04 June 2009

Out of Money? Try Doublethink.

A thinking person has to wonder just what the federal government is doing concerning spending, borrowing, and planning. Not long ago, after increasing spending by bazillions (please pardon the hyperbole), President Obama said that “we’re out of money now” in a C-SPAN interview. Yet the bailing out continues, the growing statism continues, with healthcare next on the block. Then perhaps curing “global warming” (or whatever euphemism suits the current climate) through “cap and trade” legislation. Finally, Mr. Obama will round out his “fixing” by turning schools around (and around and around).

But all of this will cost money – lots and lots of it. Bazillions might not be out of the question. Don’t worry though, the electorate is told again and again by Mr. Obama; these big fixes are just what are required to put the country on the right track. Some way will be dreamt up to pay for them, or (better yet) they’ll pay for themselves through “savings”.

Enter Chairman Bernanke (as reported on Bloomberg):

Federal Reserve Chairman Ben S. Bernanke said large U.S. budget deficits threaten financial stability and the government can’t continue indefinitely to borrow at the current rate to finance the shortfall.

“Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth,” Bernanke said in testimony to lawmakers today. “Maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance.”

Bernanke’s comments signal that the central bank sees risks of a relapse into financial turmoil even as credit markets show signs of stability. He said the Fed won’t finance government spending over the long term, while warning that the financial industry remains under stress and the credit crunch continues to limit spending.

I would suggest that Mr. Obama’s grand plans for “cap and trade”, health care nationalization, and education “fixing” will not lead anywhere near the planet, let alone the neighborhood, called “fiscal sustainability”. They will lead the country into a hole of government spending – and governmental control – from which it and we may never emerge.

The doublethink operating in the Obama administration is shocking. Mr. Obama says that the country is out of money. Mr. Bernanke tells him (at some point, surely he has) that long-term fiscal stability is in danger because of deficit spending. I expect a serious head nod and tilt from Mr. Obama. Then the next big government program is envisioned and figures are dreamt up that will pay for it. The second will fix the first, if the first were even a problem to begin with. Until the first is a problem (again). Wash. Rise. Repeat.

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