Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Stop the Spending! It's Time to Cut the Federal Government Down to Size

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Stop the Spending! It's Time to Cut the Federal Government Down to Size

Article excerpt

The economy's been growing at a rate less than half the average for the recoveries following the nine previous postwar recessions. Accompanying the worst recovery ever is the longest period of sustained high unemployment since the Great Depression, the Congressional Budget Office has noted.

Real average hourly earnings fell 1.1 percent between February of last year and this February, said the Bureau of Labor Statistics.

Americans are being squeezed more than these data indicate. The Consumer Price Index rose just 2.9 percent last year, but the American Institute for Economic Research compiles an "Everyday Price Index," which includes only things the typical consumer buys at least once a month, and it rose 7.2 percent.

High unemployment, slow growth and soaring gasoline prices are the product chiefly of government policies. They can be ameliorated, swiftly and substantially, if those policies are changed. But it's too late to vote our way out of our biggest economic problem.

Our national debt is $15.6 trillion. It doesn't include the promises made to Social Security and Medicare recipients, or the pensions of federal workers ($50.5 trillion); unfunded pensions for state and local government workers ($4.4 trillion), or the $11.4 trillion we owe on home mortgages, credit cards and auto and student loans.

Add it all up, and each American owes about $261,000. Per capita income is about $27,000.

Big trouble looms once national government debt exceeds 90 percent of the gross domestic product, economists Carmen Reinhardt and Kenneth Rogoff said after studying financial crises in 66 countries for their 2009 book, "This Time is Different: Eight Centuries of Financial Folly." U.S. debt already exceeds 100 percent of GDP.

Trouble starts with sluggish growth, but ends, typically, with a spectacular crash, hyperinflation and depression.

The collapse of the dollar is a mathematical certainty if we keep running large deficits, and the Federal Reserve keeps printing money to paper them over, the head of the world's largest hedge fund said last July. The crash will come late this year or early next, Ray Dalio predicted.

So it may be too late to defuse the debt bomb. …

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