The United States currently has revenue of approximately $2.2 trillion against expenses equal to about $3.8 trillion.\u00a0 Keep in mind that Obama increased spending by over $1 trillion.\u00a0 This means that our expenses are approximate 172% of revenue.\u00a0 Another way to state this is that our current revenue is only adequate to pay 55% of expenses, hence, the 55 or double nickel.<\/p>\n
Obviously, at the current rate of spending, we have to borrow an additional 45% in addition to our current revenue just to avoid default.<\/p>\n
Let me put this in perspective.\u00a0 Suppose someone has an income of $5,500 per month.\u00a0 Their expenses are $10,000 per month.\u00a0 They borrow $4,500 each month so they can pay the bills.\u00a0 Obviously every time they borrow money their expenses increase the next month.\u00a0 How long do you think they will last?<\/p>\n
If you knew someone in this situation, would you loan them more money?\u00a0 The answer is no, because you know that loaning them more money would not solve their problem.\u00a0 All loaning them more money would accomplish is to delay bankruptcy for another month or so.\u00a0 Letting them borrow more money just results in a bigger and bigger problem.\u00a0 The only possible solution for these people is to double their income, or to half their expenses.\u00a0 Which is more likely?\u00a0 How many people do you know who have doubled their monthly income lately?<\/p>\n
The sad reality is under Obama\u2019s leadership we are already insolvent.\u00a0 The only question is when the day of reckoning arrives and who gets blamed.\u00a0 Extending the debt limit does not solve the problem it only delays the problem for a short period of time.\u00a0 Raising taxes might help solve the problem; if raising taxes resulted in more revenue.\u00a0 But the problem is that raising taxes is likely to kill the economy, resulting in even less revenue.<\/p>\n
Virtually every state run by Democrats has raised taxes and increased spending and virtually every state run by Democrats is on the verge of bankruptcy.\u00a0 Think California.\u00a0 California dreaming takes on a whole new meaning.\u00a0 Virtually every state run by a conservative Republican has reduced taxes and cut spending and those states are already starting to recover.\u00a0 Think Texas.<\/p>\n
Republicans are seriously considering caving in to the President and raising the debt limit, through one deal or another, primarily because they are afraid of the political fallout. \u00a0I wish just one Republican would stand up and tell the truth.\u00a0 We are already in default, we are already insolvent and the longer we delay in recognizing this; the more painful it will be for everyone.\u00a0 If anyone wants to see what is just around the corner look at Greece, look at Ireland and look at Italy.\u00a0<\/p>\n
I have learned that the best way to analyze any situation is to read the New York Times and do the exact opposite of what they recommend.\u00a0 Here is a NYT article from February 22, 2011.<\/p>\n
http:\/\/www.nytimes.com\/2011\/02\/23\/business\/economy\/23leonhardt.html?_r=1<\/a><\/p>\n Less than two months later, a record even for the NYT, their analysis was proven wrong:<\/p>\n http:\/\/uk.reuters.com\/article\/2011\/04\/07\/uk-germany-institutes-idUKTRE7362RW20110407<\/a><\/p>\n Now, in July, less than 5 months after the NYT explained why cutting expenses can\u2019t work, Germany appears to be on the path to recovery and is even talking about lower taxes?<\/p>\n http:\/\/online.wsj.com\/article\/BT-CO-20110706-702324.html<\/a><\/p>\n If, and it is a big if, the Obama administration would agree to big cuts in spending, than raising the debt limit might be a good idea.\u00a0 It would buy us enough time to do the necessary, which is cut spending.\u00a0 But Obama clearly lives in a dream world where all he has to do is raise taxes on corporate jets and all his problems will fly away on streams of soaring tax revenue.\u00a0 Mitch McConnell got it right when he said no real deal to cut spending is possible while Obama is President.<\/p>\n So why does McConnell want to give Obama the ability to raise the debt limit?\u00a0 The answer is because that is a political decision, not an economic decision.\u00a0 McConnell knows that default is coming and his most important consideration is in making sure that Obama is not successful in falsely blaming this on Republicans.\u00a0 He is right to be concerned, because the main stream media is still fully in the tank for Obama.\u00a0<\/p>\n To me the worst case scenario is that Obama drive this country into bankruptcy and with the help of the main stream media finds a way to blame everything on Republicans.\u00a0 There is precedent for that.\u00a0 George Bush and Republicans are blamed for lack of regulation in the financial markets even though that was done by Bill Clinton before Bush took office.\u00a0 Bush is blamed for letting Fannie Mae and Freddie Mac take down the housing market in spite of the fact that it was primarily Democrats who facilitated that disaster and Bush went to congress on 11 separate occasions warning them about this.\u00a0 George Bush is blamed for all our economic woes, although the economy was doing just fine until January of 2007, when Nancy Pelosi became Speaker of the House and Harry Reid became Senate Majority Leader.\u00a0 Democrats are unfortunately very skilled at blaming Republicans for problems they created.<\/p>\n Perhaps McConnell got it right.\u00a0 We really can\u2019t avoid the financial train wreck that is coming as long as Obama is President.\u00a0 There is no hope of fixing this problem with this man in office.\u00a0 You cannot engage in mental combat with an unarmed opponent.\u00a0 But what we can do is force him to take ownership so the American people know who to blame.\u00a0 It is time to call his bluff.\u00a0 Put the leadership responsibility squarely on Obama so we can finally, finally, finally fix the real problem.\u00a0 If our financial ship of state has to go down, at a minimum we need to make sure we get rid of the Captain that steered us into the rocks.<\/p>\n \u00a0TDM<\/p>\n","protected":false},"excerpt":{"rendered":" The United States currently has revenue of approximately $2.2 trillion against expenses equal to about $3.8 trillion.\u00a0 Keep in mind that Obama increased spending by over $1 trillion.\u00a0 This means that our expenses are approximate 172% of revenue.\u00a0 Another way … Continue reading