Our Uncontrollable Debt

We are in the middle of an economic crisis. Wow! Is that a shock to any of you? Let me start off by saying that I am no economist. I’m just an average guy who is trying to look at this situation in the most logical way possible.

Here is the way I see it. In the mid ‘60s, President Johnson brought about the Great Society which, among other things, sought to alleviate the “crushing weight of poverty.” He wanted to solve these problems with a new form of “creative federalism.” Those of you who regularly read this column will remember my posting of 21 Oct of this year:

So, what did Johnson mean by “creative federalism?” In his speech, he urged the audience to “join in the battle to give every citizen an escape from the crushing weight of poverty…. To join in the battle to build the Great Society, to prove that our material progress is only the foundation on which we will build a richer life of mind and spirit.” These are wonderful thoughts and goals; no one will debate that. However, Johnson’s intent was to make those goals achievable through government action, not through the sweat and perseverance of the individual. As a result, the welfare rolls jumped drastically as government agencies tried to “distribute the wealth”….

The slippery slope was firmly set in place.

Let’s fast forward now. Under President Carter, the Community Reinvestment Act was passed. This was a law that forced lenders to violate good commercial practices by making loans that were, at best, questionable and at worst, unsupportable. The slippery slope had just developed a more pronounced down-angle.

Once again, let’s fast forward. Under President Clinton, even more disadvantaged borrowers were able to take out mortgages to achieve the “American Dream,” irrespective of their ability to support that dream. President Clinton “encouraged” lenders to even further violate good business practices and make more money available to these disadvantaged borrowers. Remember the mantra that there are more homeowners in America than ever before? Did anyone in Washington ever bother to look to see whether these homeowners could afford the “American Dream” they had achieved?

One of the great joys in my life has been the accomplishment of a goal through hard work. When I want something enough to work for it, the satisfaction that comes through achievement makes all the effort worth it. The message sent by the federal government to the so-called “disadvantaged” was that it did not want them to feel left out; therefore serious shortcuts were made available to them. Nobody bothered to tell them that they had to work to support their dream.

Once again, let’s fast forward to today. We have had the collapse of Fanny Mae and Freddy Mac, Merrill Lynch, Bear Stearns, and a host of others. The way I see it, there are two culprits in this debacle. The first is the federal government which had the arrogance to interfere with the free market system. This was wrong for many reasons. The Founders were wise enough to keep the federal government out of the free market. I am no constitutional scholar, but I am aware of only one situation where the Constitution allows the federal government to get involved in commerce within the US, and that is when there is a dispute between the States (some of you scholars can correct me on that one).

The other culprit is business and industry allowing the federal government to get away with their meddling. Truly astute business professionals should have been able to foresee the coming economic collapse caused by the meddling of the federal government and stopped it.

Now we are soon to be saddled with over one trillion dollars worth of debt that could have been avoided with the foresight of a sophomore economics student. What makes this situation even worse is that both the Republicans and the Democrats are fighting each other to see who can give which industry more of our money. The latest polls show that the overwhelming majority of Americans bitterly object to the bail-outs taking place, but Congress seems to be made up of people whose wisdom is so superior that they do not need to listen to their constituents.

There are a few brave Congressmen and Senators who have attempted to stand up against this tax against our future, but not enough. We have about a year to put together a slate of candidates that will decisively overturn this rampant growth of our debt, debt that is a direct result of government interference in the marketplace.

This interference in the marketplace is not limited to the front office; it extends down to the union halls and the massive corruption and power flexing that exists in the union hierarchy. That will be the subject of my next posting.

As always, I welcome your comments and discussion.


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