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There is little question that Democrats will do their best to avoid talking about economic reality at their convention this week–other than to say our current malaise would have been worse without their Keynesian interventions, or that Mitt Romney and “heartless” Republicans will make it worse if they are elected. Yet reality intrudes nonetheless. A trifecta of bad news will hang over the Charlotte celebration: America’s debt will cross the $16 trillion threshold this week, the manufacturing sector is marking its third month of shrinkage, and the latest report on food stamp usage shows a record-setting increase recorded in the month of June.
First the debt. There is no question that the previous president, as well as his fellow Republicans, bought into the dubious philosophy of “compassionate conservatism” despite the fact that it amounted to nothing more than tax-and-spend liberalism by another name. That malfeasance cost them both Houses of Congress in 2006 and likely the presidency in 2008. Yet it took Bush, along with congressional majorities from both parties, to amass $4.899 trillion in eight years. Obama and his party, who have had majority control of the federal government since 2006, (thus helping Bush accrue much of his own deficit spending) and total control of the government for Obama’s first two years in office, have managed to pile an additional $5.364 trillion of debt on the American taxpayer–in less than four years. And every step of the way, from the $800 billion stimulus package, through the nationalization of banks, car companies and insurance firms, to the Federal Reserve’s quantitative easing manipulations, we were promised that prosperity was right around the corner.
Furthermore, we have been assured that what is occurring now constitutes an official recovery. Sadly, according to a new study from Sentier Research, Americans were better off during the recession. Median annual income has declined 4.8 percent from $53,508 to $50,964 since the “recovery” technically began in June 2009 — almost double the 2.6 percent drop that occurred during the recession.
David Axelrod was apparently the only one from the Obama campaign willing to respond to requests for comment about the debt. On “Fox News Sunday,” Axelrod contended that Obama’s plan would cut the deficit by $4 trillion over the next decade. He further asserted that such a move would “stabilize” the debt. When ask about when the president’s plan would bring the budget into actual balance, Axlerod had no idea. “What’s necessary is to stabilize the debt and then work from there,” he said. “You can’t balance the budget in the short term, because to do that would be to ratchet down the economy.”
Sen. Jeff Sessions (R-AL), the ranking Republican on the Senate Budget Committee, put $16 trillion of debt — and counting — in the proper perspective. “This is a grim landmark for the United States,” he said. “Yet the president seems strangely unconcerned.” That would be the same president who apparently believes that reducing spending by $4 trillion over a decade, after adding more than $5 trillion to the debt in less than fours years, is the best his administration can hope to achieve.
The manufacturing sector is the second grim reminder that spending one’s way to prosperity is a pipe dream. It shrank at its largest clip in more than three years. In addition, both exports and hiring in the sector slumped as well. According to an Institute for Supply Management (ISM) survey released Tuesday, factory activity fell from 49.8 in July to 49.6 in August. A reading below 50 indicates a contraction in the sector. The report further indicates that the recent weakness may continue during the near term as the spread between the new orders and inventories sub-indices, considered a key indicator of future activity, fell to its lowest level since January 2009. January 2009 was the height of the recession. Quite expectedly, this latest weakness in the manufacturing was labeled as “unexpected.”
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