David Stockman, the former budget director under President Ronald
Reagan, says the economy will not improve until the United States
rethinks its habits of borrowing, spending and money printing. His new
book, “The Great Deformation: The Corruption of Capitalism in America,”
argues that Washington has enabled Wall Street to fuel financial bubbles
and alter the markets, all while crushing middle class families.
"Heroes" of fiscal integrity include Herbert Hoover (balanced budget), Dwight Eisenhower (cut defense spending, balanced budget), and Bill Clinton (balanced budget). "Villains" include Franklin Roosevelt (devalued dollar, took gold from $20 to $35 an oz), JFK (tax cuts), LBJ (guns and butter), Nixon (went off the gold standard altogether), Reagan (tax cuts, high defense spending, high deficits), and Bush II (cut taxes, high defense spending, two major wars, Medicare Drug program, huge deficits). Barack Obama is clearly in the latter category (fiscal stimulus - mostly tax cuts, payroll tax cuts, made Bush tax cuts permanent - except for 2%, high defense spending, wars in Afghanistan, Libya, Somalia, Yemen, bailout of banks, medical entitlement - Affordable Care Act).
America is committed to it's "welfare" state and it's "warfare" state. Also it is committed to printing huge amounts of money to pay for them. Entitlements are growing not declining. We are spending trillions of dollars on a huge war machine (and surveillance machine) with no enemy of any stature in sight. The "Great Depression" of 2008 was a lie. Wall Street could have suffered the results of its reckless speculation without any affect on the economy. Instead trillions of dollars were spent to bail out Wall Street. Despite years of zero rate interest and money printing by the Fed since the turn of the century, the American economy has not grown and new jobs have not been created.
With the politics of money in Washington, the defense of entitlements and defense spending, and the influence of lobbyists for those who profit from our "crony" capitalism, there will be no honest effort for fiscal integrity and a balanced budget. There will be recurring crisis like the present one over the debt limit. Eventually there will be no recourse but higher taxes and lower spending. We are looking at a future of fiscal austerity and dollar deflation.
