Reason No. 1:
"Most Americans have yet to feel any of the costs of the Iraq war," write Nobel economist Joseph Stiglitz and Linda Bilmes in an excerpt of their new book, "The Three Trillion Dollar War," in Vanity Fair. "The price in blood has been paid by members of the volunteer military. The price in treasure has been financed entirely by borrowing. Taxes have not been raised to pay for the war."
Yes, our five-year war was totally financed by borrowing. But unfortunately, "deficit spending gives the illusion that the laws of economics can be repealed. They cannot. Americans will have to pay for the war at some point -- and when they do, they will be paying not the Bush markdown but the full price,"
We were sold a war-on-the-cheap, to cost a mere $50 billion to $60 billion, to be self-financed out of oil revenues. Today we're spending $50 billion every month! This war is already an economic disaster for America and the bill's still coming due.
2. America's New Wall Street Welfare Program
This one's scary. For the first time in almost a century, the Fed's bailing out the investment bankers, those wild speculators who got us in this mess -- bailed out while two million homeowners face foreclosures and increasing interest rates.
The real sinners are free to sin again! Like J.P. Morgan Chase's $2 -- now $10 -- freebie of Bear Stern's equity, while the Fed stuck the taxpayers with billions of Bear's junk debt. Now Wall Street's greedy traders are free to start speculating again, playing in the same old $516 trillion high-risk derivatives casino. Bad move: The Fed's setting America up for an even bigger crash around 2012.
3. The Fed's Nationalizing America's Financial Industry
The Fed's dealing with America like a third-world banana republic, effectively nationalizing our financial industry! Wall Street's speculators have over $200 billion in junk write-offs. But like the government accounting tricks hiding war costs, Wall Street has also been inflating junk asset values and ginning up profits. And now the Fed's even helping them mask losses to prevent panic. Eventually this PR stunt will cut Wall Street's future earnings and increase taxes.
4. Huge Resistance to Cutting Social and Entitlement Programs
Lobbyists like AARP will fight all cutbacks in Medicare and Social Security entitlements, even though those unfunded benefits will balloon to $50 trillion to $65 trillion within a generation. Economists say solving this problem will take Draconian cuts of 40% in benefits or tax increases of 40%. If we don't, entitlements will consume the entire budget in a generation. Untouchable near-term: Ergo, minimal cuts, higher taxes.
5. America's Pork Barrel Lobbying MachineThe Washington Post says lobbying is "Washington's biggest business." All those 35,000 lobbyists will be around for the entire 2009-2012 first term of the next president, and all screaming for government handouts. The Democrats need them. And while McCain promises to veto earmarks, his campaign's inner circle is made up of special interest lobbyists, ostensibly working for "free."
Expect little change. Lobbyists earn big bucks squeezing megabucks out of the federal budget, and your taxes pay the bills.
6. Aging Infrastructure: Roads, Bridges, Water, Sewer, Etc.
Imagine taking that $50 billion monthly cost of fighting and rebuilding Iraq and shifting it to upgrading our own highways, hospitals, power, sewer and water plants. Dream on. Yet our deterioration continues and deferred maintenance only works so long. Expect higher gas taxes, plus sizeable cutbacks in state and local services, or general tax increases.
7. Paradigm Shift: Consumer Spending vs. Consumer SavingsIn one generation our savings rate declined below zero. Policymakers favored a consumer-driven economy, capital formation fell and debt piled up. Meanwhile, consumers took a cue from an out-of-control "spend and borrow" government piling up huge deficits.
9. Recession Reality Replacing Arrogant Optimism
The past five years the Wall Street Bubble Machine relied on an artificially low 1% Fed rate to create the housing boom and then the subprime-credit meltdown. Meanwhile our optimism and faith in capitalism sank with all the phony asset values and stock prices concocted by Wall Street ... and it'll happen again ... because Wall Street's relentless, all-consuming greed is setting up the economy to crash and burn again, all too soon ... and the taxpayer will pick up the tab ... again.
