Letters From Ben and Barry

These recently leaked letters from Ben and Barry shed some light on our President’s secret strategy -

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Ben Bernanke  -  Federal Reserve Chairman

 

President Barack Obama                                                                     August 6, 2013 The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500                                     —  Confidential —-

Dear Mr. President,

I am ever more worried about the path we are taking in dealing with the nation’s debt and our money supply.  As we have discussed on several occasions, creating money in massive quantities, which we are doing every month, is like giving drugs to a drug addict.  We produced the drug-induced euphoria in the markets that you wanted and government expansion is being financed with the borrowed money, but a day of reckoning is coming.

The world has never seen debt at the levels we are creating it.  Nothing even comes close.  Every thinking person knows that our present course is not sustainable.  Honestly, Mr. President, if you just do the math you will see that our current unfunded liabilities cannot be paid.  You simply cannot tax our grand-children at the rate that will be required and still have a productive economy.  We are putting such a load of obligations in this wagon that future generations will not be able to pull it.

The further we go down this road, the more painful the correction is going to be.  You see what happens when I even suggest that I may slow down on my “quantitative easing”.  The markets panic.  So I can’t do that without a very serious contraction.  You and I will be blamed.

But I can’t keep printing billions of dollars endlessly without destroying the value of the dollar.  I am already having trouble finding buyers for our bonds.  And the interest rate on the debt is sure to rise as the bonds become less desirable.    That will wreak havoc on our budget as debt service takes an ever increasing share of tax revenue.  We are going to get blamed for that.

I know our goal has been to push this trouble down the road, and I am still manufacturing fake prosperity as fast as I can, but I just don’t know if I can push the coming economic chaos off into the next President’s term.  For that reason I am submitting my resignation and would like to be replaced soon.

I have the luxury of jumping ship, but you must remain.

Regretfully,

Ben Bernanke

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President Barack Obama

 

The Honorable Ben Bernanke                                                                 August 14, 2013
Chairman
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, NW
Washington, DC  20551                                                    — Confidential —

Dear Ben,

I am sorry to see you go and I appreciate your concern for me, but you worry too much.  We have a plan to manage the problems you describe.  You need to understand that the economic problems ahead are not the issue.  The issue is who gets blamed for them.

Don’t you see, Ben, if you control The Narrative it doesn’t matter what happens.  The Narrative is shaped by the mainstream media, popular culture and the education establishment.  They are all cheerleaders for big government.  They are firmly on my side.

Look at Obamacare.  I sold this program with bold lies.  I firmly promised people that they could keep their current plans and their current doctors.   I assured them it would all be much less expensive.  I said it would lower the deficit and help businesses.  I told them it would improve the quality of medicine.

In reality, every claim I made was the opposite of the truth.  The law is so horrendous that many of my supporters have demanded exemptions.  But look, Ben, The Narrative has not changed.  Those who shape public opinion still sell the dream and ignore the reality.  Those who oppose Obamacare are demonized.  Don’t you see the power in that?  The facts don’t matter.

The current Obamacare legislation is just Step 1, anyway.  It was designed to fail.  When it fails, the extremely messy failure will be blamed on greedy insurance companies and greedy doctors.   From this crisis we will create a clamor for Step 2 – the complete government control of health care.  I win.

So chaos is my friend.  You need to read Saul Alinsky or the Cloward-Piven plan to understand how this works.  The economic turmoil you fear does not frighten me.   Managed properly it is the perfect tool for the fundamental transformation of this country.

I will show you another example this fall when we approach the debt ceiling negotiations.  I will accomplish 3 things with relative ease:

  1. I will humiliate the Republicans in the budget showdown.  They may have a winning hand if you look at the facts about debt and spending, but the facts will not be discussed.  The story will be that extremist, jihadist Republicans want to shut down the government and hurt people.  The media will herd these Republicans around like sheep.  It’s just fun to watch.
  2. I will single out the Tea Party for special humiliation.  Their power in 2010 was a serious threat to my plans, so we have had a multi-agency attack on them since that time.  They simply must be marginalized.  Those of us in power in Washington understand the threat they represent.
  3. The coming shut-down fight must last long enough to be painful.  You and I know the economy is not doing well and blaming Bush is a weaker argument with each passing year.  If I can force something that is damaging, and blame the Tea Party, I will be in a perfect position for the critical 2014 elections.  I’ll say, “The economy would be great now if those Tea Party extremists had not wrecked everything for you.”  It’s easy if you control the Narrative.  And I do.

That’s the plan, Ben, and it should work fine.  I am sorry that you don’t have the stomach for it.  I will find a replacement for you who is comfortable borrowing more money from our grandchildren.  That level of heartlessness is required.

Thanks for all you’ve done,

President Barack Obama

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The Tiresome Imperial Schtick

Obama HaloPresident Obama presented his budget yesterday and at his press conference we saw the ‘performance’ we have learned to expect from him.  There can be variations in the subject matter, but the form of the speech, in brief, goes something like this:

The body posture is erect.  The manner is self-assured.  With his chin raised, he pans the room, gazing above the crowd in an imperious manner.  He pauses for dramatic effect.  We are lucky to be in his presence as he imparts his wisdom from on high.  He speaks:

I am here to announce a bold new initiative.  We need to expand the size and scope of government in these ways ______________.  This will help everyone.  All the experts agree with me that this is a good idea.  All reasonable people agree with me.

There are some backward extremist people who don’t agree with me.  They don’t care about people like I do.  They just care about rich people who do not pay their fair share at all and are taking advantage of you.  I am going to take money from those rich people to pay for this expansion of government power.

The teleprompter provides a customized version of this speech everywhere this performer appears.  The speech is usually full of bold lies.  You can get the flavor of the lies and demagoguery in yesterday’s performance with these clips from the speech:

…here’s a clear and unassailable fact: our deficits are already falling.Over the past two years, I’ve signed legislation that will reduce our deficits by more than $2.5 trillion — more than two-thirds of it through spending cuts and the rest through asking the wealthiest Americans to begin paying their fair share.

My budget will reduce our deficits by nearly another $2 trillion, so that all told we will have surpassed the goal of $4 trillion in deficit reduction…

Our deficits are falling at the fastest pace in years.

But if we’re serious about deficit reduction…

When it comes to deficit reduction, I’ve already met Republicans more than
halfway.  So in the coming days and weeks, I hope that Republicans will come
forward and demonstrate that they’re really as serious about the deficits and
debt as they claim to be.

 [Because the numbers in the budget do not work and the document is filled with smoke and mirrors, the President closed with...]  “The numbers work.  There’s not a lot of smoke and mirrors in here.”

In addition to the press conference, the President sent a letter to Congress about his budget.  The letter further illustrates his willingness to misrepresent the facts.  Some excerpts:

[My budget]  implements the Affordable Care Act, giving every American access to the high-quality, affordable health care coverage they deserve, and reducing the deficit by more than $1 trillion…  [It is probably difficult for him to suppress laughter at this statement.]

The Budget does all of these things as part of a comprehensive plan that reduces the deficit.

…these initiatives and ideas are fully paid for, to ensure they do not increase the deficit by a single dime.

…we have moved aggressively to cut waste, fraud, and abuse.

 …we have begun to ask the wealthy to do their fair share  ….so the wealthiest pay their fair share    …so millionaires and billionaires do their fair share to cut the deficit.

Finally, this Budget continues my commitment to reforming and streamlining our Government    …targeting and eliminating wasteful spending wherever we find it.

But this Budget shows how we can live within our means.

Can we agree that this man is either detached completely from the real world or is confident that his imperial schtick will will continue to snooker about half the population.  It may be a combination of the two.

The Obama budget increases the rate of government spending.  It continues the wild growth of government and expands 79 welfare programs. It increases the deficit. And it calls for a trillion dollars in economy-damaging tax increases.  Like his previous budgets, this budget makes it clear that this President has no intention of slowing the growth of government.

REALITY

REALITY

What Happens if Work is Punished?

e unum pluribusIt is an economic truth that what you subsidize you get more of and what you tax you get less of.  So if you were to punish work and reward slothfulness you would get less of the former and more of the latter.  A government can buy as many poor people as it is willing to pay for.  If the pay is good, people will seek non-work in large numbers.

In our country, the non-work pay can be quite good as the following stories demonstrate.  First, a clip from the Tyler Durden column, When Work is Punished:

Exactly two years ago, some of the more politically biased progressive media outlets took offense at our article “In Entitlement America, The Head Of A Household Of Four Making Minimum Wage Has More Disposable Income Than A Family Making $60,000 A Year.”   In it we merely explained what has become the painful reality in America: for increasingly more it is now more lucrative – in the form of actual disposable income – to sit, do nothing, and collect various welfare entitlements, than to work. This is graphically, and very painfully confirmed, in the below chart from Gary Alexander, Secretary of Public Welfare, Commonwealth of Pennsylvania (a state best known for its broke capital Harrisburg). As quantified, and explained by Alexander, “the single mom is better off earning gross income of $29,000 with $57,327 in net income & benefits than to earn gross income of $69,000 with net income and benefits of $57,045.

Do follow the link to Durdens column.  It is a good elaboration on the trend that will devour us.

Another trend demonstrates how enticing an entitlement hammock can be.  Ask yourself if there is there something about a recession that would cause widespread disability?  I don’t think so either.  Let’s ask the question a different way.  Is there something about being paid for doing nothing that would be enticing to people?

Disability claims are skyrocketingThe government now spends more on disability than food stamps and welfare combined.  Since the recession supposedly ended in 2009, around 150,000 jobs have been created each month.  But an average of 250,000 people have applied for disability each month.  It’s good non-work, if you can get it.  And it is increasingly easy to get.  In one Alabama county, 1 out of 4 working-age adults is lying in this golden hammock.  USA Today reports that it is common for people to accept unemployment ’compensation’ until it runs out and then become disabled.

Just like poverty, a society can buy as much disability as it wants to pay for.  The economic law that you get more of what you subsidize is true everywhere.  So in Britain, where disability benefits were easily available, millions signed up.  Like all utopian welfare states, Britain itself is becoming disabled with debt, so a decision was made to review each disability claim to check for fraud.  Jonah Goldberg reports:

[Britain] asked everyone receiving an “incapacity benefit” to submit to a medical test to confirm they were too disabled to work. A third of recipients (878,000 people) didn’t even bother and dropped out of the program rather than be examined. Of those tested, more than half (55 percent) were found fit for work, and a quarter were found fit for some work.

So that’s around one-fourth who legitimately need help and around 75% who were scammers to differing degrees.  Beyond the economic cost, it is not a good sign for the future of a country when this many adults are comfortable living as parasites.

Daniel Greenfield reports that if those on disability formed a state, the State of Disability would be the 11th largest state.  One of the currently favored maladies in this state is “mood disorders”.

redistribution

On a related subject, do not be fooled by the reported employment statistics.  As bad as they are, reality is much worse.  One key to understanding the truth is to know that 663,000 people dropped out of the labor force in March.  There are now 90 million working age Americans who are not even looking for work.  The deception in the reported statistics is that these people are not counted as unemployed.  So, if everyone dropped out of the workforce, the unemployment rate would be zero….    and the media would report it as a vindication of Obamas brilliant policies.

Daniel Amerman has a detailed explanation of the employment deception here.  An excerpt:

…a  detailed look at the government’s own data base shows that about 9 million  people without jobs have been removed from the labor force simply by the  government defining them as not being in the labor force anymore.  Indeed – effectively all of the decreases  in unemployment rate percentages since 2009 have come not from new jobs, but through  reducing the workforce participation rate so that millions of jobless people are  removed from the labor force by definition.

socialism for you

Dreaming About Free Stuff

Here are some illegal aliens dreaming about free health care, “because health happens when we dream together”.

 

Does healthcare happen “when we dream together”, or is the delivery of healthcare a substantially more complicated process?

unicorn 3If wishing will give us free healthcare for all, why stop at our borders?  Why not get it for everyone in the world?  I wish that everyone in the world could have the the very best healthcare there is, for free.  Don’t you?  I wish unicorns would just fly it around everywhere.

But if it turns out that dreaming doesn’t do it, that raises a few more questions.

  • Would a culture that favors free exchange of goods and services be more likely to develop high quality medical care than a centrally controlled coercive society?
  • If a free society develops high quality medical care, is it likely to improve health care if we move toward a centrally controlled coercive system?
  • Is a person’s desire for free stuff a legitimate claim on the lives and property of others?

Can We Borrow Our Way Out Of This Debt?

Let’s face it, it’s tough to conceptualize the meaning of trillions of dollars of debt because the numbers are so big. There is an interesting visual representation of a trillion dollars here, that you should take a look at.  There is also a superb video below that reduces the debt and spending problem to an easily understandable human level.  Pay particular attention to the involvement of the child at the end of the video and ask yourself about the morality of using our children in this way.  [ Thanks to reader Kirsten Curtis for finding the video.]

If you would like another short explanation of the debt crisis, and our future, take a look at this:

In the midst of these insane and self-destructive levels of borrowing and spending, we have leaders who say that we do not have a spending problem or an entitlement problem.  In an interview that aired yesterday on ABC, Obama said, “we don’t have an immediate crisis in terms of debt. In fact, for the next ten years, it’s gonna be in a sustainable place“.   So it’s full speed ahead.  Patty Murray’s budget unveiled this week calls for huge increases in taxes and a 62% increase in spending over the next decade.  Party on!

People who call for more borrowing and spending are called the moderate and reasonable people by the mainstream press.  People who fear the destruction of this unsustainable course, the Tea Party types, are called extremist kooks.

You decide.

Forward

Why Inflation Will Occur

“For those of us who believe an economic apocalypse is unavoidable, there is disagreement as to what the end looks like. Some very bright people disagree whether the end is the hell of hyperinflation or death by freezing in the depths of deflation……..”

You can read the rest of this post from Monty Pelerin’s World here:  Why Inflation Will Occur » Monty Pelerins World.

Some Lessons

pie-chart

Sequestration:  Originally a legal term referring generally to the act of valuable property being taken into custody by an agent of the court and locked away for safekeeping, usually to prevent the property from being disposed of or abused before a dispute over its ownership can be resolved.          from auburn.edu glossary of political terms

As I see it, valuable property, in ever-increasing amounts, is being taken into custody by the State, but not for safekeeping.  Through debt, the valuable property of our children and grandchildren is being taken into custody, but not for safekeeping.  Most people understand that our rapid growth in spending and debt is unsustainable and will result in economic destruction.

The question before us in the current ‘sequestration battle’ is this:  Are our politicians willing to make even small adjustments to slow the rate of growth of government?

No, they are not willing.  They are kicking and screaming against even a slowdown in the rate of growth.  Imagine the impossibility of making real cuts in spending, where we spend less next year than this year.  Imagine the impossibility of getting on a sustainable path.

So we will stay on an unsustainable path of wildly increasing debt.  You can count on it.  And we will go to where that path leads.  I believe the current administration knows this and is focused solely on making sure the blame for the economic destruction is placed on their enemies.  If you create chaos and can successfully blame it on your enemies, then the chaos you created increases your power.  That’s the Cloward-Piven way.

The fact that there was not a healthy recovery in Obamas first four years was successfully blamed on George Bush.  Obamas’ economic policies will not allow a healthy recovery in the next four years either.  But he and the lap-dog press control the narrative, so all economic problems will  be blamed on Republicans.  ”If only they had not forced the draconian cuts of the sequester…” .  In Obama’s press conference this morning he said that the economic problems we will see in the future should all be blamed on the Republicans and how they handled the sequester.  He did not have to tell the media to do this.  They would have done it anyway.

A short but great Cato video on “Sequestration Panic:

Take a minute to read Charles Krauthammers’  Hail Armageddon .   Really.  It’s worth reading.

Here are some lessons we can take from the sequestration drama:

1. The “firemen first rule” still applies.  If we ask government to spend less of our money, they will say, “OK, we are going to lay of the firemen and teachers and let the prisoners out of jail.”  It’s a form of extortion.  Give us what we want, or else…

2. Obama is comfortable with lying (something we already knew).  His administration created the sequester plan.  He verbally supported the plan when he wanted to look like a budget cutter, saying he was absolutely not going to let the Republicans block the automatic cuts.  Now he is absolutely against these same automatic cuts that he says the cold-hearted Republicans are pushing.  It is worth noting that one or two people in the mainstream press have called him out on his lies.  Journalists doing real journalism is news.

3. It is increasingly clear that Obama’s Presidency is not about finding solutions to problems.  His Presidency is a performance aimed at creating divisions and laying blame.  It’s a constant campaign.  The sequestration deadline and the debt ceiling deadlines are known long in advance.  He does no work to solve these problems in advance.  He simply performs the blame campaign as the deadlines arrive.  This has worked quite well for him so far.

4. Obama’s “balanced approach” means:  more taxes.   He wants a ‘balanced approach’ where serious budget cutting is something we might do some day in the future and raising taxes is something we need to do right now.

5. People still get away with pretending that a modest cut in the rate of growth is a draconian cut in spending.  When you spend more next year than this year, that is an increase in spending.  If you were planning to spend an extra 100 billion next year and you instead spend an extra 98.5 billion, that is called an increase in spending.

6. The primary lesson is that there is no chance that the growth of government will be stopped.  What needs to be done will not be done.  We must plan accordingly.  [It would be more accurate to say that politicians will not reverse the growth of government, but that reality will bat last and will cut the size of government in some very unpleasant ways.  Reality will not allow the borrowing and spending to continue indefinitely.]

7.  People are asking the wrong question.  They are focusing on the negative effects of slowing the rate of growth of government.  The more important question is, what are the negative effects of not slowing the rate of growth of government.

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“If you do not change direction, you may end up where you are heading” ― Buddha
Things that can’t go on forever, won’t. Debt that can’t be repaid, won’t be.  Promises that can’t be kept, won’t be. —                        –Glen Reynolds

For more, see: Things That Can’t Go On Forever, Won’t

Update: Mark Steyn asks -

Can you pierce the mists of time and go back all the way to the year 2007? Back then, federal spending was 40 percent lower than it is today. In a mere half-decade, has all that 40 percent gravy become so indispensable to the general welfare that not even a teensy-weensy sliver of it can be cut?

If you really believe that, then America is going to die, and a gullible citizenry willing to give this laughable charade the time of day will bear ultimate responsibility.

Magical Thinking on the Economy

zim trillion

The absurdly named “debt ceiling” is not a ceiling at all.  Never has been.  Congress has just blasted right through this supposed ‘limit’ each time they reach it.  The ‘limit’ has been raised 74 times since 1962.  Congress spends with wild abandon and does not recognize limits.

But reality recognizes limits, and will re-assert itself in some unpleasant ways when our wild spending spree reaches its end.  Our exploding debt is unsustainable and will not be sustained.

A substantial portion of our population understands the danger and is seeking to do something about it.  They have even managed to elect a few legislators who are committed to changing course to avert disaster.  These honest people are a minority, though, and are regularly ridiculed for their principled wisdom.

We have once again reached the debt limit and most legislators want to blast right through as usual.  Obama says he doesn’t even want to discuss it.   Those who want some spending cuts are threatening to block continued spending unless there are real cuts.  That brings us to two ploys that are being considered by the big spenders.

First, some are saying the President doesn’t need Congress for spending authority.  They say the 14th Amendment would allow Obama to spend without regard to the limit, even though the constitutions says all spending must be authorized by Congress.  Second, some say there is a magic trick we can do that will fix things.  The magic trick is to put a platinum coin in the Federal Reserve and say it is worth a trillion dollars.  Then government would write checks on that trillion without borrowing money.

Functionally, depositing the platinum coin would be the same as depositing a lump of coal.  Both would be about the same distance from actually having a value of a trillion dollars.  An absurd stunt like this would confirm the worst fear of prospective bond buyers…   that we are not serious about dealing with our debt.  The credit rating agencies would come to the same conclusion.

Yet, the platinum stunt is being discussed as though it has merit.  Paul Krugman, for example, has written that the coin trick would result in, “no economic harm at all”.  He sees it as a reasonable response to the, “ruthlessness and craziness that now characterizes House Republicans”.  He is speaking of those extremist fools who are worried about  out-of-control spending.  Those obstructionists.

Each of us needs to decide where the craziness lies in this debate.  If you think reality will allow us to spend our way out of debt, go with Krugman.  If you think people will continue to fund our increasing debt by buying our bonds when it becomes clear that we cannot possibly pay the debt, go with Krugman.

Governments that follow the Krugman path and debase their currency often do pretend to  pay their debts.  They put a big number on a worthless piece of paper and say, here you go.  It’s like giving someone a platinum coin and saying, here’s a trillion dollars.

The Zimbabwe One Hundred Trillion Dollar bill above is real, government issued money.  You can get one for about five bucks on Ebay.  So governments can ‘repay’ their big debts with what is essentially toilet paper.  In the process, they will have destroyed the economy and wiped out the savings of the citizens.  It has happened many times before and we may be witnessing it again.  It happens when politicians care more about their power than about the future.  It happens when citizens believe there are free lunches, when there is no such thing.

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Additional info:                 At monetaryrealism.com, Vimothy posted this comment:

It comes down to the fact that the government ultimately has two and only two choices when it wants to get hold of some real economic resources: either it expropriates them outright, or it borrows them and replaces them at a later date. That’s it. There is no third choice.

All of these things like taxes, selling bonds, the platinum coin and the “operational” ability to issue as much nominal money as you like are at the end of the day simply ways to achieve (a) or (b), or some combination of the two.

The government is obviously  limited in its ability to borrow as much as it likes from the real resources of the economy because its ability to return those economic resources is itself limited. And if the government does not intend to return what it borrowed, because, for example, there is no entity above it that can force it to do so, then it did not borrow the resources; it expropriated them.

 

Good News… No Big Problems

 

Speaker John Boehner reported that during the fiscal cliff negotiations, Obama got irritatied with Boehner’s repeated insistence that they deal with the spending problem.  Obama said, “We don’t have a spending problem”.  That’s great news.

Robert B. Reich, Clintons Secretary of Labor, agrees with Obama.  He recently reported that, “Entitlement reform sounds like a noble endeavor, but it has little or nothing to do with reducing future budget deficits.”  More good news.

So spending isn’t a problem and entitlements aren’t a problem.   And even if high unemployment is a problem, Nancy Pelosi reports that she has found a solution for that.  The solution is paying people not to work.  Pelosi says unemployment benefits,  “create jobs faster than  almost any other initiative you can name.” She says spending on unemployment benefits, “creates jobs to help reduce the deficit ”.  So the spending has two benefits, more jobs and less debt.  

 

 

 

 

 

 

 

 

 

 

 

 

 

Dealing With Reality

Wolf Blitzer of CNN recently demonstrated how detached he was from reality during an interview with new Texas Senator, Ted Cruz, a tea-party conservative.  Cruz understands that our unsustainable debt is, in reality, unsustainable.  Cruz insists that we take this threat seriously.

To Blitzer, and the legions of reporters like him, this makes Cruz an extremist.  They are committed to the meme that serious fiscal conservatives are foolish troublemakers.  After Cruz discussed the seriousness of our debt situation, Blitzer lectured Cruz, saying, “You’ve got to deal with reality“.

So a man who is seriously attempting to deal with reality was attacked by a man who, like his colleagues, routinely hides and distorts reality.  Amazing, isn’t it?  It’s Mister Blitzer who needs to educate himself about reality.  He might start with this enlightening article by Chris Cox and Bill Archer.

Cox and Archer explain why our debt is actually far greater than we are led to believe. Excerpts:

We most often hear about the alarming $15.96 trillion national debt (more than
100% of GDP), and the 2012 budget deficit of $1.1 trillion (6.97% of GDP). As
dangerous as those numbers are, they do not begin to tell the story of the
federal government’s true liabilities.

The actual liabilities of the federal government—including Social Security, Medicare, and federal employees’ future retirement benefits—already exceed $86.8 trillion, or 550% of GDP. For the year ending Dec. 31, 2011, the annual accrued expense of Medicare and Social Security was $7 trillion. Nothing like that figure is used in calculating the deficit. In reality, the reported budget deficit is less than one-fifth of the more accurate figure.

…In short, if the government confiscated the entire adjusted gross income of
these American taxpayers, plus all of the corporate taxable income in the year
before the recession, it wouldn’t be nearly enough to fund the over $8 trillion
per year in the growth of U.S. liabilities. Some public officials and pundits
claim we can dig our way out through tax increases on upper-income earners, or
even all taxpayers. In reality, that would amount to bailing out the Pacific
Ocean with a teaspoon. Only by addressing these unsustainable spending
commitments can the nation’s debt and deficit problems be solved.

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