Category Archives: The Economy

Spender-in-Chief Seeks Debt Counseling

On Thursday, President Obama used an executive order to create a debt commission. The commission will be charged with “taking on the impossible” and designing a plan to reduce the federal deficit.  To lead the commission Obama chose former Sen. Alan Simpson, R-WY., and Democrat Erskine Bowles, former chief of staff to President Clinton. 

“They’re going to try to restore reason to the fiscal debate and come up with answers,” said Obama. “The politics of dealing with chronic deficits is fraught with hard choices. And therefore it’s treacherous to officeholders here in Washington.”  

White House spokesman Robert Gibbs said Obama’s executive order sets up a debt commission to study options on spending and taxes because the U.S. Congress failed to create a congressional deficit panel of its own. The presidential commission will make recommendations but lacks the power to bind Congress to them.

Obama also signed the bill to raise government borrowing authority to $14.3 trillion and reinstall pay-as-you-go rules to require Congress to offset spending with cuts, Gibbs said. The White House is forecasting a record $1.56 trillion deficit in the fiscal year that ends on Sept. 30, 2010.

Vital creditors such as China and other investors question whether the White House is serious about fiscal responsibility. Failure to convince them will have a significant impact on the dollar and bond markets. They want to see a plan to control the deficit and spending. Obama’s current budget forecast show the debt level reaching 80% of GDP by 2020. The federal deficit reached an unprecedented $1.4 trillion in 2009 and most predict it will go even higher this year. 

The commission will consist of 18 members, six will be presidential appointees; there will be 12 sitting lawmakers, 6 appointed by Republican congressional leaders and 6 appointed by Democratic congressional leaders. A 14 vote majority would be required to implement any recommendation. The recommendations are due Dec. 1. 

The Republicans are wary but plan to participate. Their fear is that solutions may aim toward increasing taxes instead of cutting spending. 

“Americans know our problem is not that we tax too little but that Washington spends too much — that should be the focus of this commission,” McConnell said. 

House Minority Leader John Boehner, R-Ohio, says the GOP has proposed immediate spending cuts through a rescissions package. If they aren’t considered a Boehner spokesman said “That doesn’t mean we won’t participate in this commission, but it does indicate that Washington Democrats aren’t serious yet about shutting down their spending binge.”  

Jerry Lewis, R-CA., is the most vocal critic of the panel. “Instead of acting appropriately to rein in spending and control skyrocketing deficits, the Democrat Congress and the President have outsourced their constitutional responsibilities to a powerless commission apparently created to provide political cover,” Lewis said. “The American people are demanding accountability from their elected officials,” he added. “This commission, which isn’t slated to produce anything until after the November elections, is essentially a way to avoid this accountability.” 

Lewis is dead on in his assessment. Fixing the deficit will be a complex task to be sure but it starts with common sense. The first way to reduce a spending deficit is to stop spending. The way to stimulate growth in the tax base is to help it grow. The proven way to do that is to cut taxes and stimulate investment. The math is simple – example: would you rather have 5% of $10,000,000 (500,000) or 7.5% of $5,000,000 (375,000). 

It is also difficult to take this idea seriously from an administration that does not mention that it has nearly quadrupled the deficit in a year. It is kind of like asking Tiger Woods for advice on marital fidelity. 

Americans need to watch this closely as it appears as Rep. Lewis has pointed out to be another distraction from the real job of reining in out of control government spending. This gives the President a new way to avoid accountability and set up scapegoats if his policy failures continue. 

Wake up, America! It is time to clean house in Washington and start over with common sense solutions that cut spending and promote fiscal responsibility. Keep speaking out and letting your representatives know we are not going to take it anymore. 

Restore the Republic, Reject the Agenda of the Progressive Left, End Big Government Now! 

“The principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale”. – Thomas Jefferson, letter to John Taylor, May 28, 1816

The Economy – There is no magic wand!

Today’s labor department job report shows initial claims for unemployment benefits increased 31,000 to 473,000. There are now approximately 14,577,800 officially unemployed Americans. That is almost 9 million jobs lost since mid 2007.  

Further aggravating the situation, the Producer Price Index for Finished Goods rose 1.4% in January. This increase followed a 0.4% increase in December and a 1.5% increase in November. The index for finished goods excluding foods and energy rose 0.3 percent in January. This is a meaningless number as we all require both food and energy. The bad news is about 75% of the increase last month was due to a 5.1% jump on food and energy goods. Prices for finished goods moved up 4.6 percent for the 12 months ended January 2010, their third consecutive 12-month increase.

Here is your warning sign; the 1.4% increase in January could easily translate into a 10+% inflation rate if the trend continues. Unless this is an anomaly we could be on pace for a significant inflation ramp. All the rescue efforts by the Federal Reserve has set the stage for this inflation, so now the Fed is going to have some decisions to make at its next meeting to try to stop it. This is why Bernanke has been saying we’re probably going to have to raise rates soon.

We have dug ourselves a very deep hole. China is no longer buying our treasury bonds and they sold off many that they had. Japan is now the biggest foreign holder of U.S. debt. Now the Federal Reserve holds the biggest share of our total debt, over $5 trillion. With our AAA credit rating at risk, the next step will be to raise the interest paid on our treasury bonds to get new investors. Do you see where this is going? It is a vicious circle. So now the Fed will drive up interest rates to try to stop the inflation and reduce the money supply which will ultimately kill economic growth.

Remember both Bush and Obama administrations said, we must spend to fix the economy. We were told that printing money, borrowing money and spending money would stimulate the economy. We were told not to worry about inflation. Now all of a sudden inflation is barreling down the road at us. We’re repeating the mistakes of many European nations such as Greece, Italy, Spain, etc. all of whom are currently in deep shit! Keynesian Economics do not work!  

Wake up, America! It is time to face the truth. The only way out of the mess we are in is to cut – spending and taxes – a lot! We have built a model that is unsustainable. We have to come to grips with the idea that big government is not the answer – it is the problem. I am not just talking about the federal government either. The federal government will have to reduce its’ services to only those which are essential – national defense, infra structure and basic services. Social programs and luxury pork barrel spending must be eliminated. State governments must get smaller too. States need to narrow their focus to the basic services they should provide. We are going to have to rely on communities to pull together and help their own. People are going to have to learn to fend for themselves. Everyone is going to have to sacrifice to fix this problem. Each citizen must be allowed to keep as much as possible so they can reinvest in their savings, communities and build businesses that will restart the economy. This is the only sane road back to prosperity. The alternatives involve deals with the devil which will lead us to a loss of sovereignty, a world government or some form of socialistic government where we can all live together as peasants.

Restore the Republic, Reject the Agenda of the Progressive Left, Eliminate Big Government! This is the only answer. 

“Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” – Ronald Reagan  

“Entrepreneurs and their small enterprises are responsible for almost all the economic growth in the United States.” – Ronald Reagan

Obama’s Rhetoric vs. Rep. Hensarling’s Facts

Last week when the President met with the Republicans at their retreat in Baltimore the Q&A session ended with an interesting exchange between Rep. Jeb Hensarling, TX 5th. Watch the exchange below and then view the Press Release put out Hensarling’s office providing the factual support of his comments. What makes this story even better is tht this week the President proposed a budget that was even larger than Hensarling had feared. Notice that the President again takes no ownership for the current economic situation and can’t man up with truth on what he is going to propose for the new budget. 

In his Stte of the Union speech, Obama said. “I know that some in my own party will argue that we can’t address the deficit or freeze government spending when so many are still hurting. I agree, which is why this freeze won’t take effect until next year, when the economy is stronger. But understand — if we don’t take meaningful steps to rein in our debt, it could damage our markets, increase the cost of borrowing, and jeopardize our recovery — all of which could have an even worse effect on our job growth and family incomes.” His idea of a responsible budget is 3.8 trillion dollars that is 25.5% of the GDP. 

Press Release

 

 

  

For Immediate Release
January 29, 2010
Contact: George Rasley
(202) 225-3484

WASHINGTON, DC — Congressman Jeb Hensarling, Vice Ranking Member of the House Budget Committee, released the following statement and fact summary sheet after President Obama challenged his facts on House Republican budget priorities verses Democrat budget priorities: 

“I asked the President today if he intended to propose the type of spending that has put our nation on the path to bankruptcy. Unfortunately, he didn’t assure taxpayers that he was committed to stopping the spending. 

“The President also challenged the facts I presented to him about House Republican budget priorities and Democrat budget priorities. I am happy to provide him with the following facts to back-up my statements. I stand by what I said. 

“I have great respect for President Obama. I am grateful he chose to address the House Republicans – and I give him credit for accepting our invitation. But, again, he didn’t answer my specific question on whether he would continue us on a path to tripling the national debt and increasing government spending to 24.5% of the economy. 

Assertion: “The Republicans proposed a (Fiscal Year 2010) budget that ensured that government did not grow beyond the historical standard of 20% of GDP.” 

FACT: Under the budget proposal put forward by House Republicans, spending as a percent of GDP is 20.7% of GDP in 2015, and in 10 years is at 20.7% of GDP. Source: House Budget Committee Republicans “The Path to American Prosperity” Budget Alternative, Table S-1 http://www.house.gov/budget_republicans/press/2007/pr20090401_gopbudget.pdf. Historical standard is 20.7% of GDP. Source: Heritage Foundation http://s3.amazonaws.com/thf_media/2010/pdf/wm_2780.pdf 

Assertion: “It was a budget that actually froze immediately nondefense, discretionary spending.” 

FACT: The House Republican budget froze non-defense/non-veteran spending for 5 years (FY2010-14). Source: House Budget Committee Republicans “The Path to American Prosperity” Budget Alternative, Page 39 http://www.house.gov/budget_republicans/press/2007/pr20090401_gopbudget.pdf 

Assertion: “It spent $5 trillion less than what was ultimately enacted into law.” 

FACT: The House Republican budget called for $36.913 trillion in spending over 10 years, whereas CBO estimated in March that the President’s budget would spend $41.726 trillion over 10 years. This is a difference of $4.813 trillion over a 10 year period. 

Source: House Budget Committee Republicans “The Path to American Prosperity” Budget Alternative, Table S-1 http://www.house.gov/budget_republicans/press/2007/pr20090401_gopbudget.pdf  and CBO’s Baseline and Estimate of the President’s Budget, June 2009 http://www.cbo.gov/ftpdocs/102xx/doc10296/06-16-AnalysisPresBudget_forWeb.pdf 

Assertion: “What were the old annual deficits under Republicans have now become the monthly deficits under Democrats.” 

FACT: According to CBO’s September 2009 Monthly Budget Review http://www.cbo.gov/ftpdocs/105xx/doc10552/09-08-mbr.htm  July 2009’s deficit was $181 billion. According to CBO’s December 2009 Monthly Budget Review http://www.cbo.gov/ftpdocs/108xx/doc10825/12-4-09MBR.htm  October 2009’s deficit was $176 billion. Comparatively, according to OMB’s Historical Tables (Table 1.1) http://www.whitehouse.gov/omb/budget/Historicals/  Republicans’ last annual deficit was $160.7 billion in FY2007. 

Assertion: “The national debt has increased 30%.” 

FACT: According to CBO’s January 2010 Budget and Economic Update (Table F-1) http://www.cbo.gov/ftpdocs/108xx/doc10871/AppendixF.shtml096834  the debt held by the public at the end of FY2008 was $5.803 trillion, and at the end of FY2009 was $7.544 trillion. This is an increase of 30%. 

Assertion: “Your administration proposed a budget that would triple the national debt over the next 10 years.” 

FACT: According to CBO’s June 2009 estimate of the President’s Budget http://www.cbo.gov/ftpdocs/102xx/doc10296/06-16-AnalysisPresBudget_forWeb.pdf  debt held by the public would rise from its 2008 level of $5.803 trillion to $17.126 trillion in 2019, which is 2.95 times larger than the 2008 level. 

Assertion: “Will that new budget, like your old budget, triple the national debt and continue to take us down a path of increasing the cost of government to almost 25% of our economy?” 

FACT: According to the President’s FY2010 budget (Table S-1) http://www.whitehouse.gov/omb/budget/fy2010/assets/summary.pdf debt held by the public is set to rise from $5.803 trillion in FY2008 to $16.027 trillion in FY2019, which is 2.76% times larger. Also, the President’s budget shows spending as a percentage of GDP at 24.4% for FY2010. CBO’s June 2009 estimate http://www.cbo.gov/ftpdocs/102xx/doc10296/06-16-AnalysisPresBudget_forWeb.pdf  of the President’s budget also shows federal outlays at 24.5% of GDP in 2019. 

UPDATE: “How did you arrive at the conclusion that what were the old annual deficits under Republicans have now become the monthly deficits under Democrats? And what is the back-up?” 

In the 12 years that Republicans controlled the House, the average deficit was $104 billion (average of final deficit/surplus FY1996-FY2007 data taken from Table F-1 below). In just 3 years under Democrats, the average deficit is now almost $1.1 trillion (average of final deficit/surplus FY2008 and 2009 data taken from Table F-1; FY2010 data taken from Table 1-3). Source: CBO January 2010 Budget and Economic Outlook http://www.cbo.gov/ftpdocs/108xx/doc10871/Chapter1.shtml 

It is time to stop the madness, stop the spending and lower taxes for businesses to stimulate the economy. We can not spend our way to prosperity. Keynesian Economics will not work now – they never have. The engine of the economy is private enterprise and free market economics. It is time to let them work. 

By the way, we need more people like Jeb Hensarling in the Congress – honest, articulate conservatives with principles and values. As for the President – learn from history, listen to the your citizens and start telling the truth. 

Restore the Republic, Reject the Agenda of the Progressive Left! 

 

The Next 5 Things: #2 The Employees Free Choice Act

As I’ve been writing for several months, our way of life, our freedom, our liberty and the America that we all love is under attack from the Socialist Left. They are led by President Obama, a Harvard educated community organizer who grew up in the rough and tumble world of Chicago politics. As we have discussed previously, he has a plan and he built a team around him to execute it. He is counting on your passive – “that can’t happen in America attitude” to provide a window of opportunity for him to “Fundamentally transform America!”

Remember – his team is mostly the Czars who work inside the Executive Branch of the Government and are only accountable to the President – no congressional/judicial oversight or approval- and sure as hell – no transparency!

The President likes to discuss policies in general terms describing how the administration might interpret and administer proposed programs. All the while deftly avoiding discussion of the contents of the bills which might become law. Think back – tax cuts for 95% of Americans, transparency and the veto pen to stop pork barrel spending policies, all of which have or are changing because “the situation changed”. As a result we must be vigilant because healthcare reform is not the only game changing bill on the table. Keeping up with these guys is like playing 3 card monte with a street hustler. Don’t be distracted by one hand because the other is up to something too.

Remember the administration is following the community organizer’s handbook. This is why there is such a rush to pass all this legislation. The plan – overwhelm the system because they are betting we can’t organize fast enough to stop everything.

So here is part 2 of a 5 part series on the Socialist Left’s agenda to “transform” the American Way of Life. These items are the building blocks for a national shift to socialism. This agenda must be stopped – our freedom and liberty depend on it.

In part 1 of the series we covered the plan to reintroduce Immigration Reform. In part 2 we will discuss The Employees Free Choice Act or Card Check.

The Employee Free Choice Act, or “card check,” has been introduced in the past three Congresses, but it always failed to win the 60 votes needed to pass the controversial legislation in the Senate.

The proposed law gives workers a choice of forming a union through majority sign-up (“card check”) or an election by secret ballot. Critics warn that this will lead to employee intimidation to sign cards and will deny individuals the right to a secret ballot. The secret ballot has been the safety valve in the organizing process. Employees could go along with process to allow a vote by signing the organizing petition but had they always had the safety of the secret ballot to protect their individual vote. As a manufacturing manager for 30 years I have had a front row seat to union organizing efforts twice. In both cases, employees were under tremendous peer pressure to sign the petition. However, both times the union was defeated by the secret ballot. It seems like the process worked as it was supposed to each time.

Supporters say the legislation will improve wages, benefits, and working conditions by helping workers form unions. However, employers say that “card check” will kill jobs because small to medium size companies will not be able to afford unionized shops and in many cases the incremental costs will drive them out of business.

“Voting is the most precious right of every citizen, and we have a moral obligation to ensure the integrity of our voting process.” – Hillary Clinton

Shouldn’t this apply towards something as important as a union election too? After all the signing the card means that you want to hear more. After both sides present their case you go cast your vote in private.

So why do we need this law? First, it will help the unions get easier victories and build their dwindling membership. Oh, yeah and the labor unions strongly support the Democrats. Can you say UAW and SEIU? This is as much about politics as it is about employee’s rights.

There is one more aspect to the bill that is equally as troubling as the secret ballot issue. That is the method by which negotiations would be handled under the bill. If the employer and the union did not reach a deal in 120 days, a government arbitration panel could intervene and take over the negotiations.

For many, the government arbitration clause looks to be a deal breaker. As long as that provision is in the bill Sen. Orrin Hatch of Utah says, “I don’t know how anybody can talk compromise.” He added, “If it wasn’t for the political power of the national unions, this wouldn’t have a chance. But they are powerful.”

A new development that makes this bill even more dangerous is the recently negotiated exemption from the proposed 5.25% luxury tax that will apply to “Cadillac health plans”. Under the terms of the agreement, “Cadillac health plans” that are negotiated through a collective bargaining agreement are exempt. This could turn into another tool for union organizers to use to entice new members.

Ironically, during the 2008 elections anti card check ads featured the leading liberal of his time – former S.D. Sen. George McGovern as their spokesman.

Even George could not get behind elimination of the secret ballot to protect the privacy of each employee. We must fight this legislation. With unemployment already tracking at over 10% nationally, we can not afford to lose more jobs. This legislation is bad for business, it is un-American and since when are we against a secret ballot? Write your Senator and tell them –just say no!

Unfortunately, Congress is currently littered with a variety of proposed legislation that supports the administration’s social reengineering agenda. Write your representatives and tell them we are not interested in an American makeover or living in a socialist nanny state. We must send them a clear message that these bills must not pass. We must be vigilant in identifying these bills and fighting them. After all, the only thing at stake is the American Dream!

Restore the Republic, Reject Socialism!

“Sometimes I wonder whether the world is being run by smart people who are putting us on, or by imbeciles who really mean it.” – Mark Twain

The Geography of a Recession

Watch this video which provides a time elapsed county by county update to the advancing unemployment. It is both unsettling and confirming. America is being fundamentally transformed right before our eyes.

or you can watch it here:

http://cohort11.americanobserver.net/latoyaegwuekwe/multimediafinal.html

We are in trouble and the administration is not addressing the real issue – UNEMPLOYMENT! No more phony stimulus plans – we need tax cuts and the government to get out of the way.

In the week ending Dec. 12, the advance figure for seasonally adjusted initial claims was 480,000, an increase of 7,000 from the previous week’s revised figure of 473,000. Insured unemployment during the week ending Dec. 5 was 5,186,000, an increase of 5,000 from the preceding week’s revised level of 5,181,000.

Currently, there are 38,093,394 Americans on food stamps. With 15,407,486 Americans “officially unemployed” and 26,486,807 actually unemployed; stimulating job creation should be the primary focus of Congress. However, their role is only to create tax breaks that reward investment the markets will do the rest. The only reason business owners are not investing is because of the government’s over involvement in the market. The government has created fear with talk of Cap & Trade, Healthcare Reform and tax increases so everyone has taken a wait and see attitude.

Wake up America – we can not survive this level of unemployment for long. It will bring another collapse. A jobless recovery is not a recovery. We can not afford anymore wasteful spending or pork barrel politics.

Restore the Republic, Reject the Agenda of the Democrats!

Obama Under Fire… Matthews & Rasmussen

The President’s numbers are tanking again. He is making such a mess of things that he has lost ground in almost every major area. Things are so bad that even MSNBC’s Chris Matthews a normally staunch supporter of President Obama recently referred to him as “Carteresque”.

Here is a transcript from the that show:

CHRIS MATTHEWS, HOST: Welcome back. The word these days is optics, visuals, signals. In the Carter presidency, the optics were not exactly robust, and Ronald Reagan rode that to a big victory in 1980. Is the Obama White House sending some Carteresque signals these days? Some see that in the deep bow to the Emperor of Japan, an unforced error say critics. Then there was, there was what happened in China: Obama got nothing in the way of concessions over there in spite of playing the polite visitor. And his effort to speak directly to the Chinese was jammed by the government. Third, that decision to try the terrorists up in that federal court in New York City. Again, nothing that had to be done, and critics say it shows that Obama, his team doesn’t understand this is a war we’re in. David, that’s the question. These optics are everything in a president. Carter used to carry that garment bag over his shoulder. This president is he making mistakes like in China like in Japan? 

DAVID IGNATIUS, WASHINGTON POST : I think he is coming across as stiff. He is talking too much sometimes and communicating too little. So the opposite of what we saw during the campaign. Although the decision to try Khalid Sheikh Mohammed in New York apparently was Eric Holder’s, it strikes me that it really is a mistake. I mean, there are too many bad things that could happen. There is no reason to have to have done this. And, you know, it’s a political feel for decision-making. That wonderful thing you just did about President Johnson’s feel for the moment. That’s what I think is missing now with this group in the White House. I don’t know where it’s gone. They certainly had it during the campaign. Maybe they’ll get it back. But it’s missing now.

MATTHEWS: It’s the political touch. You were in China. You just got back. Tell me about that. The president tried to speak to the Chinese people and apparently it was jammed. Tell me about that.

ANNE KORNBLUT, WASHINGTON POST: This was the big moment of the whole trip to Asia in fact, eight days in Asia he was going to speak to Chinese students in Shanghai unfiltered at least in his answers, and in fact the Chinese government, you know, they allowed the event to take place, but it was only shown locally on Shanghai television. People didn’t see it. The one piece of news he made in it saying that the internet should be free and people should have access dribbled out to the Chinese public and then started being deleted from all the Chinese websites. So, then, the following day he held a quote unquote press conference with the Chinese President Hu Jintao in which there were no questions and they read statements. Now, this is of course, this is the Chinese, it’s their home turf. They were allowed to do what they wanted to. That was the White House’s argument. And the White House haggled with them to get it more open. 

MATTHEWS: The White House got jammed here.

The once untouchable president is beginning to struggle with the public’s growing discontent with his policies and job performance. This administration has demonstrated an ongoing attitude of superiority and an apparent disregard for the wishes of the people by continuing to push unpopular programs and spending down our throats.

If you need proof look no further than the numbers below from the most recent Rasmussen Reports Daily Presidential Tracking Poll. Also note that Republicans are currently beating the Democrats in every policy category and that leaders on both sides of the aisle in Congress have major problems with their “Unfavorable” ratings. For the record, the Republicans have done nothing to deserve this turnaround. The country is mostly conservative and independent – this is more a vote against the Democrts than for the Republicans. See numbers below:

Perceptions of Obama

Obama Approval Index -15

Strongly Approve 27%

Strongly Disapprove 42%

Taxes Will Go Down 19%

Gov’t Spending Will Go Up 66%

Obama on Economy – Ex/Good 34%

Trust on Issues

Education  Dem 38%   GOP 43%

Health Care  Dem 40%   GOP 46%

War in Iraq  Dem 38%   GOP 45%

Social Security  Dem 37%   GOP 45%

National Security  Dem 37%   GOP 50%

Economy  Dem 36%   GOP 48%

Taxes  Dem 35%   GOP 50%

Abortion  Dem 35%   GOP 47%

Immigration  Dem 33%   GOP 45% 

Gov’t Ethics/Corruption  Dem 31%   GOP 34%

Congressional Leadership

Nancy Pelosi  Fav 33%   Unfav 57% 

John Boehner  Fav 27%   Unfav 34% 

Mitch McConnell  Fav 26%  Unfav 32%

Harry Reid  Fav 25%  Unfav 47%

The numbers speak for themselves with 64% of Americans saying the country is on the wrong track. It’s time to go back to what works; a constitutional government and a free market economy.

Restore the Republic, Reject the Agenda of the Radical Left!

“The Constitution is not an instrument for the government to restrain the people, it is an instrument for the people to restrain the government — lest it come to dominate our lives and interests.” — Patrick Henry

Even the N.Y.Times gets it… Spending is out of control!

Are we on the edge of financial disaster as a nation? Is the entire economy a house of cards? Has a recovery really begun? Whether you believe it has or not read the article below from the New York Times. Even given their normally liberal stance, it is clear that the growing deficit raises fear everywhere – even at the N.Y. Times! This is an excellent explanation of the problem.

NY Times – Wave of Debt Payments Facing U.S. Government

By EDMUND L. ANDREWS

Published: November 22, 2009

WASHINGTON — The United States government is financing its more than trillion-dollar-a-year borrowing with i.o.u.’s on terms that seem too good to be true.

But that happy situation, aided by ultralow interest rates, may not last much longer.

Treasury officials now face a trifecta of headaches: a mountain of new debt, a balloon of short-term borrowings that come due in the months ahead, and interest rates that are sure to climb back to normal as soon as the Federal Reserve decides that the emergency has passed.

Even as Treasury officials are racing to lock in today’s low rates by exchanging short-term borrowings for long-term bonds, the government faces a payment shock similar to those that sent legions of overstretched homeowners into default on their mortgages.

With the national debt now topping $12 trillion, the White House estimates that the government’s tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically. Other forecasters say the figure could be much higher.

In concrete terms, an additional $500 billion a year in interest expense would total more than the combined federal budgets this year for education, energy, homeland security and the wars in Iraq and Afghanistan.

The potential for rapidly escalating interest payouts is just one of the wrenching challenges facing the United States after decades of living beyond its means.

The surge in borrowing over the last year or two is widely judged to have been a necessary response to the financial crisis and the deep recession, and there is still a raging debate over how aggressively to bring down deficits over the next few years. But there is little doubt that the United States’ long-term budget crisis is becoming too big to postpone.

Americans now have to climb out of two deep holes: as debt-loaded consumers, whose personal wealth sank along with housing and stock prices; and as taxpayers, whose government debt has almost doubled in the last two years alone, just as costs tied to benefits for retiring baby boomers are set to explode.

The competing demands could deepen political battles over the size and role of the government, the trade-offs between taxes and spending, the choices between helping older generations versus younger ones, and the bottom-line questions about who should ultimately shoulder the burden.

“The government is on teaser rates,” said Robert Bixby, executive director of the Concord Coalition, a nonpartisan group that advocates lower deficits. “We’re taking out a huge mortgage right now, but we won’t feel the pain until later.”

So far, the demand for Treasury securities from investors and other governments around the world has remained strong enough to hold down the interest rates that the United States must offer to sell them. Indeed, the government paid less interest on its debt this year than in 2008, even though it added almost $2 trillion in debt.

The government’s average interest rate on new borrowing last year fell below 1 percent. For short-term i.o.u.’s like one-month Treasury bills, its average rate was only sixteen-hundredths of a percent.

“All of the auction results have been solid,” said Matthew Rutherford, the Treasury’s deputy assistant secretary in charge of finance operations. “Investor demand has been very broad, and it’s been increasing in the last couple of years.”

The problem, many analysts say, is that record government deficits have arrived just as the long-feared explosion begins in spending on benefits under Medicare and Social Security. The nation’s oldest baby boomers are approaching 65, setting off what experts have warned for years will be a fiscal nightmare for the government.

“What a good country or a good squirrel should be doing is stashing away nuts for the winter,” said William H. Gross, managing director of the Pimco Group, the giant bond-management firm. “The United States is not only not saving nuts, it’s eating the ones left over from the last winter.”

The current low rates on the country’s debt were caused by temporary factors that are already beginning to fade. One factor was the economic crisis itself, which caused panicked investors around the world to plow their money into the comparative safety of Treasury bills and notes. Even though the United States was the epicenter of the global crisis, investors viewed Treasury securities as the least dangerous place to park their money.

On top of that, the Fed used almost every tool in its arsenal to push interest rates down even further. It cut the overnight federal funds rate, the rate at which banks lend reserves to one another, to almost zero. And to reduce longer-term rates, it bought more than $1.5 trillion worth of Treasury bonds and government-guaranteed securities linked to mortgages.

Those conditions are already beginning to change. Global investors are shifting money into riskier investments like stocks and corporate bonds, and they have been pouring money into fast-growing countries like Brazil and China.

The Fed, meanwhile, is already halting its efforts at tamping down long-term interest rates. Fed officials ended their $300 billion program to buy up Treasury bonds last month, and they have announced plans to stop buying mortgage-backed securities by the end of next March.

Eventually, though probably not until at least mid-2010, the Fed will also start raising its benchmark interest rate back to more historically normal levels.

The United States will not be the only government competing to refinance huge debt. Japan, Germany, Britain and other industrialized countries have even higher government debt loads, measured as a share of their gross domestic product, and they too borrowed heavily to combat the financial crisis and economic downturn. As the global economy recovers and businesses raise capital to finance their growth, all that new government debt is likely to put more upward pressure on interest rates.

Even a small increase in interest rates has a big impact. An increase of one percentage point in the Treasury’s average cost of borrowing would cost American taxpayers an extra $80 billion this year — about equal to the combined budgets of the Department of Energy and the Department of Education.

But that could seem like a relatively modest pinch. Alan Levenson, chief economist at T. Rowe Price, estimated that the Treasury’s tab for debt service this year would have been $221 billion higher if it had faced the same interest rates as it did last year.

The White House estimates that the government will have to borrow about $3.5 trillion more over the next three years. On top of that, the Treasury has to refinance, or roll over, a huge amount of short-term debt that was issued during the financial crisis. Treasury officials estimate that about 36 percent of the government’s marketable debt — about $1.6 trillion — is coming due in the months ahead.

To lock in low interest rates in the years ahead, Treasury officials are trying to replace one-month and three-month bills with 10-year and 30-year Treasury securities. That strategy will save taxpayers money in the long run. But it pushes up costs drastically in the short run, because interest rates are higher for long-term debt.

Adding to the pressure, the Fed is set to begin reversing some of the policies it has been using to prop up the economy. Wall Street firms advising the Treasury recently estimated that the Fed’s purchases of Treasury bonds and mortgage-backed securities pushed down long-term interest rates by about one-half of a percentage point. Removing that support could in itself add $40 billion to the government’s annual tab for debt service.

This month, the Treasury Department’s private-sector advisory committee on debt management warned of the risks ahead.

“Inflation, higher interest rate and rollover risk should be the primary concerns,” declared the Treasury Borrowing Advisory Committee, a group of market experts that provide guidance to the government, on Nov. 4.

“Clever debt management strategy,” the group said, “can’t completely substitute for prudent fiscal policy.”

Look at numbers, they speak for themselves: http://www.usdebtclock.org/

Don’t fall for the recovery line. We need to remain vigilant and continue to fight for fiscal responsibility. We must shut down the runaway government spending and let the free markets “fix” the economy. It is time to worry about the future of our children. If we don’t get the economy back on track our children and grandchildren will be condemned to a country with a European style economy and a substantially reduced standard of living. Is that what we want our legacy to be?

Wakeup, America! Speak up and be heard. Hold them accountable, they had their chance, it didn’t work – time to return to what works; the private sector, a free market economy less government and lower taxes. To save the country we love, we must revive the original American Dream, we must trust the structure of our constitutional government and the freedom it nurtures or the dream will not survive.

I’ll close with some words of wisdom from a few of our founding fathers and great leaders:

“If we can prevent the government from wasting the labors of the people, under the pretence of taking care of them, they must become happy”. – Thomas Jefferson

“With respect to the two words ‘general welfare,’ I have always regarded them as qualified by the detail of powers connected with them. To take them in a literal and unlimited sense would be a metamorphosis of the Constitution into a character which there is a host of proofs was not contemplated by its creators.” — James Madison

As Thomas Jefferson said, “I sincerely believe… that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale.”  And…“With respect to future debts, would it not be wise and just for [a] nation to declare in [its] constitution that neither the legislature nor the nation itself can validly contract more debt than they may pay within their own age, or within the term of 19 years? And that all future contracts shall be deemed void as to what shall remain unpaid at the end of 19 years from their date?”

Restore the Republic, Reject the Agenda of the Progressive Left!