President Barack Obama

Ladies & Gentlemen,

I present to you the next President of the United States of America. May his policies that parallel the Word of God succeed beyond our wildest dreams, and may his policies that oppose the Word fail beyond our wildest dreams.



I thought this was an appropriate editorial from the Vancouver Times.

First he raised expectations, now President Obama must lower them

Harvey Enchin
Vancouver Sun columnist

Tuesday, November 04, 2008

President-elect Barack Obama inspired Americans with a promise of change that will improve their lives. He has raised their expectations. His first priority on taking office will be to lower them.

Since campaigning began in earnest nearly two years ago, the economy has gone from boom to bust. Obama will have to tell his constituents that the United States is broke and cannot afford to finance his grand plans for universal health care, rebates for moderate income families, jobs, jobs, jobs, and increases in government funding for everything from education, to infrastructure to alternative energy.

He will have to level with them and honestly explain the economic facts of life. One of those facts is that the U.S. government has to borrow to service its debt. In the real world, this state of affairs is called insolvency.

The U.S. deficit for 2008 is $455 billion US, while total debt topped $10 trillion this year, representing 72.5 per cent of gross domestic product, up from 65.5 per cent in 2007. Annual interest payments to holders of the national debt exceed $400 billion, making debt service the largest single line item in the federal budget.

The debt figures do not include unfunded obligations, such as medicare and social security, which raise the amount of government indebtedness to nearly $60 trillion. These mandatory expenditures are expected to exceed tax revenues before 2040, unless extensive reforms are introduced. Several government agencies, including the U.S. Treasury Department, have said the current fiscal path is unsustainable.

The U.S. Congress is supposed to keep a lid on debt and, in fact, allows borrowing to fund government activities only up to a specific debt ceiling. But that level is routinely raised every year. In order to finance The Emergency Economic Stabilization Act, the debt ceiling has been increased this year to $11.3 trillion.

Obama will have to admit to Americans that some of his anti-business rhetoric was pure fiction. For instance, he will have to abandon the notion of a windfall profit tax because there is no such thing as a windfall profit. There is profit for companies that are in the right place at the right time with the right products, and losses for those that aren't. Over the next year or two, there will be less of the former and more of the latter.

He will have to concede that the United States can't create wealth by increasing taxes on the wealthy and expropriating more of the gains investors earn from their investments. His plan to raise capital gains taxes, the first such tax increase since 1986, is a non-starter. Similarly, he will have to moderate his proposed tax increase for households with incomes above $200,000.

Former president Bill Clinton also vowed an assault on the rich, but instead ended up devoting his energies to reducing the deficit and negotiating a free-trade agreement.

Obama will have to stop scapegoating Wall Street and tell Main Street the plain truth that home ownership is not a right or entitlement, it is a privilege - a reward for hard work, saving, and prudent financial management. Misguided government policies encouraged people to assume debt they couldn't possibly repay, and pressured lenders to relax their eligibility criteria. The financiers of Wall St. were brought in to spread the elevated risk, but their structured investments collapsed along with the real estate market. There's blame all around.

Fortunately, the new president, blessed with a silver tongue, is a master in the art of persuasion. He will need these gifts to lead Americans through a difficult period of austerity while giving them hope that the United States will emerge stronger, richer and better than before.

henchin@vancouversun.com
© Vancouver Sun 2008