The Liberal Media Working Hard to Sustain Massive Government Spending
by Rudy Cajka on March 7, 2011 at 12:06 PM
The Washington Post published an article on Feb. 28, 2011 by Lon Montgomery entitled “GOP spending plan would cost 700,000 jobs, new report says”. The article goes on to quote Mark Zandi, chief economist for Moody’s Analytics, who stated that the GOP’s $61 Billion budget cut in the New Continuing Resolution would result in a drop in economic growth by 0.5% this year and 0.2% next year, resulting in “700,000 fewer jobs by the end of next year”.
Mr. Zandi goes on to say that this paltry cut of $61 Billion from the overall 2011 deficit of $1.5 Trillion (a 4.1% cut), or a 6.9% cut from the remaining $863 Billion remaining deficit, means that we are taking an unnecessary chance with the ongoing recovery. He further states in his report that because of unrest in the Middle East, West Texas intermediate crude has risen dramatically in recent days, resulting in higher gasoline prices which will shave 0.2% from real GDP growth in 2011. He also says that if gasoline prices rise to an average of $4 per gallon for unleaded then “growth will slow sharply and unemployment will begin rising again”. I have a suggestion for Mr. Zandi and for President Obama – lift the ban on offshore drilling immediately and support the opening of the Alaska National Wildlife Range (ANWR) to oil drilling. Otherwise, stop whining about the high price of oil.
Just who is Mr. Mark Zandi and what is the record of Moody’s, of which Moody’s Analytics is a subsidiary. Zandi is a well regarded Keynesian economist in liberal circles. His analysis of the $850 Billion economic stimulus package known as the American Recovery and Reinvestment plan was cited by none other than Christina Roemer, President Barack Obama’s first Chair of his Council of Economic Advisors. Most economists and other financial commentators today consider the stimulus plan to have been an abject failure. As for Moody’s, well they were one of the rating agencies giving good marks to the subprime Collateralized Mortgage Obligations (CMO) that largely were responsible for the financial crash of 2008, according to the federal Financial Crisis Inquiry Commission in its final report from 2007-2008. In that report , the Commission stated that Moody’s and other agencies “were essential cogs in the wheel of financial destruction”. Moody’s alone rated nearly 45,000 mortgage-related securities as triple-A from 2000 to 2007, with 83 percent from 2006 ultimately downgraded.
I don’t mean to trash Mr. Zandi or Moody’s, but I state these facts for a reason. Do not take the predictions of every “expert” as the gospel truth. These people are often wrong, as economics is as difficult a subject as any. However, Mark Zandi has been close to the Obama Administration and has been one of the chief architects of its failed stimulus plan. I would expect the Washington Post, as a leading voice of liberal journalism, to jump on any comment from Mark Zandi that supports their agenda and that is critical of Republican fiscal policies.
Will There Ever be a Good Time to Cut the Deficit?
If we can’t cut 4% from a $1.5 Trillion budget this year, then just when are we supposed to start the process? The Republicans have proposed a very modest $61 Billion cut in the Continuing Resolution and to hear the Democrats wail about it one would think the country is going to come to a screeching halt. Democrats may even be willing to shut the government down if they don’t get their way.
To put these Republican cuts into perspective, it’s like observing a family that earns $100,000 a year and spends $142,900 during the same year. Imagine a financial planner suggesting that the family cut spending by $5860 this year and the family saying that is impossible, and in fact it has to spend more money because they need to “invest” in a new car and new appliances. Maybe the family will start cutting their spending next year. This family is clearly on the road to bankruptcy.
If we keep listening to the Democrats and their advisors in the media, the United States will surely become a bankrupt nation before too long. Republicans were elected in 2010 to stop this crazy spending and to start solving the massive deficit problem facing this country. Republicans better heed the demands of their voters even if it means a government shutdown, or they won’t be around much after 2012.