Listen to Greenspan, not Bush

On Friday, President Bush made his "feel good" remarks about the economy after the latest payroll data showed a gain of 215,000 jobs last month, the most since July, and the unemployment rate staying at 5 percent. Since the President was going through some of the lowest job approval ratings of his presidential term, it was a political opportunity for him to get on TV and praise the employment report. He extolled the strength of the American economy and good "old-fashioned" hard work. Of course, this would mean that every worker's productivity have gone up substantially, but the wages haven't. Then it was back into the White House before the reporters could ask him about Iraq, Katrina, media propaganda by his military, and the deficit.

While Bush was talking about such a great future for all of us, outgoing Federal Reserve Chairman Alan Greenspan gave a different outlook on our economy. He warned that the United States' budget position "will substantially worsen in the coming years unless major deficit-reducing actions are taken." He also said that "the fundamental fiscal issue is the need to make difficult choices among budget priorities, and this need is becoming ever more pressing in light of the unprecedented number of individuals approaching retirement age."

This is far different when Bush said that the country's economy was due to "American hard work, productivity, innovation, and sound economic policies of cutting taxes and restraining spending." Gaining 215,000 jobs is good news, but the federal deficit still remains high as we pay supplemental funding for the war in Iraq and Afghanistan (which the administration does not count towards the official federal budget) and the money needed to rebuild the Gulf Coast after Hurricane Katrina. The latest CBO figures state that the 2005 federal budget deficit will be approximately $331 billion. If you add the war costs and Katrina re-construction, we are looking at $400+ billion. Our national debt currently stands at $8.1 TRILLION! Due to this, we pay about $352 billion in interest payments this year to keep the debt in check, but because the government is still spending more than what it receives, the debt continues to go up. CBO predicts that by 2015, we may be paying over $700 billion in interest payments to the debt. Think of that when trying to balance the federal budget.

The blame falls on our politicians, not just any one major party. Democrats are not willing to compromise on social security reform. It is true they are often known as the "tax and spend" party but Republicans are not that much better, having corrected only part of the economic equation by limiting government greed while allowing federal squandering to flow unchecked. For both of them, it is nothing more than the difference between no financial responsibility whatsoever and financial responsiblity only when it's popular. No matter which political party is in control, government spending will continue to grow. No one cares about balancing the budget as long the politicians get their pork-barrel projects and as long people are thinking about their paycheck right now, not 10 years from now.

Vice President Cheney got it wrong when he told former Treasury Secretary Paul O'Neill that "deficits don't matter." Greenspan is probably the only person that understands that if we do not control our deficit spending, our children's future will essentially be bankrupt. How can we explain to future generations when the debt is over $20 trillion, 80% of the budget is devoted to retirees, and our paycheck gets slashed over 90% just to keep everyone slightly fed? Is this the future that we want?

It is unfortunate that Greenspan is leaving. We do not know how his successor, Ben Bernanke, would do to continue to warn the politicians that continued overspending would severely hurt us in the long-term. All we are given is that if we do nothing, according to Greenspan, the "consequences for the US economy of doing nothing could be severe."

Greenspan: U.S. Deficit May Hurt Economy

Bush, Greenspan split on economy outlook