US Is Broke, Failing, But Show Goes On
By Staff News & Analysis - April 15, 2011

Obama (left) seeks $4 trillion cut to deficit, higher taxes for rich … Backs benefit programs, draws battle lines with GOP … President Obama pledged to pare the projected deficit by $4 trillion in the next 12 years, vowing to protect the nation's most vulnerable while pushing again for higher taxes for its richest citizens. In a 43-minute speech that mixed appeals for a united sense of purpose with sharply partisan jabs, the president laid out his vision of a country strengthened both by fewer debts and a greater diligence to solving the problems of Medicaid and Medicare. In promising to preserve those programs, he enlists his administration in the beginning of what is expected to be an epic battle with Republicans over their fate. "We are a better country because of these commitments,' he said in an impassioned defense of Medicaid and Medicare against Republicans' push for sweeping changes. "I'll go further – we would not be a great country without those commitments." – Boston Globe

Dominant Social Theme: These are important times. Every word is important, every speech is necessary. America will be saved once the politicians agree on the proper plan.

Free-Market Analysis: In his recent speech, US President Barack Obama pledged to pare the projected deficit by $4 trillion in the next 12 years, and to raise taxes on America's wealthiest Americans. His presentation was reported seriously and gravely by the mainstream media that must be aware, nonetheless, that total US obligations are in the area of US$200 trillion. There is no real way that the US federal government can honor what it has already undertaken. These proposals (by both sides of the aisle) take on aspects of a dominant social theme. They are promotions, proposing unrealistic solutions to the very problems that the process itself has created.

America is broke and the US$4 trillion that Obama just proposed in cuts or the US$6 trillion proposed by Republicans won't really make much of a difference. We've used this metaphor before, but watching the entire, larger process is like watching a cartoon where one of the animated characters has just run off a cliff. Its legs are still moving, but it is about to fall a long ways down. The amazing thing is watching the "business as usual" approach that both the media and the parties themselves seem to be taking toward the entire process.

To use another metaphor, one can think of the US as the "Titanic" after it has struck an iceberg and is sinking. There is a good deal of reporting on the deck chairs, on the music that the band is playing, on the various plans for the passengers to disembark. But there is no real acknowledgment in any of the coverage that the ship itself is sinking and that in a few hours it will not even exist as viable, floating entity. Even the International Monetary Fund, which is an invention of the Anglo-American elite has just issued a "sharp warning" that the US must make major cuts in spending or end up in default like Greece. The trouble is of course that there is no entity that will come to the rescue of the US as the European Union has (so far) come to the rescue of the Southern PIGS.

The larger EU itself, of course, has problems. All major Western economies have serious problems. But again the US political and economic system and the media that reports on it, seem incapable of dealing with the larger issues. This article excerpted above in the Globe about Obama's speech is a good example of how the establishment is coping.

The Boston Globe, a mainstream newspaper owned by the New York Times (which has its own problems) devoted a lot of ink to President Obama's speech. It was composed by two Globe staffers so we'll refer to the article as being written by the "Globe" as shorthand. The speech was "43 minutes" long and called for cutting costs across the board but notably in defense spending.

The salient points of Obama's proposal were a $4 trillion cut to the "deficit," plus higher taxes to help preserve Medicaid and Medicare. This is contrasted in the article with a Republican plan to cut almost $6 trillion in spending over 10 years made by US Representative Paul Ryan of Wisconsin last week. His plan, we learn, would "transfer much of the responsibility for [Medicaid and Medicare] costs] from the federal government to state government, individuals, and insurers.

Neither of these two plans actually reduces federal spending. They merely reduce its GROWTH. Because the GOP plan also seeks various tax cuts along with the spending plan, about $4.4 trillion would be cut from the projected deficit, the Globe reports, stating that the nation's current debt is $14 trillion (which understates the larger problem by about US$185 trillion. The Globe, predictably, was impressed by the tone of the speech, describing it as a speech that "mixed appeals for a united sense of purpose with sharply partisan jabs," and laid out "a vision of a country strengthened both by fewer debts and a greater diligence to solving the problems of Medicaid and Medicare." Here's some more:

In promising to preserve those programs, [President Barack Obama] enlists his administration in the beginning of what is expected to be an epic battle with Republicans over their fate. "We are a better country because of these commitments,' he said in an impassioned defense of Medicaid and Medicare against Republicans' push for sweeping changes. "I'll go further — we would not be a great country without those commitments.' Obama also sought cuts in defense spending and renewed his pitch for a simpler tax code.

His call for the end of the Bush tax cuts for incomes above $250,000 for couples reignites a ferocious debate from the fall midterm elections. That element of the speech triggered the most vociferous and immediate opposition from Republicans. "Any plan that starts with job-destroying tax hikes is a nonstarter,' House Speaker John Boehner, Republican of Ohio, said in a statement. The Medicaid and Medicare over haul is key to the Republicans' plan, which aims for deeper cuts to the deficit over a shorter time …

The article then notes the "chasm between the positions of the Republicans and Obama" before returning to the substance of Obama's speech and Obama's admission that when it comes to Medicare and Medicaid "some changes are needed." The plan, the Globe reports, would improve efficiency and lower drug prices by "leveraging the purchasing power of Medicare." Perhaps the saddest part of the reporting has to do with the size of Medicare program, which the Globe reports as 46.6 million beneficiaries at a total cost of $509 billion. In Massachusetts alone, meanwhile, "There are 452,600 low-income children in the state who depend on Medicaid for health care." Given these staggering numbers, one is hard-pressed to remember that neither of these programs even existed 60 years ago. In time, neither will exist again.

The speech did not touch on specifics for Social Security except to warn that adjustments will be needed. The consensus of politicians questioned by the Globe seemed to be that larger issues regarding the US's declining fiscal and monetary situation may taken several years to work out.

One wonders how those involved will ever tackle the larger issues when even the more adversarial of the two parties does not seem to be telling the truth about the numbers involved. We reported yesterday that Speaker of the House John Boehner's claim that the Republican budget deal cut some US$39 billion in federal spending obligations but might be less. In fact, in a staff report yesterday, the Christian Science Monitor yesterday presented an analysis that concluded the deal may cut as little as $352 million!

The bill did pass yesterday in the US House of Representatives, with some 60 Tea Party freshmen Congressmen and "Conservative" Republicans voting against it. Boehner's signature "deficit reducing issue" was salvaged only because enough Democrats voted for it. This, after the mainstream media anointed Boehner the "victor" in the government spending debate. If Boehner was the victor, why did the "defeated" party give him the support he needed?

The nonpartisan Congressional Budget Office is the source for the story. Many of the "cuts" we learn, involved funds that were not actually going to spent or that were not, strictly speaking even government funds. Boehner is quoted as well: "There are some who claim the spending cuts in this bill aren't ‘real,' that they're ‘gimmicks.' I just think it's total nonsense … A cut is a cut."

Boehner may take the point of view that a cut is a cut, but the larger process seems most questionable. Neither side of the aisle is able to tell the truth and the mainstream American media is incapable of doing anything more than catalogue the minutia of a failed process. This is all being presented as business-as-usual but it is not business as usual. The process itself has no answers. The entire dollar-reserve system died in 2008 but there is no recognition of that in Congress or among those who are doing the reporting.

America and NATO are apparently trying to disengage from Afghanistan (another story that is not being much reported on). But the West (and thus the US) has just started military action on several other fronts and there is as yet no political will to cut the larger military-industrial establishment that is driver behind these campaigns. Larger countries like China, Russia and Brazil that have accepted the current dollar reserve system have given notice that they will not do so much longer. Price inflation around the world is gathering strength and America is no exception. The government lies about the economy.

In truth, the third Great American Revolution is gathering even as we write. The first revolution of course saw the framing and composition of the Constitution. The second revolution resulted in the Civil War and the diminishment of states rights. But the third revolution, the current one, is both slower and probably more profound. It will likely include devolution of power and passive or active resistance to an out-of-control Leviathan. There will be demands (as there already are) for lower taxes, less military spending and even a new approach to the US monetary system. These will be resisted by the powers-that-be.

The outlines are fairly clear for those who wish to see. It is much the same in Europe as America though the emphases are currently different. In Europe, the protests continue to focus on restoring government programs and alleviating austerity. In America, the anger is basically focused on government spending. But in both Europe and America, the frustration is palpable and the arguments pit the middle classes against the elite ruling classes. This is a change from even a few years ago. All of a sudden fault lines have emerged and they are both significant and powerful.

Taking the broadest view, one could speculate that Western civilization itself is going through a fairly rare convulsion. As we have often pointed out, the last significant sociopolitical evolution took place after the invention of the Gutenberg press, which convulsed Europe and ultimately led to the Renaissance, the Reformation, the Age of Enlightenment, the formation of whole new country (America) and numerous wars, including the 30-year Peasant War and the American and French revolutions.

Today, we see similar upheavals, though not yet nearly so advanced. We argue these tumultuous times are a direct result of Internet truth-telling about the elite's central banking economy combining with the evident and obvious failures of the system as it is. In fact, it seems to us that the Anglo-American power elite has taken a desperate gamble, purposefully destabilizing the current system in order to create social and economic confusion that will lead to the establishment of world government.

These sorts of strategies have played out before. But today, the Anglo-American elite driving the process is at war with its middle classes. The goal is actually the destruction of Western economies and currencies so that a new world order can emerge out of the ruins. To this end, the West's most prominent economies and political systems are being destroyed from the inside out.

Ironically, most of those involved in the destruction are not doing so with any conscious appreciation of the roles that they are playing. The destruction has been set in motion at the highest levels and has to do with the imposition of fiat-money central banking regime, graduated income taxes, a Pan-European and American military industrial complex and regulatory democracy itself with its growing authoritarian and judicial vengefulness, phony enemies (Islam) and unreal and wasteful war on terror.

The goal is control. In Central America , a woman is fingerprinted at a grocery store when she wishes to pay for her items with a hundred dollar bill. Banks in developing countries will no longer accept bank checks; one has to be a resident of the country in order to open a bank account. INTERPOL proposes a biometric database for all seven billion citizens of the world that will make international travel more "efficient."

Privately held central banks throughout the developing world, meanwhile, are making and implementing Draconian economic rules that are then coordinated and eventually expanded to the West as well. The purpose is to freeze all money transactions of any size and to track money flows generally. Only the elite and its delegated authorities are to have access to large pools of capital on demand as they wish. The war on terror itself is very useful in this regard as it gives the elites the pretext it needs to enforce even the most ludicrous and Draconian demands for transparency.

It is part of a larger, unspoken struggle. Commercial banks and savings banks are the front line troops enforcing the will of the BIS and the elites behind the scenes. The walls are constructed regulation buy regulation in developing countries and then exported, once finished, to the West, complete with established precedents and progressive arguments. Within this context, US debates about "cutting the federal budget" can be seen as nothing more than another distraction.

After Thoughts

The elites are racing to build global government before the Western middle classes are fully aware. The current political debates, with their ephemera and trivialities hardly give one even a taste of what is yet to come. A clash of cultures is in the offing. The Western mainstream media likely will not cover it, but then, again, you see, there IS the Internet's alternative media …

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