Global Crisis/Innovation Blog

The Speech Obama Never Made – and Never Will *

By Shlomo Maital

 My fellow Americans,

    “No, America is not the greatest country in the world, like we politicians like to repeat endlessly. We’re probably not even the 95th greatest country in the world.  And here is why.  America has just been throwing a huge party, it has lasted for over 30 years, under Republican and Democrat Presidents alike, we’ve overspent, underinvested, undersaved and we’ve done this for three decades.  What enabled us to do it is the fact that the dollar is the world’s currency, so we can just print dollars and persuade countries like China to accept them, in return for massive amounts of goods.  We never ever looked at ourselves in the mirror and said, hey, there is something radically, morally wrong here, when a wealthy country like America borrows enormous sums from poorer countries like China, not to build the future for young Americans, but to let spoiled baby-boomer Americans enjoy life now at their kids’ expense  and now, to retire all-expenses-paid.    And friends, guess what.  It is time to pay the piper.  The bill collector is knocking at the door.  Here is why.   The Congressional Budget Office concluded that keeping the U.S.’s ratio of debt to gross domestic product at current levels until the year 2085  would require spending cuts, tax hikes, or a combination of both equal to 8.3 percent of GDP each year for the next 75 years…. That translates to $15 trillion over the next decade—or more than three times what I  and Speaker of the House Republican John Boehner were considering.   We can’t get the House and Senate to agree on $5 trillion of cuts..and we need $15 trillion, just to stay in the same place, like the Red Queen in Alice in Wonderland.   We need to cut consumption from 70 per cent of GDP down to about 60 per cent.  Now, THAT’S PAIN!   Boston University economist Larry Kotlikoff has calculated that if you project the gap between federal spending and federal income, under current budget conditions,  here is what you get:  a fiscal gap—i.e., the net present value of all future expenses minus all future revenue—amounting to $211 trillion.   Now that, my fellow Americans, amounts to 15 times our annual GDP.  And 15 times our current national debt.  So, I guess the conclusion is clear.  The party is over.  We will now have to LIVE WITH substantially lower standards of living, the way we live, for at least an entire generation, OR POSSIBLY THREE GENERATIONS, just to stay afloat.  I know you don’t like to hear that.  Americans want the party to continue.  But one way or another, the party’s over.  And I’m afraid that if we don’t take drastic action, the unthinkable will happen.  while America has accused a whole shopping list of other nations of irresponsibility – Mexico, Russia, Brazil, Thailand, Indonesia – all the while, it was America that was acting in the most reckless way of all. Because America is not just another country, it is the country whose money funds the world.  And my fellow Americans, I’m sorry to tell you, America is bankrupt. Oh, I know, we’ll muddle through somehow, we’ll find a way to somehow raise the debt ceiling, even if the rating agencies do downgrade us to double A instead of triple A.  But the time for muddling through is long past.  We need to make drastic cuts in what we spend, so we can set aside resources to pay for what we borrowed, and recklessly squandered, in the past – using up resources instead of using them to build assets that generated income to help us pay back the debt.  So now, we have the debt, but not the productive assets that debt should have created.  So, yes, my fellow Americans, America is probably about the 95th greatest nation in the world, and is still heading down.  I expect that when I tell you this, and when I tell you how terrible our situation is, and how awful the medicine we have to take is, you will defeat me in the 2012 election.  You may elect someone who tells you beautiful things, like I did,  “Yes We Can!”.  Well, Americans, no, we can’t.  We can’t seem to do the right thing, take painful medicine, and get our country on a solid footing again.  Because we’re soft and flabby, and we’re about to become a second-class power, despite our vast super-expensive military (which is a main cause of our decline, not the solution), just like Britain before us in 1900, and Spain before that….and Rome before that, and before that, Greece.   So, G-d bless America, G-d bless you and your families,  and only G-d knows how in the world we’re going to dig ourselves out of this god-awful mess that we ourselves created.  Current trends are unsustainable. The sooner the adjustments begin, the more gradual they can be. It’s easier to slow down from 70 mph by stepping on the brakes than by slamming into a wall.  But, Americans, let’s face it.  We are going to hit that wall.  Because our democratic political system just does not know how to put on the brakes.”

  • Based on Bloomberg Business Week,  “Why the Debt Crisis Is Even Worse Than You Think”, by Peter Coy.  Aug. 1. 
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