PHANTOM GDP

All eyes were on the U.S. , while the U.S. House, Senate and President Obama
jockeyed for position on raising the U.S. Debt Ceiling. The Dollars position, as the principal world trading currency, was at stake while those in Washington [D.C.], and in academic circles, squabbled over they way, means and impact of raising he debt ceiling. Drama aside, it was a forgone conclusion that a "deal" would be done and the
debt ceiling would be increased to accommodate U.S. deficit spending.

The side-bar to Washington's theatrics, economic growth [ measured in GDP ], was hinted at in the House passed [H.B. #2560] Cut, Cap and Balance bill, but never brought to the floor by Senator Harry Reid, for Senate vote. Gross Domestic Product, GDP,is the benchmark measure used internationally to snapshot a nations economic growth. The U.S. snapshots GDP on a quarterly, basis; and, during the quarter, when the debt ceiling drama was playing in Washington, the U.S. GDP had stalled at around 1%. Without growth, government revenue, remains stagnant, absent an increase in taxes, often masked as fees, to offset government spending.

The way GDP has traditionally been calculated [ all goods and services ] essentially is a miss-measure that overstates real economic growth by a factor equal to the amount of government costs and services included in the GDP computation. Since the miss-measure GDP computation has universal appeal, true economic growth remains phantom to the delight of Wall Street, London and world financial markets. The GDP miss-measure is a harbinger for future financial melt-downs.

Among the minority of others, China, appears recognize the GDP anomaly, by its recent downgrade of U.S. debt obligations. Others will likely realize the U.S. has been and will continue, for the foreseeable future, to experience negative GDP. This has ominous consequences for todays inter-connected world, and is one factor in the flight to gold and other precious metals. Absent an accurate measure of a nations economic growth, and a stable benchmark currency, the surplus capital necessary for economic growth, will be locked in gold and precious metals, and world economies will unravel.

This U.S. and U.S. dollar, can no longer serve as a benchmark currency. The failure of the U.S. to balance its budget, per the U.S. Balanced Budget Act of 1985, yes 1985, was the first signal to the world that new measures and new benchmarks would be necessary if sustainable, shared, economic growth were to be achieved on a world basis. The latest U.S. budget antics [yr. 2011, 26 years later ] are a signal that the U.S. is in a downward economic spiral and can no longer be viewed as a stabilizing force, and the U.S. dollar, a reliable currency.

The U.S., as a system of governance, has displayed it's inherent flaws; arrogance, fashion, feelings, and ego, trump reason. New measures and a new type of benchmark currency will be needed before financial stability can be achieved on a world basis; otherwise,one country will fail, followed by the next, and by the next; signs of which are appearing in Europe and with the Euro.

U.S. DEFICIT REDUCTION – START WITH THE OBVIOUS

President Obama, and the leaders in Congress on both sides of the isle, recognize that the U.S. is in a BAD place. The U.S., like many individuals, has spent far beyond it's ability pay. Stripped of fancy rhetoric, the U.S. is BROKE. There are many obvious steps that can be taken to reduce U.S. debt; the real question is, does Congress have the will to confront the reality the USA is broke, and do something about it. Past Congresses and Administrations stuck there heads in the sand, raised the national debt limit, and have keep spending as if there were no tomorrow. The 112th Congress can no longer pass the buck by raising the national debt limit, now set at $14.3 TRILLION dollars.

The President as well as Congress have equal responsibilities to cut spending and reduce the debt. The Federal government is the largest employer in the U.S., if not the world. The President should require that ALL Federal employees who are eligible to retire, be required to retire NOW, or else loose all government benefits. This step, requiring all eligible Federal employees to retire now, would reduce the government workforce by 12% ( savings of roughly $37 billion ) and save the government billions in future costs.

Next on the President's list should be to close all military facilities the U.S. maintains in some 150 foreign countries. The U.S. Navy and Air Force are fully capable of deploying needed forces without shore based facilities. And remember, the most effective fighting tool today, is the predator drone, controlled from Nellis AFB, Nevada. This would yield a savings in the neighborhood of $220 billion, and save billions in future costs. Vacating Iraq and Afghanistan would save another $25+ billion in annual costs.

Undocumented and illegal immigrants cost the Federal government [ vis-a-vis reimbursed benefits to States ] around $30 billion a year. By eliminating all benefits to undocumented and illegal immigrants and their offspring, including health care, schooling, and welfare, this would save the Federal and State governments, collectively, another $40+ billion a year.

Foreign aid: it is absurd for the U.S. to borrow money, to give to foreign governments whose leaders pocket it, build private mansions in safe haven counties, and leave the U.S. holding an empty bag. You don't hear much about U.S. Foreign aide except for the occasional leak. The U.S. Government intentionally obfuscates foreign aid accounting and expenditures so both Congress and the U.S. Public have no concrete idea of how many taxpayers dollars are involved, but estimates range from $22 billion to $40 billion; lets go with $25 billion, which is likely an underestimate.

Then there are the “territories”: Puerto Rico, Guam, U.S. Virgin Islands, Am. Samoa and the Northern Marianas. These tiny islands are subsidized by the U.S. Taxpayer to the tune of $10 billion a year.

The budget is within the President's purview. The President/Executive Branch prepares it, and presents the budget to Congress. If one just adds the items outlined above: roughly $360 billion, it would be one small step in the right direction to get the U.S. back on a sustainable financial track. In the event the President does not have the guts to eliminate these needless expenditures and waste from the budget, Congress should bite the bullet, not authorize funding of the 2010-2011 budget, and, at a minimum, cut the above items and amounts from the Federal budget.