Obama and America Need Deep Economic Cuts


The United States has a lot going for it: a vibrant (if gaudy) democracy and strong senses of personal freedom and national self-confidence. It is laid low by the perpetual partisan rumblings of an isolated political class, chock-full of spin, back-biting and character assassinations. The Obama Administration is now more concerned with the President’s ‘nice guy’ image than making the  decisions which are needed to get the country back on the road to prosperity, and the Republicans are seen as out of touch with ordinary citizens by dint of personal affluence, age, and the obsessive social conservatism of the evangelical right. Due to the quirk of presidential elections, which mean that there is a two term limit for presidencies, Obama does not need to face the electorate personally ever again. This has a poor effect on his incentive to actually tackle the country’s issues.

America’s biggest current problems are not Jihadists plotting in a forgotten corner of some despotism, nor the wrath of China and their brutal cyber-warfare: it is in fact their own caprice and financial illiteracy; which has compelled the world’s foremost economy into debts which no sane individual could support. The US debt clock continues its merciless ticking. We know from our own experience that deficits are a politically popular move. New Labour succeeded in running up enormous borrowing: keeping the population happy with high benefits and (relatively) low taxes.

The deficit has caused problems in America, causing its loss of AAA credit rating; the great republic has not enjoyed the best borrowing rates since 2011. This, incidentally, was directly after congress voted to raise the country’s debt ceiling. In short, debt is always a problem and can lead to many others besides. The deficits of New Labour were equalled by most recent American administrations, with all Presidents of the past forty years failing to balance the books (except a small blip in the Clinton Presidency, which had a minuscule surplus). Obama has only accentuated this, and to an insane degree.

obama presidents

The undignified spectacle of the ‘Fiscal Cliff’ (in which the most powerful nation on Earth could barely pay the bills) was a scrabble in which two power-blocs attempted to get exactly what they wanted: Democrats wanted huge tax increases, and Republicans wanted ludicrously high tax cuts in a time when it would have been impossible. The real threat was the prospect of future automatic tax increases and spending cuts, potentially strangling all hope of future growth.

America needs cuts, and they need them now. Swingeing, brutal, savage: it doesn’t matter! They need to budget and not fall into the trap of penalising the successful (like they are currently trying to do in France). All sides in America try to spin their collective incompetence to their advantage. The 112th Congress has been called the worst in US history for bungling, but their problems still cause the current legislature to fester and stew.

While they moan and jockey for power, the terrifying numbers continue to climb. The gross national debt in the US currently stands at 108% of GDP. This is an unacceptable level and any politician worth their seat would try to do something – rather than court the favour of bearded Kenynesians or slick hyper-PR men from the NRA or Wal-Mart.

annual surplus

In America, they strongly support the idea of individual freedom, but, in an apparent paradox, willingly use the state’s money in order to attain popular approval. Hence we see President Obama subsidise the motor industries, giving him key votes in industrial swing states, and support farmers – designed to court the Mid-West. Cut these, and ditch billions of dollars of development aid to Pakistan, and you have made a start. While both are small compared to the total debt, they are in the right spirit. Cutting off all financial support they give to dictatorial regimes, regardless if they are our de facto ‘allies’.

In summary, what the Americans need to do is resist the urge to create punitive tax hikes; which will only penalise those who will be able to take them out of the current financial crisis. While the prospect of appeasing the ‘middle class’ by hurting the wealthy has deep populist appeal, it does not make sense; what is needed is for the taxpayer to stop all subsidies to unproductive parts of the economy, this could fund some form of tax relief, hopefully to the lower paid workers, who could then increase demand in the economy and push for growth.


  1. Cuts and cuts alone won’t do it. Too much of the economy has been made dependent on federal spending. It’s like getting somebody hooked on a drug, then abruptly cutting off the supply. It could kill them.

    Americans, both individuals and businesses, need to be weaned of this addiction in stages.

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