Is Ben Bernanke A Liar, An Abettor, or Just Wildly Incompetent?

Last week, 60 Minutes conducted an interview with Federal Reserve Chairman Ben Bernanke. At the outset, correspondent Scott Pelley noted that this is the worst recovery the nation has ever seen.

Perhaps that's the reason that Bernanke, who is charged with finding a way out of this mess, decided to do a prime-time interview on national television. It was an unusual event.

As Pelley noted, Fed Chairmen rarely do interviews. But Pelley said that Bernanke feels the need to speak out because he believes his critics may not understand how much trouble the economy is in.

Oh, I think they know, Ben. I think everyone knows.

Bernanke felt the need to get in front of the camera and provide the Fed's spin in order to counter all the resistance the central bank is simultaneously facing from seemingly all quarters.

It's reasonable to assume that Bernanke never gives an honest assessment of anything, and that the Fed keeps all of its most harrowing data to itself. Whatever dire economic numbers the Fed reveals, it's safe to assume the real numbers are even worse. That's because the Fed, like the government, lies.

For that reason, some of Bernanke's assessments were rather sobering.

"Between the peak and the end of last year, we lost eight and a half million jobs", said Bernanke. "We've only gotten about a million of them back so far. And that doesn't even account the new people coming into the labor force. At the rate we're going, it could be four, five years before we are back to a more normal unemployment rate. Somewhere in the vicinity of say five or six percent."

Got that? The Federal Reserve Chairman was willing to admit on a nationally-viewed, prime-time news show that it may take as long as five years before unemployment comes back down to six percent.

It was a stark and stunning revelation. But to readers of The Independent Report, it's not the least bit surprising.

In an effort to jump start the economy, the Fed plans to buy $600 billion in US Treasury securities, with the intention of lowering rates on long term loans for things like cars and homes.

Bernanke wanted to emphasize that this $600 billion quantitative easing program comes from the Fed's own reserves. "It's not tax money. It does not add to the federal deficit."

Bernanke never bothered to mention where the Fed gets those reserves. That was pretty convenient.

"One myth that's out there is that what we're doing is printing money. We're not printing money. The amount of currency in circulation is not changing. The money supply is not changing in any significant way."

That's technically true. The Fed doesn't actually need to print any paper currency. It simply extends credit to various banks by electronic transfer. It all amounts to nothing more than key strokes on computers, in which billions in credit are instantly conjured and then moved from the Fed's balance sheet to the balance sheets of numerous banks. It's like magic.

When asked if there was a scenario in which the Fed would commit to more than $600 billion in quantitative easing, Bernanke replied, "Oh, it's certainly possible. And again, it depends on the efficacy of the program. It depends on inflation. And, finally, it depends on how the economy looks."

That surely spooked Treasury markets. The notion of the Fed buying Treasuries and propping up the market with conjured money is certainly discomfiting.

Bernanke went on to say that what passes for a 'recovery' may not be self-sustaining.

"It takes about two and a half percent growth just to keep unemployment stable. And that's about what we're getting. We're not very far from the level where the economy is not self-sustaining."

Notice that he said nothing about actually reducing the unemployment rate? Current GDP growth will merely serve to maintain the current unemployment rate and keep it from rising. That's hardly reassuring.

Most disturbingly, this economic collapse occurred right under the noses of Bernanke and his comrades at the Fed. And now they are being entrusted with managing a recovery. It's hardly reassuring.

Even though the Fed was the regulatory watchdog of the largest banks when outrageously risky lending led to a worldwide financial crisis, Bernanke doesn't assume any responsibility or blame.

When asked if there is anything he wishes he'd done differently over these last two and a half years or so, Bernanke replied, "Well, I wish I'd been omniscient and seen the crisis coming, the way you asked me about. I didn't."

In Bernanke's estimation, seeing the oncoming crisis, which was rushing at him like a financial freight train, required the sort of omniscience that only a genie or wizard might possess.

How did the Fed miss the looming financial crisis?

"There were large portions of the financial system that were not adequately covered by the regulatory oversight," said Bernanke. "So, for example, AIG was not overseen by the Fed... Neither [was] Lehman Brothers, the company that failed. Now, I'm not saying the Fed should not have seen some of these things. One of things that I most regret is that we weren't strong enough in putting in consumer protections to try to cut down on the subprime lending problem. That was an area where I think we could have done more."

What a joke.

Bernanke is not committed to consumer protection. In fact, he lobbied against the Consumer Financial Protection Agency.

In 2008, federal regulators had the power to supervise Citigroup, Bank of America, Wachovia, Washington Mutual, Lehman Brothers, Bear Stearns, and Countrywide and force them to pare back their risky activities–and yet they didn’t.

It is absurd to say that regulators didn’t have the authority to manage systemic risk. It was simply a lack of interest.

William K. Black, a former bank regulator and now an associate professor of Economics and Law at University of Missouri as Kansas City, says the Fed was completely derelict in its duties as a regulator.

"The most severe failure was at the Federal Reserve," said Black. "The Fed’s failure was the most harmful because it had unique authority to prevent the fraud epidemic and the resulting economic crisis. The Fed refused to exercise that authority despite knowing of the fraud epidemic and potential for crisis."

The Fed is entirely and completely against regulation. In fact, it can accurately be described as an anti-regulatory, regulating agency.

As Mr. Black further notes, "The anti-regulator policies that Bernanke championed were the principal drivers of the fraud epidemic that have produced recurrent, intensifying crises."

It is true that the Fed wasn't the regulator in charge of insurance giant AIG. That distinction belonged to the Office of Thrift Supervision, which — like the Fed — showed a complete dereliction of duty. Like other US federal bank regulators, the OTS is paid by the banks it regulates. How's that for conflict of interest?

However, Bernanke was a member of the board of governors of the Federal Reserve system for most of the period from 2002 to 2006, when historically low interest rates set by the central bank sparked the housing bubble, the resulting financial crisis, and subsequent recession.

Bernanke, and others like him, prefer to blame the whole financial disaster on sub-prime lending. But the reality is that many perfectly conventional mortgages went bust. And commercial real estate was at least as overblown as housing, and it went bust too.

It's simply stunning to hear the man who failed to supervise regulation blame weak regulation for the financial crisis, but Bernanke did just that while speaking to the American Economic Association in January. And, in his view, low interest rates were not to blame.

“Stronger regulation and supervision aimed at problems with underwriting practices and lenders’ risk management would have been a more effective and surgical approach to constraining the housing bubble than a general increase in interest rates,” said Bernanke.

However, Bernanke's predecessor, Alan Greenspan, rejected advice about the risks of subprime lending. And Bernanke followed the same lax regulatory course when he was appointed to head the Fed. The reality is that the Fed had the authority to regulate in many ways; it simply chose not to.

Bernanke, like Greenspan, believes that self-regulatory mechanisms are inherent in free markets. Both men believe in the "free hand" of the market, which makes outside regulation unnecessary.

In 2006, Chairman Bernanke professed, "Banking organizations of all sizes have made substantial strides over the past two decades in their ability to measure and manage risks.”

Not exactly.

All along, Bernanke has displayed a continual propensity for getting it wrong.

While speaking at the Federal Reserve Bank of Chicago's annual conference in May 2007, Bernanke famously stated, “Importantly, we see no serious broader spillover to banks or thift institutions from problems in the subprime market; the troubled lenders, for the most part, have not been institutions with federally insured deposits”

That was absolutely, positively, untrue. Five of the 10 largest subprime lenders during the previous year were banks regulated by the Fed.

And the fallout has continued to be brutal; so far this year, 151 US banks have failed. Yet, the Fed hasn't shown the same mercy to small local and regional banks that it has to the mega banks.

Of particular concern is the recent revelation that the Fed made 21,000 transactions, stretching from December 2007 to July 2010, that totaled $3.3 trillion. These transactions included loans and purchases with financial firms including Citigroup, Morgan Stanley, Goldman Sachs, major industrials companies including GE, and even to foreign corporations and foreign banks, including the Bank of England.

The loans were nearly interest-free. And the revelations of these secret transactions make the Federal Reserve appear to be the Central Bank of the World. None of this would have been known if Congress had not forced the Fed to reveal these transactions. Yet, we now know that the Fed has been acting as a sort of global bailout machine.

So Bernanke is either a liar, an abettor, or he is wildly incompetent. And yet he was reappointed as Fed Chairman by President Obama in January of this year.

However, Bernanke received stiff opposition on the way to confirmation for his second term. The full Senate voted 70–30 in his favor, the narrowest margin for any Fed Chairman in history.

Even before he went on national TV to plead his case, all eyes were on Bernanke, and they will continue to be. The American public is on to him. Before this crisis most Americans had no clue what the Fed was, or what it did. Now nearly everyone knows. The opposition is vast. The doubt and mistrust are massive, and perhaps even historic.

According to a new Bloomberg Poll, a majority of Americans are dissatisfied with the Federal Reserve and say it should either be brought under tighter political control or abolished outright.

Perhaps Congressman Ron Paul put it best when he said, referring to Bernanke:

"There is something fishy about the head of the world’s most powerful government bureaucracy, one that is involved in a full-time counterfeiting operation to sustain monopolistic financial cartels, and the world’s most powerful central planner, who sets the price of money worldwide, proclaiming the glories of capitalism."

A Totally Corrupt and Dysfunctional Government

The Independent Report seeks to analyze economic events in an apolitical manner. The goal is objectivity, an unbiased analysis and, well, independence.

So much of what passes for news these days is highly politicized, and the goal here is to analyze and dissect economic developments minus the political spin, and absent any particular ideology.

Normally, The Independent Report doesn't focus on politics. In fact, politics is typically avoided because of the ugly circus that it is.

It is clear is that our political system is broken in many ways. Washington appears quite divided and highly partisan.

But one political event (or, rather, charade) occurred this week that is worth mentioning because it revealed just how broken, how corrupt, and how dysfunctional our government truly is. And it also revealed that, when push comes to shove, Congress isn't nearly as divided as we're typically led to believe.

Once again, Congress proved that it is an old boys network whose members even include women. And that club takes care of its own, no matter how egregious, how unscrupulous, how unethical, or how illegal its members behaviors are.

This week, the House of Representatives chose to merely censure Rep. Charles Rangel, despite behavior that should have led to his expulsion, arrest and prosecution.

The 80-year-old Democrat admitted he had failed to pay all his taxes, filed misleading financial statements, and improperly sought money from corporate interests in exchange for a college center bearing his name.

That's typically known as tax evasion, taking bribes, a quid pro quo, and an abuse of one's power and authority. And all of it is illegal, in addition to unethical.

Last month, the House ethics committee found Rangel guilty of 11 of 13 charges of financial misdeeds, overwhelming evidence of his misconduct and guilt.

Yet, the chairman of the ethics committee, Democratic Rep. Zoe Lofgren of California, said Rangel simply "violated the public trust." However, it's far more accurate to say he violated the law — in numerous ways.

Despite this fact, Rangel's colleagues chose to merely censure him, which amounts to a slap on the wrist.

It was only the 23rd time in the nation's history that a House member has been censured. Yet, there is no real punishment, other than to say, "Mr. Congressman, this will go down on your permanent record."

What a sham. What an injustice.

Rangel's many friends and staunch allies in the House — including members of the Congressional Black Caucus and the New York delegation — tried to reduce the punishment to a simple reprimand, though that effort failed. But it didn't really matter. The punishment is the same; nothing at all.

Clearly, Congress protects its own, just like cops do.

Even Rangel's constituents seemed to care little about his conduct or the charges against him. Rangel was re-elected to a 21st term last month with more than 80 percent of the vote despite being under an ethics cloud for more than two years.

Despite the overwhelming evidence of his guilt — which was the opinion of his colleagues — Rangel hubristically argued that censure is reserved for corrupt politicians — and he's not one of them. That reveals the height of Rangel's delusion and arrogance.

The reality is that Rangel ignored rules of conduct and avoided paying his taxes despite his knowledge of tax law due to his long service on the tax-writing Ways and Means Committee. In other words, Rangel knew the rules because he helped write them. He also thought he knew how to circumvent them. How precious is that?

Rangel chaired that panel until last March, when he stepped down after the committee — in a separate case — found that he improperly allowed corporations to finance two trips to Caribbean conferences.

That is simply stunning. Rangel was booted from the committee on separate charges! This is a man who is utterly and consistently corrupt, and who is devoid of any decency or ethics.

Rangel shortchanged the IRS for 17 years by failing to pay taxes on income from his rental unit in a Dominican Republic resort. He filed misleading financial disclosure reports for a decade, leaving out hundreds of thousands of dollars in assets he owned.

He used congressional letterheads and staff to solicit donations for a monument to himself: a center named after him at City College of New York. The donors included businesses and their charitable foundations that had issues before Congress and, specifically, before the Ways and Means Committee. That's called a conflict of interest.

Rangel also set up a campaign office in the Harlem building where he lives, despite a lease specifying the unit was for residential use only.

The representative is obviously a man of enormous ego and hubris. He believes he is as important as he is powerful.

But instead of expelling Rangel and ordering his prosecution, his Congressional colleagues chose to merely censure him. Besides the embarrassment, censure carries no practical effect. The next level of punishment was expulsion, and yet Congress stopped short of that. In the process, it stopped short of assuring justice.

It is abundantly clear that Congress is a kangaroo court and that it cannot — will not — police itself. It is an elitist old boys network, where they all watch each others' backs. Congress is a totally corrupt institution and it is plainly despicable.

Like any other American citizen who is convicted of such charges, Rangel should be in jail. But instead he remains a Congressman. How disgusting.

This is what passes for justice in America. It clearly proves that there are two justice systems in the land of the free and the home brave; one for the powerful and connected, and one for everybody else.

Deficits, Tax Cuts, Budget Cuts and Reality

Taxes Are Unpopular, But Voter Sentiment Is Unrealistic

In the current political climate, many Americans want less government spending, lower taxes and the elimination of the deficit. Yet, they simultaneously demand that their (or their parents/grandparents) Social Security and Medicare benefits remain untouched.

Republicans have long embraced the idea that tax cuts don’t need to be paid for. And it seems that the Democrats have joined them in this reckless belief.

The Republicans strongly pushed the extension of the Bush tax cuts. And the Democrats feared letting them expire for all but the richest Americans. After all, raising taxes is one of the 'third rails' of Americans politics.

The problem was, extending all of the Bush tax cuts increased the deficit by about $4 trillion. Even if Congress had extended the cuts only for people making less than $250,000 a year, it would have increased the deficit by more than $3 trillion.

That's a whole lot more than the Obama stimulus or Bush's bank bailouts, both of which were wildly unpopular. This deficit increase via tax cuts occurred after the election of the Tea Partiers and other conservatives to Congress. How could that be acceptable to anyone concerned about the deficit?

Ultimately, cutting taxes or increasing spending both have the same effect on the government's balance sheet. One takes money out of the Treasury at the front end, while the other takes it out at the back end.

The Democrats have long been labelled as the party of 'tax and spend'. Yet, it's also fair to describe the Republicans the party of 'borrow and spend'.

At least one dyed-in-the-wool, true-blue conservative has called out his party for the reckless irresponsibility of their unyielding tax cut mantra.

"This debt explosion has resulted not from big spending by the Democrats, but instead the Republican Party’s embrace, about three decades ago, of the insidious doctrine that deficits don’t matter if they result from tax cuts," said former Reagan budget director David Stockman in a NY Times op-ed last summer.

Stockman is not a lone voice in the wilderness.

In 2006 William Niskanen, the former chairman of the libertarian Cato Institute, published an influential paper titled “Limiting Government: The Failure of ‘Starve the Beast.’ ”

In it, he critiqued the conservative idea that cutting taxes now would “starve” the government of revenue, and thus force it to reduce spending. The reality, he said, was the opposite. If politicians found they could cut taxes without paying for it, they realized they could increase spending without paying for it, too.

Between 1981 and 2005, tax cuts led to more, rather than less, spending. The other problem with the theory, Niskanen wrote, was that it let Republicans off the hook. The belief that you could cut taxes without reducing spending had “substantially reduced the traditional Republican concern for fiscal responsibility.”

At present, there is a lot of anger about the size of the federal government's budget deficit, and rightly so. Americans, who are tightening their belts, want the government to do the same. People are looking for governmental responsibility and restraint. The anger and concern is coming from across the political spectrum.

However, the current deficit was not caused just by over-spending and under-taxation. It was caused by the collapse in tax revenues that resulted from the 2008 financial crisis and the subsequent economic downturn. And tax revenues will only improve when the unemployment problem improves. That may be a long way off.

There is no doubt that the federal government is too big, has too many employees, and spends too much money. But the deficit problems won't be solved with budget cuts alone.

After all, we're now in year-nine and year-11 of two separate wars that are both part of America's larger and ongoing 'War on Terror'. And since tax revenues were not raised to pay for those wars, but were in fact cut, they were put on the government's credit card.

The reality is that there are no easy solutions. Rather, there are only painful ones. There will be austerity measures that deeply affect most Americans, and budget cuts of all varieties that will anger just about everyone.

But the reality is that the US won't eliminate its deficit, balance its books, and pay down its debt without tax increases. But that's the problem; any tax increases in such tenuous times could ultimately cool the ailing economy even further.

A recent LA Times/USC Poll of California voters is reflective of the general American sentiment. The poll found that Californians oppose tax hikes in favor of budget cuts to balance the state budget. Yet, they object to most of the cuts that could be made. Reality bites.

Naturally, everyone favors cutting 'waste', 'fraud' and 'abuse', however vague those terms may be. Most voters favor cuts over taxes because they believe we're already taxed too much.

The government has gotten itself — and, by extension, the rest of us — in quite a pickle. Cuts need to be made, revues need to be raised, and voters want neither.

Meanwhile, the tax base has been shrunken considerably because so any people are out of work.

Dick Cheney, who argued for a tax cut despite a looming shortfall, famously declared, "Reagan proved that deficits don't matter."

While many conservatives may have agreed with him then, most Americans — regardless of political affiliation — would beg to differ right now.

David Stockman: The Voice of Reason

60 Minutes recently aired a story about the GOP's knee jerk opposition to taxes. What made the story particularly compelling was that David Stockman, President Reagan's budget director, called out his own party for their extreme orthodoxy against taxes.

Stockman has gravitas because he is the Republican who once helped engineer the largest tax cut in history during Reagan's presidency.

But these are different times.

The Bush tax cuts were never rescinded, even while the US was engaged in two lengthy, costly, wars. Both of those unfunded wars were put on the federal government's credit card to be paid in the future.

However, this borrowed war money will be much more expensive to pay back in future years, due to the interest on the exorbitant debt that's been created.

Stockman says all the Bush tax cuts should be eliminated - even those on the middle class.

"It's become, in a sense, an absolute. Something that can't be questioned. Something that's gospel. Something that's sort of embedded into the catechism. And so scratch the average Republican today and he'll say 'Tax cuts, tax cuts, tax cuts,'" Stockman explained.

"It's rank demagoguery," he added. "We should call it for what it is. If these people were all put into a room on penalty of death to come up with how much they could cut, they couldn't come up with $50 billion, when the problem is $1.3 trillion. So, to stand before the public and rub raw this anti-tax sentiment. The Republican Party, as much as it pains me to say this, should be ashamed of themselves."

Stockman is also quite critical of President Obama for saying things like, "I believe we ought to make the tax cuts for the middle class permanent."

"We have now got both parties essentially telling a big lie, with a capital 'B' and a capital 'L' to the public," he told Leslie Stahl. "And that is that we can have all this government, 24 percent of GDP, this huge entitlement program, all of the bailouts. And yet, we don't have to tax ourselves and pay our bills. That is delusional."

The national debt is now growing by $100 billion a month. So, the massive hole continues to grow ever deeper.

"We're going to be in a period of austerity. We've had a 30-year spree of really phony prosperity in this country," said Stockman.

Yet, Stockman says neither party is truly committed cutting spending.

"Even Republicans have said there's nothing significant we want to cut. They don't want to cut Social Security entitlements; they don't want to cut Medicare reimbursements to doctors; farm subsidies; education loans for middle class students. Certainly not defense!" he said.

Stockman says there should be a one-time 15 percent surtax on the wealthy that he estimates would cut the national debt in half. But he knows it is highly unlikely in such a strong anti-tax environment in America today.

"We've demonized taxes. All right. We've created almost the idea they're a metaphysical evil," he said.

"In 1985, the top five percent of the households, wealthiest five percent, had net worth of $8 trillion, which is a lot. Today, after serial bubble after serial bubble, the top five percent have net worth of $40 trillion," he explained. "The top five percent have gained more wealth than the whole human race had created prior to 1980."

The antipathy to raising any taxes or making any real spending cuts is so intense in Washington, Stockman despairs that when the new Congress returns after the holidays, they'll do what they often do: nothing.

U.S. Facing Lingering Deficits, Crushing Debt, Difficult Choices

The U.S. is not only the world's biggest economy, it also the world's biggest debtor nation.

Just 10 years ago the national debt was $6 trillion. Today, it has more than doubled, to $14 trillion.

And it was just 10 years ago that the Clinton administration handed off a large surplus to the new president, George W. Bush.

Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget, says those surpluses were projected to continue. But they didn't.

"We were running deficits in the past decade when we shouldn't have been," she says. "They came from tax cuts that weren't paid for. They came from fighting two wars without paying for them, when normally in our past, we have. They came from the addition of things like the prescription drug program — not paid for — and high growth in government spending in general."

A reflexively anti-tax ideology resulted in a 'borrow and spend' mentality.

As a result of that uncontrolled deficit spending, says MacGuineas, the government was taking on more debt when it should have been saving to prepare for the big Medicare and Social Security payouts it has promised to current and future retirees.

But then the government's fiscal position got even worse when the financial crisis hit. Unemployment skyrocketed when millions of people lost their jobs. That shrunk the tax base and cut government revenues. At the same time, all those millions of people started collecting unemployment benefits. Add in the bailout bills and President Obama's giant stimulus package, and the deficit soared even higher.

"All of these factors came together and just piled on the trillions of dollars of debt," MacGuineas says. "And our debt climbed to levels that are well above the historical averages, and the problem is it's on a trajectory to grow even more."

As big as our deficits and debt are today, they will only get bigger as a result of entitlement spending. Due to our aging population, Medicare will become a budget buster. Add in Social Security obligations to a larger group of retirees than there are workers, and it spells trouble.

Social Security's shortfall can be solved by modestly raising payroll taxes, cutting benefits, raising the retirement age or some combination. But Medicare is a different story, MacGuineas says.

"When it comes to Medicare and health care in general, we just don't know how to fix it," she says.

If rising healthcare costs remain unchecked, Medicare and Medicaid, the health program for the poor, could consume nearly a third of the total budget just 10 years from now.

The first wave of the 76 million strong Baby Boomer generation — a group that represents 25% of the U.S. population — will begin retiring on January 1, 2011, little more than a month from now.

Think of it as a coming tsunami.

To address the continuing deficit problems and begin chipping away at the underlying debt, taxes will have to be raised, deductions and write-offs eliminated, and significant and widespread budget cuts enacted.

Even then, the gap opened by the tax cuts and new entitlements enacted during the George W. Bush administration will be difficult to overcome.

President Obama's deficit commission has delivered its plan, and the Bipartisan Policy Center has issued its own. There will be many choices, many debates, and many tough decisions to make in coming months and years. They will all be difficult, uncomfortable and unpopular.

That's why Washington hasn't done anything about the debt problem for the past decade.

Irish Austerity Measures Offer Preview For U.S.

Ireland has managed to negotiate a €85 billion ($115 billion) EU/IMF bailout to save itself from bankruptcy. In addition, the Irish government plans to slash €15 billion from its deficits over the next four years, with the harshest cuts and tax hikes slated for the next budget, which will be published December 7.

The pain of such cuts — or so-called 'austerity measures'— will be widespread and they will lower the standards of living of almost the entire Irish population, some 4.5 million people.

There will be cuts to welfare, pensions, and other public programs. The government has no choice; it's 2010 deficit is 32 percent of GDP, the highest in Europe since World War II.

Prime Minister Brian Cowen is proposing €4.5 billion in spending cuts and raising an extra €1.5 billion in taxes. That will put a tremendous burden on Irish citizens.

What's more, the bailout only raises the possibility of a future default since the banking sector’s losses will be transferred to the state. That means the Irish people are now fully responsible.

Like all European governments, the Irish austerity measures will only undermine growth, thereby lowering tax revenues. That in turn will just lead to further deficits. Think of it as a cycle of indebtedness.

Receiving an €85 billion ($115 billion) bailout will significantly increase Ireland’s debt-to-GDP ratio. Irish debt will equal 50% of its GDP.

Irish media report that the EU-IMF fund could charge interest rates of up to 6.7 percent, higher than the 5.2 percent that applied to Greece's €110 billion bailout in May.

This bailout is not a solution. It is a path to perpetual indebtedness. This plan only pushes Irish debt further off into the future, while making it even larger due to added interest payments. Such a bailout is not a plan for retiring Irish debt. It is merely a plan for delaying and enlarging it, making the current situation even worse.

If you're wondering why this matters to you, it's because these sorts of austerity measures will soon be coming to America.

Though projected to be lower than anticipated, the fiscal 2011 budget deficit will once again exceed $1 trillion, largely due to shrinking revenues. With fewer people working and millions earning less than in previous years, there is less tax money being collected by the government.

When you add the costs of two unfunded wars, absolutely massive additional defense expenditures, and expanding entitlements, you have a recipe for disaster. Current deficits and the mounting debt are simply unsustainable.

The National Commission on Fiscal Responsibility and Reform, better known as the debt or deficit commission, has proposed making nearly $4 trillion in cuts over the next decade.

The plan has already infuriated nearly everyone cross the political spectrum. That's because the proposed cuts will be quite painful and are sure to offend or outrage just about everyone.

All of the sacred cows have been put on the chopping block, including defense, Social Security, Medicare, and assorted tax breaks and deductions.

Entitlement cuts won't just piss off grandma and grandpa either; they'll outrage anyone over 50, or anyone who's been paying into the system for 20 years or more. And those folks vote.

So as we witness protests, marches, strikes and even violence across the European continent, it will be interesting to see how Americans react when they eventually realize that their taxes are going to be raised and their services reduced.

The politicians have so far avoided these eventualities, and they fear enacting them for political reasons. Tax hikes and budget cuts aren't exactly vote getters. But the longer Congress puts them off, the worse the problems — and their eventual outcomes — become.

As it stands, the debt commission projects that the interest on the debt could reach $1 trillion by 2020 if Congress doesn't act immediately.

But in America, political expediency has always trumped the bitter reality of sound, yet painful, decision-making. How soon will Congress have the courage and conviction to do what Ireland and the rest of Europe are already doing?

Tax hikes and budget cuts will amount to some very bitter medicine because they will constrict the economy and further shrink GDP.

There are no good choices; just ugly ones.

The Cost of Obesity

The Cost Of Obesity Can Be Measured Not Just In Dollars, But Also In Our Nation's Priorities And Well-Being

A new study finds that obesity costs the US about $168 billion annually, or about 17 percent of all healthcare costs.

The new research suggests that the nation's weight problem may be having close to twice the impact on medical spending as previously estimated.

So, aside from the human toll — poorer health, more disease, diminished physical ability — we now have a dollar value for America's obesity crisis.

And it is indeed a crisis. More than two-thirds (68%) of American adults are overweight or obese, and more than a third (34%) are obese.

Obesity goes hand-in-hand with a variety of diseases including: Type II diabetes, coronary heart disease, high LDL (bad) cholesterol, stroke, hypertension, fatty liver disease, gallbladder disease, and more.

In fact, the prevalence of diabetes and hypertension have now reached crisis or epidemic levels, and obesity is the primary contributing factor.

According to a report from the Organization for Economic Cooperation and Development (OECD), "soaring obesity rates make the US the fattest country in the OECD."

The OECD is comprised by 33 industrial, or developed, nations. These are the nations with the highest standards of living and the greatest abundance of food. Simply put, this means that the US is the fattest nation in the world!

Most alarmingly, the problem of obesity in the US is not limited to adults: America also has the highest rate of child obesity among developed nations.

Obesity rates among children have tripled in the last three decades, and one in three children are now obese. Perhaps most alarmingly, one-third of all children born after 2000 will suffer from diabetes.

The reason for all of this seems fairly simple; American kids have unhealthy diets consisting largely of high-calorie, high-fat, high-sodium, high-sugar foods, and they are also plagued by inactivity. Children are less active today than at any other time in American history, spending 7.5 hours a day watching TV, playing video games or simply involved in efforts that don't require movement.

The problem is so bad that it's gotten the attention of our military leadership. Recruiters are finding it increasingly difficult to find recruits who are healthy enough and fit enough to qualify for military service.

A study released in April by 'Mission: Readiness', a nonprofit group of more than 150 retired generals and admirals, concluded that 27 percent of 18- to 24-year-olds are too fat to join the military.

The study blames the poor diets of young Americans and their sedentary lifestyles.

"Today, otherwise excellent recruiting prospects, some of them with generations of sterling military service in their family history, are being turned away because they are just too overweight," read the study. "Our standards are high because we clearly cannot have people in our command who are not up to the job. Too many lives depend on it."

In testimony before Congress, the former head of the California Army National Guard, retired U.S. Army Major Gen. Paul Monroe, said that "80 percent of children who were overweight between the ages of 10 to 15 were obese by age 25."

Monroe went on to tell Congress, "In the past, retired admirals and generals have stood up to make it clear that America is only as healthy as our nation's children. Childhood obesity is now undermining our national security and we need to start turning it around today."

He and other military leaders want Congress to enact a massive child nutrition bill to remove all junk food and high-calorie beverages from schools, improve nutrition standards in schools, upgrade school menus and, the group said, "Help develop new school-based strategies, based on research, that help parents and children adopt healthier lifelong eating and exercise habits."

Ultimately, fat kids grow into fatter adults. Our nation's poor diet and sedentary behavior are both detrimental and destructive. It leads to diminished quality of life, shorter life spans, and massive medical costs that the nation simply cannot afford.

Instead of directing our money toward treating unpreventable diseases, we spend far too much of it treating preventable and obesity-related diseases. This is wasteful. This is not money well-spent.

A nation that disregards its health and well-being to such an extent is not a well nation in any sense.

Our nation's obesity rate and all of its burdensome costs are signs of a very unhealthy, over-indulged nation — a nation in decline.