David Stockman excoriates the House Republicans for their capitulation on the budget:
House Republicans “capitulated” in agreeing to the two-year budget deal reached last night and left the country to deal with an unsustainable fiscal situation until the peak of the presidential primaries in 2015, when nothing will get done, former federal budget director David Stockman told CNBC on Wednesday.
“First, let’s be clear—it’s a joke and betrayal,” Stockman, who served under President Ronald Reagan, said on “Squawk on the Street.” “It’s the final surrender of the House Republican leadership to Beltway politics and kicking the can and ignoring the budget monster that’s hurtling down the road.”
Stockman added that the budget deal means lawmakers would take a “two-year vacation” from dealing with the country’s fiscal situation and revisit it in 2015 at around the same time as the Iowa straw polls. Without an incumbent in the presidential race, both political parties will be too busy to touch the budget, he said. While some hailed the budget deal as a breakthrough in Washington’s political gridlock, Stockman compared the accord to “kicking the can” into “low Earth orbit.”
“There’s plenty of room, but they’re unwilling to make the tough choices,” he said. “Now, I understand Democrats doing that. The only hope of getting our fiscal situation under control is if the House Republicans stand up. And they’ve totally capitulated.”
Of course they did. With traitorous leaders like John Boehner and Eric Kantor, the House Republican “leadership” has far more in common with Obama than with the Republicans they nominally represent. They will “capitulate” on immigration too if they think they can get away with it and still preserve their political careers.
The US political system has completely failed. Many, perhaps even most, “representatives” no longer even pretend to represent anything but the interests of the financial institutions. This became apparent in 2008, and is now obvious in Washington’s every response to the financial crisis its credit money system and profligate spending have created.
The only possible way out was to let the credit money system default and collapse, but instead, the short-sighted, cowardly politicians bought the bankers’ threats to implode the economy and tied the political system to the financial system in what I expect will be a vain attempt to salvage it. And in doing so, I believe they have ensured the eventual destruction of both.
In Q1 2009, debt/GDP was 368 percent. The Q3 Z1 report came out on Monday. Total Credit Market Debt Outstanding was $58.082 trillion. The BEA reported Q3 GDP at $15.819 trillion. So, despite all of the economic pain, widespread unemployment, four rounds of quantitative easing, and two emergency fiscal stimulus plans, debt/GDP has been reduced all of 0.27 percent, to 367 percent.
(To put this in historical perspective, in 1951, debt/GDP was 132.5 percent and the government sector owed 55.9 percent of it.)
So, five years since the beginning of the crisis, we haven’t even begun the process of clearing the excess debt. And the cancer has gotten considerably worse in the meantime. In 2008, the government sector was responsible for 14.6 percent of $51.3 trillion in debt. In 2013, the government sector owes 25.7 percent of $58.1 trillion. Thanks to the capitulating Republicans, the next two years will see that grow to around 30 percent of $60 trillion… if they are successful in staving off a crash.
Look at what happened between 1933 and 1950. That’s why I believe the Great Depression 2.0 is going to be an order of magnitude worse than its predecessor.