As all the pundits say, Obama won. He hit a home run at the end, where he nailed Romney on his 47% remarks, especially saying that the lower 47% economic group didn’t take personal responsibility for themselves (as if only businessmen take personal responsibility for themselves).
Then the clock ran out and Romney didn’t have a chance to try to undue the damage his 47% remarks made.
However, both Obama and Romney have elements of truth in their rhetoric – and also both have elements of fallacies.
The truth in the 47% remarks
One way to look at the $1 trillion/year deficit problem is that the top 50% of income earners pay it all and the bottom 50% (actually 47%) pay none. Thus it is easy to see that the bottom 50% — who is Obama’s main support – doesn’t care at all about the deficit; they will never have to pay for it. And the top 50% care a lot about it; they will have to pay.
This picture can even get clearer. The top 10% of income earners pay 90% of the federal taxes and the next lowest 40% of income earners pay the other 10%. Thus the reality is that only the top 10% are very concerned about the deficits – they will have pay 90% of the interest payments and the debt payoff, if that ever happens.
But very few of the voters understand economics. “What’s the difference? $1 trillion debt; $10 trillion; $100 trillion? What do we care?”
But everyone will care once we go over the cliff. And Obama will ride off in the sunset, just like Reagan and Bush II did.
The solution: a bigger economy
Both Obama and Romney have an elephant of a fallacy in their economic policies. They believe (falsely) that the growth in the economy can erase the deficit. However, even with Ryan’s draconian budget plan, he doesn’t plan to balance the budget for 30 years. And Obama doesn’t even dream about when he will balance the budget.
Thus the government is borrowing 40% of what they are spending, with virtually nointention of every paying this money back. Isn’t this called fraud or theft? Theft from the future generation?
Question: What do you call someone who borrows money with no intention of every paying it back?
Both Obama and Romney are planning deficits of around $1 trillion a year and hope to pay it back with a bigger economy. Let’s do some math. The federal tax is around 25% of income and profits. This means that the economy would have to grow to around $4 trillion of GDP to get the extra $1 trillion in tax. This means an economic growth of around 25% ($16 trillion of GDP now and $4 trillion more needed). And our economic growth is now around 2%!!
But even if we did have a miraculous growth in the economy, it would mean economic doom. We would have to pollute the environment; drain the natural resources; destroy nature; and kill off more animal species even more.
And we would be encouraging other countries to do the same. We are the world’s leaders!!
The only possible way out of this cliff is austerity! (See my policy on a Green Economy.)