LEVIATHAN NEEDS A HAIRCUT

The economy’s been growing at a rate less than half the average for the recoveries following the 9 previous postwar recessions.  Accompanying the worst recovery ever is the longest period of sustained high unemployment since the Great Depression, the Congressional Budget Office noted.

Real average hour earnings fell 1.1 percent between February of last year and this February, said the Bureau of Labor Statistics.
 
Americans are being squeezed more than the BLS data indicate.  The Consumer Price Index rose just 2.9 percent last year, but it doesn’t include gasoline or food.  The American Institute for Economic Research compiles an "Everyday Price Index," which includes only stuff the typical consumer buys at least once a month.  The EPI rose 7.2 percent last year.
 
High unemployment, slow growth and soaring gasoline prices are the product chiefly of government policies.  They can be ameliorated, swiftly and substantially, if those policies are changed.  But it’s too late to vote our way out of our biggest economic problem.
 
Our national debt is $15.623 trillion  — and counting, fast.  It doesn’t include the promises made to Social Security and Medicare recipients, or the pensions of federal workers ($50.5 trillion); unfunded pensions for state and local government workers ($4.4 trillion), or the $11.4 trillion we owe on home mortgages, auto and student loans, and credit cards.
 
Add it all up, and each American owes about $261,000.  Per capita income is about $27,000.
 
Big trouble looms once debt exceeds 90 percent of the gross domestic product, their study of financial crises in 66 countries indicates, economists Carmen Reinhardt and Kenneth Rogoff explain in their 2009 book, "This Time is Different: Eight Centuries of Financial Folly."
 
Our debt already exceeds 100 percent of GDP.
 
Trouble starts with sluggish growth, but ends, typically, with a spectacular crash, hyperinflation and depression.
 
The collapse of the dollar is a mathematical certainty if we keep running large deficits, and the Federal Reserve keeps printing money to paper them over, the head of the world’s largest hedge fund said last July.  The crash will come late this year or early next, Ray Dalio predicted.
 
We can, of course, replace the political criminals who are chiefly responsible for our massive debt with politicians who’ll be more prudent.  But even if we started tomorrow to do everything right, we can’t prevent a crash – though we still can influence its timing and severity.  History indicates it will take years for us to recover from the harm we’ve done ourselves.  We’ll suffer a lot of pain in the interim.
 
So it may be too late to defuse the debt bomb.  But (to mix metaphors) if we know a tsunami’s coming, we should get off the beach.
 
Private household debt has declined each year since the recession started.  But politicians borrow and spend faster than ever.  Debt has increased more in less than 4 years under President Obama than in 8 under George W. Bush.
 
Federal spending has gone up every year since 1969.  Since 1970, it has risen 8 times faster than median household income.  Spending has soared during the Obama administration, but real per capita disposable income has been flat since the "recovery" began, data collected by the Bureau of Economic Affairs indicate.  In the private sector, the real incomes of workers have declined for a decade.
 
This is not coincidence.  Government does more to hurt than to foster economic growth.  The annual cost to comply with federal regulations rose to $1.75 trillion in 2008, a 58 percent increase since 2005, according to a Small Business Administration study.  The Obama administration has added 10,215 new regulations with a compliance cost of $46 billion a year, the Heritage Foundation estimates.  Each federal regulator destroys, on average, 98 private sector jobs, the Phoenix Center calculated.
 
The nations which recover fast after a crash are those which sharply restrict government interference in the economy.  The "economic miracle" in post-WWII Germany is the most spectacular example, but history is replete with others.
 
The federal government will spend about 31 percent more in the current fiscal year than was spent in FY 2008.  The president’s cronies benefit from the increase.  Most Americans don’t.
 
Yet when times are tough, few propose that government tighten its belt.  The budget House Republicans passed last week is "thinly veiled social Darwinism," Mr. Obama said.  But even under the GOP budget, federal spending rises year after year.
 
More Americans have been harmed than helped by the enormous growth of government. Growing it more slowly won’t make things better.  It’s time to give Leviathan a haircut.  A "high and tight" buzzcut.
 
Jack Kelly is a former Marine and Green Beret and a former deputy assistant secretary of the Air Force in the Reagan administration. He is national security writer for the Pittsburgh Post-Gazette.