The United States economy is “so far gone” and is “over the fiscal cliff,” at least according to retiring Texas Republican Congressman and three-time presidential candidate Ron Paul, who has warned about the impending fiscal doom.
Since President Barack Obama won his reelection campaign Tuesday, the libertarian community and advocates of capitalism and free markets have provided insight as to what the next four years will look like. A lot do not see any hope for the U.S. economy, including the bestselling author of “End the Fed” and “A Revolution: The Manifesto.”
In an interview with Bloomberg Television, Dr. Paul explained that as the White House and Congressional lawmakers lay out their positions on a potential budget deal, the national economy has already headed off the fiscal cliff.
“We cannot get enough people in Congress in the next 5-10 years who will do the wise things. We have to prepare for having already fallen off the fiscal cliff,” stated the promoter of Austrian School Economic thought and staunch critic of the Federal Reserve.
Paul added that politicians are only discussing what they’re going to protect in the budget rather than taking a serious approach to making across-the-board cuts. He noted that no one in Washington wants to admit that the country is broke.
“They’re just looking for the truth. They say well, all we need is a little compromise. Well, nobody expects that because they do not admit the truth, and the truth is that we are broke,” said the libertarian-leaning representative, who did not seek reelection. “How do you compromise? They only way you can compromise is if you agree on what to cut.”
Although he has refrained in the past from criticizing the leadership in charge and blaming one person, he did sharply criticize President Obama for not changing the general public’s attitude towards government spending, which is why many were surprised that he was reelected, especially considering the state of the U.S. fiscal house and economy.
“That is a bad sign in that there are more on the receiving end,” concluded Paul, who will be replaced by Randy Weber in Texas Congressional District 14. “People do not want anything cut. They want all the bailouts to come. They want the Fed to keep printing money. They do not believe we have gone off the cliff or are close to going off the cliff.”
The fiscal cliff that Paul and others are talking about is the $20.3 trillion national debt that the president is slated to leave the U.S. in 2016, the trillion-dollar budget deficit, the $121 trillion in unfunded liabilities and expenditures and the near $4 trillion in total interest.
Paul’s comments come as the Congressional Budget Office (CBO) issued two reports that offer a bleak forecast: no matter what Congress does, the economy will still remain sluggish with high unemployment figures and weak economic growth.
It is expected that as of Jan. 1, 90 percent of American households will experience significant tax increases because many tax cuts expire – spending cuts are also scheduled to take place. However, the CBO noted that canceling the tax increases and spending cuts will add to the deficits.
“If the fiscal tightening was removed, and the policies that are currently in effect were kept in place indefinitely, a continued surge in federal debt during the rest of this decade and beyond would raise the risk of a fiscal crisis and would eventually reduce the nation’s output and income below what would occur,” said the analysts from the nonpartisan congressional agency in its report.
After Tuesday’s election, the Democrats expanded their majority in the Senate, while the Republicans regained their majority in the House. Neither side, though, was given a clear mandate as to how to tackle the debt and deficits.
The leadership on both sides have also not agreed to any deal. Speaker of the House John Boehner said the GOP is opposing tax hikes, but it would accept changes to the tax code. On the other hand, Senate Majority leader Harry Reid is calling for an increase in tax rates.
Democrats and Republicans concurred with keeping tax cuts for 98 percent of Americans, but the GOP wants to extend them to the wealthiest two percent. Furthermore, the Republican leadership wants to keep the tax cuts from the era of President George W. Bush and opposes the end to deductions and loopholes unless the revenues are allocated back into the tax code for lower rates.