AGOSTINELLI: Astounding debt nightmare

The shining city on the hill is disappearing around us

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A few months ago, I gave a talk to the U.S. Naval War College. This venerable institution is home to a student body of the future leaders of the world’s navies, who preserve our freedom through strength on the seas.

Toward the end of a spirited question-and-answer session, a young officer stood and asked the final question: “What keeps you up at night?”

The simplicity of the question struck an emotive cord. In a flash, I thought of my boyhood growing up in an America where every morning I could get on my bike, and as far as the eye could see, there was President Reagan’s “shining city on the hill,” standing bright and tall on the horizon. The majesty, bounty and exceptionalism of America provided opportunity for all to climb that summit and share in the glow.

Yet now, for the first time since the Civil War, this God-blessed experiment is in real jeopardy of not being preserved for our children and the “huddled masses” seeking to embrace the American way.

I saw the concern in that lieutenant’s eyes - a soldier yet a citizen, seeking an answer. Mine was clear: “Debt out of control, entitlement spending out of control, and the loss of economic freedom and opportunity.”

Why and from where had this malady come, and, most important, how can we restore our God-given national birthright?

The sad tale of profligate spending is clear. With an abandon and reckless disregard for common-sense economics, we have mortgaged our future. This has been the fault of both sides of the political aisle. Seemingly benign acts of largesse and the application of pork-barrel spending have numbed our national sense of responsibility and left us detached from the full implications.

This has been greatly exacerbated by the equally cowardly seduction of “entitlement.” This term embodies the height of all false utopian ideals that socialism has used to seduce its wards.

Long before our current president embarked on his course of ruin, his intellectual compatriots, Presidents Franklin D. Roosevelt and Lyndon Johnson, charted the course of our demise. They were the forerunners who, in the name of good intentions, sowed the seeds of ruin whose harvest we are reaping. The expectation that the government has a duty and an obligation to provide entitlements is and always has been a flawed proposition. Simply put, it is a grand illusion with a vengeful ending if not corrected.

Enter President Obama, the supreme narcissistic leader of the realm, never one to “let a crisis go to waste.” His is an artful blend of Keynesian voodoo economics, increased imposition of government control and the largest expansion of the entitlement state in our history.

The financing of Mr. Obama’s spending and expansion of government can only be sustained by way of subterfuge.

First, our previously independent Federal Reserve has ceased to follow sound money policies. Chairman Ben S. Bernanke has to keep money flowing and interest rates low to afford the cost of carrying this irresponsible debt load.

As a result, we have to use creative accounting to finance our expenditures and avoid the glaring truth of the real cost of entitlements, which in private-sector parlance “remain largely off the balance sheet,” i.e., not counted - another form of denial.

Our $14 trillion debt ignores the liabilities of Medicare, Medicaid and Social Security. When those are fully accounted for before taking into account the cost of Obamacare, our real national liability is $75 trillion.

This is, of course, a static assessment and ignores the ultimate risk to national security. As a debtor nation, we have become reliant not on domestic savings, but on foreign sovereign wealth to keep us afloat.

Yes, this keeps me up at night, for the implications to freedom should be obvious to all. Rep. Paul Ryan is correct: We have reached the tipping point; we are actually beyond.

Mr. Obama’s populist appeal to “reason” is a calculated lie. He speaks of “cutting the entitlements we cannot afford” and simultaneously is taking control of a quarter of our gross domestic product through Obamacare. His call for tax increases for the rich to “pay their fair share” is a polemic, which will further strangle growth. His unwillingness to consider tax reform is the same, for he knows that any promise of future reform based on an increase in taxes today will never come about. He also knows that any momentary cut in government expenditure is a small price to pay to achieve the endgame of centralization.

We have but one path forward. We must take back our destiny and speak reason to the Obama heresy.

Real leadership must forevermore renounce the entitlement regime that has been imposed on our nation.

We have a duty to continue to provide these benefits for the older generations who have become too reliant on the “drug” and will not have the earning power or time to correct the habit. As the Ryan plan recommends, we must begin to turn to the private sector the decision-making and alternatives for each of these obsolete and imprisoning programs.

Further consistent with the will of the people, Obamacare must be repealed. Its structure and tentacles of control are the ultimate assault on our way of life.

Legislative action is, of course, the preferable route, but pending litigation is sure to make its way to the Supreme Court, where the individual mandate should be deemed what it is: an expansion of federal power under the commerce clause never contemplated by the Founders. Like Mr. Ryan’s plan, federal Judge Roger Vinson’s opinion that Obamacare is unconstitutional is staring right into the barrel of Mr. Obama’s duplicity. This is why his only response is one of haughty taunts aimed at the Ryan plan and brazen disregard of a federal court order on behalf of 26 states to halt the implementation of his plan.

Finally, in tandem with this shift must come a focus on growth. Myopic witch hunts of capitalists merely serve to validate the ignorance of the laws of economics and feed the fear-mongering and misdirection techniques so loved by all tyrants from time immemorial.

Corporate tax rates must be slashed and special-interest advantages removed. Personal tax rates, capital gains and inheritance taxes need to be cut and regulation of business activity relaxed. From Sarbanes-Oxley to the moronic Dodd-Frank law, they must all be unwound to make us competitive again.

These would be radical shifts away from recent policy. Moreover, they would confront - front and center - the slow drip-feed of socialism and its forbidden fruit of entitlement largesse meant to swallow our freedom incrementally. The moment is now. The job of those brave warriors of the War College is to defend freedom. Ours as citizens is to insure that our leadership preserves it as well. If we achieve this, I finally will sleep peacefully at night.

Robert F. Agostinelli is co-founder of Rhone Capital.

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