There's no doubt that everyone is being hit hard by the recent recession, but who's to blame? Most average American citizens are unanimous when stating who they think caused the problem: Wall Street and those greedy banks. It's true, those two scapegoats made risky loans, stretched themselves farther than possible, and made terrible investments with their clients capital. Their lending and investing practices were largely out of hand and irresponsible. Practices such as spending more than you bring in by taking on large amounts of debt is a recipe for disaster.

But what if I told you that there was a firm that lost more money than every bank in the US. What if I told you that this firm has been spending nearly two dollars for every dollar it takes in. What company would you guess it is? Citigroup? Bank of America? General Motors? Turns out it's not a company at all. Yet worse, it doesn't squander the capital of investors, but rather decides to take your money and lose it. To find the culprit, all you need to do is turn on CSPAN and watch the Federal Government in action.

The Federal Government has been running deficits all throughout the Bush era, and Obama plans on continuing it. Although Obama's plan is slightly better than Bush's (spending three dollars for every two coming in), a toddler could tell you that it's not sustainable. Unlike banks, the government has no safety net, as it has no spending limits and can simply print money to fund new endeavors.

Obama's new budget calls for a $3.7 trillion spending plan for 2010. So how will this affect our budget a decade from now? It's hard to tell as the Senate Budget Committee dropped the practice of laying out budget numbers for the next 10 years. Instead, they have adopted a 5 year budget span, severely clouding the budgets affect on our future, including the fact that the budget may balloon after the 5 year time span. These are the same people who want the banks to provide more transparency to the American people?

The hypocrisy of the US government is sickening. They sit back and play the good guy, scolding Wall Street CEO's for not taking pay cuts when their firms lost money. Where's Congress's pay cut? The US governments TARP investment fund lost 50% of it's value in a matter of month's. They have been spending out of control for almost a decade and have proposed little to help us get out of this mess. One of their largest rescue plans calls for increases in what caused this mess: Out of control spending.

I say government representatives should take 50% pay cuts until the government starts turning a profit. It's only fair since they have imposed pay restrictions on banks receiving bailout funds. It's time for our government representatives to listen to their own complaints, and work together to fix themselves before they try to fix the economy. You would never tell a plumber how to plumb if you couldn't. You wouldn't teach someone how to fly an airplane if you couldn't. Where does Congress get the right to tell Wall Street banks how to do their job, when they themselves are some of the worst in the industry.

Ryan Vanzo

The US government should try to balance its books at some point. But it's dangerous for them to do so right now. Obama's plan calls for spending growth to be reduced in the future (I think in 10 years) and if that can be maintained by future governments, USA will be fine.

The only thing propping up the economy right now is the government. Most of the jobs that are being created now are government jobs (perhaps it's not desirable in the long run but when the private sector almost totally shuts itself off, there is littler other choice.) If the government also withdrew, along with consumer spending and corporate spending (capex), USA could fall apart very easily and, needless to say, the world will fall apart as well.

As for politicians taking a pay cut for not balancing the budget, well, they don't get elected for that. In fact, it's not a requirement in most governments of the world. In contrast, executives are hired to create profits.


The US government debt situation isn't as bad as it seems. If you ignore Fannie and Freddie, US govt debt as a share of GDP is not that bad (it seems smaller than it was during the peak in the 30's, 40's, and 80's). Some people mistakenly include potential social obligations as part of the debt, which makes things look really large, but those are really claims on future earnings. The US govt has first claim on US corporate profits, as well as individual earnings, so the performance of the economy matters much more. Canada's debt situation was in a worse shape in the early 90's than America's is now--and don't forget that Canada can't print the reserve currency--but it eliminated the deficit at the federal govt level (provincial and municipal govts still have big debts; and the federal govt will go into deficits right now due to the economic problems.) Yet, nothing radical really happened in Canadian govt spending. It still has ways to go but it is more manageable now. Canada still spends huge sums on what conservative Americans would consider as socialist endeavours such as national healthcare, lax unemployment, and so on. The key is to cut some of the expenses while reducing the growth in govt spending. I think the inevitable solution is to cut the somewhat "lavish" retirement plans for new government employees and the almost perpetual pay raises (even when the economy is tanking).

Would you want a massive contraction in the economy, like during the Great Depression, as some liquidationists are calling for, or would it better for the govt to cushion the blow? I am in the latter camp and hence think that the debt is the last problem to worry about now.

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