The Next Fiscal Coffin Nail

According to a recent Fox News Poll, 69% of the registered voters are satisfied with what Mr. Obama has accomplished in his first 100 days in office. The number includes 92% of Democrats and only 24% of Republicans. That’s a big gap.

But the percentages sound about right. The uneducated, ignorant and complacent won’t complain until they see their tax bills climb into the stratosphere after the 2010 mid-term elections. Of course, another surge in unemployment will be a noisy part of their wakeup call.

That’s when the 52% who think the size of government hasn’t grown, or is actually shrinking, will wake up to the new reality.

Anyone who has walked through a mall in the last thirty days realizes that most US citizens are intelligent enough to know they can’t spend their way out of a recession. And that’s why the banks aren’t lending.

The financial institutions are scrambling to build their reserves for the pending disaster in commercial real estate. Think not? Go to any mall and count the number of vacant stores, mostly boutiques, which are boarded up. And take note of the growing vacancies in office parks and retail strip malls.

The home mortgage crisis will soon be compounded by defaults in the commercial sector. So anyone who believes the worst of the banking crisis is over will be blindsided by this development. America is currently experiencing a lull between fiscal storms.

The US printing presses will be working around the clock to cover this shortfall. With stocks on life support, municipal bonds looking like junk bonds and the US Treasury printing money, Americans can bet their last inflated dollar that the current recession will deepen.

And that is the good news. Without massive tax increases the value of the US dollar will implode. Timothy Geithner and Obama know this. They are also aware that America’s credit worthiness will come under further assault as phase two of this debacle unfolds.

Be reminded that the health of the US economy is built on credit, as credit sustains consumer spending. And consumer spending accounts for 70% of the GNP. When credit tightens the US economy contracts. If it dries up, the economy will come to a standstill. Small businesses will disappear in droves.

There is only one logical reason why this brewing storm isn’t being addressed publicly. And it’s the same reason Obama’s administration keeps the Social Security and Medicare time bombs in the shadows. Fiscal reality is their political enemy.

Obama and the Democrats are holding their breath. They want to pass universal healthcare and a myriad of new welfare programs before the public understands the country is facing a near insurmountable deficit.

This is the reason the Democrats are fighting desperately for the cap-and-trade energy initiative, the largest tax increase in the history of the world. This infusion will temporarily mask the inevitable economic fallout from unbridled government spending.

Here is the bad news. The taxes required to save Obama’s agenda will create ObamaLand, a second rate socialist republic.