Today’s Presidential speech on the budget will more than likely be more of the same in that it will not be a real solution that can work. The Republican’s have already outlined an unworkable program and now the President will have his chance at not being straight forward.
What he should say is pretty simple:
1) Point out that Social Security does not have a problem. The government has the problem because it did not set aside the money collected. Social security should be spun off and be funded by US debt instruments of various maturities. That being said, the retirement age should also be gradually raised to 69 over the next 10 years.
2) Point out that government revenue has to increase and the Bush tax cuts have to be recinded and even higher rates need to be instated for the top one percent.
3) The sacred cows, like defense, have to have their allocations cutback by 20 percent or more.
4) Medicare has to have it’s rules tightened.
Will Obama present a wide ranging approach like this? Probably not. Ironically, in my opinion he has to do things as somewhat as I have outlined if he wants another 4 years. The real people in America understand what the problems are and are searching in their hearts and minds for a real leader. The next President will not win by raising a lot of campaign money, but rather by raising a lot of inspiration.
The markets remain under the spell of QE2 speculative money. The majority of our computer trend programs have not given a sell signal since September 1, 2010. The various sell-offs seen since the beginning of the year in both stocks and commodities are just establishing the ceiling for later.