Washington, D.C. – The national Libertarian Party issued a scathing criticism of the Republican Party's fiscal performance after the Treasury Department's announcement that the national debt had reached an all-time record of $9 trillion this week. "The fact that the national debt has risen by more than 800 percent in an era dominated by Republican presidents will be the obituary of fiscal conservatism in the Republican Party," says William Redpath, national chairman of the Libertarian Party.

It took from George Washington to Ronald Reagan for the national debt to hit the $1 trillion mark--a period of more than 190 years. Now, 27 years later, the national debt has risen more than 800 percent under three Republican and one Democratic presidents. However, only $1.2 trillion of national debt was accrued during President Bill Clinton's administration, meaning the bulk of national debt comes from Republican administrations.

"It's tragically ironic that Republicans have crucified themselves on their own cross of fiscal irresponsibility," says Redpath. "Even Reagan, who has been deified by Republicans as the stalwart of conservatism, ran deficits and vastly expanded the size of government. When it comes down to brass tacks, Republicans of the last three decades can talk the talk, but have never walked the walk. A nine trillion dollar national debt is what happens when a political party fails to abide by its own standards of fiscal responsibility."

At the end of the fiscal year 1981, the national debt was $997 billion, according to the Treasury Department's Web site. By the time George W. Bush became president, the national debt had soared to more than $5.5 trillion. The national debt is now at $9 trillion.

"The numbers don't lie," says Shane Cory, executive director for the Libertarian Party. "Aside from a general disagreement in social philosophy and foreign policy, there is no real difference between the Republican and Democratic parties. And even those differences are waning. This is especially true when comparing the two parties' presidential frontrunners, Rudy Giuliani and Hillary Clinton. Giuliani and Clinton might as well be the same candidate."

"Americans want a choice for leaders of their country," Redpath concluded. "But they're not going to find it between Republicans and Democrats. The Libertarian Party is the only viable third party that offers a proven dedication to fiscal responsibility."

When the Democrats previously controlled Congress, they spent a lot of our hard-earned money on entitlement programs and pork barrel spending. When the Republicans gained control of Congress, they spent even more of our hard-earned dollars in the same reckless manner. As the Democrats have just regained control again, we will have to wait to see what they do. However, their actions don’t look too promising at this moment.

Of course, Congress can’t take the entire blame for bad spending bills. The President is required to sign bills into law, and the current President never found it important enough to veto even one bloated Republican spending bill.

While we are amassing a tremendous federal deficit, many Americans are forced to make tough decisions about retirement, health insurance and even the education of our children. It is imperative that we immediately cease the wasteful federal spending so we can pare down the national debt and significantly increase the amount of our own money we get to keep. The federal debts aren’t going away and there are but two choices we can make. We can either tighten our belts a bit today or force our children and grandchildren to starve tomorrow. It’s time that we start expecting our representatives in Washington to act with the national checkbook as we do with our family checkbooks.

II.1 Government Debt

The Issue: The national debt imposes debt upon Americans without their consent, and loads our economy with a fiscal anchor that will burden many future generations. Our escalating national debt is nothing less than theft from our grandchildren.

The Principle: The government should operate on a "pay as you go" basis, and not incur debt.

Solutions: A debt-free government frees up economic resources, allowing for lower taxes, economic growth and lower interest rates.

Transitional Action:
Eliminate the national debt using an incremental approach, being careful to avoid social disruption. We support the passage of a “Balanced Budget Amendment” to the US Constitution that restricts Congress from spending any more than it collected in revenue the previous year.

Eliminate earmarks, pork-barrel spending, and other forms of political corruption.

Congress should sell assets and reduce spending on non-essential functions to pay off the national debt as quickly as possible.

America is finished, washed up, kaput. Foreign investors and central banks around the world have lost confidence in US markets and are headed for the exits. The dollar is sinking, the country is insolvent, and its leaders are barking mad. Investors are voting with their feet. They've had enough. Capital is flowing to China and the Far East in a torrent. It's "sayonara" downtown Manhattan and "Hello" Tiananmen Square.

The dollar fell another 2 per cent last night, gold soared to $840 per ounce, oil topped $98 per barrel, General Motors reported a $39 billion loss after the market closed on Tuesday, the real estate market continued its downward slide, and the major investment banks are marching in lock-step towards bankruptcy.

The news is all bad. The nation's economic foundation is in shambles. US credibility is shot. Bush and Greenspan have put us on the road to ruin. Now their work is done. We're flat broke.

The catalogue of fiscal ailments now facing the country is too long to list. We'd need a ledger the size of a small encyclopedia. There's been a stampede away from the dollar even though it's already lost over 60 per cent of its value since Bush took office and even though central banks around the world will lose their shirts if it collapses. They don't care. They're getting out while they can.

Cheng Siwei, the vice chairman of China's National People's Congress, announced yesterday that China would continue to diversify its $1.4 trillion reserves away from the dollar to "stronger currencies" like the euro. "Strong currencies"; isn't that Paulson's line? Siwei's comments ignited a firestorm in the currency markets triggering a big blow-off of the greenback. The poor dollar has no place to go now but down, and it's on a greased pole to the bottom. With consumer spending paralyzed by the decline in home equity and frozen wages, and the banks "stuffed to the gills" with over a trillion dollars of mortgage-backed sludge; the prognosis for the hobbled dollar is looking grimmer by the day. The bulging trade deficits and dwindling foreign inflows haven't helped either. The greenback has suddenly become the global pariah; all it needs is a leper's rattle and a tin cup.

The news is no better in the real estate industry either, where the nation's biggest builders are reporting record losses and inventory is backed up 11 months. Sales are off 22 per cent in one year alone. Foreclosures are skyrocketing, jumbo loans (over $417,000) are impossible to get regardless of one's credit history, 40 per cent of all mortgages (subprime, Alt-A, piggyback, reverse amortization, interest-only) have been eliminated, and entire projects in Florida, Arizona, Las Vegas, and California's Central Valley have stopped building altogether. Tens of thousands of unoccupied homes across the Southwest have been reduced to ghost towns. Nothing is selling. The building boom, that began when Alan Greenspan ginned-up the Fed's printing presses in 2002, has turned into the biggest housing bust in American history.

On top of that, the banks are tightening lending standards and shunning potential buyers just when the economy needs a boost in demand. Loan originations are down and bankers are spooked by the gathering storm in the credit markets. That means that home sales will continue to be sluggish, prices will correct more quickly, and the anticipated "soft landing" will turn into a full-blown crash.

New home construction has accounted for 2 out of every 5 new jobs created in the last 5 years. Most of those workers are either delivering pizzas, cleaning bed pans or are lining up at the soup kitchen. The BLS's numbers on employment are bogus. It's just more government bunkum. They're predicated on a "birth-death" model that creates millions of fictitious jobs out of whole cloth. In truth, unemployment is soaring and the most vulnerable and impoverished among us are taking a beating from the housing debacle.

According to the Mortgage Bankers Association of Washington, the total of mortgage loans outstanding in 2006 was $10.9 trillion; $6 trillion of which were transformed into securities (CDOs, MBSs) About $1.5 trillion of those securities are subprime; another $1 trillion Alt-A (nearly as risky) and at least another $1.5 trillion in adjustable rate mortgages (ARMs). At least 20 per cent of these shaky liabilities/securities will default, and yet, no one really knows who is holding them on their books. All of the major financial institutions – the insurance companies, foreign banks, hedge funds, investment banks – have purchased these CDO "roadside bombs" and mixed them in with their other performing loans and hard assets. The projected explosions have already begun to take their toll on the financial giants – Citigroup and Merrill Lynch are just the latest victims; others will follow. The problem can't be fixed with Bernanke's low interest rates. The bad debts are everywhere and must accounted for and written down. That puts us on the threshold of a jarring market-downturn triggered by an unprecedented number of defaults that will rumble through the entire system. Bankruptcies will pop up everywhere at random. It is a blueprint for economic chaos. And it is unavoidable.

The global markets have never seen a financial typhoon of this magnitude before. Mortgage lenders, homeowners, banks, hedge funds, bond insurers, etc. will all either go under or feel the sting of a slumping market.