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The sooner entitlement spending stops the better. NZ used to be in a similar situation (growing GOVT etc), then we denationalised railways, airlines, postal services and energy (unfortunately we kept healthcare). Now we are far better off. Even though we removed ALL subsidies for farmers, we now have the best dairy industry in the world and are exporting more than ever before.
If America wants to prosper once again, Obama either has to do a full 180 or someone else has to step in. Doesn't look like the Republicans are exactly in favour of small government though, so who knows.
Ron Paul 2012!