Mo’ Money, Mo’ Money, Mo’ Money!

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Paul Krugman:

Dwindling Deficit Disorder

For three years and more, policy debate in Washington has been dominated by warnings about the dangers of budget deficits. A few lonely economists have tried from the beginning to point out that this fixation is all wrong, that deficit spending is actually appropriate in a depressed economy. But even though the deficit scolds have been wrong about everything so far — where are the soaring interest rates we were promised? — protests that we are having the wrong conversation have consistently fallen on deaf ears.

What’s really remarkable at this point, however, is the persistence of the deficit fixation in the face of rapidly changing facts. People still talk as if the deficit were exploding, as if the United States budget were on an unsustainable path; in fact, the deficit is falling more rapidly than it has for generations, it is already down to sustainable levels, and it is too small given the state of the economy.

Start with the raw numbers. America’s budget deficit soared after the 2008 financial crisis and the recession that went with it, as revenue plunged and spending on unemployment benefits and other safety-net programs rose. And this rise in the deficit was a good thing! Federal spending helped sustain the economy at a time when the private sector was in panicked retreat; arguably, the stabilizing role of a large government was the main reason the Great Recession didn’t turn into a full replay of the Great Depression.

But after peaking in 2009 at $1.4 trillion, the deficit began coming down. The Congressional Budget Office expects the deficit for fiscal 2013 (which began in October and is almost half over) to be $845 billion. That may still sound like a big number, but given the state of the economy it really isn’t.

Bear in mind that the budget doesn’t have to be balanced to put us on a fiscally sustainable path; all we need is a deficit small enough that debt grows more slowly than the economy. To take the classic example, America never did pay off the debt from World War II — in fact, our debt doubled in the 30 years that followed the war. But debt as a percentage of G.D.P. fell by three-quarters over the same period.

Right now, a sustainable deficit would be around $460 billion. The actual deficit is bigger than that. But according to new estimates by the budget office, half of our current deficit reflects the effects of a still-depressed economy. The “cyclically adjusted” deficit — what the deficit would be if we were near full employment — is only about $423 billion, which puts it in the sustainable range; next year the budget office expects that number to fall to just $172 billion. And that’s why budget office projections show the nation’s debt position more or less stable over the next decade.

So we do not, repeat do not, face any kind of deficit crisis either now or for years to come.

There are, of course, longer-term fiscal issues: rising health costs and an aging population will put the budget under growing pressure over the course of the 2020s. But I have yet to see any coherent explanation of why these longer-run concerns should determine budget policy right now. And as I said, given the needs of the economy, the deficit is currently too small.

Put it this way: Smart fiscal policy involves having the government spend when the private sector won’t, supporting the economy when it is weak and reducing debt only when it is strong. Yet the cyclically adjusted deficit as a share of G.D.P. is currently about what it was in 2006, at the height of the housing boom — and it is headed down.

Yes, we’ll want to reduce deficits once the economy recovers, and there are gratifying signs that a solid recovery is finally under way. But unemployment, especially long-term unemployment, is still unacceptably high. “The boom, not the slump, is the time for austerity,” John Maynard Keynes declared many years ago. He was right — all you have to do is look at Europe to see the disastrous effects of austerity on weak economies. And this is still nothing like a boom.

Now, I’m aware that the facts about our dwindling deficit are unwelcome in many quarters. Fiscal fearmongering is a major industry inside the Beltway, especially among those looking for excuses to do what they really want, namely dismantle Medicare, Medicaid and Social Security. People whose careers are heavily invested in the deficit-scold industry don’t want to let evidence undermine their scare tactics; as the deficit dwindles, we’re sure to encounter a blizzard of bogus numbers purporting to show that we’re still in some kind of fiscal crisis.

But we aren’t. The deficit is indeed dwindling, and the case for making the deficit a central policy concern, which was never very strong given low borrowing costs and high unemployment, has now completely vanished.

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That’s the whole article. That’s still fair use because I want you to understand I did not edit, distort or selectively quote Krugman’s words. That’s his full argument.

Allow me to rebut:

If you didn’t know any better you might get the impression from Mr. Krugman that we currently owe less than we did a couple years ago. That is because most people don’t understand the distinction between “deficit” and “debt”.

“Deficit” refers to the annual difference between government revenues and expenditures. Since we spend more than government takes in, we have a deficit. During the Clinton years we actually had a “surplus” but then George Bush blew that all to hell. Then Obama took office and made Bush look like a penny-pinching miser.

“Debt” (or “national debt”) is the total amount we owe. It’s like the difference between how much you spent on your credit cards this month and the total balance.

This is our national debt:

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The Outstanding Public Debt as of 12 Mar 2013 at 12:49:01 PM GMT is:

$16,715,847,323,009.92

The estimated population of the United States is 314,578,050 so each citizen’s share of this debt is $53,137.36

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Some of you may recall that our national debt passed the $16 TRILLION mark about six months ago during the GOP convention. So everything after the first comma was added since then.

This is Connor:

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Connor is my grandson. He will be 15 months old next Saturday. Connor owes $53,137.36 to America’s creditors. So does his sister Kate. And so do his cousins Ben and Tommy. So do your grandchildren.

They each owe $53,137.36 to pay for OUR spending.

That’s immoral.

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Utopian Ideas

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Michael Barone:

Obama keeps talking about corporate jets because it tests well in polls.

And that’s the reason, I think, he keeps talking about universal preschool, not just for disadvantaged children.

Polls show that large majorities of Americans would be willing to have more government money spent for preschool for disadvantaged children. The impulse to help adorable but needy little kids is very strong.

Unfortunately, the evidence that preschool programs do any permanent good for such children is exceedingly weak.

Preschool advocates point to a 1960s program in Ypsilanti, Mich., and a 1970s North Carolina program called Abecedarian. Research showed those programs produced lasting gains in learning.

But no one has been able to replicate the success of these very small programs staffed by unusually dedicated people. Mass programs like Head Start staffed by more ordinary people don’t work as well.

Kids in such programs seem to make no perceptible lasting gains. That’s too bad, because disadvantaged kids need help.

So why is Obama emphasizing universal preschool, which would cost a lot more than preschool for the disadvantaged? The reason, I suspect, is that you would have to hire lots more credentialed teachers, which means you would get lots more teacher union members.

Teacher union leaders would love to see more dues money coming in, and to channel more to the Democratic Party.

To my suspicious eye, the preschool proposal doesn’t make much sense as policy, but it makes a lot of sense as politics.

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I’m not in agreement with Michael Barone, particularly in regard to the value of early childhood education. But that is not the point of this post. I want to talk about one of my utopian ideas of which I was rather proud.

Any parent can tell you that one of the biggest obstacles to working and raising kids is reliable, quality, affordable daycare. If you have three or more kids you can find yourself paying more in daycare than you make from working.

At the same time we have problems with illiteracy and declining test scores compared to the rest of the industrialized world. But we have lots of trained teachers and an educational infrastructure and bureaucracy. Why not go big instead of go home?

Imagine if our children could start universal public preschool as soon as they were potty-trained. Combine that with expanded before and after school programs so that kids could be dropped off at 7:30 in the morning and picked up as late as 5:30 in the evening. Make that effective twelve months a year, Monday thru Friday and excluding major holidays. Part of the program would be optional and part of it mandatory, with an exception for private and home-schooled kids.

Think how much more our kids could learn if they entered the educational system around age three and the length of both the school day and school year were significantly increased. We could add back a lot of programs like art, sports and music that have gotten the axe in recent decades.

I acknowledge that there would be lots of bugs to work out, both practical and political. The paranoid right would freak out for sure. But we have the infrastructure and bureaucracy already in place, so we would need only to expand it, not create a new one.

Like I said, it’s a utopian idea. At the very least it would do no harm to the kids and would certainly benefit working parents. Existing daycare providers would take a hit, but many of them could more over into the expanded job openings at their local schools.

Once upon a time I was rather proud of the idea. Not so much these days.

The real problem isn’t the idea, it’s the execution. A massive expansion of our educational system would cost a buttload of money. And not just to get it started – it would cost us a buttload of money every year. And they would be unionized government employees, which are the most expensive kind of employees out there.

How much money can we afford to spend on education? In a utopia money would be no problem, but we live in the real world. This is an era of limits and we can’t afford perfection. We need to forget about all the cool things we could do and worry about what we need to do. So how much education can we afford to pay for? We need to figure that out and plan accordingly.

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Still Waiting For That Pony

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Daily Caller:

Republican activists laughed at President’s Barack Obama’s claim that his new laundry list of spending programs won’t add 10 cents to the deficit.

“Nothing I’m proposing tonight should increase our deficit by a single dime,” Obama told the nation during his 2013 State Of The Union speech.

His list of proposed programs include a national pre-school program, government aid in getting low-interest mortgages to millions of homeowners, a project to repair houses, more job-training programs and an increase in the minimum wage.

The GOP reacted promptly to Obama’s speech, which began at 9.00 pm. EST.

“FYI, Obama is right, he hasn’t added a single dime to the debt, he’s added 58.6 trillion dimes,” said a 9.41 p.m. message from Joe Pounder, the research chief at the Republican National Committee.

The committee quickly released a video showing Obama’s repeated claims that his policies would not cost a dime, and contrasting those claims with the $5.8 trillion in new debt created during Obama’s first four years.

However, Obama suggested that his extra spending will be offset by increased taxes, and should not increase the government’s near-$1 trillion annual deficit.

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{{Sigh}}

Obama is promising magic beans and unicorns covered in fairy dust. I’m still waiting for that pony he promised us the first time. Not that I ever believed him.

Unfortunately the Republicans threw away all their credibility on fiscal matters during the Reagan-Bush-Bush II years. I don’t think either party really wants to reform the federal budget, they just don’t want to be the ones left holding the bag when the fit hits the Shan.

You can hardly blame them. Telling voters the truth is not good for a politician’s career. Just ask Mitt Romney.

Both sides posture and pose, then cravenly kick the can down the road. Are they just postponing the inevitable or do they really think the damn horse will eventually learn to sing?

We need government. Correction: We need good government. We need cops and teachers and soldiers and sailors. We need inspectors and tax collectors. And bless their hearts we need bureaucrats too.

There are things that the government must do. There are things that government should do. There are things that government can do. And there are things the government has no business doing.

But nothing is free. Among the issues we need to discuss are how much government do we need, how much government do we want, and most importantly how much government can we afford?

Reasonable people can disagree. But there is a moral hazard problem when voters can vote themselves benefits and shove the costs off onto someone else. It’s kinda like going to a casino with someone else’s money and being told you can keep your winnings but don’t have to repay your losses.

“Real ponies don’t oink” – Patrick F. McManus

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Sequester Of Doom?

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Dan Pfeiffer at the White House blog:

Solving the Sequester: The Facts

With less than three weeks before devastating, across the board cuts – the so-called “sequester” – are slated to hit, affecting our national security, job creation and economic growth, we must make sure we are having a debate over how to deal with these looming deadlines that is based on facts- not myths being spread by some Congressional Republicans who would rather see these cuts hit than ask the wealthiest and big corporations to pay a little bit more.

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So we’re looking at “devastating” cuts, eh? I’ve also heard them called “cataclysmic” and “draconian.

Here’s the straight skinny:

The Sequester Explained

The Budget
Control Act (BCA) requires a cut of over $1 trillion in spending through a sequester. The Office of Management and Budget (OMB) is given authority to carry out the sequester. We do not yet know OMB’s interpretation of the Act, but the Congressional Budget Office (CBO) assumes that the sequester is intended to makecuts to discretionary appropriations and mandatory spending that add up to $1.2 trillion (less assumed debt service savings) over nine years, beginning in 2013.

[...]

Real level of program cuts is $984 billion. This is because $216 billion of the $1.2 trillion will come from assumed interest savings.

• Cuts are evenly divided between each of the nine sequester years. Therefore,each year, OMB must sequester $109 billion from projected spending.

• Annual cuts are split evenly between the non-­‐exempt portions of defense(function 050) and non-defense spending – an approximate cut of $55 billion to each. Cuts are spread among discretionary and non-­exempt mandatory spending. Defense and non-defense discretionary spending will be cut to lowest levels as a percentage of the economy in the modern era.

• Most mandatory spending is exempt from the sequester, including: Social Security, retirement programs, veteran’s benefits, refundable tax credits, Medicaid, the Children’s Health Insurance Program (CHIP), unemployment insurance, food stamps (SNAP), Temporary Assistance for Needy Families (TANF), and a host of other programs (mostly those benefitting individuals with low incomes).

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$109 billion a year in cuts? ZOMG! That’s like losing 200 Solyndras or 2 Sandy aid bills!

Actually, since the federal government spends approximately $3.6 TRILLION dollars a year, $109 billion is like 3% of the federal budget (according to my feeble math skills.) As a matter of fact, it’s less than 10% of the annual deficit.

IOW – if the sequester does kick in, we’ll just be going into debt a little slower.

BTW – Sequestration was originally Obama’s idea.

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Problem? What Problem?

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Pelosi: It’s really a false argument to say we have a spending problem

Well, I think that sequestration is a bad idea all around. … The fact is, we’ve had plenty of spending cuts. … What we need is growth. We need growth with jobs. … So, again, we have to make a judgment about how do we get growth with jobs, that’s where the real revenue comes from. You don’t get it by… cutting into education, cutting back on investments in science and National Institute of Health, food safety, you name it. … So, it isn’t as much of a spending problem as it is a priorities, and that’s what a budget is, setting priorities. … Nothing brings more money to the Treasury of the United States than investments in education of the American people. … So if you recognize that, which cuts really help us and which cuts hurt our future. And cuts in education, scientific research and the rest are harmful. And they are what are affected by the sequestration. So, it is almost a false argument to say that we have a spending problem. We have a budget deficit problem.

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I don’t have a drinking problem. I’m pretty good at it. I have a liver problem. I have a relationship problem. I have a driving problem. I have a money problem. I have a falling down problem. But my drinking is just fine.

BTW – Sequestration was originally Obama’s idea.

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Fix The Problem, Not The Blame

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The first step is admitting you have a problem. That is the foundation of all recovery programs.

We have a problem.

We spend money like Michelle Obama on taxpayer-funded vacation. Even worse, forty cents out of every dollar we spend is going on our national credit card. We’re up to our eyeboobs in debt.

Here’s an example of how we spend money:

Watchdog sees pork in Sandy relief bill

As Congress takes up the second slice of relief money for Superstorm Sandy, the influential Club for Growth said Monday it will seek to punish the lawmakers who support the $51 billion package because it includes wasteful spending and pork that have nothing to do with reconstruction efforts in the Northeast.

The dueling messages underscore the divisions within Republicans ranks over the relief package — a $17 billion bill and $34 billion amendment —- that the House is expected to vote on this week.

Earlier this month, Congress approved a $9 billion relief package to fund the Federal Emergency Management Agency’s flood insurance program.

But Mr. Christie, New York Gov. Andrew Cuomo, a Democrat, and other elected leaders from the Northeast — and both sides of the political aisle — have been waiting on Congress to approve more emergency funding and harshly criticized the delay.

The funding was expected to be voted on two weeks ago, but House Speaker John A. Boehner, Ohio Republican, changed gears and pulled a proposal after Republican lawmakers raised questions about some of the spending that was unrelated to the relief efforts.

Still, the Club for Growth and other budget watchdogs, such as Taxpayers for Common Sense, say the $51 billion package that Congress is expected to consider this week also includes millions of dollars for Amtrak upgrades, FBI salaries and road projects in states not affected by the storm.

[...]

In a letter to lawmakers on Monday, Andy Roth, the Club for Growth’s vice president of government affairs, said lawmakers should oppose the Sandy relief package — a $17 billion bill and $34 billion amendment — that Congress is expected to take up this week and said disaster relief legislation should be offset with spending cuts elsewhere and not larded up with what the groups calls pork projects.

[...]

“Congress shouldn’t keep passing massive ‘emergency’ relief bills that aren’t paid for, have little oversight, and are stuffed with pork,” Mr. Roth said. “Also, Congress shouldn’t use disasters like Hurricane Sandy as an excuse to spend billions on long-term projects that should be considered during the regular appropriations process.”

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$17 billion in aid and $34 billion in pork. That’s how you end up OVER $16 TRILLION in debt.

Denial is not a township in Ohio. Whenever someone on the right tries to discuss our spending problem, someone on the left inevitably responds with something like this:

Republicans didn’t give a damn about the debt during Dubya’s presidency. Or Poppy’s. Or Reagan’s. And it was always pretty clear that Romney didn’t care about the deficit except insofar as he could use it as an excuse to destroy entitlements.

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Personally, I blame The Gipper for starting this mess. He promised to cut taxes and spending but only cut taxes. So the debt started piling up. It kept piling up under Reagan, Bush, Bush II and now Bush III. The Clinton years (but not all of them) were the only time we were “in the black” on spending.

Classic Keynesian economics calls for deficit spending (going in debt) by government in times of fiscal slowdown to stimulate the economy. I’m not going to debate the efficacy of that policy on the economy except to say that correlation is not causation.

But Keynesian theory does not call for deficit spending during good economic times. Quite the opposite in fact – the good times is when you’re supposed to pay back the money you borrowed.

But it really doesn’t matter who ran up the debt or what we spent it on. What matters is the fact that we are now OVER $16 TRILLION IN DEBT. Whether we spent it wisely or foolishly irrelevant. We spent it and now we have to figure out how to pay it back. We need to fix the problem, not the blame.

We are in a deep hole, and the First Rule Of Holes is “When you’re in one, stop digging”. The Keynesians out there would tell us that this is the wrong time to stop digging, but they’re kinda vague as to when the right time will be.

As it’s a sure bet that when the economy finally turns around (and it will eventually) we’ll hear cries for tax cuts and increased spending under the theory that “now we can afford it.”

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Hurricane Relief

The Trillion Dollar Coin Trick

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If you’ve lost Stephen Colbert . . .

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Who Are The Crazy Ones Here?

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Kevin Drum, discussing the Trillion Dollar Coin Trick:

But put that aside for a moment. I want to ask something else: is this really the road liberals want to go down? Do we really want to be on record endorsing the idea that if a president doesn’t get his way, he should simply twist the law like a pretzel and essentially do what he wants by fiat? My recollection is that we didn’t think very highly of this kind of thing when we thought George Bush was doing it.

This whole thing is not just a ridiculous idea, it’s a bad idea too. Republicans seem willing to set the country on fire to please their increasingly fever-swampish base, and eventually they’ll pay a price for that at the polls. Sooner than that, they’ll pay a price with the business community. This is a problem that we should work out via politics and public opinion, not by pretending the law allows the president to do anything he wants.

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Gee Kevin, who are the crazy ones here?

We are currently OVER SIXTEEN TRILLION DOLLARS IN DEBT. On one side are the people who want to get a handle on government spending and set our fiscal house in order. On the other side are people who are asserting that there should be no restraints on the President’s power to keep spending money we don’t have.

Reasonable people can disagree, but the Vile Progs won’t accept that anyone who disagrees with them is being reasonable. That’s an article of their faith, not a negotiating ploy. Which, of course, makes compromise out of the question.

For the record, I am opposed to any radical ideas for achieving budgetary sanity. We have a moral obligation to take care of our children, elders and the disabled. I would not want to live in a nation that let people starve in her streets or let the sick and injured go untreated. On the other hand we cannot turn to confiscatory taxation as a solution to all of our financial problems.

But we are not facing such stark choices, at least not yet. We have been spending money we don’t have like crackheads with a stolen credit card. There is no painless solution to our problem. We cannot spend our way out of debt and we have a moral obligation to our children and grandchildren not to dump the cost of our extravagance on them.

Sooner or later there will be accountability. It took us years to get in this mess and it will take years to get out of it. The sooner we deal with it, the better for all of us.

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The First Rule of Holes: “When you’re in one, stop digging”

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Weimar Economics

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Paul Krugman:

Be Ready To Mint That Coin

Should President Obama be willing to print a $1 trillion platinum coin if Republicans try to force America into default? Yes, absolutely. He will, after all, be faced with a choice between two alternatives: one that’s silly but benign, the other that’s equally silly but both vile and disastrous. The decision should be obvious.

For those new to this, here’s the story. First of all, we have the weird and destructive institution of the debt ceiling; this lets Congress approve tax and spending bills that imply a large budget deficit — tax and spending bills the president is legally required to implement — and then lets Congress refuse to grant the president authority to borrow, preventing him from carrying out his legal duties and provoking a possibly catastrophic default.

And Republicans are openly threatening to use that potential for catastrophe to blackmail the president into implementing policies they can’t pass through normal constitutional processes.

Enter the platinum coin. There’s a legal loophole allowing the Treasury to mint platinum coins in any denomination the secretary chooses. Yes, it was intended to allow commemorative collector’s items — but that’s not what the letter of the law says. And by minting a $1 trillion coin, then depositing it at the Fed, the Treasury could acquire enough cash to sidestep the debt ceiling — while doing no economic harm at all.

So why not?

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Why not?

How about because it’s completely insane? It’s the equivalent of saying “I’m not broke, I still have some checks left.” It’s also a violation of the principle of checks and balances. Remember when liberals had a conscience?

My respect for economists has dropped considerably the past few years and my respect for Paul Krugman has gone past zero and is in negative numbers now.

Just when you think Democrats can’t get any stupider they go and prove you wrong.

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Watch This!

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“The Rule Of Lawlessness”

Seriously – watch it!

This is an open thread.

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El Foldo Grande

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Like a bunch of cheap suits:

House passes fiscal cliff deal, tamps down GOP revolt

The House of Representatives late Tuesday easily approved emergency bipartisan legislation sparing all but a sliver of America’s richest from sharp income tax hikes — while setting up another “fiscal cliff” confrontation in a matter of weeks.

Lawmakers voted 257-167 to send the compromise to President Barack Obama to sign into law. Eighty-five Republicans and 172 Democrats backed the bill, which had sailed through the Senate by a lopsided 89-8 margin shortly after 2 a.m. Opposition comprised 151 Republicans and 16 Democrats.

Republican House Speaker John Boehner voted in favor of the deal, as did House Budget Committee Chairman Paul Ryan, his party’s failed vice presidential candidate. But Republican House Majority Leader Eric Cantor and Majority Whip Kevin McCarthy voted against it.

Obama, speaking from the White House briefing room shortly after the vote, praised lawmakers for coming together to avert a tax increase that “could have sent the economy back into a recession.”

“A central premise of my campaign for president was the change the tax code that was too skewed toward the wealthy at the expense of working, middle-class Americans. Tonight, we’ve done that,” the president said.

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The party transformations are complete. The Democrats are now the party of unprincipled sleazebags and the Republicans are spineless wimps. After weeks of tough talk the Congressional GOPers surrendered faster than the Iraqi army.

They could have given up weeks ago and spent the holidays at home with their families. I guess we should be grateful – this deal will only add $4 trillion to the national debt in the next ten years.

It’s gonna be a long year. So far it sucks.

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I Was Told There Would Be No Math

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Frank J. Fleming at Pajamas Media:

Math Is Coming
Math is remorseless, and it will eventually balance its numbers, not caring who is hurt in the process.

All the debate over spending is starting to remind me of the movie Jaws. We have some people who believe there is this big threat headed our way, but the authorities all tell us not to panic — but instead of the mayor of Amity Island telling us the beaches are safe, President Obama is telling us we’ll grow our way out of this deficit.

Right now the Republicans and Democrats are hotly debating which of their two wholly inadequate plans we should use to avoid the fiscal cliff, but looking at the size of the deficit, they’re proposing different-sized Band-Aids where a tourniquet is needed. If you point this out, you’re called a Tea Party extremist who wants to throw old people off a cliff and deny underprivileged Ivy League law students free birth control. “You silly person. Budgets don’t have to balance. That’s just a superstition.”

Everyone is so used to politicians treating our tax dollars with less seriousness than the average person treats Monopoly money that they just don’t get why people are suddenly talking about the need for spending cuts. But this isn’t some idea invented by the Tea Party or Paul Ryan or the Koch brothers while sitting in their hollowed-out-volcano Koch Lair. They only mention cuts because they fear the one truly insisting on them: Math.

Politicians have long ignored Math. And it’s no wonder: Math is unelected, unsympathetic, and highly biased toward the rich and keeps demanding cuts to spending and changes to entitlements that are politically infeasible. In a nation filled with obese poor people, we’ve discovered a long list of things everyone should be entitled to besides food, clothing, and shelter — things people need, like subsidized hybrids — but heartless, uncompromising Math keeps looking at our revenue and telling us we can’t have all of that.

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I never liked math. (To be completely honest, I hate it, but I never knew until recently that math is racist.) The reason I was never good at math is probably because I’m left-handed and us southpaws are creative and artistic but whatever the reason me and numbers never got along. They say that math is the language of science and guess what? I was never good in science classes either.

On the other hand I’m not any good at singing either, but I know what it is and I can make it through a church hymn or karaoke night without embarrassing myself. And you don’t have to be a mathematician to understand a profit and loss statement or to balance your checkbook. One thing I do know is that 16 trillion is a REALLY BIG NUMBER.

Now any Vile Prog will tell you (with sneering contempt) that the federal budget is not like a household budget. And that’s true. But money borrowed must be repaid because the books must balance. (That’s why they call it a “balance sheet”.) Right now we owe a shitload of money.

That’s why this “fiscal debt” kabuki is such a waste of time. The Republicans are talking about a fight to the death to avoid raising taxes on the richest Americans by a measly two percent. But even if the Bush tax cuts were completely repealed it would only reduce the rate at which we are going into debt.

The First Rule of Holes is “When you are in one, stop digging”.

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Merry F**king Christmas From Barack Obama

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Ace of Spades HQ:

What Is Your Share of the National Debt?

Short answer:

I don’t know. You are [fucked|screwed|pooched].

I Don’t Know

Why bother reading further when the author seemingly doesn’t know the exact figure?

One problem is that the number is a moving target. Can you guess which direction the number is going?

Taking a look

This has to be a relatively simple exercise in arithmetic. One could divide a 14 digit number by a 9 digit number by hand, but I’ll do it with a calculator, thank you.

Stopping by at http://www.usdebtclock.org I get the current debt figure of $16,395,173,356,211.

Divide that by 314,982,978 people in the US and I get $52,050.98 per man, woman and child. Got a spare $52K, Bunky?

That figure, however, is wrong. It includes the all Americans, the majority of whom are non-taxpayers. It includes my retired parents and in-laws, who are contributing very little to the national treasury at this point of their lives. Let’s run the numbers again.

Take the current national debt, now at $16,395,177,588,347, divide by a US workforce of 143,963,180 and we get $113,884.52 per taxpayer. You have a job, right? Sorry if you don’t. At this point, I would still rather be pulling the wagon than riding it.

So we have this nice ballpark figure of $114K, but it still isn’t correct. No matter how average a person may be, they are still (an) individual(s). Are you washing dishes 32 hours per week? Your share is going to be lower. Are you a fund manager or an investment banker? Your share will be higher. People with more income pay more income tax. But we knew that.

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To be fair, Barack Obama is not responsible for all of that amount. He is only to blame for half of it.

If this isn’t on your list of grievances it sure oughta be. But don’t worry too much. You’ll probably die long before you finish paying your share. It’s your kids and grandkids that are really screwed.

Meanwhile, Obama is on a $4 million vacay in Hawaii.

Merry Fucking Christmas. Happy Fucking New Year too!

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Well played, Agent Orange, well played!

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A very strong statement from Speaker Boehner:

“Tomorrow the House will pass legislation to make permanent tax relief for nearly every American — 99.81% of the American people. Then the President will have a decision to make. He can call on the Senate Democrats to pass that bill or he can be responsible for the largest tax increase in American history.”

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Your move, Mr. President.

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Two From Ace Of Spades

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Two posts by Ace encapsulate my recent thinking:

Unemployment Shoots Back Up Over 8%

I can’t believe TFG is still president.

Four more years. Think about that. America is serving a medium-term prison sentence.

This is part of the reason I’m encouraging people to look to other things for happiness. I know it’s going to be very difficult for me to get through this. For the past four years I’ve had a mindset of “Just get to January 13, 2013, and then it’s all smooth sailing.”

I’m having a difficult time ratcheting myself up for “Just get yourself to January 2017, and then we’re on easy street, baby.”

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Awwww, four whole years? I am currently closing in on TWELVE YEARS of waiting out a bad presidency. I’ve been doing it four years at a time – “Just get to January 2005″, “Hang in there until January 2009″, and “Just a little bit farther” is what I’ve kept telling myself.

Know I know it will be at least 2017 before I see another POTUS who isn’t a walking, talking clusterfuck of a miserable failure.

Should Rush Limbaugh Advocate a 77 Percent Tax Rate?

Karl argues he should at Hot Air, suggesting that the GOP might have to illustrate to the public how massive our spending is by actually ratcheting up taxes to finance all this spending.

At the moment, the public is not actually confronted with the cost of the expanding government because we’re currently borrowing from China to pay for it (and will do so, until China realizes we can’t cover our debts, in which case we’re going to try some hyperinflation (which, of course, has always worked in the past)).

Let it burn.

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I don’t really care what Disgusting Pigboy advocates, but I agree with the concept. The longer we delay in restoring fiscal sanity, the worse things will get. It’s called “compound interest.”

If you really want to destroy social spending and programs like Social Security and Medicare, don’t face reality. Then somewhere down the road reality will face us all. We might all be dead by then, but we have kids and grandkids that will be suffering the consequences. Neither side wants to tell us the truth because it won’t be easy or pleasant.

Once upon a time in this land natural fires burned out the underbrush on a regular basis. Sometimes those fires were set by people. When the Europeans arrived the commented on the park-like nature of the American forests.

Then for many years the government made firefighting a priority. Any and all fires were treated as foes to be fought. Our park-like forests became choked with underbrush.

Now when fires start they burn out entire forests.

Sometimes it’s better to let it burn. It causes less damage in the long run.

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UPDATE:

Howard Dean admitted today that everyone will have to pay more taxes, not just the rich. Let me be clear – I am not some Paultard Libertarian who wants to get rid of the government. It’s just that people need to face facts.

We can have low taxes or high government spending. But not both.

For several decades we have had an unholy alliance in Washington of big spenders and tax cutters.

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TANSTAAFL

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Mark Steyn.

I suppose it’s possible to take this recurring melodrama seriously, but there’s no reason to. The problem facing the United States government is that it spends over a trillion dollars a year that it doesn’t have. If you want to make that number go away, you need either to reduce spending or increase revenue. With the best will in the world, you can’t interpret the election result as a spectacular victory for less spending. Indeed, if nothing else, the unfortunate events of Nov. 6 should have performed the useful task of disabusing us poor conservatives that America is any kind of “center-right nation.” A few months ago, I dined with a (pardon my English) French intellectual who, apropos Mitt Romney’s stump-speech warnings that we were on a one-way ticket to Continental-sized dependency, chortled to me, “Americans love Big Government as much as Europeans. The only difference is that Americans refuse to admit it.”

My Gallic charmer is on to something. According to the most recent (2009) OECD statistics: Government expenditures per person in France, $18,866.00; in the United States, $19,266.00. That’s adjusted for purchasing-power parity, and, yes, no comparison is perfect, but did you ever think the difference between America and the cheese-eating surrender monkeys would come down to quibbling over the fine print? In that sense, the federal debt might be better understood as an American Self-Delusion Index, measuring the ever-widening gap between the national mythology (a republic of limited government and self-reliant citizens) and the reality (a 21st century cradle-to-grave nanny state in which, as the Democrats’ Convention boasted, “government is the only thing we do together.”).

Generally speaking, functioning societies make good-faith efforts to raise what they spend, subject to fluctuations in economic fortune: Government spending in Australia is 33.1 percent of GDP, and tax revenues are 27.1 percent. Likewise, government spending in Norway is 46.4 percent, and revenues are 41 percent – a shortfall but in the ballpark. Government spending in the United States is 42.2 percent, but revenues are 24 percent – the widest spending/taxing gulf in any major economy.

So all the agonizing over our annual trillion-plus deficits overlooks the obvious solution: Given that we’re spending like Norwegians, why don’t we just pay Norwegian tax rates?

[...]

So, given that the ruling party will not permit spending cuts, what should Republicans do? If I were John Boehner, I’d say: “Clearly there’s no mandate for small government in the election results. So, if you milquetoast pantywaist sad-sack excuses for the sorriest bunch of so-called Americans who ever lived want to vote for Swede-sized statism, it’s time to pony up.”

OK, he might want to focus-group it first. But that fundamental dishonesty is the heart of the crisis. You cannot simultaneously enjoy American-sized taxes and European-sized government. One or the other has to go.

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As I have said many times before, there are only three ways to reduce the deficit – raise taxes, cut spending, or a combination of both. Lately we can’t even control the rate at which we are going deeper into debt – it has been accelerating.

On the other hand, read this letter to the editor of Barron’s:

A Warm Thank You

To the Editor:

This 50-something, white, conservative Republican wishes to thank America’s youth for sacrificing their financial futures and standard of living so that boomers, such as my wife and I, can look forward to a long and comfy retirement, which we could easily have afforded on our own. Now we have the youth as our guarantors and providers of a little something extra.

As reported by the national exit poll conducted by Edison Research, Americans aged 18 to 29 voted 60% to 36% for Barack Obama. Prior to Obama’s re-election, I believed that it was morally wrong for my generation to pass a crushing national debt on to the next one.

The debt will top $20 trillion before Obama moves out of the White House, and it will include spiraling retirement-related costs that the administration has shown zero interest in bringing under control, largely driven by baby boomers piling into the Social Security and Medicare systems.

With the president’s electoral crushing of Mitt Romney, my overriding sense of morality and guilt have vanished. Thank you, kids!

Edwin D. Schindler

Woodbury, N.Y.

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And here I used to feel guilty about spending my kids’ inheritance.

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Nobody Wants A Haircut

A little off the top?

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INFLUENCE GAME: Tax Them, Not Us, Groups Say

A big coalition of business groups says there must be give-and-take in the negotiations to avoid the “fiscal cliff” of massive tax increases and spending cuts. But raising tax rates — a White House priority — is out of the question, the group adds.

The homebuilding industry says it won’t tolerate even a nick in the mortgage interest deduction. It doesn’t matter, industry leaders say, if it’s part of a broad, spread-the-pain package designed to tame the soaring debt.

And there’s no ambiguity in the views of the top lobbying arm for retirees.

“AARP to Washington: No cuts to Medicare and Social Security in last-minute budget deal” the group’s Web site declares. AARP nixes the notion of slowing the cost-of-living formula for Social Security recipients, even if it’s part of a big, bipartisan compromise package. And President Barack Obama should drop his idea of raising Medicare’s eligibility age, AARP adds.

So much for the notion of shared sacrifice as Congress and the White House face a Dec. 31 deadline to craft a far-reaching deficit-reduction plan. If they fail, the government tips over the so-called fiscal cliff, at least for a time. Nearly everyone’s taxes will rise, and federal programs will be whacked. Financial markets might quake, and a new recession could begin, economists say.

In Washington, meanwhile, it’s virtually every group for itself, scrambling to protect 100 percent of each tax break and government payout it now enjoys.

America is split down the middle politically, as the last half dozen presidential races have shown. Aside from a few think tanks and civic-minded groups, there’s almost no talk of splitting the pain among interest groups, populations and professions in a manner that seems inevitable if lawmakers are to achieve the trillions of dollars in deficit-reduction both parties call for.

The old adage, “Don’t tax thee, don’t tax me, tax the man behind the tree” was never more in vogue.

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The nation debt currently exceeds $16 TRILLION dollars. (Divide that by 300 million to figure out your share.) We could raise taxes to 90% on every millionaire and billionaire in the country and it wouldn’t even put a dent in the annual deficit.

The problem is bipartisan – neither party is willing to tell the truth to the voters and make the hard choices necessary to fix it. Every candidate for president since John Adams has promised to cut waste, fraud and abuse. Some have actually succeeded, but that’s not enough to fix the mess we’re in.

Bill Clinton is the only president in recent history to run budget surpluses – we actually owed less when he left office than when he went in. Then Bush II and Bush III exploded the national debt.

Nobody wants to get their hair cut. They want somebody else to have to make sacrifices. Obama won reelection by promising to keep the gravy train rolling, so don’t expect fiscal sanity to sweep the nation any time soon.

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Borrowing from our grandchildren

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Mitt Romney said something that really resonated with me but then got lost in the noise caused by Obama’s Epic Debate Fail.

Let’s go back to that first debate:

LEHRER: … Governor Romney, you — you go first because the president went first on segment one. And the question is this, what are the differences between the two of you as to how you would go about tackling the deficit problem in this country?

ROMNEY: Good. I’m glad you raised that, and it’s a — it’s a critical issue. I think it’s not just an economic issue, I think it’s a moral issue. I think it’s, frankly, not moral for my generation to keep spending massively more than we take in, knowing those burdens are going to be passed on to the next generation and they’re going to be paying the interest and the principal all their lives.

And the amount of debt we’re adding, at a trillion a year, is simply not moral . . .

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I never heard a politician put it so bluntly before. He is correct too. It is simply wrong for us to bail ourselves out of trouble by putting our children and grandchildren into debt. I’m not saying that government should never incur debt, I’m saying that running up deficits year after year simply has to stop.

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Bye-Bye Birdie

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Mark Steyn:

Sesame Nation

Apparently, Frank Sinatra served as Mitt Romney’s debate coach. As he put it about halfway through “That’s Life”:

“I’d jump right on a big bird and then I’d fly . . . ”

That’s what Mitt did in Denver. Ten minutes in, he jumped right on Big Bird, and then he took off — and never looked back, while the other fellow, whose name escapes me, never got out of the gate. It takes a certain panache to clobber not just your opponent but also the moderator. Yet that’s what the killer Mormon did when he declared that he wasn’t going to borrow money from China to pay for Jim Lehrer and Big Bird on PBS. It was a terrific alpha-male moment, not just in that it rattled Lehrer, who seemed too preoccupied contemplating a future reading the hog prices on the WZZZ Farm Report to regain his grip on the usual absurd format, but in the sense that it indicated a man entirely at ease with himself — in contrast to wossname, the listless sourpuss staring at his shoes.

Yet, amidst the otherwise total wreckage of their guy’s performance, the Democrats seemed to think that Mitt’s assault on Sesame Street was a misstep from whose tattered and ruined puppet-stuffing some hay is to be made. “WOW!!! No PBS!!! WTF how about cutting congress’s stuff leave big bird alone,” tweeted Whoopi Goldberg. Even the president mocked Romney for “finally getting tough on Big Bird” — not in the debate, of course, where such dazzling twinkle-toed repartee might have helped, but a mere 24 hours later, once the rapid-response team had directed his speechwriters to craft a line, fly it out to a campaign rally, and load it into the prompter, he did deliver it without mishap.

[...]

Mitt’s decision to strap Big Bird to the roof of his station wagon and drive him to Canada has prompted two counterarguments from Democrats: (1) Half a billion dollars is a mere rounding error in the great sucking maw of the federal budget, so why bother? (2) Everybody loves Sesame Street, so Mitt is making a catastrophic strategic error. On the latter point, whether or not everybody loves Sesame Street, everybody has seen it, and every American under 50 has been weaned on it. So far this century it’s sold nigh on a billion bucks’ worth of merchandising sales (that’s popular toys such as the Subsidize-Me-Elmo doll). If Sesame Street is not commercially viable, then nothing is, and we should just cut to the chase and bail out everything.

Conversely, if this supposed “public” broadcasting brand is capable of standing on its own, then so should it. As for the rest of PBS’s output — the eternal replays of the Peter, Paul & Mary reunion concert, twee Brit sitcoms, Lawrence Welk reruns and therapeutic infomercials — whatever their charms, it is difficult to see why the Brokest Nation in History should be borrowing money from the Chinese Politburo to pay for it. A system by which a Communist party official in Beijing enriches British comedy producers by charging it to American taxpayers with interest is not the most obvious economic model. Yet, as Obama would say, the government did build that.

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I wonder if Mitt Romney knew what the reaction would be when he brought up defunding PBS. I doubt it – if he did then he’s waaaaay smarter than anyone gives him credit for. But whether he planned it or not it’s a conversation we need to have.

Sesame Street is not really the issue here. I’m pretty sure that franchise would survive just fine without government assistance. Mitt never said he wanted to kill Big Bird, he just wants to kick him off the dole.

PBS, on the other hand, might not survive without a government subsidy. If they do survive they will probably need to start selling advertising. Who knows, they might start even with selling ads for Sesame Street toys and clothing.

The problem isn’t that PBS is a bad thing, nor does it eat up some big portion of the federal budget. The problem isn’t that we can’t afford PBS. It’s that PBS is representative of a bigger problem.

Right now our government borrows $.40 out of every dollar it spends. That’s right, FORTY PERCENT (40%) of everyday government spending is put on our national VISA card.

That has to stop. And don’t give me no bullshit about how a government budget is different from a household budget because the same mathematical principles apply to both. We cannot spend our way out of debt. Let me repeat that:

WE CANNOT SPEND OUR WAY OUT OF DEBT!

To borrow from an anti-war slogan, “Spending your way out of debt is like fucking your way into virginity.” It is also a violation of the First Rule of Holes.

When times are tough we sometimes need to put some stuff on credit. But that is a temporary measure. If you are facing a drop in income or an increase in expenses you need to go through your budget and figure out what is essential and what isn’t. Then you start cutting the non-essentials.

PBS is about as non-essential as it gets. If we can’t cut PBS what can we cut? Mitt offered us an excellent test for all government spending:

Is it worth borrowing money from China to pay for?

That test should be applied to every single item in the federal budget.

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TANSTAAFL

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Once there was a man who held a political make-work job like so many here…shining brass cannon around a courthouse. He did this for years…but he was not getting ahead in the world. So one day he quit his job, drew out his savings, bought a brass cannon — and went into business for himself.
- Robert A. Heinlein, “The Moon Is A Harsh Mistress”

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We Americans have a weird habit of claiming we want politicians to tell us the truth and then getting mad at them when they occasionally do. Mitt Romney is the latest victim of our hypocrisy.

“There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that’s an entitlement. And the government should give it to them.

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I’m not going to quibble over the percentages because I think they are way too high, but Mitt Romney’s basic point is correct. The Democratic base includes a large segment of people who think they are entitled to stuff.

I know what some of you are thinking. (Right-wing trope! Right-wing Trope! Ratfucker!!) If you are thinking that you are wrong.

Let’s start with a basic principle – Nothing is free. Or, as the acronym “TANSTAAFL” stands for, “there ain’t no such thing as a free lunch.” Even freedom isn’t free – our forefathers and foremothers paid for our freedom with blood.

Government cannot give us free stuff. We can pass a law giving everyone “free healthcare”, but it’s not free, somebody still has to pay for it. That’s not necessarily a bad thing, but we need to be honest and realistic about what we are doing.

We all benefit from government. Some of us benefit more than others. But we don’t all pay for government. Some people pay nothing. Some people pay for less than they receive. Some get what they pay for, and some pay for more than they get. That’s pretty much inevitable because the poor simply can’t afford to pay.

That’s not a problem in a prosperous nation that provides limited benefits. For most of our history the federal government didn’t need much money because it didn’t do much except fight an occasional war. The government often had surpluses and literally gave land away.

That changed, beginning with the New Deal. I am not being critical of the New Deal (or the programs that followed over the next couple decades) when I say that it vastly expanded the size and role of government. That is simply an undeniable fact. We can argue that all that social and domestic spending was worth the cost, but we cannot deny the existence of that cost.

I would be remiss if I did not point out that beginning with World War II we saw a massive increase in military spending as well. Prior to WWII the United States did not keep a large standing army or navy during peacetime. Ever since then we have been the dominant military power in the world. That cost quite a bit too.

Our current situation is due to Ronald Reagan. The New Deal and WWII put us in the hole but the government was mostly living within its means afterwards. But since spending increased dramatically in the decades following WWII, so did taxes.

New Deal liberalism built roads, dams and bridges. It electrified homes across the nation. We built schools and colleges. The post-war era was unusually prosperous for the nation so the increased taxes didn’t seem to be much of a burden.

Then the Sixties brought two things – a slowdown of economic growth and an huge increase in government spending with the Vietnam war and the Great Society programs. Times were still prosperous but taxes were beginning to pinch. In the Seventies an anti-tax movement swept the nation.

Along came Ronald Reagan. He campaigned on promises to cut taxes along with the size of government. But when he was elected he only cut taxes.

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Here’s the cold, hard truth – Socialism works only until you run out of other people’s money. Guess what? We’re running out.

The classic leftist answer is “tax the rich.” That sounds nice until you do the math.

Our current national debt is over $16 TRILLION. That is $1,000,000,000 each from sixteen million millionaires. (As of 2008 there were only an estimated ten million millionaires in the whole world.) Even if we didn’t borrow another nickle we’re already that deep in the hole.

But we keeping digging deeper, and fast. We’re going deeper in debt about $3.5 billion every damn day, including Sundays and holidays. There are currently estimated to be 403 billionaires in this country. If we took a billion dollars from each of them it would only balance the budget for a little over three months. Before long we would start running out of billionaires.

We are currently borrowing about .40 cents out of every dollar the government spends. Paul Krugman wants us to do another stimulus. That’s not a bad idea if you’re old, because you won’t have to worry about paying it back. It’s not such a sweet deal for your grandkids though.

We should have had this discussion thirty years ago but a bunch of craven politicians just kicked the can down the road.

We need to get government spending under control, and we need to so it soon. That doesn’t mean we need to throw granny off a cliff. We will have to make some tough choices, however.

Most importantly, we need to understand the limits of government. We’ve let government spend money like a crackhead with a stolen credit card. That has to stop.

No more free stuff. That doesn’t mean abandoning the social safety net, it means understanding and accepting the cost of it. We have to meet our obligations to the weaker members of society, but we also need to live within our means.

I believe we can do both.

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