Resistance Begins at Ohm!

Thursday, December 22, 2011

What are my cats thinking?

I have spent way too much time at The Oatmeal
Is your cat plotting to kill you? 
Find out more at cats who throw up grass

Sunday, December 4, 2011

Federal budget illustration

. U.S. Tax revenue: $2,170,000,000,000
. Fed budget: $3,820,000,000,000
. New debt: $ 1,650,000,000,000
. National debt: $14,271,000,000,000
. Recent budget cut: $ 38,500,000,000

Now, remove 8 zeros and pretend it's a household budget.
. Annual family income: $21,700
. Money the family spent: $38,200
. New debt on the credit card: $16,500
. Outstanding balance on credit card: $142,710.
. Total budget cuts: $385

Sort of brings the issue "home" doesn't it?

Yahyah, I hear it. "You can't compare the national budget to a family budget. Unexpected things come up and the country has to invest in the things that will drive the economy in the future (like broadband)." So, when is enough enough? Eventually we will be one disaster over the amount some far east country is willing to lend. Maybe it's time to start charging premiums for disaster relief, since everyone seems to think it means "just like it never happened." Since when did we start expecting the government to kiss the calamity booboo and make it all better?
H/T DougH

Saturday, October 29, 2011

Lies, Damn Lies and Statistics

OMG! Did you hear? The top 20% have more money than the bottom 20%!!!
Well, duh. And if the top 20% had the same amount of money as the bottom 20%, they wouldn't be on top, would they?
Let's say you have $100 and you are in the bottom 1/5.
Let's say the next 1/5 has 20% (1/5) more and so on.
Top 1/5   $207
2nd 1/5   $173
3rd 1/5   $144
4th 1/5   $120
You       $100
That top bastich has twice as much as you!
Remember, the top 1% already pay 36% of the tax burden.
And nearly 50% don't pay income tax at all.

Bad banks, or bad attitude?

I remain astounded that a groundswell of public angst would arise because BoA decided to add a $5 fee for using your debit card. I mean, you DO use it, and it is a cost to the bank, duh. Every transaction requires a series of actions from crediting the merchant to debiting your account and all of the banks changing money in between. You don't work for free, why should they? So, why do people think that it should be free? It wasn't free before, someone else was paying for it -- merchants.
This is the essential problem with entitlement society. It isn't what people do or don't do that leads them to some expectation. It is what everyone else does or doesn't do that is viewed through the lens of personal desire. I want it, you aren't giving it to me, therefore you are a bad actor.
When did this change-up occur? More importantly, how do we undo it?

Sunday, October 16, 2011

There has been discussion about entitlement society and how government leads to dependence - that individuals learn to rely on government to solve their personal problems. Personal benefits such as food stamps, seemingly endless unemployment insurance, healthcare and retirement income actually do allow (in some cases enforce) dependence on state and federal government on a month to month basis. It's like you can't get away from it, and many/most people can't afford to pay for both the entitlement and an alternative that doesn't manage and control their day-to-day lives.

But wait, there's more. States are in the same pickle. The stimulus gave states untold billions to shore up unemployment, supposedly. And like others, I asked what happens when this faucet/firehose of funds get's shut off?

Well the answer is that states cry woe, we will have to lay off teachers, police and emergency responders because the mean old government didn't send us their paychecks. Forget we spent all our money on their benefits. And not like states are hiring most of these people anyway, local government is.

But why is local government relying on the federal government to cough up the money for their employees? Isn't that kind of careless? Did they really think the gravy train has no caboose? Look people, as long as the teachers and the county sheriffs are working for federal programs, they aren't working for you. Do you really want to give up control like that? Because the federal government will come calling with those "conditions." The money is never free.

Monday, September 12, 2011

Putting the National Debt in Perspective - another analogy

These numbers change pretty quickly, but they are close enough for government work, anyway.

• U.S. Tax revenue: $2,170,000,000,000
• Fed budget: $3,820,000,000,000
• New debt: $ 1,650,000,000,000
• National debt: $14,271,000,000,000
• Recent budget cut: $ 38,500,000,000
Now, remove 8 zeros and pretend it's a household budget.
• Annual family income: $21,700
• Money the family spent: $38,200
• New debt on the credit card: $16,500
• Outstanding balance on credit card: $142,710
• Total budget cuts: $385

Sorta brings the issue "home" doesn't it ?

Thursday, September 1, 2011

Let's talk energy

Climate change is a close relative, I don't want to go there. I just want to lay out some thoughts on energy.

According to Pickens, in 2009, the US imported 63% of our oil at a cost of $265 billion. And that was fairly cheap oil. Let's assume in 5 years, we could decrease our imported oil costs by 20%. That is a potential value of $53 billion, assuming oil in constant dollars. That is $53 billion more circulating in our own economy. Over 10 years, we should be able to bring nuclear power stations online, reducing dependence on oil and natural gas for electricity. Is another 30% reduction in oil imports reasonable in a second five year period? That's another $80 billion for a total of $186 billion over 10 years. That's money circulating in our economy instead of Saudi Arabia, Venezuela, etc.

If I am missing something please correct me.
We have a lot of natural gas reserves - 100 years if you believe Pickens.
Compressed natural gas vehicles have been around for years. I have seen them in Wash DC for at least the last 6 years, passenger cars, taxis and buses.
Many people have natural gas to their house.
Delivering CNG to main highways wouldn't be any more costly than replacing all the existing gas storage tanks (that has been going on for years because the tanks leak).

We should be able to turn over 20% of the passenger vehicles, municipal buses, taxis and light delivery trucks in 5-7 years, about the time we will need to ramp up CNG delivery infrastructure.

It seems like a reasonable goal then to reduce our dependence on foreign oil imports by both increasing our own output, converting to CNG and at least in the short term rely on coal.

How many jobs would that $186 billion create?

Sunday, August 28, 2011

Selling your foot to spite your nose.

OK, that is such a mixed metaphor it is non-sense.
But then so is this: USA companies are selling refineries???
Global oil companies are building them elsewhere? And then what, ship it to the US?
OMG, please, someone stop the madness!
If some other country is out there buying refinery products, should we not be all about selling it to them?

Thursday, August 25, 2011

Forget race, sex, religion and disability as reasons for bigotry

We have a new (yet old) act in town this year (2011).

Economic Inequality
Somehow, the prosperous seem to be the root of all evil. And all along, I thought it was envy. Oh wait, it's still envy.

The dialog this year has been ever-more frequently decrying the disparity between them that have and those who have not. Define that however you like; and that is the problem - any definition seems to work in this scheme. This is more than class warfare. Frankly, I find the concept a pointless waste of emotional energy, but that has yet to stop a progressive from bleating in the dark of economic night.

Look, if you are going to beat this sorry drum from centuries past, try pointing out the disparity between oil-rich middle east theocratic oligarchies and just about everyone else in the world. We give them our money because we want their product. It's that simple.

The fact that some people in this country are well-off and some aren't is just a fact of life. The price of stuff is set by the amount of money people who want the stuff are willing to pay. What have our efforts to increase access to home ownership, education and health care by lower income citizens accomplished? Raised the price of homes, education and health care to even higher absurd levels. Taking money away from those with more and giving it to people with less does increase demand - but it also increases cost and results in the same net effect -- the same people are at the bottom. You would think that the number of people with the wealth would decrease, and perhaps it has. But also note that the people with the wealth now have more of the wealth. Conclusion: wealth redistribution has the effect of trickling up, not down. So theoretically, we can perpetuate hate for this minority (the top 1, 2, 5 percent) as long as we like.

If this country wishes to make demons of the well-to-do and rob the rich to pay the poor, it will find the rich departing to more welcoming countries. This applies to corporations as well as individuals. Face it, one doesn't need America to be rich, one needs product. One doesn't need money to develop product, one needs energy and a tolerant environment. Given the means and the venue, the money will follow.

This zero-sum game of wealth-envy and piss on the prosperous is being played out every where from the environmentalists (we'll save the planet when YOU buy/use less) to a spiritual message.

Links to a sample the progressive poor me messages du jour:
Eliminating Inequality is Good for the Soul (or you have lies, damn lies and then there are statistics)
The Upward Mobility Gap  Bipartisanship in 2011? No Chance

A paradigm shift in commodity prices

That means energy, food, minerals and therefore all the stuff that is thereby derived

What the price of gas is doing to American consumers and therefore to the economy

Wednesday, August 24, 2011

Suddenly economics is entertainment

This is well produced and entertaining video. Which should start a whole new discussion about education, but I'm not going there.
Fight of the Century at econstories

Saturday, August 20, 2011

Can we solve this problem with more taxes?

Um. NO.
You would have to confiscate every dollar from every person who earns $200,000 or more. Imagine what that would do for the economy? But in any event, what would you do next year? Because obviously, those people would not be working those jobs and making those investments anymore. Let's see, work at 7-11 for $30K or work at Goldman-Sachs for nuthin. No brainer.
Tax Foundation

Fix the spending problem first. Then use additional revenue to PAY DOWN THE DEBT!

Maybe we should have a tax revolt instead of a tea party. Reduce your withholding as much as you can without incurring a penalty. Send the IRS a notice that you are taking the additional amount you owe off of the nation's tab. Too bad we can't send money to the treasury earmarked for debt reduction (not deficit reduction, the debt we already owe). No, you can't keep it, you would have to put it in an escrow account. But hey, interest rates are going up so at least you will be earning some money for the government, right?

Why worry about the debt? Because we are paying interest on it. And the interest, if we keep spending like drunken sailors, will consume the entire annual federal revenue in just a few short years, not decades (somewhere between 2021 and 2041 depending on interest rates).

In 2010, we spent more in interest than we did on Health and Human Services (medicare/medicaid) More than Transportation, Veterans Affairs, Agriculture, Energy, HUD, Justice, DHS, Commerce, Labor, Small Business Admin, Treasury. Combined. In the last 20 years, we have spent $8 trillion just on interest - nice income for other countries.

If Congress stopped all spending today and paid $100 million per day, it would take 389 years to pay off the national debt. And that was in 2010, so it is closer to 500 years now.
Government Gone Wild

Wednesday, August 3, 2011

A debt analogy

So, instead of amassing another $10 trillion in debt over the next decade, we will amass only $7.5 trillion more? As Ron Paul said, whoopee.
My son's analogy: So instead of crashing the plane into the tarmac at a 90 degree angle, we will just crash it at a 70 degree angle instead.

And instead of addressing the spending problem that adds another $trillion to the debt every year, we will whine and threaten and demagogue to no end tax cuts for the wealthy and tax breaks for the richest corporations (picking winners and losers again) which, if we went ahead and did what is suggested, would result in only several billion more in revenue. Why? Because the really wealthy people that are constantly being demonized don't earn the money from income. Therefore income tax increases don't increase affect them. And most people who would be affected aren't pulling wages in the $200,000+ brackets, they are business owners. If the government isn't taking their income (not wages), then it is available to reinvest in the business, thereby improving the economy, increasing the number of wage-earners and therefore income tax revenue. The millionaires and billionaires are not going to be paying any more in income tax - it isn't earned income to begin with. So much for fair share, so much for the "protecting the wealthy" argument, they are all protecting the wealthy by keeping capital gains taxes low and keeping capital expensing and amortization periods favorable. No one pays attention to how the rich are taxed except for the rich, so no one knows it is a completely different system.

Loved these articles from Reason spending-cuts, taxes and revenue
Page 2, taxes and spending
Percent of taxes by income share

Tuesday, August 2, 2011

Tuesday, July 26, 2011

The gap between wealthy and everyone else

Here's a thought:

Find out how the rich guy made the money. And do the same. Study the wealthy for how they got there, not because they have things you don't. We don't get anywhere by blaming the wealthy for what we don't have.

Honestly, I am not disparaging those who have less than the average bear. And I'm not saying that no one needs a helping hand - for all those people who are out of a job and lost their wealth when the value of their house was cut in half - you really are at a disadvantage. A family can probably lose their equity, a job or their health, but losing more than one is darned difficult to get through and the older you are, the more difficult to overcome. Still, it is not the wealthy person's job to take care of you. There is a difference between a charitable obligation and government confiscation.

I'm just saying that what made America in the past were people who said "I want that and I'm going to find out how to get it," and not "I deserve that and I'm going to find out how to take it."

It used to be that wealth was accumulated through wages, savings, home equity and retirement investments. Not great wealth but comfortable wealth. No more. I don't have the answers, I just can plainly see that what worked in the past is not part of the paradigm we live in now. 

Sunday, July 24, 2011

The other half...

I was going to post something about this class warfare demagoguery, but then I received this. Which gets to the point so well.

Wednesday, July 13, 2011

First, we can't go back to those happy days

1. Things change. Adaptation is necessary. Pretending that doing the same things will produce the same results doesn't change reality. It wastes time and that limits the options. The population is getting older and sicker and is unemployed for longer. The first two facts are obvious and aren't changing. The last one may change, but not any time soon. Not unless/until we start producing things in this country and stop sending more money overseas than we bring in.
2. It doesn't matter how high we increase taxes. If we take all the money from people making more than $250,000 per year, it still won't be enough. So the middle/working class is going to pay too, directly and indirectly. The idea that we can close loopholes for corporate jets to pay for college scholarships is ludicrous.
3. It doesn't matter how much we cut discretionary spending. Not far short of simply closing the federal government (meaning the good and the bad - cancer research, national parks, border patrol, too), cutting the budget still won't be enough.
4. If we do nothing, medicare will run out of money and everyone loses benefits. The longer we wait to fix it, the more people will be affected. We can preserve benefits as they are for people 55 and older including those who are already getting benefits - if we act now. If we wait for a new congress, it will be people 60 and over. So whether you are over 55 or under, you have no incentive to put this off. The status quo is not an option.
5. If we do nothing, social security payouts will exceed its income - and benefits will be reduced for everyone. The extra money doesn't come out of the general fund that pays for everything else. While the program is required to be self-sustaining, the benefits that are owed in the future are still obligations that the federal government owns. Increasing income taxes and closing loopholes has no impact on this - it is just changing the subject. Changing payroll SS taxes and retirement ages are required. (There is an issue in that the government has to borrow money to pay back the iou's to the SS program, but no one is proposing not paying them back. One does want to keep the interest as low as possible.)
6. Arguing over things like tax breaks for corporate jets take up more oxygen than the loopholes are worth. $300 million is a joke when we are talking about $trillions we don't have. But singling them out is just mean-spirited. Middle class workers are building those jets after all. Without buyers... does the government take over that industry, too? There are consequences. Take gas/oil taxes. Tax increases result in price increases so the tax ends up being paid by the middle class anyway.
7. The biggest budget killer is interest and the more we borrow, the more of the available budget pie gets eaten by interest. The most important thing is to quit borrowing.  The second most important thing is to keep interest rates down. Making investors worried is counter-productive.
8. Reducing the amount the federal budget increases from one year to the next is not a cut, sorry. Borrowing doesn't go down until spending goes down. Don't be fooled by those smoke and mirrors.
9. Taxes are going to increase anyway. The Bush tax cuts expire in 2013 and the 2% cut in payroll taxes expire in 2012. In this environment, there is no way either of those are going to be removed by this congress.
10. It doesn't matter what actually happens on August 3, perception rules. The markets are driven by what the marketeers think will happen. The damage will be done 7-10 days before that. And those damages are not "undone" by taking action on the borrowing ceiling on August 1. The real damage will be the increase in interest rates for everyone - take credit cards for example. When businesses are paying more in interest, then the price of goods goes up as well.

All this has impact in various ways on jobs - sometimes in unexpected  ways.

There is a smidgen of good news. If you move your 401K to treasuries, those bonds are going to be paying out more interest. If you can take a lump sum and retire to South Vietnam before the Treasury has to pay out, you might just make out. If you can survive inflation until then.

Thursday, June 23, 2011

medicare: Is doing nothing an option?

So, according to the 2011 Social Security and Medicare Trustees annual report, medicare is projected to pay out more than it collects in every future year (including 2011 and since 2008). But there is a reserve (read IOUs) in the fund cover the difference. The reserve is projected to be exhausted in 2024 (despite that currently, the reserves are being used up at better than 10% each year, which means more like 2019). Where does the money come from to pay out on those IOUs? The general fund, meaning the bank account that pays for everything from corn subsidies to military pay. Currently, the general fund pays about 45% of all medicare expenditures, which triggers a warning, which the President is required by law to address within 15 days.

That's all the background. When the reserve runs out, the program must reduce expenditures, meaning that the benefits will be cut. And if you look at how much it can't pay for out of revenue now, we are talking about a cut of around 50%.

Therefore, doing nothing will result in serious reductions in medicare benefits for everyone. As more people become eligible and also claim benefits, the benefits will be reduced even more. So much for keeping the promise. Look at it this way: The government has $100. It has to pass out the benefits equally to everyone who shows up. If 10 people show up, they get 10%. If 100 people show up they each get 1%. Regardless how many people are eligible for the benefits, once the reserves run out, the program can only pay out as much as it brings in. And that is only about 50% of what it pays out now.

Here are the options:
Do nothing, which will cut benefits by 50% for everyone including people in the program and even more for people entering the program in the future.

Change the program so that current beneficiaries can continue to rely on the program - because they do not have any alternatives. They don't, there just isn't medical insurance for retired people over 60.  But the more benefits you give people now, the less you have available later. Who is in a better position to adjust their retirement plans around these realities, people retired now or people retiring in 10 years?

Stop the program. I don't think you can cancel it for people who are already using it. And even if you cancel it for future beneficiaries, you still need to tax them in order to cover the current costs.

Take the revenue and give it to beneficiaries so they can get their own program (insurance, HMO, PPO) hopefully from an exchange of some sort. People will have to pay the difference, but they are going to have to pay the difference in costs anyway. At least if they have to budget for premiums, that is more predictable. You would know that you have to budget $500 a month for your medical care, instead of guessing where between $10 and $1 million you will have to pay any given month.

Some combination.

The law says the President must propose something besides do nothing and congress must act on that recommendation with some haste.

Here is the trustee's report. Read it and weep.

Sure people have been paying into this program all their working lives. You paid for a benefit that isn't going to be there. Sorry about that. Sure, it isn't their fault at least individually. If blissful ignorance is a valid excuse, neither is anyone at fault for Bernie Maddolf. But as a nation, we are responsible for our debts and this just happens to be a really really big one. We could have addressed the issue years ago. No, the (un)affordable health care act doesn't offer any help or relief. All it does is take $500 billion out of the program every year and give it to other people for their healthcare. And then they call it a savings. Yeah, right.

All I can say is cowboy up and deal with it. Whining about how much we paid, and how awful it is to get screwed is just wasting oxygen.

Friday, May 6, 2011

Gross domestic Product or gross domestic Spending?

There a few other interesting items this week and I hope I can get this all captured.
First, this is an interesting analysis of our economy over the last 13 years. As the author points out, we tend to think that the nineties were good and then 2001 and then we got good again, then 2008. Starting with the premise that GPD is actually a measure of spending more than making, and pointing out that real GDP growth has been at a lame 2.2% since 1998, whereas public and private debt has risen by over 3 times that rate. Meaning that the illusionary GDP growth above 2.2 percent is just us spending borrowed money. And  Rob Arnott of Research Associates of California states: "GDP that stems from new debt — mainly deficit spending — is phony: it is debt-financed consumption, not prosperity," Take the debt part out and our prosperity is nearly unchanged from 1998.
GDP is our estimator of wealth. In other words, we produce more, we exchange more, therefore we make more and we increase our assets. This faux wealth was spent, not invested. Had we successfully invested it, there would be better returns than 2.2%
This like is borrowing the assets in your retirement account and then expecting the money to be in there later when you retire. Not! If you have $100,000 in your 401K but you borrow $350,000 and go buy stuff, your 401K isn't worth more because of that big IOU to yourself. The money in your pocket isn't earning anything. Spending it isn't earning anything, either. Instead, when you square up accounts, you are in the hole, massively. The $350,000 you borrowed wasn't working for you and neither was any return on that investment likewise increasing your wealth. And the amount your $100,000 earned you isn't going to make the monthly payments, let alone pay it off.
You can't unring the bell and you can't unspend the buck. And if the last 13 years are any indication, we can't grow out of this, either. Instead, we need to turn our attention to how we build real wealth. Not how we transfer it from high income earners to the government, or from Exxon to the government. Because really, after this payment comes due (the space between the blue line and the red line below), there isn't enough to go around anymore. Thoughts on how to do that later.
 Ack! forgot the reference: CNN

Monday, April 25, 2011

More news to brighten April

I love spring. It's a season of renewal, awakening (allergies). But this spring is feeling more and more ominous. I expect thunderstorms in spring. I wish I wasn't expecting the coming economic storm.
So, here's part 1: The IMF has declared that the "Age of America" will end in approximately 2016, when the economy of China surpasses us.

This assessment is based on "purchasing power parities," not exchange rates (which as we can see, are gross indicators affected by numerous factors, speculation not being the least). This actually compares what people can earn and spend. China has a prospering middle class, while the US has a dwindling one - and not because our population is getting richer. The age of Chinese hegemony will be quite different. One reason not cited in the source article is this contrast. Our national wealth is tied up in raw resources (property and the rights to exploit them), multinational corporations (GE) and a few very wealthy individuals who have "capitalized" on the world market changes of the last 40 years or so. Chinese wealth is in their manufacturing capabilities, equity markets to an extent and mostly in their sovereign funds. Meaning China itself can pretty much buy whatever it wants to accomplish whatever purposes it wants. And it has the capacity to make and sell things the world needs to maintain this path.
Source: Marketwatch
The second item of bad news is that China looks like it will be "diversifying" about $2 trillion in sovereign wealth it currently has wrapped up in US treasuries. That is a whopping 2/3 of their dollar reserves which they propose to use to invest in their own industries and markets, strategic resources (to feed those), and (other) foreign investments. Well, duh, why would they want to keep holding those $turkeys? It's not like they are earning much interest.
Source: Xinhuanet  but this news has been on any number of sources during 2011.
No, it probably won't happen next month or even be completed this year. But if China decides to just quit adding dollars to the reserve (+$197 billion in Q1 2011), we will need to find other buyers and that means we will need to pay more interest. And there you have the wicked combination of rising interest and rising inflation (leading to rising interest and more inflation).
Which brings me back to the weak dollar. According to this article on CNBC. "If things were to somehow go into freefall (see below) or there were disorderly markets (see above), or if it is associated with a rise in interest rates (necessitated by above), there could be some concerns there," said Josh Feinman, chief global economist at Deutsche Bank Advisors. "But that's not happening at all. Rates in the US are still very, very low. At the margin, (a weak dollar) is a slight easing in financial conditions." Meanwhile, "Panic dollar selling is setting in," according to Dennis Gartman, a hedge fund manager and author of "The Gartman Letter."
How low can it go? Well if a 2/3 divestiture of dollar reserves by China and no market for US debt because of the free-falling dollar, and the kinds of inflation and interest we have not seen in decades is not cause for concern, I don't know what is. With just exactly what are we going to grow this economy back into some sort of stability, let alone hegemony?  Selling off our assets is about all we have left.

Friday, April 22, 2011

Energy as a factor in recession

I offer this interesting chart to back up my assertion that the last crash and therefore the next crash are driven by the cost of energy.

Perhaps historically, the price of food contributed. Today, the price of food is inexorably connected to the price of energy. Beyond getting food to market, agribusiness relies heavily on energy for current productivity levels. Energy is the force magnifier. The difference between an ox-driven plow and John Deer-driven plow - the power of the internal combustion engine. They both do the same thing. Food prices have increased 6.5% since January, which if you do the math, is over 25% a year.
So why is the price of gas going up? According to a SME on C-SPAN (sorry, don't have that reference it was morning edition either Monday or Tuesday), American refineries (or I should say refineries located in the U.S.) purchase oil on the spot market, not the futures market, so WTF.
April is the month that refineries change from the winter formula to the boutique summer formulas (driven by state regulation). So, refining capacity is down and the supply of gasoline is broken up into smaller "buckets." None-the-less, sooner or later the spot market catches up with futures (like in the inevitable future). Therefore, don't expect that May or June are going to provide any relief. These are two components driving the supply and demand side of the equation.
The other component that is driving both futures and spot markets is the value of the dollar. Today (April 22) it hit a 15 month low. Last time we saw this was (no surprise) Q2 2008. If the dollar is worth less, then it requires more of them to buy a barrel. Doesn't matter which market.

And the value of the dollar affects the cost of other goods imported by this country. On the other hand, it makes goods that we export more affordable in those markets. Which brings more valuable currency here. From those countries that we export to. Which are..... ummmmm.... what exactly are we making anymore?

CNBC source for chart 1
FX Street source for chart 2
IC Mark source for 2008

Update: Another source to back up my analysis - Financial Times which claims we are at a 2.5 year low against the dollar index - lowest since (drum roll please) August 2008.

Monday, April 11, 2011

Our deficits are a spending problem

Of course the debt (14 trillion), is everyone's problem.

Deficits by President

Saturday, April 9, 2011

$38 billion - A pathetic pittance

$38 billion is like sending a $1 check for a $200 payment. Not even worth cashing, let alone arguing about.
The post-game show talks about the beneficiaries of brinkmanship. How getting a cut to this and that program is a major concession. How nearly $40 billion is 60% of the way between one arbitrary number and another. That somehow, Boehner won something by losing the majority of cuts republicans wanted. That somehow Obama lost by staving off cuts to NPR, PBS and Planned Parenthood. With all of the chest beating about these wastes of precious revenue, you have to figure they are permanently off the table. Well that was easy, how many other wasteful programs can they take of the table next time?

I don't really care where the $100 billion comes from. The programs that get a pass this time have to be back on the table next time. Instead of arguing over it, the house leadership should have just said, "OK, we will set those aside for next time. Now find something else to cut that equals $40 billion."

Eventually we will get down to reality. The target for cuts is $1.65 trillion. Savings do not exist until you get to zero deficit. And then you have to balance savings against debt payment. Talk about reductions in unfunded programs, not cuts to a budget like there is actually any money to pay for it. Talk about savings next year, not next decade. Be honest, you have no idea what will happen between now and 2012. Budget outyears = smoke and mirrors.

We can afford to pay for about 5 things and everything else is an expendable expense. Interest on the debt, social security (in some revised form), medicare (because there is no way seniors are going to get health insurance once they aren't working), border protection and military defense. And the trust funds need to go back to being separate accounts used for the intended purpose or for paying off debt (which is basically deferring interest to a loan later, still saves money).

It isn't a matter of picking and choosing winners anymore. It isn't picking NPR over planned parenthood. Instead of talking about an orderly shutdown of government during a lapse in spending authority, we should be talking about an orderly shutdown of government programs forever.

Likewise with the tax code. It isn't a debate about deductions vs allowances vs credits. Stop fiddling with income tax to impose a social agenda. Quit wasting time about marriage penalty and alternative minimum tax. Value added tax and only value added tax, computed on sales (wholesale and resale), surrendered at the time of sale to the treasury. See how much eliminating the IRS will do for the budget... that's a $12 billion dollar savings right there.

I am starting to think that the solution may be the number of people in Congress. Maybe we need to limit each elected representative to three staff, limit the number of committees to ten, and limit the committee staff to 5 per. I think that is actually very generous even if 2320 employees is about a quarter of the current number estimated at 7000-8000. There is only so much a person can do, and then the rest just has to be ignored. Hard to get into the details, think up all the tangential arguments, write all the emotional speeches, plot all the political angles with 75% less "time" to do it. The legislative branch actually employees something like 33,000 people, but most are taking care of other things like security, facilities management, information technology, visitor services, etc.

Friday, March 11, 2011

Tuesday, March 8, 2011

One third of salaries and wages come from the government

Notice it does not say earnings.
So, between social security, medicare and unemployment, 35% of income (I'm thinking not reimbursements) is actually being paid by the other 65% of actual workers. One person is supported by 2 other people actually out earning it. Take 1/3 of your gross income and just stand on the corner and hand it out to your neighbors. You will get a lot more satisfaction and help a lot more people along the way. And another million or so government workers will have to go out and earn their own instead of earning part of your share or the American pie.
This is really sad. What a pathetic entitlement society.
Social welfare benefits have increased over $500 billion just in the last 2 years! That money is already spent. Too late for any savings there. Want to keep doing this year after year? How do you think you will afford your own retirement?

Sunday, March 6, 2011

Lack of tough decisions

First, I am insulted by a proposed $6 billion cut in a budget of 3,552 billion (as approved).
The 2010 budget deficit was $1.3 trillion. That is 1300 billions. 13 hundred billion.
So, based on the 2010 budget, the proposed cut is less than 1/2 of 1 percent of the deficit. A whopping 50 cents out of $100 that we are borrowing.

The 2010 budget was 20% more than the 2009 budget. from $3,736 billion in 2009 to $4,472 billion.
Note that revenue was up also -- by a minuscule 1%. But the money coming in is not going down, as many would have you believe. Another indicator that the problem is spending.
But here's what is really stunning to think about. The 2009 budget included the cost of TARP ($154 billion in 2009),[9] the American Recovery and Reinvestment Act of 2009 ($202 billion in 2009, $353 billion in 2010, and $232 billion in 2011 forward[10]), and the 2009 Omnibus spending bill ($410 billion). And that wasn't enough spending????? We need to spend 20% more??? We can only afford to take $6 billion out???

Second, I am insulted that anyone would count the additional $40 billion in the 2011 budget as a savings. That's like saying "I'm saving 50 cents out of $100 but it would be 40.50 out of $140.00 Yeah, and it would be $100.50 out of $200. Point is, we don't have more than $60 to begin with, so the whole argument is preposterous.edit to add nice explanation from Keith Hennessey
I propose we talk about cuts in terms of the deficit,  $1.3 trillion. That has to be the target. Even the $60 billion republican proposed cuts, is just 4.6%. That's less than sales tax in many states. It should be easy-peazy.

What are these people going to do when they need to find the other $1240 billion? These are not hard choices and making them so is an insult to our intelligence.

Maybe they need to think about programs in terms of buyers remorse - "if we hadn't blown all that money on (fill in the blank) think how much better off we'd be now?" Sure, children aren't going to get so many free books, and National Public Radio is going to have to increase their fund raising another 20%. More viewer support weeks. Cry me a river. Move on and make some real decisions.

Thursday, February 24, 2011

Two things really tick me off - energy related

So, Obama's ethically squeaky clean "Assistant Secretary for Energy Efficiency and Renewable Energy," Cathy Zoi has been hired by none other than George Soros to run his new investment fund. The fund? To "leverage technology and business model innovation to improve energy efficiency, reduce waste and emissions, harness renewable energy, and more efficiently use natural resources, among other applications."
Of course, the green energy boom is totally subsidized by government spending. And if that doesn't make you stand up and take notice, guess what the ethically unconflicted Ms. Zoi's husband does? He's an executive at a window company, Serious Windows, which the White House regularly held up as a "poster child of green industry."
The Freedom Foundation of Minnesota put it this way: ... "now Zoi has left the Obama Administration and will go back to work making an honest living in the private sector, where she can put all the knowledge she gained from working for the Department of Energy to work for the private equity firms."
Ummm, yeah. Honest. *sigh* source:
Item Two:
I still maintain that fuel prices actually led to the mortgage crisis as people were unable to afford their energy (heat, air, transportation, and consequent 20%+ increase in food prices). So, with crude pushing $119 today because of the uproar in the middle east, combined with the demonstrable utter absurdity of using corn for fuel (takes more energy to make it into ethanol than you get out of it in a combustion engine, not enough farm land to replace oil with corn anyway), you would think the US might rethink this dumb requirement (min 10% ethanol in auto fuel). 
This is another example of picking winners and losers. With an election in 2012, and Iowa being one of the first primaries, you can't expect the best interests of the many will prevail over the interests of a few industrial corn farmers. Not from either party.
So, don't count on any corn chips for your salsa next super bowl.  Tea party? Maybe a tortilla revolution?

US warns extreme food prices will stay inflation would surge in the second half of this year as wholesale prices filtered through the supply chain, affecting consumers. 
Mr Glauber [USDA chief economist] forecast that the heavily subsidised US ethanol industry’s demand for corn would continue to grow in spite of higher input costs, consuming about 36 per cent of the domestic crop.
[emphasis mine]
The ethanol industry has been criticised for driving food prices higher. But Tom Vilsack, US secretary of agriculture, ruled out any change in US ethanol policy. “There is no reason for us to take the foot off the gas,” said Mr Vilsack, the former governor of Iowa, a state in the US corn belt.
Analysts said the USDA forecasts for production, demand and stocks for the 2011-12 season and Mr Vilsack’s affirmative comments about ethanol meant agricultural commodities prices could surge even higher this year. “No pullback for agricultural commodities,” said Richard Feltes, a respected grain analyst with RJ O’Brien brokers in Chicago. “The speech [of Mr Vilsack] should be alarming to any corn consumer.”

Monday, February 14, 2011

Another tale of Walmart oppression

"Brenda Speaks, a Ward 4 ANC commissioner, actually urged blocking construction of the planned store in her ward at Georgia and Missouri avenues NW... Addressing a small, anti-Wal-Mart rally at City Hall on Monday, Speaks said young people would get criminal records when they couldn't resist the temptation to steal."

You can't make this stuff up. Of course, they might get jobs, too. But then they wouldn't be dependent on the District for every damn thing.

But if that isn't reason enough, "would a new Wal-Mart there really stock the same quality of food and products as its stores do in better-off, suburban communities?"

Yeah, upscale Walmart. But it is better to do without products at all than to take that risk. Like I said, you can't make this stuff up.

Friday, February 4, 2011

Applying Obama's Budget Cuts

Thanks to DH for this email:
The President ordered the cabinet to cut a whopping $100 million from the $3.5 trillion federal budget!

I'm so impressed by this sacrifice that I have decided to do the same thing with my personal budget. I spend about $2000 a month on groceries, gas, credit cards, medicine, bills, etc, but it's time to get out my own personal  budget cutting ax.

Inspired by the courage of President Obama to face the massive deficit, I'm going to cut my spending at exactly the same ratio -1/35,000 of my total budget. After doing the math, it looks like instead of spending $2000 a month; I'm going to have to cut that number by six cents!

Yes, I am going to make my own personal major sacrifice.   I'm going to have to get by with $1999.94, but that's what sacrifice is all about. I'll just have to do without some things, that are, frankly, luxuries. 

John P. Taxpayer

Oh it's even better than that. The Republican house is cutting $32 billion for the rest of the fiscal year. And somehow, $32 billion over 6 months is comparable to $100 billion over 12 months (half the fiscal year will be over in March when the current non-budget continuing resolution expires). Furthermore, they are arguing that it is really $74 billion compared with Obama's budget (I am assuming before the $100 billion he wants to cut). 

So, our most exalted leadership is arguing over the meaning of 6 cents versus 2 cents. And we pay them for this.
NY Times

I'm not talking about Egypt

I found there were some very interesting thoughts in this article about what must be done about the federal budget. Foundation for Economic Education
The "hard choices" are really the easy ones. Hard choices are the ones our government refuses to consider (which is why they are always taken off the table). Quit moaning about how hard it is and just do it.
Prolonging this agony by nibbling around the edges just causes endless whining and more battles. Eliminate on the large scale. Stop the activities the government should not be performing - like education, mortgages, loans, energy, manufacturing. (Read I, Pencil)
Quit selling of our future, our children's future, our grandchildren's future by paying for unaffordable programs to appease some constituents' short-term gratification.
"Remember that every time you spend more, you don’t get the money by selling cookies like the Girl Scouts do. You deploy force against your fellow citizens. That raises moral issues and is something which you must stop doing in such a cavalier fashion."
And finally, we must call them what they are: cowards, hypocrites, sell-outs, irresponsible, shameful, anti-social shirkers. Stewards, they are not. Thieves is more accurate.

Sunday, January 2, 2011

Forget race, sex, religion and disability as reasons for bigotry

We have a new (yet old) act in town this year (2011).

Economic Inequality

My perusal of today's political feast for the first Sunday in the new year includes numerous articles decrying the disparity between them that have and those who have not. Define that however you like; and that is the problem - any definition seems to work in this scheme. This is more than class warfare. Frankly, I find the concept a pointless waste of emotional energy, but that has yet to stop a progressive from bleating in the dark of economic night.

Look, if you are going to beat this sorry drum from centuries past, try pointing out the disparity between oil-rich middle east theocratic oligarchies and just about everyone else in the world. We give them our money because we want their product. It's that simple.

The fact that some people in this country are well-off and some aren't is just a fact of life. The price of stuff is set by the amount of money people who want the stuff are willing to pay. What have our efforts to increase access to home ownership, education and health care by lower income citizens accomplished? Raised the price of homes, education and health care to even higher absurd levels. Taking money away from those with more and giving it to people with less does increase demand - but it also increases cost and results in the same net effect -- the same people are at the bottom. What changes are the owners of the wealth, but not the number of people with the wealth. (This is what I maintain is the true fight going on. Our politicians are fighting over who in the top 5% get the goodies, not who in the bottom 95%.)

If this country wishes to make demons of the well-to-do and rob the rich to pay the poor, it will find the rich departing to more welcoming countries. This applies to corporations as well as individuals. Face it, one doesn't need America to be rich, one needs product. One doesn't need money to develop product, one needs energy and a tolerant environment. Given the means and the venue, the money will follow.

This zero-sum game of wealth-envy and piss on the prosperous is being played out every where from the environmentalists (we'll save the planet when YOU buy/use less) to -- well almost every political discussion it seems. Is hate contagious?

Links to the progressive poor me messages du jour:
Eliminating Inequality is Good for the Soul
The Upward Mobility Gap 
Bipartisanship in 2011? No Chance