Guest Post by Willis Eschenbach
I don’t usually wander too far off of the climate reservation, but this excellent cartoon by Michael Ramirez deserves wider publication, as it addresses a critical problem. It shows the US Budget for 2011, along with the cuts proposed by the Democrats (liberal) and the Republicans (GOP, conservative).
The US Government is about to shut down because the two sides can’t agree on a budget.
Can the rest of us agree that despite all the posturing, neither side is actually serious about the problem?
w.
PS – Anyone who thinks that CO2 is more important to the US than the above pie chart is fooling themselves badly …
Only one clarification. And that it needs to be clarified is because of the lack of leadership in the Republican party.
There is no budget. There has been no budget since last year’s ran out in October.
There is no budget because the democrats last year chose not to pass one.
Republicans should have been pointing this out in every speech, every press release and on every Sunday morning show every time a Republican was able to breathe air and speak.
The democrats bet Republicans would fold and they did.
For too long the Europeans have been given a free ride when it comes to their security. While many marvel at their ability to provide social services for their citizens the Europeans haven’t contributed a dime to their security. It’s time to pull our troops out of Europe to lessen our debt.
Mr. Walton, what do you mean “Democrats” and “progressives”? Last time I looked they were both Marx’ kids- and I don’t mean Groucho’s.
Oh, but it gets worse, much worse: Debt Jumped $54.1 Billion in 8 Days Preceding Obama-Boehner Deal to Cut $38.5 Billion for Rest of Year
If this isn’t enough to frost your hide, I don’t know what will. What the hell is wrong with these people?
And still more worse: Feds Spent $142B on Thursday Alone—As Pols Dickered Over Cutting $33B or $40B for Rest of Year
A people have the government they deserve…
Bye bye the American pie …
They drove your pressie to the levee,
But the levee was dry.
And them good old boys were drinkin’ whiskey and rye
When the East realised that it couldn’t defeat the US economy head on, it decided to undermine it with debt and like all creditors … they are all smiles and handshakes when they are giving out the loans, but when it comes to paying them back, in come the Rottweilers.
How could the US have been so stupid to have thrown away its economy like this?
Thanks Willis. Another great post.
Keynes is quoted as saying, “Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency.”
We don’t see much written about the consequences of excessive debt. I believe two things are inevitable. First, interest rates must rise as the Treasury runs out of nations and people willing to loan money at cheap rates; and all other rates go up in competition with the Treasury. Second, the Fed creates more money to buy Treasury debt which “debauches” the currency and fuels inflation. Expectation of inflation
fuels even higher interest rates.
Would a real Economist out there care to comment?
Repugnants don’t have the faintest idea on how to negotiate properly. A pox on both houses.
Whenever there is a war, the US leaves the gold standard behind.
Because then the government needs to print money.
You never went back to the gold standard since last time.
Look how convenient it is for the politicians to just keep on printing money.
L says: April 8, 2011 at 11:36 pm
Mr. Walton, what do you mean “Democrats” and “progressives”? Last time I looked they were both Marx’ kids- and I don’t mean Groucho’s.
Somehow, I always thought “left” in the US meant a little bit to the right of “right” in Europe and “right” was so far stuck up its own ….. that … words fails me.
It really has shocked me (if the figures are true) that the US has such a massive budget … OK, that in itself is horrific enough but the US has always lived in a hollywood world of make believe and perhaps there is virtual economics, and who really cares outside the US, when the US falls, the rest of us will pick up the economic pieces.
No, what has really shocked me is that all this fuss all this massive argument over the budget is over so so so little! You lot swat at a gnat not seeing the elephant charging. We see Greece, Portugal and other Mickey mouse economies run by “darn commies” falling over, and then we see the real Mickey Mouse economy is not Greece or Portugal, but the US … run by darn commies in the Republican party.
What is that they say about democracy … it can never succeed, because sooner or later the people will find a way to vote themselves a lifestyle of luxury which simply cannot be sustained in the real world.
Michael Ramirez is my hero! So TRUE!
David Falkner says:
April 8, 2011 at 10:00 pm
I certainly can agree Willis. Let’s end military spending now.
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Or social programs; either move would reduce expenditures by about a trillion, when all Defense spending is gathered up. (No, I can’t back that up. Call it an opinion.)
I assume you’re an anarchist? Or an extremely strict constructionist with respect to the Constitution (wanting to return to what’s in the document and no more)?
Even the Founders who firmly believed that America should have a weak military so that it wasn’t used against the people discovered that they needed soldiers, sailors, and marines after all. Adams against the French in the Quasi-War, Jefferson and Madison against predation by the Barbary States, and Monroe against the British. Again. In 1812, only 28 years after the final paperwork ending the Revolution.
Can we stop using U.S. military as world police? Yes, I’m for that. But I’d re-route quite a bit of that money into improving the pay, training, and equipping of the people at the sharp end of the spear.
We have the same problem in the UK, though our numbers are a little smaller. We do have a ‘get out’ card which you in the States do not.
If we get out of the EU, £40M per DAY saved, and stop spending on the stupid wind turbines and other useless ‘green’ rubbish, saving £100B per year, we would have no problems and not have to have any cuts at all.
Cheers.
Who were we to think congress would shut the gov down during tax season.
I plan on eating pie tomorrow. Next week…
I do sometimes wonder where this will all lead. Some European nations have the same problem, but the USA takes the biscuit.
You have twin deficits of epic proportions, and no plans to reduce consumption or spending.
Your major creditor is China, your major industrial competitor. Each American owes each Chinese $thousands.
But America has no way of paying those debts. America used to pay them with high-tech products, like computers, electronics and aircraft. But nowadays, the high end technology is comming from – you guesses it – China.
What are you going to pay the debts with – maize? (Sorry, I forgot, you no longer export maize, and power gas guzzlers with it instead.)
So what to do?
There are only two options:
a. Go for German hyper inflation, where the dollar becomes worthless and you need a wheelbarrow to take your wages home. A loaf of bread will cost about $350,000,000 and imports will be impossible – but at least your twin debts will evaporate.
b. Continue to defy economic gravity. But at some point, other nations will ditch the dollar as a reserve currency, because it is too risky. Those trillions and trillions of dollars will all flood back to the US, making the dollar absolutely worthless, much as in point a above. But this will all happen very suddenly.
The only difference is that point a. is somewhat controllable.. Point b. really will be a 1930s German crisis, where the US economy implodes overnight.
Allanj http://wattsupwiththat.com/2011/04/08/a-pox-on-both-their-houses/#comment-638564
Ditto.
Institute of Public Affairs, Melbourne, Australia in their weekly ‘Hey what did I miss’ post have a link. An illuminating letter to Congress from US Treasury Secretary Tim Geithner.
http://hey.ipa.org.au/2011/04/guess-the-most-bureaucratic-level-of-government/
Daniel Hannan, Conservative MEP South East England
I can see Paradise from a back porch in Waukesha.
==========================
I’d support Paul Ryan (even though I’m British & living on my side of the pond at that 😛 ), but sadly I’d be very surprised if his proposal (or a counter-proposal as good as it) gets anywhere.
As for talk about defence cuts… no thanks:
1. Who can replace America as the world’s policeman and is committed to the same sort of ideals as America? Not China or Russia, that’s for sure. The EU as a whole is a military joke, and in it, the only two countries that aren’t – Britain & France – don’t spend enough to really do it on the scale of the USA. If Germany wasn’t so hung up about WW2 then it might be a credible third nation, but instead its in thrall to pacifists and eco-loons.
2. If you cut things like DARPA then you make it easier for the Chinese et al to play catch-up. They may not achieve parity, but as we’re talking warmaking capabilities here, you don’t want parity – you want to be able to curbstomp the other side with your little finger, because that ability will tend to reduce the likelihood of war breaking out in the first place: people don’t go to war expecting to lose, after all.
3. Anyone who thinks a world without America (or a similar power) as world policeman would be better than the current situation is deluding themselves. Consider the two main alternatives: a world where a country far less democratically inclined than the US is the policeman, or a world in which there isn’t one at all, and troublemakers the world over can get away with things they can’t at present.
Quote, Ellis, “the Democrats (liberal) and the Republicans (GOP, conservative).”
In Europe the Democrats and the Republicans are both seen as being right wing.
A more apt description would have been “the Democrats (conservative) and the Republicans (GOP, ultra-conservative).”
I doubt they are any genuine liberals in Congress or the White House.
“The US Government is about to shut domn.”
So where is the problem? People can survive without a corrupt Government. Let them go to hell those vampires.
We the People. They work for us. We are not there slaves. We are in power.
or
1984
It’s your choice.
As Micawber from David Copperfield says:
“Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”
If money printing is the relief valve for government debt then this merely means that each dollar in your wallet is really just fifty cents unless you spend it now on something durable.
The economy, if looked at physically is a machine that requires energy input to drive it’s engines, is being ruined. That energy is food that animates people and highly condensed energy such as oil, coal and high voltage electricity that powers tools. That quite literally is what makes us get out of bed and then brews our coffee. If the money for either energy input does not recirculate back into the economy of the nation then the engine runs out of juice eventually. The scuttling of The Atomic Age is the reason for all of this mess when combined with carbon taxes that suck wealth out of the system in order to pay it out on interest to China and to guttersnipes who don’t add wealth back into the system via creative invention or at least competent raising of the young in safe communities.
The solution is obviously libertarianism in the form of the Tea Party, meaning an end to the anti-science bent that plaques the Republican Party. Stem cell research ban (by academics who rely on federal funding grants)? Ugh! Creationism taught in schools (the Earth is 6000 years old?!). The Drug War that keeps producing the likes of crack cocaine and heroin analogues that are ridiculously addictive and fully available to children?
Environmentalism is a policy issue, meaning it is politics.Politics depends not on shouting loudly at known scoundrels but on voting for people who are not scoundrels in the first place. The scientific debate is OVER. Runaway greenhouse theory has been REFUTED in the scientific sense. They don’t even hold debates any more and now they are turning to libel law to silence even bloggers like Tim Ball. Running round in round in more circles, debating statistics all day will only allow pontificating louses to create smoke screen media barrages that create a cocoon around those on the left who are moderates to ever understand that Global Warming Skepticism is *not* a Republican Party phenomena.
Excellent post Willis, thanks for pointing this out. For those UK people criticising the US don’t you realise we have exactly the same problem here. In our case though the proposed ‘cuts’ that the BBC are so critical about are not actually cuts per se – it’s simply a reduction of the rate of increase in spending!!!
Meanwhile the salaries of senior bureaucrats are massively increasing, last year for example when many were losing their jobs or on freezes the leader of the LGA was being given a £70k increase to a salary of over £300k. (The LGA are simply a local govt. lobbying group created by Tony Blair in 1997). The LGA also spend massive amounts on ‘consultancy’. It would be interesting to know just how much executive salaries have increased in the last 14 years.
http://www.taxpayersalliance.com/bettergovernment/2010/11/pay-of-lga-chief-executive-revealed-.html
Huge payments are being paid to council officials who leave and then walk into ‘consultancy’ roles.
http://www.telegraph.co.uk/news/politics/8334915/The-council-fat-cat-earning-570000.html
Unfortunately all three of our main party leaders are pursuing rabidly pro UN/EU policies such there is no real choice in who we vote for and the BBC have used their broadcasting monopoly to discredit the anti-Marxist smaller parties. Meanwhile they continue their relentless campaign on CAGW.
http://biased-bbc.blogspot.com/2011/04/held-to-account.html
Our only hope is if something like the US Tea Parties develop here.