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 …
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The movie Atlas Shrugged opens next week…do we think it will have any influence on the course of world events? Here’s an interesting point to consider. For all of you productive members of society with a market value…do you care what currency is used for your paycheck? Would you take Yen, Yuan, Rubles, Euros, gold coins or silver bars? I would. Now, think of the folks who do not have this choice, i.e., those employed and supported by a corrupt government. They have no choice–their payments will be made with local government paper.
Perhaps it’s time to go into the wheelbarrow business, if you catch my drift.
The government likes to think it is a monopoly and we’ll never have any choice in how we organize ourselves, trade and interact…but everything comes and goes. While the parasites try to get one more drop of blood from a corpse, we’ll be tending to our literal and figurative gardens.
Oh what a nice cartoon. The old-line Republicans are not really serious about deficit reduction.
For poster Ed_B: You’re proposing terrific tax increases. Wonderful. Even Christina Romer, the former Presidential economic advisor to Obama, says that’s a bad idea. She co-authored a paper stating that for every 1% of GDP increase in taxes, the long-term effect on the economy is to drop the rate of growth of the GDP by 1.9%. See the link:
http://elsa.berkeley.edu/~cromer/RomerDraft307.pdf
Do the math. We have a $1.6T deficit, a $14.1T GDP, currently growing at 3.1%. Jack up the taxes the way YOU want to fix the deficit, that amounts to new taxes of
11. 34% of current GDP. THAT translates, per Romer’s paper, to a reduction in GDP growth of -21.5%. So, the course you propose will end up giving us a GDP shrinking at a rate of -18.4%. Oh, and that’s long term, too. Genius, sheer genius.
Your examples, Ed_B, show that you don’t comprehend just how far out of control the spending in D.C. has gotten. Your examples also show you don’t realize that every tax increase for many years has always resulted in more spending. I do not recall where I saw this, but someone complied a figure that showed for every dollar of tax increase from World War II to now, Federal government spending has increased by $1.17.
Congress can’t be trusted.
The problem is that Obama increased spending by more than 17%, and it wasn’t a temporary “stimulus” expansion, but became permanent. In fact, the Democrats had more than a year to put out a budget for this fiscal year, but they were too scared to show their full plans during an election year. I guess they figured they would lose even MORE seats in the 2010 elections if they showed that their intention was to permanently increase Federal government spending.
Those interested in the grim details of the fiscal mess can read Mary Meeker’s ‘non-partisan’ analysis of the USA considered as a business –
http://www.kpcb.com/usainc/
By now, the evidence supports a hard-line interpretation, somewhat like Monckton’s view of the AGW leadership. At a high level in the Obamanation, the long term goal is the destruction of American independence. It seems to be working pretty well. Writers here see the power of the mass media in excluding any rational critique of AGW propaganda, and real fiscal reform will continue to be marginalized. If you are rational, you must be a kook!
From time to time I repeat the link to the Green Agenda website, where you can read the quotes by extreme-green and AGW leaders —
http://www.green-agenda.com/
It is important to distinguish the rank-and-file left from the leaders.
In social science, the term ‘capture’ is used to describe continuous efforts by interest groups to control official agencies. Thus, ‘regulatory capture’, a conventional phrase in political science, is well-shown by the current EPA designation of carbon dioxide as a pollutant. And, the Madoff scandal is a good example of regulatory capture at the SEC. The FDA represents big pharma interests, etc.
The ‘long march through the institutions’ is well-known concept on the extreme left. The support for AGW in the universities and even scientific societies is part of a more profound capture by anti-Western leaders.
There are two positive developments. The alternative media, such as this blog, allows a counter to the controlled press. And, there is now some hope for radical energy technology developed through the work of individuals such as Eric Lerner, Andrea Rossi, John Rohner, and others. Any radical energy source without the obvious defects of conventional alternative energy (ethanol, wind, solar…) would be a terrific victory for independent science, and a defeat for the AGW attack on the West.
Ian H says: “But when times were good, instead of running government at a responsible surplus, the republicans cut taxes.”
Actually, taxes were cut right after 9/11 and after the nasdaq bubble popped and 1/2 of everyone’s 401k disappeared overnight. Taxes weren’t cut because things were rosy. The NASDAQ POP was repeated 8 years later for pretty much the same reasons with the only difference being that the banks were left holding all the worthless real estate. Whoops! Banks don’t like that.
Remember those “surpluses” during the 90s created by Greenspan bubble number one? No one was talking about using that money to pay down the debt. Everyone was chomping at the bit to get their hands on it. That’s the problem. That’s why you don’t raise taxes. They just spend it. Raise my taxes and guarantee me that every additional cent collected will be used to pay down the debt and I’m on board…. except I know that the guarantee ain’t worth the paper it’s printed on and my money will be spent on some stupid turtle crossing somewhere.
This site is now inhabited by the brain dead! Look at the DATA:
The USA had high marginal tax rates under REPUBLICANs of the past when we were in trouble or had to pay off a war:
http://politics.gather.com/viewArticle.action?articleId=281474977623449
WWI 70%
1920s 23%
New Deal 63% to 79%
Eisenhower 91%
Nixon 70%
Reagan 50%
Bush II 35%
Is there any doubt that we the electorate are being played? It is all about making the rich richer, and wiping out the middle class. GWB started two wars and gave tax breaks. Then he shut down government oversight of the SEC. We had a 1920s boom. We had the ‘wild west’ inder GWB. Guess what, we had a 1929s crash and now a 1930s situation.
The top marginal tax rates will go up, big time.
Anyone who thinks otherwise is saying the USA will self destruct. Past history says NO, it will not. Face it, TAXES MUST GO UP!
I should also mention… Military spending is one of the major reasons that America has any intellectual property edge at all anymore.
Here’s a choice before you. Do you spend money on social programs that gives kids things to do after school, or do you spend it on military research?
What about the choice between unemployment benefits and military research?
If you throw money at some federal outlay for the social program, you will keep people living as they are for a while, but no future wealth will be generated.
If you fund military research, you create highly skilled labor jobs for young people to aspire to get.
To me the choice is obvious. Social programs generate no new technology for our society to leverage in the marketplace 10-20 years down the line. Military spending does. What’s more, military research spending sets the bar high on the skilled labor scale, which over time will INCREASE the skilled labor base a nation has. Unemployment, by contrast says, “lost your job at walmart? oh well, here’s your check.” Unemployment offers no incentive for the middle-class to make themselves more valuable in the world labor market. Military spending does.
Right on! We desperately need LEADERS in the USA, instead of half-dead, myopic politicians. Of course a “leader” on the left side of the isle just wants to spend and tax MORE!
Leif Svalgaard
A people have the government they deserve…
Well, the majority do. Trouble is, the rest of us get stuck with it, too.
This is what’s happening with the EPA / co2 legislation :
http://www.humanevents.com/article.php?id=42790
anon says:
April 9, 2011 at 7:57 am
Trying to solve the debt by raising taxes is like trying to cure a gambling addict by increasing thier credit limit.
We have way too many politicians and bureaucrats who are incurably addicted to blowing money.
Couldn’t agree more with you Wills…excellent post. As a proud Independent American (realizing that both parties are pretty corrupt), and having spent a bit of time in Washington, I have come to the conclusion that several major things must happen in order for us to really get serious about our deficit:
1) Campaign finance reform – we need to take the big money out of the political process. So long as big money is pouring in to the election process, then candidates to one degree or another become beholden to support various groups (unions, trade associations, large corporate interests) that don’t necessarily care about the financial strength of our nation, but put their own financial interest first. I have seen many a promising candidate corrupted by the reality of big money politics. We need to complete revamp the political process so that the men and women with the best ideas become our leaders and not those with the deepest pockets and wealthiest supporters.
2) A Constitutional Amendment requiring a balanced Federal Budget. There should be no equivocating about this.
3) A limit of two terms for Senators & Representatives. The same logic that holds for the term limit for the President applies to the House and Senate. Power gets too concentrated the longer a person stays in office, and this combined with the need to raise big money to get elected each term, creates the corrupt system. Thomas Jefferson’s idea of citizen public servants that come and serve for a limited time at a very modest salary is right on target. Combine this with campaign finance reform, and serving in Washington will truly be SERVING, and not seen as pathway to get rich.
But here is the sad thing. Though the average American voter may agree at some level with the 3 points above, getting any of them to pass into law is almost impossible. Why? Because the very people they would affect are the one’s who hold the power to make these into law. If real changes are going to occur (balanced budgets, campaign finance reform, term limits) , then it will take a true grass-roots peoples revolution to make it happen…marches on D.C., etc.
Just tried to post this on Facebook and was blocked. Apparently they have not fixed the problem yet.
reminds the folks here that Dubya started running budget deficits, refusing to take the example of Clinton who ran very prudent budgets! Don’t blame liberals for everything. It is mostly the Republicans in the US who start to run deficits…eg Hoover et al
stephen richards says:
April 9, 2011 at 5:16 am
I’m kinda tired of reductions that will be “starting next year”, don’cha know …
w.
A great many conservatives are at the heart of the deficit problem in the US, and I will give you a first hand example. My mother is in a nursing home. We had the foresight to take out a long-term care insurance policy(my wife and I have them as well) on her to make sure she could afford this kind of care.
She has been in the facility for 2 years, and I have been fortunate to get to know everyone who is a resident. The concept is private rooms with a common eating and gathering area. Now, I’ve talked to just about everyone there, and my mother is the only one not on public assistance. The average Medicaid payment for each resident is $2800.00 per month. Now, just about every family here is more than able to take care of their mothers(there are no dads here), they identify as mostly conservative, yet they have no problem having the taxpayer pick up the tab for long-term care.
As a matter of fact, some of the discussion over the years has centered around how to keep from picking up the tab for granny, how to hide property and income(such as transfering property and income 3 years before nursing home care begins), and how to get more benefits. And this is from mainly conservatives, or they self-identify themselves as conservatives.
The problem we have is that a large number of people(perhaps a majority) are on the government dole here in the US, and they don’t want to give it up. If one tried to cut spending for granny at the nursing home, you could well be assured that many of these same conservatives would be out front howling with the liberal mob. The reason–most don’t want to be inconvienced(either financially or personally), and I hate to say it, but it’s true.
I guarantee you that there is no way the people of the United States, or the Congress, much less the President, would support the draconian cuts that would be necessary to balance the budget. However, none of us will have a choice, as the treasury bond market will soon take care of the problem. At some point very soon, likely this year or next, no one will be willing to buy US debt, and the budget crisis will come to a head. The problem will resolve itself one way or the other(both ways will be bad). I can guarantee you one thing, funding of climate-change silliness will not enter the discussion.
One would be wise to take the proper precautions, based on what is sure to come. Consider yourself warned.
anon says:
April 9, 2011 at 7:31 am
I don’t expect either Republicans or Democrats to do much at all, given their historical actions. I’m just pointing out the size of the problem and pointing out that neither side is helping, not taking sides myself.
w.
R. Gates says: “But here is the sad thing. Though the average American voter may agree at some level with the 3 points above, getting any of them to pass into law is almost impossible. Why? Because the very people they would affect are the one’s who hold the power to make these into law. If real changes are going to occur (balanced budgets, campaign finance reform, term limits) , then it will take a true grass-roots peoples revolution to make it happen…marches on D.C., etc.”
R. Gates, what you say is true. And that is exactly how women got the vote, less than a hundred years ago. Marches, writing letters, newspaper articles. They were trying to get men to allow women to vote, which was rather a tough sell. But if women back then could get that to happen, then I think it is possible to make real change happen now. Maybe barely possible, but possible. Let’s just keep making TEA, and vote out anyone who won’t create change. Having conservatives (NOT republicans) take over both the DNC and RNC wouldn’t hurt. And there are some good solid conservative Democrats, as well as good solid conservative Republicans. It wouldn’t hurt to have a president who doesn’t have his head up his @ur momisugly$$ for the warmth.
Reason I am upset at Republicans – Under Bush they allowed unchecked Government Spending, in particular they increased Military Spending FAR too quickly ( I would have rathered special funding rather than simply increasing the funding )
Democrats – want to create/expand entitlement programs. I disagree with entitlement programs, I understand ‘why’ they want to do so, they believe that business is evil and only intent on keeping people impoverished. I have never met any Business Man who has keeping people in poverty as their goal. While a great many businesses offer lower wages people still line up to work for them! Heck I do a door to door business that pays $15.00 an hour and can’t find anyone to do it. Think about that I offer pay over 150% of Walmart but they still line up to work for WalMart because the job is ‘easier’. That is the free market working, people choose to work for a lower wage, they are not stuck there. They are CONTENT there otherwise they would find BETTER Jobs or at least higher paying jobs… I have attempted to get a job everyday this week ( just to see how hard it is ) Are they the best paying? No but I was hired at every single one of them with next to no effort on my part. No either I am exceptional ( which I do not believe ) or people simply do not want to work them ( none of them were easy desk jobs, almost all of them were sales jobs ) Perhaps that is the problem with society, we expect things handed to us, or something…
Sorry I am sick and tired of entitlements. I am tired of trying to pull those that have down rather than looking to pull ourselves up. Heck I am so sick of it I wrote a childrens book about it ( you can snip it if you want ) called “The Fisherman’s Catch : A Conservative Bedtime Story” P.S. notice it says Conservative, this means it is not Republican or Democrat, it is grounded in principles I think the either one could agree with. Such as wealth is not created through redistribution, rather that it is created when people produce something of value to each other.
Sorry for this rant I am so angry/sad/upset at the mentality people have. Who cares if 45% or whatever it is of the wealth is concentrated in 2% of the population, worry about how you can produce more wealth for yourself not what others have managed to do. Government Stop spending like it is going out of style, stop promising things that cannot be delivered. Stop blaming the other side for your cave-ins, or your inability to see things like the housing bubble coming.
Call me crazy, Willis…. but let’s give Paul Ryan a chance. His spending cut proposals are deep and real. The man has a spine and this is the right fight to have over the next 1.5 years, leading up to the presidential and congressional elections of 2012.
The battle will be won….. or lost, not by just posting our thought here on WUWT, but by being involved in the grassroots organizations that are defeating and unseating politicians that do not support real, conservative fiscal discipline. I was not a ‘political person’, until about 2006, when I became so concerned for the economic survival of my country that I started speaking out about my concerns, seeking out similar minded people, and participating in the thankless but essential tasks of grassroots political organizing. We didn’t unseat Let’s Play PattyCakes With The Unions – Patty Murray, but Sen. Maria Cantwell is vulnerable in the coming election. We must work at the local levels to install fiscal discipline minded representatives, while contributing to those in the east part of the state working to take free spending Cantwell out.
I take heart in the fact that Wisconsin, historically one of the most liberal states in the Union, found the courage, wisdom, and backbone to retire many of the progressive democrats that had supported the nearly bankrupting deficit spending and progressively accelerating state debt. If they can do this in ‘blue’ Wisconsin, we can get it done in Washington, Oregon, and even California.
Take heart. Look our opposition straight in the eye and speak to the unshakeable financial facts that our deficit spending and huge state and federal debts are going to bankrupt us without deep spending cuts sufficient to create surpluses needed to pay down debt. Seek out like minded folks in your own neighborhoods, get organized, recruit more like minded folks to support fiscal discipline candidates in the coming elections.
Let’s get this foundering ship bailed out, turned hard starboard away from the financial reefs, sailing at hull speed again, and on course for a sustainable future. There is no viable alternative.
Willis I agree completely, but at this point it’s too late. It’s like asking how do you stop a runaway bus, when the bus is already going over a cliff. The US has become addicted to deficit spending. Consider what it would take to fix the problem:
The current budget calls for $3.8 trillion in spending. Current revenues are $2.2 trillion. That leaves a shortfall of $1.6 trillion. To solve the problem through spending cuts you need to cut spending 42% across the board. That would apply to the military, Medicare, Social Security, and every single thing government spends money on. How will seniors react when you tell them their SS payments will be cut 42 percent? They will grab their pitchforks, shovels etc ( not to mention guns) and come looking for the politicians who voted for it. So that ain’t gonna happen.
On the other hand if you increase taxes, you need to raise them by 73% across the board to eliminate the deficit. That would apply to income taxes, corporate taxes, social security taxes, gasoline taxes and everything else. Someone paying $10,000 in income taxes would owe $17,300 instead. And someone who pays $3500 in social security taxes would owe $6000 instead. Do you think they’d be mad about that? This ain’t gonna happen either. And a combination of higher taxes and lower spending won’t work either.
The only outcome I can see happening is that the government will continue to spend by borrowing and printing money until the dollar collapses. We the people need to prepare for that outcome as best we can.
Ed_B wrote: “Anyone who thinks otherwise is saying the USA will self destruct. Past history says NO, it will not. Face it, TAXES MUST GO UP!”
Well you certainly got my attention the first time but such reduction of a complex system of feedbacks to a single tunnel vision variable is akin to claiming that climate depends only on water vapor feedback controlled solely by CO2. Raising taxes would be great, eventually, but it would be jumping the gun prior to freeing the economy from being shackled by statism. The government in this era needs to be starved, not fattened up. The more the current system is fed money the more it is merely used for personal and corporate welfare rather than the promotion of new wealth creation.
I’ll have to use that in my class at OSU, Willis! Let’s see — a $1.65 T deficit, spread over about 100M taxpaying households puts each one about $16K deeper in debt than last year!
Ramirez’s 4/8 cartoon on US Energy policy at http://townhall.com/political-cartoons/michaelramirez would be worth a WUWT post as well!
Don’t worry about the US being left without a government – Belgium hasn’t had one for nearly a year now, and seems to be doing just fine. I suspect that bureaucrats the world over are developing the steaming squitters in case we notice and ask what use they are.
Ed_B wrote: “Anyone who thinks otherwise is saying the USA will self destruct. Past history says NO, it will not. Face it, TAXES MUST GO UP!”
Without needed reform first, what your request translates to is: “WE NEED MORE WINDMILLS!!!”
No amount of confiscation from the rich is going to fulfill the expectations of the millions of people who have become hooked on entitlements.
–Dr. Tibor Machan