Patterico's Pontifications

1/1/2013

Happy New Year: 41 Dollars of Taxes for Every Dollar of Spending Cuts

Filed under: General — Patterico @ 9:20 am

It’s a balanced approach!

According to the Congressional Budget Office, the last-minute fiscal cliff deal reached by congressional leaders and President Barack Obama cuts only $15 billion in spending while increasing tax revenues by $620 billion—a 41:1 ratio of tax increases to spending cuts.

In November, I said I was supremely uninterested in the details of fiscal cliff negotiations. Why?

Because as a resident of California, I have seen this game played before, and I already know how it’s going to end.

There will be plenty of drama and fiscal cliffhangers. There will be rending of garments and gnashing of teeth.

And then, in the end, we will arrive at a Solemn Agreement to Tackle This Problem Head-On . . . next year.

The details of this agreement will be a matter of intense interest to the same group of politicos who discussed polling every day during the presidential election and never really discussed policy.

Meanwhile, our massive government debt bubble will continue to grow, and nobody will show the slightest bit of interest in letting the air out.

Who is to blame? Those awful politicians in D.C., right? Certainly not the American people. Except that anybody who tried to tackle spending would get voted out of office instantly. I am no fan of David Brooks, but in the round table after Obama’s absurd Meet the Press appearance, once Brooks was finished with the mandatory Republicans Suck speech, he had a good point to make:

The big lie in this whole thing is that we have got the sensible country with the dysfunctional Washington. The reality is we have a country of people who want to bankrupt their children to spend money on themselves, and they will punish any politician who prevents them from doing that. And therefore they will punish Republicans if they– if they cut entitlements. They will punish Democrats if they cut entitlements. So what you saw today was the president shifting the attention from debt reduction to tax cuts, which is the easy thing.

You can blame the spineless politicians all you like, and I will happily blame them right along with you. But the fact is, this giant pile of irresponsible debt is what this increasingly soulless and immoral country wants. The longer we do this, the more we are wrecking our children’s futures. And tra la la, nobody seems to care. We’re going to “get the millionaires who are doing pretty well to do a little more,” to use the Huckster in Chief’s well worn phrase, and meanwhile the do-nothings who contribute zero to our society get to keep sucking on the socialist teat. And this is what we want, as a country. This is what we voted for.

In the editorial cartoon I envision, a child is lying on the ground dying. On the child are the words “our children’s future.” Obama is a doctor, stethoscope hanging from his neck, standing over the dying child who needs CPR. Obama is handing out heroin to onlookers so they won’t notice he’s doing nothing to save the child. Every so often someone says, what about the child? and he starts making speeches about how we need to save the child, but it needs to be a balanced approach. We need the rich people to give us more heroin, so I can have time to save this poor child. What I won’t do is cut off your heroin just because the fat cats want to keep it all for themselves. And everybody in the crowd applauds and takes more heroin, and passes a law that the rich people need to give them more heroin.

Meanwhile the child is dying right in front of this crowd and nobody cares because they’re all too high. And you can tell they’re going to keep ignoring the child and getting high until the child is dead.

That’s where we are on this first day of 2013, folks. Our children’s futures are wasting away in front of our eyes, and nobody gives a damn, as long as we can keep injecting those sweet, sweet government benefits into our bloodstream. Just close your eyes and feel the calm wash over you, and try not to think about the small child gasping for air at your feet.

Ahhhh. Doesn’t it feel good, folks?

Happy New Year!

UPDATE: Thanks to Allahpundit at Hot Air for including a passage from this post as one of the Quotes of the Day.

183 Responses to “Happy New Year: 41 Dollars of Taxes for Every Dollar of Spending Cuts”

  1. It’s an awful thing to stand by and watch when you feel like you have no power to do anything about it.

    What are you going to do, go convince the crowd that they need to give up their heroin and vote to save the child? Good luck. They’re all junkies. They. Don’t. Care.

    Patterico (a1b66c)

  2. By the way, I’m pretty sure that portraying Obama as a drug dealer in this mental cartoon is racist.

    Patterico (a1b66c)

  3. Firstly, I denounce you for the racist mental cartoon.

    Now, as to our dilemma. I agreed with Brooks, too. People just don’t see the connection between the federal government and their daily lives. So they vote in Santa Claus because the other guys present no alternative.

    The parties on a federal level are dead. To me, the answer is federalism. In a year or so, it will be apparent to anyone, even Peggy Joseph, that the states that weaken unions and cut budgets and taxes and who refuse federal mandates are in good economic shape, as well as the converse. And the math train will catch up to our Dear Leader, and he won’t be able to talk his way out of the smashup.

    CA, IL and NY will be the avatars of blue failure. People like Walker and Snyder in MI will do the right thing, because and only because it’s politically wise on the state level.

    Patricia (be0117)

  4. I don’t think it is that people don’t care, Patterico. I think that most voters dont’t understand the situation. It is all bumper sticker, Twitter thinking: all emotion, a pithy platitude…and no depth.

    Heck, I’m pretty sure the President doesn’t understand. Three cheers for letting partisan politics rule academia and the media!

    The bill will arrive, never fear. But the politicians will be safe. They aways are.

    Simon Jester (2b1747)

  5. it is what it is I guess

    we can’t let feckless boehnertards ever ever ever enact temporary tax cuts ever again ever

    so, lesson learned

    happyfeet (48d2e2)

  6. No, pikachu, I think that was in the era of August
    Hastert and his associate, the Lott, trying to appease the most reasonable Jeffords, and the Maine
    sisters, how did that work out,

    narciso (3fec35)

  7. yes but the boehnertard instinct was to kick the can in the last round of negotiations

    so what I mean to say is that the permanence of the bush tax cuts is the only silver lining here I can see

    happyfeet (48d2e2)

  8. These are just some of the spring surprises in the bill;

    http://www.businessinsider.com/whats-in-the-fiscal-cliff-bill-2013-1#ixzz2GkL7oJjl

    narciso (3fec35)

  9. In 2012, the government spent $6.2 Trillion and the entire net worth of the Forbes 400 richest Americans was $1.7 Trillion. To really “sock it to the rich” take ALL of their money and assets. Unfortunately, that would only cover about 14 weeks of government spending. Then who will pay? There will be 400 new paupers, plus their families, with no money, no businesses, and, more importantly, no employees either. All of them will need to be supported, but by whom?

    As the Instapundit says, “Something that can’t go on forever, won’t.”

    Dave (6cafbc)

  10. ‘If you have your payroll deduction, you can keep your payroll deduction’ this is like cutting through
    tauntaun entrails,

    narciso (3fec35)

  11. I don’t think it is that people don’t care, Patterico. I think that most voters dont’t understand the situation.

    The obamawhores I listen to seem to still believe that food stamp’s vicious rape of our depleted treasury is wholly justified by

    the iraq war

    Which is one reason I’m okay with the defense money sequester. This pitiful little country and her food stamp besotted populace can’t afford a superpower military to protect their food stamp fattened asses and promote their interests abroad.

    Not when the use of that military demonstrably and dependably stokes a voracious sense of entitlement and dependency among the losers susceptible to obama-style fascism and class war.

    happyfeet (001171)

  12. hmm those first two lines were supposed to be italicky

    these samsung phones are a lot overrated i think

    happyfeet (001171)

  13. Boehner said he wouldn’t bring to the floor any bill that didn’t have support of 50% of the GOP.

    Acknowledging the Speaker’s iron will, the Hill is wondering if 100 loyal soldiers will give him enough cover.

    Bet he puts it off to ‘New Business’ for the next Congress.

    gary gulrud (dd7d4e)

  14. This administration relies heavily and smartly on low-information voters. As was stated above, they don’t understand the correlation between and direct impact of the federal government in our lives. Little sound bytes is all people want to be fed – no hard work involved – and the left meets that minimal need.

    The inky way that will change is when those low-information voters don’t get what they demand. Only when they experience personal suffering and impact,then they will wake up. It’s an inherent selfishness ruling.

    Dana (292dcf)

  15. Current economic thought seems now to be even less about John Maynard Keynes, and more about J. Wellington Wimpy. That’s Wimpy (“I’ll gladly pay you Tuesday for a hamburger today!”) from the old Popeye cartoons.

    tek (0fac7a)

  16. Inky = only…auto correct, meh.

    Dana (292dcf)

  17. 11. And the Pentagon warning its civilian contractors of furloughs sorta seals the deal.

    ‘Let it Burn’ is going to get a lot of civil accelerant.

    gary gulrud (dd7d4e)

  18. They are all who-res

    JD (78d90b)

  19. Blessed are the chirren, especially college age chirren. As President Downgrade has consistently said, everybody deserves a chance to go to college and study medieval spanish lesbian feminist fat literature and have their government student loans forgiven afterwards and collect unemployment and foodstamps. It is the New Obama Normal.

    daleyrocks (bf33e9)

  20. Plus, it stimulates the economy!!!!!!11ty!!!!!!

    daleyrocks (bf33e9)

  21. Meanwhile, their insurance rates will go up 45%,

    narciso (3fec35)

  22. Allah with the ‘Moderate’ take:

    http://hotair.com/archives/2013/01/01/fiscal-cliff-does-boehner-have-the-votes/

    Mr. Sowell meanwhile thinks the Rethuglicans ‘deserved to lose’. D’ya think?

    gary gulrud (dd7d4e)

  23. Boehner said he wouldn’t bring to the floor any bill that didn’t have support of 50% of the GOP.

    Which means either he will anyway, or that there will be amendments. Watch Bachmann’s feet.

    Kevin M (bf8ad7)

  24. #Liberal New Year’s Wish – I want more of my neighbor’s stuff, directly or indirectly.

    daleyrocks (bf33e9)

  25. Let. It. Burn.

    redc1c4 (403dff)

  26. 15 billion in the reduction of the rate of growth over 10 years. 1.5 billion in the reduction of the rate of growth a year, from a 3+ TRILLION dollar budget, were the Senate to actually pass one. This is not even a rounding error. As Iowahawk pointed out, this is the equivalent of a 2 pack a day smoker reducing their habit by 5 cigarettes a year.

    JD (78d90b)

  27. boehner is presiding over the pillaging of america with an astonishing sense of complacency I think

    does Team R really think staying the course with such desultory and enervated leadership is going to help improve their fortunes?

    happyfeet (001171)

  28. Pour gas on the fire.
    Scorched republicans deserve death blisters.

    mg (31009b)

  29. Boehner now says the House and Amerikkka needs a few days to sit in the cesspool and let us all soak, especially the unwashed.

    First order of bi’ness Thusday is re-electing a Speaker.

    gary gulrud (dd7d4e)

  30. the good news about the defense cutbacks is that Ear Leader will have that many less people in uniform when he tries to order them to confiscate weapons.

    redc1c4 (403dff)

  31. To be fair to the people, the progressive left has been indoctrinating and seducing them for many decades now. The mammoth powers of the left have taken over our schools, entertainment industry, news media, churches, and every element of our culture. Their goal has been the complete domination of the people so they will put the shackles on themselves, willingly and eagerly. This is the beginning of the end of a very long process that has been marked by the demonization of every public and private figure who has tried to stand against it.

    And everybody please STOP saying that we have done this to ourselves and that nobody gives a damn. A great many Americans have been fighting against the left for decades against overwhelming odds. My parents foresaw this looming destiny for America and carefully taught all of their children to recognize and fight against the progressive agenda. I have never voted for anyone on the left in my life. I worked for Goldwater’s election when I was still in junior high school, for pete’s sake.

    And please STOP saying that we get the government we deserve. I have NEVER gotten the government that I deserve. And neither has anyone else on the conservative side.

    pa (4f643b)

  32. way to torpedo my new years day.

    I thought religion was the opiate of the masses, but I guess I was wrong… and, oh, I denounce your possible racism.

    Obama is slinging the black tar shit to the people. (except for Harry Reid who gets the good stuff from Laos… doesn’t he look like he’s nodding out sometimes?) They’ve sold everything for the worst thing

    I always hated being near junkies….. they are all magicians who can change $1000 of your stuff into one hit.
    There is hope though, because people who despise the wastedness and all the bullshit it brings will do whatever it takes to get away from the addicts.

    SteveG (831214)

  33. To be fair to the people, the progressive left has been indoctrinating and seducing them for many decades now. The mammoth powers of the left have taken over our schools, entertainment industry, news media, churches, and every element of our culture. Their goal has been the complete domination of the people so they will put the shackles on themselves, willingly and eagerly. This is the beginning of the end of a very long process that has been marked by the demonization of every public and private figure who has tried to stand against it.

    Can anyone read this and come to the conclusion that the media will report honestly on the issues?

    Michael Ejercito (2e0217)

  34. Looking like ‘Moderates’ best hope here is to vote against the Senate Bill after some amendments provided they are acceptable to Bat Whisperer Nan.

    Dhimmis and 30-odd GOP lampreys pass the bill and the Moderates get to go on record opposing.

    More Kabuki theatre.

    Time to trash Boehner just to mix it up.

    gary gulrud (dd7d4e)

  35. Pathetic. This is what happens when you want to be liked.

    AZ Bob (28c32d)

  36. Peering into the Bizarro universe, is occasionally useful;

    http://www.motherjones.com/kevin-drum/2013/01/part-1-fiscal-cliff-over

    narciso (3fec35)

  37. Show of hands, who thinks, now that Boehner and his posse have their Obama tax cuts, that a few months down the road they can do anything to restore spending cuts with the Debt Ceiling guillotine hanging over Succubus’ and Pederast’s heads.

    What, no one home? Racists.

    gary gulrud (dd7d4e)

  38. Oh, ye of little faith, recall that Plan B, failed,
    so why would a more restrictive bill pass,

    narciso (3fec35)

  39. Well said, Cuz! Although I’ve been saying it for years, I couldn’t have said it like you can. I was talking to my brother (Pete) the other day and we both have come to the same conclusion: it’s too late. We have passed the point of no return. There isn’t any intention (and very soon, ability) to pay down the debt and it will begin to spiral at some point in the next decade crushing our ability to borrow.

    Don’t believe it? Pull out a piece of paper and a pencil and figure out what happens to the deficit if interest rates rise to a “normal” level (take your pick which rates). This means that if the economy manages to heat up, all that money the Fed is “printing” will cause inflation, and the Fed will not be able to control it. They cannot raise interest rates without enormous consequences to the deficit.

    The result is that the economy cannot be repaired in the long-term without another great depression or worse. Going over the fiscal cliff was really the last chance we had, which we all know wasn’t really an option the American people would tolerate. It’s over. Our children will not have the same opportunities we did… at least for the next decade or two.

    Happy New Year, anyway!

    Jim C (cd173d)

  40. Who is to blame? Those awful politicians in D.C., right? Certainly not the American people.

    In actuality, primarily the latter. First, for re-electing a Banana-Republic-type politician to occupy the White House, and, second, for favoring Obama’s/Democrat’s/liberals’ stance on the Greece-like budgetary situation in the US versus the Republicans’.

    rasmussenreports.com, December 31, 2012:

    The Rasmussen Reports daily Presidential Tracking Poll for Monday shows that 57% of Likely U.S. Voters at least somewhat approve of President Obama’s job performance. Forty-one percent (41%) at least somewhat disapprove. That 57% rating is up 11 points from a year ago. It’s also up nine points from the last day of 2010 and up 11 points from the last day of 2009.

    While the president’s job approval ratings remain near the highest levels of his tenure, Congress is heading in the opposite direction. Just five percent (5%) say the national legislature is doing a good or excellent job.

    Today’s figures include 34% who Strongly Approve of the way Obama is performing as president and 33% who Strongly Disapprove. This gives him a Presidential Approval Index rating of +1 (see trends).

    Thirty-one percent (31%) believe the economy is getting better, while 42% say it is getting worse. Those figures are little changed from a year ago. But there remains a huge partisan divide on this. By a four-to-one margin, Republicans believe the economy is getting worse. By a 49% to 20% margin, Democrats believe it is getting better. Among those not affiliated with either major party, 27% say better and 43% worse.

    ^ The human nature evident here has been illustrated for decades in nations like Argentina, France, Mexico, Spain, etc. If we in America have caught a similar form of Euro-sclerosis, Venezuela-itis or Mexico-ese, then we too are headed where those societies have ended or are ending up.

    Mark (b5c530)

  41. pa @12:19

    You have said a mouthful and said it very very well and quite movingly. I realized anew this morning that many of us of the type you described (who have fought and scrimped and done everything we know to do within our own family universes to plan and protect ourselves physically and financially and to support the fiscally conservative candidates at all levels through decades) have just not succeeded. We are outnumbered and increasingly marginalized. I was raised to understand that along with its beauty, life on earth can be tough, laced with disappointments and perhaps bombed with unexpected tragedy. But I was also taught that we as free individuals have a chance to control our own destiny and how we’ll come out on the other side of those setbacks.

    From the recent election in Nov. –coupled with the fiscal cliff debacle– I’m not used to feeling so almost helpless and utterly impotent when it comes to the future and where our country is headed. Yet that’s the dominant emotion I feel today in the first day of the new year. I am not happy that authorities whom I despise in Washington and in my state are making horrible decisions that affect me and the next generation so negatively.

    There’s a lot of frustration and Boehner hate around the web today. But you know what? If I were walking in his shoes today I can’t say I’d know what to do, or do differently, either. He has a fractured party, is covered by a hostile and lying press, and is not dealing with honest people on the other side of the aisle. A new or different R speaker (no matter who she or he might be) would be stepping into the exact same situation. How would things be different?

    elissa (39e555)

  42. Obviously the “we” in this post does not apply to almost any reader here. Unfortunately we do not represent the electorate at large.

    Patterico (3fdc4e)

  43. point of no return like a nu shooz boy howdy

    happyfeet (ae1213)

  44. 42. “How would things be different?”

    Good question considering the likely successors, e.g., Cantor or McCarthy.

    But just as a reminder, Speaker Boehner told us, seriously but short of wagging the finger, that CR 2011 contained “$38 Billion in real cuts”.

    In fact, it was just $380 Million.

    gary gulrud (dd7d4e)

  45. things could be different if boehner had communication skills and a message to offer

    if he were to act as if we were in a horrific crisis precipitated by encroaching dissolution and incipient fascism

    if he wasn’t played out like a 30 year old venezuelan hooker

    happyfeet (ae1213)

  46. i am truly glad that i have no children…

    redc1c4 (403dff)

  47. i bet you’d be an awesome dad mr. red

    i just know these things

    happyfeet (ae1213)

  48. With the approval ratings for Obama and Congress at opposite ends of the spectrum, how long will it be before we hear the argument that “the public is calling for Executive Rule, and that Congress just needs to go home”?
    That is the logical conclusion from those poll numbers, from a Progressive perspective, isn’t it?

    askeptic (2bb434)

  49. $1 v. $41!
    If this be victory, I don’t think we can stand many more.
    Perhaps it is time for Boehner to mimic Newt in ’98 and to resign, and return home, and let someone else (as long as they are not another Livingston or Hastert) take the reins.
    If Boehner remains, he very well could be the last Speaker of the House from the Republican Party (and will have a Robert Charles Winthrop moment), as his party collapses and morphs into something more akin to the TEA Party.

    askeptic (2bb434)

  50. “As President Downgrade has consistently said, everybody deserves a chance to go to college and study medieval spanish lesbian feminist fat literature and have their government student loans forgiven afterwards and collect unemployment and foodstamps.”

    - daleyrocks

    There are plenty of countries that pay for college education. It’s not like some ridiculous mythical concept.

    Leviticus (17b7a5)

  51. Leviticus, certainly not “plenty” with the same view of universality that has actually done harm in the US.

    SPQR (768505)

  52. not a good way to allocate limited resources in a declining america though

    people make better choices when they have skin in the game i think

    like when you buy a car you might get one with good mileage that you feel safe with on the freeway or in snow

    whereas if you let your fascist government buy your car they’ll put you in a chevyvolt that has a range of like 30 miles per charge and was built by piggy piggy illiterate united autoworker thugs who don’t give a damn about quality

    happyfeet (ae1213)

  53. There are plenty of countries that pay for college educationmake your family pay for the bullet they put into the back of your head. It’s not like some ridiculous mythical concept.

    FTFY!

    askeptic (2bb434)

  54. Looking for a state succeeding from this insane union.

    mg (31009b)

  55. And the children of Texas shall lead us.

    askeptic (2bb434)

  56. The Chevy volt is part of the deal, pikachu, along with credits for more greener homes.

    narciso (3fec35)

  57. “Looking for a state succeeding from this insane union.”

    - mg

    Do you mean “succeeding” or “seceding”?

    Either way, the answer is Texas.

    Leviticus (17b7a5)

  58. 59- Leviticus, my fault I meant seceding.
    Lake Travis must be nice this time of year.

    mg (31009b)

  59. And the hits just keep on coming….

    Fm Insty @ 6:27pm, comes news that Stockton CA will attempt, in BK Court, to get their bondholders subordinated to the pension funds ala Chrysler and the UAW.
    When retirees learn that their IRA’s, 401-K’s, and other investments are going to get a severe haircut so that retired public-works employees will keep 100% of their pensions, there are going to be a lot of upset folks, and they’re going to be upset from sea-to-shining-sea as this is not going to effect just Californios, but investors around the world.
    If this court allows this, we as a Republic, are doomed to involuntary servitude to the benefit of the public-employee.
    BTW, anyone else see the report of the CHP Captain(?) who retired at age 53 with an out-the-door check of about $285K from cashing in all of his vacation/PTO/medical leave/etc., and an annual pension of about $175K?
    Not bad for 30-years of do-nut eating.

    askeptic (2bb434)

  60. …This pitiful little country and her food stamp besotted populace can’t afford a superpower military…

    Two, happyfeet. We can’t afford two superpower militaries. China’s and then our own. So our own will have to go.

    In order to pay off our debt we’ll probably have to ship corvee labor off to China to work it off. Like Cuba engages in “medical slavery” when they send doctors and nurses to Venezuela in exchange for oil. Or North Korea when they send laborers to logging camps in Siberia in exchange for food.

    Steve57 (2073db)

  61. When we don’t have that “superpower” military, we won’t be able to afford anything.

    askeptic (2bb434)

  62. Barack Obama will require you to work. He is going to demand that you shed your cynicism. That you put down your divisions. That you come out of your isolation, that you move out of your comfort zones. That you push yourselves to be better. And that you engage. Barack will never allow you to go back to your lives as usual, uninvolved, uninformed.

    -Michelle Obama, UCLA, February 2008

    You can’t say we weren’t warned about the whole corvee labor thingy.

    What’s amazing is that the food stamp-besotted populace who keeps electing him still believes that they elected someone who’s going to force those other people to work, and won’t allow those other people to go back to their lives as usual.

    As an aside, it’s amazing to me that this country could elect anyone even once knowing that he intends to be the arbiter of what you must do, what he will allow you to do, and what he won’t let you do.

    But that’s exactly what we got in President HHS Mandate. Again.

    Steve57 (2073db)

  63. Beginning to look as tho Boehner will give the Senate bill an up or down vote tomorrow.

    An amended bill wouldn’t see a vote and that apparently cannot be reciprocated. I did not know the House was the little boys and girls playhouse.

    Chaos, gnashing of teeth, and unprotected sex.

    gary gulrud (dd7d4e)

  64. Well ideally, there should be a conference between the Senate and House bills, since the House already
    acted, earlier.

    narciso (3fec35)

  65. To #42 elissa from $32 pa: Thank you for your kind words and excellent follow-up remarks. You said exactly what I have been feeling — “I’m not used to feeling so almost helpless and utterly impotent when it comes to the future and where our country is headed.” I am almost to the point of agreeing with my eldest sister, who says that she is glad she is so old (65) that she won’t live long enough to see what is going to happen to America. I admit to feelings of utter despair about what the future holds for me and mine, not to mention the country that I used to love. (The country we have now, not so much.)

    My father’s parents died before he was six months old, and he grew up in an orphanage. He had very clear ideas about being responsible and able to take care of yourself. For example, he taught us to be careful about getting into financial debt, as you cannot be sure that anyone will be around to bail you out. That’s exactly the opposite of Obama’s game plan, which wants a dominant class of dependents. I remember my father as a man of unswerving principle who was devoted to his family and to his country. I cannot for the life of me understand why anyone would believe that Obama is a good father. What pernicious ideas he fills his kids’ heads with, and all American children as well. There’s much more to good parenting than just not beating the kids to a pulp or letting them go hungry. What is put into their hearts and minds is of far more lasting importance.

    #43 patterico: I did know that your use of “we” did not include “us guys.” But I have heard that universal “we are to blame” bit hundreds of times in recent years, and it’s beginning to grate. My remarks were not directed at you personally or your post. My only excuse for the outburst is that I have a thundering case of Obama-itis, and we teetotalers have neither drink nor drug to ease the pain.

    pa (4f643b)

  66. Call me crazy but I don’t see how another $70 Billion in revenue per annum, half of which is devoted to new spending, will placate the bond credit agencies re: any US intention to keep their currency sound.

    Pull tabs or US Treasuries? What’ll it be, sovereign?

    gary gulrud (dd7d4e)

  67. “…he intends to be the arbiter of what you must do, what he will allow you to do, and what he won’t let you do…”

    But, naturally, it is the GOP who wants to do all those things – particularly in your bedroom.

    askeptic (2bb434)

  68. 66. Good point, the Senate bill is an amended HR 8 or something, forwarded from the House.

    ‘This page intentionally left blank’ for His SmegmaBreathiness to fill in with content.

    gary gulrud (dd7d4e)

  69. And, after the usual circular firing-squad aka The Debt Ceiling, the rating agencies will drop the rating on U.S.Bonds another notch, and Teh Won will have two (count ‘em: TWO!) rating downgrades during his watch – all the fault of the GOP for not giving him unlimited spending authority, Natch!

    We’ll see that $10/gl gasoline yet; plus, I wouldn’t doubt that an EO will be forthcoming forcing 50% of all natural-gas produced via frakking to be exported, driving up the domestic cost of everything as electricity rates spike from a shortage of natural-gas, and the EPA-enforced closing of coal-fired power-plants.
    Pretty soon, one of those night-time satellite photos of North America will look very similar to the ones of North Korea – a big, black, expanse between Canada and Mexico!

    askeptic (2bb434)

  70. Comment by pa (4f643b) — 1/1/2013 @ 4:36 pm

    I cannot for the life of me understand why anyone would believe that Obama is a good father. What pernicious ideas he fills his kids’ heads with, and all American children as well. There’s much more to good parenting than just not beating the kids to a pulp or letting them go hungry. What is put into their hearts and minds is of far more lasting importance.

    In this respect, he’s not bad – he’s thoughtless. Whatever the school he sends them to says, that’s OK. (This is actually all too common.) He’s for education, but doesn’t care about the content of the education.

    So he’s thoughtless about what his children are taught. But then he’s thoughtless himself. Except that, having arrived at a position (most of the time) not for any reason that would tell you you should stick to it, often in fact for political reasons, or because that’s what his party seemed to be for, he sticks to what he said, and searches out justifications – and they often don’t work.

    Even when he did give something some thought, once he’s pronounced himself, he’s very, very stubborn – maybe not always about getting his way, but about what his way is.

    Sammy Finkelman (d1a369)

  71. A contrarian view–on the subject of rapidly devauling currencies:

    http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/9773911/Stocks-to-soar-as-world-money-catches-fire-Calvinst-Europe-left-behind.html

    Synthesis is the responsibility of Dear Reader.

    gary gulrud (dd7d4e)

  72. I’m all-in on commodities, with cash going to arms and ammo.

    askeptic (2bb434)

  73. Comment by gary gulrud (dd7d4e) — 1/1/2013 @ 4:42 pm

    the bond credit agencies re: any US intention to keep their currency sound.

    Where do you get the idea that the credit rating agencies care about the value of the dollar?

    All they care about is nominal dollars – whether payments will be made, and what gets a downgrade is not trillion dollar deficits, but paralysis in Washington to the point where there is some risk payments will not be made in time.

    Sammy Finkelman (d1a369)

  74. 67, 73. An accounting of Ogabe’s vacation time expenditures the day before return to the Throne:

    4 hours family time, 21 hours golf(on a US Marine course no less).

    Gays in marriages of convenience may not be the best parents for opposite-sexed chilluns.

    gary gulrud (dd7d4e)

  75. Our children’s futures are wasting away in front of our eyes,

    This is nonsense just like the people who predicted famine in 1975, or running out of natural resources.

    The United States of America is not going to run out of money.

    Sammy Finkelman (d1a369)

  76. it could damn well run out of liberty

    these people have a strong fascist streak, these americans

    happyfeet (ae1213)

  77. 76. Note to Samuel. Bonds are a contract to pay at maturity a given rate of return on the original investment.

    If one’s currency devalues significantly as a means of evading debt repayment in real terms that would be a bad thing in the credit agency’s eyes.

    gary gulrud (dd7d4e)

  78. if i had a gay mom or dad i would love them unconditionally mr. gary

    that’s just how i was raised

    happyfeet (ae1213)

  79. 81. Quality affection in repayment for quality absence is a heart grown fonda.

    gary gulrud (dd7d4e)

  80. What changes in policy caused these trillion dollar deficits? None.

    It’s only the recession and slow economic growth plus some bad long term trends, like rising medical and tuition costs, that can only be reversed by changing the incentive structure.

    There is no problem with deficits up to about $400 billion a year, according to Paul Krugman, and the history of the Twentieth Century has shown him right. The problem is, it’s 2 to 3 time as large and deficits that size can only continue for 10 to 20 years before interest payments present a problem.

    Sammy Finkelman (d1a369)

  81. Weimar Germany, didn’t run out of Reichmarks, they just lost all value,

    narciso (3fec35)

  82. nice volley

    happyfeet (ae1213)

  83. Comment by gary gulrud (dd7d4e) — 1/1/2013 @ 5:18 pm

    Note to Samuel. Bonds are a contract to pay at maturity a given rate of return on the original investment.

    If one’s currency devalues significantly as a means of evading debt repayment in real terms that would be a bad thing in the credit agency’s eyes.

    It might be a bad investment, but the credit rating agencies only care about nominal dollars. Are there any other kind of dollars that we have? Is there any other kind of money that we have?

    Are they experts in hyperinflation anyway? Are they experts in evaluating the risk it might happen in three, five, eight or thirteen years, and what raises the chance and what lowers it??

    How could anyone presume to judge that?

    If they did look at deficits don’t you think they would not look at anything other than actual year end deficits? Why would they look at ten year projections, or plans, or promises? They would pay no attention to what Congress does, only to how much is actually being borrowed relative to GDP.

    Sammy Finkelman (d1a369)

  84. Wasting a generation of children because of inadequate governing is child abuse.

    mg (31009b)

  85. Comment by gary gulrud (dd7d4e) — 1/1/2013 @ 5:23 pm

    Peter, Jane, or Henry?

    askeptic (2bb434)

  86. 83. As no economist by training or reputation I would prefer a contruction that said ‘Public deficits are no problem as long as creditors are confident in recouping their investment’.

    We shall be interested to follow Treasury auctions over the coming month or so. Primary and Indirect purchasers over the last weeks of the outgoing year showed a surprising lack of interest in Notes and Bills of all maturities.

    Direct dealers who resell to the Fed plus commissions lapped up the remainder. However, the Fed was only guaranteeing purchase of $45 Billion per month(as well as a similar amount of MBS retirements).

    We await with intense interest any bend in that curve, presumably upward.

    gary gulrud (dd7d4e)

  87. “If they did look at deficits don’t you think they would not look at anything other than actual year end deficits? Why would they look at ten year projections, or plans, or promises? They would pay no attention to what Congress does, only to how much is actually being borrowed relative to GDP.”

    Sammy – If you go the the websites of Moody’s or S&P, they actually explain their methodology for rating sovereign credits. Why not take a look?

    daleyrocks (bf33e9)

  88. 86. “credit rating agencies only care about nominal dollars”

    I see.

    gary gulrud (dd7d4e)

  89. Comment by narciso (3fec35) — 1/1/2013 @ 5:30 pm

    Weimar Germany, didn’t run out of Reichmarks, they just lost all value,

    Relative to U.S. dollars and British pounds. That’s in fact why they lost all value. People like Hugo Stinnes were borrowing Reichmarks, and then selling them for Dollars and pounds and francs.

    What would somebody sell Dollars for??

    I think also they did run out of Reichmarks for a while, when the printers went on strike.

    Sammy Finkelman (d1a369)

  90. I think they ran out of wheel-barrows.

    askeptic (2bb434)

  91. But the bears did not run out of marks to sell.

    Sammy Finkelman (d1a369)

  92. This happened I think actually with most currencies in Europe in the post World War I period.. They were shorted on the foreign exchange market.

    Sammy Finkelman (d1a369)

  93. 75. I’m pretty sure commodities is the way to go, for those with a decent stockpile.

    In our case location was about the best we could manage.

    gary gulrud (dd7d4e)

  94. Just so I understand what your position is Sammy–you believe there is no problemo with respect to our country’s financial health and indebtedness, or the dollar’s value? Is this a correct reflection of your assessment of the situation?

    elissa (39e555)

  95. Sammy thinks history is proving Krugman right.

    That’s the most hilarious thing I’ve seen Sammy write …

    SPQR (768505)

  96. Right now inflation indexed bonds pay a negative real interest rate of over 1%.

    An auction could fail if the Federal Reserve Board lets it fail. Unless dominated by ideologues, it won’t.

    A place like Greece has a potential to default (in nominal terms) because it can’t create its own money. When things get really close, you might look at projections, and its probably a lot of nonsense

    A country that borrows in its own currency is not in danger of default.

    Sammy Finkelman (d1a369)

  97. In the United States downgrades happen because of political infighting, and it is the infighting that creates a risk a payment might be delayed. Moody’s and Stad and Poor have made that quite clear.

    The credit rating of U.S. government debt (which anyway no one pays attention to – it’s not like anyone needs their help to analyze an unfamiliar situation, and it didn’t use to have any kind of rating at all) is not affected by deficit projections.

    What concerns credit rating agencies is an inability to pay debt – in cases of countries with large debt, an inability to sell new debt = roll over the debt.

    A too low debt ceiling can interfere with that, but not deficits.

    Sammy Finkelman (d1a369)

  98. 99. Like Argentina, like Japan. My predictions aren’t proving timely, but I’d say Argentine, Greece and Spain will walk away by the end of the year.

    Japan could go as early as next year. Abe, the new PM(?), wants to see the yen go to 90 per dollar. Get your popcorn.

    There is a huge amount of corporate bonds coming up for renewal by the end of 2014. Evans-Pritchard at the link above thinks this will be a boon to equities.

    Bonds, as a whole, are going to fail.

    gary gulrud (dd7d4e)

  99. See, nothing to worry about, Sammy says it’s all A-OK!

    askeptic (2bb434)

  100. You mean the debt isn’t such a big deal. As Obama said, we owe it to ourselves.

    AZ Bob (28c32d)

  101. Sammy should not be trusted to manage a passbook savings account.

    JD (5ed6bd)

  102. gg @6:06

    I was at an informal event last night where also present was a friend who’s a financial services guy that advises some fairly high net worth clients. He said the same thing about bonds you just did.

    elissa (39e555)

  103. Guns, ammo, and canned goods – it’s what’s hot in investment circles.

    askeptic (2bb434)

  104. Sammy rated AAA subprime mortgage tranches before he started commenting on blogs.

    daleyrocks (bf33e9)

  105. If you live in Illinois, you might want to skip the first item;

    http://www.thetruthaboutguns.com/2013/01/robert-farago/breaking-illinois-bill-to-ban-all-modern-firearms/

    narciso (3fec35)

  106. What is it with IL pols?
    Why do they insist on contributing vast sums of money to the NRA, and its lawyers?
    This will be struck down, as was Chicago’s laws in McDonald, and as was IL’s ban on concealed carry, faster than a New York Reload.

    askeptic (2bb434)

  107. “In the United States downgrades happen because of political infighting, and it is the infighting that creates a risk a payment might be delayed. Moody’s and Stad and Poor have made that quite clear.

    Bullshit, Sammy. Now you are misrepresenting what S&P wrote.

    SPQR (768505)

  108. Comment by elissa (39e555) — 1/1/2013 @ 5:51 pm

    Just so I understand what your position is Sammy–you believe there is no problemo with respect to our country’s financial health and indebtedness, or the dollar’s value? Is this a correct reflection of your assessment of the situation?

    Much less of a problem than some people imagine, and there is plenty of time to deal with it. It can be remedied and totally disappear as a problem if we can get economic growth restarted at 5% or so.

    That is not a very unlikely scenario, and certainly easier to achieve than attempting to change a few laws in such a way so as to reduce spending significantly. Economic trends will affect things more than any mandated spending cuts.

    Now there are places where you find costs climbing. Medical costs are an important example.
    Where spending is climbing, it is very insidious, and requires careful analysis of what is going on to try to stop it without reducing the value you get per dollar of spending. (an example in the medical field is higher educational requirements for nurses or patent laws) Most spending cut proposals would let the rot continue, but cut real value.

    Some people, I think including Paul Ryan, think it is a very short term problem. In fact he probably is surprised we lasted so long without a crisis, and probably finds it hard to imagine how we can get through 4 more years of Obama as president, without a crisis. But we do have time.

    If we do get into a problem, it might resolve itself with maybe 10% or 20% a year inflation.

    However, anything can be mismanaged, and the greatest possibility for mismanagement is when somebody purports to remedy the problem. That’s going on in Europe right now.

    There’s a much greater chance of damage to the dollar’s value than to our country’s financial health. Inflation, will of course, tend to cure indebtedness.

    Of course everyone has to understand, if interest rates ever rise up to where they were even five years ago, we are in big trouble – unless the debt is refinanced before that into 60 or 100 year bonds – and no amount of budget cutting can help.

    Inflation can help, and that’s how the accumulated World War II debt was whittled down.

    Sammy Finkelman (d1a369)

  109. Most gun bans were passed in the 1980s, including Chicago’s, then they were reversed, only 30 years later, with Heller and then McDonald

    narciso (3fec35)

  110. ” Inflation, will of course, tend to cure indebtedness.”

    Sammy, you have no clue how silly you look writing this nonsense, do you?

    SPQR (768505)

  111. At the state level we are all familiar with higher pensions and wages (paid for by assuming a boom will continue, and income tax collections will rise and investment returns stay high) and capital expenditures where there is no incentive to not waste money because it is all borrowed and the money cannot be diverted if it is saved) but there are also things like mandatory kindergarten. New things that aren’t particularly beneficial keep getting added.

    California could probably immediately solve its budget problem by instituting the voucher system, and paying less per student than the current average, and easing licensing of teachers. And education would improve as well.

    Sammy Finkelman (d1a369)

  112. The most important pro-poverty program is Medicaid.

    It wouldn’t be if there was no risk of it being taken away, once granted.

    Workman’s compensation is another.

    Sammy Finkelman (d1a369)

  113. NRA v. Chicago, et al

    $961,460.71 to be paid by Chicago, and Oak Park, to lawyers representing the NRA in the suit by McDonald et al to overturn restrictive gun laws in those two cities.

    http://michellawyers.com/wp-content/uploads/2011/02/7-24-12-NRA-v-Chicago-Joint-Response-of-Def-Chicago-and-Village-of-Oak-Park.pdf

    askeptic (2bb434)

  114. ” Inflation, will of course, tend to cure indebtedness.”

    Comment by SPQR (768505) — 1/1/2013 @ 6:39 pm

    Sammy, you have no clue how silly you look writing this nonsense, do you?

    Nonsense? This is a truism.

    Sammy Finkelman (d1a369)

  115. instituting the voucher system

    Since the majority of the legislature are paid hand-maidens of the PE, and Teacher’s, Unions (CEA and CTA), there is no way that a voucher system – which is anathema to the unions and the Ed-System within CA – would ever be passed.

    askeptic (2bb434)

  116. I guess we’re just a bunch of economic pearl clutchers, SPQR. We should all just calm down.

    elissa (39e555)

  117. Unbelievable, Sammy. Truly unbelievable. Your understanding of economics would make the Wizard of Oz shake his head in disbelief.

    SPQR (768505)

  118. McDonald couldn’t own a gun for nearly 30 years, as did many countless others, Illinois is willing to bet that circumstance won’t repeat, put it another way, have they ever challenged the constitutionality of the Sullivan laws,

    narciso (3fec35)

  119. 118…more…

    Sammy, it would be the same as if the NY legislature passed Right-To-Work!

    askeptic (2bb434)

  120. “See, nothing to worry about, Sammy says it’s all A-OK!”

    There is something to worry about. The risk is political and it is real. There could still be a right wing tantrum that leads to default and all the disaster that leads to. If you believe the posturing around the debt ceiling then you believe in this risk.

    NelsonK (06e6ef)

  121. The difference is that Sullivan gives you a path to have a gun (obviously, a very rocky path), where Chicago banned them, just as did DC.
    Under Heller, and now that McDonald incorporated the 2nd-A via the 14th-A upon the States, you can not ban the possession of firearms.
    Still to be determined is the degree of regulation that will be allowed.
    The lawyer (Alan Gura) involved in both Heller, and McDonald, has about a half-dozen cases in the pipeline in CA challenging almost all of the restrictive measures that CA has taken over the past twenty-years re firearms.
    Time will tell.

    askeptic (2bb434)

  122. NelsonK, I just must have been a tad bit too subtle for you.

    askeptic (2bb434)

  123. Nelson, your comment is a prime example of the Democrat horse manure. Obama and the Democrats reneged on the deal from a year and a half ago and yet, its all the “right wing tantrum”.

    The juvenile behavior of Democrats is the problem. They continue to refuse to accept responsibility for their own budget destroying tactics.

    SPQR (768505)

  124. 113. ” Inflation, will of course, tend to cure indebtedness.”

    Sammy, you have no clue how silly you look writing this nonsense, do you?

    Comment by SPQR (768505) — 1/1/2013 @ 6:39 pm

    I’d say that would be true of anyone who quotes Krugman.

    Oh, and from the S&P statement about why they downgraded the US credit rating:

    We have lowered our long-term sovereign credit rating on the United States of America to ‘AA+’ from ‘AAA’ and affirmed the ‘A-1+’ short-term rating.

    We have also removed both the short- and long-term ratings from CreditWatch negative.

    The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.

    More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.

    Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government’s debt dynamics any time soon.

    The outlook on the long-term rating is negative. We could lower the long-term rating to ‘AA’ within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.

    They lowered the credit rating because of the size of the debt. Not because the GOP won’t willy nilly agree to raise the debt ceiling so Obama and the Dems can add to the size of the debt like crazy. Like PropagandaFact and Sammy would have you believe.

    Egan-Jones was even more clear:

    Ratings firm Egan-Jones cut its credit rating on the U.S. government to “AA-” from “AA,” citing its opinion that quantitative easing from the Federal Reserve would hurt the U.S. economy and the country’s credit quality.

    …In its downgrade, the firm said that issuing more currency and depressing interest rates through purchasing mortgage-backed securities does little to raise the U.S.’s real gross domestic product, but reduces the value of the dollar.

    …In April, Egan-Jones cuts the U.S. credit rating to “AA” from “AA+” with a negative watch, citing a lack of progress in cutting the mounting federal debt.

    I am somewhat impressed that people believe these “fact checkers” who’d have you believe the NRSROs are up in arms of GOP brinkmanship on the debt ceiling. When it’s so easy to go to the source and learn that isn’t at all what they’re basing their decisions on.

    The closest statement you’ll find to that are expressions of concern that the two parties aren’t serious about the debt but instead use it as a political football.

    But anyway, as I said, I’m somewhat impressed that Democratic activists with bylines can regain the credibility they lost when they were known as “reporters” simply by rebranding themselves as “fact checkers.”

    And then deliver the same old partisan pabulum under the new label.

    So now I know that I, too, can make a living as a snake oil salesman when it all falls apart.

    Steve57 (2073db)

  125. The way Democrats think*, this $15 billion spending cut, if it actually materializes, is really a $95 billion cut, since Obama was said to be demanding $80 billion in new “stimulus” spending.

    *or whatever you call it

    Gerald A (f26857)

  126. The eGOP is a wholehearted participant in this effort to destroy the nation. They are self-serving morons of the first order…

    wareagle82 (a4a5b8)

  127. The risk is political and it is real. There could still be a right wing tantrum that leads to default and all the disaster that leads to. If you believe the posturing around the debt ceiling then you believe in this risk.

    Utter hogwash. Do what the Dems want, tax and spend endlessly, or we will blame you. You are an object lesson in childish unicorn thinking.

    JD (5ed6bd)

  128. BTW, Sammy, how are we going to inflate ourselves out of this debt when the Feds, through their QE schemes, have managed to give us a negative ROI when you consider the rate of return on bonds (.5-1%) vs the current “official” inflation (2.?%) numbers – and don’t even get me started on what the true inflation numbers are?

    askeptic (2bb434)

  129. I’m going to start calling this “The Fiscal Trampoline Bill”.

    htom (412a17)

  130. The sequester was a WH creation – dont’ blame the GOP for that disaster.

    But, it may be the only real way to stop spending increases, which is why the Dems are hot to avoid it.

    askeptic (2bb434)

  131. Right wing tantrum was pretty much your give-away, Nelson.

    JD (5ed6bd)

  132. Askeptic – Watch the Dems pivot and start demagoguing their own sequester, and try to blame their idea on Team R. MFM will gladly help,

    JD (5ed6bd)

  133. this is not a balanced approach

    president food stamp is a lying whore, and that’s a problem going forward

    happyfeet (d7717b)

  134. Nelson, so are you utterly ignorant of the agreement a year and a half ago to raise the debt ceiling, or just a brazen liar – like the President?

    SPQR (768505)

  135. [T]his giant pile of irresponsible debt is what this increasingly soulless and immoral country wants.

    Well, you’ve got the immoral part right, Mr. P. That’s what this whole mess is over: morality. Specifically, it is the result of the fact that the Republicans cannot and thus, will never challenge the fundamental base of the Socialists, i.e., that we are our brother’s keeper. Whether they actually agree with it, whether it is part of the Christian conservatism, whether they just want to be “liked” by the cool kids or whatever, they never challenge this fundamental tenet.

    And since both sides, explicitly or implicitly, agree on the ends then the only thing left to argue about is who is the cannibal and who’s the meal. And that is the aim of the Kabuki we are witnessing now.

    It is only when we challenge the moral base of socialism can we even entertain the idea of possibly winning. But not until then.

    J. P. (bd0246)

  136. “The sequester was a WH creation – dont’ blame the GOP for that disaster.”

    Blame both. The deal was bipartisan. So is wanting to avoid it — the bill to push it forward for 2 months just passed the senate with overwhelming bipartisan support.

    NelsonK (06e6ef)

  137. “Right wing tantrum was pretty much your give-away, Nelson.”

    You can probably turn on cspan and watch one right now.

    NelsonK (06e6ef)

  138. Balanced approach apparently means jack up taxes on actual taxpayers, wind tax credits, 1.5B a year in reduction of the rate of growth of spending, and Allah knows what else, in a bill the Senate didn’t even bother to read.

    #41:1

    JD (5ed6bd)

  139. Nelson – tell us all the other names you have commented under here. Chop chop.

    JD (5ed6bd)

  140. A reduction in the rate of growth of spending is a bridge too far for Dems. Tying COLA to inflation is a bridge too far. Nelson and it’s ilk would only ever actually make a real cut to defense.

    JD (5ed6bd)

  141. Comment by SPQR (768505) — 1/1/2013 @ 5:53 p

    Sammy thinks history is proving Krugman right.

    That’s the most hilarious thing I’ve seen Sammy write …

    Krugman is right on the point that $400 billion a year deficits can be sustained indefinitely because a high deficit relative to GDP was in the past. (I’m not sure about his exact number)

    He claims the rest of the deficit is due to the economic slowdown.

    Here’s his reasoning:

    http://krugman.blogs.nytimes.com/2012/12/15/further-notes-on-one-trillion-dollars/

    For starters, we need to be aware that we don’t need a balanced budget to have a stable fiscal situation; all we need is for debt to grow no faster than GDP. At the beginning of fiscal 2012, federal debt in the hands of the public was $10 trillion. Meanwhile, most estimates of long-run growth and inflation put them at a bit more than 2 and 2 respectively; so we can reasonably say that nominal GDP growth can be expected to be more than 4 percent per year. If debt grew at 4 percent, it would grow by $400 billion.

    I think he’s lowballing it here . The long term rise in nominal GDP should be more than 4% a year. You have population increase, you have “productivity” increase and it hard to anticipate inflation of less than 1% a year.

    Here’s a chart of the rise in nominal GDP in which we assume no business cycles (it’s potential GDP, but for years before about 2010, this can’t get too much head or behind what actually happened)

    http://research.stlouisfed.org/fred2/series/NGDPPOT?cid=106

    Four percent is about the minimum.

    One problem though, is that debt carries interest, and it is rare for that to be below the annual rise in nominal GDP. So at most this is an argument we can, and should, ignore interest costs.

    He then argues:

    If the economy had been at potential and revenue had been a historically normal 18 percent of GDP, revenue would have been more than $500 billion more than it was; even if revenue had been only 17.5 percent, it would have been almost $450 billion more than it was.

    Meanwhile, on the spending side, a large part of the rise in spending came from “income security” payments — in this case, basically unemployment insurance and food stamps — which surged due to high unemployment, but are already coming down….

    ….You don’t want to attribute all of the $250 billion rise since 2007 to the state of the economy, but a large fraction surely is slump-related. Also, the slump had impacts elsewhere too — for example on Medicaid spending, probably on more people taking disability, and so on. So a conservative figure for slump effects on spending would be at least $150 billion.

    Put these together: $400 billion that doesn’t increase the debt-GDP ratio; $450 billion or so in slump-related revenue loss; $150 billion or more in slump-related expenses; and guess what: the ONE TRILLION DOLLARS is basically just a depressed-economy story, having nothing to do with any fundamental mismatch between what we want and what we’re willing to pay.

    The problem here is that the deficit was actually a little bit more than $1 trillion. Also, this disability and Medicaid spending is not easily reversed.

    Still, maybe there is a $200 billion mismatch problem, but that can be eliminated with good enough economic growth.

    Another problem is, that that economic growth that he is talking about isn’t happening.

    Sammy Finkelman (d1a369)

  142. I’m starting to really love this grover norquist

    he really cares about my future and also you future and it shows

    *hugs*

    happyfeet (d7717b)

  143. Sammy, it is no longer really that interesting to watch you wander around like a drunken sailor as you slowly walk your own opinion around from the result of googling up stuff. That you confuse yourself is already quite well known.

    SPQR (768505)

  144. He’s no grover norquist but sammy fights the good fight in his way

    happyfeet (d7717b)

  145. “…the fundamental base of the Socialists, i.e., that we are our brother’s keeper…”

    I’d be very careful ascribing Christian beliefs to today’s Progressives
    (or even to the Socialist of yore who were, in the most, Marxists with camouflage),
    who align more closely to the agnostic/atheist philosophy.
    Any concern they have for their “brothers” is limited to fellow Progressives feeding at the public trough.
    Anything else is just rhetoric.

    askeptic (2bb434)

  146. 145. Another problem is, that that economic growth that he is talking about isn’t happening.

    Comment by Sammy Finkelman (d1a369) — 1/1/2013 @ 7:24 pm

    There’s a reason why the economic growth he’s talking about isn’t happening.

    Because he is, as he is on so much else, wrong about the amount of debt that can be sustained indefinitely.

    Steve57 (2073db)

  147. According to the Congressional Budget Office, the last-minute fiscal cliff deal reached by congressional leaders and President Barack Obama cuts only $15 billion in spending while increasing tax revenues by $620 billion—a 41:1 ratio of tax increases to spending cuts.

    And if you add the smaller of the two bills into which Hurricane Sandy help has been split, there;’s no spending cut at all.

    This is only a bill to avoid having taxes go up as much as scheduled and to avoid some spending cuts. Why should there be any new spending cuts in there?

    Sammy Finkelman (d1a369)

  148. Watching this debate is disgusting

    JD (5ed6bd)

  149. Hush, Sammy. You are clearly confuzzling yourself.

    JD (5ed6bd)

  150. Well, the solution to weak economic growth is (obviously) the government needs to spend more to “stimulate” the economy.
    Of course, the fact that government spending is a net-negative on that economy (the multiplier is usually in the range of 0.6 to 0.75%) is just another of those inconvenient facts that will be ignored, or else the $5T in deficit spending over the last four years would have us all on Easy Street, and not overlooking Desperation Avenue.

    askeptic (2bb434)

  151. Oops, scratch that “%” after “0.75″.

    askeptic (2bb434)

  152. Out!

    askeptic (2bb434)

  153. Krugman was one who believed the stimulus was too small, the nature of it, was the bigger issue, that’s why there is no lasting impact of the ARRA, except for debt, and rewarding certain groups over others.

    narciso (3fec35)

  154. Norquist: “Every R voting for Senate bill is cutting taxes and keeping his/her pledge”

    NelsonK (06e6ef)

  155. ARRA ran screaming from infrastructure like a frightened rabbit

    with this like really unusual screaming ability

    happyfeet (d7717b)

  156. this is not a balanced approach

    president food stamp is a lying whore, and that’s a problem going forward

    41:1 is not balanced?

    Come on, happy. Embrace the newspeak.

    Patterico (038ee9)

  157. We can have this same fight again in 3-4 weeks over the debt ceiling.

    aphrael (727793)

  158. It came out just the way the President thought it would, which means of course it was unbalanced.

    Kevin M (bf8ad7)

  159. So 151 Thugs voted against. I wonder if some of them will vote ‘Present’ Thursday?

    gary gulrud (dd7d4e)

  160. UPDATE: Thanks to Allahpundit at Hot Air for including a passage from this post as one of the Quotes of the Day.

    Patterico (038ee9)

  161. Turn off your TV’s. President Downgrade is about to speechify.

    JD (5ed6bd)

  162. aphrael, why wait? First order of business is electing a Speaker, and to paraphrase Disraeli: “Boehner won the vote, but lost the party.” 85-151. I’d bet on Cantor.

    Kevin M (bf8ad7)

  163. There is no chance that we can grow our way out of this debt without massive population increase. That is ONE of the key problems of mature economies like Japan, Europe and the US. Without population increase, mature economies will not be able to sustain economic growth anywhere near 5%. Combine stable populations with aging populations and government incentives (like social security and medicare) to pull people out of the workforce, and you will achieve very little economic growth, if any, for many years. This makes deficits much worse for the future, not better.

    I don’t think the duration of the federal debt is high enough to be able to inflate it away. Can anyone here confirm what the duration is or at least find out any kind of distribution of bond maturity dates?

    Jim C (cd173d)

  164. Aphrael – I suspect, other than the MFM playing for one side, the next debate is going to be quite different. Now that the Dems got to jack up taxes and spend some more, the next debate is all about spending and limits.

    JD (5ed6bd)

  165. “There is no chance that we can grow our way out of this debt without massive population increase.”

    Good thing plenty of people want to immigrate here.

    NelsonK (06e6ef)

  166. I’ve been watching the Tudors marathon, no way would I subject myself willingly to that foolishness,

    narciso (3fec35)

  167. Mr P I can’t get past this idea that this is all whistling past the graveyard in a sick fascist vaguely raunchy flo rida way

    no food stamp we are not “chipping away at the problem” that’s just you doing that lying whore thing

    happyfeet (d7717b)

  168. Europe tried to solve its problems by allowing unfettered immigration. Unlike Mexican immigrants, Muslim immigrants to Europe did not add much to the tax-paying labor force. Quite the opposite. Uhtil a few years ago, the US could have gotten quite a few highly skilled immigrants from Europe and Asia. Now we’re less of a draw as the government makes upward mobility much harder.

    Kevin M (bf8ad7)

  169. no food stamp we are not “chipping away at the problem” that’s just you doing that lying whore thing

    We are “chipping away at the problem” in exactly the same way I’m dieting by not eating my ice cream much faster.

    Kevin M (bf8ad7)

  170. “Good thing plenty of people want to immigrate here.”

    We’ll need them – and need them to start successful businesses too. They won’t pay taxes (without draining social security even further) unless they’re big earners.

    Jim C (cd173d)

  171. 167. I believe 70% of the debt matures over 7 years or less. A great deal is to be rolled over imminently.

    Another reason we should see prices rise. $400 Billion to maintain the debt in 2012. At what point will Kruggie consider it a problem? $1 Trillion? More?

    gary gulrud (dd7d4e)

  172. Nelson is one of those cowardly serial trolls.

    Obama wants more taxes. This was just a start. His idea of reduction in spending is increasing investment, and demagoguing actual cuts.

    JD (5ed6bd)

  173. Down the road: The California/Illinois/New York bailout. It probably needs a -cliff name.

    Kevin M (bf8ad7)

  174. Gary, your 70% number is consistent with my understanding, but I haven’t been able to confirm it recently. Look at what Volker did in the early 80′s. Even if the average interest rates increase to a modest 6% to combat inflation, we’re already looking at $1T annually. Once the debt reaches $22T, we only need the rate to be 4.5% to be at $1T interest charges annually.

    Jim C (cd173d)

  175. I guess Mr. Ryan didn’t figure to wail on Ms. Clinton anyhow.

    gary gulrud (dd7d4e)

  176. New, pissed off post on the House vote: Surrender is Complete.

    Patterico (038ee9)

  177. 178. And OH, AL, MS,.. So the Fed, ECB and BOJ get into a bidding war over who will backstop their ne’erdowells at the highest premium.

    We are off to the races.

    On the bright side the Weimar hyperinflation didn’t last but a matter of months, did it? The Fascists turned it around. Glad I look Aryan, not like a JOOOO.

    gary gulrud (dd7d4e)

  178. The thing that I noticed about Barack Obama speaking last night after 11PM is that he seemed to think the year was 2012, and the New Year had not yet arrived.

    Sammy Finkelman (d1a369)

  179. Well, he said that he wasn’t much good at 7th grade math. Now we find out he’s not even good at first grade math.

    Dirty Old Man (c726ea)


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