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Wednesday, December 19, 2012

A 401(k), with nuclear weapons

Loath to raise taxes on the middle class yet unwilling to cut deeply into the budgets for Social Security or Medicare, the president and his advisers proposed cutting the discretionary part of the budget devoted to everything except defense and other security agencies to 1.7 percent of economic output by 2022, down from 3.1 percent last year.

This is not irrelevant spending. It accounts for every government expenditure except entitlements, security and interest. It pays subsidies for higher education and housing assistance for the poor. It finances the National Institutes of Health and the Food and Drug Administration. It pays for the Federal Emergency Management Agency and training programs for unemployed workers. Without such spending, the government becomes little more than a heavily armed pension plan with a health insurer on the side.

The whole thing is here.

Comments (19)


Massive debt and deficits take away choices. Rely on a tax the wealth strategy without upping taxes where the overwhelming majority of income lies, run the Federal Government as a big give away machine, elect an anti-business and anti-economic growth President and Senate and, in so doing, burden your children and grandchildren with trillions upon trillions of dollars in debt – that’s the government you voted for and got.

People, you don’t have palatable choices ahead. You chose your fate. It will only get worse (when interest rates rise, as they inevitably will, much worse). You’ve made the choices that matter. Stop complaining.

Merry Christmas.

Nonsense. If any shred of what Newleaf says were true, interest rates on US Treasurys would not be at record lows. Our current deficit of $1 trillion, give or take, is composed of $450 billion of foregone tax revenues because output in the private sector is below capacity; $150 billion of expense on unemployment, food stamps and other benefits to the unemployed (who represent the extra output we could be having), and $400 billion of added debt that represents a wholly sustainable level of growth in national debt based on population increases and improvements in productivity. What we need is bigger deficits now, devoted to infrastructure repairs and improvements.

Allan L. trusts the government.

Why dat?

"What we need is bigger deficits now, devoted to infrastructure repairs and improvements."

I believe we tried that a couple of years ago. Once it hit Oregon it went for PERS contributions mostly (just like the tobacco settlement). I guess I should be happy since the follow up is for OR to just take $1B every biennium out of the gen fund and away from schools.

I don't disagree with deficits, but if my choice is $1 of govt spending vs. $1 less taxes in a consumer's pocket, I'd argue for lower taxes.

I mean how much extra debt have we taken on since Obama/Bush? As of now we are at $16T total debt or $50K/person. For all that debt since Clinton do you really feel like you are worth $50K more due to deficit spending?

As far as interest rates being low, the only thing keeping them low is:
1) Inflation is weak due to poor consumer demand
2) We're able to sell our debt and look better than uglier countries that sell debt. I think we are squandering our credit-worthiness though.

Unfortunately, I think we're heading down the path of Japan - a 20 year recession with 0 interest rates and no growth.

What Allan said. Also, don't forget that the "trillions and trillions in debt" come mainly from RR and GWB's military build-ups, undeclared wars, tax cuts that overwhelmingly benefitted people who already had more money than they could ever spend, and a deregulatory economic environment that led directly to the biggest bank failures and real estate crash in history, necessitating massive federal bailouts. Subtract those Republican policy choices and the debt would be a small fraction of what it is.

Obama is far from a perfect president (I wouldn't even call him good) but he's a model of fiscal rectitude compared to that two-man wrecking crew. It's astounding to me that nearly half the country still somehow remains convinced that the Democrats are the bigger problem.

"from RR"

Wow, you forgot to include JFK and LBJ.

As a reminder, one of the biggest deficit contributions by Bush was the prescription drug program liability at about $21T currently (or 1/4 of Medicare).

Hard as it is for people to accept but compromise means pleasing no one to get a deal done. Tax and Spend Democrats and Borrow and Spend Republicans need to come up with a plan that halts the 30 plus year drive to shift the tax burden to the middle class while still providing the services that are now part of our expectations. The Genie will not go back into the bottle...everyone expects the government to "do something" when things go bad. And that something costs money. Leaving a bloated defense budget off the table when talking of spending cuts is idiotic. Throwing money at our enemies does nothing but provide corporate welfare for defense contractors.

one of the biggest deficit contributions by Bush was the prescription drug program liability

Indeed -- a giant give-away to the pharma industry.

Allen L., a little math lesson, if interest rates are at record lows about the only way they can move is up. For now US interest rates have been kept abnormally low by a slow economy, an unsustainable Fed money printing program, turmoil in Europe that's driven currency out of the Euro and into the US dollar, and a temporary slowdown in Asia. With that kind of a backdrop, there is little if any potential for US interest rates to go down and enormous potential for interest rates to rise. Further, the US isn't like Japan, which has a savings oriented culture that willingly finances the government debt domestically for little to no return. I'm looking for Bernanke to turn down a third term because he doesn't want the turn in rates to occur on his watch. It will take a miracle for the US to escape from this mess when the print and borrow house of cards falls apart.

Interest rates are not low.

Check out any rates you can get. Mortgages are at 3%-6%. Student loans are at 6%-8%. Revolving credit is at 10%-30%. Those are historically “normal”, not low.

The only reason they are that low is that banks can get money at 0%-0.25% and lending standards have been tightened (either officially or de facto) to level s unseen for decades.

When real world rates are “normal” only as a result of long term and extraordinary coordinated central bank action it’s impossible to be blasé about the future, to have confidence that it’ll all be fine in the future. Racking up debt against an uncertain future is foolish. It’s called speculation, gambling. You can theorize all you like about “government debt is different”, but the people (those who bother to think about it) don’t see it that way.

Just read the article btw.

Note the many references to "government", when what is meant is the Federal Government. Normal, disingenuous, "shape the narrative" reporting from the paper of record.

This notion that all roads for "government" to do anything lead through Washington DC is what many push back against.

"Indeed -- a giant give-away to the pharma industry."

Two things:

1) It does cost a lot of money to develop drugs and get it past the FDA, so maybe that's not a bad subsidy.

2) Think about the seniors we are benefiting (especially since most of them don't live in Afghanistan.)

End corporate subsidies. For example, why are we giving ~ 40% or all agricultural subsidies to Fortune 1000 companies?

Tax all income at the same rate. Tax all income, period. 90% of the tax code is written to benefit the top 10% of incomes, including the mortgage interest deduction.

Change business taxes to a carbon tax.

Remove all deductions, except for catastrophic medical expenses, and lower the rates. This is the most equitable way to broaden the tax base.

Close ~ 200 of the 800 military installations the US has around the world.

The US has one of the highest officers/enlisted personnel ratios in the world. The military is glutted with people who are just waiting for their pensions to become vested. We should pro rate and vest their pensions and send them out into the free market.

After simplifying the tax code, triple the number of IRS auditors and turn them loose on those tax cheats who owe the Treasury hundreds of billions of dollars.

Make businesses pay royalties on their use of government-funded research.

Charge market rates for resource extraction from public lands.

Open up Medicare to everyone.

Not going to happen, but it would greatly improve our financial situation.

Steve: drug companies spend more than twice as much on marketing as they spend on R&D. And taxpayer-funded research has contributed more than half of the cost of developing major drugs. Because Medicare Part D prohibits the government from negotiating drug prices, people in other, far-away countries like Canada pay only a fraction of what Americans pay, or Medicare pays for them, for medications.

Mike Austin: Change business taxes to a carbon tax.
JK: Why tax energy, the very foundation of our prosperity?
(I hope you did not get suckered by Al Gore's climate fraud. Do you know that the earth's temperature has not risen in the last 10 years and has been statistically unchanged for 16 years.)

Let me ask if you know of any real evidence that man’s CO2 is causing dangerous climate change? (We both know that unusual weather is not proof that man is the cause; nature puts out 96% of the CO2 compared to man’s 4%; that Al Gore's ice cores show CO2 increases FOLLOW temperature by about 800 years; that Al Gore’s temperature chart showing a sudden recent rise is a fraud and that the climate was warmer in the Medieval, Roman, Egyptian and Minoan times without man’s CO2, and no one has explained what caused those earlier warm periods AND why that cause is not the cause of the current warming.)


JK: "Why tax energy, the very foundation of our prosperity?"

The tax is on dirty energy, or the dirty waste products of fossil fuels. I know you obsess about this issue, so it's crazy that you don't understand this basic fact. Fossil fuels generate pollution that negatively impacts all the people in close proximity to where that fossil fuel is converted into energy. Additionally, the mass accumulation of fossil fuel byproducts is contributing to historic upticks in temperature around the glove regardless of your baseless assertions. 98% of climate scientists think humans are contributing to climate change.

I'm not a climate scientist. So when I want information about climate science, I turn to the experts rather than crackpots or pseudo-experts funded by the fossil fuel industry. Thanks.

5th Gen Oregonian: The tax is on dirty energy, or the dirty waste products of fossil fuels.
JK: Natural gas has almost ON “dirty waste products”. Why would you tax that? (Or do you even know that?)

5th Gen Oregonian: Fossil fuels generate pollution that negatively impacts all the people in close proximity to where that fossil fuel is converted into energy.
JK: Care to explain exactly what “negatively impacts all the people in close proximity”? Otherwise you appear to be merely repeating greenie talking points.

5th Gen Oregonian: 98% of climate scientists think humans are contributing to climate change.
JK: I hope you realize just how laughable that claim is. To help you understand:
1. Here is a list of 450-750 peer reviewed papers that contradict that:
2. The IPCC latest report said that earth quit warming 10-16 years ago depending on how you cont the details:
3. How that 98% lie was fabricated:

5th Gen Oregonian: I'm not a climate scientist.
JK: Obviously.

5th Gen Oregonian: So when I want information about climate science, I turn to the experts rather than crackpots or pseudo-experts funded by the fossil fuel industry. Thanks.
JK: Oh, like the Sierra Klub that took $26 million from Chesapeake energy to attack coal?
Or a host of other money grabbers:


Inflation-adjusted US Budget Deficits from 1981 to 1988: $2.454 Trillion.

Inflation-adjusted US Budget Deficits from 2009 to projected 2013: $6179.41 Trillion.

Why are you dragging Reagan into this again? His deficit was less than 40% of what Obama's is, and Obama only has 5 years on versus Reagan's 8. And remember, all figures have been adjusted for inflation so just leave that particular club in the bag.

I agree that GWB spent like a drunken sailor, and had a sycophantic Congress for all but two years that allowed him to do it - it also explains some of Obama's deficits. But on the face of the numbers alone, let's not just slam "the other guys" because it's what people do. Let's have a real conversation.


Since I was curious (and taking US Debt Clock .org as accurate) looked up historical deficits:

2000 - $5.6B
2008 - $10.6B
2012 - $16.4B

Ann growth rate 2000-2008 = 9.5%
Ann growth rate 2008-2012 = 15.7%

I don't think this is going the right direction.


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