July 29th, 2011

Debt ceiling negotiations, redux

The other day I wrote a post about the debt ceiling negotiations. Few people in the comments section agreed with my point of view. But I had expected that, and I expect it for this one, too, which is fine; I don’t need a bunch of yes-men (yes-persons?) on the blog.

So, here I go again. But first, a little overview.

I don’t think that people in the blogosphere are typical of the average American. I’m not talking about their political persuasions—liberal, conservative, or in-between. I’m talking about their intensity about politics, and their interest in it and patience for reading and thinking about it.

Residents of the blogosphere talk amongst themselves. A lot; in fact. And in that process they tend to fire each other up with ever-increasing fervor. And so people who are already fairly intense and even fanatical about their points of view often become even more so.

That’s what I perceive happening on the right side of the right side of the blogosphere now regarding the debt ceiling bill (let’s call that faction the Tea Party side for the sake of simplicity).

From its beginning, the Tea Party movement was painted by the MSM and the Democrats as a bunch of racists. That was a lie, although unfortunately a fairly successful one. What was even more successful was the MSM/Democrat effort to paint Tea Partiers as a bunch of wild-eyed crazy fanatics. But, for the most part, what the Tea Party actually consisted of (and what appealed to me about it) was a bunch of fiscal conservatives and even moderates who were angry at the escalating government spending of the last decade (and more) by both parties, and wanted it to be reined in by new leaders that the Tea Party would help promote.

That was the goal, and to a significant degree it was accomplished in the Congressional elections of 2010. But although the House was won, the Senate remains in Democrat hands, and of course the presidency as well.

That’s where we stand today. And that’s a huge part of what’s stalling the current negotiations over the debt ceiling bill. There is not only a rift between Republicans and Democrats, but between the two wings of the Republican Party.

Those of you who are with the Tea Partiers say fine, bring it on, this is what we sent them there for. Hang tough. Don’t cave like the Republicans in the Bush Congress, those Democrats Lite who brought us the swelling deficit that Obama later blew up even further. We’re tired of compromise. We have the power. Let’s use it! And oh, default won’t happen and/or won’t be so bad.

I won’t debate the fiscal merits of the Tea Party case. That’s not what this post is about, nor do I have all the facts at my fingertips. You might say the devil is in the details, and if you haven’t learned the details of each proposal and tried to ascertain exactly what their consequences will be then you should just shut up. But I have been frustrated in my attempts to do so. Most of what I’ve read seems to be a combination of cheerleading, spin, and glib summaries. I have yet to find what I would consider a dispassionate and objective discussion of all the issues and proposals involved, or even an attempt at one.

You might say that I ought to have the patience to wade through it all. You might say that if I read enough about it, it would come clear. But it hasn’t happened. And I submit that I am far more typical of most of the American public than those who pick through this stuff with a fine-tooth comb and argue about how many tax loopholes can dance on the head of a pin.

People are sick of Congress, sick of this president, sick of the whole thing. They are not reading a lot of details. They are just seeing the overview and the sound bites and getting impressions from that. And their impressions are bad.

What do the people want? I think it’s this: Reined-in spending. A bona fide and serious attempt to reduce the debt enough to make it manageable. A government that seems reasonable run by people who can work together to actually accomplish these things. A pipe dream, probably.

The Tea Party members of Congress who are hanging tough may get what they want. They may force enough concessions from Boehner that they get a bill they can vote for. Then what? The Senate almost certainly won’t pass it, and whatever you or I may prognosticate about the next step is probably incorrect—except that the public will grow ever more weary and disillusioned and angry and frightened.

“Frightened” is an important part of it. You might say there’s no reason for the looming prospect of a default to frighten anyone; it’s bogus. You haven’t convinced me, though. One thing I do know is that if people are frightened, it affects the economy negatively. Whatever the economics of a pending default may be, the current climate of fear and uncertainty has very negative effects on the stock market and investment in general. And this cannot be good. The longer it lasts, the worse it probably will be.

[NOTE: Oh, and as far as the substantive issues go, will the addition of a balanced-budget amendment mean that the Boehner bill will pass muster, and pass?]

47 Responses to “Debt ceiling negotiations, redux”

  1. Bill I Says:

    Thank you for a well-reasoned comment. We need more of these on the internet and in the national dialogue.

  2. Mr Xyz Says:

    I have three Democratic congress critters. If I felt ever-increasing fervor, my call to them would be: “Nuts” (end of call). http://en.wikipedia.org/wiki/Anthony_McAuliffe

  3. vanderleun Says:

    Excellent essay on all points. Fanatics are so, well, fanatical… I know. I’m one of them.

    It all reminds me of an ancient Ed Arno New Yorker cartoon with the gag line: “I’m sick of the economy, dear. Can’t we disagree about something else?”

  4. DirtyJobsGuy Says:

    I pointed out to my wife last night that one of the things the MSM can rely on is that few people have a feel for the size of the entire US budget and the relative sizes of each part. Many people are sincerely convinced that we could eliminate the deficit by (pick one depending on political leanings) cutting defense, foreign aid, corporate tax breaks, waste & fraud etc. The fact that we spend most of the money on entitlements is not really clear (nor is the scale of the deficits).

    It will be a long process to turn the ship around. We need these fights to start getting peoples attention. It is a big problem and it has to be fought over like it is important.

  5. kolnai Says:

    Neo –

    If you don’t already Keith Hennessey, then you should add him to your blogroll post haste. He’s a seasoned vet, he’s even-tempered, he’s modest, and no one can explain sausage-making and complicated budgetary issues with his command and charm. Of him it is actually true to say, “He knows what he’s talking about.”

    Here’s Hennessey’s recent interview with Russ Roberts:

    http://cafehayek.com/2011/07/everything-you-always-wanted-to-know-about-the-debt-ceiling.html

    It’s well worth your time.

  6. Scott Says:

    There will be no default. Obama, Geithner, and everybody else using that rhetoric is engaging in irresponsible fear-mongering.

    They confiscate $2.2 trillion from us annually in taxes, and interest expense is $200 billion. How can they default when cash flow is over 10x interest expense? But what about maturing debt, you may ask? There is nothing to prevent them from refinancing the existing debt, they just can’t issue new debt that exceeds the statutory debt limit.

    Considering they borrow 40 cents of every dollar they spend, then when the borrowing stops somebody is not going to get paid. But the creditors will. They are first in line. The only way a default will occur is if it is mandated by the Treasury, not from insufficient cash flow. And if the Treasury irresponsibly mandates a default, then Obama should be impeached in the House even if it’s unlikely he will be convicted in the Senate.

  7. vanderleun Says:

    I vote we rename the blogosphere in this instance as the “blathersphere.”

  8. Curtis Says:

    I’m hoping it doesn’t matter either way, but I’m not sure of the predictions or questions on this issue:

    Might not the congealed understanding and conviction of the tea party affect other people and become mainstream?

    Is it a good principle to allow slander against the tea party determine votes? to allow the power of the media to determine votes?

    Don’t the two big lies (we will default, we will cut spending) overwhelm any other argument?

    I’m torn between the good reason offered here by Neo and seconded by Bolton and even Thomas Sowell and an instinct which says “this time is different.” This time, because Obama is so unlike Clinton and Beohner so unlike Gingrich, and the issue is so much more bi-partisan in substance, and because it is apparent that the Republicans have tried for a solution, this time the right decision will not be vilified and will not result in loss of congressional seats and loss of the Presidency. I expect that Obama’s strategy will fail because moderates, being the most rationally motivated of the polity, will rationally reach that conclusion and since all the other voices are known, the question is how does this affect the undecideds?

    And for me, the fact that Boehner lied about how much would actually be cut, shows he is operating out of fear–a Munich syndrome. Until I can trust whomever is leading the score, I’m not paying to attend the symphony.

  9. George Pal Says:

    “You might say the devil is in the details”

    And the sin is in the giving in. Refusing to raise the debt ceiling will have repercussions, raising the debt ceiling, yet again, will have repercussions. We are beyond the point of having no repercussions and beyond the point of a soft landing. Start taking the medicine.

  10. A_Nonny_Mouse Says:

    I think us Tea Party types are just worried that Our Illustrious Legislators will agree to raise the debt ceiling without ironclad, cast-in-stone, absolutely MANDATORY spending cuts in the multiple-trillions-of-dollars range.

    Some of us are extremely jaded regarding the political process, and we fear that any raised ceiling will be treated by the Powers That Be as a “mandate to spend” (–like drunken sailors–) until they hit the new ceiling and have to start begging for more. And at the same time, we fear that spending cuts, although earnestly promised, will be postponed until sometime after The Second Coming.

    Right now we see proposals allowing a trillion-dollar debt ceiling increase (to take effect RIGHT NOW — how long is that good for — six months?) being “offset” (ha,ha!) by spending cuts of a trillion dollars over TEN freakin’ years, and back-end-loaded to boot. How does that help lower our spending RIGHT NOW? (Because we ARE overdrawn at the bank RIGHT NOW.)

    What good is it to “avoid an immediate fiscal crisis” by raising the debt ceiling now, if we have no will to start SLASHING out-of-control spending now? Washington’s promises to cut spending by billions or trillions or gazillions in a decade, or two, or five, will evaporate like every other addict’s promise that “I’ll quit tomorrow”.

    The “intransigence” of Tea Party types is due to our belief that without a significant club to hold over the heads of Big-Government spenders, no cuts will EVER be made — because EVERY government program is “too important to cut”.

  11. Wolla Dalbo Says:

    Scott—As I believe I have posted here before, the problem is not just the interest on the public debt, which is a “mandatory expenditure,” but all the other mandatory expenditures i.e. civil service retirement benefits, veterans pensions, but most especially the other major entitlement expenditures—Social Security, Medicare, Medicaid, Unemployment benefits, WIC, and other social programs. The amounts of mandatory funds needed for the current year are estimated, sequestered, and cannot be spent for any other purpose; anything left over can be used for “discretionary expenditures.”

    Right now, all these mandatory expenditures consume 63% of the entire federal budget, and because entitlement programs are structured so that each year more people are eligible for them and most years the benefits each person is eligible for increase, that current 63% is scheduled to grow to 65% and then 68% and then 70% in the next few years and to continue heading towards 100%, steadily decreasing the percentage of the budget that can be spent on discretionary items—which includes national defense, running all of the government executive agencies, and everything else the government does. Moreover, the growth in the mandatory percentage will increase even faster when our cost to borrow money i.e. interest rates on Treasury bills and bonds, inevitably increases from their artificially low rate of less than 1% today.

    Thus, unless this runaway entitlement spending can be cut and cut drastically now—and this means much stricter eligibility criteria, benefits to cut in later in life, and benefits themselves to be drastically curtailed and perhaps some programs (SSI comes to mind) drastically scaled back or even eliminated, and perhaps even some cabinet level agencies drastically trimmed back or even eliminated–we are looking at entitlement spending eating the entire federal budget, an economic catastrophe/default/the collapse of the dollar/ and our credit rating/hyperinflation in whatever combination you care to posit, and apparently none of the budget deals proposed so far does anywhere near the kind of really serious cutting that is necessary if we are to avoid catastrophe.

    So far, all I see is smoke and mirrors. It has been reported that one of these plans, for instance, “decreases expenditures,” not by cutting current expenditures but by decreasing estimated expenditures in out years i.e. we projected that we were going to spend $900 billion in 2015 but instead we are only going to spend $300 billion so, see, we just saved $600 billion dollars.

    Add to this Obama musing about how he’d like to increase the debt limit unilaterally regardless of what that restrictive old Constitution says, trying to spook the markets by talking up default, doing things like reportedly calling Veterans groups to the White House the other day to threaten them with loss of their disability and retirement checks, the Senate not even taking up the last House bill for a vote, Harry Reid saying that any new Republican bill is already as good as dead, the DNC talking about how any thing less than more and more spending will ruin the coming Christmas season, and you can see that the Democrats just want more and more spending, no matter what the ultimate cost to the country, and the Republicans are advocating supposed spending cuts that are nowhere near the kind of real, draconian cuts in current spending that are going to be necessary. In short, we are screwed.

  12. jim murray Says:

    There are two parties. The evil party and the stupid party. Right now the stupid party has produced one bill that the evil party has tabled without a vote. Now the stupid party is going to produce another bill which the evil party will disembowel and replace said bowels with their own bowels and send back to the stupid party. The stupid party will then reject the new bowels and be blamed for the ‘default’. The evil party wins. The stupid party should say ‘we sent a bill to the evil party and they are sitting on it’. Then walk away.

  13. Mr. Frank Says:

    The big difference between drunken sailors and politicians is the sailors spend their own money. Neither party is prepared to make meaningful cuts and Democrats want to spend more and tax more.

    We are on the edge of serious problems. The GNP figures that came out today are frightening. It won’t take much to crash this thing. As weak as things are a 40% budget cut for a few weeks might do it. Looking at the first quarter GNP growth of .4% tells me the only thing keeping us afloat is government spending and the Fed. The Tea Party had better tread lightly.

  14. expat Says:

    This whole issue is being reported here in Germany (at least in the popular media–I haven’t read Frankfurter Allgemeine analyses) as hard-headed red-neck Tea Party types being unwilling to cooperate with the reasonable Obama to solve the debt ceiling problem. People here haven’t heard that S&P is more concerned about continued deficit spending than the debt ceiling. They really think that conservatives are hard-headded racists.

    It makes me wonder how a Bachmann would do in the foreign affairs arena where foreign bankers and national banks have a lot of input into politics.

  15. geran Says:

    Good job from jim murray–evil party and stupid party!

    Here’s the thing. We are bent/busted/broke.

    Let’s fix it NOW!

  16. armchair pessimist Says:

    The TP has forced people to recognize there is a deficit problem, which isn’t a small feat. For decades, politicians of both parties accustomed the American people to consume more government services than they paid for, much more. No sweat, our Chinese sugar daddy will pay the bill. That was falling apart anyway, but the GOP will likely take the rap.

    Now the politicians and we the people are left with two sour alternatives. We either tax ourselves to the hilt to pay for the goodies we used to get cheap, or we cut them out. If you think the latter will go down with the urban poor, to whom a govt check is as natural as breathing, think again. We are so screwed.

  17. SteveH Says:

    What’s really frightening is NOBODY is talking about the massive wealth creation that will be needed to fix this mess. Fixing it by shuffling paper will never work.

  18. foxmarks Says:

    Wolla, entitlements are not mandatory. The Supreme Court has ruled that the FedGov does not owe any retiree any amount. Benefits paid are entirely at the discretion of Congress. There is no contract.

  19. Indigo Red Says:

    My Congressman is voting with the Boehner proposal while my two Senators will vote against it.

    The BBA component as part of the current debt ceiling or reduction is preposterous at best, Folks are talking about a balanced budget amendment as if it only needs to pass both houses, be signed by the president, and voila, there’s a new amendment to save the day when in fact an amendment to the constitution requires ratification by two-thirds of the state legislatures often taking years or decades and in one case almost two centuries to pass, and that doesn’t guarantee a correct action has been taken as in the case of the 18th, or that it will actually end the debate as is the case with the 2nd and 14th. As a nation, we have so far only unanimously agreed the 3rd and 27th are absolutely good and right.

  20. Curtis Says:

    The conventional wisdom says the Tea Party will take the rap. And yet Obama’s number’s are dropping:

    http://tinyurl.com/4xdxpwr

  21. Mike Mc. Says:

    It is no great, good, decent or even healthy thing to take a swipe at the “Tea Party”.

    Of the entire lot of players in this game, they are the best.

    To their everlasting credit, they actually did something concrete and good. They worked hard to get a place on the actual field of play.

    Therefore, let’s be hypercritical of them!!! Aren’t they so very naive! Look at me! I am laughing at how dumb they are! They are so non-droll! I am droll, proving my incredible drollness on the droll scale!

    I know! They do not know like me!

    Wow. When will the good consider it good to fight for the good or at least rush to defend the good?

    On roughly that very day, we will win.

  22. kaba Says:

    Thanks for the link kolnai. I had heard most of the information presented at one time or another. But never so completely or cogently explained.

    On 28 December 2003 I suddenly began spitting up blood. I had experienced some vague symptoms over the previous weeks. But nothing so acute or so localized as to demand my attention. As I learned over the following two weeks I had developed a cancer on the base of my tongue; my left tonsil; and the lymph nodes in my neck. I basically had three options at that point. One was to have radical surgery that would have left me, at best, with needing to learn to speak again. The second option was to have an extreme regiment of chemo and radiation therapy followed by surgery to remove those lymph nodes. The third option was just to continue to ignore the problem and treat future symptoms as they appeared with perhaps a year or eighteen months of life remaining. My oncologist advised that I had something like a 34% chance of surviving five or more years no matter my decision.

    I think our country is in the same position I was on that December day almost eight years ago. We all know something just isn’t right. We have tried to ignore it or explain it away. But we are now learning that we have a serious or perhaps fatal disease. We can continue to ignore it. Perhaps hope for some new painless cure. Or we can proactively address the problem knowing full well that any treatment is going to be extremely painful and perhaps we will need to relearn the fundamentals of a free capitalist system and individual responsibility again.

    The one thing that we either suspect now or will subsequently learn is that procrastination is not an available option. We either begin radical treatment now or our nation, as we’ve known it, is dead.

  23. J.J. formerly Jimmy J. Says:

    Here’s my take. Make of it as you will. A deal will be made and the debt ceiling raised – maybe not by 8/2, but there willl be no default. There may be some pain. Obama may decide to cut some people’s pay just to create more angst. if nothing happ[ens by 8/2.

    The deal, will be no new taxes and no real cuts except back loaded, which mean nothing. The pols (especially the dems) are not listening to the rating agencies. There must be real cuts and some semblance of cooperation between both parties or the debt rating WILL be cut. That is when the rubber meets the road. The only way to restore the AAA rating will be real cuts, real repairs to SS, Medicare, and Medicaid. I expect the dems will not want to go there, even when the reduced debt ratings create economic chaos. Of course I could be wrong. Even drunken sailors quit drinking when they finally realize that they’ve run out of money and the barkeep won’t put anymore on the tab. Maybe the dems will finally see the reality of the situation.

    After the rating cuts the descent will be slow at first, but will pick up speed if better fiscal policy is not enacted pretty quickly. There are a few safe havens. Cash, gold, silver, Swiss Francs, and maybe Yen.

    I have been calling my three dem Congress Critters everyday and telling them real cuts and no new taxes. It has been a bit like like peeing into the wind, but at least I have the satisfaction of telling them what I want. Has anyone noticed that the dems are all voting strictly party line? No, well they have. That is why the deal will be no real cuts and, IMO, will lead directly to a credit rating downgrade. Hold onto your hats and wallets, it’s going to be a rough ride.

  24. Don Carlos Says:

    Neo says what she wants is a pipe dream, probably. Then she calls down the TP Repubs for working to realize that dream. LOL.

    We seem to agree that we need radical change, the inexorable force of compound iterest being indeed inexorable. But such change is just tooo radical for us of the entitlement era.

    Reid and Obama just won their bluff. The House folded the stronger hand and leaves the table poorer for it, all of us also. No Profiles in Courage here except for the 22 GOP Reps who voted against.

  25. Soviet of Washington Says:

    Please review Karl Denninger’s chart of nominal GDP (green line) and real GDP (red line [nominal GDP-government deficit spending [blue line] subtracted). The ONLY reason the economy since 2008 hasn’t felt like a 2nd Great Depression is Federal deficit spending, which obviously can’t continue. At this point, there is NO painless way out of the box.

    Most analysis’ I see treat the US situation as a stand-alone issue with countries like China relatively uneffected. With the dollar as world reserve currency, I don’t think so. Read The Bubble that Broke the World by Garrett Garet to get a better feel for how this situation played out last time. This was a near contemporaneous report by a seasoned economics reporter. To read it correctly, this time the US=Germany, China=US.

  26. davisbr Says:

    If you don’t understand “base-line budgeting” (as practiced by the Washington elites), then absolutely nothing you say say is relevant to any of this crap …except one thing: in the real world, we spend TOO MUCH more than we take in.

    Way too much. Period.

    The question you might consider is, what happens when YOU spend more than you earn? Times, say, 50 years. Or 30 years. Or hell, 10 years.

    Think on it.

    Regardless, that’s where your relevant participation ends, if you don’t have a handle on b-l-b.

    OTOH, base-line budgeting is kind of simple to understand. So, let’s break it down so you can have an informed and relevant opinion on what’s going on in Washington right now (unlike most of the electorate, Congress, and all of minitru), and explain what b-l-b is.

    Let’s say you have this monthly budget in January 2011. And it comes to $2,000 per month.

    Your monthly take home pay is $2,500 (and for purpose of this explanation, we’ll just forget complications like taxes, deductions, and anything else). So you have $500 at the end of the month for “other”, non-budget expenditures.

    Heck, let’s say at the end of the year, because you’re a thrifty soul, you have saved $6,000 in the bank. (Good on you.)

    To continue. You and your SO sat down one crisp wintry morning earlier this year, and decided that for the next 10 years (until 2021), you’re going to add 5% a year to your monthly budget (and that amount is not compounded or anything that would make this explanation more complicated …it’s just a flat 5% increase for the monthly budget at the beginning of the new year).

    Here’s the kicker. You both agree that you MUST spend that additional increase!!! – All of it (whether you can “afford it” or not).

    To reiterate: I want you to forget about income (because in Washington base-line budgeting, income is mostly irrelevant …yeah, seriously: traditional, party-line, Congress critters really don’t pay that much attention to income). So, for base-line budgeting, we’re only discussing expenditures.

    Anyways. Next year, in January 2012, our little monthly budget becomes $2,100 (or $1200 more spent during the entire year.)

    The year after, 2013, the monthly budget is now $2205 (or $2460 for the year …again spent).

    …and so on, with a 5% mandated annual increase, until 2021.

    That’s it. That’s the core of of understanding base-line budgeting. It’s a mandated budget increase, just like our example.

    Easy-peasy, eh? Well …maybe. We’ll get back to that in a minute.

    Oh. You may be curious as to what the actual dollar amount of your 2021 monthly budget is.

    Uh, sit down first, okay?

    In 2021, your monthly budget is … …$3,257.79. Yep.

    And that year, the year of our lord 2021, you [will have] spent $15,093.48 more than you did 10 years earlier. An increase of almost 63%.

    Starting to get it now?

    And …remember that $6,000 per year you’ve been saving? That amount was “one year only”. And ALL the savings part of that went away in 2016 or so, when you started spending more than you earned, period, trying to “make up the difference” (because – unlike Congress – you are at least partially fiscally responsible).

    Want more?

    Here. Let me hammer those numbers in, so you can really be shocked. And maybe, very, very angry.

    Over those 10 years, your total budget expenditures – which would have been $240,000 – instead increased to $340,962.89. Yeah. Your 5% “mandated increase” upped your expenditures by $100,962.89. 63%. Scary, eh?

    And what about your income (or “revenue” as they say in Washington DC)? Well, you started out with good intentions …and if you hadn’t added that “little” 5% increase to your budget per year, your intentions would have resulted in $66,000 (in a presumably interest bearing account) by 2021.

    In actuality though, you owe your savings almost $11,000 (and no, I don’t know how that’s supposed to work or where you were supposed to get it from either).

    On the bright side, this also means you did a whole lot better than the Beltway Elites have done, are doing, and are proposing.

    But …let’s get back to base-line-budgeting …and the “cuts” being proposed.

    To illustrate the point, and still using our little budget, let’s pretend that you proposed your were going to spend 1% less over the entire 10 years of your budget.

    In other words, of the $100,962.89 real-world increase to your 10 year budget …you’re now proposing to spend $1009.63 less than the original 5% increase.

    But let’s also pretend your SO objects to the “cut” in your 10 year budget.

    And that last sentence is pretty much exactly what’s been going on in Washington.

    And you now understand b-l-b, and what makes us Tea Party types absolutely nuts. And adament.

    How can anyone characterize less of an increase as a cut?

    What frelling fantasy world do you have to live in where less of an increase dominates your distorted version of fiscal reality enough to demonize that as a “cut”?

    A world where you want to borrow at additional cost to cover an actual increase in the first frelling place.

    …where, back in the real-world, Mitch Kapor created the Lotus spreadsheet 30 years ago which makes figuring this out little more than child’s play.

    At this point in the explanation, this whole charade should be making you angry. Very, very angry.

    The Beltway elites can ask you to live within your means (actually, they’re proposing you to accept straitened circumstances, lube-free, and you better smile about it), but they can’t even do with less of a frelling increase? These are poseurs, charlatans or idiots. Or they’re just crazy stupid. There is no other explanation for such manifest disingenuousness. None.

    …but that, my friends, is the beginning of your personal fiscal sanity.

    Fire.Them.All.

    …or just let it burn while we have the strength to rise from the ashes.

    My two bits.

  27. SteveH Says:

    “”The ONLY reason the economy since 2008 hasn’t felt like a 2nd Great Depression is Federal deficit spending,”"

    Those of us in a lifetime of ties to construction industry have been in the 2nd depression going on 3 years.

  28. blert Says:

    The only solution to the entitlements programs is to lift the retirement age.

    Nothing else works.

    We’re living too long.

    The absurd Federal liabilities figures tossed around are entirely based upon the fantasy that America can continue to retire at 65 while living longer and longer.

    The other killer is unlimited immigration — from populations that norm 15 IQ points below white America and 30 IQ points below Ashkenazi Jews.

    Our high tech economy is super saturated with weak IQ talent. The inevitable outcome is chronic economic dependency — for generations to come.

    Europe has the same problem made worse by islam. The immigrants can’t fit in. Praying five times a day and taking Friday off is entirely impractical for employers. Hence a shocking level of welfare dependency. Indeed, there are no end of muslim fanatics in Europe living entirely off of the State.

    Such spending is blowing up the national economy.

  29. Don Carlos Says:

    Read also “When Money Dies: The Nightmare of Deficit Spending, Devaluation, and Hyperinflation in Weimar Germany” by Adam Fersusson, published 1975, reissued 2010.

    A bit of a slog re German political figures, but the parallels with where we are now are inescapable. Germany’s post-WWI loss of national territory (not colonies; 15% of Germany), its reparations debt plus private debt then =our deficits plus unfunded entitlements now. Both monstrous.
    Germany got chaos, utter destruction of its highly educated middle class, and Adolf, who built lots of infrastructure (e.g. Autobahn) and was an early ecofreak, among other features. We will get what?

    The US of A is teetering on a knife’s edge. I don’t think we’re gonna make it, not when folks like Neo seem not to see it, and fuss about the TPs.

  30. kolnai Says:

    kaba -

    My God, talk about an effective analogy.

    I know the words of an anonymous stranger can only mean so much – and a stranger who doesn’t know the appropriate words to boot – so I’ll resist the impulse to elaborate on your experience and just let the implications of my stunned silence carry the weight.

    And, of course, your very welcome for the link – glad you found it as helpful as I did.

  31. kolnai Says:

    grrrr… “YOU’RE very welcome.”

    Must… proof…read.

  32. Perfected democrat Says:

    “I have yet to find what I would consider a dispassionate and objective discussion of all the issues and proposals involved, or even an attempt at one.”

    The Democrats have an adolescent fantasy that they are akin to Robin Hood. In reality, they are shallow left-wing ideologues, simplistic central planning advocates, and blowhards. Thomas Sowell, in his fourth edition primer on economics, details clearly the bottom line concerning the authentic realities and unavoidable trade-offs between top-down versus bottom-up economic management; the ramifications of the “pricing mechanism” which functions as surely as gravity. It’s not for no reason that left-wing cultures have generally poor records in every arena; from personal freedom and notorious unemployment to sprawling slums and marginal technological and scientific innovation; even lacking responsibility for their own military defense, as well as marginal foreign aid contributions.

    The bottom line is that the deficit/debt, in the context of additional spending programs is beyond the real capacity of the American tax payer to meet the ultimate long-term obligations, and can only end up in a fatal inflation. Everywhere in history when the left-wing program has prevailed for a significant period, the result has been similar; the masses tragically, uniformly poorer. Case in point today, nine-plus percent unemployment, but closer to twenty percent for our black population, while the current government bureaucracy has expanded almost exponentially in a two year period of time; a bureaucracy which has deliberately orchestrated (based on dubious scientific rationale), and for only one example, the doubling of the price of gas, fifty bucks a tank for many now.

    When your income falls to $1200/month, or lower, and you have other mouths to feed as well, finding a job, much less getting there, with all the other economic realities and implications, may become an insurmountable obstacle; ditto for “universal” health insurance, as government simultaneously borrows money to expand the system, while attempting to enforce artificial price controls for billing; eventually the doctors will not be able to justify their own investment in time, money and effort. Then we will have a medical system like Cuba (bring your own sheets if you aren’t Hugo Chavez), or as conditions are becoming apparent in England… As an aside, don’t you have to wonder why Hugo Chavez, president of an oil, resources, and land wealthy nation, is in Cuba being treated for an apparently common cancer? The Democrats have always been the party of illusion, from their KKK roots, to their current hard-left demagoguery; and like good communists, they have almost always placed party first…

    Profit has always been an incentive for excellence, while central planning bureaucracy, with its innate incompetence, spawns inevitable black markets, government/business elite collusion (fascism) and political special interest dishonesty, their exclusively identifiable brand of greed and hypocrisy. The entire tragic history of the left-wing during the twentieth century illustrates this clearly, from Che and Castro’s firing squads to Stalin’s camps, to Mao’s great leaps backward, including even now their support for the regime in North Korea, and all the consequent, indirect ramifications (WMD’s, Iran…); and now this defective culture has come to control America with Obama and his fellow Democratic Party traitors.

  33. rickl Says:

    I’ve quoted and linked Karl Denninger’s Market Ticker here many times. In my opinion, it’s one of the most important sites on the internet for economic issues.

    If I had to boil down his thousands of Tickers into a single phrase, it would be this: “Math trumps politics.”

  34. rickl Says:

    Perfected democrat Says:
    July 29th, 2011 at 9:15 pm

    The Democrats have an adolescent fantasy that they are akin to Robin Hood.

    Most people have an entirely erroneous view of the Robin Hood legend. The popular saying is “He took from the rich and gave to the poor”, but in actuality, the Sheriff of Nottingham was a representative of the government who extracted taxes from the common people. Robin Hood recovered that money and gave it back to its rightful owners.

    A better analogy would be the pirate Ragnar Danneskjöld from Atlas Shrugged.

  35. ELC Says:

    @ A_Nonny_Mouse Says 4:27 pm. Ditto to all that.

    Tea Partiers need to remember that without us, there would have been hardly a blip of discussion about raising the debt ceiling this year, mostly because the Republicans would probably not have regained the House last year. That, in and of itself, is a victory. Because Tea Partiers are only a large portion of one party in one legislative chamber (plus maybe a handful in the Senate), not much more can realistically be expected in this Congress.

  36. rickl Says:

    armchair pessimist Says:
    July 29th, 2011 at 5:08 pm

    Now the politicians and we the people are left with two sour alternatives. We either tax ourselves to the hilt to pay for the goodies we used to get cheap, or we cut them out. If you think the latter will go down with the urban poor, to whom a govt check is as natural as breathing, think again.

    Sounds like they better get used to sweeping floors and scrubbing toilets for a living, or else starving in the gutter. I don’t much care which.

    I have exactly zero concern for what the “urban poor” wants or likes.

  37. Amy Says:

    neo, you wrote: “What do the people want? I think it’s this: Reined-in spending. A bona fide and serious attempt to reduce the debt enough to make it manageable. A government that seems reasonable run by people who can work together to actually accomplish these things. A pipe dream, probably.”

    Yes, a pipe dream. The people who want to reduce spending already know the president and the Democrats in power don’t want that, and won’t “work together.” That is why they gave the Republicans a chance in 2010 and sent so many of them to Washington. Now, after these hideous “negotiations,” how is the average American – who doesn’t really identify with Republicans or Democrats – supposed to tell the difference between the parties? What do Republicans stand for? Borrowing trillions more until maybe they control the Senate and presidency too?

  38. Bobar Says:

    Amy – People want something for nothing or something for the least expenditure of energy – hence our modern technological western society.
    It does come at a price. Those who can’t or won’t be educated will be left at the mercy of the government. God help them.

  39. rickl Says:

    I don’t think that people in the blogosphere are typical of the average American. I’m not talking about their political persuasions—liberal, conservative, or in-between. I’m talking about their intensity about politics, and their interest in it and patience for reading and thinking about it.

    Yes, I resent having to think about politics 24/7/365. That is not a natural state of affairs.

    Before the New Deal, the average American citizen had little if any interaction with the federal government. The governing authorities were local, county, and state governments, in that order.

    But nowadays the federal government asserts total control over everybody and everything, and is stampeding across the landscape like Godzilla on crystal meth.

    We definitely need to change it back. And then we could get back to our normal lives and would no longer need to be obsessed with federal politics.

  40. expat Says:

    Amy,
    I think the people are frightened, but I think the problem is caused by lack of leadership. If we had a president who believed in this country, recognized its strengths, and really tried to pull us together with coherent policies, the people would take heart.
    What we now have is a man who worked as a victim group recruiter and protest organizer who equates those things with building a community. We’ve had about 50 years of this kind of leadership from the left, people who told women they can have it all and told inner city blacks that the college degree even without accomplishment is what will get them ahead. These “leaders” have told them someone else is to blame if they don’t have it all. They have turned attention away from the essential questions about what makes a good life. For me, a good life is about relationships and accomplishments, no matter how modest. There is something unbelievably satisfying about saying to yourself, I did it when what you did reflects your own desires and your own efforts. Today, we have allowed that to be taken from large parts of our people. Ivy credentials and thread counts in sheets have been used to separate people who count from those who don’t. Michelle Obama once complained that when you achieved something “they” raised the bar. Guess what, Michelle, stop trying to jump over their bar. Pick another course. Our country is big enough and free enough to let people do this. It has gotten where it is because we’ve let people have their own dreams. The meaning of freedom has been changed from freedom to achieve to freedom from all constraints, including the laws of physics.

    The fear of the people will subside when they finally have people in government and positions of power who respect them and encourage them and recognize them for what they contribute to our society. Then people will not be frightened about raising the retirement age.

  41. thomass Says:

    I liked bill #3 much better than 1 or 2. Your right though; the Senate will tear it up and send it back.

    On the micro good side of this issue; all the dead on arrival talk and any gloating about rewrites by democrats chips away at their argument that wacko tea party people are causing this whole thing.

    But the republicans will probably loose on the pr war on the whole for the issue. The house republican leaders are not up to arguing their case. The democrats tore up the constitution to pass the healthcare bill (used interstate commerce bs). They scammed paygo with reconciliation and bogus cbo data points… Now they’re creating a phony crisis with default talk and no Social Security checks + threats to creatively living constitution the 14th amendment. We shouldn’t need to have a fight over the debt ceiling but we are having it due to their previous pattern of lawlessness. This is a place we were able to get some footing to push back.

  42. thomass Says:

    SteveH Says:

    “What’s really frightening is NOBODY is talking about the massive wealth creation that will be needed to fix this mess.”

    Not gonna happen if we push taxes up to 20%+ of GDP to pay for the dems spending (assuming 3-4% more is paid with inflation…). :)

    So, a double whammy. Out of control spending with 1-2% growth…. Ah dem econ..

  43. SteveH Says:

    “”The meaning of freedom has been changed from freedom to achieve to freedom from all constraints,”"
    expat

    Wasn’t it FDR who came up with freedom from want? An absurd notion that probably set the course for the omniscient super state in charge of removing all suffering from life. And if it fails (which is guaranteed) it’s really an issue of a lack of funding from heartless citizens who don’t care.

  44. Mr. Frank Says:

    Ricki says: “Sounds like they better get used to sweeping floors and scrubbing toilets for a living, or else starving in the gutter. I don’t much care which.

    I have exactly zero concern for what the “urban poor” wants or likes.”

    I remember the urban riots of the Sixties. It didn’t take much to set them off. Because Obama is black he has been getting a pass from blacks so far. With the current high unemployment among blacks and the destruction of the black middle class, a white, Republican president would be pilloried right now, and riots would be likely.

    Obama’s mere presence in the White House is buying us some time, but the economic data suggest no relief in sight. The flash mobs in the cities are a look into the future.

  45. Amy Says:

    Here we go. This is exactly right, in my hobbit-humble opinion. Worth reading the whole thing. Andrew McCarthy: Against the Boehner Plan.

  46. Curtis Says:

    Thanks, Amy. I heartily agree. The following three excerpts capture the heart of McCarthy’s argument:

    “John Boehner has a plan that he touts as slashing about $900 billion in government spending — shy of his original claim, only two days earlier, that cuts would amount to $1.2 trillion. It’s nonsense, of course. In Washington, unlike the rest of the known universe, a “cut” is a reduction in the rate of increase.”

    “The saddest thing about Thomas Sowell’s take on all this is not his suggestion that the political fallout of the debt controversy trumps the substance of the debt problem. It is his intimation that the truth can’t win.”

    “Our system is premised on the conviction that the right side can always win — that the strength of its arguments can turn the political tide and force even committed ideologues like Barack Obama to yield. And I believe the system works.”

    Basically, the plan is lies, fears and tears. It is not honest pragmatism.

    Don’t be afraid of the coming hard times. The weak, lazy and dishonest will be winnowed out like chaff.

  47. Curtis Says:

    Is truth important?

    How about the BIRTHER controversy where most everyone “agreed” to turn a blind eye. Consider the following AT article which calls that behavior information cascade and Wilfred Trotter’s herd-instinct behavior.

    “the president’s long-form birth certificate has a lengthy line of forgery experts willing to testify that the April 27th White House PDF is a complete digital fabrication.”

    http://tinyurl.com/3dgouuh

Leave a Reply

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>



About Me

Previously a lifelong Democrat, born in New York and living in New England, surrounded by liberals on all sides, I've found myself slowly but surely leaving the fold and becoming that dread thing: a neocon.
Read More >>








Blogroll

Ace (bold)
AmericanDigest (writer’s digest)
AmericanThinker (thought full)
Anchoress (first things first)
AnnAlthouse (more than law)
AtlasShrugs (fearless)
AugeanStables (historian’s task)
Baldilocks (outspoken)
Barcepundit (theBrainInSpain)
Beldar (Texas lawman)
BelmontClub (deep thoughts)
Betsy’sPage (teach)
Bookworm (writingReader)
Breitbart (big)
ChicagoBoyz (boyz will be)
Contentions (CommentaryBlog)
DanielInVenezuela (against tyranny)
DeanEsmay (conservative liberal)
Donklephant (political chimera)
Dr.Helen (rights of man)
Dr.Sanity (thinking shrink)
DreamsToLightening (Asher)
EdDriscoll (market liberal)
Fausta’sBlog (opinionated)
GayPatriot (self-explanatory)
HadEnoughTherapy? (yep)
HotAir (a roomful)
InFromTheCold (once a spook)
InstaPundit (the hub)
JawaReport (the doctor is Rusty)
LegalInsurrection (law prof)
RedState (conservative)
Maggie’sFarm (centrist commune)
MelaniePhillips (formidable)
MerylYourish (centrist)
MichaelTotten (globetrotter)
MichaelYon (War Zones)
Michelle Malkin (clarion pen)
Michelle Obama's Mirror (reflections)
MudvilleGazette (milblog central)
NoPasaran! (behind French facade)
NormanGeras (principled leftist)
OneCosmos (Gagdad Bob’s blog)
PJMedia (comprehensive)
PointOfNoReturn (Jewish refugees)
Powerline (foursight)
ProteinWisdom (wiseguy)
QandO (neolibertarian)
RachelLucas (in Italy)
RogerL.Simon (PJ guy)
SecondDraft (be the judge)
SeekerBlog (inquiring minds)
SisterToldjah (she said)
Sisu (commentary plus cats)
Spengler (Goldman)
TheDoctorIsIn (indeed)
Tigerhawk (eclectic talk)
VictorDavisHanson (prof)
Vodkapundit (drinker-thinker)
Volokh (lawblog)
Zombie (alive)

Regent Badge