Uncle Sam: How dare you! Do you know who I am?
S&P: Yeah, just another bum living beyond your means...
But one could also loudly ask where the hell S&P gets off doing such a thing. This is the same ratings organization that gave the gold seal thumbs up to the financially toxic underwater shitbombs packaged and sold to an unsuspecting world by the Wall Street gangsters it was in cahoots with.
The Standard & Poor's Seal of Approval was all over those "toxic assets" President Bush explained were "clogging the system." Instead of taking a plunger and flushing the whole damned stinking mess down, he instead watched helplessly as Dirty Hank Paulson and his merry gang of Wall Street pirates blew a hole in the side of The Treasury. The congressional looters came in after and finished the job, with Boss Obama handing out checks to union cronies and rotten state and local governments.
So Now What?
Economics reporter extraordinaire James Pethokoukis laments the lack of a comprehensive plan for governmental and financial reform. Congress and the president applied a band-aid to the pinky, completely ignoring the sucking chest wound.
Progressives rightly point out that we cannot afford our government at current rates of revenue collection. We are spending close to 25% of GDP while collecting only around 17%, producing an annual gap of around $1.5 trillion, not including the growing bow wave of unfunded liabilities as the baby boomers retire. The Social Security lock box is full of intergovernmental IOUs which must be paid out of the general treasury, which means this “self-sustaining” program will have to be supported from the general budget, putting us deeper in the hole.
It’s time for a fundamental debate in this country about just what government should and should not be doing, and how we propose to pay for it.
Three Plans
* Simpson - Bowles: The presidential commission whose results the president ignored. I think he gave Alan Simpson the Dali Lama treatment and laughed from an upstairs window as Simpson stepped through a bag of stinky garbage on his way out.
* The People’s Budget - Aptly named, The moniker is reminiscent of the glory days of that communist workers’ paradise, The old Soviet Union. This is the Congressional Progressive Caucus's stab at destroying our nation by destroying the economy by driving every last job creator to China.
* The Ryan Roadmap - Paul Ryan's plan. Scored by the CBO and the only truly viable plan of the three.
All parties need to keep in mind that such plans can only take hard numbers so far. Since they project out into the future, the authors must make demographic and economic assumptions, and those are the details the devil wallows in, and that is where the fighting takes place.
As a public service to my fellow Blogistanis, I've collected some links that describe and discuss each of the three plans.
Ryan's Roadmap
Roadmap for America’s Future
Jed Babbin – Ryans Roadmap
Paul Ryan – Where’s Your Budget, Mr. President?
CBO Analysis of Roadmap
Misunderstanding the Ryan Roadmap
The People's Budget
The People’s Budget
Megan McArdle – The People’s Budget
CS Monitor – The People’s Budget
Simpson-Bowles
Simpson Bowles Report
Tax Policy Center – Simpson Bowles
Derek Thompson – Simpson Bowles Summary
38 comments:
I can't imagine that you will get any disagreement on the rating agencies.A parcel of rogues if there ever was one.
I think the following excerpt may give some insight why this economy is going nowhere.
""I've never seen labor markets this weak in 35 years of research," says Andrew Sum, director of the Center for Labor Market Studies at Northeastern University. Wages and salaries accounted for just 1 percent of economic growth in the first 18 months after economists declared that the recession had ended in June 2009, according to Sum and other Northeastern researchers.In the same period after the 2001 recession, wages and salaries accounted for 15 percent. They were 50 percent after the 1991-92 recession and 25 percent after the 1981-82 recession.
Corporate profits, by contrast, accounted for an unprecedented 88 percent of economic growth during those first 18 months. That's compared with 53 percent after the 2001 recession, nothing after the 1991-92 recession and 28 percent after the 1981-82 recession."
In other words, no demand. But don't tax them or they won't create jobs. Heaven forbid we tax the hedge fund managers who have turned this economy into on big casino.
Meanwhile The Black Bush continues to pursue job creation by touting more free (LMFAO) trade agreements. It's as if he doesn't understand the law of one price.
Which is that since companies can build the latest manufacturing anywhere and have the same commodity prices, it is labor costs that determine variations in price and labor only.
So let' have a free trade agreement with South Korea. The Black Bus figures it's a real job creator.
Meanwhile, just what are we doing to utilize our R&D advantages. Well, not investing in R&D and losing the advantage.
Meanwhile, we shipped the jobs way, the market economy did a bang up job creating consumer goods and we wet deep, deep into debt buying. Time to pay up.
Please note that the market economy is not so good providing basics like health care. It runs into trouble there and elsewhere.
But keep on in Afghanistan, we're making progress. Don't tax the "job creators" (LMFAO) and privatize education so that the "free market" can bleed it dry.
We are a sorry people in the advanced state of decline.
But look over there -- A SCARY MUSLIM.
The Standard & Poor's Seal of Approval was all over those "toxic assets"
lol! FANNIE and FREDDIE have since been taken over by the US taxpayer and now have bought up and OWN most of those "toxic assets". So there should be no wonder that US debt is being downgraded.
the law of one price
Don't get me started on exposing THAT bit of drivel again, duckmeister. The law of one price is a "law" only in yours and some dumb economist's minds. If you ever needed proof of that, all you would have to do is watch a stock ticker for any particular stock for five minutes.
There are no worlds of "perfect price information" nor are there worlds were all consumers have equal need for any particular product that meets their maximum "perfect price" expectations.
...but then again, what do modern ECONOMIST know of wealth?
Xenophon, "Oeconomicus"
Soc. The same things, in fact, are wealth or not wealth, according as a man knows or does not know the use to make of them? To take an instance, a flute may be wealth to him who is sufficiently skilled to play upon it, but the same instrument is no better than the stones we tread under our feet to him who is not so skilled . . . unless indeed he chose to sell it?
Crit. That is precisely the conclusion we should come to. To persons ignorant of their use flutes are wealth as saleable, but as possessions not for sale they are no wealth at all; and see, Socrates, how smoothly and consistently the argument proceeds, since it is admitted that things which benefit are wealth. The flutes in question unsold are not wealth, being good for nothing: to become wealth they must be sold.
Yes! (rejoined Socrates), presuming the owner knows how to sell them; since, supposing again he were to sell them for something which he does not know how to use, the mere selling will not transform them into wealth, according to your argument.
Crit. You seem to say, Socrates, that money itself in the pockets of a man who does not know how to use it is not wealth?
Soc. And I understand you to concur in the truth of our proposition so far: wealth is that, and that only, whereby a man may be benefited. Obviously, if a man used his money to buy himself a mistress, to the grave detriment of his body and soul and whole estate, how is that particular money going to benefit him now? What good will he extract from it?
Crit. None whatever, unless we are prepared to admit that hyoscyamus,as they call it, is wealth, a poison the property of which is to drive those who take it mad.
SF: THIS is what caught my eye and I couldn't agree more "But one could also loudly ask where the hell S&P gets off doing such a thing."
Terrific information here, thanks very much.
Message in the downgrade...
Wall Street to Main Street...KEEP UP the payments OR ELSE! And btw - KEEP BORROWING! Cutting spending might make you too independent so that in the future you might not be FORCED to bail US out!
Ducky: I take exception to your use of the term "Black Bush", it reflects badly upon yourself and a fine Irish Whiskey.
It all starts with fiat money. War and welfare are fueled by it. Sound money naturally limits Big Government. Restoring sound money is the fundamental issue of our time.
"It’s time for a fundamental debate in this country about just what government should and should not be doing, and how we propose to pay for it"
That has been going on for 235 years and 'we the people' have been losing ever since.
Benjamin Franklin famously said when asked what we were getting "A Republic, if you can keep it", well apparently we could not as that ended decades ago and morphed into a democracy or mob rule.
@Divine: It all starts with fiat money. War and welfare are fueled by it. Sound money naturally limits Big Government. Restoring sound money is the fundamental issue of our time.
Amen Sister!
All the egghead big government types poo poo hard currency because it ties governments' hands and limits flexibility.
To which a sensible person responds, "Yes!"
They Keynesians and the monetarists have brought the global economy to the brink of ruin.
@ mr. ducky,
Just because you're an internationalist doesn't mean that EVRYONE has to be one. The Constitution grants Congress the ability to set tariffs. THAT used to be it's only source of revenue.
Oh, but Taft-Hartley and the Great Depression showed us the danger in trade wars. But that was a danger to a centralized INDUSTRIAL-CORPORATE economy. I thought you didn't like those evil "corporate elites." Well, NOW is your big chance to get RID of them... and the union shops that were set up to steal from them.
Stop carrying water for Hypermnestra's sisters, mr. ducky. There's a hole in their bucket.
...and that's the ONLY source of money that you're ever going to see money come from.
btw - hyoscyamus is also called "pigs bean". It does to harm to the pigs who often were fed off it. But then, everything has a use for those who know them. And are potentially a "harm" to those who don't.
erratum - "NO harm" for "to harm", above.
SALIENT POINTS from several of the article cited:
Babin on Ryan:
”Federal government debt and spending -- on the current course -- will reach 223% of the Gross Domestic Product by 2040. Ryan’s plan -- which still allows increased spending - reduces that to 99%, still far too high.
“The Ryan plan provides that Americans over 65 by 2020 will receive current and rising Medicare benefits for life. Those who reach 65 after 2020 will be given vouchers to purchase private health insurance, resulting in enormous savings in federal spending. CBO says, “Under [Ryan’s] proposal, national health expenditures would almost certainly be lower than they would under [Obama’s vague plan.]
“‘The lower budget deficits under [Ryan’s] proposal would result in much less federal debt than under the alternative [Obama] fiscal scenario and thereby a much more favorable economic outlook.’”
Ryan:
”Ever since they abused the budget process to jam their health-care takeover through Congress last year, the Democrats have simply done away with serious budgeting altogether. The simplest explanation—and the president's real bluff—is that they don't want to commit publicly to the kind of tax increases and health-care rationing that would be required to sustain their archaic vision of government.”
From Howard Gleckmann’s blog on The Peoples’ Budget:
”The problem with these very high tax rates [proposed by liberals], of course, is that the wealthy will find ways to avoid them. Some may incorporate and take advantage of those much lower corporate rates. Rich individuals will shelter or defer income, or find ways to move it (or themselves) offshore. Corporations will surely decamp for tax havens.”
Megan McCardle on the Peoples’ Budget:
”... If you want to get the budget under control without meaningfully cutting into entitlements, you're going to need to hike taxes substantially on the middle class.
Derek Thomspon of The Atlantic on Domenici-Rivlin-Bowles-Simpson:
”Stimulus now and austerity later might be an appropriate five-word summation of the latest deficit reduction plan to hit the press. And it's good.
“ ... the slow elimination of the employer health care subsidy until 2028. This would encourage employers to put more money toward taxable wages, which would raise lots of money for Social Security. In any case, this is a much more balanced approach to Social Security reform than Schakowsky's plan to nearly eliminate the taxable ceiling and make no spending cuts.”
Submitted by FreeThinke
A childish question no doubt:
Why can't government and citizenry alike realize and accept what seems painfully obvious?
The solution to our fiscal problems is very simple:
Everyone is going to have to tighten his belt and make do with less.
Isn't a reduced amount of SOMETHING a lot better than a full measure of NOTHING?
All this shuffling around of numbers and attempts to shift responsibility always to someone else's sector never addresses the real problem, and that is no matter what we do -- even if we reduced "the evil rich" to penury, and melted down and redistributed all the evidence of a once-privileged and luxurious lifestyle -- there just isn't enough money in the world to fund these overly ambitious government programs.
The stale cliché holds true: Once you kill the goose that lays the golden eggs,everyone will suffer. By destroying wealth and privilege you may have achieved "equality," but it will only mean equally shared misery and deprivation.
Class Warfare is the tool of Envy, Spite and Malice -- deadly sins all. Such tactics have no capacity to do good to anyone.
~ FreeThinke
Wise words, FreeThinke.
They are killing the golden goose.
I'm also glad you brought this up:
”Federal government debt and spending -- on the current course -- will reach 223% of the Gross Domestic Product by 2040. Ryan’s plan -- which still allows increased spending - reduces that to 99%, still far too high.
And they call Ryan's plan too extreme.
Everyone is going to have to tighten his belt and make do with less.
Some more than others. They've managed to "privatize" their gains and "publicize" their losses. That's what a "social democracy" is ALL about.
Thank you SilverFiddle. You gave us a lot to go on today. Good stuff, even if it does tell us mostly bad news. It looks like Ryan may be our last best hope, but because of the septic atmosphere fostered by the media, he looks more and more like that proverbial snowball on hell. Sad!
BTW, you asked an important question an another blog earlier today:
"Why is the Pakistan-Afghanistan border more important than the US-Mexican one?"
That opens up a big can of worms for a potentially lively discussion. I have no good answer, but I wish we could talk about it here sometime soon.
Like you I am a recent convert to the anti-War stance. George W. Bush and the neocons bought us a mess of trouble with no hope of reward. I'm ashamed that i was taken in by it as long as I was. Just because I dislike President Obama, doesn't mean I have any admiration for his predecessor.
The diehard liberals -- and certain types of doctrinaire conservatives -- remind me of people who continued to fight the Civil War well past its hundredth anniversary.
The dynamics of the struggle have changed dramatically. The enemy these diehards are fighting isn't the enemy who's trying to do us in now. The battle between left and right has become an illusion perpetrated by the real villains who use old, irrelevant issues to distract us from what they're doing behind the scenes.
What's the use of jousting with shadows and shooting at imaginary targets, when the real bad guys are preparing to stab you in the back or yank the rug out from under your feet?
Sorry my argument is so short in specifics, but there is plenty of evidence out there to back it up, and I've presented long lists of it here several times already. I don't regard it as "conspiracy theory," because everything said and catalogued has been done out in the open -- but the media has either studiously ignored it, or swept it under the rug, and deliberately failed to report on it -- just as they did with their virtual blackout or curt dismissal of Conservative Thought for several decades before the advent of the erudite, high-falutin' Bill Buckley and then the more plain-spoken Rush Limbaugh's greater mass appeal changed the dynamics of media coverage of politics forever.
~ FreeThinke
They don't see it as killing the golden goose. In this country there are hundreds of thousands of golden geese. Most are small and a few are very big. What Obama and his ilk want is to consolidate all of the little into a handful of maega gesse that will who will control all means of production and will be beholden to the statist government for the right to exist. we will all be told where we can live and where we can work and we will do it or we won't have food or a roof over our heads. Its the new world order totalatarian semi-socialist system of government. This is what Obama wants for us.
The Standard and Poor Whiz kid John Power who has been on TV with his politcs,how we do not get along. here is his Bio:
After graduating in 1977 with a bachelor of arts in literature and philosophy, he went Ivy League, enrolling at Columbia University, where he got a master’s degree in English literature.
I say this is a deliberate attempt at stealing billions. Running us closer to the third rail. Yes we need to correct our house, but we are not a Banana Republic
Excuse me, not Powers, but Chambers
THE Golden Goose is the Capitalist System of Free Enterprise, of course. Unfortunately, this is not threatened only by Marxism. The Warfare-Welfare State is abusing the Capitalist system and turning it into an amalgam of State and Corporate power that works against the individual.
Why do you think there are no more Edisons, Bells and Wrights Brothers? INDUSTRY and GOVERNMENT together have created a system of research funded in corporate owned experimental labs. Anything and everything useful discovered in these places now belongs to the corporate conglomerate. The individuals who work in these places are owned and operated. There is hardly anything such thing as INDIVIDUAL ACHIEVEMENT anymore.
One way or another the collectivist mentality seems to hold sway in the long run. If there ain't no gold, and ain't no glory to be gained no more, where's the incentive to persevere in pioneering research?
Was there ever a man born who had a burning ambition to become a cog in someone else's mega-machine?
Were Shakespeare's plays written by a committee? Were Beethoven's symphonies? Were Jane Austen's novels? Were Escoffier's classic French recipes?
Are ya beginnn' to get the idea?
When individual inventiveness, pride in workmanship and craftsmanship die, and machine made standardization prevails, zest for living dies too.
It isn't just the money that's at stake, it's our humanity as well.
Ever read The Handmaid's Tale by Margaret Atwood?
THAT's where were headed. It ain't pretty.
~ FreeThinke
Bunkerville: Interesting info. I agree with your conclusion.
Thanks!
Finntann -- I'm a bourbon guy myself but point taken. I'll stick with Obummer
I was never much of an Old Bushmills fan myself...
The Ryan plan attacks entitlements, which can easily be funded, while it ignores the elephant in the room - discretionary spending on the military and borrowing.
It's a stupid plan. It doesn't pay the bills and it does not stop accruing the bills. It's stupid, sleazy, underhanded, rightwing-rabble-rousing-retarded rhetoric.
Come up with a grown-up plan, and then American will have something to talk about. I'm still waiting to hear one from any party or anyone.
JMJ
"Why is the Pakistan-Afghanistan border more important than the US-Mexican one?"
--------------------
They're both really good money pits. If it ain't the Army pissing money away in Afghanistan, it's ATF shipping guns to Mexico.
Good for the GDP both ways.
>Come up with a grown-up plan
That pretty much eliminates anything the current administration could come up with. Stealing more property from successful people to give it to chronic leeches in an effort to buy votes (The Obama Doctrine) isn't a grown-up plan.
You guys really aren't good with numbers are you?
Defense spending is 20% of the budget, eliminating it wouldn't cover medicare, medicaid, and social security by half which make up 43% of the budget.
In 2010 we spent 1.494 Trillion on Medicare/Medicaid and Social Security alone.
http://en.wikipedia.org/wiki/File:U.S._Federal_Spending_-_FY_2007.png
As of March 2011 the total war funding since 9/11 has been 1.283 Trillion... and that is for an entire decade.
http://www.fas.org/sgp/crs/natsec/RL33110.pdf
That pressure you feel is the Entitlement Elephant teabagging you. (Since y'all seem so enamoured of that phrase).
The elephant is sitting on your face and all you can do is go... NOM NOM NOM
Defense, Interest, and Mandatory spending consist of 38% of the budget.
Entitlements and earmarks make up 55% of the budget.
Who's the elephant now?
So since defense is 20% and debt service is 6%, how does that make it the elephant in the room?
I'm all for eliminating spending on Iraq and Afghanistan. Spending on those two wars in 2010 was 171.7Billion, and at no time since 2001 has exceeded 185.6B.
In 2010 you spent 1.171 Trillion more than you took in, eliminating defense and the wars won't cover that, all it will do is slow down the crash.
2010:
Income: 2.381 Trillion
Social Security: 695B
Medicare: 453B
Medicaid: 290B
Interest: 164
Mandatory Programs: 571B
That alone is 2.173T
Leaving 208B left over
Now, whatever mandatory programs are, they are not the budget of the rest of the government.
The Department of Health and Human Services eats another 78.7B
Leaving 129.3
Lets see...Department of Transportation 72.5B leaving 56.8B
Housing and Urban Development is 47.5 leaving just 9.3B... lets just add in the social security administration for 9.7B leaving us a 400 Million dollar debt.
That's all we can afford, what's left unfunded?
Defense, State, Veteran Affairs, Education, Homeland Security, Energy, Agriculture, Justice, NASA, Commerce, Labor, Treasury, Interior, EPA, NSF, Corp of Engineers, National Infrastructure Bank, Corporation for National and Community Service, SBA, GSA, TARP
You could eliminate everything but Entitlements and entitlement servicing, and you would still be bleeding cash.
Nice try though.
Oops, forgot to give you the budget:
http://www.gpoaccess.gov/usbudget/fy10/pdf/fy10-newera.pdf
Oh and I apologize, let me correct myself: in 2010 we spent 1.438 Trillion on Medicare, Medicaid, and Social Security. Seems the number I used previously was for 2007
I guess we old people have a duty to die sooner rather than later in order not to bankrupt the system, don't we?
Another way of saying, "I have but one life to give to my country."
And to that I say, "SHIT!"
~ FreeThinke
Amen!
Merde!
Has obama come up with a plan to restore the AAA rating, apart from the gaseous platitudes and lies about everyone else coming together and sacrificing while he dances the night away bitching that it's someone else's problem?
Last i checked he was the president, you know the one leading the country. So it's really his job to figure out his ass from his elbow and call upon his various advisers to put something together isn't it.
Perhaps he's accepted that he's really just another incompetent, useless bum living off the American taxpayer.
The problem with Ryan's plan is that most of the cuts are down the road. When has the government ever made good on it's promise to cut spending down the road. It's like an alcoholic who is going to cut back next week, never going to happen.
Yeah Trestin. That's my problem with it as well. Yet the libs scream that its too radical!
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