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Debt Wish: Talk is Cheap



Debt Wish: Talk is Cheap

Entitlements are the biggest drivers of our debt. It’s time to reform Social Security and Medicare. Adding to the national debt is “unpatriotic” and “irresponsible.” These are some of the statements we heard from President Obama a few years ago regarding our fiscal mess. And now that we’re more than $16 trillion in debt and facing yet another fight over the debt ceiling? We “don’t have a spending problem,” according to the president. Could this be at the heart of Washington’s refusal to face the facts on spending?


First-Term Obama: “Entitlements Are The Biggest Drivers Of Our Deficit.”

Obama: “I Believe That We Have To Continue To Take A Serious Look At How We Reform Our Entitlements, Because Health Care Costs Continue To Be The Biggest Driver Of Our Deficits.” (President Barack Obama, Remarks By The President At A News Conference, The White House, 11/14/12)

In 2009, Obama Pledged To Reform Social Security And Medicare. “President-elect Barack Obama pledged yesterday to shape a new Social Security and Medicare ‘bargain’ with the American people, saying that the nation’s long-term economic recovery cannot be attained unless the government finally gets control over its most costly entitlement programs.” (Michael D. Shear, “Obama Pledges Reform Of Social Security, Medicare Programs,” The Washington Post, 1/16/09)

Obama: “What we have done is kicked this can down the road. We are now at the end of the road and are not in a position to kick it any further … We have to signal seriousness in this by making sure some of the hard decisions are made under my watch, not someone else’s.” (Michael D. Shear, “Obama Pledges Reform Of Social Security, Medicare Programs,” The Washington Post, 1/16/09)

Second-Term Obama: “We Don’t Have A Spending Problem.”

Obama: “We Don’t Have A Spending Problem.” “… What stunned House Speaker John Boehner more than anything else during his prolonged closed-door budget negotiations with Barack Obama was this revelation: ‘At one point several weeks ago,’ Mr. Boehner says, ‘the president said to me, ‘We don’t have a spending problem.’ ” (Editorial: Stephen Moore, “The Education of John Boehner,” Wall Street Journal, 1/6/13)

Spending Cuts Have Been “Barely Discussed.” “In public statements since [Obama’s] re-election, he has barely discussed how he would pare back federal spending, focusing instead on the aspect of his plan that plays to his liberal base and involves all gain and no pain for 98 percent of taxpayers.” (Peter Baker, “Obama Tilts Tax Debate Away From Spending Cuts,” New York Times, 11/29/12)

First Post-election News Conference Mentioned Spending Just Once. “One reason a lot of people may not be aware of the cuts Mr. Obama has proposed is that he does not talk about them often. In his first postelection news conference, he focused on tax increases on the wealthy and used the term ‘spending cuts’ just once without elaborating.” (Peter Baker, “Obama Tilts Tax Debate Away From Spending Cuts,” New York Times, 11/29/12)

The Atlantic: “There Are No Spending Cuts In [The Fiscal Cliff] Deal.” (Derek Thompson, “Fiscal Cliff Deal FAQ: What Just Happened And What It Means For You,” The Atlantic, 1/2/13)


Former Chief Of Staff Erskine Bowles: “…We Darn Well Better Cut Spending.” “First of all, most important thing is if we’re going to raise revenue, and if we’re going to raise it in any form, then we darn well better cut spending because spending is the biggest part of this problem, and the biggest part of that problem is the fact that health care is growing at a faster rate than GDP.” (Erskine Bowles, CBS’s Face The Nation, 12/9/12)

Bill Clinton: “We’ve Got To Deal With This Big, Long-Term Debt Problem, Or It Will Deal With Us.” (“Transcript of Bill Clinton’s Speech to the Democratic National Convention,” New York Times, 9/5/12)

“[Treasury Secretary Timothy] Geithner Targeted Entitlement Programs As The Key To Reducing The National Debt While Insisting That Social Security Benefits Remain Protected.” (“Geithner: Entitlement Programs Key To Cutting Deficit,”, 2/15/11)

Hillary Clinton: Debt Is “Message Of Weakness Internationally.” “Secretary of State Hillary Clinton waded into the nation’s fiscal debate Wednesday, calling the expected $1.3 trillion U.S. deficit a ‘message of weakness internationally.’ ‘It poses a national security threat in two ways: it undermines our capacity to act in our own interest, and it does constrain us where constraint may be undesirable…'” (“Clinton Says deficit is a national security threat,” The Hill, 9/8/10)

“… Former Obama Economic Advisers Austan Goolsbee And Peter Orszag Have Also Argued That Spending Cuts And Entitlement Reform Must Be Part Of Any Meaningful Budget Deal.” (Andrew Stiles, “Democrats Ready to March Off the Cliff,” Washington Free Beacon, 12/11/12)

Bowles: Forget Taxes, Cut Spending. “Even if you raise the top rates back to the Clinton rates, that only creates about $400 billion over 10 years. That’s $40 billion a year. We have a trillion dollar a year deficit. That alone won’t solve the problem. We have to cut spending.” (Erskine Bowles, CBS’s Face the Nation, 12/9/12)

IMF Managing Director Christine Lagarde: “… [A]n agreement that would only extend tax cuts for the middle class without addressing spending or entitlements would be insufficient to reassure the rest of the world, [International Monetary Fund Managing Director Christine Lagarde] said.” (Sandrine Rastello, “IMF’s Lagarde Says U.S. Fiscal Agreement Should Be Comprehensive,” Bloomberg, 12/9/12)


“Three In Four Voters Want To ‘Cut Government Spending Across The Board’ …” (James Hohmann, “Battleground Poll: Hike Taxes on the Rich,” POLITICO, 12/9/12)

Gallup Post-Election Polling Finds 72% Of Americans Want “Major Cuts To Federal Spending.” (Lydia Saad, “Economy, Entitlements, Iran Americans’ Top Priorities, Gallup, 11/15/12)

“By An Overwhelming Margin, Voters Throughout The Country Believe That The Cause Of The Federal Debt Comes From Government Spending Being Too High (79%) Rather Than Taxes Being Too Low (15%).” (The Tarrance Group, “Findings From National Survey,” Memo To Public Notice, 10/28/12)


“CBO: Debt Poses Greater Long-Term Economic Threat Than Fiscal Cliff” (Joel Gehrke, “CBO: Debt poses greater long-term economic threat than fiscal cliff,” The Washington Examiner, 11/16/12)

“Lawmakers wrangling over ‘fiscal cliff’ negotiations may have a bigger problem on their hands over the next decade, as the current rate of federal spending could drive the United States into a fiscal crisis, according to the Congressional Budget Office.” (Joel Gehrke, “CBO: Debt poses greater long-term economic threat than fiscal cliff,” The Washington Examiner, 11/16/12)

According To The Congressional Budget Office, “Entitlement Programs Are The Biggest Driver Of The Long-Term Debt.” (Heidi Przybyla, “Democrats Hint at Entitlement Program Cuts in U.S. Budget,” Bloomberg, 12/7/12)


Under Obama, The National Debt Has Increased By $5.8 Trillion, An Increase Of 55 Percent. (US Department Of The Treasury,, Accessed 1/4/13)

In 2008, Obama Said Adding $4 Trillion To The National Debt Was ‘Irresponsible’ And ‘Unpatriotic.’ “… In 2008, Obama said, ‘Number 43 added four trillion dollars [to the national debt] by his lonesome … that’s irresponsible, that’s unpatriotic.’ Obama, of course, has been adding to the debt at double the rate of his predecessor.” (Kyle Smith, “Obama’s Call For Economic Patriotism is as Convincing as New Coke,” Forbes, 9/27/12)

Projected To Reach $21 Trillion By 2017. (Table 7.1 – Federal Debt at the End of Year: 1940-2017)

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Wealth is not Created at the Top: It is Only Devoured There



The UK has left the EU and we can argue about the minutiae of Wealth until we’re blue in the face. But the overriding factors are apparent and in one of the richest countries in the world it is shocking that so many people can’t even be sure if they are going to be able to eat enough today or provide for their loved ones.

These days, politicians from the left to the right assume that most wealth is created at the top. By the visionaries, by the job creators, and by the people who have “made it”. By the go-getters oozing talent and entrepreneurial-ism that are helping to advance the whole world – Opinion by 


… across the spectrum virtually all agree that wealth is created primarily at the top and so entrenched is this assumption that it’s even embedded in our language. When economists talk about “productivity”, what they really mean is the size of your paycheck. And when we use terms like “welfare state”, “redistribution” and “solidarity”, we’re implicitly subscribing to the view that there are two strata: the makers and the takers, the producers and the couch potatoes, the hardworking citizens – and everybody else.

Bankers, pharmaceutical giants, Google, Facebook … a new breed of  rentiers are at the very top of the pyramid and they’re sucking the rest of us dry


In reality, it is precisely the other way around. In reality, it is the waste collectors, the nurses, and the cleaners whose shoulders are supporting the apex of the pyramid. They are the true mechanism of social solidarity. Meanwhile, a growing share of those we hail as “successful” and “innovative” are earning their wealth at the expense of others. The people getting the biggest handouts are not down around the bottom, but at the very top. Yet their perilous dependence on others goes unseen. Almost no one talks about it. Even for politicians on the left, it’s a non-issue.

To understand why, we need to recognise that there are two ways of making money. The first is what most of us do: work. That means tapping into our knowledge and know-how (our “human capital” in economic terms) to create something new, whether that’s a takeout app, a wedding cake, a stylish updo, or a perfectly poured pint. To work is to create. Ergo, to work is to create new wealth.


But there is also a second way to make money. That’s the rentier way: by leveraging control over something that already exists, such as land, knowledge, or money, to increase your wealth. You produce nothing, yet profit nonetheless. By definition, the rentier makes his living at others’ expense, using his power to claim economic benefit.

But here comes the rub. Most rentiers are not as easily identified as the greedy banker or manager. Many are disguised. On the face of it, they look like industrious folks, because for part of the time they really are doing something worthwhile. Precisely that makes us overlook their massive rent-seeking…


The problems we face are that the politicians are firmly in the hands (pockets) of the uber wealthy. We live in a corporate plutocracy and those holding all the wealth and therefore power have no intention of changing the status quo, even if it isn’t sustainable. They remind me of bacteria (or cancer) devouring the host body more and more even though eventually it will kill them too.

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Donald Trump Forgets Important Lesson From Grandad:




Harper’s Magazine reprints an interesting letter from US President Donald J. Trump’s own grandfather that may get you thinking. Here is it then:

The Emigrants – By Friedrich Trump – From a letter written in 1905 by Friedrich Trump, Donald Trump’s grandfather, to Luitpold, prince regent of Bavaria. Trump had been ordered to leave Bavaria for failing to complete mandatory military service and to register his initial emigration to the United States twenty years earlier.


Prince Luitpold rejected Trump’s request for repatriation; the family later settled in New York. Translated from the German by Austen Hinkley.

Most Serene, Most Powerful Prince Regent! Most Gracious Regent and Lord!

I was born in Kallstadt on March 14, 1869. My parents were honest, plain, pious vineyard workers. They strictly held me to everything good — to diligence and piety, to regular attendance in school and church, to absolute obedience toward the high authority.

After my confirmation, in 1882, I apprenticed to become a barber. I emigrated in 1885, in my sixteenth year. In America I carried on my business with diligence, discretion, and prudence. God’s blessing was with me, and I became rich. I obtained American citizenship in 1892. In 1902 I met my current wife. Sadly, she could not tolerate the climate in New York, and I went with my dear family back to Kallstadt.

The town was glad to have received a capable and productive citizen. My old mother was happy to see her son, her dear daughter-in-law, and her granddaughter around her; she knows now that I will take care of her in her old age.

But we were confronted all at once, as if by a lightning strike from fair skies, with the news that the High Royal State Ministry had decided that we must leave our residence in the Kingdom of Bavaria. We were paralyzed with fright; our happy family life was tarnished. My wife has been overcome by anxiety, and my lovely child has become sick.

Why should we be deported? This is very, very hard for a family. What will our fellow citizens think if honest subjects are faced with such a decree — not to mention the great material losses it would incur. I would like to become a Bavarian citizen again.

In this urgent situation I have no other recourse than to turn to our adored, noble, wise, and just sovereign lord, our exalted ruler His Royal Highness, highest of all, who has already dried so many tears, who has ruled so beneficially and justly and wisely and softly and is warmly and deeply loved, with the most humble request that the highest of all will himself in mercy deign to allow the applicant to stay in the most gracious Kingdom of Bavaria.

Your most humble and obedient,

Friedrich Trump

… Well then. Long ago, yes.. Still applies? You tell me.

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