Common Cents: Two Cent Solution
Two cents out of every dollar. Based on federal spending last year, that’s approximately how much Washington would have to cut to offset the sequester. But instead of getting out the red pens and finding a couple of pennies per dollar in waste and inefficiency, (surprise, surprise) Washington is once again coming hat-in-hand to the American people for more money. As they do, here’s something to consider: If you’ve run up four straight trillion dollar deficits, are on pace for a nearly $20 trillion national debt in the next four years, and still can’t cut two cents on the dollar, you might have a spending problem.
The $85 Billion Across-The-Board Cuts In The Sequester Amount To About 2 Cents On The Dollar. (CBO, “The Budget and Economic Outlook: Fiscal Years 2013 to 2023,” 2/5/13)
I DON’T HAVE A PROBLEM, YOU HAVE THE PROBLEM
Washington Refuses To Admit It Has A Spending Problem:
Rep. Nancy Pelosi: “[I]t is almost a false argument to say we have a spending problem, we have a budget deficit problem.” (FOX’s “Fox News Sunday,” 2/10/13)
President Obama: “We don’t have a spending problem.” (Stephen Moore, “The Education of John Boehner,” The Wall Street Journal, 1/6/13)
White House Press Secretary Jay Carney: “Deficit reduction is not a worthy goal unto itself.” (Daniel Halper, Carney: “Deficit Reduction Is Not A Worthy Goal,” The Weekly Standard, 1/10/13)
SO FAR “BALANCED APPROACH” HAS BEEN ALL TAX HIKES
President Obama: “Over the last few years, we’ve made good progress towards reducing our deficit in a balanced way. There’s no reason we can’t keep chipping away at this problem.” (President Obama, “Weekly Address: A Balanced Approach To Growing The Economy In 2013, White House, 2/10/13)
But The Deal To Avert The Fiscal Cliff Was Anything But Balanced:
The Atlantic: “There Are No Spending Cuts In This Deal.”(Derek Thompson, “Fiscal Cliff Deal FAQ: What Just Happened And What It Means For You,” The Atlantic, 1/2/13)
The New York Times: “And It Includes Almost No Spending Cuts.” (David Leonhardt, “For Obama, A Victory That Also Holds Risks,” The New York Times, 1/2/13)
The Associated Press: “[The Fiscal Cliff Deal] Puts Off The Toughest Decisions About Spending Cuts…” (Charles Babington, “Analysis: Cliff Deal Is Another Pain-Free Punt,” The Associated Press, 1/3/13)
AND PRESIDENT OBAMA IS EXPECTED TO CALL FOR MORE SPENDING, NOT LESS
Bloomberg: “Obama to Propose Spending to Boost Jobs in State of Union.” “The president will offer proposals for spending on infrastructure, clean energy and education, according to a senior official briefed on the speech.”(Lisa Lerer and Heidi Przybyla, “Obama to Propose Spending to Boost Jobs in State of Union,” Bloomberg, 2/10/13)
President Obama Says Tax Revenue Will Go Towards Spending. “In a foreshadowing of more budget battles to come, Obama said he would insist that taxes be raised by closing loopholes that benefit the wealthy, as a way to raise money for spending projects.” (Steve Holland, Obama open to “big deal” on budget, but wants revenues, Reuters, 2/7/13)
Even Though Spending Has Soared In Recent Years:
“… [T]otal discretionary domestic spending is up closer to 30% from 2008-2013. The sequester would claw that back by all of about 5%.” (“The Unscary Sequester,” The Wall Street Journal, 2/7/13)
From 2008 to 2010, Federal Domestic Discretionary Spending Soared By 84 Percent. “In Mr. Obama’s first two years, while private businesses and households were spending less and deleveraging, federal domestic discretionary spending soared by 84% with some agencies doubling and tripling their budgets.” (“The Unscary Sequester,” The Wall Street Journal, 2/7/13)
“[F]rom 2008-2013 federal discretionary spending has climbed to $1.062 trillion from $933 billion—an increase of 13.9%. Domestic programs grew by 16.6%, much faster than the 11.6% for national security.” (“The Unscary Sequester,” The Wall Street Journal, 2/7/13)
And The CBO Predicts It Will Only Get Worse:
The CBO Reports By 2017, Our National Debt Will Be Nearly $20 Trillion. “The government’s debt is $16.4 trillion and is slated to reach almost $20 trillion by 2017, according to financial analysis by the non-partisan Congressional Budget Office.” (Neil Munro, “Credit-Rating Agency Threatens Downgrade If Obama Spending Isn’t Curbed,” The Daily Caller, 1/15/2013)
By 2023, The Debt The Public Holds Will Equal 77 Percent of GDP. “By 2023, if current laws remain in place, debt will equal 77 percent of GDP and be on an upward path, CBO projects.” (“The Budget And Economic Outlook: Fiscal Years 2013-2023,” Congressional Budget Office, 2/4/13)
Entitlement Spending Will Double. “Spending on Social Security and healthcare will double to $3.2 trillion a year over the next decade, threatening a sharp rise in national debt unless Congress acts to avoid the danger, congressional researchers warned on Tuesday.” (David Morgan, “Social Security, health spending to hit $3.2 trillion a year,” Reuters 2/5/3013)
Interest Payments Alone On Debt Set To Overtake Defense Spending. “Accumulated interest payments from 2014 through 2018 are $1.76 trillion under CBO’s new baseline. Interest payments for the second five years are more than double that or about $3.64 trillion. … The end result is that annual interest costs are predicted to have overtaken defense spending by 2020 even allowing for an extra $100 billion annually for overseas contingencies.” (David Rodgers, “CBO: Interest on debt snowballing,” POLITICO 2/513)
CBO: A Large Debt Poses An Increased Risk. “Moreover, such a large debt poses an increased risk of precipitating a fiscal crisis, during which investors would lose so much confidence in the government’s ability to manage its budget that the government would be unable to borrow at affordable rates.” (“The Budget And Economic Outlook: Fiscal Years 2013-2023,” Congressional Budget Office, 2/4/13)
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 Rutger Bregman
… 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.
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,
… Well then. Long ago, yes.. Still applies? You tell me.
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