The anticipated 2012 budget deficit will be $1,500,000 million ($1.5 trillion). This means we are borrowing that amount from our children to fund all of the Democrats’ Utopian spending programs.
Finally, the president has proposed “tough budget cuts” that total $775 million. No, that’s not a joke.
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It is generally recognized by just about all members of the commentariat with IQs higher than room temperature that America’s projected entitlement spending was unsustainable… before Obamacare was added. The federal deficit threatens this country’s current economic, political, and military capabilities and promises to undermine the prosperity of future generations.
The president’s response is disappointing even to people on the left. Andrew Sullivan was a particularly conspicuous bellwether today, departing from his customary role of flack and harshly criticizing Obama.
[T]his president is too weak, too cautious, too beholden to politics over policy to lead. In this budget, in his refusal to do anything concrete to tackle the looming entitlement debt, in his failure to address the generational injustice, in his blithe indifference to the increasing danger of default, he has betrayed those of us who took him to be a serious president prepared to put the good of the country before his short term political interests. Like his State of the Union, this budget is good short term politics but such a massive pile of fiscal bullshit it makes it perfectly clear that Obama is kicking this vital issue down the road.
To all those under 30 who worked so hard to get this man elected, know this: he just screwed you over. He thinks you’re fools. Either the US will go into default because of Obama’s cowardice, or you will be paying far far more for far far less because this president has no courage when it counts. He let you down. On the critical issue of America’s fiscal crisis, he represents no hope and no change. Just the same old Washington politics he once promised to end.
Giovanni Battista Piranesi, View of Paestum from L’ancienne Ville de Pesto, 1778
The Wall Street Journal reported that the end of the era of New York City and the United States as the world’s leading center of finance is not just imminent, it is here right now.
After 219 years as the citadel of American capitalism, the New York Stock Exchange was near an agreement to be acquired by Deutsche Börse AG in a deal that would create the world’s largest financial exchange.
With the parent of the New York Stock Exchange and Germany’s Deutsche Borse in advanced talks to merge, Aaron Lucchetti and Dennis Berman look at the likely impact on Wall Street as the financial capital of the world.
If a deal is reached and regulators approve, the combined company would trade more stocks and futures than any rival in the world and more options than any U.S. exchange. The takeover would culminate a decade of tie-ups by exchanges around the world eager to find new sources of growth and catch up with smaller rivals that have been quicker to embrace new and lucrative kinds of trading.
For New York, the move is symbolic of the city’s fading dominance on the world stage as other countries are drawing investors directly to their markets. The move also is a recognition that securities trading today goes on at all hours and in all time zones, making the actual bricks and mortar of Wall Street far less important than before.
“New York is going to be important, but it’s not the financial center. Capital markets are everywhere now,” said Michael LaBranche, CEO of LaBranche & Co, the family-run firm that traded on the floor of the New York Stock Exchange for 87 years before it sold that part of its business to Britain’s Barclays Capital in 2010. …
The exchanges, which are presenting the deal as a merger of equals, said the combination would leave 60% of the company in the hands of Deutsche Börse shareholders, with NYSE Euronext shareholders holding the remaining 40%. The combined company, with a putative market capitalization of some $25 billion as of Wednesday, would be incorporated in the Netherlands and split its headquarters between Frankfurt and New York.
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To put all this into perspective, take this little news item into account.
The U.S. budget deficit grew in January, heading for an expected record in 2011 amid warnings about the nation’s burgeoning debt and wrangling over government spending.
The Treasury Department’s regular monthly statement, released Thursday, showed the U.S. spent $49.80 billion more than it collected last month.
That’s right. In one single month, your government spent an amount of money in excess of its actual income totaling twice what it would cost to buy the combination of the New York Stock Exchange and the German Deutsche Börse, the largest merged securities trading entity in the world.
Liberal policies are not only tremendously economically destructive. Their impact is far more rapid than is commonly recognized. New York City’s financial industry has been been propping up not only New York’s tremendously misgoverned city and state for decades, but the entire region. Picture the financial district of New York before long coming to resemble the manufacturing districts of the Northeast. Then picture the US in the position of post-WWII Britain, obliged to dismantle its military and retreat from its traditional role of world leadership permanently, because it just cannot afford military power or a major international role.
James Polous, at Ricochet, was listening to Obama’s State of the Union address and speaks for his own generation when he notes that the Big Zero picked the wrong metaphor.
[Y]ou heard it in the surrealistically repurposed Sputnik Moment, which became in Obama’s hands a way to get older Americans to imagine that the reliable, stable world of their past was actually a cavalcade of personal reinvention and societal reeducation.
Young Americans? To the extent that we heard anything, we heard that our future is cut and dried: science and math education, because that’s what they do in China; a career as a scientist, an engineer, or a science and math teacher, because in South Korea those people are celebrated as “nation builders;” a lifetime of work spent in an economy propped up by spending, subsidies, and a perpetual partnership between big government and big business.
Cheer up, kids. You’re the ones you’ve been waiting for. Remember?
Which generation’s Sputnik moment is this, again? If we’re fated to work with metaphors from the middle of the twentieth century, let’s at least choose one that resonates with people who are coming of age in the twenty-first.
Say, perhaps, the Hitler Finds Out metaphor. From the vantage of the young, for the President — and, indeed, virtually the entire leadership class of the United States of America — this is their Stalingrad moment: the moment at which the vast armies they continue to maneuver around the gigantic battle map turn out to be gone, destroyed, never to return again. The bold challenges, the arbitrary and random numerical goalposts (80% more of these, 100,000 more of those) — it all gave off the disconnected feel of denial-driven fantasy. It’s not that the emperor has no clothes. It’s that he has no divisions.
Young Americans already face a future defined by an inescapable reckoning. They already tend to look at our grand entitlements as phantoms, as dead entitlements walking. They already know the problem isn’t that we have too few college graduates, but that we — like Tunisia and (gasp!) China, to mention a few — have too many for the market to absorb. And they already know that all the science and math in the world can’t serve to nourish our personal and cultural convictions about the purpose and character of American life in transformed times.
When will Obama’s generation reckon with that?
The young people who are going to get to pay the check for Barack Obama’s socialist free lunch are feeling a bit dyspeptic.
The latest posting today of the National Debt shows it has topped $14 trillion for the first time.
The U.S. Treasury website today reported that as of last Friday, the last day of 2010, the National Debt stood at $14,025,215,218,708.52.
It took just 7 months for the National Debt to increase from $13 trillion on June 1, 2010 to $14 trillion on Dec. 31. It also means the debt is fast approaching the statutory ceiling $14.294 trillion set by Congress and signed into law by President Obama last February.
The federal government would have to stop borrowing and might even default on its obligations if Congress fails to increase the Debt Ceiling before the limit is reached.
Some Republicans in the new Congress have said they’ll seek to block an increase in the Debt Ceiling unless a plan is in place to significantly reduce federal spending and unfunded government liabilities on entitlement programs such as Social Security and Medicare.
You probably didn’t even know that the humble carp, an oily fish belonging to the Eurasian family Cyprinidae (which includes goldfish), constituted a problem.
The Chinese and Japanese think carp are beautiful and keep them in ponds for ornamental purposes.
Carp is an important staple in Continental European cuisine, most familiar in America in the form of the Jewish Gefilte fish.
Carp are popular with anglers in Europe, and to British bait fishermen a good carp can represent a real trophy. Isaac Walton claimed, in the Compleat Angler (1653), that
The Carp is the queen of rivers; a stately, a good, and a very subtle fish; that was not at first bred, nor hath been long in England, but is now naturalised.”
But for the Federal government, carp are a SERIOUS PROBLEM. One requiring yet another Czar.
The White House has tapped a former leader of the Indiana Department of Natural Resources and the Indiana Wildlife Federation as the Asian carp czar to oversee the federal response to keeping the invasive species out of the Great Lakes.
On a conference call today with Illinois Sen. Dick Durbin and other congressional leaders, President Obama’s Council on Environmental Quality announced the selection of John Goss to lead the near $80 million, multi-pronged federal attack against Asian carp.
“This is a serious challenge, a serious threat,” Durbin said. “When it comes to the Asian carp threat, we are not in denial. We are not in a go-slow mode. We are in a full attack, full-speed ahead mode. We want to stop this carp from advancing.”
Asian carp, which have steadily moved toward Chicago since the 1990s, present a challenge for scientists and fish biologists. The fish are aggressive eaters, consuming as much as 40 percent of their body weight a day in plankton, and frequently beat out native fish for food, threatening those populations.
They are also prolific breeders with no natural predators in the U.S. The fish were imported in the 1970s to help wastewater treatment facilities in the South keep their retention ponds clean. Mississippi River flooding allowed the fish to escape and then move into the Missouri and Illinois rivers. Some species can grow to more than 100 pounds.
The challenge for Goss, who was director of the Indiana DNR under two governors and served for four years as the executive director of the Indiana National Wildlife Federation, will be to make sure millions in federal money is spent efficiently, to oversee several on-going studies — including one looking into the possibility of permanently shutting down the Chicago waterway system linking Lake Michigan to the Mississippi River–and to bring together Great Lakes states currently locked in a courtroom battle over the response to the Asian carp threat.
Does anyone seriously believe that $80 million spent on studies and the creation of a Federal Asian Carp Directorate is really going to stop these frisky critters?
On the occasion of the notional end of the War in Iraq, Randall Hoven examines the popular liberal talking point that it was the Bush deficits incurred because of the Iraq War that wrecked the economy.
It was under Mr Bush that the deficit spiralled out of control as we fought an unnecessary and endless $3,000bn war in Iraq…”
– James Carville, the Financial Times.
“The Iraq adventure has seriously weakened the U.S. economy, whose woes now go far beyond loose mortgage lending. You can’t spend $3 trillion — yes, $3 trillion — on a failed war abroad and not feel the pain at home.”
– Linda J. Bilmes and Joseph E. Stiglitz, The Washington Post.
The correct [figure], according to the Congressional Budget Office, is $709 billion. The Iraq War cost $709 billion. Why Carville, Bilmes, and Nobel-winning economist Stiglitz thought the answer was $3 trillion is anybody’s guess. But what’s a 323% error among friends?
The CBO breaks that cost down over the eight calendar years of 2003-2010. [Above] is a picture of federal deficits over those years with and without Iraq War spending. …
No one will say that $709 billion is not a lot of money. But first, that was spread over eight years. Secondly, let’s put that in some perspective. Below are some figures for those eight years, 2003 through 2010.
* Total federal outlays: $22,296 billion.
* Cumulative deficit: $4,731 billion.
* Medicare spending: $2,932 billion.
* Iraq War spending: $709 billion.
* The Obama stimulus: $572 billion.
There is an important note to go along with that Obama stimulus number: the stimulus did not even start until 2009. By 2019, the CBO estimates the stimulus will have cost $814 billion.
If we look only at the Iraq War years in which Bush was President (2003-2008), spending on the war was $554B. Federal spending on education over that same time period was $574B.
So the following are facts, based on the government’s own figures.
* Obama’s stimulus, passed in his first month in office, will cost more than the entire Iraq War — more than $100 billion
(15%) more.
* Just the first two years of Obama’s stimulus cost more than the entire cost of the Iraq War under President Bush, or six years of that war.
* Iraq War spending accounted for just 3.2% of all federal spending while it lasted.
* Iraq War spending was not even one quarter of what we spent on Medicare in the same time frame.
* Iraq War spending was not even 15% of the total deficit spending in that time frame. The cumulative deficit, 2003-2010, would have been four-point-something trillion dollars with or without the Iraq War.
* The Iraq War accounts for less than 8% of the federal debt held by the public at the end of 2010 ($9.031 trillion).
* During Bush’s Iraq years, 2003-2008, the federal government spent more on education that it did on the Iraq War. (State
and local governments spent about ten times more.)
Niall Ferguson is touring Australia warning that the end of American dominance may be imminent and sudden. Somehow the ideas in Codevilla’s essay are popping up everywhere, whether people have read it or not. Ferguson describes how rapidly empires can fall.
The Bourbon monarchy in France passed from triumph to terror with astonishing rapidity. The sun set on the British Empire almost as suddenly. The Suez crisis in 1956 proved that Britain could not act in defiance of the US in the Middle East, setting the seal on the end of empire.
But those things happen only to the denizens of history. People who live in the today usually think they are different. So despite evidence of dramatic change, people who have spent their whole lives among the policy certainties of the postwar period find it difficult to accept they may have to build a world of their own from first principles. Ferguson asks his audience: “what would you do in a world without America? Has the question even crossed your mind?â€
Australia’s post-war foreign policy has been, in essence, to be a committed ally of the US. But what if the sudden waning of American power that I fear brings to an abrupt end the era of US hegemony in the Asia-Pacific region? Are we ready for such a dramatic change in the global balance of power? Judging by what I have heard here since I arrived last Friday, the answer is no. Australians are simply not thinking about such things.
But if the Australians are not thinking about it, the Chinese are certainly preparing for it. The Wall Street Journal recently noted that Beijing objected to the right of US naval vessels to exercise in the Yellow Sea, despite the fact that they are international waters. At least they used to be. Waters are only international if kept so by a powerful navy committed to the freedom of the seas. People sometimes forget that treaties reflect realities rather than create them, no matter what the European Union may think. …
[Caroline Glick observes that] “[j]ust as US bureaucrats, journalists, politicians and domestic policy wonks tend to combine forces to perpetuate and expand the sclerotic and increasingly bankrupt welfare state, so their foreign policy counterparts tend to collaborate to perpetuate failed foreign policy paradigms that have become writs of faith for American and Western elites.†In other words, when it comes down to funding politics or funding defense, fund politics. Ferguson made the same point more starkly: “it is quite likely that the US could be spending more on interest payments than on defense within the next decade.â€
If the love of money is the root of all evil, the lack of it is the cause of the fall of empires. Ferguson gave some examples:
Think of Spain in the 17th century: already by 1543 nearly two-thirds of ordinary revenue was going on interest on the juros, the loans by which the Habsburg monarchy financed itself.
Or think of France in the 18th century: between 1751 and 1788, the eve of Revolution, interest and amortisation payments rose from just over a quarter of tax revenue to 62 per cent.
Finally, consider Britain in the 20th century. Its real problems came after 1945, when a substantial proportion of its now immense debt burden was in foreign hands. Of the pound stg. 21 billion national debt at the end of the war, about pound stg. 3.4bn was owed to foreign creditors, equivalent to about a third of gross domestic product.
Alarm bells should therefore be ringing very loudly indeed in Washington, as the US contemplates a deficit for 2010 of more than $US1.47 trillion ($1.64 trillion), about 10 per cent of GDP, for the second year running.
But alarm bells aren’t ringing in Washington. The entire alarm system has been disabled, disconnected, perhaps scrapped. Anyone who wants to turn it back on will have to root through the dumpster to see if any usable parts can still be retrieved. No better symptom of the absence of alarms is the genuine astonishment of Charles Rangel that it is illegal to break the law. Almost as a matter of course he concealed hundreds of thousands of dollars in income, used Congressional letterhead to solicit donations for private causes, took four rent controlled apartments for himself. Innocently. He probably didn’t think he was doing anything wrong. Things had been so sweet, so long that even after he was offered the chance to negotiate his way out of 13 separate violations of House rules and federal statutes he simply refused to believe it was happening.
Like Brecht’s fictional Atlantean who “the night the seas rushed in … still bellowed for their slaves,†the members of what Codevilla called the “ruling class†can’t believe it is happening. They still want their last dollar, their last perk. Literally, no matter what. “Massachusetts Congressman Barney Frank caused a scene when he demanded a $1 senior discount on his ferry fare to Fire Island’s popular gay haunt, The Pines, last Friday. Frank was turned down by ticket clerks at the dock in Sayville because he didn’t have the required Suffolk County Senior Citizens ID. A witness reports, ‘Frank made such a drama over the senior rate that I contemplated offering him the dollar to cool down the situation.’â€
The worst thing about the ferry incident is the possibility that if the witness had really offered Frank the dollar he might actually have taken it. Automatically; out of conditioning, like a Pavlovian dog. The culture in which the chairman of the House Financial Services Committee rose to power is one in which it is OK to blithely borrow more money than the entire defense budget can service and yet refuse to spend one whole dollar of his own money. The ethos of that world can be captured in one phrase: “don’t you know who I am?â€
The economy is a disaster, the federal government is operating at a deficit unequaled in the history of the Republic, it is essential to find a way of coping with the National Debt in order to restore economic confidence, and the democrats naturally want to raise taxes.
Scott A. Hodge looks at the options for taxing our way back to a balanced budget.
To erase this year’s estimated $1.5 trillion deficit, we would need either to:
Enact a 25% VAT (Greece is still a mess with a 19% VAT);
or,
Take 130% of the taxable profits earned by U.S. companies this year (that’s what you call net opperating losses);
or,
Raise the top three tax brackets (28%, 33%, and 35%) to 100%. Actually, this would still not raise enough money to erase the deficit – of course, assuming all the wealthy taxpayers didn’t flee to Switzerland.
or,
Take 100% of the business income earned by individual taxpayers in 2008.
In other words, new taxes are not the solution to Washington’s deficit problem. That is, unless we want to wreck our economy for decades to come.
J. Kennerly Davis Jr., at the Richmond Times Dispatch, points out that you may have forgotten to add your household’s share of federal debt and unfunded obligations to your personal deficit. Add a negative $1,069,100.
Currently, federal, state, and local government debt, in the form of bonds and other securities, totals approximately $16 trillion. As staggering as this figure is, it doesn’t capture the full scope of the threat that confronts us.
In addition to selling bonds and other securities to borrow money, government at all levels also has made enormous financial commitments over the years, without providing funds to back up these commitments. Currently, the unfunded commitments of the federal government to programs such as Social Security and Medicare total almost $109 trillion.
It’s difficult to grasp the significance of such huge numbers and the real threat they pose to you and your family.
Let’s consider the case of a family living in Richmond. Call the parents Michael and Jennifer. They have been married 10 years, live in the Fan, and have two young sons who attend William Fox Elementary School.
They both graduated from college and have good jobs. Jennifer is a high school teacher and Michael is a corporate financial analyst. Last year they had a combined earned income of just under $125,000, the median income for the typical American two-income professional couple. They are hard-working and financially responsible.
Last year they were able to save approximately $1,500. They took one family vacation trip to Sandbridge. In 2003, they purchased their house in the Fan for $380,000. They are current on their mortgage payments and other monthly bills.
Over the past year or so, Michael and Jennifer have become very concerned about their financial situation. Recently, after reviewing some financial advice columns in The Times-Dispatch, they decided to draw up a household balance sheet to get a snapshot of all their financial assets and liabilities.
Like most Americans, Michael and Jennifer’s home is by far their most valuable asset. Its current market value is approximately $450,000. Their savings and in vestments total just under $76,000. The combined value of their two cars and other personal property is approximately $45,000.
So, altogether, their household assets are worth more than $570,000. The liabilities on their balance sheet are limited as a result of their responsible lifestyle. They owe $266,000 on their mortgage, and approximately $34,000 on their car loans.
When Michael and Jennifer compared their assets to their liabilities, they were pleased to see that the value of their total assets exceeded their total liabilities by about $270,000. They were proud that they had been able to build up this much net worth.
But wait! The balance sheet that Michael and Jennifer prepared does not begin to accurately represent the family’s real financial health and future financial prospects. It does not take account of their household share of federal, state, and local government debt and unfunded commitments.
In round figures their share is:
Federal debt: $108,000 Federal unfunded obligations: $907,100 Virginia debt: $3,100 Virginia unfunded obligations: $30,200 Richmond debt: $16,000 Richmond unfunded obligations: $4,700.
So this young family’s total share of government obligations and debt is $1,069,100.
When these obligations are added to their other liabilities their household ends up in a deep financial hole. Despite all their hard work and responsible financial behavior, decades of financial mismanagement by the government have effectively wiped out the net worth of $270,000 they thought they had. Instead, they owe almost $800,000.
How about you? What does your household balance sheet look like when you factor in $1,069,100 of additional liabilities?
CNS reports on just how inclusive the federal safety net has become.
According to the Government Accountability Office (GAO), the federal government helped pay the home air conditioning bills for more than 11,000 dead people, 1,100 federal employees, and 725 convicts in fiscal year 2009.
The payments were made by a $5 billion program known as the Low-Income Home Energy Assistance Program (LIHEAP). LIHEAP is designed to provide federal assistance, administered by the states, to help people pay the energy bills to heat their homes in the winter and cool them in the summer. The funds are disbursed by the Department of Health and Human Services and are distributed based on a formula that takes into account a state’s weather and the size of its low-income population.
The GAO examined the LIHEAP programs in seven states: Virginia, Maryland, Ohio, New York, Illinois, Michigan, and New Jersey. The agency found evidence of fraud in each state.
“Our analysis of LIHEAP data revealed that the program is at risk of fraud and providing improper benefits in all seven of our selected states,†reported the GAO. “About 260,000 applications–9 percent of households receiving benefits in the selected states–contained invalid identity information, such as Social Security numbers, names, or dates of birth.â€
Most glaring among the problems the GAO found were the pervasive payment of LIHEAP benefits to dead people, some of whom, records show, had been dead for quite a long time.
CNBC reports that the homebuyers stimulus program was rife with fraud. How does the administrator approving the payment fail to notice the prison address?
Nearly 1,300 prison inmates wrongly received more than $9 million in tax credits for homebuyers despite being locked up when they claimed they bought a home, a government investigator reported Wednesday.
The investigator said 241 of the inmates were serving life sentences.
In all, more than 14,100 taxpayers wrongly received at least $26.7 million in tax credits that were meant to boost the nation’s slumping housing markets, said the report by J. Russell George, the Treasury Department’s inspector general for tax administration.
Some taxpayers received the credit for homes purchased before the tax break was started. In other cases, multiple taxpayers improperly used the same home to claim multiple credits. Investigators found one home that was used by 67 taxpayers to claim credits.
Today… we are losing touch with too many of the places and proud traditions that have helped to make America special. Farms, ranches, forests, and other valuable natural resources are disappearing at an alarming rate. Families are spending less time together enjoying their natural surroundings. Despite our conservation efforts, too many of our fields are becoming fragmented, too many of our rivers and streams are becoming polluted, and we are losing our connection to the parks, wild places, and open spaces we grew up with and cherish. Children, especially, are spending less time outside running and playing, fishing and hunting, and connecting to the outdoors just down the street or outside of town. …
it is hereby ordered as follows:
Section 1. Establishment.
(a) There is established the America’s Great Outdoors Initiative (Initiative), to be led by the Secretaries of the Interior and Agriculture, the Administrator of the Environmental Protection Agency, and the Chair of the Council on Environmental Quality (CEQ) and implemented in coordination with the agencies listed in section 2(b) of this memorandum. The Initiative may include the heads of other executive branch departments, agencies, and offices (agencies) as the President may, from time to time, designate.
(b) The goals of the Initiative shall be to:
(i) Reconnect Americans, especially children, to America’s rivers and waterways, landscapes of national significance, ranches, farms and forests, great parks, and coasts and beaches by exploring a variety of efforts, including:
(A) promoting community-based recreation and conservation, including local parks, greenways, beaches, and waterways;
(B) advancing job and volunteer opportunities related to conservation and outdoor recreation; and
(C) supporting existing programs and projects that educate and engage Americans in our history, culture, and natural bounty.
(ii) Build upon State, local, private, and tribal priorities for the conservation of land, water, wildlife, historic, and cultural resources, creating corridors and connectivity across these outdoor spaces, and for enhancing neighborhood parks; and determine how the Federal Government can best advance those priorities through public private partnerships and locally supported conservation strategies.
(iii) Use science-based management practices to restore and protect our lands and waters for future generations.
Barack Obama thinks America’s children are not hunting and fishing enough? And there’s going to be a federal initiative to do various things about this?
Visions of federally-grant-funded programs hiring aging boffers to take a boy fishing swim before my eyes. I should get one of those How-To-Write-Federal-Grant-Proposals books and start a corporation, rather like ACORN, which would recruit the kinds of individuals my mother used to refer to uncomplimentarily as “woods rats,” the kind of guys who’d rather fish and hunt and drink than work, and sign them on board to take under-Field-Sports-privileged youths out bluegill fishing and bunny shooting. I know some of just the bars to look for my first staffers in.
The idea of a democrat administration ponying up to pay for the gasoline, live bait, cartridges, (and beer) required to expose America’s youth to the out-of-doors is wonderfully amusing.
