Effor.com

I was reading a Reuters story about the proposed budget in California tonight when I saw this:

Wheelchair-bound Christina Mills, 32, of Sacramento, California said disabled workers could not afford to have subsidies for assistants cut as the governor proposed.

“If they didn’t have home-care workers to help them get dressed in the morning, they wouldn’t be able to go to work.”

Hey Christina – that sucks doesn’t it?  It’s sad, but true – if you need someone else to pay for you to get to work, you’re not earning enough to make your job worth the investment in you!  It would be cheaper for everyone if you stayed home and we payed to take care of you there.  Plus, you wouldn’t be in denial about how much your work is actually worth.

Yes, it’s harsh.  But it’s also true.

gk

Share on Facebook

This is from an old (sometime in the 1980’s) Dave Barry column, but I ran across it today and I still find it funny.  It’s about the difference between Democrats and Republicans.  Unfortunately for our country, it’s pretty close to the truth….

“The Democrats seem to be basically nicer people, but they have demonstrated time and again that they have the management skills of celery. They’re the kind of people who’d stop to help you change a flat, but would somehow manage to set your car on fire. I would be reluctant to entrust them with a Cuisinart, let alone the economy. The Republicans, on the other hand, would know how to fix your tire, but they wouldn’t bother to stop because they’d want to be on time for Ugly Pants Night at the country club.”

Republicans spend too much on defense, bailouts of inept corporations, and in new programs designed to show people that they’re really good guys, like the prescription drug bill.  Democrats spend too much on everything.  Neither is willing to raise taxes enough to pay for their spending.  The only time in the last 50 years that spending has been kept somewhat in check is when we had a Republican congress and a Democrat as president.

For 6 years – from January 1995 through January 2001 – Republicans controlled congress and Clinton was president.  Spending was kept in check and we almost had a balanced budget.  I know Clinton claimed surpluses, but he lied.  The “surplus” came from Social Security payments and the total federal debt increased each and every year, so there wasn’t actually a surplus – but it was as close as we’re ever likely to see from here on.

Obama is making Bush’s budget busting spending look like child’s play.  This year alone, we’re spending twice as much as we’re collecting in taxes.  We’re effectively borrowing money from the Chinese to make interest payments to the Chinese.  It’s the same as using your Visa card to make minimum payments on your MasterCard.  How long do the idiots on Capital Hill think they can continue this Ponzi scheme?

gk

Share on Facebook

The NY Times is reporting that President Obama is proposing about $17 billion in budget cuts for the next year.  As the NY Times puts it the proposed cuts represent about 1.4 percent of the $1.2 trillion deficit that is projected for the fiscal year 2010.

I’ll put it more bluntly – these cuts are farting in the wind.  They are about 1/2% of Obama’s $3 trillion plus budget for next year.

Just look at the crap they’re cutting:

• Eliminate the post of an attaché for the Education Department in the American embassy in Paris
• Halting payments to states for abandoned mines that have already been cleaned up (WTF!)
• An early childhood education program known as “Even Start”
• A long-range radio navigation system that has been made obsolete by GPS technology

Why is this crap even in the budget?  Can anyone, and I mean anyone, explain why we need to have the Education Department represented in Paris anyway?  (Or even why we need to have an Education Department, but that’s a topic for another day.)

Is there any logical reason why we would pay states to clean up mines that have already been cleaned up?  Yeah, that’s what I thought.

At least half the Federal budget could be cut – and I’m not exaggerating – and only the people employed in those useless positions and programs would notice it.  And most of what the Fed’s spend our money on is unconstitutional anyway – again, I’m not exaggerating.

For example, just last night I was helping my youngest daughter with her homework.  It was on the US Constitution and the Bill of Rights.  The homework was about the 10th Amendment, which states “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

In the study guide that was sent home with her, an example was given to explain limits on the Federal government.  The example said something like “Since the Constitution doesn’t grant the Federal government authority over education, education is controlled by the states.”  So why do we have a Department of Education?  Why do we have an Energy Department?  Why do we have Social Security, Medicaid, Medicare, food stamps, or welfare at the Federal level?

The answer is simple – we have those programs because politicians pandered to voting blocks, and no one had the balls to take them to court at the time so that any judge who has even glanced at the US Constitution could throw it out as unconstitutional.

After all, what politician would go on record as opposing education for our children?  Which politician wants to see old people starve, or go without health care?  Which politician would say they want poor people to starve?  That’s what deTocqueville meant when he said the tyranny of the majority.  That’s what you get when the people discover that they can vote themselves bread and circuses – for awhile.

I’m afraid the next 50 years aren’t going to be very much fun for people in the US.  I’m 47, and I smoke, drink, and eat lot’s of fatty foods.  I expect to live about another 20 years.  With any luck I won’t be here for the worst of it – but the next 10 years won’t be much fun either.

Depressing ain’t it?

gk

Share on Facebook

George Bush was – by far – the biggest budget busting president of all time.  In just 8 years he racked up almost as much debt as the previous 42 presidents did in the previous 212 years of the United States combined.  To put it another way, Bush almost doubled the national debt in just 8 years.  The national debt when Bush took office was $5.7 trillion, and when he left office it was $10.6 trillion – an increase of $5 trillion in 8 years.

Barack Obama – while vastly different  on other policies – is doing his best George Bush impersonation when it comes to fiscal responsibility.  According to a report issued by the Congressional Budget Office (link will open an Excel spreadsheet) today, Obama’s projected budgets will result in a national debt of $15.5 trillion in the next 8 years – an increase of $5 trillion.

Keep in mind that these are budget projections, and the CBO always relies on extremely optimistic economic scenarios.  For example, when Bush took office, they estimated that the national debt would be paid off by 2010, and that obviously isn’t going to happen.

If you open the spreadsheet in the CBO link above (select the tab labeled “Federal Debt), you’ll see that the 2009 deficit is estimated at $1.39 trillion (cell E24) and that is projected to drop to “only” $636 billion in 2010 (cell F24).  By 2013, the CBO is projecting the deficit to be “only” $42 billion (cell I24).

Does anyone actually believe that?

In just two short months, Obama passed a $700 billion stimulus package, and the Federal Reserve has said it will “expand it’s balance sheet” (a euphemism for printing money) by $300 billion by “purchasing” Treasury debt.  That’s $1 trillion in additional debt in just two months!

Predictions:  The actual 2009 deficit will exceed $1.6 trillion, and the increase in national debt in 2013 will be at least $1 trillion – many orders of magnitude higher than the rosy $42 billion currently projected.  And the 2010 debt (currently projected to be $636 billion) will be well over $1 trillion.

Update – 8:15 pm ET:  Crap, the numbers above are already out of date.  The CBO just released new figures, estimating the 2009 deficit at $1.7 trillion and the 2010 deficit at $1.1 trillion.

The new estimate on the cumulative deficit (the amount added to the national debt) is $9.3 trillion through 2019 – roughly $1.3 trillion more than the last CBO estimate in January.

The new CBO estimate does not include an estimate for the total national debt, so I’m unable to be more precise than the numbers above.  But with each passing day, Obama is getting closer to perfecting his George Bush financial folly impersonation.

If he really wanted to impersonate Bush, Obama would start proposing things like wiretaps, locking people up without charges, etc.  Then he could trample on our rights as well as our wallets.  And be just as bad as George.

I don’t think Obama will get that bad – I sure hope not – but he’s not starting off well by inviting these comparisons with the worst president ever.

gk

Share on Facebook

Capitalism is almost dead in the US.  What follows is a copy and paste of part of yesterday’s Daily Reckoning.  You need to read it – both what follows and the Daily Reckoning site.  Enjoy!

gk

Obama’s new budget is the biggest bag of leeches to come along since the Roosevelt Administration. We have not seen it in detail. But from what we’ve gathered from the press reports, it has something in it for almost every bloodsucker.

The raw numbers are breathtaking. Whereas the feds have taken about 21% of the nation’s income in recent years, now they’re going to take 28%. The deficit alone will equal more than 12% of total GDP.

Put the feds together with state and local hacks, altogether they will consume 40% of the nation’s total output. Whoa…that’s put it close to the levels of such free-market bastions as Zimbabwe and Algeria, both with 43% of spending done by government…and Hugo Chavez’s Venezuela, where the government spends 41% of GDP.

By contrast, in France, that socialistic, bureaucrat-saturated country with the croissants, 53% of GDP is spent by the government. But wait…in France healthcare is a government industry and so is the passenger train system. In America, 17% of GDP is spent on healthcare. As for the passenger trains…forget it…in America, we scarcely have any. So, if you add the 17% spent on private healthcare to the 40% you actually get a total higher than that of France. Ooh la la…the age of big government is back!

Who pays?

Ah…that’s an interesting subject in itself. Obama says he’s going to soak the rich. But the rich are already pretty well marinated. Reagan’s tax cuts freed them to earn more money – and pay more taxes. Now, the top 5% pays 60% of the costs of government. The bottom 40% pay no taxes at all. They get all government ’services’…which is to say their boondoggles…for free.

Share on Facebook

Spending “only” $3.55 trillion is considered to be fiscally responsible?

President Obama inherited a more than $1 trillion deficit from the idiot George Bush, but he’s tacked on more than his fair share already.  The current estimate of the deficit is now up to $1.75 trillion for fiscal year 2009, which started on Oct 1st, 2008.

Here’s a story from the NY Times about the budget.

His administration will attempt to close the large fiscal gap even while starting a major health-care initiative intended to substantially extend coverage; to do so, it foresees increasing taxes on the wealthiest Americans and using revenue from a new program: selling carbon credits to manufacturers as part of a cap-and-trade plan meant to slow climate change.

The forecasts are also founded on optimistic assumptions that the recession will end by next year and quickly produce stronger growth than was seen in the last decade. After the economy shrinks this year, the Obama team assumes that the gross domestic product, adjusted for inflation, will increase by 3.2 percent next year and then 4 percent or more the following three years, a rate nearly twice the average of the Bush years.

I wrote a post a few minutes ago where I talked about people saying that this is the bottom in various markets.  But Obama is basing his presidency on this year being the bottom.  I’m afraid he’s mistaken.

But here’s one bit of good news – Mr. Obama promised to include the full costs of the wars in all his budgets, saying that because of “dishonest accounting” past budgets have “not told the whole truth about how precious tax dollars are spent. Large sums have been left off the books, including the true cost of fighting in Iraq and Afghanistan.”

It’s about time that these costs were included in the budget.  We still have to pay them, but Bush somehow made the cost of these wars disappear. They didn’t actually disappear (look at the debt clock at the top of this page!) but they didn’t appear in his budgets – or the official deficits.

The State Department gets the biggest increase, rising from $36.7 billion this year to $51.7 billion next year, although Mr. Obama will not be able to keep his promise to double foreign aid.

There are literally hundreds of things I could say about the bloated, pork laden, unconstitutional (read it!) budget proposal.  None of it is new, and I complained about the exact same things when Bush proposed the massive budgets.  But I promise to get into a lot of the details when the official budget is released with actual line items that I can talk about.

But if you thought Bush’s budgets were mind boggling, the first one from Obama promises to be even worse.  My bet is that he’ll break Bush’s record $1 trillion plus deficit his first year.

gk

Share on Facebook

According to Reuters, an anonymous “administration official” said The deficit this administration inherited was $1.3 trillion or 9.2 percent of GDP. By 2013, the end of the president’s first term, the budget cuts the deficit to $533 billion or 3.0 percent of GDP.

I don’t think Obama will do that – he certainly hasn’t started out that way.  But I hope he’s serious.

The Reuters report goes on to say “Most of the savings will come from winding down the war in Iraq, increased (tax) revenue from those making more than $250,000 a year, and savings from making government work more efficiently and eliminating programs that do not work,” the official said.

Let’s see how many programs he eliminates.  He’s due to announce his budget later this week, and I’ll be watching to see which programs are actually cut and eliminated.  I’ll set the “over/under” at 3 – and I’ll take the under.

gk

Share on Facebook

It’ll be on CNN at 2pm Saturday and 3pm Sunday.  It’s an exclusive “televised” version, so it’s not identical to the movie, but I’ve been wanting to see it for quite awhile.  Here’s the press release for it:
http://www.iousathemovie.com/press/iousacnn/

From the press release:  The two-hour program will feature an exclusive televised version of the nonpartisan film I.O.U.S.A., which examines the U.S. government’s fiscal landscape and the consequences for the national economy. Since its premiere at the 2008 Sundance Film Festival, the film has garnered rave reviews from critics; has been nominated for a Critics Choice Award; and is on the short list for an Oscar nomination for Best Documentary Feature.

The more people who learn about the financial state of our country the better.  Please watch – or Tivo it – if you can.  I’m sure CNN will clutter it up with bone headed commentary, but hopefully the message of the movie won’t be altered from the original.

gk

Share on Facebook