Emily explains it all

The feebs we sent to Congress keep coming up with all these plans for a fiscally sound increase to the debt ceiling (lol, inorite), and what I’m hearing from people is myriad variations on, “why are all these plans so fucking stupid?”  Boehner’s first plan excitedly announced it would “cut $1 billion from the federal budget in the first year!”

And then everyone laughed.  Because that’s really stupid.

So everyone’s looking at each other and wondering, why can’t they get it together?  This is not difficult.  And it isn’t, really.  Ten years ago it would have been complicated – which is not the same thing as difficult – but now the sheer size of the debt/deficit means it’s all been neatly simplified for us.  For e.g., we once might have had to spend a month arguing whether to cut the SEC or the DoE.  No more!  Now we have no money to fund either one.  See how simple that was?

It’s just math, people.  It’s basic addition and subtraction, stuff we all learned when we were kids.  Yes, the numbers are really big, but the process doesn’t materially change when you add some zeroes (or claim that 1 minus 1 equals 2, because otherwise kitties will die of cancer).  If you can balance a checkbook, you can balance the federal budget.

Yet, the politicians are playing dumb, standing around drooling on themselves, putting forth several plans which everyone then freaks out about how that plan would be the end of the world as we know it, and then the CBO lets us know that it wouldn’t actually do anything at all, and they go back to the drawing board.

Two reasons for that.

The most important reason is political will.  There’s that old saying, “Woulda, coulda, shoulda, but you didn’t.”  Sometimes you knew what the answer was, but, for whatever reason, you didn’t implement it.  No sense crying about it after the fact.

Politicians know what the answers are, they just don’t have the balls to effect them.  The answers were painful in the S&L debacle in the 80’s, so we papered it over, which made the answers more painful when the tech bubble collapsed, so we papered that over, which made the answers more painful when the housing bubble collapsed, so we papered that over…  The pain is delayed, which means that when the INEVITABLE (underline underline boldface) conclusion is realized, it is more painful that it would have been originally but, to politicians, that isn’t the point.  The point is, they have to delay the pain (with compound interest) or else it might cost the next election.  Bugger what it does to you.

Bluntly, politicians have turned one nasty financial episode which would have cleared the overhead but probably cost a few of them their re-election campaigns, into a global financial Armageddon.  And they did it with malice aforethought.  Sorry.  Sucks to be us.

They’re hardly going to switch horses midstream.  They know the plans they are proposing are bullshit.  It’s a dog-and-pony show.  They could do something about the issue (it isn’t fucking difficult – math is rather easy, actually), but by now they have borrowed so much trouble that they know fixing the problem would wreck their careers forever.  They’ve promised so much to Paul by means of robbing Peter that they’ve reached the point where Paul will lynch the lot of them if they dare not follow through.  Regardless of the fact (FACT) that it is now mathematically impossible to rob enough from Peter to pay Paul what they’ve promised.  FACT.  It cannot happen.

Which brings me to my second point.  They cannot propose a plan which either significantly raises taxes OR cuts spending.  Why?  Government spending is all that is propping up GDP.  Recall that a ten percent reduction in GDP is how one identifies a depression.  We’re already in a depression, the numbers prove it, but federal spending is included in the GDP calculations.    Ergo, all the feds had to do was drastically ramp spending (remember when the Dems were freaking about Bush2.0’s 400billion deficit?  Yeah we’re more than quadruple that this year, with crickets from the Dems).  This hid the loss in GDP.  We are papering over an actual recognition of an economic depression by fudging numbers.  Fuck with the numbers (either tax increases OR spending cuts will mean a hit to GDP) and we’ll have to acknowledge reality.  Politicians don’t like reality.  Being at the helm in a depression hurts their chances of being re-elected.

There you have it.  A proper plan, which either increases taxes or cuts spending, will piss people off and bring into the open that our economy is in a depression.  Both will significantly reduce politico asshats’ chances of being re-elected.  Therefore, they give us stupid plans.  I mean, really, what else do you expect?

Published in: on July 28, 2011 at 8:05 pm  Comments (3)  

Debt plan analysis

The CBO has scored both Harry Reid and John Boehner’s plans.  Since the CBO couldn’t find reality with a really big map, I offer the cliffnotes.

Potay-toe, potah-toe.  No significant difference between the plans , and no apparent competency for actually solving the deficit problems, which is par for the course in our one-party clown parade.  Both plans can be summed up with, “We want to keep doing what we’re doing, win the next election, and hope to God you aren’t sharp enough to cotton on to our shenanigans.”

Boehner’s plan adds just enough to the debt ceiling that we’ll be having this fight all over again next year, in plenty of time to have an effect on the 2012 elections.

Reid’s plan adds enough to get us through the elections so Obama’s candidacy won’t be blemished by nasty talk about deficits.

Both plans use 7% annual GDP growth in their calculations.  Long-time readers know my opinion on that, it’s ground I covered immediately following the passage of Obamacare.  In short: crock of shit.

Reid claims to cut $2.7 trillion over ten years.  CBO says it’s actually $2.2 trillion.  But Emily, you cry, two trillion is a lot of money!  Yes.  To you or me, two trillion is a lot of money; to the government, it’s $55 billion a quarter, which is a rounding error to an entity which spends 3.7 trillion every damned year.

Besides (and now we get to the meat of the issue… om nom nom) neither Reid nor Boehner are actually cutting sweet FA from the budgets.  Both plans count $1T in “savings” from drawing down the wars in Iraq/Afghanistan/Libya/wherever else we’re at war, I haven’t checked the news in a whole two hours.  We were already going to draw down those wars at some point in the next ten years.  Bugger that anyone who has ever had a checking account knows that saying, “I plan to NOT spend money later that I wasn’t going to spend anyway.  There, budget problem solved” is Funny Math.

And then they take that “$1T saved” and calculate the interest we might have incurred if we had spent it, which we never planned to but that’s not the point.  And they add that “saved interest” to the total.  See how easy it is to cut $1.3 trillion from the budget over ten years?

Huffington Post reports that both plans implement a Super Special Improved For The Children Congress, which I have not yet confirmed and you should take with a grain of salt (Mitch McConnell of Kentucky and Harry Reid, the bi-partisan spawn of Satan, did sponsor such a bill though).  I do not approve of this fuckery.

But I digress.  Back to the debt plans.  They cut nothing.  They enable huge deficits we cannot finance indefinitely – and since Moody’s and S&P are threatening to downgrade the US, we may not be able to finance next month, never mind next year.  It’s all looking very Greek.**

I cannot help myself, and since I’ve got a better track record than most Harvard-educated economists in the media, I feel fully justified in making a prediction:

There will be no deal.  On Aug 2, we hit the ceiling and have to operate off current available revenues only.  Obama pays the bills selectively, for maximum media impact.  We’ll see a parade of grannies and young, attractive Army wives on the news, sobbing about how they can’t pay their bills.  after three weeks, the unwashed masses will be howling for an increase to the debt ceiling.

In the meantime, the DOW tanks slowly but surely.  More middle-class wealth is siphoned off.  The banksters buy in at the low, immediately before Congress announces that, Happy Day!, they have reached a deal.  The rating agencies do nothing.  The next six months is second verse, same as the first, a little bit louder, a little bit worse.

Finally, debt ceilings explained, for your amusement.

**In the fiscal policy sense, my gutter-minded lovelies.  Although that analogy works as well.

Published in: on July 27, 2011 at 12:26 pm  Comments (7)  


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Published in: on July 26, 2011 at 1:34 pm  Leave a Comment