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Showing posts with label US Debt. Show all posts
Showing posts with label US Debt. Show all posts

Monday, May 16, 2016

About That Debt...

Paul Krugman's recent piece on where Trump gets his support is sheer brilliance. The part I especially enjoyed was this.

The Trump solution would, among other things, deprive the world economy of its most crucial safe asset, U.S. debt, at a time when safe assets are already in short supply.

Right. US debt is still one of the safest assets in the world despite what foams out of the mouth of the old lady debt hystericals.

And I'm still waiting for those debt collectors to come a callin' by the by...:) (he said, wondering the people who caterwaul about our debt even understand who owns it).

Monday, March 03, 2014

Fannie Mae Pays Back With Interest, US Makes Profit

Fannie Mae has paid back the United States government all of the $116.1 billion dollars it borrowed after posting an eighth straight quarterly profit. Earnings were at $84 billion dollars, the highest ever for the firm. The total amount paid ended up being $121.1 billion dollars.

“Obviously, it’s good news for taxpayers that Fannie Mae is profitable,” Chief Executive Officer Timothy J. Mayopoulos said on a call with reporters.

“For the last five years, the employees of Fannie Mae have come to work with the goal of reaching this accomplishment for the taxpayers,” said Mayopoulos, 54. “I’m very proud of what our employees have achieved and I’m very, very happy for the taxpayers.”

I seem to recall shrieks of doom and rolling in boiling pits of sewage over Fannie Mae. Hmm....

Saturday, February 15, 2014

US Assets Outweigh US Debt

The next time you here someone blow a bowel over federal debt, show them this.
  • More than 900,000 separate real assets covering more than 3 billion sq. ft. 
  • Mineral rights, on and offshore, covering 2.515 billion acres of land, more than the total surface land in Canada -45,190 underutilized buildings, the operating costs of which are $1.66 billion annually 
  • Oil and gas resources on and offshore worth $128 trillion, roughly eight times the national debt of the country
This doesn't even include all of our military resources. Add that in and all of the obsessive focus on our debt is seen clearly as being irrational and hysterical. Even the Heritage Foundation agrees.

So, given these very simple facts, it seems that some folks have been trying to pull the wool over our eyes (see: lying) simply because they have a pathological hatred of the federal government (see also, unresolved issues with parents, authority, massive insecurity) and can't admit when they are wrong. 

Thursday, December 05, 2013

Where's Her Apology?

Martin Bashir has resigned from MSNBC after taking Sarah Palin to the mat over her ridiculously awful comparison our debt to slavery. Not only was she insensitive but she demonstrated (once again) that she is sorely lacking in an understanding of our debt. On his Nov. 15 broadcast, Bashir called Palin "a world class idiot" because she made a comparison to slavery while discussing U.S. debt to China. The host then read an excerpt from the diary of a former plantation manager who wrote of forcing one slave to "S-H-I-T" in another slave's mouth, and said "if anyone truly qualified for a dose of [such] discipline... then she would be the outstanding candidate." He has since apologized for the remarks and now tendered his resignation from the network.

What I'm wondering is where is Sarah Palin's apology? Does she get to play with different rules?

Yes. Yes, she does.

In fact, so do all conservatives. They get to act like jack wagons because...well...they are. And their base eats it all up. But liberals don't get to act that way because they are the adults in the political arena, hence Bashir's resignation. If the Fox News personalities were held to the same standard, there would be no one working at the network.

Honestly, it's pretty fucking unfair if you ask me. It's almost like we simply have accepted that it's OK for conservatives like Sarah Palin to say offensive things. They get a pass and liberals don't. 

Tuesday, November 12, 2013

Simply Wrong

For the most part, I think it's best to not use comparisons to slavery in this day and age. But if you are Sarah Palin and want to get attention, then I guess it's OK!




Ignoring the obvious offensiveness of the statement, it's simply wrong as I have demonstrated just recently. Our debt is not entirely owned by the Chinese. For the most part, it's money we owe ourselves and it isn't that big of a problem.

Conservatives like to talk about how it's all "simple math" yet they completely ignore our assets as a country (hundreds of trillions of dollars), our economy ($17 trillion and growing), and our very steady revenue stream (just south of $6 trillion a year). Their irrational screeds about spending sound more and more like sermons and proselytizing and less like actual facts. Of course, Sarah Palin can best be summed up like this...


Friday, November 08, 2013

Yep

From Paul Krugman

As some of us have tried to explain, debt, while it can pose problems, doesn’t make the nation poorer, because it’s money we owe to ourselves. Anyone who talks about how we’re borrowing from our children just hasn’t done the math. 

True, debt can indirectly make us poorer if deficits drive up interest rates and thereby discourage productive investment. But that hasn’t been happening. Instead, investment is low because of the economy’s weakness. And one of the main things keeping the economy weak is the depressing effect of cutbacks in public spending — especially, by the way, cuts in public investment — all justified in the name of protecting the future from the wildly exaggerated threat of excessive debt. 

If only those "debt scolds" could leave their emotions and pride out of the equation, we'd have a better economy. My only disagreement with Krugman here is that he, like the people he criticizes, are far too pessimistic. Despite the idiocy of austerity, our economy is doing better as I noted earlier today. 

Wednesday, November 06, 2013

In The Black

Perhaps I was too hasty in poo-pooing comparisons of our nation's economy to an individual's economy. Certainly, there are plenty of differences that are largely ignored by the Right but there are some similarities that were illustrated quite well over at The Pragmatic Capitalist. The first piece, "The US Government is not $16 Trillion dollars in the hole," points out the obvious.

The IER estimates that total fossil fuel resources owned by the Federal government are valued at over $150 trillion alone. These assets alone are FIFTY FIVE times the amount stated in the CNBC report. But that only scratches the surface. I haven’t even looked into the huge amount of federally owned land and buildings that would surely amount into the hundreds of billions if not trillions of dollars. There’s also the gold resources. And there’s the trillions of dollars in its own liabilities that it owns via the Fed and Social Security funds.

Just like an ordinary person who owns land, oil, a profitable business and other assets like gold, the US government also has a gigantic pile of assets that make us far into the black. And that's with all the future Social Security and Medicare liabilities (around $60-7$0 trillion). As PragCap show us, we are not going bankrupt and the people who claim this are simply lying because of their pathological hatred of the US government and their inability to admit fault. Their obsession with spending is essentially holding us back from economic growth and one was to wonder if this is the whole point. They want our country to fail so they can win the argument.

Of course there are still differences which the second link illustrates quite well.

The constraint for the government is different from that of a household or business who can really “run out of money”. The US government’s constraint is not that it will run out of funds, but that it could supply too much liquidity to the private sector thereby causing inflation. So the US government’s real constraint is inflation and not solvency. This is a vastly different issue than the one the US media usually harps on with regards to the budget deficit and the US government’s ability to “afford” its spending. 

The USA has an institutional arrangement in which it is a contingent currency issuer. That is, while the Treasury is an operational currency user (meaning it must always have funds in its account at the Fed before it can spend those funds) it has the extraordinary power to tax and issue risk free bonds that the public will always desire to hold so long as inflation is not extraordinarily high. In addition, even in a worst case scenario, the US Treasury can always rely on the Federal Reserve to supply the funds necessary to fund its spending. Therefore, the US government can be thought of as a contingent currency issuer who can issue the funds to spend. This makes it very different from a household. 

The US Treasury is a currency user, but the government as a whole can be seen as a contingent currency issuer by institutional design because of this implicit funding guarantee. So the key here is that there’s no solvency constraint as in, “running out of money”. Greece doesn’t have this arrangement. In fact, since the ECB is essentially a foreign central bank there is a real solvency constraint. So banks and private investors have become hesitant to buy Greek bonds because of this flawed institutional arrangement and the lack of an implicit guarantee. It’s apples and oranges compared to the USA.

Once again, not like Greece. Not going bankrupt. Not overspending. Not running out of money. Plenty of assets.

IN THE BLACK. 

Monday, November 04, 2013

Show Him This

There are many myths about our nation's debt and most our being pushed by the Right. "We can't keep spending like this!" they whine incessantly or "sooner or later, the money will run out!!" Strange, really, because they act as though we don't control our own money supply nor have any revenue. The simple fact is we have both. We have collect just under 6 trillion dollars in revenue and enjoy a 17 trillion dollar economy.

But talking about the economy in a simplistic way is what the Right does, not the rest of us who understand the complexities of monetary policy. The truth is, as Lawrence Summers puts it, the debt isn't that big of a deal.

More fundamental is this: Current and future budget deficits are now a second-order problem relative to other, more pressing issues facing the U.S. economy. Projections that there is a major deficit problem are highly uncertain. And policies that indirectly address deficit issues by focusing on growth are sounder in economic terms and more plausible in political terms than the long-term budget deals much of the policy community is obsessed with.

The latest Congressional Budget Office (CBO) projection is that the federal deficit will fall to 2 percent of GDP by 2015 and that a decade from now the debt-to-GDP ratio will be below its current level of 75 percent. While the CBO projects that under current law the debt-to-GDP ratio will rise over the longer term, the rise is not large relative to the scale of the U.S. economy. It would be offset by an increase in revenue or a decrease in spending of 0.8 percent of GDP for the next 25 years and 1.7 percent of GDP for the next 75 years.

Here is our budget deficit over the last five years.
















There is no doubt we are heading in the right direction. And, as I have explained many times, we have been in debt pretty much since we have started as a country. Take a look below.
















Certainly, we have been in far worse spots and predictions of 100 percent debt to GDP in the last few years have not materialized. Right now we stand at just over 70 percent debt to GDP which is entirely manageable. In fact, there are perils in the philosophy of austerity as Eduardo Porter pointed out recently that illustrate the cost-benefit analysis of taking on some more debt and getting paid off in the long run with more growth and thus, less debt.

A recent analysis by the research firm Macroeconomic Advisers estimated that cuts to discretionary government spending — roughly everything the government spends money on except for Social Security and Medicare — trimmed growth by seven-tenths of a percentage point a year since 2010, and cost some 1.2 million jobs. The costs are mounting across the Atlantic, too, despite the contentment in London and Berlin. 

A study by an economist from the European Commission published this month concluded that spending cuts put in place by governments from Greece to Germany since 2011 had stalled the economic turnaround of the entire euro area. A host of economic analyses over the last three years by researchers from different corners of the world — including Roberto Perotti at Milan’s Bocconi University, Alan Taylor and √íscar Jord√° at the University of California, Davis and researchers at the I.M.F. — have concluded almost invariably that budget cutting in a depressed economy is counterproductive. 

By cutting teachers or raising taxes, reducing government transfers or trimming public purchases of goods and services, austerity shrinks the economy in the short term, often more than it shrinks the burden of public debt.

Exactly right. This is why we have the anemic growth that we have right now. I suspect that many in the business wing of the GOP know this and they just want Obama to fail so they bloviate about cutting taxes and bring guys like Arthur Laffer back into the mix.

I think that Simon Wren-Lewis, a professor of economics at Oxford University, has it right. Arguing that the tiny amount of economic growth Britain has recently achieved after a years-long downturn proved austerity to be the right policy is tantamount to saying that global warming skeptics had “won the climate change argument because of recent heavy snow.” Of course, they argue that as well!

So, when your weird uncle, who, at the age of 40-60 something, still has a problem with authority, starts spouting off at the upcoming holiday gatherings about the deficit, the debt, and how it's "math," show him the information in this post and have him explain his understanding of these facts. And then read him this.

If even half the energy that has been devoted over the past five years to “budget deals” were devoted instead to “growth strategies,” we could enjoy sounder government finances and a restoration of the power of the American example. At a time when the majority of the United States thinks that it is moving in the wrong direction, and family incomes have been stagnant, a reduction in political fighting is not enough. We have to start focusing on the issues that actually are most important.

Drop me an email or put up a comment and let me know what he says:)

Tuesday, October 15, 2013

Shutdown A Go Go

Quite a bit to talk about today as we enter the last 48 hours before we default on our debt so let's get to it...

It looks as though Harry Reid and Mitch McConnell have crafted a deal which re-opens the government and raised the debt ceiling into early next year. The House has just announced that they are going to push their own deal as well. The former doesn't have much about the Affordable Care Act in it but the House bill wants to delay the medical device tax for two years. The House just can't let go of the ACA, can they? Of course, it's part of their overall temper tantrum summed up quite eloquently by another Mark...

Speaking of the House, Pryor told CNN that "some Republicans are, quite honestly, they're acting childish about this. They almost want a shutdown. They almost want to see us break the debt ceiling."

Marks are cool people. I wonder if he has been reading my blog...:)

Here are the basics about the Senate deal which is the one likely to pass.

I must admit that the Right really had me fooled on this one as I thought they were much smarter and had more power than this. What a bunch of fucking idiots. Had they not taken this route, they could have sat back and made much hay out of the problems with the launch of the health care exchanges. Their popularity would have soared and they might have even gotten some changes through in regards to the ACA.

Instead, they had several irrational and incoherent outbursts (see video below) followed by the usual stomp down the hallway, door slam, and adolescent room trashing. The American people now realize exactly how ridiculously immature these people are and have rejected them. It's now more than possible that the Democrats will take back the House in 2014, six years earlier than I predicted. Had the GOP not engaged in this shutdown/debt ceiling folly, they would have solidified their hold on the House and possibly taken the Senate.

But they can't resist the catnip of being moonbats and, man oh man, have they released a full pack of them in the last two weeks. Roger Simon sums it up quite nicely in this piece.

Protesters marched through the streets of Washington on Sunday with a Confederate flag and then a protester lounged against the White House fence with one. Displaying the Confederate flag in front of a home occupied by a black family was meant to send a particular, and particularly repellent, message. There were other signs of our descent. 

Remember Samuel Wurzelbacher? Known as “Joe the Plumber,” he was selected by John McCain as his presidential campaign mascot in 2008 with the same care McCain used to select Sarah Palin. Over the weekend, Wurzelbacher posted an article on his blog titled: “America Needs a White Republican President.” “Admit it,” the article said. “You want a white Republican president again. Wanting a white Republican president doesn’t make you racist, it just makes you American.” 

At least one can appreciate the fact that they aren't hiding it anymore. Check out this video.



"I call upon all of you to wage a second American nonviolent revolution, to use civil disobedience, and to demand that this president leave town, to get up, to put the Quran down, to get up off his knees, and to figuratively come out with his hands up," Klayman told the crowd.

Wow.

Through all this anger and hatred, though, it was nice to see that the World War Two vets who have been pushing to re-open the memorial gave the middle finger to the dark hart of American populism.

The political agenda put forth by a local organizer in Washington DC was not in alignment with our message. We feel disheartened that some would seek to hijack the narrative for political gain. The core principle is about all Americans honoring Veterans in a peaceful and apolitical manner. Mr. Cruz, Ms. Palin and some attendees, including political parties may have not been aware of the goals of the marches which took place in over 60+ rallies across the nation.

Double Wow. It looks like they are losing the old white guy crowd now as well.

The next two days are going to be interesting, folks. Check back here often as the news unfolds.




Wednesday, October 02, 2013

Seven Years

I wonder if Republicans will look back on this week and note that this was the beginning of the end of their party. It is truly something to behold as one of the two major parties in this country commits ritual suicide. They haven't gotten over the fact that the Affordable Care Act is law. They haven't gotten over the fact that they lost the election of 2012. They haven't gotten over the fact that Barack Obama is the president. In short, they are whiny babies throwing an all out temper tantrum.

The reaction has been swift.

Andrew Sullivan...

How does one party that has lost two presidential elections and a Supreme Court case – as well as two Senate elections - think it has the right to shut down the entire government and destroy the full faith and credit of the United States Treasury to get its way on universal healthcare now? I see no quid pro quo even. Just pure blackmail, resting on understandable and predictable public concern whenever a major reform is enacted. But what has to be resisted is any idea that this is government or politics as usual. It is an attack on the governance and the constitutional order of the United States.

An attack? Well, it is amusing that Republicans are behaving in a more obstinate fashion than the Iranian president. American Taliban indeed.

Thomas Friedman

“Give me the money and nobody gets hurt.” How did we get here? First, by taking gerrymandering to a new level. The political analyst Charlie Cook, writing in The National Journal on March 16, noted that the 2010 election gave Republican state legislatures around the country unprecedented power to redraw political boundaries, which they used to create even more “safe, lily-white” Republican strongholds that are, in effect, an “alternative universe” to the country’s diverse reality.

An alternate universe...hmm...like in a bubble? Well, they are going to have to learn the hard way, I guess. I don't think they realize what's going to happen in 2014 now that they have shut down the government. It might be even worse if they let the government default in a few weeks. Speaking of which, Henry Aaron has a great solution for that problem.

Obama should ignore the debt ceiling

The debt ceiling is the fiscal equivalent of the human appendix — a law with no discoverable purpose. It is one law too many. Once Congress has set tax rates and spending levels, it has effectively said what it wants the debt to be. If Congress leaves the debt ceiling at a level inconsistent with duly enacted spending and tax laws, the president has no choice but to ignore it.

Indeed. Our country functioned just fine without it up until 1917. If the moonbats want to fuck around over the debt ceiling again, I say the president should just ignore it and pay our bills. That's his job and Congress has already given him parameters with which to work. Further, the Constitution guarantees that "the validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned." Not surprising that the Right has trouble remembering that there is a Fourteenth Amendment.

I'm setting the clock for today and predicitng that the GOP has seven years of life left in it. They are going to lose more seats in 2014, lose in a big way in 2016, lose more seats in 2018, and, when the new census is taken in 2020 and we get out of the gerrymandering boondoggle, it will all be over.

Unless, of course, they grow up and change. How likely is that?

Oh, and how many hits did healthcare.gov get yesterday?

Friday, July 12, 2013

Will He Get Any Credit?

Through the first eight months of the budget year, the deficit has totaled $509.8 billion, according to the Treasury Department. That's nearly $400 billion lower than the same period last year.In fact, the federal government on Thursday reported a rare surplus of $116.5 billion in June, the largest for a single month in five years. The gain kept the nation on track for its lowest annual deficit in five years. I guess that's what happens when reduced spending and increase taxes. Huh...

The deficit reached a record $1.41 trillion in budget year 2009, which began four months before Obama took office.The president promised that he would cut the deficit n half during his first term. That didn't happen largely because of the economic downward spiral as well as GOP adolescent foot stomping and stubbornness (we can't let him succeed.....wahhhhhh!!). But now he has achieved his goal and fulfilled his promise.

I wonder if he will get any credit for it....

Wednesday, January 09, 2013


Tuesday, January 08, 2013































Uh, that would be a no...no, they didn't. It's not _______ when we do it!!!

Saturday, January 05, 2013

A Collection of Voices In My Head

I've heard so many "voices in my head" of late. What are they saying these days?

“The numbers — at some point it’s got to catch up or else we’re all going to die,” said Chris Chocola, head of the anti-tax Club for Growth.

Cue the boiling pit of sewage!

Obama you stupid sand nigger get off my tv. Your just making the families hurt and miss their kids more and I want to watch football 

The above is one tweet of many. Make sure you read all of the comments from the non-Republican, non-racists.

And what happens when you hug the president and you are a registered Republican?

But the attention wasn't all positive. Van Duzer, a registered Republican, had voted for Obama in the last election and said he did again in November. That brought out the worst in anti-Obama zealots, who called in bomb threats, sent him hate mail with death threats, and brought out a level of vitriol Van Duzer said he had never witnessed. Some tried to organize a boycott of his restaurant and bombarded Yelp!, the restaurant review website, with thousands of one-star reviews from first-time visitors to the site.

It must be the left wing media's fault! Where's Katie Couric?!??

Thursday, January 03, 2013

Seeing the End?

I've been trying to figure out exactly WTF the House Republicans have been thinking these last few days and I got nothing. I like John Boehner and, in many ways, actually feel sorry for him. He has to deal with around 75 adolescent males every day (enough to make any parent or teacher cry!) in his caucus so cutting him some slack seems like the right thing to do.

But this latest game with the aid for Hurricane Sandy victims shows just how fucked up the Right is these days. They are run by a group of people who see any sort of government spending (except defense) as the equivalent of raping children. I guess the general welfare clause also does not apply to people whose homes were lost to natural disaster. Why should we have to pay for their loss? They just need to pull themselves up by their bootstraps, stop spooning off the government, and get to work, by gum!

Boehner finally gave in after New Jersey Governor Chris Christie unleashed holy hell and a vote in the House will now be scheduled on Friday. Honestly, though, this is a larger issue that we are going to see play out in the coming months and it really only has one conclusion: more Democratic victories and a likely retaking of the House in 2014.

In what has to be the finest example of "Doing it again, only harder," GOP leaders have already indicated that they are going to play chicken with the debt ceiling again. It worked so well last time so why not try it again? With all the good economic news (more on that tomorrow), it makes perfect sense to try to ruin any chances of improvement. After all, they have been rooting for America to fail since the president took office in their never ending quest to not be proven wrong and win the argument. Who gives a shit if the economy continues to sputter?

The Right has also indicated that, in the aftermath of the Sandy Hook tragedy, that: a) more people being armed is the answer (see: 1984, George Orwell) and b) we can't really do anything anyway because we are free and freedom means impotence. So, a far right stance on guns will be taken with no possibility for even a reasonable discussion or alternative solutions, We are talking about a choice between our freedom or burning in hell under a totalitarian regime. The stakes have never been higher, folks!!

Even with immigration, the Right remains steadfast. They don't have time for the details. It's "Fuck you, get out!" They don't seem to mind that, if they continue down this path, possibly in 2016 (2020 is more likely), Texas will turn blue and the Republican Party as we know it will have gone the way of the Whigs.

I think the head of the conservative organization Club For Growth, Chris Chocola, summed up the thinking on the Right (and the "voices in my head") when he said, of the debt, "The numbers-at some point it's got to catch up or else we are all going to die." Look out, folks! We have to stop government before they inflict any more evil on the world!!! AHHHH!!!!

I guess the Right didn't learn anything from the election last November and their possible end is becoming more and more clearer every day. Politically, that's great for me but my concern is how many Americans they are going to drag down with them in their teenage male stomp down the hallway.

Thursday, November 29, 2012

Let Warren Unburden Them

Warren Buffett's recent opinion piece seen in many papers and online over the last few days is a fine example of how completely ridiculous the Right is in regards to federal government tax policy. He begins with an anecdote.

Suppose that an investor you admire and trust comes to you with an investment idea. "This is a good one," he says enthusiastically. "I'm in it, and I think you should be, too." Would your reply possibly be this? "Well, it all depends on what my tax rate will be on the gain you're saying we're going to make. If the taxes are too high, I would rather leave the money in my savings account, earning a quarter of 1 percent." Only in Grover Norquist's imagination does such a response exist. 

Only in all their imaginations does such a response exist. I can say with near certainty that anyone on the Right that says they do this or has known people to act in this fashion is lying. As Mr. Buffett has said many times previously, people invest to make money. Government tax policy doesn't enter into it.

And facts are facts...

Between 1951 and 1954, when the capital gains rate was 25 percent and marginal rates on dividends reached 91 percent in extreme cases, I sold securities and did pretty well. In the years from 1956 to 1969, the top marginal rate fell modestly, but was still a lofty 70 percent -- and the tax rate on capital gains inched up to 27.5 percent. I was managing funds for investors then. 

Never did anyone mention taxes as a reason to forgo an investment opportunity I offered. Under those burdensome rates, moreover, both employment and the gross domestic product (a measure of the nation's economic output) increased at a rapid clip. The middle class and the rich alike gained ground. 

They both gained ground because there was less inequality. The money that was used from the higher tax revenues paid for investments in infrastructure and education (the GI Bill, for example). This, in turn, led to a higher skilled labor force and an economy that was robust and innovative. This is not the case today.

The group's average income in 2009 was $202 million -- which works out to a "wage" of $97,000 per hour, based on a 40-hour workweek. (I'm assuming they're paid during lunch hours.) Yet more than a quarter of these ultrawealthy paid less than 15 percent of their take in combined federal income and payroll taxes. Half of this crew paid less than 20 percent. And -- brace yourself -- a few actually paid nothing. 

This is how money has been transferred upwards as Stiglitz mentions in "The Price of Inequality."

So what does Warren think should be done about this?

We need Congress, right now, to enact a minimum tax on high incomes. I would suggest 30 percent of taxable income between $1 million and $10 million, and 35 percent on amounts above that. A plain and simple rule like that will block the efforts of lobbyists, lawyers and contribution-hungry legislators to keep the ultrarich paying rates well below those incurred by people with income just a tiny fraction of ours. Only a minimum tax on very high incomes will prevent the stated tax rate from being eviscerated by these warriors for the wealthy. 

And what will the result be?

Our government's goal should be to bring in revenues of 18.5 percent of GDP and spend about 21 percent of GDP -- levels that have been attained over extended periods in the past and can clearly be reached again. As the math makes clear, this won't stem our budget deficits; in fact, it will continue them. But assuming even conservative projections about inflation and economic growth, this ratio of revenue to spending will keep America's debt stable in relation to the country's economic output. 

I agree and, as Warren notes, this will involve major concessions by the Right and the Left. All sides in this debate have signaled a willingness to bend so I do have some hope.

And what about that figment of the Right's imagination who is overly obsessed with "uncertainty?"

In the meantime, maybe you'll run into someone with a terrific investment idea, who won't go forward with it because of the tax he would owe when it succeeds. Send him my way. Let me unburden him. 

 Maybe I should send ol' DJ from TSM to Mr. Buffett...hee hee...:)

Monday, August 13, 2012


Saturday, February 25, 2012

If You Are Really Concerned About The Debt and The Deficit...

...then the person you should be supporting is Ron Paul. After that, it's Barack Obama.

A recent report by the non partisan U.S. Budget Watch, a project of the Committee for a Responsible Federal Budget, showed that Mr. Paul's plan would only add less than 500 billion dollars to the deficit by the end of 2016. President Obama would add just a little more than that with 649 billion.

Yet, Mitt Romney would add 700-800 billion dollars to the deficit with 2.6 trillion added to the debt by 2012.  Rick Santorum would add over 1 trillion dollars to the deficit by the end of 2016 with the debt rising to 4.5 trillion dollars by 2021. The worst offender, Newt Gingrich, would add 1.5 trillion to the deficit with a whopping 7 trillion dollars added to the debt by 2021.

So, why so much under the plans of the GOP hopefuls? Tax cuts. Well, they worked so well before...

Now that I think about it, they did work. The tax cuts have enabled the right to blame President Obama for all our economic problems.

Monday, February 06, 2012

He Said....What??!??

First of all, David, I don’t think you’ll ever find me talking about an age of austerity. I don’t think that’s the right solution. I am a pro-growth Republican. I’m a pro-growth conservative. I think the answer is to grow the economy, not to punish the American people with austerity. 

---Newt Gingrich, 5 February 2012, Meet the Press

What do you suppose he means by this?

Tuesday, January 03, 2012

A True Gem

Krugman's recent piece on debt is a true gem and, more or less, torpedoes much of the doom and gloom we hear from conservatives and libertarians these days. He makes several key points which are worthy of highlighting.

First there is the central question of who owns our debt. Ask someone on the street and their first answer will likely be China. Of course, this is what the media and right wing pundits have conditioned them to believe but it's simply not true. In fact, the majority of our debt is owned by...us. Here is how it all breaks down.

Hong Kong: $121.9 billion (0.9 percent)
Caribbean banking centers: $148.3 (1 percent)
Taiwan: $153.4 billion (1.1 percent)
Brazil: $211.4 billion (1.5 percent)
Oil exporting countries: $229.8 billion (1.6 percent)
Mutual funds: $300.5 billion (2 percent)
Commercial banks: $301.8 billion (2.1 percent)
State, local and federal retirement funds: $320.9 billion (2.2 percent)
Money market mutual funds: $337.7 billion (2.4 percent)
United Kingdom: $346.5 billion (2.4 percent)
Private pension funds: $504.7 billion (3.5 percent)
State and local governments: $506.1 billion (3.5 percent)
Japan: $912.4 billion (6.4 percent)
U.S. households: $959.4 billion (6.6 percent)
China: $1.16 trillion (8 percent)
The U.S. Treasury: $1.63 trillion (11.3 percent)
Social Security trust fund: $2.67 trillion (19 percent)

So America owes foreigners about $4.5 trillion in debt. But America owes America $9.8 trillion.


Even the issue of foreigners holding our debt is offset by US claims on foreigners. Here's a chart that Krugman provides.





















The blue line represents income from assets abroad and the red line represents payments on foreign owned assets. Since these assets often take the form of subsidiary US corporations, they often give a higher rate of return than do our liabilities as foreigners tend to put their money in safe, low yield assets, as Krugman notes.

The other thing that makes the doom and gloom crowd predict that we will all be thrown into a boiling pit of sewage is running debt to GDP of 100 percent (as we likely will for the next few years). Yet this chart says otherwise.
















Look at all those years of 100 percent (and much higher) debt to GDP in the UK. Are they in a boiling pit of sewage? No. It makes you wonder how much of their current shift towards austerity is politically based as opposed to reality based. I certainly wonder that here although in our case it's more about "winning the argument" and "proving the Democrats wrong."

So, as Krugman aptly notes, nobody understands debt. Those who say that the government should just "live within its means like ordinary Americans do" don't understand that people owe their debt to a bank. American owes its debt to itself which is a very different thing.


First, families have to pay back their debt. Governments don’t — all they need to do is ensure that debt grows more slowly than their tax base. The debt from World War II was never repaid; it just became increasingly irrelevant as the U.S. economy grew, and with it the income subject to taxation. 

Second — and this is the point almost nobody seems to get — an over-borrowed family owes money to someone else; U.S. debt is, to a large extent, money we owe to ourselves. This was clearly true of the debt incurred to win World War II. Taxpayers were on the hook for a debt that was significantly bigger, as a percentage of G.D.P., than debt today; but that debt was also owned by taxpayers, such as all the people who bought savings bonds. So the debt didn’t make postwar America poorer. In particular, the debt didn’t prevent the postwar generation from experiencing the biggest rise in incomes and living standards in our nation’s history.

Exactly right.

Where he is exactly wrong, though, is with this line.

So yes, debt matters. But right now, other things matter more. We need more, not less, government spending to get us out of our unemployment trap. And the wrongheaded, ill-informed obsession with debt is standing in the way.

Spend more than we are now? Or much more? How much? Where? This seems too vague and doesn't make much sense considering the unemployment has dropped in the last few months without increased spending. While I don't think we need the Draconian cuts called for by many on the right, we also don't need increased spending. In fact, we could cut spending in the Big Three (Defense, Social Security, Medicare) in a number of ways that won't erode employment as much as Krugman thinks and do quite a bit to reduce our long term debt and deficit. Throw in the end of subsides and tax cuts on the wealthy and things look even better. So, on this point, I simply can't agree with him.

But he is right about everything else. The next time a conservative or libertarian friend starts foaming at the mouth about our debt and how it's going to destroy us, show them this information, tell them to stop reading right wing blogs, and take a fucking chill pill.