You Can't Spend Your Way Out of This

This past Tuesday, the Congressional Budget Office (CBO) released a report that says that the budget deficit will grow through 2023 and it states that it will eventually require the government to raise taxes, reduce benefits and services, or undertake some sort of combination of the two. Here is the kicker, these steps will be needed just to cover the interest payments.

You know that point when you have a mortgage or student loans, you've been making your payments, painful as they may be from month to month, then look at your end of the year statement and realize the principal isn't going down. That all the money you've put into these payments are just for the interest. The country is starting to get that way.

The CBO projects that interest rates on the Ten-Year Treasury Note will rise from 2.1 percent currently, to 5.2 percent in 2017. A mix of every bond ratings declining and the fed continuing to eat most of the free market action on bonds has helped keep this rate artificially low for some time, but the CBO is projecting that these rates will not stand over the next 5 years. Since the government usually pays no more then the interest in it's debt anyway, and is still borrowing at ridiculous levels, our payments to service the debt, a topic getting not nearly enough explanation during the fiscal cliff crisis, will go up... by a lot.

In December, the Treasury Department reported that total interest bearing debt owed by the government carried an interest rate of 2.5 percent. FY2012’s interest payments on our debt was in the neighborhood of $360 billion. If interest rates overall reflect the CBO’s forecast for the benchmark, these interest payments alone will clear the $1 Trillion mark by 2017. At which point we will be spending more on debt then on education, or welfare, or even national defense. It would also equal about the amount of money we have to borrow now to just make it though a fiscal year.

What an odd coincidence that Obama will be out of office at the end of 2016. But, like a first divorcee of a gold digger, we get stuck paying off the bill for this multi-year shopping spree. Leaving us with the choice of paying our obligations to our debt, or spending money on frivolous things like Social Security or Medicare. 

Couple this very predictable crisis with the possibility of dipping into another recession if the can-kicked sequester on defense spending proceeds and the economy doesn't see a turn around in the next, oh, lets say, three to five hours. Another recession and more spending could also push us into more bond rating trouble, which could push the 5.2 percent guesstimation of the CBO even higher, causing even higher payments, well, you can see how this can go from horrible to downright cataclysmic if everything doesn't go according to plan.

Or, the more likely route, the fed will continue to buy up bonds with this magical invisible stockpile of money they have. Shoring up Social Security and Medicare as they start to pay out more then they take in in the trillions. All the while this is used as an excuse to raise tax rates and come up with new things to pay tax on, (Internet Tax?) while never addressing the real problem, that this government (note that I'm not singling out the president) has a significant spending problem.

Why a Democrat Voted 'Nay'

Dear Chris:

Thank you for contacting me regarding legislation recently enacted by Congress to address the automatic spending cuts and tax increases known as the "Fiscal Cliff" that were scheduled to take place on January 1, 2013. I appreciate hearing from you about this important topic.

Over the last few decades, middle class families have seen their jobs become more insecure, their wages stagnate, their savings and pensions shrink, and the cost of education skyrocket. At the same time, the wealthiest among us and the largest corporations have grown ever richer.

Our economy is out of balance, and this lack of balance threatens the very fabric of our entire economy. That's because the economy is driven forward by middle class families with money in their pockets. We need to start to put our economy back in balance with an economic policy that will help to rebuild the middle class, providing good jobs now and in the long term.

Over the course of the debate on the fiscal cliff, I repeatedly stated that I would evaluate any legislation to avert our economic and fiscal challenges based upon the impact it would have on middle-class families. Unfortunately, I did not feel that the final agreement reached would help to strengthen the middle class, and as a result I voted against the measure. While I fully understand the economic impacts that would follow if the tax increases and spending cuts were allowed to take effect as scheduled, I do not believe that the legislation put forward was the appropriate or the only response to our present challenges. Specifically, I have three concerns about the legislation.

First, this legislation does not address our number one priority - creating well-paying, middle-class jobs immediately. While the economy has improved considerably since the depths of the Great Recession, millions of Americans are either unemployed or working in jobs that do not pay adequate incomes to allow them to support their families. Short-term job creation and long-term deficit reduction are both critical, and I was disappointed that the bill failed to provide the direct investments in immediate job creation measures that our country desperately needs.

Second, I am concerned that the legislation does not raise enough revenue to put our country on a path to fiscal sustainability while still allowing us to make the important investments in important areas that support a strong middle class, especially job training and education. Under the agreement, individuals and families earning less than $400,000 and $450,000 per year respectively will see their tax rates permanently extended at 2012 levels.

While I was pleased that middle class families did not experience a tax increase, extending tax rates for many wealthy individuals will reduce revenues by hundreds of billions of dollars over the next decade. By not allowing tax rates on wealthy households earning between $250,000 and $450,000 to revert back to Clinton-era levels - a time when economic growth was robust and job creation was at all-time highs - we increase the risk to important benefits for the middle class. With government spending dropping and deficits remaining high, every dollar of sacrifice that the wealthy forgo in this deal is a sacrifice that we will later be asking middle class Americans to give up in earned benefits such as Social Security and Medicare.

Finally, I am concerned that the changes made to the tax code will make our system of taxation less progressive and over time provide fewer benefits to those with modest incomes. While the legislation made permanent tax benefits for wealthy Americans, such as the income tax rates on upper income earners and the estate tax, tax measures targeted at the middle class families - especially those with children - are only extended for five years. This includes the American Opportunity Tax Credit, which provides families $2,500 annually to help pay for college. It also includes an expanded Earned Income Tax Credit, an effective tool for helping working families escape poverty, and the Child Tax Credit. The temporary extension of the tax benefits for middle class Americans will make it much more difficult to renew them in the future.

Sometime in February, Congress will likely consider legislation to reduce the deficit, raise the debt ceiling, and avoid automatic across the board spending cuts called sequestration. Throughout that process, I will continue to advocate for a balanced approach that will raise revenue from those who can afford to contribute and decrease spending in ways that minimize the adverse impact on the middle class and those of more modest incomes.

As I continue my work here in the Senate, I will continue to place the highest priority on rebuilding the middle class and promoting economic security among working families. Thank you for writing to me.

Sincerely,

Tom Harkin
United States Senator

Fiscal Sham

We are so fed up and disappointed in our congress, in Washington, with all the rhetoric and stupidity, how much do we hate them you may ask, well, just keep reading.

• President Obama – Reelected
• Speaker John Boehner – Reelected
• Minority Leader Nancy Pelosi - Reelected
• 393 members of the house sought reelection, 358, or 91%, won their election.
• 23 Members of the Senate sought reelection, 21, also 91%, won their election.

Americans are fed up with Congress like almost never before.  Congressional approval rating sit in the teens. What the heck is going on that we as an electorate keep voting in the same idiots time and time again?

Richard Lugar in Indiana was actually primary’ed out of his place on the ballot, which ultimately resulted in a seat being gained by the Democratic party. These guys have no idea what they are doing, they have no idea how to get us back to some sense of stability and normalcy, but man, can they get elected. And we are the chumps that keep voting for them!

Of course, all this frustration is coming in the wake of one of the worst pieces of legislation ever to come out of Washington in my lifetime, the Fiscal Cliff deal. Today, the 113^th congress is being sworn in. We are currently running the government on accounting tricks and gimmicks as we pass, yet again, the debt limit. The CBO says the last piece of legislation passed by the 112^th congress will add about $4 trillion in new debt to our country.  Everyone’s taxes are going up despite warnings that this will be one of the worst taxes to raise in terms of the economy, which I could accept if it was on the premise of reducing the deficit  but, as I already stated, this bill ADDS to the deficit.

Why would we pass a bill that does nothing but add to the problem that it is supposed to be trying to address? Why is this being touted as a solution in the first place? If making hurried decisions in the middle of the night when everyone was trying to make it to the bars for last call was considered a good idea, I would be CEO of Earth. Nothing is fixed, but congress did do one thing that it excels at, loading this legislation with pork.

• Tax breaks to Scooter Drivers
• Tax breaks for shooting movies in low income neighborhoods
• Tax breaks for people who own/operate race tracks
• Tax Credits for Algae and Asparagus owners

That’s it, I can’t take any more. I’m out of here. Someone please bring me back to sanity!

Retoric

A Rare Victory for Cable News.

How Hilarious this is, the frustration of a reporter that is trying to pierce through the rhetoric of a trained Politician. Followed by a rapturous applause of the people burdened with the consequences of a lame duck congress in the background. If a free media was devoted to challenging the words of our leaders in Washington rather then just choosing a side and singing 'rah rah rah' all the way through an election cycle (or a continuous 'boooo...' depending on the news organization and the party in power). Then we would get the best of both worlds much more often, a greater level of accountability and a fantastically entertaining news industry.

This past week, Maria Bartiromo of CNBC's "The Street" Interviewed Senator Cardin (D-MD) about the impending fiscal cliff by challenging such bloviating and over-ripened statements such as "Balanced approach" and "Lack of Leadership" by aggressively pointing out a lack of proposing or even condoning revenue in any form other then raising the rates on the wealthy of our country, getting him to openly nixing revenue raising ideas such as cutting charitable contributions and mortgage interest. Alas, what can words say that YouTube can't. Here is the clip from last Thursday;

There is also a more complete recording of the interview available here; although it is of much lower quality brought to you by people who know how to use a webcam to record but can't figure out how to run a coax feed into their PC, but I digress.

The best part about this news cast is that, despite it being a grilling of a Democratic Senator, these same questions could have been given to a Republican member of the house with almost the same impact. "You have once again rejected Boehnor's plan for raising taxes on the extremely wealthy, and you know that we need to shrink the deficit, so what ideas are you bringing to the table? Social Security reform? OK, so in 10 years when people who fall outside your grandfather period start retiring we'll save, what, $50 Billion a year?  $100 Billion? We need some deficit relief now Congressman, what is your plan?"

It was said best in the video, people are just frustrated, and have lost any real respect for the role of Congress. Perhaps it takes the stench that comes from our capital getting so grotesque for reporters to begin putting down their campaign yard signs and begin to act a little bit more like journalists. Thank you, Maria.

Fiscal Cliff Solved

Like a bully holding a child's favorite toy just out of reach during a school yard altercation, so too, this government holds the promise of lower taxes and responsible government hostage to the innocent middle classes. After decades of wealth being created by those who now mysteriously have wealth, while those who never had wealth continue to not create wealth, are doomed to suffer in a world where they still don't have wealth. Gone are the never existing days when a generation of middle-class families where not having to worry about paying bills or putting food on the table, after a historic recession that plunged our economy into a crisis from which, three years after technically being over, we are still fighting to recover from, it is time to construct an economy that is built to last longer then the three weeks the current one was designed to last for. To this end, I give you my proposal to put America back on the path that led to this problem in the first place... In the hopes that the laughable left and the ridiculous right will find some common ground to start from and fix this mess we are in.

The Fiscal Year 2013: Kurmudkin Budget Proposal.

The Budget Message of the President

In the Year 2008, this house of Cards we call an economy collapsed,  and  unlike a pole dancer who was under the stage lights too long and collapsed into a sweaty naked pile of well toned feminine flesh, this collapse was ugly, like an ugly pole dancer who collapsed after being under stage lights too long. In this budget, I hope to address everything from the rising cost of groceries to the rising cost of college tuition. This may come as a bit of a shock since at no point I propose any real plans to address tuition or groceries, but there is a line at the end of one of the pages, I forget which one, that talks about a $6,000,000,000.00 slush fund. Just assume that part of that will go to solving a lot of the problems with the country today. Thank you.

Building a Strong Economy

What is an economy? Webster defines it as " the management of household or private affairs and especially expenses". Who better to build up a strong economy then the government? 'nuff said.

"Tax" Reform, Reducing the Deficit, and Asking All to Pay Their Fair Share

After minutes of contemplation it occurred to me. Why are we wasting so much time trying to get money from rich people only to end up without their money and occurring all this debt? The answer seems clear. Rather then taking people's money, we are just going to start handing out the government's debt! Everyone look in your mailboxes for a stack of I.O.U.'s with uncle Sam's name scratched out and a space for you to fill out your name and phone number, and expect some calls from creditors soon. 

Investing in Our Future

Most Sci-Fi novelists agree, that in the future, we will be conquered by a super intelligent race of aliens that vaguely resemble giant slugs. In preparation for such a day, several new government bureaucracies will be developed, charged with the task of designing welcome signs for our soon to be alien overlords.

Budget Changes to Major Government Entities

Department of Agriculture - $60,000,000 in new spending to discover a weight loss diet that consists of cheeseburgers and pudding pops.

Department of Commerce - $100,000,000,000 in federal backed loans to Wal Mart, in the hopes of showing that the Federal Government can invest in a company that doesn't go bankrupt within a year.

Department of Defense - Cut by $4,000,000,000,000 and outsource all military operations to Canada. 

Department of Education - Increase funding by $5,000,000,000,000 from the defense budget savings and then outsource to Canada, also. (There are no typos in this line.)

Department of Energy - Pass new Auto regulations that will require all automobiles to run off the tears of children by 2023.

Department of Health and Human Services - Raise the funding to Medicare, Obama-care  Medicaid, Medicare Part D, SCHIP, Planned Parenthood, AARP, and Extreme Makeover: Wightloss Edition bu 7000%, then appoint a special panel that will figure out how to pay for the other half of these programs.

Department of Homeland Security - Funding for a research program to determine why this department exists in the first place.

Department of the Interior - Develop plans to move this department outdoors.

Department of Justice - Reduce Judicial staff by 80% as new laws do not require as many warrants to be signed. Use savings to allow Department of the Interior to purchase plants for their new location.

Department of Labor - Increase staff by 500,000 per month until unemployment goes down below 4%, with a 'trigger' that will fire them all unless incumbents are all re-elected.

Department of State - Grant one "Get out of a Political Debacle Free" card, then use said card. 

Department of Transportation - Develop plans for a super extensive luxury commuter line, then forbid anyone from using it HAHAHAHAHAHA!!!

Department of Treasury - Like we could actually tell these guys what to do.

Department of Veteran Affairs - $80,000,000,000 for a new administrative building, authorize the hiring of several new bureaucrats, then several more bureaucrats to address the needs of the ever expanding bureaucracy. Then outsource the task of determining why Vet's aren't getting the benefits they where promised.

In Summary

We're screwed.

There you have it, the new benchmark for negotiations. I suspect that it has has as good of a chance of being implemented as anything that comes out of Washington over the next few weeks. Thank you for reading, or as our to-be alien masters would say, "Ess-Karr-Go'h!"

Water Cooler Quiz