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The Next Ten Years – Part I: There Will Be Blood
The Road to Perdition -
The majority of Americans may believe that the economic crisis knocked them off their destined course to wealth and prosperity, but the truth is that we were never as rich as we thought we were when cheap credit and cheap oil expanded our purchasing power unnaturally beyond the limitations of our productivity, of minds and machines, to generate an economic surplus.
If we were honest we’d admit, like a lottery winner who has spent all his winnings on cars and drugs, that the era of free-wheeling fun has come to an end.
We had a blast, but it’s over.
At least some of us had fun. The dot com speculators who sold at the top. The housing bubble speculators who got out in time. The Wall Street investment bankers who played it both ways, selling junk on the way up and shorting it on the way down.
Too bad for everyone else, for those who missed out, for the paycheck workers and the stock mutual fund buy-and-hold investors. The losers along with the winners will have to shoulder the burden of coping with cheap oil and credit era debris. The inherent unfairness of this outcome of the credit bubble era will pose yet another threat to the long standing presumption of American political stability and security that underpins the relative safety of US capital markets.
Debt Debris
The collapsed credit bubble has left us with a debt overhang that diverts the cash flow of households and business toward payments of principle and interest, preventing our economy from reaching its full output potential. Failure to write down the bubble era debt consigns us to corrosive debt deflation that demands more government stimulus spending to keep the top line of the economy growing while eroding the bottom line -- the purchasing power of income and savings -- with cost-push inflation, an artifact of a persistently weak dollar.
Richard Koo refers to his condition euphemistically as a “balance sheet recession.” That’s banker-speak for using public funds to try to close an output gap created by the collapse of a credit bubble that enriched creditors without holding them to account. As we see later in this analysis, Japan's experiment with applying Keynesian stimulus for decades rather than for a brief period to close an output gap as Keynes intended, will be among the great economic failures that befall the world in the coming decade.
Left-leaning economists deploy semi-scientific language to argue that we need to use public funds to prop up the economy until it becomes self-sustaining. They ignore the fact that the policy only works if the private sector can be primed to borrow more money into existence than it is retiring via debt repayment, else the dependence on deficit spending becomes structural and the spending perpetual, at least until the nation runs out of credit in a decade or two.
Right-leaning economists argue for cutting government spending and taxation to free up producers to hire and consumers to spend, ignoring the fact that when an over-indebted economy is in an output gap a reduction in government spending reduces the economy's primary surplus, shrinking the economy further, either in real or nominal terms, and worsening its fiscal position. It's like a mortgage lender demanding that a borrower sell the car he needs to use to get to work, so that income that he is spending on car loan payments can instead be used to pay off the mortgage. It's self-defeating.
Once an over-indebted country in an output gap begins to have difficulty repaying foreign debt, because debt payments exceed available tax revenue net of outlays, that nation will only dig itself deeper into a hole if policy makers attempt to reduce budget deficits by means of spending cuts. According to economist Sebastian Edwards, “Perverse fiscal dynamics – where the country fails to generate a primary surplus large enough as to stabilize the debt to GDP ratio – usually generates a vicious circle, where failure to stabilize the debt ratio results in higher cost of funds, lower growth, and in an even larger required primary surplus.”
The so-called debate about debt ceilings, spending cuts, and entitlements reductions is a red herring. The public debt crisis arose from the 2007 - 2008 private credit market crisis, not the government liabilities that have been building for decades.
The mistake of both the left and the right is thinking that we can escape an output gap without facing up to the politically unpopular task of demanding that creditors take a loss on loans taken out during the credit bubble era.
We need a private sector debt cut, not a tax cut.
Trillions in mortgage debt against fictitious housing value remains on the balance sheets of households after home prices deflated 25%.
These debts should not exist. They resulted from an over-abundance of credit and deficiency in lending discipline.
But Main Street’s credit bubble era debt is Wall Street’s political cash flow entitlement.
The banking lobby will make sure that the next president and Congress keep the bogus debt service payments flowing, no matter that principle and interest payments on mortgage debt now consume 30% of the average household budget, followed by transportation costs at 19% and rising, food costs at 14% and rising, insurance costs at 12% and rising, and health care costs at 6% and rising. Throw in a value-added tax proposed by Paul Volcker and others to balance the budget and we can kiss what’s left of our Postcatastrophe Economy goodbye.
Debt deflation is not the only holdover from the cheap credit era that is keeping us stuck in an output gap. At the same time the bill is coming due for building a transportation infrastructure that is dependent on cheap imported oil.
In the short-term, high oil costs push the US economy ever closer to negative real growth territory.
In Q1 2011, consumer price inflation averaged 3% according to the MIT Billions of Prices project, while the Bureau of Labored Statistics' revised Q1 GDP number confirmed a 1.8% real annual growth rate. In the same quarter the BLS reported a 3.7% nominal GDP growth rate and an average 2.2% inflation rate. When we subtract 2.2% from 3.7% we get a real GDP of 1.5% not 1.8%, but enough quibbling. If the nominal GDP growth rate was 3.7% and we use the MIT versus the BLS numbers, we get 0.7% real GDP growth, and I estimate that in Q2 2011 the economy contracted in real terms. This is the beginning of the first Peak Cheap Oil Cycle recession, a recession in real but not nominal terms. As we see later in this analysis, real GDP recessions are far more painful and political destabilizing than the nominal recessions.
In the short run, bad energy policy is heightening stagflation. In the long run it drives destructive public policy.
Forgotten Lessons and the Repetition of Fatal Errors
The private credit crisis that gave rise to our current economic crisis is a product of the second large scale credit bubble in 100 years.....
Full Article at:
http://www.itulip.com/forums/showthread.php/19599-The-Next-Ten-Years-%C2%96-Part-I-There-will-be-blood-Eric-Janszen?p=200282#post200282The Road to Perdition - The majority of Americans may believe that the economic... more-
- Schnookums
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GOP Negotiators Pull Out of Budget Talks, Willing to Do Just About Anything to Get Their Way
WASHINGTON—U.S. House and Senate Republican negotiators said they were pulling out of the bipartisan budget talks headed by Vice President Joe Biden for now because the group has reached an impasse over taxes that only President Barack Obama and Speaker John Boehner could resolve.
House Majority Leader Eric Cantor (R., Va.), in an interview after a negotiating session he described as bitterly contentious, said he would not be attending Thursday's scheduled meeting of the bipartisan deficit-reduction leadership group. Mr. Cantor said he believed it was time for the negotiations to move to a higher level.
"We've reached the point where the dynamic needs to change," Mr. Cantor said. "It is up to the president to come in and talk to the speaker. We've reached the end of this phase. Now is the time for these talks to go into abeyance."
An aide to Senate Minority Whip Jon Kyl (R., Ariz.) also said the lawmaker was withdrawing from the talks. The two have been the GOP representatives in the negotiations for the last six weeks.
"The White House and Democrats are insisting on job-killing tax hikes and new spending," Mr. Kyl said in a statement. "That proposal won't address our fiscal crisis, our jobs crisis, or protect and reform entitlements."
Continue at:
http://online.wsj.com/article/SB10001424052702304569504576403522729881988.html?mod=WSJ_hp_MIDDLETopStoriesWASHINGTON—U.S. House and Senate Republican negotiators said they were pulling... more-
- Schnookums
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- 11 months ago
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We MUST cut costs – but not THOSE costs: three new political 'toons from Paul Szep
Afghanistan, support for Israel, Pentagon budgets out of control ... three takes from one of America's best political cartoonists.Afghanistan, support for Israel, Pentagon budgets out of control ... three takes from... more-
- hoosierdaddy
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- 11 months ago
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Taxes: If They Do the Crime, Make Them Do the Time
Americans like to trumpet the belief that we’re a “nation of laws”. Unfortunately, our laws are unevenly enforced when enforced at all. Congress churns out dozens of laws every year, while at the same time, guaranteeing they’ll fail by not budgeting for enforcement. Tea partiers like to say that most corporate laws constitute “over-regulation”. However, one could make a reasonable case that we don’t over-regulate, we under-enforce – and a law unenforced is no law at all.Americans like to trumpet the belief that we’re a “nation of laws”.... more-
- omnipotentpoobah
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- 11 months ago
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That Pesky Equity Component of Independent Film Finance Plans - Baseline Intelligence
Film Finance Attorney, Author, and Lecturer John Cones explains some key points about what is involved in equity (investor) film financing of low budget films.Film Finance Attorney, Author, and Lecturer John Cones explains some key points about... more-
- jamesluk
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Glenn Beck Changes Mind on Ayn Rand!
The media and blogosphere have been abuzz the last few weeks around the fixation GOP leaders have with Ayn Rand whose teachings are anathema to Christians. Rep. Paul Ryan said we need more of her "morality and thinking" in DC. Rush Limbaugh and Glenn Beck both extolled her on their radio broadcasts. But Ayn Rand said Christ's teachings were evil and that the goal of her books was to undermine Judeo-Christian morality.
As many of us on Current know, Glenn Beck usually does not change his mind, but two days ago he did! In June of last year he extolled Ayn Rand on his radio show saying, “You gotta love her – she’s great!” But then he watched and played American Values Network's ad, which has been at the center of the recent discussion, and highlights the Rand vs Jesus problem for the GOP. And Beck did an about-face, calling Rand a "bigot" and someone who wrongly used freedom for selfish ends. Check out the video and the link to the article above. If even Beck – Glenn Beck! – can’t ally himself with Rand’s morality, how could some of our political leaders –who claim to be “Bible-believing” – still find it possible to praise her morality and say our federal budget should be modeled on her teachings?The media and blogosphere have been abuzz the last few weeks around the fixation GOP... more-
- HK_NY_Chicago
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- 12 months ago
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Minnesota GOP Won't Compromise on Budget: State Sends Layoff Notices To 36,000 Workers Ahead Of Possible Shutdown
Thank you Pawlenty for creating this mess.
Thank you GOP legislators for not compromising.
Now our state will shut down and we will have to deal with:
* Can't enjoy our state parks
* Can't have court procedings heard in a timely manner
* Universities will shut down
* Essential Government services sharply curtailed
* Roads not being repaired
* Locked Highway rest stops
* No Drivers Licences issued
and the list goes on and on...
SHAME on you, GOP Legislature!
http://www.huffingtonpost.com/2011/06/10/minnesota-budget-layoff-notices_n_875219.htmlThank you Pawlenty for creating this mess. Thank you GOP legislators for not... more-
- Imzadi
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- 12 months ago
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American ARE under-taxed
McClatchy Washington Bureau
Posted on Thu, May. 05, 2011
This fact may not sit well: Americans are under-taxed
Kevin G. Hall | McClatchy Newspapers
last updated: May 05, 2011 09:40:18 PM
WASHINGTON — Here's a dirty little secret that most Americans don't want to hear: We're under-taxed.
That may sound like heresy; nobody wants to pay more taxes. But by historical standards, what we pay in federal taxes — rich, poor and everyone in between — has gone down.
At a time when Washington is wrestling with how to end federal budget deficits and trim the national debt — huge questions that are expected to dominate the nation's politics through the 2012 elections — the fact that Americans are under-taxed compared with U.S. historic norms is central to the discussion.
This fact is separate from the politically charged questions of whether government spends too much, the fairness of who pays how much and what we value or don't in government spending. It's simply that our tax burden is low in the long view of U.S. history, and there are many ways to measure that central truth.
One way is to look at the trend of total federal revenues, 81 percent of which come from income and payroll taxes, 9 percent from corporate taxes, 3.5 percent from excise taxes and 6.5 percent from other sources, according to the Office of Management and Budget.
The post-World War II historic average is that federal revenues equal about 18 percent of the U.S. gross domestic product, the broadest measure of annual economic production. In the year 2000, after the longest economic expansion in U.S. history, federal revenues equaled almost 21 percent of the economy. As a result, Washington cut taxes in 2001 and 2003.
Revenues plunged to around 15 percent of the economy in 2009 and 2010 amid the deep financial crisis, and dipped even further this year, to 14.4 percent, the lowest level since 1950.
Meanwhile, federal spending soared this year to 25.3 percent of the GDP, the highest since 1945, the last year of World War II.
The difference between spending and revenue yielded the federal budget deficit: $1.6 trillion this year, the highest ever.
Don't like that tax measure? Here's another:
Americans across all income classes paid lower effective tax rates in 2007, the last year of complete Internal Revenue Service data, than they did in 2000. The effective tax rate is what people pay after all exemptions and deductions. This is according to the most recent comprehensive look at taxes by the nonpartisan Congressional Budget Office.
The highest 20 percent of tax filers saw their total average federal effective tax rate fall from 28 percent in 2000 to 25.1 percent in 2007, according to the CBO. That's considerably lower than the current top marginal tax rate of 35 percent, and lower than the 27.5 percent effective rate in 1979, the first year that CBO data are available.
For the wealthiest 1 percent of filers, the effective tax rate fell from 33 percent in 2000 to 29.5 percent in 2007. The poorest 20 percent of filers saw their effective rate fall from 6.4 percent to 4 percent.
That's not to say the wealthy don't pay taxes — the top 1 percent paid 39.5 percent of all U.S. income taxes in 2007 — but taxes take a smaller share of their wealth today than historic post-World War II norms.
"They've been coming down for everybody, but we're taking more income at the top. Even if their rates are lower than they used to be, you are applying those lower rates to much larger income," said Roberton Williams, a senior fellow at the nonpartisan Tax Policy Center who spent 22 years as a CBO tax and income analyst. "The share of revenue being paid at the top end rises as their income rises too. But looking at the trend in effective rates, the rate has come down" for all income groups.
The CBO data are instructive because 2007 was the last year before the U.S. economy slipped into recession and nearly crashed. Comparing with 2000 is equally instructive because it's the final full year before the Bush-era tax cuts. They became the Obama tax cuts last December when he agreed to extend them until Dec. 31, 2012.
"It's hard to argue that we're overtaxed, and we're low by world standards," said David Wyss, the chief economist for the New York ratings agency Standard & Poor's.
Joseph Thorndike, a tax historian and visiting professor at the University of Virginia, concurred that Americans are "under-taxed relative to historical averages." However, he cautioned that what Americans pay in taxes can't be seen in isolation from what their government is spending.
"I think it's half of the discussion," he said. In his view, the high level of today's deficits and debt dictates two responses: Federal spending must fall and taxes must rise.
"The hard reality that people should be alerted to is these taxes are going up. They have fallen for most of us to varying degrees, but it is hard to imagine a scenario where they don't all go up."
Still doubtful?
There's yet another way to gauge the tax burden, using data from the Commerce Department's Bureau of Economic Analysis that go back to 1929. The bureau's data on personal income make it possible to guess roughly what portion of income goes to the taxman.
Under this calculation Americans on average saw 17.3 percent of their income go to federal taxes in 2009 and 2010. The last time the percentage was this low was 1975, and during the late 1960s.
If you exclude social insurance taxes on wages — for Medicare and Social Security — the share of taxes as a percentage of income drops to 9.4 percent in 2009 and 9.3 percent in 2010, the lowest since 1950.
The overall tax burden rose sharply in the late 1960s, as Americans began paying for Medicare, which was created in 1965. The burden rose again in 1983 with an increase in tax for Social Security. And tax revenue reached record levels in the late 1990s because the economy was booming and people moved up the tax ladder as they grew wealthier.
Whatever the facts, however, Americans think they're overtaxed, and polls show that they've thought that to be true for more than 50 years.
The American Enterprise Institute, a conservative research center, in April updated its report on "Public Opinion on Taxes: 1937 to Today."
Never have more than 3 percent of Americans thought their taxes were too low, the institute's poll research shows. And never have more than half of Americans considered their taxes "about right," although in 2003 that was the answer for exactly 50 percent of respondents to a Gallup poll.
For most of the period between 1980 and 2000, more than 60 percent of poll respondents thought their taxes were too high. This number dropped sharply beginning in 2003 — perhaps partly because tax rates also declined — falling to less than half of respondents for most years since then. It was 48 percent in a Gallup poll in April 2010.
Why do so many people think their taxes are too high, in good times and bad?
"I think people see a real disconnect between what they pay in and what they get out. We pay a lot for defense, yet we don't have a tangible sense of what we actually spend in Afghanistan or Iraq. Almost half of unemployment insurance recipients say they've never benefited from a government program," said Andrew Fieldhouse, an economist with the liberal Economic Policy Institute.McClatchy Washington Bureau Posted on Thu, May. 05, 2011 This fact may not sit... more-
- kvb1
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3 Ways Your Social Security Payments Are Already Being Cut
Policy experts have focused on alternative ways of eliminating Social Security’s 75-year financing gap, but lost in the debate is the fact that even under current law Social Security will provide less retirement income relative to previous earnings than it does today. Combine the already legislated reductions with potential cuts to close the financing gap, and Social Security may no longer be the mainstay of the retirement system for many people.
In 2002, the frequently quoted replacement rate for the “medium earner” who earned about $42,000 in today’s dollars and retired at age 65 was 41%; that is, Social Security benefits were equal to 41% of the individual’s previous earnings. Under current law, three factors will reduce this replacement rate: 1) the extension of the full retirement age; 2) the increase in Medicare premiums; and 3) the taxation of Social Security benefits.
1. The extension of the full retirement age
Under current law, the full retirement age is scheduled to increase from 65 for those reaching 62 in 2000 to 67 for people reaching age 62 in 2022. This increase is equivalent to an across-the-board benefit cut. For those who continue to retire at age 65, this cut takes the form of lower monthly benefits; for those who extend their work lives, it takes the form of fewer years of benefits. Thus, as reported in the Social Security Trustees Report, the replacement rate for the medium earner will drop from 41% to 36% for people who retire at age 65 in 2030.
2. The increase in Medicare premiums
The rising cost of Medicare will also affect future replacement rates. For the medium earner, Medicare premiums, which are automatically deducted from Social Security benefits, are scheduled to increase from 5% of benefits for someone retiring in 2002 to 12% for someone retiring in 2030.
3. The taxation of Social Security benefits
The taxation of Social Security benefits The third factor that will reduce Social Security benefits is the extent to which they are taxed under the personal income tax. Under current law, individuals with less than $25,000 and married couples with less than $32,000 of “combined income” do not have to pay taxes on their Social Security benefits. (Combined income is adjusted gross income as reported on tax forms in addition to nontaxable interest income and half of your Social Security benefits.) Above those thresholds, recipients must pay taxes on either 50% or 85% of their benefits. In 2002, only 20% of people receiving Social Security had to pay taxes on their benefits, so median earners typically did not pay any taxes. But the thresholds are not indexed for growth in average wages or even for inflation so, by 2030, as real benefits and other income increases, many medium earners will pay tax on half of their benefits.
The bottom line is that the net Social Security replacement rate for the medium earner will decline from 39% in 2002 to 29% in 2030 under current law (see Figure). Policymakers need to be aware of this fact when they consider how much of the 75–year financing gap should be closed by benefit cuts and how much by tax increases.
http://blogs.smartmoney.com/encore/2011/05/31/3-ways-your-social-security-payments-are-already-being-cut/?link=SM_hp_retirementPolicy experts have focused on alternative ways of eliminating Social Security’s... more-
- Radical_Centrist
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- 12 months ago
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Stop the Granny Bashing: Despite What You May Think, Our Seniors Are in Trouble
We must fight the deficit hysterics' relentless granny-bashing. Most people don't grasp that this group has already been hit hard by budget cuts and the recession.
“We lived very well,” said Norma Hair, 71, over a shaky table at the small pizzeria she runs in San Miguel de Allende, Mexico, with 68-year-old Carol Schmidt, her wife and partner of over 30 years. “In 1979, Carol was making $33,000 per year, which was a lot of money back then. Then I rose to the position of supervisor of accounting in a company. So, our combined income [in the early-1980s] was probably about $60,000.”
The two women are sharp, with bright, youthful eyes and a slightly wicked sense of humor. But their bodies betray their years. “The reason we have nothing,” says Hair, “is because we spent everything we could on medical to keep Carol alive when we were in the United States.” Both women suffer from chronic heart problems in addition to other ailments.
“Hospitals have to treat you for life-threatening illnesses,“ explains Hair. “[Carol] got two lifesaving surgeries for nothing. But it was getting harder and harder, so I decided that it was easier if we traveled to different cities.”
So they did. They sold their home, bought an RV and toured the nation's emergency rooms. “We were on the road for three and a half years,” says Schmidt, “just so we could go to a new ER each time and they wouldn't be suspicious -- oh, you're back again?"
The two have lived in Mexico since 2002, in part because of their love for the country, but also because they can live well on their combined income of $2,200 per month – Social Security, a little money from a self-published book and Schmidt's small pension. The health care is cheap, too – Schmidt had what she described as an “atrial fib situation” a few weeks before our interview, and an overnight stay at the hospital cost them $45. The ambulance ride required only a “donation,” and the women offered 200 pesos – about $18 dollars.
They've also got Medicare in the US to fall back on. “I had a serious operation in 2003, and I did go back,” says Schmidt. “My surgeon told me, 'I'm going to operate or you're going to die.'” Even inexpensive health care can add up when the procedures are complicated, and the two women couldn't afford to pay for the surgery out-of-pocket. In other words, Carol Schmidt owes her life to the relatively threadbare social safety-net that their country of birth provides.
They are two among millions of older American struggling to get by. “One out of three seniors in the United States is economically insecure,” Howard Bedlin of the National Council on Aging told journalist Paul Kleyman. “Yet the public perception is that seniors are doing fine and not struggling.”
The GOP may lose control of the House as a just reward for passing Paul Ryan's draconian budget – one that would replace the popular single-payer Medicare system with vouchers the elderly would then fork over to private insurance companies (assuming they'd cover them). It's somewhat of a political mystery why they'd touch that third rail given that the measure has no chances of passing the Democratic-controlled Senate, much less surviving Obama's veto pen. I've argued that it was the result of a party believing its own spin:
For years, the American Right has portrayed itself as representing “real America,” as Sarah Palin put it. They've long characterized the U.S. as a “center-right” nation full of people who hate “big government,” and they've portrayed popular social safety-net programs as somehow being foreign, if not unconstitutional signs of “creeping socialism.” Last year, when they swept into control of the House, they convinced themselves that the American public had enthusiastically handed them a mandate.
But on a more basic level, it's likely they thought they'd insulated themselves from the wrath of seniors – a major demographic for the GOP – by leaving Medicare intact for anyone over 55 years of age. The problem for Republicans is that older Americans know quite well how difficult it can be to live out one's golden years in the United States, and they have no interest in making it much harder for their children and grandchildren when they reach retirement age. This is where ideology – the Right's emphasis on individuals taking care of themselves – meets the real world, one in which people suffer from heart attacks and strokes and require thousands of dollars in prescription drugs to stay alive.
The National Council on Aging did a study earlier this year which found that most people don't grasp the tenuous situation many of our elderly find themselves in today. Among the findings, as summarized by Kleyman:
Less than one-third of Americans knew that low-income elders now pay 25 percent of their incomes for health care out-of-pocket, despite having Medicare.
Only one in six people understood that 40 percent of seniors recently faced such housing problems as being unable to pay their mortgages or living in dilapidated housing.
Only one in five knew that nearly 6 million older Americans are at risk of going hungry.
Fewer than one-fifth of those surveyed knew that average credit-card debt for seniors was $10,000.
Read the rest here
http://www.alternet.org/news/151094/stop_the_granny_bashing%3A_despite_what_you_may_think%2C_our_seniors_are_in_trouble?page=entireWe must fight the deficit hysterics' relentless granny-bashing. Most people... more-
- wanderingmissy
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- 12 months ago
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As debt limit nears, budget battlegets real
The 2012 budget debate begins in earnest Wednesday as House Republicans test the waters with deep cuts from state and local Homeland Security grants even as the Pentagon is promised a $17 billion increase over current spending.
The $40.6 billion Homeland measure — which went before the House Rules Committee on Tuesday evening — is the first of nine appropriations bills that the GOP hopes to push through the floor before August. But to get there, the leadership is relying on a “borrow-from-Peter-to-pay-Paul” scheme that back ends 70 percent of the proposed cuts so they fall on the last three of the 12 annual spending bills, making them virtually impossible to move until there is some compromise reached with the White House.
What’s evolving then this summer is a two-track budget process — each track affecting the other and converging in early August.
The Treasury has warned of a default in August unless its borrowing authority is expanded to cover the government’s obligations. And that’s also when the appropriations process will be near collapse absent a budget deal that makes it possible for Congress to complete all 12 bills and avert a repeat of the 2011 stalemate that nearly led to a government shutdown in April.
The first track — marked by public political threats and closed-door meetings — is already playing out with Vice President Joe Biden leading House-Senate deficit-reduction talks toward finding the votes for raising the debt ceiling.
The second — more incremental but also grittier — begins Wednesday and will consume much of the House’s floor schedule up to the summer recess — a major test of Republican discipline.
As if firing a starting gun — with blank cartridges — the House GOP staged a faux debt ceiling roll call Tuesday to illustrate that more must be done over the next two months to cut spending if the votes are to be there in August.
The proposed $2.4 trillion debt ceiling increase went down 97-318 with its chief sponsor, Ways and Means Committee Chairman Dave Camp (R-Mich.), setting the tone: “This vote will and must fail,” Camp told his colleagues.
Read more: http://www.politico.com/news/stories/0511/55987.html#ixzz1O20ohXjVThe 2012 budget debate begins in earnest Wednesday as House Republicans test the... more-
- letsliveinpeace
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- 12 months ago
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Washington Post Claims DNC Chair Lied about Ryan's Plan on Face the Nation
According to the Washington Post, Debbie Wasserman-Schultz, the head of the DNC, used mediscare lies on Face the Nation to downplay the already defeated Ryan budget. Why is she still talking about an old budget plan that has no chance to seethe light of day?
http://www.washingtonpost.com/blogs/fact-checker/post/wasserman-schultzs-bogus-claim-that-the-gop-medicare-plan-will-throw-you-to-the-wolves/2011/05/31/AG8y9lFH_blog.htmlAccording to the Washington Post, Debbie Wasserman-Schultz, the head of the DNC, used... more-
- samthesixth
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- 12 months ago
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House overwhelmingly passes 690 billion dollar defense bill
Oh but hey, how will we afford to rebuild Joplin Missouri? We're broke!-
- JanforGore
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- 1 year ago
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Paul Ryan's Medicare-Ending GOP Budget Dies In Senate With 5 Republican Defectors
Senate Democrats enthusiastically rejected the House’s budget blueprint Wednesday in a politically charged vote over the future of Medicare.
Democrats chose not to produce their own budget while bipartisan negotiations led by Vice President Joseph Biden continue and instead pivoted to a show-vote strategy, convinced that Republicans are hurting themselves by embracing the plan by House Budget Chairman Paul Ryan (R-Wis.) to overhaul Medicare.
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Final vote 40 - 57
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The Republican defectors were Sens. Scott Brown (R-MA), Olympia Snowe (R-ME), Susan Collins (R-ME), Lisa Murkowski (R-AK), and Rand Paul (R-KY). (Unlike the others, Paul voted against it because it wasn't radical enough.) Sens. Chuck Schumer (D-NY), Pat Roberts (R-KS), and Kay Bailey Hutchison (R-TX) did not vote.
http://thinkprogress.org/2011/05/25/senate-kills-ryan-plan/Senate Democrats enthusiastically rejected the House’s budget blueprint... more-
- Stoneyroad
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- 1 year ago
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House Members Pass Out Bonuses During Budget Crisis
The LA Times is reporting that House members from both parties gave out bonuses during the budget crisis. People who had lost re-election bids gave out more than those who won.
http://www.latimes.com/news/nationworld/nation/la-na-congress-bonus-20110525,0,7990945.story?track=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+latimes%2Fmostviewed+%28L.A.+Times+-+Most+Viewed+Stories%29The LA Times is reporting that House members from both parties gave out bonuses during... more-
- samthesixth
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FairyTales.pdf
https://www.doxmart.com/documents/4315-fairytalespdf-by-HweePin.Yeo.html This is a nice and interesting Fairy Tales classic by Charles Dickens. An all-time favorite for the kids who likes to read. Suitable for primary school children to improve their English.https://www.doxmart.com/documents/4315-fairytalespdf-by-HweePin.Yeo.html This is a... more-
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America's Fiscal Crisis: What States Can Do with Their Own Banks
“Ford to New York: Drop Dead,” said a famous headline in 1975. President Ford had declared flatly that he would veto any bill calling for “a federal bail-out of New York City.” What he proposed instead was legislation that would make it easier for the city to go bankrupt.
Now the Federal Treasury and Federal Reserve seem to be saying this to the states, which are slated to be the first ritual victims in the battle over the budget ceiling. On May 2, Treasury Secretary Timothy Geithner said that the Treasury would stop issuing special securities that help state and local governments pay for their debt. This was to be the first in a series of “extraordinary measures” taken by the Treasury to avoid default in the event that Congress failed to raise the debt ceiling on May 16. On May 13, the Secretary said these extraordinary measures had been set in motion.
The Federal Reserve, too, has declared that it cannot help the states with their budget problems -- although those problems were created by the profligate banks under the Fed’s purview. The Fed advanced $12.3 trillion in liquidity and short-term loans to bail out the financial sector from the 2008 banking collapse, 64 times the $191 billion required to balance the budgets of all 50 states. But Fed Chairman Ben Bernanke declared in January that the Fed could not make the same cheap credit lines available to state and local governments -- not because the Fed couldn’t find the money, but because it was not in the Fed’s legislative mandate.
The federal government can fix its own budget problems by raising its debt ceiling, and the too-big-to-fail banks have the federal government and Federal Reserve to fall back on. But these options are not available to state governments. Like New York City in 1975, many states are teetering on bankruptcy.
A Beacon in the Storm
Many states are in trouble, but not all. North Dakota has consistently boasted large surpluses, aided by a state-owned bank that is showing landmark profits. On April 20, the Bank of North Dakota (BND) reported profits for 2010 of $62 million, setting a record for the seventh straight year. The BND’s profits belong to the citizens and are produced without taxation.
Inspired by North Dakota’s example, twelve states have now introduced bills to form state-owned banks or to study their feasibility. Eight of these bills have been introduced just since January, including in Oregon, Washington State, Massachusetts, Arizona, Maryland, New Mexico, Maine and California. Illinois, Virginia, Hawaii and Louisiana introduced similar bills in 2010. For links, dates and text, see here.
The Center for State Innovation, based in Madison, Wisconsin, was commissioned to do detailed analyses for Washington and Oregon. Their conclusion was that a state-owned bank on the model of the Bank of North Dakota would have a substantial positive impact on employment, new lending, and government revenue in those states.
The BND partners with local banks in providing much-needed credit for local businesses and homeowners. It also helps with local government funding needs. When North Dakota went over-budget a few years ago, according to the bank’s president Eric Hardmeyer, the BND acted as a rainy day fund for the state; and when a North Dakota town suffered a massive flood, the BND provided emergency credit lines to the city. Having a cheap and readily available credit line with the state’s own bank reduces the need for massive rainy-day funds that are a waste of capital and are largely invested in out-of-state banks at very modest interest.
What States Can Do with Their Own Banks
North Dakota has a population that is less than 1/10th the size of Los Angeles. The BND produced $62 million in revenue last year and $2.2 billion in loans. Larger states could generate much more.
Banks create “bank credit” from capital and deposits, as explained here. The Bank of North Dakota has $2.7 billion in deposits, or $4000 per capita. The majority of these deposits are drawn from the state’s own revenues. The bank has nearly the same sum ($2.6 billion) in outstanding loans.
You can get a rough idea of what a state bank could do for your state, then, by multiplying the population by $4,000. California, for example, has 37 million people. If it had a state-owned bank that performed like the BND, it might amass $148 billion in deposits. This $148 billion could then generate $142 billion in credit for the state, assuming the bank could come up with $12 billion in capital to satisfy the 8% capital requirement imposed on banks.
Note that this capital would not be an expenditure. It would just be an investment; and like any capital investment, it would actually make money for the state. The Bank of North Dakota has had a return on equity in recent years of 25-26%, and a major portion of this has been returned to the state treasury. All states have massive rainy day funds of various sorts. Some of this money could simply be shifted into equity in the state’s own bank.
There are many options for using the state’s credit power, but here is one easy alternative that illustrates the cost-effectiveness of the approach. Assume California’s state-owned bank invested $142 billion in municipal bonds at 5% interest. This would give the state $7 billion annually in interest income. California has outstanding general obligation bonds and revenue bonds of $158 billion, and $70 billion goes for interest. If California had been funding its debt through its own bank for the last decade or two, it would have saved $70 billion on its bonded debt and would be that much richer today.
In a futile attempt to “balance the budget” in a shrinking economy, we have been pressured into a self-destructive economic model in which the only alternatives are said to be to slash services, raise taxes, and sell off public assets. These are not our only alternatives. What destroyed our local economies was not excess government spending but was a credit crisis on Wall Street. We can restore the prosperity we lost by restoring credit in the state; and we can do that by taking our deposits out of Wall Street banks and putting them in our own state-owned bank, to be leveraged into credit for local purposes. For more information, see here.
Supporting links at:
http://www.globalresearch.ca/index.php?context=va&aid=24855“Ford to New York: Drop Dead,” said a famous headline in 1975. President... more-
- Schnookums
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Paul Ryan Throws Grandma Off The Cliff (spoof)
The video below is a spoof but it has an element of truth to it. What Paul Ryan's Budget Plan does… It takes a look at YOU & ME and sees us as leaches, bloodsuckers who suck profit away from the rich.
Yepper, that's the GOP in a nutshell.
If only they could get rid of us bums, freeloaders, and scroungers so easy as by pushing us all over a cliff, they would do it like... yesterday. We work hard all our lives and some of us still wind up with low or hardly any income and because of that we are viewed, in the eyes of the filthy rich Republican... AS WORTHLESS! It's sad but true! thinkingblue
Paul Ryan Throws Grandma Off The Cliff (spoof)
AMERICA THE BEAUTIFUL... NOT WITHOUT MEDICARE! Today, The Agenda Project released a shocking new video dramatizing Paul Ryan's proposal to end Medicare. The video -- which shows an elderly woman getting thrown off a cliff -- asserts that the Ryan plan will hurt elderly Americans.
Paul Ryan's budget plan, named "The Path to Prosperity," is a ludicrous proposal to slash funding for almost every domestic service provided by the federal government EXCEPT for defense spending, meanwhile LOWERING taxes even further than the Bush tax cuts for the rich. Does that sound like a "balanced" budget to you? But Ryan's plan specifically targets Medicare. Right now, Medicare is a free-for-service program which itself pays for health care procedures for most beneficiaries. Under Ryan's plan, this program would be changed into a series of subsidies -- that is, you go and get your own insurance and then the government will "subsidize" (pay a little money) towards that privatized insurance. Now, that may not sound so bad if it weren't for the fact that Ryan's plan, consciously, DOES NOT take into account any sort of inflation whatsoever. Ever wonder why your healthcare exam increased in cost from the previous year? That's right, its called inflation and it is rampant in the healthcare industry. What that means is that Ryan's plan would eventually screw over the elderly by not keeping up with healthcare inflation -- meaning it pays less and less over time. Does this amount to any less than pitching our elderly off a cliff?
More than half of America lives on less than $28k a year! These individuals are NOT at fault for our current fiscal state. It is the duty of the politicians of this country to fix their mistakes -- a war that has cost trillions of dollars, billions spent on bailing out unregulated banks -- not to slide that cost onto our senior citizens.
Republicans want to privatize Medicare -- creating a potentially disastrous healthcare landscape, all while they continue to cut taxes for the rich and spend trillions of dollars in defense. That is not a "path to prosperity," that is a path to the rich getting richer, the poor getting sicker, and the country going down the tube. If America truly is beautiful, then we won't let Paul Ryan and the Republican House push our grandmothers over a cliff.
The video is already getting heavy media coverage, including postings on Alternet, which calls it "hitting the right wing where it hurts," Down with Tyranny, and Buzzflash.
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Now click the link below and watch Lawrence O'Donnell speak on the Republican's radical plan of STARVE THE BEAST and how this disgusting plan has worked. There are way too many ignorant voters in America and because of that America is going to fail as the BEACON OF FREEDOM. thinkingblue
Trickle-down theory in real life May 18: Last Word host Lawrence O’Donnell tracks how Ronald Reagan's "starve the beast" strategy is now working better than he ever imagined it would. http://www.bing.com/videos/watch/video/trickle-down-theory-in-real-life/6h17e1e?from=#The video below is a spoof but it has an element of truth to it. What Paul Ryan's... more-
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Sunset Boulevard’s Bureaucratic Medians
I just finished reading an article today in the West Portal Monthly about the medians on Sunset Boulevard. I knew something was up because I’ve noticed they’ve been tearing them up recently. Not all of them, but only a six block area of them. This got me wondering when I saw the new turf laid down and wondered home much that cost the taxpayers.I just finished reading an article today in the West Portal Monthly about the medians... more-
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Confidential Source in Obama Administration say Deficit is only $1.6 billion not $1.6 trillion
A confidential source in the Obama Administration says that the real Federal Budget Deficit is a minscule $1.6 Billion dollars not $1.6 trillion dollars as Senator Army from Texas stated several months ago. Now, this just shows you that Senator John Boehner is a fascist satanist. There is absolutely no reason to cut the budget at all. There is no reason to raise taxes either. Also, the attempt by Boehner and his henchmen to gut the Social Security Insurance Fund shows that Boehner is a satanic mafia scumbag. Boehner is a Russian Soviet Spy and in the Russian Mafia who is trying to rape America. Boehner should be put in jail where he belongs. By the way, Obama should spend more time on his golf game, they say he has a terrible right hook. In putt putt golf, this is a real detriment.A confidential source in the Obama Administration says that the real Federal Budget... more-
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