And So It Begins…..
“And we cannot sit idly by while both political parties lie about:
Cuts that are not actually cuts. Spending less than you intended to, but more than last year, is not a “cut.” This is like a 400lb man going to the Chinese Buffet every day and eating five plates instead of six, claiming that he’s “dieting.” Ok, in a year he’ll weigh 500lbs instead of 600, but that’s not a “cut.”
“Stimulus” that is nothing more than demand replacement. We’re now up to more than 12% of GDP. This is not a “bridge” to tide us over either – we’ve been doing it for three straight years and will be four by the end of the year. This is a major problem as once this becomes part of what the economy “expects” it is no longer stimulative and results in people doing less work and expecting more “cheese.”
The promise to reduce spending (and raise taxes) “tomorrow” and “on someone else.” There’s a 30 year history on this – spending decreases come never, tax increases usually do occur. But this time tax decreases that were allegedly “temporary” (e.g. the Bush Tax cuts) wind up permanent (even among those who say they won’t support it, ala Democrats) and they even get added to – such as the FICA tax reduction! “
“Some more facts – and you’re not going to like any of them:
Within hours of the passage of the bill more than half of the authorized increase in the debt ceiling (the first tranch) was blown and gone as Geithner unwound all the screwball theft games he had played for the previous two months. More than $200 billion instantly vanished. The scale and price of his deception was instantly laid bare upon the table, as was our fiscal trajectory, since June is one of the heavy tax receipt months (estimated taxes.)
In calendar year 2007 GDP was $14.3 trillion, more or less. The actual borrowing increase was $548 billion. The Federal budget was $2.73 trillion. To balance our fiscal house we would have had to cut 20% of the Federal government – in 2007.
In the last year GDP was $14.8 trillion, more or less. The actual borrowing increase was $1,700 billion. The Federal budget (which was never actually passed and signed, a rank violation of Constitutional requirements) was $3.8 trillion. To balance our fiscal house we would have had to cut 45% of the Federal government – more than double the 2007 figure.
To bring the economy into balance debt must not grow faster than GDP. In a time when GDP is shrinking debt must shrink faster, not grow faster. This is basic exponential mathematics. 15 minutes with Excel will prove this to anyone’s satisfaction. This has been the foundation of my perspective on the economy and our errors since I started pontificating in public on it in the 1990s while running MCSNet, and has been the foundation of The Ticker as well. Twice in the last month or so I have posted links to Google spreadsheets for those too lazy to do it themselves, making it even easier to visualize what I’ve been talking about. Anyone arguing otherwise must be able to demonstrate why the laws of mathematics do not apply and prove they are correct, and if they’re unable to they must be ejected from the debate on the path we take as a nation.”
Via Market Ticker