What Does It Mean?

"When I use a word,' Humpty Dumpty said, in rather a scornful tone, 'it means just what I choose it to mean — neither more nor less.' – Humpty Dumpty, Through the Looking Glass by Lewis Carroll

All this time I thought we were living, well, on earth. Apparently, I was wrong. I thought that when the President and Congress said that they were going to reduce the debt, they meant they would make it smaller. That is how my several dictionaries define ‘reduce,’ to make something smaller. At least, that is what it says on this side of the mirror. But, apparently Washington DC is not on this side of the mirror. Instead, we have something else again.

Let me explain.

As of a week ago, the US had an official debt of $14.3 trillion dollars. Some very ‘clever’ economists in Washington had forecasted that by 2021 that debt would grow to some $26.4 trillion. Let’s be clear, this is over the next ten years – it hasn’t happened yet – it’s in the future. Then, a great many people stood around and argued for several weeks and by the time all was said and done, they said they had reduced the debt by more than $2 trillion.

What had they done? Well, in fact, what they had done is to reduce that number – the $26.4 trillion – to $24.3 trillion.

That’s what just happened. Our government (they work for us, not the other way around) – took in about $2.3 trillion in revenue last year and spent $3.7 trillion, a $1.4 trillion difference. That difference, and the debt from previous administrations stretching back into the mists of time, now total $14.3 trillion. The rational mind would suggest that this has to stop, and soon. But our government doesn’t quite see it that way. In fact, the current Congressional Budget Office (CBO) forecast yearly revenues to rise to $5 trillion by 2021, but yearly expenses to rise to $5.7 trillion that same year, this before the big ‘deal’ of the past weekend. Now, the White House proudly tells us that they have reduced the debt by $2.1 trillion, reducing NOT the $14.3 trillion, but reducing the total deficit expected to accumulate by 2021 to $24.3 trillion from the previous estimate of $26.4 trillion – a “reduction” of $2.1 trillion. We are going to continue to add debt at a rate of roughly $1 trillion per year, down from $1.2 trillion per year and we are supposed to thank the folks in Washington and celebrate their hard work. This is as sound fiscally as rewarding a child who promises not to overspend as much next year as this year.

Will Rogers once observed that: “When a dog gets a bone, he doesn’t go out and make a down-payment on a bigger bone, he buries the one he’s got.” Our elected representatives in Washington, led by the President, clearly have considerably less sense then the average dog. Anyone who can define a $10 trillion debt increase over the next ten years, as opposed to a $12 trillion increase, as a ‘reduction,’ is either a snake-oil salesman of the highest order - or stupid. Either way, they shouldn’t be in office and neither should their aides and henchmen.

For those of you who want to read on, here is the problem in relative terms: Let’s pretend you have $143,000 in debt. The bank is a bit concerned because last year you only managed to bring home $23,000 and yet you spent $36,000. (If these numbers look vaguely familiar, they should; multiply each 100 million and they are the relevant numbers for the US Government – our government.) The Bank sends around an accountant and financial planner and they ask to see your financial plans for the next ten years. You pull out your books and show them that by 2021 you intend to be bringing in about $50,000 a year and spending $57,000 a year, by which time your debt will have risen to ‘only’ $264,000. The accountant and the financial planner beat their breasts and say that doom is upon you. You struggle for weeks.

In the end, you develop a plan that trims your spending from $57,000 per year to roughly $53,000 per year by 2021, and your total debt to $243,000. In other words, your spending, currently at $36,000 per year, will only increase $1700 per year rather than $2100 dollars per year, while your income will increase $2700 per year. You all celebrate.

Huh?

“If Stupidity got us into this mess, then why can't it get us out?” Will Rogers

Throw the Bums Out

Well, we now have a new debt ceiling. I am told by the pundits that I am supposed to feel good about this, that we have avoided a possible catastrophe and that we are now on our way to some sort of economic/fiscal/monetary salvation. Or some such thing.

That is, of course, nonsense.

Because no one seems to be raising the real issue, let’s review.

1) The US debt is not, strictly speaking $14.5 trillion (or, more poignantly $14,500,000,000,000). Debt is defined as an obligation to pay. What is the total obligation the US government now has to pay, under the law? The answer, for those who are interested (which should be all of us), is roughly $120 trillion (I’ll skip writing it out). That is the total amount of money that the US Government has agreed to pay out via various retirement plans, Social Security, Medicare, Medicaid, Unemployment Compensation, Aid to Financially Dependent Children and dozens of other such entitlement programs. The current population of the US – 309 million – will receive $120 trillion in payouts over the course of their lives. (More, of course, will be paid out as the population rises and as inflation moves Congress to adjust entitlement payouts. About that in a minute.)

2) Despite all the noise from Washington, very little of what just took place changes that huge number. All of that money must come, eventually, from the private sector. (Government employees may pay into Social Security, but they do so with money that they received via taxes on the real economy.) And the private sector has only 140 million workers. That translates into a great deal of money per worker that must be paid into the coffers of each of these programs over the course of the next 40 years or in some other way set aside to make those payments. (The average workers ‘earning period.’ The fact that many of our fellow 309 million citizens have either already retired or have yet to begin working all balances out in the averages. Suffice it to say that among those 309 million, they will generate roughly 5.6 billion man-years of labor.) How much? Roughly $23,000 per worker per year. For the nation, that means $3.2 trillion. And that does not pay one dime in interest on borrowed money, nothing to national security, nothing to pay any government employees (military or otherwise), nothing to pay for any of the other discretionary spending.

In 2010 the US collected $2.2 trillion and spent $3.5 trillion.

Discretionary spending (i.e., the non-entitlement programs such as those discussed above) includes roughly $800 billion for defense and other national security programs, nearly $500 billion for other discretionary spending (from Department of Commerce and Department of Agriculture, to the Departments of Justice, Labor, etc.) We will also spend a bit more than $200 billion on servicing the debt this year.

3) What has just happened in Washington is that the government has just been given approval to raise another $2 trillion in debt. Why is that? Because they can’t figure out how to live within their means – our means. Now, it says in the paper that they managed all sorts of cuts. Maybe. But the numbers we are talking about above – the trillions of dollars flowing out - are taking place every year. And the agreement just signed manages to find $2 trillion dollars in savings over ten years. We are told that $900 billion in cuts will take place ‘immediately.’ Does that mean that the 2012 budget will be $3.6 trillion? No, not at all. In fact, next year’s discretionary budget will be cut only $22 billion, while our total debt will climb roughly another trillion dollars. In fact, over the next ten years US debt will climb – under this new plan – to $22 trillion. The savings come about because the projected numbers would have had the US debt reach 24.6 trillion in the same time frame. So much for savings.

Nor does this account for the simple truth that the next Congress need not be bound by this bill. Nor does it account for provisions in the law that already provide for automatic increases in various entitlement programs as inflation increases. And most economists are fairly certain that inflation is going to climb significantly over the next few years as a result of the current deficit spending and monetary policy.

4) What Congress and the President did over the last few days is not exactly equivalent to rearranging the deck chairs on the TITANIC, as this debate, if continued vigorously, might indeed yield real results. But, whether it does is doubtful. And the reason for that is simply put: the wrong people are in office. Make no mistake, the system is NOT broken. The Constitution works just fine. What is happening is that Congress and the White House and the huge, sprawling bureaucracy that is the Federal Government simply is not working for the citizens, they are not doing their jobs.

The President says ‘Washington has the ability to focus when there is a deadline.’ That is nonsense. Washington has been unable to pass a real budget since the President took office. The budget is what Congress and the White House are supposed to do. It is the day to day mechanism for actually making the government operate. No final budget was passed in 2010 or 2011. It is looking increasingly like one will not pass in 2012. The President will no doubt rant and rave at Congress and the Republican House that they blocked it. The fact is that the President had an overwhelming majority in both Houses of Congress for two years and could not pass a budget.

The White House, the Congress, and the vast bureaucracy that surrounds the daily processes of government are no longer working. It is time for them to go. The nation is not benefiting from the idiotic rantings of the White House and various Congressmen as well as senior bureaucrats. And while there are many who often say that ‘there are many who are working hard and they are doing important work,’ the answer is that, in fact, the performance of the Federal Government, to include large elements of the Department of Defense (and despite the great job of the troops in the field), is so abysmal that the only answer is to start anew. In short, it is time to vote the bums out.

To those who respond that these acts would be irresponsible, that it would leave us without anyone who knows how to run the government or to carry out the nation’s laws, my answer is simple:

You – the incumbents – have already demonstrated that you do not know how to run the country or how to carry out the nation’s founding laws – the Constitution.

You have spent us into ruin.

You have constructed a tangle of laws and regulations that are so confusing and restricting that only those who operate within the confines of certain key, well connected ‘communities’ can benefit, while everyone else pays.

You allowed false and twisted economic policies to be enacted that ruined many an average American while a small number of insiders, all of whom have deep ties to various government bodies and key political figures, massively benefited, often with funds derived from taxpayers.

You have failed to act on your primary responsibilities – passing a budget – while engaging in seemingly endless inanities for your own self-aggrandizement.

You hold ‘high theater’ with the nation’s economy yet in the end devise no plan to reduce our debt, curtail government spending or address our economic problems.

In short, you the ruling “elite” have shown yourself unworthy of our support or our trust. It is time for you to go.

Herewith a recommendation to all my fellow citizens:

Vote against every incumbent.

Vote only for those who will publicly swear on a bible and sign an oath that they will be fiscally responsible.

Demand the resignation of every appointee, and every SES in the government. In order to be fair, the same must be demanded of the Defense Department: every flag officer should resign.

Demand the resignation of every Federal Judge. Those that will not resign should be impeached by Congress.

Demand that the permanent staffs on Capital Hill be wiped clean.