Tag: debt

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folly

Shocking Consequences

Greece Surprised, Greek, spending, crisis, debt, EU, collage, photomontage, Paul Jacob, http://cognitivebiasparade.prosite.com/, political, politics

Five years into (the latest phase of) the Greek debt crisis, a former bureaucrat who was unable to withdraw her money from an ATM when the government declared a bank holiday had this to say: “How can something like this happen without prior warning?”

It’s always a surprise — to some people — when blatant causes lead to blatant effects.

In the case of Greece, or any socialistic welfare state, it’s a surprise when the money finally runs out. So accustomed to binge behavior, enthusiasts for “what’s thine’s mine” and “spend now/​pay later” politics are nonplused when there’s nobody left to temporarily rescue them from the worst wealth-​destroying effects of all the productivity-​destroying causes.

The woman’s question has a short-​term answer and a long-​term answer.

The first is: what did you expect? The point of suspending access to bank accounts without warning is to stop holders draining banks of the last of the euro cash, supply of which the Greek government cannot expand unilaterally. Warning would have made the suspension pointless.

The second answer is: what did you expect? That is, haven’t you been paying attention for the last several decades?

By the time you read these words, Greece and the European governments may have come up with another patchwork deal for a loan with another series of deadlines. Or maybe Greece will have left the EU or at least the euro and returned to a (now massively inflated) drachma. Greek account-​holders may or may not get another rickety, temporary reprieve.

But what can’t go on forever, won’t.

So it won’t.

Count on it, ma’am.

This is Common Sense. I’m Paul Jacob.

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Greece Surprised!

 

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national politics & policies too much government

The State of the Union of the States

Politicians know all about lying with statistics. But it’s more effective to lie with anecdotes — using stories to ignore the biggest Statistic in the Room.

President Barack Obama delivered his constitutionally obligatory State of the Union address to Congress last night. He told a lot of stories, and most of them may have been mostly true, for all I know. But what we do know for sure is that these stories distracted us from the one statistic that matters.

You know, to the actual state of the union.

Which is not sound.

The rising level of debt is putting the finances of the union in grave jeopardy. Politicians have promised too much — delivered too much — courtesy of borrowing from future tax revenues. The current debt is larger than the nation’s annual GDP. (That’s the stat that matters.) The federal government owes more than all of us, together, earn in a year.

This, of course, is unsustainable.

And yet the president is doing precious little to curb this unhappy meeting with destiny. Deficits are down a tad. He took credit for that. He didn’t credit the Republicans, his recalcitrant enemies.

But, in a State of the Union address filled with programs to expand and goals to “guarantee,” he didn’t offer to cut anything, did he? (Other than promise, yet again, to close Guantanamo.)

Indeed, in Obama’s most recent bickering “negotiation” with the House had his bid for extending unemployment benefits met with an ask price of an offsetting cut elsewhere in the budget. The prez balked.

Our “state”? In a deep debt hole, oblivious, and still digging.

This is Common Sense. I’m Paul Jacob.

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Townhall: The Politic Path of Least Resistance

The looming debt load will some day come a‑crashing. But politicians are doing nothing — or nest to nothing — to stop the growth of the debt, and thus keep on piling on the extent and severity of debt.

So click on over to Townhall​.com, to read this weekend’s column by Yours Truly, the purveyor of Common Sense, and then come back here for further reading.

Categories
national politics & policies responsibility too much government

Death by a Thousand Non-Cuts

As I write this, the United States of America is $16,275,179,205,442 in debt. By the time you read this, we’ll have piled up millions more.

Much debt is of recent vintage. When George W. Bush became president in 2000, the national red ink totaled $5.7 trillion. In eight years, Dubya nearly doubled it to $10.6 trillion. Since his 2008 election, President Obama has far outpaced Bush, sinking us another $5.3 trillion in debt in just half Bush’s time.

And, by continuing to run yearly deficits of over $1 trillion, we’re digging the hole deeper at top speed.

For all the hysteria over draconian cuts, forced at the so-​called fiscal cliff, those somewhat slippery savings would at best amount to about 10 percent of our yearly deficit, leaving us spending 9/​10ths of a trillion dollars we don’t have.

In the “other cuts” department, the Obama Administration had been supporting paltry reductions to federal Medicaid spending of $17.6 billion over ten years (that’s less than $2 billion a year), but just flipped its position. Why? State governors are deciding if they can afford to take part in Obamacare’s massive Medicaid expansion to cover those earning up to 133 percent of the poverty line.

Not content to spend recklessly alone, the Feds picks up the entire tab of new Medicare recipients’ first three years. After that, Washington pays 90 percent and the states pay 10.

States are wondering how they’ll come up with that additional 10 percent — seven governors have already declined to join in the spending program. No one in Washington has given a second thought to paying the 90 percent.

They figure they can always raise taxes.

This is Common Sense. I’m Paul Jacob.

Categories
national politics & policies too much government

Slowest Spending in Decades?

Government tends to grow in spurts, with budgets not decreasing after each spurt. This “ratchet effect” of fast growth then tapering off amounts to a long-​term trend: growth.

You’ve probably seen Rex Nutting’s MarketWatch squib, the subject of many a Tweet and Facebook post. Entitled “Obama spending binge never happened,” it begins, “Of all the falsehoods told about President Barack Obama, the biggest whopper is the one about his reckless spending spree.” Nutting reframes the issue as one of the rate of spending growth … just as Republican apologists did in the ’80s, even though spending under Ronald Reagan’s first term grew at a whopping 8.7 percent — a bigger rate increase than Obama’s. Nutting entitles his graph comparing administrations’ spending growth rates “Slowest spending in decades,” indicating not how much Obama has been spending over revenue, but year-​to-​year rates of increase.Barack Obama, Spree Spender

The prez gets a bad rap.

Well, yes and no. The graph should make party-​loyal Republicans and Bush admirers cringe with shame. Sure. But Obama and the current Congress are still spending. Hugely. And rapidly — those dollars fly out the door!

Further, by maintaining high annual deficits, Obama has increased the federal debt so that this year it has shot above 100 percent of current Gross Domestic Product, a first for my lifetime.

Obama can be blamed for not doing the decent thing after the horrible six years of united government under the Republicans, he didn’t reduce spending.

In other words, he’s no Warren G. Harding, who presided over a huge contraction of government spending, thereby helping usher in a quick recovery from the post-​Great War bust.

We could use a man like Warren Harding again.

This is Common Sense. I’m Paul Jacob.

Categories
too much government

Down and Out and California

Barring drastic action, the Golden State will run out of cash in March.

There is no provision in the Constitution for dealing with a bankrupt state. But then, there’s nothing explicit dealing with federal bankruptcy, either. The founding fathers didn’t expect their republic to permanently accumulate debt. Indeed, Thomas Jefferson wished to foreswear all sovereign debt. He considered the practice parasitic.California's Direction

Our leaders are supposed to run our governments so to avoid debt crises.

But, because politicians do just the opposite, they run into cash flow crunches. Last year, California’s statesmen borrowed $5.4 billion to cover the lean time before Spring’s tax revenues flowed in. They had figured they would be good through June, but miscalculated. Now they’re scrambling for an extra $3.3 billion.

Time to fudge the books! Pay late. Not answer the phone or respond to dunning notices.

Of course, the real problem is over-​spending. California’s politicians spend too much.

Alas, it doesn’t look like they are about to reform.

Gov. Jerry Brown still pushes the huge “investment” of high-​speed rail, for the grandest example. The project’s supporters have over-​estimated ridership, underestimated costs (the most realistic official accounting now puts the system at $98 billion), and have been forced to restrict the extent of the line, excluding both San Diego and the state capital. Brown’s response? Making up for cost overruns by hijacking funds from the state’s “cap-​and-​trade” (the nation’s only carbon-​footprint-​based) tax.

Ah, politicians: Spend, spend, spend, even as the institutions they are responsible for lurch into insolvency.

This is Common Sense. I’m Paul Jacob.