Thursday, February 26, 2009
I Thought Of A Way To Explain It
It is not Obama that is such a fool; it is the electorate that are fools for believing him. And the electorate believes because it wants to believe, not because there is anything credible in what we are hearing. And yes, those of us who voted for Obama are stupid. What we saw is what we got.
Regardless of the dysfunctional passivity of the electorate, our eviction notices are already in the mail. What we heard the other night was just another episode of political Fantasy Island. The man can talk all he wants about $2,500 tuition tax credits; the reality is that the US will be cutting social welfare spending for such nonessentials (not already promised) rather substantially over the coming years, and the US will also be raising taxes heftily on everyone from the lower middle class on up.
It is not that Obama created this problem. Any administration would inherit the same situation. The retirement bulge and steadily expanding entitlement programs have created a massive budget deficit that is baked in and will require massive cuts in government spending for most other purposes.
However Obama does seem uniquely gifted at proposing new, expansive spending programs without even worrying about the already-allocated spending for which we cannot pay. Instead, he proposes these new programs, adds some taxes which don't even cover the new proposed programs, and then throws flour on his face, staggers out of the kitchen with this plate of budgetary Rice Crispy treats, and gives a speech about it. The US public is really enjoying the sugar rush, but it isn't going to last very long.
The numbers behind the, ah, "budget" can be read here. Start with the tables (22 page pdf file). Go to page 5 and look at that chart. The first section is the baseline projection of outlays. The huge budget item (a fact that Democrats don't want to see) is the social welfare spending. That includes Social Security, Medicare, Medicaid, and all other welfare programs such as food stamps, other medical grants, and welfare.
In 2008, the outlays for these programs ALONE are 2.9 trillion. Yes, that is TRILLION. In 2018 the projected outlays for just these programs are just under 5 trillion. Current dollar US GDP as of Q4 2008 was estimated as 14.26 trillion. Thus, we are spending slightly over 20% of GDP on just the entitlement programs. That doesn't include defense, and it doesn't include interest on the deficit.
In 2008, interest on the deficit is listed as 253 billion. In 2018, interest on the deficit is expected to cost 651 billion.
In 2008, the deficit was 459 billion. Now we go to table 1 in the pdf, which shows the proposed spending. The proposed 2009 deficit is 1.7 trillion. In 2010 the proposed deficit is 1.1 trillion.
Now, we can't do this, but a whole lot of people think we can. The reason they think we can is that they think we can tax the rich. I have been hanging out on Democratic Underground, and they all believe we can continue to live the fantasy by taxing the rich. Some are willing to go up to 90% top tax rate, which wouldn't leave the billionaires enough to pay their state, local and property taxes. So let's adopt the DU mindset. We are going to essentially confiscate all the money of our rich people.
Let's just say we are going to use that money to pay the interest on our national debt so that we can keep borrowing. In other words, we won't raise taxes on the rich to pay for our social spending. We'll just raise taxes to pay the interest on our growing national debt so that we can keep borrowing.
So let's go to Fortune's 2008 list of the world's billionaires. You can sort this by country of residence. The US resident billionaires start on page 27. Mind you, these folks are not as wealthy now, but let's play pretend, shall we? It seems to be the only game in town, at least in DC.
So here they are. We'll start by covering 2008's deficit, which is 253 billion. And we'll do it by getting all their money:
|1||Warren Buffett||United States||77||62.0||United States|
|3||William Gates III||United States||52||58.0||United States|
|12||Sheldon Adelson||United States||74||26.0||United States|
|14||Lawrence Ellison||United States||63||25.0||United States|
|26||Christy Walton & family||United States||53||19.2||United States|
|26||S Robson Walton||United States||64||19.2||United States|
|26||Jim Walton||United States||60||19.2||United States|
|29||Alice Walton||United States||58||19.0||United States|
|32||Sergey Brin||United States||34||18.7||United States|
|33||Larry Page||United States||35||18.6||United States|
|37||Charles Koch||United States||72||17.0||United States|
|37||David Koch||United States||67||17.0||United|
Gee! We only had to confiscate money through Alice Walton to cover the 253 billion! There's plenty more left! We've still got pages and pages of billionaires to go. Of course, since we cleaned out ol' Buffet, Gates, and the WalMart fortune, we're already getting into diminishing returns.
Let's skip the next few years. Let's just worry about covering the estimated 383 billion in interest on the deficit a few years from now (2013). From here on, we can just eyeball it. The next four entries on the list have net worths varying between the high 18s and 17, so we'll call it 17.5 each. These four net us 70 billion. Only 310 billion more to go. Working our way down the list, we find the next 3 entries have 16 billion a piece. We'll call it 16.2, so that's 48.5 billion. Only 260 billion to go! Between Ballmer and Johnson, we come up with another 30 billion. 230 billion more to go. Now these chintzy tax cheats are getting to us. The next 5 of these parasites should have worked harder; each one of them is only good for 14 billion. Still, that's another 70 billion. 160 billion left over.
Here is where the future stops being so bright that Obama and Pelosi have to wear shades. The next 15 entries on the list average out at under 10 billion, so we still have 10 billion to cover. Now we go to the next page, discovering to our sorrow that those crappy, lazy, useless idle rich average out around 6 billion each. So we clip off the top one.
But here our worries grow as the bag per billionaire drops astonishing. Now we've got to settle down to the hard work of figuring out how to cover the 2013 interest payment due on the deficit of 447 billion.
The remaining 24 billionaires on that page are only going to yield 144 billion.
Next page: Fortunately the net worths are beginning to decline more slowly. The 25 on this page eyeball at a median of about 4.4. 4.4 * 25 = 110 billion. I've still got 193 billion more to go. Page 31. Median about 3.5 billion. 25 * 3.5 billion = 87.5. 105.5 billion still to go. This is worse then selling Girl Scout cookies as a kid.
Next page (32). I'll call it a median of 3.1. 3.1 * 25 = 77.5. 28 billion left. Next page - 2.65 per billionaire for a haul of 66.5 billion. Made it! And I have about 38 billion left for 2014's interest payment, which is estimated to be 495 billion. We'll call that 450 billion, but at a median of 1.5 billion each, it takes 300 more billionaires, and now I run out of billionaires. I only had 12 more pages left. I pretty much can cover the 2014 interest payment, but there is nothing left over to cover the 539 billion I owe in 2015.
Unfortunately, billionaires do not grow like kudzu. Once you've cleaned them out, you have to wait around a generation for a new crop to sprout.
So this is why I'm laughing so hard. You can laugh with me, unless you are a billionaire. It is over. The jig is up. If we don't pay the interest we can't borrow.
The world has changed. Voters have no excuse for electing Obama and no excuse for applauding him. The man is just the man; a population of people demanding a dream voted for a dreamer.
I now quote from the Shrink's post:
There is a particular type of patient I often see in the clinic who has arrived there in a particular, predictable way. This patient is middle class and has a history of full time employment but has recently fallen on hard times. He, or she, arrives at the clinic in a state of despair, on the verge of losing their apartments, in serious financial difficulty. Their problems are identified as beginning when they lost their job yet upon further investigation, that is hardly the fill story. Very often they recognized their jobs were at risk long before arriving at the clinic yet could not overcome a type of passivity that led them to behave as if nothing was ever going to change. They could not or would not change their behavior even when their behavior was no longer functional or adaptive. For example, they could see that their company was cutting back, that their jobs were insecure, yet continued going into the office everyday, making only the most vague and cursory attempts to look for alternative work. They felt a lassitude that is inadequately diagnosed as depression but is more correctly thought of as a dysfunctional passivity (which can be attended by depression, of course.) By the time they arrive at the clinic, they would typically be 6-12 months out of work, with no insurance, and thoroughly defeated. Although they are treated as if they are depressed and often gain some symptomatic relief, in reality their dysfunction started well before their depressive symptoms appeared; their problems began when they assumed that nothing would ever change in their lives even as they could see the writing on the wall.He is a polite man. Too polite. This is us. We are broke, we are the dysfunctional passives.
The intelligent amongst us will hunker down and prepare for the financial axe that is going to fall. There is no way out of this but to tighten our belts. Health care will be rationed. Government subsidies for the middle class must be cut. Taxes for about the top 60% must be raised.
We don't have any time or money for Obama's wonderful plans. He may well pass them, but we won't be able to actually pay for them. It is over.
The much-maligned George W. Bush stumped the country trying to get enough support from the voters to force Congress to confront reality. He couldn't get it. George W. Bush was a better president than this country deserved. That is why he was hated. He told the truth.
Obama is adored because he doesn't tell the truth. The proof is that he is following every Bush policy for which Bush was maligned, and yet that does not change the adoration.
The funniest part of the budget proposal shown is that GDP hardly falls from 2008 to 2009 and is projected to grow in 2010. That is also a fantasy.