Circus Maximus vs Sequester Minimus (Addended)

George Rebane

[This is the transcript of my KVMR commentary broadcast on 1 March 2013.]

It’s hard to think good thoughts about what is going on in Washington and the competency of our government.  We seem to have entered into an endless sequence of crises, questionable appointments, and scandals which literally have no end – they now stretch into the future as far as the eye can see, and then there are still more out there waiting that we can’t see.  As a political junkie even I am overwhelmed.

We just concluded cabinet appointments that made it not because of the candidates’ sterling resumes – they are arguably awful - but simply because of party loyalty.  The guy for Secretary of Defense was at a loss to explain anything that was relevant to his office, and the Secretary of the Treasury candidate told the Senate that he didn’t really know what he did in private practice, why he got those big million dollar bonuses, and what experience recommends him for the job.  Nevertheless, these two are now the worthies one of whom will maintain our national security in the face of shrinking defense budgets, and the other one will be in charge of keeping China lending us money they will never see repaid.

And the borrowing will go on forever because we will never bring our federal budget under control – all budgets and obligations call for every aspect of spending to increase indefinitely.  Washington’s claim of reducing spending is a very big fairy tale told repeatedly to a very large population of faithful morons.  The rule to spending cuts is simple – publicly plan to spend at some arbitrary and prodigious rate, then with much breast beating reduce the planned outlays to their usual budget busting levels, and then credit the difference to your having reduced spending – the sheeple will never know.  Meanwhile, the actual dollar amounts of spending just keep roaring upward year after year.

Consider that the size of government spending has doubled in the last decade, and will do so again in the next ten years along with our unpayable debt.  In return we are asked to believe all that is the result of Washington’s prudent spending cuts.  And so we come to today’s deadline to implement the now infamous ‘sequester’.  I love the misuse of that word.  Those who read know that to sequester something is to set it aside and make it available for later use.  But Washington’s sequester is a bit more draconian – it means to do away with completely.  Actually I like their definition, but wish they would have picked a more appropriate word.

All of us have listened to the way that the sequester is supposed to be implemented – namely, with across the board cuts.  Upon drafting President Obama’s recommendation into law, everyone knew that this was a ‘beyond stupid’ way to do it, but it would make the $85B sliver of a $3.8T federal budget wreak maximum havoc.   So everyone signed on believing that it would never come to pass, everyone thought our vaunted federal government would never be that dysfunctional.  Well, with the exception of President Obama, everyone was wrong – Washington has been and continues to be unbelievably broken.

President Obama knew exactly how to bring the crisis to a head – at the proper time when agreement might have been possible, and after the Democrats got their tax increase on the rich (and the middle class), Obama then ‘moved the goal posts’ and demanded that any new agreement must also include new taxes.  Oh yes, and in case you didn’t catch it, he also lied and said that the sequester was never his idea in the first place.

When renowned journalist Bob Woodward went on national TV and pointed out what the President had done, he was taken to the woodshed by the administration.  And after being yelled at for a good part of an hour, this former darling of progressives was advised “you will regret doing this.”  The White House quickly denied ever having threatened Woodward, and promised never to do it again.

The bottom line of this kabuki dance on spending is that our growing national debt burden is taking us down as a nation in more ways than we can count.  Thomas Jefferson advised us early on that there “does not exist an engine so corruptive of the government and demoralizing of the nation as a public debt.  It will bring on us more ruin at home than all the enemies from abroad …”

My name is Rebane, and I expand on this and related themes on georgerebane.com where the transcript of this commentary is posted with relevant links, and where such issues are debated extensively.  However these views are not necessarily shared by KVMR.  Thank you for listening.

[Addendum]

Comments

[Ben Emery]

A manufactured crisis to divide the electorate once again but in the long run austerity wins the day. It is circus and "We The People" are the losers. Can anyone name a nation that has cut its way to prosperity?

[Bill Tozer]

Another fine commentary by Dr. Rebane. How about the guy that is up for the CIA Director's job? He ran political flack for the Administration concerning the Libyan Consulate attack and even crafted the talking points that carefully shielded the Administration's role before the election. Unfit for CIA Director at any speed, but he can pose as the entire White House spin machine family all by himself.

As far a the sequester goes, I came to the conclusion that there are no plans from the White House or Senate to ever ever ever balance the budget or reduce one penny from the debt. Obama promised his one time trillion dollar additional expenditures (just one time, lol) and now another one time increase, and another and so on and so on. We dropped 850 billion in the Stimulius when the budget was 1.6 trillion. Then, more and more added to the one time budget increase the following year and the next year. It has jumped to 3.4 trillion, then 3.6 trillion, and so on and so one, different strokes for different folks.

All this hoopla in the MSM is a bunch of hooey. What, 40-80 billion in spending reduction is going to sink the ship?? That is less than 1/10th the Stimuli in your eye and 40-80 billion ain't a drop in bucket. Medicare and Medicaid is off limits. If any CEO declared cutting 2% off overhead is going shutter the factory doors, that CEO would be run out of town by the Board of Directors and never work in any town again. He would be an infamous laughing stock. What a bunch of bully pucky.

[George Rebane]

BenE 858pm - Just for openers Sweden, Finland, Estonia, and Germany. And the US in 1946 when Truman cut most of FDR's New Deal programs, to get us out of the post-war recession. The better question is 'can anyone name a country that has spent itself to prosperity through printing and borrowing to unpayable levels?'

BillT 908pm - Agreed Mr Tozer. "Do nothing, sooner!", Ludwig von Mises.

[Bill Tozer]

Ben, can you name a nation that has taxed and spent its way to prosperity?

“There are two ways to conquer and enslave a country. One is by the sword. The other is by debt.”
― John Adams (attributed to John Adams, but some historians disagree if he actually say those exact words.) Great quote nonetheless. Mao echoed the same thought.

Yes, this little 2% cut in an over inflated budget deficit will cause more workers than even exist in America to lose their jobs. Liberal math at its finest.

http://www.theglobaldispatch.com/maxine-waters-says-170-million-jobs-could-be-lost-due-to-sequester-video-62943/

[Russ Steele]

Some good sequester news:

Green Jobs Programme To Get Axed In Sequester --The Daily Caller

A controversial Bureau of Labor Statistics program that tracks U.S. green jobs will get the axe, according to Bloomberg News, because of the automatic budget cuts, called the sequester, which are set to take effect today if lawmakers can’t reach an alternative agreement.

- See more at: http://www.thegwpf.org/green-jobs-programme-axed-sequester/#sthash.aPjQYNe0.dpuf

[Walt]

Russ. That can't really effect too many people. Since two jobs were lost for every one gained when it came to "green". On second thought, there may be four gov. workers employed to keep track of every one green job made. Then it could actually work in our favor.

" cut it's way to prosperity".... Really??? Well.... That "spending our way to prosperity" has worked out just GREAT!!!,,, hasn't it?

Try that with your own finances first(Ben), and let us know how that works out.

Funny how Wall St. likes the squesture. When Gov. get's a knot tied in the money tit, private buisness gets to move forward.

[Walt]

"O"'s first pardons have been released.
http://washingtonexaminer.com/obama-pardons-man-convicted-of-firearm-charges/article/2523010?custom_click=rss&utm_source=twitterfeed&utm_medium=twitter

What gets me ,is the light sentences to start with.

"O" is real tough on gun crime. Isn't he? A guy found with a gun with the SN# removed... and he pardons the guy? He must be a close friend.

Will all of get a pardon when we are all turned into felons with the stroke of a pen?

[Ben Emery]

George,
I went to look up your countries and started with Sweden and you are wrong once again. Their investments, foreign trade, and per capita GDP were all at highs during 1950- 1975. They didn't give annual statistics but just block with summaries. I don't need to look into the other nations since you are trying to play that liar statistics as we all like to do.

We need as a nation massive infrastructure investment. Just physical infrastructure has been estimated over $2 trillion. Then we have intellectual infrastructure that has return on investment ratio of 9:1 in higher education but we are going further and further down tuition based funding, high personal debt, corporate sponsorship of specific departments e.g. BP UC Berkeley.

Hmmm I wonder if the university will feel pressure not to publish findings of their research that would hurt BP's bottom line.
http://www.berkeley.edu/news/media/releases/2007/02/01_ebi.shtml

[Ben Emery]

Walt,
Kind of like HW Bush pardons of criminals within the corrupt and criminal Reagan administration.

http://www.nytimes.com/learning/general/onthisday/big/1224.html

[George Rebane]

BenE 1036am - And here I thought that all well read people knew of the economic travails that Sweden has gone through. Well, it turns out that I still think that way. So far it appears that the depth of your knowledge base is not helped by your ability to do research. Googling Sweden's economic history provides more than enough evidence for the points that I have made. But just to keep it simple, one can read a brief summary of the Swedish crises, the last being in the 1990s ... and Keynesian spending was not the solution. Starting already in the 1970s Sweden suffered a massive corporate and brain drain which it halted with a tax reform that cut its "investments" in the all the things that warm the cockles of a socialist's heart. As usual, you cited the wrong statistics.
http://en.wikipedia.org/wiki/Economy_of_Sweden

And here's more. "... The slow down in Swedish growth from the 1970s may be considered in this perspective. While in most other countries growth from the 1970s fell only in relation to growth rates in the golden post-war ages, Swedish growth fell clearly below the historical long run growth trend. It also fell to a very low level internationally. The 1970s certainly meant the end to a number of successful growth trajectories in the industrial society. At the same time new growth forces appeared with the electronic revolution, as well as with the advance of a more service based economy. It may be the case that this structural change hit the Swedish economy harder than most other economies, at least of the industrial capitalist economies. Sweden was forced into a transformation of its industrial economy and of its political economy in the 1970s and the 1980s that was more profound than in most other Western economies." (Check out the chart.)
http://eh.net/encyclopedia/article/schon.sweden

[Ryan Mount]

Ben-

I believe George was referring to the recent government of those countries and their attempts at reducing their fiscal sizes. Not 1975 Sweden, et al.

My concern about austerity measure when it comes to the USA (the USA != Sweden for spending outlay comparison purposes), is that [some/many] fiscal hawks are really Military Keynesians[gasp!]; they like want to cut spending on everything except their military projects. They have their numerous reasons, like Progressives have for pumping more dough into their favorite public works programs as well.

This was demonstrated in the recent dip in growth which was linked to a dip in Military spending. When confronted, said Military Keynesians were silent. Crickets abound.

So no one is really serious about fixing any of this mess. I seems to me that we should cut spending on stupid programs (there's a dearth of them), as well as the Military. And, we should probably raise taxes across the board for everyone earmarked to pay down our long term debt (not to incentivize more spending, BTW). Maybe a VAT specifically for long-term debt reduction? I dunno. But we have to get serious about this pretty soon.

Note, neither of my proposals (cutting spending and taxes) will never make it above noisy loud mouths on both the Left and the Right. Although we appear to be lurching back and forth quite a bit. So maybe there's hope.

[Wayne Hullett]

Why not just cut all the fraud and waste that we are promised at every election? Or does it all automagically disappear as soon as the election is over?

[George Rebane]

WayneH 157pm - I think you're spot on, it just disappears after each election. Consider all the fraud and waste that has been publicly cited during the last 2-3 weeks with redundant programs and huge buildings full of faceless bureaucrats whose disappearance from this universe 7 seconds from now would do nothing but create a refreshing breeze across the land, along with a welcome spurt in our economy. All of that is utterly invisible to the administration. Were it not so, then we would have to consider utter incompetence or treasonous perfidy as alternative explanations.

[Gregory]

Ryan, your 'military Keynsians' remark is off-base. The right wing militarists don't want military spending to boost the economy, they want military spending to insure the USA can kill people and break things worldwide as needed. And guess what? Sometimes that is needed, though I'd say a lot less than either Bush I, II or Obama I have chosen to have killed.

Regarding the amount of the sequester, it's about the same amount the Fed is creating out of thin air every month to make bonds go away. For now.

[Walt]

How about some cuts to those government "think tanks" and gov. consulting firms? Nope.. The threat is to the simple thing we see every day.
None of the useless spending is ever mentioned.
The Justice dept. has many of the Gulf stream 5 s for the elected and their appointees beck and call. Holder got a trip to the Superbowl in one.
And of course it was listed as a "classified" use. But the word got out none the less.
Nope,,, those won't be on the chopping block anytime soon.

[George Rebane]

Gregory 219pm - Thanks for the important yardstick. Yes, the Fed is printing the sequester amount monthly. However, a double printing one month would have made no one happy. The Repubs see would see it as unwarranted increase of debt - i.e. no solution to deficit reduction. And the Dems want to make it up in more taxes, not more printing.

[TheMikeyMcD]

Massive overhaul in Military Spending, Medicare and Social Security are REQUIRED. Taxes (my family paid 52% of taxable income to taxes-income, property, dmv registration, gas tax, sales tax, school taxes, etc in 2012).

Cuts are the only way out of debt. No one with half a brain cell left can believe that adding debt is the best way to get out of debt.

[TheMikeyMcD]

George, you forgot Canada! As someone that is paid to watch currency values I can attest to George's list of Countries cutting themselves to prosperity (as a partial list).

Proof from a liberal rag http://www.bbc.co.uk/news/10254055

Can any entity (family, government, school district, etc) spend its way to prosperity?

[Account Deleted]

You don't cut your way to prosperity or spend your way there either. First of all, there is no 'cut' in fed govt spending. We will spend more and more this and every year, as projected. There are several things that must happen for this country to survive. Note that I didn't say boom or prosper. Just survive. First, there must be a complete overhaul of entitlement spending. You will not get the promised money, because it's gone. Sorry - they blew the money and it's gone. The tax code must be simplified to something like a flat tax or a consumption only tax. No one and no entity should pay more than 15% of income to the feds. The states are free to tax at will and suffer the consequences. The fed govt must get rid of all functions that the states are capable of handling. There are to be no fed rules for private contracts between parties. State laws are sufficient. We must stop the suicidal notion of ending the use of carbon based fuel. The fed govt must set up a timetable to pay off the debt and meet the amount set every year as a top priority. We must have a country that produces goods and services to sell in the private market as a way to keep afloat. There will be, in the near term, fewer and fewer buyers outside of the US that are able to buy our goods with currency that is backed with something solid. That is why, even if we are able to turn our country around, it will be hard to prosper. I'm not a gloomy person, but a pragmatic one. The world economy is, for the most part, built on a bubble. There is so little real value in the capital that is being pushed around the various markets, that eventually it will bite us all in the butt. All of the well meaning social programs that are run by the govts need to have private industry to support them. The govts can not run by themselves successfully. We have witnessed the ones that have tried that route.

[Bill Tozer]

Every time fossil fuels become more attractive them libholes have a conniption fit. Danger! Natural gas is clean and plentiful and cheap and right in our back yard so it must horrible I tell ya, plumb stinkin' horrible. Run your factories on wind and algae cause I am friggin idiot and I told ya "no fossil fuels". Burning cockroach farts in your fuel tank is the way to go. That will create billions of jobs and turn the deficit into a surplus and it is free. Free wind, free sun, free farts and free money that grows on trees. What a slop of hogwash.

Germany is a great example of cutting their way back to sanity. Germany tried the mine laden path the winos and olive pickers in the other Western European countries were skipping along and almost fell into the dead beat trap. Somewhere, some how they woke up one day in a moment of clarity and said enough, this debt will ruin our country. Besides, Germans have enough pride and brains and stubbornness to change their errant ways.

A small example is I was shacking up with a German National, or living in sin if you prefer. I kept asking her why after all these years does she not apply for citizenship. Her answer was always the same. She will go back to Germany and collect their Social Security which is much more than ours. US citizenship would make her ineligible for the freebies across the pond. Well, surprise, surprise, surprise Sargent Carter. Germany went behind her back and started cutting and getting back on the road to recovery, the road less traveled. She is out of luck thinking she would have a carefree life of comfort in retirement in Germany. Yep, she is still here in the USA having a life of comfort and ease on the US taxpayer's dime. The joke is on us.

There is such a thing as Debtors Anonymous as well as Friggin Looney Tunes Anonymous. The first step is to admit you have a problem, which Friggin Looney Tunes Anonymous just can't wrap their libhole minds around.

[Ben Emery]

You guys are oblivious to reality. There are so many falsehoods flying around on this thread I don't even want to start.

When the US invested in its infrastructure after WWII, especially its intellectual infrastructure we boomed as a nation. When we stopped investing as a nation we have fallen behind. May I refer you to a principled republican telling us how it really is- Chance For Peace 1953
http://www.edchange.org/multicultural/speeches/ike_chance_for_peace.html

We have tripled our defense/ offense spending since 1998 out pacing the entire developed world combined while our infrastructure has decayed. Our priorities are upside down.

[Russ Steele]

BenE at 10:16

How much did we spend in the War on Poverty during the same period? Oh? Do you thing the spending 15 trillion on the war on poverty with no improvement, many have sapped some of the money need for infrastructure? Just wondering?

[Bill Tozer]

Build them public housing boxes, call them the projects, watch them become unsafe and slum like, then knock them down.

BTW, Obama is one smooth operator. He already planned to cut 13% from HUD and subsidized housing in his proposals. When the little sequester works its way down the pike, po folk won't be able to tell if it is Obama's planned cuts or the sequester and blame them mean o Republicans and Tea Party types. The waiting lists for low rent government subsidized housing is so long currently that no one will notice any difference, but it will be great political hay.

I remember back in the day when a young Jesse Jackson proposed taking the money sitting around in the Social Security coffers and launching massive public works projects. Said it would put black folk to work. Just raid the SS fund and build stuff. Too late Mr. Reverend JJ. Its already been raided by folks that think like you. Tomorrow never comes.

[Bill Tozer]

Make love now war. Ben, the military is starting to trim the fat and looking more closely at its procure procedure:

http://finance.yahoo.com/news/unions-help-foreign-company-land-220622507.html

[Russ Steele]

Thomas Sowell:

"Too many among today's intellectual elite see themselves as our shepherds and us as their sheep. Tragically, too many of us are apparently willing to be sheep, in exchange for being taken care of, being relieved of the burdens of adult responsibility and being supplied with "free" stuff paid for by others. "

Read more: http://www.realclearpolitics.com/articles/2013/02/26/shepherds_and_sheep_117152.htm

[Account Deleted]

"There are so many falsehoods flying around on this thread I don't even want to start."
C'mon, Ben - you can do better than that. How about - "I don't like what I'm reading, but I haven't got anything to rebut the facts"? Just to start, let's look at what our 'investment' dollar bought in the 50's. Let's look at how many miles of 4 lane freeways we could build with a million dollars. Now adjust for inflation and these days we find our 'investment' dollar doesn't do very much. Now, it's how many millions per mile just to start a study to see if we need more money to have more studies. Who cares if anything is built. We have the money already for fixing bridges and repairing highways, but it gets sidetracked to build bike lanes and subsidize other, non-paying freeloader means of public transport. Obama's talk about 'infrastructure investment' is nothing more than giving the unions billions to blow on unneeded pork projects. CA's HSRA comes to mind right off.

[George Rebane]

ScottO 834am - Scott you raise an important point that we should emphasize here a lot more when arguing for less government - I have called it 'the piss away factor' (PAF). Because of the rampant increase of all phases of progressivism (witness comments on these pages), everything that the government does today cost more, delivers less, and fails sooner. That is the prime reason why the standard formulas for (Keynesian) GDP stimulation don't work as well. Because of the PAF, government "revenues" don't all wind up contributing to the economy as planned.

I indicated the PAF as the wiggly line from government going poof in a previous post explaining GDP here. The PAF is getting bigger - it's an endemic symptom of collectivism.
http://rebaneruminations.typepad.com/rebanes_ruminations/2012/05/a-look-at-gdp.html

The figure from that post is -

[Steve Frisch]

But of course lets ignore the PAF in the health care and defense industries, which account for a huge portion of our national debt and deficit spending.

[Joe Koyote]

"We just concluded cabinet appointments that made it not because of the candidates’ sterling resumes – they are arguably awful - but simply because of party loyalty." -- So what else is new? This has been going on since day one. Washington's first appointment was to name Alexander Hamilton (One of George's top wartime aides) as Sec. of Treasury. Hamilton's first act was to declare continental currency (used to pay soldiers and suppliers for the war) valueless as he negotiated foreign loans to back it up. Alerted to the situation, Hamilton's cronies went and bought up as much script as they cold get their hands on for pennies on the dollar. When the loans came through, Hamilton bought back the script at face value and his cronies became overnight millionaires.

Or what about Jack Snow, GWB's Sec. of the Treasury? He was CEO of CSX (the largest railroad conglomerate in the US ). In the three years prior to Snow's appointment, CSX paid zero income tax and got $164m in rebates on $1b in income. When he left CRX for government he gave himself 44 years of service credit on his pension (he was there 25 years and will get $2.1m per year for life), a $15m bonus for leaving for public service ( I guess to compensate for his low govt. salary), and the company bought back $10m in stock options for $25m. Snow slashed benefits for employees while he gave himself a 69% raise. All of this while the company stock tanked and lost 53% of its value. He was obviously hired for his management skills not politics.

"can you name a nation that has taxed and spent its way to prosperity?" How about the United States of America? It is pretty much common knowledge that the most prosperous (for all Americans not just the wealthy) era in American history was the Eisenhower era where the tax rate on the 400 wealthiest Americans was 91% (51.2% after loopholes and deductions) on income over $400k. Their average income in today's dollars was $13m. In 2007 the top 400 people made $345m and paid an effective rate of only 16.6%. Kennedy lowered the top tax rate to 70% (pocketing a sizable chunk in the process) and Reagan lowered it to 28%. The country has been going downhill and the jobs going overseas as the job creators took their tax breaks and created jobs everywhere but in America ever since.

[Russ Steele]

Scott@08:34AM

Do not forget here in CA we have CEQA, with the millions spend on environmental studies which are then declared deficient by the opposition to growth and wealth creation. That requires the studies be done over costing more millions. Then when the second round study does not support their views the envro-wackos take their case to court. Years go by and no infrastructure is build, but now the money to build it is gone -- pissed away.

I was a Transportation Commissioner in the 1990 during the reign of the Gang of Four on the BOS. At one of my first Commission meetings, a fellow commission leaned over a whispered. “The trick is to keep demanding more studies until the developer runs our of money and leaves town, and we keep it just like we like it.” The “it” was western Nevada County. This was right out of the environmentalist play book.

Now the wackos have passed laws to restrict urban development to within the walking distance of public transportation. The only problem is, people do not want to like in human scale rabbit hutches along a railroad track. No demand, no building. Here in the rural areas, we are not restricted to building along rail road tracks, we do not have any. We just do not have any job growth to create demand.

[George Rebane]

SteveF 948am - Let's not Steve. The PAF for both healthcare and defense are merely components of the the government's overall PAF. Remedies for healthcare and defense savings are almost straightforward and await a political solution as has been outlined numerous times on RR.

It is only the progressive ideologue who believes that runaway healthcare costs are due to a capitalistic conspiracy. The same crowd has no understanding of how the government spends defense dollars. Some leftwing worthies here still believe that it's America's defense industry that actually foments worldwide hate and discontent so that they can sell more guns and grenades to everyone.

[Joe Koyote]

"Some leftwing worthies here still believe that it's America's defense industry that actually foments worldwide hate and discontent so that they can sell more guns and grenades to everyone." Is it not true that the "war on terror" has created more terrorists than it has captured or killed?

[George Rebane]

JoeK 1001am - You are confusing corruption with capability on your cabinet appointees.

And on 'taxing your way to prosperity', you bring up the tired and false progressive saw about Eisenhower era top marginal tax rates which no one paid, and which contributed essentially zero to government revenues. The only real metric that is valid in this debate is the fraction of GDP from government participation. This indicates the bite that fed takes and imposes on the economy and includes all the tax rates, loopholes, set asides, ... . I have added a Fed graph (below) of this as an addendum to my commentary. That should cut the crap about Eisenhower tax rates that seems to be tattooed into the list of liberal talking points.

And can you relate your 1024am to anything that we have been talking about here? It seems to be another leap of leftwing logic, please help out those of us not so nimble in jumping from here to there.

From Mike Shedlock's Government Spending as Percentage of GDP (August 28, 2012). Chart by Doug Short of Adviser Perspectives

[Joe Koyote]

George - "You are confusing corruption with capability on your cabinet appointees." Not sure of the relevance of this rebuttal or what your meaning is. I was just pointing out that self-interested or questionable political appointments as a function of "political payback" is nothing new nor is it exclusive to the Democratic party.

[Ryan Mount]

I'm too busy paying my taxes to keep up with these threads. But for now...

> The right wing militarists don't want military spending to boost the economy, they want military spending to insure the USA can kill people and break things worldwide as needed.

It's not that simple. So military contractors aren't really interested in spending government money? They're just doing it for the good of the USA? Enlightened Self Interest? Really?

And...

There are plenty of people that regard military spending as a cornerstone of our prosperity. And the numbers play it out quarter over quarter: a good chunk of our economy is propped up by Defense Spending.

So we may say that our Right Wing element (NOTE for the hard of hearing: I said Military Keynesians and fiscal hawks, not right wing militarists*) "want military spending to insure the USA can kill people and break things worldwide as needed." I happen to agree with that. But that's just makes them, at best, apologists for a significant, out of control Miltary complex, and worse, economic dimwits to think that they're spending sprees shouldn't be included into the discussion. Which they typically aren't at least by the Military Keynesians.

The best you'll get is something like, "that's the price of admission," whose reasoning smells an awful lot like Progressives.

* who are a minority, to be frank.

[George Rebane]

re RyanM 1232pm - The DoD's total procurement budget for FY2013 is about $108B, and has been running in that range.
http://comptroller.defense.gov/defbudget/fy2013/fy2013_p1.pdf

Out of a federal budget of about $3.6T, the defense contractors get 3%. And its impact on a $16T GDP is less than 0.7%.

"There are plenty of people that regard military spending as a cornerstone of our prosperity. And the numbers play it out quarter over quarter: a good chunk of our economy is propped up by Defense Spending."

Maybe we can again conclude that "plenty of people" don't know which end is up.

[Steve Frisch]

I love how George insists on implying that no one knows anything about defense contracting, other than of course him, who spent his life sucking at the government teat of defense contracting, only to retire and excoriate government for profligate spending. Fortunately I know people very high in the Department of Defense who actually oversee certain types contracting, and they talk to their colleagues, and I have talked to them over the years about this issue. For the record, they are conservative, voted for GW Bush, McCain and Romney. According to my friends the number one problem: the lack of real competition leads to paying according to their estimation about 2-3 times more for goods and services than they should be.

If one adds all defense related expenses together in 2011 they were $718 billion. Of that roughly $115 billion is let in 'no bid' government contracts.

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/07/everything-chuck-hagel-needs-to-know-about-the-defense-budget-in-charts/

http://www.publicintegrity.org/2011/08/29/5989/windfalls-war-pentagons-no-bid-contracts-triple-10-years-war

Of course this is not huge compared to a $3.6 billion budget--and it pales in comparison to price gouging in health care costs...but it is pretty damn significant--it sure would be nice to have that extra $80 billion per year. Over 12 years that would wipe $1 Trillion of our deficit out just from defense contracting.

[Joe Koyote]

George 10:51 "You are confusing corruption with capability on your cabinet appointees." To me, the two go hand in hand. A corrupt person is an incapable person, but a less capable person is not necessarily corrupt. Which would you want guarding the till, capable but corrupt or less capable but not corrupt. The right doesn't like Chuck Hagel because he is not a hawk and so they paint him as less capable. I'll take him over Rummie any day.

[George Rebane]

SteveF 139pm - No one is implying anything of the sort, I and people like me just know what we experienced. (And BTW, my life was not spent in "sucking at the government teat".) Your claim that defense contracting is government welfare is just continuation of established fundamental ignorance shared by the progressives. Our government can buy what it needs for defense from anyone in any amounts. And as the publicly available share prices and profit margins attest, government contracting is not a road to riches. But you can be thankful that America has the technical talent to field combat systems and train the men and women to operate them that have kept your butt safe from the day you were born.

My citation stands as does the fact that Bernanke now 'prints' about $85B per month to keep Washington afloat.

[Steve Frisch]

Your right George, I should not have said 'implied', you stated it directly, right here:

Posted by: George Rebane | 03 March 2013 at 10:09 AM

"The same crowd has no understanding of how the government spends defense dollars."

And reading your resume it would appear that you did spend a good deal of your life sucking at the government teat. You just can't admit it.

And I might add many members of both my direct and extended family have served this nation, from the Iron Brigade in the Civil War, to Special Forces whose last deployment in Afghanistan was a mere 12 months ago. You don't have a monopoly on patriotism.

[George Rebane]

SteveF 219pm - Steve, where do you get this crap? Even your own statement confirming your 'thinking' is fractured. Go read it again, and compare it to what I said (by which I stand).

My resume is a matter of record, I make no other claims and admit to everything that is there. But that's not the point here is it? Almost every time you arrive in these pages you contribute NOTHING to the posted piece, and immediately start denigrating me or other commenters, or claiming that there's a dick measuring contest going on that you want to enter. Is there no other forum that will serve as an outlet for such sophomoric snark?

In the meantime I offer for your consideration 'tedium' as a notion that may have some relevance here.

[George Rebane]

Got this in an email from a friend and poker buddy. Now this is talent, and nothing but talent. For a lighter moment on these pages - enjoy.

"You have to see this! Watch how he uses his fists and elbows and doesn't even look at the keys when he sings! This is amazing to see. It's Richard Wayne Penniman (aka Little Richard) about fifteen years before "Tutti Frutti, Oh, Rudy...." a-whop bop-a-lu bop a-whop bam boom.

Here is some very rare footage of "Little Richard" as a child, when he was just starting out in the music biz'... From a movie with Van Johnson ..."

http://www.wimp.com/oldschool/

[TheMikeyMcD]

George, love the taxation as a % of GDP measurement, however, we also must factor in the BS taxes to DMV, sales, property, soda, cigs, gas, fishing licenses, etc etc. Income tax is but one of many taxes prohibiting economic growth.

Without Medicare and SS reform no 'solution' is realistic.

The rich have never paid more in taxes (especially if you factor in all the BS taxes) http://www.huffingtonpost.com/2013/03/03/taxes-on-the-rich_n_2801206.html?utm_hp_ref=business

[Ben Emery]

SS is a self funding program and the fact conservatives, republicans, fascists, corporatists or what every we consider ourselves continue to point to it as a debt creator shows this is about ideology not fiscal soundness. SS has a $2 plus trillion surplus that is invested in US treasuries, the safest investment on the planet.

Medicare needs to drop the newest Prescription Drug Coverage a.k.a Medicare Part D and Medicare Advantage a.k.a Medicare Part C and the program becomes solvent.

When and where did the debt get created. 1980 the national debt was $909 billion. By 1988 it was $4 trillion. 1992 $5.5 trillion. 2000 $7 trillion. 2008 $12 trillion. 2012 $16 trillion.

In 1980 we shifted our tax policies, trade policies, and expanded our military empire to benefit a small few business men/ women and transnational corporations, which have never seen it so well while the rest of the nation struggles. In 2000 retirable debt was just above $2 trillion with the other debt owing the treasuries on SS and future retirement/ health benefits for federal employees. So what happened? Afghanistan, Iraq, Medicare Part D, and DHS. Those are the places we should start reforming first and then move on.
This is from 2007 and the inequality has become even greater since the bank induced financial crisis. In 2010 alone 93% of economic gains went to the top 1%.

Income Gap Is Widening, Data Shows
http://www.nytimes.com/2007/03/29/business/29tax.html

[Account Deleted]

"SS has a $2 plus trillion surplus that is invested in US treasuries, the safest investment on the planet."
This is another excellent example of the divide. SS has nothing, Ben - it's broke!
They didn't invest the money, they spent it and wrote out an IOU. It's no different than a drunk running up a bar tab he can't pay. The 'safest' investment on the planet is like saying the 'safest' place to stay in Hiroshima when the bomb drops.
No wonder this country is broke with thinking like this.

[n]

"George, love the taxation as a % of GDP measurement"

Not taxation, spending.

A more informative chart

http://mercatus.org/sites/default/files/Expenditures_as_share_of_GDP_1.jpg

I believe that government spending numbers are accurate, but ignore the cost of government regulations. The trend is reasonably obvious. The paying-for part would come from a combination of taxation, inflation, and bankruptcy.

[TheMikeyMcD]

Benn, your faith in government is unfounded. Ever asked yourself why SS requires young folks like us to contribute 12%+ of our pay AND when it started it was only 2%!? hint: PONZI

http://www.examiner.com/article/social-security-disability-trust-fund-projected-to-be-insolvent-by-2016

[George Rebane]

BenE 520pm - "SS is a self funding program and the fact conservatives, republicans, fascists, corporatists or what every we consider ourselves continue to point to it as a debt creator shows this is about ideology not fiscal soundness. SS has a $2 plus trillion surplus that is invested in US treasuries, the safest investment on the planet."

That is hands down the most ignorant statement that has ever landed on these pages. Believers in this myth have no idea what is the national debt, nor its ability to be repaid in anything except funny money of zero value (re its purchasing power) printed as the need arises. Thank you for memorializing that myth in such a compact and comprehensive way. It does demonstrate beyond argument that the Right and Left don't even agree on the rules of arithmetic. Thereby is raised another appeal for identifying any common ground between the polarized sides - RL Crabb call your office.

More here -
http://rebaneruminations.typepad.com/rebanes_ruminations/2010/03/social-security-lockbox---kvmr-commentary.html
http://rebaneruminations.typepad.com/rebanes_ruminations/2010/08/unbelievable-maybe-not.html

[Bill Tozer]

Dr. Rebane: You should be nicer to Ben. Albeit you disparaged his comment, it is heartwarming that you did not disparage him personally. Kind of the old "I love you but I don't love what you are saying" thang. We should all try to be more understanding and wish him a speedy and full recovery from his affliction with the broken thinker. Goodness, you have been more than patient with me and I deeply appreciate that.

Back to the topic at hand, I noticed President B.H. Obama is not too happy with the sequester law. Now, if he signed it into law, then why is he bitching about it. Its his signature on the law. 85 billion of cuts must be implemented by Sept 30th. No use blaming them wryly Right Wingers if the buck stops with his signature. Just wait until the 1.7 trillion in planned cuts come to a politician near you. Time to buy some earplugs. But, then again, isn't that the exact reason people elected fiscal responsible types starting in 2010 and sent them to Washington to have some adults in the room? Love the cacophony coming from Queen Nancy. Remember it was Nancy who said her proudest achievement of the 41st congress (or some other number Congress)....that her proudest achievement of the particular Congress was passing Pay-Go. She probably had the flu when she said that.

[TheMikeyMcD]

George, I second your observations about Benn's review of the health of social security. I hold out faith that his remarks are secretly some kind of comedy.

#PONZI

http://drhurd.com/index.php/Daily-Dose-of-Reason/Politics-Government/Its-No-Longer-the-Economy-Stupid-Part-2-of-2.html

"there are not nearly enough rich people and will never be enough rich people to finance all the things to which “average” Americans now feel entitled."

[Ben Emery]

George,
What I have found through the last year of coming to ruminations is that you are full of sh!#. You knowledge is very limited to a couple topics and the rest is lifted straight from Limbaugh or Hannity.

Social Security is funded strictly through payroll taxes something capital gains/ dividends are exempt from paying. I pay a higher % in FICA tax since I am self employed than Romney pays in income tax.

SS has a $2.7 trillion surplus and is solvent for another 20 years, that isn't a crisis. If we made all income subject to the FICA tax not just $113,000 earned income the program would be solvent forever. Two things could then happen 1) benefits could increase up to 50% or 2) rate paid into could be reduced.

[Ben Emery]

I mainly came here to post another Walmart fact I didn't realize was going on.

Walmart shut down a factory in Cambodia and tried to not pay back wages to its employee's. Workers at the factory are making $0.50 an hour, which is up from two years ago and probably why the factory shut down. Nice business model and just think you guys celebrate the company's "success".

Striking workers call on Wal-Mart to take responsibility after supplier skips country owing $200,000 in wages
http://coztoujours.com/2013/02/01/the-plight-of-cambodias-garment-workers/

"On Thursday morning garment workers gathered outside the US Embassy in Phnom Penh to follow up with the petition they submitted on Januray 18th, 2013 asking the US government to pressure Wal-Mart. They are owed $200,000 by Kingsland, a Hong Kong-based company that started to operate in Cambodia 10 years ago and worked with Wal-Mart and H&M suppliers."

[TheMikeyMcD]

Benn, your ideology is based on hate (and a lack of economic understanding, inability to use math...).

SS is a PONZI scheme. Those of us at the bottom are now paying over 600% more than the original participants to insure that the current beneficiaries are paid and we will rely on future generations to pay for our benefits... all the while our government gets to spend the trust fund. This would be illegal for you or I.

Have you ever read a SS statement?
The trustees themselves don't believe the fund is solvent. You cite 20 years as proof of the ponzi scheme!

Simple question: Could the SS program pay out all liabilities (promises made) to beneficiaries if no more contributions were paid into the program?

[Bill Tozer]

Micky D: You are missing the point. There are just too many rich people. That number should be down around 400 in the entire globe, max. The reason there are so many po folk is because of rich people. Rich people bust into poor folks homes and take their old couches and Hi-Fi radios and Granny's dentures...even been known to take Granny's denture glue as well. Greedy things they are. They have no shame. The reason Steve Jobs and Bill Gates got to be so filthy rich is because they paid their employees slave wages. Disgusting , the whole lot of them. Ever wonder why Obama and Biden kept bringing up Warren's Buffet's secretary?? Cause Warren kept her chained in a closet at night and paid her a handful of rice each day in lieu of minimum wage and then made her pay taxes on top of that!! Did not even have the decency to call her his executive assistant...no, that evil Warren labeled her as a common secretary. What century is this? Kill the beast, kill the beast. Do it in the name of justice...its not fair..its not fair

[George Rebane]

BenE 750am - Thank you for crediting me with at least "a couple of topics".

I take it that you are also lambasting the President's OMB, and the surprising number of Democrat economists and politicians similarly filled. I think we'll have to leave you to your burden of superior knowledge, especially in how SS is funded and works. But I do think that you owe the WH and Harry Reid a call to put their minds at ease.

And if you'd care to check the RR record for primacy, you might discover that Limbaugh and Hannity may be secret RR readers ;-) (Unfortunately my schedule doesn't allow fitting in those two gentlemen. I find Limbaugh's information rate to be dismally low, he could profitably do his program in 15 minutes. But then all the entertainment value would be gone. And I don't really know what Hannity really contributes to the Fox News smorgasbord of commentary.)

re your 803am - An absolute perfect citation of 'social justice' - when a vendor defects, hold his customer responsible for his liabilities. As I've said here for some time, it will be a brave old Bolshevik world if/when you and yours assume power. But I must admit that with gay abandon we continue to sell you rope.

[Account Deleted]

note: I have to add that I wrote this on a text editor and when I came back to RR to paste the comment, George had beaten me to the punch. I'll post anyway....
Thanks for posting the Walmart story, Ben. Once again you bring to our attention the reason the left in this country walk around with hatred and vitriol as their filter for acquiring information. There seems to be no legal basis for Walmart to address the subject of the workers that were apparently stiffed by the Hong Kong based company. This is nothing more than a bunch of communists stirring up the workers with false info about who is responsible for their dilemma. But Walmart has money, so they protest outside the US embassy and Ben just scans the headline and another bit of self-rightous anger wells up in his Marxist heart. What if you hired a contractor to renovate your bathroom and later he didn't pay his alimony? Are you responsible to the woman he didn't pay? Gosh, Ben, you have money and she doesn't and she is destitute and you did business with her ex. Aren't you ashamed? But you need your daily bit of hate to keep you going and so here we are.

[TheMikeyMcD]

Pie Chart:

http://capitalism.aynrand.org/wp-content/uploads/2013/02/sequester-cartoon-ramirez-3.jpg

[George Rebane]

For those readers confused by our progressive naifs here promoting more deficit spending as the way out of our fiscal tragi-comedy, here's Stanford's Michael Boskin on the record of spending cuts and economic recovery.
http://online.wsj.com/article/SB10001424127887323549204578315752295424028.html?mod=WSJ_Opinion_LEADTop

Elsewhere, I believe it was in a Cato policy report, research showed that the 'optimum' recovery rates obtained in countries when they instituted an approximately 85/15 (spending cuts/new taxes) policy.

[bill tozer]

Here is another view of Obama's sequester:

http://moneymanagementradio.com/node/509