Hinges of history (with apologies to Thomas Cahill)

Via JammieWearingFool:

...Former Treasury Secretary Paul O'Neill compared lawmakers trying to block a debt-ceiling increase to terrorists...

A different perspective:

Dueling Ithaca Tax Day protests and podcasts

Ed Weissman is a member of "Forward Thinking," the tea party group in Ithaca. They plan to protest outside of Rep. Hinchey's downtown Ithaca office at the corner of Green and Cayuga starting at noon today.  Listen to Ed's interview on WHCU today here.

And listen to Tompkins County Democratic Committee Chairwoman Irene Stein talk about a counter-protest across the street from the tea partiers in downtown Ithaca today here.


Not Tea Party Tea Party


By Tom Reynolds:

I campaigned with Richard Hanna last year and often heard him talk about leaving a better America for our children.  Obamacare is NOT leaving a better America; it will leave a bankrupt America for our children.  The solution is not chipping away at Obamacare.  It must be repealed.

We sent a new class to the House of Representatives to make a major change in the direction of the country. Over 40 cents of every dollar spent by the federal government is borrowed; does anyone believe that can continue?  Obama does and apparently the "New 'Republicans'” in Congress share that belief.  Their recent efforts at budget reform are just not good enough. Actually, laughable comes to mind, but it’s no laughing matter.

Did they believe they could get away with using accounting tricks instead of real reform?  Welcome to the age of the internet, Mr Boehner.  Information is not controlled by the news agencies of the liberal left who will take a pass on your efforts since it serves their purposes.

There are good points in the Republican budget proposal, but a six year plan is no plan at all.  And what happens if we did get a balanced budget in six years?  We would still have a $20 trillion debt to service.  A balanced budget doesn’t pay it down.

Perhaps Speaker Boehner has a clever plan that he will implement shortly.  Personally, I doubt it, since his latest efforts show an opposite inclination.  I can give him a little more time, but just a little.

Stand up Mr. Boehner.  Stand up Mr Hanna.  Stand up or get out.  America can't wait much longer.

Scientific notation and moral hazard


Odd juxtaposition?  Not really. I'm trying to think of every possible way to convince people that we are in deep, deep manure. My 14-year-old is learning scientific notation in math and science; she gets it.  At Ace:

Our current unfunded entitlement liabilities run about $100 trillion.

That is an enormous, ludicrous number that can only be properly expressed in scientific notation: 1x1014. It's the kind of number you use to describe problems in astrophysics and quantum theory, not finance. It will never be paid out because it can't be paid out. This is what happens when you let a bunch of disorganized hippies who don't know math control fiscal and social policy. The welfare state will bankrupt us just as surely as the sunrise.

And we are doubly boned because Americans like their comfy welfare-state apparatus, but don't want to pay for it. This is what happens when you never see the true cost of things you buy; this is what happens when you never see a bill.

Read the whole thing, as well as Monty's series on economics—he's really pretty good.

A house divided

Today is the 150th anniversary of the opening shots of the Civil War being fired on Fort Sumter, outside Charleston Harbor, South Carolina.  For an interesting video on what happened that day and the run-up to it, see this at the Daily.

So, as you might expect, Civil War analogies have been flying. Leonard Pitts' column at the Detroit Free Press (reprinted—mostly—in today's Ithaca Journal) is here. And here's Jesse Jackson:

“This is a Civil War fight,” he said. “I think Time magazine has it right. This is the 150th anniversary of the 1861 Civil War. Now those are determined to shut the federal government down to make their point — their ideological-religious point.”

“You have those who believe in states’ rights and those who believe in a more perfect union,” he said. “States’ right are anti-civil rights, anti-workers’ right to bargain, anti-social justice, pro-rich and significantly insensitive to poor people — that was the great divide 150 years ago and it’s the great divide today in the ideological sense.”

Jerry Brown got into the act too:

This week Brown has been using Civil War metaphors at his public events to describe the deep divisions in California, and the entire country for that matter, preaching with the passion of a born-again that the country is dangerously polarized.

“We are at a point of civil discord, and I would not minimize the risk to our country and to our state. It is not trivial. I’ve been around a long time, I’m a student of history, I’m a student of contemporary politics. We are facing what I would call a ‘regime crisis.’ The legitimacy of our very democratic institutions are in question,” he said.

We've said things like that before on this blog, but I'm guessing we wouldn't see eye to eye with Governor Brown on what exactly that means.

And as we approach the deadline for filing tax returns, Philip Klein writes at the Washington Examiner (emphasis mine):

I wrote last week that for President Obama, it's never the right time to deal with the long-term debt crisis. But senior adviser David Plouffe took to the Sunday morning shows to announce that Obama would give a major speech outlining his plan on Wednesday.

[....] While short on details, Plouffe said Obama would argue for raising taxes on higher income levels once the current tax deal expires at the end of 2012 – but that's already accounted for in the budget he released, in which deficits are $4.4 trillion higher than Ryan's over the next decade.

On the spending side, Obama has already either ruled out many of the obvious entitlement reforms or is using them to finance the health care law.

For instance, in his State of the Union address Obama had this to say about Social Security:

To put us on solid ground, we should also find a bipartisan solution to strengthen Social Security for future generations. We must do it without putting at risk current retirees, the most vulnerable, or people with disabilities; without slashing benefits for future generations; and without subjecting Americans’ guaranteed retirement income to the whims of the stock market.

If you aren't going to to touch benefits, that implicitly means no changes to the retirement age either. So the only thing that leaves is raising taxes. Yet Obama's big Social Security plan during the campaign – to raise the payroll tax on higher incomes – was already used to help finance ObamaCare.

[....] The only options that would evidently be open to Obama is to find more ways to raise taxes beyond merely cutting some loopholes and rescinding the dreaded Bush tax rates on higher incomes, and to slash defense spending significantly when the nation is fighting three wars...

As we've pointed out before, even entirely confiscating the assets of the "wealthy" would not allow us to continue on our current course of spending.  Which leaves us with borrowing and monetizing the debt—leading to rampant inflation. So, some people at least would look at it this way (emphasis mine):

...The future is literally being stolen from our children and our grandchildren.  They will be inheriting the 14 trillion dollar (and still rising) national debt that we have accumulated.  What we have done to future generations is unthinkable, and yet we continue to endlessly borrow more money.  The Congressional Research Service estimates that the U.S. government will need to borrow $738 billion between April 1st and September 30th.  Faith in U.S. Treasuries is falling so rapidly that now the biggest bond fund in the world, PIMCO, is actually shorting U.S. Treasuries.

When you base an entire economy on debt, eventually you end up with money problems that never seem to end.  As a nation we are now enslaved to a vicious spiral of debt that is going to destroy everything that our forefathers worked so hard to build.

As the debt loads of our federal, state and local governments become even more burdensome, they are going to want even more money from us.  For decades we gave in to new tax after new tax thinking that it would finally satisfy them.  But it never seems to be enough.  They always want more....

At the risk of being called racist, I'd say enslavement takes many forms.

"...you may all go to hell, and I will go to Texas," part deux

We've said it before. And Michael Barone says it again, at Pajamas Media and Investors.com (via Ace):

...One of the lowest tax burdens in the nation, one of the most stable housing markets, and home to more Fortune 500 corporations than any other state. That’s Texas, and it’s no accident. The GOP-controlled government here lives by a couple of simple rules: Don’t tax everything that moves, and don’t spend all the money.

Paul Ryan on America's future

I like Ryan a lot, but beware the normalcy bias. Via Ace:

Meanwhile, at the IMF (h/t Aaron): 

To restrain the U.S.’s future budget crisis, the federal government must raise taxes by at least 35% and cut entitlements such as health care and Social Security by 35%, International Monetary Fund economists warned Monday in a new working paper.

While the projected ballooning of future costs of entitlements as the so-called baby boomer generation enters old age isn’t new, the IMF paper’s quantifying just how much the federal government will have trim its balance sheets sheds fresh light on the political hurdles ahead...

Given recent events and the general tone of the IMF paper ("hey, ya got a nice place here...hate for anything to, y'know, happen to it), maybe we need to be a little more concerned:  

And then there's our earlier post here.


Call me a jeremiah but...

...there are none so blind as those who will not see.
This may not seem like a particularly local or even regional issue—it's not—except for the fact that it quite possibly affects some local folks' retirement accounts.  And it doesn't bode well for the state of the economy, and that affects us all:

Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., eliminated government-related debt from his flagship fund last month as the U.S. projected record budget deficits....

That's U.S. government debt we're talking about here, not some other government's debt.

And there are lots of people—locally, people I know, and not just those cretinous conservatives—who admit quite candidly that they avoid paying any attention to what's going on in the outside world, or at least in the world outside Tompkins County. This becomes painfully apparent when you look at these poll results (via Hot Air):

Scary, isn't it?  "Fully 72 percent think reducing foreign aid would produce some sort of “large” savings whereas 51 percent think reducing Medicare benefits would produce savings that are smallish."

...Yet foreign aid accounts for about 1 percent of federal spending...and [Medicare and Social Security] account for about 40 percent of the budget and are the main drivers of the long-term deficit...

according to Bloomberg.

So, are people that ill-informed (often by conscious choice), delusional, or what?

The only solution that would really work -- draconian cuts to entitlement programs and a serious effort to pay down the national debt -- would require a level of austerity that few Americans have the stomach for. This means that a political solution to this problem is also pretty much impossible. There is no political solution to this dilemma because neither the citizens nor the politicians are willing to do what is necessary.

Read the rest.

And yet there are still people—locally—who don't see the problem as out-of-control spending but as "insufficient revenue":

Martha Robertson, chair of the Tompkins County Legislature, said the idea of letting the tax surcharge on the wealthy expire now is wrongheaded, considering the dire straits the state is in financially. Robertson said cutting programs rather than extending the surcharge shows lawmakers have "the wrong idea about what government is for." 


Gird your loins, people.

The rub

Although our circumstances in NYS are not precisely parallel, we can learn from the experience of our Massachusetts neighbors who voted in a 2.5% property tax cap 30 years ago. This article appeared in the Buffalo News recently:

Massachusetts offers less-taxing lifestyle

WEST STOCKBRIDGE, Mass. -- Something happens as the green "Welcome to New York" sign fades in the rearview mirror when you cross into Massachusetts: Taxes go down.

They are lower on clothing purchases. On gasoline, on furniture, on alcohol and on a range of goods and services. On businesses. And personal income is taxed at a lower rate.

But, most noticeably, property taxes are lower...

There's a lot of grist for the thoughtful reader's mill in this article, much of it having to do with just plain economics, which is classified with other social sciences for a reason—to a great degree, it has to do with how actual people behave in the actual world. And when something changes in that world, people's behavior changes as well, particularly for those at the margin (quite literally in this instance):

"Realtors in Massachusetts do use the taxes as a selling point," said Martha Piper, a broker associate with Stone House Properties in West Stockbridge.

"The difference in taxes is almost double between the border," said Ed Hoe, president of Kinderhook Real Estate Co., an agency based in Columbia County, N.Y., that does business on both sides of the border. Homebuyers use the tax difference to try to work better deals for houses on the New York side, he said.

"What it ends up doing is having an adverse effect on value or what people are willing to pay in New York State," he said.

Clearly, those who live and work along the border between NYS and Massachusetts respond rationally to things such as differences in tax burdens between the two states. There are those, like Barbara Lifton, who resist the notion that people behave in such a rational fashion.  But resistance is futile.

Another point:

...said Andrew Bagley, research director at the Massachusetts Taxpayers Association, a nonpartisan policy group, "Yes, you can control property taxes. It just means the money has to come from somewhere else -- unless you want to eliminate services," he said.

Aye, there's the rub! You can play the fiscal shell game, capping property taxes but continuing to spend like a drunken sailor and finding other "sources of revenue" to pay for that spending, or—you cut spending.  And as American Majority says:

...cutting government spending isn’t easy.  Almost regardless of what elected officials would try to cut from their government’s budget, there would be strong opposition from those currently benefiting from that government spending....

Once a person benefits from government spending, they rely upon it and will be extremely motivated to contact their elected officials if there is even a rumor of cutting that spending.  Almost without fail, there will be stronger political pressure to not cut spending than the political pressure to reduce the spending.  Moreover, government agencies always think their budgets should grow, regardless of the effectiveness or necessity of their programs.  It takes a tremendous amount of courageous commitment to see a proposed spending cut through to be enacted into law.

Looking around the country, even Democratic Governors...are proposing budgets with significant spending cuts.  In New York State, for example, Governor Cuomo, a Democrat, announced a budget with cuts to many government programs...

Stay tuned.

There's much, much more in the Buffalo News piece.  Do read the whole thing.

On a tip from Tom


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