The direction the country is taking bothers me. Increasingly, I see little hope for a bright prosperous future. Frankly, things cannot continue going in the direction they’re heading without a disastrous result.
Mark Steyn wrote earlier this week:
Generally speaking, functioning societies make good-faith efforts to raise what they spend, subject to fluctuations in economic fortune: Government spending in Australia is 33.1 percent of GDP, and tax revenues are 27.1 percent. Likewise, government spending in Norway is 46.4 percent, and revenues are 41 percent – a shortfall but in the ballpark. Government spending in the United States is 42.2 percent, but revenues are 24 percent – the widest spending/taxing gulf in any major economy.
This is unsupportable, by any measure, and should be seen to be so by anyone with common sense, irrespective of political party, but apparently is not. And it’s important to recognize that the reason revenues are at a historically high 24% of GDP—the historical average is around 18%—is that GDP growth for the last 4 years has been atrociously bad, and well below the 3% historical trend rate of growth.
In a rational world, we would make a decision to settle on a continuum somewhere between cutting government spending to 24% of GDP, and raising taxes to 42.2% of GDP, which would necessarily imply massive tax increases on the middle and, yes, even the lower class.
At the moment, however, it is impossible to cut spending to 24% of GDP. Not just politically impossible, though that appears to be true also, but I mean impossible impossible. The reason it is impossible is that 24% of current GDP will not cover the cost of mandatory entitlement spending and service on the national debt. More than 62% of government spending is mandatory spending on essentially social security and Medicare. Another 6% is interest on the national debt, and it’s only that low because 1) the Fed has been buying massive amounts of US treasury bonds, and 2) interest rates are historically low.
In other words, 68% of the federal budget is taken up by entitlements and debt service, alone. We could eliminate the entirety of the rest of the federal government and, at current rates of taxation, would still run a deficit.
At the current rate of spending, we can expect to add over $12 trillion dollars in debt over the next decade. To combat this, the president has requested an additional 1.6 trillion in new revenue, which he expects to gain by increasing tax rates on only the upper class. Even assuming, arguendo, that such a taxation plan would actually result in that much additional revenue—which it likely would not—we would still add an additional $10 trillion in debt.
And that, of course, assumes interest rates would not rise from their current low levels. A rise to the historical rates of interest would increase debt service costs from $250 billion per year to $650 billion per year, or approximately 15% of the budget.
Neither Congress nor the President are proposing a serious plan to balance the budget, which would require a politically impossible mix of massive budget/entitlement cuts, and/or massive tax increases on the middle and lower classes.
Absent such a plan, we will inevitably default on our debt, or hyperinflate our way out of it, both of which are merely two sides of the same coin. In either case, the dollar will lose its status as the world’s reserve currency, and the life savings of every single person in the country—except, perhaps, those embodied in some classes of hard asset—will be rendered worthless. There will be massive unemployment, and a high possibility of civil strife. Imported goods will essentially be unobtainable, and I’m not just talking about BMWs and Land Rovers, but everyday things we never even think about, like fresh fruit from Chile in the winter, or clothes from Singapore and Taiwan at any time.
The least damaging course of action would be a massive reduction in government spending. A more damaging course would be a massive increase in taxation. The most damaging course would be to do nothing but nibble at the edges of spending and taxation until we default, either formally, or de facto through hyperinflation. So far, we are set on the third course.
We are set on a path to completely destroy the currency and economic life of the Republic, and we will inevitably do so without massive tax increases, massive spending cuts, or some mixture of the two.
Meanwhile, in Washington, DC, the Fiscal Cliff negotiations—by which I mean "farce"—continue. Personally, I’m a charter member of the Let It Burn club. The Democrats have set up a narrative in which, no matter what happens, Republicans will get the blame. And yet, 18 months ago, what we’re now calling the Fiscal Cliff was unilaterally hailed as a wise, bipartisan, and far-seeing compromise that would set the country on the road to financial rectitude. And quite frankly, the president is giving every indication that he wants to go over the Fiscal Cliff, and that he can weather the political and economic fallout from it.
OK. Then let’s test that theory.
This is not a risk-free strategy. As Ace of Spades points out:
The Walk Away/Let It Burn option is growing on people. One cautionary note, though: This will provoke a serious constitutional crisis and may undo the Republic. So a soft Let it Burn could turn into a genuine collapse of the Republic.
Obama is a tyrant. If Republicans do not lift the debt ceiling, it is perfectly obvious what he will do, as he’s argued for it before: Like Putin, he will begin unilaterally asserting power he doesn’t have.
And what will be the recourse? Court, I suppose. Impeachment, sure, but Democrats will block conviction. So whether or not the President can suddenly assert sweeping power over the purse — sweeping aside the last real check on his power granted to the House of Representatives — will depend on the vote of Justice Go Along to Get Along Roberts.
President Obama has already asked for it. It’s that one exception I mentioned before: He is asking for unilateral power to raise the debt ceiling and no president should ever have that power.
Our constitution is clear that the money bills must originate in the house. Equally clear is the principle of Congressional supremacy, in that Congress may pass laws even over a presidential veto. The debt ceiling is clearly a Congressional, not a presidential prerogative.
Congress, of course, has already amended the Constitution’s strictures in practice. For instance, the Senate takes House bills, say, for building a dam, and strips the original language, then loads it up with budgetary items. The House accepts them in conference. Additionally, we have operated without a federal budget—though one is required annually by law—since 2009. This is a…constitutional novelty.
But giving unilateral budgetary power to the president goes far beyond novelty. In my view, granting this power to any president will mark the end of the Republic, just as surely as the creation of the First Triumvirate marked the death knell of the Roman Republic.
The American people elected President Obama. It is only right that they should reap the full measure of the consequences of that decision. Ace is right. Going over the Fiscal Cliff may undo the Republic. But if that is true, then I’m entirely unconvinced that the Republic should be saved.
This is a bit odd:
Residents in a Newhall senior apartment complex are protesting an order from management to remove their beloved Christmas tree from the community room because, they were told, it’s a religious symbol.
So, is it a government run facility?
On Tuesday, Tarzana-based JB Partners Group Inc. sent a memo to staff at The Willows senior apartment building demanding they take down Christmas trees and menorahs in communal areas.
The company has owned The Willows for four years, but this is the first time it’s given such a directive to staff.
Ok, what’s the objective then? Yes, I understand that they own the property and can do pretty much anything they wish, I’m just curious about the ‘why’.
If it isn’t a government facility and the overwrought nonsense that goes on about the separation of church and state, why is a private company demanding that people living in their building and using a common area in the facility refrain from putting up a Christmas tree?
Unless we’re deeply into political correctness and the horrible possibility that it might offend someone?
Ye gods … I swear, we seem to take joy in making life much more difficult than it needs to be at times.
The following US economic statistics were announced today:
The Bloomberg Consumer Comfort Index eased down -0.8 points to -33.8.
The Census Bureau’s quarterly information services survey reports that rose 0.3% in the 3rd quarter, up 2.1% On a year-over-year basis.
The Challenger Job-Cut Report indicates that November layoff announcements rose to 57,081 from 47,724 in October.
Initial claims for unemployment fell 25,000 last week, to 370,000. The 4-week moving average rose 3,000 to 408,000. Continuing claims fell 100,000 to 3.205 million. The weekly drop is being taken as an indication that all the Hurricane Sandy-related jobless claims have been fully unwound.
Because we’re served by the worst political class ever:
President Obama’slead negotiator in the “fiscal cliff” talks said the administration is “absolutely” willing to allow the package of deep automatic spending cuts and across-the-board tax hikes to take effect Jan. 1, unless Republicans drop their opposition to higher income tax rates on the wealthy.
Treasury Secretary Timothy Geithner said in an interview with CNBC that both sides are “making a little bit of progress” toward a deal to avert the “cliff” but remain stuck on Obama’s desired rate increase for the top U.S. income-earners.
“There’s no prospect for an agreement that doesn’t involve those rates going up on the top two percent of the wealthiest,” Geithner said.
Apparently there is no way to raise the desired revenue, at least according to Obama/Geithner, that “doesn’t involve those rates going up on the top 2%”. No way.
Oh, wait …
What we said was give us $1.2 trillion in additional revenues, which could be accomplished without hiking taxes — tax rates, but could simply be accomplished by eliminating loopholes, eliminating some deductions and engaging in a tax reform process that could have lowered rates generally while broadening the base.
Say, wasn’t that President Obama in July of 2011 at a press conference? Why yes it was. So there is a way, but he and apparently his “negotiator” refuse to pursue it (btw, no I”m not fooled by the illusion that this isn’t just as much a tax hike as what they’re proposing)? It that what is happening?
Why yes, yes it is. So there is another way to do this, apparently. Unless our President was telling a tall one about what he’d be willing to do in July? Yeah, I know, perish the thought. Lie to us? Unthinkable.
Instead according to Turbo Tax Timmy, they’d “absolutely” take us over the cliff, because, you know, raising taxes on the “rich” is now the only acceptable position. You and your life? You’re a mere pawn for these poppinjays. They’re fine with playing with your life and livelihood to score a political win. They have no problem holding your life and property ransom and using your future to force their desired resolution. But if we go over the cliff, screw you.
Meanwhile, in the House, Speaker Boehner continues to look for a comfortable place to lie down and surrender.
In the Senate the GOP actually tried to bring the President’s proposal to a vote and Majority Leader Reid denied it. Because it was, per Reid, a “stunt”.
This is all a “stunt”. A miserable stunt perpetrated by a miserable group of people who have no concept of leadership or service to their country but are long on ego and party.
It is the price of always voting for the “lesser of two evils”.
The following US economic statistics were announced today:
The MBA reports that mortgage applications rose 4.5% last week, with purchases up 0.1% and refinancings up 6.0%.
The ADP Employment Report is forecasting a rise of 118,000 net new jobs in November, down from 157,000 in October.
Nonfarm productivity was revised up to a 2.9% annualized rate for the 3rd quarter, while unit labor costs fell -1.9%.
Factory orders rose a stronger-than-expected 0.8% in October, and ex-transportation orders were up and even stronger 1.3%.
The ISM Non-Mfg Index shows activity picking up, as it increased nearly a full point to 54.7.
You likely recall the controversy concerning the President’s denial of approval for the Keystone XL pipeline a few months back. Citing the route through the state of Nebraska as a problem, Obama decided to defer a final decision until after the election.
Up for grabs – a lot of oil and 20,000 jobs. Most saw approval as a no-brainer and the route through NE as easily “fixable”. But Obama was having none of it, choosing to please his base vs. opting for jobs for Americans. Since the disapproval, Canada, where the pipeline originates, has announced plans to sell that oil to China.
Well, there’s a new route through NE and local leaders have voiced strong support for the pipeline:
TransCanada has proposed a new route for the pipeline that avoids the Nebraska Sandhills, and the Nebraska Department of Environmental Quality is seeking comment before it drafts its report on the new route. Port-To-Plains Alliance, which is made up of more than 100 local elected officials and community leaders, has today offered its “strong support” for the Keystone XL Pipeline.
Their reasoning seems pretty strong — if you’re interested in putting Americans back to work and helping the economy:
Keystone XL will provide significant economic benefits for our region. The pipeline is expected to create approximately 20,000 manufacturing and construction jobs in the United States. It could also generate more than $5.2 billion in tax revenue to the Keystone XL corridor states. At a time when state and local governments across the country are struggling to balance their budgets, these employment and revenue benefits are critical to our region. Specific benefits for Nebraska include:
- More than $465 million in new spending for the Nebraska economy
- More than 7,500 person years of employment
- Increased personal income by $314 million
- Additional state and local tax revenues of more than $11 million
- $390 million in increased Gross State Product
And that’s just Nebraska. Other states stand to gain significant revenue as well.
Then there’s the issue of the Bakken Formation oil in Montana and North Dakota. It too needs the pipeline to be finished so it can efficiently ship oil from there to the coastal refineries.
Again, the major problem has apparently been solved. It’s a move that would lessen our dependence on Venezuelan and Middle East oil (instead opting for supplies from a loyal and stable ally), would make the shipment of Bakken oil less costly, benefit state and Federal revenue (at a time when both entities are hurting for it) and, most importantly, create multi-thousands of jobs.
So, what excuse do you believe Obama will use to further delay or disapprove it this time?
Now that progressives, liberals, whatever they’re calling themselves today, are secure in the fact that Barack Obama will be in the Oval Office for another 4 years, they plan on doing everything they can to see that he does what he said he’d do way back in 2008 - or at least what they thought they heard him say he’d do.
Those parts include climate change, drone strikes, gun control and closing the detention facility at Guantanamo Bay, among others.
We’ve seen the first shots fired in the gun control advocacy (no pun intended) with the absurd Costas gun-control editorial at the half-time of an NFL game. And, of course, Dianne Feinstein is making the usual “assault weapons ban” noises.
By the way, as a complete aside, but speaking of gun control, I want to show you a classic exchange:
Can you say pwned?!
Anyway, back to the subject at hand – the liberal agenda. Remember, Obama told the Russian President that he’d be “more flexible” after his re-election. There’s absolutely no reason that he won’t be less politically inhibited (because in the political world, that’s what “more flexible” really means) domestically as well as internationally is there?
But now? Now it’s safe:
“Liberals in the media are going to be tougher on Obama and more respectful at the same time,” Hendrik Hertzberg, The New Yorker’s chief political commentator and a former speechwriter for Jimmy Carter, told POLITICO. “He was the champion of our side, he vanquished the foe….. [but] now liberals don’t have to worry about hurting his chances for re-election, so they can be tougher in urging him to do what he should be doing.”
Apparently the NY Times plans on leading the way in pushing and prodding Obama to do what he said he’d do (or what the NYT thinks he said he’d do):
The New York Times editorial page launched a series titled “Goals for a New Term,” calling on the president to implement stronger gun control laws and shutter Gitmo, which he had pledged to do during his first year in office. The tone of the editorials has been sharply critical: On guns, the editors suggested Obama lacked courage. On Guantanamo, they slammed his administration for deciding “to adopt the Bush team’s extravagant claims of state secrets and executive power, blocking any accountability for the detention and brutalization of hundreds of men at Guantánamo and secret prisons, and denying torture victims their day in court.”
Gitmo? There are rumblings out there – again – of the Federal government purchasing a closed prison with the idea of moving the jihadists in captivity there on to the shores of the US. Seems prison is okay for the jihadists if the left initiates the idea of buying one and housing them there. But holding them in Gitmo, a place that wasn’t their idea (but clearly is superior to moving them here) is just beyond the pale because, you know, it was that evil Bush’s idea. So it’s not about incarceration, it’s about the myth of Gitmo … or something.
Obama has claimed he has no interest in climate change legislation/taxation in his second term (well, he doesn’t as long as there’s a Republican House … if that changes in 2014, he might develop an immediate interest). Then he’s said he does. Then, yeah, not so much. So who the hell knows. But what we do know is progressives intend to try to push him on this and it certainly wouldn’t surprise me if he responds positively. He certainly has nothing to lose. And it may provide a distraction if the economy keeps tanking. He can couch his attempt to tax thin air in the usual class warfare (fat cat corporations fouling the streams and polluting the air while melting the ice caps to boot). He can call for “social justice” because, you know, climate change effects those least able to afford it first … or something.
Drone strikes? Yawn. A small faction of the left concerns itself with drone strikes. It is classic leading from behind. Get over it progressives. Your President approves all those arial assasinations himself. It is part of the responsibilities that Nobel Peace Prize winners must endure.
Sarcasm aside, it will indeed be interesting to see if Obama does anything for progressives in his 2nd term. Will he become an activist president or will he vote “present?”
Well, let’s see – is he taking the lead in fiscal cliff negotiations and working tirelessly with Congress to ensure a solution before the deadline or is he going on a 20 day vacation to Hawaii ending January 6th?
Very interesting read today by David Gordon in “Minding the Campus” (via Insty). In his piece he talks about the subject of history being at present in the best of times and in the worst of times, to mangle Dickens.
What am I talking about? Well, the blog in which Gordon’s article appears subs its title with “Reforming our Universities”.
Why is that important? We’ve talked about it in the past. It is where liberal America has set up shop for decades. And the effect is never been stronger than now. In fact, a lot of what you see as the changing attitudes in America can, I think – at least in part – be traced to academia.
Gordon notes its beginning:
This extraordinary bias began in the late 1960s with the anti-Vietnam war protests. Many participants, at least those who subsequently went into academia, have never gotten over it. Their fossilized views have made their own disciplines largely museums of dead ideologies. Another of the remarkable changes within the historical profession has been the growth of women’s history. With only a negligible representation in 1975, almost 10% of all historians today identify themselves as historians of gender and women’s affairs.
What bias is Gordon talking about? Well it’s a bias that he sees as “mangling history” to our detriment:
The evolution of the historical profession in the United States in the last fifty years provides much reason for celebration. It provides even more reason for unhappiness and dread. Never before has the profession seemed so intellectually vibrant. An unprecedented amount of scholarship and teaching is being devoted to regions outside of the traditional American concentration on itself and Europe. New subjects of enquiry — gender, race and ethnicity — have developed. Never have historians been so influenced by the methodology and contributions of other disciplines, from anthropology to sociology.
At the same time, never has the historical profession been so threatened. Political correctness has both narrowed and distorted enquiry. Traditional fields demanding intellectual rigor, such as economic and intellectual history, are in decline. Even worse, education about Western civilization and the Enlightenment, that font of American liberties, and the foundation of modern industrial, scientific and liberal world civilization, has come to be treated with increasing disdain at colleges and universities.
Now call me crazy, but you can see easily the effect of what Gordon is talking about today in the last election. Increasingly students (and that includes further down the academic chain in high schools) know less and less about our history and traditions and more and more about, well, women’s studies, gender studies, things which have little bearing on economic and intellectual history – for instance:
The problem with this is that it has helped force out many other kinds of historical enquiry. It is important to emphasize women’s role in society and in history. However, it is difficult to see how a feminist perspective could contribute very much to a purely economic history of the English industrial revolution (as opposed to its social consequences), or to a diplomatic history of Europe between the Napoleonic and the First World War. As a result, these kinds of studies are receiving ever less attention.
We all understand that women and minorities were mistreated. Got it. And we all know that was wrong, with 21st Century hindsight. But what happened back when all that bad stuff was going on, in terms of economic and intellectual history, is still critically important today.
Instead history’s “new focus” has helped bolster both the “victimization” and “entitlement” mentality:
Worst of all, women’s history has contributed to the current holy trinity of race, gender and class that dominates the historical profession. Under normal circumstances, the tight focus on victimization would soon fade. Since oppression studies explain so little, they soon become boring. But, as a part of a political chorus demanding ever-more extravagant entitlements for key voting groups, an essential part of the identity politics that is so destructive of national unity, the trinity is ensured a long life. Historians can grow tired of an intellectual movement. Politicians of a useful political tool, never.
There is also something else beyond the fanciful and fraudulent political and academic rhetoric of “equal opportunity – affirmative action.” That is jobs. Key voting groups designated as oppressed have been hired preferentially in the academy, most especially in the social sciences, including history. To justify these preferences, historians of gender and race must keep emphasizing oppression. How otherwise can their privileges be justified? Hence, the refiguring history to justify their positions in the professoriate.
We used to hear people laugh derisively when someone mentioned “political correctness”. But what you’re reading here is an example of political correctness run amok.
And it’s effect? Read James Taranto’s piece in the WSJ today. It’s an incredible example of political correctness gone nuts. I’m talking about Emily Yoffe’s answer to an obviously absurdly insensitive question addressed to her. However, her answer, among much of the left, is both appropriate and “correct”. It’s what they believe. It’s what they’ve been taught.
Will it get worse? Well, Gordon seems to think it will:
A remarkable generational change is also coming. Most of the historians in the declining fields, economic, intellectual and diplomatic history, earned their degrees more than 30 years ago. At the same time, more than 50% of the new PhDs are now trained in women and gender history, in cultural history (a watered-down version of social history), in world and African-American history. This is going to make an extraordinary difference in what kind of scholarship will continue to be undertaken, and how the past will be taught. The history profession, seemingly innovative and robust, is in fact intellectually debilitated, and sadly reduced in scope.
If you think it is bad in the history department, you’ve seen what is going on in the science department (
global warming climate change “science”).
Many have been hinting for years that the culture battle – the battle between individualism and freedom v. collectivism and entitlement- is being lost in academia. Gordon manages to put an exclamation point to the claim. One of the reasons our population knows less and less about economic and our intellectual history is because it has been waylaid and replaced with “disciplines” which stress entitlement and victimization.
Is it then a surprise when more and more of the population view themselves and this country through those lenses? And is it then any more surprising when they perceive government – more and more government – as the answer? Again, it’s what they’ve been taught.
The following US economic statistics were announced today:
In weekly retail sales, Redbook reports sharply lower 2.1% increase from the previous year. ICSC-Goldman reports an abrupt weekly sales decrease of -3.1%, and a 3.1% increase on a year-over-year basis.
The following US economic statistics were announced today:
Construction spending rose 1.4% in October, and was up 9.6% on a year-over-year basis.
Vehicle sales have been coming in strong today, with domestic sales at an annualized 11.7 million. Overall vehicle sales are set to top 15 million, the best rate since the 15.5 million annualized in February, 2008. Ford, Honda, and Nissan are posting better sales than expected, while GM sales are weaker than expected.
The Markit Economics PMI Manufacturing Index rose 0.7 points to 52.8, indicating increased manufacturing growth.
In contrast, the ISM Manufacturing Index dropped sharply from 51.7 to a weaker than expected 49.5, a below-50 reading that indicates economic contraction.