Monday, October 17, 2011
Occupy Wall Street
In this country you create rich people by buying their stuff. Nobody puts a gun to your head. I was thinking about inventing the next generation iphone while blowing my life savings and working 100 hours per week. But that would mean I might create 50k jobs, potentially get rich, and those genius wall street protesters would vote to legally steal the fruit of my labors. I think I'll just keep my life savings and they can keep their unemployment.
Thursday, August 4, 2011
The Federal Debt Ceiling Crisis of 2011
It's so hard to know whom to believe. Seems like every news outlet has their own spin they are trying to sell to the public. Is there any way on Earth a simple man like me could unravel the Federal Debt Ceiling Crisis of 2011 without the help of dubious politicians and new anchors with personal agendas?
If I could get my hands on the raw numbers, could I make sense of them? I mean, I do have a bachelor's degree in Economics. But I haven't used that degree in almost 20 years. Is there any way a simple man like me could ever explain the Federal Debt Ceiling Crisis of 2011 in simple terms? Maybe I can try.
I think of the Federal government like a business with revenue (taxes they charge to citizens) and expenses (things they want to buy and programs they think benefit people). It's also not all that dissimilar to my personal finances where I have revenue (the paycheck I get from work) and expenses (like my insatiable iTunes appetite).
A good business earns more that they spend and finishes each year with a net profit. A bad business spends more than they earn and ends the year with a net loss, or negative net profit. Personally, when I earn more than I spend I get to save the extra money for retirement. If I spend more than I earn, my credit card balance rises and they start charging me interest.
Having a Federal debt ceiling is like my wife telling me that I can spend as much as I want on iTunes until my credit card is maxed out, and when that happens then she's cutting me off. But since my wife is such a nice person, when I max out one credit card she just gives me another credit card which is like giving drugs to a junkie. Our government is a junkie and spending money they didn't have to earn/raise is the drug, so every time our elected representatives vote to raise the debt ceiling it means we're just giving them another credit card to max out and keep feeding their addiction.
Maybe the raw numbers can help me figure this out. I found them at http://www.davemanuel.com/history-of-deficits-and-surpluses-in-the-united-states.php. Of course you can't believe anything you read on the Internet these days so these numbers might be bogus, but then again maybe they are real. It's hard to compare nominal figures so let's stick with the inflation-adjusted numbers.
I can't really grasp the nuances of studying these numbers since the beginning of time, so let's just focus on the last 50 years. Generally speaking I'd guess that we would have deficits when the economy is bad and generally have surpluses when the economy is good. And the economy seems pretty decent most years, except when it's not, so let's say about half the time we should have a surplus and half the time we should have a deficit. Wait a minute. The data actually shows that in the last 50 years we've only had 5 surpluses. That can't be right, can it? I mean, the economy wasn't bad for 45 years in a row was it?
I bet it's because of those dang liberals. They must be causing this. We had a Democrat president for 22 of those 50 years with an AVERAGE annual net loss of 270 Billion. Yup that's what caused it. Wait a second. For the 28 years we had a Republican president we had an AVERAGE annual net loss of 255 Billion. That can't be right.
Oh yeah. It's really congress that controls spending not the president. And the house and the senate sort of have to agree or else they just block each other. In those 50 years it looks like the Democrats controlled the house and the senate 31 times with an AVERAGE annual net loss of 255 Billion. During the 10 years the Republicans controlled both the house and senate, we had an AVERAGE annual net loss of 136 Billion. Wow I could have swore that Republican-controlled congress would have had a profit but oh well. Losing 136 Billion is a lot better than losing 255 Billion.
But can't the president veto what the Republican congress was trying to do? I bet a Democrat president was vetoing all those spending cuts the Republicans were trying to pass. So the real power happens when one party controls the presidency AND both houses of congress. During the 15 years the Democrats controlled all three, we had an AVERAGE annual net loss of 295 Billion. That makes sense. And during the 4 years that the Republicans controlled all three, we have an AVERAGE annual net loss of 375 Billion. Hold the phone! That can't be right.
Could it be that despite the "conservative" label, Republicans are just as addicted to spending as the Democrats? Children cover your ears! Maybe those liberal journalists are right. Obama spends a lot of money but so did Bush.
Wasn't it Reagan who got a bad rap for deficit spending? Yup, from 1981-1988 we AVERAGED an annual net loss of 337 Billion. But Bush 41 got it under control and only AVERAGED an annual net loss of 369 Billion. Wait that can't be right.
But then Clinton took over and screwed things up. Over his presidency he AVERAGED an annual net loss of 70 Billion. Wait that's lower than Bush and Reagan. That can't be right. Well Clinton did sort of "luck" into the Internet frenzy, rapidly increasing property values, and a raging stock market bubble. Every year of his presidency got better and better from a deficit perspective and luck or not, at least 4 out of the only 5 surpluses IN THE LAST 50 YEARS occurred directly on his watch. Good job. But I wish you had been just a little more proactive about rooting out global terrorism.
Then Bush 43 took over and got a raw deal. The Internet bubble burst, the stock market crashed, terrorists struck and we had to retaliate, Enron collapsed, and we found out that everyone including my dog being able to buy a house valued at 20x their annual income with 1% down wasn't such a good idea. On Bush's watch our AVERAGE annual net loss was 269 Billion. It's interesting that even that was a lot smaller loss than many of the presidents before him and they had a lot fewer problems to deal with.
Then came Obama. Yeah the economy was a mess when he took over but he seems to be a little more addicted to spending than your average bear. Eh boo boo? On his watch the AVERAGE annual net loss has been 1,453 Billion. In other words, not only is his average worse but it is 4x WORSE than the WORST presidential record in the last 50 years. Comparing the WORST one year loss EVER of 462 Billion to an AVERAGE net loss of 1,453 Billion for 3 straight years is enough to make even a simple man like me sit up and take notice.
So what have I learned?
If I could get my hands on the raw numbers, could I make sense of them? I mean, I do have a bachelor's degree in Economics. But I haven't used that degree in almost 20 years. Is there any way a simple man like me could ever explain the Federal Debt Ceiling Crisis of 2011 in simple terms? Maybe I can try.
I think of the Federal government like a business with revenue (taxes they charge to citizens) and expenses (things they want to buy and programs they think benefit people). It's also not all that dissimilar to my personal finances where I have revenue (the paycheck I get from work) and expenses (like my insatiable iTunes appetite).
A good business earns more that they spend and finishes each year with a net profit. A bad business spends more than they earn and ends the year with a net loss, or negative net profit. Personally, when I earn more than I spend I get to save the extra money for retirement. If I spend more than I earn, my credit card balance rises and they start charging me interest.
Having a Federal debt ceiling is like my wife telling me that I can spend as much as I want on iTunes until my credit card is maxed out, and when that happens then she's cutting me off. But since my wife is such a nice person, when I max out one credit card she just gives me another credit card which is like giving drugs to a junkie. Our government is a junkie and spending money they didn't have to earn/raise is the drug, so every time our elected representatives vote to raise the debt ceiling it means we're just giving them another credit card to max out and keep feeding their addiction.
Maybe the raw numbers can help me figure this out. I found them at http://www.davemanuel.com/history-of-deficits-and-surpluses-in-the-united-states.php. Of course you can't believe anything you read on the Internet these days so these numbers might be bogus, but then again maybe they are real. It's hard to compare nominal figures so let's stick with the inflation-adjusted numbers.
I can't really grasp the nuances of studying these numbers since the beginning of time, so let's just focus on the last 50 years. Generally speaking I'd guess that we would have deficits when the economy is bad and generally have surpluses when the economy is good. And the economy seems pretty decent most years, except when it's not, so let's say about half the time we should have a surplus and half the time we should have a deficit. Wait a minute. The data actually shows that in the last 50 years we've only had 5 surpluses. That can't be right, can it? I mean, the economy wasn't bad for 45 years in a row was it?
I bet it's because of those dang liberals. They must be causing this. We had a Democrat president for 22 of those 50 years with an AVERAGE annual net loss of 270 Billion. Yup that's what caused it. Wait a second. For the 28 years we had a Republican president we had an AVERAGE annual net loss of 255 Billion. That can't be right.
Oh yeah. It's really congress that controls spending not the president. And the house and the senate sort of have to agree or else they just block each other. In those 50 years it looks like the Democrats controlled the house and the senate 31 times with an AVERAGE annual net loss of 255 Billion. During the 10 years the Republicans controlled both the house and senate, we had an AVERAGE annual net loss of 136 Billion. Wow I could have swore that Republican-controlled congress would have had a profit but oh well. Losing 136 Billion is a lot better than losing 255 Billion.
But can't the president veto what the Republican congress was trying to do? I bet a Democrat president was vetoing all those spending cuts the Republicans were trying to pass. So the real power happens when one party controls the presidency AND both houses of congress. During the 15 years the Democrats controlled all three, we had an AVERAGE annual net loss of 295 Billion. That makes sense. And during the 4 years that the Republicans controlled all three, we have an AVERAGE annual net loss of 375 Billion. Hold the phone! That can't be right.
Could it be that despite the "conservative" label, Republicans are just as addicted to spending as the Democrats? Children cover your ears! Maybe those liberal journalists are right. Obama spends a lot of money but so did Bush.
Wasn't it Reagan who got a bad rap for deficit spending? Yup, from 1981-1988 we AVERAGED an annual net loss of 337 Billion. But Bush 41 got it under control and only AVERAGED an annual net loss of 369 Billion. Wait that can't be right.
But then Clinton took over and screwed things up. Over his presidency he AVERAGED an annual net loss of 70 Billion. Wait that's lower than Bush and Reagan. That can't be right. Well Clinton did sort of "luck" into the Internet frenzy, rapidly increasing property values, and a raging stock market bubble. Every year of his presidency got better and better from a deficit perspective and luck or not, at least 4 out of the only 5 surpluses IN THE LAST 50 YEARS occurred directly on his watch. Good job. But I wish you had been just a little more proactive about rooting out global terrorism.
Then Bush 43 took over and got a raw deal. The Internet bubble burst, the stock market crashed, terrorists struck and we had to retaliate, Enron collapsed, and we found out that everyone including my dog being able to buy a house valued at 20x their annual income with 1% down wasn't such a good idea. On Bush's watch our AVERAGE annual net loss was 269 Billion. It's interesting that even that was a lot smaller loss than many of the presidents before him and they had a lot fewer problems to deal with.
Then came Obama. Yeah the economy was a mess when he took over but he seems to be a little more addicted to spending than your average bear. Eh boo boo? On his watch the AVERAGE annual net loss has been 1,453 Billion. In other words, not only is his average worse but it is 4x WORSE than the WORST presidential record in the last 50 years. Comparing the WORST one year loss EVER of 462 Billion to an AVERAGE net loss of 1,453 Billion for 3 straight years is enough to make even a simple man like me sit up and take notice.
So what have I learned?
- There's something different about government. If I had business losses for 45 out of 50 years I'd be fired. If I personally spent more than I earned for 45 out of 50 years I'd be bankrupt and living in a cardboard box. If I were addicted to spending and maxed out my credit cards, my wife would probably cut me off.
- A balanced budget mandate/amendment/whatever you want to call it makes sense in every other walk of life except our representatives won't support it in congress.
- Someone wise once said that if you find yourself in a big hole then stop digging. What part of a 14.whatever TRILLION dollar debt doesn't look like a big hole to you?
- Democrats really can't be blamed and Republicans really can't be exonerated. Seems like everyone has a spending problem.
Can you boil this down to one principle?
I'm a simple man with simple logic. If a politician or any person spends money on you or gives you something for free, they are going to be popular and well-liked. If a politician raises your taxes or takes your money, they are going to be hated. It's in my best interest to increase my popularity without increasing hatred directed at me. If there were only some way to spend more money WITHOUT having to raise taxes, it would totally solve my problem.
Wait a minute! Can I get one of those credit cards?
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