You would have to be an idiot, I mean seriously stupid, to believe that the U.S. can continue spending as we have the last decade, without collapsing our financial system through default or hyper-inflation. Every category of spending is growing at an exponential rate.
And raising taxes won’t do it either. Throughout our country’s history, raising taxes has resulted in one thing: higher spending. Does anyone truly believe that if we raised taxes that the increased revenue would be used to pay down the deficit? And just “taxing the rich” won’t do it either. To close the projected deficit in 2020 of over 1 Trillion dollars, the top tax rate would have to be 134%. I’m not aware of a way to tax more than 100% of someone’s income.
To recap: Spending is growing exponentially; tax increases have historically been used to increase spending, and taxing the rich will not close the deficit.
So we have a big problem, and the only way to solve it is to decrease spending substantially. After watching the last few weeks of debt-ceiling negotiations, I’m convinced that our politicians will NEVER be able to cut spending enough to keep our country from barreling headlong into a financial Armageddon.
The dumb-fucks in Congress are playing politics, trying to ensure their election or re-election in 2012. Let me tell you something. Let me tell you how stupid these fuckers are. You HAVE to be an idiot to want to be a politician in 2012, because 2012 is the end of the road. In 2012, you will either be responsible for massive, across-the-board spending cuts and fundamental entitlement reform, or you will be responsible for ushering in hyper-inflation, whereby things get so bad that Americans are “sawing off their own fucking legs.” The days of over-promising and under-delivering are over. There is no other way out of this.
So why would you want to be re-elected in 2012? Why would you want your party to hold onto Congress, or the White House, when inevitably your party will be the ones left holding the bag of empty promises?
There is only one reason why these fuckers in Congress are playing politics, while Rome burns. They are more worried about their own power than the health of our country. There is no way our country can survive with “leaders” such as the buffoons we see on the daily news cycle, offering only platitudes, unwilling to stand for the truth, regardless of what it means for their political careers. The Democrats know good and well that spending has to be cut dramatically, entitlements must be reformed, and that tax increases aren’t going to fix the problem. The Republicans know that defense has to be cut, the tax code has to be reformed to eliminate breaks and loopholes for favored constituents, and that they must cut spending in areas that the Democrats will use to paint them as villainous demons. Both parties will have to alienate a large percentage of their bases in order to make the changes that must be made. They won’t because alienating the base is not a recipe for re-election. That fact that they are worried about re-election at this point shows them to be insane. (See the previous two paragraphs).
Finally, when this country collapses, I hope the American mainstream media has nothing left to eat except for their own shit, and maybe a few copies of the fucking New York Times. Because these fucking hacks have worked hand-in-hand with the politicians, eager to be part of the social elites, eager to be celebrities, they have not been doing their jobs, which is to tell the truth in a manner in which average Americans can understand it. Hell, they haven’t been telling the truth at all.
The U.S. is fucked.
I have a solution. Let’s just enslave a third world country and steal their oil.
Problem solved.
You mean LIbya?
egg-zactly, as the good senator fm kentucky would say
Juicey, are we agreeing on something?
Ugh. Good grief.
Very well said!
Thanks for listening. Not like I can walk across the street and say this stuff to my neighbors.
Or your co-workers… heh.
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Pity you don’t work for The Economist, Wood.
🙂
It would have made for one of their classic headlines, maybe.
Twenty years from now, they will date the great American Renaissance and rebirth from that headline.
A contrarian dream, that kind of headline.
Tee hee, hope you’re wrong…
lol…yes, the old headline indicator! I hope I’m wrong, too!
You know I am a contrarian…maybe I was really meaning the opposite of what I was saying?
LOL too. No you meant it. And it is quite true. Just enjoying the timing of it…
Wood I can feel your anger in your writing.
Great stuff. So true.
Hard not to be angry with Obama telling us to tweet our congress people. Its a joke. Neither fucking plan, Boehner or Reid’s, will change anything about our trajectory.
great post, and point of view,
You know what the fundamental problem is? It is that our politicians and indeed our society pay no attention nor give any credence to facts and data. We have become a society of opinion and my opinion and rhetoric is as good as yours. Do you trade based on political philosophy? Of course you don’t you trade based on what the data from your analysis tells you. We need a tax policy that increases wealth in the long term for the nation but any correct policy at this juncture will hurt massively either through austerity or inflation. The only way you get that kind of tax policy is to crank the numbers with everything available as a possibility and see what gives me the biggest net deficit/long term debt reduction with the least impact (it will still be a big impact). But what did these guys do for months? Apparently they just talked in generalities and postured as they have nothing and even the “plans” they say they have don’t cost out at anything close to what they claimed. We need a facts and data party. You are correct about 2012, this is getting interesting. A great teaching opportunity for your kids.
Agreud. Plenty of facts and data out there, but that doesn’t make for good sound bites and telling the truth (for the American media) doesn’t seem to be an option.
Woody, I heard that this whole argument has to do with when they kick the can till. Dems want it kicked back to 2013 and reps to 2012 just in time for the election. Yes, they both know there is nothing they can do, but they still want the power.
And in 2012, your new president will be Ron Paul.
Insanity. There is something they can do. They won’t do it because it means they may not get re-elected. I’m not necessarily opposed to Ron Paul, but I would have to do a lot of research on his positions before I would offer an opinion.
Excellent essay. No bs. No political agenda. Just matter of fact. Deal or no deal, we are indeed fucked.
Thanks! When you realize that neither party is doing a damn thing to fix things, it makes it hard to root for one side over the other.
This is a quality post. Globalization has played a part in this also. Im really not a doomsayer but i cant help but think that something enormously catastrophic needs to happen before the real decisions will get made. I dunno. Im scared.
Super, I worry that something really really awful will have to happen first, as well. It is scary.
wood,
I have exchanged messages with you a few times before. I know you are one of the most dignified blogger on iBC. I wanted to broach this issue with you, since Chess blocked my ability to post on his blog. He wrote about a doji/dragonfly on SP 500 and I posted the following message:
Chess,
Your analysis would be valid only if the SP 500 index had accurate opening prices, it doesn’t, therefore your analysis of candlestick does not apply. If you want candlestick analysis you must work with accurate opening prices (e.g., SPY, QQQ, IWM), there you can see there is no doji or inverted hammer.
Massive reversals off the lows (>+1%) do carry statistically significant bullish bias, but in this case, it is neither a doji, nor a hammer
Best –
Removing such a message is at best unprofessional.
Well said. Both parties need to put the country ahead of their political agendas.
Democrats cling too tightly to unions and entitlements. Republicans cling too tightly to tax cuts as the solution to every crisis.
In terms of fiscal responsibility and hypocrisy, I thought this chart was interesting:
http://zfacts.com/p/1170.html
Time for politicians in both parties to compromise or resign.
DTR, nice graph. I like it, but I didn’t follow through on all their calcs. I’ll just assume it is correct. Interesting though that they started with Bush/Reagan debt. Following their logic, Bush/Reagan would have paid off the debt were it not for the interest due on previous debts. Am I reading it incorrectly?
I think the Reagan Bush-1 debt was just under $5T in total, but when compounding the interest on this debt it represents about $8T of the current total debt.
Both Democrats and Republicans are on a spending binge…Republicans just deny it. Both parties need to have their “blank check” taken away…I don’t trust either side with our check book.
One more interesting graph of debt in terms of %GDP:
http://zfacts.com/p/1195.html
I haven’t checked their numbers in detail, but this site appears to be using data from the US Treasury.
Here is an interesting read on Reagan which dovetails nicely with the Zfact chart. http://mises.org/freemarket_detail.aspx?control=488
Also, here is another site I like to reference. I think you’ll like it. http://www.usgovernmentspending.com/federal_debt_chart.html
It also seems to support the Zfact chart.
Great links below…depressing stuff though!
The 70’s sucked. Reagan – “the U.S.” – thought that spending beyond their means was necessary to jump start things. Nobody told the politicians that they had to shut it off though. Clinton presided over one of the greatest times in human history with the advent of the personal computer AND the internet. Both of which increased human production exponentially. The U.S. debt should have been paid off (or significantly reduced) at that time. (I’m not blaming dems or repubs, they are both responsible. As you can see right now, the President is pretty impotent, especially when Congress is a “different” party.) However, the politicians/fed kept pumping the economy when it didn’t need any help and the result has been bubble city (Internet, Housing, and soon to be U.S. standard of living). Is their a solution? Who knows? I think the Fed may finally be realizing that they are pushing on a rope. Maybe not, I don’t trust academic people to be very smart. Liquidity is not going to work anymore. It worked in the 80’s and overheated things in the 90’s and 2000’s but its time has come. It is time for real solutions and I don’t know if anyone has them.
I also wanted to add that I don’t think that raising taxes is the answer. I make somewhere between 50k and 100k when you figure it all out (federal income tax, state income tax, city income tax, social security, medicare, sales tax, property tax, personal property tax, fuel tax, sin tax (alcohol), cell phone taxes, taxes on utilities, hotel taxes, etc., etc.) I pay almost 50% of my income to taxes. So, with my 50% I provide food, housing, entertainment, and savings for me and my wife. What are these governments doing with my other half? Because, they could be providing for at least two people to be living pretty comfortably.
Excellent post fella!
Thanks Go2!
I think you should clean up the language, particularly the headline and send this out as a press release… prweb.com or something, maybe even send ibankcoin to google news
http://www.google.com/support/news_pub/bin/answer.py?answer=40787
lol, on the other hand, I’m not sure with all the cussing that goes on around here that it’ll make it, but an individual PR submission to PRweb might.
This is great information that people need to know.
Tim, thanks! Not a bad idea. I think we’ve been accepted to google news several times and been kicked off several times…lol…
Anyway, glad you enjoyed it.
Had a dream I ran for TN senate seat. This was my platform:
1 term only.
Will donate weekly salary to 52 diff TN charities.
I will not accept any long term benefits from the job.
I will cut spending.
I will not vote for any pork, nor will I seek any earmarks for TN.
I won.
I’d vote for you!
my contention has always been that politics, as a civic duty should be on a voluntary basis. based on term limits.pay scale would be commensurate to the size of your family=married,how many children etc. you pay into so-sec like everyone else.you co- pay your health insurance like everyone else. no special pension,because your not special. and should adhere to lie detector tests twice a year to find out whether or not you are taking money on the sly,and or coveting favors to special interest or corporations that are not in the best interest of the people you represent.and any and all politicians, including the president ,are candidates for recall, and impeachment by petition,only by the people. not other politicians seeking revenge,where recall and impeachment can only be put forth by them, and not the people. we need more say in what these people do anymore.it’s quite evident that the last 20 years has been just nothing but a money grab before they drive us off the cliff.
Preach on, Preacher!
Tremendous piece Woodshedder. Sums up our current mess perfectly. I never was a democrat but now can’t consider myself a republican either anymore. They’ve both screwed our country up (likely to the point of no return) over the past decade that I detest both parties equally.
I fear that in 100 years people will look back on 9/11 as the turning point in the story of America, with two of the worst presidents in our history serving back to back at a time when we needed intelligent, common sense leadership more than ever before. That is certainly not what we got (or are getting).
Wood – word. Well and clear spoken. Out here in Madison, WI there’s been a big battle going on between takers and producers – so far, the producers are holding on and we’re headed towards fiscal sanity – but not by much.
Perhaps it’s time to rethink how we allocate governmental responsibility – as it there’s there’s too much incentive (reelection) to do nothing but spend, spend, spend – easiest way to buy votes. There’s simply no fiscal accountability.
Maybe we should have representation by alphabetical order – or vote for congresspeople in other states – like my district would vote for you congresscitter…something.
The system’s broken and the looters are in charge. Atlas is beginning to shrug.
btw – did you see this story? DC is pissed b/c the markets haven’t panicked
http://www.cnbc.com/id/43943482
fuckers
Cheese, how are the recalls going out there in Madison area?
Wood – the action starts next week – unions are blanketing the ariwaves and basically saying if you don’t vote their way, you hate kids, America and puppies. But there’s a huuuuuuge number of people pissed off about the protestors and the recalls and the state senators who fled – and they’ll vote big.
Tax increases must be part of the solution. You have close to the lowest taxes in the industrialised world. International lenders will not continue to lend to you until you are serious about fixing your tax regime.
Check out an article written in the Globe and Mail, Canada’s conservative/business newspaper about your taxes.
http://www.theglobeandmail.com/report-on-business/international-news/us/us-in-state-of-denial-over-taxes/article2114872/
Ahem. The US has the third highest corporate tax rates on the planet! Only Japan and Germany have higher rates. And you want to raise them?? Huh?
Look at Figure 2.1, page 22 (page 36 of the pdf)
http://www.cbo.gov/ftpdocs/69xx/doc6902/11-28-CorporateTax.pdf
You do have a high rate of corporate taxes, but few actually pay them.
Here is a quote from the above article.
“On the corporate side, Mr. Hufbauer pointed out that U.S. tax rates are high by international standards, but special corporate entities created by Congress dramatically shrinks the corporate tax base. While business taxes average 22 per cent of GDP in the OECD, the ratio is just 13 per cent in the U.S.”
Mr Hufbauer is “a senior fellow at Peterson Institute for International Economics in Washington and a former top tax official at the Treasury department.”
Its true, and part of the reform has to be to reform corp. taxes to get rid of all the special subsidies written into the code over the years. The time of gov’t picking winners and losers and using the tax code to implement their picking, is over.
Hufbauer is being disingenuous, and I disagree. I assume by “special corporate entities”, Hufbauer means entities like LLC’s and subchapter S corp’s. Well, income from those type of entities are put on the personal 1040 return, which has a 35% rate. Not much less than the corporate rate. That still puts the US high up in tax rates according to that CBO link above. In 7th place, actually.
And to compare government tax receipts to GDP is an apples to oranges comparison and not valid at all. Hufbauer has obviously been in Washington too long.
Nice post Woodrow!
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Thanks Jake. I figured you might like it!
Wood, Although your focus is on the dysfunctional U.S. political system, I believe the fault lies in the way all westernized nations have developed “democracy”. By that I mean look at all of Europe, Japan, Canada, Australia etc. They are heading in the same direction, some faster and farther down the road than others. The democratic system of one person one vote is flawed IMHO because most people are selfish, stupid, and short sighted.
They will continue to demand a standard of living that they can not afford. Politicians don’t get elected by the typical idiot voter if they promise enact financially sound long term plans which will lower our current standard of living (even if it means avoidance of catastrophe further down the road).
The current system where everyone who is 18 years of age has the privilege to vote is flawed.
I understand your frustration, and sometimes I too believe that people are ignorant and short-sighted and selfish and will therefore eventually destroy the country by voting against the financial health of the country and currency.
However, I also believe that very large groups of people tend to also get things right, compared to small groups of people. See this wikipedia link about the wisdom of crowds: http://en.wikipedia.org/wiki/The_Wisdom_of_Crowds
I think the biggest reason people have been voting in a way that will ensure the destruction of our financial system is because the media are brainwashed to be Keynesian and also are stupid. Journalists are stupid wanna be celebrities. Writing about the destruction of our currency, debt, deficits, exponential spending, etc. are not sexy and do not secure them to the coattails of the political elites. The few outlets that do cover such issues are branded as “radical” or “extreme” and the mainstream media has made sure that if you do read such publications, that you are a racist and that you hate poor people and women.
I somehow missed this post by Woodshedder. Holy bat fuck it is spot on.