Posts Tagged ‘Deficit’
“Not one penny of US debt has been repaid for 51 years: the last time US government funded debt actually decreased on a year-over-year basis was 1960”
Bill Buckler presents an amusing compendium of facts, let us call them inconvenient truths, in the latest edition of his newsletter, some of which would make for entertaining anecdotes if presented at the Biden “deficit cutting” talks, which also, and very paradoxically, aim to cut US debt by increasing it.
- Not one penny of US debt has been repaid for 51 years: the last time US government funded debt actually decreased on a year-over-year basis was 1960
- 97% of today’s funded debt has been accumulated since August 1971 – the end of the Bretton Woods era by Nixon, and the terminal delinking of all fiat currencies from any and all hard assets, ushered in the era of modern-day hyper-debt insolvency
- Obama projects 2.5% Fed Funds rate in budget calculations through 2020. Average Fed Funds rate since 1980: 5.7%; Since 2008: 0.00%, If average 5.7% rate was used, projected US deficit would increase by another $4.9 trillion by 2020
- Obama projects 4.2% growth rate over next 3 years. If a normal growth rate of 2.5% is used, deficits would increase by another $4 trillion by 2020
- The US government borrows 40-50 cents for every dollar it spends. A balanced budget would mean cutting government spending in half.
- Implementing a balanced budget would not reduce current debt outstanding. It would merely stop it from growing.
- Over the past three fiscal years US debt grew by over $1.5 trillion per year: this is more than three times the record annual debt increase in any previous year in US history
- Last night deficit reduction targets were cut from $4 trillion to $2 trillion over the next decade, in exchange for a $2.4 trillion debt ceiling hike, which will last the Treasury until the next presidential election. Said otherwise, the Treasury needs to fund a $2.4 trillion hold over the next 15 months. Over a decade this come to $20 trillion: ten times more than the proposed deficit reduction.
And the most inconvenient truth of all:
The Global Financial Crisis (GFC) is said to have been precipitated by the Lehman failure in 2008 which froze inter-bank lending on a global basis and almost brought down the system. It is said to have been prevented by a massive and global increase in new money creation. In reality, had economic nature been left alone to take its course, there is a good chance that the world would be fast emerging from its financial black hole by now. At a minimum, most of the malinvestments would have been discounted to the point where they would no longer act as a dead weight on future savings and investment.
Economic “miracles” (so-called) have happened before. The US emerged from a deep recession in 1920-21 because the government and the central bank did NOT interfere. Germany emerged from the actual physical rubble of WW II for exactly the same reason. So, to a lesser extent, did Japan. In all these cases, debts which could not be repaid were not held on life support by central banks, they were written off. In all these cases, creditors took very severe “haircuts” indeed while many debtors literally had to start again from scratch. In all these cases, the LACK of government impediments or government largesse meant that a recovery took place in a much shorter time frame than would otherwise have been the case.
Economic distortions today are HUGELY bigger than they were then. That means that the recession will be deeper and the recovery phase possibly longer. But until it is allowed to begin, there is no way out.
None of the above will be noted anywhere by the great diversionary media spin machine over the next two weeks, since July 22 is the date by which Congress says it needs to pass the debt ceiling legislation so it can get it to Obama’s desk for his signature by August 2.
On June 30, QE2 ended with a whimper. The Fed’s second round of “quantitative easing” involved $600 billion created with a computer keystroke for the purchase of long-term government bonds. But the government never actually got the money, which went straight into the reserve accounts of banks, where it still sits today.
June 6, 2011 OurFuture.org
On June 7, 2001, President George W. Bush signed into law the Economic Growth and Tax Relief Reconciliation Act, the first of two “Bush tax cuts.” That measure reduced the top income tax rate from 39.6 percent to 35 percent, and reduced capital gains and estate taxes. In the 10 years since the first Bush tax cut went into effect:
The richest Americans received the most benefit from the Bush tax cuts.
- $520,000: The average tax cut received by the top 0.1 percent of Americans, those making more than $3 million a year. That is over 450 times the tax cut received by an average middle-class family.
- The middle 20 percent of wage earners (making between $40,000 and $70,000) received less than 11 percent of the total Bush -era tax cuts.
- The bottom 20 percent (making less than $20,000) received only a 1 percent share of the Bush tax cuts; 75 percent of these low-income families saw no tax benefit at all.
- The average middle-class family received one-eighth of the tax breaks that a family in the top 20 percent of income earners received while the average working-class family reaped less than one-hundredth of the average tax cut received by a family in the top fifth of earnings.
Source: Economic Policy Institute
The middle class has fallen behind as wealth has been transferred to those at the very top.
- The top one percent of the population enjoyed 65 percent of the income growth between 2002 and 2007.
- Median household income in 2009, $49,777, was 5 percent below what it was in 2009, adjusted for inflation.
- By contrast, the nation’s top 400 taxpayers reported an average adjusted income of $108 million in 2008, 56 percent higher in real terms than in 2009.
- In 2000, 11.3 percent of the population was in poverty. By 2009, that percentage had increased to 14.3 percent.
- In 2000, 33.7 percent of the population earned less than $35,000 a year (in 1999 dollars). In 2009, that percentage was up to 36 percent.
The Bush tax cuts did not create a jobs bonanza for middle-class workers.
- Job growth between 2000 and 2007 was the weakest in any business cycle since the 1950s; job growth was only one-third of the rate seen between 1989 and 2000.
- One in three manufacturing jobs has been lost (from 17.3 million to 12 million) between 2000 and 2008; one in four goods-producing jobs have been lost (from 24.6 million to 18.9 million), and 900,000 construction jobs have been lost since 2001.
- 8 million: The number of jobs lost during the recession that started in 2008.
- Three years is the minimum time it is projected to take to gain back the jobs lost in the recession, if the economy grows at a rate of 300,000 new jobs added a month.
The Bush tax cuts is at the root of today’s deficit problem.
- The surplus in the fiscal 2001 federal budget was $127 billion. The 2010 budget had a budget deficit of $1.3 trillion. The long-term national debt more than doubled from $5.6 trillion in 2000 to $13.6 trillion in 2010, mostly under Bush’s watch.
- Federal tax receipts in 2010 were 14.9 percent of gross domestic product . In 2000 it was as high as 20 percent.
Corporations have escaped paying their fair share as a result of the Bush tax cuts and other tax policies.
- Twelve top corporations paid no taxes or actually received money from the IRS between 2008 and 2010. The list includes Boeing, Verizon, Dupont, Yahoo, IBM, Wells Fargo, American Electric Power, Exxon Mobil, FedEx, General Electric, Honeywell International, and United Technologies.
- $62.4 billion was reaped in subsidies by these twelve companies over the three-year period, even as they paid no taxes on $171 billion in profits.
Source: Citizens for Tax Justice
If you take a job away from someone who is paid a reasonable wage because they enjoy the protections and prosperity of democratic government, move it across a border, and give it to someone living under a thugocracy, forced to work for pennies with no protections whatsoever, it should be just plain obvious that the worker on our side of the border and the worker on the other side of the border are not going to be better off. And when you do this on a massive scale it just stands to reason that most people on both sides of the border are going to be worse off.
But propaganda being what it is we were somehow convinced to try a worldwide experiment in taking good jobs from democracies and turning them into bad jobs in thugocracies. Now, of course, the experiment has run its course and we can see the results.
Worker Against Worker
Setting worker against worker enabled a few people to get really, really really wealthy and powerful and use that wealth to become even more wealthy and powerful. Our country is in decline, burdened by massive trade deficits because the ones with vested interests in cheap labor won’t let us won’t take on the mercantilists, burdened by budget deficits because those vested interests have bought low taxes and government subsidies, our infrastructure crumbles because multinational business leaders refuse to invest here, with no more need of us as workers, and the resulting hollowed-out middle class can’t consume anymore. Other countries also suffer from similar stresses.
Out of this situation a new global elite has emerged, contemptuous of democracy and government and any power but the power of their own money. In country after country, these top few won’t share the proceeds with their own, either, while they keep the world from approaching solutions.
Written by laudyms
March 15, 2011 at 10:27 am
Ron Paul and Ralph Nader joined Judge Andrew Napolitano on Freedom Watch to discuss the possibility of fighting the establishment through a libertarian-progressive alliance.
Written by laudyms
January 21, 2011 at 9:03 am
Their wars and tax cuts created the deficit. Now they want to profit from it and make scapesgoats of the poor.
Steve Benen 7/14/10 Washington Monthy
THE POLITICAL CONSEQUENCES OF ECONOMIC KNOW-NOTHINGISM…. Four months before the midterm elections, “virtually every Republican” in Congress agrees that the country can’t afford $30 billion in extended unemployment benefits, but it can afford $678 billion in tax cuts for the wealthy. Rep. Joe Barton’s (R-Texas) apology to BP instantly became a key moment in this cycle, as did Rep. John Boehner’s (R-Ohio) dismissal of the importance of the crash of 2008.
But this new issue is a development to build an entire campaign around.
This week, the Senate Republican leadership made one of the single dumbest policy arguments imaginable: policymakers shouldn’t even try to pay for massive tax cuts for the wealthy, because they pay for themselves. GOP officials see the overwhelming evidence that Bush’s tax policies helped produce a massive deficit, but they reject it, preferring to believe a ridiculous fantasy.
Written by laudyms
July 15, 2010 at 8:41 am
Reps. Ron Paul and Barney Frank discuss military spending and the war in Afghanistan with CNN’s Wolf Blitzer. They want to save $1Trillion by withdrawing troops from Afghanistan and Iraq.
Written by laudyms
July 8, 2010 at 9:02 am
Today the country is looking for ways to cut spending and borrowing. Yet military spending, the biggest spending item in the budget, is barely part of the discussion — obviously because of the amount of campaign and lobbying dollars it generates.
The corrupting influence of lobbying money is clear: the fact that the Soviet Union collapsed in 1991 has not yet penetrated the bubble around the country’s capital. In fact, military spending has soared in recent years:
(Source http://www.usgovernmentspending.com/ Includes DOD, Veterans, Foreign military aid, Foreign economic aid. Does not include military share of debt interest.)
Because of this application of lobbying dollars our military spending vastly surpasses the amount spent by the rest of the world, and dominates our country’s budget:
Now a bipartisan commission is willing to take this on. Commission outlines ways to cut defense spending by $1T over the next decade,
The Sustainable Defense Task Force, a commission of scholars from a broad ideological spectrum appointed by Frank, the House Financial Services Committee chairman, laid out options the government could take that could save as much as $960 billion between 2011 and 2020.
U.S. lawmakers and watchdog groups on Friday called for a dramatic revamp of the defense budget to reverse widening U.S. deficits, including termination of the $382 billion Lockheed Martin Corp (LMT.N) F-35 fighter.
This should be a litmus test to determine the seriousness and honesty of any deficit cutters. Do they take on the big lobbying interests, or do they take it out on the poor and elderly. We’ll see. The record so far is not good.
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