LESSONS LEARNED #48: “Government benefits aren’t from the government. They’re from the taxpayers.” -Old Pithy

Posted by PITHOCRATES - January 13th, 2011

Defense Spending is in the Constitution, Entitlements Aren’t – And it’s Entitlement Spending that’s Growing

People like to bitch about defense spending.  And I can understand why.  It’s a lot of money.  Just to kill people and break things.  People would rather see that money spent on education.  Health care.  Food assistance for the poor.  Entitlements.  Those nice, generous, government benefits.  The kinder, gentler side of government spending. 

People like the free stuff.  They want to get something for all those taxes other people are paying.  And it just kills them to see it spent on the military.  Because they’d rather see that money spent on them.  Of course if you read the Constitution, you’ll find defense spending in there.  It’s in the preamble (provide for the common defense).  You’ll find it in Article I.  In Article II, too.  Defense spending is pretty conspicuous in the Constitution.  Conspicuous by their absence, though, are entitlements.  Did the Founding Fathers overlook this?  No.  It was the whole point of federalism.  They designed the central government to do only those things that the states couldn’t.  To establish credit for the new nation, to treat with foreign nations, to coin money, etc.  And, of course, to provide and maintain a military force.  Alexander Hamilton wanted it to do more.  And he stretched the “necessary and proper” clause in Article I for some of the things he wanted the central government to do (to try and make the nation rich and powerful like Great Britain).  Pity, too.  For the Left has been stretching that clause ever since.

All right, defense spending is a constitutional requirement of the federal government.  Entitlements aren’t.  So how much are we spending on these?   In 1962, defense spending was 49% of all federal spending (see Federal Spending by the Numbers 2010).  Social Security and Medicare (the two biggest entitlements) were 13%.  Current baseline projections show that, in 2020, defense spending will drop to 14%.  And Social Security and Medicare will rise to 36%.  Medicare is the real cost driver here.  In the decade from 2000 to 2010, Medicare spending has jumped 81%.  It is outgrowing Social Security and Medicaid.  The runaway costs of Social Security, Medicare and Medicaid (the Big Three) are projected to equal total current tax revenues in the year 2020.  That means the total federal budget today will only pay for the Big Three in 2020.  Concerned?  You should be.  Especially if you’re a taxpayer.

You can pay Uncle Sam with the Overtime.  And will.

Taxpayer, beware.  The government is feeling especially generous.  With your money.  By 2020, Washington will be spending $35,604 per household.  That’ll take almost $5,000 in additional taxes per household for the Big Three alone.  That is projected to jump to $12,636 in 2050.  And that doesn’t include Obamacare.  When that is factored in, it’ll cost you as much as paying cash for a new car each and every year.  And a nice one, not a subcompact with a sewing machine for an engine.  Can you afford that?  I hope so.  Because you won’t have a choice.  You’ll be buying it.  But not for yourself.  No.  That nice beautiful car you’ll be buying each and every year?  You don’t get to drive it.  It will be for someone else.

The entitlement spending is getting so out of hand that we have record deficits.  Compounding this problem is the 2008 recession corresponding with a huge jump in entitlement spending.  It’s opened a rather large gap between revenue and spending.  And that gap isn’t going anywhere soon.  Unless they cut entitlements.  Or raise taxes.  And you know they won’t be cutting entitlements.  So, guess what?  You can pay Uncle Sam with the overtime.  Because that’s all you’ll get for your money (borrowed from Billy Joel’s Movin’ Out (Anthony’s Song)).  So get used to it.  Paying Uncle Sam.  Because Sam is going to raise your taxes.  He has no choice.  Because he won’t cut entitlements.

And they’ll have to raise taxes.  Because we’re running out of creditors to borrow from.  I mean, the Chinese only have so much money to lend.  And we can’t keep printing money.  They’ve been doing that.  Quantitative easing, they call it.  But they can’t keep doing it.  Anyone alive during the Seventies will know why.  Or anyone who has done some reading outside the public school curriculum.  In a word, stagflation.  That’s a phenomenon where you have both high inflation and high unemployment.  It’s usually one or the other.  The normal rules of economics don’t allow both to happen at the same time.  Unless you’re printing money like there’s no tomorrow.  Which they were in the late Sixties and Early Seventies.  To pay for the Vietnam War.  NASA’s Apollo program (to the moon and back).  And, of course, entitlement spending.  The biggest to date was a group of programs we called the Great Society.  Inflation was so bad that they joked about it on Saturday Night Live.  Dan Aykroyd played President Jimmy Carter, joking about the pleasure of owning a $400 suit.  And how easy it was to just call the treasury to have them print off another sheet of hundred dollar bills.  (Or something like that.)

The Reagan Deficits were Bad, but they Make the Obama Deficits look Good

The Seventies were a bad time.  Economically speaking.  Printing money was bad.  Quantitative easing was bad.  Easy money was bad.  So Paul Volcker started tightening monetary policy.  And Ronald Reagan cut taxes. And the Eighties were like a glorious spring following the bleakest of winters.  But you can’t teach an old dog new tricks.  The liberal Democrats weren’t going to roll over and cry ‘uncle’.  For they knew there was more spending left that they could do. 

So the spending continued.  Reagan had a Democrat Congress.  They fought him tooth and nail.  But he spoke directly to the American people and got his tax cuts.  And Reagan’s tax cuts resulted in a windfall of revenue.  And the Dems in Congress couldn’t spend the money fast enough.  Actually, they could.  They spent it so fast that surpluses soon turned into deficits.  They blamed Reagan’s defense spending.  So he made a deal.  He agreed to increase taxes.  If they would cut some of their entitlement spending.  To get the deficits under control.  So they did.  Increased taxes.  But they never cut spending.  Which just goes to show you that you can’t trust liberal Democrats.

You youngsters probably have no memory of these times.  But Ronald Reagan was attacked more than George W. Bush.  Hell, he was attacked almost as much as Abraham Lincoln.  The Seventies were the high-water mark of liberalism.  Then it went head to head with Reagan’s limited government supply-side economics in the Eighties.  And lost.  The hatred for Reagan knew no bounds.  For he was the man that repudiated liberalism.  So they attacked him ruthlessly. Screamed about his defense spending.  And yet his deficits were only around $200 billion.  Obama’s, on the other hand, are around $1,500 billion.  But they’re okay with that.  It’s no big deal, they say.  Just raise the debt ceiling.

It’s Spending, not Tax Cuts, that’s Causing those Record Deficits

But they can’t just raise the debt ceiling to keep spending.  Because spending is the problem.  Our debt is approaching 100% of our GDP.  When you’re borrowing money at record levels, you’re doing this because you just can’t raise taxes anymore.  You put the two together and it’s destroying the economy.  Taxes kill economic activity.  And the interest on the debt is soaring.  It’s projected to be approximately $760 billion in 2020.   That’s more than 70% of the projected budget deficit.  That means that most of the money we’ll be borrowing will go to pay the interest on the money we’ll be borrowing.  At that rate we’ll never pay down our debt.

Revenue averaged 18.0% of GDP from 1960-2009.  During the same period, spending averaged 20.3% of GDP from 1960-2009.  Not good.  But not too bad.  That’s a small, somewhat manageable deficit.  But spending takes off in 2010.  It’s projected to rise to 26.5% of GDP.  Meanwhile, revenue is projected to rise only to 18.2% of GDP.  That’s a projected deficit of 8.3% of GDP.  That’s fricking huge.  And that’s all runaway spending causing this mammoth deficit.  It ain’t tax cuts causing this.  It’s those entitlements.  Those fat, generous government benefits.

By this time there won’t be anything left to cut from the defense budget.  So they will have to turn to the generosity of the taxpayers.  And hope they enjoy personal sacrifice.  Because they’re going to be doing a lot of that.  To pay for these generous benefits.  These benefits for other people.



Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Europeans Wonder why Americans Don’t Love Obama as Much as They Do

Posted by PITHOCRATES - October 29th, 2010

Obama falls from grace because the American people have learned what the mainstream media wouldn’t tell them; the truth.

America, Europe, the Middle East, hell, the whole world had a love affair with Barrack Obama.  A man who did nothing but serve a partial term as a U.S. senator.  Before that?  Community organizer.  His resume had a lot of white space on it.  He is the most inexperienced person to ever become president.  Even Sarah Palin, who the Left disparages as stupid and experienced, has executive experience.  She was more qualified than Obama to be president.  Based on their experience.  Place their resumes side by side and no one can dispute this.  Yet Palin is stupid and inexperienced.  And Obama is the second coming of Christ.  And when the results of Obama’s policies reflect his experience, those infatuated express shock and disbelief (see Europe ‘dismayed’ as midterms highlight Obama’s struggles by Marian Smith, msnbc.com).

“They’re very confused as to how [Americans] could vote for Obama and then two years later turn around and vote for a completely different set of policies,” Sarah Oates, professor of political communication the University of Glasgow, told msnbc.com.

There’s a simple reason for this confusion.  The mainstream media was also infatuated with Obama.  They endorsed his candidacy.  But they never vetted him.  No one knew anything about Obama during the campaign.  They ignored his far-left associations with Reverend Wright and Bill Aires.  They didn’t discuss his criticism of the U.S. Constitution (it didn’t empower government enough).  Or his policy guide: Rules for Radicals by Saul Alinsky.  The mainstream media’s gross journalistic malfeasance hid the real man from the American voter.  The real Obama is not the Obama the American people voted for.  Hence his fall from grace.

Jimmy Carter handed off a worse economy than Bush.  But things got better when Ronald Reagan cut taxes.

Obama has told us ad nauseam that he inherited the worst economy since the Great Depression.  Some would argue that the numbers were pretty bad when Ronald Reagan took office.  But he followed Democrat Jimmy Carter.  So they don’t like to bring up his atrocious economy.  Because the economy he handed down to Ronald Reagan was pretty atrocious.  I mean, they didn’t use words like ‘malaise’, ‘stagflation’ or ‘misery index’ during the Bush economy.  And they’re not using them during the Obama economy.  But you repeat the lie enough, people just accept it as fact.

However, Obama remains broadly well-liked and many Europeans think the disenchantment that many American voters have been expressing is unfair.

“What he inherited was so enormous that no American president could have fixed it,” Manfred Gortemaker, professor of modern history at Germany’s University of Potsdam, told msnbc.com.

The bad economy Obama inherited was a long time in the making.  Because the Democrats were in power for a long time.  And it was their passion that caused it.  Affordable housing.  Putting people into houses who couldn’t afford houses.  Ask anyone which party you think of when it comes to affordable housing and they’re not going to say Republican.  The American disenchantment is with Democrat Big Government.  And Obama believes in Big Government.  The bigger the better.  America just can’t afford it anymore.  There isn’t enough money left in the private sector to steal to pay for it.  And Obama just wants to spend more.  But spending doesn’t work.  It didn’t help Carter.  That’s why he lost to Reagan.  Reagan cut taxes.  And, you know what?  That worked.  The electorate wants more Reagan.  Less Obama.

It’s good t be king.  As long it’s not 1790 France.  Or 2010 America where the Tea Party is spoiling a good time for the ruling elite.

The French can’t figure out the Tea Party movement.

“In all the French newspapers and magazines, people are writing, trying to figure it out,” Bacharan said.

Michelle Obama stayed at a 5-star Spanish resort while Americans were suffering near 10% unemployment and seeing banks foreclose on their homes.  There have been other vacations at very expensive and exclusive resorts.  And a lot of golf outings.  Obama has played more golf in 2 years than George W. Bush has in his 8 years.  Then there’s the latest presidential vacation.  They’re going to India.  They’ll be taking 40 airplanes.  Three helicopters.  A bunch of armored cars.  And they’ll be staying at the 5-star Taj Mahal hotel.  And only them.  The Obama party has booked the whole place.  It’s good to be king.

Now, I’m poking a little fun at my French friends.  That ‘good to be king’ line comes from Mel Brooks History of the World Part One.  But it’s something the French should understand.  While the masses are suffering, the Obamas are living like royalty.  They are detached from ordinary America.  Cold and detached.  Sort of like King Louis XVI and his queen, Marie Antoinette.  We’re just waiting for Michelle Obama to say, “Let them eat cake.”  Of course, we have the right to vote.  Unlike the people did in 1790 France with their ruling elite.  And it’s that right that the Tea Party is exercising.  Because they feel the way the French felt in 1790.  (Without the famine, of course.)

The Tea Party are not Nazis; Obama is not Hitler.  But the Nazis were Big Government liberals

The mainstream media has been falsely reporting a ‘Nazi’ element within the Tea Party.  They repeat the lie so often that many accept it as fact.  Even the Germans, no doubt sensitive to anything Nazi, are writing about it.

“The Holocaust was the result of murderous ideological fanaticism of the kind not to be found in leaders forced to face re-election every four years,” [a Der Spiegel newspaper] editorial said. “It is hard to imagine even the most hard-bitten Tea Party activist sincerely believing that President Barack Obama wants to systematically murder over 6 million people like Adolf Hitler did. And that is necessarily the implication.”

The German people elected Adolf Hitler to office in free elections.  He did not campaign on the Holocaust, though.  He did adopt what would eventually be Saul Alinsky’s Rules for Radicals.  He identified, isolated and attacked his enemies.  The Jews.  Obama has identified, isolated and attacked his enemies.  The Tea Party.  George W. Bush.  And Republicans in general.  Hitler was an environmentalist.  Obama is an environmentalist.  Hitler expanded state power.  Obama wants to expand state power.  Hitler controlled state media.  Obama has a willing and complicit mainstream media.  Hitler nationalized industries.  Obama nationalized industries.  Take away the crazy, the Holocaust and the militarism, and Hitler was just another Big Government liberal.  Like Mussolini.  Like Stalin.  And FDR.  And as Big Government liberals, they lied to their electorate to get elected (well, except for Stalin).  Then people learned the truth.

That said, Obama is no Hitler.  He is not a Nazi.  Sure, some kooks on the fringe say stupid things.  Just like some on the Left said George W. Bush was another Hitler.  Called him a Nazi.  But we need to stop the crazy. On both sides.  Obama got a pass by the mainstream media during the campaign.  They worshipped and adored him.  Got the people to vote for him.  And now people have learned the truth.  And here’s why Obama is NOT Adolf Hitler.  We can fix our mistake in the voting booth. 



Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,