Aging Populations cause Falling Revenue and Greater Spending Obligations in Japan and the United States

Posted by PITHOCRATES - January 5th, 2013

Week in Review

President Obama added $5.3 trillion in new debt in his first term.  Approximately the sum total of all debt added from George Washington to George H.W. Bush (in real dollars).  It took about 200 years to accumulate that massive amount of debt.  It only took President Obama 4 years.  Yet according to the Left we have a revenue problem.  Not a spending problem.  But when you add about 200 years of debt into only 4 years you have a spending problem.

In the recent fiscal cliff theatre the Democrats got a bipartisan compromise.  They got the higher tax rates they wanted.  And the Republicans gave them those higher tax rates.  The very meaning of bipartisan to the Democrats.  Unconditional surrender so they can get their way.  And now the total debt is around 103% of GDP.  Which means we owe as much as the nation produces in economic activity.  Meaning that we ain’t paying it down anytime soon.  And with our aging population things are only getting worse.  More workers are leaving the workforce consuming retirement and health care benefits than are entering the workforce to pay for them.  Which means the problem is only going to get a lot worse.

Eternal Keynesian optimists on the Left, though, like to point to Japan.  Whose total debt is about 230% of their GDP.  They say if Japan can get along with a debt of 230% of GDP then we have nothing to worry about.  Well, the Japanese are starting to worry (see Japan’s population logs record drop by AFP/fa posted 1/1/2013 on Channel News Asia).

Japan’s population logged a record drop in 2012, health ministry estimates showed on Tuesday, highlighting concerns that an ever-dwindling pool of workers is having to pay for a growing number of pensioners…

Japan is rapidly greying, with more than 20 percent of the population aged 65 or over — one of the highest proportions of elderly people in the world.

The country has very little immigration and any suggestion of opening its borders to young workers who could help plug the population gap provokes strong reactions among the public.

Japan has a lot to worry about.  And the last thing we want is to have their problem.  The Left understands this.  Which is one of the reasons they want to grant immunity to all those in the country illegally.  So they can tax them.  But when you’re buying votes by giving away free stuff you’re still going to have a spending problem no matter how much you increase revenue.  Especially when your spending has pushed the national debt past 100% of GDP.

As the population continues to age revenues will shrink.  This is the reality we have here (as well as what the Japanese are facing).  Adding a new entitlement, Obamacare, was the height of fiscal irresponsibility.  It will quickly push our debt up to Japanese levels.  Who will have a very painful day of reckoning in the not so distant future.  Higher spending obligations and falling revenues can only lead to one place.  And it isn’t a good place.  Just ask the Greeks.

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The Republicans and the Credit Rating Agencies believe it’s a Debt Crisis, not a Revenue Problem

Posted by PITHOCRATES - July 23rd, 2011

The Crisis of the Debt Crisis Negotiations

It’s near crunch time.  When something has to happen.  Something.  Good.  Or bad.  But the politicians aren’t playing nice.  And the pundits are opining (see Reactions to the impasse posted 7/23/2011 on First Read).

Andrew Sullivan: Republicans are anarchists.

David Frum: The Republicans made the debt problem a debt crisis.

Jay Cost: Obama is a lot like Jimmy Carter.

Ezra Klein: John Boehner is purposely wasting time by making non-offers.

Over on the New York Times, Paul Krugman is calling it Naked Blackmail (posted 7/23/2011). 

It turns out that in the final stages of the debt negotiations, Republicans suddenly added a new demand — a trigger that would end up eliminating the individual mandate in health care reform.

…the health care mandate has nothing to do with debt and deficits. So this is naked blackmail: the GOP is trying to use the threat of financial catastrophe to impose its policy vision, even in areas that have nothing to do with the issue at hand, a vision that it lacks the votes to enact through normal legislation.

Which is one side of the story why Boehner walked out of the negotiations.  For another side you can read Why the Obama-Boehner talks fell apart by Keith Hennessey (posted 7/23/2011).

The President backtracked in private negotiations this week, demanding bigger tax increases after the Gang of Six, including three conservative Republican Senators, released a plan that raised taxes more than the President had previously demanded…

…the President retreated from an earlier position on taxes as a result of the Gang of Six introducing their plan. On total tax revenues, tax rates, and refundable outlays, the President increased his demands last week.

And then there’s the unfunded mandate.

…the President and the Speaker had open disputes about how much to save from Medicaid, and about an automatic mechanism to force Congress to act on the entitlement and tax provisions. The President wanted a provision that would “decouple” tax rates if Congress failed to act, allowing top tax rates to increase while extending the other tax rates. Republicans would hate this outcome and would therefore have an incentive to legislate the deal. The Speaker insisted that if this automatic hammer decoupled tax rates, it also had to repeal the individual mandate from the Affordable Care Act (ObamaCare), to create roughly equal legislative pressure on both sides of the aisle.

So there’s a lot more to the story some people are leaving out in their condemnation of Speaker Boehner and the Republicans.  For it would appear that it’s Obama and the Democrats who are refusing to make a deal that cuts spending or doesn’t raise taxes.  And it’s Obama that’s been increasing his demands.  With an able assist from the Gang of Six.

The Debt Rating Agencies siding with Boehner and the Republicans

But are Boehner and the Republicans just partisan mad men?  Making mountains out of molehills?  Debt crises out of debt problems?  Guess it depends on who you talk to.  If you talk to partisans on the left, yes.  If you talk to credit rating agencies, no (see Egan Jones cuts US rating, cites high debt load by Karen Brettell posted 7/18/2011 on Reuters).

Credit rating agency Egan-Jones has cut the United States’ top credit ranking, citing concerns over the country’s high debt load and the difficulty the government faces in significantly reducing spending.

…the cut is due the U.S. debt load standing at more than 100 percent of its gross domestic product. This compares with Canada, for example, which has a debt-to-GDP ratio of 35 percent, Egan-Jones said in a report sent on Saturday.

And S&P is getting closer to following suit (see Obama officials clash with S&P over downgrade threats by Tim Reid and Rachelle Younglai, Reuters, posted 7/23/2011 on Yahoo! News).

Since October, S&P has accelerated its deadline three times for when it might downgrade the United States’ coveted AAA credit rating as efforts in Washington to reach a deal on cutting long-term deficits have faltered.

The U.S. is in very dangerous debt territory.  Even Al Jazeera is writing about the severity of this debt problem (see Obama launches crisis talks over US debt posted 7/23/2011).

The US government now owes $14.3tn, which is its current legal limit, and is more than the size of the economies of China, Japan and Germany put together…

The largest US creditor, China, has twice warned that the US must protect investor interests, as ratings agencies Moody’s and Standard & Poor’s have said the sterling Triple-A US debt rating was in danger of a downgrade.

You know your debt is bad when it exceeds the sum of three of the largest economies in the world.  At least you should know.  That’s why the rating agencies are looking at downgrading American sovereign debt.  The debt problem is that bad.  And tax hikes without spending cuts will only make this very bad problem much, much worse.  Because it’s a debt problem.  Not a revenue problem.

And, yes, the high costs of Obamacare need to be included in this conversation.  Because it is a BIG part of the spending problem.

From Sea to Shining Sea, at Least for awhile Yet

Raising the debt ceiling is not the problem here.  It’s the amount of debt that’s the problem.  Whatever happens in the next few weeks the United States will survive.  But it will not be able to survive the long term explosion of spending (in particular on health care) and debt.  Which is the thing that is making the rating agencies nervous.  As well as the rest of the world.

In the grand scheme of things, it would appear that Boehner and the Republicans are trying to do the right thing.  Whereas Obama and the Democrats are merely looking for short-term political gain.  Which is not in the best interests of the country.  But they’re not worried.  For whatever becomes of America, they are certain that they will be ensconced in their liberal Democrat city-states.  Insulated from the surrounding ruins that they will simply refer to as flyover country.

So much for “from sea to shining sea.”

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Only Obama can make the U.S. Default on its Debt Obligations

Posted by PITHOCRATES - July 15th, 2011

$172.4 Billion is a lot of Money

Still no closer to a budget agreement to raise the debt limit.  Obama wants more taxes and more borrowing.  The Republicans want a little fiscal sanity.  Because something is definitely wrong in Washington when $172.4 billion a month isn’t enough (see August Invoices Show U.S. Treasury’s Limited Choices by David Rapp posted 7/12/2011 on Bloomberg Government).

The U.S. government, whose legal authority to borrow money expires on or about Aug. 2, expects to take in $172.4 billion next month — enough to cover little more than half of its bills due then, according to a study for the Bipartisan Policy Center, a research organization.

The U.S. may not have to default on outstanding debts or withhold interest payments for that month; it may be able to cover $29 billion in anticipated interest due on Treasury securities with its cash receipts…

Jay Powell, undersecretary of the Treasury for Finance under President George H.W. Bush, calculated for the policy center that $306.7 billion in bills will come due after Aug. 2. They include Social Security benefits, defense vendor payments and military active duty pay, along with federal pay for every department and agency, in addition to the interest payments.

I think we’re missing the bigger picture here.  The government collects $172.4 billion but spends $306.7 billion.  That is, for every dollar it collects it spends $1.78.  In other words, the government’s spending is 78% over their cash budget.  Managers in the corporate world get fired for performances like this. 

That is either a big spending problem.  Or a big revenue problem.  So are taxes too low?  I don’t think so.  I mean, $172,400,000,000 is a lot of money.  How much?  It’ll buy 542 of the new Boeing 747-8 jetliners.  Or 149 Dallas Cowboys Stadiums.  Or 27 nuclear powered aircraft carriers.  It’ll even pay for the Apollo moon program with $41.3 billion left over.  $172.4 billion is an enormous amount of money.  You couldn’t spend this much money if you tried.  Even if you bought the best houses, cars, jewelry, clothes, island, etc.  And if you had the mother of all drug addictions.  It’s just a staggering amount of money.  And if you’re collecting in taxes more money than the cost of the Apollo moon program each month, guess what?  You don’t have a revenue problem.  You have a spending problem.

Bloomberg has a nifty little calculator on their website.  You can put checks on the things you want to pay.  And leave the things you don’t unchecked.  It’s an interesting list of bills coming due this month.  There’s a lot of stuff we can cut easily to save $47.1 billion.  Federal salaries & benefits ($14.2 billion).  Small Business Administration ($0.3 billion).  Education Department ($20.2 billion).  Department of Housing and Urban Development ($6.7 billion).  Energy Department ($3.5 billion).  Labor Department ($1.3 billion).  Environmental Protection Agency ($0.9 billion).  What taxpayer would miss any of these?  Cuts to Social Security and Medicare, on the other hand, will be a little more difficult.  For they actually do something.  And people will miss them.

Incidentally, interest on the debt is $29 billion.  Though a lot of money, it’s not too high for the $172.4 billion to cover.  So if the Obama administration doesn’t pay this and causes a downgrade in our credit rating, President Obama will have some ‘splaining to do.

Monthly Spending Equivalent to 1.3 Apollo Programs should be Enough

The president has no intention of cutting spending.  Their goal is to make Republicans look bad.  And to better position themselves for the 2012 election.  So the president will lie and spin misinformation in hopes that this stuff is just too complicated for the layperson to follow.  And that they only remember one thing.  That Republicans stopped Social Security checks going out because they’d rather give tax breaks to the rich.  And that they miss the fact that Obama and his Democrats gave us this crisis to begin with.  With the greatest spending orgy of any peacetime president.  So he threatens that if the Republicans don’t pay for his reckless spending, he’s going to tell everyone it’s their fault that the country defaulted (see Obama: Chance for ‘something big’ to calm economy by Jim Kuhnhenn, Associated Press, posted 7/15/2011 on Yahoo! News).

Obama urged Republican lawmakers to make tough calls, too. He attempted to turn their opposition to any tax increases back against them, warning that a government default caused by failure to raise the debt ceiling would increase interest rates, “effectively a tax increase for everybody.”

No, a failure to raise the debt ceiling won’t cause a government default.  Barack Obama will.  If and when he decides to pay something he thinks is more important than the interest on the debt.

Obama sternly rejected any plan of that size that did not include increases in tax revenue.

Apparently spending the equivalent of 1.3 Apollo programs a month just isn’t enough.  Obama gives new meaning to tax and spend liberal.  Pity Ted Kennedy didn’t live long enough to work with his kind of liberal in the White House.  Or see his pet cause, national health care, signed into law.  Then they both could have seen their policies destroy this country.  Don’t believe me?

Spending/Debt so bad it’s bringing back the Gold Standard

Then ask the Chinese communists.  Though their economy is rife with cronyism and will no doubt collapse as the Japanese economy did in the Nineties, they know too much debt when they see it (see Return of the Gold Standard as world order unravels by James Quinn and Ambrose Evans-Pritchard posted 7/16/2011 on The Telegraph).

Xia Bin, an adviser to China’s central bank, said in June that the country’s reserve strategy needs an “urgent” overhaul. Instead of buying paper IOU’s from a prostrate West, China should invest in strategic assets and accumulate gold by “buying the dips”.

Step by step, the world is edging towards a revived Gold Standard as it becomes clearer that Japan and the West have reached debt saturation. World Bank chief Robert Zoellick said it was time to “consider employing gold as an international reference point.” The Swiss parliament is to hold hearings on a parallel “Gold Franc”. Utah has recognised gold as legal tender for tax payments.

A new Gold Standard would probably be based on a variant of the ‘Bancor’ proposed by Keynes in the late 1940s. This was a basket of 30 commodities intended to be less deflationary than pure gold, which had compounded in the Great Depression. The idea was revived by China’s central bank chief Zhou Xiaochuan two years ago as a way of curbing the “credit-based” excess.

So the Chinese, the World Bank, the Swiss, Utahans and a dead John Maynard Keynes agree that the U.S. has a spending problem.  A spending problem that is racking up debt to saturation.  So bad that the once invincible U.S. dollar should no longer serve as the world’s reserve currency.  A sad development indeed.  And painful to hear.  Especially coming from a commie.

Tax Hikes First, then Broken Spending Cuts Promises

And yet the president is in denial.  He doesn’t see a spending/debt problem.  He sees a revenue problem.  Because high taxes and high debt are okay in his world.  As long as they pay for liberal government spending.  That’s why he’s dead set against spending cuts only.  He wants those tax hikes.  He needs those tax hikes.  And will promise almost anything to get those tax hikes.  Because once he does, and mark these words well, he will break every spending cuts promise he made to get them.

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Team Obama Lying to Scare Americans to Increase the Debt Limit so they can Continue their Orgy of Spending

Posted by PITHOCRATES - July 10th, 2011

Talking up the Horrible Economy in 2010

Back in August of 2010, Timothy Geithner took to the New York Times to tell everyone how wonderful the economic recovery was (see Welcome to the Recovery by Timothy Geithner posted 8/2/2010 on The New York Times).

The recession that began in late 2007 was extraordinarily severe, but the actions we took at its height to stimulate the economy helped arrest the freefall, preventing an even deeper collapse and putting the economy on the road to recovery…

Private job growth has returned — not as fast as we would like, but at an earlier stage of this recovery than in the last two recoveries. Manufacturing has generated 136,000 new jobs in the past six months…

Wow.  In only 6 months their policies have created 136,000 new jobs.  And their swift and bold action prevented the freefall loss of gosh knows how many jobs.  That’s good.  So how bad was that freefall?

The new data show that this recession was even deeper than previously estimated. The plunge in economic activity started an entire year before President Obama took office and was accelerating at the end of 2008, when G.D.P. fell at an annual rate of roughly 7 percent.

Panicked by the collapse in demand and financing and fearing a prolonged slump, the private sector cut payrolls and investment savagely. The rate of job loss worsened with time: by early last year, 750,000 jobs vanished every month. The economic collapse drove tax revenue down, pushing the annual deficit up to $1.3 trillion by last January.

Okay, first he has to get the obligatory blame George W. Bush first out of the way.  So then we get to the good news.  The amount of damage they prevented.  We were losing 750,000 jobs every month.  Which would be 4,500,000 in a 6-month period.  Humph.  Getting back 136,000 of the 4,500,000 jobs lost is being on the road to recovery?  That’s like one job back for every 33 lost.  Are you sure this is a recovery? 

Oh, and that $1.3 trillion deficit?  It wasn’t from a lack of revenue.  It was from an orgy of spending.

The economic rescue package that President Obama put in place was essential to turning the economy around. The combined effect of government actions taken over the past two years — the stimulus package, the stress tests and recapitalization of the banks, the restructuring of the American car industry and the many steps taken by the Federal Reserve — were extremely effective in stopping the freefall and restarting the economy.

According to a report released last week by Alan Blinder and Mark Zandi, advisers to President Bill Clinton and Senator John McCain, respectively, the combined actions since the fall of 2007 of the Federal Reserve, the White House and Congress helped save 8.5 million jobs and increased gross domestic product by 6.5 percent relative to what would have happened had we done nothing. The study showed that government action delivered a powerful bang for the buck, and that the bank rescue on its own will turn a profit for taxpayers.

A powerful bang for the buck?  I don’t know.  Saying how great your actions were by what didn’t happen is a bit spurious.  I mean, I could say that thanks to George W. Bush and the policies he implemented after 9/11 he saved the lives of 8.5 million Americans that would have otherwise died in terrorist attacks.  Simply by scaring a lot of bad guys from trying anything now that there was a new sheriff in town.  It’s as plausible as that Blinder and Zandi report.  You can’t prove either.  Or disprove either.  So it’s a license to lie.

Still Talking up the Horrible Economy in 2011

It’s almost been a year since Geithner’s NYT piece.  If he was right things should be a whole lot better now.  The Obama administration took full credit then for the ‘recovery’.  So the current economic numbers are now theirs.  Which means they can’t blame George W. Bush anymore.  And how are those numbers?  Still horrible (see You are what your record says you are by Conn Carroll posted 7/10/2011 on The Washington Examiner).

Last month, David Gregory tripped up new DNC Chair Debbie Wasserman Schultz up with a chart detailing President Obama’s economic record. It showed unemployment up 25 percent since Obama was inaugurated, debt up 35 percent, and gas up more than 100 percent. Wasserman Schultz lamely tried to argue that the economy was getting better, to which Gregory replied: “Americans don’t believe that’s the case.”

This Sunday was Treasury Secretary Tim Geithner’s turn and he fared no better. At one point he even blamed the weather for Obama’s terrible economic record.

The numbers are horrible now.  And they were horrible a year ago.  There’s been no recovery.  And all of the administration’s actions haven’t done anything but explode the federal debt.  Which is at a record high.  As are the deficits under Obama.  And what does Team Obama want to do about that?  Why, borrow some more.  To spend some more.  Of course.

The U.S. isn’t close to Running out of Money

Despite the great economic news last August and the current great news (per the Obama administration, not per reality), things are pretty bad on the debt front.  In fact, those rascally Republicans with their opposition to raising the debt limit may place this glorious economic recovery into jeopardy.  Worse, they may destroy America as we know it (see ‘No delaying’ deadline to lift US debt ceiling posted 7/10/2011 on the BBC).

The US faces running out of money and defaulting if Congress does not allow the government to take on more debt.

If no agreement is reached, the government would be unable to pay civil servants, government contractors, pensioners or holders of government debt.

Economists and the White House have warned that such a default could push the US back into recession and have a global economic impact.

This is actually BS.  And I don’t mean Barbara Streisand.  The federal government is awash in cash.  Just not enough to further increase spending.  How much?  Well, let’s look at some of the numbers per the Tax Policy Center.  Tax receipts (i.e., actual cash dollars the government collects) for the years 2008, 2009 and 2010 were $2.5 trillion, $2.1 trillion and $2.2 trillion, respectively.  That doesn’t include any borrowing.  That’s pure cash on the barrelhead.  That’s a lot of cash that can pay a lot of bills.  It’s in the neighborhood of $180 billion a month.  And the projection for 2011?  Holding steady at about $2.2 trillion.  Again, that’s cash flowing into Washington from taxpayers.  Nothing borrowed.  Or printed.

Despite this staggering amount of cash raining down on Washington it’s not enough.  For the years 2008, 2009 and 2010, the deficits were $458 billion, $1.4 trillion and $1.2 trillion, respectively.  And the projected deficit for 2011 is $1.6 trillion.  Again, it’s the orgy of spending that is the problem.  It’s not a revenue problem.  The U.S. isn’t close to running out of money.  Team Obama is just lying to try and scare the pants off of people to get them to hate Republicans.  And to pressure them to raise the debt limit.  So they can borrow more.  And go on another spending bender.

Green Energy can only Survive when heavily Subsidized by the Government 

So what, exactly, did they spend all that money on?  Well, there was the stimulus.  The financial and auto bailouts (which should have been left to the bankruptcy courts).  And all their tweaking of the private sector economy.  Especially the green one.  For that’s America’s future.  Green energy.  And they were going to help make it happen.  By subsidizing the crap out of it (see Michigan town shows promise and pitfalls of job retraining by Don Lee posted 7/10/2011 on The Los Angeles Times).

Uni-Solar began with a hiring surge that by 2009 had climbed to 422 workers… But the Greenville plant’s primary market is Europe, and when sales in Italy and France declined as a result of the recession and other factors, Uni-Solar cut back…

Greenville and Uni-Solar also were hurt because state and federal policies simply weren’t in place to support them. Unlike the United States, for instance, Canada subsidizes consumers who adopt solar power, but only if they buy solar panels with domestically manufactured contents…

Canada is not alone in adopting comprehensive programs of subsidies, tax provisions and other incentives to foster domestic industries. Germany has an elaborate program to support automobile, electronics and other manufacturing and to discourage its companies from moving operations overseas.

That’s right, the green energy sector can only survive when heavily subsidized by the government.  To help the green energy market compete with the more reliable and less expensive fossil fuel market.  In the U.S.  As well as in Europe.  Worse, all this government help has only created a green energy bubble.  Created a lot of supply for a demand that wasn’t there.  Just like this plant in Greenville, Michigan.

The only way to make Green Energy practical is to make Consumers pay more for Electricity

The U.S. should consider itself lucky that their government is cutting subsidies.  Because it at least gives consumers a chance at a better economy.  Perhaps Washington will cut its spending.  And let the taxpayers keep more of their money so they can make it in an economy with rising prices.  Unlike in the UK (see Power bills to soar by 30% in ‘green’ reforms by Rowena Mason and David Barrett posted 7/9/2011 on The Telegraph).

Costly new incentives to encourage energy companies to invest in renewable power sources such as wind farms will put an extra £160 a year on the average household bill over the next 20 years…

Mr Huhne is expected to announce on Tuesday that energy companies, such as Centrica and EDF, will get a fixed price for electricity generated from nuclear power and wind farms, which will be higher than the market price.

The financial incentives will be funded by consumers, who will see their electricity bills rise by 30 per cent over the next 20 years from an average of £493 per year to £655 per year.

You see, renewable energy is a money losing investment.  It’s just too costly.  So power companies won’t venture into these green markets unless someone makes it worth their while.  And in the UK the government is doing just that.  By giving them lucrative cash incentives.  Which the government will pay for via higher electricity bills.  Leaving the consumer with less money to live on in an economy with rising prices.

The costly package due to be outlined in full this week is designed to reassure generation companies that Britain is an attractive place to build nuclear power stations and wind farms.

Mr Huhne admitted in an interview with The Sunday Telegraph last year that there was no money available for direct state subsidies for a new generation of nuclear plants, so this week’s announcement sets out how consumers will shoulder the cost of incentives directly.

Yes, the only way to make green energy practical is to make consumers pay more for electricity.

The changes to be outlined by Mr Huhne this week will hand billions of pounds in subsidies to the energy companies and kick-start a construction programme creating thousands of jobs.

But combined with further green taxes, such as the European emissions trading scheme, and upgrades to Britain’s national grid the measures could see Britain’s gas and electricity bills rise by 50 per cent – or £500 per average household bill – according to Ofgem, the energy regulator.

Create ‘thousands of jobs’ by making all consumers live on less.  At least those who use electricity.

By the time you factor in the other costs of green living the average Briton could see a 50% increase in their utility costs.  Which is a staggering cost to pay for a few thousand jobs.  The economy, and the consumer, would be better off with coal.  It’s more reliable.  It’s cheaper.  And one plant out of site can provide power to hundreds of thousands.  Which is better than dotting the landscape with windmills as far as the eye can see.  To produce power only when the wind blows.

The Government has a Spending Addiction

Team Obama has made a mess of things with their orgy of spending.  More than tripled the deficit since coming into office.  Requiring ever more borrowing to ‘save the country’.  Which is, of course, a lie.  Washington is awash in cash.  Over $2 trillion a year.  And if that isn’t enough to pay the bills then this administration should just resign.

The economy is stalled.  The recession never ended.  Money poured into the green energy sector was money wasted.  And is only creating a green energy bubble by building supply for demand that isn’t there.  Like in Greenville, Michigan.  Yes, supply can create demand per Say’s Law.  If that supply is something that people want.  And that’s the problem.  People don’t want more expensive and less reliable energy.  Especially in an economy with rising prices.

The facts and figures all confirm one thing.  The U.S. has a spending problem.  Not a revenue problem.  The government is like an addict with a spending addiction.  Who will lie and say anything to satisfy that addiction.  Only this addict is worse than your run of the mill junkie.  For if Team Obama overdoses it will take a nation with it.  In fact, this administration is in such denial that perhaps an intervention is in order.  Which is really what the budget debate is.  The Republicans need to be strong.  For Obama.  And the nation.  They have to hold the line on the debt limit.  Do not give them more money to spend.  Because with over $2 trillion a year, they have enough already.

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Budget Debates and the EU Emissions Trading System, Lying to Spend More

Posted by PITHOCRATES - July 3rd, 2011

Time to Scare the Old People

And the budget debate to raise the debt limit goes on.  The Republicans are trying to be responsible.  The Democrats are taking the opposing position.  And if the Democrats can’t get their way (more and more spending), they’ll cut programs that will kill grandma (see Debt-Limit Delay Would Jeopardize Social Security Payments by Richard Wolf, USA TODAY, posted 7/3/2011 on ABC News).

It shows that in August, the government could not afford to meet 44% of its obligations. Since the $134 billion deficit for that month couldn’t be covered with more borrowing, programs would have to be cut.

Wow.  The monthly deficit is $134 billion?  Ronald Reagan was mortgaging our kids’ future with his irresponsible deficit spending.  Remember how big his deficits were?  Approximately $200 billion.  Annually.  While the current deficit stands at $134 billion.  Monthly.

Back then with a Republican in the White House it was a spending problem.  Today with a Democrat in the White House it’s a revenue problem.  Reagan’s economic programs led to an economic explosion.  To which the Democrats point to those deficits and say, “Yeah, but at what cost?”  The same Democrats who have no problem with a deficit that is almost ten times greater than Reagan’s.  With no economic results to show for it.  And they want to borrow even more?  Unbelievable.  They make Ronald Reagan look like a penny-pinching tightwad by comparison.

If Social Security, Medicare, Medicaid, unemployment benefits, payments to defense contractors and interest payments on Treasury bonds were exempt, that would be all the government could afford for the month. No money for troops or veterans. No tax refunds. No food stamps or welfare. No federal salaries or benefits.

Democrat politics 101.  Threaten to cut spending on the things that will scare people the most.  Police.  Fire fighters.  Soldiers.  Teachers.  And anything to do with old people.  Like Social Security and Medicare.  Because seniors make up the largest and most active political group in American politics.  Democrats are counting on their help.  To bitch and moan to Republicans.  And they’re filling their heads with horror stories about Republicans.  That they are not only going to cut off their Social Security checks.  But they’ll be coming by at night to their homes so they can kill them while they sleep.  Because they’re just that mean.

Interestingly, with a $3.5 trillion dollar annual budget (approximately) and a $1 trillion dollar annual deficit (remember they hated Reagan for his $200 billion annual deficits), that means that the government collects about $2.5 trillion dollars annually.  That’s just over $200 billion per month.  Cash.  Coming from us and going into the U.S. Treasury.  So if they don’t send out the Social Security checks, what, then, will they be spending that $200+ billion each month on?  I mean, $200+ billion will cover Social Security.  And then some.

The Bipartisan Policy Center studied Treasury Department receipts and spending for August 2009 and 2010 and found that the government likely would not have enough revenue to make the full $23 billion payment to Social Security recipients due Aug. 3…

The first major interest payment to creditors would be due Aug. 15 — $29 billion, more than the $22 billion due to arrive in revenue.

So the million dollar question is who are they going to pay?  Themselves?  Their pension plans?  Their health care plan?  Political cronies?  Ethanol subsidies?  The UN?  The World Bank?  Exactly who is going to get that $200+ billion if it’s not going to be our seniors and our debt holders?  Together that’s only $52 billion.  Leaving about $148 billion left over.  That’s still a lot of money.  If they don’t pay the seniors and the debt holders, they better itemize who they do pay.  Because this sounds more like political posturing than responsible governing.

Saving (and Owning) Greece

And speaking of responsible governing, that’s something we can’t do.  Speak about responsible governing.  Here.  Or in Europe (see Euro zone warns Greeks on sovereignty and privatization by Jan Strupczewski and Erik Kirschbaum posted 7/3/2011 on Reuters).

Euro zone finance ministers have approved a 12 billion euro ($17.4 billion) installment of Greece’s bailout, but signaled that the nation must expect significant losses of sovereignty and jobs.

The price to save Greece from themselves?  Just a loss of jobs.  And a loss of sovereignty.  The Euro zone finance ministers are making it clear.  If you can’t be responsible we’ll be responsible for you.  Other than the loss of sovereignty thing, it would be nice to see something like this happen in America.  Have someone step in and be responsible.  Because Washington sure isn’t.

Germany hopes this will eventually total around 30 billion Euros, with banks voluntarily buying new Greek bonds when old ones they hold mature, meaning Athens would not have to produce cash to repay its creditors immediately…

Those discussions continue, with the involvement of the private sector in the next package a must for several euro zone countries as voters grow increasingly opposed to shouldering the burden of bailing out Greece on their own.

The taxpayers in the Euro zone are a lot like American taxpayers.  They, too, don’t want to pay for irresponsible government spending.  Especially the irresponsible spending of other governments.  That’s why the austerity cuts are so important.  Without them Greece will never become solvent.  And they need that to get private investors to buy their bonds.  For the private sector will never buy bonds from an insolvent country.  And if they don’t that’s more for the non-Greek taxpayers.  Which just may not be politically doable.  Especially with other countries (Spain, Portugal, Ireland, etc.) in financial trouble.  To save them and the Euro they may have to find another source of revenue.  Other than their own taxpayers.

Emissions Trading System – Europeans Taxing non-Europeans

And they have.  Instead of being responsible, they’ll just tax non-Europeans to help with these European nations with budget problems (see U.S. Airlines Challenge European Emissions Rule by James Kanter posted 7/3/2011 on The New York Times).

Starting Jan. 1, the Union intends to expand its Emissions Trading System to cover emissions from most flights that touch down at, or take off from, European airports. That means airlines will have to buy some of their carbon permits from traders and E.U. governments…

But the plan has generated fierce opposition from airlines, many of them non-European. They say that Europe has no right to charge for emissions on some routes that are mostly outside European airspace.

What was that about loss of sovereignty?  Boy, these Europeans look like they want to rule the world. 

Let me see if I understand this.  The Americans flying into the European Union (EU) have to pay a tax to the EU even though the Americans don’t vote in the EU.  Pay a tax.  But have no representation in the government collecting the tax.  Humph.  Oh, by the way, Happy 4th of July.  The celebration of America’s independence from the British Empire due to their policies of taxing them without allowing them a voice in Parliament.

Carbon trading.   Big Government’s greatest scam.  Charging for engine exhaust.  Something that has no value.  And is produced by others.  Yet the European Union has taken title to it.  And placed an arbitrary value on it.  Now anyone flying into or out of European airspace has to pay an additional fee to cover the cost of their emissions.  Even if their emissions only emitted in European airspace for a tiny fraction of their flight.  All in the name of fighting global warming. 

The airlines also are expected to attack the cost of the system and the lack of guarantees that revenues will be used for climate protection.

Seeking to defuse the dispute, E.U. officials have emphasized that they will exempt incoming flights if other countries take “serious measures” to reduce emissions that would be considered equivalent by the Union. E.U. officials also have begun discussions with national governments on introducing rules requiring them to use the revenues from permits to tackle climate change…

What is clear is that by charging airlines for their carbon emissions, the European Union would do more than protect the climate. The system could be a source of revenue for countries, like Britain, with busy airports and ballooning budget deficits.

Looks like it’s more about the money than global warming.  So countries with irresponsible government spending can continue to spend irresponsibly.  That’s the thing with governments.  They always increase spending.  So it’s never a good idea to give them more money to spend.  Even if it’s for a noble purpose.  Because if they get this today, they’re just going to ask for more tomorrow.

Airlines complain that some of the money they will spend on carbon permits will end up subsidizing debt-laden governments.

“Countries like Britain have reserved the right to use the money how they see fit,” said Nancy Young, a vice president at the Air Transport Association of America. “Helping Europeans out of their fiscal hole is not the aviation industry’s job.”

So the smart thing would be to stop flying into the EU.  Hmmm.  I believe Norway is not a member state of the EU.  Perhaps they should think about expanding Oslo International Airport.  It can be the gateway to Europe.  The hub for all international flights to and from the EU.  Then the EU states can fly the last leg of these international flights.  And pay their silly and extralegal emissions tax to their hearts content.

Global warming is a crock.  It’s just way to raise revenue.  For cash-strapped countries who like to spend irresponsibly.  But that money will not go to fight global warming.  It’ll go into the general fund.  To help cover those budget shortfalls.  Just like all those lotto proceeds were going to go to the public schools in America.  And didn’t.

Buying Votes with Free Stuff

The U.S. has to raise their debt limit or it will be the end of the world.  The European Union needs their Emission Trading Scheme or it will be the end of the world.  Literally.  Or so they say.  But we know they just want the money.  To pay for their orgy of government spending.  Just like the Americans and their battle to raise the debt limit.  But there is a better way to solve their problems. 

What’s the problem?  Governments are spending more money than they have.  Solution?  Stop it!  Stop spending more money than you have!  You do this and you can balance your budgets.  You’ll be able to placate those pesky responsible Republicans.  Taxpayers are happy because they can keep more of their earnings.  And the rest of the world won’t be pissed at you for shaking them down to pay for your fiscal woes.  Everyone wins.  So why not do it?  Because if tax and spend liberals don’t spend they can’t buy votes.  By giving away lots of free stuff (tuition assistance, retirement assistance, health care assistance, etc.).  And, really now, why else would you vote for a liberal if it wasn’t for the free stuff? 

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