We’ve been hearing for the last couple of months that Congress needs to raise the debt limit before August 2 in order to prevent the U.S. Government from defaulting on its obligations. This isn’t new; in the past, Congress has increased the debt limit as a matter of course. The only thing different this time is that there are members of Congress who have to show their constituents that they are “doing something about the problem” of excessive government spending.
Don’t get me wrong. I agree that our government squanders entirely too much money. I’ve noted many times in the past that I think our government’s spending is completely out of control and that we must rein it in if we want to maintain our standard of living and our status as a leader in the world economy. But refusing to increase the debt limit is not the way to do it.
Those who say we shouldn’t increase the debt limit are, at best, confused. In the first place, we’ve already committed to trillions of dollars in new spending–money that we don’t currently have. We will have to borrow in order to meet those commitments. We can’t just say to our creditors and others we’ve made those commitments to, “sorry, we’re out of money.”
Second, there’s no way that failing to increase the debt limit will prevent us from meeting those commitments. Our government will meet its obligations, at least for the immediately foreseeable future. It’s not like government will stop functioning on August 2. We will be “breaking the law” by continuing to spend beyond the currently authorized debt limit, but government will continue to function.
Those who think that the way out of this mess is to increase taxes haven’t been paying attention. Congress has shown that it’s unable to exercise any kind of restraint when it comes to spending. If government takes in more, it just spends more. We’ve seen this happen as recently as the Clinton years, when a combination of an unusually prosperous few years and a President and Congress who actually kept each other in check produced a projected budget surplus. That surplus wasn’t nearly as large as some would like you to think, and it disappeared pretty quickly when the economy turned down, helped of course by the next President and Congress who had a “you wash my back and I’ll wash yours” approach to spending.
Our current President and the previous Congress had the same type of relationship, and as much as the Republicans who control the House would like you to think otherwise, that hasn’t changed much since last year’s election. Neither really cares how much money is spent. They just want to make sure that when money is spent, they can spin it to make the other guy look bad. Or, if that fails, make themselves look good. That is, it’s best if one can say, “The other guy spent that money!” It’s almost as good to say, “Well, yes, I spent that money, but it was for this Good Thing.”
All the noise you hear coming out of Washington recently about the debt limit boils down to nothing but a bunch of hot air. Members of both parties will blame the other for reckless spending, obstructionism, confiscatory taxation, stealing food from the mouths of babies, “playing politics” with our grandchildren’s futures, balancing the budget on the backs of the poor (or the rich), and all manner of other heinous crimes.
The whole mess is a result of Republicans insisting on some type of deficit reduction as a condition of increasing the debt limit. Whereas I think they’re right in raising objections to our profligate spending, their choice of battleground is not particularly wise. They somehow think that the good press they’ll get from “making a stand” against excess spending will outweigh the bad press they’re getting from all corners. I suspect that they’re going to come out smelling like they rolled in a pig pen.
President Obama and the Democrats in Congress said they were willing to participate in a discussion. The original proposal was to cut four trillion dollars off the deficits over the next 10 years. The project deficits over that period amount to about $15 trillion. So even if the four trillion figure were attainable, we’d still amass $11 trillion in new debt. But Republicans won’t entertain any kind of increase in taxes, and Democrats at first weren’t willing to pass anything that didn’t include more revenue (i.e. higher taxes). Increased taxes are now off the table, and current proposals by both parties amount to about $2.5 trillion reduction over 10 years. Those proposals are so full of holes that the Congressional Budget Office estimates they’ll result in a savings that’s between 25% and 30% lower. Not that either proposal will fly. The House bill is D.O.A. in the Senate, and likewise the Senate bill in the House.
Both parties are playing a game of chicken, arguing over what amounts to at best a 12% reduction in deficits over the next 10 years, and holding up an increase in the debt limit that probably doesn’t matter at all and most likely will eventually be passed, regardless of how this particular little squabble turns out. In other words, all this noise is just an argument over an imaginary spending reduction that started over a routine bit of meaningless bookkeeping.
The real issue has nothing to do with spending, taxation, deficits, or debt limits. If you’ve been paying attention at all, you can see that the real issue is simply election politics. Next year is a big election year. Republicans are pushing for a small increase in the debt limit, hoping that we’ll have to go through this again next year, shortly before the election. Democrats want a larger increase in the debt limit so that they can skip having to discuss this until after next November’s election. Republicans are hoping to make President Obama look bad going into next year’s election, and Democrats are trying to prevent that.
Of course, each party is accusing the other of “playing politics.” And the mindless parrots who make up the majority of the American electorate go along with it happily, never stopping to consider that their selected tribe is doing the same thing that they’re excoriating the other tribe for doing. It never occurs to the denizens of either tribe to engage their brains and figure out that they’re being hoodwinked by their tribal leaders who don’t give a damn about the American people, our economy, or the long-term health of our country. Their only consideration is power: how to get it and how to keep it. Whatever helps the tribe amass or retain power is good. Everything else is irrelevant.
There’s no doubt that we need to rein in spending, but the people currently in charge of the purse strings aren’t going to do it. They’re not even interested in it, and neither are any of the people who are thinking about standing for election next fall. You might think that a “throw the bums out” reaction in next year’s election will “send a message,” and it will. The message received will be, “Suckers! You think you can get rid of us that easily?” The new crop of elected parasites will set up shop and continue to fleece you.
The only way out of this mess is to throw off the idiotic illusion that your tribe is better than the other tribe, and that if your tribe has control everything will be okay. Ditch party politics. Think for yourself. Refuse to vote for anybody who claims a party affiliation. Judge based on actions and on real answers to real questions.
You can continue in your slavish devotion to your tribe, and continue to blame the other tribe for things getting worse. And they will get much worse. Or you can engage your brain, see the parties for the manipulators that they are, and elect real people who actually care about doing what’s right rather than what will keep themselves and their tribes in power.
The Twitter convention for referencing a stock is to put a dollar sign in front of the ticker symbol. For example, a tweet that contains $MSFT is talking about the stock for Microsoft Corporation. The tweet likely contains a link to an article about the company’s performance, or perhaps somebody’s sentiment about the stock. I got to wondering which stocks get the most tweets.
Twitter has a very easy to use API, and fairly liberal usage restrictions. It was a matter of a few minutes to get a list of the stocks on the S&P 500 and write a simple program that does a Twitter search for each stock and computes a “tweets per hour” figure for each stock. From there, it’s a simple matter of sorting to come up with the most-tweeted stocks.
If you assume that Twitter is a reliable proxy for overall chatter about stocks, then you can say that the stocks below are the 20 most talked about stocks. I don’t know enough about the market to say with any certainty that the assumption holds true, but the list below does include more than just technology companies. So I suspect there is at least some correlation between tweets and overall market sentiment.
||Tweets / hour
||Goldman Sachs Group
||Bank of America Corp
||Agilent Technologies Inc
||Sprint Nextel Corp.
||Freeport-McMoran Cp & Gld
||Medco Health Solutions Inc.
||United States Steel Corp.
I was somewhat surprised to find Walgreen (WAG) in the top 10. PEP, FCX, MHS, and X were a bit surprising, too. The most likely reason for Express Scripts (ESRX) being on the list is that they announced a merger with Medco yesterday. Or was it Wednesday? Either way, Twitter reflects the recent buzz about ESRX.
Note that the list above is just a snapshot. I did a one-time snapshot to get the recent tweets for each stock at one particular time. There are all kinds of things that could skew the data in a single snapshot. You would need several snapshots per day over a few days to get a more reliable list. For my purposes, a single snapshot is just fine.
I’ve carved dozens of these little dogs–perhaps more than a hundred. I know they’re not high art, but I enjoy them. Some people play Solitaire or Bejeweled, watch TV, or sit around drinking beer and talking with friends. I whittle.
You’d think that after carving so many of these I’d “have it down.” But whereas most carvers work primarily with kiln dried basswood, where every piece of wood is almost identical to every other, I tend to work with “found wood.” This piece, for example, is from an apricot limb. The dot between the dog’s ears is the pith, and the tail is a smaller limb that was growing off of this one. The blemish on the nose is part of a worm hole that I didn’t discover until the piece was half finished. I wasn’t about to throw the thing away just because I found a little rotten wood.
Working with found wood is challenging because every piece is unique. This apricot, for example, had been sitting out in the weather for quite a while after it was cut. It has a lot of bugs in it, some soft spots, and some very hard spots. I cook each piece in the oven for a couple of hours to kill any bugs. The apricot cuts very nicely, and is somewhat forgiving if I cut against the grain.
I’ve carved these dogs from more than a dozen different woods, including basswood, mesquite, walnut, mahogany, fig, cherry, pear, maple, ambrosia maple, sumac, oak, apricot, poplar, lyptus, elm, cedar, sycamore, and a few “mystery sticks” that I’ve picked up along the way. Every type of wood, and sometimes different limbs of the same type, has a unique character that presents its own challenges.
If you work in found wood, there’s almost never a shortage of material. Unless I’m stuck in an office building somewhere, I can almost certainly find a tree limb that’s about an inch thick. That and a knife is all I need. In an hour or so, I’ll have a little dog carving.
Another benefit of working in found wood is that I don’t have to paint the dogs. The natural wood grain provides much better coloring than I’ve ever been able to obtain with paint. Besides, I dislike painting.
Some people have asked me why I don’t sand the pieces to remove fuzzies or tool marks. I’ve sanded some of them to remove the fuzzy bits, but often when I carve one of these all I have is the knife. Sandpaper is another thing I’d have to carry around. And I’d never sand one perfectly smooth. The tool marks add character.
I keep saying that I’m going to make a step-by-step picture tutorial about carving these little things. I’ve started a few, but I always get involved with the carving and forget to pause to take pictures. One of these days. Really.
I’ve spent most of my limited carving time recently on more spoons. A few of the little bears, but that’s about it.
My friend Mike was about to throw an old table into the burn pile up at the ranch. I grabbed a few slats to bring home, because I wanted to see what kind of wood was hiding under all that rot.
The wood turned out to be teak. I now have the entire table and will be making things from it.
I got ambitious on Sunday and made another mesquite log spoon. This one turned out really nice.
Finally, another coffee scoop. The wood used is ambrosia maple. I’m getting better with the square or rectangular bowls.
Last month the Congressional Budget Office released their 2011 Long-Term Budget Outlook. Unsurprisingly, this was not reported by the media or mentioned by any of the players in the fiscal tug-of-war that’s currently occupying our elected parasites. It’s likely that most of them haven’t even read the report.
They should, and the the media should be all over this, because the CBO report paints a very bleak picture of our fiscal situation. You should also understand that historically the CBO almost always overstates revenues and understates expenditures. In addition, the language of their reports is purposely vague. Even with that, the picture they paint is frightening indeed.
The report analyzes the impact on the budget under two scenarios. Under the most optimistic scenario, things are bad. Under the more likely scenario, things are catastrophic.
Under the Extended Baseline scenario, expiration of tax cuts, changes in tax law, and the way that the tax system interacts with the economy result in increasing revenues, with revenue reaching about 23 percent of GDP by the year 2035, and continuing to grow after that. At the same time, spending on everything but health care, Social Security, and interest on the debt would decrease to the lowest levels since World War II.
The projected result of the Extended Baseline scenario is that federal debt will increase to about 84 percent of GDP by the year 2035, from about 69 percent now. Interest on the federal debt will be about 4 percent of GDP, or about 17 percent of all federal spending.
The Alternative Fiscal Scenario incorporates several expected changes of law. The 2001 tax cuts, extended in 2010, will be extended again, the reach of the alternative minimum tax is reduced, and in general tax law will change to keep revenues at their historical average of about 18 percent of GDP. In addition, health care costs are projected more realistically and spending on other government programs are not expected to decrease as much as in the Extended Baseline scenario.
Under the Alternative Fiscal Scenario, federal debt explodes, reaching 100 percent of GDP by the year 2021, and 190 percent of GDP by 2035.
According to the report:
Many budget analysts believe that the alternative fiscal scenario presents a more realistic picture of the nation’s underlying fiscal policies than the extended-baseline scenario does. The explosive path of federal debt under the alternative fiscal scenario underscores the need for large and rapid policy changes to put the nation on a sustainable fiscal course.
Note that the current spending is not sustainable, nor is either of the scenarios outlined above.
Scary as those projections are, the really frightening part of the report is contained in the section entitled The Impact of Growing Deficits and Debt. The first paragraph is so alarming that it should have every American calling his elected representatives to demand immediate changes to put us on a sustainable path:
CBO’s projections in most of this report understate the severity of the long-term budget problem because they do not incorporate the negative effects that additional federal debt would have on the economy, nor do they include the impact of higher tax rates on people’s incentives to work and save. In particular, large budget deficits and growing debt would reduce national saving, leading to higher interest rates, more borrowing from abroad, and less domestic investment—which in turn would lower income growth in the United States. Taking those effects into account, CBO estimates that under the extended baseline scenario, real (inflation-adjusted) gross national product (GNP) would be reduced slightly by 2025 and by as much as 2 percent by 2035, compared with what it would be under the stable economic environment that underlies most of the projections in this report. Under the alternative fiscal scenario, real GNP would be 2 percent to 6 percent lower in 2025, and 7 percent to 18 percent lower in 2035, than under a stable economic environment.
In other words, the budgetary impact of our fiscal overindulgence results in a reduction of GNP in the next 15 years.
As I said before, CBO projections in the past have typically been overly optimistic because they are based on current policies and projections of historical averages. They don’t take into account the rate at which government spending has increased over time. Regardless, even the CBO’s most optimistic projection here is unsustainable.
Meanwhile, Congress and the President are wrangling over a plan to reduce deficits by up to four trillion dollars over the next 10 years. Whereas that sounds like a lot (about a 27% decrease in deficit), it still saddles us with about $11 trillion more debt by the year 2021. Assuming, of course, that the plan actually has the projected impact. More likely, flaws in whatever convoluted legislation they cook up will result in much lower savings, and future legislation will negate whatever actual savings is realized.
When you find yourself in a hole with a shovel in your hand, sinking ever deeper, the first thing you should do is stop digging and drop the dang shovel. When you find yourself sinking deeper into debt, the first thing you have to do is stop borrowing money!
Any fifth grader can do the math. If you keep taking more than you’re getting, eventually you have nothing.
Putting our government on a sustainable fiscal path will require pain. A lot of pain. Historical evidence and the most recent CBO report indicate that raising taxes will not have a positive impact on our budgetary problems. The only way we can solve the problem is to reduce spending. As I pointed out in Out of Control, more than 60% of federal spending is on “mandatory” programs: Social Security, Medicare, Medicaid, unemployment, welfare, etc. We spend more on those programs alone than we take in every year in revenues. Those programs must be cut.
But cutting any of those programs is political suicide. Because our elected “leaders” are more interested in keeping their jobs than they are in prolonging our way of life, Congress and the President will end up passing bullshit “reform” legislation that just whitewashes over the problem, perhaps extending the inevitable for another few years–long enough that some other suckers have to worry about it.
So go ahead, Mr. President. Mr. Speaker. Mr. Senate Majority Leader. Have your fun. Make all your silly speeches and look good for your constituents. Play the game of making the other guy look bad so that you and your parties can remain in power. But please don’t expect those of us who actually paid attention in fifth grade math class to swallow the shit you’re shoveling.