Friday, March 1, 2013

And the Debt Goes On!

I am having trouble believing that the American people are so clueless about debt. You cannot continue spending more than you take in. Suppose that you take in $2,900/year and spend $3,800. That is a deficit of $900/year. Suppose also that you have current debt of $17,000 and long-term debt of $71,000. You agree in August 2011 to immediately increase your current debt limit by $1,200 and cut your spending by $120/year for the next 10 years. When the first actual cut is due (19 months later), you say police, firefighters, teachers and children in Head Start will be homeless on the streets.

In the SOTU Obama talks about deficit reduction – never debt reduction. In my example this means spending $3,680 and a deficit of $780/year. For actual debt reduction to occur, the federal government must run a surplus. A balanced budget only stops the bleeding. The Senate has ignored the budgets passed by the House, and the President has not proposed even a balanced budget. The federal government has run on continuing resolutions (CRs) for years. This means that programs that existed 4 years ago are still funded at the same level. The program may have ended or be unnecessary, or it may be counterproductive to the current economy. Congress and the President keep funding them while increasing the debt.

The Federal Reserve keeps buying Treasury Notes and toxic mortgage debt. This artificially stimulates the government to spend and the banks to lend. Unfortunately stimulating the banks has caused consolidation rather than increased lending. The 10 banks bailed out with $125B of taxpayer money in 2009 now control 77% of the financial industry. If they were “too-big-to-fail”, then now they are “too-bigger-to-fail.” This money printing by the Fed also causes inflation – an illegal tax since only the House of Representatives can take your money by Law.

The “housing bubble” was partially caused by by low interest rates at the Fed over-stimulating the real estate industry. Fed rates are near 0%, and new bubbles are about to burst. The President talked about his college scorecard, - although the employment data is not available – you can see that colleges are graduating small percentages while the students are walking away from the loans. Colleges are admitting students who cannot compete.

Ponzi schemes like Social Security need new blood to pay for promises to the elderly. The liberal Supreme Court said in 1973 that it was “legal” to “terminate a pregnancy.” Since then over 55 million babies have been murdered. The United States demographics is now wrong for a Ponzi scheme to continue much longer. This is why Progressives desperately need immigrants to fill the gap - and vote for them.

It is illegal to bribe a voter, but it is “legal” for the FCC to charge “fees” on cell phone bills and use the money to provide free cell phones to those already on federal transfer payment programs. The inarticulate woman in Cleveland explains why the Progressives were re-elected. You cell phone bill payers provided the bribe!

And the debt spiral continues!

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