Off the fiscal cliff and into the great abyss

November 12, 2012

(FOX) Negotiations to avert the Fiscal Cliff offer great political drama, but they won’t solve Washington’s budget woes and may cast the nation into another recession or worse.
The Budget Act of 2011 requires the president and Congress to agree on a nine-year $1.2 trillion deficit reduction program, or cuts in annual defense and non-entitlement outlays each equal to 54.7 billion trigger on January 1. Simultaneously, the Bush Tax cuts, the 2 percentage point payroll tax holiday, and other assorted programs expire.
Altogether, $136 billion in annual spending reductions and $532 billion in additional taxes could trigger cataclysmic consequences for the economy. Unemployment would rocket past 15 percent, state government finances would collapse, homeowners would default on mortgages, and hundreds of banks would fail.
To avoid calamity, President Obama and House Republicans will likely agree to raise taxes on high income Americans by $100 to $150 billion and curb spending by an equal amount. However, those efforts will prove too little, and yet, the economy may still skid into recession—depriving the federal government of tax revenues and further pushing up the budget gap.
The federal deficit exceeds $1 trillion dollars—up from $161 billion in 2007, the last year before the financial collapse. Spending is up some $1 trillion, as outlays for and other entitlements have increased by an amount equal to the entire 2013 defense budget.
By the end of the decade, runaway entitlement spending will require shutting down the military or crippling many other domestic spending programs to head off ballooning deficits.
With Americans living longer, the only reasonable solution is to raise the Social Security retirement age to 70, and pattern US health care reforms after other national systems that better contain costs.
The Germans and Dutch spend one-third less on health care than the United States, because their governments more aggressively regulate prices, better ration care, and spend less on law suits.
Democrats, hamstrung by unions, are loath to require Americans to work longer, and are too beholden to tort lawyers and the medical establishment for campaign support—hence, ObamaCare just throws more money into a broken system.
Republicans refuse to admit more competition—we already have plenty of it among providers, drug and device manufacturers and insurance companies—won’t adequately slow rocketing health care costs.
Over the next decade, without a significantly higher retirement age, effective price controls in health care and torts reform, federal spending and the national debt will jet into the stratosphere. Mounting interest payments, investor reluctance to buy US Treasurys, and consequent draconian cuts in spending will thrust the United States into the crisis now gripping Greece and Spain.
More immediately, even modest tax increases and spending cuts threaten a second recession, because President Obama and Congress failed to address dysfunctions that created the bubble and bust of the 2000s and make the economy perilously dependent on deficit spending.
From 2001 to 2005, the trade deficit doubled to more than $700 billion, thanks to subsidized imports from China, restrictions on US sales into the Middle Kingdom and rising oil prices. This resulting loss of demand for US-made goods and services should have instigated a recession; however, Chinese and Middle East oil exporters stepped up purchases of US securities, and those helped finance questionable mortgages, car loans and credit card debt. Americans spent more than they earned and the boom continued into 2007. When homeowners and other borrowers could no longer service their debts, defaults and bankruptcies resulted and the economy crashed.
A huge trade deficit with China and on oil continues, but now the federal government is doing the extra spending and borrowing for us. If budget negotiations slice $200 to $300 billion off the deficit, as is likely, GDP will contract $350 to 500 billion and unemployment will rise above 10 percent.
President Obama and House Republicans indicate no interest in genuinely confronting Beijing to force a more equitable trading relationship with the Middle Kingdom.
Slashing oil imports requires the President to permit more drilling in the Gulf, off the Atlantic and Pacific coasts and in Alaska, and for Republicans to embrace alternative energy sources and more aggressive conservation measures.
Neither seems likely.
All told, absent major changes in trade and energy policies to boost domestic demand and growth, budget deficit reduction is not possible without another long, hard recession. And absent genuine deficit reduction, the country is headed for economic chaos by the end of the decade.

Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, and widely published columnist. Follow him on Twitter @PMorici1


Eric Cantor fights the TAX HIKE

June 23, 2011
Washington Post so called blog sez that:

Eric Cantor pulled out of the debt ceiling talks this morning,
citing unbridgeable differences over the Dem insistence on tax hikes as part of a deal…

C’mon, how hard is it to link to this press release? Boker Tov!

Both Greg Sargent at this WashPo “blog” and Jennifer Steinhauer at a NY Liberal Times “blog” lack this rudimentary courtesy.

image from H Ken of International Business Times


Garofalo, clinging to hope that Anthony Weiner will still be mayor someday

June 11, 2011
why would anyone believe that giving people like Weiner more power is a good idea? because they believe in a huge nanny state. Don’t let the Cigie full you. Garafalo’s tush is owned by the powers that be. The big money is the state, not the rich. Billionaires like Bloomberg know this. That is why moving up is out of the free market and into government. Bloomberg would never have the power he has if he were just using his own money.
…meanwhile… never mind the Weiner….

in Spain the ruling Socialist party faces prospect of “humiliating”, “crushing” defeat… because taking money from individuals for a government that is in debt about twenty times all the rich people in the U.S. combined is not a good idea.  You take away from the few to kill the engine of development.  It’s proven.

General view of the Puerta del Sol square in Madrid on May 21, 2011 during a protest against Spain’s economic crisis and its sky-high jobless rate. Spanish youths furious over soaring unemployment kept up their week-long protest movement on the eve of local elections expected to deal the ruling Socialists a crushing defeat. (Getty Images)

Real Time, June 10, 2011
( Janeane Garofalo, Joshua Green, Sharon Waxman )
http://xrl.us/WeinersWeiner

UPDATES PENIS STORIES!
Nazi Porn! and ‘Foreskin Man’


Everybody doesn’t have to pay their taxes… except this guy

October 31, 2010

Here is the deal. He’s an adult. Everyone else is children because we think our taxes are too high. So the new rule is any large corporation that proportionately financed Obama in the last election and this guy… is going to be taxed. Everyone else is free to watch this guy make a new sign.

via news.nationalpost.com


burden on small and medium sized business = NO JOBS

January 14, 2010

Section 404(b) of the Sarbanes-Oxley Act is a burden on small and medium-sized businesses that could grow and create jobs.

In lamenting the lack of economic growth in the decade that just passed, New York Times columnist Paul Krugman had pointed the finger at a typical culprit: the supposed deregulation that occurred in the Bush administration. “As for the Republicans, now that their policies of tax cuts and deregulation have led us into an economic quagmire, their prescription for recovery is – tax cuts and deregulation.” Krugman called the 2000s “the decade in which we achieved nothing and learned nothing.”

the very same Paul Krugman who sees “humanity” in climategate… not liars.

Yet a glance at what really happened in the first decade of the new millennium shows that Krugman and others of his ilk are the ones who have really learned nothing. They continue to insist that the financial crisis was caused by deregulation even though so much government intervention in housing — from the subsidies to Fannie Mae and Freddie Mac to the reckless lending encouraged by Community Reinvestment Act – contributed to the mortgage meltdown.

And, as Rep. Ron Paul recently pointed out, “As for a lack of regulation, the last decade saw the enactment of the Sarbanes-Oxley Act, the largest piece of financial regulatory legislation” in decades.

Rushed through Congress and signed by President Bush in the wake of the Enron and WorldCom scandals in 2002, the law has quadrupled the costs of the audit process for public companies and achieved little tangible results in preventing fraud. Because of all the high-paying work it creates for auditors in helping firms comply with the law, Sarbox has been called “a boon for bean counters” (in Business Week) and the “Accountants Full Employment Act.”

Sarbox is a significant cost factor holding back job growth and a stronger recovery. If it is repealed or scaled back, the second decade of the new millennium could see real prosperity as American entrepreneurial energies are once again unleashed through the next Microsoft and Googles going public.

On top of this, Sarbanes-Oxley has achieved very little in preventing fraud. In 2007 Countrywide Financial Corp. was praised for its Sarbanes-Oxley controls by the Institute of Internal Auditors. Two years and many scandals later, its former executives have been charged with securities fraud. And certainly, overall transparency doesn’t increase when companies go private or delay going public, as many have chosen to do because of the law’s costs.

So how do you keep companies like Enron from abuse? My opinion… more competition. If there is a near monopoly in energy for example then the government should break up the private company or make it easier for other “Enrons” to get out there. One private energy company going against the government is a system that is ripe for abuse. The same could be said about the healthcare industry that we are presently creating. A government industry with only one private alternative will always have people cheating and even cronyism between the government and it’s private competitor.

burden on small and medium sized business = NO JOBS

January 14, 2010

Section 404(b) of the Sarbanes-Oxley Act is a burden on small and medium-sized businesses that could grow and create jobs.

In lamenting the lack of economic growth in the decade that just passed, New York Times columnist Paul Krugman had pointed the finger at a typical culprit: the supposed deregulation that occurred in the Bush administration. “As for the Republicans, now that their policies of tax cuts and deregulation have led us into an economic quagmire, their prescription for recovery is – tax cuts and deregulation.” Krugman called the 2000s “the decade in which we achieved nothing and learned nothing.”

the very same Paul Krugman who sees “humanity” in climategate… not liars.

Yet a glance at what really happened in the first decade of the new millennium shows that Krugman and others of his ilk are the ones who have really learned nothing. They continue to insist that the financial crisis was caused by deregulation even though so much government intervention in housing — from the subsidies to Fannie Mae and Freddie Mac to the reckless lending encouraged by Community Reinvestment Act – contributed to the mortgage meltdown.

And, as Rep. Ron Paul recently pointed out, “As for a lack of regulation, the last decade saw the enactment of the Sarbanes-Oxley Act, the largest piece of financial regulatory legislation” in decades.
Rushed through Congress and signed by President Bush in the wake of the Enron and WorldCom scandals in 2002, the law has quadrupled the costs of the audit process for public companies and achieved little tangible results in preventing fraud. Because of all the high-paying work it creates for auditors in helping firms comply with the law, Sarbox has been called “a boon for bean counters” (in Business Week) and the “Accountants Full Employment Act.”
Sarbox is a significant cost factor holding back job growth and a stronger recovery. If it is repealed or scaled back, the second decade of the new millennium could see real prosperity as American entrepreneurial energies are once again unleashed through the next Microsoft and Googles going public.
On top of this, Sarbanes-Oxley has achieved very little in preventing fraud. In 2007 Countrywide Financial Corp. was praised for its Sarbanes-Oxley controls by the Institute of Internal Auditors. Two years and many scandals later, its former executives have been charged with securities fraud. And certainly, overall transparency doesn’t increase when companies go private or delay going public, as many have chosen to do because of the law’s costs.

So how do you keep companies like Enron from abuse? My opinion… more competition. If there is a near monopoly in energy for example then the government should break up the private company or make it easier for other “Enrons” to get out there. One private energy company going against the government is a system that is ripe for abuse. The same could be said about the healthcare industry that we are presently creating. A government industry with only one private alternative will always have people cheating and even cronyism between the government and it’s private competitor.