Washington Pulling Off The Big Con
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Sometimes I think I am being "conned" by both sides of the aisle. For instance, this past week I heard the phrase that "Social Security is going bankrupt" about two times with every half-hour news program.
Well, Social Security is not going broke. It spends about what it takes in without borrowing.
Of course, the rest of the government is already bankrupt. It has to borrow about 45 percent of what it spends. When we compare Social Security with the rest of the federal budget, Social Security looks like Apple and the rest of the government looks like General Motors before the "crash."
Then, there is the "fiscal cliff." It is not a crisis of disagreement. The crisis is that both parties agree with the John Maynard Keynes "con" that government spending boosts the economy. Both parties want to keep government spending at current levels. The Democrats want to keep spending on social programs. The Republicans want to keep spending on defense.
Neither is there disagreement on how to pay for it. The disagreement is on how not to pay for it. The Democrats do not want to lose benefits. Republicans do not want Democrats to benefit from the money Republicans lose. In the past, the consensus between both parties is that neither has to lose because the benefits can be borrowed from China.
And, when the smoke clears from all the negotiations on New Year's Day, the China option may be the consensus opinion again.
But that is a con too. Most representatives know that the China option of borrowing money to keep government spending high is also not a viable option. That is because China is no longer the major source of our debt problem. Our problem is so severe that not even China can loan the United States enough money to keep the government solvent.
The source of government GDP funding keeping our economy alive through the re-election of President Obama was "quantitative easing" by the Federal Reserve.
This was a realization by the Fed that neither China nor anyone else would buy the amount of bonds America needed to sell to keep solvent. Therefore, the Fed issued bonds that it bought itself with money it simply printed without any backing. Our federal spending and our "recovery" were actually financed by the largest counterfeiting scheme since the Weimar Republic let the German presses roll after World War I.
Spending, both defense and social, will have to be cut. This will result in a loss of government jobs until these are replaced with private sector jobs. But, this has to be done.
The government can never tax enough to replace that portion of the federal budget which is either funded by borrowing from China or printing from the Fed.
Complaining about spending cuts reminds me of Lucy calling Ricky names when Lucy wants to buy a designer dress and Ricky replies, "I can' afford it."
Well, we can afford Social Security, because we pay for it. We cannot afford runaway welfare and expensive Navy ships because we do not pay for them. And we do not have the capacity to tax enough to begin to pay for both no matter how much the rich are soaked to coddle the poor and the Defense Department.
The politicians promise "a chicken in every pot." Well, we know that is a con. But do we know that both we and our grandchildren are being conned when we are told that the secret to a vibrant economy is to cut the Social Security for which we do pay and increase the weapons and welfare for which we do not?
The fiscal cliff discussions in Washington seem to center on what to spend and who to tax. They need to center on what not to spend and who to tax less. And, Social Security has nothing to do with it.
If the Congressional negotiators on the fiscal cliff come up with a "compromise" to raise taxes, raise the retirement age, raise the debt ceiling and keep defense and welfare spending constant, then you will know that while New York remains The Big Apple, Washington is, was and will always be, the home of The Big Con.
Robert M. Levy is chairman of the Moore County Republican Party. Contact him at Law52@prodigy.net.
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Comments
pgericson 5 months, 3 weeks ago
Quantitative easing, contrary to the author's assertions, does not increase US debt: the Federal Reserve does not issue any additional bonds. Instead, it buys bonds, both Government and private, to keep long-term interest rates low so as to encourage investment (and thus economic growth). One specific goal is to keep home mortgage rates low to encourage refinancing by US homeowners and the purchase of homes. To my way of thinking, these are good things to be doing.
If the Federal Reserve did not engage in quantitive easing we would still be able to sell out bonds: they are a much better investment than the bonds of most other countries. Interest rates on these bonds would be higher, however, causing the US to pay more in interest on its debt.
Toyboy52 5 months, 3 weeks ago
It buys bonds with money it does not have.In other words it prints money without backing. This devalues the dollar. I'n exchange for low interest rates you get a lower standard of living. The federal reserve makes unlimited federal debt possible and a lower standard of living inevitable.
Yukonjohn 5 months, 3 weeks ago
All we can do is sit back and watch it self-destruct. It will all come tumbling down in due time, probably within the year. When it does, hopefully the Repubs will have realized that if they dont act differently, that some other party will be in power. I would just about as soon see the Dems have it as the Repubs. To me, there is not much difference.
alladat1 5 months, 3 weeks ago
Hey John - go back in your bunker.
packwilleat 5 months, 3 weeks ago
The state is a lie. Biggest "con" in human history. Well, other than religion.
Yukonjohn 5 months, 3 weeks ago
Good day Packwilleat. I hope your day has gone well. It is a beautiful day here, albeit 30 below. I continue to wonder how America did not see the message that RP tried to put out as the answer to our problems? As I believe Gary Johnson said, "It should be an "easy sell"!! Instead, they continue to go down this path to destruction. Buddy, we are still looking for you up here. We need more like you to come up to our place where we already think in libertarian terms. I guess we will just sit and watch as things progress. People like alladat are going to be so surprised/disappointed/shocked when it all goes to ashes..
fatboy 5 months, 3 weeks ago
Excellent article, Mr. Levy. Too bad the libs don't have the ability to comprehend.
packwilleat 5 months, 3 weeks ago
Yukon ~ I hpoe you're keeping warm up there brother. We've had great weather for the Thanksgiving break. The price of peanut oil on the other hand has sky rocketed, $45 for 3 gallons. Still shaking my head over that. But all is well. These Liberals around here think they can fix the economy by soaking the rich, nothing could be farther than the truth. But when the dollar collapses it doesn't matter how many rich and wealthy have been soaked it will still be a wheel barrel of worthless paper. Funny how things keep repeating over and over again. Gotta love 'em.
Yukonjohn 5 months, 3 weeks ago
Holy Cow, 15 bucks a gallon for peanut oil? Wow!! I do love fried turkey though. The only problem here is that it is just too cold to fry them on any holiday that one eats turkey. Hope your T-day holiday has gone well. Well tomorrow is "back to work" day. The only great thing about next week....l have hit my MRA and if they make me too upset, l will let them get me a replacement, cause l will retire!! YIPEE!! Now, if l can only find enough wheelbarrows of money to get by on...LOL That is a scarey thought, but one l feel sure will happen, and happen rather quickly.
Toda 5 months, 3 weeks ago
"And we do not have the capacity to tax enough to begin to pay for both no matter how much the rich are soaked to coddle the poor and the Defense Department."
JimHeim 5 months, 3 weeks ago
Reading this column you'd probably not find that the federal deficit has declined more in the last three years than a comparable period since WWII. And that's a bad thing. We need deficit spending to keep the economy going until it can sustain itself.
There's time for reduction when the loss of jobs will be less traumatic. But do not doubt that if some grand bargain reduces federal spending in the short term, recession will be the least of our worries.
Yukonjohn 5 months, 3 weeks ago
Jim, I went to Union Pines back in the early 70s. I think l got a pretty good education there. Also, it was during the time our economy was going to pot back then. They we had Jimmy Carter. He only exacerbated the problem many fold. I wonder where you got your education? I also wonder how long you have lived on this earth? You really do not believe what you just said do you? Just curious. I could not disagree more with your points, and l am NOT a Republican!
Toyboy52 5 months, 3 weeks ago
Southernpineswestside: it is lowering your standard of living. The devaluation of the dollar lowers the standard for everyone
packwilleat 5 months, 3 weeks ago
SPUW~ you are truly an idiot, honestly.
Yukonjohn 5 months, 3 weeks ago
OMG, there is nothing you can do for that Pack.
JD 5 months, 3 weeks ago
by JD
DannySteen 5 months, 3 weeks ago
Oh My! Its the Evil Lobbyist! What shall we do???? Complain to your representative and stop begging The Government for crap you are too lazy to get for yourself. You whine because BIG(enter entity here)has Lobbyist working for them. So what, so do you. Unions, NRA, AARP, NAACP, Religion, Gay, Race, every one of these groups that wine, dine and probably some of the above, in your favor are Lobbyist. So shut up about Lobbyist or stop the one ones you love so much.
fugitiveguy 5 months, 3 weeks ago
Once again Jim illustrates his total lack of understanding of our economic crisis. Stunning.
Thatcher 5 months, 3 weeks ago
"Devaluation of the dollar...(etc.)"...perhaps the saddest post I've read here in over a year. Clueless about economics. Wow.
Yukonjohn 5 months, 3 weeks ago
And that's a bad thing. We need deficit spending to keep the economy going until it can sustain itself.
Jim, can l please use this line. It takes the cake. I will be sure to give you credit, l promise.
skylinefirepest 5 months, 3 weeks ago
Jim, I will probably get banned for this comment BUT IT HAS TO BE SAID!!! If you really believe that stupid crap that you stated about deficit spending lowering and being necessary....there's no other way to say it....you're just freaking stupid! Tell me that you're wife didn't marry so far below her education level that you really believe that stupidity....you've got to be kidding. The liberals have pretty much ruined the country ( with gracious help from the right, I admit ) and we're borrowing forty cents on the dollar right now to support the champagne appetite of your elected Chi-town mob boss and you want more deficit spending.......Jeez!
JimHeim 5 months, 3 weeks ago
Those who believe that deficit spending is not crucial to an economic recovery are flying in the face of decades of real-life evidence. Not surprising from a group that generally doesn't understand evolution or global warming. Your grasp on political polling is a little lacking as well.
packwilleat 5 months, 3 weeks ago
"Decades of real-life evidence" so that is how we got to be $16.4 trillion in debt. Liberals should just stop trying to talk economics. That part of their brain is simply absent. But they will believe what they believe till the bitter end, regardless of sound evidence that proves other wise. Like Jim and his global warming (ps. ~ now called "climate change") all evidence points that this scheme was intended to exploit your emotions and empty your pocket. But the liberals will keep supporting the cause because it sounds all warm and caring. Funny how they put faith in Al Gore, but call religious folk stupid.
skylinefirepest 5 months, 3 weeks ago
Don't pat yourself on the back too hard there, Jimmy boy. I do understand somewhat the theories of how we got here and evolved and, as an ex-Air Force weatherman I probably have a better understanding of so called money making global warming better than most politicians! Especially local one...er, ones!!
Yukonjohn 5 months, 3 weeks ago
Jim, I am sorry, you are so far lost that l believe there is no hope. Hey, if l do attribute it to you, l hope you don't mind me using that line about having to spend borrowed, deficit dollars to aid the economy!! That has got to be the most outlandish line l have even seen in my short 56 years!!
JimHeim 5 months, 3 weeks ago
packwilleat - You don't seem to notice that over 60% of that debt was generated under Republican presidents. Most of it came just from Reagan and the Bushes. I didn't see all of that wailing and gnashing of teeth by conservatives then.
Nobody cares about the deficit except as a way to hammer the incumbent. If you want to eliminate the deficit, put Americans back to work. That will do it with nothing else needed. Want to do even more? Get a handle on the health care costs that are costing Americans so much from their paychecks Maybe your side could work to improve Obamacare.
If we paid the same for health care as the rest of the developed world, the federal government would be running a surplus and Americans would be in better health.
It's amusing to see this drive to austerity measures when the true solution is in front of your faces. But you're all about scoring political points instead of working toward a solution.
JimHeim 5 months, 3 weeks ago
firepest, as a pilot I have a much better grasp of weather than the average meteorologist. His life doesn't depend on it.
Beyond that, weather forecasters have no more insight into climate change than the rest of us. Climate and weather are not the same.
Since 1991 there have been 13,950 refereed papers in scientific journals dealing with climate. 24 denied global warming. There is no controversy among actual scientists. It's only right-wingers who can't cope with reality.
Courseaire 5 months, 3 weeks ago
Methinks the only thing you have a grasp on is the stick between your legs when you're in the cockpit.
JimHeim 5 months, 3 weeks ago
Methinks someone has no idea how most modern aircraft are constructed.
packwilleat 5 months, 3 weeks ago
Jim ~ I have never supported Bush or Reagan. There are not many presidents/congresses that I support at all, come to think of it. If I had to choose Thomas Jefferson could carry the torch, but even the Louisiana Purchase was unconstitutional, and he admitted it. But to answer your question as to why you didn't see/hear all the bickering during the Bush years is mainly due to the fact that social media simply did not exist as it does today.
JimHeim 5 months, 3 weeks ago
packwilleat - No one even bothered with letters to the editor. The fact that Clinton's surpluses led to te recent recession. We need a larger deficit with continued low taxes if we are to bring unemployment down to acceptable levels. There is no other way and austerity just makes it worse.
JD 5 months, 3 weeks ago
So shut up about Lobbyist or stop the one ones you love so much.
DannySteen can I get this translated from over the top rager speak? You seem to miss the point and make up for it with some deranged nonsense. kkthx.
clarabelle 5 months, 3 weeks ago
" Thatcher - "Devaluation of the dollar...(etc.)"...perhaps the saddest post I've read here in over a year. Clueless about economics. Wow. "
You must have written this on your off day from the US budget office............ or maybe walmart said you were too old to work there anymore.
Perhaps you and professor fg can enlighten everyone on economics. cheers!
Thatcher 5 months, 3 weeks ago
No one, not a single person, no matter how gifted, could enlighten you on economics. Cheers!
Jason 5 months, 3 weeks ago
If you read one article this year that is written by a Republican, this is it!- http://www.theamericanconservative.com/articles/revenge-of-the-reality-based-community/
Jason 5 months, 3 weeks ago
Or this! - What's the GOP message if the economy booms? http://www.cnn.com/2012/11/26/opinion/frum-gop-prosperity/index.html?fb_action_ids=10151261855034483&fb_action_types=og.recommends&fb_source=aggregation&fb_aggregation_id=288381481237582
Thatcher 5 months, 3 weeks ago
How much do the "poor" (whatever your definition) pay in federal income taxes? Middle class (again, whatever your definition)? Look it up. Cheers!
fugitiveguy 5 months, 3 weeks ago
upperwestside, what do you think is the maximum percentage anyone (regardless of their income) should have to pay in federal income taxes. Hint:I am asking for a number
fugitiveguy 5 months, 3 weeks ago
upperwestside-are you aware that nearly half the country pays zero income taxes? Its a fact.
Hint:income taxes are not to be confused with sales tax, social security tax, medicare tax, estate tax, thumb tacks. Please answer with that in mind.
Thatcher 5 months, 3 weeks ago
fugitiveguy-- Whatever the number, and whatever the rate, you can bet it will be accompanied by "our president barack obama." Cheers!
packwilleat 5 months, 3 weeks ago
I'll answer for SPUW............................ "more!!"
I almost forgot......."god bless our president B.H. Obama!"
Thatcher 5 months, 3 weeks ago
Now packwilleat, you unlawfully included the "H." That is racist. Cheers!
skylinefirepest 5 months, 3 weeks ago
Westside...I'd argue with you again...BUT it's useless because you've already said that you would support this incompetent piece of lying trash even if you believed what we said about him was TRUE!! Your true colors are showing! If you could understand numbers you would realize that you can't buy food for your family with forty percent borrowed money. And Jimmy claims to be a pilot and therefore to know more about meteorology than most weathermen.....bullhockey, Jimmy, right quick now...what's a high cloud 9??? I'll give you a hint...only an extremely stupid pilot would try to fly through them.
Courseaire 5 months, 3 weeks ago
Not sure what's in a high clould 9, but I once swallowed one in college and went on a 3 day trip - what a blast.
JimHeim 5 months, 3 weeks ago
If you want a number, all income over $3 million should be taxed at 67%. That's the number found to produce the most economic growth for the country.
And, firepest, go back and read what I actually wrote. What makes you think that pilots are not trained to know which clouds are likely to be dangerous?
Middleman522 5 months, 3 weeks ago
Westside, you and many others think BHO is God! Blind faith!! Heim 67%? Are you that jealous of success? You want more Fed. Union workers taking more from American workers, deciding who gets whatever is left over after buying votes? Liberal Platform for years! That money does more in the market place. But then useless liberals could not get elected and spend other people's money, buying votes. Does this all just slide right by you?
JimHeim 5 months, 3 weeks ago
Middleman, The top rate was 91% before Kennedy (a Democrat, I might remind you) cut it in half. The country did quite well in the post-war years. That tax rate was one of the reasons.
Just where do you think the 'marketplace' gets that money?
clarabelle 5 months, 3 weeks ago
Too funny - the far right loonies at it again!
http://news.yahoo.com/blogs/ticket/ex-republicans-claim-fla-gop-suppressed-democratic-vote-194121956--election.html
clarabelle 5 months, 3 weeks ago
" Thatcher - No one, not a single person, no matter how gifted, could enlighten you on economics. Cheers!"
Yes.............. didn't think so. You are as hollow and worthless as they come - all hot air and no substance!
ooops.......... almost forgot....... cheers!
JD 5 months, 3 weeks ago
You are as hollow and worthless as they come - all hot air and no substance!
I'm still waiting for him to expose me as DRjr or to post quotes where I 'disparaged' his wife, or for him to post his email to Nagy. But it's Thatcher - the softer side of trolling. What do you expect of an old man that models himself after an old woman.
Cheers, Excelsior!
Thatcher 5 months, 3 weeks ago
clarabelle-- "Hollow and worthless" is my middle name. Just ask my wife and kids. Or the people whom I employ. Hands down, you are the expert on economics here...simply based upon your last post. I would reference previous posts you have made here about economic theory, but I can't remember any. Cheers!
buddysmith 5 months, 3 weeks ago
i am still trying to understand how a young lady used a food stamp debit card to buy 2 12 packs of sodas and 20 chocolate cadbury eggs??? true story, she was in front of me at the express line at a local food lion
Thatcher 5 months, 3 weeks ago
buddysmith-- Your question is a good one, and certainly will be answered by our resident economic expert, clarabelle, in short order. Cheers!