Why Washington will collapse

It’s mathematically guaranteed, given the total failure of the supposedly responsible party, the Republicans, to even openly discuss the fiscal realities, much less address them. The Market Ticker walks through the numbers:

NOW we need to cut the federal budget not with a knife or a scalpel, but a chainsaw. Bachmann has said “43%.” There were gasps when she uttered those words. Sorry, that’s not enough. (Take your heart medication before continuing folks.)

Here’s the math.

Last year (Calendar 2010) we ran a 12% of GDP deficit, $1.7 trillion. This year we are tracking to run about $1.4, but we have three months left. If history repeats as to size it’ll come in around $1.4 trillion, which is approximately 9% of GDP. This is within the rough range of 9-12% of the last three years. The last year of Bush’s Presidency we ran somewhat over 9% of GDP. Obama has run 11 and 12%, respectively, and this will be ~9-10%, so there’s no change in that regard.

But withdrawing the deficit spending is not enough because the withdrawal of that money, when it runs through the economy, then produces a (gross) reduction in tax receipts. Figure 1/3rd of that deficit spending ultimately returns to the government in the form of taxes in some form or fashion by the time all of the “turns” those funds made in the economy (e.g. from company making the presidential limo to the folks making the alternator to the folks making the copper wire to the mine pulling the copper out of the ground), and subtract that off as well.

So now we need to reduce spending not by $1,700 billion but that plus about another $500 billion for the tax impact, for a total of $2.2 trillion out of $3.7 trillion spent. About $500 billion of our spending at present is interest so this means we have: $3.7 – $2.2 – $0.5 = $1 trillion in total actual federal spending available to us out of an original $3.7 trillion.

One can – and I will – take exception to the estimate of $800 billion for the net revenue consequences from what economists describe as “the multiplier effect”, but the more important point is that changing government spending patterns will have an effect on the economy. It is as foolish to apply a static government spending cut model as it is to apply a static tax revenue model. Now, we can come up with a total range of estimates by utilizing the very high multiplier of optimistic Obama administration economists, who assumed it to be 1.6, then comparing that to the actual Four Wars multiplier of Robert Barro, which worked out to 0.8.

At present, federal tax revenues are $2.3 trillion. This means tax revenues/GDP are 2.3/15.0, or 15.3 percent. For the maximum range, we’ll ignore the BEA’s estimate of G and go with the actual amount of federal spending, which is $3.7 trillion. The range of multiplier effects means that the net contribution of that government spending to the economy is somewhere between $5.92 trillion (Obama) and $2.86 trillion (Barrow). Applying the Tax/GDP ratio indicates a TOTAL tax benefit of between $906 billion and $453 billion from ALL $3.7 trillion in government spending, which means that Karl’s estimate of $800 billion in lost taxes from the aforementioned 1.7 billion reduction is almost surely too high, even before we notice that the 0.8 multiplier means that reducing government spending would tend to increase GDP and therefore tax revenues by a factor of 1.25.

So, in order to obtain the most conservative estimate of the tax effect, we have to multiply (1.25 x 1.7 trillion) x .153. This would indicate a benefit of $325 billion to GDP from the reduction in spending rather than an additional loss. On the other side, (1.6 x 1.7 trillion) x .153 means a maximum tax revenue loss of $416 billion.

I’m not sure where Karl got his interest figure, (it looks like he used the 2015 estimate), but the reported interest on the national debt is $240 billion for 2011. So, in order to prevent the debt situation from expanding, and depending upon which economist you trust concerning the multiplier effect, federal spending must be reduced to somewhere between $2,085 trillion on the high end and $1.344 trillion on the low end. And here are the current big-ticket items:

$761 billion – Social Security
$468 billion – Medicare
$269 billion – Medicaid
$598 billion – Unemployment/Welfare
$679 billion – Department of Defense + Foreign Wars

So, this is why the Tea Party and the Republican Party cannot possibly salvage the situation They’re not proposing the end of ANY of these major programs even though the nation can only afford to keep two of them, three in the unlikely event that both Defense and Social Security are entirely junked. Since that’s not going to happen, given the way in which the incompetence of politicians presently inhabiting Washington aren’t willing to even consider such drastic action, the financial collapse of the US federal government is assured.

Because I harbor Austrian School inclinations and the propensity for government malinvestment is obvious, I think the higher figure based on Barro’s multiplier is the more relevant one. It’s hardly a surprise that the Keynesian model would make government spending look more desirable and cuts to that spending more horrific, and obviously the administration economists were incorrect about that 1.6x multiplier given the failure of their $787 billion stimulus plan. But I found it to be interesting to discover that the $2.085 trillion figure works out to a 43.6% required reduction in federal spending, which tends to suggest that Michele Bachmann’s economists are utilizing an equation similar to the one that I have worked out here. Perhaps old Crazy Eyes really does read Mises at the beach.

The conundrum of the anti-Christian

Brian Philips examines the dichotomy of the Tebow hater’s cheering for the failure of the Denver quarterback:

I find myself half-consciously rooting for Tebow to fail, even though I have nothing against him, have lots of religious friends, am not especially tribal by nature, and wouldn’t want to be responsible for the nacho-related deaths of any prominent evangelical leaders, even if I detest their politics. Doesn’t matter. The part of me that wants to eat pork and not stone people just switches on and cheers for the blitzing linebacker.

There’s a problem with this, though, a problem that I’m convinced lies at the heart of the minor cultural puzzle that Tebow represents. The problem is that if you’re rooting against Tebow because he’s religious, you’re giving way to the trial-by-combat impulse. And the whole idea of the trial by combat is that there’s a higher power adjudicating the combat. It means something for the blue knight to kill the green knight only if God is moving the swords. So what I, many secular football fans, and Imaginary Daniel Dennett are really rooting for is for God to make Tim Tebow fail as a means of discrediting Himself, God, in accordance with our wishes, and against His, God’s, own interests.

This — arguably — doesn’t make a whole lot of sense.

It all comes down to atheist logic. Which, as FA von Hayek could have pointed out for us, is simply not logic at all.

Blind eyes won’t see

If you’ve placed a negative value on unborn little girls, then you shouldn’t be terribly surprised when those who manage survive the pre-natal gauntlet aren’t valued any more highly:

So was it capitalism that deadened those drivers and passers-by to the death of one little girl, or was it a culture that traditionally devalues girls and that has, for thirty years, had enforced a government policy that, inevitably, means that girls are killed in utero? If girls are so valueless in utero, why should their value increase ex utero? The message that Chinese citizens have absorbed is simple: Don’t get involved as a general matter because the government is likely to come after you — and considering the risk, you should especially avoid getting involved with a manifestly disposable citizen, i.e., one little girl in bright pink trousers.

It is sheer lunacy to attempt to blame capitalism for the more than a dozen people who walked by, indifferent to the suffering of the dying little girl. These are people who have been taught for the entirety of their existence that a) there are too many people and b) killing little girls is a social good. Now they’re supposed to suddenly switch gears because there is one less undesirable little girl to overpopulate China?

Quite clearly, that’s not going to happen. There is nothing wrong with those Chinese individuals that isn’t the result of social engineering. This is the New Chinese Man that Mao wanted to create. They aren’t monsters so much as they are the product of a monstrous society, raised from birth to be blind to the suffering and death of little girls.

The incompetence of the elite

Lest you think the people of the West are being governed by their betters. It’s gotten to the point that we need a new word to collectively describe the increasingly inept oligocracy. I suggest “an incompetence of politicians”:

Her rapid rise to become the youngest minister in government has taken some colleagues by surprise. Now extraordinary claims are circulating at Westminster that Chloe Smith was appointed because David Cameron was confused about her credentials. Miss Smith, who became the youngest MP in Parliament when she won the Norwich North by-election in 2009, was promoted last weekend to become Economic Secretary to the Treasury in the mini reshuffle that followed Liam Fox’s resignation….

After Mr Cameron told Miss Smith he would like to offer her the post, she is said to have replied: ‘Well, thank you Prime Minister. . .It would be an honour, but the Treasury…it’s a little daunting…’

The Prime Minister allegedly responded: ‘Not daunting surely for someone who was a chartered accountant?’

The confusion may have arisen because the MP, an English literature graduate, worked for accountancy firm Deloitte before entering politics, but as a consultant not an accountant. The confusion may have arisen because the MP, an English literature graduate, worked for accountancy firm Deloitte before entering politics, but as a consultant not an accountant The Norwich North MP is then said to have admitted: ‘Er, well, actually Prime Minister, I wasn’t an accountant. I was a management consultant in an accountancy firm.’

Mr Cameron apparently then said ‘never mind’ and welcomed Miss Smith aboard.

So chartered accountants are supermen? What? Anyhow, it can be little surprise that the economies of the West are sinking into a slough of debt and contraction when they are overseen by such a group of astonishingly corrupt and incompetent individuals. Now, I’m not a credentialist by any means, but even I would say it is going a just a bit too far in the other direction when, in a time of very dangerous economic and financial crisis, the Economic Secretary to the Treasury is a young woman with a degree in English Literature.

That being said, she’d be hard pressed to do worse than Gordon Brown did as Chancellor of the Exchequer. Or, for that matter, as Paul Krugman would if given half the chance.

Democracy in the UK

It doesn’t exist:

David Cameron suffered the biggest-ever Tory rebellion on Europe last night. Almost half of all his backbenchers voted in favour of a referendum on EU membership.

Up to 81 Tory MPs were believed to have defied a three-line whip, the strongest party instruction on how to vote. Thanks to Labour and Lib Dem MPs, the vote was defeated by 483 to 111, with around 50 abstentions. It was a worse mutiny on Europe than any suffered by Ted Heath, Margaret Thatcher or John Major, and came after Mr Cameron told his MPs that they could have to wait years before Britain claws back powers from Brussels….

A ComRes survey for ITV’s News at Ten found that more than two thirds of the public – 68 per cent – support the idea of a national vote on whether or not the UK should remain a member of the EU. Yet the Conservatives, Labour and the Liberal Democrats all ordered their troops to vote against a back-bench motion triggered by a public petition, even though the result could have had no impact on government policy.

The parliamentarians appear to have forgotten last week’s salient lesson of Qaddafi. If you refuse to submit to the will of the people on matters they consider to be of sufficient importance, they eventually have no choice but to shoot you in the head.

And David Cameron has revealed himself to be a eurowhore instead of the euroskeptic he previously, and unconvincingly, claimed to be.

So the Pope really is the Antichrist?

I’m not what you’d call a Left Behinder, but I am eschatonically aware and I have to admit, it would certainly be a little ironic if the more extreme Protestants actually turned out to be correct after all:

The Vatican called on Monday for the establishment of a “global public authority” and a “central world bank” to rule over financial institutions that have become outdated and often ineffective in dealing fairly with crises. The document from the Vatican’s Justice and Peace department should please the “Occupy Wall Street” demonstrators and similar movements around the world who have protested against the economic downturn.

“Towards Reforming the International Financial and Monetary Systems in the Context of a Global Public Authority,” was at times very specific, calling, for example, for taxation measures on financial transactions. “The economic and financial crisis which the world is going through calls everyone, individuals and peoples, to examine in depth the principles and the cultural and moral values at the basis of social coexistence,” it said…. It called for the establishment of “a supranational authority” with worldwide scope and “universal jurisdiction” to guide economic policies and decisions.

No offense, Catholics, but it does tend to look pretty, well, evil, for the Pope to be calling for world government and a one world bank. I’m not saying the case is settled yet, but if the Vatican next announces implanted debit cards with Benedict’s smiling face on them along with the excommunication of anyone who uses cash, well, that will pretty much tend to serve as all the confirmation needed. Especially if it throws in a big, splashy peace agreement with Israel.

Arab Spring in Libya

Once again, the neocons have supported the expansion of popular and democratic Islam:

Mustafa Abdul-Jalil, the chairman of the National Transitional Council and de fact president, had already declared that Libyan laws in future would have Sharia, the Islamic code, as its “basic source”….

Mr Abdul-Jalil went further, specifically lifting immediately, by decree, one law from Col. Gaddafi’s era that he said was in conflict with Sharia – that banning polygamy. In a blow to those who hoped to see Libya’s economy integrate further into the western world, he announced that in future bank regulations would ban the charging of interest, in line with Sharia. “Interest creates disease and hatred among people,” he said.

So, how is this in the American national interest, exactly? And actually, if you think about it, what is the real difference between formally banning interest, as Abdul-Jalil has directed, and reducing the interest rate to zero, as Bernanke, King and Trichet have done.

WND column

Herman Cain: Pro-Choice Republican

Herman Cain on abortion, Take 1: “It’s not the government’s role or anybody else’s role to make that decision. Secondly, if you look at the statistical incidents, you’re not talking about that big a number. So what I’m saying is, it ultimately gets down to a choice that that family or that mother has to make. Not me as president. Not some politician, not a bureaucrat. It gets down to that family, and whatever they decide, they decide. I shouldn’t have to tell them what decision to make for such a sensitive issue.”

Herman Cain on abortion, Take 2: “As to my political policy view on abortion, I am 100 percent pro-life. End of story.”

End of story? I think not.

VPFL Week 6

74 Moundsview Meerkats (4-2-0)
61 Green Reverends (3-2-1)

79 Bailout Banksters (3-2-1)
54 Greenfield Grizzlies (4-2-0)

60 Bane Sidhe (2-4-0)
40 RR Redbeards (2-3-1)

74 Macau Marauders (3-2-1)
58 MS Swamp Spartans (3-3-0)

58 Cranberry Rhyneauxs (2-4-0)
34 GroverBeach Quixotes (2-4-0)

This is your weekly open NFL thread. And yes, I laughed upon reading this at ProFootballTalk. I laughed helplessly.

clavinusps says: Oct 23, 2011 10:40 AM
Just reading that article about Tebow made me a better person.

No limits on self-defense

This McDonald’s cashier is a hero, not a criminal:

A McDonald’s cashier jailed for beating two irate customers with a metal rod says he was only trying to defend himself. Rayon McIntosh was arrested Oct. 13 after a wild fight inside a McDonald’s in the Greenwich Village neighborhood in Manhattan. Video recorded by a customer showed two furious women vaulting a counter to attack McIntosh after some sort of dispute.

McIntosh grabbed a metal bar and fought back with savage force, continuing to deliver crushing blows even after the women were incapacitated on the floor.

Good for him. I wouldn’t have any problem with his actions if he had killed both women after they were “incapacitated”. Police commit “justifiable homicide” in far less dangerous circumstances all the time and are infamous for firing dozens of shots after their target is already down. It’s simply not always possible to turn off the adrenaline-fueled aggression, particularly if you aren’t sufficiently accustomed to experiencing it.

And more importantly, once you attack someone unprovoked, all bets are off and you merit no protection from the law. The fact that the attackers were women is irrelevant, a two-on-one attack absolutely merited such a vigorous response. How on Earth could the cashier have known neither of the two hair-trigger lunatics didn’t have a weapon and wouldn’t use it once they were knocked down?

Rayon McIntosh shouldn’t be found innocent, he shouldn’t even be charged. And McDonald’s should be paying his legal fees.