l****z
发帖数: 29846 | 1 By Henry Percy
A junior in college majoring in finance asked me the other day what I
thought of the negotiations coming out of Washington, D.C. I'll call him
Arthur.
Not much. The premise is raise taxes now, and a future Congress will make
cuts later. Trust us. Trust us. Yeah, sure. How can any Congress promise to
tie the hands of a future Congress?
The Demos and MSM have made much of S&P's threatened downgrade of US bonds
from AAA if we don't raise the debt limit. Well, the S&P report also said
that they need to see significant budgetary reform too, i.e., regardless of
lifting the debt limit.
Bottom line: Congress can scramble and pass the debt increase, pat
themselves on the back, and still get the bond downgrade because their "
Grand Bargain," or whatever they call it, is transparently a fraud. Why don'
t they call it the Faustian Bargain?
Arthur:
I thought the Gang of Six's proposal was to cut close to $4 trillion off the
debt over the next decade through tax changes and cuts, am I wrong about
this? And that's pretty lousy; what's the point of even raising the debt
ceiling if our credit is going to take a hit either way.
Me:
$4 trillion / 10 = $400 billion per year (assuming that the cuts would be
evenly spread, though we know they love to backload them in what they are
fond of calling the "out years"). But the deficit is running $1.6 billion /
year. So the $4 trillion does not really even begin to get a handle on the
problem. How about this for a headline: "Grand Bargain Leaves Deficits of $
12 Trillion over 10 Years." Think we'll see that?
Our beloved politicians calculate "cuts" based on what's called the current
baseline plus projected increases in spending due to inflation and
population growth and "need" and wants and various other fudge factors.
Under Obama the baselines have risen dramatically. So a "cut" does not even
get us back to where we were in the days of the Bush terror, when deficits
ran $400 billion and the Demos were screaming that the sky was falling.
According to the WSJ this morning, the Gang of Six's talking points sound
fairly OK on paper, but they're just that: seven pages of broad suggestions.
Those will be taken up by the various committee chairmen in the House and
Senate, and no one, no one can predict what will come out of that process.
Which process will drag out for months and be repeated every year for the
next 10 years, long after most of the current actors are out of office, in
order to realize the purported "savings."
So the best you can say about such a "plan" is our "public servants" are
saying, "Let's kick the can down the road and see if we can make it past the
next election."
Arthur:
When you say the deficit is $1.6 billion per year do you mean $1.6 trillion?
If that's the case then the Gang of Six's plan sounds almost entirely
worthless if we'll still be running a deficit of $600 billion.
Me:
Whooops, you're right. Billions, trillions--it's all just zeros, right?
But it's worse than that: $1.6 trillion - $400 billion = $1.2 trillion
deficit / year as far as the eye can see. After the cuts and tax increases.
As you can see, I easily fumble the zeros. I'm sure the vast majority of the
public does as well. So I looked up the numbers and translated them into
something the average person can relate to.
Let's say you earn an even $100,000 per year, part of the 52% of Americans
who pay taxes. You've got too much to qualify for food stamps or the Earned
Income Tax Credit and other goodies, but you're not rich either, driving an
old car, definitely no corporate jet waiting for you at the airport.
But wait, why are you driving an old car? Why not a BMW? You deserve it. And
a Lexus for the missus? And a vacation in Hawaii? Cruise in Europe? You're
wonderful, you deserve it all. Soon you're spending $150,000 per year. It's
not hard, because you, not the bankers, set your own credit card limit.
After a couple years the missus gets nervous, says maybe, just maybe you
should cut back. You're indignant: you have to have transportation, are you
expected to drive an old clunker? And you need to relax; you'd be a nervous
wreck without getaways to far-off places.
OK, you tell her, how about we cut back on our tips when we eat out? That'll
save $10 per year. (This is the equivalent of eliminating the tax deduction
for corporate jets, which was part of the Stimulus Bill and which Obama has
hammered mercilessly, oh those fatcats in their private jets.)
The missus says that $10 is really, kinda, sorta insignificant compared to
the $50,000 in new debt you're taking on every year. So at last you tell her
you can embezzle $4,000 per year from your employer and cut your spending
by $8,000, so you'll only slide $38,000 into the hole each year. You say all
this with a great scowl, moaning about how hard it's going to be to reduce
your standard of living so drastically. Then you tell her it was so much
work calculating all those terrible cutbacks that you deserve a night out on
the town to celebrate your newfound sobriety and prudence.
Henry Percy is the nom de guerre for a technical writer living in Arizona.
He may be reached at saler.50d[at]gmail.com. |
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