[Falconoffury]

The industrial age is a pyramid scheme. I like the sound of that.

[Magus]

Quickly! We need to get Bush to press the magic money button! You know, the one on the Oval Office desk that causes cash to mysteriously fall from the D.C. sky?

Senate Passes 2.8 Trillion 2007 Budget

$this->bbcode_second_pass_quote('', 'B')y ANDREW TAYLOR, Associated Press Writer
1 hour, 7 minutes ago


WASHINGTON - Congress pushed the ceiling on the national debt to nearly $9 trillion Thursday, and the House and Senate promptly voted for major spending initiatives for the war in Iraq, hurricane relief and education.

The House approved $92 billion in new money for the wars in Iraq and Afghanistan and for relief along the hurricane-ravaged Gulf Coast.

The Senate adopted a $2.8 trillion budget blueprint that anticipates deficits greater than $350 billion for both this year and next. The spending blueprint, approved 51-49, little resembles President Bush's proposal last month for the budget year that begins Oct. 1.

To the disappointment of budget hawks, the Senate's measure would break Bush's proposed caps on spending for programs such as education, low-income heating subsidies and health research. All told, senators endorsed more than $16 billion in increases above Bush's proposed $873 billion cap on spending appropriated by Congress each year.

[Geko45]

$this->bbcode_second_pass_quote('Falconoffury', 'T')he industrial age is a pyramid scheme. I like the sound of that.

[Doly]

$this->bbcode_second_pass_quote('Geko45', '
')Life as we know it is a ponzi scheme. The entire 125 years of industrialized civilization has existed on the up-slope of the pyramid.

[Battle_Scarred_Galactico]

Hmm, a system that relies on a constantly expanding supply of a certain resource otherwise it crashes... can't get much more of a ponzi scheme than that.

[Falconoffury]

On second thought, during the time in which the US dollar was backed by gold, it wasn't really a pyramid scheme. Gold held the dollar down and kept it from getting out of control. When they went off the gold standard, the country became like a fat woman "letting herself go" and getting off her diet to gorge herself.

If the government doesn't want to raise taxes, maybe they can sell land, then forcefully evict people from the land, wash, rinse, repeat.

[Geko45]

I would submit that the growth we have seen in this "modern" era was fueled not by dollars or gold but rather by an ever increasing supply of cheap available energy. This collapse would be coming even if we had sound fiscal policy (which we don't). The death of the gold standard was simply a symptom of moving to the next level in the pyramid.

[cube]

$this->bbcode_second_pass_quote('smallpoxgirl', '.')..
A: There is no international bankruptcy court that a government can go to. Their only option is default.
...

[lateStarter]

$this->bbcode_second_pass_quote('DantesPeak', 'I') guess cancelling Treasury auctions was the last straw. The Senate passed the limit by 52-48:


$this->bbcode_second_pass_quote('', 'S')tatement of Secretary John W. Snow on Debt Limit

I commend Congress for protecting the full faith and credit of the United States with today's action on the debt limit. This legislation ensures that the U.S. can deliver on promises already made, such as Social Security and Medicare payments and aid for the victims of the 2005 hurricanes.

[pup55]

It took me a long time to find this:

2007 US Budget

and the closest thing to what I really wanted, which is a simplified balance sheet was on page 397 or something. Evidently, the government is not too proud of what they are doing or they would make it easier to understand.

Currently, the US government revenues are about 2.154 trillion. The expenses are 2.472 trillion, for a net deficit of .360 trillion, which is 360 billion, so that's pretty close to the currently published figures.

The economy is about 11 trillion, so this means that the feds are extracting about 19% of the economy in taxes. That sounds about right, based on what I pay.

Of the 2.154 trillion, about 1.5 trillion is "mandatory expenditures", That's the interest on the national debt, which is about .360 trillion, and all of the social security and medicare etc.

With a national debt of 8.3 trillion, and interest of .360 trillion, this means they are paying about 4.5% interest, which is also about right.

The government will not "go broke" unless they get to the point where they cannot pay the stuff they have to pay, including the interest. At this point, they are nowhere near this. They could, if they wanted to, increase taxes by approximately 15% (to a total of 22% of the economy) and have the budget break even. The other alternative is to cut .360 trillion out of the budget. They do not want to do either of these. The nominal strategy is that because of the low taxes, the economy will grow by 15% at some point, at which time the revenues will balance out the expenditures, and all will be well. Where their strategy is blowing up is that they are not controlling expenditures, and also, the rate of growth is not sufficient to bring in enough tax money. So, they are running this deficit.

In the business world, it is pretty common for the value of a business' debt to be much higher. The wal mart corporation, for example, has 70 billion in debt, and 120 billion in total assets, or 19%. For the USA, according to the budget our national value is 300 trillion, our debt is 8 trillion, so only 2%.

If you do it on profit, Walmart pays 1.2 billion in interest on 17 billion in profit, and 283 billion in revenues, so that's about 7% on profit, or .38% of revenues. The government is harder to measure, since there is no such thing as profit, but if you take the 11 trillion GDP, and .360 trillion interest, that's only about 3.2%.

It is entirely correct that in 10 years, when us boomers start to retire, something has to give. But, we really are not talking about any sort of default/meltdown or anything else, at least in my estimation, when you actually look at the numbers.

What we are looking at, though, is spinelessness on the part of the current government in not going to the people and asking them to pay for this spending. Also, irresponsibly not controlling the spending. Where the strategy has a further chance to blow up is if there is an economic contraction, and no corresponding contraction in spending. Then, the problem could well be right around the corner. I will tell you when it arrives.

Here's the profile for Wal Mart:

Wal Mart via Yahoo Finance

[Geko45]

$this->bbcode_second_pass_quote('pup55', 'I') will tell you when it arrives.

[xarkz]

This 2007 deficit will be much higher than those 360 billions.

For example 2005: http://www.fms.treas.gov/fr/05frusg/05frusg.pdf
"Budget deficit" was 319 billion $, but the actual deficit, "net operating cost" *
(excess of expenses over revenues) was 760 billion $.. about 35% of its income..

In 2004: "budget deficit" was 412 billion $ but "net operating cost" 615 billion $.
The last years have been like this, 4 year deficit is equal to one year income .
The state is technically bankrupt imo, beside these debts there is
a huge hole in the retirement funds.


*$this->bbcode_second_pass_quote('', 'E')vidently, the government is not too proud of what they are doing or they would make it easier to understand.

[pup55]

$this->bbcode_second_pass_quote('', 'T')he main components of the net operating cost that are not included in the budget deficit are the
changes in accrued expenses related to employee and veteran benefits.

[Graeme]

US debt limit nears $9 trillion

$this->bbcode_second_pass_quote('', 'U')S President George W Bush has signed a bill to raise the national debt ceiling to nearly $9 trillion (£5.12 trillion).

In addition, it permits the US to pay for the war in Iraq without increasing taxes or making domestic cuts.

An additional increase in the debt limit next year is likely, the Associated Press news agency said.

[seahorse2]

Everytime the US raises its debt limit, I think we should all follow suit. In fact, I'm going to start a thread on this.

[eric_b]

Normally I always try to link to the original piece, but I wasn't able to find it. So I'll quote it in its entirety.
There's a thread in current events asking why young people are so
unhappy these days. I think it's because whether they are aware of it or not they intuit the direction things are going in. I live in a large campus town, and there's a meanness and edginess on the streets that I never recall from years past

Nuking the Economy
Forget Iran—Americans Should be Hysterical About This By Paul Craig Roberts
Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He was Associate Editor of the Wall Street Journal editorial page and Contributing Editor of National Review. He is coauthor of The Tyranny of Good Intentions. He can be reached at: paulcraigroberts@yahoo.com. This article originally appeared at counterpunch.org and is published in the Baltimore Chronicle with permission of the author.
$this->bbcode_second_pass_quote('', 'L')ast week the Bureau of Labor Statistics re-benchmarked the payroll jobs data back to 2000. Thanks to Charles McMillion of MBG Information Services, I have the adjusted data from January 2001 through January 2006. If you are worried about terrorists, you don’t know what worry is.
Job growth over the last five years is the weakest on record. The US economy came up more than 7 million jobs short of keeping up with population growth. That’s one good reason for controlling immigration. An economy that cannot keep up with population growth should not be boosting population with heavy rates of legal and illegal immigration.
Over the past five years the US economy experienced a net job loss in goods-producing activities. The entire job growth was in service-providing activities--primarily credit intermediation, health care and social assistance, waiters, waitresses and bartenders, and state and local government.
US manufacturing lost 2.9 million jobs, almost 17% of the manufacturing work force. The wipeout is across the board. Not a single manufacturing payroll classification created a single new job.

The declines in some manufacturing sectors have more in common with a country undergoing saturation bombing during war than with a super-economy that is “the envy of the world.” Communications equipment lost 43% of its workforce. Semiconductors and electronic components lost 37% of its workforce. The workforce in computers and electronic products declined 30%. Electrical equipment and appliances lost
25% of its employees. The workforce in motor vehicles and parts declined 12%. Furniture and related products lost 17% of its jobs. Apparel manufacturers lost almost half of the work force. Employment in textile mills declined 43%. Paper and paper products lost one-fifth of its jobs.
The work force in plastics and rubber products declined by 15%. Even manufacturers of beverages and tobacco products experienced a 7% shrinkage in jobs.

The knowledge jobs that were supposed to take the place of lost
manufacturing jobs in the globalized “new economy” never appeared. The information sector lost 17% of its jobs, with the telecommunications work force declining by 25%. Even wholesale and retail trade lost jobs. Despite massive new accounting burdens imposed by Sarbanes-Oxley, accounting and bookkeeping employment shrank by 4%. Computer systems design and related lost 9% of its jobs. Today there are 209,000 fewer managerial and supervisory jobs than 5 years ago.

In five years the US economy only created 70,000 jobs in architecture and engineering, many of which are clerical. Little wonder engineering enrollments are shrinking. There are no jobs for graduates. The talk about engineering shortages is absolute ignorance. There are several hundred thousand American engineers who are unemployed and have been for years. No student wants a degree that is nothing but a ticket to a soup line. Many engineers have written to me that they cannot even get Wal-Mart jobs because their education makes them over-qualified.

Offshore outsourcing and offshore production have left the US awash with unemployment among the highly educated. The low measured rate of unemployment does not include discouraged workers. Labor arbitrage has made the unemployment rate less and less a meaningful indicator. In the past unemployment resulted mainly from turnover in the labor force and recession. Recoveries pulled people back into jobs.

Unemployment benefits were intended to help people over the down time in the cycle when workers were laid off. Today the unemployment is permanent, as entire occupations and industries are wiped out by labor arbitrage as corporations replace their American employees with foreign ones.

Economists who look beyond political press releases estimate the US unemployment rate to be between 7% and 8.5%. There are now hundreds of thousands of Americans who will never recover their investment in their university education.

Unless the BLS is falsifying the data or businesses are reporting the
opposite of the facts, the US is experiencing a job depression.
Most economists refuse to acknowledge the facts, because they endorsed globalization. It was a win-win situation, they said.

They were wrong.
At a time when America desperately needs the voices of educated people as a counterweight to the disinformation that emanates from the Bush administration and its supporters, economists have discredited themselves. This is especially true for “free market economists” who foolishly assumed that international labor arbitrage was an example of free trade that was benefitting Americans. Where is the benefit when employment in US export industries and import-competitive industries is shrinking? After decades of struggle to regain credibility, free market economics is on the verge of another wipeout.

No sane economist can possibly maintain that a deplorable record of merely 1,054,000 net new private sector jobs over five years is an indication of a healthy economy. The total number of private sector jobs created over the five year period is 500,000 jobs less than one year’s legal and illegal immigration! (In a December 2005 Center for Immigration Studies report based on the Census Bureau’s March 2005 Current Population Survey, Steven Camarota writes that there were 7.9 million new immigrants between January 2000 and March 2005.)

The economics profession has failed America. It touts a meaningless
number while joblessness soars. Lazy journalists at the New York Times simply rewrite the Bush administration’s press releases.

On February 10 the Commerce Department released a record US trade deficit in goods and services for 2005--$726 billion. The US deficit in Advanced Technology Products reached a new high. Offshore production for home markets and jobs outsourcing has made the US highly dependent on foreign provided goods and services, while simultaneously reducing the export capability of the US economy. It is possible that there might be no exchange rate at which the US can balance its trade.

Polls indicate that the Bush administration is succeeding in whipping up fear and hysteria about Iran. The secretary of defense is promising Americans decades-long war. Is death in battle Bush’s solution to the job depression? Will Asians finance a decades-long war for a bankrupt country?"

[bonjaski]

there is no problem with job loss in mafucturing;

manufacturing isn't the future;

[o2ny]

$this->bbcode_second_pass_quote('bonjaski', 't')here is no problem with job loss in mafucturing;
manufacturing isn't the future;

[skeptic]

$this->bbcode_second_pass_quote('bonjaski', 't')here is no problem with job loss in mafucturing;
manufacturing isn't the future;

[pigleg]

Well... we'd all agree manufacturing isn't the future!