Chapter 11: Super Committee: Economic Failure is an Option; The Twin Debt of Economics
I wonder why we have Congress. They just show up to get very little, if anything, done. Take their latest failure: the task
of cutting another $1 Trillion off the long-term debt of this nation. ($1.2 Trillion is alleged to kick in automatically.) Yet,
no work was done. None. Just, a pathetic legally-pleasing note that my dog ate my homework and I can’t get shit done
because I don’t like the other side’s desires.
Their real excuse: we can’t make an agreement because our ideology and electability depends on us to honor our
biggest contributors to our campaigns’ pledges, or else. We refuse to govern. Stalling is a fair tactic. And, who will
remember me as the problem, anyways?
Senate Members House Members
Patty Murray, Washington, Co-Chair Xavier Becerra, California
Max Baucus, Montana Jim Clyburn, South Carolina
John Kerry, Massachusetts Chris Van Hollen, Maryland
Jon Kyl, Arizona Jeb Hensarling, Texas, Co-Chair
Rob Portman, Ohio Fred Upton, Michigan
Pat Toomey, Pennsylvania Dave Camp, Michigan
These members are no different from the non-Super Committee members. They cannot make tough decisions because
they feel immune to answer to anyone. Privileged, and figuring, no real threat exists. (The Tea Party and Occupy Wall
Street are minimal threats to power. As long as money buys air time – and people enjoy the mudslinging. Which they
must, because: Has anyone won that was not a lawyer, or rich, or well-backed in the past twenty years – and stayed to
make a difference without the requisite money to go back again?)
The tax theory put forth by Republicans is simple: small businesses create jobs. Yet, they must too be all millionaires;
cannot raise taxes on these self-made people; it will kill jobs.
#1: So far, no taxes have been raised. The Bush tax cuts were extended late in 2010. But not enough jobs have been
created even though taxes were not raised, and the stimulus only arrested a drastic decline. So, why is this not
changing? (Rich are sitting on their cash. Banks refuse to deal with small businesses under $500,000 in value. (No
millionaires there.))
#2: Taxes happen post hoc – after you earn a profit. Most tax gurus are so slick that posting a loss is a matter of ‘mark to
market’ or ‘mark to make belief’ on Wall Street. But Wall Street rebounded; the rest of society is stuck in the unknown.
Democrats theory: Don’t cut anything that looks like a social program. Since there is too many agencies to discuss,
suffice to say, education, healthcare, retirement, and safety net programs are all the mainstays of the Democratic sacred
cows. I can understand this more. People hate losing something called services. As bad as it is alleged the government
provides this – never completely proven, when you look at privatization foul ups and cookie jar stealing – we would
really miss public schools K-16, healthcare woes (as a nation stressed now), or our retirements in more crisis. That said,
we spend more than we get from taxes. It requires we cut something – military is obvious, but it is not going to get us
home – and guts from millions who need to learn the real meaning of sacrifice sadly. (No more ‘free’ lunches.)
We have a thing called a budget. Sometime in the past 30 years, we forgot that. Stating, “oh, as long as the debt is less
than 60% of GDP, we are good.” This benchmark was suddenly passed in an eyelash in 2007-2008. Now we are at 100%,
and growing. (Yes, Obama spent plenty. Seem to remember the other guy, Bush II, did some spendin’ and cuttin’ too.)
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During the past three years, these are the FY deficits: FY 2009: $1,413 billion; FY 2010: $1,293 billion; and FY 2011:
$1,299 billion. Once you are put on a deficit trajectory (Bush administration) it is very difficult to go back to reasonable
deficits ($200 Billion, only –ha!) in an eyelash. The Republicans are irresponsible and irrational; the Democrats are
dreamers and do-nothings. Neither really has the silver bullet, nor would they be willing to negotiate, if they did.
The crater put into the economy was at least several trillion in real assets. (We won’t know until the mortgage defaults
are cleared off the bank books – and that is still going on. As many still are not buying.)
But, more to the point, here are some additional charts related to GDP growth and the other twin in the deficit game:
Balance of Trade. As you will see, the recent plights are actually improving our situation. But the whole was much
deeper than what is advertised on the networks. And we should be more thankful that this turn around was not fueled
by continuing to run a huge trade deficit – else our money would be inflating, and the economy would be far worse, I
believe from my basic Economic 101 knowledge.
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To read it, you have to see that:
A) Bush’s expansion era before the bubble burst was not substantially better than Obama’s expansion out
of the Great Recession. I see plenty of mediocrity in both. (From 2004 to 2006 –remember – that was
the housing boom, artificial or inflated numbers, therefore the 3% growth is really a 2% or less…)
B) Whatever Obama’s pull out is lacking is the hundreds of billions of tax breaks and hoarding by those
same banks we bailed out to the tune of several hundred billion. (Credit creation has been slow – and
the tightening of standards, when people are trying to finance new ideas, does not assist a sluggish
economy. While the average Joe is paying down debts –or downsizing his life – the rich have barely
noticed. And the next charts will add more loss to this economic fire not rekindling.)
C) Obama’s stimulus plan inflates too. Without that money, the extended deficit levels to Bush’s last fiscal
year of 2009, we’d be in the negative still…maybe as low as -7% GDP. Maybe 15% unemployed – AWAG.
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This graph above tells again why it was so easy for Bush to keep the ball rolling. The Trade Deficit (Balance of Trade) was
consistently around 60 Billion per month (+/- 5 Billion) from late 2004 onto October 2008.
(As these two charts reflect in detail.) The cliff was reached in October/November of 2008 – Lehman Bros. failure, $700
Billion dollar rescue, 3-page Paulson plea, and the manufacturing and consumer sectors massive slowdown. (China’s
economy even lost a little steam. Worldwide trade locked up tighter than an English castle under French siege.)
Let’s do some math: 48 months (late 2004 to late 2008) x 60 Billion = $2.88 Trillion in money out to buy your favorite
foreign-imported good. The sub-prime crisis was roughly $2 Trillion in bad loans – used as ATMs. Hmmm…a pattern.
Now, this mortgage game was fueled by deregulation, low interest rates (money created on faith), gambling like a frat
house party with 100 lovely ladies in da house, and poor consumer choices and those bets on houses like a bingo parlor.
Everyone knows this now. Each side of the political aisle gave their best to create The Perfect Storm.
Now, Obama’s plight in the Balance of Trade game after The Perfect Storm disrupted an inflated economy:
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Tally: 7 months at $30 Billion; 5 months at $35 Billion; 12 months at $42 Billion; lastly, 8 months at $46 Billion.
Average: $39.25 Billion, roughly. Or 32 months with $20 Billion less than the Bush last years’ fuel to the fire. Or: $640
billion less buying of the foreign competitor’s stuff. Or: the trade deficit has drastically improved while our overall deficit
looks abysmal. (If you take away $20 Billion x 48 months = roughly $1 Trillion of goods, or basically, no growth under
Bush’s plan from 2005 to 2009. We just printed more money!!! And do you want more of that? Seriously?)
So, while we cry over the home deficit, this twin measure of indebtedness is actually in much better shape. While
Obama’s record is nothing special, it is a far cry from the Bush years of unrealistic trade policies (building up China, for
example, without any concerted effort to force the flow back to us – more American exports) and credit binging like
nothing ever seen in human history. (Another discussion for another date.)
Now, this drawback is mostly Americans not spending. Less gas. Less electronics and furniture. Less of Walmart. So it is
naturally ebbing back to the pre-Obama years as we grow (attempting to create more debt abroad, fueling other
economies, yet diminishing ours by reliance on our country’s checkbook). This will not do.
This economic tangent or digression serves this point: if you are looking to solve our National debt, you might as well
forget it. The congressional jokers cannot do it. We, as Americans, can however. Export more goods – find other places
that we can compete. Make new technology no one is currently doing. Get to the cutting edge quickly. Ingenuity serves
all humanity well, and us, doubly so. Without it, the whole Debt thing is moot: we won’t solve it; until it solves the U.S.A.
a la the Roman Empire in 476 A.D. (A really long discussion I need more information to complete rightly.)
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