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Dec 12, 2011

An Intellectual Program

Intellectual:  We must adopt policies ... any normative concept of a just society. [applause]

Mike:  He must have a great mind. I didn't understand much of what he said, but I find myself agreeing with him.
Jim:  He's not so great. Either he is intentionally confusing, or he can't figure out how to explain it to us.

02/15/07 - Elsewhere.Org

The following is an excerpt of a significant article. Don't spend time diving into the complexity, just get a feel for it.

The Rubicon of Reality:
Precultural Socialism, Socialism and Neomaterial Capitalist Theory

By Henry Wilsonaka the computer program Pomo, Department of Deconstruction, University of North Carolina

1. Consensuses of fatal flaw

In the works of Gibson, a predominant concept is the concept of textual art. It could be said that Baudrillard promotes the use of neostructuralist constructive theory to deconstruct capitalism. The subject is contextualised into a predialectic paradigm of expression that includes narrativity as a reality.

“Sexual identity is part of the meaninglessness of truth,” says Foucault; however, according to Cameron [1] , it is not so much sexual identity that is part of the meaninglessness of truth, but rather the rubicon, and subsequent stasis, of sexual identity. Therefore, Bataille’s model of textual nationalism holds that the raison d’etre of the writer is significant form. The characteristic theme of Prinn’s [2] critique of semiotic neotextual theory is the difference between class and society.

This article and about 5,400,000 others are significant because they were generated by the computer program Postmodernism Generator. It starts with a collection of authors and quotes, and writes them out in grammatical forms without knowing any meanings. It produces high class, random gibberish, allowing the reader to supply his own meanings and puzzle about the deep and intricate ideas which might lie within.

This is a neat trick. Even if you were fooled, you might think that true intellectuals would not be.

Alan Sokal is Professor of Physics at New York University. He wrote an article Transgressing the Boundaries: Toward a Transformative Hermeneutics of Quantum Gravity and submitted it to the journal Social Text, which accepted and published it in its Spring/Summer edition of 1996.

A few months later, Sokal explained that this paper was a parody.

Social Text describes itself: Social Text covers a broad spectrum of social and cultural phenomena, applying the latest interpretive methods to the world at large. A daring and controversial leader in the field of cultural studies, the journal consistently focuses attention on questions of gender, sexuality, race, and the environment, publishing key works by the most influential social and cultural theorists.

A Physicist Experiments with Cultural Studies

[edited]  I tried a modest, uncontrolled experiment to test intellectual standards. Social Text is a leading North American journal of cultural studies. Its editorial board includes luminaries such as Fredric Jameson and Andrew Ross. Would it publish an article liberally salted with nonsense which sounded good and flattered the editors' ideological preconceptions? The answer, unfortunately, is yes.

Could the editors really not have realized that my article was written as a parody? Is it now dogma in Cultural Studies that there exists no external world? Or, that there exists an external world, but science obtains no knowledge of it?

In the second paragraph, without the slightest evidence or argument, I declare that "physical reality" is at bottom a social and linguistic construct. Not our theories of physical reality, mind you, but the reality itself. Fair enough: anyone who believes that the laws of physics are mere social conventions is invited to try transgressing those conventions from the 21st floor windows of my apartment.

I wrote the article so that any competent physicist, mathematician, or even undergraduate physics or math major would realize that it is a spoof. Evidently, the editors of Social Text felt comfortable publishing an article on quantum physics without bothering to consult anyone knowledgeable in the subject.

The fundamental silliness of my article lies in its dubious central thesis and the "reasoning" used to support it. Quantum gravity is a speculative theory of space and time applying to distances of a million billion billion billion'th of a centimeter. I claim that it has profound Progressive political implications.

I support this as follows. First, I quote some controversial philosophical pronouncements of the physicists Heisenberg and Bohr, and assert without argument that quantum physics is profoundly consonant with "postmodernist epistemology". Next, I assemble a pastiche of Derrida and general relativity, Lacan and topology, and Irigaray and quantum gravity, held together by vague rhetoric about "nonlinearity", "flux", and "interconnectedness". Finally, I jump to assert without argument that "postmodern science" has abolished the concept of objective reality.

Nowhere is there anything resembling a logical sequence of thought, only citations of authority, plays on words, strained analogies, and bald assertions.

Alan Sokal's paper was more outrageous than a computer generated one. So, it is amazing that it fooled the editors of Social Text. They didn't understand what they were publishing. They only seemed to care that it supported their political beliefs, no matter what the subject area.

Social Text refused to publish Sokal's explanation of his hoax, as not meeting its editorial standards.

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Alan Sokal's articles about the Social Text affair.

Thanks to Bill Quick for the link at Daily Pundit.

Dec 4, 2011

Workers Pay Unemployment Insurance

Max:  I'm going to take the summer off on unemployment.
Fred:  Have fun on my nickel.
Max:  Lighten up. The company will be paying through unemployment insurance.
Fred:  My wage is lower because of that cost, and I need to keep working.
Max:  Aren't you the busy bee.

About Unemployment Insurance
12/04/11 - The Money Illusion by Scott Sumner
  Via  Cafe Hayek

[edited]:  The statistical evidence on UI is overwhelming significant. When UI benefits maxed out at 26 weeks, there was a spike in the number re-employed right after the benefits ran out.

That might be efficient if due to the income effect. But, it is hard to dispute that UI insurance affects labor supply and employment. Studies show those effects even in areas with double digit unemployment.

Many Western European countries such as France saw their natural rates of unemployment rise from around 2% in the 1960s to about 10% in the 1980s. The most plausible explanations have to do with labor market policies.

I comment at Cafe Hayek.

The irony. Employers pay cash wages and incur employment costs which include healthcare, taxes, unemployment insurance, and employment related legal entanglements. The employer correctly sees these as part of the total cost of employing the worker.

Competition and productivity determine the total which can be spent on a worker, and employment costs determine the cash wage which can be offered. Greater expenses for unemployment insurance mean lowered wages. Companies are writing the checks for unemployment insurance, but workers are paying for that “insurance” through lower wages offered.

People with jobs are paying for the people who supposedly were fired without cause. If they realized that, there would not be much support for giving 99 weeks of compensation to the non-working. At 3-5% of payroll for unemployment insurance, many workers are giving up ten days of paid vacation each year to support the unemployed.

Nov 26, 2011

Wall Street Was Not Bailed Out

Occupy:  The bailouts prove Wall Street bribed our government.
Mike:  Wall Street received TARP loans and have paid them back.

Occupy:  So who was bailed out?
Mike:  Hundreds of small banks in every congressional district.

Occupy:  Small banks own the government?
Mike:  In a way. Small banks give political contributions to congressmen. And, hundreds of small bank failures would point blame at government's disastrous housing policies.

Occupy:  Occupy Main Street!
Mike:  Not quite. Try "Occupy Government".

Wall Street Was Not Bailed Out

11/26/11 - Power Line by John Hinderaker

[edited]  In what sense were “Wall Street banks” bailed out? They weren’t in fact “given” any of our money. Most of the largest banks (which were perfectly healthy) were forced to take TARP loans so that there would be no stigma attached to the few large unhealthy banks, and the many unhealthy small community and regional banks which were saved by those loans.

Almost all large “Wall Street banks” have repaid their TARP loans with interest and in short order. Three-quarters of TARP went to hundreds of small regional banks, notoriously unstable, particularly from commercial real estate lending. It is exactly those small banks who who remain “bailed out”, who lent recklessly to the real estate developers who built the bubble housing.

Taxpayers will end up paying for the government policies which directed money into housing and to automobile worker's unions. Wall Street made 3% commissions. The rest of the bailouts have gone to Main Street, the 99%.

Oct 15, 2011

Insane Budget Savings

Official One:  The CLASS Act was intended to provide long-term care insurance to everyone. I'm sorry to report that we will not be implementing it. It is too expensive.

Official Two:  Even worse, we won't be able to save $86 billion by implementing it.

Mike:  Too expensive, but it was going to save money. Are you nuts?

The Wall Street Journal reports that the US Department of Health and Human Services (HHS) has abandoned a part of ObamaCare.

[edited]:  The CLASS Act was intended to provide long-term care insurance for people who become unable to care for themselves.

HHS has re-examined the program as being too costly over the long run. It stopped implementation and reassigned the staff last month. HHS Secretary Kathleen Sebelius informed Congress that she does not see a viable path forward.

Fire Dog Lake explains more.

[edited]:  The Obama administration always thought that this program would need taxpayer subsidies to operate in the long-term.

Cancelling the CLASS Act forfeits $86 billion in savings [?] in the Affordable Care Act. The CLASS Act was scored by the CBO as providing revenue in the ten-year window of the legislation, because it collected more in premiums than it paid out in the early years.

The CBO is the Congressional Budget Office. "Scoring" is its official determination of the costs and savings of legislation.

US Senator Judd Gregg (R. NH) had amended the law to require that CLASS be self-sustaining for 75 years without taxpayer funds. HHS had to work within those guidelines.

My  ?  above marks a contradiction. CLASS could only be implemented with government subsidies from taxes, but the CBO scores CLASS as saving $86 billion dollars. This contradiction illustrates an insane, dishonest, and immoral budget process. This budget accounting trick is so common that officials and the mainstream press don't give it a thought.

The Wall St Journal  -  The Definition of Insanity
Why Democrats won't repeal a program that everyone in Washington knows is a fraud.

[edited]:  Democrats added CLASS to ObamaCare as a budget gimmick among many. These create an illusion that trillions of dollars of new spending will somehow reduce the deficit [save money].

CLASS was supposed to start in 2012. People who signed up would pay premiums immediately, but could not receive benefits for the first five years. Democrats planned to spend these premiums immediately on other things, as if the future payments to beneficiaries would never come due.

About $86 billion would have accumulated between 2012 - 2021 to help finance the rest of ObamaCare. CLASS would then go broke a few years later. That would be somebody else's problem.

The CBO estimates the revenue and cost of a proposed law over 10 years. This is usually adequate for a fair evaluation. But, social programs have a much longer life. Democrats routinely propose laws which collect money now to fund promises more than 10 years in the future. This shows up as a budget "savings" now, because it ignores promises due after the 10 year window.

Thankfully, Sen. Judd Gregg especially applied a 75 year evaluation period to CLASS. Team Obama could not work around this appeal to reality. Strangely, the zombie of the "savings" scored by the CBO still lives within the fantasy world of 10-year budget accounting.

So, HHS will not implement CLASS because it would cost too much money in reality. But, HHS will not officially kill CLASS because it is tied to a fantasy savings of $86 billion.


The budget process is immoral. Democrats have passed programs into law which cannot be funded as advertised. This puts at greater risk any person who relies on them, and it prevents partial solutions from the private market.

A proponent might say "These plans give aid to the needy in the short run. That is good, even if the long run solution will require much larger taxes on everyone, and especially the rich".

I say that such programs involve a growing number of people who will rely on them until the time that they fail. A plan for the future is not "We will do this now, and then we will hope".

Our government (politicians) pretends that it is planning for the long-term, but it uses fraudulent accounting to justify short-term plans which are destined to fail in as little as 10 years.

Long Term Care Insurance

Private long-term care insurance (LTCI) is a variation on life insurance. The insurer enrolls a person who is not already in dire health and charges him a monthly fee (the premium) based on his current health and age. The insurer agrees to pay to him a monthly support payment for as long as he is disabled, after he suffers future ill health or an accident.

Private LTCI applies immediately after the person is accepted. For example, it would pay toward nursing home care after an accident which occurs a few days (or 20 years) after acceptance. No state would approve a plan with a five year waiting period such as CLASS.

LTCI is like fire insurance. Each participant pays in enough each month to pay for the costs of sudden disability for a few unlucky people like him, say from stroke or accident. Each person pays according to his own risk, averaged among people with the same risks as he has.

Note that he is not paying for the care of people who are much older or sicker, in the hope that younger people will pay for him when he is himself older and sicker. Voluntary insurance cannot force him to pay more in order to support people in higher risk categories. An insurer who tried this would find that other companies are charging lower premiums, attracting away new business and the insurer's healthy clients.

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CBO:  Social Security Trust Funds
Feb 2011 - Easy Opinions

The accounting fraud in CLASS above is to spend "excess" premiums while ignoring future promises which justified those premiums. Sadly, Social Security is a much larger and more serious fraud of the same type.

There is nothing real in the Social Security and Medicare "trust funds" (or in any US Treasury trust fund). The special Treasury bonds in these "trust funds" are only a political promise to find the money somewhere.

The shortfall is about $66 trillion in today's dollars for the combined promises of Social Security, Medicare, and Medicaid. This is about four times the entire yearly income of everyone in the US. That promise is much more than what is recorded in the trust funds, which is itself only an unfunded promise. The trust fund bonds are a promise, but they don't help to pay for themselves.

The Social Security and Medicare trust funds are only a record of what was collected and then immediately spent for things other than Social Security and Medicare.

Reporters assume incorrectly that something called a "trust fund" must have something valuable in it. These "funds" were created and named by politicians. They only hold IOU's from the Treasury to itself. Call it a reminder of what the Treasury took out of the fund to buy other things and is supposed to put back someday.

Oct 7, 2011

Fooling the Future

Government Planner:  Our next stimulus plan is really, really targeted at creating jobs and prosperity.
Mike:  What about the last stimulus plan?

Planner:  That was only sort of, kind of targeted at creating jobs and prosperity. We were distracted.
Mike:  How long will this new stimulus work?

Planner:  For about a year, probably past the next election.
Mike:  Then what?

Planner:  We'll have another stimulus plan ready, to continue the good works of the last two.

Future Economic News:

Federal Reserve Chairman Ben Bernanke has announced that Quantitative Easing Eight combined with Stimulus Six has not achieved the results that "were expected by now-fired Fed analysts". This is despite recent reports of an IRS program to increase tax audits unless "businessmen borrow money and invest in job-creating expansion, like it or not".

Quantitative Easing plus Stimulus is the following strategy:

(1) Increased government purchases and salaries cause increased demand for filing cabinets and restaurant meals. This starts a virtuous cascade of money throughout the society, leading to an explosion of wealth and prosperity.

(2) Small businessmen with "more luck than brains" are fooled into investment and expansion by a six-month, 5% increase in business. They will naturally hire more workers, at least until the six-month government buying spree ends.

"It is mystifying that this plan has yet again failed" said Bernanke. "We have run out of traditional economic levers to pull. Very few businessmen have a degree from Harvard. Yet, manipulating money and credit is failing to fool businessmen in any significant way."

"We are now forced to use non-traditional methods. We are making huge ad buys in major markets. Our message is that it is patriotic to lose money, if necessary, by expanding business and hiring workers in the current environment of regulation, taxes, and medical mandates. That is the carrot."

"We accept that business owners are unhappy. We will make it clear just how much more unhappy business owners will be if they don't do what we say. We are fundamentally pro-business. We want businesses to prosper by doing exactly what we tell them to do. One for all and all for one. That is the stick."

Wags have unfairly and mindlessly compared government policy to the South Park cartoon  Underpants Gnomes:
(1) Collect underpants.  (2) ???  (3) Produce huge profits.

(See the video starting from 17:40. Sorry for the 30 second commercial.)

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Cause and Effect
EO -> 10/11/11 - Knowledge Problem by Michael Giberson
( Click the link above, then see the further link at the upper right. )

The oil price increases of the 1970s prompted politicians to raise interest rates in an attempt to control inflation. The economy slowed. Was this because of the oil price increase, or the result of the higher interest rate?

This seemingly simple economic question is actually hard, with uncertain answers, like most questions about the economy.

Motto: We don't really know, but we are willing to guess.

Aug 28, 2011

Basic Principle of the New Deal

President:  We will now pivot and act resolutely to overcome the serious problems presented to us in these past months and years.

Reporter:  What is your plan?
President:  We will be resolute in our various policies.

Reporter:  Can you give some examples?
President:  Each problem will be solved as required, with a solution tailored to each situation.

Reporter:  Then, what is your guiding principle?
President:  Our principles will emerge as we solve each problem in turn.

Reporter:  I see. You are a big picture, idea type of leader.
President:  Yes. I would not want to limit our problem solving by committing prematurely to particulars.

"Liberal Fascism: The Secret History of the American Left, From Mussolini to the Politics of Meaning" by Jonah Goldberg   (via Ed Driscoll)

[edited]  Today in 2007, many liberals subscribe to the myth that the New Deal was a coherent, enlightened, unified endeavor encapsulated in the largely meaningless phrase “the Roosevelt legacy”.

This is poppycock. Raymond Moley was FDR’s right-hand man during much of the New Deal:

To look upon these programs as the result of a unified plan was to believe that the accumulation of stuffed snakes, baseball pictures, school flags, old tennis shoes, carpenter’s tools, geometry books, and chemistry sets in a boy’s bedroom could have been put there by an interior decorator.

Alvin Hansen was an influential economic adviser to FDR. He was asked in 1940 whether the basic principle of the New Deal was economically sound, and he responded, “I really do not know what the basic principle of the New Deal is.”

Aug 2, 2011

Free Ice Cream Cones

Fred:  You have a nice coffee maker there.
Mike:  It's great. It was expensive, but they gave me a coupon for $40 off which I couldn't pass up.

Fred:  But, you are not smiling.
Mike:  Funny thing. I saw one later, just like it. No coupon, but the base price was even less than I paid in total.

Fred:  Coupons are funny that way.

A political gathering in the US.

Politician on outdoor stage:  May I first say that all of you are the most intelligent, beautiful, clear thinking, generous, patriotic, and deserving people that I have met, along with all of the other great people of your town, city, and state.

Voice in the Crowd:  Yeah, whatever.

Politician:  Unlike my opponent, I want to strengthen government in all of the right ways to help you in this life of woe.

Voice:  What about the debt?

Politician:  "Debt"  is only a bad word for borrowing money. It is money that someone has little use for, which we will invest in our great country for your benefit.

Voice:  What benefit?

Politician:  Ice cream cones.

Voice:  Are you nuts?

Politician:  Which of you wonderful people would like a free ice cream cone?

Voice:  [drowned out]

Crowd:  [clapping]  Me, Us, We do, Yeah, Great.

Politician:  I will arrange for free ice cream cones, as many as you want, and other free stuff. Would you like that?

Voice:  [drowned out]

Crowd:  [loud cheers]  Yay, Yes, You said it, Gimme, I can't wait.

Voice:  [as cheering dies down]  There is no such thing as a free lunch.

Crowd:  [some booing]

Politician:  My friends, the heckler is correct. But we are not talking about lunch. We are talking about free ice cream cones.

Crowd:  [louder cheering]

Voice:  [as cheering dies down]  They will make us all pay more.

Politician:  No, we will make the rich pay. They have lots of money. In these times, when we have fewer ice cream cones than we want, it is only fair that rich people and corporations put in their fair share, much more than they are putting in now.

Voice:  [stands on park bench]  Wait! You all will pay more.

Taxes on companies will appear as higher prices. Taxes on investments will slow company growth. You and your children will have fewer and lower paying jobs.

The politicians always take a big cut. Your retirement funds will not grow as fast, as everyone invests less. The same corrupt politicians who promise to tax the rich will make deals with the rich and pass the costs onto you.

This has always been the result of promising free stuff and promising to tax the rich.  [he shouts louder]  You are being asked to vote away your own prosperity!

Crowd:  [some boos, and a stunned silence as people try to think]

Politician:  My fellow citizens. I will get you free ice cream cones. We will all work together and contribute our fair shares. Keep your faith and vote for a better future.

Voice:  [the man is pulled down from the bench]  Stop that. Let go.

Crowd:  [loud cheers toward the stage]  Yes. You're the man. We're for you. We deserve the ice cream cones.

Aug 1, 2011

Keynes' Brilliant Moment

Fred:  Keynes proposed that everyone would have a job if the government would print more money and distribute it widely.
Mike:  Distribute it to me, and I wouldn't have to work.

A lost recording, England 1932:

Keynes:  There must be a way to end this depression. Along the way, we can show that government can be good, and business is bad.

Assistant:  How to do it?

Keynes:  I have it! There is not enough demand for goods and services. Something changed, and people stopped wanting enough stuff. They became suddenly and disastrously frugal, and no longer want to buy things.

Assistant:  With a raise, I would buy more things.

Keynes:  Forget the raise. If only we could find Martians who would buy more of our stuff, then people would work for the Martians. The increased demand would get money flowing, like a river, and we would all be rich.

Assistant:  Sir, we had a long talk about the Martians. We have gone over that.

Keynes:  OK, yes, no Martians. Where else can we get demand?

Assistant:  How about the French and Germans?

Keynes:  They are not rich enough. They are still progessing toward wealth through adaptation to Socialism, and they haven't yet adapted. They have this stupid notion that they should sell more of their stuff to us, not buy more stuff from us.

Assistant:  If you and I both had more money, we could buy things and help to raise demand.

Keynes:  More money? Eureka! The government can print up the stuff and spread it around. And, I can get more money by advising the government. The workers will chase those pieces of paper like catnip. They will become used to working again, instead of being lazy and stupid.

Assistant:  More people may find work. But Sir, the value of money will fall and prices will go up. Everyone now working and saving will be silently taxed to employ those extra people. And, what will happen when the stimulus stops?

Keynes:  First, we and our friends in government will all have more money. That has to be a very good thing. Second, in the long run we are all dead. Forget about tomorrow, it is in the future.

Assistant:  So, I get my raise?

- -
Use Inflation to Fool People
Keynesian economists expect most people to be slow-witted and unable to make rational economic decisions. The government tries to fool people into working harder by inflating the currency to just the right amount. But, it doesn't work for long.

"Keynesian Economics" in The Political Dictionary
Understand politics by knowing the meanings of things.

Econ 201: The Myth of the Economic Multiplier
You don't create $40 in wealth by paying $10 to mow your lawn.

The Deadweight Loss of Taxes
Collecting $1 in extra tax kills $2 in production.

A Short Argument Against Stimulus
It isn't so stimulating when you know that it must be paid back.

Let's Counterfeit Our Way to Wealth
If Obama and Keynes are correct, that there is a 1.5 wealth multiplier on spending, then $100 in spending produces $150 in wealth, and we should all benefit from counterfeiting. It is not my fault that the belief in a multiplier is so outrageous that it leads to this outrageous result.

Jul 16, 2011

The Memory of Idiots

Fred:  I haven't seen you in a while. How are things?
Mike:  (looks up information on tablet PC)  Yes, Fred! Pretty good. Let's meet later to talk. Or, you could just review my tweets.

Future News:

A team of researchers at Columbia University [ed. what were their names again?] has used a unique perspective on home environments to conclude that most of us were raised by idiots, and probably are idiots ourselves. They pose the serious question about whether democracy should be replaced in the US by a "Platonic board of thoughtful intellectuals from Columbia".

The Team looked at original materials from homes where the mother or father cooked regularly. In almost every instance, they found dog-eared cookbooks and collections of food-stained recipe notes. "These people referred repeatedly to favorite recipes as indicated by wear and staining on the papers. Their dependency is revealed, in that they must have had these materials directly in hand while cooking."

What could explain adults repeatedly referring to written descriptions of favorite recipes? They conclude that these people could hardly remember anything. They were idiots, who spread their idiocy to their children. The implications are tragic and enormous.

- -
Is the internet negatively impacting our memory?
07/15/11 - RiehlWorldView by Sissy Willis
Inspiration for my sarcastic post above.

Jul 10, 2011

Marketing Capitalism

Max:  Corporate managers extract profits from the labor of the workers.

Fred:  They are paid out of the production of the company, just as you are.

Max:  They make undeserved profits. I make a well deserved salary.

There is a big marketing problem for the terms "capitalism" and "profit". "Capitalism" was constructed by Karl Marx to be negative (capital ruling over men), and profit has come to mean "excess costs which result in a higher price".

Someone noted that we eat pork, not pig, and we eat veal, not baby cow. Names matter.

We should say "a system of free exchange" instead of "capitalism", and say "net productivity" instead of "profit".

The statement "XYZ Company had an obscene net productivity in the past year under an outrageous system of free exchange" doesn't have the same Marxist zing as using the conventional terms.

- -
Are Hospital CEOs Overpaid?
07/05/11 - Insureblog

How much does CEO pay at hospitals affect the cost of care? Are non-profit hospitals always cheaper?

Jul 9, 2011

Police Academy

Reporter:  Tell me about the bank robbery.

Police Spokesman:  The incident may have involved removing something from the bank, possibly money, or something else valuable, maybe. We are investigating, so don't hold me to any of this. The situation is fluid and epistemology is difficult. Officially, I don't really know anything.

Via Dr. Grumpy

Fireworks Accident in North Fargo
InForum - 07/05/11

[edited]:  Hanson saw his neighbor set off a second round of a homemade or illegal artillery shell firework. Hanson heard a loud bang and saw a cloud of smoke. He walked to the scene and saw no head on his neighbor's body.

The police spokesman gave me a laugh.

[edited]:  At this point, we don’t know if he was struck or if the munition blew up, but it appears based on the information we got during our investigation that it was caused by the fireworks in some manner.

The victim’s injuries included massive head wounds from what appeared to be caused by a mortar type firework.

The police bureaucracy is guarded and uncertain about a simple, horrible incident. We have no hope when we give bureaucracies power over more complicated situations.

May 26, 2011

High Prices and Low Pay Are Good

Fred:  I can't find work, and I am barely getting by.
Alice:  Work is a rat race which literally burns resources. I am glad that you are now in accord with Gaia, rather than fighting her.

Why you should love $5 gas
05/25/11 - MSN Money  (Via Instapundit)

The above article has insights which demand to be applied to unemployment (smile).

- -

Stop grousing about having a lower-paid job or not having a job. Your unemployment could be good for you and good for America. Here are some benefits, and I'm not serious about any of them.

Fewer people will die on the road, including you. The less you drive, the more likely you will survive. Driving to work is the single biggest reason that people risk their lives in a car. Would you rather be poor or dead?

Demand for high-mileage cars could grow. As you become hungry and lean, you will consider driving much farther to hold a job. A high-mileage car will be your only choice, maybe subsidized by the government. If that is still uneconomic, you can move to the central city for a service job. Public transportation is not as bad as you remember it, and there is no car to park or shovel out in the winter.

Shorter airport security lines. Airline traffic will be down. You certainly won't be flying.

Less pollution and less congestion. You will be doing so much less with the little resources you must live on. This not only cuts your polution, but the polution and congestion not generated by not supplying you with all of those once-necessary conveniences you were buying. You will be surprised how little it will take for you to barely eke by.

Less work leads to more work. It will soon become clear that you are part of a large, vocal group. Entrepreneurs will be attracted to the large pool of unemployed. The government may catch on and lower the minimum wage, providing the opportunity for everyone to be employed again.

More exercise. Remember walking? Without a car you will become familiar with the sights and sounds of your local neighborhood as you walk yourself to health. Master the few blocks around your apartment, and take walks with your new roommates. A sharp eye and heightened "street smarts" will lower the chance of you getting mugged.

No more war. Wars cost money. You will have no money, so you won't support conflict with the same gusto that you used to have for adventure. Finding a cheap hamburger will be all the adventure you will need.

Local businesses could profit. Walking around will introduce you to local businesses. They will adapt by offering cheaper goods. A win-win.

It's all about Democracy. You voted for the caring, giving politicians (mostly Democrats) who have arranged for a more fair and just society. You have had a job for so long, let some others have a chance. Do you want jobs under the cruel supervision of selfish capitalists, or a more just distribution of wealth under caring politicians? We know your choice already, because you are not selfish, and you have already voted your heart. Keep the faith; don't backtrack now.

Obama and the Guest Book Date

Doctor:  (patient seems disoriented)  What is today's date?
Mike:  May 24th.
Doctor:  What year is it?
Mike:  2008.
Doctor:  (concerned) Who is the President?
Mike:  (sad expression)  Barack Obama.

Barack Obama's Great European Adventure
05/25/11 - Examiner.com by Scott Paulson

[edited]:  Obama signed a guest book at the Westminster Abby in London, England. He dated his signature as 24 May 2008, when in fact the date was 24 May 2011.

The day was correct; the year was wrong. Have you ever known anyone to get the current year wrong, by three years? I have dated checks in January using the prior year, but never three years ago.

If your spouse or parent did that, would you laugh, or have them evaluated for stroke?

Possibly a physician could comment. If you are evaluating the orientation of a patient, and they report the wrong year, by three years, what does that usually mean?

Mar 28, 2011

Family Budget

Bob:  Like the government, I have promised to help out my family members when they retire.

Mike:  Why the grim face? How much did you promise?

Bob:  About $1,500,000 above my after-tax income of $50,000, while I repay $210,000 that I have borrowed.

Mike:  Just break it to them gently.

( This is Version 3 of this post. What changed?After clicking this link, you can come back here with the "Back" button of your browser.  )

Spending Cuts of  1.8%

Republicans have approved cutting $61 billion from government spending of $3,500 billion this year, a 1.8% cut. The government accounting year 2010  (the 2010 fiscal year)  is the 12 months ending September 30, 2011.

The numbers are huge and hard to grasp.

$2,200   billionin taxes received
+  $1,300   billionof borrowing (the deficit)
=  $3,500   billionin government spending

The government borrows 60% above its income of $2,200 B.
The government spends 1.6 times its income.
The proposed cut is 4.7%  (1/21st)  of the borrowed money.

For your reference,

$1 billion  = 1,000 × $1 million
$3,500 billion  = 3,500,000 × $1 million =  $3.5 trillion

Family Sized

The numbers above are too big to really understand. Here is what our government's spending and financial situation would be when reduced in proportion to the spending of (say) Bob's family:

Bob has$50,000  of yearly income to spend after-tax.
He borrows$29,900  more,  60% of his income.
He spends$79,900  1.6 times his income, not saving anything.
Proposed cut $1,400  is 1.8% of Bob's total spending,
or just 4.7% of Bob's yearly borrowing.
Bob's debt is $210,350  at 2.2% interest, a low current rate.
Bob pays$4,550  yearly interest in his spending above.

Democrat Bob responds:  "No way. I can't live with that drastic cut of $1,400. You are threatening my family. Think of my children!"

The proposed cut is only 1/21st of what is needed to balance the current budget and stop increasing U.S. debt.

Super-Sized Promises

Bob is a soft-hearted and generous guy. He has made additional promises to his parents, uncles, and cousins for Social Security, Medicare, Prescription Drugs, Medicaid, and more. He hasn't yet set aside $1,525,650 to provide the complete funding for those promises. Bob does not want to disappoint or worry his family, so he has not fully explained the situation to them.

Bob currently spends everything he earns and borrows. He pays $4,550 for the yearly interest on his debt, but he is not paying down the balance of $210,350. Amazingly, he is borrowing $29,900 more each year.

Contributions From the Family

Some of Bob's family pay to him $20,000 (40%) of his income (Social Security and Medicare contributions). He has promised to invest that money wisely for their support later when they retire or become sick. This year, he spent $33,100 on other family members who are already retired or sick.

Bob is currently meeting his obligations to support some of his family. But, Bob is not saving anything and has not planned how to later support the family members who are now paying in. He treats their $20,000 in contributions as part of his current income and spending.

Social Security Trust Fund

Bob collected money in the past which he did not need to spend immediately on family support. He put it into a trust fund, added it up, and immediately withdrew it to spend on other things. If he had saved that money it would now total $60,100 (in proportion to the Social Security trust fund of $2,600 billion). But, he didn't save it.

Worse, Bob's promises to support his family are far greater than all the amounts he collected, even if he had saved. By now, he would need savings of $182,600 dedicated to support Social Security.  That is 3.6 times his income from all sources. (That is in proportion to the $7,900 billion unfunded liability of Social Security.)

All Promises

Mary Meeker and her team (below) have estimated all of the amounts Bob has promised to spend on Social Security, Medicare, and Medicaid over the next 75 years. They compared this obligation to the payroll taxes that will be collected for those purposes at current tax rates. Bob won't collect nearly enough to meet his promises.

Bob would need $1,525,650 right now in safe investments earning 3% interest to make up the difference. That is Bob's part of the combined "unfunded liability" of Social Security, Medicare, and Medicaid over the next 75 years. This is a way of valuing and comparing today what those promises will cost in the future.

Bob doesn't have any savings, so those promises will require much more income (much more in taxes). The Social Security Trust Fund will not help, because it only contains more promises. In our analogy, the trust fund is only a promise from Bob to himself to find more income in the future. See Unfunded PromisesAfter clicking this link, you can come back here with the "Back" button of your browser. below for more on this.

We expect that Bob's income will increase by 3% each year. This will not help much, because we also expect almost all of Bob's expenses to increase at that rate.

Taxes  ×  1.76

Here is the additional income Bob would need to pay for all of his promises.

Promise AmountIncome
Entitlements $1,525,650$20,342
SS/Med Income 20,000
SS/Med Payments -33,100
Federal Debt 210,350 772
Borrowing 29,900
 Total Extra $37,914
Current Income $50,000
Total Needed $87,914
Multiple of Income× 1.76

This means collecting 1.76 times as much tax as at present. That huge amount must come mostly from the middle class. Only part would come from the rich.

You might think that a growing economy will make it easier to pay these promises. But, the official government analysis already assumes 3% yearly growth in the economy and taxes. Bob needs 76% more income (tax collections) today, and his total income and payments must increase yearly by 3%.

You can skip these details without missing much.

$1,525,650 is the lump-sum value, earning 3% per year, needed to pay for unfunded Entitlements over the next 75 years. The first payment, this year, would be 1/75th of that amount, $20,342. This is in addition to the funded portion, $20,000 this year. The funded + unfunded need is $40,342. Bob is paying $33,100 of that. Bob needs to save $7,242 more to meet his promises. All payments increase by 3% each year.

The payment of $772, increasing by 3% yearly, is enough to pay off Bob's proportional part of the national debt of $210,350. We assume that debt does not increase yearly. Interest on that debt is already being paid from other borrowing and taxes.

Is it reasonable to suppose that the national debt will not increase? Yes, because we are calculating here the additional income that Bob needs to pay for his promises, stop borrowing, and pay off the national debt.

Last, Bob must have additional income of $29,900 to stop borrowing each year, increasing by 3% yearly. He needs that income because every dollar of that borrowing is now being used to pay for something.

See the Excel worksheet  FamBudget.xls  for all of the calculations.

Who Will Pay?

In 2006  the the top earning one-quarter of taxpayers paid 86% of all personal income taxes. They paid an average of 16% of their incomes. That is not their top tax rate, but the total part of their adjusted gross income (AGI) paid in income tax. The  figures for 2008  are not much different. I haven't done a detailed analysis for those more recent figures.

They are also paying payroll taxes, state taxes, and sales taxes along with everyone else. To collect an additional 76% from them, they would have to pay 28% of their total income toward income taxes alone, and also increasing payroll taxes as explained below.

The lower-earning three-quarters of taxpayers would also have to come up with 1.76 times their current taxes. This applies to their payroll taxes as well as income taxes. The payroll tax rate would go from about 15.3% of salary up to about 26.9%. This would hurt.

See below You Pay All Payroll TaxesAfter clicking this link, you can come back here with the "Back" button of your browser. for more explanation of this.

The 76% increase on business and "other" taxes (about 20% of tax collections) would discourage investment and raise prices for goods. The general public would pay those increased taxes in an indirect way. The government likes to impose indirect taxes which are hard for the average person to understand.

Taking more tax from the economy and from those who are most productive would lower economic output, and would create unemployment and/or reduced incomes. See also the separate post  The Deadweight Loss of TaxesEO 12/2008 - The deadweight loss caused by increasing tax rates above current levels may exceed $2 per $1 of revenue increase. When the government collects $1 more in taxes, the economy loses at least $2 in production and jobs. .

Maybe taxes can't be raised enough. The government might find that raising tax rates brings in far less money than the simple multiplication above. The reduced take-home pay and high unemployment rate resulting from high taxes may make those taxes politically impossible.

This comparison of our government's finances to Bob's income, spending, and obligations is not perfect. But, the amounts are proportional to Bob's $50,000 of spendable income.

We and Bob are in deep trouble.

Rising Interest Expenses

Every family meets sudden expenses. These can be catastrophic when a family is living on the edge. We can predict a large increase in interest payments.

Our government debt is $9,100 billion (4.2 times total tax receipts). These are loans made to the government by Americans, foreign individuals, and foreign governments, but not including other parts of the government. For example, US savings bonds are loans to the government. Most loans are made by paying cash for US Treasury bonds. These bonds are promises by the government to pay back a fixed amount of cash in the future.

U.S. BobIncome
Debt and Interest Billions $  %
Debt $9,100$210,350421%
Interest at  2.15% 196 4,500 9%
Interest at  3.70% 337 7,800 16%

The US currently pays an average of 2.15% interest on its debt, an historic low. The average rate over the last 30 years has been 6.4%.

Analyst Mary Meeker (below) estimates that the average rate on the debt will be 3.7% by 2016, requiring a yearly interest payment of $337 billion, (an increase of $141 billion, 7% of income). That will increase the financial pressure on the government.

The proportional burden on Bob would be $3,300 more in interest payments, 7% of his $50,000 spendable income.

Probable inflation would produce interest rates that are even higher, and government interest expenses that are higher than estimated above.

For more details, see Debt and InterestAfter clicking this link, you can come back here with the "Back" button of your browser. below.

The Data

Mary Meeker is a partner at Kleiner Perkins, a large and respected venture capital fund. Her work is analyzing and investing in businesses.

She has analyzed U.S finances as she might do for a large corporation. Busines Insider talks about her report  A Summary of America's Financial Statements (pdf).  A web "slide show" of some of her report is here. My post uses mostly Meeker's figures.

These are charts of U.S. income and spending from page 9 of the report. "B" indicates billions (1,000 million). "T" indicates trillions (1,000 billion, or one million million).

The Figures

The column for Bob is proportional to the data for the United States. US tax revenue is about 43 million times Bob's after-tax income of $50,000. Bob's numbers are rounded to the nearest $50. You can view or download the Excel 2003 worksheet for these figures.

U.S.Bob% of  
Family Budget$ Billions$Income
Income to Spend2,16350,000100%
Total Spending$3,457$79,900160%
GOP Cut611,4002.8%
Of Spending1.8%
Of Borrowing4.7%

U.S. TaxBob% of  
Income$ Billions$Income
SocSec / Medicare86520,00040%
Individual Tax89920,80042%
Other Tax2084,80010%
Corporate Tax1914,4009%
Total Income$2,163$50,000100%
Exclude SSec/Med$1,298$30,00060%

U.S.BobMultiple of
Promises$ Billions$Income
Social Security7,900182,6003.7
Total Unfunded66,0001,525,65030.5
Federal Debt9,100210,3504.2
Federal Pensions2,10048,5501.0
Veteran Benefits3,70085,5501.7
All Other1,60037,0000.7
Total Benefits7,400171,1003.4
Total Promises$82,500$1,907,10038.1

U.S.Bob% of  
Spending$ Billions$Income
Tarp, Bailouts1523,5007%
Total Discretionary1,27729,50059%
Interest on Debt1964,5509%
Social Security70716,35033%
Medicare + Medicaid72416,75033%
Unemploy't, Other55312,80026%
Total Entitlements2,18050,400101%
Total Spending$3,457$79,900160%

Unfunded Promises

The above "Total Unfunded" Promises are the major promises of our government above any current income from taxes. Repayment of the National Debt is required by legal contract; the others are government programs continued from year to year by Congress. All payments to these programs come from current taxes and borrowing. There are no assets or savings set aside to pay for any of these promises.

Many people believe that trust fund "savings" are set aside for the Social Security program and for Medicare. Actually, those trust funds hold only special US Treasury Bonds. These bonds are promises by the government to pay back cash in the future.

Taxes collected for Social Security are first used to pay current Social Security checks. Remaining amounts have bought those special US Treasury bonds and went into the US Treasury. Those amounts plus borrowing have been spent each year on government activities. The situation for Medicare is similar.

This year, payroll tax collections for Social Security are less than the amounts paid out. The government is "cashing in" some of those accumulated bonds. In reality, the government must now find some more real tax revenues (or more borrowing) to write Social Security checks in full.

No Real Assets

There is no gold, corporate stock, or anything of independent value set aside. There is only a promise from the government to repay to itself the money owed to future retirees. Only higher taxes on the public or our children can supply that value.

This is like an insane person saving up for his child's college education. He puts $100 each Friday into his savings account. Each Monday he withdraws that $100 and spends it on wine and entertainment, but he carefully records in his "college trust fund" what he has taken out. He increases the fake-reality of the fund by adding 3% as interest each year to the total on paper.

When his child is 18, he tells him that he saved $50,000 over the years, plus interest. He only has to pay back what he took out, with the help of his child to supply the money.

Amazingly, this is exactly like the government accounting of the Social Security (and Medicare) trust funds. The funds hold only promises from the government, in the form of special Treasury bonds. The government duly issues additional bonds as interest each year, adding more to the total.

CBO:  Trust Funds Are Only Promises

Some people argue that these bonds are real assets, as good as any Treasury bond owned by the public. They indeed would be, if the taxing power of the entire government were not in doubt. The promises of the government are so large that all of its bonds may lose some or all of their value, including the bonds in the Social Security and other accounts. The bonds represent a part of the promise, but they don't help to pay for the promise.

Don't take my word for it. Here is the written statement of the Congressional Budget Office - October 2002 [edited from the Summary]:

The money that the government owes to itself has no impact on the economy because it represents debt owed from one Treasury account to another, mostly held in federal trust funds.

Trust fund holdings are not assets of the government and do not represent money owed to program recipients individually. Payments to Social Security recipients (like other social insurance programs) are based on rules set by law unrelated to trust fund holdings.

A federal trust fund is an accounting device that measures the difference between the income designated for a program and the expenditures made to its beneficiaries. The accumulated balance often represents the future "spending authority" for the program, but it is not a reserve of money for making payments.

The National Debt

Meeker reports the National Debt as $9,100 billion. The usual figure in the news is $14,500 billion.   $9,100 billion is the "debt held by the public", the amount of Treasury bonds sold to people outside of the US government.

The higher figure includes "inter-governmental debt", the amount of bonds sitting in trust funds within the government as an accounting device.

$9,100 billion is held by people with a legal, formal right to sue the government for payment. The other $5,400 billion is held by government agencies which are a part of the government. The government can not effectively sue itself.

The $5,400 billion of trust fund debt causes confusion. It totals money collected in the past and long since spent on government activities, without any saving. Including this as part of the National Debt is mostly a bad thing. The fixed, definite quality of that figure gives the impression that "this is what we owe". But, government's promises are not much related to that amount.

Government spokesmen point to that relatively small $5,400 billion, but the unfunded promises are approximately $66,000 billion, 12 times as much, according to Meeker's accounting. Other sources calculate the unfunded promises as $86 trillionConcord Coalition - Stop 2011.org - p.18 to $106 trillionNational Center for Policy Analysis - Figure II

This video clip estimates the unfunded promises of the US at $120 trillion, 8 years of total US production.

- -
Why Do We Take Politicians Seriously?
02/22/11 - Cafe Hayek by Professor of economics Don Boudreaux

[edited]  The Social Security “trust fund” is indeed filled with ample quantities of interest-bearing U.S. treasuries. But, who pays the principal and interest to Uncle Sam when the treasuries are cashed in? Answer: Uncle Sam, who must raise taxes on flesh-and-blood people to get the dollars that he pays to himself, so that he can then pay out promised Social Security benefits.

Promises written to yourself are not assets. They are only pathetic reminders of gross financial irresponsibility.

Government Accounting
An XTraNormal video (2:12) by Prof. Boudreaux.

Fred:  You loaned me $10,000. I have $10,000 in bonds in my desk drawer to guarantee that I can repay you.

Mary:  What institution wrote the bonds? Are they good for the money?

Fred:  I wrote the bonds. I will pay $10,000 to myself when they come due.

Mary:  You are an idiot. That is not proper accounting.

Fred:  No? It is the accounting our government uses for Social Security.

Obamacare Bails Out Medicare
  09/2009 - EasyOpinions
Obama's healthcare reform is a huge increase in taxes combined with rationed medical services.

- -

Who Pays Payroll Taxes?

Why do I say above that your Social Security taxes would rise from 15.3% to 26.9%  ?

The Social Security tax is described as 6.2% and the Medicare tax as 1.45% paid by each of the employee and employer. This description suggests that you are paying 7.65% of your income and that your employer is paying an equal amount.

Actually, you generate all of the wealth that pays your salary and the taxes associated with your employment. The employer writes the check, but you earned that money, and it would be part of your take-home pay if the burden did not exist on your employer. Competition for skills sets salary levels and arranges the maximum you can negotiate as your pay.

Here is a rough example. What would happen if the government charged employers an additional $10,000 per employee as a "social benefits" tax?

If your take-home pay was $50,000, employers would quickly shift to offering you only $40,000. Whatever value you were creating would have to support that extra $10,000 expense. You would get less salary because that extra expense would immediately make you less valuable to the company.

Similarly, your value to your company is currently supporting all of the taxes and expenses associated with your employment. The following is how your employer sees it.

Bob's Yearly Production$110,000
For the Employer-30,000
Expense managing Bob-10,000
Human Resources-1,000
Medical Plan-8,000
Payroll Taxes-4,051  (1)
Bob's Gross Salary56,949
Bob Pays to Medical Plan-4,000
 Social Security Wages52,949
Payroll Taxes 7.65%-4,051  (1)
Bob's Cash Salary$48,898

The lines marked (1) are the payroll taxes for Bob and his employer. Both of those payments reduce what Bob receives as a cash wage. They are both subtracted from Bob's total production, which has to pay for everything associated with his employment and also for a profit to his employer.

That is how Bob pays for all of his payroll taxes, even though his employer writes a check for him. If payroll taxes go up, Bob's salary will go down to pay for almost all of that tax, including the "employer's part".

See The Economics of Tax Incidence for a more detailed discussion.

- -

Interest on the National Debt

Our National Debt is $9,100 billion (4.2 times total tax receipts). These are loans made to the government by Americans, foreign individuals, and foreign governments, and not including other parts of the government. For example, US savings bonds are loans to the government. Most loans are made by paying cash for US Treasury bonds. These bonds are promises by the government to pay back a fixed amount in the future.

The US currently pays an average of 2.2% interest on this debt, about $196 billion per year (9% of tax receipts). This interest rate is at an historic low. The average rate over the last 30 years has been 6.4%. Analyst Mary Meeker (below) estimates that the average rate will be 3.7% by 2016, and the yearly interest payments would be $337 billion.

The goverment will pay $141 billion more (7% of income), and Bob would pay $3,300 more in proportion from his $50,000 of spendable income. That will increase the financial pressure on the government and Bob.

The interest rate is not set by the government. It comes from the market price for US government debt at an auction. Yes, the government borrows money by asking a crowd, "What will anyone offer for these Treasury bonds, which will pay back $100,000 in (say) 2 years?". For convenience and efficiency, only certain companies are allowed to buy at these auctions, and the auctions are done electronically. Most bonds are bought for clients.

When there is low inflation, and depending on the world economy, buyers will pay about $96,000 for a $100,000 bond due in 2 years. That is our current situation. This gives the buyer a $4,000 profit in two years, about 2% interest on his investment.

These days, bond buyers see the US government borrowing huge amounts, collecting less tax, having high unemployement, and putting money into the economy as "stimulus".  Analysts fear that there will not be enough tax revenue to pay back the huge debt. They expect the value of money to fall as the government prints more money to pay back what it borrowed. So, they want more profit from Treasury bonds to replace the declining value of the dollars they will receive in 2, 5, or 10 years.

When buyers offer only $88,000 for a 2-year, $100,000 bond, the interest rate is about 6%, $12,000 over two years.

Government debt is made up of bonds that come due over time periods from a few months to 10 years or more. The government must pay back the short-term bonds first, and must borrow more to continue (refinance) the debt. As the interest rate increases, short-term debt will first be refinanced at the higher rates. In the following years, all of the debt will be refinanced at higher rates. The average cost of maintaining the National Debt will increase greatly over time.

- -

Meeker's Report

I used the following parts of  Mary Meeker's financial report in this post. Page numbers are to the document, not the PDF display pagination.

 9.  Pie charts showing income, spending, and entitlements (promises).

71.  The effective interest rate on Treasury debt is 2.2% in 2010.

76.  There is no economic value in the Social Security trust funds.

77.  08/2004 - Statement by the Congressional Budget Office (CBO): "The Trust funds are basically an accounting device. Their balances provide no resources to the government for meeting future funding commitments, even if they are "invested" in Treasury securities.

82.  Definition of the unfunded liabilities of Social Security, Medicare, and Medicaid.

107.  Overview of healthcare spending.

143.  Effective interest rates are at an historic low of 2.2% in 2010, vs. the 30-year average of 6.4%. The rate will rise with the federal funds target rate and long-term Treasury yield as our economy recovers. Long-term debt (10+ year bonds) in 2010 is only 10% of total debt. The average interest rate on US debt will change quickly following changes in interest rates.

166.  Effective interest rates are 2.2% in 2010, and will be 3.7% in 2016.

465.  Appendix


Federal Hospital and Medical Insurance Trust Funds
8/5/2010 - 2010 Annual Report of the Board of Trustees

Tax Burden of Top 1% Exceeds Bottom 95%
7/29/09 - Tax Foundation - 2007 figures

Income tax paid by AGI threshold
National Taxpayers Union - Tax years 1999 to 2008

Normal Interest Rates Would be a Disaster for U.S. Debt
  03/14/11 - LesJones.com
The US currently pays about 2%. If rates were to return simply to that historical average, it would involve an increase to our overall interest bill of $640 billion — to be paid immediately. “An impossible situation,” in US Sen. Coburn’s words.

Social Security and Medicare Liabilities
  06/11/09 - National Center for Policy Analysis - NCPA
The estimated Social Security and Medicare liability as of 2009 is $17.5 trillion.

Social Security Administration Trust Fund Assets
  01/31/11 - Social Security Administration On-Line
The Social Security trust fund holds $2,600 billion in special US government bonds.

The 2010 Budget (pdf) - By the Concord Coalition
Many clear charts explaining the US budget, showing debt and spending in 2010, and estimates for the future.

FamBudget.xls - 03/2011 - Excel 2003 worksheet.
The calculations for this post. You are welcome to open or download it.

2006 Tax Comparisons - 04/2009 - Easy Opinions
Analysis of who pays taxes based, on income slices, from the US 2006 tax data.

The Economics of Tax Incidence
  08/2010 - Economists View
The government makes businesses pay taxes, but where does the money really come from? Almost all of it comes from offering lower salaries or charging higher prices. The working public pays those taxes, one way or another, and their real prosperity suffers.

The Deadweight Loss of Taxes - 12/2008 - Easy Opinions
The deadweight loss caused by increasing tax rates above current levels may exceed $2 per $1 of revenue increase. When the government collects $1 more in taxes, the economy loses at least $2 in production and jobs.

- -

Version 3 - What Changed?

  • The GOP in Congress settled on a $61 billion proposed spending cut, rather than the $70 billion used in Version 2.
  • Version 2 calculated a need for 2.6 times current tax revenue to pay for all promises. This post calculates 1.76 times current tax revenue.

    This post uses a consistent "3% interpretation". It calculates what tax revenues would need to be today, increasing at 3% yearly, to pay the unfunded promises of the next 75 years. The government and independent analysts use this same interpretation (a 3% discount rate) to calculate the lump-sum amount today that represents government promises in the future.

    A payment that increases at 3% yearly over 75 years can start at much less than a fixed payment (like a mortgage payment) that pays off the same amounts in the future.

  • This post eliminates some double-counting of future unfunded liabilites. Unfunded liabilities in Social Security and Medicare are estimated above the current revenues from dedicated payroll taxes.

    The government is currently paying more for Social Security and Medicare than is collected. So, I assume that the overage is currently applied toward some part of the unfunded amount estimated by analysists. This reduces the remaining unfunded liability which will require increased tax revenue.

  • More of the numbers are easier to read and compare in charts, along with general editing, additional sections, and a list of links and referencees.

Edit History
02/21/11 - V1 Posted
03/03/11 - V2 Expanded without change in figures
03/28/11 - V3 Expanded, new figures as described above

Jan 23, 2011

Metaphorically Speaking

Progressive:  Your military metaphors break civility and encourage violence.
Conservative:  Your side uses them all the time.
Progressive:  We are fighting in a revolution to break the power of our capitalist oppressors. So, we're justified.


From:  Right-Wing Cabal Central
To:  You know who you are

The forces discussion groups of the Left are leading their most effective attack advance pressure ever. Our military language, metaphors, and symbols are under attack respectful pressure. Soon they will be removed from us. Without them, we will be unable to create any enthusiasm, and will be swept before the Leftist Progressive advance insistent argument.

Without "target", we will only be able to "direct our attention to". Without "attack", we will be left with "raise our concerns in respectful ways". We will sink below the waves of hyper-civil discourse, while our opposition friends of differing viewpoint use these same weapons symbols against us with devastating more than a bit of uncomfortable effect.

We have prepared for this eventuality. We now implement Contingency Plan 36.

Turn your official word processor to mode "P36". All uses of "target", "attack", "oppose", "crush", "eliminate" and numerous other military metaphors will automatically be replaced with "bunny". This will seem awkward and ungrammatical at first, but you will quickly adapt.

Instead of crosshairs, circles, pointers, or sharp angles, use the supplied cute bunnies for graphic emphasis.

Happy Bunny Graphic #20 Happy Bunny Graphic #9 Bunny Outline

Remember also that one of the allowed meanings of bunny is "to love and be best friends with", according to context. Report this meaning if you are captured and questioned.

Thus rhetorically prepared, we will go forth to bunny those who disagree with us politically.

Remember the words of Winston Churchill at a time of great challenge (as converted by P36):  "We shall respectfully hinder the invasion of our island, whatever the cost may be, we shall bunny on the beaches, we shall bunny on the landing grounds, we shall bunny in the fields and in the streets, we shall bunny in the hills; we shall never surrender."

- -
Another False Narrative About the Tucson Shooting

01/16/11 - Legal Insurrection gives the context for my post above.

[edited]  The first false narrative was that Sarah Palin, Tea Parties, and conservatives were directly or indirectly responsible for the shooting. That narrative has been thoroughly debunked in the past week, although writers such as Paul Krugman and political figures such as Clarence Dupnik cling to the fantasy.

- -
Mobilizing the Jobless
01/23/11 - The Nation by Frances Fox Piven
- Via The PJ Tatler and Instapundit

Piven is an intellectual beacon for the Progressive movement. Her call for violence is Progressive, unless there is widespread condemnation of her advice.

There is widespread Progressive and liberal criticism that metaphors and symbols used by conservative speakers must be stopped, because such metaphors supposedly, might encourage violence. In contrast, direct calls for violence by Progressive leaders are acceptable, even when the call is to repeat violence which has already happened.

Piven [edited]:  Local protests have to accumulate, spread, and become more disruptive, to create serious pressures on national politicians.

An effective movement of the unemployed will have to look something like the strikes and riots that have spread across Greece in response to the austerity measures forced on the Greek government by the European Union. Or, they will have to look like the student protests that recently spread with lightning speed across England in response to the prospect of greatly increased school fees.

The British and Greek protests were violent, and riots are violent by definition.

Three Reported Killed in Greek Protests
05/06/10 - New York Times

[edited]  ATHENS — Swarms of violent groups in the city center overtook a general protest against austerity measures. Police report that demonstrators hurled gasoline bombs, setting fire to a bank building and killing three bank workers.

British protests over increased tuition turn violent
11/10/10 - Deseret News

[edited]  LONDON — Demonstrators protested government proposals to cut education spending and steeply increase tuition for university students. The demonstration turned violent when protesters attempted to storm the building that houses the Conservative Party.

The protesters scuffled with police officers, set off flares, burned placards, threw eggs, bottles, and other projectiles, and shattered windows at the building. A small group of demonstrators, some wearing ski masks, climbed to the roof of a nearby building, waved anarchist flags, and chanted "Tory scum."

Jan 3, 2011


Director:  Our new carbon regulations go into effect today. A great day. All of those old power plants will either clean up or shut down.

Assistant:  With permission. Many of them say these regulations go too far. They don't want to invest more when the Agency is suing them. They will probably shut down.
Director:  Good riddance.

Assistant:  What will their workers do?
Director:  Anything they do will be better than working for evil. Anyway, that is the business of the Department of Labor.

Assistant:  By chance, do you know where our building power comes from?
Director:  No, why do you ask?

Consider these scenes from the movie Titanic.

Ismay  (imperious president of White Star Lines):  So you've not yet lit the last four boilers?

Captain:  No, I don't see the need. We are making excellent time.

Ismay:  The press knows the size of Titanic. Now I want them to marvel at her speed. We must give them something new to print! This maiden voyage of Titanic must make headlines!

Captain:  Mr. Ismay, I would prefer not to push the engines until they've been properly run in.

Ismay:  Of course, I'm just a passenger. I leave it to your good offices to decide what's best. But what a glorious end to your final crossing, if we were to get to New York on Tuesday night and surprise them all! Make the morning papers. Retire with a bang, eh E.J.?

Captain:  (nods reluctantly)

Ismay:  Good man.

- -
(The Titanic has hit an iceberg. The Captain reviews the damage.)

Ismay:  Most unfortunate, captain!

Captain:  (perspiring and trembling) Water fourteen feet above the keel in ten minutes. In the forepeak, in all three holds, and in the boiler room six.

Ismay:  When can we get underway, damnit!

Captain:  That's five compartments! She can stay afloat with the first four compartments breached, but not five!

(pause)  Not five. As she goes down by the head, the water will spill over the tops of the bulkheads at E deck from one to the next. Back and back. There's no stopping it.

Smith:  The pumps... if we opened the doors...

Captain:  The pumps buy you time, but minutes only. From this moment, no matter what we do, Titanic will founder.

Ismay:  But this ship can't sink!

Captain:  She's made of iron, sir! I assure you, she can and she will. It is a mathematical certainty.

Many people see the prosperity of the US as a given. They think many things. That we float on air because of luck, or location, or whatever. That one person earns more money than another because he is only lucky or privileged. That this lucky and undeserved wealth should be taken in taxes and redistributed. That businesses can be restricted at will, and can be made agents for the social good, in detail.

They believe that our country can't sink, no matter what laws or policies are implemented. But, the iron laws of incentive, energy, and economy cannot be abolished. People will not work hard if their income is taxed away. Investors will not risk their money if they cannot make more money. Great doctors will not work in a profession that requires half of their time to be devoted to paperwork at no benefit to the patients.

Our great ship can sink. It is kept afloat by well organized effort and private initiative. It will float for a while as damage increases. We are floating now at a tilt, after reckless government policies created more housing than people could pay for. Now we are all paying. How much more arbitrary and wishful policy will the government impose? Flood the fifth compartment, and our country will sink. It is a mathematical certainty.

- -
Caring and Reality

A conversation in San Francisco.

[edited]:  I pointed out that California and San Francisco were both hemorrhaging money, destroying jobs, and were fundamentally unsustainable systems.

She said “I know, I know. I’ve heard all that. But, you know, I just love it here so much and I don’t want anything to change. Something will come up and it will get fixed. I just have to believe it.”

- -
And, Best of All, It's FREE
01/01/11 - Insure Blog

The government has declared that certain unproven treatments for autism are now covered by health insurance, up to $40,000 per year in each case. But, care is not free, and the providers will be paid. All people buying insurance will pay the providers through increased premiums and taxes.

This is just one cause for insurance premiums to go up. If you think that insurance benefits are free, to be mandated by the government, then you might think anything. You might think that iron will float regardless of the damage to the ship.

- -
The Wreck of the Edmund Fitzgerald
01/27/11 - A Brief History
Video (6:38) and song by Gordon Lightfoot.

The S.S. Edmund Fitzgerald was an ore carrier, 729 ft long, 75 ft wide, weighing 13,632 tons empty. That is big. It broke up and sank in a storm on Lake Superior on November 10, 1975.  All 29 of its crew were lost.

Large, stable, systems can be broken by the chance forces of nature. You never know. Prudent men manage with a wide margin of safety; even then, it may not be enough. So, it is troubling that our politicians are managing our country at the edge of stability. We are currently in a storm, and we don't know what will be lost.