Saturday, April 09, 2011

Congressional Logic: Insanity Mixed With Self Importance

Congress almost shut the government down because both sides couldn't come to an agreement over a 40 billion dollar cut in the budget. That's hard to fathom let alone comprehend their thinking.

The pie chart below shows how much government took in taxes in 2010, $2.162 trillion dollars.


Now look at how much they spent, $3.456 trillion dollars. Our government almost got shut down over some petty change issue?? Spend $3.456 trillion and the taxes received were $2.162 trillion; hmm where did the extra $1.3 trillion come from??? It must have been a loan! No thought of cutting here.


Uncle Sam paid $413 billion in interest on the national debt in 2010. Figure the government is paying 3% on funds borrowed. What would happen if interest rates doubled to 6% like they have in Greece? A possible jump from $400 billion to $800 billion in interest charges doesn't even faze those in Congress. $413 billion dollars in interest, is paid out each year. How many taxpayers does it take to pay, just the interest?

Somehow, the phrase "penny-wise and pound-foolish," seems to have lost its meaning. The $1.3 trillion dollars borrowed is real, in the sense that it is gone. What would be the monthly repayments on $1.3 trillion dollars borrowed for 20 years? Of course, if you don't plan to pay it back, who cares? That appears to be the way Congress plans to handle it, and that's insane. It's kind of like trying to retire on the bonus dollars you get back from using your charge card.

Last week's Congressional Brouhaha,(to paraphrase Shakespeare from Macbeth) was, "a tale told by an idiot, full of sound and fury, signifying nothing."

28 comments:

Anonymous said...

This "head in the ground" attitude
has NO consequences to current congress.
Twenty years ago, Calif. legislature promised huge pensions to government employees, if they would vote for them.
They made these promises,knowing full well they would be out of office by then, collectiong their OWN pensions.
Same deal with Congress. When it hits the fan, they will not be there.

AIM said...

Clowns to the left of me,
jokers to the right.
Here I am,
Stuck in the middle again.

We've tolerated and continue to tolerate... immorality, corruption, criminality, incompetence, ignorance, stupidity and vested interests within our government. We've allowed big business (banks) to take control of our government.

We had our rise and now have only ourselves to blame for The Fall of the American Empire.

We ignored the warnings of the US founders to practice vigilance and to act accordingly to preserve our freedom.

Now we pay the price. BIG TIME.

Turn to your religion, your God, your spiritual side for succor and consolation because that is about all you are going to have left.

Anonymous said...

I have a perfect credit history and a FICO in the high 700's. I just added up the available credit that I have on my existing credit cards and it comes to $260,000. Credit just sitting there, not being used. I could probably get the limit raised on some of them and could also apply for many more credit cards and maybe reach a total available credit amount of $350,000.

Income is tight for me right now. I got blown out of the water when the real estate market collapsed. Some of my investments have collapsed and my monthly passive income has diminished as a result. I've got some debt to pay off, some dental and health issues I'd like to take care of, and there are some service facilities I would like to buy to help me to earn more in business (such as a new computer, a motorhome, etc.)

I've always worked hard, made my own way, paid all of my bills on time, paid my taxes, etc. Your standard law-abiding citizen.

The thought just occurred to me. "Why not act just make the government and Congress, the Federal Reserve and the bankers my role models and follow in their footsteps?" The lessons they have taught me are many, such as: to spend and spend and then borrow and borrow in order to spend some more; devalue your currency; spend more than you earn; distribute the earnings of the productive to the non-productive; give entitlements to the undeserving; punish the producer and reward the non-producer; and so on.

The government and the bankers together have destroyed our economy (their actions have screwed up my livelihood, my investments, my savings and my future prospects and I'm pissed) and to pour salt on the wound, they never shared in the pain and they put it all on the taxpayer's back. The bankers have the highest profits ever going and the government is still spending us into debt that can never be paid back. Whether it ends up in default or inflation I still lose.

Why don't I follow their example. Why not just default on paying the 35k in credit card debt I already have?

Why not get as much credit as I possibly can (beyond the 260k I already have) from credit cards and buy all the things that I need (computer, small motor home, clothes, iPhone, use some of the cash to recoup my investment losses, get my teeth and health problems handled, use some of the capital to start up a few internet based businesses, etc.). Man, I would really be set up to prosper.

And then when the credit card statements roll in just toss them in the trash. When they call just tell them "sorry, I can't pay you back due to personal and business problems". Just stick it to the banks (they aren't even losing money because the money they "loaned" me was just numbers on a computer screen... part of the "fractional reserve lending" scam that they've been running on us for half a century or more.

The credit card companies can't come after me because it is all unsecured debt. If I use cash advances and balance transfers they will have no record of what I've bought and what I own.

So I ruin my credit for 7 years or so. So what, my record will be cleaned off in 7 years anyway and I'll be ready to go again. Plus, I won't need any credit anyway. I'll be set and will operate on a cash basis anyway (I'd like to be done with paying taxes too).

The idea of stiffing the banks really is exciting. It's sort of like street justice. This is all very tempting.

Hmmm... should I do it?

Hmmm... I wonder how many others are having these sort of thoughts?

Jim in San Marcos said...

Hi Anon 7:59

I think both of us had a very good role model that gave us a head start for success in life. There is no need to dump that, I would have a rough time shaving in the morning, looking at my mug in the mirror.

I would suggest getting the dental work done. Dental insurance doesn't cover much. On expensive procedures, stress you have no insurance, and expect a 30% discount. They might come back with easy financing, but hold your guns, you want $300 off of that $1,000 crown or root canal. I've sat in the chair twice, fully loaded with Novocaine discussing the bottom line. And I got a very good price reduction both times.

Other than that, I would sit tight. And I know, it sounds like lousy advice considering what everyone about us is pulling off.

Take care, and thank you for your post.

frakrak said...

Mark to Market Accounting should quickly balance the budget Jim, and will get rid of the "too big to fail" terminology from the hallowed halls of deceit, (where ever they may be!) :)
cheers

Anonymous said...

When everything is out in the open, all debts are under control, and all criminals are brought to justice, I think we can begin to recover as a country. Sigh.

Anonymous said...

JISM,

Can't credit card companies have your bank accounts frozen and go after your personal assets if you default on your debts to them?

SurvivalAndProsperity.com said...

Just wait until the debate over raising the federal debt ceiling is in full-swing...

Joseph Oppenheim said...

I've always worked hard, made my own way, paid all of my bills on time, paid my taxes, etc. Your standard law-abiding citizen.<<<<<

It takes more than that, it takes common sense. The housing boom was a great opportunity to make a lot of money, except for those who got GREEDY. Oh yeah, greed is actually a moral failure.

Same with now, we have been in a bull market for stocks for two years. Just picking up some great companies which pay and raise dividends each year. Only fools haven't benefited from a great opportunity to pick up great stocks at cheap prices. We are a capitalistic country...DUH! Plus, there are moral companies which produce moral products and services. Again, a moral opportunity, as long as one doesn't get greedy.

Actually, during this whole financial mess, so to speak, my net worth has gone up. No speculating, no crazy schemes, just basics, saving, investing and not getting GREEDY.
Working hard? Nah. Exited the workplace at age 48. Worked hard at something I liked but not pure fun, to get to where I didn't have to. It's called common sense.

Anonymous said...

Everyone should team up and not pay their mortgage, not pay their credit card payments and not pay their income or property taxes. That would put the government and the banks out of business instantly and totally at the our mercy. And make them stop and listen and reform. It's easy, the people have the power. Always did and always will. They've just brainwashed into thinking they don't have any power. We could kick all the criminals out of the financial sector and all of the parasites out of government and be cleaned out and ready to roll in one year. I'd vote for Donald Trump in a heartbeat, just like I voted for Perot. What could be better than to have a businessman running things instead of a lawyer or career politician? Perot or Trump would get the country's fiscal house in order. I'd vote for anyone that would get the Dems and Reps out of the White House and get a new 3rd party started.

Anonymous said...

anon 7::56,
your suggestion is sort of revolution based,,, most people could never understand or even consider it becuz they're brainwashed,,, but you are on the right path,,, extreme action is needed based on where we are headed,,, government is out worst enemy and is threatening our individual freedom and liberty more now than ever in history of usa,,, people are foolish enough to listen to government rhetoric from our politicians, etc,,, all you have to do is look at their actions to understand what is happening

more and more debt
more and more wars
more and more laws
government getting bigger and bigger
government destroying the value of the usd
government not confronting the true issues needed to turn things around

our forefathers warned us of this and we have failed to recognize what is happening and stand up and stop it

jefferson would vomit blood and his brain would explode if he saw what was happening today,,, and he would incite revolution as a last ditch effort for us to restore and maintain our individual liberties

debase the currency = destroy the country

this is a crying shame

Anonymous said...

"We are a capitalistic country"

I'll agree that we used to be.

What do you like best now, Government Motors? The military industrial complex? Or maybe you are part of the group that gets the list of the stocks the FED or that Wall Street will pump next.

Does anyone remember the phrase "better dead than red"? I was surprised to learn that many of the younger generations do not know this phrase, and they do not believe in the concept either. The good old fashioned hard work partriotic ethic we had back in WWII may not be there this time around. We would need that to get out of this mess. Does anyone really think a student with 300k in student loans is going to want to save this country?

frakrak said...

Max Kieser on Russian TV, is an entertaining 30 minute take on Global banking fraud, he does advocate insurrection.
Don't think that is such a wise move:)
I can't see too much difference with what the U.S. (capitalists, and notice the I haven't used the term Americans) have done in the past 50 or 60 years, to what the Roman Empire did 2100 years ago to 1650 years ago. Its almost a direct copy of history.
So there really isn't anything new under the sun so to speak, with all things current.
I do believe that anarchy is a dangerous and uncontrollable force, and you may find it counterproductive.
I am thinking that Egyptian people just traded a dysfunctional democracy in for a brand new military dictatorship!
So I would give Caesar what is Caesar's for the time being, and hope that Ben graduated with honors from magic school:)

Anonymous said...

It's time for the Magna Carta again. Except this time instead of freedom from the king's tyranny, it's freedom from the US government's tyranny.

A small government only there to maintain the infrastructure and stay out of our personal and business lives.

Cut government down to 1/5 of its size. No income tax. Drop Medicare, Social Security, unemployment, etc. and let everybody fend for themselves. No entitlements period.

Its the only way out of this diseased entitlement system of weak individuals who have become dependent on the government.

You work and make your own way or you go by the wayside. Only the tough survive as in nature.

Mad As H*** said...

The government needs to take a lesson from my brother......

49 years old and retired.
He bought a house in Florida when prices were still reasonable. The house had a separate bedroom and bathroom suite that he rented to a tenant. He took that income every month and paid toward his mortgage and paid the house off in 11 years. Then he converted his garage into another suite that he rents. So now he has $1100 per month cash income.
He owns 3 cars the most expensive is a 1989 GMC he bought for $1500. He rotates the cars driving one while working on the others. He has had 2 of the 3 cars for 25+ years. He estimates he spends $300 to $400 per year maintaining them--less than most people's monthly car payment.
No house payment.
No car payments.
No home insurance (he's told the waterfront lot it's on is worth more if the house is bulldozed away.)
His only monthly expenses are food, car insurance, electric, and $22 for a phone.
No cell phone
No internet
No cable TV

Most people would say they couldn't live like that but on the other hand my brother says he likes not having to work to support all of the things most of us have come to accept as necessities.

As far as the economic downturn--- it has actually helped my brother get tenants.

Joseph Oppenheim said...

"We are a capitalistic country"

I'll agree that we used to be.<<<<<

Sorry, our private economy is the largest the planet has ever known. Try learning about economics.

Me, I like Coke, Pepsi, Kimberly-Clark, Procter and Gamble, 3M and similar great companies which pay dividends and raise them each year. Don't really care what the stock prices do, just collect the income and pick up some more if they dip in price - plus no taxes on unrealized cap gains, plus lower cap gain taxes than working earned income and favorable taxes on dividends - so why work? The government loves it when I am a private investor.

Joseph Oppenheim said...

Mad As H*** said...The government needs to take a lesson from my brother......

49 years old and retired. <<<<<<

Yes, he has the right idea. Plus, it IS the GOVERNMENT which gives him the opportunity to do that.

YOU, "Mad as H***," why? Just do like your brother. Isn't he happy?

Anonymous said...
This comment has been removed by a blog administrator.
Anonymous said...

RIGHT,,, NOT ONLY DO THE AMERICAN PEOPLE ELECT CRIMINALS AND INCOMPETENTS TO GOVERNMENT AND ALLOW THEM TO STAY IN OFFICE AFTER IT IS CLEAR THEY HAVE OTHER OR SELF-SERVING AGENDAS AND ARE CONTRIBUTING TO THE DEMISE OF OUR COUNTRY. THEY ALSO INVEST IN (SUPPORT) COMPANIES THAT ARE POISONING THEM WITH THEIR "FOOD PRODUCTS", SENDING JOBS OVERSEAS, DESTROYING OUR FORESTS AND WATERWAYS, TOXIFYING OUR BODIES AND OUR PLANET.

WE THE PEOPLE ARE RESPONSIBLE FOR ALL OF THE WOES THAT BEFALL US BY NOT BEING EDUCATED, VIGILANT AND WILLING TO FIGHT AND STOP THE SUPPRESSION.

WHAT DO WE NEED TO HAVE HAPPEN TO LEARN... EXTINCTION?

IT IS A SHORT SIGHTED PERSON THAT INVESTS IN A MANNER TO JUST MAKE A RETURN FOR THEIR OWN PERSONAL GAIN (ALTHO IT ISN'T REALLY FOR THEIR GAIN OR SURVIVAL) AND DOESN'T LOOK AT THE BIG PICTURE OF WHAT THEY ARE CONTRIBUTING TO.

WHEN WE TAKE AN ACTIVE ROLE IN OUR GOVERNMENT, REFORM THE CORRUPT BANKING INDUSTRY, REFORM CORRUPT CORPORATIONS, STOP THE POISONING AND DESTRUCTION OF OUR PLANET'S NATURAL RESOURCES, STOP THE FOOD COMPANIES FROM SELLING SYNTHETIC AND POISON "FOOD", ETC. ETC. WE MAY HAVE A CHOICE.

BERNANKE, SUMMERS, RUBIN, GEITHNER, OBAMA, BIDEN, GREENSPAN, BLANKFEIN, AND ALL THE REST OF THESE IGNORAMUSES AND CRIMINALS SHOULD ALL BE IN JAIL.

Anonymous said...

Mad As Hell,
Your brother is pretty smart. Could we talk him into running for president?

One point: he still does have a mortgage. It's eternal. It's known as property tax. He doesn't really own his house because the government will take it from him if he doesn't give them the property tax money (that they don't deserve). And they can raise it as much as they want (and they will). In 10 years it will probably be 3X what it is now. Government bureaucrat lackey: "Don't like it? Not gonna pay? Ok, we'll just have to kick you out and put your house on the auction block. Have a nice day."

The BIG lie is that there is freedom and ownership and an unfettered path to pursue prosperity in this country. Maybe when the country started but not now under this creeping Socialism soon to turn into Fascism.

A closet anarchist

frakrak said...

Not being a U.S. citizen I find it hard to understand why a lot of the anger is directed at the poor, or public servants when the biggest welfare is doled out to your corporations.
You don't have to threaten not to pay your bills, get the biggest welfare recipients in your country to start paying what they paid around 1980, problem fixed!
Are you scared of these corporations going off shore? They have already done that, you are still the biggest market in the world for them!
Here's a simple video made by your average tax payer .....
http://www.insidejob.com/video/taxes-the-debt-get-the-facts

Joseph Oppenheim said...

Not being a U.S. citizen I find it hard to understand why a lot of the anger is directed at the poor, or public servants when the biggest welfare is doled out to your corporations.<<<<

I am one US citizen who is disgusted, but I do understand....it's called GREED. I was lucky, really just luck, to have been born of parents, and their parents who made sure I had at least the opportunities, like where I grew up, property taxes on our home when it was worth about $48K was $3.5K per year, probably a similar ratio when I was in school, a modest middle class neighborhood, the only school district in NY state with all its public schools as either blue ribbon or distinguished schools status.

Looking back, in my early 20's, the year was 1968, after the presidential election, when I saw the direction this nation's majority had decided to take us, at a crossroads in our recent history, after the presidential election, if I had had the guts, I probably should have headed for Canada, a more moral country. But, I do still have hope, as America does have a history of at the worst of times, rescuing itself and others, and there are still many good people, even some politicians.

Mad As H*** said...

Regarding the comment about my brother still having to pay property taxes.....

True, but in Florida they passed a law that property taxes for full-time residents can increase very little. So his property taxes are very manageable.

Jim in San Marcos said...

Hi Frakrak

I don't see it that way.

The call to tax big corporations is nothing more than a political ploy to get votes.

Corporations pay no taxes, they only collect taxes and pay them to the government. You and I pay those taxes when we buy their products.

There comes a point to where a corporation can't compete and survive because of all of the government costs of doing business. From there they move off shore.

All that taxes do with corporations, is determine the final selling price of their product. If it isn't competitive, they're out of business.

There is something that could work along similar lines, and that would be a Value Added Tax (VAT). This would be a consumption tax. I like this concept, because it taxes those that have a way to avoid paying taxes. At the same time corporations could compete on a more level field in the world market.

Anonymous said...

JISM I agree.

Very good point about corps not paying taxes. We pay them when we buy their products and services.

Income tax is a cancer. You should never tax production. It is much more logical to tax consumption. Income tax has been slowly killing our country since its incept.

Government is our worst enemy. It needs to be neutralized and put in its proper place.

Those countries that are favorable to business and have the least penalizing tax laws will be the overseas locations where US companies relocate to. What an opportunity for a smart leader to take advantage of in order to build up his country's economy. Are you listening Panama? Costa Rica? Jamaica? Argentina? or wherever?

frakrak said...

Jim this is probably a debate your citizens need to have, reform instead of revolution Your consumption tax has merit, what if gets put to the American people? Perhaps they can also consider other alternatives? One could be a financial transaction tax of 1% levied on all forms of financial transactions! This apparently will capture more tax than a flat rate of 12.5% consumption tax! Then everyone pays the same amount and of course ALL your citizens pay. Or perhaps a flat rate of 5% income tax with no loop holes, no tax write downs, and a 5% consumption tax, with a .5% financial transaction tax, wow the possibilities are endless. There is something to be said for an eclectic approach to reform, gets rid of the dualistic ideologues, and for all intents and purposes the government screws everyone without favour:)

Jim in San Marcos said...

Hi Frakrak

Getting rid of the loop holes would be a start. I read today that 45% of all households pay no Federal tax.

The trouble is, actions like that won't get you re elected.

How about if we total up the cost of government and divided it by the number of people between 18 and 65 and send them a bill? The Romans kind of did it that way. You worked for them one month building roads or paid someone to work in your place.

The real problem is Congress, they can't even agree on how to spend what they haven't got.

frakrak said...

Jim it would seem there is no easy answer ...
Would love to see the U.S. come out on top, a little stronger, and a little more like you once were ..
cheers