A Rant & Stockman On the Bush Tax Cuts

A rant from a business owner

The topic under discussion in this old clip from MSNBC is the extention of the Bush tax cuts and the additional cuts Obama got. BTW, the Bush tax cuts are set to expire at the end of 2012. This is a massive tax increase of several trillion dollars. 

Sorry abut the commercial. 

Are We Doomed?

I was reading Charles Hugh Smith's website and these two paragraphs jumped out at me:

If all Republicans suddenly agreed with Paul Krugman and Robert Reich, would Peak Everything be resolved? Would the U.S.A.'s dependence on exponentially rising debt and imported oceans of oil magically go away? Would the consequences of The End of Work vanish? Would the consequences of 72 million (or 79 million counting legal immigrants) Baby Boomers retiring, fully 25% of the entire population, magically disappear?

Now repeat the question for the flip-side of the coin: if Democrats suddenly saw the light about free markets, low taxes, etc., and became die-hard Republicans, would any of these structural problems suddenly go away? No. 

Republican, Democratic and Tea Party Mice? In other words our problems are systemic. The Republican and the Democratic templates are distorting reality—like the Mary Poppins video I posted yesterday. If you were not familiar with the movie, and saw the fake trailer you would be convinced that Mary Poppins was a horror movie.

All templates distort reality—even my libertarian one. Smith called these templates "ideological boxes" in his blog. We are blinded by our assumptions. This is why the Congress is deadlocked. 

I see it in the comments on Facebook when I announce a new blog entry. For example, I was unable to convince a high school friend that a bond redeemed from the Social Security administration, since it reduces the total debt, would allow the government to borrow more money—a pretty obscure topic, I know. He is one of the most intelligent people I know, he got an 800 on the old scale on his math SAT. My 730 was quite respectable, but not in his league. (We will not talk about my written score, there is a reason I have a friend read and edit my longer blog posts. I am Dyslexic.) My inability to communicate with my friend is probably due to the ideological box he is in—that rascal. But thinking about Smith's website post I have to wonder about my own ideological boxes in which I live. What is my friend saying to which I am completely blind? If I am blind, I would not know it would I?

The answer to the question I asked in the title is no—we are not doomed. But it is very clear to me that the difficulty in getting cheap energy, the aging population and the false promises made to us boomers about our retirement, and the cost of our empire will give us an extended period of troubles. This is actually an optimistic view. I expect we will have a series of modest reforms that will kick the can down the road. But there is a cliff down the road. My guess is that we will gradually slow down as we approach the cliff. (Let me add here that I wrote this post on Saturday night before Sunday's budget agreement.) But the process of slowing down will mean the end of Medicare as we know it, it will mean reductions in Social Security. It will mean we will dismantle our empire. It does not matter if these things are good or bad, we do not have the money.

As Ralph Waldo Emerson said "Solvency is maintained by means of a national debt, on the principle, 'If you will not lend me the money, how can I pay you?'" He said this in 1857. 

But are we blinded by our ideological boxes to such an extent that we will go off the cliff? I do not think so, but then again I am an optimist.

Scary Mary

I guess it depends on the perspective. 

This relates to a theme I have been developing. The way we look at the world, which I have been calling templates, can change a children's movie like Mary Poppins into a totally different movie. Each of these scenes are from the movie, but with the eye of someone with a template, the movie changes. In the same way we need to be sure we do not do the same in our personal lifes. How should we look at the world? What things should we think about? 

Here is the advice of the Apostle Paul in Philippians 4:

⁶ Do not be anxious about anything, but in every situation, by prayer and petition, with thanksgiving, present your requests to God. ⁷ And the peace of God, which transcends all understanding, will guard your hearts and your minds in Christ Jesus.

 ⁸ Finally, brothers and sisters, whatever is true, whatever is noble, whatever is right, whatever is pure, whatever is lovely, whatever is admirable—if anything is excellent or praiseworthy—think about such things. ⁹ Whatever you have learned or received or heard from me, or seen in me—put it into practice. And the God of peace will be with you.

Is this your template? 

You Can Not Lead From Behind

Governor Christie on the debt crisis. 

We need a large tax increase, and an even larger spending cut. 

To Save Life As We Know it

It almost goes without saying, Nancy Pelosi said something rather odd:

“What we’re trying to do is save the world from the Republican budget….we’re trying to save life on this planet as we know it today.”

While I have said that the Republicans have good and valid reasons to be reluctant to raise taxes, raising taxes is necessary. Even if the Democrats were given all the tax increases they might want, lets say 4 trillion-4 times what they have been asking for, that would still leave 9 trillion in deficits over the next 10 years. So with a large tax increase no one is talking about we would still need an across the board cut of 33% to balance the budget. Social Security checks would be 33% less; Military payroll would be 33% less; Medicare would be 33% less. I do not think that many in government will admit, even to themselves, how bad the situation really is.