hehe...new taxes for everyone....

[Rochey]

The prototypical family earns $22k a year but spends $38k a year, the credit card debt is around $140k...
JR   

This needs to be on billboards across the country.
I don't think people understand how bad this is.

I wouldn't blame one particular president etc... but I want to know how people plan to reduce it.
Just thinking about the interest payments terrifies me.

(I lean a little more to the left in terms of my politics)

 

[JohnRoberts]

Thanks for clearing that up. That's an expression that hasn't made it to these shores yet (as far as I know!)

For some more of the "pork" story, many state executives (governors) have "line item veto" power, which allows them to veto just some individual spending earmark while still approving the overall bill that this pork was attached to.

Many US presidents  have asked for this and Pres Reagan actually got it back in the '90s. Pres Clinton used the line item veto on his federal budget (anybody remember those?) 82 times before the supreme court ruled it unconstitutional (as an unapproved amendment to the overall bill. I don't agree with that ruling completely since the pork is not vetted by the entire congress that approved the bill, but that is another story).

I would love to see line item veto's brought back and an amendment to the constitution to limit spending and borrowing to reasonable fixed fraction of GDP. This is more than a little squishy because government spending is a pure cash flow analysis, with zero consideration for future value of what that money was spent on. Arguably money spent on building a highway, or educating a kid has persistent future value, while so much entitlement spending is consumed and has zero future value. 

A second problem with firm borrowing limits is that historically many nations have borrowed heavily to fund wars. We are no exception there. The problem with borrowing to fund our war on terror, is that it is already a decade + old and seems open ended with no end in sight so that should be brought onto the regular budget for sustainable funding.

As long as I am making wishes, how about passing a federal budget, any budget?

JR

PS it looks like the pork in the Sandy relief bill is getting some news exposure. We'll see how that plays out. The pork is so indefensible that the congress refuses to even name who attached the pork. So I don't expect too many in congress standing up to publicly defend it. Privately it is the coin of that realm and the quid pro quo that greases getting many bills passed. The actual members rarely get to read all the pork attached to bills at the last minute.   

 

[pucho812]

John correct me if I am wrong but  doesn't the constitution state that a budget must be pass. 

 

[JohnRoberts]

John correct me if I am wrong but  doesn't the constitution state that a budget must be pass.

The constitution mandates that all spending bills must originate in the House. Additional rules about the federal budget process are bills themselves that were passed by congress. The modern budget process is based on a bill passed in 1921, with some more rules passed in a bill in 1974 defining specific time table for when the original budget proposal from the president is due.

Passing the budgets is another matter as the congress gets a say, and often instead of a clean thoughtful budget they monkey around with continuing resolutions to essentially keep doing what they were doing and postpone agreeing on a new different formal budget.  They pass enough budget resolutions so they can continue collecting taxes and spending our money.

Since the executive branch is in charge of policing the laws, it is difficult to hold the chief executives feet to the fire. The congress can withhold all funds and shut down the government but they kind of shoot themselves in the foot. The last time the budget process went so far, as shutting down the government, the public was even more unhappy with congress than now (last time it happened was by Gingrich/Dole against Clinton in the '90s. )
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Strangely the debt limit or borrowing authority is a separate bill and not linked to the budget process. The borrowing authority is usually incremented up in large round numbers so as not to have to keep messing with it. But despite being above 16T we are running out of debt authority again. Geithner has managed to postpone the exact drop dead date a few weeks, but that is probably the next big fight.  This is kind of an invented fight because nobody in their right mind would suggest that the US not pay our obligations, and the entitlement spending on an up escalator with weak tax revenues from a soft economy means this will keep going up.  I expect some extra tax revenue last year from citizens pulling income forward into 2012, that they would have normally taken in 2013 to pay the lower tax rate. A number of large companies pulled dividend payouts forward into 2012. This won't be huge, but at least in the right direction in the near term. However it means the expected revenue from the higher rates in 2013 will be missing this income that was moved into 2012.

A classic problem with tax revenue projections is expecting that the citizens will not alter their behavior, in response to changes.

JR

PS: they passed the first reduced size Sandy bill ($9B) , but NY/NJ wants a lot more, and nobody has addressed how this will be paid for. 

 

[Spiritworks]

" The bottom line is the workers are lazy idiots. If they had half an ounce of sense they would get up off their backsides and get themselves voted in to government and make sure it never happens again " .

This must be referring to the unionized minions who lounge under the umbrella of some federal, state or local governmental employer.

The fact is, there is a subset of our society whose only career goal is to get on, and remain on for  as long as possible, the dole. They spawn so as to increase their "entitlements". They blame "the man" for everything they don't have, yet rely on "the man" for everything they do have. They have abdicated any sense of responsibilty to anyone else, and will vote for whomever promises to keep the status quo. Meanwhile, they sit around all day while they wait for their Govt checks.

This is way different than the out-of-work person who needs some help until such time as they can get back on their feet.

 

[JohnRoberts]

" The bottom line is the workers are lazy idiots. If they had half an ounce of sense they would get up off their backsides and get themselves voted in to government and make sure it never happens again " .

This must be referring to the unionized minions who lounge under the umbrella of some federal, state or local governmental employer.

The fact is, there is a subset of our society whose only career goal is to get on, and remain on for  as long as possible, the dole. They spawn so as to increase their "entitlements". They blame "the man" for everything they don't have, yet rely on "the man" for everything they do have. They have abdicated any sense of responsibilty to anyone else, and will vote for whomever promises to keep the status quo. Meanwhile, they sit around all day while they wait for their Govt checks.

This is way different than the out-of-work person who needs some help until such time as they can get back on their feet.

It is not constructive to argue about motivations, but economists are well aware of how incentives affect human behavior in the margin. There is a conflict or tension between keeping an unemployed worker from starving between jobs, and making them so comfortable they pass up  jobs that they would otherwise take without the long term monetary support. 

This is not some conspiracy to drive workers into lower paying jobs. If anything the economy just before the 2007/8 collapse was in a bubble of sorts so pay and economic conditions for just about everybody back then was unrealistically high.

To be completely fair, it seems a lot of this government support should be a loan that the recipient could owe and ultimately pay back, not an outright gift. Help all who really need help, but do not provide disincentives to work in real jobs. The comparison between a lower paying job and unemployment income would be a lot different if that unemployment had to be paid back (even if just a fraction of it). I could also support funding job specific training to help match workers to open jobs. the good old days of getting paid well for just showing up are long gone. We need to create more value from our work effort than the new machines in automated factories if we expect to get paid by private industry.

Arguing about the fairness of this new reality is not productive either. Again this is not some evil conspiracy against unskilled workers by better educated wealthy. The higher educated wealthy are just better at adapting to changing economic conditions so they prosper compared to other segments of the population who aren't good with change.

We don't need income redistribution, but better targeted education and less unintentional economic disincentives. I don't think politicians have bad intentions but unemployment for life may not really be the best way to help most workers.   

JR

PS: Speaking of taxes and fairness a little discussed consequence of getting an upside-down home loan forgiven via a short sale or the like, is that this debt forgiveness looks like income or revenue to the IRS for tax purposes. Another gift is the government forgiving this tax liability too.  Arguably if we did expect and ask for these people to pay back all the government largess they received, we would probably only see a tiny fraction of it, but it might change how all this is viewed and perhaps reduce the entitlement (I'm owed something) mentality. We are only "entitled" to the opportunity to work, not 3 hots and a cot, for doing nothing in return.  I don't care if many of these people die owing their government money. we need to get the economic incentives properly aligned so government support is not over-used and can be sustained.  The current trajectory does not look very robust. Our individual share of $16T/300M is already more than $50k per person and climbing, why not be a little more specific about assigning some of the debt to the actual recipients of the benefit. 

PPS: I doubt our founders ever anticipated us having so much access to easy debt. Borrowing is typically self-limited by more disciplined lenders, but the current debt markets are significantly distorted by central bank manipulations here and around the world.