It is easier to exclude harmful passions than to rule them,
and to deny them admittance than to control them after they have been admitted.
Seneca
Obama is 4 for 4: FY12 $1.089T Deficit
The president has put forward a balanced proposal to further strengthen the economy and reduce the country’s future deficits,” [Treasury Secretary Geithner] said. “It is time for Congress to act on these necessary steps that will help create sustainable economic growth for years to come.”
“The path forward on deficit reduction is clear,” said [Acting Budget Director] Zients. “Congress needs to work with the administration to enact balanced deficit reduction that includes further spending cuts and additional revenue from asking the wealthiest to contribute their fair share.”
Obama says he has a $4 trillion deficit-reduction plan but critics have pointed out that the savings includes $1 trillion from last year’s debt-ceiling deal, war savings from having pulled out of Iraq and reduced interest payments.While political hacks continue to distort out of context a GOP Presidential debate point about a ratio of spending cuts to new tax dollars of up to 10 to 1 for a deal. It would be like asking a religious woman whether she would be willing to sell her virtue starting from $1 to $1M. In the real wold, have spendthrift Democrats ever offered a 10-1 deal? Of course not! What every candidate there remembered was how many times Congressional Dems promised Reagan and especially GHW Bush spending cuts that never happened in exchange for tax hikes (particularly at the upper end)--and then Bush's broken "no-new-taxes" pledge was a prominent issue during the 1992 campaign--and what was one of the first things Clinton and the Democratic-controlled Congress do? Pass an additional tax hike--the top rate went from Bush's initial 28% to 39.6% Granted, Defense spending went down--but after the end of the Cold War. But note that in the smaller deficit over FY11, $147B came from taxes and only $61B from spending. Keep in mind you get at least some revenues just from payroll taxes from any uptick in employment-and the Fed which is effectively monetizing federal debt, has been rebating interest on the debt it holds back to the Treasury.
Keep in mind Obama's $4T "cut" is over 10 years, and spending starts at over $3.5T a year. Treating Iraq and Afghanistan costs as ongoing federal programs is totally disingenuous. If and when the Fed acts to defend against inflation, e.g., raises near-zero rates or sells bonds, interest payments on a $16T debt will skyrocket. Accounting gimmicks like reductions on baked-in budget increases are similarly unsustainable. Obama fought the debt ceiling cuts tooth and nail and still hasn't identified non-Defense cuts he'll accept. In less than 4 years Obama who promised to halve the Bush deficit has already doubled Bush's net debt over 8 years; his promises have zero credibility.
It's bad enough that Democrats' idea of "shared sacrifice" is prostituted to mean stealing from the other guy's pocket, not the common sense meaning of proportional sacrifice. Obama continues to push this totally absurd notion of middle class victimization. Notice the progressive left, known for vacuous mottoes like "equal pay for equal work" aren't smart enough to realize that they're actually inconsistently voicing a key argument against the morally bankrupt progressive income tax system. I've been arguing the tax system is too progressive, with too few Americans vested in smaller, more efficient, effective government.
The Nobel Prize winning Austrian economist Frederich Hayek (whose work is, of course, unknown to Obama--I think he's waiting for the Hayek for Dummies book to come out) has a nice retrospective of the proportional/flat/fair vs. progressive tax system here.
Obama's Ongoing Crony Capitalism and War on Consumers
One can sometimes look at business as a type of chess game. An anecdote from personal experience: in my IT career : I taught myself APL, a mathematically-noted interpretive computer language that IBM had introduced as a rapid prototyping tool: I could write in one cryptic line what it would take dozens or more lines in a compiled language like COBOL. APL operates in memory-constrained workspaces. In the earlier days, programmers had to write very efficient programs to run in tiny workspaces. Quite often programmers reused variables and gave short shift to comments to keep program sizes small. I remember at one time having to count the number of repeating X's to figure out what variable I was dealing with.
In time, more feasible memory led to bigger workspaces; my APL expertise led to Houston APL timesharing jobs which included fixing old production code: we made money on computer time running our custom APL applications. If our undocumented legacy applications broke, we lost revenue. This explains in part my research obsession with documentation and human factors/ergonomics.
Many people forget it wasn't until cheaper RAM and Windows 3 that Microsoft's applications rook off. the top applications running on the DOS platform were non-Microsoft titles like WordPerfect, Lotus 1-2-3 and dBase. Microsoft set its sight on building market share for its office applications on the new, popular Windows platform. The rest is history.
For a particular market generation, dominance does not imply success at the next, consider, for instance, what has happened to names like AOL, Nokia and Blackberry. Consider how fracking has transformed domestic energy generation, with post-Fukushima nuclear and coal business models decimated by abundant, cheap natural gas. Advances in production technology can substitute for commodity labor or open value-added opportunities, and we've seen failures in the old communist bloc's dysfunctional centrally planned economies, e.g., steel being produced without customers.
I don't know the motive--is this a response to China bashing by both Presidential campaigns--which I've repeatedly criticized as irresponsible. (The Chinese pegging their currency to the Fed's easy money policy-- rhey're doing so at the expense of their own living standards. not to mention production imported resources (including energy).) AFB has a report out showing the yuan is now trading at a high against the dollar. Romney should realize that currency fluctuations can't overcome failing business models--before casting stones at other countries, Romney should focus on restoring our economic freedom slide under Obama, not competing for the dubious title of Mercantilist-in-Chief
Any faithful reader of this blog knows I'm against protectionist anti-consumer tariff hikes: in particular, the Obama Administration, on behalf of its crony Big Green Energy interests is igniting a counterproductive trade war with China over solar panels with tariffs. Mark Perry of Carpe Diem does one of his trademark markups of the Times' story here, and one of my favorite economists Don Boudreaux has additional comments here. (He reprises some libertarian arguments over economic inefficiencies under slavery: for example, if labor is "free", why invest in labor-saving production technology?)
Musical Interlude: My Favorite Groups
The Four Tops, "Sugar Pie, Honey Bunch"
