Debt Ceiling Breached

Now they will start stealing from the Government Employees G Fund to finance the government for the next few months which by law is illegal.

See story at http://thehill.com/blogs/on-the-money/economy/275051-government-to-reach-164-trillion-borrowing-cap

I thought this was a Democratic Republic

Can someone please tell me how two people can determine the fate of nearly 320 million Americans.  All day long only two people Biden and McConnell were putting a deal together to resolve the fiscal cliff.  Meanwhile the other 99% of  Congress was not involved in the discussions.  This is simply amazing.

Will the Ratings Agencies have any Balls

There are no spending cuts in the so called Fiscal Cliff Deal which by the way I said would be done at the last minute as usual.  Meanwhile the ratings agencies said they would downgrade the US if Spending Cuts weren't addressed and here we are 18 months later and nothing has been done.  So they should immediately downgrade the US on January 2nd but likely won't. 

Just STFU

I and likely many others are sick and tired of the rhetoric coming out of DC.  Saturday was a rather quite day but Sunday has seen several members of Congress and the President blame both sides that no deal has been made.  However it's always possible a last minute kick the can down the road measure will pass at 1159 pm EDT on December 31st.  Since everything these days is tied to the stock market if it drops 10% on Monday that will pretty much seal a last minute deal in my opinion. 

Just Plain Stupid

Friday Night Obama rescinded the pay freeze for government workers which will take place in late March.  Although most workers will only get a 0.5% raise the timing of this announcement was terrible based on the fiscal cliff, an unresolved budget for 2013 and the debt ceiling being breached soon. 

Plan B...Plan C...Plan D...Plan E?

You really have to hand it to the idiots in Washington.  However I still expect a last minute deal by Midnight on January 1st to kick the can down the road for another 3 months.  Then in March the whole fiasco will begun once again except this time they will have to deal with the debt ceiling and try to figure out an actual budget for 2013.  Keep in mind folks there hasn't been a budget agreement since 2009 so it's highly unlikely the clowns in DC will get one figured out for 2013.  Maybe they should start working on 2014 instead.      

Will the Ratings Agencies Pull the Trigger?

If there is a last minute Fiscal Cliff deal by January 1st I expect there will be no spending cuts at all.  Thus Fitch, Moody's and the other rating agencies should immediately downgrade the US on January 2nd.  The ratings agencies have given the US over a year to get it's deficit spending under control however the government has done nothing to cut spending and is on pace to have another year of 1 Trillion deficits. 

Last Minute Deals

Congress is notorious for last minute deals and the current fiscal cliff will be no different.  However last minute deals are usually not good since everybody panics at the last minute to get something done without thinking about the consequences.  This is pretty much how we got into this mess in the first place. 

Independence

As we near the Christmas Holiday all of us should read why this country became a nation in the first place.  I imagine many have never read the Declaration of Independence so here it is.

When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature's God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.--That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, --That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.--Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.

He has refused his Assent to Laws, the most wholesome and necessary for the public good.
He has forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them.
He has refused to pass other Laws for the accommodation of large districts of people, unless those people would relinquish the right of Representation in the Legislature, a right inestimable to them and formidable to tyrants only.
He has called together legislative bodies at places unusual, uncomfortable, and distant from the depository of their public Records, for the sole purpose of fatiguing them into compliance with his measures.
He has dissolved Representative Houses repeatedly, for opposing with manly firmness his invasions on the rights of the people.
He has refused for a long time, after such dissolutions, to cause others to be elected; whereby the Legislative powers, incapable of Annihilation, have returned to the People at large for their exercise; the State remaining in the mean time exposed to all the dangers of invasion from without, and convulsions within.
He has endeavoured to prevent the population of these States; for that purpose obstructing the Laws for Naturalization of Foreigners; refusing to pass others to encourage their migrations hither, and raising the conditions of new Appropriations of Lands.
He has obstructed the Administration of Justice, by refusing his Assent to Laws for establishing Judiciary powers.
He has made Judges dependent on his Will alone, for the tenure of their offices, and the amount and payment of their salaries.
He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.
He has kept among us, in times of peace, Standing Armies without the Consent of our legislatures.
He has affected to render the Military independent of and superior to the Civil power.
He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation:
For Quartering large bodies of armed troops among us:
For protecting them, by a mock Trial, from punishment for any Murders which they should commit on the Inhabitants of these States:
For cutting off our Trade with all parts of the world:
For imposing Taxes on us without our Consent:
For depriving us in many cases, of the benefits of Trial by Jury:
For transporting us beyond Seas to be tried for pretended offences
For abolishing the free System of English Laws in a neighbouring Province, establishing therein an Arbitrary government, and enlarging its Boundaries so as to render it at once an example and fit instrument for introducing the same absolute rule into these Colonies:
For taking away our Charters, abolishing our most valuable Laws, and altering fundamentally the Forms of our Governments:
For suspending our own Legislatures, and declaring themselves invested with power to legislate for us in all cases whatsoever.
He has abdicated Government here, by declaring us out of his Protection and waging War against us.
He has plundered our seas, ravaged our Coasts, burnt our towns, and destroyed the lives of our people.
He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation and tyranny, already begun with circumstances of Cruelty & perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.
He has constrained our fellow Citizens taken Captive on the high Seas to bear Arms against their Country, to become the executioners of their friends and Brethren, or to fall themselves by their Hands.
He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless Indian Savages, whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions.

In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people.
Nor have We been wanting in attentions to our Brittish brethren. We have warned them from time to time of attempts by their legislature to extend an unwarrantable jurisdiction over us. We have reminded them of the circumstances of our emigration and settlement here. We have appealed to their native justice and magnanimity, and we have conjured them by the ties of our common kindred to disavow these usurpations, which, would inevitably interrupt our connections and correspondence. They too have been deaf to the voice of justice and of consanguinity. We must, therefore, acquiesce in the necessity, which denounces our Separation, and hold them, as we hold the rest of mankind, Enemies in War, in Peace Friends.
We, therefore, the Representatives of the united States of America, in General Congress, Assembled, appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the Name, and by Authority of the good People of these Colonies, solemnly publish and declare, That these United Colonies are, and of Right ought to be Free and Independent States; that they are Absolved from all Allegiance to the British Crown, and that all political connection between them and the State of Great Britain, is and ought to be totally dissolved; and that as Free and Independent States, they have full Power to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which Independent States may of right do. And for the support of this Declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor.

Will Raising Taxes Help Much in 2013

The data below is from the CBO website and are estimates for 2013.  Keep in mind this is a baseline scenario and I believe assumes the Bush Tax Cuts are not extended for anyone.  If CBO's estimates are close to reality the 2013 Deficit will still be around 900 Billion Dollars.  Thus to make any headway on the deficit government needs to cut spending. 

Thank You President Obama

Although I'm not the biggest fan of President Obama it was just announced that Federal Employees will get Monday off (Christmas Eve).  Since Feds haven't had a pay raise in 3 years, and likely won't get one in 2014 as well, it was nice of the President to give all of us at least one extra day off (except for those who are emergency employees like me but we do get compensated for having to work).

Federal Receipts vs Federal Spending

The chart below shows yearly Federal Receipts and Federal Spending from 1977 through 2012.  Based on data from 1977-2011 the Average Annual Growth of Federal Receipts has been 5.9% while the Average Growth of Federal Spending has been 6.7%.  If we apply these averages out in time through 2025 you can see there will continue to be a huge difference between Federal Receipts and Federal Spending as the gap will continue to grow.  In fact by the end of 2023 Federal Deficits will be nearing 2 Trillion Dollars a year if the current long term averages for Federal Receipts and Federal Spending continue over the next 10 years.  To balance this out you have to Cut Federal Spending and Raise Taxes as there is no other way to do it.  Otherwise at some point the whole system will eventually collapse much like we have seen in Greece.

Alternative Minimum Tax

The idiots in Congress better get the AMT fixed or a bunch of Americans are going to get screwed big time for taxes in 2012 and 2013.  This was talked about by Bruce Krasting back in November.  I encourage you to closely read the article at http://brucekrasting.com/irs-to-back-value-heinous-amt-to-2012/

Federal Government Spending by Department

It doesn't take a rocket scientist to figure out why the Government is broke.  Here are spending changes by each department from 2000 through 2011 in millions of dollars.  Note I used 2001 for the Department of Commerce since 2000 would have included money to do the census which would have skewed the results substantially to the downside.  Also the Small Business Administration is from 2002 since both 2000 and 2001 had negative outflows.  Congratulations to GSA for having the largest % increase in spending since 2000.

Let's Screw Federal Employees even More

The Republicans want Federal Employees to contribute 5% more towards their retirement.  Let's see we haven't seen a raise in 3 years which may turn into 4 years before all is said and done.  Meanwhile the cost of living continues to rise each year as well and yet they want us to pay more towards retirement.     

See story at http://www.fedsmith.com/2012/12/20/house-bill-would-increase-retirement-contributions-by-5/

As Rome Burns the Emperors Fiddle

You would think the American public would be tired of the games played in Washington.  As Emperors Obama and Boehner fiddle around with the so called Fiscal Cliff, so far they can't seem to come to a compromise. As a result the rest of us are going to suffer with massive tax hikes in 2013.  Now it's still possible these two will come to their senses and stop playing their fiddles yielding a compromise by 12/29 but it doesn't appear likely at this point.  

Once again "3" Easy Steps to Balance the Budget

According to the Brookings Tax Policy center in 2011 the Top 20% Wage Group paid 76% of all Individual Income Tax.  In 2011 the Government collected 1.1 Trillion in Individual Income Tax so 836 Billion of that number came from the Top 20% Wage Group.

Let's say we raise taxes on the Top 20% Wage Group by 4% in 2013.  Based on 2011 numbers that would increase Government Revenue by roughly 50 Billion.

As I mentioned in a previous post the CBO Projects Government Spending in 2013 at 3.5 Trillion with a forecast Deficit of 640 Billion (of course they are way off on this but we will still use it as a baseline).  Now if we reduce Government Spending by 10% that leaves a savings of 350 Billion.  Meanwhile if we add in the extra 50 Billion from Taxing the Top 20% Wage Group we have now decreased the Deficit by 400 Billion so we still have another 240 Billion to go.  Based on Consumer Spending in 2011 which was 11 Trillion for Goods and Services, if we implement a 2% National Sales Tax, that would generate an additional 220 Billion in Government Revenue which would basically bring the forecast Deficit to near Zero and lead to a Balanced Budget based on the baseline scenario.

So there you have a balanced approach in "3" Easy Steps which allows every single American to have a part in reducing the Deficit for 2013.

1.  Decrease Government Spending by 10%
2.  Increase Taxes on the Top 20% Wage Group by 4%.
3.  Implement a National Sales Tax of 2.0%

Once again I have presented another rather easy approach Congress could implement to Balance the Budget in 2013.     

Why the Fiscal Cliff is a Big Joke

During the past 4 years the Federal Government has spent on average $100 Billion more a month than it brings in.  What is amusing too me is that even if an agreement is done Federal Revenues will likely not exceed an extra 100 Billion per year for the next 10 years.  Thus unless significant spending cuts are made  Federal Deficits will continue to grow substantially in the years ahead.   

Fitch...Moody's and S&P Wake Up!!!

Where are the US Downgrades Fitch...Moody's and S&P ?  It's obvious the US Government has no desire to save any money by making necessary spending cuts.  Thus over a year ago the ratings agencies said if nothing was accomplished in 2012 to reign in spending they would downgrade the US.  Well here we are and so far not a peep.

The end of the "2" Party System

The Republican Party will be the first to break apart which is already beginning.  The Democratic Party will eventually follow as their policies will fail leading to massive problems in the future.  When the masses wake up a new political party will emerge and likely win the next election in 2016.     

Obama's 1.6 Trillion Revenue Increase

Okay let's say we actually do increase Federal Revenue by 1.6 Trillion over a 10 year period which comes out to 160 Billion a year.  At the current time the government ran up a spending deficit of 172 Billion just in November alone.  So how in the hell is raising tax revenue by 100 Billion a year going to solve anything when the government is spending money like crazy.    

Second Worst Start to Federal Deficit Spending

Nearly 300 Billion Dollars has been added to the deficit in the first "2" months of Fiscal year 2013.  This is an astounding accomplishment by both the President and Congress who are spending tax payer money like the world is going to end on 12/21/12. 

Federal Deficits Explode

Once again it's all Bush's fault as we start the 2013 Federal Fiscal Year with nearly a $300 Billion Dollar Deficit for the 1st two months.  Thus it appears we are well on our way to another 1 Trillion Dollar Deficit year.  Bush has been out of office for 4 years now so he can no longer be blamed for the Federal Government's Overspending as it's now in Obama's court.

  

Term Limits should be Implemented

It's obviously there are major issues with Congress and the only way at least some of the issues can be fixed is for term limits to be implemented.  I would limit any senate position to two terms (8 years) and representatives to 3 terms (6 years).  Naturally term limits won't solve all of the issues but at least it would be a start.   

Food Stamp Usage

The number of people on Food Stamps continues to soar and now is nearing 48 Million people.  At the end of 2002 the number was at 19 Million so in the past 10 years the number has gone up 153%.  If this trend continues for another 10 years by 2022 the number of people on Food Stamps would be around 120 Million or roughly 30% of the projected population.  If the so called economy is improving why is Food Stamp usage soaring? 

 

Teen Employment is Shocking

I got my first job as a 16 year old teen in 1978 making $2.65 an hour busing tables in a restaurant. What is shocking to me is that teen employment (16-19 years of age) has dropped substantially after peaking in the late 1970's around 12 million.  Today the number of teens in the workforce has dropped below 6 million which is a 50% decrease since the late 1970's. 

Social Security is in Big Trouble

The chart below shows the number of US Workers in the 25-54 age group.  Notice this number steadily rose from the late 1940's through the late 1990's.  However there was  quite a drop from the early 2008 high and has been going sideways the past two years.  If another substantial drop occurs in the coming years this spells big trouble for the Social Security Trust Fund as far more money will be going out than will be coming in.

Emperor Obama

Here you go:

OBAMA PLAN CALLS FOR END OF LAWMAKER APPROVAL OF DEBT LIMIT

So the Emperor (I mean President) wants to have a blank check to spend as much money as they see fit.  

Who was against raising the Debt Ceiling in 2006?

Who made this speech back in 2006?

"The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies... That is money that we have borrowed from the Social Security trust fund, borrowed from China and Japan, borrowed from American taxpayers. This rising debt is a hidden domestic enemy, robbing our cities and States of critical investments in infrastructure like bridges, ports, and levees; robbing our families and our children of critical investments in education and health care reform; robbing our seniors of the retirement and health security they have counted on. Every dollar we pay in interest is a dollar that is not going to investment in America’s priorities."

My name is Barack Obama and I approved this speech back in 2006

Debt Ceiling will be Reached Soon

Debt to the Penny reports the Real National Debt which on November 30th stood at 16.370 Trillion (underlined in purple) which is roughly 24 Billion below the Debt Ceiling of 16.394.  However due to some accounting tricks by the Government they typically subtract out around 31 Billion (underlined in blue) to keep the reported numbers lower than they actually are.