The government is finally cutting
spending that is of such a massive magnitude that the number of aircraft carriers are being cut back in the Persian gulf, illegal aliens have to be released from jail, people will be loosing their jobs, and many other catastrophic
events will be headed our way according to our president. What is the
cause of all of this calamity? 85 billion dollars worth of
cuts that will take place this year. This is a lot of money or about
half of a percentage point of the official debt of 16 trillion--
the real debt is around 100 to 200 trillion dollars--
or about 10 percent of this year's projected budget deficit. Here are
some numbers to help put this extremely massive spending cut into
perspective. The government borrows about 4 billions dollars a day,
85 divided by 4 equals 21. So the amount of money that will be cut is
equal to about 21 days worth of new debt. The other days of the year
the government will still be adding debt at the rate of about 4
billion per day. The government borrows 35 cents of every dollar
spent, and under the sequester it will borrow 32 cents for every dollar
it spends. That is a reduction in the rate borrowing by 2 cents or 6
percent. And this says it all: from Feb. 27 to Feb. 28, you need to check out the link to
Treasury.gov to put this into perspective., the government issued about 85 billion dollars worth of debt or “In other words,
the entire apocalyptic impact of the sequester for 2013 was offset by
one day's debt issuance.".
To
sum up this 85 billion spending cut: it is extremely insignificant.
The government will never do with less money. The government will
never reduce its sphere of influence in the economy. Not under Ronald
Reagan or any president (click on the chart below). The state will continue to
expand no matter who is at the reins. It is sad that our elected
leaders will not be honest with the American people by warning them
of the true economic crisis that is headed our way and warning them
to prepare for what is coming. And instead of our leaders helping to
prevent this crisis by making the necessary spending cuts and
entitlement reforms that will avert this coming economic reset, our
leaders will lie to and scare the American people when the government
has to make such a small and insignificant cut and attempt to make it
unnecessarily painful by cutting things that really matter like national defense as opposed to cutting waste like funding for studying shrimp running on tread mills. While our elected leaders will not level with
the American people about the coming economic reset, there are plenty of investors with a proven track record of predicting
economic events that will: Jim Rogers, Kyle Bass, Peter Schiff,
Stanley Druckenmiller, Marc Faber, and others. It is time for
Americans to stop getting taken advantage of and get their heads out
of the sand, pull up their pants, pick up a magnifying glass, and get
some clues.
Good job 00139x. For breaking the silence on the blog and for writing a good post.
ReplyDeleteObama is making a big fuss about the sequester so he can use it as a scapegoat for the inevitable sour downturn in the economy. He'll probably blame conservatives for the sequester when he is proposing more spending and claim "look at what happened when we cut spending".
For some better "sequester infographs", check this link out.
ReplyDeletehttp://www.yaliberty.org/posts/sequester-infographics
I made a correction. The 85 billion is about 10 % of this years projected budget deficit which is suppposed to be around 850 billion and not 1 %. Although the budget deficit will likely be higher.
ReplyDeleteOn the military spending info graphic on that link, I think the military needs to be cut a little bit and cut back on some waste like paying military people so much, --especially young single military people. One thing that you have to keep in mind when you look at the fact that America spends much more on defense than any other nation is that America exports a lot of that military spending to the world by helping to police the world and to protect our allies and national interest. America is the world's police man to some extent. For example it helps to keep vital sea lanes open such that the strait of Hormuz. And when a natural disaster happens America is there to help. The world needs a powerful American military to help keep stability. If America looses this position, then some other nation such as China will have to take this place.
Obama wants to reduce the military so that he can spend more on the welfare state. Like is the case in Europe. You cant have a large military and a large welfare state. So the military cuts are a positive for Obama.
It is interesting that we are spending more than during the Cold War (adjusted for inflation too!).
ReplyDeleteIt would be more interesting to see where this money is allocated. I would bet that more money now is going to wages and pensions than was the case in the 80's.
The main cost driver, I would think, is that we are still fighting a war. Afghanistan and Iraq have a ton of costs attributed to them. I don't think any other war in our history has been fought with such a large scale occupation. It is probably makes it more expensive and difficult because the nations we are occupying are in such a shitty economic situation from the get go. For example, when we occupied Germany they had a competent population of workers. When we kicked out the Taliban, we were left with a bunch of Afghans who couldn't take care of themselves and had no infrastructure.
All of that money spent to fight the Cold War wasn't enough as America along with Europe has been defeated by communism: America elected a communist president twice and in Europe the European Union is the new soivet union. I am joking about the money part but not about communism becoming the dominate political and eocnomic sytem in the world today.
ReplyDeleteThere is a lot of waste that could be eliminated in the military, but special interest keeps this from happening. For example, it is hard for the military to eliminate unsuccessful or wasteful programs because a congressmen won't support the elimination of it because the program employes a lot of people in his state.
The government is consuming too much of the nation's resources and is too big. It can't continue forever. Reality will take hold and cause things to go back to an equilibrium. When reality does take hold, there will be a lot of pain for people as senator Coburn points out.
Military wages are not a problem at all. Soldiers get paid crap, compared to their civil service counterparts doing mundane jobs, or contractors hired by the govt to do the same job. Cutting military wages would turn serving in the military into something like working at McDonalds, in which case we would need to contract out everything, and probably end up paying more. I make more doing my engineering job than a Col in the military who has multiple orders of magnitude more responsibility than I do.
ReplyDeleteIt's worth noting that military spending is not the big driver of our discretionary budgets. Other governmental services are. Even though we are fighting war (just one) in Afghanistan. Also note that the federal budget is larger now than it was during the early Bush years when we were going hot and heavy in Iraq, and also present to a smaller extent in Afghanistan. Dems trying to blame the size of government on wars is emotionally satisfying to the clueless but does not bear out an actual inspection of the facts.
To get Obama and the Dems to come to the table on the sequester, Reps had to eat a bigger cut in Defense, proportion-wise than the other parts of the budget under discretionary spending. Democrats mistakenly thought that Republicans would buckle when the Sequester was set to happen. We are all pleasantly surprised that Republicans actually held their ground. One small victory.
The Cold War staved off WWIII, which would have been a horrible catastrophe, even worse than the economic one we are bringing on ourselves now. It also gave freedom to the central and eastern European people. The majority of them may be voting in Socialistic governments and pushing for the big demographic/Ponzi scheme disaster that we are all looking at, but the freed people of Eastern Europe,East Germany, the Baltic nations, are in much better shape than they were, and nobody died. To say the Cold War was a waste -at the time or in hindsight- is ridiculous .
I don't think that Cold War spending was a waste. I just don't understand why military spending is still comparable to what it was.
ReplyDeleteVA benefits are a huge problem though. They are not as bad as Medicare or SS but they should not be immune from cuts. Wages in the military (by wages, I mean all forms of compensation) are definitely too high. Why else would we have a surplus of recruits? 99% of military jobs are about or even less rigorous as flipping a burger. The Colonel may be under compensated, but that is a small exception. I would rather recruit soldiers because of their patriotism than waiving money in their face.
Most military personnel, who I've known, who re-enlist are doing it for monetary reasons.
I think that when you factor in all of the benefits that people in the military have, they get compensated more than their civilian counterparts.
ReplyDeleteMy point about the Cold War was that America and the West lost the war because central economic planning and an all encompassing state is the dominate economic and political system in America and the West. The communist knew they would never defeat America militarily, but they knew that they could defeat America from within by infiltrating our culture and education systems, McCarty was later found out to be correct, and make America accept the communist doctrine. Norman Thomas and a Soviet Union dictator articulated this.
Sequester was Obama's idea as admitted by his economic advisor. The sequester was pointless as the government issued over 100 billion in debt for the month of feb. thus canceling out any savings in one month alone. The Republicans and Democrats are no different. This fact is very hard, painful to accept. It causes a lot of cognitive dissonance and hurts very badly.
I agree with the general idea of both your responses here. Certainly there is a lot of fat in the miltary, as there is in the entire federal govt. But, looking at the military in particular, if you tried to hire out to mercenary contract groups defense of our country, it would cost far more. Those guys get paid very well. We are getting a bargain in our PFCs as well as our Cols.
ReplyDeleteAnd it's certainly the case that we have heavy Socialism bearing down on us. However, the massive panic shown by the Obama administration and Democrats in general, at the thought of a small slowing of the rate of increase in govt presented by the Sequester, shows how tied they are to ever-increasing govt, and Republicans standing firm this time was a good sign. There's a possibility that the Sequester Apocolypse that didn't happen will remove the scales from the eyes of the electorate. Maybe. We can only hope. Though once the hysteria and overpricing of ammunition dies down, I'm definitely stocking up, because I don't have enough faith in the American people at this point.