If the President (and his Senate) fail to reach a deal on raising the debt ceiling on October 17th, will the federal government go into default? Only if Barack Obama wants it to, because it’s entirely in his hands.
Monthly revenue can easily cover the amount America must spend to service its debt. On top of that, monthly revenue can keep Social Security, Medicare, and Medicaid fully funded — even at the bloated and obscenely wasteful levels at which those programs currently operate. In fact, America can even maintain all of its defense spending at current levels too.
What will happen on the 17th if no deal is reached? The federal government will be legally required to stop borrowing more money and adding to the debt.
Look at it this way. If you earn $5000 in salary every month, but you max out your credit cards by spending $6000 every month, the bank will eventually refuse to bump up your credit limit any further. When that happens, you can respond in several ways. You can cut your spending by $1000 and stay forever at the limit. You can cut spending by more than $1000 and start paying off your debt. Or you can refuse to cut your spending by at least $1000, and you’ll be unable to make payments on your debt. In other words, you can choose to go into default. If the only thing keeping you from cutting your spending is your fondness for steak, single malt scotch, Italian shoes, fast cars, and weekends in Vegas … the blame for your default is 100% yours.
If the Obama Administration announces that they’ll stop making interest payments on the national debt on October 17th, then they’ve voluntarily chosen that course of action. Nothing will force them into it.
There’s plenty of revenue coming in every month to keep America from defaulting on the debt. We do not have a revenue problem. We. Have. A. Spending. Problem.
The Bureau of Labor Statistics reported that U-3 unemployment for September dropped to 7.8% after seasonal adjustment. Good news? No. Employment’s at 92.2% now? No. Surprising news? No, it was completely predictable.
I’m only surprised that they fudged the numbers so blatantly. I thought they’d at least try to be more subtle.
The U-3 unemployment number doesn’t tell the whole story. But don’t just take my word for it. James Pethokoukis explains:
Yes, the U-3 unemployment rate fell to 7.8%, the first time it has been below 8% since January 2009. But that’s only due to a flood of 582,000 part-time jobs.
The broader U-6 rate — which takes into account part-time workers who want full-time work and lots of discouraged workers who’ve given up looking — stayed unchanged at 14.7%. That’s a better gauge of the true unemployment rate and state of the American labor market.
The labor force is collapsing. Confused? Look at it this way.
8% unemployment (technically)
When the BLS plays with the number of people it designates as “discouraged workers,” then you see results like today’s report of 7.8% unemployment. The Obama BLS is cooking the books to make Obama look better.
Scroll back up to the top of this page. Look underneath the banner for a link labeled “Unemployment 101” and read what’s there a few times until you have a good grasp on the accounting tricks you’re being fed by the Obama BLS.
12:05 Update: Yet more accounting tricks, this time with government jobs vs. private sector jobs.
12:25 Update: The total number of unemployed and underemployed people reveals another aspect of the BLS’ deception. Look how it jumped today.
Don’t be surprised if August’s unemployment rate gets quietly revised from 8.1% to 8.0% this week. That would set up a more plausible-looking report of 7.9% unemployment for September, since a drop from 8.1% to 7.9% right before the election would look too suspicious.
The Obama Administration can continue to fudge the unemployment numbers by playing around with the number of “discouraged workers,” who have stopped looking for jobs and no longer count as “unemployed” in the Bureau of Labor Statistics reports.
If that happens, watch for a last-minute blitz of ads from Obama’s campaign trumpeting that unemployment is finally under 8%, thanks to Dear Leader’s wonderful awesomeness. Low-information voters won’t look past the surface to see that the jobs numbers have been cooked, and some might decide to vote for Obama as a result.
Barack Obama is the President of the future. He spends all of his time daydreaming about the glorious utopia to come, while the rest of us are stuck in the crap hole that he and his progressive friends have turned America into.
No doubt living in Obama’s future will be peachy. But in the meantime we have to live in his present — the one he’s nominally in charge of, the only one available. It is tempting to compare him to a great magician, artfully producing flags of many lands from his breast pocket while misdirecting the audience. In fact, Obama’s misdirection isn’t even that good: In essence, he’s promising to perform spectacular tricks at some unspecified point in the future even as he stands on stage with an empty top hat, and the girl in spangled tights he sawed in half is bleeding all over the floor.
Two weeks ago in this space, I wrote that, in striking contrast to the official line, the Benghazi slaughter was not a spontaneous movie review that got a little out of hand but a catastrophic security breach and humiliating fiasco for the United States. Even more extraordinary, on September 14, fewer than two-dozen inbred, illiterate goatherds pulled off the biggest single destruction of U.S. airpower since the Tet Offensive in 1968, breaking into Camp Bastion (an unfortunate choice of name) in Afghanistan, killing Lieutenant Colonel Christopher Raible, and blowing up a squadron’s worth of Harriers. And, even though it was the third international humiliation for the United States in as many days, it didn’t even make the papers. Because the court eunuchs at the media are too busy drooling over Obama’s appearance as what he calls “eye candy” on the couch between Barbara and Whoopi.
Read it all. Get motivated. Vote early, if you can. Capitalize on whatever good will you’ve built up with your neighbors and friends and family, and ask them to vote Obama and friends out of office.
Most importantly, pray that God will have mercy on us and save America from the would-be tyrants trying to destroy it. If we lose this election, the Republic dies.
I have questions for people who say “the rich don’t pay their fair share.”
What counts as “rich” to you? Are we looking at net worth? Annual income? Households or individuals? What’s the cutoff for “fair share,” pray tell? 40% of income? 50%? 75%? 100%? Or are we talking about confiscating wealth instead of just income? Should there be salary/wage ceilings?
Define the terms you incessantly bleat about, or shut up.
… remember that you can’t get the full picture from news reports that only mention how many jobs were added. The size of the whole population also changed, and so did the size of the labor force. The full picture got worse last month. Click the image to see it at full size:
Take a look at the average American’s share of federal revenue and spending from 1920 to now, adjusted for inflation to the value of a dollar in the year 2005. Click the chart to see it at full size.
Since around 1995, the amount of revenue Uncle Sam has been able to squeeze out of the average American has leveled off between $6000 and $8000 per year, suggesting that we’ve hit the practical limit. Historically, the most revenue the federal government can expect to raise is an average of 18% of GDP (Gross Domestic Product; the entire annual American economy). In brief boom times or during existential threats like World War II, the federal government can squeeze more than 18% out of the economy, but it never lasts long. No matter how hard Uncle Sam tries, the biggest average chunk he can grab is locked in at 18% of the economy, because people respond to taxes.
In the seventeen years since 1995, Uncle Sam’s borrowing and spending has not leveled off. The average American’s share is past $10,000 per year and climbing. Our debt is piling up faster than we can repay it. The “recovery” from the late 2008 economic crash has been flat for years, but Uncle Sam keeps pushing the gas pedal down as we drive toward the edge of the cliff.
There is no more revenue to be had.
If the federal government raises taxes it can only collect more than 18% of the economy for a short period, and then revenue will drop again, as always. If the government keeps borrowing — or tries to print boatloads of money — to feed its spending addiction, the inflation rate will skyrocket. That will destroy the value of the dollar, which will destroy the economy and your life’s savings.
As long as “money out” is a bigger number than “money in,” the national debt will grow and you’ll be on the hook for it. It will sink the economy as surely as that iceberg sank the Titanic. “Money in” is not going to get bigger, but “money out” absolutely will keep getting bigger as long as we keep sending the same progressives to Washington. They won’t stop themselves. Only we can stop them by replacing them with sane people who will reduce “money out” until it’s a lot lower than “money in,” and keep it there for generations. We can either take our medicine now and have an unpleasant experience, or we can keep deceiving ourselves and watch America collapse. There is no third option. The insane big-spending politicians in Washington are going to ruin your life and your children’s lives unless you stop them. Listen to the warning and save your country and your family.
We do not have a revenue problem. We have a spending problem. Anyone who tells you otherwise is either misinformed, a fool, or a liar.
Would we balance the budget and reduce the national debt if we completely eliminated every last dime spent on the military and on defense? The numbers speak for themselves. Look at the chart. We do not have a revenue problem.
Figures often beguile me, particularly when I have the arranging of them myself; in which case the remark attributed to Disraeli would often apply with justice and force: “There are three kinds of lies: lies, damned lies and statistics.”
Here’s a simplified way to visualize the economy when it’s as close as it ever gets to “full employment.” The best America can typically do is when that U3 number drops to around 5% — five out of every hundred people in the workforce have no jobs. Even when the economy’s booming that statistic never drops to zero because there are inevitably at least a few people who find themselves between jobs. It’s not always the same people, and sometimes they’re between jobs for good reasons (on vacation between jobs, going to school, on sabbatical, just sold their business, etc.), so it’s silly to get upset if the U3 number hovers in the neighborhood of 5%. Also remember that this doesn’t represent the whole population of America; we’re only looking at the workforce. We’re leaving out retirees, the disabled, illegal aliens, children too young to work, and the like.
Now let’s say a big recession hits. Ten out of every hundred people of working age find themselves out of work, so unemployment rises to 10%.
After a long time passes, the federal government announces that unemployment has dropped to 8%, and the TV talking heads eagerly parrot that latest U3 number. Good news, right?
Not necessarily. True, it could mean that two of every hundred workers went back to work. That’s an easy assumption to make when you hear that happy “news” report:
At the other extreme, it could mean that the government designated a large chunk of the working age population (in our example, 37½%) as “discouraged workers” who have left the workforce (see here for a simple definition). Such sleight-of-hand would count eight of every hundred people still in the workforce as “unemployed” according to the definition of that well-known U3 statistic, but it hides the full story.
8% unemployment (technically)
Discouraged workers might still be working, but only part time. They might have given up looking for work completely. They might still be “looking for work” in some half-hearted way, but they’ve either been unemployed for so long or haven’t actively looked for work in the past 4 weeks, so the government number-crunchers simply treat them as if they aren’t part of the workforce anymore.
Whatever the mix may be at any given time, those people are still of working age and they’re able-bodied, but they don’t show up in the U3 number reported as the official unemployment rate on the nightly news. This situation would be worse than the nightly news reports would have you believe.
To get an accurate picture of how big a chunk of the workforce is actually working, you have to flip things around and consider employment instead of just U3 unemployment and the raw “XXX jobs created this month” announcements.
When a country’s debt climbs past 60% of the total size of its economy for an entire year (what economists call its “Gross Domestic Product”), the country’s economic health suffers. When the debt-to-GDP ratio passes 90%, alarm bells go off. The longer it stays that high — or higher — the greater the risk of total economic collapse. We are becoming Greece.
We do not have a revenue problem. We have a spending problem.
This chart comes from the White House (check page 58 of the monster PDF file), not from some crazy right wing extremist oppressor of downtrodden poor people and kicker of puppies.
This is the Obama Administration’s current plan, in a document never intended to actually be passed. It’s published strictly for election propaganda (“Look! It’s a do-nothing Congress!!!”), so it’s a very mild version of what they actually want. They tout this as responsible stewardship of your money. Imagine what they’ll actually spend when the election’s over, and they have four years of freedom to enact their agenda without worrying about re-election.