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US Economy

Thucydides said:
This is hardly anything to cheer about, and the persistent high unemployment calls for a complete reversal of the destructive policies that prevent economic recovery.

Which ones? The forced austerity of the sequester, the Dem uselessness, the Republican obstructionism, the Tea Party extremist view of " Give Me 0 tax rates or Give Me death"?

Two things that could get this economy rolling again - Infrastructure Investment and Job Creation. And in fact they could well be one in the same. The investments need to be made now, and it makes complete economic sense to do it now while the costs are lower than they will be in 5 to 10 years from now when you have no choice in the matter.

The economy is not growing because people are not getting back to work fast enough. Get  them back to work, revenues will increase (without the tax increases that Dems call for), deficits will decrease at a faster rate.
"Job creation" has been the promise since 2008 (that's where the graph comes from, The blue lines were what the President and the Dems promised would happen with thier economic plan, the red dots are the month by month tracking of the real unemployment rate vs the one that was supposed to happen if the "stimulus" never occured.

As for infrastructure, the Americans were also promised "shovel ready " projects were going to be funded...$5 trillion dollars later what do you see?

OTOH that has been a constant stream of class warfare rhetoric, tax and regulatory increases, and now the real effects of Obamacare are kicking in. Sorry cupper, but the mythical reasons for political and economic dysfunction like the sequester (a 2% spending cut. Really?) or the TEA Party movement agetating for smaller government just don't cut it. In fact, if you look at States where the TEA Party movement philosiphy is in effect you will also see most of the State where there is a positive outlook on economic growth and lower unemployment. I think you have to look higher up the food chain to find where the problem lies.
My argument is that the blame needs to be spread across the entire spectrum. We have a completely useless political system south of teh 49th parallel. It is in complete disarray, with a Republican Party that is hell bent on keeping anything the Administration proposes from coming to fruition, regardless of the original genesis of the idea. A Democratic Party that has the balls of a Naked Mole Rat subjected to years of steroids and Irish Spring soap that refuses to push back, and an Administration that has no concept of leadership and selling itself, except on the campaign trail.

And if I hear one more idiot down hear bitch and complain about being over taxed, I'm going to start climbing the nearest tall building and tracking targets.
Better get your ladder ready; the US has the highest business tax rate in the OECD.

Canadians should be extolling the virtues of our 15% rate and luring as many American business as possible to the Great White North. If the US wants to play silly political games WE can use the surge in investment and job creation that a migration north would cause.
Thucydides said:
Better get your ladder ready; the US has the highest business tax rate in the OECD.

That is true, if you only consider the marginal rates.

When you factor in loopholes and deductions, the actual rates are significantly lower than the marginal rates.
For crony capitalists, yes.

For small business, which does not have the resources to take advantage of loopholes or lobby for exemptions, not so much. And so small business adopts desparate strategies like pushing their workers into part time positions and hard capping hiring.

This is very similar to the situation with personal income taxes, the "rich" can avoid taxes, the middle class cannot. You might also pay attention to the way the tax debate is framed: the "rich" are poorly defined, and wealth and income are used synonymously (they are not). A person earning an income of $250,000 from a business is not in the same class or tax bracket (and is treated differently in tax law) as a person with $250,000 in assets; the first is income, the second is wealth.

The credulous press isn't helping; no one comments as to why the stock market is rising, even as business posts miniscule profits. (Hint, look up ZIRP), or delves into the real unemployment numbers, hence the stories and analysis are essentially fantasy.
Thucydides said:
For crony capitalists, yes.

For small business, which does not have the resources to take advantage of loopholes or lobby for exemptions, not so much. And so small business adopts desparate strategies like pushing their workers into part time positions and hard capping hiring.

This is very similar to the situation with personal income taxes, the "rich" can avoid taxes, the middle class cannot. You might also pay attention to the way the tax debate is framed: the "rich" are poorly defined, and wealth and income are used synonymously (they are not). A person earning an income of $250,000 from a business is not in the same class or tax bracket (and is treated differently in tax law) as a person with $250,000 in assets; the first is income, the second is wealth.

The credulous press isn't helping; no one comments as to why the stock market is rising, even as business posts miniscule profits. (Hint, look up ZIRP), or delves into the real unemployment numbers, hence the stories and analysis are essentially fantasy.

One other thing to keep in mind though, the majority of small businesses are classed as "Chapter S" corporations where the principles pay the business taxes as part of their own personal income taxes. Again, it allows the business to pay at the lower personal tax rates, and spread the tax burden among the principles.

As for Zero Interest Rate Policies that the Fed is following, I have long believed that it has done more harm than good for all sectors. Personal savings are at their lowest for several reasons, but when you have no return on savings you aren't going to put it in a CD or savings account. Raise rates a few points, it shouldn't slow lending any more than not lending has. a few points of inflation won't hurt, and could actually speed growth.
To demonstrate just how out of sync the US political establishment really is, here is the historical spending patterns of the United States. A spending freeze coupled with the $95 billion savings of eliminating duplicate programs  (I personally believe the true number could be much higher if a rigerous program of examining all programs were to be done) would allow the economy time to grow and let rising tax revenues shrink the deficit and potentially the debt (over a long enough period of time). Sadly the issue of unfunded liabilites can still blindside this.

These issues (and potential solutions) apply to us as well. We are starting from a better position, so a freeze plus elimination of duplicate and overlapping programs could get us out of debt much faster, and allow us the time needed to deal with the unfunded liabilites problem (another $500 billion on the Federal side alone at last count):


Spending Freezes in History

When the economy grows, lawmakers should cut spending or at least hold it flat.

By  Chris Edwards

With Congress reconvening, members will soon be battling over discretionary-spending levels for fiscal year 2014, which begins October 1. They will decide whether to abide by current federal budget caps, which are designed to keep discretionary spending roughly flat over the next few years. The problem is that many lawmakers have become so used to rising budgets that a spending freeze seems impossibly tight-fisted to them.

During long periods in American history, flat budgeting was the norm. For the first 150 years of the nation’s existence, federal policymakers generally restrained spending and reduced debt between wars. Today, the war in Afghanistan is winding down and the economy is growing, so lawmakers should be cutting spending or at least holding it flat.

While the budget deficit is expected to continue falling until 2015, it will then start rising again. The problem is excessive spending, not a shortage of revenue. Consider that if Congress simply held total spending to this year’s level of $3.5 trillion, the budget would be balanced by 2016 as the growing economy generated rising tax revenue.

Freezing entitlement spending would be tough to do, so it makes sense to pursue structural reforms to these programs to reduce growth in spending rates. But with discretionary spending, a hard freeze makes sense — and this is where our early history is instructive. From the founding of the nation until entitlements were invented in the 1930s, the whole budget was “discretionary,” and during extended periods spending was held flat.

Let’s start with President Thomas Jefferson. He and his Treasury secretary, Albert Gallatin, were appalled at the rise in federal debt under the prior Federalist government, and they vowed to reduce the burden. From 1801 to 1809, they succeeded in keeping federal spending at around $10 million. They cut debt from $83 million to $57 million.

Jefferson and Gallatin’s attack on debt and their relatively frugal budgeting influenced federal policy for decades. The federal budget was roughly balanced or in surplus every year from 1800 through 1836 except for five years around the War of 1812.

Wars have always been budget busters that push up spending and debt. But before the 1930s, responsible legislators rebalanced the books and restrained spending for long periods during peacetime. The Jefferson-Gallatin rule was simple: Freeze total spending and use natural revenue growth to generate surpluses and pay down the debt.

For two decades beginning in 1817, federal spending hovered around $20 million. As revenues grew with the economy, the large debt added during the War of 1812 was rapidly paid off. Indeed, the debt was completely wiped out by 1835 under President Andrew Jackson, although it did start to rise again very slowly after that.

Spending rose in the late 1830s, fell in the early 1840s, and then rose in the late 1840s owing to the Mexican-American War. Spending fell in the early 1850s and then rose in the late 1850s. So there were both ups and downs in spending, but as late as 1860, the eve of the Civil War, total federal spending was less than 2 percent of the U.S. economy.

The Civil War sent federal spending skyrocketing from around $70 million to more than $1 billion in 1865. Again, however, war was followed by a long period of retrenchment, as federal spending was held constant and the debt was paid down. Spending was roughly flat at about $300 million for two decades, 1870 to 1890. The budget was balanced every year from 1866 to 1893.

A fiscal champion during this period was President Grover Cleveland, a Democrat, who was in office for one term in the 1880s and another in the 1890s. He vetoed many pension bills and repeatedly countered Republican efforts to overexpand benefits for Civil War veterans. He also famously vetoed a subsidy bill for Texas farmers after a drought, arguing that such aid should come from private charity, not the federal government.

Unfortunately, Republicans William McKinley and Theodore Roosevelt, who took over from Cleveland, were less frugal, and the Spanish-American War at the turn of the century helped push up spending as well. But the government still ran surpluses about half the time, and so federal debt remained constant at about $1 billion from 1891 to 1916.

The First World War and two terms of President Woodrow Wilson exploded the federal debt to $25 billion by 1919. Once again, however, Americans were wise to elect advocates of restraint in Presidents Warren Harding and Calvin Coolidge. As writer Amity Shlaes has explained, Coolidge was intensely focused on finding efficiencies in the government. He kept federal spending frozen at $3 billion over the six years of his tenure, and federal debt fell steadily. When he left office in 1929, federal spending was just 3 percent of the economy.

Sadly, the idea of flat budgeting disappeared with the invention of entitlements under President Franklin D. Roosevelt in the 1930s. Entitlement programs put spending on autopilot, allowing politicians to dodge responsibility for chronic deficits and rising debt. Federal spending is now 22 percent of the economy, which is about ten times the level typical of peacetime during the nation’s first 150 years.

Entitlement reform is the main budget challenge today, but maintaining a freeze on discretionary spending at current sequester levels is also crucial to getting our fiscal house in order. Given that war costs are falling, at least for now, and that the economy is growing, now is the time to cut the government’s massive debt load — and not the time to undo the successful budget caps and sequester.

— Chris Edwards is editor of the Cato Institute website Downsizing Government. Historical spending and debt data are from the Census Bureau.
The long term US outlook is even poorer, as the job market continues to collapse and unfunded pensions turn out to be an even larger problem than previously thought. "Adding back" all the unemployed who are counted out leaves US unemployment still hovering around 10%, which in real terms means Canadians are missing out on a market of US customers the size of our entire population, and of course when the pension problem implodes, that will involve either crippling tax hikes or an even larger cohort of people who thought they were covered for retirement but are not:


Why Today's Jobs Numbers Are a Drag
By Megan McArdle - Sep 6, 2013

The unemployment rate has fallen, but keep the cork in the champagne bottles: it’s falling because people are just giving up looking for work. The share of the population that is either working, or looking for work, has fallen to a 35-year low. The economy created just 169,000 jobs last month, barely more than we need to keep up with population growth. It’s nowhere near enough to absorb the people who have been out of work for months or years -- what Karl Marx called the reserve army of the unemployed. No wonder fast-food workers are demonstrating for higher wages; jobs designed as supplementary income for kids, or housewives, are now being taken by breadwinners who can’t find anything else.

To be sure, some of the decline is demographic. The population is aging, and that means people are leaving the labor force, simply because labor force participation peaks in your thirties and forties. So the weak economy can’t be blamed for all of this; it’s collided with a long-term trend that will continue even if the economy roars back.

That isn’t as comforting as it might initially sound, because an aging population that’s leaving the workforce is itself a drag on economic growth. GDP growth is basically just the growth in your workforce plus the growth in that workforce’s productivity. If your workforce is declining, you have to muster a heck of a productivity improvement to overcome the demographic drag.

Here’s the really bad news: The weak economy may be accelerating the rate at which older workers exit the labor market. Thanks to changes in Social Security benefits (and the entry of women into the workforce), labor force participation rates among those over 55 have been trending upwards since the 1990s. But since the recession, that progress has plateaued. Older workers are actually less likely to be out of work than their younger counterparts (probably in part because they’re clinging to jobs in order to make up big losses in their retirement accounts). But if they do end up out of work, they have a much more difficult time finding new jobs.

That doesn’t just bode ill for the present; it also promises lower growth for the future. There is no ray of sunshine to be found in this jobs report. The best thing you can say about it is that it wasn’t worse.



The Pension Crisis is Worse Than We Thought

America’s pension crisis may be much worse than we thought. A new report from State Budget Solutions looks at each state’s pension liabilities using a lower estimate of the rate of return than the states use themselves, and found that the country’s plans are underfunded by $4.1 trillion, and only 39 percent funded overall. The state-by-state breakdown looks even worse, with Illinois, Connecticut, Kentucky and Kansas holding plans that are less than 30 percent funded, and another 27 states below 40 percent. Other states have it bad as well: Reuters notes that in five states, pension liabilities more than 40 percent as large as the state’s economy as a whole, and in Ohio and New Mexico, they’re more than half as large. Considering that many people consider plans to be “safe” only when their funded level is over 80 percent, this is troubling news indeed.
These numbers are significantly higher than those we’ve seen before, which is due to the extremely conservative estimates of the rate of return.

Rather than assuming a rate of return in the 7-9 percent range, as most plans do, State Budget Solutions is using the “risk free” rate of 3.225 percent, which is tied to the yield on treasury bonds. The SBS explains its reasoning:

Current public sector practices involve discounting a liability according to the assumed investment returns of plan assets, typically around 8 percent. Yet with discount rates tied to expected investment performance, plan sponsors can easily take on greater risk in order to make liabilities appear smaller. This reduces the resources required today to pay for the promises of tomorrow.

Accurately accounting for a pension system’s liability requires incorporating the nearly certain nature of benefits. That is, once promised, the chances that benefits will not have to be paid are extremely low.

A fair-market valuation does away with optimistic investment return assumptions and instead uses a rate that reflects the risk of the liability itself. One common approach, taken here, is to discount liabilities according to the yield of a 15-year Treasury bond.

We’re not actuaries, and we’re not sure whether the the rate of return will be as low as the risk-free rate suggests. Nonetheless, it’s obvious that the rates of return used by cities and states are far too high, and given the problems we’ve seen with underfunded pensions, it’s probably prudent for states to err on the side of caution when it comes to calculating the rates of return on pension investments.
For T6 and others who are aware of what is happening in the USA.

Ordering a Pizza in 2015

This is hilarious, . . ..and just a bit frightening. Watch how the pizza restaurant employee tracks everything on her computer.

Ordering a Pizza in 2015

While I'm not sure that I agree with all the conclusions presented here, Megan McArdle is pretty clear headed about economic matters. Certainly the long term forecast seems correct; the factors that led to downward presssure on wages don't seem likely to be as large in the future (and the coming population bust will actually bring an upward pressure on wages, as employers bid for a shrinking pool of skilled labour in most Western countries).


U.S. Workers Pay a High Price for Free Trade
By Megan McArdle Sep 20, 2013 5:40 PM ET

When I was in business school, way back at the turn of the millennium, one of the things we learned was that labor always got about two-thirds of national income, with the other third going to capital. That percentage might fluctuate, as the economy waxed and waned, but it was basically steady.
The last 10 years have completely upended this “fact.” No matter which data source you look at, labor’s share of national income has declined pretty dramatically over the last decade.

Progressives have tended to look at the decline in unionization to explain this; conservatives have tended to look away. But another provocative paper from Brookings this week argues that the best explanation is what they call “import exposure,” which is to say, trade. Offshoring of the labor-intensive portion of the supply chain has deprived workers of bargaining power and driven them into lower-wage jobs -- or into government programs like disability.

"Labor's Declining Share of Income and Rising Inequality," by Margaret Jacobson and Filippo Occhino. Federal Reserve Bank of Cleveland.
Meanwhile, capital is doing well. And yet, when you talk to manufacturers, they don’t feel that they have a choice about either outsourcing or squeezing their labor force for higher productivity and lower wages. In order to compete with China, they need to automate, or they need a much lower-wage workforce; try to keep to the old model and they’ll be out of business. Sure, there’s always special pleading by bosses, but I don’t think you can put the radical changes in the U.S. manufacturing base down to an outburst of employer greed. They were presumably just as greedy before; the difference is, they weren’t competing with low-wage countries brought closer by modern telecommunications and cheap shipping.

Back when I was in graduate school, or working at the Economist, such thinking would have been heresy. Free trade was pretty well established to be good for everyone. Maybe some workers were dislocated, but you gave them trade adjustment assistance to move into another sector where they’d be fine -- better off because of all that trade, which effectively made the economy more productive.

And maybe it’s still heresy. This is, after all, just one paper. But it’s hard to deny that at least one of the two things that are supposed to make us all better off -- trade and technological innovation -- are making many workers worse off, even as the owners of capital, and the people in naturally sheltered sectors like health care, see big gains. It’s not just wages. In fact, in many ways wages are the least of the problems; wages can be finessed with transfers or the higher consumption possibilities created by trade. Rather, I’d argue that the biggest problem is simply the disappearance of reliable jobs. A large swath of Americans without college diplomas have no sense that they can build a stable life for themselves. Even if you get a job at $9 or $10 an hour, it could disappear at any moment, and you could be back to minimum wage, or nothing.

Yet if trade is the problem, a policy solution isn't obvious. When there’s a surplus of workers, and employers are competing with even lower-wage labor, then unions or higher minimum wages are a recipe for unemployment, not prosperity: Some workers are better off, but others work for manufacturing firms building products on thin margins -- companies that eventually give up and move their operations to China. Protectionism might benefit those workers, but creates other big problems, like giving domestic manufacturers an oligopoly to exploit with high-cost, low-quality products. Then there’s the fact that we’re helping comparatively rich Americans by dooming comparatively poor Chinese people to lose their jobs.
Nor do transfers seem ideal -- necessary, maybe, yet also curiously inadequate. A disability check is a poor substitute for a job, from both the recipient and the taxpayer’s perspective. The sort of person who prefers a disability check to a decent job is the only person we don’t want to help.

On the other hand, for workers who have been dislocated over the past few decades, this may actually be more hopeful than attributing the declining labor share to technological change. My sense is that we are through the largest part of the trade transition. The explosive-growth phase of China’s rise seems to be tapering off, as wages rise and their great population centers run into some natural limits. And no country seems poised to fill the role that China did in the 1990s and 2000s, relentlessly driving down the cost of goods all over the world. Vietnam is ramping up manufacturing, but it has nowhere near China’s population; India has the population, but for various reasons, does not seem poised to become a global manufacturing power. So as China matures into a middle-income country, U.S. workers will be able to breathe a bit. Sad news for those of us enjoying flat-screen televisions. But for the workers and manufacturers whose lives have been upended over the last few decades, things may be about to get a bit brighter.
With the US political system seemingly unhinged, looking ahead to a possible US default might be prudent:


What Default Might Look Like: A History Lesson

October 6, 2013 - 11:47 am

Reuters has an interesting analysis of what a US default might look like based on bank statements from the Treasury Department over the same period last year.

OCT. 17

The Treasury Department exhausts all available tools to stay under the cap on borrowing and can no longer add to the national debt. Treasury expects it would still have about $30 billion cash on hand to cover its bills. Among the many inflows and outflows that day, it takes in $6.75 billion in taxes but pays out $10.9 billion in Social Security retirement checks. By the end of the day, its cushion has eroded to $27.5 billion.

OCT. 18 – OCT. 29

Treasury’s cash reserve quickly dwindles. Washington only takes in about 70 cents for every dollar it spends and is now unable to issue new debt to cover the difference.

The tide turns briefly on October 22, when the government takes in $3.5 billion more than it spends.

But that temporary gain is soon erased. October 24 is an especially rough day: Treasury pays $1.8 billion to defense contractors, $2.2 billion to doctors and hospitals that treat elderly patients through the Medicare program, and $11.1 billion in Social Security, while taking in only $9.6 billion in taxes and other income.

One possible wild card: Treasury could lose the trust of the bond market.

Even though the government cannot add to the national debt at this point, it can legally roll over expiring debt. Investors have the opportunity to cash out about $100 billion worth of U.S. debt every week but choose to reinvest it. If fear of default causes investors to steer clear of new debt offerings, Treasury’s finances could unravel almost overnight.

“It’s very hard to predict,” said Brian Collins, an analyst at the Bipartisan Policy Center, which helped Reuters with this analysis. “It’s the same thing that causes (bank) runs or credit markets to freeze.”

OCT. 30

Default happens. By the end of the day, the government is $7 billion short of what it needs to pay all of its bills.

So who gets stiffed?

Everybody, according to the Obama administration.

Treasury says it doesn’t have the ability to pick and choose who gets paid. The last time the government faced this situation in 2011, they planned to wait until public coffers were full enough to pay a full day’s bills before cutting any checks, according to a Treasury Department watchdog report from 2012.

It only gets worse, according to the Reuters analysis. On October 31, a $6 billion interest payment to bondholders comes due:

A missed payment could shake that foundation. The United States currently pays some of the lowest interest rates in the world due to a strong history of repayment; those borrowing costs would almost certainly rise. Stock markets could tumble and nervous consumers could spend less of their money, further damaging the economy.

For the Treasury Department, this is where the truly tough decisions begin. Does the government pay bondholders in China or troops in Afghanistan? The Obama administration says it doesn’t have the ability to prioritize payments, but analysts are convinced it would at least try.

“Not making an interest payment on time is probably a worse way to default than not making other payments,” Collins said.

After that, tough choices:

In theory, the government could keep bondholders whole indefinitely because tax revenues are more than enough to cover interest payments, and Treasury pays creditors through a separate system than other obligations.

That would mean longer delays for everybody else. U.S. troops could fall behind on their rent payments, and seniors who rely on Social Security may have trouble buying groceries.

It’s hard to see how this scenario — or anything close to it — will come to pass. The signs will be unmistakable and unless total madness grips the capitol, it probably won’t get this bad.

But even if the scenario is partially correct, the economy will take a significant hit — perhaps enough to push us into a deeper recession. Will Congress roll the dice? If they do, snake eyes seems a definite possibility.
Sometimes good news comes in the strangest places. The Sequester and now the "shutdown" of the US government is showing people how much (or little) effect big government really has in their day to day lives. Since there are lots of people out there wondering what all the fuss is about, arguments for actually cutting government functions and spending are now much stronger, since people can now point and say "what really happened to you when the US Government cut spending by 2% (the sequester) or 17% (the "Shutdown").

Maybe the argument that @ 20% of government spending is non essential and can be eliminated permanently will really take hold among the voters.

The last paragraph is the money quote. The changes in demographics, ecponomics and technology that have reshaped our lives over the last 20 years have also made most of the poitical institutions erected since the 1930's obsolete. Politicians and rent seekers may try to continue to milk them for power and perques, but most voters are looking for more appropriate and local solutions.


No Good Options for Obama
Not long ago, the conventional wisdom in official Washington held that the so-called sequester spending cuts would be a disaster for the Republican Party. They were expected to rise up in vehement protest once the "cuts" went into effect.

Instead, nobody outside of Washington noticed.

Today, the conventional wisdom suggests that the so-called government shutdown is a big time loser for the GOP. But, once again, few Americans other than federal workers have really noticed any difference.

That's a big problem for the president. Nothing can be more frightening to liberal politicians than proving how little impact many federal programs have on the day-to-day lives of individual Americans. If nobody notices when they're missing, it's hard to argue against trimming the size of government.

So, the president is stuck with an impossible dilemma. If he tries to make the shutdown as painless as possible for the public, he loses all political leverage. If he tries to make people feel his pain, he looks like a bully. If he makes a deal with Republicans, his political base will be demoralized heading into the midterm election. If he doesn't, and the standoff continues, calls for more permanent spending cuts will grow.

The choices so far have been relatively easy. While there have been bad headlines about the National Park Service blocking veterans from war memorials and other tourist attractions, those stories haven't become a dominant narrative mainly because of their small scale.

So the president and his administration are threatening to bring out the big guns. There have been hints that Social Security benefits might not be paid in full.

That would certainly get the public's attention. But is the president really ready to tell people that there is no trust fund and that the government's been lying about it for seven decades?
Like his predecessor, George W. Bush, Obama's second-term problems can be traced directly to decisions made early in his first term.

Politically, his root problem came when he passed a bloated stimulus package in early 2009 with not a single Republican vote in the House. That shutout stunned official Washington and the display of backbone surprised voters. After showing the Republicans in Congress were willing to make a stand, the GOP was on track for an historic victory in the 2010 midterm elections.

Substantively, though, it was the first-term decision to ram through a partisan health care law that is causing the president the most pain today. That leaves the president with another impossible choice. He could delay the program a year to get past the 2014 elections. But that, too, would run the risk of demoralizing his base. Additionally, it might become the first of many delays that would effectively end any hope of ultimately implementing the law.

No matter how you look at it, the president's in a tough spot. Given the bumbling tactical mistakes of Congressional Republicans, how did the president end up in this situation?

The central reason is that the American people aren't interested in buying what he wants to sell. In the iPad era, people's lives are decentralizing and services are becoming more customized. Community solutions are being found closer to home. Giving more power to a-one-size-fits-all federal government is out of synch with that reality.
Food stamps hit 20% of the US population. Perhaps raising the minimum wage and getting the moocher corporations to stop paying less than a living wage because of government handouts is in order. The US gov is essentially subsidizing the worst jobs in America.
Nemo888 said:
Food stamps hit 20% of the US population. Perhaps raising the minimum wage and getting the moocher corporations to stop paying less than a living wage because of government handouts is in order. The US gov is essentially subsidizing the worst jobs in America.

Interesting point you bring up there Nemo. 

It seems that "some" Democrat voters got a glimpse of the pain yesterday.  Apparently a "glitch" prevented the welfare debit cards from working in 17 states yesterday.  Places included were
Alabama, California, Georgia, Iowa, Illinois, Louisiana, Massachusetts, Maryland, Mississippi, New Jersey, Oklahoma, Pennsylvania, Texas and Virginia


That seems to me a potential two edged sword.  On the one hand it could be a goad to the Democrats clients to remind them of how much they need the Government.  In which case this short, sharp shock could benefit the Democrats.

On the other hand one of the key elements of Obamacare is a benefits card supported by software - much like the Debit card - and it is already being used by the Republicans as an argument supporting the delay of Obamacare - because it is Glitchy and not ready for rollout.  In that case this could be used to bolster their cause.

The game continues.......
Nemo888 said:
Food stamps hit 20% of the US population. Perhaps raising the minimum wage and getting the moocher corporations to stop paying less than a living wage because of government handouts is in order. The US gov is essentially subsidizing the worst jobs in America.

Or perhaps the government should stop encouraging cronyism. Handing out foodstamps, Obamaphones and other goodies to buy votes (at the expense of others) is moraly repulsive to begin with, and crony capitalism (handing out tax breaks, subsidies etc.) to buy corporate support at taxpayer expense is simply the opposite side of the coin.

As an added bonus, a redical reduction in subsidies to both rich and poor will do wonders to the spending envelope, deficit and debt issues that plague America and most other Western democracies.

Stand by.....


Fitch puts US AAA rating on rating watch negative
Published: Tuesday, 15 Oct 2013 | 4:46 PM ET
By: CNBC.com with Reuters

Tuesday, 15 Oct 2013 | 4:46 PM ET
Fitch has put the U.S. credit rating on negative watch, reports CNBC's Dominic Chu.
Fitch Ratings put the US government's "AAA" credit rating on 'rating watch negative' Tuesday, saying that the standstill on the U.S. debt ceiling negotiations risks undermining the effectiveness of the country's government and political institutions.

U.S. stock index futures fell.

"Although Fitch continues to believe that the debt ceiling will be raised soon, the political brinkmanship and reduced financing flexibility could increase the risk of a U.S. default," the rating agency wrote in a statement.

S&P 500 futures fell 9.6 points while Dow Jones industrial average futures sank 60 points and Nasdaq 100 futures fell 7.5 points.

A Treasury Department spokesperson said the Fitch move reflected an urgent need for Congress to act on the debt ceiling.

Earlier today Senate Majority Leader Harry Reid lashed out at House Republicans, shortly after the collapse of a rival GOP proposal.

He warned at the time that the U.S. credit ratings could be downgraded as soon as Tuesday night.

Of course after the first downgrade the US Administration responded by threatening legal action, rather than perhaps adressing the root cause.
Kirkhill said:
Interesting point you bring up there Nemo. 

It seems that "some" Democrat voters got a glimpse of the pain yesterday.  Apparently a "glitch" prevented the welfare debit cards from working in 17 states yesterday.  Places included were

Other Democrat voters got a taste of spending as much of other people's money as they wanted.  No limit EBT  cards hit some areas and the word got out fast.  A Walmart was essentially looted.  The no limit glitch was fixed and the shopping mob left hundreds of full carts in the store once the jig was up.


Remember "you have to pass the bill to see what's in it?" Here is another example of the law of unintended conswquences:


An Unintended Consequence of Obamacare: The Underground Economy

Unintended consequences accompany well-meaning government legislation. Welfare for single parents? What a compassionate idea! I know a guy whose daughter was tired of work, did the math, and went out and got pregnant so she would qualify. Of course, there was no husband, and no father in the child's life. The government probably didn't see that coming.

With Obamacare, there's a predictable consequence that I haven't seen comment on. And that's the effect the subsidy will have on reported income. Here's the set-up:

Under the Affordable Care Act, if your 2014 income is between 138 and 400 percent of poverty level for your household size, you can purchase health insurance on a state-run exchange (such as Covered California) and receive a federal tax subsidy to offset all or part of your premium.

I understand that the effects of being a dollar above the cut-off can be thousands of dollars of lost subsidies. What this means is this: Some people will simply work less to keep below the cut-off. However, the unscrupulous will resort to the underground economy, doing work on the side and hiding income to maintain eligibility for the subsidy. A vile practice, yes, under-giving on taxes so you can over-get on taxpayer-paid handouts, but you can count on it.

Here's my prediction: Obamacare will increase the underground economy, further undermining the moral fiber of America, denying the federal government revenues it desperately needs while increasing the subsidy payouts it would otherwise be paying.