obama

Debt & Taxes: Obama’s Rate of Change

/ L. M. Walker / 1 Comment

Obama’s Rates of Change

By: Larry Walker, Jr. [Revised]

Today I am observing the rates of change embedded in Barack Obama’s budget projections. My objective is to determine whether Obama represents ‘change you can believe in’, and whether or not his policies are in line with his rhetoric. I will compare Obama’s 4 year budget projections during his first (and only) term, to the previous 16 year period. An observance of rates of change can provide assurance that the course charted is the one navigated. Here are a few observations.

  1. During the 16 year period ending with fiscal year 2009, GDP achieved an average annual growth rate of 6.8%, while government revenues (taxes) grew at 4.5%, and the national debt grew at 10.3%. Summary: The national debt outpaced economic growth, while tax revenues lagged the economy.

  2. In following Obama’s budget projections for the four year period ending in fiscal year 2013, GDP will grow at an average annual rate of 5.2%, while government revenues (taxes) will grow at 12.9%, and the national debt will grow at 9.2%. Summary: Tax revenues will more than double the pace of economic growth, while the national debt will continue to grow faster than the economy.

Click to Enlarge

“Tax revenues will more than double the pace of economic growth, while the national debt will continue to grow faster than the economy.”

After decades of reckless government spending, the change I would have expected, and could have believed in, would have led to an increase in GDP, a reduction in income taxes, and a dramatic reduction in government spending. Instead, it appears that the change I will get will be as follows:

  1. GDP will grow at an annual rate which is 23.5% slower than what we experienced over the last 16 years. This means that our wealth will be diminished.

  2. Income taxes will increase by 186% over the next 4 years. Taxes will consume more of a shrinking economy.

  3. Although the National Debt will grow at a slightly slower pace, it will: (a) grow 77% faster than GDP, and (b) continue to grow in spite of massive tax increases.

Conclusion: The course Obama has charted, is not the one being navigated. Obama talks about controlling the debt and deficits, cutting taxes for 90% of working families, and building a new foundation for economic growth. The only problem is that by following his budget, we will experience an increase in the national debt, higher income taxes, and lower economic growth. This is ‘change’, but it is the kind of change that I cannot, do not, and will never believe in.

Sources:

http://www.usgovernmentrevenue.com/downchart_gr.php?chart=F0-fed

http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt.htm

Death Spiral: Obama’s Progressive Debt

/ L. M. Walker / 3 Comments

By: Larry Walker, Jr.

Piercing Obama’s Echo Chamber

In analyzing the contribution to our National Debt by President (see table below), my initial idea was to determine the actual cost of each annual budget deficit, over time, by utilizing the Rule of 72, along with current and future interest rates. Since our debt has traditionally never been repaid, the future value of each deficit doubles roughly every 18 years, using an average interest rate of 4.0%. Although I found this to be sickening enough, what’s even more striking is the progressive pattern of reckless spending under the last five administrations.

Chart 1, Click to Enlarge

What’s striking is the fact that only a total of $740.5 billion was added to the Debt between fiscal years 1951 through 1981 (see table below).

Chart 2, Click to Enlarge

Contrast that with the following:

  1. Although I consider myself to be a Reagan conservative, his record on deficit spending was horrible. During his two terms in office, Ronald Reagan is partly responsible for adding $1.86 trillion to the Debt.

  2. George H. W. Bush, as a one-term president, was partially responsible for adding $1.55 trillion to our Debt. H.W. nearly surpassed Reagan in half the time.

  3. Bill Clinton is often touted as having run budget surpluses during his second term in office, however, this is mostly attributable to a Republican lead Congress. But even Bill Clinton overspent, and in the end would run up the Debt by $1.39 trillion during his eight year term.

  4. George W. Bush exploded the Debt by $5.31 trillion over 8 years. Although I would come to trust GWB with my life, I wouldn’t trust him with my wallet. To be fair, I have deducted Obama’s fiscal year 2009 addition of $787 billion for his failed Stimulus program, and I added it to Obama’s 2010 deficit. I would also attribute $2.1 trillion of Bush’s $5.31 trillion in red ink to Nancy Pelosi, and the majority Democrat Congress.

  5. Then we come to Barack Obama. Obama is projected to advance the National Debt by $5.15 trillion in his first (and last) term in office. Obama will go down in history as the most fiscally reckless president of all time, adding as much to the Debt in 4 years as Bush did in eight. Why would anyone even consider a 2nd term for Obama?

Barack Obama represents not only ‘more of the same’, but Obama has earned the nickname, ‘Double Bush’. That’s right, in fiscal matters Obama is twice as reckless as George W. Bush, not to mention twice as dangerous in terms of national security. The American people are too smart and too unforgiving to ever consider giving Obama a second chance. Sorry Barry, you blew it.

What really irks me about the first table is the addition of $5.72 trillion to the Debt between the fiscal period beginning October 1, 2007 and ending September 30, 2011 (highlighted in white). This can be mostly attributed to the current Democrat Congress led by Nancy Pelosi. Sorry Nancy but you’re gone. And sorry to most of you coming up for re-election in 2010, but you’re done too. Those who realized the error of their ways have wisely dropped out of the race. To those of you who are complicit, and still trying to hang around for another term, my only advice is to spare yourself the embarrassment.

Where was it that the buck stops again? So there you have it, I have pierced Obama’s ‘echo chamber’ once again, in hopes of exposing his insular ‘death spiral’. My goal is to inspire you to elect more responsible politicians in all of the upcoming races.

Sources:

http://www.treasurydirect.gov/govt/reports/pd/hist debt/histdebt.htm

www.whitehouse.gov/omb/budget/fy2011/assets/hist01z2.xls

More Government = Fewer Jobs

Obama’s Tax Fallacy

/ L. M. Walker / 5 Comments

By: Larry Walker, Jr. [Updates in Red]

Barack Obama – “I gave 95% of all Working Families a tax cut…”

Really?

First of all 43.4% of Americans don’t pay any income taxes. That leaves the rest of us. So did 95% of the 56.6% who actually pay income taxes get a tax cut? I doubt it, but even if that were true, it’s not 95% of all Americans (or ‘working families’, whatever that means) [see Tax Fallacy II: 95% B.S. for more on this].

Is a refundable tax credit the same as a tax cut?

But the real fallacy lies in the fact that refundable tax credits are not tax cuts, but rather, they are subsidies. Subsidies are paid for by taking money from some Americans and giving it to others. This is also known as ‘spreading the wealth around’.

I’m not very cheery knowing that while I have been faithfully paying my mortgage, people are buying foreclosed houses down the street for $110K less than what I owe. And not only that, but the Government is giving them an $8,500 subsidy out of my tax dollars. It’s as if the $110K of potential equity wasn’t enough of a subsidy. Also, when the government refunds a person $8,500 to buy a house, it only applies to those who bought houses, not to 95% of all Americans.

The $400 ($800 for joint filers) Making Work Pay Credit is also a refundable tax subsidy. It is however only available in full to those (a) who made less than $75,000 ($150,000 for joint filers), (b) is reduced if income exceeds these amounts, (c) and it is not available at all for those making over $95,000 ($170,000 for joint filers) in 2009. Is it possible that 95% of Americans who actually pay income taxes made less than $95K ($170K for joint filers) and will get the full credit? Not when the top 50% of wage earners pay 96% of income taxes.

The earned income credit is a well known tax subsidy. If you made $10,000 and have a child, you will pay no taxes and will get back a $4,043 tax subsidy ($3,043 earned income credit, plus $1,000 child tax credit). This is not a tax cut, but rather a 40.43% bonus awarded for not trying very hard.

Non-refundable tax credits represent true tax cuts, as they can only be used to reduce the amount of tax actually owed, with the balance being lost. The child care credit is an example of a non-refundable tax credit, and has not changed in years. The retirement savings credit would be a good way to cut taxes, but unfortunately if you made over $27,750 ($55,500 for joint filers), you don’t qualify. The education credit used to be a way to cut taxes, yet it is already $2,500 per year, so nothing new was stated by Obama when he said he will give out a $10K credit over 4 years. Uh, we already have that, sir. [What is new, however, is that as of 2009, now 40% of the education credit has become a refundable tax subsidy.]

Another tidbit, right now, all three of my kids are in college. I’m divorced and they live with their mother out of state. I am paying part of the way for one while the other two have full scholarships. Because I don’t claim any of them as dependents, I am not allowed any credit for the tuition that I’m paying. I wonder how many others are in the same boat. It’s not that I want anything from the Government, but just want to let you know that there are cracks in the real world.

Capital Gains Tax Cut for Small Business?

Finally, Obama wants to give a Capital Gains Tax Cut for Small Business Investment. What does that mean? A capital gains tax cut only applies if someone has an appreciated asset to sell, which they have held for more than one year. So, first you have to have an appreciated asset. Then you have to either have a small business that buys and sells appreciated long-term assets, or would need to sell your business in order to benefit. The only problem with what Obama said is that the lower Capital Gains Tax rate that we already have, which is currently 0% for those in a 15% or lower tax bracket, already applies. Nothing new here.

As a small business owner I haven’t quite figured out how anyone can really use this one. And what kind of tax rate are we talking about anyway? He didn’t say anything specific. The only way I could use it is if I sold my business. But I don’t want to sell the business. And if I did sell my business I would already benefit from the Section 1244 exclusion or the low capital gains rate.

While you are applauding Obama’s words, you should stop and think about how a capital gains tax cut can benefit a small business. If anyone can explain it to me, I’ll be glad to listen, but to me, it’s just rhetoric.

In conclusion, all I heard from Obama tonight, regarding taxes, was the same class warfare, wealth redistribution rhetoric that I heard in 2008 when I cast my ballot for the other guy.

___________________________________________________

References:

http://www.taxpolicycenter.org/numbers/displayatab.cfm?Docid=2276&DocTypeID=7

Give Me a Tax Cut, or Give Me Death II

/ L. M. Walker / 8 Comments

Small Business Tax & Toil

By: Larry Walker, Jr.

Small business owners, like myself, pay twice as much in Social Security and Medicare Taxes as regular employees. Yet when we ask for a payroll tax cut on our own pay, what we get from the government is a crackdown on regional banks to give us more loans. Aside from the fact that 140 of these banks have failed since January 16, 2009 (here), what Obama’s Cluelessian economists fail to understand is that wealth is not created through amassing debt.

If Obama wants to run the Federal Government based on the myth that wealth is created through debt, that’s one thing, but his attempt to sell this ideal to small business owners like myself makes him look inept. Small businesses are already in debt. Adding more debt does not translate directly into increased sales, but rather into higher monthly principal and interest payments (aka. ‘paying current expenses out of future income’). It’s one thing to borrow money to start a venture, or to secure lines of credit for working capital, but it’s entirely another to pile debt upon debt in a degenerating economy.

Wealth is created by increasing sales of products and services while maintaining or reducing expenses. Bankruptcy is achieved through maintaining or increasing expenses in the face of declining revenue. It is a fact, not a theory, that Obama’s reckless economic policies will lead to the latter.

So what is the Small Business solution? What could possibly help small business owners survive in the face of a colossal governmental failure? A payroll tax cut for one. And what is it that justifies a payroll tax cut for small business owners? As I pointed out in Part I, small business owners pay an unfair burden of Social Security and Medicare Taxes, and we receive nothing in return. By nothing, I mean that we will receive the same benefits as regular workers after having paid twice the amount of payroll taxes (see the chart below).

Click To Enlarge

What we are asking for is fair. What we are asking for is economic justice. We want the Federal Government to stop unfairly burdening small businesses with an unjust burden of payroll taxes with no corresponding benefit. All we want back is some of our own hard earned money, produced from our own toil, in order to improve the future economic outlook of our communities and our nation.

If we get our desired tax cut, what will small business owners do? We will have been aided in paying our bills, in reducing our current debt, in not having to lay off additional workers, and in having survived for another day. And we will have done so with our own money, and not through a government handout.

Who will die? When I say, “give me a tax cut, or give me death”, it won’t be me or my fellow entrepreneurs who die. The first casualty will be the next laid off employee, and eventually the Federal Government. Every employee we lay off leads to negative government revenue, and reduced GDP. Most of us can scale back on spending and survive, but one can only cut so much before creditors are jeopardized. The Federal Government is well on the road that leads to death.

We will survive, but will the Federal Government? Small businesses have been cutting back on spending in the face of the economic decline. The Federal Government, on the other hand, has been increasing its debt. If Obama’s incompetent economic theory leads to the bankruptcy of the United States government, then that is just a natural consequence of spending more than annual revenue, year after year. Eventually the principal and interest payments will surpass revenue. But that’s Obama’s plan and not the road for me. As for me,

Give me a tax cut, or give me death!

—

Tips: 5 Ways To Manage Business Debt

National Debt Crisis – 2010

/ L. M. Walker / 3 Comments

Obama’s Debt Crisis

How much is the National Debt costing America?

It’s interesting to note that the total interest paid on the National Debt since 1988 has been $7,393 billion (that’s $7.4 trillion). That’s a lot of money being wasted by politicians in Washington, D.C. and there are not enough people talking about it. There is an even more deafening silence regarding what the cost will be over the next 10 years. The United States will pay almost as much interest as it did over the last 20 years in just the next 10. And no one in Washington is addressing the Debt Crisis. I would to God that somebody would wake them up before it’s too late.

click to enlarge

Source: Treasury Direct

Plan A – Pay the Debt Now

The National Debt is currently $12,087 billion (that’s $12 trillion). If principal and interest payments were made over the next 30 years at 4.0% interest, the total remaining interest cost would be $8,883 billion (that’s $8.9 trillion). The total annual P&I payment would be $699 billion or roughly 31% of current government revenues (click on the chart below). But since it’s not likely that this plan will ever see the light of day, what is Plan B?

PLAN A - click to enlarge

Plan B – Ignore the Debt until 2019

The National Debt is projected to grow to $19,224 billion (that’s $19 trillion) by the year 2019. This is calculated by adding the CBO’s projected budget deficit of $7,137 billion to our current debt. If the debt is not addressed until 2019, the cost of interest over the next 10 years would be $6,271 billion, since no principal payments will have been made (see chart below). Then, assuming that a plan is put in place to pay the debt off over the ensuing 30 year period, ending in fiscal year 2050, the total cost of interest over the next 40 years will be $20,397 billion (that’s $20.4 trillion). If the government starts making payments after 2019, the annual P&I payment would be around $1.1 trillion or 49% of current government revenues.

PLAN B - click to enlarge

Obama’s Debt Crisis

If we address the National Debt now it will cost roughly $8.9 trillion in interest. If we wait until 2019 it will cost closer to $20.4 trillion in interest. If we never address our debt and continue to treat it as an interest only loan, then this number will “skyrocket”. In fact we may already be at the point of no return.

This is Barack Obama’s failure. Obama talks the talk but he doesn’t walk the walk. Obama will cost America $6.3 trillion in interest over the next 10 years by his failure to address the national debt. Add that to his $7.1 trillion (and rising) budget deficit and Obama will have cost America at least $13.4 trillion. So any success that Obama touts short of $13.4 trillion in savings, revenue or benefits is a joke.

The Consequences

What consequences could American’s face if the debt is not dealt with? Well, for one interest rates are currently at an all time low, and there is only one direction they can go, up. When interest rates begin to rise, so will the cost of the debt. As shown here, if interest rates rise to 5.0% and the debt is not brought down by fiscal year 2050, then the total interest cost jumps from $20.4 trillion to $36.8 trillion. That’s about the equivalent of three times annual GDP wasted on interest payments.

Also, the United States could lose its AAA-credit rating. Once AAA status is gone it will be tougher for the nation to borrow money and lenders will charge higher interest rates. Lenders may also begin to impose stringent standards on our nation’s fiscal policies. Don’t forget that a lot of this borrowed money comes from foreign countries. In other words, if we don’t deal with the debt now it will only cost more in the future and we could potentially lose some of our freedom in the process.

Is Congress Brain Dead?

When Congress talks about saving the country a couple of hundred billion over 30 years, by passing a health care entitlement bill, I can’t help but wonder if anyone is awake at the helm. Congress is on the path of costing the country roughly $6.3 trillion in interest over the next 10 years, plus another $14.1 trillion over following 30 years, and these are probably low-ball figures, and what are they up to? Telling us how they will save a few pennies by adding a few trillion more to the National Debt. Yet, if Congress fails to address the Debt by 2019, the interest costs will soar well beyond the $20 trillion mark.

Those who truly love this country could care less about the Congress saving $200 billion on a new entitlement program. I could especially care less since I know that it will cost 5 times as much to implement and more down the road. Don’t talk to me about Health Care reform while your back is turned on the more pressing $20 trillion problem. Will somebody please wake up the Congress, the Media, and the Borrower in Chief? Wake them up before it’s too late.

Note: This posting is based on the following assumptions: (1) that interest rates are fixed at 4.0%, and (2) that the debt is repaid over a 30 year term.

References/Related:

GAO Financial Audit of Public Debt 2007-2008

CBO Budget Projections through 2019

U.S. Treasury Direct

Paying The National Debt For Dummies 2.0

/ L. M. Walker / 2 Comments

Ignoring The Problem?

[updated below]

The Cost of Paying the Debt Now

By starting today, the Federal Government can pay off the National Debt in 30 years by making interest and principal payments of $699,013,323,930.52 per year (see the chart below). In Fiscal Year 2009 the government made interest payments of $383,656,592,545.78. So it would take an additional $315,356,731,384.74 in annual payments to completely extinguish the debt in 30 years. By starting now, the total cost of interest will be $8,883,038,042,900.88 (8.883 trillion), at 4%, over 30 years.

Amortization Schedule - click to enlarge

Opportunity Cost: Waiting until 2019 [updated]

If the Federal Government chooses to wait until 2019 before addressing the debt, the cost rises dramatically. If we choose to wait, our annual principal and interest payments will rise to $1,111,746,741,447.46 per year (see chart below), an increase of $412,733,417,516.94 in annual P&I payments. The total interest on the debt will rise to $20.4 trillion which is computed by adding the $14,128 billion at 4%, over 30 years plus the $6,271 billion in 4% interest only payments, over the first 10 years (shown here). Thus, the cost of waiting is an additional $11.514 trillion ($20,397 billion minus $8,883 billion) in interest.

Amortization Schedule 2.0 - click to enlarge

So What Are You Waiting For?

Are you wondering what will happen when interest rates rise? If politicians were serious about fiscal responsibility, surely they would find a way to cut government spending. All of Washington, DC is guilty. The longer you ignore a problem, the greater it becomes. America needs to stop the deficit spending ‘now’. Politicians need to start paying off the debt, and to put an end to annual budget deficits. Politicians need to stop making excuses, and quit playing political games.

References:

http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm

Paying The National Debt For Dummies

/ L. M. Walker / 2 Comments

Amortization Schedule - click to enlarge

The Federal Government can pay off the National Debt in 30 years by making interest and principal payments of $699,013,323,930.52 per year. In Fiscal Year 2009 the government made interest payments of $383,656,592,545.78. So it would only take another $315,356,731,384.74 per year, or about $1,051 per capita to completely extinguish the debt. Since this will cost $8,883,038,042,900.88 in interest (at 4% over 30 years), I would suggest that you get started right away.

If you politicians were serious about fiscal responsibility, surely you could find a way to cut spending by $315,356,731,384.74 per year. I mean after all, many of you are claiming that more than that is wasted on Medicare each year.

The only condition for taking this bold step is that you stop deficit spending ‘now’. Pay the debt, end the deficits, stop making excuses, and quit playing games.

Source:

http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm

Give Me a Tax Cut, or Give Me Death!

/ L. M. Walker / 5 Comments

Small Business Tax & Toil

By: Larry Walker, Jr.

I have been contemplating all the blood, sweat, and tears shed by Small Business owners such as myself. Having been in business for the past 9 years, I have come to the realization that:

  1. I am paying a hell of a lot in Taxes (and government mandated fees), and

  2. I am feeling mighty underappreciated.

The Federal Government, under the American Recovery and Reinvestment Act of 2009, chose to give a Social Security tax cut, the Making Work Pay Credit, to workers making under $75,000 per year. That’s all well and fine, but what about the Small Businesses who pay those wages? Small Business Owners have to pay double the amount of Social Security and Medicare taxes on our own pay, plus a matching amount on what we pay our employees.

As the owner of an S-Corporation, in order to write myself a paycheck I am hit with 25% in Federal Withholding Taxes, 15.3% for Social Security and Medicare (since as an owner-employee both halves come out of the same pocket), 5% for State Withholding Taxes and Federal and State Unemployment Taxes. Excluding Unemployment Taxes, I have to withhold and pay in 45.3% of my pay every month. On top of that, since I have employees, I also have to match 7.65% of their pay for Social Security and Medicare Taxes.

As a side note, I also have to pay County business license fees, Federal and State license fees, County property taxes, State Sales Taxes, Federal Excise taxes on telephone, cell phone and internet usage, interest and principal payments on a Federal SBA loan and other business debts, professional liability insurance, health insurance, matching retirement contributions, etc. … and then the actual operating expenses. When it’s all said and done, in return for my contribution to society, I get to keep about 20% of my gross income (toil). But lets just keep the focus here on Social Security, Medicare, and Income Taxes.

As an example, let’s say I have to write gross pay checks for myself and my employees of $8,000 per month. And let’s say $5,000 of that is for me, and the other $3,000 is for two employees. In order to pay myself $5,000 I have to set aside $2,265 for taxes ($5,000 * 45.3% = $2,265). In order to pay my employees $3,000 I have to set aside an extra $229.50 ($3,000 * 7.65% = $229.50) to match Social Security and Medicare.

So to summarize my gross pay started out at $5,000, but my net take home pay wound up being only just $3,117.50 (see the chart below). In the end, I have spent a total of $8,612.00. My employees took home $2,770.50, I took home $3,117.50, and the Government took home $2,724.00.

click to enlarge

When times are good and I can afford to take a full paycheck I have to fork over 45.3% of my earnings to the Government. When times are tough and I can’t afford to pay myself a full paycheck I still have to fork over 45.3% of my earnings to the Government. And when the business makes a profit, the Government will be standing there laying claim to another 30% or more of my toils (25% Federal Taxes and 5% State Taxes).

And now the Federal Government, through the Senate’s Health Care Bill, is proposing to:

  • Add an Excise Tax on Comprehensive Health Insurance Plans

  • Burden us with Employer Reporting of Health Insurance Costs on W-2 Forms

  • Hike Taxes on Health Savings Account Withdrawals by 10%

  • Raise the “Haircut” for Medical Itemized Deductions from 7.5% to 10% of AGI

(See How Does the Reid-Obama Health Bill Raise Taxes on Your Current Health Plan?).

If there is any common sense at all in Washington D.C., Congress and the President will realize that Small Businesses employ most of America, and that Small Business owners pay an unfair burden of Social Security and Medicare Taxes. And we receive nothing in return. By nothing I mean that business owners do not get double the Social Security and Medicare benefits for paying twice what the average worker pays into the system. When liberals start whining about tax cuts for the rich, perhaps they should try standing in the shoes of a small business owner. They would not last a week. They would die from their own complaining.

Do Small Business Owners deserve tax relief? You’re damned right! What can you do about it in Washington D.C.? Well, if you want Small Businesses to spend more, hire more, and stop the lay offs, then stop squeezing us.

  1. Give small business Owners an immediate tax cut of 50% of the Social Security and Medicare Taxes on the wages that they pay themselves. This is not only fair, but it would be just that simple.

  2. Or, if you really want to be fair, then give us a 50% tax cut on the Social Security and Medicare Taxes on all the wages that we have paid so far this year. It’s time to act.

Give me a tax cut, or give me death!

Obama’s Cluelessian Economics – Obamanomics

/ L. M. Walker / 4 Comments

By: Larry [Update: below in red]

As economists from across the globe are grappling to find a new name for Barack Obama’s economic policies, I have beat them to the punch. Cluelessian is Obama’s new model for future economic (failures). Thus, in an effort to ensure that others do not slip and fall down into the same bottomless pit, let me help you define the difference between Free Market Economics and Cluelessian Economics.

The two most basic concepts in free market economic theory are the laws of supply and demand. Under the law of supply as prices increase the quantity of goods and services increases, as additional investment is attracted into the market. Under the law of demand as prices decrease, the quantity of goods and services demanded increases, because more consumers are able to afford these goods and services. Where supply and demand meet is at the prevailing market price.

Now when a price is set below the prevailing market price in order control prices, less investment is attracted to produce the supply. Where the price is fixed as in the graph below, the quantity demanded is higher than the quantity supplied, thus creating excess demand, better known as shortages. And shortages lead to rationing.

On Health Care Reform

Under Cluelessian Theory, the laws of supply and demand didn’t work for everyone. Thus, what is being proposed with health care reform is an increase in the number of people covered by insurance through a legal mandate (demand), without increasing the price. This is only possible under the Cluelessian Model. In fact, under the new theory demand will increase, prices will decline, supply will decline (as insurance companies go bankrupt) and higher income taxes will make up the difference.

Under Cluelessian theory you actually wind up paying more for less, but that’s all right because higher taxes don’t count towards the price of health insurance, right? Also by following the Cluelessians we can get rid of all those evil, greedy doctors and insurance companies at the same time. So under Cluelessian theory it would appear that we would actually destroy the free market system, and create not only government run health insurance, but also government doctors and hospitals.

On Climate Change

Now when it comes to making an impact on the effects of that evil, and relentless Sun, that sits in the middle of our solar system spewing out all that heat, the laws of supply and demand just don’t quite cut it. So it will be necessary to dramatically reduce the supply of electricity, coal, natural gas, and gasoline; meaning that prices will necessarily ‘skyrocket’ (a Cluelessian axiom).

Cluelessian policies will necessarily call for a dramatic decline in the demand for energy. As the supply declines and businesses begin to lay off workers and shutter plants, and as people begin to freeze to death in their homes and to die of heat stroke, the Cluelessians will compensate by _______? (I don’t think they have thought this one all the way through.)

A. Raising taxes to help those who can no longer afford their energy bills?

B. Coming up with a nifty formula to demonstrate how many human beings they saved, or how many years of life they added to Planet Earth?

On Jobs

Under Cluelessian law, a job saved (or created) is equal to giving a pay raise to existing employees. Contemporary economists thought that a job saved entailed cancelling a layoff, or recalling laid off workers; and that a job created meant hiring new employees on top of the existing workforce. However, under Cluelessian theory, whatever makes you look good counts. As we saw recently in the news, the Southwest Georgia Community Action Council was able to save 935 jobs by providing a cost of living increase for only 508 people. (See the last post: Jobs and O-bonics Interpreted).

The Cluelessians haven’t yet been able to formulate a way to actually create jobs so please check back for updates over the next three (3) years.

[Update: The Cluelessians have just stated that a key part of their plan for job creation will involve housing Guantanamo terrorism detainees in U.S. prisons. Cluelessian economists are talking to Illinois officials about buying the Thomson Correctional Center, a maximum-security prison about 150 miles west of Chicago. A limted number of the remaining 215 Guantanamo detainees would be housed there which some Cluelessians are claiming could create up to 2,000 jobs. So now we have an even better understanding of how Cluelessian policies will impact future economic and social deterioration.]

Conclusion

So in conclusion it’s not very hard to understand Cluelessian Economics. Simply throw away the idea of a free market system. Forget about the laws of supply and demand. Under this new theory the Government will take care of all of us. The Government will supply our health care, energy, and employment needs. The Government will take the place of the free market. The Government is good, and we are bad. The Government knows all. And when the Government runs out of money, then under Cluelessian law, they will make up another lie (i.e. blame Bush).

Now if you want some real answers, you should check out The Just Third Way Blog, or The Center for Economic and Social Justice. You may even want to read, Capital Homesteading for Every Citizen or Binary Economics: The New Paradigm.

Related to and inspired by John Galt at: John Galt’s Wisdom Blog

Obama: Ready to Go!

/ L. M. Walker / 2 Comments

Most American’s were ready for Obama to go before his term started. Now after nine month’s in office, the first affirmative action POTUS declares that he is ‘ready to go’. I don’t know where he’s planning to go, but I suspect that it’s not anywhere that the rest of America would care to venture. Let’s review Obama’s performance as CEO of the United States.

According to the Associated Press, the Federal Budget deficit has surged to an all-time high of $1.42 trillion as tax revenues plunged while the Obama Administration was spending massive amounts on the way to its undeclared destination. The Obama Administration has projected that its deficits will total $9.1 trillion over the next decade.

For 2009, the Government collected $2.10 trillion in revenues, a 16.6% drop from 2008. That was the largest percentage decline in records going back nearly seven decades. Meanwhile, Government spending last year jumped to $3.52 trillion, up 18.2% over 2008, the biggest percentage increase since a 23.4% jump in 1975.

In the private sector, a CEO with such a record would not be able to weasel his way out of being fired through clever rhetoric. In fact, a search committee would be formed, with haste, to locate a new CEO who specializes in turnarounds. If Obama were not the current POTUS, it is highly doubtful that a man with his lack of experience and qualifications would be sought for the job.

The Review

Let me get this straight, Obama, you lost $1.42 trillion in your first nine months. You generated revenues of just $2.10 trillion, while you spent $3.52 trillion? And your plan is to lose another $7.68 trillion for a total of $9.1 trillion over the next ten years? And now you say, “I’m fired up and ready to go?” Well, you can go alright. You can go right now. In fact, YOU’RE FIRED!

You know, there is a Constitutional provision whereby a POTUS may be forced to leave office before his term ends. It’s called impeachment. Don’t rule it out. By the way, this isn’t personal, it’s business.

Reference:

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10603996