© 2010, Pontificus. All rights reserved.

Spending your way to debt bondage

In the sea of self-righteous proclamations by Democrats in Congress to wait for the new Republican Senator from Massachusetts before engaging in further healthcare debate, the same induhviduals have carefully neglected to discuss the real elephant in the room. Namely the national debt.

The reason is now obvious. Harry Reid and company clearly wanted to pass the biggest increase in the national debt ever, and saying that they would wait for Brown on such a key issue would have made them liars.

So there it goes, a $1.9 TRILLION dollar addition to the national debt, care of the Democrat Senate.¹ The vote was on party lines, 60-40, and would have failed had Reid waited another few days.

To put this number in perspective, it represents about 53% of the 2010 federal budget, as submitted by the biggest spender ever to occupy the White House. It also increases the national debt by a whopping 15%, the biggest percentage ever, in addition to by far the biggest absolute value ever. And it increases the direct national debt to $45,000 for every American man, woman and child.

This vote by the Democrat controlled Senate shows that Democrats with Harry Reid at the helm take issue with Brown, who might have taken away their credit card and impacted their freespending habits. Should the Democrat controlled House concur that the credit card limit should be raised by this whopper, the Democrats lead by Reid, Pelosi and Obama will be free to spend their way into the worst possible future for the American people. Namely debt bondage.²

© 2010, Pontificus. All rights reserved.

Obama's Fall Gal?

Analyzing the stunning victory for the Republicans in Massachusetts, one of the most liberal states in the Union, one comes away with various theories on what might have been playing out behind the scenes. Here’s one of those theories for your enjoyment.

Let’s pretend that we are a narcissistic¹ politician occupying the White House, and our only goal is to ensure re-election for a second term. Would it matter if our radical policies pass? Of course not. What matters is that enough people believe that we can bring Hope and Change™ and that problems are caused by the evil opposing party.

In that scenario, how would we approach a key Senate election in a traditionally radically Democratic state?

Easy. Act as if a Coakley victory is a done deal.

If it is, we continue to look like the Messiah™ that some would like us to be, and we can keep our policies going at full speed as before.

If it isn’t, it’s a blessing in disguise, as it provides a convenient explanation for the failure of our radical policies for healthcare, the economy, taxes and the environment. This guarantees that there will be a good load of warm steaming Hope and Change™ available when it comes time for our next re-election.

How likely is it that Obama pursued such a cynical² win-win strategy? You decide.

© 2010, Pontificus. All rights reserved.

What Obamacare Means For You

Obamacare

• The Efficiency of the Postal Service
• The Sustainability of Social Security
• and all the Compassion of the IRS

(No further comment)

© 2009, Pontificus. All rights reserved.

Nevada Development Authority

The Golden State hasn’t been that golden in a long while. Year after year the state seems to move from one budget crisis to the next. From one massive budget shortfall to another just as big or bigger. If political speeches promising a better future had any worth, the state would be platinum by now.

The experience that California is going through can be very helpful to the rest of the nation.

If we were to look at what the state has done to avoid technical default, it would be an amazingly long list, just to name a few:

1. Defer payments to its creditors;
2. Front-load tax payment obligations from its residents;
3. Short term furloughs;
4. Pile on more debt;
5. Reduce services; and
6. Increase already high taxes on its residents.

To someone who has not followed the events more closely these maneuverings might give the impression that the state is addressing its budget problems. However the reality remains that if it were not a state it would have been in actual bankruptcy years ago.

One might conclude that California has done all it can, and that all the state needs to do is weather the current economic storm so that it can look forward to a bright future again.

But such a conclusion would be wrong on two accounts.

First, the state has bit by bit destroyed the business environment that made it the birthplace of many high technology industry giants, and the laboratory in which many of the things we take for granted today were invented. A few such examples are the mouse (Stanford), the graphical user interface (Xerox), the modern hard drive (IBM), and Ethernet (Xerox).¹

Second, California continues to avoid doing the one thing it should have done years ago: cut its programs that are bankrupting it. After adjusting for inflation and population California has increased its state spending per capita by 38% in the past 10 years.²

Even though the answer is staring every Californian right in the face, the state imposed yet another round of gimmicks, short term accounting adjustments and more debt to make it through the 2009-2010 budget year that was almost $25 billion short (about 22%). Now as the 2010-2011 budget year is getting closer, it seems that another $14 billion deficit needs lipstick.³

It’s not difficult to figure out where to look for real solutions to these problems. To start, here are a few good ideas by Craig Westover at the Minnesota Free Market Institute. While Mr. Westover makes the proposals for Minnesota, they apply equally to California:⁴

1. Reform the state tax system;
2. Cut state spending;
3. Limit state regulatory activity;
4. Reform tort law; and
5. Reform the relationship of state and local government.

Should California fail to address the root of its budget problems, then the rest of the country will get to observe the Great California Bankruptcy Experiment and hopefully learn what not to do.

© 2009, Pontificus. All rights reserved.

One would think that the the global warming predictions — and the so-called models they are based on — were sufficiently busted through actual observations of the weather and solid science¹ that there would be no further discussion of laws relying on them. But things aren’t so simple when money becomes part of the discussion.

We could still see Cap and Tax (called Cap and Trade by some) enacted, and create yet another job and economy killer for the United States. Visit NoCapAndTrade.com for details.

© 2009, Pontificus. All rights reserved.

Not so fast. The Bureau of Labor Statistics (BLS) has many methods for computing unemployment, only one of which is presented as the official unemployment rate.

Further, independent third parties provide their own computations for unemployment rates as they would be performed in other countries, or using methodology BLS applied in the past, but has since changed.

The BLS definition for unemployment is actually relatively simple:

Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work.¹

This main definition leaves out long term unemployed, “discouraged workers”, and others who have not found work for some time.² These “marginally attached workers” increase the pool of the unemployed significantly, and are tracked by the BLS as the U-6 measure.³

Unemployment rates (from shadowstats.com)

As can be seen from this chart provided by shadowstats.com, the U-6 measure is significantly higher than the “official” U-3. (Shadowstats also computes their own “SGS Alternate” unemployment rate, which merits a discussion of its own.)

The takeaways from this are straight forward:

1. Unemployment rate as officially published (as the BLS U-3) is a relatively narrow measure,
2. The BLS U-6 measure is more accurate in defining the proportion of the work force that is idle, and
3. There are additional methods for estimating the unemployment rate that provide even higher results.

To tip off some future topics, it’s interesting to note that the U-3 and U-6 measures appear to show a dip in mid-2009, followed by continued rapid increase in unemployment…

© 2009, Pontificus. All rights reserved.