The Math (Part II)

I'm sorry, but if you've come to my professorial office hours for help with the exercise, you'll have to wait till next class.

One of my correspondents at the Club for Growth -- which has key-voted the defeat of the Boehner plan -- replied almost immediately thus:

The only thing that math can't immediately conclude, however, is if the spending cuts will ever materialize.  The big joke about the Boehner Plan is that it increases the debt limit NOW for only the promise of spending cuts over the next 3650-ish days.  It's a fool's bargain.

I've Done the Math

There are two things that have come up during the debt limit battle that deserve some mathematical analysis, and as a former math professor, I'm just the guy to do them for you.

First is the discovery by someone -- trumpeted yesterday by none other than our Hero of the Revolution Rush Limbaugh -- that the CBO would score a ten year clamping of spending at last year's level as a $10T cut in spending over ten years.

The Debt Limit End Game for the Republican House

According to Congressional Budget Office projections, in fiscal year 2011 Federal spending will amount to about $3.7T*, and tax revenue only to about $2.2T.  That excess of spending over taxation of $1.5T, means we are borrowing about 40 cents of every dollar we are spending now.

Thus, if we hit the debt ceiling next month -- our credit card limit -- and have to immediately balance our budget, we will be forced to cut spending by 40%.  Social Security, Medicare, Medicaid, and interest in the debt amount to something near 50% of current spending.  If we insist that those are the most important things to do once the debt limit is reached, we will then have only about 10% of current spending to cover the remaining 50%.

The Tale of the Prodigal Brother-in-Law (Part II)

About my tale of the prodigal brother-in-law (Will Failure to Raise the Debt Ceiling Harm Our Credit Rating?) one of my correspondents wrote

This recalls my proposal many years ago for the National Brother-in-Law Act. It was a suggestion that we remove the middle man (i.e., the Federal government) in dealing with welfare. Every family (satisfying some arbitrary income level) would simply be assigned a poor person who would live with them. Like you fabled brother-in-law, he would eat your food, and wear your robe, while sitting around the house, reading your newspaper and waiting for the next free meal. After a brief increase in homicides, these folk would be put directly to work, mowing the lawn, washing the car, cleaning the pool, etc., In some cases, they would take over, but you would know the face of your oppressor personally, (not just as a faceless bureaucrat). For some reason, this idea never caught on.

I think we might have a theme going here.

Will Failure to Raise the Debt Limit Harm Our Credit Rating?

Imagine you have a financially irresponsible brother-in-law.  He's not a ne'er-do-well, as he and your sister make good money, but he spends more than he makes.  He's been doing it for years, and he's deeply in debt to you and your other siblings.  You've been loaning him about five or ten percent of his annual income each year to maintain his life style. 

He's superficially responsible about it, signing a note for each new loan, making interest payments every six months on the notes and paying off the older notes when they come due after one year, or five years, or ten years, but every year he's back asking for enough to pay off the interest and debt that's coming due, and borrowing more to increase the total loan. His debt has mounted up over the years to 70% of his annual income.

How Big Are the Cuts in the Proposed Debt Limit Deal?

I think it's important that we understand the deal on the debt limit that the Republican House and Senate leadership has proposed for months now.

It is that Republicans will vote for a $2.5T increase in the debt limit only if the bill includes $2.5T in cuts in spending and no increases in tax rates.  I have pointed out to all within earshot -- sometimes a quarter mile -- that the deal would get done because the proposed cuts would be over a long period, probably ten years.  That the proposed period is ten years was finally confirmed in very recent news stories on the negotiations.

Judicial Precedents Paved the Road to Serfdom (Part II)

I liked the previous piece of this series a lot.  When I reread it, I liked it so much I reread it again.  In the days after it went out, however, I was reminded of my favorite -- actually my only -- Nietzsche quote: "Every doer loves his deed much more than it deserves to be loved."

From the response I got from you, my faithful correspondents, Nietzsche was right, because it apparently didn't resonate.  One of you said that I had gone all intellectual, and that it was "Too esoteric.  And too long."

Another one said, "I liked that piece you wrote earlier this week."

Which one?" said I, hopefully.

Judicial Precedents Paved the Road to Serfdom

Judicial protection of our economic freedoms under the so-called rule of law* languishes today under a pile of ridiculously reasoned Depression-era precedents extorted from the Supreme Court of the United States (henceforth SCOTUS) by the then President of the United States (henceforth FDR).  He threatened them with loss of face from the overturning of their precedents defending economic freedom -- Oooo, scandalous! -- by a new SCOTUS altered by his appointment of six new, presumably progressivist Justices after having Congress quite constitutionally increase the number of Justices on the Court from nine to fifteen.

By The Rude Bridge that Arched the Flood

My brother lived in Boston for many years.  He used to take visitors out to Concord and give them the story of Emerson's "rude bridge"  in his own way.  Though it's written for Patriot's Day, April 19th, a State Holiday in Massachusetts, it is about the event that led roughly 15 months later, to the Declaration of Independence we celebrate today.

But I should let him tell his story, which I would like to dedicate today to our friend and former Senator Harrison Schmitt and his fellow astronauts of the US space program, past and present.

>>>>>>>>>>>>>   <<<<<<<<<<<<<<

I've a habit of taking out-of-town relatives and friends, and especially their kids, out to Concord, and walking them to the medium-sized obelisk with the "rude bridge" line from Emerson's "Concord Hymn" on it.

A Day of Reckoning for Economic Ignorance

I have written that when it comes to economic productivity, Democrats are cargo cultists: they have no idea how or why things get made and they believe that the amount of goods and services produced is the same at any price.  Worse yet, they believe that the only job of the five hundred forty-five wise men in DC -- 435 + 100 + 1 + 9 -- is to divvy things up.

How economically illiterate -- illeconomate? -- is The Awesome One really?  He professes to believe that the automation of the bank teller functions thirty-five years ago and the subsequent wide distribution of the remote banking terminals that we know today as ATMs is a cause of his term's lingering unemployment rather than a net time saver for the economy and an efficiency for everyone who needs some cash from their bank account.

The Fantasy of Five Wise Men

George Will here summarizes Reckless Endangerment, Gretchen Morgenson and Joshua Rosner's scathing indictment of Democrats for causing the 2008 financial collapse, a crisis responsible for the length of this recession and the weakness of its recovery.  Morgenson and Rosner make clear that this collapse was caused by government mandates pushed by Democrats starting in the early nineties that forced the financial industry to make home loans to borrowers who would probably not be able to repay them.