Bathtubs for Beginners

By James Kwak

In economics life there’s a basic conceptual distinction between a flow and a stock. A flow is a something that occurs over some period of time, like water pouring from a faucet into a bathtub. A stock is something that exists at a specific moment of time, like the water in that bathtub. You measure a flow over a period of time (e.g., gallons per minute); you measure a stock at a specific moment in time (e.g., gallons). For a business, the income statement (revenues and costs in a year) measures flows, while the balance sheet (assets and liabilities) measures a stock. That’s why the income statement is dated for a year (or a quarter) and the balance sheet is dated for a specific day. Everyone understands this. If you didn’t, you would get confused between your salary and your bank account.

But not David Brooks.

In today’s self-indulgently contrarian column, Brooks argues that the Occupy Wall Street movement is made up of “small thinkers.” Here’s his evidence:

“They will have no realistic proposal to reduce the debt or sustain the welfare state. Even if you tax away 50 percent of the income of those making between $1 million and $10 million, you only reduce the national debt by 1 percent, according to the Tax Foundation. If you confiscate all the income of those making more than $10 million, you reduce the debt by 2 percent. You would still be nibbling only meekly around the edges.”

This is incoherent to begin with. Tax policy directly affects flows, not stocks, so its impact on the national debt (a stock) is indeterminate unless you specify a length of time for the policy to be in place.

If you look at the Tax Foundation report, it says that those two policies would increase taxes by $306 billion. The Tax Foundation doesn’t even say in what year that would happen, but they link to a series that ends in 2009, so let’s say they’re using 2009 data. In 2009, GDP was $14.1 trillion, so $306 billion is 2.2 percent of GDP.

Now let’s apply that to the CBO baseline. Right now, my updated CBO-style baseline shows national debt at 61 percent of GDP in 2021 and 59 percent in 2035. If you add 2.2 percent of GDP to revenues in every year beginning in 2012, those numbers fall to 44 percent in 2021 and 5 percent in 2035 (a reduction in the debt of 54 percentage points, or 92 percent). In other words, the entire long-term deficit problem goes away.

If you prefer to use the CBO alternative scenario (in which, among other things, the Bush tax cuts are made permanent), my updated alternative scenario shows the debt at 80 percent of GDP in 2021 and 142 percent in 2035. Increase revenues by 2.2 percent of GDP and those number become 63 percent and 91 percent. These are big, big differences—a lot more than “1 percent” and “2 percent” and “nibbling meekly around the edges.”

Saying these tax changes would reduce the deficit by 3 percent (that’s 1 percent + 2 percent, by the way) is a mistake that guts the rest of the column, which is based on the idea that major tax increases on the rich wouldn’t matter. It doesn’t surprise me that David Brooks can’t do basic math, but doesn’t he have a fact checker? Or at least an editor?

The people at the Tax Foundation, I assume, are not innumerate. David S. Logan, the person who wrote the analysis that Brooks cites, must have realized that, when you open the tap further, you can’t estimate how much the water level in the bathtub will increase without specifying how long the tap will be open.* But their job is to come up with analyses that prove what they want to prove and hope that journalists will take the bait. Every so often one does.

Now, I don’t think we should have a 100 percent effective tax rate on people who make more than $10 million. But the idea that increasing taxes on the rich will have a minimal impact on the national debt is pure innumeracy. David Brooks may have something valuable to say about, well, I don’t know, but something else. But why is the Times letting someone who doesn’t understand arithmetic write about budgetary issues and the national debt?

* At least I assume he knows it. His bio says that he is in a Ph.D. program in business economics at Washington University, a school where they know their math. (When I was in the Math Olympiad Program one of the teaching assistants was a student there.)

50 thoughts on “Bathtubs for Beginners

  1. Odds are, Brooks does not have an in-house editor with any say over his content. Spelling errors and the like are probably fair game, because we wouldn’t want him to seem ignorant, but the record for the NYT OpEd page is not much better than for the WSJ OpEd page. The difference is that the NYT plays the “balance” game, while the WSJ is blatantly partisan. “Balance” in modern journalism obviates editing for content.

  2. JK, I guess you have read “How to Lie with Statistics”. Don’t know why you libs have to resort to name calling when you lose the debate based on facts. GDP is meaningless because it is minipulated by government spending. National Debt today is over 90% of GDP. How can you estimate what the deficit or national debt will be in 2021 or 2035 when Congress has not passed a budget for 2012? Talk about “self-indulgently” and “incoherent”. Your solution is keep increasing spending, increase taxes (on whatever definition you want for “rich”) and all our problems will just go away in 2035. Crazy! Ask the EuroZone how that plan is working.

  3. This is what is called dimensional analysis in the physical sciences. Why should something so dry and esoteric get in the way of a feel-good argument? We should all embrace the new order, with truthiness for all!

  4. @Bill Munny…sort of funny how you claim JK is name calling and then assert, completely without any proof or points of fact, that ‘libs lose the debate based on facts.’ Libs? The debate? There is clearly much here that is implicit in your comment. Please elaborate so the rest of us can be as sure as you.

  5. @Mr. Kwak, (When I was in the Math Olympiad Program one of the teaching assistants was a student there.)

    Right, it’s a GAME. We are talking about a financial system based on fiat $$$ issued through a fractional reserve credit scheme. It’s all made up stuff. Got nothing to do with how it really flows – SCIENTIFICALLY – you know, plants, weather, extraction of energy and other resources….that’s just the infrastructure that even robots would be programmed to adjust to….humans are totally out of the picture on Planet Kwak, don’t worry.

    The question is this – in what shape will the planet be with 7 billion people now, 12 billion (were you good at exponential math? Stats doesn’t cover the FLOW) too soon, and all we do is keep flowing fiat $$$ into CONSUMER death, destruction and misery delivering corporate industries?

    So in that REALITY, should you still have your nose in your neighbor’s personal financial account and in his his salary so that you can flow it to you? Everybody taking a just one li’l ol’ penny from Warren Buffett…?

    Who’s gonna save you….? Do you know why they are for-hire *mercenaries*?

    Nasty social engineering – get the f*kg Barney Boyz to slide out the first lower layer – the savings of *feminists*. Shouldn’t you be thinking about what they are gonna do to YOU since you are the second layer – the slave labor pile-er of Yuk Rocks – think of what they’ll do to you in good time….I’m trying to get them to go teach the grizzly bears we’re going to preserve how to fear eating humans. Top dog mercenaries respect me (if they still have that human capacity – maybe only 20% do) more than they do you – I can’t be bought. I don’t pile up rocks for any master…time travelors from the future don’t do that…we’re here to help you all get back to a very happy and comfortably stupid place on the evolutionary scale of millions of years and then you can have time to try and *love one another* without the sex-love…”

    Planet Annie :-) – merciful to my prisoners…

    We’re trying stupid plans. Genius ones did not work.

  6. So many of these writers have run out of their lifetime limit of mistakes, bad logic, or downright lies that it is amazing they could even get a job writing for the comic books.

  7. @Bill – This is a factual take-down. Dips into ad hominem, but given the magnitude of the mistake (and the repeated factual errors by Brooks), what else do you expect?

    So, what are we to do if GDP, and by extension the debt/GDP forecasts are bogus? Just make stuff up? I’ll refer you to the Ryan budget if that’s what you want.

    BTW – the corollary to your supposition that counter cycle monetary and fiscal policy is bad is that trickle down and pro-cyclic spending is good. Which has been a massive failure. The math is pretty simple, whatever the stimulus was, it was several multiples too small and had too many benefits for people that didn’t need them. The size of the issue was obscured by accounting tricks (mark-to-market – ha) and the nature of “securitization” (et al) (which are not publicly traded – hence no one knew the magnitude of the outstanding obligations). We also can’t forget that it was securitization that brought us to this point – which was aided and abetted by militant free market libertarian / Austrian / Chicago school officials and economists.

    And just to nip it in the bud, the assertion that somehow government “regulation” is the problem is a lie as well – as shown by BLS statistics.

  8. I stopped paying attention to David Brooks years ago because of nonsense like this. To David a stock is something used to make soup and Flo is a chain of brasseries.
    But seriously, almost all of the analysis on both sides treat each suggestion/proposal in a vacuum, as though each is the totality of a solution. Only the likes of Paul Ryan has the audacity to pile them together into one single inchoate program devoid of any discussion of societal consequences or understanding of the actual numbers.
    It is baldly obvious that any debt solution needs to be broad-based and multi-faceted: higher income taxes (all references to “tax reform” have become code for maintaining the status quo in effects while tinkering with the disparate elements), spending discipline (military included), and realistic medicare reform.
    The analysis I really want to see is how much the totality of income tax changes from Reagan to the present
    has cost us – including increased interest payments annually on the national debt.

  9. This may be more than most of you can handle. Please read if you want to honestly debate the issues and policies:

    Sorry I don’t have time to respond to each individual. Sounds like everyone went to the same Liberal Seminar to get your talking points. I doubt anyone on this blog will read a oppostion paper to get another view.

    Let the snide comments begin!

  10. Yes, the same Heritage.

    Interesting how righteous indignation is becoming more an aspect of troll comments. New talking points I guess.

  11. I eagerly await Bobo’s next column, where he’ll undoubtedly explain how *cutting* the taxes of those same people will somehow, despite the “tiny” amount of money involved, massively boost the economy.

  12. Here is some flow and stock. The flow is the biker, the stock is the antelope, guess who wins?

  13. Oh my goodness!! The last time academics like Kwak tried to come near the noble profession of finance, we got products like Subprime CDOs. Small armies of quant PhDs from Ivy league schools invaded wall street and created fancy products based on theoritical mathematics like the gaussian copula to create these fancy instruments no one could understand.

    Today Kwak wants us to rely on CBO estimates!! Ha Ha. What a joke. You may as well rely on S&P AAA ratings. one and the same thing.

    in August the CBO reduced their deficit estimates by $1Tr for ‘technical reasons’. What a bunch of clowns!

    Perhaps Kwak is trying to bolster Simon Johnson’s career – after all Johhny boy is a CBO economist…as is Goldman Sachs Jan Hatzius….hmmm, maybe I am onto something here….i almost think i can write a book on the lines of the 13 bankers conspiracy theory.

    Wonder what is behind MITs fee inflation? Profs like Johnson spend countless hours preaching their worthless sermons outside of school while taking a paycheck from MIT.

    “…If you add 2.2 percent of GDP to revenues in every year beginning in 2012, those numbers fall to 44 percent in 2021” Haha….my pink flying monkey says we can have 2% unemployment.

    Kwak, you should have stayed in the math olympiad program. the real world is not the place for you.

  14. Apparently, David Brooks’ badly constructed column (which is Brooks worse on, analogies, economics, mathematics??) against the Occupy Wall Street demonstrations is his version of “Eeh!! You guys suck!!!” ???

    I think David Brooks possibly imagines James Kwak sitting in a dark conference room with a fedora hat pulled low over his forehead, with dark sunglasses, taking notes from Jimmy Hoffa Jr. The imaginary scene probably goes something like this:

    Hoffa Jr.: “See it’s like this, we get the Conservative NYT columnist on his bad math, his surface knowledge of economics, and then we go for the jugular when he makes one of those horrid Brooks analogies like ‘Britney Spears did charity work, Mother Teresa did charity work, so Mother Teresa often went pantyless!!’ type analogies Brooks does…. ”

    James Kwak: [writing notes frantically] “Wow Jimmy this is gold!!! This is pure gold!!! Give me more for my next post!! More!!! Please more!!! Tomorrow the public sector unions will control the world!!!”

    Hoffa Jr. and Kwak together: [in demon-like and conspiratorial manner] “Yes!!! Tomorrow the public sector unions will control the woooorld!!!! BWAAAHAAAAHAAA!!! BWAAAHAAAHAAA!!!”

  15. Desi Girl, I like the way you think. We should hook up some time and tweek the libs some more. They can’t stand it….lol!

  16. Krugman’s incredibly lame excuse.
    Translation: I’ve spent my life hustling (making major effort) with my education, choices of career/workplaces, and the socio-economics of the area where I chose my home (See New Yorker profile) aimed to avoid smelling the sweat of regular people hanging in the atmosphere. And on top of the possibility of smelling regular people’s sweat, there’s also hand-shaking, and possibly a 10–15 minute conversion with regular people which would cause my muscles to tighten so much my bladder would feel pressure, and my sphincter muscle would tighten as to crush a raisin from a cinnamon roll into a small diamond.

    What will they do, fire him for “congregating with the masses”??? NO ONE on God’s green Earth believes this bullsh*t excuse. It’s more believable Krugman ASKED his boss if he could use NYT as an “out”.

    Krugman, you can wave your liberal flag from your desk, just please don’t LIE to people why YOU CHOSE not to go to Zuccotti Park

  17. What projection of the future can we rely upon? Each has strengths and weaknesses. The issue, as James so wisely set forth, is if you use a model, what happens when the top earning folks have to pay a tax rate that not only reflects fairness in the sense of a progressiveness. In my view, the,tax rate should be increased further to recoup the amount of wealth the top earning folks obtained by misleading the middle class into accepting expanded credit instead of their fair share of the wealth they helped produce. This process started in the late 1970s to the early 1980s, coinciding in part with the suppression of unions. There is no way to recoup this ill-gotten wealth through other means in the short term other than through taxation which, as James’s model shows, will materially reduce long term debt and fund necessary job creation. In the meantime, we should focus on adopting laws that support existing and to-be-created institutions that can challenge the moneyed classes to help workers obtain a fair measure of the wealth their work creates. If such a policy causes the super-rich to flee the USA for more generous tax-havens, we should impose an exit tax that results in their existing wealth staying in the USA. Such wealth should be distributed to those whose efforts created it, not to investment bankers, buy-out gangsters and their ilk.

    If I sound like a crazed commie, believe me, I’m not. I spent 26+ years saving capitalism from itself.

  18. Your stock-flow explanation is on the clunky side. It can be stated a lot simpler: the flow is the change in the stock.

  19. desi girl and Bill Munny should talk to each other, and leave rest of us — or most of us — alone, since we cannot comprehend their BS.

  20. Hi,

    Do you think your time is fully utilized responding to economic ignoramus? I thought the point of this blog is to have stimulating conversation about economics and not responding to political/party rhetoric.

  21. In trying to understand why David Brooks is still allowed to write a column and appear as a talking head, the only thing I can think of is that he is a brainless channel for whatever ideas are current in the right wing blog-a-sphere and his existence is predicated on his ability to disparrage those who should be helped.

  22. So is James Kwak saying that “if you tax away 50 percent of the income of those making between $1 million and $10 million, [or even] confiscate all the income of those making more than $10 million” then you are resolutely tackling the debt problem?

  23. @ little Walt: The debt solution reminds me of the characters before they were to meet the all mighty OZ. They needed to be buffed and cleaned before the introduction so they would look just like the OZ would have wanted them to look like. For the most part.

  24. This is a great blog, and I enjoy many of the fine and varied viewpoints presented by the comment contributors. Some are more technically oriented and focus generally on making incremental changes to improve market fairness (like Per K, or Woych), others wish to toss out the rascals and would like to see riots in the streets (Annie and Tony Foresta come to mind), while others come and go on occasion with eloquence, fantastic insight, and balanced nuance. Still others swoop in and cast a pall of short-sighted negativism. I wonder if the latter truly believe what they write, or if they are not just purposely sowing seeds of doubt to hinder understanding, and in so doing to preserve the status quo, which presumably benefits them and those close to them at the expense of the rest of the world. That is, I think they don’t speak from experience when they write what they write, rather they just assume the world is full of nameless, faceless lazy people.

    Early in her career, Elizabeth Warren was a dyed-in-the-wool Republican when she investigated bankruptcy, presuming that she would find lazy people eager to duck their responsibilities by wiping their slate clean and starting on a new spending binge afresh. What she found made her the champion of the downtrodden she is today. It is one thing to have a large and wasteful bureaucracy, but it is quite another thing to have an unfair system that is skewed in favor of the largest players with the most political influence. If market fairness cannot be improved, it may bring the whole system down.

  25. @simpson, “…others wish to toss out the rascals and would like to see riots in the streets (Annie and Tony Foresta come to mind)….”

    They really should make you take a course on how to be a human, or at least a course on what humans do to liars thieves and murderers – in time – eventually. I stand guilty of making sure it does NOT get ugly but instead gets channeled into the right activity – which right now is not even LOOKING at your ilk for solutions or ideas or funding….

    In other words, by 2012, I will be completely IMMUNE to having YOU color my character with shit.

  26. A correction: change ‘That is, I think…’ to ‘A more charitable interpretation is that’

  27. @jeff – apology accepted :-))

    99% is the HUMAN IMMUNE SYSTEM taking on the 1% cancer – picking maggots off of healthy skin and organs is FAIR PLAY – and a necessary part of the process of getting at the 1% aggressive, brutally armed, predatory cancer.

    I grew up hearing the DETAILS about stalinistas – which means I was vaccinated against the disease at an early age.

  28. I forwarded this post to the NYT public editor to ask him to address Mr. Kwak’s criticism of Brooks’ column. I don’t expect a response.

  29. I wrote to NPR asking that they stop using him as their “reasonable conservative” because of his intellectual dishonesty.

  30. I’ve done that as well. Diane Rehm usually has Matt Continetti, or Rich Lowry. I sent a message asking them if they can find someone who has some credibility. Maybe they have no choice but to use Brooks, Lowry, etc because “conservatives” with any credibility are very hard to find.

  31. >i almost think i can write a book on the lines of the 13 bankers conspiracy theory.

    Seems you have constructed a conspiracy theory in one line and it is not all that convincing.

  32. Yet more about Federal debt.

    But James Kwak and his buddy, Simon Johnson, have nothing to say about non-Federal debt, which is 2/3 of the debt we are “bequeathing to our grandchildren”. And Federal debt is far less a problem anyway – it could be eliminated in a few years, without inflation, by paying off retiring US bonds with Greenbacks. Why not an analysis of that, Mr. Kwak?

    Getting back to non-Federal debt – how about some talk about how it has skyrocketed in recent years? Can it keep increasing without limit? Kwak and Johnson and almost every academic ecnomist seem to think so, since they never say a word about it. Does it lead to inequality of wealth? You bet – “Them that has, gets”. Those who hold the debt get the interest, that is. Does inequality hit a ceiling? When it does, do we get a financial collapse? Interesting questions, never discussed.

    How about it, Mr. Kwak? We know Mr. Brooks will never mention non-Federal debt, since he speaks for those who hold it. What about you? Are you also working for the coupon clippers? Maybe you don’t even realize it’s what you and almost every other economist are doing..

  33. @ Does inequality hit a ceiling? When it does, do we get a financial collapse? Interesting questions, never discussed.

    Inequality starts at birth and never really ends, the only collapse comes when the growth rate declines from its historic norm(8%) and the wealthy have convinced and leveraged themselves to it, that without it the whole house o cards collapes’s, at least everything above the first floor. We built to many houses, to keep the growth rate up, and now there is a hugh bubble o houses and they are occupied,with under water, unemployed tenants. The boom kept many working from plumbers, designers/archotechs to landscapers and lunch diners. There are no logical replacements (the unions high wage demands sent ceo’s salarys skyrocketing and then they sent jobs overseas to keep their ball rolling), the second coming of christ had nearly the whole world busted and that is still fanning out like a plague. So the new game in town is save money so/like you don’t need it. Unfortunitly there are only a few of us able to currently do so.

  34. “We built to many houses, to keep the growth rate up, and now there is a hugh bubble o houses and they are occupied,with under water, unemployed tenants.”

    What a VILE talking point and sociopathic analysis.

    Like the PLANET is not trashed from a century of *overproduction* of weapons!

  35. Suggestion for your examination on the “tax the 1%” debate. Most of what I read & hear dwells on personal income. How about some analysis of business income including corporations and LLC’s. What are the gross dollars of income and taxes paid. Instead of gearing the debate toward taxing the modest number of super rich individuals, why not help inform us of the numbers of business taxpayers & the potential tax generated by modest reform of “corporate” taxes. One example: business aircraft. Everyone knows they get used extensively by executives with little oversight as to business or personal use. Why not simplify things? Government spending is “x” GDP is “Y”. Impose a simple flat tax on ALL dollars changing hands. Eliminate personal income, excise taxes, estate taxes. Tust a thought.

  36. The pretension of the arguments back and forth need a little humor. ….Lady in Red
    PS: This was written months ago by the brilliant and witty Mark Steyn — but it’s got some interesting BIG

    There is something surreal and unnerving about the so-called “debt ceiling” negotiations staggering on in Washington. In the real world, negotiations on an increase in one’s debt limit are conducted between the borrower and the lender. Only in Washington is a debt increase negotiated between two groups of borrowers.

    Actually, it’s more accurate to call them two groups of spenders. On the one side are Obama and the Democrats, who in a negotiation supposedly intended to reduce American indebtedness are (surprise!) proposing massive increasing in spending (an extra $33 billion for Pell Grants, for example). The Democrat position is: You guys always complain that we spend spend spend like there’s (what’s the phrase again?) no tomorrow, so be grateful that we’re now proposing to spend spend spend spend like there’s no this evening.

    On the other side are the Republicans, who are the closest anybody gets to representing, albeit somewhat tentatively and less than fullthroatedly, the actual borrowers — that’s to say, you and your children and grandchildren. But in essence the spenders are negotiating among themselves how much debt they’re going to burden you with. It’s like you and your missus announcing you’ve set your new credit limit at $1.3 million, and then telling the bank to send demands for repayment to Mr. and Mrs. Smith’s kindergartner next door.

    Nothing good is going to come from these ludicrously protracted negotiations over laughably meaningless accounting sleights-of-hand scheduled to kick in circa 2020. All the charade does is confirm to prudent analysts around the world that the depraved ruling class of the United States cannot self-correct, and, indeed, has no desire to.

    When the 44th president took office, he made a decision that it was time for the already unsustainable levels of government spending finally to break the bounds of reality and frolic and gambol in the magical fairy kingdom of Spendaholica: This year, the federal government borrows 43 cents of every dollar it spends, a ratio that is unprecedented. Barack Obama would like this to be, as they say, “the new normal” — at least until that 43 cents creeps up a nickel or so, and the United States government is spending twice as much as it takes in, year in, year out, now and forever. If the Republicans refuse to go along with that, well, then the negotiations will collapse and, as he told Scott Pelley on CBS the other night, Gran’ma gets it. That monthly Social Security check? Fuhgeddabouddit. “I cannot guarantee that those checks go out on August 3rd if we haven’t resolved this issue,” declared the president. “Because there may simply not be the money in the coffers to do it.”

    But hang on. I thought the Social Security checks came out of the famous “Social Security trust fund,” whose “trustees” assure us there’s currently $2.6 trillion in there. Which should be enough for the August 3rd check run, shouldn’t it? Golly, to listen to the president, you’d almost get the impression that, by the time you saw the padlock off the old Social Security lockbox, there’s nothing in there but a yellowing IOU and a couple of moths. Indeed, to listen to Obama, one might easily conclude that the whole rotten, stinking edifice of federal government is an accounting trick. And that can’t possibly be so, can it?

    For the Most Gifted Orator in Human History, the president these days speaks largely in clichés, most of which he doesn’t seem to be quite on top of. “Eric, don’t call my bluff,” he sternly reprimanded the GOP’s Eric Cantor. Usually, if you’re bluffing, the trick is not to announce it upfront. But, in fact, in his threat to have Granny eating dog food by Labor Day, Obama was calling his own bluff. The giant bluff against the future that is government spending.

    How many of “the wealthy” do you require to cover a one-and-a-half trillion-dollar shortfall every single year? When you need this big a fix, there aren’t enough people to stick it to. “We are not broke,” insists Van Jones, Obama’s former “green jobs” czar and bespoke Communist. “We were robbed, we were robbed. And somebody has our money!”

    The somebody who has our money is the government. They waste it on self-aggrandizing ideologue nitwits like Van Jones and his “green jobs” racket. How’s the “green jobs” scene in your town? Going gangbusters, is it? Every day these guys burn through so much that they can never bridge the gap. By that, I don’t mean that an American government that raises $2 trillion but spends $4 trillion has outspent America, but that it’s outspent the planet. In my soon to be imminently forthcoming book, I discuss a study published last year by John Kitchen of the U.S. Treasury and Menzie Chinn of the University of Wisconsin. Its very title is a testament to where we’re headed:

    “Financing U.S. Debt: Is There Enough Money In The World — And At What Cost?”

    The authors’ answer is yes, technically, there is enough money in the world — in the sense that, on current projections, by 2020 all it will take to finance the government of the United States is for the rest of the planet to be willing to sink 19 percent of its GDP into U.S. Treasury debt. Which Kitchen and Chinn say is technically doable. Yeah. In the same sense that me dating Scarlett Johansson is technically doable.

    Unfortunately, neither Scarlett nor the rest of the planet is willing to do it. It’s not 2020 and we’re not yet asking the rest of the planet for a fifth of its GDP. But already the world is imposing its own debt ceiling. Most of the debt issued by the Treasury so far this year has been borrowed from the Federal Reserve. That adds another absurd wrinkle to the D.C. charade: Washington is negotiating with itself over how much money to lend itself.

    Meanwhile, the World’s Greatest Orator bemoans the “intransigence” of Republicans. Okay, what’s your plan? Give us one actual program you’re willing to cut, right now. Oh, don’t worry, says Barack Obluffer. To demonstrate how serious he is, he’s offered to put on the table for fiscal year 2012 spending cuts of (stand well back now) $2 billion. That would be a lot in, say, Iceland or even Australia. Once upon a time it would have been a lot even in Washington. But today $2 billion is what the Brokest Nation in History borrows every ten hours. In other words, in less time than he spends sitting across the table negotiating his $2 billion cut, he’s already borrowed it all back. A negotiation with Obama is literally not worth the time.

    In order to fund Obamacare and the other opiates of Big Government dependency, the feds need to take 25 percent of GDP, now and forever: The “new normal.” It can’t be done. Look around you. The new normal’s already here: flatline jobs market, negative equity, the dead-parrot economy. What comes next will be profoundly abnormal. His name was Obamandias, King of Kings. Look upon his works, ye mighty, and despair. Round the decay of that colossal wreck, boundless and bare, the lone and level sands stretch far away.

    Do they still teach Shelley in high school? Or just the “diversity manual” about “social justice” the Omaha Public Schools paid for with $130,000 of “stimulus” funding?

  37. And from the ever witty Iowahawk. ….Lady in Re

    Feed Your Family on $10 Billion a Day

    Seems like these days I hear a lot of whiney whiners whining about “out of control government spending” and “insane deficits” and such, trying to make hay out of a bunch of pointy-head boring finance hooey. Sure, $3.7 trillion of spending sounds like a big number. “Oh, boo-hoo, how are we going to get $3.7 trillion dollars? We’re broke, boo-hoo-hoo,” whine the whiners. What these skinflint crybabies fail to realize is that $3.7 trillion is for an entire year – which translates into only a measly $10 billion per day!

    Mister, I call that a bargain. Especially since it pays for all of us – you and me, the whole American family. Like all families, we Americas have to pay for things – health, food, safety, uncle Dave America with his drinking problem. And when little Billy America wants that new quad runner they promised, do Mom and Dad America deny him? No, they get a second job at Circle K, because they know little Billy might have one of his episodes and burn down the house.

    So let’s all sit down together as an American family with a calendar and make a yearly budget. First, let’s lock in the $3.7 trillion of critical family spending priorities; now let’s get to work on collecting the pay-as-we-go $10 billion daily cash flow we need.

    12:01 AM, January 1
    Let’s start the year out right by going after some evil corporations and their obscene profits. And who is more evil than those twin spawns of Lucifer himself, Exxon Mobil and Walmart? Together these two largest American industrial behemoths raked in, between them, $34 billion in 2010 global profits. Let’s teach ’em both a lesson and confiscate it for the public good. This will get us through…

    9:52 AM January 4
    Okay, maybe I underestimated our take. But we shouldn’t let Exxon and Walmart distract us from all those other corporate profiteers out there worth shaking down. In fact, why don’t we grab every cent of 2010 profit made by the other 498 members of the Fortune 500? That will net us another, let’s see, $357 billion! Enough to get us to…

    2:00 AM February 9
    So we’re running out of corporate cash, but look – it’s Super Bowl time! As we all know, the game has become a crass disgusting festival of commercialism. So let’s take all the TV ad money spent on stupid Super Bowl ads, and apply that to government needs. That would be $250 million, enough to fund us for, let’s see… 36 minutes. The half time show, at least. But why stop there? Let’s take every cent of ad money spent on all 45 Super Bowls, a cool $5 billion, which would cover us until…

    2:00 PM February 9
    Speaking of sports, why should the players be immune to our pressing public needs? Lord knows professional athletes make obscene salaries for playing a dumb game. So let’s take the combined salaries of all players in the NFL, Major League Baseball, the NBA, and the NHL. Hey, they’ve got endorsement deals, they’ll hardly miss it. Throw in the total winnings of everybody on the PGA tour and NASCAR, and we get $9.4 billion, enough to get us through until…

    1:00 PM February 10
    Okay, it’s time to stop messing around. Athletes aren’t the only ones greedily raking it in. What about America’s rich – those fancy pants fat cats living the high life in the above-$250,000 income bracket? According to IRS statistics, these 1.93% of US households are hogging 25% of US income. And why do they need it? For crying out loud, they probably stole it anyway. I say let’s take 100% of every penny they make above $250,000. They can use the rest to pay their state and local taxes. Now we’re talking big bucks, brother. How much? Let’s see…

    A: Number of US households: 116,000,000
    B: Average US household income: $68,000 (median = $52,000)
    C: Total US household income (A * B): $7.89 trillion
    D: Percent of households above $250k income: 1.93%
    E: Number of households above $250k income (A*D): 2,238,800
    F: Percent of national income earned by households making $250k or more = 25%
    G: Total income of households making $250k or more (C*F): $1.97 trillion
    H: Total income of households in excess of $250k (G – E*$250,000) = $1.412 trillion

    Alright! Take that, fat cats! Our $1.412 trillion windfall has us covered for the next 141 days, or until…

    6:00 PM July 2
    Well, I guess maybe there are a few items we can cut from the budget. Those quagmires in Iraq and Afghanistan, for example. Why don’t we end all funding for those wars, and bring our troops home to march in the Fourth of July parade? That would save us $105 billion Afghanistan and $159 billion in Iraq, a total of $264 billion – enough savings to cover us until…

    4:00 AM July 29
    Summer blockbuster season! And of course the biggest blockbuster of all time was Star Wars. To punish George Lucas for those stupid sequels, let’s confiscate every penny of revenue generated by the Star Wars franchise since 1977 – movies, TV rights, books, toys, action figures, everything – which nets us $25 billion. Enough to keep the lights on until…

    4:00 PM August 1
    Well, there’s plenty more money in Hollywood to go after. So, for the national good, let’s evict everyone in Beverly Hills and sell their homes at current market value. 15,000 homes at $2 million per gets us another $30 billion, paying the bills through…

    4:00 PM August 4
    The kids will be going back to school soon, so we’re gonna have to bring out the big guns and really go after those moneybag plutocrats like Warren Buffett and Bill Gates. Between ’em, those two bastards have amassed a combined fortune of $100 billion. What kind of jerk needs that kind of money? The worst thing is they’re shielding it from the public treasury using the oldest trick in the billionaire playbook – by continuing to live. Once they kick the bucket, and after we close the estate tax loopholes, the American public will get the 50% of their ill-gotten loot we so richly deserve. So let’s say we arrange a couple of unfortunate “accidents” for Mssrs. Gates and Buffett. Now we’ve got another $50 billion for the US coffers, enough to get us to…

    4:00 PM August 9
    Aw, screw it. There are plenty more American billionaires to go after – 398 more to be precise, according to the latest Forbes 400, with a combined total net worth of $1.29 trillion. 398 more “accidents,” 398 more estates taxed at 50%, and we’ve got another $650 billion to tide us through…

    4:00 PM October 13
    Crap. Okay, let’s just kill all the billionaires and take all their money. Add in another 100 or so of the almost-billionaires, and that buys us an additional 73 days until…

    4:00 PM December 25
    Merry Christmas! Just one more week to go. In the spirit of the season, let’s give the surviving conservative wingnuts a few of the budget cuts they’ve been bitching for, like getting rid of foreign aid. This saves $50 billion – getting us to…

    4:00 PM December 30
    Only 32 hours to go! To cover the remaining $12.5 billion vital federal program tab, let’s pass the cash bucket and demand every surviving American man, woman and child to kick in another another $40 bucks. I’m pretty sure they will, after all those previous “accidents.”

    12:00 AM January 1
    Happy New Year!

    See? Easy peasy lemon squeezy. Time to do it all again, except this time we’ll need to come up with $11 billion per day. I’m sure we’ll figure it out somehow.

    Do you know where we can get some more plutocrats?


    Too many incompetant babushka busybodies in HR….? HR departments provide propaganda for WHY no one is qualified to fill the jobs because this, too, is a game – they don’t really intend to hire anyone – if they hired people for all these open positions, the ratio in the salaries between the CEO and the engineer would be squeezed – meaning the CEO could no longer pocket the $$$$ *saved* by not hiring and/or cutting staff.

    Not very complicated math….

  39. Why do we allow people to use the term “welfare state” with its negative connotations when referring to government programs that distribute something (cash, student loans, food stamps, healthcare, etc.) to individuals, but not use the same term when referring to government programs that distribute something (farm subsidies, subsidized mineral extraction, bank bailouts, corporate tax holidays, etc.) to businesses? In both cases, government is redistributing wealth from one group to another.

  40. To Bill Munny

    You asserted:
    “GDP is meaningless because it is minipulated by government spending.”

    I thought the whole argument around conservative economics was that fiscal policy had no effect on GDP. Nice to see that you have become a Keynesian.

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