Lies And Truths About The Budget

Truths - Lies How about a little scorecard? False

  • The Democrats have presented a coherent plan; the Republicans are obstructing. Lie.  The Constitution says that all revenue bills must originate in The House.  The Senate’s role is one of concurrence; it is not able to (lawfully) initiate spending.  Sorry Harry, that’s how it is, and our government was designed this way on purpose because The House is the “more-connected” body to the people.
  • Obama can refuse to negotiate and thus can get what he wants, like it or not. Lie.  Obama is President, not dictator.  The President is, in the context of spending, intentionally weak.  While he puts forward a “budget” it is nothing more than a mere suggestion with no force of law.  See the above point for why this is the case.  As such the President can turn his back but if he does there is no obligation for Congress to do as he demands.
  • The Republicans are the part of fiscal restraint. Lie.  They may want this mantle now, but they sure as hell haven’t up until this point.  One can argue “better late than never” but the fact remains that even today there is no broad agreement among Republicans to stop spending more than the government makes.
  • If we don’t raise the debt ceiling we will default.  Lie.  The government takes in roughly 10 times as much tax revenue in a given month as it must pay in interest.  If there is in fact a default on the debt it would be an intentional act by the Treasury, not due to running out of money.  What refusal to raise the debt ceiling would do is force an immediate balanced budget.
  • “Tea Party” Republicans want a balanced budget.  Lie.  Go ask them for their public, on the record statements to the effect that they will not accept deficit spending.  Good luck — even so-called “fiscally responsible” Republicans refuse to make such statements and more than one of them has had their staff told to fuck off, in those exact words, by me personally over this very point.
  • Deficits don’t matter.  Lie.  Every dollar of credit emitted in excess of GDP debases someone’s purchasing power and that debasment happens immediately and without fail.  It cannot be otherwise because this is a matter of arithmetic, not politics.  That we have shoved much of this offshore is even more offensive than if we “ate” it here at home, as this crap has been directly responsible for much loss of life and political dislocation worldwide, including in Egypt and now in India.
  • Obama’s and The Democrats plan, if the Republicans cave, will lead to economic improvement — and already has. Lie.  The Federal Reserve has conspired with government to keep the party going by buying up nearly one trillion in bonds over the last year and even more in their prior programs, but since 2009 there has been exactly zero progress in employment as a percentage of the working-age population that has a job.  Worse, the vast majority of those jobs that were created were part-time, low-wage or both.  This is why food stamps and other entitlement benefits are at all all-time high.
  • Obamacare will help bring down health costs.  Lie.  At best it will shift costs from one person to another.  Until and unless the medical monopolies, which are pervasive and cross all boundaries in the medical field, are broken there is no solution to this problem that will actually work.  At best we can hide it for a while longer, disadvantaging more and more people until the cost of inaction finally collapses the government and our society.
  • Congress doesn’t understand the above. Lie.  I have personally been to Washington DC and explained it to multiple staff members, using their (the government’s and The Fed’s) numbers and charts.  Incidentally, I’ve explained it publicly too, and do all the time here — and have since 2007.  They know damn well I’m right but there is also no policy desire to step to the microphone and tell you that.  In other words they’re cowards — all of them with damned few exceptions (e.g. Senator Cruz.)
  • We can get out of this without taking the personal pain required to fix the excessive leverage that has been piled on in America.  Lie.  The damage is in fact being compounded on an ongoing and daily basis by our present policies and, much like a poker player who has gone “all in” with a crap hand they know they’re trapped on both sides of the aisle.
  • An economic Depression would be worse than in the 1930s and we would all suffer dramatically. Lie.  In 1920/21 there was an economic dislocation that was the worst, in terms of contraction per unit of time, ever recorded — producer prices fell by 40% in less than 12 months!  But this dislocation, which was brought about by outrageously-distorted economic conditions related to the end of WWI, was left alone and the budget balanced.  The result was that the market cleared on its own and full employment was restored within 18 months, with industrial production rising at a rate never-since duplicated.  In short this adjustment, which we must take, would be followed by a reallocation of production and investment in the economy that would be good rather than bad.  (As an aside when have you seen 1920/21 mentioned on the TV or in the mainstream economic press?  That would be never — guess why….)

How about some truths?


  • If we strip the medical monopolies the rest of the fiscal problems are easily addressed.  Truth.  And not only at the federal level either; nearly all of the state and local budget problems are also tied to medical monopoly practices!
  • If we strip medical monopolies then we would have an instantaneous economic depression. Truth.  Collapsing those monopolies would result in a ~15-20% decline in GDP almost overnight.  But, keep reading….
  • Deflation is good, not bad.  Truth.  You like deflation, in fact, and ought to be demanding it.  You would like lower prices for food, medicine, cars, cell phones and everything else you buy.  The only people who don’t like deflation are those who want to buy something and then sell it to you, unchanged and with no value added, for more.  Think about it.  Those who produce things want to spend less and get more.  That’s productivity improvement and it’s good, not bad.  The only people who don’t like this economic condition are those who want you to borrow money you don’t have to buy things you don’t need from them after they have purchased them first, adding no value in the process but rather simply skimming off a piece of the funds for themselves.
  • The natural state of an economy is deflationary.  Truth.  Productivity improvements make this true over any reasonably-long period of time.  Mechanization of farms, factories, computerization and more have all made it possible to do more with less.  You, and not someone else, should get the benefit of that which you improve with your own hand and mind.  Deflation is that benefit.  Start calling out the liars who claim otherwise.

Thus ends our list for today….

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