Rome did this. Where are the Romans?

Stop spending money we do have, as in stop taking it from the very people who create jobs.. That money has been stolen from people who dared to be productive.. That and end entitlements. If we don't get people off the idea that government is supposed to take care of them then it will happen all over again. We need to tell the seniors who depend solely on SS to go live with tier kids, privatize public schools, Deregulate several things, dismantle the IRS-EPA-NEA and all those other letter institutions. Then we will be getting somewhere. Whatever petty little budget cuts they make now are a joke. And the tea partiers aren't going to get behind this. As I have said before I think they are mostly full of it. They want a bunch of freebies and they want them paid for with fairy dust.. Unless there is a serious awakening or we crumble as a nation.. this is what we are stuck with.. Or we will wind up like England.. where everyone goes to college and no one has a job..+9

He's correct on the larger point, but wrong on the specifics. The 'Bush Tax Cuts' aren't the problem. They're probably not helping, but they're certainly not 'ruinous'. Similarly discretionary spending really isn't the problem, the problem is rooted in entitlements. Currently 2/3 of the budget is devoted to transfers.

The obvious concern with introducing a national sales tax w/o first addressing spending is that the government will increase the budget to absorb any new revenue from the tax. So structural fiscal reforms are needed first.

The accumulation of local, state, and federal debt has recently exceeded GDP. This is likely to be a tipping point for the value of the dollar, which will become apparent through borrowing costs and monetary inflation.

----

Also WTF? is someone who opposes the Bush Tax Cuts because they benefit the rich proposing a sales tax, which is the most regressive form of taxation available?

Can I substitute the unpaid furlough I was forced to take last year, which I figure cut my pay by close to five percent for this sales tax?

I gave at the office.

It is about time those who are spending my money did the same.

I've never quite understood the affinity for raising and/or adding more taxes. Other than removing money from the pockets of people who will create wealth isn't it obvious that government will just spend the money raised (seized) frivolously. Of course once the five percent is gone we'll need a ten percent national sales tax.

Jfp,

Exactly. There will never be enough money. The will always be some twit who is sure this really important thing over here should be payed for by the government. And there will always be a senator or congressman who has a wife/brother/friend who is very interested in that topic and wants to help who would be perfect to run that and be the CEO/ manager/head of that Org/charity/government bureaucracy. Of coarse they will put friends, who aren't really expected to show up for work, on the board of directors too.. Convincing someone that the government charity doesn't work is near impossible. Especially if they get to harrass and aggravate the people they are supposed to be helping.

Like chesteron said, a person who tortures for pleasure will eventually quite. One who tortures you for your own good won't. The way things are running those on Medicare and SS had better run fast and far to avoid the coming fate. They will be cut off from things slowly and it will always be for their own good.. Death panels won't be the worst of it. I would put it past the government to come in a set a standard budget for seniors.. Tell them how much they should spend on each things. Then they can underbudget them and cut their benefits accordingly.. I could be wrong though..

However, if they did as I wish, instead of hanging on desperately to the bureaucracy, then each family would have the extra income and expanded buying power to take care of the parent.. If I were an old person with nephews or kids I'd be asking myself, do I want the government to gradually kill me or live happily with a loving relative..

Ok.. People who torture for pleasure will eventually quit.. My iPod has decided the word quit doesn't exist?

And I wouldn't put is past the government to.....

Sorry.

For the U.S. to restore any kind of fiscal sanity, we would have to cut $2 trillion of spending NOW, which would not only allow us to eliminate the current-year deficit but begin paying back the debt we already have. (Note how pleased they are for cutting $61 billion. It's surreal.)

The only way to cut $2 trillion in spending is (for starters) to get out of both Iraq and Afghanistan, and then make massive cuts to entitlements. Self-reliance is such a foreign concept to many Americans now, that will be a hard sell. Also you have millions of baby boomers turning 65 who "want back what they paid in" even though what they paid in has already been spent.

Don't count on any kind of meaningful cuts - we don't have leaders OR a populace willing to do it. Instead, expect the endless money printing to continue, and start reading up on what has happened to various countries who experienced a currency crisis. Argentina, Chile, the Weimar Republic, and Russia when the Soviet Union fell. Everyone in those countries did not die - life went on - but life got pretty hard. Also read about what life was like in Great Britain after their pound sterling lost its status as the world's reserve currency. Because that is exactly what is going to happen here.

Here is what I mean:

http://people-press.org/report/?pageid=1901

Americans say they would like to eliminate federal deficits and lower our debt, but when it comes to what specific things to cut, they think Santa Claus exists.

As long as the populace remains this hopelessly delusional and stupid, there is no hope. The money-printing will continue until it can't. The U.S. dollar will lose its status as the world's reserve currency, and then Americans will experience a world of discomfort that will make government spending cuts look pale by comparison.

I give it:

50% likely to happen this year
90% likely to happen by the end of next year
100% likely to happen within 5 years

And yet it will come as a complete surprise to most people. They'll get mad and blame the government. Yet the reason the government isn't cutting spending is because it's following the will of the people, and the people are a bunch of clueless douchebags.

PJ, "getting out" of Iraq and Afghanistan would cost more than finishing the job, and it's less than one tenth of one percent of the budget.

To start with, we can eliminate the personal income tax and the IRS. Starve the beast. They can't spend what they don't have, and nobody's gonna loan DC more money.

Then we can scale back the EPA and FCC. Eliminate the DEA (if they haven't won the "war on drugs" by now, they aren't going to. May as well let the streets solve it.), sell off most federal land holdings to private trusts, eliminate the bulk of congressional staffs, cut congressional salaries by 50%, cancel all payments of social security to anyone under the age of 55 (and stop collecting the money).

Audit Medicare and Medicaid. Prosecute all fraud.

Eliminate all direct and block payments of individual assistance from the federal government. If the states can't figure it out, tough shit.

Transfer ownership of all interstate highways to the states, and eliminate federal subsidies for highway maintenance.

Eliminate all subsidies for farmers, manufacturers, etc.

That's a good start.

I'll stop when the government spends less than 10% of GDP.

Honestly brian, I don't know how much that all would help. These political cock suckers would create fake people to give money to, then line their own pockets with it, see Al Gore and his global warming scheme.

The giant elephant in the room is entitlements. You could do everything Brian suggested, AND end both wars, and we would still be running in the red each year. If we are going to eliminate the deficit (leaving aside the question of our existing debt for now) there is no way to do it without making cuts to entitlements.

Everyone wants to get their Social Security checks, but they don't stop to question how much those checks will buy when the dollar loses its value. They think the Federal Reserve is spinning straw into gold.

"That's a good start."

That's also delusional, Brian. Case in point: the Department of Education. The fact that there is not one word in the US constitution giving the federal government any authority over children's education did not stop Jimmy Carter from creating this monster in 1979. It's current budget is $ 60 billion, plus $ 50 billion of American Recovery & Reinvestment Act funding. What, exactly, has it delivered in return for the staggering amount of money it sucked up over the past 32 years? If America can't bring itself to even think about eliminating an unconstitutional bureaucracy with a proven record of absolute uselessness, then I just don't see how any of the items on your list will become reality until the economy reaches the point where an American dollar has about the same value as a Zimbabwe dollar.

Government spending, borrowing, debt, and promises like Medicare and Social Security and all huge numbers. They can't be comprehended as is.

What if a family budget operated like the government, in proportion? That would provide a feeling for what is happening.

Sam:  Like the government, I have promised to help out my parents when they retire.
Mike:  Why the grim face? How much did you promise?
Sam:  About $1,523,000 from my salary of $65,000, while I repay $330,000 that I owe on my credit card.
Mike:  Just break it to them gently.

Family Budget

Martin -

I didn't say it was politically possible or even likely. I said it was a good start.

Kind of like a ship full of MBAs at the bottom of the ocean.

I've already gone through the stages of grief on this issue. It took a couple of years. I thought at one point the Tea Parties might make a difference, but now I realize it is already too late for anything to make a difference.

So I'm researching what happens during hyperinflation and a currency collapse. This is one interesting article I found. It's actually about what happens to real estate prices during hyperinflation, which is interesting in itself, but a guy posting as 'Anonymous' from Russia posts some very eye-opening comments.

http://gonzalolira.blogspot.com/2011/02/inflation-hyperinflation-and-real.html

@ Pirate Jo
Completely agree, but even if we get politicians such as Governor Christie or Senators Ryan/DeMint/Coburn as POTUS who would be willing to do something about entitlements I doubt they could pull it off.

I was recently talking to my 70 year old father and his friends, who are around the same age, about this and they want their money. The government took their money for fifty years and now they want the return. I can't fault them for that since I would feel the same way, but the money isn't there. My father voted for a Republican for President the first time in 2008, but I doubt he would again if they start cutting entitlements.

Unfortunately I think the only way out of this is when there really is no way for the government to borrow/mint one more cent. When finally no accounting, Federal Reserve, or Treasury trick is enough to cover the problem, and the government just says "We can't pay any more. Sorry. Ask what you can do for your country, not what your country can do for you. Thanks for the money you gave us for bridges to nowhere, etc."

@ Pirate Jo
Completely agree, but even if we get politicians such as Governor Christie or Senators Ryan/DeMint/Coburn as POTUS who would be willing to do something about entitlements I doubt they could pull it off.

I was recently talking to my 70 year old father and his friends, who are around the same age, about this and they want their money. The government took their money for fifty years and now they want the return. I can't fault them for that since I would feel the same way, but the money isn't there. My father voted for a Republican for President the first time in 2008, but I doubt he would again if they start cutting entitlements.

Unfortunately I think the only way out of this is when there really is no way for the government to borrow/mint one more cent. When finally no accounting, Federal Reserve, or Treasury trick is enough to cover the problem, and the government just says "We can't pay any more. Sorry. Ask what you can do for your country, not what your country can do for you. Thanks for the money you gave us for bridges to nowhere, etc."

JFP, everyone is in a complete state of denial when it comes to accepting that their Social Security contributions have already been spent elsewhere. But it doesn't take a rocket scientist to figure it out. My grandparents got everything back from Social Security that they had ever paid into it within one year of drawing benefits - they then continued to draw from it for twenty more years. My parents are approaching 70 and have already gotten back everything they paid into it, although it took more like five years. But again, they've already gotten it all back and will keep getting checks for another 15 years.

With Medicare, people are getting three times out of the system what they paid in.

If you suggest making cuts to these programs, people scoff at the idea of "working till you drop" or they start screeching about "death panels." There is no getting through to them, because they have never lived during a time when people were expected to work until a) they simply, physically couldn't, or b) they had enough of their own money saved to quit their jobs - whichever came first. People living today have always known they would get a check at age 62 or 65, whichever they prefer, and this is reflected in the savings levels of most people. And they think that if it takes $2 million of other people's money to keep them alive for another six months to a year, well, "you can't just let people die."

But without making cuts to these programs, there is NO way to get rid of the annual deficit, let alone begin to pay back the debt we already have. Sure, Americans might want to keep the merry-go-round going - as long as we have satellite TV and cheap food, why should we care if the debt goes up? Well, because the people who loan you money only do it because they think you will pay them back - or at least the interest.

The Chinese are dumping our treasury bills and the Federal Reserve will soon be our #1 lender, which is something I can't quite get my head around. We're borrowing money ... from ourselves? I know the Fed has been buying a lot of bonds. How do they do that, exactly? Do they simply print the money needed to make loans to the U.S. government AND buy bonds?

Some interesting stuff, here:

http://www.answerbag.com/q_view/82919

"Do they simply print the money needed to make loans to the U.S. government AND buy bonds?"

Yes, that's exactly what the Federal Reserve is doing. It's "solving" the debt problem by devaluing the currency. It simply prints the money that it uses to buy Treasuries. Of course, by doing so, it adds enormously to the money supply, and inflation results (and that's what is now happening). Everybody in D.C. chuckles over this and says "we're screwing over China; we'll pay them back with devalued dollars". JFP's dad probably thinks that too. Of course, he'll think differently when he gets his SS check in devalued dollars.

As it happens, I was just doing some reading about hyperinflation a few days ago. From what I've read, there are three possible outcomes. One is that an external entity comes along and bails the country out. Clearly that ain't happening here.

The second possibility is that eventually the currency becomes so worthless that people simply quit accepting it, and starting using something else as a means of exchange. Usually what happens is that everyone adopts someone else's currency. We could do that here. We could adopt the Canadian dollar; there's enough cross-border commerce that it could create a pretty good supply of Canadian dollars coming into the U.S. if American companies that trade in Canada accepted payment in Canadian dollars.

Once it starts happening, though, the government will notice. At that point you had better get all of your assets converted to something stable pronto, because the next step will be a currency reboot. The government will start issuing a "new dollar" and they will decree that old dollars will be exchanged for new ones at the rate of 10,000,000 old dollars to one new dollar. And oh by the way, that will be the exchange rate for Canadian dollars too. Of course, JFP's dad will still be getting his SS checks in old dollars.

I'm not playing around, Josephine. If I had my way, entitlements and their related taxes would simply be gone. And my Mom's on disability, so it would be tough on me, but I support the disappearing of entitlements anyhow. Our country's in THAT GRAVE a danger.

Pirate Joe: I am ready for entitlement cuts, even eliminations, with the corresponding FICA deductions eliminated. With the money I save, I'd be better prepared to take care of my Mom.

We're borrowing money ... from ourselves? I know the Fed has been buying a lot of bonds. How do they do that, exactly? Do they simply print the money needed to make loans to the U.S. government AND buy bonds?

Yep. And eventually, that money, created out of nothing, will get into our economy, whether through government spending, bank loans, investments in commodities, or other means (I admit, I haven't precisely pinned down the mechanics). And when it does (2.6T of QE and counting), watch out! I heard late last year that food prices will triple this year.

(Technically, Treasury prints the money. The Fed then buys it and lends it out and/or purchases treasuries with it.)

Ben Bernanke's a dumbshit.

Between the catastrophic devaluing of the dollar that's on the horizon, and the oil price shock about to be unleashed due to the unrest in the middle east, we're fucked.

As in the banks won't bother foreclosing on houses, they'll just hold the notes open hoping that people might start paying again when the currency situation stabilizes.

When the shit hits the Chan, I doubt China's going to do much of anything. What could they do other than declare war on us, or try to come here and repossess everyone's house?

Between the catastrophic devaluing of the dollar that's on the horizon, and the oil price shock about to be unleashed due to the unrest in the middle east, we're fucked.

And you think it will take that much?

I was watching the news over the last couple of days. I don't remember the exact numbers but plus $10 per barrel is about $0.023 cent rise per gallon. There is also an equivalent decrease of GDP of .38%. Our GDP growth is about 1%.

In other words the US growth is about to become negative and gas inflation positive.

I have a positive about this. We are positively fucked.

How bad is it that the first thing that went through my head when I heard that Libya was bombing protestors was "I need to get my oil tank topped up."

166 gallons later, I should be good through the end of calendar 2011.

http://politics.blogs.foxnews.com/2011/02/23/paul-says-congress-not-even-close-debt-reduction-plans-announce-social-security-reform-pr

Good for Rand Paul - he seems like one of the few who acknowledges the puny attempts to reduce spending for what they are.

But then notice the comments after the article. A chorus of people saying, 'I want back what I paid in!' I just want to shake them. You CAN'T HAVE back what you paid in, unless you get paid back in such badly devalued dollars that it takes your entire Social Security check to buy a week's worth of groceries!

They money you paid in wasn't set aside for you, it was immediately spent on people who got back many, many times what they paid in. They enjoyed years of retirement they didn't even have to save up for! YOU paid for it. Sucks, doesn't it? Well that's what happens when you sit around for decades and let something like this continue. Too late now. The people who made out like bandits on it already spent the money, then died, and it's not coming back.

"As in the banks won't bother foreclosing on houses, they'll just hold the notes open hoping that people might start paying again when the currency situation stabilizes."

Some smart bank (is there such a thing? Maybe among smaller local banks) is eventually going to realize that this is a perfect time to bring back the assumable mortgage. Say you're a bank and you have a house in foreclosure? First of all, if the mortgage is upside down, write down the balance to the current market value. Then offer to sell it for $1 down to anyone who will assume the mortgage. When you sell the house, just change the lessee name on the mortgage to the new owner. It's a win-win: for the buyer, there's no down payment needed, no closing costs, and you get the house at current market value. For the lender, you get a bad loan off your books and you get to write down the loss now, instead of having to hold on to the property for five years waiting for the market to recover. And you don't have to go try to dig up funds for a new loan; the existing loan is based on funds already committed.

I could go with a national sales tax if it replaces the income tax, but not on top of the income tax.

As far as hyper-inflation goes, I invest in a mutual fund of precious metals stocks. It has been going through the roof. Good thing I started early.

Too bad the first thing the government does when hyperinflation sets in is prohibit citizens from trading in precious metals.

"Too bad the first thing the government does when hyperinflation sets in is prohibit citizens from trading in precious metals."

At the rate we're going, that won't be a problem because all metals will be precious.

Or, we can use gasoline as currency. We're actually experiencing hyperinflation in gas prices where I live -- prices have risen about 20% in the last 24 hours, and gas stations can't update their sign boards fast enough to keep up.