Bush's deficits and the coming crunch.

[Dinner]

Federal Reserve Chairman Alan Greenspan told France's Finance Minister Thierry Breton the United States has "lost control" of its budget deficit

http://money.cnn.com/2005/09/24/news/international/greenspan_france.reut/

CNN is quoting both Fed Chairman Alan Greenspan and French Finance Minister Thierry Breton that the US deficit is set to explode.

NPR is reporting the exact same thing.

http://www.npr.org/templates/story/story.php?storyId=4855367

It seems that the final accounting will be pawned off on next year but even so this will be very close to last year's record budget and once the new Iraq war spending bill and the orgy of corporate pork for Katrina are factored in we will see the budget sink ever deeper into red. If I lose it will be because of an accounting trick of when they log these massive expenses.

[Dinner]

Canada's new abassador to the US McKenna says that the US government is disfunctional and lacks the will to either control spending or raise taxes. Raised alarms about the coming massive increases in American debt.

U.S. government 'dysfunctional': McKenna
By Neil Herland, CBCUnlocked
Updated: Sep 29, 2005, 16:17

Canada's ambassador to the United States gives a failing grade to his new country of residence.

In a speech on Thursday to the Empire Club of Canada, Frank McKenna called the U.S. government dysfunctional and raised the alarm over America's growing budget deficit.

"The United States is a wonderful creation," McKenna said. However, "the government of the United States is in large measure dysfunctional."

McKenna began his term as ambassador in Washington six months ago. His speech in Toronto was delivered to an audience of businesspeople and politicians.

Among those who attended was David Wilkins, U.S. President George W. Bush's recently appointed ambassador to Canada.

"He sent us a tremendous ambassador to represent the interests of the United States of America," said McKenna.

In a joking reference to the ongoing softwood lumber dispute between the two countries, McKenna said Canada and the U.S. "are so close you can hardly get a stick of two-by-four between us."

Despite the quip, McKenna avoided the subject of lumber, choosing instead to emphasize the superiority of Canada to the United States.

Among the achievements McKenna boasted, Canada is the only major
industrialized country to post a budgetary surplus, over the past three years.

Canada is the biggest exporter of electricity, natural gas, and uranium to the United States. Canada is also now the biggest exporter of oil to the U.S., having displaced Saudi Arabia in 2004.

While McKenna admits the United States offers the best medical care to some of its citizens, he adds that, overall, Canada still has a higher average life expectancy.

McKenna also dismissed the concerns of Canadians who were offended when Bush failed to mention Canada in his State of the Union address after Sept. 11.

"Back when it happened I felt so self-conscious and so concerned that we in Canada would care about whether we had to be mentioned in a speech by somebody," said McKenna. "Are we so self-conscious or so unsure ourselves as a nation that we need that validation constantly from others as to who we are and what good neighbours we might be."

Wilkins commended McKenna's speech afterwards.

"I think Frank McKenna is a great orator and he's a good friend and he gave a pretty compelling speech about the attributes of Canada," said Wilkins, adding that he wasn't offended by the jabs at his homeland.

"The United States is a beacon of light for so many people throughout the world, I could not be prouder of my country and I quite frankly did not take personal the remarks of Mr. McKenna in any way."

Wilkins says the destruction of hurricane Katrina has increased the demand for lumber, though he says the trade dispute between Canada and the U.S. will only be resolved through further negotiation.

http://www.cbcunlocked.com/artman/publish/article_540.shtml

[Dinner]

The place to go is the National Center for Education statistics specifically the results for the National assessment for Education Progress report which is the only national level standardized test which you can compare the results from all states.

http://nces.ed.gov/nationsreportcard/

I'm going to keep looking for the full results then cross refrence last years red vs blue state to see how they stack up.

[Dinner]

This is going to be a lot of work. There are a half dozen catagories and each state has a percentage who score above average, average, below average. I don't feel like crunching that much data then cross refrencing to 2004 election results. I recall a thread which showed such results soon after the 2004 election but the search function isn't turning it up. I need to remember who started it or some of the key words.

[Boris Godunov]

Hey, what happened with this? Wasn't there some kind of, oh, bet or something?

[DanS]

[Mr. Harley]

Real Deficit - Without Crooking The Books
By Ed Henry

August 08, 2005

The real deficit is the amount of money the government must borrow to make ends meet each year. So far this year, the national debt has gone up $508.5 billion and we’ve still got two more months before the end of the fiscal year on September 30th so we’re going to end up with an increase of more than $600 billion this year.

But this increase in debt does not mean that all of it is a deficit. A sizable chunk of it is nothing but interest that’s dumped into 151 trust fund accounts on the fraudulent “Intragovernmental Holdings� (IH) portion of the national debt, the side where entitlements like Social Security, Medicare, Military Retirement, and so forth, form more than 90 percent of these debt “holdings� and where it costs the government absolutely nothing to add this interest since they merely credit these black hole debt accounts with more obligations for you and your children to pay off.

As of Friday, July 29th, the national debt stands at $7.89 trillion which means we will hit the debt limit or self-imposed ceiling game of $8.18 trillion somewhere around the end of the calendar year when this ceiling will, with a few theatrical noises, be automatically increased once again and for the umpteenth time. Merry Christmas, Happy New Year, and another nice present for your children and grandchildren who will have no way in the world of paying off this obligation brought to you by a government that cannot live within its means, will not raise income taxes even when needed, and has little if any financial conscience. Why should they? The “public servants� responsible for this mess will be gone in a few years, retired in luxury.

It will also mean that the Bush administration will have borrowed $800 billion in 13 months since the last ceiling increase in November of 2004 and $2.2 trillion since taking office in January of 2001. That’s about a 40 percent increase in the national debt in five years.

After this fantastic markup, George Bush promises to cut deficits in half by the end of his presidency. Isn’t that great? Wow, what a feat. The debt will only increase half as much each year after he has done such a wonderful job of putting us under the thumb of countries like China , Japan , India , and others.

And the loyal trickle-down borrowholics are ga-ga over the fact that this year’s deficit is going to be less than anticipated just a few months ago. The recent boost in income tax receipts means that we may have only about a $375 billion deficit in fiscal 2005, the tax cuts for the rich and famous are producing results, and Bush may be able to keep his promise of bringing deficits down to a mere $200 billion or so by 2008. The last year of Clinton ’s reign brought us an increase of $18 billion.

In the last forty years, the national debt has never gone down. How could it when the interest alone that’s being dumped into the IH accounts amounts to so much. Social Security alone will produce at least $1.6 trillion in interest by 2018, the year everyone currently agrees will mean the end of surpluses produced by payroll tax overcharges. $87 billion is being dumped into the account this year alone, and that’s not counting all of the other so-called “trust funds� that will get interest too.

And it costs the federal government nothing to add this public indebtedness. Even Thomas R. Saving, one of the public trustees of the Social Security and Medicare trust funds says; “We can make that trust fund anything we want to. If we want to change the interest payments, which is a suggestion that’s been made, change the rate of interest, make it 100 percent a year, we can make this last forever.� There is no actual money involved in this annual interest increase.

Adding this interest is the most heinous part of the scam. It’s bad enough that the Beltway Bandits steal our retirement, health care, and other entitlement surplus overpayments for invasions and pork, but adding interest merely to support the false idea that they only “borrowed� the money is the greatest crime of all.

In short, we would be better off if the pirates just stole the money and ran off to build their Empire, conduct invasions, and protect themselves behind a wall of false security.

And they’ve just added another element of protection by electing Chris Cox to head the Security & Exchange Commission. While the rest of the country was involved with the question of John Bolton’s appointment to the United Nations, Sandra Day O’Connor’s replacement on the Supreme Court, and other newsworthy items, Cox was appointed on Friday, July 29th, just before Congress adjourned for its vacation without a whimper from any of his fellow buckaneers. Oh well, the SEC never did anything to protect the American taxpayers from this scam anyway.

If you want to know the real deficit for this year, wait until the close of the fiscal year and subtract the annual interest dumped in IH accounts from the increase to the national debt. It will be close to a half trillion.

On the other hand, let's assume that the government's way of accounting for the deficit brings it in at $375 billion this year. From that point we can add the money they stole from Social Security alone which will be about $67 billion this year. Remember, they are the ones who claim to be "borrowing" this money, so why isn't it counted along with the rest of the money they borrowed legitimately?

That brings the amount to $442 billion without counting the rest of the money they "borrowed" from Medicare and other entitlements. The latter will bring us closer to the half trillion mark.

And what about the interest that they dump into the IH accounts? It may not be direct borrowing, but it certainly is tied to the amounts they've borrowed/stolen in the past and it adds to our indebtedness. Social Security's contribution alone is another $87 billion in interest this year. Where would that put us for a total deficit?

In other words, isn't the amount that the national debt increases every year our real deficit, $593 billion last year and even more this year? God save the Empire.

[Mr. Harley]

In case anyone wants to find out if they were "hiding" any debt, which I wonder about reference the previous article - here are two statements from the US Treasury. Enjoy decoding them, I am going to sleep.

September 30, 2004 -Cash and Debt Operations of the US Treasury

September 30, 2005 -Cash and Debt Operations of the US Treasury

[DanS]

Ed Henry's numbers don't seem quite right. As an illustration, the federal deficit is at $320 billion rather than $375 billion.

The real place to look for this is the "Net Borrowing" figure from the Bureau of Economic Analysis, Table 3.2, Line 45.

http://www.bea.gov/bea/dn/nipaweb/TableView.asp?SelectedTable=85&FirstYear=2003&LastYear=2005&Freq=Qtr

Sum the figures for the last 4 quarters and divide by 4. Through the second quarter of this year, we're running at $395 billion net borrowings against $470 billion a year ago.

[KrazyHorse]

I've said it before and I'll say it again: the American people are suckers for allowing the government to manage their social security contributions in the manner it does.

Not only does Canada run its social security fund independently (so that the increase in the value of investments is its only objective, rather than the borrowing needs of the government); it also caps the amount of government debt that can be held by the fund, and in addition this debt is held in the same form as publically-held government debt i.e. government bonds. Whatever money we borrow from the retirement scheme is thus fully accounted for in the budget.

I personally cannot believe that the US government gets to completely disregard any of the debt incurred by borrowing from SS.

The average American is being ****ed in the ass by the insane and corrupt workings of its government, and doesn't utter a peep.

[DanS]

I agree. Bush's Social Security plan would address the problems that you raise and in a more neutral and slightly safer manner than the Canadian system, what little I know of it.

[KrazyHorse]

His figures are off because he assumes that the government spends all of the money accrued by the SS "trust fund". It seems to be spending about half of it (this being the difference between the reported deficit and the net governmental borrowing)

[DanS]

No, that's not his problem (or at least that's not the problem that I flagged). The net borrowings figure includes all of the social security transactions. The difference between the net borrowings and the headline deficit is in certain asset and liability transactions.

[KrazyHorse]

Originally posted by DanS
I agree. Bush's Social Security plan would address the problems that you raise and in a more neutral and slightly safer manner than the Canadian system, what little I know of it.

The board of trustees of the fund is appointed for, IIRC fixed terms by somebody at least one step removed from the PMO. As long as we want to ensure that some people are not wiped out by imprudent or unlucky investments I don't see a privatisation scheme working in the long term (rather than in the short, in which the "you can't possibly lose money" guarantee will actually cost the government more money)

[KrazyHorse]

Dan, are you denying that the government lets itself discount any borrowings from guaranteed-benefit entitlement plans in reporting its headline rate?

I don't know whether its true or not. If it is true then those "certain asset and liability" transactions actually netted the government ~25 billion dollars last year from its headline rate.