Wednesday, April 25, 2012

Rising Interest on Federal Debt | Don’t Double My Rates

Hey, Don’t Double Obama’s Rates!

* By: Larry Walker, Jr. *

Mr. Obama asked students at the University of North Carolina yesterday afternoon to tell their members of Congress one thing: Don’t double my rates.

Once again, Mr. Obama doubled down on flimflam, this time misdirecting towards rising interest rates on student loan debt -- instead of targeting the rising cost of interest on the federal debt. According to the White House, interest on the federal debt is projected to surpass $1.0 trillion per annum by the year 2020. Mr. Obama also failed to mention the $494 billion tax hike scheduled to hit American taxpayers on January 1, 2013.

According to Mr. Obama, “Five years ago, Congress cut the rates on federal student loans in half. That was a good thing to do. But on July 1st -- that’s a little over two months from now -- that rate cut expires.  And if Congress does nothing, the interest rates on those loans will double overnight.... And just to give you some sense of perspective -- for each year that Congress doesn’t act, the average student with these loans will rack up an additional $1,000 in debt -- an extra thousand dollars.  That’s basically a tax hike for more than 7 million students across America…”

If rising interest rates on student loan debt represents a tax hike, what are we to make of next year’s higher income tax rates?

Nine years ago, Congress cut income tax rates across the board. That too was a good thing to do. But on December 31st -- that’s a little over eight months from now -- those rates expire. And if the U.S. Senate does nothing, income tax rates will rise overnight… Tax policies in seven different categories will expire, including the Bush Tax Cuts, the payroll tax cut, and the AMT Patch. Plus five of the 18 new tax hikes from Obamacare will begin. And just to give you some sense of perspective -- Taxmageddon is a $494 billion tax increase, so each year that the U.S. Senate doesn’t act, every man, woman, and child in America will rack up an additional $1,500 in income taxes -- an extra fifteen hundred dollars. That’s an extra $6,900 for every U.S. taxpayer (the 50% of us who actually pay income taxes) – an extra six thousand nine hundred dollars.

So should my three children, who are all in college, be worried more about rising interest rates on student loans, dismal employment prospects, looming tax hikes, or rising interest on the federal debt?

Rising Interest on the Federal Debt

Based on Obama’s fiscal year 2013 budget, per Table 27-13, Baseline Budget Authority and Outlays by Function, Category, and Program, Gross Annual Interest on Treasury Debt Securities is projected to grow from $453.9 billion in 2011 to over $1.0 trillion by 2020, and to surpass $1.2 trillion by the year 2022 (see Chart below). Since this represents about half of the government’s current revenue, that doesn't leave much room for anything other than Social Security and Medicare.

Today’s college students need to give serious and careful thought to a lot more than interest rates on student loan debt. Within the next eleven years, on a cumulative basis, the U.S. Government will incur more than $9.3 trillion in interest on the federal debt (see Chart below). That equates to roughly $30,000 for every man, woman and child in America. And since only 50% of working Americans pay income taxes, for those fortunate enough to obtain gainful employment, it amounts to nearly $131,378 each. And that’s just over the next eleven years -- an extra one hundred and thirty one thousand three hundred and seventy eight dollars.

Thanks, Mr. Obama, for sugarcoating the dire consequences of your lack of a cohesive economic plan, and for sacrificing my children and grandchildren’s futures in lieu of your own selfish ambitions.

Tables


Reference:

Table 27-13. Current Services Budget Authority and Outlays by Function, Category, and Program

Related:

#DontDoubleHisDebt

#DontDoubleMyTaxes

Saturday, April 21, 2012

Evacuated Tube Transport | A Silver Bullet

Nix the Bullet Train to Bankruptcy

* By: Larry Walker, Jr. *

Forget about airplanes, electric cars, algae biofuel, and the bullet train to bankruptcy, evacuated tube transport is the wave of the future. At 1/10th the cost of high speed rail, and 1/4th the cost of a freeway, with top speeds of 370 mph intrastate and 4,000 mph interstate/international, silent, safe, and faster than jets, ET3’s six passenger frictionless magnetic levitation capsules are far more viable than any other form of transportation on the horizon.



Does the idea of travelling from New York to L.A. in 45 minutes, without a TSA pat down, and at a fraction of the cost sound appealing to you? Would I buy a ticket? Hell yeah! I would ride today if I could. Looks like the government can cancel its plans on that $500 billion high-speed rail network to nowhere. It’s already obsolete.



There’s just one caveat: Let the private sector run it.

Reference: http://www.et3.com/

Related: Obamarail | The Bullet Train to Bankruptcy

Thursday, April 19, 2012

Passing the Buck and Taking Names | Obama’s GSA

* By: Larry Walker, Jr. *

“Ultimately the buck stops with me… I'm going to be accountable." ~ Barack Obama *

What a load of bull! Harry Reid’s U.S. Senate hasn’t passed a budget resolution since April 29, 2009. Barack Obama hasn’t presented a budget, at least not one acceptable to either Democrats or Republicans, since the day he set foot in office. Yet he thinks he should keep his job. But that’s not how it works in America. Obama was given a fair shot; he had his fair share of opportunities, but he chose to pass the buck, running his mouth instead of governing, and now it’s time to give someone else a shot.

U.S. Gross Domestic Product has grown by a mere 7.59% from 2007 to 2011, or at an average annual growth rate of a pathetic 1.90%. But Federal Agency spending has increased by 32.04% over the same period, or at an average annual growth rate of 8.01%. Does the fact that Agency spending outpaced the economy by 322% sound any alarms? Well if we had a chief executive who was paying attention it would. This is an outrageous, hair-raising, mind-boggling, egregious, statistical fact, yet all U.S. taxpayers have heard for the last three plus years are threat after threat of higher taxes.

The Bush tax cuts are out, no they’re in. The payroll tax cut is gone, no it’s back. The AMT Patch is dead, no it’s still breathing.’

And now we have to contend with yet another threat, Taxmageddon. Taxmageddon is a $494 billion tax increase that strikes at the beginning of 2013. This time it’s the largest tax increase in U.S. history, scheduled to hit us smack in the face on January 1, 2013. Under current law, tax policies in seven different categories will expire, including the Bush Tax Cuts, payroll tax cut, the AMT Patch, plus five of the 18 new tax hikes from Obamacare will begin, see Taxmageddon: Massive Tax Increase Coming in 2013.

Unusual uncertainty remains unusually uncertain.

With Taxmageddon looming, the GSA scandal is well-timed. It has undeniably exposed the truth. And the truth is that the federal government has been living large through its discretionary spending, throwing our future to the wind, while we’ve been left sitting on pins and needles. Since the economy is practically at zero growth, where do these morons think the money to pay higher taxes will come from? I find it amazing, simply amazing, that no one has been in charge of the national purse for the last three-plus years. Absolutely no one has kept tabs on how our tax dollars were spent. We deserve better.

With an estimated $6.3 Trillion borrowed and squandered on Obama’s watch, and red flags abounding, it makes me sick to my stomach that politicians are suddenly concerned. You would have to be blind or not paying any attention to federal spending whatsoever to not notice the humongous 6,896.30% increase in the GSA’s expenditures from 2007 to 2011. Why blame the GSA? Blame yourselves, or blame Obama. The buck stops with Obama, right? So fire him. Put Obama on trial.

Maybe if someone wasn’t on the golf course, on vacation, or campaigning every other week (at our expense), and instead actually took time to study the budget “line by line”, and to work with Congress on cutting and capping spending, the GSA incident wouldn’t have occurred. I call it not doing the job you were elected to do. But hindsight is 20/20; foresight is not reelecting someone who has proven he can’t handle the job.

Does the following condensed OMB table, Outlays by Agency, which compares government spending growth from 2007 to 2011, raise any flags? If you ask me, the entire record is a red flag. The General Services Administration is an obvious bell ringer, its expenditures having grown from $27 million in 2007, to over $1.8 billion in 2011, or by 6,896.30%. But it’s not the only agency that should concern us, frankly they all should.

As you scan through the following highlights, keep in mind that the entire U.S. economy grew by a mere 7.59% over the four-year period, or at average annual growth of 1.90%.

  • The Department of Agriculture’s four-year spending growth was 65.11%, with average annual growth of 16.28%. You would think they were actually growing crops or raising livestock, but we know that’s not the case, so why have annual expenditures increased by $54.9 billion? Cut it.

  • The Department of Commerce’s four-year spending growth was 53.36%, with average annual growth of 13.34%. You would think they were actually manufacturing products or providing services, but we know that’s not the case, so why have annual expenditures increased by $3.5 billion? Cut it.

  • The Department of Energy’s four-year spending growth was 55.95%, with average annual growth of 13.99%. You would think they were actually producing electricity, mining coal or drilling for oil, but we know that’s not the case, so why have annual expenditures increased by $11.3 billion? Cut it.

  • The Department of Labor’s four-year spending growth was 177.58%, with average annual growth of 44.40%. You would think they were actually performing job placement services, but we know that’s not the case, so why have annual expenditures increased by $84.4 billion? Cut it.

  • The Department of State’s four-year spending growth was 77.29%, with average annual growth of 19.32%. You would think they were annexing nations and granting Statehood, in order to increase GDP, but we know that’s not the case, so why have annual expenditures increased by $10.6 billion? Cut it.

  • The Department of Veterans Affairs’ four-year spending growth was 74.36%, with average annual growth of 18.59%. Is this sustainable on average annual GDP growth of just 1.90%? Not hardly. So why have annual expenditures increased by $54.1 billion? Cut it.

  • The Corps of Engineers--Civil Works’ four-year spending growth was 158.75%, with average annual growth of 39.69%. You would think they were actually building roads and bridges, but we know that’s not the case, so why have annual expenditures increased by $6.2 billion? Cut it.

  • The Small Business Administration’s four year spending growth was 424.51%, with average annual growth of 106.13%. You would think they were actually making loans directly to small businesses, but we know that’s not the case, so why have annual expenditures increased by $4.9 billion? Cut it.

  • The Social Security Administration’s (On-Budget) four-year spending growth was 182.82%, with average annual growth of 45.70%. On-budget spending isn’t mandated, it’s not the entitlements portion in which Social Security Taxes offset payments to retirees and those with disabilities. No, this is interest and principal repayments of previously looted funds, and coverage of shortfalls due to the payroll tax cut and other gimmicks. You would think they were actually increasing benefit checks or lowering Medicare premiums, but we know that’s not the case, so why have annual expenditures increased by $100.4 billion? Cut it.

  • Total Federal Outlays experienced four-year spending growth of 32.04%, with average annual growth of 8.01%. With that kind of spending, you would think our economy would have grown by more than 7.59% over the four-year period, and achieved far more than average annual growth of 1.90%, but we know that didn’t happen, so why have annual expenditures increased by $874.4 billion? Has the economic stimulus program of 2009 become permanent? Cut it.

  • And last but far from least, the General Services Administration’s four-year spending growth was a whopping 6,896.30%, with average annual growth of 1,724.07%. You would think they were throwing some really wicked parties, or something. Oh, it turns out that was the case! No wonder annual expenditures increased by $1.9 billion. Just cut it.

Our government is spending at a rate which is 322% greater than the underlying economy. We call this “unsustainable”. What do you call it? The egregious growth of the GSA’s expenditures should have been caught long before it became a public scandal. Has anyone in the District of Columbia been paying attention for the past three years? You would think Obama would have caught this with his vast experience running companies, governing States, and all. Oh that’s right, he doesn’t have any experience.

I just gave you $340.2 billion of simple budget cuts, while Obama refuses to acknowledge the problem. If you still don’t get it, here’s the wrap.

The economy isn’t growing. The government is spending at a rate which is 322% greater than its underlying economy. Every additional dollar of tax revenue sucked out of our stagnant economy will cause the economy to decline further, while government continues to live the high life. Since there is no additional revenue to garner, government spending must be cut. The economy was on fire in 2007 on dramatically less government spending. Therefore, returning to the budget of 2007 damages nothing, other than Obama’s plan to bankrupt the nation. If Obama isn’t trying to bankrupt the USA, then what is he doing?

Fire Obama! Cut government spending. Cut the B.S. Cut it big. And cut it now!

References:

Table 4.1—Outlays by Agency: 1962–2017

BEA—Gross Domestic Product and Personal Income

Spreadsheets

Related:

Obama's Unfunded Consumption

#Debt

Friday, April 13, 2012

Obama's Secretarial Tax Fallacy

By: Larry Walker, Jr.

There's no way Obama's secretary paid a higher effective tax rate than the Obamas. You don't believe it? Are income taxes such a mystery that we can't figure it out? Well, let's run the numbers and see.

According to Jake Tapper of ABC News, Mr. Obama released his 2011 federal income tax today, with he and his wife reporting an adjusted gross income of $789,674. The Obamas paid $162,074 in total tax – an effective federal income tax rate of 20.5%.

The White House also reported that President Obama’s secretary, Anita Decker Breckenridge, makes $95,000 a year. White House spokeswoman Amy Brundage told ABC News that Breckenridge “pays a slightly higher rate this year on her substantially lower income, which is exactly why we need to reform our tax code and ask the wealthiest to pay their fair share.”

The only problem with this story is that Amy Brundage doesn't know how to compute a tax return, or an effective tax rate. If Ms. Breckenridge were single, made wages of $95,000, and had no other dependents or deductions, her standard deduction would have been $5,800 and her personal exemption $3,700. So taking Ms. Breckenridge's income of $95,000 and subtracting her deductions of $9,500 results in taxable income of $85,500, and a total income tax of $17,564 (click the tax return image below to enlarge). Thus, her effective tax rate is 18.4% (17,564 / 95,000). The last time I checked 18.4% was less than not greater than 20.5%.

Is the Obama Administration so delusional that it believes the American public doesn't understand basic math? Get a clue! Or ask an accountant. In my opinion we're all paying way too much for the incompetence of this government. The mainstream media should be ashamed for not verifying the numbers. And Obama's definitely on the wrong track, one which should (should have) lead to the end of his short and sorry career. That suits me fine.

Note: What I have calculated above is the maximum effective tax rate possible for a single person with $95,000 of gross income. However, if Ms. Breckenridge is married her tax rate will be lower, if she has dependents her total tax will be reduced, if she owns a home and pays mortgage interest, gives to charity, or pays a substantial amount in State taxes she could itemize deductions on Schedule A, any combination of which would make her effective tax rate substantially lower than 18.4%.

Thursday, April 12, 2012

Fair Shot, Fair Share and a Glass of Algae

* By: Larry Walker, Jr. *

Lake Erie is facing its worst toxic algae bloom since the 60's and somehow it is going unnoticed...” ~ JoeOH111 *

According to Mr. Obama, you don’t have a fair shot right now, and it’s all because millionaires aren’t paying enough income tax. If millionaires would just give the federal government its fair share, then you, I, and everyone else would have a fair shot…, and a glass of algae.

What, pray tell, is a fair shot?

The best definition I can surmise is “a lawful chance at odds.” But don’t we all have this already? For example, the odds of winning the recent $640 million Mega Millions jackpot were 1 in 176 million. In order to guarantee a win, one would have had to spend $176 million buying up every combination. So if some nefarious millionaire had purchased all 176 million combinations, would he or she have had an unfair advantage?

Well, perhaps, but what millionaire would be dumb enough to blow $176 million on lottery tickets? What are the odds of that ever happening? The odds of one person buying all 176 million winning combinations, across multiple States, would probably be 1 in (infinity). In other words, a guaranteed win is impossible, at least when it comes to the Mega Millions lottery. But a fair shot is open to anyone who plays the game. “You gotta be in it to win it.”

According to CBS News, one person purchased $2,600 worth of lotto tickets, and another threw down $55, while the more frugal played their usual dollar or two. Did the one who blew $2,600 have an unfair advantage over $55 and $1 players? I will concede that the $2,600 player had an advantage, but I would hesitate to call it unfair. The poor sap simply had more to lose, yet not a dime more to gain. Not one dime. Now let’s flip over to the Mega Trillions Federal Debt Lotto.

Mega Trillions Federal Debt Lotto

If a taxpayer earns $176 million in taxable income and pays $29.9 million in federal taxes (a rate of 17%), while another earns $50,000 and pays $8,500 in taxes (also a rate of 17%), and yet another earns $25,000 and pays $0, does either have an unfair advantage? Since both the millionaire and the $50,000 wage earner pay the exact same tax rate (17%), the non-taxpayer has an advantage. But is it an unfair advantage? I would say so, especially since in the recent past we all pitched in at every level of income. Yet the one paying $29.9 million in taxes has a lot more to lose than both the $8,500 payer, and the non-taxpayer.

But who wins in this crapshoot? With the federal government borrowing and spending hundreds of billions of dollars, in advance, and squandering it to produce test-tube sewage-fed algae biomass for fuel, while Lake Erie and other U.S. lakes are full of “free” blue-green scum, the answer is no one. You’d have to be an idiot to waste hundreds of billions of dollars manufacturing something that’s sitting right in front of your face, wouldn’t you? Hindsight is 20/20, foresight is priceless.

When it comes to the national debt, those who don’t pay federal income taxes make out like bandits, they have nothing to lose. And those who already pay more than their “fair share” (i.e. taxed enough already) have nothing to gain. It’s not the 2% of top earners that worry me, they generally pay their bills on time, but rather the federal government which has already borrowed more than 100% of our entire economy, an amount estimated to reach $16.3 Trillion by September 30th of this year.

Only a depraved leader would have his nose in other peoples finances while ignoring his own debt laden, broken, overspent, and soon to be bankrupt enterprise. The federal government is not the solution to our problems; it’s the $16.3 Trillion in the hole, deadbeat, money squandering, largest debtor-nation in the Universe, leach, which is forever in the way and constantly on our collective back.

The moral of this story: Never confuse motion with action.

In other words, quit giving speeches and fix the problem. No one is going to vote for a tax increase in the middle of an election cycle, no matter how many speeches are enounced and dribbled. Especially not the one proffered, which in the end will barely cover one day’s worth of current deficit spending. No not a one! We don’t have a revenue problem; no, no, no, what we have is a deadbeat, money squandering, and largest debtor-nation in the Universe, ass-backwards, leach of a federal government problem. Get a clue!

Rather than paying more taxes, or spending multi-millions on lottery tickets to become multi-millionaires all over again, our well-to-do brethren would do better by investing in their own casinos, creating jobs and fair shot opportunities for others. And that leads us back to square one all over again: cut taxes, cut spending, and get out of our way and off our backs.

Photo Credit: Lake Erie, Stirred Up | Via: NASA Earth Observatory (March 21, 2012)

Sunday, April 8, 2012

The Real Employment Situation – January 2009 through March 2012

* By: Larry Walker, Jr. *

"Our economy's now created more than 4 million private sector jobs over the past 2 years. And more than 600,000 in the past 3 months alone," Mr. Obama boasted to a forum at the White House on women and the economy, on Friday (CBS News).

And in related news, on the previous evening, Egan-Jones Ratings Co. cut the U.S.A.’s credit rating one step to AA, the second downgrade in nine months and two levels below its highest grade, with a negative outlook citing the nation’s increasing debt burden (Bloomberg).

Most of us are well aware of the nation’s impending debt implosion, but the real employment situation has been distorted beyond reason. I understand how badly Mr. Obama is fighting against returning to the obscure existence he led prior to 2008, but if he was at all capable, he would at least tell us the truth about where we stand. I’m frankly weary from all the sugarcoating and distortion of facts. So what’s the real employment situation?

The Truth Shall Set You Free!

In order to know the truth, we must examine not so much monthly trends in employment, but rather changes which have occurred from the end of January 2009 through March 2012. When we examine the entire record, we find that our economy hasn’t created any jobs at all over the past 3 ¼ years, on a seasonally adjusted basis. Instead the unemployment rate has risen from 7.8% to 8.2%, the number of nonfarm jobs has declined by 740,000, the number of unemployed persons has increased by 624,000, and total employment has declined by 153,000. Meanwhile, the working age population has grown by 7,865,000, while the civilian labor force has only managed an increase of 471,000, causing the number of persons no longer counted in the labor force to balloon by 7,395,000.

The truth is that our economy hasn’t created any new jobs since Obama’s policies took effect. The total number of jobs peaked at an all time high of 146,595,000 in November of 2007, and through March of 2012 the number stands at 142,034,000, more than 4.5 million off the mark. If we had more jobs than existed in November of 2007, then Obama would have something to brag about, although not much. But since the truth is somewhat inconvenient, we are supposed to ignore the fact that we are more than 4 million jobs in the hole, and submit to repeated media brainwashing and succumb to the belief that we have somehow moved ahead by over 4 million. Phooey! Here are the facts.

Unemployment Rate

The unemployment rate rose from 7.8 percent in January of 2009 to 8.2 percent as of March 2012, according to the U.S. Bureau of Labor Statistics (Employment Situation 4/6/2012). (See table A-1 / Seasonally Adjusted)

Nonfarm Employment

Nonfarm payroll employment declined by 740,000 through March of 2012, from 133,561,000 in January of 2009 to 132,821,000. (See table B-1 / Seasonally Adjusted)

Unemployed Persons

The number of unemployed persons increased by 624,000 through March of 2012, from 12,049,000 in January of 2009 to 12,673,000. (See table A-1 / Seasonally Adjusted)

Total Employment

The number of persons employed declined by 153,000 through March of 2012, from 142,187,000 in January of 2009 to 142,034,000. (See table A-1 / Seasonally Adjusted)

Civilian Noninstitutional Population

The Civilian Noninstitutional Population (working age population) increased by 7,865,000 through March of 2012, from 234,739,000 in January of 2009 to 242,604,000. (See table A-1 / Seasonally Adjusted)

Civilian Labor Force

The labor force increased by 471,000 through March of 2012, from 154,236,000 in January of 2009 to 154,707,000. The labor force hasn’t grown at all since October of 2008. (See table A-1 / Seasonally Adjusted)

Not in Labor Force

The number of persons not in the labor force increased by 7,395,000 through March of 2012, from 80,502,000 in January of 2009 to 87,897,000. (See table A-1 / Seasonally Adjusted)

To make the claim of having created more jobs than Mr. Bush, which we all know was Mr. Obama’s insinuation; he must first match Mr. Bush’s all-time-high of 146,595,000. If the number of persons who involuntarily dropped out of the labor force (7.3 million), since Mr. Obama’s policies took effect, had instead been jobs created, Mr. Obama might go down in history as the all-time greatest. However, since we presently have 4.5 million fewer jobs than existed at Mr. Bush’s peak, and since, under the direction of Mr. Obama, 7.3 million new working age persons have been pushed straight into joblessness and generational dependency, Mr. Obama’s policies should perhaps be branded as the most ineffective in U.S. history.

Since employment is a lagging economic indicator, and because economists are calling for recession in 2012, and since the statistics above represent the sum total of Obama’s economic accomplishments, we’re in for serious troubles ahead. To reiterate, Mr. Obama’s policies of Inordinate Stimulus, Undue Debt and Global Warming Foolishness caused the Looming Recession.

Photo Credit: A swarm of Western Toad tadpoles eating algae. Photo: Kristiina Ovaska

Reference: Bureau of Labor Statistics, Employment Situation Summary

Data: Worksheets