Sunday, February 5, 2017

February, 2017, Part 4, Political Class Insanity: Fiscal Mismanagement At Every Level Of Government, Obama's Golf Tally, and More

It has been several weeks since Donald Trump has been sworn in which means at some point in the future we may run out of material to talk about. With the demise of the Obama administration, eight years worth of wasteful and excessive spending for nothing in return, foreign affairs blunders, Obama Care disasters, and assorted other administration and government blunders and screwups might end with the onset of a new administration. Trump may usher in a new paradigm of government actions that are limited, effective, cost efficient, and protective of the Constitution. If so, then this blog would run out of material to discuss and would have to be shut down.
But I doubt it. Even if Trump is truly a different type of President, he is still fighting over 500 embedded and entrenched politicians in Congress and thousands and thousands of government bureaucrats who will not go peacefully into the night for the good of the country. I wish him well and hopefully he can fix at least some of the myriad of problems the American political class creates everyday but until then, enjoy the latest political class insanity from Washington and beyond:
1) Democrats and liberals often trumpet the empty slogan to “tax the rich,” as if confiscating even more from the more fortunate in the country will solve all of our issues. We have often shown how absurd this is, that this country cannot resolve its fiscal crisis by raising taxes, the problem can only be resolved by reducing out of control government spending. Let me explain.
According to a recent BBC article, that was summarized in the January 27, 2017 issue of The Week magazine, the three richest people in this country, Bill Gates, Warren Buffet, and Mark Zuckerburg have a total net worth of about $181 billion. That seems like a lot of money but it really is not when compared to out of control government spending.
The Federal government spends about $10.4 BILLION a DAY. If you confiscated and liquidated every asset of these three billionaires, leaving them with nothing, the total amount of wealth you would then have could run the Federal government for about...17 days, or about two and a half weeks. Not very long. I addition, by confiscating all of their wealth, you would no longer receive the billions of dollars in taxes they pay over the years, forcing the tax rates for the rest of us to go up to cover their shortfall.
So if confiscating ALL of their wealth has virtually no effect on government spending, imagine how little effect there would be by raising their tax rate on their income, not their wealth. It would be lost in the rounding. And speaking of being lost in the rounding, all of their wealth if used to pay down our $20 TRILLION national debt would pay off less than 1% of the national debt. Proving once again that we do not have an under taxation problem in this country, we have a government overspending problem in this country.
2)As an FYI, Obama played 306 rounds of golf while President, the most rounds played by any President since Eisenhower 60 years ago. This was a Presidential candidate that promised to devote 24 hours a day, seven days a week to his Presidential duties and take no vacations or time off for himself. Yeah.
3)While some liberals and Democrats hail Obama as an economic wizard for his economic recovery, we have often pointed out that his recovery was one of the worst economic recoveries ever, based on the following realities:
  • Six years after the Obama recovery started, annual national economic growth has not come close to the long term average of just over 3%.
  • For this anemic growth rate, Obama doubled the national Federal debt by a whopping $10 TRILLION that will hinder future economic growth and burden future generations of Americans with the interest bill due on that incremental $10 TRILLION in debt.
  • Job creation during the Obama recovery did not even keep up with adult population growth.
  • And those millions of jobs that were created during the Obama recovery were mostly temp jobs, short term contract jobs, and jobs in low paying industries.
  • Wages and household income have been stagnant for most of the entire recovery period, only recently having started to increase a bit.
  • The labor participation rate is at very low levels, levels that have not been seen since the dark days of the Carter “stagflation era.”
  • Over 94 million American adults are currently not in the workforce.
  • As a result of poor quality jobs and low/stagnant wages, young adults are still living with their parents at levels not seen since the Great Depression and more seniors are working past the retirement age than ever before.
To add to these very bad economic results, Annie Lowrey, writing an article for The Atlantic, that was summarized in the January 13, 2017 issue of The Week magazine, revealed these sad Obama recovery results:
  • In rural America, the employment rate is 2.9% LOWER than it was before the recession started while in metro areas, the employment rate is 4.8% HIGHER than it was before the recession started.
  • Businesses are adding jobs at twice the rate in metro areas vs. rural areas.
  • Unbelievably, only 20 counties out of 3,000 counties across the country accounted for fully half of the net new businesses added between 2010 and 2014.
  • And these 20 counties came from only three metro areas, New York, Los Angeles and Miami.
  • The counties that Hillary Clinton won last November accounted for two thirds of the nation’s economic output while the counties that Trump won accounted for only one third of the nation’s economic output.
Thus, although Democrats are always crying about economic inequality, it seems that their candidates and their geographic strongholds are the richest of each in their respective categories. In other words, listen to what I say and not what I do….or where I live or how much money I make.
4) We often talk about how the Washington political class has spent and wasted so much taxpayer money that we are now stuck with a massive $20 TRILLION national debt (with virtually nothing to show for it), burdening every living American with about $63,000 of debt, as the fiscal solvency of the country is quickly becoming a disaster. Earlier this week we talked about how the state government of California has over $400 billion on uncovered liabilities, saddling each one of its residents with almost $12,000 worth of state debt, all of which is threatening the fiscal solvency of that state. And also earlier this week we talked again about how fiscally mangled the state of Illinois is, so mangled that it is refusing to pay off state lottery winners.
But it is not just liberal politicians operating liberal states and cities that are in big trouble. Consider an analysis from the latest issue of Reason magazine where it shows that two cities that have enjoyed incredible financial, economic, and population growth still had politicians that managed to screw up excellent financial opportunities and conditions:
  • You can see why Detroit actually filed for bankruptcy since its population over the past 60 years decreased by over a million people, severely depleting its tax base and revenue stream while Dallas saw its population triple over that timeframe from 434,000 to 1.2 million residents.
  • Despite the tripling of the tax base and revenue stream potential, Dallas is $5 billion short in its pensions fund for retired police and fire personnel.
  • Moody’s credit rating service estimates the pension funds will be dry and bankrupt within about 20 years unless current taxpayers and politicians allocate much more money to the pension funds.
  • Which is not a surprise since in 2015 the city contributed $115 million to the pension funds while retirees took out $283 million in benefits.
  • In a weird loophole of the pension’s fund rules, retired police and fireman can pull their money out of the funds early (which resulted in $230 million being pulled out in just six weeks in 2016) which many are doing, anticipating the coming fiscal storm, making matters even worse.
  • And another high growth Texas city, Houston, is not much better fiscally since it has the fourth worse pension debt problem of all U.S. cities despite very robust economic and population growth over the past few decades.
Which proves once again that we do not have an under taxation problem in this country: at every government level, Federal, state, and municipal, American politicians do not know how to develop, manage, and live within a budget despite sometimes being given a rapidly growing economic and tax base.
That will do it for today’s insanity: fiscal mismanagement at every level of government, Obama made the rich richer despite being a liberal, and he played a LOT of golf for a President while accomplishing very little when he was not playing golf.

More insanity tomorrow.

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