The Facts of Life

People like to couch these things in political terms, but in my view, regardless of what happens at the next election or which party is In power, past and current economic realities make it inevitable that three things are going to happen: the retirement safety net is going to be (dramatically) reshaped and scaled back; defense spending is going to be slashed, and taxes are going to be raised, in some cases by a lot. In fact, three recent reports suggest those wheels are already in motion:

1. Retirement system:

"Social Security Cuts Weighed by Panel" (Wall Street Journal)

A White House-created commission is considering proposals to raise the retirement age and take other steps to shore up the finances of Social Security, prompting key players to prepare for a major battle over the program's future.

The panel is looking for a mix of ideas that could win support from both parties, including concessions from liberals who traditionally oppose benefit cuts and from Republicans who generally oppose higher taxes, according to one member of the commission and several people familiar with its deliberations.

In addition to raising the retirement age, which is now set to reach age 67 in 2027, specific cuts under consideration include lowering benefits for wealthier retires and trimming annual cost-of-living increases, perhaps only for wealthier retirees, people familiar with the talks said.

On the tax side, the leading idea is to increase the share of earned income that is subject to Social Security taxes, officials said. Under current law, income beyond $106,000 is exempt. Another idea is to increase the tax rate itself, said a Democrat on the commission.

2. Defense budget:

"Pentagon’s ‘Endless Money’ Era Ends" (Financial Times)

Robert Gates, US defence secretary, on [August 11] announced what could be the biggest cuts to the Pentagon bureaucracy since September 11, as he declared that the era of “endless money” had come to an end.

Mr Gates announced cuts of almost 30 per cent on outside contractors, and curbs on military intelligence agencies and his own staff, as well as the proposed abolition of a military command and a reduction in the ranks of generals and admirals in Europe and beyond.

The cuts would lead to the loss of thousands of jobs but could be fiercely resisted in Congress.

“The culture of endless money that has taken hold must be replaced by a culture of savings and restraint,” Mr Gates told a press conference. But he added: “My greatest fear is that in economic tough times that people will see the defence budget as the place to solve the nation’s deficit problems, to find money for other parts of the government.”

The US’s looming fiscal crunch is almost certain to end the breakneck expansion in military expenditure that has nearly doubled the base defence budget in 10 years to $549bn (€414bn, £345bn) for 2011. When the wars in Iraq and Afghanistan are taken into account, total spending is more than $700bn a year.

3. Taxes:

"Raise Taxes Now -- the Elders of the Economy Say So" (CNNMoney.com)

First it was Greenspan. Now one by one, other elders of the economy are speaking out against deficits, and they're making the surprising argument for higher taxes.

Former Federal Reserve chairman Alan Greenspan was first and has taken the most extreme position, arguing that all of the Bush tax cuts of 2001 and 2003 should be allowed to expire.

Greenspan, no fan of big government and an initial backer of the Bush tax cuts, allows that higher taxes now could lead to slower economic growth, but has said that chipping away at the deficit is more important.

Joining him -- at varying degrees -- are David Stockman, former budget director in the Reagan White House, and former Treasury Secretaries Robert Rubin and Paul O'Neill.

The White House and most Democrats have argued for keeping the tax cuts in place for most households, but letting them expire for those earning more than $250,000, about 2% of the country.

Extending the tax cuts for everyone would cost the government $3.7 trillion over 10 years. Taxing the high-earners would get back about $700 billion of that.

David Stockman joins Greenspan at the far end, saying the nation can't afford to extend the tax cuts now. "You have to pay your bills. I say we can't afford the Bush tax cuts," Stockman told NPR this weekend.

Comments

[francismarion]

If American military power retreats in the world or worse, simply thins the sinews of its force, the consumers of the seed corn will exult and parade their new-found virtue for all to see.

As long-time American allies capitulate or seek acomomdation with predatory neighbors, we will withdraw into ourselves and pull up the blanket of of cradle to grave nanny stateism a little higher around our neck.

Let's see: Depressionary economy, check.
Unchecked ascendant totalitarian regimes, Check. Dismantled military, check.

All the pieces will be in place.

The preconditions for World War Two are all in place.

Oh, I'm sorry. We already ran that one. What comes after two?

[Tim]

Yes let's continue to post our legions all over the world. It's our internationalist duty, right?
We can't afford it.
Let me know when our allies devote the same percentage of GDP to defense as we do.

[Youngworker]

Guess what? The rich are the only people keeping this country alive. Its the billionaires and multimillionaires that you can try to tax.

[out of control]

Wonder how much $ could be used to prevent this if goldman and their ilk did not bilk the country for their losses...

We have not seen bad yet...

LAKE MARY, Fla. -- Investigators in Seminole County say they've discovered a bizarre problem: adult children are dropping off their elderly parents at hotels and motels, and abandoning them.

"A lot of the local hotels seem to be getting seniors that are just dropped off by their kids," said Officer Zach Hudson of the Lake Mary Police Department.

One man was left at the La Quinta Inn in Lake Mary for several weeks.

http://www.wftv.com/news/24694944/detail.html?cxntlid=cmg_cntnt_rss

[kevinearick]

So, what do we do with a large population that has now been bred to accept ignorance as a way of life?

Wave Generation: The Economy in a Nutshell Recap – Ignorance is Bliss

OK, so, riddle me this Batman:

Why, at this point in the “crisis”, when people are increasingly committing suicide, are we paying an elevator mechanic ½ million per year in total cost, borrowed against theoretical future ponzi proceeds, as the example to be followed by other mechanics, to do the exact wrong thing, creating a wave of economic losses, counted as economic activity accounting profit, when we could pay 5 real engineers, any one of whom could solve the problems presented in a small fraction of the time allotted to the elevator mechanic (who has the degree), with the rest of their time employed to design better elevator circuits, which, if applied to other systems, would create a wave of economic profit?

a) the digital economy is designed to create accounting profit from repeated, temporary relief of symptoms;
b) government oversight is as corrupt as corporate finance;
c) organizations currently masquerading as unions are actually appendages of the cartel system;
d) communities have been castrated, on the enterprise side by the multinationals, and on the real estate side by their controllers; or
e) all of the above.

From the perspective of the centrally planned dc bus, a 1% change in human behavior is catastrophic; from the D/A A/D perspective, a 10/100 change is almost trivial.

Stacking engineers in corporate cubicles, “solving" artificial problems is a structural error. Society needs those engineers out in the community, solving real problems (honeybees?). A society is limited by its infrastructure, which is why ours is so ignorant. It assumes a black box is better equipped than a human, resulting in a self-fulfilling prophesy. Now, the economy needs to be rebuilt from the bottom up, few have the fortitude for the job, and the last thing the guilty want to do is pay, which is what placed them on this course in the beginning.

They see the mirror, turn around, walk the circle back to the other side of the mirror, and repeat, fully expecting a better result every time, until the circle becomes an efficient point, make-work. There is no magical formula to get a dc bus to act like anything other than a dc bus. People pay to get on it by choice. If a “union” doesn’t energize its community, the entire system collapses in on itself. Unemployment in the dc bus is manipulated like everything else there. Economic activity in the dc bus is symptomatic of its closing NPV window. As it closes, the proprietors accelerate economic activity to reinforce the illusion of control, until they crash the system.

“We are the ‘evil’ ones. You are the ‘good’ ones. You cannot attack us without casting away your self-image.” So many bad assumptions on so many levels, and they are always surprised when their “stuff” gets flushed down the evolutionary toilet.

Once engineering internal infrastructure is complete, the distillation will trigger titration catalysis of the external infrastructure required. On a big job, the components are placed and then wired, which is why the economic priests “think” they are running the economy / wires. They are not the sharpest pencils, so the process begins randomly, hits a low-level peak, 2 steps below optimum voltage potential, and then continues back to 0 with increasing efficiency, in a distribution / wave.

Consciousness begins with recognizing potential differences, and grows as they are put to work, creating ever more diverse potential differences. At the macroeconomic level, the process appears continuous. At the microeconomic level, the process proceeds in quantum jumps. Within any particular dc bus, which is racing around in orbit, the participants only recognize and adjust to partial differentials. The jump point is a wall placed in front of the train, at the location required to make the next orbit.

As the mirrors close in on the dc bus, it loses potential from the springs / autotransformer. That potential is transferred to the autotransformer between the mirror. Constants provide coherence, assumptions attaching the springs. The differences between the springs, the box, and the dampers are themselves relative.

A universe is a shared perception. It exists and it does not exist. The digital engineers agreed to a perception fashioned by the proprietors, which can only have one outcome, discharge. It is an artifice, artificial intelligence at its lowest possible potential.

[francismarion]

Tim,

Isolationism is tempting until we consider the result. The world will not ignore us or leave us unaffected by what happens there. Only be being able to stand up to tyrants everywhere can we hope for peace in our own back yard. Retreat only emboldens aggressors to take the next step. We cannot change the ways of the world so easily but we can keep them from overwhelming us.

We can't afford to police the world? You need to consider the alternatives.

Weaken forces-Tempt aggressors to attack weaker friends-we try to stop them- we have to choose to either be beaten or use nukes.

Withdraw forces-Aggressors seize weaker friends-emboldened, they strike closer to home in areas we cannot afford to run from-lacking forces in the area we have to choose between trying to fight with forces lacking local bases pulled from homeland or use nukes.

It is a lot cheaper keeping a large robust and resolute presence everywhere at a trillion a year than to clean up after a nuclear war that could obliterate several cities and nations and cost many tens of trillions. Not to speak of unprecedented death, misery, trauma, dislocation, defeat, long term effects of nukes, encirclement, dismemberment and conquest.

These are the fruits of giving the field and all the resources to the eager and waiting predators of the world.

Ironically, we can avoid nuclear war only if we can fight and win conventional wars (that are coming). We must have strong forward bases forces for that.

Belly up to the bar, gentlemen, what's your pleasure?

[Real Deal]

Let's sing all together now:

Thank you, thank you
G W Bush
You came to power at the height
G W Bush
You screwed around with hubris, delusion, wars and arrogance and called it 'faith-based' government
G W Bush
You partied with pals called neocon, Greenspan and Big Money
G W Bush
When the bubble get blown to Earth's size, you didn't give a shit
G W Bush
But when the Wall Street neutron bomb detonated, you become history's biggest socialist
G W Bush
Now rejoice in your Texas rat hole just like OBL
G W Bush
To see the USA empire flame out
G W Bush
And hole on to your chair
G W Bush
As TX 'ain't gonna bailout CA' secedes

[Michael]

Better get those straw hats ready for the banana picking before you're too poor to buy them ...

The wealth of your nation nation (the world, really) has been stolen by the plutocrats, and with popular support no less (easy when you are the media). And now there's nothing left for the people to whom it really belonged.

[yoni levy]

"Guess what? The rich are the only people keeping this country alive. Its the billionaires and multimillionaires that you can try to tax. "

I agree with you comment.

Yoni Levy.