Monday, August 9, 2010

Blog Wars Over the Coming Economic Collapse

Free0352 (author of the excellent blog, John Galt for President) was caught up in a discussion on one of our progressive friend's blog the other day.  (J. Marquis's Major Conflict).  The posting and ensuing discussion was regarding "starving all the beasts", meaning that Marquis was posing the proposition that our bloated military needed to be cut to help the deficit, instead of just social programs, assuming that this would go a long way towards fixing the financial straights in which we find our country currently.

Free has a talent for putting the issue behind any debate into proper perspective, and he did so here masterfully.  I begged him to do a follow up posting regarding this on his own blog which he humored me and did today.  Please see his excellent posting here.
I also wanted to include some of the commentary from Free that precipitated this request.  This is the short blurb from Marquis's blog that started it all here.  Some of Free's comments that bring the reality of the goliathan problem to proper perspective in that posting follow:

"Free0352: Think about it dude, in 2011 the defense budget grand total will be about 708 billion dollars. The 2011 budget deficit will be $1.267 and that's after the tax cuts expire and 400 billion more in revenue come in (and we can only hope that comes in, we aren't sure how much it'll be really till it's collected)

So, simple math.

Total deficit= 1.267 trillion.

total defense budget = 708 Billion.

1.26T - 708B = 559 Billion in the red. Getting rid of the entire military wouldn't make much difference. And that's not even computing the coming unfunded mandates of Medicaid and Social security. That totals about 73 Trillion dollars. The entire defense budget wouldn't even cover the interest on that debt.

So what's your plan genius? Where are you going to come up with this money, because I've got some ideas. They start with dismantling the welfare state that got us into this mess in the first place.

So what that means guy, is if the cuts I'd make came into effect (no more medicare, Medicaid, social security, or welfare of any kind along with most departments like energy and education) we'd cut about 57% of the total federal budget. That amounts to about 1.3 trillion a year. Therefore, in 70 years we'd pay the debt down to zero. (emphasis is mine.)

Yeah, it's that bad.

Just raise taxes you say? Okay, well never mind that we do have a Laffer curve staring us in the face and that at some point the government can take too much away and we actually will loose tax revenue because of the burden- lets say we take it all. That's right, 100% of the GDP which this year is going to be about 14.5 trillion. That's another simple math problem. If we took ever dime in America (which we can't, as there are only about 800 billion green backs anyway but whose counting?) we could pay off the current debt in one year. That means we all loose every dime we'll make this year... every American. Now, factor in the unfunded mandate? We'd have to confiscate every penny earned for nearly half a decade to get enough money to balance the budget and get us in the black.

I'm pretty sure over the next five years, people are going to need food and shelter so that's not really an option, but that's why I laugh hysterically when you talk about raising taxes. It just won't work. At the end of the day, the nanny state has to end, and even then we'll have a generation or two of Americans reared under austerity. The quicker we get to it, the quicker it's over. It's going to happen, there is no preventing it. This isn't voodoo economics, this isn't fear mongering. It's math, it's non-partisan, and it's a reality."

Free nailed it and put it into the proper frightening perspective.  The free lunch is over and it is now time for America to pick up the tab.  Unfortunately it looks like we will all need to be eating bologna sandwiches for many years to come since we failed to pay the bill for our steak and lobster in the past.  That is, assuming we can even afford bologna in the coming collapse.