"For Perspective" ...

For perspective, the entire federal budget for nondefense discretionary spending—programs outside of entitlement programs and interest on the debt—now runs about $600 billion annually. You would have to eliminate every penny of that spending—on roads, education, law enforcement and scientific research—for 25 years to fill that hole. 

Or, alternately, as the bipartisan Committee for a Responsible Federal Budget estimated, you would have to cut all government spending outside of Social Security by 93%.

http://www.wsj.com/articles/campaign-2016-not-servicing-national-debt-1460392002

To pay down the debt, you would need to not only balance the budget but create a surplus to be able to buy up all the old debt—an idea that many economists say would create its own economic shocks.

This all should be grist for a detailed campaign discussion, because the economic stakes are enormous. But it isn’t, in part because many voters have stopped taking seriously plans put forth by political figures of all stripes. Who can blame them? Washington has become the capital of dysfunction, where even the most well-crafted policy proposals go to die.

America’s real ice bucket challenge - The Washington Post

Federal debt will reach 74 percent of gross domestic product this year, more than twice what it was at the end of 2007 and higher than in any year since 1950, the nonpartisan CBO found. In a decade, it will hit 77 percent; in 25 years, 100 percent — "a level seen only once before in U.S. history, just after World War II."

What's more, 85 percent of the federal government's spending increases between now and 2024 will be consumed by just three items: Social Security (which will claim 28 percent of the increase), Medicare and other health-care programs (32 percent) and interest on the debt (25 percent). Spending on everything else — military and domestic programs alike — would fall to the lowest proportion of the economy since at least 1940, when such statistics were first collected.

http://www.washingtonpost.com/opinions/dana-milbank-americas-real-ice-bucket-challenge/2014/08/29/333c7fe0-2f89-11e4-9b98-848790384093_story.html

The End of Government | RealClearPolitics

But no one is looking. Budget debates and the media focus on deficits and debt ceilings. This makes people seem engaged when they are actually evading explicit choices of what programs to cut and taxes to raise.

Both liberals and conservatives are complicit in this charade, but liberals are more so because their unwillingness to discuss Social Security and Medicare benefits candidly is the crux of the budget stalemate.

This refusal is rich in irony: The pro-government party in rhetoric has become an anti-government party in practice. 

Read more: http://www.realclearpolitics.com/articles/2014/02/10/the_end_of_government_121515.html#ixzz2t8yvXiRr 
Follow us: @RCP_Articles on Twitter

http://www.realclearpolitics.com/articles/2014/02/10/the_end_of_government_121515.html

Pension Death Spiral, "What Could Go Wrong?"

Frank McCoy’s coming retirement after eight years as Oceanside police chief comes with a steep price: taxpayers will owe him an annual pension of more than $170,000, based on the 51-year-old’s 29 years as a cop. Factoring in automatic 2 percent annual increases, McCoy is on track to one day make more as a former cop than he ever did on the force.

Such is the fallout from the generous pensions cities and counties throughout California granted employees during the late 1990s and early 2000s, particularly to public safety workers, many of whom are able to retire at 50 with a pension of 3 percent of their highest base pay for every year they worked. “It’s an unsustainable system,” says Oceanside City Councilman Jerry Kern.

http://www.utsandiego.com/news/2013/oct/14/pension-tsunami-strikes-again/

Coercion at its finest!  What are you paying to prevent this man from ever facing the economic risk you face each day?

But we should also want to consider the ways a relentlessly rising level of debt could damage our economic prospects. The debt ceiling for the United States is currently set at $16.7 trillion. In 2000, the U.S. national debt stood at$5.7 trillion. The amount of the U.S. national debt is now roughly the same size as the annual output of the economy. Is this a problem?

Yes, suggests recent research by numerous macroeconomists. Specifically, they find that a big public debt “overhang” likely slows down future economic growth for more than two decades. In other words, excessive national debt racked up now will make future Americans considerably poorer than they would have been otherwise.

http://reason.com/archives/2013/10/11/the-morning-after-americas-debt-binge

This is why the Keynesian idea, which was to borrow if necessary to create economic growth, and which by the way has never been proved to be true, is the ultimate drug for politicians.  In debt with slow growth?  Borrow more!  And spend more!  "What could go wrong" as they say.

The Death Spiral

By one recent estimate, the total pension gap for the states is $2.7 trillion, or 17% of GDP. That understates the mess, because it omits both the unfunded pension figure for cities and the health-care promises made to retired government workers of all sorts. In Detroit's case, the bill for their medical benefits ($5.7 billion) was even larger than its pension hole ($3.5 billion).

Some of this is the unfortunate side-effect of a happy trend: Americans are living longer, even in Detroit, so promises to pensioners are costlier to keep. But the problem is also political. Governors and mayors have long offered fat pensions to public servants, thus buying votes today and sending the bill to future taxpayers. They have also allowed some startling abuses. Some bureaucrats are promoted just before retirement or allowed to rack up lots of overtime, raising their final-salary pension for the rest of their lives. Or their unions win annual cost-of-living adjustments far above inflation. A watchdog in Rhode Island calculated that a retired local fire chief would be pulling in $800,000 a year if he lived to 100, for example. More than 20,000 retired public servants in California receive pensions of over $100,000.
http://www.economist.com/news/leaders/21582258-it-not-just-detroit-american-cities-and-states-must-promise-less-or-face-disaster


Public employees should retire later. States should accelerate the shift to defined-contribution pension schemes, where what you get out depends on what you put in. (These are the norm in the private sector.) Benefits already accrued should be honoured, but future accruals should be curtailed, where legally possible. The earlier you grapple with the problem, the easier it will be to fix. Nebraska, which stopped offering final-salary pensions to new hires in 1967, is sitting pretty.

You Can't Make This Stuff Up

"Liberals could have had a revenue increase of $3.7 trillion over 10 years. Instead, they surrendered nearly $3.1 trillion of that. They cannot have repeated bites at this apple. They cannot now increase government revenue as a share of gross domestic product through tax reform because Republicans insist that the Taxpayer Relief Act closed the revenue question. And because tax reform is dead for the foreseeable future, so are hopes for a revenue surge produced by vigorous economic growth.

"No numerate person thinks that today's entitlement state, let alone the steady expansion of it that is liberalism's aspiration, can be funded by taxing the income of the 0.7 percent of taxpayers whose rates were just raised. Or the 2 percent whose rates would have been raised had liberals and their president simply allowed the automatic increase of rates for individuals earning more than $200,000 and couples earning more than $250,000."
http://www.washingtonpost.com/opinions/george-f-will-time-for-a-balanced-budget-amendment/2013/01/09/6ecf85ec-59d5-11e2-9fa9-5fbdc9530eb9_story.html

"Willing To Do What It Takes, Whatever It Takes"

"President Obama says raising taxes to cut the deficit is a "balanced"
approach.

"Balanced ...

"But what's "balanced" about raising taxes after vast increases in spending? Trillions for war, Medicare, "stimulus" and solar panels. Tax receipts rose -- after tax-rate cuts -- from $1.9 billion in 2003 to $2.3 billion in 2008, the year the recession started. That increase couldn't keep up with the spending. The deficit doubled -- actually, more than doubled -- as politicians increased spending to nearly $4 trillion! Our debt, at more than $16 trillion, now exceeds our gross domestic product."
http://www.realclearpolitics.com/articles/2012/12/19/its_the_spending_st 
upid__116460.html

The President says this kind of thing because he's a politician, which is why I no longer listen to politicians. You can tell what they'll say before they say it. They'll say whatever is necessary to justify doing what they want, or getting what they want (elected, for one).  "If Republicans and Democrats reach a deal, the tax increases will be real -- but spending "cuts" probably illusions. If they actually happen, they will only be reductions in already planned increases. The Wall Street Journal notes that when the two parties talk about cutting spending by $4 trillion over a decade, "those numbers have no real meaning because they are conjured in the wilderness of mirrors that is the federal budget process. Since 1974, Capitol Hill's 'baseline' has automatically increased spending every year according to Congressional Budget Office projections ... . Tax and spending changes are then measured off that inflated baseline."  How can you tell they are not serious? They are not even talking about this: "Given our growing debt, can't they even slow the growth of government to the rate of inflation? Or inflation plus 1 percent? Or even inflation plus 2 percent? That might balance the budget within a decade."

State Pensions

"The stakes here are high for both parties. San Bernardino is desperate to save money anywhere it can, and pension contributions are among its largest costs. Calpers, meanwhile, wants to avoid setting a dangerous precedent that cities in trouble can refuse payments. There are plenty of distressed cities throughout the state, and they will be watching this showdown closely. If San Bernardino can get off without making payments, other cities will expect the same treatment, leaving Calpers with a serious crisis on its hands."

http://blogs.the-american-interest.com/wrm/2012/10/22/pension-showdown-brewing-in-california/

What I think of when I see this is that the people who made the unsustainable promise - the politicians and union leaders of the day - are the only ones who will not suffer the consequences of their choices.

The workers, the taxpayers, and economy as a whole will pay dearly for their deal.

Bernardino Death Spiral

"Yet on close examination, the city's decades-long journey from prosperous, middle-class community to bankrupt, crime-ridden, foreclosure-blighted basket case is straightforward - and alarmingly similar to the path traveled by many municipalities around America's largest state. San Bernardino succumbed to a vicious circle of self-interests among city workers, local politicians and state pension overseers.

"Little by little, over many years, the salaries and retirement benefits of San Bernardino's city workers - and especially its police and firemen - grew richer and richer, even as the city lost its major employers and gradually got poorer and poorer.

"Unions poured money into city council elections, and the city council poured money into union pay and pensions. The California Public Employees' Retirement System (Calpers), which manages pension plans for San Bernardino and many other cities, encouraged ever-sweeter benefits. Investment bankers sold clever bond deals to pay for them. Meanwhile, state law made it impossible to raise local property taxes and difficult to boost any other kind."

http://www.reuters.com/article/2012/11/13/us-bernardino-bankrupt-idUSBRE8AC0HP20121113

The blue state model reaching it's predictable end - patronage in the name of social justice means collapse, just as with the Soviet Union.

Tax Your Way Out Of This?

"Nothing like that $8 trillion amount is available for the IRS to target. According to the most recent tax data, all individuals filing tax returns in America and earning more than $66,193 per year have a total adjusted gross income of $5.1 trillion. In 2006, when corporate taxable income peaked before the recession, all corporations in the U.S. had total income for tax purposes of $1.6 trillion. That comes to $6.7 trillion available to tax from these individuals and corporations under existing tax laws.


"In short, if the government confiscated the entire adjusted gross income of these American taxpayers, plus all of the corporate taxable income in the year before the recession, it wouldn't be nearly enough to fund the over $8 trillion per year in the growth of U.S. liabilities. Some public officials and pundits claim we can dig our way out through tax increases on upper-income earners, or even all taxpayers. In reality, that would amount to bailing out the Pacific Ocean with a teaspoon. Only by addressing these unsustainable spending commitments can the nation's debt and deficit problems be solved."
http://online.wsj.com/article/SB10001424127887323353204578127374039087636.html?mod=WSJ_Opinion_LEADTop

So anyone who says it has to be taxes and spending cuts is either ignorant, lying, or believes real spending cuts only come with tax increases - which is an accurate observation but not a constraint on future choices.

Will Bringing the Heat

"When Sen. Richard Durbin (D-Ill.) said, "Social Security has not added one penny to the deficit," Charles P. Blahous III, a member of the Social Security board of trustees, wrote to The Post to say that in 2012 this program will add $165 billion to the deficit because benefit expenditures exceed Social Security tax revenue by that amount and "this gap is filled entirely by revenue that the federal government borrows." The fact that the second-ranking Senate Democrat is off by 16,500,000,000,000 penniesreveals the sort of precise thinking that got the country into its current condition and that supposedly will produce a cure. It is enough to make you want to hop in your Fisker and drive off a fiscal cliff.

"You should know Fisker because you have helped to finance the Anaheim, Calif., company that makes — well, has made a few — electric cars. Its only model, the Karma — really; Obama administration green investments are beyond satire — costs $110,000. Your subsidy helped Justin Bieber, the fabulously rich Canadian teenager (he sings), buy one. No one ever said saving the planet one electric car at a time would be easy."

http://www.washingtonpost.com/opinions/george-f-will-fixing-the-tax-code-at-the-cliffs-edge/2012/12/12/70b08f06-43cc-11e2-8061-253bccfc7532_story.html

In the normal, non coercive creation and dispersion of technology to the masses, the rich pay for the whole process; eventually, we all benefit.  In the government's attempts to "create" technology the rich get free government money - borrowed "free" government money - and then it goes to money heaven.  It's certainly convenient for all involved except those who will be forced to repay the government bonds.

Something To Worry About

"Meantime, the Fed's near-zero interest rate policy will continue to disguise the real cost of government borrowing. One reason the Obama Administration can keep running trillion-dollar deficits is because it can borrow the money at bargain rates. Stanford economist and Journal contributor John Taylor says the Fed has bought more than 70% of new Treasury debt issuance this year.  "All of this will create a fiscal cliff of its own when interest rates start to rise. The Congressional Budget Office says that every 100 basis-point increase in interest rates adds about $100 billion a year to government borrowing costs. Pity the President and Congress who have to refinance $15 trillion in debt at 6%. If Mr. Bernanke really wants to drive the President and Congress to reduce future spending, he shouldn't keep bailing them out with easier money." 

http://online.wsj.com/article/SB1000142412788732398150457817569368704638 
4.html?mod=WSJ_Opinion_LEADTop  

So our best creditor, China, bails on investment in US bonds and chooses instead direct foreign investment; who's going to buy our debt from us when the Fed can no longer do so? And what will they charge?  That's the start of the death spiral, let's hope it's just something to worry about.

Blue on Blue

"As the blue social model decays, the coalition that was once united behind it is becoming increasingly splintered and parochial. Boies, known for representing Al Gore, waging antitrust battles against Microsoft, and fighting California's Proposition 8 in federal court, has impeccable bona fides as a liberal Democrat. But in the face of economic realities, he and other blue liberals are being forced to make fundamental choices about their values and goals. "

http://blogs.the-american-interest.com/wrm/2012/12/05/rhode-islands-blue 
-civil-war/  

As the negative unintended consequences of years of "Union Boss to Willing-And-Vote-Hungry-Political-Accomplice" cooperation unfold, it is clear who will be hurt - everyone but the union bosses and their former political operatives.  The citizenry will be stuck with a bill - how large is yet to be seen - and fewer services. The union members will be deprived of a benefit they exchanged their life energy to get.  I can see no good long term outcome, but that seems a very natural outcome from a use of coercion which amounted to "Let's take money from the citizenry at gunpoint, so I can keep winning my union leader job and you can keep winning your city/state leadership elections."

Watching the Death Spiral

Equally unclear is how the country can reduce its sovereign debt load to a bearable 120 percent of gross domestic product by 2020. The Greek government's current budget proposal envisions this year ending with a debt load of 169 percent of GDP. In 2013, it will be 179 percent of GDP. "The debt level is extremely high," says Jens Boysen-Hogrefe of the Kiel Institute for the World Economy. "Given current conditions, the country won't likely be able to handle it."

Greece's spiralling debt load is primarily a function of the country's abysmal economy. In the last four years, the Greek economy has shrunk by fully 20 percent with economists expecting a further 6.5 percent drop this year. Athens expects that 2013 will see the economy shrink by an additional 3.8 percent, but most economists are more pessimistic.

The further the economy shrinks, the more difficult it becomes for Greece to pay the interest on its debt. "Thanks to the austerity packages, the Greek budget, minus interest payments, is largely balanced," says Boysen-Hogrefe. "The country requires external aid almost exclusively to service its debt."
http://www.spiegel.de/international/europe/ongoing-greek-debt-problems-overshadow-merkel-visit-to-athens-a-860264.html

The Death Sprial's "Chronicaller"

...he described Washington's infamous unfunded mandates, most of them in
the form of future entitlement spending, as the "federal government's
financial sinkhole"

At the University of North Carolina, to an audience mostly consisting of
certified public accountants, he amplified on the dimensions of this
sinkhole: "It's $70.8 trillion, going up 10 million a minute, a hundred
billion a week," he said. "So the federal financial sinkhole is much
bigger than the politicians admit. It's growing rapidly by them doing
nothing, and they've become very adept at doing nothing."

Dave Walker fashions himself as a non-partisan, which is accurate
enough, but a better way to understand what he's doing is to see his
criticisms as bipartisan -- i.e., they offer no solace for Republicans
or Democrats. The budgetary obligations represented by Obamacare, he
believes, are their own separate sinkhole. Yet defense spending has to
be on the table, he insists, along with every other GOP sacred cow. The
U.S. military budget, he points out, exceeds the combined expenditures
of China, Russia, France, Great Britain, Japan, India and Germany.

http://www.realclearpolitics.com/articles/2012/10/10/david_walker_for_pr
esident_115731-2.html

It's the Death Spiral Math, Stupid

Since the president took office:

* Medicaid is up from 46.9 million to 56 million people.

* Disability beneficiaries are up from 7.5 million to 8.8 million.

* The food stamp program has grown from 32 million Americans to 47
million.

Add to that 80 million beneficiaries 40 million Americans age 65 or older on Social Security and Medicare (9 million of the 49 million on Medicare, including some under age 65, also receive means-tested benefits).

That 120 million does not include the numerous smaller entitlement programs.

Put them all together, and a number approaching half of the country participates in an entitlement program.

Now add in the 16 million new Medicaid beneficiaries, thanks to ObamaCare, plus an estimated 12 million people who enter the health insurance exchanges by 2014, where most will receive federal subsidies.

The budget implications of these programs are huge. For fiscal 2012, America spent $2.2 trillion of its $3.7 trillion budget on entitlement programs - $400 billion less than the $2.6 trillion in gross annual
revenues.

Oh, and interest on the federal debt was $220 billion.

Read More At IBD:
http://news.investors.com/ibd-editorials-perspective/101512-629360-entit
lement-cliff-threatens-americas-fiscal-health.htm#ixzz29UIDZgS2

Thus, the cost of entitlement programs plus interest on the debt are nearly equal to total federal revenues today.

Virtually everything else the government does is with borrowed, or printed, money.

Entitlement spending is also growing much faster than the economy.

Since 1980, Social Security and the various income security programs have grown at an average annual rate of 6%, while Medicare and Medicaid have both grown at more than 9% annually, which includes population growth.

For Whom Doth The Death Spiral Bell Toll?

"U.S. government debt currently totals around $16 trillion. The Treasury estimates that this debt will rise to around $20 trillion by 2015, over 100% of America's Gross Domestic Product.

That's not counting other current and contingent commitments not explicitly included in the debt figures - government support for Freddie Mac and Fannie Mae (known as government-sponsored enterprises) of over US$5 trillion and unfunded obligations of over $65 trillion for programs such as Medicare, Medicaid and Social Security. State governments and municipalities have additional debt of around $3 trillion."
http://www.marketwatch.com/story/debt-is-drowning-the-american-dream-201
2-10-17?pagenumber=1

Tracinski - The Death Spiral

Here is the basic pattern of the interest rate "death spiral." A
country's interest rates increase, making it harder to make the basic
payments on its debt. This make lenders even more nervous, so they
increase rates even more, making it even harder to service the debt,
which makes lenders raise rates again, and so on. You want an idea of
how bad this can get and how fast? Check out this grim little graph,
which shows interest rates on Greek debt spiking from a little over 3%
to 30% in about two years. That's what a real sovereign debt crisis
looks like, and you can see how Greece had no way out without
intervention from a larger and wealthier country like Germany.

This describes what the crisis looks like, but not what drives it. What
drives the crisis is the inability to stop borrowing or to pay down the
debt because massive, chronic borrowing is built into the system. It is
built into the system because the country has adopted a massive welfare
state and bloated government employment. Government has grown so big
that the private economy can no longer realistically be taxed enough to
support it. Nor can the size of government be reduced significantly,
because so much of the economy has become dependent on it that any
reduction in welfare payments or in the rolls of government employees
causes a massive increase in unemployment and deepens the recession. So
the only alternative is to keep borrowing at high levels, year after
year-and when the government can no longer do that, the country faces,
not a mere recession, but economic collapse. When massive spending cuts
are then forced onto a country, millions of people feel as if they have
been suddenly cut off for no reason, and they are driven into the
streets in rage.

That is what the Eurocrisis is about, and under Obama, America is
setting itself up for exactly the same kind of death spiral.

http://www.realclearpolitics.com/articles/2012/10/11/the_economic_case_f
or_romney-ryan_115748-2.html

I don't know why the news talks about anything else - this is the one
bright shining object. Everything is drivel compared to this one
imperative. The fact that Ryan laid out an option, and was nommed for
VEEP as a result, is the only hopeful part of this election.

It's the Spending

Progressives say: If you're so worried about the deficit, raise taxes! But it's a fantasy to imagine that taxing the rich will solve our deficit problem. If the IRS grabbed 100 percent of income over $1 million, the take would be just $616 billion. That's only a third of this year's deficit.

http://www.realclearpolitics.com/articles/2012/07/11/budget_insanity_114758.html

Amazingly, we could grow our way out of debt if Congress simply froze spending at today's levels. That would balance the budget by 2017. If spending growth were limited to just 2 percent per year, the budget would balance by 2020!

But the politicians won't do even that.