The News is Bad ...And Getting Worse

[Mark E. Smith]

From Capitol Hill Blue

If Diogenes were stumbling about Washington with his lantern looking for an honest man, sooner or later he would bump into David Walker.

Walker, who wears monogrammed shirts and takes his children on cruises, is comptroller general of the United States, the official auditor of the federal government, and runs the Government Accountability Office. What he has to say will make your hair stand on end.

(Warning: This is not beach reading.)

The United States is reaching a "demographic tsunami" as baby boomers retire, for which it still is totally unprepared.

Nobody knows how the Pentagon is spending $1 billion a week in Iraq. The Department of Defense has "absolutely atrocious financial management. If it were a business, it would be out of business."

The federal government's long-term liabilities and unfunded obligations now total $45 trillion, or $365,000 for every worker. In one year, long-term liabilities rose by $13 trillion, mainly because of the new medicare prescription-drug benefit. In contrast, the federal government's entire annual budget is $2.5 trillion.

Last year, the government operating deficit was $567 billion. Only about $100 billion of that was from the war on terror and homeland security.

In 35 years, it is "entirely plausible that the federal government could be reduced to doing little more than paying interest on the national debt."

http://www.capitolhillblue.com/artman/publish/article_7041.shtml

[bemildred]

1. Hey, there is always the Argentinan solution.

Stiff your creditors and start over.

[wli]

10. liabilities and obligations aren't debt

They're basically saying the cost of social programs and long-overdue infrastructure overhauls will overwhelm the federal government and that the US is en route to Third World status (which by some accounts it has already achieved).

So, it's not the debt, but things the federal government is obliged to do that will drive it further into debt.

The cryptofascists have impoverished several generations with regressive economic policies, depriving themselves of the taxes to carry all this out. Their strategy for coping with the collapse is IMF/WTO -style "austerity" and forceful pacification of the populace with police state tactics, mass imprisonment, martial law, etc.

[bemildred]

27. True, that. nt

[HysteryDiagnosis]

2. The repugs apparrently have little trouble with these facts.

[wli]

4. their strategy was unrealistic

They thought they could cope with it by colonizing the Middle East and generating the revenues that way.

[AngryAmish]

3. Soylent Green is people

We'll just eat the Boomers once they hit 65.

[Glorfindel]

5. Hell, no you won't! We outnumber you...

and we're stayin' in shape! (Round is a shape, right?)

:bounce:

[RUMMYisFROSTED]

6. The only problem, from my experience, is that

eating 65 year olds is like eating a rubber ball. But hey, that's why they invented catsup.

[On the Road]

9. "In Your Experience"?

Do tell.

[RUMMYisFROSTED]

19. It was a stormy night at the Old Folks Home....

...Damn! My cellphone just went off. Be right back...

[onecitizen]

28. that's on TCM today

sometime,I think:-)

[MissWaverly]

31. why don't we just tax the rich

How hard can that be especially since the profits from some independent
oil cos. have risen to 160%

[sendero]

7. To repeat myself..

.... it isn't terrorists that are going to do America in, it is the total mismanagement of the economy leading to crippling debt.

China will overcome us without firing a shot by selling us cheap goods and owning half our treasury bills.

[Wapsie B]

20. That's very true.

So many people don't understand that this war for freedom has got to be paid for somehow. This deficit spending that the gop has fallen in love with doesn't come without huge strings attached. We are now just the slaves of our bondholders, namely foreign countries. New World Order indeed.

[biggertent]

8. The theocrats are waitin for the second coming and..

the neo-cons just want perpetual war; the rest is just boring details to them

[wli]

15. they're playing "who wants to be a trillionaire?"

The war stuff is just funnelling money through defense contractors. They've looted the government's coffers to the tune of 13 trillion with no-bid arms contracts, big pharma pushes, etc. It's likely they were plotting to abscond before it was figured out.

[Wapsie B]

17. That's true.

If the theocrats don't get a fetus-lover on the Supreme Court to replace O'Connor the Wilson/Plame scandal won't be the only thing the gop has to worry about.

Welcome to DU!

[Straight Shooter]

11. Capitol Hill Blue is like a margarita. Take it with mucho grains of salt.

I'm just sayin'

[papau]

12. CAN WE SAY END BUSH TAX CUTS FOR THE RICH?

And single payer national health must be passed?

As for those silly "liabilities", beyond being meaningless because they are so arbitrary because of the huge changes caused by out year assumption changing, they will actually come down once we get back to higher interest rates - through the math magic of higher interest rates and discounting - and those higher rates will occur once China and Japan choose to stop investing their massive trade surplus in US gov bonds - at a huge financial loss which keeps the exchange rate down and the trade deficit going. It is a trade deficit that moves US jobs overseas to become job growth overseas, but at a cost of a financial loss on all those dollars they are getting via the trade deficit.

Crazy how Bush's trade deficit causes job loss that we do not talk about (excluding the guess for "at home not paying payroll tax as yet" jobs- the DOL "BIRTH/DEATH" number, 5 years of Bush has lost jobs) Bush gets a nice talking point for "low interest rates" as he screws our economy into the ground.

[rurallib]

13. In 35 years Grover Norquist achieves his dream

That has been the key to their strategy from day 1 - run the debt so high that the only thing that the government can do is pay interest - no social security (can't redeem bonds) no welfare, no highway programs etc. Defense and interest payments is all we can get for our taxes. And they'll keep the perpetual war/fear going to keep the defense budget high.

[Iris]

16. My reply should have gone here!

[wli]

22. clearly this is not the actual conclusion

Rather that neoliberalism renders the state inert by bankrupting it, and an effective plutocracy ensues. This is often called a "corporate police state." The term for the transitional state is, of course, kleptocracy.

[Iris]

14. Starve the beast.

That's the strategy behind this admin. increasing the size of gov't. by 30%.

[HamdenRice]

18. The 45 trillion number is extremely misleading ...

I agree with the overall thrust of the argument that we are in big financial trouble. But writers throw around the 45 trillion unfunded liabilities in a very misleading way.

That refers not just to regular governmental debts, such as treasury bills, but also to all the guarantees the federal government issues. For example, bank deposits are guaranteed by the federal government as are many types of home mortgages.

The overwhelming likelihood is that the overwhelming majority of these liabilities will never need to be paid. Only if there is a run on the banks will federal deposit insurance get paid. Similarly, most mortgages will be paid off and the government's liability for those mortgages will simply disappear.

In fact, the rise in unfunded liabilities can be a sign of economic growth. For example if bank savings increase, so does the government's liability for deposit insurance.

Of course, with a bush in the WH, it is always possible that unfunded liabilities, instead of lapsing, will be called. The last time a shrub dynasty scion was in the WH, GHW, there was a run on the savings and loan banks, and the federal government ended up having to pay hundreds of billions of dollars to bail them out.

Shrub is doing nothing while corporations are threatening to default on pensions, which would shift the liabilities from corporate books to the federal pension benefit guaranty corporation.

So, while the number is misleading, you never know what might happen when an incompetent thieving shrub in president.

[JanMichael]

21. The only nation EVER to get away with having huge trade imbalances AND...

...massive government spending (For any long period of time)is doomed.

International Capitalism doesn't dig that.

[wallwriter]

23. Cheney said Reagan proved that defecits don't matter.

That will be little consolation when the whole country goes belly-up

[GreenPartyVoter]

24. If it were a business, it would be out of business. Priceless!

[Karenina]

25. Just like every concern

the *dauphin has ever touched.

[drduffy]

26. The corporatists who are

internationalists couldn't care one whit for the US. Except as a populace from which to harvest young men and women for the war on terra. I remember seeing that Kissinger quote that Americans are "useless eaters".

[Vinca]

29. So can anyone tell me why other nations expect money from us

when we should be getting money from them? Just asking.

[bobbieinok]

30. W's discovery---cut taxes to fund a war.....an historical first

[DaveT]

32. America As Story Line From The Sopranos

Tony's old high school buddy, David Scutino, who has never been associated with the mob, owns a very respectable sporting goods store. David does have one vice, however, gambling. He begs Tony to let him into the Big Shot Poker Game attended by high rollers such as the real life Frank Sinatra, Jr. (Called "Chairboy of the Board" by one of the goombahs.) Tony tells David that the game is not for him, but David HAS to have this one chance to play Big Time cards.

Of course he loses his ass at the table, coming up close to $50,000 in debt to Tony's crew. David cannot raise that kind of liquidity -- so Tony and the boys take over the store, using up every penny of the business's credit buying all manner of stuff that they in turn sell on the black market for a perfect profit -- pay nothing for it, make a ton selling it.

After a few months the creditors come calling and the business goes belly up -- and Tony's crew moves on to the next score.

The Bush Gang is doing that to the United States of America. A simple bust-out. Taxes are slashed to make campaign contributors happy, and the Treasury uses our country's full faith and credit to go on a buying spree that just happens to go into the accounts of more campaign contributors.

A long series of wars are planned with two of them on the pad already -- open ended destruction followed by open ended reconstruction, with rigged bids paying a dollar on the dime for the new infrastructure in Iraq, and eventually the rest of the Middle East.

With an identical prospect waiting in the wings next door in Iran.

This is not unprecedented. All the shitty countries on earth that we used to smirk about -- Banana Republics, the Former Soviet Socialist Republics, the Kleptocracies of Africa -- go through this scheme over and over again.

The result is hyperinflation.

The utterly cynical and ruthless destruction of Americas's credit is covered by a double-barreled smoke screen of propaganda: God and the Flag for the illiterate dumbshits. A wink-wink strategy of anti-government foolosophy for the literate dumbshits who are told that this deficit spending is actually a technique for "starving the beast" of government.

The people pulling off this Argentinization of America will all be rich as Croesus when the bills come due, laughing their nihilistic assess off.