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Monday, September 29, 2008

Federal Budget

Before the latest proposed bail-out of Wall Street, here is what we were dealing with as a nation: United States Federal Budget. These are the things our Congress and President have committed to spending and generally do spend each year. Some expenses are discretionary and some mandated like Social Security.

The budgets, so far as I can determine, have yet to include the cost of the war in Iraq and probably not the costs we will be accruing for years to come in terms of increased Veteran Health problems. They also were put together before the latest proposal to bail out the stock market.

There are other sites that also explain it but they are not so easy to understand, like: US Budget. You can go from there to find individual departments and what they were budgeted for 2008.

Here is another site to help you see what we have been borrowing: U.S. National Debt Clock. To get some perspective on this, $.22 of every dollar of taxes goes to interest on this debt and it will rise as the debt rises. Senator McCain suggests that we can solve this problem with earmarks but they were a small part of the budget and some of them were for items that need solutions like bridges to somewhere.

Think about this problem in a logical sense for a minute. If an economic adviser was looking at your home expenses and you said you were paying $.22 of every dollar of income on interest but not paying down the principle, what would they say to you? How much leeway does this give our government to work on any problems anywhere?

With the stock market taking another nose dive, major financial institutions have proven deregulation doesn't work where it comes to money and it never has. The supposed capitalist manifesto, Wealth of Nations, by Adam Smith was not about totally unregulated capitalism allowing the greedy free rein.

Smith wrote: " It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages." He referred to this as rational self-interest-- something we haven't been seeing much of in these markets. When you kill the golden goose, there are no more eggs-- unless you can talk someone else into handing them to you.

There are two key provisions in our Constitution about federal responsibility and one is regulating commerce. Who forgot about that? Somebody not paying attention? Or did they financially benefit in their forgetting? Don't forget how lobbyists have grown in numbers just since Bush got in office.

Right now, we are as individuals facing one heck of a mess-- as will our next president. We have to worry about our own investments, our salaries, loans, our family member or neighbor who is losing their home or out of work, and then what happens if the country cannot continue to borrow from the rest of the world?

Currently the United States borrows the bulk from the Federal Reserve. They are certainly making a tidy profit; so long as we can continue paying that interest-- and that doesn't pay anything down. A lot of people listened to Cheney when he said the debt was insignificant. Our grandchildren will find their options as a people far less because of what they have inherited from their insolvent parents.

The talk goes that Democrats increase the debt, obviously proven false by when it has grown biggest. The question I was left with is-- who benefits from this debt? Who is profiting from it? My best guess is it's not those welfare moms that some Republicans worry so much about.

Chart from: zfacts

Whoever becomes president in January will inherit some nasty problems on a federal and domestic level. If the American people expect a band-aid response to those problems, the end result will keep escalating and being pushed into the future, but it cannot be ignored forever.

Sacrifice was denied even after 9/11. Go shopping! That's still the answer with the government's $600 rebate to most families. What can $600 buy? Go get a new DVD player and find out. Suppose the government had used that money in another way and put it into our crumbling infrastructure, done the kinds of projects we can't individually finance-- maybe rebuilt more bridges before they collapsed, improved our rail lines or airports?

One of the things that helped a lot of families during the depression was work projects, which we still have as benefits today all around the country. Projects like that provide jobs but also leave us with something real for our money. Oh yeah, I know a DVD player is real too-- until it gets replaced by newer technology and ends up in the garbage dump.

Investment in infrastructure is what we see in other countries that are sometimes surpassing us for the quality of their lives. It's something that Republicans often argue is the duty of the private sector. Fine, do you want to pay to use that new freeway every time you turn onto it? Tolls for the bridges? There are many ways to pay taxes and a lot of them have a profit tucked in for somebody else.

[Update or should that be downdate: The vote today on the bail-out leaves me depressed. From the sounds of this, from Kos, this bail out will give wall street what it wanted and leave main street holding the bag. Typical.

Yes, I get it.Without this we head for a depression. I understand the banks are saying without this, they will crash, but explain why those who failed should get fat cat salaries? To me this just delays something worse coming and with the government having less money to handle it.

I operate on logic and to me this bill doesn't sound logical but is likely to be voted through on fear mostly by Democrats... ugh! A depression will be bad. Loss of our stock market investments will be bad, but does this do anything but delay when that happens? The government, with a population unwilling or able to pay more taxes, cannot keep going into this kind of debt forever!]

12 comments:

Darlene said...

You have posted another excellent analysis, Rain. It really makes you want to go back to bed and hide under the covers. I don't see any silver lining ahead and I am old enough to remember what a depression is really like.

I am trying not to be depressed, but it gets harder each day. The only hope I have is that Obama wins and injects some sanity in our government. Sans that, we are doomed.

Rain Trueax said...

Well at least the House voted down this bill for now. I am not sure of the solution but rewarding the CEOs who made these choices doesn't make sense to me. Yes, we might be heading to rocky times but the truth is that the Federal government doesn't have the money short of huge borrowing. That cannot go on forever. Farm Boss had called our Senator to request he vote against it and learned then that it had gone down.We all must make our opinions known on this. Just griping here isn't enough. Email and phone your opinion-- whatever it is.

I hope for the best Darlene. There may be a way but it doesn't look good right now, that's for sure.

Mary Lou said...

I thought it failed! At least that was the word as of 1:00. Gads I was so busy setting up my new toy that I was not watching tv.

Mary Lou said...

DUH!! Should read the comments first huh?

Brenda Pruitt said...

Didn't the politicians look stupid on TV, scuttling back into their mouse holes because their constituents read them the riot act and crammed it down "their" throat that they wouldn't re-elect them? Poor Bush. Stupid son-of-a-bitch. And I live in Texas, so believe me, he has his supporters around here. Even worse son-of-a-bitches, and sad to boot, if they believe any fool thing that comes from his mouth. If you don't like the profanity, I'll understand if you don't publish my comment. Just can't think of a more proper way to put it on this historic day.
Brenda

Diane Widler Wenzel said...

This afternoon I watched CNN leading me to believe in the bail out as an investment for the tax payers. This is a time of golden possibilities if you are an expert to pick up bargains but only if you are an expert and use money that you don't need in the next ten years.
We wonder what horrible thing will happen if there is not a bail out. Nobody at CNN breaths much in imagining anyting more than a slow down of business loans. Well,there are historic examples of what will happen like China for one. Foreigners will buy up our industries. They will buy our property. They will demand ownership and complete control of military related industries. And if we are like 19th and early 20th century China we will be using foreign currency. We will welcome a dictator patriot who has the strength to rid the country of foreign devils.
The passage of one event after another reminds me of how China lost their democracy led by Sun-yet sen. The morgage mess and loans are only a small part of the total financial failure. We have been cutting trees and shipping them to Asia. We have been borrowing from China as well. It could become an ironic turn of events.
Maybe tomorrow I will think of something cheerful.

Rain Trueax said...

Unfortunately our assets are already being purchased by petro dollars and by China who has plenty to spend given the interest we are sending them to have them fund our loans. What bothers me about this current proposed bail-out is there is absolutely no guarantee it would solve anything but it would take more money from a treasury that is already over extended way too far. It would be nice to have something positive to say but better is to honestly face our situation.

Fran aka Redondowriter said...

Thanks for the informative budgetary information. I simply haven't the slightest idea what to think anymore except that something has to be done. Can they wait until after the election? Can we hope, because McCain couldn't sway his party, his campaign went down the toilet?

I'm very scared to look at my retirement portfolio, but will go online and do so tomorrow.

Anonymous said...

All through this brouhaha over the financial crisis I've thought...what if they were able to return those folks that were forced out of their homes by the ballooning of their mortgages back to their original mortgage payment? The banks would have income - granted, not the big bucks they thought they'd get, but at least something. I don't understand all this and surely giving the fat cats more money can't be a solution that is going to help the people who are struggling so hard against inflation, and the appetite of the financial organizations.

Anonymous said...

Oh, also, I couldn't help but think that this first vote to not accept the bailout was just a show for the "folks back home". There, we've shown them that we listen - now let's get out there and vote for it the second time. That way they don't risk being voted out of office, perhaps.

Anonymous said...

We are in a financial mess that will get worse !!

Barefoot and Pregnant in the Kitchen said...

First of all, I just discovered your blog and love it!

Even in developing countries, it has been shown that the trickle down theory does not work. That is why large money-lenders to these nations, such as the IMF and the World Bank (more so the former than the latter) have not been so sucessful in stablizing developing nations' economies. You expect the money to trickle down but as it's trickling a large amount of it gets "lost" in the pockets of those on top. What does work, however, is smaller, rural micro-credit banks which give modest loans to villagers who, with that loan, can begin their own small business. Once their business takes off, they can not only pay back the loan, but can also begin to hire their neighbors, friends, and family members in the village. That is how you stimulate an economy, from the ground-up. Rich people may be hard working, but they are also generally in a mind-set to make as much money as possible. That's the idea of a corporation! So why would anyone expect anything to trickle down from corporate executives giving themselves half a million dollar salaries?

My second thought is this--why do Republicans not want to be told what to do with their money, but want to be able to tell everyone what to do with their bodies/lives? The phenomenon of the conservative Republican is one that continues to baffle me. Why is it ok to deny young single women their welfare rights AND their right to abortion? Why is it ok to say, "I don't want the government's hands in my pocket" AND "I want the government to enforce what I believe is moral." I may be generalizing, but to me this is how the GOPs advertise themselves.