Category

Commentary

Apr 14
0

Ad Supported Blogging

By | Commentary

You may have noticed over the last few days I have been playing around with advertising…I’m not really expecting much, but the IRS is going to take me behind the woodshed if my home office doesn’t start generating some tax revenue, so I guess this means we are moving from the “really crappy hobby” realm to the “unsuccessful small business” realm….baby steps right?

I have joined the Amazon Affiliate Program…if you aren’t familiar with it, here is how it works. If you click on an Amazon ad from my site, then purchase anything from Amazon within 24 hours, supposedly I get a small commission that doesn’t cost you a penny. So next time you are thinking about purchasing a Bugatti Veyron from Amazon…read my review again, click on an ad, and proceed to make me the happiest US deficit blogger in the country.

Apr 12
0

4/10/2013 Daily US Cash Deficit

By | Commentary
The US Daily Cash Deficit for 4/10/2013 was $9.5B bringing the April Deficit through 10 days to $73B. We do see tax deposits continue to edge up, now about 6% over last year, but net revenues are only up 3%. Not that it matters in the big picture, but it is worth noting that 4/2013 will have one more business day than 2012, which should help revenue a bit at the end, but hurt cost. There is one promising metric…Taxes not withheld from paychecks…for example taxes due paid by check (because you didn’t withhold enough) are up 17% compared to last year, good for $2B. It’s not much in the big picture, but if we extrapolate it, it could mean some big revenue gains next week… or it could mean nothing at all.

2013-04-10 USDD

Apr 11
0

Social Security Demographics Guarantee US Bankruptcy

By | Commentary
From money.com

“I cannot afford to have my Social Security cut by one penny! Plain & simple.”

and

“I doubt that one government official can begin to live on what the average senior citizen does,” wrote one 77-year-old woman. “I hope that Pres. Obama truly understands the dire straits that his plan could cause senior citizens.”

As discussed a few days ago the latest discussion to fix the deficit has to do with changing the annual inflation adjustments from regular CPI to “chained cpi”, which supposedly runs a few fractions of a % under CPI. Both numbers are laughably bogus…CPI has been running around 2% or year….gasoline has more or less doubled in the last 4 years…you do the math. Actually…the government gets to do the math, and make the number whatever they want anyway…not sure why they need to pretend about using a different made up number, but I digress. That we are even discussing such miniscule cuts and pretending they will save us is a testament to the rampant financial stupidity present in DC.
Back to the article, which basically has a bunch of seniors discussing whining about the potential impact of losing a few dollars a year…you know, throwing them back into poverty ect… They are all pretty pissed at Obama for even allowing the discussion. This is one of the main reasons I firmly believe we are incapable of fixing our problems….In a democracy, it is possible for a powerful voting block to demand, and get free stuff from a weaker voting block. And please don’t send me anything about how you paid into Social Security so you are owed. The truth is, every penny you ever paid into social security was stolen and spent years ago by politicians you elected…
Regardless, with 300k seniors retiring every single month (netted against the 200k or so that pass), I suspected that the demographics are getting close to if not already past a point where it is likely impossible to actually make any real changes to the program. I mean what are the odds of anyone on social security supporting any reduction at all? Pretty close to zero I’d say, and I completely understand that. If I was living off$1400 a month of government cheese, and hadn’t saved a dime of my own money, I suppose I might feel the same way.
So I looked at the US population, finding that in 2011, the population over 20 (sorry…no breakdown of 18+) was 223M. Of that population, 44% was over 50, and I assume not willing to vote to make any voluntary cuts to social security. Then, I looked at some other statistics and determined that the over 50 crowd has a voter participation rate of about 66% compared to the under 50 rate at ~50%. After adjusting for participation, on a straight vote, Over 50 has 51% of the vote to 49%, and thus the power of the majority to do whatever it takes to prevent benefit cuts for themselves, and even raise taxes on the under 50 crowd to pay for it. So absent a moral uprising against the blatant generational theft that is the Social Security/Medicare program, the demographics of democracy virtually ensure we will go full speed over the cliff. No matter what the  politicians say, or the jokesters at the CBO predict…there is no way in hell the hundred trillion or so of promises made by the federal government won’t be defaulted on in one way or another, so you might as well get ready for it. If you can’t afford the $3 a month cut being proposed, you’re going to be in for a rude awakening when the checks stop coming altogether.

Apr 10
0

4/8/2013 Daily US Cash Deficit

By | Commentary
The US Daily Cash Surplus for 4/8/203 was $5.8B bringing the deficit through 8 days to $60B.

2013-04-08 USDD

Just a note related to the charts…for this month only…I am including for prior years the current date+1. For example, the above has through 4/8 for 2013, but through 4/9 for the other years. I am doing this to essentially sync up 2013 and 2012 and partially eliminate the timing we typically see throughout the month. This month…it is easy…the first business day of 4/2012 was Monday 4/2…the first business day of 4/2013 was Monday 4/1. So, by including 4/9/2012, I get  not only to compare 6 business days vs 6 business days… but the same business days. Doing this if one month started on a Thursday, and the other on a Monday wouldn’t really accomplish much…but in this case I think it does. I haven’t even looked at how it affects 2010/2011, but honestly I am mostly looking at 2012/2013 anyway….So be warned…I will be presenting like this for the rest of the month.
Looking at the charts…I see two months pretty much in sync…less the much discussed cost timing issue. Still no breakout in total net revenue, but there was a slight increase in tax deposits…now looking at +5.6% YOY, being offset by refunds and a decrease in “other”. Not time to panic yet, about not seeing 10% YOY increases…give that at least a few more weeks.
Apr 07
0

Obama: “Deficits are Shrinking”

By | Commentary
I read with great interest Obama: ‘The Truth Is, Our Deficits Are Already Shrinking’. One of the main reasons I do this is to provide some proper accounting for the historical record. So…He is right. The deficit is shrinking…no doubt about it, but it’s not exactly something new.

2013-04-06 2009-2012 deficit

After topping out in 2009, we have seen slow but steady improvement down $500B to $1.096T in 2012 from $1.596T in 2009. And 2013, helped by the elimination of the payroll tax cut, and maybe to a small degree the tax hikes on the wealthy, is likely to continue this positive trend.

2013-04-06 2013 deficit through 94 days

Through  April 4th…94 days into 2013, the deficit, at $419B is $49B under where it was last year through 94 days. So does anyone see the problem here?… Maybe that we are working on our 5th consecutive $1T+ deficit, and our debt will soon blow through $17T…on it’s way to $20T and beyond. So, let’s use a football analogy. If in Year 1, your team loses 70-0…that’s pretty bad, kind of like our 2009 deficit. The next year, if you only lose 63-0, sure, maybe it’s an improvement, but you still got stomped. So here we are…5 years later. Maybe we lose 42-0, maybe we lose 35-0…does it really matter? Now fortunately, football seasons are not cumulative….everybody starts 0-0, no matter how bad they were last year. Deficits aren’t like that…and our $17T debt is one heck of a testament to that.
Now…. the economists and the politicians, as I’ve discussed before, are atrocious accountants. They will spout all kinds of ridiculous justifications about pointless ratios like debt to GDP, and rave about how low interest rates are….so it is ok to take on debt now… Don’t you believe any of them. Where we are now is like a household with 50k of income closing in on $300k of credit card debt. There is nothing to show(or secure) for this debt…no cars, no house (no dams, bridges to nowhere, or fleets of electric cars.) Just mountains of unsecured debt on a 0% special….expiring sometime soon. The answer for our household is obvious…declare bankruptcy, and those foolish enough to lend them the 300k in the first place, get to suffer the consequences for their foolish decisions. The US story will end the same. We are simply too far gone and our political system too broken. The game is already over, we just haven’t admitted it yet.
So, while President Obama is right…the debt  deficit has been coming down, we are still losing 35-0. Worse, while we are likely to have another year or two of improvement, with 10k boomers retiring every single day, the exponential growth of Social Security, Medicare, and the other entitlement programs will soon overwhealm the entire budget. In CBO vs CBO I forecasted that by 2022, the annual deficit will have grown to $1.788T. Our Debt….external only will have doubled to $24T…not including our Intragovernmental Debt… The only good thing about a Trillion dollar deficit, is that at least it’s not 2 Trillion.