Thinking Outside the American Box

I think there are two basic reasons that the United States has budgetary problems: (1) The USA spends way too much on defense; and (2) It doesn't collect enough in income taxes. One would never guess that these are the actual problems based on Congressional and Presidential soundbites in the general vicinity of the issue.

I spent an unedifying hour this evening watching the House debate on the so-called Boehner plan. I'm not sure why they're having this debate; the whole thing was an ill-tempered exercise in bad faith and posturing. If it passes in the House, the Senate will vote it down. Then what? No matter. What is striking is that the political process in Washington, D.C. is now so completely dysfunctional that the obvious solutions cannot even be mentioned.

The simple charts up above are a graphic depiction of where America's income taxes come from, who pays them and how much. The top chart is from 2007, the bottom the most recent tax year. They afford a picture of the radical skewing of wealth in the United States. Essentially, the bottom 50% of earners in the USA contribute virtually nothing to the approximately $1 trillion in income taxes collected by the IRS. On the other hand, the top 1/5th of earners pay in nearly two-thirds of all such taxes. These are the people who were most helped by the so-called "Bush tax cuts," who were exposed under Clinton's regime to marginal rates of 39.6%, but gained "relief" through the legislation of 2001 and 2003 and now pay 35% on such marginal income.

The big earners, of course, such as the Wall Street playuhs, have a great deal of "marginal income" exposed to such rates, and the nearly 5% reduction means a lot of additional take-home. If $1 million of your income is paid at the highest marginal rate, you can save $46,000 under Bush that you used to pay Uncle Sam under Bubba. That's a lot of additional cocaine and Ukrainian whores. Another way of thinking about our absurdly imbalanced society is to reflect that the saving alone is higher than the average national income for the rest of the plebes here in our increasingly Louis the Sixteenth wannabe times.

So the top 20% are paying about $640 billion per year in income taxes. Since restoration of the top marginal rate would imply an increase of about 14% in such rate, as a first approximation we might guess that the $640 billion would increase by a similar amount, or about $89 billion, if only this rate were changed and the rates of the lower earners (which were also reduced by the Bush legislation) were left alone, as they probably should be. Alternatively, a steeper progression could be applied to the top 40% of all earners, who pay nearly 85% of all tax, in an effort to close the budget gap. You get the sense, however, that such measures are seriously inadequate. Even if this raised an additional $200 billion (dubious), the actual budget deficit this year (a year without extraordinary stimulus spending) is about $1.7 trillion, or 1,700 billion.

It's funny, in a sickening way, when you think about how profligate the Bush Administration was with war spending. How many times did we hear about supplemental appropriations for the Iraq War where Bush would demand another $140 billion, or $115 billion, or whatever the number of the day was in order "not to abandon the troops?" And his obedient Republican Congress would play along until they were unseated in 2006, and then the Pelosi-led House took their turn writing blank checks. Look how hard it is to come by such sums of money! Squandered, wasted, thrown away, by an Idiot-in-Chief who knew absolutely nothing, as in zero, about how to run a business or balance a budget.

Still, the goal now has to be to find some midpoint between feasible revenue and sensible expenditures. The entitlement programs, if their surplus payments since 1983 are counted as they should be, are not the source of the problem. (The problem was Congressional stealing of the surplus for use in defense contracting and fighting superfluous wars.) The problem is how to raise enough money to support a $3 trillion budget in today's dollars, with defense and security expenses reduced from their current $1 trillion to about $300 billion. At this level, the expenditure would still be about three times larger than our mortal enemy and business partner, the People's Republic of China. Realistically, this is the only country which offers any serious threat of taking us on.

Most of the military budget could be funneled into the nuclear umbrella. I wish, for many reasons, that we still had public intellectuals of the stature of Carl Sagan and Richard Feynman who could guide this debate and remind us of the stark realities of nuclear winter and the unwinnability of a worldwide nuclear holocaust. Big wars between big countries are no longer possible, yet we maintain a force and weaponry structure appropriate to re-fighting World War II, but with no conceivable relevance to the world we live in. World War II is no longer possible because it would immediately escalate to World War III, the one that Tom Lehrer's singing pilot told us would be over "an hour and a half from now." Our current military force has nothing to do with fighting terrorism, either, unless the fact that Osama bin Laden's body was dumped from a warship counts as "use of the Navy." Iran, Iraq (at one time), North Korea, Pakistan, Israel -- all of these countries have acquired nuclear weapons, or are trying to acquire them, so that other countries will not invade them. That is their "best" and only sane use. The same goes for us, and we're still the Big Dogs in the nuclear weapons world. But maintaining a nuclear umbrella requires a very small fraction of what we now spend on defense.

So we could actually operate with a budget of $3 trillion, with a combination of somewhat higher tax revenue (from the current $2.2 trillion to, say, $2.6 trillion as we finally recover and as we raise taxes at the marginal rate), with the safety net intact. Borrowing $400 billion a year is certainly manageable. We could institute a single payer system so that we don't pay double what the rest of the Western world pays while achieving inferior results, thus controlling the explosive cost of health care. The defense budget would still be the world's largest by a factor of three, but all 750 international forts, bases and installations would be shut down worldwide and the troops demobilized.

Watching the morons on TV tonight, I know that such rationality never enters their minds. Yet it's right there. It's not that difficult. If we once began doing rational things, it might even become a habit.

Waiting for things to pick up

I suppose one upside of the debt ceiling fiasco is that more Americans have become aware of the fine-grained details of the federal budget. It is oddly telling, however, in this day of PowerPoint and desktop publishing, that the President, when repetitively addressing the nation about the dangers of not raising the debt ceiling, never once uses any form of visual aid or chart. Thus, our leaders want us to be aware that there is a problem but not to the point of being fully informed about how bad it is. Being fully informed can lead to unwanted reactions, such as totally freaking out.

There appear to be two forms of denial in operation these days, as the good ol' U.S. of A. comes to terms with its new, penurious reality. One approach, favored by liberal economists such as Paul Krugman, Brad DeLong of Berkeley and Dean Baker, is to assign most of the current problems to the financial shock delivered by the fall of one medium-sized investment bank in late 2008, Lehman Brothers. This approach has the merit of allowing such wishful thinkers to use a straight edge to graph a GDP-growth trend line from 2003 through 2007 - and then to extend such a line into 2011. Under this approach, the liberal economists can then laugh and snicker at the feckless policy makers who fail to see that federal spending, always in some vague, unspecified amount, would restore the nation quickly to such hypothesized trend line, and voila! the bad times would be over. Krugman often laments that the failure of the government to take his advice has "gratuituously" consigned America to economic recession. I really think that Krugman's ego should be designated a National Monument, if indeed not a National Park.

The other approach, now taken by the Sturmabteilung wing of the Republican Party (the Tea Bag contingent), is to believe that America's greatness can be restored simply by identifying federal government "waste," such as the Department of Education and the EPA, eliminate it, and America will then gain "confidence," and small businesses, freed from the yoke of intolerable "regulation," will go on a hiring binge which will fill the nation's coffers with overflowing tax dollars.

These are the competing fantasies of our political leaders. The sad truth is that the early years of the Aughts decade (2000-2007) were an illusion and an aberration. Taking office with a small surplus bequeathed to the Republicans by Bill Clinton, George W. Bush and Tom DeLay pushed relentlessly to lower the top marginal tax rate while simultaneously massively increasing military spending, both as a Pentagon baseline and for the "supplemental" costs of fighting wars in Afghanistan and Iraq, neither of which was remotely necessary for the nation's safety or defense. Because, however, the housing bubble was in its most robust expansionary phase, the tax revenues (resulting from all that consumer activity made possible with borrowed money) kept fairly close pace with the federal budget, although Bush, as with all Presidents since Reagan, cheated by subtracting the money stolen from the Social Security fund from the true yearly deficits. Measured as the growth of the national debt, Bush ran deficits of about $500 billion per year, even in the midst of the housing boom and with total tax revenues nearing $2.7 trillion, or at least half a trillion more than today, four years later.

What the lib econ guys miss, such as Dean Baker, is that the boom times cannot be extrapolated forward to the present. (I don't know how they miss it, but they do.) They're gone. However, thanks to the mania for compromise which characterizes our current Chief Executive, the tax reductions, which would have expired on December 31, 2010, remain with us (along with a poorly conceived reduction in the Social Security tax). Further, Barack decided to be Just Like George on the war front as well, expanding the war in Afghanistan and starting brand new ones in Yemen, Libya and Somalia while making no reductions whatsoever in the Pentagon baseline budget.

We thus have a Triple Witching Hour placing enormous pressure on the federal budget: an aging work force trying to retire, but with too few active workers to support their Social Security payments; an inadequate tax base with marginal tax rates too low and unemployment too high, but with a plutocracy in control which will not allow any increase; and an obsolete "consumerist" economy, hollowed-out by offshoring and ruinous free trade agreements, with no housing equity to keep the buying bonanza in motion.

Despite the above, indisputable realities, the country keeps trying to spend about $1 trillion per year on defense and homeland security in its maintenance of an international empire. Every day we unleash more Predator missiles to defend ourselves against Muslim insurgents, terrorists and surprised members of wedding parties, all of them in countries thousands of miles from the United States but in some undisclosed fashion posing an imminent threat to our safety. (We're unclear whether we "almost never" kill innocent civilians, as John Brennan, the National Something-or-Other claims, or we kill about 14 civilians for every "terrorist" we take out, as a just completed British study contends. One or the other; doesn't matter, as long as we're winning.)

We will certainly raise the debt ceiling. The Republicans are simply looking for a way to do so while fooling their cadres of overweight, white, religified government dependents that they're not doing precisely that. Remembering that the government runs a deficit of about 12% of our entire GDP, and that GDP is calculated by adding C+I+G+(Ex-Im), where C is consumer spending, I is certain types of capital investment, G is government spending and Ex-Im is the net of exports over imports (this one's always negative here in Walmartland), one can deduce that if the government suddenly loses 42% of its "funding" (borrowing) equal to about 12% of GDP, the gross domestic product is going to take a massive hit. Those in power from either party will not want to preside over that, because telling the Tea Baggers, "This is what you wanted," will not do the solons any good while the tar pots are being fired up.

It will be good when the fiasco is behind us, simply because it's too demoralizing to think about and hear about all the time. We will then go back into Godot Mode, as in Waiting For. Waiting for the economy to recover, for jobs to appear, for seniors to unretire, for the sick on Medicare to get well, and for candy-shitting unicorns to reproduce at a prodigious rate. This has been the "strategy," one way or the other, for about five years, from that occasion when W told us, in his one moment of felicitous description, that "this sucker could go down." He might very well have been right.

Freedom from Debt Slavery

I am intrigued by the argument, now being voiced by more prominent figures such as Bill Clinton, that the way out of the debt ceiling impasse is through use of a rather obscure paragraph of the Fourteenth Amendment to the United States Constitution. To wit,

4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

When the 14th Amendment is mentioned in public discourse, it's usually about its first paragraph, the one containing the prohibition against denial of due process or equal protection by any State of the Union (the Fifth Amendment already covering these points where the federal government is concerned). The 14th was one of the crowning achievements of Reconstruction; it eventually assured the citizenship of any slave born in the United States, and served, ultimately (nearly a hundred years after its passage in 1868), as the basis for the Civil Rights Movement, as the 14th was the great federal trump card against George Wallace, Orval Faubus and other blights upon American history, who were the ones who gave "States' rights" a very bad name which persists to this day.

Paragraph 4 was not really passed with the current situation in mind, of course, anymore than the Founding Fathers were thinking about gestational trimesters when they enacted the Ninth Amendment. The Constitution is a small island of text, however, surrounded (and inundated) by an ocean of judicial gloss and exegesis (and oceans made of glosses and exegeses rarely occur in nature). The 14th Amendment's "debt" clause (the above paragraph) has only rarely been addressed by the United States Supreme Court, and never in the context of a contest between the legislative enactment known as the debt ceiling (which has only been around since 1974, I believe) and the Constitution. If there is a contradiction, of course, then under the holding of Marbury vs. Madison the 14th Amendment prevails, although with Roberts, Scalia and Alito around, the overturning of even Marbury vs. Madison is a possibility. That would raise some interesting logical paradoxes - the Supreme Court overruling the concept of Judicial Review by using Judicial Review to conclude that Judicial Review is unconstitutional. More or less like figuring out: This Statement Is False. I love stuff like that. Maybe the Supreme Court could meet in a building patterned after an Escher drawing.

Although there has not been much judicial guidance as to the application of the 14th to the debt ceiling, the current learned debate concerns whether the "public debt" that "shall not be questioned" refers to existing debt incurred through Treasury borrowing or is a more general prohibition against denying the validity of obligations of the federal government. Either way, it might offer President Obama a way out if push came to shove.

Under a conservative reading of the first sentence (and Obama, being a preternaturally cautious individual, would certainly prefer to go out on a limb only as far as necessary), the 14th would seem to permit the incurring of additional debt if necessary to carry on debt service on existing debt or to "roll over" outstanding Treasury obligations (since there is never a precise, neat and clean correspondence between maturing debt and how much money you need to handle the redemption). That is to say, the Ponzi economic scheme we now use, whereby we take on additional debt by selling Treasuries to marks and suckers who "invest" so we can use their money to handle the debt from suckers who invested earlier in the inverted pyramid, "shall not be questioned," because it's either who we are or what we've definitely become. A nation with an acquired, vested right to live permanently beyond our means because we're Exceptional. Deal with it, world.

A great cry would of course arise from the humid, fetid trailer parks of this great land, as the Tea Bag contingent of the Booboisie (h/t: H.L Mencken) realize they've been had by this Ivy League hipster, and next thing you know, we'd be embroiled in an impeachment crisis; a Constitutional crisis, as the Supreme Court, naturally, rules against President Obama on the issue; and many other circus-like developments. I can only say: please, Lord, let all that happen. Impeachment would fail, as it did against Clinton, because 2/3rds of the Senate is not going to vote to convict. If the Supreme Court rules against President Obama, O can reach into the mists of history and use that great quote from President Andrew Jackson replying to the Supreme Court's ruling in Worcester vs. Georgia: "Justice Marshall has made his decision; now let him enforce it."

Sure, the quote is apocryphal, and sure, Barack Obama would never say such a thing, but it would be a great "Mr. Smith Goes to Washington" moment. More interesting, anyway, than listening to John Boehner.

Drifting toward the falls

A friend and faithful reader writes:

"I enjoy your consistently perceptive comments on the budget goings-on, but I wish you had used to illustrate the problem that Obama's "grand bargain" to cut $4 trillion of spending over the next 10 years doesn't begin to address the deficit problem. Assuming the average savings is $0.4 trillion a year (it's not but so what) and that the savings turn out to be what they're forecast to be (they rarely do), we still have to fund an annual deficit of $1.1 trillion or so. The deficit is so large that elimination of the entire military budget wouldn't fix the problem (and I'm not suggesting that the military budget not be significantly cut). The $2.4 trillion package they're now trying to negotiate is even less effective."

These statements are unfortunately true, and I don't disagree at all. In fact, my understanding is that the "$4 trillion dollar deficit reduction" is not actually a subtraction from the amounts of the current budget or future budgets, so that we would actually be spending less now or in the future than we are at present (in nominal terms), but is only a reduction in the anticipated increases in future budgets. Thus, if the future budget deficit is still $1.5 trillion, but it would have been $1.9 trillion without the "cut," that still counts as "$400 billion toward a ten-year total of $4 trillion." Joe Biden was apparently asked by one young GOPer at a recent meeting how much his "$2 trillion plan" would reduce actual federal spending next year, versus current expenditures, and his answer was "$2 billion." These are all just improvised acts in the Theater of the Absurd.

One must learn to speak the language of our slippery politicians. The problem that Congress faces in trying to find something, anywhere, that can actually be cut is that by the time they get around to the "appropriations process," about 67% of the budgeting has occurred automatically, because Congress deems it politically necessary to honor existing commitments to Social Security, Medicare/Medicaid, unemployment, food stamps and interest on the public fraction of the national debt. Thus, even the suggested changes to Social Security and Medicare speak in terms of future "means testing" or raising eligiblity ages, and these ideas tinker around the edges. As the population ages and the rolls of Social Security and Medicare/Medicaid continue to swell, all of the safety net problems are going to get worse.

Not that Congress or the President actually bothers with a "budget." We have not had an actual, signed budget since fiscal year 2009; they're literally making it up as they go along, which, when you think about it, makes sense under the circumstances. When your income is $2 trillion and your expenses are about $3.6 trillion (actually, the newest Monthly Treasury Statement just came out, if you want to take a look: http://www.fms.treas.gov/mts/index.html, and it's the usual horror story - the deficit is now at $1.7 trillion), does it actually make a lot of sense to talk about "allocating your resources?" They're just hanging on and faking it from month to month.

Let's face it, the "plan" all along was for the United States to grow its way out of this mess, and to resume the upward trend line as in previous recoveries; however, that's not happening, so we're stuck with the awful problem of exponential growth in debt matched with precisely no growth in actual wealth; thus, the "yahoos" in the Tea Party who are fighting the debt ceiling raise may be crazy, but it's possible they're crazy only because they're right for the wrong reason, if that makes any sense and I don't see how it does. So to rephrase: I think the real motivation of the Tea Party thinkers is simply an assault on certain aspects of central government of which they (or their financiers, such as the Koch brothers) disapprove, which is why they often cite as examples of runaway Big Government the "EPA," or the Departments of Education and Energy, or the tiny fraction of 1% of federal money that might find its way into sex education. There are, of course, problems with Big Government, but the places to look for them are in the Departments of Defense, Homeland Security, State, Agriculture and the other real money-suckers among the budgetary line items.

Anyway, we continue to drift toward D-Day (Default Day), and the propaganda from our squealing politicos is getting very shrill indeed. President Obama talks about suspending Social Security payments. The guy gets paid, what, 400 grand a year? This is symptomatic of our problems these days: gross incompetence. It so happens that Social Security is one of the federal programs where it's okay to sell debt to continue operating, even after the debt ceiling is hit. The reasons for this are a little technical, but should be well within the ken of a high elected official. Specifically, while it's true that the total of public debt (a little under $10 trillion) and intragovernmental debt (Social Security and Medicare, mainly, currently about $4.5 trillion) cannot exceed $14.3 trillion under the current ceiling, the Treasury can sell public bonds to redeem the intragovernmental bonds on a 1:1 basis; thus, as Column A goes up (public debt), Column B (intragov.) goes down, leaving the total the same, pressed tightly against the debt ceiling. The "redeemed" bonds would allow Social Security to remain solvent for a few years longer even with the existing ceiling. Yet I suppose that one of two things is possible: Obama simply doesn't know this (pathetic), or he doesn't want to mention it because it will reveal exactly what we're doing now to fund the shortfall in Social Security receipts vs. outlays (misleading). Either way, he's picked the worst possible example and has called again into question whether his vaunted "political instincts" are really all that impressive.

I'll leave for another day the obsolete idea of "growing our way" out of debt, another increasingly hopeless conceit of the Beltway and of the academic economists. Meanwhile, the canoe continues to drift toward Niagara, and the paddlers have thrown their oars overboard and decided to engage in fistfights instead. Hey, it's what we pay them for.

Further reflections on the budget morass

(Click on graph to open in separate window.) I found yesterday's exercise in going through the fine-grained detail of the budget negotiations somewhat head-clearing, and, after all, isn't it the duty of an American to apprise himself of the actual data as an act of informed citizenship? So much of the daily blather I read and hear about the debt ceiling impasse seems political and "qualitative." Liberal Keynesians such as Paul Krugman and Brad DeLong urge, without doing the basic number-crunching for us, that the government simply borrow and spend more in order to "spur a recovery." For them it's all so obvious. At the other extreme we have the Congressional Tea Party Caucus taking blood oaths and signing mutual suicide pacts assuring that no member will ever vote to raise the debt ceiling.

The above graph is from the research facilities of the St. Louis Federal Reserve Bank (FRED), which maintains all kinds of basic data on the U.S. economy. It's not as if you can't look this stuff up and see for yourself; it's all there. The above graph, of course, misleads by extending the "receipts" figure into years beyond the current fiscal year ending on September 30, and implies that tax revenue will approach $2.4 trillion. The government and its agencies just can't help themselves. Their sinecures depend on sunny optimism. But leaving aside the projection into the unknown, you can see where we've been with a great deal of accuracy.

The graph tells you that the United States has never, in its history, received more than about $2.7 trillion in revenue from all sources, and of course even this number is infected with the usual "on budget/off budget" malarkey, the contribution from phantom trust funds, and the rest. It's not a "quiet" number; it's noisy, as usual. However, let's call it close enough for government work. The maximum number earned in the best of times, in other words, is about $1 trillion less than current federal expenditures.

The surge in income during the early years of the Bush Administration was attributable, obviously, to the housing bubble. The temporary wealth effect of the housing boom pumped a lot of additional money into the American economy. This has been quantified in other studies, and we know that at the peak of the boom (around 2005 or so), as much as $800 billion in additional spending was made possible through the phenomenon of house-as-ATM. This was more money (as direct spending, as opposed to tax breaks) than the federal stimulus program known as ARRA, and it was happening on a yearly basis. Further, the bubble bolstered construction employment and jobs in the financial end of real estate.

That's all over and done with. The dragging effects of the huge debts remain, but the stimulative effects are gone. With high unemployment, falling wages and working hours, a stagnant labor participation rate, and unconscionable skewing of wealth toward the wealthier strata (resulting in the lower half of the American population paying no income tax at all, while the upper 10% pay more than half), the prospects for increased federal government revenue in the near term are very dismal indeed, despite that hopeful little tail upward at the end of the FRED graph (it should really be extended horizontally to take into effect the decrease in FICA taxes which our government, in its moronic way, granted the citizenry at the end of last year in an effort to buy our love).

There are no bubbles on the horizon, not the tech and dot.com boom of the Clinton years nor the housing bubble of the Bush years. No gimmicks, in other words. Congress, meanwhile, as a wholly-owned subsidiary of Big Business, is not going to increase taxes on higher-strata earners, not even to the Clinton-era level of 39.6% as the top marginal rate. It would not solve the problems the U.S. government faces even if Congress took such a measure. Defense could be radically cut, but this entails the problems of "military Keynesianism;" war is a big industry in this country, a major employer, and one of our principal exports. Bombs, planes, missiles, armored vehicles, firearms - we make 'em all, and we sell them all over the world. Defense is the most vested of vested interests. Still, defense will have to be cut substantially, but even cutting it in half does not solve the problems of a $1.5 trillion annual deficit. It won't happen this year, of course; finances will have to get much worse before Congress gets that desperate.

My surmise is that Congress will, in fact, raise the debt ceiling and resume borrowing large sums of money to keep the game going. I base this idea on the simple formula of C. Wright Mills, that those in power always make decisions designed to maintain their power, and if the government defunds itself, it loses power. So various weasel techniques will be used to justify the capitulation to reality, but they have no choice. It's borrow or die. The government simply does not earn enough money to come close to paying its own way. As long as the Treasury can borrow cheap, it will continue to borrow as much as it can, and the national debt will ratchet its way toward $15 trillion, $20 trillion, whatever number the world will allow.

The alternative, after all, is to face reality, and that is just not an "exceptional" thing to do.

Congress Dances Up Against the Ceiling

Afflicted as I am with the common cold (rhinovirus? coronavirus? I know not), I find myself with a few more morning hours of wakefulness than I would choose to have under other, more healthful circumstances. To wit, I'm under the weather. Let us call this Day 4 of the Cold, the first (Monday) being largely symptom-free until later in the day, when a peculiar taste of almonds took up residence in the back of my sore throat. Then general malaise, that useful French word for which the English equivalent is "malaise," sneezing, as the viruses began using the cells of my upper respiratory tract to be fruitful and multiply. By the millions and millions. Day 2 marked the development of post-nasal drip and clear congestion in the nose, fatigue, and a subnormal temperature (pathognonomic for cold versus flu, except for H1N1, but there's no way I could have that; I mean, all those blackbirds falling out of the sky worldwide are simply auditioning for Birds II: This Time It's Over). Day 3 (Wednesday) introduced me to a chartreuse form of mucosal discharge (TMI, I know), a dry cough, more sneezing, a headache, a slight rise in temperature (the white blood cells at last mounting a counter-attack), and a curious euphoria that made me think I was better already, except I wasn't. Today (Thursday) is like a mature form of Tuesday. It's said a cold will last 14 days if you treat it, two weeks if you ignore it, but the symptoms are only aggravating for the first 6 to 9 days, depending on the severity. One thing about living alone is that there is virtually no secondary gain from illness, so I'm motivated to forget about this annoying cold as soon as possible, and I promise never to mention it again.

Now, a word from Frank Sinatra:

http://www.youtube.com/watch?v=bLlv2IM67LQ

This is the classic "Dancing on the Ceiling" by Jule Styne and Betty Comden; I'm sorry, but I just can't get myself to take Lionel Richie seriously about anything, although I'm sure Richie made more money than Jule Styne with one song ("All Night Long") than Jule did writing what I consider the greatest standard ever written ("Just In Time"). I think Lionel was kind of rubbing it in by writing a cheesy disco tune with the same "Dancing on the Ceiling" title as Jule and Betty's great song, but such are the ways of progress and the relentless debasement of popular culture.

Yet it is Congress which now dances up against the ceiling, the debt ceiling in this case. Off to your right you can watch the National Debt Clock whirl away. The Klowns only gave themselves leeway up to $14.3 trillion last time they raised it. After that, the federal government supposedly loses its "authority" to spend money and must "shut down." Here's the key point on the National Debt Ceiling: it's utterly meaningless. Many of the Tea Party Reps and Senators made a big issue of the debt ceiling when they were elected (Rand Paul being one of the more vociferous), but they're caught in a strange version of Catch-22: if they seriously tried to stop the government from borrowing more money to stay in business, then their own salaries, those of their staffs, the whole apparatus of Congress, would also close down and terminate, and the very oxygen which sustains them (publicity) would also disappear. This leaves them in a rather obvious contradiction now, because they did make such a huge deal of the National Debt Ceiling when they were shucking and jiving their way to Washington. Hell, even Barack Obama voted against raising the National Debt Ceiling in 2006, when he was briefly a senator, once Barry was absolutely certain there were enough votes in the Senate to ensure that the ceiling would be raised anyway.

As I said the other day, Congress absolutely depends on you, me and every other American never paying any attention to the hard numbers involved in the "budget debate." If we really analyzed this freely-available data, published monthly by the Treasury Department with lots of details and lots of forecasts for the coming year, we would immediately see the absurdity of all this talk about a "balanced budget." The United States has never been farther away from a balanced budget. This year Congress will spend about $3.8 trillion, and about $1 trillion will be for various forms of defense and "security." There has never been a time in the history of the American Republic when the U.S. Treasury ever received even three trillion dollars in taxes and receipts.

So how will Orangeman and the Tea Party (maybe the GOP could stand for "Grand Orange Pekoe") learn to live on about $2.4 trillion per year, which is what the government plans to take in for fiscal 2011? (I don't think it will make that much, now that it's given away about $400 billion in tax revenues with its end-of-the-year "bipartisan compromise.") That's a good one, huh? What's the point of reducing federal spending to $3.7 trillion per year except as Kabuki theater for the rubes in the cheap seats? That's what I mean about how completely these dorks count on us falling asleep in civics class.

So hell yeah, Rand, I'll take what you said to Judge Napolitano recently on TV seriously: you think we ought to live within our means, within that roughly $200 billion per month, and I'll give you credit for actually using a realistic number for your calculations. Here's one idea: leave Social Security alone. It has a free-standing funding mechanism, the FICA tax, which would require only raising the cap above the present $100,000 limitation to put it back in the black (and doing away with that suicidal reduction in the employee's share of FICA). So that's okay, and that's about $790 billion per year. The Department of Health and Human Services, which adminsters Medicare, has a budget of about $900 billion per year. Listen up, Rand: do you think you're going to turn all those over-65 people loose to take their chances with private insurers? Here's a clue: I pay $718 per month to Blue Shield with a $5000 deductible, and Blue Shield just announced it plans a 59% rate hike. Using my 1950's-era grade school math skills, that tells me I'm looking at $1,141 per month, and being out of pocket $18,692 per year before I draw my first dollar of benefits. That's not a lot less than I made as an annual salary at my first lawyer job out of law school. How many seniors do you think might wind up uninsured, especially since they would be rated at higher premiums? When their medical premiums exceed 100% of the Social Security they receive?

Are you beginning to feel the room heat up a little, Rand? We're coming very close to the Tea Party's Golden Fleece: the defense budget. As a benchmark, Russia, our perennial nemesis, our death-struggle foe, the Mutual in Mutual Assured Destruction, spends about $40 billion per year (http://www.globalsecurity.org/military/world/russia/mo-budget.htm). China, our new nemesis and rival for world domination, spends about $77 billion. How about this approach? We'll add these two together = $117 billion, and spend that. I know, ridiculous. Okay, how about we double that figure and spend $234 billion per year, and reduce the defense budget by about $800 billion? We're living on our income now. We still have about half a tril to cover the rest of the federal government's basic services, and that will be enough. The old folks are secure, the country's safe, the courts are functioning, the national parks are open for business, and Congress can meet about two or three times a year to conduct what little business will be left.

Works for me. Let's balance that sucker. Otherwise, just cave in now and shut the hell up.