'The Federal Budget is on An Unsustainable Path'

The director of the Congressional Budget Office, an officially non-partisan outfit that tries very hard to stay that way, testified before Congress on Thursday about the federal budget and the impact of new programs like health care reform.

Douglas Elmendorf also has a blog, and he posted this after his appearance:

Today I had the opportunity to testify before the Senate Budget Committee about CBO’s most recent analysis of the long-term budget outlook.

Under current law, the federal budget is on an unsustainable path, because federal debt will continue to grow much faster than the economy over the long run. Although great uncertainty surrounds long-term fiscal projections, rising costs for health care and the aging of the population will cause federal spending to increase rapidly under any plausible scenario for current law. Unless revenues increase just as rapidly, the rise in spending will produce growing budget deficits. Large budget deficits would reduce national saving, leading to more borrowing from abroad and less domestic investment, which in turn would depress economic growth in the United States. Over time, accumulating debt would cause substantial harm to the economy. The following chart shows our projection of federal debt relative to GDP under the two scenarios we modeled.

At least until ObamaCare is added, the two biggest culprits for unsustainable deficits are Medicaid and Medicare, the government's pre-existing health care programs that have rocketed out of control over the years.

Why would anyone think that a new program would actually curtail costs when the government hasn't been successful in its two previous medical programs?

Elmendorf had this interesting bit to add about the deficits for 2009 and 2010.

The current recession and policy responses have little effect on long-term projections of noninterest spending and revenues. But CBO estimates that in fiscal years 2009 and 2010, the federal government will record its largest budget deficits as a share of GDP since shortly after World War II. As a result of those deficits, federal debt held by the public will soar from 41 percent of GDP at the end of fiscal year 2008 to 60 percent at the end of fiscal year 2010.

Did you catch the "60 percent of Gross Domestic Product" by the end of next year?

Unsustainable is the word.

ObamaCare Would Expand the Culture of Death

If Congress gives us ObamaCare, and you lose your private health insurance because your insurer can't compete with the government-run "free" insurance, don't be surprised if you are denied care if you are too old or feeble.

President Obama is telling you exactly what is coming.

From the Los Angeles Times:

President Obama suggested at a town hall event Wednesday night that one way to shave medical costs is to stop expensive and ultimately futile procedures performed on people who are about to die and don't stand to gain from the extra care.

In a nationally televised event at the White House, Obama said families need better information so they don't unthinkingly approve "additional tests or additional drugs that the evidence shows is not necessarily going to improve care."

He added: "Maybe you're better off not having the surgery, but taking the painkiller."

Obama said he has personal familiarity with such a dilemma. His grandmother, Madelyn Dunham, was diagnosed with terminal cancer and given less than nine months to live, he said. She fell and broke her hip, "and the question was, does she get hip replacement surgery, even though she was fragile enough they were not sure how long she would last?"

Obama's grandmother died two days before he was elected president in November. It was unclear whether she underwent the hip-replacement surgery.

So we just give the oldsters pills to control the pain until they "get on with it then and decrease the surplus population," as Ebeneezer Scrooge suggested in the Dickens' classic, "A Christmas Carol."

How many of us have an older relative who is alive and kicking today because of exemplary health care and procedures, like open heart surgery, that weren't available a half century ago?

How many of these relatives would die under ObamaCare?

And so the Culture of Death expands.

British Pandemic 'Dry Run' Was a Mess

Authorities in Great Britain did a "dry run" on a flu pandemic a couple of years ago and found out that the real thing would be disastrous.

UK financial regulators have rehearsed how a pandemic like the swine flu, now spreading from Mexico, will affect Britain. In the most detailed disaster planning exercise held anywhere in the world, more than 70 City firms, including HSBC and Norwich Union, secretly tested how the crisis would unfold over five months.

The exercise, which began in November 2006, was masterminded by the Bank of England, the Financial Services Authority and the Treasury – the three authorities that monitor financial stability. It was condensed into six weeks, with firms sent updates as the crisis developed.

Some of the results included:

... government spending budgets were adequate, but, before long, hospitals ran out of masks and hand gel, and the Department of Health warned it would take four to six months to produce a vaccine. Hospitals canceled all except urgent operations. [And this differs from ordinary procedure in what way? - DTO]

But as the crisis deepened, Britain's economic structure collapsed. There were queues at garages as motorists filled cars and petrol cans. Panic buying at supermarkets was followed by stores stocking only basic food and clothing, while smaller shops and restaurants closed, creating ghost towns. Food piled up on docksides but could not be distributed. Sickness and absenteeism led to bank branches closing and empty cash machines after the public hoarded banknotes. Supermarkets' cashback replaced banks until they ended that service.

As the death toll reached 50,000, the prime minister called on people to show their famed bulldog spirit but the country was grinding to a halt. The three authorities warned: "The UK economy could face financial meltdown unless the situation improves soon." Rather than improve, businesses closed due to lack of staff, suppliers or customers.

Besides the Tube closures, London's commuter railways were suspended, and intercity trains, all packed, were reduced to one an hour, stopping only at major towns. Roads became jammed – but London refused to lift its congestion charge. Airlines cancelled hundreds of flights as demand plummeted. [SNIP]

By the time the exercise ended, the flu had affected 500 million people worldwide and killed nine million [in Britain]. Problems continued: insolvencies soared and firms' credit ratings were downgraded in the following months.

The reporter put a happy face on the story at the end, saying:

But participants claim the exercise prepared them for a crisis like today's pandemic.

Call me skeptical, but I don't think you can "war game" these types of situations with computers, think tanks and committees. Like elections and football games, you have to play the real thing to find out how people will react. The recent book, "The Survivor's Club," tends to debunk the myth that most people exhibit their worst characteristics in a crisis. Some will, many won't.

My guess is that the upshot of this exercise is that the "lesson" will be to give the government greater control over all aspects of British life which, I predict, will bring about much of the chaos they seek to avert when, and if, they real thing comes along.

Just Another Apocalyptic Monday

It must be the Apocalyptic Monday.

Mike Adams, who bills himself as the "Health Ranger, Natural News Editor" explains why he has become a permanent resident of the "democratically healthy" Ecuador (they have public protests and toss their elected officials out at random intervals). He explains:

It is in America, where the sheeple have been terrorized into staying inside the boundaries of their little "protest zones," that you find a fragile, unstable nation.

Through complacency and fear-mongering, most Americans have become cowards when it comes to political activism. They think emailing their Senator a few times a year is all that's required to defend freedom and preserve a nation. Marching in the streets is seen as uncivilized... or even unpatriotic! The government agrees with this, too, now labeling anyone who protests in public a "potential terrorist" and targeting them for FBI.

Adams briefly explains why he believes the political/economic powers are stripping America of its treasures and preparing to trash out the currency soon, including the actions by the Fed to create money out of thin air.

That's why I say America's days are numbered. The America as we know it, at least. This repeated creation of trillions of dollars in new money by the Federal Reserve is the last great looting of the U.S. economy by the wealthy elite. The Titanic is sinking, and high officials have monopolized the life rafts, leaving everyone else to drown with the ship. And while they're rowing away from the doomed vessel that's taking on water, they shout back to the low-income workers clinging to the rails, "Don't worry! The ship isn't really sinking. It's just 'correcting!'" [snip]

The U.S. dollar will eventually collapse or be abandoned. This could happen literally overnight, or it could take years, but make no mistake: The American people will not be forewarned of the collapse of the dollar. ...

... Within hours, the National Guard will roll into the cities of the United States, and Americans will find themselves penniless prisoners in their own country. Anyone who protests will be arrested or shot. Law will be dispensed at the end of military rifles, and the President will get on television and explain how this is all being done for YOUR benefit! It's for your own safety and protection, didn't you know?

From here, it's difficult to say exactly what will unfold. We could see UN troops on U.S. soil, the IMF taking over the U.S. banking system, and the forced transition to a global currency. Other possibilities include the Balkanization of the formerly-united States of America, with regional nation-states declaring their own independence from Washington.

Definitely a gloomy forecast. Sadly, I can't say that he's wrong because many of his complaints are mine. But I choose to remain and fight the good fight hoping that we can reclaim our nation peacefully through political action.

If that's got you down, another article today should give you hope. The LA Times says we live in "World of End-of-the-World Predictions."

On Sept. 21, 1945, Pasadena minister Charles Long and his followers stayed up all night, reading Scripture and waiting for the world to blow up, as Long had predicted.

"Many had sold their possessions, paid their debts and made peace with their neighbors," The Times reported.

To their considerable surprise, the sun greeted them the next morning. The minister matter-of-factly explained that he had made a "minor error in his calculations," The Times said.

Sixty-four years later, there still seems no end to end-of-the-world forecasts.

The latest concerns a supposed ancient Maya prophecy that pinpoints Dec. 21, 2012, as doomsday (a Friday, in case you were making plans).

Late last year, a group of New Age entrepreneurs sponsored a 2012 conference in San Francisco for which attendees paid $300 each to hear debates on such topics as whether the Maya were actually space aliens.

It could be argued that some people deserve to have their currency destroyed.

What would a real 'Depression' look like?

With little or no good economic news to encourage us recently, perhaps we'd be better served by trying to foresee where events are leading us rather than bury our heads in the sands of apathy. One of those who is trying to glimpse a potential future is Drake Bennett, identified in The Boston Globe as a "writer for Ideas." (We think - but are not absolutely certain - that IDEAS is an online research arm of the Department of Economics for the University of Connecticut.)

The article today is entitled, "Depression 2009: What would it look like?"

Bennett, who seems to agree with economists who believe the "odds are we will yet avoid a full-blown depression," raises the question of whether a 21st Century Great Depression would look anything like the one we had back in the 1930s. Not likely, he believes.

He makes a good case that the Depression will be radically different, but in my estimation he is entirely too optimistic. Bennett writes,

"We are separated from the 1930s by decades of profound economic, technological and political change, and a modern landscape of scarcity would reflect that."

"Unlike the 1930s, when food and clothing were far more expensive, today we spend much of our money on healthcare, child care, and education, and we'd see uncomfortable changes in those parts of our lives. The lines wouldn't be outside soup kitchens but at emergency rooms, and rather than itinerant farmers we could see waves of laid-off office workers leaving homes to foreclosure and heading for areas of the country where there's more work - or just a relative with a free room over the garage. Already hollowed-out manufacturing cities could be all but deserted, and suburban neighborhoods left checker-boarded with abandoned houses next to overcrowded ones."

He foresees a return to the inner cities for security and less security in the suburbs.

"... a Depression circa 2009 might be a less visible and more isolating experience. With the diminishing price of televisons and the proliferation of channels, it's getting easier and easier to kill time alone, and free time is one thing a 21st-century depression would create in abundance. Instead of dusty farm families, the icon of a modern-day depression might be something as subtle as the flickering glow of millions of televisions glimpsed through living room windows, as the nation's unemployed sit at home filling their days with the cheapest form of distraction available."

And you say, "That's optimistic?"

Admittedly we are deep into our Nostradamus role playing games, and who knows for sure how it might all shake out. Much of what he writes could be spot on - and you should read the whole thing for yourself - but we think Dr. Bennett misses a couple of key factors that also have changed since 1929.

One, ours is a much coarser culture. There are fewer church-going folks and several generations more or less raised on the idea that morality is relative to one's situation. A Depression would eventually change this, but the early going might be bumpy. Can't see the inner city as a place to run toward.

Two, our economic system heavily relies on corporate agriculture and distribution systems that in turn feature J.I.T., "just in time" delivery. We are but a couple of weeks away, at any given moment, from seeing empty store shelves if something were to interfere with the timely arrival of supply trucks. Diesel shortages, blocked roads, corporate bankruptcies, massive layoffs, credit shortages, or piracy could mean hunger for a lot of folks real quick. Ask anyone who stayed behind in New Orleans during Hurricane Katrina if it was easy to find a can of clam chowder down at the jiffy mart a few days in.

Bennett addresses the food issue. He cities an academic who says that people, even in the cities, will try their hand at growing food. That's probably true, but what if hard times arrive in the dead of winter? It takes several weeks of growing season, seed and a little bit of knowledge, to grow food that you can eat. What happens in the meantime. In 1929, nine out of ten Americans either farmed or had gardens, and gardening experience. Today, I would guess, maybe five out of one hundred Americans have the ability and know-how to grow food.

Steep learning curve.

And what if utilities failed? Those millions of TV sets and DVRs won't do much good if there is no power.

I pray to God every day that the people of this country awaken to the potential disasters ahead and start making plans, simple plans, to protect themselves and their families. If nothing happens, so much the better. If the worst happens, that's one less family that will be panicked into doing something stupid or worse.

Six months ago, an article like Bennett's was unthinkable in a major metro newspaper. It's worth some thought.