The future in a ‘death spiral state’

Forbes.com asks, “Do you live in a death spiral state?”

For those who live in Illinois and other state government disaster areas, that answer is Yes Of Course We Do.

For reference, here’s how Forbes qualifies what “death spiral” means: (1) more takers than makers, which means more people who draw from the government rather than pay into it, and (2) a state credit situation downgraded for large debt, uncompetitive business climate, and weak home prices and employment numbers.

But what is a “death spiral”? What does it really mean to actual people? Well, I’m no expert on economics, but I do play one on this blog, and I know a thing or two about it, so here is my take on what a “death spiral” means for actual people.

First of all, abstract debt numbers like $80 or 90 billion help almost nobody, because almost  nobody comprehends them. ‘Billion’ looks and sounds like ‘million’, but a billion is 1,000 times more than a million, so it is a much larger number. It’s 1,000,000,000 vs. 1,000,000. See the difference? Nine zeros, not just six.

The majority of those who may not fully grasp the gravity of the fiscal situation in Illinois do not understand such numbers in any meaningful way – and why should they? They are irrelevant to our lives. Regular folks have no reason at all to understand them.

But regular folks do have a reason to understand that fiscal realities will eventually have a real-world impact on regular people, on our jobs, our cost of living, our taxes, our property values, and the quality of our schools, among other things. Huge debts cause lower credit ratings – which just happened again to Illinois last week - which means higher borrowing costs for the state going forward for every bond issued. Those costs are passed on to the taxpayer, of course – bonds scheduled to be issued today, in fact, will now cost the taxpayers of Illinois $95M more in interest for that single bond issue. In addition, the state income tax has already doubled, which will more than likely decrease the income to the state treasury, making the budget deficit and debt worse instead of better.

Imagine a vicious cycle of increasing tax burdens and decreasing municipal and state services which causes jobs to flee the state, incomes and property values to decline, and school quality and other community services to suffer. Each of those feeds the other, and quality of life declines in just about every conceivable way. Lather, rinse, repeat. That is what a death spiral might look like.

Need more details? How about budget cuts in the schools leading to cutting teachers, and programs like band, drama, and sports, but probably not the administrators, whose role in educating children is almost nil. Budget cuts in city and county services, like picking up garbage less often, fewer snowplows and people to man them to keep streets clear, and firing building inspectors which will slow down every real estate transaction and construction project. Higher property taxes since declining state tax revenues will impact public schools and others who rely on state funding, and the government trough has to get filled from somewhere. Higher unemployment and declining property values from all of the above, plus businesses leaving and downsizing. Add to that the many young people saddled with huge college debt that they simply can never repay (nor can they discharge it via bankruptcy), and people who cannot find work and are essentially forced to drop out of the labor force and become takers rather than makers. Lather, rinse, repeat.

People have choices in life. Those who own a business now, or would start one, have choices on where to do that. Those who have a family and career now, or are ready to start down that path, have choices on where to do that, too. They can choose a place like Illinois with a spending problem and a rather “iffy” prognosis for recovery, or a place that is stable and growing and where people have jobs and where schools are more likely to improve than to go downhill.

Is there something special about Illinois that can overcome those disadvantages? What would those be? The beautiful scenery? The fantastic climate? I don’t think so.

The rational, logical side of my brain understands this and accepts the conclusion for what it is, but the emotional side of my brain says, “this sure as hell is not the world I was counting on for my kids”.

 

Newsweek’s demise is all Tina Brown’s fault? Not so fast, pal.

Dustbury quotes some dude named Alex Pareene who rips Tina Brown for destroying Newsweek, which may well be true as far as it goes, but ignores the fact that Newsweek and most other news magazines were already headed for oblivion anyway.

Listen, I’d happily blame Tina Brown for anything at all, from the death of Newsweek to premature tire wear to that time in 1992 when I ordered my burger medium-rare and it came out medium instead. But the truth, the larger picture here, is that every print-oriented news outlet is already a dead man walking. She may have just accelerated it, a little bit, for this one newsweekly.

Here’s what I don’t get about the media world. Somebody please explain it to me. While the entire news industry – supposedly non-ideological and driven purely by profit motive, not partisan politics – struggles with declining ad revenue and readership, and has basically no readers under the age of 30, and panders to a center-left audience, not one of the geniuses who could stop the bleeding stops to think “hey, call me crazy, but what if we changed editorial direction, and moved more to the center ideologically, and stopped competing with every other news magazine for the same shrinking audience?” Yeah, imagine that. That would be . . . something. Which is better than an obvious and predictable death, no?

The media world has been run by the same monolithic, cookie-cutter minds for decades. Watergate and Vietnam were defining moments for nearly everybody in today’s publishing world. They hated LBJ for lying to them (not to America) about Vietnam, and they hated Nixon for lying to them (not to America) about Watergate, so today while they see their world crashing around them, they help Obama lie to America and the world about, well, nearly everything and nearly all the time.

All these smart men and women, sitting in corner offices, and not one of them arrives at the one idea that would shake up the entire media world and might actually deliver a big audience – explicitly courting a center-right audience by hiring a sensible conservative/libertarian publisher and editor. If what you’re doing now ain’t working, then if nothing else, such a move would stave off the debt collectors for a few months or even years while the PR blitz and curiosity factor kicked in. And who knows, it might even increase advertising revenue, and since the news business depends completely on advertising revenue, and since those who run those news businesses on behalf of shareholders have a legal duty to protect the business, and since changing editorial views may well be the last remaining idea that nobody has tried yet … it’s really not that crazy an idea. But . . . nothing.

What a bunch of sniveling cowards. Rush Limbaugh created a multi-billion dollar broadcasting empire by taking conservative and center-right politics mainstream. Rupert Murdoch created a multi-billion dollar cable news giant with Fox News by taking conservative and center-right (and in many ways, populist) politics mainstream. You don’t think there is some of that action waiting for somebody in the print news business? Some of us would like to read a general interest newspaper or magazine – whether online or in print, I do not care – that offers pop culture filtered through a world view that also respects religion and the Founding Fathers, and is not beholden to political correctness or diversity as defining mantras.

So, IF it is really all about earnings and profits, this would seem to be the way to go today, because the market is underserved (yes, there are blogs and other internet outlets, but we’re talking actual magazines with established street cred). If it doesn’t work, hey, you tried, right? But . . . nothing. Which tells us pretty much what we need to know: the media chose and deserve their fate, and the faster the better, and no matter how bad Tina Freaking Brown may or may not be, she has literally nothing to do with that.

OPEC nation says “jump”, Matt Damon says “how high?”

Matt Damon wrote, produced, and starred in the movie “Promised Land” that is not kind to “fracking”, a revolutionary method of extracting natural gas and oil from the earth. Greens and environmentalists, of course, are very, VERY worried about The Horror Known As Fracking.

That’s their job, of course, to be very VERY worried about how man is constantly screwing up what is otherwise blissful perfection and (to them), quite literally, heaven on earth.

But it seems that the horror might be misguided, because multiple investigations by multiple government agencies have found no evidence of environmental damage so far from The Horror Known As Fracking. The few instances of damage were due to improper usage of the technology, not from the technology itself.

Not only that, but fracking itself has revitalized the energy industry in the U.S., dramatically driving down the price of natural gas and oil with greater production, resulting in a boom that over the next few years could radically transform not just the U.S. economy but the balance of energy producers and consumers in the world. For the U.S., this means more jobs, cheaper energy and greater economic growth, greater security from energy independence, and making the transition from net exporter of energy to net importer, all of which are very important and strategic needs for the U.S. Fracking may reduce CO2 emisions, as well.

So you could say that not only is the jury still out on this issue, but a lot of the evidence goes into the “plus” column, not the “minus” column. IF you’re dealing with facts instead of green energy platitudes and popular myths that feed narrative and drama for movies, that is. And IF you’re in favor of things that empower rather than weaken America and our future.

Even more interesting is the fact that an OPEC nation is funding a movie that threatens the American fracking industry. As the article notes, the movie was produced “in association with” Image Media Abu Dhabi, a subsidiary of Abu Dhabi Media, which is wholly owned by the government of the United Arab Emirates. What a shocking coincidence – a nation that stands to gain if America loses is bankrolling a movie that feeds perceptions that could enable that outcome!

Remember back when we viewed OPEC with suspicion, back in the 1970s? If an OPEC nation had tried to  bankroll a movie affecting our energy independence, the American people would have stayed away in droves. Memories of the 1973 Arab-Israeli War and resulting OPEC oil embargo that caused shortages, price spikes, and huge lines were still very fresh. Those days could easily come back again, and by pretending that energy independence is not a crucial strategic advantage for our people and our nation, we court disaster.

But hey, what does Matt Damon care? Matt Damon and his UAE  homies got no time for your silly facts, jack. They have a movie to make, and an agenda to push. An agenda that is at odds with our children’s future, and more aligned with the best interests of a foreign nation than with our own.

I think I’ll pass on this one. Maybe Matt Damon, who in “Good Will Hunting” went out of his way to pump up the anti-American history book “The People’s History of the United States” by virulent anti-American socialist douchebag Howard Zinn, should just admit what is obvious by now: he doesn’t really like America all that much, and is actively working to keep it down.

There seems to be an awful lot of that going around these days.

Also see: Matt Damon’s Anti-Fracking Movie Financed by Oil Rich Arab Nation and State Department Promotes Debunked Fracking Documentary

Let’s stop with the delusions about erasing deficits with higher tax rates on the top 2%

Why? Because it’s built on two fundamentally incorrect ideas: 1) that our federal debt problem is caused by not taxing rich people at high enough rates, rather than spending, and 2) that we could tax our way out of debt because rich people have enough money to cover a $16T debt (which is approximately the size of our annual GDP).

Let’s do a little math. But first, a graphic from reason.com showing spending and revenue since 1999.

The red line represents spending. The blue line, revenues.

See how the red line trends up, while the blue line stays (roughly) between two lines on the graph? That space between the red line and the blue line is a problem. Pretend it is colored with a yellow highlighter to visually call out the space. Within that gap, the vertical distance between the red and blue lines represents the annual deficit at that point in time. And the area between those two lines, as it grows larger, represents commensurate growth in the total deficit, now up to $16T.

$16,000,000,000,000. Look at all o’ them zeroes.

This is nearly $50,000 for every single man, woman, and child in the country. And growing. With interest. 

And lately, it’s getting bigger by $1.2T-$1.4T every year. Which means another $4,000 for every man, woman, and child. Plus interest. Every. Single. Year.

Who do you think is going to pay for that? You can tax every single rich person in the country at 100% – hell, shoot for 200%, since the whole idea is a fantasy anyway – and you will not come close to paying that bill. There just aren’t enough rich people to fund that level of spending.

The top 2% of income earners is, what, 2-3 million people? Let’s go with 2.5 million. So to tax your way out of a $16,000,000,000,000 hole, you need 2.5M taxpayers to cover a $16T bill.

So: $16,000,000,000,000 / 2,500,000 people = $6,000,000 per person.

And that is in addition to what they already pay.

SIX MILLION DOLLARS per person.

This is just not feasible. Many of those rich people are not even worth $6M, and some would just barely cross over into that territory. And we obviously cannot tax anybody at 100%, or anywhere close to that. So: we can’t seriously propose that taking their wealth while doing nothing about spending is going to fix anything.

Tax rates on rich people are not the problem – spending is the problem. In fact, the Bush tax cuts from the early 2000s increased tax revenue for 2007 (just to pick one example). Yes, tax cuts increased tax revenue. Somebody get the president on one of those Obamaphones!

We got to a $16T deficit by spending too much. And any discussion about fixing the deficit must include real spending cuts, not the fake Washington kind, where you slow next year’s increases in spending.

No matter how many times President Obama says otherwise.

via Please read this if you think deficits don’t matter and that spending doesn’t drive deficits. – Reason.com.