Thursday, February 10, 2005

Feb. 9, 2005

Worse Than Voodoo

Yesterday I listed the many ways the president’s budget simply does not add up. Not even close. While reading through Bush’s 2006 budget I found myself becoming wistfully nostalgic for the days when all we had to endure was Reagan’s voodoo economics. Bush’s budget is not just voodoo, but an outright pact with Satan-Debt. A man who built his “business” career on debt he never had to repay, now believes he can do the same with America. The only trouble with this is that, unlike his businesses, all the Bush family friends in the world, including the Saudis, do have enough money to bail America out of the hole this guy is digging.

We will have to bail him out – us, our kids and their kids. Taxpayers will get this bill, just as they got the bills to bail out his Brother Neil’s Silverado Savings and Loan, and his other brother, Jeb’s Broward S&L defaulted loans. (Making expensive messes others have to clean up is a Bush family tradition. (For fact-checked details Click Here.)

The rule sane people follow is that, once you discover you are in a hole, first stop digging. Bush keeps digging. Today’s bad news -- the new Medicare Drug benefit (that helped Bush get senior votes in the last election) will not cost $400 billion, as the president promised in his 2003 State of the Union, but $1.2 trillion. He was only $800 billion off on that one, but hey, who’s counting?

And, again there are only two possible explanations; either our president is a congenital liar, or pathological delusional. There can be no third option here. The numbers are too easy to add up and his budg
et “assumptions” too easy to disprove. For example, this time around his budget calls for cuts in 150 federal programs. In his last budget he called for cuts in 65 programs and congress cut just three. What on earth makes him think he is going to better that average this time around? This time he does not face reelection, unlike Republican members of Congress. Nevertheless, he is betting the farm – our farm – on it. He either has to know his chances run from slim to now, or simply not care. If he knows, then he is a liar. If he knows but doesn’t care, then he’s mad, mad as a hatter.

Smoked out by the Medicare cost revelation last night, White House spokesguy, Scott McClellan admitted that the new drug benefits – now including Viagra -- will cost “more than $107 billion annually.” How much more? Stay tuned.

This administration has taken on the feeling of a Mad Hatter’s Party. We are up to your ears in debt so what to do? Cut taxes on the rich. That produces even less tax revenue and more debt. What to do? Make those tax cuts permanent. Start a war we can’t afford. What to do? Create more debt, trillions of dollars more, borrow, borrow, borrow. Need to get reelected, throw a bone to the senior voters with Medicare drug benefits we can’t afford. How to pay for it? Borrow, borrow, borrow. Borrowed money is untax money, and therefore good money. Borrow, promise, borrow, promise… trillions of dollars and growing. Party on dudes -- spend the stuff as fast as you can. “Pass the cake and let the goodtime red ink flow,” says Cheshire Cat Rove. “We won’t have to pay the bill for this party.”

Memo to Democrats
Hello in there. We need a bit of guerilla theater out of you guys, and now! Here’s what you need to do – today.
  • Send your aides out to buy 250 cheap $5 plastic pocket calculators. The more colorful the better.
  • Each Dem should carry their calculator with them at all times.
  • Whenever and wherever they encounter Republican colleagues, draw your calculator and wave it in their face -- a visual protest to Bush’s phony budget numbers.
  • Demand that they take your your calculator and use it to show how Bush’s numbers add up.
  • Do it in the halls, do it in the cloakrooms, do it in the cafeteria, do it when appearing on TV, do it whenever you see a camera pointing in your direction.
And don’t stop harassing them with calculators until the Republicans present a budget that is not ruinous to the economy, burdens future generations with debt and not an insult to our intelligence

Do not underestimate the value of such visual aids as a "stunt" beneath your dignity. Republicans regained the majority with such stunts. Remember their Contract With America? Their tax-cut pledges? Their term-limit pledges they shoved under everyone's nose demanding they sign on? And they are still at it -- all those purple fingers waving in front of TV cameras during the recent State of the Union.

Get with it you guys. Or are you too good for such grassroots, in your face politics now? If so, let us know and we will replace you with someone who remembers what it means to be a political street fighter for truth, justice and the American way. So, get those calculators and wave them proudly.

A fringe benefit of forming these calculator brigades is that we will make the pocket calculator a symbol of the new Democrat Party -- the party that, in the 1990s balanced the nation’s books, and will again, if given the chance.

Speaking of Deadbeat Republicans

I was raised to believe that, while Democrats might have kind hearts, Republicans were the party with a solid head for business. Republicans understood how money and the markets interacted.

That may well have been the case in the 1950s, but clearly no longer is. This batch of Republicans don’t seem to have a clue about economic ecolo
gy – the complex inter-relationships that move markets. For proof of this, look no further than their push for Social Security private accounts.

If the neo-cons get their way and retirees are allowed to invest a large portion of their SS savings in the stock market. they would set the stage for the mother of all recessions, or worse. Think about it… because clearly they have not. Here’s what the real experts say would happen if Bush gets his way with Social Security:

In the next two decades, as elderly populations swell throughout the developed world, retirees will begin withdrawing their savings, selling their financial holdings to raise cash and potentially glutting the world with stocks and bonds. Richard Jackson, director of the Center for Strategic and International Studies' global aging initiative, called it "the great depreciation scenario." Germany's Mannheim Research Institute for the Economics of Aging dubs it the "asset meltdown hypothesis."

"If economic growth is slow enough that we've got a problem with Social Security, then we are also going to have problems with the stock market. It's as simple as that," said Douglas Fore, director of investment analytics for TIAA-CREF Investment Management Group. A spokeswoman said the company has not taken a position on the Social Security debate.

"If there isn't an alternative source of demand for those assets, you're going to have a tremendous slowing of growth," said Jeremy J. Siegel, a University of Pennsylvania finance professor who just completed a book on the subject. (Washington Post)

And slow growth means a lower stock market, which means less money being invested by investors to fund growth, which will result in further slowing of growth sending the market even lower… and so on. God help the retiree who faces retirement during such a market death spiral.. a death spiral sparked by the retirees withdrawing money from their retirement accounts.

The fact that the neo-cons cannot see the hazard they would put in place with private accounts is only compounded by the fact that major Wall Street brokerages have produced reams of studies that predict that stock market troubles when the Baby Boomers begin tapping their 401Ks.

Add to that billions of dollars being yanked out of Social Security private accounts and you get a perfect storm rather than a perfect retirement.

Raconteur at Large

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