Balanced Budget Amendment and Spending Cap

The debt crisis is misnamed. At root, it is not an economic crisis, it is a moral crisis and it is not a debt crisis, it is a spending crisis.
MLLG’s Continuing Series About the Spending Crisis
Balanced Budget Amendment and Spending Cap
By: George Noga – September 23, 2018

        This is the latest in MLLG’s ongoing series about the US spending crisis. I will publish regular, periodic (non-consecutive) posts as the runaway debt train hurtles toward the cliff. I have been inundated with requests to write about what actions can be taken to protect you and your family against (or to profit from) the greatest and most predictable crisis of our time. I listened and in October I will publish such a post.

        Americans overwhelmingly (80%) favor a balanced budget amendment (“BBA”) in the belief it will force fiscal discipline on the government. However, a BBA is doomed to fail and the following list identifies twenty one of its numerous flaws.

  1. Writing a BBA is tough; how do we define budget; what does balanced mean?
  2. How do we deal with economic cycles; do we balance annually or over a cycle?
  3. What about exceptions/waivers for wars or disasters; how are they defined?
  4. Lawsuits will challenge the BBA and judges will wield enormous influence.
  5. Do we distinguish annual expenses from capital; how?
  6. How do we deal with off budget spending such as Fannie, Freddie and USPS?
  7. Is interest on the debt exempt; what happens if interest rates skyrocket?
  8. How about special taxing districts of which there are 50,000 nationwide?
  9. Are entitlements like Social Security, Medicare and pensions included?
  10. Are there restraints on user fees? If not, watch out for  outrageous new fees.
  11. Loan guarantees can be used to fund programs off budget. Isn’t this spending?
  12. Regulations can be used instead of taxes for de facto government spending.
  13. California, Illinois and New Jersey have BBAs; what does that tell you?
  14. Greece, Italy and France have anti-deficit laws but are in or near bankruptcy.
  15. A BBA would be the only part of the Constitution subject to waiver/exception.
  16. The tax code can be larded with tax expenditures, incentives and earmarks.
  17. Don’t forget mandates; the Obamacare mandate survived judicial scrutiny.
  18. A budget can be balanced via tax increases instead of spending cuts.
  19. You can’t take the politics out of politics. Watch for unintended consequences.
  20. There are myriad paths around, through, over and under a BBA to eviscerate it.
  21. A BBA would beguile us into falsely believing the crisis is permanently solved.

The debt crisis is misunderstood. At its heart, it is a moral crisis, not an economic crisis. The debt crisis also is misnamed. It is a spending crisis not a deficit or debt crisis and in the future MLLG always will refer to it as the spending crisis. It can’t be solved by artifices like a BBA. It can’t be solved until the American people make some incredibly difficult and painful choices, which they are not yet prepared to make. Moreover, the USA has, in all likelihood, already passed the point of no return.

If a BBA can’t work, can anything else work? Since we really are in a spendingcrisis, a hard constitutional spending cap is a better alternative. Switzerland (Article 126) and Hong Kong (Article 107) have constitutional spending caps that work as did Colorado (TABOR) for many years until voters opted for a “time out” in 2005. A hard spending cap takes tax increases off the table and is much better than a BBA; however, spending caps are subject to most of the same 21 problems noted supra for BBAs.

The ineluctable and bitter truth is nothing will work because we have dug the hole too deep and are blissfully continuing to dig it deeper. Also, there isn’t enough time. Simply to freeze the debt ratio at its present level requires permanent spending cuts of $1.25 trillion a year, equal to over 25% of federal government spending, most of which must come from entitlements. This is impossible politically and absolutely nothing will happen until America is deeply enmeshed in the worst crisis of our time.


Our next post on September 30th declares victory in America’s war on poverty.

Reality and Denial in America

“Reality is that which, when you stop believing in it, won’t go away.” (Philip Dick)
Reality and Denial in America
By: George Noga – September 16, 2018

        Mokita is a word in the Kivila language of Papua New Guinea; it describes a truth everyone knows but agrees not to talk about or pretends doesn’t exist. There’s no comparable English word; however, mokitas are regular topics in conversations behind closed doors, around kitchen tables and office water coolers throughout America. Political correctness or “PC” demands such conversations not take place publicly or even be acknowledged. This post intrepidly addresses mokita in America.

        Reality does not go away because it is unpopular, politically incorrect or even offensive. Objective realities exist despite what we want them to be, despite what political correctness demands they be and despite aggressive suppression of the truth that is a central fact of modern progressivism. Subordination of objective reality to political imperatives has always been a central tenet of totalitarian regimes.

         Progressives assert benign motives for PC such as preventing loss of self-esteem. Some are willing privately to acknowledge reality but argue that the truth would be unnecessarily hurtful to protected groups. But clinging to false PC narratives does not alter the underlying facts – which John Adams famously noted are stubborn things. But lies have consequences and any society choosing fantasy over reality is at grave risk.

        PC is particularly virulent when it involves groups with victim status. Of 325 million Americans, statistically 2.5%, (8 million) have an IQ two standard deviations below the norm (below 70 IQ), which means de facto retardation. Not uncoincidentally, there are about 8 million Americans in material poverty. It is incandescently obvious these two cohorts are the same; nonetheless, we delude ourselves about the cause of poverty because it is politically incorrect to blame it on low cognitive ability. To varying degrees, the same is true of homelessness, crime and even failing schools.

        Mokita thrives at the University of Pennsylvania where law professor, Amy Wax, was savaged for openly criticizing Penn’s racial preference policy. Wax, intending to be supportive of blacks, noted that quotas can harm their ability to succeed by putting them in over their heads at elite schools. Penn’s law faculty and administration knew Wax was correct and never tried to refute her facts. Instead, they brutally attacked her, not for being wrong but, for violating a mokita by publicly speaking a known truth.

       The Law School Admission Council has compiled data on 27,000 law students in 90% of law schools. After one year, 50% of blacks ranked in the bottom tenth versus 5% of whites. Two-thirds of blacks were in the bottom fifth while only 10% were in the top half. After 5 attempts, 22% of blacks did not pass the bar versus 3% of whites. Racial preferences are to make white liberals feel good about themselves and to create jobs for diversity, equity and inclusion bureaucrats. The beneficiaries of preferences suffer; they fail to get choice clerkships, law firm slots or even to pass the bar.

         Whenever we see someone from an identity or victim group occupying a position that seems incongruous, we wonder whether it is a result of merit or quotas; whether it is due to qualifications or to political correctness; or if it stems from competence rather than from preferences or window dressing. This is grossly unfair to and demeans those members of victim groups who achieved their positions solely through merit.

        Mokita is present whenever truth yields to power. Mokita is present whenever fear of reprisal yields to political correctness. Mokita is present whenever facts yield to identity or victim group politics. But, in the end, objective reality always prevails and, unlike progressive denials, it wont go away when people stop believing in it.


Our next post on September 23rd continues our discussion of the debt crisis.

Capitalism and Pope Francis

Capitalism is not moral because it works; it works because it is moral.
Capitalism and Pope Francis
By: George Noga – September 9, 2018

       As someone born Catholic, who attended parochial school and was observant much of his life, I take no pleasure in this posting. But Pope Francis is astoundingly callow and ignorant of even elementary economic concepts. Because 1.25 billion Roman Catholics (1 of every 6 souls on the planet) look to the Pope for enlightenment, it is important to set the record straight. Go to our website www.mllg.us to see our related March 13, 2016 posting entitled “Pope Francis Enters the Twilight Zone”.

      Recently, the Pope (directly and via Vatican pronouncements) has criticized capitalism for, inter alia, consumerism, fossil fuels, environmental harm, materialism, lack of charity, speculation, seeking profit, promoting individualism, harming the poor, credit rationing, injustice, legal tax avoidance and credit default swaps. He advocates more government intervention, regulation, politics, taxes and central planning.

        If you missed it, read the September 2nd post on our website. It reports capitalism cutting extreme poverty in the world by 75% and lifting 1.2 billion humans out of the grip of poverty in the past 25 years. Every day, capitalism raises 135,000 more living, breathing people out of extreme poverty. Again thanks to capitalism, every metric of human well being is improving. Capitalism has produced a cornucopia of wealth and is the greatest human success story of all time for the common man. Yet strangely, there is never any mention of this economic miracle by Pope Francis – only vitriol.

         Capitalism is effective and also moral. A market economy is based on voluntary transactions in which both parties benefit; that’s why, upon concluding a transaction, both buyer and seller say “thank you”. Capitalism is peaceful and non-coercive; it channels human nature and self interest toward the common good. Capitalism is a positive sum game since both parties win in all transactions; there are no losers. The most powerful force on earth is a consumer armed with a free choice and even the biggest and most powerful corporation cannot make someone buy its product.

         There is space to address only a few of the Pope’s naif criticisms. Nations must be wealthy (capitalist) to be good environmental stewards; the worst degradations of all time took place under the commies and now are  being cleaned up by capitalists. The Vatican labels credit default swaps “economic cannibalism that profits from the misfortune of others“. Such swaps are merely insurance against defaults and make it easier for poor countries to borrow. The Pope condemned derivatives and speculation, both of which make markets more orderly and especially help third world agriculture.

          Pope Francis doesn’t grasp that squandering trillions for uncertain, infinitesimal climate benefits means the money cannot be spent now to alleviate suffering from unsafe water, malnutrition and lack of electricity and medicine. The last thing a poor child in an African slum needs is a solar panel. The Pope has called money “the dung of the devil” – no riposte needed. Capitalism doesn’t cause consumerism; it responds to it. If consumers demanded more bibles, the market would instantly supply them.

        The Pope is concerned for the poor but attacks the greatest anti-poverty engine in human history. Poor countries suffer due to insufficient capital; wealth must be created before it can be shared and private charity is much more effective than government redistribution. Pope Francis said building a wall is “unchristian”. Is the US unchristian for creating great wealth amidst liberty and becoming a magnet for emigrants?  Or, are socialist nations unchristian for creating great poverty, stifling liberty, fomenting civil unrest and making life so miserable that their people desperately flee their homes?

        Capitalism is not moral because it works; it works because it is moral. Capitalism has achieved, and continues to achieve, miracles that in earlier ages could only have been ascribed to the gods. However well-meaning Pope Francis may be, he fails to understand the morality of free markets and the immorality of statism and collectivism.


Our next post on September 16th addresses reality and denial in America.

Celebrate Capital Day 2018

“The achievement of capitalism is not to provide more silk stockings for princesses but to bring them within reach of the shop girl.” (Schumpeter)
Celebrate Capital Day 2018
By: George Noga – September 2, 2018

       This Monday, let’s celebrate capital along with labor. Labor is a noble activity but capital puts labor on steroids by making it more productive. The natural condition of mankind is, and always has been, poverty. Therefore, we should not be asking what causes poverty, but what causes wealth. The answer to that question is capitalism.

       Paleolithic fishermen worked incessantly spearing enough fish to survive until one nascent capitalist thought of a net. Since he had no capital, he worked longer hours for months to accumulate enough extra fish (his capital) to give him time to construct a net. He then generated a surplus of fish to trade for other goods. His capital investment made him wealthier than others but it also made everyone else better off. The same is true of the capitalists who founded Wal-Mart, Amazon, Apple and Microsoft.

        Per the World Bank, capitalism has cut extreme poverty by 75% in just the past 25 years, equal to 1.2 billion human beings with an additional 50 million being lifted out of poverty each year. Each day there are 135,000 fewer people in poverty. Today less than 10% of the world’s population lives in extreme poverty and it could end within our lifetime. This is by far the greatest economic success story of all time. For the average human being, the world has never been a better place – thanks to capitalism.

        Americans are ignorant of the dramatic progress against extreme poverty. Surveys have asked if, over the last two decades, extreme poverty has doubled, remained the same or halved (the correct answer). A staggering nineteen out of twenty (95%) Americans get it wrong. The only plausible explanation is media ignorance and bias. Despite capitalism stamping out poverty and vastly improving the human condition, it is widely condemned – even by the Pope. Why all the criticism?

  •      Capitalism is perceived as flawed because it hasn’t solved every human problem. In fact, capitalism is purely an economic system and most of the things for which it is criticized (wealth distribution) are political rather than economic issues.

 

  •       An ubiquitous critique is that capitalism is based on self interest or greed, if you insist. Like it or not, greed is an inseparable part of the human condition. The genius of capitalism is that it channels greed into incentives to serve your fellow man. Greed is just as endemic under socialism but it is channeled toward destructive ends.

 

  •       The practice of capitalism always is compared to the theory of socialism; this is a wholly dishonest comparison. If actual results of both systems are compared, capitalism triumphs handily. If the theories of both systems are compared, capitalism again wins because socialism is contrary to human nature and it never can succeed.

 

  •       Leftists, academia and the media are infatuated with socialism even though in 10,000 years socialism (and its cousins) never has succeeded in any group bigger than a family, clan or tribe (about 25 people) in which familial bonds supersede economic interests. How many more Venezuelas must there be before they learn?

      Capitalism has created a cornucopia of wealth unprecedented in human history. Extreme poverty is being eliminated; every metric of human well being is improving. Even inequality is shrinking as the poor are getting richer at a much faster pace than the affluent. Average folks live better than monarchs a few decades ago. Luxuries a short time ago are selling for ridiculously cheap prices at Wal-Mart and Costco.

        Not one of these miracles was created by government or socialism. Who has done more to benefit the common man – Henry Ford, Steve Jobs, Sam Walton or any king, president or commissar? America is the bastion of capitalism; tomorrow, let’s celebrate capitalism and the capitalists who had a dream and the will to accomplish it!


September 9th we blog (reluctantly) about capitalism and Pope Francis.

Kavanaugh – SunRail – Election Meddling

Robots don’t create unemployment – politicians do. 
Kavanaugh – SunRail – Election Meddling
By: George Noga – August 26, 2018

Micro Topics: If liberals were in charge in 1776, America’s founding document would  be the Declaration of Coexistence and New Hampshire’s motto would be Live Free or Coexist. . . . . The Second Amendment exists to protect citizens against tyrannical government and recently it was used twice successfully (Nevada and Oregon) for that very purpose. . . . . Progressive comedy is meant to be serious, but when they are serious, it is comedy. . . . . Robots don’t cause unemployment, politicians do. . . . Under capitalism, both buyers and sellers customarily say “thank you” after transactions because both benefited – unlike under socialism or when dealing with government.

SunRail & Greece: We once wrote that the Greek national railway, Hellenic Railways, could save money by paying every passenger to take a taxi. We yucked it up at this example of socialism run amok and why Greece was bankrupt, never believing such lunacy could happen in America, much less in Central Florida and within just a few years. Silly us! SunRail could pay every rider $35 to take Uber and save money.

The math is straightforward: SunRail costs $34 million to operate; tickets bring in only $1.9 million, creating a loss of $32.1 million. Average ridership is 3,500 for the 254 days each year SunRail operates, resulting in 890,000 riders. Dividing SunRail’s loss by the passenger count, equals over $36; hence, SunRail could pay each passenger $35 for Uber and taxpayers would be better off. Incredulously, government considers SunRail a success and is rapidly expanding it. Even the Greeks weren’t that crazy!

Kavanaugh Causes Progressive Paroxysm: Progressives contort into pretzels to avoid uttering “abortion” in which they believe passionately but refuse to say aloud; they substitute euphemisms like women’s healthreproductive rights and choice but they all mean only one thing: abortion. They demand abortion anywhere, at any stage of pregnancy, at any age and for any reason including gender selection, which is equivalent to femicide. Preposterously, they argue that females must be aborted to protect their rights; i.e. that it is necessary to kill women in order to save them.

Progressives also twist into pretzels to oppose Judge Kavanaugh even though their real argument is not with him but with the Constitution. Kavanaugh clearly is eminently qualified and has an impeccable personal narrative, but liberals demand judges who will enact their agenda from the bench. They have given up on the legislative branch and the thought of losing the judicial branch reduces them to paroxysms. However, just as they refuse to utter the word abortion, they refuse to articulate that their real bete noire is not Brett Kavanaugh but the Constitution of the United States of America!

Election Meddling: America is awash in progressive crocodile tears over meddling although the USSR/Russia interfered in every US election since the 1950s. Perhaps Obama ignored the 2016 meddling because he was busy with his own interventions. Following are the top six of meddler-in-chief Obama’s most egregious meddles.

(1) In Kenya he supported Raila Odinga, an Obama relative, whose son is named after Fidel Castro; (2) Israel, where he diverted US government funds to Netanyahu’s opponent; (3) He favored the Muslim Brotherhood in Egypt; (4) In Honduras he supported leftist Zelaya who defied the Honduran constitution and supreme court; (5) Macedonia, where he destabilized a center-right government at George Soros’ behest; and (6) He publicly opposed Brexit while visiting England just before the vote.


Next on September 2nd, we will post something apropos for Labor Day. 

Montana Moments – Favorite Stories

Huckleberry Finn got his name because, like huckleberries, he could not be domesticated.
Montana Moments – Favorite Stories
By: George Noga – August 19, 2018

        This post contains some favorite vignettes about life in Whitefish and NW Montana. The natural setting, adjacent to Glacier National Park, is so spectacular that (unbeknownst to viewers) many commercials you see were filmed here. You can go off the grid in nearby Polebridge which has no Wi-Fi, internet or electricity. Ted (Unabomber) Kaczynski did that for many years not too far away. Enjoy!

Bear Bell: The club where I play golf has a “blind” approach to the 18th green. To signal the group behind that it is safe to hit, departing players ring a loud bell as they complete the hole. When the bell inevitably rings, I act surprised and concerned and tell my visiting Florida guests that was the “bear bell“, warning that a grizzly is nearby. It works every time and the reactions from my unsuspecting guests are priceless.

Huckleberries: Hucks grow many places in the US, but are especially prized in NW Montana, which has huckleberry ice cream, pancakes, jam, syrup, martinis, etc. Hucks only grow in the wild and cannot be domesticated despite prodigious efforts to do so; that’s how Huckleberry Finn got his moniker – he was wild and undomesticated. Each season there are huckleberry festivals and the status of the current huck crop is a ubiquitous topic among Montanans. Families have secret huck patches handed down through many generations, the locations of which are jealously guarded secrets.

Poker Talk: I frequently play Texas Hold’em poker at live games which are legal in Montana. During games, which often last many hours, there is much conversation among the players. Once there was a particularly voluptuous lady in her 40s or 50s playing and a male player remarked several times that she looked “awful familiar” and hadn’t they met before. Finally, when the guy asked again for the umpteenth time, the lady averred, “Maybe you’ve seen me before; do you watch much porn?”

Judge Wears Jeans: Even government works better here, as most interactions with  citizens are polite and efficient. This is because Whitefish is such a small place that if any government employees behaved imperiously, word would soon get around and they would be shunned. I once went to city court to contest a speeding ticket. Upon entering, I noted the judge wore blue jeans and cowboy boots under his robe. When my turn came, I pointed out there were no speed limit signs posted on the road where I was ticketed. He conferred briefly with his clerk and promptly invalidated my ticket.

Great Northern Cabaret: Every Sunday at 9:00 PM there is live cabaret with a new show each month written and produced in Whitefish to incorporate local humor. For example, nearby Butte is the butt of jokes – much like Bithlo is for Central Florida. If you are somewhat priggish, this is not for you. By the way, a Scotch costs only $2.75.

Private/Public Partnerships: The 36-hole golf club where I play is governed by a board composed of half public and half private members because originally one course was public and one private before they merged. Whitefish also has “The Wave“, a massive indoor aquatic and fitness facility with pools, lockers, food court and myriad daily activities for all ages. During long winter months, it is so popular (and affordable) that some days 25% of the town’s population goes there. The golf club and The Wave both are well-run, first-rate facilities. Private/public partnerships seem to work in Montana.


Next on August 26th we discuss Mokita – truths that no one will discuss.

“A Rat is a Pig is a Dog is a Boy”

“Every great cause begins as a movement, becomes a business and eventually degenerates into a racket.”  (Eric Hoffer)
“A Rat is a Pig is a Dog is a Boy”
By: George Noga – August 10, 2018

        Great causes follow the same script. Wrongs cry out to be righted. Movements are founded by (usually) sensible leaders to seek redress; they are joined by people of good will throughout America. In time, the wrongs are righted via education and legislation. After achieving their initial aims, both leaders and followers move on. The movements are then hijacked by fanatics, with a small hard-core following; they degenerate into rackets; and they never, never go away. This post examines four such movements.

Animals Rights and PETA

         Animal cruelty once was widely condoned, particularly in medical/drug research and testing and other experimentation. Now, animal experiments are closely supervised by ethicists under strict guidelines; transgressions carry serious consequences. PETA is run by fanatics who believe “a rat is a pig is a dog is a boy“. They believe animals are no different than people, bellowing “it doesn’t matter if we have fur, feathers or fins, we’re not different in any important way.” They are fond of showing a hip-hop video of a black man morphing into an Asian woman, then into a bear and a chicken. QED.

Women’s Rights and Feminism

        Women had many valid gripes: sexual harassment, back-alley abortion, unequal pay, hostile work environment, domestic violence, degrading treatment by police in rape cases and inferior legal status to husbands in some situations. Every one of these wrongs has been rectified by legislation and also by a sea change in public attitude.

        Where is feminism now? They hype a phony campus rape crisis and promulgate rules denying men due process and assuming guilt. They assert that regret is the same as rape. They cling to the canard that pay differentials persist. They demand abortion for gender selection and even infanticide. They dictate toxic masculinity be taught in kindergarten. They deny gender differences. Slaves to political correctness, they refuse to criticize Islam’s genital mutilation and treatment of women as mere chattel.

Gay Rights and the GLBTQ+ Movement

        I lived in Manhattan in 1968 during the Stonewall Inn uprising that marked the beginning of the gay rights movement. Like all people of goodwill, I disapproved of anti-gay discrimination and supported equal treatment and rights. Since Stonewall, the GLBTQ+ community has achieved its goals: marriage, military service, legal status for health/estate issues, adoption and anti-discrimination laws. There also has been a radical shift in public attitude toward full acceptance of the GLBTQ+ community.

        Instead of declaring victory and disbanding, they ratcheted up demands including NAMBLA-inspired lowering the legal age of consent and pro-gay indoctrination in schools. There now are 112 (and increasing) genders, many with their own pronouns. There are even genders for those who identify as dragons and unicorns. They have made the restroom issue into a cause celebre. They are insisting on gender discussions in elementary schools and support gender reassignment surgery for young kids.

Civil Rights and Racism

        No movement has faced the obdurate prejudice African-Americans suffered, nor has any accomplished so much so fast. When US population was 40 million, the KKK had 4+ million members – one in ten Americans. Now there are 6,500 members, one out of 50,000. Every initial objective of the civil rights movement has been achieved: desegregation, voting rights, affirmative action, equality. To cap it off, we had a two-term black president. Genuine racism in America is on the brink of being extinguished.

       Race is now a racket. Look no further than Starbucks’ unconscious bias. There were films, training guides, tool kits, instructors and programs, all highly profitable for the race racket and enough to make even Jesse Jackson blush. Equality of opportunity has been supplanted by equality of outcome. America overflows with diversity, equity and inclusion czars – all handsomely paid. Racial animus is worse today than ever; it won’t end as long as the race racket remains profitable financially and politically.

      I can’t make this stuff up. A rat is a pig is a dog is a boy; genders for dragons and unicorns; and female genital mutilation is beyond criticism if practised by Muslims.


August 19th is our final Montana Moments posting for this summer. 

Debt Crisis Timetable Accelerating

When Titanic struck the iceberg, it remained afloat and the disaster was not yet apparent. However, its fate was irreversible from that moment; so it is with a 90%  debt/GDP ratio.
Debt Crisis Timetable Accelerating
By: George Noga – August 1, 2018

       I have a recurrent nightmare about an endless train, brimming with passengers and priceless cargo, slowly but inexorably hurtling along its tracks toward a bottomless abyss. The engineers, conductors, passengers and observers all know the train is going over the cliff; however, instead of trying to stop the train they are opening the throttle to speed it up. When I awake, I realize it is no nightmare; it is happening right now to the United States of America. Following are data just released by CBO and SS.

  • Social Security begins devouring reserves this year, 4 years earlier than projected last year. Reserves will be depleted in 15 years and benefits would require a 25% cut.

 

  • Medicare will be unable to pay scheduled benefits in 8 years; just during the past year this shortened by 3 years. What does that say about the integrity of the data?

 

  • Deficits average $1.5 trillion (total $15 trillion) over the next 10 years (based on current policy), raising the public debt/GDP ratio to 105% per the latest CBO estimate.

 

  • Interest on the debt will triple to just under $1 trillion per year within 10 years per the June 2018 CBO report. Debt service will soon overtake defense spending.

 

  • The really bad news is that the projections cited above, by government agencies, are wildly optimistic. None assumes a recession during the coming decade, while it is nearly certain there will be one or possibly even two. Recent projections made by private sector economists (Fortune Magazine, Cato Institute) are much worse.

       No one cares! For most Americans the problem is too abstruse; they are tired of hearing pundits cry wolf; and there is no discernable impact on their daily lives. For politicians, tackling the issue has no upside; it is all downside, including possible electoral loss. No constituency exists for reining in benefits, cutting spending or raising taxes; the political apparat favors the opposite. Each year that we dithered, the problem became more intractable and costly; now, finding a solution is virtually hopeless.

        Economists believe the point-of-no-return is a public debt to GDP ratio >90%; the World Bank says 77%. The US already is at 77% and will reach 90% much earlier than believed only months ago. The crisis doesn’t begin when we exceed 90%; it just means there is no going back. The Titanic remained afloat a long while after it struck the iceberg and the crisis was not immediately evident to those aboard. Nonetheless, the moment Titanic hit the iceberg, its fate became irreversible; so it is with a 90% ratio.

       As my nightmare continues, nothing happens until after the train goes over the cliff and we are subsumed by crisis. Panicked politicians impose a VAT, modest at first, but rapidly ramped up to European levels of 20+%. Income taxes skyrocket. Only token changes are made to entitlements. Economic growth tanks. Defense is compromised. There is a 15-25 year lost generation as we morph into a European-style welfare state. People lead lives of quiet desperation and the USA, as we know it, ceases to exist.

      There are two certainties about the impending debt crisis: (1) if something cannot go on forever, it won’t; and (2) excess debt ultimately must be purged from the system. The debt can be purged only via higher taxes, less spending (especially entitlement spending), hyperinflation or repudiation; there are no other options.

      By the time the crisis hits, a combination of new and higher taxes and spending cuts totalling $1.25 trillion per year in today’s dollars (25% of the budget) for 15 straight years will be needed just to get back to today’s 77% debt/GDP ratio. That should give you some perspective about the devastation that purging the debt will wreak on America – as well as the reason for my recurrent nightmares.


Our next post on August 10th documents great causes turning into rackets.

Man-Made Global Warming (1988-2017) R.I.P.

Man-made global warming, a/k/a climate change, was a political construct from its  inception in 1988. It now has run its five-stage course and is dying a political death. 
Man-Made Global Warming (1988-2017) R.I.P.
By: George Noga – July 22, 2018
       Progressivism feeds man’s neurotic fear of social catastrophe while providing a path for moral redemption. It’s no different for global warming. This explains the fervor with which climate change was embraced – mostly in far left precincts. It now joins the pantheon of junk science in the dustbin of history. Trump’s withdrawal from the Paris Agreement was merely the end of a trend that was evident for some time.

      We will not recount the myriad reasons climate change has descended into the netherworld of liberal canards and environmental scare politics. We have been there, done that. There still is plenty of sound and fury emanating from warmists, but people tuned it out and quit listening some time ago. Most governments, if judged by their actions rather than their words, also are backing away from global warming paranoia.

        A five-stage life cycle for political movements was identified by political scientist Anthony Downs in 1972. Following is the life cycle for man-made global warming.

Stage 1 Public problem identified: Man-made warming was born on June 23, 1988 when NASA scientist, James Hansen, testified before Congress that he was 99% certain burning fossil fuels created a greenhouse effect that alters global climate and will affect life on Earth for centuries to come. Note: Hansen has been proven wrong.

Stage 2 Politicians and media embrace the issue: This is the messianic stage where activists jump in with a rush of dopamine, making it a spiritual, metaphysical and even an existential issue. They predict the end of the world unless we do what they want to save mankind from the over-hyped peril. This stage began immediately after Hansen’s testimony and peaked in 2006 with publication of Al Gore’s An Inconvenient Truth.

Stage 3 Pivot due to skepticism about costs, benefits and underlying facts: This stage, overlapping slightly with stage 2, began with the Kyoto Protocol taking effect in 2005. A gradual and spreading realization began to dawn on the public that the costs weren’t worth the putative and uncertain benefits. Many began to doubt the facts underlying man-made warming and noted the failure of warmists’ dire predictions to be realized.

Stage 4 Public interest wanes: As stage 3 morphs into stage 4, public interest wanes both in terms of public concern and intensity; this stage goes from circa 2012 to 2017. In recent years the public consistently has rated climate change dead last out of 20 issues of concern. Only 1 in 4 or 5 Americans now rate climate change a priority.

Stage 5 Post-problem stage is prolonged limbo: Man-made global warming died on June 1, 2017 when Trump withdrew the US from the Paris Agreement. The issue is effectively dead although there may be spasmodic recurrences of interest. Climate change’s death throes will be agonizing because it had such a maniacial following. We have reached the tipping point on climate change – just not the one warmists expected.

      Our first posting was about global warming and we have blogged about it more than any topic. We will miss global warming, much as we miss the former USSR, because it provided a soft, inviting and comedic target. Fear not; we will revisit climate change from time to time during its death throes. It was fun while it lasted; wasn’t it?

        As Eric Hoffer said: “Every cause begins as a movement, becomes a business and eventually degenerates into a racket.” Global warming has been a racket for quite some time with Al Gore and other rent-seeking environmentalists loading up at the trough. From the git-go, climate change was purely a political issue and whatever lives by politics, also dies by politics. Global warming (1988-2017) – rest in peace.

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Our next post revisits the the US debt crisis.

Montana Moments: The Canadian Connection

Only 50 miles from Canada, Whitefish has a massive Canadian presence from which Montanans can learn many lessons about sky-high taxes and nationalized health care.
Montana Moments: The Canadian Connection
By: George Noga – July 15, 2018

          Whitefish is 50 miles south of Canada and a mere 4 hour drive from Calgary and its 1.3 million people; altogether, 2 million Canadians live within an easy drive. Given the profuse attractions of Whitefish and Glacier National Park, the massive Canadian presence during summers is no surprise. Alberta’s energy economy and the favorable exchange rate (until recently) bring in Canadian hordes flush with petrodollars.

          Canadians also are attracted by the nightlife and incredibly cheap prices vis-a-vis Canada. They come for weekends, vacations and endless holidays; they even come for their weddings which, due to rock-bottom prices, can cost up to 50% less than home. Mainly however, they come to party because of the absurdly cheap booze. They party so frenetically that in the argot of Whitefish, drunkencanadian is one word.

         Cocktails in Whitefish are one-third the price and twice the size of those north of the border due to Canada’s sky-high alcohol taxes. A scotch costs $2.75 and beer $1.00. During happy hour, our tab once was $32.00 for 27 drinks! Moreover, some watering holes accept Canadian loonies at par which makes cocktails ridiculously cheap. Before leaving Montana, they pack as much food and potables as allowed into their SUVs to beat the oppressively high Canadian prices and value added taxes.

         Not all Canadians come for cheap booze; many come for medical care. There are long waits for procedures in Canada while Montana offers same day service. They are so desperate, they pay out-of-pocket at great sacrifice. I have heard many heart wrenching stories about Canada’s system and most of my Canadian interlocutors passionately forewarn me against Canadian style socialized medicine for the USA.

        The median wait time between referral and treatment in Canada is over 21 weeks, 42 weeks in some provinces and a staggering 4 years in extreme cases. The wait for a CAT scan is 11 weeks and increasing – while Montana has no waiting whatsoever. Over 1 million Canadians (3% of the population) are in line. The long waits are not just inconvenient; they often transform potentially reversible conditions into chronic or permanent disabilities. Free medical care is not much good if you can’t get it.

        While in Montana, I make it a point to ask our northern visitors how satisfied they are with Canadian healthcare. Out of the scores I have thus queried, only two said they were satisfied. The first said he liked the care in Canada but came to Montana whenever the wait times were problematic. The second defended the Canadian system by asserting is was very good at triage, i.e. if you were mired on a long wait list and your conditioned deteriorated, they would move you up on the list.

       So, what can we learn from the Canadian connection? First, Canada has a high cost of living due to confiscatory taxation. The federal income tax rate is 29%; provincial income tax rates are 15%-20%; health care is 6% and a 13% VAT is embedded in all purchases. If you are keeping score, the total is 64% to 68%!

       Second, Canada is a nanny state that doesn’t want its children, err citizens drinking and imposes alcohol taxes that make cocktails 600% more costly than in Montana. That shouldn’t be unexpected from a country whose founding documents tout “peace, order and good government” instead of life, liberty and the pursuit of happiness.

       Finally, we learn much about the disaster that is Canada’s national healthcare. When anything is in great demand, it must be rationed via either time or cost; that’s an immutable economic law. Since healthcare is free, it can’t be rationed via cost; that leaves time. Bingo! How comforting it must be for Canadians to know that if their condition seriously deteriorates, they may be moved above the other 1 million poor, desperate souls waiting in line for treatment that is instantly available in Montana.


The next post is TBD