Class Warfare Blog

November 1, 2013

Weird Budget Negotiations

A Congressional committee has convened to try to come to agreement on a federal budget. Fat chance of that working. Republicans are adamant that there will be “no new taxes” and they consider taking away a tax loophole a tax increase. So, there will be no tax reform under the hands of these guys. In fact they really don’t want anything ordinary Americans want.

What many do not recognize is that the GOP has gotten its way since the Great Recession: the stimulus was so small it barely worked, there are many fewer federal workers now than before. Taxes are at the lowest rates since the 1950’s. The Sequester and other budget cuts have reduced the budget deficit to it’s lowest value in almost a decade.

And what has this gotten us? It has gotten us the slowest recovery from a recession in recorded history. Clearly the U.S. economy is one of the most robust in the world, yet we keep limping along at a minuscule rate.

Austerity is not the solution. It never has been. Repubs have been hysterical about the National Debt, currently about on par with our GDP (our national income). They also keep making comparisons with ordinary citizen’s household budgets, claiming “You wouldn’t do that.” I beg to differ. How many U.S. Household have less debt than their annual income? Unless you own your home and car outright, my guess is that your debt far exceeds what you make in a year. Let’s see, we owe $17,000 on the car and $238,000 on the house and the college loans for the kids, hmm.

The National Debt is not a big problem right now. The deficit is not a big problem right now. The big problem is righting the ship for ordinary Americans which means providing jobs through which they can pay their bills, including taxes that will lower the deficit.

We need to get past this bump in the road because if you think our problems are big now, consider what the near future looks like (and I am not talking Medicate and Social Security, they are just other bumps in the road). Capitalists of the Milton Friedman ilk have convinced us that the solution to all of our problems is “growing the economy.” This is necessary because the population is growing and we want our standard of living to be getting better rather than worse. Yep, growth is needed, absolutely.

But I have to ask, what happens if we just keep growing? If we were a person that just kept growing we would be considered diseased and would be treated by doctors. The same would be true for any animal. Can an economy “just keep growing?” An economy consumes resources. Take oil, for example; when I was a boy it was inconceivable that we would exhaust the supplies of oil in this country. Now, it is done, we have little left. And if you think tar sands, fracking proceeds, etc. are new sources of energy, think again. They are sources of fuel, transportable fuel, but each gallon of oil extracted from those tar sands, for example, consumes more energy than the oil provides. The more we take out the less energy we have available. These are not sources of energy, they are forms of energy. We are running out of cheap, transportable forms of energy. The Middle East oil producing countries (remember OPEC?) claim they have the same reserves that they had a decade, even two decades, ago. Is it any wonder, OPEC sets quotas on how much oil a country in their group can extract annually based on the amount of reserves they have. That their reserves haven’t changed year after year is physically improbably to the nth degree, so what are their real petroleum reserves? Nobody knows. Are they likely to be as high as they were 20 years ago? (Ask yourself.)

Economies extract resources from the world around us. As economies grow, they extract more resources. The end result of economic “Grow, Baby, Grow” is . . . diminished or even exhausted resources. And a basic rule of nature is as resources become exhausted, additional resources become harder and harder to come by. Hey, if we need metals, we can always mine asteroids! Yeah, sounds cost effective to me. The era of cheap resources is pretty much done, so what do we do next?

This is a big issue, it will take years and years to work out.

There are bigger problems on our horizon than the ones we face now. If we could only get the GOP’s backers to look beyond their quarterly financial statements, we might be able to make some real progress.

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4 Comments »

  1. I mostly agree with you here, but the economy works with a little different laws than nature. You can use the same amount of resources and combine them differently with a different value. For example, it takes about as much physical resources to make a $10 dollar calculator and a $700 smartphone. It also helps that money is basically a made up concept, so it can be created practically infinitely 🙂

    Comment by List of X — November 1, 2013 @ 9:43 pm | Reply

    • Money can be created out of thin air and is every day. That is not the problem; the problem is that goods are not created out of thin air. And at the rate we are disposing of electronics I think we may find shortages of strategic component elements. Recycling electronics is dirty and dangerous and we are dumping megatons of the stuff on poor countries which do not have the infrastructure to do it well, just “cost effectively” (if you don’t count externalities like pollution). Similarly we have been using lead and mercury to make batteries and not recycling them at all well for many decades. The more spread out those elements, the harder (and more energy is needed) to gather them together again. The list of these strategic materials is very long and many of them are very problematic.

      PS We’ve moved (again)! Just change the Apt # from 28C to 17A (110 feet down and about 30 feet east). Effective Date: October 1, 2013

      *Entia non sunt multiplicanda praeter necessitatem.* ************** Steve Ruis

      Comment by stephenpruis — November 2, 2013 @ 8:07 am | Reply

      • Well, my hope (which is I think very reasonable) is that as the recycling technology continues to improve, we will be able to recycle more and more of the resources that we previously discarded. By the way, most of battery lead is already recycled. Also, my hope is we move away from coal and oil to wind and solar energy, the supply of which is effectively infinite (according to Wikipedia, Earth gets twice as much solar energy in a year than we can get from all the oil, coal, gas, and uranium deposits on the planet). Cover Texas with solar panels and you got about 140% of the world energy needs. (Also, no more Texas 🙂
        So if we continue on the path we are on – using non-renewables and not recycling, we won’t have growth. If we maximize recycling and use only renewable energy, this growth can go on for centuries at least, assuming we don’t accidentally nuke all life on Earth by then.

        Comment by List of X — November 2, 2013 @ 12:32 pm | Reply

        • Hopes are wonderful, but have you noticed the resistance to developing alternative energy sources in the country? If the folks blocking progress would get out of the way… Even so, there are some barriers. Solar collectors still need a couple of orders of magnitude in efficiency, wind collection and wave collection both still have problems. Distribution…have you noticed how ineeficient our electrical distribution network is? Progress on all of these is being blocked so that profits can remain high on traditional cheap enery sources.

          And then there is the third law of thermodynamics. Even the best recycling processes have losses. Natural process occured to concentrated minerals into seams and pits. we dig it up and spread it all over the world. It will be much harder to collect it back up again.

          PS We’ve moved (again)! Just change the Apt # from 28C to 17A (110 feet down and about 30 feet east). Effective Date: October 1, 2013

          *Entia non sunt multiplicanda praeter necessitatem.* ************** Steve Ruis

          Comment by stephenpruis — November 2, 2013 @ 8:22 pm | Reply


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