The Poor Taxpayer Test

On the outskirts of Las Vegas there’s a mid-range trailer park that grandiosely styles itself the “Orchard Mobile Home Estates”. There is no orchard in sight. It’s not the bottom of the pond for trailer parks, but it’s a ways from the top. A 41-year-old waitress lives there in a double-wide trailer, with her two kids who are eleven and nine. She’s single, but she wasn’t always single. She was married to a lawyer when she had the kids. In fact, it was her waitressing job that put him through law school. They had a happy family until he said he wanted “space to find himself”.

Apparently, said “space” involved a shocking proportion of the law firm’s escrow account as well as a twenty year old legal assistant whose “assistance” seems to have been mostly horizontal. In any case, she hasn’t heard from the bum and his slut for seven years. She was left with all their debts, including his student debt which in an excess of feelz she had stupidly co-signed, so she’s on the hook for the whole thing. So far she’s paid off about a third of it.

After he cleaned out the bank account and left, she went back to waitressing. She moved into the double-wide with her kids. She took on an extra shift. She pays her taxes and raises her kids as best as she can. She has no slack in her budget, which she juggles constantly. Childcare is a constant nightmare. More food means less clothing. A high fuel bill means short rations all round. Their school is one-third illegal immigrants. She worries about her kids constantly. She has an old car that drinks gasoline faster than her ex drank expensive booze, a gas-guzzler she owns for a simple reason—she can’t afford a fuel-efficient car. She needs it to get to work and prays that it doesn’t die and that gas prices don’t go up.

She knows the US is about twenty trillion dollars in debt. She doesn’t quite know what that means, but it worries her. She knows that she is about twenty thousand dollars in debt. She knows exactly what that means, and it keeps her awake at night.

So … here is the important question.

How much of her hard-earned tax dollars does she want us to spend on the National Endowment for the Arts, where one-fifth of direct NEA grants go to multimillion-dollar arts organizations and museums, and where some guy got money she can only dream of, $15,000, to put a crucifix in a jar full of urine and take its photograph?

How much would she say the NEA should get of her taxes?

Serious question, folks. We are in debt up to our ears. It took almost 250 years to build our national debt up to about ten trillion dollars. President Obama and the Democrats doubled that to twenty trillion dollars in a mere eight years, with nothing to show for it. Where is the ten trillion dollars in value that we got in exchange for that money? He pissed it down a rathole just like far too many Presidents before him, only on a much grander scale.

poor taxpayer test II

And regardless of how we got here, we are in deep financial trouble.

Currently, we finally and fortunately have a President who wants to do something about that. To reduce the debt, we have to cut the budget. And in that process, we will undoubted be cutting out programs that are somebody’s favorite. Heck, every program is someone’s brilliant idea. And nobody ever wants to give up “free” government money.

So let me propose what I might call the “Poor Taxpayer Test” to use in this ongoing fight to bring government spending under control.

For each program that the President has proposed cutting, think about how that program looks to that waitress living in the Las Vegas double-wide in particular, and how it looks to the hard-pressed and hard-working poor taxpayer of every race and station in general. Ask yourself, would they want us to spend money on this program?

From that point of view many things become clear. We do not want to spend money on the National Endowment for the Arts. We should not throw money down a climate rathole in the hopes that it might perhaps cool the earth by 0.1°C in fifty years. We cannot afford to educate and feed illegal immigrants. We should not spend money on the National Endowment for the Humanities. The Humanities can take care of themselves until such time as we’ve taken care of the humans.

We cannot go on wasting billions on Defense budget cost over-runs for fighter planes and ships. In short, we cannot and should not pay for a whole host of programs, some started under Obama but most of them long-standing, because of one simple reason.

We’re broke. Busted. Out of money. In debt up to our ears. So we need to examine every dollar we spend, and we need to cut out everything but the essentials.

We’ve gotten that broke by borrowing money only to waste it on things that look all pretty but do little for the people who both deserve it and need it the most—THE TAXPAYERS. We need to break our focus on what the residents of other countries need, and what illegal immigrants need, and what petulant college students need, and what Somali refugees need, and focus on WHAT THE TAXPAYERS NEED. We’re broke. We cannot afford to pay for ourselves, much less for others. So the Somalis may just have to wait.

Be clear that this doesn’t mean that conservatives are heartless or callous, or that Americans don’t care about Somali refugees or the arts. Americans are caring to a fault, our generosity is one of our problems, and as an artist and a musician I know the value of the arts. So not paying for the NEA doesn’t mean we think that art is unimportant.

It just means we’re broke.

Now, it will take a while to turn the massive cash-burning US Government steamroller around, and much longer to work our way out of debt. It will not be pretty, and there will be a lot of baby birds cheeping “FUND ME, FUND ME, YOU MUST FUND ME BECAUSE YOU ALWAYS FUNDED ME BEFORE” … sorry, folks, but we can’t just keep flashing the Taxpayer Express credit card for every cause, no matter how good the cause might be. The party’s over. The wallet is empty. The bank is rupt.

So … the next time that you are outraged by some proposed cut in some program that you think is critical, let me invite you to consider the waitress living in the Las Vegas double-wide who is working two shifts, and apply the Poor Taxpayer Test to your favorite program. Would she want her tax dollars spent on what you are advocating? In general she wants her tax dollars spent on the schools and the roads, on keeping the nation safe, on caring for the elderly, on providing jobs, on clean air and clean water, on things that actually benefit her and everyone today.

The Poor Taxpayer Test is, does she want to take money from one of those important things just to fund your program?

If we apply that test, I suspect that everyone can come to some kind of agreement about what spending is unimportant and unjustifiable when we’re underwater in debt.

Finally, I see many people who despair of ever paying off the debt. And to be fair, $20 trillion is a lot of green.

But the Gross National Product of the US is about $17 trillion. So we’re in debt a bit more than one years GNP. This is the equivalent of say a business with gross annual sales of $170,000 being $200,000 in debt. Not the best situation to be sure, but one that a business can dig its way out of IF IT TIGHTENS ITS BELT.

So the bad news is we’re trillions in debt, and the good news is that we can get out of debt as long as we consistently apply the Poor Taxpayer Test to all of our spending, tighten up our belts, raise our chins, and work together to make it all work.

Best to everyone,


87 thoughts on “The Poor Taxpayer Test

  1. The well is dry in Illinois.

    Illinois Universities Feel the Brunt of State’s Fiscal Woes

    Schools are taking drastic steps as funding from Springfield dries up
    With the budget stalemate in Illinois in its 21st month, public universities in the state are going beyond belt-tightening to deal with a funding drought that has no end in sight.

    Campuses already have pressed pause on new construction and stopped hiring for vacant positions. Now, universities including Northeastern Illinois, Governors State and Southern Illinois are looking to fixes like hiking tuition, cutting academic programs or laying off student workers.

    More to come.

    Liked by 1 person

    • As a former Illinois refugee, this has been coming for decades. The crunch is now. Rauner cannot solve. So state financial implosion is immenent. Boy, that chapter 11 will be something for the state pubkic employee unions to behold. Unfortunate, but necessary.


      • “Ahh but how to rid the campus of the (mostly) overpaid tenured “professors”??”

        They most likely have many more staff than overpaid tenured “professors”. Just as an example, Yale for the 2015 fall semester, lists total university enrollment as 12,355, faculty headcounts as 4,410 and university staff headcounts as 9,455. That works out to 1 faculty for every 2.8 students and 1 staff for every 1.3 students. The Illinois Universities may be managed somewhat better than that, but I would still bet they have at least twice as many staff and administrators as they do faculty.


    • The problem is that Socialism is an easy “sell” to the uninformed. It sounds like Christian Charity without personal sacrifice. What right-minded person would object to helping the needy without much having to give very much to accomplish it?

      The problem is that it then becomes not charity, but an entitlement, and you end up getting a lot more of what you are trying to get rid of.


  2. Unless we can bring people together again, stop the decisiveness which the “left” seems to promote,
    end the handouts, and begin again to truly educate the “kids”, I’m gonna invest in fried baloney futures.
    At the same time shorting any and all companies invested in solar, or especially wind fantasies.

    Liked by 1 person

    • I finally got tired of arguing with a liberal who claimed the missing Social Security and Medicare trust fund money is an asset and not a liability, since the Social Security and Medicare administrations hold notes for the full value of the money that was borrowed from the government by the government and spent.

      I hope Trump employs better accountants than that.


      • Pops, I heard those notes are kept in their own separate filing cabinet. Are they even considered as part of the National Debt?


  3. The state budgets in a way very different from your responsible lady in Las Vegas. She sees – I’ll get this much money, I have to pay a rent, a car insurance, gasoline, buy bread and milk – what else can I afford? The state starts with a list of everything it wants, then it asks where to get money for it all. California budgets a high-speed train from Modesto to Bakersfield – who will ride it, no one knows. Third world countries have plenty of ruins of grandiose projects, abandoned after a change of government.

    The test question for every budget item is: How urgently do we need this? What happens if we get it? What happens if we don’t?


  4. As someone once said, socialism is the best possible popular democracy___ until you run out of other people’s money ( as in Venezuela). The US has run out, despite being THE reserve world currency. Kudos for a great essay.


      • You’re quite right to attribute that comment to MT. However, she was a Baroness, not a Dame. A Damehood is usually used to honour someone in the Arts or in public life who has done ‘good works’. i.e. spent other people’s money, just as Willis has described. The stuff all good socialists run out of eventually!

        Prime Ministers usually get kicked ‘upstairs’ into the House of Lords once they step down as PM. It is a life peerage as it is a political Honour (like Knighthoods) for services to the country rather than one from Royal patronage, which are the hereditary ones, and were often for services to the Crown like winning battles in the past. Our Monarch doesn’t create those any more, so no new Dukes, Earls etc.

        HM does bestow personal honours like Knight of the Garter (also for life and limited to 24) which is within her personal gift. The KotG goes back to Richard the Lionheart when he was fighting in the Crusades. His best Knights wore a ribbon (Garter) tied round their leg to identify them in battle. Yes, we still carry on those traditions, though they are purely ceremonial now. No-one quite does ‘pomp and circumstance’ like us Brits!

        Going back to Maggie. She was Baroness Thatcher of Kesteven in the County of Lincolnshire. She was born in Grantham, Lincolnshire. Titles are usually associated with a place that has some connection to the person.

        A bit of useless info for a wet and blustery Sunday morning.

        Liked by 1 person

  5. I would add academia funding to the list. Horrendous waste of money in some area’s, acid test, employment rate of graduates and cost of earned qualification.


  6. I agree wholeheartedly with the sentiment, but fiscal responsibility will never happen voluntarily.

    Leviathans of this nature can be stopped only by annihilation and that, unfortunately, means a lot of pain for everyone in proximity to the implosion.


  7. The NEA budget for 2016 was about $148K. Less than most blockbuster movies cost. Let the “artists” in Hollywood and the tech moguls pay for the D**mn NEA! They’ve got more than enough if they want to fund the “arts”. They talk about the rich paying their fair share, well let them pay “their fair share” if they love it that much. Gates makes more in a year probably than the entire cost. Let them pay the governments portion of PBS and NPR too. On top of having their egos boosted by giving back to the artists that weren’t lucky enough to get the big break, they also get to pick and choose the crap they want to support. Though I doubt if they’ve got the discerning eyes that would support the artists that say the Medici did.


  8. I think you are misstating the difference between the personal budget process and the state budget process.

    It’s not the simple “this is my income, now what can I get” vs “this is what I want to spend, where do I get the money” because the individual does the second as well. If they want to spend more than they have as income, they look at working additional shifts/overtime, get a second/better job, etc.

    The difference is not even at the state level, they have a longer piece of rope, but they can hit the end of it (as we have been seeing in some places), but at the federal level where they have the ability to just print money.

    but both the state and federal budgets suffer from a lack of real auditing of their budgets.


  9. I can understand how the NEA, PBS, and many other costs to the taxpayers can be cut to zero. Those that love them can easily establish a method to fund them.
    However, other programs have evolved into multilayered monsters that should be phased out more thoughtfully.
    When I was a kid, there was the “surplus food” program. [Note the link to agricultural support.]
    By a few dollars per month, we did not qualify. However, we were given some by a neighbor who got great blocks of cheese and large boxes of powdered milk [almost dissolvable as sand].
    Some thought this program was humiliating for poor folks, so to restore their dignity, the food stamp program was born. This morphed to Supplemental Nutrition Assistance Program (SNAP), and may soon allow on-line use.
    Some folks misuse this program but many do not.
    Perhaps the lady of the essay uses SNAP.

    To zero-out a food program that many use could do serious harm. I’ve had no involvement with this since that first box of powered milk – so I likely need to be enlightened.
    Maybe SNAP passes the “Poor Taxpayer Test” or would with some modification.

    I do think many programs could be cut to zero, say in the next 3 years. At least before the next socialistic type gets elected president. Building new programs might be more difficult than reinvigorating those that have been dead for a year or two.


    • I suspect that Trump is working on exactly this plan.

      cut what can obviously be cut fast

      block grant things to the states that can’t be cut (which eliminates the federal workforce that was administering them)

      As the economy improves, future budgets can work to reduce the sizes of the block grants, possibly tied to decreasing taxes further (requiring states that want to keep funding the programs to increase their taxes, but close to net zero for the taxpayer)

      I could really see the question being raised in a couple of years as to what the Constitutional authority is for the Federal Government to be involved with some of these areas.

      But as you say, there’s a need to taper off, cutting off the funding with no warning (and therefor no way for people to know they need to plan for it) will just cause problems.


    • My wife and I, while we were poor, married college students, participated in that Abundant Foods program, as it was called at the time. We both worked part-time jobs (full-time during summer breaks) and pulled a full-load in school, and somehow manged to get by without resorting to student loans. It was a life-lesson that we will never forget.

      The food we received wasn’t the basis of haut cuisine but with a little imagination you could make some pretty decent meals. We were very grateful for the program, and over the years we have paid back many-fold in taxes for what we were then given for “free”.

      As far as the powdered milk is concerned, it wasn’t any worse than what came in the box with the “Carnation” label in the store. The cheese was about the same as a brick of Kraft “American” brand.

      Bottom line, the so-called “surplus” food we received was a very decent but never an extravagant supplement to our daily meals. If we wanted steak for a special occasion, we saved for that and bought what we could afford. If we wanted fancier food we knew we had to pay for it ourselves, and that provided incentive to work harder and not squander our limited funds on more frivolous things.

      The SNAP system may well be easier and less expensive to administer, but it allows too many to maintain a “junk-food” lifestyle, and others to fraudulently trade their benefits for cash.

      The Abundant Foods program may not have been fancy, but the fact that it was so basic provided incentive for participants to improve their own financial situation.


      • I went to University in the 1960’s for an engineering degree and the costs were very reasonable in state if one stayed with parents and worked part time. Some of the causes of drastically increased tuition are politicians (Obama) and other leadership pushing for nearly all to go to college, higher numbers of foreign enrollments starting in the 1980’s, the student loan program and an inability to adjust cost bloating because of tenure.. According to the Economist the chances of an American student completing a four-year degree within six years stand at only around 57% which indicates that many of these students should be in trade schools where oddly, after some competent experience, they can make as much or more than most with a (useful) 4 year college degree.


  10. LA Times (March 2017): What is the National Endowment for the Arts and what would we lose without it? (For starters, works like ‘Hamilton’)

    Business Insider (April 2016): ‘Hamilton’ tickets sell for more than $2,000 — here’s how much money Broadway’s hottest musical is raking in

    It’s estimated that the musical could pull more than $1 billion in just New York … Investors put up $12.5 million. A report from Broadway Journal said that money had already been recouped by March, though producers have not confirmed. If the musical does hit $1 billion, it will have returned roughly $300 million in profit.

    I think the LA Times picked a bad example


  11. The NEA, PBS and the like are not the drain we should be concerned about; waste in the defense budget is the problem. And the new administration wants to throw how many billions more down that hole?


    • I do not disagree with the notion you have expressed. However, the Constitution makes National defense the priority job of the government, and the only mandatory function of the national government.
      Unlike many other things the Government does, defense can’t be zeroed out.


    • Papaloi March 19, 2017 at 4:29 am

      The NEA, PBS and the like are not the drain we should be concerned about; waste in the defense budget is the problem. And the new administration wants to throw how many billions more down that hole?

      Papaloi, thanks for replying. My experience as a businessman is that you need to be concerned about EVERY money drain, not just the bigger ones as you claim. This is for three reasons.

      First, it’s very hard to convince people to save money elsewhere if you are still throwing money away on crap.

      Second, the old saying is right: “If you take care of the pennies, the dollars will take care of themselves”. Of course for the government that becomes “If you take care of the millions, the billions will take care of themselves”.

      And third, we need to squeeze every dollar out of every single government program if we are to have any hope of knocking down our twenty TRILLION dollar debt.

      Finally, President Trump as a businessman is NOT interested in throwing “billions more down a hole”. In fact, his actions have already reduced the cost over-runs on the F-35. He is interested in getting the biggest bang for the buck, and has a history of being successful at that … I’m quite sure he will apply that philosophy to the Pentagon just as well as the other parts of the budget.

      My best to you,



        • Thanks for the comment, Papaloi. First, although it sounds large, bear in mind that $54 billion is about a third of one percent of one year’s government budget here.

          Next, we have “folk sayings”, words of wisdom handed down for generations because they contain some kernal of undisputed truth.

          One of these, which apparently you haven’t heard, goes like this:

          “The best defense is a good offense”.

          And one of our previous presidents, T. Roosevelt, famously said “Speak softly … and carry a big stick”.

          Trump has said clearly that his plan is NOT “Peace Through Weakness”, it is “Peace Through Strength”. And right now, we are very weak. We’ve gone through about sixteen years, two President’s worth, of fighting a variety of wars on the cheap. As a result, we’re basically out of everything from bullets to cruise missiles.

          Now when you look at the deployments, yes, it looks impressive. But when only a bit more than a quarter of our warplanes are even flyable, I fear your map is not much more than a sad hope …



          • “Next, we have “folk sayings”, words of wisdom handed down for generations because they contain some kernal of undisputed truth.
            One of these, which apparently you haven’t heard, goes like this:
            ‘The best defense is a good offense’.”

            Willis, no need to be condescending. As for platitudes, they are useless for debate. But, to the extent yours, above, is relevant, I offer as exhibit A our country’s 2003 invasion of Iraq. Great offense. Like in Libya (exhibit B) and in Syria (exhibit C).


          • “achieved peace through weakness” –> “Switzerland”

            Google “switzerland neutrality”. It does not support this answer. Switzerland was prepared to defend itself vigorously. For various reasons that was not necessary.

            Belgium tried the weak defense strategy in both world wars and suffered badly each time.

            For the US, homeland defense hasn’t been very necessary, at least until ballistic missiles were invented. Now homeland defense is very important, but the F-35 isn’t the weapon needed for the next war. Hint: it won’t be war with Russia.


      • I spent my 34-year career working in the defense industry. As a 21 year-old zealot, one of the things I wanted to be involved in was stopping cost overruns. That was because I didn’t understand the cause of EVERY SINGLE ONE of those causes, bar none.
        In every case, the Government, after awarding a contract, came back and demanded no-cost changes to the contract, or they would go to a senior engineer on a particular element of the program, and work out with him what the cost of adding something (an extra 60 gallon fuel tank to a fighter, for example). This cost would be their basis for negotiating with the company. That cost ofttimes became a cost overrun to the original contract, and.only a few of the more astute aerospace companies demanded the contract be changed to reflect a new cost basis. But the press/Congress was never interested in the new cost basis, only the terms of the original contract.
        Since the company, in a cost-cutting move, and had already gotten rid of the project’s original architect, they didn’t understand the impact on the rest of the aircraft. When it came time to fly, the fighter didn’t have the specified climb rate. New analyses/testing showed that the aircraft could no longer meet flight envelope requirements. New (heavier) wing spars had to be designed, and engines had to be upgraded to haul all that extra weight into the sky. control surfaces resized, and new flight control software had to be re-coded..
        But no fighter jet has ever had just one – or two, or ten – changes made to the original requirements. The same is true for military satellites. I don’t know about tanks, ships, and small arms, I was in aerospace.
        Cost control can occur only if the Government is barred from making requirements changes – and contract changes. For instance, The Air Force has ordered constellations of satellites. The contractor priced that number of satellites. But just as the first satellite is undergoing assembly, the contract is chopped to 1/3 the original order – as is the contract price. Literally billions of dollars in development and long lead parts are suddenly gone. Government does get charged, but now the contractor is the bad guy because each unit. Further, the Government doesn’t want them as quickly, as on-orbit satellites are exceeding their design life. But slowing down procurement means many of those long-lead batteries degraded below requirements, and had to be re-ordered. Engineer turn-over resulted in kids trying to make a vehicle they only thought they understood work to requirements. Etc,. etc.
        Now, time to be fair: the Government often has good reason to change requirements. Intel shows our potential adversaries have developed new counter-measures, or can move assets out of range, etc. Nevertheless, all such new requirements get press calling them overruns. End of story.


  12. Sir Humphrey and Elected Minister Jim Hacker discuss subsidies to Football versus Opera in this clip from the BBC British TV comedy “Yes Minister” (wade thru the commercial, sorry)

    The BBC’s own subsidy is not mentioned.

    My only objection is Hacker’s notion that football SHOULD be subsidized. In the US that usually means local and county money awarded to billionaire owners and corporations like AT&T or Wrigley.


    • In the US, public money is almost never paid to the team/stadium owners, instead what happens is that the team/stadium owners get a big tax break, with the logic being that they will cause a lot more buisness to take place in the area, and host businesses will be paying taxes, so the local government still ends up with more money.

      Once in a while you have an odd situation where the Stadium is owned by the local government, and the team demands that the Stadium be upgraded before they move it. That’s a normal negotiation between landlord and tenant.


      • Not true of several recent examples here in Atlanta. The Hawks (basketball) stadium was replaced on the same site in 1999 and it was financed by city bonds paid for by a tax on car rentals at the airport. This was called an “exportable tax” because for the most part Atlanta residents wouldn’t pay it. A new stadium was a requirement of the NHL to grant an expansion franchise to the city. The Atlanta Thrashers lasted in Atlanta from 1999 until 2011 when they were sold and moved to Winnipeg. Now they’re talking about a substantial upgrade to the facility to keep it competitive, and Atlanta will be providing some of the cash for it.

        More recently, the city put up $200 million to build the Atlanta Falcons new home — Mercedes Benz Stadium.

        Not to be left out, the Atlanta Braves new stadium (SunTrust Park) has Cobb County on the hook for $300 million.

        These are cash contributions financed by bonds; there are probably special new taxes to cover them. This does not include the value of other tax concessions Atlanta and Cobb county may have granted.


      • Hi David, You write: “public money is almost never paid to the team/stadium owners”

        A lawyer would rate that as true. A taxpayer might disagree that having the city or other government “contribute” to the construction of a stadium, funded by money borrowed at government rates rather than commercial rates, borrowing for construction of the arena or stadium etc competing with other borrowing for roads and sewers etc … Or if tax breaks are awarded the activity different from and more generous than breaks offered OTHER commercial enterprises — If the money is spent to attract or keep or comfort an enterprise it doesn’t much matter to Willis’s trailer park taxpayer whether the stadium owner pockets it directly or via fungible networks of transactions.

        I also worry about the (borrowed, government bond) money spent on US high school stadiums and basketball arenas, to develop a feeder system to pro sports. In the first place baseball, hockey and soccer get nor need such levels of support. In the second place orchestras and art studios and science labs also avoid the multi-million dollar long-term construction expense. And in the third place a feeder system to college should, I think, focus on reading and math rather than carrying or passing a ball.

        But that’s just me, of course


        • There are some cases where the government pays money directly, but I haven’t seen that as the most common case.

          Any time there is talk of tax breaks, arguments could be made that other commercial use of the property could be better, but that’s exactly the type of choices that the elected officials are being paid to make. If you think you can do better, run for office (or vote for someone who you think will do better)

          second guessing without having all the info available to you isn’t productive.


          • ” If you think you can do better, run for office ”

            Done that. Won. Unseated an incumbent with 14 years service representing the majority race in the school district. (I and my family of are two distinct minority races, here.) This following a series of blog posts and local news articles that demonstrated the incompetence and/or dishonesty of the superintendent, got him dismissed, and brought in a state-level “conservator”.

            There are traditions, incentives, and folklore in any level of civil service that strongly resist even questioning “the ways things have always been done”, let alone react to changing them.

            Turns out for this reformer it was more effective to act from outside the tent and pee in, than to attempt fixing the plumbing from inside that tent. That is, it was easier to assemble a majority coalition of common-sense voters than a majority on a 7 seat board of those motivated by incentives other than common sense.


  13. Years ago I saw a reproduction of a political cartoon portraying Franklin Roosevelt and his cabinet as a royal court, with Roosevelt sitting on his throne wearing a crown and various cabinet members attired as courtiers or jesters dancing and capering around the throne chanting “we owe it to ourselves”. I have tried to find an online image several times recently but have been unable.

    Prior to Roosevelt the general public impression of public debt was it was something to be entered into sparingly and paid off as quickly as possible. The New Deal brought about a change in that perception and ever since the debate has not been over whether public debt is a good or bad idea, but how much debt is reasonable. Nobody expects the US to pay off its public debt anymore. We’ve adopted the Keynesian view that government spending is an essential tool to control the economy. In this view not spending money causes problems and the debt required to finance that spending is just a necessary ticket to continued prosperity. The cost to service public debt has been at historical lows for much of the Obama administration but shows every sign of going up in the future. This will impact state and local government bonds as well as federal ones — the cost of new borrowing (including rolling over current obligations) is going to go up.

    In this light, I am quite wary of Trump’s proposal to spend $1 Trillion on infrastructure — it will be almost impossible to avoid a large proportion of pork. I see completely useless spending on a lot of projects around Atlanta, and I assume they were funded as part of Obama’s “stimulus” program.

    During the first Bush administration and living in Connecticut, I got a lesson on why waste is so hard to stop. Following the collapse of the old Soviet Union there was a lot of discussion on how to spend the “peace dividend”, in other words where to spend the extra money we get by cutting defense. The administration proposal included cutting the Seawolf submarine program down to just one — 3 were originally authorized and one was very close to completion and the second had just been started.

    I thought it was an excellent proposal. It made no sense to scrap the one nearly completed sub, but little was lost by halting the other two. The Seawolf was designed to hunt down Soviet missile subs, but the economic collapse had already accomplished that and the Soviet missile subs were rusting in northern harbours. Their threat at the time was contamination from the reactors nobody was left to maintain and monitor.

    US Nuclear submarines are all built by one company: Electric Boat and Electric Boat has only one product and only one customer. There was not then, nor now, nor probably ever a civilian use for $2 Billion nuclear submarines. With the lesser need for a nuclear deterrent, Electric Boat’s options were to diversify into other products hopefully beyond strictly military markets, or downsize and live off the continuing repair and refit business.

    They chose option #3: lobby Congress. At that time my congressman was the conservative Republican John Rowland, who later became Governor. The 2nd Congressional district where major Electric Boat facilities were located was represented by the very liberal Democrat Sam Gejdenson. The governor at the time was former liberal Republican turned independent Lowell Weicker. All three of these gentlemen went to Washington to lobby the Bush administration on behalf of this “vital” program. For all I know they went on the same plane; certainly they were singing out of the same hymnal.

    The upshot was the administration restored funding for one of the Seawolf submarines we did not really need. This is the art of “compromise”: you want to spend $4 billion on something we don’t need; I want to cut that to $0; and we “compromise” on spending only $2 billion unnecessarily.

    It is a very big swamp and a very large and powerful ecosystem of interests has made its home there.


    • > In this light, I am quite wary of Trump’s proposal to spend $1 Trillion on infrastructure — it will be almost impossible to avoid a large proportion of pork. I see completely useless spending on a lot of projects around Atlanta, and I assume they were funded as part of Obama’s “stimulus” program.

      keep in mind that unlike Obama, Trump isn’t saying that he wants to spend $1T of federal money on infrastructure. He’s saying that he wants to get $1T worth of infrastructure built, and is looking for public-private partnerships to do it.

      This is far more likely to take the form of tax breaks to more local firms that want to do projects anyway, combined with regulatory easing to remove roadblocks from the projects than it is to have the Feds write massive checks.

      Also look for Trump to be looking to ease/encourage projects that local/state governments wanted to do anyway. Places where a small change in the conditions/taxes/funding could result in the success or failure of a project.

      By getting the local folks (businesses or governments) to put their own money on the line for a project, you will avoid a lot of the boondoggles that Obama’s plan ran into.

      > This is the art of “compromise”: you want to spend $4 billion on something we don’t need; I want to cut that to $0; and we “compromise” on spending only $2 billion unnecessarily.

      That is what a compromise is, neither side gets everything that they want. You consider the money a total waste, the other side sees it as being valuable, you walk away from the deal with neither of you satisfied.

      It’s frequently worth ‘wasting’ some money to arrange a soft landing rather than trying to force abrupt cutoffs and then have to deal with the resulting damage.

      In this case, the shipyards still had to do without future construction business, so they did have to either diversify or shrink, they just had a little more time to do so.

      Most of the time, if you contract someone for custom work, and they go and spend a lot of money getting started, you don’t get to just change your mind and walk away from the deal, you usually have a very steep penalty payment you need to make (which may be the full cost of the project if it’s very far along). I suspect that the penalties for the Seawolf project were large enough that finishing the second sub was a reasonable choice from a purely financial point of view.


      • I believe Trump’s idea would be to cancel the last two subs and agree to spend $1B for other products and services that the government needs over the same time period.
        EB gets a soft landing and we get watercraft repaired and refitted.
        win win
        That’s the difference, imho.
        A second boat would require a captain plus officers and crew along with millions per year in maintenance and training…Sad…Bad Deal!


    • I still cannot find an image of the original cartoon, but I did find this excerpt describing it from a 1958 essay by William F. Buckley, included in his book Up From Liberalism:

      Halfway through the second term of Franklin Roosevelt, the New Deal braintrusters began to worry about mounting popular concern over the national debt. In those days the size of the national debt was on everyone’s mind. Indeed, Franklin Roosevelt had talked himself into office, in 1932, in part by promising to hack away at a debt which, even under the frugal Mr. Hoover, the people tended to think of as grown to menacing size. Mr. Roosevelt’s wisemen worried deeply about the mounting tension . . . And then, suddenly, the academic community came to the rescue. Economists across the length and breadth of the land were electrified by a theory of debt introduced in England by John Maynard Keynes. The politicians wrung their hands in gratitude. Depicting the intoxicating political consequences of Lord Keynes’s discovery, the wry cartoonist of the Washington Times Herald drew a memorable picture. In the center, sitting on a throne in front of a maypole, was a jubilant FDR, cigarette tilted up almost vertically, a grin on his face that stretched from ear to ear. Dancing about him in a circle, hands clasped together, their faces glowing with ecstasy, the braintrusters, vested in academic robes, sang the magical incantation, the great discovery of Lord Keynes: “We owe it to ourselves.”

      With five talismanic words, the planners had disposed of the problem of deficit spending. Anyone thenceforward who worried about an increase in the national debt was just plain ignorant of the central insight of modern economics: What do we care how much we–the government–owe so long as we owe it to ourselves? On with the spending. Tax and tax, spend and spend, elect and elect . . .

      Except today, we owe about one third of it to other countries.


      • “We owe it to ourselves.”

        That was the mantra of my parents, who were Depression-era children of the Left. Sounds plausible; if we’re feeling generous, we can just forgive the debt, wipe it off the books. Except for those other countries we owe money to. . . Well, we can just print more money and then all their bonds will be worthless! Oh wait. . . so will all our money.

        /Mr Lynn


  14. ” Nobody expects the US to pay off its public debt anymore.” True, but doable easily – all that’s needed is a truckload of banknote paper and several barrels of a green ink. That would eliminate the public debt completely, and also 50% of everybody’s savings, and 50% of everybody’s debts. No one is willing to do it next week, so we go a way of a slow inflation – leaving the Las Vegas lady’s problem intact, and savers with their savings intact.


  15. A part of the huge debt problem was not actually Obama’s fault, although excesses in the way it was solved may have been. The Fed under Greenspan (Clinton/Bush) threw out the last leg of Glass Steagall and allowed the biggest banks to go from gambling depositor money (also at one time disallowed) from ~8 times reserves up to 40 times reserves on housing and other products in OTC, derivatives and Credit Default Swaps. At 40 times reserves, banks had to be “exact” in their predictive capabilities to prevent failure. It didn’t help that a liberal congress got loosened loan criteria to many who couldn’t afford them, making those added toxic products. When all the gambling blew up and the biggest banks lost the money, literally the world was faced with an economic shutdown because there was, technically, no money to provide everyday corporate loans for operation. Note that in this case bankruptcy would have made things worse and CEO’s were not on the hook because these were corporations and individuals were not liable except in cases of fraud. as a result, there apparently was no choice except to print enough money for bailouts. When Obama said that the corporations didn’t do anything illegal, he was mostly right since this permission was given by Greenspan, a rabid Republican who didn’t believe in regulation of almost everything, including OTC’s. However the Obama administration could have set a bailout rule denying corporate bonus’s and other bailout waste, but chose not to (probably because most of the personnel use to work for the banks). Greenspan: “admitted in an October congressional hearing that he had “made a mistake in presuming” that financial firms could regulate themselves.” Although the “official” cost of TARP was up to 700 billion, according to a team at Bloomberg News, “at one point last year the U.S. had lent, spent or guaranteed as much as $12.8 trillion to rescue the economy.” So no one knows exactly how much it was with any accuracy, especially since Europe was involved also.
    The point being that in this case it was a Fed Republican that nearly caused a worldwide calamity because he equated oversight with useless regulatory procedure. Lest one think that this is “over and done,” be reminded that derivatives and similar products are prohibited from being federally tracked or examined by congress, They are completely unregulated and estimated to be anywhere from 10 to 20 times world GDP. One little known thing Trump pledged to do was replace Dodd-Frank with Glass-Steagall. However, the banks and wall street are not happy about this for obvious reasons so blow back is expected.
    Another reason cuts are difficult is because congressional members don’t like cutting pork in THEIR districts which they need for votes. Something national, like NPR or NEA should be easier. As for the military, there is much waste, especially in the upper echelons, which Ex Secretary Gates at one time pointed out, but their influence in congress forbids any useful changes..


  16. This Can’t Go On

    Academic economists often cite Stein’s Law, a principle enunciated by the late Herbert Stein, chairman of the Council of Economic Advisers during the Nixon administration. The law comes with various wordings; my favorite is: ”Things that can’t go on forever, don’t.” Believe it or not, that’s a useful reminder.

    For we’re now led by men who think that macho posturing makes Stein’s Law go away. On issues ranging from budgets to foreign policy, they insist that we can sustain the unsustainable. And when challenged to explain how, they engage in magical thinking.

    The prime example I have hammered on in this column is, of course, the federal budget. Realistic budget projections say that current policies aren’t remotely sustainable.

    From 2003. Guess the source.


    • heh, you must be one of the only people who believe Trump is “business as usual”

      His supporters are convinced that he is going to change everything for the better

      His detractors are convinced that he is going to change everything and be a disaster

      I haven’t heard anyone arguing that things were going to remain the same


      • davidelang wrote, “heh, you must be one of the only people who believe Trump is “business as usual””

        I do not. From the link …

        the bipartisan Concord Coalition and the Center on Budget and Policy Priorities concluded that under current policies, federal debt would rise by $5 trillion over the next decade. And then baby boomers will start collecting benefits, and our debt will really explode.

        Such explosive growth in debt can’t go on forever, and it won’t. Yet our current leaders and their apologists insist that the problem will magically solve itself. Last year’s deficit came in slightly below forecasts, and we’ve had one quarter of good economic growth — see, we’ll grow out of the deficit!

        But we won’t, and there will eventually be a day of reckoning.

        In 2003, when the column was written, the total US debt was $6.783 trillion. In 2013 it was $16.732 trillion — double the prediction above. Whether from budget cuts, tax hikes or economic collapse, there WILL be pain. How much pain, how intense the pain and the duration of the pain is yet to be decided but I expect that strong medicine (extending the metaphor) will be required.


  17. The lady in the double-wide probably pays no Federal income taxes. In all likelihood she probably receives an Earned Income Tax Credit, which is essentially a welfare payment.

    Here’s the breakdown of who pays taxes (2014):

    If this doesn’t work, go here:

    This is not to deny the validity of Willis’s point: every taxpayer, including the top 5% of income earners (who pay 60% of Federal income taxes), should be asking the very same questins: Do I want my tax dollars going for programs, projects, and boondoggles that are not essential and not mandated to the Federal government by the Constitution?

    /Mr Lynn


  18. On the outskirts of Las Vegas there’s a mid-range trailer park that grandiosely styles itself the “Orchard Mobile Home Estates”. There is no orchard in sight. It’s not the bottom of the pond for trailer parks, but it’s a ways from the top.

    I’ve seen an orchard on the outskirts of Las Vegas. That’s high on the unlikely scale. I have not seen any mobile home parks in Las Vegas, which is also unlikely considering how ubiquitous they are, but LV is a huge place and amazingly high end. I’m sure they send you all their thanks for giving them your money. The rest of NV is different. There, you would be rich if your trailer had exterior walls. The impression there is poverty on the Mexico scale. So I was curious about the trailer park you mentioned. There is one by that name in Tracy, California. A quick search didn’t show any by that name in LV. Maybe “outskirts” is a bit broader than I expected.

    Apparently, said “space” involved a shocking proportion of the law firm’s escrow account as well as a twenty year old legal assistant whose “assistance” seems to have been mostly horizontal. In any case, she hasn’t heard from the bum and his slut for seven years. She was left with all their debts, including his student debt which in an excess of feelz she had stupidly co-signed, so she’s on the hook for the whole thing. So far she’s paid off about a third of it.

    The bum is a lawyer who stole money, but nobody can trace him or the money? Is she getting good legal advice? If he stole her money and isn’t paying child support and skipped out on his student loans, wouldn’t she have a good case that she is a victim and shouldn’t be further victimized by the legal system? Why didn’t she declare bankruptcy?


    • It’s much harder for a co-signer to declare bankruptcy. Stealing her money, since they were married would (depending on circumstances) be a civil suit, costly and not likely to pay off. Child support recovery is considered a national scandal. Many states outside of the one lived in will not bother to pursue/return deadbeats for lack of child support. Sometimes the feds will become involved under the Child Support Recovery Act but generally the Feds like to leave this up to local & states. Also remember that this woman is a waitress with probably little knowledge of how to get help and her ex? is a lawyer knowing just what to do to escape any justice required.
      There is a business in Vegas titled “Orchard Mobile Home Park LLC”, so maybe that park has another name but is owned by them (as a guess).


      • Btw: You cannot be exc[used from student loans in bankruptcy. They took particular pains to provide for this. Wonder why?


  19. That lady in the trailer needs to hire a real, hard-nosed lawyer. And maybe a female one who can feel her pain. Even the children might get one each.


  20. There are those that subscribe to the “Modern Monetary Theory”, which see government as the only source of (Fiat) money, and any “debt” is really just the lag time between government “investing” and it returning in “taxes” resulting from the economic “stimulus” from Government… or something like that… Have you come across this, and what is the best way to address such a viewpoint?


  21. It is difficult to see the logic in our government increasing our debt to contribute to one particular charity like the NEA. What about charitable tax deductions in general? They represent a huge hidden loss of revenue. If my tax rate 30% and I deduct a dollar from income for charitable donations effectively I donate 70 cents and the IRS donates 30 cents. Sure, many charities are quite noble but many are run by Clintons. Would it not be enough of a break to just let charities skip paying their own taxes?


  22. As mentioned in the post, the big dog that needs to be reined in is Defense. They can’t account for roughly half of the national debt as it is. Pay salaries to the people and buy nothing, repair everything that can be done economically, and above all, close overseas bases that serve no true defensive purpose, and get to hell out of all wars. THEN look at what needs to be done to insure the nation will not be attacked – a gun in every house is a good start at “making America safe.” Not many nations can raise a 200 million man army to try to take the nation down. Probably could carve 3-400 billion a year off the debt just dong that. Hell Russia just cut it’s “whopping” $50 billion a year defense budget to $38 billion, and they are our biggest worry. And we spend in excess of $1 trillion a year on defense, more than the rest of the world combined. Tells you just how much waste there really is since the Russians are gaining on us as far as real capability is concerned.


    • Tom O, unfortunately while we might like to “get out of all wars”, a quick look at WWII shows that this is neither possible nor desirable. If we’d “gotten out of” WWII it would have been disastrous.

      As to the idea that all we need is for the citizenry to be armed, how will that help us if say North Korea decides to toss a nuclear bomb our direction? At that point, you might wish the US had something more than modern muskets …

      Is there waste in the defense budget? Assuredly … but that doesn’t make the military irrelevant as you seem to think.



    • Last year the deficit (the amount we added to the debt) was $590B.

      The Defense Budget waas $573B (with Veterans Affairs being an additional $163B)

      so if we completely eliminated the US military, we wouldnt even break even on the budget, let alone start paying down the debt.

      There are only two ways to balance the budget

      1. improve the economy so that more money is taken in in taxes

      2. start cutting entitlements.

      nobody is willing to do #2 at this point, so the only hope we have in the short run (and it will take a couple of years for Trump’s changes to fully take effect) is to change the rules to improve the economy.

      David Lang


  23. Here is a nuance to your proposal. Meals on wheels is on the list for cuts. Local director writes to the paper arguing that is a bad idea. I used to donate to Meals on Wheels – right up until the time I got their newsletter announcing the winner of their college scholarship. I did not donate my money so they could have a college scholarship so my donations stopped immediately. I don’t think government money should go to that either. I guess my point is that given the severity of the budget problem even those programs that we agree need to be funded have to be checked for inappropriate expenditures.


  24. I can’t find an “Orchard Mobile Home Estates” anywhere near Las Vegas, The nearest one seems to be in Tracey, California.

    Remember, Mr Eschenbach, you are dealing here with suspicious people who like to check things…


    • Dodgy Geezer March 20, 2017 at 11:26 am

      I can’t find an “Orchard Mobile Home Estates” anywhere near Las Vegas, The nearest one seems to be in Tracey, California.

      Remember, Mr Eschenbach, you are dealing here with suspicious people who like to check things…

      Um … er … thanks for the question, Dodgy. Actually, the story is a composite of a number of single moms I’ve known, including my own. So no, there is no “Orchard Mobile Home Estates”, no lawyer with his horizontal bimbo … just an all-too-common story about poor families and how we might profitably look at where we can cut our Federal budget.

      My best to you, and to all,



  25. It seems to me there is an assumption in here, that ‘money’ is a real and finite thing.

    These days it is mainly simply digital signals in computers. Only 11% percent of Euros are actually in the form of notes and coins in circulation (and under mattresses).

    ‘Money’ is mainly created by commercial banks lending to their cutomers under some degree of control by central banks: generally, depending on their credit ratings, they can lend up to 20 times the value of the assets they hold, and if course, every new loan comes with a new set of asset backings. It is an almost infinite concept, especially when the economy is booming and all are full of confidence.

    If you wander in and borrow $1,000,000 dollars, that amount is created by typing 1,000,000 into an account entry. Immediately out of that are extracted a myriad of fees and bonuses which go to the bank’s bottom line, and into the pay packets of executives. The bank holds some overinflated (in good times) asset as collateral. On the basis of which they can lend again by a factor of 20.

    On top of this we have derivatives trading: hugely leveraged betting instruments, almost impossible to understand, which at any time hold outstanding positions something like 50 times the annual world GDP.

    So what’s the problem then?

    Loss of faith.

    Somebody once said, ” This whole thing only works because we think it does”.


    • um, sorry, when you borry $1m from the bank, they don’t just make the money up from nowhere.

      It’s not that they get $1 deposited and now can loan out up to $20, it’s that for every $100 that is deposited, they can loan out up to $80 and are required to keep the other $20 on hand. This limit was created after problems in great depression where there was no limit (they could loan out the entire $100) and too many banks got caught short when too many people wanted to withdraw their money.

      The Federal Government can “print” (electronically or physically) more money, but they are the only ones.

      David Lang


      • David. That’s what is taught at school, but it’s not how it works:

        How banks create money.

        Most of the money in our economy is created by banks, in the form of bank deposits – the numbers that appear in your account. Banks create new money whenever they make loans. 97% of the money in the economy today is created by banks, whilst just 3% is created by the government. This short video explains:

        The money that banks create isn’t the paper money that bears the logo of the government-owned Bank of England. It’s the electronic deposit money that flashes up on the screen when you check your balance at an ATM. Right now, this money (bank deposits) makes up over 97% of all the money in the economy. Only 3% of money is still in that old-fashioned form of cash that you can touch.

        Banks can create money through the accounting they use when they make loans. The numbers that you see when you check your account balance are just accounting entries in the banks’ computers. These numbers are a ‘liability’ or IOU from your bank to you. But by using your debit card or internet banking, you can spend these IOUs as though they were the same as £10 notes. By creating these electronic IOUs, banks can effectively create a substitute for money.

        Further: Bank of England. Pdf.


        • If banks could just ‘create money’ they would never go under. Banks go under when they no longer meet one of two criteria

          1. minimum cash on hand (as a % of deposits)

          2. total liquidity (cash on hand + loans is no longer > deposits)

          from the very first bank ever created, they have not had 100% of the deposits in their vaults, they loan out the money that is deposited. Yes, this lets the money work twice (it’s working for the person it’s loaned to, and it’s owed to the original depositor), but that’s not creating money at will.

          The Bank of England IS the government.


          • From the Bank of England pdf.
            Some quotes. Some paraphrasing.

            The reality of how money is created today different from the description found in some economics textbook.

            Whenever a bank makes a loan it simultaneously creates a matching deposit in the borrowers bank account thereby creating new money.
            This accounts for 97% of the money in circulation.

            This article begins by outlining the two common misconceptions about money creation and explaining how in the modern economy, money is largely created by commercial banks making loans.

            The article discusses;
            1. How banks are not lending out deposits
            2 . That the Central Bank does not control the amount of lending by a multiplier effect based on the quantity of central bank money.

            Control is by setting interest rates and by so-called ‘quantitative easing’, when already low interest rates cannot stimulate sufficient activity. This directly boosts the amount of money in the economy by the Central Bank investing in ‘assets’ from major financial companies. This creates Central Bank Reserves. In no way does the aggregate of reserves directly constrain the amount of bank lending or deposit creation.

            Just as taking out a new loan creates money repayment of a bank loan destroys money.

            My notes: But if I take out a million dollar, interest only loan on a house from a seller who originally bought it for $10k fifty years ago, then the seller now has $900k in his pocket, the bank has taken $50k in fees out which will go as bonuses, wages and shareholder returns, the government has $50k in fees and taxes, and the bank takes my monthly interest payment as income for the next 10 years.



  26. If thou of fortune be bereft,
    and in thy store there be but left
    two loaves, sell one, and with the dole,
    buy hyacinths to feed thy soul.


  27. The critique could easily be extended to other elitist organizations.

    Harvard or Yale, for example, receive an enormous tax benefit for their endowment earnings. Your average Joe or Jane will never even visit these places, let alone receive any tangible tax benefit for their subsidy.

    It bugs me that admitted a few pennies of my taxes are effectively sent to these institutions. The fact that money is fungible does not change my concern.


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