Sequestration: Yea or Nay?

[Maui]

In other words: all or nothing. Of course everybody is going to have something about it they don't like, but in sum, would you rather have all of it or keep the status quo?

[Skipjack]

It would completely ruin commercial crew, while the SLS would stay untouched. It would push american human spaceflight back years. The rest sucks too.

[mvanwink5]

What a joke. DC idea of a cut is a decrease in the increase. It is 100% Greek talk.

[hanelyp]

For anyone who's puzzling over what mvanwink5 said, look up baseline budgeting. It's a twisted practice where next year's budget is derived starting from a baseline of last year's budget inflated by a certain percentage. So a line item which is more than last year, but less than the base line, is considered a cut.

[Diogenes]

I've seen this game played many times. I am now convinced that if the US federal budget will ever get cut, it will have to be something like this.

I personally think the degree of cut from sequestration is a joke, but if it accomplishes anything, it might be useful as establishing a precedent.


I also think bringing American troops back home to enjoy the Obama Job market is also ultimately in the best interest of the nation.

[rj40]

I recall reading something from just before the election. Basically the writer, from a left of center publisher, said that Obama wouldn't mind if it kicked in. It would protect some key social programs and hit defense more than he might otherwise get. Plus, in the writers words, it would still cut the deficit. I wish I could find that article. New York book review from early November 2012? I'll keep looking. I have seen another article from the left just last week stating about the same thing. I cannot find that one either. On top of all that, apparently, not needing to worry about running for office again makes all this easier for him.

And now I see many republicans on the Sunday talk shows and elsewhere thinking it would be preferable to tax increases. So, if all this is even sort of true, it looks like it will happen.

But what happens on March 27th? I think that is when the CR runs out.

All fun and games until someone looses an ... well, until the DoD or similar misses something because of this. And then we are all screwed.

[choff]

Is the fiscal problem caused by spending or compound interest?

[ladajo]

Both.
In my opinion, Compounding is one of the greatest financial crimes ever foisted upon the populace.

[Diogenes]

Is the fiscal problem caused by spending or compound interest?

Yes.

[Maui]

Compounding is one of the greatest financial crimes ever foisted upon the populace.

Huh? Isn't that like saying mathematics is one of the greatest crimes ever foisted upon the populace? Compound interest isn't a policy, it's an equation. Or what am I missing?

[GIThruster]

Yea. It's the only way I can see to stop the insane spending. Although I agree with Skippy that it will hurt human spaceflight, I'm not much interested in the NASA program right now anyway. I don't think they're spending money on any of the things they should and the lions share is going to SLS--things they shouldn't, so I am about done caring what NASA does.

What what Elon Musk does, especially if Woodward gets large thrusts with the next gen designs. Forget NASA.

[choff]

So, then the question would be, what percent of the spending is on principal and what percentage on compound interest. Is the government printing money and lending out for a fraction of the interest that it pays to borrow it back. In my country the principal on the gross national debt is 9% of the total.

[paperburn1]

Compounding is one of the greatest financial crimes ever foisted upon the populace.

Huh? Isn't that like saying mathematics is one of the greatest crimes ever foisted upon the populace? Compound interest isn't a policy, it's an equation. Or what am I missing?

The other way loans were made was, I give you 1000 dollars and you give me back 1100 dollars . you must do it in so many days/week years.
This meant your "credit rating" was based on how fast you paid off your loans . but if you were slow to pay them back and it took you longer you did not keep piling on interest payments without paying down the principle amount. You just were not able to borrow again because you still owed money. A self regulating system.
But right now you can make interest payments until the moon turns blue and not pay any on principle (think credit card) and if you keep borrowing you can eventually end up unable to pay down the principle amount and everything goes to the lender in interest payments.. Good for the lender, bad for the borrower and a unstable economic decision when the borrower defaults.

[ladajo]

Compounding is one of the greatest financial crimes ever foisted upon the populace.

Huh? Isn't that like saying mathematics is one of the greatest crimes ever foisted upon the populace? Compound interest isn't a policy, it's an equation. Or what am I missing?

What you are missing is that Compound Interest is a policy. The Compunding concept and function is on eof the core policy problems in big business that drives the inequity that is often complained about.

Consider the question; Why do companies give percentage based raises on an annual basis?

Do the math:
Company wide 3% (pick-a-number) raise.
Pay Rate Basis;
Entry level worker: $10/hr
Mid-level Manager: $20/hr
Executive: $50/hr

Raises:
Entry: $0.30/hour
Manager: $0.60/hour
Executive: $1.50/hour

Now after 2 years...
Entry: $0.31/hour
Manager: $0.62/hour
Executive: $1.55/hour

And at 5 years...
Entry: $0.34/hour
Manager: $0.68/hour
Executive: $1.69/hour

And at 10 years...
Entry: $0.39/hour
Manager: $0.78/hour
Executive: $1.96/hour

That makes for an annual income based on 50 weeks/40 hours per week difference in earnings over tens years as:
Entry Starting Annual: $20K, after 10 years $26,878
Manager: $40K, after 10 years $53,757
Executive: $100K, after 10 years $134,391

And a 10 year cummulative in the pocket $$$ earned increase for each worker position with an annual 3%:
Entry: $36,156
Manager: $72,312
Executive: $180,780

See the problems now?

Now translate this concept to earnings on business loans and other mechanisms where repetitive percentaged based functions (compounding) are applied.

[choff]

Translate it into what the government borrows to cover revenue shortfalls and you get to see the fiscal problem in Washington.

Pierre Trudeau wrote of when as a child he worried that he might not become the Canadian Prime Minister. After getting elected in '68, he deliberatedly manufactured a recession to justify signing Canada up to the Basil accords in '74. Later statistics revealed Canada never actually had a recession in that timer frame. Before Basil, the Canadian government borrowed from a bank that it owned, any profit made by the bank came back to government revenue. After Basil, it went out to private bankers. The other fun thing Trudeau did was change the way revenue was reported in budgets, after '74 tax credits were not reported in revenue statements to parliament. If they had been, they might have been cancelled to cover revenue shortfalls. Trudeau created idiotic programs to help create the deficit, it wasn't that Liberals are stupid, it was deliberate deficit creation. That way his banker pals could charge interest on a manufactured deficit. In retrospect, Trudeau was a manufactured, mind controlled sock puppet.

Compare that to what has happened in your country with the Federal Reserve system. Imagine what your taxes would be like and how your economy could perform if the deficit vanished overnight.