Posts Tagged ‘government spending’

GE is looking to cut the cost of solar panel installations in half by engineering a system that would make it possible to roofers and contractors to perform the installation as opposed to higher costed specialized labor. They want to get the total cost down to roughly $21,600 (from roughly $35,000).

Here’s how our Federal government can quickly solve energy problems as well as stimulate the economy in a real manner. We all know that Obama and Congress love spending money. Heck, throw W into the spending mix too, and you have the largest deficits and national debt in the history of the world! Unlike most spending our Federal government does, this spending would actually bring about some real value to America.

Our Government Just Prints More Money Anyway

Spend another $700 billion dollars to install the $21,600 systems on homes in America. Now, the first argument might be that we need to evaluate whether there is enough sun coming in to make this worthwhile. Well, good news, someone has already done that! There is plenty of sun hitting the majority of the United States to make this worthwhile.

The $700 billion investment would put solar systems on approximately 32,407,407 houses. Now, that’s not taking into consideration economies of scale. Manufacturing that many solar panels and performing that many installations would considerably drop the costs associated with the installations. We could easily see a 20-30% drop in total cost, but I’ll stick with the 32.4 million installations for easy math. That’s roughly 24.93% of the estimated 130 million houses in America. With these solar panel systems producing an average of 85% of the house’s energy needs, that means a drop in existing energy consumption by 21.19%

What would happen if our need for energy from existing sources dropped by 1/5??? Well, simple economics would shift the price of energy down. For global warming worriers, it would mean production of 1/5 of our energy now comes from solar. Of course, it wouldn’t really mean a drop in household energy cost by 20 percent. Production from other sources would decline to keep prices from plummeting by 20 percent, but there would be a substantial decline in the cost of energy for the end consumer. Even if it was a 10% decline, I’ll show you at the end just how substantial this could be!

True Trickle Down Economics

Now, let’s get into the worker value! Solar panel production would skyrocket. Solar panel producers would need to hire more employees, put more people to work, order more materials from their suppliers… It’s true trickle down economics. But that’s just the production side of things! There’s the installation side as well. Thousands of workers would be put to work making good, hard-working money! These workers would be driving, eating, buying clothes for their families, etc. True trickle down economics. Local economies around the US would greatly benefit from this massive rise in employment and their subsequent spending!

Now, let’s talk about the true economic savings as energy costs in the United States drop by 20% I’ve mentioned in Energy Based Inflation that rising energy costs have an impact on EVERYTHING. There’s no escaping the cost of energy in our current economy. Every company and every job requires energy. For some companies and some families, energy is a massive expense! For someone like me with a house but no kids, my electric bills are very low. Still, my house could produce enough energy for me and half of what the family that lives across the street from me needs!

But wait! There’s more!!!

Electric cars will become viable global warming worrier alternative energy vehicles. Currently, electric cars don’t really save much (if at all) in greenhouse gas emissions because of the fact that America gets so much energy from coal… This solar panel plan would make electric cars much cleaner than gasoline cars, since American would not be getting 21.19% of our energy from solar. Greenies rejoices!

So, what would the ROI be for our Federal government to print another $700 billion dollars? Well, we can start with the amount that Americans spend on electricity (Retail Electricity): $350,438,000,000. Yes, that’s $350 billion Americans spent on energy in 2009. Now, earlier I reasoned that while there is a 20% energy savings, our costs would only drop by maybe 10% because production from other sources would adjust to compensate for the sudden massive increase in energy production by solar. Even at just 10% that means Americans will be saving $35 billion (yes, BILLION with a B) in energy costs/year.

Collectively, we can go spend that money on other things, save it, invest it in retirement funds/stock market/kitchen remodel, etc. The savings for $35 billion dollars would significantly stimulate the economy because we aren’t just going to sit on that $35 billion. We’ll spend/invest it! We, the people will stimulate the economy from a legitimate and long-term value add from our Federal government. Much better than a couple of $600 “stimulus” checks we got from W! Or the great W/Obama bank/auto bailout.

I hear the cries of the supposed 99% (OCCUPY) folks. I’m in the 53%, the group of Americans that pays Federal and State income taxes. On top of that (like many Americans), I pay property taxes, gasoline taxes, sales taxes, and countless other government fees (including those 9/11 security fees on plane tickets). There are taxes upon taxes that I’m paying… and more taxes on top of all that.

While I think we should be on a bond-only system for funding our government programs, there’s an interim solution to getting there. One that wouldn’t be so radical: opt-out taxes. I’m not talking about being able to opt-out of Federal income taxes like my friend Jimbosway is likely to support. I’m talking about giving tax payers the right to opt-out of funding Federal programs with their tax dollars.

Where The Money Goes

This doesn’t mean you get a tax refund right away and the government losses all it’s money because nobody is going to want to fund any program. It just means that your tax dollars don’t get spent on something you don’t want them spent on. For example, if someone wants to not fund farm subsides for sugar in Florida, they opt-out of that program. If someone doesn’t want to fund NPR, opt-out. Etcetera.

We could even take it a step further and allow someone to change their funding from say sugar subsides to NASA, so NASA would have additional funding. You’d have to lock in your choices for a year at a time. This way, each program will know what it’s budget is for the coming year.

Now, what happens to the opt-out money? Well, let’s just face it. That’s a problem we’re not going to have to worry about for another $1+ trillion dollars. However, eventually, there could be a budget surplus as government programs are defunded. There’s nothing wrong with a government surplus. When that happens, and if it runs surplus long enough then the government will know how much money each taxpayer should receive back. That’s pretty simple and fair.

Accountability

This will also put a tremendous amount of accountability onto the shoulders of US (that’s an emphasized us, not United States – well, United States citizens…) If we don’t want to support programs like TARP and bailout programs, we don’t fund them. Now, people will say things like: TARP was an emergency. We couldn’t wait a year to get that funding. I’ll just laugh at that argument. Unless you were John McCain, you saw it coming!

Transparency

Another HUGE benefit of this is that it would give us massive government transparency. Rather than transparency being a punchline in an Obama speech, it becomes a reality! We’ll know what programs are receiving how much funding, and more importantly we’ll know what the hell the programs are! If someone is spending your hard earned money, don’t you think you should know where it’s spent? It’s not like the government agencies need to send us postcards or pictures of the kids we’re helping like a charity does. But we will at least know that our money isn’t going to fund a program that we don’t support.

Technology has advanced significantly over the last few decades. Yet, our political system and taxes are way behind on utilizing technology to better themselves. We can create and easily maintain massive databases that would house this information and allow our budgeting to be based upon democratic taxation.

Other Ways the Government Can Still Steal Our Money

And Congress members who love to spend money like it’s going out of style need not fret. They can still work on pork belly programs! Pass whatever spending they want with the existing methods they now have. Fund it just like they do now. If we the people decide to provide them with the funding, the program can continue on. If we don’t, the program dies.

Congress could also go about imposing “fees” instead of using income tax dollars. Just look at your cell phone bills or airplane tickets to see examples of those. They could go about imposing other use taxes (perhaps a national sales tax, since they’re already talking about it anyway).

None of these worry me because if we did have an opt-out system in place and Congress did try to go about stealing more money from our pockets, we’d be more educated about what is going on with our government on a greater scale than we do know. We’d have a much greater vested interest in where our money is being spent/wasted. The second Congress tried to implement a national sales tax or additional fees, we’d put a stop to it.

More Accountability

I also think that our greater involvement with the spending of our taxes dollars would turn the tables on today’s political thinking. Right now, Congress can just go pass any spending bill they want without much accountability to their constituents. With an opt-out system in place, Congress is going to have to go back to the people they serve and ask them to support their decisions. Congress is going to have to explain why they’re voting yes on spending more money. Opt-out make Congress accountable to the people they serve!

American capitalism is dead.

I’m sensationalizing a bit with the first sentence, but the reality is that American capitalism is on life support. We’re propping up a facade of capitalism and millions of people are blaming “deregulation” (to slander the ideals of capitalism) on this long drawn out “recession”. I’m using a lot of “quotes” here because “deregulation” is a misnomer and the “recession” is really a depression masked by bogus inflation numbers and massive government deficit spending and a decline in the value of the US Dollar. That last sentence was a mouthful, so let’s start with these myths…

Deregulation is defined as the act of freeing from regulation, particularly government regulation. The idea that the federal government deregulated the banks is much like the idea that The Constitution clearly uses the words “separation of church and state”. Deregulation, in the sense that is being used to slander capitalism, was merely a change in the regulations by the government that created holes that thousands of bankers and millions of consumers took advantage of.

Nobody can take a loan out for 125% of the value of their home and honest think there is nothing wrong with that. Just like nobody can offer a loan at 125% of the value of a home and not think there is nothing wrong with that. Just like nobody in the Federal government can pickup a newspaper from 10 years ago about 125% loans and not think there is something wrong. If you can, you’re exactly why we are in the banking mess we are today.

 

Recession is defined as a decline in GDP, employment, and trading lasting a period of six months to a year. Earlier, I referred to bogus inflation numbers and massive government deficit spending and a decline in the value of the USD. First, the inflation numbers don’t require a rocket scientist (because supposed economists clearly aren’t capable of the math)  to figure out that they are false.

Simply take a look at what goes into calculating the Consumer Price Index (CPI). You will find few line items where the government is not heavily subsidizing/regulating that industry. Given that the federal government is more than $14 trillion in debt, it’s pretty clear that inflation numbers are considerably underestimated. If you didn’t follow that last part, I’ll help explain: if is costs you $3.15 for a gallon of milk at the grocery store but the federal government is providing subsidizes to milk producers to the tune of $0.50/gallon, the true cost of a gallon of milk for you is actually $3.65. I’ll admit that I haven’t done the research to find out the exact $/gallon of milk the subsidizes equate to, but you can get the point. Now, count this over the hundreds of entitlement programs the Federal government spends money on, and you have a real problem with the calculation of the CPI (inflation).

To further exacerbate the national debt issue, people don’t really consider the buildup of interest on the national debt as part of the total problem. This isn’t that unusual. A lot of people in business often forget about how borrowing money from a bank or investors requires payments that impact the actual bottom line of the company. Here’s a simple way to think about it: when the Federal government was over budget by $455 billion in 2008, the total increase in national debt was actually more than $1 trillion.

This all compounds!

When you include the devaluation of the USD abroad and the fact that we purchase so much product from overseas and that it takes 6+ months for that devaluation to ripple its way into our prices, you get rest assured that there are much higher prices coming to a store near you very soon…

 

Now, let’s get back to capitalism. At the beginning of this article, I needed to dismiss the myth of low inflation over the last decade so that we could really see that this “recession” is indeed a depression (I’m betting that decades from now, we will finally admit in our history textbooks that the numbers were wrong and that this is a depression).

Capitalism has been slandered by the myth of deregulation. Deregulation was a change in regulation that anyone sane and honorable would have realized had massive holes that were being taken advantage of. Nobody wanted to halt the good times, so our governments (which could have done something about it) did nothing for years! That’s NOT deregulation. It wasn’t an act of capitalism. Plenty of people warned for years about pending doom, and they were dismissed as pessimistic and bearish.

However, these aren’t the true measure of capitalism’s comatose state. The true measure is that we look to our politicians to “create jobs” and provide “bailouts”. What is capitalistic about bailouts? NOTHING! What is capitalistic about too big to fail? NOTHING! The funniest part about “too big to fail” is that the giant banks that were too big to fail were merged with existing banks, making those new banks too bigger to fail! Why weren’t the banks broken up into smaller pieces with the non-profitable sections written off and offset by “bailout” money? But I digress, and that’s for another sub-1000 word blog.

The Capitalist mindset in this economy would be this: What can I improve, change, or invent that would make a profit, provide jobs, and improve our economy. Instead, we are waiting for Obama to create more Federal jobs, and the “Republicans” are spewing forth their usual taxes rhetoric. Even Sarah Palin is talking about how can the federal government create jobs and stimulate the economy. What would best stimulate the economy would be a strong USD position, 10% reduction in all federal government spending and an increase in taxes. Of course, anyone will say I’m crazy and it wouldn’t work. Because it obviously didn’t work in the 90s when Clinton did it, right?

It doesn’t take a genius to know that America is going to go bankrupt when we spend $3.7 trillion and only take in $2.9 trillion. With the spending habits of our Congress and Administrations over the last 10 years, we have eroded the value of the USD and the faith in America to maintain fiscal responsibility. Our Federal Reserve has contributed greatly to this situation as well. We keep being fed story after story about how we can spend our way out of this and that we just need to get institutions lending and people spending again. That’s exactly what got us into the situation we are in today: too much lending and spending!

William Bennett made a great common sense contribution to CNN.com today with his post “America Needs A Budget Breakthrough“. The budget breakthrough is simple: cut spending and increase taxes. It’s exactly what nobody wants to here and what nobody wants to say. What got us here is a liberal President cloaked in Republican clothing: George W. Bush. W is much like a tax and spend liberal, just without the taxes. Boy! Can that guy sign spending bills coming from Congress.

Some might think that I’m being a bit harsh on W. However, it’s pretty clear that Congress doesn’t regulate itself. If it did, it would look at the 800 billion dollar deficit before it added to the outflow of cash. Perhaps it would benefit our government to pickup their junior high text books again (that they are so adamant about spending money) so they can educate themselves on checks and balances.

The Bush Administration should have put the brakes on spending. Instead, it went with the mentality that running a deficit is not a problem and that getting the American people to spend more would stimulate the economy… Pause for just a moment and think about it… Most Americans are under a mountain of debt. The solution to get out of the debt is to spend more money…

Obama continues this W. Bush ideology. Bush tax cuts remain. Spending remains excessive. Financially, what’s the difference between W and Obama? What change was voted into office in 2008? If anything, Obama and Congress have increased spending! And given even more tax cuts to “stimulate spending”. How many times must we get beaten over the head with the non-tax and spend myth? It doesn’t work!

I understand the reasoning of it: Stimulate spending. Stimulate small businesses so that they hire more people who consume more and generate more income for themselves that will then be taxed at the existing tax rates and everyone will be happy. It’s failed reasoning!

The solution is simple: 10% cut for all federal spending, including the so-called non-discretionary spending, and a tax increase for all tax brackets. Few people want to admit this. Certainly, nobody in Congress has the spine to risk their political career by stating such an absurd solution. And certainly nobody in Congress wants to tell the Federal Reserve that they need to quit restructuring American debt and calling it “Quantitative Easing”.

I know I’m about to piss off just about every college student in America, but they really aren’t to blame for cuts to the government spending at state universities. It’s the students before them that are the issue.

The entire concept of the state government providing funding to the state universities is pretty simple: the universities provide an education that allows students to attain higher paying jobs and create businesses that in tern hire more people.

With unemployment at record highs and income a lower levels than a decade ago, clearly the universities have not produced the results the state government was hoping for. The state government pays for most everything with tax dollars. If unemployment is high and business isn’t booming, the universities haven’t produced students who can grow the economy. Their funding should get cut. It’s pretty simple.

Of course, the state governments should be providing the universities with any funding. If anything, they state governments should issue grants and loans to prospective students only. On top of that, the state governments should not rely on taxes for those funds at all. Instead, states should issue bonds to raise money for the grants they issue to students. This would eliminate “budget cut” woes for universities. A university would stand purely on its own merit and ability to compete for quality students. All of this would allow universities to actually compete for students instead of having state mandated tuition fees. Generally speaking, competition generates lower prices as cost is quite often one of the most important factors for any purchasing decisions.

Here’s an idea for the government bailout program that the vast majority of Americans don’t support. Give us an opt out clause on our taxes for the next 10 years.

Now, I’m not talking about opting out of our taxes. Those of us who don’t support the bailout will still have to pay our taxes as usual. However, we can opt out of our tax dollars being used to fund this ridiculous scam.

If you limit the government’s availability of funds, they can’t be as spendthrift as they have been. If they want to come up with $700 billion to spend on some useless bailout, they will need to get it from some other source than the American taxpayer.

Years ago, this would not have been possible. However, with technology today, this is entirely possible. In fact, we could give taxpayers the ability to opt out of any irresponsible government spending. It would really make it simple for the government to determine how much they can waste on pointless bailouts like the automobile industry bailout. If 60% of Americans don’t support the automobile bailout then they will only have access to 40% of the taxpayer funds.

This would make budgeting for the government much easier! Taxpayers don’t support something, Congress can’t just go spend the money whenever and wherever they want. I suspect that we could balance the budget within 4-5 years and keep it balanced indefinitely with a bailout opt out clause. In fact, I suspect the government would end up with considerable surpluses as government waste would now have a true checks and balance system in place. The total tax dollars collected would be the same, but the ability for Congress to spend would drop considerably.

Now, some might argue that this would create serious problems with because the funding for the bailout is something that is “necessary” to avoid a greater economic downturn or because it is something the public doesn’t understand the importance of. I have two words December 2007.

I’m honestly wondering what the hell is going on with our politicians! Perhaps we citizens of America are not sending enough letters and emails. Or maybe we think communism is a good thing. Since when did the federal government buying equity stakes into troubled industries become OK?

Sure, we’ll save a few thousand jobs in the immediate future and cripple the entire country for decades to come. I’m not going to be one of those people who talk about how “The End is Near“, but this communism stuff is really starting to boil my red-blooded American capitalist… well, blood. And if I hear one more person talk about this being socialism, I’ll exercise my Second Amendment rights on you!

Socialism and Communism are not the same thing. In fact, what our Congress and White House are practicing is the opposite of what most socialist believe. Most socialists would say things like, “Damn those billionaire running their banks, squeezing us little folks out of our money. We need a government handout. Where’s my bailout?” That’s not what Pelosi and company are saying.

They are saying, “Those poor defenseless billionaires running their banks and automobile companies are loosing so much money because those evil consumers are not consuming enough to keep them rolling along the way we want the world to work. Those poor businesses need a handout at the expense of the taxpayer.”

Meanwhile, the capitalist will say, “What a bunch of idiots! They pissed away our money and they want us to bail them out despite their antiquated technology and crappy service! We are compassionate, and will give you another chance. Here’s a tax break to go update your crap engines that haven’t improved our dependence on fossil fuels despite the fact we knew it was a problem 30+ years ago. And here’s a tax break for you idiot banks who keep your call centers in the United States instead of outsourcing it to India where we end up with crap service and no answers to any of our problems. If you ef up again, go lobby the communists Pelosi and George W. Bush. Otherwise, invest in a cardboard box.”