Facebook's Grand Bargain

The following is making the rounds on Facebook as a smug, “just-folks like me are so much smarter than all those idiots in Washington” piece of myth-making:

Salary of the US President. ..$400,000. Salary of retired US Presidents …$180,000. Salary of House/Senate…$174, 000. Salary of Speaker of the House…$223,500… Salary of Majority/Minority Leaders… $193,400… Average Salary of Soldier DEPLOYED IN IRAQ $38,000… I think we have found where the cuts should be made! If you agree… repost.

OK, let’s give this the benefit of the doubt by rounding up to maximize the budget-cutting magic. Let’s say that every member of Congress gets paid the presidential salary cited here of $400,000 a year. And then let’s say we could simply eliminate all those salaries.

That would total about $215 million in budget savings.

Or about 0.00006 percent of the federal budget.

I realize that’s not really the point of the silly social media spam above. That’s not really intended to offer any serious ideas about balancing the budget, only to reassure the posters and re-posters of their own virtue and superior intelligence. But if you happen to get hit with that post from someone who is also at all interested in the actual problem of the actual deficit, you might want to show them this graph, from Austin Frakt, which Ezra Klein calls “the graph all budget discussions should start with.”

Congressional and presidential salaries are not really the place to look for savings for anyone seriously interested in balancing the budget by cutting spending instead of by restoring revenue by putting the 14 million unemployed Americans back to work.

But then I don’t understand why anyone would want to try to balance the budget by cutting spending instead of by putting the unemployed back to work.

Unless they just really don’t like unemployed people.

  • Lori

     It is the nature of larger organizations to be in debt - it is the purpose of governments to be in debt.  

    That “boom” you just heard was the sound of heads exploding all over the internet :)

  • Lori

     How is this sentence – repeated verbatim by L&J and all those like them – ever valid? 

     

    I could go into a whole long spiel about observable reality vs personal interpretation of an ancient book of questionable province, but I think it makes more sense to simply ask if you’ve ever heard of hyperbole.  

  • Hawker Hurricane

    “One thing that I have noticed among very far-righties is an extreme aversion to all debt at any cost.”
     
    I’ve noticed is this extreme aversion to all debt only applies when the President’s name ends with a (D).  Otherwise, they do not give a shit.  Where were these guys when Bush the Lesser ran up the credit card with two wars and a massive tax cut on the people who needed it least? ‘Oh, we were complaining then, too’… but not where anyone could hear them.

  • Reidman8

    While there is an aversion to indebtedness, there’s no end to the number of people by whom credit and the extension of credit, is demanded. At both macro- and micro- economic levels this debt to credit ratio serves as both a wall of defense and a determination of power. In the U.S., increasing numbers of disenfranchised middle to upper level class members are now thoroughly pissed off that the center is moving away from them, and that their power structure is being threatened. With their own creditors knocking at their doors, what do they do? They attempt to sway national policy in their favor by frantically diving into their bankrupted fiscal ideology and accessing their dangerous moral compasses for the benefit of the childlike rest of us. More to the point, it is no longer a mere perception, it’s a nationally recognized fact that this once mighty country is not the powerhouse that it once was back in the day and much of issue has to do with our economic debt. It’s rightly frightening, not only to this class and their kingpins, but to a majority of Americans.  Instead of embracing progressive measures that would perhaps save the social fabric, the post-Reagan conservatives and Tea Party regulars are more likely to throw a plastic cover over the couch, splash some paint over the signs that display an ever-more moderate center. They prefer “…the phony populism of resentment”, as Tonio put it, to the reality of debt-reduction and saving face. With their hands straight down the drawers of the plutocracy that now has a stranglehold on the country’s heart and minds, (as well as its pocketbook), social media has put a broad level of hawkish insecurity on display, while the right-wing has shown exactly who’s pulling who’s business.

  • Guest-again

    ‘and still use debt reasonably’
    I do understand that debt has different attributes. However, a large number of older Germans would vehemently disagree that debt can ever be used reasonably. Debt is simply paying more, not less – that is what interest is all about. Saving is paying less, not more – again, that is what interest is all about

    Much the same way that buying high quality products that may cost twice as much as the cheapest version is a way to save money, if the high quality product lasts 3 times as long. This is considered self-evident in Germany, and is one (of several, mainly related to labor laws) reasons Walmart lost an estimated cool billion before pulling out of the German market entirely.

    I was simply trying to point out that not everyone rejecting debt is on the American fringes, but instead are part of a long cultural tradition in a country which tends to be noted for its industry producing high quality products – with an unemployment rate that may be as much as half of that found in the U.S. Germans didn’t borrow from their future to rebuild their economy- they worked hard in the present, and saved for the future.

    I’m not sure the U.S. is capable of that any longer. Instead, we continue to talk about using future promises to handle today’s challenges. One could, in a way, call this escapism.

    Which has nothing to do with actually repairing crumbling infrastructure, stopping three wars/occupation, or fundamentally changing how we live. Notice that only one of those three has anything to do with using debt in a constructive – and it is by far and away the most trivial aspect? Repairing the roads of suburbia simply ensure that we keep driving, while fighting the wars for oil (two out of three of them, right now) that Carter predicted were inevitable in a generation, before we elected a B-movie actor to play the role of president.

    We have already borrowed about as much from the future as we can – the future is now. Check out this link – http://nsidc.org/arcticseaicenews/ – for another example of how something that wasn’t supposed to happen until later is happening right now.

     

  • http://guy-who-reads.blogspot.com/ Mike Timonin

    Indeed. I get the same reaction from my students when I assert this.

    Another head asplody idea – government cannot spend money on itself. If a government agency buys, say, new cars for its members, they have to buy them from someone, and, if the members of the agency change, the cars stay with the agency…

  • http://outshine-the-sun.blogspot.com/ Andrew G.

    it’s a nationally recognized fact that this once mighty country is not
    the powerhouse that it once was back in the day and much of issue has to
    do with our economic debt

    National recognition doesn’t make something a fact.

    Blaming economic problems on the national ‘debt’ is foolish and reveals a fundamental failure to understand what that debt is. In a sovereign-currency country, the ‘national debt’ is nothing more nor less than the net SAVINGS of all entities that have saved money in financial instruments denominated in that currency. (Any time you see someone talking about the national debt on a per-capita basis you know that the speaker is, whether innocently or not, a fraud – because the intent of presenting the figure that way is to make it appear as though the national debt is something that the population owes, when in fact from the viewpoint of the private sector it is an asset.)

    There is however an important connection between the government budget deficit (and hence the change in the ‘national debt’) and a country’s position as an importer or exporter. The sectoral balances equation makes this clear; the equation can be written in many forms but this is one of them:

    (T – G) + (S – I) = (X – M)

    where:

    T = tax revenue, G = government spending, hence (T – G) = government budget balance (surplus is positive)

    S = private sector saving, I = private sector investment spending, (S – I) = private sector balance (net saving surplus is positive)

    X = exports, M = imports, (X – M) = current account balance (net exports are positive)

    This makes it clear that if an economy shifts in the direction of higher imports, then if the domestic private sector behaviour remains unchanged, the government budget deficit MUST increase simply to balance the books. If this does not happen, then the private sector numbers will shift instead, in the direction of greater net private borrowing. (The sectoral balances equation is a matter of accountancy, not economic theory – it can’t be violated unless someone is adding up the numbers wrong, just as a balance sheet must actually balance.)

    (I use the term ‘national debt’ out of convenience to represent the total sum over time of the government budget deficit. The actual issuing of government bonds is an irrelevance that serves little purpose except to direct additional funds to the well-off in the form of interest payments.)

  • http://outshine-the-sun.blogspot.com/ Andrew G.

    it’s a nationally recognized fact that this once mighty country is not
    the powerhouse that it once was back in the day and much of issue has to
    do with our economic debt

    National recognition doesn’t make something a fact.

    Blaming economic problems on the national ‘debt’ is foolish and reveals a fundamental failure to understand what that debt is. In a sovereign-currency country, the ‘national debt’ is nothing more nor less than the net SAVINGS of all entities that have saved money in financial instruments denominated in that currency. (Any time you see someone talking about the national debt on a per-capita basis you know that the speaker is, whether innocently or not, a fraud – because the intent of presenting the figure that way is to make it appear as though the national debt is something that the population owes, when in fact from the viewpoint of the private sector it is an asset.)

    There is however an important connection between the government budget deficit (and hence the change in the ‘national debt’) and a country’s position as an importer or exporter. The sectoral balances equation makes this clear; the equation can be written in many forms but this is one of them:

    (T – G) + (S – I) = (X – M)

    where:

    T = tax revenue, G = government spending, hence (T – G) = government budget balance (surplus is positive)

    S = private sector saving, I = private sector investment spending, (S – I) = private sector balance (net saving surplus is positive)

    X = exports, M = imports, (X – M) = current account balance (net exports are positive)

    This makes it clear that if an economy shifts in the direction of higher imports, then if the domestic private sector behaviour remains unchanged, the government budget deficit MUST increase simply to balance the books. If this does not happen, then the private sector numbers will shift instead, in the direction of greater net private borrowing. (The sectoral balances equation is a matter of accountancy, not economic theory – it can’t be violated unless someone is adding up the numbers wrong, just as a balance sheet must actually balance.)

    (I use the term ‘national debt’ out of convenience to represent the total sum over time of the government budget deficit. The actual issuing of government bonds is an irrelevance that serves little purpose except to direct additional funds to the well-off in the form of interest payments.)

  • http://outshine-the-sun.blogspot.com/ Andrew G.

    it’s a nationally recognized fact that this once mighty country is not
    the powerhouse that it once was back in the day and much of issue has to
    do with our economic debt

    National recognition doesn’t make something a fact.

    Blaming economic problems on the national ‘debt’ is foolish and reveals a fundamental failure to understand what that debt is. In a sovereign-currency country, the ‘national debt’ is nothing more nor less than the net SAVINGS of all entities that have saved money in financial instruments denominated in that currency. (Any time you see someone talking about the national debt on a per-capita basis you know that the speaker is, whether innocently or not, a fraud – because the intent of presenting the figure that way is to make it appear as though the national debt is something that the population owes, when in fact from the viewpoint of the private sector it is an asset.)

    There is however an important connection between the government budget deficit (and hence the change in the ‘national debt’) and a country’s position as an importer or exporter. The sectoral balances equation makes this clear; the equation can be written in many forms but this is one of them:

    (T – G) + (S – I) = (X – M)

    where:

    T = tax revenue, G = government spending, hence (T – G) = government budget balance (surplus is positive)

    S = private sector saving, I = private sector investment spending, (S – I) = private sector balance (net saving surplus is positive)

    X = exports, M = imports, (X – M) = current account balance (net exports are positive)

    This makes it clear that if an economy shifts in the direction of higher imports, then if the domestic private sector behaviour remains unchanged, the government budget deficit MUST increase simply to balance the books. If this does not happen, then the private sector numbers will shift instead, in the direction of greater net private borrowing. (The sectoral balances equation is a matter of accountancy, not economic theory – it can’t be violated unless someone is adding up the numbers wrong, just as a balance sheet must actually balance.)

    (I use the term ‘national debt’ out of convenience to represent the total sum over time of the government budget deficit. The actual issuing of government bonds is an irrelevance that serves little purpose except to direct additional funds to the well-off in the form of interest payments.)

  • Anonymous

    Household budget tip from Republicans:  Quit your job to save on gas money!

    Seriously, these people don’t need to control the government finances, they probably can’t even balance their checkbooks.

  • Kogo

    *“just-folks like me are so much smarter than all those idiots in Washington”*

    Is there some evidence I’ve missed out there that the 535 members of Congress, 9 Supreme Court justices, President and Vice President, and vast swathes of our nation’s huge and ever-expanding security apparatus are *not* stupid, cruel and vain? Because I’m not seeing it.

    I’m more than willing to agree that Washington *employs* some smart people. But they tend to work at great remove from the levers of power. They’re funded not by the General Services Administration but rather by the NSF, NIH, DOE, Smithsonian, Park Service, CPB and similar.

    But no, I don’t believe that anything the 3 constitutional branches of our government have done in the past 10-40 years merits anything less than 80-90% salary cuts for poor performance and gross immorality. Given than more than one single civilian was killed needlessly and more than one single penny was wasted during our stupid wars on Iraq, Afghanistan, Drugs and Cities, I think I’ll take that .00006 budget reduction, thank you.

  • http://twitter.com/FearlessSon FearlessSon

    Germans didn’t borrow from their future to rebuild their economy- they worked hard in the present, and saved for the future.  I’m not sure the U.S. is capable of that any longer. Instead, we continue to talk about using future promises to handle today’s challenges. One could, in a way, call this escapism.

    I think that it might have something to do with the way the U.S. election cycle tends to run.  For example, during the Clinton administration, there was a budget surplus.  The smart thing to do would be to use that surplus to hedge against debt, paying off current debt or saving it away for when the country has need of such funds.  But that did not happen, because fiscial conservatives saw the fact the country was taking in more money than it was spending and said “The government has more money than it absolutely need!  Cut taxes!”  And when Bush got into office, that is exactly what happened. 

    Any time the U.S. does manage to get itself ahead, someone is going to complain that it is being irresponsible, and the thing will get dragged back down. 

  • Kogo

    I also have to say that I’m not kindly disposed toward foreign aid right now, no matter how tiny. Not after listening to this guy on NPR:

    http://www.npr.org/2011/07/13/137825943/haqqani-discusses-troubled-pakistani-u-s-relations

    The sheer SMARM of the guy, lecturing America on how we simply *must* give millions and billions to Pakistan’s army and they have to do nothing in return forever and ever amen made me hate him and his country.

    Add that into a series of books I’ve recently read on the ineffectuality–and, indeed, the often genuinely malignant effect–of international aid (heck even aid to JAPAN after the earthquake ended up going awry: we replaced fishing boats and it turned out by giving each person a boat, we disrupted local small-town economies based on some people having boats and other people having trucks to haul the fish and thus everyone having a distinct, non-competing role) and no, I’m against aid. Aid does NOT “buy us friendship” in the world. We’ve been giving aid to Afghanistan since the early 1950′s (yes, really: this is *literally* the 9th attempt of USAID to build up the local infrastructure in the town of Marja over the past 65 years).

    Like the most-recent report from Afghanistan said, terrorists generally do not attack because there isn’t a good local well or school. And people generally don’t *not* attack when there is one. Good infrastructure–roads, wells, schools, clinics–are great. But they’re either the effect of a peaceful society rather than it’s cause, or they’re just a dissociative factor altogether.

    Too, our emphasis both in our own country and abroad has been to “rebuild [blank]” where “blank” is always a *place*, not a specific person or group of persons. “We’re going to rebuild New Orleans” or “We’re going to rebuild Afghanistan.”

    Except that that *always* means giving money to contractors and not to the people themselves. What if we gave the money to the *people* of New Orleans, even if that meant they were going to leave and never come back?

    Alternatively, what if we just gave Afghan women and girls U.S. passports, a ticket to JFK, $10,000 and a Pashto-English dictionary? We’d save tens of billions of dollars, years of time and thousands of lives, that’s what. But that would run counter to our stated aim to “rebuild Afghanistan” (fuck the actual Afghans, I guess), so no dice.

    [Last 5 paragraphs = kudos to Edwin Glaeser “Triumph of the City”
    http://www.amazon.com/Triumph-City-Greatest-Invention-Healthier/dp/159420277X

  • Kogo

    Sorry to keep serial-posting but one refinement to what I said:

    *Except that that *always* means giving money to contractors and not to
    the people themselves. What if we gave the money to the *people* of New
    Orleans, even if that meant they were going to leave and never come
    back*

    Btw, by “give the money to the people of New Orleans”, I mean that quite literally: Write each Nawliner a check. NOT give it to “neighborhood groups” or such, but very directly say, “Here is money with which to rebuild your life as you very personally see fit. Stay. Leave. You decide.”

  • Anonymous

    Actually, yeah, I’m pretty much just being lazy about it, that and I’ve got most of my info on DF2010 from the wiki which seems increasingly to be both incomplete and outdated. On the other hand, I’m really curious to see if I can get my current fort to a century without ever turning on migration, so it’ll probably be a while still before I make the switch. (Dwarf Therapist helps a lot there by letting you set labors on children, which makes them useful far sooner than they’d otherwise be. Child labor? Why, no! It’s apprenticeship.)

  • Tonio

    Where were these guys when Bush the Lesser ran up the credit card with
    two wars and a massive tax cut on the people who needed it least?

    Reminds me of this anecdote supplied by Molly Ivins. Look for the paragraph that begins with “Spending on the military doesn’t increase the deficit.”

  • Lori

     ”Spending on the military doesn’t increase the deficit.”  

     

    This is totally true. Spending on the military goes back into the economy and circulates and there’s a trickle down effect. Money spent on other government programs does not do this. Because once it’s done it’s work of limiting freedom and strangling business it is set on fire. 

    (It think it’s difficult for people who weren’t around during the Reagan years to fully grasp just how ridiculous he was in nearly every respect.)  

  • Sgt. Pepper’s Bleeding Heart

    Banancat, I suspect your observation is a reflection on the moral value much of our society has put on money. If you have money, it shows you have good character. If you don’t have money, you’re morally weak. Going into debt shows that you have less money than you need, so it’s a sign of moral failure. I’m sure Calvin’s to blame, somehow.

    What I don’t understand in your post is the suggestion that people who choose not to go into mortgage debt are in a poorer financial state in the short term. I’ve never lived in a time or place where mortgage repayments cost less than rent. So what I find incongruous is people who put themselves under severe finanical stress in order to buy a house.

  • P J Evans

    Well, for one thing, corporations are reporting record profits, and they also aren’t hiring record numbers of people (some of them are refusing to even look at unemployed people for the jobs they’re offering). So that money is not going back into the economy in ways that benefit a lot of people. Apparently, what they aren’t paying out in dividends and executive salaries (most of which are excessive: anything over a million dollars a year is pretty much just funding egos) is sitting in their bank accounts.
    Also, when you have a corporation like Exxon reporting record profits in the US, and not paying taxes in the US on that money, you know there’s a problem with the tax system that urgently needs fixing.

  • P J Evans

     Ba may think that money spent on space exploration is actually sent into space.

  • P J Evans

    At the very least the household budget people should want infrastructure fixes.

    They ought to be encouraging ribbon-cutting and ground-breaking ceremonies for every piece of infrastructure repair and maintenance in the country. Heck, they ought to be arranging them and showing up themselves: government at work and doing good work.
    But I think they’re too busy whining about everyone else getting more cheese than they do to notice that everyone’s cheese uses the same infrastructure.

  • Cissa

    I DO think that all these people should have the same sort of health “care” that is the minimum for anyone in their districts, as their paid option.

    And if they want better… well, then, they can buy it individually just like they require of everyone else.

  • Anonymous

    This is totally true. Spending on the military goes back into the economy and circulates and there’s a trickle down effect. Money spent on other government programs does not do this. Because once it’s done it’s work of limiting freedom and strangling business it is set on fire. (It think it’s difficult for people who weren’t around during the Reagan years to fully grasp just how ridiculous he was in nearly every respect.)

    I especially love the guys who say the New Deal didn’t help end the Great Depression – that was all just World War II.

    Because apparently spending out of a deficit only works if the money goes towards killing people.