2009 August 21 Friday
10 Year Deficit Projection Up To $9 Trillion
What's another couple trillion dollars to the 10 year US government deficit projection?
The new projections add approximately $2 trillion to budget deficits through 2019. Earlier this year, the administration had predicted that Obama's policies would require the government to spend $7.108 trillion more than it collects in tax revenue over the next decade.
Obama's health care plan might end up adding another $2.1 to $2.4 trillion to those costs. We definitely live in Warren Buffett's Squanderville, not Thriftville.
Of course that much of a deficit requires continued willingness of lenders to fund such a huge spend spree. We can not count on this state of affairs continuing.
Treasury markets have been worried all year about the mounting deficit. The United States relies on large foreign buyers such as China and Japan to cheaply finance its debt, and they may demand higher interest rates if they begin to doubt that the government can control its deficits.
I expect the numbers above are all optimistic. Why? America's demographics are deteriorating. The Baby Boomers will be replaced by intellectually lower performing younger generations. Plus, Peak Oil is going to knock the economy down repeatedly, denying the spenders the tax revenue growth they expect from a growing economy.
James Hamilton's paper Causes and Consequences of the Oil Shock of 2007-2008 explains what happens when oil price shocks hit the economy. We are going to experience a series of oil price shocks as oil production peaks and then declines.
Update: I am reminded of what Texas oil billionaire Richard Rainwater said in 2005: Rainwater expects Peak Oil will lead to higher taxes, a scaling back of government programs, and riots.
What concerns him most is the conflict that he thinks an oil shortage will precipitate. What happens when people get blindsided by prices rocketing past any level they have contemplated--especially when you factor in other challenges America faces? "We've got a lot of things going on simultaneously," he says. "The world as we know it is unwinding with respect to Social Security, pensions, Medicare. We're going to have dramatically increased taxes in the U.S. I believe we're going into a world where there's going to be more hostility. More people are going to be asking, 'Why did God do this to us?' Whatever God they worship. Alfred Sloan said it a long time ago at General Motors, that we're giving these things during good times. What happens in bad times? We're going to have to take them back, and then everybody will riot.' And he's right."
Riots? Depends on the slope of the downhill production slope. Given a sharp enough slope some countries will descend into chaos.
1965-2035, How to wreck a nation in a mere 70 years. Incredible.
I think at some point the thinking will begin to entertain notions of emigrating somewhere else. Can you imagine how many NAM's we will have on public assistance/jails/virtually un-employable by 2030? Who will buy our debt at that time?
Will our nuke arsenal protect us by then? How many young swipples will even be left (as so many of them go childless#? I dont think people even want to concieve of how bad things can get here by then. There is still enough middle America to bail out dystopias like Southern California in the now, but if we keep importing more tax liabilities and dont start breeding more tax assets I cannot see our debtors still lending to us. I see them nationalizing our foreign assets though, or maybe our corporations will just fly the roost and relocate when things start really looking bleak #in about 2025-2030).
Not too unrelatedly, look what we did on the prison front between 1980-2006. Pretty astonishing graph here. The fold change for that period was 3.61 after I corrected for the ~33% population growth (I did not adjust for age):
Will our nuke arsenal protect us by then?
How big does it have to be to do so? I don't know. One nuke is pretty cheap; I don't know whether a by-god un-mess-with-able M.A.D. arsenal is cheap.
I think at some point the thinking will begin to entertain notions of emigrating somewhere else.
Maybe. But I think ColdEquations is right that most race realists probably overestimate the odds of really widespread race-realist white and/or NE asian ethno-consciousness arising. However, it's possible that some ethnically euro country (or breakaway enclave) will restore a "White Australia" style immigration policy and a pro-natal cultural vibe. Or a euro + NE asian immigration policy. This will be tolerated by the international community: it doesn't actually harm or disrupt anyone's life, and race realism will have gained some respectability even if it never becomes orthodox. Such a "Galt's Gulch" might wind up drawing lots of immigrants from the US, UK, etc - if so, then even a polity that's only 65% euro / NE asian to start with could have a demographic future much more like the old USA's. If said country didn't make too big a spectacle about such policies, then even quasi-devout SWPLs could move there - "strictly because of the economic opportunities" rather than anything having to do with race. I'll stick with the USA myself: the whole issue of race is mostly an economic matter for me, and while I believe in economic freedom rather than a socialism benefiting lower-productivity ethnies, it's not a practical priority for me personally.
Assuming the USA can(?) continue to defend itself, I don't see why it should be likely to see some crisis; it will "merely" become semi-poor like Brazil, Russia, or Argentina, and no doubt crime will increase somewhat. Even if the USA were to break up, or to de facto devolve most of its power, I tend to doubt that war would be involved. But why would it break up, anyway? From what I hear, I don't think the white rural areas are outproducing the less white coastal states economically, but rather the opposite (I'm not certain). If so, then the biggest producers are the SWPLs, and I don't think they will radically abandon SWPLism en masse.
Here's a red/blue state net tax recipiency breakdown - this is the kind of data I was talking about, re SWPLs being our economic powerhouses. I wasn't born yesterday, so I don't doubt there's more than one way to tote this stuff up; these numbers might be distortive. But I'm guessing they are at least not the diametric opposite of the truth:
Obviously, these difference are likely to moderate somewhat in the future - but I'm not sure that Montana, say, will ever have something significant to gain, economically, by attempting some sort of secession. Thus my prediction of a united USA for the future.
"Here's a red/blue state net tax recipiency breakdown - this is the kind of data I was talking about, re SWPLs being our economic powerhouses."
This evidence is not credible.
Older people are moving from the SWPL areas to the red state areas because retirement is cheaper. Consequently, they bring their social security checks with them.
The government deficit is a desperate measure (ineffective) against foreign trade deficit, and the 10 % unemployed people are being given that money every year by the government to keep them alive, but this money is transferred to foreign countries as trade deficit. Allmost all the cash for clunkards money went to foreign car companies. Ultimately the only solution will be to impose currency controls to stop foreign trade deficit.
Can you imagine how many NAM's we will have on public assistance/jails/virtually un-employable by 2030? Who will buy our debt at that time? Will our nuke arsenal protect us by then? How many young swipples will even be left (as so many of them go childless#? I dont think people even want to concieve of how bad things can get here by then.
2030 is about when rejuvenation and intelligence-enhancing treatments should start hitting the U.S. market. Given that, I don't expect the lack of young SWPL's and un-employability of NAM's to be a serious problem. Even with a fairly steep decline in oil production, the USA will be fabulously wealthy by our standards.
"2030 is about when rejuvenation and intelligence-enhancing treatments should start hitting the U.S. market. Given that, I don't expect the lack of young SWPL's and un-employability of NAM's to be a serious problem. Even with a fairly steep decline in oil production, the USA will be fabulously wealthy by our standards."
My friend I hope you are right, believe me. I'd love for that to be so, and hope these things can indeed come to pass.
My latest "worry" is the Climate Bill's potential passage. It will make manufacturing in Red States more expensive. We need to manufacture in red states where land is cheap, thus wages can be lower. We -need- to be able to produce things in this nation in my opinion. I know that sounds retrograde and old-fashioned to many, but I cannot see a nation staying wealthy on selling financial services, insurance, real estate, and entertainment as mainstays. I think tech and manufacturing are vital long-term.
I hope my current concerns turn out to be invalid when Im an old man. Im patriotic enough about this place to want it to be nice for our grandchildren's grandchildren.