Probably the most important aspect of business is trust. Trust is, of course, built on competence and truth-telling. Your business partners will not trust you if you are an idiot, and they will not trust you if lie to them repeatedly. It is never a good idea to start out a business relationship with a lie. This is why television advertising is such an abject failure, for example.
At 10:30 Tuesday, Congressman Paul Ryan held a press conference to announce, with much fanfare, the Republican’s bold new plan (even newer and bolder than the old, bold new plan) to save the nation from those big-spending Democrats in the Obama Administration who like to spend money.
The plan does not achieve an actual balanced budget until after 2030, but rather it achieves something it euphemistically calls “Primary Balance” in 2015. “Primary Balance” is where we still deficit spend, but we needed a feel-good term to describe our deficit spending that would also provide a talking point for the talk shows. Only by doing this can we be guaranteed to fool the voters who are so busy trying to keep their heads above water that they’ll swallow damned near anything. According to the Ryan Plan, “Primary Balance” means all of fed dot gov’s spending minus interest payments on debt is equal to fed dot gov’s income. Since interest payments on the debt are virtually guaranteed to be one of the fastest growing components of the budget, this is a happy lie indeed.
The plan makes use of the oldest canard in politics; one of the “Major Proposals” to cut spending is to “eliminate wasteful Washington spending.” I haven’t heard that lie since yesterday.
Here’s another one: the plan is going to rout out $178 Billion in DOD waste, and then “reinvest” $100 Billion of it in…”key combat capabilities.” New weapons systems! Stimulus, anyone? Woo hoo!
In order to sell this sham to the Tea Party, it includes de-funding Obamacare. Thanks!
The plan contains happy assumptions that reveal it to be joke. How is the budget balanced? Federal spending is cut by less than $100 Billion in 2012 (sound familiar?) and then resumes rising forever. Federal revenues (tax receipts) are projected to rise by 13% in 2012, 13% in 2013, 8.2% in 2014, 4.6% in 2015…you get the idea. Detailed analysis to follow, but is this really the best we can do?
Precious metals have correctly concluded that the Ryan plan will require the Fed to keep right on printing money. Here is what the precious metals market thinks of Ryan’s plan to “balance” the budget. NOTE CAREFULLY THE TIMING OF THE MOVE:
Perhaps Ryan’s plan is anything but
perfect, but at least he is talking about some
real numbers rather than the incredibly small
cust being proposed by the Republican leadership.
Remember,he’s on our side.
Mr. Nelms,
I wish I could agree, but I don’t. We don’t have 20+ years to balance the budget. Ryan’s numbers do not reflect our fiscal reality. If we don’t act very quickly the USD will lose its reserve status; when that happens, food and energy costs in this country skyrocket and the middle class is wiped out. I am betting that is what will happen, while trying to convince people to help me stop it. So far the betting part is working out very well, but the convincing part is not.
We don’t need happy talk. We don’t need pie-in-the-sky revenue growth estimates. We need to drastically slash the budget, right now. If we don’t do it, it will be done for us. When someone puts forward a budget plan that assumes the federal government’s tax revenue will grow by 13% per year, I am not amused, I am insulted at being lied to.
With our debt overhang and interest rate exposure, such a growth rate is not possible unless the regulatory state would be completely dismantled so that real economic growth could happen. Or, perhaps more likely, he is counting on the Fed to cause a suitable rate of inflation for the next few years by continuing to print money.
Mr. Ryan is in a position to know that 13% real revenue growth for two years in a row is unrealistic. This leaves three possibilities: 1) he is lying to us; 2) he is an idiot; 3) he knows the Fed is going to destroy the currency and, far from doing anything to stop it, he is counting on it.
Those are all unacceptable.