This is going to be complicated, so you may want to stop reading now and take an aspirin, get a cup of tea and get comfortable because we are going to be here for a while. On Monday, Valentine’s Day, President Obama will be releasing the fiscal budget for 2012. On Thursday, he will be making a spectacular announcement about plans for a National Wireless Internet Network.
There, that is the last easy thing you are going to read in this post. Now, I am going to begin to walk you through the general details of both of these items and, begin to explain what their implications are for us-as individuals and as a nation. And oh yes, I will explain how they will impact both the Canadian and Mexican economies as a result of all this and why we should even care about this. The impact is even farther reaching but that is too much for one article.
First of all, I want to point out the timing of the release of the budget. To make such a presentation on such an important topic on a day that is virtually Christmas for this country is a sure fire way to make sure that few people are really listening. Valentine’s day is rarely a day when one has an attention span for anything beyond the heart, let alone facts and figures of the heaviest kind of accounting.
Now, I am by no means a conspiracy theorist. Part of what I am is a performer. Part of what I am is also someone who has what is called a “Public Presence.” It is Marketing and Promotion 101 to understand that the timing of announcements will control the reception more so than the content of what is being announced. If you do not think that the choice of this day was on purpose, think again. Part of the Administration of any President is a whole department that is devoted to publicity and spin doctoring. In this case, the spinning is starting before anyone knows the details – that alone should be enough to make you sit up and start paying attention.
To have picked a day that can only be termed one of national distraction for the budget announcement and then follow up on a day when people are more apt to pay attention with a program that sounds like it is giving something to the people, this is interesting to me.
Now, a brief overview of the National Budget. This is how the budget breaks down, in descending order:
The greatest expense in the budget (and it is mandatory) is Social Security at $695 billion. The next greatest expense (not mandatory) is the military at $663.7 billion dollars.
This is followed by mandatory spending: general ($571b), Medicare ($453b), Medicaid ($290b) and interest on the National Debt ($164b).
The remainder of the budget consists of a slew of domestic programs and departments, from transportation to Veterans, Homeland Security to Education. Most of these are funded in the under $50b range. Health and Human Services and the Department of Transportation both have $70b+ budgets. The lowest funded agency is the Small Business Administration, coming in at a measly $0.7b. You can find the exact order of breakdown by following this link:
Mind you, these are 2010 numbers.
– 34% of the budget goes to mandatory Social Security
– 33% of it is non mandatory and spent on defense.
That is what? 67% of the budget. Of the remaining 33% about:
– 21% is used on Federal programs such as NASA, Homeland Security, Transportation and the Department of Education.
– 10% is used for grants to states to support various public health and service programs as well as fund infrastructure projects.
Now, unless you have been living under a rock, you know that we are in the depths of an economic crisis that is going to cause (by Bernake’s projections) our debt to surpass our GDP (Gross Domestic Product – that is the value of all the goods and services we make in a given year as a country, in a way – our potential worth and profit).by 150% by the year 2030.
Countries whose debt reaches 7% of their GDP are considered to be in a deep depression and on the verge of going permanently bankrupt.
The projection for our debt to GDP within 10 years is 12%. That would bring us to 2021.
I will be 52 years old.
On Valentine’s day, Obama will release the fiscal budget for 2012 that promises to cut $400b from spending and keep our debt at 3% of our GDP.
Our current National Debt is at over $14 trillion dollars and increases at a rate of $4.12 billion dollars a day. This means that each citizen bears a share of this debt to the tune of $45k and rising. What is meant by sharing in this debt is that at some point, taxes must be implemented in order to get your share from your earnings or, programs funded by the government that you benefit from must have an equivalent cut. Typically, this only occurs if the lenders want the debt paid, which is why we can still pursue tax cuts. We have not yet been called on to make good on our loans. That usually only occurs when the debt to GDP reaches 7%.
I think it was Norway or Finland who recently hit that mark and was called on to pay their debt to all the international banks. Their government presented a series of drastic cuts to programs and higher taxes to pay off the debt and the citizens voted that they would rather default on the loans and suffer through rebuilding the country then have their lives so overwhelmingly burdened. They also were not happy that the government moved to protect special interests and the wealthy from any of the cuts and taxes. That drama is still playing out.
On Valentine’s day, Obama will release the fiscal budget for 2012 that promises to cut $400b from spending and keep our debt at 3% of our GDP.
He is going to accomplish this through a series of funding cuts and freezes to budget amounts.
All of the cuts and freezes effect the lower 10% of the budget, i.e. the states and you and me. Mind you, the mandatory spending has to remain (although at some point we have to realistically assess at what level, we can no longer afford social security, Medicare and Medicaid and in 20 years our population will have overwhelmed the system).
In 20 years I will be 62.
The majority of the cuts will come in the following areas:
– 1 billion from airport grants
– 1 billion from state aid for water treatment plants and similar projects
– major cuts to forestry
– major cuts to public health grants
-Home energy assistance to low-income families and community service block grants would be cut in half, and an initiative to restore the Great Lakes’ environmental health would be reduced by one-quarter.
Exempt from reductions and freezes would be the Pentagon.
All the Bush-era tax cuts that are to expire at the end of 2012 would be made permanent.
The cost-saving provisions of the health care law would be repealed.
Now, let’s go over a few things a bit slowly.
The Pentagon will be exempt however, they will point out, there will be tremendous savings in war costs after the withdrawal of troops from Iraq and several defense development programs have also gotten the axe.
Left out of this statement is that several months ago we committed to radically increase our presence in Asia and Asian waters. It would not be a war but we are committed to a policing presence that I can almost guarantee will meet the Iraq costs in no short order. There is also no mention of a withdrawal from Afghanistan which has been a much longer and costlier war than Iraq and continues to be so.
While some defense weapons development programs have been cancelled more have been ordered. In other words, their cup will remain full and occasionally over flow.
But more disturbing is that the cuts to save the day are all coming from programs which take care of this nation’s people and hate to say it, more importantly, the infrastructure of the nation.
Our bridges and roadways and dams were built by the WPA during Franklin Delano Roosevelt’s presidency way back in the 1930s.
That makes our bridgework over 80 years old. Concrete and steel has a joined life span of 35 years. Ask me, I was a Union Ironworker. I have worked on many of the bridges in the New England area and even a brief stint on the dam out in Nevada, among other projects. I love my steel. I heart my concrete. But we have left important structures unattended for a very long time.
When you talk about cutting funding for sewer plants “and other similar projects” along with airport grants what you are talking about is cutting funding to infrastructure programs. Our everything is not only so old it is hanging on by a thread, but our population is shifting out of older, developed areas into the more rural south and west which does not have the utility capacity to handle the population and their generated waste. The EPA is constantly chasing cities and towns across the south and west that have still not updated their treatment plants and continue to dump waste in water and bury it despite the changes being mandated in the 70s.
Without forestry and conservation programs it will become easier for large industries to move in and develop plants in rural areas that may threaten areas that otherwise would have been protected. Not to mention, tourism aside, many of our forestry and conservation areas also serve the purpose of containing elements that left unattended could cause flooding in developed areas.
Cutting funding to the states for such programs as heating assistance etc hits the poorest and the elderly the most. The states, if you haven’t noticed, don’t have the money to even come close to providing help for those who need it.
In other words, the budget cuts are coming from those of us most in need and will drive the large and growing population of the working poor into the arms of…where else? Federal services such as Medicare and Medicaid. So rather then being able to bring down some debt and then deal with the rising costs of the entitlement programs, the cuts are going to create a whole new population to place an increased burden on those programs. Mind you, the Republicans would like to see even more money cut from these programs.
Which brings me to the carrot on the stick. Thursday’s announcement about spending $9.6 billion dollars to bring 500 MHz broadband into rural areas. Now, think about what I just said about certain cuts opening the way for development by large industries and think about whether or not they would benefit from that service. Industrialized nations who develop National Wireless Internet services to encourage innovation, increase competition and add to educational opportunities do so by offering the service for free in all areas and subsidizing computers.
There has been no mention of that in the proposal. What has been mentioned is that it would be done by reclaiming airwaves by asking large corporations, such as CBS, to give up some broadband blocks to auction. The company, of course, would receive 20% of the auction amount; the government would get the rest. So the question is, who is buying at that auction?
And by the way, in spending $9.6 billion the projection is we will gain and put $10.6b towards the debt, which in my book is really $1b.
There is no talk about free access to this network. No mention of how it will be wed to education and perhaps, small business initiatives. And the latter is important because this past year alone our trade deficit went up 33%. A trade deficit means that you are importing more than you are exporting. In other words, we are buying more than we are selling and this will raise our debt to GDP ratio. Research and development, as well as increased education, is crucial to bringing both down to reasonable levels and reclaiming a part of the world market that can help sustain our economy.
And all of this effects other countries too. What we do with our economy has broad reaching effects. The way that the cuts will effect our infrastructure will have drastic effects on the economies of both Canada and Mexico. Why? Because like us, over 90% of our products and goods are transported by truck. The worse our roads and bridges get the more companies will suffer. And not just companies, but consumers too. Food prices rise and fall partially based on the ability of produce to make it to processing factories in a timely fashion.
All in all, what is going to be presented tomorrow is a 10 year plan for the destruction of America. What the Republicans are rabbling about doing for the next year’s budget (which they start working on shortly) is even worse.
Trying to resolve an economy’s debt woes by penalizing its citizens worsens both the society and the economy. Continuing to preserve the divide between the nation and the 3% of people and companies who make a profit off of everyone else’s suffering cannot continue. Penalizing and asking the nation to suffer to redeem the mistakes of the few is not the way. There is no company and no institution that cannot go under. We have to stop thinking that there are things “too big to fail” and that includes social security and Medicare and Medicaid. All of those were great ideas, but their budgets and management has been abysmal and they have become too sick to go on.
Letting the working parts of the country rot while feeding the military machine is not going to do it either.
Neither is speaking in tongues or handing out lollipops.
That “National Wireless Network” is a joke. It is a panacea to distract from the fact that we will not be able to provide for our weakest in times of need nor, protect ourselves as our infrastructure slowly begins to crumble around us.
I know everyone has their own thing going on but I hope you read this at some point.
Please, please, please, there is nothing that can be done about the 2012 budget but we can have a strong voice in 2013. Do more than click a button or send a form letter. Educate yourself, come up with your own theories, interject yourself into the conversation and goddamnit, act like you care and act like the health of this nation is worth something to you.
I want the generations to come to have more hope than so many of us have right now. That alone gives my life purpose and drive. As I go, I grow and find others who not only feel the same way but work to be heard and to create change and change that is not dictated, defined and contained by the established order that is so intent on pillaging our entire country for profit until there is nothing left.
The only difference between the US and Egypt is that our Mubaraks remain behind the scenes.
Time to start shining the lights and opening doors.
Let’s let some fresh air in.
written for Blue Skies @ http://Womansmojorisings.com with contributing material from Reuters
c.2011. Cassandra Tribe. All Rights Reserved