Budget Hero

While listening to NPR the other day I heard them promoting a game that Marketplace had created called Budget Hero. The game is flash based and presents you the budget as it currently exists which includes the automatic repeal of the Bush Tax Cuts in 2012. It then gives you several categories to pick from and there are options in each category that will either add to or take away from the budget.

The options available to choose from seem pretty comprehensive in some areas, specially those areas that are supportive of deeply conservative ideas and neo-liberal economic ideas. At the same time there are other areas that seem deeply lacking, such as ideas that promote progressive ideas. Further some of the explanations are pretty disingenuous such as one option in the health care field. Every option gives you a pro and a con. In the con for adding the Public Option for health care they state that it will kill American innovation with out giving any evidence to support this rather dubious claim pushed by neo-liberals. I haven't finished going through all the options but I'm sure there are plenty more of these discrepancies throughout.

Take some time to play around with the budget and see what you come up with. The budget I came up with reduced our budget deficit to -$70B by 2021 (meaning we will still owe another $70B.). I reduced the debt from 75.5% of GDP in 2012 to 59.2% of GDP in 2021 and I pushed the year in which the current budget would need changes from 2031 to 2034. I also managed to greatly expand the role of the federal government in providing a safety net for most Americans and expanding infra-structure and science and education investment all the while reducing the size of the federal government from 25.9% to 23.6% of GDP.

When you are done they give you a great way to compare your budget to other demographics based on location, income, sex, age, and political affiliation. For reference, my three badges are Safety Net, Competitive Advantage, and Green. You'll understand when you play a round.

-Kris

Healthcare in America: Still totally screwed.

A man was injured while riding his motorcycle in Plumas County, California. When paramedics arrived on the scene he clearly communicated to the paramedics that he didn’t want to be treated and didn’t want transportation to a hospital. He had recently dropped his pricey medical insurance because he couldn’t afford it anymore. Despite his protestations paramedics took him to a nearby hospital and then was transported by helicopter to the nearest trauma center. Doctors then told him that he had a concussion and a broken bone around his eye. He was then discharged and later received a bill for $40,000; for services he never authorized.

There are a few things wrong with this story:

One, the man had to make the choice between health insurance or no insurance because there are no affordable plans for him to purchase.

Two, since he can’t afford insurance he had to make the decision on whether to seek medical care when he was injured.

  

Third, the paramedics took him against his will to the hospital where they gave him treatment he didn’t want for a price he can’t pay.

That third option can leads to the worst part. These crushing medical bills he will incur will likely force him to file for bankruptcy. Bankruptcy will stay on your credit report for ten years. Recent changes to hiring laws allow companies to make hiring decisions based on your credit report. Put this all together: this man can face serious problems with finding a job for ten years because he couldn’t afford health insurance.

Once all of PPACA (what Republicans call Obamacare) kicks in to effect this man will be no more likely to afford health insurance than he was before. There are many different ways to point out the absurdity of the reform of the health insurance industry. With any luck it won’t take us another 15 years to reexamine the issue and we can pass actual, meaningful, healthcare reform. Until then more and more people are going to end up like this guy.

-Kirs

The Debt Ceiling

What is it?
A artificial limit that the government can accrue debt.
The word "debt" shouldn't be viewed as a negative word. The government having debt is an entirely different idea than a person having debt.

There are many government run services that exist beyond the well-known social security and medicare/medicaid. Some of the more obvious ones that you might not even think about are the interstate highways and bridges, municipal airports, and the power and water grids.
In order to run this, the government obviously needs money. For example, if the government was a person named Bob. Bob owns a store. In order to run his business he has some overhead costs such as rent, power bills, cost of getting his product, and so on. To pay for all of this Bob sells his products from his store front and uses the money generated to pay down his costs and if there is any left over, invest in making his business better. Well the government is the same way. The government needs money in order to pay for your use of certain services. In order for the government to pay for these services they have people pay taxes. If everyone paid their taxes, they are giving the government a little bit of money to be able to use and take advantage of the services the government provides.

A problem we have now is not everyone pays their taxes, but that is a story we'll get into later. When there is not enough money taken in through taxes, the government needs a "second form of income." Much like Bob would do to expand his business, the government gets a loan. The total value of these loans is the government debt. The government issues their own debt by selling bonds. These bonds work by the government saying, “you give us $5,000 now and in return we’ll give you this bond note. In 5/10/20/etc... years you can show us this bond and we’ll give you back your $5,000 plus some amount of interest. If you cash in your bond before the time is up though you don’t get as much money.” The government puts the full faith and credit of the US government up as collateral for the bond, meaning that the government would have to go bankrupt for the bonds to not pay out. Since the government sells its bonds only in US dollars the government can never go bankrupt because it can always print more dollars to pay off the bonds.

That is how it should work at least, except we still have this debt ceiling thing hanging around. The concept of the debt ceiling really is outdated and not needed today. It was created during WWI when the economy ran off of the gold standard, which is tying the value of money to the total amount of gold you have. This created a limited amount of money that the government could print. Since every dollar printed had to be backed by gold this limited how much debt the government could get into and that limit was the debt ceiling. Today, we run on a fiat system and we can print as much money as we want. This happens because the dollar’s value is set by the Federal Reserve through controlling the amount of money in circulation. The more money in circulation the less valuable each piece of currency holds the less currency the more value each piece holds. Another way of saying it is the less money in circulation the more you can buy with your dollar, the more money in circulation the less you can buy. When we moved off the gold standard we never got around to getting rid of the debt ceiling however.

So really, the debt ceiling is like having an appendix. It is no longer needed, but when something goes wrong it still needs to be dealt with. The reality is, you could live without it.


Congress has to vote to raise the debt ceiling every time we reach it and has done so as a matter of routine the last dozen plus times the vote has come up. This time however Republicans in Congress made their vote on raising the debt ceiling conditional on Democrats agreeing to spending cuts in the budget on an equal amount. So for every one dollar that the debt ceiling was raised by, the budget deficit must see one dollar decrease. The budget deficit is merely any money in the budget that must be covered by bonds instead of tax revenue.

Democrats agreed to their demands and the argument then became to what degree the budget cuts were going to come from spending cuts vs. revenue increase. The political narrative started coming out of Washington saying that these budget cuts were necessary for raising the debt ceiling. Remember though, there is no connection between the two and the only reason they are tied now is because politicians say so.


If we don’t agree to raise the debt ceiling by 02 August 2011 then the government will no longer have the ability to pay off its debts as well as pay for the programs it is supposed to fund listed in the budget. The plan that looks like will make its way through both chambers of Congress to raise the debt ceiling will end up cutting $2.1 trillion over ten years from the budget. Don’t let the big numbers trick you into anything. This amounts to about 1/10^th or so of our total current debt.

Not only does this plan create a significant change in our debt but it will further damage our already very unstable economy. Our economy suffers right now from a demand crisis, meaning that companies have plenty of goods to sell to consumers, however consumers lack the ability to buy the goods. This is because there is massive and wide spread unemployment and for those that are employed, many face crushing levels of debt that prevent them from spending freely. Many of these people are only able to stay as afloat as they currently are because of government services like unemployment benefits, welfare, foodstamps, and living assistance programs like money for heating oil. These are the very same programs that will see cuts in the plan snaking through Congress right now, further hurting demand in the economy, thus making the economy worse.

Why then does Congress and president Obama insist on pushing this deal through even though it will hurt the economy? The answer to that question is for another post.

-ElfEnnerji  

Why You Should Read The Whole Article

I have never really followed the political news, at least not in great detail I just read the headlines which are supposed to sum up what the rest of the article is about. That was probably a bad idea on my part.

So those of you reading this will probably think something along the lines of, "Reading the headlines? What's wrong with that?"
Two words: Source amnesia. (http://en.wikipedia.org/wiki/Source_amnesia).

Almost everyone, if not all, will experience source amnesia at some point in their life. It's the thing that makes you go, "I think I've heard about that before... But I can't remember where..." The human brain isn't like a computer where it can easily save loads and loads of information; it can only recall on a limited amount. As we learn new things, previous information stored in the brain becomes, in a sense, condensed. You'll probably eventually only remember the key points, almost like a headline. How is this connected to the whole, "only reading the headline," as a bad idea. Well, repetition is one of the most effective ways to remember things.

Politicians and the media exploit this all the time. All a politician has to do is make a statement whether it is true or not. It creates an idea that there could be some kind of scandal among us. The media then picks it up and posts it as a headline "Is there a scandal among us?" If one media source picks it up, many others pick it up as well to not lose out on ratings. Pretty soon you’ll have the idea of a scandal repeated to you many times. Even if the articles you read are debunking the scandal, the fact that there was any type of scandal (true or untrue) will be the only thing you remember.

For example, the famous, "Obama is a Muslim," headline. Conservatives repeat that line over and over so many times that even up until today; many people still believe that Obama is a Muslim, despite the fact that Obama is in fact, not a Muslim.

This is also very similar to the, "Thought Stopping Technique."
This is an effective technique for those suffering from anxiety and panic disorders, among other things. When you begin to experience negative thoughts, you consciously tell your brain to stop and then replace those negative thoughts with thoughts that discourage further thinking.

Have you ever been to a game, whether it be basketball, football or even hockey? Think of the times where your team may be losing or on the verge of losing. You were probably experiencing feelings of dread and possibly even panic. But when there is a chant going on to root for you team, did you start feeling better? That is the thought stop technique. Cheering in the form of chanting for your team is a good feeling. You stopped any negative thinking about your team losing and you began focusing on happily cheering on your team.

This is heavily used in any type of political convention, where your favorite politician is up there raving on about his goals for your country. In between him shouting out each bullet point of his agenda, you're probably chanting something along the lines of "USA! USA! USA! USA!". Immediately chanting after someone speaks doesn't allow your brain to process what was just said because you are too busy cheering on.

Funnily enough, though-stop is also used in cults (http://www.cultclinic.org/qa1.html) as a form of brainwashing.

Perhaps reading the headline isn't the best source of information after all. Seeing a headline repeated over and over as if it were being chanted will only make you remember keywords whether the statement is true or not.


--ElfEnnerji