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A prudent person foresees danger and takes precautions. The simpleton goes blindly on and suffers the consequences.

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Monday, October 7, 2013

By Michael Mccune: The Rant (US Government auditor for 16 years In Cheyenne, WY. - Default Hits Not On Debt But Unpaid SS- (( to Have Michael send you the Rant to your Email contact Him Here ((

Default Hits Not On Debt But Unpaid SS

It is disheartening to discover all those anger management classes I took are wasted when I listen to what passes for new reports.


Monday morning it was the effects of the government shutdown that set me off. The government is forbidding professional fishermen from doing their job because the Coast Guard cannot "protect" them or rescue them in case of a disaster. It is another scam by our government designed to divert attention away from its spend-thrift policies.


Think about the inanity of having the august Supreme Court re-open a session today for a case involving religious activity which is guaranteed by the First Amendment. The government is in a partial shutdown. Open, walk-through malls have been gated and wrapped to keep citizens out. National Parks have closed, keeping citizens out. Yet we still have a State Department operating 192 countries. We still have 209 countries in which we have troops stationed and we are still provided "financial aid" to 221 countries. Finally, many government union leaders showed up at work today, not to work but to collect their paychecks.


The government sent home all non-essential personnel. Furloughing those people while the mucky mucks get paid has no logical base. They are bystanders in this mess. Congress should be the first to be designated as non-essential. The Executive Branch should follow since it cannot do anything without Congress doing its job first.  


Yet the news outlets try to scare Americans with "default" talk and the disaster that will be every 15 minutes. They even show an October calendar with the 17th circled in red.


Examine what a default really means. America's government cannot pay for its outstanding, bonded debt nor the interest on that debt in a default situation. America's government currently is on the hook for slightly more than $200 billion dollars this month in interest on debt and maturing IOUs. America's government expects to have tax payments of about $220 billion this month, well over the amount necessary to pay its "default line" obligations.


So why the talk of default?


It is a ruse to get the average citizen to stay tuned for the latest 'breaking headlines.' But what is frustrating is it is also a way to scare those currently dependent upon government coffers to continue to support Washington's 'business as usual' practices.


Social Security recipients should be worried. Over the years they let their government steal the Permanent Trust Fund to pay off current bills. By allowing 'business as usual' in Washington to continue the word "let" is not too far-fetched. Medicare and Medicaid recipients should likewise be concerned. But if their benefits disappear is it due to a political stalemate in Washington or because they allowed the government to take those funds from them in the first place?


Those government employees that are facing the hardship of not having a paying job are being paraded across the TV screen as pathetic examples of the hardship the shutdown is having. Did you know a private businessman faces that same dilemma every MONTH? His employees are guaranteed nothing if either they or the boss make an error but especially if some dunderhead in government decides something they have no control over.


The news item that sent chills through my economic core was the fishermen who couldn't proceed to sail because of cutbacks at the Coast Guard. These fishermen play a vital role in our economy, harvesting the bounty of the oceans to feed millions. Yet their activity falls into the 'other' category in the Congressional Budget Offices' charts on economic activity.


The 'other' category accounts for 44% of the total current economic activity in this country. Government activity gives us an additional 18%. Financial institutes chip in 16%, construction about 4%, mining 2%, transportation 3%, non-durables 5% and durables 8%. This is how the CBO breaks down its economic pie.


It is disheartening to compare the various charts in the CBO report. Non-durables take a lesser portion of hours but its economic share of the whole has not shrunk as much. Financials consume only slightly more time than 20 years ago but their nominal value to the pie has exploded and is more than double the size it was two decades past.


Most Americans are in the 'other' category for employment and contribution. The number of hours worked as part of the whole10% higher than it was but the financial reward has not kept pace, it is slipping into negative territory. The real eye sore in the chart was government's share because the government put Social Security, Medicare and Medicaid into its economic "contribution." How, when it is our money to start with?


This is the default line that cannot be pushed aside any longer. This is the default coming towards America.


A flat statement from the General Accountability Office on its own charts tells the sad story. "The GAO's simulation [projection of debt load] lead to an overarching conclusion: current fiscal policy is unsustainable over the long term. Absent reform of federal retirement and health programs--including Social Security, Medicare--federal budgetary flexibility will become increasingly constrained." This is the most current published assessment, done this past spring.


As working Americans we paid for the benefits of Social Security, Medicare and Medicaid with our FICA taxes. The politicians blew through the extra funding issuing IOUs. Now, to cover their excesses, they want to put a larger burden on our kids and grandkids while not cutting their programs a whit.


This default line has been set already by past governmental actions and exacerbated by the Progressive expansion of government by the politicians currently in place. There is no avoiding it.


The whole government shutdown is backwards. Once again citizens are to feel the pain while the merits of pet programs and excesses are debated  to death. Main Street America should be able to continue as normal while the bureaucrats and the politicians are forced to work for the slave wages they expect us to lean on--wages which should also carry no financial benefits whatsoever since it is the politicians that got us into such a state in the first place.


The unspoken problem is government blunts initiative with rules and regulations. Without initiative, private business cannot grow. Without private business, the economy cannot grow. Without a growing economy, more people are claiming a share of the non-growing pie which means the standard of living must decline.


Numbers don't lie. You can see the 'how' in the American collapse. The only question left for discussion is the when part.


"I have sworn on the altar of God eternal hostility to every form of tyranny over the mind of man."--Thomas Jefferson


Attached is a series of four economic charts used as the statistical base for this Rant. These charts came from a set of working papers within the CBO. The quote from the GAO was attached to a chart from its website "The Long-Term Federal Fiscal Outlook", 'Debt Held by the Public Under Two Fiscal Policy Simulations.'

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