I was reading my Twitter freed this morning to get the latest news and commentary.  There were references to a wide range of stories from various news outlets and some funny and interesting posts by individuals that I follow.  As I finished my review I was struck by the fact that we live in a world that is filled with people with perspectives that are extremely diverse.  They range from ultra-liberal in a western cultural context to ultraconservative (conservative isn't close to being the right word because these people appear to be living in about 700 AD).  As I read about the opinions of people with extreme views, compared to my own or centrist views in the US, it was hard to comprehend what planet some of these people come from.

It is also easy to understand why many nations, including the US, are having problems making their elected governments work effectively.  The incredible diversity of perspectives makes building consensus almost impossible.  The democratic nations of the world seem to be breaking apart along lines that are ethnic, class, or special interest oriented.  The fundamental organizational structure of a nation is based on geography.  Yet we see a number  nations in the world being pressured by their own people to break apart into multiple countries or yield fundamental power from the central government to regional governments.  We all know that the nations of the  world have reorganized themselves many times in the past.  I wonder if we are approaching a time when a new type of geopolitical reorganization will evolve.

The government leaders of many western nations apparently failed basic mathematics and economics in school because they don't show any capability or desire to properly manage their countries finances.  Maintaining a proper balance between income and expenses isn't very hard to do if you can add and subtract.   But there are people around the world that don't seem to care about balancing anything.  They want others to hand them a particular lifestyle without working for it.  They want to create money and wealth out of thin air without earning it through the labor of their citizens.  They seem to forget that all wealth creation is tied to labor of some type at some time.  The world has developed mechanisms for storing wealth for future use. But once citizens have spent their wealth it is gone.  Peoples and nations have to start over at the bottom and begin building their wealth from the beginning.   The extreme economic views being expressed by political leaders in some countries are almost incomprehensible.  There is no logic to their arguments other than they want some other nation to give them wealth and receive nothing in return.

Extreme views can be tolerated at different levels.  If some country on the other side of the world wants to impose extreme social or cultural mores on its citizens there is not much anyone in the US can do to stop it.  We should try to avoid interacting with that culture as much as we can.  The governments in western democracies should give their own people as much freedom of choice as possible.  Since the US is made up of many different subcultures our federal government should not be involving in mandating or prohibiting behavior by its citizens.  It should delegate that task to the individual states so they can make their own decisions.

But in the end the social framework must be compatible with the economic math, which must add up properly for countries to be prosperous and stable. Extremists insisting that we ignore the math of basic economics must be removed from influence.   Voters in western democracies should do their best to eliminate any leader or political group that refuses to properly execute basic economic math.  Nations can't function indefinitely when one plus one doesn't equal two.  There is no role for extreme views in economic math.

TPM

It seems like every time I turn on a cable TV news show these days I watch a very earnest person arguing for federal government funding for some type of social welfare program.   If they are asked about the budget deficit and the need to curtail entitlement programs, they generally ignore the point and continue making their case for more federal money.  By some calculations 50 percent of the US population is receiving government funding in one form or another.  While this is happening our national government budget deficit continues at a level above $1T and our national debt is on its way to reaching the $16T level.

What I find most astounding about the "entitlement" people I see on TV is that there is almost no acceptance of the idea of personal responsibility.  The "entitlement" people don't accept the concept that people must take responsibility for their own circumstances and take actions needed to improve their life.  It appears one can't even have a rational discussion with most of the "entitlement" crowd.

I wonder what our Great Depression era parents and grandparents would think about todays "entitlement" people.  The lives of the "Greatest Generation" that won World War II and developed the US into a post war economic powerhouse were formed during the Great Depression.  Life was hard, but they survived.  Even if their formal education was limited they learned skills and developed their talents.  They took what little they had and succeeded.

Pain serves a purpose in life.  It is a warning signal that something is wrong and needs to be corrected.  Some people can live with minor pain and effectively ignore it.  However, when the pain is intense major corrective action is required.

The collective US population is feeling moderate pain at the moment.  It is likely that in the next few years the pain will become more intense.  Our government is creating more long term pain while it attempts to provide short term relief.

It is time for our nation to ignore the pain and drive forward as strongly as possible.  More and expanded entitlement programs won't solve anything. Collectively we need to dig deep inside ourselves and compete in the global economic war that is heating up. 

We must discard the entitlement mentality.

TPM

Today is Saturday, April  7, the day before Easter.  It is a beautiful Spring day in the Washington DC metro area.  Three months ago my wife and I moved into our new townhouse.  Our new development was started a few years ago.  Home construction in phase one and development of phase two of the project stopped cold during the financial crisis when the initial builder went bankrupt. 

Our builder bought the existing lots out of bankruptcy and began delivering new homes in 2010.  Our builder sold new homes at a steady rate in 2011 and their current sales rate must be pretty good because we have new home construction in process all over phase one and lot development for phase two moving forward.  We haven't been around large scale new home construction since the late 1980s but it appears to us that our builder is moving forward aggressively with lots of sold signs in front of homes under construction.  We understand that the Washington metro area doesn't have the same economic issues as other parts of the country due to the huge financial stimulus that US government spending provides to our area.  My views on US government spending are well documented in other blogs and articles so I won't repeat them today.

My wife like to take hour plus walks as part of our effort to remain in reasonable physical condition.  We are enjoying our walks around and through all the construction so we can watch the progress the construction guys are making.  Today we took a mid afternoon walk.  A group of Hispanic construction workers that are assembling (from prefabricated framing) several groups of town-homes were out working hard.  These guys work about ten hour days, six days a week.  They are always working hard, no matter what the weather or day of the week.  They are some of the most industrious people I have ever watched work.  We continue to be amazed by the speed at which they can construct these homes.  Today, during a "holiday" weekend they are out working.  The guys that are operating the heavy equipment preparing the streets and lots for phase two only work five days a week.  They work for a different company.

We don't know the home country of the Hispanic workers we are watching.  We assume they are from Mexico but that may not be correct.  We don't know if they are working in the US legally or illegally.  From our perspective those points are irrelevant.  These guys are hard working people.  They are busting it to get the job done quickly and done well.  They built our new home so we know that they do good work.  Whatever they are getting paid they have earned their pay. 

I would love for some of young American workers would come to the construction area and watch these guys work.  They could learn a few lessons about what it means to work hard to achieve your objectives.  I wish all of these workers and their families the very best.  I have total respect for these hard working guys.

TPM

The US House of Representatives recently conducted a series of votes on FY 2013 and 10 year budgets.  President Obama's proposed budget received zero votes.  Over 400 members of the House voted against the President's budget including all members of the Democratic party that voted.  A bipartisan budget modeled after the Bowles-Simpson deficit reduction plan, developed by several Congressman from both parties, received only 38 aye votes and went down in flames.  Chairman of the Budget Committee, Paul Ryan's budget was approved by a substantial margin. 

Ryan's budget slows down the growth in entitlement spending but doesn't balance the Federal budget for many years, far beyond the time that any accurate forecast can be made by any economist.  Ryan proposes to reduce taxes and simplify the tax code.  However, the details required to fully evaluate his plan are not included in his proposed budget.  Ryan says that his budget will "save" over $6T when compared with the current government fiscal baseline based on current law.  Obama's proposal is advertised to "save" over $3T compared to the government's fiscal baseline.

The US Senate under the non-leadership of Nevada Democrat Harry Reid has not approved a budget for three years.  Reid has completely abdicated any fiscal responsibility.  There is no doubt that in the future historians will evaluate Reid's actions during this period and describe them as disgraceful.  Reid routinely criticizes the proposals of his Republican colleagues but takes no action to develop a meaningful alternative.

Now that Ryan's budget has been passed and effectively endorsed by Mitt Romney, the likely the Republican Presidential nominee, the media battle over the budget has been fully engaged.  Every day we see Republican and Democrat House members or talking heads from the parties or their advocates slam the other approach to the budget.  They debate the merits or demerits of entitlement reform, defense spending, growth in government agency spending, individual and corporate tax policy and many other issues.

The topic that doesn't get discussed is that none of the plans prevent a massive buildup of additional US government debt and the associated increase in interest expense that is required to service the debt.  None of the plans really address the fiscal problems our country faces.  The apparent lack of understanding by the talking heads of the magnitude of the problem is laughable.  It is also tragic.

Big government spenders have had control of the US government for decades.  Continuing increases in the national debt reflect our leaders inability to control spending for entitlement programs, DoD and agencies and programs of all types.  Too many people want the money and power associated with the government and its programs.  Collectively US citizens are devouring the national wealth that was created by our forefathers.  Our national debt is a measure of US citizens collective greed and lack of fiscal responsibility.

The US government's commitment to budget management and fiscal responsibility is a joke.  None of the budgets that have been presented truly address our nations fiscal issues.  The debate that is occurring is between grossly irresponsible (Obama) and irresponsible (Ryan) policy.  No politician is willing to fully address the problem because too many people, many of them very powerful, will be impacted.

Therefore, the US Government Budget Dark Comedy continues its run.  At some point in the future the Dark Comedy comes to an end.  It will not be pleasant.  It will be very ugly.  I hope you will be prepared.

TPM

Rep Paul Ryan, Chairman of the House Budget Committee, presented the House Republican budget recommendations this week.  The Republicans put a lot of effort into the lead up to the big announcement with Ryan and other house leaders tweeting away and creating internet videos.  Ryan hit the TV news circuit over the past few days to get out the message.

The big news is that Ryan has proposed to save over $6T against current projections over the next 10 years while President Obama's proposal will save around $3T.   Ryan claims his plan will reduce the US government debt as a percentage of the US economy.  Ryan proposes two lower tax brackets (10 and 25 percent) for individuals with a reduction in "tax breaks".  Unfortunately,  the reduction in "tax breaks" is currently undefined.  Ryan has proposed some form of public input into the process of defining what "tax breaks" get cut.  Ryan also proposes to significantly reduce government spending on a variety of programs including some entitlements.

I like Paul Ryan.  He has been one of the very few political leaders willing to have a rational discussion about solving the US debt crisis with real changes to US government spending.  But his plan doesn't balance the budget, it doesn't keep the national debt from continuing to grow and doesn't fundamentally solve the problems that must be addressed.  And he was roundly criticized for his plan by liberal progressives that can stand the thought of reductions in US government entitlement spending.

The US Senate hasn't passed a budget in about three years and it appears there will be no action on a budget this year because of the November elections.  Senator Harry Reid, is likely the most irresponsible political leader in Washington as he willfully violates the law by refusing to permit budget debate in the Senate.  Reid has no problem advocating unnecessary spending in his home sate and building up the US debt pile to the moon.  After Ryan's budget passes the House of Representatives it will sit in the Senate with no action taken.

While the Congress accomplishes nothing, President Obama continues to advocate programs that don't make fiscal sense and fail to act on policy changes that are needed to point the county in the right direction from a fiscal perspective.  The recommendations of Obama's Bowles-Simpson Commission haven't been acted upon.  The failure of President Obama to fundamentally endorse the Bowles-Simpson Commission's recommendations will be remembered by historians as one of the greatest failures of political leadership in the history of the United States.

Our national debt is now in excess of $15T.  The deficit this year will exceed $1T. Most US citizens are takers, not givers, in one form or another from the US government and many are advocating for more handouts. It is likely we will hit the current US federal debt limit around the end of 2012.   The absurdity of the US government fiscal management and budget process continues. 

TPM