Another victory like this and we are undone
By Norman Leahy | Tuesday, August 2nd, 2011 | Policy, PoliticsThe great debt deal, which will save the Republic from…something…increasingly resembles a sad joke. Your morning chart, courtesy of Tad DeHaven, offers a sobering look at what the political class and its pilot fish consider a win on spending:
Somewhere, Pyrrhus of Epirus is smiling.
Now here’s another chart to ponder: it plots the price of gold versus hikes in the federal debt ceiling limit since 1994:
There are any number of reasons why gold has risen over the last 17 years — wars, uncertainty, demand, etc. The barbaric relic’s rise, though, does seem to fit neatly with the debt ceiling’s rise. Notice the long, flat period during the late 1990s for both gold and the debt? Those were the salad days, when the feds were running near or in the black. Not surprisingly, those were also the days of divided government, hyper-partisanship and the Clinton impeachment. And a tech bubble.
Oh Pets.com, how could you have gone so wrong?
It all falls apart during the Bush years, particularly in his second term, and becomes almost parabolic during the Obama years…which also coincide with the fed’s furious currency debasement.
Is it all a coincidence? Possibly. But this is the sort of chart that should make you wonder just how long the era of fiat currencies will last. Coupled with the first graph, it makes me wonder if that moment has already arrived.
(Cross-posted at Score Radio Network)
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About the author
Norm Leahy has written about Virginia and national politics online since 2002, beginning with One Man's Trash (OMT), and continuing through Bacon's Rebellion (both the blog and the e-zine), Sic Semper Tyrannis, NBC12's Decision Virginia, Richmond.com and Tertium Quids. He is the chief blogger at "The Score" and a producer of "The Score" radio show as well as being a Washington Post contributor.
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3 Responses to "Another victory like this and we are undone"
…even Cut, Cap, and Balance wouldn’t have really fixed anything long term.
As for fiat currencies, they will exist as long as war and economic downturns are realities. So long as governments can spend more than 100% of their capacity, they will.
I think your previous post established that it was the conversation, tone or atmospherics which changed not the substance. Since many states operate in reasonably balanced fashion it is possible to do that Federally. Hopefully the Obama Admin has cured the country of the idea that government pork (as opposed to increased liquidity) will rescue it from hard times. Its in the hands of the voters now. They cannot plead ignorance.
@ Val,
I’d challenge your assumption (many states operate in a reasonably balanced fashion) based on these numbers:
So here is a quick chart that shows how much states pay in federal taxes vs. receive back from the federal government.
http://visualizingeconomics.com/2010/02/17/federal-taxes-paidreceived-for-each-state/
It appears that the following 18 states are subsidizing the rest. (How much they receives for every $1 paid, how they voted in the 2010 Presidential Election)
California ($0.78, D)
Connecticut ($0.69, D)
Colorado ($0.81, D)
Delaware ($0.77, D)
Florida ($0.97, D)
Illinois ($0.75, D)
Massachusetts ($0.82 , D)
Minnesota ($0.72, D)
Michigan ($0.92, D)
New Hampshire ($0.71, D)
New Jersey ($0.61, D)
New York ($0.79, D)
Nevada ($0.65, D)
Oregon ($0.98, D)
Rhode Island ($1.00, D)
Texas ($0.94, R)
Washington ($0.88, D)
Wisconsin ($0.86, D)
It is interesting that all but one of the 18 states subsidizing the other 32 voted for President Obama in 2010.
In Virginia, for every $1 we pay in federal taxes, we receive $1.51 back. If we, and the other 31 states living on Federal Welfare, received $1 for every $1 we paid, how would our economy look, how would our state’s balance sheet look?
Obviously Federal tax revenue is used in many fashions and only occasionally goes directly into the state coffers; however, it has a huge impact on a state’s economy and revenues.
Here’s a look at the debts of individual states:
http://www.forbes.com/2010/01/20/states-debt-pensions-interactive-map.html
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