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S&P's $2 Trillion Math Mistake 1040

Last friday Moody's S&P announced that they had downgraded the U.S.'s credit rating (leading to a pretty huge discussion on Slashdot I might add). Since then more interesting news has come out, suraj.sun writes "In a document provided to Treasury on Friday afternoon, Standard and Poor's (S&P) presented a judgment about the credit rating of the U.S. that was based on a $2 trillion mistake. After Treasury pointed out this error — a basic math error of significant consequence — S&P still chose to proceed with their flawed judgment by simply changing their principal rationale for their credit rating decision from an economic one to a political one. S&P incorrectly added that same $2.1 trillion in deficit reduction to an entirely different baseline where discretionary funding levels grow with nominal GDP over the next 10 years. Relative to this alternative baseline, the Budget Control Act will save more than $4 trillion over ten years — or over $2 trillion more than S&P calculated. S&P acknowledged this error — in private conversations with Treasury on Friday afternoon and then publicly early Saturday morning. In the interim, they chose to issue a downgrade of the U.S. credit rating."
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S&P's $2 Trillion Math Mistake

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  • Pack of LIES (Score:3, Insightful)

    by Anonymous Coward on Monday August 08, 2011 @08:58AM (#37020898)

    More lies...the debt will INCREASE by almost 8 trillion over the next 10 years. And probably more than that I can guarantee you! The S&P should have downgraded us a loooonnnggggg time ago.

    And sorry it is no ones fault but ours.

  • by goldspider ( 445116 ) <ardrake79@gm a i> on Monday August 08, 2011 @09:01AM (#37020926) Homepage

    Somebody correct me if I'm wrong, but at current spending levels, cutting $4T over 10 years still has us running a deficit. Considering that this deal was politically the best we could do, it's easy to agree with S&P's pessimistic view of our political budget woes.

  • by Cornwallis ( 1188489 ) on Monday August 08, 2011 @09:02AM (#37020946)

    There was a time when people worried about who had the largest nuclear arsenal.

    This kinda reminds me of that "1000 vs 10,000" nuclear weapons discussion. Everybody is dead after 1000 bombs go off. It isn't like 10,000 bombs are going to kill you that much more.

    The point being the economy is still going down the tubes...

  • by Anonymous Coward on Monday August 08, 2011 @09:03AM (#37020956)

    It was S&Ps rating system that the banks gamed with repackaged mortgages in the first place. Fuck um.

    How long before the media points that out? Think they will?

  • by Hijacked Public ( 999535 ) on Monday August 08, 2011 @09:07AM (#37021006)

    It isn't basic math, or any math at all, really. Despite massive quantities of data analysis and some of the most mind bending graphs ever devised, plain old emotion still rules most financial markets and most certainly rules things like applying "AAA" versus "AA+" to some piece of paper.

    These people everyone is amped up about changing the US' rating are the same people who entirely failed to foresee the biggest economic collapse most of us have ever lived through. They were handing out AAA ratings, to mortgage backed securities that no one other the guy who invented them could even understand, just a few months before they became almost completely worthless. The fact that anyone still trusts S&P and their ilk is illustrative of the fact that emotion rules this game. They've proven with math that they know no more than anyone else.

  • Re:Political (Score:5, Insightful)

    by SwedishChef ( 69313 ) <craig.networkessentials@net> on Monday August 08, 2011 @09:08AM (#37021014) Homepage Journal

    You're right... it's just too bad that S&P didn't warn investors about the even greater risks involved in bundling questionable home loans and calling the result "investments".

  • Amateur hour (Score:4, Insightful)

    by TimHunter ( 174406 ) on Monday August 08, 2011 @09:08AM (#37021018)

    S&P stands revealed as not understanding basic analysis of budget estimates. []

  • Re:Amateur hour (Score:3, Insightful)

    by goldspider ( 445116 ) <ardrake79@gm a i> on Monday August 08, 2011 @09:10AM (#37021036) Homepage

    Leave it to Paul Krugman to defend our current spending practices.

  • by IWannaBeAnAC ( 653701 ) on Monday August 08, 2011 @09:12AM (#37021054)

    The total debt US has is way too high anyway, if a person had same sort of debt load they would be insolvent.

    That is a pretty astounding thing to say. Most people who have a mortgage have a far higher debt load than the US government, and sub-prime victims excepted, the vast majority of home-owners do not go insolvent in the process.

  • by Anonymous Coward on Monday August 08, 2011 @09:12AM (#37021056)

    No, you see... the point here isn't to make a well-reasoned argument, rather they are trying to link the 'error in calculation' to somehow mean the S&P downgrade is faulty.

    IIRC, the 'math mistake' they did was assuming that the Bush tax cuts wouldn't expire... Which seems like a rather obvious thing to happen considering there's certain elected people who'd rather let the US default than lose the next election.

  • by Snarky McButtface ( 1542357 ) on Monday August 08, 2011 @09:13AM (#37021062)
    I find it difficult to believe their reasoning is sound. The other two ratings agencies, Moodys and Fitch, have no plans to downgrade US debt. Standards and Poors also gave AIG and Lehman Brothers AAA credit ratings up til they crashed and burned. Then there were the mortgage backed derivatives issued the same AAA rating by S&P. The United States does have some serious long term budget problems but the credit downgrade is just political posturing.
  • by acidfast7 ( 551610 ) on Monday August 08, 2011 @09:14AM (#37021084)

    "S&P still chose to proceed with their flawed judgment"

    The judgement is not flawed ... AT ALL. With the revised GDP numbers from previous years, America does not deserve an "AAA" rating. However, neither do most other countries with a "AAA" rating.

    But seriously, just GET OVER the fact that America is not fundamentally economically sound.

    Every one complaining about S&P sounds like a 4-year whining about having their favorite toy taken away. S&Ps downgrade didn't place the America into the current position they're in. Lack of fiscal management from 1980 onward, did.

  • as a European. (Score:2, Insightful)

    by drolli ( 522659 ) on Monday August 08, 2011 @09:17AM (#37021112) Journal

    I dont get it.

    One of the critical point is that S&P obviously believes that the deal made has unreasonable restrictions for future budget decisions, like the tax politics.

    On the other hand i have never seen any political party so unwilling to accept (and clean up) the mess they made as the Republicans. Everybody knows the explosion of the deficit has nothing to do with Obama, it is the consequence of 2 wars at the same time started without specific goals, running over a decade, and insufficient results up to now.

    So while the publically stated goals of the tea party may be understandable to me (everybody *sees* that things need to change), there is a significant difference between saying "we spend less" and "we just dont pay, even if we are obliged". The latter does not solve *any* problem (even if the right problem is stated), but destroys the trust of the insitution lending the money.

    To say it in a analogy: If you have ordered something a restaurant, its not an option to say: "oh, i just dot pay this and dont eat it". Thats what they suggested. Obviouls there is significant difference to just not ordering something.

  • by Arlet ( 29997 ) on Monday August 08, 2011 @09:20AM (#37021148)

    But then again, most mortgage owners have a reasonable plan to get out of debt in a certain time. For instance, my mortgage will be fully paid off in 15 years, and even assuming I default before that, the bank can sell the house and get their money back, so it won't disrupt anything else.

    Can the US government claim the same ?

  • by Colonel Korn ( 1258968 ) on Monday August 08, 2011 @09:23AM (#37021188)

    regardless of the math, S&P's reasoning is sound. let's not try to find scapegoats, please. the U.S. is hurtling at full speed towards a deficit meltdown, and quibbling over S&P's math doesn't change the fact that the country needs to come to terms with it ASAP.

    I do not think that words means what you think it means.

    Even if their conclusion is correct, their reasoning isn't anything close to sound. "Oh, the justification for our action was off by about 20%? That's okay, we'll just support the same conclusion and justify it with our gut feeling about politics," isn't reasoning at all. It seems to me that sound reasoning would be quantitatively comparing default likelihoods between the US government and other AAA-rated securities and then adjusting accordingly.

    What they did is like killing a chicken, looking at its entrails, and then declaring that because of the intestines, they are confident that 2 + 2 = 4.

  • Re:Pack of LIES (Score:4, Insightful)

    by Joce640k ( 829181 ) on Monday August 08, 2011 @09:23AM (#37021194) Homepage

    It's not "the rich" who caused the problem. Asking "the rich" to pay more doesn't really address the root cause and will only be a band-aid on the sucking chest wound that is the economy.

    The people who should pay up are the ones who got a trillion dollar taxpayer bailout and are now busy awarding themselves billion dollar bonuses for doing such a great job bankrupting the economy.

    Then after they've paid up ... boot the parasitic bastards out of the system.

  • by nstlgc ( 945418 ) on Monday August 08, 2011 @09:24AM (#37021202)
    How can you in one sentence admit that "the US does have some serious long term budget problems" AND claim that getting anything less than the highest possible rating would be "political posturing" ?
  • by Sycraft-fu ( 314770 ) on Monday August 08, 2011 @09:27AM (#37021240)

    He says the government's performance is sure not AAA, but he'd rate the debt as AAA.

    Remember: Ratings on bonds is supposed to be how likely they are to default. Nothing has changed that makes the US more likely to default. []

  • by ArcherB ( 796902 ) on Monday August 08, 2011 @09:31AM (#37021298) Journal

    Our political situation is horrible, and shows no signs of becoming better. The Tea Party dominates the GOP, and the Democratic president folds faster than a house of cards whenever they do something stupid.

    Let me break it down to the most basic of concepts:

    Democrats want the government to spend more. The TEA Party wants the government to spend less.

    Who do you think is right here?

  • by jeffmeden ( 135043 ) on Monday August 08, 2011 @09:34AM (#37021332) Homepage Journal

    The total debt US has is way too high anyway, if a person had same sort of debt load they would be insolvent.

    That is a pretty astounding thing to say. Most people who have a mortgage have a far higher debt load than the US government, and sub-prime victims excepted, the vast majority of home-owners do not go insolvent in the process.

    When the government has already borrowed to over 10x it's annual income and continues to borrow yearly at almost double its income, I can assure you it acts NOTHING like a normal person. If I had a $500,000 mortgage and only earned $50,000 a year but had a car note that cost me $100,000 a year... you think creditors would get anywhere near me! AAA?? More like FFFFFFFFFFFFFFUUUUUUUU.

    The common mistake with the "debt to gdp ratio" is that the federal government doesnt have a valid claim on every dollar in the GDP. They have a claim to what they have levied in taxes (it says so in our constitution). So saying "oh debt to gdp is better than anyone with a big mortgage" is like saying "oh the rest of the guys at my company all own a Porsche, i am just a janitor and my paycheck is 1/10th any of theirs but I can afford to get one too because WE all make TONS of money!"

  • Re:Pack of LIES (Score:3, Insightful)

    by shentino ( 1139071 ) <> on Monday August 08, 2011 @09:34AM (#37021334)

    It's not my fault that every damn candidate is a corporate cock sucker.

    It's also not my fault that the corporate owned media system is never going to let fly someone waltzing in and pushing their little cozy community out into the cold where it belongs.

    All it takes is a little scandal and even the most angelic of candidates will find themselves stained with some outlandish smear that enough John Q. Publics will run away from, leaving

    That same corporate media engine will also make sure that John Q. Public is mesmerized by content that will keep his nose out of politics and getting educated, so he will just keep getting dumber.

    Furthermore, the recent article on the ohio election just proves how low the establishment is willing to stoop to keep itself in power even among fairly educated voters, which means that using the democratic process to fix things is an exercise in futility, and serves as a nice rebuttal to all those blowhards that claim the average voter is just a lazy bum too complacent to do anything about it. If the average voter got more educated and involved, it still wouldn't matter, because the people in power are willing to cheat to win.

    As long as the general population is numb, content, and naively happy, nothing is going to change, and the system has every incentive to keep it that way.

    Nothing short of either a catastrophe or a miracle is going to shake them loose.

  • by Stormy Dragon ( 800799 ) on Monday August 08, 2011 @09:36AM (#37021354) Homepage

    The CBO assumed discretionary spending will grow at the rate of inflation. S&P assumed it grows with GDP. Both of these are perfectly valid assumptions (if any complaint is to be made, they're both too optimistic since historically the growth in discretionary spending has far exceeded both measures); a legitimate alternate choice of economic models is not an error. This is the Obama administrations typical "all reasonable experts agree" tactic of painting legitimate differences in opinion as disengenuous.

    As for S&P's "acknowledgement", it was more along the lines of "we just reported your long term unfunded obligations are $211 trillion and you lack the political will or ability to do anything about it. And you want to have an argument over whether it's really $211 trillion or $209 trillion? If it's that improtant to you, we'll use your numbers, but you're completely missing the point here."

  • by vlm ( 69642 ) on Monday August 08, 2011 @09:37AM (#37021362)

    Nothing has changed that makes the US more likely to default.

    I would strongly disagree.

    Almost all bond issuers can only default by not repaying the principle and interest. I do agree with you that is infinitely unlikely, since the US Govt can simply print the money on demand. Of course no one expected the USSR to collapse when it did, so, its slightly more likely the USA could collapse now.

    The failure mode is the US is one of the few bond issuers who controls global inflation. What exactly is the difference, financially, between "not repaying" and "repaying a hyperinflated nominal value"?

    Real world example: You buy a 10 year, $1K t-note. I agree completely the odds are excellent, although not quite 100% perfect, that in 10 years you'll have your $1K plus a tiny bit of interest returned to you. I disagree in that the odds are pretty high that due to high to hyper inflation, that $1K t-note will only be worth approximately one restaurant meal.

    That is an inflationary default.

  • by MightyYar ( 622222 ) on Monday August 08, 2011 @09:50AM (#37021398)

    I happen to be on the side of "spend less", but it is a perfectly legitimate opinion to want to spend more AND collect more. The Democrats aren't advocating raising spending while lowering taxes. Frankly, that sounds like what the Repubs did under Bush II.

  • by mackertm ( 515083 ) on Monday August 08, 2011 @10:00AM (#37021508)

    Yes, because the position of the Democratic party (and all Democrats) is that basic. "SPEND MORE!"

    It must be a simpler, more straightforward world in which you live.

    Most every Democrat I've heard has talked about the desire to do some spending cuts in combination with some array of revenue increases. Sometimes they differ in what they think should be cut or protected (Medicare, Social Security, defense, whatever), which can then lead to internal disagreements among Democrats that might make it look like the entire party doesn't want to cut anything; the same holds for revenue increases, I'd say. I'd hope that over time they could come up with a plan that at least most Democrats could get behind that would be part spending cuts/reforms and part revenue increases.

    On the Republican side, there are certainly some I've heard talk about the need to reform the tax code and (at least) start cutting out tax expenditures. I'd say that those Republicans are in the minority, mainly because of the no increased taxes pledge and the Tea Party pressure from the right of the party.

    I wouldn't mind the "cut spending" pressure coming from the Tea Party if the people pushing hardest for that didn't also seem to be entirely incapable of compromise. Compromising isn't something to be frowned upon, it's how both parties could leave with a deal they might like (or at least dislike equally). As I see it, the Tea Party's anti-spending stance is one that we need - it's the execution that is lacking.

  • by buzzn ( 811479 ) on Monday August 08, 2011 @10:02AM (#37021546)
    > Democrats want less government spending as a percentage of GDP [1]. The TEA Party wants to destroy government [2], unions [3], and the US economy [4].


    Sources: [1] []
    [2] []
    [3] []
    [4] []
  • by Archangel Michael ( 180766 ) on Monday August 08, 2011 @10:07AM (#37021608) Journal

    He's from Washington?

    Seriously, who believes anything coming from Wall Street OR DC? We are continuously lied to, by people treating us like children getting ready for Christmas. "Yes Virginia there is a Santa Claus"

    We've known about the budget problem, we've known about Social Security going bust, We've known about Medicare, three wars, pork barrel spending all draining money from our economy for YEARS and yet, all they do is kick the can down the street.

    Both DC and Wall Street have one thing in common, neither ever takes responsibility for the crap they get us into. And I'm afraid that short of a million people showing up in DC armed to the teeth, that nothing is going to change. After all, people like teat of Momma Government and Daddy Wall Street's allowance.

  • by AngryDeuce ( 2205124 ) on Monday August 08, 2011 @10:09AM (#37021630)

    Yeah, and God Forbid the people that can afford to give a little more to help the country that allowed them the opportunity to become wealthy in the first place actually do so. They didn't write those big bribe checks...oh, I'm sorry, campaign contributions... to have someone turn around and raise their taxes and cost them an extra percent a year. I mean, what is that, a few thousand dollars less a year? How will they ever survive?!

    I'm all for spending cuts, but without taxes being raised on the wealthy, it's just more of the same BS. Tell the people living on 12 grand a year in the projects that it's time to tighten their belts so that the asshole speculators on Wall Street can get away with their ridiculously low effective tax rates. Oh, but I forgot, all that paper being traded back and forth "creates jobs". That's why these there's so many jobs out there now, right? That's why these companies are all sitting on record amounts of cash in the bank both here and abroad, meanwhile they're laying people off left and right...

    This is just Part II of the extortion scheme that started with the bailouts as the rich try to snatch up an even bigger piece of the pie than they already have.

  • by Archangel Michael ( 180766 ) on Monday August 08, 2011 @10:09AM (#37021644) Journal

    They didn't cut 4 Trillion over 10 Years. They said they did, but it us up to future legislatures to make it happen. They did nothing except put on a dog and pony show for the kids at home. Nothing meaningful happened.

  • by dnahelicase ( 1594971 ) on Monday August 08, 2011 @10:17AM (#37021728)

    Running a deficit and running an unsustainable deficit are two different things.

    Not really. This is where basic math and basic economics comes into play.

    Economists will come up with ways to make it sound different, but it's simple. Running a deficit is bad. Running a surplus is good. It's better to spend less than you have. Period.

    The only time it can be good is a short-term deficit to cover a cause/project. For example, you can cover a war, cover a mission to reach the moon, cover a massive infrastructure investment, etc. This is called borrowing.

    Borrowing is okay because you don't have the cash today to cover the full cost, but you will in the future - and in the end will benefit from it, resulting in a net gain.

    Deficit spending is when you don't care about math or the future. Running a deficit is when you suck at your job

  • by geoffrobinson ( 109879 ) on Monday August 08, 2011 @10:20AM (#37021770) Homepage

    1) Plan on gaining 100 pounds.
    2) Gain 75 pounds.
    3) Congratulations. You have a weight loss of 25 pounds.

  • by trout007 ( 975317 ) on Monday August 08, 2011 @10:20AM (#37021778)

    Any time I see a 10 year budget I get a good chuckle. We don't even have a budget for this year.

  • The fact that anyone still trusts S&P and their ilk is illustrative of the fact that emotion rules this game. They've proven with math that they know no more than anyone else.

    "All you need to know about rating agencies is that in May 2010 Moody’s still rated Greece triple-A." - Mark Steyn

  • Re:Pack of LIES (Score:4, Insightful)

    by AngryDeuce ( 2205124 ) on Monday August 08, 2011 @10:34AM (#37021946)

    The poor? Those guys with government housing, free health care, food stamps, welfare, WIC and government cheese? The guys with a PS3 and an Xbox on their 42" LCD TV?

    You know, it amazes me how many people think being poor is just so awesome...

    As someone that's actually been poor and lived in the projects, (really poor, not "my parents can't afford to buy me a car for my 16th birthday" poor) that's a bunch of crap. More right-wing propaganda to justify their moral bankruptcy and not being satisfied with what they have, nor grateful that they are successful enough not to be in that position. I went to sleep every night listening to gun shots, police sirens, dogs barking, and helicopters, watched families get torn apart by drugs as they sought some escape from their dismal existence, seen fist-fights break out over job openings at McDonald's and Walmart because there's nowhere else to work. Yeah, that sure is an awesome lifestyle. Highly recommend it...if you want to grow up without a childhood.

    Meanwhile, the right finds that one guy out of a thousand that made it out and broke the cycle and holds him up as being some sort of proof that anyone can do it, conveniently ignoring how ridiculously lucky that guy really was. Throw 1,000 darts at a dartboard and you're probably going to get a bullseye, but that doesn't count for shit when the other 999 are embedded all over the bar.

    While I agree wholeheartedly that our government is ridiculously corrupt and that the people of this country no longer have representation (unless they make $250,000+ or are one of those new "people", i.e., a major Corporation), I don't think we need to leverage our financial solvency strictly on the backs of the poor and disadvantaged. Cutting these social programs isn't going to effect the crack dealers and hustlers in the ghetto, it's going to hurt the kids, the elderly, and the infirm. The kids that the right all professes to care about when they're railing against Planned Parenthood, they're the ones that are going to go hungry. What the hell did they do to deserve their lives? They were born to the wrong mother and father so screw 'em, that's what they get for being poor? Yeah, right...

    But, by all means, keep talking about that awesome welfare existence. It helps identify those that truly have no clue what they're talking about...

  • by davek ( 18465 ) on Monday August 08, 2011 @10:39AM (#37022026) Homepage Journal

    Government: We planned to increase the budget deficit by $4 trillion next few years, but now we're only increasing it by $2 trillion! We cut spending by $2 trillion dollars!

    S&P: You still increased spending. You didn't cut anything. You still spend almost twice as much as you make. You are no longer credible.

    Government: Traitors! Terrorists! Hostage takers! Can't you idiots in private industry do math?

    Pathetic. Even the slashdot title of this article is complete rubbish.

  • by Anonymous Coward on Monday August 08, 2011 @10:40AM (#37022044)

    You have to be a complete piece of shit... continue being a Party loyalist at this point, and thinking one Party could possible be at fault. Seriously, to be a partisan at this point is beyond metal retardation and into comatose.

    Congratulations! You are a complete piece of shit, and the heart and soul of the problem.

    there appears to be a massive number of epically stupid people

    And you're one of them, you unthinking, ideological self-brainfucked sack of scum. Please fucking die. Honestly, people like you dropping dead can only be a net plus to society.

  • by nehumanuscrede ( 624750 ) on Monday August 08, 2011 @10:41AM (#37022068)
    Considering how petty Congress is being about the entire issue, I would downgrade the damn rating as well. From their ( S&P ) standpoint, the leaders of the USA are willing to put the entire economy at risk while they squabble about their own little pet issues.

    We ( the US ) obviously can't get its act together by ourselves. Congress proved that. It took the threat of a downgrade before we finally decided to get semi-serious about the issue. Personally, I would consider the S&P downgrade as a warning shot across the bow. In effect "Get your sh*t together or suffer the consequences".

    We shouldn't REQUIRE a GD debt increase to begin with. If our idiot 'leaders' would learn to spend less than they take in, we wouldn't NEED a debt ceiling at all. S&P sees this, as does the rest of the world. The leadership isn't interested in reducing their spending and, as a result, S&P made the right decision. This isn't a sustainable path. At some point it WILL come falling down around you. Why the retards in charge can't figure this out is beyond my ability to explain.

    Personally, I hope the other rating companies follow suit. It will take that level of threat before my elected morons finally quit bickering and note the cliff edge they're dancing on. Maybe ( and it's a longshot ) they'll be able to get this train back on the right track. Maybe.

    Given their track record, I'm definitely not counting on it. . . :|
  • Re:Pack of LIES (Score:3, Insightful)

    by DavidTC ( 10147 ) <<moc.xobreven> ... .vidavsxd54sals>> on Monday August 08, 2011 @10:43AM (#37022094) Homepage

    All this talk about raising taxes on the wealthy "killing small business" is crap. Something like 80% of businesses in this country bring in less than $75,000 a year, the statistics are all on the various government agencies that do the reporting.

    Man, don't even frame it that way, you're already inside the lies.

    It doesn't matter how much small businesses bring in. The wealthy's income taxes has nothing to do with how much money businesses have.

    The wealthy own, or are employed by, businesses. The only way taxing them can even possibly hurt monetarily is if some sort of magical fixed amount of money going to the wealthy, so when the wealthy make less due to taxes, they merely have to file a complaint somewhere, and the business bumps up their income, and therefore decreases everyone else's. (And if that's how the world works...damn, we're already rather fucked up.)

    Once you actually point this out, idiots ill try to make 'reducing taxes' the rich investing in companies, but that doesn't work either...that's capital gains tax, not income tax. (And even if companies are invested in, they don't hire more people until they need them, period, no exceptions.)

    Don't buy into the idea it's some sort of trade off, but the right is lying because income tax increases will only 'hurt' large companies. It's not any sort of fucking trade off at all. Companies do not hire and fire people based on their own taxes, and they sure as fuck don't hire and fire them based on the taxes of their owners and the taxes of their CEOs. It's not any sort of arguable point. It's total nonsense, either the person arguing that is a partisan liar, or they're an idiot.

    However, even pretending the whole 'businesses will have less money (Because they magically have to pay the rich the same amount.)' is true, it doesn't make sense anyway. It requires an utterly stupid concept of how businesses work. Companies do not sit around going 'Man, we've got some extra workers now, but we'll keep them around until we (aka, the rich CEO) need some extra the money, at which point we'll fire them and hand the profits to the CEO.' Companies don't keep extra people around, and giving them more money won't cause them to keep extra people around, and removing money won't remove people.

    Companies hire people because they need people working for them to produce the jobs and services that others buy from them. Period. The only way to fix the economy is to have people start buying stuff, so companies hire people to produce said stuff. And the only way to have people start buying stuff is either to give money to the poor, who spend it immediately, or have the government just buy stuff, like it for WWIII to get out of out the Great Depression.

    Instead, we've decided to give money to the rich, because uh, I dunno know.

  • by siride ( 974284 ) on Monday August 08, 2011 @10:43AM (#37022102)

    I keep seeing these arguments and they keep pissing me off. We all KNOW that raising taxes alone won't solve the problem. So why do you people keep writing up these long-winded posts about how taxing the rich is a waste of time? You are tilting at a strawman.

    Another set of problems in your post:
    1) You say that states can take over services, yet states are often doing a lot worse than the feds and unlike the feds, they are frequently required by their constitutions to have a balanced budget, so they can't even do short term deficit spending until the economy improves. In my home state of North Carolina, they basically gutted public education, among other things, to solve the budget gap. You want NC to now have to cover the burden that the feds used to cover? Fat chance.
    2) If you really want the economy to grind to a halt, a federal sales tax is a good way to do it. How will taxing/penalizing economic transactions help people make more economic transactions?
    3) The top 1% pay most of the tax burden because they have by far most of the wealth in this country and benefit the most, directly or indirectly, from government services. Why do so many right-wingers act as though these people are being unfairly burdened with having to pay for the country that allowed them to become and remain wealthy? I don't think we ought to soak the rich, but as part of a multi-faceted plan to fix the budget, they ought to pay, you know, just a little bit more. Not just the top 1% either, of course.

  • by Comboman ( 895500 ) on Monday August 08, 2011 @10:47AM (#37022168)

    Social security was NEVER intended to be a retirement fund. It was never advertised as a retirement fund. Now its being used as a retirement fund.

    Intended or not, corporations saw Social Security as a excuse to drop employee pensions (and take the difference as profits). At one time, even "menial" workers got decent pensions as part of their employment package. After 30 years of downsizing, rightsizing, off-shoring and union-busting, most people's only options for retirement are to gamble what little savings they have on the stock market (we all know how that worked out) and fall back on Social Security for the rest. The problem is not the "entitled" poor and retired, it's the entitled corporations who have sucked this country dry and given nothing back.

  • by OeLeWaPpErKe ( 412765 ) on Monday August 08, 2011 @11:05AM (#37022448) Homepage

    Well, first a positive note : America's not nearly as bad as most other nations that grace this planet. China, while currently better than America, isn't without debt problems. But America's better off than Europe when it comes to debt. Yet Europe is better behaved than Turkey & middle east, who are in worse shape despite massive influxes of money.

    But still that would mean that on the average, Americans ... did never even intend to repay their debts. Welfare states were created, knowing full well they were doomed. People trading their income now, in the form of taxes, for health care, study help for their kids and pensions that won't come, except for the first ones who enjoyed these benefits.

    And yet lots of generations had the option of turning the tide, and didn't. Not just in America, but in Europe, the middle east, and Asia, lots of people had the option of stabilizing the system by choosing to take responsibility instead of shoving the bill to their kids, and all chose wrong.

    The real question is, now that the cat's out of the bag, how long do we pretend we can put it back in ? The system has failed, and while this obvious truth can still be denied, it will reassert itself soon enough. Though I do hope we can pretend a while longer, I have a family to take care of, and despite the rosy pictures implied in leftist and progressive propaganda if we simply take the money from the bankers, we all know that their promises of wealth, brotherhood and justice for all will turn into the wars, concentration and slaughter camps they turned into last time.

    I would simply suggest to take the lessons of history to heart : when public opinion does not just jabber about evil bankers, but actually attacks them in numbers, do what millions of people forgot to do before world war 2 : run ! Run to a place with sufficient food, home produced food, without multiculturalism (which will soon be nothing but a fancy word for ethnic wars), and preferably a nation without military alliances. Stay far away from any large American city, get the fuck out of Europe (the EU, not Switzerland), get the fuck out of the middle east, get the fuck out of Africa, or if you must, at least stay out of Northern Africa and the Saharan countries.

    I don't know who will rise, it depends on many factors. I guess it will be whichever decent nation manages to not get destroyed, and I frankly seriously doubt it will be China.

  • by stdarg ( 456557 ) on Monday August 08, 2011 @11:14AM (#37022560)

    Political posturing and the political circus has contaminated sound judgement in the US.

    If deciding how to spend tax revenue isn't a central, complex political issue, what IS? You think there's some obvious "sound judgment" that everybody intuitively knows but it's been covered up by master politicians?

    You are sitting on a multi-billion dollar fleet...

    The fact that the only spending problems you pointed out are related to the military makes you sound really biased. A credible solution is going to involve cuts everywhere.

  • by DavidTC ( 10147 ) <<moc.xobreven> ... .vidavsxd54sals>> on Monday August 08, 2011 @11:29AM (#37022794) Homepage

    It being a bubble did not automatically mean that mortgage-backed securities were iffy. All the rating agencies cared was: 'Were people going to continue to pay their mortgage?' They couldn't care less if the house value was going to collapse, except to the extent that it was going to affect the likelihood of paying the mortgage.

    However, the fact it was a bubble did affect that, and hence the rating agencies should have taken a closer look at them...

    ...and when they had, they would have noticed the massive fraud going on inside them, fraud that still seems to not make the newspaper. I'm not talking about 'selling mortgages to people who can afford them' fraud (which is, indeed, fraud.), I'm talking about actual fraud within the mortgage backed securities.

    Something like half those damn things never had the mortgages properly transferred inside. Some mortgage backed securities appear to, legally, have no mortgages at all in them.

    This isn't some sort of fraud in the loan making, where the rating agencies arguably weren't supposed to care about. It wasn't fraud in the foreclosures, which is also happening. This is fraud in the actual securities. Some of the investors who went bust have started looking at the actual securities, and discovered they were utter nonsense, without actual loans inside.

    Forget the damn housing bubble, or the economic collapse. Those can be argued the rating agencies weren't able to foresee. However, the fact they stamped A+ or whatever on an security with bogus pieces of paper stating that some unknown mortgage will be transferred in at some future date, some mortgage that didn't even exist and can't be transferred now...well...seriously, I don't understand how they're still in business.

  • by jmorris42 ( 1458 ) * <jmorris@[ ] ['bea' in gap]> on Monday August 08, 2011 @11:34AM (#37022862)

    > Intended or not, corporations saw Social Security as a excuse...

    Sorry to rain on your progressive emotion based rant but have you considered a reality based rationale? If the Feds are raking off ~15% for SS, another couple of points for Medicare, another few points go into various other funds before we even start talking about withholding actual income taxes, there isn't any budget left for a company pension plan. And don't forget medical. And in today's more changing world people don't work thirty years for the same company. These days many companies don't last thirty years. Having your paycheck AND pension tied to the longterm health of a single company probably isn't the smartest thing to do.

  • Re:Pack of LIES (Score:5, Insightful)

    by AngryDeuce ( 2205124 ) on Monday August 08, 2011 @04:19PM (#37026478)

    I'm not gonna bother picking out each assertion you made and responding to it like you did, but the reason why we do not allow things to revert to how they were at the birth of the industrial age when there were no social programs whatsoever is because it is in the interests of the greater good to provide these basic things.

    The alternative is to end up with situations where you have large quantities of street rats banging on car windows at every intersection in every major city in the US, crime skyrocketing, property values plummeting, urban blight, disease due to poor living conditions and malnutrition. Basically, look at how the poor live in Mumbai or Rio, or hell, even here in the US in cities like Detroit and Cleveland. Those people are getting assistance and look at how bad off those areas are. Can you even imagine what it's gonna look like when they're cut off? Detroit is gonna burn to the ground.

    Now, I'm sure I'll get some sort of "so?" response to that, or how it's their own fault for being lazy, or whatever the hell sin they committed to end up poor (since nobody has ever had problems outside of their control, like illness or job loss), but regardless, getting them aid is better than playing the "survival of the fittest" game that you seem to be championing for. This isn't a third world country; there are plenty of them to choose from if that's what you're looking for. Hell, I bet your money will go pretty damn far there, too, and I doubt there'd be too many tears shed if more like minded people followed suit, but that's not the type of country that so many people have given their lives defending.

What is algebra, exactly? Is it one of those three-cornered things? -- J.M. Barrie