The Federal Budget And Why The US Is In Trouble

[Westernskies]

Glad you mentioned that. Planned Parenthood, when externalities are considered, is likely one of the few federal programs that not only pays for itself but returns a society wide profit.

Ha

+1

 

[beowulf]

SS may be 22% of the budget, but for now and at least the next 7 years or so, the money that has already been collected and is in the SS trust fund plus each year's revenue is adequate to pay for all benefits. The fact that the government spent that money on something else and now has to pull the money out of general revenues is not the fault of the people who contributed. According to the SS Trustee's 2010 report, in 2018 the DI part of the fund will be exhausted and the main portion will run out in 2036. From 2037 until 2084, income from the SS tax will fund 75% of annual benefits. For SS, the bottom line is that the only reason it's such a large percent of the budget is that it was spent - but not on SS. How is it fair to cut SS when the money for it was already collected and should be available?

Medicare is a bit more complex, but here is a quote from the same report:
"The projected date of HI Trust Fund exhaustion is 2029, 12 years later than in last year’s report, at which time dedicated revenues would be sufficient to pay 85 percent of HI costs. The share of HI expenditures that can be financed with HI dedicated revenues is projected to decline slowly to 76 percent in 2045 and then to rise slowly, reaching 89 percent in 2084."

Given the fact that the money has been paid in for these benefits and has been spent by politicians, how is it fair or reasonable to cut these benefits until money from general revenues is actually needed? What is happening now is that the IOUs given to SS and Medicare are coming due and it appears on the budget. But NO actual money for these programs would have been needed from general revenues had the money not been stolen by politicians of both parties.

I am tired of hearing misinformation that gives the impression that both funds are broke and our FITs are paying for them - that's only the case because our elected thieves stole the money .

 

[brewer12345]

There are other posters who have more automotive knowledge than I do, and I hope they will give you more technical details, but I suspect that if it is economical relative to gasoline, it should not need a subsidy. Car owners would vote with their wallets.

The economics of fuelling cars with nat gas is quite attractive, at least at current nat gas and oil prices. The problem is that the infrastructure does not currently exist, although the technology is available. I was poking around at a company that specializes in exactly this sort of equipment, and if you go look at their latest investor presentation they lay out the cost comparison very nicely: http://www.corporate-ir.net/Media_Files/IROL/10/109507/Investor_Presentation.pdf

Retrofitting vehicles to do this is possible, although it wold be easier to d via OEM installation. Whether the existing natural gas delivery infrastructure is up to the task of millions of vehicles runng on nat gas, I could not say.

I would also point out that unless there is a radical change in the supply and cost of US natural gas, it is highly likely that the US will begin exporting LNG in increasingly large quantities in the next few years. If you look at the trend of coal exports since 2005, I expect we will see a similar trajectory.

 

[NW-Bound]

I do not follow the production of nat gas closely, but remember that in the past there have been some shortages and high prices.

In the early 2000s, a company called Calpine had a plan to build smaller electric producing plants throughout the nation. Their role was to produce power during peak periods to supplement larger plants, and being close to or even sitting among city centers, they had to run on clean burning nat gas.

Calpine went bankrupt. There were many factors, but the higher price of nat gas then was a factor. I also remember some winters when Easterners were complaining of the higher cost for heating with nat gas. I do not know why is it abundant now.

 

[haha]

I do not follow the production of nat gas closely, but remember that in the past there have been some shortages and high prices.

In the early 2000s,a company called Calpine had a plan to build smaller electric producing plants throughout the nation. Their role was to produce power during peak periods to supplement larger plants, and being close to or even sitting among city centers, they had to run on clean burning nat gas.

Calpine went bankrupt. There were many factors, but the higher price of nat gas then was a factor. I also remember some winters when Easterners were complaining of the higher cost for heating with nat gas. I do not know why is it abundant now.

Part of the shortage back then was Enron and manipulation.

But more importantly, a whole new source of gas supply opened up by using two new production techniques-horizontal drilling, and hydro-fracturing. This allowed gas from very tight formerly unproductive shale formations to be produced. If you want to read about it, read about George Mitchell in the Barnett Shale around Ft. Worth. His vision got it all started.

Mitchell is an incredible innovator and businessman. In addition to Mitchell Energy which made it to FOrtune 500 stateus before merging with Devon, he also built the Woodlands, an upscale community near Houston.

Ha

 

[brewer12345]

I do not follow the production of nat gas closely, but remember that in the past there have been some shortages and high prices.

In the early 2000s,a company called Calpine had a plan to build smaller electric producing plants throughout the nation. Their role was to produce power during peak periods to supplement larger plants, and being close to or even sitting among city centers, they had to run on clean burning nat gas.

Calpine went bankrupt. There were many factors, but the higher price of nat gas then was a factor. I also remember some winters when Easterners were complaining of the higher cost for heating with nat gas. I do not know why is it abundant now.

There has been a technology revolution in the US which hs allowed the extraction of way more gas than used to be the case (shale gas). That is why we are floating on a sea of excess nat gas.

 

[Mulligan]

I do not follow the production of nat gas closely, but remember that in the past there have been some shortages and high prices.

In the early 2000s,a company called Calpine had a plan to build smaller electric producing plants throughout the nation. Their role was to produce power during peak periods to supplement larger plants, and being close to or even sitting among city centers, they had to run on clean burning nat gas.

Calpine went bankrupt. There were many factors, but the higher price of nat gas then was a factor. I also remember some winters when Easterners were complaining of the higher cost for heating with nat gas. I do not know why is it abundant now.

In the past two years they have discovered through technology a way to get out the natural gas that was previously unrecoverable. I forget the specifics but it is VERY dramatic as far as increasing the supplies of it. Natural gas however is a harder energy resource to export out than coal, and oil. As you know things always change, but people have basically said we are flooded with natural gas supplies. I hope this continues as I heat my house with it!

 

[NW-Bound]

Thanks to all posters above. Obviously, I did not follow this industry, using no nat gas myself, and am the last to know!

 

[donheff]

There has been a technology revolution in the US which hs allowed the extraction of way more gas than used to be the case (shale gas). That is why we are floating on a sea of excess nat gas.

Have you all seen "Gasland?" It takes Fracking to task for poisoning some water tables. Lots of entertaining videos of water taps bursting into flames Don't get me wrong -- I am not anti-fracking and DW's gas energy lawyer types tell me Gasland is part BS. But the movie is an interesting introduction to the technology in the absence of a good NOVA.

 

[brewer12345]

Have you all seen "Gasland?" It takes Fracking to task for poisoning some water tables. Lots of entertaining videos of water taps bursting into flames Don't get me wrong -- I am not anti-fracking and DW's gas energy lawyer types tell me Gasland is part BS. But the movie is an interesting introduction to the technology in the absence of a good NOVA.

I have littel doubt that some of it is hysterical BS. But even if it is not, the alternatives are basically coal, more imported crude, and nukes. I personally would strongly prefer nat gas to all of those.

 

[Independent]

I'd say that there's no way natural gas powered cars can have a meaningful impact on our federal budget deficit in the next ten years. Yes, IF we had so much natural gas that we could reduce oil use to the point that we really don't care what goes on in the middle east, then we could cut our military budget. But that's a benefit that will take a long time to get here and it would only close part of the gap.

That said, I can't resist getting in:

Here's fun fact, Honda has been selling natural gas powered Civics in the US for some time. MSRP is about $25,500, build you own here: 2011 Honda Civic GX Overview - Official Site

The problem with "shale gas" is that it involves pumping a mixture of water, sand, and and undisclosed mixture of chemicals into wells at enough pressure to fracture the rock and let gas escape. The gas, water, sand, and chemicals all come back up the pipe over time. We don't know how to get rid of all the stuff that comes back up. I'm sure it's solvable, but we don't know the cost.

Fortunately (for those of us in fly over country) the best gas fields seem to be in PA and NY - close enough to the big population centers that somebody will look at this closely.

I haven't seen a calculation that goes "In order to replace 35% of our gasoline supply, we would need and annual production of __ trillion cubic feet of natural gas, which would require treating ___ billion gallons of water and __ billion cubic yards of sand." And then "At this rate of use, our supplies of natural gas would last about __ years".

 

[youbet]

I notice that the misunderstanding of who will pay more taxes continues. Obama proposed "an end to the Bush tax cuts for the 2 percent of Americans making $250,000 or more."

Actually, the Bush tax cuts would end for individuals making $200,000 or more. A married couple filing jointly would be spared if their COMBINED income was $250,000 or less.

How can the administration and the media continue to communicate such a misunderstanding?

I'm not necessarily against the higher tax rates (combined with sharp spending reductions) given the sad state of our national debt. But I think the $250,000 number should be used accurately since there are so many 2-income professional families these days. A NYC fire chief married to a elementary school principal would be subject to the higher taxes for example. I think it's misleading when the President gives examples of himself and Warren Buffet as being typical of those who would pay higher taxes as he did today in his speech.

 

[jebmke]

But I think the $250,000 number should be used accurately since there are so many 2-income professional families these days.

Presumably the $250K number refers to taxable income since it would be impossible to write tax code targeted at gross income. $250K, when adjusted for things like salary deferrals , itemized deductions, exemptions etc could easily run up to $300-350K.

I suppose you could simplify things, eliminate all adjustments and deductions and set the rates to tax gross. That is, no 401K, no IRA, no alimony adj, nothing -- x% off the top.

Getting rid of itemized deductions would be simple to administer - has a lot going for it.

 

[HFWR]

Have you all seen "Gasland?" It takes Fracking to task for poisoning some water tables. Lots of entertaining videos of water taps bursting into flames Don't get me wrong -- I am not anti-fracking and DW's gas energy lawyer types tell me Gasland is part BS. But the movie is an interesting introduction to the technology in the absence of a good NOVA.

Boone Pickens was on CNBC this morning. His comment on fracking was that it was 2 miiles down, whereas most water is at 1000-2000 ft.

Sounds plausible, but I don't fracking know for sure...

 

[GregLee]

Boone Pickens was on CNBC this morning. His comment on fracking was that it was 2 miiles down, whereas most water is at 1000-2000 ft.

I've listened to T. Boone Pickens several times in the last 3 months. If I understood him, he's talking up solar and wind-power, but he thinks that in the short term, we need natural gas as a "bridge" to those sources of power.

 

[youbet]

Presumably the $250K number refers to taxable income since it would be impossible to write tax code targeted at gross income. $250K, when adjusted for things like salary deferrals , itemized deductions, exemptions etc could easily run up to $300-350K.

I suppose you could simplify things, eliminate all adjustments and deductions and set the rates to tax gross. That is, no 401K, no IRA, no alimony adj, nothing -- x% off the top.

Getting rid of itemized deductions would be simple to administer - has a lot going for it.

Good points jebmke, but my comments were in reference to the ongoing confusion regarding the $200k benchmark for single filers vs. $250k benchmark for a married couple's combined income. The media keeps talking about "rich taxpayers who earn over $250k" being taxed more. Actually it will be "rich taxpayers who earn over $200k."

 

[M Paquette]

Boone Pickens was on CNBC this morning. His comment on fracking was that it was 2 miiles down, whereas most water is at 1000-2000 ft.

The frac well has to penetrate through the water table depth, and then well beyond to reach the depths where the hydraulic fracturing is to be done. The gotcha is that the well has to be sealed properly. That is done with a layer of cement injected around the inner metal tubing, which serves to both hold the tubing in place when pressurized, and to prevent any leakage from reaching the water table.

From what I understand, if the cementing has significant gaps, is incomplete, or the materials are a bit too weak (reminds me of excess sand in cement, or excess porosity from the odd body in construction concrete...), then the barrier is compromised and there can be seepage of toxic hydraulic fluids into the water table.

But that sort of thing mostly affects state and local budgets, unless the EPA gets involved and turns the frac contamination into a superfund site. Cutting the EPA funds keeps this from affecting the federal budget...

 

[donheff]

I notice that the misunderstanding of who will pay more taxes continues. Obama proposed "an end to the Bush tax cuts for the 2 percent of Americans making $250,000 or more."

I just watched the whole speech and did not hear the $250,000 number. I heard him say cuts for the top 2%. The actual quote was, "So my budget calls for limiting itemized deductions for the wealthiest 2 percent of Americans -- a reform that would reduce the deficit by $320 billion over 10 year." I am not saying that the actual change (that he gave up on last December) doesn't hit AGI over $200K, just that he didn't say it only affected $250K+.

Edit: actually that quote refers to something new. On the Bush tax cuts he just says he won't extend tax cuts to the wealthiest Americans -- doesn't mention $250K

 

[sheehs1]

Good points jebmke, but my comments were in reference to the ongoing confusion regarding the $200k benchmark for single filers vs. $250k benchmark for a married couple's combined income. The media keeps talking about "rich taxpayers who earn over $250k" being taxed more. Actually it will be "rich taxpayers who earn over $200k."

Mike Huckabee made this point...(sort of) today. He said basically what you are saying...and in addition..he stated ..."this is a huge marriage penalty". Huge difference between a single being taxed on adjusted gross of $200K and a couple possibly with several children being taxed on $250K.

Too many holes in the "talking points" today. IMHO.

 

[Lisa99]

Government Waste

Until we stop the extreme waste that exists within our government the deficit problem will not be fixed.

Example: DH works for an IT-based megacorp. He was in Hilton Head SC this week presenting to a federal govt agency that had brought all of their IT managers to Hilton Head for a week of 'stragety meetings'.

Their 'strategy meetings' included a round of golf every day and lavish dinners every night.

Both DH and I work for an IT megacorp. We have more than $30 billion in cash, yet we are not allowed to travel for any reason unless the customer is paying for it. This has been the policy for the last three years. So, why does the government still have boondoggles using taxpayer money when private companies have tightened their belts??

How can we fix this serious issue? The government had to borrow the money to allow this boondoggle!

And the answer should be, VOTE, but ya know what, the issues are so deep and so ingrained that voting doesn't seem to be able to fix the major issues anymore because the government would rather ensure being voted back in than fixing the country's problems.

I'll get off my soapbox now. When I found out where DH was this week and who had brought him there I was enraged.

 

[haha]

Presumably the $250K number refers to taxable income since it would be impossible to write tax code targeted at gross income. $250K, when adjusted for things like salary deferrals , itemized deductions, exemptions etc could easily run up to $300-350K.

"Could easily" is a very long way from "typically does". Coming up with $100,000 of personal exemptions and sched A deductions on an AGI of$350k would not be easy to do.

We can be mislead by the ability and tolerance on the part of board members to have very high incomes with a very moderate life style. Most families burn money, and it takes earning a lot to be able to burn enough to come up with deductions like you mention-except once in a blue moon.

IMO, this is a bad idea, and only marginally worse because the bar is set so low.

Ha

 

[Tadpole]

Example: DH works for an IT-based megacorp. He was in Hilton Head SC this week presenting to a federal govt agency that had brought all of their IT managers to Hilton Head for a week of 'stragety meetings'.

Their 'strategy meetings' included a round of golf every day and lavish dinners every night.

First of all, federal employees get a fixed amount for meals. Anything over this you pay for yourself. If the government employees were buying for the others there may be a violation of the law. If the government employees were playing golf during working hours, they may have been breaking the law. They would have to pay for golf out of their own pockets and on off duty hours unless it was a part of the event and couldn't be construed as a gift.

So the question really is: Was the event run by one of the numerous contractors that the government hires to organize and run events? If so, the government employee attendees really had no say as to the schedule or included meals. It would be the responsibility of the person monitoring the contract to assure best value for the government. The contract monitor might not even be a part of the organization attending the event if a broad contract was used.

I was in the DOD and there was no way that I could have done any of the excessive expenses unless they were done after duty and paid for out of my own pocket. I just retired from the federal government and in all the years I spent in the government I have never seen anything remotely like this nor have I heard stories from other workers remotely like this. But I hear it all the time on the Internet. My conclusion must be that the DOD has extremely strict rules compared to other agencies or people see something and come to the wrong conclusion. What agency were the government workers from?

 

[Lisa99]

It was not the DOD and it wasn't sponsored by a contractor.

 

[sheehs1]

Until we stop the extreme waste that exists within our government the deficit problem will not be fixed.

Example: DH works for an IT-based megacorp. He was in Hilton Head SC this week presenting to a federal govt agency that had brought all of their IT managers to Hilton Head for a week of 'stragety meetings'.

Their 'strategy meetings' included a round of golf every day and lavish dinners every night.

Both DH and I work for an IT megacorp. We have more than $30 billion in cash, yet we are not allowed to travel for any reason unless the customer is paying for it. This has been the policy for the last three years. So, why does the government still have boondoggles using taxpayer money when private companies have tightened their belts??

How can we fix this serious issue? The government had to borrow the money to allow this boondoggle!

And the answer should be, VOTE, but ya know what, the issues are so deep and so ingrained that voting doesn't seem to be able to fix the major issues anymore because the government would rather ensure being voted back in than fixing the country's problems.

I'll get off my soapbox now. When I found out where DH was this week and who had brought him there I was enraged.

Lisa99..you might consider writing your Congressmen and women - all of them. Look them up for your state and you can do it by email. In fact we all need to be communicating with our Congress men and woman. I'd be outraged as well. The government was "outraged" when AIG....did the same thing on a larger scale after they got the government bail out. IMHO the government is no better. They want the same bail out.

 

[obgyn65]

The dollar is going to decline much further IMO. I would not be surprised if 1 euro = $2 in 2015. Expect the unexpected.

3) deceptively via a declining dollar– currently taking place right in front of our noses,