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Thursday, May 24, 2012

Blue Model Disintigration

Today's post draws from two separate but related editorials. First, the Blue Model Breakdown at  Buckeye Institute. The background is that the Blue Model is the need for growing government welfare programs, as begun following WWII.
The blue model was the prevailing way of things beginning in the late 1940s. It was epitomized by big companies, growing prosperity, and life time job security. And as the wealth that was produced in the private sector grew, much of it spilled over into the public-sector. This in turn allowed local and state governments to grow both in size and in generosity to those in their employ. These happy days went on until the 1970s, at which time the blue model started to breakdown for the private sector.

In retrospect, it is clear that the blue model was possible only because, after WWII, the U.S. was the only nation with an industrial base able to meet world demand. As Europe and Japan recovered, however, this started to change. And the pace of change rapidly accelerated as heretofore undeveloped nations like China, India, South Korea, Brazil, and so on, with billions of people, started to industrialize and compete in the world market.
The end of the Blue Model is manifest by the separation between public sector benefits and private sector benefits. The money just isn't there anymore! Something has to give.
Simply put, the blue model is unsustainable. The compensation, the benefits, and privileges that were afforded to government workers was possible only with an unusually healthy and robust private sector which itself was made possible by the lack of serious foreign competition. That world no longer exists, nor is it ever likely to again. Governors like John Kasich (Ohio) and Scott Walker (Wisconsin) recognize this fact faster than others, but in the end, all states will have to conform to the new reality.

Why? Because, as Mead says, voters simply will not be taxed to cover the costs of blue government. Voters with insecure job tenure and, at best, defined-contribution rather than defined-benefit pensions will simply not pay higher taxes so that government employees can enjoy lifetime tenure and secure pensions. Also, voters will no longer accept the shoddy services that blue government provides (think of public education). Government is going to have to respond to growing ‘consumer’ demand for more user-friendly, customer-oriented approaches.
Exactly. We need to elect more Walkers if we want to return to a growing economy sooner than later. Government has become so big as to be burdensome to the overall well being of the economy. It's trying to soak the citizens for more when the citizens don't have enough to pay - unsustainable again.
Next: Ann Coulter. This week she takes on this Democratic refusal to talk about the facts. The refusal to talk about the money government spends that isn't there. The refusal to admit that Democrats are digging us into a hole. Now, to muddle the minds of Americans, liberal network MSNBC is attributing all of Obama's first year of spending to Bush, rather than Obama, and slimming down the money spent in the rest of his time in office to boot.
But Obama didn't come in and live with the budget Bush had approved. He immediately signed off on enormous spending programs that had been specifically rejected by Bush. This included a $410 billion spending bill that Bush had refused to sign before he left office. Obama signed it on March 10, 2009. Bush had been chopping brush in Texas for two months at that point. Marketwatch's Nutting says that's Bush's spending.

Obama also spent the second half of the Troubled Asset Relief Fund (TARP). These were discretionary funds meant to prevent a market meltdown after Lehman Brothers collapsed. By the end of 2008, it was clear the panic had passed, and Bush announced that he wouldn't need to spend the second half of the TARP money.

But on Jan. 12, 2009, Obama asked Bush to release the remaining TARP funds for Obama to spend as soon as he took office. By Oct. 1, Obama had spent another $200 billion in TARP money. That, too, gets credited to Bush, according to the creative accounting of Rex Nutting.

There are other spending bills that Obama signed in the first quarter of his presidency, bills that would be considered massive under any other president -- such as the $40 billion child health care bill, which extended coverage to immigrants as well as millions of additional Americans. These, too, are called Bush's spending

Frustrated that he can't shift all of Obama's spending to Bush, Nutting also lowballs the spending estimates during the later Obama years. For example, although he claims to be using the White House's numbers, the White House's estimate for 2012 spending is $3.795 trillion. Nutting helpfully knocks that down to $3.63 trillion.
Ugh. These numbers make me feel nauseous. Obama is spending 3.8 TRILLION dollars this year alone? How is the total deficit only $15.5T thus far, with over $5T his own? The federal revenue is nowhere near $3T, it's more like $2T if I remember correctly. One thing is abundantly clear to most Americans, and that is all this government spending isn't doing a thing to turn around the economy. It may be keeping it afloat, but sooner or later the debt raft will sink us all unless we cut spending and cut budgets and cut duplicate programs and in general get government out of everyone's hair.
Unsustainable spending is unsustainable spending, and how long are the Democrats planning to keep up this charade and act like adults with our federal budget?

As a bonus: see Politico's Has recall election made Scott Walker a GOP hero?
And another one: USA Today's Real federal deficit dwarfs official tally. Warning: the deficits look much worse if they're not hidden behind Social Security, which is getting robbed blind.

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