Monday, April 25, 2011

USA Ranked #2 in Internet Freedom (tiny Estonia #1)

The U.S. is essentially the best country in the world when it comes to Internet freedom. Which is why the federal government needs to regulate it, obviously.

Saturday, April 23, 2011

How much did your vote for Obama cost you?

In this post I determine how much your vote (or someone else's vote) for Obama will cost you throughout your working career to pay for the interest on Obama's massive deficit spending. The results may astound you. I welcome suggestions and attempts to help refine my calculations. But first, just how massive is Obama's deficit spending? This massive:

To do the following calculations, I assumed you are a college student graduating this year (2011), and you will have a 40 year working career ending in 2051. I also made the safe assumption that between now and 2051 the principal on the federal debt will not be touched, but only the interest payments will be made each year. Why did I include only the interest? You can argue all day about the cost vs. benefit of Obama's deficit spending, but one thing is certain: taxpayers get nothing from paying the interest on the national debt.


All my budget data came directly from the Office of Management and Budget's 2010 analysis, or the excellent website, which aggregates the same OMB data into easily downloadable spreadsheet format. My tax calculations used the 2006 IRS tax brackets, FICA rates, and standard deductions (I wanted to pick a pre-recession tax code) -- in other words, I assumed your actual tax rates will NOT go up any time in the next 40 years, which is a very generous assumption. Nationwide average wage/salary data by occupation came from the Bureau of Labor Statistics database. Inflation rates came from

Methodology and analysis:

I calculated the average annual interest rate paid on the national debt from 1980-2010 by dividing the yearly federal interest payment by the gross public debt for each year. That average comes to 5.875%. The 2010 interest rate was very low at 2.19%, but OMB projections have interest rates increasing in the coming years, and given historical trends and the S&P's recent downgrading of the U.S. financial outlook, I think 5-6% interest on our national debt is a good estimate for the next 40 years.

Next I needed to estimate total federal spending from 2011-2051. I did this by taking the OMB estimate for federal outlays from 2012-2016 and extrapolating that trend to 2051. I did the same for federal revenues. The OMB projects both revenues and outlays to increase linearly from 2012-2016, and extrapolating those trends, the federal budget will be balanced in 2029, and from 2030 on revenues will exceed spending. By 2051, revenues will have exceeded spending by a total of $815 billion. Looking at the historical spending and revenues trends back to 1980, I think a linear extrapolation is quite reasonable, and is the most fair and politically balanced estimate -- e.g. it does not include any massive increases or cuts to spending or revenues. By this method, total federal spending from 2011-2051 will be $321,845 billion, or $321.8 trillion. This may seem like a huge number (and it is!), but this was arrived at with a linear spending increase each year, and we can project GDP growth will increase by a constant percent each year -- which means GDP grows exponentially instead of linearly. From 1980-2010 the average rate of GDP growth was 5.68%. Assuming this is the average growth rate from 2011-2051, that $321.8 trillion in federal government spending will account for only 16.6% of the total GDP for that period. At the peak of the US economy in 2000, federal spending was 18.0% of GDP (it is 24.9% in 2011). So the financial outlook from these projections is actually pretty favorable, and in fact may be a little too much so.

Now on to the cost of Obama's deficit spending. I calculated the total public debt added by Obama's deficit spending from 2009-2012 using the OMB data (2011 and 2012 are estimated of course). To be as fair as possible, I subracted from each year the 2008 deficit of $459 billion. Even though the 2008 budget was passed by Democrats when Obama served in the Senate, it cannot be ascribed to him. In other words, $459 billion was the annual deficit "baseline", and I included only the 2008-2012 deficits over that amount in determining the cost of Obama's spending. The total debt from 2009-2012 is $5.45 trillion, and Obama's portion of that is $3.62 trillion.

Next, I used the average annual interest rate of 5.875% to calculate the total cost of the interest payments on the $3.62 trillion in Obama debt. From 2011-2051, interest payments on Obama's 2009-2012 deficit spending will total $8.72 trillion. To look at it another way, when Obama sold us his 2009 "Stimulus" bill at a cost of $1 trillion, he failed to mention its true cost to taxpayers is actually $3.4 trillion ($1 trillion principal + $2.4 trillion in interest over 40 years). When the government is running a deficit, any politician's sales pitch for new spending is a bait-and-switch scam so massive it should be illegal.

We now have enough information to calculate the cost of a vote for Obama. The $8.72 trillion in interest payments on Obama's 2009-2012 deficit spending will account for 2.7% of total federal spending from 2011-2051.

Using IRS data, I calculated the total federal taxes (income tax + Social Security and Medicare taxes) paid by heads of household earning incomes between $10,000 and $240,000. I then matched and interpolated these numbers with Bureau of Labor Statistics data to calculate the average total taxes paid during a 40-year working career for each occupation in the BLS database, and adjusted for an annual inflation rate of 4.1%, which is the historical average rate from 1980-2010. Finally, I calculated the fraction of those tax dollars that will go to pay for the interest on Obama's 2009-2012 deficit spending. The results for various occupations are given in the table below. The first entry, average of all college graduates, assumes a lifetime average salary of $45,000 (in 2010 dollars).

According to these results, the average college student graduating this year will pay $25,941 just to cover the interest on Obama's deficit spending. Many students will pay much more. If you voted for Obama, that 30-minute trip to the polling station was probably the most expensive 30 minutes of your life.

Table: Scroll down to find your occupation and see how much your vote (or someone else's vote) for Obama cost you.

Your occupationYour vote for Obama cost youDays of lost income to pay for it
Average of all college graduates$25,94189
College professors$53,18997
Kindergarten teachers$34,03894
Elementary school teachers$34,44794
Middle school teachers$34,50695
Secondary school teachers$34,74395
Chief executives$137,415122
Sales managers$88,514114
Engineering managers$98,317116
Education administrators$61,797108
Social and community service managers$43,215100
Financial analysts$61,585108
Loan officers$43,464100
Tax examiners, collectors, and revenue agents$34,54395
Computer programmers$52,600105
Architects, except landscape and naval$53,065105
Aerospace engineers$70,588110
Biomedical engineers$61,320107
Chemical engineers$70,180110
Civil engineers$61,185107
Computer hardware engineers$79,091112
Electrical engineers$61,684108
Environmental engineers$61,142107
Materials engineers$61,626108
Mechanical engineers$61,126107
Anthropologists and archeologists$35,05096
Political scientists$79,062112
Community and social services occupations$25,64889
Child, family, and school social workers$25,75189
Paralegals and legal assistants$33,99394
Art directors$70,167110
Fine artists$34,07594
Multi-media artists and animators$43,413100
Fashion designers$52,569105
Graphic designers$26,31090
Interior designers$34,27694
Reporters and correspondents$25,71589
Broadcast news analysts$44,069101
Technical writers$43,768101
Writers and authors$43,635101
Sound engineering technicians$34,56495
Dentists, general$127,700121
Family and general practitioners$137,487122
Obstetricians and gynecologists$180,178129
Pediatricians, general$137,081122
Physician assistants$61,544108
Registered nurses$43,885101
Physical therapists$52,770105
Radiation therapists$52,894105
Recreational therapists$25,45488
Respiratory therapists$34,60295
Speech-language pathologists$44,115101
Dental hygienists$44,053101
Radiologic technologists and technicians$34,59995
Emergency medical technicians and paramedics$18,99186
Pharmacy technicians$13,69889
Massage therapists$20,03190
Fire fighters$26,23890
Police and sheriff's patrol officers$34,74795
Private detectives and investigators$26,22090
Chefs and head cooks$25,84289
Janitors and cleaners$12,70984
Hairdressers, hairstylists, and cosmetologists$13,31487
Flight attendants$25,72689
Sales representatives, technical and scientific products$61,203107
Real estate brokers$53,007105
Real estate sales agents$34,44094
Executive secretaries and administrative assistants$25,81289
Legal secretaries$25,67289
Plumbers, pipefitters, and steamfitters$26,57791
Structural iron and steel workers$26,39590
HVAC mechanics and installers$25,76889
Commercial divers$35,17396
Airline pilots, copilots, and flight engineers$88,943114
Air traffic controllers$79,541112
Truck drivers, heavy and tractor-trailer$19,95190

Note: my original post contained some errors in the interest and inflation rate calculations, which have been corrected now.

Friday, April 22, 2011

Public Vs. Private Sector: Not Two Sides of the Same Coin

Somebody asked me this question the other day, with regards to government jobs vs. private sector jobs:
Isn't it two sides of the same coin? Taxes make more gov't jobs and public services, which puts money in the economy. Isn't that the same as investments in corporations who provide jobs, etc...? Do you know why one stimulates the economy better than the other?
Here is my reply:

There are many ways to answer this question.  I'll go with the most simple one.  The private sector involves a feedback loop that incentivizes productivity and efficiency, and punishes waste and inefficiency.  The private sector is centered around making a profit.  And what is a profit?  It is the transformation of things of lesser value into things of greater value.  That is the essence of human progress, and the free market capitalist system quantifies it with money.  If you're doing work and you don't make a profit, it means you've transformed things of greater value into things of lesser value.  Whoever does that in the private sector loses money and eventually goes out of business.  The profit motive is a feedback loop that ensures that activities done by, and money invested in, the private sector will contribute to economic expansion, not economic contraction.

This feedback loop is not present in the government.  Unlike the private sector, the government does not generally have a competitor, and where it does (e.g. the postal service and UPS/FedEx), it does not compete fairly.  The private sector depends on customers making willful choices to buy from them or to buy from someone else who provides a better product or better value, and on investors making willful choices about where they think their money will produce the most value.  The government takes its money by force.  The government can never go out of business.  If it needs more money it simply confiscates it by force.  There is no punishment in the government for the action of taking things of greater value and turning them into things of lesser value; the government can (and does) do this all day, month, and year, ad infinitum, destroying wealth instead of creating it.

Even when it comes to creating jobs, not all jobs are beneficial to the economy.  If I pay somebody $100/hr to dig a hole and then fill it again, nothing will be accomplished by that work and eventually I run out of money.  If I pay somebody to go around breaking everybody's windows in order to create 10,000 new jobs in the window repair business, I haven't done a service to the economy; I have destroyed wealth instead of creating it.  The private sector has that feedback loop that ensures the jobs it hires people to do create wealth and grow the economy, because the private sector will only hire you if your work produces more value than what it costs to pay you; otherwise the company would lose money on your work and lose out to its competitors.  With the government, on the other hand, there is nothing at all stopping it from hiring people to do work that produces less value than the money paid to do it.

That is why money invested in, and jobs created by, the private sector stimulates the economy, and money/jobs in the government do not.

That is not to say that SOME jobs in the government produce value and create wealth.  But the federal government employs more people than the entire manufacturing, construction, and farming industries COMBINED -- and pays its workers significantly more than the private average.  Think of all the value created for our society from those private industries: just about everything you use, eat, wear, and live in every day.  Compare all of that to the things of value you encounter every day that are made or provided by the federal government.... there's really not much of that, is there?  There is no comparison.  We're spending way too much on government and that's a big part of why our economy is struggling.

Canadian "Human Rights Court" Fines Comedian $15,000 for Lesbian Insult

More human rights abuse by the Orwellian "human rights" tribunals in Canada. The tribunal ordered a stand-up comedian to pay $15,000 to a lesbian audience member he insulted at an open-mic night. Canada, you've gotta put an end to these disgusting tribunals and their abuse of basic human rights.

For some background on these Canadian "human rights" courts, check out the story of human rights hero Ezra Levant and watch the videos as he awesomely attacks this abusive legal system.

The Anti Dog-Eat-Dog Rule Becomes Reality

I can't believe it.  It's the "Anti Dog-Eat-Dog Rule" from Atlas Shrugged come to life!  Boeing is building its factory for the new 787 Dreamliner in South Carolina, a "right to work" non forced unionization state.  The Obama Administration is trying to force Boeing to built the factory in Washington instead, where the workforce will be unionized.  Boeing originally wanted to build the plant in Washington, but after long negotiations it was unable to accept the demands of that state's labor unions, and so decided to build the plant elsewhere.

In the words of John Galt, "The removal of a threat is not a payment, the negation of a negative is not a reward, the withdrawal of your armed hoodlums is not an incentive, the offer not to murder me is not a value."

If our nation is ever to recover, we must put an end to this insanity.

Tuesday, April 19, 2011

Crony Capitalism costs US taxpayers another $11,000,000,000

Our bailout of Government Motors is looking to cost taxpayers at least $11 billion. What a terrible, terrible deal. We should have let that company fail. Here's to 2012 and the end of Crony Capitalism! (If one can be so optimistic.)

Let's give this a try

I might have _just_ enough free time these days to update this blog regularly. We'll see how it goes!