There is a video going around called “United States Budget Dilemma”.  It’s a great video, made better by its slow pace and the credibility that an innocent party brings to the topic.  Watch it.

I want to add “Level II” to our understanding of the budget dilemma fundamentals.  In the video, the author references the numbers for 2012 in the President’s proposed 2013 budget where according to Summary Table 5 it is clear that “Mandatory Spending” plus net interest totals $2,477 billion while receipts total $2,469 billion.  The video’s very valid point is that even if we cut everything from National Defense to the congressional cafeteria, the budget could not be balanced if we spend our tax revenue on Medicare, Medicaid, Social Security and Interest on the Debt.  Everything else had to be borrowed or printed.  That everything else was $1,319 billion.

While this is true, there are good objective reasons to ignore this fact.  First, 2012 was an atypical year for revenue assuming that both the Bush tax cuts and the Obama Payroll cuts will expire. They won’t be allowed to expire of course but politicians console themselves with the idea that if they really needed to, they could let them expire.  Letting each of these cuts expire would bring in approximately $250 billion.  Remember, we have to find $1,319 billion cuts or another $1,319 – $250 = $1,069 billion to balance the budget.

Another way to look at revenue projections would be to think about waiting out the business cycle and let increased corporate, income and payroll taxes come in.  Historically according to Hauser’s law, we can expect that about 18.0% of GDP to be collected in federal revenue. Yes, revenues as a percent of GDP have been as high as 20.9% of GDP but 18% is typical.  Current US GDP is $14,587 billion so historically we should expect approximately $2,626 in revenue.  Even if we had that level of revenue, it leaves us with a deficit of $3,796 -$2,626 = $1,170 billion.  The practical implication is that using historical numbers and assuming that we spend as much as we promised on Mandatory spending, our discretionary spending would have to be cut $1,170 / 1,319 =… 89% to balance the budget.

To balance the budget with growth alone, the GDP has to grow to 1/.18 = 5.55 times our spending.  That is 21.1 trillion dollars or 44% greater than it is today.  So even if we kept our spending constant and let the economy grow away our deficit, it will have to grow 44% before we can expect our revenue to exceed our current spending.

This is just simple arithmetic.

Can the budget be balanced before the economy collapses?  Maybe not.  To do so requires steep cuts in everything.  Not just the things we want to cut but the things we don’t want to cut like National Defense, Social Security and Medicare.  I don’t know of any serious conservatives talking about that let alone conservative politicians.  What conservative politicians do talk about is tax cuts causing the economy to grow fast enough to balance the budget.  I’ll get to that fantasy next week.

The Yin and Yang symbol is used to show how the beginning of one thing resides in the full being of its opposite.  It’s origins, black beginning in white and white beginning in black, goes back to the notion that the coming of night begins at high noon and the coming of day begins at midnight.

Progressivism is usually defined as trying to change things for the better.  Trying to create something new.  That’s a good thing, something human nature is attracted to.  However, when something is created, something else is destroyed.  In the case of buildings, green fields or at least old buildings are destroyed.  In the case of gay marriage, it’s traditional marriage.

I find the concept of Yin and Yang is a quick convenient way to think about progressive positions.  Whenever a progressive says, “I am for X” think about what has to be destroyed for “X” to come to be.  In the case of universal healthcare, individual choice and insurance companies are destroyed.  In the case of forgiving student loans, individual autonomy, the benefits of family savings and systematic accountability are destroyed.

Some progressives are truly attracted to the positive things that progressivism wants to create.  I find that most of the hard core progressives though are motivated by destroying.  You find this in Obama’s talk about the Buffet rule.  He’s not interested in pulling people up or bringing down the deficit.  He’s interested in sticking it to rich people.  On the global warming front, all objective observers agree that limiting only America’s CO2 emissions would do little if anything to limit global emissions yet Obama still takes every opportunity to kill the oil, gas and coal industries.  This week we have a leader of the Anti-Bullying campaign go off on an anti-Christian screed.

So the next time you listen to a progressive talk about a new program or tax, think about what they are trying to destroy.  It’s a quick way to turn the discussion from something positive, i.e. universal healthcare, to their negative motivations, i.e. sticking it to insurance companies.

When they argue based upon their negative motivations, they lose as it is also human nature to avoid negative people.

In the pending argument over the interest rates charged for student loans, Mitt Romney has already capitulated, deciding to go against conservatives and support Obama’s proposal to extend current rates, 2.36% (depending), rather than the forthcoming 6.8% (depending). http://www.direct.ed.gov/calc.html

Today’s outrageous student loan debt just doesn’t make sense to a businessman.  The debt some students take on is simply irrational.  Students can take on a maximum of $57,500 in direct student loans for an undergraduate degree and $138,500 aggregate for a graduate degree regardless of their ability to repay it.  Private loans are available beyond that.

A sensible businessman looks at the student loan situation and quickly figures out what is wrong.  The one party with the most credibility gets all the benefit.  The university gets cash up front and bears none of the risk.  The student, who is least able to evaluate the deal and the most trusting, takes on all the risk.  The money obviously comes from the Democrats through federal government.

What do the Democrats get out of this?  What the Democrats always get out of any deal, power.  Once the student signs the Master Promissory Note, the Government gets to make decisions in the student’s life.  The Government decides how much the student gets to live on by determining the repayment amount.  The Government helps the student decide to get married or not by changing the repayment rate based upon status.  The Government gets to influence where the student works through public service as defined by College Cost Reduction and Access Act of 2007.  The list can be endless depending on what new regulations or legislation is passed.

(A quick note to all Libertarians, saying it’s the students fault for getting themselves into the situation is necessary but insufficient to solve the problem.)

A good salesman looks at this deal and quickly figures out to get in on the act.  That’s what Romney did.  He’s a good salesman.  He knows that arguing with the Democrats on this issue is a losing exercise. He fears that expanding the argument would fail to make it through the press’s filter.

Unfortunately it puts to a lie Romney’s main talking point, that he understands business.  I’m sure he understand business in the practical sense but he is not a business leader.  A business leader, a Steve Jobs or a Jack Welch, would LEAD.  He would clearly and simply define the problem.  He would explain why other definitions are incorrect.  He would find a simple and effective solution.  He would be flexible in his terms to get the deal done.  Remember Herman Cain?

A simple, business minded solution to this problem is to allocate the risk to the party best able to assess the risk, the university.  Let the university decide if a four year degree in journalism is work the risk of repayment on a $50,000 loan or a graduate degree in speech therapy is worth $130,000.

PS – Let’s see how Romney handles the next issue, HR 4170 The Student Loan Forgiveness Act of 2012.  My guess?  Not so well.

Carrying a gun is a big decision.  A gun is a tool that when needed is the best tool to have.  It is a powerful tool.  A person who carries such a powerful tool has at least a moral responsibility to act in a proper manner.  They should not go looking for a fight.  They should not talk in a way that causes people to lose their tempers.  They should not intimidate people.  They should act in a good manner always considering how their words and actions affect the people around them.

If a gun becomes a tool for self-indulgence then it is a bad tool.  If a gun makes a person feel free to do as they want, say what they want and take the peace from others then the right to carry will be seen as an immoral right.

Conservatives should not argue for guns being used to replace one group of bullies with another group.  Guns are needed for a good and proper free society where we add to the lives of people around us and do not have to worry about someone taking that away just because they want to.

There are a lot of opinions on the Contraception Mandate and a few things need to be said both to hearten Catholics and to explain to non-Catholics.

First for the Catholics, do not worry.  The Catholic Church has been going strong for 2000 years surviving and defeating the likes of Roman emperors, Islamic invaders and Communist dictators.  Obama doesn’t stand a chance.  We’ll come back to this later.

For the non-Catholics, understand that the Church is experienced in these matters.  It is patient and has its goal firmly in mind and that goal is serving Christ.  I know it’s frustrating in this day and age that the Bishops aren’t on TV talking and debating their opponents.  There is no debate.  They will not comply.  Publicly debating the point would simply alienate people and harden hearts.  They will not push away anyone from the faith except when by doing so it serves Christ.  That is truly rare.  It sees itself as the church of all men and women, from the businessman to the street walker, from the anarchist to the statist, from the citizen to the President.  It does not entice its members to join with the best preachers, the biggest halls or just one way of expressing faith.  It sees itself as focused up to God and not down into the pews.  It does not measure its legitimacy by the makeup of its congregation.  The Catholic Church is catholic (all encompassing) and this does not just mean that it sees itself as encompassing all churches but all people too.

The Obama administration’s justification for the modification of the Contraception Mandate will fail to sway the Church.  The argument that it is not telling the Catholic Church to spend money on contraception, merely saving it money on paying for childbirth and children’s medical care is no different than China’s one child policy.  The Catholic Church believes that both are equally against Christ’s will and the church of St. Thomas Aquinas is not swayed by logic wrapped in accounting methods.  It will not comply.

Right now, as we speak, there are thousands of Catholic Churches in America each with a devout and humble person attending to the Eucharist.  This goes on every hour of every day of every year.  This sacrifice they make strengthens them to make other sacrifices, a communal strength community organizers can only dream of.  There may come a day when the Catholic Church seemingly has its back against the wall but don’t be fooled by its humility.  Humility is not weakness.  It has the strength of thousands of people who will stand for it and pray anywhere, anytime in community for Christ’s mission and even that strength pales in comparison to the strength of Christ.

On one side we have the Catholic Church on a point of its belief and on the other side we have Obama and his thought.  There is no doubt which will prevail.