The Debt Thing

When a private individual or a business spends more than they make, they either get the rest on credit or borrow it from another source. If they do not pay back the money, eventually their line of credit is cut off. If said individual or business goes to a credit counselor or consultant about their finances, one of the first things they'll be told is to "stop unnecessary spending."

Now the government is a slightly different entity, in that it is not really allowed to go bankrupt. It also has an advantage over a person or a business in that it can print money to pay debts it owes to others (isn't that a neat trick?). Of course the result of printing more money is inflation, where an oversupply of currency reduces its value and raises prices. The government's been doing the money-printing thing for awhile now--it's called quantitative easing. 

The debt ceiling matter is something else. The point of a debt ceiling, in theory, is to set a self-imposed credit limit on the government's ability to borrow. Right now, there are two visions of how to fix the problem. The President and his advisors want to increase the debt limit and increase taxes to make up the difference between the federal government's current income and its expenditures. In a slight bow to reality, the President is willing to reduce expenditures, but mostly in "out years," which is to say any budgets in the future not covered by the current budget. The numbers sound impressive: trillions cut over the next ten years. But the reality is that no congress has ever considered itself beholden to promises made by previous congresses. So if the President's plan is followed, there is no guarantee that future "savings" will ever materialize. Raising taxes--increasing revenues--makes sense, but in a recession like we're still in, taxes will slow down the economy even more. And if the debt ceiling is raised, even if present and future spending are curtailed, there is still a good chance that the nation's credit rating will be lowered anyway.

The Republicans in congress have a couple of different visions, but their primary emphasis is on reducing--by quite a lot--the spending side of the equation. On the revenue side of things, they want to keep taxes at the same level that they have been since President Bush lowered tax rates to restart the economy after September 11. Another suggestion by the Republicans has been to let the country reach its debt ceiling to force drastic spending cuts. The declared downside of that approach is that the U.S. Government could be seen as defaulting on its obligations and, again, have its credit rating lowered.

The thing that makes me crazy is this: the President jacked up spending to some crazy number--3 or 4 trillion dollars--when the previous grand total was around 1 trillion, and then declared that Republicans were making drastic cuts to necessary services. Here's the problem: those "necessary services" were at previously unseen levels, but the President acted as if those new, astounding spending levels were the baseline all along. Only in Washington is a drastic reduction in the growth of spending considered a "cut." It's a shell game.

Anyhow, both sides of the aisle are playing a little chicken right now to figure out who's going to win this debate and control the rate of spending in Washington now and in the future. I like my mother's take on this business: "The governments [she was referring to the feds and the states] are like everybody else--they've been living beyond their means for years, and now they're paying for it." As are we all.

Potpourri CXLVII

Hoo boy. I got way behind. Expect a heapin' helpin' of links today.

Culture

Let's start with something fun. A new "flash mob" activity: singing La Traviata in the Reading, PA, train station. I still like the group that danced to a song from The Sound of Music in the Antwerp train station. Occasionally the internet can do fun things.

However, social media are like people: not always good, and occasionally subject to abuse. Take, for example, the effort made by two Venezuelan citizens for stating that the financial system in that country was unstable. Venezuela's dictator, Hugo Chavez, promptly had them arrested. Now the Tweet might or might not be true, but it says something very telling about a socialist government when even a <140-character>

Found by Dennis: Speaking of Twitter, some university researchers depicted the "mood" of Tweets across the lower 48 States graphically. I'm still not sure how this works, but it's an interesting visual.

From Doc: "Some Friday 'splode." I'd like to thank Doc and Widge for introducing me to the concept of 'splode, which is short of "kick'splode," which itself is shorthand for an all-encompassing type of movie that usualy includes violence (kicks) or property damage via explosions ('splode). What they call kick'splode, I usually call "big, dumb action movies." Anyhow, RED looks fun. However, the ultimate kick'splode movie of the summer might be The Expendables, which stars almost every single action hero from the '80s and '90s, including Sylvester Stallone, Arnold Schwarzenegger, Bruce Willis, and Dolph(?) Lundgren. To quote Widge, "Hijinks will ensue."

This has to be a joke or an industry-inspired made-up holiday, but apparently today is National Tequila Day. Don't American beverages need some support, too?

If you like space art, you might want to check out Pat Rawlings' site. He does work for SAIC, I believe, and was gracious enough to serve as one of the judges for the 2009 NSS Space Settlement Calendar.

Now this is useful! A light saber bottle opener.

A guy robbed a bank dressed as Darth Vader. I’ll say this: it’s creative.



Disney is taking another shot at making a Haunted Mansion movie. I’d forgotten about the Eddie Murphy version. Anyhow, my curiosity persists: what needs are films based on theme park attractions or old TV shows fulfilling?



Be careful which outdoor activity you practice this summer: http://gizmodo.com/5594567/reminder-dont-practice-one-of-these-summer-activities

From Kate Down Under: a reminder that the U.S. has buried another Medal of Honor recipient. The summary of what he did to earn it, as always, is astounding:

In 1944, 2nd Lt. Baker was sent to Italy with a full platoon of 54 men. On April 5, he and his soldiers found themselves behind enemy lines near Viareggio, Italy. When concentrated enemy fire from several machine gun emplacements stopped his company's advance, Baker crawled to one and destroyed it, killing three Germans. Continuing forward, he attacked an enemy observation post and killed two occupants.


With the aid of one of his men, Baker attacked two more machine gun nests, killing or wounding the four enemy soldiers occupying these positions. Then he covered the evacuation of his wounded soldiers by occupying an exposed position and drawing the enemy's fire.

On the following night, Baker voluntarily led a battalion advance through enemy mine fields and heavy fire.

In all, Baker and his platoon killed 26 Germans and destroyed six machine gun nests, two observer posts and four dugouts.

Baker's MOH was delayed because he was black. Well earned, and long overdue, sir.

From Father Dan: a restaurant at Downtown Disney now has a meatball bar. As in the food on the menu includes different kinds of meatballs. As to whether there are meatballs sitting at the bar, well, you pays your money and you takes your chances.
Women are fighting abuse in rural India





Wood floors made from wine barrels. Cool! And here’s another bit: a coffee table filled with old computer parts. BoingBoing finds some weird stuff.


An interview with a technical writer and science fiction that is worth reading. An important caution here, but the entire interview bears attention:


Dr. Who themes from 1963 to 2010. You know: because everyone wants to know.

I can't recommend technical writing as a day job for fiction writers, because it's going to be hard to write all day and then come home and write fiction. Nowadays I work as a freelance writer, so I usually do contract technical writing part of the year and then I take time off and do fiction writing the rest of the year. It's too difficult for me to do technical writing at the same time as fiction writing - they draw on the same parts of my brain. So I can't say it's a good day job in that sense, but it's a way to make money.

My buddy Karl would like this…a little applied psychology, though I’m not sure I like the implications: 101 ways to influence others’ behavior.



Not sure what to make of this cartoon, but it’s got a space theme.


Looking to get arrested? Someone is selling stickers that make it look like you’re carrying a lot of drugs in your suitcase. Here's your sign...

This pug "singing" the old Batman TV show theme has been making the rounds on the internet. Oy. Please, make him stop! 

A young girl’s rocket-making video. Kinda reminds me of my niece. Wouldn't my sister love that!?

A Millennium Falcon guitar: now we're talkin'!

U.S. Politics

From Dale: Some folks are suggesting a moratorium on new business regulations for a year to help economic growth. Why do this? For an instructive tutorial on why adding more and more regulations can screw up the economy, I highly recommend Amity Shlaes' The Forgotten Man, a history of The Great Depression. However, the short version is simply this: governments might think they're "doing something for the people" by creating a lot of new regulations and laws to rein in "big business," but what really happens is that businesses big and small will refrain from investing or hiring new employees because they're afraid they might not be able to afford what government is going to do next. So when businesses stop investing and hiring, whom does that help? Exactly.

Sen. John Kerry, an old friend of forcing higher taxes on the rest of us, is docking his yacht(!) in Rhode Island to avoid paying higher docking taxes in his home state of Massachusetts (also known by some as “Taxachusetts”). Here’s a wild idea, Senator: try reducing taxes for everybody, not just when it suits your convenience. Or, if you truly believe that higher taxes are good for America, you should dock your boat in Massachusetts and gladly pay your “fair share.” Just sayin’.

Science, Technology, and Space

Some folks in India have announced the development of a $35 computer. Yeah, you read that right: $35, about $1,500 Rupees. The goal of the low-cost computers is to connect more schools and universities. Interestingly, the machines are run on Linux. Microsoft and Apple, please take note.

More on the internet...someone's figured out that we're running out of internet addresses. Expect more uneducated Y2K-type media frenzy as the problem becomes more well known (but not necessarily better understood).

NASA has released "the most accurate map of Mars ever."

Frank Morring at Aviation Week has a good assessment of the state of Constellation.

From Hu: BigThink.com has a brief history of laser weapons online.

From a friend at work: if the astronaut corps is about to be downsized, what will inspire kids to get into science and other technical disciplines? Good question.

A rapid-response team for oil spills—about bloody time.



Again, if you’ve not read his stuff before, my friend (and much more dedicated fellow space blogger) Jeff Foust has been providing excellent coverage of what’s happening with the NASA budget. The state of things right now is that both Houses of Congress have an authorization bill—a “vision,” if you will—stating what they want NASA to do, and those bills do not agree with each other. The Administration seems to agree with the Senate bill, but this ain’t over. Makes for an interesting working environment, I’ll say that.



Someone set up a Russian tank ballet. No, really.



Nanomaterial anti-bacterial surface. Cool!


A cloaking device? Not quite yet.




Foreign Affairs


The North Koreans are threatening “physical action” in response to U.S.-South Korean naval exercises. Yes, that ratchets up tensions in East Asia, but the Norks are known for raising heck to achieve just that result without any action to back it up. People take the Glorious Leader (Kim Jong Il) more seriously because he now has nuclear weapons. Imagine how much fun the news will be when Iran finally gets the nukes they want.

And I think I'm going to let it rest here for the time being. Lots of interesting stuff out there, but there's a limit, ya know?

Peace out,

/bRobotic scientists are now analyzing data and forming hypotheses. Perhaps we need to reevaluate the Turing Test?

More Random Reading

Obama vows to cut the budget deficit by two-thirds by raising taxes. Good lawd, man! Stop the spending! But then there's this CNN story, stating that Obama wants to cut taxes to 95% of Americans. Oh, right. This is the $13 tax credit per week people are supposed to get.

1. Let's start with the first fallacy: 48% of Americans don't pay income taxes. They get a full refund of all those taxes.
2. Next fallacy: only the rich benefit from tax cuts. This actually isn't a fallacy, but something that Obama just leaves out of his speeches. The top 25% of wage earners pay 86% of the income taxes. Obama is engaging in pure class warfare on this issue. One might complain about "tax cuts for the rich," but how disingenuous is that complaint when the rich pay the majority of the taxes? Also, income taxes are on wages, not trust funds and other things that keep folks like the Kennedy kids fed, so the folks who are born lucky enough to inherit a ton of money don't get socked by many of the taxes that are out there.
3. Fallacy #3: a tax credit to people who do not normally pay income taxes is not a tax cut, that's a giveaway from someone who does pay taxes.

A Swiss political party wants to retaliate against a U.S. government probe into Americans who sent their money to Switzerland to protect that money from intrusive U.S. banking laws. I wonder how much trouble I'd get into if I opened a Swiss bank account. Never mind, I don't have enough money to be worth confiscating anyway.

Chicago's Mayor Daley wants a surveillance camera on every street corner. With very strong gun control laws, the Windy City has ensured that only the criminals and the government has guns. So now you're an ordinary, law-abiding, non-gun-carrying citizen. How safe do you really feel?

Mahmoud Ahmadenijad and following the 12th Imam.

Benjamin Netanyahu, a conservative (Likud Party), again Prime Minister of Israel. There are also conservative-leaning governments in France, Germany, and New Zealand...just around the time America has gone liberal. Interesting world.

Various Items and Comments Regarding the Economy

President Obama's $800+ billion-dollar "stimulus" bill is a problem for people who believe in classical economics. It is mostly about federal spending on various sorts of pet projects, political favors, bailouts of failed banks and businesses, and perhaps creating a nationalized Bank of the United States. The tax base cannot support it. Since the Dow Jones Industrial Average dropped from 11,000 to around 8,000, we've lost at least a trillion dollars in value from our economy. Businesses have closed their doors, unemployment has gone up, interest rates are at essentially zero yet no bank will issue new loans. This is a crisis of confidence, and a new government expenditure of a trillion dollars, unsupported by the tax base or the monetary system, can only mean one thing down the road: hyperinflation. Hyperinflation is simple to understand--too much money is created, prices continue to increase, leading the government to print more money to help people artificially keep up with rising prices, causing the value of the currency to drop.

My "favorite" image of hyperinflation occurred in Weimar Germany, the republic formed after Kaiser Wilhelm II's regime collapsed in 1918. In the economic hardship and uncertainty that followed from crushing war debts, Germany's currency was inflated to pay the debt. Citizens of Germany faced mounting inflation, to the point where instead of US$1 equalling 60 Marks, US$1 equalled 8,000 marks. People were going to the store with wheelbarrows full of money to buy a loaf of bread. The value of the Mark collapsed because there was nothing of value backing it--at the time, gold was the standard for backing national currencies.

Since the U.S. went off the Gold Standard in 1973, the dollar has had a value accepted based on currency speculation and the full faith and credit of the U.S. Government. That is, people in this country and around the world believe the dollar has value because the U.S. Government says it does and is willing and able to back up that value with something of tangible worth. It is "fiat money," from the Latin term "fiat" meaning "let there be" (ex. "fiat lux" - let there be light). So: the U.S. Government says, "Let there be money," and lo, it was so. But that sort of money only lasts so long as people believe in the ability of the U.S. Government or its people to create enough value in this country to consider the dollar still believable. When the government says, "We're going to spend a trillion dollars to fix the economy!" some folks might say, "Great!" Others, a little more cautious, would ask, "Where's the money going to come from?" The sources, given the current state of things, are limited:

1. Print more money (inflation)
2. Increase taxes
3. Borrow money from someone else who has it
4. Create new wealth

Curious about what happens with inflation? See that article on Weimar Germany or these items on the inflation occurring right now under dictator Robert Mugabe in Zimbabwe (formerly Rhodesia):

http://www.telegraph.co.uk/news/worldnews/africaandindianocean/zimbabwe/3264644/Zimbabwe-shops-stop-accepting-local-currency.html

http://www.telegraph.co.uk/news/worldnews/africaandindianocean/zimbabwe/4224947/New-Zimbabwe-50bn-note-buys-three-newspapers.html

Okay, so what about raising taxes? You might recall that businesses all over the country are facing profit losses because the economy is slowing. Unemployment is rising because businesses are cutting costs (employment) in order to stay afloat. They are unable to expand into new ventures because fewer consumers and investors have money to buy into them and because banks are unwilling to loan money. So there's less money to go around to support economic growth, and some folks want to raise taxes on businesses. That will slow down how well money flows through the economy (liquidity), as the government gets more and businesses capable of building long-term employment shrink further.

We could, have, and probably will, borrow more from other countries who can afford to buy U.S. Treasury Bills: Europe, Japan, China, and (surprise, surprise), the oil sheikdoms of the Middle East. The first problem is that an economic slowdown here cuts down economic activity elsewhere, reducing the amount of money available overseas to buy our debt. Second, T-Bills are, like the dollar, backed by the full faith and credit of the U.S. Government, with the difference that they actually have a due date for a return on investment. If other countries no longer believe that the U.S. will ever repay the debt, they might stop buying our T-Bills or declare us to be in default, which amounts to the same thing. Back when Japan was still our biggest economic competitor (from the mid '80s to the early '90s), there was some loose talk about Japan accepting the state of Hawaii or California as "payment" for our debts. Could that idea arise again? Who would buy that?

The best ways government itself can increase tax revenues, create jobs, and stimulate businesses are to lower taxes, reduce intrusive regulations, create and maintain infrastructure, and keep government out of competition with the private sector. The best ways private industry can create growth are to find new sources of wealth, develop new technologies, and create new businesses.

The best place for this nation to do those things is in space. As of yet, I've not heard about any new money going to NASA or any tax breaks going to businesses seeking to start businesses or prospect for resources there. But, of course, I'm a conservative and a kook, so what do I know?

This whole thing is just insane because the government is most likely to pick options 1, 2, and 3, which will stifle option 4, thereby slowing the recovery. Amity Shlaes' The Forgotten Man has never been more timely.

The Current Financial Mess and What It Means for Space

As if space advocates don't have enough to worry about, now we've got a shaky economy as well as a federal government willing to spend five times NASA's budget at the stroke of a pen to rescue one company (AIG) and one and a half times NASA's budget to rescue Fannie Mae and Freddie Mac. And if my discussions with liberal friends are any indications, we can expect more nationalizing of large businesses if there's a perception that not doing so would crash the economy.

Where are those strident voices asking, "Where is the money going to come from?" or "Shouldn't we be spending our money on more important things?" But of course what could be more important than "saving" the economy from individual and corporate bad decision making?

Back in college I had a history teacher who insisted that the Great Depression lasted as long as it did because "the government wasn't doing enough." Another theory suggests that the government was doing too much, and that the nationalization of banks and other activities, combined with a lot of make-work government jobs in fact extended the Depression. It is safe to say that both Marxist and Austrian economists agree that World War II got the U.S. out of the Depression, though they would pick different reasons--Marxists would focus on government spending (which was already going on under the New Deal), while classical economists would focus on the need for American goods overseas. In both cases, it was the private sector creating the jobs and employing people, regardless of who was in charge.

The next major economic crisis of the 20th century was the extended period of "Stagflation" in the 1970s and early 1980s under Nixon-Ford-Carter. Ronald Reagan's economic advisers took the dramatic step of reducing the top marginal tax rates. Using the so-called Laffer Curve, Reagan simultaneously increased economic activity and, counterintuitively, increased federal taxes. The deficits of the 1980s can be attributed partly to Reagan's defense buildup, but economic and political historians tend to ignore the simultaneous increases domestic, non-defense spending that were made possible by the tax cuts. Congressional lawmakers saw all the money flowing in, and couldn't resist feeding their own pet projects. Nevertheless, the Reagan tax rates held for ten years, and the U.S. has continued to benefit from them, even though the Clinton Administration raised the top marginal tax rate to 39.5% in 1993.

Now we're in another potentially ugly economic crisis, worse than the "Dot-com" mess of 2000 if some folks have their way, and the big choices will be there for the next president to make: increase taxes and direct handouts to citizens to pump more government money into the economy or decrease taxes ("make the Bush tax cuts permanent") and allow the productive classes to use their increased incomes to invest in more economic activity.

The economic history above is rather high-level, but it provides some of the context for spending on space. In 1990, the Cold War was ending, and the savings and loan industry was undergoing its own bailout. At approximately the same time, the Bush 41 Administration was proposing its Space Exploration Initiative to go to the Moon, Mars, and beyond. We know the decisions of that time: citizens were rightly outraged at the amount of money being spent to rescue other people's bad decisions ($175 billion), but defenders of the action said it was necessary to stabilize the economy. Domestic spending was made a priority, and human space exploration was allowed to languish.

The lessons for the Constellation Program and for space advocates in general should be obvious. The S&L bailout did not stop people from making bad decisions, nor did it stop the government from bailing out businesses. However, it should be obvious which economic policies will allow the United States to continue spending money on space: only a rich nation can afford space travel. It is complex and expensive.

Taxing the rich even more will not increase or improve economic activity. The top 10% of income earners pay nearly 80% of the taxes. The bottom 50% of wage earners pay 3% of federal income taxes. And the odds are pretty good that folks in the bottom 50% are employed by folks in the upper 50%. So: the money that the top 10% pay for taxes does not go toward new investments, new businesses, or new jobs for others. Tax the rich, and you squeeze the poor, who find themselves unemployed and subjects of the welfare state, which only grows and grows, squeezing out all other forms of federal spending--including investments in science, technology, and space, which could actually create wealth.

We've got a big problem here, people: if the federal government's primary spending is on supporting individual consumption and medical care, that is money that will not be spent on basic infrastructure (bridges, roads, etc.), homeland defense and security, or critical investments in science and technology, never mind local pet projects and bridges to nowhere. And that is where we are heading. Therefore, it is not enough for space advocates to be single-issue voters and focus solely on which "space architecture" is going to best create a spacefaring civilization. We need to consider the economic and political environments in which those space architectures are being built. And lastly, we need to take a good, hard look--as citizens and taxpayers concerned about our common future--at what we can and cannot afford to do.