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I'm here on the scene at the Scarchuck's coffee shop where we are going to try
getting some "Man on the Street" reactions about the economy.
[distracted] Here's my co-host now.
We can get started with the technical parts first.
Hey charlie,
great to have you.
Yeah, it's a bit earlier than I like to get up. The M****r
F*****g Sun is still out.
You owe me for this!
Think of it as doing your civic duty by educating our fellow Americans about
what matters before they vote.
Yeah.
I had to see some people about some stuff.
So what are we doing here?
Have a seat.
We are going to be talking about the National Debt and the Economy
I'm not so sure if I should have came out for this.
If you're just gonna bring me down all morning, I'll leave. You'll be fine.
This is going to be more like a Ross Perot/charts & graphs thing.
Nothing too difficult for you.
All right,
I'll give you a chance.
Great!
So before we get started I'm wondering if you have a degree in Economics?
HA! You're a funny guy. [sarcasm]
Are you just asking that so everybody knows i don't know Economics and I'm not
good at math?
That sums it up.
It's been a while since we talked,
so I can't remember how good you are at picking up nuance or hidden messages.
Are you good at that?
Well that depends.
If I by hidden messages you mean like when Romney said,
"We have the President talking about someone's plan in a way that's
completely ... foreign ...
... to what my real plan is."
[aside] Hear the dog-whistle Birthers?
Then yeah I do.
If by nuance you mean when Romney said,
"We have his own record which is we have four consecutive years where he said,
when he was running for office,
he could cut the deficit in half.
Instead he's doubled it."
Which literally translates to,
Obama had a 4-year term in which Congress, the Senate,
and his White House were responsible for the deficit spending going up from
Bush's peak of $0.9 Trillion to Obama's latest
$1.3 Trillion,
and it wasn't until first quarter 2009 that he said he
planned on cutting the deficit spending in half by an early retirement of the
Bush tax cuts which the Republican controlled Congress wouldnt
let happen. [inside] Winning!
Then those lies are peppered with a nearly true statement of the total debt
going from $10 Trillion to nearly 16 Trillion, but he
left out that the increase in the Debt was caused by a reduction in Federal
Revenue (aka: taxes),
which was brought on by a crippled economy and tax cuts.
He left that out and doubled-down with a new lie that the Debt would grow to
$20 Trillion if Obama is re-elected.
That is total bull because the Economy is getting better, the Federal Revenue is
rising,
the spending is drastically lowering, and there are more big cuts coming.
Chances are that whoever is President next, if they did nothing would likely
see the debt lower.
By nuance did you mean that? ... What,
did I say something wrong?
Well you covered so much there that I think you just ruined the show.
You ever hear the expression that a story is like an onion? People don't want
to bite into it, they want it layer by layer and sauteed or diced.
Well, you were the one hitting me with that uppity sarcasm.
[inside] Oh! You gotta sit down before I knock you down!
It wasn't meant to be uppity sarcasm.
We don't know who is going to watch this show,
so we needed to appeal to a broad audience.
That was my way of letting the audience know to look out for nuance on their own,
because we are not going to spell it out for them. Oh, I see.
Moving on.
To make the point better for the folks at home,
I'm going to show you two different graphs about DNA variants,
and you need to tell me what's different about them.
Take a good look.
That's one.
Now here's the other.
Well, did you see it? They were way different on the variance.
Was it the DNA of something like eyes versus the DNA of the
genders? Nope,
both were total DNA of the person studied,
but the blue one was showing the amount of DNA they had identical, and the red
shows the DNA that each person had that was different than all the other
people.
The main difference is, the red one was a thin slice of the top of the blue one
all stretched out to make it look like a big deal when it's not.
Here are some other examples.
What's different about these three graphs?
(Flip it.)
(And flip to the last.)
So what do you think is different about those?
You didn't say what ...
the graphs were representing.
It's unemployment statistics.
Okay.
First was the great depression unemployment,
second was Obama unemployment, and third was Reagan unemployment.
That's a good try, but no.
They were all the same exact data.
The second and third where the same trick as the last example,
but the first was the non-zero graph trick,
aka: lie.
All three showed employment from 2002
through 2012,
but the low number on the first chart was 4% instead of 0%.
That trick stretches out the curve to make the unemployment look like it's had
a remarkable change.
The third graph showed the employment curve over the same period where the low
was 0%,
and the upper was 100%.
You can definitely still see the dip,
but you'll realize the vast majority of people have jobs.
Our economy is so sensitive to unemployment because it's based on
consumerism, and people don't have savings to get through tough times.
Small unemployment changes are a big deal.
Okay,
I'm with you,
but nobody actually does that ... right?
It's a bit more typical than you think.
Newspapers love a controversy,
so you will often see charts with non-zero baselines. So now we are going
to talk about the deficit?
Yes.
Let's do that.
Can we get my first exhibit on the main monitor now?
Thanks.
This first chart is a very important chart that has a lot to do with
government spending.
What you are looking at there is a population distribution by age and
gender.
Old on top,
young down on the bottom,
male on the left side, and females on the right side.
if you are watching at home,
you might want to pause here to take in the details,
or you can look for links to the full sized images in the description
area below this video.
I should have got a cup of Joe,
that chart looks blurry to me.
It might be the superimposed data.
It's showing the 2000 census info right on top of the
2010 census data.
The dark bars are the 2010,
and a ghostly bars are the 2000.
It helps show how the population is moving up in age brackets.
Right now the baby boom has started retiring.
If you look closely,
you will see that each of the next 4 years will add about 1,000,000 new
Social Security pensioners.
That's a pretty big bill to contend with.
Obama got hit with the first wave of this, which is partly why spending went
up for him.
He was adding about 750,000 new pensioners a year for his
first term in office.
Whoever is next will have a bigger spending bill from that alone.
There is another very special effect to see there.
What's that?
Look how pointed the 2000 top was, and how much flatter the
2010 is.
So what's that got to do with anything?
Well it... Oh, wait a minute!
People are living longer.
That's probably been going on a long time now,
which means that when they planned Social Security,
they thought of a very pointy top,
but our widening top means that people are going to get way more benefits
over the long run out of the system than it was designed to give. Brilliant!
Charlie,
you really catch on fast.
And now that you mention it,
that chart has gotten taller and wider since they wrote the first laws
governing Social Security.
That is a big difference in the total amount spent.
Sure there were more people paying into it,
but there are still a lot more taking out,
so yes,
it needs to have some reforms and some long-range planning,
but you would need a large number of adults to get together for that to
happen.
Fat chance of that happening in D.C.
We will hear more about that later.
Moving on.
This graph shows our federal spending over both Clinton terms,
both Bush terms, and the current Obama term.
People at home are going to want to pause this one for sure,
that's a lot of colors! Right.
The big base is the money that comes in from your IRS 1040 forms.
The next higher colored area is corporate taxes.
Obviously it's a far thinner line than the Revenue area depicting people's
Income Taxes,
which is really irritating, since they have far more control over the
government than we ordinary people do, but obviously they pay a lot less in
aggregate.
Oh ... my ... God!
Look at how thin that purple area is!
Estate taxes!
With all the *** you hear rich people do about their estate taxes, and it's a tiny
little line.
Wussy pricks!
Hey now ...
Take one last look at the curvature.
The 2000 recession that Clinton dodged, which hit Bush caused
a drop in revenue.
The bigger collapse of our economy,
which came after Bush did the same thing
(but more severely), to Obama.
Note that revenues are on the rise for years now.
Moving on.
What goes up ...
must come down?
So if that last one was revenue,
this one must be spending. Elementary my dear Watson.
The National Defense is a lot smaller than I thought it would be.
Is that all of it?
Sort of ...
It's not including any of the inactive duty or retired/discharged
servicemen.
None of their benefits,
be they college tuition or prosthetic's.
Those post service spending amounts are included in the human resources section.
There is a lot bundled into human resources,
like unemployment benefits.
The net interest area is the Treasury Bond Interest on the National Debt.
That mostly goes to rich people right?
Well, kind of ...
Most rich people like to have stability come out of their investment income,
and they like their income to be tax-free.
We have a bunch of bonds in China too.
People complain about that but what else are the Chinese going to do with all our
money after we bought the junk they were making?
They don't want the stuff we make ourselves,
so buying Government Bonds is a good place to put their piles of our currency
until they find something of ours they want.
I see.
Hey, that's weird how jagged the spending chart is.
Wait, all the peaks are the years Congressmen are running for office,
and the dips are the year after they won their seat.
That's hilarious! I hadn't really put that together yet.
Great analysis Charlie. You have much to learn young grasshopper.
Moving on.
Okay,
so the main thing you should focus on now is the red line.
This line graph combines the previous two area charts.
That red line is the deficit spending on a yearly basis.
People at home may want to click pause here.
What's that bright green line?
Oh, that was the stimulus package.
Wow, that's tiny.
Yeah, now you see why Paul Krugman called it anemic spending.
Focus on the red line right now.
It clearly shows that Obama's 2010 year was the highest
deficit spending of all time.
His 2009 and 2011 years equal Bush's departing year
when looking at deficit, but Bush didn't have a crushed economy to inflate his
deficit by the lack of tax income.
What did you do there with the colors?
Money green for revenue,
olive drab green for military spending,
and obnoxious green for the stimulus package? Yes,
i think that's what i did.
Next graph please.
Here is an interesting thing I discovered while looking for a predictor.
The economic item that was the best predictor out of all the standard
economic indicators of Federal Revenue changes was gross private domestic
Investment.
So that curve is going up lately,
which means revenue will be going up. Yes,
precisely.
It's a leading ...
indicator ...
I wonder if any of that private investment is windmills.
I don't know,
but probably.
And before we move on,
take note of how sharply it fell before Bush's second term ended.
That's what I mean when i say it's a good predictor of Federal Revenues;
first Gross Private Domestic Investment goes up,
then Federal Revenue goes up,
and vice versa.
Okay, were gonna be wrapping up the Ross Perot part of the show after this last
chart.
This one has older history,
and perhaps the most interesting,
and anti-climatic of all the information.
What are we looking at there?
The shapes of these lines is what is most important.
They have been re-scaled in order to all fit on the same graph.
The purple line at the top represents our population.
It is smoother than it should be mainly because the census people merely do
population estimates between decades,
and those estimates are kind of linear.
The money green and the red lines are two different representations of the
same thing.
Money green is straight up dollars of the Federal Budget,
but inflation can distort the true value of money, so the red line is
adjusted to take away the effects of inflation.
Not only is it adjusted for inflation,
but it's adjusted for population.
The huge bumps you see in the green and red lines where they exceed the
population line,
that's when the FDR spending got us out of the Great Depression.
I see the red line crosses the green line closer to modern times.
Yes,
and it starts to head away from the population line.
That means during the Clinton years we got so efficient with government that we
were spending less per person on government than ever before,
but it went up for Bush,
and even up faster for Obama.
That's correct,
but before you jump to conclusions,
think of the nuance.
The recent economic problems were in some ways equal to the Great Depression.
Back then there was no government pensioners to worry about,
now there are.
The size of government was tiny,
now it's big.
Before you had no social safety net when trouble came along,
now we do.
So the Obama jump in government size is bad,
but predictable,
and it's expected to diminish in the next few years. And the yellow line is how
long we live.
It's the number of years the person is expected to collect benefits.
Oh, holy crap!
Yeah, holy crap is right.
The bright green line is the relative payments to all pensioners per year,
There is a really interesting relationship between the gold line and
the bright green line. I see it.
When the social security benefits really started rolling out, the life expectancy
started going up steadily. Right.
Healthier and older.
Look at the direction the green goes though,
that is a feedback loop.
The Social Security Insurance and Medicare payments are going to run up
fast!
It is a serious problem.
We need all the elected people to be adults about it.
No more games.
Exactly!
Well, that's the end of the topic portion of the show.
Were now taking questions and comments from our viewers.
Who wants to go first?