Reuters has the story Analysis: Budget constraints limit Obama’s second-term agenda.

Many budget experts expect Congress will ultimately conclude that the spending caps are too severe to work. The drive to cut spending could abate in coming years as well if an expanding economy boosts tax revenues and narrows budget deficits.

But meanwhile, Obama will have few resources to implement his economic vision.

“When I hear an aggressive agenda for investment, given the numbers we’re looking at under the Budget Control Act I tend to be highly skeptical,” Minarik said.

Does it occur to many people that there is something wrong with an economic policy that forces actual harm on the economy to avoid the mythical problem of adequate investment in the economy’s future which requires the collection of more taxes than are now being collected?

There are two solutions to the mythical problem,

1. Collect more taxes.  The money going into the hands of people who can afford to save, suck liquidity right out of the economy that needs that liquidity to be invested.  That’s not a criticism of the people who save.  It is just a statement of reality.
2. Recognize that deficits during a recession is just a problem of appearances, and just spend what needs to be spent.  Some people who apply micro-economic standards to the macro-economic federal budget don’t like the look of the bookkeeping fiction of a deficit.

The Real News Network has the interview Stewart vs Krugman and the Religion of Austerity that is the latest installment of William Black’s Finance and Fraud Report.

Black attributes this call for austerity to a new dogma of the moneyed interest. However, when you see behavior that appears to be magic to you, it is time to apply Greenberg’s Law of Counterproductive Behavior.

Then read the book The Shock Doctrine to understand what is really going on.

In THE SHOCK DOCTRINE, Naomi Klein explodes the myth that the global free market triumphed democratically. Exposing the thinking, the money trail and the puppet strings behind the world-changing crises and wars of the last four decades, The Shock Doctrine is the gripping story of how America’s “free market” policies have come to dominate the world– through the exploitation of disaster-shocked people and countries.

The New Yorker has the article Republicans Accuse Obama of Using Position as President to Lead Country by Andy Borowitz.

The Texas congressman said that if Mr. Obama persists in executing the office of the Presidency as defined by the Constitution, he could face “impeachment and/or deportation.”

Did I fail to mention that Andy Borowitz is what they call a humorist?

MaryA has sent me more information about the incinerator issue in Massachusetts.

There is a Feb. 15 deadline for responding to the Mass Dept. of Environmental Protection about lifting the moratorium.

Health Risks from Waste Incineration – Dr. Paul Connett Speaking in Christina Lake
http://www.youtube.com/watch?v=38PfTRQlJzQ

The “voodoo economics” of incineration
http://www.youtube.com/watch?v=htgZK_QNrdk

nano-particles, free radicals, and antioxidants
http://www.youtube.com/watch?v=Zm9YzhOrB9Q

dioxinated babies, part 1
http://www.youtube.com/watch?v=u0YPoGdeDoY

dioxinated babies, part 2, “the beginning of the end”
http://www.youtube.com/watch?v=9QqxUgEPjXg

Energy from Waste: Part 1 -The Myths Debunked
http://www.youtube.com/watch?v=XB5iOtxlpCs

Trash and the Incinerator: Detroit’s Dirty Truth
http://www.emeac.org/2012/04/trash-and-incinerator-detroits-dirty.html

Toxic Tour Stop One: The Detroit Incinerator
http://www.mlive.com/news/detroit/index.ssf/2012/10/toxic_tour_stop_one_the_detroi.html

Inside America’s Most Indebted City
http://www.npr.org/blogs/money/2012/08/31/160379247/inside-americas-most-indebted-city

Coalition Against the Incinerator (CAI)
http://www.stoptheburn.com

Incineration: A Poor Solution for the 21st Century, by Dr Paul Connett
http://www.slideshare.net/FrankieDolan/incineration-a-poor-solution-for-the-21st-century-by-dr-paul-connett

What has come over The New York Times for publishing the piece Public Goals, Private Interests in Debt Campaign.

In Washington’s running battles over taxes and spending, Mr. McCrery and his colleagues at Fix the Debt have lent a public-spirited, elder-statesman sheen to the cause of deficit reduction. Leading up to the fiscal negotiations, they set up grass-roots chapters around the country, met with President Obama and his aides, and hosted private breakfasts for lawmakers on Capitol Hill. In recent days, Fix the Debt has redoubled its efforts, starting a new national advertising campaign and calling on Mr. Obama and Congress to revise the tax code and reduce long-term spending on entitlement programs.

But in the weeks ahead, many of the campaign’s members will be juggling their private interests with their public goals: they are also lobbyists, board members or executives for corporations that have worked aggressively to shape the contours of federal spending and taxes, including many of the tax breaks that would be at the heart of any broad overhaul. While Fix the Debt criticized the recent fiscal deal between Mr. Obama and lawmakers, saying it did not do enough to cut spending or close tax loopholes, companies and industries linked to the organization emerged with significant victories on taxes and other policies.

This is the kind of information that The New York Times usually tries to hide when they get on some political kick to convince us to do something that is not in our own best interests.  How did they let this article escape?

Of course it has been obvious for a long time that Simpson-Bowles has an agenda that does not align with the needs of the other 98% of us.  Even the 2% will eventually rue the day that they get what they are pushing for.  Apparently these people learn nothing from the history of the French Revolution and the Russian Revolution.  That lesson being that if you do manage to monopolize the wealth and income through manipulation of the government, evenutally the people will get so fed up they will just do away with your government.

The American Institute of CPAs has the article and video What’s at Stake? A CPA’s Insights into the Federal Government’s Finances.

With all due respect to my daughter the accountant and my cousin the CPA, it is too bad that the AICPA does not realize the limits of its expertise.

First the “revenue” that the Federal Government takes in as taxes bears little relation to the “revenue” that a corporation takes in. (The Federal Government does not actually need any revenue from taxes to run the government. Our Federal Government creates the money that it uses to pay for its expenditures. Taking in taxes is just a policy decision that the government has made.)

Second, comparing future obligations that will be paid out over an infinite future is not comparable to obligations that have a fixed payment schedule or to yearly income or revenue. To put it mildly, it is an oversimplification to compare $51 trillion of obligations, such as Social Security, to the current net worth (not assets) of the citizens of the country. Perhaps some people would be shocked to actually count up how much money they will spend over their lifetimes to the amount of money they make in their best year.

Thirdly, to say that the Federal Government assets are only $2 trillion is beyond asinine.

Other than that I don’t have too many more complaints about this video.

This is not to say that sound accounting principles should not be applied when appropriate.  Of course they should.  In my uneducated view of accounting, I think that some accountants forget that accounting rules were invented to help run enterprises well.  If the accounting rules make it difficult to run an enterprise well, then you have to think about what is wrong with applying the particular rule to the particular situation.  Perhaps the accounting rule will make you realize something that you are not doing well in running the enterprise.  On the other hand, it is possible that the accounting rule is not applicable to the current situation or is missing some essential element of the current situation.

Accounting rules are changed from time to time, when the arbiters of accounting such as the Federal Accounting Standards Board (FASB) deems it important to adapt the rules to changing circumstances or to different enterprises. In other words, there is nothing sacred about accounting rules.

New Economic Perspectives has the article News Conference for a Paradigm Shift.

What would you say if the President announced the following in a news conference?

“So now we come to the third great paradigm shift of modern civilization, which I am going to announce today. Right now, in fact. Here it is: Sovereign governments do NOT have to collect tax dollars in order to have dollars to spend. In fact, exactly the opposite of what we have believed for so many generations actually is the case: In order for people to have dollars with which to pay taxes, the sovereign government has to SPEND dollars first.

Crazy, huh?

CBS News has the story Pelosi: “Not enough” revenue in “fiscal cliff” deal.

House Minority Leader Nancy Pelosi, D-Calif., argued that additional revenue must be included in upcoming deficit reduction deals, calling the revenue secured by the “fiscal cliff” deal “significant” but “not enough.”

“The President had originally said he wanted $1.6 trillion in revenue,” she said on “Face the Nation.” “He took it down to 1.2 as a compromise in this legislation. We get $620 billion dollars, very significant, high-end tax, changing the high-end tax rate to 39.6 percent, but that is not enough on the revenue side.”

I am glad that Pelosi made this clear.  I am sure that many people were ready to claim that the President and the progressives in government got all they wanted out of the fiscal bump negotiations, and now all we need to do is cut the budget.  The “deal” was $1 trillion short on the revenue side.  The “deal” also had some items that only further concentrate wealth in the hands of fewer and fewer people.  This last part is something that is definitely taking our country in the wrong  direction.  This is much worse than first part merely takes us not quite far enough in the right direction.

An article Will a robot take your kid’s job? in a local newspaper has a subhead “A troubling new study suggests technology will mean downward mobility—especially for the young.”

The study to which it refers is Smart Machines and Long-Term Misery by Jeffrey D. Sachs and Laurence J. Kotlikoff.

The abstract of the study is

Are smarter machines our children’s friends? Or can they bring about a transfer from our relatively unskilled children to ourselves that leaves our children and, indeed, all our descendants – worse off? This, indeed, is the dire message of the model presented here in which smart machines substitute directly for young unskilled labor, but complement older skilled labor. The depression in the wages of the young then limits their ability to save and invest in their own skill acquisition and physical capital. This, in turn, means the next generation of young, initially unskilled workers, encounter an economy with less human and physical capital, which further drives down their wages. This process stabilizes through time, but potentially entails each newborn generation being worse off than its predecessor. We illustrate the potential for smart machines to engender long-term misery in a highly stylized two-period model. We also show that appropriate generational policy can be used to transform win-lose into win-win for all generations.

This downward mobility is only made worse by our new economic rules that concentrate wealth in the hands of fewer and fewer people.  This generational policy that Sachs and Kotlikoff propose is likely the very tax policy that the politics of our country is so divided over.

So, not only does Keynesian economic analysis say that there cannot be a self-sustained economic recovery with this much concentration of wealth at the top, we now have technological changes that make matters even more dire.

If more people fully understood what is at stake in this political argument, it could change a few minds.

The Real News Network has a great Cliff Deal a “Moderate” Betrayal? with William Black.

Besides a great discussion of the road ahead, there was the following amazing statement by William Black:

And the third thing you can do is you don’t actually have to issue debt, because the real deal about money is that it’s actually created by keystrokes on computers. And we use bonds for other purposes in, you know, pretty abstract macro economics, not because we actually have to get cash. And if you’ve ever wondered if this is true, ask IRS sometimes what happens if you send in cash to pay your tax bill. And here’s—I’ll tell you what happens: they burn it or shred it.

I presume that Bill Black is in a position to know this, but I’d still like to do a little research to see if this can be confirmed.

The Payment Options – Ways To Make a Payment page on the IRS web site tells you how to make a cash payment of your taxes, but it does not tell you what they do with the cash.

Cash payments can only be made in person at a local IRS Office. Do not send cash through the mail. Due to staffing limitations, not all local IRS offices accept cash. Please check the Services Provided page for the local IRS office at Contact My Local Office.

After a Google search, I found the following comment on The Mosler Economics web site:

Scott Tam Says:
March 30th, 2010 at 6:04 pm

I’ve read and heard Warren Mosler claim the IRS shreds cash it receives in payment of taxes. I cannot find any reference to this anywhere other than those quoting Mr. Mosler. (While it is a well known and documented fact the Treasury shreds old, torn, or defective bills to take them out of circulation, this is not what Mr. Mosler is talking about.) Can you give me any proof, documentation or third party reporting on this shredding of cash tax payments?

I have also found the interesting article Where US Currency Goes to Die. This does not answer the question about the IRS and cash, but it does have the following interesting quote:

Paciello makes sure to make one final point about money shredding by the Fed perfectly clear.

“The Federal Reserve doesn’t destroy money,” he says. “They destroy banknotes. Don’t ever call it money.”