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.”

The New Yorker has the article Senatus Decadens. It is a nicely written description of how the Senate has declined over the last 40 or so years.

The Senate is in a prolonged, self-induced coma. It does not produce creative legislation. It does not inspire important debate. It is not responsive to key national problems. Its pretense of institutional dignity is so battered that junior senators openly mock it. I’m amazed that so many talented people—Elizabeth Warren among the most recent—still fight like hell to get into it.

This article trots out the usual explanation for why the Democratic leadership is hesitant to embrace reform.

…among Democrats, most of the leadership oppose anything that will upset the status quo, perhaps out of a fear that the same tactic could be used on them.

And I respond again.

What a silly concern.  If it takes only 51 votes to change the rule, then the Republicans can change it the next time they get a majority irrespective of what the Democrats do now.  You can bet that the Republicans won’t be so squeamish.

In fact the mere threat of doing away with the filibuster the last time the Republicans were in control was enough to cower the Democrats.  I don’t see any signs of this level of tactical thinking by the Democrats.

Truth Out has the article The Case Against Billionaires. The article is good, but the simplest way to get the idea is to listen to the talk by Nick Hanauer, a venture capitalist from Seattle, that the article references.

The Truth Out article summarizes the argument as follows:

So if it were true that the world’s economies rely on their super-rich to do well, as today’s oligarch-inspired, right-wing economics argues, then why are world’s “austerity” economies doing so poorly?

It’s because billionaires are not job creators, they are somewhere between symbiotes and parasites. That’s not meant as a personal insult against billionaires, many of whom are decent people. But it’s meant as a statement of common sense. If vast fortunes are being hoarded in the hands of very few people who can’t possibly spend that much money in their lifetime or their kid’s lifetime or even their kid’s, kid’s, kid’s, kid’s, lifetime, then it’s essentially being wasted.

This is the point billionaire Nick Hanauer was making in his recent TED talk explaining why rich people aren’t job creators (He also said the same thing on The Big Picture with Thom Hartmann). As he said, “There can never be enough super-rich Americans to power a great economy. The annual earnings of people like me are hundreds, if not thousands, of times greater than those of the median American, but we don’t buy hundreds or thousands of times more stuff.”

Mother Jones has the article America’s Real Criminal Element: Lead by Kevin Drum.

New research finds Pb is the hidden villain behind violent crime, lower IQs, and even the ADHD epidemic. And fixing the problem is a lot cheaper than doing nothing.

After seeing this article posted on the Facebook pages of two friends, I thought it might be a good thing to read.  It is a rather amazing story.

I would have invented a quantum theory of general relativity by now if I hadn’t enjoyed melting lead fishing sinkers on the kitchen stove when i was younger.  Maybe the lead helps account for my tumultuous career.  Always did have a problem with authority figures.  Then there were all those years of soldering electronics and the occasional plumbing fix with 60/40 tin/lead solder..

Politico has the story and video Barney Frank: I want to be senator.

Governor Deval Patrick has said he would only appoint an interim Senator who would agree not to run for the Senate in the election. He said that nobody could perform the duties of a Senator and run for election at the same time. Ironically, the person most likely to run for the position is Representative Ed Markey. Markey will perform his job as a U.S. Representative at the same time he is running for Senator.

Well, if we must accept Governor Patrick’s nonsensical reasoning, the least he could do is appoint Barney Frank.

Thanks to RichardH who forwarded this cartoon that was forwarded to him. Things Nobody Ever Said: U.S. History Edition by Drew Sheneman.