On Rick Santelli's "Meet The Press" Appearance, A $113 Trillion Future Rounding Error, And The Metamorphosis Of The American Dream To A Nightmare

Tyler Durden's picture

Today, appearing on Meet The Press, in addition to Susan Rice, Dick Durbin, Lindsey Graham, Jennifer Granholm, Harold Ford, and Ed Gillespie was CNBC's uber contrarian voice, Rick Santelli. The topic: reigning in government spending, a topic which will be with America until its last bond issuance, sometime in the next 5 years. And while Rick was quite subdued this time around (it seems the CBOT voice only sees red when confronted with the likes of Steve Liesman), he did compare the crisis facing America now to the events from 9/11... "I think this is an issue that needs to be put out into the air and
see--many, many other states, ultimately, might have--not have the same
balance sheet as Wisconsin, but I think, ultimately, collective
bargaining, even from a federal level, these are big issues, and these
costs need to be put under control.  If the country is ever attacked
like it was in 9/11, we all respond with a sense of urgency. What's
going on on balance sheets throughout the country is the same type of
attack." He also noted the critical Illinois muni situation whose alternative is a forced austerity plan (and considering that various Wisconsin politicans received death threats over what is finally being perceived a loss in some entitlement benefits, the outcome of inevitable austerity in America will not be pretty): "Senator Durbin is from my state:  $3.7 billion muni issuance that they need to bring to the market.  They
haven't paid vendors.  You know, it has come to the crossroads where if
we don't start to make the changes that the governor and the congressman
know are going to take time, we will have austerity forced on us, and
that type of austerity is going to be much messier.  There really isn't
much opportunity for debate here.  We do need action." But most importantly is the realization that nobody has any idea what to do, and as an article just penned by the Global and Mail screams, "Wake up, Americans. Your economic dream is a nightmare." Luckily, with everyone's head in the sand, nobody really minds.

Clip from Meet the Press (and full transript here):

Visit msnbc.com for breaking news, world news, and news about the economy

And now for some facts: On February 28, 2001 George Bush said this about his 2002 Budget: “It will retire nearly $1 trillion in debt over the next four years.” Instead, US debt, which at that point was $5.7 trillion, rose to $7.7 trillion. $3 trillion rounding error? Also in the same budget, Bush predicted a $5.6 trillion surplus over the next ten years, which would wipe out all of America's debt by 2011. The latest debt figure was $14.1 trillion. A $14.1 trillion rounding error, or a nearly five fold increase in "rounding errors" in a decade. At this point, the 2021 total debt (including insolvent Social Security) is expected to be $24 trillion. Applying the same rounding error variance to government "projections" means... $113 trillion in debt?

Most jarring, total US Debt to GDP will be over 100% in under 6 months. Paging Reinhart and Rogoff...

A little more on future rounding errors as per Bill Buckler's latest Privateer:

As did Mr Bush’s fiscal 2002 budget, Mr Obama’s fiscal 2012 budget delivered on February 14 includes projections ten years into the future. Unlike Mr Bush’s projections, Mr Obama’s projections for the period between now and 2021 do not contain a single budget surplus. Instead they add up to a cumulative deficit over the next ten years of $US 7.2 TRILLION. The biggest projected annual deficit - $US 1.65 TRILLION - is for the fiscal year ending on September 30, 2011. The smallest - $US 619 Billion - is for fiscal 2018. By 2021, the total annual outlay of the US government is predicted to be $US 5.697 TRILLION. That is an increase of 49 percent over the projected outlay for the current (2011) fiscal year. By 2021, the total annual revenue of the US government is predicted to be $US 4.923 TRILLION. That is an increase of 126.5 percent over the projected revenue for the current (2011) fiscal year. By 2021, government revenues are predicted to have risen 2.5 times as fast as government spending.

How is this to be done? GDP is “projected” to rise from $US 15.1TRILLION to $US 24.6 TRILLION.

The surreal nature of watching as this country dissolves into insolvency prompted the Globe and Mail to write the following must read article, "Wake up, Americans. Your economic dream is a nightmare":

Our southern friends are living the American dream these days, a dream that’s removing them from reality. Their federal legislators, including the President, are imagining a brilliant future that cannot be. None of them, it would appear, wants to awaken Americans from this dream.

The dream? Economic recovery followed by the return of prosperity, built on borrowed money. And not just some borrowed money, but trillions and trillions of borrowed money.

In this scenario, the rest of the world will keep lending to the United States, borrowing costs won’t rise, inflation will be banished, and the punishment that would befall almost any other country that ran such a lopsided budget will not strike the U.S.

Like all dreams, this one has lost touch with reality. In Washington, legislators seem to accept that amassing trillions of dollars of additional debt is a bad idea. Then they argue furiously about a mere 12 per cent of the budget that, even if half of it were to be eliminated, would still leave the government in a deficit position this year.

The discretionary part of the budget contains programs people count on, everything from education to the environment, food inspections to basic research, farm aid and student assistance. The other parts of the budget are debt, the military and the so-called entitlement social programs of health care for the poor and seniors and social security.

Two bipartisan non-governmental commissions have instructed the country in simple arithmetic: namely, that the budget can’t be restored to sanity without cuts to discretionary spending and entitlement programs, and tax increases. In the dreamland of U.S. discourse, however, no one wants to talk about cuts to entitlement programs or tax increases. Worse, just before Christmas, Congress and the President forged a deal that continued the fiscally ruinous tax cuts of George W. Bush, the ones so tilted toward the already wealthy, and pumped even more discretionary spending into the U.S. economy.

American friends who despair of dreamland discourse acknowledge that it will take a “crisis” to awaken enough people so serious action can occur, instead of the shadowboxing that passes for action.

What would constitute a “crisis”? The stock market is roaring; happy days have returned to Wall Street financiers. Interest rates are low. True, the unemployment rate is above 9 per cent, but that means 91 per cent of Americans are working.

Would a huge run on the dollar be a “crisis”? Would a serious surge in inflation? Or a nose-diving stock market? Or another housing plunge? Or all of the above? No one wants any of the above, but what will it take to awaken Americans from their dream?

It might have been thought that their President would try to alert them to the damage being done daily to their future, and to the serious shift in world power and influence away from a country so hobbling itself with debt.

Barack Obama has obviously calculated that the political risks are too great for candour, so he, too, operates within the dream by proposing some restraint on discretionary spending without touching the entitlement programs, the military or taxes. In this, he is complicit with Republicans in deforming the nature of the debate and ill-informing Americans.

He has obviously reckoned that, with the Republicans believing the problem can be solved by discretionary spending cuts alone, he isn’t going to do anything credible before the next election.

So health care for seniors and the poor continues to rise by 8 per cent annually. The bloated Pentagon budget will be a staggering $670-billion. Still, the Secretary of Defence says any cut of more than $9-billion would cripple the nation’s capacity to defend itself.

With a 5-per-cent national sales tax, of the kind every other industrial country has implemented, the U.S. would be halfway home to budgetary solvency. In dreamland, however, such a dose of reality is unthinkable.

Unfortunately, dreamland will soon be nightmareland. And nobody will have seen it coming. Nobody.



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buzzsaw99's picture

the msm, the ny, dc, and chicago elite will lead us out of bondage and into the promised land. LMAO!!

bankrupt JPM buy silver's picture

Silver lease and LBMA rates moving higher...time to rock and roll



IQ 145's picture

 Multi-kilo lots of Silver bullion selling for over $32/oz. now in London; "The reason they call it the American Dream, is that you have to be asleep to believe it." George Carlin.

Michael's picture

Wisconsin Governor Scott Walker is killing two birds with one stone.  He is doing defect reduction and removing power from public unions at the same time. The MSM is trying to make the legislation about one issue money, or the other issue removing collective bargaining rights. Both are necessary to fix the problem in the long run and I applaud the Governor for having the balls to stand up to the unions. We the taxpayers have had the public unions hands ringing our necks for too long, squeezing every drop of taxpayer money from us they could possibly get their grubby paws on. This is just the beginning of public union dominoes to fall and causing the democrat base to crumble. The end of the nanny state is near. Halleluyah!

goldfish1's picture

That fascist fukk passes new entitlement programs for his cronies to the tune of $130 M and then wants to cut collective bargaining power to the people? He can go to hell along with Kasich in Ohio.

Michael's picture

If you are actually one of the few the public school system taught to read, it's really quite simple spelled out in plain English.

Plunder: How Public Employee Unions are Raiding Treasuries, Controlling Our Lives and Bankrupting the Nation


Lord Koos's picture

So now you're pro-government and anti-worker.  Do you really think that screwing a bunch of teachers over is going to fix the budget in that state?  You think the tax breaks the governor gave are going to create jobs?  

Backspin's picture

The teachers aren't getting screwed.  They are simply being given terms more similar to workers in the private sector.  The deal that they have had up until now is one that involve the taxpayer getting screwed for their benefit.  And yes, tax breaks will create jobs.  The private sector will always deploy capital more efficiently that the public sector.  Always.  The difference is that the jobs produces will actually result in goods and services that are more in demand.


unununium's picture

Always?  The private sector has deployed your capital to Jamie Dimon.  Are you just peachy with that?

DonnieD's picture

Actually, the public sector deploys capital to Jamie Dimon. What world do you live in?

unununium's picture

How wretched and sad to see teacher pay, of all things, blamed for even the slightest part of these problems.

Popo's picture

The private sector??? It was the Public sector that deployed capital to C. A true private sector enterprise would be bankrupt already, and Dimon would be the laughing stock of the financial world. It was only through the public sector that he survived and prospered.

Lord Koos's picture

Terms similar to the private sector???  Teachers in the private sector make more money than public school teachers.  Teachers in the private sector are also free to negotiate with the boss.

Perhaps you can explain to us all how the Bush tax cuts created so many jobs.

The private sector, unregulated, will deploy their capital to Switzerland and the Caymans, after first deploying it to China, India and Thailand.  I don't see how this country could bend over any further to satisfy big business.

DonnieD's picture

You've almost got it figured out. Just one more step until you reach the conclusion that both the public sector and big business are screwing over everyone else not lucky enough to have their political connections.

amsterdamzero's picture

+12.5% contribution to your own health coverage.

Ham Wallet's picture

Feel free to look up the avg. Private teacher salary v. Public teacher salary in Wisconsin, dopey.

Michael's picture

Actually, this move by the Governor and legislature may count as killing four birds with one stone.


Popo's picture

Wow, you're confused. Private school teachers make significantly LESS than public school teachers.

The rest of your argument falls apart after that one enormous misconception.

And actually, the tax cuts did create jobs....


IQ 145's picture

 This is exactly correct; it's frightening to realize that the morons who junked you probably vote; It's amazing that people can't understand something this simple.

Popo's picture

The "morons" here responded with factual corrections. So mr. iQ 145: what are the comparative average private vs. public teacher salaries?

Matt's picture

http://www.wpri.org/WIInterest/Vol11No3/Niederjohn11.3.pdf shows the wage gap between public teachers being $8-$9K higher than private school teachers. It covers the health insurance benefits of the public sector teachers, and pay of unionized teachers vs non-union, but does not cover total benefits of the unionized public teachers compared to non-union private school teachers.

From that article, the conclusion is the only public teachers that are underpaid are the ones who are really good at their job, as the pay spread from highest to lowest performing is quite small.

unfortunately, it does not cover total compensation for public and private employees. the numbers do not at all match the numbers at http://www.econbrowser.com/archives/2011/02/analogy_watch_c.html which are from the BLS.

Which brings up the whole problem that if no one knows or can agree on the numbers, how can anything be resolved? is the Wisconsin State deficit $137 million or $4 billion? That is a huge disparity.

MachoMan's picture

This is the inevitable conclusion to our expansionary policies...  our ability to collectively bargain is going to be cast aside...  the size and scope of our government dramatically reduced...  and the victors of the wealth gap emerge with even more power...

eventually, we get up the nerve to begin collective bargaining again and the cycle beings anew...

I think the way to look at the WI issue is not "screwing over a bunch of teachers", but rather "not stealing from the general populace"...  You're talking about a zero sum game bud...  it's us or them...  better to be them.  [not that it hasn't already been us for the last 3+ years].

I'll leave you with a closing thought as to the success of failing to throw dead weight overboard...  General Motors. 

Lord Koos's picture

General Motors was a drop in the bucket compared to the banks.

Popo's picture

And Darfur pales before Stalin's purges. Your point?

Freddie's picture

Teachers are govt stupid.

mtomato2's picture

Don't be a dick, L.K..  Supporting one politician isn't anywhere NEAR being pro-government.  Take your straw man to hell with you.

Sean7k's picture

I would feel better if he was standing up to the police, fire and hwy patrol unions, but he is not. This is a violation of equal treatment under the law. He is creating a special class- which makes him just another asshole.

Bastiat's picture

Exactly the shit Whitman tried to pull in CA -- making a deal with police and fire. 

StychoKiller's picture

Well, the police do carry firearms -- we can't have them going "postal", now can we?  Guess the firemen also need motivation to actually do their job(s) too.  Bottom line:  Neither of these professions should be supplied by the govt. at any level.

hayleecomet's picture

Unions are no friend of mine and I think they are as corrupt as our government.  In this case, Walker has exempted the police,firefighters and state troopers because those three unions supported him.  This is all about politics and taking away the unions that support the dems.  Wisconsin was in a good financial position until his tax cuts to large corporations.  He is just another fuck, like the rest of them.

LawsofPhysics's picture

I presume that you want to end ALL unions, not just public.  I mean, after all we have been BAILING THEM OUT and will no see any return of that taxpayer money.  If you don't, then you are just another fucking hypocrite. I agree end ALL unions and ALL bailouts, when a company goes down, fuck em.  Everyone for themselves, I will do fine in a third world economy.  Everyone wants great public services, but does not want to pay for them, fine with me, I can hire and feed my own police force.  I am sure none of you mind ME being the law for a while.  I like where this is going.

Terminus C's picture

You'd better find yourself a patron lord before you think of becoming the "law".  You may have some money and might be the local big swinging dick for a time, but you'll get squashed by the bigger swinging dick if you don't bow down and give it a sweet little suck.

Feudalism bitchez.

Mr Lennon Hendrix's picture

The word union is described as a special interest; a group with commonalities.  So to think that there is something wrong with people sharing their ideas concerning their rights is moronic.  Everyone will always form special interest groups.

Now if you have a problem with the way a particular union runs their operation, I understand.  Unions can be very shady.  But hold content for the people involved, not the concept of the union itself.

lawrence1's picture

You are so ignorant and misinformed that you are hopeless.
This govenor is another corporate whore doing their bidding in the guise of reducing the deficit. Name one republican who goes after the banks or military spending, and name one who supports the common man. Corporate cocksuckers all.

Attitude_Check's picture

Who do you think makes money when the State issues bonds? The Banks


Who gets the future tax benefits of the interest being paid on those bonds?  The Bond holders which tend to the the wealthy (think PIMCO)


Now tell me how it is in the benefit of the Wisconsin taxpayer to increase the State debt?  WHO ACTUALLY IS THE BENEFICIARY?  When you answer that, you know where to point your anger.

sun tzu's picture

Ron Paul and Rand Paul. Now name one banker cocksucking Democrat who has gone after the bankers. Cocksuckers Obama  & Holder just decided that Angelo Mozilo did not commit any crimes. No criminal charges will be filed against him or any other bankers. LOL

Commander Cody's picture

I wonder if Walker will attack the cops' unions next.  I wonder what they'll do if so.

Pegasus Muse's picture
I cut this from a rather lengthy article that touches on a lot of problems the country has so far just glossed over or avoided entirely.


Analysis of the Global Insurrection Against Neo-Liberal Economic Domination and the Coming American Rebellion – We Are Egypt [Revolution Roundup #3]

IX :: The Battle in Madison: A Sign of Things to Come

While bloated federal and state spending has grown to staggering levels of debt, and demands immediate attention, any cut in spending or attempts to reduce the deficit must first come at the expense of the organized criminal class that has looted the national economy. Any cuts that happen before that need to be understood as an escalation and extension of the attacks on the American people.

While continuing their attacks on American small businesses and private-sector workers, the global financial elite are now stepping up their attacks on public workers. In this context, the Wisconsin state government attacks against the state teachers’ union doesn’t have anything to do with the old Democrat Vs. Republican divide and conquer debates of the past. This is about people fighting back against their economic oppressors. In Egypt, Mubarak was the Neo-Liberal Aristocracy’s local enforcer. In Wisconsin, Scott Walker is the Neo-Liberal Aristocracy’s local enforcer.

This battle in Madison, Wisconsin, between the American people and the global financial elite, represents the opening salvo, the awakening of an American resistance movement and a sign of what’s to come.




Waterfallsparkles's picture

I think a lot of it has to do with the States and Counties getting huge amounts of revenues from Property Taxes as Real Estate Prices rose.  Now with Real Estate prices tanking the revenues are hugely reduced.  State and County Governments became to rely on those taxes and now they are gone.

Another boom bust cycle from our Fed affecting our daily lives.

gs_runsthiscountry's picture



And, as federal cuts have steadily increased, the education costs have steadily been transferred to the property tax rolls.

The lowest common denominator....loss of property tax base. That extend and pretend by banks of all size is coming home to roost in 2011-2012. As the foreclosures have started to hit the last 90 days it has been eye opening. I personally watched the bottom drop out of values in my area. I can now throw stones from my home, to homes that have fallen in value 75%+ from the peek. And, you can not collect property tax revenue on a foreclosed home when no one is buying it.

We now read Banks are walking away in some regions of the country from foreclosed homes. Chris Whalen has outlined this many of times in his writings and speeches, and he is dead on.

I would love to be a fly on the wall at our local assessors office for the conversations going on now. Assessments to be released  2-1/2 months....tick tick tick. I have already talked to local officials, as have neighbors, after my prodding. We are already ready to challenge the assessments, as last years was not even close. Also, knowing full well it will be made up via increase in Mil rates.

So, the property owners get screwed again, as banks maybe walking away from property taxes, only to be made up by those who are maintaining their property. How many property owners in 2011 will be faced with the dilemma of falling into the red or even deeper. At what point does this not inspire more jingle mail, even from those who have a strong moral compass. How many will just throw in the towel?

Waterfallsparkles's picture

In my state you can request an assessment hearing every year.  You have to check the City or County website.

I got stuck for 3 years on a few propertys.  One they raised the property taxes from $3,000. to $7,100. in three years.  Now I got it back to $4,200.  Not a victory but a help.  Yet for 3 years I paid into the coffers a lot of money. 

The biggest problem the City faced was that by raising Property Taxes so high it in effect lowered Property values by the same amout as the taxes.  So, as property taxes went thru the roof the property values went down to compensate for the taxes.  As the Taxes are calculated in Buyers monthlly payment as to what they can afford.  So, fewer Buyers, lower prices.

LawsofPhysics's picture

Wait until the muni market caves.  You will be taxed, but in a different way.

sun tzu's picture

Federal cuts have steadily increased? In which universe?

gs_runsthiscountry's picture

You are correct - should have read "state."

It was the state aid I was referring to. K-12 and local college now make up 43% of our local property taxes, w/ the college levy increasing 31% in the past 6 years.

lincolnsteffens's picture

Whose real estate taxes have been reduced?? Not mine. In fact mine went up 8%, my health care went up 12%, and sales tax last year went from 5% to 6.25%. Now there is talk about  a Federal value added tax. Fuck that. Sorry but bloated Govt. and excessive regulations have to get cut big time before I'll support any added taxes. I've been responsible, finished my last debt payment. I could have applied for unemployment but so far have not. Instead I'm working full time for paid health insurance and a few other small perks. Do I deserve to be forced to bail out the criminal or foolish? I don't think so!!!!

Absinthe Minded's picture

Yeah, but the people in Egypt are protesting so they can afford to eat and feed their children. The fucksters in Wisconsin are protesting so they can buy another flatscreen and keep up with the Joneses. Face it we are fucked. No politician has the balls to get up there and say,"This is it, we need to cut 20% of all budgets across the board." That's what we need to do. Even the 5% national sales tax would be fine with me, if it were in conjunction with the government cuts. Everybody needs to take a hit. We've lived high off the hog for too long. Junk away but you all know it's true. And I'm not referring to everyone, I know there are people that are hurting, but their not part of the unions in Wisconsin.