I often wondered if politicians are really that ignorant and deficient when it comes to math skills or are they really good at math but arrogant enough to think that they can tell us anything, math wise, and we are too deficient to understand the math lies we are being told. Consider the following examples and then you decide, ignorant or arrogant:
- It seems forever that politicians have been telling us what a great financial idea the Social Security program is and why it is stupid to allow mere mortal citizens to handle their retirement affairs by, gasp, investing their retirement funds in the stock market. Well, I did a little math work in this area and put together some elementary math models to determine if this myth was true. I got my historical Social Security salary history from the Social Security Administration, I researched the historical Social Security tax rates which enabled me to compute how much money was sent to the government for my retirement based on my wages, I found the historical S&P 500 annual returns for the stock market over the years, and put all of these numbers into a simple spreadsheet. The basic assumption of the model is that I would have been allowed many decades ago to keep all of that money that was being sent to the government (and political class) and invested it in an S&P 500 taxfree/IRA-like, low fee mutual fund. The results indicated that if the world had been like my spreadsheet, I would have been able to retire with a monthly check that was about two and half times what I will get from the Social Security Administration. This estimates takes into account the drastic reduction in stock market values from the "Great Recession." If I had played it more conservatively and invested in one year Treasury notes over that time I would have been able to retire with 50% more that what I will get from Social Security. Thus, I am tired of the political class telling me how great their program is and how dangerous it would have been if I had managed my retirement wealth, the math proves them wrong.
- Of course, we have constantly heard how the Obama stimulus package saved the economy and how many jobs it saved and created. Forget the fact, that unemployment is much higher than anyone in the Obama administration said it would be if the stimulus package was passed, let's do some simple math using only the administration's numbers. In a series of articles in late October, 2009, the Associated Press took a look at what effect the stimulus package was having. At that time, the Obama administration was claiming that 650,000 jobs had been created or saved. The AP and Reason magazine were relatively close in their estimates of how much of the stimulus package had been spent up to that point, about $180 billion. If you do the simple math of dividing the number of jobs created and saved, Obama's own numbers, and divide that into how much was spent to create and save them, you come out to about $277,000 per job. You cannot solve a recession when your policies cost over a quarter million per job. Didn't anyone do the math at the White House, these are not good numbers.
- Forget math, how about basic counting skills. The 650,000 jobs at that time should have been considered a best case estimate. Subsequent Associated Press reports found that in many, many cases, jobs saved/created were double counted, in some cases stimulus money was given to people as raises but those people were counted as saved jobs, and it the best example of bad math skills, a Georgia day care center said its stimulus money saved 129 jobs - that is one big day care center. If the political class cannot even count, how can we expect them to fix anything and fix it efficiently and with integrity?
- Back to math skills. The Obama administration has claimed from day one that it must incur large spending deficits and higher national debt in order to drag the country out of the recession. So far, results have certainly been lack luster with high unemployment persisting and GDP down to less than 2% a year. Apparently, no one in the administration took a look at what happened to the economy during the 1940s or if they did, they did not understand the math of the U.S. economy during that time. Between 1945 and 1948, the budget of the Federal government shrank by almost 68%, unemployment never got above 4% and the size of the U.S. economy grew by almost 21%. These are official U.S. Government figures. These good economic things happened despite the fact that over ten million Americans came home from the war and assimilated into the domestic U.S. economy. Thus, relative to the 1940s, the Obama administration is doing the exact opposite of everything that worked to transition the U.S. economy from a war time footing to a peace time economy. Just look at the math.
- In the first two years of the Obama administration, 2009 and 2010, and likely for 2011 also, his administration will incur a Federal deficit in these three years of over four TRILLION dollars, running an annual deficit of between $1.4 and $1.5 TRILLION. Now for the silly math. The President has this irrational obsession of raising the taxes on those Americans that make more than $250,000 a year by 4%, the levels before the Bush tax cuts, insistently saying that these people need to pay more in taxes to get the deficit under control. Good math or silly math? I went to the IRS website where I was able to get the official income levels by income bands for 2008. Using some simple, elementary math, I was able to construct a spreadsheet model that accurately predicts what the incremental tax hike would generate in additional taxes and the impact it would have on the deficit. The result is less than Mr. Obama would have you believe. The math shows that raising the taxes on these American would generate an additional $70 billion a year in tax revenue, or reduce the annual Federal deficit by a whopping 5%. The math just does not support Obama's deficit reduction assertion: ignorance of the math or arrogant in his assumptions that we are too dumb to figure it out? The problem with the deficit is that this administration spends too much, not that the rich are not taxed enough. [Note: this $70 billion estimate is a solid estimate, at least in the government's mind. According to a recent Associated Press article, Congressional analysts estimate that that the incremental amount of tax revenue from raising taxes on the rich would be about $700 billion over the next decade or... $70 billion a year, our estimate.]
- Another Federal deficit/tax the rich exercise. About six months ago, Fortune magazine estimated the total wealth, not the income, of the richest 400 Americans. If you added up their total wealth, you found that the richest 400 Americans were worth just under $3 TRILLION. Thus, if the government could somehow confiscate the wealth of these richest Americans as a one time tax levy, their total wealth would not even cover the Federal budget deficit that Obama will ring up during just his first two years in office, never mind the deficit already in place or predicted for the future. Do the math, you cannot tax the rich enough to eliminate the deficit even if you took everything they owned, the math just does not work. Given that the rich pay the vast amount of the government's budget anyway, once you took their wealth, you would still have to raise taxes on everyone else to cover the shortfall from the rich who are unlikely to try and become rich again if the government is just going to take it. The Federal deficit is a spending problem, not a government income problem, the math does not lie.
- More about deficit spending math. An Associated Press article form September 13, 2010, quoted Congressional analysts' estimates that if the Bush tax credits were allowed to expire for ALL Americans, an additional $400 billion a year would flow to the Federal government. However, even if everyone paid more in taxes, we would still be a TRILLION short relative to the Obama administration's annual spending history and plans. Thus, even this math proves we have a spending problem, not a taxing and income problem.
Earlier this year, the President publicly claimed that for every dollar the government spent on pre-school education, the country gets back $10 in value. I wondered at the time how anyone could come up with that kind of math calculating how a dollar spent today will turn into $10 worth of benefit decades later. Before I went too crazy trying to figure out that math, the President's own HHS Cabinet Secretary released a report that showed the benefits from the Headstart pre-school program and other similar Federal programs had no lasting effect at all on the children involved with the programs. Thus, the 10-to-1 ratio the President talked about was obviously faulty or deliberately deceiving math. In either case, the administration's own people proved his math to be wrong.
- Talk about ridiculous math, consider a September 12, 2010 Associated Press article about the earthquake clean up process going on in Haiti. According to the article, the United States has spent $98.5 million of U.S. taxpayer money to clear out 1.2 million cubic yards of ruble. Now, to the math deficient, 1.2 million yards seems like a lot. To the math capable, if you divide the cost ($98.5 million) by the amount of rubble removed (1.2 million cubic yards) you quickly find out that the American taxpayer spent about $82 to move each cubic yard of rubble, or about $3 to move each cubic foot. Two shovelfuls would probably move a cubic foot, how in the world does it cost us $3 to do that? Just do the math.
- One last tax the rich scenario. The President recently tried to sell his tax the rich (those making over $250,000 a year) by claiming that if you allow these Americans to keep their earning they will not spend it and stimulate the economy. The example he gave is that Warren Buffet will not spend his saved taxes and stimulate the economy. But from a math perspective, how many Warren Buffets are there in the country? This is a pathetic example of politicians demonizing a group of Americans, which in this case really do not even exist. 76% of the taxpayers that would be affected by the Obama "tax the rich by 4% more plan" make less than $500,000 a year, hardly Warren Buffet territory. On average, these Americans will retain just $5,000 more in taxes if the Bush tax cuts are kept in place. They are likely to spend it and stimulate the economy if allowed to keep it. 91% of the people affected make less than a million dollars a year, again, hardly Warren Buffet territory. And finally, if you look at the 2008 IRS data, only about 630,000 Americans made over a million dollars that year. If you do the math and divide these 630,000 tax filers with the number of U.S.households, about 115 million, you find that the people most affected by the Obama obsession is about .5% of the country. Contrary to Mr. Obama's position, the math shows that you cannot balance the budget on about .5% of the population.
Getting back to the original question. are politicians that deficient in math that they cannot see what their policies and programs are really worth or are they so arrogant that they know their programs do not work but assume we are too ignorant to understand the basic math of their reality? When you think about it, it does not matter. By denying the reality of the math, the political class continues to under serve or misserve the country with programs that are incoherent with the reality of our times, as defined by simple math concepts.
Until we can elect competent math people for Washington, we will continue to be fed lies and wrong information which is no way to run any entity, especially one that controls what happens to our tax dollars. Two steps need to be implemented to address this math ignorance or arrogance. First, we need to reduce the size of the Federal government by 10% a year for the next five years. Given that the political class does not know how to accurately count or does not want to accurately count how our tax dollars are spent, the only real solution is to give them less tax dollars to deal with. We also need to institute term limits, preventing the currently math deficient political class from staying in office longer than necessary.
Mark Twain popularized the saying: "there are lies, damn lies and statistics." If that was updated for our current day government it would probably read like: "there are lies, damn lies and politicians." In any case, keeping our current politicians in office does not add up.
- It seems forever that politicians have been telling us what a great financial idea the Social Security program is and why it is stupid to allow mere mortal citizens to handle their retirement affairs by, gasp, investing their retirement funds in the stock market. Well, I did a little math work in this area and put together some elementary math models to determine if this myth was true. I got my historical Social Security salary history from the Social Security Administration, I researched the historical Social Security tax rates which enabled me to compute how much money was sent to the government for my retirement based on my wages, I found the historical S&P 500 annual returns for the stock market over the years, and put all of these numbers into a simple spreadsheet. The basic assumption of the model is that I would have been allowed many decades ago to keep all of that money that was being sent to the government (and political class) and invested it in an S&P 500 taxfree/IRA-like, low fee mutual fund. The results indicated that if the world had been like my spreadsheet, I would have been able to retire with a monthly check that was about two and half times what I will get from the Social Security Administration. This estimates takes into account the drastic reduction in stock market values from the "Great Recession." If I had played it more conservatively and invested in one year Treasury notes over that time I would have been able to retire with 50% more that what I will get from Social Security. Thus, I am tired of the political class telling me how great their program is and how dangerous it would have been if I had managed my retirement wealth, the math proves them wrong.
- Of course, we have constantly heard how the Obama stimulus package saved the economy and how many jobs it saved and created. Forget the fact, that unemployment is much higher than anyone in the Obama administration said it would be if the stimulus package was passed, let's do some simple math using only the administration's numbers. In a series of articles in late October, 2009, the Associated Press took a look at what effect the stimulus package was having. At that time, the Obama administration was claiming that 650,000 jobs had been created or saved. The AP and Reason magazine were relatively close in their estimates of how much of the stimulus package had been spent up to that point, about $180 billion. If you do the simple math of dividing the number of jobs created and saved, Obama's own numbers, and divide that into how much was spent to create and save them, you come out to about $277,000 per job. You cannot solve a recession when your policies cost over a quarter million per job. Didn't anyone do the math at the White House, these are not good numbers.
- Forget math, how about basic counting skills. The 650,000 jobs at that time should have been considered a best case estimate. Subsequent Associated Press reports found that in many, many cases, jobs saved/created were double counted, in some cases stimulus money was given to people as raises but those people were counted as saved jobs, and it the best example of bad math skills, a Georgia day care center said its stimulus money saved 129 jobs - that is one big day care center. If the political class cannot even count, how can we expect them to fix anything and fix it efficiently and with integrity?
- Back to math skills. The Obama administration has claimed from day one that it must incur large spending deficits and higher national debt in order to drag the country out of the recession. So far, results have certainly been lack luster with high unemployment persisting and GDP down to less than 2% a year. Apparently, no one in the administration took a look at what happened to the economy during the 1940s or if they did, they did not understand the math of the U.S. economy during that time. Between 1945 and 1948, the budget of the Federal government shrank by almost 68%, unemployment never got above 4% and the size of the U.S. economy grew by almost 21%. These are official U.S. Government figures. These good economic things happened despite the fact that over ten million Americans came home from the war and assimilated into the domestic U.S. economy. Thus, relative to the 1940s, the Obama administration is doing the exact opposite of everything that worked to transition the U.S. economy from a war time footing to a peace time economy. Just look at the math.
- In the first two years of the Obama administration, 2009 and 2010, and likely for 2011 also, his administration will incur a Federal deficit in these three years of over four TRILLION dollars, running an annual deficit of between $1.4 and $1.5 TRILLION. Now for the silly math. The President has this irrational obsession of raising the taxes on those Americans that make more than $250,000 a year by 4%, the levels before the Bush tax cuts, insistently saying that these people need to pay more in taxes to get the deficit under control. Good math or silly math? I went to the IRS website where I was able to get the official income levels by income bands for 2008. Using some simple, elementary math, I was able to construct a spreadsheet model that accurately predicts what the incremental tax hike would generate in additional taxes and the impact it would have on the deficit. The result is less than Mr. Obama would have you believe. The math shows that raising the taxes on these American would generate an additional $70 billion a year in tax revenue, or reduce the annual Federal deficit by a whopping 5%. The math just does not support Obama's deficit reduction assertion: ignorance of the math or arrogant in his assumptions that we are too dumb to figure it out? The problem with the deficit is that this administration spends too much, not that the rich are not taxed enough. [Note: this $70 billion estimate is a solid estimate, at least in the government's mind. According to a recent Associated Press article, Congressional analysts estimate that that the incremental amount of tax revenue from raising taxes on the rich would be about $700 billion over the next decade or... $70 billion a year, our estimate.]
- Another Federal deficit/tax the rich exercise. About six months ago, Fortune magazine estimated the total wealth, not the income, of the richest 400 Americans. If you added up their total wealth, you found that the richest 400 Americans were worth just under $3 TRILLION. Thus, if the government could somehow confiscate the wealth of these richest Americans as a one time tax levy, their total wealth would not even cover the Federal budget deficit that Obama will ring up during just his first two years in office, never mind the deficit already in place or predicted for the future. Do the math, you cannot tax the rich enough to eliminate the deficit even if you took everything they owned, the math just does not work. Given that the rich pay the vast amount of the government's budget anyway, once you took their wealth, you would still have to raise taxes on everyone else to cover the shortfall from the rich who are unlikely to try and become rich again if the government is just going to take it. The Federal deficit is a spending problem, not a government income problem, the math does not lie.
- More about deficit spending math. An Associated Press article form September 13, 2010, quoted Congressional analysts' estimates that if the Bush tax credits were allowed to expire for ALL Americans, an additional $400 billion a year would flow to the Federal government. However, even if everyone paid more in taxes, we would still be a TRILLION short relative to the Obama administration's annual spending history and plans. Thus, even this math proves we have a spending problem, not a taxing and income problem.
Earlier this year, the President publicly claimed that for every dollar the government spent on pre-school education, the country gets back $10 in value. I wondered at the time how anyone could come up with that kind of math calculating how a dollar spent today will turn into $10 worth of benefit decades later. Before I went too crazy trying to figure out that math, the President's own HHS Cabinet Secretary released a report that showed the benefits from the Headstart pre-school program and other similar Federal programs had no lasting effect at all on the children involved with the programs. Thus, the 10-to-1 ratio the President talked about was obviously faulty or deliberately deceiving math. In either case, the administration's own people proved his math to be wrong.
- Talk about ridiculous math, consider a September 12, 2010 Associated Press article about the earthquake clean up process going on in Haiti. According to the article, the United States has spent $98.5 million of U.S. taxpayer money to clear out 1.2 million cubic yards of ruble. Now, to the math deficient, 1.2 million yards seems like a lot. To the math capable, if you divide the cost ($98.5 million) by the amount of rubble removed (1.2 million cubic yards) you quickly find out that the American taxpayer spent about $82 to move each cubic yard of rubble, or about $3 to move each cubic foot. Two shovelfuls would probably move a cubic foot, how in the world does it cost us $3 to do that? Just do the math.
- One last tax the rich scenario. The President recently tried to sell his tax the rich (those making over $250,000 a year) by claiming that if you allow these Americans to keep their earning they will not spend it and stimulate the economy. The example he gave is that Warren Buffet will not spend his saved taxes and stimulate the economy. But from a math perspective, how many Warren Buffets are there in the country? This is a pathetic example of politicians demonizing a group of Americans, which in this case really do not even exist. 76% of the taxpayers that would be affected by the Obama "tax the rich by 4% more plan" make less than $500,000 a year, hardly Warren Buffet territory. On average, these Americans will retain just $5,000 more in taxes if the Bush tax cuts are kept in place. They are likely to spend it and stimulate the economy if allowed to keep it. 91% of the people affected make less than a million dollars a year, again, hardly Warren Buffet territory. And finally, if you look at the 2008 IRS data, only about 630,000 Americans made over a million dollars that year. If you do the math and divide these 630,000 tax filers with the number of U.S.households, about 115 million, you find that the people most affected by the Obama obsession is about .5% of the country. Contrary to Mr. Obama's position, the math shows that you cannot balance the budget on about .5% of the population.
Getting back to the original question. are politicians that deficient in math that they cannot see what their policies and programs are really worth or are they so arrogant that they know their programs do not work but assume we are too ignorant to understand the basic math of their reality? When you think about it, it does not matter. By denying the reality of the math, the political class continues to under serve or misserve the country with programs that are incoherent with the reality of our times, as defined by simple math concepts.
Until we can elect competent math people for Washington, we will continue to be fed lies and wrong information which is no way to run any entity, especially one that controls what happens to our tax dollars. Two steps need to be implemented to address this math ignorance or arrogance. First, we need to reduce the size of the Federal government by 10% a year for the next five years. Given that the political class does not know how to accurately count or does not want to accurately count how our tax dollars are spent, the only real solution is to give them less tax dollars to deal with. We also need to institute term limits, preventing the currently math deficient political class from staying in office longer than necessary.
Mark Twain popularized the saying: "there are lies, damn lies and statistics." If that was updated for our current day government it would probably read like: "there are lies, damn lies and politicians." In any case, keeping our current politicians in office does not add up.
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