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    Here Comes the Sledgehammer

    Mac Slavo
    November 10th, 2010
    Comments (44)
    Read by 120 people

    In Austerity Will Hit America Like An Eight Pound Sledgehammer we quoted Charlie McGrath describing what would happen once austerity measures in the USA became the new normal:

    A week from now when Republicans control the house, maybe the Senate, it really doesn’t matter. Everything’s going to come to a grinding halt. Every talk of extending unemployment benefits is going to come to a grinding halt and austerity is going to be implemented on the American people. Like it or not, it’s coming.

    When austerity becomes vogue in this country, it’s going to hit like an eight pound sledgehammer and a lot of people are not going to be able to take it.

    The fiscal commission established by the White House has released a report that, if implemented, will have dire consquences for millions of Americans who depend on government sponsored personal bailout plans to keep them afloat.

    According to the Huffington Post and The Wall Street Journal, the new plan would do serious damage to an already ailing economy and beaten down average Joe:

    …taken as a whole, the plan authored by Erskine Bowles and Alan Simpson would have devastating effects on the government and its ability to help the most vulnerable in our society, and it would put the squeeze on the middle class, veterans, the elderly and the sick – all in the name of an abstract goal that ultimately only a bond-trader could love. (Huffpost)

    Among the proposed austerity measures, the commission recommendations would:

    • Increase the Social Security retirement age and limit yearly cost-of-living increases to the rate of inflation rather than of wage growth. The cut in annual increases would affect current retirees — which was supposed to be off the table. Their benefits would go down by about 3 percent after they’ve been retired for 10 years, and about 6 percent after they’ve been retired for 20 years.
    • Eliminate the home mortgage exemption making it more difficult for middle class Americans to buy a house in the middle of the deepest housing recession probably in the history of the world, leading to even more pain down the road.
    • Set a cap on the rate of growth of federal health expenditures to 1% of GDP per year, meaning health care costs for the federal government will not be able to exceed this threshold. This will lead to lower wages for doctors and health care professionals, as well as rationing of health care services.
    • Make cuts in government spending, with at least $400 billion in cuts through 2015.
    • Cut the federal work force 10%, at a further savings of $13.2 billion by 2015. The proposal would not terminate 10% of the workforce, but rather, slow the government’s hiring practices so that they hire only two employees for every three that leave their jobs.
    • Cut $100 billion in annual defense spending. And though defense is important, it’s no secret that government spending in this sector is outrageous, with Donald Rumsfeld testifying before Congress on September 10, 2001 that the Defense Department misplaced $2.3 trillion dollars and the DoD unable to account for some 25% of their yearly spending. (Incidentally, we never got to the bottom of the missing $2.3 trillion dollars, as the accountants that handled the numbers were reportedly killed in the attack on the Pentagon)
    • Add co-pays to veteran health care benefits, forcing military personnel to not only deal with an already rationed health care system, but to partially pay their own way.
    • End schools for families on military bases
    • Eliminate the Earned Income Tax Credit and the child tax credit for millions of families that currently depend on it to keep them out of poverty

    The current iteration of the plan is subject to change and is still in commission, but it is clear that measures similar to these and more are going to be proposed over coming months and years – and there is nothing that can be done to stop them. They are necessary.

    The government has overspent and it must take action with self-imposed measures to limit its spending. By doing so, millions of Americans are going to be impacted for the worse.

    We knew this was coming.

    Austerity will lead to more economic malaise for the average guy on the street going forward.

    It will not, however, do anything to really change the direction of our economy at this point.

    We maintain the view that the federal government, as well as states and cities have spent their way to oblivion and defaults are sure to ensue.

    The Cutting of a few billion here and a few billion there is not going to do anything when our total outstanding debt and obligations over the next couple decades amounts to some $200 trillion. It’s kind of like borrowing $200 from a friend and then paying him back $5 and calling it even.

    The commission has made concessions here, but nothing on the order of what is really required, which, realistically speaking, is massive and drastic spending cuts across the board, in every governmental entity. Given the trend towards unlimited government and centralization of control that has been the norm for the last 100 years in America, the proposed plan is nothing more than just kicking the can down the road for a few more months, maybe a year or two if we’re lucky.

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    Author: Mac Slavo
    Views: Read by 120 people
    Date: November 10th, 2010

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    1. Mariposa de Oro says:

      I say we eliminate the EPA, DoE, DoEd, National Endowment for the Arts, ObamaCare, foreign aid, cut all ties with the UN, and anything to do with Big Green(enviroMENTALism, global whatever).  Of course, my suggestions will never happen.  Neither will the commission’s.  The idea is to to make the people scream, with the government finally respecting the people’s wishes. and changing nothing.  When its time to pay the piper, our ‘leaders’ will point the finger at the people.

    2. Mike says:

      400 billion is chump change.  We are going to have to make deeper cuts than that if we want to keep from falling into the dark abyss.
      Maybe Mushroom can bail them out with his big stack of $10 bills.
      Maybe Mushroom will get eaten alive, since he has full faith in the Federal Govt. to protect and feed him instead of making sure he could do that himself….


    3. Burn down the friggin’ house! Its such a mess and in shambles anyway, I hope they do it ALL! The quicker the better. I’m tired of all this bickering and whining. BURN IT DOWN! Its easier to build an new one that to shovel that amount of shit out of the old one.

      I’m ready. Pass the matches!

    4. Mike says:

      I would like to add that I think there should be a govt. spending freeze of ANY and ALL subsidies /handouts to ANY and ALL foreign entities until we have paid off our huge deficit.  30% paycuts for ALL Federal employees over the next 5 years.  That is 6% a year and cut the workforce at leat 25%.  These cuts are going to suck and God knows one or all of us here could be affected by them, but it is the right thing and only thing to do.


    5. Sketch says:

      how about we just give the gov’t the ability to FIRE people. right now, if effectively impossible to fire someone, short of them committing a felony at their place of work. From what I understand, Cisco cuts it bottom performing 5% every YEAR. sounds like a start with the Gov’t

    6. Close ALL foreign military bases and stop sending money to foreign governments overseas unless we get something tangible for it. Put all federal employees that are left after 30 percent cuts into Medicare and Social Security. Make them pay into both and copays for everyone. Audit the Federal Reserve and make all federal offices post their real balance sheets and p&ls on their websites. If Social Security recipients don’t get a cost of living increase neither should a government employee. The constitution needs to be followed and our borders protected, and the UN needs to move to France. Let the french deal with the nuts who don’t like us but want our foreign aid and dollars.

    7. JANE says:

      Most American people agree, we have to rebuild America from the start.  The bankers have planted MAN-MADE cancers, at least since 1933, which are now metastasizing into stage IV.

      DIVIDE and CONQUER: A divided government for all these years is more likely to fuel a legislative stalemate when the new Congress begins in January. Dems are still in control of the presidency and the Senate, the Republican Party (GOP) cannot override any veto or remove Obama’s veto power – it would require 67 votes that the GOP doesn’t have.

      McConnell said “We’ll work with the administration when they agree with the people & confront them when they don’t.”

    8. Roark says:

      Eliminate the home mortgage exemption making it more difficult for middle class Americans to buy a house in the middle of the deepest housing recession probably in the history of the world, leading to even more pain down the road.”

      Page 26 of the draft report contradicts the above statement ->
      Under “Option 2: Wyden-Gregg Style Reform” :

      “Limit mortgage deduction to exclude 2ndresidences, home equity loans, and mortgages over $500,000”

      Anyone who buys a half million dollar home in this housing and employment market is not middle class, anyone who owns a vacation home in the aforementioned market is not middle class, and anyone who decides to use their home as an ATM after this fiasco needs their head examined.

    9. Durango Kidd says:

      None of these recommendations by this commission will pass muster. They are stupid to begin with. Eliminate the mortgage deduction? Housing fuels the economy, either up or down.

      Roll back federal paychecks. Eliminate federal health care for government employees. Eliminate retirement programs for past and present members of Congress. Eliminate ALL foreign aid. Cut defense spending by 1/3. Eliminate the Dept of Education altogether. End the FED.  Cut every department, agency, office, commission, or pizza run by half!


    10. Chuckles says:

      Well we could cut out Barry’s and Michelle’s vacations for a start, that would save a good deal of money.

    11. Anon says:

      Come on Mac…you can do better than this slanted article.

      Eliminate the home mortgage exemption making it more difficult for middle class Americans to buy a house in the middle of the deepest housing recession probably in the history of the world, leading to even more pain down the road.”

      Hello Mac, are you advocating that my fellow citizens have a right to reach into my pocket to subsidize their buying a house?

      Cut $100 billion in annual defense spending. And though defense is important…”

      Yeah sure Mac, having drone airplanes kill civilians halfway around the world is “important”.  That surely constitutes “defense”.

      Mac, I listed just two of your slanted billet points above.
      The tone in which you presented them is what I take issue with.

      You can’t have your cake and eat it too.
      Either huge,Huge,HUGE cuts get made, or the US goes belly up.
      So don’t insinuate that anone has a right to government nooky.

      That nooky comes out of my paycheck.

      Let’s limit the government to just the absolute bare bones basics and nothing more.

    12. Gunga says:

      I’m with the Prairie Chick and Ron Paul. 

    13. Tom says:

      Cut the politicians (ALL) pay check by 80%, treat them like a new military member that goes to war, 2 terms, the same health care they voted in, for them NOW, for the rest of their life!  No more free flights, includes FLOTUS.  Put mug shots up of U.S. Federal Reserve members in every Post Office.  Randum drug screening for all welfare/food stamp people over 1 year.  Community service for all that receive.  Bring back gold/silver standard now.

    14. Hello Mac, are you advocating that my fellow citizens have a right to reach into my pocket to subsidize their buying a house?

      So if I work and earn money and the government doesnt confiscate it, or at least not all of it, thats coming out of your pocket? Your comment presupposes that the money was yours in the first place. Its not. I own my labor and the fruits thereof. The government steals a portion of it from me and then says I can have some of it back in the form a deduction.

    15. Fat Assez on Welfare says:

      The sad fact is that way too many Americans have become welfare cases and depend upon the government for assistance.  Sad too is the fact that Social Security was not really designed as welfare - it was supposed to be a type of retirement insurance or annuity (pay in your entire life, draw from when you retire) – but the federal government has squandered the Social Security monies and promised way more than they can pay out.   Now it will end up totally being Social INsecuity for millions.  Shows us we should not put faith in governments, or government schemes. 

    16. TnAndy says:

      Although everybody has their pet areas they would cut ( and I’d agree will ALL of them ), the fact is the govt CAN NOT do an austerity program of anything more than lip service.

      The problem is our debt based money system.  It requires a constant expansion of debt to create the fiat to pay back the previous debt + interest. This has been mostly on the back of the consumer in the past with the govt taking up the slack if needed.

      NOW the govt is the primary creator of debt since the consumer has pretty much reached the max they can handle.  The govt is trapped, they CAN NOT STOP BORROWING even if they wanted to, which there is no real indication they do.  This is just posturing by the right hand branch of the single party.

      My prediction ? 

      The spiral will continue until collapse.  Pay no attention to the flapping of gums in Washington.

    17. Tina says:

      Mariposa de Oro
      I say we eliminate the EPA, DoE, DoEd, National Endowment for the Arts, ObamaCare, foreign aid, cut all ties with the UN, and anything to do with Big Green(enviroMENTALism, global whatever).  Of course, my suggestions will never happen.  Neither will the commission’s.  The idea is to to make the people scream, with the government finally respecting the people’s wishes. and changing nothing.  When its time to pay the piper, our ‘leaders’ will point the finger at the people.

      I totally agree with Mariposa de Oro. While they should be reviewing everything they really need to look within the govt walls and start slasking (carving with a scapel is a thing of the past). But they skimmed the things they will make everyone scream and nothing will get done. No serious cutting here

      Does anyone else question the timing of this report? They have been working on this for a long time and it just so happens to get released ONE week after the election…..not before  

    18. Catalyst says:

      What about the millions upon millions of dollars we sent around the globe to “help” other nations that are struggling for whatever reason? How about keeping HALF of that here at home!

    19. Dave says:

      It shows how far we’ve gone down the road of expecting others to pay for our needs when the talk of Washington cutting back these transfers are referred to as “austerity measures”.
      You do NOT have a right to my income, whether it is transfers from my paycheck called “social security”, or someone on the street sticking a gun in my side, robbing me to give it to you (for your vote).

      I do NOT have a right to your income, whether by federal agents, or via some thug who mugs me for my wallet then gives you some of it (after taking his share, of course).

      Keep your hands out of the pockets of others.

    20. Johnnymustardseed says:

      It is now show time for all those cuts the GOP promised, but they will do nothing. It is not politically expediant to disinfranchise any group prior to the 2012 rout they have planned. The hot air continues as we sink into third world status. The riots will start with the pensioners who have “earned” their big pensions and are about to see them disappear with the default of state governments. Europe is slightly ahead of us, their problem is that they have not figured out how to run up debt like us and then fund it with FED buys of Treasuries like we do. Our crash will be bigger and more violent because we are much more entitled and foolishly more heavily armed.

    21. Tom says:

      I agree TN but I would still like to see the politicians not get what they want for themselves after the plug is pulled.  Nothing will stop this ship from sinking although I understand they are working on the pumps to stop the flooding.  I’m putting my dry suit on after I blow up my water wings.

    22. eugend66 says:

      Comments….. C`mon ladies:

    23. greaseman says:

      Comments….. Our government couldn’t run a circle jerk. Any function they begin to prove austerity, is purely for show. a real austerity program would begin by closing down many far flung military bases. An immediate 25% rerduction of federal employees, plus a hiring freeze, plus a wage freeze.  if they didn’t like it, go find another job.  Do away with the dept of Education, Energy right away.
           By the way, what was the purpose of the dept of energy? When instituted, our foreign energy dependance was under 10%.  Now –well you know that hasn’t worked out as planned. What a useless bunch of people.
           Congress immediately needs to take a wage reduction, as a symbol they are for real.  No program needs to be instituted without cutting funding from another to pay for it.
          I could go on and on, but you get the picture.  Even a street bum suffering from PTSS, could come up with enough spending cuts to save significant ammounts of money.  Our Congress is a joke, as are the rest of our leadership. We are all totally screwed, as we are past the tipping point, falling, and we just haven’t hit the bottom yet. a gigantic reset is coming. These economic natural principles will happen, no matter what is instituted to postpone them.
          Our fate has been sealed, and we are a dead man walking. Not exactly what you wanted to hear today, but reality is a bitch.

    24. Tom says:

      What a bunch of hypocrites.  The politicians should look in the mirror if they think there are no more whales to harpoon.  They should have case studies done on them.  I won’t buy a book from any of them.  But I understand the library probably will, so I’ll have to pay for it anyway.

    25. MadMarkie says:

      You can’t really ‘fix’ our present day economic system because it is build entirely on debt and interest. The PTB don’t want to fix it either. It must first crash in order for the elites to institute their nifty new one world order/govt./banking system.

    26. I recently was in Italy and drove by a US military base. It was aboout three miles long, tanks and trucks and all kinds of expensive crap. Seriously, WTF are we doing in Italy. You would think they would look around there and see what happen to the Roman empire and the reasons it collapsed. Here is a link of  737 bases around the world ,

    27. Tom says:

      Make me eat Pop-Tarts/Spam & tell me to row like a Viking while on vacation.

    28. RogerDoger says:

      “Limit mortgage deduction to exclude 2ndresidences, home equity loans, and mortgages over $500,000″
      When QE2 turns into hyperinflation, we’re all going to be living in homes over $500,000.
      This is a bad idea

    29. Tom says:

      Nice sat pic of Gilligan’s Island J.  Great snorkeling in bay but watch out for the sharks.  Where about in Italy?

    30. @TN QUOTE: “Hello Mac, are you advocating that my fellow citizens have a right to reach into my pocket to subsidize their buying a house?

      So if I work and earn money and the government doesnt confiscate it, or at least not all of it, thats coming out of your pocket? Your comment presupposes that the money was yours in the first place. Its not. I own my labor and the fruits thereof. The government steals a portion of it from me and then says I can have some of it back in the form a deduction.”

      Great comments all!

      TN et. al. – I am in no way advocating the raising of taxes or seizure of your money to fund government projects. I merely outlined what the plan will do.

      For example, when I point out that a certain commission recommendation is going to hurt middle class workers, it doesn’t mean I am against the recommendation. The premise here is to show 1) the austerity measures 2) the effects of those measures on the common man… This is the “Sledgehammer”…. The government has to cut services that have become “essential” to many. The point here was to show that these austerity measures are going to hurt a lot of people.

      As mentioned in my commentary – the measures are necessary, but they are not enough. If it were up to me, it would be a total slash and burn of gov services, and my view is that taking such drastic action would do a serious amount of damage for a time (not as bad as what happens if we don’t take those steps).

      I realize that the money you earn is the fruit of your labor and no one has a right to that money. The fact is, however, that the government has a different view and believes it has a right to a portion of what you earn. For the last several decades, that seized money has gone to fund things like food stamps and welfare and millions of people have this idea that those benefits and services are now “rights.”

      Now, the majority of the folks reading this web site will likely agree that we need to cut welfare and food stamps, not because we are evil people that want to watch people starve, but because the funds being used were seized illegally from the actual wage earners. So, let’s say we go ahead and do that and take the extreme example of cutting all food stamp, welfare and unemployment benefits.

      What do you think that is going to do?

      It’s going to hit a lot of people like a sledgehammer, and it’s going to cause riots across the country – at the very least.

      That doesn’t mean I am against cutting these benefits – just pointing out that when you do, the SHTF for a lot of people.



    31. GoneWithTheWind says:

      Imagine that!  A bunch of politicians get together to figure out how to cut the deficit and they decide to cut Social Security and increase taxes!!  Who would have guessed.  The amount we spend on all forms of welfare exceeds $1 trillion and not a single mention of cutting welfare.  DUH!  What was I thinking.  You can’t cut the handouts for the bums but you can cut the SS for the people who actually contributed to the system.  It’s time for tar and feathers.

    32. GoneWithTheWind says:

      Here is my solution:
      1) Take the SS out of the hands of congress and make it pay out using standard accounting principles.
      2) Cut the federal government to the bone.  Eliminate most federal agencies starting with the Dept of Education and Dept of energy.  The total federal budget should be about $800 billion after removing the SS system.
      3) Cut all forms of welfare over 6 months to zero.  Put them on notice they will now have to work and to go ask a illegal alien where the jobs are.
      4) Declare a national emergency on the borders and use the national guard to enforce our laws.  Make it a priority to find and deport all illegals.  Illegal aliens cost federal state and local governments over $100 billion a year.   

    33. Hey, PrairieChick?

      A) Are you single? I’m not but I have a son who is. 😉

      B) Have you considered running for a public office? I’d consider “Chicago Voting” for someone like you!

    34. overtheedge says:

      The PTB will do everything possible to hold the mess together. Congress WILL make cuts; the problem? The cuts will be in next years projected budget. Ie. cut the increase.

      Austerity is an understatement.

      Deductions on your taxes? Keep in mind that there is a fixed cost to government determined by Congress. If you get a deduction for anything, it means someone else has to make up the difference by paying higher taxes. This ABSOLUTELY includes corporate taxes. Worse, an increase in corporate taxes just transfers the costs to the consumer in the form of higher retail prices.

      The consumer/taxpayer pays for everything. Anyone remember the balanced budget amendment? And where did it go?

      My opinion straight up. My life is the logical outcome of all the decisions I made. I am NOT responsible for the health and welfare of anyone but me. Bring on the austerity, damn the whiners. Had I the dictatorial powers, I would cut ALL spending by 90% over a 6 month period, pay out the actual Social Security contributions over a 2 year period starting with current retired first. Eliminate all social programs. Transfer all federally owned property to the respective states and in doing so, eliminate the Dept of the Interior. Military? Bring em all home and seperate them retaining a total force of 100,000 mostly as training cadre divied up amonst the different branches with no less than 10,000 in the Coast Guard.

      But I ain’t and they won’t.

    35. Roark says:

      RogerDoger :
      “When QE2 turns into hyperinflation, we’re all going to be living in homes over $500,000.”

      Entirely possible, but will *your* mortgage be over $500K at that point in time or did you previously buy the home when it was priced much less? If one is anticipating hyperinflation, they would be ‘going to ground’ and acquiring hard assets right now. Buy low, hold high?

      If I was a seller in that environment, I would not be accepting cash (including a bank loan) – that is for sure. By the time I would have the money in my hand, it would be worthless. I would be accepting hard assets, and I have yet to see a local bank offering mortgages in tools, oil, or gold.

      Sooo … No loan, no mortgage. No mortgage, no interest. No interest, no deduction. Anyone previously in the pool will enjoy a deduction on the interest for a mortgage that is a mere pittance of the home’s true value at the time.

      In a steady inflation environment where wages keep pace, then raising the 500K limit in lock step with the true inflation rate to help the middle class makes sense. In a deflationary, stagflationary, or hyperinflationary environment, it does not – for a variety of reasons.

    36. Durango Kidd says:

      SS is SOLVENT until 2037. If it ain’t broke, why “fix” it?

    37. REB says:

      Force the fedgov back into the constitutional box our founders made for it…then set the states and people free from the box the fedgov put them in!
      Enforce the 9th and 10th ammendments particularlyby requiring any and all federal ABC agencies,bureaus or related to prove they are needed and required by the constitution,if they cant(and most cant)terminate them!
      Perform the same “litmis” test on everything the fedgov has and do the same,thatll get rid of the UN and all the foreign bases and money givaways…ect… enforce the constitution(the law) and we fix amost everything that needs fixed!

    38. greaseman says:

      Comments…..@ madmarkie
       Hey markie, your message was short and sweet.  But you hit the nail on the head. The system can’t be fixed , and must reset. I’m watching it start to reset now.  We’re in a freefall, but just haven’t hit bottom yet.  Things will get interesting soon.
           I must confess that I will get some joy telling family members-“I told you so”, when it all comes down. They think that things can’t go “that’ bad. We will see won’t we.??  I would still love to be wrong, because if I’m wrong, I’ve lost nothing, but if the non believing sheeple are wrong, they are in a world of hurt. Again, we will see, and soon I think.
         Good luck preppers, and finish up what you need to, because this time, time is really short.

    39. ADAM says:

      One time fee for 3 years at tax time for min. of $100 and up that come off your tax return. That money would go straight to the effort of paying down the debt. This would be between 40-100 billion each year. Fed. hireing freeze, 10% in total spending cut. No extra pay for special sesion for congress, and pay raise freeze. The Fed. employees will stay right where there at even with no raise”they have it made.” Also the goverment needs to match what the Americans give as the one time fee. Don’t tax gas more or raise Social Security. Last talk to Dave Ramsey no joke he could help.

    40. sjdude says:

      This is a self correcting problem, friends. They are ruining the currency because all Keynesians know how to do is “print more”. Problem solved. The moment the dollar is worthless, they will have no more power to legislate anything because there will be nobody to enforce their laws. It will be the end of the welfare/warfare state. There’s nothing we can do until this happens except, perhaps, to try to educate and inform our fellow citizens, family, friends, etc. Just remember to protect yourselves.

    41. GoneWithTheWind says:

      Adam:  Don’t be fooled.  I fully expect the politicians to come up with schemes to “pay down the debt”.  They will essentially be tax increases and promises that “some” of the money will go to pay down the debt.  But there are two important points:
      1)We cannot pay off our debt.  It is impossible.  If we taxed everyone 100% of their income it wouldn’t pay off the debt.  It isn’t going to happen.  At this point we will either go bankrupt or print the money to buy back the debt.  Either choice will collapse our economy.
      2)The politicians intended to use the debt to raise taxes.  In the last 4 years the debt has skyrocketed by $5 trillion and it was intentional because they wanted to then use it as an excuse to raise taxes.  The prize for the tax and spend Democrats is a national sales tax.  Once this is in place then can raise it at will and they will have access to more and more of your money.  Do not be fooled into letting them raise taxes under the lie that they will pay down the debt.  

    42. Cut spending. It’s that simple. Hold your state representatives responsible for legitimate fiscal policy.


      We can start to learn to barter and trade with commodities and goods. Learn a trade/skill. The dollar will be worth sh*t but that wont matter if you have a skill set, goods, and common sense to manage your lifestyle.

    43. Geoff-UK says:

      This is all just moving beans around the table while the house is on fire.  All we can do is pray that after the whole thing explodes, we return to our founding principles versus a socialist thugocracy.  I’m betting on the thugocracy, given human history, but would love love love to be proven wrong.


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