And this calculation that does not include the bourgeoning cost overruns of Obamacare, a behemoth and still budding motivational cancer entitlement, with the inevitable perverse side effects of encouraging people of all ages to supply less, or more relaxed (i.e. lower quality) labor to the overall economy, while America faces challenges from the three billion emerging world. These economic activity stifling costs, which will cause the USA to loose its top spot in worldwide competitiveness, go much deeper that the simple and obvious ObamaCare monetary cost overruns. But Obamacare, as an irreversible springboard to a full blown welfare state and irreversible path to decline is a story all in itself. Returning to the limits of financing even current levels of spending by only taxing the rich: It is impossible.

So for all practical purposes, the American people have voted for a future with VAT and other hidden taxes that will affect both rich, middle and poor, while, MORE IMPORTANTLY, economic growth descends to European levels and Americans start sliding down their world prosperity rankings at 3% per year (=5% average world growth minus the new reality of a more euro-like American 2% growth trendline). But that is not even where it ends. The second derivative of growth is also negative. Relative to the historical 3-3.5% American growth trendline, a 2% growth trendline will precipitate a deteriorating mood amongst the American public. As the European story repeatedly demonstrated time and again, that coming American somber mood will inevitably translate into mandates for more “government help” through the democratic polling process. With electoral demand present and a three hundred million population, an even newer generation of politicians willing to guide the voter moths to the light will certainly be found and brought to prominence.

These are the only equilibrium points of the welfare state, which Americans, for all practical purposes, have now chosen to join. And we are even talking about the relatively successful welfare states like Sweden and Denmark, not basket cases like Greece, Spain, Italy who are sliding down the world prosperity rankings at a full -5%, under near zero growth, or even negative growth — though the negative growth is only a temporary adjustment in my view. If there were other equilibrium points, one or another of the many European states would have discovered it and settled in it during the now four decade long European experimentation with welfare state incentives. At best, this equilibrium is an equilibrium of relentlessly compounding decline, growing at 2% per year in a world that aggregately grows by 5% — and thus sliding down the relative prosperity world rankings by 3% per year. A three percent perpetually compounding growth deficit WILL amount to significant decline in relative standard of living over 10-20-30 years, a transformation already evident in the somber resigned mood of European life and prospects. That is the future Americans are staring right in the eye and have irreversibly chosen, like the moth tragically flies to the light in great Hope.

But while apprehensive, both American left and right hold out some hope that this will not happen. Hope that somehow, human genes upon migrating to America have irreversibly mutated in a mere century or less (clearly a biological impossibility) and therefore hope that Americans possessing these unique American genes will maintain — even under the welfare state incentives — their legendary ambition, optimism, desire and expectation to one day excel. Or they simply do not understand the very simple arithmetic reality that a two percent growth trendline, in a world that is growing by five percent, means the deterministic slide into decline at a three percent relentlessly compounding yearly rate. Or they do understand it but simply don’t care. They only see a couple of years ahead and think that consequences are far enough out into the future and corrective action wil somhow be an option it it does not work out. As for the right, they have their own delusions, like a non negligible proportion of “conservatives” who believe that The Divine is ultimately on America’s side, so what can go wrong?

But by the time reality smashes these Hopes for both left and right, it will be too late. WAY too late for any one citizen group to take the first unilateral step towards withdrawing from the welfare state, where everyone is everyone else’s partial slave. You withdraw, you loose your slave but remain a slave to others. Nobody steps forward, decline continues under a severely sub-par low-motivation growth trendline.

Once sandwiched between America on the top and the rising emerging world at the bottom, and continuing their way to decline, Europeans must be partially consoled that America is finally stepping on the same low-motivation, low-growth banana peel. They do though seem to be still complaining that America is not killing its motivation and prosperity fast enough.

The western world lemmings that Americans have now decided to join, deserve every bit of the decline that is in store for them. Watching this unfold will be at least partially entertaining to me while I’m kept warm by the American furniture that HopNChange is burning, away and insulated from the rat-race of the “greedy”. If you decide to do the same, just make sure you secure a salvage boat for you and/or your kids — for when the furniture eventually runs out into a rather fast decline – sooner rather than later. OR…, if the left is ultimately right (no pun intended), continue living-on happily, in perpetuity, in a high growth happy America, while you enjoy and consume the work of others, some distant motivated highly capable greedy individuals, or the unexceptional work of less motivated mediocre people who coming together under mandatory collectivism perform Paul Krugman economic magic and prosper.

You decide what is wiser to do on a personal level. Cheer up! The future looks bright!!! The years of decline can be happy if you play your cards right and secure a life boat. Take it from an ex-European with some proportion of Greek blood. You find yourselves in the same environment as you are headed into, you WILL react the same way! Bye-bye America. American voter lemmings keep me warm with your furniture for a few more years.

Good piece putting the emphasis back on the real problem – spending!

1. Give Obama what he wants, vote present and let him own it. When the economy tanks, the blame will be squarely on Obama. (Everything except the debt limit increase!)

2. If they don’t go with option 1, the GOP will get all the blame. If they’re going to get all the blame, then they should fight for everything they want since they are getting the blame. Why give in to Obama’s demands if you’re going to get blamed for all of the negative consequences?

I’d like to see immediate cuts to spending, but the GOP is stupid. They’ll probably agree to future cuts, that will quickly disappear. The only way you can capitulate on increasing the top tax rate is if you get immediate cuts, no increase to capital gains and a corp tax cut.

Any company executives would get thrown in jail if they used such dishonest maths. If companies have to use generally accepted accounting principles, then shouldn’t politicians as well?

There are laws against dishonest company accounts, accountants and heads, shouldn’t they also be used against similarly dishonest government accounts and accountants…