The stimulus bill, as ill conceived as it is, gives is a fantastic opportunity to test Keynesian economic policy and models in comparison to actual results.
According to the law, districts with the highest unemployment were supposed to get the bulk of the stimulus money. Did that actually happen?
First: The idea behind the $787 billion stimulus bill is that, if the government spends money where it is the most needed, it will create jobs and trigger economic growth. Hence, we should expect the government to invest more money in districts with higher unemployment rates.
Controlling for the percentage of the district employed in the construction industry, a proxy for the vulnerability to recession of a district, I find no statisticalcorrelation for all relevant unemployment indicators and the allocation of funds. This suggests that unemployment is not the factor leading the awards. Also, I found no correlation between other economic indicators, such as income, and stimulus funding.
Second: On average, Democratic districts received one-and-a-half times as many awards as Republican ones. Democratic districts also received two-and-a-half times more stimulus dollars than Republican districts ($122,127,186,509 vs. $46,139,592,268). Republican districts also received smaller awards on average. (The average dollars awarded per Republican district is $260,675,663, while the average dollars awarded per Democratic district is $471,533,539.)
The exact same thing happend under the “new deal” where much of the spending went to swing districts to buy votes. Massive amounts of money spent and non-farm unemployment never dropped below 20% during the New Deal.
The fact remains and it might as well be considered a Law of Economics: Politicians spend money with a political result in mind, not an economic one. Pictorial logarithm proof:
As you can see the log shows no correlation, but look at this….
Well would you look at that. Oh the news gets better…
Now in case you are thinking to yourself, /whiney voice on “Well wait, that economist you quoted doesn’t count cause she is French and she wrote a note about her findings to Natioal Review which means she is a nazi and only twice removed from Hitler’s third cousin!”
Well USA Today hired some econo-geeks and they came up with the same result:
Counties that supported Obama last year have reaped twice as much money per person from the administration’s $787 billion economic stimulus package as those that voted for his Republican rival, Sen. John McCain, a USA TODAY analysis of government disclosure and accounting records shows. That money includes aid to repair military bases, improve public housing and help students pay for college…
When Rep. Nancy Pelosi (D-Calif.) gave her inaugural address as speaker of the House in 2007, she vowed there would be “no new deficit spending.” Since that day, the national debt has increased by $5 trillion, according to the U.S. Treasury Department.
“After years of historic deficits, this 110th Congress will commit itself to a higher standard: Pay as you go, no new deficit spending,” Pelosi said in her speech from the speaker’s podium. “Our new America will provide unlimited opportunity for future generations, not burden them with mountains of debt.”
Pelosi has served as speaker in the 110th and 111th Congresses.
Press coverage of the budget frenzy on Capitol Hill has suggested that pork-barrel earmark spending is still a bipartisan problem, that after months of self-righteous rhetoric about fiscal discipline, Republicans and Democrats remain equal-opportunity earmarkers.It’s not true. A new analysis by a group of federal-spending watchdogs shows a striking imbalance between the parties when it comes to earmark requests. Democrats remain raging spenders, while Republicans have made enormous strides in cleaning up their act. In the Senate, the GOP made only one-third as many earmark requests as Democrats for 2011, and in the House, Republicans have nearly given up earmarking altogether — while Democrats roll on.
The watchdog groups — Taxpayers for Common Sense, WashingtonWatch.com, and Taxpayers Against Earmarks — counted total earmark requests in the 2011 budget. Those requests were made by lawmakers earlier this year, but Democratic leaders, afraid that their party’s spending priorities might cost them at the polls, decided not to pass a budget before the Nov. 2 elections. This week, they distilled those earmark requests — threw some out, combined others — into the omnibus bill that was under consideration in the Senate until Majority Leader Harry Reid pulled it Thursday night. While that bill was loaded with spending, looking back at the original earmark requests tells us a lot about the spending inclinations of both parties.
In the 2011 House budget, the groups found that House Democrats requested 18,189 earmarks, which would cost the taxpayers a total of $51.7 billion, while House Republicans requested just 241 earmarks, for a total of $1 billion.
Where did those GOP earmark requests come from? Just four Republican lawmakers: South Carolina Rep. Henry Brown, who did not run for re-election this year; Louisiana Rep. Joseph Cao, who lost his bid for re-election; maverick Texas Rep. Ron Paul; and spending king Rep. Don Young of Alaska. The other Republican members of the House — 174 of them — requested a total of zero earmarks.
Talk to Republicans, and they’ll say it would be nice if there were no earmark requests at all, but party leaders can’t control everybody. “Brown’s retiring, Cao’s defeated, Paul is Paul and Young is Young,” one GOP aide shrugs. Still, the bottom line is that the House GOP’s nearly perfect renunciation of earmarks is striking. “For a voluntary moratorium, it was impressive that there were only four scofflaws,” says Steve Ellis of Taxpayers for Common Sense.
The Senate is a different story. But even though some Republicans are still seeking earmarks, Democrats are by far the bigger spenders. The watchdog groups found that Democrats requested 15,133 earmarks for 2011, for a total of $54.9 billion, while Republicans requested 5,352 earmarks, for a total of $22 billion.
If you look at the top 10 Senate earmarkers as measured by the total dollar value of earmarks requested, there are seven Democrats and three Republicans. (The leader of the pack is Democratic Sen. Mary Landrieu, who requested $4.4 billion in earmarks.) The three Republicans are Sens. Roger Wicker, Sam Brownback and Thad Cochran. One of them, Brownback, is leaving the Senate, while the other two are from Mississippi, which is apparently earmark heaven.
Commentary:
Isn’t it interesting that the only time you hear about “deficits” from the Democrats and the elite media is when they want to raise tyour taxes? Then the Democrats drop a 1.1 trillion dollar spending bill in the hopper near the end of a lame duck session and what do we hear? The ….chirp….chirp….chirp… of crickets in the silence.
As the Deficit Commission has rightly pointed out tax rates need to be lowered for most individuals and businesses because the higher the rate the less the compliance, the higher the rate the more wealth goes overseas, the higher the rate the fewer will take risk, the higher the rate the less small businesses can hire. The simple truth is that the wealthy and upper middle class can take money and park it in a tax free growth account and leave it there. They have the option of not moving their money thus it cannot be taxed. It is for these reasons it is economic growth that generates real revenue, not high tax rates.
You heard the rhetoric all over the elite media and from the Democrat leadership, “If we don’t raise taxes on the “rich” the government will lose half a trillion dollars a year in revenue”. That entire narrative is a canard for the following reasons.
There are very few wage earners who make $250,000 a year.
The way the tax code is set up the majority of people who pay the top marginal tax rate and not individuals at all, but are Sub-S small businesses with 5 – 200 employees.
The half a trillion dollar number is generated from a series of formula’s that make up what is known as the “static Keynesian model”. These models not only are not accurate, but usually are not even clos,e as they do not account for changes in behavior that result from people changing the rules. For example: the government taxes every cheese burger 100 dollars. Since America consumes a billion cheese burgers a year the government estimates that the tax revenue will be $100 billion dollars.
Of course this leaves out the obvious, who would buy a cheeseburger of the government taxed each one $100? So along comes a Republican who proposes to lower the tax to $50 per cheese burger; along comes the media and the Democrats to cry that the tax cuts are costing the government $50 billion a year! Quite dishonest isn’t it?
Lowering tax rates resulted in increased revenue under Coolidge, Kennedy, Reagan, Clinton (second term tax cuts), and Bush II.
Remember that Clinton/Gingrich Welfare Reform that was so effective at stopping people from gaming the system and helping people get back to work? Did you know it was reversed with the Obama Stimulus Bill?
Government payouts—including Social Security, Medicare and unemployment insurance—make up more than a third of total wages and salaries of the U.S. population, a record figure that will only increase if action isn’t taken before the majority of Baby Boomers enter retirement.
Even as the economy has recovered, social welfare benefits make up 35 percent of wages and salaries this year, up from 21 percent in 2000 and 10 percent in 1960, according to TrimTabs Investment Research using Bureau of Economic Analysis data.
“The U.S. economy has become alarmingly dependent on government stimulus,” said Madeline Schnapp, director of Macroeconomic Research at TrimTabs, in a note to clients. “Consumption supported by wages and salaries is a much stronger foundation for economic growth than consumption based on social welfare benefits.”
The accomplishments of Calvin Coolidge are many and he was one of our greatest presidents. He helped lead the united states out of a depression caused in large part by the progressive policies of Woodrow Wilson, he helped to restore liberty and was the man largely responsible for making the “Roaring Twenties” roar. We featured him BEFORE. Coolidge’s accomplishments have been largely scrubbed from textbooks and he was the Reagan of his time.
Dr. Alan Snyder is professor of American history and chair of the Department of Historical, Legal, and Leadership Studies at Southeastern University in Lakeland, Florida.
Ronald Reagan admired him a lot. In fact, when Reagan was looking over his new house—the White House—shortly after his inaugural in 1981, he entered into the Cabinet Room.
On the wall were portraits of Truman, Jefferson, and Lincoln. The White House curator commented at the time, “If you don’t like Mr. Truman, you can move Mr. Truman out.” Even though Reagan, a former Democrat, had voted for Truman back in 1948, he made his decision: Truman’s portrait was removed and one of Calvin Coolidge was dusted off and put in its place.
Nowadays, in all the “right” circles [to be found primarily among the academic elite], the person of Coolidge is a source of amusement, if not outright derision. Why, he was a do-nothing president, someone who didn’t use the power of the office as he should have. Probably his most grievous sin, in their view, was the way he put the brakes on destiny: he was a foe of the progressive movement that was intended to reshape American government and culture.
Coolidge, whose administration spanned a good part of the 1920s, was a throwback to an earlier time. He was not a Woodrow Wilson; rather, he believed in the vision of the Founding Fathers and their concept of limited government. He remained true to the principles of self-government and the sanctity of private property. The rule of law was paramount in his political philosophy. No one was above the law, a belief that, if followed, would keep the people safe from the power of an overextended government.
During the 1920s, the continent of Europe experimented with socialism. What might larger government be able to accomplish? What vistas await us once we unleash the full power of government intervention? Coolidge stood opposed to this false vision of the future.
Historians also like to make fun of his approach to speechmaking. Coolidge preferred to say as little as possible. As he once noted, he never got in trouble for things he didn’t say. Yet when he did speak, he made some very significant pronouncements. His words conveyed key ideas for American success. Meditate on this paragraph, for instance:
Calvin Coolidge
In a free republic a great government is the product of a great people. They will look to themselves rather than government for success. The destiny, the greatness of America lies around the hearthstone. If thrift and industry are taught there, and the example of self-sacrifice oft appears, if honor abide there, and high ideals, if there the building of fortune be subordinate to the building of character, America will live in security, rejoicing in an abundant prosperity and good government at home and in peace, respect, and confidence abroad. If these virtues be absent there is no power that can supply these blessings. Look well then to the hearthstone, therein all hope for America lies.
Notice Coolidge’s stress on what he called the “hearthstone,” which is a designation for the family. He saw the family as the cornerstone of society, the place where character should be developed. Note also his subordination of financial fortune to the building of character. Fortune may come, but only if character comes first: thrift, industry, and honor—qualities in short supply at the moment.
America was prosperous during the Coolidge years. The Great Depression was just around the corner, but it didn’t occur as a result of Coolidge’s policies of tax cuts and economic liberty. The Depression was more a result of misdirection from the Federal Reserve [low cash reserves in banks; easy credit]; its continuation throughout the 1930s was due to government actions of the New Deal.
If there’s one thing most historians can agree on with Coolidge, it’s that he easily would have won reelection in 1928 had he chosen to run again. Yet he voluntarily stood down. Why? What prompted that decision? He tells us what led him to do so in his autobiography.
It is difficult for men in high office to avoid the malady of self-delusion. They are always surrounded by worshipers. They are constantly, and for the most part sincerely, assured of their greatness. They live in an artificial atmosphere of adulation and exultation which sooner or later impairs their judgment. They are in grave danger of becoming careless and arrogant.
Coolidge saw the problems associated with elected office. He knew that men often developed what might be called the “swelled-head syndrome.” He wanted nothing to do with that. If for no other reason, Coolidge should be honored for his willingness to set aside power and maintain his good character. Where are the politicians willing to do that today?
Coolidge’s thoughts on self-delusion mirror’s our critique of leftist academia and the political class that I stated my old college blog, “they pat each other on the back and tell each other how brilliant they are….and after all it MUST be true because all of these PhD. types tell them so. Invariably this environment brings you to a point where you start to believe it. You internalize it and eventually you stop challenging your own assumptions. The end result is an atrophied thinking process”. The result as I have been telling people who are willing to listen for several years is self-delusion.
This is not from any light-weight folks, this is linked on Dr. Greg Mankiw.
Mankiw wrote one of the most respected series of econ college textbooks used in universities today.
Dr. Mankiw:
Tim Conley and Bill Dupor have a new paper on the American Recovery and Reinvestment Act (that is, the Obama stimulus bill). Their empirical findings:
Our benchmark results suggest that the ARRA created/saved approximately 450 thousand state and local government jobs and destroyed/forestalled roughly one million private sector jobs. State and local government jobs were saved because ARRA funds were largely used to offset state revenue shortfalls and Medicaid increases rather than boost private sector employment. The majority of destroyed/forestalled jobs were in growth industries including health, education, professional and business services.
Our benchmark results suggest that the ARRA created/saved approximately 450 thousand state and local government jobs and destroyed/forestalled roughly one million private sector jobs. State and local government jobs were saved because ARRA funds were largely used to offset state revenue shortfalls and Medicaid increases rather than boost private sector employment. The majority of destroyed/forestalled jobs were in growth industries including health, education, professional and business services.
So the American people borrowed and spent close to a trillion dollars to destroy a net of more than one-half million jobs. Does President Obama understand this? I very much doubt it. When he expressed puzzlement at the idea that the stimulus money may not have been well-spent, and said that “spending equals stimulus,” he betrayed a shocking level of economic ignorance.
You can look at the 2010 Budget Chart Book HERE. Just click on the tabs near the top of the web page for the categories and then you will see sub-categories allowing you to examine almost any meaningful statistic imaginable.
Be sure to look at this chart right HERE to find out just who it is that have been paying taxes and you will see that the top 10% of wage earners paid 71% of federal income tax. But there are two very important thing you should know about this stat.
Starting in 2008 and more so today, this number is going down and more tax burden is being transferred away from the wealthy and investor and production classes. Why? because when you have a government that is this active and when you have this level of economic and regulatory and fiscal uncertainty those who can invest or take risk park their money so it is not taxed or they invest it in a safe place like China, where the leaders have some economic common sense. As a result the tax burden is transfered to the middle class, working poor and small businesses.
The other thing you should know is that for the super rich and the very well connected it does not matter what the wage earner (small business) tax rate is, because they have loopholes in the 60,000 page tax code made for them and in the case of those like Teresa Kerry or George Soros much of their income is defined as either non taxable or not taxable at the wage earner rate. Now what party has been saying that we need to have a flatter and more simple tax code to help avoid this problem?
Lee Doren of “How The World Works” explains how tax cuts and increases work in a progressive income tax system like we have here in the United States.
Let us examine some charts that help to illustrate this further.
Here is the tax burden by taxable income that came out at the middle of the Bush Presidency:
You see when tax rates are cut and the economy grows the upper and top parts of the PRODUCER CLASS (notice I did not say rich as many of the super rich are NOT producers) pay the lions share of federal income taxes. Those who produce actually produce more, invest more, take more risk and hire more people when the economy grows. So as they pay a lower tax rate they actually pay more in real dollars because they are punished less by moving their money and takling risk.
Now let us look at the tax burden as it is today. According to the Tax Foundation:
Incomes reported by tax returns at the high end of the income spectrum plummeted from 2007 to 2008, as did their share of the nation’s income and income taxes paid.
In 2008, the top 1 percent of tax returns paid 38.0 percent of all federal individual income taxes and earned 20.0 percent of adjusted gross income, compared to 2007 when those figures were 40.4 percent and 22.8 percent, respectively. Both of those figures—share of income and share of taxes paid—were their lowest since 2004 when the top 1 percent earned 19 percent of adjusted gross income (AGI) and paid 36.9 percent of federal individual income taxes.
Each year from 2005 to 2007, the top 1 percent’s constantly growing share of income earned and taxes paid set a record. That trend reversed in 2008. In fact, the income share for the top 1 percent of tax returns was lower in 2008 than in 2000, largely due to differences in capital gains.
Another indicator of this reversal in the income and tax shares of the top 1 percent is that during 2007, the top 1 percent had actually paid more in federal income tax than the bottom 95 percent, a comparison that was much remarked on a year ago. But the diminished income of the top 1 percent in 2008 means that the comparison no longer holds. During 2008, the bottom 95 percent (AGI under $159,619) paid 41.3 percent of the total collected, a larger share than the 38.0 percent paid by the top 1 percent (AGI over $380,354).
The top-earning 5 percent of taxpayers (AGI over $159,619), however, still paid far more than the bottom 95 percent. The top 5 percent earned 34.7 percent of the nation’s adjusted gross income, but paid approximately 58.7 percent of federal individual income taxes.
So why did the percentage of the tax burden of “the rich” during most of the Bush presidency go UP year after year till 2007, even after the so called “tax cuts to the rich”?
And why in 2008 did a huge portion of the tax burden get shifted to the working middle class and poor?
It is just as we said, if the incentive is there to produce, if the taxes are low and if the risk is measurable those wealthier Americans and producers will take more risk and be more economically active. If you remove the incentive by threatening them with taxes, cap & trade, ObamaCare, tons of regulations, bureaucrats and the corruption that always follows such policies it creates uncertainty investors and producers can no longer make a measured risk. This is when they bottle their money up or invest it in China, who is smart enough not to punish investors and producers for taking risk.
This shows that the tax rate that the producers or “the rich” pay is secondary to certainty, confidence, and economic growth as to how much tax they pay in real dollars.
It is ironic that the left, who claims to pass this stuff in the name of the middle class and “soaking the rich”, in real dollars accomplish exactly the opposite of their stated intent. It ends up that it is the producing middle class who gets soaked with more tax burden and more inflation.
The way to crush the middle class is to grind them between the millstones of taxation and inflation. – Vladimir Lenin
These facts have been coming out for a year yet they have fallen out of the dialogue. It is time to remind each other and our friends. With the demise of the CLASS Act it is now worse. We said that ObamaCare would cost a trillion dollars to implement and every day new evidence moves us closer and closer to that number.
The government’s chief actuary for Medicare spending on Wednesday said he had more confidence that Republican Paul Ryan’s plan to reform entitlements would drive down health-care costs than President Obama’s recently passed overhaul.
Richard S. Foster, the chief actuary of the Centers for Medicare and Medicaid Services, made the comment in response to questions from lawmakers during House Budget Committee hearing.
Rep. Chris Van Hollen, the ranking Democrat from Maryland, went on the attack against committee chairman Paul Ryan’s “Road Map” plan, which is a long-term proposal to make entitlement spending solvent.
Van Hollen pressed Foster on whether Ryan’s plan would work, prompting Foster to point out that one of the biggest problems in health care now is that most new technology that is developed increases costs rather than decreasing it.
“If there’s a way to turn around the mindset for the people who do the research and development … to get them to focus more on cost-reducing tech and less on cost increasing technology, if you can do that then one of biggest components of [increasing costs] turns to your side,” Foster said. “If you can put that pressure on the research and development community, you might have fighting chance of changing the nature of new medical technology in a way that makes lower cost levels possible.”
Foster said: “The Road Map has that potential. There is some potential for the Affordable Care Act price reductions, though I’m a little less confident about that.”
The thinking behind Foster’s comment is that a voucher system would reduce the amount of government money available for health care over time, causing consumers to shop around and creating an incentive in the health-care sector to compete for those dollars.
In a brief interview outside the House chamber later in the day, Ryan explained it this way: “There’s only going to be so much money for health care because the economy can only support so much … So is it better spent through the person in a competitive marketplace or through the government under increasing price controls and pressure?”
“If you go through the century, these entitlements consume all money. The GAO calculation assumes Congress is going to wise up and cut back on these programs because people will decide they don’t want 100 percent of their discretionary income going to health care. They want some for food and some for shelter and some for other things. So there will be a curtailment of health care spending in the future,” Ryan said. “The question is which curtailment gets you the better results at going after the cause of health inflation: consumer pressure or government price controls.”
There are many bad sections and power grabs in the Obama “Jobs Bill”. We will be elaborating on them soon, but in general it does six things that will affect most people.
1 – Obama wants to continue the payroll tax rates which shows no evidence of creating a single job. It has a small impact on disposable income but it also further endangers Social Security.
2 – Extend unemployment benefits.
3 – Obama wants almost half a trillion dollars in new deficit spending to pay for more green jobs stimulus money that has not created long-term jobs; much of which was spent on cronies and Solyndra like boondoggles.
At the same time Obama wants to:
1 – Eliminate the Home Mortgage Interest Deduction
2 – Eliminate Charitable Interest Deductions
3 – Eliminate the partial deduction for state and local taxes.
These three changes to our current tax code would be devastating to charities, the housing market and the economy. It would also, interestingly enough, devastate States ran by progressive Democrats as they have the highest state and local taxes. States ran by Republicans would be a much better deal. Obama’s “Jobs Bill” would make Canada an even better deal as their version of the TEA Party is rewriting Canada’s tax code to a pro growth, jobs friendly policy. This is why even most Democrats are not pushing the bill.
Billions of dollars in potential oil revenue that could help close the federal deficit is being lost as a result of President Obama’s anti-drilling agenda.
Production in the Gulf of Mexico — which normally accounts for about 30 percent of all U.S. production — is expected to drop this year by 220,000 barrels per day, according to projections from the U.S. Energy Information Administration.
With oil currently at $90 a barrel and the royalty rate at 18.75 percent, that equals $3.7 million in lost revenue each day.
If the agency projections hold over the course of the year, the federal government would lose more than $1.35 billion from Gulf royalty payments this year.
The number grows even larger when coupled with a lack of Gulf lease sales and fewer rental payments. Those three components — royalties, leases and rent — make up a sizeable amount of government revenue.
The looming shortfall is raising red flags on Capitol Hill. Sen. David Vitter, R-LA, an outspoken critic of the Obama administration’s drilling moratorium and the subsequent slowdown in permitting, first called attention to it in September.
“It’s not only about job loss along the Gulf Coast — the federal government is losing revenue as a result of the administration’s misguided moratorium,” Vitter explained.
“I’ve been attacking the moratorium from multiple angles and will continue to do so until drilling can fully resume.”
Interior Secretary Ken Salazar canceled a Gulf lease sale last October. He postponed another in the central Gulf of Mexico, originally scheduled for March, until 2012. One planned for October 2011 in the western Gulf also could be delayed until 2012. That would make 2011 the first year since 1965 that the federal government has failed to hold a lease sale in the Gulf.
Bonus bids from lease sales averaged about $1 billion in 2009 and 2010, according to data from the U.S. Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE).
The lack of lease sales ultimately means the government will collect less in rent payments by lease holders. Offshore rents currently generate more than $200 million per year.
“Over the years, offshore production royalties have provided billions of dollars to the U.S. government,” saidNational Ocean Industries Association President Randall Luthi, former director of the Minerals Management Service, which predated BOEMRE. “Now, at a time when Congress is looking to maximize efficiency without raising taxes, there sits millions of dollars per day uncollected,” he said.
The Obama administration has dismissed the financial impact. The revenue loss would be “negligible,” Rebecca Blank, under secretary for economic affairs at the Department of Commerce, told a Senate committee in the fall.
“It is difficult to speculate now on the specific impact the moratorium would have over the five- or 10-year budget window, but one would expect the impact on the deficit to be negligible,” Blank wrote to the Senate Committee on Small Business and Entrepreneurship in September.
“Revenues may be higher or they may be lower depending on future years’ oil prices and the time profile of production,” Blank said.
Energy experts said the administration’s policies are certain to have long-term consequences for the industry.
“You continually need new discoveries and new production coming online to replace what’s being depleted,” said Andy Radford, senior policy adviser at the American Petroleum Institute. “These wells taper off over time — the ones that are producing now — so without a continual flow of new discoveries and new production, the number will continue to decrease.”
A report from the economic forecasting firm IHS Global Insight estimated that federal, state and local taxes related to the Gulf, combined with royalty payments, totaled $19 billion in 2009.
Royalties, bonus and rent payments made up more than $6 billion of that number. That pot of money could go a long way toward deficit reduction. And that’s from the Gulf alone.
Significant additional revenues would be generated if the federal government opened access to exploration and production in areas currently closed to development such as the eastern Gulf of Mexico, portions of the Rocky Mountains, ANWR, and the Atlantic and Pacific coasts.
A recent study conducted by Wood Mackenzie for the American Petroleum Institute estimated that increased access to those areas would bring $150 billion into federal coffers by 2025.
Why leave so much money uncollected, especially in a time of rising deficits?
Democrats called 1.5% cuts “draconian” and that is after tripling deficit spending in 2008 over 2007 levels. The yearly deficit in 2010 level was over and 6.5 times the 2007 level.
The United States is on a fiscal path towards insolvency and policymakers are at a “tipping point,” a Federal Reserve official said on Tuesday.
“If we continue down on the path on which the fiscal authorities put us, we will become insolvent, the question is when,” Dallas Federal Reserve Bank President Richard Fisher said in a question and answer session after delivering a speech at the University of Frankfurt. “The short-term negotiations are very important, I look at this as a tipping point.”
Flashback March 2011. Remember Obama’s Deficit Commission??? The elite media dropped it like a hot potato.
UPDATE – Worlds largest bond fund dumps U.S. Treasuries – LINK.
Great interview. All credit to Erskine Bowles, who used to be one of the nastier partisan Democrat hired guns. He has almost completely adopted a near Steve Forbes like tax agenda, because that is the best way to raise government revenue. Bowles even makes the case that Democrats need to get real on spending cuts and that Republicans aren’t pushing hard enough. I am in awe. Bowles has even says that unions have over reached. I am sure Bowles is feeling the heat from his former colleagues. I never thought I would see myself typing these words; Erskine Bowles has earned my respect. My hat is off to his courage.
Bowles even uses the same analogy IUSB Vision [My old college blog – Editor] does almost verbatim from the link. The deficit in February was $232 billion (yes that is for a single month), which is substantially higher than the entire yearly deficit the last year the Republicans had fiscal control (2007).
Remember that debt increase deal? Just remember come election time to remember the following…
As far as the budget deal we thought we have a few comments.
1 – We were never in danger of a default. The government brings in almost 200 billion a month in tax dollars which is more than enough to service the debt. Anyone who said that the August 2nd date would result in default is just lying straight up. Judging by how the elite media has been repeating this it furthers my personal observation that journalists are lazy and are, as a collective, the most uninformed people I have ever encountered.
2 – These polls that you here about in the news saying that the people want “republicans to compromise” are polls like the CBS News poll that had a sample which included only 25% Republicans, so the sample was rigged. Notice how the Democrats are not asked to compromise in the press? When the people were stone against Obama Care by a 60% margin where was the press pounding the polls than? Where was the compromise when the Democrats would not allow the GOP into the room and would only see the bill a few hours before a vote?
3 – “Reagan increased the debt limit”… Reagan did not have a House controlled by his own party. During that time we had the 24/7 nuclear triangle operating at the pinnacle of the Cold War and a government shut down at such a time would have undermined our efforts to posture and beat the Soviets.
4 – “We need to raise taxes on the rich”. First of all we have been “raising taxes on the rich” for decades now so why is it that John Kerry paid 12.34% on $5,072,000 worth of income? The dirty little secret is that the tax rate that the Democrats are talking about is the wage earner rate which is paid by high-end wage earners such as doctors and engineers, but it is also the rate paid by most small businesses that have employees. Most of the income that the “rich” bring is defined by the tax code as “unearned income”, so you could raise this tax rate to the moon and the multimillionaires and billionaires will laugh as it will not be they who pay it. For more details on why this is follow this LINK.
Using static models as the CBO likes to use the Democrats proposed tax increase would pay for all of 10 days of deficit spending. Of course since people do not operate in a static universe the result would be an impact on job creators and even less revenue growth to the government. Can anyone name a mainstream economic theorist who said to raise taxes during what appears to be a double dip recession?
4 – As far as spending cuts in the “deal”, we must remember base line budgeting. If we froze spending at current levels Washington would consider that to be a $9.5 trillion dollar “cut”, so all we are talking about here is a small reduction in the typical increases in spending. As far as spending cuts are concerned this is not a serious plan as spending under this deal will continue to skyrocket. Democrats and some leftist journalists are calling these “draconian cuts” and are simply engaging in the most dishonest demagoguery imaginable.
5 – But here is the rub, when we lose our AAA credit rating, which now appears unavoidable as both Moodys and S&P have said that neither the Boehner plan nor the Reid plan are serious about getting spending under control, it will cost us more than $100 billion a year in interest alone; when that is factored in there are no reductions even in the increases in spending. It gets worse. When you add the damage to the economy that loss of AAA will bring it makes all of this worse.
The loss of AAA will impact most unsecured credit, it will impact the value of the dollar (inflation), it will impact those who use short-term credit such as farmers who use seasonal loans and import/export businesses. It is going to damage the economy in such a way that most people will feel it. We did not lose AAA even during the great depression. The “deal” which passed is also easy to demagogue because the left will say that this deal IS the “Boehner Plan” (which is largely isn’t any more do to an almost total cave on spending cuts) and HIS plan caused us to lose AAA.
[Note: The first plans that were introduced by the Tea Party/GOP were much more serious and had a real chance of preventing the loss of AAA. While this is indeed a failure of government, is there any doubt that the Democratic Party is intent on blowing up our credit rating? The first proposals from the House had a chance of preserving AAA and the media/Democrats had a conniption fit calling called it extreme. Think about this folks, preserving AAA is now an extreme position according to much of the elite media and a political party. The Constitution does have limits and the GOP cannot run the government from the House. This is why elections matter.]
6 – The deal also includes a vote on the Balanced Budget Amendment to send it to the states. If this amendment resolution passes the Democrat controlled Senate and gets to the states it will be a great tool to begin to get this spending problem under control. If it looks like it will pass the Senate I expect the Democrat leadership will pull some stunt prevent the vote or prevent its passage. Government has a structural institutional incentive to spend more and more, so the only way to curb that is to make a structural change. Aside from a vote on this Amendment, which I will stress has not happened yet, this was not a tough deal or a Herculean compromise by any stretch.
This is a must see exchange between Marco Rubio and John Kerry on the debt limit debate. Be sure to watch every second as this is invaluable.
Kerry will think twice before trying to posture Marco Rubio again. Notice also, even though Rubio did not join the TEA Party Caucus he defends their position, which is to offer a plan that fixes the problem. Rubio uses a most interesting analogy to show why this is so important.
UPDATE – The latest version of the deal includes $2.1 Trillion in cuts over 10 years with half planned now and the other half planned by a “budget cut committee later”. Keep in mind that cuts in “Washington Speak” are not cuts, but rather a decrease in the increase in spending. So instead of a planned increase in spending over 10 years of $9.5 Trillion they will plan to increase spending by $7.4 trillion. The president gets his debt increase limit extended to well passed the campaign, deficit spending shoots up, no entitlement reform, no plan to balance the budget over the next eight years. There are some actual small cuts in discretionary spending, but entitlement spending that is on autopilot. Of course even this is a fraction of the increase in discretionary spending that has gone up since 2008.
Remember when we said that the Democrats are pushing for a government shut down, which is why they keep moving the goal posts in trying to boost deficit spending? Well here is the proof. It is called acting in bad faith folks.
How could anyone who wants fiscal responsibility ever vote for any of these people again. You heard me. If you take exception to that comment please try to justify what we have just seen in the comments below.
UPDATE: Rand Paul: What Schumer is doing to the country is extreme
Michelle Bachmann responds as well:
Mike Pence: If the Democrats want a shutdown so bad, do it and see what happens…
Boehner/Bachmann: Democrats rooting for a shutdown
Its true too. Every time the Republicans make a compromise the Democrats move the goal post. First it was move spending back to 2008 levels; then it was cut by $100 billion; then it was $61 billion’ then it was, 10.5 or 33 billion dollars depending on what Democrat you were talking to. How anyone, and I mean anyone who tells you that they are for fiscal responsibility and want to vote Democrat in 2012 is either duped or just lying to you.
An analysis of the propaganda campaign to get Al-Jazeera carried by more cable and satellite systems reveals an interesting fact. The terrorist TV channel is already available through something called MHz Networks. And it turns out that the MHz Networks is supported by the American taxpayers at the federal and state levels.
MHz Networks is a division of Commonwealth Public Broadcasting and receives over $2 million a year from federal and state governments. In this case, because Commonwealth is based in Virginia, the culprit is the state of Virginia. However, Governor Robert F. McDonnell has proposed eliminating state funding of public broadcasting by cutting $2 million in fiscal 2012 and $2 million in fiscal 2013. Even if state legislators go along with this proposal, that still leaves the federal subsidies for Commonwealth and MHz Networks.
According to figures supplied by Joseph H. Koch, Commonwealth Public Broadcasting Vice President and Chief Financial Officer, $1.4 million of that $2 million came from the Corporation for Public Broadcasting (CPB), which is funded by Congress. The CPB distributes taxpayer money to public broadcasting stations and entities.
Since Al-Jazeera is totally owned, run, and paid for by the Emir of Qatar, officially known as “His Highness,” this means that American tax dollars are paying for foreign propaganda in the U.S.
Not only that, but American taxpayers are being fleeced on behalf of an Arab dictator with billions of oil dollars. The Emir, Sheikh Hamad bin Khalifa Al Thani, is number 8 on the Forbes list of the “richest royals,” with an estimated net worth of $2.4 billion. His channel has been labeled “the greatest Arab media organization” by the Muslim Brotherhood, which has spawned various terrorist organizations and is now poised to take power in Egypt and perhaps other countries.
Obama takes credit for global oil production going up, but this is in spite of him not because of him. domestic Oil production is down 13% since he was elected, he has instituted an illegal offshore drilling ban which he is in contempt of court for. Thousands have lost their jobs. But look at what Obama says below.
Obama knows he can tell the fattest whoppers imaginable and the elite media will cover for him. Luckily we have blogs, talk radio and a Fox News willing to tell both sides.
President Obama told the American public on Friday:
So any notion that my administration has shut down oil production might make for a good political sound bite, but it doesn’t match up with reality. We are encouraging offshore exploration and production.
The Obama administration continues to delay or defer action on developing our domestic resources of oil and natural gas at every turn.
“The trend is alarming. The administration has postponed lease sales in offshore areas. It has cancelled lease sales in onshore federal lands. It has extended permitting timelines for current leases and added unnecessary regulatory burdens. It has chosen inaction on essential energy projects that would create jobs, drive economic growth, and boost federal revenues.
“The administration is well on its way toward creating higher gasoline prices for Americans.
“To get more oil and gas, we need more access. Placing more government lands and waters off-limits and forcing companies to focus on areas that may show little promise even if already under lease will not solve our energy challenges.
Dana Perino is right.
It is frightening that the Obama Administration is so willing to openly lie to the American public.
Rush Limbaugh comments as well. This is a must see.
“The top 1% of income payers pay 41% of all state income tax. We already have the highest taxes in America and the neighbor who lives next door to you who works in the private sector, is already paying much more for his health care than you are for yours and they are paying the taxes to pay for yours on top of it.”
Governor Christie didn’t even mention that public sector employees tend to make much more than those in the private sector as well. The simple truth is that government employees have been well shielded from the pain of this recession. They have been promised pay and benefits by Democrats who left office years ago that government just cant afford.
GAO report expected to show hundreds of duplicate programs
By Vicki Needham – 02/28/11 09:00 PM ET
The Government Accountability Office (GAO) found hundreds of possibly duplicate programs throughout the federal government’s agencies, according to a report scheduled for release on Tuesday.
The GAO, an independent, nonpartisan agency that works for Congress and investigates how the federal government spends taxpayer dollars, identified programs across the agencies including Defense and Energy departments, the Wall Street Journal reported Monday night.
Congress and the White House have targeted many duplicate programs for elimination, including several that are included in the House Republicans’ two-week continuing resolution, also in President Obama’s fiscal 2012 budget, that cuts $4 billion in spending through March 18.
The Journal reported these duplications from the GAO study:
1. Food safety: 15 agencies that implement several federal laws.
2. Defense: Duplication in the purchasing of tactical wheeled vehicles, procurement and medical costs.
3. Economic development: 80 programs spread across several agencies that share goals.
4. Surface transportation: More than 100 programs run by five divisions within the Transportation Department.
5. Energy: Cutting ethanol production programs could save $5.7 billion each year.
6. Government information technology: 24 federal agencies handle IT.
7. Health: The Defense and Veterans Affairs departments are still working separately to update electronic health records.
8. Homelessness: There are more than 20 federal programs dealing with the issue.
9. Teachers: 82 programs and several agencies deal with teacher quality.
10. Job training: 44 employment and training programs.
Pardon the dopey 15 second introduction before the substance of the video begins (we didn’t edit this piece), but watch this video.
The Chinese have noticed what the rest of the worlds investors pretend not to see: The United States is on a completely unsustainable fiscal course with no apparent political means of self correction…
Have you ever heard one of those sports guys on the radio who can tell you the stats of every football and baseball game since 1940 right off the top of their head? Prof. Niall Ferguson is like that, but with history and the history of economics. Prof Niall Ferguson is accepted by many academics as the most brilliant historian alive and judging by all I have seen in recent years I have only seen one man in my lifetime who is in the same ballpark as far as ability in this area is concerned. Take a look at his bio HERE.
Ferguson said in another interview that only one time in history has a major power emerged from this kind of debt and survived and that was England after the wars of the 1800’s. It doesn’t look good unless we change course now.
The volume is low on some of the videos so you may have to adjust your speaker volume.
If you care about kids or education at all this is a must see.
Profiles in ridiculous: 70% of the superintendents in New Jersey make more than the governor…
“You achieve I’ll pay you…”
“If you are not careful, the newspapers will have you hating the people who are being oppressed and loving the people who are doing the oppressing.” – Malcolm X
Political Arena 