Category Archive 'Federal Spending'
28 Jul 2022
Matt Purple says he’s getting “thirty pieces of (inflated) silver.”
I, for one, never thought he would do it. I never thought Joe Manchin, who was elected in West Virginia after running an ad in which he literally shot the 2009 cap-and-trade bill, would sign on to Joe Biden’s Build Back Better climate agenda.
Yet sign on he has. Last night, Manchin announced that after over a year of logjamming Biden’s spending plans, he’d struck a deal. The legislation he agreed to weighs in at a ballpark of $700 billion, a sharp climbdown from the $6 trillion Democrats had initially asked for. But it’s still a lot of money, and even more importantly, it’s a major psychological boost for the left. Now, barring some let-the-world-burn chaos from goth kid Kyrsten Sinema or revolt from House Dems, Build Back Better will be signed into law.
Before we get to the green stuff, let’s pause for a moment and consider the clinical insanity of dumping hundreds of billions into the economy at a time of massive inflation. The Democrats audaciously claim that the package will somehow reduce inflation. They even went back and renamed it the Inflation Reduction Act of 2022, a bit of Orwellian chicanery. They cite the bill’s tax hikes on big corporations as proof it will slice the deficit and help control rising prices.
But then they make similar claims about every spending package and the deficit only ever seems to widen. Irrespective of what you think of the tax hikes — and raising taxes amid recession fears and rising interest rates is a serious gambit — the fact remains that they’re still dumping hundreds of billions of new spending into the economy. Inflation simply means too many dollars chasing too few goods; can anyone seriously argue this won’t exacerbate the problem?
Jeffrey Carter, at Points and Figures, is justifiably outraged.
Finally, Senator Joe Manchin got what he wanted and rolled over. At least, that’s what we are hearing. Hence, a new spending bill will make its way through Congress.
Increases in government spending are INflationary. They don’t take inflation down.
Government has input into the costs of goods and services but it doesn’t set the price. The “scorecard” I saw showed how all of this spending is revenue neutral. That’s always a joke.
Details are sketchy but supposedly:
15% minimum tax on corporations
Eliminating Carried Interest tax rates on Investment
First, raising taxes during a recession is not a good idea. Second, the way to spur GDP growth is to decrease corporate taxes and taxes on investment.
Corporations do not pay taxes, they aggregate them. They pass them along to their customers. If they pay higher rates of tax, they don’t increase salaries for employees nor do they invest in property, plants, and equipment.
Interestingly, Democrats want Biden to stop sending refined oil products overseas to try and decrease gas prices in the US. You’d think that would work because it would increase the available indigenous supply. Except, there is not enough storage for those products so it would all be wasted.
This bill kills an incentive for any company to invest in storage facilities to make the Democratic scheme work.
One of the smart things Reagan did to kill the inflation beast was to cut taxes on investment. For those that don’t know, carried interest is the money that people receive when they successfully operate private equity, real estate, hedge, or venture fund. If you are a general partner at one of those funds and cover the costs of operating the fund, 20% of what’s left of the profits accrue to you.
There are various tax codes for different funds. But, you generally pay the long-term capital gains rate on gains. That’s a big incentive to invest.
Democrats just crushed the incentive.
15 May 2014
Tyler Durden passes along Simon Black, who notes: “We’re already there.”
Last week in the Land of the Free, I heard a radio campaign ad for a local political candidate while in Texas.
In the ad, he was talking about the debt and excessive government spending. And then he said something along the lines of, â€œWe need to get this under control before America goes bankrupt.â€
â€˜Buddy,â€™ I remember thinking, â€˜America isnâ€™t going bankrupt. It already IS bankrupt.â€™
Just so that we donâ€™t mince words, my dictionary defines â€˜bankruptâ€™ as â€œany insolvent debtor,â€ i.e. a debtor whose liabilities exceeds assets.
Thatâ€™s the US government, by its own admission.
As weâ€™ve discussed before, the US Government Accountability Office (GAO) publishes financial statements each year in which they list all official government assets and liabilities.
The liabilities far exceed the assets. Big time. And the hole is getting deeper each year.
At this point the governmentâ€™s net worth is roughly NEGATIVE $17 trillion, about 110% of GDP. Thatâ€™s textbook insolvency.
The only reason the US government is still able to service its debts is because they are borrowing money just to pay interestâ€¦ and because the Federal Reserve keeps printing money to buy up US debt.
These are hardly sustainable fiscal strategies.
02 Apr 2014
Darrel Issa posted this chart on his Facebook page yesterday.
17 Dec 2013
Fifty years ago, defense spending accounted for about half of all government spending. Today, defense spending accounts for less than a quarter of all government spending. (In the graph, by the way, “Non-defense” refers to non-defense discretionary spending, which includes education, transportation and lots of other government programs.)
Medicare didn’t exist 50 years ago; last year, it accounted for more than 10 percent of federal spending.
19 Oct 2013
Jeffrey T. Kuhner observes that the left may be celebrating now, but reality is on the side of the Tea Party.
The conventional wisdom is wrong. The mainstream media â€” and their parrots in the Republican establishment â€” are claiming that President Obama decisively won the government shutdown battle. In fact, the narrative being peddled is that the GOP brand has been badly damaged, paving the way for a possible Democratic Party takeover of the House of Representatives in the 2014 elections. This is puerile nonsense. Tea Party Republicans, led by Texas Sen. Ted Cruz, may have lost the battle, but they are poised for a major victory in the larger Obamacare war. …
This is myth and propaganda masquerading as analysis. The legislative deal simply does one thing: kick the can down the road. Yet the same, enduring problems remain â€” the very problems identified by Mr. Cruz and Tea Party Republicans. America is sitting on a ticking debt bomb, Obamacare â€” the most destructive law in modern memory â€” is a disaster, and our ruling elites are incapable of reining in out-of-control public spending.
America is increasingly dominated by one seminal reality: We are the most indebted nation in history. The national debt is approaching $17 trillion. By 2016, the debt is expected to hit $20 trillion. That will be Greece-like levels, a debt load so crippling that Washington will have trouble simply paying the interest on the debt payments. Our creditors will realize we are sliding toward the United States of Argentina â€” a fiscal basket case unable to live within our means. The value of the dollar will plunge. Interest rates will soar. Taxes will have to be increased. The social safety net will be shredded. Unless Congress immediately confronts the reckless spending and near-record trillion-dollar deficits, the United States will go bankrupt. The question is no longer if, but when.
Mr. Obamaâ€™s massive health care overhaul is precipitating the impending economic collapse. Nearly every aspect of Obamacare has turned out to be a lie. The real price tag is not less than a $1 trillion; rather, it is a multitrillion-dollar entitlement program that America cannot afford. Rather than lowering premium costs for the average family, it dramatically raises them â€” sometimes by thousands of dollars a year. Millions of citizens have lost their health benefits or are unable to keep their doctor. People seeking to enroll in Obamacareâ€™s marketplace exchanges are stunned at the high costs of the health insurance plans. In fact, the Congressional Budget Office acknowledges that the law will not achieve its stated goal: universal coverage. Instead, about 30 million Americans will still not have health care. Hence, one-sixth of the U.S. economy will have been revolutionized essentially to put only 17 million new recipients on the Obamacare rolls. The complex law also undermines economic growth and job creation, compelling employers to either slash employeesâ€™ hours or not hire new workers. In short, Obamacare is a cancer, slowly devouring our economic dynamism, individual liberties and medical care.
As the law is implemented, its devastating effects will be increasingly felt. By next year, the government shutdown will be a fading memory. What the public will remember, though, is that a band of Tea Party patriots sought to thwart the oncoming disaster. Mr. Cruz, along with Sens. Rand Paul of Kentucky and Mike Lee of Utah, represent the future. The question is no longer ideological â€” small government versus big government, free-market-based health care versus nationalized health care, or capitalism versus socialism. Rather, it is about something more simple â€” and profound: basic arithmetic.
The United States is a giant bus that is rushing toward an economic precipice. A few more years of Mr. Obamaâ€™s borrow-and-spend policies and America will crash upon the rocks of fiscal reality and national insolvency. The Democrats are keeping their foot on the gas pedal, full speed ahead. The Republican establishment thinks we may need to slow down â€” at least a little. The bus, however, will still go off the cliff. Only the Tea Party is saying â€” in fact, yelling â€” to hit the brakes. Theyâ€™re right, and they will be vindicated. The only question is this: Will Americans wake up before itâ€™s too late?
16 Oct 2013
Jim Geraghty (via email) explains why democrats think they don’t need to compromise.
[T]he president probably doesn’t really want a default . . . but that doesn’t mean he’s willing to do much to avoid one. He’s probably confident he’ll win the blame game afterwards — he has good reason to think that! — and this scenario would undoubtedly give him a clear, concise message from here until November 2014: “House Republicans destroyed the economy.” In fact, from November 1, 2013 until January 20, 2017, President Obama would cite his built-in excuse:The U.S. government’s failure to pay money it owes did irrevocable damage to the confidence of investors around the globe, an obstacle that not even his enlightened, innovative, unprecedented, wise, and munificent policies could overcome.
This is what happens when you have a bunch of elected leaders who are so convinced they can win a crisis that they aren’t that interested in preventing the crisis. Or that they seem to welcome crises, believing they’re all opportunities in disguise.
This ultimately all can be laid at the feet of the mainstream media, or whatever you like to call it these days: The New York Times, the Associated Press, Time, the network news crews, and so on. They’ve created a political environment of near-zero accountability.
We live in an atmosphere where Democrats aren’t worried about any of their decisions backfiring, because they know the mainstream coverage will always give them the benefit of the doubt, hammer their opponents, and gloss over or downplay their worst moments. The flip side of the coin is a “Tea Party caucus” (for lack of a better term) that has absolutely no fear of getting bad press — because they feel/suspect/know they’ll get negative coverage no matter what they do. Most of these guys shrug at the Morning Joe panel unanimously denouncing them as fools and unhinged extremists, because they think the only way that panel won’t denounce them as fools and extremists is if they stop being conservatives. A lot of those House members feel they might as well vote their principles and draw the hardest line possible — because if you’re going to get bad coverage, you might as well get bad coverage while fighting for a good cause.
21 Mar 2013
Juanita Tudor Lowrey, 86, receives a federal pension for being the daughter of Civil War veteran Hugh Tudor.
One squishy liberal I know was posting an editorial on Facebook yesterday which complained that the government was not doing enough for veterans.
Why! In fact, the government in 2013 is still actually paying survivor benefits to two (or possibly 10) living offspring of veterans of the War Between the States.
The Des Moines Register notes:
The Civil War payments are going to two children of veterans â€” one in North Carolina and one in Tennessee â€” each for $876 per year.
Surviving spouses can qualify for lifetime benefits when troops from current wars have a service-linked death. Children under the age of 18 can also qualify, and those benefits are extended for a lifetime if the person is permanently incapable of self-support due to a disability before the age of 18.
Take Mrs. Lowery above:
(Her father, Hugh) Tudor moved with his unit through Kentucky and Tennessee to the East Coast. He probably would have participated in Gen. William Tecumseh Sherman’s march to the sea except that an apparent case of the measles kept him back.
Born in Iowa in 1847, the son of Welsh immigrants lived in Missouri most of his life. That he has a daughter proudly talking about him in the year 2012 is a remarkable mathematical stretch, but not a stretch of the truth.
After the war, Lowrey’s father settled in Dawn, Mo., a farming community south of Chillicothe, with his wife, Elizabeth Watkins. They had been married 50 years when she died in 1917. They had no children.
Three years later, at age 73, Tudor married 36-year-old Mary Morgan, who hadn’t been married before but who had known “Mr. Tudor” her whole life.
Besides romance, Lowrey says, probably there were practical concerns. He likely needed a housekeeper and she security. And it seemed he still fancied having children.
Indeed, to the new union came two daughters, HuDean Grace in 1924 and Juanita Mary in 1926.
13 Mar 2013
Despite President Obama’s recent dinner with Republicans, it is increasingly obvious that Barack Obama has no real intention of compromising with the GOP in order to achieve the so-called “Grand Bargain” that would reduce entitlement spending, increase revenues, and begin balancing the federal budget.
Politico reports on one prominent Republican’s congressman’s encounter with the president.
House Majority Whip Kevin McCarthy (R-Calif.), the third-ranking House Republican, told us about an exchange he had with Obama at Saturday nightâ€™s white-tie Gridiron dinner. During a break in the program, McCarthy saw an empty chair next to Obama and decided to seize the chance. Surprised Obama wasnâ€™t working the room, and thinking the president really is a loner, McCarthy walked up to the head table. He found the president was reading his BlackBerry. …
â€œIâ€™m waiting for my dinner invitation,â€ the Republican joshed to Obama, referring to the presidentâ€™s recent evening out with Republican senators. â€œI listen to Paul,â€ Obama replied, according to McCarthy, referring to House Budget Chairman Paul Ryan. Then, in what McCarthy took as a reference to a political charm offensive, he recalled Obama saying, â€œYou guys give us too much credit. Weâ€™re not doing all that stuff you think we are.â€ As told by McCarthy, Obama then said that if Republicans are going to get entitlement reform, â€œYou need me.â€ As McCarthy walked away, the congressman thought: â€œHeâ€™s still a law professor. Heâ€™d rather lecture you and put a red mark on your paper than talk to you.â€
Rep. McCarthy’s aperÃ§u appears to be reinforced by Obama’s subsequent interview with George Stephanopoulos, in which the President openly stated that he was not interested in balancing the federal budget “just for the sake of balance.”
Obama stressed that what matter to him was how the budget was balanced, not that it should be balanced. What he cares about is sticking to his left-wing ideological guns. Obama clearly intends to do nothing contrary to his class warfare agenda to restore economic confidence and avert fiscal disaster.
Really, though, Barack Obama is much worse than he appeared to Rep. McCarthy. His loyalty to theory obviously crosses the border dividing advocacy from action. And Barack Obama’s character is much more that of the fanatic than the contemplative intellectual. What has going on in Washington during the Obama Administration has not been a panel discussion or a colloquium. The administration has proceeded ruthlessly on every front simply to impose its will and get its way. What is most striking has been the absolute unwillingness of this President to subordinate his ideological agenda to economic reality.
Obama’s intransigence and complete indifference to consequences identify him really as a terrorist, rather than a mere theorist and professor. If Barack Obama is a professor, he is a professor resembling Peru’s Abimael Guzman, the founder of that country’s Shining Path guerilla movement. In the final analysis, President Obama has adopted a desperate modus operandi consisting essentially of holding a loaded gun aimed at the economic well-being of Americans and declaring himself perfectly willing to pull the trigger if his political opponents fail to surrender to his demands for an enormous payoff consisting of drastically increased taxes on businesses and upper income Americans.
We can only hope that Republicans recognize that nothing positive can possibly be gained by negotiating with terrorists.
27 Feb 2013
Bastiat Institute (on Facebook)
23 Feb 2013
Yuval Levin puts the oh-so-terrible impact of the automatically-triggered sequester into perspective. It doesn’t shut down the federal government. It does not starve the poor or leave America defenseless. It doesn’t even really reduce federal spending. It merely slightly slows already budgeted spending.
Letâ€™s get a grip. In its first year, fiscal year 2013, which ends September 30, the sequester would involve a total of $85 billion in spending cuts. Thatâ€™s a reduction of 3% from what federal spending otherwise would have been this year. But even that significantly overstates the effects the sequester would actually have this year. The federal government is so lumbering and huge that it canâ€™t even reduce its own spending that quickly. Thatâ€™s why â€œfirst yearâ€ cuts are always so difficult in even the most fiscally conservative budget proposals. The Congressional Budget Office (on page 11 of its latest budget outlook, published earlier this month) estimates that while FY 2013 spending will ultimately be reduced by $85 billion, â€œdiscretionary outlays will drop by $35 billion and mandatory spending will be reduced by $9 billion this year as a direct result of those procedures; additional reductions in outlays attributable to the cuts in 2013 funding will occur in later years.â€ So in this fiscal year, we would actually be looking at a $44 billion spending cut, or less than a 1.5% reduction from what federal spending otherwise would have been. It would mean that federal spending in 2013 will be about $3.553 trillion. In 2012, federal spending was $3.538 trillion. Yes, that means that even with the sequester we will be spending slightly more in 2013 than we did in 2012. In fact, we will be spending more than we did in any year in American history except for 2011 (when we spent $3.598 trillion).
Democrats and their media allies will be blaming Republicans, if the Sequester comes to pass, but Bob Woodward (no Republican) points out the truth.
What is the non-budget wonk to make of this? Who is responsible? What really happened?
The sequester and the debt ceiling, explained:â€‰President Obama and lawmakers are facing several important fiscal deadlines. One is to avoid the $1.2 trillion in spending cuts included in sequestration and another is raising the countryâ€™s debt ceiling. Here is a look at some of the issues involved in these two fiscal challenges.
The finger-pointing began during the third presidential debate last fall, on Oct. 22, when President Obama blamed Congress. â€œThe sequester is not something that Iâ€™ve proposed,â€ Obama said. â€œIt is something that Congress has proposed.â€
The White House chief of staff at the time, Jack Lew, who had been budget director during the negotiations that set up the sequester in 2011, backed up the president two days later.
â€œThere was an insistence on the part of Republicans in Congress for there to be some automatic trigger,â€ Lew said while campaigning in Florida. It â€œwas very much rooted in the Republican congressional insistence that there be an automatic measure.â€
The president and Lew had this wrong. My extensive reporting for my book â€œThe Price of Politicsâ€ shows that the automatic spending cuts were initiated by the White House and were the brainchild of Lew and White House congressional relations chief Rob Nabors â€” probably the foremost experts on budget issues in the senior ranks of the federal government.
Obama personally approved of the plan for Lew and Nabors to propose the sequester to Senate Majority Leader Harry Reid (D-Nev.). They did so at 2:30 p.m. July 27, 2011, according to interviews with two senior White House aides who were directly involved.
Nabors has told others that they checked with the president before going to see Reid. A mandatory sequester was the only action-forcing mechanism they could devise. Nabors has said, â€œWe didnâ€™t actually think it would be that hard to convince themâ€ â€” Reid and the Republicans â€” to adopt the sequester. â€œIt really was the only thing we had. There was not a lot of other options left on the table.â€
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