Archive for the ‘Debt – Deficit’ Category

About those “non-essential” government employees…

January 3, 2019

The current partial government shutdown showcases one of my hot-button issues.

Best that I can tell, about 1 million government employees are impacted: about half of them are “essential” employees who must report to work and will be paid when the budget is resolved.

The other 500,000 are classified as “non-essential” … they get to stay home for the duration … and, will also be paid when the budget is resolved.

That raises 2 questions:

(1) why should non-essential employees get a better deal than essential employees (who have to work for their pay)?

(2) Why do non-essential employees ever have to report to work, and why do they ever get paid?

As I’ve said, I’ve been on this issue for awhile … and the shutdown gives me an opportunity to reprise a post on the subject from last winter … when you read “snow storm”, simply substitute the word “shutdown”.

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It’s snowing in DC … “non-essentials” need not report.

It’s snowing in DC today … err, kinda.

Not much on the ground … temp is 34 degrees … roads are clear … but those AccuWeaterher folks are saying more snow is coming.

Good enough for the Feds … to shut the government down.

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Archive photo … not from today!

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Just heard my absolute favorite public service message on TV:

Due the inclement weather, non-essential Federal government workers do not have to report for work today.

Maybe the Feds can use the snow storm to solve the budget bruhaha … here’s how.

(more…)

Fed Watch: What’s the impact of 1/4 of 1% interest rate increase on you (and me)?

September 22, 2015

Last week’s Federal Reserve action (err, make that inaction) caused a stir in the financial markets.

Common view was: ” geez, is the economy so bad that it can’t absorb a measly 25 bps increase in interest rates?”

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Source

In yesterday’s post, I put the number in context, illustrating that the economic cost of a measly .25%  just on servicing the national debt is about $45 billion ( .25% times $18 trillion) ….  equivalent to roughly half of the Federal government’s annual cost for ObamaCare.

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Today, let’s take a couple of more views of the 1/4 of 1 % …. the impact on household incomes.

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Why aren’t Dems boasting about the jobs they “created”? I’ve got a hunch …

October 27, 2014

Last week, the NY Times took aim at the Obama-deniers – the Dem Senatorial candidates who wont even admit that they voted for the guy (even though they voted with the guy over 90% of the time).

Specifically, the Times blasted:

But one of the reasons for his unpopularity is that nervous members of his own party have done a poor job of defending his policies over the nearly six years of his presidency, allowing a Republican narrative of failure to take hold.

Few voters know that the 2009 stimulus bill contributed heavily to the nation’s economic recovery, saving and creating 2.5 million jobs.

I can nit pick that it should be “recovered” not created … and I could point out that full-time jobs are being replaced with part-time jobs … and I could pile on by mentioning that most of the jobs are in the low pay hospitality and retail industries.

But, I won’t do that, because I want to make another point.

 

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Let’s flashback to the Obama Stimulus …

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Nums: About the Federal debt limit …

October 10, 2013

Great infographic from CBC News … re: the U.S. Debt limit.

Takeaways below the chart …

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As commonly known, the debt limit has surged under both Bush and Obama.

The debt to GDP ratio has soared under Obama … after being flat for about 20 years.

Of course, part of the ratio increase is tied to the denominator … the debt has increased faster than the slow economic recovery.

Biggest surprise (to me) is that The “inflection point” – when the debt really started to takeoff was during the Reagan presidency.

So what?

Upward trajectory has to end some day, right?

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click to play with the infographic … worth browsing.

 
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Deficit: Simpson-Bowles … be careful what you wish for, because you might get it.

March 28, 2013

Last week with Ryan & the Dems offering dueling budget plans, there was renewed chatter: “Why don’t they just implement Simpson-Bowles?”.

It’s usually stated in a way that it’s a painless gimme.

The convenient compromise.

My hunch: About as many people read the Simpson-Bowles Report as read the ObamaCare law.

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I expect that S-B will become a template for any “grand bargain” … so I started refreshing my memory

Here’s what you need to know …

(more…)

Let ’em eat cake: Michelle O says “rock on” …

March 11, 2013

Let me get this straight …

The Sequester is causing unprecedented Fed fiscal heartburn.

So bad, the public tours of the White House have been cancelled … saving a reported $75,000 weekly.

No place else to look for scratch.

Not to worry, though, the party lights will still be shining bright at the White House.

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Here’s what’s going down …

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Forget Sequestration … here’s something to worry about.

March 8, 2013

Liberal economists say not to worry since interest rates are so low … take all the cheap money you can get.

So, the Feds have been piling on debt … at an average cost of about 2%.

Doing some arithmetic, the cost to service the debt is about $350 billion annually … about 10% of Federal spending.

Here’s the rub …

About half of the debt is short-term … less than 3 years.

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Source: Strategic Research Partners

So what?

What if interest rates were to jump back to more historical levels …. say 6%.

Boom.

Suddenly, servicing the debt would have an annual downstroke of over $1 trillion.

Makes the Sequester look like a walk in the park, doesn’t it?

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Barack Obama, Derek Bell … and “Operation Shutdown”

March 7, 2013

Last Saturday, my son forwarded a friend’s Tweet to me:

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Hmmm.

Started me thinking … Sequester announced on Friday … slow down on Saturday … coincidence?

Then, Obama announces that he’s shutting down White House tours because of the Sequester – the Presidential version of taking his bat & ball and going home.

Wait a second: I’ve seen this play before … bat & ball, Operation Shutdown.

Of course.

It’s the Derek Bell story.

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The year was 2002.

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WaPo: Public SUPPORTS the Sequester’s budget cuts almost 2-to-1 …

March 6, 2013

Hot off the wire …

Despite the Administration’s dire warnings, the release of jailed  criminal immigrants and the slower-than-usual TSA checks …

The  Washington Post is reporting survey results indicating that 61% of folks support the Sequester’s budget cuts overall … though 60% oppose the cuts to military spending.

Said differently, folks overwhelmingly support the non-military donestic spending cuts.

That’s huge!

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Here are some interesting details …

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It’s snowing in DC … “non-essentials” need not report.

March 6, 2013

It’s snowing in DC today … err, kinda.

Not much on the ground … temp is 34 degrees … roads are clear … but those AccuWeaterher folks are saying more snow is coming.

Good enough for the Feds … to shut the government down.

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Archive phote … not from today!

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Just heard my absolute favorite public service message on TV:

Due the inclement weather, non-essential Federal government workers do not have to report for work today.

Maybe the Feds can use the snow storm to solve the Sequester bruhaha … here’s how.

(more…)

Kerry threatens 6,000 teachers’ jobs … Where’s the outrage?

March 4, 2013

Last week, Secretary of Education Arne Duncan was shrilling on behalf of the Chicken Little crowd that because of the Sequester  40,000 teachers would lose their jobs.

His claim was quickly debunked, but he left a lasting impression .. on me, at least.

“Dollars” don’t have emotional impact any more.

So, let’s start thinking in terms of full-time teacher equivalents (FTTEs).

Duncan got his estimate by assuming that an average teacher makes $70,000.

Maybe in Chicago they do.

But, according to PayScale.com the national average  is in the mid-40s.

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Let’s do a hard round for arithmetic convenience and call it $50,000.

Here’s what Kerry did, evaluated using the new metric full-time teacher equivalents (FTTEs) …

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Ode to a billion …

March 1, 2013

A billion is a difficult number to comprehend,

To put a billion in perspective, consider …

A billion seconds ago it was 1981

A billion minutes ago Jesus was alive.

A billion hours ago our ancestors were living in the Stone Age.

A billion days ago no-one walked on the earth on two feet.

A billion dollars ago was only 8 hours and 20 minutes, at the rate our government is spending it.

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Think about that the next time a politician casually drops the word “billion”.

Source: viral email

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Follow on Twitter @KenHoma                         >> Latest Posts

Obama was wrong, Annie was right … case closed!

March 1, 2013

Yesterday, while the President was ringing Sequester Armageddon alarm bells, Annie was  pitching calm and confidence.

The sun’ll come out tomorrow
Bet your bottom dollar that tomorrow there’ll be sun
Just thinkin’ about tomorrow
Clears away the cobwebs and the sorrow till there’s none

When I’m stuck with a day that’s gray and lonely
I just stick out my chin and grin and say

The sun’ll come out tomorrow
So you got to hang on till tomorrow, came what may
!

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If you need an upper today …

click to listen it’ll make you feel better, for sure.

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I say, Annie for President !
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Follow on Twitter @KenHoma            >> Latest Posts

Fugetaboutit: Maybe 40,000 teachers won’t lose their jobs …

February 28, 2013

Arne Duncan – Secretary of Education – has been the  one Obama cabinet member who seemed competent to most people.

Then, he jumped on Obama’s Sequester Armageddon train, claiming that:

  • 40,000 teachers were going to lose their jobs, and
  • School districts had already started laying off teachers because of the Sequester

Oops.

That earned the dude 4 Pinocchios from the Washington Post for “Significant factual errors and/or obvious contradictions.”

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Here’s the real story …

According to the Post’s factchecker

Regarding the 40,000 jobs:

An aide to Duncan described it as a “rough back-of-the-envelope calculation,” derived by dividing the average pay and benefits of a teacher — $70,000 — by the amount — $2.8 billion — that needed to be cut in education programs.

But, school districts and states may find many ways to juggle funds or reduce expenses to avoid losing many teachers, which is what has happened during previous periods of financial stress.

Keep in mind that local taxes (i.e. real estate taxes) fund about 90% of teachers. … and, remember that most districts are now bloated with administrators feeding the Federal bear with paper.

Regarding the layoffs already occurring:

The Education Department for days was unable to cough up the name of a single school district where these notices had been delivered.

Then, Duncan appeared before the White House press corps and produced a name — Kanawha County in West Virginia.

But, no one in the county seemed to know what Duncan was talking about, including the education reporters who cover the school district for the Charleston, W.V., newspapers.

“There’s very little sequestration-related panic, at least on the education side of things,” one reporter said.

Our colleague Lyndsey Layton helped unravel the mystery.

She discovered that these were not layoffs, but rather “transfer notices” sent to 104 Title I teachers for reasons unrelated to the sequestration cuts.

In other words, Duncan was peddling a made-up story.

Good luck rebuilding your cred, Arne.

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Follow on Twitter @KenHoma             >> Latest Posts

Ready to Rumble: Woodward vs. Obama (and the rest of the media) …

February 28, 2013

Perhaps, the first break in the mass media ranks.

In a Washington Post blog post, famous journalist Bob Woodward:

  • Repeated his claim that the Sequester idea came from Obama and his sidekick Jack Lew
  • Declared that Obama is now constantly moving the Sequester’s goalposts

Well, that didn’t sit well with the White House.

Woodward told CNN that a “very senior person” at the White House warned him in an email that he would “regret doing this,”

Uh-oh.

Woodward countered on MSNBC, calling Obama’s hysterical Sequester claims “…  a kind of madness that I haven’t seen in a long time.“

click to view

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I don’t think this bruhaha is over.

Team O isn’t attacking Rush or Hannity … they’re shooting at a journalistic institution.

This one will be fun to watch.

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Want to read the transcript?

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Want to know the difference between the private sector and the government?

February 27, 2013

Today, a couple of big Wall Street firms announced another round of cuts:

  • Citigroup plans to slash 11,000 jobs and close branches worldwide as part of a broad restructuring effort it hopes will save about $1.1 billion in expenses,
  • JPMorgan Chase became the latest Wall Street firm to scale back in an uncertain economy, announcing plans Tuesday to save $1 billion through various costs cuts and about 4,000 job reductions.
  • Goldman – which has already let 3,300 employees go worldwide in the past two years – announced another round of layoffs to cut costs by a cool billion dollars

OK, so 3 companies are cutting over $3 billion in expense.

No gnashing of teeth ,,, no “the sky is falling”

Just “times are tough … we’ve gotta do it.”

No so on the Sequester front … apparently the torch has officially been passed from the 12-21-12 Doomsday crowd to Team Obama …

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Today was another day of .hysteria  … and silly rhetoric.

Allegedly, Obama said that – because of the Sequester – an already closed agency would have to be shuttered.

Say, what?

And, here’s the gem of the day …

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Nums: Are there more singles or married people?

January 22, 2013

Answer: Married folks … but not by much and the curves are soon to cross,

At the end of 2012, singles accounted for a record 49.6% of the population aged 16 years or older.

That’s up from 37.6% at the end of 1976.

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Source

Here are some more nums and the ‘so whats’ …

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Getting financial houses in order … and not.

January 16, 2013

Here are a couple of charts that put things in perspective

Ask yourself: Which one doesn’t isn’t like the others?

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Consumers have been deleveraging.

The ratio of mortgage debt to disposable income has retreated by 20 percentage points and continues to fall.

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More broadly, the percentage of disposable income servicing household debt is at a historic low …

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Broke: Geithner says so … but, Q4 tax revs are surging … huh?

December 27, 2012

Somebody explain this to me.

Turbo-tax Tim Geithner sent Harry Reid a conveniently timed  letter yesterday, reading in part:

Dear Mr. Leader:

I am writing to inform you that the statutory debt limit will be reached on December 31, 2012, and to notify you that the Treasury Department will shortly begin taking certain extraordinary measures authorized by law to temporarily postpone the date that the United States would otherwise default on its legal obligations.

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OK, the fact that the U.S. is broke and has exhausted its credit line is not new news.

Here  what I don’t understand.

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Eliminate the debt ceiling … say, what?

December 10, 2012

Even in 2010, when the national debt was “only” $13.7 billion

… the U.S. was the world’s #1 debtor in the sheer amount of debt

… and was approaching the top 10 as a % of GDP.

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Source

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The debt continues to grow in $$$ and as a percent of GDP

Here are the nums:

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Which is bigger: mortgage debt or student loan debt?

November 30, 2012

There’s an increasing amount of chatter re: student loan debt being the next financial bubble to burst.

In fact, according to the WSJ, student loan balances are approaching $1 trillion and have blown by auto loans and credit card balances.

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= = = = =

How do student loans rack up relative to home mortgages?
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Mid-week holidays, 3 day weekends … forget about it in Italy.

August 17, 2011

Feel a bit guilty reporting this from Myrtle Beach, but …

According to Reuters, one of the provisions in Italy’s debt-crisis-induced austerity program is …

A rule ensuring that non-religious public holidays, such as the June 2 anniversary of the founding of the Italian Republic, are celebrated on a Sunday to increase the number of working days in a year.

Geez, that means Italians will have to make do with their measly 6 weeks of paid vacation.

There’ll be flash mobs over this one, for sure.

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Source

>> Latest Posts

"Timmy, you’re doing a heckuva job"

August 10, 2011

During the Katrina fiasco, Bush gaffed by saying to the overwhelmed head of FEMA: “Brownie, you’re doing a heckuva job”

Over the weekend – after the U.S.’s first ever debt downgrade — President Obama asked Treasury Secretary to stay on until the election.

Is it just me, or was it Obama’s Brownie moment?

>> Latest Posts

The ratings downgrade … and Pascal’s wager.

August 9, 2011

One of the few things I remember from Philosophy 101 is Pascal’s Wager.

In a nutshell, it says that God may or may not exist … and we all have the choice to live righteously or sinfully.

Naturally, that creates a 2 X 2 matrix …

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What’s Pascal got to do with the debt downgrade?

Well, the President can choose to treat S&P’s downgrade as truth and start living a more righteous (debt-reduced) life … or, treat S&P as demonic frauds and keep living a sinful (free-spending) life.

Based on yesterday’s speech, the President is choosing the latter course.

Damn …

>> Latest Posts

The “Tea Party” downgrade ? … au contraire.

August 9, 2011

Blame the messenger (S&P). Blame the catalyst )Tea Party). Accept no blame )O&G).  Stall.  Offer no plan.

That seems to be the game plan.

Rick Santelli of CNBC – whose rant started the Tea Party movement – has hit the nail on the head again:

In the end, in the end we need to address problems we know exist. A Treasury Secretary or a President should be out here not fighting S&P, not grabbing the other coach and slapping him around, taking the umpire behind the barn. He should be getting the team psyched to overcome.

See I remember I had a professor in college. I wrote a great paper. Could never please this guy. But it made me better.

Don’t get caught up in the minutia. All this BS.

We’re better than this. We need to prove it.

We’re off the track. Whether we’re better than some other country or not, the real issue is we’re on the wrong path.

Blame the Tea Party? Geez,

If it wasn’t for the Tea Party, they would have passed the debt ceiling thumbs up, we would have been rated BBB.

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Best headlines so far:

  • BARACKALYPSE NOW
  • OBAMAGEDON

A must read:

>> Latest Posts

Debt downgraded … Congress leaves town … huh?

August 8, 2011

My family often recounts the stories of our family vacations being interrupted or cut short when a business crisis cropped up.

That was a price to be paid as a biz exec.

So, I shake my head in wonderment.

Might have expected that the President would call the Congress back from their August vacation for an emergency session to attack the debt-downgrade crisis.

Not so.

And, there doesn’t seem to be any public outrage.

Why?

I may scream later this month when Obama heads off for his annual Hyannis Port vacation.

>> Latest Posts

Oh, those painful budget cuts …

August 3, 2011

IBD put the debt deal’s spending cuts in perspective

“In the short term, the reported  “deep,” “sharp,” “slashing” cuts will still leave the federal government spending roughly 4% more in 2012 than it did in 2010, and 20% more than it did in 2008.

The deal’s $2.4 trillion in 10-year cuts amounts to a mere 5% trim off total projected federal spending during that time.

It’s like a 400-pound man boasting that he plans to drop 20 pounds over a decade, while his doctors warn about the risks of losing weight so fast.

Even calling these “cuts” is a bit of a stretch, since spending will continue to increase, just at a slightly slower pace.”

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Ken’s Take: Back-loaded, illusory cuts … strictly funny money.

Only upside: wild spending may have reached America’s consciousness.

We’ll see.

>> Latest Posts

From trillions to billions … those vanishing spending cuts

August 2, 2011

Punch line: The $1 Trillion (with a T) in spending cuts in the debt deal includes $7 Billion (with a B) in 2012 and $3 Billion (with a B)  in 2013.

I guess the program catches steam in 2014.

Yeah, right.

Talk about back-loading … and illusion.

According to the AP

The first phase of cuts would reduce spending by $917 billion over 10 years. A congressional committee would decide on a second phase of cuts totaling $1.5 trillion.

The first phase of a deal to raise the government’s borrowing limit would pose little threat to the economy in the short term because almost none of the spending cuts would occur before 2014.

Discretionary spending, which excludes Social Security, Medicare and Medicaid, would be cut by only $7 billion in 2012 and $3 billion in 2013, according a summary by Senate Democrats.

That’s a tiny fraction of the nation’s $14 trillion economy.

“That’s certainly inconsequential for the economy.”

As Gomer Pyle would say: “Surprise, surprise, surprise”.

>> Latest Posts

Boehner’s Powerpoint summary of the deal …

August 1, 2011

Here’s the link  (or click the slide)

Not a model of Powerpoint pitches, but gives the GOP-spun interpretation of the deal.

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Ken’s Take: Deal is – in the final analysis – much to do about nothing.  Apparent spending cuts are trivial in context and probably just illusionary.

The “teeth” are – at best – Halloween wax teeth.

Will the gov’t restrict defense spending if security is challenged? Or, if Obama goes off on some more “kinetic activities”?  I doubt it.

They tried to get cute by making the Medicare cuts “reduced reimbursement rates to doctors and hospitals”.  With more and more doctors refusing to take patients with Medicare (think Mayo clinic), the move would promote a mass exodus of docs from the system. That one won’t happen either.

Biggest gain is that folks are finally focused on the Administration’s unfocused and unbridled spending spending.

>> Latest Posts

What if the debt limit doesn’t get raised?

July 29, 2011

Amazingly, Sec. Geithner said last Sunday that there wasn’t a contingency plan in place – just in case the debt ceiling wasn’t raised.

That’s so unbelievable that I assume he was lying to avoid the politics of disclosing what would and would not be paid,

Good news for Geithner: the Bipartisan Policy Center & Bloomberg have put together an interactive planning tool so that he (and you) can use to prioritize claims … that is, who gets the $172.4 billion that will be coming in during August.

First, read through the excellent “Debt Limit Analysis” done by the Bipartisan Policy Center.

Then take a shot with the “Interactive Debt Prioritizer”.

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Finally, read the NYT’s summary Q&As re: the debt ceiling, default, etc.  I think it’s a pretty fair recap of the issues

Thanks to AS for feeding the lead

>> Latest Posts

What business would operate this way ???

July 28, 2011

I rarely agree with lib-pop-biz-observer Thomas Friedman, but he struck a chord in his op-ed  “Can’t We Do This Right?” by saying:

There is only one thing worse than Republicans and Democrats failing to agree to lift the debt ceiling, and that is lifting the debt ceiling without a well-thought-out plan and with hasty cuts totaling trillions of dollars over a decade.

What business do you know — that is still in business — that would operate this way: making massive long-term cuts, negotiated by exhausted executives, without any strategic plan?

It certainly wouldn’t be a business you’d expect to thrive.

First, the obvious: There are virtually no people with serious business experience sitting in on the negotiations.  And, the “CEO” has neither  business experience nor apparent business  instincts.

So, why would anybody expect the gov’t to run like a world-class business?

Following on to Friedman’s points, what well run business …

Operates with no budget? With no contingency Plan B’s?
(Note: Geithner said Sunday that there was no contingency plan … either there isn’t one or he’s a liar.  Either way, we lose.)

Creates 10 year financial plans with all the savings materializing in the out years? (Note: well-run businesses might look out 5 years in op planning – longer for capital planning – but will stack the savings in the “in” years to make sure they happen.)

The reality is that none of these Washington jabrones would cut muster as a corporate CEO – with hard metrics and accountability.

As a CEO buddy once told me : “Given his resume, I couldn’t get Obama approved to sit on my Board”.

>> Latest Posts

A breakthrough idea for generating more “revenue” …

July 28, 2011

First, a couple of tax facts …

  • Roughly 140 million individual  tax returns are filed each year … some, individual, some joint
  • Those returns report a bit over $8 trillion in AGI … about $5.3 trillion in taxable income
  • Those returns generate about $1 trillion in income tax “revenue” … that’s about 12.5% of AGI and about 19.5% of taxable income

The Federal deficit is about $!.6 trillion.

Let’s see how we can close that gap …

  • Option 1: Increase the average tax rate (on taxable income) by about 2.5 times … from 19.5% to about 45%
  • Option 2: Make every individual  filer pay an additional $1,000 – each joint filer $2,000
  • Option 3: Make everybody who voted for Obama (about 50 million people) pay an additional $3,000

I really like option 3 … since the vast majority of those folks like the job the President is doing, let them pay for it.

As long as they’re paying, I don’t care how much the President spends …

>> Latest Posts

From the “No Choice but to Withhold Granny’s Check” file …

July 27, 2011

Courtesy of http://dirtyspendingsecrets.com/

Sure wouldn’t want to cut any of these fine programs.

  • Incredibly, Washington is spending $2.6 million training Chinese prostitutes to drink more responsibly on the job.
  • Congress recently gave Alaska Airlines $500,000  to paint a picture of a Chinook salmon on a Boeing 737
  • Federal employees cost taxpayers $146 million each year when they upgrade to business class flights. The Government Accountability Office found that more than half of these upgrades were not properly authorized.
  • The government has spent $3 billion to re-sand our nation’s beaches. Advocates claim this prevents erosion and keeps the beaches attractive to tourists. But the National Oceanic and Atmospheric Administration says the sand does nothing to prevent erosion—and this sand gets swept out to sea just as easily as existing sand!

Pick your favorite …

>> Latest Posts

America’s Got Talent … and the Debt Crisis

July 27, 2011

AGT has  passed CSI to become my favorite TV show – at least, for now.

Watching last night, I was struck by two ironic commonalities between AGT and the President’s speech on Monday night.

First, the headline act was a guy named Professor Splash who belly-flopped 36 feet into a kiddie pool filled with 12 inches of water.

Great metaphor for solving the debt crisis, right?

Second, the winners are, of course, decided by folks phoning and emailing to vote for their favorites.

After performances, acts would wave the number of fingers that corresponded to their act’s ID number.

If only, the President had waved and shouted “ … and press the number 1 if you want balance and compromise” when he implored people to call and write to members of Congress.

Agree?

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P.S. Since you asked: My current favorite acts are Silhouettes – a choreographed group of kids that dance into amazing formations behind a screen to create artistic silhouettes …. and Prof. Splash – partly because I love the name.

I learned years ago that anybody can just start calling themselves “professor” and write a blog.

If this dude gets up to, say, 50 feet for his belly-dives, he deserves the $1 million.  And, if he dies trying, his widow should get the money …

>> Latest Posts

“Intransigence” or “Consequences”

July 26, 2011

In Spring 2009, President Obama bluntly, repeatedly, and publically chided Congress and the American people that “elections have consequences”.

Then, bolstered by a filibuster-proof majority in the Senate, he – with sidekicks Reid & Pelosi – rammed through ObamaCare with no GOP votes.  No compromise, except to sway Dem votes (think Cornhusker kick-back, Louisiana Purchase, Florida Medicare Advantage, union waivers, etc).

Yep, elections have consequences.

Last November, voters took the President’s words to heart and elected a majority GOP Congress – largely driven by angry tax payers who didn’t want to pay for Obama’s spending binge.

Now, the Congress refuses to jack up taxes … or, in Obama-speak, to increase revenues.

The President and Sen. Reid say the GOP Congress is being “intransigent”.

Hmmm.

I thought elections were supposed to have consequences …

>> Latest Posts

How’d we get in this fix? … Here are the nums re: the Fed’s spending binges.

July 25, 2011

Obama’s stump riff is that we’re in this debt-deficit mess because of 2 unfunded wars, an unfunded prescription drug plan, and the unfunded Bush tax cuts.

Oh, really?

Let’s look at the nums … starting with Bush’s last year – 2008.

A couple of takeaways:

  • No surprise, the big 3 – defense,  Medicare and Social Security – are roughly equal in magnitude and account for about 70% of gov’t spending
  • Bush handed off to Obama a deficit of roughly $500 Billion and a $10 Trillion national debt.
  • IMPORTANT: ‘Baked in’ to those numbers are Obama’s talking points: the wars, the Rx plan, and the tax cuts … more on that later.

That’s the static view.

For context, let’s look at Bush’s spending (in his last year) versus Clinton’s spending in his last year (2000):

                                            click to enlarge

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A couple of more takeways:

  • Bush increased spending over $1 Trillion (2000 to 2008)
    …OUCH!
  • Almost 1/3 of the increase was in defense spending … 2 wars will do that to you … especially when compared to Clinton’s skinnied down military (remember the “peace dividend” that Reagan handed Clinton?)
  • Over 1/4 of the increase was attributable to higher healthcare costs … a prescription drug plan and a touch of inflation will do that to you
  • Note: about $200 Billion of the increase is attributable to Welfare (think refundable tax credits) and Education (think NCLB)
  • Interesting (to me): The national debt grew by about $4.5 Trillion from 2000 to 2008 … to about $10 Trillion …  during the same period, tax receipts (“revenue” in Obama-speak) increased by about $500 Billion (according to the Tax Policy Center)
  • Conclusion: The increase in the debt / deficit during the Bush years was more than fully explained by the oversized spending … though marginal tax rates went down, tax receipts increased, offsetting some of the higher spending.

Now, keep in mind, that Obama inherited a national debt of about $10 Trillion and an annual deficit of under $500 Billion.

Also, keep in mind that the spending on the 2 wars and the Rx drug plan were baked into Bush’s final year’s numbers.

OK, now let’s look at the Obama years.

                                       click to enlarge

image

Well, well, well.

Total spending for the current year is projected to be almost $1 Trillion over spending in Bush’s last year … and, about $2 Trillion over Clinton’s last year.

Gawd, how can that be?

  • Again, keep in mind that the spending on the 2 wars and the Rx drug plan were baked into Bush’s final year’s numbers.
  • Still, defense spending increased by 28% (over 2008) … I guess doubling down on Afghanistan, initializing “kinetic activities” in Libya, and tripling the number of drone missile attacks will do that to you.
  • Healthcare is up over 25% … to be fair, there’s inflation in there, but there’s also the massive bureaucracy being built to run Obamacare…
  • Welfare is up over 25% in 2 years … think food stamps (and more food stamps)

So, there’s a roughly $5.5 Trillion projected increase in the national debt in Obama’s first 3 years …. or, $4.5 Trillion if you still believe that the Stimulus was a necessary and extraordinary budget item.

Double OUCH !

During the period 2008 to 2011, tax policy (i.e. rates, brackets and deductions) stayed essentially constant – remember that the Bush tax cuts were extended last December.

But, tax receipts went down from $2.524 Trillion in 2008 to $2.162 Trillion projected in 2011.  I guess a “making work pay” program, a  payroll tax holiday, and 9% unemployment will do that to you.

* * * * *

Bottom line: Readers know that I stay pretty close to this stuff.

Still, the numbers are mind-numbing … even to me.

Bush added a Trillion to the deficit over 8 years.  Obama did it in 3.

Bush added about $5 Trillion to the debt in 8 years.  Obama did it in 3.

Bush disappointed when it came to fiscal management.

But, Obama has literally spent us into a potential default.

He thinks the problem is accelerated depreciation on corporate jets and too little tax paid by the rich.

And, he doesn’t seem to understand – despite the Nov. elections –that tax  payers don’t want to pay for his spending binges.

I’m not very optimistic …

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The “Mother of All No Brainers” … say, what?

July 24, 2011

A real smart friend pointed me to a recent NYT Op-Ed by David Brooks titled The Mother of All No-Brainers … suggesting that it well summarized the destructive idiocy of the GOP for refusing to raise taxes in light of the debt crisis.

Oh, my …

Brooks general premise: “If the Republican Party were a normal party, it would take advantage of this amazing moment. It is being offered the deal of the century: trillions of dollars in spending cuts in exchange for a few hundred billion dollars of revenue increases.”

A couple of Brook’s arguments supporting the premise – with my take…

* * * * *

“The Democrats have agreed to tie budget cuts to the debt ceiling bill.”

Ken: For months, Obama demanded “a clean increase in the debt level” unencumered by spending cuts to narrow the deficit.

Even now, the Democrats have agreed to nothing.

A few floated leaks do not constitute an agreement … especially when Schumer & Pelosi run to the mics to say “over their dead bodies”

* * * * *

“Democrats have agreed not to raise tax rates.”

Ken: Au contraire.

First, there is the Dem obsession with pushing the upper brackets back “to the Clinton levels”.

An obsession as deep as the GOP’s obsession to just say no.

Second, it’s just semantics if you pare deductions (oops, I mean “loopholes”).

May be a good idea, but the point just isn’t true.

* * * * *

“Democrats have agreed to a roughly 3-to-1 rate of spending cuts to revenue increases.”

Ken: Again, Dems have agreed to nothing.  It’s vapor.

Further, the President’s last offer – according to him in his presser – was a 1 to 1 ratio.

* * * * *

“The Senate majority leader, Harry Reid, has talked about supporting a debt reduction measure of $3 trillion or even $4 trillion.”

Ken: Agree: “talked about supporting”.

Let’s see walk not talk.

And, don’t forget: “A federal budget compromise that was hailed as historic for proposing to cut about $38 billion (with a B) would reduce federal spending by only $352 million (with an M) this fiscal year, less than 1 percent of the bill’s advertised amount, according to the Congressional Budget Office.”

Fool me once … then don’t expect me to trust you next time.

* * * * *

“There are some Democrats in the White House and elsewhere who would be willing to accept Medicare cuts if the Republicans would be willing to increase revenues.”

Ken: Yeah, and there are some Republicans who support jacking up taxes.

To be fair, Dems did partially fund ObamaCare with $500 billion in Medicare cuts, demonstrating a willingness to whack away at the program.

But, I haven’t seen any specifics re: what they’re willing to cut this time around.

* * * * *

“The members of this (no new taxes) movement do not accept the legitimacy of scholars and intellectual authorities.”

Ken:  English translation –  “We’re smarter than you and we know it because, well, we’re smarter than you”.

How do jabrones who have never worked in the private sector, who sit relaxed in protected jobs-for-life, or who – in some cases – haven’t taken a single course in economics or business — qualify as “intellectual authorities”?

Geez.

* * * * *

“The members of this (no new taxes) movement have no sense of moral decency. A nation makes a sacred pledge to pay the money back when it borrows money.”

Ken: Excuse me ?

Remember the auto bailout?

The Administration subordinated secured creditors beneath their unsecured union cronies, making a complete mockery of established bankruptcy laws … and, oh yeah, violating a sacred pledge.

And, the President “can’t guarantee” Social Security Insurance payments to be disbursed from a Social Security Trust Fund.

So much for sacred pledges.

* * * * *

“The members of this movement have no economic theory worthy of the name.”

Ken:   How did that Keynesian Stimulus work out for you?

I know “we averted a catastrophe” (or did we “dodge Armegedon” that time, I forget).

The Stimlus was costly for sure  —  adding a TRILLION dollars to the debt.

The results were equivocal, at best … over $250,000 per job saved or created based on the Administration’s flakey numbers.

Question: If the Administration’s economic theory is so “worthy”, why did Summers, Romer, Goolsbee, Bernstein, and Orzag jump (or get pushed) off the ship?

Hmmm.

* * * * *

“To members of this movement, tax levels are everything. They are willing to cut education and research to preserve tax expenditures.”

Ken:  OK, keep education – even though tens of billions of spending doesn’t seem to be getting us anywhere.

Question: Do we really need 82 federal programs to improve teacher quality?

And, keep research, except, maybe for studies like “$2.6 million studying why Chinese prostitutes don’t drink more responsibly on the job”.

But please, at least read the GAO report that uncovered billions of dollars in “wasteful spending by the U.S. government due to duplicate work done by dozens of overlapping agencies on redundant and ineffective federal programs”.

* * * * *

The GOP has separated itself from normal governance, the normal rules of evidence and the ancient habits of our nation.”

Ken: I especially like the part about “normal governance”.

I guess the new normal is vilification of all dissenters as evil and stupid, “gun-to-head” problem-solving to avert catastrophes —  real or imagined, closed door decision-making by a handful of smarter-than-you politicos, and “pass it to see what’s in it”.

Maybe we need a new new normal.

* * * * *

“Independent voters will conclude that Republicans are not fit to govern.”

Ken: As the President used to say “elections have consequences”.

Last November, they voted that the Dems were’t fit to govern and elected a GOP-majority Congress that pledged not to raise taxes.

Now, those Congressmen are being demonized for keeping their pledges and promises.

Go figure …

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Geez, didn’t they see this coming?

July 22, 2011

Chart from the WSJ highlights the extent of the recent spending binge.

Bush pushed spending from 18% of GDP to 20% … ouch.

Obama has pushed it over 25% … OUCH!

His constituencies think it’s a great idea.

Taxpayers? Not quite so sure.

Rating agencies? Warning of downgrades.

Didn’t those jabrones see this coming?  Geez.
1downgrade
Source

>> Latest Posts

“The greatest wet blanket to business”

July 20, 2011

Casino mogul Steve Wynn lashed out at Pres. Obama’s anti-business rhetoric and actions.

Wynn’s comments are remarkable for 2 reasons.

First, he’s a Democrat whose family contributed to the Obama campaign and who is a staunch supporter of Harry Reid.

Second, based on my very small sample, he’s speaking for many CEOs who share the sentiments are afraid to speak out for fear of reprisals from an Adminstration that is ready and willing to go directly after industries (think oil companies and tanning salons), companies (think Boeing and Blue Cross of California), and individual CEOs (think Ed Whitacre – who was bounced from GM when he went lukewarm on the Volt).

I doubt Wynn will cause a bandwagon effect of CEO speak-outs … the CEOs will continue to lie low and just keep the lid on jobs …

* * * * *
Here’s the video and transcript of Wynn’s remarks

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>> Latest Posts

The last debt ceiling vote …

July 20, 2011

Bush was President.

All Dem senators voted against raising the debt ceiling … including Sen. Obama (D-IL)  and Sen. Biden (D-DE).

I guess where you stand depends on where you’re sitting …

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Source: Senate Web Site

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Reprise: Dogbert for President – His Tax Plan

July 12, 2011

This was originally posted July 30, 2008 as the Presidential campaigns were heating up … and has recently been one of the Homa Files most popular posts.

Since it’s particularly relevant during the current deficit debates… here it is again…

* * * * *

A few years ago I stumbled on a Dogbert cartoon. At the time it made me smile.

Today, the cartoon makes me nervous — very nervous.

Of course, the source of my angst is the Obama tax plan. But, my specific concerns aren’t the ones that most pundits dwell on.

* * * * *

Buying Votes

True, Obama did hijack Dogbert’s campaign strategy and plans to raise tax rates on the top 3% of income earners (individuals and couples earning over $250,000 annually) and to redistribute the “savings” via a new tax credit of $500 per person, or $1,000 per working family.

Cynics point out that in the good old days, Mayor Daley’s Chicago political machine could deliver a vote for a the price of a pack of cigarettes. Apparently the price of a vote has gone up more than the price of gasoline. At least votes are now “marked to market”. The Obama plan clearly sets the price at $500 (cash) per vote, with a perpetuity value of about $10,000 @ 5%.

* * * * *

Buying Old Folk’s Votes

And, Obama promises zero Federal taxes for seniors over 65 on income up to $50,000 .

Mark Penn, Hillary Clinton’s former chief strategist says: “The Obama camp hit a bull’s-eye with this proposal, which has little economic justification but is great politics.”
http://www.politico.com/news/stories/0708/12117.html

* * * * *

Upping High Bracket Marginal Rates

In a WSJ op-ed, Stanford economics professor Michael Boskin opines that despite the rhetoric to the contrary, Obama’s increases don’t just hit “rich” individuals. They also impact lot of small businesses and two-earner households in high cost-of-living areas.

Specifically, Obama would raise the top marginal rates from 35% to 39.6%, increase the tax rate on capital gains and dividends, and uncap Social Security taxes (which currently are levied on the first $102,000 of earnings).

When payroll and state income taxes are thrown in, Boskin estimates that the high bracket marginal rate goes to over 60% – with almost $2 of every $3 earned at the margin, going to the government for services and redistribution.

click to make table bigger

click to make table bigger

http://online.wsj.com/article/SB121728762442091427.html?mod=opinion_main_commentaries

* * * * *

Redistributing $131 Billion Annually

An analysis done by the Tax Foundation — a self-proclaimed non-partisan think tank – indicates that Obama’s plan — as proposed — would redistribute about $131 billion each year. Taking money from the undeserving rich, and giving it directly to the financially besieged middle (and lower) class).

Tax Foundation - Tax Policy Center Estimate
Source: Tax Foundation – Tax Policy Center Estimate

“Hard Numbers on Obama’s Tax Redistribution Plan
http://www.taxfoundation.org/publications/show/23319.html

* * * * *

My POV

1. On a philosophical level, I agree that the grossly uneven distribution of earning power in the US is a serious problem that needs to be fixed.

2. But, I don’t think that the problem of income inequality should be fixed via a tax system — which was originally intended to “tax & spend” efficiently on necessary common services — not to “grab and redistribute”. Direct transfers from one citizen’s pockets to another’s (e.g. refundable tax credits) are certainly the latter.

3. Except for the impact on small businesses, I can’t get too riled over marginal rate increases that start at $350,000; but I do think a “doughnut hole” payroll tax schedule is wacky and I think raising capital gains taxes during an economic slowdown is dangerous.

4 . My real issue: The numbers say that in Obama World, a minority of voting age Americans will be paying income taxes. That scares me. What’s to stop an income tax-free majority from continually voting to raise taxes on the tax-paying minority to fund an ever increasing potpourri of benefits or add to the redistribution pot.

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Corporate jets … “since John the Baptist”

July 8, 2011

Charles Krauthammer puts the President’s railing against corporate jets into perspective in today’s Washington Post:

What have been Obama’s own debt-reduction ideas?

In last week’s news conference, he railed against the tax break for corporate jet owners — six times.

I did the math.

If you collect that tax for the next 5,000 years — that is not a typo — it would equal the new debt Obama racked up last year alone.

To put it another way, if we had levied this tax at the time of John the Baptist and collected it every year since — first in shekels, then in dollars — we would have 500 years to go before we could offset half of the debt added by Obama last year alone.

* * * * *

>> Current Posts

Football, band, honors classes and hot lunches … here we go again.

July 6, 2011

When I was a kid, the local school board would biennially warn that football, the band, the honors program and hot lunches would be cut unless a levy was passed to boost real estate taxes.

I remember that – even as a kid – it sounded like a bunch of bull.

Sometimes the levies passed. Sometimes they didn’t.

Regardless of the vote, the stadium lights still glowed bright on Friday nights, the smart kids still got their honors courses, and the cafeteria kept serving up hot slop.

Today’s equivalent of football, band, honors and lunches was articulated at Pres. Obama’s press conference last week: college scholarships, food safety, medical research, etc.

Nothing else can possibly be cut.

Nope, it’s gotta be football, band, honors and hot lunches.

But, wait a minute.

What about  the $100 to $200 billion in wasteful spending that the GAO reported last last March:

WSJ, Billions in Bloat Uncovered in Beltway, March 1, 2011

A GAO report uncovered billions of dollars in wasteful spending by the U.S. government due to duplicate work done by dozens of overlapping agencies on redundant and ineffective federal programs

For example, the U.S. government has 15 different agencies overseeing food-safety laws, more than 20 separate programs to help the homeless and 80 programs for economic development.

The agency found 82 federal programs to improve teacher quality; 80 to help disadvantaged people with transportation; 47 for job training and employment; and 56 to help people understand finances.

The report took particular aim at government funding for surface transportation, including the building of roads and other projects, which the administration has made a major part of its push to update the country’s infrastructure. The report said five divisions within the Department of Transportation account for 100 different programs that fund things like highways, rail projects and safety programs.

The report chided the government over encouraging federal agencies to purchase plug-in hybrid vehicles while having policies that agencies reduce electricity consumption. It said government agencies have purchased numerous vehicles that run on alternative fuels only to find many gas stations don’t sell alternative fuels. This has led government agencies to turn around and request waivers so they didn’t have to use alternative fuels.

The GAO identified between $100 billion and $200 billion in duplicative spending.

GAO’s prior recommendations have generally been ignored or postponed by federal agencies and lawmakers, particularly when they could require difficult political votes.

Hmmm.

Just not hearing a lot about that report these days …

Nope, it’s gotta be football, band, honors and hot lunches.

* * * * *

Click to see the full report

image

Hey, let’s just split the tab down the middle …

July 2, 2011

Everybody knows one of these jabrones: they order apps, expensive wine (which you don’t touch), a high-priced entre, a fancy dessert (or two)  … and then have the gall to suggest splitting the bill down the middle.

Ouch.

Ratchet the game up a notch, and you get Thomas Sowell’s perspective on the debt limit:

What the national debt-ceiling actually does is enable any administration to get all the political benefits of runaway spending for the benefit of their favorite constituencies — and then invite the opposition party to share the blame, by either raising the national debt ceiling, or by voting for unpopular cutbacks in spending or increases in taxes.

The Obama administration is a classic example.

When all its skyrocketing spending bills were being rushed through Congress without even being read, the Democrats had such overwhelming majorities in both the Senate and the House of Representatives that Republicans had … no chance of stopping, or even slowing down, the spending of trillions of dollars.

Now that the bill is coming due for all that spending and borrowing, Republicans are suddenly being invited in to share the blame for either raising the national debt ceiling or for whatever other unpopular measures will be legislated.

“If you didn’t invite me to the big take-off, don’t invite me to the crash landing.”

This was Obama’s big, partisan spending spree, but “bipartisanship” requires Republicans to either split the bill or be blamed if the government shuts down or defaults.

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So much for consumer deleveraging …

June 9, 2011

In the 1960s and 1970s, consumer debt as a percentage of after-tax income averaged a bit over 60%.

Starting in the Clinton years – and gaining steam through the Bush years – the ratio doubled – as consumers took out easy money mortgages and credit cards.

The 2009 financial scare prompted a wave of debt-reduction, but it looks like the austerity wave is becoming passé.

* * * * *
According to the WSJ:

The economy is likely to be stuck with at best subpar growth until the private sector’s deleveraging, or debt-shedding, process is complete.

Households have made some progress lately, but this still looks to be in its early stages.

While debt as a percentage of after-tax income has fallen from its peak, it remains about 120% — well above the 89% it averaged in the 1990s.

And, there are signs that consumers are even starting to borrow again:

  • Consumer credit outstanding rose by $5.5 billion in April after a $6 billion increase in March.
  • Student-loan debt is at record-high levels
  • There has been an uptick in credit-card borrowing by cash-strapped consumers.

P.S. In Japan, deleveraging took the better part of 15 years.

[AOT]

* * * * *

Another Obama economist bites the dust …

June 7, 2011

According to Politico

Austan Goolsbee, chairman of the White House Council of Economic Advisers – and one of the crafters of the administration’s  Trillion Dollar-Stimulus plan — plans to resign this summer and return to teaching economics at the University of Chicago.

This past weekend, Goolsbee was pitching the administration’s  “bump in the road” response to May’s dismal jobs report. 

Sommers, gone.

Romer, gone

Bernstein, gone.

Goolsbee, gone.

Obama says: His economic program saved us from catastrophe. and is working just fine, thank you.

Yeah, right.

What happens if we crash into the debt ceiling?

May 24, 2011

Economist Alan Blinder’s WSJ op-ed put the debt ceiling issue into perspective:

Consider inflows and outflows of cash to and from the Treasury … at average fiscal 2011 rates, receipts cover only about 60% of expenditures.

So if we hit the borrowing wall traveling at full speed, the U.S. government’s total outlays — a complex amalgam that includes everything from Social Security benefits to soldiers’ pay to interest on the national debt — will have to drop by about 40% immediately.

A 40% shortfall translates to over $4 billion a day, including Saturdays and Sundays.

For openers, suppose the federal government actually does reduce its expenditures by 40% overnight.

That translates to roughly $1.5 trillion at annual rates, or about 10% of GDP.

That’s an enormous fiscal contraction for any economy to withstand, never mind one in a sluggish recovery with 9% unemployment.

Of course, Blinder insinuates that the risk is too great.

My view: gotta face the issue some day, why not now?

Tanning salons say thanks to S&P …

April 19, 2011

Can you imagine the amount of government scrutiny and pressure that will be laser-focused on S&P after the ratings agency responded to Obama’s “in your eye” speech by putting the United States of America on a rightly deserved credit watch?

It’ll be interesting to watch what Moody’s does.  On one hand, Moody’s completely missed the mortgage meltdown, so I’d expect them to be conservative and follow suit.

On the other hand, Obama’s BFF —  Warren “Please let me pay more taxes” Buffett — owns a big stake of Moody’s.  So, I’d expect some respectful crony capitalism.

For now, the tanning salons are finally out of the spotlight. 

First, the poker sites … now S&P.

Been a good week for the salons …

“The budget process shouldn’t be used to advance a social agenda” … oh, really?

April 8, 2011

President Obama – concerned that ObamaCare might be defunded —  is ranting that “The budget process shouldn’t be used to advance a social agenda.”

And, I haven’t heard any pundits call him on the obvious hypocrisy:

ObamaCare was passed using a Senate scheme called “reconciliation” so that it could be passed by a simple majority.

You may remember Harry Reid wrangling with the Senate parliamentarian over the rules.

You see, by Senate rules, reconciliation can ONLY be applied to budget matters.

Somehow, ObamaCare was ruled to be a budget matter requiring only a simple majority.

I guess ObamaCare isn’t a social agenda item when it’s passed, only when it’s being defunded.

Go figure …

87% agree: “A debt problem is a failure of leadership” … but, there’s a surprise twist

April 7, 2011

Yesterday, Freedomworks (a conservative org) released the results of a survey on the debt and deficit.

Folks were asked: Do you agree or disagree with the following statement?

“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure.

It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies…

Increasing America’s debt weakens us domestically and internationally.

Leadership means that ‘the buck stops here.’

Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren.

America has a debt problem and a failure of leadership. Americans deserve better.” 

A resounding 87% of the respondents agreed with the statement.

The percentage dropped to the high 50s when the statement was identified with its speaker: Sen. Barack Obama, Congressional Record, S.2237-8, 3/16/06