Tag Archives: economics

Federal Debt Ceiling

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The Progressive-Democratic Party says they’ll refuse to negotiate on raising the debt ceiling. Not at all. Those politicians are looking to hold our nation’s weal and our national security hostage against their demand to spend, spend, spend.

Republican Party politicians—at least those in the House and some of them in the Senate—insist that the debt ceiling can’t be raised without agreement on spending cuts in the next and subsequent budgets: not agreement to talk about cuts, but actual, specific cuts.

These Leftist politicians insist that the debt ceiling is solely about current bills that must be paid and that future spending questions—cuts or otherwise—are separate questions and must be negotiated separately. This is badly mistaken.

Today’s debt ceiling problem is the result of past failures to cut spending: failures to agree to do more than just talk about cuts and, where cuts actually were agreed, failures to honor those agreements. The next budget’s spending will impact the next debt ceiling and create pressure to raise the ceiling again. Failure to accept, or even to recognize, the relationship between a debt ceiling and budgeting just leads to functionally automatic debt ceiling raises and so functionally automatic debt increases.

Current debt ceilings and future spendings are inextricably intertwined. The Republicans in the House need to stand tall and not allow any debt ceiling increase without agreement to specific, measurable cuts (not reductions in increases) in future budgets’ spending on specific programs. Senate Republicans need to find backbone and stand tall on this pairing, also.

Progressive-Democrat refusal to negotiate on this puts our nation’s debt crisis squarely on their backs, and no place else. Their refusal to negotiate is just their demand to continue spending us average Americans‘ money in ever increasing amounts, their demand to drive our nation ever more deeply into debt—demands born of the irrational concept that money can be created out of the æther with no economic consequence.

Lies of the President?

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President Joe Biden (D) claimed, as a result of the latest inflation report, that food prices are falling.

The BLS, however, actually said this:

The food index increased 0.3 percent over the month [of December] with the food at home index rising 0.2 percent[.]

And this:

BLS data shows the “food at home” index rose 0.2% in December and 11.8% in the past year. Food away from home rose 0.4% in December and 8.3% in the last year.
“The index for cereals and bakery products rose 16.1 percent over the year. The remaining major grocery store food groups posted increases ranging from 7.7 percent (meats, poultry, fish, and eggs) to 15.3 percent (dairy and related products)[.]”

And this:

Meats, poultry, fish, and eggs rose 1% in December and 7.7% in the last year. Dairy and related products prices declined 0.3% in December but rose 15.3% in the last year. Fruits and vegetable prices declined 0.6% in December but rose 8.4% in the last year. Nonalcoholic beverages and beverage materials prices rose 0.1% in December and 12.4% in the last year. BLS’ “other food at home” category saw a 0.4% increase in December and a 13.9% increase in the last year.

When that flood of data came out, Biden reclamaed, and acknowledged in a speech Thursday that food prices did rise in December, but lauded the slower increase.

Oops.

Some will insist that the dichotomy between Biden’s initial claim and reality is further evidence of his decline. Politicians of the Progressive-Democratic Party and their Leftist supporters will insist he’s in full possession of his faculties (perhaps harkening back to his faculty status at UPENN [/snark]).

Taking the Progressive-Democrats and the Left at their word, though, would mean that Biden is openly lying about food inflation.

Go figure.

Pretty Words

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In remarks prepared for Tuesday’s Central Bank Symposium that Sweden hosted, Federal Reserve Chairman Jerome Powell had this to say, among other things:

Mr Powell said he believes the “benefits of independent monetary policy in the US context are well understood and broadly accepted.” He also said grants of independence to regulatory agencies should be “exceedingly rare, explicit, tightly circumscribed, and limited to those issues that clearly warrant protection from short-term political considerations.”
In exchange for such autonomy, Mr Powell said the Fed “should ‘stick to our knitting’ and not wander off” into addressing policy issues that aren’t directly linked to its mandate to keep inflation low and to support a strong job market.

And

“Without explicit congressional legislation, it would be inappropriate for us to use our monetary policy or supervisory tools to promote a greener economy or to achieve other climate-based goals,” he said. “We are not, and will not be, a ‘climate policy maker.'”

Does Powell mean these words? And if he does, can he enforce them? Hope springs eternal….

Rules and Defense Spending Cuts

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The House—in particular, the majority Republicans—along with too many so-called defense journalists are having trouble with a rule that potentially leads to defense spending cuts, a particular anathema in today’s environment of a Russia at war and a People’s Republic of China threatening war.

However, the fact is defense spending has always been vulnerable to cuts, particularly by the Progressive-Democratic Party and its predecessor Democratic Party. The proposed rule just makes the potential explicitly stated. But it does not mandate defense spending cuts; it mandates spending cuts in one (or more) places if there are to be spending increases in other places. Quoting from the proposed rules:

Initiatives to Reduce Spending and Improve Accountability. Subsection (a)(1) replaces current “pay-as-you-go” requirements with “cut-as-you- go” requirements. The provision prohibits consideration of a bill, joint resolution, conference report, or amendment that has the net effect of increasing mandatory spending within a five-year or ten-year budget window. This provision continues the current practice of counting multiple measures considered pursuant to a special order of business which directs the Clerk to engross the measures together after passage for purposes of compliance with the rule and provides a mechanism for addressing “emergency” designations.

And

Subsection (e)(2) establishes a point of order against consideration of a bill or joint resolution reported by a committee (other than the Committee on Appropriations) or an amendment thereto, or a conference report thereon, which has the net effect of increasing direct spending in excess of $2,500,000,000 for any of the four consecutive 10 fiscal year periods beginning with the first fiscal year that is 10 fiscal years after the current fiscal year. The levels of net increases in direct spending shall be determined based on estimates provided by the chair of the Committee on the Budget.

And

Spending Reduction Amendments in Appropriations Bills. Subsection (f) provides for spending reduction account transfer amendments and requires a spending reduction account section to be included in all general appropriations bills.

There’s nothing in there that mandates cuts in defense spending. All spending, though, needs to be up for discussion in light of the current Progressive-Democratic Party-driven economic condition of our nation, as Freedom Caucus Founder, Congressman Jim Jordan (R, OH) has pointed out. That I—and lots of others—disagree with not continuing to increase defense spending in these parlous times simply means that we need to make our case instead of relying on inertia to carry it. And refreshing the case is entirely good.

In the event, the rules package was passed without significant change.

The rules as proposed can be read here.

Yes, and No

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Company employees are getting pay raises just for staying on the job rather than moving on to other endeavors.

Wages for workers who stayed at their jobs were up 5.5% in November from a year earlier, averaged over 12 months, according to the Federal Reserve Bank of Atlanta. That was up from 3.7% annual growth in January 2022 and the highest increase in 25 years of record-keeping.

It’s also the case that new hires are getting bigger signing bonuses, initial salaries, and more perks for joining the company.

However, this claim by The Wall Street Journal (at the link above) is mostly backwards in the present environment:

Faster wage growth is contributing to historically high inflation….

It’s true that increasing wages—increasing labor costs generally—feeds into inflation as companies have to raise their prices when labor costs eat too far into their profit margins. However, as WSJ also noted,

Prices rose at their fastest pace in 40 years earlier in 2022.

That sharp rise in inflation actually began before the sharp rise in wages, and it has far outstripped the rise in wages: 2022’s inflation peaked above 9%, and it’s still around 7%. The current wage increase is only a nominal increase. The real change in wages, what real people spend on real necessities and wants, has been negative: that 5.5% nominal increase in November, compared with November’s 7.1% inflation for instance, actually represents a 1.6% decrease in actual buying power for us average Americans.

The fact is that the current period of high inflation is driving the rise in labor costs, not the other way around.