Tag Archives: spending

It Isn’t Your Money

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Or, gimme, gimme, gimme.

Treasury Secretary Jack Lew told “Fox News Sunday” that President Obama will neither sign government funding bills that slash domestic spending nor negotiate with Republicans over spending cuts to reduce the federal debt limit.

That’s not all.  He told ABC’s “This Week”

I think the president has made crystal clear, he’s not going to negotiate over the debt limit.

But he’s willing to “work with” all comers.  Sure.

This President, and his cronies in the Senate, are perfectly willing to blow up our credit rating (or what’s left of it after their last fiasco just a couple of years ago) and shut down the government if they’re blocked from taking more of your money away from you (in their demanded higher taxes) or taking more of your children’s money away from them (in their demanded continuing borrowing) and spending ever more of your money (their demanded spending increases).

All because these…politicians…think they know better than you—or your children—what that money should be spent on, and they’re convinced it’s their money and not yours in the first place.

Spinning

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From the National Republican Congressional Committee, and on the heels of President Barack Obama’s latest Presidential Bull on the economy, comes this compilation of the…pivots…that  Obama has made during his administration.

  • “Obama Aims to Shift Focus To Boosting Jobs, Economy” (Wall Street Journal, 7/18/13)
  • “Obama Pivots to Jobs Tour at End of Scandal Filled Week” (ABC News, 5/18/13)
  • “Obama’s Texas Trip An Attempt To Refocus On Jobs, Economy” (Washington Times, 5/8/13)
  • “Obama: State Of The Union To Focus On Jobs” (USA Today, 2/8/13)
  • “Obama Turns To Congress For Jobs Help” (The New York Times, 6/1/12)
  • “Obama Turns Attention To Economy After Fundraising Pitch” (Associated Press, 5/11/12)
  • “Fresh Off Debt-Ceiling Brawl, Dems Pivot To Talk About Jobs” (The Hill, 8/3/11)
  • “Obama To Focus On Jobs” (San Jose Mercury News, 1/23/11)
  • “Obama To Focus On Jobs, Spending In State Of The Union Speech” (The Tennessean, 1/27/10)
  • “Hill Democrats Set To Pivot To Job Creation” (Washington Times, 1/25/10)
  • “Obama Pivots To Jobs As Key Theme” (Politico, 1/8/10)
  • “Obama Turns Focus To Job Creation” (Associated Press, 12/5/09)

Sort of gives new meaning to the phrase “political spin.”

Detroit and the Nation

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In Detroit’s bankruptcy filing, Michigan Governor Rick Snyder (R) included a letter outlining his reasons for his approval of the filing.  Here are some of them [emphasis added].

  • The City’s unemployment rate has nearly tripled since 2000 and is more than double the national average.
  • Its citizens wait an average of 58 minutes for the police to respond to their calls, compared to a national average of 11 minutes.
  • The City’s police cars, fire trucks, and ambulances are so old that breakdowns make it impossible to keep up the fleet or properly carry out their roles.
  • The City has more than $18 billion in accrued obligations.
  • Detroit tax rates are at their current legal limits, and that even if the City was legally able to raise taxes, its residents cannot afford to pay additional taxes. Detroit simply cannot raise enough revenue to meet its current obligations….
  • The City’s population has declined 63% from its peak, including a 28% decline since 2000.
  • A decreasing tax base has made meeting obligations to creditors impossible.

Horribly high expenditures against a tax system that’s already very expensive for the citizens has driven Detroit into the ground and forced restructuring through bankruptcy.

What are the implications for the nation as a whole?

On the one hand, bankruptcy—legal bankruptcy—is not an option for the US.  Nations have no bankruptcy system available to them; all a bankrupt nation can do is to repudiate its debts or debase its currency, repaying with devalued (dollars)—to repudiate its debts through subterfuge.

Here lies the United States: we have horribly high expenditures (see Obamacare, Medicare, Medicaid transfer payments, Social Security, Federal public service union pensions, Stimulus spending, etc) against a tax system that is hammering the paying population into the ground while, by design, excluding half the tax base from tax obligations.   This combines to create on the national level massive annual deficits, exploding national debt, and increasing costs to borrow (presently low, Bernanke’s artificially suppressed interest rates will not be able to stop the market’s assessments of our national creditworthiness).

Detroit is the future of the United States under our current policies.  In that light, notice the loss of population as Detroiters fled the disaster—28% of its people just since 2000.  As our national disaster unfolds—unless we move to terminate our Federal government’s destructive policies and put aside our own disdain for work and responsibility—where will Americans go?

Greed and Bankruptcy

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Detroit filed for Chapter 9 bankruptcy last week when

…Emergency Manager Kevyn Orr’s attempt to reach out-of-court settlements could not overcome opposition from unions, retirees and a long list of lenders….”

Orr’s spokesman Bill Nowling had much of it right:

Pension boards, insurers, it’s clear that if you’re suing us, your response is “no.”  We still have other creditors we continue to have meetings with, other stakeholders….

But that’s only part of it.  The pensions and unions are owed the largest amount out of Detroit’s total $18 billion debt, but they’re not the only ones who were intransigent.  Bank of America and UBS AG agreed to a restructuring of the debt Detroit owed them (chump change alterations on less than $500 million of that debt), but they were nearly the only ones actually willing to deal.  Nearly all the remaining creditors each insisted, regardless of the city’s ability to pay, on holding out for their full cut, or as much of it as they could squeeze, and to hell with the rest of the creditors.

Effect of Quantitative Easing

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Martin Feldstein, Council of Economic Advisers Chairman under President Ronald Reagan, described some in a recent Wall Street Journal op-ed.

  • unemployment has declined to 7.6% from 8.2%
  • there has been no increase in the ratio of employment to population
  • no decline in the teenage unemployment rate
  • virtually no increase in the real average weekly earnings of those who are employed
  • decline in the number of people in the labor force in the past 12 months…exceeded the decline in the number of unemployed

And

The Fed’s forecast of substantial employment gains rests on the assumption that real GDP will grow by about 2.5% during the four quarters of 2013 and by more than 3% in 2014.  That would represent a substantial rise from the growth rates of less than 2% in 2012, 1.8% in the first quarter of 2013, and a likely 1.7% in the second quarter.

And

Meanwhile, low interest rates are generating excessive risk-taking by banks and other financial investors.  These risks could have serious adverse effects on bank capital and the value of pension funds.

Additionally, these moves have hurt our seniors, who depend on fixed income instruments for their income.

On the flip side, we have gained a substantially increased risk of high inflation.

In sum, cut it out.