Monthly Archives: December 2012

Some Government Spending

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Progressives in Congress and the White House are loathe to reduce spending—especially actual reductions, not just the reduced rates of growth that they, along with too many Republicans, masquerade as spending reductions.  This reluctance is part of why they’ve been so indisposed toward passing a budget, which would make their spending excesses even more apparent.

Bret Baier, of Fox News, though, has dug out some numbers illustrating the present excesses.  Just last November, for instance, the Federal government collected $5 billion in total revenue, while spending $11 billion, each day of the month, for a spending excess of $6 billion per day.  The table includes Baier’s numbers and provides some of the biggest spending sources.  (The Totals sums won’t agree  between across and down due to rounding.)

Spender Daily Tab ($billion) Monthly Tab ($billion) Projected Annual Tab ($billion)
Department of Health and Human Services

3

90

1,080
Social Security

2.5

75

900
Department of Defense

1.8

54

648
interest on the national debt

0.85

25.6

307.4
Totals

8.2

244.6

2,935

Notice that the two biggest spenders are Obamacare—HHS—and Social Security: two of the entitlements which the Progressives have already said are not negotiable—no matter the damage to our economy.

Notice further that those $300+ billion in debt interest are utterly withdrawn from our economy; it’s just the vig on our debt.  Those dollars don’t circulate.  Moreover, that vig doesn’t pay down the debt a single fēn (分).  Then, too, when interest rates revert to our historical levels in the neighborhood of 5% from our current roughly 0.25%, those interest payments will explode to the region of $6,148 billion—over $6 trillion.  Per year.

No wonder the Progressives are so reluctant to discuss spending or actual deficit elimination and debt reduction.  That would be hard.

A Press Conference

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Here’s what was said at a recent press conference:

So I’m going to continue to talk to the President and the other leaders up in the Senate.  But, ultimately, they’ve got to do their job.  Right now their job is to make sure that middle-class taxes do not go up and that we have a balanced, responsible package of deficit reduction.

It is there for all to see.  It is a deal that can get done.  But it is not going to be—it cannot be done if every side wants 100 percent.  And part of what voters were looking for is some compromise up here.  That’s what folks want.  They understand that they’re not going to get 100 percent of what they want.  And for some reason, that message has not yet taken up at the White House or in the Senate.

And when you think about what we’ve gone through over the last couple of months—a devastating hurricane, and now one of the worst tragedies in our memory—the country deserves folks to be willing to compromise on behalf of the greater good, and not tangle themselves up in a whole bunch of ideological positions that don’t make much sense.

So I remain not only open to conversations, but I remain eager to get something done.  I’d like to get it done before Christmas.  There’s been a lot of posturing up at the White House and over in the Senate, instead of just going ahead and getting stuff done.  And we’ve been wasting a lot of time.  It is the right thing to do.  I’m prepared to get it done.  But they’re going to have to go ahead and make some adjustments.

Was that Speaker of the House John Boehnor (R, OH)?  Not really.  It was President Barack Obama, and he wasn’t talking about himself and his allies; he was disparaging Republican efforts to avert our fall over the cliff.

Never Let a Crisis….

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The Democrats, led by President Barack Obama and Senators Diane Feinstein (D, CA) and Chuck Schumer (D, NY) want to “discuss” gun control and make it harder/impossible for us to retain our 2nd Amendment rights.  But this would make us more like Europe, and that’s a Good Thing, isn’t it?

Here’s what Europe is blathering on about in re the Newtown mass murder.

[The Newtown massacre] is once again the unavoidable result of a national culture….  Once again, the United States is debating its gun laws, even if the discussion is likely to be short and inconclusive.  But the real thing that must change (though it hardly will), is the misunderstanding that America’s formative myth of “freedom” allows for weapons to be as widespread as smart phones.

And from Süddeutsche Zeitung, this:

Their [Republicans and the gun lobby] opposition to almost any kind of gun control borders on political complicity in murder and manslaughter.

And from Die Welt, this, even as they “recognize” the legitimacy of private ownership of guns:

A country-wide weapons registry would make sense. … [A]t least a ban on semi-automatic weapons, such as the one that existed during the administration of Bill Clinton, makes sense.

And from Stuttgarter Zeitung, this:

[T]this variety of martial liberalism is a relic of a bygone era that no longer fits in the time.

Never mind our Creator’s endowment of rights and the expression of them in our Bill of Rights.  The latter exists to facilitate our satisfaction of our individual endowment of obligations, which includes our obligation to help each other enjoy those inalienable rights.  Which demands an ability to defend ourselves and our fellows by force of arms, if necessary, not only against other members of our compact and intruders from outside it, but also against an overweening, overly intrusive government that is a necessary evil and not the fount of our rights, responsibilities, and freedoms.  Which in turn demands a 2nd Amendment that explicitly acknowledges our inherent right to be adequately armed for executing that self- and mutual defense.

Disarming us, as even the Süddeutsche Zeitung understood elsewhere in its editorial, cannot have prevented such mass murders.  Disarming us would not disarm the criminals, or the insane, or the criminals who would use the insane.  Progressives dismiss this as ridiculous, a catch phrase, but it is no less a truth for that.

Nor has the threat receded in a modern, dangerous world, as the Stuttgarter Zeitung so innocently hopes.  Thinking so is dangerously naïve.

Government has no need to know what its employers have in our possession.  Fishing expeditions, which include a national gun registry with its associated limits on the purpose for which we might be permitted to possess and use a firearm, and of which restrictions on what we are in the end permitted to own are a subset, are at once an early step in the erosion of freedom and a textbook example of why another requirement was written into our Bill of Rights: the need for a separately court-approved search warrant before our government might pry into our private affairs.  A government that assumes, a priori, that its employers are dishonest is a government that, even more so, cannot be trusted.

What those who idolize Government, those who truly think that government is the origin of our rights, responsibilities, and freedoms—rather than an unfortunately necessary tool for helping us preserve our individual liberties and satisfy our individual responsibilities—do not understand is that these are truly individual; our liberties and obligations are individual and are inherent in us as individuals.  Thus, we cannot wish them away onto another entity for preservation or satisfaction.  They cannot be divorced from us any more than our lives can be.

In the end, the only ones who want to disarm a population are those in Government with guilty consciences about their own designs on liberty and those who truly believe that freedom flows from Government and not from God.  Both sorts are dangerous.

They Don’t Like Me

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Answering a question about the status of fiscal cliff negotiations, President Barack Obama said that his Republican colleagues oppose compromising with him because they oppose him personally, not because of the substance of any deal.

I don’t know if that just has to do with, you know, it is very hard for them to say yes to me.  But, you know, at some point they’ve got to take me out of it, and think about their voters.

No worries, though.  You’re likeable enough, Barack.

The Fed’s Move

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In the last week, the Federal Reserve Bank has said that it’s going to keep on buying mortgage debt (euphemistically called “mortgage-backed securities (MBS)”), and that it’s actually going to increase the purchase rate.  In addition to buying up MBS at $40 billion per month, they’re also going to buy $45 billion/mo of T-bonds.  Astonishingly, they’re going to pay for both by issuing new reserves to banks.  The Fed will continue to do this until certain unemployment thresholds are crossed.

James Pethokoukis, writing for Ricochet, suggests in quoting Economist David Beckworth, that this is a good thing:

It makes very clear to the public that the Fed will not stop until these targets are hit.  Markets, in turn, should respond in anticipation of these goals being hit.  That is, the elevated demand for liquid assets should start declining as households and firms start moving their funds into higher yielding assets.  This rebalancing should raise asset prices, help repair balance sheets, and ultimately spur nominal spending.  In other words, by better managing expectations, the Fed should cause the public to do the heavy lifting—and they already have started.  If all goes according to plan, the Fed may not have to actually purchase that many additional assets.  Ironically, this means that had the Fed been doing this all along its balance sheet would be much smaller now

On the other hand, King Banaian, also for Ricochet, writes

This would induce private lenders to leave the MBS market and hopefully make loans to the business sector.  Meanwhile, short-term interest rates would rise.

…

Reserves eventually become money.  Currently, most reserves are held by banks who receive interest on them from the Fed.  In short, the Fed is using its profits from operating in money markets to induce banks not to lend the reserves they are printing with one hand, while manipulating interest rates to encourage borrowing with its other.  And this process threatens to debase our currency.  The lone dissenting vote from Wednesday’s meeting, Richmond Fed president Jeremy Lacker, noted the Fed had only a few years ago agreed with Treasury that steering credit is not a job for monetary policy. Yet now that’s precisely what they’re doing.

The problem is that the power of all that additional money in the economy, when it does start to get spent (assuming the Fed’s credit manipulation works and “higher yielding assets” do turn into increased spending)—and lent, which exponentially expands the capacity to spend—is explosively inflationary.  By the time that inflation is recognized to be on the horizon, though, it’s actually already in full throat.  That inflation will then destroy the value of all that extra money poured into the economy, leaving us all where we are today—only with three times as much money, each dollar of which is capable of buying only one-third as much.

Maybe the Fed should stop.  Maybe the Fed should simply get out of the way and let our economy recover without the strait jackets of Fed debt-buying and of Progressive Do-Good welfare pushing.  The Fed can’t do anything about the one.  But it doesn’t have to do the other.

And this doesn’t even get into the smoke and mirrorsexpectation management that the Fed now admits is the sum and total of all that it’s doing.