Monthly Archives: April 2013

The Growth Deficit Redux

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There’s this from last fall:

Let’s look at this another way.  It’s been widely reported that this “recovery” is the weakest, most anemic post-recession recovery in our nation’s history.  Those reports aren’t far wrong.  A normal recovery coming out of a downturn as deep and steep as was the Panic of 2009 typically sees growth rates of 5%-6% per year, or more.  This Obama recovery has been 6.7% over the entirety of his term in office—nearly four years [as of October 2012.  It’s not any better today].  Had we seen a normal recovery (and using a pessimistic 5%/year growth rate), we would have reached today’s unemployment rate after a shade over one year—in 2010—and we would have been back to full employment (in the range of 4.8%-5.5%) in just under 2 years—by last year.

Next, there’s this from last weekend:

We are now in year five of what has been one of the great experiments in Keynesian economic policy.  We were told that if Congress would spend $830 billion more temporarily, and the Federal Reserve would unleash monetary policy, a recovery would begin and rapid growth would resume.  Larry Summers, Alan Krueger, Jared Bernstein and their allies on Wall Street got their policy wishes.  Their economy has delivered mediocre growth and declining middle-class incomes—though we will concede that the wealthy have done well as the stock market has recovered.

So now the same Keynesians say the spending blowout wasn’t large or long enough, taxes still aren’t high enough, and monetary policy hasn’t been easy enough.  What this economy really needs is a statute of limitations on intellectual denial.

Finally, there’s this from Henry Morgenthau in the depths of that earlier great experiment in Keynesian economic policy:

We have tried spending money.  We are spending more than we have ever spent before and it does not work.  I want to see this country prosper.  I want to see people get a job.  I want to see people get enough to eat.  We have never made good on our promises.  I say after eight years of this administration, we have just as much unemployment as when we started.  And enormous debt to boot.

Hmm….

Obama’s Syrian Timidity

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From The Wall Street Journal:

President Barack Obama said the White House needed further proof that Syria’s security forces gassed civilians and rebels to change his “calculus….”

And

[T]he president walked a fine line by defending his insistence that he would not tolerate the use of chemical weapons, but also by saying he would not be pressured into quick military action in Syria.

Of course, it’s not possible to help the 70,000 Syrians already butchered by al Assad.  I’m sure, though, the surviving Syrians, including those who will be killed by al Assad’s repudiated government in the coming days and weeks will by heartened by Obama’s…studiousness.

Bill Murray, ex of the CIA and experienced in the area had this (I’m at a loss to know whether he offered this as an excuse or a description):

Lebanon was like a tar baby.  It sticks to your fingers, and you can’t get away from it.  Syria is the same way.  There’s not going to be a happy outcome no matter what you do.

Granted.  Stop worrying, then, about consequences, and do the right thing.  No more stalling, no more looking for excuses not to act.

National Debt

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Kevin Williamson, writing in the National Review Online, is not optimistic about our 2023 national debt, projecting our interest costs on the assumption that interest rates won’t rise over the next 10 years (OK, he’s pessimistic; he holds rates at their current near-zero levels only to make a point).

Williamson projected the interest payments on the $26 trillion debt projected for 2023 to be $763 billion at today’s rates.  That works out to an interest rate of 2.9%.  Those $763 billion would be more than what the Federal government spent on Social Security, national defense, or all nondefense discretionary spending in 2011, Williamson noted.

But suppose interest rates rise as lenders decide our sovereign debt just isn’t all that valuable, our ability to repay that debt just isn’t all that assured?

First a rounding exercise: let’s say our interest rates rise to 3%.  That runs our 2023 interest payment to $780 billion.  That’s not so bad, eh?  However, nearby historical treasury rates, dating back 1990, have run around 5%.  That runs the interest bill to $1,300 billion.  If rates run to 7%, where they were during the Vietnam War, the interest bill gets over $1,800 billion.  If it spikes to 14%–the Carter Recession—the interest bill explodes: $3,600 billion. That’s what the Federal government spent—on everything—in 2012.

Who wants to bet lender confidence levels in our debt will keep our interest rates from rising above that historical average?

YGTBSM

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via Friday’s Politico:

Tuesday morning, a peculiar announcement trickled out of the White House press office: President Barack Obama would be holding a moment of silence for the victims of the Boston bombings.  At the White House. By himself.  No press or other intruders allowed.

Except the White House photographer.

How precious is that?

He Built This

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President Barack Obama and his DoT folks, abetted by the press, have done their best to create a commercial travel problem out of the Obama Sequester.  The press, including “fair and balanced” Fox News, are focusing on the ATC Controller furlough-caused 1,600 delays per day since the furlough scheme went in.

What the press cynically omit to mention is that ATC Controllers handle 28,500+ commercial, 27,000+ general aviation, 24,500+ air taxi and charter, 5,000+ military, and 2,000+ air cargo flights, or more than 87,000 flights each day.

Now we’re six days into the Obama-directed Huerta Furlough, and the FAA’s own Web site shows the lack of widespread “staffing” delays.  If you’re patient, and track that site through a day, you’ll see that the “staffing” delays are concentrated in the New York area with an occasional bump in LA or Chicago.

Michael Huerta, FAA Administrator, was asked during his testimony before the House Wednesday why he couldn’t focus ATC furloughs—to the extent they’re needed at all—on regional and small airports, leaving these larger, much busier airports fully staffed.  Huerta responded that he couldn’t pick winners and losers from among the nation’s airports.

Which, of course, is exactly what he’s doing when he elevates those regional and small airports to the same level as the US’ air traffic hubs.  Oh, and maximizing what little pain the FAA’s share of the sequester can cause.

Update: The FAA…has suspended furloughs for air traffic controllers….

Air traffic facilities are supposed  to return to regular staffing through today, and  normal ops should be achieved by tonight.