Tag Archives: political economy

Some Thoughts on the Ryan-Murray Budget Deal

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Americans for Prosperity President Tim Phillips has this one:

This budget compromise is not just bad policy, it is bad politics.  The American people remember hard-won bipartisan spending limits set by the sequester, and are not pleased to see their conservative representatives so easily go back on their word to rein in government over-spending.

The deal does, after all, increase spending to a skosh over $1 trillion (just about halfway to the Democrats’ spending call of $1.058 trillion from the current spending of $0.967 trillion), while increasing, slightly, defense spending (rather than the more draconian cut the sequester had scheduled for 2014) and increasing, slightly, discretionary spending—all paid for with spending cuts and fees elsewhere, with chump change left over for a net deficit reduction.  Yes, yes, this is a current increase in spending paid for with future cuts and fees.  See below.

American Conservative Union Chairman Al Cardenas has one, too:

The solution is not to walk away from progress and add over $60 billion in spending over the next two years.  We are not impressed by the cost cutting gimmicks and urge members of Congress to tell the budget conference to get back to work[.]

What’s your plan, guys on which the conference committee should “get back to work?”  With what votes, particularly in the Senate, do you claim your alternative (you do have something more intelligent than just “No,” yes?) can pass?

Certainly, there’s much to dislike in this compromise, but it’s good enough for the next year (albeit it covers the next two).  More importantly, blocking it is tactically stupid: it moves the focus in an election year to Republican intransigence, whether that’s a fair perception or not.

I have one, also.  Take the deal, lose the distraction.  Keep the election year focus on the failed Obamacare, on the anti-business Dodd-Frank, on the Democrats’ tax and spend demands, on the Democrats’ blowup of the Senate (picking any two (so long as one is Obamacare) in order to have that focus).  Win elections, then do the budgets that are necessary, repeal Obamacare (you do have a replacement plan ready to proffer, yes?), eliminate the CFPB, and so on with the votes to do so actually present in the House and in the Senate.

Quit being chuckleheads.  Quit being the Party of Stupid.

Last Week’s Jobs Report

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The headline is that the jobless rate fell in November to 7.0% from October’s 7.3%, and the participation in the labor force (the number of Americans working at some capacity or looking for work) rose in November to 155,294,000 from October’s 154,839,000.

However, the headline ignores the fact that the Democrats’ government shutdown for much of October led to a large number of Federal employees being furloughed (some 450,000 were out of work for the duration), which both contributed to October’s rise in unemployment and that lowered number in labor force participation.  Comparing November’s data with September’s, the month immediately preceding that shutdown, provides a much more useful comparison.  In September, the unemployment number was 7.2%; the November still seems a significant drop.  However, September’s labor force participation was 155,559,000 Americans: that force had shrunk by 265 thousand Americans by the end of November.  The lower participation contributed significantly to the headline unemployment rate “drop.”

Who Lost?

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Dunstan Prial at Fox Business, noted that

The Treasury Department on Monday announced that the government has sold its remaining shares of General Motors, and that losses from the 2009 auto industry bailout total about $15 billion.

In a conference call, Treasury officials said the government has recovered about $39.9 billion of the $49.5 billion earmarked for GM under the Troubled Asset Relief Program (TARP) approved by Congress as the company teetered on the brink of bankruptcy nearly five years ago.

And

Treasury has intermittently sold its shares of GM but always at a price below that which would have allowed the government to break even on the deal, which accounts for the nearly $10 billion in losses.

And

The government has lost an additional $1.3 billion on its bailout to Chrysler[.]

Leaving aside that the auto industry was not bailed out, nor was it ever at risk—only two failing car companies were at risk—there is another misunderstanding, and one that’s surprising from a business writer.  The government lost nothing on these bailouts.  The government has nothing of its own, and so it has nothing that it can lose.

We American taxpayers lost those $10 billion on GM, those $1.3 billion on that Italian car company, those $15 billion overall.

Economic Growth Rates

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The folks at Power Line addressed this in Presidential term aggregates; I thought I’d graph the GDP rates in each year of the last five Presidents’ terms.  The data for the graph were collected from here.

Aside from the fact that economic growth is poorer in Obama’s administration than it was in any of the preceding four Presidents’ terms, stretching back over 32 years, President Barack Obama’s performance year by year (first year compared to each of the others’ first year, second year compared to second year, and so on) generally has been poorer, also.  It’s certainly true that Obama’s first year was a continuation of President George Bush the Younger’s last, but so has each of those Presidents’ first years been continuations of their predecessors’ last years.  And President Ronald Reagan’s first year was a continuation of President Jimmie Carter’s last year—which was 3.8 points lower at 8.8% and declining from Carter’s prior years.

This also contrasts with Obama’s predecessors having had to work with the opposing political party controlling at least one house of Congress for significant portions of their terms, just as Obama has done.  Those Presidents, though, sought implementable bipartisan solutions rather than Obama’s “my way or no way” and “evil, obstructionist Republicans” attitudes.

Farm Subsidies and False Premises

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Negotiators [on a proposed milk price support bill] are…working out how farm subsidies should be restructured in the absence of a traditional subsidy called direct payments, which are paid to farmer regardless of crop price or crop yield.  Both chambers’ bills would eliminate this $5 billion annual subsidy in response to critics who say it pays farmers not to farm.  But they have argued over how to replace those payments, with major farm groups squabbling over whether subsidies should kick in based on crop prices or farmer revenue, and how to count the acreage on which the subsidies are based.

Unfortunately for our pocketbooks, those negotiators are operating from a false premise: that the subsidies need to be revised in any way.  The only ones who benefit from these subsidies in any large way are the large agribusinesses and the “farm state” politicians supported by them.  Mom and pop farms?  Not so much.  On top of that, though, us food eaters are materially harmed by the subsidies through the artificially inflated prices we have to pay for food that those subsidies create.  And the poor among us are harmed the most by those inflated prices.  Additionally, us taxpayers are harmed a second—and third—time by having to pay for those subsidies that are driving our prices up and by having to pay for the food stamps that are used to mitigate for the poor those artificially inflated prices.

No.  The subsidies need to be done away with: “replace” them altogether through a bill that eliminates all of the farm subsidies, which ding us for $25 billion annually.  That seed then lets the much larger $80 billion/yr food stamp program to be drastically reduced, if not eliminated altogether, since most of those remaining who truly need help would generally be within the resources of their local communities and states.