Tag Archives: political economy

Another Look at the Senate Democrats’ Budget

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The Heritage Foundation has looked at it.  As has already been pointed out, Senate Budget Committee Chairwoman Patty Murray’s (D, WA) budget has little good in it; although it does preserve the sequester cuts in their magnitude and general allocation.  However.

Cynically, it raises taxes on Americans—and amazingly, on our businesses, which already are subject to the highest rates in the world—by a shade over $1.5 trillion.  This isn’t new, but their budget is worse than originally thought.  The Democrats’ guess (and I use that term advisedly) of getting $155 billion per year over the next 10 years is based on their erroneous static analysis.  A dynamic analysis, which includes the actual and ongoing effects of taking this much money out of the economy, indicates that this “budget” would only get $88 billion per year.  Heritage’s graph below illustrates the year-by-year revenue flow.                                          

This only exacerbates the impact of the Democrats’ continued increases in spending on our debt and on our economy.  Their 5% increase in spending, in every year of those same 10 years, increases the Federal budget deficit, and it contributes to a continued explosion in our national debt—to the tune of $7 trillion more added to an already ruinous level.

But that’s all to the good, anyway, right?  The Democrats say so.  The Senate Republicans have a different analysis.  Overall, they point out that this budget would

  • Lower GDP by $1.4 trillion over 10 years.
  • Cut job growth by an average of 853,000 jobs each year.
  • Slash after-tax incomes by $1.9 trillion over 10 years.
  • Shrink household income by $1,512 per year.

They also look on a state-by-state basis, and the outcome is clear and even starker (it’s important to note here that the state-by-state analysis was done by the Senate Budget Committee’s staff economists, not by Republican staffers).  Here are the outcomes for, oh, say, California and Texas.

California:

For the state of California these tax changes mean losses in personal income, household disposable income, and job opportunities:

Texas:

For the state of Texas these tax changes mean losses in personal income, household disposable income, and job opportunities:

There are no states—none—in which the Budget Committee’s staff economists projected gains in personal income, household disposable income, or job opportunities.  Every state suffers losses as a result of this Democrat budget.

Obama Sequester Cluelessness

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Here are two examples.

DHS Budget Undersecretary Rafael Borras, just last Tuesday, on the sequester:

There was an expectation that the sequester would not come to pass.  We’re doing everything we can to limit the impact.

House Democrats are whining about President Barack Obama and his administration being hectored about the sequester’s budget impacts before his Cabinet and agencies have had a chance to begin dealing with it.  Also last Tuesday, Congressman Gerry Connolly (D, VA) bleated

Did we expect [the sequester] to kick in within 19 days?  No!

Crap.  They’ve had 19 months since the sequester was passed—and signed into law by Obama.  On what basis do these folks think a law was not to be obeyed?

They All Could Learn from the Poles

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In the aftermath of the Cyprus Parliament’s rejection (wholly correct IMNSHO) of the troika’s “bailout” offer—a “one time” “tax” on bank deposits held by Cyprus banks—talks are failing (breaking down?) within the government, between the government and the troika, and between the government and Russia on a Plan B to avert Cypriot bankruptcy.

Amid this crisis, and exacerbated by the rejection and potential failure of the subsequent talks, panic is growing in the EU, and especially in the euro zone, that a Cypriot bankruptcy will force Cyprus out of the euro zone, and that will lead to the doom of the euro.

That panic is both palpable and foolish (see here, also).

Polish Foreign Minister Radoslaw Sikorski has the right of it.

There is no obligation to accept help.  Cyprus has the possibility of living with its own mistakes.

He knows—Poland does not use the euro.  Greece and the EU should take this advice to heart, also.

Why Not Just Take It All?

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Spiegel International Online notes that the Cypriot government may be figuring out some of the foolishness of the troika’s (ECB, EC, and IMF) demand concerning the latter’s “offered” bailout as well as some of the variants under discussion.  Some of those variants include reallocating the confiscationtax according to more deposit account sizes than just two, and hitting the highest—still those over €100,000 with a 15.6% claim.

[C]oncerns have emerged that a large number of foreign investors and depositors will withdraw their money from the country en masse.  Critics warn this would devastate Cyprus as a financial center and also threaten the country’s entire economy.

Well, yeah.

Still, even the current proposal has central bankers nervous.  Officials at the Cypriot central bank are still fearing a massive capital flight.  Central bank head Panicos Demetriades said he expects that at least 10 percent of deposits will be transferred abroad during the first few days after the banks reopen, according to lawmaker Roula Mavronikola who attended the session.

Demetriades is optimistic.  The Cypriot banking system would be fortunate to retain a single euro, were this institutionalized theft to go through.  The only way to stop the capital flight would be for the government to steal it all.

In the event, though, the Cypriot Parliament rejected any sort of levy, rather resoundingly.

More Obama Sequester in Action

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A few of items.

Congressman Ted Poe (R, TX) is wondering about sequester cuts to tuition aid for our military veterans while we continue to send education aid to Pakistan.  The Marines, for instance, had spent $47 million tuition aid in 2012, while nearly $13 million went to Pakistan for “higher education.”  And then, post-sequester, the Obama administration committed another $37 million to the Pakistan program.

Hmm….

And there’s this example of Obama cynicism.  Recall that the US Department of Agriculture would be forced to “furlough” a significant portion of its meat inspectors, among other personnel.  In the meantime, though, and again post-sequester, the Obama administration

continues to pursue a “partnership” with the Mexican government to “raise awareness” about food stamps among immigrants from that country.

In complete disregard for current immigration law that says immigrants can’t come in unless they are, or can reasonably be expected to be, self-supporting.

And this:

School officials on Native American reservations across Minnesota are forced into making cuts to their current budgets in anticipation of sequester cuts.  These  are programs that had been making progress, improving high school graduation rates by the small, but concrete, 3% per year.

But in post-sequester DC, a six-figure income position was created for a former aide to Congressman Charles Rangel (D, NY) with the important title of Executive Director of the White House Initiative on Educational Excellence for African-Americans.

Apparently some uses for post-sequester money are more important than others.  Especially when there’s political gain to be had.