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Belmont Club

Getting Things Straight

March 3rd, 2013 - 11:58 pm

GREGORY: Back in October, the President staked out some very clear grounds, in a presidential debate against Mitt Romney, here is one:

PRESIDENT OBAMA: First of all, the sequester is not something that I proposed. IT is something that congress proposed. It will not happen. The budget that we’re talking about is not reducing our military spending, it is maintaining it.

GREGORY: As the White House as acknowledged, that is not accurate. The President did propose it. He didn’t want it to become law, and Republicans supported it, that it was the White House’s idea, he said equivocally, it will not happen. And yet it’s happened. Is there some responsibility he bears?

SPERLING: David, Jonathan Chait of New York Magazine gave the following analogy: A mugger comes up to you and says, give me your wallet. You say, I don’t have my wallet, but here is my watch. Well, technically, giving the watch was your idea, but it doesn’t really tell the whole story. We know, everyone knows, that the president wanted an enforcement mechanism that included revenues on the most well-off. The speaker insisted, the Republicans insisted that if this be an enforcement mechanism, that it be on all spending cuts. Because we were forced to do that, it is true we suggested going back to the Gramm-Rudman-Hollings mechanism.

GREGORY: That’s not what he said in that debate.

SPERLING: Well, I think that–

DAVID GREGORY: He said, “I didn’t propose it.”

Listening to the President, you’d think someone else thought it up.

But he proposed it after all. So was the sequester Obama’s idea? Not his idea? His idea? Was Bob Woodward right? Did Sperling threaten Woodward or are they really best buddies such that Andrew Sullivan, who called Woodward a liar, is correct after all?

Here’s a notion.

Maybe the sequester just kind of happened. As to the true origins, well there is no truth in Washington. And if there is nobody cares what it is. It’s his idea, not his idea, his idea.

Tell Bob Woodward to forget it. It’s Chinatown.

The fundamental problem facing both political parties is that years of riding the gravy train have used the design margin up. The country is broke. Henceforth all budget cuts or tax increases must come out of the hide of one political constituency or the another. In the good old days whenever the GOP or the Dems got thirsty they could in the last analysis pump more water out of the well. But now the well is dry. So to satisfy their core constituencies the politicians have to steal water from each other.

But that’s a zero sum game. Pareto has left the building. The old political spoils system has nothing more to dispense except pain. ‘Happy Days’ aren’t coming back any time soon and the only game left to play is the blame game. Neither side has yet come to terms with the idea that they are the disease, not the cure. There is no solution to the budget problem at the current share of government spending. The only way the ration of water is going to suffice, given the exhaustion of the well, is for politicians, consultants, journalists, Beltway aristocrats, and camp-followers gathered round the barrel to thin out.

The politicians have not come to that idea yet. But arithmetic will enforce the outcome by the end.


The Three Conjectures at Amazon Kindle for $1.99
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All Comments   (27)
All Comments   (27)
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Here is a chart of the historical Fed funds rate http://en.wikipedia.org/wiki/File:Federal_Funds_Rate_1954_thru_2009_effective.svg

Note that with Quantatative Easing, the effective rate is at zero whereas during the Eisenhower Administration is averaged about 2%. That was a time of outstanding economic growth. Mortgages at 4%. Savings interest at 3%.There was a reward for savings. Try putting money in a savings account now! 1% is typical. So savers lose to inflation.

But Obama gets to finance his reckless spendiing without growing the deficit due to interest payments on the National Debt.

END QUANTITATIVE EASING NOW!

1 year ago
1 year ago Link To Comment
Someone pointed out that the worst thing about make-work and fake jobs is that they wasted people's lives. It trapped people in uneconomic employment, made seemingly viable by cross subsidies. Glenn Reynolds has charted the decline of enrollment at law schools. This is a reaction to the growing realization that there are too many lawyers. That feedback is burning through the contrived narrative and students are adjusting their plans accordingly.

The same thing is happening, but on a much broader scale, to all kinds of government funded jobs. Some of these activities are no longer economically worthwhile to undertake. The tax many taken to support them represents a transfer from a best use to a bad use.

Doubtless there are some government jobs which remain economically necessary. Those which keep the country safe, for example, and only certain of them. But there are probably many government jobs which are simply not worth doing any more. Perhaps the Post Office jobs are an example.

A sequester might be "painful" but at the same time it will ultimately free people to do something. Something real. The resource crisis is actually a feedback mechanism. It's nature's way of tell us something's wrong.

You can argue about what is wrong precisely. But clearly the lack of money arises from some fundamental inefficiency that simply can't be fixed by printing more paper.
1 year ago
1 year ago Link To Comment
THE TRUTH CONTESTER VERSUS THE TRUTH MOLESTER

Whose idea was sequester
Mr. Sperling, a court jester
Says Republicans said here, just take my watch
But the question still would fester
Prior statements they would pester
Even though Chris Matthews tingled in his crotch
It turns out that O’s tea tester
Was a secret O detester
And he managed to place words between O’s lips
And those words, like any nester
Came to roost on the protester
Who claimed Gods like O don’t lie and don’t make slips

1 year ago
1 year ago Link To Comment
1 year ago
1 year ago Link To Comment
January M2 - M1 = $10,444.6 B - 2,469.5 B = $7,975.1 B

[M2 consists of M1 plus (1) savings deposits (including money market deposit accounts); (2) small-denomination time deposits (time deposits in amounts of less than $100,000), less individual retirement account (IRA) and Keogh balances at depository institutions; and (3) balances in retail money market mutual funds, less IRA and Keogh balances at money market mutual funds. Seasonally adjusted M2 is constructed by summing savings deposits, small-denomination time deposits, and retail money funds, each seasonally adjusted separately, and adding this result to seasonally adjusted M1.]

1% of $7,975.1 B = $79.8 B. So at the cost of $160B on higher federal borrowing costs, you'd put about $80 B right back into the economy plus reduce the unfunded liabilites of state and local government by tens of billions more. So you shift the cost of out of hand government spending from the states to the feds, by getting the Federal Reserve to RAISE interest rates.

QE and QE2 have been killing the economy. Make Obama pay for the rising federal budget interest payments!! He has been skating because the Fed has been artifically restraining the Fed Funds rate to keep federal interest payments low at the expense of EVERYONE ELSE.

Strip away Bernacke's camouflage for out of control federal spending by ending Quantitative Easing.
1 year ago
1 year ago Link To Comment
Two points, if I may. First, I find the slight shift in role of David Gregory to be worthy of continuing attention. This is, after all, David Gregory.

I have referred to Obama [stealing the line from somewhere] as "the cabana boy to the Lord of the Flies". At best, Gregory is the cabana boy to the cabana boy. Gregory would gladly lie, abase himself, and betray anyone to publicly imitate an overamorous Bichon Frise at Obama's ankle.

Keep in mind that at the behest of "those who are above the Law"; he was allowed/encouraged/granted immunity to commit a felony level status crime on national television in support of the regime's agenda, with no bad consequences.

Going back to the rodent-dog metaphor; Gregory wears the leash and pink puppy sweater proudly, and has been taken to the vet to be fixed.

Yet, in a public forum, albeit a very controlled one, he actually contradicts "Teh Won's" narrative. There is something deeper here. It may involve Maskirova or it may involve an annelid changing direction.

The second involves the Sequester. Yeah, the Sequester splits 50-50 between civilian and military. What is NOT mentioned is that it only affects the "discretionary" budget. All of the military is discretionary.

Over 60% of the actual money spent is defined by the Congress as "Mandatory Spending" that is required and not covered by normal budget bills [back when we had those]. Short form, these are entitlements; Social Security, Medicare, Medicaid, TARP, Food Stamps, and all Federal welfare programs. Functionally, 50% of the Sequester is imposed on the military's less than 1/5 of the spending. The other 50% is spread thinly over the 80% of the remaining spending, and is barely noticeable except where it serves the interests of the Left.

Bait and Switch everyone.

Subotai Bahadur
1 year ago
1 year ago Link To Comment
Of course, it's necessary to preface with "So what?" and "What difference does it make?"

But just for the heck of it, here's some of the math:

We know the $85 billion Sequester is a disaster because President Obama has told us so.
http://www.youtube.com/watch?v=GZMNfP_HCUA )

Since I hate to see BCer's dismayed by the looming catastrophe of Sequester, let's find another issue to focus on – the impact of a rise in interest rates on government finances.

The Federal debt amounts to more than $16 Trillion ($16,000,000,000,000). The current interest rate on that debt is 2%. Historically, this is an extremely low rate. As recently as 2009, the Federal Government was paying 3% (still historically low). If interest rates return to 3%, that would cost the government an additional $160 billion per year.

If we go back to Clinton era interest rates (when everything was wonderful), the Federal Government would be paying 5% - an additional $480 billion per year.

Bottom line: no need for anyone to be scared of that measly $85 billion Sequester.

Oh, almost forgot – we are adding about $1 Trillion per year to the debt.

Have a nice day.

1 year ago
1 year ago Link To Comment
Of course, it's necessary to preface with "So what?" and "What difference does it make?"

But just for the heck of it here's some of the math:

We know the $85 billion Sequester is a disaster because President Obama has told us so.
http://www.youtube.com/watch?v=GZMNfP_HCUA )

Since I hate to see BCer's dismayed by this looming catastrophe of Sequester, let's find another issue focus on – the impact of a rise in interest rates on government finances.

The Federal debt amounts to more than $16 Trillion ($16,000,000,000,000). The current interest rate on that debt is 2%. Historically, this is an extremely low rate. As recently as 2009, the Federal Government was paying 3% (still historically low). If interest rates return to 3%, that would cost the government an additional $160 billion per year.

If we go back to Clinton era interest rates (when everything was wonderful), the Federal Government would be paying 5% - an additional $480 billion per year.

Bottom line: no need for anyone to be scared of that measly $85 billion Sequester.

Oh, almost forgot – we are adding about $1 Trillion per year to the debt.

Have a nice day.
1 year ago
1 year ago Link To Comment
So now Gregory is also sorta/kinda giving Obama flunkeys a "hard time?" I hope to see more of this, as the mask continues to slip.

To a lot of people out there who may now be aware that there is a back-and-forth going on about who owns the sequester, the reaction is probably to look on it as childish. On one level that is understandable, but misses the biggest point: Obama's remarkably high level of mendacity. We have never in modern times (or, perhaps, ever) had a president this consistently and almost constantly dishonest. Not even LBJ, Clinton, and Nixon. And any duplicities by the likes of FDR or Wilson or Lincoln were usually due to truly existential crises that required misdirection in the cause of victory. Obama has no such excuses. He is a serial, compulsive political liar without equal in the office he holds.
1 year ago
1 year ago Link To Comment
There's a certain sort of historical fiction that resonates not because it talks about the past, but because it talks about the present. Grease wasn't really about the 50s, it was about the 70s. Similarly, Mad Men isn't really about the 60s. It's a story about modern thought and modern ideas set in the past.

One of the best and most chilling scenes in the entire series took place near the end of season one. Don Draper is passing up Pete Campbell for a promotion. Pete follows Don into senior partner Bert Cooper's office. He has learned Don's true identity and is going to retaliate by exposing Don. Here is the video clip: (Season one spoilers included ...)

http://www.youtube.com/watch?v=OqkHPsY8p84

Let's exchange the characters. Don Draper is Barack Obama. Pete Campbell is us. Bert Cooper is the general public.

The devestating line is "who cares?" It's utterly modern. In the 1960s, all those things that Pete Campbell had discovered would have mattered very much. But today, "who cares"? As Cooper says, "a man is whatever room he is in." Right now, Barack Obama is in the Oval Office. He won the election, he's handing out the money, and so what if he was born in Kenya? So what if he is crashing the economy? So what if he's building a fantasy ideology around himself? So what if he breaks his promises?

"So what?" could well be the political ideology of our time. You could go on for hours about Barack Obama, everything he's failed to do, and you will run up against the same brick wall of "So What?" The good news is that that ideology, or lack of such, can't go on forever without disaster. Unfortunately that's also the bad news.
1 year ago
1 year ago Link To Comment
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