Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Tag Archives: Deficit

More Keynesian Insanity: Negative Interest Rates

This article first appeared at The McAlvany Intelligence Advisor on Monday, May 4, 2015:

There’s a corollary to the insanity rule. It’s called the Keynesian Corollary: When something doesn’t work, do more of it. When history is written about the coming Second Great Recession, historians will likely note July 2012 as the turning point. That was when Mario Draghi, head of the European Central Bank (ECB) said during a panel discussion that the ECB “is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.”

Other historians might list that as one of the top ten “famous last words” ever issued by a human being. Since that moment bond yields across the world have dropped, and dropped, and dropped. On Thursday Jeremy Warner, the London Daily Telegraph’s assistant editor, announced that

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Chicagoans had to Choose Between Venal and Feckless for Mayor

This article first appeared at The McAlvany Intelligence Advisor on Wednesday, April 8, 2015: 

In Tuesday’s mayoral runoff in Chicago, voters had only two choices: to vote for the venal Rahm Emanuel or the feckless Chuy Garcia. Four years ago Emanuel rode Barack Obama’s coattails to victory, winning in a walk with 55 percent of the vote. In February, Emanuel couldn’t squeeze out a majority, getting only 46 percent of the vote and forcing a runoff with a far-left progressive on the Cook County Board of Commissioners, Jesus “Chuy” Garcia.

With the help of an estimated 100 “friends of Rahm,” Emanuel buried Garcia, raising some $30 million for his campaign, eight times what Garcia was able to raise. On Monday Emanuel held an 18-point lead over Garcia.

Garcia was hoping for a miracle.

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Latest Jobs Report Deceptive; Jobs Exported Overseas

This article first appeared online at TheNewAmerican.com on Saturday, March 7, 2015:

English: A North American Free Trade Agreement...

North American Free Trade Agreement logo

The employment report from the Labor Department on Friday was hailed as more evidence that the worst from the Great Recession is now in the rear view mirror, and receding. The unemployment rate in February dropped to 5.5 percent, lower than economists were predicting, while job growth added nearly 300,000 jobs, pushing the streak of gains of 200,000-plus new jobs per month out to a full year, the longest such streak since 1995.

The news caused stocks to lose more than one percent of their value, as Wall Street expected the robust numbers to hasten the day when the Fed would increase interest rates, potentially slowing the sluggish economy even further. Investors needn’t worry: Friday’s report was a head-fake.

If the recovery were real,

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U.S. Government’s Interest Costs to Quadruple in 10 Years

This article first appeared online at TheNewAmerican.com on Thursday, February 5, 2015: 

On Tuesday, the Wall Street Journal reported that the federal government will be paying $800 billion annually just to service the interest on its massive debt by 2025, up from just over $200 billion currently. By 2021, those interest costs will equal what the government is projected to be spending on national defense, and on non-defense (so-called “discretionary” items), and will greatly exceed those two budget items just by 2025. The Journal also noted that “non-discretionary” items (so-called “mandatory” expenditures) will continue their inexorable march upward, from $2 trillion currently to more than $4 trillion by 2025.

Surprisingly, few eyebrows were raised over the announcement,

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Latest CBO Report shows Deficits Approaching $1 Trillion

This article first appeared at The McAlvany Intelligence Advisor on Wednesday, February 4, 2015: 

English:

When the Congressional Budget Office issued its Budget and Economic Outlook 2015 to 2025 in January, few could be bothered to do a serious review of it as it seemed to contradict the present meme of the Goldilocks economy: job growth accelerating, interest rates low, consumer confidence improving, deficits shrinking, and so forth. Even those taking the time to look at it, scoffed at its conclusions. Said the CBO:

The federal budget deficit, which has fallen sharply during the past few years, is projected to hold steady relative to the size of the economy through 2018.

Beyond that point, however, the gap between spending and revenues is expected to grow, further increasing federal debt … which is already historically high.

The CBO explained why:

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Wisconsin Governor Walker to Substantially Reduce University Spending

This article first appeared online at TheNewAmerican.com on Wednesday, February 4, 2015: 

On Tuesday, as part of his continuing quest to bring Wisconsin’s government spending under control, Governor Scott Walker announced a 13-percent cut to the University of Wisconsin’s $2.3 billion annual budget. In addition, his plan includes a two-year tuition freeze and the severance of state control over the university, passing it over to an autonomous authority. It also includes drug testing for people applying for public assistance, the merging of several state agencies, and the elimination of 400 state jobs. Walker explained: “Our plan will use common-sense reforms to create a government that is limited in scope and ultimately more effective, more efficient and more accountable.”

He also made clear in a radio interview that professors are going to have to ante up as well: 

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Obama Goes on Offense, Wants to Spend Even More

This first appeared at The McAlvany Intelligence Advisor on Monday, February 2, 2015:

English: Obama speaks at American University.

Taking a page not only out of the Super Bowl on Sunday, but also out of the statistical study proving that offense is more effective in winning than defense, Obama is offering a grievously offensive and logically indefensible budget for 2016 today (Monday, 2/2/15). His proposal is morally offensive in that he proposes to take money earned by some and give it to others. It is logically flawed in that it will increase deficits each year for the next ten years, adding yet another $6 trillion to the $18 trillion already extant (up from the $10 trillion when he took office in 2008). It will limit job growth, stifle innovation, keep tax lawyers and accountants busy into eternity, and do nothing for his favorite target: the beleaguered middle class.

None of that matters. It’s all for show and to keep the Republicans on the defensive by couching his proposal in terms that only progressives could love:

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New Illinois Governor Facing Torrent of Red Ink

This article first appeared online at TheNewAmerican.com on Monday, January 12, 2015:

 

Previous Illinois administrations and politicians have been kicking the can down the road for decades. Now, the state has run out of road. Bruce Rauner, Illinois’ new Republican governor, was inaugurated on Monday and is facing a daunting task: a $4 billion backlog of unpaid bills and a budget showing deficits approaching $21 billion in three years unless something is done.

During his campaign that successfully ousted what Huffington Post noted as the “nation’s least popular governor,” Pat Quinn, Rauner made the usual political promises of streamlining government and improving education and the state’s business climate, all without increasing taxes. In fact, he promised

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Venezuela’s Welfare State Collapsing Along with Oil Prices

This article first appeared at The McAlvany Intelligence Advisor on Monday, December 29, 2014:

 

As oil prices have dropped, so has Venezuela’s revenue stream that supports its welfare state. Ninety-five percent of Venezuela’s export earnings come from crude oil, and the industry makes up one quarter of the country’s gross domestic product. With oil prices setting new lows last week, Venezuela’s economy, already on the ropes, is set to descend into chaos, anarchy, and looting. The decision by Saudi Arabia to continue to pump in order to maintain its market share reveals not only the inherent inability of any cartel to maintain itself over time, but also the inability of a welfare state to sustain itself without outside help.

With the world’s largest oil reserves, surpassing those even of Saudi Arabia, an uninformed observer would be unable to explain how a country as richly blessed with natural resources as Venezuela could go broke,

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Collapse in Oil and Natural Gas Prices Hitting OPEC the Hardest

This article first appeared online at TheNewAmerican.com on Monday, December 29, 2014: 

On November 17, gas prices had dropped to $1.9...

As prices for crude oil and natural gas continued their precipitous fall over the last five weeks, most commentators have been focusing on the impact — real or predicted — on the oil and gas industry in the United States. Little noticed, however, was the report from the U.S. Energy Information Administration (EIA) about how those declines are likely to affect OPEC.

OPEC’s total revenues, which hit an all-time high of $900 billion in 2012, are expected to decline by half next year, to just $446 billion. And that projection is based on the assumption that oil prices will average

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IRS Chief Threatens Furloughs, Possible Shutdown

is article first appeared online at TheNewAmerican.com on Monday, December 22, 2014: 

English: United States Internal Revenue Servic...

United States Internal Revenue Service Criminal Investigation Division Badge

One unheralded part of the widely criticized CRomnibus bill came to light last week when IRS Commissioner John Koskinen complained about the $346 million cut in his agency’s funding and the possible impact it would have on its services. The agency requested $12.4 billion, but the spending bill gave them just $10.9 billion, a reduction of $346 million from last year and $900 million below 2010 levels. In an e-mail to his employees on Wednesday, Koskinen warned them that “Our hiring — already limited at a ratio of one [new] hire for every five people who leave — will be frozen…. We will stop overtime except in critical situations.” He noted further that, adjusted for inflation, the IRS budget is about where it was back in 1998.

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Latest Poll: Vast Majority Oppose Gas Tax Increase

This article first appeared online at TheNewAmerican.com on Wednesday, December 17, 2014:

A new poll from Benson Strategy Group confirms not only that most Americans don’t want an increase in their gasoline taxes but that they’re afraid Congress will enact one anyway. Coming on the heels of Republicans joining with Democrats to pass a pork-laden CRomnibus bill earlier this week, the poll’s results show that two out of every three Americans don’t want to pay more at the pump. 

Those polled are likely also concerned that the recent precipitous drop in the price of gas will be seized by the Congress as an opportunity to raise the tax with minimal initial pain to drivers. 

An early attempt by a safe-district liberal Democrat from Oregon, Earl Blumenauer, a year ago to raise gas taxes by 15 cents a gallon failed to gain any traction, with just one co-sponsorship coming from a House member who knew he would be retiring this year. 

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Voters Finally Learn What’s in the CRomnibus Bill Passed by the Senate

This article first appeared online at TheNewAmerican.com on Tuesday, December 16, 2014:

Official portrait of United States Senator (R-KY)

Kentucky Senator Mitch McConnell, the leader of the Republican sellout

The so-called CRomnibus bill (a combination of a Continuing Resolution and an omnibus spending bill covering dozens of federal agencies) was passed by the Senate late Saturday night, 56-40, approving government spending through next September.

Passage, although delayed slightly by complaints from Senator Ted Cruz (R-Texas) that it funded President Obama’s illegal immigration executive order without debate, was guaranteed when 24 Republicans, including every GOP leader, voted for it. This allowed some Democrats the opportunity to vote against it as a sop to constituents or to build their resumes in contemplated runs for the White House in 2016. They included newly inducted Senator Cory Booker (D-N.J.), along with Senators Elizabeth Warren (D-Mass.), Amy Klobucher (D-Minn.), and Kirsten Gillibrand (D-N.Y.).

Others whom Republicans bailed out with their “yea” votes included naysayers

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51 OECD Countries Sign Tax Evasion Treaty

This article first appeared at TheNewAmerican.com on Monday, November 3, 2014: 

Last Wednesday’s agreement among 51 countries belonging to the Organization for Economic Co-operation and Development (OECD) in Berlin to share tax information across borders in a continuing effort to crack down on tax evasion was announced with great excitement but precious little logic.

German Finance Minister Wolfgang Schaeuble told the group at a meeting entitled the “Global Forum on Transparency and Exchange of Information for Tax Purposes” that the agreement is “a joint contribution to more transparency and fairness in our globalized 21st century.” Britain’s Finance Minister George Osborne added, “Tax evasion is not just illegal, it is immoral. You are robbing from your fellow citizens and you should be treated like a common thief.” Said Osborne, the new treaty “strikes a blow on behalf of hard-working taxpayers.”

A careful look reveals that the new treaty in fact is designed to benefit tax collectors, not taxpayers.

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CBO’s Funny Math

This article first appeared at The McAlvany Intelligence Advisor on Wednesday, October 22, 2014:

National debt clock

National debt clock

The Congressional Budget Office’s August update to the federal budget and outlook for the next 10 years released last week was so filled with questionable assumptions as to make their conclusions completely unrealistic. As expected, the mainstream media focused only on the parts of the report that fed and supported their worldview. For instance, the CBO said that revenues were expected to increase by about 8% over last year to a world record $3 trillion, thanks to increases in individual income taxes, payroll taxes, and corporate income taxes.

This was understood by the White House and establishment economists to

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National Debt to be $27 Trillion in 10 Years, Says the CBO

This article was first published at TheNewAmerican.com on Thursday, October 16, 2014: 

English:

There was something for everyone in the release last week by the Congressional Budget Office of its August update and outlook. The federal government’s revenues are expected to top $3 trillion this year for the first time in history, thanks to individual income taxes rising by six percent, payroll taxes by eight percent, and corporate income taxes by 15 percent. Those infatuated with big government are celebrating the event as a reflection of an improving economy resuscitated by government spending and stimulus programs. Small government advocates, on the other hand,

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Despite Stock Market Gains, Public Pension Plans Fall Further Behind

This article first appeared at TheNewAmerican.com on Thursday, September 25, 2014:

 

In its latest report on public pension plans, Moody’s announced on Thursday that, despite recent historic gains in the stock market, those plans’ liabilities are increasing even more quickly. Reporting on the 25 largest public defined benefit pension plans in the country, Moody’s Global Credit Research estimates that those plans are now $2 trillion short of where they need to be to pay out all the benefits promised to their beneficiaries. This has occurred despite record gains in the stock market, which,

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California Governor Being Challenged by Republican Upstart in November

This article first appeared at TheNewAmerican.com on Tuesday, September 23, 2014:

English: Photo of California Attorney General ...

California Governor Jerry Brown

In response to a challenge posed by his Republican opponent for the governorship in November, California Governor Jerry Brown said:

A lot of people forget the mess that California was in just four years ago. There were 1 million jobs that had been lost. Our budget deficit was astronomical: 27 billion. We hadn’t had a budget on time in probably 10 years.

Brown’s challenger is Republican Neel Kashkari, a practicing Hindu born of Indian parents with a background as a Bush appointee and a former executive with Goldman Sachs. While his political positions on key issues qualify him as a RINO — Republican in Name Only — he is already closing the gap on the once-invincible California governor.

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House Slashes IRS Enforcement Budget Almost 25 Percent

This article first appeared at TheNewAmerican.com on Wednesday, July 16, 2014:

English: Anti-United States Internal Revenue S...

Earlier this week the House of Representatives took up the Financial Services and General Government Appropriations Act to fund the government for the next 12 months. In the process it took advantage of the opportunity to savage the IRS by cutting its funding severely, specifically its enforcement budget dedicated to “assisting” taxpayers to stay in compliance with its 74,000-page tax code.

Thanks to Lois Lerner (former director of the Exempt Organizations Unit of the IRS and potential future inhabitant of a federal penitentiary for her role in ordering the illegal scrutinizing and delaying of conservative groups’ applications for tax-exempt status and then covering up those orders by conveniently losing potentially incriminating e-mails), members of the House had a field day piling on amendments to the bill. Along the way they relieved themselves of some of the frustrations they have felt as the IRS has rebuffed and stalled them during various House committee investigations into those matters.

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The New Third Rail: Cutting Government Spending

This article was first published by The McAlvany Intelligence Advisor on Monday, July 14, 2014:

 

Historical government spending in the United S...

Historical government spending in the United States from 1902 to 2010

Back in February the Congressional Budget Office (CBO) estimated that the deficit for the 2014 fiscal year would be $514 billion, or about 3 percent of the total economic output of the country. Since this was a nearly 27 percent drop from last year, the implication is that all is well, nothing to see here, move along please. After all, the perception has been that the White House has been spending money faster than at any time in history, running up deficits and the national debt to staggering levels. Half a trillion? Is that all? Pocket change!

Greg Valliere, the chief political strategist for the Potomac Research Group, said at the time that this guaranteed that there would be no pressure for any sort of entitlement reform this year. Jack Lew, Obama’s Treasury Secretary, said the numbers bought some time: “We have a little time to deal with the long term.”

Last week both the White House and the CBO revised downward even further the expected deficit, with Obama taking full credit for the result:

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.