Archives for August 2011

Does anyone really believe this deal cuts spending?

With yesterday’s overwhelming vote in favor of the debt plan in the House, no one expects the Senate not to deliver on putting it on President Barack Obama’s desk. But given pace at the plan has been pushed through Congress, details on what it actually does are becoming clear; and I’m not talking about what media reports say. No, I’m referring to the spending cuts that won’t likely happen, as Chris Edwards notes (emphasis mine):

The “cuts” in the deal are only cuts from the CBO “baseline,” which is a Washington construct of ever-rising spending. And even these “cuts” from the baseline include $156 billion of interest savings, which are imaginary because the underlying cuts are imaginary.

No program or agency terminations are identified in the deal. None of the vast armada of federal subsidies are targeted for elimination. Old folks will continue to gorge themselves on inflated benefits paid for by young families and future generations. None of Senator Tom Coburn’s or Senator Rand Paul’s specific cuts were included.

The federal government will still run a deficit of $1 trillion next year. This deal will “cut” the 2012 budget of $3.6 trillion by just $22 billion, or less than 1 percent.

Debt deal passes the House

In case your head has been buried in the sand this evening, you know that the debt deal struck between the White House and leaders from both parties in Congress cleared the House of Representatives by a vote of 269 to 161. The vote was made even more surreal when Rep. Gabrielle Giffords (D-AZ), who was the target of an assassination attempt during a constituent even earlier this year, showed up to cast a vote in favor of the deal.

The debt plan now moves over to the Senate where it is expected to clear tomorrow, though several conservatives, including Jim DeMint (R-SC) and Mike Lee (R-UT), are expected to vote against it.

We’ll have more on the deal in tomorrow.

[UPDATE] In case you’re wondering, Republicans voted 174 to 66 on the bill and Democrats were split down the middle, 95 to 95.

An economics lesson for Matt Damon

In his pathetic attempt at political activism at the recent and poorly named Save Our Schools rally in D. C., Matt Damon gave an interview to Think Progress in which he stated that “despite what you hear even the union teachers are underpaid.”

Some teachers are underpaid, and some are also highly overpaid. The problem is we don’t know which we’re paying too little and which we are paying too much. As I’ve noted before, absent a free market in education, we don’t know if teachers are underpaid or overpaid because, with fixed wages in a monopoly, we don’t know what teacher wages should be.

If teacher A has an efficacy rating of 85% and teacher B has a rating of 50% and they are both being paid $40k per year (and all other factors are equal), teacher A is being underpaid relative to teacher B. But they both may still be underpaid, or vice-versa, because we don’t know what each of them should be getting paid.

Prices (of which wages are in specie) convey information; they tells us things we cannot know inherently, such as the subjective value of a teacher.

Putting “politics” aside is capitulation

With the August 2 deadline fast approaching, many people are getting more than a little anxious for some kind of deal on the debt ceiling.  One of those is syndicated columnist Donna Brazile.  In her column, she calls on Congress to “drop politics”.  Unfortunately, like most any other person who calls for folks to drop politics, her motivations are political.

You see, any time anyone calls on the opposition group to drop politics, it’s really a call for that other side to shut up and do what the person wants.  It’s no different than calls for bipartisanship.  It doesn’t matter on political affiliation either, because both major parties do it pretty regularly.

However, if Brazile was serious about helping the nation, I would argue, then she would also beg for deep, deep spending cuts that exceed John Bohner and Harry Reid’s plans.  She would be calling for a serious rollback on intrusive government and job hampering regulations that would, ultimately, lead to increased revenue for the federal government.  She would call for a lot of things, but she isn’t.

Like so many others out there, Brazile is just wanting Republicans to shut up and do what she thinks they should be doing.  Is she necessarily wrong?  Well, that’s a topic for debate all on its own.  I honestly don’t want to get into that one right now.  But right or wrong doesn’t really matter, not for the purposes of this post as it applies to the debt ceiling.

Breitbart to Skip CPAC

Some good news to start off this week (in which I suspect everyone will be screaming their lungs out for.) The PJ Tatler reports that Andrew Breitbart, conservative blogger and media mogul extraorindary, will be skipping CPAC 2012—because the American Conservative Union banned the gay Republican group GOProud. (I’m not going to do the usual quote box because the article itself is only a few lines.)

Conservatism as we know it is heading out the door. It may take a little longer to boot it to the curb then progressivism and FDR-style “social welfare liberalism,” but it’s heading towards the door all the same. Breitbart’s decision just highlights what Al Cardenas and the rest of the ACU are doing—shooting themselves in the foot.

Look at New York. Look at the upcoming generation. Look at our country. Those who continue to deny homosexuals the right to marry and live their lives are becoming a minority, fast. And I say good riddance. I hope Al and the gang continue doing and saying things that make them and CPAC more irrelevant, so the rest of us, those who are serious and focuing on grown up matters, can finally take care of our real problems.

Global Warming models fall short

For years, we’ve been told that scientific models show an increase in the Earth’s temperature due to greenhouse gases.  The incredible heat we’ve been experiencing in Southwest Georgia makes it kind of hard to argue with folks who can’t help but believe that the heat we’re experiencing is climate change made real.  Unfortunately, science seems to disagree:

Study co-author Dr. Roy Spencer, a principal research scientist at the University of Alabama in Huntsville and U.S. Science Team Leader for the Advanced Microwave Scanning Radiometer flying on NASA’s Aqua satellite, reports that real-world data from NASA’s Terra satellite contradict multiple assumptions fed into alarmist computer models.

“The satellite observations suggest there is much more energy lost to space during and after warming than the climate models show,” Spencer said in a July 26 University of Alabama press release. “There is a huge discrepancy between the data and the forecasts that is especially big over the oceans.”

In addition to finding that far less heat is being trapped than alarmist computer models have predicted, the NASA satellite data show the atmosphere begins shedding heat into space long before United Nations computer models predicted.

The new findings are extremely important and should dramatically alter the global warming debate.

Indeed, it should.

August 2nd: A Day That Won’t Live In Infamy

If a deal hasn’t been reached by the time this is posted (the agreement reached by congressional leaders and the White House over the weekend is pending caucus approval), then tomorrow will be a day of infamy. According to public consensus, our credit rating will be downgraded, our borrowing rates will skyrocket, Social Security checks won’t go out, we’ll have to lay off millions of government workers (oh hyperbole), China will get mad, and our cost of living will sharply increase while the quality of living decreases dramatically. The sky will fall, the world economy will collapse, unemployment will make what we have now look like a cakewalk. It will be Disaster;.

Except it will be none of these things.

August 2nd, if a deal is not reached, will not spell the end of the world. Even if S&P and Moody’s try and downgrade the United States. Why? Three reasons: One, if the markets thought we were going to be screwed, they would have done it before. Second, the credit rating agencies are utterly superfluous and worthless when it come to US debt. Third, even if we hit the debt ceiling, Turbo Tax Geithner will be permitted to prioritize interest payments on the debt and send out Social Security checks, meaning we won’t have a default (and Grandma can still buy the ingredients for her damned fruitcake.)

Taken together, these three things illustrate a picture where August 2nd isn’t the end of the world, and that we should really slow down, take a deep breath, and then have a shot of whiskey. Preferably rye, but that’s just me.

Article the First: The market was supposed to explode under the debt ceiling, showing how urgent and necessary it is to raise it, according to John Carney:

Obama, congressional leaders agree to a debt deal

It looks as though congressional leaders have agreed to a deal that would raise the nation’s debt ceiling and cut spending in advance of tomorrow’s deadline:

President Obama and congressional leaders announced an agreement Sunday night to raise the debt limit by up to $2.4 trillion, ending a long partisan stalemate that threatened to send the nation into default.

The announcement caps a weekend of frantic negotiations as both parties worked to beat Tuesday’s deadline for a default.

The bipartisan deal is not final until rank-and-file members from both parties give it a green light but Republican leaders expressed confidence their side would approve it.
The deal would set up a select 12-member bicameral committee to put together another $1.5 trillion deficit-reduction package that must be reported to Congress by Thanksgiving and which Congress must approve by Christmas.

If the special committee deadlocks or Congress fails to act on its recommendations, it would trigger $1.2 trillion in across-the-board spending cuts divided evenly between defense and non-defense spending.

The automatic spending cuts would apply to Medicare but not Social Security, Medicaid, veterans or civil and military pay, according to a summary provided by Boehner’s office.

A congressional aide familiar with the deal said the Medicare cuts would not affect beneficiaries. Healthcare providers and insurance companies, however, would see a reduction in payments. Cuts to Medicare would be limited to 2 percent of the program’s cost, according to a Democratic fact sheet.

Total discretionary spending in fiscal year 2012 and 2013 would be reduced by $7 billion and $3 billion, respectively, compared to current levels, according to a Democratic summary. National security cuts would account for half of those savings.

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