Thursday, March 31, 2011

Don't worry, Europe! - Paul Krugman says your debt is not a big deal. NY Times: "Setbacks in Portugal and Ireland renew worries on debt crisis."

(Almost) April is the cruelest month - So I went to my kid's Spring concert tonight where they performed songs like "Comes the Rain with Me" and "Welcome Spring!" Then we get outside and it's blizzarding snow.

Tuesday, March 29, 2011

Obamacare and the vile weed

Here's Jonathan Adler at the Volokh Conspiracy with "Justice Kennedy, the individual mandate and the broccoli question."
This, in the end, is why mandate defenders need to be able to provide a doctrinally satisfying answer to the broccoli question: If the federal government may require everyone to purchase qualifying health insurance plans from private companies, why can’t it also require everyone to purchase broccoli? Suggesting that Congress would never seek to do such a thing is insufficient, as citing political safeguards on federalism is no answer and does not respond to Justice Kennedy’s concern.
How would Justice Newman rule on this?

Tax the rich...and hope they stay rich - Over at Opinion Journal, Robert Frank writes that states overdependent on wealthy taxpayers are inordinately hurt when that tax revenue disappears in a recession: "The top 1% of earners fill the coffers of states like California and New York during a boom - and leave them starved for revenue in a bust."
Riding the wave to 2012 - Pajamas Media: "Social Security: Obama and the Democrats dodge their debris."

On a related note, the non-partisan had this one last month: "Democrats deny Social Security's red ink - Some claim it doesn't contribute to the deficit, but it does."

Monday, March 28, 2011

Slo-Mo-Town - Opinion Journal "A Requiem for Detroit": "Unlike New Orleans and Japan, the ruin we see in Detroit is entirely man-made."
"Like Syria" - That's what I kept repeating over and over again to the television while watching Obama's speech. There's nothing he said about Libya and Gaddafi that wouldn't apply to Syria and the Assad family.

Sunday, March 27, 2011

Physics humor - Saw a red bumper sticker today with the text: "If this bumper sticker is blue, you're driving too fast."
Message management

AoSHQ: "Gates: Libya isn't in our national interest, Clinton: Yes it is."

And then there's this guy, back in 2008:

Should be an interesting speech tomorrow.

Extra - Or maybe the White House wants to limit the message.

Saturday, March 26, 2011

Fantasy finances

Here's an interesting tidbit from this WashPost article "Pensions squeeze government budgets." Over two-thirds of the largest public pension plans assume a rate of return of 8% or greater, while the S&P average annual growth for the past 20 years has been less than 6%.

Just last week, the nation's largest public pension plan - California's CALPERS - voted down the recommendation of it's own chief actuary to adjust the plan's investment forecast to 7.5%. CALPERS stuck with their 7.75% expected rate because lowering the estimate would mean that California towns and cities would be on the hook for millions of new contributions. So they embraced the fantasy of unrealistic returns.

The California voters, it seems, are getting concerned.

Friday, March 25, 2011

How Social Security dies by torpor

Writing in the WashPost, Social Security trustee Charles Blahous lays out a credible scenario on how an unreformed Social Security could die by inaction:

If we delay until 2031, taxpayers would already be providing $280 billion annually in additional general revenue (read: income taxes), just to redeem trust fund bonds and to keep benefit payments flowing. These obligations of general revenue would be nearly as great as the amount required to fix the shortfall after 2037.

Given those circumstances, what would legislators do? Would they impose sudden benefit reductions and tax increases more than three times larger than in 1983, to preserve Social Security’s continued ability to finance itself? Or would they shrug and say, “Well, general-income taxpayers are effectively subsidizing Social Security already. Let’s just formally have them keep doing it.”

The answer seems obvious. Faced with a choice between wrenching benefit cuts and/or payroll tax increases vs. tearing down the wall between Social Security and the rest of the budget, legislators will tear it down.

And that would be the end of Social Security as we know it. No more separate trust fund. No more special parliamentary protections. No longer would benefit payments be shielded from the chopping block by the rationale that they were funded by separate payroll tax contributions. Social Security would be financed from the general revenue pool, and its benefits would thereafter have to compete with every other federal spending priority.
Remember how we've been told that those Social Security bonds are real and not an accounting trick? OK, let's assume that's true. It's 2037 and the Trust Fund is depleted and the Social Security administration can only pay out what's coming in through the payroll tax, meaning that everybody get an automatic 25% benefit cut. I wonder how the popularity of the system will fare after millions of workers do the math to find they've been duped into a giving the government a multi-decade free loan with a negative return on investment.

So, go ahead and do nothing.

ExtraHot Air: "Democrats appear to belatedly awakening to this very danger."

Thursday, March 24, 2011

Ron Swanson's Pyramid of Greatness

I like "Parks and Recreation" and I love Ron Swanson. (H/T EW with link to big version.)
NATO puts Libya on double secret probation - Here comes the mission creep. CNN: "NATO may go for enforcement of 'no fly plus'."
A bunch of economists agree - Politico: "Unsustainable budget threatens nation."

Extra - From the Corner.

Tuesday, March 22, 2011

Betty Friedan is dead - Who gives a fig what the National Organization of Women (NOW) has to say about Sarah Palin? You might as well ask Bert Convy or some other relic of the 70s. That organization has been a joke since the "one free grope" rule was invoked.
Missed this one yesterday - Veronique de Rugy: "Autopilot programs will squeeze out everything else." Bye-bye, discretionary spending.

Monday, March 21, 2011

The Great Un-decider - Hot Air: "Obama will punt on Social Security reform." With video goodness of Candidate Obama telling us that "a candidate for President owes it to the American people to tell us where they stand." The actual President: not so much!
Americans don't like it - And the taxes haven't even kicked in yet. Reason: "The Sisyphean struggle to sell Obamacare." As Factchecker Glenn Kessler of the Washington Post notes, most of the Democrats' perpetual sales pitch involves oft-repeated lies.
Yes, it's another post about our crushing debt

Monty at AoSHQ links to a Victor Davis Hanson article then echoes my feelings exactly:

We are in a very real sense selling our own children into indentured servitude so we can continue to live beyond our means.
This makes me incredibly angry. It offends me on a very deep moral level. If we had simply arrived on the scene with the situation as it is, we'd be baying for blood and demanding fundamental changes. But since we have marinated in this dream-world for our entire lives, we simply take it as our due. There is the incoherent but widely-spread belief that...well, things will just work out, somehow, without anyone having to make any difficult decisions.
That's accurate: everybody except the "crazy" Tea Party is buying into the fiction that we can "grow" our way out of debt if we could just get the economy moving again even as the CBO reports that Obama's budget would double the national debt by 2021.

What's equally annoying is that a lot of newly-minted history buffs are pointing to Americans 100%+ debt-to-GDP load after World War II as a sign we can erase this debt again. Impossible. In 1946, Social Security didn't have pubic hair, Medicare wasn't yet enacted and America's economy was the only game in town, flush with returning GIs to fill the labor force. The situation this time is the exact opposite: our economy is losing ground to rapidly expanding economies (the ones lending us money), and the mandatory spending of entitlements and interest on the national debt are swallowing the federal budget.

What do we do? Congress is holding drag-out, knock-down debates on cutting $6 billion from the annual budget as we roll up over triple that amount in overspending in February alone. This is how the country dies, not with a bang but with the whimper of a downgraded credit rating.

Sunday, March 20, 2011

Impeachment watch - They warned me in 2010 that if the Republicans gained control of the House of Representatives, there would be calls to impeach Barack Obama. And they were right!

Extra - Smug and sting at Instapundit.

Saturday, March 19, 2011

Borrow from your left pocket to pay the right

Charles Krauthammer strikes back at White House budget chief Jack Lew over Social Security with "It's still an empty lockbox."
Invoking the “full faith and credit” mantra for those IOUs in the trust fund is empty bluster. It does not change the fact that, as the OMB itself acknowledged, those IOUs “do not consist of real economic assets that can be drawn down in the future to fund benefits.” Yet Lew continues to insist that these “special issue” trinkets will pay off seniors for the next 26 years.

Nonsense. That money is gone with the wind. Those trust fund trinkets are nothing more than a record of past borrowings. They say nothing about the future.

Consider: If Treasury had borrowed twice as much from Social Security in the past — producing twice as many IOUs sitting in the lockbox — would this mean the trust fund is today twice as strong? Solvent for 50-some years instead of just 26? Of course not. The trust fund “balances” are mere historical record-keeping. As the OMB itself admitted, future payouts will have to be met by future taxes and future borrowings — or by Social Security reform that, by reducing benefits, makes such taxing and borrowing unnecessary.

There is no third alternative. There is no free lunch. And there is nothing in the lockbox.
As I've noted for several fruitless years, those "special" Social Security bonds are an accounting trick and they represent claims on the U.S. Treasury that cannot be paid without either finding other sources of revenue and borrowing, or by monetizing the debt by printing money and allowing inflation to run away. Those "special" bonds don't exist in a vacuum: Social Security recipients want money and it has to come from somewhere.
Et tu, Streisand? - According to Lloyd Grove at the Daily Beast, the eggheads at the Aspen Ideas Festival have fallen out of love with Obama.
A trillion here, a trillion there - Pretty soon you're talking about crushing debt. WashPost: "CBO: Obama policies would require deficits of $9.5 trillion through 2021."

Related - Powerline finds that "slashing" the budget adds up to one-third of a french fry in a Big Mac meal.

Friday, March 18, 2011

Deciding not to decide

Remember when candidate Obama said that taking a position was "above my pay grade"? Good times. Here's Kimberley Strassel with "President 'Present.'"

While a bipartisan mix of Senators beg our President to take a position on the budget crisis, Obama's jetting off to South America for Carnival! But he'll be back in time for a Chicago party.

It's good to be the king President. Fire up Air Force One! Bammy wants deep-dish pizza.

Tuesday, March 15, 2011

Running out of other people's money

Kevin Williamson explains how we can't tax the rich to erase the deficit in "There aren't enough millionaires." For example: if we depend on only millionaires to wipe out the shortfall, we would have to increase their annual federal taxes by $6 million. Even people pulling down a cool million a year can't pay $6 million in taxes.

You can be fiscally sane, even when the government isn't - Megan McArdle has a common sense (cents?) rundown of the "10 quick pickups for your personal finances." For my money (yuk yuk), Beth Kobliner's "Get a Financial Life" should be required reading for every person starting out in a new job. Short version: save your money, dummy, and don't buy that Jet-Ski.
No Social Security reform from this White House - Moe Lane reads between the lines of a story from the Hill and correctly declares: "No SS reform from Obama Administration."

This is all theater from this Administration to spray a patina of "fiscal seriousness" before the inevitable election year pivot to "defending Grandma's check." It's pretty obvious from Obama's kiss-off to the Deficit Commission that he's going to nothing to tackle our long-term debt problem.
Obama's got top men working on the government - Top. Men.

Saturday, March 12, 2011

"The claim is a breathtaking fraud" - Don't know how I missed this one but Charles Krauthammer had an article the other day about how the White House is embracing the fiction that Social Security is fiscally sound.

Extra - Rep. Paul Ryan on what's driving our debt.

Friday, March 11, 2011

Earthquake in Japan - There's not much I can add at this late hour except that I was listening to NPR this morning and the reporter in Japan had to pause every minute or so to say " comes an aftershock."

Used cars for sale, slight water damage:

(H/T The Truth About Cars)

Thursday, March 10, 2011

Everybody knows it's coming - Deficit commission chair Erskine Bowles and Alan Simpson call our coming collapse "The most predictable economic crisis in history." The canary in the coal mine is that big investors like Warren Buffet are edging away from U.S. bonds.

In other economic news, President Obama has called a press conference tomorrow to talk about oil prices. My prediction: he's going to say the Commerce Clause can force Americans to buy a Chevy Volt.

More - Congressional Democrats to Obama on the budget: "Are you gonna do anything?" Obama: "No time! Gotta give my big speech on bullying."

Wednesday, March 09, 2011

Vote of no confidence - National Review Exchequer: "Biggest bond fund dumps U.S. debt."
What? What'd I miss? - That was sudden: "Wisconsin Senate GOP votes to strip state workers of collective bargaining rights."

Extra - Good review from Legal Insurrection.
Government spending: is there anything it can't do?

I guess President Obama was in Boston yesterday at a fundraiser for the DCCC. His speech was boilerplate stuff: what a terrible economy we inherited, look how we turned it around, and we need to address the deficit but let's give all these schoolkids their own laptops.

This section, however, boggles the imagination:

We’re going to have to make an investment to make sure that research and development, the cutting-edge technologies that drive our economy, continue to happen right here in Boston. You go over to MIT, you go over to Harvard, and they’ll be the first ones to tell you if we don’t have federal research grants, a lot of the work we do is not going to happen. And if it’s not happening there, then all those biotech firms, all those medical advances aren’t going to be taking place here, or along Route 128.
I love Obama's credulity here: these colleges say that unless they get a big pile of taxpayer cash, it's back to the Middle Ages because this research is "not going to happen." (As the Church Lady would say: "How convenient!") Remember how Thomas Edison took that big federal grant from Rutherford B. Hayes to develop the light bulb? And Steve Jobs built Apple on the taxpayer's dime? Thank heaven for public funding to underwrite Jonas Salk's research on the polio vaccine. Otherwise, it might never have happened.

Tuesday, March 08, 2011

Three Pinocchios - WashPost: "Did we say Obama's a liar on the level of budget cuts? We meant to say he's a triple liar."
Very bad things - Christian Science Monitor: "What happens if Congress doesn't rein in national debt?"
Today's most unexpected headline - Politico: "Reid: Save federal funding for the cowboy poets!" It's all about priorities, people. I mean "y'all."
The black hole - Over at Opinion Journal, Gerald Seib takes note that interest on the national debt is "a quiet cancer" on the nation's fiscal position. I think it was former newscaster David Brinkley who commented that interest on the debt buys America nothing: no Medicare, no highways, no shiny new aircraft carriers. And every year, we're paying a bigger share of nothing.

Monday, March 07, 2011

Sucks to be you, Generation Y

I'm bone-tired of hearing Nancy Pelosi and others complain that anything over $6 billion in budget cuts is tantamount to kicking schoolkids into the snow. I wonder where's the moral outrage of saddling these same kids with mounds of debt, high inflation, and an anemic economy. Over at National Review, they lay out the numbers in "An Emergency for Americans under 30."
A news alert for the Debt Paying Generation: President Obama’s budget for Fiscal Year 2012 brings the national debt from $14.1 trillion to nearly $26.4 trillion by 2021. This will take the amount of debt per working American by the end of this fiscal year - all 153,000,000 of them - from $101,150 to more than $161,631. Young Americans are going to get hammered by this debt if entitlement, welfare, and defense reforms are not under way within the next two to five years.
Those 115 million Americans between 5 and 30 years old are going to have to absorb virtually all of this debt.
Just today, word came out that the Obama Administration has presided over the largest monthly deficit in American history, overspending by $223 billion in February. Yet it's next-to-impossible to get Congress to cut $6B, much less $100B, from the yearly budget which is now running a deficit over $1.6 trillion.

Sorry, kids.

More - Via Powerline, the budget cuts in perspective:

Saturday, March 05, 2011

Always look on the bright side of life

I know I can be a gloomy Gus with all my hand-wringing over America's debt, so it helps to read some encouraging words from eminent British historian Paul Johnson:

"Of course I worry about America," he says. "The whole world depends on America ultimately, particularly Britain. And also, I love America - a marvelous country. But in a sense I don't worry about America because I think America has such huge strengths - particularly its freedom of thought and expression - that it's going to survive as a top nation for the foreseeable future. And therefore take care of the world."
He goes on to say that the Tea Party movement "cheered me up to no end" and he's a fan of Sarah Palin.
The man is a menace! - Here's a NY Times story about David Koch's $100 million gift to open a cancer research center at M.I.T.

Friday, March 04, 2011

Steyn speaks - Here's Mark Steyn in an interview with Hugh Hewitt discussing the debt crisis and the reality of entitlements: "But the fact is, these entitlements are unsustainable. So Americans can tell pollsters they're quite happy with 1930's entitlement provisions for Social Security, but it ain't gonna be there."
Sebelius admits double-counting

Thursday, March 03, 2011

It's electric! - Megan McArdle reports that Chevrolet has sold nearly 1,000 Volts. Rising gas prices should push sales of electric cars into the stratosphere, maybe four-digits.
We're all Keynesians kleptomaniacs now

It's depressingly familiar: another poll showing that – even as the country racks up record-shattering deficits – Americans of all political persuasions don't want to do a thing about spending.

Jeff at Protein Wisdom despairs: "And here we thought the country was ready to grow up" and Doug Ross follows up with a post titled "Poll finds lack of support for arithmetic, logic and reason."

As depressed as I was when Obama became President, I held out a long-expressed hope that only a Democratic President could reform entitlements, as "only Nixon can go to China." But it's now glaringly obvious that Obama is utterly and completely unserious about cutting the budget deficit in any meaningful way.

We're going to keep spending and borrowing and spending and putting it on the kid's tab.

Tuesday, March 01, 2011

More heartless governors - Guess who's talking about rolling back pensions for police officers unless he gets tax extensions? California's own Jerry Brown. Meanwhile, over in New York, Andrew Cuomo's proposed health care and education cuts to close a $10 billion deficit are not going over well with the state's Democrats.
Car's a clunker

According to the Detroit News, Consumer Reports took a look at the Chevy Volt and scratched its head:

"When you are looking at purely dollars and cents, it doesn't really make a lot of sense. The Volt isn't particularly efficient as an electric vehicle and it's not particularly good as a gas vehicle either in terms of fuel economy," said David Champion, the senior director of Consumer Reports auto testing center at a meeting with reporters here. "This is going to be a tough sell to the average consumer."
Well, I'm surprised by this assessment since everybody knows that the combination of a corporate model set in the 1950s mixed with an entrenched union (see 50s model) then infused with government intervention always produces gold.

Extra – Patterico "Great news about that Government Motors car": "So it’s not very good, but it is very expensive...And when this car fails, will GM need a bailout to pay for this boondoggle?"