Showing posts with label budget. Show all posts
Showing posts with label budget. Show all posts

Monday, February 09, 2015

Gridlock is Good! (exclamation point optional)

Gridlock Escher
In January, the Congressional Budget Office published the 2015 estimate of federal spending, revenues, and deficit. On Groundhog Day, President Barack Obama released the administration's proposed FY 2016 Federal Budget. At the intersection of the two was a White House twitter-storm promoting the budget and taking credit for deficit reduction during the Obama administration.
The White House neglected to mention that the deficit reduction was primarily realized over the four years since the GOP took majority control of the House of Representative and divided the government. It takes a special kind of chutzpah for the President to complain about "mindless austerity" and congressional obstruction when they are the very reason for the declining deficit he is bragging about. But he did. The cognitive dissonance is only made worse by a few inconvenient facts:

Wednesday, January 01, 2014

Carnival of Divided Government LVI
Excessum et Renatum
Special Last Carnival
& 2014 New Year Edition


Welcome to the Carnival of Divided Government Excessum et Renatum - Special 56th and Final 2014 New Year Edition.

As noted before, the whole "Blog Carnival" concept is well past its "Sell By" date, eclipsed by Facebook, Twitter, and other social network aggregation schemes. Blog Carnivals were popular when the Dividist started this blog in 2006. The idea was to solicit and compile posts and articles contributed to the carnival on a particular subject then periodically share the content and links on the blog. Social media fulfills that function now.

We've not received much relevant content contributed to the carnival for a few years. This feature morphed into a simple compilation of topical posts and articles that caught the Dividist's attention as he wandered about the 'sphere. The format was as comfortable as a old shoe, so we just kept it going.

As we return from an extended sabbatical, kick off an election year, and attempt to insinuate this blog into social media platforms, the time has come to put this obsolete format to bed. This last effort will help the Dividist "prime the pump" after the long layoff, but the Oblogocare Death Panel has spoken. Without further ado, here the Carnival of Divided Government swan song....

Tuesday, March 12, 2013

The First Season of Sequestivus
A Time to Air Grievances

It is the season of Sequestivus

The legend of the origin of Sequestivus*

The great leader Obama, who was dearly loved by (52% of) the people spoke to his minions and said "Hear me! You must fear the great beast Sequester, for if it is loosed upon the land there will pestilence and famine." And the people listened to Obama and wondered.

"Go now!" He pointed "Go to the dark castle on the Hill, where the Congress of Many Heads created the great abomination called Sequestration. Bring your pitchforks and torches! Storm the castle and kill the great beast before it wreaks havoc on the land!" The great leader Obama paused, nodding his head sagely  "And if you accidently kill the Congress of Many Heads that lives in the castle on The Hill, well - you know -  collateral damage... shit happens... I wouldn't get too worried about it."

The people considered what the dear leader said and asked. "WTF? A 2.3% decrease in the rate of spending increases? Are you f*cking kidding me? Do you have any idea what kind of cuts we've had to make over the last four years? And you're saying can't figure out how to cut a lousy 2.3% out of this bloated governments spending increases?"

And the dear leader Obama's heart was heavy when the people did not heed his warning. Not to mention pissed. So it came to pass that the Sequestration monster was released to prey upon 48% of the people. And the great leader Obama again went to the people and said "I declare this to be the Season of Sequestivus,  A time of regret, remorse, and recrimination. Let the Airing of Grievances begin."

And so, as a public service, the Dividist Town Crier herewith offers a selection of public grievances in this the first fortnight of the first season of Sequestivus.

Monday, February 18, 2013

Sequestration is not the problem. Sequestration is (part of) the solution.

UPDATED: 2/20/2013
Find the sequester 
The steady drumbeat in the mainstream media about the sequestration "crisis" is getting louder by the day. With less than two weeks until the cuts go into effect it is already approaching an absurdist crescendo.
the scream
The sequestration is coming!
Let's be clear. The "sequester" is not a crisis.  The "sequester" is not the problem. The real problem is the massive growth in federal spending creating unsustainable deficits and debt that will be shouldered by generations to come.  The "sequester" is a solution to a real problem facing America.

That said, the "sequester" is not a great solution.  It's not even a good solution.  The sequester cuts are not a smart way to address the spending problem. The sequester cuts are also not adequate to solve the spending and unfunded liability disaster that looms in our entitlement programs. But the odds of getting anything smart out of this administration or this congress that even makes as little impact on the real problem as do the sequester cuts are vanishingly small. Since it's a bad bet to rely on our leaders for smart significant cuts, let's at least take the cuts they already passed.

Monday, August 22, 2011

When Bipartisanship Happens to Good Partisans
A meditation on debt ceilings and deficit reduction.

In the dark days before the debt ceiling compromise vote, with the doomsday "debtapocalyspe" countdown dominating the media, several polls struck a common theme: The public demands bipartisan compromise! Taegon Goddard's Wire summarized the gestalt of the moment:

"A new Pew Research poll finds 68% of Americans say that lawmakers should compromise on the debt ceiling debate, even it means striking a deal they disagree with. Just 23% say lawmakers who share their views should stand by their principles, even if that leads to default."
So it follows that when our representatives and leaders in Washington D.C finally got together and crafted a truly bipartisan deal, the country cheered wildly. Or not:
"A majority of Americans disapprove of the deal struck Sunday by President Barack Obama and congressional leaders that will raise the country's legal borrowing limit, and three out of four believe elected officials have acted like "spoiled children."
Since that legislation was signed, nothing but cries, lamentations and the rending of garments has been heard across the land. The animus from the right, left and center for the debt ceiling compromise is quite extraordinary. Q&O had a good survey of the early reaction and little in the popular assessment has changed in the weeks since.

Congressional and presidential approval levels plunged to new lows. When describing the debt ceiling deal and the process and the process to get there, the pejorative of choice is : Our government is... OMG ! DYSFUNCTIONAL! And it must be true. I mean ~750,000 Google search hits on "debt ceiling dysfunctional" can't be wrong. Who am I to argue with that? But maybe, just maybe - dare I say it? Our government is working exactly as it was designed to work, and our representatives are doing exactly what we, the voters, sent them to Washington to do.
For all of the lip service paid to the virtues of bipartisan compromise from pundits and bloggers across the political spectrum, there appears to be very little support for a picture perfect example of a bipartisan centrist compromise when Congress does enact one.

Consider the actual vote for the debt ceiling legislation:
Senate Vote: 74 For 26 Against
Republicans: 28 For 19 Against
Democrats: 46 For 7 Against
House Vote: 269 For 161 Against
Republicans: 174 For 66 Against
Democrats: 95 For 95 Against
There is simply no way to characterize this vote except as an overwhelming bipartisan compromise victory. Moreover, to the extent that “Centrist” actually means anything in concrete policy terms, this was a purely Centrist piece of legislation. The extremes of both parties voted against it. It required a bipartisan coalition of more moderate, centrist, practical Democrats and Republicans to pass this legislation. Liberal votes were not needed. Tea Party votes were not needed. It passed overwhelmingly. It is exactly this model that future deficit reduction legislation will follow.

Wednesday, July 27, 2011

SPOILER ALERT! How the debt ceiling "crisis" ends.


Well played gentlemen!

Kabuki Theater - a traditional form of Japanese drama characterized by highly stylized postures and exaggerated gestures accompanied by familiar songs and plots rooted in historical tragedy (or comedy). The audience knows the story and knows how it ends. The art is in the quality of the performance and not in the plot. In the United States, this art form is more easily recognizable as "The Debt Ceiling Crisis." A few weeks ago the Dividist commented on the Outside The Beltway blog, describing the show we were about to witness:
"The only thing that provides political cover for a compromise for both sides is the dire consequences of missing the deadline. So there will be a compromise. The compromise will include some formula for revenue increases, (probably in the form eliminating deductions while reducing rates), it will include cuts to the military, and it will include deep meaningful and substantial cuts in spending in the overall budget. And the compromise will be agreed on the brink of default to no one's satisfaction. In the meantime, we have six weeks of Kabuki theater to enjoy while the eventual compromise is hammered out. Both tribes will have ample opportunity to point at the feckless hypocrisy of the other. Enjoy the show."
While the Dividist is not ready to take a victory lap, he does not see any reason to change that prediction. The debt ceiling will be raised, because all leadership on both sides of the aisle say it will be raised. There is no politician of consequence in Washington who is saying otherwise. We know how this story ends. It is all about the performance that takes us there.

This is not to say that the performance is unimportant. Quite the contrary. The performance will determine public opinion and the final shape of the compromise. Whether looking at the more recent temporary measures proposed by Reid, McConnell and Boehner, or the "Grand Bargain" that was being negotiated between Obama and Boehner - the fact is that the two sides are very close, as Ezra Klein explains:

"Now, remember that the deal Obama offered Boehner about a week ago now, or maybe a little bit less than that was $1.2 trillion in tax increases for $4 trillion in deficit reduction total. Boehner walked from that. but Boehner did say he would be okay with an $800 billion tax increase if there were $4 trillion in debt reduction total. So in some strange way, the two aren't as far apart as you would think, but they can't bridge that final gap. so now Boehner's arguing for no tax increases at all, but Obama is sort of held to that same deal and is trying to continue to offer it to Boehner."
The "Grand Bargain" is still on the table. That became clear in the dueling press conference "arias" sung by the two principal actors Monday evening. Despite Harry Reid proposing a plan with no revenue increases earlier in the day, Obama ignored Reid's plan in his speech and continued to make the case for his version of the "Grand Bargain" - including revenue increases. Despite Boehner himself proposing a stop-gap measure earlier in the day - he spent most of his press conference arguing the case for his version of how the "Grand Bargain" negotiation broke down. Conclusion - they are still negotiating the big deal in earnest.

Boehner is playing his supporting role exceedingly well in the shadow of Obama's scene stealing dramatics. Still - the President has an edge, successfully portraying himself to the press and most of the public as the more reasonable party in the negotiation. Last week he attempted to press this advantage to push for full $1.2 trillion in revenue increases. That was when negotiations broke down. He pressed it again on Monday with a call for public support to apply pressure in the House. Boehner played his last best move, exiting stage right, proposing a stopgap, knowing that Obama really wants the "Grand Bargain". But Obama knows that Boehner wants it too. The plot thickens.

The simple fact is that the $400 billion difference is not all that significant in the context of the complete $4 trillion deficit reduction plan. These last few moves are about how that last $400 billion will be split. So far - advantage Obama - but it's not a big advantage. The Dividist predicts Boehner will move off of his $800 billion "revenue enhancement" cap, but it will stay under $1 trillion.

The problem - both now and throughout the process - is that this "blink contest" negotiation cannot be settled except on the brink of a looming disaster deadline. Neither side can satisfy their constituency with the inevitable compromise. Our representatives on both sides take considerable political risk if they compromise too early - i.e. before a doomsday deadline. We've seen this every time the sides get close. Liberals and Democrats are furious at Obama and Reid. Conservatives and Republicans are furious with Boehner and McConnell.

The compromise solution requires a hard deadline. The key variable determining when an agreement is reached will be when we - The People - agree whether the deadline is real and exactly when it takes place. This is part of what we heard last Friday, with both sides upping the rhetoric to make the case that the deadline was really on Monday. Nobody bought it. So we are back to the August 2 deadline, except that may not be a real deadline either. Boehner's stopgap plan moves the deadline ahead another six months. Nobody really wants that either. The Dividist continues to believe the most likely scenario is that we will get a real compromise by Monday.

A suggestion: Instead of assuming that one side or the other are intransigent hypocrites, consider the possibility that both sides are arguing from principle (i.e. sincerely believing they are fighting for a position that their constituency holds dear). If you accept this framing, then it follows that both sides must maintain the posture that they are willing to walk right up to the brink of a debt ceiling default rather than compromise their principles. To do otherwise would undermine their negotiating position and be a betrayal of the people who elected them.

Monday night the President said - "The American people may have voted for divided government, but they didn’t vote for a dysfunctional government." A good line, but it misses the mark. We have a divided government because we have a divided country.

There is a significant faction of the electorate who would like to see our country more closely emulate a European style social welfare democracy. There is an equally significant faction of the electorate who would like to see our country move back to the more limited government concepts on which it was founded. To a large extent the Democratic and Republican politicians we elected to represent us are doing exactly what we expect of them - representing our views - just the way we want them to. Our government is not dysfunctional, it is behaving as designed to resolve conflicts between large and opposed factions in the populace.

Oddly, The Dividist is filled with optimism and almost euphoric watching this peformance. It reinforces his belief that he does not need to put any faith in the motivations of the politicians of either party. It is enough to know that we have a system that was designed to anticipate this kind of political conflict - in fact - to insist on it and institutionalize it. As James Madison said in Federalist #51 when arguing for our constitutional division of power: "Ambition must be made to counteract ambition." Out of the conflict inherent in a government run by men and not angels we get better results than we would in the absence of the checks they put on each other. Madison again in Federalist #10:
"The influence of factious leaders may kindle a flame within their particular States, but will be unable to spread a general conflagration through the other States. A religious sect may degenerate into a political faction in a part of the Confederacy; but the variety of sects dispersed over the entire face of it must secure the national councils against any danger from that source. A rage for paper money, for an abolition of debts, for an equal division of property, or for any other improper or wicked project, will be less apt to pervade the whole body of the Union than a particular member of it; in the same proportion as such a malady is more likely to taint a particular county or district, than an entire State. In the extent and proper structure of the Union, therefore, we behold a republican remedy for the diseases most incident to republican government."
The time to worry is when the factions are not fighting each other to a standstill. That usually means the system is not working as it should and power is too concentrated. Or it means we are going to war.

The Dividist's primary rationale for supporting divided government is that it leads to more fiscal responsibility and spending restraint in our federal government. The Dividist is interested in the result, not the histrionics that are necessary to get there - no matter how entertaining. The kind of giant cuts envisioned in the "Grand Bargain" can only happen when we are teetering on the brink and can only happen with a divided government. Pay attention to the result - not the performance. Divided government may be winning and winning big.

Bravo, gentlemen. Play on.

Divided and Balanced.™
Now that is fair.



Friday, April 15, 2011

Ministry of Truth issues Deficit Reduction Plan

The Dividist is not in the habit of agreeing with Paul Krugman. Generally we cite his column only to point and laugh, but this time he has a point. Oh sure Krugnman's response to President Obama's speech unveiling his deficit plan was the usual predictable Krugman claptrap - "Spending cuts are bad!", "Tax increases are good!" However, he makes an interesting observation among the several "updates" appended to the post. This first update wasn't it:
"Update: I should probably say, I could live with this as an end result. If this becomes the left pole, and the center is halfway between this and Ryan, then no — better to pursue the zero option of just doing nothing and letting the Bush tax cuts as a whole expire."
Perhaps Krugman did not listen to the entirety of the President's speech. Perhaps he dozed off like Vice President Biden. For whatever reason, Krugman missed the part where the President explicitly stated that his plan was not expected to be the "end result". It is indeed the left pole to the Ryan plan right pole and, if/when a compromise is passed, it will certainly be somewhere between the two:
"I don’t expect the details in any final agreement to look exactly like the approach I laid out today. This a democracy; that’s not how things work. I’m eager to hear other ideas from all ends of the political spectrum. And though I’m sure the criticism of what I’ve said here today will be fierce in some quarters, and my critique of the House Republican approach has been strong, Americans deserve and will demand that we all make an effort to bridge our differences and find common ground." President Obama - April 13, 2011
This is not hard to understand: "common ground" = field goal kicked between the left and right upright. The President has clearly improved his negotiating skills, erecting his goal post so far to the left that even Krugman can offer up a lukewarm endorsement. Regardless, the ultimate compromise solution will certainly be kicked squarely between the uprights and, to Krugman's disappointment, it will not be anywhere near the left pole.

Krugman's second update is where we find a cogent and insightful observation (Hey - It can happen):
"Update update: I don’t want to step too much on the administration’s selling point, but progressives upset by the claim that there are three dollars of spending cuts for every dollar of tax increases should be aware that there’s a bit of creative labeling going on. As I understand it, they’re counting both interest savings and reductions in “tax expenditures” — subsidies through the tax code — as spending cuts. It’s a much more balanced plan if you look at the balance between revenue increases and non-interest outlays."
Krugman is calling the administration out for the creative labeling cynical doublespeak employed in the speech. The offending passage:
"I believe reform should protect the middle class, promote economic growth, and build on the Fiscal Commission's model of reducing tax expenditures so that there is enough savings to both lower rates and lower the deficit... my plan will require us to come together and make up the additional savings with more spending cuts and more spending reductions in the tax code."
"Tax expenditures"??? "Spending reductions in the tax code"??? Hard to believe those words actually passed Obama's lips. It is such a transparent manipulative spin and laughably ham-handed obfuscation that it is difficult to understand why they even bothered.

The political motivation for this linguistic sleight of hand is clear. By a 62%-29% margin, American people support spending cuts over tax hikes to fix the deficit. Centrists and Independents understand that insane out of control spending is the problem. But it still begs the question - Who do they think this is going to fool? It is not the right. It is not the left. It is not the independent center. The only ones who appear to be taken in by this disingenuous rhetoric is the union leadership.

The Dividist would like to understand what they hoped to accomplish with this absurd misuse of language and misrepresentation of reality. Perhaps they simply have not quite grasped the subtle difference between Lakoffian "framing" and Orwellian "doublethink." Perhaps they truly believe they can influence political perception by pretending a word means something that it does not. These phrases should be embarrassing to supporters, are certainly insulting to the electorate, and betrays a real contempt for the intelligence of the American voting public. But on the plus side, they provide fodder for a humorous and well-deserved skewering by Jon Stewart (the good part starts at 4:15):

The Daily Show With Jon StewartMon - Thurs 11p / 10c
Slashdance - Democratic Deficit Reduction Plan
www.thedailyshow.com
Daily Show Full EpisodesPolitical Humor & Satire BlogThe Daily Show on Facebook

"Can we afford that and the royalty checks you will need to send to George Orwell?"

We can thank President Obama's political team for the new and improved slogans to be found outside the Ministry of Truth:
War is Peace
Freedom is Slavery
Ignorance is Strength
Tax Increases are Spending Reductions
There is plenty to criticize about the President's Deficit Reduction Plan above and beyond the doublespeak nonsense. Number one on the list - it is not a plan. At least not a plan in in the same sense as the Simpson-Bowles Plan or the Paul Ryan Plan - both of which offered 70+ pages of detailed proposals unsullied by Orwellian euphemism. There are few details offered in the President's seven page framework, which can be more accurately described as general spending and revenue goals wrapped in partisan political rhetoric.

The saddest aspect of the President's presentation is that on the very point they danced around, the President is right. Revenues will indeed need to increase in addition to massive spending cuts. Unfortunately, the point is undermined by the perverse presentation and the absurd euphemism for tax increase. It is hard to start a budget compromise waltz when one of the dancers is pretending to hear a tango.

Nevertheless, the dance has begun. The administration has taken a dainty step closer to the center after their discredited first movement. Whether our legislators are listening to the same tune remains to be seen, but it is encouraging to hear some pundits from across the spectrum beginning to harmonize:

Clive Crook:
"Bowles-Simpson is the right basic answer. Obama several times said he was drawing on their recommendations, but he did so only partially and incoherently. He has not embraced their overall approach, not by a long shot. Nothing on Social Security. Little of what they propose on Medicare. And on tax reform I think he is actually making it harder for himself to move, eventually, in their direction."
Charles Krauthammer:
"The most serious charge against Rep. Paul Ryan’s budget is not the risible claim, made most prominently by President Obama in his George Washington University address, that it would “sacrifice the America we believe in.” The serious charge is that the Ryan plan fails by its own standards: Because it only cuts spending without raising taxes, it accumulates trillions in debt and doesn’t balance the budget until the 2030s... The Simpson-Bowles commission, for example, identifies $1.1 trillion of such revenue-robbers. In one scenario, it strips them all out and thus is able to lower rates for everyone to three brackets of 8 percent, 14 percent and 23 percent. The commission does recommend that, on average, about $100 billion annually of that $1.1 trillion be kept by the Treasury (rather than going back to the taxpayer) to reduce the deficit. This is a slight deviation from revenue neutrality, but it still yields a major cut for the top rate from the current 35 percent to 23 percent. The overall result is so reasonable and multiply beneficial that it rightly gained the concurrence of even the impeccably conservative (commission member) Sen. Tom Coburn. That’s the beauty of tax reform: It is both transparent and flexible."
If Obama would just quit tripping over his own partisan linguistic feet and follow the spending cut dance steps in the Simpson-Bowles deficit commission ballet he sponsored, we might yet see our elected leaders dancing a compromise budget balancing pas de deux.

Divided and Balanced.™
Now that is fair.

Friday, March 04, 2011

Read 'em and weep. USA "all in" with a bad hand.

For anyone interested in doing a deep dive into the state of the financial budget crisis facing the United States, you cannot do better than Mary Meeker's recently released report "USA Inc." Published under the auspices of venture capitalist Kleiner Perkins, it is detailed and comprehensive, yet clear, understandable and served up in digestible bites. It is well worth the time and effort.

The forward signed by Paul Volcker, George Schultz, Michael Bloomberg, Richard Ravitch and John Doerr sets the tone:
"Our country is in deep financial trouble. Federal, state and local governments are deep in debt yet continue to spend beyond their means, seemingly unable to stop. Our current path is simply unsustainable. What to do?

A lot of people have offered suggestions and proposed solutions. Few follow the four key guideposts to success that we see for setting our country back on the right path:
  1. create a deep and widely held perception of the reality of the problem and the stakes involved;
  2. reassure citizens that there are practical solutions;
  3. develop support in key constituencies; and
  4. determine the right timing to deliver the solutions.
USA Inc. uses each of these guideposts, and more; it is full of ideas that can help us build a better future for our children and our country."
Highly recommended. Every American should take the time to dig into this document. The Dividist skimmed it and was blown away. He expects to return often for deeper insights into the problem and as a reference for future posts.

At over 250 pages, with hundreds of clear and comprehensive graphs, it is impossible to do this work justice in a blog post. The Dividist is often (justifiably) accused of preferring thousands of words when a picture or a pithy paragraph would suffice. At least he is not the only one. In an attempt at exercising a little pontification discipline, in this post we will simply deal out a 5 card poker hand pulled from the hundreds in this presentation deck.

This busted hand should have been folded as soon as it was dealt. No one is buying the bluff now. Time to throw it in, cut the losses, and reshuffle.

Henry Blodgett says this is the only chart you need to understand why we are screwed. We cannot keep spending $5 dollars for every $3 we bring in.

It's the entitlements stupid. Spending is out of control and by 2025, entitlements plus net interest payments will absorb all of the USA's revenue. Yes, that is correct. In less than 15 years all taxes will go to interest and entitlements. As Mike Shedlock says "If that is not a shocking state of affairs, what is?"


We have to grow, but we cannot just grow our way out of the problem this time, as that presumption requires wildly unrealistic growth assumptions.

Taxing the rich cannot solve the problem. Taxing everyone does not solve the problem.

Unfunded liabilities are a crushing burden. We've got to lighten the load.

Net net. The Meeker solution, unsurprisingly, is all of the above. Spending must be slashed, unfunded entitlement liabilities must be reduced dramatically, and revenue must be raised. Yes, tax rates on the rich must go up, tax loopholes must close, and the tax base must also be broadened.

Make no mistake. There is something for everyone to dislike in her recommendations - right, left and center. The Dividist is no exception. Meeker actually advocates increases in Infrastructure, Education and Defense spending while slashing entitlements. The Dividist thinks nothing should be spared.

No matter. The Dividist is in.

Cut the bullshit.

Deal.

Divided and Balanced.™
Now that is fair.


Friday, February 18, 2011

Elections Have Consequences
F-35 Alternate Engine Edition

An interesting and surprising story this week offers insight into the difference between the 111th and 112th Congress. The Dividist hopes this is a sneak preview of coming attractions from our new Tea Party infused House of Representatives in the upcoming budget battles.
Obama, GOP freshmen win in jet engine budget fight

WASHINGTON (AP) — Determined to reduce deficits, impatient House Republican freshmen made common cause with President Barack Obama on Wednesday, scoring their biggest victory to date in a vote to cancel $450 million for an alternative engine for the Pentagon's next-generation warplane.

"Right here, right now was a surefire way to reduce spending," declared Rep. Tom Rooney of Florida, a second-term lawmaker whose summons to cut money from the F-35 fighter jet was answered by 47 Republican newcomers...

Strictly by the numbers, the vote was a bipartisan one, with 110 Republicans and 123 Democrats supporting cancellation of the funds, while 68 Democrats and 130 Republicans wanted to leave them in place. But that breakdown obscured the change wrought by the voters last fall. A similar vote in May ended in defeat for opponents of the alternative engine."
Let's review. The alternate engine is a defense pork barrel project that will not die because it is supported by legislators determined to bring home the bacon to their respective district or state. It was opposed by Presidents Bush and Obama, as well as their Secretaries of Defense who considered it unnecessary and a waste of taxpayer money. Nevertheless, Congress continued to allocate billions on an engine the military did not want or need.


Last May, with a Democratic President and large Democratic majorities in both the Senate and House, this project continued to be funded, passing in Nancy Pelosi's House of Representatives by a vote of 231-193.

Last week, in the Republican controlled House of Representatives, despite Speaker of the House John Boehner supporting the continued funding of the unneeded engine, it was finally defeated. Credit to President Obama and Defense Secretary Robert Gates for reaching out to Republican legislators. Kudos to the new crop of Tea Party supported freshmen Republican representatives who stood up to their own leadership.

The Dividist was dubious about the bipartisan lame duck tax and spend compromise passed in the last gasp of the One Party Democratic Regime last December, but this kind of bipartisanship compromise the Dividist can get behind. Score one for Divided Government and the Tea Party.

The Reader may be shocked! shocked! to learn that this fight is still not over. The Democratic controlled Senate may yet restore the funding. I'll leave it to The Reader to figure out where the problem in the Senate may lie. Here is a hint:


There will be a lot money and influence put to work in the Senate in a last ditch effort to restore funding for this boondoggle. There will be bipartisan support. But the Senate rejected this once before and it seems likely that bipartisan support will also be found to reject it again.

The Dividist is optimistic. Pass the popcorn.

X-posted at Donklephant

Divided and Balanced.™
Now that is fair.

Thursday, February 17, 2011

Budget Bolero Ballet Begins

Anyone familiar with Ravel's Bolero will instantly recognize the simple musical phrase that is repeated over the entire piece. It begins slowly as a snare drum establishes a military march-like rhythm, joined by a solo woodwind, then a flute, then more instruments are added with every iteration until the entire orchestra is engaged. The piece was written for ballet, is simplistic and highly repetitive, yet as the increasing musical voices repeat the same monotonous refrain, it becomes oddly compelling. The composition was popularized in the movie "10" when Bo Derek declared it as the perfect musical accompaniment for getting screwed. Which, when you think about it, makes the Bolero a perfect analogy for the political process surrounding the federal budget.

On Monday, as the President's proposed budget was released, the right and left executed a familiar pas de deux. On Tuesday the President introduced the budget in a Press conference:

"Just like every family in America, the federal government has to do two things at once. It has to live within its means while still investing in the future. If you’re a family trying to cut back, you might skip going out to dinner, you might put off a vacation. But you wouldn’t want to sacrifice saving for your kids’ college education or making key repairs in your house. So you cut back on what you can’t afford to focus on what you can’t do without. And that’s what we’ve done with this year’s budget...

We also know that cutting annual domestic spending alone won’t be enough to meet our long-term fiscal challenges. That’s what the bipartisan fiscal commission concluded; that’s what I've concluded. And that's why I’m eager to tackle excessive spending wherever we find it -– in domestic spending, but also in defense spending, health care spending, and spending that is embedded in the tax code."
The president is absolutely right. Like the family in his example the US has been overspending for a long time. In fact our extended American family is now spending $5 every year for each $3 of revenue we bring in. Anyone with basic arithmetic skills can easily understand this as problematical and unsustainable. Not to mention - batshit insane.

If one was to quibble with the President's message, it would be with his measured tone, and not the words themselves. The Dividist is just not sure that skipping a few dinners out and cutting back on vacations is going to cut it when the family debt is greater than the gross economic output of the entire fracking planet. Just sayin....

The problem is not with what President Obama says. His message is spot on. The problem is with what he does. The problem is that, despite what he says, the budget he is proposing does not reduce spending. He says we need to "live within our means". This budget does not. He says we need to "cut back" on spending. This budget increases spending. Those of us who are familiar with conventional English usage know that increasing spending is the diametric opposite of "cutting back."

Chris Edwards at Cato:
The chart shows Obama's proposed spending for FY2012 from last year's budget, and his proposed spending for the same year from his new budget. His new budget proposes slightly more discretionary and entitlement spending for next year than did his last budget!
  • Last year, Obama planned to spend $1.301 trillion on discretionary programs in FY2012, but now he plans to spend $1.340 trillion.
  • Last year, Obama planned to spend $2,107 on entitlement programs in FY2012, but now he plans to spend $2,140.

So take that Tea Party!

Obama claimed in his "Budget Message" yesterday that "taking further steps toward reducing our long-term deficit has to be a priority," but looking at his actual budget numbers shows that isn't true."

"Actual numbers" can be so annoying. So black and white. So... indifferent to soothing tones or soaring rhetoric.

The Dividist is going to cut President Obama some slack here. I assume that this budget is a tactical non-serious opening offer in what the administration expects to be a protracted, knock-down drag-out no-holds-barred steel cage match negotiation with Congress. Given the slings and arrows the President suffered from his left flank attacking his negotiating posture on Obamacare and the lame duck tax compromise, we should expect a different opening gambit now.

The administration knows that whatever they put on the table, the need to compromise with the GOP will force deeper cuts into the final budget. So why not start with a budget that makes no cuts whatsoever? It is a good negotiating posture, but the Dividist just can't believe he has the cajones to describe this budget as if it represents any fiscal belt-tightening at all. Even the press corp had a hard time finding anything resembling fiscal responsibility in the proposed budget.

This glaring credibility gap between what the President says and does is the defining characteristic of his first term. This budget may be the worst example yet. Remember when President Obama said there would be no more budget gimmicks to hide the real cost of programs and the impact on the deficit? Remember when President Obama claimed that Obamacare will lower costs and reduce the budget? Well, meet the Mother of all Budget Gimmicks, used to disguise the fact that Obamacare is not paid for. Not even close. This is not a credibility gap, this is a credibility Grand Canyon.

Megan McArdle explains:
"Obama's budget includes a two-year, paid for fix. But how it's paid for is pretty worrying: as Cannon's graph shows, the spending is all done in the first two years, but the cuts needed to pay for them take place over 10 years.
  • Limit the taxes that states can place on Medicaid providers, which has had the effect of increasing the federal contribution to state Medicaid budgets: $18 billion over 10 years
  • Claw back "erroneous payments" to United Healthcare under Medicare Advantage: $6 billion one time
  • Limit the ability of brand name pharmaceutical manufacturers to cut side deals with generic manufacturers to end patent challenges: $8.8 billion over 10 years
  • Shorten the market exclusivity period for biologic drugs from 12 years to 7: $2.3 billion over 10 years
  • Lower Medicaid reimbursements for home medical equipment: $6.45 billion over 10 years
This is a dog's breakfast. First of all, as I noted yesterday, many of these things are having trouble getting through Congress as it is; and second of all, why on earth would you use this motley grab-bag of long-term pay-fors to cover short term spending? The answer, I suspect, is that the cupboard is bare. They don't have any better revenue mechanisms left--everything that anyone even thought was plausible went into ObamaCare. And yet, they can't simply cut doctor's reimbursements by one fifth. So they scrambled for anything at all--and the only way they could come up with the necessary revenue was to stretch the cuts out over ten years, while covering the spending for only two years.

Obviously this is not a sustainable strategy, any more than I can simply pay for an increase in my annual restaurant budget by cutting back on my movie budget for the next ten years--eventually, you've zeroed out the rest of the entertainment budget, and the tab at Komi is still growing. Yet this seems to be the only plan the administration has to pay for the doc fix--a problem that wasn't addressed during health care reform, as far as I can tell, precisely because it was too expensive."
The music plays on.



The Dividist would like to see President Obama re-elected, as he distrusts One Party Republican rule even more than he distrust President Obama. But President Obama is not going to get re-elected if he continues to treat American voters like they are complete idiots. He cannot tell us that increased spending is really a spending cut, and that a massive new entitlement program will save money when it will actually cost money and expect to maintain any credibility.

If he wants to get reelected he needs to outflank the Republicans on fiscal responsibility by supporting the bipartisan recommendations of the deficit commission he sponsored. If he puts the full weight of the Presidency behind the Simpson-Bowles Plan and pushed it to a floor debate, the American people would put their electoral weight behind him.

Shall we dance?

Divided and Balanced.™
Now that is fair.


Thursday, December 02, 2010

This blog supports the Simpson-Bowles Deficit Plan and I just threw up a little bit in my mouth.

UPDATED: 12/3/2010
Last spring President Obama chartered the bi-partisan National Commission on Fiscal Responsibility and Reform to develop a comprehensive solution to our impending debt crisis. On Wednesday they released their final report. The 18 member commission met to review and publicly comment on the report. The entire commission will vote on Friday whether to adopt the plan. If 14 of the 18 members vote in favor, the plan will be offered for debate and a vote on the floor in both houses of Congress. This plan deserves that debate and vote. The American people deserve to hear Congress debate this plan.

I read the plan and watched some of the commission meeting on c-span. I can't find the video or transcript of the meeting, but will update this post with a clip and quotes if/when I track down the video or transcript. In the meantime, a couple of choice paragraphs from report Preamble:

"Our challenge is clear and inescapable: America cannot be great if we go broke. Our businesses will not be able to grow and create jobs, and our workers will not be able to compete successfully for the jobs of the future without a plan to get this crushing debt burden off our backs...

As members of the National Commission on Fiscal Responsibility and Reform, we spent the past eight months studying the same cold, hard facts. Together, we have reached these unavoidable conclusions: The problem is real. The solution will be painful. There is no easy way out. Everything must be on the table. And Washington must lead...

The President and the leaders of both parties in both chambers of Congress asked us to address the nation’s fiscal challenges in this decade and beyond. We have worked to offer an aggressive, fair, balanced, and bipartisan proposal – a proposal as serious as the problems we face. None of us likes every element of our plan, and each of us had to tolerate provisions we previously or presently oppose in order to reach a principled compromise. We were willing to put our differences aside to forge a plan because our nation will certainly be lost without one...

After all the talk about debt and deficits, it is long past time for America’s leaders to put up or shut up. The era of debt denial is over, and there can be no turning back. We sign our names to this plan because we love our children, our grandchildren, and our country too much not to act while we still have the chance to secure a better future for all our fellow citizens."
Let me be clear. There are a million and one things wrong with this plan. Whole sections are completely ass-backwards. There are not enough cuts, health care is not dealt with adequately, and... I could go on. As Erskine Bowles says - everyone can find a reason to be against this plan. It is not libertarian and it is not liberal and it is not conservative and it is not Democratic and it is not Republican. No one but no one is going to like it. But we have to face reality. This country is fucked if we don't get our fiscal house in order.

Tuesday, October 19, 2010

It's the spending stupid - Part 13,665,926,643,255

That 13,665,926,643,255 number is the dollar amount that we, as American citizens, now owe to pay for all the spending that we demanded from the politicians that we elected. If you have a problem sorting through all those digits, that number is around $13.7 trillion. It doesn't look so bad when you write it like that.

CBS Reports: National Debt Up $3 Trillion on Obama's Watch
"New numbers posted today on the Treasury Department website show the National Debt has increased by more than $3 trillion since President Obama took office. The National Debt stood at $10.626 trillion the day Mr. Obama was inaugurated. The Bureau of Public Debt reported today that the National Debt had hit an all time high of $13.665 trillion. The Debt increased $4.9 trillion during President Bush's two terms. The Administration has projected the National Debt will soar in Mr. Obama's fourth year in office to nearly $16.5-trillion in 2012. That's more than 100 percent of the value of the nation's economy and $5.9-trillion above what it was his first day on the job."
It is not like we are not getting value for all that debt. We are paying for at least two wars, subsidizing the defense of Japan, Germany, and South Korea, policing the world, and attempting to rebuild several Mideast nations in our image.

Additionally, since coming into office, this administration and the One Party Democratic Rulers that we (meaning you) elected thought it important to step up the spending and borrowing because they decided our government needed to fund:
  • Large increases in public sector jobs while private sector jobs are lost during a recession
  • A record historically ginormous pork filled stimulus plan that does not stimulate.
  • Taking over a corrupt bankrupt insurance company and two bankrupt car companies.
  • Paying down and subsidizing risk the mortgages of people who cannot afford the houses they bought at wildly overpriced levels in a bubble (caused by government policy distorting the housing market by pumping dollars into home ownership for everyone).
  • Bailing out the banks that made the bad home loans by investing in pools of securitized mortgage instruments that hold the bad loans (not to mention the Fed loaning banks money for free).
  • A trillion dollars in new spending on a "reform" health care bill that does not control health care costs, does not cover everyone, is not paid for, and no one understands (least of all the Democratic legislators who steamrolled it over GOP opposition).
As reported by the CBO last week, all this largess added up to a record 21.4% increase in mostly unfunded additional Federal spending in the almost two years of One Party Democratic Rule.

For most people, this looks like a pretty easy equation. A massive increase in irresponsible unfunded spending over the last two years resulted in massive record setting increases in the deficit over the same two years. It looks superficially as easy to understand as 2 + 2 = 4. But that would be wrong. You see this is actually an example of "scared voters not thinking clearly".

To correctly understand what is happening requires the sophistication and big brains of a liberal Nobel prize winning economist. Paul Krugman is the man for the job. He explains that to understand this spending correctly, you need to consider the spending within the context of a completely imaginary GDP that is much larger than the one that is - you know - here with us on Earth, in the actual U.S. of A. in what we like to call - reality. Then he completely throws out several categories of spending where some of the biggest increases took place, and Ouila! Obama is a positively parsimonious small spender!

OTOH - for all you scared voters like me who are not thinking clearly about this election -

Ed Morrissey sums it up nicely:
"Clearly, while Republicans have been somewhat irresponsible in running up debt, Democrats have managed to be almost three times worse than Republicans. Just as clearly, they have no intention to cut spending to correct this, but instead plan to hike taxes to fund their spending spree. And they’re being led by a President who wants to spend even more, as his own budget projections show."
Or even more succinctly - It's the spending stupid.

Divided and Balanced.™
Now that is fair.

Wednesday, October 13, 2010

It's the spending stupid - Part 111

Just in case there is any doubt about why the American people consider One Party Democratic rule to be fiscally frightening, economically irresponsible, and are apparently poised to hand them a stunning, historic, midterm defeat - The CBO released the latest spending and budget numbers last week. From the Wall Street Journal:
"Perhaps you missed it, but then so did the Washington press corps. Late last week the Congressional Budget Office released its preliminary budget tallies for fiscal year 2010, and the news is that the U.S. government had another fabulous year—in spending your money... Once again domestic accounts far and away led the increases. Medicaid rose by 8.7%, and unemployment benefits by an astonishing 34.3%—to $160 billion. The costs of jobless insurance have tripled in two years. CBO adds that if you take out the savings for deposit insurance, funding for all "other activities" of government—education, transportation, foreign aid, housing, and so on—rose by 13% in 2010.
As for the deficits, the 2010 total was $1.29 trillion, down slightly from $1.42 trillion. That's a two-year total of $2.7 trillion, or more than the entire amount during the Reagan Administration, when deficits were supposed to be ruinous. Now liberal economists tell us that deficits are the key to restoring prosperity. But all we have to show for spending nearly 25% of GDP for two years running is a growth rate of 1.7% and 9.6% unemployment...

The 21.4% federal spending increase in two years ought to put to rest any debate about the nature of America's fiscal problem. The Pelosi Congress has used the recession as an excuse to send spending to record heights, and its economic policies have contributed to a lousy recovery. The solution is to stop the spending and change the policies. Polls open on November 2."
You'd think it would be as obvious to the Democratic leadership and party faithful as it is to the American people that flawed policies and batshit insane spending are the prime cause for their impending electoral disaster. Instead, Democrats continue to delude themselves that the election is about crazy Republicans, stupid Republicans, Republicans with too much money, flawed messaging, and Democrats just not attacking business enough.

Sorry Andy, It is not the stupidity, stupid. Maybe it will be in 2012 when the GOP has found new ways to alienate the electorate, but for 2010 - there is no doubt: It's the spending stupid.

It is too late for Obama and Democrats to get religion now and salvage the 2010 mid-terms. But perhaps it is not too late for Obama to salvage his presidency.

UPDATE: Some Democrats get it.

Divided and Balanced.™
Now that is fair.