The BLS Employment Situation Summary for November 2013

Posted by PITHOCRATES - December 9th, 2013

Economics 101

There was Much Spending in November where People Gathered to Celebrate the Thanksgiving Holiday

The Bureau of Labor Statistics November’s Employment Situation Summary is out.  The government is trumpeting the 203,000 jobs created and the fall in the unemployment rate from 7.3% in October to 7.0%.  Proof they say that the economy is turning around.  And that their economic policies are working.  So everything is coming up roses.  If you stop reading the Employment Situation Summary there, that is.  For if you read further the economy is still horrible.

A big part of this improvement was the furloughed federal workers returning to work after the government shutdown.  And the Thanksgiving Holiday.  With retail hiring seasonal employees and stocking their shelves for the kick off of the Christmas shopping season.  This year starting on Thanksgiving Day for many retailers.  So you would expect a gain in employment connected to the Christmas shopping season.  Which there has been.  Retail trade employment added 22,000 jobs.  And leisure and hospitality, employment in food services and drinking places added 18,000 jobs.  And air transportation added 3,000 jobs.  Thanks to the biggest travel day of the year falling in November.

So there was much spending where people gathered with friends and family to celebrate the Thanksgiving holiday.  And the mad rush to the stores to begin their Christmas shopping.  There was much traveling, shopping and dining in November.  As there always is.  Though some years are better than others.  There was also new hiring in the automobile and construction industries.  Probably more due to the near-zero interest rates thanks to the Federal Reserve’s quantitative easing.  Basically printing money to drive down interest rates.  To encourage people to buy big ticket items like cars and houses.  Even though they had no plans to do so.

It is only the Decline in the Number of People in the Labor Force that gives us an Improving Unemployment Rate

So new jobs in these areas don’t reflect on the overall economic climate.  Because once Christmas is over business will lay off those they hired for those seasonal jobs.  And once the Federal Reserve stops ‘printing money’ those interest rates will rise.  Perhaps compounded by runaway inflation from so much printing.  So these aren’t good indicators of the economy.  We can gain a better understanding by looking at the higher stages of production.  Where there are large capital outlays required to hire and expand business.  Industries that look at the long-term.  So if they’re not hiring they’re not optimistic about the long-term economic picture.

A lot of economic activity has to happen before a retail store can sell anything.  Raw material industries have to pull resources out of the environment.  Industrial processors have to transform these raw materials so manufacturers can use them.  And once manufacturers build things wholesalers buy them and resell them to retailers.  That’s a lot of costs these industries have to incur to produce things that may sell 6-9 months later.  Or longer.  And if the economy is looking anemic to them they are not going to incur these costs.  Which is what happened in November with some of these higher stages of production.  Mining, logging and wholesale trade showed little to no change.

The civilian labor force declined by 720,000 in October.  With the government shutdown blamed for a lot of these lost jobs.  So when the government opened for business again in November we should have seen a large increase in the civilian labor force.  But we didn’t.  The civilian labor force only increased by 455,000 in November.  Which means that if you factor out the government shutdown there was still a decline in the number of jobs.  And it is only this decline in the number of people in the labor force that gives us an improving unemployment rate.  For once people give up and quit looking for a job because the economy is so bad the Bureau of Labor Statistics (BLS) stops counting them.  Skewing the real unemployment rate.

The Current Economic Recovery is a False One created with the Smoke and Mirrors of Low Interest Rates

This gets to the crux of the Obama economic recovery.  Or, rather, the absence of any recovery.  The government trumpets the creation of 195,000 new jobs per month this year.  But they don’t tell us how many jobs we lost per month this year.  Which we can calculate.  In January of this year there were 89,009,000 people not in the labor force.  In November that number rose to 91,273,000.  A total loss of 2,265,000 jobs this year.  Or a loss of 205,909 each month.  So while they cheerfully report the creation of 195,000 new jobs per month we actually lost 205,909 jobs each month.  If you count those people who left the labor force the BLS doesn’t count when calculating the unemployment rate.  In fact, if you look at the trends this year you can see the trends are going in the wrong direction.

Those in Labor Force vs Unemployment Rate thru November 2013 R1

The most shocking thing about this chart is that there are over 91 million people not in the labor force.  The labor force is the sum of the employed and unemployed persons.  So these are people who could be in the labor force but aren’t.  Because they don’t have a job.  For whatever reason.  On welfare, collecting disability, early retirement, just can’t get a job because the economy is so bad, etc.  So there will always be people out of the labor force.  And a large number is bad.  Because these people aren’t helping to create economic activity.  Which is why the Obama recovery is so anemic.

What’s also shocking about this chart are the trends.  The official unemployment rate has been falling.  Good news, yes?  Well, as it turns out, no.  Because the number of people not in the labor force has been rising during the decline in the unemployment rate.  Making the unemployment numbers questionable at best.  For you can’t have less unemployment if people continue to leave the workforce because they can’t get a job.  And the employment picture isn’t getting better.  It’s getting worse.  And it’s going to keep getting worse until those higher stages of production start hiring.  Which they won’t do until they see a real economic recovery.  And not a false one created with the smoke and mirrors of low interest rates.

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Obamacare freezes Hiring and robs the Healthy and Young to pay for the Old and Sick

Posted by PITHOCRATES - October 20th, 2013

Week in Review

President Obama has scolded Republicans over and over during the recent government shutdown.  Saying their actions have hurt the American economy.  Just at a time when it was gaining traction.  Even business leaders appear to agree with the president (see Obamacare Delaying Hiring, Debt Ceiling Debate And Shutdown Hurt The Economy: Beige Book by Agustino Fontevecchia posted 10/16/2013 on Forbes).

The Fed released its beige book for late September to early October on Wednesday, where business leaders blamed the government shutdown and debt ceiling debate for “increased uncertainty…”

Business leaders hate uncertainty.  Because you can’t plan your cash flow or your capital budget when you are uncertain about the future.  So the president may be right there.  But you know what else business leaders hate?  Obamacare.

…while employers remained reluctant to expand payrolls because of Obamacare.

Talk about your uncertainty.  Of course, President Obama doesn’t care about what this uncertainty does to the economy.  Or what Obamacare does to a part of his liberal base.  The youth vote (see Premiums for young healthy people will jump in 45 states under Obamacare by JOEL GEHRKE posted 10/19/2013 on the Washington Examiner).

Young people in 45 states will see their health insurance premiums increase under Obamacare because the law relies on the money they pay into the system to offset the cost of caring for older enrollees, according to a new study.

Virginia leads the pack, as individuals aged 27 and under will see their health insurance premiums jump by 252.5 percent — $416.55 — according to the Heritage Foundation’s Center for Data Analysis.

Virginians under the age of 50 will see their premiums jump by an even greater percentage, rising from $228 to $991.03.

During the hippy movement the mantra was to never trust anyone over thirty.  Now those hippies are in the government.  Who are the architects of Obamacare.  And they’re taking money from those under 30 to pay for the health care of those over thirty.  Including those old hippies who are now racking up huge medical bills.  And don’t want to pay for their own costly health care.

Guess the hippies were right.  You should never trust anyone over 30.  Especially if they’re liberal Democrats.

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The Petulant President scolds Republicans, Conservatives and Anyone Else who dares to Oppose Obamaism

Posted by PITHOCRATES - October 17th, 2013

Politics 101

The government shutdown is over. And we avoided defaulting on the national debt  Or so they say.  So who won and who lost?  Well, at this point in time it looks like the Democrats lost less than the Republicans.  But it is the American people who lost.  For they are stuck with Obamacare for the time being.  And President Obama can raise the national debt to a new record high.  But it gets worse.  This morning the president gave a petulant, God-awful speech scolding the Republicans, the Tea Party, talk radio, the blogosphere and pretty much anyone else who dares to oppose Obamaism (see Transcript of Obama Remarks on End of Standoff posted 10/17/2013 on The Wall Street Journal).

Good morning, everybody.  Please have a seat.

Well, last night, I signed legislation to reopen our government and pay America’s bills.  Because Democrats and responsible Republicans came together, the first government shutdown in 17 years is now over.  The first default in more than 200 years will not happen.  These twin threats to our economy have now been lifted.  And I want to thank those Democrats and Republicans for getting together and ultimately getting this job done.

There was never a risk of default.  With $2.45 trillion in annual revenue coming into the treasury from the taxpayers there was never a risk of the $415.7 billion annual interest payment on the debt going unpaid.  Lying about it just helped a petulant child get his way.  Waaa.

Now, there’s been a lot of discussion lately of the politics of this shutdown.  But let’s be clear:  There are no winners here.  These last few weeks have inflicted completely unnecessary damage on our economy.  We don’t know yet the full scope of the damage, but every analyst out there believes it slowed our growth.

What growth?  Since coming to office the president’s policies have lost approximately 9,966,000 jobs through the September jobs report.  That’s just shy of 10 million jobs he’s lost.  So what recovery?  Or is he just setting the stage to blame the worst economic recovery since that following the Great Depression on this 16 day shutdown?  And not the lost economic activity from those 10 million or so lost jobs?  Of course he is.  Because what are 10 million jobs when he can stick it to the Republicans?

We know that families have gone without paychecks or services they depend on.  We know that potential homebuyers have gotten fewer mortgages, and small business loans have been put on hold.  We know that consumers have cut back on spending, and that half of all CEOs say that the shutdown and the threat of shutdown set back their plans to hire over the next six months.  We know that just the threat of default — of America not paying all the bills that we owe on time — increased our borrowing costs, which adds to our deficit.

Yes, pity the government bureaucrats who had to go 16 days without reporting to work.  Even though they will be paid for those 16 days they missed.  Yes, pity the government bureaucrats.  And not the 10 million who have disappeared from the labor force since President Obama assumed office.  I mean, what are 5 years without a paycheck compared to missing 16 days of work?  Which the taxpayers will still pay them for?

Businesses cut back on spending and hiring because of the great uncertainty of a 16-day shutdown?  Are you sure it wasn’t the regulatory requirements of Obamacare that is forcing employers with close to 30 ‘full time’ employees (30 hours or more per week) to not hire any more workers?  Even pushing full-time workers to part time?  Are you sure this isn’t the reason why they’re not hiring?  Especially with the cost of health insurance going through the roof now that it must cover everything under the sun (such as pediatric care for a couple whose children are now grown adults) as well as pre-existing conditions?  Where someone can walk in off the street who was just diagnosed with cancer and buy an insurance policy for the first time in their life?  Are you absolutely sure it’s the 16-day shutdown and not Obamacare?   If so someone needs to attend a high school economics class to learn the first thing about economics.

And, of course, we know that the American people’s frustration with what goes on in this town has never been higher. That’s not a surprise that the American people are completely fed up with Washington.  At a moment when our economic recovery demands more jobs, more momentum, we’ve got yet another self-inflicted crisis that set our economy back.  And for what?

Again, are you sure it was the 16-day shutdown and not the 4 years or so of Obamacare?

There was no economic rationale for all of this.  Over the past four years, our economy has been growing, our businesses have been creating jobs, and our deficits have been cut in half. We hear some members who pushed for the shutdown say they were doing it to save the American economy — but nothing has done more to undermine our economy these past three years than the kind of tactics that create these manufactured crises.

The last fiscal year ending deficit while George W. Bush was president was $498.37 billion (adjusted for inflation).  At the end of the first fiscal year with President Obama in office the deficit soared to $1.539.22 trillion.  An increase of 208.9%.  It is this deficit number that he cut in half.  The one he exploded with his near trillion dollar stimulus that did not stimulate anything but unions and the president’s cronies on Wall Street and in Big Business.  Especially Big Green Business.

And the president had something else preventing him from spending as much as he did during his first term.  Sequestration.  Which the Democrats hate with a passion and want to get rid of.  So they can turn on the spending spigot once again.  Like they did during his first term.

And you don’t have to take my word for it.  The agency that put America’s credit rating on watch the other day explicitly cited all of this, saying that our economy “remains more dynamic and resilient” than other advanced economies, and that the only thing putting us at risk is — and I’m quoting here — “repeated brinksmanship.”  That’s what the credit rating agency said.  That wasn’t a political statement; that was an analysis of what’s hurting our economy by people whose job it is to analyze these things.

Really?  Brinkmanship?  You don’t think adding $6.2 trillion to the national debt during your presidency had anything to do with the credit rating agency’s concern about our debt paying ability?  A high school economics student can understand that the greater your debt is the greater your debt-paying problem.  Funny how you don’t, Mr. President.

That also happens to be the view of our diplomats who’ve been hearing from their counterparts internationally.  Some of the same folks who pushed for the shutdown and threatened default claim their actions were needed to get America back on the right track, to make sure we’re strong.  But probably nothing has done more damage to America’s credibility in the world, our standing with other countries, than the spectacle that we’ve seen these past several weeks.  It’s encouraged our enemies.  It’s emboldened our competitors.  And it’s depressed our friends who look to us for steady leadership.

I thought it would have been your bad foreign policy that did all those things.  Starting with the Green Revolution in Iran.  An uprising of the people against the Islamist and oppressive government of Iran.  The precursor to the Arab Spring.  Where you did nothing.  Leaving the good Iranian people with that oppressive Islamist government.  Which is currently working to produce a nuclear bomb.  Then there was the Arab Spring and you telling our friend and ally and anchor to peace and stability in the Middle East, Hosni Mubarak, that he had to go.  Turning Egypt over to the anti-Western Muslim Brotherhood.  And then there was Libya.  Another ally in the War on Terror, Muammar Gaddafi (who joined the fight against terrorism after our invasion of Iraq), that he had to go.  Turning Libya over to radical Islamists.  Who killed four Americans in Benghazi.  Then there was the red line fiasco with Syria.  If you cross that red line I will hem and haw and stammer.  Then I might say something else.  Then Vladimir Putin steps in and saves the day for their Syrian ally.  Russia.  Who suspended all adoptions to Americans to spite America.  Who are also helping the Iranians with their nuclear program.  All the while laughing at President Obama who they see as weak.  Who couldn’t get one nation to join him for military strikes against Syria.  If you want to talk about our prestige on the world stage you gave that up long ago.  For today no one fears the wrath of the United States these days.  With some nations seeing the United States becoming irrelevant in the world.  Especially Russia and China.  As well as radical Islam.

Now, the good news is we’ll bounce back from this.  We always do.  America is the bedrock of the global economy for a reason.  We are the indispensable nation that the rest of the world looks to as the safest and most reliable place to invest — something that’s made it easier for generations of Americans to invest in their own futures.  We have earned that responsibility over more than two centuries because of the dynamism of our economy and our entrepreneurs, the productivity of our workers, but also because we keep our word and we meet our obligations.  That’s what full faith and credit means — you can count on us.

And today, I want our people and our businesses and the rest of the world to know that the full faith and credit of the United States remains unquestioned.

There is a difference between economic investment and buying our bonds.  Any money that buys government bonds is money pulled out of the economy.  Investing in government bonds doesn’t create economic activity.  It actually destroys economic activity.  And the only worry the rest of the world had was what you were going to do, Mr. President.  Would you not pay the interest on the national debt out of spite to attack the Republicans?  That’s what they were worried about.  For even they knew we had the money to pay our debt without new borrowing.  They just don’t trust you.

But to all my friends in Congress, understand that how business is done in this town has to change.  Because we’ve all got a lot of work to do on behalf of the American people — and that includes the hard work of regaining their trust.  Our system of self-government doesn’t function without it.  And now that the government is reopened, and this threat to our economy is removed, all of us need to stop focusing on the lobbyists and the bloggers and the talking heads on radio and the professional activists who profit from conflict, and focus on what the majority of Americans sent us here to do, and that’s grow this economy; create good jobs; strengthen the middle class; educate our kids; lay the foundation for broad-based prosperity and get our fiscal house in order for the long haul.  That’s why we’re here.  That should be our focus.

Strong words coming from a professional activist.  For he was a community organizer.  And taught activism.  Funny how there are two types of activism.  The good kind in his world.  When it advances a liberal agenda.  And the bad kind in his world.  The kind based in conservatism.  The president hates conservative activism, otherwise known as a government of the people, by the people and for the people, and believes it should be silenced and replaced with one-party rule.

Now, that won’t be easy.  We all know that we have divided government right now.  There’s a lot of noise out there, and the pressure from the extremes affect how a lot of members of Congress see the day-to-day work that’s supposed to be done here. And let’s face it, the American people don’t see every issue the same way.  But that doesn’t mean we can’t make progress.  And when we disagree, we don’t have to suggest that the other side doesn’t love this country or believe in free enterprise, or all the other rhetoric that seems to get worse every single year.  If we disagree on something, we can move on and focus on the things we agree on, and get some stuff done.

And the Democrats calling the political opposition terrorists, arsonists, hostage takers, the Taliban, etc., how is that coming together to focus on the things we agree on?  To get some stuff done?  Well, Mr. President, it is obvious you believe compromise is the Republicans caving and becoming your bitch.  This is not a government of the people, by the people and for the people.  This is a government of, by and for you.

Let me be specific about three places where I believe we can make progress right now.  First, in the coming days and weeks, we should sit down and pursue a balanced approach to a responsible budget, a budget that grows our economy faster and shrinks our long-term deficits further.

At the beginning of this year, that’s what both Democrats and Republicans committed to doing.  The Senate passed a budget; House passed a budget; they were supposed to come together and negotiate.  And had one side not decided to pursue a strategy of brinksmanship, each side could have gotten together and figured out, how do we shape a budget that provides certainty to businesses and people who rely on government, provides certainty to investors in our economy, and we’d be growing faster right now.

The last time we did this little dance it was the same.  You want to raise taxes and cut no spending.  That’s your idea of a balanced approach.  Oh, you’ll promise spending cuts after we raise some taxes.  But those spending cuts will never come.  Democrats just don’t cut spending.  Unless they get themselves stuck in a sequester.  And that’s not even real spending cuts.  It’s only smaller increases in future spending.

Now, the good news is the legislation I signed yesterday now requires Congress to do exactly that — what it could have been doing all along.

And we shouldn’t approach this process of creating a budget as an ideological exercise — just cutting for the sake of cutting.  The issue is not growth versus fiscal responsibility — we need both.  We need a budget that deals with the issues that most Americans are focused on:  creating more good jobs that pay better wages.

Can the nation afford anymore of your job creation?  After losing some 10 million jobs we should just cut our losses.  And refuse anymore of your ‘help’ with the economy.

Cutting for the sake of cutting?  What, we don’t have a debt crisis that requires our debt ceiling to be raised again and again?  We’re spending too much.  Hence the need to keep raising our debt ceiling.  And Obamacare only makes this worse.  A lot worse.  Hence that 16-day government shutdown.  Or did he miss that?

And remember, the deficit is getting smaller, not bigger.  It’s going down faster than it has in the last 50 years. The challenges we have right now are not short-term deficits; it’s the long-term obligations that we have around things like Medicare and Social Security.  We want to make sure those are there for future generations.

Oh, you are devious, Mr. President.  The deficit is going down faster than in the last 50 years only because you raised it to record highs in your first year in office.  Your smallest deficit is still larger than George W. Bush’s last deficit.

Medicare?  You cut Medicare spending so you can spend that money on Obamacare.  And Social Security?  The Social Security Trust Fund has no cash in it.  It’s stuffed with government IOUs.  Because the government is spending so much money that they have to raid the Social Security Trust Fund to pay for it.  And even that’s not enough to prevent deficit spending.  So they’re robbing Peter to pay Paul.  This out of control spending is why Medicare and Social Security may not be there for future generations.

So the key now is a budget that cuts out the things that we don’t need, closes corporate tax loopholes that don’t help create jobs, and frees up resources for the things that do help us grow — like education and infrastructure and research.  And these things historically have not been partisan.  And this shouldn’t be as difficult as it’s been in past years because we already spend less than we did a few years ago.  Our deficits are half of what they were a few years ago.  The debt problems we have now are long term, and we can address them without shortchanging our kids, or shortchanging our grandkids, or weakening the security that current generations have earned from their hard work.

More on education?  That’s to shore up the teachers’ underfunded pensions.  Infrastructure?  That’s just pork-barrel spending.  Building airports where no one wants to fly.  Or high-speed rail that requires constant government subsidies.  Money that buys votes in Congress to pass huge spending bills.  Like Obamacare.  Which passed only by buying off Democrats with the Cornhusker Kickback, the Louisiana Purchase, the Florida Flim Flam, etc.

So that’s number one.  Number two, we should finish fixing the job of — let me say that again.  Number two, we should finish the job of fixing our broken immigration system.

There’s already a broad coalition across America that’s behind this effort of comprehensive immigration reform — from business leaders to faith leaders to law enforcement.  In fact, the Senate has already passed a bill with strong bipartisan support that would make the biggest commitment to border security in our history; would modernize our legal immigration system; make sure everyone plays by the same rules, makes sure that folks who came here illegally have to pay a fine, pay back taxes, meet their responsibilities.  That bill has already passed the Senate. And economists estimate that if that bill becomes law, our economy would be 5 percent larger two decades from now.  That’s $1.4 trillion in new economic growth.

There’s a reason why people hire illegal aliens.  So they can pay them less than legal citizens.  So once these illegals become legal they’re not going to work for illegal wages anymore.  So it will raise labor costs.  Forcing businesses to lay off some workers.  Creating no net economic benefit.  But the Democrats don’t care.  Because it’s not about the economy.  It’s about all those new Democrat voters.  To turn the nation, like they turned California, Democrat.

The majority of Americans think this is the right thing to do.  And it’s sitting there waiting for the House to pass it.  Now, if the House has ideas on how to improve the Senate bill, let’s hear them.  Let’s start the negotiations.  But let’s not leave this problem to keep festering for another year, or two years, or three years.  This can and should get done by the end of this year.

Really?  A majority of people want immigration reform?  And because of that we should pass it?  Well, the majority of people want to repeal Obamacare.  So perhaps this is a negotiation the Republicans and Democrats can agree on.  To please the majority of people.  Exchange immigration reform for the repealing of Obamacare.

Number three, we should pass a farm bill, one that American farmers and ranchers can depend on; one that protects vulnerable children and adults in times of need; one that gives rural communities opportunities to grow and the long-term certainty that they deserve.

You know, it was a farm bill that helped precipitate the Great Depression.  Price parity.  Increasing the price of farm goods so they were closer to the price of nonfarm goods.  In response to their increased productivity due to the mechanization of the farm that produced bumper crops.  Increasing supply beyond demand.  Causing the price of farm goods to fall.  So Hoover passed legislation raising the price of food.  Making it harder to put food on the table for the average American.  An example of the unintended consequences of government intervention.  Such as requiring gasoline to include a portion of the corn crop.  Thus raising the price of corn.  And everything in the food chain downstream from corn.  Like beef, chicken, milk, eggs, etc.  No, the last thing consumers need who are trying to put food on the table is another farm bill.

Again, the Senate has already passed a solid bipartisan bill.  It’s got support from Democrats and Republicans.  It’s sitting in the House waiting for passage.  If House Republicans have ideas that they think would improve the farm bill, let’s see them.  Let’s negotiate.  What are we waiting for?  Let’s get this done.

So, passing a budget; immigration reform; farm bill.  Those are three specific things that would make a huge difference in our economy right now.  And we could get them done by the end of the year if our focus is on what’s good for the American people. And that’s just the big stuff.  There are all kinds of other things that we could be doing that don’t get as much attention.

I understand we will not suddenly agree on everything now that the cloud of crisis has passed.  Democrats and Republicans are far apart on a lot of issues.  And I recognize there are folks on the other side who think that my policies are misguided — that’s putting it mildly.  That’s okay.  That’s democracy.  That’s how it works.  We can debate those differences vigorously, passionately, in good faith, through the normal democratic process.

And sometimes, we’ll be just too far apart to forge an agreement.  But that should not hold back our efforts in areas where we do agree.  We shouldn’t fail to act on areas that we do agree or could agree just because we don’t think it’s good politics; just because the extremes in our party don’t like the word “compromise.”

When the Republicans wanted to add tax breaks for small business in the stimulus bill President Obama refused to listen.  Because he won the election.  And elections have consequences, he said.  And to the winner goes the spoils.  When the Democrats had the House, Senate and the White House they had no interest in compromise.  And didn’t.  But when they don’t have all the power they expect the other side to compromise.  And give them what they want.  That’s their idea of compromise.  Unconditional surrender.

I will look for willing partners wherever I can to get important work done.  And there’s no good reason why we can’t govern responsibly, despite our differences, without lurching from manufactured crisis to manufactured crisis.  In fact, one of the things that I hope all of us have learned these past few weeks is that it turns out smart, effective government is important.  It matters.  I think the American people during this shutdown had a chance to get some idea of all the things, large and small, that government does that make a difference in people’s lives.

We hear all the time about how government is the problem.  Well, it turns out we rely on it in a whole lot of ways.  Not only does it keep us strong through our military and our law enforcement, it plays a vital role in caring for our seniors and our veterans, educating our kids, making sure our workers are trained for the jobs that are being created, arming our businesses with the best science and technology so they can compete with companies from other countries.  It plays a key role in keeping our food and our toys and our workplaces safe.  It helps folks rebuild after a storm.  It conserves our natural resources.  It finances startups.  It helps to sell our products overseas.  It provides security to our diplomats abroad.

Really?  You want to go there?  Security of our diplomats?  The administration that let 4 Americans die in Benghazi on its watch?  Despite ample warnings?  Warnings so serious that the British pulled out of Benghazi?  Before our four diplomats were killed?  But there was an election, wasn’t there?  And we just couldn’t have trouble with terrorists during an election, could we?  Not for the president that won the War on Terror with the killing of Osama bin Laden.

So let’s work together to make government work better, instead of treating it like an enemy or purposely making it work worse.  That’s not what the founders of this nation envisioned when they gave us the gift of self-government.  You don’t like a particular policy or a particular president, then argue for your position.  Go out there and win an election.  Push to change it. But don’t break it.  Don’t break what our predecessors spent over two centuries building.  That’s not being faithful to what this country is about.

The Founding Fathers created LIMITED government.  What we have today is far from limited.  The progressives/liberals have destroyed what the Founding Fathers gave us.  Today we have a big, fat, bloated bureaucracy.  And the Republicans would like to change it by winning elections.  Which isn’t that easy when the Obama administration suppresses the vote by turning the IRS loose on the Tea Party.  Limiting their fundraising ability.  Causing their turnout to be less than it was in the 2010 midterm election.  When the Tea Party stirred the people to vote the House of Representatives back to the Republicans.  Which they weren’t going to let happen in 2012.  Hence using the IRS to suppress the Republican vote.

And that brings me to one last point.  I’ve got a simple message for all the dedicated and patriotic federal workers who’ve either worked without pay or been forced off the job without pay these past few weeks, including most of my own staff: Thank you.  Thanks for your service.  Welcome back.  What you do is important.  It matters.

You defend our country overseas.  You deliver benefits to our troops who’ve earned them when they come home.  You guard our borders.  You protect our civil rights.  You help businesses grow and gain footholds in overseas markets.  You protect the air we breathe and the water our children drink.  And you push the boundaries of science and space, and you guide hundreds of thousands of people each day through the glories of this country. Thank you.  What you do is important.  And don’t let anybody else tell you different.  Especially the young people who come to this city to serve — believe that it matters.  Well, you know what, you’re right.  It does.

And those of us who have the privilege to serve this country have an obligation to do our job as best we can.  We come from different parties, but we are Americans first.  And that’s why disagreement cannot mean dysfunction.  It can’t degenerate into hatred.  The American people’s hopes and dreams are what matters, not ours.  Our obligations are to them.  Our regard for them compels us all, Democrats and Republicans, to cooperate, and compromise, and act in the best interests of our nation –- one nation, under God, indivisible with liberty and justice for all.

Thanks very much.

The majority of people want to repeal Obamacare.  But the president doesn’t care about these American people.  Because they don’t share his vision of expanding government power in our lives.  People who would prefer to keep the health insurance they have.  And the doctors they have.  As well as not paying more for their health insurance.  But what they want isn’t as important to President Obama as what he wants.  So there is no compromise.  No cooperation.  Or acting in the best interest of the United States.  For this may be one nation, under God, indivisible with liberty and justice for all.  Where all Americans are equal.  Only some are more equal than others.  Like those who share President Obama’s vision.

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Funding Gaps and Government Shutdowns

Posted by PITHOCRATES - October 15th, 2013

History 101

The Constitution prevented the Executive from Ruling Arbitrarily and becoming Judge, Jury and Executioner

There have been funding gaps.  And there have been government shutdowns.  But not always both.  For once upon a time the executive branch stayed open for business even when the House of Representatives did not approve their bills for payment.  But that all changed in 1980 thanks to Jimmy Carter’s attorney general.  Benjamin Civiletti.

Civiletti wrote two opinions as attorney general changing the way government spends money.  The first said the executive can’t spend any money without the House of Representatives’ approval.  A strict interpretation of the U.S. Constitution.  His second opinion softened the first.  Giving the executive power to spend money the House of Representatives doesn’t approve of when necessary to protect life and property.  Such as funding the military.  And so grew the delineation between essential and nonessential spending.  Or what some would say essential spending and pork.

The Founding Fathers saw the damage absolute monarchies could do.  Even a constitutional monarchy with too much power.  So they separated powers.  They created three branches of government.  The executive, the legislative and the judiciary.  One branch to write the law (the legislature).  One branch to enforce the law (the executive).  And one branch to interpret questions in the law (the judiciary).  Thus preventing the executive from ruling arbitrarily and becoming judge, jury and executioner.  Like a king.

The Founding Fathers gave the Power of the Purse to the House to rein in Executive Spending

The Founding Fathers took the separation of powers further.  The House of Representatives was the people’s house.  Where the people voted in their representatives by popular vote.  But to keep a check on federal power the Senate was the states’ house (since changed by constitutional amendment, thus greatly increasing the power of the federal government over the states).  Each state in the union had an equal voice.  Thus requiring not only a majority of the people it also required a majority of the states to pass federal law.  To keep the larger urban populations from dictating policy to the lesser populated rural areas.

The Founding Fathers took the separation of powers even further.  Giving the power of the purse to the House of Representatives.  So the executive couldn’t wage costly wars.  Or expand bloated bureaucracies to reward campaign donors with patronage.  Or expand a welfare state to buy votes.  Especially since Alexander Hamilton opened Pandora’s Box with his interpretation of the necessary and proper clause.  Which expanded the scope of the federal government to include whatever it thought was necessary and proper.  Giving rise to the progressive/liberal state.  Something that would have horrified Alexander Hamilton if he were alive today to see the behemoth the federal government became.  And had he known then what would become of the federal government today he would have been a Jeffersonian.  Jefferson and Hamilton would probably still have hated each other but they would have agreed on keeping limited government limited.

Civiletti understood that the Founding Fathers meant to rein in the spending powers of the executive branch.  To meet the intent of the separation of powers they felt was essential for representative government.  A government of the people, by the people and for the people.  As Abraham Lincoln so eloquently said in the Gettysburg Address some 76 years later.  Hence his first opinion.  Which he softened with his second when it hurt his boss and the Democrat cause.  For Civiletti was a Democrat.

The Democrats want to Break the Republican Opposition and Govern Against the Intent of the Founding Fathers

Before Civiletti’s opinions there was little urgency to settle funding gaps between what the executive branch wanted and what the House would approve.  So at the end of a fiscal year the executive often continued to operate without spending authority.  Letting the durations of these funding gaps last for a week or more.  With no interruption of government services.  But after Civiletti’s opinions the government shut down nonessential services.  Which did speed up the closing of the funding gap.  For when the funding gap included a government shutdown resolving the funding gap went from a week or more to a few days.

Funding Gaps and Government Shutdowns

To date there have been 18 funding gaps that went unresolved into the new fiscal year.  One of which is still ongoing.  In the table you can see how much quicker the House and the executive branch resolved their differences with the threat of a government shutdown.  The exception to that being the longest shutdown during the Clinton administration.  Which ultimately led the way to welfare reform.  Which greatly dampened President Clinton’s costly liberal agenda.  And was the law of the land until President Obama used sweeping powers he does not have to roll back some of that legislation.

President Obama and the Democrats have called the House Republicans about every derogatory name in the book for dare trying to enforce the Founding Fathers’ separation of powers.  Saying that never before has a radical fringe held a gun to the head of the executive, took hostages, demanded ransom, etc.  But that’s not true.  Of the 18 funding gaps where the House of Representatives did not give the president all the money he wanted that president was a Republican 55.6% of the time.  So Republican presidents got their way fewer times than Democrat presidents.  And as far as hostage takers, the Democrats held the power of the purse 15 of those 18 funding gaps/shutdowns.  Or 83.3%.  So the president and the Democrats aren’t telling the truth when it comes to the historical record.  Who seem to be more interested in swinging public opinion to their side.  So they can break the Republican opposition.  And govern against the intent of the Founding Fathers.

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World War II Veterans not allowed on the National Mall while Illegal Immigrants Are

Posted by PITHOCRATES - October 12th, 2013

Week in Review

The Democrats are loving the government shutdown.  They get to screw Americans and blame it on the Republicans (see Obama wants you! Feds hiring for thousands of open jobs amid shutdown by Jim McElhatton posted 10/8/2013 on The Washington Times).

The federal government is shut down, but that hasn’t stopped agencies from running lots of “help wanted” ads.

More than 4,000 job postings remained active on the federal government’s hiring site as of Tuesday. Although many ads first ran before the shutdown began, nearly 500 posts were placed in the past three days.

They can’t let World War II veterans visit the outdoor World War II monument on the National Mall but they can hire up to 4,000 new employees?  Further proof that the partial shutdown is political.  With the left making it as painful as possible to the masses of people.  While making sure their few friends and campaign donors are not inconvenienced.  Such as the big rally on the National Mall for illegal immigrants.

World War II veterans-no.  Illegal immigrants-yes.  World War II veterans-no.  Government bureaucrats-yes.  Political-yes.  Democrats put the needs of the people above their political agenda-no.

There are two Americas.  Resembling a 2-story outhouse.  Where the American people are on the lower level.  And the liberal Democrats are on the upper level.

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FT190: “The children are our future. God help us.” —Old Pithy

Posted by PITHOCRATES - October 4th, 2013

Fundamental Truth

Our Universities praise Government Intervention, Vilify Capitalism and Denigrate US History

I recently saw some students on television from our most prestigious universities.  I won’t say who or where they were because it doesn’t matter.  For they all pretty much think the same.  There were liberal Democrats.  And conservative Republicans.  Young people.  Just into their twenties.  They spoke of economics, health care, free markets, investing in education, etc.  Kids too young to have experienced life.  In fact, most were still on their parent’s health insurance policies.  But they knew everything there was to know.  Particularly the liberal Democrats.

In college kids don’t know anything.  That’s why they are there.  So someone can tell them all those things they don’t know.  The problem is this.  The people telling them what to think have a liberal bias.  It’s no secret.  The teachers’ unions demand pay and benefit packages well beyond what most people can get in the private sector.  The government let’s them gouge taxpayers.  And in return they teach our kids in public schools to become Democrat voters.  Then it’s on to college.  Where the anti-capitalist hippies of the Sixties went on to become college professors.  Who talked about the fairness in the former Soviet Union and the former East Germany.  Where they put people before profits.  Admiring their love of people.  And hatred of profits.  While glossing over on their oppressive police states, thought crimes, prisons for political dissidents, torture and wholesale executions.

These radical hippies took over higher education.  And wrote the curriculum.  Which praised government intervention into the free market economy.  Vilified capitalism.  And denigrated the United State’s role in history.  Programming our children to hate whatever they hate.  And to love what they love.  Even when the facts get in the way.  Which they can fix with a little history revisionism.

The Arts did Very Well during the Eighty thanks to the Generosity of Gainfully Employed People

They call the Eighties the decade of greed.  While at the same time calling President Reagan’s economic policies a failure.  Supply-side economics.  Of the Austrian school.  Everyone did well.  Everyone made money.  Which is why they were so materialistic.  Because they had good-paying jobs that allowed them to be materialistic.  Allowing them to buy Sony Walkmans and CD players.  Which everyone had to have.  Even though no one knew what they were before they hit the stores.  Proving Say’s law.

Say’s law is a part of supply-side economics.  In general it states that supply creates its own demand.  No one was clamoring for Sony Walkmans or CD players in the Eighties.  But when these companies explained how great they were all of a sudden we were demanding them.  Supply created demand.  Just as PC supply created PC demand.  PCs were on the market long before they were in everyone’s home.  It was a tough sell in the beginning.  Because no one knew what they would use them for.  But they have them now.  Just like the Internet.  For a generation who had just mastered the recording functions on their VCRs (video cassette recorders—what we used to record TV programs on before DVRs) the Internet was a confusing thing.  And many said “thank you, but no thanks.”  Then people began creating content and putting it on the World Wide Web.  Today, people can’t live without their Internet connection.  Again, supply created demand.

This is Say’s law in action.  Supply creates demand.  You make it easier for people to be creative and bring things to market and they will.  Two ways to do this is to lower tax rates and reduce the regulatory climate.  So people are more willing to take risks.  Which they will do if there is sufficient reward for taking that risk.  Reagan did both during the Eighties.  The economy exploded.  Everybody was working.  The jobs were so good that we had money for material comforts.  And generous donations.  The arts did very well during the Eighties thanks to the generosity of gainfully employed people.

Obamacare will take Money from the Young and Healthy to pay for the Old and Sick

But this isn’t what they’re teaching in our universities.  They say that Reagan did cut taxes and created an economic boom.  But at what cost?  For he had record deficits.  Because of those tax cuts.  Which is where that history revisionism comes in.  Yes, he cut tax rates.  And when he did tax receipts (actual money flowing into the treasury) nearly doubled.  But our universities don’t teach that.  As demonstrated whenever a liberal talks about Reaganomics.  Instead they attack Reagan.  Capitalism.  And Republicans in general.  Because they all believe that limited government is best.  Which threatens a ruling class.

Our universities teach our kids the economics school that benefits the ruling class.  By supporting an ever expanding government.  Keynesian economics.  Which has a proven track record of failure whenever we’ve tried it.  John Maynard Keynes himself advised FDR during the Great Depression.  FDR didn’t think much of Keynes.  But he liked his idea about government spending during times of recession.  Even though it only delayed the correction—and prolonged the recession—by interfering with market forces trying to correct market prices.  Giving us the Great Depression.  Keynesian economics also gave us the stagflation of the Seventies.  Japan’s Lost Decade in the Nineties.  The American dot-com bubble and recession in the Nineties/early 2000s.  The 2008 subprime mortgage crisis.  And the ongoing European sovereign debt crisis.  All of these crises have their roots in Keynesian economics.  The school of economics of the ruling class.  But what do they teach in college?  Free market capitalism is bad.  And Keynesian economics is gospel.

These twenty somethings were anxious to show how smart they were.  How in a mere 2-4 years of college they had learned everything there was to learn.  And could regurgitate the party line.  Rolling their eyes at the idiots around them.  Laughing with all-knowing condescension.  Praising President Obama.  Obamacare.  Believing that it will provide more for less.  When nothing in the world works that way.  More costs more.  Yet they naïvely bleat what they were taught.  These kids who haven’t opened up a letter from their private health insurer advising them that their premiums will rise by 50%, 75%, 100%, or more, to comply with Obamacare.  Because it costs more to have more.  And people now have to pay more even if they don’t want more.  In particular young people.  For Obamacare is a transfer program.  Where Obamacare will take money from the young and healthy (like these college students once they graduate) to pay for the old and sick.

These kids, of course, blame the Republicans for the government shutdown.  And that their concern for our deficits is silly.  For they believe we don’t have a deficit problem.  Yet the smaller Reagan deficits were the end of the world as we knew it.  And they don’t have a problem with members of Congress and their staff getting subsidies to pay for their Obamacare.  As paying for their Cadillac health care plans with their six-figure salaries would have been too much of a burden for them.  And beneath them.  So we should pity them while record numbers of Americans have disappeared from the labor force.  Especially during the government shutdown.  Where the grooms of the stool may not be there for them.  Forcing the ruling class to wipe their own bottoms after they go potty.

This is what government and the political left is turning into.  A ruling class.  The very thing we fought our independence from.  And they are getting away with this because they control education.  And because they do they can revise history.  And change their failures to successes.  And change conservative successes to failures.  All you need are fresh young minds to corrupt.  And corrupt they do.  These kids talk like they know everything.  But they know nothing.  Which is sad.  For the children are our future.  God help us.

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Shutting Down Government and Taking Hostages

Posted by PITHOCRATES - October 3rd, 2013

Politics 101

Democrats close National Parks and Deny Cancer Treatment for Children to win Political Contest

The politicians have shut down the government.  And the executive branch (i.e., President Obama’s branch) is really trying to make the shutdown hurt.  In fact they are gleeful.  For the president had his ass handed to him over his redline comment on Syria.  Having been ridiculed on the international stage he is trying to show how tough he is with people he can push around.  Americans.

So President Obama has closed national monuments.  To really annoy the people.  Even World War II veterans (men who know a thing or two about courage and bravery and being tough) coming to see the outdoor World War II monument.  Yes, he closed that, too.  But he didn’t stop there.  His executive branch even tried to close Mount Vernon.  The privately owned and privately operated Mount Vernon.  Proving the politics that motivate the president and the Democrats.

When a reporter asked Senator Harry Reid if he would approve a spending bill that would let children with cancer to participate in an experimental treatment program he said ‘no’.  Because if he did that would mean the other side would have won.  When you’re talking about winners and losers, though, you’re not doing what is best for the American people.  You’re doing whatever you can to win.  Regardless of what’s best for the people.

The Obama administration refused additional security in Benghazi so they wouldn’t offend their Muslim Hosts

The Democrats are playing hardball.  Acting like petulant children who can’t get their way.  And they don’t care who they hurt in the process.  Children throwing tantrums rarely do.  Pity they couldn’t show this same toughness when it comes to real enemies of America.

President Obama and the Democrats have unleashed every invective in the dictionary against the Republicans.  Calling them terrorists and their actions jihad.  Yet they bend over backwards not to offend those waging jihad against America.  To this day they still call the Fort Hood massacre workplace violence.  After the Boston Marathon bombing they held off calling it an act of terrorism.  And refuse to call the bombers Muslim even though they were Muslims fighting a jihad for Islam.

When the American ambassador in Libya requested additional security for their mission in Benghazi the Obama administration refused the request.  As they didn’t want to offend the sensitivities of their Muslim hosts in Benghazi by showing that we were worried about our safety there.  For President Obama won the War on Terror with the killing of Osama bin Laden.  So there was nothing to worry about.  And there was an election coming up.  So not only were they worried about their Islamic host’s sensitivities they were worried about how a ramp up of security in Benghazi would look back at home.  As they were getting a lot of miles out their campaign slogan.  “Osama bin Laden is dead.  And General Motors is alive.”  Which led to four dead Americans in Benghazi.

The Democrats hold Social Security Recipients Hostage whenever they can’t get What they Want

Of course, what government shutdown would be complete without scaring old people?  Yes, they have brought up Social Security.  Because those Social Security recipients are hostages to the government.  If the government doesn’t get what they want the government threatens to take away their benefits.

The government shutdown does not affect Social Security.  But tying the current fight in with the future fight over raising the debt limit helps the Democrats.  For they buy a lot of votes.  Which isn’t cheap.  Each year federal spending increases to pay for new and/or expanded federal programs that buy votes from those they make dependent on government.  This is the Democrats’ great fear.  That they won’t be able to raise the debt limit.  So they can continue to buy votes.  Which they must do as they can’t win in the arena of ideas.

Which is why they’re already playing the Social Security card.  Taking Social Security recipients hostage.  Threatening them that if they don’t pressure the Republicans to stop trying to be responsible they will make them pay.  And stop issuing their checks.  Which further proves how political everything is.  First of all, we pay into Social Security.  There is a Social Security Trust Fund that is supposedly holding our money.  Which means one of two things.  Either they’re withholding our own money from us.  Or Social Security is really a Ponzi scheme after all.  And the Trust Fund is empty.  Filled with nothing but federal IOUs.  Yes, they’ve spent that money to buy more votes.  So not only have they spent more than the government can pay.  They’ve also raided our retirement accounts.  To buy votes.  Which is what Obamacare is all about.  Buying votes.  To get even more Americans dependent on the government.  So the government can hold them, too, hostage to get what they want.

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LESSONS LEARNED #76: “You know they’re governing against the will of the people when they play with the meaning of words to fool the people.” -Old Pithy

Posted by PITHOCRATES - July 28th, 2011

When is a Spending Cut an Increase in Spending? 

I have a riddle for you.  When is a spending cut an increase in spending?  “Well, that’s when…, hey, wait minute,” you say.  “That’s not a riddle.  That’s a paradox.  It’s like saying draw a square circle.  Or a name an objective journalist.  You just can’t do these things.  Just as a ‘cut’ can’t be an ‘increase’.  They are the very opposite of each other.”

Yeah, you would think.  Not that much of a riddle, then, is it?  For a true riddle is solvable.  Or should be.  Like, say, I have two coins that add up to thirty cents.  One of them isn’t a nickel.  What are they?  You’re a bit stymied, aren’t you.  Because a quarter and a nickel are the only two coins that add up to thirty cents.  So what’s the answer?  A quarter and a nickel.  “But you said one of them wasn’t a nickel,” you say.  “Right,” I say.  “One of them isn’t a nickel.  But the other one is.”

Now that’s a riddle.  Clever.  But solvable.  So now back to my first riddle.  When is a spending cut an increase in spending?  The answer is when you use baseline budgeting.

The Power of Baseline Budgeting

Politicians lie.  And they love to spend our money.  Put the two together and what do you get?  Baseline budgeting.   Which in a nutshell is government spending on autopilot.  Next year’s spending is this year’s spending plus a little extra.  That ‘little extra’ is the amount in all budget negotiations. 

For example, let’s say there is an item in the budget with a billion dollar budget amount this year.  That’s the baseline.  That’s where we start budgeting for next year.  Next year’s budget will be one billion dollars plus or minus that ‘extra amount’.

Typically they set this ‘extra amount’ to be equal to or greater than the rate of inflation.  And/or changes in legislation for that budgetary item.  Let’s say there is no change in the program legislation.  And they set the program’s budget so that next year’s budget equals this year’s budget plus 10%.  So this budget item will be $1 billion this year.  And $1.1 billion next year.  Projecting this out for 10 years, this will automatically add $1.36 billion to this budgetary item.

In Baseline Budgeting a Spending Cut is an Increase in Spending

A couple of things should jump out at you.  For one you see why government programs never die.  Once they add them to the budget they stay in the budget.  And grow.  Always.  Forever.  And the bigger the starting budget amount the bigger the program will grow over time.  Again, automatically.  So you can see why baseline budgeting has been a godsend to Big Government.  It guarantees the growth of government.  Now.  And forever.

Now let’s look at a spending cut.  Let’s say spending is getting out of control.  Deficits are growing.  (As hard as that is to imagine.)  So there’s a budget deal to ‘cut’ the budget by 2%.  But this is a 2% cut in baseline budgeting.  So we’re not reducing the budget amount.  We’re only reducing the amount above the baseline.  Spending was going to increase 10% the following year.  But with this 2% cut, that 10% increase becomes only an 8% increase. 

This is where the language play comes in.  The budget is increased by 8%.  But in baseline budgeting it is a 2% decrease.  Instead of increasing the budget by $100 million, they only increase it by $80 million.  The budget is increased by $80 million but they count it as a $20 million cut.  Because future spending was cut $20 million.  So it’s a cut even though no spending was actually cut.  Spending still increases.  Just not as much as previously budgeted.  And that’s the wonderful world of baseline budgeting.  Where a spending cut increases spending.

The Government Shutdown of 1995 and 1996 

When CBO takes these projections out to 10 years it makes these spending ‘cuts’ look draconian.  As originally budgeted, this item would have been increased by $1.36 billion over 10 years.  Because of the reduction in the size of future spending, it will only increase $1 billion over 10 years.  But instead of calling this a $1 billion increase (which it is), they will call it a draconian cut of $359 million (which it isn’t).  Instead of saying this budget item will increase by 99.9% (which it will), they say it will be cut by 26.4% (which it obviously won’t).  Now politicians understand this baseline doublespeak.  But the average American doesn’t.  They hear ‘26.4%’ cut in some program for single mothers or hungry children and think what vicious, heartless bastards Republicans are.

And this was the stage for the government shutdown of 1995 and 1996Bill Clinton campaigned as a moderate in the 1992 presidential election.  After winning, though, he governed as a tax and spend liberal.  The people expressed their disapproval and gave both houses of Congress to the Republicans in the 1994 midterm electionsNewt Gingrich became Speaker of the House.  Gingrich and the Republicans saw their election as a mandate to stop the out of control government spending.  And that’s what they were trying to do in the budget battles beginning in 1995.

The Republicans were trying to reduce the rate of growth of government spending per the will of the people.  Spending would still increase.  But at a slower rate.  Clinton, though, fought against the will of the people.  Using baseline budgeting newspeak to mislead the people.  Clinton called these reductions in growth rates draconian spending cuts.  Even though there were no real cuts in spending.  But being a tax and spend liberal, he wasn’t about to cut the rate of growth.  So they squared off in budget battle.  It all came to a head when the government hit its borrowing limit.  The Republicans tried to get some spending cuts in exchange for increasing the debt ceiling.  Clinton refused.  Unable to pay its bills, the government shutdown.  And the United States collapsed.

Baseline Budgeting helps you Govern against the Will of the People

Not really.  Few people even noticed the shutdown.  Everyone still went to work.  Collected their pay (unless you worked in a national park).  And life went on.  Social Security checks went out.  Interest on the national debt was paid.  The credit rating on U.S. sovereign debt remained AAA.  So there was little damage.  Clinton came out okay from the crisis.  Newt Gingrich not so well.  Many believe that this helped Clinton’s reelection in 1996.  Of course a lot of that had to do with Dick Morris.  Who pulled Clinton to the center.  And became the moderate the people thought they elected.

Clinton may have won reelection, but he paid a price.   Republicans still held both houses of Congress.  Who ultimately won in the long-run.  Their Balanced Budget Act of 1997 did cut the growth rate of government spending.  And then the dot-com boom of the late Nineties produced a windfall of tax revenue that, with the ‘spending cuts’ of the Balanced Budget Act, actually balanced the budget.  For a few years.  But it turned out that the dot-com boom was actually a dot-com bubble.  Thanks to a lot of irrational exuberance.  And the bubble popped.  With the resulting recession tax revenue fell.  And those balanced budgets were no more.

Unwilling to concede to the will of the people, Clinton played with the meaning of words.  Called a spending increase a spending cut.  Because he knew the average American didn’t understand baseline budgeting.  And politicians continue to this day scaring people about draconian spending cuts where there are no spending cuts.  Not in the world of baseline budgeting.  Which makes it easy for them to continue to govern against the will of the people.  As they continue to do.  As they always have done.  Because nothing is more important than growing government.  And spending as much of our money as possible before we get a chance to spend it ourselves.

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Budget Compromise Averts Government Shutdown, but Worse is yet to Come

Posted by PITHOCRATES - April 9th, 2011

Shutdown Averted, now we can Create Jobs

So there’s no government shutdown.  The nation will experience one less crisis.  A bunch of people will be able to keep their phony baloney jobs.  All is right with the world once more.  We have pleased some of the people.  Some of the others, though, are pretty pissed (see Some Democrats Complain About Budget Compromise by Michael D. Shear posted 4/9/2011 The New York Times).

Robert Reich, the former labor secretary under President Bill Clinton, wrote on Twitter: “The right held the U.S. govt hostage, and O paid most of the ransom — inviting more hostage-taking. Next is raising debt ceiling.”

Held the government hostage?  Inviting more hostage taking?  Oh, come on.  Does Reich believe there is no end to the dollars the government can print?  Then again he was the Secretary of Labor.  A good friend of Big Union.  So he has some socialist leanings.  So, yeah, he’ll approve the printing of more money before cutting any spending.  Because that’s what socialists do.  Print, baby.  Print.

Ms. Pelosi also weighed in.  Her words were more reserved.  And then she unloaded some B.S.

Some Democrats appeared willing to reserve judgment. In a less-than-effusive statement after the agreement, former House Speaker Nancy Pelosi commended Mr. Obama and Senator Harry Reid of Nevada, the majority leader, for their “leadership and perseverance to keep the government open.”

But she added: “House Democrats look forward to reviewing the components of the final funding measure. The American people’s top priority is creating jobs, and we will continue to measure every proposal by whether it creates jobs, strengthens the middle class and responsibly reduces the deficit.”

Nancy Pelosi and her Democrats had the House for 4 years.  Her pal Harry Reid and his Democrats had the Senate those same 4 years.  Plus he’s still there.  When have they ever created jobs?  Strengthen the middle class?  Reduced the deficit?  Sure, they like to blame George W. Bush, but Bush just didn’t have the votes in the last two years of his presidency.  He had to play ball with the Democrats.  Nancy and Harry called the shots.  And wrote the legislation.  Nothing they did created jobs, strengthen the middle class or reduced the deficit.  And let’s not forget that the greatest financial crisis to ever hit this nation, the subprime mortgage crisis, happened on their watch.  They were responsible for the oversight of Fannie Mae and Freddie Mac.  Those GSEs at the center of that financial crisis.

EPA, PBS and NPR win; Defense, Obamacare and Abortion Lose

All right, just what did they agree to?  Who won?  Who lost?  And who got taken to the cleaners (see Who Won the Shutdown Showdown? It Wasn’t Even Close by Carl Cameron posted 4/9/2011 on FOX NEWS)?

The deal mandates a host of studies and audits of Obama administration policies. It also blocks additional funds for the IRS sought by the Obama administration and bans federal funding of abortion in Washington, D.C.

The history of offers on this bill goes something like this. Democrats first offered no cuts, then $4 billion, then $6.5 billion, then $33 billion, then settled at $38.5 billion.

Boehner made numerous adjustments to his offer in recent days too, but started at $32 billion, then with a Tea Party push went to $62 billion, then dropped to $40 billion, then $38.5 billion.

Now that’s some interesting negotiating.  The Republicans settled for a larger cut than they were originally asking for.  And the Democrats accepted a tax cut that was greater than the Republicans opening offer.  Throw in the studies and the audits.  And the defunding of the IRS and abortion.  No wonder some of the Democrats are pissed.  It looks like the Republicans negotiated like Democrats.  Like they had a pair.

House Speaker John Boehner won more cuts than he originally sought and got the Senate to agree to votes to defund the health care reform law and groups like the nation’s largest abortion provider Planned Parenthood…

It was not a totally lopsided bargain. Dems have some silver linings. There were no votes on defunding the EPA or PBS and NPR. Democrats fought for and won a $2 billion cut from the Department of Defense, knocking the military appropriation for the rest of the year down to $513 billion.

Sure, cut the military after starting a third war.  That makes a lot of sense.  The country would have been better keeping that $2 billion and cutting the EPA, PBS and NPR.  But if you’re getting the Democrats to vote to defund Obamacare and abortion, I guess you had to throw them a bone.

Still, what is $38.5 billion in spending cuts when you have trillion dollar deficits?  I’ll tell you.  Not enough.  Like it or not bigger spending cuts are coming our way.  Or higher taxes.  And by higher taxes I mean confiscatory high taxes.  The kind that makes socialism look like capitalism by comparison.  Or bankruptcy.  Those are the choices.  Like it or not.

Federal Workers get a Taste of Reality…and don’t Like It

Raise your hand if you’ve ever been laid off.  Ever just escaped being laid off.  Or kept your job only to do the work of those laid off for the same amount of pay.  If your hand isn’t up you’ve been very lucky.  Think it’s silly to raise your hand while reading on line.  Or you work for the government.  Because most everyone in the private sector has gone through these anxious moments.  And a lot of us had to start all over doing something completely different.  It’s not easy.  But we move on.  Because that’s life.  And it ain’t easy. 

For some life has been easy.  They work in a magical place.  Where layoffs are unknown.  Pay is generous.  And benefits fat.  Where is this magical place?  In the government.  So how does one more privileged than others take a potential momentary paycheck interruption?  Not good.  Here are some of their comments after the government passed a budget deal (see D.C. was prepared for the worst by Ed O’Keefe, Carol Morello and Michael E. Ruane posted 4/8/2011 on The Washington Post).

“It brings relief,” [a Department of Homeland Security worker] said, adding he couldn’t afford to be out of work for more than two weeks…

Younger federal employees and contractors seemed jubilant…

… a 22-year veteran of the Broadcasting Board of Governors, compared this week’s impasse to the drama of asking a girl to the high school prom who also gets asked by another guy…

Yeah.  It can be like that.  When the pretty girl already has a date.  That hurts.  Almost as much as being out of work for two weeks.  I can’t imagine what those people in Michigan are going through.  Some of them have been out of work for 2 years.  That must be like having the pretty girl say “yes.”  And she tells you that she’ll pick you up for prom.  And you wait and wait and wait but she never shows up.  And when you finally walk through the rain to the prom you see her dancing with the quarterback of the football team.  And they’re laughing at you.  That’s Michigan.  In Washington DC you’d probably still end up at the prom.  You’d just be with a different girl.

“It’s frustrating not to be able to get our work done,” she said, adding that now she fears the potential of a “post-crisis period.”

“I won’t be able to just come in on Monday or Tuesday morning and hit the ground running,” she said.

A “post-crisis period.”  You see, that’s what happens to you when you live sheltered from the real world.  You get soft.  Spoiled.  And whiny. 

Around midday Friday, hundreds of angry State Department and U.S. Agency for International Development employees spent their lunch hour protesting the prospect of a shutdown…

“Why must we, who work around the Hill, suffer the adverse consequences of those who work on top of the Hill?” a representative with the American Federation of Government Employees…

Protesting?  Adverse consequences?  I guess someone didn’t get the memo.  These people are entitled to their jobs.

…a social worker with the Attorney General’s office, said the last few days have been stressful as she and co-workers shared their concerns about how they would pay their mortgages and other bills.

All the talk about who was essential and who wasn’t essential weighed on people’s minds, making it hard to focus on their work, she said.

As the weekend approached, she was angry.

“Who wants to start a nice, cherry blossom weekend wondering what do we do — do we go to work on Monday?” she said.

When news of the possibility of a breakthrough came, [she] said it wasn’t going to be to switch off her anger at the politicians who she felt toyed with her livelihood and well-being.

“I’ve still got a little bitter taste in my mouth.”

Anger?  Bitter taste?  Toyed with her livelihood and well-being?  My God.  What have we done?  We spoiled her nice, cherry blossom weekend.  For shame.  I mean, Michiganders are one thing.  But federal workers in Washington DC?  They deserve better.

Four Horsemen of the Apocalypse

So what have we learned?  Well, first of all, this country is truly screwed.  With all the drama surrounding the recent budget debate that cut a paltry $38.5 billion from a $3+ trillion budget, cuts that actually mean something will probably bring out the Four Horsemen of the Apocalypse.  Anyone who thinks there will be entitlement reform before the United States follows Greece and Ireland into bankruptcy is like the proverbial ostrich with its head in the sand.  And nothing will get them to open their eyes.  Except, perhaps, four horsemen bearing down on them.  Of course, by then, it will be too late.

Oh, and federal workers are a bunch of whiny cry babies.

www.PITHOCRATES.com

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A Government Shutdown over the Budget Debate would be Transparent, unlike this Current White House

Posted by PITHOCRATES - April 7th, 2011

It is interesting the doom and gloom the White House is warning us about a potential government shutdown.  But as they make their case, it seems less doom and gloom and more of a good thing.  The truth is most of us wouldn’t even notice it.  And we’d save a lot of money we don’t even need to spend (see White House says shutdown will delay pay to troops by Richard Lardner and Jim Kuhnhenn, Associated Press, posted 4/7/2011 on Yahoo! News).

The Obama administration warned Wednesday that a federal shutdown would undermine the economic recovery, delay pay to U.S. troops fighting in three wars, slow the processing of tax returns and limit small business loans and government-backed mortgages during peak home buying season.

No worries here.  There is no recovery.  At least nothing worth saving.  We’ll pay the troops.  This is more of a scare tactic to scare the military wives.  Some of us may have to wait longer to write a check to the IRS for our income tax.  Those who do I’m sure will manage.  Small business loans?  Government shouldn’t be making loans.  That’s why we have banks.  And government-backed mortgages?  Really?  Come on, it was the government-backed loans that got us in the mess we’re in.  The subprime mortgage crisis wouldn’t have happened if the government wasn’t backing loans in the first place.

The dire message, delivered two days before the federal government’s spending authority expires, appeared aimed at jolting congressional Republicans into a budget compromise.

To jolt the Republicans?  Compromise is a two-way street.  Why is always the Republicans who are stubborn?  Why isn’t the other side, the stubborn side, stubborn?  What happened to President Obama’s debt commission?  The Republican budget isn’t asking more than Obama’s highly esteemed debt commission that Obama has filed away in the round file.  For he never had any intentions of making any cuts.  Because Democrats don’t make cuts.  They just talk about them.  So people can see that they’re serious.  And when people lost interest, bang went the debt commission’s report into the trash.

As the talks continued, the White House sought to put the prospect of a shutdown in terms people would care about, warning even that the beloved National Cherry Blossom Festival Parade in the nation’s capital would be wiped out. The Smithsonian Institution and national parks around the country would also be closed.

Life’s hard.  People are dying in genocide in Libya (according to the Obama administration).  If it’s not quite genocide then let’s call it civil war.  And there’s a lot of that going around.  In the grand scheme of things, missing the National Cherry Blossom Festival Parade just doesn’t seem as great a disaster as wholesale death and destruction.

Under long-standing federal rules, agencies would not be affected that provide for U.S. national security, dispense most types of federal benefit payments, offer inpatient medical care or outpatient emergency care, ensure the safe use of food and drugs, manage air traffic, protect and monitor borders and coastlines, guard prisoners, conduct criminal investigations and law enforcement, oversee power distribution and oversee banks.

That sure sounds like we’ll be paying our soldiers.  They’re providing national security.  And if Libya is a vital national security interest, so are the war zones in Iraq and Afghanistan.  If we don’t pay our military it is nothing more than a cheap partisan trick to scare people into hating Republicans.  No, it seems like we’ll pay most of the ‘important’ things in the event of a shutdown.  Other than parks and Cherry Blossom Festivals.

Mail deliveries would continue in the event of a shutdown. U.S. postal operations are not subsidized by tax dollars.

Really?  Our tax dollars don’t subsidize the U.S. Postal Service?  That same postal service that hasn’t shown an operating profit since I don’t know when?  Really?  Since when?  But I digress.  The important thing is that the mail will keep coming during a shutdown.

According to the shutdown scenario described by the administration, the government would have to significantly cut staffing across the executive branch, including workers at the White House and civilian employees at the Defense Department; close to 800,000 workers would be affected. Congress and the federal court system will also be subject to a shutdown.

Good.  Make Thomas Jefferson happy.  Well, make his spirit happy.  Cut the executive branch.  It has grown way beyond what any of the Founding Fathers ever envisioned.  I doubt if Alexander Hamilton would even approve of its size today.  Though he would be pretty impressed with the power of the military, though.  But that’s a different story.  Let’s slash the executive branch for awhile and see if anyone notices.  If not, here’s a chance for some real budget cutting.  Let’s make these cuts permanent.

At the Pentagon, defense officials were finalizing plans that would lay out how the department would deal with a shutdown. But they already have acknowledged that U.S. military troops — including those in war zones — would receive one week’s pay instead of two in their next paycheck if the government were to close.

Military personnel at home and abroad would continue to earn pay, but they wouldn’t get paychecks until there was a budget agreement and government operations resumed.

Cheap partisan scare tactics.  Whenever a government can’t get the tax increases they want, they threaten the teachers, cops, firemen and, now, the military, in a childish tantrum.  Gimme want I want or I will cut the things that are important to you.  Those things that, if cut, puts you into peril.  How do you like that, hmmm?

What makes this worse is that they’ll enjoy not paying the military.  They don’t like them.  Never have.  In fact, they almost regret repealing Don’t Ask, Don’t Tell because it took away their go-to excuse to keep these people off of their Ivy League campuses.

Key national security responsibilities, including operations in Afghanistan, Iraq and Libya and earthquake assistance to Japan, would not be interrupted by a shutdown, the Pentagon said.

So are they paying them?  Or just making them work without a paycheck?  Maybe our soldiers should go on strike.  Like the teachers.  To prevent unfair treatment.  You have to admit being forced into combat operations without pay is worse than being asked to contribute another fewer percentage points to your own health care.  Of course, these aren’t the same.  The Obama administration would not stand by and allow teachers to suffer an outrage like paying for their own health care.  Soldiers in combat?  The hell with them.

Social Security payments would continue to be delivered, and applications for benefits would continue to be processed, Social Security Commissioner Michael Astrue said.

Yes, they will sacrifice the soldiers.  And why not?  Most of them vote Republican.  But senior citizens?  Dependent on Social Security?  That’s another story.  Anyone dependent on the federal government votes to keep federal government big, i.e., they vote Democrat.  So the seniors get paid.  Always.  Unless the Republicans can be blamed.

Medicare would still pay medical claims for its 48 million recipients, who are mainly seniors but also several million younger people who are permanently disabled or have kidney failure. Payments to doctors, hospitals and other service providers could be delayed, however, should a shutdown continue for several months.

Sacrifice the soldiers (many of who vote Republicans).  Protect the seniors (many of who vote Democrat).

The Obama administration said the impact on the housing market would be more severe than in 1995, the last time there was a government shutdown. The Federal Housing Administration accounts for 30 percent of the mortgage market, nearly three times the amount 16 years ago.

And the greatest financial crisis ever (the subprime mortgage crisis) to hit the United States happened after the government backed three times as many mortgages than they did in 1995.  Having the government stop backing mortgages is a good thing.

The nation’s 15,700 air traffic controllers would keep working, as would many of the Federal Aviation Administration’s 6,100 technicians who install and maintain the equipment for the nation’s air traffic control system.

The planes will still fly in the event of a shutdown.

Operation of the International Space Station would be unaffected. NASA’s Mission Control in Houston would continue to work around the clock to keep watch.

Soldiers, no.  Astronauts, yes.  Even though the International Space Station is international.  With other nations ‘watching’ the station.  And our astronauts often catch a ride with the Russians on their Soyuz rockets.  So the space coalition could survive a few months easily without us.

Among other consequences cited by the administration:

_The Environmental Protection Agency would cease issuing permits and stop reviewing environmental impact statements, which would slow the approval of projects.

_Most government websites would not be updated, unless they were deemed essential.

_Federal courts would be unable to hear cases as clerks, stenographers, bailiffs, security guards and other employees would not be at work.

At most these are inconveniences.  Unlike the out of control spending that can “herald the end of the republic.”  As Benjamin Franklin warned us about when people learned they can vote themselves money.  And that’s where we are.  They’ve learned.  And have.  Franklin’s prophetic warning is about to play out if we don’t stop spending.  This is the choice.  Keep spending and end the republic.  Or make some serious cuts.

The Democrats have not presented a budget as called for in the Constitution since before the last election season.  Why?  It wouldn’t help them win any elections.  Further out of control spending would show them as irresponsible.  Responsible spending cuts would anger their voting base.  So they abdicated their constitutional responsibility.  They punted.  Now they’re trying to run out the clock with the Republicans on offense.  Positioning them to look like the bad guys.  No matter what happens.  Pain now (cuts).  Or greater pain later (no cuts).  It will be the Republicans’ fault.  Because they’re acting like the grownups here.  While the Democrats play their childish, partisan games.  And when the Democrats break the nation with their spending, like a child they’ll say it wasn’t them.   It was the big elephant in the room.  The big GOP elephant.

But what will the Democrats do if they win this showdown?  What will become of our country?  For if they don’t cut spending they will have to raise taxes.  But not by a little bit.  For the spending cuts proffered by the Republicans still aren’t large enough to solve the impending entitlement crisis.  So if there are no spending cuts the increase in taxes will have to be huge.  Bigger than the dollars in the current debate.  So big that they will truly undermine the anemic economic recovery underway.  Pulling the nation into a deeper recession.  So deep that we may never pull out without even more ‘draconian’ spending cuts.

In the grand scheme of things, a government shutdown is the least of our worries.

www.PITHOCRATES.com

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