Category: Budget

No Big Surprise

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The Annual Report of the Board Of Trustees of the Federal Old-Age and Survivors Insurance And Federal Disability Insurance Trust Funds is out and Social Security is just fine, and healthcare reform has improved Medicare’s financial picture.

This is not a surprise. If you follow this at all, and possess the math skills required to engage in basic counting, and are not demagoguing this for political advantage, then you already know this.

Of course, the conditions that I have stated rule out 95% of the reporters, 99% of the pundits, and 101% of the Republicans out there, (someone must be hitting the button twice) so we still get the “youngsters will never see social security” bullsh%$.

Signs of the Apocalypse, Republican Tax Cuts Edition

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Who is the latest economics notable criticizing the Republican desire for never ending tax cuts?

Why it’s 1980s wunderkind David Stockman, who was Ronald Reagan’s director of the Office of Management and Budget.

Not only does he excoriate supply side, “Tax Cuts Pay for Themselves,” mentality, he lays the financial crisis at the feet of these policies.

We are living in Bizarro world when David Stockman is the voice of reason.

House Calls Obama Veto Threat on JSF Engine

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The House Appropriations defense subcommittee has voted to fund the F136 alternate engine for the JSF (see also here) which runs full face into the implied threat of an Obama veto (SecDef Gates has said that he would recommend a veto, but that is different from Obama himself threatening a veto).

I’m of mixed emotions on this matter.

I think that the F-35 is over priced, behind schedule, and useless for any likely future war, but I remember the history of Pratt & Whitney’s F-100 before GE started competing with them with their F-110 engine, and it was not pretty, so I think that the engine is a good idea.

I think that the Pentagon is worried that any dollars spent on this will drive up the front end costs, making it more likely that the program will be canceled, and they are willing to eat the additional costs of P&W being the soul source on the back end.

What BTD Says

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There seems to be a push by the blue dogs and DINOS to try to make some portion of the disastrous Bush tax cut permanent.

Of course, most the Republicans won’t vote for it unless it keeps tax cuts for millionaires, and so it needs liberal Democratic votes to pass.

Well, the the blogger formerly known as Armando has this right, the best course of action absent some major concessions from the Blue Dog types is to do nothing, and let taxes go up, particularly the inheritance tax, which will pay for the loss of revenues this year in about 18 months if it returns to its old levels:

But it is not for progressive Dems. In short, to hell with Baucus and Reid on this issue, Progressives can get what they want by simply making sure nothing happens. They have the bargaining power now. Time to use it.

All that needs to happen for the taxes to be repealed is to do nothing.

Doubtless, the Obama administration will twist arms over this, since he promised people making less than $¼ million a year that he would not raise taxes, but he also promised to support a public option, to get us out of Iraq, repeal Don’t Ask Don’t Tell, and have a serious look at torture and other war crimes by Bush and His Evil Minions™.

I don’t see any reason for liberals in Congress to go out of their way to support Obama on bad policy promises if he won’t fight on good policy promises.

I Really Cannot Wrap My Head Around this

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As much as I rag on the Washington Post, there is some reporting of real value amongst the dross, including Dana Priest, who, along with William M. Arkin, have published an extensive investigative report on the burgeoning world of the American security-industrial complex:

These are some of the findings of a two-year investigation by The Washington Post that discovered what amounts to an alternative geography of the United States, a Top Secret America hidden from public view and lacking in thorough oversight. After nine years of unprecedented spending and growth, the result is that the system put in place to keep the United States safe is so massive that its effectiveness is impossible to determine.

Basically it points to a picture of a state security apparatus run amuck, where there are so many players, generating so much analysis, from so many sources, that it is impossible to separate the wheat from the chaff, or as Glenn Greenwald notes:

So it isn’t that we keep sacrificing our privacy to an always-growing National Security State in exchange for greater security. The opposite is true: we keep sacrificing our privacy to the always-growing National Security State in exchange for less security.

(emphasis original)

More than ever, we need to ensrhine into the constitution something analogous to the the Swedish concept of Offentlighetsprincipen (openness), because right now all that our paranoia is generating is a massive trail of profiteers/contractors without generating much in the way of security.

It should be noted that reigning in this will not be easy. You can be sure that when the budgets are in jeopardy, the various wings of the state security apparatus will come up with scary stories to subvert any effort at real reform, and the current administration is terrified of being labeled, “soft on fillintheblank,” so they do not have the inclination to even bend the curve.

I’ll be going through the story, and the supporting material, to see if I have anything to add.

Because the Banks and Insurance Companies Own Us

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Hungary has just broken off talks with the IMF and the EU, because the IMF and EU only want deficit reduction on the backs or ordinary people, so throw pensioners into the streets, destroy your healthcare and education systems, and raise the VAT, but whatever you do, don’t raise taxes on banks and insurance:

Mr Orban had intended to raise some half a billion euros (187 billion forints) via a new tax on banks and insurance firms. The IMF however said this “”is likely to adversely affect lending and growth.”

More subtlely, the EU’s Mr Rehn said: “Care will also be needed to ensure a stable environment for both domestic and international investors.”

Brussels and the IMF will be hoping a swift sharp spanking from the markets will chasten Mr Orban’s government, but the move will also unnerve investor thinking about the condition of economies across the bloc, particularly in eastern Europe.

The truth here is that the bailout package is more a bailout of western banks than it is of Hungary, which is why the EU and the IMF find it unacceptable that banks actually pay taxes in Hungary.

If I were the Hungarian PM, I would start drawing up plans to reverse Hungary’s commitment to joining the Euro, and start immediate preparations to exit the European Exchange Rate Mechanism and allow the Forint to float.

It is clear that the deal with the Euro is that if you join, you don’t just lose sovereignty to the EU institutions, but to French, German, and British banks as well.

In the Annals of Troubled Military Programs, This One Takes the Cake

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As I have mentioned a number of times that I spent some time working on the recovery and maintenance vehicle for the now-canceled Future Combat Systems (FCS).

Well, no matter how misbegotten, it appears that the program reappears with a different name a few years later.

Case in point is the replacement for the FCS, the Ground Combat Vehicle, GCV, which is different largely in only one area, it no longer needs to fly on a C-130, so the 20 ton maximum weight for shipping has gone by the wayside.

This is not surprising. After all replacing the 30 ton weight class M2/M3 with a vehicle with superior mobility and protection is difficult to do in ⅔ the weight of its predecessor, all while reducing the cost of operation, is a tough nut to crack.

It’s clear that they will be going with a remotely operated turret, and without the space for the gunner and commander and the turret penetration, it makes it rather simple to fix a rather prominent shortcoming of the Bradley, its inability to carry a full 9 soldier infantry squad.

So the Pentagon is are back to square, which means fighting the wheels/tracks war yet again, though it appears that the military is favoring a tracked vehicle.

The advantages of tracks are better off road mobility, better performance in an active city conflict, since it can go over a road block made from cars or trucks, and a wheeled vehicle cannot, and more volumetric efficiency, since the wheel travel is less, and you do not need to accommodate the swept volume of the wheels which pivot to steer.

The disadvantages are operating costs, noise, weight and speed on roads.

That being said, one huge advantage for tracks is that if your infantry fighting vehicle grows into a 70 ton behemoth, wheels just won’t work at all:

The U.S. Army’s chief of staff wants to put the service’s Ground Combat Vehicle program on a diet.

Gen. George Casey said he thinks the future replacement for the Bradley Fighting Vehicle needs to be much lighter than the estimated 70 tons program officials are projecting that the new GCV will weigh.
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“I keep saying, ‘Look, man, an MRAP [mine-resistant ambush-protected] is about 23 tons, and you’re telling me this is going to be 70 tons, which is the same as an [M1] Abrams. Surely we can get a level of protection between that, that is closer to the MRAP than it is the M1,’ ” Casey said June 7. “It’s not going to be a super heavyweight vehicle.”

It would also be unaffordable. I would suggest that if the army really needs a better vehicle, that it procures new-build/rebuilt Bradleys, with the crewed turret replaced with something like the CTI tele-operated turret, and with enhanced armor based on the non-homogeneous armor technologies developed for the M-1 Abrams and the original FCS program.

You would still probably end up with less than a 40 ton weight, and you would get the capability you need at a much lower cost.

Meanwhile in the somewhat less sexy areas of folding in a few drones and an advanced network-based radio called JTRS as part of what is now called the, “Brigade Combat Team Modernization, the House Armed Services Committee is cutting this because of poor performance and cost escalation.

Once again, it’s over budget, behind schedule, and not performing.

So on the little things, where the Pentagon knows what needs to be done, they are not executing, and on the big programs, they don’t have a clue as to what they want.

Count me in Barney Frank’s and Ron Paul’s corner. We need to slash military spending.

I would also add that we need to somehow or other put adults in charge of the procurement process.

Even a Stopped Clock…………

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And Alan Greenspan are actually correct every so often:

Former Federal Reserve chief Alan Greenspan believes Congress should let the tax cuts enacted by President George W. Bush expire for all Americans in order to address the widening deficit, according to a TV interview airing Friday.

“They should follow the law and let them lapse,” Greenspan told Bloomberg TV’s Judy Woodruff.

The 2001 and 2003 tax cuts are due to expire at the end of the year. President Obama had promised to make them permanent for families making less than $250,000.

As to Obama’s promise to people making less than 250K, it would necessarily involve deal cutting which would require some sort of very expensive sop to the rich, so just put this in the category of another Obama promise not kept, and let the rich pay more.

The amount saved by folks making less than 250K amounts to just a few bucks a week.

Of course, that is not what is going to happen. Instead, Obama will propose an extension on the lower income tax cuts, and then he will propose tax cuts for the wealthy, basically giving away the store at the start of negotiations, and then the Republicans, and Ben Nelson, and various Blue Dogs, will go and lard it up with more give aways for the rich, most likely give aways on interest, capital gains, and dividend income, and Obama will declare victory, and sign it.

My suggestion would be to make the proposal, and raise the marginal tax rate for folks over 250K, to something on the order of 85% for income over $10 million a year.

Start there, and you may actually get a good tax bill.

Seriously, soaking the rich is good policy and good politics.

Why You Should not Give to the DSCC

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Because, will throw money at people like Blanche Lincoln, who, now that the primary challenge is done, is once again throwing her lot in with the rich bankers who are in the process of destroying our country.

This time, she and John Kyle, he of the “never need to pay for tax cuts for rich folk,” fame, have introduced an inheritance tax bill that is a big wet kiss for the richest families in the United States:

Their proposal would require Democratic leaders to amend the small-business jobs bill with a provision that sets the estate tax at 35 percent with a $5 million exemption. These amounts will be phased in over a 10-year period and also be indexed for inflation. In addition, inherited assets would be taxed at their worth upon transfer, not when the deceased purchased them.

Of course, because of the way the Bush and His Evil Minions™ wrote his tax cuts, there is no inheritance tax at all this year, but next year, it goes back to 55% and a $1 million exemption, and, quite honestly, the “liberal” proposal is a $3.5 million exemption and a 45% rate.

Of course, when given a choice between giving something to rich heirs, and giving everything to those same heirs, Blanche Lincoln goes with giving money to the useless heir class.

The first broad based tax adopted by the founding fathers was an inheritance tax. They did it because they realized that dynastic wealth was corrosive to the republic.

But Blanche Lincoln needs those campaign dollars, so f%$# the budget and American people.

It goes without saying that the Democratic Senate Campaign Committee is backing her to the hilt, which is why you shouldn’t give to the DSCC when they come calling.

Military Budgets

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Matthew Yglesias comes to a stunning realization on the military budget as juxtaposed against their financial crisis:

The thing about military spending that I don’t think is properly understood is the extent to which if it’s not necessary it’s truly wasteful. Building a mag-lev train from Chicago to Milwaukee would be a “waste of money” but if you did it, the resulting train would still be useful to people and lead to some increased value. But a tank you don’t need just does nothing. An extra brigade of soldiers consumes resources and doesn’t produce anything. Of course if your tanks and soldiers produce “Nazis don’t conquer Europe” then it’s valuable indeed. But if you don’t need them, you really don’t need them.

(emphasis original)

Matt was talking about Greece and Turkey, but looking at the bigger picture makes one wonder why the biggest debtor in the world, the United States of America, is well served by spending nearly as much on defense as the rest of the world combined.

Unambiguously Good News

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For the first time since the 3rd quarter of 2008, State tax receipts rose in the 1st quarter of 2010.

The obvious bit of good news here is that increasing tax revenues means that there is more hiring (income tax) and buying (sales tax), but there is another significant effect.

49 states, all of them but Vermont, are required by their constitution to run balanced budgets, and what this has meant is that the state governments have had to act like 49 little Hoovers, cutting budgets and staffing in the midst of the worst downturn since the great depression.

The turnaround in tax revenue means that the spending cuts can stop, which removes a drag to those state’s economies created by budgetary retrenchment as well.

You Cannot Negotiate With the Insane

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A hack writer once said that, “A gaffe is when a politician tells the truth.”*

Well, John Kyle just had a bit of a gaffe.

He just said that tax cuts never need to be paid for, just spending:

You cannot run a hospital with people who believe in bleeding and leeches.†

There is simply no basis for rational cooperation with moonbats.

[on edit]

I should note that insanity is the best spin on what Kyle said. A more likely interpretation is that the real goal here is to create deficits at such a level that cuts government, particularly to social services,‡ are inevitable.

It’s called, “starve the beast.”

H/t Ezra Klein.

*Michael Kinsley, who is evidence that mindless contrarianism is never a substitute for real insight.
†Yes, I am aware of the fact that there are actually medical treatments that involve bleeding and leeches,most notably iron poisoning and reattaching limbs, it’s a metaphor.
‡But of course, we must never ever reign in our bloated wasteful Pentagon.

Jim Webb Asks the Right Question

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The distinguished gentleman from Virginia is asking why the military has so many flag and general officers (generals and admirals):

Sen. Jim Webb, D-Va., is pressing the Defense Department for justification of why the military has so many flag and general officers, and he also wants to know why the military is paying salary and tuition assistance to officers on loan to some Washington, D.C., think tanks.

It’s a good question, with about 1/10 the men in uniform as at the height of the 2nd world war, we have more active duty general officers .

Additionally, we just have more officers, with one officer for every 5 enlisted men, up from the traditional number of 1 for 10 that was the standard for the military throughout most of history.

The answer is, I think, that much like the incompetent banksters thinking that it is all about the banksters, the officer corps thinks that its all about the officer corps.

Lots of navel gazing, and lots of waste.

Cut back on the officer corps, and spend it on senior NCOs, and you will get a better military.

Barack Obama In Trying for Credibility in Defense, Destroys Our Military

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Because Barack Obama and His Stupid Minions™ are terrified about being accused of being soft on defense,* that his future budgets will by expensive high tech weapons systems at the expense of operations, maintenance, and readiness:

U.S. spending on weapons through 2016 likely will grow faster than the overall defense budget, which will have annual increases of only about 1 percent above inflation, according to Pentagon Comptroller Robert Hale.

“Our goal would be to get forces and modernization to grow by 2 or 3 percent,” Hale said in an interview, while saying that “it’s not a given.”

So Obama intends to spend money on crap we don’t need, thereby diverting money from the crap we do need

Of course, the fact that we are already spending more money on defense than at any time since the end of the 2nd World War, and he’s still trying to increase the defense budget in real terms just buggers the mind.

Republicans support wasteful defense spending because:

  • It’s easy to demagogue.
  • They find defense contractors an easy touch for donations.
  • They want to ruin our finances so that we have to make cuts in social programs.

The Democrats support wasteful defense spending because:

  • They are afraid that Republicans will call them names.

Truth be told, I am not sure which one is more pathetic.

*It won’t work, the Republicans will run against you as soft on defense anyway. As the saying goes, “The coward dies a thousand deaths, the brave man only one.”

Timothy Geithner Can Bite My Shiny Metal Ass

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So, with all the talk of screwing the ordinary guy on the social safety net through Barack Obama’s Pete Peterson sponsored catfood commission, Timothy “Eddie Haskell” Geithner still has the time to promise people who never worked a day for their money that they will pay less in taxes than the guy at McDonalds:

Obama administration will keep tax rates at levels that benefit job-creating businesses and limit taxes on capital gains and dividends, U.S. Treasury Secretary Timothy Geithner said on Wednesday.

Interviewed on CNBC’s “The Kudlow Report”, Geithner said the intent is to extend and keep in place tax cuts that should benefit 95 percent of businesses.

“We’re going to make sure that we keep at 20 percent the existing rates on dividends and capital gains,” Geithner said. “We think that’s good policy.”

Call me a commie, but I think that people who work for their money should pay less, not more in taxes than the trust fund babies who haven’t lifted a finger for their lifestyle.

Yes, the Shrill One Is Shrill

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Paul Krugman compares the justification behind European austerity programs to the infamous French strategy in World War I.

He’s right, of course.

The statements by ECB President Jean-Claude Trichet that austerity in the face of a depression will win through the creation of confidence is much like the infamous Plan XVII envisioned by the French to win the war through the confidence and fighting spirit of the French citizen (élan), as described by Baraba Tuchman in her book The Guns of August:

Entirely offensive in nature, Plan XVII made extensive use of the belief in the mystical élan vital assumed to be instilled within every Frenchman – a fighting spirit capable of turning back any enemy by its sheer power.

Needless to say, Plan XVII was as meaningful an idea as the statement by a British General during the same period of something to the effect of, “A machine gun bullet cannot stop a horse.”