The Blue State

A Randy Post About Bloomberg From a NY'ker

It's been a while since I poked my nose in here, but I just wanted to give my thought's about Bloomberg:

As a Long Island Ny'ker working in NYC, I (as many NY'ker's ) felt Bloomberg was a pompous, arrogant and condescending individual. However, that changed over time and once I (and many others) saw the changes he implemented, our feelings turned. When I look back at why I didn't like him, it was my ignorance which didn't allow meto see the forest through the trees...after all he had banned smoking in the city and that was just wrong because I was a smoker. And let's face it, ifya can't trust The Doctors and Santa, who can ya trust?  In my opinion ya can trust Michael Bloomberg, that's who. While sitting back and letting my thought's flow through my slightly toasted brain cells, it dawned on me "the guy is doing a pretty good job in the city, and he's got a cool few billion, maybe he knows a little more than I do?". Well I have to make a Dr's appt. and start my Christmas list, so until next time kids I bid you farewell.

Well, that's all I have to say about that.

Absurdity of September budget battle

During a time when Congress should devote all of its attention to debating Iraq, leaders on Capitol Hill decided to wait until just this month to address the budget for the 2008 fiscal year, which begins on October 1st.  In other words, the bills must be passed within the next month, or else the federal government cannot fully function.

We can complain all we want about how Democratic leaders should have dealt with this issue earlier.  In fact, the media will do a lot of that.  But what should not be overlooked is the absurdity of Bush's complaint that Democrats are asking for too much money.

Richard Simon shows us the dispute:

Cabinet heads wrote to congressional leaders last week urging them topass appropriations bills "with reasonable and responsible spendinglevels" before the current fiscal year ends.

Bush has proposedexpenditures of $933 billion, a 6.8% increase from this year's spendinglevels. That amount does not include direct expenses for the wars inIraq and Afghanistan. The House bills, by the White House's estimate,exceed the president's level by $22 billion.

In layman's terms, Bush is raising a fuss because the Democrats want to increase the budget by 2%, even though Bush's own version is a 6% increase from last year.  This complaint comes from the same President who never vetoed a single spending bill when the Republicans held Congress, yet the national debt rose by more than $3 trillion.

George W. Bush is the last guy that has any credibility while preaching fiscal discipline.

Washington Times acknowledges reckless GOP spending

No one really faults newspapers for having an ideology.  Just don't let ideology get in the way of facts.  This morning, the Washington Times may have shocked its conservative readership by pointing out that Republicans, not Democrats, are responsible for today's budget mess:

While we welcome the fiscal restraint now being demonstrated byPresident Bush and congressional Republicans, we regret that theirunrestrained profligacy during the previous six years has contributedso much to the fiscal challenges that now confront the nation. Duringthe last six years alone, federal outlays have increased by 49 percent,rising from $1.863 trillion in fiscal 2001 to a projected $2.779trillion for fiscal 2007, which ends Sept. 30. Inflation-adjustedfederal outlays have increased nearly 27 percent in six years. (Federalspending in 2001 was less than 10 percent above its 1995 level.) Forthe 2001-07 period, the average annual real increase in federal outlaysexceeded 4 percent. Because the real economy would have increased byonly 2.5 percent per year between fiscal 2001 and fiscal 2007, federalspending as a share of the economy jumped from 18.5 percent in 2001 (arecession) to 20.2 percent in 2007 (the sixth year of an expansion).

It is a fact that the National Debt currently stands at $8.9 trillion.  It is also a fact that no Republican president has balanced the budget since 1969.

Drowning in red ink

A new nonpartisan Congressional Budget Office report released today found the deficit in 2009 and 2010 will rise, only affirming that the party that has not balanced a federal budget since 1969 has a flawed fiscal policy:

However, despite the short-termimprovement, CBO predicts that, in 2009 and 2010, the deficit will riseagain to a greater share of the gross domestic product.  

“Overthe long term, the budget remains on an unsustainable path,” CBO said.“Unless changes are made to current policies, growing demand forresources caused by rising healthcare costs and the nation’s expandingelderly population will put increasing pressure on the budget.”

HouseMajority Leader Steny Hoyer (D-Md.) said the latest CBO report“reaffirms that Republican policies have created deficits as far as theeye can see.”

Yes, rising health care costs will be a huge problem, because the current system does not value preventive care.  Preventive health care would save money in the long run.

Richardson rolls out economic agenda

This week, Democratic candidate Bill Richardson rolled out his economic proposals for if he is elected president.  He became the first candidate in either party to call for a balanced budget amendment.  The Des Moines Register had a general run-down of the proposals:

Richardson’s economic plan also comes in the midst of a massivedownturn in the U.S. stock market, a point the governor noted in theopening lines of his speech.
He proposes four ideas to remedy the country’s economic woes:

• Support a constitutional amendment to balance the federal budget.

• Eliminate pork-barrel spending, which, he said, would save $40 billion over the next five years.

• Cut corporate welfare to save $230 billion over the next five years.

• Stop tax cuts for the wealthy, cutting taxes instead to create jobs and help the middle class.

A balanced budget amendment is more necessary now than ever before.  We have so much debt floating around in foreign markets, which we will have to pay interest on years from now.  Also, high amounts of debt can affect the value of currency.  Look at the European Union.  They have a constitutional amendment that requires a balanced budget each fiscal year.  Their currency has been beating ours for most of this decade.  A balanced budget amendment would force our Congress to be careful how it spends money, and make it harder for Senators like Ted Stevens to finance bridges to nowhere.

Editorial: Bush and media playing "deficit" games again

All this week, President Bush, his advisers and conservative news organizations have touted numbers that project the federal deficit to be less this year than in 2006.  Again, these are just projections, which the White House has had a reputation of over-hyping.  For example, the Administration projected a deficit in July of $35 billion, even though figures released this morning put the actual number an entire $1.4 billion higher.

But the real issue is the Administration's reluctance to inform Americans about what the word "deficit" actually means.  When they say the deficit is shrinking, many people think, "Oh great, all that money we owe will soon be erased."  That is not at all the case.

The words "deficit" and "debt" have two different meanings.  "Deficit" refers to the amount of liabilities over assets over a certain period of time.  "Debt" is the all-time remainder of liabilities over assets.  So when Bush says the deficit is shrinking, that does not mean our debt is shrinking as well.  Instead, it means the rate of increase to the debt is shrinking, but the debt itself is still growing.

In 2004, President Bush said he would cut the deficit in half by 2009.  What that really means, if that actually happens, is the National Debt will still rise, but just by half as much that year. 

So now that we all have this clear, no matter how much the annual deficit decreases, it is impossible for President Bush to cut the National Debt in half.   He will still preside over the largest debt increase in our nation's history.

(Click chart for larger image)

Democrats' new spending rule would balance budget by 2012

House Democrats recently passed a budget bill that institutes a 'pay as you go' rule.  In other words, no spending unless there is budget money available to pay for it.  Similar rules led to surpluses during the Clinton years, but were allowed to expire in 2001 after Republicans took control of both the Congress and White house:

Balancing the budget "is an urgent national priority," Rep. DennisCardoza, D-Calif., said during the debate, and "now is the time" tobring back the rules.

The House budget rules, approved 280-152, bar spending increases forany new program unless spending is simultaneously cut elsewhere ortaxes are raised to offset the cost.

Likewise, any reduction in tax revenues must beoffset by spending cuts or tax hikes in other areas. That change coulddoom Republican efforts to permanently extend tax cuts passed duringBush's first term, most of which expire at the end of 2010.

Some Republicans will complain that this bill raises taxes.  Don't let them fool you.  Nowhere in this bill does it say anything about a tax increase.  The bill simply specifies that spending cannot happen unless money is available to pay for it.

The good news is that Bush is not expected to veto it.  The only question is what will the Senate do with it?  If this thing makes it through, expect for there to be a crackdown on the pork and other wasteful spending that both parties have been getting away with for so long.

The only other obstacle is the farm bill, which will end up being rather expensive.  There are some that want to wave the pay-as-you-go rule in order to get the farm bill through -- but it is unlikely that will happen.

National Debt at $59.1 trillion

If the government implements the same accounting standards that corporations use, the national debt would be much higher than the approximate $8.8 trillion in red ink that the Treasury Department currently reports.

Dennis Cauchon explains that we are not reporting our finances correctly:

Modern accounting requires thatcorporations, state governments and local governments count expensesimmediately when a transaction occurs, even if the payment will be madelater.

The federal government does not follow the rule, sopromises for Social Security and Medicare don't show up when thegovernment reports its financial condition.

Bottom line:Taxpayers are now on the hook for a record $59.1 trillion inliabilities, a 2.3% increase from 2006. That amount is equal to$516,348 for every U.S. household. By comparison, U.S. households owean average of $112,043 for mortgages, car loans, credit cards and allother debt combined.

Regardless of which method is correct, it is interesting that the government refuses to implement the very same accounting procedures that it forces corporations to follow.

Under Bush, the debt has increased by at least $3 trillion -- and maybe even higher when using corporate accounting procedures.  A lot of that money is being borrowed from banks in countries with corrupt leaders.  That may pose a long-term national security risk:

As anyone who has had to borrow money is well aware, lenders haveleverage. Whether it's your brother-in-law or the Bank of America, acreditor has claims that you can't entirely ignore.

Because of our low national savings, the United States has had toborrow heavily from foreign countries. Foreign ownership of U.S.Treasury bonds alone increased $1.2 trillion in the first five years ofthe Bush administration.

Much of this money belongs to governments whose interests do not always mesh with our own.

So much for being the party that is big on protecting national security!  Hopefully 2004 will be remembered as the last time we bought that nonsense.

Maxing out the credit card on Iraq

The Christian Science Monitor really had an excellent article about how the U.S. Treasury pays for this war.  In 2005 and 2006, the expenditures for this war did not even appear on the official budget.  So how is it being paid for?  The CSM has the answer:

But to pay for the ongoing wars in Iraq and Afghanistan, the US hasused its credit card, counting on the Chinese and other foreign buyersof its debt to pay the bills.

Now, as President Bush is promising to boost the number of troops inIraq, there is increased scrutiny over how the US is going to pay forit all.

The US is spending about $10 billion a month on Iraq andAfghanistan. By the end of this year, the total funds appropriated willbe nearly $600 billion – approaching the amount spent on the Vietnam orKorean wars, when adjusted for inflation.

President Bush took us into Iraq because he felt (and remember that "feeling is different than "thinking") that it would benefit U.S. national security.  Now, he is escalating the war by 20,000 more forces because of that very same feeling.  But is it in the interest of U.S. national security to owe half-trillion dollars to banks in China and other undemocratic regimes?  Remember, we have to pay interest on that debt.  Also remember that debt decreases the value of currency.

So the next time Congress appropriates another $150 billion or so for Iraq, please remind your elected officials that our grandkids' generation will have a substantially devalued currency unless we can pay for what we spend on this war.

Treasury Dept brags about $80 billion increase in debt

This week, the Treasury Department happily announced that the deficit in the latter fourth of 2006 reached $80.4 billion.  So how is that positive?  It was the lowest deficit of any 4th quarter in four years -- certainly a step in the right direction.  Newspapers all over the country jumped on the story, as if it was a sign that our budgetary situation was beginning to turn the corner.

But is a $80.4 billion deficit for a quarter of the year anything to cheer about?  The last time it was any lower was in 2003, during an actual recession.  Translation: our deficit has risen during a time of economic prosperity, when inflation has gone up.  What all this means is a lot of the prosperity was artificial, and the debt could increase in the near future.  When debt increases, so do interest rates and so does our dependence on foreign banks in non-democracies such as China.

In fact, the non-partisan Congressional Budget Office (CBO) is predicting the debt to increase this year.  They forecast a 2007 deficit of $286 billion, larger than in 2006.  The House Democrats' new spending rule, titled "Pay as You Go," is a healthy step in the right direction to control spending.  But in order to minimize the deficit in the coming year, more money may have to be cut from entitlements.

The Democratic Congress will need to be careful what it spends taxpayer money on over the next two years.  Young Americans will eventually have to be the ones paying interest on this debt, and they keep that in mind when heading to the polls each election cycle.  As a young American, I speak from experience.