Cutting the Deficit in Half, Is It a Fairy Tale?

President Barack Obama told a news conference at the end of the G20 conference in Toronto that all nations have agreed to cut their deficits in half by 2013. So I asked myself:

What is the difference between the public debt and the deficit?

According to treasurydirect.gov The deficit is the difference between the money Government takes in, called receipts, and what the Government spends, called outlays, each year. Receipts include the money the Government takes in from income, excise and social insurance taxes as well as fees and other income. Outlays include all Federal spending including social security and Medicare benefits along with all other spending ranging from medical research to interest payments on the debt. When there is a deficit, Treasury must borrow the money needed for the government to pay its bills.

We borrow the money by selling Treasury securities like T-bills, notes, Treasury Inflation-Protected securities and savings bonds to the public. Additionally, the Government Trust Funds are required by law to invest accumulated surpluses in Treasury securities. The Treasury securities issued to the public and to the Government Trust Funds (intragovernmental holdings) then become part of the total debt.

The current federal debt is $13 Trillion. The deficit for fiscal year 2009, which ended Sept. 30, 2009 came in at a record $1.42 trillion, more than triple the record set in 2008. The administration projects a shortfall of $1.6 trillion in the fiscal year that ends in September 2010. The president’s immediate solution is to reduce domestic discretionary spending. CNN reports that such spending amounts to 2% of the budget. The government is about to ask for another $33 Billion for the Afghan War. Republican lawmakers — joined by Democrat Ben Nelson of Nebraska — maintained a unified front to sustain a filibuster of the $110-billion bill for the extension of unemployment benefits. The vote was 57 to 41; the majority was three short of the 60 needed to cut off debate and bring the bill to a final vote. Enough Republicans will probably switch their votes next week to pass this bill.

Where will the spending cuts come from? Perhaps it will be a fairy godmother that solves this dilemma. Perhaps they won’t happen at all except in our dreams.

It’s Not the Glass-Steagall Act

Unfortunately the new financial reform bill that will most likely be signed into law by July 4 does not bring back the stringent regulations of the Glass-Steagall Act that was revoked in 1999. Too many lobbyists had too much influence.

From the Los Angeles Times:

…the overhaul legislation wouldn’t force big banks — the target of much public criticism during the crisis — to shrink.

In contrast, in the 1930s, the landmark Glass-Steagall Act forced banks to separate their riskier investment banking operations from their commercial banks, which predominantly take deposits and make loans. The idea was to protect commercial banks, which are backed by federal deposit insurance, from devastation during financial crises. The Glass-Steagall provision, however, was repealed in 1999.

Moving back in the direction of Glass-Steagall, the Obama administration proposed the so-called Volcker rule, developed by former Federal Reserve chief Paul Volcker. The rule was one of the most contentious elements of this week’s negotiations. The final compromise limits banks to investing no more than 3% of their capital in hedge funds, private equity funds and proprietary trading desks.

On derivatives, the banks would be forced to move some particularly risky trading into separate entities. Virtually all derivatives would have to be traded through a clearinghouse, bringing down some of the profits from the private derivatives deals in which the banks currently engage.

New York Times reporter Binyamin Appelbaum had this article:

“I don’t know that there has been a bill that has touched as many different substantive areas as this one,” said A. Patrick Doyle, a partner at Arnold & Porter who has worked on financial issues for three decades. “Clearly there’s going to be a lot of work.”

The surge in hiring has sent a joke bouncing around Washington: Congress finally passed a jobs bill — full employment for lawyers.

Failure of Government Bureaucracy

Despite the Tea Party’s crusade for less government there is ample evidence that what is needed is improved government effectiveness. The lax enforcement of government regulation is the real issue. A very good example is our neighbor to the north. Canada does have more government enforcement than the United States. They do have a one payer health care system that does provide longer life than the United States. Canada’s Gross domestic product rose an annualized 6.1% during the three months ended March 31, 2010. The United States domestic product rose at a revised 2.7%. Canada is the country that has been derided by many people as having too much government control. Precisely the opposite of the Tea Party groups that think America needs less government.

The new financial overhaul legislation is reported to be 2,000 pages long. Who, other than lawyers and geeks, will be able to understand the new law let alone implement any worthwhile or significant changes? The SEC and the MMA have reportedly been using government computers to search for porn sites. Those two departments alone have had too cozy relations with the businesses they are supposed to be regulating.

There were federal regulators that cited the Massey Mine in West Virginia eight times for “substantial” violations relating to the mine’s methane control plans, according to the records. No action was actually taken to stop operations. That cost 25 lives.

Remember the contamination of dry-roasted and oil-roasted peanuts, granulated peanuts, peanut meal, peanut butter and peanut paste. The Peanut Corp. of America was driven into bankruptcy as a result of that situation but it was an exposé on “60 Minutes” that brought this issue to the American public. The FDA was late to the problem.

We don’t lack laws to protect society from bad guys. We do lack the laser beam focus to get the jobs done.

Follow-up on Murfreesboro Mosque

Candidate denounces Murfreesboro mosque proposal

By TRAVIS LOLLER

Jun 24, 8:21 PM (ET)

NASHVILLE, Tenn. (AP) – A Tennessee Republican candidate for Congress says plans to build a mosque in a Nashville suburb pose a threat to her state’s moral and political foundation.

In a Thursday evening statement, 6th District candidate Lou Ann Zelenik said she stands with those who oppose building what she calls “an Islamic training center.” She says the center is not part of a religious movement, but a political one “designed to fracture the moral and political foundation of Middle Tennessee.”

“Until the American Muslim community find it in their hearts to separate themselves from their evil, radical counterparts, to condemn those who want to destroy our civilization and will fight against them, we are not obligated to open our society to any of them,” Zelenik says in the statement.

Many residents in the suburban Nashville community only became aware of the planned mosque and community center after it had been approved. An overflow crowd packed a Rutherford County Commission meeting last week to speak against it.

Some wore Christian- or patriotic-themed clothing and a pastor told commissioners they should understand the nature, funding and intent of any group in the community “under that general banner (of Islam).”

In response to the uproar, Murfreesboro Islamic leaders announced an open house to answer questions from neighbors. It is scheduled Saturday at their current mosque, which they say they have outgrown.

Campaign manager Jay Heine said Zelenik was not available for comment on Thursday. He would not answer questions about the statement other than to say the campaign stands behind it.

Zelenik, who calls herself a leader in the Middle Tennessee tea party movement, hopes to replace U.S. Rep. Bart Gordon, who is retiring after 13 terms.

A representative for the mosque did not immediately return a call and e-mail seeking comment.

Continuing Lack of Job Growth

CNBC reported that weekly Initial job claims dropped by 19,000. That is quite an improvement but it is also very misleading. Job claims for the previous week were revised upward by 20,000. So in fact, job claims actually increased by 1,000. The network’s continuing misleading reporting will result in my watching and listening to Fox Business News.

Weekly Initial job claims are revised one week after the initial report when more accurate data is compiled. The weekly revised number dropped to 433,000 in the weeks ending December 26, 2009 and January 2, 2010. It has not been that low since those two weeks. That low number is probably the result of delayed filing due to the holiday season. Last week’s revised 476,000 tells me that high unemployment is likely to be around for quite awhile.

I am not alone in this opinion. This is a quote from Businessweek magazine in the June 14, 2010 issue. “We are not going to generate a lot of jobs. The cost of labor is too high. We are having a huge substitution of technology for people to save money and make profits.” – Allen Sinai, president, Decision Economics, and former chief economist for Lehman Brothers, speaking about the U.S. economy

A Defense for McChrystal’s Behavior

Andrew C. McCarthy III is a former Assistant United States Attorney for the Southern District of New York. A Republican, he is most notable for leading the 1995 terrorism prosecution against Sheik Omar Abdel Rahman and eleven others. The defendants were convicted of the 1993 World Trade Center bombing and planning a series of attacks against New York City landmarks.[1] He also contributed to the prosecutions of terrorists who bombed US embassies in Kenya and Tanzania, resigning from the Justice Department in 2003. He is currently a senior fellow at the Foundation for Defense of Democracies, serving as the director of the FDD’s Center for Law and Counterterrorism. He has served as an attorney for Rudy Giuliani, and is also a conservative opinion columnist who writes for National Review and Commentary.

Regardless of General Stanley McChrystal’s political views, he screwed up. He disrespected the President of the United States and his major advisors. That is why he was fired!

NRO — The Corner (NRO is National Review On-Line)

Thursday, June 24, 2010

“You sit and ask yourself: What are we doing here?” [Andy McCarthy]

Why would General Stanley McChrystal give that kind of access to a lefty rock-n-roll magazine? Maybe because he’s a kindred spirit who felt the need to assure Rolling Stone‘s Michael Hastings that he voted for Obama — even against McCain, a military legend who shares McChrystal’s transnational progressive outlook.

“Now it can be told,” elaborates Marc Ambinder at the Atlantic “The story about [McChrystal] voting for Obama is not contrived. He is a political liberal. He is a social liberal. He banned Fox News from the television sets in his headquarters. Yes, really.”

Yes, really. The revealing Rolling Stone profile also tells us that the general “banned alcohol on base [and] kicked out Burger King and other symbols of American excess.” (Recall the very similar Obama edict that American forces not fly the Stars and Stripes at their base during their humanitarian mission in Haiti — a self-loathing trend that has also taken hold on college campuses.) Even McChrystal’s undoing here — ironically, by Rolling Stone, not Fox News — is, as VDH suggested yesterday, attributable to a disturbing contempt for authority and decorum that McChrystal and his top aides made little effort to conceal from Hastings. (Byron has more on that, here.)

I got in some hot water here last year for arguing that Gen. McChrystal, for all his undeniable valor, is a progressive big-thinker who has been conducting a sociology experiment in Islamic nation-building. It’s a flawed experiment that assumes Afghan Muslims will side with us — i.e., the Westerners their clerical authorities tell them are infidel invaders and occupiers — against their fellow Afghan Muslims.

Nothing in the ensuing months changes my mind. To the contrary, what I’ve seen lately indicates that, while our troops are imperiled under strait-jacketing rules of engagement imposed by Gen. McChrystal to avoid offending Afghans, Christian missionaries have been suspended for preaching (proselytism for any belief-system other than Islam is illegal in Afghanistan). I’ve seen Asia News’s report that Afghan converts to Christianity have been sentenced to death for apostasy. All this, moreover, is happening under the new constitution we helped write, which (as the State Department bragged in 2004) enshrines sharia as Afghanistan’s fundamental law. That is, the Afghan Muslim population our troops are fighting and dying to protect has institutionalized the persecution of other populations (when the said Muslims are not otherwise busy killing each other).

In the Examiner, Byron points to Rolling Stone‘s account of a frustrated American soldier, lamenting the death of a fellow soldier killed because of the rules of engagement. “You sit and ask yourself,” says the soldier, “What are we doing here?” I don’t know, but whatever it is, it is not what Americans thought they were sending our military to Afghanistan to do.

Who is Joe Barton?

“I think it’s a tragedy of the first proportion that a private corporation would be subjected to what I would characterize as a ‘shakedown,’ – in this case, a $20 billion shakedown.” – Joe Barton, R-Texas. What a great way to obtain national media exposure!

His apology for those words was weak at best. After all it was taking back the words he really believed. I have not heard about any subsequent interviews with him. The conundrum is that the Gulf coast relies on oil drilling and extraction as much as fishing and tourism for its economic well being.

I am far removed from the Gulf coast but I do appreciate the ecological impact of the continuing oil spill. After all if both James Carville and Mary Matalin are upset about the impact of the spill, this situation really does rise above politics. (Digression: How did those two ever get married?)

NPR reports that Joe Barton has received $100,470 in campaign donations from oil and gas interests since the beginning of 2009, according to the Center for Responsive Politics. The same group reported that since 1990, political action committees of the oil and gas industry and people who worked for it have given more than $1.4 million to Barton’s campaigns, the most of any House member during that period.

Live Spill Camera

This cam will stay on top of all new entries until the oil leak is capped in the Gulf of Mexico.

http://www.wkrg.com/gulf_oil_spill/spill_cam/

July 15, 2010 photo from nola.com

BP’s Cap Works, Oil Stops Leaking Into Gulf

Answers to Long Term Care Insurance Questions

Jeff Radich of the Estate Plan Center LLC in Chisago City, MN keeps sending me his promotions. This is really worthwhile information. You must click the link. This is one of the few sensible discussions on long term care insurance that I have ever heard. It answers the question: Do I really need long-term care insurance?

It never fails. Almost 2-3 times a week I get questions about long-term insurance. It’s so common that I finally decided to do something about it.

Here’s why… where can you get objective advice on the subject of long-term care insurance? Almost anyone who understands the subject tries to sell you a policy.

That’s why I interviewed retirement expert Robert Carlson and in a second, I am going to give you the link to listen to the interview (at no cost).

Hopefully you will receive the objective advice from this call to make a wise decision. In fact, Robert provides 4 alternatives to long-term care insurance that you may find a better option. The interview is only 9 minutes and 48 seconds.

Another reason this interview is good is because of the source, Robert Carlson.

He’s a financial consultant, an attorney, an insurance expert, a retirement planner, and an investment advisor.

Not only that, but he’s author of The New Rules to Retirement and he is managing editor of Retirement Watch an online subscription newsletter that has more than 10,000 subscribers.

Bob really knows it all when it comes to retirement planning strategies. In fact, he’s been interviewed by many national publications on this issue including The Wall Street Journal, Barron’s, and The Washington Post.

This is a really good interview packed with solid information without any selling 🙂

I hope it helps you.

Use this link to listen to the interview

Simply click this link above and you should be able to listen to the interview right in your browser… but make sure your speakers are turned on.