Cash for Congress – err – Clunkers

Cash for clunkers seems to be all the rage this week.  Hundreds of news stories and blog posts are telling everyone how successful it is, how it RAN OUT OF MONEY IN ONE WEEK when it was supposed to last until November, and how this will boost the economy.

Bullshit.

Here’s an excerpt from the Daily Reckoning.com explaining why it’s bullshit.

And as Bill has been pointing out, this is just another example of the government promoting the idea that the future doesn’t matter – just spend for today. He wrote in Friday’s essay: “Instead of letting the consumer buy a new car when he is ready, the feds give them money to buy now. So, he buys in 2009 and not in 2010. What good is accomplished? It is as if they didn’t expect 2010 to ever arrive…”

The Wall Street Journal backs us up here: “The subsidy won’t add to net national wealth, since it merely transfers money to one taxpayer’s pocket from someone else’s, and merely pays that taxpayer to destroy a perfectly serviceable asset in return for something he might have bought anyway. By this logic, everyone should burn the sofa and dining room set and refurnish the homestead every couple of years.”

This is what’s known as the “broken window fallacy” that I posted about in February 2008.  It’s a classic story and you can read all about it on the link, but here’s the main part as told by Henry Hazlitt’s classic “Economics in One Lesson” (Which I urge you to read.) It’s copied from my earlier post -which was copied from Lew Rockwell’s post on Mises.org.

A kid throws a rock at a window and breaks it, and everyone standing around regrets the unfortunate state of affairs. But then up walks a man who purports to be wise and all knowing. He points out that this is not a bad thing after all. The man fixing the window will get money for doing so. This will then be spent on a new suit, and the tailor too will get money. The tailor will spend money on other items, and the circle of rising prosperity will expand without end.

What’s wrong with this scenario? As Bastiat put it, “It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way which this accident has prevented.”

You can see the absurdity of the position of the wise commentator when you take it to absurd extremes. If the broken window really produces wealth, why not break all windows up and down the whole city block? Indeed, why not break doors and walls? Why not tear down all houses so that they can be rebuilt? Why not bomb whole cities so construction firms can get busy rebuilding?

It is not a good thing to destroy wealth. Bastiat puts it this way: “Society loses the value of things which are uselessly destroyed.”

It sounds like an unexceptional claim. But herein rests the core case against everything the government does. Perhaps, then, we can see why the allegory is not better known. If we took it seriously, we would dismantle the whole apparatus of American economic intervention.

If you are with me to this point, perhaps you have a hard time believing that anyone really believes that wealth destruction is actually a good thing. Let me try to show that the fallacy is as pervasive as ever.

After every natural disaster, we at the Mises Institute start what we call the “Broken Window Watch.”

After hurricane Katrina, the Labor Secretary said, “[W]hat will happen — and I have seen this in previous catastrophes and hurricanes — there is a bright spot in that new jobs do get created.”

And The Economist said, “While big hurricanes like Katrina destroy wealth, they often have a net positive effect on GDP growth, as the temporary downturn immediately after the storm is more than made up for by the burst of economic activity that takes place when the rebuilding begins.”

And the New York Times said, “Economists point out that although Katrina has destroyed a lot of accumulated wealth, it ultimately will probably have a positive effect on growth data over the next few months as resources are channeled into rebuilding.”

That’s what we’re doing with Cash for Clunkers.  We’re diverting capital from where it would naturally go into a program to destroy valuable assets and replace them.

Why not apply the concept elsewhere? How about cash for houses? Cash for liquor? Cash for newspapers? Cash for trips to Europe?

Yes, there will be a temporary boost to the economy, but it comes at the expense of next year, and the next year, and the next year.  WHO IS PAYING FOR IT?  We all are, and all we’re actually doing is postponing the day of reckoning.  You cannot borrow your way out of debt, and that’s what this program is trying to do.

gk

Democrats and Republicans

This is from an old (sometime in the 1980’s) Dave Barry column, but I ran across it today and I still find it funny.  It’s about the difference between Democrats and Republicans.  Unfortunately for our country, it’s pretty close to the truth….

“The Democrats seem to be basically nicer people, but they have demonstrated time and again that they have the management skills of celery. They’re the kind of people who’d stop to help you change a flat, but would somehow manage to set your car on fire. I would be reluctant to entrust them with a Cuisinart, let alone the economy. The Republicans, on the other hand, would know how to fix your tire, but they wouldn’t bother to stop because they’d want to be on time for Ugly Pants Night at the country club.”

Republicans spend too much on defense, bailouts of inept corporations, and in new programs designed to show people that they’re really good guys, like the prescription drug bill.  Democrats spend too much on everything.  Neither is willing to raise taxes enough to pay for their spending.  The only time in the last 50 years that spending has been kept somewhat in check is when we had a Republican congress and a Democrat as president.

For 6 years – from January 1995 through January 2001 – Republicans controlled congress and Clinton was president.  Spending was kept in check and we almost had a balanced budget.  I know Clinton claimed surpluses, but he lied.  The “surplus” came from Social Security payments and the total federal debt increased each and every year, so there wasn’t actually a surplus – but it was as close as we’re ever likely to see from here on.

Obama is making Bush’s budget busting spending look like child’s play.  This year alone, we’re spending twice as much as we’re collecting in taxes.  We’re effectively borrowing money from the Chinese to make interest payments to the Chinese.  It’s the same as using your Visa card to make minimum payments on your MasterCard.  How long do the idiots on Capital Hill think they can continue this Ponzi scheme?

gk

Is Geithner really that dumb?

Timothy Geithner is either really stupid or he’s simply lying to buy time.  I left work early today and I heard this quote from Rush Limbaugh on the way home (I used to listen to him regularly, but his shtick is getting old – how long can he blame everything on the Democrats and Clinton?  Bush had power for 8 years, and borrowed as much money as ALL previous presidents combined – I didn’t hear Rush bitching about spending then.)  so I had to look it up.

Rush is right on this one – here’s a quote from a Bloomberg news story: “It will be helpful if Geithner can show us some arithmetic,” he said.

“He” is Yu Yongding, a senior researcher at the government-backed Chinese Academy of Social Sciences and a former central bank adviser. “The Chinese public is worried about the safety of its foreign- exchange reserves,” Yu said in an e-mail.

Yup, that would sure be “helpful”.  I’m still trying to figure out how we (the US) can borrow as much as we collect in taxes this year and next year and still Geithner can state “No one is going to be more concerned about future deficits than we are”. I’d like to see the math on that.

To put it bluntly, Geithner is either really, really dumb, or he’s simply lying. I think he’s lying.

According to a Reuters story about the visit A major goal of Geithner’s maiden visit to China as Treasury chief is to allay concerns that Washington’s bulging budget deficit and ultra-loose monetary policy will fan inflation, undermining both the dollar and U.S. bonds.

That sounds good – I too would like to be reassured that my savings aren’t going to be worthless because of the incredible amount of money being printed.  But guess what?  Words mean nothing – it’s what they actually do that counts.  And what the Obama administration is doing is driving the final nails into the coffin that is the US economy.  Bush dug the hole, and Obama is pushing us into it.

The really sad part of Geithner’s statements is that even the Chinese know that he’s lying.  According to the same Reuters story when Geithner said “Chinese assets are very safe,” it  drew loud laughter from his student audience, reflecting skepticism in China about the wisdom of a developing country accumulating a vast stockpile of foreign reserves instead of spending the money to raise living standards at home.

Towards the end of the Bloomberg story, it says “I will, of course, make it clear that we are committed to a strong dollar, that we are committed to bringing our fiscal deficits down over the medium term to a sustainable place, to a sustainable level,” Geithner said in the briefing May 27. “We believe in a strong dollar. A strong dollar is in the U.S. interest.”

That’s pure bullshit and I think Geithner knows it.  He can’t really be that stupid.  No deficit is “sustainable” over the long run – every year simply puts you further and further behind.  At some point you must pay the debt off.  And in order to pay ANY debt off you must have a surplus.  That’s simply not in the cards for the US.  Medicare and Social Security are soon to run huge deficits – and where will we get the money to pay that?

gk

A dialogue with Geithner

Today’s Daily Reckoning had a good piece (as usual) from Bill Bonner.  He had an imaginary conversation with Tim Geithner about how to handle the debt bubble.  I wish I would have thought of that, but I’m not known for being original.  🙂  Here’s part of the conversation where Tim calls up Bill and asks for Bill’s advice:

“We need to recognize, first, that this is not just a regular recession. So you can forget the usual recession remedies – a few points off the Fed funds rate…a little counter-cyclical fiscal spending. This is much more serious.

“What we have here is a depression. It’s a depression because it requires a fundamental restructuring of the international financial model. You know how it worked during the Bubble Epoch; Asians made things…Americans bought them. Asians made money; Americans spent it. Asians saved; Americans borrowed. And now the Asians have money; and Americans have debts. Not really very complicated, is it?

“Well, these programs of trying to bailout businesses…and the banks…and the economy…you can see how they are all a waste of money. All of these efforts are trying to revive the old model. They’re trying to free up credit so that Americans can buy more! Now, we don’t really have to explain why that won’t work, do we? More debt won’t do Americans any good; more IOUs from Americans won’t do China any good.

“Instead, the model has to be taken apart and reconstructed. China needs to sell more to people with money – its own people, mainly. Americans need to pay down their debts before they can take up serious consumption again.”

“But wait, Bill,” Mr. Geithner interrupted. “Won’t that cause serious disruptions? When Americans save, in order to reduce their debts, they take away the single primary source of demand for the world economy. If they don’t begin buying soon, businesses all over the world will go broke. That’s why I’ve spent so much money trying to bail out the banks. Americans have no money. So the only way they can spend is if the banks provide credit. So, we have to save the banks first…then they’ll begin lending…and then the economy can begin growing again.”

“Uh…no. That’s not how it works. Even if you make all the banks solvent, whom are they going to lend to? Who’s going to borrow? Americans have too much debt already. Right now, if they get any money, they’re holding onto it…and using it to pay down their debts. They’re not going to start spending just because a bank offers them a loan.

Good stuff!  One thing that Bill left out is the power of savings.  Americans don’t have any savings to speak of, that’s why our government needs to borrow from China and Japan.  When the government ran up huge debts during the Depression and WWII, American citizens were the people who provided that money.  They provided it from savings, and we don’t have the money to do that today.

So when we purchase something made in China (or Germany) we have to effectively borrow that money in order to buy it.  That’s what a trade deficit does over time.  Wealth is extracted from the country with the deficit, and it flows into the country with the surplus.  It’s not rocket science.

Note – I am NOT suggesting that we pass protectionist measures to combat the trade deficit.  The fix to that is to simply live within our means and only purchase what we can afford.  That means paying as you go.  No new debt.  Pay down the old debt and save actual money.  When the debt is gone, people can once again buy more things – as long as they pay for it.

Robert Heinlein wasn’t the first to say it, but he said TANSTAAFL in a way that I remember it.  “There Ain’t No Such Thing As A Free Lunch”.  He’s right, and we’re finding that out in the US now.

I’m currently re-reading volume one of The Story of Civilization. “Our Oriental Heritage” and it’s amazing how many times throughout history that government (and people) think they can rewrite the laws of nature.  Supply and demand is one of those laws, and no amount of wishful thinking and no amount of new regulations is going to change it.  The countries that have tried it in the past are gone.

I fear we’re following rapidly down that well trodden path.  I wish that weren’t the case, but idiots keep voting for bread and circuses.  Unless that changes, we’re going downhill.

gk

A deficit dummy

It’s easy to find dumb articles on the economy these days, but this one by Robert H. Frank in the NY Times is quite possibly the dumbest collection of nonsense that I’ve read in quite some time.

Mr. Frank is an economist at Cornell – evidently Cornell has loose requirements on who can claim that title – and he has his facts wrong.

For example, Mr. Frank states:  In 1929, President Herbert Hoover thought that the best response to a collapsing economy was to balance the federal budget. With incomes and tax receipts falling sharply, that meant cutting federal spending. But as almost all economists now recognize, President Hoover was profoundly mistaken.

Everyone has heard some variation of that basic statement over the years. The problem is that it’s simply not true.  That’s a polite way of saying that Mr. Frank is lying.

Hoover did not cut federal spending – Hoover increased federal spending.  Here is a chart of federal spending from 1928 -1940.   (Source data is the GPO here – link opens Excel spreadsheet.)

Year	Total Fed Spending (millions)	Percent Change
1928	$2,961	3.64%
1929	$3,127	5.61%
1930	$3,320	6.17%
1931	$3,577	7.74%
1932	$4,659	30.25%
1933	$4,598	-1.31%
1934	$6,541	42.26%
1935	$6,412	-1.97%
1936	$8,228	28.32%
1937	$7,580	-7.88%
1938	$6,840	-9.76%
1939	$9,141	33.64%
1940	$9,468	3.58%

As anyone can plainly see, federal spending actually increased every single year from 1929 through 1932 – the four years of the Hoover presidency.  Yet Mr. Frank states that Hoover cut spending. The fact is that federal spending increased from $2.9 billion in 1928 (the year before Hoover took office) to $4.6 billion in 1932.

That’s a 63% increase in federal spending in just 4 years!  How can Mr. Frank be that ignorant of history and still write authoritatively about economic history?

And this data also lets a little air out of the myth that FDR’s spending brought us out of the depression.  It’s true that FDR increased spending, but when you actually look at the numbers, he increased spending in his first term from $4.6 billion in 1932 to $8.2 billion in 1936 – a 76% increase.  That’s not dramatically larger than Hoover’s 63% increase.  And during his next 4 years, FDR increased spending from $8.2 billion in 1936 to $9.4 billion in 1940 – a meager 15% increase in 4 years.

I have no doubt that “almost all” Keynesian economists will continue to propagate the lies about the Great Depression, Hoover, and FDR, but you and I know that they’re lying.

With that common fallacy exposed, we now turn back to Mr. Frank.

Mr. Frank states When a downturn throws people out of work, they spend less, causing still others to be thrown out of work, and so on, in a downward spiral. Failure to use short-run deficits to stimulate spending amplifies that spiral, causing further declines in tax receipts and even bigger deficits. That this path makes no sense is a settled issue.

It sounds good, but his statement that this is “a settled issue” is false.  It’s false because of his implicit premise that government deficit spending creates productive employment.  I have no doubt that government spending can employ otherwise idle people, but this is not a net gain for the economy.  The government simply transfers wealth from one segment of society to another – it doesn’t create wealth.  Mr. Frank’s major flaw is in his unstated assumption that the government can allocate resources better than individuals.

Take the current auto bailout as an example.  What would have happened if the government didn’t bail out GM?  GM would have declared bankruptcy.  People who had invested in GM stocks and bonds would be SOL – and that’s the way it should be.  When you invest your money, you (whether you realize it or not) are incorporating risk in choosing where to invest.  You may choose to invest in something risky like a dot com or alternative energy start-up, because you balance the risk of them going bankrupt against the possibility of huge returns.

It’s your money – invest it however you want.  But don’t bitch and moan and beg for a bailout when the money you invested disappears because the company goes broke and leaves you with a sock puppet.

In the case of a GM bankruptcy, valuable assets such as factories and parts would be auctioned off to the highest bidder.  Assets with no value are wiped out and those who invested in them would lose money.  Some would be unable to survive and would themselves go broke.

In other words, the “bad” (non-profitable) assets of GM would disappear.  But the “good” (profitable) assets would be sold to private investors (or companies) who would put them to productive use.  Good companies survive and thrive off of the mistakes of their competitors.  Just imagine how many productive  jobs Honda, Toyota, or Nissan could provide using GM facilities and patents.

Mr. Frank also shows his ignorance when he states Once the downturn ends, there should be no need to incur additional debt. Indeed, there are many ways to pay down debt without requiring painful sacrifices. A $2 tax on each gallon of gasoline, for example, would generate more than $100 billion in additional revenue a year.

Politicians and economists have been saying that they’ll balance the budget and start paying down the debt for as long as I can remember – and I’m 47.  It has not happened in my lifetime.  Not once.

The last time the US reduced the national debt was 1957.  (Source is the US Treasury.) When do you suggest we start making payments on the principal Mr. Frank?

And a $2 per gallon tax on gasoline would be an additional $283 billion in taxes at the current rate of consumption of 141.9 billion gallons per year. (Source is US Energy Information Administration.)

Mr. Frank also says It’s also useful to put the nation’s debt burden into perspective. Over the last eight years, Bush administration deficits raised the national debt by almost $5 trillion. Given the current crisis, it’s easy to imagine a similar increase during the next four years. At recent interest rates, servicing $10 trillion of extra debt costs about $400 billion annually — a big amount, to be sure, but less than 3 percent of the economy’s full-employment output. We’ll still be the richest country on the planet even after paying all that interest.

Bullshit.  That’s like saying you got the highest score of those who failed.  I’m not a fan of Bush – since I consider Bush the worst President in my lifetime, that’s the understatement of the year – so I don’t like it when Obama imitates Bush.  Liberal or Conservative – big government is big government.

The 3% figure Mr. Frank gives is technically accurate – when you take the $400 billion figure he uses – but why does he use that number?  The bottom line is the one that matters.

The national debt is currently over $11 trillion (source US Treasury).  The US GDP for 2008 was $14.2 trillion (source BEA).

Our current national debt is 77% of GDP.  If Obama adds $5 trillion more in the next 4 years (as seems likely) our debt will be over 100% of GDP.  And if Mr. Frank thinks that’s sustainable, I’ve got some great beach-front property to sell him.

I could go on and on about the errors in Mr. Frank’s article – such as his mistaken assumptions about the wealthy – but you can read it yourself.  I’m amazed that the NY Times editors allowed an article this full of errors to be published.

gk

Obama is imitating Bush

George Bush was – by far – the biggest budget busting president of all time.  In just 8 years he racked up almost as much debt as the previous 42 presidents did in the previous 212 years of the United States combined.  To put it another way, Bush almost doubled the national debt in just 8 years.  The national debt when Bush took office was $5.7 trillion, and when he left office it was $10.6 trillion – an increase of $5 trillion in 8 years.

Barack Obama – while vastly different  on other policies – is doing his best George Bush impersonation when it comes to fiscal responsibility.  According to a report issued by the Congressional Budget Office (link will open an Excel spreadsheet) today, Obama’s projected budgets will result in a national debt of $15.5 trillion in the next 8 years – an increase of $5 trillion.

Keep in mind that these are budget projections, and the CBO always relies on extremely optimistic economic scenarios.  For example, when Bush took office, they estimated that the national debt would be paid off by 2010, and that obviously isn’t going to happen.

If you open the spreadsheet in the CBO link above (select the tab labeled “Federal Debt), you’ll see that the 2009 deficit is estimated at $1.39 trillion (cell E24) and that is projected to drop to “only” $636 billion in 2010 (cell F24).  By 2013, the CBO is projecting the deficit to be “only” $42 billion (cell I24).

Does anyone actually believe that?

In just two short months, Obama passed a $700 billion stimulus package, and the Federal Reserve has said it will “expand it’s balance sheet” (a euphemism for printing money) by $300 billion by “purchasing” Treasury debt.  That’s $1 trillion in additional debt in just two months!

Predictions:  The actual 2009 deficit will exceed $1.6 trillion, and the increase in national debt in 2013 will be at least $1 trillion – many orders of magnitude higher than the rosy $42 billion currently projected.  And the 2010 debt (currently projected to be $636 billion) will be well over $1 trillion.

Update – 8:15 pm ET:  Crap, the numbers above are already out of date.  The CBO just released new figures, estimating the 2009 deficit at $1.7 trillion and the 2010 deficit at $1.1 trillion.

The new estimate on the cumulative deficit (the amount added to the national debt) is $9.3 trillion through 2019 – roughly $1.3 trillion more than the last CBO estimate in January.

The new CBO estimate does not include an estimate for the total national debt, so I’m unable to be more precise than the numbers above.  But with each passing day, Obama is getting closer to perfecting his George Bush financial folly impersonation.

If he really wanted to impersonate Bush, Obama would start proposing things like wiretaps, locking people up without charges, etc.  Then he could trample on our rights as well as our wallets.  And be just as bad as George.

I don’t think Obama will get that bad – I sure hope not – but he’s not starting off well by inviting these comparisons with the worst president ever.

gk

A $3.55 trillion budget

Spending “only” $3.55 trillion is considered to be fiscally responsible?

President Obama inherited a more than $1 trillion deficit from the idiot George Bush, but he’s tacked on more than his fair share already.  The current estimate of the deficit is now up to $1.75 trillion for fiscal year 2009, which started on Oct 1st, 2008.

Here’s a story from the NY Times about the budget.

His administration will attempt to close the large fiscal gap even while starting a major health-care initiative intended to substantially extend coverage; to do so, it foresees increasing taxes on the wealthiest Americans and using revenue from a new program: selling carbon credits to manufacturers as part of a cap-and-trade plan meant to slow climate change.

The forecasts are also founded on optimistic assumptions that the recession will end by next year and quickly produce stronger growth than was seen in the last decade. After the economy shrinks this year, the Obama team assumes that the gross domestic product, adjusted for inflation, will increase by 3.2 percent next year and then 4 percent or more the following three years, a rate nearly twice the average of the Bush years.

I wrote a post a few minutes ago where I talked about people saying that this is the bottom in various markets.  But Obama is basing his presidency on this year being the bottom.  I’m afraid he’s mistaken.

But here’s one bit of good news – Mr. Obama promised to include the full costs of the wars in all his budgets, saying that because of “dishonest accounting” past budgets have “not told the whole truth about how precious tax dollars are spent. Large sums have been left off the books, including the true cost of fighting in Iraq and Afghanistan.”

It’s about time that these costs were included in the budget.  We still have to pay them, but Bush somehow made the cost of these wars disappear. They didn’t actually disappear (look at the debt clock at the top of this page!) but they didn’t appear in his budgets – or the official deficits.

The State Department gets the biggest increase, rising from $36.7 billion this year to $51.7 billion next year, although Mr. Obama will not be able to keep his promise to double foreign aid.

There are literally hundreds of things I could say about the bloated, pork laden, unconstitutional (read it!) budget proposal.  None of it is new, and I complained about the exact same things when Bush proposed the massive budgets.  But I promise to get into a lot of the details when the official budget is released with actual line items that I can talk about.

But if you thought Bush’s budgets were mind boggling, the first one from Obama promises to be even worse.  My bet is that he’ll break Bush’s record $1 trillion plus deficit his first year.

gk

Can Obama cut the deficit in half?

According to Reuters, an anonymous “administration official” said The deficit this administration inherited was $1.3 trillion or 9.2 percent of GDP. By 2013, the end of the president’s first term, the budget cuts the deficit to $533 billion or 3.0 percent of GDP.

I don’t think Obama will do that – he certainly hasn’t started out that way.  But I hope he’s serious.

The Reuters report goes on to say “Most of the savings will come from winding down the war in Iraq, increased (tax) revenue from those making more than $250,000 a year, and savings from making government work more efficiently and eliminating programs that do not work,” the official said.

Let’s see how many programs he eliminates.  He’s due to announce his budget later this week, and I’ll be watching to see which programs are actually cut and eliminated.  I’ll set the “over/under” at 3 – and I’ll take the under.

gk

How to blow $787 billion – American Recovery and Reinvestment Act of 2009

In perusing the Recovery.gov site, I found some interesting things.  It doesn’t say anything, but it has a link, to a link where you can read the whole text of the bill.  You can click 4 times through the various websites and messages to get there, but eventually you wind up here. (One click, I promise.)

The short title of the bill is the “American Recovery and Reinvestment Act of 2009”.  I’m reading through it, and I’ll copy some important stuff later.  Here are a few choice quotes from the recovery.gov FAQ:

Q: How will the Recovery Act work?
A: Very soon, the different agencies — such as the Departments of Education; Health and Human Services; and Energy — will decide who will receive award grants and contracts. Sometimes the money will go to a state government; other times, the funds will go directly to a school, hospital, contractor, or other organization. Agencies will then deliver that information to the Recovery.gov team. We will subsequently make the information available on Recovery.gov, and you will be able to track where the money is going. You’ll be able to search by state or even by Congressional district; you’ll be able to look up names of Federal contractors or other recipients of Federal dollars; and you’ll be able to send in comments, thoughts, ideas, questions, and any responses you have to what you find.

So these agencies will decide who gets our money.  Neither the President nor Congress knows right now.  Which means there’s no way Congress knew when they voted to spend the money.  Which means they voted for a “pig in a poke“.

And when they say “you’ll be able to look up names of Federal contractors or other recipients of Federal dollars”, I hope they mean it.  I want to see who, by name, got my money to help pay their mortgage.

Q: I heard I’d be able to track recovery funds. Why can’t I do that?
A: You aren’t able to track funds yet because we have not yet started receiving information from Federal agencies on how they are going to allocate the money.

Same as above.  They’re basically saying that “we gave these agencies a boatload of your money – and we don’t have a clue what they’re going to do with it”.

Ok, on to the actual bill.  This is going to be basically random copy and paste portions of the bill as I read things that I think are stupid.  Or that have absolutely nothing to do with economic stimulus or recovery.  In other words, things that are a bunch of crap that shouldn’t be receiving our tax money under any circumstances – especially under the guise of a stimulus package to create jobs.

The parts in italics are direct quotes.  I’ve cut a lot of verbiage.  When you see “….” that means that I edited a chunk of text that merely makes it unreadable.  You are welcome to read the bill yourself if you think I changed the meaning of the text by this editing.  I don’t think I did, but you can read it and make your own decision if you’d like.   Any text [inside of these brackets] are my comments.

• $1.38 billion for direct loans and grants for the rural water, waste water, and waste disposal programs
• $2.5 billion for the cost of broadband loans and loan guarantees
  
• $290 million for ‘‘Watershed and Flood Prevention Operations’’
• $100 million for National School Lunch Program equipment
• $500 million for the special supplemental nutrition program
• $150 million For an additional amount for the emergency food assistance program
• Section 101 doesn’t provide a dollar amount, but it states the value of benefits ….  for Puerto Rico and American Samoa …. shall be calculated using 113.6 percent of the June 2008 value….
• Another one with no cost listed.  ….the Secretary of Agriculture may not reduce the value of the maximum allotments, minimum allotments or consolidated block grants for Puerto Rico and American Samoa.… [WTF?]
• $5 million For the costs relating to facility improvements and equipment upgrades associated with the Food Distribution Program on Indian Reservation [Side note – this section also contains one of the many loopholes big enough to drive a supertanker through – it states]  (f) FUNDING.—There are appropriated to the Secretary out of funds of the Treasury not otherwise appropriated such sums as are necessary to carry out this section. [In other words, they are saying that “if we didn’t actually give you enough money, we hereby give you the right to take as much money as you think you need to do the bullshit that we asked you to do.]
• Dozens of items relating to farm programs with absofuckinglutely no numbers given, but where Congress authorized them to spend our money.  Crap that gives agencies a blank check like this one (E) AUTHORITY OF THE SECRETARY.—The Secretary may provide such additional assistance as the Secretary considers appropriate to provide equitable treatment for eligible producers on a farm that suffered production losses in the 2008 crop year that result in multiyear production losses, as determined by the Secretary. [Bullshit.  With a capital B.]
• $50 million to assist eligible aquaculture producers for losses associated with high feed input costs
• $1 billion For an additional amount for Periodic Censuses and Programs [WTF are we giving the Census Bureau an additional $1 billion for?]
• $4.7 billion for Broadband Technology Opportunities Program [We already gave them $2.5 billion – why a separate line giving them another $4.7 billion?]
• $650 million for Digital-to-Analog Converter Box Program [Ummm, that was already supposed to be over with – just like the bailout goes on longer and costs more money, the DTV conversion is also dragging on and getting more expensive.]
• $360 million for Construction of Research Facilities
• $225 million for Violence Against Women Prevention and Prosecution Programs
• $2 billion for the Edward Byrne Memorial Justice Assistance Grant program
• $225 million for assistance to Indian tribes
• $1 billion For an additional amount for ‘‘Community Oriented Policing Services’’
• $10 million For an additional amount, not elsewhere specified in this title, for management and administration and oversight of programs within the Office on Violence Against Women, the Office of Justice Programs, and the Community Oriented Policing Services Office [We gave them billions just above – this is an additional $10 million to administer the programs we gave them the money for!]

Believe it or not, I’m skipping billions of dollars of spending – either because it didn’t make for an easy copy and paste, or I thought it might actually create a few jobs.

Here’s something else you won’t believe – I’m only on page 16 of the bill!  ALL of the above spending is in the first few pages, I haven’t gotten anywhere near the good stuff yet.  For example, here’s how page 17 starts out:

SCIENCE
For an additional amount for ‘‘Science’’, $400,000,000.
AERONAUTICS
For an additional amount for ‘‘Aeronautics’’, $150,000,000.
EXPLORATION
For an additional amount for ‘‘Exploration’’, $400,000,000.
CROSS AGENCY SUPPORT
For an additional amount for ‘‘Cross Agency Support’’,
$50,000,000.
OFFICE OF INSPECTOR GENERAL
For an additional amount for ‘‘Office of Inspector General’’,
$2,000,000, to remain available until September 30, 2013

That’s over $1 billion in just a few lines at the top of the page – and that’s just NASA’s portion of it.  Just below that the National Science Foundation gets $2.5 billion for Research and Related Activities.

Someone tell me how any of the stuff above is supposed to stimulate the economy.  How does it create jobs – other than paying bureaucrats to administer the programs.  We’d create more jobs by paying a group of people to dig holes on even numbered days – then fill them in on odd numbered days.  And we’d accomplish just as much.

It’s midnight and I’m going to bed.  I’ll probably add to this or post another article later when I read more of this crappy waste of our money.

gk

The Mogambo Guru

Richard Daughty is a funny man, with something serious to say.  In today’s essay he makes a number of good points, but the increase in the deficit is the one that caught my attention.  He says:

The end result is that it looks like there is going to be a lot of borrowing and printing of money, as Bloomberg.com reported that “The U.S. budget deficit soared to a record in the first quarter of the 2009 fiscal year,” as the deficit jumped to $485.2 billion”, which was so much that it is “surpassing the shortfall for all of last year”, when “ the shortfall was $454.8 billion.”

As scary as this is, the numbers are a Big Stinking Load Of Hooey (BSLOH) because it is much worse than that, as I can easily prove by showing that the national debt right now, in January 2009, is $10,635 billion, whereas last year at this exact time it was only $9,210 billion, a difference of a sizzling $1,435 billion! A trillion and a half dollars more debt in twelve months, yet these guys say that it is only $454.8 billion!

Yeah, just another example of why Bush is an idiot.  He blew away his old record deficit from last year in just 1 quarter of 2009.

Don’t forget, we’re still living under Bush’s budget until June 30th of 2009, and don’t be surprised if it comes in 3 or 4 times higher than any other budget deficit in history.  And (and the Mogambo Guru explained so eloquently above) that’s just the official number.  The real number (as shown by the increase in the national debt) is waaaay worse.

At the end of President Clinton’s last fiscal year (June 29th, 2001) the total national debt was $5,726,814,835,287.17.   Roughly $5.7 trillion.  As of today (Jan 26th, 2009) the national debt stands at $10,620,397,126,433.52, or roughly $10.6 trillion.

It took from 1789 to 2001 (212 years) to reach $5.7 trillion.  President Bush has almost doubled the amount we owe in just 8 years!   And his legacy will live on, because his fiscal 2009 budget isn’t complete until June 30th.  Anyone want to bet that we’ll be at least another trillion in the hole, making Bush’s legacy an easy to compute round doubling of the national debt?

BTW – The numbers above are straight from the US Treasury web site.  I encourage you to go there often to see just how much money you owe.  The National Debt Clock is another good site.  In fact, I think I’m going to add a permanent link on this site somewhere.

(I added a debt clock to the top of the site.  Damn, that number moves fast!)

Anyway, no matter which numbers you use, Bush is an incompetent, blithering idiot when it comes to finance – I’ll avoid getting into all the other areas where he screwed up for now.  He did more harm to this country in 8 years than all the other idiots we’ve elected – combined!  Quite an accomplishment George.  Bush is an idiot.

gk