I got reminded of something interesting
Jan. 27th, 2010 12:08 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
solarbirdHow is it already 11:30? Damn!
I wanted to mention yesterday, but forgot - thanks to![[livejournal.com profile]](https://www.dreamwidth.org/img/external/lj-userinfo.gif)
cow for the reminder - the projected budget deficits coming up over the next few years. This year is projected for US$1.35 trillion, with a T. Sadly, since Mr. Obama has started using some of Mr. Bush's off-budget bullshittery, that number is almost certainly going to come in a little higher - and break last year's record deficit - even if all else stays the same.
But I wanted to go to a source I don't usually tap for economic material, Glenn Greenwald, mostly because he's talking about the politics of the deficit. Mr. Obama's proposed 'freeze' - which he opposed during the campaign in a slightly different flavouring - doesn't include most of the budget. It excludes all nondiscretionary spending, it excludes all interest payments (of course), and most of all, it not only excludes military spending, but Defence Secretary Robert Gates has promised military contractors and suppliers that the military budget will continue to rise, steadily, every year, full stop.
Let's do some math, shall we? 2009 numbers. Military spending: 44.4% of the budget. This will rise. Interest payments on debt: 10.9% of budget. This will rise. Medicare/Medicade/Health: 19.7% (mostly non-discretionary, unless I'm wrong about the makeup of that, but I don't think I am). 44.4+10.9+19.7= 75% of the on-book budget. (This ignores Social Security, which has a theoretical trust fund, which is at best a figment of accountancy imagination. But I digress.)
Almost 75% of the budget is immune from any "freeze" of any sort. Particularly the damn-near-half that's military spending, and the more-than-half that's military-and-debt. And the military portion is only going up.
Where do you think this takes us?
In other news, seasonally-adjusted new home sales fell to the lowest level since March 2009, much, much worse than expected. (Seasonal adjustment makes the drop less, not more, so going to the "real numbers" makes the picture worse, not better.) Talking heads are saying, durr, it's December, ignoring, again, these are seasonally-adjusted numbers.
Mish Shedlock rounds up a bunch of downward-revisions in jobs and durable goods orders, noting also WalMart's Sam's Club division laying off 10,000. Teen and recent graduate unemployment is particularly bad, and states are running out of funds for their unemployment compensation packages - 24 are borrowing already, nine more will be by July.
Garth at GreaterFool.ca thinks the Canadian housing bubble is about to burst. That's been a theme for a while over there, but the report showing expensive cities for housing - with Vancouver leading the list globally - has really rather set him off.
Zero Hedge has a really interesting column up about Goldman Sachs offering to "take [a] haircut" on AIG derivative contracts, despite public statements from the Federal Reserve Bank of New York that Goldman absolutely refused, followed by GS being made entirely whole with tax dollars funnelled through AIG. Gosh, I wonder what Goldman Sachs wonk might have been involved with that manoeuvre?
Federal Reserve Open Markets Commission notes today said "everything's getting better but it's still an emergency and we aren't changing anything despite the fact that everything's getting better," which is a real nothing-to-see-here-move-along statement. The market apparently likes the tablet; AAPL is up 1.5% at the moment, which is after the announcement. The USD hasn't done much interesting in several days. Can$ is at US$0.937, falling slowly from a spike high of US$0.98 over the last week or so, probably on oil but that's entirely ex recto. Oil is continuing its decline, down to US$73.68 as we are well into one of the two off-peak-demand seasons. Look for that to start its seasonal rise in late March or early April in advance of summer "driving season."
I wanted to mention yesterday, but forgot - thanks to
cow for the reminder - the projected budget deficits coming up over the next few years. This year is projected for US$1.35 trillion, with a T. Sadly, since Mr. Obama has started using some of Mr. Bush's off-budget bullshittery, that number is almost certainly going to come in a little higher - and break last year's record deficit - even if all else stays the same.But I wanted to go to a source I don't usually tap for economic material, Glenn Greenwald, mostly because he's talking about the politics of the deficit. Mr. Obama's proposed 'freeze' - which he opposed during the campaign in a slightly different flavouring - doesn't include most of the budget. It excludes all nondiscretionary spending, it excludes all interest payments (of course), and most of all, it not only excludes military spending, but Defence Secretary Robert Gates has promised military contractors and suppliers that the military budget will continue to rise, steadily, every year, full stop.
Let's do some math, shall we? 2009 numbers. Military spending: 44.4% of the budget. This will rise. Interest payments on debt: 10.9% of budget. This will rise. Medicare/Medicade/Health: 19.7% (mostly non-discretionary, unless I'm wrong about the makeup of that, but I don't think I am). 44.4+10.9+19.7= 75% of the on-book budget. (This ignores Social Security, which has a theoretical trust fund, which is at best a figment of accountancy imagination. But I digress.)
Almost 75% of the budget is immune from any "freeze" of any sort. Particularly the damn-near-half that's military spending, and the more-than-half that's military-and-debt. And the military portion is only going up.
Where do you think this takes us?
In other news, seasonally-adjusted new home sales fell to the lowest level since March 2009, much, much worse than expected. (Seasonal adjustment makes the drop less, not more, so going to the "real numbers" makes the picture worse, not better.) Talking heads are saying, durr, it's December, ignoring, again, these are seasonally-adjusted numbers.
Mish Shedlock rounds up a bunch of downward-revisions in jobs and durable goods orders, noting also WalMart's Sam's Club division laying off 10,000. Teen and recent graduate unemployment is particularly bad, and states are running out of funds for their unemployment compensation packages - 24 are borrowing already, nine more will be by July.
Garth at GreaterFool.ca thinks the Canadian housing bubble is about to burst. That's been a theme for a while over there, but the report showing expensive cities for housing - with Vancouver leading the list globally - has really rather set him off.
Zero Hedge has a really interesting column up about Goldman Sachs offering to "take [a] haircut" on AIG derivative contracts, despite public statements from the Federal Reserve Bank of New York that Goldman absolutely refused, followed by GS being made entirely whole with tax dollars funnelled through AIG. Gosh, I wonder what Goldman Sachs wonk might have been involved with that manoeuvre?
Federal Reserve Open Markets Commission notes today said "everything's getting better but it's still an emergency and we aren't changing anything despite the fact that everything's getting better," which is a real nothing-to-see-here-move-along statement. The market apparently likes the tablet; AAPL is up 1.5% at the moment, which is after the announcement. The USD hasn't done much interesting in several days. Can$ is at US$0.937, falling slowly from a spike high of US$0.98 over the last week or so, probably on oil but that's entirely ex recto. Oil is continuing its decline, down to US$73.68 as we are well into one of the two off-peak-demand seasons. Look for that to start its seasonal rise in late March or early April in advance of summer "driving season."
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no subject
Date: 2010-01-27 08:26 pm (UTC)Guess he needs more clueless Republican vote.
no subject
Date: 2010-01-27 10:22 pm (UTC)That said, it's a good thing it's a gimmick, because the last thing we need right now is a cut in government spending. Hopefully by 2011 there will be some job growth and this won't hurt much. A lot depends upon how much stuff is snuck into spending before the freeze takes place. Hopefully we'll get lots of infrastructure spending.
Once we do have job growth and a real recovery, this kind of thing is fine. But it should be real, and should include military and security spending under the cap. As for entitlements, the only thing I'd do is eliminate the trust fund fiction and make Social Security pay-as-you-go, which would require modest tax increases phased in over a very long time (and not yet, because annual flows are still in surplus through 2015). Oh, and I'd fix Medicare's problems by fixing health care for real, but the Senate bill plus reconciliation changes is probably the best we'll get in the short term so we should take it.