View 686 Monday, August 01, 2011

Ramadan, Defaults, and The Deficit Dance

· The Budget Deal

· Spending Facts

· The White House View of the Deal

The Budget Deal

The Wall Street Journal is proclaiming it “A Tea Party Triumph.” I don’t quite see it that way. The Journal says:

If a good political compromise is one that has something for everyone to hate, then last night’s bipartisan debt-ceiling deal is a triumph. The bargain is nonetheless better than what seemed achievable in recent days, especially given the revolt of some GOP conservatives that gave the White House and Democrats more political leverage.

***

The big picture is that the deal is a victory for the cause of smaller government, arguably the biggest since welfare reform in 1996. Most bipartisan budget deals trade tax increases that are immediate for spending cuts that turn out to be fictional. This one includes no immediate tax increases, despite President Obama’s demand as recently as last Monday. The immediate spending cuts are real, if smaller than we’d prefer, and the longer-term cuts could be real if Republicans hold Congress and continue to enforce the deal’s spending caps.

I don’t quite see it that way. What I see is a continuation of the Stimulus; more Bunny Inspectors and a larger and more expensive Department of Education SWAT team; no elimination of or control over regulations and regulators; and a continued exponential growth of government, with no cuts whatever in spending and not even a lot of slowing in the rate of acceleration; and the foundation for the largest tax increases in recent history.

And that, we are told, is the best we can do having won the House last November. There was not even an attempt at Zero Increase Budgeting.

A Few Facts to Keep in Mind

The most important thing to understand is that if the Congress were to freeze government spending: pass a Bill that says that we will next year spend precisely the same amount as we did last year, same salaries, same payments to pensions, same purchases, same veteran benefits, same payments to Bunny Inspectors and SWAT teams, same amount to Food Stamps and Free Lunches – if we froze government, the result would be called a $9.5 Trillion cut.

Stopping the exponential growth of government will be called a $9.5 Trillion cut, an intolerable cut, balancing the budget on the backs of the poor, giving enormous tax benefits to the rich, grinding the faces of the poor for the benefit of corporate jet owners. Etc.

The Budget Deal proposes at best about $3 Trillion “cut” over a ten year period. This amounts to a reduction in the exponential growth of government from something over 7% to something over 6%; meaning that government spending now on track to double in 11.5 years will instead double in 13.5 years. Since no Congress can bind the next Congress, and no “cut” takes place before 2013, there is a possibility that exponential growth of government will not change at all; and at best the exponential growth of will continue the inexorable march of the United States toward a regulated planned economy welfare state.

The Deal Bill says there are no tax increases, but that is not correct. The Bush Tax Cuts will expire under this deal. That is a tax increase. The Deal Bill has no effect on the increases in taxes built into ObamaCare, and has no effect on ObamaCare costs or employer burdens.

The Deal Bill increases spending by at least $8 Trillion, locking in all of the Stimulus Increases. It makes almost certain the largest tax increases in history.

This is, according to the Wall Street Journal, the best we can get from having taken the House last November.

The White House View

The White House view of this budget deal is given here. It is triumphant in tone, as it should be.

What Comes Next:

The government will grow, defense will be cut, the economy will continue to plummet, and taxes will rise, in theory for “the rich”.

Note that this won’t be distributism: that is, confiscation of wealth in order to distribute it to everyone. That is one form of “stimulus” on the theory that poor people spend their money and that builds an economy. I am not making that case, but a case can be made for lowering the gap between rich and poor in the interest of the appearance of fairness, and distributing the money to those who will spend it is the best way to stimulate an economy, particularly if that is coupled with more economic freedom.

That is not what will happen. Under this New New Deal things will go on as before. Government will grow, unionization of government will continue with a vengeance, much of the government spending will go to create political funds and lobbies for continued spending, and the United States marches on toward becoming Portugal, or Greece. Taxes will rise.

The Deal raises the Debt by the greatest amount that the Debt has ever been raised in one putsch. The Deficit Dance ends in a grand finale. Perhaps the Bunny Inspectors will now come out to show us what we are getting for our 2010 Election Victory.

We can all hope I am wrong in this analysis. Alas, I do not think I am.

This has not passed the House, and may not do so. The Dance may not be over. And in any event this Deal hasn’t anything like enough “cuts” to affect the US AAA Bond rating. We may get the Deal and a bond downrating. And many say “this is the best we can do until we take both Houses and the White House.” The House leadership fears that Obama will deliberately default then blame it on the Republicans. The Dance continues.

The Deal Passes

The deal comfortably passed the House. That put the crucial vote off until November 2012, when there will be a natonal referendum on Zero Growth budgeting. The Tea Party won no victory here, but it did stave off defeat, and lives to fight another day.

The next step is to look at Obama Care. I remind everyhone: no Congress can bind the next one, and no money can leave the Treasury except according to law; which is to say, without a House resolution appropriating money, the budget does not grow. And there is such a thing as a continuing resolution…

View 685 Sunday, July 31, 2011

· Arab Ramadan replaces Arab Spring

· The Deal: Doubling the Deficit

·

Ramadan Intervention

Ramadan begins: the Syrian Government is renewing the army’s assault on the rebellion, according to Al Jazeera; there are armored personnel carriers in the streets, as well as armor; there are tanks firing against structures; it looks to be a full assault on at least one village. One wonders if they will invoke Hama Rules again. Thousands of troops, hundreds of armored vehicles, fighting block to block. President Obama has said that he is horrified. His last comments, before he was horrified, were that this was unacceptable. This appears to be where Libya was a few months ago before the US and NATO and the UN Security Council came to the rescue of the Libyan people.

The official reason the UN is not intervening is that in Syria they are not using helicopters and aircraft. Our half arsed intervention in Libya was to impose a no-fly zone, which we then extended to air strikes against Khadaffi’s armored units. Slowly, slowly, the Libyan rebels advance toward Tripoli, but they don’t have a lot of strength outside Cyrenaica. At least they have a secure base which can be recognized as a government. Progress in Libya is slow, but so long as the US is willing to borrow money to pay for the rebel ammunition it will probably continue. The slaughter in Syria is greater than ever, possibly far greater than it was in Libya, but since there are no aircraft involved a no-fly zone can’t be imposed, and not much will happen.

We have an army in Iraq, not all that far from Syria, and it wouldn’t take a lot to use it to impose regime change in Syria; surely that has occurred to some of the neo-cons, and perhaps even to Obama. It will certainly have occurred to Netanyahu, but US-Israeli relations are not very good just now, and it is unlikely that Netanyahu has even discussed this (or much else) with Obama.

Note that I am not advocating US intervention in Syria. Our success in Libya, which is much smaller and has an actual rebel army in the field and a rebel territory with something like a government, makes it pretty clear what would happen if we decided to intervene in Syria. When the US decided to intervene in the territorial disputes of Europe back in World War One AKA The Great War, the results were, at best, mixed, and one could say that they led to the German crisis, The Weimar Inflation, the Weimar collapse, and the rise of National Socialism. Our intervention in World War II was decisive, but the aftermath was the Cold War, the enormous expansion of US government, deals in which the Liberals would allow the Cold Warriors to prosecute the war in exchange for Social Progress like the Great Society, and such. Note that I was a dedicated Cold Warrior and I am not being apologetic over our WW II European intervention. I do wonder if it would have been needed had we not been inveigled into The Great War.

Our interventions in the Middle East, beginning with the Bush I liberation of Kuwait, have had ambiguous results at best, in part because we didn’t have any objectives. Straight Imperial tactics would have liberated Kuwait, and kept it as an American protectorate, with the installation of a monarchial government friendly to the United States, and US development of oil resources which would pay tribute to the US as a means of paying for the country’s liberation.

Straight republican tactics would have installed a military government which would then write a new Constitution for Kuwait, reducing the Royal Family – which spent its time in exile in the London Casinos – to a monarchy that reigned but did not rule.

Neither happened. We then drove into Iraq, defeated the Iraqi army, and halted. We encouraged uprisings against Saddam Hussein, but did not support them, with terrible results.

Our interventions in the Balkans resulted in a mess. Kosovo was handed over to illegal immigrant Albanians, who quickly used ethnic cleansing to get rid of the Christians who had held Kosovo for a thousand years.

Our interventions in Afghanistan, and in Iraq the second time, resulted in quick victories followed by long and expensive wars of attrition which could only be won if we could establish that being friends with the Americans was a better long-term deal than working hard not to antagonize enemies.

Our interventions in the territorial disputes of Europe and the Middle East have been expensive.

Ramadan is approaching. In August. It’s going to be hot and dry in the Middle East. Arab Spring is ended. Arab Ramadan 2011 begins. What will we borrow money to do now?

Deficit Deals

As of 1500 PDT there is still no Deficit Deal in Washington. There are now some serious people betting that there won’t be one.

The rumors are that there will be no new taxes but there will be a “deal” that includes revenue enhancement, namely elimination of “loopholes” such as deductions for mortgage interest (which is a raise in taxes for all those evil people with mortgages who have not yet be foreclosed on; clearly they deserve higher taxes); and elimination of deductions for state income taxes. One supposes the argument for that says, well, look at all the public services the people in high tax states get, that’s income, so why should they not have to pay federal taxes? It’s only fair. Or, if you’re so dumb that you will stay in a high tax state, you deserve to be taxed; like lotteries, it’s a tax on stupidity. In any event, it is being established that there can be revenue enhancements through “closing loopholes” and that isn’t really raising taxes.

Whatever the outcome here, it’s pretty certain that the 7.3% exponential increase in government spending – and thus Deficit – will continue. There may be “cuts” that bring the exponential growth to below 7%. Assume as low as 6%. Assume 6%. This means that the Deficit will double in 13 and a half years instead of in 11 years. So the best we can hope for from these Deals is a two year delay in doubling the national deficit. Hurrah!

At some point this has to stop. It can’t go on forever. But it sure can go on past another couple of elections or at least the politicians think so.

**

As of 1530 both the Tea Party and the Liberals have resolved not to support whatever the latest Deal is. Perhaps it is time to make some contingency plans for a government shutdown.

Clearly no one expects the government to shut down. There is almost no discussion of what one ought to do, just in case. Having a few hundred dollars in cash can’t hurt.

* * *

The new version of Fallen Angels complete with the Afterword by Niven, Pournelle, and Flynn, is now available from Amazon. Those who bought the older version can download the new one free although you will lose any bookmarks or notes you may have made.

View 685 Friday, July 29, 2011

· There Will Be No Cuts

· How to Have Real Cuts

· Terror in Fullerton

· Do NOT Buy Fallen Angels! (Wait just a bit) Wait is over. BUY IT NOW

There will be no cuts.

Boehner has changed to Plan Three. That has apparently passed the House.

The Club for Growth had previously opposed the Boehner Plan, but said this:

The last 24 hours have been nothing but chaotic…to say the least. As you know, the Club opposed the Boehner Plan leading up to last night’s scheduled vote in the House. It lacked the structural reforms that would actually fix our debt situation permanently. Thankfully, when Speaker Boehner realized that he didn’t have the votes, he pulled the bill and improved it.

He did that by inserting language that makes passage of a Balanced Budget Amendment to the Constitution now a condition to releasing the second debt ceiling increase a few months from now. Because of that, the Club withdrew its key vote against the plan. While nothing is certain, the bill is now expected to pass the House.

Going forward, as the Senate decides to make its move, it’s critical that a Balanced Budget Amendment remain part of any final bill. It’s the catalyst to this whole debate.

Note that it’s the Club for Growth that says a Balanced Budget Amendment is crucial: I have not said that. As several of you have indicated in mail, that’s a formula for automatic tax growth, not for thrift. The only way to cut the budget is for the Congress to appropriate less money.

The acquiescence of the Club for Growth seems to have done the job: apparently the House passed the Bill. It now goes to the Senate, where the strategy will be to Amend in two ways: remove restrictions on spending, and add revenue increases i.e. taxes. It will then be sent to a conference committee. Note that it will be sent as a House Originated Bill, not a Senate Bill. It will have an HR number. This will be important because the Democrats will add “revenue increases”, and revenue bills must originate in the House. When some monstrosity that bears no resemblance to the Boehner Bill is returned to the House and the Republicans reject it, the President will then go on TV and read from his teleprompter that the Republicans are forcing the nation into default.

Of course I hope I am wrong on this. (Later: The Bill was immediately tabled in Senate, and will not be voted on. No one wants to be on record on this, so t here was no vote. What the Senate will now propose is a mystery.)

Do note that even if the Senate passes the Boehner Bill exactly as it passed the House, There Will Be No Cuts. At best there will be some reduction from the inevitable growth of government spending from, say, 8% to, say, 5%. This will be trumpeted as Trillion Dollar Cuts, but in fact the Debt will Continue To Increase by Trillions of dollars. Make no mistake. There will be no cuts.

How To Cut

The only way to actually cut the budget would be for the House to include in every appropriation a phrase to the effect that revenues appropriated under this resolution shall not exceed some specific amount lower than the amount spent on this last year. Better would be a blanket resolution limited all appropriations to no greater than 99% of the amount spent in the previous year. That would make for a 1% cut, actual cut, in the amount spent, in the growth of government, and in the growth of the national debt. Of course some exception would have to be made for debt servicing, because the Debt is going to continue to rise even if we get Real Cuts, and will grow wildly if we continue on the course we are set.

Meanwhile the President is proud of raising the gas mileage requirements for car. That ought to grow the economy for us. And of course the people who enforce all that will need more money. As will the Department of Agriculture Bunny Inspectors and the Department of Education SWAT team who will continue to get their pay raises, medical benefits, and fully funded pensions. None of that will change. And the Deficit will rise by Trillions. There are no proposals for actual cuts: the government will grow by 8% a year and any reduction in that growth is called a cut, but of course it is not a cut at all. A cut means an actual cut, and No One is proposing anything as drastic as that. Government will continue to grow. The Deficit will continue to grow.

Salve Sclave.

Terror in Fullerton

People in Fullerton California are protesting that six police officers alleged to have beaten to death a 135 pound schizophrenic white man for resisting arrest remain armed and on full patrol duty, and since none of the officers have been identified, everyone is terrified of any police encounter. Under the California constitution the primary law enforcement officer is the county sheriff, but we haven’t heard of any sheriff’s investigation. As of last count the FBI is now investigating.

I would have thought that it would have been better to keep these matters local, not make federal cases of them. From my view, entrusting protection of our rights to the Federal government is not a wise idea, and making the FBI the sole guardian of our rights is dangerous.

And yet: the Fullerton Police Department seems determined to protect the police, not remove any – there were at least six involved – from duty even with pay, and in general were set to ignore the incident until amateur video tapes went on line, and the London Daily Mail of all places published a story on it. The so-called video is not as graphic as the Rodney King case. There’s little video of what actually happened: it is mostly audio recording of unidentified witnesses commenting on what’s happening off stage. The situation is not as obvious as the King situation, and when the facts began to emerge it became even more inexplicable. Kelly Thomas was the son of a retired deputy sheriff. A number of LA Area radio personalities have become interested. But the officers involved have not been identified, and they are still on the streets carrying weapons. Which is why there is terror in Fullerton: the officials are afraid of the police unions, and the citizens are afraid that there are rogue police on the streets.

The Fullerton Fiasco will be remedied. We do not need Federal intervention. Let the sheriff and District Attorney do their work. A free press brought this out. I note that the city of Fullerton has offered a million dollar settlement in the hopes of making this go away, but that has been rejected.

DO NOT BUY FALLEN ANGELS JUST YET (Revision: OH YES YOU CAN! Buy it now!)

This has not been a productive day. I have discovered that the version of Fallen Angels posted at present for Kindle does not contain the retrospective afterword crafted by Niven, Pournelle, and Flynn. I am getting together the new file to post. I do not know what procedures Amazon has for getting the proper copies to those who have already bought it – please do not compound the problem by buying Fallen Angels until I get that fixed and Amazon puts it up. It will not be long. And I’ll try to find out how those who already bought the book get the book they paid for. If I have to I’ll buy them copies.

All right: I have uploaded Fallen Angels with the retrospective. I also cut the price to $2.99. When you see the book availab le for that price b uy a copy. Buy another and give it as a present. Tell  your friends. It’s a good book.

If you already bought it and it didn’t have the retrospective, let me know. I’ll figure something out. And my apologies for all this.

It turns out that if you already own a Kindle book you can get a new download. Amazon has not, as of 2330 Friday put up the new version, but when it does, here’s what to do:

I believe if you go to the "Manage Your Kindle" page, you can re-download a title that you already purchased and downloaded before. You loose any bookmarks or highlighting, but you do get the latest version of the book.

….Rick…..(the web guy)

And no I have this from Amazon:

Hello Jerry,

Thank you for your cooperation in updating the content for "Fallen Angels." We’ll be glad to send an e-mail to customers who previously purchased your book to let them know an updated version is available.

At this time, we must receive their permission before sending the revised version to their Kindles because receiving the new version causes highlights, the last page read, bookmarks to be removed, and the locations of any notes won’t match the updated copy of the book.

We’re working on a long-term solution to improve this experience by automatically making the revised content available in My Kindle Library.

Thanks for using Amazon KDP.

However, as of this writing, 2300 Saturday, Fallen Angels is still listed as “publishing” meaning that Amazon has not made the new edition available.

1430 Sunday: Fallen Angels is now Live on Amazon. Those who previously purchased it should download the new version, which will have the Afterword Retrospective.