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H.R. 5618 - Extending Unemployment Benefits– A Bad Bill
The House passed H.R. 5618 on Friday along party lines. This bill would
extend unemployment benefits to November 2010. To see if your
congressperson voted for this bad legislation see this list.
I have two major objections to the bill. First is that this is not “pay
go” and second this is all about politics and an election.
The House bill was structured as an “emergency” spending bill. This
designation allows for it to be exempt from the pay go rules. I am one
of those who think that the biggest emergency the country faces is the
size of the budget deficit. This bill would add $34 billion to our debt
load. Here is how the CBO scored it.
If the Senate passes this bill it would extend benefits to the end of
November. Gee, that is a convenient time. Just a few weeks past the
critical bi-elections. This bill has little to do with structural
unemployment. It is about buying votes and trying to sustain political
control of Congress. Those that support/vote for it will say that they
are doing so to help the unemployed. Actually it is just more bad
legislation. This is about politics, not economics.
The Senate has gone on a ten-day holiday and will pick up the proposed
legislation when they return. The vote will be on party lines. As of
this weekend that means the White House has 57 of the 60 votes needed to
pass. Olympia Snowe (R. Ma.) has indicated she will support it.
Therefore they are two votes shy. If this deal clears the Senate and
becomes law it would mean that two Republican Senators had their arms
twisted, that or they had their political palms greased with some form
of side deal. Washington at its worst.
Does it matter that we are adding another $34b to our debt load when the
debt is already $14 trillion? Not really. This only increases our debt
by a ¼%. It is equivalent to about 20 days of interest. We are in so
deep at this point that $34b is a very small number. How is that
possible?
I think the outcome of this legislation is important in a number of
respects. It will influence markets and the economy.
-If passed, it will be a weight on the dollar. Outside of the US every
country is singing fiscal conservatism. We stand out in the opposite
camp. Passage of this bill will be reflected in the capitol markets.
-If enacted it will have some short-term beneficial impacts. It will
keep consumption going for a bit longer. More I-phones will be bought,
the number of defaults will be a bit less, there will be some monthly
data released that will hide some of the weakness.
-The President’s fiscal commission will release its results on December
1st. The day after the extension of benefits will expire and three weeks
after the election. There is no way this temporary extension will be
extended at that point. Either we hit a wall then or we hit a wall now.
The President and the legislative side of D.C. will not be able to avoid
the recommendations of the fiscal commission.
-If this bill is not passed it will accelerate the slowdown that now
seems to be coming at a frightening speed. Consider these two graphs of
the number of people who will be impacted. By the end of July the number
grows to 3.2mm. These are big numbers. This will show up on Wal-Mart’s
sales. It will show up everywhere. Consumption will drop. Landlords will
not get paid. Confidence will drop. Markets will drop. Federal and
State revenues will drop. Deficits will rise. Debt will rise. These
things will happen sooner versus later. H.R. 5618 just buys a few
months.
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+1
On one hand, the elections in November don't matter: The US sovereign defaults either way. Neither party can/will fix this (there is no fix). Further, both parties are utterly clueless and incompetent on economics and basic math. (Neither understand the problem.)
On the other hand, it is quite likely the group moved into office will supervise the constitutional convention after the Federal government dissolves. The senate also happens to be the ones to Aye/Nay the new Supreme Court Justices, which in our perverse world is merely another political legislative body in the form of "Lifetime Philosopher King Elites" mercifully spared any voter accountability.
Yes, I assert that happens inside the next two years (e.g., the term for those elected in November).
Ditto for Illinois, California, New York ... those states will dissolve, rewrite their constitutions, and re-form.
Love the photo. Stuck between a rock and a hard place. Perfect. Mind if I steal it?? I will use it in a piece some day.
b
bkrasting@gmail.com
RF!Lo!!!!MMAO!!
Nancy Pelosi said that the best way to create jobs is with unemployment checks.
QED