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White House Saturday Night Special – Another $50 billion of Debt
Last night the White House sent a letter
to lawmakers asking them for legislation to (primarily) assist
states. The plan is to distribute the states money so that they can
defer job cuts of teachers, police and fireman.
-I hate it when these things get snuck onto the table in the dark hours
of a weekend. Doing it this way is a measure of just how unpopular the
“spend more” economic policies are both in D.C. and in the country.
-This request is about politics. The President wants to spend an extra
$50b between now and the November elections. The thinking is that that
the 300,000 state workers who will keep their jobs for another half year
will all vote for Democrats. That might be the case. My guess is
another million or so voters will pull a non-Democrat lever as a result.
-This additional spending bill will happen. The votes are there. It will
probably end up as a technical adjustment of the 2009 ARRA stimulus
legislation. The result will be a future year budget impact but nothing
new on the books in 2010.
The letter from the President strikes me odd. Last week the head of the
Fed, Ben Bernanke, went out of his way to tell us that things were on
the mend. The MSM pushed this thinking broadly. Many suggested that the
better tone to the markets recently was a product of the “soothing”
words from the Fed maestro. The President’s Treasury Secretary, Tim
Geithner has been on the airwaves as well, touting the recovery that he
and the Administration has created. Others like Christine Romer and
Larry Summers have been talking the same line. With that in mind a few
lines from the Presidents letter:
“We are at a critical
juncture on our nation’s path to economic recovery.”
“Given the urgency
of the continued economic challenges we face…”
“address the
devastating economic impact of budget cuts at the state and local levels
that are leading to massive layoffs of teachers, police and
firefighters.”
“if
additional action is not taken hundreds of thousands of additional
jobs could be lost.”
“Because the urgency
is high these provisions must be passed as quickly as possible”.
“We must take these emergency
measures.”
“ I know you
share my sense of urgency as we continue our efforts to jumpstart
job creation and restore fiscal discipline in Washington”.
The pundits (and political leaders) out there who are selling the story
that we are in a sustainable V shaped recovery are wrong. The economy
struggles to create 40,000 jobs a month. But budget cuts are about to
lay off 300,000 high paid workers. The President’s proposal will pass
the buck forward a few months on these layoffs. But by January they will
be back on the table. We are less than six months away from another
significant slowdown. The President no longer has the money to avoid
that reality.
»
- advertisements -
Don't bend over to pick up that FRN?
Oh no..... please not community baths.
Very nice.
Call that a 'stick-save'.
In that BP was Obama’s second largest contributor, and that BP is in process of destroying the Gulf of Mexico, which will wreck the economies of Texas, Louisiana, Mississippi, Florida, and oh yeah, Mexico and may impact the Atlantic----- what say BP comes up with the 50 Billion NOW. The concept of a transparent government was very appealing in the Obama campaign. The shadow government, that we are now subjected to, can not and will not stand. Democrats must loose total control.
Look I am not a fan of Obama. In fact, I think we ought to ask him to be resign for being such a worthless leader. But seriously, do you think Obama accepted campaign contiributions from BP so that they could fuck up the GOM? Really? Seriously?
Obama was appealing to idiots only.
My Depression-era father is sometimes fond of asking, in a fit of pique, "What do you want me to do, shit money?"
Now TPTB are actually doing it, like some kind of nightmarish 8mm fiscal scat film.
Tell him next time to shit gold. Or maybe silver, though he might need some fiber for that.
Fiber we got -- wood pulp! Of course it's tainted with green ink but it'll do in a pinch.
More than 300,000 unemployed will have their UI expire over the next 6 months but Pelosi just laughed that off when asked if there was to be another extension for them. Of course the unemployed are not part of SEIU, AFSCME or another union so their very real plight is not priority and its hard to vote when your address is a car, cardboard box or the bushes behind the 7/11!
its hard to vote when your address is a car, cardboard box or the bushes behind the 7/11!
We obviously need to hire more Census workers
IMO They NEED to come off unemployment. Once they are hungry the smart ones will take their skills and offer them at a price that is significantly lower than big union's price. We will all hire them (to save our dwindling fortunes) and the union's will not be able to cut costs and still pay employee's and themselves both. Wallah - return of the small business. If government tries to intervene with tax punishment the people can simply go to a cash (or gold, or barter) system and starve the beast. Desperate times will force the fix.
Yes, they are basically criminalizing productive sources of revenue. It will make criminals of all of us. Remember though, govs have their own non-competition laws, they decree that only the gov can provide the "service". They will/have/are making it illegal for anyone to produce an income outside of their matrix.
"The U.S. has never defaulted on a debt obligation"
is beginning to sound like
"Housing prices have never decreased" circa 2007.
This statement is pretty much true, given its power to disown obligations after the fact.
There are precedents for this, one of the most notorious being WWI veteran bonuses.
closing the gold window, was a default
Bingo.
This is inflationary, right?
Absolutely not.
The hedonics adjustment for 'enjoying spending ever more and more money' has proven beyond a shadow of a doubt that we actually have deflation.
Show me something that's going up in price and I'll show you something that will shortly join energy and food in the list of non-essential things excluded from 'core inflation'.
Snickers bar $1.29.
Just sayin'.
Honestly, I doubt it will cover the mounting Medicaid debt incurred in the first 6 months of the year. I know Maryland hasn't paid their bills since January. Hospitals in MD have already budgeted for cutting FTEs. This is not going to help.
I would speculate that this is for Interest payments on muni bonds.
This cockroach knows he's got a number of very unpopular reforms/acts (Cyber security, Enemy Belligerent Act etc...) to get passed before the elections. He know's he's gonna get smashed in November regardless and does not give a fck. He was only meant to be a 1 term traitor anyway. This is about convincing the democrats politicals that he's managed to fool the public that we actually have a recovery so they'll more inclined to pass his treacherous laws.
Bush 41, Clinton, Bush 43, Obama should all be impeached.
Hdawg, you mean, impaled? : )
I'm a constitutionist. If Impeachment fails i have the right to defend myself by impaling :)
Insert "impaled" for impeached and I'm with ya.
Don't forget the "Carbon Tax". *rolls eyes*
The 50-Billion won't even cover the added pension and health care liabilities that those several added months of employment will create. There are structural problems in that the public sector is compensated (1 1/2 times as much as the equivalent private sector employee) and how their pensions are guaranteed vs the 401k you have. Just bring public sector (that included politicians) wages, benefits and pensions in line with the private sector and then we only need to tackle SS, Medicare and Military spending - it's easy - I can see GS will be the advisor. There is that pesky little problem in the Gulf - (lighthearted weekend thoughts)
The public sector is compensated (1 1/2 times as much as the equivalent private sector employee)
Bull shit.
Why do you think special operators go to work for the black bag crews and regulators are able to be captured?
Miles,
IMO, this public sector/private sector ratio differs a lot depending upon where you are within our big landmass. I am somewhat aware of the DC (Northern VA) area due to a Navy career stepson at the Pentagon (when not in Iraq) and other in-laws that live there. I know what the stepson does relative to what he makes.
IMO, the East Coast (DC to Boston) zone has one set of conditions; the industrial Midwest another. Certainly here in Michigan income for things like the upper level of engineering and computer skills are well compensated. But they are the minority. The auction houses seem to be doing well, but in auto assembly, robots are gradually replacing manual labor. Cars will cost less (relatively) for the technology you get. Public service sectors are seeing some reduction but slowly with most of the change due to reduction of head count.
After they've locked in their public pension.
Rounding out the public pension madness is a decision by NY electeds to allow the state and municipalities to borrow $ 6 billion to get current with their pension fund obligations. They will borrow the money from the very same pension fund they owe it to and simply " pay it back with interest " starting in 2013.
They cannot be serious. That is not funny. It is insane !!
Is this "pay it forward"? It almost seems they chose that date because they know failure is imminent.
LOL Maybe they chose that date because their calendar stops 11 days prior!
2012. It's not the end of the world. It's the end of people painting themselves into corners.
You didn't see the movie right? I guess no room for you on the boat my friend, sorry.
Yes I watch tons of movies. It's the only way to dicipher what kind of crap the powers that be want us to believe.
Agreed. It's called predictive programing.
Its been insanity for a long time. Nothing new to see here. Move along, move along.
Second verse, same as the first.
A little bit louder, and a little bit worse.
Debt as fiat is doomed.
Borrow to grow goes boom.
Interest charges! Debtors wail.
Exponential fiat growth will Fail!
I'm so confused. :)
Good. That shows you are paying attention.
Not surprising. He can't even spell spekulashun.
I think it is phonetic for Special-KoolAid-in'.
Bruce, another excellent post. There is absolutely no difference between this and the $1 trillion dollar rescue package of the Southern European countries. The Federal government taxes the individuals in the states so that it can send the money back to the very same states (and in the process takes a handsome "processing fee" off the top for its well compensated employees) in the same way that Spain and Portugal contribute to the $1 trillion program to save Spain and Portugal. Pretty soon the sky is black with criss-crossing dollars and no one any longer knows where the dollars came from and where they are going and any sense of responsibility and accountability has long been lost.
The best part is the money is sent back with strings attached since it's now federal money.
Ah, yes, the sticky strings, laced with unfunded mandates that further enlarge the debt problem. Bright ideas wrought in Washington, paid for by Kansas, to prolong the agony in California.
Pretty soon the sky is black with criss-crossing dollars and no one any longer knows where the dollars came from and where they are going and any sense of responsibility and accountability has long been lost.
Awesome and appropo visual!
I agree also, excellent post Bruce, my only problem is the picture: we are not hanging over water, we are hanging over punji sticks.
Correct,
And that is exactly as it was meant to be.
FUBAR redux.
Get the money from Paul McCartney. We're tapped.
http://www.cnbc.com/id/15840232?play=1&video=1506508223
They'll try to hold it together till November. It won't work.