Obamas Party While the Economy Burns

It's not just Barack. And don't expect to see this in the major press in this country — they're still supporting and covering for Obama. But here's another tidbit about the Obamas priorities, and their version of "shared sacrifice".

The Daily Mail is carrying White House reports the Obamas have spent more than $10 million on vacations in the past year. The article ties the vacation spending to "vacation junkie" Michelle Obama because of the several vacation trips she took without her husband, as well as the vacation trips she took with him (like the current vacation on Martha's Vineyard). The White House source says "It's disgusting. Michelle is taking advantage of her privileged position."

It has long appeared that both Barack and Michelle are taking full advantage of their positions to get anything they can get. You might say they're just in it for the perks.

It appears the only U.S. press coverage of this story is in the National Enquirer. (Just like the John Edwards stories? This one, just as an example? For a long while, the Enquirer was the only publication covering that story. Is the National Enquirer becoming mainstream?)

It is increasingly clear we can't rely on the major media to keep us informed, except where it fits their agenda.

Obama Parties While the Economy Burns

U.S. President Barack Obama didn't let Thursday's disaster in the financial markets disturb his party scheduled for that night. After all, one must keep one's priorities straight, mustn't one? His one concession was keeping the White House party, attended by celebrity supporters and Democrat party leaders, off the official schedule so it wouldn't be quite such an up-front deliberate slap in the country's face. It seems to me that action demonstrates a knowledge of guilt. But that guilt didn't stop the partying, or even slow it down.

The partying for the extended celebration of Obama's birthday continued. One subsequent celebration included former chief of staff (now Chicago mayor) Rahm Emmanuel.

While that was going on, apparently, Standard and Poor's downgraded the U.S. government's credit rating. The reasons given for the downgrade are, in part,

• The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics.
• More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.
• Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government's debt dynamics any time soon.
• The outlook on the long-term rating is negative. We could lower the long-term rating to 'AA' within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.

It sounds like Standard and Poor's is saying the same thing I have been saying: Our problem is that government spending has exploded and is out of control. What we have to do is rein in spending.

Meanwhile, Barack Obama received a birthday greeting for his fiftieth birthday.

Happy 50th Birthday Mr. President! While surprises are for birthdays, it is no surprise to the American people that your failed economic policies — from TARP to your health care bill — have resulted in disaster for our economy. Since taking office, unemployment has remained at or near 9 percent for 28 months, America has added $3.4 trillion in debt in 29 months — the equivalent of about $4 billion per day — we have an anemic housing market with record foreclosures, and an average price of nearly $4 for a gallon of gas. Even your budget did not receive one single vote in the United States Senate — and the icing on the cake — a stock market slide of nearly 800 points in the last 5 days.

While it may be hard to hear the American people’s frustration over the pop of the champagne corks and R&B bands at your $30,000/person birthday party, the citizens of this nation are suffering under your failed leadership. The best present you can give the American people will be for you and your failed economic policies to be defeated in November of 2012.

                  — Allen West (R-FL)

Why is it that what keeps running through my mind is "Nero fiddled while Rome burned"?

What They Told Us About the Debt Bill Wasn't True

They told us if a deal wasn't made to raise the debt ceiling, the financial markets would be in turmoil. In that case, it might produce a day on the stock market like this — a drop of more than 512 points in a single day — the worst day since the financial crisis started with the bursting of the housing bubble (and FNMA and FMCC) in 2008.

Oh, wait. . . . Congress did pass a debt ceiling deal. On Tuesday. And that stock market graph is what we got on Thursday. (Wednesday was bad, too — just not quite as bad as Thursday.) They told us this wouldn't happen if that bill was passed. They were wrong, and what we got was this.

They told us passing a debt ceiling bill ceiling bill would keep this from happening, too. But, of course, the real threat to the U.S. government credit rating, then as now, was the fact that our government's debt was approaching — and now has passed — our government's annual income. And that's because our spending is completely out of control. So they misled us on this, too.

Or maybe it's just that they don't have any idea what they're doing.

Obama Got His Debt Ceiling Deal

President Barack Obama has gotten his "compromise" debt ceiling deal, and has now gotten it passed through both houses of Congress. The House of Representatives passed is yesterday evening (Monday), the Senate passed it today (Tuesday), and the President immediately signed it. Everything happened fast.

The markets issued their judgment fast, too. The US markets said unequivocally that no deal would be better than this deal. The foreign markets agreed, too.

And it looks like my analysis of last week was spot on. Apparently there's almost no cut in spending till after the presidential election. But the spending takes place immediately, and House Majority Leader says it will be eaten up by the time we reach 2013. (That's a continuing $1.6 trillion per year deficit through that time, though the White House had previously claimed the deficits would be reduced — just like the unemployment rate.) It really is a case of "I'll gladly pay you Tuesday for a hamburger today."

There is a way to fix this, and it ties in with the "supercommittee" that will have to develop most of the spending cuts in this deal. The key issues are that we really need to cut spending — or at least stop its increase rather than merely reducing the rate of increase — and we need to avoid raising taxes and shoving the economy back into recession.

So here's what we do and how we are told the Congressional Budget Office (CBO) will score it relative to the current profligate baseline spending level (remembering that spending has increased by $1 trillion per year since Obama took office — and that is now part of the baseline).

1. Immediately freeze spending, cancelling all programmed automatic spending increases. (Cutting spending — perhaps to where it was when Obama took office — would be better, but we'll take what we can get.) We are told the CBO will score this as a $9 trillion cut in spending over the next ten years.
2. Immediately block the impending tax increase that's the largest in US history, now labeled as stopping the end of the Bush tax cuts. This will prevent a new/repeated/continued recession. We are told the CBO will score this as a $5 trillion debt increasse in the coming decade.

The combination of these two (a) actually stops spending increases, (b) avoids shoving us into recession, and (c) scores out as a $4 trillion debt reduction over ten years. An additional $1 trillion in new spending for the same period can be avoided by repealing Obamacare. That would be an appropriate initial step toward getting the federal government's profligate spending under control.

Some Budget Options

Congressional negotiators are trying to reach a deal on spending cuts to get $1, $2, or $4 trillion dollars in spending cuts (relative to "the baseline") over the next ten years. That is intended to enable them to get agreement on raising the debt ceiling to allow continuation of the current obscene spending rates. That $1, $2, or $4 trillion dollars in spending cuts translates to an average of $100, $200, or $400 billion less spending per year, probably back-loaded to the later part of the ten year period. (That sounds to me a lot like "I'll gladly pay you Tuesday for a hamburger today.") Being delayed like that most likely means that — most likely — the debt ceiling and debt would quickly go up but the spending cuts would probably never actually occur.

But the bigger problem is that, even if the spending cuts do occur, they won't get us out of the current unconscionably large budget deficits. The cuts need to be bigger.

So here are a couple of budget cutting suggestions that will do a lot better:

- We are told a large number of current laws have built in escalator clauses that will increase their spending levels by a total of more than $9 trillion dollars over the next ten years. Put a freeze on those escalators and we've saved $9 trillion over those same years.

- Government spending has increased by more than $1 trillion a year since President Barack Obama took office. Get rid of that increased spending and we've saved more than $10 trillion over ten years.

These may be oversimplified, but it seems to me either one of these would do a lot better at cutting bloated government spending than anything being discussed in Congress.