TFP Column: Sequestered, Shut Down, and Debt Limited

In spite of the fact that I seem to be contributing in no substantive way to the number of awards one by the Toledo Free Press, Editor-in-Chief Michael Miller continues to accept my submissions. (We all have blind spots)

Who am I however, to question the judgment of this award winning publication by second guessing their use of "Sequestered, Shutdown, and Debt Limited" this week; while we gear up for the next national financial battle over the Debt Limit even before the previous one over the Shutdown is over.

The truth however is that this is the endless drama in Washington DC has become a dysfunctional reality show, and there's no understanding any of it.  There's no watching any of it either; as their lack of plot, poor dialogue, and even worse acting make "Here Comes Honey Boo Boo" a welcome relief.  (Man, I really hate Reality Shows.)

Speaking of welcome relief, it's early enough in the week that you have both the mid-week "Star" edition to look forward to, as well the newspaper that not only continues to be the largest circulation Sunday newspaper, but for the fifth year in a row has one the Best Weekly Newspaper in the State of Ohio (at least according the the Ohio Society of Professional Journalists).  I speaking of course, of none other than the Toledo Free Press.


 

Silly Bits VI

The Government appears to be about ready to shut down today.  Since this is one of the silliest things that the government does (a statement which goes much further than I'm sure the two major parties would be willing to concede), what better time to talk about some of the Silly Bits involved where this particular shutdown is concerned.

Shutdown, Schmutdown ... big deal.  After all, we've shut down the government some 17 times in recent history, and for all the common sense that seems to make, the damn thing keeps coming back to life like the evil lead in a Zombie Apocalypse movie.  Besides, all the really cool stuff in Washington DC like White House tours, the parks, and the museums were shut down already because of last year's Sequester. (Or so they've told us.)  

I for one am suspicious about these so-called shutdowns.  They tell us that this one will not threaten the checks of soldiers or the elderly on Social Security, but could eventually threaten the processing of claims for both; all so they can keep the special subsidies for a medical plan for members of Congress and theirs staffs who are making far more than the average citizen.  We'll no doubt keep writing checks for foreign aid (a post in itself that will have to wait for another day); all to keep from granting the same one year delay to individuals signing up for the ACA through legislation that were granted by Presidential fiat to employers. 

Besides, it's getting hard to worry about the bad things that will happen from this government shutdown when House Minority Leader Nancy Pelosi already told us only last week that the government has cut everything it can already and can't cut more.  If that's the case, for all we know we might have been shut down already.   

Democrats want to blame Republicans for this potential shutdown, since it was their idea to shut down the government the last time in 1995.  Republicans in turn would like to blame Democrats, since it's Harry Reid and his party in the Senate that seem to have become the party of 'NO' lately in their refusal to compromise (or in many cases, even vote). A pox on both their Houses!

The truth is that Government is on the verge of shutting down because both parties are too busy posturing for position for an election that's 13 months away to have done their job for the previous 12 months.  Both parties require some media face time, good sound bites, and a jumping off point for fund raising.  So instead of doing one of the few things that they are obligated to do under the Constitution to perform, they ignore their fiscal responsibilities (and common sense) and square off on partisan lines at the last minute in such a way that any decision made must be ill-considered at best and a knee-jerk reaction at worst.

I've got an idea!  How about instead of passing a Continuing Resolution, we have them instead pass a law to hold a special election this November for ALL of those currently in office in both houses (regardless of the status of their term).  How about we make a 'very special' election' and not allow incumbents to run in it?  If your party gamesmanship is so important to that you continuously place it above your oath of office, take the bullet for it and go find another place to work.  If you're unable to perform the simplest requirements of the job you have, step a aside and allow us to find someone who will.

According to Democrats and some in the media, Republicans in the both houses of the national legislature should stop messing with Obamacare (The Affordable Health Care Act) because its law.  What a preposterous notion!

It's the job of members of the Congress to challenge laws when and if necessary, and to fix those that need it even after they're passed.  They've been doing this since the inception of this branch of government and as a result, we've seen things as foolish as the 'Jim Crow' laws of this nation redressed.

Of course, still waiting in the wings is the Debt Ceiling and yet another possible stand off .  You remember the Debt Ceiling; it's the limit of the government's ability to borrow money.  Now however, the President is out there on the stump telling us that the nation's debt is going down faster than it has in years.  Am I the only one that sees the logical inconsistency in this?  

If the debt is going down, why have we once again run out of money to borrow?  How is it that what we were told were the 'draconian cuts' of the 2012 Sequester have not prevented this from happening as threatened (promised)?  If we are so quickly again reaching the national credit limit however, shouldn't we be doing even more to bring in line the government's spending with it's revenues (like delaying a very expensive new government program like Obamacare)?

By the way, where does the $85 billion of government debt that the Federal Reserve purchases in bonds every month figure into this concept?  Call it Quantitative Easing or just the monthly bond auction, this government escapade doesn't even show up on the balance sheet.  Likewise, no elected official has to approve it, since this is the Fed's money and not really the government. (Like there's a difference?) This ruinous fiscal policy already has already led to devaluation of the currency and will eventually lead to some fairly massive inflation.  Such devaluation may some good for some in the stock market and those looking at the national debt we're worried about, but it won't do much good for anyone who earns and purchases in US dollars.

During the 2012 election, Presidential candidate Ron Paul held up a silver dime when talking about the current price of gasoline.  He reminded the nation that because of the changing worth of the currency in 'real goods', the value of the metal in what was a ten cent coin when minted was still enough to buy a gallon of gas, even at today's prices.  

As to the idea of a federal government shutdown itself, it should probably be pointed out that the real problem may not be whether it should happen or not; but this:

How did we let this government become "too big to fail" in the first place and allow the potential of its temporary shutdown to matter.   

The federal government long ago exceeded the limitations placed on it in the the Constitution.  This rampant overreach is as much responsible for the potential train wreck than anything else we're facing today.  Perhaps if so much money and power were not relegated to this bug-infested swamp on the Potomac River, we'd be cheering rather than fearing its potential of its temporary demise.  
 

Celebrate Sequestration Day!

For those of you who haven't been paying much attention to the news for the last couple of weeks (you lucky bastards), this Friday is Sequestration Day.  Now for those of you who have additionally failed in your obligations to have read the previous posting on this subject in JBS (go ahead, I'll wait here), the Sequestration of 2013 is a series of government spending reductions suggested by the White House, passed in a bi-partisan effort by both Houses of Congress, and mandated to occur by virtue of the 'Budget Control Act of 2011'.  If Congress couldn't come to an agreement on some form of budget reform between August of 2011 when it was signed into law and March 1st of 2013 (after a 'kick the can' extension that moved it from January 1, 2013) Sequestration automatically happened.

In typical recent government fashion, the law was passed to trade spending now for savings later; in this case getting a debt ceiling increase of $400 billion back then (with an option for $500 more that was used) for $1.2 trillion in spending reductions over ten years.  If an agreement on those reductions wasn't reached, a form of them would kick in automatically instead; and since Congress seldom has the courage to cut money from any program, these cuts would be made based on the difference between the annual portion of the $1.2 trillion and whatever across the board cuts Congress could come up with.  (Hell, the Senate hasn't even had the testicular fortitude to pass a budget in four years and the President has been late in delivering budgets four out of the last five years. )  They would affect almost everything except entitlement programs like Medicare, Medicaid, and Social Security.  

Hidden in the fine print of all such government language however, is that any such action would be  based on the 'Base Line Budget' process that Congress uses where the national checkbook is concerned.  Now for those who don't understand this concept of accounting, practices that would be considered illegal if practiced by anyone other than the government; it means that every budget program funded by the government is assumed to get bigger each year.  This means that programs will normally see the equivalent of cost of living increases of between 4% and 6%, assuming that their prior year's budget is spent.  In this year's case, because the date of Sequestration was moved back to March 1st, the $120 billion of projected reductions that was originally required would now in fact consist ofof a mere $84 billion ... approximately 2.4% of the projected $3.8 trillion 2013 federal budget.  (I say projected, because without both Houses passing a budget that's signed into law for the last four years, actual budget numbers get rather fuzzy.)  What that in turn means is that the amount of spending that Sequestration will reduce is smaller than the budget increases already built-in under the 'Baseline Budget' principle.  In other words, in spite of the process of Sequestration, the government will still spend more this year than it did last year.

All of the Doom and Gloom coming out of the national bully pulpit that we've been hearing about the last week or so about how these cuts will undoubtedly bring about a fiscal Armeggedon in this country are really nothing more than someone from our government telling us that these agencies must 'suffer' with only slightly more than their funding for 2012.  Their threats of dire consequences are in fact only being made in order to scare us into paying even more taxes than Congress agreed to just a month ago.  So what are we going to do about it?

Well I don't know about you, but I'm going to celebrate Sequestration!  Sequestration may be the only government 'reductions' in spending that we are likely to see this year from the bi-partisan efforts the White House and Congressional behavior that has become far more like that of a crack addict than of a responsible national government.  It appears that we can no longer count on either major political party to do the right thing, but only instead to produce lies and excuses about their own failures.  This is not because they don't know what the right thing is, but because the haven't the backbone to offend any of those special interest groups feeding at the public trough.  After all, with today's endless election cycle, if they aren't looking for campaign contributions for a re-election bid, they're looking for at least the vote of benefiting members of a parasitic constituency.  

Just this once, it appears that they may have done the right thing (probably by mistake) and they don't know how to dig out of the hole that they've created.  While the Sequestration cuts are barely a token, they still represent more than either party has done to change the horrible path that this nation is on in the last couple of decades.
 
In fact, I recommend that we all go out and celebrate; and that we do so as publicly as possible!  Those currently out there on the stump have consistently lied to us not only about the budget, but about the dreaded process of Sequestration that they themselves visited upon us; and for no better reason than to keep us frightened and as they see it, easier to control.  Countering their fear mongering with enthusiasm for what they've tried to make a see as disaster might put them back on their heels.  Celebrating what they think we should be terrified of could make us seem less predictable in their minds.  Acting in a way that passes their understanding might shake recent assumptions by those in Washington that their skills in steering the herd that they believe us to be are anything but complete.  If nothing else, we may get a chance to enjoy their temporary discomfiture and give them pause before trying to create their next faux panic in yet another attempt to manipulate us in the next budget debate.

Yes, I know that it's possible that there might actually be negative consequences to Sequestration; though I suspect that if there are, they will be at our leaders' purposeful doing.  Even if some hard lessons come out of these manipulations however, we should take it as our just deserts for allowing the bi-partisan fiscal impropriety that's been committed.  Times are tough out there financially, and and it's far past time that everyone (including our fearless leaders in Washington) recognized that it's time to learn to do with less in order to survive.  

So while it might be a couple of days early in doing so, I would like to wish each and every one of you:

Happy Sequestration Day!

Sequestration - A Hallmark Disaster

Those of you who regularly read these efforts in "Just Blowing Smoke" have heard me speak before about 'Hallmark Holidays'.  I won't go through the list of such days here, as it often varies on a personal basis.  They can all be easily recognized however by the fact that they are 'made up' holidays, use special cards (usually manufactured by KC's own Hallmark) for their occurrence, and often seem to carry a requirement to purchase flowers, jewelry, and/or automobiles for a loved in order to properly celebrate them.  (Many can also be recognized by ads in the newspaper which enable one to purchase tires or mattresses at reduced prices.) 

It occurred to me however, that lately we have become a nation of not only Hallmark Holidays, but of Hallmark Disasters; in spite of the fact that apparently the greeting card companies have shown a failure in their ability to keep up with the times.  It seems, for example, a shame that we have yet to see 'Debt Ceiling' cards, 'Kick the Budget Can Down the Road' cards, and with it being less than a week away ... 'Sequestration' cards.

Oh sure, each of these is purported to be a disaster rather than a day of celebration, but like their supposedly joyous counterparts, they are mostly made up and meaningless.  Let's look at their overall design:

• Each is a disaster (like some of the holidays) has been created by the government with, the willing participation of the two political parties that have a strangle hold on it, under the guise of being for our benefit.
• Each is a bi-partisan effort that the two sides of the aisle later blame on each other for occurring in the first place.
• Each is debated about by politicians and media talking heads, while largely ignored by the public.
• Each is one that both politicians and political parties change their positions on with each rising tide and wind direction change.
• Each is billed as the equivalent of the End of Days, even after so many of them have come and gone without anything of significance happening as a result of their occurrence.  

As for this latest made-by-government misadventure, it might be the thinly disguied bit of BS yet.  After all, Sequester was supposed to be the latest answer to doing something other than 'Kick the Budget Can'.  Voters, it seems, were beginning to tire of yet another boring event in which only feet were used; and probably for many of the same reasons.  (The US doesn't appear to be very good at it, few in the stands really understand the rules and most found it too low scoring for attention span of the average voter ... or six year-old.)

The truth of the matter is that 'Sequestration' was a poor designed Doomsday at best, with even those attempting to stop the clock from ticking down losing interest.

• The White House originally presented this budgetary Armageddon as a 'final solution' and now can't seem to even remember the 'Simpson-Bowles' report or the result of ignoring it.
• Both parties voted for Sequestration as a last resort; yet as the deadline that they most feared approaches, both are so concerned over the ticking down of its doomsday clock that they .... take a vacation and leave town.
• Both parties continue to call Sequestration budget 'cuts', in spite of the fact that even under its strictures, the government will spend more money this year than it did last year (which was more than the year before).
• Democrats continue to successfully blame Republicans for a failure to avoid this supposed disaster in spite of the fact that a Republican-controlled House has voted twice to amend it and a Democratically-controlled Senate has failed to vote on anything even vaguely related to it.
• Both Houses and Parties continue to ignore the simple solution of allowing the budget cuts of Sequestration to happen, but allowing the President or Departments heads involved to prioritize their own spending and cut accordingly rather than making across-the-board cuts.
• Almost everyone involved with this form of budget resolution wants to talk about the horrible impact that it will have on the recovery of the economy and with unemployment, when in fact all that it will do is to provide a reduction of 2.4% of what's expected to be a budget of some $3.8 trillion.
• Far too many would like you to believe that somehow the continuing problem of a $16 trillion debt that continues to grow because we're spending more money than we take in will go away if we just close some tax loopholes for individuals and corporations.  It won't!
• With very rare exceptions indeed, no one at any level of government will tell you what will actually happen if Sequestration occurs, though they are more than willing to set up 'straw man arguments' that have nothing to do with the process.  (My person pet peeve however, was the President talking about police and firemen being laid off if it occurs when these people are paid out of municipal and state budgets and not the federal budget that Sequestration affects.)

Since there appears to be no way to get the Executive or Legislative Branches of government to pay serious or proper attention to the actual state of fiscal affairs in this country, I therefore propose that we attempt to get what growth in the GDP that we can from turning these mostly made-up disasters into the same type of opportunities that they've done with made-up holidays.  

Oh sure, it will take them a while to get up to speed on which ones are best suited (and which might even require 3-day weekends), that's no reason not to get the presses rolling.  If they can't doing anything about addressing the fiscal crisis in this country in any meaningful way, the least they can do is let us properly celebrate their ineptitude  Let's face it, with just a little effort on the part of greeting card companies acros the nation, I'm sure that some cards with catchy slogans could be produced before the next Debt Celing deadline occurs.  

Perhaps the morons in the national legislature could even offer some phony baloney Stimulus dollars to someone other than a green energy company that the Chinese will eventually want to purchase so that we can get a tire or mattress sale (or two) in place, and move these Hallmark Disasters into true national prominence. 

TFP Column: Capital / Capitol Offenses

The English language can be rather tricky to work with, as anyone whose been in a hurry while using there, their, and they're can tell you.  Sometimes however, you don't even have to be in a hurry in order to become more than a little confused.  So I found out at least as I found myself working in the wee hours of the morning on a piece for the TFP website entitiled "Capital / Capitol Offenses" detailing some of the things going on in our national legislature in our nation's headquarters.  I won't try to explain that confusion to you, as the explanation itself might confuse you.

On the other hand, my guess is that you will find today's release of the TFP "Star" edition far less confusing than any of my efforts.  I suspect that without contradiction, I can go even further and predict that far less confusion is also likely to be found in this weekend's edition of Toledo's largest Sunday circulation  and Ohio's best weekly newspaper for years; the Toledo Free Press.

TFP Column: SOTU 2013

Once upon time, the State of the Union speeches were at least supposed to mean something, but those days are long gone.  I would personally like to see us go back to the Jeffersonian period when Thomas would send them in written form.  Today they are slightly less entertaining than listening to back-to-back monologues by all of the late night hosts.

It was with this in mind that I listened to the President's entire State of the Union speech last night, plus not only Mark Rubio's Republican response but Rand Paul's Tea Party response.  For the record, you are not obligated to thank me for the time and sleep that I lost; but you probably should thank me for at least trying to separate the wheat from the chaff.

This week's harvesting yielded this week's TFP effort:  "SOTU 2013", whose title is about as interesting as the hour long, 78 applause breaks, no laugh track performance by the Commander-in-Chief.  

Fortunately for you, this will probably be the least interesting part of the Star and weekend edition combined.  But don't take my word for it, go online youself to catch up with Toledo's largest Sunday circulation newspaper and Ohio's Best Weekly newspaper of the year ... The Toledo Free Press.

 

Fiscal Cliff or Debt Ceiling - Confusion of Terms

It seems like everyone is talking about the country going over the Fiscal Cliff; and most of them like to use the same "Thelma and Louise" movie reference for this December 31st event that I've often used for the entire process of how the government deals with borrowing and spending money.  Of course I would have thought that going over a cliff was a bad thing (since both Thelma and Louise attained room temperature as a result of this last drive), but maybe I'm just a little confused.  Silly me.  It appears that both sides preaching their share of doom and gloom only do so they could steal my Hollywood reference to describe what would happen if the country were forced to plummet into the depths of the horrible, the evil ... "Sequester".  (The Bastards!  I mean geez, it's not like I get a lot of original ideas, and the one I do get they steal.)

Now Sequester, for those of you who have buried your heads in the sand for the last couple of years and don't understand it (which is apparently quite a lot of you), is the agreement to automatic tax increases and budget cuts that Democrats and Republicans consented to when they discovered that they didn't have the testicular fortitude to come up with another piece of duct tape to hold on the budget band aid that holds on the actual band aid that holds in place the government budgeting process.  Sequester was meant to be the Armageddon which no one wanted, but which would be required of the nation if the D's and R's once again could not agree on how much money the nation should take in and how much it should spend.  This horror would involve the end of previously agreed to tax cuts (you know, passing a tax increase without actually voting on one) and across the board spending cuts (which can be overruled by new legislation passed as soon as possible after the Sequester occurs).  This way, legislators of both parties can tell you that Sequester is bad (in spite of the fact the they created it as an alternative in the first place), that higher taxes are bad (in spite of the process letting tax cuts expire), and that spending cuts are bad (in spite of the making them automatically part of the Sequester).  

By the way, can anyone tell me why tax cuts are always temporary, but tax increases are permanent?  It almost seems that legislators are saying that increasing taxes is good, hence their permanence; and tax cuts are bad and should only be allowed to exist temporarily and when no other alternative exists.  Of course, we all know that this can't be the case.  After all, they've told us so.

Not surprisingly, much of the current budget jury-rigging came about not because of the Fiscal Cliff negotiations currently stalled; but because of the fact that the annual budget process and the  Debt Ceiling have failed to reach any effective conclusion for the last couple of years.  The Debt Ceiling, lest we forget, is the credit limit on the ability of the government to borrow.  The Annual Budget of course, is the money that the government spends each year.  Since we continue to spend more each year than we take in through tax revenues, the need arises regularly to raise the limit of the amount of money that the government is allowed to borrow in order for it to write the checks on money that it doesn't have.  

Interestingly enough, the only things that the two parties of experienced legislators (perhaps too experienced, if you know what I mean) were able to agree on during previous Budget and Debt Ceiling debates was to go ahead continue to spend more than we were taking in for a while longer (called 'Kicking the Can'), and to let the country borrow more money than it ever had in the past. (Though curiously these days, most of that debt is not purchased by the Chinese as politicians on talk shows would like to have you to believe; but by the Federal Reserve, which simply goes out and prints more money in inflationary spiral that makes that debt worth less in a process which it also ignores.)  After years of intransigence. obstinancy, and belligerence, these same legislators decided to threaten themselves with the formidable prospect of Sequester in the future in order to convince us that their continue lack of serious action in the present was a plan and not simply a failure failure of leadership. 

The result of this lack of fiscal responsibility going into the 2010 election was that Republicans took back control of the House; I suppose in the hope that such Armageddon could be avoided (and scrubbing the Bruce Willis / Ben Affleck shuttle mission).  Since then, the House has regularly passed budgets bills that at least attempt to address the reining in of the expansion and out-of-control spending of government, mostly to no effect since the Senate refuses to vote on the House proposals.  Of course their efforts at responsibility are performed in so timid a fashion as to be unrecognizable as such, but they should get credit for at least trying.  Instead however, its members are pilloried for sending the Senate weak-kneed spending reforms that are demonized by the majority party in the Senate as 'draconian cuts' and attempts to throw mom off a cliff. 

Meanwhile, in what is supposed to be the more deliberative Senate, no actual deliberation takes place, mostly because the Senate Majority Leader Reid won't allow it to.  (The Senate in fact has failed to pass an annual budget for almost four years, in spite of requirements that it do so.)  Out-of-hand rejecting the ideas of the House (too far to the right) and the President (too far to the left), the Majority Leader is apparently incapable of coming up with anything of his own that might be 'just right'.  He instead appears content to sit quietly with his gavel and mumble to himself "My Precious" while not Rome, but the entire nation burns around him.  (My personal belief is that Senator Reid's stubbornness may be part of an advertising contract in which he receives a fee for using his manner and appearance to draw attention to the upcoming release of  "The Hobbit: An Unexpected Adventure", which opens in theaters on December 14th.  Unfortunately, this may be a long running contract, as the movie is expected to have two sequels.)  Some say in Harry's defense that budgets coming from the House Republicans couldn't be voted on because the R's have thus far refused to compromise by replacing their own ideas with those of the D's; but that seems a rather lame excuse when a bi-partisan effort in the Senate rejected the last proposal of the leader his own Democratic party by a vote of 99 to 0.  

So if all of this appears confusing, don't feel bad ... it actually is.  You're not alone in having difficulty understanding this confusion of policies, described by terms that tells us that we are now going to go over a cliff in part because we are unable to agree on a budget that keeps us from hitting a ceiling.  You're likewise far from alone in confusion over the fact the end of the year will see us being forced into mandatory tax increases and spending cuts by two political parties who will tell you that both of these concepts, singularly or together, are an anathema not to be tolerated and the last thing that they want to see done in this country (except of course, for reaching agreement on any sort of alternative).