constitutionalley.us

Yesterday, the New York Times had this to say about S&P’s downgrading of U.S. debt:

Amid Criticism on Downgrade of U.S., S.&P. Fires Back

The day after Standard & Poor’s took the unprecedented step of stripping the United States government of its top credit rating, the ratings agency offered a full-throated defense of its decision, calling the bitter stand-off between President Obama and Congress over raising the debt ceiling a “debacle.” It warned that further downgrades may lie ahead.

[snip]

Officials at the White House and Treasury criticized S.& P.’s move as based on faulty budget accounting that did not factor in the just-enacted deal for increasing the debt limit.

But we can do that! Factor-in, that is.

Here’s the latest upgrade/update to the deficit and debt calculator:

which is available here for downloading and personal tracking of OUR debt.

Well, that sure makes a difference. . .NOT! Before any of the “big” cuts factor-in, we’ll be another $2.50T in the hole. S&P is correct in saying that Congress has basically done nothing to reduce America’s deficits and borrowing requirements. And when you keep on going deeper into debt without an increased capacity to pay, your credit rating goes down. That’s the way it’s supposed to work, you “Officials” at the White House and Treasury, you!

By the way, the “Daily Burn Rate” is derived by dividing the change in Public Debt since the end of the last fiscal year by the number of days since the close of that fiscal year. The Public Debt for the end of fiscal 2011 is the arrived at by adding the burn-rate times days-to-go to the Treasury number for the Public Debt on the date under consideration.

This September, while you’re following the Pennant races, I’ll be following the Debt Race. Oh well, such is the price of a misspent adulthood.

But back to the issue at hand.

What does the “World” think of all this? Let’s ask Brian Williams to enlighten us:

Visit msnbc.com for breaking news, world news, and news about the economy

Did that help?

And, how do Americans view the responsiveness of those charged with our governance? Here’s a recent survey from Rasmussen:

New Low: 17% Say U.S. Government Has Consent of the Governed

Sunday, August 07, 2011

Fewer voters than ever feel the federal government has the consent of the governed.

A new Rasmussen Reports national telephone survey finds that just 17% of Likely U.S. Voters think the federal government today has the consent of the governed. Sixty-nine percent (69%) believe the government does not have that consent. Fourteen percent (14%) are undecided. (To see survey question wording, click here.)

The number of voters who feel the government has the consent of the governed – a foundational principle, contained in the Declaration of Independence – is down from 23% in early May and has fallen to its lowest level measured yet.

This is getting very ugly, folks. Maybe even 1860-ish ugly.

For those of you interested in doing some Social Security and Medicare funding shortfall forecasting, I have some new spreadsheets available for said purpose:

• Social Security OASI & DI, Old-Age & Survivors Insurance and Disability Insurance, is here.
• Medicare HI, Part A Hospitalization Insurance, is here.
• Medicare SHI, Parts B & D Supplemental Health Insurance is here.

As time goes on I’ll get more reference and explanatory documentation added to those.

For your convenience, once again here are the links to the 2012 OMB budget spreadsheets:

• 2012 Budget Outlays with subtotals & off-budget listed separately
• 2012 Budget Receipts with subtotals & off-budget listed separately

That should be enough to keep you busy ’til the end of the fiscal year! :)

Ciao, Dennis

Today, the Washington Times reports that. . .

U.S. eats up most of debt limit in one day

U.S. debt shot up $239 billion on Tuesday — the largest one-day bump in history — as the government flexed the new borrowing room it earned in this week’s debt-limit increase deal.

The debt subject to the statutory limit shot way past the old cap of $14.294 trillion to hit $14.532 trillion on Tuesday, according to the latest the Treasury Department figures, which are released on the next business day.

That increase puts the government already remarkably close to the new debt limit of $14.694, which means one day’s new borrowing ate up 60 percent of the $400 billion in space Congress granted the president this week.

That didn’t take long.

If we put that information into our new, improved – and corrected – debt calculator, we get the following:

So, it appears as though we’re on target for our fiscal year-end debt total of $14.540T. Oops! The most recently reported debt total is $14.532T, so we’re nearly there already. And, we still have another two months to go until the end of the fiscal year. And, since our esteemed legislators raised the debt limit by only $400B before booking out of town, they’ll have more budget busting work to do when they get back from their well-earned summer respite. Right? You would think they could have cut themselves a bit more slack.

Given this new information, it’s fairly certain that the deficit for fy2011 will come in at something greater than the originally forecast $1.645T. Oh, well. . .

Wonder what’s next?

The whole nine yards:

2012 Budget Outlays with subtotals & off-budget listed separately

2012 Budget Receipts with subtotals & off-budget listed separately

Found an error in my calculation of total debt as of 09/30/11.

Will post updated information soon.

Doesn’t change any conclusions, just the timing.

Sorry ’bout that.

The Management.

Congressman Paul Ryan, chairman of the House Budget Committee, today in the Wall Street Journal asks the same question of President Obama:

Where’s Your Budget, Mr. President?

During the negotiations over raising the debt ceiling, President Obama reportedly warned Republican leaders not to call his bluff by sending him a bill without tax increases. Republicans in Congress ignored this threat and passed a bill that cuts more than a dollar in spending for every dollar it increases the debt limit, without raising taxes.

Yesterday, Mr. Obama signed this bill into law. He was, as he said, bluffing.

Nevertheless, the president still hasn’t shown us his cards. He still hasn’t put forward a credible plan to tackle the threat of ever-rising spending and debt, and his evasiveness is emblematic of the party he leads.

Apparently, as CNS News reports, the President has had other things on his mind:

“President Barack Obama said the weak economy in the United States could be blamed partially on international events and natural disasters, such as the March 11 earthquake in Japan.” 

Fair enough. But now, Mr. Ryan has negated all my hard work when he states that:

The president’s February budget deliberately dodged the tough choices necessary to confront the threat of runaway federal spending. It was rejected unanimously in a Senate controlled by his own party.

But, what set of numbers is Mr. Ryan using for his projections? Oh, they come from the CBO, Congressional Budget Office, and not the White House OMB, Office of Management and Budget. Also, essentially everything Mr. Ryan offers is presented as a percentage of GDP, Gross Domestic Product. Such as this:

Certainly is “frightening” but doesn’t tell us very much, Mr. Ryan. Where are the spreadsheets so we can ascertain your plans for cuts in specific line items such as Capitol Police outlays, up from a $120m in ’01 to $366m in ’10 with $397m “budgeted” for ’12? Over a third of a billion dollars just for safeguarding our esteemed legislators?

Hillary Clinton’s State Department empire has grown from $6.69b, when her husband was Prez, to $23.80b in ’10 with $32.48b scheduled for the next fiscal year. Whoa! And those pesky foreigners still don’t like us. Think we could save some money there.

How many federal employees will be terminated laid-off? What about Congressional salary cuts? Anything in the works there?

You can swim in the sea of OMB budget numbers yourself by diving in here. If you’re willing to suspend some of the Congressman’s disbelief, that is.

Whatcha got, Mr. Ryan? Your numbers, please!

* * *

Update: Here’s the latest from Rasmussen. . .

Just 22% Approve of Debt Ceiling Deal, Most Doubt It Will Cut Spending

Wednesday, August 03, 2011

Most voters disapprove of the debt ceiling agreement reached by the president and Congress earlier this week and most doubt it will actually reduce government spending.

A new Rasmussen Reports national telephone survey finds that just 22% of Likely Voters nationwide approve of the agreement while 53% disapprove. Twenty-six percent (26%) are not sure. (To see survey question wording, click here.)

Guess the American people, as Mr. Lincoln once wryly observed, aren’t all that easy to fool. You’d think somebody in Washington would catch on. But then, Mark Twain’s comments would indicate otherwise. :)

Received a video clip link from Family Security Matters wherein Congressman Paul Ryan justifies why he voted for the raising the debt ceiling. Was a bit chagrined when therein I learned that the cuts to, what I surmise are, the fy2012 and fy2013 budget outlays amount to only $21 billion and $46 billion respectively. What?! I thought we were talkin’ about $240 billion per year over ten years?

Well, of course, this requires an update to my handy Jim Dandy budget forecasting spreadsheet, so here it is:

So, after cutting only $21 billion out of fiscal 2012 outlays, we can still get past the election without having another debt limit crisis. Such a deal! The problem is we’ll be at least another $1.34 trillion in debt.

As I get more detail on the “Deal” I’ll update the number crunching and pass it along.

Have a good evening.

Ciao, Dennis

Good news this morning from the Wall Street Journal:

The deal would raise the debt ceiling by $2.4 trillion in two stages, and provide initially for $917 billion in spending cuts over 10 years. A special committee of lawmakers would be charged with finding another $1.5 trillion in deficit reduction, which could come through a tax overhaul and changes to safety-net programs.

If the committee doesn’t find at least $1.2 trillion in savings, or Congress doesn’t adopt its proposals, a pre-set array of spending cuts would kick in, including cuts in military spending and Medicare payments to health-care providers.

Or is it?

To find out, let’s get out our “Whoop-de-doo Budget Deal” Deficit & Debt Forecaster spreadsheet, a copy of which is available for downloading and your personal use here.

(Link is to spreadsheet updated & corrected 08/04/11. The one shown below is what was originally posted. See 08/04/11 post for corrected information.)

Note that the inputs have been set at 90% revenue growth rate factor and zero spending cuts. Considering the recent revenue history, the base forecast seems optimistic. That’s the reason for the adjustment. No attempt was made to forecast “intragovernmental” debt and that was assumed constant at the closing value for fy2010. The “Base” numbers are taken from the OMB fy2012 budget spreadsheets.

This is the acid test to see if the “Deal” has anything to do with fiscal sanity or is merely a ruse to get past the 2012 election. Sure enough, even if the economy continues to lag and none of the “cuts” are put in place quickly enough to affect the 2012 deficit, both political parties can make it under the election wire without having to again address the debt limit question prior to that looming referendum. Just political Theatre Kabuki as per usual.

But that Ol’ Man Deficit will just keep rollin’ along.

Perhaps you’d like to send this to your Congressperson? (spellcheck did accept that) That’s one way of letting him or her know you know more than they know. . .or will admit to.

Ciao, Dennis

P.S. “Happy August,” by the way.

UPDATE: From the WSJ editorial page:

A Tea Party Triumph

The debt deal is a rare bipartisan victory for the forces of smaller government.

“Triumph”? Rupert, get serious. Or don’t you read your own papers?

That is not as easy a question to answer as I have been thinking. While doing more exploring of the federal web sites, I came across a page at the GAO (Government Accountability Office) that informs as follows:

Measuring the Deficit: Cash vs. Accrual

In recent years, public debates and media reports have focused on the country’s financial position. This debate has historically focused on the budget deficit, also called the “cash deficit,” which reached a record of $1.4 trillion in fiscal year 2009. Because the budget deficit is primarily measured on a cash basis, we call it the cash deficit. However, another measure referred to as the accrual deficit also provides a useful perspective on the federal government’s financial condition. While the cash deficit closely approximates the federal government’s annual borrowing needs, the accrual deficit provides more information on the longer-term implications of the government’s annual operations.

Okay. That’s clear enough. But when I try to correlate the level of publicly held debt with the size of the deficits, I come up with the following (click to enlarge):

What’s wrong? As you can see, over the last ten years we have accumulated about $900 billion in publicly held debt over and above the accumulated deficits. If the “budget deficit” or “cash deficit” closely approximates the federal government’s annual borrowing needs, why is there a nearly $1 trillion discrepancy? I’m not an accountant, and I may be off base here, but in my mind something doesn’t seem to compute. And I don’t believe it has anything to do with recent Quantitative Easing. Those Treasuries end up in the Fed’s hands and I don’t think that counts as “Debt Held by the Public.”

Mr. Boehner? Mr. Reid? Mr. Frank? Mr. Sarbanes? Mr. Oxley? Mr. President?

Anybody?

I find it very difficult to disagree with someone, specifically Congressman Barney Frank (D-Mass.), who asks the same questions as those that pop into my head. The Republican establishment seems to have the same degree of difficulty understanding why they are unable to sell platitudes to the voting public that clash with past GOP actions, or more accurately, past inactions. Congressman Frank has on occasion turned criticism of such contradictions into political sport. For example. . .

While debating the federal financing of ACORN with Michele Bachmann on a May, 2009, “Lou Dobbs Tonight” show, the following exchange took place:

BACHMANN: And I think Congress has the fiduciary responsibility to set the bar very high for organizations…

FRANK: Well, I noticed, Lou…

BACHMANN: … that receive taxpayer money.

FRANK: I noticed that Congresswoman Bachmann didn’t answer your question. If it is wrong — and I’m appalled by some of what I’ve learned — why didn’t the Republicans — they were in the majority in Congress in fact until 2007. And George Bush was president. And when you had a Republican majority in both houses and George Bush is president, millions of dollars went to the ACORN housing counseling group.

Ms. Bachmann?

In October of 2009, Mssrs. Frank and Ryan had the following exchange during a Congressional hearing on health care reform:

I suspect that Congressman Ryan is still frustrated.

Regarding the disasters that are Fannie Mae, Freddie Mac and “Housing,” FOX News broadcast the following report a couple of weeks after the September, 2008, financial meltdown:

Responding later, the ever loquacious Mr. Frank is once again not at a loss for words:

Rebuttal, anybody? Anything to add, Mr. Oxley?

Here’s a quick summary of Mr. Frank’s positions over the years

It will be interesting to see what Frank will say someday regarding the budget deficit crisis currently engulfing us. After all, the acceleration in deficit spending did start when George W. lowered taxes, instituted the Medicare prescription drug program, exploded education spending with “No Child Left Behind,” as well as his continuing of the perennial policy of spending Social Security surpluses on other programs. The Republicans are not innocent bystanders when it comes to Congress’s dereliction of fiscal responsibility. They’ve aided and abetted same when it suited their purposes. After all, hasn’t Obama reminded us that GOP hero Ronald Reagan raised the debt ceiling 18 times during his 8-year tenure in the Oval Office? That’s approximately once every 5.33 months. (No wonder David Stockman quit!) So what’s the problem?

The problem is that both the Democrats and establishment Republicans are pointing fingers at the Tea Party-supported members of Congress who are the only ones committed to not kicking the fiscal can down the road. We are at a unique point in history and politics as usual will not work. As the Fram filter ads once said, “Pay me now or pay me later.” The longer we delay paying the price for our financial profligacy, the worse it will be.

Mr. Boehner? Please don’t hand Mr. Frank more talking points. . .however disingenuous he may be.

Speaking for “Everyman”. . .

What part don’t you understand, Mr. Boehner?

Thank you for your thoughts, Mr. Garvin.

h/t: Cliff S.

From today’s Wall Street Journal ‘Morning Brief’:

July 27, 2011 — 9:00 a.m. EDT

Boehner Plan Faces Rebellion

House Speaker John Boehner, facing a rebellion among conservative Republicans and questions about the amount of spending cuts in his plan for raising the borrowing limit, abruptly postponed a vote on the measure scheduled for Wednesday.

The delay added further confusion less than a week before a possible government default. It was a setback for GOP leaders who had promoted Mr. Boehner’s plan as the best way to raise the debt ceiling while cutting the deficit.

The jolt came late Tuesday, when the Congressional Budget Office said the plan, which was intended to initially cut $1.2 trillion in spending over 10 years while raising the debt limit by $900 billion, would in fact cut only $850 billion from the latest spending projections.

I don’t have access to the up-to-the-minute ‘spending projections’, so let’s take a peek at what the fy2012 White House budget tells us:

Or, you can get the table directly from the OMB here.

Guess those pesky, recalcitrant, budget-bashing Tea Partiers see things the same way I do. How’s cutting even $1.2 trillion out of the budget over 10 years, i.e., $120 billion per year or thereabouts, do much to reduce deficits projected to total $3.77 trillion over the next 5 years?

And that’s only if the revenue projections hold!

Note that since topping out in fy2007, receipts have fallen and remained relatively flat at an average of around $2.15 trillion. The the forecast for fy2012 shows receipts jumping back up by about $450 billion to a level higher than the 2007 peak.

Think that’s realistic, Mr. Boehner? I don’t.

That’s why you have a Tea Party rebellion on your hands. They intend to keep their promises to their constituents. That’s why they’re called “Representatives.”