Boom, boom, boom, boom – the US deficit and debt continue to explode

In honor of John Lee Hooker’s famous lyric, which is played at the beginning of “NCIS – New Orleans” and in the movie “Blues Brothers,” a good wake-up call for our US deficit and debt is “boom, boom, boom, boom.” Please note, this is not the trade deficit, which is overblown as a problem as we are more of a consumer nation. This is due to our government spending far more than they take in revenue.

Per the following introduction in a Bloomberg News article, “U.S. Budget Gap Balloons to $739 Billion Despite Tariff Revenue,” we have an escalating problem.

“The U.S. budget deficit widened to $738.6 billion in the first eight months of the fiscal year, a $206 billion increase from a year earlier, despite a revenue boost from President Donald Trump’s tariffs on imported merchandise.

The shortfall was 38.8% more than the same period a year ago, the Treasury Department said in its monthly budget review released on Wednesday. So far in the fiscal year that began Oct. 1, a revenue increase of 2.3% hasn’t kept pace with a 9.3% rise in spending.”

Right now, our US debt tallies more than $22 trillion and was expected to increase by $10 trillion over the next ten years, before the tax cuts in December, 2017. Our fiscal year runs October through September, so this is the first fiscal year with full benefit of the tax cuts. The Congressional Budget Office forewarned the tax cuts would increase the debt by $1.5 trillion over the next ten years over the already projected $10 trillion. That will put us closer to $34 trillion at that time.

Yet, Americans were told by the president and favorable politicians that the CBO was wrong and growth would accelerate enough to pay for the debt using the assertion “the tax cuts will pay for themselves.” Per the Committee for a Responsible Federal Budget, tax cuts do not pay for themselves, with the best historical result being in the neighborhood of 30%, but usually much less. That leaves 70% of the revenue reduction adding to the deficit in the best of times.

The reasons for the increase in deficit are increases in military, healthcare and interest cost spending, which have overshadowed the revenue increases due to the longest running economic growth period in the US. Even the worst budgeter amongst us knows, we should be paying down debt when times are good, not increasing it. Sadly, the economy has begun to slow some, so the tax cutter’s rosy projections of 4% and above growth have not materialized (except in an isloated quarter) and economists are expected  lower growth rates than the current 3% per annum the rest of the year.

Per The Concord Coalition, the above Committee for a Responsible Federal Budget and the Simpson-Bowles Deficit Reduction plan from December, 2010, we must solve our deficit and debt problem through spending cuts and revenue increases (tax increases) both. The math will not otherwise work. If any politician, no matter how smugly, tells you otherwise, they are not be honest with you or are misinformed themselves.

To be brutally frank, I said so then, but the tax cuts passed in December, 2017 were malfeasance in my mind. We borrowed from our future to make a pretty good economy a little better. It was also hypocritical. Former Freedom Caucus members got elected saying the previous $5 trillion, then $8 trillion, then $13 trillion debts were abhorrent. Now, when it is just below $22 trillion, they pass a bill that increases it even more.

When I raised this with a Freedom Caucus staff member, he curtly told me the CBO is often wrong and they are wrong on this. My push back was simple. These folks do their homework to try and get it right. And, what I have found in my 40 years of adult life, is politicians hail the CBO when their number agree with their decision and call them on the carpet, when they don’t. Yes, it is a projection, but these folks try to be apolitical.

Folks, we have a problem that is not getting talked about enough. We must cut spending and raise revenue. My GOP friends have ceded their fiscal stewardship mantra – that is highly unfortunate. My Democrat friends need to question every candidate on how they plan to pay for their ideas and what they plan to do about the debt. We cannot have Medicare for all if we cannot pay for it.

So, let’s get real and ask politicians some pointed questions. If we don’t, John Lee Hooker will sing even more loudly. “Boom, boom, boom, boom.”

 

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Coal can’t be made great again says conservative economist

Walter Block is a professor of economics at Loyola University in New Orleans and a Libertarian. He recently penned an op-ed piece in The New York Times called “Coal can’t be made great again.”

Block sets the context for free-market thinking using more basic purchases – shoes, clothes, restaurant meals. This “leave it to the market forces” is a mantra for free-market Republicans. Yet, as Block notes “One would think that Republicans would apply that same logic to our fuel industry.”

He adds while government has a “legitimate role” in ensuring the safety of nuclear and other plants, “it should not favor, or oppose, nuclear power, gas, oil, coal, wind, water, solar, or any other source of energy over any other.”

He also notes a couple of observations of data points which reveal “the market is moving away from coal.” First, he writes “In 2016, American reliance on coal had dipped to 30% of total electric energiy expenditure, from about 50% in 2000. In contrast, natural gas and even wind, solar and water power are becoming less expensive, and will likely take on a greater share of the overall energy industry.”

Second, he notes “For the first time, as predicted by the Institute for Energy Economics and Financial Analytsis, in April, renewables generated more electricity than power plants fueled by what was once called ‘King Coal.'”

It is through these lenses, he views the efforts to subsidize coal use and place tariffs on imported solar panels as a political attempt to “pick winners.” We should not be “propping up coal” at the expense of alternative energy sources.

In my view, we are passed the tipping point on coal. New plants are too costly to build and the present value cost of acquiring, transporting, burning, storing the ash, health and environmental degradation and litigation of coal exceeds other sources. Further, the solar energy jobs are 4x the number of coal jobs. And, wind energy is soaring in growth, especially through the plains states.

This is not a US-centric result. Renewables are growing rapidly abroad with Germany now getting more energy from renewables than coal. China has been heavily investing in solar panels. But, my favorite global example is southern Australia is now solar powered using American Elon Musk’s battery storage and a French company’s installation of solar panels. Three continents came together to forge a renewable future.

While I agree with Block for the most part, government can play a role to help move forward cleaner energy initiatives, at least temporarily. So, the temporary 30% tax credit for solar power installation makes sense, especially when our Department of Defense continues to cite climate change as a significant threat to national security, even under the current president.

But, as the renewable costs have become more on par from a production standpoint, they can stand on their own without the tax subsidy. Embracing future technologies that will drive the economy is essential. As an example, yesterday, Toyota announced the movement from 2030 forward to 2025 when 1/2 of their vehicle sales will be electric cars, with batteries being made in China. So, if our leaders look backwards too much, we might get passed by.

 

 

 

 

Stable genius

A few quotes to ponder:

“I am a stable genius,” said Donald J. Trump on several occasions, most recently after he threw a tantrum to abruptly end a meeting to discuss infrastructure.

“You have been telling me you are a genius since you were seventeen. In all the time I have known you, I still don’t know what you mean,” sang Steely Dan in “Reeling in the Years.”

“We were out-prepared,” testified former Secretary of State Rex Tillerson under oath to the Senate Foreign Relations Committee as he described a meeting between Putin and Trump.

More colorfully, Tillerson commented while Secretary of State after the President changed his mind again, “He is a f**king moron.”

Testifying under oath to a House Committee, Michael Cohen, Trump’s former lawyer and fixer said “Donald Trump is a racist, he is a con-man and a he is a cheat.”

“You will have to do a deal with the European Union,” said German Chancelor Angela Merkel eleven times in one sitting to Trump until it finally sank in he could not do a trade deal just with Germany.

“Donald Trump lies every day even about things of no consequence,” said former Trump attorney Thomas Wells.

Finally, former National Economic Advisor Gary Cohn said after witnessing the President lie about what he said to the Australian Prime Minister, “He is a prodigious liar.”

Lastly, at 60 years-old, I am hard pressed to recall a very smart person bragging on how smart he or she is. These folks need not brag.

I could go on, but that will give you a sense. The title of this post depict two words that are not top of mind to me to define the US President – stable or genius.

Legislators do your job – I have a dream

I have a dream of legislators working together. I have a dream that leaders like McConnell, Pelosi, Schumer, McCarthy and Pence will sit down with a to-do list and find common ground to pass needed legislation to help people. Stabilizing healthcare costs and addressing the opioid crisis, addressing deteriorated and needed infrastructure, providing better job retraining and community reinvestment, addressing the risks of climate change and addressing the increasing deficit and debt are a few priorities.

It is a dream I have. You may not agree with my priorities, but I hope you share my dream of our legislators being more concerned with doing their jobs than keeping their jobs.

Note: The above letter was forwarded to my newspaper opinion page. Please feel free to modify and use.

The time has come

It is reported the ice caps are melting at a faster rate than predicted. Coastal cities have seen increasing days of sunny day flooding. Extreme flooding is occurring as larger weather systems are stalling. And, drought areas are seeing more severe drought and forest fires are larger and more frequent.

The time has come to move forward in a concerted manner to address climate change. Efforts to waylay climate change actions must be highlighted and remedied. This should not be a political issue, but the fossil fuel industry has its foot on too many politicians’ throats.

That must change. I believe people who see the problems occurring now must act. Ask every politician what they plan to do about climate change. If the person gives a trite, dismissive answer, say that is not an acceptable answer.  The problem exists and we need to do something about it.

Even an older GOP Senator from Iowa called the President on the carpet for his “idiotic” comment about wind energy. When the President said wind mills cause cancer, Senator Chuck Grassley said that was “idiotic” and added that he was the “father of wind energy tax credits.” It should be noted Iowa gets 1/3 of its electricity from wind energy. That is forward thinking, but is not new. Oil tycoon T. Boone Pickens said wind energy was the future about eight years ago, once we bought time with natural gas. We have.

The time has come. Do not worry about being passionate as we need more fervent action.

A few green thoughts for a green day

In honor of St. Patrick’s Day, here are a few green thoughts for the day. Green will take a few different meanings herein.

– Let’s give a big shout out to the kids around the world who went on strike from school to bring awareness to the need for more action on climate change. I am certain they will receive push back from the fossil fuel funded crowd, but these kids care about the future and present of our planet.

– Let’s give a shout out to the twenty kids suing the US Federal government for insufficient action on planning the demise of fossil fuel in response to what they already know about climate change. As this unheard of case progresses, the lead attorney told CBS’ “60 Minutes” that their information is very solid and comes from the files of the US government.

– Let’s give a shout out to Germany and places like Georgetown, TX, Greensburg, KS and Burlington, VT. Coal energy now lags renewable energy in Germany as they are on their way to eliminating coal use in twenty years. As for the three US cities, they are 100% renewable energy powered.  The CPA Mayor of Georgetown said the renewable energy model selected is more cost-effective than the fossil fuel model – so it is saving greenbacks as well.

– Let me state my being green with envy as China is investing a trillion US dollars in building trade corridors with dozens of countries around the world. This is occurring at the same time the US is retrenching from its global leadership role, leaving global multilateral agreements, denigrating allies and spending money to build a wall for an overstated problem. The symbolism is stark – China is building bridges, we want to build walls. The US is enabling an ascendant China.

– Let me close with a shout out to people with chutzpah to set forth a Green New Deal. While not perfect, it is an idea worth discussing to fashion a plan going forward.   Ignoring a problem does not constitute a plan.

Happy St. Patrick’s Day. May the road rise to meet you.

 

What if an event in history did not happen – Part II

A few years ago, I wrote a post asking the question, what if certain events or outcomes did not happen. The premise is to think how other events may have been impacted. The post was more US-centric, so I would like to follow-up with a more global set of questions.

– What would have happened if the Mongols had continued their western push deeper into Europe?

– What would have happened if Roland and his successors were unable to push the Muslim expansion out of Europe?

– What would have happened if Apartheid in South Africa had not been pressured out of existence?

– What would have happened if China had not retrenched from its sea-based expansion as they focused on domestic problems?

– What would have happened if the British acquiesced and signed a truce with Germany and Italy rather than continue the fight in WWII?

– What would the Americas look like if the Mayans continued their existence?

– What would have happened if some tangible semblance of the Roman Empire continued to exist well beyond its demise?

That is plenty to ponder. Pick one or two and let me know what you think? To my way of thinking, there are lessons even for today.