How Does This Statement Make Sense?

Yesterday I posted an article that included the following:

…Newly-elected Rep. Rashida Tlaib (D-MI) also endorsed impeaching Trump on her first day in office, according to The Nation, which described Tlaib as calling for “immediate steps” to remove the president from the White House.

“Each passing day brings more pain for the people most directly hurt by this president, and these are days we simply cannot get back. The time for impeachment proceedings is now,” Rep. Tlaib declared.

I really am confused about how this president is hurting people. I am further confused by looking at Representative Tlaib’s statement in view of some economic news that was reported today.

For instance, CNN is reporting today:

US employers added 312,000 jobs in December, well above what economists expected and underlining that the American economy remains strong despite recent market turbulence.

The unemployment rate rose to 3.9% as more people were looking for work. It had been at a 50-year low of 3.7% for two of the last three months.

Employers added 2.6 million jobs in 2018, compared to 2.2 million in 2017. Revisions to the October and November estimates added an additional 58,000 jobs to the 2018 total.

…Paychecks grew as employers raised wages to attract new workers. Average hourly pay was up 3.2% compared to a year earlier. The average number of hours people worked also edged up.

…The unemployment rate rose because more than 400,000 people joined the labor force looking for jobs. The percentage of the working-age people in the work force matched a five-year high.

“Yes, the nation’s unemployment rate rose to 3.9%, but for the best of reasons,” said Mark Hamrick, Bankrate.com senior economic analyst. “That’s a deal we’ll take if more people are participating in the workforce.”

The chart that I watch to see how things are going is from the Bureau of Labor Statistics. It is the chart of the Workforce Participation Rate. It indicates how many Americans are actually part of the workforce. This is the chart:

Note that we have reached the 63.1 percent participation rate only three times since 2014. When President Obama took office, the rate was 66.2. By the time President Obama left office, the rate was 62.7. That was after the federal deficit doubled due to the stimulus package that was supposed to create jobs.

The House of Representatives has a choice–they can either join in the efforts of President Trump to improve the American economy and the lives of American workers, or they can do everything they can to slow it down. Unfortunately, the new rules they are putting in place will bring us laws and policies that will slow the economy down. That is unfortunate–Americans deserve better, even though they elected these people.

The Real Numbers

Yesterday Investor’s Business Daily posted an editorial about the federal deficit and federal revenues. The numbers tell a very different story than the one the media would have you believe.

The editorial reports:

The latest monthly budget report from the Congressional Budget Office shows the deficit jumping $102 billion in just the first two months of the new fiscal year.

…A true apples-to-apples comparison, the CBO says, shows that the deficit climbed by just $13 billion.

So, no, the deficit is not soaring.

The editorial explains:

In fact, the CBO report shows that overall tax revenues climbed by $14 billion in the first two months of the year, compared with the same months last year. Which means they continue to hit new highs.

The CBO report shows that combined income and payroll taxes were the same in the first two months of the new fiscal year as they were last year. That’s even though far less money was withheld from paychecks thanks to the Trump tax cuts.

It also found that corporate income taxes went up by $5 billion. That’s despite the “massive corporate tax giveaway” that Democrats want to repeal.

Why are these revenues flat or up? Simple: The tax cuts help spur accelerated economic growth, which create jobs and spark income gains. More workers and higher wages mean more tax revenues. On the corporate side, a bigger economy means more profits, which even when taxed at lower rates can produce more revenue. This is exactly what advocates of Trump’s pro-growth tax cuts said would happen.

Meanwhile, revenue from “other sources” climbed by $8 billion. (To be clear, at least some of that $8 billion came from the re-imposition of ObamaCare’s nefarious tax on insurance premiums, which Congress had suspended the year before.)

But while revenues climbed by $14 billion, spending in the first two months of the new fiscal year climbed by $27 billion.

The obvious solution to the deficit problem is to limit spending. If we can’t agree on that, we could lower taxes again to increase revenue further, but I suspect that would really cause some Congressional heads to explode.

The Numbers Tell The Story

Yesterday Investor’s Business Daily posted an editorial about the growing federal deficit. The numbers in the editorial tell the story of what is actually happening:

Each month the Treasury Department releases its tally of federal spending and revenues. The most recent data are through the month of August. Since the federal government starts its fiscal year in October, the latest report includes all but one month of the 2018 fiscal year.

What do the data show?

Through August, the federal deficit topped $898 billion. Over the same period last year the deficit was $674 billion.

So, the deficit is running $224 billion higher this fiscal year compared with last.

But the Treasury data also show that federal revenues through August totaled $2.985 trillion. That’s an increase of $19 billion over the previous year.

In other words, despite Trump’s massive tax cuts, federal revenues are running higher this year than last.

The problem is that federal spending has climbed even faster. Through August, outlays totaled $3.88 trillion. That’s $243 billion more than the prior fiscal year.

…The Treasury data show that while corporate income tax receipts are down, individual income tax revenue is up by $100 billion — a 7% gain — over last year. Payroll taxes are up by $5 billion. Revenues from excise taxes and customs duties are also up.

So, while corporations are paying fewer taxes, they’re hiring more workers and paying them more, which is generating additional income and payroll taxes. This is exactly what advocates of the tax cuts predicted would happen.

As Kudlow explained in his remarks, increased growth has “just about paid for two thirds of the total tax cuts.”

The article goes on to illustrate that government spending is totally out of control. Until the spending drops, the deficit will not decrease. Those of us who voted for Republicans expected them to stop the runaway spending. If they continue to spend like drunken sailors, they will lose their majority.

The Real Numbers About The Budget

This is a picture of the federal budge deficits over the years:

federaldeficitsthrough2016The chart and other related information can be found here.

On Saturday, Conservative Treehouse posted an article about an aspect of the federal budget under President Obama that you may not be aware of.

The article reports:

The last federal budget was signed into law in September of 2007 by President George W Bush for fiscal year 2008.  Since then the entire mechanism of the federal government has been carried out by continuing resolutions, raises in the debt ceiling, and unfettered spending.

Absent of an actual federal budget, all spending falls under a process called base-line budgeting to determine allocation.  Federal distribution of the money within the continuing resolution, is essentially a year-over-year expenditure with a statutory increase based on inflation.  Essentially, whatever was spent in 2009 was respent in 2010 along with a little bit more.   What was spent in 2011 was a little more than ’10, and so forth.

In February 2009  congress passed the American Recovery and Reinvestment Act, or ARRA, commonly referred to as Obama’s stimulus plan.  The stimulus was just shy of one trillion ($986 billion +/-).

At the time of passage this single stimulus expenditure reflected a growth of approximately 20% in total federal spending.  The spending went directly into the deficit.

Approximately 30% of that “one time” trillion dollar stimulus was spent in 2009, the remaining 70% was spent in 2010.  (*note fiscal years run from October 1st to September 3oth annually).

However, absent a federal budget -and because of baseline budgeting- it became a repeated expenditure in each of the following fiscal years.

The $1 Trillion Stimulus was spent eight more times.

The article points out that most Americans cannot tell you what the stimulus was spent on. President Obama put money into the Department of Education to subsidize state education and teachers’ salaries, keeping the teachers’ union happy.

The article reports:

The key point is the $1 trillion 2009 “stimulus” funds, became a tool for President Obama to use in whatever cabinet office need he saw.

So long as congress never passed an actual budget (and the traditional budget appropriations process kicked in), he would always have this massive amount of extra money to play with.  Obama, Pelosi and Reid ensured there was never going to be a budget.

As the economy somewhat gained footing (2012), for the last several years a lot of the money appears to have been spent on propping up ObamaCare and hiding the structural financial collapse.

If Obama didn’t have this extra $1 trillion at his disposal, ObamaCare would have already collapsed.  If you were wondering why ObamaCare didn’t collapse, well, there’s your answer.

This scheme worked brilliantly so long as Team Obama could kick-the-budget-can into successive years.  They did.

…Remember: #1) Obama’s trillion stimulus was a +20% jump in federal spending which has continued year-over-year since 2009, #2) most of that money is now spent on propping up Obamacare via the insurance corridor reimbursement program.

…That $1 trillion in annual expenditure is what initially kept government at full size when originally passed in ’09.  It then transmogrified into a slush fund two fiscal years later, and ever since about 2012 it’s been a way for Obama to fund his priority list – and the UniParty congress has done nothing about it; because, well, essentially, congress agrees with what it’s being spent on.

It’s a staggering amount of money, $986 billion.  If Trump/Ryan eliminate the worst aspects of ObamaCare they can save a massive amount of that expenditure.  However, beyond that – it shows you just how much money can –and hopefully will– be cut out of government by that elimination alone.

It would be wonderful to have a Congress and a President who want to bring federal spending under control, but I am not convinced yet.

A Reasonable Plan To Balance The Federal Budget

According to the U.S. Constitution, all spending bills originate in the House of Representatives. Therefore, constitutionally the House of Representatives controls government spending. In recent years, voters concerned about the amount of government spending and the rapidly increasing federal deficit have sent people to Congress that promised to shrink government and cut spending. Evidently there is something in the water in Washington, D.C., because as soon as those elected representatives get to Washington, they forget why there were elected. There are a few exceptions, but they are few. One Representative may have the answer to this problem.

On Friday, the Daily Caller posted an article about legislation introduced on Friday by Iowa Republican Rep. Rod Blum.

The article states:

Iowa Republican Rep. Rod Blum introduced legislation Friday that would decrease congressional members’ salaries annually until the national budget is balanced.

Lawmakers’ pay would be docked 5 percent the first year and an additional 10 percent each year after, according to the legislation. The Fiscal Responsibility Act of 2016 would restore compensation levels upon the closure of the deficit.

Representative Blum explained that there need to be consequences when Congress mismanages resources. In the private sector, there are consequences. Thus far, in Congress there are not consequences. That needs to change.

This Is Pathetic

The graph below is from an article posted today at the Washington Examiner. It illustrates the national deficit over the past few years. Please look at the graph carefully.

So why is this graph posted here? President Obama has stated, “I’m proud that since I took office, we’ve experienced the fastest period of sustained deficit reduction since the end of World War II.”

I would like to quietly point out that he reduced the deficit after he tripled it. (That is somewhat like being against the war after you were for it.) The deficit is still higher than it was when he took office. Statements like the above are one reason Americans cannot afford to be low-information voters. I am sure that there are many people who totally believe that President Obama has reduced the deficit during the time he has been in office. Those people need to see this graph.

Policies Have Consquences

Yesterday The Daily Caller posted an article detailing some of the impact President Obama’s policies will have on the federal deficit after he leaves office.

The article states that during the remainder of President Obama’s term, the deficit should shrink. That is the good news. However, all of the news is not good.

The article reports:

…The bad news is the deficit begins spiking again in 2017, the year Obama’s successor will be sworn into office, before returning to $1 trillion a year in 2025.

All that red ink comes without another Great Recession, with the country’s biggest wars supposedly ending, without any new big-ticket spending items.

The article explains the reason for the increasing deficit:

Medicaid spending will be double what it was when Obama took office, thanks in part to Obamacare. Spending on the health care exchanges, a mere $15 billion in 2014, will be just under $100 billion annually in only two years.

Between 2016 and 2025, the Obamacare Medicaid expansion will cost $920 billion and $1.1 trillion on health insurance subsidies. That’s a rounding error away from $2 trillion.

…The baby boomers’ retirement isn’t Obama’s fault. The fact that the major federal retirement programs are all still structured the way they were for the baby boomers’ parents and grandparents is partly his fault. And the costs of Obamacare are almost entirely his fault (Congress deserves its share of the blame too).

It is very obvious that the first step to solving this problem should be to abolish ObamaCare and return healthcare and health insurance to the private sector. That will not solve the entire problem, but it would be a big step forward. Let’s see if the new GOP majority in Congress is willing to do that. If not, it’s time to elect a different GOP majority.