April 17, 2009

Seeing Red, Not Collecting Green, and ‘Going Galt’

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 11:42 am

Note: This column went up at Pajamas Media on Wednesday morning. The left just loooooooves it (/sarc). Truth hurts, guys. Also: See this BizzyBlog update.

_______________________________________________________

Why this year’s deficit will probably be even worse than predicted.

_______________________________________________________

On Good Friday, just ahead of Tea Party Wednesday, the Treasury Department delivered the latest news concerning Washington’s ongoing crucifixion of future generations’ financial well-being.

Straight from Uncle Sam’s March Monthly Treasury Statement, here is how the first six months of the federal government’s current fiscal year compares to last year:

DeficitsThrough6mosFY09v08

If spending continues at the rate seen during this year’s first six months, the government will exceed last year’s outlays on July 6.

There’s little reason to believe the spending spree will slow down.

Even in supposedly routine areas, outlays have ballooned. Here is short list of how some departments have been hemorrhaging dollars in comparison to last year:

  • The Department of Agriculture is up $9.9 billion, or 18%.
  • Defense (which, despite its importance, is in need of serious cost control) is up $23.5 billion, or 8%.
  • Health and Human Services is up $40.6 billion, or 12%.
  • Labor Department spending has more than doubled to $52.7 billion from $25.1 billion, largely reflecting its open-wallet approach towards bailing out state unemployment insurance funds.
  • The Social Security Administration is up $24.4 billion, or close to 8%.

Then there are the new spending monsters on the block. The Troubled Assets Relief Program (TARP) has disbursed $293.5 billion out of the $700 billion Congress authorized in early October. Much of it was “given” to banks with a (figurative) gun pointed to CEOs’ heads. There is strong evidence that Treasury Secretary Tim Geithner and Obama are refusing repayments from larger banks that want to get out from under the government’s current and imminent onerous terms. Does anyone want to bet against Geithner not forcing out the remaining $400 billion-plus to either the willing or unwilling?

Remember Fannie Mae and Freddie Mac? Those were the government-sponsored enterprises Barney Frank, Maxine Waters, and other Democrats said were in ship shape not too long ago. Through March, Frank, Waters et al have “only” been wrong to the tune of almost $60 billion the Treasury has spent to shore up whatever remains of those two entities. This amount, by the way, roughly matches the worst estimates of the total losses from Enron, with one important difference: Investors and employees primarily ate Enron’s losses. Taxpayers are on the hook for Fan and Fred. Does anyone seriously think those two entities are done draining the treasury?

Oh, and it’s going to get worse before it gets better (if it ever does). Not only has spending rocketed, but as you can see above, receipts have also fallen precipitously.

Just think: It was a bit less than a year ago at this time that we were celebrating the “Supply-Side Stunner,” the fact that Uncle Sam’s April 2008 tax collections came in at an all-time one-month record of over $400 billion. Those collections not only included final payments of 2007 taxes due, but also first-quarter estimated tax payments from individuals, many of whom are small- and medium-sized business owners. As I wrote at the time, “The increase may not only reflect that entrepreneurs and the self-employed had pretty decent years in 2007, but that many of them are thinking, in the face of relentless media harping to the contrary, that 2008 will be at least as profitable.”

At that point, there was every reason to believe that the economy, which had gone through a tough fourth quarter of 2007, was back on track towards resuming decent growth. Indeed, the first two quarters of 2008 had positive GDP growth, and the second quarter’s annualized 2.8% was far from tepid.

But then in mid- to late-June, along came the POR (Pelosi-Obama-Reid) Economy. The Democratic triumvirate’s intent to starve the nation of energy, regardless of the consequences, and newly-minted presidential nominee Barack Obama’s designs on punitively taxing 5% of the nation’s most productive in the name of redistributing money to everyone else, both became crystal clear. As a result, paraphrasing what I wrote at the time, businesses, investors, and entrepreneurs responded to the trio’s total lack of seriousness by battening down the hatches and preparing for the worst.

They haven’t stopped, which is why the POR Economy is now the POR Recession as normal people define it. It is also why tax collections have taken a dive.

March is supposed to be a big month for tax receipts from regular corporations whose years end in December. In March 2008 (go to Table 3 on Page 2 at the link), $32.6 billion poured in. This year? I’m not kidding: $3.4 billion. For the fiscal year thus far, corporate income tax collections are down almost 57%.

Through March 31 of last year, according to Treasury’s Daily Statement, “Individual Income and Employment Taxes Not Withheld,” which are largely payments made by the self-employed, partners, and those in S corporations whose income flows through to individual tax returns, are down about 13%, or almost $15 billion, from a year ago. These not-withheld taxes are what drove last April’s all-time collections record, which is definitely not going to repeat itself.

It’s clear that quite a few ordinarily industrious people “went Galt” months before the Tea Party movement even came into existence. As a result, fiscal 2009′s deficit could come in closer to $2 trillion than to the Obama administration’s estimate of $1.75 trillion, or even the Congressional Budget Office’s $1.85 trillion.

Pelosi, Obama, Reid, and their party created the conditions that led to this, and are primarily responsible for how bad things are. After months of doing everything to tear down everyone’s confidence, they are the ones who are going to have to figure out how to restore it. If they can’t, it would seem that the Tea Partiers, aka the voters, will find others who can, as soon as they can.

Lucid Links (041709, Morning)

Filed under: Lucid Links — Tom @ 9:15 am

Noteworthy Net-Worthies:

GM might be able to sell Saturn to one of those eeeeevil private-equity firms or a dealer group — If the government hadn’t intervened several months ago, this might have happened much sooner. Will Obama prevent this if he realizes how much small-car expertise might be leaving his Government Motors?

Carrying in something from a mini-dustup yesterday — The left fringe really doesn’t like your truly’s latest Pajamas Media column, even as it’s being proven correct. Specifically, as I wrote last night, “tax collections from individuals on April 15 in the ‘non-withheld’ and ‘individual income taxes’ line items amounted to $7.215 billion. Last year, same day (a Thursday instead of a Wednesday): $21.191 billion. That’s roughly a 66% drop. I wonder why? I would suggest that many of the most productive among us who pay their taxes directly have decided not to work so hard.” Further, last year’s collections from April 16-30 in those two lines were about $73 billion, while at the rate things are going, it will be a miracle if this year’s comparable figure is $50 billion (only $30 billion wouldn’t surprise me). I would say the arrows are pointing to me being right, and lefties being wrong.

They’re not going to like this Pajamas Media column by Raymond Ibrahim about the terrorists in training in Somalia — “What Piracy? This Is the Same Old Jihad.” On Sunday, while giving kudos to Obama for doing the right thing, I expressed the hope that Obama’s okay to take out the terrorists in training holding Richard Phillips hostage wasn’t “a one-trick testosterone display.” Well, the “pirates” have ramped up: “Wednesday, the gang that launched an abortive attack on a Long Island-owned ship loaded with food aid Tuesday said they were singling out American vessels and would kill their crews.” That’s a de facto declaration of war. The “four-point plan” of Hillary Clinton foolishly wants to use criminal law. Where’s Barry?

Further evidence of unseriousness — “I don’t believe Obama would intentionally endanger the nation, so it must be that he thinks either 1. the previous administration, including the CIA professionals who have defended this program, is lying about its importance and effectiveness, or 2. he believes we are no longer really at war and no longer face the kind of grave threat to our national security this program has protected against.” Read the whole thing.

The Department of Homeland Security issued its ‘extremism’ report despite civil liberties-based objections — “the department’s Office of Civil Rights and Civil Liberties raised objections about some of the language in the nine-page report before it was sent to law enforcement officials nationwide.” AP also has a story. Well of course they issued it. Civil liberties only matter to hard-leftists when they’re NOT in power. Janet Napolitano’s related “apology” to veterans is far from the unconditional “We were wrong, we are sorry” the situation demands — “”I know that some veterans groups were offended by the fact that veterans were mentioned in this assessment, so I apologize for that offense.” She’s essentially criticizing those she “apologized” to for being so thin-skinned. She also “stands behind the intent of the report,” which would appear to be part of a campaign to convince Americans that our real enemies aren’t those inside our country who celebrated the 9/11 attacks and are trying to perpetrate others. No-no-no, they’re prolifers, and people who want to control our borders, people who understand the original intent of the Constitution, and other “radicals.”

Walter Williams on Democracy and the Brakes Our Founders Put On It

Filed under: Quotes, Etc. of the Day,Taxes & Government — Tom @ 12:02 am

Mr. “Black by Popular Demand” makes some great points about built-in anti-mob rule features of the Constitution:

….. The founders of our nation held a deep abhorrence for democracy and majority rule. In Federalist Paper No. 10, James Madison wrote, “Measures are too often decided, not according to the rules of justice and the rights of the minor party, but by the superior force of an interested and overbearing majority.” John Adams predicted, “Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There was never a democracy yet that did not commit suicide.” Our founders intended for us to have a republican form of limited government where the protection of individual God-given rights was the primary job of government.

Alert to the dangers of majoritarian tyranny, the Constitution’s framers inserted several anti-majority rules. One such rule is that election of the president is not decided by a majority vote but instead by the Electoral College. Nine states have over 50 percent of the U.S. population. If a simple majority were the rule, conceivably these nine states could determine the presidency. Fortunately, they can’t because they have only 225 Electoral College votes when 270 of the 538 total are needed. Were it not for the Electoral College, that some politicians say is antiquated and would like to do away with, presidential candidates could safely ignore the less populous states.

Part of the reason our founders created two houses of Congress was to have another obstacle to majority rule. Fifty-one senators can block the designs of 435 representatives and 49 senators. The Constitution gives the president a veto to weaken the power of 535 members of both houses of Congress. It takes two-thirds of both houses of Congress to override a presidential veto.

To change the constitution requires not a majority but a two-thirds vote of both Houses to propose an amendment, and to be enacted requires ratification by three-fourths of state legislatures.

Positivity: ‘Angel’ saves man in blizzard

Filed under: Positivity — Tom @ 12:01 am

From Mullen, Nebraska:

Published: Sunday, April 12, 2009 4:13 AM CDT
World-Herald News Service

MULLEN – Groceries that needed to be picked up caused one man to drive to town, which enabled him to become an “angel in the snow” and save the life of another man on the way during the blizzard that hit the Sandhills on Saturday, April 4.

Travis Warren, 27, of Mullen, said he wanted to get to town to pick up some groceries a friend had picked up for him before he headed back out to do more calving.

“With the sun still shining, it didn’t look that bad,” he said. “I shouldn’t have been out in it, but I didn’t know that when I started out.”

Warren now knows there was a reason he went out into that blizzard that was much more important than groceries.

“I headed into town before dark and I happened to notice a car in the ditch,” he said. “I saw the door was open, so I thought I had better stop and check it out.”

When Warren got to the car, he nearly tripped over something next to the car.

“I parked my pickup and walked over to the car and found a man lying in a snowdrift next to his car,” he said. ” I didn’t see him until I was almost on top of him.”

Warren said he called home to have his family call for help then returned to his vehicle for coats.

“I always have a heap of coats in the back,” he said. “I grabbed the coats, got the man sat up and wrapped the coats around him.”

He couldn’t get the man up and into his car, Warren said, so he stayed with him there in the snow.

“I couldn’t get him picked up,” he said. “So I kind of bear hugged him until they got there. I was there probably a half-hour before help arrived.”

Warren lives 4.5 miles east of Mullen and found the man approximately half a mile west of his turnoff. He had been busy doing night calving before he took the break to go after the groceries.

“We were right in the thick of it Saturday night,” he said. “We probably had 50 calves on the ground and eight more were born that night.”

Warren said he didn’t do anything special, that the credit for saving the man’s life goes to the Sheriff’s department, the EMTs and the Department of Roads.

….. Warren said he had heard only that the man, who he knows only as “Jed,” is from Seneca and is probably “in his 40s” is “going to live.”

Go here for the rest of the story.