January 5, 2010

Not News: 4Q09 Treasury Collections Down 11% from Previous Year

65343-Down-graph

Despite six months of positive economic growth, Treasury collections are continuing what is now a serious two-year downward slide.

In August, the Congressional Budget Office projected that collections during the fiscal year that will end on September 30, 2010 will be $2.264 trillion (PDF; page 2 at link). That’s $159 billion, or about 7.5% higher, than fiscal 2009′s final total of $2.105 trillion.

There’s a problem. Unless there’s a surprise when the final numbers come out next week, Uncle Sam’s receipts for the quarter that just ended, i.e., the first quarter of the 2010 fiscal year, are already $60 billion behind the previous year. Somehow, this is not news.

Through November, as seen here, collections were already behind last year by about $40 billion ($268.9 bil vs. $309.6 bil). From all appearances, December was little better, as its estimated take of $218 billion trailed last year’s $237.8 billion.

So here’s my estimate, based on previous Monthly Treasury Statements and December’s final Daily Treasury Statement, comparing this year to 2008 and 2007:

UST4Q09Receipts

The chart also shows that to get back on track with CBO’s projection for the full year, receipts from January through September of 2010 will have to beat the same period in 2009 by 14.1%. I would suggest that my beloved and cursed Chicago Cubs have a better chance of winning next year’s World Series than Treasury has of collecting almost $220 billion more than it did the previous year in the coming nine months.

If the American people had any idea (and most don’t) that collections have seriously declined for two years running, and that this year’s decline is even worse than last year’s (4Q08 trailed 4Q07 by “only” 9%), much of what little enthusiasm remains for statist health care and further “stimulus” efforts would vanish.

It’s not unreasonable to believe that this is precisely why the establishment press is pretending that Uncle Sam’s cash collections crunch is not important.

Cross-posted at NewsBusters.org.

Lucid Links (010510, Morning)

Filed under: Lucid Links — Tom @ 6:36 am

Larry Kudlow is optimistic that the economy “is coming back,” which confirms my assessment last week that the “rebound” claimed as a done deal by Jeannine Aversa of the Associated Press in her review of 2009′s top stories is anything but that.

Kudlow also cites two items of what he calls “false prosperity:

I’m calling it a “mini boom” because we’re likely headed toward 4 to 5 percent real economic growth. That’s not as good as the 7 to 8 percent boom that followed the similarly deep recession of the early 1980s. Then again, Reagan slashed tax rates and Volcker stabilized the dollar. That’s not happening now. Gold has jumped from around $700 to $1,100, signaling higher inflation in 2010 and even more price increases in 2011.

But we know from recent data on retail sales, personal income, corporate profits, industrial production, business investment, and jobless claims that the economic patient is healing.

…. The biggest source of economic stimulus is not the $800 billion Obama spending package. It’s the $4.6 trillion of capital gains thrown off by the stock market over the past three quarters. This is investment money, and it also enhances consumer spending. As a result, jobs are likely to start rising early in 2010.

The second-biggest stimulus is the Fed’s zero-interest-rate policy and ballooning balance sheet that has poured about $1.5 trillion into the economy. How the Fed exits from this remains to be seen. The longer it waits, the more inflation-prone the coming boom will be. So there’s a false prosperity here, or at least one that raises skepticism about the longer term.

And with marginal tax rates going up in 2011, the top 5 percent of successful earners and investors are going to bring their income forward next year in order to beat the tax man. That’s even more false prosperity.

Given that the economy is less than 40% of the way back to where it was before the POR (Pelosi-Obama-Reid) Economy kicked in during the summer of 2008, it’s going to be at least a couple of quarters before anyone can try to claim there has been a “recovery.” But that won’t be enough either, because it will take another quarter or two beyond that to get real per-capita GDP back to where it was in the second quarter of 2008. THAT and that alone will represent a real recovery.

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Speaking of economy-improving items for which the Obama administration can claim no credit:

(The Semiconductor Industry Association) said the rise in personal computer sales may signal the beginning of a recovery in demand from businesses, which have lagged behind consumers. That trend has gotten a boost from the release of Microsoft Corp.’s latest operating system, Windows 7.

By far, the strongest year-over-year sales growth came in the Americas, which posted a gain of nearly 26 percent. Sales in Asia Pacific countries grew 12.8 percent.

The fact that Microsoft did a terrible job with Vista held back and hurt the economy for almost three years. The fact that Microsoft has apparently done a very good job with Windows 7 will greatly help it. Even as a Mac user, that’s a good thing to see.

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It’s a cliche that “no good deed goes unpunished.” In “Whatever happened to the Duke 88?” at Powerline, we learn that seemingly no bad deed goes unrewarded.

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Don’t miss the 2009 edition of Patterico’s LA Times/Dog Trainer year in review. It’s excellent as usual, and it largely explains why circulation at the Times dropped by double digits again during the last reporting period.

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Venezuela, which is swimming in oil, is nonetheless literally descending into darkness:

Venezuela begins 2010 with electricity rationing

A decree published on Christmas Eve states that commercial centers may operate from 11:00 am to 9:00 pm on the electricity grid, but beyond that establishments would have to operate off-grid, using their own generators.

Venezuela is flush with oil — the country’s primary export — and natural gas, but relies mainly on hydroelectric generation to meet domestic energy demand.

Yeah sure, it’s the mean old drought that’s doing this. Nope; it’s the socialism.

If Venezuela were a free-market economy, the drought’s immediate impact would have been to push up electricity prices which would in turn have moderated demand. In relatively short order, electric utilities would search for substitutes like the plentiful natural gas (or would already have a substitution mechanism in place), which would make more electricity available and further moderate price increases.

But since prices are controlled and inflexible, and there’s no incentive to spend the money to develop or use alternatives, the government has instead resorted to rationing. It’s another sign that for all its wealth, Hugo Chavez could yet turn his country into Cuba writ large.

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While we’re on Venezuela, this item from a couple of weeks ago bears mentioning:

Chavez announces new discount ‘socialist’ stores

President Hugo Chavez on Tuesday announced a new chain of government-run, cut-rate retail stores that will sell everything from food to cars to clothing from places such as China, Argentina and Bolivia.

“We’re creating Comerso, meaning Socialist Corporation of Markets,” Chavez said at the opening of a “socialist” fast-food location for traditional Venezuelan arepas (cornbread).

“They’ll see what’s good. We’ll show them what a real market is all about, not those speculative, money-grubbing markets, but a market for the people,” said Chavez in his drive to change Venezuela from a market-based economy to a socialist one.

…. The socialist retail outlets will serve the public alongside the Mercal supermarket chain, which sells subsidized food in Venezuela’s working-class neighborhoods.

Here are some questions about this “public retail option,” so to speak:

  • Do you think Comerso will have to pay the same income, property, business, and other taxes Mercal pays?
  • Do you think health and safety regulators will be as tough on Comerso as they will be on Mercal?
  • Will injured workers or dissatisfied consumers have the same rights to sue Comerso as they have to sue Mercal?
  • Especially if Mercal holds its own against Comerso for a time, how long will it be before Comerso lowers its prices below cost and relies on government subsidies coming partially from taxes Mercal has paid to unfairly compete?

Finally, if all of this strikes you as terribly unfair to Mercal and other private retailers and as something designed to put them out of business (and it should), how is this any different from the U.S. government setting up a public option in health insurance with analogous advantages to unfairly compete against existing insurers?

Positivity: A Christmas miracle after all

Filed under: Positivity — Tom @ 5:57 am

From Jackson County, Florida:

Published: December 23, 2009

The mother of the teenager who was pinned between two trucks in a Jackson County accident Saturday is calling her son’s survival and recovery a Christmas miracle.

Kristian Torano, 14, was retrieving a coat from his family’s truck when another pick-up backed into him in the McDonalds parking lot on State Road 71, just south of the Marianna city limits.

The driver, Ronald Phillips, 50, of Altha, is charged with improper backing.
But the boy’s mother, Tatiana Torano, isn’t focusing her thoughts on blame or anger.
Instead, she vividly remembers that the driver’s wife held her, prayed and cried with her as paramedics prepared to take her son by helicopter to Tallahassee Memorial Hospital.

In the immediate aftermath of the accident, Torano learned that some caregivers thought her son’s leg or foot might have to be amputated, that his femoral artery might be severed, that his pelvis might be cracked, and that he might be paralyzed.

None of those fears were realized, however.
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