While many are complaining about the recent debt-ceiling deal, is it really the issue? Sure, statists say that the Republicans steered us toward crisis with their initial unwillingness to compromise, while traditionalists complain that the GOP folded and “let us down again.” Our problems, however, lie not in our politicians but in ourselves.
Just so you know, my solution to our spending woes would be to once again limit the central government to only that which our Constitution dictates it may do, which would cause its budget to immediately shrink by at least two-thirds — and probably far more. Of course, this would involve eliminating bureaucracies such as the Department of Education, Environmental Protection Agency, and Equal Employment Opportunity Commission, and programs such as Social Security and federally provided food stamps. There would be nothing to fear, either, as there is much duplication here; for example, states have their own environmental and education agencies and other bureaucracies/programs that render the feds’ corresponding ones redundant. And why are we paying for two different levels of government to do the same thing? As for third-rail program Social Security, it could be devolved to the states, whose residents could then decide what its future would be.
The U.S. Postal Service (USPS), which has been cited for decades as a case study in government inefficiency, waste, and top-heavy bureaucracy, has announced that it will make deep cuts to its staffing, as well as overhaul the generous benefits package it provides to employees. According to the Federal Times, the USPS will cut 120,000 workers — about a third of its work force — by 2015. In addition, the government agency is seeking to set up its own health benefits plan for postal workers, as well as eliminate pensions for new employees.
“The Postal Service is essentially bankrupt and will run out of cash next month, which is forcing it to take drastic steps to cut costs,” reported the Federal Times. In a draft document of the plan, one USPS official waxed candid about the agency’s dire financial state, noting: “If we were a private company, we already would have filed for bankruptcy and gone through restructuring — much like major automakers did two years ago.”
Almost everyone is aware that the federal government pays farmers not to grow certain crops. But not many know that taxpayers are also being forced to pay airlines to fly empty planes. It’s true. According to the Associated Press, the $200 million federal Essential Air Service (EAS) program subsidizes airline service to less populous areas of the country; and because it does so on a per-flight — not per-passenger — basis, airlines sometimes fly empty planes back and forth just to keep the free funds flowing.
EAS was created in 1978 as an outgrowth of airline deregulation — deregulation, like most words, not meaning the same thing in Washington as it does outside the Beltway. Some in Congress believed that airline service to rural areas was so critical that it had to be maintained even if it was unprofitable to airlines; and who better to take on an unprofitable venture — and guarantee its continued unprofitability — than Uncle Sam?
University of California at Berkeley professor Severin Borenstein, one of the designers of EAS, told the AP that “Congress originally intended for the program to end after 10 years.”
Tea Party activist Ryan Rhodes confronted President Obama publicly at a town hall meeting in Iowa and demanded to know whether or not Vice President Joe Biden did in fact call Tea Partiers “terrorists” during the debt ceiling debate. Reports indicate that Obama did engage in a “heated back and forth” with the activist but refused to directly answer the question.
On August 1, Vice President Joe Biden and a number of other House Democrats issued a verbal lashing to Tea Party Republicans, accusing them of having “acted like terrorists” in the fight over the debt ceiling.
According to Politico, Biden was “agreeing with a line of argument made by Rep. Mike Doyle,” who said, “We have negotiated with terrorists. This small group of terrorists have made it impossible to spend any money.” Biden later made a similar statement, “They have acted like terrorists.”
Against the backdrop of price inflation reaching six percent, the unemployment rate touching five percent, the increasingly large holdings by foreign governments of dollars (that at the time were convertible into gold upon demand) and his desperate need to get reelected, in August, 1971 President Nixon conferred with his economic advisers about how to solve the inflation problem without taking any blame for it.
The meeting was precipitated by the demand from the British ambassador “who showed up at the Treasury Department to request that $3 billion [of paper dollars] be converted into gold. At that moment in time, the amount of “cover” — the amount of gold held in Fort Knox as a percentage of outstanding paper dollar claims against it — had declined from 55% to 22% — leaving the Treasury desperately close to default. The economic advisers surrounding Nixon knew that “shutting the gold window would weaken the dollar against other currencies, thus adding to inflation by driving up the price of imported goods,” but they moved ahead anyway. And so was born the Nixon lie, delivered just as the Asian markets were opening on Sunday night, August 15, 1971. Here are the relevant parts of the lie:
Finally, some good news about the economy, from an unlikely place: North Dakota. CNNMoney reported that while the United States' economy grew at less than 3 percent last year, North Dakota’s grew by more than 7 percent. And with national unemployment over 9 percent, in North Dakota it is just over 3 percent (and hasn’t touched 5 percent there in more than 20 years).
The prime driver is the discovery of vast untapped but recoverable oil reserves in the Bakken Formation, along with improved technology, which is allowing entrepreneurs to obtain access to it: fracing (or fracking). Luke Popovich, a spokesman for the National Mining Association, explains: “North Dakota has a lot of untapped shale oil, and developing that field [has] attracted a lot of investment and a lot of employment into the state.”
The Bakken Formation is an oil shale deposit located two miles below ground, and reaches from western North Dakota into eastern Montana and up into Saskatchewan, Canada.
Many suspect leftist billionaire George Soros of having profited from Standard & Poor's recent downgrade of the U.S. credit rating. According to ETF Daily News, an “invisible trader” bet nearly $1 billion that the rating would be downgraded. Kenneth Schortgen of the Examiner notes:
While the identity of the "mystery investor" remains unknown, many indicators do point to George Soros as the principal benefactor. First, Soros has been tied to the Obama administration since the 2008 elections. In February of this year in fact, a Soros investment fund profited well on President Obama’s new green energy policies.
Secondly, right about the exact same time as the $1 billion bet took place on the US credit rating downgrade, Soros made public the move to divest his management fund of outside investors, and quietly go private. This move allows him to make trades and investments without being required to notify the SEC under the new Dodd-Frank act passed in Congress last year.
The Italian government revisited its plans for handling the nation’s gaping public debt problem. On Friday, Prime Minister Silvio Berlusconi said that tax increases and spending cuts would both be in the new austerity plan. The tax increases included a “special levy” on income above €90,000 per year as well as tax increases on income from financial investments. More specifically, there would be a surcharge of 5 percent on incomes above €90,000 and a 10-percent surcharge on incomes above €150,000. The tax rate on financial income would increase from the current level of 12.5 percent to 20 percent. The government also pledged to crack down on tax evasion.
The spending cuts were directly largely at local government. Giuseppe Castiglione, head of the Union of Italian Provinces, almost immediately bemoaned the government cuts, which he said would fall most heavily on direct services to Italians: "When you talk about municipalities, you're talking about social services, when you talk about provinces, you're talking about schools, security at school, local roads."
An analysis just released by the Federal Reserve Bank of San Francisco concludes that most of what Americans spend on consumer goods, electronics, clothing, sneakers and the like, stays in America. Surprisingly little comes from China after all. Say the authors:
Goods and services from China accounted for only 2.7% of U.S. personal consumption expenditures (PCE) in 2010…Chinese imports make up only a small share of total U.S. consumer spending…
Athough globalization is widely recognized these days, the U.S. economy actually remains relatively closed. The vast majority of goods and services sold in the United States is produced here. In 2010, imports were about 16% of U.S. GDP. Imports from China amounted to 2.5% of GDP.
The Little America Hotel in downtown Salt Lake City was abuzz with activity and excitement when your reporter arrived on July 14 for the opening of the U.S. & China Trade, Culture & Education Conference 2011. Throngs of Chinese delegates and journalists packed the lobby, while still more delegates from the People’s Republic of China (PRC) disembarked from limousines and tour buses at the hotel entrance. The scene was much the same across the street at the hotel’s pricier corporate sister, the Grand America Hotel, which served as the main venue for the National Governors Association Annual Meeting and U.S.-China Governors Forum.
My first order of business was to pick up my press credentials for the Trade, Culture & Education Conference, which was being sponsored by the American & Chinese Friendship Promotion Society. Unfortunately, I arrived at the credential room a few minutes too late; the man in charge had closed up and departed for the afternoon, taking the press badges with him. Mine would be available the next morning, in time for the main events, his assistant assured me. In the meantime, the assistant said, since he had seen my name on the list of officially approved journalists, I could use the press badge of Le Yeng, a Chinese journalist who had not shown up, to get into the afternoon’s remaining events.