An “additional income tax to the upper brackets, folks earning more than $200,000 or $250,000,” could fund more troops, Levin, a Michigan Democrat, said in an interview for Bloomberg Television’s “Political Capital With Al Hunt,” airing this weekend. White House Budget Director Peter Orszag has estimated that each additional soldier in Afghanistan could cost $1 million, for a total that could reach $40 billion if 40,000 more troops are added.
That cost, Levin said, should be paid by wealthier taxpayers. “They have done incredibly well, and I think that it’s important that we pay for it if we possibly can” instead of increasing the federal debt load, the senator said.
I wish I can say that $40 billion for an Afghanistan troop surge sounds like a lot of money, but after the $700 billion TARP bill last fall, the $787 billion stimulus bill in February, the $400 billion omnibus bill in the spring and the record $1.4 trillion deficit for the 2008-2009 fiscal year as well as the looming $800+ billion climate change bill, the looming $800+ billion health care reform bill and the $12+ trillion debt, $40 billion is peanuts. I'm happy to hear that the senator is concerned with increasing the federal debt load, but isn't it a little too late for fiscal responsibility? Does the cliche "stepping over a dime to save a penny" come to mind?
Unemployment is already high; raising their taxes won't help. What concerns me more is that eventually someone will have to pay for all of these new bills and programs, as well as the old existing ones, and the politicians will need more than just these wealthy taxpayers to do it. Will there come a day when we will be forced to turn over all of our wealth to them? If so, we will be slaves of the state.
Friday, November 20, 2009
Monday, November 9, 2009
Si vis pacem, para bellum
Here's a question for you. Who said in so many words the best way to avoid war is to be prepared for it...Ronald Reagan or Hugo Chavez? Would you believe both?
Reagan is credited with saying, "The defense policy of the United States is based on a simple premise: The United States does not start fights. We will never be an aggressor. We maintain our strength in order to deter and defend against aggression - to preserve freedom and peace."
Bloomberg reported in a November 8, 2009 news article, “Generals of the armed forces, the best way to avoid a war is to prepare for one,” Chavez said in comments on state television during his weekly “Alo Presidente” program.
Were they both right or both wrong? Reagan was not satisfied with the status quo U.S.-Soviet relationship of MAD and detente. He promoted a stronger defensive position that ultimately led to the demise of the Soviet Union and the fall of the Berlin Wall which happened twenty years ago today. Was there an ensuing peace with the Soviet Union? Do we still have it two decades later?
The U.S. agreement with Colombia, giving American troops access to seven Colombian bases is part of an effort to “strengthen and increase ties with countries in the region,” Robin Holzhauer, spokeswoman for the U.S. Embassy in Caracas, said by telephone. “We’ve done that with governments who want to have partnerships with us.” Colombia has said the agreement would help combat drug trafficking. Apparently, Chavez isn't buying it.
How much can nations increase their defenses without planting seeds of war in the minds of their neighbors? Will this U.S. agreement with Colombia start another mini-detente with Venezuela?
Reagan is credited with saying, "The defense policy of the United States is based on a simple premise: The United States does not start fights. We will never be an aggressor. We maintain our strength in order to deter and defend against aggression - to preserve freedom and peace."
Bloomberg reported in a November 8, 2009 news article, “Generals of the armed forces, the best way to avoid a war is to prepare for one,” Chavez said in comments on state television during his weekly “Alo Presidente” program.
Were they both right or both wrong? Reagan was not satisfied with the status quo U.S.-Soviet relationship of MAD and detente. He promoted a stronger defensive position that ultimately led to the demise of the Soviet Union and the fall of the Berlin Wall which happened twenty years ago today. Was there an ensuing peace with the Soviet Union? Do we still have it two decades later?
The U.S. agreement with Colombia, giving American troops access to seven Colombian bases is part of an effort to “strengthen and increase ties with countries in the region,” Robin Holzhauer, spokeswoman for the U.S. Embassy in Caracas, said by telephone. “We’ve done that with governments who want to have partnerships with us.” Colombia has said the agreement would help combat drug trafficking. Apparently, Chavez isn't buying it.
How much can nations increase their defenses without planting seeds of war in the minds of their neighbors? Will this U.S. agreement with Colombia start another mini-detente with Venezuela?
Friday, November 6, 2009
Recessions & unemployment
I enjoyed the irony from today's AP.
"The unemployment rate has surpassed 10 percent for the first time since 1983 — and is likely to go higher. Nearly 16 million people can't find jobs even though the worst recession since the Great Depression has apparently ended."
Apparently ended? How do those newly unemployed people feel about the apparent end of the worst recession since the Great Depression? Is it even the worst recession since the Great Depression?
One of the rule-of-thumb definitions of a recession is two consecutive down quarters of GDP; by that definition the current recession started in the fourth quarter of 2007 which is not in dispute. If you assume that a recession ends after two consecutive up quarters of GDP, as AP apparently does, then we are "out of the woods" so to speak because the first, second and third quarters of this year saw changes in GDP of -6.4%, -0.7% and +3.5%, respectively; the last two quarters are "up".
While 3.5% is historically strong and -0.7% is a big shift in the right direction from -6.4%, it is driven primarily by private investment, namely residential investment which grew at 23.4% in the third quarter of 2009. This is probably due to a large number of people buying homes that were overpriced for years and the first time homebuyers tax credit. As the price of anything falls, more of it is purchased. However, this same residential investment figure had been negative (an average of -20%!) from the first quarter of 2006 through the second quarter of 2009. Wouldn't it be good to see a few more consecutive up, if not positive, quarters of residential investment specifically, private investment generally, private consumption and overall GDP before we conclude that the recession is over? (Government investment and consumption also factors into GDP, but what it invests and consumes must first be taken from the private sector.)
Also, if this is the worst recession since the Great Depression, then what was the 1983 recession? In 1983, unemployment was just as high and reached even higher (10.8%) before trending back, and inflation and interest rates were much higher then too (10.3% & 21.5%). Shouldn't we wait for numbers similar to or higher than these before we say that this recession was the worst? Well, since it's apparently over now, I guess it was not the worst recession.
Furthermore, "Congress sought to address the impact of long-term unemployment this week by approving legislation extending jobless benefits for the fourth time since the recession began. The bill would add 14 to 20 extra weeks of aid and is intended to prevent almost 2 million recipients from running out of unemployment insurance during the upcoming holiday season. President Barack Obama is expected to quickly sign the [$24 billion]legislation."
Do these people realize that this is essentially a loan...and a buyoff? They probably do not know or don't care, but I bet Congress does. This President and Congress have already spent $1.4 trillion more this year alone than has been taken into the treasury. Since they don't have the money now, it must be borrowed or printed. Who has to pay back this loan or deal with the inflation down the road? The same people getting the "benefits" and their children will pay it back. Congress also has to keep the electorate happy at least until next November.
If the recession is over and unemployment remains high, then is this not a jobless recovery similar to the one over which Bush presided in his first term? Hiring usually lags behind GDP growth and that played out after the last recession. Will a similar recovery occur now?
"The unemployment rate has surpassed 10 percent for the first time since 1983 — and is likely to go higher. Nearly 16 million people can't find jobs even though the worst recession since the Great Depression has apparently ended."
Apparently ended? How do those newly unemployed people feel about the apparent end of the worst recession since the Great Depression? Is it even the worst recession since the Great Depression?
One of the rule-of-thumb definitions of a recession is two consecutive down quarters of GDP; by that definition the current recession started in the fourth quarter of 2007 which is not in dispute. If you assume that a recession ends after two consecutive up quarters of GDP, as AP apparently does, then we are "out of the woods" so to speak because the first, second and third quarters of this year saw changes in GDP of -6.4%, -0.7% and +3.5%, respectively; the last two quarters are "up".
While 3.5% is historically strong and -0.7% is a big shift in the right direction from -6.4%, it is driven primarily by private investment, namely residential investment which grew at 23.4% in the third quarter of 2009. This is probably due to a large number of people buying homes that were overpriced for years and the first time homebuyers tax credit. As the price of anything falls, more of it is purchased. However, this same residential investment figure had been negative (an average of -20%!) from the first quarter of 2006 through the second quarter of 2009. Wouldn't it be good to see a few more consecutive up, if not positive, quarters of residential investment specifically, private investment generally, private consumption and overall GDP before we conclude that the recession is over? (Government investment and consumption also factors into GDP, but what it invests and consumes must first be taken from the private sector.)
Also, if this is the worst recession since the Great Depression, then what was the 1983 recession? In 1983, unemployment was just as high and reached even higher (10.8%) before trending back, and inflation and interest rates were much higher then too (10.3% & 21.5%). Shouldn't we wait for numbers similar to or higher than these before we say that this recession was the worst? Well, since it's apparently over now, I guess it was not the worst recession.
Furthermore, "Congress sought to address the impact of long-term unemployment this week by approving legislation extending jobless benefits for the fourth time since the recession began. The bill would add 14 to 20 extra weeks of aid and is intended to prevent almost 2 million recipients from running out of unemployment insurance during the upcoming holiday season. President Barack Obama is expected to quickly sign the [$24 billion]legislation."
Do these people realize that this is essentially a loan...and a buyoff? They probably do not know or don't care, but I bet Congress does. This President and Congress have already spent $1.4 trillion more this year alone than has been taken into the treasury. Since they don't have the money now, it must be borrowed or printed. Who has to pay back this loan or deal with the inflation down the road? The same people getting the "benefits" and their children will pay it back. Congress also has to keep the electorate happy at least until next November.
If the recession is over and unemployment remains high, then is this not a jobless recovery similar to the one over which Bush presided in his first term? Hiring usually lags behind GDP growth and that played out after the last recession. Will a similar recovery occur now?
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