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Daily Archives: November 9, 2012

Simple Math

Let’s take a minute and look at some simple math about the Federal Budget. Just as a mental exercise to keep some things in mind as we approach the fiscal cliff.

The 2012 Federal budget—a word I use very advisedly, since there wasn’t an actual, you know, budget—as enacted, spent a total of $3.59 trillion.  Of that amount, total mandatory spending was $2.252 trillion. Discretionary spending, i.e., those things in the federal budget that can be arbitrarily changed without changing federal law, was $1.338 trillion. So, 63% of expenditures is mandatory spending which can’t be touched without changing Federal law.

On the revenue side, when you tote up all the taxes, excises, fees, etc., the Federal government collected $2.469 trillion. So, in 2012, once mandatory entitlements were covered, there was a grand total of $217 billion to fund the entirety of the remaining Federal government. The result was a deficit of $1.1 trillion.

So, to boil it down to the simplest terms, our current revenue is just enough to cover our mandatory spending, and about 1/3 of the defense budget. Everything else is funded solely through deficit spending.

When the Bush-era tax rates are raised in January, we will finally stick it to those rich SOBs and get the money they owe us. That will provide a massive influx of tax revenue in the amount of…uh…$42 billion in 2013. By the Democrats’ estimate. Which means the deficit will be slashed from $1.1 trillion to $1.058 trillion.

Ta da!

Every little bit helps, I guess.

Assuming the economy grows, and revenue keeps pace with the increases in mandatory spending. Which I’m not sure I’d bet a lot of money on.

~
Dale Franks
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Economic Statistics for 9 Oct 12

Here are today’s statistics on the state of the economy:

Wholesale inventories rose sharply, up 1.1% in September, but is offset by a 2.0% rise in sales, leaving a leaner 1.19 stock-to-sales ratio.

Export prices were unchanged in October, and are down –0.5% on a year-over-year basis. Import prices rose 0.5%, but only 0.4% year-over-year.

Consumer sentiment is strengthening, up 2.3 points to another recovery best of 84.9.

~
Dale Franks
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Zombie “climate change” returns

It is quotes like this that drive me crazy:

“Climate scientists agree the Earth will be hotter by the end of the century, but their simulations don’t agree on how much. Now a study suggests the gloomier predictions may be closer to the mark. … That means the world could be in for a devastating increase of about eight degrees Fahrenheit by 2100, resulting in drastically higher seas, disappearing coastlines and more severe droughts, floods and other destructive weather.”

First, some “climate scientists agree”, not all.  Some climate scientists actually disagree.  In fact, quite a few.

Second – their simulations have been shown to be factually invalid.   They can’t even recreate the past.  Yet here we have a newsie asserting, by fiat, that they’re valid and the only problem we face is figuring out “how much” is “right” from these hopelessly flawed models.

Finally, a “new study” based on these flawed models predicts even more extreme consequences than most.  Wow … there’s a surprise.

Zombie climate apocalypse continues to stagger on. Why? Because it will be used as a basis to claim we need a carbon tax. Government is not going to miss the opportunity to create a revenue stream out of thin air no matter how questionable the “science” supporting such a power grab remains. It has paid it’s grants, gotten the “science” it paid for and now plans to cash in.

~McQ

In reality, it’s all about math

And we know we’re a nation of math scholars – NOT.

Seriously though, you shouldn’t have to be a math scholar to understand what constitutes unsustainable fiscal conduct. We seem to be a nation in denial. So was Greece and reality didn’t pay a bit of attention to their desire to ignore the math that put them in the situation they now enjoy. We, however, continue to think we’ll be an exception to reality.

Good luck with that. From Zero Hedge:

The amount of debt required today to create a single dollars’ worth of GDP today is clearly unsustainable. However, the current Administration has been increasing Federal debt at a run rate of more than $1.2 Trillion annually to date. The understanding of the impact of increasing debt on economic growth is crucially important to understand.

As we discussed recently in “Debt and Deficits: Killing Economic Prosperity” it is “the economic impact of spiraling debt levels that have eroded economic growth. Debt is, by its very nature, a cancer on economic growth. As debt levels rise it consumes more capital by diverting it from productive investments into debt service. As debt levels spread through the system it consumes greater amounts of capital until it eventually kills the host.

But:

The current Administration, however, is trapped into the belief that “big government” is the solution to the long term economic ills. However, a simple look at the impact of debt increases on economic growth tells us that this approach is misguided.

It is not “misguided”, it is flat wrong. And there are tons of examples to make the point. But, we’ve just seen the status quo given another 4 years to redefine “unsustainable” into something from which we can’t recover (btw, 4th quarter GDP has been downgraded to 1.5%).

The good news?

Well the good news is “lady parts” will be “safe” for those 4 years unless, of course, the unsustainable crashes and then, well, I guess the Sandra Flukes of the world will have to find a new provider of contraception.

~McQ