A Stitch in Haste

I rarely do "blog memes," but I'll chime in with my own contribution to "Porkbusters." Background here; see also here.

It wasn't at all hard to find the pork scored in the recent "Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users" (i.e., the Transportation Pork Act) by my "advocate" in Congress, Representative Carolyn Maloney (D-NY-14). She has a nice, multi-page press release bragging about it:

Congresswoman Maloney was instrumental in securing the inclusion of the following funds for New York transportation projects in today's legislation:

• $6.4 million to advance the reconstruction of Queens Plaza on the eastern end of the Queensborough Bridge
• $1.92 million to contribute toward the full reconstruction of all the streets in Long Island City, Queens surrounding 11th Street


• $1.2 million for the reconstruction of Times and Duffy Squares in New York City
• $400,000 for the reconstruction of Herald and Greeley Squares in New York City
• $4.4 million to contribute toward the development of terminal facilities for water taxi projects in numerous locations in New York City

...
In addition, the Report announced that the FTA's 2006 budget includes $158 million in federal funds to be distributed to the Second Avenue Subway and five other projects from around the country, and $390 million for East Side Access.

Maloney is humble, however, and insists that New York's two Democratic senators, Charles Schumer and Hillary Clinton, were also responsible for the mammoth allocations. I'll be sure to make a note of that.

Technorati Tag: porkbusters

The ultimate expression of failed redistributionist economic theory, the International Monetary Fund, is pooh-poohing the Bush Administration's stated intent of halving the U.S. federal budget deficit in half by the end of the President's term.

Instead, and unsurprisingly, the IMF prefers a wide panoply of new taxes of every ilk:

As an alternative, the IMF recommended that the United States consider raising taxes through such methods as eliminating some current tax deductions, creating a national consumption tax or a new energy tax, all ideas that run counter to President Bush's tax-cutting goals.

Of course, the question of how realistic any deficit reduction forecasts are, now that we have the dual propositions of "whatever it takes" Katrinanomics and "there is no fat left" DeLayonomics, is totally valid when condemning the current fiscal policy of the tax-and-spend Republicans in Congress and the White House. But that is not the same as saying that we should engage in taxation carpet-bombing, not only hiking every tax already on the books but also crafting new ones like a national consumption tax.

As the Porkbusters project irrefutably demonstrates, there is a third way: reduce government spending. Reduce it dramatically. Surely the nation can do with a few less "bridges to nowhere" and obsolete moonshots in order to get our fiscal house in order.

It's the first rule of debating: both sides can be wrong. Such is the case with the Hobson's Choice of "higher taxes or higher deficits."

Technorati Tag: porkbusters

Just a quick note that one week ago today, the national debt exceeded eight trillion dollars for the first time ever.

Kind of puts this conversation in perspective, doesn't it?

And keep in mind that, even assuming a very conservative 4% interest rate, that's about $320 billion in interest -- $320 billion in federal taxes that buys nothing, builds nothing, employs no one, feeds no one, educates no one, houses no one, cures no one and defends no one from terrorism or even avian flu.

Remind me again why you're not all libertarians?

(Via Government Bytes.)

No sooner did the Senate "find" $39 billion to trim from the "untrimmable" federal budget than that very same Senate proceeded to "find" new ways to spend it:

Senate Majority Leader Bill Frist, R-Tenn., is a top sponsor of the $4 billion avian flu plan, which would direct $2.8 billion to developing medicines and vaccines to combat the flu. An additional $1.2 billion would be earmarked to otherwise prepare for a potential pandemic.
...
Not to be outdone, Health, Education, Labor and Pensions Committee Chairman Mike Enzi, R-Wyo., moved in with a $2.7 billion plan to lower student loan processing fees and provide aid to students and schools in the hurricane zone.

Save a buck, spend a buck. Tax a buck, spend a buck. Borrow a buck, spend a buck. And all the while promise two bucks more tomorrow. Because, after all, eight trillion dollars isn't really that much.

And besides, tax reform will save us by "broadening the tax base."

Heaven help us.

---

Meanwhile, the Federal Reserve raised the fed funds rate for the twelfth consecutive time, to 4%.

Not too long ago, the ten-year Treasury note was below 4%.

Many people claimed that the yield curve, which in a rational economy must slope upward, would continue to flatten and possibly even invert as fed funds reached 4%. This anomaly would be possible, they maintained, because people here and abroad would simply love to keep loaning our government money at such a low interest rate. Forever and ever and ever.

Well, the fed funds rate is now at 4% ... and the 10-year is not at 4% but 4.56%. The yield curve triumphs again.

As does the rule that, if the government keeps running budget deficits, sooner or later interest rates simply must rise. The laws of supply and demand, um, demand it.

Keep that in mind when your hear claims that "there is no fat left" in the federal budget, or that "deficits don't matter," or that eight trillion dollars is no big deal.

This is mostly an administrative, bureaucratic and symbolic event that has no real impact on anything, but it's worth pointing out anyway:

Treasury Secretary John W. Snow said yesterday that the United States could be unable to pay its bills in early 2006 unless Congress raises the government's borrowing authority, which is now capped at $8.18 trillion.

Snow, in a letter to lawmakers, estimated that the government is expected to bump into the statutory debt limit around the middle of February.

"At that time, unless the debt limit is raised or the Treasury Department takes authorized extraordinary actions, we will be unable to continue to finance government operations," Snow wrote.

I blogged about the notional amount of the national debt reaching the eight trillion dollar mark previously.

Some apologists for fiscal recklessness — especially Republican fiscal recklessness — insist that escalation of the public debt is no big deal because the "correct" metric is the debt as a percentage of GDP, a figure that has been relatively stable and even declining under President Bush.

This is, of course, utter nonsense.

The apologists want to have it both ways: they relentlessly highlight and cheerlead and I-told-you-so over the strength of the U.S. economy, but then conveniently forget that when an economy is strong, warning-sign statistics such as the federal budget deficit, the current account deficit, and the national debt ought to be, not "less doomsday," but "non-doomsday." A rip-roaring economy should be generating budget surpluses, current account surpluses, and a shrinking national debt. If, when we are doing our best economically, the warning lights are still blinking, then what are we to expect when the economy is not hitting on all cylinders?

I'm as big a fan of supply-side economics as anyone, and I do believe that it's possibly to "grow your way" out of deficits and debt.

But only when the accelerator isn't already hitting the floor.

Meanwhile, Econbrowser has a related story on the changing nature of interest on the public debt.