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Jim Cook



Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

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The Best of Jim Cook Archive

Best of Bill Buckler
January 31, 2011
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The Consequences of Spending Cuts

On January 19, discussing the “promise” of the new Republican majority in the House of Representatives to link any vote permitting the Treasury to borrow more money with reducing the amount the U.S. government spends, YAHOO ran the following headline:  ‘GOP spending cuts would affect millions of people.’  The Captain and crew of The Privateer see a lot of fatuous headlines in the course of researching a new issue, but this one takes some beating.

It is one of the truisms of our age that Everything a government (in the U.S. or anywhere else) does affects “millions of people.”  The only exception would be in a nation or area which does not contain that many people.  In a nation where the government runs the economy, its every action directly or indirectly affects all of its citizens.  Even those amongst them that see themselves being benefited in the short run are harmed in the longer term.  What is taken from their neighbors to bestow on them in one instance is taken from them to bestow on their neighbors in the next instance.  In the long run, everybody loses.

The YAHOO article was specifically concerned with the government programs which might face less funding if the Republicans get their way and the “underprivileged,” “low income” or “disabled” people who might suffer.  Even worse, the report quoted the White House as saying that federal layoffs would be unavoidable.  This is reportedly a serious concern laden with political land mines.

The Discretionary Budget

The U. S. government, like its peers in the “developed” world, runs a welfare state.  This has inevitably split the government’s budge into two parts.  One is the “discretionary” budget.  The other is the “mandatory” budget.  In the U.S., the mandatory budget include such items as Social Security, Medicare and the interest on the ($U.S. 14 trillion) national debt.  The discretionary budget includes everything else – except expenses like the war and occupation in Iraq and Afghanistan which are “off budget” appropriations.  This discretionary budget is, supposedly, the only part of the budget that the Republicans or anybody else can “cut.”  Cutting the “mandatory” budget is officially politically impossible.

The problem is that in the 2010 fiscal year, the discretionary budget was officially less than 40 percent of the entire budget.  Over the 2009 fiscal year, for example, the discretionary budge was actually less than the official budget deficit run that year.  That means that the U.S. government could have cut their discretionary spending to $U.S. 0.00 and still have run a deficit, albeit a fairly small one.  In fiscal 2010, that situation was slightly improved on the official numbers.  

In economic “analysis” a steepening yield curve is said to be a feature of an economy “recovering” from recession.  In a recession, short-term yields are said to “stagnate.”  When the recession ends, the longer-end of the curves rises first – “once the demand for capital is re-established by growing economic activity.”  These definitions were not coined in an era when the central bank was holding its control rates at zero and directly monetizing government debt in an attempt to hold interest rates down.  Today, rising yields show only one thing:  An increasing concern over the validity of the debt.



Ó 2009 – The Privateer

(reproduced with permission)


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