Republicans block jobs

Once again, Senate Republicans have blocked a jobs bill for the reason it might be a stimulus to the economy. Senator Mitch McConnell (R – KY) stated that President Obama didn’t really want the jobs bill enacted, he wants Republicans to vote against it so that their no-votes can be used against them for political advantage, like he thought that made sense and anyone would believe him that he was just doing what Obama really wanted him to, or the fact that Obama is for it forces Republicans to be against it, just because.

Huge hunk of space junk

The scientists are not sure about when or where, exactly, but sometime this weekend a big 3000 pound heat resistant piece of the German ROSAT satellite will fall from the sky and hit the surface of the earth while moving at several hundred miles per hour. Bigga badda boom! Seven in ten odds it hits water, but it could land anywhere. Stay alert and get ready to jump.

Occupy Louisville – march from U of L

Friday’s march from the University of Louisville to the downtown financial district was smallish. The crowd chanted to the beat of a plastic bucket used as a drum, “We are the other ninety-nine percent.” That’s Occupy Louisville on day 4 of its existence. As you can see from the photo, there were about 50 marchers, with bicycle outriders. Every last one of them looked to be a university student. The weather has been exceptionally dry and nice this week, but I wonder how long they can keep it up heading into Halloween, and the first frost of the season.

Defense: Congress gives Obama a blank check

H.R.2608 started out as An Act to provide for an additional temporary extension of programs under the Small Business Act and the Small Business Investment Act of 1958, and for other purposes, but ended at the Oval Office on October 4, 2011 as the Continuing Appropriations Act, 2012. In truth, it is the second continuing budget resolution for fiscal year 2012. The first was for a mere four days, to accommodate the Republican workplace demands of four-day weekends. Section 114(a) of the resolution provides:

SEC. 114. (a) Except as provided in subsection (b), each amount
incorporated by reference in this Act that was previously designated
as being for contingency operations directly related to the global
war on terrorism pursuant to section 3(c)(2) of H. Res. 5 (112th
Congress) and as an emergency requirement pursuant to section
403(a) of S. Con. Res. 13 (111th Congress), the concurrent resolution
on the budget for fiscal year 2010, is designated by the Congress
for Overseas Contingency Operations/Global War on Terrorism
pursuant to section 251(b)(2)(A) of the Balanced Budget and Emergency
Deficit Control Act of 1985, except that such amount shall
be available only if the President subsequently so designates such
amount and transmits such designation to the Congress. Section
101(b) of this Act shall not apply to any amount so designated.

The money being discussed in this section is about $158 billion that cuts a wide swath through many parts of the U.S. Defense Department budget. This $158 billion is in addition to the discretionary spending caps Congressional Republicans insisted upon this summer, in the  Budget Control Act of 2011. This $158 billion is divided up into some fifty different account categories from personnel ($16.2b), operations and maintenance ($95.8 b), procurement ($26.1 b) , the Afghanistan Security Forces Fund ($11.6 b) and the Pakistan Counterinsurgency Fund ($800 m).

If President Obama “subsequently so designates such amount” the money is there, but only if he so designates. It is the President’s option.

Occupy Louisville – day two

I stumbled by 4th Street and Jefferson in time for today’s 1 p.m. General Assembly of Occupy Louisville. There looked to be about 40 participants, not counting the dog.

Louisville Metro Police were nearby, in the shade. One cop for every seven protesters.

Cut, cap and roll the dice

Shiftless adults playing dice and telling lies in the middle of a summer afternoon. I’m talking Congressional Republicans and the not too calculated gamble they took with the recent Federal debt ceiling deal. The talk was of “cut, cap and balance,” but it was just talk in the end. The debt ceiling was raised and the Republicans in Congress dug a deep pit for themselves.

As I write this on October 2, 2011, the second full day of the Federal government’s 2012 fiscal year, the headlines read, “Republican budget hawks cut 2012 defense spending by $100 billion.”

You will never actually read that headline because nobody in or out of government believes it will end up that way, even if it is the way it temporarily stands today. Personally, I have no reason to believe it either.

Nevertheless, while dancing their “cut, cap and balance” dance, the Republicans insisted that fiscal year 2012 Security Category spending not exceed $684 billion, and for some strange reason they also arranged it that about $130 billion in funding for the Global War on Terror was not included in that amount. The plan is to have a special emergency appropriation for such overseas operations that would automatically boost the spending cap.

The problem is that the $684 billion Security Category spending cap is law, and the special emergency military appropriation has not happened. There has even been some talk that President Barack Obama and the  Democratic members of Congress might use the situation as leverage in negotiating Obama’s jobs bill and revenue increases.

I’m just saying that the Republicans bragged openly about the tough bargain they won in the debt ceiling deal, and in this context it would by very difficult to blame massive defense cuts on the Democrats. The Republican’s got what they wanted, and nobody force them to lie about it.

How will Republicans talk their way out of this?

At the beginning of August I expressed my opinion that the Budget Control Act of 2011 was a bad joke that would be forgotten by the end of September.  Little did I know that the authors of the Budget Control Act of 2011 never intended it to be taken at face value. It’s easy to see, once you look at it. Even the Congressional Budget Office doesn’t take it seriously.

In July, 2011, the Republican House passed a $649 billion defense spending bill for FY 2012 , but the August Budget Control Act of 2011 put a spending cap of $684 billion on Defense, Homeland Security, Veteran Affairs, Foreign Assistance and Nuclear Security combined. For Defense to be funded at $649 billion in FY 2012, Homeland Security, Veteran Affairs, Foreign Assistance and Nuclear Security must each be cut by 80% from their FY 2011 funding levels.

This is not going to happen. It was never going to happen. Those who negotiated the Budget Control Act of 2011 and who insisted upon spending limits knew all along that the spending caps for 2012 were phony.  It was a queer bill from its inception, and the Republicans put the country through nine types of hell over the debt ceiling for nothing. Absolutely nothing, except a stupid charade that wouldn’t fool a third grader.

What’s the charade, you ask?

They forgot to include the costs of Afghanistan and Iraq in the spending limits. Republican leadership, so-called, was planning on slipping another $150 billion into the pot by an emergency off-budget war appropriation that nobody would notice.

It is such a lame charade simply because it is impossible to hide a $150 billion Congressional appropriation by pretending it didn’t happen.

Certainly Congressional Democrats will have no qualms about bumping up the spending limit on the Security Category by another $150 billion, but be sure the firebrand deficit hawks on the right will. Republican leadership doesn’t have the guts for significant spending reductions in the Security Category. This gives Congressional Democrats considerable leverage, if they can hold out and not pass any defense spending bills prematurely.

A quirk with the defense budget

At the beginning of the wars in Afghanistan and Iraq, the expense of the operations were dealt with outside the Federal Budget process by means of special appropriations. Starting with fiscal year 2010 and thereafter, the  various military, diplomatic, intelligence and foreign assistance aspects of Iraq and Afghanistan have been desegregated and distributed out to the annual budgets of various Departments. A new catchall category called “Overseas Contingency Operations” was added as a Defense Department Budget account by the Obama administration. It was intended to replace the bombastic, “Global War On Terrorism” budget category.

There are many Federal Executive Departments and Agencies spending time, money and effort in or on behalf of operations in Iraq, Afghanistan and elsewhere. In addition to the Department of Defense, there is significant participation by the State Department, the Department of Agriculture, The Department of Transportation, the Justice Department, the International Trade Commission, the Export-Import Bank of the United States, and the Agency for International Development, to name a few that have public names.

Normalizing the Iraq and Afghanistan costs as part of the budget management process reflects a level of common sense. The operations have stabilized and are suitable for budget management.  But, Congress ignores that.  Also ignored is the fact there have been no supplemental spending Bills for the “Global War on Terror” for several years. Yet, there is an atavistic tendency in both the  House and the Senate to re-animate that decrepit process and that insists upon doing things the old way. For example, the Department of Defense Appropriations Act, 2012, H.R 2219 passed the House (336-87) on July 8, and was referred to the Senate. According to the press release, “the bill contains $530 billion in non-emergency funding . . . [and] . . .  $119 billion in emergency spending for Defense activities related to the Global War on Terror.” [Total $649 billion]

An important point is that the phrase, “Provided, That each amount in this paragraph is designated as being for the global war on terrorism pursuant to . . . . “, appears in the Bill thirty-two times. The significance of this language is that it raises the Security Category spending cap for FY 2012, as set in the Budget Control Act of 2011 (The Act) by the same amount appropriated for the identified account. And, it does it unobtrusively.

The quirkiness of the game introduces a new step into the legislative approval process which effectively grants President Obama a quasi line-item veto to fine tune the Security Category spending cap for FY 2012 to be almost any way Obama wants it.  The Act provides, in part, “[If] . . . .  the Congress designates for Overseas Contingency Operations/Global War on Terrorism in statute on an account by account basis and the President subsequently so designates, the adjustment shall be the total of such appropriations in discretionary accounts . . . .”

The 32 instances of the phrase, “being for the global war on terrorism,” followed by a dollar amount and an account name in H.R 2219, have given President Obama 32 different dollar amounts that he can either designate or not designate being for the global war on terror. If this House Bill passes the Senate, President Obama can sign the Bill into law like any other piece of legislation, but it is a separate official act for him to accept or reject the designation required by The Act. Every designation that Obama accepts raise the spending cap in the Security Category, and every rejected designation does not, even if it does increase the appropriation.  The effect of the latter would be to force cuts in other parts of the Security Category, either voluntarily or by sequestration.

The grand budget bamboozle

bam·boo·zle (tr.v.)
Informal. To take in by elaborate methods of deceit; hoodwink.
Variations: bamboozled, bamboozling, bamboozles

The Sting

Seeking a cultural metaphor to encapsulate the debt ceiling standoff of July and August, one need look no farther than the 1973 Paul Newman – Robert Redford classic film, The Sting. In that movie, a vagabond group of petty criminals band together to right a wrong, and to steal from the rich and murderous crime boss for the benefit of the poor. The Sting is a Robin Hood story executed by means of finesse and intelligence, rather than with swords and force,  with an impressive display of of legerdemain and over-the-top showmanship. Nobody actually gets killed or injured as justice is dispensed.

The audience understands at the movie’s end how badly crime boss Doyle Lonnegan (Robert Shaw) was out-foxed, but Lonnegan himself is merely confused. suspicious, and hustled. It will take him some time to understand that the Redford and Newman characters picked his pocket of half a million dollars, and got away with it.

Obama arrives in Chicago August 3, 2011

Budget Control Act of 2011
(P.L. 112-25, S. 365, 125 Stat. 239, enacted August 2, 2011)
Full text from the Government Printing Office

This is the name given to the deal enacted on August 2, 2011 that raised the Federal debt limit and staved off the Republican threat of self-inflicted sovereign default. It is a difficult bill to read and understand, and it contains several parts in addition to raising the debt limit. Two Hundred two Congressional Republicans, seventy percent of them, voted for this bill. It might be fair to say that not one of them understood in full detail what the Budget Control Act of 2011 (“The Act”) actually provided. If the Republicans  had understood it, they would never have voted for it.

Cut, cap and no balance

A salient feature of The Act is the limit it places on Federal discretionary spending for fiscal years 2012 through 2021. The Federal budget concept of “discretionary spending” is adjusted by The Act by specifically including the following items in the working totals.

1. Overseas contingency operations and global war on terrorism;
2. Continuing disability reviews under Social Security;
3. Health care fraud abuse control program (account 75–8393–0–7–12 571), and;
4. Disaster funding.

Some of these are nominally mandatory spending items and have caps of their own imposed by The Act.

For fiscal years 2012 and 2013, The Act expresses its basic adjusted discretionary spending limits in two categories:  Security and non-security. The spending limits for all subsequent years (2014 – 2021) are aggregate sums.

The term ‘security category’ includes discretionary appropriations associated with agency
budgets for:

1. The Department of Defense;
2. The Department of Homeland Security;
3. The Department of Veterans Affairs;
4. The National Nuclear Security Administration;
5. The intelligence community management account (95–0401–0–1–054), and;
6. All budget accounts in budget function 150 (international affairs).

The ‘non-security category’ is everything else.

For fiscal year 2012, The Act caps security spending at $684 billion, and non-security at $359 billion. For fiscal year 2013 these numbers are, respectively, $686 billion and $361 billion. At first glance, one might think that these spending caps are weighted in favor of defense spending, and against domestic spending. That’s what I thought at first, but digging into the budget numbers tells a different story. The ‘security category’ is cut by a percentage amount greater than  2 to 1 compared to the ‘non-security category” .

Hard numbers

Using numbers provided by the Office of Management and Budget, Public Budget Database – Budget Authority, it is possible to add up the amounts that comprise the ‘security category,’ as defined by The Act.

FY 2006 – $629 billion
FY 2007 – $727 billion
FY 2008 – $812 billion
FY 2009 – $824 billion
FY 2010 – $857 billion
FY 2011 – $879 billion
FY 2012 – $684 billion
FY 2013 – $686 billion

By capping the FY 2012 ‘security category’ spending at $684 billion, Congress has agreed to roll that collection of budget items back to pre-2007 levels, in aggregate.  It is a 22.2% decrease from the $879 billion FY 2011 funding levels. This compares to The Act’s 10.4% reduction in the ‘non-security category,’ from $400 billion to $359 billion.

The trick

The discretionary spending limits The Act imposes are automatic, by a process called sequestration. This mechanism was perfected by the Balanced Budget and Emergency Deficit Control Act of 1985, also known as the Gramm–Rudman–Hollings Balanced Budget Act.  Since the mechanism of sequestration  makes flat percentage cuts across all non-exempt budget categories, regardless of priorities, it seems extreme.  Congress so far has been unwilling  to ever let it happen. When faced with the possibility of sequestration in the past, Congress has always repealed the budget caps.

Fiscal year 2011 ends September 30, but the Congressional appropriation process is far from complete. A Joint Resolution that continues government functions  beyond October 1 at the 2011 levels has been discussed, but the sequestration process will ultimately kick in to arbitrarily remove nearly $200 billion from the ‘security category.’ It could be an administrative and political nightmare. The best solution would be for Congress to devise an omnibus budget bill that incorporates the required spending limits.

The next trick

The Act also requires a Congressional ‘super-committee’ to devise a bill that eliminates at least an additional $1.2 trillion  of the budget deficit by FY 2021. If this deficit reduction bill is not enacted into law by January 15, 2012, The Act imposes a different set of discretionary spending caps for FY 2013 through 2021 for the ‘security’ and the ‘non-security’ category, but it also redefines the meaning of the categories. The net effect of the change is to focus spending cuts on he Defense Department, if Congress fails in its mission.

Smoke and mirrors

The Budget Control Act of 2011 is a nightmare to read, and if you believe any part of the Republican claims they “got what they wanted, ” or media claims that Obama capitulated, it makes it that much more difficult. What Republican wants to cut defense spending by 22%, but to cut domestic spending by only 10%?

Did Obama eat the Republican’s lunch?

After noodling the numbers in shocked disbelief for several weeks, that’s how it looks to me. If anyone has a better understanding of this legislative horror, I want to know about it.

I have to set this aside now for a while to let my brain cool off, but I have to say it looks like President Obama took the Republicans to the cleaners during the debt limit negotiations, and then he kept his mouth shut about it.

Reading the political tea leaves

This is not about the Tea Party faction. This is about predicting the outcome of political elections.  I use the phrase ‘reading the political tea leaves’ with an oracular or divination connotation, on the one hand, and a propaganda function on the other . The practice of political prognostication is not a regulated profession, so what you are buying is strictly a factor in what the particular soothsayer is selling. Caveat emptor applies here. No license is required to engage in overt acts of predicting future events, and there is no general penalty for being wrong. In fact, partisan political predictions are preordained, as propaganda-based morale boosters. Partisans are required to foretell the ultimate victory of their chosen candidate regardless of the circumstances, and with unwavering certitude no matter how bad the situation may be.

Fourteen months before the Presidential election of 2012 is too far in advance of the decision point for the shape of the probability wave to be measured, or even observed. Events during the year immediately preceding an election generally have more influence on the outcome of an election than do those of any prior year, just due to the electorate’s  shortness of memory. Presently, the most relevant time period is called ‘next year.” The immediate situation leading up to an election has more impact than does a  distant historical past. At this point in time, all trance induced vision of the future are marketed for entertainment purposes only. The main constant is that things change, especially now.

It is impossible to read about politics and current events without encountering a steady stream of political predictions regarding the question, “Who will be President of the United States in January, 2013?” The whole process is hopelessly impossible given that things change fairly rapidly these days.  Fourteen months is a long time in dog years, and it is impossible to predict. Yet, the essential human urge to speculate, to place bets and to make odds about future events is not repressed in the least by that fact. The careers of many are built upon it.

One of the simplest methods of predicting the outcome of the 2012 Presidential election is the unemployment rate. On May 25, 2008 the national unemployment rate was 5%. That day the Washington Post analyzed the unemployment rate on election day for every Presidential election since 1960, Unemployment and presidential elections, and confidently predicted, “If the rate continues to rise between now and November, Republican John McCain will likely have difficulty retaining the White House for his party.” Little did this Washington Post writer know of the major economic bumps that lay ahead in the summer and fall of 2008. The national economy was in such bad shape by November, 2008, the Onion announced Barack Obama’s victory with the headline, Black Man Given Nation’s Worst Job.

This is a perfect example how radically circumstances can change in a few short months. For those with the memory capacity to do so, imagine the difference between May, 2008 and election day on November 4, 2008.  True enough the National employment rate slacked off a bit and the general prediction held.

Another useful measure of an incumbent’s chance for re-election is Ronald Reagan’s famous question, “Are you better off now than you were four years ago?” The suggestion was if you were worse off in 1980 compared to 1976, then blame it on President Carter and vote for Reagan. It was less a predictor than it was a rhetorical reminder that the Federal government plays a large role in the health of the economy. Most people can’t actually remember how well  off, or not,  they were four years ago.

The most popular method of enjoying the illusion of a political horse race between election years is the opinion poll. There are hypothetical head-to-head contests, approval ratings, job performance and likability indices.  The substantial amount of money in partisanship politics and advanced technology has made opinion polling a growth business. At any point in time it is cheap and easy for an average person to know what a statistically significant sampling of the Nation thinks on any given topic, and to track the changes over time. Still, the next best opinion poll sample is the one taken closest before he election itself. Fourteen months in advance popularity polling is fairly useless.

But, it provides employment and something to talk about.

Good short term predictors are the future event markets, like Intrade.com.

 

The hard cash speculators saw Rick Perry coming several weeks before most others did.