While some on the left side of the aisle in Congress are getting all starry-eyed about prospects of more federal stimulus spending, the first round of stimulus under President Barack Obama may have done even less to help the ailing economy than supporters claim.
On MSNBC's July 9 broadcast of "The Daily Rundown," co-hosts Chuck Todd and Savannah Guthrie interviewed CNBC "Closing Bell" anchor Maria Bartiromo from the Aspen Ideas Festival in Aspen, Colo. And Bartiromo offered her views why the economy didn't spiral out of control any more than it did. She said according to some on Wall Street, it wasn't Obama's $787-billion "stimulus" that included a huge bulk of state government bailout spending, but instead action by the Federal Reserve to put more liquidity in the economy.
"Look, there's no doubt about it - we were close to going off a cliff the weekend at Lehman Brothers declared bankruptcy, Merrill [Lynch] was sold and AIG acquired by government," Bartiromo said. "You know, I mean I think we were very close and the economy needed stimulus in a big way. It's arguable whether that stimulus that helped the economy was really because of the stimulus plan or really because of the Federal Reserve. I think most people on Wall Street will believe and will tell you that it was really the Fed action in terms of giving greater access to the banks to overnight lending that really, really got us out."
On Wednesday, the Congressional Budget Office released its Monthly Budget Review for June. It estimated that June's deficit was "only" $69 billion, down from $94 billion last year, and that the deficit through nine months of the current fiscal year is $1.005 trillion, down from last year's $1.087 trillion.
June's single-month improvement -- or more properly stated, its less disastrous result -- is probably legitimate, because collections have picked up a bit. But, as I noted in April (at NewsBusters; at BizzyBlog), the reported year-over-year deficit reduction, such as it is, has nothing to do with anything resembling control of government spending.
What follows was my explanation at the time, which still holds, and which you will more than likely not see in any media coverage of the government's financial situation when the Treasury Department releases its official monthly statement next week (also see the chart below the jump which shows what the deficit really is after adjustment):
West coast viewers got to see a July 4 CBS Evening News on Sunday, and those who tuned in saw CBS's interim "report card" on Congress's performance so far. Under the headline of "unfinished business," correspondent Wyatt Andrews and his sole expert, Politico's Jonathan Allen, both fretted how Congress is now "paralyzed" due to a "growing fear of the deficit."
Many Americans are probably wishing Congress had become "paralyzed" a few trillion dollars ago.
Andrews rued that supposedly job-creating "stimulus spending" may be sacrificed if enough congressmen feel deficit spending is now "political Kryptonite."
Many members of Congress especially those in tough re-election campaigns are home right now, trying to figure out the spending issue: Will voters support more stimulus spending if it directly leads to jobs, or has deficit spending itself become political Kryptonite?
“The side that talks about the need to rein in the federal government” is “not very rational,” yet “is winning” the debate over whether to pass another “stimulus” bill, Al Hunt regretted on Sunday’s This Week on ABC.
The former Washington Bureau Chief for the Wall Street Journal, who’s Washington Editor for Bloomberg where he hosts Bloomberg TV’s Political Capital show, fretted over how “right now, that argument – that we have to rein in because the stimulus didn’t work -- well, I think most economists would say the stimulus did work in the sense it would have been a lot worse if there hadn’t been one.”
Hunt’s assessment came in reaction to an outnumbered Dan Senor, the lone voice on the panel against additional government spending to spur the economy and who warned of a Greece in our future. New York Times columnist Paul Krugman charged the 2009 stimulus bill wasn’t big enough and proposed that in the face of a likely $20 trillion debt in ten years, “whether we borrow another $500 billion now” is “really trivial,” Cynthia Tucker of the Atlanta Constitution yearned for a new “robust stimulus” and Jorge Ramos of Univision declared: “We need more government intervention.”
Paul Krugman is known for throwing a bomb or two from his platform in the New York Times, but it's really tough to take him for a violent fellow.
In his July 2 blog post, "I'm Gonna Haul Out The Next Guy Who Calls Me ‘Crude' And Punch Him In the Kisser," Krugman lamented criticism of his support for more stimulus spending. A July 1 editorial in The Economist noted that the economy needs more private spending, not more government spending.
"Mr Krugman's crude Keynesianism underplays the link between firms' and households' behaviour and their expectations of future tax and spending policy," the editorial said. "For example, firms across the rich world are hoarding cash. Their reluctance to invest may have more to do with regulatory, financial and fiscal uncertainty than weak consumer demand (see article). If governments address those worries, businesspeople may start spending."
If it were only that simple - that is the way CNBC's Rick Santelli would have it.
On CNBC's June 28 "Squawk Box," CNBC's senior economics reporter Steve Liesman vigorously defended the need for higher tax rates as a measure to cut federal deficits. Others argued that government revenues would increase if tax rates were lower because it would stimulate growth. (h/t Real Clear Politics Video)
"Let me get this straight - all you guys want to cut taxes en route to bringing down the deficit?" Liesman asked.
But according to Santelli, it has nothing to do with taxes, but the role of government in the economy.
Treasury Secretary Tim Geithner is admonishing the leaders of other countries attending the G-20 summit in Toronto to keep spending like there's no tomorrow, because if they spend like there's no tomorrow, there will still be a tomorrow. But in the gospel according to Geithner, if they don't spend like there's no tomorrow, there really won't be a tomorrow.
With such blubbery logic, is it any wonder that America's stature with the rest of the world is plummeting?
Earlier this evening, Brent Baker at NewsBusters pointed to an ABC report warning that a second recession might be on the horizon if the G20 nations don't follow the spend-spend-spend recommendations of the Obama administration.
In his attempt to convince the rest of the world of the folly of being fiscally responsible, Geithner has invoked a supposed "lesson" from the 1930s. Back in mid-May, I happened to stumble on the fundamental untruth of his assertion, and will demonstrate it shortly.
The Associated Press's Jeannine Aversa let Geithner's contention pass without challenge in her Saturday report on the summit. Here are the three relevant paragraphs from her report:
On Thursday, a new unemployment bill died in Congress as Senator Ben Nelson (D-Neb.) joined Republicans on the grounds that government spending can't go on forever.
Instead of reporting both sides, the media couldn't seem to hide their anger.
The bill was called a "jobless aid" package that "governors were counting on" to help "the poor" across the nation. Almost all news reports began from the Democrat perspective and waited several paragraphs before weakly defending Republicans.
Worse yet, a consensus with far more damaging impact began to grow: the loss will cause the nation's economy to fall into a double dip recession, and it will be entirely the Republicans' fault.
Never mind last year's stimulus bill worth $700 billion, or the bank bailout of 2008, both of which have failed to live up to promises of recovery. No, our economy is suffering because fiscal conservatives won't spend even more.
On Friday's Situation Room, CNN's Jack Cafferty tossed cold water on the Obama administration's "recovery summer" claims, stating that the "current recovery has been one of the worst for job creation ever." Cafferty also criticized the dangerous growth in the national debt, underlining that there "appears to be a rather serious disconnect," as the President requested billions in additional spending.
The CNN commentator began his 5 pm Eastern hour commentary with a contrast between Obama's "massive P.R. campaign" touting the apparent effectiveness of the $860 billion "economic stimulus bill" and the continuing high unemployment figure: "President Obama and Vice President Biden have kicked off a massive P.R. campaign, celebrating what they're calling 'recovery summer'....But the celebration may be premature. Just yesterday, the Labor Department reported new claims for jobless benefits jumped by 12,000 last week- much sharper increase than was expected."
Cafferty touted a recent editorial in the Washington Times which "suggests the administration's 'make-work' jobs program has failed, and that those infrastructure jobs, which are being funded by the taxpayers, will disappear when the stimulus money runs out- soon." He bluntly continued, "Fact is the current recovery has been one of the worst for job creation ever."
For taxpayer-funded PBS, the blueprint for America's future is centered on advancing the Obama administration's taxpayer-funded green agenda. In the June 17 installment of "Blueprint America," Miles O'Brien, a "NewsHour" special correspondent, hailed Dubuque, Iowa as the "city of the future" for transforming itself into a liberal beacon of environmental sustainability.
O'Brien's piece showered Dubuque with praise as it promoted the city's liberal environmental initiatives, which the correspondent noted are bankrolled with taxpayer dollars courtesy of the Obama administration's economic stimulus package.
"The people in this old factory town along the Mississippi have signed on to a unique experiment," explained O'Brien. "They're attempting to turn Dubuque into one of the nation's most sustainable cities."
Listing the city's seemingly countless awards for "livability" -- a term the PBS reporter struggled to define -- O'Brien championed President Barack Obama's budgetary boondoggle for the bountiful fruit it has given to Dubuque:
The network morning and evening news shows have all but ignored President Obama's Saturday letter to congressional leaders asking for $50 billion in additional spending to prevent the "massive layoffs of teachers, police, and firefighters." Only Sunday's Good Morning America on ABC has covered the President's request so far.
The chief executive's June 12 letter to Speaker Nancy Pelosi, Senate Majority Leader Harry Reid, Senate Minority Leader Mitch McConnell, and House Minority Leader John Boehner urged "swift action" on the multi-billion dollar proposal to prevent the public sector layoffs and "give our nation's businesses added impetus to hire and grow."
ABC anchor Bill Weir brought up the President's letter with White House correspondent Jake Tapper 13 minutes into the 8 am Eastern hour of Sunday's Good Morning America:
CNN's Jack Cafferty ripped the Democratic-controlled Congress for their inaction to pass a budget during a commentary on Thursday's Situation Room: "The Democrats in Congress can't be bothered to pass a budget for next year. That's their job....It's simply outrageous." Cafferty also channeled the Tea Party and strongly condemned the federal government for "taking us down the road to financial ruin."
The CNN commentator began his 5 pm Eastern hour commentary by highlighting the "skyrocketing federal deficits and a national debt that just passed $13 trillion," along with the Democratic congressional leadership's stalling in passing next year's budget. He continued that "efforts to pass a budget have stalled in the House because Democrats can't agree on what and how much to cut. See, it's an election year and we can't be seen cutting things in an election year."
After using his "outrageous" label, Cafferty actually complimented the Republicans in Congress: "Republicans say the Democrats are making a huge mistake by not passing a budget, and they're right."
Has Pres. Obama's ass-kickin' line given license to MSM members to offer cruder commentary? Could be, judging from Mika Brzezinski's Morning Joe performance today, in which she suggested that House Republican leader John Boehner should "just bend over."
Mika normally plays the role of Morning Joe hall monitor, keeping the rambunctious trio of Joe Scarborough, Mike Barnicle and Willie Geist in line. But with Joe away today, it was Mika who indulged in some off-color imagery. Prompting Mika's remark was a clip of Boehner wondering why Pres. Obama isn't looking for someone's "ass to kick" on the subject of unrestrained federal spending.
Is it the government’s job to spread happiness? A former president of Harvard University, who was profiled on the June 2 PBS “NewsHour,” seems to think so. Derek Bok, author of The Politics of Happiness, believes the government should be in the business of manufacturing happiness.
“I think a government that tries, systematically, to relieve what causes lasting misery and emphasize what gives lasting happiness will eventually win the support of the people,” declared Bok.
In a telling review, Sara Robinson of the wildly liberal blog Firedoglake expressed adoration for the book:
It reads like a progressive wish list — a ratification of the kind of ‘for the common good’ policies we’ve always stood for. But Bok’s approach is academic and disinterested and acutely non-ideological: he reaches these conclusions only because the preponderance of data proves (once again!) that reality has a distinctly liberal bias.
Three months after the networks, led by ABC’s Jonathan Karl, derided Senator Jim Bunning for daring to hold up an “emergency” spending bill which circumvented the “pay as you go” rules, as Karl made a fool of himself chasing the elderly Senator into elevators to cajole him to give in, on Monday’s World News Karl had the chutzpah to scold Congress for approving “emergency” spending which doesn’t have to follow those very same “pay-go” rules.
“Congress is on its holiday break this week,” fill-in anchor George Stephanopoulos announced, “but there is no break in the steady increase in the national debt, now up to an astounding $13 trillion.” Stephanopoulos promised that in “watching out for your money, Jonathan Karl found some of the culprits” – though neither cited the news media’s role in incessantly pushing for more spending.
Without displaying any self-awareness of his own hypocrisy, Karl listed some of “the ‘emergency’ bills Congress has taken up over the past few months,” including “$20 billion for highway construction.” Yet back in early March, Karl fretted: “Bunning is also blocking money for highway construction. So across the country today, 41 construction projects ground to a halt, thousands of workers furloughed without pay.”
For the second year in a row, a state official has proposed eliminating the former Golden State's "welfare-to-work" program, which the rest of us know as "welfare," or Temporary Assistance for Needy Families (TANF). Last year, it was left to a spokesman for the state's Department of Finance to bring out the idea. This year, Governor Arnold Schwarzenegger fronted it himself.
As has been the case for the almost four years I've been following the situation, the press once again universally failed to provide anything resembling context. If it did, people would understand that this is a story about a decade-long shocking level of theoretically well-intentioned waste (the cynical observation would be that the good intentions are tempered by the likelihood that dependent voters are overwhelmingly Democratic voters).
The as up to date as possible context (through September 30 of last year for recipients and families, the latest available government data; some estimation was required because certain data fields are blank) is this:
The comparison of the results contained in the April 2010 Monthly Treasury Statement released this afternoon to April of last year is bad enough. But if the American people knew that April 2010 came in about a quarter-trillion dollars worse than both 2007 and 2008 with almost 40% less in tax collections, most of them would be appalled. Many more than are already doing so would be questioning what in the heck this administration and Congress are up to.
That's why you probably won't see establishment media outlets like the Associated Press go back more than one year in their detailed comparisons, even though during the presidency of George W. Bush, writers like the AP's Martin Crutsinger and others frequently went back to fiscal 2000 and 2001 to remind readers of the surpluses that occurred during those fiscal years. The intent, of course, was to imply that things were just peachy keen under Bill Clinton until the eeeeevil Bush ruined everything. As noted later, that ain't so.
Here is the AP's Crutsinger on today's Treasury Statement, blissfully pretending, with the exception of one cryptic reference, that the two high-collection Bush years neeeeeeeever happened:
It doesn't seem like this exercise should be that tough.
The government issues Daily Treasury Statements telling everybody what went in and out on a given business day. At the end of the month, the last Daily Treasury Statement has a record (admittedly jumbled and larded with lots of bureaucratic excess) of all receipts and disbursements for the month.
The folks at the Congressional Budget Office look over the final Daily Treasury Statement and estimate what the totals for receipts and disbursements (or "outlays") will be. The difference, obviously, is their estimate of the month's reported deficit. The only remaining items should be error corrections (if any), or accounting entries resulting from the government's ill-advised choice to account for "investments" in banks, car companies, and other entities on a "net present value" basis.
On the eighth business day of the following month, the Treasury Department releases its Monthly Treasury Statement.
On Friday, the CBO estimated that the April's deficit would be $85 billion. The press (as covered at NewsBusters; at BizzyBlog) virtually ignored its report. That's bad enough, but when reporters went out to economists for deficit estimates, their predictions were significantly lower. For starters, here's what the Associated Press carried this morning:
Talking with CNBC's Jim Cramer on the May 6 "Hardball" about the Greek fiscal crisis, everyone's favorite MSNBCer blamed "right-wing" dictators from the Cold War era for financial troubles in Greece, Portugal, and Spain [MP3 audio available here]:
I'm a political guy, you're a money guy. Let's crosswalk this thing. It seems to me that you and I grew up with the fact there were dictatorships in Europe. They were in the Iberian peninsula and in Greece. You had Franco, who overstayed the Second World War a bit, by about two generations. You had Salazar in Portugal, and of course you had the Greek colonels.
The right-wing governments in Europe seem to be the ones that are most precarious right now: Greece, Portugal, Spain.
What's the connection? Is this a complete coincidence, or is it old-line right-wing politics that never quite stabilized into serious social democratic countries? What happened?
Most economists are not susceptible to partisanship in their work, a new scholarly study finds. But anyone who reads Paul Krugman's columns in the New York Times will hardly be surprised to learn he is a glaring exception to the study's findings.
He consistently changes his fiscal views depending on the party in power.
"Krugman has changed his tune in a significant way regarding the budget deficit when the White House has changed party," found Brett Barkley, an economics student at George Mason University. The study, published in Econ Journal Watch, a peer reviewed journal, examined statements from 17 economists from 1981 through 2009, and gauged the consistency of their stances on deficit spending and reduction during Republican and Democratic administrations.
According to the study, Krugman was the only economist of the 17 to "significantly" change his stance on the federal budget deficit for partisan reasons.
If a genuine, sustained economic recovery is truly underway, why can't the government show us the money? This would appear to be a question the establishment press has no interest in answering.
As seen in the graphic at the right (HT to an e-mailer), when the government's Monthly Treasury Statement is released next Wednesday, the anticipation is that it will show an April deficit of $85 billion. That estimate comes from the Congressional Budget Office, which released its Monthly Budget Review yesterday.
The government almost always runs an April surplus because it's the biggest month for tax collections. Individual filers have to settle up what's left of their previous year's liabilities with Uncle Sam on April 15, and the first installments of current-year individual and corporate estimated taxes are also due.
But as seen in the chart that follows, April receipts have cratered during the past two years by stunning amounts compared to April 2007 and 2008. The April 2010 plunge continues a nearly unbroken trend of year-over-year declines in monthly receipts going back almost two years:
The Pentagon rescinded the invitation of evangelist Franklin Graham to speak at its May 6 National Day of Prayer event because of complaints about his previous comments about Islam.
The Military Religious Freedom Foundation expressed its concern over Graham's involvement with the event in an April 19 letter sent to Secretary of Defense Robert Gates. MRFF's complaint about Graham, the son of Rev. Billy Graham, focused on remarks he made after 9/11 in which he called Islam "wicked" and "evil" and his lack of apology for those words.
Col. Tom Collins, an Army spokesman, told ABC News on April 22, "This Army honors all faiths and tries to inculcate our soldiers and work force with an appreciation of all faiths and his past comments just were not appropriate for this venue."
The media is still having trouble understanding the Tea Party movement and what it is protesting, even though its roots are clear.
On Feb. 19, 2009 during CNBC's "Squawk Box," Rick Santelli made his famous rant heard around the world, calling for a so-called tea party-style revolt. And that helped fuel the growth of a Tea Party movement that has resulted in more than 600 protests this April 15, 2010.
Santelli's call for protest wasn't about high taxes. Instead, it was a cry against the Obama administration's plan for a taxpayer-funded mortgage bailout. The very beginning of the tea parties was about bailouts and the growth of government.
But the Associated Press still seemed to miss the point about worries over an overspending government in an April 15 article by Calvin Woodward about the Tea Party rallies. In that report, Woodward defended Obama's tax policies.
"Lost in the rhetoric was that taxes have gone down under Obama," Woodward wrote. "Congress has cut individuals' federal taxes for this year by about $173 billion, leaving Americans with a lighter load despite nearly $29 billion in increases by states. Obama plans to increase taxes on the wealthy to help pay for his health care overhaul and other programs."
On Wednesday's CBS Early Show, fill-in news reader Betty Nguyen reported on President Obama's new plan to cut back America's space program, but failed to mention sharp criticism by astronauts Neil Armstrong, Jim Lovell, and Eugene Cernan in a signed letter sent to the White House.
Nguyen noted: "President Obama unveils a revamped plan for America's manned space program....reviving part of a plan he canceled earlier this year. NASA will begin development of a crew capsule called Orion....[it] won't go to the moon, but will be used as an emergency vehicle on the space station."
In contrast, on ABC's Good Morning America, anchor Juju Chang began a news brief on the same topic this way: "President Obama under fire, accused by the first man to set foot on the moon of leading the U.S. space program down a path of, quote, 'mediocrity.'" Correspondent Jake Tapper followed: "Armstrong and two other former astronauts wrote that it was a terrible decision. They called it 'a misguided proposal that forces NASA out of the human space operations for the foreseeable future.'"
NBC's Today also covered the criticism, as anchor Natalie Morales explained how: "three Apollo astronauts call the changes devastating. In a letter, Neil Armstrong, James Lovell and Eugene Cernan write, 'The President's plan destines our nation to become one of second, or even third-rate stature.'"
Last May, I wrote a column called "The Federal Deficit Becomes Nearly Indecipherable," pointing to a mid-fiscal year policy shift in how the government handles the Troubled Asset Relief Program (TARP) and other bailout efforts:
What Treasury did in April (2009) was to convert the TARP “investments” it began making in October in the country’s financial institutions, General Motors, Chrysler, and who knows what else to NPV (Net Present Value) accounting.
Mixing hundreds of billions of dollars of NPV into what has essentially been a cash flow report turns the Monthly Treasury Statement, and deficit reporting in general, into an exercise that will become not only become ever more difficult to comprehend, but one that will also be routinely subject to political manipulation.
One such political manipulation occurred in the March 2010 Monthly Treasury Statement that was released on Monday, and it involved NPV accounting (to be explained in a bit). While the Associated Press's Martin Crutsinger dutifully noted its existence, he deceptively described its meaning in his report's opening sentence, and in doing so played along with that manipulation (bold is mine):
And now a liberal group called Campaign for America's Future (CAF) is attacking CNN for planning to air a documentary called "I.O.U.S.A.: Solutions," suggesting the network is "fanning the flames of deficit hysteria." The group's co-director Roger Hickey is demanding CNN impose a "Fairness Doctrine" on itself.
"This weekend, CNN is giving four hours of free airtime to the leading propagandist fanning the flames of deficit hysteria, Pete Peterson, along with his lackeys," Hickey wrote in an e-mail sent to supporters and also posted on the Huffington Post. "[A]nd if they do go ahead with this programming, tell them to provide balance to Pete Peterson's deficit hysteria. Give equal time to defenders of Social Security, Medicare and public investment."
New York Times columnist Charles Blow and MSNBC contributor Mike Barnicle traded liberal talking points like Topps baseball cards on today’s “Morning Joe.” Confident the American people care more about eliminating preexisting conditions and expanding health insurance entitlements than the $569.2 billion tax increase and the $1.2 trillion price tag, the journalists failed to substantiate their claims with anything more than their liberal impulses.
“Most people want what they have in this bill or more,” insisted Blow. “We cannot let Republicans take over that talking point, which is that most people don’t want this bill somehow because it is too liberal. That’s just a lie. That is just a lie.”
Really? The American people don’t think the largest tax increase in American history is too liberal? The American people don’t think an unprecedented expansion of government control in the health insurance industry is too liberal? Blow’s failure to back up his assertion renders it laughable.
“Democrats used the word 'giddy' to describe their reaction when they got the cost estimates from the non-partisan Congressional Budget Office (CBO),” NBC's Kelly O'Donnell relayed Thursday night, but she could have been talking about CBS's Katie Couric and Nancy Cordes who shared the giddiness in touting the CBO numbers, favorable to Democratic spin on the health bill, without any caveats or reservations -- yet with a dose of exaggeration.
“The price tag certified,” Couric trumpeted in teasing the CBS Evening News before leading with how the CBO “put out a report that may help win over some Democrats,” reciting: “It says the plan, which would cost $940 billion over 10 years, would reduce the deficit over that same period by $138 billion.” She then cited a claim CBO didn't make: “It would cut the deficit over 20 years by more than $1 trillion.”
Cordes pegged $1.3 trillion as “the amount by which the final health care bill would reduce the deficit over the next 20 years,” bucking up the CBO's credibility: “That's according to the non-partisan Congressional Budget Office, which is trusted by both parties as the authority on budget matters.”