It’s Official: 2018 Federal Deficit Largest Since 2012 The federal government spent $790 billion more than it taxed during fiscal year 2018. The deficit is about to get worse. Much worse.

10/17/2018

The Confirmation Files Business, Economy, government, Politics , , Leave a comment

The federal government finished the 2018 fiscal year—it ended on September 30—a whopping $779 billion in the red, the largest annual budget deficit since 2012.

The current fiscal year is likely to see an even larger deficit, potentially in excess of $1 trillion.

The Treasury Department’s final data for the 2018 fiscal year, released Monday, shows that the deficit was driven by a combination of higher spending and additional borrowing. The latter was necessary to finance the former, of course, though last year’s tax cuts contributed to the widening gap between how much money the federal government takes in and how much it spends.

Tax revenues were flat during 2018 and corporate tax collections fell by $76 billion, Treasury reported.

On it’s own, the fact that American companies were able to keep $76 billion out of the government’s hands is cause for celebration. Those funds will certainly be put to more productive uses because they won’t be funneled to Washington. Trump’s corporate tax cuts brought the United States in line with the rest of the world, thereby increasing U.S. competitiveness in a global market.

But tax cuts without spending cuts are a recipe for disaster. While the Treasury’s data for fiscal year 2018 looks backwards, the trajectory for the future is the bigger story.

The $779 billion deficit for fiscal year 2018 was up 17 percent from the $666 billion deficit recorded in fiscal year 2017. The data show that the deficit is growing faster than the economy as a whole. In 2017, the federal deficit was equal to 3.5 percent of gross domestic product (GDP), but grew to 3.9 percent of GDP in 2018.

According to the Congressional Budget Office, current policies have the United States on course for a $2 trillion deficit before the end of the next decade.

“It’s an unsustainable fiscal course that will lead us to debt overtaking the size of the entire economy in as soon as a decade, and not long after topping all-time highs as a share of the economy not seen since World War II,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, which advocates for balancing the budget, in a statement.

Driven by old-age entitlements and surfing on a wave of retiring boomers, the federal government will continue to pile on more debt unless serious structural reforms are undertaken. A new analysis from longtime congressional budget aide Brian Riedl, now a senior fellow at the Manhattan Institute, a free market think tank, shows that Social Security and Medicare will run a $100 trillion deficit over the next 30 years. With the country already facing a national debt of more than $20 trillion, massive annual deficits in future years are likely to drive-up the cost of borrowing and cause America’s already astronomical debt to grow at a faster pace, he warns.

That this latest increase in the deficit happened during a period when Republicans had full control of the federal government reveals that they were never very serious about balancing the budget. Even now, they refuse to recognize the problem. Democrats, meanwhile, are promising to spend even more on entitlements, if and when they return to power.

Almost nothing about the current state of affairs in Washington suggests that policy makers are prepared to deal with this looming catastrophe. Today’s news is a reminder that the reckoning is coming, regardless of whether our elected officials are ready for it.

By Eric Boehm/Reason

Posted by The NON-Conformist

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What the Black Men Who Identify With Brett Kavanaugh Are Missing

10/16/2018

The Confirmation Files Blacks, Crime, History, Law, Legal , , , , , , , , , , , , , , , , , , Leave a comment

On Tuesday night, I was in an auditorium with 100 black men in the city of Baltimore, when the subject pivoted to Brett Kavanaugh. I expected to hear frustration that the sexual-assault allegations against him had failed to derail his Supreme Court appointment. Instead, I encountered sympathy. One man stood up and asked, passionately, “What happened to due process?” He was met with a smattering of applause, and an array of head nods.

If you think Kavanaugh receiving some measure of support from black men in inner-city Baltimore is as strange as Taylor Swift suddenly feeling the need to become a modern-day Fannie Lou Hamer, then brace yourself: The caping for Kavanaugh does make a twisted kind of sense. Countless times, black men have had to witness the careers and reputations of other black men ruthlessly destroyed because of unproved rape and sexual-assault accusations. And as that Baltimore audience member also argued, if the claims were made by a white woman, expect the damage to be triple.

 

More from Jemele Hill @The Atlantic

Posted by Libergirl

What is ‘stop-and-frisk’ — and why does President Trump want it to happen in Chicago?

10/09/2018

The Confirmation Files Blacks, Crime, government, Politics , , Leave a comment

President Donald Trump said at a police conference on Monday that Chicago should implement a “stop-and-frisk” law to help cut down on crime.

“The crime spree has a terrible blight on that city, and we will do everything possible to get it done,” Trump said at the International Association of Chiefs of Police Annual Convention in Florida, according to ABC. “It works and it was meant for problems like Chicago. It was meant for it. Stop and frisk.”

But just what is the law — and why do some see it as racist?

And why do others see it as just being tough on crime?

What is stop-and-frisk?

Stop-and-frisk describes a divisive policy in New York City that allowed officers to stop anyone they believed “committed, is committing, or is about to commit a felony or a Penal Law misdemeanor” if they have a “reasonable suspicion,” The Washington Post wrote.

Some other states have adopted “stop and identify” laws that require people who are detained by police to identify themselves if an officer has reasonable suspicion that they were involved in a crime.

But the law in New York City, first implemented in 1999, gained nationwide attention — and Trump hailed the city as proof that the policy can cut down on crime.

“Rudy Giuliani when he was mayor of New York City had a very strong program of ‘stop and frisk,’ and it went from an unacceptably dangerous city to one of the safest cities in the country,” Trump said Monday, according to ABC. “And I think the safest big city in the country. So it works.”

In New York City, more than 500,000 people were stopped each year from 2008 to 2012 — with more than 5 million stopped since 2002, according to the New York Civil Liberties Union.

So, did it work in New York City?

It depends on whom you ask, and what you define as “work.”

Supporters of the law will tell you that the stop-and-frisk policy can help take guns off the streets. As reported by Forbes, the New York Police Department said the policy led to the recovery of 770 guns in 2011 alone. That meant a gun was found 1.9 percent of the time during a stop.

And the following year, 715 guns were found in New York City because of the policy, according to FiveThirtyEight. As noted by the outlet, data from the Bureau of Alcohol, Tobacco, Firearms and Explosives found that 18 percent of all guns seized in 2012 in New York City were found during a stop-and-frisk session.

Data also show violent crimes and murders decreased along with the implementation of stop-and-frisk in New York City, according to The Washington Post.

Critics point out that the rate of crime and murder remained level even after a federal judge ruled the city’s specific stop-and-frisk policy unconstitutional in 2013, according to The Washington Post.

But Heather Mac Donald, a political commentator, argued in The Wall Street Journal that “proactive policing” under the law led to a decrease of murders by nearly 80 percent.

What are the critiques of stop-and-frisk?

Many point to apparent racial profiling in who gets stopped.

In 2011, for example, 685,724 people were stop-and-frisked, according to data from the New York Civil Liberties Union.

Of those people, 88 percent were found to be innocent. Overall, just 9 percent of those stopped were white, while 53 percent were black and 34 were Hispanic. The 2010 census reported that 33 percent of New York City residents are white, while 26 percent are black and another 26 percent are Hispanic.

Black people make up a majority of those stopped for every year there is data, while white people barely make up 10 percent of those stopped on average. In a report, Jeffrey Fagan, from Columbia Law School, examined police data on stop-and-frisk and found that race has a “marginal influence” on who gets stopped — even when accounting for “the social and economic characteristics” of the area.

Fagan also said there is little evidence that the policy helped prevent crime or reduce murders.

“Anyone who says we know this is bringing the crime rate down is really making it up,” Fagan told The Washington Post in an interview.

Why was New York City’s stop-and-frisk law ruled unconstitutional?

For the same reason as Fagan’s concerns.

Judge Shira Scheindlin ruled in 2013 that the law violated the Fourth Amendment rights of citizens, and that the practice was “racially discriminatory” because of the disproportionate numbers of people of color stopped by police because of it, according to the Center for Constitutional Rights.

After her ruling, the number of police stops of people of color dropped to 18,449 in 2015 — even though that number was just more than 160,000 in 2013, according to The New York Civil Liberties Union.

“This is a 96 percent decrease from the height in 2011 of more than 600,000 stops,” Scheindlin wrote in the National Black Law Journal in 2016. “And what has happened with crime statistics in the meantime? They have remained steady!

“The enormous decrease in stops has clearly not caused an upsurge in crime despite alarmist predictions by our former Mayor Michael Bloomberg and Police Commissioner Ray Kelley,” she continued.

By Josh Magness/MiamiHerald
Posted by The NON-Conformist

Donald Trump’s grotesque fraud

10/04/2018

The Confirmation Files Business, Economy, Education, Entertainment, Politics , , , , Leave a comment

When Donald Trump set up Trump University, he promised to share his “secrets of success.” He said he would tell people how they could “just copy exactly what I’ve done and get rich.” It was a fraud. Now, courtesy of the New York Times, we know for certain it could never be anything but a fraud. The only knowledge Trump can impart to anyone about wealth is an unteachable skill: have rich parents.

As the Times’s investigation revealed, Trump’s success depended on massive transfers of family wealth from his father, real estate developer Fred Trump. Ultimately, Fred Trump gave hundreds of millions of dollars to his children, a staggering amount turbocharged, as the Times reported in extensive detail, reportedly by fraud. By age 3, the Times reports, the young Donald Trump received an income that was the equivalent of $200,000 in today’s dollars from his dad. He was a millionaire before finishing elementary school. The largesse continued into adulthood. He even paid for the adult Donald’s car, and Manhattan offices — the same ones where the future president gave interviews claiming business genius.

The story Trump told on the campaign trail, about how he received only a “small” $1 million loan from his dad to build his business — and one Fred Trump made him pay back. “It has not been easy for me,” he whined. Garbage. The Times reports that the senior Trump loaned his son $60.7 million at a minimum, most of which was never repaid.

So why the pretense? Well, Americans love the myth of the self-made man. A foundational belief in our culture is that anyone can become a millionaire — or even better, a billionaire — with just the right amount of hard work, gumption and smarts. There is an idea that the person who goes out and makes himself — and it is almost always a man — a fortune is somehow a more skilled and smarter human being, capable of using his skill in one industry to master another.

Americans love this myth despite evidence that it is widely exaggerated. The United States has less class mobility than many European nations, but Americans think we enjoy more. In the United States, the quickest and easiest way to make it to the 1 percent of wealth holders and remain in that world is to be born into it.

One reason we might love this myth as much as we do: It allows us to avoid hard discussions about the reality of class in the United States. All too many Americans, the beneficiaries of what I like to call the upper-middle-class welfare state, can convince themselves that they are uniquely deserving. When Jessica Wiederspan, now a researcher studying basic income with Y Combinator, interviewed working- and middle-class families in Rust Belt states, she found many in absolute denial about what their financial backers accomplished for them. One woman, the recipient of family aid that permitted her everything from a nice home (with a mortgage in her mother-in-law’s name) to soccer lessons and summer camp for her children, told the researcher she believed the vast majority of people who did well in the United States, “are people who are willing to work for what they want.” As for the others, she sniffed, “they expect handouts to get from here to here.”

In fact, as both Wiederspan’s research and the Times story shows, it is frequently the rich and well-to-d0 who seek handouts without copping to it. It is the Trump administration that signed into law a tax-reform package that gave the typical worker a tiny and time-limited tax cut, while showering the wealthiest with a massive and permanent cut. It is the Trump administration that is seeking to make staggering cuts in social safety-net programs, such as Medicaid and food stamps, which is the only help available for people who hit a rough patch or are mired in poverty. At the same time, it is the Trump family — and no doubt many other families — who seek to skip out on paying taxes, money that can be used to help those who lack their financial advantages. That too many Americans tacitly accept this reality allows frauds such as Trump to flourish.

By Helaine Olen/WAPO

Posted by The NON-Conformist

Here’s What Congress Was Doing While You Were Watching the Kavanaugh Circus The passage of tax reform 2.0 blows a huge hole in the budget, and a much-touted opioid bill might just make the crisis worse.

09/29/2018

The Confirmation Files Economy, government, Politics , , , Leave a comment

While much attention was diverted by the political circus surrounding Judge Brett Kavanaugh on Thursday and Friday, Congress passed a massive spending bill and another round of tax cuts that will combine to blow an even bigger hole in the federal budget. Lawmakers also found time to pass a bill restricting Americans’ access to prescription painkillers, something that’s likely to force people who are dependent on or addicted to opioids (a distinction seemingly lost on legislators) to seek out more dangerous alternatives.

Let’s start with the spending: Friday’s passage of the House Republican’s so-called Tax Reform 2.0 proposal will likely get heavy rotation in campaign ads over the next five weeks, even though the bill faces an uncertain future in the Senate. The bill does several things, but the key part of the proposal is the permanent extension of the individual and corporate income tax rate cuts enacted last year. Those lower rates are set to expire after 2025—reverting to their previous levels—but Republicans have been aiming for a permanent extension since before the final votes were cast on last year’s tax bill.

If Republicans still cared about deficits, Tax Reform 2.0 would be a non-starter. Having last year’s tax cuts expire in the middle of the next decade was a maneuver (or a gimmick, if you prefer) designed to limit the impact of tax reform on future deficits and the national debt.

Unsurprisingly, then, extending those tax cuts will add to the deficit. According to an analysis by the Joint Committee on Taxation, a nonpartisan number-crunching agency within Congress, the bill will add $631 billion to the deficit over a decade. While the JCT says an extension of the tax cuts will cause the economy to grow by about 0.5 percent in the years immediately after 2025, additional revenue from that growth will cancel out a mere $86 billion of the tax cut’s impact on the deficit. Other analyses of the bill by the left-leaning Tax Policy Center and the right-leaning Tax Foundation make similar estimates about the long-term effect on revenue.

The bottom line? Even when accounting for increased economic growth, Tax Reform 2.0 comes with a price tag of more than $500 billion added to the deficit—an amount future taxpayers will have to cover.

The bill is not without its charms. A proposal to created so-called universal savings accounts would allow Americans to create tax-advantaged savings accounts where they could stash up to $5,000 annually without having to deal with all the restrictions and limitations that come with similarly structured 401(k) and IRA plans now. Encouraging savings—especially savings that are partially sheltered from the tax man—would be a positive step that helps families plan for the future.

But if you needed further evidence that Congress doesn’t give a damn about planning for the country’s future, look no further than the passage this week, in both houses, of a $853 billion spending bill. About $600 million of the spending is directed towards the Pentagon—boosting the military budget to levels not seen since the height of the Iraq War.

The bill is now on its way to President Donald Trump’s desk. He must sign it before October 1 to avoid a government shutdown, which might be complicated by the lack of funding for his border wall.

The spending bill has raised the ire of the few fiscally conservative Republicans who sit in Congress. Rep. Justin Amash (R-Mich.) encouraged Trump not to sign the bill and blasted his fellow lawmakers for being “far worse than the politicians they once derided.”

Justin Amash

This gigantic, wasteful, pathetic spending bill passed the House and Senate. @POTUS @realDonaldTrump said, “I will never sign another bill like this again,” about the last bill like this, the omnibus. He’ll now be put to the test.

$850 BILLION of spending in one year in one bill—and Republican leaders have been bragging to everyone about this massive spending increase. Vote is TODAY. The same Republicans who used to blast GWB’s spendthrift GOP have become far worse than the politicians they once derided.

While the Kavanaugh hearings devolved into partisan acrimony, Congress was also serving up reminders of what happens when nearly everyone agrees. The Tax Reform 2.0 vote went mostly party line, but spending an obscene amount of money was, once again, a bipartisan affair in both the House and Senate.

So, too, was the passage of the Support for Patients and Communities Act, a much-touted bipartisan effort to address the opioid crisis in the most congressional of ways: by throwing money and more prohibition at the problem.

The final version of the bill, which passed the House 393-8 on Friday and now heads to the Senate, will spend about $8 billion on state-run opioid treatment centers and research into non-opioid pain killers. It also beefed up border security in the name of stopping the importation of illicitly manufactured fentanyl and other lab-made drugs.

But the bill may unintentionally increase demand for fentanyl and other drugs used by opioid addicts who can’t get a legal fix. Several provisions in the proposal would restrict access to prescription painkillers; other aspects of the legislation would increase penalties for drug manufacturers and doctors deemed to have over-sold and over-prescribed opioids.

As J.J. Rich, a policy analyst for the Reason Foundation (which publishes this blog) notes in the November issue of Reason, previous crackdowns on prescription drugs have actually made the opioid crisis worse.

“It’s clear that the black market has claimed the economy ceded by restrictions on the legal market,” Rich notes, citing Data from the National Survey on Drug Use and Health show that pain reliever abuse rates have been flat since 2002. “When government restricts access to something people want, it drives demand to the black market. In this case, as opioids have become increasingly difficult to obtain legally in the last decade, users have switched to “diverted” prescription medications and illicit alternatives, including heroin. And just as Prohibition pushed bootleggers to switch from beer to potent bathtub gin, traffickers are increasingly adulterating their narcotics with potent synthetic opioids such as sufentanil—a substance that can be up to 500 times stronger than morphine.”

By Eric Boehm/Reason

Posted by The NON-Conformist

Peter Schiff: The Latest Jobs Report Was Anything But Strong

09/29/2018

The Confirmation Files Business, Economy, Education, government, Politics , , Leave a comment

The August jobs report came out last Friday. Mike Maharrey offered a little bit of analysis during the Friday Gold Wrap podcast, saying he was skeptical that the actual employment situation is as great as the mainstream seems to think. Peter Schiff offered a more in-depth breakdown of the employment report in his latest podcast, saying it was “anything but strong.”

The headline number was the 201,000 jobs employers added last month. That came in above expectations, and as Peter noted, people tend to get excited when the number pushes north of 200K.

“For an economy the size of the United States, this is really not a lot of jobs, even if we were creating 200,000 jobs a month.”

Peter said that lost in all the breathless reporting about that August number was the fact that the labor department revised the previous two months downward. It came to a net loss of 50,000 jobs. Analysts took 10,000 jobs away from the July number and 40,000 off the June estimate.

“So, it was a weaker report than probably what everybody was looking for, yet it was spun positive by the media because the current month was better than estimates.”

And when you look at the types of jobs the economy is generating, the picture becomes even less impressive. Not only did the labor department revise down the number of manufacturing jobs created in July, the economy actually lost manufacturing jobs in August, according to the report.

“So, we actually fired people in the month of August from manufacturing. So much for the manufacturing revolution. So much for how the tariffs are working and we’re bringing our jobs back and American manufacturers are bringing back the jobs. Three thousand pink slips sent out in the month of August. So, this is bad news. If you’re trying to hang your hat on the revival of American industry, of American manufacturing, we lost 3,000 jobs.”

Peter also looked at the labor participation rate. It was at 62.9 in July and had been ticking up. People in the Trump administration were even saying, “See, people are coming in off the sidelines.” Well, in the latest report, labor force participation came in at 62.7. The payroll-to-population ratio also dropped from 60.5 to 60.3.

This means fewer people are in the workforce. The unemployment rate held steady at 3.9%, but more people simply dropped out of the labor force.

“So, had people not left the labor force then the unemployment rate might have gone up, because maybe some of the people who left the labor force, well, now they’re no longer looking for jobs because they’re no longer part of the labor force. And so if you’re not in the labor force, you can’t be unemployed even though you’re not working.”

The gain in average hourly earnings got the most attention from the mainstream. It came in at 0.4 – higher than expected. The year-over-year number also came in higher than expected at 2.9%.

“Is a 2.9% year-over-year gain in wages really indicative of a strong economy, or is it indicative of inflation? See, I think it’s the latter. I think it’s inflation that is the reason wages are going up. Remember, wages are prices. They’re the price that you pay to hire labor. So, the price of labor is wages… The price of goods and the price of labor are both affected by inflation. So, because we have all this inflation, prices are rising. They’re rising for goods and they’re rising for labor.”

Peter noted the CPI is currently at 2.9%, exactly the same as the growth in hourly wages. And he said he thinks the real cost of living is rising far faster than 2.9%.

“If all you’ve done with your increased wages is keep pace with higher prices, there’s nothing to brag about.”

Peter went on to talk about how the markets reacted to the jobs report. Of course, it continued to buoy expectations that the Fed will keep pushing forward with interest rate hikes. That made Peter wonder what investors are smoking. You’ll want to listen to the rest of the podcast to get his breakdown of what all of this really means for the markets. One thing he pointed out is that people should be buying gold.

“Gold is an inflation hedge! It’s the absence of inflation that might be bad for gold. As inflation rears its ugly head, that makes gold look prettier and prettier. So, people should be buying gold when the inflation numbers are higher. Now, eventually, they will, once people realize no matter how hot the inflation fire burns, the Fed’s not going to put it out.”

By SchiffGold

Posted by The NON-Conformist

The Myth of Job Creation

09/29/2018

The Confirmation Files Economy, Education, government, Politics , Leave a comment

This is an old article but a relevant one.

The headlines from the last presidential debate focused on President Obama challenging Mitt Romney on issue after issue. There was a less noticed, but no less remarkable, moment when Mr. Obama agreed with Mr. Romney on something — and both were entirely wrong.

The exchange began with a question about the offshoring of American jobs. Part of Mr. Obama’s answer was that federal investments in education, science and research would help to ensure that companies invest and hire in the United States. Mr. Romney interrupted. “Government does not create jobs,” he said. “Government does not create jobs.”

It was a decidedly crabbed response to a seemingly uncontroversial observation, and yet Mr. Obama took the bait. He said his political opponents had long harped on “this notion that I think government creates jobs, that that somehow is the answer. That’s not what I believe.” He went on to praise free enterprise and to say that government’s role is to create the conditions for everyone to have a fair shot at success.

So, they agree. Government does not create jobs.

Except that it does, millions of them — including teachers, police officers, firefighters, soldiers, sailors, astronauts, epidemiologists, antiterrorism agents, park rangers, diplomats, governors (Mr. Romney’s old job) and congressmen (like Paul Ryan).

First, the basics. At last count, government at all levels — federal, state and local — employed 22 million Americans, with the largest segment working in public education. Is that too many? No. Since the late 1980s, the number of public-sector workers has averaged about 7.3 for every 100 people. With the loss of 569,000 government jobs since June 2009, that ratio now stands at about 7 per 100.

Public-sector job loss means trouble for everyone. Government jobs are crucial to education, public health and safety, environmental protection, defense, homeland security and myriad other functions that the private sector cannot fulfill. They are also critical for private-sector job growth in two fundamental ways. First, the government gets its supplies from private-sector companies, which is why Republican senators like John McCain have been frantically warning about the dire effects on job creation if Congress moves ahead with planned military spending cuts. (Republicans insisted upon the cuts as part of their ill-advised showdown over the debt ceiling.) Second, government spending on supplies and salaries reverberates strongly through the economy, increasing demand and with it, employment.

That means the economy suffers when government cuts back. A report by the Economic Policy Institute examined the effect of recent cutbacks at the state and local level — including direct loss of government jobs and indirect loss of suppliers’ jobs; the jobs that should have been added to keep up with population growth; and the reduction in purchasing power from other cutbacks. If not for state and local budget austerity, the report found, the economy would have 2.3 million more jobs today, half of which would be in the private sector.

The government does not create jobs? It most certainly does. And at this time of state budgetary hardship, a dose of federal fiscal aid to states and localities could create more jobs, in both the public and private sectors.

From NYT Opinion

Posted by The NON-Conformist

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