rrbatch

Obama's Role in the Market's Next Breakout

Tim H - You mention "some pork in stimulus". Maybe you haven't taken the time to lay out all the appropriations in the House bill in a spreadsheet. I have.

You say "Who here on this board does not agree that this country's infrastructure needs to be rebuilt and modernized?" I can agree that some modernization is needed, and we already have a porcine transportation bill passed in the last congress to do that. The additional funds in the "stimulus" bill for highways amount to $30B - about 3% of the total package. More goes to rail and mass transport for which users do not pay the cost and that need perpetual taxpayer subsidy.

The majority of the appropriations are going to typical liberal Democrat constituencies, e.g.: justice assistance grants ($3B); NSF research ($2.5B); workforce training ($4B); grants to local education agencies ($13B); Pell grants ($15B); and the biggest grunt of all, state fiscal stabilization fund to bail out the most profligate states ($79B). I see no stimulus here for the private sector, just for enlarging the corps of bureaucrats.

With each trillion dollars added to the national debt, we incur another $50B of interest expense each year at the 5% average rate currently paid on Treasury notes and bonds. With $10 trillion of debt outstanding, we devote $500B per year to interest alone (nearly 25% of the federal budget), with no hope of actually paying down the debt. At least some individuals are paying down their own debt, but not the government. Where does this end? In a US default? Are we going to wind up like Argentina?

Forget the idea that BO or Mme. Pelosi know what is needed to resuscitate the economy - neither have any background in business, and BO has hired a bunch of academics and tax cheats to give him economic advice. Experience has demonstrated that increasing tax rates will result in reducing government revenues. The only things shown to reverse the downward spiral we are in are a major war or a reduction in tax rates. Not a "new" New Deal.