Thursday, March 14, 2013

the phone is ringing, the green one

The economy continues slowly gain steam as unemployment claims fell another by 10,000 to a five year low. Retail sales were up significantly in February and housing continues to recover from the collapse of the Bush bubble. Hourly wages are up more than the rate of inflation but not by any great amount. Corporate profits are high of course.

The Congressional Budget Office estimates the annual deficit at a bit over 800 billion with half of that amount for safety net outlays due to high unemployment and low wages. The easy fix for that would be to increase the minimum wage so that people who work don't need food stamps. Why does Walmart need to have its workers subsided by the taxpayer? Because it can.

Obama has taken the CBO report to his lunch meetings with Republicans to basically tell them that he doesn't need to make nice with the hardliners at all. If they like flying back home on weekends to airports without traffic control, he can live with that. The budget is under control long term, no compromise is needed. He tells them,"'s not smart, we can do better". You can bet Nancy Pelosi is working on the same group of Republicans that defected on the fiscal cliff to come up with a real budget.

The Republicans would like to reinstate the cuts to Defense spending while allowing the normal people affected by the sequester to swing in the breeze. But that requires Obama's signature, so not so fast. As layoffs by contractors back in the districts start to kick in, the pressure will build. You see the Military-Industrial Complex is careful to build something in almost every Congressional District. The easiest budget items to cut are parts from these plants. Obama has said he's just about ready to give up on fixing the sequester, you can bet the phones are starting to ring in Republican offices, the green phones with numbers only lobbyists have.

Paul Ryan is ranting that the Republican Party has to get out and tell people that they are 'the party of jobs'. Notice he didn't say that they actually are 'the party of jobs', just that they need to tell people that. That's as close to honest as he gets. His 'new' budget does away with Obamacare, it conveniently keeps the new revenue and the cost savings, but cuts all the benefits. His budget sharply cuts taxes for the rich while estimating that tax revenue with magically rise with economic growth not seen since before Reagan. No explanation how this will happen, except that the 'job creators' will not be burdened with taxes so they'll hire people. They won't have any new market, so why make more stuff they can't sell? Short answer: they won't, in fact they'll make less stuff as the money disappears from the economy. They'll lay people off and cut wages, just like they always do when given the opportunity.