Great Charts on the Sequester Cuts

Here is a great set of graphics on how much will come out of which programs and states, put out by ProPublica

Fast and Easy way to look at the Obama 2013 Budget proposal

New York Times Graphic -- published today -neat!

Gingrich says CBO must go.

Why I'm taking Gingrich seriously, knowing what I know about him from my CBO days, is a mystery to me. I guess it's just that I worry about who the Prez might be if not Obama.  So, here he is at his most Gingrich, espousing the death of CBO BECAUSE OF ITS HEALTH WORK!  Neat!  Thanks to the CBO alumni group for alerting me to this.  Link to Stan Collander's article is here: http://capitalgainsandgames.com/blog/stan-collender/2416/newt-gingrich-wants-kill-cbo

The best summary of the causes of the financial crisis

The Washington Post's Sunday business section had a wonderful piece by Barry Ritholtz on the causes of the meltdown:  The Big Lie.
He could have made more of the long-running idiocy of the SEC that anointed the three ratings agencies (S&P, Moodys and Fitch) as the only "nationally recognized" sources of bond ratings, thereby requiring pension funds and insurance companies to rely on those ratings for SEC compliance, and at the same time taking the pension fund managers off the hook for failure -- "What else could I do?  I had to rely on the ratings agencies.  Besides, if I had to do more work, I wouldn't have been able to go home to my beautiful family and our house in the Hamptons (or Martha's Vineyard, take your pick) on the weekends."

Here's some charts he put up on his web site as of 11-20-2011. Ritholtz Charts

The state of the global economy, by Joseph Stiglitz

Much has been made of his nobel prize in Economics, but let's face it...there are now a lot of those running around.  Nevertheless, I always find his papers and remarks understandable, which is a big thing in my view.
Here he has a sort of radical idea for saving the world economy, and he also puts the "state of" in an excellent perspective.
Here it is:  Stiglitz World Bank Talk

Dems help keep low tax rates on wealthy.

We expected it of the Republicans, but this Washington Post Article reviews the voting patterns of many Democratic legislators (and President!) who created and protect the very very low (now 15%) capital gains tax.  Only the wealthy have substantial capital gains that are not sequestered in tax-deferred or tax-free IRAs or 401-Ks.  It takes a wealthy person to benefit from the low capital gains tax.  If we need to raise revenue, we should start there.

How bad is your State's credit risk?

Barron's  has a great article this month on the state of our States' credit ratings. Whether you're an investor or not, it's worth a look to see how your own State fares in the "best" list and the "worst" list. After all, in the end the taxpayer will pick up the tab, and that's all of us one way or another.
Little Delware (the Blue Hen State) turns out to have the strongest credit position among all states. How do they do it, considering that they must spent gadzillions rebuilding the beaches every spring to keep the ocean from washing it away?
I very much like the layout of criteria for assessing a State's credit health. Hope this link to the article works. Good, Bad and Ugly. If not, go directly to Barron's and search for the article.

Imagine the USA without regulators of gas pipelines.

When your TeaParty friend starts up again this fall, calling for deep federal discretionary spending cuts, here's a great example to (figuratively) shove in her face of an industrial regulation that we may not be able to live without.
This gas pipeline example involves faulty welds holding together the Millenium Pipeline Company's line through the southern tier of New York State.  Cities I know well -- Spencer, Oswego to name two --are in the pipeline's path. For a map of the track of the pipeline through New York's southern tier, see NaturalGasWatch.org. 
ProPublica has a good article on how bad the situation with the pipeline is.  If you know people who live in the southern tier of NY State, pass this information on. 
We should start a catalogue of federal government "discretionary" programs that are endangered by steep budget cuts.  I betcha our teaparty friends would say, well, of course not THIS program, but the other, wasteful, programs are the ones that need to go.  Or, maybe they would say this is just an outlier situation that the company will handle on its own quite nicely.  (I wish the company had addressed the issue somewhere in its web site. I would sleep better at night on behalf of my friends in  Oswego and Spencer if I thought the company was taking safety issues seriously enough to inform the public.)
We middle-of-the-roaders should start to catalogue federal discretionary programs, especially regulatory ones, that are worth their costs beyond a shadow of a doubt.  And, ask our teaparty friends to start listing the specific programs or regulations that are not worth their costs.  Let's see what we all come up with.

Details of the Budget Deal in (sort of) plain language

CBO's cost estimate lays out the essence of the provisions, and also a concise description of how the process going forward will work.   Even better is the CBO Director's Blog.   There is no mention of the CPI change as described in my previous post.  So, that provision appears not to be in the current agreement.  Perhaps it will come in the next one, if there is ever an agreement at any time ever again over anything.

The budget deal will include a hidden Social Security benefit decrease

[Update Note 8-3-2011:  This provision was not included in the Budget Agreement of 8-1-2011.  It may come up again in the further cuts implied by the agreement.]

I'm not against the benefit decrease that I'm about to explain.  It's relatively minor.  But, it's emblematic of the snookering job our pols give  us through legislative deals that are too arcane for us to understand.   When the Pols tell you they haven't touched Social Security or government pensions with the deal now in the making, you can say, "sure, buddy,...just keep passin' the kool-aid so's I can drink."
My trip to Wegmans yesterday to buy raw frozen shrimp for a casserole will explain all, if you stay through the arcania of the next paragraph or so. 
In a nutshell, the budget deal will change the basis for the annual COLA update from the current Consumer price index (CPI) to a Chained Consumer Price Index (C-CPI).  I've heard several experts, including democratic pundits (see NPR program),  say that this is a "more accurate" way of measuring the update than is the standard CPI.  I say "Hooey".
The government calculates the CPI each month by using a careful sample of a defined "market basket" of goods and services that consumers buy to keep themselves going. This market basket is set every 5 years or so.  It includes our purchases, ranging from toothpaste and broccoli to automobiles and housing.  The price of each component in the market basket is measured each month, and the overall CPI index value is based on the price today as a ratio of the price in a base year (say 1983) for each item.  Every item in the sample is weighted by its percentage of spending in a "weighting year," which is different from the base year.  Though the weighting years change from time to time, years can go by before new products are added into the market basket and new weights are calculated.
The weighted average in a particular base year (say, 1983)  is given an index value of 100, and today's value is calculated as the current weighted average of prices divided by the weighted average of prices on that base date.  The CPI for 2010 was 218 (compared with 100 in 1983).  That means that prices more than doubled in the 28 years from 1983 to 2010.  (See The Economic Report of the President 2010 for a table of CPI over the years.)
The chained CPI plays with the weights in a way that lowers the measured CPI.   Here's how.  Whereas the regular CPI uses  weights for some prior year -- say, 5 years ago -- which reflect the choices consumers made among all these items back then, the C-CPI keeps changing the weights to reflect the current distribution of expenditures across items.  So... let's say that the price of one item goes up radically while the prices of all other items increase only slightly.  What usually happens is that people stop buying so much of that item and its weight in the index declines while others go up.  Best example is steak vs hot dogs.  Let's say the price of beef is going up faster than other things  (due to all those Chinese rich people who suddenly want to get fat on steaks).  Now, instead of our tasty filets every Saturday night, we have a nice hot dog with kraut and ketchup.  We aren't thrilled, but we adjusted, right?  And we lived within our budget.  Our quality of life has gone down, at least by a smidgen.  And lots of us do this, so that the value of steaks in our market basket today is now lower than it was last month.  So, the government "rewards" us by reducing the weight placed on the price increases for steaks and increasing the weight on all other items, including hot dogs, which haven't increased so much.
One expert, Dean Baker, says that this switch to the chained CPI will likely reduce social security and other pension benefits with COLAs (e.g., federal employees) by about 0.3% a year, or roughly 3% over 10 years.  That's not very much, and it's the result of our resilience as Americans in learning to cope with adversity.  But, IT IS A REDUCTION IN BENEFITS!  So, don't let anyone -- Dem or Republican or TeaParty -- tell you that you haven't already given. 
Now to Wegmans and my shrimp.  I have a very good recipe for Sullivan Island Shrimp, which needs a pound of raw shrimp.  So, I went to Wegmans, found a bag of frozen raw shrimp, couldn't find the price, and finally with help learned that 2 pounds would cost me 29 bucks.  I couldn't believe it.  Rechecked.  Sure enough.  Well, just six months ago, I could get 2 pounds for about 16 bucks.  After much back and forth -- I put it in my cart twice before finally putting it back -- I decided that the nice chicken pot pie in my freezer would do just fine.  "Wow!," I thought.  "I've reached that point -- can't (or don't want to) afford my signature shrimp dish.  Oh, well, I'm coping."  And, of course, I'm helping the government reduce my social security payment in the coming year.

Fracking for natural gas, or conserving at the pump?

The new fracking technology proposed by the natural gas industry promises to reduce energy costs in the near term, but at what cost to the environment?  Fracking began in the US in Wyoming, and the current action is in Pennsylvania, New York State, and even Maryland.  Here is a ProPublica article on the impact of fracking on fresh water in Wyoming.  It's long but gripping.
Meanwhile, I'm cheering the rising price of oil, due to international events and China's demand, which may lead us Americans to start conserving at the pump.  There's nothing like $4.50 a gallon to get one to start thinking about high-mileage cars.  A gas tax that would get us there-- coupled with fixed dollar relief through payroll tax holidays and social security checks -- is what I think is the only sensible long-run energy-related response to so many problems:  balance of payments, federal deficit,  national security, and global warming,
Especially if you live in New York, Maryland or Pennsylvania, and are alarmed by what's happening in the shale bed regions of those states, you can pass on the Propublica article.   People should start contacting their state legislators about this before it's permanently too late. 

ProPublica is an on-line experiment in investigative journalism that is independent and thorough.  You can subscribe to email alerts -- I do. 

My prediction for 2012 Republican Presidential Ticket

One of the joys of having this little personal blog is that I can indulge my favorite hobby-- to be able to say "I said that this would happen."  This post is to go on record with my prognostication for the republican ticket in 2012.  That way I can say, "See?.."
or, more likely, "Well, I don't  know diddly about politics, and never said I did."  (That latter statement is true.)
Here goes:
Republican Nominee for President, 2012, Mitch Daniels, Governor of Indiana
Republican Nominee for Vice-President, 2012, Marc Rubio, newly elected Senator from Florida.
This prediction should in no way be considered an endorsement of the above.  I'm just having fun with my told-you-so hobby.  You, dear reader, may have been a recipient of such statements in the past regarding all manner of things, and you know that I live for the times when you say something to me like,  "Do you remember way back in 2007, Judy when you told me to sell my house now rather than to wait for the price to improve?"  Well, you were right!
Now, if you REALLY want to have fun with me, why don't you counter --in the comments -- with your own predictions.  And then we can compare our prescience in September 2012 (God willing).

Federal Employees Health Plan 2011 Premiums

The US Gov't OPM announced the new rates for 2011 for the FEHB plans. Here is the chart showing 2011 premiums for national plans. For HMOs and other plans available in your area, click on FEHB site page.

For those of you who hate federal workers, you can see what the premium subsidy is for federal employees and retirees. Before you explode and bloviate, however, remember that salary + benefits = total compensation, and in general total federal compensation is not out of line with the private sector. In my view, federal employees are generally more risk averse than private sector workers, or more dedicated to public service, or lucky to have found a safe federal job and aware they couldn't command the same salary in a more competitive system. (Or some combination thereof.) We're no angels, but we aren't total ripoff artists, either.

Areas of agreement & disagreement on how to reduce federal deficit

The Committee for a Responsible Federal Budget just published the results of its on-line budget simulation project, where people could vote on which actions they would prefer to see the Federal government take. I'm amazed at how much agreement there is across parties on some things. Seems that it's likely the Social Security retirement age will be raised to 68, if lawmakers follow the will of the pople.

To tackle the federal deficit EVERYONE must suffer some.

Here's an analysis from the Committee for a Responsible Federal Budget which lays out how federal employees have fared over the past few years compared with employees in the private sector. In my view, federal employees should share in the pain to avoid an angry backlash from the American taxpayer in the future.
But, so should everyone else. AARP should take a leadership role here, but I'm not holding my breath.