Patterico's Pontifications

10/22/2013

L.A. Times Emits More Bull$&!% About the State of the Budget

Filed under: General — Patterico @ 7:22 am



At the L.A. Times, Lisa Mascaro works hard to expand on the David Lauter spin that the budget is hunky-dory under Obama:

Interest in a big fix for the nation’s budget has faded among Democrats because many no longer believe it is necessary or worth the political perils. The deficit has declined rapidly, and the national debt, now $16.7 trillion, is projected to be stable or even declining as a share of the economy well into the next decade.

. . . .

Although the politics have shifted as the battered GOP struggles to regroup amid deep internal divisions, the nation’s budget problems remain difficult and economically daunting: The country is on a budget trajectory that, while substantially improved from the recent recession, remains unsustainable.

It’s nice that she admits it’s “unsustainable” — but the rest of this is claptrap.

It falls once again to Tom Blumer, who took apart Lauter’s nonsense, to correct Mascaro’s deception:

Lisa Mascaro, with the help of Brian Bennett, David Lauter and Michael A. Memoli, added to that effort late Saturday afternoon. In an item primarily about the politics of the Washington’s next scheduled fiscal standoff in mid-December, she did the usual spin on this year’s budget deficit (writing that it has “declined rapidly,” while conveniently forgetting that this year’s shortfall will be higher than any non-Obama deficit in U.S. history). She also gave undue credence based on poor historical accuracy to Congressional Budget Office projections which claim that “the national debt … is projected to be stable or even declining as a share of the economy well into the next decade.” But she ventured beyond the careful but misleading realm of the previous two statements into flat-out falsehood when she wrote: “The country is on a budget trajectory that, while substantially improved from the recent recession …”

Her Saturday writeup claimed that the national debt is “now $16.7 trillion.” No ma’am. It was actually $17.075 trillion as of Thursday, the latest figure available at the U.S. Treasury, thanks to the post-shutdown unwinding of the Treasury Department’s accounting and money-shifting tricks. These “undo” actions caused the debt to go up by a record $328 billion in a single day.

Substantively, yes, I realize that Mascaro added that our current path “remains unsustainable” at the end of the sentence I quoted above. That doesn’t change the fact that she has given her readers the completely false impression that the U.S. in far less fiscal and economic peril now than it was 4-1/2 ago, when the “recent” (cough, cough) recession ended.

. . . .

Only economic illiterates or blind partisans could pretend that a nation with a debt-to-GDP percentage in the 70s is “substantially improved” in comparison to four years ago, when the percentage was in the low 50s, and where the predicted situation at the end of this decade is now over 15 percentage points worse.

Once again:

Screen Shot 2013-10-20 at 10.03.37 AM

So relax!

P.S. It’s off topic, but while we’re bashing the Times, let’s not forget this “let’s trade Texas for England” piece sent to me by a few people. It’s self-refuting, which is nice, as it saves me the effort.

99 Responses to “L.A. Times Emits More Bull$&!% About the State of the Budget”

  1. A marvelous companion piece to this was just posted yesterday The Reality of America’s Finances, (what I’ve labeled as “The Great American Debt Chart”) posted by Jeff (at 11:26 AM October 21) over at:

    http://www.gatpatriot.net

    See for yourself.

    T (03662b)

  2. England is chock full of nasty inbred royal whores what can’t keep their dang clothes on

    Texas has oil and common sense plus also you get balmy nights, the air perfumed with magnolia

    you also get barbecue

    and pie after

    happyfeet (8ce051)

  3. The deficit has declined rapidly, and the national debt, now $16.7 trillion, is projected to be stable or even declining as a share of the economy well into the next decade.

    Looks like this time the talking point wasn’t botched up.

    .” No ma’am. It was actually $17.075 trillion as of Thursday, the latest figure available at the U.S. Treasury, thanks to the post-shutdown unwinding of the Treasury Department’s accounting and money-shifting tricks

    That’s what I said. Nothing illegal here, and it’s not a revelation of a secret loan from the Federal Reserve Board.

    The “cash” balance went up to over $300 billion from the low point of $30 billion. This did not anything uch to the deficit, because only actual spending does that.

    Not understanding any of this, Lisa Mascaro used a figure for the federal debt that was several days old.

    Sammy Finkelman (86c6e0)

  4. The national debt was $17,074,260,390,144.95 as of last Friday, of which $12,115,701,896,091.53 was :debt held by the public, and $4,958,558,494,053.42 was “intergovernmental holdings.”

    They’d like you to forget about that last part, but it’s important: all of the Treasury Bills held by the Social Security Trust Fund are part of that, and that means that future Social Security payments will have to come out of general tax revenues once they exceed total Social Security taxes.

    Our gross domestic product was $15.68 trillion in 2012; we owe more than a whole year’s worth of our production. Total debt held by the public may be “only” 75% of GDP, but total debt is 108.9% of GDP.

    The Dana who looks up the numbers (3e4784)

  5. As for trading Texas for the UK, that would mean that our Head of State would be Her Majesty the Queen, something with which I could live. It would also mean that the head of government would be the Speaker of the House, John Boehner.

    Who would you rather look at, the Duchess of Cambridge or Michelle Obama?

    The Anglophile Dana (3e4784)

  6. errata * This did not add asnything to the deficit.

    Only economic illiterates or blind partisans could pretend that a nation with a debt-to-GDP percentage in the 70s is “substantially improved” in comparison to four years ago, </i.

    Improved in the sense, that the trend – the curve – is not getting worse and worse. The talking point leaves out some information.

    The idea is that as long as the debt-to-GDP ratio doesn't get too high, everything is OK.

    Before it was looking like it might climb too high to sustain. Now it looks like it might stop climbing in a few years, but then the same projections say it might start climbing again in the mid-2020s.

    The reason things are still unsustainable, is because AFTER the middle of the next decade it’s projected to get worse again – but that assumes that the CBO numbers are correct, while actually they are garbage. They are probably assuming certain levels of job and population, and medical inflation growth.

    Sammy Finkelman (86c6e0)

  7. Comment by The Dana who looks up the numbers (3e4784) — 10/22/2013 @ 9:01 am

    that future Social Security payments will have to come out of general tax revenues once they exceed total Social Security taxes.

    A minor correction – up to 25% or so of those payments. Or they could raise some taxes, or reclaculate benefits. One favorite idea is changing the way the cost of living index is computed, (particularly by indexing it to prices rather than wages) because in the models used by the CBO, that can save a lot of money.

    Wages is more accurate actually – but wages include gains in productivity (real income)

    Sammy Finkelman (86c6e0)

  8. 1. We are sorry, http://www.gatpatriot.net

    Sammy Finkelman (86c6e0)

  9. Comment by The Anglophile Dana (3e4784) — 10/22/2013 @ 9:04 am

    You should be shipped off to Englandistan, too, you redcoat-loving Tory.

    nk (dbc370)

  10. “A minor correction – up to 25% or so of those payments. Or they could raise some taxes, or reclaculate benefits.”

    Sammy – I don’t know why you add squid ink qualifying comments like this. Off course if social security taxes are raised or benefits are reduced the situation changes. If the earth burns up due to global warming we won’t have to make future social security payments either. I can think of dozens of scenarios to correct the stated condition, but that is not the point and you know it.

    The point is, assuming no fix to social security system, the statement was correct. Or are you going to quibble with that and manufacture hypothetical situations again which would change it?

    daleyrocks (bf33e9)

  11. Sammy – if my Aunt had nuts, she would be my uncle.

    And you have to be a fool to believe that our reported debt went unchanged for 150+ days unprecedented, then magically had the largest single day increase in EVER without it being manipulated

    JD (90d4c6)

  12. So, you’re saying that you’d rather look at Michelle Obama than the Duchess of Cambridge? Perhaps our Philadelphia physician is an ophthalmologist, because you seem to need help. 😆

    The Dana wondering about nk's eyesight (3e4784)

  13. JD: And if you aunt had nuts, she could still marry your uncle, right next door!

    The Dana next to New Jersey (3e4784)

  14. JD – If your aunt had nuts she could still use the women’s bathroom.

    daleyrocks (bf33e9)

  15. Esau sold his inheritance for a plate of lentils and you’d give away the Liberty Bell for a glimpse of cheesecake. Sigh.

    nk who sees better than some others seem to (dbc370)

  16. As for the CBO guesstimates, would that be the same CBO who corrected the President’s estimates of the effectiveness of the stimulus plan, and said that instead of holding unemployment to a maximum of 8%, it would hold it to 8.5%?

    If they’d have been right, and projected unemployment topping out at 10%, the damned thing would never have passed. CBO is supposedly non-partisan, but they are very Democratic.

    The Dana who remembers (3e4784)

  17. If our Liberty Bell has a crack in it, by the time Barack Hussein Obaminable is done, it will have split right in two.

    The Dana who sees more danger to our liberty due to the buffoon in the White House than from the Crown (3e4784)

  18. It’s nice to know that the LAT is reaching out to the developmentally challenged community to offer them employment opportunities.
    Perhaps an addition to the masthead under the “Los Angeles Times” banner:
    A Home For Morons!

    askeptic (b8ab92)

  19. 13. Comment by JD (90d4c6) — 10/22/2013 @ 9:32 am

    And you have to be a fool to believe that our reported debt went unchanged for 150+ days unprecedented, then magically had the largest single day increase in EVER without it being manipulated

    There was manipulation going on, but there was also something real: Cash on hand went down by a couple of hundred billion dollars. It had probably been raised as high as possible before May 17.

    Sammy Finkelman (86c6e0)

  20. daleyrocks: It worked for Tom Cruise in Top Gun!

    The Top Gun fan Dana (3e4784)

  21. Sammy, the idea that the Treasury keeps $370 billion in cash – a sum equal to half the entire Federal deficit for a fiscal year and about one-fifth of the entire budget – on hand is ludicrous.

    SPQR (768505)

  22. Mr Finkelman: What difference does it make? The federal government writes a check, which is honored by the bank at which it is cashed or deposited, and is not returned for insufficient funds by the Treasury. It doesn’t matter whether they have cash on hand, because the checks never bounce!

    The accountant Dana (3e4784)

  23. We didn’t really a debt limit the last time (and this time too) We had a debt level freeze.

    The first time it was frozen at whatever it was on May 17, 2013.

    Next scheduled date is February 7, 2014.

    (Technically, the debt limit resets to whatever it is/was on those days and before there is no limit, or at least that is what the newspaper articles reported.)

    Sammy Finkelman (86c6e0)

  24. SF lives in his own little static world.

    askeptic (b8ab92)

  25. TTGFD – That’s because he had lost that loving feeling.

    daleyrocks (bf33e9)

  26. “We didn’t really a debt limit the last time (and this time too) We had a debt level freeze.”

    Sammy – Aren’t the above two different concepts? Congress sets the government debt limit. The Administration in power makes a decision whether or not to freeze debt levels or borrowings at a certain amount.

    daleyrocks (bf33e9)

  27. Comment by The accountant Dana (3e4784) — 10/22/2013 @ 9:47 am

    The federal government writes a check, which is honored by the bank at which it is cashed or deposited, and is not returned for insufficient funds by the Treasury. It doesn’t matter whether they have cash on hand, because the checks never bounce!

    That’s only if it is allowed to borrow money.

    They can’t issue checks if they have no cash.

    The checks (or direct deposits) will indeed bounce, or not be issued. Nobody was arguing the contrary.

    And if they can’t borrow, they can’t get extra cash – except by some other measures, that Obama, for his own reasons, refused to accept, like:

    1) The platinum coin – which adds cash without borrowing money from anybody.

    Also:

    2) Premium bonds (e.g. 23% coupon bonds sold at a large premium over face value)

    This borrows money while owing a lot less than the amount borrowed. It’s how much is owed back that counts against the debt ceiling, not how much is borrowed!!

    They were a way out – albeit prohibited by regulations, Obama could have changed them.

    Sammy Finkelman (86c6e0)

  28. 23. Comment by SPQR (768505) — 10/22/2013 @ 9:46 am

    Sammy, the idea that the Treasury keeps $370 billion in cash – a sum equal to half the entire Federal deficit for a fiscal year and about one-fifth of the entire budget – on hand is ludicrous.

    Didn’t it take five months – from May 17, 2013, to October 17, 2013, to run the cash balances down to $30 billion?

    That’s exactly what they did before May 17, and now they did it again.

    Sammy Finkelman (86c6e0)

  29. Sammy, are you mainly trying to convince yourself—or to convince other people?

    elissa (f45420)

  30. “Didn’t it take five months – from May 17, 2013, to October 17, 2013, to run the cash balances down to $30 billion?”

    Sammy – I don’t know. Do you have a link to prove your theory on the cash balances?

    Just think about the timing of government cash receipts. Good amounts of them are lumpy in April with tax payments, in September with quarterly estimated payments and October with final 2012 tax payments.

    daleyrocks (bf33e9)

  31. “We didn’t really a debt limit the last time (and this time too) We had a debt level freeze.”

    Comment by daleyrocks (bf33e9) — 10/22/2013 @ 9:56 am

    Sammy – Aren’t the above two different concepts?

    Yes, but Congress (or the media) still called it a debt ceiling.

    Congress sets the government debt limit. The Administration in power makes a decision whether or not to freeze debt levels or borrowings at a certain amount.

    Congress set the debt limit to I don’t know what, maybe infinity, with the proviso, that it reset back down to whatever was outstanding on May 17, 2013 and now again on February 7, 2014.

    http://money.cnn.com/2013/05/16/news/economy/debt-ceiling/

    As part of a budget compromise in February, lawmakers suspended the country’s legal borrowing limit at $16.394 trillion, and let Treasury keep borrowing to pay all the country’s bills. But on Sunday the debt ceiling will automatically reset to a higher level reflecting the amount borrowed during the suspension period. The Bipartisan Policy Center estimates the increase will be roughly $265 billion.

    The debt limit being suspended means there was no limit, although maybe there may have been conditions.

    It would take real digging to find out what the law(s) actually said.

    Sammy Finkelman (86c6e0)

  32. Well, if it were just England they would probably want 9 states, one for each administrative region.

    As for Texas, they would probably be joined by a number of others, and the inflow of refugee would drain things until Obama put up a wall.

    Kevin M (bf8ad7)

  33. And what you got then on May 17, 2013, was a debt freeze.

    It’s unclear how much time the extraordinary measures will buy. Treasury Secretary Jacob Lew said in a letter to lawmakers Friday that the measures could last “until after Labor Day.” Just how long after that is uncertain, he said, given that tax receipts are unpredictable as is the pace of spending due to the forced budget cuts that began in March.

    Other estimates, however, put the drop-dead date for raising the debt ceiling at sometime in October or even November thanks to the fact that the deficit this year has fallen faster than expected.

    The first move that Treasury will take is to temporarily stop issuing special securities to state and local governments.

    Other measures Treasury can take include redeeming existing investments in the retirement and disability funds of civil service and postal workers.

    What they were really doing, of course, was reducing cash on hand.

    These measures only refer to how the cash on hand reduction is managed. You return money to the civil service and postal workers disability fund etc. There was actually $5 trillion worth of money owed to these funds, but there was only some $300 billion cash on hand. The cash on hand is the key datum.

    Sammy Finkelman (86c6e0)

  34. Mr Finkelman wrote”

    The federal government writes a check, which is honored by the bank at which it is cashed or deposited, and is not returned for insufficient funds by the Treasury. It doesn’t matter whether they have cash on hand, because the checks never bounce!

    That’s only if it is allowed to borrow money.

    They can’t issue checks if they have no cash.

    And just what is there to stop them? The law? As in the same law which somehow enabled the national debt to not rise because it wasn’t reported as having risen, that law?

    Barack Hussein Obama is the chief federal law enforcement officer in the country; who the f(ornication) is going to arrest him for breaking the law?

    The Dana waiting to see a check from the Treasury marked NSF (3e4784)

  35. “Congress set the debt limit to I don’t know what”

    Sammy – I believe it was set at $17 trillion. Surely you know that.

    daleyrocks (bf33e9)

  36. Comment by Kevin M (bf8ad7) — 10/22/2013 @ 10:14 am

    And considering you can’t throw a rock in Texas without hitting a girl prettier than Kate Middleton …. Yup.

    nk with better eyesight than Dana (dbc370)

  37. Sammy – Where are you getting your cash on hand figures, especially the difference between May and October?

    daleyrocks (bf33e9)

  38. Comment by daleyrocks (bf33e9) — 10/22/2013 @ 10:09 am

    Sammy – I don’t know. Do you have a link to prove your theory on the cash balances?

    No, I don’t, not yet, but I do have a link to show there was debt freeze, and what it’s saying doesn’t make any sense, unless you assume the real limitation on the ability to continue doing business as usual is cash on hand.

    Just think about the timing of government cash receipts. Good amounts of them are lumpy in April with tax payments, in September with quarterly estimated payments and October with final 2012 tax payments.

    Yes, yes yes. A large amount of cash on hand can make the lumpiness irrelevant. Eventually it gets so low that it starts to really matter. There is lumpiness also on expenditures, ceryainly on a daily basis, although not as big as on revenue.

    The Treasury continued to issue debt like there was no limit or freeze,

    http://www.reuters.com/article/2013/08/26/usa-debt-bills-idUSW1N0F102B20130826

    Meanwhile keeping below the debt limit by lowering the balances held by certain government controlled funds, which count against the debt ceiling.

    As a kind of a side-effect, cash on hand kept dropping, with wide swings down and up.

    They didn’t make it clear that that’s what they were doing, and are prepared to do again, but that’s what had to have been going on.

    Sammy Finkelman (86c6e0)

  39. “Congress set the debt limit to I don’t know what”

    Comment by daleyrocks (bf33e9) — 10/22/2013 @ 10:17 am

    Sammy – I believe it was set at $17 trillion. Surely you know that. <

    No, I didn't. If so, then on May 17, it reset to something like $16.7 trillion.

    Or is the $17 trillion the temporary debt limit till February 7, 2014, after which it goes down to whatever amount is outstanding? No it can't be – it's already over $17 trillion, according to Tim Blumer.

    Sammy Finkelman (86c6e0)

  40. Sammy – There were $166 billion of SLUGS outstanding at the end of 5/13 and $124 billion at the end of September, which means that the federal government repaid state and local governments $40 billion of cash between May and September and borrowings also declined by $40 billion.

    That is a wash on your theory.

    http://www.treasurydirect.gov/govt/reports/slgs/slgs_mnthlyslgsstat.htm

    daleyrocks (bf33e9)

  41. I’d be shocked, shocked I tell you, if Sam handles the purse strings at home.

    Uncle Miltie prolly comes in to do the books every other Sunday.

    gary gulrud (dd7d4e)

  42. Comment by daleyrocks (bf33e9) — 10/22/2013 @ 10:19 am

    – Where are you getting your cash on hand figures, especially the difference between May and October?

    The $30 billion on October 17 is pretty clear.

    That was in many newspaper stories.

    http://www.nytimes.com/2013/09/26/business/treasury-warns-of-potential-default-by-mid-october.html?_r=0

    The Treasury has handed Congress an urgent deadline: Oct. 17.

    On that day, unless Congress were to raise the debt ceiling, the Treasury would have only $30 billion cash on hand

    A little bit of searching found an article that included a statistic for May, 2013 indicating it was in the hundreds of billkions of dollars.

    http://www.ijreview.com/2013/06/60105-government-math-deficit-up-138b-in-may-debt-down-90b/

    Government Math: Deficit UP $138B In May, Debt DOWN $90B…

    The government spent $138.732 billion more in May than it collected in tax revenues. But – the national debt decreased by $90.024 billion during the month. Confused? Yeah, me too….

    According to Treasury’s official accounting, the spread between expenditures and revenues was approximately $228.756 billion. So where did the government get the $228.756 billion it needed to not only cover its $138.733 billion deficit for the month – but to also pay down a net $90.024 billion in debt?

    The first part of the answer is simple; the Treasury drew down its cash on hand by $179.182 billion. (In the Personal Financial Planning business, we call that “spending your cash reserves.”)

    As a result, Treasury started the month with $213.863 billion cash on hand, according to the Daily Treasury Statement, and ended the month with only $34.681 billion cash on hand – a net drop of $179.182 billion in the federal government’s cash account. (Are you staying with me so far?)

    Only $34 billion at the end of May, 2013? But they had also reduced the debt by some $90 billion, so the available cash was really $124 billion.

    Sammy Finkelman (86c6e0)

  43. 41. There, in black and white(‘cepting when it toggles pastel blue) Sammy doesn’t provide a service here.

    There is absolutely no added value in pulling everything from your bung hole and splattering the rest of us.

    gary gulrud (dd7d4e)

  44. Comment by daleyrocks (bf33e9) — 10/22/2013 @ 10:34 am

    There were $166 billion of SLUGS outstanding at the end of 5/13 and $124 billion at the end of September, which means that the federal government repaid state and local governments $40 billion of cash between May and September and borrowings also declined by $40 billion.

    They repaid $40 billion and so could borrow $40 billion from other sources without exceeding the debt limit. This was only one of the funds used.

    Notice also it shot up between February and May 2013 (during the period of time when the Treasury could borrow with no practical limit)

    That is a wash on your theory.

    What wash? They repaid, so borrowed less. They borrowed the from other sources.

    Sammy Finkelman (86c6e0)

  45. “what it’s saying doesn’t make any sense, unless you assume the real limitation on the ability to continue doing business as usual is cash on hand.”

    Sammy – What it is saying is the debt limit inhibits your ability to continue business as usual if you continue to spend more money than you take in over an extended period of time without addressing the issue, which is a perfect description of the Obama Administration’s failure to seriously discuss fiscal issues.

    Meanwhile keeping below the debt limit by lowering the balances held by certain government controlled funds, which count against the debt ceiling.

    Sammy, the above requires cash and does nothing for your ability to continue operating as usual. At the end of 2011 and the beginning of 2012, the government stopped making contributions to government employee pension funds in order to conserve cash. My guess is they did the same thing between May and October.

    daleyrocks (bf33e9)

  46. nk wrote:

    And considering you can’t throw a rock in Texas without hitting a girl prettier than Kate Middleton …. Yup.

    Depends upon the neighborhood.

    Just for you!

    The Dana with excellent vision . . . now (3e4784)

  47. “They can’t issue checks if they have no cash.”

    Comment by The Dana waiting to see a check from the Treasury marked NSF (3e4784) — 10/22/2013 @ 10:15 am

    And just what is there to stop them? The law?

    Yes, the law. This is not China.

    Also Barack Obama’s refusal to roll out the platinum coin or issue premium bods, which would get the Treasury more cash.

    As in the same law which somehow enabled the national debt to not rise because it wasn’t reported as having risen, that law?

    It didn’t rise because cash on hand was reduced.

    The exact way it was reduced is actually almost irrelevant.

    Barack Hussein Obama is the chief federal law enforcement officer in the country; who the f(ornication) is going to arrest him for breaking the law?

    In the end, it all goes to court. Nobody will arrest him, but hhe really can’t counterfeit money or pass bad checks.

    Unless he does it the right way.

    Sammy Finkelman (86c6e0)

  48. That is a wash on your theory.

    What wash? They repaid, so borrowed less. They borrowed the from other sources.

    Sammy – Exactly. They had to borrow from other sources and are right back at the same place with nothing net accomplished. Follow the steps.

    Pay state and local governments $40 billion of cash to repay SLUGS. Cash on hand and debt both decline by $40 billion.

    Sell $40 billion of new treasury securities. Cash on hand and debt both increase by $40 billion.

    Change in balance sheet position with respect to debt limit and cash on hand – NOTHING

    daleyrocks (bf33e9)

  49. “Meanwhile keeping below the debt limit by lowering the balances held by certain government controlled funds, which count against the debt ceiling.”

    Sammy, the above requires cash and does nothing for your ability to continue operating as usual.

    It requires cash, which is gotten by borrowing. But in the meantime, cash on hand is steadily, although irregularly, dropping.

    At the end of 2011 and the beginning of 2012, the government stopped making contributions to government employee pension funds in order to conserve cash. My guess is they did the same thing between May and October.

    I think I heard something like that too.

    Comment by daleyrocks (bf33e9) — 10/22/2013 @ 10:52 am

    Sammy Finkelman (86c6e0)

  50. If the Treasury doesn’t bounce the checks, it’s not a bad check, is it?

    The coldly realistic Dana (3e4784)

  51. Comment by daleyrocks (bf33e9) — 10/22/2013 @ 10:57 am

    Pay state and local governments $40 billion of cash to repay SLUGS. Cash on hand and debt both decline by $40 billion.

    Sell $40 billion of new treasury securities. Cash on hand and debt both increase by $40 billion.

    Change in balance sheet position with respect to debt limit and cash on hand – NOTHING

    But in the meantime cash on hand, separately, gets drawn down from several hundred billion dollars to $30 billion.

    Sammy Finkelman (86c6e0)

  52. 52. Comment by The coldly realistic Dana (3e4784) — 10/22/2013 @ 10:59 am

    52.If the Treasury doesn’t bounce the checks, it’s not a bad check, is it?

    It’s not the Department of the Treassury that decides whether there is enough money in the Treasury account to transfer the money to some other account, but the Federal Reserve Board, I would think.

    Sammy Finkelman (86c6e0)

  53. Comment by The Dana with excellent vision . . . now (3e4784) — 10/22/2013 @ 10:54 am

    The Fright House….and….

    The Road House!

    Say, I’ll have a longneck if you please.

    askeptic (b8ab92)

  54. Comment by The coldly realistic Dana (3e4784) — 10/22/2013 @ 10:59 am

    House Banking Scandal, anyone?

    askeptic (b8ab92)

  55. 49. The remainder of your stupidity aside SCOTUS just ruled a few months back that when the Executive refused to uphold DOMA in defiance of Congress that the issue was to be settled between them and please not to bother our august selves.

    There, having responded to one idiocy and setting aside the rest entailed there is nothing left to consider re: this particular SF scat.

    gary gulrud (dd7d4e)

  56. 54. See, down the memory hole. No effort, ever, after the fact to check up on one’s hazards.

    Unalloyed effluent.

    gary gulrud (dd7d4e)

  57. 48. Point of order. I heard that rock shriek like Jaime Lee and looked to see it glancing off a UT coed.

    Horror vacui.

    gary gulrud (dd7d4e)

  58. “But in the meantime cash on hand, separately, gets drawn down from several hundred billion dollars to $30 billion.”

    Sammy – That’s is what you are telling us the cash position is but I have seen no independent verification of your $300 million number for May or $30 billion figure for October unless I missed it.

    Are you sending us on Sammy invented wild goose chase or do you have actual government links showing cash balances?

    Personally, I think extraordinary measures such as not making periodic contributions to government employee pension plans look suspiciously similar to the prioritization of payments which Jack Lew claimed was impossible but Tim Geithner and John Snow both said was doable.

    Saying there was not statutory authority supporting prioritization was the wrong approach. Determining whether there was statutory language preventing prioritization was the right approach.

    daleyrocks (bf33e9)

  59. “But in the meantime cash on hand, separately, gets drawn down from several hundred billion dollars to $30 billion.”

    Sammy – Not by any transactions related to SLUGS.

    daleyrocks (bf33e9)

  60. 56. Comment by askeptic (b8ab92) — 10/22/2013 @ 11:03 am

    House Banking Scandal, anyone?

    It was a little bit too informal, and should have been structured as a credit union, but I don’t think they lost any money on it.

    It was run pretty soundly:

    http://en.wikipedia.org/wiki/House_banking_scandal

    Another practice which contributed to the scandal was that House members were allowed to overdraw their accounts, provided that the overdraft did not exceed the member’s next paycheck.

    There was just about no risk. I could see a problem when someone’s last term ran out, but I never read about the bank losing any money, so that must have been prevented some way.

    The problem wasn’t that some people got overdrafts, the problem was the source of the money to pay the overdrafts. It wasn’t legally borrowed.

    The House bank would delay posting deposits in order to let other members write checks. That’s not the way it’s supposed to be done.

    If a bank makes a loan, they’re supposed to borrow money that the borrower knows about (and possibly pay interest) not hold up one person’s deposit to be able to clear another person’s check!

    This had been started I guess so that nobody would bother a member of Congress with details, unless the amount of the overdrafts got to be really, really big, when I suppose someone would deferentially approach a member of Congress…it therefore was very informal, and not legally sound.

    Of course I can add maybe this only worked because not all members of the House of Representatives took advantage of the no checks bouncing privileges.

    Sammy Finkelman (86c6e0)

  61. Only this paragraph is from Wikipedia:

    Another practice which contributed to the scandal was that House members were allowed to overdraw their accounts, provided that the overdraft did not exceed the member’s next paycheck.

    (italics mine) This is also from wikipedia:

    blockquote> The House Bank functioned according to rules different from the laws governing deposit institutions. The facility was operated under very loose rules at the time, using a pencil and ledger system rather than a computerized accounting system, and the bank manager did not provide regular account statements to House members, nor were notifications sent to House members in the event they had overdrawn their accounts. Further contributing to the problem was the fact that the House Bank didn’t post deposits in a timely manner, often as much as seven weeks after the fact

    Sammy Finkelman (86c6e0)

  62. Close enough for government work.

    daleyrocks (bf33e9)

  63. I’m reading Edward Klein’s ‘The Amateur.’

    It is stunning to find out how many of Obama’s acquaintances in Chicago—a number of them African-American—say that Obama cast them aside, screwed them over, or didn’t adhere to ‘promises’ he made when he needed money or support from them way back in the day.

    Elephant Stone (6a6f37)

  64. “But in the meantime cash on hand, separately, gets drawn down from several hundred billion dollars to $30 billion.”

    Comment by daleyrocks (bf33e9) — 10/22/2013 @ 11:19 am

    Sammy – Not by any transactions related to SLUGS.

    All of that is misleading, and they misled the public. That’s not the secret of how the Treasury was able to go 5 months under a debt freeze.

    Sammy Finkelman (86c6e0)

  65. That’s our IBambi, Elephant Stone. A Blanche DuBois. http://www.youtube.com/watch?v=DSTd1LuiVUs

    nk (dbc370)

  66. 57. I think there are laws that prevent the Department of the Treasury from just creating money but the platinum coin looks like a unintended loophole. It doesn’t have to be set to two or five times the value of the metal. The sky is the limit.

    They also can’t spend money without appropriations and there’s even a federal law that can hold people personally responsible: The Anti-Deficiency Act.

    They can’t borrow without specific authorization.

    They can’t even pay interest on the debt without an appropriation, but a bill was passed in 1847 authorizing the payment of interest on the federal debt for all time.

    Sammy Finkelman (86c6e0)

  67. SF, the House Banking Scandal was just that….
    A SCANDAL, because there were no rules, and there was no accounting, except at the ballot box where several of the members were tossed aside by their constituents, including the Speaker, Thomas Foley (RIP) one cycle later – the first sitting Speaker to lose re-election to his seat in modern memory.
    Of course, CA (in proving how strong is the stupid out here) elected Babs Bouncer to the Senate.

    This was on top of the House Post Office Scandal, where members were trading their “franks” for cash.

    askeptic (b8ab92)

  68. ES, as more and more comes out about the “private life” of Barack the Petulant, the picture is of a very disturbed and evil not very kind person.

    askeptic (b8ab92)

  69. “All of that is misleading, and they misled the public. That’s not the secret of how the Treasury was able to go 5 months under a debt freeze.”

    Sammy – You are the individual who has been going on and on about SLUGS on this website and how the government used them to conserve cash. If there has been any misleading going on, the responsibility is yours.

    daleyrocks (bf33e9)

  70. “I’ve always relied upon the kindness of strangers.”
    —Blanche DuBois

    Well played, nk.

    Elephant Stone (6a6f37)

  71. “But in the meantime cash on hand, separately, gets drawn down from several hundred billion dollars to $30 billion.”

    Comment by daleyrocks (bf33e9) — 10/22/2013 @ 11:14 am

    Sammy – That’s is what you are telling us the cash position is but I have seen no independent verification of your $300 [b]illion number for May or $30 billion figure for October unless I missed it.

    The $30 billion for October was all ove rthe press. I don’t have a cash balance number for May but it must have been around that kevel.

    http://www.ijreview.com/2013/06/60105-government-math-deficit-up-138b-in-may-debt-down-90b/

    Says:

    Treasury started the month [of May 2013] with $213.863 billion cash on hand, according to the Daily Treasury Statement,

    Are you sending us on Sammy invented wild goose chase or do you have actual government links showing cash balances?

    This would seem to have the daily statements from September and October 2013:

    http://www.fms.treas.gov/dts/index.html

    This is May 17, 2013:

    https://fms.treas.gov/fmsweb/viewDTSFiles?dir=a&fname=13051700.pdf

    I’m not sure where to find out how much money they really had.

    Sammy Finkelman (86c6e0)

  72. Personally, I think extraordinary measures such as not making periodic contributions to government employee pension plans look suspiciously similar to the prioritization of payments which Jack Lew claimed was impossible but Tim Geithner and John Snow both said was doable.

    They do.

    Saying there was not statutory authority supporting prioritization was the wrong approach. Determining whether there was statutory language preventing prioritization was the right approach.

    It was just excuses. Like the terrorism excuse for closing the national parks and the mall. And if someone laid the groundwork for it before, tell me what kind of terrorist pays attention to whether or not there is a government shutdown in place? It suddenly went away on October 16?

    Sammy Finkelman (86c6e0)

  73. Comment by daleyrocks (bf33e9) — 10/22/2013 @ 11:56 am

    Sammy – You are the individual who has been going on and on about SLUGS on this website and how the government used them to conserve cash. If there has been any misleading going on, the responsibility is yours.

    I was following what I read, but I never said that’s how they conserved cash. That’s how they kept under the debt limit, while conducting business as usual.

    They did ordinary borrowing and reduced the amount held by SLUGS etc.

    That, of course is a wash, or else they could have spent $5 trillion.

    Obviously, cash on hand must have been going down.

    Sammy Finkelman (86c6e0)

  74. 69. Comment by askeptic (b8ab92) — 10/22/2013 @ 11:53 am

    69.SF, the House Banking Scandal was just that….

    A SCANDAL, because there were no rules, and there was no accounting, except at the ballot box

    That was later, after it became public.

    There was accounting, because they ultimately had to give each member their pay, and they couldn’t give anybody any extra money either.

    The books basically had to balance over the medium term, and certainly at the end of each Congressional term.

    What they did was not credit member’s accounts immediately and use the money as a revolving fund to clear checks.

    And it only worked because only a minority of members had negative cash balances (or would have had they issued timely account statements)

    This was on top of the House Post Office Scandal, where members were trading their “franks” for cash.

    That one was actually a little bit more serious, because that’s not supposed to be convertible into cash.

    Sammy Finkelman (86c6e0)

  75. Something tells me that they are frantically trying to come up with schemes to sock trillions away before the Feb 7th date arrives.

    Like buying long-leadtime items they can cancel, or paying down the federal retirement funds well past the actuarial necessity. Or maybe true bust-out schemes like buying a fleet of cars to resell at a discount later.

    They can loan me a billion and I promise I’ll pay it back in March when they need it.

    Kevin M (bf8ad7)

  76. Comment by Elephant Stone (6a6f37) — 10/22/2013 @ 11:44 am

    Wasn’t his first elected position at the expense of undermining a senior African American community leader with last minute charges of forged or fake signatures on her nomination petition?

    MD in Philly (f9371b)

  77. “I was following what I read”

    Sammy – That’s the danger in repeating what you read without understanding it. Even the letter you linked from Lew to Boehner admitted the stoppage of SLUG sales created no headroom under the debt ceiling. The key was debt repayments from Fannie and Freddie and BS exceptions created by Congress to defer repayment or reinvestment of maturing government retirement obligations but to cease treating the matured obligations as liabilities.

    daleyrocks (bf33e9)

  78. I am not convinced that the Treasury had $370 billion in “cash” anywhere. I still believe that the Treasury did something illegal – like borrow under the table from the Federal Reserve.

    SPQR (768505)

  79. askeptic wrote:

    The Fright House….and….

    The Road House!

    Say, I’ll have a longneck if you please.

    For you!

    The Southern Dana (3e4784)

  80. Apologies for the sloppy fingers, that site (comment # 1) is:

    http://www.gaypatriot.net

    posted there by Jeff (at 11:26 AM October 21).

    T (03662b)

  81. “I still believe that the Treasury did something illegal – like borrow under the table from the Federal Reserve.”

    SPQR – The letter from Lew to Boehner which Sammy linked above is very illuminating. Lew was projecting the receipt of a $60 billion payment from Fannie Mae in June, $74 billion from the nonreinvestment of Civil Service Retirement Plan in treasury securities although the retirement plan would not actually be repaid the cash by the Treasury, and $160 billion from the non-reinvestment of a defined contribution Federal Employee retirement plan in Treasury securities again, without the retirement plan taking possession of the cash according to my reading of the letter.

    By magic the intergovernmental obligation represented by special treasury securities which count against the debt ceiling disappear because the requirement that funds held by such plans be invested in such special treasury securities is temporarily suspended.

    daleyrocks (bf33e9)

  82. Meanwhile U-6 is above 17% – that’s some recovery.

    SPQR (768505)

  83. daleyrocks, gee does that not sound to you like the Treasury choosing who to pay and who not to pay?

    SPQR (768505)

  84. “daleyrocks, gee does that not sound to you like the Treasury choosing who to pay and who not to pay?”

    SPQR – Weeellllll, Congress apparently told them they could do that in this type of situation even though Treasury said it was unpossible.

    daleyrocks (bf33e9)

  85. SPQR – Unwinding the extraordinary measures does provide a pretty good explanation for the jump in debt post debt limit increase.

    Hey, all of a sudden those federal retirement funds the treasury was holding got reinvested in the kinds of funds they were legally supposed to be reinvested in, you know, the ones that count against the debt limit.

    daleyrocks (bf33e9)

  86. Rocky, watch me pull this rabbit out of a hat.

    daleyrocks (bf33e9)

  87. 18. As for the CBO guesstimates, would that be the same CBO who corrected the President’s estimates of the effectiveness of the stimulus plan, and said that instead of holding unemployment to a maximum of 8%, it would hold it to 8.5%?

    If they’d have been right, and projected unemployment topping out at 10%, the damned thing would never have passed. CBO is supposedly non-partisan, but they are very Democratic.

    Comment by The Dana who remembers (3e4784) — 10/22/2013 @ 9:40 am

    Unfortunately the CBO has to operate under the constraints and assumptions written into the bills. They’re not policy analysts and they’re not allowed to be policy analysts. If Congress writes a health care law that assumes x amount of savings will occur because of cuts to programs or cutting waste, fraud and abuse, the CBO must accept that on face value. They predict how people and businesses might respond to the legislation, but they’re not allowed to speculate about what changes Congress will make in the future. Even if everyone knows that those assumptions written into the bill (or in Obama’s case his budgets) will never happen. Even if the congresscritters submitting those bills are already talking about eliminating those cuts in reconciliation or their next piece of, uhh, legislation. Doesn’t matter. The CBO has to score what’s in front of them, which is totally unrealistic but just written to get a good CBO score.

    The CBO explains in more diplomatic language.

    http://www.cbo.gov/about/our-processes

    Steve57 (022c57)

  88. 85. Did I link to the letter from Lew to Boehner? Where? I can’t find it. Maybe it was a link in a link?

    But here is the letter plus appendix: (preceded by a blog post)

    http://econintersect.com/b2evolution/blog1.php/2013/05/19/secretary-lew-sends-debt-limit-letter-to-congress

    Sammy Finkelman (86c6e0)

  89. CBO’s revenue estimates never match, almost always too high. CBO’s deficit estimates never match, reality is always higher.

    SPQR (95c543)

  90. True, SPQR. But it isn’t like the people at CBO don’t know that. That’s mostly because of the rules they have to go by. Rules that Congress establishes so Congress can game the system.

    The director of the CBO sometimes editorializes about how the features in the bills they have to score are totally unrealistic, but never actually in the scoring results.

    Steve57 (022c57)

  91. Comment by The Southern Dana (3e4784) — 10/22/2013 @ 1:13 pm

    GOOD TIMES!

    askeptic (b8ab92)

  92. Comment by daleyrocks (bf33e9) — 10/22/2013 @ 1:48 pm

    Check Kiting on a grand scale.

    askeptic (b8ab92)

  93. It’s funny that the Tea Party’s relationship to America is similar to Germany’s relationship to the Eurozone. These groups essentially represent the ‘fiscal sanity’ wing of their respective organizations.

    The big difference is the media. Even German critics don’t call Merkel a terrorist (outside of Greece) but the Tea Party can be called anything…..racist, terrorist, treasonous. By an impartial media. The media is a huge battlefield in politics and the Rs aren’t even playing. Yeah, I’m sure they’ll be fair to your next candidate, Republicans. It’s not like they love the Clintons or anything.

    If the Rs can’t take on the media then step aside and let the Tea Party do it. But since that isn’t going to happen (good Lord, can Drudge be right – McCain for President again?) I’m wondering if the Tea Party should talk about going Galt? Maybe expand it to concepts like ‘Half Galt’, ‘Quarter Galt’ etc. that would equate to general economic ‘roll backs’ by individuals. I’m sure this isn’t new thinking but I wonder if the latest R cave creates a new opportunity. This is the equivalent of the Bush era anti-war protests – they supported their cause by smelling up San Francisco for a day while the Tea Party supports it’s cause by denying the treasury money for the leviathan. Isn’t that the kind of thing that would move the middle to the fiscal sanity of the Tea Party? Actual sacrifice by real Americans.

    East Bay Jay (a5dac7)

  94. “This is the equivalent of the Bush era anti-war protests – they supported their cause by smelling up San Francisco for a day while the Tea Party supports it’s cause by denying the treasury money for the leviathan.”

    Starving the beast. I’m on board with that.

    T (04f2ea)

  95. No, only for Senator, did you forget about the Journolist, it has formalized what Tyrell called the Kultursmog, an informal consensus about how the news has been agred upon,

    narciso (3fec35)


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