Tuesday, December 31, 2013

We don't have jobless benefits because Democrats prefer discretionary spending


Hillary Clinton Calls for Restoring Jobless Benefits
When Congress returns from its holiday recess, the Senate will consider a bipartisan bill that would extend the benefits program by three months. But support in the House is not assured, and House Speaker John Boehner (R., Ohio) has said Republicans would back an extension only if it is paired with spending cuts elsewhere.

Hillary is the usual delusionist. It was her friends that bitched about sequester and cuts to discretionary spending. When they finally get that restored, at the expense of unemployment, then they bitch. The basic problem is Hillary has a choice. She can call for growth, in which she has to plug a 15% hole in the federal budget, or she can push for a downturn. That hole arises because our government in DC just got their interest payments increased, and they will likely have to allocate 15% of their budget for interest expense. They jump borrowing in the bond market during high growth, they will shoot rates way too high. Just to cover interest expense, they will need to borrow an equivalent of 1% of GDP.

Gobierno en Washington no puede permitirse los pagos de intereses durante los períodos de alto crecimiento
Aquí están los números:

We collect about 18% of income for taxes in DC.  Our interest expense becomes about 3.2% from 1.8% over in the next year, mainly due to growth. That is a jump of 1.4%, or 7%.  That is the minimum size hole. Congress needs to plan for 10% jump if they want to sustain growth.

Not impossible, over the next few years, taxes will rise a bit faster than growth. But our Congress is not likely to pull it off, their track record is dismal. The odds still favor a sharp rise in interest rates at just the wrong time.

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