Category : The U.S. Government

(Defense One) The awful arithmetic of our wars

In September, a wave of 19 Russian drones crossed into Polish airspace. The Gerbera-type drones cost as little as $10,000—so cheap that they are often used as decoys to misdirect and overwhelm Ukrainian air defenses. NATO countered with a half-billion-dollar response force of F-35s, F-16s, AWACS radar planes, and helicopters, which shot down four of the drones with $1.6-million AMRAAM missiles.

This is a bargain compared to how challenging U.S. forces have found it to defend against Houthi forces using this same cheap tech. Our naval forces have fired a reported 120 SM-2, 80 SM-6, and 20 SM-3 missiles, costing about $2.1 million, $3.9 million, and over $9.6 million each. And this is to defend against a group operating out of the 187th-largest economy in the world, able to fire mere hundreds of drones and missiles. Our supposed pacing challenge, China, has an economy that will soon be the largest in the world and a combined national industrial and military acquisition plan to be able to fire munitions by the millions.

Even in America’s best-laid plans for future battlefields, there is a harsh reality that is too often ignored. The math of current battlefields remains literally orders of magnitude beyond what our budget plans to spend, our industry plans to build, our acquisitions system is able to contract, and thus what our military will deploy.

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Posted in * Economics, Politics, America/U.S.A., Budget, Defense, National Security, Military, Economy, Foreign Relations, Military / Armed Forces, Politics in General, The U.S. Government

(NYT) Trump treasury Secretary Scott Bessent Raises Recession Fears, and Points Fingers at the Fed

The Trump administration is wielding the possibility that parts of the economy are in a recession as it raises pressure on the Federal Reserve to cut interest rates, hoping to ensure that the central bank will bear the blame for any economic weakness.

Treasury Secretary Scott Bessent and Stephen Miran, President Trump’s appointee to the Fed’s Board of Governors who is on a temporary leave from his job leading the White House’s Council of Economic Advisers, this week struck a downbeat tone about the health of the world’s largest economy. Mr. Bessent went so far as to say some sectors were already contracting. He did not specify which sectors, but high mortgage rates have put housing and adjacent industries such as construction under pressure.

“I think that there are sectors of the economy that are in recession,” Mr. Bessent said on CNN on Sunday. He described the economy as being in a “period of transition” because of a pullback in government spending to reduce the deficit. He called on the Fed to support the economy by cutting interest rates.

Mr. Bessent’s remarks added to pressure on the Fed and deflected blame from Mr. Trump in case the economy does ultimately face a downturn, reinforcing a strategy that has been in place since the start of the year. As the administration has imposed aggressive tariffs on nearly all of America’s trading partners and slashed federal spending, potentially slowing growth, it has sought to pin blame squarely on the Fed in the event of an economic downturn.

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Posted in * Economics, Politics, Economy, Federal Reserve, President Donald Trump, The U.S. Government, Treasury Secretary Timothy Geithner

(Economist) Governments are living far beyond their means. Sadly, inflation is the most likely escape

It is….increasingly likely that governments will…resort to inflation and financial repression to reduce the real value of their high debts, as they did in the decades after the second world war. The machinery for such a strategy is in place at central banks, which have a large footprint in bond markets. Already, populists such as Mr Trump and Nigel Farage in Britain attack their country’s central banks with proposals that would weaken the defenses against inflation.

Price rises are unpopular—just ask the hapless Joe Biden—but they do not need political support to get going. Nobody voted for them in the 1970s or in 2022. When governments cannot get their act together, and run economic policies that are unsustainable, bouts of inflation just happen. By the time markets wake up, it is too late.

All the more reason to think ahead and reflect on how inflation harms the economy and society. It redistributes wealth unfairly: from creditors to debtors; from those with cash and bonds to those who own real assets such as houses; and from those who agree on contracts and wages in cash terms to those wily enough to anticipate higher prices. It causes what John Maynard Keynes called an “arbitrary rearrangement of riches”. And that could happen just as societies are grappling with other transfers of wealth that the losers will also see as unfair: in the labour market, as AI takes on routine office work; and through inheritance, as baby-boomers bequeath vast property wealth to those lucky enough to have the right parents.

This multi-pronged upheaval of fortunes could wreck the middle class, which binds democracies together, and scramble the social contract.

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Posted in * Economics, Politics, Economy, Ethics / Moral Theology, Globalization, History, Politics in General, President Donald Trump, The U.S. Government

Robin Brooks–What we know about rising gold prices and the global debasement trade

So here’s what we know. This year’s gold rally has come in fits and starts. The April move was about a loss of confidence in the Dollar, a move that’s since run out of steam. The move since Jackson Hole is about “global debasement” and coincides with three notable developments: (i) there’s a global rise in long-term government bond yields as markets increasingly worry about unsustainable fiscal policy in many places; (ii) the universe of safe haven countries has shrunk because Germany and Japan are at the forefront of the global rise in yields; and (iii) the few safe haven countries that remain – notably Switzerland – are small, with limited capacity to absorb safe haven inflows. These three forces are supercharging the rise in gold prices, which is really about the global deterioration in fiscal sustainability and growing risk that debt overhangs will be inflated away.

What we don’t know is who is driving the latest rise in gold prices. There’s endless rumors about another round of central bank buying, but I am skeptical. There’s a clear macro catalyst to the latest move in the form of Jackson Hole. I find it hard to believe that central banks in emerging markets will be trading such a catalyst. It’s more likely that this is a genuine market move, with a growing number of investors worried about fiscal sustainability and debasement. If that’s true, the gold move can go a lot further.

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Posted in * Economics, Politics, Currency Markets, Economy, European Central Bank, Federal Reserve, Globalization

(Bloomberg) Goldman Sees US Consumers Paying More Than Half of Trump Tariffs

Americans are set to pay more than half of President Donald Trump’s tariff costs as companies raise prices, according to economists of Goldman Sachs Group Inc.

US consumers will likely shoulder 55% of tariff costs by the end of the year, with American companies taking on 22%, the Goldman analysts wrote in an Oct. 12 research note to clients. Foreign exporters would absorb 18% of tariff costs by cutting prices for goods, while 5% would be evaded, they wrote.

For now “US businesses are likely bearing a larger share of the costs” as it takes time to raise prices, economists Elsie Peng and David Mericle wrote in the note. “If recently implemented and future tariffs have the same eventual impact on prices as the tariffs implemented earlier this year, then US consumers would eventually absorb 55% of tariff costs.”

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Posted in * Economics, Politics, Consumer/consumer spending, Economy, Office of the President, President Donald Trump, Taxes, The U.S. Government

(Bloomberg) Trump’s Interest Rate Obstacle Is Bigger Than Federal Reserve Chairman Jerome Powell

President Donald Trump wants lower interest rates. Achieving that objective will require overcoming bigger obstacles than Fed Chair Jerome Powell.

There are structural forces that drive the cost of borrowing, and right now they’re pointing up. Governments and businesses are piling on debt to pay for tax cuts, military spending, and AI investments — which means more demand for credit. As the Baby Boomers retire and China decouples from the US, the pool of saving to finance those loans is drying up.

Attacks on Fed independence risk shrinking the pool further. Investors don’t want to see the value of their hard-earned cash inflated away by a central bank under political control.

Add all of this together and it points to a world where 4.5% may be the new normal for ten-year Treasuries — the crucial rate for mortgages and corporate bonds, and the one Trump’s team says it wants to bring down. In fact, Bloomberg Economics analysis shows it’s more likely to trend above that figure than below it. For the world’s biggest economy, that means a wrenching transition.

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Posted in * Economics, Politics, America/U.S.A., Budget, Credit Markets, Economy, Federal Reserve, President Donald Trump, The U.S. Government

(Washington Post) Medicare, Medicaid plans to experiment with covering weight loss drugs

Some obese Americans on Medicare and Medicaid could get access to expensive weight loss drugs under a five-year experiment being planned by the Trump administration.

Under the proposed plan, state Medicaid programs and Medicare Part D insurance plans will be able to voluntarily choose to cover Ozempic, Wegovy, Mounjaro and Zepbound for patients for “weight management” purposes, according to Centers for Medicare and Medicaid Services documents obtained by The Washington Post.

It’s a strong signal that the administration is open to more broadly covering GLP-1 drugs — lauded by many as a miracle solution to Americans’ long-standing struggle with weight — through government insurance programs. Medicare covers the drugs mainly for patients with Type 2 diabetes, even as some private insurance plans cover them for patients with obesity.

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Posted in Drugs/Drug Addiction, Health & Medicine, Medicaid, Medicare, The U.S. Government

NYT front page–Medicare Pay Rule Would Favor Primary Care Over Specialists 

For decades, the prices Medicare pays doctors for different medical services have been largely decided not by Medicare itself, but by a powerful industry group, the American Medical Association.

An A.M.A. committee meets in secret to determine the difficulty and time demands of each type of medical visit, test and procedure, and then recommends to Medicare how much doctors should be paid for performing them.

And for decades, critics have complained that this process unfairly rewards surgeons and other specialists, at the expense of primary care physicians and other generalists.

Medicare officials have been loath to change it because it has spared them from needing their own staff and budget to make such pricing decisions, along with the unpleasant politics of adjudicating conflicts between competing groups of physicians.

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Posted in * Economics, Politics, Economy, Health & Medicine, Medicare

(Economist) Trumponomics 2.0 will erode the foundations of America’s prosperity

…the One Big Beautiful Bill act (BBB) that passed the Senate on July 1st and the House on July 3rd looks more like traditional tax-cutting, spending-slashing Republicanism worthy of Paul Ryan or Mitt Romney than it does a MAGA fantasy. Suddenly, business leaders are again willing to see Mr Trump as the populist from his first term: a man to be taken seriously but not literally.

Unfortunately, the BBB, which Mr Trump plans to sign into law on July 4th, is likely to cast a shadow over this sunny picture. It illustrates the long-term damage Mr Trump is doing to the foundations of America’s economy.

The bill’s main effect is to extend the tax cuts from Mr Trump’s first term which were due to expire. Republicans paint this as an extension of the status quo. Yet they, like the Democrats before them, ignore the fact that the status quo is unsustainable. Over the past 12 months America’s budget deficit has been an astonishing 6.7% of GDP. If the bill passes, the deficit will remain around that level and the country’s debt-to-gdp ratio will in about two years exceed the 106% reached after the second world war. Revenue from tariffs will help, but not enough to stop the ratio rising—meaning that the drift towards crisis will continue.

To the extent the bill tightens the belt, it does so in the wrong places. As life expectancies rise and the population ages, America should trim handouts to the old, for example by raising the retirement age. Instead, pensioners are getting a tax break and Republicans are cutting Medicaid, health insurance for the hard-up. Some sensible measures include reducing the ability of states to game the system for more federal cash. Yet according to official projections, the overall effect will be to add nearly 12m to the number of Americans without health insurance. That is a scandalous number for the world’s richest big country. Many of those who lose coverage will fall foul of new requirements that recipients must work. Such rules have in the past created an obstacle course of paperwork for claimants while failing to boost employment.

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Posted in Budget, House of Representatives, Medicaid, Medicare, Office of the President, Politics in General, President Donald Trump, Senate, The National Deficit, The U.S. Government

(Economist) Looking at the Content of the Senate Tax and Budget bill passed today

In the days leading up to the final vote, the CRFB assessed that the measure would add between $3trn and $4trn to the deficit. It includes a smorgasbord of tax cuts whose fiscal effects are only partially offset by other reforms. The tax cuts include Mr Trump’s campaign promises to remove tax on tips and overtime pay. In theory those are temporary and will elapse when Mr Trump leaves office. In practice, once taxes are cut they often stay cut (as Republicans’ new accounting method implies). The bill would also set up “Trump accounts” for newborns, including one-off payments to new parents for the next three years. It would give big boosts to spending by the Department of Defence and to Immigration and Customs Enforcement, which the administration wants so that it can increase the number of people deported from America.

Modelling the effects of any legislation on economic growth is hard. But the tax cuts should provide a small boost in the short term. That might help to explain the current exuberance of the stockmarkets. Over a longer timeframe the picture is different (see chart 3). The House’s original bill would shrink America’s GDP by 2% by 2050, according to the Budget Lab at Yale, a research centre. That mainly reflects the impact of a bigger debt load leading to higher interest rates, which squeeze the private sector. Some other forecasters are more optimistic, thinking that the tax cuts will push more workers into the jobs market and incentivise investment, offsetting that impact.

America’s debt surged after the financial crisis of 2007–09 and the covid-19 pandemic. The ratio of debt to GDP is already close to the level reached after the second world war. By extending tax cuts that were set to lapse, without offsetting savings, the OBBB will drive it higher still. According to the CRFB, the Senate’s version as of June 30th would push debt to between 125% and 130% of GDP by 2034—well above the 117% forecast if the 2017 tax cuts were allowed to expire, and higher even than the 124% expected under the House bill….

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Posted in * Economics, Politics, America/U.S.A., Budget, Economy, Medicaid, Office of the President, Politics in General, President Donald Trump, Senate, Taxes, The National Deficit

(Bloomberg) As Markets Sank and Soared, a New Fear About America Itself Spread Across Wall Street

Serious questions now exist around the wisdom of owning American assets that until recently were the envy of a risk-obsessed world.

Amid the manic moves, key trading patterns even bear soft echoes with emerging markets. All told, fear is spreading that Trump’s bid to rewrite the terms of global trade risks imperiling America’s privileged status in the financial system.

“You honestly feel like you’re seeing stuff wrong sometimes. You have to check the scaling on your graphs because prices are moving so quickly,” said Charlie McElligott, managing director of cross-asset strategy at Nomura Securities International Inc. “It’s just a constant stream of bells and popups on the desks right now. Automated messages like risk limits and risk alerts. It’s maximum overstimulation, maximum dopamine saturation.”

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Posted in * Economics, Politics, Credit Markets, Currency Markets, Economy, Globalization, President Donald Trump, Psychology, Stock Market, The U.S. Government

(Telegraph) Ambrose Evans-Pritchard–If you think it’s alarming now, just wait for President Trump to wreck the bond market

If Trump succeeds in extracting rate cuts from the Fed and tax cuts from Congress, the same problem is going to arise. So my assumption is that he will blame the symptoms and will resort to price controls.

The elephantine difference is that US federal debt was 34pc of GDP in 1971. Today it is 122pc on the Fed measure, and galloping upwards. The fiscal deficit is over 6pc as far as the eye can see.

If you think the stock market gyrations of the last few days are terrifying, just wait until Trump destroys the credibility of the Fed and of US treasury debt, the anchor of the global system.

He could order a captive Fed to relaunch quantitative easing and buy the bonds, but to do that when inflation is running hot would be seen by the whole world as naked fiscal dominance. It would set off a price spiral and a collapse of the currency – the sort of outcome seen over the decades in Latin America, or Erdoğan’s Turkey.

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Posted in * Economics, Politics, Budget, Credit Markets, Economy, Office of the President, President Donald Trump, The National Deficit, The U.S. Government

(FT) US debt burden to top world war two peak in coming years, watchdog says

The US’s federal debt burden is set to surpass the peak it reached in the wake of the second world war in coming years, Congress’s fiscal watchdog has warned, underscoring growing concerns over America’s public finances.

The Congressional Budget Office said on Thursday that the US’s debt-to-GDP ratio would reach 107 per cent during the 2029 fiscal year — exceeding the 1940s era peak — and continue rising to 156 per cent by 2055. The debt-to-GDP ratio is forecast to be 100 per cent for the 2025 fiscal year.

The projections come just days after Moody’s delivered a warning about the sustainability of the US’s fiscal position, with the rating agency saying that President Donald Trump’s trade tariffs could compromise attempts to bring its large federal deficit under control by raising interest rates.

“Mounting debt would slow economic growth, push up interest payments to foreign holders of US debt and pose significant risks to the fiscal and economic outlook; it could also cause lawmakers to feel constrained in their policy choices,” the CBO said on Thursday.

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Posted in * Culture-Watch, America/U.S.A., Ethics / Moral Theology, The National Deficit, The U.S. Government

(FT) Moody’s warns on deteriorating outlook for US public finances

Credit rating group Moody’s has warned on the US fiscal outlook, saying President Donald Trump’s trade tariffs could hamper the country’s ability to cope with a growing debt pile and higher interest rates.

The rating agency said on Tuesday that America’s “fiscal strength is on course for a continued multiyear decline”, having already “deteriorated further” since it assigned a negative outlook to America’s top-notch triple A credit rating in November 2023.

While Moody’s highlighted the “extraordinary” economic resilience of the US and the role of the dollar and the Treasury market as backbones of the global financial system, its analysts also warned on Tuesday that the policies of the second Trump administration — including sweeping tariffs and plans for tax cuts — could do more harm than good for government revenues.

“The potential negative credit impact of sustained high tariffs, unfunded tax cuts and significant tail risks to the economy have diminished prospects that these formidable strengths will continue to offset widening fiscal deficits and declining debt affordability,” Moody’s said.

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Posted in * Economics, Politics, America/U.S.A., Budget, Economy, President Donald Trump, The U.S. Government

(Washington Post) The Free-living Bureaucrat–Michael Lewis on Heather Stone of the Food and Drug Administration

If they’d been asked to write an autopsy of their marriage, Walter and Amanda Smith might have agreed that the cause of death was their lack of understanding of the institution. By the summer of 2021, they were like two people who had formed their own country before agreeing on the rules of citizenship. Walter was drinking too much and going through the motions; Amanda felt trapped and separated from the identity she’d been handed as a child. “I was raised to be a ray of sunshine inside,” she liked to say. “I’m supposed to be the joy of the room.” To which one day Walter blurted out, “You are not a ray of sunshine. You’re a black cloud.” Since they’d collided 10 years earlier in a Texarkana roadside bar — Amanda was the waitress who didn’t mind that Walter had already had too much to drink — they’d never spent a night apart. Both were easy on the eye and quirky and impulsive and extraordinarily willful. Both were also unhappy. Walter had ballooned to 250 pounds and was going through two six-packs of Budweiser a night. Amanda had decided that marrying Walter Smith after knowing him for only five months was the biggest mistake of her life — which was saying something.

Still, at first glance, they appeared to have built a life together. They’d bought a place with land around it outside De Queen, Arkansas. Walter had taken a good, if all-consuming, job fixing anything that broke inside a massive coal-fired power plant an hour’s drive away. At one stretch, he worked 12-hour shifts for 93 straight days. They’d accumulated a vast number of animals: chickens, goats, rabbits and cats, along with a surprising number of dogs. “I pick up dogs off the side of the road,” explained Amanda. Inside of six years, Amanda had given birth to three children and was pregnant with a fourth. Walter insisted on naming their first, a boy. Hunter, he’d called him, after one of his favorite writers, Hunter S. Thompson. By cobbling together names from Amanda’s side of the family, he’d named their second child, too, a daughter: Alaina. After that, Amanda seized back the naming rights and, for reasons Walter has never learned, called their third child Henry. The fourth time around, Amanda was racked with indecision. “Infant Smith,” read the baby boy’s birth certificate for the first three months after his birth. “I thought, she’s going to come up with some wild shit,” Walter said. “And one day she says it: Johnathan. And I’m like, ‘You got to be sh*&^ing me.’ It took you three months to call him John Smith?”

At a glance, they were a union, but by the summer of 2021, they were engaged in something closer to civil war. “I’m doing all the things I’m supposed to do,” Walter said. “But I wasn’t willing to do the shit that made her happy. I was doing the shit that would shut her up. I would do everything I could to keep her off my ass so she would feel guilty to ask me to quit drinking.” For example, he knew that Amanda wanted to rely less on processed foods and more on what they grew themselves. The soil on their farm was poor — just gravel and red clay that required a pickax to dent. And so before Amanda could think to ask him, Walter hauled in endless sacks of enriched soil and erected four massive garden beds.

As he worked, Alaina, then 5 years old, went out to watch and play. She loved hanging around her father. Making mud pies was her favorite hobby. Walter thought nothing of it until he looked up and saw Alaina enveloped in a dust cloud. “Hey, baby, get out from downwind of that,” he said. For a moment, he worried about the effect on her lungs of the dust. But then Alaina moved, and Walter returned to the job of making his wife unhappy.

And so their small nation was divided when its first external threat presented itself. The moment from Sept. 10, 2021, is still vivid in Amanda’s mind. “Hunter runs in and says, ‘Mom, when I’m talking to Alaina, she’s not talking back to me.’”

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Posted in Blogging & the Internet, Children, Health & Medicine, History, Labor/Labor Unions/Labor Market, Marriage & Family, Pastoral Theology, Science & Technology, The U.S. Government

(NYT)  David Wallace-Wells takes a look back at the Covid19 pandemic after five years

The pandemic response wasn’t perfect. But the pandemic itself was real, and punishing. Above all, it revealed our vulnerability — biological, social and political. And in the aftermath of the emergency, Americans have largely looked away, choosing to see the experience less in terms of death and illness than in terms of social hysteria and even public health overreach. For many, the main lesson was that in the world of humans, as in the world of microbes, it’s dog-eat-dog out there.

But the consequences and aftershocks were also more subtle and diffuse: it isn’t easy to live in isolation and in fear, often largely online and surrounded by exceptional illness and mortality, as we watched aspects of the world and our own lives we’d long taken for granted be withdrawn or torn apart. And it isn’t easy to get over all that, however eager we thought we were to “return to normal.” We lived through as many deaths as some of the worst-case scenarios predicted, and without an initial spasm of inspiring solidarity and miraculous biomedical intervention, it could have been worse. But when we came out the other side — 1.5 million fewer of us — we were, as a country, exhausted, resentful, deluded and distrustful. A huge amount of the world in which we now reside was formed in that crucible. I will write more about that next week.

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Posted in America/U.S.A., Anthropology, China, Ethics / Moral Theology, Globalization, Health & Medicine, History, Politics in General, Science & Technology, The U.S. Government, Theology

(Bloomberg) T. Rowe Raises Prospect of 6% Treasury Yields on Fiscal Risk

Treasury 10-year yields may climb to 6% for the first time in more than two decades as US fiscal woes worsen and Donald Trump’s policies help keep inflation elevated, according to T. Rowe Price.

The benchmark yield may first reach 5% in the first quarter of 2025 before potentially climbing further, Arif Husain, chief investment officer of fixed-income, wrote in a report. Husain is doubling down on calls for higher yields, citing persistent US budget deficits as Trump cuts taxes during his second presidency, as well as potential tariffs and immigration policies that would sustain price pressures.

“Is a 6% 10‑year Treasury yield possible? Why not? But we can consider that when we move through 5%,” wrote Husain, who helps the money manager oversee $187 billion. “The transition period in US politics is an opportunity to position for increasing longer‑term Treasury yields and a steeper yield curve.”

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Posted in * Economics, Politics, Budget, Credit Markets, Economy, The National Deficit, The U.S. Government

(CFRB) Gross National Debt Reaches $36 Trillion

As if lawmakers needed any other reasons to take America’s fiscal health seriously, the gross national debt of the United States has now officially reached $36 trillion. We started 2024 by crossing the $34 trillion threshold, added another trillion during the summer, and now we’re heading into the holidays with yet another trillion. Government borrowing is becoming as certain as the changing of the seasons these days.

It’s often said that the more times you say a word over and over, the more it starts to lose its meaning. With so many trillion-dollar debt milestones in recent years, it’s easy to forget that each of them has real-world consequences.

But rising debt poses serious domestic and geopolitical risks: it slows our economy, threatens higher inflation and interest rates, and squeezes our budget through higher interest rates. And it hampers our ability to be flexible in responding to recessions and disasters at home and foreign crises abroad.

And the future trajectory looks bleak as well.

Read it all.

Posted in * Economics, Politics, Budget, Economy, The National Deficit, The U.S. Government

(Defense One) What Trump’s win means for the federal workforce

Donald Trump is projected to return to the White House next January, according to the Associated Press, and is poised to spur the most dramatic reimagining of the staffing of government in more than a century.

That’s because Trump has vowed to revive Schedule F, a controversial abortive effort at the end of his first term to strip the civil service protections of potentially tens of thousands of career federal workers in “policy-related” positions, effectively making them at-will employees. Trump and many of his former staffers have frequently bemoaned that “rogue bureaucrats” inhibited his policymaking power during his first stint in the White House.

Though President Biden quickly rescinded Schedule F when he took office in 2021—before any positions could be converted out of the federal government’s competitive service—that hasn’t stopped Trump and his allies from working on the initiative in absentia. Both the Heritage Foundation and America First Policy Institute, which have organized dueling unofficial transition projects have endorsed reviving Schedule F, going so far as to creating lists of upwards of 50,000 current career civil servants to strip of their removal protections and threaten with termination.

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Posted in * Economics, Politics, Economy, Labor/Labor Unions/Labor Market, Office of the President, President Donald Trump, The U.S. Government

(W Post) As smuggling rings made billions from migrants, the U.S. was sidelined

He called himself a simple onion farmer, a Mayan Indian with four kids and a fourth-grade education.

U.S. prosecutors knew better.

By his late 30s, Felipe Diego Alonzo had built a crime route stretching from Central America to Texas, allegedly paying off Mexican drug cartels along the way. He tooled around Guatemala’s western highlands in a loaded silver Ford Ranger pickup. When the police finally raided his ranch, they found a study in rural narco-chic: wooden chalets, a swimming pool, a show horse valued at $100,000.

What they didn’t find was a narco. Alonzo’s business “was more profitable than drug trafficking,” said one of the Guatemalan officials who detained him.

Alonzo was moving people.

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Posted in * Economics, Politics, --Guatemala, Colombia, Economy, Ethics / Moral Theology, Foreign Relations, Immigration, Law & Legal Issues, The U.S. Government

(W Post) George Will–A mountain of government payments buries the myth of American self-reliance

Payments from government entitlement programs — transfer payments — are the fastest-growing major component of citizens’ personal income. Such transfers are the third-largest source of personal income: In 2022, the average citizen received almost as much from government transfers ($11,500) as from investments ($12,900), and more than one-quarter as much money as was obtained from work. This average citizen received six times more (adjusted for inflation) in government transfer payments than in 1970, during which span income from other sources increased less than half as much. Transfers’ share of total (inflation-adjusted) personal income has more than doubled since 1970, from 8.2 percent to 17.6 percent in 2022.

The Washington-based Economic Innovation Group, which promotes economic dynamism, has released a report, “The Great ‘Transfer’-mation,” explaining how swiftly U.S. communities became dependent on government transfer payments. In 2022, Americans received $3.8 trillion in government transfers, 18 percent of all personal income. In 1970, not even 1 percent of counties received one-quarter or more of personal income from transfers. By 2000, 10 percent did; in 2022, it was 53 percent. This is certain to increase as the population ages.

The primary explanation: the aging U.S. population.

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Posted in * Economics, Politics, America/U.S.A., Economy, History, Medicaid, Medicare, Social Security, The U.S. Government

(RS) Welcome to the defense death spiral

The Death Spiral is one of the main Pentagon Pathologies. The American people devote ever greater resources to their defense while receiving less and less in return. The Air Force had 10,387 aircraft in 1975 when the Military Reformers began their work in earnest. Today the Air Force has 5,288. The Navy had 559 active ships in 1975. Today the fleet has only 296. The Pentagon’s base budget is more than 60% higher today than it was in 1975, when adjusted for inflation. The American people simply spend more and receive much less in return for their defense dollars.

An argument can be made that modern military equipment is more expensive because of the capabilities they provide the troops. That is extremely debatable because many of the high-profile acquisition programs over the past 25 years have been underwhelming at best, and often complete failures. It is difficult to find anyone who will honestly say the Littoral Combat Ship was worth the effort.

Left unchecked, the acquisition Death Spiral’s inevitable destination is unilateral disarmament. Norman Augustine, a former DoD official and Lockheed Martin CEO predicted in 1983, with only a hint of satire, that by 2054, “the entire defense budget will purchase just one aircraft. This aircraft will have to be shared by the Air Force and Navy 3-1/2 days each per week except for leap year, when it will be made available to the Marines for the extra day.”

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Posted in * Economics, Politics, Defense, National Security, Military, Foreign Relations, Military / Armed Forces, Politics in General, Science & Technology, The U.S. Government

(WSJ) Medicare Paid Insurers Billions for Questionable Home Diagnoses, Watchdog Finds

Private Medicare insurers got about $4.2 billion in extra federal payments in 2023 for diagnoses from home visits the companies initiated, even though they led to no treatment, a new inspector general’s report says.

The extra payments were triggered by diagnoses documented based on the visits, including potentially inaccurate ones, for which patients received no other medical services, the report says. Insurers offering private plans under Medicare, known as Medicare Advantage, are paid more when patients have costly conditions.

Each visit was worth $1,869 on average to the insurers, according to the Office of Inspector General for the Department of Health and Human Services. The findings are similar to those of a Wall Street Journal investigation published in August. It showed that insurers between 2019 and 2021 pocketed an average of $1,818 for each visit based on diagnoses for which people received no other treatment.

The OIG recommended in Thursday’s report for the first time that Medicare restrict or even cut off payments for diagnoses from these visits. 

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Posted in * Economics, Politics, Corporations/Corporate Life, Economy, Ethics / Moral Theology, Health & Medicine, Medicare

(Bloomberg) Global Public Debt to Hit $100 Trillion by End of 2024, IMF Says

Global public debt is set to reach $100 trillion, or 93% of global gross domestic product, by the end of this year, driven by the US and China, according to new analysis by the International Monetary Fund.

In its latest Fiscal Monitor — an overview of global public finance developments — the IMF said it expects debt to approach 100% of GDP by 2030, and it warns that governments will need to make tough decisions to stabilize borrowing.

Debt is tipped to increase in the US, Brazil, France, Italy, South Africa and UK, according to the IMF report, which urges governments to rein in debt.

“Waiting is risky: country experiences show that high debt can trigger adverse market reactions and constrains room for budgetary maneuver in the face of negative shocks,” it said.

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Posted in * Economics, Politics, Economy, Ethics / Moral Theology, Politics in General, The National Deficit

(Telegraph) Ambrose Evans-Pritchard–Enjoy the torrid Fed rally, but the world is not out of the woods yet

The start of a Fed rate-cutting cycle is a huge moment for the international financial system. Central banks in emerging markets can loosen a little without fearing a run on their currencies. Indonesia’s central bank has stopped defending the rupiah and dared to cut rates. India’s Sensex stock index hit an all-time high on Thursday as markets anticipate a new world of abundant liquidity and surging inflows of foreign funds.

The Fed’s jumbo half-point cut is transmitted instantly to the 40-odd countries and currency boards linked to the US dollar in one way or another. These regions were forced to import the most aggressive tightening cycle in 40 years through their exchange rates, whether or not their local economies were synchronised with the US cycle….

But there is a large caveat to this rosy global picture. It all depends on whether the Fed is ahead of the curve and delivers a soft landing; or whether it is behind the curve, has misjudged the delayed effects of past tightening, and has already let recessionary dynamics take hold.

These binary outcomes can have drastically different consequences for the world.

Mislav Matejka, equity strategist at JP Morgan, says there have been four soft landings and eight recessions in the last 12 Fed cycles. The “softs” delivered stock market gains of 20pc or so over the following year. The “hards” led to months of sell-offs, snowballing into wipeout crashes in 2001 and 2008. This time the starting point is stretched after a 26pc rise in Wall Street’s S&P 500 index over the last year.

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Posted in Economy, Federal Reserve

(DW) FBI disrupts major Chinese hacking group, director says

The FBI said on Wednesday that it had disrupted a Chinese hacking group nicknamed “Flax Typhoon”  that targeted critical infrastructure in the United States.

The Flax Typhoon hackers installed malicious software on thousands of computers and other internet-connected devices including cameras, video recorders and routers.

This created a botnet — a massive network of infected computers.

Universities, government agencies, telecommunications providers, media organizations and NGOs were among the targets, the FBI said.

“Flax Typhoon’s actions caused real harm to its victims, who had to devote precious time to clean up the mess when they discovered the malware,” said FBI director Chris Wray.

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Posted in Foreign Relations, Politics in General, Science & Technology, The U.S. Government

(CRFB) CBO Releases June 2024 Baseline Update

The Congressional Budget Office (CBO)…[recently] released new ten-year budget and economic projections – an update from its February baseline – again confirming that the national debt is on an unsustainable path. According to CBO’s new projections:

Debt held by the public will reach a new record by the end of Fiscal Year (FY) 2027 – 106.2 percent of GDP – and rise to 122.4 percent of GDP by the end of 2034.

The budget deficit will rise to $1.9 trillion (6.7 percent of GDP) in FY 2024 and $2.9 trillion (6.9 percent of GDP) by 2034, totaling $22.1 trillion over the 2025-2034 budget window.

Interest costs will reach a near-record 3.1 percent of GDP this year – exceeding defense and Medicare spending – set a new record next year and grow to 4.1 percent of GDP by FY 2034.

Under CBO’s latest baseline, federal debt held by the public will grow by $23 trillion through FY 2034, from over $27 trillion today to nearly $51 trillion by the end of 2034. As a share of the economy, debt will rise from 97.3 percent of Gross Domestic Product (GDP) at the end of 2023 to 106.2 percent by 2027 – surpassing the prior record set just after World War II – and 122.4 percent of GDP by 2034. Debt in 2034 will be $2.4 trillion and 6.4 percent of GDP higher than projected in February.

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Posted in * Economics, Politics, Budget, Defense, National Security, Military, Economy, Ethics / Moral Theology, History, Medicare, Social Security, The National Deficit, The U.S. Government

(NPR) Couples say they can’t get married because of this government program’s outdated rules

Amber and Devin Weise lived in distant states when they met in an online social media group for Christian singles. They quickly became a couple, spending hours texting or talking on video chat. After several months of long-distance dating Devin wanted to propose, but thought it was proper and more romantic to do it in person.

Amber hinted she’d be OK with a proposal on a video call. Devin proposed and sent the ring in the mail.

It wasn’t until after they married that they learned the federal disability benefits program Amber relied upon penalizes couples who marry. Amber lost her monthly income check and the health care that came with it.

Amber is one of 7.4 million people who rely upon Supplemental Security Income, or SSI, a federal program that provides monthly cash assistance to disabled and older people with little income and resources. And for Amber and others, being on SSI is also the way they get health insurance.

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Posted in Marriage & Family, Personal Finance & Investing, The U.S. Government

(The FP) Niall Ferguson: Could we be living in the late Soviet America?

Even more striking to me are the political, social, and cultural resemblances I detect between the U.S. and the USSR. Gerontocratic leadership was one of the hallmarks of late Soviet leadership, personified by the senility of Leonid Brezhnev, Yuri Andropov, and Konstantin Chernenko. 

But by current American standards, the later Soviet leaders were not old men. Brezhnev was 75 when he died in 1982, but he had suffered his first major stroke seven years before. Andropov was only 68 when he succeeded Brezhnev, but he suffered total kidney failure just a few months after taking over. Chernenko was 72 when he came to power. He was already a hopeless invalid, suffering from emphysema, heart failure, bronchitis, pleurisy, and pneumonia.

It is a reflection of the quality of healthcare enjoyed by their American counterparts today that they are both older and healthier. Nevertheless, Joe Biden (81) and Donald Trump (78) are hardly men in the first flush of youth and vitality, as The Wall Street Journal recently made cringe-inducingly clear. The former cannot distinguish between his two Hispanic cabinet secretaries, Alejandro Mayorkas and Xavier Becerra. The latter muddles up Nikki Haley and Nancy Pelosi. If Kamala Harris has never watched The Death of Stalin, it’s not too late.

Another notable feature of late Soviet life was total public cynicism about nearly all institutions. Leon Aron’s brilliant book Roads to the Temple shows just how wretched life in the 1980s had become.

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Posted in * Culture-Watch, * Economics, Politics, America/U.S.A., Budget, Ethics / Moral Theology, History, Russia, The National Deficit, The U.S. Government

(NYT Op-ed) Bret Stephens–How Capitalism Went Off the Rails

The Group of 7 countries might have set a record when they met in Italy last week. Has there ever been a less popular assemblage of leaders of the free world? Approval ratings ranged from Giorgia Meloni of Italy’s about 40 percent to Emmanuel Macron of France’s 21 percent to Fumio Kishida of Japan’s 13 percent. Last year the Edelman Trust Barometer found that only 20 percent of people in the G7 countries thought that they and their families would be better off in five years. Another Edelman survey, from 2020, uncovered a broad distrust of capitalism in countries across the world, “driven by a growing sense of inequity and unfairness in the system.”

Why the broad dissatisfaction with an economic system that is supposed to offer unsurpassed prosperity? Ruchir Sharma, the chairman of Rockefeller International and a Financial Times columnist, has an answer that boils down to two words: easy money. In an eye-opening new book, “What Went Wrong With Capitalism,” he makes a convincing case.

“When the price of borrowing money is zero,” Sharma told me this week, “the price of everything else goes bonkers.” To take just one example: In 2010, as the era of ultralow and even negative interest rates was getting started, the median sale price for a house in the United States hovered around $220,000. By the start of this year, it was more than $420,000.

Nowhere has inflation (in the broad sense of the term) been more evident than in global financial markets. In 1980 they were worth a total of $12 trillion — equal to the size of the global economy at the time. After the pandemic, Sharma noted, those markets were worth $390 trillion, or around four times the world’s total gross domestic product.

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Posted in * Economics, Politics, Budget, Economy, Federal Reserve, Politics in General, The U.S. Government