Kooky "Macro Tourist" tells us to put aside our political views, uses crabbed Talking Points Memo graph to warn us about Republican federal spending increases

THINGS HAVE CHANGED...:

Although the Republicans are supposedly the party of fiscal conservatism, we all know that sort of talk is only for when they are not in power. ... There should be little surprise that under Republican stewardship, the greatest fiscal stimulus in the past decade has been instituted. Not saying if it is good or bad because my opinion is completely irrelevant. ... You would be foolish to ignore the dramatic change in the world’s attitude towards economic policy. “Tight fiscal and easy monetary policy” is being replaced with “easy fiscal and (somewhat) tighter monetary policy”. And ironically enough, the Republican Party under Trump’s “leadership” is at the forefront of this change.

Apparently the guy can't figure out the facts for himself, which show that Trump is projected by the center left Tax Policy Center to be in the same league as Obama through fiscal 2020, not in the Reagan league, not in the Nixon league, not in the Bush 41 league, either. Hell, he's not even projected to make the Bush 43 league, which was bad enough. Spending is going up under Trump, too be sure, but it's a world away from previous Republican administrations.

What really matters for spending is who controls the purse strings, which is Congress. Until Clinton, Republican presidents had to bargain with Democrat Congresses to get what they wanted. That often meant agreeing to big spending bills. The Republican resurgence in Congress under Clinton marked a new era in spending, which comparatively speaking is way down on a compound annual growth rate basis, even under spendthrift Bush 43.

Personally I'm less fearful than I had been of a new spending spree under Trump with Republicans in control of Congress. Trump is adversarial with the Republican Establishment in a way that no Republican president of the past has been. Getting what he wants hasn't been at all easy for this very reason. Republicans are obstructing him no less than Democrats are even as Trump folds like a house of cards on taxes and regulation without getting anything in return, like a wall. At some point he's going to veto something, or go down to electoral defeat.

At any rate, talk of a new dramatic change is simply kooky.

Noah Smith embraces the Trump narrative: "There’s no doubt that the U.S. economy is in a boom"

Here for Bloomberg.

After examining several indicators, which, however, are not unequivocal for their interpretation despite saying "no doubt", Noah Smith comes down on the side of improved sentiment as the cause of the current "boom".

On that we agree. There's a boom in sentiment.

The problem is, too many people are importing that improved sentiment into their reading of the data, and into their choice of the data.

For example, Smith focuses on job openings to unemployed, which is a tiny measure (6.66 million in June) of what's really going on in the labor market. But the broadest measures of unemployment still show 15.9 million unemployed, underemployed, and no longer counted in the labor force. There is still huge slack in the labor market, which is one reason why wages for the vast majority of workers are not rising like they would in a real economic boom (2.7% y/y in July vs. in the 4s in 2006/7).

Similarly Smith discusses the percent of population employed aged 25-54, but clearly misses that it's most definitely not "back to 2006 levels" as he claims (H1 2018 is at 79.2%, still below the 2006 average of 79.8% and also below the average of either half of 2006). The broadest measure of the percent employed, on the other hand, still shows a huge gap between now and the pre-Great Recession average when over 6 million more were employed than are at present (60.5% now vs. 62.9% then, on average).

The case is similar with domestic investment.

Smith chooses to highlight "Shares of gross domestic product: Gross private domestic investment: Fixed investment: Nonresidential (A008RE1Q156NBEA)" to show that "investment as a percentage of the economy is at about the level of the mid-2000s boom". But the current level in H1 2018 at 13.7% is also identical to H2 2014. Was that indicative of a boom? Did we blink and miss it? How about in H1 2008 when it was again at 13.7%? Was that indicative of a boom? If so, why did the economy then promptly crash in H2 2008?

A broader measure of domestic investment, however, "Shares of gross domestic product: Gross private domestic investment (A006RE1Q156NBEA)", shows us well off the 2006 peak and even the more recent 2015 level. Whatever we call what we have right now, the current 17.7% is still far below the 19.8% level of H1 2006, which itself failed to equal the boom level of the year 2000 (19.9%).

With all that cash unleashed by the tax reforms and sloshing around in the economy, one would think things would look a lot better than this, which simply shows that most of that money indeed went elsewhere.

GDP has been temporarily goosed by the tax reforms in concert with a fresh gusher of federal deficit spending. But those are one-offs. They will not, and cannot, be repeated over and over again in short succession.

We know what comes next.

Bernie's Medicare For All to add 72% to current outlays

From the story here:

The Mercatus analysis estimated the 10-year cost of "Medicare for all" from 2022 to 2031 [at $32.6 trillion], after an initial phase-in. Its findings are similar to those of several independent studies of Sanders' 2016 plan. Those studies found increases in federal spending over 10 years that ranged from $24.7 trillion to $34.7 trillion.

Current outlays in fiscal 2018 are estimated to finish up at $4.137 trillion, to which add the average increase from BernieCare of $2.97 trillion, an increase of nearly 72% to outlays, and you've got nothing short of a draconian tax increase needed to pay for it all.

By surviving past May 30 and not resigning, John McCain has insured there will be no election for his seat until 2020

When he dies, as he surely will, the governor of Arizona is obligated to appoint a Republican to fill out the remainder of his term.

Another man might have given Arizona voters what they deserve under the circumstances, a fully-capable senator whom they themselves elected, but that man is not John McCain.

Democracy for me, but not for thee.

The story is here.

Edit:

Of course, not resigning but sequestering in Arizona for medical reasons brings a twofer: He stymies the advance of the Trump agenda in the Senate where the votes are razor-thin even when he's there. This makes the likelihood of success for "moderate" alliances between liberal Republicans and Democrates in the Senate even greater.

Trump has cut federal employment by a miniscule 0.3% November 2016 through April 2018

9000 jobs, a fart in a windstorm.

Federal employment peaked in 1990 at 3.2 million and hasn't averaged below 2.7 million since the mid-1960s.

As with ending abortion, cutting federal spending is only aspirational for Republicans in the same way that ending poverty and securing equal pay are only aspirational for Democrats.

Actually delivering on these promises would mean having to come up with new ones, which is too much like work.

While Rush Limbaugh keeps trying to find a way to rationalize Trump's signature on the omnibus, Laura Ingraham minced no words

On her radio show this morning she called this a betrayal.

And that's what it was.

There were 167 votes against the omnibus in the US House: 90 Republican, 77 Democrat

The House Roll Call is here, the Senate here. There were 32 votes against in the Senate: 23 Republican, 8 Democrat, and Bernie Sanders.

For all the previous action on HR 1625, see here.

87% of the Michigan Congressional Delegation, both Republican and Democrat, voted "Yea", except for good guys House Republicans Justin Amash and Jack Bergman.

Notable "Yea" votes included Republican goodfellas:

Kevin Brady of Texas, Liz Cheney of Wyoming, Bob Goodlatte of Virginia, Trey Gowdy of South Carolina, Duncan Hunter of California (ouch), Darrell Issa of California, Will Hurd of Texas, Peter King of New York, Adam Kinzinger of Illinois, Kevin McCarthy of California, Michael McCaul of Texas, Cathy McMorris Rodgers of Washington, Devin Nunes of California, Peter Roskam of Illinois, Paul Ryan of Wisconsin, of course, Steve "Bullseye" Scalise of Louisiana, and Joe "You Lie!" Wilson of South Carolina.

Say it isn't so, Joe!   

The line of the week was Rush Limbaugh's: "Whenever you see the word omnibus, think trash can"

Here:

So on this, for example, this omnibus, whenever you see that word, folks, just think of a trash can. No! In fact, think of a Christmas tree with anything you want gift wrapped underneath it. That’s what omnibus means.

He had it right the first time. A conservative's trash can is a liberal's Christmas tree.

Nancy Pelosi is quite content for Trump to think he's getting his wall, and urges him to sign the spending bill

Quoted here:

". . . if you want to think you're getting a wall, you just think it and sign the bill."

House Freedom Caucus urges Trump to veto spending bill

Reported here.

Spending bill is a giant FU to Trump, prevents him from using any of the new border wall prototypes

Reported here:

But, crucially, the bill specifically prevents the Trump administration from using any of the new wall designs it commissioned and tested in California last year. All money has to be spent on “operationally effective designs deployed as of the date of the Consolidated Appropriations Act, 2017” — a bill Trump signed on May 5, 2017.

If President Trump cared less about his wall than about a wall, this wouldn’t be an issue. But everything we know about the president indicates that’s not the case, and that this is a blow to his ego — he reportedly upbraided congressional Republicans this week for not supporting it, claiming they “owed” him for his support for the tax bill and his nomination of Neil Gorsuch to the Supreme Court. The bullying tactics do not appear to have worked. ...

Trump wanted 1,000 new ICE agents; he’s getting barely 100, and none of them are the field agents responsible for arresting unauthorized immigrants. (Instead, ICE is getting more staff for investigations and mission support.)

And when it comes to immigration detention, Congress isn’t just refusing to give the White House the 20 percent increase in detention Trump asked for — it’s rebuking ICE for overspending and expecting Congress to bail it out. 

h/t Mickey Kaus

Limbaugh predicts the omnibus spending bill will make Trumpists go wobbly

Well, they should since it's a total betrayal.

Brian Wesbury is back in the excuse-making business for future GDP

Here, complaining that the upcoming two-year Republican $300 billion discretionary spending extravaganza will crowd out the private sector.

Really?

Republicans were quite content under Obama to permit deficits of $7,313 billion over eight years, and Wesbury chirped the whole time about his good old Ploughhorse Economy which produced, for him, passable GDP.

Republicans now are rewarding their constituencies through spending, no less than Democrats did under Obama. The constituencies are different.

We'll see if the spending gets as out of control as it was formerly, but the handwringing, given the disparities, is misplaced.