Chris Christie credits Fed interest rate policy for denting government-spending-induced inflation but misses the role of collapsing energy prices

 Chris Christie is a smart guy with many of the right ideas about government spending, taxes, inflation, energy, and the environment.

But it's a real stretch to think that the timid interest rate increases of the Fed are responsible for this year's so-far moderating inflation indicators when it's falling energy prices since the winter which deserve the real credit. Christie himself admits that outrageous government spending hasn't been curbed at all.

His is a simple binary view which, while conventional and correct as far as it goes, doesn't get to the heart of the current matter. 

Low energy prices have always been and remain key to a successful economy, and it was the spike in natural gas cost inputs because of the Russia-Ukraine war which accelerated inflation globally, not just in the US.

Fed chair Jerome Powell was correct in June of 2021 to believe that inflation would be transitory for "weak supply" reasons, but the Fed rate increases didn't actually commence until the start of the war in Ukraine, which compounded those reasons with the cutoff of European natural gas supplies.

But since the winter the natural gas price is down 73% from peak, coal is down 70%, and gasoline is down too, but a comparatively modest 24%. 

Americans consumed in 2022 the energy equivalent of 26.9 billion kWh/day of natural gas, 13 billion kWh/day of gasoline, and 7.9 billion kWh/day of coal.

Natural gas is twice as important as gasoline in the overall American energy picture, primarily for heating, and as a substitute for coal in electricity generation.

Natural gas produced 4.6 billion kWh/day of electricity in 2022, the top source of electricity, vs. coal at 2.3 billion kWh/day and nuclear at 2.1 billion kWh/day.

Chris Christie is right though. We must "uncap" US oil and gas production and be energy independent.

Europe's natural gas storage, by the way, is presently 93% full as the war in Ukraine drags on. They are ready.

The US used 88.5 billion cubic feet of natural gas per day in 2022. We presently have about 35 days in storage.

Crude oil consumption in 2022 was about 20.3 million barrels per day. The Strategic Petroleum Reserve is down to about 17 days of supply, from about 35 in 2011.

 

Watch CNBC’s full interview with GOP Presidential Candidate Chris Christie

Christie lets Fed off the hook for inflation, blames Trump and Biden for overspending

 

 

The US debt downgrades of 2011 and 2023 have one thing in common: Nancy Pelosi's record of the four most fiscally irresponsible years in the post-war

Nancy Pelosi owns the record for the four most fiscally irresponsible years in the post-war, spending 316% of tax receipts in 2020, 276% in 2021, 310% in 2009, and 296% in 2010.

Her four years as Speaker 2007-2010 averaged current expenditures as a percent of current tax receipts of 251%, highest for any Speaker ever.

S&P downgraded the debt in August 2011.

The Boehner/Ryan interregnum averaged 219%.

Pelosi's next four years as Speaker 2019-2022 averaged 252% in overspending.

Fitch has now downgraded the debt in August 2023.

Taken all together, Pelosi's Speakership produced the worst overspending in the post-war at 251% of revenues. The excess has to be borrowed, ballooning the debt.

The ratings agencies sound the alarm bells no one else will ring, but they are mocked by all the experts, whose livelihoods depend on the scam continuing. 

 All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.     

-- US Constitution, Article One, Section Seven

 

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

The Reagan GDP miracle is a complete myth: It was all government spending (on defense)

And it set a horrible precedent for the dramatic overspending of George W. Bush and Barack Obama, which has sent us on a course to oblivion. You can argue it was necessary to defeat the USSR, but you can't argue that baseline spending (in black) has done anything but go up, up, up to dangerous new levels as a result (notice the baseline Jimmy Carter inherited from liberal Republicanism, for which he got the blame from Ronald Reagan, which wasn't very nice of the old man who went on to bequeath a similar giant new baseline to his successor, G.H.W. Bush).

No, the real miracle was the pathetic loser in Iran, Jimmy Carter, who spent the least in the post-war for his additional GDP, followed by Bill Clinton.

Of course, the spending is all the prerogative of the Congress. The president proposes but the Congress disposes, as the saying goes.

Beware libertarian politicians preaching balanced budgets, as well as utopian infrastructure spending enthusiasts promising the moon and liberal Republicans selling government spending as security to senior citizens at the expense of younger Americans in a time of protracted war. They have delivered little beyond $20 trillion in debt.

Congress has abdicated its spending oversight responsibilities for 20 years, and just did so again

From the story here:

Both Senate Majority Leader Mitch McConnell (R-KY) and House Speaker Paul Ryan (R-WI) have repeatedly promised a return to regular order instead of relying on take-it-or-leave-it omnibus bills and short-term CRs to fund the federal government. However, they have not kept that promise. On Thursday, the House passed a $1.1 trillion short-term CR (HR 2028) to keep the federal government operating until April 28, 2017. Lankford said Thursday that he will vote against the CR when it gets to the Senate on Friday. Despite some gains made since 2014, when Republicans took over control of the Senate, Lankford pointed out that Congress has been “missing out on real oversight” by passing supposedly temporary CRs for the past 20 years.

The New York Times criticizes Republican tax plans, pretending revenues are needed to cover spending

Here:

"All of these candidates deny fiscal reality. In the next 10 years, revenues will need to increase by 40 percent simply to keep federal spending even, per capita, with inflation and population growth. Additional revenues will be needed to pay for health care for the elderly, transportation systems and other obligations, as well as for newer challenges, including climate change. And interest on the national debt will surely rise because interest rates have nowhere to go but up."

Who is the Times trying to kid?

Revenues have never been needed to cover expenditures and they know it, and rarely have covered expenditures. Expenditures will continue to grow whether the Times or the Republicans like it or not. They are baked into the cake of the legislation that drives them. The only way to fix that is to rescind the legislation or modify it, with its built-in cost of living increases and added population coverage assumptions.

This country has run minor annual surpluses in just twelve years since 1939, doing nothing but slowing down our present arrival at $18.2 trillion in debt.

Spare us the histrionics.

The heavy hitters when it comes to spending are:

• HHS ($1 trillion, 91% of which is Medicare and Medicaid)
• Social Security ($.96 trillion)
• Defense ($.59 trillion, protecting the world without reimbursement)
• Treasury Dept. ($.57 trillion, $.4 trillion of which is interest on the debt overspending)
• Veterans ($.16 trillion, which does such a good job veterans die waiting for appointments)
• Agriculture ($.14 trillion, over half of which is the food stamp program).

Together those six account for 88% of federal spending, and the Times dares the Republicans even to think about reforming Social Security and Medicare, calling instead for higher taxes.

Meanwhile there's plenty else to cut just by axing all the other departments which account for the remaining $.48 trillion making up the 2015 fiscal outlay total of $3.9 trillion.

Let's start with the Education Dept., $76 billion, then International Assistance Programs, $22 billion.

Ka-ching! Ka-ching! You're 20% of the way there, just like that.

See how easy that was?

Obama Regime Doubles Down On Using IRS To Silence Political Opponents

Kimberley Strassel for The Wall Street Journal, here:

Democrats are instead fully vested now in using the IRS to shut down criticism by outside groups of ObamaCare, overspending or (ironically) the IRS targeting. Even liberal groups are howling about the White House's use of the IRS to silence political speech, and the House on Wednesday passed a bill to delay the regulations. The White House's response? A veto threat.

5 Million American Homes Repossessed In The Last 7 Years

DrHousingBubbble.com has a sobering post at the end of November 2012 here looking at the big picture for American homeowners in the wake of the bursting of the housing bubble.

Out of 10 million foreclosure filings since the beginning of 2006, about half have ended up in flat-out repossession by the banks. With 50 million mortgages out there, that means roughly 9% of mortgaged homes have ended belly up over the period.

With 5.3 million mortgages currently 30 days or more in arrears, a similar repo rate would mean we could expect another 2.5 million mortgages to go to the dogs.

It's still my opinion that housing in the United States is about 12% too expensive overall at the very minimum, and that federal interventions on a massive scale are prohibiting price discovery for this and other asset classes.

Probably more than anything else, however, those interventions are not designed to obscure these matters intentionally, nor to help individual Americans with their financial problems even as they protest to the contrary. Instead the interventions are primarily designed to rescue the biggest banks which have all these non-performing loans turning their books into Swiss cheese, not to mention helping their pals in Congress who need the cheapest dollars they can get to finance all the overspending which keeps them in power. 

'Wasteful Spending Will Always Rise To The Level Of Revenues'

So says Arthur Laffer in support of Newt Gingrich in The Wall Street Journal, here:

Mr. Gingrich's flat tax proposals—along with his proposed balanced budget amendment—would put a quick stop to overspending and return America to fiscal soundness. No other candidate comes close to doing this.

Here is a corollary I learned from a Harvard-trained philosopher, PJWM:

'Work expands to fill the time allotted.'

Our Enemy, David Stockman, Wants Higher Taxes on the Middle Class

We already know David Stockman wants to turn home owners into renters.

Now his first words out of the box for The New York Times, here, call for raising taxes on the middle class, as if the middle class had any money:

IT is obvious that the nation’s desperate fiscal condition requires higher taxes on the middle class, not just the richest 2 percent.

Mr. Stockman affects displeasure with class warfare in others while himself engaging in it, on behalf of the speculators who enriched themselves for years at the expense of Americans' primary store of wealth: their homes.

But our world is not shaped by the top 2 percent of earners, and everyone else below them "the middle class." This sort of nonsense plays as well at a White House prayer breakfast as it does at the country club, where everyone is middle class for purposes of public discussion, which is why The Times is happy to put up a former (was he ever one?) conservative to say what it doesn't have the courage to say openly.

Having screwed us out of our housing wealth, they're next target is our declining American paycheck.

And unless the Fed wants to ruin the value of the dollar . . . Mr. Stockman tellingly opines later in the piece, revealing how miserable is his grasp of the utter failure of The Federal Reserve since its inception. What do you mean, "unless?" The 1913 dollar is today worth about 4 cents. I'm sure Americans will be happy to surrender 100 percent of their paychecks to the government when the dollar goes to zero.

No, the middle income quintile in America is just 35 million tax returns strong, with a paltry $1.7 trillion in adjusted gross income. To eliminate our annual budget deficits under the big spending liberals like Obama, Pelosi and Reid, Mr. Stockman would have to confiscate 100 percent of this middle class money. Comrade David Stalin might as well starve us all to death, or line us up against the wall and shoot us.

Is there enough money below them?

Where the two lowest income quintiles dwell there are 70 million tax returns with even less money: $1.1 trillion in AGI.

At the top in America are 35 million tax returns with $5.6 trillion in AGI resting on these 105 million with $2.8 trillion in AGI. The 105 million are getting crushed.

The very top 14 million carry the most weight, with $3.8 trillion in AGI.

Even if we imagined raising taxes on the middle class meant we increased taxes on the 21 million tax returns in the upper middle and lower upper class, the pile of money available there for Mr. Stockman's extraction efforts barely beats that available in the real middle class at $1.8 trillion in AGI.

The big money is concentrated at the top, for a multitude of reasons, despite the on-going lies from The Wall Street Journal, Rush Limbaugh, Sean Hannity, and now David Stockman. That's why President Obama's rhetoric about increasing taxes on the wealthy plays so well with the American people. It's the secret of his success.

By overwhelming numbers Americans support increasing taxes on "the rich." Despite all the success of the Tea Party in the US House, the American people obviously still haven't made the connection between the president and the Democrats and the massive revenue shortfalls. The shortfalls exist not because taxes aren't high enough. They exist because of massive new overspending.

That Mr. Stockman attempts to exploit the failed connection, perceiving that an opening yet remains, to confuse, obfuscate and lie, tells you all you need to know about him. Like the rest of our elites, he hates the Tea Party.

Right back atcha, David.