Visualizing Obama's budget cuts.

Well played, Missouri

You can argue back and forth about the legitimacy of their actual stances, but I just wanted to shed some light on what appeared to me to be votes that were slightly above-average in principle from Missouri's two senators.

Claire McCaskill has a much easier case to make. She was one of three Democratic senators who voted against Obama's spending bill, along with Evan Bayh and Russ Feingold. She stands out because she and Feingold were the only two Democratic senators not to insert any earmarks into the bill, and both Bayh and Feingold are up for re-election in 2010, while she is not.

Chris Bond - well, I'm doing my best for a Republican ... He's actually in favor of earmarks, but at least he still had the guts to vote for the bill.

This was all part of an article that's generally unrelated, about popular presidents who struggled with issues of unity in their own party.

A few things (Updated Twice)

(Update: I was going to say that I never thought Caroline had much of a chance. And using your uncle's collapse to find a way out is not just total BS, it's horrible.)

Random thoughts and rants.

Should Tim Geithner's tax issues be a bigger deal? I hear more about that than if he's really the best guy to be in the position. For what it's worth, I heard O'Reilly belligerently defending Geithner against a conservative caller yesterday.
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Obama's speech was not that bad. Everybody's ripping on it. Not everybody, but many people. I thought the speech was very good. Expecting it to be epic is like expecting Babe Ruth to hit three homeruns just because you're at the game. People, he can't give one of the greatest 20 speeches in American history every time he opens his mouth.

Besides, I actually took a copy of the speech and read it line for line, trying to choose the ones that might be "remembered" in history. In so doing, it became quite clear that there's no way to know, because it all depends on what happens in the future. It needs to sound prophetic. If the energy crisis somehow got much worse, and he got us out of it, the line about "harnessing the wind, sun, and soil" could very well be the hallmark of a 21st century presidency. Or not. It all depends, and the whole speech is like that. But I thought that the tone was appropriate, and that the style achieved the sort of timelessness you're looking for in an inaugural address (i.e., except for a few specifics, it basically could have been given by any president).

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As was the case with the Golden Globes, Heath Ledger is nominated for an Academy Award for Best Supporting Actor. Maybe I'm delusional here, but whether you want him to win or not, I would have thought he'd be in the best lead actor category. He's got to have pretty similar screentime to Batman I'd think, and his performance certainly leads the movie. A pretty minor controversy, to be sure, but just a thought I'd had.

Also, I think it was underreported that Kate Winslet won Best Lead and Best Supporting at the Golden Globes. Then again, it is the Golden Globes.

(Update2: An interesting coincidence is that the nominations for the Oscars were announced today, on what I just read is the one-year anniversary of Ledger's death.)
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This whole re-oath thing is pretty stupid, but dammit Barack, why didn't you use a Bible the second time? Just save us the grief! On a related note, Konservapedia is still sure he's Muslim. ("He took the oath on a Bible and not a Koran? Well that's what a secret Muslim would do.")

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I knew I had something else but I can't remember it so I'll do this instead.

Starting with 2008 GDP of $13.84 trillion and debt of $10.6 trillion, and assuming long-term growth of 2% and inflation of 1%, and also assuming the CBO estimate for debt as a percentage of GDP, then in 80 years the nominal GDP will be $150 trillion and the nominal debt will be $1 quadrillion.

That's a lot of money

Christopher Buckley, or C-Buckz, as I'm tempted to call him (just kidding, although that really makes me wish he'd marry Star Jones so she could be Star-Buckz - sorry, it's been a long week) has an article at the Beast trying to put a handle on how much the $1.2 trillion dollar deficit really is. And while I like what he does, he's taking a macro approach, and before I had read it I was already planning on taking more of a micro approach.

Let's start with Bernie Madoff. One fraud case, 50 billion dollars. That's a lot of money. A whole lot. It averages out to about $170 for every man, woman, and child in America.

Now, you didn't lose $170 in the Madoff fraud case, which you're probably pretty happy about. And that makes you like most Americans - almost all of them in fact. But for every American who didn't get ripped off by Madoff, that means that one of them who did lost an extra 170 bucks. Put another way, if you put all Americans on one side of a giant room with a big line down the middle, then for every single person that got to cross the line to the "didn't invest" side, some investor would have to pay $170. Just think about how long that would take ...

Now think about the stimulus. The tax rebate stimulus in early 2008 was $150 billion. Then TARP was $700 billion. Now Obama proposes another $825 billion. That adds up to $1.675 trillion (Just for fun: $1,675,000,000,000) There are 138 million taxpayers in the United States, so this amounts to $12,140 per taxpayer. That's incredible! Essentially, the federal government is forcing taxpayers to band together and go into (an additional!) $12,140 worth of collective debt each (albeit at a low interest rate, and of course the burden is not evenly distributed).

The entirety of the debt when Clinton left office was under $6 trillion. It's now over $10 trillion with $1 trillion deficits projected indefinitely. And we haven't even gotten to Social Security et al yet.

Dammit

At least I was clear about rescinding my post, but this didn't take long: China doesn't like our debt anymore.

Is China Going to Call in our Debts?

(So, I wrote nearly this whole post before completely undermining it at the very end.  But I didn't really feel like throwing it away, so even if I'm basically an idiot here, at least it could bring about some discussion.  But keep in mind that, somewhat ironically, I no longer stand by some of what I've written here.)

With the economy tanking one of those comments you hear from time-to-time is that China, whose holdings of US debts amount to $585 billion, or over 4% of our entire economy, will suddenly call in our debt, crushing our economy.

Is this scenario plausible?  Might China actually do this?  I can't say it more strongly: no.

Unless I'm missing something, I can base this conclusion on two three things.  For one, "China" is not one entity.  There's about 1.5 billion people there right?  Now sure, the debt is likely to be pretty consolidated among more powerful actors, but it's not like there's one guy in the government who sits in front of two buttons all day that say "hold" and "call," just waiting for the moment to trash the economy.  So for "China" to call in our debt, that would mean that some circumstance would have to change that would result in the many different Chinese debtholders simulateneously wanting to call in that debt.

OK, I'm going to kind of gloss over number two because I did not follow this in my intermediate macro class, but I'm pretty sure this issue of debt is tied into trade deficits.  So for China to call in the debt would mean that China would also not be able to continue selling us more than we sell them.  And I don't think they want to do that.  (If anyone can correct me on this one, please do)

But the third one is also pretty key.  Let me add here that Japan holds almost the same amount of debt that China does, and combined they hold about 9% of our debt, or $1.15 trillion.  So, I was going to assume that the treasury rate was about 4% returns on this debt.  Unfortuantely, I just looked it up and realized it's closer to 0.4%.  This really kills my argument, but I'll keep going anyway.  So, 4% of $1.15 trillion means a return of $46 billion per year on this investment.  By contrast - think about how much fuss there was over the $25 billion for the automakers.  Even at today's rate of 0.46%, this results in annual interest of $5.29 billion.  And that's not a bad take.  OK, you're right it kind of is.  Dammit.

A new sin tax

To begin: "A study by the Centre for Science in the Public Interest showed that soft drinks were the single biggest contributor to calories in the American diet [...]"

That's right, soda beat out meat, starches, grains, fruits, and vegetables; it beat candy, cookies, and cakes. That quotation makes me feel uncomfortable drinking a soda, even if I am able to ignore the various environmental reasons for avoiding the drinks (e.g. creation of plastic bottles and draining of aquifers near bottling plants, particularly in impoverished areas in other countries (e.g. India)).

Now it seems as if Gov. Patterson is trying to change this frustrating/disgusting consumption pattern. Under Patterson's new budget plan for 2009, "[...] consumers will have to pay an 18% tax on non-diet sodas and sugary drinks." Obviously this faces resistance from drink companies and the American Beverage Association, but I am all for this policy. Sin taxes are (or at least should be) designed to discourage behavior that has a demonstrable negative effect on the person or a negative spillover effect on the community as a whole (e.g. soda leads to obesity which raises all health care costs). I think that taxing what largely amounts to a luxury good as a manner of both improving the overall level of health in the community and as a budget deficit filler is a fantastic idea. I would love to see the price of soda skyrocket to the point where it becomes as unappealing to consumers as its lasting effects are to those who actually study these effects.

Also, I have no qualms about the fact that this policy is regressive. Poverty is highly correlated with (and sometimes causally linked to) obesity, which is also causally related to soda consumption. At this point soda needs to be made a less appealing option so that money spent on calories is directed at the (slightly) healthier available alternatives as economic pressures force people to buy cheaper foods. I know that the healthy foods are the expensive foods, so it is all the more important that we push people toward the healthier end of their available consumption spectrum as their available spectrum shifts to a lower dollar level. We can take this recession and use it as a tool to shift preferences so that they take into account the true cost of the decision to drink soda. Basically, if we can get poor people to make healthy decisions we will be taking a lot of the burden off our health care system, which helps everyone and will hopefully create a positive-feedback loop that leads to lower levels of poverty (as, say, total time out of work due to poor medical treatment declines).

In the end I am actually also just happy to have another, better excuse to quit drinking soda. I hope that was coherent; I am very cold and it is pretty early.