Somewhat ironically, the editors of the Washington Post declaim that President Biden and Congress should worry about the burgeoning federal deficit and debt:
In 2023 — with the economy humming along — the federal deficit is spiking to $2 trillion, according to calculations from the Committee for a Responsible Federal Budget, a watchdog group. That’s double last year’s deficit. The deficit has been this high and surged this fast only during global crises such as World War II or the covid-19 pandemic. This isn’t supposed to happen in a good economic year, in which tax revenue rises and fewer people need government aid.
and
Federal debt is on track to hit a record level by 2029, meaning it will be higher as a percentage of the U.S. economy than even World War II’s peaks. And it will only get uglier from there if politicians continue to ignore it.
concluding:
Getting the United States on a better fiscal track requires significant, broad-based change that includes tax increases, spending moderation and modest reforms to Medicare and Social Security. We know it’s hard. We spent months coming up with our own debt plan this year, and we received many angry letters. But delaying action means the problem gets worse and the solutions become more painful.
Don’t blame me. I opposed both President Bush’s and President Trump’s tax cuts and have argued for Medicare and Social Security reform for decades.
The significance of historic deficits and debt is that increasing spending now would place fiscal policy and monetary policy at cross-purposes.
What needs to happen is that the United States needs to produce more of what its people consume not less. Keynesian strategies for economic growth only work when aggregate product exceeds aggregate demand. That hasn’t been the case for some time. Furthermore, the Republicans’ preferred economic strategy, reducing taxes, was effective in Reagan’s time but it’s a lot less effective now. Now tax cuts just increase the deficit.
Lately I’ve been taken to task for relying too heavily on the rate of inflation as a measure of economic health. Let’s consider some others. Real median household income
Since 2019 real median household income in the U. S. has declined sharply.
Household net worth
When adjusted for inflation household net worth has declined.
Manufacturing activity
As a percentage of GDP manufacturing is at an historic low. When adjusted for inflation, manufacturing activity has declined.
Exports
When adjusted for inflation U. S. exports have declined.
Sales of existing homes
The sales of existing homes are down sharply.
Sales of new homes
Sales of new homes are down, too.
What about unemployment (I hear someone say)? Yes, unemployment is back down to 2019 levels but that statistic must be considered with an asterisk. Labor force participation is down since 2019:
That means that the actual number of people working has declined since 2019 and, as I have previously noted, that cannot be explained by more people pursuing higher education because college enrollments are down, too.
Update
Youth unemployment
The youth unemployment rate is too high. That can’t be blamed on retiring Baby Boomers.
If you’re not aware of it the notorious “food pyramid” has been replaced by MyPlate.
I dutifully entered my age, weight, height, and activity level and I was presented with my target calorie consumption (for either losing weight or weight maintenance) and the proportions of each food group (fruits, grains, vegetables, protein, dairy) I should consume.
The weight maintenance plan they presented to me is just about twice my daily calorie consumption and my weight has been rock steady for quite a while. I believe my weight would soar were I to eat as MyPlate proposes.
I am genuinely surprised at Nicole Friedman’s victory dance over housing prices in the Wall Street Journal:
Home prices aren’t falling anymore.
After declining on a year-over-year basis for five consecutive months—the longest run of declines in 11 years—U.S. home prices rose in July.
The surprisingly quick recovery suggests that the residential real-estate downturn is turning out to be shorter and shallower than many housing economists expected after mortgage rates soared last year.
Scarcity is a big reason. High interest rates have prompted homeowners to stay put rather than buy new homes and take on more expensive mortgages, resulting in an unusually low inventory of homes for sale.
Many potential home buyers have given up their search because mortgage rates recently hit a two-decade high. But the homes that do list often still receive multiple bids, driving up the final sales price.
The result is a market in which the overall volume of transactions has fallen dramatically. Sales of previously owned homes are now down about 36% from January 2022. But prices are generally holding firm outside of a few trouble spots.
For most buyers the price of a home is not the first consideration. The first consideration is the monthly mortgage payment and that is highly dependent on prevailing interest rates.
That’s why we don’t really know what’s going on with the housing market these days. Will the Fed raise interest rates, lower them, or leave them the same?
Consider this:
Taking that into consideration would you say that a crash in the housing market has been forestalled?
I can almost excuse analysts and journalists who’ve never lived through high inflation and attendant high interest rates. Almost.
This year my wife engaged in an experiment. She planted potatoes and the picture above illustrates our harvest. We harvested and ate a few a couple of weeks ago (they were delicious).
She says it puts her in touch with her Irish ancestors.
Whatever you think of Hunter Biden’s guilt or innocence, Donald Trump’s guilt or innocence, or what Joe Biden knew and when he knew it, I think some attention should be paid to Matt Taibbi’s lament at the conclusion of his most recent post:
I think a lot of people in the world I once inhabited, in center-left media and academia, don’t realize they’ve slipped into a deeply unattractive habit of substituting checklists of unquestioned assumptions for thought. In the blue bubble Trump’s limitless evil is an idea with such awesome gravitational pull that it makes nuanced discussion about almost anything impossible. It’s why no one in media could suggest even the possibility he hadn’t colluded with Russia. He’s become an anti-God, of a faith that requires constant worship. When do we get to go back to being atheists
Was it Alan Simpson who said that the Republicans were the stupid party and the Democrats the evil party? How did we arrive at our present situation? Now we have two stupid and evil parties, at daggers drawn, while there’s broad consensus among ordinary people on any number of issues. My belief has always been that it’s because opposing a stupid and evil party is a good way to get people to re-elect you so you can continue to do stupid and evil things.
The increased availability of information with everyone having a library in their pockets hasn’t helped. If anything it has hurt. Who has the time to do the meticulous research that the people paid to do the research won’t do? It is poised to get worse as “deep fakes” become increasingly difficult to distinguish from genuine videos.
Not only will you not be able to believe what you read in the New York Times, you won’t be able to believe what you see with your own eyes and hear with your own ears.
Carbon offset projects claiming to curb deforestation are significantly overestimating their impact, according to a new study published in Science on Thursday.
Sold as a way to lessen the impact of greenhouse gas emissions by allowing polluters or consumers to purchase offsets or credits that allow them to keep emitting in return for funding projects that decrease emissions elsewhere, offsets have become a high-profile model for corporate climate action.
But a systematic evaluation of 26 carbon offset projects that claim to slow the rate of potential deforestation in six countries on three continents found that the vast majority of projects did not actually slow deforestation, and those that did were significantly less effective than they claimed.
For decades I have thought that carbon offsets based on activity in faraway countries was all too likely to be a scam. Maybe these foreign projects are sincere in their efforts; maybe they aren’t but regardless of intention they’re not working. Not to be deterred Microsoft and Meta seek another way as this article at Financial Review by Agnes King points out:
Global technology and e-commerce giants are driving demand for direct air capture technology to remove carbon emissions, according to Sydney-based carbon removal company, AspiraDAC, but Australian firms are lagging behind.
Direct air capture is an embryonic industry that aims to fight climate change by extracting carbon dioxide from ordinary air then storing it or making products out of it.
AspiraDAC chief executive Julian Turecek says frontrunners like Microsoft are setting the agenda with offtake agreements for early-stage direct air capture, and they are paying a premium to remove legacy emissions dating back to when their operations commenced.
The only way for a company or country to go carbon negative is to remove more CO2 from the atmosphere than it emits, Turecek says.
My only advice is don’t take any steps you are unable or unwilling to monitor. Good intentions are sufficient only for PR campaigns not for making material progress.
Ruy Teixeira returns: to same drum he’s been beating for some time—the Democratic Party’s support among non-white voters is waning:
Democrats may have thought that they were on the right track in the wake of the “racial reckoning†of 2020. Surely if Democrats went all-in on social justice and racial “equity,†that would lock down the nonwhite vote. That was a chimera as a careful examination of actually-existing opinions and priorities among actually-existing nonwhite voters would have quickly revealed. Perhaps now that declining nonwhite support for the Democrats is “officialâ€, that much-needed examination can take place.
There is a thorny question to which I do not know the answer but I would bet there are some Democratic pollsters who do. What turnout among non-white voters do Democrats need to win national elections? Recent elections have been sufficiently close that they don’t need to lose all non-white votes to lose the election. Just enough of them.
The West ought to be introspective about missing important decision points, which had a profound impact on the course of the war, constraining everyone’s options later on. Decisions about future support should have been made well before this offensive even began, assuming that it was unlikely to end the war. Instead, another cycle of attritional fighting may ensue after this offensive, followed by yet another surge effort to restore Ukraine’s offensive potential. In short, the West has been unappreciative of the lead times required to reconstitute military potential or provide Ukraine with a decisive advantage.
The recent anonymous criticism by officials spilling select narratives in the press, rather than fostering an open discussion about Ukraine’s challenges and successes, reveals enduring problems in this war effort: The first, is a lack of Western understanding of how Ukrainian forces fight. The second, which is closely related, is an insufficient Western presence on the ground to enable closer coordination or even the invaluable understanding that could be offered by battlefield observers. Western capitals have sought to keep this Ukraine’s war, avoiding an in-country presence that includes contractor support or trainers. To be clear, there are Western contractors and companies operating independently in Ukraine, but this is not the same as a government sanctioned and supported effort. There is much more that could be done without becoming directly involved in fighting or deploying uniformed personnel on the ground. The hitherto cautious approach has clear limits to its efficacy. Western support thus far has been sufficient to avert a Ukrainian defeat, and arguably has imposed a strategic defeat on Russia, but not enough to ensure a Ukrainian victory. Independent of the outcome of this offensive, Western countries need to be clear-eyed about the fact that this will be a long war. Taken together, Western industrial and military potential greatly exceeds Russia’s, but without the political will, potential alone will not translate into results.
I found the observation about what I think is a general Western indifference to understanding how the Ukrainians make war particularly astute.
As a more sober reality sets in, it’s worth asking why Western governments and the media were such effusive boosters of Ukraine’s war effort. The writer Richard Seymour has suggested that part of it was about identity formation, wherein Ukraine is emblematic of an “idealised Europe†or even democracy itself, while Russia represents Oriental despotism and authoritarianism. The war thus embodies the supposed civilisational struggle theorised by Samuel Huntington between democracies and autocracies, promoted by the Biden administration through initiatives such as its Summit for Democracy. That annual event aims to “renew democracy at home and confront autocracies abroadâ€, underlining the continuity between liberal opposition to the putative authoritarian affinities of Donald Trump and Russia’s war in Ukraine.
But beyond the merely symbolic there was a practical rationale for the kinds of coverage we saw in the war’s early months: the conflict in Ukraine has revived a waning Atlanticism – a long-sought aim of proponents of Nato enlargement. Just a few years ago Emmanuel Macron, the French president, declared Nato “braindeadâ€; the war in Ukraine has brought it back to life. Finland and Sweden applied to join. Critics say that the governments of both countries used “shock doctrine†tactics to convince their respective populations to abandon their policy of neutrality, making the decision to apply for membership while the war was top news and the public was still afraid.
I don’t believe that the change in tone betokens an imminent change in policy.
These are tiny snippets from lengthy pieces.
I’ll just contribute this which touches on a theme I have mentioned before. As U. S. aid to Ukraine in its prosecution of war against Russia approaches $100 billion
How much of that aid has been spent opposing Russia?
How much of that has been siphoned off by corrupt U. S. and Ukrainian businesses and officials? 1%? 10%? 90%? It makes a difference.
I’m seeing quite a few articles demanding that either Joe Biden’s or Donald Trump’s name be withdrawn from contention for the nomination of their respective parties for president in 2024. Let’s engage in a little thought experiment. What would happen if neither Trump’s nor Biden’s name are on the ballot in 2024?
My speculations are that
whoever succeeds them would be more extreme than either Trump or Biden, the Democratic candidate being more left wing than Biden and the Republican candidate more right wing Trump
