While I continue to struggle to write my post about why we should be balancing the federal budget, Edward Conard has an op-ed in the Wall Street Journal, urging reduced federal spending:

Trade deficits and the mistaken belief that they chiefly fund business investment have led to a debt-fueled increase in American consumption. This surging consumption contributed to the 2008 financial crisis and unsustainable federal deficit spending while doing little to boost domestic production. It has left voters addicted to deficit-financed consumption and determined to stick someone else with the bill.

Unless the U.S. begins painful fiscal consolidation—unlike anything it has undertaken before—it will inevitably face slower long-term growth.

There is empirical evidence for that in the form of a well-known study by Ken Rogoff and Carmen Reinhart. Contrary to the assertions of those who favor increased federal spending without regard to how much we borrow, that study has not been reputed—even the scholars who identified mathematical errors in the study do not claim to have refuted it.

There’s a lot more in Mr. Conard’s op-ed, particularly about trade deficits. Here are some eye-opening statistics:

Federal government spending has risen from 19% of GDP before the 2008 financial crisis to more than 23% today, while taxes have remained at a lower-than-average 17% of GDP. Publicly held federal debt has grown from 35% to 100% of GDP and that share will continue to rise according to the Congressional Budget Office. The future will likely be worse than CBO’s forecast, which assumes no budget-busting recessions.

Fiscal deficits have surpassed an unprecedented 6% of GDP during a period of economic expansion. Debt-financed consumption now devours savings that otherwise would have funded business investment.

That trade deficits do not result in increased investment is not the only mistake we have been making. Reductions in the personal income tax rates for the highest income earners does not produce increased business investment, either. Consider this chart:

The cuts in the personal income tax rates during President Trump’s first term took place in 2018. Do you see a strong persistent increase in business investment? Me, neither.

I don’t believe I need to document that consumer spending has increased or the effects that increased consumer spending has had on inflation, hurting the lowest income earners.

So, what does that leave us? Cutting spending and increasing taxes. As I’ve said before, spending money we don’t have is a lot more fun than making up for it.

The results of some early term special elections are in. After pre-election columns yesterday wondering if Republicans were expecting a “Blue Wave”, the opinion writers at major media outlets are touting the election of a progressive judge in Wisconsin despite Elon Musk’s campaigning for her opponent and two Republican Congressmen in Florida to replace two Republican Congressmen in Florida as a success for the Democrats.

Michelle Cottle at the New York Times
Karen Tumulty at the Washington Post

That looks like a maintenance of the status quo ante to me. How bad must things be for the Democrats if maintaining the status quo is a victory?

I want to commend a New York Times article to your attention, “The Partnership: The Secret History of the War in Ukraine”. It’s lengthy. Here’s a snippet:

With remarkable transparency, the Pentagon has offered a public inventory of the $66.5 billion array of weaponry supplied to Ukraine — including, at last count, more than a half-billion rounds of small-arms ammunition and grenades, 10,000 Javelin antiarmor weapons, 3,000 Stinger antiaircraft systems, 272 howitzers, 76 tanks, 40 High Mobility Artillery Rocket Systems, 20 Mi-17 helicopters and three Patriot air defense batteries.

But a New York Times investigation reveals that America was woven into the war far more intimately and broadly than previously understood. At critical moments, the partnership was the backbone of Ukrainian military operations that, by U.S. counts, have killed or wounded more than 700,000 Russian soldiers. (Ukraine has put its casualty toll at 435,000.) Side by side in Wiesbaden’s mission command center, American and Ukrainian officers planned Kyiv’s counteroffensives. A vast American intelligence-collection effort both guided big-picture battle strategy and funneled precise targeting information down to Ukrainian soldiers in the field.

To my eye the piece, while couched in the most positive possible way, paints a fair picture of what went right and what went wrong since 2022. The picture they paint is one of a Ukraine that is militarily capable but politically weak.

There are some missing pieces, that, for example, the longer-distance missiles the Ukrainians have wanted required the direct participation of U. S. military personnel as has been pointed out by milbloggers.

As a counter-point you might want to reflect on Matt Taibbi’s piece, “Biden Lied About Everything, Including Nuclear Risk, During Ukraine Operation”. Here’s a snippet from that:

Now that the war appears lost, and newspapers abroad (conspicuously, not here) are full of news about an apparent bombing of Vladimir Putin’s motorcade, and the future of NATO hangs by a thread, the Times has run a 13,000-word “Secret History” that shows the same U.S. officials who denounced Trump and American voters for saying it out loud long ago concluded that they, too, should probably “walk away.”

The piece is also an extraordinarily comprehensive betrayal of Zelensky and Ukraine, exponentially worse than the “dressing down” by Trump. Authored by longtime veteran of controversial intel pieces Adam Entous, it’s sourced to 300 American and European officials who seem to be responding to their apparent sidelining via a shameless tantrum, exhibiting behavior that in the field would get military men shot. Not only do they play kiss and tell with a trove of operational secrets, they use the Times to deflect blame from their own failures onto erstwhile Slavic partners, cast as ignorant savages who snatched defeat from the jaws of America-designed victory. It’s as morally abhorrent a piece of ass-covering ever as I’ve seen in print, and that somehow is not its worst quality.

I sincerely doubt that President Biden lied to us but not because he was above lying. I don’t think he lied because I do not think he has the mental capacity to form the intention to deceive necessary for a lie. Any lies would be those of his staff and supporters.

My own questions are more about politicians, whether Ukrainian or American, using war and risks of war to bolster their own political interests. I don’t think our leaders should be doing that regardless of political party.

Walter Russell Mead uses his Wall Street Journal column to muse about President Trump’s reasons for his repeated statements about making Greenland a part of the United States:

Disentangling Mr. Trump’s true intentions is difficult. The blizzard of foreign and domestic initiatives unfolding around the most hyperactive White House since Franklin D. Roosevelt and the extreme unconventionality of many of the Trump administration’s policies make this administration singularly difficult to analyze. The president’s approach to politics, intuitive rather than analytical and working from intellectual and moral foundations that largely reject the mainstream consensus of the post-Cold War era, adds to the complexity of the task.

The administration’s conscious use of shock and outrage as political tools makes cool, levelheaded assessment harder still. The president’s preternatural talent for baiting his adversaries into self-defeating, over-the-top responses to his provocations is a not insignificant factor in his meteoric rise.

He goes on to characterize the “political establishment’s” view of the president’s remarks about Greenland:

a political absurdity and a moral monstrosity

concluding with the following advice:

To be effective, Trump administration critics need to think more and rail less.

As I’ve said any number of times, I find President Trump baffling. Here’s a thought that I don’t think I have heard anyone else suggest. Have you ever heard of a “brushback pitch“? Said another way what do you think of the idea of China or Russia occupying Greenland?

In his most recent Wall Street Journal column Walter Russell Mead declaims that President Donald Trump seeks a “calm Middle East”:

Even before senior national security figures discussed secret war plans over a Signal chat that inadvertently included a magazine editor, it was clear that March Madness has broken out in the Middle East.

Military conflicts and political unrest are simultaneously on the boil across the region. The Trump administration is sending a second carrier strike group to the region as the U.S. confrontation with the Houthis intensifies.

Iran, staggered by its catastrophic and humiliating losses to Israel, hesitates between the alternatives of nuclear breakout and negotiated settlement with its foes.

As Turkish financial markets melted down and demonstrators across the country called for democracy, the government of President Recep Tayyip Erdogan jailed his most formidable rival on corruption charges. Israeli troops returned to Gaza even as the Israel Defense Forces stepped up the pressure in Syria and Lebanon.

Back home, Israeli streets filled again with protesters denouncing Prime Minister Benjamin Netanyahu’s government even as the cabinet fired the head of Israel’s domestic intelligence agency and initiated proceedings to oust the attorney general—and Houthi missiles sent millions of Israelis into bomb shelters.

concluding:

Mr. Trump’s agenda in the Middle East is a simple one. He wants what every American president has wanted since World War II: a quiet Middle East that pumps oil and gas and buys American goods (including arms) without entangling the U.S. in more wars. While the Trump administration is pursuing a policy toward the trans-Atlantic alliance that produces upheaval and is challenging China on trade, it wants the Middle East to settle down.

Middle East powers seeking Mr. Trump’s friendship should bear this in mind. The countries who offer him the most stability at the lowest cost are the ones most likely to enjoy his support.

I do not know what President Trump’s agenda in the Middle East is. I don’t do mind-reading.

However, anyone—president or otherwise—who wants a calm Middle East will be doomed to disappointment. It has never been calm. There have been some very brief periods that presented the illusion of calm but never really calm.

Consider the alternatives. If the Israelis killed all of the Arabs on the West Bank and in Gaza, it would not provide a lasting peace. The Israelis would continue to be attacked by Arab groups supported by the Iranians, the Turks, or the Gulf Arabs. If the Palestinians killed all of the Israelis, that would not provide a lasting peace, either. Groups supported by Iranians would fight groups supported by the Turks and those supported by the Gulf Arabs. If some miracle unified the Arabs, they would still be fighting the Iranians to be the dominant voice in Islam. There is no prospect for calm in the Middle East.

I want to recommend a post by Noah Smith, “Blue states don’t build. Red states do.” Here’s a sample:

Many things frustrate me about this debate. One is that most of the progressive critics of the abundance idea appear not to have actually read Klein and Thompson’s book; they lazily assume it’s all about deregulation, when in fact Klein and Thompson spend more time calling for building up state capacity and the power of the bureaucracy. Another frustrating thing is that the progressive critics seem to assume that their preferred ideas — such as antitrust — are alternatives to abundance, when in fact they usually don’t conflict, and sometimes complement each other.

But what frustrates me most is that by insisting on degrowth over abundance, progressives are hurting themselves much more than they’re hurting any billionaires, oligarchs, or conservatives. Most development policy is set at the city and state level, not at the federal level. Which means by embracing degrowth, progressives are only stifling development in blue states and progressive cities — places like California and Massachusetts. Meanwhile, red states like Texas just keep growing, because progressives can’t tell them what to do.

The question I’d like to ask is why don’t “blue states” build? The answer to which Mr. Smith points is excessive regulation but IMO that’s a symptom rather than the disease.

Another possibility is NIMBYism but, again, I think that’s a symptom rather than the disease. Even more aggravating is BANANA (Build Absolutely Nothing Anywhere Near Anything).

I think that a great deal of the problem is that the process is the objective rather than the product.

Why has California been trying to build high speed rail for the last 40 years? The first version began in 1982; the reboot in 2008. Of the 171 miles in the “Initial Operating Segment” (IOS) none has been completed but 22 miles have been declared ready for track-laying. That’s since 2014. For perspective the Golden Gate Bridge was constructed in four years, Hoover Dam in five years, and the transcontinental railroad in six years.

The City of Ithaca’s ambitious plan to go entirely renewable has met with similar obstacles. Electrifying 6,000 buildings over five years was planned; to date 10 have been electrified and the project has more or less been abandoned.

My speculation is that establishing committees, doing planning, and spending money are the actual objectives while actually producing highspeed rail going green takes a backseat. The meetings and planning upset no one and produce little backlash; actually building anything will be controversial and produce political backlash.

Consider the state with which I’m most familiar. Here in Illinois the state’s objectives are rather obviously employing and paying wages to public employees, later paying their pensions. Teaching kids, enforcing the law, having safe neighborhoods, and maintaining the roads are far less important.

I get the distinct impression that we’ve had some slow news days lately. To my eye the big stories are:

1. The district judge’s decisions on the Trump Administration’s removal of illegal immigrants.
2. The incipient ceasefire between Russia and Ukraine in the area around the Black Sea.
3. The Signal discussion “heard ’round the world”.
4. The demonstrations in Turkey

On the first story, a district judge only has the last say if the appellate court and/or the Supreme Court say he does. We won’t know the status of that for a while.

IMO commenting on the ceasefire is premature.

I’ve been saying for some time that federal government agencies are manifestly incapable of maintaining proper digital security. That’s not new. It has obviously been the case for years. It has been tolerated under Democratic administrations and Republican administrations. What’s the solution for that?

The demonstrations against Erdogan and his government in Turkey have been going on for six days now. I have read coverage of those demonstrations from U. S. news sources, British news sources, French news sources, and German news sources. None of them have much to say that I couldn’t write right here without looking at those news sources. That suggests to me that either 1) they don’t know any more than I do; or 2) they’re not really that interested in them or maybe both. If the Erdogan government falls it could be a very big deal, indeed.

In listening to the interview of Sen. Bernie Sanders on the talking heads programs yesterday I noticed something confusing. He continually talks about the “1%” and then conflates that with “billionaires”.

There are fewer than 1,000 billionaires in the United States. Their total combined wealth is around $6 trillion. Their combined annual income is unclear.

There are about 1.5 million individuals in the top 1% of income earners. Their combined annual income is around $120 billion. Their combined wealth is around $49 trillion.

Which is Sen. Sanders concerned about? I’m concerned about the heavy concentration of wealth in so few hands in the United States but I’m even more concerned about the wealth and income of the top 1% than I am of the .001%.

My uninformed take on the .001% is that they are shrewd exploiters of “the system” and will prosper regardless of what that system is. Perhaps they are using the influence their enormous wealth brings but it’s a lot less obvious than the lobbying and manipulation of the top 1% of income earners.

Take Elon Musk as an example of the “billionaire class”. An extremely short summary of where he obtained his wealth might be

Zip2 => X.com (online bank) => PayPal => SpaceX => Starlink => Tesla

Most of his wealth is Tesla stock. I don’t see a great deal of rent-seeking on his part until SpaceX but ever since he founded SpaceX he’s been very skillful at it. Would Tesla actually be where it is today without the federal subsidies for electric vehicles? I doubt it. But here’s the key point: Mr. Musk did not lobby to get those put in place. He’s said that he opposes such subsidies. His benefiting from them as much as he does is an example of my point: he’s riding the waves not creating them.

The situation with the top 1% is somewhat different. In many cases their high incomes depend on lobbying organizations that try to get the Congress to craft the laws in ways that benefit them.

Consider the graph at the top of this post. The incomes of “the billionaires” has gone up twice as face as that of the top 1% but the income of the top 1% have gone up three times as fast as those of the top 25% of income earners.

That’s why I’m as worried about oligarchy as Sen. Sanders is but I’m worried about rule by the 1% at last as much as rule by billionaires. And that 1% includes Sen. Sanders.

Paul Vallas, Chicago Mayor Brandon Johnson’s erstwhile opponent for the job of mayor, has a piece at Illinois Policy decrying Mayor Johnson’s handling of negotiations with the Chicago Teachers Union:

Chicago Mayor Brandon Johnson will do whatever it takes to get his cohorts at the Chicago Teachers Union the unaffordable and egregious contract it wants, and it will be just the beginning of ruining city finances.

The mayor’s failed efforts to allow his office to make loans and grants to the school district through his infrastructure proposal, much like his renewed pressure on the district to borrow $242 million for pensions, is but a prelude to the efforts he will undertake to pay for a new teachers contract that is unaffordable. It will raise property taxes and force the city to cut services.

The last record-setting contract made CTU members the highest-paid workers among large school districts and added over 9,000 new staff, all while adding $1.5 billion in new spending. That lucrative contract did not stop the CTU from engaging in two illegal work stoppages, effectively forcing the district to keep schools closed during COVID with devastating consequences.

The increased spending didn’t improve student outcomes in Chicago Public Schools: five years after the 2019 contract negotiations, 41% of students are chronically absent and fewer than 1 in 3 students are proficient in reading and even fewer are proficient in math.

The CTU’s original demands for its next contract exceeded $10 billion. However you cut it, the new contract will force Chicagoans to pay substantially more for bad outcomes.

The City of Chicago’s present S&P credit rating is BBB—the lowest investment grade bond rating. The next step would be what is called a “speculative grade”, i.e. not investment grade. The recent downgrade is a vote of “no confidence” from S&P and will mean that Chicago will pay more to finance its debt going forward.

I voted for Vallas in the last mayoral election. I have no idea how anyone expected Brandon Johnson to do anything other than what he has done.

Chicago’s population has declined by nearly a million people since its peak in 1950. I see little prospect for Chicago being able to fix its financial situation with any measure short of bankruptcy. Those who want a solid financial basis are leaving Chicago and, indeed, the state leaving Chicagoans who think they are benefiting from the city’s profligacy behind.