Fiscal


The Navy gave a first look inside the stealthy and futuristic Zumwalt destroyer on Friday during the ship’s first port stop at a Rhode Island naval station.

The 610-foot-long warship has an angular shape to minimize its radar signature and cost more than $4.4 billion. It’s the most expensive destroyer built for the Navy.

. . .

The ship is named after the late Adm. Elmo “Bud” Zumwalt, who earned the Bronze Star in World War II and commanded small boats that patrolled the Mekong Delta in Vietnam. He became the youngest chief of naval operations and earned a reputation as a reformer, who fought racism and sexism.

Aside from all the sentimentality, is this really necessary? Oh yes, we have to forever commemorate WW II vets and someone who fought racism and sexism to boot.

We’ll be paying for these things for the rest of our lives.

Here.

The US now spends more on the military, this is under the Obama administration, then ever. See chart in link. Despite what Republicans and conservatives say.

The problem is the military is overextended so it cannot maintain its readiness.

More Here.

After years of not setting aside enough money, state pension funds are looking at a $1 trillion shortfall in what they owe workers in benefits, according to a new analysis from The Pew Charitable Trusts.

Question. Why give politicians, bureaucrats, and government in general at all levels more power? They have not shown the ability to manage the responsibilities they already have.

Government at all levels is susceptible to special interests to bend the government to their benefit.

Here.

 

In his big speech last night Trump said:

We are going to ask every department head in government to provide a list of wasteful spending projects that we can eliminate in my first 100 days. The politicians have talked about this for years, but I’m going to do it.

Start here

 

 

“Clinton would increase spending by $1.45 trillion over ten years, from 22.1 to 22.7 percent of GDP.” Under Trump, spending would increase “from 22.1 to 22.5 percent of GDP.”

Up is up, and everyone pays for it in some way.

From Johnson/Weld:

Governor Johnson has pledged that his first major act as President will be to submit to Congress a truly balanced budget. No gimmicks, no imaginary cuts in the distant future. Real reductions to bring spending into line with revenues, without tax increases. No line in the budget will be immune from scrutiny and reduction. And he pledges to veto any legislation that will result in deficit spending, forcing Congress to override his veto in order to spend money we don’t have.

This is a normal economic plan. Reduce government outlays and keep resources in the private sector.

Here.

ZeroHedge links to a video of CNBC’s Rick Santelli who suggests firms seeking higher corporate profits are causing lower employment and lower wages. ZeroHedge has a graphic overlay that shows corporate profits rising and the percentage of US population with a job decreasing.

This is incorrect, as tempting as it is to blame corporations. The primary reason for the soaring corporate profits, which have peaked, is the government budget deficits. This is because a deficit in one GDP account must appear as a surplus in another GDP account. The deficit is in the federal budget while the surplus is in corporate profits. See this post for the accounting identity.

It drives a lot of us at Cato nuts to read news stories almost every day which simply assume that government spending is good for the economy. Any defense or nondefense spending restraint will hurt economic growth, it is assumed.

Chris has a nice chart. Here.

There is another reason government spending does not provide a durable, long-term economic recovery. The “equation” spending proponents use is actually an accounting identity:

GDP = consumption + investment + (government spending) + (exports − imports)

An accounting identity “is an equality that must be true regardless of the value of its variables, or a statement that by definition (or construction) must be true.”

There is no net gain from government spending because an increase in government spending must be offset by a decrease in one or more of the other variables on the right side of the equal sign.

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