1 year ago

Heading for a fiscal cliff?

Is the Federal government spending us into financial ruin? The current numbers and budget projections suggest so. Yet I think that the scary numbers reflect an unresolved conflict over the role of government more than a threat of bankruptcy.

The national debt of the United States, the accumulated borrowing since the Republic’s founding, stands at $21.85 trillion. The deficit, or amount borrowed to cover spending in excess of tax revenues, for fiscal year 2018 was $780 billion.

A sense of magnitude is difficult to maintain once we get into the “illions” – meaning millions, billions, and trillions. A good way to size up Federal red ink is as a percentage of U.S. GDP, the value of all the goods and services produced in a year, which is currently $20.1 trillion. So 2018’s deficit and the national debt are 3.9 and 109 percent of GDP respectively.

A second debt figure, the debt held by the public, confuses the matter. What is the difference? Some Federal government agencies hold debt, including Social Security and the military and civilian pension plans. As this debt is sometimes described as “owed to ourselves,” some experts focus on debt held by the public, which is currently $16 trillion (78 percent of GDP).

Which measure matters more? Debt held by the public is the amount the U.S. Treasury borrows in global credit markets. Interest rates are prices adjusting to bring demands for borrowing – by businesses and households in addition to government – into line with the supply of funds from savers and investors. Publicly-held debt potentially crowds out productive investment.

The intra-government debt is also real. The $800 billion the Treasury has borrowed from the Department of Defense’s pension program is supposed to pay retirement benefits, but was used for other Federal spending. If not repaid, military pensions would need to be paid out of current taxes.

Does the national debt spell inevitable bankruptcy? Warren Buffett has observed that the debt is not necessarily a problem because it was higher relative to GDP at the end of World War II. Mr. Buffett’s observation highlights the importance of budget projections. We borrowed to fight World War II, and investors expected spending to decline precipitously after the war. It did, and debt fell below 40 percent of GDP during the 1950s.

By contrast, spending is expected to increase significantly in the future. The most recent Congressional Budget Office (CBO) 30-year forecast projects Federal spending to increase from 20.6 to 27.9 percent of GDP. An aging population using more medical care will increase spending on Social Security, Medicare, and Medicaid. The CBO expects debt held by the public to reach 152 percent of GDP by 2048. This will be uncharted territory for the U.S. and could trigger a debt cycle through rising interest rates.

Will debt at 150 percent of GDP mean bankruptcy? Perhaps. Greece has teetered on the verge of bankruptcy with debt at 180 percent of GDP. But Japan remains sound despite debt at 220 percent of GDP.

Debate over insolvency obscures a common assumption that tax revenues will not rise significantly. The CBO, for instance, projects Federal revenues of 19.5 percent of GDP in the 2040s, only three percentage points higher than today. A Cato Institute analysis of fiscal imbalance kept tax revenue at current levels.

Potential Federal insolvency demonstrates that we cannot afford a European-style welfare state without European-style taxes. This tension, I think, goes back to Ronald Reagan, who pursued tax cuts even though his desired spending cuts proved politically unachievable. Reagan set Federal spending on a collision course with our distaste for taxes, likely hoping that his tax cuts would eventually force spending cuts. Maintaining Social Security and Medicare as they are given demographic changes will require paying more taxes.

I am not advocating for higher taxes and would prefer downsizing government. We cannot, however, afford a Cadillac on the payments for a Chevy and will soon have to decide whether we are truly willing to pay for big government.

Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University.

4 hours ago

Fmr Gov. Don Siegelman appears to be using outrage over George Floyd to sell new book

Former Alabama Governor Don Siegelman to sell his new book is using robocalls that appear to reference the current unrest over George Floyd’s death while in Minneapolis police custody.

On Thursday afternoon, a Yellowhammer News reporter received a robocall from 1 (800) 890-5875, a number listed as “Robocaller” by the phone protection company NoMoRobo. The voiceover of the robocall was apparently recorded by Siegelman himself.

The message began, “Don Siegelman, your governor here. We’ve got to protect people from the abuse of power by police, prosecutors, or presidents.”

“My new book, Stealing our Democracy, is a wakeup call to action. It’s also number one among new releases on amazon.com,” the message added.

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An individual from the Wiregrass told Yellowhammer News that she also received the voicemail.

In addition to that, at least one Twitter user appeared to have received the robocall.

Siegelman was convicted on June 29, 2006, of conspiracy, bribery and fraud.

The former Alabama Democratic governor appeared to lump in his claimed unjust treatment by the authorities with the death of George Floyd.

Listen:

Siegelman is currently promoting his new book “Stealing Our Democracy.”

Yellowhammer News’ request for comment from Siegelman was not immediately returned. A message was left on his personal cell phone number.

He claimed the book is “#1 among new releases on amazon.com”

Yellowhammer News examined the new releases chart on Amazon.com, which revealed that Siegelman’s book is not in the top 100 best selling new releases.

However, the book is #1 in the sub-subcategory “Urban, State & Local Government Law.”

Urban, State & Local Government Law is one of 12 sub-subcategories of the “Administrative Law” subcategory.

The “Administrative Law” subcategory is one of 23 subcategories under the category “Law.”

“Law” is one of 36 categories into which Amazon divides the kinds new-release books that it sells.

As a matter of record, the book is only available for pre-order. It has not been released to the public yet.

The former governor’s book claims that his downfall and conviction of felony bribery were part of a politically motivated prosecution coordinated by Karl Rove.

His book will be released to the public on June 16.

Henry Thornton is a staff writer for Yellowhammer News. You can contact him by email: henry@yellowhammernews.com or on Twitter @HenryThornton95

5 hours ago

Two charged with capital murder in slaying of Moody PD officer

Two suspects have been charged with capital murder in the case of slain Moody Police Department officer Stephen Williams.

The two suspects are 27-year-old male Tapero Corlene Johnson and 28-year-old female Marquisha Anissa Tyson. Both are from Birmingham and will be eligible for the death penalty if convicted.

At a press conference Friday, St. Clair County Sheriff Billy Murray described said the investigation is still continuing and described it as “complex and intense.”

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Williams was posthumously promoted to lieutenant at the press conference on Thursday by Moody Police Chief Thomas Hunt.

Hunt said Williams had remarked at times that he would like to achieve the rank of lieutenant someday, and now he will forever be known as Lt. Stephen Williams.

The District Attorney for St. Clair County said the two suspects had been in police custody since the shooting on Tuesday night.

Investigators say they have determined that Johnson and Tyson fired weapons at Williams who was responding to a disturbance at a Super 8 Motel.

A GoFundMe page to help Williams’ family has been raising money in recent days.

Williams served the public as a police officer for 23 years before being killed in the line of duty this week.

Governor Kay Ivey commented on the incident earlier in the week, saying Williams “died a hero.”

Henry Thornton is a staff writer for Yellowhammer News. You can contact him by email: henry@yellowhammernews.com or on Twitter @HenryThornton95

6 hours ago

Data shows Alabama nursing homes performing better than national average for COVID-19 cases, deaths

The Centers for Medicare and Medicaid Services on Thursday released facility-specific COVID-19 data for nursing homes across the United States, and an analysis of the data shows Alabama fairing better than the national average.

The data was collected on a mandatory basis by the CDC and currently covers through the week ending on May 31.

Nationwide, the average number of confirmed coronavirus cases per 1,000 residents in nursing homes was 91.2, while the average number of deaths from the disease per 1,000 residents was 30.2.

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In Alabama, both of those numbers were significantly lower than the national average, at 64.9 and 20.9, respectively.

Alabama Nursing Home Association president and CEO Brandon Farmer issued a statement on the data’s release.

“According to the Centers for Medicare and Medicaid Services (CMS), Alabama nursing homes report fewer cases of COVID-19 per 1,000 residents and fewer deaths from COVID-19 per 1,000 residents than the national average,” he confirmed.

“Because we are on the front lines of fighting COVID-19, we expect the number of COVID-19 cases to rise as more tests are administered and the data is added to the Centers for Disease Control and Prevention (CDC) system. The Alabama Nursing Home Association hopes this data will be used to prioritize resources for skilled nursing facilities,” Farmer advised.

“Alabama nursing homes have been transparent from the beginning of the COVID-19 pandemic,” he continued. “Our members have reported cases to their local county health department and the Alabama Department of Public Health from the start. In May, we began reporting cases to the CDC. Facilities also inform residents and their family representatives and employees of cases in their buildings. We are following the guidelines set forth by the multiple state and federal agencies that regulate our sector. No other business or health care provider reports COVID-19 cases to more government entities and people than nursing homes.”

Nationwide, nursing homes reported 95,515 confirmed COVID-19 cases and 31,782 deaths through May 31. Nursing homes in Alabama reported 1,000 confirmed cases and 335 deaths.

Moving forward, CMS will release the next round of data on June 18. After that date, new data should be released weekly.

“The Alabama Nursing Home Association and its members will continue to work with local, state and federal leaders to address the needs of nursing home residents and employees,” Farmer concluded.

The CMS data can be viewed here.

As of Friday at 2:00 p.m., the Alabama Department of Public Health reported 19,073 total confirmed COVID-19 cases in the state, with 672 deaths.

Sean Ross is the editor of Yellowhammer News. You can follow him on Twitter @sean_yhn

6 hours ago

NFIB survey of Alabama business owners shows ongoing COVID-19 related fears

A new study from the National Federation of Independent Businesses (NFIB) showed that an overwhelming majority of proprietors are nervous about several aspects of how the coronavirus pandemic is affecting their business.

Yellowhammer News reported in the first week of May that 70% of the NFIB’s membership across the United States was concerned about individuals filing frivolous lawsuits claiming a business had caused them to catch COVID-19.

A poll from the Alabama division of NFIB this week shows that 69% of businesses in the Yellowhammer State remain nervous about lawsuits, and roughly equal amounts are worried whether customers might come back and that it may prove difficult to comply with ongoing regulations.

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The top results of the survey as follows:

  • 70% of owners say they’re very or moderately concerned about getting customers back.
  • 69% are concerned about managing the health and safety of their customers; 66% are concerned about managing the health and safety of employees.
  • 69% are concerned with having to comply with new regulations related to the coronavirus.
  • 68% are concerned about finding an adequate supply of supplies such as hand sanitizer and disinfectant.

NFIB state director Rosemary Elebash told Yellowhammer News Friday that the survey was administered to businesses in every county and every city with a significant population.

“It wasn’t just NFIB members,” Elebash added about the survey, saying the group had worked with a number of trade associations to increase the amount of responses.

The NFIB also continues to strongly support Senator Arthur Orr’s (R-Decatur) bill to grant civil immunity from COVID-19 lawsuits to businesses in Alabama.

Elebash noted in a release that Orr’s bill would be “one of NFIB’s top priorities” if Governor Kay Ivey calls a special session later in the year.

Henry Thornton is a staff writer for Yellowhammer News. You can contact him by email: henry@yellowhammernews.com or on Twitter @HenryThornton95

7 hours ago

Tuberville: Nationwide unrest linked to ‘education and jobs’

Many argue there is much more to the civil unrest across the nation than the lone incident in Minneapolis involving the death of George Floyd while in the custody of the police department. Former Auburn head football coach Tommy Tuberville indicated he agrees with that.

During an appearance on Huntsville WVNN’s “The Jeff Poor Show,” Tuberville, a candidate for U.S. Senate, said based on his interactions with people on the campaign trail, there is a longing to get back to a sense of normalcy in the wake of the heights of the COVID-19 pandemic.

“I speak to eight to ten places a day — groups are worried, obviously. I think they’re getting a little more confident they can go out and be around other people,” he said. “And we’re just hoping we can just put this pandemic, and it is a problem, it is serious — again, you’ve got to protect yourself. It’s not going away. It is still here, especially if you’re having health problems and those things. That will go away — but then all of a sudden we get hit with this civil unrest, and again — we’re all Americans. We’re all in this together. We’ve got to find a solution.”

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Tuberville said he is asked for his thoughts by voters while on the trail, to which he said he points to “education and jobs,” and the erosion of the American middle class.

“I had a group ask me today, ‘Coach, what do you think the problem is?’ Education and jobs. We don’t have a middle class anymore,” Tuberville stated. “There are people out there that don’t have the opportunity to advance in this country like they want to. This is not a black issue. This is not a white issue. This is an American issue. We shipped our jobs to China, bottom line. We’re finding out more and more about that every day, and we’ve got to give the opportunity for young men and women to have a chance to grow in this country, and give them a fair chance. Unfortunately, our middle class has dissipated. We have more drugs in this country, and a lot of people take other options. We got to understand — we’re all in this together, 340 million people. We’re either going to make it together or not make together.”

@Jeff_Poor is a graduate of Auburn University and the University of South Alabama, the editor of Breitbart TV, a columnist for Mobile’s Lagniappe Weekly and host of Huntsville’s “The Jeff Poor Show” from 2-5 p.m. on WVNN.