Blog

Budget time is wasted time

Budget time where the congressional baseball game is just as productive as any appropriations debate. But that devalues the baseball game. I would say that congress is wasting its time, but that is probably redundant.

Budget time is when congress thrashes around, pontificates, says a million words, writes one thousand page bills, yell at each other, tweaks the tax code to hand out favors and spends more borrowed money. Let’s waste a few words on the hapless hopeless morass. Even if the congress decided not to appropriate another penny but to keep last year’s budget, federal spending would grow because of the cost of living adjustments built into programs like Social Security, the Supplemental Nutritional Assistance Program (SNAP) and civilian and military pensions. In all there are over a dozen federal programs with COLAs. A modest suggestion would be to eliminate all COLAs but few if any politician has the will to do so. What about other items in the budget?

Here is basically a repeat of what I write every year at this time, only with a revision of numbers.

Last year the government spent $6.75 trillion. Of that $4.1 trillion was nondiscretionary, $1.8 trillion was discretionary and $900 billion was interest. The major components of nondiscretionary spending are Social Security ($1.45 trillion), Medicare ($865 billion) and Medicaid $618 (billion). The federal government collected $4.9 trillion meaning that if the government were to use its tax collections to pay only the mandatory components and the interest on the debt it would not have a penny for everything else. Therefore, it borrowed to fund all discretionary spending leaving a deficit of $1.75 trillion. Thus, it is literally impossible to not add to the debt unless mandatory spending programs are addressed. But congress ignores entitlement reform so the debt must grow every year, regardless of what congress is doing during budget time. Instead the congress is doing high fives on passing a rescissions package that cuts $9.4 billion in spending already appropriated.  Mind you, $9.4 billion is a rounding error in a $7 trillion dollar budget.

Nondiscretionary spending increases gobble up a growing percentage of GDP simply because the escalators increase faster than the growth in GDP. One solution is to cap the percentage of GDP allocated to nondiscretionary spending, eliminating the automatic escalators. Next, raise the full benefit age for Social Security to 70 for those aged younger than 50. Remove the limits on annual contributions to 401(k)s to allow people to increasingly fund their own retirement. Next, limit the federal budget to grow no more than the growth in previous year’s GDP. This would allow the budget to increase but not at an increasing rate. Finally, codify these suggestions into law with the provision that only if the president declares a national emergency and both houses of Congress agree with a two-thirds majority will these limits change.

A shorter term solution was suggested by the sainted Thomas Sowell who says that Federal government should sell some of its vast holdings of land currently valued at around $2 trillion. “The amount of land owned by the National Park Service alone is larger than Italy. The land owned by the Fish and Wildlife Service is larger than Germany. The land owned by the Forest Service is larger than Britain and Spain combined. The land owned by the Bureau of Land Management is larger than Japan, North Korea, South Korea and the Philippines combined.” Of course, trying to sell the land would incur the wrath of the Sierra Club, the Wilderness Society, the Rainforest Trust, the Nature Conservancy and all the rest of the environmental organizations who would lose all of their funding and would have to look for real jobs. Donald Trump has no love for these organizations so why doesn’t he follow Sowell’s advice and have a land sale?

But don’t look for congress to do any of this. Instead they give themselves high fives for clawing back a paltry $9.4 billion out of a $7 trillion budget bill. No single democrat would ever suggest cutting one penny – unless it is to the military. No single republican – not even the so called fiscal hawks – would ever suggest anything of value. Every single member of congress and every single member of any administration (who wants to keep his job) is completely totally gutless. Rather than effect real change they are all content to make the appropriate clucking sounds and keep passing the problem off to the next group of legislators and bureaucrats. Trump is not the only one saying “What me worry?”

Happy Fathers’ Day

I am banned from X. Don’t know why but they won’t let me create an account and many times won’t let me access any posts. I guess Musk didn’t like me saying that DOGE was redundant.

California senator Alex Padilla was forcefully removed from an ICE press conference. He interrupted Homeland Security’s Kristi Noem saying “I am Sen. Alex Padilla. I have questions for the secretary.” He was grabbed by security, forced to the ground, handcuffed and removed from the hearing. He was then released without being charged. Naturally the democrats are having a cow – and rightfully so (later on why). The democrat Hispanic caucus called for an investigation. Fellow democrat senators like Schumer, Warnock and Schiff denounced the action. On the republican side Lisa Murkowski expressed concern. The republicans were less sanguine. Speaker Mike Johnson said “It was wildly inappropriate. Democrats have been “defending lawbreakers, and now they are acting like lawbreakers themselves.” Naturally the White House was unapologetic with press secretary Karoline Levitt saying Padilla “should be ashamed of his childish behavior today.” Of course it this had happened to a republican legislator, the republicans would be spiting mad.

Noem said that she thought the senator was “an attacker.” “His approach was something I don’t think was appropriate at all, but the conversation was

great, and we’re going to continue to communicate. I’ll let law enforcement speak to how this situation was handled but I will say people need to

identify themselves before they start lunging at people during press conferences”. FBI Deputy Director Dan Bongino said the agency’s personnel “acted completely appropriately” and that Padilla wasn’t wearing a security pin to identify himself.

Pardon me but Noem and Bongino are lying if they say that they did not know who Padilla was and if they are telling the truth then both should be fired. In my years on Capitol Hill I can tell you that the security personnel there pride themselves in being able to recognize and identify every legislators by sight. 

Noem and Bongino knew who Padilla was. Any statement to the contrary is a lie. That is the reason that any person from the congress should be alarmed – regardless of party. Noem and Bongino should be censured. Mike Johnson should be ashamed for not supporting his legislative colleague. You may want to condemn Padilla for showboating but you have to condemn the actions taken against him.. Mind you, I am no fan of the senator but I am aghast by the boorishness of this incident.

Did you see the headline “Anti-ICE riot funding investigated after ‘numerous high budget requests’ for paid agitators were reported”? Seems that a California firm named Crowds on Demand provides crowds for “spontaneous” protests said that it received “numerous high budget requests” to get involved with the anti-ICE riots in Los Angeles and other cities but declined to participate. I wonder why. Probably they weren’t getting paid enough. The company spokesman said that it declined to get involved because it did “not want to get close to any form of illegal activity, including violence, vandalism or blocking off roads without a permit.” Seriously.

A cargo ship with over 3,000 cars including 800 EVs is burning off the coast of Alaska. The fire started in one of the lithium batteries in an EV. The authorities are just letting it burn since trying to extinguish an EV fire is problematical. As was the case with the Los Angeles fires where hundreds of EVs were aflame, the atmosphere has all the toxins in the batteries such as hydrogen fluoride, hydrogen chloride, and hydrogen cyanide. Again, if EVs weren’t “green” they would be banned as hazardous to ones health.

The proposal by some so-called conservatives to use the DOGE “savings” to give out $5,000 checks is too stupid to comment on. President Trump said regarding the $5,000 checks “We’re thinking about giving 20% back to the American citizens, and 20% down to pay back debt.” Don’t.

The San Francisco school superintendent suggested further dumbing down their standards by allowing students to retake final exams an infinite number of times and allowing 21 as a passing grade. This is called the “grading for equity” initiative. The proposed grading approach includes allowing students to retake tests; excluding factors like lateness, effort, and participation from final grades; omitting classwork and homework from grading; and basing 100% of the grade on “summative” testing.

Also more than 200 California takers of the bar exam were moved from “fail” to “pass” after a state bar committee approved new scoring adjustments. Is this also “grading for equity”?

Pete Hegseth says that the Pentagon has contingency plans on invading Panama and seizing Greenland by force. Say it isn’t so. Do it and even I will back an impeachment of this president.

The newly named interim dean of the Terry College of Business at the University of Georgia is Dr. Santanu Chatterjee who holds the Harold A. Black Distinguished Professorship in Economics. Congratulations Dr. Chatterjee!

From UGA Today

Chatterjee named interim dean of Terry College of Business

He will begin his tenure as interim dean on June 30

Santanu Chatterjee, a professor and associate dean for graduate programsin the C. Herman and Mary Virginia Terry College of Business at the University of Georgia, has been named interim dean of the college, Senior Vice President for Academic Affairs and Provost S. Jack Hu announced Friday.

“Dr. Chatterjee is a highly distinguished scholar and teacher, and his leadership has been instrumental in expanding the impact of the Terry College through its highly competitive graduate programs,” Hu said. “I am thrilled that he has agreed to guide the Terry College during this transition. Thanks to the commitment of its faculty, staff, students and alumni, Terry has built a well-deserved reputation as one of the nation’s best colleges of business, and I’m confident Dr. Chatterjee will provide the leadership to continue its impressive trajectory.”

Chatterjee, the Harold A. Black Distinguished Professor of Economics, also serves as director of both the full-time MBA and the Master of Science in Business Analytics programs in the Terry College. He will begin his tenure as interim dean on June 30. Benjamin C. Ayers, dean of the Terry College since 2014, was recently appointed UGA’s senior vice president for academic affairs and provost.

“Dr. Chatterjee’s administrative experience and deep familiarity with the Terry College and the university provide an excellent background for him to serve as the interim dean,” Ayers said. “I greatly appreciate his valued service and look forward to Terry continuing to reach new heights as one of the nation’s top business schools.”

Terry’s full-time MBA program has achieved international recognition since Chatterjee was named director in 2014. The program was ranked the No. 1 value for the money globally by the Financial Times in both 2024 and 2025. In separate rankings, the program placed No. 11 among public business schools and No. 29 overall in the 2025 U.S. News & World Report survey. This marked the eighth consecutive year the survey has ranked the UGA MBA among the top 20 full-time programs at public universities.

Chatterjee was promoted to associate dean in 2021, with a focus on graduate program enhancement and growth. He has worked to expand interdisciplinary offerings through the creation of new dual-degree programs with the College of Engineering, the School of Law and the College of Pharmacy. He also helped develop Terry’s Pathway MBA for undergraduates in STEM majors and its 2+2 Early Admissions Program, which provides an opportunity for UGA undergraduates to secure an early admissions decision and deferred enrollment to the full-time MBA.

“I appreciate the opportunity to serve the college in this capacity and know that we are approaching this transition from an exceptionally strong foundation,” Chatterjee said. “I am excited to support our faculty, staff, students and alumni as we work together to advance the college’s mission.”

Chatterjee has earned several honors for his teaching, research and service at the college and university levels. In 2018, he was named a Josiah Meigs Distinguished Teaching Professor, the university’s highest award for instruction. He received the Richard Reiff Award for Campus Internationalization in 2021 in recognition of his exceptional contributions to global education at UGA. Chatterjee has received the George P. Swift Award for Outstanding Teaching in Undergraduate Economics three times, and he received the university’s Hugh O. Nourse Outstanding MBA Teacher Award in 2018.

Chatterjee has published extensively on economics in refereed journals and books, and he is frequently invited to present his research at national and international conferences and seminars.

Chatterjee has served the university community as a member of the University Council and its Educational Affairs, Program Review and Assessment, and University Libraries committees. He is a member of the UGA Teaching Academy and a fellow of the Southeastern Conference Academic Leadership Development Program.

Chatterjee earned his doctorate in economics from the University of Washington, his master’s in economics from Delhi University and his bachelor’s in economics from the University of Calcutta. He joined the UGA faculty in 2001 as an assistant professor in the Terry College.

No Kings?

A friend of mine just texted me about June 14^th. I thought she was referring to National Flag Day but she was referencing something called “No Kings” where the person who commands the left (its king) has proclaimed June 14^th as No Kings Day. I guess No Oligarchy Day just didn’t resonate. The King of the Left has ordered all his minions to take to the streets to protest Donald Trump. His subjects will comply. I am sure there will be millions out there partying – er protesting – with some doing their usual looting thing and maybe their burning thing while carrying homemade but pre-printed signs of organic protest. I guess there will be Mexican flags and Palestinian flags and maybe an American flag or two to be spit upon and burned. The media will play up the number of protest sites and numbers of protestors. Mind you the left’s commander-king should tell them to keep those flags at home and wear red white and blue and carry only the American flag. You know, pretend to be patriotic. But want to bet that won’t happen?

I would be disappointed if there aren’t millions in the street. Of course that number means absolutely nothing since we all know that probably one third of those in America fear and hate Donald Trump. Remember Kamala Harris got 74 million votes. The No Kings website (nokings.org) of the King of the Left, says “They defied our courts, deported Americans, disappeared people off the streets, attacked our civil rights and slashed our services. The corruption has gone too far. No thrones. No crowns. No kings.” So the King of the Left is proclaiming no kings? I guess kings on the right are not allowed.

What can I say? Wasn’t Biden king? Didn’t Biden defy the Supreme Court? What court has Trump defied? What Americans have been deported? Yes, there was that little girl who was born here who was taken out of the country when her mother was deported. But saying “Americans were deported” is a stretch. What people have disappeared? What civil rights have been attacked? What services have been slashed? I guess we have already forgotten that Biden’s term has been called the most corrupt in history. Why else would he pardon his family? Biden -like all presidents – also ruled by fiat (executive orders). Isn’t that what kings do? Those on the right had their civil rights attacked by Biden. Their institutions were raided. Banks were pressured to debank them. Has the left forgotten that the IRS harassed and the FBI raided those on the right? Who tried to keep Trump off the ballot? Who ordered the democrat AGs to sue Trump on trumped up charges. Who was the king then? Joe Biden.

All losers whine. The right whined during the reign of Biden (or whoever was running the government) and now it is the left’s turn. The only difference between the two is that the left loves a (mostly) peaceful riot, er protest. That lets apologists like Maxine Waters say with a straight face “Don’t think that somehow because they called out the National Guard there was violence. There was no violence. I was on the street, I know.” The mayors on the left let their cities burn because they claim that the presence of the National Guard is provocative. Is this nonsense their decision or is this also deemed by the King of the Left? Regards. June 14, no kings day will just be another futile attempt to oust Trump. But then the left just loves to party.

No Kings? But since this is “Pride” month, shouldn’t it be “No Queens”?

The rescissions nonsense

“Save public media?” More nonsense.

Someone asked me if I knew why federal budgets keep increasing regardless of which party is in power. I replied it was because we never vote out someone who wants to spend more. Since attacking the albatross that is the federal debt is only addressed by taxing more and/or spending less, politicians will do neither. Taxing more may get them booted from office while spending less never resonates with the electorate writ large. In fact, in Washington spending less even if spending more is unpopular. Huh? Consider the times when there were proposals to grow overall spending but at a slower pace. That is, spending will increase but at a decreasing rate. Mathematicians call that a negative second derivative. So instead of spending growing by five percent, if there is a proposal to increase spending by less, say 2 percent, then the cry will be that you are cutting the budget and inducing harm to those who will get less – or not as much. 

Legislators know this and if they do propose cuts, it will be in programs that affect relatively few of their constituents. Have you ever wondered by nationally congress polls among the least liked institutions in the country yet the re-election rate is usually 95 – 98 percent? One of the few times that the rate dipped below 90 percent was in 2010, Obama’s midterm election which was 85 percent and the democrats lost  52 seats. I would not be entirely shocked if the re-election rate in 2026 showed significant losses for the republicans if Trump’s tariffs remain in place.

A perfect example of the games the congress plays in which there is a lot of huffing and puffing, posturing, pontificating and bloviating while accomplishing very little in in today’s rescissions packages. A rescissions package is one where the congress cancels spending that has been previously approved. In that this is strictly budgetary it needs to be approved only by a simple majority vote in both houses. The first bill to be considered rolls back $9.4 billion in spending previously authorized to fund USAID, NPR and PBS. You may recall that the funding for all three was among the early DOGE targets so I won’t go into details here. The left is howling “Savd public media.” What nonsense. NPR gets only one percent of its budget from the feds while PBS gets 13 percent. So this is what all the shouting is about? From all of the whining about Trump and the congress destroying public media, NPR and PBS will do just fine without the few pennies they get from the federal government.

In a $7 trillion budget, the rescissions package is a mere rounding error. But hey, it gives the MAGA crowd something to cheer about and gives the impression however false that the republicans are doing something meaningful. Make that some republicans because some will oppose even these cursory “cuts”. Don Bacon in the house and Susan Collins in the senate oppose some USAID cuts and will oppose the bill. However, both know that regardless of their stance, there will be little likelihood of this particular bill having any impact on their congressional tenure.

Even the Committee for a Responsible Federal Budget – which should know better – issued the following statement

“Enacting a rescissions package is a first step toward the major deficit reduction this country needs. We are borrowing nearly $2 trillion annually, on pace to hit record debt within a few years, and the House passed a bill to make the debt $3 trillion worse. Nonetheless, every bit of savings helps.”

Way to go guys! If the committee actually believes this, then the situation is truly hopeless. Instead of urging the congress to take meaningful steps towards addressing the debt by tackling entitlements, this statement basically tells them to keep putting on a show rather than doing something that makes a difference.

Insurrection, Part 2

Are riots part of the resistance?

It is apparent that there are no moderate democrats left when every democrat governor signs a letter condemning President Trump’s use of the California National Guard and the Marines to quell the rioting in Los Angeles. The letter read in part “President Trump’s move to deploy California’s National Guard is an alarming abuse of power. Governors are the Commanders in Chief of their National Guard and the federal government activating them in their own borders without consulting or working with a state’s governor is ineffective and dangerous.” But Trump did call California governor Newsom (though Newsom denies it) and told him to “get his ass in gear.” 

Yet Newsom and LA mayor Karen Bass seem content to let parts of the city burn and be looted if it serves to stop the ICE raids and the deportation of illegals. Alarmingly so do apparently every democrat governor. We know that Tim Walz thwittled his thumps while Minneapolis was engulf in flames during the George Floyd riots and actually ceded a police precinct station to the mob. Remember CHAZ (capitol hill autonomous zone) where it was a “police free zone”? It is clear that Trump was no going to allow the mob to take over parts of Los Angeles regardless of the wishes of the democrats, socialists and anarchists who run (ruin) the state.

The riots present the American public with a contrast. Trump’s tariffs are unpopular and will become more so if he persists. When empty shelves appear in the store and consumer prices increase, even the MAGA folk will find their loyalty faltering. Yet the same American public will be hesitant to exchange republican legislators for democrat ones when the democrats prioritize criminal activity over peace keeping. Burning vehicles, looting stores, burning American flags while carrying Mexican and Palestinian ones, spitting on and injuring law enforcement all are bad looks. If these protests were peaceful then there would have been no need for Trump to mobilize the California National Guard and the Marines.

However, the Administration speaks out of both sides of its mouth. Tom Homan declares that all the ICE raids have warrants for the arrests of illegals who have committed crimes. That makes the protestors who are attempting to thwart the arrest and deportation of criminals a losing issue for most voters. But on the other hand we have Trump’s immigration zealot Stephen Miller chastising ICE for not arresting and deporting more illegals and telling them to target Home Depot and 7-Elevens to arrest day laborers. That puts a lie to Homan who should be upset by it. Of course, every one of the 20+ million illegals in the country have broken the law but it is a stretch to call them criminals. If Trump were to override Miller and tell Homan and Kristy Noem to concentrate on the criminals, they would have enough work to keep them busy for a lifetime, not to mention the next three years.

The White House said that “Radical left lunatics are taking to the streets of Los Angeles — attacking law enforcement, hurling projectiles at police cruisers, burning vehicles, and shutting down freeways — because the Trump Administration is removing violent criminal illegal immigrants from their communities.” Well then go after the bad guys and quit targeting the day laborers at the Home Depot. Last week I was at the Georgia farm and my overseer was having some block work done on his house. I looked at the workers and said “Where are the Mexicans?” The reply was “They are all hiding.”

That the California democrats care more for providing sanctuary to the illegals than to enforcing the law is evident by the state suing Trump and asking a Federal court to enjoin the use of the national guard and the marines. The court denied the request.

So the basic question is whether the Federal government should allow the state and local authorities to allow their city to be looted and pillaged?  in Los Angeles, the police chief said that the “disgusting” violence “overwhelmed” his forces. adding that “there’s no limit to what they’re doing to our officers” and

“we’ve seen violence at a level that disgusts every good person.” Yet, Newsom, Bass and the democrat governors are whining about state’s rights while letting their cities burn and turn lawless. What about the rights of the citizens who are caught in the maelstrom? Speaking of which, a new touch to the rioting was the summoning of the Waymo autonomous self-driving taxis to the scene to be set on fire. The taxis are EVs and the fires are difficult to extinguish. Waymo then suspended service to downtown LA. One business owner said “This is so ridiculous. This doesn’t look like they’re protesting for ICE or anything. They are doing [it] just for the looting of the stores.” Another owner said that the politicians just don’t care. “These people don’t care. The only way it’s going to stop is if many troops come in, round them up, put them in the back of trucks, and bring them into a cell. “We’ve got a lot of empty jail cells here in Los Angeles. We need to put them in jail cells, as many as we possibly can. If it’s thousands, it’s thousands.” 

Finally, in contrast to the letter from the democrat governors condemning the president, the republican AGs also wrote a letter. It read that they stand “united in condemning violent attacks on law enforcement, the normalization of mob violence as ‘activism,’ any attempt to delegitimize efforts to restore order,” and “leaders who put politics above public safety. “We will always defend the right to peacefully protest, but there’s nothing peaceful about arson, assault, and anarchy. If you set police cars on fire, throw Molotov cocktails at law enforcement, and loot businesses, you must be held accountable.”

Kentucky and Pennsylvania have a democrat governor and a republican AG pitting the two are on opposite sides of the issue. These are interesting times.

Insurrection

“Insurrection – an organized and usually violent act of revolt or rebellion against an established government or governing authority of a nation-state or other political entity by a group of its citizens or subjects; also, any act of engaging in such a revolt.”

Democrats labelled January 6 as an “insurrection.” Although it seemed more like a frat party (with an unfortunate death) than an insurrection, I suppose that it does qualify given the definition above. The question is now whether the democrats will call what is happening with the ICE protests and especially what is occurring in California as an insurrection. It is but I am not holding my breath.

There have been organized protests against the ICE raids throughout the country. Boston, Portland, New York, Philadelphia, Aurora, Colorado, Fort Worth, Phoenix, Atlanta and other cities have seen these protests with the latest, largest and most violent (however mostly peaceful) one being in Los Angeles where just over 1,000 folk just happened to materialize to protest actions by ICE. These protests are not organic but are well organized. In Georgia the Party for Socialism and Liberation, which helped organize a protest in Dekalb Country, Georgia on Saturday against Trump’s mass deportation policies said “We’re going to stand up, build this movement, and fight back.” Then there is the “Communities Not Cages” National Day of Action hosted by the American Friends Service Committee and Immigrant Justice Network calling for an end to Trump’s immigration detention and deportation policies. Is it no surprise that leftist/Marxist groups like the progressive Working Families Party and the Service Employees International Union are behind the demonstrations? Groups like the Coalition for Humane Immigrant Rights have funded the Los Angeles ICE protests while promoting a radical political agenda. By the way, the Coalition for Humane Immigrant Rights received grants from the Biden Administration totaling over $750,000. I bet no illegals are protesting for fear of being arrested and deported.

I believe that efforts to topple the government via these demonstrations is a loser. We have had the riots associated with the assassination of Martin Luther King Jr, the Watts riots in 1992, Furgerson, Missouri, Trayvon Martin, George Floyd and now illegal immigration. All in some way tested the fabric of the country. All were exploited by the radical left. And all were found wanting.

Trump campaigned on closing the border but also on mass deportations. The border closing was a winning issue. Arresting and deporting criminals is also a winning issue – despite democrats making a fool out of themselves with regard to Abrego Garcia. But mass deportations – not so much. I noted that the mass deportations of the 20+million illegals in the country were not practical and I did not want to live in a country with Gestapo-type raids with people being stopped and asked to show their papers. Mind you, I am 100 percent in favor of locking up criminals and either deporting them or putting in jail. I am less sanguine about raiding slaughterhouses like they did in Morristown, Tennessee or Home Depot or your local restaurant to ferret out illegals. Recently, there was a raid on an Italian restaurant in a trendy neighborhood in Los Angeles where around 20 ICE agents arrested and handcuffed workers. Needless to say the democrats in California had a field day, uniformly condemning the raid. Not publicized was that ICE had warrants for specific criminal activity in the arrest of those taken in the raid and were not after some random dishwasher.

What remains to be seen is whether the public reaction to the ICE raids is favorable to the democrats or is outweighed by the reaction to the violence of the protests. Burning cars, spitting on Federal agencies, violence directed at those agents, disrupting commerce, blocking streets and homemade Molotov cocktails have never been a winning issue for the public at large. So I believe the violent protests will work against the insurrectionists.

What would Harold do? I would do is to require all able bodied illegals to register to get a work permit. No work permit equals deportation. This would equivalent to a guest worker program. I would then allow them to travel freely across borders with the work permit also serving as a visa. Not doing so opens the door for the democrats to try to exploit the issue by tugging at peoples’ emotions. I would also speedily deport all illegals who commit crimes, forfeiting their work authorization permits. I also want the illegal crossings stopped and any illegal trying to enter be denied entry. I would still allow legal immigration, per the law.

The image of ICE forcefully entering budlings and placing people under arrest who have no criminal records is a photo-op for the democrats to try to sway opinion against Trump. It also offers them the opportunity to team up with the socialist and anarchist elements who want not only a regime change but the installation of a socialist government as evidence by the organizers of the protests. It was no surprise that the state president of the Service Employees International Union was arrested in the Los Angeles riots. The SEIU is thoroughly socialist and is a mainstay of the professional left. Here is what the National Center for Policy Public Research says:

“The Service Employees International Union (SEIU) is a North American labor union. Easily recognizable by their purple t-shirts, SEIU members flock to protest conservative and free-market events and to campaign for democratic candidates. SEIU leaders are closely tied to pro-socialist ideals, and critics suggest its members engage in thuggery.

SEIU, through its political action committee (PAC), donates millions of dollars mostly to democratic political candidates each election cycle.”

In Los Angeles, Trump called out the California National guard to quell the demonstrations and to protect federal property. California’s governor is now suing to stop the deployment. While the Los Angeles police chief said he needed help, the mayor denied that help was needed. In other words, it is a mess with the democrats trying to exploit the situation as painting ICE as government’s terrorists. First the democrat strategy was to talk about due process and now it is focus on the humanitarian aspect of seizures and deportations. Again, all this would go away under a guest worker program. But the administration’s point man on immigration, Stephen Miller wants to severely limit legal immigration and completely shut down illegal immigration. Actions on ending H-1B visas, foreign student visas, and banning travel from over a dozen countries make apparent that the end game is to stop all immigration, both legal and illegal making my notion of work permits for illegals at best wistful thinking.

Trump and Sanders: Fiscal Policy Bros

What do Donald Trump and Bernie Sanders have in common? Both are believers in Modern Monetary Theory. There is little doubt that politicians be they democrat or republican ascribe to Modern Monetary Theory in which governments can print all the money it wants and not worry about such silly things as deficits, default or inflation. To wit: MMT says sovereign governments cannot default. They can always print the money to redeem whatever government bonds are maturing – see Greece and Japan. So debt doesn’t matter and governments can function nicely by increasing it through ever growing expenditures. If inflation occurs, as surely it must, then all the government has to do is to increase taxes to take the money out of circulation. Of course, governments rarely do this and use the additional tax receipts to increase expenditures even more.

In the MMT world, the government need not sell bonds to finance its spending since it can create money to do that. Bonds exist to allow the Fed to manipulate excess reserves in the banking system to set the Fed funds rate. If the Fed wants to decrease the rate, then it will buy bonds from the banks which increases their excess reserves and lowers the Fed funds rate. The result will be an increase in the money supply via the banks. MMT says that large deficits don’t matter and that deficit spending is actually beneficial in that it builds people’s savings. 

In our political world it is probably not surprising that Bernie Sanders is a fan of MMT. But so apparently is Donald Trump. MMT provides cover for fiscal irresponsibility. Trump’s budget bill shows that he is a fan of ever increasing deficits. That he is a devotee of MMT is apparent when he keeps pressuring the Fed to accommodate his fiscal policy by lowering interest rates. Never mind that traditional economics says that lowering interest rates in this particular economic climate will create inflation. Trump’s notion is “What me worry?” He also wants the Fed to lower borrowing costs of the deficit. Here, the Fed’s lowering short term rates will actually increase long term yields as inflationary expectations rise. To counter the Fed would have to buy back Treasury bonds. That action would increase Treasury prices and lower their yields. Mission accomplished? Not so fast my friends. The end result of that action would also lead to inflation and more pressure on the bond market. Do we really want to see a repeat of the Fed’s increasing their balance sheet by buying governments? During Covid, the Fed’s balance sheet exploded going from around $3 trillion to over $8 trillion.

Of course, when the Fed buys all these bonds, it creates new money which in turn is inflationary. Although the MMT crowd would say that this is no big deal, I guess one approach would be for the Fed to be the main purchaser of new Treasury bond issues to drive down bond yields and have the Treasury not spend the money. Sure. Then the Fed’s balance sheet can grow without limits. Any interest payments from the Treasury would be made to the Fed which could then remit them back to the Treasury. Who needs foreign investors? Of course, the question is what happens if US inflation causes a de-dollarization in world markets, imperiling the dollar as a reserve currency? In Trump’s world this does not matter since his ideal is a return to mercantilism and a minimizing of imports which in turn minimize dollars flowing into world markets and central banks.

Thus the key to MMT is a compliant central bank. The Fed must always subordinate monetary policy to fiscal policy. This is not a given with our “independent” Fed but would be if the Fed were merely a branch of the Treasury Department. That way the Fed would be to do the bidding of the president. Then Trump would not have to rant and rave about Powell “lowering” interest rates. MAGA folk may want this but imagine what the economy would then look like the next time a Joe Biden is elected president.

Trump’s budget like all those before it depends on spending more and more. To spend the government must either tax, borrow or print. With Trump, increased taxes are out so it is borrow or print. Yet borrowing is expensive as evidenced by the latest Treasury auction – unless we have the Fed purchase all the new issues of Treasury bonds. So print baby print. But in either case, what me worry? As long as the Fed is accommodating. Let MMT reign!

The BBB. I have some good news and some bad news.

The so-called Bib, Beautiful bill (hereafter BBB) is a major disappointment. 

With republican control of both houses of congress and the presidency, one would have thought that this was one of the few chances to get federal spending under control. When Trump came into office the first time, the Federal deficit was $20 trillion. Then came Covid and Biden. The deficit ballooned to $36 trillion. Now the BBB will push it up by $5 trillion more. Yes I know that the Congressional Budget Office – one of my old employers – estimated an increase of “only” $2.4 trillion over the next decade. But that number assumes that the tax decreases extend only through the current administration. Making them permanent adds another $2 trillion. Counting interest the total number is $5 trillion. And this mind you is from the republicans!

The republican mantra is always the same: tax decreases will stimulate growth which will reduce the deficit. However, there is no significant tax decrease in the BBB. It is only preventing the Trump tax cuts from expiring. Therefore, there should be no additional stimulus forthcoming. A MAGA apologist has chided the CBO for its projections saying that its model is flawed. The attack on CBO is not based on a critique of the model but on a critique of the voting of CBO staff. It is alleged that no CBO staffer has voted republican since 2000 (I left in 1985) so how can CBO be “nonpartisan.” It must be that all those democrats would construct models that favor democrats and not republicans, never mind all the criticisms from democrats when the CBO estimates their budget numbers. The MAGA-guy probably doesn’t know that the CBO director is appointed jointly by the speaker of the house and the president pro tempore of the senate. When I was at CBO, the director was Rudy Penner, a republican. Currently, the director is Philip Swagel, who is not surprisingly also a republican. Another “nonpartisan” group is the Committee for a Responsible Budget which provides in-depth analysis of federal budgets. Their estimates are virtually the same as CBOs. So the onus is on the MAGA-guy to produce his model with its assumptions and parameters which show a reduction in the debt. Not happening.

Elon Musk filed for a divorce from Trump citing irreconcilable differences when he called the BBB a “disgusting abomination of pork spending.” I know that Musk may have had personal reasons for attacking the bill. Some say it is because the bill cuts the EV tax credit. But Musk had said earlier that Tesla didn’t need the tax credit and anyway it no longer qualified due to the number of vehicles sold. As Musk tweeted “I’m sorry, but I just can’t stand it anymore. This massive, outrageous, pork-filled Congressional spending bill is a disgusting abomination. Shame on those who voted for it: you know you did wrong. You know it.” Musk tweeted further “It will massively increase the already gigantic budget deficit to $2.5 trillion (!!!) and burden America citizens with crushingly unsustainable debt” and added a USA budget deficit chart.

The markets seem to believe CBO, Musk and not the MAGA-guy. US debt has been downgraded. The recent Treasury bond auction was deemed a failure because the rate that cleared the market was over 5 percent, increasing the cost of interest payments on the debt. The 30 year Treasury is also above 5% while the 10 year is 4.6 percent and inching higher.

But the BBB is a typical DC budget, only this time from the republicans rather than the democrats. It has basically left entitlements unchanged despite all the gnashing of teeth over Medicaid and has all the tweaks to the tax code that inhabit every budget bill. The Medicaid cuts makeup a miniscule $880 billion over 10 years. As Stevie Wonder says “What the fuss?” That is the good news. The bad news is that if the Trump tax cuts are not extended, the net result will be a $4.5 trillion tax increase that will help kill any chance of economic growth. Certainly there must be someone in the administration brave enough to tell the president that his oppressive tariffs will help kill growth rather than kindle it as he always proclaims. So it is likely that the market reaction to the bill not passing may be worse than the reaction if it passes. Such is the world in which we live.

At the start of Trump Part 2, I said that there was no need for Elon Musk and DOGE. Doesn’t every agency have inspector generals? What are they doing to earn their money? Why didn’t Trump command that all cabinet members use their inspector generals to ferret out waste and fraud? Moreover, why didn’t he ask each cabinet member to bring him a budget that was 15 percent smaller than the previous year’s budget? He would then submit those numbers to the House budget committee and tell them to operate within those parameters and bring back a BBB that was at a minimum 15 percent smaller than the previous year’s.

Yes there would be a lot of screaming and shouting. Yes the democrats would repeat their standard mantra of “balancing the budget on the backs of the poor.” Yes Trump would have to work overtime to shore up wobbly republicans. But at least he would have made the effort. As it now stands, there are only a handful of republicans that have the guts to openly oppose Trump. Resistance is building in the senate starting with Rand Paul and Ron Johnson. Trump is losing support in the house, even among those who voted for the bill like Majorie Taylor Greene. But where are the so-called fiscal hawks? Where are Chip Roy, Ralph Norman, Andrew Clyde, Anna Paulina Luna and Byron Donald? Where is Tim Burchett? 

Over one of the doorways at the senate is the inscription “Annuit coeptis” (God has favored our undertakings). In the house chamber it is “In God we Trust.” In reality as I once wrote that the inscription above the doors to the congress should read “Lasciate ogne Speranza, voi ch’intrate” – abandon hope all ye who enter here.

Is that why I have this feeling of foreboding?

National security tariffs? Huh?

Imports fell 16 percent in April narrowing the trade deficit to $61 billion. I guess Trump is doing high fives since he thinks that trade deficits harm national security. So he applies universal tariffs on every good from every country. This thinking is similar to a person with a hammer seeing every problem as a nail. Did anyone ask “what deficits impair national security?” Surely it is not the trade deficit on socks, belts and panty hose. So why impose tariffs on them? What about rare earth minerals? Trump’s tariffs apply to fabrics from Lesotho to lithium from China. Does that make sense to anyone other than Trump and his Harvard Phd advisors? Is it too simple to ask that the administration ponder lifting all tariffs and then subsidizing those items that are considered vital to national security? What? Isn’t that opposite what Trump is doing?

Aren’t aluminum and steel vital to national security? Of course they are. But why did Trump double the tariffs on these metals to 50 percent? Some specialty steel used by the US military is only imported. It makes no sense to impose tariffs on imported steel in that there isn’t a US equivalent. Trump putting tariffs on these products simply make no sense. Won’t that imperil national security if they were not imported due to the tariffs? Trump and his people have forgotten to do a simple thing, namely realize that aluminum and steel are inputs in production as well as outputs. In his last dalliance with tariffs when he raised them to 25% during his first term, the impact was an increase in new domestic steel employment of around 1,000 but a loss of over 75,000 jobs. This is because more workers are employed in positions that use steel as an input than those who manufacture steel as an output. Look for the same to occur this time. Taken another way, Trump’s tariffs on steel and aluminum imperil national security rather than enhance it.

What about rare earth minerals? China dominates rare earth minerals that are indeed vital to our national security. It produces 84 percent of them. Putting tariffs on them is perverse (in the economic sense). Economics implies that there should be no tariffs on those items that are imported and vital to national security. Why make them more expensive? Why tick off the country of origin and motivate them to sell to our competitors? Rather a rational approach would be to make these imports as cheap as possible. Then heavily subsidize US industry to mine/produce them domestically. One drawback will be all the environmental rules dictating domestic production. Waive them. If we can mine lithium, cobalt and all the 17 rare earth minerals here in the US, then do it and do it regardless of the cost – if they are so vital to national security.

But no. The administration has adopted the opposite tactic that is ass-backward. It has imposed universal, not selective tariffs. It has made the importation of vital items more expensive instead of less expensive. In so doing, it has alienated everybody, (former) friend and foe. It has actually brought our (former) allies and current enemies closer by encouraging them to trade with each other in greater volumes to make up for the loss of the American market.

Virtually all of the US’s rare earth mining is at one facility in California which produces less than four percent of the total utilized in the country. Adding to that capacity would not be cheap or easy. There are obstacles strewn everywhere. It would cost billions of dollars to build the infrastructure, mining and processing facilities. It would have to overcome all the environmental obstacles and lawsuits from the greenies. Then there is the expertise. It was noted that in the iphone realm that the US lacked the engineers necessary for iphone production. However, China had them by the boatloads. The same is true for rare earth mineral production.

So what can be done? Subsidize. Subsidize. Subsidize. Contract with private corporations to provide what is needed to build the industry from scratch. Offer grants and aid to attract engineering majors. Pay large salaries and bonuses to existing engineers. Go out and buy the expertise. India, Australia have mining operations and the engineers. Even hire the Chinese and subsidize foreign engineering students. Have the government completely finance the construction of the facilities and to buy all the product at market prices. This is not going to be a task that private enterprise would undertake under almost any rational set of reasoning. So let the government do it. If it is a money loser, then so be it – if it is truly vital to national security. As to the cost, when the fiscal budget is over $6 trillion what’s another several billion to fund an industry vital to national security?

The US can build a domestic rare earth industry. The minerals are here albeit difficult to access and difficult to mine and process. That private enterprise has not done so is an indicator that such a task is unprofitable when all the costs and legal hurdles are considered. The obvious solution is to let the government provide the financing and private industry provide everything else. The other obvious solution is to eliminate all tariffs on stuff vital to national security. But there is no indication that anyone in the administration has thought about the consequences of the “reciprocal” tariffs. That may just be a bridge too far with this administration.