StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



George Constanza Budgeting

11 May 2012
Posted by Stan Collender

You remember "Seinfeld," the hit NBC show that proudly was about nothing?

If the show was still on the air doing original programs (It's obviously still on the air everywhere all the time in reruns), two federal budget-related events from yesterday no doubt would have inspired the writers and been the fodder for future episodes.

The first was the consideration and passage in the House of what was called the "Sequester Replacement Reconciliation Act of 2012." The fact that the bill was adopted by the House means...wait for it...absolutely nothing because it has no chance whatsoever of being enacted. And in spite of its name, it's not a reconciliation bill and even if it were enacted it wouldn't completely replace the spending cut -- the sequester -- that is scheduled to take effect on January 2, 2013.

Other than that it's very meaningful.

For the record, the vote was 218-199 and all of the ayes were Republicans. The no votes included 16 Republicans and 183 Democrats.

Yesterday's second nothing budget event was the surprise announcement by the Treasury that the United States recorded a more than $59 billion surplus in April.

On the one hand, not only was the surplus larger than expected, it was also the mirror image of last April's more than $40 billion deficit so the results could be an indication that the budget situation is changing for the better. This was, after all, the first monthly surplus since September 2008, that is, in close to four years. So even if April used to always be a surplus month, the fact that it was again in 2012 is as noteworthy as when it didn't happen 2009, 2010 or 2011.

On the other hand, a one-time one-month surplus cannot be assumed to be the start of a trend. It may be, but at this point anyone who says that is doing more wishing and hoping than solid analysis.

More important, even after the April surplus the overall fiscal 2012 deficit is projected to be close to $1 trillion and, therefore, is still a political problem.

In other words, it actually changes nothing.

 

 

Below $1T? That would be news...

George W. Bush's last FY deficit was $1.4T. While the Obama Administration has done better, two years of $1.3T is still psychologically significant.

Below $1T for the FY would be a major accomplishment.


Budget

"You remember "Seinfeld," the hit NBC show that proudly was about nothing?"

Yes, I do.

Try this. It is about something.

Article

Section 1. The National Debt is the sum of the outstanding balances of all financial debt instruments issued by the United States Government and backed by its full faith and credit. The Debt Ceiling is the amount which limits the size of the National Debt. Except as provided for in subsequent sections of this article, Congress shall make no law authorizing, and the Treasury shall not issue or sell, any such instruments while the Debt Ceiling is equal to or less than the National Debt.
Section 2. Coincident with regular elections of the House of Representatives, the following question will be placed on each ballot:
“Shall the Debt Ceiling be Increased (Yea) or Decreased (Nay)?”
A majority of votes cast shall set the direction in which the Debt Ceiling may then be changed and this will remain binding until the next regular elections of the House of Representatives.
Section 3. During the Calendar Year following regular elections of the House, Congress may, by a bill for that purpose which becomes law, determine the amount of increase or decrease, dependent on the result set by the section 2 vote, to be applied to the Debt Ceiling, provided that the resulting Debt Ceiling amount shall not be less than the National Debt.
Section 4. During the Calendar Year following regular elections of the House, Congress may, by a bill for that purpose passed by a majority, proportionately larger than the majority in the Section 2 vote by the People, of the whole number of members of each House which becomes law, set the Debt Ceiling to any amount greater than the National Debt.
Section 5. While a Declaration of War against another Nation-State by Congress is in effect, Congress may, by a bill for that purpose which becomes law, set the Debt Ceiling to any amount greater than the National Debt.
Section 6. Congress may, by a bill for that purpose passed by three fifths of the whole number of members of each House which becomes law, set the Debt Ceiling to any amount greater than the National Debt.
Section 7. The repayment of principle when due shall have first priority on Government receipts.
Section 8. The initial amount of the Debt Ceiling shall be set at 150 percent of the National Debt of the last full calendar year US National Gross Domestic Product, on the occasion of the first session of the House of Representatives following the ratification of this amendment by the necessary number of the several States.




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