Deficitly
May 25, 2011
With all the commotion going on around us
Osama…..tornadoes….floods
The public has been spared the talk on the debt ceiling
Did you hear the gang of six talks fell apart?
They were seen as representing the best hope
For a bipartisan deal to reduce the deficit
Senator Tom Coburn dropped out
Citing differences over entitlement spending,
Saying the 3 Republicans and 3 Democrats were
Unable to bridge differences over Medicare and Social Security
The clock is ticking,
We already exceeded the debt limit.
Now we are just shuffling payments
While waiting for a resolve.
How did we get to
this point?
There is some great information on the internet about this
subject.
Stephen Bloch did some extensive research on the deficit
And how it relates to each President
His report is titled:
US Federal Deficits, Presidents and Congress
Below are some of the facts I found interesting
- First data he found showing
a deficit was traced back to 1910
- The single best predictors
of deficits for most of the century have been war.
- Starting in the 1970’s, it
became harder to see a connection between war and deficits:
- Permanent deficits became
a way of life, regardless of whether there was a war going on.
- The Deficit did not break
the $1 trillion mark until 1981
- The Deficit did not break
the $5 trillion mark until 1995
- During the first seven
years of G W Bush presidency, the deficit was increased by almost twice
the dollar amount as it had been for 32 years. (Running from JFK through
GHW Bush).
- When GW Bush entered
office the deficit was $5.807 trillion
- When GW Bush left office
the deficit ballooned to $11,909 trillion. - The deficit increased
$6,102 trillion
- Since Obama entered office
the deficit has grown to $14,268 trillion - That an additional $2,359
trillion
Some other interesting facts:
- Military spending has
increased 81% since the year 2000
- Fraud constitutes at least
ten percent ($100 billion) of the nearly one trillion in taxpayer dollars
that Medicare and Medicaid will spend this year.
- The current tax system of
the United States will collect about 18% of the GDP(Gross Domestic
Product)
- Spending needs are much
higher, currently around 24% of GDP.
What makes up the 24%?
I referred to an article by Jeffrey Sachs (Economist and
Director of Earth Institute, Columbia University)
Focusing on best estimates for 2021, a decade from now
- Social Security outlays
will total around 5.2% of GDP - As Americans age and as
health care cost have multiplied, The cost of Social Security and
Medicare have risen from 1.7% of GDP in 1980 to 5.1% of GDP in 2011 - Medicare will total around
3.6% of GDP - Medicaid, assuming no
drastic cuts, will total around 2.9% of GDP - Other mandatory programs
for the poor, such as food stamps, will total 2.1% of GDP - Total defense spending is
around 5% of GDP, most agree that defense should be cut and be around 3% of
GDP - Most projections put
interest cost on debt around 2.7% of GDP - Discretionary spending
(cost used on public goods and services that cannot be provided
efficiently by the private economy alone) will be around 4.5% of GDP
Now if you go and add up all these categories,
You will see that cost will total around 24% of GDP
In Paul Ryan’s plan, taxes would be kept at 18% of GDP and
spending would be cut to 19% of GDP.
However the deficit is still expected to grow to $16 trillion by 2021.
The Obama plan would have a slightly higher tax collection,
around 19% of GDP (by allowing Bush tax cuts expire for those making over
$250,000), while allowing the deficit to grow to $19 trillion by 2021.
Guess what!!!!!
They are still going
the wrong way!!!!!
Many experts feel that both of these current plans, as
presented seem practically impossible.
In several opinion surveys,
The public has spoken clearly about what to do:
- Do not balance the budget
by slashing Medicare, Social Security, or programs for the poor; - Increase spending on
education and infrastructure; - Tax the rich and giant
corporations.
This is not a practical solution either…….
It is our responsibility to stop the bleeding
Everyone will have to proportionally share in the sacrifice
Will someone step forward and have the vision and leadership,
To usher in this era……….
Will the public be accepting to the reality of their
resolution….
Or will we continue to allow our excesses to undermine us.
Let us know your thoughts…… email george@hbsadvantage.com
Unemployment Benefits: More States Eye Cuts
May 20, 2011
Written by Arthur Delaney for Huffington Post
Add Pennsylvania and Wisconsin to the list of states considering cuts to unemployment insurance.
The Pennsylvania General Assembly needs to pass a law in order for the state to remain eligible for the federal Extended Benefits program for the rest of the year, which provides the final 20 weeks of checks in Pennsylvania for people who use up 73 weeks of combined state and federal aid. Within the past two months, lawmakers in Michigan, Missouri and Florida permanently slashed state unemployment aid in bills that preserve temporary federal aid.
Two Republican-sponsored measures moving through the GOP-controlled Pennsylvania statehouse would achieve similar results. And in Wisconsin, a proposal by Republican Gov. Scott Walker would restore the Extended Benefits program after local lawmakers let it lapse with virtually no public debate last month. But Walker’s bill would also permanently install a one-week waiting period for new claimants before any jobless claims are paid, relieving Wisconsin businesses of a $45.2 million tax burden. (Wisconsin is one of 13 states that had no waiting week in 2010.)
“Without knowing exactly how the state arrived at the $45.2 million figure, it is safe to say that a roughly equivalent amount will come out of workers’ pockets,” said Mike Evangelist of the National Employment Law Project, a worker advocacy group.
States pay for the first 26 weeks of unemployment benefits, and during recessions the federal government pays for extra weeks. While current federal unemployment benefits will only be around until January barring an unlikely congressional reauthorization, changes to state law will be permanent.
The bill in the Pennsylvania House of Representatives would save the state $632 million chiefly by cutting the average weekly payment from $324 to $277, according to Sharon Dietrich, an attorney with Community Legal Services, a nonprofit group that advocates for poor people in Pennsylvania. The bill in the Pennsylvania Senate — which Dietrich said she considers “way more innocuous” — would, like its counterpart in the House, tighten work-search requirements, but would only result in a net spending decrease of $50 million, Dietrich said. Each bill will reach the floor of its respective chamber early next week.
“On June 11, approximately 45,000 unemployed Pennsylvanians who currently qualify for federal extended benefits will be dropped from the unemployment rolls unless we slightly modify the state law,” State Sen. John Gordner (R) said in a statement. “It costs the state no money to qualify for these fully funded federal benefits through the end of the year, and results in an estimated $150 million in economic benefits.”
And in the U.S. Congress, Republican lawmakers are pushing a bill that would give states leeway to trim federal aid to the unemployed to use the money instead to repay federal unemployment government loans
Peco says commercial customers to see big increase
May 17, 2011
By Andrew Maykuth
INQUIRER STAFF WRITER
Peco’s commodity charge, which accounts for about two-thirds of a typical customer’s bill, will increase sharply to reflect the higher price of procuring power during the summer months, said Cathy Engel Menendez, the utility’s spokeswoman.
The increase won’t affect the 37 percent of Peco’s 60,359 small commercial customers who have switched electrical suppliers in Pennsylvania’s deregulated energy markets. Nor will the increase affect most larger commercial and industrial customers, the vast majority of which switched suppliers after Peco’s market rates went into effect this year.
Shop owners, office managers and manufacturers that had been sitting on the fence about shopping for electrical suppliers might take a second look at alternatives in the face of the impending increase.
For small commercial customers, Peco’s price to compare will increase from 9.43 cents per kilowatt hour to 10.32 cents on July 1, a 9.4 percent increase.
For medium commercial customers, whose demand is between 100 kilowatts and 500 kilowatts, the rate will increase from 9.30 cents per kWh to 10.47 cents, a 12.6 percent.
Peco had already announced that its charges will be increasing by 4.3 percent on July 1 for residential customers. Peco’s residential price-to-compare will increase from 9.99 cents to 10.42 cents. For consumption above 500 kilowatt hours, the price increases to 11.69 cents per kWh.
Peco says that the commodity prices are based on procurement contracts with suppliers, and that the utility passes the cost along to customers without markup.
The wholesale cost of power has always fluctuated seasonally, but it is only this year that Peco’s charges are adjusted quarterly to reflect the market conditions. Electricity tends to be more expensive in the summer, when demand is higher.
The adjustments don’t affect Peco’s distribution charge, which is assessed on each customer regardless of who supplies the electrical power. The distribution charge reflects Peco’s cost for maintaining the wires and customer service system, and is regulated by the Public Utility Commission.
While most alternative suppliers quote their residential rates in public through the PUC, only a few post their commercial rates, which are often quoted individually and depend upon a customer’s usage patterns.
The Energy Cooperative Association of Philadelphia is one supplier that does post its small-commercial rates, which may now be more attractive in light of Peco’s impending increase.
The Energy Coop charges 9.42 cents per kilowatt hour for small commercial customers, virtually identical to Peco’s current rate. But when Peco’s rate goes up to 10.32 cents in July, the nonprofit’s price will be 8.7 percent less than the utility’s. The cooperative also charges commercial customers a $30 membership fee.
Jossi Fritz-Mauer, co-director of the cooperative, said customers need to initiate the switch now in order to take advantage of the savings this summer.
“Businesses and residents won’t see those huge bills for their summer usage until it’s too late,” said Fritz-Mauer.
“If they wait for big bills to shock them into switching, they’ll miss out on a lot of savings,” he said.
Note: Hutchinson Business Solutions has been providing commercial deregulation savings solutions to their clients for over 10 years. There are great opportunity for savings.
Call 856-857-1230 or email george@hbsadvantage.com to learn more about your opportunity to save.
The California-based solar leasing firm Sungevity announced a deal on Monday with home improvement giant Lowe’s that could make obtaining a personalized estimate for installing solar panels a push-button affair at Lowe’s outlets.
The deal gives Lowe’s just under a 20 percent stake in Sungevity, according to a solar industry source, though neither company would discuss specific dollar figures.
Under the agreement, scheduled to launch in 30 Lowe’s stores in California in July, customers will be able to access kiosks equipped with Sugevity’s iQuote system, a Web-based application that allows homeowners to simply enter their address and receive a firm installation estimate within 24 hours, eliminating the expense of an on-site visit.
The system combines aerial and satellite image analysis with research by Sungevity engineers at the company’s Oakland headquarters to assess the geometry of a home’s rooftop, its disposition to the sun at different times of day and year and any potential occlusions presented by nearby vegetation or built objects.
In addition to an installation estimate, customers can also get a visual rendering of their home with solar panels installed. And if interested parties provide information on typical power usage, such as an account number or past electric bills, the iQuote system can estimate potential savings expected from using the equipment.
The iQuote system can already be used online, and the company’s founder, Danny Kennedy, estimated that roughly 25,000 users had taken it for a test drive, though only about 1,500 of those had been converted to sales.
The deal with Lowe’s, Kennedy said, could help Sungevity — a petite player in the solar leasing market compared to bigger players like SolarCity of San Mateo, Calif., or San Francisco-based SunRun, which raised $200 million in financing earlier this month — significantly expand its reach.
Despite tough economic times and often uncertain economic incentives, a number of analyses predict a boom year for solar power in 2011.
A report published in December by IDC Energy Insights, a market research firm based in Framingham, Mass., estimated following a healthy 2010, the solar market in North America could well see two gigawatts of solar power installations this year.
Jay Holman, the report’s lead analyst, told The Huffington Post that those numbers had been revised somewhat, but that 2011 was still expected to bring in 1.6 gigawatts of new solar installations, roughly double the 2010 total.
Part of the reason for America’s interest in solar energy may be a decline in the robust incentives the once drew a deluge of equipment and installations to the European market, particularly countries like Germany, the Czech Republic and Italy, Holman said. Those countries have begun to scale back their subsidies, forcing companies to look to other markets.
Meanwhile, federal tax incentives, including a 30 percent tax cash grant extended through the end of 2011, have helped keep solar alive. Several states have healthy incentives in place as well, including the eight states where the Sungevity/Lowes deal will eventually be rolled out: Arizona, California, Colorado, Delaware, Maryland, Massachusetts, New Jersey and New York.
Holman also said solar leasing companies like Sungevity, SunRun and Solar City, which retain ownership of the equipment while reducing or, in many cases, eliminating the up-front installation costs, also help drive the expansion of solar power.
“Obviously, we’re obsessed with being customer-focused,” said Kennedy. “We hope that this deal will make going solar as easy as shopping for light bulbs.”
For Our Own Deficit
May 13, 2011
Well……. we did avoid a government shutdown.
Thanks to some last minute wrangling down and DC,
the US economy lives on…..
limping until the end of September 2011.
All eyes now have turned to the vote on raising the debt ceiling.
Officially, the government states we should pass the debt limit sometime in early to mid-May.
What would happen if the Congress votes not to raise the debt ceiling?
Steps can be taken at that time to start shuffling who and what to pay…..
That should buy us another month.
Reports are that if the debt ceiling is not raised by the beginning of July,
The US will go into default.
What would happen should the US go into default?
- The United States would default on its bond payments and would see its credit rating fall dramatically
- Bondholders’ would be unable to receive interest payments
- Investors would have a difficult time trusting the United States to honor its obligations and demand for long term United States debt would fall.
- Senior citizen would not receive their Social Security checks
- loss of these dollars would likely further hurt domestic consumption in the United States and place an undue strain on the budgets of senior citizens
- A default will lead to increased risks for owning U.S. bonds.
- Increased risks equal higher rates
- Business loan borrowers and individuals looking for personal loans would see their borrowing costs rise astronomically
- home or auto loan rates will be drastically higher, since access to credit would be at a premium
That’s just a snap shot of what to expect.
We made it thru the Great Recession.
Many experts feel this would throw the US into another Great Depression.
.
Not much time to dawdle!!!
Several weeks ago….
Standard and Poors, for the first time lowered its long term outlook for the federal government’s fiscal health……
From stable
To negative……..
They warned of serious consequences
If the lawmakers fail to reach a deal to control the massive federal deficit
So when is Congress expected to start tackling this issue?
It is reported they will start meeting on this issue sometime in June.
Congress just passed the 2011 budget!!!!
Heck, we still have 5 months left until the 2011 fiscal year is over.
Yet they will resolve the debt issue in 30 days?
America is a great country
No matter what is said
There is no place better to live
Everyone would love to enjoy
The freedoms we take for granted.
The debt ceiling and the deficit…….
Should not be a political issue
It is not going to go away
What are we doing to provide a secure future for the next generation?
We must carefully look at all the programs
Analyze what works
And put a true dollar value on sustainability
We are at a fork in the road
And the decisions we make
Will determine what path we go down
Natural Gas Revolution Is Overblown, Study Says
May 12, 2011
Written by Tom Zeller Jr
For the Huffington Post
A veritable explosion in the number of natural gas wells in the United States in the late 2000’s resulted in only modest gains in production, a new study finds, suggesting that the promise of natural gas as a bountiful and economical domestic fuel source has been wildly oversold.
The findings, part of a broader analysis of natural gas published Thursday by the Post Carbon Institute, an energy and climate research organization in California, is one of a growing number of studies to undermine a natural gas catechism that has united industry, environmental groups and even the Obama White House in recent years.
It also comes on the heels of another study, published Monday, lending credence to claims that modern natural gas drilling techniques are contributing to methane contamination of drinking water wells in surrounding communities.
According to the author of Thursday’s study, David Hughes, a geoscientist and fellow at the institute, the bedrock assumptions of the natural gas revolution — that new drilling techniques have cracked open deep layers of shale and made available a 100-year supply of clean, domestic energy that could displace dirty coal and oil — are simply not true.
“The real takeaway here is scale,” Hughes said in a telephone interview. “If you look at the production estimates as the government is making them now, you’re talking about a near quadrupling of shale gas by 2035.”
The estimates come from the Energy Information Administration, which suggested in its most recent projections that shale gas would account for 45 percent of all natural gas production in the U.S. by 2035 — up from roughly 14 percent currently.
But the actual productivity profile of new, unconventional wells — often tapped at tremendous expense — is far less clear than is normally portrayed, Hughes said. Studies at existing fields, or plays, suggest that many shale wells tend to be highly productive in their first year, and then decline steeply — sometimes by as much as 80 percent or more — after that, requiring new wells to be plumbed
Indeed, while the number of active gas wells, which has nearly doubled since 1990, to half a million, has increased in the U.S, production per well has declined by nearly 50 percent over the same period, Hughes said, suggesting that as the industry converts increasingly to shale gas, more and more wells will be needed to maintain even a baseline level of production — much less to create a substantive increase.
If that’s the case, Hughes said, then those hoping that the shale gas boom might one day provide enough natural gas to replace coal for electricity generation, or oil as a transportation fuel, will be sadly disappointed. Indeed, he said, the number of new wells that would be needed to meet these goals would create a dystopian landscape of well pads and gas pipelines that few people would want to inhabit.
“If that were to happen, for those people living in Pennsylvania and New York, well, they haven’t seen anything yet,” Hughes said, referring to those states now sitting atop major shale gas deposits.
Mr. Hughes also highlighted the growing number of environmental costs that come with natural gas development. These include everything from water intensity and heavy truck traffic to the risks of localized pollution associated with hydraulic fracturing, or fracking — the high-pressure injection of water, sand and chemicals underground to break up rock formations and release gas.
More broadly, questions have been raised about the greenhouse gas footprint of natural gas development over its lifecycle, with at least one study suggesting that it may be no better than coal.
Dan Whitten, a spokesman for America’s Natural Gas Alliance, an industry lobby group, said in an e-mail message that the report was retreading old ground and amounted to a smear campaign on natural gas.
“This report is recycling the widely discredited claims of anti-drilling activists on greenhouse gas emissions,” Whitten said. “Their estimates run counter to the accepted scientific consensus and have been heavily criticized by climate scientists and others who are interested in a fact-based debate about our energy choices as a nation.”
Whitten also argued that it is now “the established scientific consensus” that the U.S. has “vast domestic supplies of natural gas that can play a growing role in meeting our country’s energy needs for generations.”
He also said that no one was seriously suggesting that coal or transportation fuel be entirely replaced by natural gas, and that such arguments amount to “unrealistic scenarios” presented by Hughes simply to be knocked down.
“Most experts in our energy debates understand and agree that it will take all kinds of energy to meet our nation’s growing future needs,” he said. “From our initial review, no new ground was broken with this report. As such, it doesn’t change the fact that the vast supplies of clean natural gas right here in North America give our country a chance to substantially improve energy security, clean our air and improve our economy.”
But while the resource is inarguably vast, Hughes is not alone in suggesting that the industry is overstating how much can be economically pulled out of the ground.
Arthur E. Berman, a geological consultant and director of Labyrinth Consulting Services, Inc., also argues that natural gas is not as abundant or as inexpensive as is commonly believed.
“I do not dispute for a minute that the resource size for natural gas is huge. There’s a lot of gas in place in shales,” Berman said in a telephone interview. “The question for me is how much can be produced for a profit?”
Berman says that reserves — meaning the amount of natural gas that is actually commercially available to produce — will last only about 22 years. This is partly because shale gas plays once touted to be monstrous in size have typically contracted to core areas of production a mere fraction of the originally advertised size.
Hughes, meanwhile, cited Berman and and other analysts who also say that gas, at roughly $4 per thousand cubic feet (mcf), is too cheap for companies to recoup the costs of producing it.
From Thursday’s study:
Analysts like Arthur Berman suggest the marginal cost is about $7.50/mcf compared to a current price of about $4.00/mcf. Others, such as Kenneth Medlock (2010), suggest that the break-even price ranges from $4.25/mcf to $7.00/mcf. The Bank of America (2008) has placed the mean break-even cost at $6.64/mcf with a range of $4.20/mcf to $11.50/mcf. One thing seems certain: Shale gas, which appears to be the only hope for significantly ramping up U.S. gas production, is expensive gas, much of which is marginally economic to non-economic at today’s gas prices.
And yet, with easier-to-reach, conventional sources of gas largely depleted, the ability to pull gas from deep layers of shale rock has been touted as a game changer, and the notion was quickly embraced by a broad cross-section of social, political and business interests.
Writes Mr. Hughes:
First, the shale gas industry was motivated to hype production prospects in order to attract large amounts of needed investment capital; it did this by drilling the best sites first and extrapolating initial robust results to apply to more problematic prospective regions. The energy policy establishment, desperate to identify a new energy source to support future economic growth, accepted the industry’s hype uncritically. This in turn led Wall Street Journal, Time Magazine, 60 Minutes, and many other media outlets to proclaim that shale gas would transform the energy world. Finally, several prominent environmental organizations, looking for a way to lobby for lower carbon emissions without calling for energy cutbacks, embraced shale gas as a necessary “bridge fuel” toward a renewable energy future. Each group saw in shale gas what it wanted and needed.
And at least for now, the 100-year slogan continues.
“A lot of times, things are right underneath our feet, and all we need to do is change the way we’re thinking about them,” says Erik Oswold, an ExxonMobil geologist, in an ad circulating on the online video service Hulu. “A couple decades ago, we didn’t realize just how much natural gas was trapped in rocks thousands of feet below us. Technology has made it possible to safely unlock this cleaner burning natural gas. These deposits can provide us with fuel for 100 years.”
President Obama, delivering a speech on energy policy at Georgetown University on March 30, echoed the industry’s mantra.
“Now, in terms of new sources of energy, we have a few different options,” the President said. “The first is natural gas. Recent innovations have given us the opportunity to tap large reserves — perhaps a century’s worth of reserves, a hundred years worth of reserves -– in the shale under our feet.”
The Unwisdom of Elites
May 10, 2011
By PAUL KRUGMAN
Published: May 8, 2011
The past three years have been a disaster for most Western economies. The United States has mass long-term unemployment for the first time since the 1930s. Meanwhile, Europe’s single currency is coming apart at the seams. How did it all go so wrong?
So this seems like a good time to point out that this blame-the-public view isn’t just self-serving, it’s dead wrong.
The fact is that what we’re experiencing right now is a top-down disaster. The policies that got us into this mess weren’t responses to public demand. They were, with few exceptions, policies championed by small groups of influential people — in many cases, the same people now lecturing the rest of us on the need to get serious. And by trying to shift the blame to the general populace, elites are ducking some much-needed reflection on their own catastrophic mistakes.
Let me focus mainly on what happened in the United States, then say a few words about Europe.
These days Americans get constant lectures about the need to reduce the budget deficit. That focus in itself represents distorted priorities, since our immediate concern should be job creation. But suppose we restrict ourselves to talking about the deficit, and ask: What happened to the budget surplus the federal government had in 2000?
The answer is, three main things. First, there were the Bush tax cuts, which added roughly $2 trillion to the national debt over the last decade. Second, there were the wars in Iraq and Afghanistan, which added an additional $1.1 trillion or so. And third was the Great Recession, which led both to a collapse in revenue and to a sharp rise in spending on unemployment insurance and other safety-net programs.
So who was responsible for these budget busters? It wasn’t the man in the street.
President George W. Bush cut taxes in the service of his party’s ideology, not in response to a groundswell of popular demand — and the bulk of the cuts went to a small, affluent minority.
Similarly, Mr. Bush chose to invade Iraq because that was something he and his advisers wanted to do, not because Americans were clamoring for war against a regime that had nothing to do with 9/11. In fact, it took a highly deceptive sales campaign to get Americans to support the invasion, and even so, voters were never as solidly behind the war as America’s political and pundit elite.
Finally, the Great Recession was brought on by a runaway financial sector, empowered by reckless deregulation. And who was responsible for that deregulation? Powerful people in Washington with close ties to the financial industry, that’s who. Let me give a particular shout-out to Alan Greenspan, who played a crucial role both in financial deregulation and in the passage of the Bush tax cuts — and who is now, of course, among those hectoring us about the deficit.
So it was the bad judgment of the elite, not the greediness of the common man, that caused America’s deficit. And much the same is true of the European crisis.
Needless to say, that’s not what you hear from European policy makers. The official story in Europe these days is that governments of troubled nations catered too much to the masses, promising too much to voters while collecting too little in taxes. And that is, to be fair, a reasonably accurate story for Greece. But it’s not at all what happened in Ireland and Spain, both of which had low debt and budget surpluses on the eve of the crisis.
The real story of Europe’s crisis is that leaders created a single currency, the euro, without creating the institutions that were needed to cope with booms and busts within the euro zone. And the drive for a single European currency was the ultimate top-down project, an elite vision imposed on highly reluctant voters.
Does any of this matter? Why should we be concerned about the effort to shift the blame for bad policies onto the general public?
One answer is simple accountability. People who advocated budget-busting policies during the Bush years shouldn’t be allowed to pass themselves off as deficit hawks; people who praised Ireland as a role model shouldn’t be giving lectures on responsible government.
But the larger answer, I’d argue, is that by making up stories about our current predicament that absolve the people who put us here there, we cut off any chance to learn from the crisis. We need to place the blame where it belongs, to chasten our policy elites. Otherwise, they’ll do even more damage in the years ahead.
Hutchinson Business Solutions 
