Federal Spending As Percentage of GDP

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How to Eliminate Social Security and Medicare

Ralph Raico writes:

How to Eliminate Social Security and Medicare Expenditures under the Social Security and Medicare programs account for approximately one-third of total federal government spending. It is obvious that any major reduction in government spending requires major reductions in spending for these programs. Unfortunately, Social Security and Medicare are generally regarded as sacred and thus virtually untouchable, with the result that few if any proposals have been made that would greatly reduce the spending they entail... This program will undoubtedly seem much too slow for some supporters of individual rights and freedom. Nevertheless, I believe that it is in fact the most rapid means of achieving its ultimate goal that does not entail a revolutionary overthrow of what have come to be established rights in the law, however wrongheaded the law has been in establishing those rights in the first place. Proceeding in this way is an essential aspect of liberalism in its classical sense. Fundamentally, rights to entitlements of any kind, that must be paid for involuntarily by other people, are no more legitimate than the alleged property rights of slave owners in their slaves. Yet to avoid civil war, liberalism would have urged a policy of compensated emancipation rather than one of violent emancipation. Today, in fundamentally similar circumstances, liberalism must limit as far as possible the disturbance that would otherwise be caused by the elimination of illegitimate, perverted rights... If we want to protect the value of individual human life, particularly in old age, when it is most vulnerable, we must reverse direction and start dismantling Social Security and Medicare, two potentially deadly collectivist institutions. We must restore to the individual the responsibility and the power to determine his own future through forethought and saving. The individual must have his own individual property with the freedom to use it for his own well-being, as he sees fit. Government officials must be barred from the process. source

Filing Tax Returns

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Gold Prices

Cartoon: Supply and Demand

NASDAQ 100: Rebalancing

Nasdaq OMX is rebalancing the Nasdaq-100 index (QQQs), which currently has one company — Apple (AAPL) as more than 20% of the index.

The WSJ notes “Apple’s market capitalization is roughly $300 billion, twice that of Google. But its weighting in the index was five times that of Google. After the rebalancing, Google’s share of the index will be 5.8% compared to Apple’s 12.3%. Apple will remain the largest component of the index.”

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Unemployment by Recession

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Unemployment: Duration and Education

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Labor Force Participation

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S and P 500 and QE

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Analysis of Ryan's "The Path to Prosperity"

Here is his full plan. Path to Prosperity

Here are some critiques.

Robert Wensel writes:

Mainstream media will portray him as a big government slasher for this proposal. He is nothing close

Ryan's "radical" budget would only reduce government spending to 20% of GDP by 2015. Obama wants to cut it to 23%. It is currently at 25%. In other words, there's only a 3 percentage point difference between Ryan's proposal and that of wild spending Democrats. And, this of course is before all the Congressional horse trading that goes on that would surely boost spending levels...

Ryan's plan does not touch the Empire.

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Nick Gillespie and Veronique de Rugy write:

the GOP's plan written by Rep. Paul Ryan (R-Wis.) "is refreshingly engaged with reality. Unfortunately for taxpayers and citizens, Ryan's plan looks better when standing in the shadow of Obama's. Neither budget provides a good way forward for a country still battling the effects of recession and the non-stop, self-inflicted spending binge that began with George W. Bush and has proceeded unabated since then. Ryan's budget is indeed a positive break from past efforts by Republicans and Democrats alike, but it doesn't provide the solutions the American people deserve."

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Jacob Sullum writes:

Instead it lays out "a path to prosperity–by limiting government to its core constitutional roles, keeping America's promises to seniors, and unleashing the genius of America's workers, investors, and entrepreneurs." From this I gather that Ryan thinks sending retirees a check every month and paying for their health care are among the federal government's "core constitutional roles." Judging from the programs that Ryan wants to cut or consolidate rather than eliminate, so are a lot of other activities that one would be hard pressed to locate under any of Congress' enumerated powers, including medical coverage for poor people, agricultural subsidies, college scholarships, and job training.

Ryan is on firmer ground when he says "the first responsibility of the federal government is to provide for the defense of the nation." But that should not mean that anything labeled "defense" gets a free pass. One of the plan's notable weaknesses is its failure to question the premise that defending the nation requires the U.S. government to spend as much on military programs as the rest of the world combined—and more today in real terms than at the height of the Cold War.

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The 19 Percent Solution: How to Balance the Budget Without Raising Taxes

Ryan v. Obama

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Paul Ryan's Budget Proposals

Our budget, which we call The Path to Prosperity, is very different. For starters, it cuts $6.2 trillion in spending from the president's budget over the next 10 years, reduces the debt as a percentage of the economy, and puts the nation on a path to actually pay off our national debt. Our proposal brings federal spending to below 20% of gross domestic product (GDP), consistent with the postwar average, and reduces deficits by $4.4 trillion.

A study just released by the Heritage Center for Data Analysis projects that The Path to Prosperity will help create nearly one million new private-sector jobs next year, bring the unemployment rate down to 4% by 2015, and result in 2.5 million additional private-sector jobs in the last year of the decade. It spurs economic growth, with $1.5 trillion in additional real GDP over the decade. According to Heritage's analysis, it would result in $1.1 trillion in higher wages and an average of $1,000 in additional family income each year.

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Cartoon: Irrational Exuberance

2011 Budget Battle

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Income Mobility

1. For American households that were in the lowest earnings quintile (bottom 20 percent) in 2001, only 56% of those households remained in that quintile in 2007, and 44 percent had moved to a higher quintile by 2007. Five percent of low-income households in 2001 had moved to one of the top two quintiles in just six years.

2. For those households that were in the highest earnings quintile (top 20 percent) in 2001, 34 percent had moved to a lower quintile by 2007, and 5 percent of those households had moved all the way to the bottom quintile.

3. For those households in the middle earnings quintile (middle 20 percent) in 2001, about one-third moved to a higher quintile by 2007, more than one-fourth moved to a lower quintile, and only 42 percent remained in the same quintile.

4. More than half of the households in the second, third, and fourth quintiles in 2001 moved to a different earnings quintiles by 2007 (see bottom row in chart).

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Housing Double Dip?

Home prices fell in 13 of 20 cities in January, paced by a 3.4 percent decline in Minneapolis, a 2.4 percent drop in Seattle, and a decline of 1.9 percent in San Francisco. On a year-over-year basis, Phoenix saw the biggest drop, down 9.1 percent, followed by a decline of 8.1 percent in Detroit, and prices fell 7.8 percent in Portland. source

Manufacturing Profits and Profit Margin

Profits for U.S. manufacturing firms reached $135.3 billion in QIV last year, the highest amount of profits ever recorded in a single quarter for America's manufacturers, and surpassing the previous record of $127 billion in QII 2007 before the recession started (see top chart above). The after-tax profit margin for U.S. manufacturers also reached an all-time time of 9.1%, at least for the data the Census Bureau has available going back to 1999 (see bottom chart above).

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Personal Consumption Expenditures

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Job Loss by Recession

The employment graph shows the percentage of payroll jobs lost during post WWII recessions - aligned at maximum job losses.This shows the severe job losses during the recent recession - there are currently 7.5 million fewer jobs in the U.S. than when the recession started.

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