“The GAO notes that it would be more cost-efficient to hold off on buying F-35s until they are operationally tested than it would be to pay for the aircraft now and upgrade them later.
But, of course, when did cost efficiency and the military go hand-in-hand? There’s a reason Lockheed Martin brags about building parts of the F-35 in 48 different states, and that’s not because it saves money. The F-35 has been as much an expensive make-work program for military contractors as it has been a vital part of America’s national defense—and in that regard the cost overruns and eventual upgrades might be seen as a feature rather than a bug.
Production of the F-35 fighter was originally supposed to cost about $200 billion, but the price tag has already ballooned to about twice as much. Recently, Lockheed Martin warned that supply chain issues and inflation could cause further delays and cost overruns. Monday’s GAO report confirmed that construction is running behind schedule, with about 28 percent of the 553 completed jets having been delivered late.”
“the Congressional Budget Office (CBO) attempted to attach some math to the difficult policy decisions that lie ahead. Regardless of when lawmakers decide to address the $30 trillion national debt, just stabilizing it (that is, implementing policies to stop it from growing relative to the nation’s economy as a whole) will require that “income tax receipts or benefit payments change substantially from their currently projected path.”
In short, taxes will have to go up and government services—including benefits from programs like Social Security and Medicare, the health insurance program for the elderly—will likely have to be reduced.
That’s hardly a new set of prescriptions. Debt-watchers have been warning for years that benefit cuts and tax increases will likely be needed to have any realistic shot at managing America’s long-term debt. (And, remember, we’re talking about what’s needed to merely stabilize the debt, not reduce or eliminate it).”
…
“If policy makers wait until the end of the decade to raise taxes and cut spending, the best-case scenario would leave the debt hovering around 120 percent of GDP over the long term. Waiting longer means higher debt levels forever and more severe consequences.”
…
“A larger amount of debt translates into reduced economic growth in the long run, as the cost of interest payments on the debt consumes dollars that could otherwise be put to productive use. As the CBO notes, persistently high levels of debt can also put upward pressure on interest rates and make it more difficult to combat inflation.”
“Over the course of the pandemic, the Treasury Department issued roughly $6 trillion, $2.7 trillion of which was monetized by the Federal Reserve. Americans were sent $5.1 trillion through various programs, including individual checks and unemployment bonuses. Overall federal debt has since risen by about $6 trillion.
This response assumes the 2020 recession was sparked by a demand shock leading to a fall in aggregate demand, rather than the strangling of aggregate supply caused by the pandemic and lockdowns. Under these circumstances, sending people and companies money was never likely to impact output. Instead, it greatly inflated demand for the durable goods still being produced.
Even by the Keynesian economic standards that prompt this sort of fiscal response, COVID-19 relief was larger than any “output gap”—the difference between what the economy is producing and the most it could produce. In March 2020, the gap was $2.3 trillion, and that year alone, the government spent $3 trillion through several relief bills.
In March 2021, Democrats passed the over-the-top $1.9 trillion American Rescue Plan. At the time, the projected output gap was $700 billion through 2023—the period when most of the spending would take place. As such, the bill was two or three times too big, especially considering the economy was mostly reopened and growing, with unemployment dropping fast from 14.8 percent the year before to 6 percent.”
…
“Today, several new studies confirm that this bout of inflation is rooted in demand, not supply. That’s not to say supply-chain chokepoints, originally resulting from the global shutdown imposed by governments and a sudden shift away from services toward goods, played no role.
However, we wouldn’t have such large-scale supply-chain problems without the shutdowns followed by the aforementioned government-fueled increase in demand for durable goods. According to Robert Koopman at the World Trade Organization, artificially inflated demand accounted for as much as two-thirds of supply shortages.
Second, global supply chains are, obviously, global. If inflation were truly the product of supply-chain issues, we would witness roughly the same rates of inflation throughout the industrialized world. But we don’t. Most industrialized countries have lower levels of inflation than the United States. These other countries also implemented significantly lower amounts of COVID-19 spending.”
…
“Today, all prices are rising, including wages (though for now at a lower rate), and the inflation is persistent. This is because of overblown fiscal and monetary policies. Tackling the problem requires strong Fed actions and significant fiscal restraint by Congress. Short of both, inflation will persist for much longer, inflicting disproportionate harm on the most economically vulnerable.
This also means that the recent calls to offset inflation with subsidies for gas, housing, child care, and more will require borrowed money. Since fiscal largesse is the source of the problem, and since these efforts make the affected markets more inefficient, the approach raises the risk of a great stagnation spiral.”
“Conflict over President Joe Biden’s immigration policy is complicating passage of a $10 billion coronavirus bill before a two-week congressional recess.
Just a day after Republican Sen. Mitt Romney and Majority Leader Chuck Schumer announced a deal on billions for therapeutics, vaccines and testing, GOP senators threw in a wrench that could mean Congress will break with nothing. Senate Republicans say they want a vote on an amendment that would keep in place the Title 42 border restrictions, which allows limits on immigration due to the pandemic. Without one, they say the bill can’t proceed.
Senate Minority Leader Mitch McConnell told reporters Tuesday that “there’s going to have to be an amendment on Title 42 in order to move the bill.” Without agreement among all 100 senators, the Senate will be unable to take up and quickly move the bill this week.”
…
“The impasse could stall for weeks what Biden called much-needed coronavirus aid, unless senators can reach a deal before they plan to leave on Thursday or Friday. Without a breakthrough, the aid won’t be approved until late April or perhaps May. Republicans blocked a vote advance the bill on Tuesday, though Schumer can quickly bring it back up if there’s a deal on amendments.”
…
“Democrats already think they’ve conceded plenty to the Republicans after Monday’s bipartisan agreement left out global vaccine funding. So there’s not a ton of enthusiasm for giving Republicans their immigration vote.”
“the latest CR means that government agencies are still operating on a budget from December 2020. Not only is that budget insufficient to meet the funding needs of major portions of the government, such as the Defense and Transportation departments, but the use of the CR prevents the implementation of new programs from legislation Congress has already passed, like the infrastructure bill. Without individual appropriations bills or an omnibus bill that accounts for all of the programs and funding needed for different agencies, the government can’t get started on a number of major projects despite the clear need for infrastructure upgrades and bipartisan support for the legislation.”
“combined with previous coronavirus response bills and spending packages, the federal government has now spent almost $5 trillion addressing the pandemic”
…
“It’s not clear yet where all this money will go — states have an enormous amount of leeway as to how they’ll spend it and until 2026 to do so. (In total, $155 billion went out to states in 2021, with the rest due to be distributed later this year.) Most states have used the windfall of cash to address the budget problems caused by the economic downturn following the pandemic and to address the inequities thrown into sharp relief during the past two years. But while there are broad commonalities in how states have spent the money, it’s also true that how relief from the pandemic is defined varies widely — not necessarily across partisan lines but in ways that are still shaped by local conditions and ideology.”
…
“Almost every state that has allocated money so far has spent some on broadband, water and sewer infrastructure”
…
“Infrastructure has also been a big priority for states like Florida, which is spending money on highways and other transportation projects that had been long-planned but unfinished. Lazere said some of the need for infrastructure goes all the way back to the Great Recession, which began in 2007, and the long, slow recovery that followed. “These were areas of need that had not been addressed, [for which] there hadn’t been a dedicated state or federal funding source, so the rescue plan gave them the opportunity to tackle these problems that had been around for a long time,” he said.
Additionally, because the funds are a large, one-time payment, with no expectation that they’ll continue into the future, it encourages spending on infrastructure.
“It really starts with states doing that analysis, to be able to know what’s affordable over the long-term and what’s not,” said Josh Goodman, who is part of The Pew Charitable Trusts’s state fiscal health project.”
…
“In Alabama, $400 million will be used for building two new prisons.”
…
“the state has been under a court order to improve mental health care in its prisons since 2017, and advocates of the new law say using the recovery funds to build a new prison will address those problems, as well as overcrowding and inadequate staffing. They also say the new facilities will improve the overall health care and mental health care available to incarcerated individuals.”
…
“In more liberal states and localities, lawmakers are pursuing new financial assistance programs for local families. One idea that has picked up steam is funding guaranteed income pilot programs, with eligible residents receiving between $500 and $1,000 in cash assistance monthly. Support for these programs has been growing across the ideological spectrum, especially in the last few years.”
“In New York, where I live, real per-pupil revenue has increased by a mind-boggling 68 percent between 2002 and 2019. Public schools in the Empire State are now shelling out more than $30,000 per kid. That’s more than double the national average, and it doesn’t even include the $16 billion extra that New York’s system got in combined federal and state COVID-19 relief funding.
Yet New York’s public schools are still as terrible as the Mets, the Jets, and the Giants, with only a third or fewer of students up to grade level in eighth grade reading and math, according to their scores on the National Assessment of Educational Progress (NAEP), widely considered the gold standard for judging school outcomes. Those scores aren’t much different than they were 20 years ago.
In fact, $30,000 a year puts the lie to the argument pushed by unions and progressives that more money will fix schools. More money hasn’t helped the rest of the country boost their scores either. According to NAEP, whatever minor improvements in reading and math that were made for students ages 9 and 13 since the early 1970s have flattened since the early 2000s. We’re paying more for the same results.
None of this is a mystery. The connection between bigger spending and good outcomes is weak at best, whether we’re talking about comparisons among U.S. states or international ones.”
“With American consumers spending freely and many supply chains still snarled, year-over-year inflation may have notched yet another four-decade high in January.
The factors that have accelerated prices since last spring remain largely in place: Wages are rising at the fastest pace in at least 20 years. Ports and warehouses are overwhelmed, with hundreds of workers at the ports of Los Angeles and Long Beach, the nation’s busiest, out sick last month. Many products and parts remain in short supply as a result.
And reports indicate that the expiration of stimulus checks and other government aid has yet to slow Americans’ appetite for shopping.”
“The US national security establishment sees China as the most urgent threat of the moment, while the entrenched interests of the arms industry endure.
Put another way, although the US is no longer in Afghanistan, taxpayers continue to pay for the American military’s massive global presence. Absent a fundamental rethinking of how the US sees national security and the role the military plays in foreign policy, big cuts are unlikely.”
…
“Congress didn’t think that Biden had committed enough to combatting China in his original defense budget request, so lawmakers added some $25 billion in all.”
“Some of the causes are fairly self-evident: Entering the third year of the Covid-19 pandemic, the US — and much of the rest of the world — is grappling with a supply chain crisis. That means most goods, from game consoles to oranges, are more difficult to get to store shelves for one reason or another, whether it’s a lack of critical tech components or a backup at ports due to labor shortages. But US consumers simply haven’t stopped buying, and that demand-supply disjunction has caused record inflation.
Some economists, as well as President Joe Biden, take the view that the pandemic — and the pandemic-snarled supply chain — are the primary culprits, and inflation will ease as the US keeps combating the pandemic and implements supply-chain fixes. On Friday, according to CNN’s Kaitlan Collins, Biden told reporters that “the reason for inflation is that we have a supply chain problem that is really severe.”
Others, though, are concerned the problem is bigger than that. Former Treasury Secretary Larry Summers, for example, has also pointed to government spending as a reason for increased inflation, and believes it’s far from a bump in the road.”
…
“lockdowns and being stuck at home — unable to travel or go to restaurants, bars, and live events — have shifted what Americans are spending their money on. Less money spent on travel or experiences, combined with stimulus funds, has driven many Americans to buy more consumer goods. That, combined with supply chain problems decades in the making and exacerbated by the pandemic, has led to the current, precipitous rise in inflation.”
…
“While the US has spent trillions in pandemic relief, however, inflation is also occurring elsewhere in the world, where governments have taken different approaches to dealing with the fallout from the pandemic — suggesting that government spending doesn’t tell the whole story.”
…
“While the Biden administration is doing what it can to fix supply chain issues and drive down rising gas prices, most of the tools to address inflation are in the hands of the Federal Reserve.”
…
“One way the Fed plans to cool the economy is “tapering” — gradually decreasing the $120 billion it spends per month on government-backed bonds, which has injected money into the financial markets during the pandemic. In November, Fed Chair Jerome Powell announced the central bank would reduce that amount by $15 billion each month. The purchasing program is supposed to end halfway through 2022, but as the New York Times reported in early December, it could finish more quickly as the Fed attempts to reduce inflation.
“At this point, the economy is very strong, and inflationary pressures are high,” Powell said in late November. “It is therefore appropriate in my view to consider wrapping up the taper of our asset purchases, which we actually announced at our November meeting, perhaps a few months sooner.”
Along with that could also come interest rate hikes, although the Fed has not announced specific plans to do so.”
…
“Beyond monetary policy, though, the other massive piece of the puzzle is the supply chain — and that’s something politicians and policymakers have much less control over. Biden has attempted to ease supply chain woes by running the Port of Los Angeles 24 hours a day, clearing the docks so goods don’t wait for days on cargo ships stranded in the water. And the release of 50 million barrels of oil from the US Strategic Petroleum Reserve last month was geared toward reducing gas prices, which have already begun to fall.
Most likely, however, the supply chain will remain snarled for the foreseeable future — keeping inflation higher than we’re used to — and policymakers will have to react to that reality.”