Morning Glory February 13th, 2018

Deficits Don’t Matter

President Trump’s budget was released yesterday and, as many people had predicted, it’s a big one

The plan would continue to markedly increase military spending and set aside money for a wall along the U.S.-Mexico border. It seeks to authorize $4.4 trillion in spending for 2019, up 10 percent from the amount of money the government spent in 2017.

The plan also calls for major cuts to Medicare, Medicaid, food stamps and other social programs — reductions that conservatives have long sought.

But even with these reductions, which add up to more than $3 trillion in cuts over 10 years, the proposal would not bring the budget into balance because of the lost tax revenue and higher spending on other programs. WaPo

This budget is enormous.  The proposal would increase spending by 10% in just 2 years.  On a 4 trillion dollar budget that is insane.  There are 3 big takeaways from this proposal

  1. The GOP is once again waving bye bye to any attempt to look like they care about spending and the national debt
  2. All the supposed cuts are pretty much DOA.  They’re either cuts to domestic spending that the new spending agreement actually increases or it’s Medicare cuts that no Republican or Democrat will touch.
  3. The White House straight up lied to us about the tax cuts “paying for themselves.”  WaPo highlights the White House’s projections for tax revenue “The White House even projects that tax receipts will be $200 billion lower in 2027 than forecast last year,”  I’m not saying we shouldn’t have done the tax cuts but the White House and the GOP shouldn’t have lied to us.  I know, wishful thinking…

Filing Day

We are officially one day closer to November 6th in North Carolina

Republican county commissioner Skip Watkins was the first in line at the New Hanover County Board of Elections to submit his name as the election filing season opened Monday.

Following Watkins was fellow incumbent Commissioner Rob Zapple, a Democrat; incumbent N.C. Rep. Deb Butler, D-New Hanover; Democrat Leslie Cohen, who is challenging N.C. Rep. Holly Grange, R-New Hanover; and Democrat Marcia Morgan, who is challenging N.C. Rep. Ted Davis, R-New Hanover. SN

The media is continuing to hype the narrative that 2018 is going to be the year of the Democrats.  However, recent polling from Meredith throws some cold water on that notion.  Not to mention, the fundraising hauls for 2017 favored the GOP across the board in southeastern North Carolina.  Only one candidate out raised their GOP counterpart and that was because they gave their campaign a 50,000 dollar loan…

Good Day on Wall Street

After two turbulent weeks the market opened with a much needed 400 point gain

U.S. stocks roared for a second consecutive session Monday as commodity prices stabilized, providing a respite for investors after two bruising weeks that pushed indexes from New York to Hong Kong into correction territory.

The S&P 500 and Dow Jones Industrial Average climbed out of the gate, marched steadily higher and never reversed course during the day. The S&P closed up 1.4% while the Dow gained 1.7%, but remain off 7.5% and 7.6% from their Jan. 26 highs. WSJ

This was a much needed day for many.  It not only starts the week off right but it strings to up days together which gave February it’s first two-day winning streak.  It’s also a good news for Trump who has hitched himself to the Stock Market for good or bad.  However, as Irwin Stelzer at the Weekly Standard points out it’s all about the bonds, not stocks…

Sooner or later, fundamentals rear their lovely heads, and the growing economy and robust corporate earnings justify the newer, less frothy share prices that were dependent on a forever indulgent Fed holding rates down. All fine. Unless . . .

Unless the share price decline has a feedback loop into the real economy. A decline in the value of their investments spooks consumers into cutting back on spending, higher interest rates discourage corporations from going forward with some planned projects, and millennials decide to remain in their parents’ basements rather than enter the housing market. It’s called a recession, which I suppose Trump would call “treason.” WS


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