It’s the Interest Rates, Stupid

In terms of our national debt, liberals run the gamut from thinking it’s a problem in the future but not now, to it’s never a problem ever.  Of course the practical aspects in terms of policy lead to the same thing:  Keep on spending baby!  Even the liberals who feign deep concern over the debt will only provide lip service to the idea of doing something about it.  And really, what choice do they have?  If you’re a liberal, everything that is important to you about your political ideology and wishes for policies have to assume that a country can keep on spending and running deficits forever.  That leads to the eternal problem for liberals: cognitive dissonance. Their entire ideology is based on the false twin assumptions that money is no object and everyone can get more out of the welfare state than they put into it.  Best not to think about it.

A few weeks ago, we passed the 16 trillion mark in national debt.  Congratulations to President Obama for that!  Whether he likes it or not, the debt will be one of his administrations’s enduring legacies.  But even with such massive amounts of debt, we seem to be humming along.  In fact, believe it or not, we are actually paying less to service the debt now, than we were in 2000.

Currently, interest on the debt is 224.8 billion dollars for 2012.  That’s about 6% of the budget on a debt of almost 16 Trillion dollars. Not too bad.  Now in 2000, interest was 12% of the budget; double the percentage of the current budget.  However the amount of interest we were paying that year was 215.2 billion dollars.  Just a little less than what we are paying now, even though the debt at that time was about 5 trillion dollars.  So how is it that we are paying almost the same in interest now when the debt is 3 times as much?

Our interest rates.

10 year Treasury bond yields in January 2000 were 6.66%.  AS of January 2012 they were at 1.97%. Those are interest rates at historic lows.  The chart I was looking at went back to 1953 and interest rates now are at the lowest rate they’ve been since then.  If we were paying the same interest now as we were paying in 2000 our payment on the interest on our debt for this year would be over 700 billion dollars.    That’s a pretty large amount of money to spend every year in which you get nothing out of it.

Although the average Treasury interest rates since 1900 is 4.9%, we’ve had our interest rates run the gamut.  For the period of November 1979, to October 1985, except for one month interest rates stayed above 10%, reaching a high of 15.3%.

Interest rates are the real time bomb of our debt crisis; just ask the Greeks (paying 24% on their bonds).  Under the conservative CBO Baseline interest on the debt exceeds defense costs in 2019.  Of course, the CBO’s predictions on interest rates are no better than mine, that is to say, crappy.  There are too many factors involved that goes in to interest rates.  But I don’t see how we can avoid the inevitability of Treasury bond interest rates returning to the normal 4% to 6 % range.  In fact, interest rates returning to these levels would instantly add 4.9 Trillion to our national debt.

Or higher.  They’ve been higher before, and with the unprecedented amount of monetary expansion we’ve done in the past few years, eventually they’ll have an effect on our inflation rate that even government statistics won’t be able to hide.

So… if you think interest rates are going to continue to stay at these historic lows, spend away.  I can’t predict when interest rates are going to start rising again.  If I could, I would be posting this from my own Private Island.  Or Idaho.  But in any case I would be really rich.   However I am sure that interest rates will rise again at some point.  Meanwhile, the debt gets higher.  We are adding a trillion dollars plus of new debt to our deficit every year.  We have to service that debt.

There are things we could do to mitigate this situation.  We have a great deal of intergovernmental loans that could be rolled over into 50 or 100 year bonds, locking in these historically low interest rates, however The Treasury Secretary doesn’t seem to want to do anything that will make our debt situation look worse, even though in the long run it would stabilize our long term debt situation.  Of course, if you haven’t noticed, this administration isn’t concerned with the long term.

We’ve seen other nations hit the debt wall, and we’ve seen the economic havoc that it can cause, but forward we go, spending away as if there is no tomorrow.  However tomorrow does eventually come, and so will these higher interest rates.

And our comeuppance.

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How Much Is Media Bias Worth?

Although the media consensus was that Obama won the 2nd debate “on points”, and the polling on who won seems to bear that out (Gallup Obama win 51%, Romney win 38%), he hasn’t had the big bounce back in the polls that one would expect.  With the extra help he had from the moderator from DNC, err… I mean, CNN, Candy Crowley, you would expect a rebound to bring the polls back to something similar to what they were before Romney’s big first debate win.  But it hasn’t happened.

HEMPSTEAD, NY - OCTOBER 16:  U.S. President Ba...

HEMPSTEAD, NY – OCTOBER 16: U.S. President Barack Obama (R) speaks as Republican presidential candidate Mitt Romney (L) listens and moderator Candy Crowley (C) plots to help President Obama (Image credit: Getty Images via @daylife)

Why not?

In the days prior to the first debate, Gallup showed Obama at 50% and Romney at 45%, a five point advantage.  In the days after the first debate, the race had shifted substantially to dead even; Obama and Romney both at 47%.    After the second debate; the one that Obama won?  The Rasmussen Daily Tracking Poll for Saturday the 20th shows Romney 49% and Obama 48%.  In other words, Obama didn’t benefit from his win.

There have been a couple of theories as to why Romney was able to make up such ground on the strength of one debate performance.  One is that Romney just looked more Alpha next to Obama on stage, helping Romney close the gender gapamong women voters.  Another is that this was the first opportunity much of the country has had to see Romney, and surprisingly, they liked what they saw.  Considering that Romney has been the prospective nominee for most of the year, how is it that just now, the American people are getting their first unfiltered look at the Presidential nominee mere weeks before the actual election?  Particularly with the amount of media attention shown on this race?

As I predicted back in February, this was going to be a campaign between the Republicans against the Democrats and the mainstream media working together.  That is a tough combination to beat, but from the moderating in the Republican Primaries to the moderating in the second debate, the MSM has abused the position of power they hold in our society to take sides in this political contest.  It’s hard to draw another conclusion when during the 2nd debate President Obama made reference to the moderator about a transcript of a speech he had made that the moderator just happened to have with her at the moderator podium. How would he know she had a copy with her?  And why, of all the data and information that she would have, would it include that particular speech?  Curious indeed.

Romney’s coverage in the media has consisted of Democratic attacks and then pundits sitting around and discussing those attack ads.  That was the bulk of the political coverage over the past few months.  With that sort of coverage model, how is the public ever going to be able to draw informed conclusions on the candidates?  So when the public actually got to see Mitt Romney for the first time, in a 90 minute unfiltered debate, he didn’t appear at all to be the image that had been carefully crafted of him by the media.  He didn’t seem to be a racist, sexist, homophobe, or a cross between Mr. Burns from The Simpsons, and Mr. Potter from, It’s a Wonderful Life.  Instead they saw a serious competent businessman, not a murderer or tax evader.

That wide divergence of perception explains the polls.  Even if Obama has another win “on points” in the 3rd debate on Monday, I don’t see the race changing based on the debate.  The perception of Romney has already changed.

So to my original question, how much is media bias worth?  Since Romney was 5 points down before the first debate and the race is neck and neck now, that’s your answer.

Five percentage points.

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If Christopher Nolan Did Green Arrow…

…you might get something very similar to the CW’s new Arrow.  It’s not surprising that the new show should take a similar path.  Christopher Nolan’s interpretation of Batman was hugely successful, both critically, and financially.  Batman, the Frank Miller inspired version; the obsessed, little-bit psychotic vigilante, fighting his own demons as much as bad guys, translated well onto the screen.  So if you were looking for another DC superhero property to give the same treatment to, there probably isn’t a better choice than the Green Arrow.

The show looks good on the screen, although the foyer of the Queen mansion looks suspiciously like the one in Lex Luthor’s transplanted castle in Smallville.  As much as I enjoy the miracle of CGI and its ability to bring anything that you can imagine to the screen, there is nothing like good old fashioned stunts.  The pilot has lead actor Stephen Amell demonstrating some fairly impressive parkour skills and in fact Amell did train in parkour to prepare for this role, although many of the stunts are done by stunt doubles.  It’s a smooth enough transition that I can’t tell the difference though.  I was watching and it looked like Amell did all of the parkour stunts.

As originally portrayed in the comics, Oliver Queen was a millionaire playboy who also dabbled in crime fighting as the Green Arrow.  He was an expert archer, acquiring those skills while stranded on an island.  His stock in trade was trick arrows that could perform assorted functions.  He was Batman, without the compelling reason to be a Batman.  Eventually the comics provided a reason, having Queen lose his fortune and discovering the living is a lot harder without lots of money to fall back on.  Green Arrow becomes a crusader for social justice as well as the old fashioned kind.

In Arrow, the CW takes those basics and tries to re-imagine a much grittier, edgier version; a Green Arrow to match the edgier Dark Knight version of Batman.  As the pilot episode opens, Oliver Queen is rescued from his island prison after being missing and presumed dead for 5 years.  However this Oliver has a specific agenda, that’s partially revealed in flashbacks to the sinking of his yacht and the death of his father.  If you’ve not seen pilot, I won’t spoil it other than to say the death of his father gives him a very specific list of wrongs to be righted.

This Oliver Queen is rather morally ambiguous.  Is he a good guy?  It’s not so clear cut, and it looks like the show intends to draw that out.  The outing he was on when his yacht sank has him bringing along his then current girlfriend’s sister for a little cheat-o-rama. That girlfriend, Laurel Lance, despises him for her sister’s death although their futures may be linked since careful comic book readers will note that Laurel Lance is the future Black Canary, Green Arrow’s long time girlfriend in the comics.  But cheating on a girlfriend isn’t that edgy or gritty; killing a kidnapper who is helpless is.

In most superhero sagas, guns are never used and killing is strictly forbidden.  However for this show, we have a superhero that does kill, not in self defense, but to protect his secrets.  That ups the ante in the gritty and edgy department.  Without the normal limitations of the superhero genre, who knows where this show will go?

Weaved into the plot is more potential “drama” than you can shake a stick at.  His kid sister is using drugs, there is a new stepfather, and mommy dearest isn’t exactly the June Cleaver type; she has secrets of her own.  Not to mention the local police detective is the father of both Laurel Lance and the sister who died when the Queen yacht sank.  Guess who he blames for his daughter’s death?

And for that, I’m enthusiastic about this take on the Green Arrow story.  Yes, I realize there is the potential to go too far; turning this version of Green Arrow from less like an edgy Batman and more like a rich Dexter.  That would be a mistake, and hopefully the producers will put the brakes on any mass murder spree by a DC superhero.

Still, I like what I see so far and am willing to give this show some long rope to see where it goes.

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The Talking Points Debate

When even the MSNBC hosts agree that Romney won last night’s debate with President Obama, and Chris Matthews looked like he had been crying off camera, then yeah, I guess Romney won.  I admit I called this one wrong.  Not that I didn’t think Romney would do well, but I thought no matter how well he did the MSM would call it a tie at best.  I figured they could only call it for Romney if Obama totally screwed the pooch, Obama wasn’t quite that bad (no major gaffes) but I honestly didn’t expect Obama to do as poorly as he did.

Obama was clearly poorly served by his debate preparation team.  His habit of scowling when hearing things he doesn’t like is well known, and he knew he was going to hear things he didn’t like so he should have been prepared for that.  Also his annoying habit of looking down and not looking at his opponent… come on guys, that’s basic freshman Speech class stuff!  All this from someone who allegedly prepared more for these debates, “than any sitting President in the modern era.

Obama didn’t even bother to offer “the audience a sandwich.”

Even Jeff Greenfield, no fan of the right, said:

Yes, it wasn’t the best atmospherics for Obama to look down, purse his lips, appear distracted, while Romney was attentive, engaged, relaxed. But this was much more than atmospherics. This was about one candidate who came with a frame for the evening, and who was prepared to engage on every question; and another who, perhaps because of his documented faith in his own abilities, felt he could wing it with snatches of familiar verbiage.

One really feels the loss of the teleprompter.

But optics and atmospherics aside, the real difference is that Romney came to the debate armed with facts and familiarity with the issues.  Obama came with his talking points, such as the one about the tax break for shipping jobs overseas.

Obama: “But I also want to close those loopholes that are giving incentives for companies that are shipping jobs overseas. I want to provide tax breaks for companies that are investing here in the United States,”
“Right now, you can actually take a deduction for moving a plant overseas. I think most Americans would say that doesn’t make sense. And all that raises revenue.”

Romney: “Look, I’ve been in business for 25 years. I have no idea what you’re talking about. I maybe need to get a new accountant, but the idea that you get a break for shipping jobs overseas is simply not the case.” 

There is no tax deduction for moving businesses overseas.  Costs of business are deductible, like closing (or opening) manufacturing plants, but that isn’t a deduction that gives a special break to a company to move overseas.  However this has been a leftie talking point for years.  They listen to themselves repeat the same things over and over until they never doubt the truth of it.  Romney made Obama look like he had no idea what he was talking about, which was actually the case; Obama didn’t know what he was talking about.  Sorry lefties, there is no special tax break for outsourcing American jobs.

 The other issue was that Romney’s tax plan would raise the deficit 5 trillion and raise taxes on the middle class in order to give the rich a tax cut.  Once again, Obama relied on his dubious talking points only to be confronted by a Romney denial that his tax plan would raise taxes on the middle class, lower taxes on the rich, and increase the deficit by 5 trillion dollars.  I know a little something about this issue since I demolished a claim made by the Tax Policy Center in August that Romney’s tax plan couldn’t work as planned.  You can get the details here, however the gist is:

Romney’s plan is revenue neutral, so there is no, I repeat, no cut in tax revenues.

Even though rates are lowered, the deductions and credits are removed to make up the difference.  This makes for a simpler tax code.

The Tax Policy Center admitted that the plan they actually scored, was only similar to Romney’s plans, and they had to make up the details.

The Tax Policy Center counts the 20% cuts in tax rates on top of the Bush tax cuts, which will no longer be in force when Romney would be President.

There were probably more talking point moments by Obama, but these were the big ones.  Meanwhile, over at MSNBC, the gang was apoplectic about Obama not using even more talking points!

Although one debate can probably be dismissed as a bump in the road, I hope that the President does take Chris Matthews advice and start getting his talking points from MSNBC.  Obama armed with even more inaccurate talking points would make the rest of the debates must see TV right up to the election.

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