Continuing wills for the United States?

July 28, 2011

The theatrics in Congress concerning the debt ceiling, now in their seventh month, have sent increasingly strong shock waves throughout the U.S. and global financial systems. The debt ceiling is the legislatively-imposed limit for the nation to issue debt to fund its activities. It’s been stalled at the same level of $14.3 trillion since May 16. The U.S. Treasury has been scrambling to find extra monies, including borrowing internally from the federal government workers’ pension plans, so that they can continue to pay the nation’s obligations. They say the cash drawer is near empty.

What would a debt-limit crisis cost the states?

July 27, 2011

Thanks to Jordan Eizenga at the Center for American Progress, you can see some scenarios of the impact of the halt in payments to states if the debt ceiling is not raised. Jordan says:

The growing gap

July 26, 2011

The debate between President Obama and Republicans in Congress is getting more and more confusing. The graph above might help a little in understanding what the basis for the argument is. There is a large and growing gap between revenues and outlays. The deficit, or the difference between what comes in and what is paid out, is funded by selling U.S. Treasury bonds. We have reached the upper bound of what we can issue unless the Congress increases the debt limit. This has repercussions everywhere, including states.  Reuters has an excellent overview of the effect on the states since they rely on the federal government for a significant portion of their funding.

Infrastructure shuffle

July 25, 2011

Once the Congress and the Obama administration finish their negotiations on the debt ceiling, attention will turn to plans for reducing unemployment. The lack of jobs for Americans is the most crippling element of the recession. There seems to be a growing bipartisan consensus for the federal government to alleviate this problem through the establishment of an “infrastructure bank.” U.S. Senator Kerry has introduced Senate Resolution 652 to create the American Infrastructure Financing Authority. Here is what the legislation says:

“Unrelenting rigidity”

July 7, 2011

“Unrelenting rigidity”

It feels as though American politics has become a war. The battle is not about civil rights or women’s suffrage; it’s a war about how large a role the government should play in the redistribution of income and the support of the people. There is plenty of room to disagree on these issues.

The infrastructure bank as political cover

June 23, 2011

If you have been around Washington much, you know that a lot of what happens is often kabuki. What may appear to be a geisha girl coyly teasing a samurai is really a young man with heavy make-up and mincing steps. It’s beautiful deception.

Standardizing AAA

June 22, 2011

For many years, a AA-rated municipal bond did not have the same risk of default as a AA-rated corporate bond. In fact, the corporate bond was about 6 times more likely to default.

Muni sweeps: Employment slightly better

June 20, 2011

We are making some headway on unemployment although some states still have substantial problems. For the larger, original version from Calculated Risk Blog click here.

Auctioning off the infrastructure

June 17, 2011

Fiscally-stressed municipalities have leased roads, airports and statehouses to private entities. I’ve never seen a good compendium of how these privatizations worked for various stakeholders. But it is fair to assume that private investors are attracted because there are ways to increase margins and make profits. A 2008 New York Times article identified some of the approaches used by investors:

Muni sweeps: Taxes are the fuel for public sphere

June 13, 2011

Taxes are the fuel for the government. Without taxation the state withers. Our governments have taken on so many responsibilities but have become starved for fuel. There is much debate on how much we as a country should spend on entitlements and defense, but often these arguments are made on the premise that the United States has higher taxes than other nations.