Americans shopped on “Black Friday” like there’s no tomorrow

Shop till you drop!

MSM organs such as CNBC exult that this Black Friday, the day after Thanksgiving, Americans went on a shopping binge, pushing retail sales to a record $11.4 billion, an increase of a whopping 6.6% from last year!

Over the Thanksgiving holiday weekend, 226 million Americans — half of the U.S. population! — went shopping, racking up a record $52.4 billion in sales!

Alas, neither the average income nor savings rate of Americans commensurately increased by the same 6.6% rate. On the contrary, Americans’ personal savings rate recently dropped to pre-Great Recession level, from a 2011 high of 5.3% in June to 3.6% in September. At the same time, the average U.S. income was just barely above unchanged at 0.1%, the lowest number since the Great Recession began back in December 2007.

All of which means that as far as the economy is concerned, the consumer is just getting worse and worse off. To make matters worse, our assets are greatly reduced because our homes are getting cheaper by the day.

Here are some other facts and figures about Black Friday which  are sobering:

• Revolving consumer credit, which excludes cars and colleges, continues to contract.

• There’s more self-gifting than last year: Mike Thielmann, group executive vice president at J.C. Penney, noticed that while “Americans are still worried about jobs, still worried about the economy,” shoppers were buying gifts and for themselves.

• There was more purchasing in discretionary categories: 51.4% of spending went to clothing and accessories. Thielmann said that jewelry “was selling well.”

• Men outshopped and outspent women.

In other words, the portrait of Black Friday 2011 is that of a people who are self-indulgent and in deep denial about their finances.

The average American hasn’t made more money this year, is saving less, but spending more. Although a new poll by CBS News shows 50% of Americans are concerned they can’t afford Christmas presents this year, Americans still managed to buy gifts for themselves (“self-gifting”) and buying items that are non-essential.

Tyler Durden of ZeroHedge says that what really caught his attention was that this year’s black Friday weekend’s sales broke records, with the Black Friday weekend in 2008 being “second best.” But Thanksgiving 2008 happened just after a nearly 400 point plunge in the S&P in two months, which leads him to wonder if this Black Friday’s record buying will prove to be the harbinger of a second Great Recession.

~Eowyn

The Devil is in the Details of Obama’s Debt Deal

The fine print of the hastily-put-together debt ceiling bill passed by Congress and signed into law by Obama yesterday is still hazy. But the details that are emerging are worrisome. Here are 3 bad things about the Budget Control Act of 2011:

No. 1: debt ceiling raised by $2+ trillion

The U.S. federal government’s debt limit is immediately increased $2.2 to 2.4 trillion, the biggest explosion of debt in American history. Sen. Rand Paul (R-Kentucky), who voted against the bill, says the bill will add another $7 trillion to our national debt.

By this Christmas, 2011, US national debt will be $15 trillion — a sum that exceeds 20% of the entire world’s combined GDP (Gross Domestic Product) and 100% of America’s GDP. This is the same 100%+ debt-to-GDP ratio of the bankrupt European PIIGS (Portugal, Ireland, Italy, Greece, Spain). The only difference between the USA and the PIIGs is that there’ll be no European Union Germany to bail us out.

No. 2: Cuts to defense

The law calls for $917 billion in spending cuts over a span of 10 years. But in contrast to the Boehner-GOP proposal, the cuts are no longer restricted to non-defense discretionary spending!

Discretionary spending is that part of the U.S. federal budget that includes everything that is not in the mandatory budget. The latter, mandatory budget, refers to entitlement programs required by law to provide certain benefits, such as Social Security and Medicare.

Discretionary spending in FY 2010 was $1.3 trillion, or 38% of total spending. More than half ($815 billion) was security spending, which includes the Department of Defense, overseas contingency programs and Homeland Security. Non-security spending was $491 billion, which was spent on such departments as Health and Human Services ($84 billion), Education ($64.3 billion), Housing and Urban Development ($42.8 billion) Justice ($27.6 billion), and Agriculture ($25 billion).

According to a Reuters article by Linda Stearn, August 2, 2011, almost all discretionary federal spending will face some cuts over the next 10 years, with defense spending taking a comparatively heavy hit of about $350 billion of the projected cuts.

No. 3: Super Committee can raise taxes & cut entitlements

More ominously still, the deal sets up a bipartisan 12-member congressional committee to find another $1.5 trillion in cuts. But the Super Committee is not restricted to just discretionary spending cuts! Instead, its menu is wide open and can include Social Security reductions or tax increases. If that committee fails to come up with at least $1.2 trillion in savings – or Congress doesn’t approve its recommendations by December 23 – automated cuts begin to get triggered. Those cuts would be deep, hitting Medicare and the military but sparing Social Security, Medicaid and a handful of other programs.

Remember the Republicans who voted for this bill. I’ll find out who they are and post their names in a post to come.

H/t beloved fellow Anon.

~Eowyn

John Boehner’s Voodoo Spending Cuts

Republican Speaker of the House John Boehner’s proposal to cut $3 trillion in spending is not what it appears to be.

A “trusted source” told Patriot Action Network that Boehner’s chief of staff admitted that the proposed cuts as rated by the Congressional Budget Office would come to only $29 billion between now and 2012.

But according to CNN’s Deirdre Walsh, the cuts in the first year are even less, amounting to a $24 billion reduction in non-defense discretionary spending. The way the Boehner proposal is structured, it will take more than 10 years for spending cuts of $1.2 trillion.

I looked into what “discretionary spending” means. This is what I found:

Discretionary spending is that part of the U.S. Federal Budget that includes everything that is not in the mandatory budget. The latter, mandatory budget, refers to entitlement programs required by law to provide certain benefits, such as Social Security and Medicare.

Discretionary spending in FY 2010 was $1.3 trillion, or 38% of total spending. More than half ($815 billion) was security spending, which includes the Department of Defense, overseas contingency programs and Homeland Security. Non-security spending was $491 billion, which was spent on such departments as Health and Human Services ($84 billion), Education ($64.3 billion), Housing and Urban Development ($42.8 billion) Justice ($27.6 billion), and Agriculture ($25 billion).

By my calculations, then, in FY 2010:

• Mandatory spending accounted for 62% of total spending.
• Discretionary spending accounted for 38% of total spending.
• Security discretionary spending was nearly 24% of total spending.
• Non-security discretionary spending was about 14% of total spending.

Boehner’s proposal to cut $24 billion in non-defense discretionary spending will come out of that 14% of total spending. But the news gets even worse. Boehner’s proposed cut of $24 billion is LESS THAN 5% of the total ($491 billion) non-security discretionary spending!!!!!

At this rate, our gargantuan official national debt of $14.3 trillion will just keep increasing. By this Christmas, 2011, US national debt will be $15 trillion — a figure that is more than 20% of the entire world’s combined GDP (Gross Domestic Product) and more than 100% of America’s GDP. This is the same 100%+ debt-to-GDP ratio of the bankrupt European PIIGS (Portugal, Ireland, Italy, Greece, Spain). See “Visualizing U.S. National Debt“.

Another flaw in the Boehner plan is that it will raise America’s national debt limit.

All of which prompted opposition from a large group of fiscal conservatives in the House, led by Ohio Republican Rep. Jim Jordan. “While I thank the Speaker for fighting for Republican principles, I cannot support the plan that was presented to House Republicans this afternoon,” Jordan said in a written statement.

By the way, the fans of Rep. Allen West should know that West is not among this group. Instead, West has sent a message giving Boehner his support.

The major problem House conservatives have with Boehner’s plan is that a central part of their “Cut, Cap, and Balance” plan — a requirement that Congress pass a balanced budget amendment before raising the debt ceiling – is not in Boehner’s bill. Boehner’s plan requires that both the House and Senate vote on an amendment before the end of the year, but doesn’t mandate that it must pass. Jordan and 38 other House Republicans have signed a pledge that they would not vote to raise the debt ceiling if it didn’t adhere to the principles in the “Cut, Cap, and Balance” bill that passed the House last week.

To send your e-mail to Mr. Boehner, click here.

Sign a petition that you are against any debt limit deal that doesn’t address the enormity of the fiscal challenges we face, here.

~Eowyn

We Are Screwed: Govt Mandatory Spending Will Exceed All Income in 2011

3 guesses who the dinosaurs are

The GOP campaign promise in 2010 midterm elections was to cut $100 billion from the feral gubmint’s bloated budget, as a way toward decreasing America’s super-gargantuan national debt of more than $14 TRILLION. The Demonrats, of course, are in a screaming-and-hair-pulling fit, opposed to any and all cuts.

House Republicans have passed two stopgap measures that achieve that level of cutting on a temporary basis. In lieu of bipartisan agreement on a longer-term spending plan, a two-week stopgap funding bill passed March 1 cut $4 billion from last year’s spending levels. A three-week extension, passed on Tuesday, cut $6 billion. Multiply those cuts out over an entire year, and House Republicans supposedly will hit their $100 billion mark.

But as Republicans gain ground in the fight over federal spending, a dispute already is simmering within the GOP’s ranks over just how aggressively to confront the White House and the Democratic Senate. A coalition of conservatives and tea partiers – led by Reps. Michele Bachmann (Minn.), Allen West (Fla.), Raul Labrador (Idaho), and Mike Pence (Ind.) – are pushing for more cuts and taking on Obama and the Demonrats, while Speaker John Boehner and GOP leaders are content with what they’ve achieved thus far in the House — achievements that have an uncertain future in a Senate in which Demonrats still have a majority.

Here’s the bad news:

Even if the Republicans, by some miracle, succeed in cutting not just the promised $100 billion, but all discretionary non-essential spending, the federal government’s project revenue income in 2011 will still be less than mandatory spending – required expenditure to which the government is obliged! In other words, we’d still be accumulating more debt!

There are two types of government spending:

1. Discretionary spending, which accounts for roughly one-third of all Federal spending, includes money for things like the Army, FBI, the Coast Guard, and highway projects. Congress explicitly determines how much to spend (or not spend) on these programs on an annual basis.
2. Mandatory spending accounts for two-thirds of all government spending. This kind of spending is authorized by permanent laws. It includes entitlements like Social Security, Medicare, and Food Stamps — programs through which individuals receive benefits based on their age, income, or other criteria. Spending levels in these areas are dictated by the number of people who sign up for these benefits, rather than by Congress.

Here’s what Jeffrey H. Anderson discovered, in his ”Mandatory Spending to Exceed all Federal Revenues — 50 Years Ahead of Schedule,” Weekly Standard, March 16, 2011:

We have now gotten to the point — as I noted yesterday — where if national defense, interstate highways, national parks, homeland security, and all other discretionary programs somehow became absolutely free, we’d still have a budget deficit. The White House Office of Management and Budget projects that in the current fiscal year (2011), mandatory spending alone will exceed all federal receipts. So even if we didn’t spend a single cent on discretionary programs, we still wouldn’t be able to balance our budget this year — let alone pay off any of the $14 trillion in debt that we have already accumulated.

Simply put: the (Dis)United States of America is broke.

We are so screwed….

~Eowyn