Day: February 26, 2009

Military Budget Under The Knife?

When Obama was elected president I wondered if the mushrooming economic crisis would effect the massive military budget that seems to grow no matter how bad the economy gets.  My question is sorta answered….but we will see.

Hi-tech fighter aircraft, new warships and missile defense projects are all potential targets for big cuts in the US defense budget, as the American military faces a new era of limits under President Barack Obama.

With a mushrooming budget deficit of more than a trillion dollars, the new administration has signaled it hopes to scale back military spending partly through a planned reduction of troops in Iraq and by taking the axe to big ticket weapons programs.

A list of candidates for possible cutbacks drawn up by the Pentagon includes more Navy destroyers built by General Dynamics, fighter jets including Lockheed Martin and Boeing’s F-22 Raptors and carrier-based Super Hornets, a digital radio system for all the armed services and missile defense weaponry for Poland and the Czech Republic.

Gates has already singled out the F-22 Raptor fighters, which cost about 350 million dollars each, for potential cutbacks.

Military analysts have also questioned the need for more Navy aircraft carriers and a computer-linked network of Army vehicles, known as Future Combat Systems, which has faced criticism.

On the political left, Obama has already been accused of failing to rein in the vast Pentagon budget that represents nearly half of the world’s military spending.

“The Barack Obama administration is continuing the neo-conservative agenda of US military domination of the world — albeit with perhaps with a kinder-gentler face,” said Peter Phillips, a professor at Sonoma State University and director of Project Censored.

For decades, the military budget was been sacred and untouchable…maybe those days are coming to an end.

To Reduce The Federal Deficit By 2013

It has been several days since this statement was made by the Obama Admin and I have thought about it and thought about it……

President Barack Obama plans to cut the U.S. budget deficit to $533 billion by the end of his first term by increasing taxes on the wealthy and cutting spending for the war in Iraq, according to an administration official.

Obama wants to reduce the deficit because he’s concerned that over time, federal borrowing will make it harder for the U.S. economy to grow and create jobs, said the official, speaking on the condition of anonymity. The deficit Obama inherited on taking office last month was $1.3 trillion. The administration next week is to release an overview of its budget proposal for the 2010 fiscal year, which begins Oct. 1.

To increase revenue, Obama will propose taxing the investment income of hedge-fund and private-equity partners at ordinary tax rates, which are now as high as 35 percent and may rise to 39.6 percent under the administration’s plan, the New York Times reported today. They are currently taxed at the capital-gains rate of as much as 15 percent.

The $1.3 trillion deficit Obama inherited equals 9.2 percent of gross domestic product, said the administration official. The administration’s budget proposal cuts the deficit to 3 percent of GDP by 2013, at the end of Obama’s first term.

Most of the savings will be realized from winding down the war in Iraq as well as increased revenue from Americans making more than $250,000 a year, said the official. The Times said Obama will propose letting President George W. Bush’s tax cuts for the wealthy lapse in 2010.

You may ask how do you spend trillions and cut the deficit by 50%…..now there is a tap dance I want to watch.  He, Obama, has essentially made a promise….if it is not kept then it will be great ammo for the opponents in the next presidential election.

And You Had Thought You Had Heard It All

Think again!  I recall many years ago about an optometrists that had women take off their shirts while having an eye examine……and then there was the doctor that no matter what you symptoms were wanted your to disrobe….but really this is really rich stuff…..

The attorney for a Woodland dentist told jurors that his client massaged women’s chests as part of a medical treatment.

Defense attorney Michael Rothschild told the six-man, six-woman Yolo County jury that Mark Anderson was treating his female clients for temporomandibular disorder, or TMD. The attorney says the condition affects the muscles of the upper body.

Anderson faces 19 felony charges for skin-to-skin contact and one misdemeanor for touching a patient’s breasts over her clothing. The incidents occurred between February 2005 and his arrest in August 2007 and brought complaints from 14 women.

Ever notice that we seldom hear about a gynecologist doing stuff like this?  I wonder why?  (that is a rhetorical question, btw)

The Internet made him do it!

Geithner’s Bank “Stress Test”

On Feb. 25 regulators laid out details on how they will run the “stress tests” that Treasury Secretary Timothy F. Geithner has promised on the biggest banks. Now those tests, designed to judge whether the banks have the capital to keep lending and absorb losses in a severe recession, face an exam of their own.

Much of the credibility of Geithner’s struggling bank bailout program hinges on what Treasury does with the test results. Many investors believe the banking system is drastically undercapitalized. While no one expects regulators to declare the money center banks insolvent, they are watching to see whether Geithner will allow the weakest of the examined banks to fail. “If everyone passes the test, it won’t provide [investors] any comfort,” says Andy Laperriere, a Washington-based policy analyst with the research firm International Strategy & Investment Group.

Regulators say they plan on more rigorous, more forward-looking versions of the computer simulations that the banks themselves have conducted to project how their capital would hold up through a variety of worst-case scenarios. While the banks’ own tests often focused narrowly on issues such as interest rates, inspectors will consider two other prospects. First, they’ll see what would happen to loan defaults and bank revenues if GDP falls by 2% this year and grows 2.1% in 2010, which is the consensus forecast. Then they’ll look at what would happen should things get dire: if GDP falls 3.3% in 2009, say, and remains flat after that. The feds are projecting home prices will slide 14% this year, and will look at the impact of unemployment at 8% or even 10%. Regulators may also be more skeptical than the banks about the impact of a prolonged recession on the values of mortgage-backed securities, derivatives, and other assets.

But it looks like flunking out is not in the cards. Speaking before Congress on Feb. 24, Fed Chairman Ben Bernanke said “the outcome of the stress test is not going to be pass or fail.” A senior Administration official adds, “There is no explicit cap on the amount of capital we will provide.” Investors are worried. “It’s like a test you get to do again if you didn’t do well,” says Donald J. Rismiller, chief economist of institutional broker Strategas Research Partners. Adds Petrou of Federal Financial Analytics: “The fear is that the tests will simply set the price tag for how much more taxpayers have to put in.”

If you are a regular reader then you know what I am going to say on this point……The Treasury is trying to create liquidity……but what good will that do when there is no demand?

Do you realize that with all the cash that we are pumping into banks……if it had been given to Main Street and mortgages had been paid off……This whole recession thing would not been hurting as badly as it is know…..Washington is still chasing the Wall Street biggies for the hand game…..Main Street keeps getting deeper and deeper into a hole of the government’s making.