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Statute

Economic Stimulus Package HA-20-1-08

By Tony Sanders

Introduction / Economic Growth Overview / Balance of Payments / Balanced Budget / Conclusion / Bibliography

Introduction

1. The federal government beat the three year $1 trillion account deficit in 2007 when a budget deficit of $150 to $205 billion and international trade deficit of $720-795 billion are less than a trillion dollars. However, economic growth in the first and fourth quarters of 2007 and beginning of 2008 was less than 1% for a 2007 with 2.5% economic growth. Inflation in 2007 was 4% and disposable personal income only increased an estimated 3%. No economic stimulus package would be complete without changing the name of the Bureau of Economic Analysis (BEA), to the Economic Statistics Program (ESP). The stimulus package will elicit the partnership of the States, to offset roughly 50% of the cost of unemployment insurance, food stamps, TANF and SCHIP while the federal government pays all of the disability insurance backlog a one time “no” to 50% of the DI trust fund solvency, for a federal budget deficit of -$225 billion that might be cut in half if Congress were truly dedicated to balancing the budget of the 111^th Congress (2009-2010), as negotiated by the Presidential candidates. The Democratic party has been given a $100 billion negotiation between tax rebates and cash assistance to people from the lower two quintiles. The Republican party has $50 billion for business subsidies to treat the mortgage crisis and inflation in the retail price of gasoline that rose 29% in 2007. For free, this essay could balance the federal budget and predict a growth rate of 0.5% in the first quarter if expectations for annual economic growth could moderate around 2% annually. Legislating a $150 billion economic stimulus package would probably keep economic growth over 1% but less than 2% in the first quarter, the second and third quarters might reach as high as 2.4% before the stimulus package is exhausted and GDP growth falls to 1.8% in the fourth quarter, for annual economic growth of around 2%, but would create a federal budget deficit of $75 billion that the budget cannot afford. Surplus funds from the balanced budget of the 111^th Congress shall sustain successful programs. This economic stimulus package (ESP) could be the ESP to begin all ESP for the $500 cost of this 80 hour week, at minimum wage.

2. The US economy was reported by the Department of Commerce and Bureau of Economic Analysis to have grown at an annually adjusted rate of 3.8% in the second quarter and 4.9% in the third quarter of 2007. In the fourth quarter economic growth fell off to an estimated rate of 1% making the average growth rate 2.5% in 2007. Inflation frequently reaches 4%. There is growing concern that the economy will fall into a recession this 2008. At the beginning of 2007, many economists put that chance of a recession at less than 1-in-3; now an increasing number says it has climbed to around 50-50 (Aversa 2008). The economy now ties with Iraq as the greatest fear of 20-21% of Americans. Democratic leaders have introduced an economic stimulus package of tax rebates, longer unemployment benefits and more food stamps (Fram 2008). The Labor Department's showed that hiring practically stalled in December, driving the nation's unemployment rate up to a two-year high of 5 percent (D’Innocenzio 2008). Heretofore, the labor market has been a source of stability in the macroeconomic situation, with relatively steady gains in wage and salary income providing households the wherewithal to support moderate growth in real consumption spending. Should the labor market deteriorate consumer spending would fall. The baseline outlook for real activity in 2008 has worsened and the downside risks to growth have become more pronounced. A number of factors, including higher oil prices, lower equity prices, seem likely to weigh on consumer spending (Bernanke 2008). The measures now being debated in Washington and on the campaign trail are - tax rebates, food stamps, added help for the unemployed and those facing sharply higher heating bills and, a move by the Federal Reserve to further cut interest rates. Banks, have so far acknowledged losses of some $100 billion and more large write-offs are coming (Goodman & Norris 2008).

2. Higher costs for energy and food last year pushed inflation up by the largest amount in 17 years, even though prices generally remained tame outside of those two areas. Meanwhile, industrial output was flat in December, more evidence of a significant slowdown in the economy. Consumer prices rose by 4.1 percent for all of 2007, up sharply from a 2.5 percent increase in 2006. The CPI report showed that the 4.1 percent increase in overall prices was the biggest since a 6.1 percent jump in prices in 1990. Energy costs rose by 17.4 percent this past year while food costs rose by 4.9 percent. Both were the biggest increases since 1990. Gasoline prices were up 29.6 percent, the biggest increase since they soared by 30.1 percent in 1999. The 2.4 percent rise in prices outside of food and energy was the smallest since a 2.2 percent rise in 2005. Clothing costs and the price of new cars actually fell for the year, both dropping by 0.3 percent, while airline fares, reflecting higher fuel costs, were up 10.6 percent and medical care, always one of the leading areas of price increases, rose by 5.2 percent for 2007. Workers' wages failed to keep up with the higher inflation. Average weekly earnings, after adjusting for inflation, dropped by 0.9 percent in 2007, the biggest setback since a 1.5 percent fall in 2005 (Crutsinger 2008). US GNI needs to increase faster than GDP. To compete with inflation investment must lead directly to income security.

3. The holiday season was disappointing. In early December the growth in the rate of spending by American Express’s 52 million cardholders, a generally affluent group of consumers, fell 3 percentage points, from 13 percent to 10 percent, the first slowdown since the 2001 recession. Sales in November-December were up a mere 2.2 percent, the weakest holiday period since 2002 when holiday sales rose 0.5 percent. The November-December pace was in line with the average for retailers' fiscal year, which begins in late January, but it is well below the 3.6 percent pace in the same year-ago period. Sales plunged by 11 percent at Kohl’s and 7.9 percent at Macy’s, compared with last year. Sales of sports gear and electronic gadgets particularly G.P.S. navigation devices and flat-panel television sets rose over the last three months indicating Americans can still purchase what they really want. The big exception is gasoline consumers are buying just as many gallons as ever, but paying more for them, forcing cutbacks in other purchases. Gasoline prices usually drop after the summer driving season, but this year they shot up, from $2.85 a gallon on average in September to $3.07 in December and $3.15 in the first week of January (Barbaro & Uchitelle 2008).

4. The best explanation for the drop in consumer confidence is the decline in personal savings rate caused by the inflation in oil prices. After declining from a high of 10% in 1985 and fluctuating in the vicinity of 2 percent from 1999 to 2004, after which time, the saving rate for Americans dropped sharply, and stood at negative 1-1/4 percent, on average, in April and May of 2007 (FRB 2007). Consumer spending accounts for 70 percent of the economy. The theory is that employment redistributes the wealth from the idle wealthy to the middle class and low-income people, who are more likely to spend it. Rising gasoline prices have caused a sharp slowdown in consumer spending, at every level of the American economy, from the working class to the wealthy. Consumer satisfaction with the economy has reached a 15-year low. Americans are not earning enough to afford the generalized inflation from oil prices. Food prices increased 4% May 2006-2007. Americans are finding themselves increasingly strapped for cash, and after several years with lessening credit are learning to budget. The Pew center reports surveys are showing one of the lowest levels of satisfaction with national conditions in any recent presidential election year. You have to go back to 1992 to get a lower number of people saying the national economy is excellent or good. The nation was recovering from recession that year. Consumer spending had contracted in two separate quarters in 1991, and while economic growth was gradually accelerating as Bill Clinton and George H. W. Bush sought the presidency, the Clinton camp famously posted a sign in its campaign war room proclaiming, “It’s the economy, stupid ”

5. Presidential candidates must compete to balance the budget for Congress, as a prerequisite for holding office. The hypothesis of most American voters, in the face of rising income inequality and recent record budget deficits, is that Democratic presidents have consistently higher economic growth and lower unemployment than Republican presidents. Under Democratic presidents, every income class did well but the poorest did best. The bottom 20% had average pretax income growth of 2.63% per year while the top 5% showed pretax income growth of 2.11% per year. Republicans were polar opposites. Not only was their overall performance worse than Democrats, but it was wildly tilted toward the well off. The bottom 20% saw pretax income growth of only .6% per year while the top 5% enjoyed pretax income growth of 2.09% per year. Strangely Republicans produce great economic growth for all income classes in election years, and that's all that voters remember. Economic performance during election years is however a mirror image. During election years Republicans produce better overall performance, which is especially stupendous for the well off. Democrats not only produce poor overall performance in election years, they produce disastrous performance for the well off, who actually have negative income growth. In other words, Republicans produce great economic growth for all income classes in election years, but that’s all (Drum 2006). Over the last century, the economy has been in a recession four times in the early part of a presidential election year, according to the National Bureau of Economic Research. In each of those years - 1920, 1932, 1960 and 1980 - the party of the incumbent president lost the election (Goodman & Norris 2008).

6. The liberal Democratic 110^th Congress elected in November of 2006 supports the theory that Democrats are better for the economy. The Democratic Congress raised the minimum wage for the first time in over a decade and liberated the United States from a record $1 trillion dollar account deficit for the first time in four years. The second session of the 110^th Congress will need to extend income security to the middle class and improve assistance for the poor. The Fair Minimum Wage Act of 2007, Pub.L. 110-28, Title VIII, signed into law on May 25, 2007, amends 29USC(8)§206 to increase the minimum wage from $5.15, over two years to $5.85 per hour 60 days after enactment July 24, 2007, to $6.55 on July 24, 2008 and to $7.25 on July 24, 2009. Assuming four, forty hour weeks, are worked every month this translates into a change in monthly earnings for minimum wage workers from $824 to $936 2007-08 to $1,048 2008-09 to $1,160 2009-10. Annually that means $9,888 to $11,232 in 2007 to $12,576 in 2008 to $13,920 after July 24, 2009. Economic progress must continue to the second session of the 110^th Congress to protect gains in income from inflation. There is concern that the Democratic Congress will not continue to enjoy economic success in the election year. The Senate must definitely confirm at least two Commissioners to regulate campaign finance so the Federal Election Commission would have a quorum to do business. The Congress has given the Federal Reserve a dual mandate to foster the objectives of price stability and maximum employment (Mishkin 2008).

7. Hospitals & Asylums statute upholds the dual mandate for price stability and maximum employment, in two references.

First, to sell US products at market prices. the Buy American Provisions under 24USC(4)§225h promote the Buy American Act of 1933 at 41USC(1)§10a that states, “Notwithstanding any other provision of law… only such…articles, materials, and supplies as have been mined or produced in the United States…shall be acquired for public use”. Government officials must use this leverage to negotiate with suppliers for reasonable prices, for all. The WTO 2007 Draft Text on Anti-dumping, subsidies and countervailing measures and fisheries subsidies clarifies, market subsidies are only legal when they are targeted to support assistance for research activities or to improve industrial safety except under the Agreement on Agriculture. Tax relief is a prohibited subsidy unless compensating for loss or injury to a force majeure. Market subsidies should foster employment in market research and safety to avoid manipulating the market with ill-advised subsidies.

Second, to maximize employment the Authority to Accept Certain Uncompensated Services under 24USC(10)§422 (d) the status of persons providing voluntary personal services or gratuitous services or receiving training, shall be considered to be an employee of the Federal Government only for purposes of compensation for work-related injuries or claims for damages or loss. The federal government must therefore extend the scope of the services accepted for employment so that voluntary personal services and gratuitous services do not injure a person to enjoy an income less than the hourly minimum wage at 29USC(8)§206. It is a widely respected fact that a great deal of our economic well-being is derived from the uncompensated services of caregivers (Eisler 2007). The government must respect the humble petitions of caregivers and market researchers and enforce the speedy award of reasonable compensation to people making less than $12,000 a year, to promote their freely chosen careers, representing the legitimate interests of the United States. Congress enforces a minimum wage of $1,000 a month at 24USC(3)§154 that defends against unlawful intrusion of the reserve and violations of rules and regulations.

8. Congress is responsible for balancing the budget under Art. 1 Section 7 and Art. 1 Section 9 Clause 7 of the US Constitution that states,

“No money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time”.

Strong revenues, together with spending restraint, are critical to reducing the deficit. Leadership of the budget process of the federal government has been delegated to the President who is responsible for presenting a balanced budget at the time of the State of the Union address in the beginning of the year under Art. 2 Section 3 of the US Constitution. The President must submit his/her budget to Congress after the first week of January and before the first week of February every year under 31USC(11)§1105. Several balanced budget Amendments have been proposed however no one proposed Amendment has been agreed to. The text of the version presented to the Senate and to the House of Representatives which (after revision) was approved by the Senate (by a vote of 69 to 31) on 4 August 1982 but supported by an inadequate majority of the House of Representatives (with a vote of 236 to 187) on 1 October 1982. A second was version introduced into the House of Representatives with 160 sponsors on 7 January 1997. On 17 February 2005, a similar measure to that of 7 January 1997 was introduced with 24 sponsors. On 13 July 2005 another was introduced with 123 sponsors. The text of a Balanced Budget Amendments would state,

Section 1 Total outlays for any fiscal year shall not exceed total receipts for that fiscal year.

Section 2 Prior to each fiscal year, the President shall transmit to the Congress a proposed budget for the United States Government for that fiscal year in which total outlays do not exceed total receipts.

Section 3 The Congress shall enforce and implement a balanced budget by appropriate legislation.

9. For a Balanced Budget Amendment to succeed, it is now clear, Article VI Section 1 and Sections 4 and 5 of the Fourteenth Amendment to the United States Constitution must be repealed. The supremacy clause would be section number one and oath of office, number two at Art. VI and the Fourteenth Amendment would conclude at section 3, “remove such disability”. Under the current Constitution balancing the budget cannot be a religious test for the candidates for office. Balancing the budget is however, perhaps the most important responsibility of the President. The Balanced Budget Act of 1997 (Public Law 105-33) that was improved in the Balanced Budget Refinement Act of 1999 earned the Clintons credit for achieving federal saving for three years. Support is growing for a balanced budget amendment. The Deficit Reduction Act of 2005 and 2006 mitigated the President’s record $420 billion deficit projections of 2004-2005. A Balanced Budget Amendment would be a stellar XXVIII Amendment to the United States Constitution. The challenge of balancing the budget is integral to the task of governing. No federal plan would stimulate the economy more than a balanced budget. Voters would be very impressed with any Presidential candidate who could introduce a balanced budget for the 111^th Congress (2009-2011), to the public, in a timely fashion.

10. The US became aware of the trillion dollar account deficit in December 2006, and succeeding in bringing the account deficit below one trillion dollars in 2007. This is sustainable development. In 2007 the USA beat the trillion dollar account deficit. Not even the most pessimistic reports of the President dispute this fact. An account deficit is defined as the sum of the budget and international trade deficit in goods. More obscure methods, such as calculating the international trade in services, result in different figures. Since 2004 the account deficit has been over a trillion dollars. In 2004 it was -$1,077 billion, in 2005 -$1,183 billion, in 2006 the account deficit began to decline at the end of the year to -$1,007 billion, this 2007 it is down to an estimated - $964 billion. Preliminary estimates for the trade deficit in 2007 are around -$789 billion; a slight increase over 2006 deficit of -$759 billion that actually improved on the –783 billion of 2005. Final figures for 2007 could be much lower. The budget deficit is estimated between -$150 and -$205 billion, down from a high of -$400 billion in 2005. Wherefore the account deficit for 2007 is estimated between -$900 and -$999 billion at -$964 billion.

Balancing the Trillion Dollar Account Deficit in billions 2000 – 2010 v. HA 2007-2010

Year	Rev.	Exp.	Fed. Sav.	Debt	Int. Dev.	Int. Trade	Acct. Def.	GNI	GDP
2000	2,025	1,788	87	5,628	12	-452	-365	8,430	9,719
2001	1,991	1,860	-33	5,770	14	-427	-460	8,724	10,022
2002	1,853	2,011	-317	6,198	15	-483	-800	8,882	10,339
2003	1,782	2,157	-375	6,780	35	-547	-922	9,163	10,828
2004	1,880	2,292	-412	7,355	15	-665	-1077	9,727	11,552
2005	2,052	2,479	-400	8,058	17	-783	-1183	10,301	12,227
2006	2,407	2,655	-248	8,451	25	-759	-1007	10,983	13,065
2007	2,577	2,771	-170	8,899	30	-789	-964	11,312	13,721
2008	2,771	2,925	-155	9,364	35				14,401
2009	2,855	3,071	-215	9,905	40				15,120
2010	2,950	3,071	-255	10,501	50				15,881
HA
2008	2,771	2,663	87	8,700	65	-750	-663	11,651	13,700
2009	2,855	2,710	111	8,650	80	-700	-589	12,000	13,974
2010	2,950	2,825	50	8,500	100	-650	-600	12,360	14,253

Source: CBO & BEA

11. Having introduced the Congress. The rest of this essay shall analyze the above Table: Balancing the Trillion Dollar Account Deficit in billions 2000-2010 v. HA 2007-2010 from right to left in three parts. The first topic promotes moderation of expectations of economic growth to ensure a steadily prevailing wage. The second topic estimates a balance of payments for 2007 and calls for regression of the international trade deficit in future years. The third and final topic proposes to balance the federal budget by instituting spending limits for the military and a pay as you go strategy for Medicare and Social Security. The conclusion summarizes the myths and inequalities discovered in the course of this research and sets forth to eliminate inequality begun in the 1970s when the command economy of the Drug Enforcement Agency (DEA) infringed upon both, the acronym of the Bureau of Economic Analysis (BEA) and the medical establishment. Freedom from fear and want are fundamental to economic success. The extra-judicial pillaging was aggravated by the creation of the Court of International Trade of the United States (COITUS) in 1984. The international trade balance has dramatically deteriorated since then. Inequality is not defined exclusively by the widening gap between the income of the rich and poor but extends to inaccuracies in an estimated 33% of national accounts. After some deliberation, the name Economic Statistics Program (ESP) is decided upon as the best successor to the BEA. A US International Tribunal (USIT) would succeed the COITUS.

Introduction / Economic Growth Overview / Balance of Payments / Balanced Budget / Conclusion / Bibliography

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