Thursday, February 4, 2010

Budget Observations and Suggestions

I have been watching the hits on my budget observations from Moscow to Beijing, none from DC yet, so why am I not surprised. I surmise that other countries are wondering what in God's name are those Americans thinking about. They will just self destruct on their own stupidity.

Now two observations.

1. The cyclic behavior of the annualized rate of change difference of receipts less outlays is truly cyclical. It follows a strong 6 year cycle over the past 64 years! Is there meaning in this? I do not know but it is an interesting fact.

Let me reshow the data I did yesterday.

Now if we do a power spectrum analysis of this, power of the FFT, we obtain the spectrum below. I have not normalized this.

The above shows the 6 year cycle and the height of the spectrum shows it is a strong cycle/ This seems to apply broadly and perhaps there is some meaning here politically, more than economically.

2. The proposed Democrat jobs bill has been presented in the NY Times as follows:

An aide to Mr. Reid, Jim Manley, said that Senate Democrats would like to put forward a “robust” jobs package, similar to a bill approved in December by the House, which would spend $174 billion, including $75 billion taken from the financial bailout program, and use it for job creation efforts including highway construction, school renovation and hiring of new teachers, police officers and firefighters.

If one looks at the 2011 Budget and its receipts one sees that corporate taxes are just a small amount above this:

Now the solution is to reduce corporate taxes to zero! No Government stimulus, let the market work. I suggested this a year ago but then we were no in as bad a shape as we are now. The solution should be a Republican solution. It is a classic back of the envelope suggestion since we can explain it on a napkin in a diner! We have no need of a Harvard or MIT economist, in fact we can fire them all and hire the waitress in the diner who is closer to understanding markets!