Budget Director Mulvaney Admits No Hope “To Balance The Budget This Year”


Tyler Durden's picture

Appearing on Meet the Press earlier this morning with the always condescending, well at least if he’s interviewing a Republican guest, Chuck Todd, the Director of the Office of Management and Budget, Mick Mulvaney, said there’s no hope of achieving a balanced budget this year.  Of course, that should hardly come as a surprise to almost anyone other than the suddenly fiscally conservative Chuck Todd.

“No, we won’t be able to balance the budget this year, but we’re working on trying to get it to balance within the ten-year budget window, which is what Republicans in the House and the Senate have traditionally done the last couple of years.”

A smirking Chuck Todd also pressed Mulvaney regarding his thoughts on raising the debt ceiling with a series of ‘gotcha’ questions:

Todd:  “Debt ceiling.  We hit it on Friday.  Extraordinary measures by the Treasury Secretary will mean a couple more months.  You were a tough nut to crack on the debt ceiling when you were Congressman Mulvaney.  Why should people who were like minded with you who basically said ‘hey look, I’ll give you that debt ceiling but I want real cuts, I want real deficit reduction, I want a real plan.’  I think at one point you said I’ll raise the debt ceiling in exchange for a balanced budget.  You’re not going to be making that ask this time, are you?”

Mulvaney:  “I have voted to raise the debt ceiling before as most people in Congress have.  Traditionally, you go back to the 1920’s and 1930’s, the debt ceiling debate has been used to try and step back and say ‘why do we have a deficit problem, why do we have a debt problem and how can we fix it.’  So we’ll be coming forward with ideas to raise the debt ceiling but at the same time try to address some of those long-term reasons that we have the debt in the first place.”

Meanwhile, Mulvaney took a shot of his own saying that Trump’s vision for the budget is consistent with his comments on the presidential campaign trail and that “He’s trying to do something that politicians are not very famous for, which is actually following through on his promises.” For those who missed it, here is our previous summary of Trump initial “skinny budget” proposal:

Today at 7am, Trump released his “skinny budget”, his administration’s first federal budget blueprint revealing the President’s plan to dramatically reduce the size of the government. As previewed last night, the document calls for deep cuts at departments and agencies that would eliminate entire programs and slash the size of the federal workforce. It also proposes a $54 billion increase in defense spending, which the White House says will be offset by the other cuts.

“This is the ‘America First’ budget,” said White House budget director Mick Mulvaney, a former South Carolina congressman who made a name for himself as a spending hawk before Trump plucked him for his Cabinet, adding that “if he said it in the campaign, it’s in the budget.”

In a proposal with many losers, the Environmental Protection Agency and State Department stand out as targets for the biggest spending reductions. Funding would disappear altogether for 19 independent bodies that count on federal money for public broadcasting, the arts and regional issues from Alaska to Appalachia. Trump’s budget outline is a bare-bones plan covering just “discretionary” spending for the 2018 fiscal year starting on Oct. 1. It is the first volley in what is expected to be an intense battle over spending in coming months in Congress, which holds the federal purse strings and seldom approves presidents’ budget plans.

Trump wants to spend $54 billion more on defense, put a down payment on his border wall, and breathe life into a few other campaign promises. His initial budget outline does not incorporate his promise to pour $1 trillion into roads, bridges, airports and other infrastructure projects.  The budget directs several agencies to shift resources toward fighting terrorism and cybercrime, enforcing sanctions, cracking down on illegal immigration and preventing government waste.

The White House has said the infrastructure plan is still to come.

That said, Congress controlled by Trump’s fellow Republicans, is likely to reject some or many of his proposed cuts with some republicans calling the budget “dead on arrival.” Some of the proposed changes, which Democrats will broadly oppose, have been targeted for decades by conservative Republicans. Moderate Republicans have already expressed unease with potential cuts to popular domestic programs such as home-heating subsidies, clean-water projects and job training.

Trump is willing to discuss priorities, said Mulvaney. “The president wants to spend more money on defense, more money securing the border, more money enforcing the laws, and more money on school choice, without adding to the deficit,” Mulvaney told a small group of reporters during a preview on Wednesday. “If they have a different way to accomplish that, we are more than interested in talking to them,” Mulvaney said.

The defense increases are matched by cuts to other programs so as to not increase the $488 billion federal deficit. Mulvaney acknowledged the proposal would likely result in significant cuts to the federal workforce. “You can’t drain the swamp and leave all the people in it,” Mulvaney said.

A visual summary of the proposed budget changes is shown below, courtesy of Reuters:

The biggest losers:

Trump asked Congress to slash the EPA by $2.6 billion or more than 31 percent, and the State Department by more than 28 percent or $10.9 billion. Mulvaney said the “core functions” of those agencies would be preserved. Hit hard would be foreign aid, grants to multilateral development agencies like the World Bank and climate change programs at the United Nations.

Trump wants to get rid of more than 50 EPA programs, end funding for former Democratic President Barack Obama’s signature Clean Power Plan aimed at reducing carbon dioxide emissions, and cut renewable energy research programs at the Energy Department. Regional programs to clean up the Great Lakes and Chesapeake Bay would be sent to the chopping block.

Community development grants at the Housing Department – around since 1974 – were cut in Trump’s budget, along with more than 20 Education Department programs, including some funding program for before- and after- school programs. Anti-poverty grants and a program that helps poor people pay their energy bills would be slashed, as well as a Labor Department program that helps low-income seniors find work.

Long reviled by conservatives, the Internal Revenue Service would get a $239 million cut, despite Treasury Secretary Steven Mnuchin’s request for more funding. The Education Department would receive $1.4 billion to invest in public charter schools and private schools, even as its overall budget is cut by 14 percent. But other numbers appear to contradict some of Trump’s top priorities. One of his campaign pledges was to work to cure diseases, but the National Institutes of Health will reportedly see $5.8 billion slashed from its budget.

Trump calls for a 13 percent cut to the Transportation Department, which would ostensibly play a big role in Trump’s promised infrastructure overhaul. That includes $500 million from the TIGER grant program, which provides funding for road and bridge projects.

Trump’s rural base did not escape cuts. The White House proposed a 21 percent reduction to the Agriculture Department, cutting loans and grants for wastewater, reducing staff in county offices and ending a popular program that helps U.S. farmers donate crops for overseas food aid.

And the winners

White House officials looked at Trump’s campaign speeches and “America First” pledges as they crunched the numbers, Mulvaney said. “We turned those policies into numbers,” he said, explaining how the document mirrored pledges to spend more on the U.S. nuclear weapons arsenal, veterans’ health care, the FBI, and Justice Department efforts to fight drug dealers and violent crime.

The Department of Homeland Security would get a 6.8 percent increase, with more money for extra staff needed to catch, detain and deport illegal immigrants. Trump wants Congress to shell out $1.5 billion for the border wall with Mexico in the current fiscal year – enough for pilot projects to determine the best way to build it – and a further $2.6 billion in fiscal 2018, Mulvaney said.

The estimate of the full cost of the wall will be included in the full budget, expected in mid-May, which will project spending and revenues over 10 years. Trump has vowed Mexico will pay for the border wall, which the Mexican government has flatly said it will not do. The White House has said recently that funding would be kick-started in the United States.

The voluminous budget document will include economic forecasts and Trump’s views on “mandatory entitlements” – big-ticket programs like Social Security and Medicare, which Trump vowed to protect on the campaign trail.

“There is no question this is a hard-power budget,” said Mulvaney. “It is not a soft-power budget.”

The budget requests $1.5 billion to detain and remove undocumented immigrants, and $314 million to hire 500 new Border Patrol officers and 1,000 new Immigration and Customs Enforcement officers.

America Supports Most of the Free World and we have 200,000 Troops Deployed To 177 Nation, this costs a lot of money but it is Required to Maintain world Peace


Tyler Durden's picture

There was no shortage of cuts proposed in Trump’s budget for 2018, which was released earlier this week. However, as Visual Capitalist’s Jeff Desjardins notes, one of the few departments that did not receive a haircut was the Department of Defense. If the proposed budget ultimately passes in Congress, the DoD would be allocated an extra $54 billion in federal funding – a 10% increase that would be one of the largest one-year defense budget increases in American History.

To put the proposed increase in context, the United States already spends more on defense than the next seven countries combined. Meanwhile, the additional $54 billion is about the size of the United Kingdom’s entire defense budget.

Courtesy of: Visual Capitalist

 

“BE ALL YOU CAN BE”

With over half of all U.S. discretionary spending being put towards the military each year, the U.S. is able to have extensive operations both at home and abroad. Our chart for this week breaks down military personnel based on the latest numbers released by the DoD on February 27, 2017.

In total, excluding civilian support staff, there are about 2.1 million troops. Of those, 1.3 million are on active duty, while about 800,000 are in reserve or part of the National Guard.

On a domestic basis, there are about 1.1 million active troops stationed in the United States, and here’s how they are grouped based on branch of service:

Internationally, there are just under 200,000 troops that are stationed in 177 countries throughout the world.

In 2015, Politico estimated that there are 800 U.S. bases abroad, and that it costs up to $100 billion annually to maintain this international presence

Trump Supporters Get Unexpected Surprise Visit With President Trump in Mar-a-Lago…


Source: Trump Supporters Get Unexpected Surprise Visit With President Trump in Mar-a-Lago…

President Trump Weekly Address – March 18th 2017…


Source: President Trump Weekly Address – March 18th 2017…

Fake News of The Day – “Handshake” Outrage…


Source: Fake News of The Day – “Handshake” Outrage…

T-Rex Visits South Korea: “”The policy of strategic patience has ended”…


Source: T-Rex Visits South Korea: “”The policy of strategic patience has ended”…

President Trump, VP Pence, Chancellor Merkel Attend Roundtable Business Discussion – Vocational Training…


Source: President Trump, VP Pence, Chancellor Merkel Attend Roundtable Business Discussion – Vocational Training…

RUSH: Trump Has Pulled Off An AMAZING Number Of Achievements Already


In Europe, Winners Are Losers & Left Is Right


Tyler Durden's picture

Authored by Raul Ilargi Meijer via The Automatic Earth blog,

The Dutch elections on Wednesday have provided a whole bunch of Orwellian narratives. PM Mark Rutte’s right wing VVD party, actually the ‘business’ -or should we say ‘rent-seekers’ in 2017- party, who lost some 20% of the seats they had obtained in the previous parliamentary election in November 2012, down from 41 to 33 seats, is declared the big winner. While Geert Wilders’ very right wing party, PVV, won 25% more seats -it went from 16 to 20- and is the big loser.

Moreover, Rutte’s coalition partner, labor PvdA, gave up 29 out of 38 seats to end up with just 9. That’s a loss of over 75%. Together, the coalition partners went from 79 seats in the 2012 election to 42 in 2017. That’s an almost 50% less. Not that it could prevent Rutte from proudly declaring: “We want to stick to the course we have – safe and stable and prosperous..” Makes you wonder who the ‘we’ are that he’s talking about.

That course he wants to stick to had a finance minister named Dijsselbloem, and his party just lost by over 75%. So he won’t be back. But perhaps the EU can pull another ‘Tusk’, and leave him in place in Brussels as chairman of the Eurogroup no matter what voters in his own country think of him. Still, declaring your intention to ‘stick to the course’ when your coalition has just been sawed in half, it’s quite something.

The only reasons Rutte’s VVD ended up being the biggest party all have to do with Wilders. The anxiety over the election all had to do with polls. Wilders is a one man party and a a one trick pony. If he would leave, his party would dissolve. And his sole ‘message’ is that Islam is bad and should vanish from first Holland and then Europe. He doesn’t really have any other political program points. Ok, there’s Brussels. Doesn’t like that either.

Perhaps that’s why he largely shunned the pre-election debates. Problem with that is, these things attract a lot of TV viewers, crucial free air-time. All in all, since he’s his own worst enemy in many respects, it’s not that much of a surprise that Wilders’ support collapsed, and that’s just if we were to take Dutch pollsters more serious than their counterparts in the US and UK.

Talking of which, according to Rutte, those are the countries where ‘the wrong kind of populism’ has won and delivered Trump and Brexit. And of course there are lots of people who agree with that. What either they, or Rutte himself, would label ‘the right kind of populism’ is unclear. Maybe Rutte himself is the right kind of populist?

The row with Turkey over the weekend must have helped Rutte quite a bit. Not only were his actions in the row met with approval by a large majority of the Dutch population, including just about all other party leaders, the Dutch also got to think about what WIlders would do in such a situation. And there can be no doubt that Rutte is seen as much more of a statesman than Wilders.

Not that the row is over. After Turkey announced yesterday it would return 40 Dutch cows (?!) , today Turkish Foreign Minister Cavusoglu said Europe’s politicians are “taking Europe toward an abyss”, and: “Soon religious wars will break out in Europe. That’s the way it’s going.” There can be no doubt that a shouting war like this with Wilders as one of the participants would take on a whole different shape, and a different choice of words.

What Rutte’s going to do next is form a new coalition, this time not with the left but with the center-right, and no-one will be able to tell the difference. If Dutch, and European, and global, politics have one main problem, it’s that. Left is right and right is left and winners are losers. If a guy like Dijsselbloem can squeeze Greek society dry in his capacity as Eurogroup head, while he runs as a leftist candidate in his own country, and loses hugely, anything goes.

All those who think they can see in the Dutch experience, a sign that Marine Le Pen’s chances in France’s presidential elections in April and May have dropped a lot, would appear to be delusional. Judging from reactions in the financial markets, many seem to be. But Le Pen is much less of a fringe figure than Wilders is, and she certainly wouldn’t shun a debate. It’s true that her Front National is a one-woman operation, bit she has a much clearer political program than Wilders does.

And she doesn’t have an opponent like Rutte, who’s become a formidable presence domestically, as anyone would be who can be PM for many years and not be put out by the curb. The man who should be Le Pen’s main adversary is not; Hollande is out by that curb and doesn’t even dare run again. His Socialist party has become a joke. The next strongest opponent should be François Fillon, but he’s all but gone now he’s been placed under formal investigation.

That leaves only Emmanual Macron, an independent without a party and without a program. In France, you can be elected president in such a situation, but your hand are tied in all sorts of ways, because you need parliament to vote for things.

..the nuances of the French political system put Macron in a spot of bother. The president derives their power from the support of a majority in the lower house of parliament, the National Assembly. Macron was a minister for the Socialist Party government but quit in 2016 to form his own political movement. Now he doesn’t even have a party, let alone a majority. Although the constitution of the French Fifth Republic, created by Charles De Gaulle in 1958, extended presidential powers, it did not enable the president to run the country.

There are only a few presidential powers that do not need the prime minister’s authorisation. The president can appoint a prime minister, dissolve the National Assembly, authorise a referendum and become a “temporary dictator” in exceptional circumstances imperilling the nation. They can also appoint three judges to the Constitutional Council and refer any law to this body. While all important tasks, this does not, by any stretch of the imagination, amount to running a country. The president can’t suggest laws, pass them through parliament and then implement them without the prime minister.

The role of a president is best defined as a “referee”. Presidential powers give the ability to oversee operations and act when the smooth running of institutions is impeded. So a president is able to step in if a grave situation arises or to unlock a standoff between the prime minister and parliament, such as by announcing a referendum on a disputed issue or by dismissing the National Assembly.

So, why does everyone see the president as the key figure? In a nutshell, it’s because the constitution has never been truly applied. There lies the devilish beauty of French politics. A country known since the 1789 revolution for its inability to foster strong majorities in parliament has succeeded, from 1962, in providing solid majorities.

Perhaps those who believe that what happened in Holland is also likely to happen in France are swayed by the notion that both are part of the EU. But they are very different countries and cultures, and different political systems. And Le Pen is no Wilders. She doesn’t say crazy things anymore, she’s cleansed the public image of her party by getting rid of her father, and she keeps any remaining extremists out of view.

There is still plenty suspicion in France about her, and about her party, but there are also a lot of people who agree with a lot of what she says. The perhaps most noteworthy statement she’s made recently is that she would step down if she loses the referendum about membership of the EU she intends to launch if elected president. That should keep Brussels on their toes. Marine means what she says. And a lot of French people may get to like her for that. In a political landscape in which the competition keeps shooting itself in the foot.

Another thing about Le Pen is that her political program contains quite a few bits and bolts that could be labeled leftist; a 35-hour work week, retirement at 60, lower energy prices. It’s just that she wants to reserve these things for the French. Foreigners, especially, Muslims, are not invited. And she is very much opposed to neo-liberalism and globalization:

They’ve made an ideology out of it. An economic globalism which rejects all limits, all regulation of globalization, and which consequently weakens the immune defences of the nation state, dispossessing it of its constituent elements: borders, national currency, the authority of its laws and management of the economy, thus enabling another globalism to be born and to grow: Islamist fundamentalism..

Le Pen’s popularity does not come from an overwhelming innate racism in France -though such a thing certainly exists-. It comes instead from the formidable failure that the country’s immigration policy has been for many decades. At the outskirts of major cities ghetto’s have been allowed to form in which those that come from former French colonies, especially in Africa, feel trapped with no way out. The French tend to feel superior to all other people, and the political system has let the situation slip completely out of hand.

Now France, and Europe is general, will have to deal with this mess. So far, the main European reaction is to turn Greece into a prison camp for a new wave of refugees and migrants. That can of course only make things worse. And it doesn’t solve any of the existing problems. Which makes the rise of Marine Le Pen inevitable.

And Wilders too; he’s the no. 2 party in Holland, because his party won 33% more seats than in 2012 to go from 15 to 20. That 33% gain, versus Rutte’s 20% loss, makes Wilders a loser in the eyes of many ‘relieved’ observers.

Winners are losers, and as is evident in Le Pen’s social policies for the French, in European coalition governments that contain Labor and right wing parties, and in the course of the Democratic party in the US, left is definitely the same as right.

Orwell always wins. Next problem: the actual left are not represented by anyone anymore.

Rising Rig Count Is Pushing OPEC To Breaking Point


Tyler Durden's picture

For the 9th straight week (and 35th of the last 37 weeks), the US oil rig count rose this week (surging by 14 to 631 – highest since September 2015).

The rig count continues to track the lagged WTI price

 

US Crude production has accelerated at a faster pace than the lagged rig count

 

And that is pushing OPEC to the breaking point:

  • *OPEC COMMITTEE SAID TO SEE COMPLIANCE WITH CUTS OF 106% IN FEB
  • *JOINT OPEC, NON-OPEC COMPLIANCE SEEN AT 94% IN FEB.: DELEGATES
  • *CUTS COMPLIANCE BY NON-OPEC ALONE SEEN AT 64% IN FEB.: DELEGATE

Who’s the sucker at that table?

As OilPrice.com’s Michael McDonald points out, the trend in the United States of accelerating oil production does not seem to be slowing down. Recent reports show that oil production from U.S. shale producers will increase in April, according to the Energy Information Administration. High market prices are currently being supported by OPEC cutbacks, and these higher profits are funding the growth of American drilling.

The release from the EIA predicts that net oil production will increase by 109,000 barrels per day in April. The seven major oil and gas basins that were included in the report will then have an output over nearly 5 million barrels per day collectively.

The monthly projections from the EIA have been climbing month after month since December. That month, 11 large oil exporting countries joined the supply cuts established by OPEC to control what they believed was an oversupplied market for crude oil.

In the United States, the main benefactors have been drillers at the Permian Basin, in Western Texas and southern New Mexico. The basin has been producing high volume since the end of 2016. The EIA expects the Permian drillers to see a gain of 70,000 barrels per day next month in their projections.

However, the Permian Basin is not the only United States site trying to capitalize on high prices. Drillers in southeast Texas, the Eagle Ford region, have also been ramping up production. Those drillers will amount for an increase 28,000 barrels per day in the EIA’s overall growth projections. Prior growth expectations for Eagle Ford producers was half on that number, at an increase of 14,000 barrels per day; the growth is not only steady, but is accelerating.

The EIA report for next month also shows a decline at several U.S. drilling sites. Take, for instance, the Niobrara region of Colorado and the Bakken Shale production in North Dakota. Both will experience declines of 11,000 barrels per day, and 10,000 barrels per day respectively.

The supply increases by the U.S. have capped any gains to be seen for OPEC nations from their cutbacks. This has been keeping crude futures within a tight range. On Monday, March 13th, U.S. crude ended at $48.40, a price that hasn’t been seen since before OPEC announced their cutbacks in December 2016.

These recent developments have led analysts to believe OPEC’s cutback policy is fated to end in the near future. It is clear that the United States has a sustainable means to regulate prices in the global oil market. Furthermore, the dynamics of U.S. outputs indicate that the country will not have any desire to participate in the cutbacks; U.S. law prohibits any such price controls. The United States will continue to threaten any gains to be had by OPEC.  

Saudi Arabia has been the leader in the cutbacks thus far, compensating for Russia’s hesitation with withholding supply. Historically, the kingdom has refused to participate in such cuts. However, under the tutelage of new oil minister Khalid al-Falih, they have exceeded their cuts far beyond the original OPEC deal. However, without total compliance, markets will remain unstable – regardless of how much the Saudis holdback.

These factors combined have led analysts to believe the OPEC deal will be forced to end, if only to end the profitability to U.S. growth and production.