Weekend June 26, 2021
Discord Means No Accord
S & P Sets Record after Spending Accord
Headline in today’s Wall Street Journal
But the problem is that they did not have deal. Sure one saw back slapping and sounds of compromised, neither side got all it wants amid the photo ops. But a short two hours later President Biden announced that he would not sign the $1 trillion ‘infrastructure bill’ unless he gets the other $3 trillion he wants. That’s a record short time for a bait a switch scheme.
Democrat hold outs Joe Manchin and Krysten Sinema are the hold outs in the Gang of Ten not going along with breaking the filibuster rule and allowing a 51 vote simple majority to pass trillions of dollars in spending. And so Biden and Pelosi will blame the two holdouts and all the Republicans for failure to pass this spending spree.
That should not bother anyone as most of this is not infrastructure but everything from re-paying union support to free college to child care. And we don’t have the money for this.
Another infrastructure idea is to add 86,000 new IRS agents to ferret out ‘tax cheats.’ Supposedly this would target the wealthy. But they hire the best CPAs and tax attorneys to to advantage the legal tax code. No wonder it is estimated that it costs $2-3 for every dollar such an agent might find.
To put this in perspective how much would each of the 86,000 IRS agents need to recover to raise $1 trillion? The answer is $11,627,906 each. To pay for four trillion, well multiply by 4x. Oh wait, that does not cover the salaries and overhead of the new agents….
We told you all that to illustrate the extreme of negative social mood in the country. Two hundred thousand ‘migrants’ cross our southern border each month. Violent crime is on the rise in major cities. Amazingly while an ex NYC Police Captain leads in the Mayor’s Race, in second place is a woman who would defund the NY Police another one billion. The so called crime initiative from Biden would only make it more difficult for law abiding citizens to buy firearms. Criminals do not go through legitimate dealers. Perhaps the most amazing statistic is the estimate that there are 117,000 gang members in Chicago alone. No doubt each has plenty of weapons.
The 1973-74 Watergate meltdown was significant for rampant negative mood. Lines at gas pumps, inflation, and crime were all issues then. Now we have, uh, increasing gasoline prices, rising crime, and total discord in Washington,
The DJIA made its high May 10. The SPX and NASD have just recorded new highs. Crude oil remains aboe $70. And yes if speculation continues it can certainly go higher. But higher stock prices are not being confirmed by positive social mood. Finally the 30 year bond dropped another $10 in price Friday. This suggests interest rates have begun an increase once again.
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