Archive for the ‘Gov’t Spending’ Category

Congress cut military pensions … did they cut their own?

December 20, 2013

The flap over the budget deal that cut military pensions – including those for disabled vets — resurrected an old question of mine: I’ve always wondered what retired members of the Congress and Senate got to live on when they retired.

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Here’s the scoop …

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Uh-oh: Jurassic Government

May 28, 2013

Everybody knows Jurassic Park – the 1993 science fiction adventure film in which a team of genetic scientists create a wildlife park of cloned dinosaurs.

When the security systems go haywire, the dinosaurs go uncontrollably wild.

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Jonathan Turley is a left-leaning law prof at George Washington University …. a frequent legal analyst on CNN … not to be mistaken as a Tea Party kinda guy.

He had a weekend op-ed in the Washington Post that’s a must read.

Titled “The rise of the fourth branch of government “, the article’s central thesis:

The growing dominance of the federal government over the states has obscured more fundamental changes within the federal government itself:

It is not just bigger, it is dangerously off kilter.

Our carefully constructed system of checks and balances is being negated by the rise of a fourth branch:

An administrative state of sprawling departments and agencies that govern with increasing autonomy and decreasing transparency.

That is, the government agencies have gotten so big and sprawling that they  have substantially more power over our lives than the 3 Constitutional branches of government … and they are, for all practical purposes, unmanageable and largely out-of-control.

Hmmm.

= = = = =

Here are some highlights and stats from Turley’s article …

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Prediction: Calls to spend billions on crumbling bridges …

May 24, 2013

Six years ago (August 1, 2007), the I-35W Mississippi River bridge in Minneapolis –  an eight-lane, steel truss arch bridge that handled 140,000 cars daily – collapsed during the evening rush hour, killing 13 people and injuring 145.

The NTSB cited a design flaw as the likely cause of the  the catastrophic failure.

Last night, a section of a bridge along Interstate-5 in Washington State collapsed.

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Here’s the good news and the bad news …

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Vanguard CEO: “Uncertainty the enemy of the economy” … I disagree”

April 29, 2013

In a WSJ editorial today, Vanguard CEO Bill McNabb says that …

Americans who seek to earn a living and save for the future are confused and discouraged.

Concerns of investors are asking: How does this affect my retirement fund? What about my college savings account? How does this affect my taxes? Would I be better off putting my savings under the mattress?

Firms can’t see a clear road to economic recovery ahead, so they’re not going to hire and they’re not going to spend.

It’s what economists call a “deadweight loss“.

He points to economic research that indicates U.S. economic policy uncertainty has been 50% higher in the past two years than it has been since 1985.

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Source: PolicyUncertainty.com 

The uncertainty revolves around regulatory policy, monetary policy, foreign policy and, most significantly, uncertainty about U.S. fiscal policy and the national debt.

Vanguard estimates that the rise in policy uncertainty has created a $261 billion cumulative drag on the economy … which adds up to more than one million jobs that we could have had by now, but don’t.

Mr. McNabb makes a strong argument.

But, I respectfully disagree.

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Before you cut the football team, band, honors classes and hot lunches …. consider these places to cut government spending

April 17, 2013

According to an IBD recap

The Government Accountability Office’s latest annual report on government waste and duplication found 31 areas in the government that overlap, duplicate efforts or are egregiously inefficient.

That’s on top of the 131 found in its previous two annual reports …. the vast majority of which have been totally ignored by Obama’s crack team of budget-cutters.

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Sen. Tom Coburn (R-Okla.), who pushed for this report, figures the latest examples alone add up to $95 billion — more than the spending cuts under this year’s “sequester.”

Here are some of head-scratchers that the GAO found …

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Taxes: In total, how much do Americans pay in taxes? For what? To whom?.

April 16, 2013

Since yesterday was tax day, I thought you might like to see a recap of how much dough (some) Americans fork over to the government …

Americans pay a tad over $5 trillion in taxes to the Feds, States and Local Governments.

Technical note: In government parlance, the taxes are called “revenue”.

By taxing authority

Drilling down, the $5 trillion is split roughly 50%-30%-20% to the Feds, States and Locals, respectively

Here’s more detail …

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Taxes: Did you hear me screaming yesterday?

April 11, 2013

Timing is everything, right?

Yesterday, like many – err, make that some Americans, I was putting the finishing touches on my 2012 tax returns (which are due in a couple of days).

Like some – err, make that a few Americans, I have to pay income taxes.

Yesterday morning I swallowed hard and wrote out the check … the big check.

Lots of money … at least half of it will be out-and-out wasted by a cost-bloated government machine,

Most of the rest will be spent on stuff that I don’t agree with or support.

OK, it’s still my civic duty, right?

Tried to put taxes out of my mind.

Then, President Obama unveils his new budget.

The chart below tells the story.

Lots of taxes and some phony “savings” against grossly escalating budgets.

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Source

Bottom line: those who already paying all the taxes should pay even more …

Couldn’t the President at least had the courtesy of waiting for the ink to dry on my check before calling me out as a piker and saying I wasn’t paying my fair share.

Gimme a break, man.

You’re making ME want to stop working …

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Barack Obama, Derek Bell … and “Operation Shutdown”

March 7, 2013

Last Saturday, my son forwarded a friend’s Tweet to me:

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Hmmm.

Started me thinking … Sequester announced on Friday … slow down on Saturday … coincidence?

Then, Obama announces that he’s shutting down White House tours because of the Sequester – the Presidential version of taking his bat & ball and going home.

Wait a second: I’ve seen this play before … bat & ball, Operation Shutdown.

Of course.

It’s the Derek Bell story.

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The year was 2002.

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WaPo: Public SUPPORTS the Sequester’s budget cuts almost 2-to-1 …

March 6, 2013

Hot off the wire …

Despite the Administration’s dire warnings, the release of jailed  criminal immigrants and the slower-than-usual TSA checks …

The  Washington Post is reporting survey results indicating that 61% of folks support the Sequester’s budget cuts overall … though 60% oppose the cuts to military spending.

Said differently, folks overwhelmingly support the non-military donestic spending cuts.

That’s huge!

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Here are some interesting details …

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It’s snowing in DC … “non-essentials” need not report.

March 6, 2013

It’s snowing in DC today … err, kinda.

Not much on the ground … temp is 34 degrees … roads are clear … but those AccuWeaterher folks are saying more snow is coming.

Good enough for the Feds … to shut the government down.

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Archive phote … not from today!

* * * * *
Just heard my absolute favorite public service message on TV:

Due the inclement weather, non-essential Federal government workers do not have to report for work today.

Maybe the Feds can use the snow storm to solve the Sequester bruhaha … here’s how.

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Hey Arne: Which Federal government agency is rated lowest?

March 5, 2013

Last week, Secretary of Education Arne Duncan was racking up Pinocchios, trying to whip up some Sequester hysteria.

He said that the world will end if the Fed’s Ed budget is cut by 2% … 40,000 will lose their jobs.

Hmmm.

His analysis was quickly debunked but, for me,  it prompted a fundamental question: how is the Dept. of Education doing?

Today, let’s look at perceptions.

Bottom line:  folks – you know, taxpayers – the Ed Dept’s  “customers” –  rate the Dept. of Education the lowest among Federal Agencies … and the agency with the sharpest decline.

A Pew Research poll reports that …

Despite spending hundreds of billions of dollars over the past couple of decades, the Department of Education gets the fewest favorability nods for Americans … only 40% give it a favorable rating … and its favorability rating is falling faster than any other agency.

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The Education Dept’s low ratings aren’t that surprising since the U.S. is constantly reported to be trailing other developed nations in math, science and other basic skills … and since every politician lasers in on our need to fix public education (while protecting the sanctity of the teachers’ unions).

Want more analysis?

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Kerry threatens 6,000 teachers’ jobs … Where’s the outrage?

March 4, 2013

Last week, Secretary of Education Arne Duncan was shrilling on behalf of the Chicken Little crowd that because of the Sequester  40,000 teachers would lose their jobs.

His claim was quickly debunked, but he left a lasting impression .. on me, at least.

“Dollars” don’t have emotional impact any more.

So, let’s start thinking in terms of full-time teacher equivalents (FTTEs).

Duncan got his estimate by assuming that an average teacher makes $70,000.

Maybe in Chicago they do.

But, according to PayScale.com the national average  is in the mid-40s.

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Let’s do a hard round for arithmetic convenience and call it $50,000.

Here’s what Kerry did, evaluated using the new metric full-time teacher equivalents (FTTEs) …

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Obama was wrong, Annie was right … case closed!

March 1, 2013

Yesterday, while the President was ringing Sequester Armageddon alarm bells, Annie was  pitching calm and confidence.

The sun’ll come out tomorrow
Bet your bottom dollar that tomorrow there’ll be sun
Just thinkin’ about tomorrow
Clears away the cobwebs and the sorrow till there’s none

When I’m stuck with a day that’s gray and lonely
I just stick out my chin and grin and say

The sun’ll come out tomorrow
So you got to hang on till tomorrow, came what may
!

* * * * *
If you need an upper today …

click to listen it’ll make you feel better, for sure.

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I say, Annie for President !
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Follow on Twitter @KenHoma            >> Latest Posts

OMG: Sequester puts the football season is at risk …

February 28, 2013

OK, here’s the silliness of the day ….

The fiscal pin prick (aka, the “Catastrophic Sequester”) puts this fall’s college football season at risk …  at least for the National Champions — the University of Alabama.

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Apparently, the only thing that can possibly be cut from the FAA budget are the air traffic controllers at the Tuscaloosa, Alabama airport on Crimson Tide football weekends.

According to Channel 42 WIAT News:

Looming budget cuts from the Federal Aviation Administration could have an impact on the next college football season.

Budget cuts could include eliminating local air traffic controllers at the Tuscaloosa Regional Airport.

We’re told that the airport wouldn’t shut down, but pilots would fly in and out using “visual flight rules” and Birmingham’s air traffic system.

Hundreds of flights come in and out of the Tuscaloosa  Airport during the football season.

This development is mind-blowing for a couple of reasons …

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Fugetaboutit: Maybe 40,000 teachers won’t lose their jobs …

February 28, 2013

Arne Duncan – Secretary of Education – has been the  one Obama cabinet member who seemed competent to most people.

Then, he jumped on Obama’s Sequester Armageddon train, claiming that:

  • 40,000 teachers were going to lose their jobs, and
  • School districts had already started laying off teachers because of the Sequester

Oops.

That earned the dude 4 Pinocchios from the Washington Post for “Significant factual errors and/or obvious contradictions.”

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Here’s the real story …

According to the Post’s factchecker

Regarding the 40,000 jobs:

An aide to Duncan described it as a “rough back-of-the-envelope calculation,” derived by dividing the average pay and benefits of a teacher — $70,000 — by the amount — $2.8 billion — that needed to be cut in education programs.

But, school districts and states may find many ways to juggle funds or reduce expenses to avoid losing many teachers, which is what has happened during previous periods of financial stress.

Keep in mind that local taxes (i.e. real estate taxes) fund about 90% of teachers. … and, remember that most districts are now bloated with administrators feeding the Federal bear with paper.

Regarding the layoffs already occurring:

The Education Department for days was unable to cough up the name of a single school district where these notices had been delivered.

Then, Duncan appeared before the White House press corps and produced a name — Kanawha County in West Virginia.

But, no one in the county seemed to know what Duncan was talking about, including the education reporters who cover the school district for the Charleston, W.V., newspapers.

“There’s very little sequestration-related panic, at least on the education side of things,” one reporter said.

Our colleague Lyndsey Layton helped unravel the mystery.

She discovered that these were not layoffs, but rather “transfer notices” sent to 104 Title I teachers for reasons unrelated to the sequestration cuts.

In other words, Duncan was peddling a made-up story.

Good luck rebuilding your cred, Arne.

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Follow on Twitter @KenHoma             >> Latest Posts

Ready to Rumble: Woodward vs. Obama (and the rest of the media) …

February 28, 2013

Perhaps, the first break in the mass media ranks.

In a Washington Post blog post, famous journalist Bob Woodward:

  • Repeated his claim that the Sequester idea came from Obama and his sidekick Jack Lew
  • Declared that Obama is now constantly moving the Sequester’s goalposts

Well, that didn’t sit well with the White House.

Woodward told CNN that a “very senior person” at the White House warned him in an email that he would “regret doing this,”

Uh-oh.

Woodward countered on MSNBC, calling Obama’s hysterical Sequester claims “…  a kind of madness that I haven’t seen in a long time.“

click to view

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I don’t think this bruhaha is over.

Team O isn’t attacking Rush or Hannity … they’re shooting at a journalistic institution.

This one will be fun to watch.

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Want to read the transcript?

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WARNING: Graphic image of a catastrophe …

February 27, 2013

With only a day or two until Armageddon

… until life as we know it ends

… or until, at least, the sky falls

… let’s put the Sequester in perspective.

This single graphic says more than a thousand words … or, in Obama’s case, a couple of thousand words,

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Source

Please, sleep well tonight … I think the Nation can absorb this fiscal pin prick.

Thanks to MC for feeding the lead.

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Follow on Twitter @KenHoma               >> Latest Posts

Want to know the difference between the private sector and the government?

February 27, 2013

Today, a couple of big Wall Street firms announced another round of cuts:

  • Citigroup plans to slash 11,000 jobs and close branches worldwide as part of a broad restructuring effort it hopes will save about $1.1 billion in expenses,
  • JPMorgan Chase became the latest Wall Street firm to scale back in an uncertain economy, announcing plans Tuesday to save $1 billion through various costs cuts and about 4,000 job reductions.
  • Goldman – which has already let 3,300 employees go worldwide in the past two years – announced another round of layoffs to cut costs by a cool billion dollars

OK, so 3 companies are cutting over $3 billion in expense.

No gnashing of teeth ,,, no “the sky is falling”

Just “times are tough … we’ve gotta do it.”

No so on the Sequester front … apparently the torch has officially been passed from the 12-21-12 Doomsday crowd to Team Obama …

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Today was another day of .hysteria  … and silly rhetoric.

Allegedly, Obama said that – because of the Sequester – an already closed agency would have to be shuttered.

Say, what?

And, here’s the gem of the day …

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Ouch: Sequestration gets personal …

February 22, 2013

The band, the football team, the honors program, hot lunches … and the Blue Angels.

Every year, a friend holds a BBQ at their home on Annapolis’ Severn River on the Naval Academy’s graduation day.

Why?

Because the Blue Angels put on an awesome show as part of the graduation ceremony.

Well, maybe not this year.

According to the Baltimore Business Journal:  Blue Angels shows in Annapolis, Ocean City are jeopardized by sequestration.

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I’m bummed … and a bit perplexed by the accounting.

The Feds claim the Navy will save $28 million.

Other than the fuel that the Angels burn, where’s the cost savings.

They’re not going to fire jettison the pilots or sell the planes, right?

Sounds like the Feds need a crash course on marginal accounting.

Thanks to SMH for feeding the bad news.

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Follow on Twitter @KenHoma                         >> Latest Posts

Answer to Sequestration: pray for snow !

February 22, 2013

The news broadcasts today are talking a lot about Sequestration and Snowstorm Q.

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Let’s connect those dots …

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Football, band, honors classes, hot lunches … and dead cows … say, what?

February 21, 2013

This is getting downright silly.

Sequestration will cut less than 3% of Federal spending … about the amount that was granted to Hurricane Sandy states in the whisk of a pen.

Still, President Obama had to broadcast dire consequences in front of a group of firemen … who will have to be laid off, probably causing small children to die in fires.

Give me a break.

We covered this topic earlier this week Football, band, honors classes and hot lunches … here we go again.

Apparently, the folks at Business Insider didn’t read the post.

Evidence?

An article titled “11 Ways The Sequestration Will Ravage The US Government“ … replete with an alarming picture of dead cows.

Technical note: It’s no clear o me how the sequestration will do the cows in.

Also, it’s not clear to me that the cows aren’t just taking a snooze.

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What are the 11 Ways The Sequestration Will Ravage The US Government? 

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Getting financial houses in order … and not.

January 16, 2013

Here are a couple of charts that put things in perspective

Ask yourself: Which one doesn’t isn’t like the others?

* * * * *
Consumers have been deleveraging.

The ratio of mortgage debt to disposable income has retreated by 20 percentage points and continues to fall.

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More broadly, the percentage of disposable income servicing household debt is at a historic low …

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Oink: Porking deficit reduction … say,what?

January 3, 2013

Nice recap  in the WSJ today outing the pork that was sausaged into the deficit-adding Fiscal Cliff Bill:

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Here’s a sampling:

  • Michigan Democrat Debbie Stabenow was able to retain an accelerated tax write-off for owners of Nascar tracks (cost: $78 million
  • New Mexico’s Jeff Bingaman saved a tax credit for companies operating in American Samoa ($62 million), including a StarKist factory.
  • Distillers are able to drink to a $222 million rum tax rebate.
  • Businesses located on Indian reservations will receive $222 million in accelerated depreciation.

The WSJ gave special recognition to Chris Dodd, the former Senator who lobbied for Hollywood’s movie studios … getting a provision that allows film and television producers to expense the first $15 million of production costs incurred in the United States … this Hollywood special will cost the Treasury $430 million in 2013 and 2014.

Consumers will get tax credits for buying plug-in motorcycles ($7 million).

Do the jabrones in Washington have no shame?

You can’t reduce the debt by adding to the deficit.

It’s that simple guys.

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Follow on Twitter @KenHoma       >> Latest Posts

Reality: The end of “cake & eat it”

December 9, 2012

Why the DC gridlock re: taxes & spending?

First, while Obama won a relatively slim majority of the countrywide macro vote … the GOP won a majority of the district-by-district micro vote.

In other words, the whole doesn’t equal the sum of the parts.

Further, as argued by Jay Cost in an Insightful Weekly Standard piece, people don’t really grasp the perilous financial situation the US is in … in part, because past economic growth rates have insulated folks from the hard choice of higher taxes or lower spending.

They’ve been able to have their cake … and eat it, too.

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Here’s the essence of Cost’s argument:

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The election in a nutshell … maybe jobs don’t matter as much any more!

October 18, 2012

There’s a sobering,  must read editorial in the WSJ today … Can Government Benefits Turn an Election?

Here are key points …

The federal government’s 120 means-tested programs today provide $1 trillion of benefits.

  • Unemployment insurance has stretched to 99 weeks
  • Record numbers of unemployed have qualified for disability benefits
  • Food stamps recipients have increase 40% to almost 50 million

The spending for these programs has grown 2½ times faster during the Obama presidency than in any other comparable period in American history.

To what extent might these benefits not just foster dependency but also make the economy’s performance seem less of a deciding factor in voters’ choices?

If you are concerned about your well-being and worried about a failed recovery — but getting new help from the government— do you vote for the candidate who promises more jobs or do you support the candidate who promises more government benefits?

Voters have historically set high standards and voted out incumbents not because they personally disliked them.

Rather, they’ve elected a new president because they understood the importance of a strong economy to their jobs, their income and the future prospects of their children.

Based on the economy, Mr. Obama should lose on Nov. 6. Yet it seems implausible that tens of millions of Americans who have received additional government benefits during his presidency can be completely unaffected by that largess. The election will test the relative power of private-sector aspirations and public-sector dependence.

Based on the economy, Mr. Obama should lose on Nov. 6.

Yet it seems implausible that tens of millions of Americans who have received additional government benefits during his presidency can be completely unaffected by that largess.

The election will test the relative power of private-sector aspirations and public-sector dependence.

Keep in mind that most jobs being created are relatively low paying service sector jobs … an increasing number of which are part-time … in part of duck Fed regulations and taxes (think, ObamaCare).

To get a visceral sense of the electoral “tension”, read Threats to Assassinate Romney Explode After Debate.

And, consider that an increasing number of folks feel that they are paying their fair  share (or more) with the government wasting much or most of the taxes it takes in …   what if those folks decide it’s not worth 60 hour weeks any more any more and shift into neutral?

This year’s election won’t be the end of the process … regardless of the outcome.

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Just in time for tonite’s debate … battery maker A123 files for bankruptcy.

October 16, 2012

Hot off the wires from Bloomberg

A123 Systems –  the electric car battery maker that received a $249 million federal grant –  filed for bankruptcy protection after failing to make a debt payment that was due yesterday.

There is “no assurance” that A123 will be able to find a way to continue to operate its business as a going concern, the company said.

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For those keeping score,  Solyndra left taxpayers holding a  $535 million loan guarantee granted by the U.S. Energy Department.

Welfare: How much has been spent since LBJ declared the war on poverty?

October 1, 2012

Answer: About $17 trillion … but, there’s much more to the story.

There has been so much talk about welfare recently that I did some digging … not to judge good or bad, simply to to get some facts.

You can draw your own conclusions …

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Overview

According to Congressional testimony given by the Heritage Foundation, “welfare” refers means-tested federal programs providing cash, food, housing, medical care, social services, training, and targeted education aid to poor and low income Americans.

Means-tested programs are anti-poverty programs: they are intended to increase the living standards of improve the capacity for self-support among the poor and near-poor.

Means-tested welfare spending or aid to the poor consists of government programs that provide assistance deliberately and exclusively to poor and lower-income people.

For example, food stamps, public housing, Medicaid, and Temporary Assistance to Needy Families are means-tested aid programs that provide benefits only to poor and lower-income persons.

Non-welfare programs provide government benefits and services for the general population — all income levels.

For example, Social Security, Medicare, police protection, and public education are not means-tested per se.

But, Social Security benefit pay-out rates are lower for higher income people and Medicare premiums are higher for higher income people

There are 69 means-tested welfare programs operated by the federal government:

  • 12 programs providing food aid;
  • 10 housing assistance programs;
  • 10 programs funding social services;
  • 9 educational assistance programs;
  • 8 programs providing cash assistance;
  • 8 vocational training programs;
  • 7 medical assistance programs;
  • 3 energy and utility assistance programs; and,
  • 2 child care and child development programs.

* * * * *
Spending

Since the beginning of the War on Poverty, government has spent $15.9 trillion (in inflation-adjusted 2008 dollars) on means-tested welfare.

In FY2011, federal spending on means-tested welfare, plus state contributions to federal programs, were about $940 billion.

Combined federal and state means-tested welfare is now the second largest category of overall government spending in the nation.

Means-tested welfare is  exceeded only by the combined cost of Social Security and Medicare.

Welfare spending is greater than the cost of public education and is greater than spending on national defense.

Total means-tested spending in 2008 was $708 billion … about $7,700 to $17,100 in means-tested spending for each poor American (depending on the estimating method) … on average, around $30,000 to $33,000 for a family of four … with about 1/3 of the amount going to medical care.

In FY 2011, total means-tested spending going to families with children … was around $33,000 per low income family with children.

In recent years …

  • 52 percent of total means-tested spending went to medical care for poor and lower-income persons,
  • 37 percent was spent on cash, food, and housing aid.
  • 11 percent was spent on social services, training, child development, targeted federal education aid, and community development.

Roughly half of means-tested spending goes to disabled or elderly persons.

The other half goes to lower-income families with children, most of which are headed by single parents.

Most of these lower-income families have some earned income. Average earnings within the whole group are typically about $16,000 per year per family.

If average welfare aid and average earnings are combined, the total resources available come to between $40,000 and $46,000 for each lower-income family with children in the U.S. … about 15%  below the total population’s median household income.

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Dennis Miller: “Just quit !”

September 29, 2012

Dennis Miller – comedian & political commentator – does a regular Wednesday nite segment on O’Reilly.

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This Wednesday, he was unusually provocative by commenting:

If you’ve got a family of 4 and you’re busting your hump 40 or 60 hours a week – maybe 2 jobs — to make $45 grand and make ends meet … if Obama gets re-elected, just quit. 

Kick back … take the handouts and enjoy life. 

You can make just as much just sitting around …

If you don’t, those who are just  riding the train will be laughing at you. 

Why keep hitting your head against the wall?

Paraphrased from O’Reilly 9-26-12

Struck me at the time as akin to Rick Santelli’s “We need a Tea Party” rant on CNBC.

O’Reilly tried to soften the blow by bloviating (his word) about the American work ethic and how “most Americans have too much pride to stop working … that being on the dole has a stigma attached to it”

O’Reilly’s words seemed quite hollow in comparison to Miller’s.

And, reminded me of the government government promotional campaign to counter the “pride and other beliefs” that keep people from signing up for the SNAP program and getting food stamps.

The USDA has adopted a range of strategies and programs designed to bring more people to SNAP, including taking on “pride.”

Local assistance offices have been rewarded for “counteracting” pride and pushing more people to sign up for benefits.

The Ashe County Department of Social Services in Jefferson, N.C., for example, received a “Gold” award for confronting “mountain pride” and increasing food stamp participation.

“Eventually, many accepted assistance from the Low Income Energy Assistance Program, the Qualified Medicare Beneficiary program, and others, in some cases doubling a household’s net income. In 1 year, SNAP participation increased over 10 percent.”

Overcoming “beliefs” is a stated method from the USDA to bring more people to the program.

A “Supplemental Nutrition Assistance Program (SNAP) Community Outreach Partner Toolkit” details the importance of reaching people who … have beliefs that conflict with accepting food stamps.

Excerpted from the Daily Caller

Since the USDA has “mountain pride” in the win column, will “work pride” be the next to fall?

I think Miller is onto something.

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Which Federal government agency is rated lowest?

September 24, 2012

Answer: the Department of Education

As Nick Cannon would say on AGT, “America has voted … via a Pew Research poll.

Despite spending hundreds of billions of dollars over the past couple of decades*, the Department of Education gets the fewest favorability nods for Americans …  only 40% give it a favorable rating … and its favorability rating is falling faster than any other agency.

The Education Dept’s low ratings aren’t that surprising since the U.S. is constantly reported to be trailing other developed nations in math, science and other basic skills … and since every politician lasers in on our need to fix public education (while protecting the sanctity of the teachers’ unions).

Second lowest is the IRS … also not surprising given its adversarial role versus citizens …  imagine the IRS rating once the 15,000 new agents start enforcing the ObamaCare mandates on companies and individuals.

I was surprised to see the low rating for the Social Security Administration … especially since its primary mission is handing out money.  Best hypothesis I can conjure is that the SSA is generally regarded as a hassle to deal with, and probably gets the brunt of ill-feelings when folks can’t make ends meet when on Social Security.

Initially, I was most surprised to see the comparatively high score for the oft-maligned Post Office … with an 89% favorability score, it’s 10 points higher than #3 – the Center for Disease Control.

Come to think of it, the Post Office hasn’t disappointed me often – especially given the number of transactions it handles.  In fact, our local Post Office and our neighborhood mail carrier provide really good service.  I guess that happens when people are customers not captives, and when there is some private enterprise competitors keeping the system somewhat on its toes.

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* Source re: Dept. of Education Spending

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Is the Federal government a good value?

August 28, 2012

A Kaiser Foundation survey asked folks:

Thinking about all that the Federal government does for you, do you think that you get more or less value than what you pay in taxes?

The results

  • Less than 10% said that they got more value than what they paid in taxes.
  • About 1/3 thought they got about the right value for taxes paid
  • More than half of the respondents said that they got less value than what they paid in taxes.

Of course, the last finding is most interesting since it’s a majority … and since about half of the folks don’t pay any income taxes.

Hmmm

* * * * * *

Source question

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Why are (some) people opposed to big government?

August 21, 2012

Background

A colleague and I have been exchanging ideas on this topic.

He’s more liberal than me (no surprise), so it’s an interesting exercise.

We’re starting to find some common ground and develop testable hypotheses.

Here’s one of our initial observations.

Chime in, please … would love your input on this and subsequent reveals.

 

The big shift in government’s “mission”

Long ago, say 40 or 50 years, the central government mission was to provide essential common services … such as military defense and national infrastructure (aka. “Transportation”).

That mission has become more “mixed” over time (see chart below).

Spending on the original essential common services – while still substantial — are proportionately decreased.

For example, military defense was almost 30% of Federal spending in 1970 … it’s less than 15% in 2012.

Some additional layers of spending – consistent with the original mission of essential common services – have been added.

For example, Homeland Security (aka. “Protection”) has been substantially ramped up.

But, the bulk of additional spending over time is attributable to health & welfare entitlements, public employee pensions, education (mostly new Federal programs and administration).

Time bomb warning: Note that “Interest” on the public debt has remained proportionately constant over the 40 year period.

But, of course, the components are very different.

In 1970, there was relatively low debt but high interest rates.

In 2012, we have very high debt with historically low interest rates.

The obvious uh-oh: what happens when interest rates jump up to more “normal” levels?

In other words, spending trends seem to validate the observation that the implicit “government” mission has expanded from a relatively sharp focus on providing essential common services by (1) expanding the scope of declared “essential common services (think DOE and Dept. of Education) and (2) re-missioning to become increasingly a transfer payment hub for “safety net” entitlements.

Ergo the rub.

More to come.

Your views?

 

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Perhaps, the sloppiest analysis ever …

May 30, 2012

Well, maybe that’s hyperbole, but it’s certainly a candidate.

Last week, some jabrone named Rex Nutting blogged in MarketWatch that the “Obama spending binge never happened”.

Nutting cooks some CBO numbers to conclude that “under Obama, federal spending is rising at the slowest pace since Dwight Eisenhower brought the Korean War to an end in the 1950s.”

Oh really?

The crux of his argument is that all the surge in Fed spending occurred in FY2009 — the last year of the Bush presidency.

Barack the Austere has just been treading water.

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Hmmm.

Apparently Nutting wasn’t aware that Fed fiscal years run from Oct to Sept, so FY2009 was 3/4s Obama … and included about $1 trillion of his Stimulus and bailouts.

So, the real story is that Obama uber-boosted spending to try to stimulate the economy and had has kept spending at that higher level.

Hardly belt tightening.

Nutting’s analysis was so bad that the pro-Obama Washington Post gave it 3 Pinnochios … for “significant factual error and obvious contradictions.”

That didn’t stop the President from repeating the bogus conclusion in his campaign speeches yesterday.

Shame, shame.

P.S. The entire Wash Post fact-checker article is worth reading … an example of a good analysis .. with links to a couple of other pretty good analyses.

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Presidential “piggybacking” … your tax dollars at work (but only if you pay taxes)

April 19, 2012

In an earlier post “Government Gone Wild?”, I said:

If the President takes day trips on Air Force One to campaign, why shouldn’t GSA folks take day trips to Hawaii for ribbon cuttings?

A loyal, left-leaning reader (maybe now a former left-leaning reader) challenged the Homa Files fact-checkers as “just plain wrong” since:

The campaign reimburses the federal gov’t for the usage of Air Force One and costs associated with protection of the POTUS directly related to campaigning.

My immediate reply:

There is partial reimbursement …. the campaign pays for “incremental costs not related to official business” …. it’s not prorated …. when he gives a 30 minute Buffett Rule speech and does 3 hour long fund-raisers, the campaign doesn’t pay for 75% (or 85%) of the cost of the trip.

Just to sure, we doubled back on the facts.

Landed on a point-on article by ever right-wing ABC: Presidential Piggybacking: Obama Trips Combine Official, Political Business

The act of presidential piggybacking — coupling official duties, in this case a speech on the economy, with political fundraising — was not pioneered by Obama but is prominently on display this year.

The president’s jet-setting has raised the curiosity and questions from taxpayers about who bears the sky-high costs.

Official presidential travel has traditionally been paid for by taxpayers as part of executive branch operations, while political trips and events are to be covered by a candidate’s campaign committee.

On the occasions that they mix, the costs are to be split.

“Most presidents have doubled up on trips and said they followed the law, which is a complex formula no one really understands. At the end of the day the Federal Election Commission has not been abundantly clear about how the costs of mixed purpose travel should be paid for”

As a rule of thumb, an incumbent president’s campaign is expected to reimburse the government the cost of a first class commercial airline ticket for each person riding Air Force One to or from a political event.

But the amount doesn’t come close to covering the proportional operating cost of Air Force One, or the army of Secret Service agents, White House advance teams, the fleet of Air Force cargo planes transporting the presidential motorcade or the helicopters that often ferry the president from an airport to a remote site.

Air Force One alone cost $179,750 per flight hour in fiscal year 2012.

That figure includes fuel, flight consumables, depot level repairs, aircraft overhaul and engine overhaul. Pilot and airmen salaries are not included because they are paid regardless of the plane’s use.

On a recent three-day, three-state swing that included two official events and eight fundraisers, netting more than $8 million, incurred flight costs alone of $2.1 million, based on the Air Force figure and flight times gathered from press pool reports.

The Obama campaign has reimbursed more than $1.5 million for travel so far this election cycle, according to FEC records.

Read that last paragraph carefully.

80% of the “stops” of the cited trip were campaign-related.

And, just the cost of AF One were over $2 million.

So, you’d expect that the Obama Campaign would have picked up at least $1.6 million of the costs — just for AF one, just on this one trip.

But, according to ABC, the Campaign has only picked up $1.5 million in total, for the entire campaign cycle so far.

C’mon man.

I say to the GSA guys: Go cut some ribbons” … Why not?.

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Mindreader: “I’m not picking up a signal”

April 6, 2012

According to the Journal of Commerce, the head of the General Services Administration (GSA) and top staff got pink slips for spending $800,000 on a Las Vegas conference.

U.S. Rep. John L. Mica (R-FL) sniffed out that “the tab even included a clown for entertainment” and huffed that “this is just the tip of the iceberg.”

Boy, that’s for sure.

Riding lower on the conference iceberg was a mindreader, leading Rep. Mica to wonder “if the $3,200 mind reader told GSA officials that blowing more than $800,000 on a Vegas conference for a few hundred bureaucrats would get them fired?”

Silly question. 

Mindreaders read minds, they don’t tell fortunes.

Fortune tellers tell fortunes.

Maybe they should have hired a fortune teller …

* * * * *

P.S Yeah, the expenses sound a little high, but c’mon, man  … every conference I’ve ever been to has had some entertainment … and a mindreading act isn’t exactly el primo education.

Also, while I love to pick on gov’t waste, I’m told that the GSA does a pretty solid job.

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MoFoFree: Cell phones update …

February 15, 2012

Punch line: Wireless operators like Sprint Nextel are building a big business providing free cellular service to the poor. Taxpayers pick up the tab.

Ouch

* * * * *

Last year, we blogged about the Feds free cellphone service to low income folks.

You see, chatting and texting is an entitlement that tax payers are morally required to subsidize.

Say, what?

The program started with good intentions: to provide every low income household with a landline for emergency use.  No long distance.  No special service.  Just local calls and 911.

No problem.

Well, then landlines became “so yesterday” and the program morphed to cell phones

And, guess what?

Demand is exploding.

According to Business Week:

Companies like Sprint Nextel aren’t driven by altruism.

Serving cash-pinched customers  can pay off due to federal government subsidies.

And finding new customers isn’t hard.

Now the poor or unemployed form a large pool of would-be customers.

With unemployment at 9.4 percent and one in six Americans living in poverty, Sprint and  TracFone have seen an explosion in sign-ups for the government-subsidized free wireless services. 

Applicants have to be eligible for Medicaid or several other low-income assistance programs, have a family income significantly below the local poverty level (poverty guidelines vary by state), or receive food stamps.

In October, 43.2 million received such food assistance, up 14.7 percent from a year earlier.

Despite the rules, it’s reported to be  pretty easy to get one of these phones – or to get several of them.  Think “no doc” mortgages with fewer controls.

One reported scam is for qualified people to sign up, sell their phones on eBay, and then go back to the government  trough for another phone.

But, not to worry.

Also according to Business Week: “A staffer at the Federal Communications Commission, which oversees carriers, says the agency may consider tightening oversight and cost management of the fast-growing program.”

That’s a relief, for sure.

And, oh yeah … under consideration is extending the program to broadband service.

Gimme a break already.

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From the “No Choice but to Withhold Granny’s Check” file …

July 27, 2011

Courtesy of http://dirtyspendingsecrets.com/

Sure wouldn’t want to cut any of these fine programs.

  • Incredibly, Washington is spending $2.6 million training Chinese prostitutes to drink more responsibly on the job.
  • Congress recently gave Alaska Airlines $500,000  to paint a picture of a Chinook salmon on a Boeing 737
  • Federal employees cost taxpayers $146 million each year when they upgrade to business class flights. The Government Accountability Office found that more than half of these upgrades were not properly authorized.
  • The government has spent $3 billion to re-sand our nation’s beaches. Advocates claim this prevents erosion and keeps the beaches attractive to tourists. But the National Oceanic and Atmospheric Administration says the sand does nothing to prevent erosion—and this sand gets swept out to sea just as easily as existing sand!

Pick your favorite …

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About those oversized government pensions …. what about Congressmen?

March 10, 2011

The flap over government employees’ pensions resurrected an old question of mine: I’ve always wondered what retired members of the Congress and Senate got to live on when they retired.  Here’s the scoop ..:

* * * * *

Members of Congress are eligible for a pension at age 62 if they have completed at least five years of service.

Members are eligible for a pension at age 50 if they have completed 20 years of service, or at any age after completing 25 years of service.

The amount of the pension depends on years of service, an accrual rate (2.5%), and the average of the highest three years of salary.

For example, after 30 years of Congressional service and a high-3 average salary of $161,800, the initial annual Civil Service Retirement System (CSRS) pension for a Member who retired in December 2006 at the end of the 109th Congress would be: 
                $161,800 x 30 x .025 = $121,350

  • Note: It’s unclear whether the qualifier is Congressional service or civilian government service … both terms are used.
  • Note: Base pay for Representatives and Senators was $165,200 in 2006.

Federal law limits the maximum CSRS pension that may be paid at the start of retirement to 80% of the Member’s final annual salary

As of October 1, 2006, 413 retired Members of Congress were receiving federal pensions based fully or in part on their congressional service. Of this number, 290  had retired under CSRS and were receiving an average annual pension of $60,972.

In 1983, Congress passed a law (P.L. 98-21) that required all federal employees first hired after 1983 to participate in Social Security.

The law also required all members of Congress to participate in Social Security as of January 1, 1984, regardless of when they first entered Congress.

Because the CSRS was not designed to coordinate with Social Security, Congress directed the development of a new retirement plan for federal employees, called the Federal Employees Retirement System (FERS), which does coordinate a federal pension with Social Security.

A total of 123 Members had retired with service under both CSRS and FERS or with service under FERS only. Their average annual pension was $35,952 in 2006.

Since, on average, SS benefits are typically around $24,000 annually,  the total is bumped to about $60,000.

Bottom line: a typical member of Congress get a pension of about $60,000

According to the National Taxpayers Union, the Congressional pension program is about two-to-three times more generous than the average corporate executive pension plan, .

* * * * *

Source:
http://www.senate.gov/reference/common/faq/retirement_for_members.shtml

Full report:
http://www.senate.gov/reference/common/faq/retirement_for_members.shtml

Perspective on Federal revenues (aka “taxes) …

January 3, 2011

Interesting chart from Heritage, referenced in a Forbes article …

Couple of takeaways:

As the headline says, Fed revenues have tripled since 1965 … that’s about 3% per annum … pretty much in line with GDP growth.

No big news there.

I added the line connecting 1965 and 2010 … note the 2 recent bulges above the long-term trend line … the first courtesy of the Clinton tax hikes and the dot-com bubble …  the 2nd courtesy of the Bush tax cuts and the housing bubble.

What’s common?

Fed revs jumped during the bubbles … but, rather than the Feds treating the inflows as “found money”, they treated it as a permanent change in the revenue stream and poured it into spending programs … all of which are now apparently untouchable.

Hmmm.

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This ad says it all …

October 25, 2010

Watch it first, then read the background below …

http://www.youtube.com/watch?v=OTSQozWP-rM&feature=player_embedded

Background

“Last week, Citizens Against Government Waste (CAGW) unveiled a national ad addressing our country’s spending addiction, the dangers of relentless deficits, and the corrosive nature of our national debt.

The ad features a chilling look at one potential future scenario if America continues on its current destructive fiscal trajectory.

The new ad is part of an ongoing communications program in CAGW’s decades-long fight against wasteful government spending, increased taxes, out-of-control deficit spending, and a crippling national debt that threatens the future and survival of our country.

CAGW plans to run the ad on major cable networks throughout the rest of 2010 and into 2011.”

http://www.cagw.org/

 

Bailing out government pension plans …

June 23, 2010

There has been mucho chatter recently about gov’t pay levels which exceed comparable private industry rates and gov’t pension plans that make the UAW envious.

Bottom line: Many states have crafted gov’t pension plans that are going to implode in the not too distant future.

So, tax payers in fiscally responsible states will be forced to ante more into the pot to bail out the free-promising, overspending states.

Think about it next time you’re standing in line at the DMV.

* * * * *

Bloomberg: Pension Plans Go Broke as Public Payrolls Expand, June 11, 2010

Seven states will run out of money to pay public pensions by 2020.

That hasn’t stopped them from hiring new employees.

The seven are Illinois, Connecticut, Indiana, New Jersey, Hawaii, Louisiana and Oklahoma.

Combined, these states added 9,700 workers to both state and local government payrolls between December 2007 and April of this year.

Companies started firing more employees than they hired in January 2008.

Employment peaked in December 2007 at 115.6 million. During the subsequent two years, companies shed 8.5 million workers, or 7.3 percent.

By contrast,  from a peak of 19.8 million, state and local governments have reduced headcount by 231,000, or 1.2 percent.

What our politicians are telling us is that state and local governments are optimally sized — just right.

If tax revenue declines, well, then we’ll just have to find more taxes and fees to replace it.

We couldn’t possibly look at the cost-of-labor side of the equation.

If you really want to provoke outrage, you have to take into consideration public pensions.

Generous and bloated are the terms that have been used to describe them … What’s clear is that such pensions and benefits now seem unaffordable, because those responsible — state and, sometimes, local governments — didn’t put away enough, or haven’t invested wisely enough, to pay for them.

Full article:
http://www.bloomberg.com/apps/news?pid=20601039&sid=awW.rqJzAad4

Your tax dollars at work …

February 8, 2010

In case you missed it last nite, our government spent $2.5 million of our tax dollars (the equivalent of 50 firefighters for a year)on a ridiculous 30 second spot for the 2010 census … part of a $340 million ad campaign.  Ouch.

Click below to view.

For more details: Super Bowl spot kicks off debate over spending on 2010 Census ad campaign
http://thehill.com/homenews/administration/80113-super-bowl-spot-kicks-off-debate-about-census-ad-campaign

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http://www.youtube.com/user/paytonschlewitt

Anybody concerned about the national debt ?

May 19, 2009

Ken’s Take: Next to the government just flat out wasting money, my worry is the burgeoning debt.  Some debt – ok.  But, staggering levels not ok.

When I ask students why they’re unfazed, they admit that the sums are so large that “it’s more like Monopoly money” or”payback is so far off that’s it’s not worth worrying about”.

Somebody is eventually going to have to pay the piper …

* * * * *

Excerpted from IBD, “Why No Focus On Huge Ongoing Debt?”,
May 15, 2009

Since 1961 the federal budget has run deficits in all but five years. But the resulting government debt has consistently remained below 50% of GDP; that’s the equivalent of a household with $100,000 of income having a $50,000 debt. Adverse economic effects, if any, were modest.

From 2010 to 2019, Team Obama projects deficits totaling $7.1 trillion; that’s atop the $1.8 trillion deficit for 2009.

By 2019, the ratio of publicly held federal debt to gross domestic product (GDP, or the economy) would reach 70%, up from 41% in 2008.

The CBO, using less optimistic economic forecasts, raises these estimates. The 2010-19 deficits would total $9.3 trillion; the debt-to-GDP ratio in 2019 would be 82%.

By CBO’s estimates, interest on the debt as a share of federal spending will double between 2008 and 2019, from 8% of the total to 16%.

One reason Obama is so popular is that he has promised almost everyone lower taxes and higher spending. The president doesn’t want to confront Americans with choices between lower spending and higher taxes — or, given the existing deficits, perhaps less spending and more taxes.

Closing future deficits with either tax increases or spending cuts would require gigantic changes.

Full article:
http://www.ibdeditorials.com/IBDArticles.aspx?id=327285979616580

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It’s simple arithmetic … your taxes going up

April 9, 2009

Excerpted from WSJ, “Obama Plans Sound Fiscally Responsible But Don’t Add Up”, April 9, 2009

For years, the American people have been told they could have it all: costly wars, expansion of Medicare to cover drugs, health insurance for those without, more money for schools — and tax cuts for practically everybody. They deserve to be told that they can’t have it all in the future.

In the 1930s and the 1960s, the government began popular programs to support the sick and the elderly. The cost of treating the sick is rising, and the number of old people climbing. Since 1970, the government has paid for that by cutting defense spending.  But going forward, defense spending will not fall as much as it has, even if the Iraq war ends and the Pentagon is forced to be more efficient.  

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Pres. Obama envisions a federal government that taxes the American economy somewhat more than the historical average and spends significantly more. The president’s own projections show a deficit equal to 3% of gross domestic product well into the next decade, and that assumes all goes well.

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The bottom line:  either taxes as a share of GDP rise or spending on those popular benefit programs (or everything else) is throttled back.

It’s simple arithmetic.

Full article:
http://online.wsj.com/article/SB123921904349802157.html?mod=djemalert

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Turning around the economy on a dollar-a-day …

April 7, 2009

Well, the “middle class tax cut for 95% of workers” has officially started hitting paychecks.

So, if you work but earn less than a couple of hundred grand per year, your paycheck is now about a buck-a-day higher — the $400 tax rebate spread across 365 days.

For perspective, the total stimulus bill was about $800 billion.  The Congressional Budget office estimates that about 1/4 of it  (~ $200 billion) will hit in the first year.  The $400 program is about 1/2 of the $200 billion.

In other words, about half of this year’s stimulus is in place. Yipes.

I hope you’re feeling better about this plan than I am.

* * * * *

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The real Obama …

February 12, 2009

During the campaign, anti-Obama legions cautioned that candidate Obama was an inexperienced, rhetorically muscled purveyor of political bromides with no record of performance or provable sustained beliefs.  Even the notorious Rev. Wright warned that “Barack’s a politician and politicians say and do things to get elected.”

Understandably, many voters were frustrated by President Bush’s well-recognized performance and personality shortfalls, unswayed by John McCain’s erratic campaigning and unnerved with his controversial “long balls” (think Palin and “suspending the campaign”), and vulnerable to Obama’s messianic symbolism, historical breakthrough, and his “cooler than cool” promise of hope and change.

Swing voter’s bought in.  Even though hard evidence was sorely lacking, they concluded that maybe, just maybe, Obama was the real deal and that he would  usher in a new era of cooperation, high sprits, and progress.

The first 20 days of the Obama administration — arguably 20 “dog days” given the economic challenges and the fast-paced, high-pressure  legislative turmoil — have provided the answers to questions regarding Obama’s character, positions and executive style.  The real Barack Obama has revealed himself — for better and for worse.

First, President Obama has stayed true to his stated support for abortion rights, terrorist rights, unions, and community organizations.  And, he has been consistent in his suspicion and disdain for businesses and the people who run them.  Nobody should be surprised by any executive orders and bully pulpit proclamations on those topics.  On those counts, the voting majority got what they should have expected, and apparently, what they wanted.

But, there have been serious — and much forewarned — contradictions revealed, too.

The spirit of post-partisan cooperation was initially showcased in jaunts to “the Hill” and one-on-one meetings with weak-kneed Republicans at the White House, but quickly replaced by “We won. We trump.”

The promise of “line by line scrubbing of waste in the budget” was immediately discarded for “about the right size and scope” and “no time to wait for perfection”.

The “no special interests” promise was modified to allow unions and machine politicos to get seats at the table.

The “new faces, well-vetted outsiders” became a parade of recycled Clintonites, and tax-dodgers.

Obama’s discipline, “Mr. Cool” demeanor, and rhetorical splendor quickly denigrated to an amateurish lack of legislative control, and un-presidential sarcasm and attack-dogging.

The politics of “hope and change” were shelved in favor of the politics of catastrophe-mongering and political monkey business as usual.

President Obama has dutifully heeded Rahm Emmanuel’s advice to “never let a good crisis go to waste.  While the legislative process has been sloppy, the President ended up getting what he wanted in his stimulus package.

Unfortunately, the expensive grab bag of pork and paybacks is unlikely to have any perceptible stimulative effect on the economy.  For the next year or two, we’ll be hearing that Bush’s failed policies left the economy in even worse shape than anyone imagined and we’ll get bombarded with TARP-like claims that things would have been even worse without the added spending.  Jobs will continue to evaporate, but at a slower rate than some made up “what if” number.

The President has deftly managed to move his social agenda forward at warp speed.  His refundable tax credits are now in place, and a voting majority of Americans will pay no income taxes.  Healthcare is officially on the track to nationalization, Alternative energy gets a boost with government rules and spending.

In November, the majority of Americans were willing to bet on the come for hope and change.  Now, President Obama keeps reminding us that he won, so he — along with Pelosi and Reid — set the rules.  The rules are becoming clearer by the day.

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Stimulus tax breaks: going for the capillaries instead of the jugular

February 11, 2009

The tax cuts included in the current version of the stimulus bill deserve the resounding “thud” that they’ve been getting.

Setting ideology aside and just resorting to basic arithmetic reveals the plan’s glowing deficiency: it is so “in the box” and marginal that it is unlikely to have any measurable effect on the economy.  Rather than slashing at the economy’s jugular, the tax cuts barely scratch the capillaries.

For example, take President Obama’s pride and joy, the $500 refundable tax credit.  Does anybody really believe that $1.37 per taxpayer per day is going to jump start the economy?    Or, will an extra $40 per month save many struggling mortgage holders from foreclosure? 

Similarly, take the GOP’s idea of a $15,000 tax credit on the purchase of a new home.  Somebody buying a $150,000 home with a 5%, 30 year mortgage would save about $80 on their monthly mortgage payment (getting it down to about $750) and provide a $15,000 equity cushion, just in case home values fall further.  Is that really enough incentive to pull job-threatened folks off the sidelines? 

The annual AMT adjustment would have happened later in the year anyway, especially since its greatest impact is in Democratic strongholds with high state income taxes (think NY, CA. NJ, and CT). That said, its average impact is about $2,400 for affected taxpayers.  These folks earn enough to have an AMT problem, so an extra $200 per month isn’t likely to change their shopping behavior, let alone their life style.

The biggest business tax break is the tax loss carry backward which allows retroactive tax credits (refundable I assume) for companies that made money during the boom but are tanking during the bust.  Again, the extra money may keep some marginal companies on life support for awhile, but isn’t likely to turn a struggling company into a jobs creator.

Congressional thinking has been trapped in partisan boxes.  Many ideas have been death-branded as either old and tired, or as favoring the rich.  No big ideas have been proposed that could realistically get the economy moving again.

There are big ideas for the politicos to consider if they are really serious about moving the economy forward.

First, there is the tried and true investment tax credit.  Give companies a 15% ITC for investment spending in 2009, and a 10% ITC for investment spending in 2010.  If necessary, sweeten the pot by allowing 2009-2010 investments to be written off on a very accelerated basis (say, over 3 or 5 years).

Second, give multi-nationals a tax holiday on repatriated earnings.  Cut the 2009 rate from 35% to 5% or 10%.  Such a move could bring over $500 billion back into the U.S. from foreign stashes, and generate $25 to $50 billion incremental tax revenue.  Otherwise, companies will use the money in their foreign operations and the U.S. tax take will be zero.

Third, give companies that maintain or grow their workforce a payroll tax rebate.  For example, a company that contributes the same amount of payroll taxes in 2009 as it did in 2008 might get 25% of its aggregate contributions rebated; a company that pays in10% more payroll taxes year-to-year might get a 50% rebate. A company that shrinks its workforce gets no rebate.

Fourth, since a depressed housing market is the root cause of the economic turmoil, adjust the standard income tax deduction a bit and allow the two-thirds of all taxpayers who use it to deduct their home mortgage interest payments.  This move alone would put money into more than 35 million pockets, might save a few people from foreclosure, and could coax some new buyers into the market.

Fifth, eliminate capital gains taxes on all residential real estate purchased in 2009 that is held at least 18 months. This initiative would certainly get investor-landlords back into the market.  They could buy some of the existing excess homes’ inventory, and deploy it as affordable rental housing.

Sixth, eliminate capital gains on all stocks bought in 2009 and held for at least 18 months.  Doing so would jolt the stock market upwards.  Would it favor the rich? Sure.  But it would also help restore the value of soon-to-retire baby boomer’s IRAs.

These ideas are representative of the pool of big ideas that have been overlooked in the stimulus package. It is time for Congress and the President stop playing small ball and go for the fences.  Give us something that we can believe will work.

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“Up to 4 million jobs created or saved”

February 10, 2009

Call me cynical, but Pres Obama’s promise of  “up to 4 million jobs created or saved” sounds like a pretty soft metric to me.

First, there’s the “up to” part.  So, if the final answer is, say 2 million, the metric is made.

But, the real weasle room is in the “created or saved”.  What exactly is a saved job?  How do you know one when you see it?

My bet: For the next year or two, we’ll be hearing that Bush’s failed policies left the economy in even worse shape than anyone imagined and we’ll get bombarded with TARP-like claims that things would have been even worse without the added spending.  Jobs will continue to evaporate, but at a slower rate than some made up “what if” number.

For sure, we’ll have saved up to 4 million jobs.

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What’s magic about one stimulus bill? … Answer: nothing … so bite size it

February 5, 2009

Pres Obama and his surrogates have taken to repeating a mantra: the stimulus bill must be big and must be enacted quickly or else we’ll face an economic catastrophe.  The logic: we’re already taking a shelling and economists say $1 trillion is about the right number.

I’m struck that the emphasis is on big and quick … not right and effective.

There are parts of the proposed bill that make sense and seem to have consensus — e.g. extending unemployment benefits.  Others are debatable philosophically but can probably pass the “does it stimulate” criteria — e.g. Barack O’s $500 refundable tax credits.  Many (most ?) are outright pork and pay-offs.

Why not break the bill into parts?  Pass the stuff that’s on target and relatively non-contentious now … then debate the marginal and flakey stuff in due course.  Since most of that stuff won’t make a bit of difference to the economy, delaying won’t matter.

Even if $1 trillion is the right number, we can roll up to it … it’s not necessary to swallow it in one huge gulp.

What am I missing?

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What's magic about one stimulus bill? … Answer: nothing … so bite size it

February 5, 2009

Pres Obama and his surrogates have taken to repeating a mantra: the stimulus bill must be big and must be enacted quickly or else we’ll face an economic catastrophe.  The logic: we’re already taking a shelling and economists say $1 trillion is about the right number.

I’m struck that the emphasis is on big and quick … not right and effective.

There are parts of the proposed bill that make sense and seem to have consensus — e.g. extending unemployment benefits.  Others are debatable philosophically but can probably pass the “does it stimulate” criteria — e.g. Barack O’s $500 refundable tax credits.  Many (most ?) are outright pork and pay-offs.

Why not break the bill into parts?  Pass the stuff that’s on target and relatively non-contentious now … then debate the marginal and flakey stuff in due course.  Since most of that stuff won’t make a bit of difference to the economy, delaying won’t matter.

Even if $1 trillion is the right number, we can roll up to it … it’s not necessary to swallow it in one huge gulp.

What am I missing?

* * * * *

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Did the Social Security crisis just go away ?

February 4, 2009

A couple of years ago, the hot socio-economic topic was the projected insolvency of Social Security. 

Remember how Al Gore wanted a “lock box” to insulate FICA contributions from Congressional money grabbers?  Or, how Bush wanted to privatize Social Security so folks could earn higher returns?

Now, pundits (e.g. Robert Reich, Larry Lindsay) are calling for payroll tax holidays.

President Obama is bound and determined to give payroll tax rebates to low income folks who don’t pay income taxes.  That is, to reduce their Social Security contributions … by about $135 billion annually.

Does that mean that Social Security has miraculously found strong financial footing?

Hardly.

Social Security is a trust fund (currently over $2 trillion).  Workers make contributions to the trust and draw benefits from it when they retire or become disabled.  In concept, the contributed inflows and trust earnings (i.e. interest) are supposed to cover the benefit outflows. (Think Ponzi and Bernie Madoff … see excerpted article “Social Security: National Ponzi Scheme ” below)

Currently, about $785 billion in Social Security taxes are collected annually  from about 163 million workers and $585 billion in benefit checks are sent out  to 50 million Social Security recipients.

Well, according to the Social Security trustees, because of demographic shifts (i.e. more retirees, fewer workers), outflows will exceed inflows somewhere around 2020 — a little earlier if interest on the trust isn’t counted, a little later if it is.  And, they project that the trust fund will be completely exhausted by around 2040.

With t-bill rates now hovering slightly over zero, earnings on the Social Security trust must be minimal (and less than considered in the projections).

So, if the Feds cut contribution inflows to the trust by over $100 billion annually, won’t Social Security be in a world of hurt — sooner rather than later?

I haven’t heard any of Obama’s smart guys in the room talking about this part of the problem … and it’s a big part !

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Excerpted from IBD, “Social Security: National Ponzi Scheme”, Williams, February 02, 2009

Congress collects about $785 billion in Social Security taxes from about 163 million workers to send out $585 billion to 50 million Social Security recipients.

Social Security’s trustees tell us that the surplus goes into a $2.2 trillion trust fund to meet future obligations.

The problem is that whatever the difference between Social Security taxes taken in and benefits paid out, Congress spends it.

What the Treasury Department does is give the Social Security Trust Fund non-marketable “special issue government securities” that are simply bookkeeping entries that are IOUs.

According to Social Security trustee estimates, around 2016 the amount of Social Security benefits paid will exceed taxes collected.

That means one of two things, or both, must happen: Congress will raise taxes and/or slash promised Social Security benefits.

Each year the situation will get worse since the number of retirees is predicted to increase relative to the number in the work force paying taxes.

In 1940, there were 42 workers per retiree, in 1950 there were 16, today there are three and in 20 or 30 years there will be two or fewer workers per retiree.

Full article:
http://www.ibdeditorials.com/IBDArticles.aspx?id=318470763456742

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