Archive for the ‘Government & Politics’ Category

Stop right there, professor … proof of citizenship, please !

June 16, 2016

Unfortunately, this has become an annual event.  A summer initiation of sorts.

Once again, I was detained for questioning by government officials.

This year was unusually unnerving.

No, it wasn’t by rogue TSA agents targeting an alleged conservative blogger.

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Once again. I was suspected of crossing a border to illegally access government-provided services.

Here’s the story …

Yes, your (usually) mild-mannered man of the classroom … stood up on suspicion of unlawful conduct.

An intimidating officer of the state demanded to see a photo ID — proof of citizenship – and my car’s registration.

Really !

OK, it wasn’t the U.S.- Mexico border … it was the Maryland-Virginia border.

The services that I was allegedly attempting to use illegally: use of the “Anne Arundel County landfill and recycling center” (a.k.a. the local dump).

That’s right.  In order to throw an old desk chair into the landfill dumpster, I had to show my driver’s license and to produce proof of Anne Arundel County, Maryland residency.  Fortunately, I may be the only person in Maryland driving around with paid real estate tax bills in my glove compartment.

Think about it.

Maryland is a state that – for example – reportedly looks the other way when it comes to admitting illegal immigrants into public schools and allows them to pay in-state tuitions at colleges.  No harm, no foul.

Photo ID to vote in Maryland?

No way !!!

Discriminatory.

But, the line gets drawn in the sand at the local dump.

I didn’t really mind showing my ID docs, but the situation certainly did make me scratch my head (again) …

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DC’s anti-burglary initiative off to a bad start …

January 8, 2016

Let’s end the week with something from the you-can’t-make-this-stuff-up file …

There has been an epidemic of burglaries in DC.

The DC police chief chalks it a change in criminals’ organization structure:

“We used to say that violence was neighborhood-based … now criminal street gangs are organized around armed robberies.

They’re involved in a high number of robberies and they don’t just do it in one neighborhood.”

In MBA-speak, they used to be organized geographically … now they’re organizing functionally.

Hmmm.

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Recognizing the problem, Mayor Muriel Bowser did the what mayors do ….

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Stop right there, professor … proof of citizenship, please !

June 25, 2014

Unfortunately, this has become an annual event.  A summer initiation of sorts.

Once again, I was detained for questioning by government officials.

This year was unusually unnerving.

No, it wasn’t by rogue IRS agents in Cincinnati targeting an alleged conservative blogger.

 

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I was suspected of crossing a border to illegally access government-provided services.

Here’s the story …

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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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Nums: Scandals important, but O’s rating is up … say, what?

May 19, 2013

The term “Teflon president” is being re-calibrated.

Here’s a head-scratcher:

Despite the Benghazi, IRS and AP scandals, CNN reports that Obama’s job approval ratings have bumped up.

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That’s despite the parallel findings that respondents think the 3 scandals are important, that they are indeed scandals, and that they think that the GOP-led Congress is handling the matter correctly.

Here are some details …

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Nums: Will the scandal hurt the IRS’s image?

May 17, 2013

Trick question since the public’s perception of the IRS is already pretty low

According to A Pew survey, the Internal Revenue Service, now under intense scrutiny for singling out conservative groups,  is one of the least-popular federal agencies.

Specifically. the IRS ranks 11th out of 14 agencies (the 13 listed below plus the Homeland Security Department) in terms of public perception of their performance.

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Only 47% of people surveyed said they had a “very” or “mostly” favorable opinion of the IRS.

Hmmm.

That pesky 47% number.

 

I guess that folks who don’t pay income taxes think that the IRS lightening everybody else’s wallets is way cool.

The IRS is the second-lowest among the 13 agencies people were asked about.

The only agencies ranking lower were Eric Holder’s Justice Department (38% excellent or good), the Social Security Administration (36%) and Arne Duncan’s Education Department (33%).

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Stop right there, professor … proof of citizenship, please !

May 16, 2013

Unfortunately, this has become an annual event.  A summer initiation of sorts.

Once again, I was detained for questioning by government officials.

This year was unusually unnerving.

No, it wasn’t by rogue IRS agents in Cincinnati targeting an alleged conservative blogger.

image

I was suspected of crossing a border to illegally access government-provided services.

Here’s the story …

(more…)

Gotcha: IRS admits to targeting “Patriots” … turns attention to ObamaCare enforcement.

May 13, 2013

Just in case you missed the news last Friday, the IRS publicly admitted that it targeted conservative groups during the 2012 election … and then shielded itself behind a George Castanza defense.

Here is the WSJ summary of the IRS disclosure:

Yesterday,an Internal Revenue Service official disclosed for the first time, and by way of apologizing, that the agency that wields the taxing power of the federal government had targeted conservative groups for special scrutiny during the 2012 election season.

A spokeswoman acknowledged that the agency had flagged groups with the words “tea party” or “patriot” to have their tax returns inspected.

In addition, the agency was targeting groups raising  “issues regarding government spending, government debt or taxes”,  or …  how to  ‘make America a better place to live’WSJ update

She added the tax inspections were carried out entirely by low-level workers in Cincinnati without any direction from Washington.

Here’s my take on the IRS revelations:

First, a couple of weeks ago Obama bristled at the thought that some (many ?) folks don’t trust the government. 

What does the jabrone expect if his administration turns its bulldogs on its political opponents?

Can you imagine the outcry if George Bush had told the IRS to key word search “Muslim”, “Islamic”,”Progressive” or “choice” and then said to go get ‘em.

All hell would have broken loose.

Second, about the “don’t blame me, it was somebody in my organization” defense …

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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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Cajones: Congress considers an exemption to ObamaCare … to themselves!

April 26, 2013

From the you can’t make this stuff up files …

During the 2009-10 battle over what’s now dubbed Obamacare, Republicans insisted that Capitol Hill hands must have the same health care as the rest of the American people.

Now, according to left-leaning Politico, “Congressional leaders in both parties are engaged in high-level, confidential talks about exempting 535 lawmakers and their aides from the insurance exchanges they are mandated to join as part of ObamaCare.”

“The lawmakers — especially those with long careers in public service and smaller bank accounts — are concerned about the hit to their own wallets.”

Obviously, “by removing themselves from a key ObamaCare mandate, lawmakers – who passed the law — and aides would be held to a different standard than the people on whom they’re imposing the law.”

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Picture credit

Politico keenly observes: “If Capitol Hill leaders move forward with the plan, they risk being dubbed hypocrites by their political rivals and the American public.”

You think?

Good for us, bad for them.

Hmmm.

There’s more. Here’s the real head-scratcher …

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Uh-oh: Where did the bombers get the money?

April 24, 2013

I’d been wondering – since there has been no mention of jobs – how the bomber brothers got the dough to (a) live (b) travel to Russia for 6 months and (c) construct weapons of mass destruction.

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The older brother didn’t have a job and the younger one was a pot-smoking college student.

The Boston Herald has just surfaced one avenue: that they (and their parents) were on the government welfare dole … so, in effect, taxpayers were paying their way.

Hmmm.

That’s bad, but is welfare enough to fund a terror plot complete with trips to Russia?

Doubt it.

So where did the rest of the money come from.

DHS Chief Napolitano says there’s no way they got it from terrorist groups.

Oh really, Janet.

No way?

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An IRS agent, an FBI agent and a gardener ….

April 22, 2013

No, this isn’t the lead line of a bad joke.

It’s a question of priorities.

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Let’s start with the gardener …

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What’s so shocking about Cyprus’ tax on bank accounts?

March 26, 2013

OK, Cyprus is going to slap a tax on bank accounts over $100,000.

The world is aghast.  The end of financial systems as we know them is in the balance.

Say, what?

It’s not the first time that a government – think, U.S. government — has seized (oops, I meant “taxed”) private assets

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Here are a couple of examples from close to home …

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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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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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Do Americans think that they can trust government?

September 20, 2012

Yes for state and local governments …  the Federal government: not so much.

According to Gallup, less than 1 in 5 Americans say that they trust the Federal government

… over 80% only trust the Federal government some of the time or never.

 

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According to Gallupa majority say that they trust state governments to handle their problems

…. about 2 in 3 think they can trust their local governments.

The lesson to politicos: keep it local … decentralized … closer (and more responsive) to the people.

 

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Does the Federal gov’t have a positive or negative impact on your life?

August 29, 2012

According Pew Research, an increasing plurality (43%) of people think the Federal government negatively impacts their lives.

15 years ago, 50% thought he impact was positive … now,  only 38% think so …..

How do you feel?

 

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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

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Source question

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What’s the government’s GPA?

August 27, 2012

A Kaiser Foundation survey asked folks to grade the government on a traditional A to F grading scale.

Back in 2000, the government scored a “gentleman’s C” … GPA = 2.07.

In the past decade, the GPA has dropped to 1.63 … a C-minus / D-plus.

Hmmm.

Isn’t that probationary at most b-schools?

 

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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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Tanning salons are back in the hot seat …

October 11, 2011

Apparently, the ObamaCare tax surcharge wasn’t enough to kill the tanning business.

Now, California is banning use of tanning salons by minors.

According to Reuters:

Governor Jerry Brown signed a bill on Sunday prohibiting anyone under the age of 18 from using ultraviolet tanning devices.

The bill was part of a cluster of legislation designed to “improve the health and well-being of Calfornians.”

I guess you don’t want to own a tanning salon or Gibson Guitars …

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Shocker: Over 80% of Americans dissatisfied with government

September 29, 2011

Punch line: According to Gallup a record-high 81% of Americans are dissatisfied with the way the country is being governed

As Gomer Pyle would say “surprise, surprise, surprise.”

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Ken’s Take  Carter tanked it, Reagan brought it back, Clinton held it, Bush re-tanked it,  Obama sqandered hope & change to all-time lows.

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Drilling Down

Majorities of Democrats (65%) and Republicans (92%) are dissatisfied with the nation’s governance.

69% say they have little or no confidence in the legislative branch of government, an all-time high and up from 63% in 2010.

57% have little or no confidence in the federal government to solve domestic problems

43% have little or no confidence in the government to solve international problems.

53% have little or no confidence in the men and women who seek or hold elected office.

Americans believe, on average, that the federal government wastes 51 cents of every tax dollar

49% of Americans believe the federal government has become so large and powerful that it poses an immediate threat to the rights and freedoms of ordinary citizens.

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One of the uncelebrated blessings of American capitalism …

September 5, 2011

Interesting snippet from a WSJ tribute piece on Steve Jobs:

Steve Jobs both created the PC revolution and was created by it.

The PC era can be seen as the extension of the superhuman will of this one brilliant, mercurial and far-seeing figure.

Every generation produces a few individuals whose will to restructure the world in their own image is so powerful that they seem to distort reality itself.

They change the world …

That in the U.S., they often choose to pursue entrepreneurship and industry rather than politics is one of the uncelebrated blessings of American capitalism.

Ken’s Take: I’ve often said that – in my business career – I worked with dozens of men & women who are far more capable to lead than those who get elected to Congress or the White House.  Too bad that the Potomac has become so polluted that they can’t be lured to high gov’t positions and we’re stuck with hacks …

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Dems establish some bad precedents … that’ll come back to haunt them.

December 23, 2010

Gotta give the Dems a hat-tip for pushing to the limits of the rules to cram their agenda in.

First, it was using the budget reconciliation process to pass ObamaCare.

Then, came the lamest of lame duck Congresses pushing through some debatable (but not debated or amended) legislative initiatives.

Note: I don’t have a clue whether the START Treaty is a good idea or a bad idea … but for the first time in U.S. history, a treaty is being ratified by lame duckers.  That sure sounds fishy, doesn’t it?

Now, the FCC – working though “executive authority” – implements rules to regulate the internet.  Rules that courts and legislatures have deemed inappropriate use of FCC powers.

Dems are feeling pretty proud about the way they’re using the system to their advantage.

But, as Grandma Homa used to say “what goes around comes around”.

Just wait until the GOP uses the same tactics.

The squealing will be intense.

Prying eyes: gov’t hones in on your financial transactions …

May 25, 2010

The was (and is) broadscale opposition to the Patriot Act provisions that let Feds listen in to phone chats.  But, not much whining about the Feds getting their  hands on all of our health and financial records. 

ObamaCare gives the Feds access to individual health records (though they promise they won’t do anything ontoward with them) ,,,  and the new Financial Reform ductates more detailed accounting of financial transactions.

And, oh yeah, there’ll be 15,000 more IRS agents …

* * * * *

Excerpted from cnnMoney.com: Stealth IRS changes mean millions of new tax forms, May 21, 2010

The 1099 is a catch-all series of IRS documents used to report non-wage income from a variety of sources like contract work, dividends, earned interest and pension distributions.

There’s  massive expansion of requirements for businesses to file 1099 tax forms that was hidden in the 2,409-page health reform bill, but it’s just one piece of a years-long legislative stealth campaign to create ways for the federal government to track down unreported income and close the so-called “tax gap”.

The federal government loses an estimated $300 billion each year from the “tax gap” between what individuals and businesses owe and what they actually pay.

A new 1099-K aims to shine a light on a currently hard-to-track payment stream: credit cards.

Starting in 2011, financial firms that process credit or debit card payments will be required to send their clients, and the IRS, an annual form documenting the year’s transactions. It applies to all payment processors, including Paypal, Amazon.com, and others that service very small businesses.

The 1099 changes attached to the health care reform bill massively expand the requirements for filing the “1099-Misc” form, which companies use for recording payments to freelance workers and other individual service providers.

Until now, payments to corporations have been exempt from 1099 rules, as have payments for the purchase of goods.

Starting in 2012, all business payments or purchases that exceed $600 in a calendar year will need to be accompanied by a 1099 filing.

In essence, the 1099-Misc is having its role changed from a form for tracking off-payroll employment to one that must accompany virtually any sizeable business transaction.

Full article:
http://money.cnn.com/2010/05/21/smallbusiness/1099_deluge/index.htm

Sen. Kerry calls for pirate hearings … and I think it's a great idea!

April 10, 2009

Sen. John Kerry,  the chairman of the Senate Foreign Relations Committee called for hearings on the mounting piracy threat

Kerry said. “I plan to hold hearings to further examine the growing threat of piracy and all the policy options that need to be on the table .”

* * * * *
Ken’s Take:

(1) Now, some people make think hearings on piracy are a waste of valuable Senate time.  I disagree.  It might distract them from the current spending spree.

(2) Which reminds me: whatever came out of the Senate hearings on steroid use in baseball?  That’s another issue I want them spending time on …

(3) Question: Who will testify at the hearings?  Do you think they’ll be able to get real pirates to come and answer Kerry’s inane questions?

(4) Idea: Get Barry Bonds (former Pittsburgh Pirate) to come and testify.  Kills two birds with one stone: steroids and piracy.

* * * * *

Thanks to SMH for the heads-up on this one.

Source article:
http://thehill.com/leading-the-news/kerry-calls-for-pirate-hearings-as-drama-continues-2009-04-09.html

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The Stimulus: Obama’s missed opportunity … to do something right (and maybe great)

February 26, 2009

Ken’s Take: Sameulson is a left-leaning economist, which should give him some broad credibility. I think his analysis is right on target.  Below are highlights.  Full article is well worth reading.

* * * * *
Excerpted from IBD, “Stimulus Needs More Power At Front End” Samuelson, February 20, 2009

Judged by his own standards, President Obama’s $787 billion economic stimulus program is deeply disappointing.

Given his dire warnings (about the economy), you’d expect the stimulus package to focus almost exclusively on reviving the economy. It doesn’t, and for that Obama bears much of the blame. His politics compromised the program’s economics. Look at the numbers.

* * * **

The Congressional Budget Office estimates that about $200 billion will be spent in 2011 or later — after it would do the most good. For starters, there’s $8 billion for high-speed rail …  the design and construction will occupy many years. It’s not a quick stimulus.

Then there’s $20.8 billion for improved health information technology — more electronic records and the like. Probably most people regard this as desirable, but here, too, changes occur slowly. The CBO expects only 3% of the money ($595 million) to be spent in fiscal 2009 and 2010.

The peak year of projected spending is 2014 at $14.2 billion.

Consider the retrofitting of federal buildings to make them more energy-efficient.  Obama says “We’re creating jobs immediately.”  Yes — but not many. The stimulus package includes $5.5 billion for overhauling federal buildings. The CBO estimates that only 23% of that would be spent in 2009 and 2010.

* * * * *

Worse, the economic impact of the stimulus is already smaller than advertised. The package includes a “patch” for the alternative minimum tax. This protects many middle-class Americans against higher taxes and, on paper, adds $85 billion of “stimulus” in 2009 and 2010.

One problem: “It’s not stimulus … Congress was going to do it anyway. They do it every year.” Strip out the AMT patch, and the stimulus drops to about $700 billion, with almost 30% spent after 2010.

The stimulus package offers only modest relief to states. Using funds from the stimulus, states might offset 40% of their looming deficits,. The effect on localities would probably be less.

The stimulus provides most funds to states through specific programs. There’s $90 billion more for Medicaid, $12 billion for special education, $2.8 billion for various policing programs. There’s a big downside: “Temporary” spending hikes for specific programs … will be harder to undo, worsening the long-term budget outlook. The major outcome:  more power centralized in Washington.

* * * * *

No one knows the economic effects of all this; estimates vary. But Obama’s political strategy stunts the impact from what it might have been.

By using the stimulus for unrelated policy goals, spending will be delayed and diluted.

Politics cannot be removed from the political process. But here, partisan politics ran roughshod over pragmatic economic policy. Even the token concessions (including the AMT provision) to some Republicans weakened the package.

Obama is gambling that his flawed stimulus will seem to work well enough that he’ll receive credit for restarting the economy — and not be blamed for engineering a colossal waste.

* * * * *
Full article:
http://www.ibdeditorials.com/IBDArticles.aspx?id=320024639130404

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For the record: here’s what economists were saying pre-stimulus …

February 19, 2009

Since Team Obama has started the chatter that “saving or creating jobs” will be measured against an 11% unemployment rate, I checked to see what economists were saying right before the stimulus was passed.  Consensus was 8.8% — to me that’s the bar to apply to Obama’s program.  Let’s see what happens.

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http://online.wsj.com/public/resources/documents/info-flash08.html?project=EFORECAST07

Article:
http://online.wsj.com/article/SB123445757254678091.html

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Congress and The Big Three: Marriage on the Rocks?

February 18, 2009

Excerpted from Washington Post, “Congress in the Driver’s Seat”, by Kimberly Kindy and Kendra Marr, February 4, 2009

* * * * *

It is the end of an era — one in which automakers ruled Congress, easily deflected pressure to build fuel-efficient cars and packed their trademark shows with super-size SUVs perched on fake mountaintops.

There has been a gradual erosion of the auto industry’s clout in Washington and in state legislatures.

President Obama’s move last week to support strict California vehicle emission standards was another blow to the industry, already reeling from financial pressures and dismal sales.

For decades, Congressional advocates protected the industry from demands for more fuel-efficient vehicles, while sophisticated and expensive lobbying and legal strategies — some taxpayer-funded — also helped the carmakers fight off challenges.

But that kind of rock-solid support in Congress has worn away, as many members say they have been repeatedly misled by the companies’ promises of reform and complaints that new initiatives would spell financial ruin.

* * * * *

In Washington, the auto industry spent $65 million last year to lobby Congress, ranking 16th among all industries, according to the Center for Responsive Politics. Its efforts largely focused on developing a national fuel economy and emissions standard weaker than the one proposed by California.

Industry leaders continue to argue that Congress is trying to force them to build cars Americans don’t want, at least as long as gas prices remain low.

They are asking Congress to pass laws that will spur consumers to buy such vehicles. Industry leaders said drivers in Europe are willing to own smaller cars because gas costs so much more there. Without such incentives, “it puts us in the industry in the position where we are at war with the customer.”

Regardless, some trade groups acknowledge that the landscape has changed, and they are promising to work more cooperatively.

“Has the industry lost its power to say no?” asked the president of the Alliance of Automobile Manufacturers. “The industry is saying, ‘Yes, however. . . . Yes, let’s work it out.’ It’s a different starting point in the discussion. The nature of the industry has changed.”

Edit by DAF

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Full article:
http://www.washingtonpost.com/wp-dyn/content/article/2009/02/03/AR2009020303960_pf.html

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The stimulus package broken down …

February 17, 2009

Great analysis by the Washington Post.  Good numbers and clever charting.

Too big to extract, so here’s the link.  Worth browsing.

http://media3.washingtonpost.com/wp-dyn/content/graphic/2009/02/01/GR2009020100154.gif

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Jefferson (Thomas of Virginia, not William of Louisiana) is rolling over in his grave …

February 17, 2009

These Jeffersonian quotes have been making the email rounds.  Even if TJ didn’t really say this stuff, it’s worth reading.

Too bad TJ wasn’t here for the stimulus debate.  Oops, I forgot.  There wasn’t time for one.

* * * * *

“I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.”

“To compel a man to subsidize with his taxes the propagation of ideas which he disbelieves and abhors is sinful and tyrannical.”

“The democracy will cease to exist when you take away from those who are willing to work and give to those who would not”

“It is incumbent on every generation to pay its own debts as it goes.”

“My reading of history convinces me that most bad government results from too much government.”

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Thanks to SGC for the heads-up

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Getting to $787 Billion … here are the details

February 16, 2009

The Wall Street Journal has summarized what’s in the stimulus bill.  Even their summary is too long to post, so here’s the link.

http://online.wsj.com/article/SB123458384689487271.html

Worth browsing ….

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Obama’s team sets the stimulus bar at limbo level …

February 16, 2009

Obama says the trillion dollar pork-laden, faux stimulative program will “save or create up to 4 million jobs”. 

Last week, I pointed out that “up to” provides mucho definitional cover by itself, but that the serious wiggle room comes from “jobs saved” — a comparison against some fabricated “what if” number.

Well, the fabricated “what if” number is already being planted:

Austan Goolsbee, one of Obama’s chief economic advisers, says  he’ll consider the effort successful if the worst scenarios don’t come to pass, “if by the end of 2009 we aren’t looking at GDP numbers that are huge negatives, if unemployment rises to the 8% range rather than the 11% that some are predicting.”

I can’t find any non-Obama paid economist saying 11%.  Most economists are saying that the unemployment rate will peak in the range of 8 to 8.5% if we do nothing.  Apparently, Team Obama is prepared to declare success (i.e. claim millions of jobs saved) is the stimulus plan does about as well as doing nothing. The jobs saved will be calculated against a disaster scenario that they’ll specify, thank you. 

In other words, a victory party is guaranteed …

* * * * *
Reference for Goolsbee quote:
http://money.cnn.com/2009/02/13/news/economy/easton_economicteam.fortune/index.htm?postversion=2009021310

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The mortgage market: when government intervenes …

February 13, 2009

Ken’s Take: It continues to amaze me how Congress and past Presidents are able to deny their part of the blame for the mortgage crisis …

Excerpted from IBD, “What Happened To Business Prudence?”, Bradley, February 06, 2009

For decades, government has intervened in the mortgage market, in the name of the “public interest.” There was the creation of Fannie Mae and Freddie Mac, the Home Mortgage Disclosure Act of 1975 and the Community Reinvestment Act of 1977, the Financial Institutions Reform Recovery and Enforcement Act of 1989 and the Federal Housing Enterprises Financial Safety and Soundness Act of 1992.

There was the demand in 2000 by HUD that Fannie Mae dedicate 50% of its business to low- and moderate-income families. And there was President Bush pushing homeownership for all as the way to prosperity.

In 2000, for example, the Fannie Mae Foundation identified the “Outstanding Accomplishment” of Countrywide Financial Corp. as making almost one-sixth of its mortgages to blacks, Hispanics and Native Americans.

And Countrywide was hardly alone in the assault on invisible-hand decision-making. A decade ago, a senior managing director at Bear Stearns said this about mortgages made pursuant to the Community Reinvestment Act:

“While credit scores can be an analytical tool with conforming loans, their effectiveness is limited with CRA loans. Unfortunately, CRA loans do not fit neatly into the standard credit score framework. We believe a broader array of credit analysis data is needed to get a clearer perspective of the situation.”

Certainly, the people formerly employed by Bears Stearns now have a clearer perspective on the value of those mortgages.

Government regulation and political correctness are at the root of recent organizational failures that, in turn, have resulted in massive taxpayer-financed bailouts. New government intervention is trying to address the problems created by prior intervention — and futilely, it appears.

Full article:
http://www.ibdeditorials.com/IBDArticles.aspx?id=318815966519210 

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For sale: state owned aircraft … yeah, right

February 13, 2009

Now that the Feds have bailed out the states, will the governors have to be like the bank CEOs and give up their state owned airplanes & helicopters?

I know they have them … rode on a couple of them a few years ago.

Let’s have Barney Frank make the governors come in and raise their hands if they have one.

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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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Stimulating the economy on a dollar per day …

February 12, 2009

Uh-oh.

Reid & Pelosi slashed Pres Obama’s pride and joy, the $500 refundable tax credit down to $400 per worker.

I used to make fun of the $500, pointing out that $1.37 per taxpayer per day wasn’t likely to jump start the economy

My hunch: odds are even lower at $1 per day … or, to be peresise, a buck and a dime per day.

* * * * *

Pelosi and Reid also scratched the  GOP’s idea of a $15,000 tax credit on the purchase of a new home.  While I think it would have had a minimal impact, it was at least pay-as-you-go.  Credits could only be claimed when houses were purchased, and there was a cap on the amount.

Would have at least made Congress look like it was trying to address the housing problem.

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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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“Paying taxes is strictly voluntary” … so says Harry Reid

February 11, 2009

It makes me shiver to think that this guy is the second most powerful person in the country (after Nancy Pelosi)

Trust me, this is worth watching.
http://www.youtube.com/watch?v=R7mRSI8yWwg

click link to view … picture is just for effect
       image

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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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My Take: Another mis-step … delaying the announcement of the bank bailout plan

February 9, 2009

According to Obama’s economic adviser Lawrence Summers,  Barack-O decided to delay unveiling the administration’s new bank bailout plan until Tuesday, in an effort to keep Washington’s focus on the stimulus package now before Congress.

In other words: to keep the spotlight on the President’s prime time press conference tonight.

My prediction: the market will tank today because of the bank plan delay — the delay prolongs uncertainty and creates doubt that the administration — with an avowed policy of “big & fast” over “deliberate & right” —  has figured out what to do.

All the chatter today will be about the market slide and bank plan.  Maybe that’s the strategy — take people’s eyes off the (un)stimulus package.

WSJ article:
http://online.wsj.com/article/SB123410527886060705.html?mod=article-outset-box

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Things change: Terrorist "renditions" – bad by Bush, ok by Obama

February 6, 2009

Ken’s Take: Under Bush, terrorist renditioning was dirtier than dirt.  A clear violation of terrorists rights.  Now, it’s ok.  Hmmmm.

* * * * *
Excerpted from LA Times, “Obama preserves renditions as counter-terrorism tool”, February 1, 2009 

The CIA’s secret prisons are being shuttered. Harsh interrogation techniques are off-limits. And Guantanamo Bay will eventually go back to being a wind-swept naval base on the southeastern corner of Cuba.

But even while dismantling these programs, President Obama left intact an equally controversial counter-terrorism tool.

Under executive orders issued by Obama recently, the CIA still has authority to carry out what are known as renditions, secret abductions and transfers of prisoners to countries that cooperate with the United States.

Current and former U.S. intelligence officials said that the rendition program might be poised to play an expanded role going forward because it was the main remaining mechanism — aside from Predator missile strikes — for taking suspected terrorists off the street.

The Obama administration appears to have determined that the rendition program was one component of the Bush administration’s war on terrorism that it could not afford to discard.

The decision underscores the fact that the battle with Al Qaeda and other terrorist groups is far from over and that even if the United States is shutting down”

“In some ways, [rendition] is the worst option,” the former official said. “If they are in U.S. hands, you have a lot of checks and balances, medics and lawyers. Once you turn them over to another service, you lose control.” the prisons, it is not done taking prisoners.

The decision to preserve the program did not draw major protests, even among human rights groups. Leaders of such organizations attribute that to a sense that nations need certain tools to combat terrorism.

Full article:
http://www.latimes.com/news/nationworld/washingtondc/la-na-rendition1-2009feb01,0,1822531,full.story 

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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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Now, it must be ok for the automaker’s to file for bankruptcy …

February 5, 2009

Back in December, the Detroit Three argued for a bailout because American consumers won’t buy General Motors and Chrysler cars if they are forced into bankruptcy. They would be tainted by a stigma and by worries that warranties and parts wouldn’t be available years down the road if the firms ran the risk of liquidation. They cited consumer surveys that support the view. One survey of 6000 consumers by CNW Research this summer found that 80% said they would abandon an auto maker if it were to file for bankruptcy.

At the time, I called out the automaker’s bankruptcy argument as completely specious.

As I said then, “the survey results are misleading.  Would somebody be more likely to buy a car from a financially healthy car maker?  Of course.  Would somebody prefer to by from one that is on the brink of financial collapse or one that is in bankruptcy proceedings?  I bet that would be a statistical tie.”  
https://kenhoma.wordpress.com/2008/12/16/the-automakers-specious-bankruptcy-argument/

Well, January sales results for the  automakers are in.

According to the Wall Street Journal: “Sales by the Big Three U.S. auto makers plunged in January to the lowest levels in decades, raising fresh questions about the future of the companies and the viability of the government’s bailout program.

Chrysler LLC’s U.S. sales fell 55% compared with January 2008 to 62,157 vehicles. General Motors Corp.’s sales slid 49% to 128,198. Ford Motor Co.’s dropped 40% to 93,041.”

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Ken’s Mega-Take:  As predicted, cash strapped consumers decided not to buy cars from “non-bankrupt” automakers that are on government life support 

Is there anyone who doesn’t recognize that the Detroit automakers are hanging by financial threads?  The companies are bankrupt, they’re just not in legal bankruptcy proceedings. If they were, they’d at least stand some chance of restructuring themselves into healthy positions. The current government thinking stands no chance of doing that.

So why not simply have them file for bankruptcy proceedings?  Simple, bankruptcy proceedings would dismantle the high cost, work rules heavy UAW contract.  Politics trumps market forces and economic sense.

[Detroit Reels as Auto Sales Skid]

http://online.wsj.com/article/SB123367018137943377.html

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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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Uh-oh … the perils of becoming president

February 4, 2009

According to the Rasmussen Reports, President Obama’s approval index (the % of people strongly approving of the job he’s doing less the % of people strongly disapproving of the job he’s doing) is down by half since inauguration day — from 30% to 15%.  Hmmmmm.

image

http://www.rasmussenreports.com/public_content/politics/obama_administration/daily_presidential_approval_index

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“Page by page, line by line” … oh, just kidding.

February 3, 2009

Ken’s Take:

Candidate Obama promised that waste and special interests would be clinically scrubbed from the entire Federal budget. 

So, I wonder:  why didn’t his crack team scrub the pork-laden, non-stimulating $819 BILLION  “stimulus” package? 

Said differently, why should we expect that they’ll do a better job on the full $10 trillion Federal budget ? 

Dire prediction: For the record, if the stimulus package is passed in its current form — or a similar pork-laden variant — the Dow will go to 5,000.

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Excerpted from Boston.com, ” Obama vows line-by-line budget review”, November 25, 2008

President-elect Barack Obama vowed today to get rid of federal programs that no longer make sense and run others in a more frugal way to make Washington work in tough economic times.

Obama said that to make the needed investments to create jobs, “we also have to shed the spending we don’t need.”

“In these challenging times, when we are facing both rising deficits and a sinking economy, budget reform is not an option. It is an imperative,” Obama said.

“We cannot sustain a system that bleeds billions of taxpayer dollars on programs that have outlived their usefulness, or exist solely because of the power of a politicians, lobbyists, or interest groups. We simply cannot afford it. This isn’t about big government or small government. It’s about building a smarter government that focuses on what works. We will go through our federal budget – page by page, line by line – eliminating those programs we don’t need, and insisting that those we do operate in a sensible cost-effective way.”

Full source post:
http://www.boston.com/news/politics/politicalintelligence/2008/11/obama_vows_line.html 

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“No special interests” … unless you count labor unions

February 2, 2009

Ken’s Take: Candidate Obama pledged that he wouldn’t play to special interests if elected.  Yeah, right. 

First in line to get their favors: the labor unions.  No surprise, except for the fast timing. (Source post from left-leaning CBS News is below).

Ken’s Prediction: Laws prohibiting secret ballots for  union elections — the misnomered “Employee Free Choice Act” which allows union thugs to “encourage” employees to sign-up for unions publicly — will be enacted before the end of the summer. 

And, the Southern-based “transplant” auto factories will be among the first targets.  Why?  There are 2 ways to make Detroit’s labor costs competitive: either lower Detroit’s unionized wages and work rules, or force the the high wages and restrictive work rules on the transplants.  I’m betting the Obama administration pursues the latter tact.  Wrong answer !

* * * * 

Excerpted from CBS.com, “Obama  Reverses Bush Orders For Labor Unions”,  Jan. 30, 2009

The Democratic president, not even two weeks into his term, was already trying to address the needs of one of his party’s most reliable constituencies – organized labor.

Labor leaders visited President Obama in  the White House for a second consecutive day Friday. Unions have been lobbying the Obama administration to repeal scores of executive orders they view as hostile to their cause. Officials gave administration officials their top 10 executive orders they wanted to see dismantled quickly.

Pres. Obama signed a series of executive orders Friday that he said should “level the playing field” for labor unions in struggles with management.

“I do not view the labor movement as part of the problem. To me, it’s part of the solution,” he said, to a round of applause. 

“Over the last 100 years the middle class was built on the back of organized labor. Without their weight, heft and their insistence starting in the early 1900s we wouldn’t have the middle class we have now.”

Full article:
http://www.cbsnews.com/stories/2009/01/30/politics/100days/economy/main4764111.shtml 

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Doubts on stimulus plan mount … combo of bad fundamentals and bad marketing

January 28, 2009

Below is a summary of the proposed stimulus plan.

Ken’s Take: (1) No question but that a stimulus is needed to kick the economy back into gear (2) But, a stimulus should stimulate, not be used as a trojan horse to advance a socio-political agenda (3) the Dems made a mistake throwing everything — including the kitchen sink — into the plan — especially controversial stuff like abortion aid and global warming studies and  (4) the Dems make a mistake everyday letting Reid & Pelosi out in public to explain the plan (5) If I were a GOP rep, I’d vote no on the plan — it’s going to pass anyway — conspicuous benefits are unlikely (it’ll be more TARP-talk: “would have been worse without it) — so, let Obama-Reid-Pelosi own it (“we won – we write the laws now”)  — and let them get the credit in the unlikely event that it does work.

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Excerpted from WSJ, ” Doubts on Obama Plan Mount” & “Stimulus Bill Near $900 Billion”, Jan. 27, 2009 

The economic stimulus package proposed by Democratic House leaders totals $825 billion and includes three broad pieces: a $365.6 billion spending measure for such brick-and-mortar projects as highways and bridges; a $180 billion measure to boost jobless benefits and Medicaid, and a $275 billion tax-relief package, which includes a plan to give a $500 payroll tax holiday to all workers (a proposal from Mr. Obama’s presidential campaign).

The Congressional Budget Office estimates that $169 billion (~ 20%) of the $825 billion in stimulus will hit the economy before the end of September and that the bulk of it will show up in 2010 and 2011.

CBO also said that government borrowing prompted by enactment of the plan would add another $347 billion, pushing the estimated cost of the stimulus plan to more than $1 trillion, including interest.

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The estimates point to one of the challenges of formulating an effective plan. Tax cuts can be implemented quickly, but many economists think they wouldn’t stimulate much new spending because consumers and businesses are so keen on saving. Government spending would generate economic activity more quickly, but it is hard to ramp up right away.

The one thing that is certain to flow from the stimulus is a large increase in the federal debt. Large government budget deficits are showing signs of starting to nudge interest rates on government debt higher, from very low levels.

If that persists, it could eventually damp some of the stimulus-plan’s benefits. Higher government rates raise the cost of borrowing not only for the Treasury, but also for many private-sector borrowers, since corporate bonds and mortgage bonds are often benchmarked to Treasury yields.

Bond markets have been hit by a flood of new supply of Treasury debt in the past few weeks, a factor that some traders say has pushed up rates. The yield on a 10-year note hit 2.519% Tuesday, up from a little over 2.00% at the end of 2008.

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It’s projected that deficits in 2009 and 2010 will reach between 10% and 12% of gross domestic product, respectively, roughly double the previous peacetime records set in the Reagan years. It added that federal debt will soar from about 70% of GDP to more than 90% of GDP.

Economists say that the rise in debt will eventually lead to slower economic growth and diminished standards of living in the U.S.

Full article:
http://online.wsj.com/article/SB123311521129023245.html?mod=article-outset-box 

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