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Category Archives: economy

Tone Down the Rhetoric? Biden Says Pass Obama Jobs Bill or Rapes Will Increase

Correct me if I’m wrong, but I think I remember not too long ago that there were calls to tone down the political rhetoric in the wake of the Gabby Jeffords shooting.  Anyone else remember this?

Obviously the message was lost.  Recently, former House Speaker Nancy Pelosi implied abortion funding legislation passed by Republicans would result in women dying on hospital floors with doctors not allowed to save them–because somehow, the legislation in question would prevent them from doing so.  Common sense tells us that that assertion is wrong and way over the top.  But lets move on.

Lately, Vice President Joe Biden has been out pushing for passage of President Obama’s jobs bill.  Evidently, it was not enough for him to simply say the bill is needed to create jobs.  Instead, the VP decided to take a different tack.  He decided the best method is to pull out one of the things that terrifies women most–rape. His assertion? That without passage of the bill, the number of police on America’s streets will decrease, and rapes and murders will increase. He first stated this at a rally in Flint, Michigan and even cited statistics. He then said it again a week later at a fireman’s rally in DC.

But there is a minor problem.  As I like to say, don’t let facts get in the way of a good argument.

In general, there are statistics out that show that in many places, even with fewer officers on the beat, crime rates have still gone down.  Specifically, the Fact Checker at the Washington Post obtained numbers for crime in Flint, where Biden first made his assertion, and showed that Biden overstated the number of rapes by a lot. On top of that, the Chief of Police in Flint has previously stated there was no real correlation to the size of the force and the amount of crime:

As the Flint Journal reported in May: “Officials said the fact that 46 police officers were laid off last year had little to do with the escalating crime. Most of the crimes were between people that knew each other. ‘No matter how many officers we have, we can’t stop disputes between two people in their own homes,’ Lock said.”

Lock made a similar assertion in September, 2010, when FBI statistics were released showing violent crime in Flint had decreased in 2009. The Flint Journal reported: “A smaller police force doesn’t automatically mean more crime, said Flint police chief Alven Lock. ‘There’s been years when we had 300 officers and we still had more homicides,’ he said, referring to 1986, when he was in the homicide division and homicides hit an all-time high of 61.”

I’m willing to bet that many other members of law enforcement say the same thing. Of course, that doesn’t make for a good political soundbite when one is trying to paint a picture of the opposing party as being ok with an increase in crime.

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When Repubs do it? “They’re Bad!” When Dems do it? *crickets*

As it has been stated before, the President is taking every possible opportunity to tell the public that Republicans are preventing Americans from getting jobs by not passing his jobs bill.  This, despite the fact that his own party members blocked the bill last week, and despite calls from Republicans to negotiate a more bipartisan approach.

This week we have more of the same.  Democrats have decided to attempt to pass the bill piecemeal in the Senate.  As expected, the Dems first attempt to pass a bill for teachers and first responders failed.  Republicans all voted against the bill, which would be paid for via a 0.5% surtax on millionaires.  There were also two Democrats and Independent Joe Liebermann who voted no.

As expected, the President released a statement condemning the vote and saying its “unacceptable” that Senate Republicans “have chosen to obstruct a bill that would create jobs and get our economy going again.”

However, Republicans brought to the floor a bill that would eliminate a 3 percent withholding tax on federal contractors.  Ironically, the idea came from Obama‘s own plan.  Ten Democrats voted for the bill along with the Republicans, but it was still three votes short.  So here we had a jobs bill, defeated through the efforts of Senate Dems who voted against the bill.

And just like when Dem Senator Harry Reid blocked a vote on the bill, there was no statement from the President.  No condemnation for not passing the bill.  Nothing but…crickets.

President Obama has not shied away from giving his own party a tongue lashing in the past.  But now?  Nothing.

It must be election season.

Bill Clinton Says No Tax Increases Now; Dems Want Supercommittee to Spend, Not Slash

Recently, former president Bill Clinton was on with David Letterman.  Though many in his party are pushing for higher taxes, Clinton advocates a different approach:

“Should you raise taxes on anybody right today — rich or poor or middle class? No, because there’s no growth in the economy,” Clinton said on the “Late Show.” “Should those of us who make more money and are in better position to contribute to America’s public needs and getting this deficit under control pay a higher tax rate when the economy recovers? Yes, that’s what I think.”

He also mentions that there should be no spending cuts right now, either. Seems he is directly opposite of other party members.

Remember the supercommittee that is supposed to find a way to cut a couple trillion dollars from the deficit over the next decade? Well, Democrats are already lobbying for both tax increases AND more spending:

For instance, Democrats on the House Transportation and Infrastructure Committee want the supercommittee to find ways to pay for a six-year surface transportation funding bill at a cost of $500 billion, which they said would create or save 6 million jobs.

Rather than cut, House Democrats want the supercommittee to collect more money — whether from the pharmaceutical industry, in the form of lower drug prices, or from government health care programs by weeding out inefficient and misguided payments.

And of course, there is the constant cry about tax breaks for oil companies–tax breaks that all businesses get–which would produce $43 billion.

I suspect that the supercommittee will fail and that the automatic triggers built in will be activated. Then things will really get interesting.

Reid Goes Nuclear, Blocks Vote on Jobs Bill, President Blames House Republicans??

We all remember the speech.  “Pass this jobs bill right away!”  We all heard that phrase many times during the President’s prime time speech on jobs.  Yet, after a month, there had been no bill brought to the floor of either chamber of Congress.

When I wrote about how Dems weren’t even trying to place the bill in the House, I recall someone saying that there was no point, because Republicans wouldn’t vote for it and it would lose.  My view was (and is) that you at least have to try.

According to President Obama, Republicans are blocking his bill in the house, so he took the time to call out Eric Cantor during a stop in Texas:

President Barack Obama got tough on House Majority Leader Eric Cantor (R-Va.) on Tuesday, calling him out by name for saying he will block a vote on the president’s $447 billion plan to create jobs and boost the economy.

“Yesterday, the Republican majority leader in Congress, Eric Cantor, said that right now, he won’t even let the jobs bill have a vote in the House of Representatives. That’s what he said,” Obama told a crowd in Mesquite, Texas. “Won’t even let it be debated. … Do they not have the time? They just had a week off. Is it inconvenient?”

Now, if thats true, then the President is right for calling him out.  But, Cantor retorted with a good point about support, or lack of, for the bill from the President’s own party:

Cantor said Monday that the president’s jobs bill is dead on arrival in the House and won’t be brought to a vote. “This all-or-nothing approach is unreasonable,” he said. “I would say from a practical side … he’s got problems on his own side of the aisle with provisions in the bill that Democratic members disagree with. There are many issues that I’ve listed here that we can work together on. So instead of continuing to maintain this sort of campaign posture, let’s do something to work together.”

Somehow, the President conveniently left out that many in his own party don’t support his bill as written.  But pointing that out wouldn’t score political points, now would it?

Then, the Obama campaign sends out an email pointing out that Cantor and Co. were blocking the bill. Because of course, the best way to raise money is to call out the other guys, right?

There was only one problem.  Senate Majority Leader Harry Reid, who happens to be a Democrat, went “nuclear” in order to block a vote on the very jobs bill that President Obama yelled at Republicans for blocking.  In other words, to prevent a vote, Reid changed the rules of the Senate:

Reid and 50 members of his caucus voted to change Senate rules unilaterally to prevent Republicans from forcing votes on uncomfortable amendments after the chamber has voted to move to final passage of a bill.

Reid’s coup passed by a vote of 51-48, leaving Senate Republican Leader Mitch McConnell (R-Ky.) fuming.

The surprise move stunned Republicans, who did not expect Reid to bring heavy artillery to what had been a humdrum knife fight over amendments to China currency legislation.

For those who forgot, the last time there was discussion of the “nuclear option,” it was because Democrats were stalling to block Bush judicial nominees, and Republicans were threatening to do what Reid did yesterday.   Of course, back then, Dems were howling that it wouldn’t be right for Republicans to change how things had been done in the Senate for many many years just to get their way, and in the end there was a bipartisan compromise to get past the gridlock.  Yet, Reid jumped in yesterday and opened Pandora’s Box.

Reid claims his move was to prevent the Republicans from offering endless amendments to the bill up for vote, and that Republicans were just trying to “embarrass the President” since they know the bill wouldn’t pass as written–due to lack of support from Senate Democrats.

So, the question is, will the President call out his own party?  Will his campaign send out an email talking about how Reid and friends are blocking the jobs bill and should explain themselves?

Don’t hold your breath.

That Jobs Plan Sounded Good…Then Reality Set In

Last week I listened to the president outline a new plan to help create jobs.  “Pass this bill right away!” the president implored.  Initially, I was right on board with what he was saying, and was impressed that instead of the non-stimulating shotgun approach of the first bill, President Obama was firing targeted rifle shots with each line.  Even better, he started off by saying the plan would be paid for.

Then, about 2/3 of the way through, things started going downhill.

First, the president pulled out some of the tried-and-true garbage talking points.  He spoke of removing tax breaks for oil companies (hey, that *could* bring in a whopping $2 billion a year!), of millionaires and billionaires that don’t need tax deductions, and of the rich paying their “fair share” (I’m STILL waiting for specificity on what exactly their “fair share” is).  he even pulled out Warren Buffet’s claim of paying less in taxes than his secretary (I suggest people read up on capital gains taxes vs marginal income taxes to understand why this is bogus).

Second, President Obama punts the responsibility for paying for the bill to the newly-formed supercommittee, who will already have to find a way to cut $1.5 trillion in spending before December.  Seems to me there is a difference between saying something is paid for and saying “well, THEY are going to figure out how to pay for it.”

Then, for the coup de grace, the bill is rolled out on Monday…and its designed to be paid for via tax increases.

Sigh.

Though I don’t support the idea of absolutely no tax increases, the move makes the president look downright indecisive.  Not only that, but he knows that under the current environment, the chances of passing his bill (which came under criticism from all sides shortly after the post-speech euphoria wore off) just went from possible to “snowball’s chance in hades.”  Granted, a bill may get passed, but it definitely won’t fly through paid for just with tax increases.

Social Security and Ponzi Schemes: What’s the Difference Between Bernie Madoff and Uncle Sam?

While listening to popular radio talk host Neal Boortz, I heard a comparison that has been made many times.  Simply put, Social Security is a Ponzi scheme.  And when you look at, the that assessment is dead on.

For the uninitiated (which included me until I looked it up), the father of the Ponzi scheme is Charles Ponzi, who at the peak of his pyramid scheme in the early 1900s was bringing in $250,000 a day before his downfall. There is a good Wiki on this here, but in short, hundreds of investors paid money into his scheme, with the promise of high returns in a short amount of time. What was really happening was, Ponzi was taking the money from new investors and paying out to “older” investors. A more recent grassroots example that many may have heard of was the infamous “Friends Helping Friends” scheme (I can’t be the only one that was asked at one point to join this). Same concept–you pay in, work your way up the pyramid, and cash out. And of course, there is Bernie Madoff, who had a $50 million dollar Ponzi scheme going until he was ratted out by family.

For the plan to work, there has to be a constant influx of new people and new money. When that stops, the pyramid falls.

So, let’s compare Social Security, that bedrock of entitlement programs, with the common aspects of the Ponzi Scheme.

  • In a Ponzi scheme, new people coming into the pyramid-like scheme pay in, expecting a payout later.  With Social Security, workers pay in during their working career, expecting a payout after retirement.
  • Ponzi scheme:  the people at the top of the pyramid get their payouts using the money from the new investors at the bottom of the pyramid.  Social Security:  recipients are paid using the money paid in by current workers.
  • Ponzi scheme:  money coming in is spent immediately, not saved.   Social Security:  money coming in goes right back out.  There is no “lockbox,” and by law, surplus Social Security funds are put into the general fund to pay for other government things having nothing to do with Social Security.
  • Ponzi scheme:  rate of return may vary, but is usually very high, which is what attracts investors.  Social Security:  compared to the rate of return available on the private market, that of Social Security is a joke (for lack of a better description).
  • Ponzi scheme:  when there are not enough folks paying in, the pyramid collapses.  Social Security:  when there are not enough folks paying in (we’re getting to that point), insolvency occurs and the government goes into debt to fund it.
  • Ponzi scheme:  investors pay in voluntarily.  Social Security:  attempt to opt out, and you will get a visit from government agents with badges and guns.
  • Ponzi scheme:  people who run them are arrested and go to jail.  Social Security:  Well, you know the answer to that one.

There you have it.  Our Social Security program that everyone knows and loves is a government-endorsed Ponzi scheme.  Anyone saying otherwise just doesn’t get it.

Another Person Who Agrees With Me–Reagan Would Be Persona Non Grata in Today’s GOP

On a couple of different occasions, I wrote about how former President Ronald Reagan probably could get elected by today’s GOP no matter how much they revere him (see here and here). It’s an opinion shared by a number of pundits across the blogosphere. Here is another example of exactly what I mean:

After trying (and failing) to disembowel Social Security, Reagan did an dramatic about-face and bailed out the program to the tune of $165 billion and made Social Security taxes more progressive, forcing upper-income Americans to shoulder more of the burden than their poor counterparts.
Reagan raised taxes 11 times! He passed the largest tax increase since World War II and introduced hefty new corporate taxes.

While conservatives like Sarah Palin tout Reagan’s record for standing up to the Soviet Union, they ignore that Reagan was attacked by far-right conservatives for being too conciliatory to the Communist bloc. When Reagan engaged in direct talks with Gorbachev and the Soviets, conservative leader Paul Wyerich wrote in The Washington Post, “Reagan is a weakened president, weakened in spirit as well as clout.”

Go here to read the rest. It’s definitely worth the read.

A Few Things to Make You Say “Hmmmmmmm…”

Each of these could be a blog piece by itself (and probably will be eventually).  But for now, here are some things to make you say “hmmmmmm,” or scratch your head, or go buy a stiff drink…

THE GOVERNMENT IS NOT GOOD AT PICKING WINNERS (part 1):  The government has ordered the phasing out of the trusty incandescent light bulb, which means we all have to go out and get the curly-looking compact fluorescent light (CFL) bulbs.  Sure they are more energy efficient.  But they also have a small amount of mercury in them.  Broken one lately?  Have you seen the steps involved to clean up after one breaks? But that’s not the worst part. Because of the government mandated change, GE has closed all of their incandescent light bulb plants in the US. At a time when unemployment is already high, that’s more jobs lost.

THE GOVERNMENT IS NOT GOOD AT PICKING WINNERS (part 2): The search for alternative fuels is very worthwhile. Except when the government is subsidizing it. Let’s talk ethanol. First, the government subsidizes ethanol production with taxpayer dollars. Second, there is a tariff placed on the importation of Brazilian sugar cane ethanol, as a way of protecting US production (it would be cheaper otherwise). The result? Not only are food prices (especially corn) higher because farmers are spending more time growing corn for ethanol, but the end product has been found to damage small engines over time. Oh, and then the government tells us ethanol is cheaper per gallon. Right.

HE’S TALKING ABOUT THE TEA PARTY, RIGHT?: Here is a recent quote from Senator John Kerry:

“And I have to tell you, I say this to you politely. The media in America has a bigger responsibility than it’s exercising today. The media has got to begin to not give equal time or equal balance to an absolutely absurd notion just because somebody asserts it or simply because somebody says something which everybody knows is not factual.”

“It doesn’t deserve the same credit as a legitimate idea about what you do. And the problem is everything is put into this tit-for-tat equal battle and America is losing any sense of what’s real, of who’s accountable, of who is not accountable, of who’s real, who isn’t, who’s serious, who isn’t?”

Let me guess. The press should ignore the Tea Party, their supporters, and maybe even the GOP because they lie, right? Got it. By the way, Senator, would you apply that standard to your own party? Because I’m sure we’d see a lot less of some of your pals.

SPEAKING OF LYING…: This one came to my attention earlier today. Senator Harry Reid said earlier this month that there were 8 million jobs lost during the Bush years. Unfortunately, it is an easily provable lie:

As always, we looked at jobs numbers compiled by the Bureau of Labor Statistics, the government’s official source of employment data.

During Bush’s eight years in office — January 2001 to January 2009 — the nation actually gained a net 1.09 million jobs. (Because there were gains in government jobs, the private sector actually lost 653,000 jobs during that period.)

This isn’t remotely close to what Reid claimed. Reid’s office didn’t respond to our request for information, but we think we know what he was referring to.

From the economy’s peak to its low point, the nation lost 8.75 million jobs. Here’s the problem: The peak for jobs came in January 2008, while the low point for jobs came in February 2010.

This means the starting point for Reid’s measure came seven years into Bush’s eight-year tenure, and the low point occurred about a year into Barack Obama’s tenure.

‘Nuff said.

ON TAXING THE RICH:  According to the IRS, there are over 8,200 income earners that earn more than $10 million per year.  Their combined income is $240 billion/year.  If you taxed them at 100%, it would be enough money to pay for government spending for a whopping 22 days.

Finally, I leave you with this thought, which most definitely will take on a life of its on another day in another post…

PARTISAN VOTERS HAVE NO CLUE WHAT AN INDEPENDENT VOTER IS: We get accused of straddling the fence, or of taking no stance. Even worse, we get attacked by both sides if we actually accept a view held by one party over another. But it’s simple. We look at the views and candidates available and choose what we like, regardless of what side it represents, and it could vary from week to week, from party to party, or from election to election. I’ve learned that instead of constantly fighting accusations that I’m not independent, I will simply stop feeding the trolls and continue business as usual.

Party on, dudes!

Do Politicians Understand What “Stimulus” Means? I Think Not.

Is it so difficult that the idea behind a “stimulus” package, or “stimulus” spending, or “stimulus” funding would be to stimulate the economy via job creation?  Somehow, politicians aren’t getting this.  The suggestions made by them aren’t ones that include a job multiplying effect.  In other words, for stimulus to be effective, it has to go towards something that creates a job, which directly creates a need for additional jobs, and so on.

Earlier this week, during a press conference, White House press secretary Jay Carney was asked how extending unemployment benefits creates jobs.  His reply?

“There are few other ways that can directly put money into the economy than applying unemployment insurance,” Carney said.

Carney answers the question: “It is one of the most direct ways to infuse money directly into the economy because people who are unemployed and obviously aren’t running a paycheck are going to spend the money that they get. They’re not going to save it, they’re going to spend it. And with unemployment insurance, that way, the money goes directly back into the economy, dollar for dollar virtually.”

This is similar to a comment made by former Speaker of the House Rep. Nancy Pelosi:

Economists will tell you this money is spent quickly. It injects demand into the economy, and is job creating. It creates jobs faster than almost any other initiative you can name because, again, it is money that is needed for families to survive, and it is spent. So it has a double benefit. It helps those who have lost their jobs, but it also is a job creator.

Back when Pelosi made the comment, as you can see from the feedback on the Media Matters page, they were more than happy to show how economists backed up what she said, while right-leaning critics were going nuts and criticizing her.

Regardless of the economists that affirmed her statement (and even the CBO), we can now agree that the assertion was wrong.

Maybe I’m out in left field here, but I am willing to wager that the majority of people who are collecting unemployment benefits are spending the money on necessities–food, power, gas, phone, ect.  While the money is technically going into the economy, its not going in for things that will create more jobs.  Listening to Carney, Pelosi, and those who agree with them, it’s as if the unemployment benefits are disposable income.  Paying the bills is not a job multiplier.

Likewise, the expressed opinion of the Left is that the stimulus was a success.  Even a CBO report says that it had some success. From Factcheck.org:

As we have written before, the nonpartisan Congressional Budget Office released a report in August that said the stimulus bill has “[l]owered the unemployment rate by between 0.7 percentage points and 1.8 percentage points” and “[i]ncreased the number of people employed by between 1.4 million and 3.3 million.”

Simply put, more people would be unemployed if not for the stimulus bill. The exact number of jobs created and saved is difficult to estimate, but nonpartisan economists say there’s no doubt that the number is positive.

But the key words are “created and saved.” Many of the jobs that received stimulus money were to maintain exisiting positions, not create new ones. Much of the money went to states to help prevent them from firing government workers. Not to mention, as the President himself said not too long ago, some of the shovel-ready jobs were “not so shovel-ready.” (Sidenote: he chuckled after cracking this joke. Looking at the cost of the stimulus, and how those shovel-ready projects were talked about ad nauseum to get the bill passed, its not very funny.) Again, in the end, for the section of the stimulus intended to create jobs and stimulate the economy, based on the unemployment rate since then, there was no multiplier effect.

So, with calls coming for another stimulus, we should be afraid.  Be very afraid.

Random Thoughts: White House and the Ratings Downgrade, Al “global warming” Gore Unhinged, Wisconsin Recall Elections

Just a few thoughts and observations:

With the recent downgrade of the country’s credit rating by Standard & Poor’s, the White House had to blame someone for what happened.  So they complained loudly about how S&P had made a mistake with the downgrade, even pointing out an accounting error that S&P made that made things look worse than they really are.  Then, they came out and blamed the Tea Party for causing the downgrade.  I’m confused.  If S&P made a mistake, it would have nothing to do with the Tea Party, right?  Then again, everything is the Tea Party’s fault, from what I hear.

The other day, President Obama did a press conference to address the credit downgrade.  While he was giving his speech, the stock market dropped 200 points.  Ouch.

Speaking of Standard & Poor’s, how do you go forward with a downgrade even after you’re told you made an accounting error?  Simple.  Just blame the politicians!  Say it’s because Congress can’t work together.  Come up with a worthy excuse.  But just don’t own up to it.  By the way, they didn’t downgrade Lehman Brothers until AFTER they imploded…

Former Vice President and current Global Warming–uh,  Climate Change– crusader Al Gore was giving a speech recently and ran off the rails.  Seems he was calling BS on those who don’t agree with him, and called the scientists who put out anti-warming info fake.  I could’ve sworn that the main basis for the argument is whether or not the changes occurring are man made or natural.  But I digress.

It’s recall season in Wisconsin.  Democrats, angry that the Republican-led Legislature changed collective bargaining law, were able to collect signatures to force a recall election for 6 Republican state senators.  In order to have a chance at taking control of the state Senate, they needed to win 3 of the seats up for recall.  Unfortunately for them, they only won 2.  There are more elections coming but they will have no chance at winning control until the next election.  If the Dems had succeeded, I think it would’ve sent shockwaves nationwide.  Having said that, pay attention to the redistricting fights going on in the states.  Redistricting happens every 10 years and the party in power at the time in a particular state usually tries to stack things in their favor.  Look and see how strange some districts end up looking just to accomplish either keeping a rep in office or getting the opposition OUT of office.

The President and the False Blame Game

This article was brought to my attention by a friend of mine (shoutout to Kovarik Glasco, fellow Georgia Tech grad and fellow fan of the “Song of Ice and Fire” series).

There is a narrative that President Obama and many on the left engage in when discussing the economy.  Even two-plus years into the new presidency, the “blame Bush” technique is still used.  In this narrative, the picture painted shows runaway spending and runaway deficits during the Bush years.  And the main point he uses is that the year he entered office he inherited a deficit of nearly $1 trillion.

But in an article found on the Huffington Post, Dean Baker, Co-Director of the Center for Economic and Policy Research, shows how this narrative just isn’t true:

This is simply not true. In its budget projections from January 2008, the last set before the impact of the collapse of the housing bubble was clear, the Congressional Budget Office (CBO) projected a deficit of just $198 billion for 2009. This is less than one-fifth of the “on track to top $1 trillion” figure that President Obama gave in his speech. This is a serious error. One trillion is a much bigger number than $198 billion.

This difference is central to the budget debate. People can argue that the $198 billion deficit projected for 2008 was too large. But it would be absurd to claim it was out of control or represented any remotely serious threat to the nation’s solvency. In fact, over the five years 2003-2007 the country’s debt to GDP ratio was virtually unchanged, meaning that the country could run deficits of the same size (relative to the economy) literally forever.

This changed with the recession caused by the collapse of the housing bubble. It was the recession, and the response to it, that pushed the deficit in 2009 from the $198 billion projected by CBO to the over $1 trillion noted by President Obama in his speech.

Further, Dick Morris explains where the President is getting his numbers from:

In 2008, George W. Bush ran a deficit of $485 billion. By the time the fiscal year started, on Oct. 1, 2008, it had gone up by another $100 billion due to increased recession-related spending and depressed revenues. So it was about $600 billion at the start of the fiscal crisis. That was the real Bush deficit.

But when the fiscal crisis hit, Bush had to pass the Troubled Asset Relief Program (TARP) in the final months of his presidency, which cost $700 billion. Under the federal budget rules, a loan and a grant are treated the same. So the $700 billion pushed the deficit — officially — up to $1.3 trillion. But not really. The $700 billion was a short-term loan. $500 billion of it has already been repaid.

So what was the real deficit Obama inherited? The $600 billion deficit Bush was running plus the $200 billion of TARP money that probably won’t be repaid (mainly AIG and Fannie Mae and Freddie Mac). That totals $800 billion. That was the real deficit Obama inherited.

Then … he added $300 billion in his stimulus package, bringing the deficit to $1.1 trillion. This $300 billion was, of course, totally qualitatively different from the TARP money in that it was spending, not lending. It would never be paid back. Once it was out the door, it was gone. Other spending and falling revenues due to the recession pushed the final numbers for Obama’s 2009 deficit up to $1.4 trillion.

One important note that both writers mentioned: the important thing being missed is JOBS. Job creation will create income earners, which will boost the economy and help revenues. This is what the debate in Washington should be all about.

Random Thoughts: Obama/Boehner Disrupting Prime Time, “Fair Share,” Political Garbage Speak, ect

Just some random thoughts:

Why did the President and the Speaker waste our prime time last night?  President Obama took his time to get in front of the mic and say the same things he has said in his press conferences the past few weeks.  He threw in some statements about negotiations, made some nice statements about Speaker Boehner, and made sure to trot out his tried-and-true, base-energizing catchphrases:  “corporate jet owners;” “millionaires and billionaires;” “breaks we don’t need” (paraphrased).  You pushed back the start of our 8 pm shows for this??  Even worse, I listened to Chris Matthews afterwards and heaven forbid, he said something I agree with; he said usually, Presidents only request prime time to make an announcement or to make news.  This speech was neither and shouldn’t have been done in prime time.  Write it down somewhere–I agreed with Chris Matthews!  Then, House Speaker Boehner jumps up with the canned response.  There are really only two things I pulled out of his speech:  1)he had a couple of zingers at Obama’s expense that were funny, and 2)Republicans are now going to position the President’s stance as wanting a “blank check” since he did not support their Cut, Cap, and Balance bill.  The election may be next year, but the game is already afoot.

Speaking of corporate jets:  First, if the tax break in question was eliminated, it would save a whopping $3 billion.  Over ten years.  Yes, ten.  Trillions in deficits and we’re talking $3 billion.  Second, Obama is responsible for the very tax break he criticizes.  See the stimulus bill for more details.  Third, he has people thinking these “corporate jet owners” are just average wealthy individuals with money to burn.  For the most part, based on the tax break, the owners of corporate jets tend to be…wait for it…CORPORATIONS!!  Way to muddy the issue for duh masses, Mr. President.

Did he really mention Reagan?:  Obama referred to Ronald Reagan in his speech in order to take a swipe at Republicans.  Reagan’s quote somewhat supported what the Left has been saying.  The irony is, I noticed Obama didn’t quote HIMSELF from 2006, when he was talking about how raising the ceiling was a failure in leadership.  Or what about Harry Reid, who  fought against a debt-celing increase that same year and asked  “How can (Repubicans) explain that they think it’s fair to force our children, our grandchildren, our great grandchildren tofinance this debt through higher taxes?”  Now THOSE are quotes that should’ve gotten some airtime.

If all else fails, let’s create some wealth and income envy:  My friends on the left need to own up to this.  Their belief in raising taxes creates a need to make the rest of America mad at the wealthy.  You can hear it when the President speaks of the previously mentioned corporate jet owners.  Or when he talks about tax breaks that high-earners “don’t need.”  You even get it when he speaks of the oil companies.  Lest we forget, Dems want to take a tax break away from the top 5 oil companies, since they are making so much money.  Absurdity, not only because we’re talking about a small amount of money ($21 billion over 10 years), but because it would then be a break that every company in America EXCEPT those 5 oil companies could take advantage of.  But hey, Big Oil is evil and they need to pay up!

Can someone define “fair share?”:  Sometime soon this will get its own post.  I’ve heard my friends and the President refer to fairness in various terms when it comes to taxes.  But I don’t understand what that means, since I’ve never heard it defined.  What is fair?  Based on the proportion of taxes paid, high-income earners pay a ton.  We hear about hedge fund managers paying less than their secretaries, but is it unfair that they take advantage of lawful tax deductions and such?  And do they really pay less than the secretary, or is that just another one of those garbage speak political catchphrases referred to earlier?  I would go with the latter.

The Left in Canada Led the Country out of Economic Doldrums; Maybe the Left in the US Can Take Note

When looking at how the ongoing debt negotiations have gone back and forth for weeks, there is one thing that my friends on the Left can’t deny–that while the President and the liberal members of congress have repeatedly criticized the plans put forth by Republicans, they haven’t put forward a plan of their own. Further, the notion of making cuts to entitlement programs (even though most of the cuts aren’t really cuts) causes the Left to jump up and down and talk about how much the cuts are going to negatively affect Li’l Jimmy and how it’s only fair if we increase taxes on high income earners.

(Sidenote: “Li’l Jimmy” is a fictitious character being used as part of a WWE storyline each week by wrestler R-Truth. I and my other wrestling fan friends who also talk politics have found “Li’l Jimmy” to be useful in these conversations.)

Fred Barnes in a Wall Street Journal piece talks about how Canada made it’s way out of financial crisis and has arguably created a stronger economy than the US. The irony? It was the Left in Canada that led the reversal, and they did it through spending cuts, not tax increases:

Mr. Chretien and his finance minister, Paul Martin, took decisive action. “Canadians have told us that they want the deficit brought down by reducing government spending, not by raising taxes, and we agree,” Mr. Martin said. The new administration slashed spending. Unemployment benefits were cut by nearly 40%. The ratio of spending cuts to tax increases was nearly 7-to-1. Federal employment was reduced by 14%. Canada’s national railway and air-traffic-control system were privatized.

The economy rebounded. Between 1995 and 1998, a $36.6 billion deficit turned into a $3 billion surplus. Canada’s debt-to-GDP ratio was cut in half in a decade. Canada now has faster economic growth than America (3.3% in 2010, compared to 2.9% in the U.S.), a lower jobless rate (7.2% in June, when the U.S. rate was 9.2%), a deficit-to-GDP ratio that’s a quarter of ours, and a stronger dollar.

What’s most remarkable about the Canadian turnaround: It was led by liberals. Mr. Chretien and Mr. Martin were leaders of the Liberal Party. Yet they responded to the clear wishes of Canadians and, to the surprise of the political class, shifted to the right. Or to the center, the two leaders would say.

I wonder what the likelihood of this happening in the US would be.

A Nice Visual Explanation of How the Government Can “Cut” Spending…and Increase Spending at the Same Time

Been curious as to whether or not the government was really cutting spending in all these negotiations?  Wondered what “baseline spending” is?  Didn’t realize that all the crying about cutting programs for the poor is crap?  Check out this video.  You’ll never look at “spending cuts” the same again!

President Obama says “Hey! You Don’t Need That Money!”

Yesterday amongst my online pals, I was lamenting a new law that pushes for light bulbs to be more efficient, but in effect ends up pushing the masses to use more efficient but also more expensive and more hazardous CFC bulbs.  The focus of my complain was a statement from Energy Secretary Steven Chu, who said: “We are taking away a choice that continues to let people waste their own money.”  Yes, we the masses would be lost if we didn’t have the government guiding our way.

Now, we have President Obama, who is currently trying to get a deal done to raise the debt limit.  During a press conference, he stated:

I don’t want a deal in which I am able to keep hundreds of thousands of dollars that I don’t need, while a parent struggling to send her kid to college finds they have a couple thousand dollars less in grants and student loans.

For now, let’s move past the second part of the statement, where he invokes the time honored tradition of scare tactics. Let’s talk about the “need.”

On the surface, Mr. Obama is talking about himself not needing a tax break, and not needing money he considers to be extra money.  It’s quite humorous that he states this, since as President, he has everything taken care of.  But let’s go below the surface.  Obviously, his statement implicitly implies that the higher income earners should be happy to pay more in taxes because they don’t “need” the extra money they have in the bank.  Once again, here is the government to our rescue, to guide us!

Hey!  You’ve earned enough money!  It doesn’t matter what your plans are for you money, we the government have decided FOR you that you have more than you need!  Ignore that we are notorious for overspending!  Its your patriotic duty to pay up anytime we feel we need more money!

Oh, and let’s do revisit the second part of the statement, regarding grants and loans. We are in a dire financial situation.  Isn’t it a natural assumption that folks are going to feel the pain? And even if taxes go up, wouldn’t that money go to pay down the debt?  Evidently, even in a situation where cuts should be the priority, and paying down deficit and debt right behind that, the administration will find ways to either increase spending somewhere or attempt to keep things status quo.  Hello!  McFly!  Is that what Joe Public does when he needs to cut spending in his own household?

Just remember:  the government knows what’s best!

When Spending Cuts Aren’t Really Spending Cuts (or, “They Think We’re Stupid”)

In the ongoing battle between the parties to negotiate a debt-limit increase, there has been much talk of spending cuts.  Republicans are strongly taking a stand on cutting spending but no new taxes.  Democrats are open to spending cuts but are looking for ways to increase revenue to increasing taxes or cutting tax breaks.  But people won’t be surprised to know that both sides are choosing not to be up front with we the people.

When we the people look at a budget, we base it on what we have coming in at the time.  We then decide where we will spend those funds.  We won’t get into the notion that if we were out of money and needed more, if we did as the government does sometimes and print our own, we’d be hauled off to jail rather quickly.  In general, most people don’t have the luxury of just going out and getting loan after loan while continuing to spend above their means.

Not so with the government.

I got a call from a good friend of mine who was watching a show on CNBC.  He said a guy was on talking about how spending cuts weren’t spending cuts and how he’d remembered hearing it from me months ago.  You see, the government doesn’t operate the way normal people do.  Matter of fact, the government doesn’t even operate like a good company does.  And here is where they pull the wool over our eyes.  Let me explain using an example.

When Joe Public is doing a budget, he bases it off of how much he has coming in, and how much he as going out.  If he has more going out than coming in, he has no choice but to cut spending.  If he decides that he must make a spending cut, typically its going to result in him spending an amount less than what he is spending now.  So, where he may be spending $1,000 per month now, a budget cut may result in spending $950 per month next year.  That is a budget cut.

Now, the government doesn’t do that.  The government uses a nice little trick called baseline budgeting.  The government has already planned ahead as to what spending increases will be.  For example, while the budget for program A is $1,000 for 2011, they have already planned that in 2012 it will be $1,100, for 2013 it will be $1,200, and so on (sidenote:  the government tends to project increases in terms of percentages.  I’m using real numbers so I don’t have to use a calculator.).  So when there is talk of a spending cut, it is not like Joe Public, who takes his spending below what he was spending before.  Instead the government says, “well, instead of spending $1,100 in 2012, we’ll spend $1,050, and in 2013 we’ll spend $1,100.”  As you can see, overall spending still goes up, just not as fast.

This is why complaints about spending cuts have to be taken with a grain of salt.  Politicians will make things seem like a program is going to die due to budget cuts, but that is making the assumption that the reduced spending increase won’t be enough.  They also assume (correctly) that the majority of the people have no idea of how they are pulling the wool over their eyes.  If there is to be a serious, authentic discussion about spending cuts, then lets see some serious, authentic reductions in actual spending!

Good Reasons Why the GM Bailout Was Not a Good Thing

I came across an opinion piece that reminded me of the reasons why the GM bailout was not a good thing.  Shikha Dalmia explains why in an article at Reason.com called “Driving to Delusionville.” He mentions many reasons that have been stated before, but here is my favorite:

It gave Chrysler’s secured creditors, who would have had priority in a normal bankruptcy, 29 cents on the dollar. Chrysler’s unions, on the other hand, got more than 40 cents, even though they are equivalent to low-priority lenders. This made a mockery of longstanding bankruptcy law, something that will make credit markets wary of lending to political sacred cows in the future.

The administration favored union workers not only over creditors, but also other workers. All United Auto Workers retirees at Delphi, GM’s auto supplier, got 100 percent of their pension and retirement benefits. But 21,000 nonunion, salaried employees lost up to 70 percent of their pensions, and all of their life and health insurance. The Treasury could have covered 93 percent of the benefits of all employees for the same funds it spent on full union benefits, testified Bruce Gump, a representative of the Delphi Salaried Retirees Association.

So, not only did the government meddle when it wasn’t necessary, they managed to make sure union workers (who tend to vote Democrat) got good deals, while pretty much sticking it to the non-union employees and creditors. I would love for someone (anyone!) to get the White House to explain why the unions should get special treatment. The way the non-union Delphi employees were treated is absurd and indefensible.

White House Disputes the Findings of Their Own Economic Advisors

Earlier I posted about how a group of economists picked by President Obama issued a report that showed the stimulus saved or created 2.4 million jobs at a cost of $278k per job.  Evidently the White House disagrees with those findings:

“That’s a cost to taxpayers of $278,000 per job,” according to the Weekly Standard, a Washington, D.C.-based magazine. “In other words, the government could simply have cut a $100,000 check to everyone whose employment was allegedly made possible by the ‘stimulus,’ and taxpayers would have come out $427 billion ahead.”

But the White House said that study is based on “partial information and false analysis.”

“The Recovery Act was more than a measure to create and save jobs; it was also an investment in American infrastructure, education and industries that are critical to America’s long-term success and investment in the economic future of America’s working families,” White House spokeswoman Liz Oxhorn said in a statement to FoxNews.com.

Read more: http://www.foxnews.com/politics/2011/07/05/white-house-disputes-study-saying-stimulus-cost-taxpayers-278000-per-job/#ixzz1RGDNjWuj

The story goes on to say that the WH points at a CBO report that says the number is closer to 3.6 million jobs, that the stimulus lowered unemployment, and helped spark economic growth. Republicans point out that unemployment is higher than it was, in addition to a substantial increase in the national debt. Still another person quoted says that there is no point in measuring effectiveness based on “cost per job.”

Whether or not the stimulus was effective will continue to be debated, it seems.

 

$278k Per Job “Created or Saved.” So the Stimulus Worked?

From Jeffrey H. Anderson at The Weekly Standard:

When the Obama administration releases a report on the Friday before a long weekend, it’s clearly not trying to draw attention to the report’s contents. Sure enough, the “Seventh Quarterly Report” on the economic impact of the “stimulus,” released on Friday, July 1, provides further evidence that President Obama’s economic “stimulus” did very little, if anything, to stimulate the economy, and a whole lot to stimulate the debt.

The report was written by the White House’s Council of Economic Advisors, a group of three economists who were all handpicked by Obama, and it chronicles the alleged success of the “stimulus” in adding or saving jobs. The council reports that, using “mainstream estimates of economic multipliers for the effects of fiscal stimulus” (which it describes as a “natural way to estimate the effects of” the legislation), the “stimulus” has added or saved just under 2.4 million jobs — whether private or public — at a cost (to date) of $666 billion. That’s a cost to taxpayers of $278,000 per job.

Wow.  Not very efficient, right? I would say that in corporate America, and you were running a company that was that inefficient, you’d get canned. When hiring an employee, there is the employee’s salary. Then, factor in another 30%-40% of the salary, which is what it costs the employer to train the new employee. Then, factor in another 20% of salary to account for benefits, social security, and other costs. Even if every employee accounted for in the stimulus numbers were new hires, and they were all paid $100,000 salaries, it STILL wouldn’t cost $278,000 to hire them. So one has to wonder why the cost was so high.

In the face of these numbers, as well as the fact that unemployment post-stimulus is higher than pre-stimulus, the argument made by Obama supporters that things were “worse than they thought” doesn’t justify the inefficient spending. Then again, I have to agree with Anderson–that maybe the stimulus would’ve worked better if the money had not been spent “mostly on Democratic constituencies rather than in a manner genuinely designed to stimulate the economy.”

 

GOP Claims “Reagan Conservatism” but Reagan Would Disagree

I’d written before that if Ronald Reagan ran for president, he wouldn’t make it our of the Republican primaries these days. Why? Because of his stance on taxes. You see, for all the railing today’s GOP is doing about no tax increases or ending of tax breaks, what gets overlooked is Reagan’s overall record on taxes and revenue.

Surely we’ve all heard that Reagan cut taxes. The storyline goes “Reagan cut taxes and the economy grew.” But therein lies some serious policy omission. After a massive tax rate cut in 1981, Reagan along with Congress (which included a Republican-led Senate) proceeded to pass a number of measures designed to raise revenue. Any of those measures would be criticized today as tax increases.

I’d been surprised that little has been said about this. But finally, an article in Politico spells it out:

The Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) is the most famous, because of its historic size and timing, a dramatic course correction that quickly followed Reagan’s signature income tax cuts in 1981. But in the six years after were four more deficit-reduction acts, which combined to almost double TEFRA’s revenue impact on an annual basis.

Translated into current dollars, the total revenue increases for the five bills would then be equal to about $190 billion a year. That’s far in excess of anything that has been proposed by the White House in recent deficit talks led by Vice President Joseph Biden, yet most of these increases were approved when Republicans controlled the Senate in the 1980’s.

Democrats could really bash Republicans’ heads with this. Instead of the insipid arguments we keep hearing about “tax breaks for millionaires and billionaires” and “tax breaks for Big Oil” a simple tack of “well, Reagan did it” would be nearly impossible for Republicans to counter. After all, Reagan is patron saint of conservatism.

Dems Want to End Oil Company Subsidies. Another Fight Over Chump Change

Oil companies, aka “Big Oil,” have been a constant target of the Left for as long as I can remember.  Oil companies don’t control the price of oil, and only make a couple of pennies off the sale of gas, but one would never know that from listening to the constant berating they receive.  Since most of us drive to get from A to B, we have to buy gas.  When oil prices go up, so do gas prices.  When this happens, SOMEBODY has to be the boogeyman.  Why not those mean, nasty Big Oil companies?  Any report of high profits must be attacked–in spite of the fact that the profit margins of the same oil companies tend to stay the same.  Not only that, but they don’t even rank in the top 10 in terms of profit margins, yet companies with far greater margins don’t get nearly the attention.  Its as though cheap gas is some type of right, not just a commodity.

Recent world events have sent the price of oil to major highs.  Subsequently, some of the larger oil companies had record profits to report.  Right on time, members of the Left were quick to start yelling about record profits, as well as government subsidies that oil companies receive.

Just to be clear (thank you, Pres. Obama.  I love that phrase!), in a time of high deficits, I’m in favor of major cuts in corporate subsidies.  We shouldn’t be borrowing money to fund ethanol (proven to be a waste of time), fund farms, ect.  If there is an argument to be made, argue for getting rid of all of them.

But that is not the argument being made.  Democrats in Congress are rallying to end corporate subsidies for the major oil companies.  They basically say the companies don’t need it, and the money can be used to lower the deficit.  I want to say amen but I find myself laughing at this.  Why?  Because just like with the budget negotiations, we have politicians making a huge deal over a relatively small amount of money.  The projected savings from ending just those subsidies is $21 billion over 10 years.  Yes, my fellow Americans, with trillion dollar deficits projected over that same time period, Democrats are yelling about what amounts to an average of $2.1 billion per year.

Is it a lot of money?  To us, yes.  As part of a multi-trillion dollar budget?  No.  This is nothing but a political ploy.  A game.  An attempt to lash out at those mean nasty oil companies.  Someone let me know when the games end and folks get serious.

Clark Howard Nails It: The Country is “Sailing Up Denial” About Taxing Our Way Out of Debt

I happened to hear Clark Howard on the radio while driving back to the office from a business event.  For those that don’t know, Clark Howard (like Dave Ramsey) is a consumer guru known for giving out advice and tips to the masses via his radio and TV programs.  During his program today, he mentioned that the country as a whole was “sailing up denial” when it comes to solutions to fix the country’s long-term debt issues.  While I will still be more of a fan of the saying “denial is a river in Egypt,” Howard definitely nailed the thought process that currently occupies the minds of many Americans–that increasing taxes on the top earners, without making cuts to Social Security, Medicare, and Medicaid, is a viable option for debt reduction over the long term.

The fact that a poll was taken on this subject is quite humorous.  There are a couple of ideas that rule the hearts and minds of many Americans.  The first is that they wouldn’t support the reduction of government benefit programs, knowing they would be affected by the reductions.  Seems to be the simple law of self preservation to me.  The second is that people feel if a person is rich (or seems that way) then regardless of whether or not they actually paid into a benefit, they have money and can do without the government entitlements.  These thoughts reflect, as Howard also stated, that in America, we don’t have a notion of shared sacrifice on the issue.  “Don’t change MY stuff, just make the rich fund it.”  Tricky thing is, as Howard explained, you could tax the upper 1%-2% of income earners all the way to destitution, and the debt problem still wouldn’t be solved.  Further–and I thought this was spot on–if the solution used was more taxes with no benefits cuts, eventually there wouldn’t be enough money coming into the government to pay for benefits.  Before long, individuals would find themselves solely responsible for their own welfare and wellbeing, just like in the old days.  One can only imagine the outcry THAT would produce.

Here’s to hoping that Congress gets it right for a change and puts the sacrifice on everyone, not just a few people.

I Said We All Lose With the Budget Deal; It’s Worse Than I Thought

In my last post, I explained why I thought we all lose out in the end when it comes to the budget deal agreed on last week.  Well, now that they put out the details of the agreement, many people are realizing that it’s worse than we thought.  In many cases, “cuts” aren’t cuts at all.

So, what constitutes a “budget cut?”

Many of the cuts appear to have been cuts in name only, because they came from programs that had unspent funds.

For example, $1.7 billion left over from the 2010 census; $3.5 billion in unused children’s health insurance funds; $2.2 billion in subsidies for health insurance co-ops (that’s something the president’s new health care law is going to fund anyway); and $2.5 billion from highway programs that can’t be spent because of restrictions set by other legislation.

About $10 billion of the cuts comes from targeting appropriations accounts previously used by lawmakers for so-called earmarks – pet projects like highways, water projects, community development grants and new equipment for police and fire departments. Republicans had already engineered a ban on earmarks when taking back the House this year.

Republicans also claimed $5 billion in savings by capping payments from a fund awarding compensation to crime victims. Under an arcane bookkeeping rule — used for years by appropriators — placing a cap on spending from the Justice Department crime victims fund allows lawmakers to claim the entire contents of the fund as “budget savings.” The savings are awarded year after year.

For those keeping count at home, that block of funny money amounts to $24.9 billion of the $38 billion in budget cuts! Yes, the shutdown drama was over about $13 billion in actual cuts, which amounts to a miniscule percentage of the overall budget. Oh, and they managed to find time to tell D.C. how they can and can’t spend their money, too.

This is the type of tomfoolery we have to put up with. Both sides should be ashamed. But we know its just business as usual.

Forget Picking Winners in the Budget Fiasco; We All Lose in the End

Unofficial seal of the United States Congress

Image via Wikipedia

After the absurd theater that was the “oh-my-god-the-government-will-shut-down” nonsense of last week, many news sites were picking “winners” and “losers.”  Frankly, the loser in all of this is clear–the American People.  If it takes this much effort to get Congress to cut a few billion dollars from a 3-plus trillion dollar deficit, what happens going forward, with expected trillion-dollar deficits for the next ten years?

Contrary to the posturing being done by Senate Majority Leader Harry Reid and President Obama, Democrats came out on the losing end of the battle.  At least temporarily (since success can be fleeting in politics), many Americans scratched their heads as Democrats dug in and fought against budget cuts that make up less than one percent of the total budget.  One looks silly fighting to hold on to every penny when nearly everyone knows that the level of debt we are piling up as a country is unsustainable and a threat to national security.

Wait.  I digress.  Based on the number of people who actually supported the Dems position in all of this, either “nearly everyone” is far from accurate, or there are a lot of people in denial.  They are convinced the way to fix this is to maintain the spending and only increase taxes.  But that’s a different story.

Since we’re talking budgets, and in Washington, its always about the baseline, let’s look at the baseline of the budget battle.  If Democrats had passed a budget back in 2010, while controlling Congress and the White House, none of this would’ve happened.  It was the first time in many years that there was no budget submitted.  Even worse, the fact that the Dems punted in June of 2010 in order to go into butt-covering mode for the upcoming elections seems to have been swept under the rug.  I’m very surprised some person within the Democrat machine didn’t point out that if they didn’t get it done, it could possibly be out of their hands in 2011.

Meanwhile, the Tea Party, whose focus is and always has been spending cuts (don’t be fooled by accusations to the contrary), powered an election that sent new people to Congress with the mission of reigning in spending.  I’ve actually gotten a kick out of watching how people who were quick to defend the ramming through of Obamacare by saying “that’s what we elected them to do” turn around and actually criticize members of Congress for being beholden to the Tea Party!  It’s more important to demonize the TP than to recognize that their criticism of spending is legit.

But back to the budget fight.  Republicans aren’t without criticism here.  This was no time to inject social issues into the fray.  A fight over funding for Planned Parenthood had no business occupying time and space in this.  Or did it?  One analysis of the battle said the Democrats fell for the okey-doke in that regard; that really, defunding Planned Parenthood wasn’t really the big priority that Democrats thought it was, and when they agreed to give up something in return for a dropping of that issue by Republicans, they were suckered.  Further, as part of the final agreement, Obama and Reid agreed to allow a debate and vote on defunding PP to be brought up in the Senate.  Still, any future fight over defunding Planned Parenthood just because they are an abortion provider is a waste.

There is one upside to the way the deal went down.  Democrats hoped to achieve cuts by simply delaying some projects (which did happen) and/or freezing funding for certain programs and refunding them in the next budget.  Republicans didn’t play ball.   Instead, many programs were terminated in order to get to the nearly $40 billion in cuts.  For the other programs with reduced budgets, they have a new baseline to start from in the 2012 budget.  In other words, even if there is a programmed funding increase, they will still spend less going forward.  This serves to reduce the monsterous deficits already projected for the next 5-10 years out.

So, after all of that, why do I say we all lose?  Because this bears repeating:  we nearly had a government shutdown over cuts amounting to less than 2% of the overall budget!  So much hinged on so little.  In order for the country to win, spending has to come down.   Is that so hard to understand?

Sorry, Michael Moore; Taking the Billionares’ Billions Won’t Bail Us Out

Mary Katherine Ham took Michael Moore’s idiot idea of confiscating wealth and using it as a “national resource” and basically showed how much of an idiot he is

The grand total of the combined net worth of every single one of America’s billionaires is roughly $1.3 trillion. It does indeed sound like a “ton of cash” until one considers that the 2011 deficit alone is $1.6 trillion. So, if the government were to simply confiscate the entire net worth of all of America’s billionaires, we’d still be $300 billion short of making up this year’s deficit.

Read more: Michael Moore’s National Resources

Never thought i’d see it: Dems accusing Repubs of cutting too much defense spending!

Usually, Dems will yell at the right for never cutting defense spending. But in an interesting move, the shoe is on the other foot.

Since there is no official budget in place, the government is being funded through continuing resolutions–in short, declarations that say the government will continue to be funded at current levels temporarily. In the latest offering, republicans have suggested a number of deep spending cuts, including to the department of defense. But the president isn’t having it, saying he will veto the GOP spending measure:

“The statement said the GOP proposal goes too far and proposes cuts that would sharply undermine core government functions and investments key to economic growth and job creation, and would reduce funding for the Department of Defense to a level that would leave the department without the resources and flexibility needed to meet vital military requirements.”

Expect this drama to drag on for a while.

Neither party is serious about debt, and the joke is on us

As of today, to pay off the entire US debt would require every US citizen to write a check for $45,400.  EVERY citizen.  The total debt is right at $14.1 TRILLION.  And neither party is really serious about doing something about it.

On the right, they are making a lot of noise, but as the saying goes, “full of sound and fury, signifying nothing.”  First, after promising to cut $100 billion in spending from the next budget, they are only able to come up with about $65 billion.  After being called to task by the Tea Party, they are able to dig and find the promised $100 billion.  The problem?  Not only are the cuts based on a budget that President Obama never sent to the House, but they also used the infamous “baseline budgeting” tricks.

Quick refresher:  Baseline budgeting is a technique where by the budget of a particular department or organization is projected years in advance.  Typically, those budgets include an already-applied increase in funding.  So, a department may already have on paper that in 2011, they will be funded at $10 million, but due to a budget increase already factored in, they may know that their budget in 2012 will have $10.3 million due to an expected 3% increase in funding.

What republicans have done is to say “we are going to cut x billions,” not acknowledging that instead of truly cutting funding, they are simply reducing the already scheduled budget increase.  So instead of cutting a department’s funding from $10 million to $9 million, they are simply advocating cutting the 3% increase to 2% or some other number.  The cut isn’t really a cut.

Further, in the “fraud waste and abuse” category, some republicans are on board with funding a 2nd, alternative engine for the F-35 Lightning II project.  The F-35 is slated to replace thousands of fighter jets in the US inventory, and the building effort is being shared across many countries, including the US, Canada, the UK, and Turkey.  The engines for the plane are made by Rolls Royce, but there is an effort in Congress to secure funding for a second engine.  The reasoning given is “in case the first one has problems,” but the real reason is to secure jobs and a contract for an American firm.  Even the Pentagon has said they don’t want it.

Democrats aren’t helping.  Even thought the White House has proposed cutting funding to some programs (like a heating oil assistance program), many Dems refuse to go along with any proposed cuts in “entitlement” spending.   Though everything should be on the table, dems are resisting anything that might touch Social Security, Medicare, and Medicaid.  Obama and the democrats have also been using the baseline budgeting trick, especially with the healthcare reform bill.  Once again, a cut isn’t really a cut.

For there to be real solutions, someone on both sides needs to wake up and wake up their fellow politicians to the real threat they all know about but are afraid to do something about (don’t want to mess up their reelection chances!).  The recommendations of the Debt Committee would be a good place to start.

Reagan is Conservatism’s Patron Saint But Would Never Get Elected By Today’s GOP

Official Portrait of President Ronald Reagan

Image via Wikipedia

Aside from Feb. 6th being Super Bowl Sunday, it was also what would’ve been President Ronald Reagan’s 100th birthday.  As Reagan is considered a hero by many on the right, there have been remembrances, dedications, shout outs, flashbacks, and countless other looks back on Reagan and his legacy in the last week.  Of course, folks on the left are having none of that, understandably choosing to focus more on those “accomplishments” that they feel did more bad than good.

I (as is often the case) am in the middle on Reagan.  I wouldn’t call him a hero, but then again, I wouldn’t try to back over him with a MARTA bus, either.  But I’m pretty convinced that based on his overall record, if an exact Reagan clone popped up today and attempted to run for President saying he would do exactly as Reagan did and be exactly as Reagan was, he wouldn’t even make it out of the primaries.  Why?  Simple.  Reagan doesn’t fit the mold of today’s Republican.

First, there is his track record on taxes.  In 1981, Reagan signed the The Economic Recovery Tax Act of 1981 also known as the ERTA or “Kemp-Roth Tax Cut.”  The top marginal rate for personal income taxes went from 70% to 50%, and the bottom rate dropped from 14% to 11%.   In general, the Act lowered marginal tax rates on average 23% across the board.  He also lowered taxes in 1986.  After that, the top marginal rate was 28%.  While tax revenues decreased over the short term, over the long term there was not only an increase in the amount of tax revenues to the government, but also a long period of economic growth.  But, that’s not the entire story.

As the budget deficit grew, Reagan knew something had to be done.  So, he signed into law legislation that, in essence, were tax increases.   Bills signed in 1982 and 1984 closed tax loopholes and increased the tax base by making more transactions taxable.  The 1986 reform bill eliminated many deductions that high income earners had been allowed to use, increasing their tax bills.  In the end, his tax increases actually increased tax revenue to the government and offset much of the revenue lost from the earlier tax cuts.

In 1982, Reagan led efforts to privatize Social Security.  Not only did it not work, but (as is usually the case in midterms) the GOP lost many seats in the following elections.  In 1983 he signed legislation that bailed out Social Security.  Pricetag:  $165 billion. Results of the bailout included higher  payroll taxes for higher income earners and the self-employed, expanded the system to include federal workers, and made Social Security benefits taxable.

These tax increases are rarely mentioned.  In today’s environment, once it came to light, the Reagan-clone would get skewered for ever considering tax increases as fiscal policy.

The national debt also tripled under Reagan.  It went over $1 trillion during his first year, and was $3 trillion when he left.  Of course, that was a bipartisan effort, as the House was under Democrat control all 8 years of his presidency, and the Senate was for 2 of his 8 years.  But evidently, veto wasn’t an option.  Of course, many will say that much of the spending was to counter the Soviet Union.  But SOMEONE has to account for the money vacuum that was SDI, which never worked.

Among other things that are rarely mentioned:

  • Reagan promised to reduce the size of government, in part by eliminating the Departments of Energy and Education.  Instead, he added a new Department of Veterans Affairs.
  • There was little done in the way to reduce government spending over Reagan’s 2 terms.
  • Many will always repeat Reagan’s call to Gorbachev to “tear down this wall” and say “see?  you have to be tough!”  In actuality, Reagan and Gorbachev nearly agreed to eliminate ALL nuclear weapons from each country’s arsenal.  Plus, to help Gorbachev enact reform, the US reduced defense spending in the latter part of Reagan’s second term.  How’s that for “peace through strength?”

Finally, the the proverbial straw that would bring our Reagan-clone’s hopes to an end–and yet one more point rarely mentioned–is immigration.  In 1982, Reagan signed a bill that allowed any illegal alien in the US before that year to be eligible for amnesty.  Yep, blanket amnesty.  In today’s environment, that would be a big no-no.

In the end, Reagan gains sainthood by default.  For those keeping up with conservative politics, there is no one else that can take his place.  Nixon resigned.  Ford was considered weak.  Bush I lost his reelection bid despite removing Saddam Hussein from Kuwait (taxes played a role in his defeat).  Bush II had two terms, but many on the right don’t consider him conservative enough.  So who is left?  No one but the Gipper.  But he’d never make it today.

to pass a bill they say we can’t afford, let’s make it MORE expensive

An article out today explains how Senator Harry Reid has added some things to the Obama tax cut deal to help get it passed. Confusing, since much has been said about how the agreement does nothing to help with the deficit, and how the tax rate cuts for the higher income earners is unaffordable:

The sweeping tax cut bill introduced Thursday night by Senate Majority Leader Harry Reid is chock-full of sweeteners which could serve as a legislative pacifier for Democrats outraged over the concessions President Obama has handed to Republicans.

The stimulus-sized package includes about $55 billion worth of short-term tax extensions for businesses and individuals. They cover a host of alternative energy credits, a potential salve for environmentally conscious lawmakers, as well as targeted benefits for everything from the film and television industry to mining companies to rum producers.

Senate Tax Cut Package Filled With Sweeteners, Obama Predicts Passage

So, the answer to unaffordability? Make it more expensive!

QuickHit: tax rate cuts

http://hdl.loc.gov/loc.pnp/cph.3b04241

Image via Wikipedia

An interesting quote from then-Treasury Secretary Andrew Mellon, in regards to the tax rate cuts of the 1920s:

The history of taxation shows that taxes which are inherently excessive are not paid. The high rates inevitably put pressure upon the taxpayer to withdraw his capital from productive business and invest it in tax-exempt securities or to find other lawful methods of avoiding the realization of taxable income. The result is that the sources of taxation are drying up; wealth is failing to carry its share of the tax burden; and capital is being diverted into channels which yield neither revenue to the Government nor profit to the people.

Obama can’t win for losing

Last night, the President announced a compromise on tax rate cut extensions and unemployment benefits.  He threw in a few other pieces (including a Social Securit

Barack in Cedar Rapids, IA 10/29/07

Image by Barack Obama via Flickr

y rate cut) and implored his party to come on board.

It seems he’s not getting the love.

Members of the right are furious.  For them, its not enough to get the desired tax rate cut extensions and an extension of unemployment benefits.  In their eyes, Obama has sold out for agreeing to extend the tax rate cuts for “millionaires and billionaires.”  Add that to how he increased troops in Afghanistan and hasn’t closed Guantanamo Bay yet, and he has some liberals apoplectic.  Searching Google for “liberals furious with Obama” brings up a ton of links that popped up in less than 24 hours, all at various levels of ticked off-ness and disbelief.  Comments range from “fight harder” to “Obama got rolled” to “Obama caved so hard it scared the bats!” (the last one from the Huffington Post).  It will be interesting to see the intraparty fight that will follow in the coming days.

Republicans inciting violence! oh, wait. She’s a Democrat. Will she get condemned?

I’ve lost count of the number of times I have seen those on the left calling for condemnation of statements made by folks on the right.  But what about when one of their own says something in the same category?   It seems a senator was suggesting that americans take up pitchforks…she’s a Democrat!

But lets look at some of what she says:

“…they insist on a permanent tax cut for the wealthiest americans, completely unpaid for”

Lets look at this the way it should be looked at. If the projected loss in revenue is indeed $700 billion over 10 years, that means spending would need to be cut from elsewhere for it to be “paid for.” The problem is, instead of suggesting that cuts be found, its easier to criticize the cost. Further, someone should ask a pertinent question: if continuing a tax cut that is unpaid for is such a bad thing, how is continuing ANY of the tax cuts good, since NONE of it is paid for?

“we are fighting for the middle class”

No. you are pulling the wool over the eyes of the middle class in hopes of getting them vote for you and keep you in office.

“70% of Americans don’t itemize deductions.”

So what? That has nothing to do with extending tax cuts. Wait…unless you’re building towards a bigger point…

“so that big ol complex tax code? its been written for wealthy america.”

Ah, there it is! Let’s dig at the high income earners! THATS what you were getting at! Unless there are rules in the tax code that say “only wealthy americans can get these deductions,” you just bent the truth, Senator.

“they have all kinds of ways that they can use the tax code to avoid paying taxes.”

Ah, yes, a famous tactic, used often by Democrats. Let’s imply that the high income earners aren’t paying their “fair share.” Too bad that the top 5% of income earners (making over $158k/yr) make 35% of all adjusted gross income (AGI) in the US, but pay almost 60% of all income taxes paid. The top 10% ($114k and up) make 46% of US AGI, but pay 70% of all income taxes paid. So, that leaves the bottom 90% of income earners to pay the remaining 30% of income taxes paid. This includes the bottom 50% of income earners, who pay less than 3%. The point? High income earners pay a lot in taxes, as they should, but implying they aren’t paying their share is rediculous.

“Its about leveling the playing field”

Its not the government’s job to redistribute wealth and calling it “leveling the playing field!”

“If they think its ok to raise taxes for the embattled middle class because theyre gonna pout if we don’t give more money to millionaires, it really is time for the people of america to take up pitchforks.”

Where do I start on this one? First, Republicans want to extend tax cuts for EVERYONE, not just the wealthy. Second, can someone explain to the Senator that a tax rate cut is not giving money away? To give something away implies there was possession in the first place. When someone has a tax cut, that means they get to keep more of THEIR OWN MONEY! I can only assume that she and other Democrats feel the government is entitled to everyone’s money and should be able to tell folks what they can and can’t do with it. Finally, the pitchfork comment, which is what came to my attention in the first place. I’ve heard many of my left-leaning friends screaming about something someone on the right said, how it should be condemned, and implying that Dems don’t do such. Well, let’s see if those people step forward and comment on this one.
The rest isn’t worth breaking down, other than to mention that she throws in a few digs at the wealthy just to get her constituents even more ticked off at Republicans and at the filthy rich people. It’s a shame that Congress can’t have serious discussions about this type of thing, but also a shame that people don’t realize people like her are part of the problem, not part of the solution.

QuickHit: Just a question or 3

Why is raising the retirement age for earning Social Security such a big deal, when the changes wouldn’t be implemented until 2050 and 2075?  That means the folks most affected by the changes either a)haven’t had much chance to start contributing to social security or b)haven’t been born yet!  Further, where is this idea coming from that keeping the retirement age where it is is some kind of right?

Speaking of rights, do people realize what the concept of a “right” is?  Its as though anything that someone feels a person should be entitled to is a right, even if it involves forcefully taking time, talent, or treasure from someone else.

Is it not possible that allowing the tax rate cut for those over the $250k mark may not end up costing $700 billion over ten years?  Can we really predict how people and revenues will behave 10 years out?  If the economy improves, wouldn’t that number come down?

And finally, will someone recognize that the problem isn’t just revenues, its also spending?  That the main excuse for wanting to let the cuts expire and supposedly bring in the $700 billion is to try and fund the government WITHOUT cutting spending?

Just a few thoughts.

At this rate, we’ll NEVER fix the issues

Today is the final vote on recommendations from Obama’s deficit panel.  For those who missed it, President Obama put together a bipartisan panel of 18 appointees, tasked with producing solutions for debt reduction.  The commission did its job, recommending multiple ideas that, if enacted, would help move the country towards fiscal stability.

As expected, the response was chilly at best.  Folks on both sides took the expected approach–“we need cuts, but don’t cut programs that I support!”  Republicans didn’t like the idea of tax increases on gas.  Democrats didn’t like the notion of raising the retirement age or lower tax rates.  Neither side wanted to sign on to doing away with popular tax breaks (even though lowering tax rates would offset it).

So, unless there is some sanity injected into things, we will continue on the rocky road to fiscal disaster.

QuickHit: very good article about tax cuts and small businesses

today on Yahoo, there is a very good fact checking article about tax cuts and small businesses. As is usually the case, both parties are bending numbers to make their argument look better, but the truth is in the middle:
FACT CHECK: Small business caught in tax battle

“I’m Tired”

Back in 2009 a former Marine and state senator posted a vent on his blog.  It’s being circulated again, wrongly attributed to an actor with the same name.  But its an interesting read.  Read the original, it should make for interesting discussion:

I’m Tired.

Tax shenanigans, or why $700 billion is unaffordable, but $3 trillion is affordable

The level of back-and-forth over the extension of tax rate cuts enacted under Bush 43 has reached a fever pitch.  From the right, we get “all or nothing!” or “no one should have a tax increase in this economy!” or, to borrow from a classic hip hop song by the one-hit-wonder group, The Double XX Posse, “not gon be able ta do it!”  From the left, we get “no tax cuts for millionaires and billionaires!” or “tax cuts for the rich” and “no subsidizing the rich” or “they don’t need it.”  But my favorite is that, in essence, we can’t afford the $700 billion cost (CBO projected).

For the life of me, I could not figure out how anyone would have the nerve to specifically talk about the $700 billion that extending the current rates for high-income earners may cost (remember, they are projections, so its only a guess), but not talk about how the cost of the rest of the cuts.  After all, the same CBO that produced the $700 billion number also stated that the TOTAL cost of extending ALL current tax rates would be $3 trillion.  So what gives?

Just more political shenanigans.

Let’s step back for a moment to 2007.  From wikipedia:

The PAYGO system was reestablished as a standing rule of the House of Representatives (Clause 10 of Rule XXI) on January 4, 2007 by the 110th Congress:

It shall not be in order to consider any bill, joint resolution, amendment, or conference report if the provisions of such measure affecting direct spending and revenues have the net effect of increasing the deficit or reducing the surplus for either the period comprising the current fiscal year and the five fiscal years beginning with the fiscal year that ends in the following calendar year or the period comprising the current fiscal year and the ten fiscal years beginning with the fiscal year that ends in the following calendar year.

Less than one year later though, facing widespread demand to ease looming tax burdens caused by the Alternative Minimum Tax, Congress abandoned its pay-go pledge.

So, to set themselves apart from the previous congressional crew, the swept-into-power Democrats in the House re-enacted a rule that makes a lot of sense–if we are gonna spend it, we are going to pay for it. Tub notice the next next line: it lasted less than a year. PAYGO was shelved, allowing major pieces of legislation, like the Bush Stimulus package in 2008 and Obama’s Stimulus package in 2009, to be passed without the rules applying. Then, new statutory PAYGO rules were again passed in February of 2010.
In addition, Obama signed new budget rules. From Businessweek:

Under the budget rules, any tax cuts benefitting individuals earning more than $200,000, or couples earning more than $250,000, must be offset with new tax revenue or spending cuts elsewhere.

Apparently, the tax cut line-in-the-sand was drawn long ago. After bucking the PAYGO rules, now the rules must apply and for those high-income earners, tax cuts aren’t affordable.
Here’s what’s missing.
Lets be honest. If there is an argument to be made, its that NONE of the tax rate cuts are affordable. But let’s stick to the current discussion. The reason that Democrats are saying we can’t afford the $700 billion is not because we can’t afford it. That can’t be the case, since evidently, financing $2.3 trillion via debt is not a problem (and allowed under the rules!). The real problem is that offsetting spending cuts would have to be made. History has shown that Democrats are not big on cutting spending (unless its Defense related). Any mention of cutting programs, especially entitlement programs, is met with more resistance than a goalline stand in the national championship game. Any other arguments, like referring to lower tax rates as a “subsidy” (how can the government grant or gift a person their own money) or “welfare for the rich” (once again, its their money) just distracts from the true discussion.

Don’t worry, my Dem friends, I’ll tackle the Repubs too.

Who has more disposable income–a minimum wage household or a $60k household?

I was forwarded an article-about-an-article that shows that “a one-parent family of three making $14,500 a year (minimum wage) has more disposable income than a family making $60,000 a year.”  Seemed unbelieveable, but the writer of the piece spelled it out very concisely.

In a nutshell, based on income, there are certain sources of financial assistance that are available to that minimum wage household that are not available to the $60k household–Food Stamps, Free Lunch, Medicaid/CHIP, and others.  When the available programs are added in in terms of financial benefit to the family, and compared to what the $60k household would have to do for similar benefits, the lower income household has more money left over.

Just left out there with no discussion, I suspect this would prompt a couple of scathing responses.  There will be those who will make it partisan and say something about conservatives attacking.   Some will be offended because how dare ANYONE say anything negative about programs that benefit the poor!  Still others will look at it as class warfare.  Obviously, things could go in a number of different directions.

Anyway, the article: Entitlement America.

Guest Writer: OCD3 on the GM bailout and IPO

My Thoughts on the GM bailout and recent IPO

While, I’m very happy that the American automotive icon GM is still in business, I initially had mixed feelings regarding the bailout and spending taxpayer dollars to shore up what appeared to be a dying company.

But first understand that I’m a fan. I’ve driven and owned only American cars my entire life. From my first car, a ‘83 Pontiac Firebird (black of course), to my mom’s ‘85 Chrysler Reliant which I drive for a short time in college I’ve been a fan. From the used ’87 Chevy Celebrity that I bought for $700 upon graduation to the ’98 Pontiac Grand Prix which I still drive today…I’ve been a fan. What many people don’t always understand is that GM DOES build high quality products…and they have done so for a long time now. The issues of the 80s are long gone. The focus on quality has been evident since the 90s but a bad reputation is difficult to shake.

I’m not happy for GM for nostalgia’s sake. I’m not even happy for GM because I drive one of their cars. The Pontiac brand which I’ve come to love has been retired…for the time being anyway. I’m happy for the people who build cars and feed their families because of it. I’m happy for the automotive suppliers and parts suppliers and the suppliers to those suppliers. This was not just about GM. It was about an industry that supports a significant part of our economy and the people who rely on that industry to survive. You see, I was once one of them.

I used to work for GM. I started as a young engineer fresh out of college. I felt lucky because GM was one of those big companies that so many engineers wanted to be part of. I enjoyed my time there. But I also saw things that made me feel concerned. I saw some employees who took their jobs for granted. I would tell them that some of their actions were leading to jobs being sent to Mexico. Some responses were to the effect of: I don’t care, my job is union guaranteed. I saw some who took advantage of union agreements in ways that scream lunacy.

For example: a material mover fell asleep in a closet. A foreman grabbed a box of parts to keep the line from shutting down while the mover was missing. When the mover later learned that a non-union worker did union work, he filed a grievance and was awarded time-and-a-half for the day.

The problems were not just employee based or union-based. I strongly support the unions. I’m just against the abuse of them. I saw management making decisions and putting policies in place that had no practicality. I saw a lack of innovation in product design to capture a new market. I saw a failure to understand the buying habits of a new generation. Gone were the days of brand loyalty where one would buy a Pontiac Sunfire as a teenager, a Pontiac Grand Am as a young adult, a Pontiac Firebird as a young professional, a Pontiac Grand Prix as a middle class family man, and a Pontiac Bonneville as a middle-aged man set in his ways who just “loves his Pontiacs”.

There were things happening that I didn’t see as well…such as the aging work force, the rising cost of healthcare for employees and retirees, and no plan to deal with it all.

I say all of this because I believe I have a personal view of the company as a former employee and a long-time customer. When the bailouts were announced, I thought it was a big mistake. I don’t believe in throwing good money after bad. I left the company because I saw a plan to move most of the operations in my area to Mexico as soon as natural matriculation allowed. There wasn’t much of a future for me there. I felt that the failure of GM to get its house in order is not the taxpayer’s problem. Furthermore I felt that the effort was futile. I did not believe GM could be saved. I felt they needed an overhaul of management, both at the company and the unions. I felt employees needed a change of attitude. Their union contracts may be guaranteed but their jobs are not. They forgot about the free market’s right to decide that they don’t have a job regardless of their contracts.

Then the bailouts passed and I was…not angry. I was relieved. They have a chance. The industry has a chance. An American icon has a chance. The justification was not just saving the company, but the cumulative effect it would have on the industry and our economy.

This week GM issued stock in a new IPO that was one of the biggest ever. Bush 43 started the automotive bailout and Obama continued it. From all accounts it worked and they both deserve the credit. Taxpayers will get their money back and then some. Jobs were saved. The economy did not slip into depression. Some say they could have gone into bankruptcy and might have come back a stronger, leaner company. They could have also gone into bankruptcy and disappeared forever.

Our government interfered with free market forces. I hope it never does so again. This along with TARP, healthcare reform, and other policies caused the Democrats the majority in the House. Politicians choice to ignore the will of the people and they were punished for it. But in this case, their actions have proven to be a success. I grade on performance and outcome, not on whether or not my ideology won or loss. Their actions save an important piece of Americana and likely kept us from entering a depression. To criticize it by saying that it might have been fixed another way is foolish. If you could go back in time and risk the economic health of the country by changing the decision while knowing that the decision as is did indeed work, would you?

To our government let me say: well done! This was $50B well spent. Please don’t do it again.

OCD3

*Note:  OCD3 will be making frequent appearances here at F&C so show him some love!  –Hal

The left says the GM bailout is a success. The right disagrees. Who is correct?

Logo of General Motors Corporation. Source: 20...

Image via Wikipedia

This week, GM launched an IPO, moving forward in a turnaround that many thought unlikely a few years ago.  Just a couple of years ago, GM was losing a ton of money, closing dealerships, and about to go into serious bankruptcy.  Bush 43 began the bailout process with over $17 billion in loans.  Obama and Co continued the bailout, but with a caveat that many still consider controversial to say the least:  the United Auto Workers came out with a larger stake in GM than the shareholders and bondholders, even though the amount GM owed the union was less than that owed to the shareholders.  Many feel that letting GM go into bankruptcy and emerge leaner and profitable would’ve been better and allowed the pain to be shared more equally.  Many also felt that allowing the unions to end up with a larger share that seemed out of proportion was an obvious example of the Dems giving special treatment to their union supporters.

Sidenote:  many of the left leaning sources that are celebrating the IPO are saying the company would’ve died without the bailout.  This isn’t necessarily true.  A large number of companies that go into bankruptcy eventually come out.

So my good friend Ocie asked me this morning:  “GM IPO, we’re making American cars, people are employed, was the $50B bailout of GM worth it?”  My immediate answer to him was that it would be worth it once the US breaks even on its investment at least (the US Treasury owns a 33-35% stake in GM, that it took instead of money payback).  Having thought more about it, I would say that it has its positives and negatives.  I agree jobs were saved, but there is no guarantee jobs would not have been saved via bankruptcy.  I will say that bankruptcy may have had more of a negative impact “down the line,” as in the vendors that do business with GM.  But it can’t be denied that politics played a part in the end result–the union ended up with a larger stake than stock and bond holders.  And it will be years before the US is fully divested and paid back on their “investment.”

So let’s declare that it was worth it, but should’ve been done differently.

Earmarks: most states give much more than they get (NYers, ya’ll get hosed!)

People hear about “earmarks” but many aren’t sure what they really are.  In short, an earmark is when a piece of legislation is added to a bill directing money be spent on a specific project.  Members of Congress do it all the time to steer federal money home to their districts to fund different things.  Of course, many will yell about pork until it pertains to their own district.  Then, its not pork, its critical.  Need an infamous case?  Look up the “Bridge to Nowhere” debacle in Alaska.

Brandon Arnold writes a good article in Politico about how most states are getting less in earmarks than they should based on how much tax revenue comes from that state:

You and Your Neighbor’s Pork.

 
The article is good, but his follow-up is even better, with a chart showing how much states pay in taxes and receive in earmarks. New Yorkers are definitely getting the screwjob here:

 
Earmark Donor States.

 
Of course, if all earmarks are banned, we won’t have this problem.

Tax cuts, small businesses, and the $250k line

During the long drawn out battle regarding the Bush Tax cuts.  Democrats have drawn the line at $200k/yr for individuals and $250k/yr for families as the dividing line between those who should get permanent tax cuts and those who shouldn’t.  The main argument is that the $700 billion in lost revenue over the next 10 years is unaffordable.  Republicans counter that not only should there be no tax increases in these economic times, lots of small businesses will be negatively affected.  Of course, the truth (as I see it, of course) is somewhere in the middle.

A logical approach would be to extend them all temporarily (give it a year or 2), then let them expire.  Now, people are right now saying I’m crazy.  But if we’re going to be for real about getting the deficit under control, that should be option 1 on the table.  Republicans like to say “no tax increases” but there has to be a middle ground where folks aren’t overtaxed and the government is getting more revenue.  If anything, add a new bracket for folks making a million per year or more.  Either way, its illogical to completely remove the idea of a tax increase of some kind to combat spending.

Democrats, on the other hand, have established $250k as the line in the sand.  Mind you, no one has any idea why this number is the magic number.  But as Dems often do, it becomes an emotional issue.  That approach started from the beginning, when the tax cuts were enacted.  Despite the easily researchable facts that the cuts actually removed a number of lower income taxpayers from the tax rolls, reduced the lowest tax rate, and shifted the overall tax burden to the highest income levels (look it up), the cuts have often been referred to as “tax cuts for the rich” simply based on the sheer amount that an upper income earner got to keep (not “was given to them” as is often used as yet another argument).  What’s often heard is that folks making that much money either “don’t need a cut” or “won’t spend it.”  Or, that they cost too much.  I usually wonder how it can be said that the estimated $700 billion over 10 years is considered unaffordable, when the rest of the cuts are estimated to cost over $2 billion over the same time.   This is why if anything should be done, ALL should be rolled back.

I predict that the White House will give in to all cuts being renewed for 2 years in order to avoid all of them expiring on 12/31/10, which would be a political disaster.

Quack! Quack! The Lame Ducks are here! What to watch for.

No, I’m not talking about all those Canadian Geese that are blocking traffic and crapping all over your lawn.  I’m referring to the “Lame Duck” session of congress.  For the uninitiated, the term refers to the congressional session between the elections and the beginning of the new congressional term, when many of the members of congress are simply biding their time before they are shown the door and replaced.  It’s a time where lots of shenanigans can occur; if you’ve been voted out and you only have a few weeks to “live,” you can vote on some things with no concern as to how it will affect you.

In this case, congressional democrats originally had lots of plans for the session.  Unfortunately, November 2 hit like a category 5 hurricane and messed up their plans.  But no worries, there will be fireworks.  Here is a sample of what to watch for:

  • The biggest issue to be resolved will be the extension (or not) of the Bush Tax Cuts.  Republicans want all of them made permanent.  Democrats want to draw the line at people making $200k/$250k individual/family.  There is talk of a 2 year extension of all cuts, but Obama and Pelosi are holding firm that they want no compromise.  Another compromise by Senator Chuck Shumer (D-NY) popped up over the weekend.  We will see if anyone pays attention.
  • The estate tax, aka the “death tax,” if not addressed, will go from 0% back to its original level of 55%.
  • Funding of the government is currently done via a temporary spending bill.  Congress will have to put in place a new spending bill for the year.  Should be a simple thing, right?  No.  Dems are refusing to accept a Repub proposal to hold spending at 2008 levels to reduce spending.

Other things that may come up include “Don’t Ask Don’t Tell” (which needs to go), the DREAM Act (a little too soon and too controversial right now), and the Alternative Minimum Tax, which could hit a lot more people if nothing is done.

Politicians aren’t serious about fixing problems

President Obama has installed a Debt Commission in order to come up with ways to reduce the deficit.  The report of the commission is due in December.  Everyone knows going into this that there will be some hard decisions that will have to be made, and not everyone is going to be happy.

Wednesday, an initial copy of the Commission’s report was released.  In it they suggested many ways to get the deficit down.  Among them:

As expected, folks on both sides have gone nuts.  The idea is, yes cut the money–but not for the folks that I support!

I’ve linked to a breakdown, as done by radio host Neal Boortz.  Some don’t like him, but read it anyway, since he breaks down each of the suggestions:
Let the Games Begin.
As mentioned, the negative responses weren’t slow in coming:
Response to deficit plan–tepid to “unacceptable”.
They just aren’t serious about fixing things.

A shot at Bush and Republicans–from a Republican

Many times, I’ve tried to explain that the anti-spend, anti-government angst didn’t just start when Obama took office.  Many conservatives’ ire began during Bush’s 8 years in office.  Many were upset at how much money was being spent by Bush and the republicans in congress, but such complaints were overshadowed by the war and the economy to an extent.  Now, re-elected governor Rick Perry takes a shot at Bush and his republican congress:

“They cowardly and selfishly empower themselves politically by compromising liberty issue by issue, often selling principle for a bridge, a museum, or some building named after them back in their home district or state,” writes Perry in the 187-page polemic.

Read the rest here:

Rick Perry knocks George W. Bush, Mitt Romney for ‘big government’ policies

Finally, a simple explanation for why oil (and our gasoline) is expensive

Came across an article about today’s oil prices.  In it, it explains why oil prices are high (which is why gas prices are as well):

Oil is priced in dollars and becomes cheaper for holders of foreign currency when the dollar falls. Europeans, for example, get more dollars for their euros and can buy more oil for fewer euros. Since oil is cheaper for them, they buy more, sending up the dollar price of oil.
Energy traders expect this to happen, so they buy oil when the dollar falls, boosting the effect.
When the dollar weakens, investors would rather hold hard assets like oil and other commodities because hard assets protect them against more weakening and inflation.

Link to article is here: Oil above $87 in Asia, at highest since early May