Deficit increased by $181 billion... just in July...

[Grunthos]

Deficit grew by $181 billion in July
By Walter Alarkon
Posted: 08/09/09 06:06 PM [ET]
Bailouts for financial firms and billions in tax revenue lost because of the recession drove the deficit to a record $1.3 trillion in July, according to the independent Congressional Budget Office (CBO).

Tax receipts that have fallen due to the poor economy and increased spending to save car companies, banks and mortgage firms were major contributors to the federal deficit, according to CBO, which provides official budget numbers for Congress. The federal deficit grew by another $181 billion in July.

Falling tax receipts and increased spending on bailouts for auto companies and the financial sector and for the economic stimulus package added to the deficit, according to CBO, which provides official budget numbers for Congress.

Spending through July of 2009 has increased by $530 billion, which is 21 percent over the same period in 2008. The bailout money for Freddie Mac and Fannie Mae accounted for almost half of the spending increase. Unemployment benefits have more than doubled, Medicaid spending has grown by a quarter and Medicare spending has increased by 11 percent.

Tax revenue for the first three quarters of 2009 has fallen by approximately $350 billion, or 17 percent compared to the same period last year, due mostly to the effects of the recession on payroll, income and corporate taxes. A third of the decline is due to tax breaks in the stimulus, including the middle-class tax cut that President Obama campaigned on during last year's election.

The independent budget scorekeeper has projected the deficit to reach $1.8 trillion by the end of the fiscal year, Sept. 30. The deficit in 2008 reached $455 billion, which was a record at the time.

The latest deficit projections come as Democrats in Congress and the White House are pushing for healthcare reform criticized by Republicans as too costly.

House Speaker Nancy Pelosi (D-Calif.) stressed during a town-hall meeting in Colorado this week that the healthcare bill won't add to the deficit or restrict benefits and instead will increase access to care. But lawmakers have yet to settle on a way to pay for the bill, expected to cost roughly $1 trillion over the next decade. Pelosi has supported an income surtax on the highest earners, those making more than $280,000, while senators are considering a tax on insurance companies that offer expensive health plans.

Sen. Judd Gregg (N.H.), the top Republican on the Budget Committee, said that Democrats in Congress aren't doing anything to address the record deficit and are instead pushing ahead with “wildly expensive” healthcare legislation.

“To allow the deficit to hit these previously unthinkable levels – while still planning to implement massive new spending programs – shows an incredible lack of fiscal responsibility, especially toward the future generations who will be saddled with the consequences of today’s actions,” Gregg said.

One poll released last week suggests that the GOP attacks are starting to work. A Rasmussen survey of likely voters found that 71 percent believe Obama's policies have increased the deficit. While most -- 54 percent -- blamed the recession that started during the Bush administration for the country's fiscal situation, 39 percent blamed Obama's policies.


http://thehill.com/leading-the-news/deficit-grew-by-181-billion-in-july-2009-08-09.html

Meanwhile, the House plans to buy a bunch of new Gulfstreams, spending $500 million tax dollars on eh same form of luxurious transportation they demonized the CEOs of PRIVATE companies for using.....

...and the Senate is apparently staring to feel the heat...

WASHINGTON -- Bipartisan opposition is emerging in the Senate to a plan by House lawmakers to spend $550 million for additional passenger jets for senior government officials.

The resistance to buying eight Gulfstream and Boeing planes comes as members of both chambers of Congress embark on the busiest month of the year for official overseas travel. The plan to upgrade the fleet of government jets, which was included in a broader defense-funding bill, has also sparked criticism from the Pentagon, which has said it doesn't need half of the new jets.

View Full Image

Associated Press

House Minority Leader John Boehner opposes the jet purchase.
.Two Missouri senators, Democrat Claire McCaskill and Republican Christopher Bond, said they would oppose funding for the jets when the legislation is taken up by the Senate in September.

"The whole thing kind of makes me sick to my stomach," said Mrs. McCaskill in an interview Sunday. "It is evidence that some of the cynicism about Washington is well placed -- that people get out of touch and they spend money likes it's Monopoly money."

Sen. John Thune (R., S.D.) says the planned purchase "is a classic example of Congress being out of touch with the realities of deficit spending."

The Obama administration had sought $220 million to buy four passenger jets, including two that are currently being leased by the Air Force, to replace a fleet of older planes. Before leaving town for the August break, House lawmakers doubled the aircraft order to eight, at a total cost of $550 million.

.Mrs. McCaskill said she was lobbying members of the Senate Appropriations Committee to oppose funding for the planes. She said she has spoken to several senators on the panel who oppose the funding, including Mr. Bond. A spokesman for Mr. Bond confirmed that he "opposed the funds for the jets."

Several House Republicans Sunday said they are against the purchase, including Republican leader John Boehner of Ohio. Tennessee Republican Rep. Marsha Blackburn, the senior member of a group of House conservatives, also voiced opposition to the House plan.

Lawmakers who support funding for the planes say the move would save the government money down the road because the new planes are less expensive to operate than the older planes, some of which are now grounded.

"The key here is not whether or not planes will be bought, it's when planes will be bought," said Ellis Brachman, a spokesman for the House Appropriations Committee, the panel that approved the spending. He has said the planes are predominately used by the military, with roughly 15% of the Air Force's passenger flights dedicated to congressional travel.

View Full Image

Getty Images

Sen. Christopher Bond (R., Mo.) also opposes the jet purchase.
.The tension over the jets is erupting just as lawmakers embark on the high season for government travel. Traditionally, August is the busiest travel period of the year, since Congress usually recesses for a month. Since 1995, House lawmakers have disclosed a total of $6.2 million in travel expenses for all the months of August, according to a Wall Street Journal computer-assisted analysis of 60,000 travel records. While some legislators take issue with the pricey new aircraft that would ferry officials around, they still see value in the trips themselves.

The day after the House began its summer holiday, Mr. Boehner, the House Republican leader, and five other lawmakers departed for a two-week trip around the globe. They were Reps. David Camp of Michigan, the senior Republican on the Ways and Means Committee; Dan Boren (D., Okla.); Jo Bonner (R., Ala.); Tom Latham (R., Iowa); and Greg Walden (R., Ore.), according to a travel document reviewed by the Journal and an aide to one member.

The goal of the trip, which will include stops in Germany, Ukraine, Kazakhstan, Mongolia and China, was to discuss issues surrounding the global economic crisis and national security with government and private-sector officials in those countries.

At least some of the lawmakers took their spouses, which they are allowed to do under House rules at no costs to themselves for "protocol" purposes.

The group -- which also included four aides to Mr. Boehner, a congressional physician, a diplomatic security officer and three military liaisons, who coordinate the trip -- departed Andrews Air Force Base just outside of Washington bound for Switzerland. After visiting Asia, the delegation is scheduled to fly to Vancouver before returning to Washington in mid-August, according to the travel document and the aide.

This month, Sen. John McCain, the Arizona Republican, is scheduled to leave with a group of senators for a week-long trip to Libya, Kuwait, Iraq, Yemen, Afghanistan and Iceland. A spokeswoman for Sen. McCain didn't respond to calls or emails for comment.

Sen. Patrick Leahy, a Vermont Democrat, Sen. Judd Gregg (R., N.H.) and other Senators and their spouses are planning to travel to the U.K. for the week before the Senate reconvenes after Labor Day. The purpose of the trip, according to a spokeswoman for Sen. Gregg, is an annual meeting with members of the British Parliament.

[Tonus]

So, uh... can I have my stimulus back? (http://www.usatoday.com/money/economy/2009-08-16-stimulus-poll_N.htm)

Poll: 57% don't see stimulus working

WASHINGTON — Six months after President Obama (http://content.usatoday.com/topics/topic/People/Politicians,+Government+Officials,+Strategists/Executive/Barack+Obama) launched a $787 billion plan to right the nation's economy, a majority of Americans think the avalanche of new federal aid has cost too much and done too little to end the recession.

A USA TODAY/Gallup Poll found 57% of adults say the stimulus package is having no impact on the economy or making it worse. Even more —60% — doubt that the stimulus plan will help the economy in the years ahead, and only 18% say it has done anything to help improve their personal situation.


That skepticism underscores the challenge Obama faces in trying to convince the public that the stimulus has helped turn the economy around. It also could complicate the administration's plans to overhaul the nation's health care system.


"This is a wake-up call for the administration." says House Minority Whip Eric Cantor (http://content.usatoday.com/topics/topic/People/Politicians,+Government+Officials,+Strategists/U.S.+Representatives/Eric+Cantor), R-Va. "People see the stimulus hasn't worked, and now you want to lay on over $1 trillion in a health care plan."

The administration declined to comment on the poll results.


The stimulus package contains $288 billion for tax cuts and $499 billion in new spending, much of it meant to pay for unemployment and other social services. The $1 billion "cash for clunkers" program was not part of the bill, although its $2 billion expansion comes from stimulus funds.


The government has allocated more than $200 billion in aid. Since the plan began, however, the recession has left an additional 2.2 million Americans without jobs, according to Labor Department surveys.


Economists generally say the recession would have been worse without the stimulus, though they disagree widely on how much it has helped.


"The economy was like a huge pothole we had to fill, and what we did was throw a little gravel in the bottom. You don't fill the hole, not even close. But you make it better," says University of Oregon economist Tim Duy. "Many people don't see the effects so they assume it's not working."

The poll Aug. 6-9 of 1,010 adults has a margin of error of +/–4% for the full sample. In a question asked of a subsample, 51% of Americans say the government should have spent less on the stimulus; 31% say the amount was "about right." Also, almost half in the full sample say they are "very worried" that stimulus money is being wasted.

As usual, we get a heaping dose of BULLSHIT from a clueless economist (oh, wait, he's a professor at a university, that explains it). The stimulus, he claims, helped to cushion the blow a small amount. People think it isn't working because they don't see the effects directly.

The problem with this way of thinking? See the text highlighted in green.

Most of the stimulus, which by description was intended to boost the economy and avoid excessive job losses, go to tax cuts and social services. Both of these tend to provide a minor and temporary economic boost by putting some extra money in people's pockets. But it does dippity for long term economic prospects, and while investing in social services can be useful in a recession, it has no impact on driving economic growth. A handout is not a job. <-- Quick, someone explain this to the economics professor!

Perhaps we can also explain to him that sometimes, when people don't see the positive effects of a particular economic policy, it's because there are none. But they can certainly see the negative effects, such as an unemployment rate that's almost 2% higher than predicted even without the stimulus. Or maybe they'd be able to see the effects if the stimulus money was actually being spent. Hey, someone explain to the college professor that money that isn't spent doesn't stimulate anything aside from bad poll numbers!

Or to paraphrase Mae West, sometimes a lousy economic package is just a lousy economic package.

[Tonus]

*sniff* Do you smell that? Smells like government efficiency: (http://hotair.com/archives/2009/08/17/cash-for-clunkers-a-screwed-up-bureaucracy-says-a-liberal-democrat/)


Cash for Clunkers a screwed-up bureaucracy, says … a liberal Democrat?

Bear in mind that the Congressman making this public (http://www.foxnews.com/politics/2009/08/16/auto-dealers-paid-just-percent-clunkers-claims-congressman-says/?test=latestnews) isn’t a member of Republican leadership, isn’t a Republican at all, or even a Blue Dog Democrat. In fact, it’s the same Congressman who convinced the liberal activists at Netroots Nation that he represented their interests better than incumbent Senator Arlen Specter (R D-PA). The Cash for Clunkers program has only paid on 2% of the applications submitted by dealers, while over 80% of those applications have been rejected for petty bureaucratic nonsense:The federal government has only reimbursed auto dealers for 2 percent of the claims they’ve submitted through the popular “cash for clunkers” program, a Pennsylvania congressman said, calling on the Obama administration to help speed up the process.

Rep. Joe Sestak, D-Pa., called for “immediate action” to address the problem in a statement Sunday, after writing a letter to President Obama Saturday expressing his concerns.
In the letter, Sestak said only 2 percent of claims have been paid and that four of every five applications have been “rejected for minor oversight.”

In recent days, auto dealers across the country have been complaining that the reimbursement payments are slow to process. And they said some of their applications were being rejected because of apparent procedural issues. The statistics Sestak cited suggest those complaints are not based on isolated incidents.
The program was supposedly so wildly successful that the Obama administration requested and received an extra $2 billion in financing just as Congress went on its recess. If they’ve only paid 2% of the applications, where did the original $1 billion go? What will happen to the next $2 billion?

And of course, the big question: if the federal government can’t run a program designed to kill a few hundred thousand cars, how can we expect them to run a program to keep hundreds of millions of Americans alive and in good health?


80% of claims have been rejected, and we need an additional $2 billion for the program. Which means one of two things-- the program is so successful that the only way to prevent it from costing tens of billions is to stiff auto dealerships, or only a fraction of the $1 billion has been paid out even as the administration asks for $2 billion more.

By the way? This is the same government that expects you to believe that letting it run health care will result in enough savings to remain "budget neutral." I'm sure doctors and clinics across the country cannot wait to bill the government for medical services rendered! Sorry, you didn't fill this form out in triplicate with red ink and the specially-created government watermark between the hours of 4:30AM and 4:31AM... DENIED!!! HA HA HA!!!

[Grunthos]

I wonder who ends up eating the $4500 per car, should the government 'refuse' a claim?

The dealer, or the consumer?

I also wonder what happens to recipients at tax time?

"Refusing high-dollar claims for bureaucratic, petty procedural reasons..." wow, sounds just like the people I'd want in charge of MY health system! (rolleyes)

[Diniden]

So far I think the consumer is being hit with a good chunk of the lack of 4500. Currently I have heard several cases of people around me turning in their car for the cash, but then later getting denied their 4500 benefit on the newer car they purchased. Really ran some families into a hole (not sure how reliable this was but it sounded about right).

[Grunthos]

If true, that's a scandal - - and a scam - - of epic proportions.

[Shady]

At least one of the local dealerships here in Birmingham has stopped participating in the program. They have made over 100 sales as part of the program and have only been reimbursed for 4. They won't start again until they are paid...which may be never.

[Tonus]

Now you guys are starting to sound like racist nazi unAmerican traitors. And racists.

[Grunthos]

Progam's scheduled to end Monday, now.

[Shady]

A new York auto group pulled out as well.

[Tonus]

Progam's scheduled to end Monday, now.
After spending as much as $3.5 billion, or $500 million more than has been allocated so far. Of course, the government can just continue to stiff auto dealers, and then they wouldn't have to commission the additional funds.

Estimates ranged as high as $8.5 billion if sales held up for the rest of the summer. How great does it feel to be an auto dealership right about now? Talk about having the rug yanked out from under you!

[Grunthos]

Hell of a way to run a railroad...

[Tonus]

All things considered, this is the logical result (http://www.gallup.com/poll/122411/Americans-Expect-Income-Tax-Hike-Obama.aspx) of the administration's handling of the economy. To summarize the information in the link, a Gallup poll finds that:

% of people who expect a tax increase? 68%
% of people who expect a BIG tax increase? 35%
% of people who expect their taxes to remain the same? 20%
% of people who expect a tax decrease? 9%
% of people who expect a BIG tax decrease? 2%

There is some hope in the future of America, when the number of people who are in complete and utter denial is just 2%.

[Tonus]

I wonder if conservatives will enjoy this video (http://hotair.com/archives/2009/08/21/video-is-obamas-loss-wall-streets-gain/) nearly as much as Jim Cramer must have enjoyed making it.

One thing to note is that Cramer has always been a staunch Democrat. Elsewhere (was it UGOP?) I linked to a site that tracks political donations, which showed that over the last two decades or so, Cramer had made more than $260,000 in political donations... 100% of that money went to support Democrats.

So imagine how he felt when his early disillusionment over Obama's policies led to his being blasted to smithereens by the left, with the coup de grace being delivered by an indignant John Stewart? So on the one hand, Cramer probably doesn't enjoy trashing the current administration. But there has to be some perverse pleasure in being able to show that he was right, after his own ideological buddies tore him to shreds for being worried about the same thing that everyone else has been worried about since.

[Grunthos]

If he's an HONEST Democrat, he should enjoy bashing the crap out of incompetents in his party, because that's the only way you improve your party - - it's not possible to actually kick anyone out of an American political party; you have to make them want to go.

Evidently, he's one of the few honest Democrats - - he's calling it as he sees it.

[Grunthos]

This just in; The White House is using Friday After presstime to announce that the deficit will rise $2trillion over the next decade.

That's $2trillion, in ADDITION to the trillions already projected.

It's time to pack this man in the clown car and send him off to Florida. We can't afford him!

AP sources: $2 trillion higher deficit projected
Updated 1h 21m ago


WASHINGTON (AP) — The Obama administration expects the federal deficit over the next decade to be $2 trillion bigger than previously estimated, White House officials said Friday, a setback for a president already facing a Congress and public wary over spending.

The new projection, to be announced on Tuesday, is for a cumulative 2010-2019 deficit of $9 trillion instead of the $7 trillion previously estimated. The new figure reflects slumping revenues from a worse economic picture than was expected earlier this year. The officials spoke only on the condition of anonymity ahead of next week's announcement.

Ten-year forecasts are volatile figures subject to change over time. But the higher number will likely create political difficulties for President Obama in Congress and could create anxiety with foreign buyers of U.S. debt.

Earlier this week, the White House revealed that it expects a budget deficit for the fiscal year ending Sept. 30 to be nearly $1.6 trillion. That figure was lower than initially projected because the White House scratched out $250 billion that it had initially added to the budget as a bank rescue contingency. The administration ultimately did not ask Congress for that money.

Still that number, together with the 10-year projection, represents a huge obstacle for an administration trying to undertake massive policy overhauls in health care and the environment.

Economists predict a slow recovery from the recession, further testing Obama's goal of cutting the deficit to $512 billion in 2013. Even as he seeks higher revenues to pay for new climate change and health care measures, the president could face pressure to increase revenues or make deep spending cuts to tame the deficit.

Earlier long-term estimates released in February and May relied on now-outdated projections of economic growth. Then, the White House predicted the economy would shrink by 1.2% this year, but the economy shrank 6.4% in the first quarter, the worst in nearly three decades.

Both the White House and the Congressional Budget Office scheduled announcements for Tuesday on their new budget estimates. Relying on more pessimistic economic projections than the White House, the CBO earlier this year predicted deficits totaling $9.1 trillion over 2010-19. Those predictions were based on expectations that the economy would shrink by 2.2% this year.

In its earlier projections, the White House said the deficit would be manageable if it slides to 3% of gross domestic product. Earlier projections barely met that standard — even after relying on optimistic assumptions like the wars in Iraq and Afghanistan costing $50 billion a year instead of the $130 billion budgeted for 2010.

Now, the deficits could easily exceed 4% of GDP, even after cost-cutting efforts or new revenues claimed in Obama's budget.

Such deficits have always prompted Congress and the White House to take politically painful steps to curb them, such as former President Bill Clinton's tax-heavy 1993 deficit reduction plan. A companion effort by Obama could force him to break his promise to not raise taxes on individuals making less than $200,000 a year.




http://www.usatoday.com/news/washington/2009-08-21-obama-budget_N.htm

[Tonus]

Inexcusable, or symptomatic of a larger problem? (http://www.nytimes.com/2009/08/24/us/politics/24confirm.html?_r=1&partner=rss&emc=rss) After seven months, Barack Obama still hasn't filled all of his advisor positions. In fact, he's filled less than half of them.

Obama’s Team Is Lacking Most of Its Top Players

WASHINGTON — As President Obama (http://topics.nytimes.com/top/reference/timestopics/people/o/barack_obama/index.html?inline=nyt-per) tries to turn around a summer of setbacks, he finds himself still without most of his own team. Seven months into his presidency, fewer than half of his top appointees are in place advancing his agenda.

Of more than 500 senior policymaking positions requiring Senate confirmation, just 43 percent have been filled — a reflection of a White House that grew more cautious after several nominations blew up last spring, a Senate that is intensively investigating nominees and a legislative agenda that has consumed both.

While career employees or holdovers fill many posts on a temporary basis, Mr. Obama does not have his own people enacting programs central to his mission. He is trying to fix the financial markets but does not have an assistant treasury secretary for financial markets. He is spending more money on transportation than anyone since Dwight D. Eisenhower (http://topics.nytimes.com/top/reference/timestopics/people/e/dwight_david_eisenhower/index.html?inline=nyt-per) but does not have his own inspector general watching how the dollars are used. He is fighting two wars but does not have an Army secretary.

He sent Secretary of State Hillary Rodham Clinton (http://topics.nytimes.com/top/reference/timestopics/people/c/hillary_rodham_clinton/index.html?inline=nyt-per) to Africa to talk about international development but does not have anyone running the Agency for International Development (http://topics.nytimes.com/top/reference/timestopics/organizations/a/agency_for_international_development/index.html?inline=nyt-org). He has invited major powers to a summit on nuclear nonproliferation but does not have an assistant secretary of state for nonproliferation.

“If you’re running G.M. without half your senior executives in place, are you worried? I’d say your stockholders would be going nuts,” said Terry Sullivan, a professor at the University of North Carolina (http://topics.nytimes.com/top/reference/timestopics/organizations/u/university_of_north_carolina/index.html?inline=nyt-org) and executive director of the White House Transition Project, a scholarly program that tracks appointments. “The notion of the American will — it’s not being thwarted, but it’s slow to come to fruition.”

Mrs. Clinton expressed the exasperation of many in the administration last month when she was asked by A.I.D. employees why they did not have a chief. “The clearance and vetting process is a nightmare,” she told them. “And it takes far longer than any of us would want to see. It is frustrating beyond words.”

The process of assembling a new administration has frustrated presidents for years, a point brought home when George W. Bush (http://topics.nytimes.com/top/reference/timestopics/people/b/george_w_bush/index.html?inline=nyt-per) received the now-famous memorandum titled “Bin Ladin Determined to Strike U.S.” eight years ago this month but still did not have most of his national security team in place when planes smashed into the World Trade Center and the Pentagon.

All parties vowed to fix the process, and Mr. Obama has a more intact national security team than his predecessor at this point. But even in this area, vital offices remain open. No Obama appointee is running the Transportation Security Administration (http://topics.nytimes.com/top/reference/timestopics/organizations/t/transportation_security_administration/index.html?inline=nyt-org), the Customs and Border Protection (http://topics.nytimes.com/top/reference/timestopics/organizations/c/customs_and_border_protection_bureau/index.html?inline=nyt-org)Drug Enforcement Administration (http://topics.nytimes.com/top/reference/timestopics/organizations/d/drug_enforcement_administration/index.html?inline=nyt-org) or the Bureau of Alcohol, Tobacco, Firearms and Explosives (http://topics.nytimes.com/top/reference/timestopics/organizations/b/bureau_of_alcohol_tobacco_and_firearms/index.html?inline=nyt-org). Mr. Obama still does not have an intelligence chief at the Department of Homeland Security (http://topics.nytimes.com/top/reference/timestopics/organizations/h/homeland_security_department/index.html?inline=nyt-org), nor a top civilian in charge of military readiness at the Pentagon.

Mr. Obama is far enough along in his presidency that some early appointees are already leaving even before the last of the first round have assumed their posts. Among those who have left already is the person charged with filling the empty offices, Donald H. Gips, who quit as presidential personnel director to go to South Africa as ambassador last month.


The consequences can be felt in small ways and large — from the extra work for appointees on the job to the slowdown of policy reviews and development. For example, Mr. Obama’s promised cybersecurity initiative to improve coordination among government agencies and the private sector has stalled while he looks for someone to lead it.


“There’s every reason to be concerned,” said Jim Manley, spokesman for Senator Harry Reid (http://topics.nytimes.com/top/reference/timestopics/people/r/harry_reid/index.html?inline=nyt-per) of Nevada, the Democratic majority leader. “The president deserves to have his full complement of staff in the different agencies.”

But the White House expressed less concern because by its count it has matched or surpassed past presidents in putting together its government. “Given that we’re ahead of where previous administrations have been, we feel we’re moving at a fairly quick clip to get everything done,” said Bill Burton, a deputy White House press secretary.

Measuring the progress in appointments depends on what positions are counted and who is doing the counting. The White House Transition Project counts 543 policymaking jobs requiring Senate confirmation in four top executive ranks. As of last week, Mr. Obama had announced his selections for 319 of those positions, and the Senate had confirmed 236, or 43 percent of the top echelon of government. Other scholars have slightly different but similar tallies.


The White House prefers to include ambassadors, United States attorneys (http://topics.nytimes.com/top/reference/timestopics/subjects/u/united_states_attorneys/index.html?inline=nyt-classifier), marshals and judges, who are also subject to Senate votes but are not counted by the scholars. By that count, Mr. Obama has won confirmation of 304 nominees, compared with 301 for Mr. Bush, 253 for Bill Clinton (http://topics.nytimes.com/top/reference/timestopics/people/c/bill_clinton/index.html?inline=nyt-per) and 212 for the first President George Bush at this point in their administrations.


If lower-ranking senior executive service officials and political appointees who do not require Senate approval are counted, the White House said it had installed 1,830 people, at least 50 percent more than any of the last three presidents had at this stage.

No matter how the counting is done, though, hundreds of senior positions remain empty with 15 percent of Mr. Obama’s term over. While appointments linger, those jobs are generally filled with acting officials — and the White House says that has not slowed its ability to effect change.

But acting officials do not have the full latitude that confirmed appointees do. “It’s just not the same thing,” said Paul Light, a professor at New York University (http://topics.nytimes.com/top/reference/timestopics/organizations/n/new_york_university/index.html?inline=nyt-org) who specializes in appointments. “They don’t have the same authority. They don’t feel the same loyalties or freedom to exert control. And what you get is drift in the agencies.”


Blame is being freely passed around. After several early nominees were discovered to have failed to pay some taxes, the White House tightened its vetting. The Senate Finance Committee has a former Internal Revenue Service (http://topics.nytimes.com/top/reference/timestopics/organizations/i/internal_revenue_service/index.html?inline=nyt-org) official helping to go through many nominees’ taxes. And Republican senators are holding up nominees like John McHugh for Army secretary to influence what happens to the detainees at Guantánamo Bay, Cuba.


The Finance Committee argued that fault lay elsewhere. Scott Mulhauser, a spokesman for the panel, said it had approved 14 of 16 nominees whose paperwork was received before July. But officials said the process had become so intrusive that many candidates declined to be considered.

“Anyone who has gone through it or looked at this process will tell you that every administration it gets worse and it gets more cumbersome,” Mrs. Clinton said last month. “And some very good people, you know, just didn’t want to be vetted.” She added: “You have to hire lawyers, you have to hire accountants. I mean, it is ridiculous.”


This article can be fisked up and down, but I'm still generally of the mind that it's become too much of a burden for an incoming administration to fill all of the offices that may or may not be necessary to effectively run the country. You have to select 543 people to run various offices in the government, and each one has to pass Senate confirmation, and there are hundreds more positions to fill? Are you kidding me?

Now, this doesn't mean that the present administration walks away from this without some blame. I'm going to assume that most Presidents prefer to fill certain cushy ambassadorial positions early as a reward for financial support, and Obama has been no different. There are also some pretty critical positions that have either not been filled, or have been filled by people like Tim Geithner, whose tax problems were exacerbated by his pathetic excuse that he'd been trumped by tax preparation software.

The Times tries to put at least part of the blame on the Senate, as is seen from Hillary's quote that some 'good people' do not want to go through the confirmation process. Her comment about lawyers and accountants implies that nominees go through a brutal background search that they do not want to bother with, which is an attempt to mask the fact that those background checks have turned up a series of embarrassing tax problems that have either sunk nominees or left them tainted by their own pasts.

Obama may also be using this as an excuse for the worrisome use of "czars" for various functions. These are people who are directing policy and answer only to the President. They do not need to be confirmed and do not answer to congress. The whole idea of "czars" strikes me as unconstitutional and an abuse of power, I don't care how many Presidents have used it, and now we're seeing an example of why it's a bad idea.

It's time to find ways to streamline the appointment of administrative positions for incoming presidents. Not only is it ridiculous that a president typically can take a year to fill them all, but you are providing an opening to incompetence and abuse. And I think we're seeing both of those displayed this year.

[Tonus]

In fact, it seems as if the present administration is going backwards. (http://abcnews.go.com/Blotter/story?id=8398902)

[S Carver Orne]

I miss Bush. :(

[Tonus]

THIS (http://keithhennessey.com/2009/08/26/new-projection/) could be a disaster for Democrats in the 2010 mid-terms...

New projection: 2.3 million fewer people working in 2010

Yesterday the Congressional Budget Office released their “summer update (http://www.cbo.gov/ftpdocs/105xx/doc10521/08-25-BudgetUpdate.pdf)” publication, in which they update their baseline budget and economic projections for changes in the economy and legislation enacted so far this year. The Administration also released their “Mid-Session Review (http://www.whitehouse.gov/omb/assets/fy2010_msr/10msr.pdf)” publication, which makes similar updates for the President’s policy proposals.

Most of the press coverage focused on the updated budget deficit projections. I instead want to draw your attention to one component of the new CBO economic forecast.


We know of two big changes since CBO published their January baseline projection:


The economy in 2009 was worse than most professional forecasters projected at the beginning of this year before President Obama took office and launched his ambitious legislative agenda. A weaker economy has caused everyone to lower their estimates of employment and their estimates of this year’s recession, where “everyone” includes CBO, OMB, and major private forecasters. Forecasters also have lowered their estimates for 2010, in part because they are starting from a lower 2009 level.
There have been significant policy actions, the most notable of which was the $787 billion fiscal stimulus.

The new economic forecasts reflect both changes. The first makes the updated economic projections for 2009 and 2010 much worse than they were in January, and the second makes them somewhat better. (There is a vigorous debate about how much better.)

There is no disagreement, however, about the net directional effect of the two. CBO and OMB project a weaker economy in the remainder of 2009 and in 2010 than they projected at the beginning of this year before enactment of the stimulus.

How much weaker?

Based on CBO’s forecast for the average unemployment rate in calendar year 2010, 2.3 million fewer people will be employed on average next year than they projected in January.

For comparison, in July there were about 140 million people employed in the U.S.

Next year’s reality will depend heavily on when the economy turns up and how quickly growth returns. A new projection of fewer people employed next year should not surprise anyone. But 2.3 million is a big bad number.

I highlighted a portion in red. I can only assume that the "experts" whose predictions turned out to be wrong are the same ones who spent most of 2005-2007 informing us that the economy was soaring and unstoppable. The same experts who tried to laugh people like Peter Schiff off of the stage when he warned that the housing bubble was going to burst.

Why aren't these idiots also out of a job?

Anyway... the more important issue here is that the 2010 mid-term elections could see a significant shift in the congressional balance of power. Republicans and Democrats have been strategizing with 2010 in mind. Democrats want to pass as much legislation by then as possible, while also making sure that many legislative provisions don't take effect until 2011 and 2013, thus helping to protect their seats in 2010 and the presidency in 2012. Republicans have been trying to slow or obstruct the Democrat agenda, knowing that with the economy in the tank and health care reform becoming a poisonous issue, they might be able to win back control of the House and/or Senate in 2010, at which point they can bring Obama's agenda to a screeching halt.

Things are looking bad enough as it is, with unemployment soon to hit the 10% mark. The hope for the Democrats was that the economy would rebound in 2010 and a dash of good news would provide them with a boost when election time came around. But if we're looking at continued increases in joblessness (and a possible acceleration!), then the 2010 elections will likely be a bloodbath, with Republicans possibly making significant gains in both houses of congress.

[Tonus]

I know that Californians aren't surprised by this news, (http://hotair.com/archives/2009/08/27/tax-hikes-coming-for-californians-anyway/) nor by the brazen audacity exhibited by the excuse given for it. But it still has to make you at least roll your eyes.

In short, after having their tax referendum go down in a blazing heap, the California legislature is taxing its citizens anyway, by lowering tax brackets and removing some deductions. Why? Because inflation has decreased. That's right, the buying power of the dollar in California went up, and thus government needs more tax revenue to-- wait, WHAT THE FUCK?!?!

These are the assholes that would be helping to manage Obamacare in California.

[Ythogtha]

Suddenly I feel bad about arguing with my wife that she spends to much money.

[Tonus]

Here's a fun site. (http://www.usdebtclock.org/)

Note the largest budget items. After defense spending, the next three largest are Social Security, Medicare/Medicaid, and interest on the debt. At the rate that we're increasing the debt, I wonder if interest will eventually overtake any other spending.

Unclear is what they include in defense spending, which they list as "defense/wars." Does that mean it includes spending allocated for Iraq and Afghanistan, or are those separated somehow?

I know lots of people often say that one way to help balance the budget is to cut defense spending. And if you look at many of the charts that are shown, the USA's defense spending dwarfs that of any other country. It's obscenely large. Then again, if the USA really wanted to cut defense spending by a significant amount, the governments of countries around the world (Europe, primarily) would fall over each other to object. You see, the primary reason that those countries spend so little on defense when compared to the USA, is because a lot of the USA's defense spending is tied up in troop and material deployments in those countries.

I recall a few years ago when Bush spoke of recalling the 50,000 US military personnel in Germany (you heard that right, 50,000 US military personnel in Germany... how long ago did WW2 end?). There was an uproar because US spending in Germany to maintain that force was more than $1 billion a year, and they weren't very interested in losing that money, as well as having to spend their own money to replace the people and equipment.

I honestly would LOVE for the USA to announce that in its next budget it was going to cut back defense spending by recalling all US personnel around the world and letting those nations pay for their own defense. Just for the sake of watching the rest of the world go absolutely apeshit over the thought of US troops and equipment AND MONEY leaving Germany and France and the Balkans and Africa and South Korea and Japan and so on and so forth. I'd hate to think of the consequences from a practical standpoint, but hey, we spend too much on defense, don't we?

[Tonus]

I bump these topics mostly to try and keep related information together, which makes it easier to find links and data later on.

Windows Vista has the Sidebar feature, and on mine I have a widget that shows currency values. I have it so that it's always showing the dollar versus the Euro, with the Euro set as 1.000 as a baseline. I did this around 5-6 months ago, when the Euro was worth around 1.322 US dollars. It had shrunk to 1.295 shortly thereafter, but then began a slow and mostly steady decline since. This morning it stands at 1.474, which is after a pretty swift recent drop.

The stock market has been making a steady recovery over the last eight months. It is far short of its high values (and frankly, even now it's WAY overvalued) but it has been rising. Jim Cramer pointed out that this is in part due to the confidence that investors have in the failure of Obama's policies. The worse that things seem for health care reform or cap and trade, the faster the stock market recovers.

But this is just a reminder of how speculative the stock tickers are. A more reliable indicator is how our currency compares to other currencies around the world. The Euro may soon be worth 1.5 US dollars. This is BAD. We receive less from exports and pay more for imports. Debt gets harder to pay off. Creditors are less likely to buy US bonds, requiring us to increase the interest on them, meaning we pay more for our debt now and we pay more later. The option of easing economic woes by printing money becomes less and less attractive (not a bad thing, to be honest).

The conversion rate between the Euro and the US dollar may wind up being the most reliable indicator of how things will go in the 2010 midterm elections. I wouldn't want to be an incumbent, the way things look right now.

[Tonus]

Oh boy. (http://www.qando.net/?p=4677)

Read the link. Democrats want to revive and expand the Community Reinvestment Act. This is the legislation that planted the seed that eventually became the real estate and economic crash that we are still suffering from. You know, the one the President called the worst since the Great Depression?

[Tonus]

Personally, I don't like automatically dismissing people who wonder why no one complained about Bush running up deficits, because it's true that he ran up deficits at an unprecedented pace. His pace wasn't a lot worse than those of the two previous Republican presidents, but both Reagan and Bush Sr (with the help of Democrat-led congresses) increased the national debt at an alarming pace.

Currently, many people feel that this means that any complaints about Obama's spending (both current and projected) is motivated less by fiscal concerns and more by political concerns. And racism, of course. However, this ignores a very important factor, which the following video brilliantly illustrates. And remember, the numbers used here for Obama are from the administration itself... numbers that are likely to be far lower than what we actually wind up with.

Being perfectly honest here-- this is frightening.

P5yxFtTwDcc

The next time someone wonders why no one was complaining about deficits under Dubya, point them at this video. Then see if they still think that the town hall protests and 9/12 crowds were driven by racism or partisan politics, instead of fear over our economic future.

[Tonus]

I'm not going to cut and paste these, just provide links and a short description.

Back in May, the Hudson Institute's Chuck Blahous considered a handful of Social Security myths (http://www.hudson.org/index.cfm?fuseaction=publication_details&id=6182) and showed why they are indeed myths. In short, for a long time analysts (perhaps "analysts" with quotes is better, as a lot of the analysis appears to be done with political motivations in mind, ie- they reached their conclusion first, then worked backwards) have been downplaying the coming problems with Social Security. Blahous explains why thier conclusions are incorrect and what we're really facing, or more likely to be facing.

So it should come as no surprise that the new estimates are much worse (http://hotair.com/archives/2009/09/22/exclusive-cbo-predicts-social-security-cash-deficits-in-2010-11/) than the fantasy predictions that assumed that economic factors affecting SS would always outperform historical norms, allowing SS to thrive for anywhere from decades to centuries, or longer.

Now the CBO is predicting that SS will run its own deficit from 2010-2011, recover slightly from 2012-2016, and then begin to sputter again until 2019, at which point it becomes a permanent drain on the economy. This problem is not as simple as it may first seem. Sure, some may say that we can cover the shortfall with tax revenues or more deficit spending. But the thing is, the government has been using Medicare and SS surpluses to cover part of the deficits that it runs. When these programs become a permanent drain on the economy, the government's fiscal chicanery creates a double-whammy. We have to use tax dollars to shore up these programs, and we won't have their surpluses to cover our deficits in the rest of the budget.

Which means that if SS runs a deficit for all of 2010 and 2011, the budget deficit will be even worse than the enormous numbers we are already being told to expect. What's more, if it does recover from 2012-2016, whichever party is in power will gleefully tell us that they've saved the program and that everything is okay now, while dismissing predictions that the bottom is about to drop out of it.

[Diniden]

You know, when discussing government debt and all of it's dealings with policy etc, it sounds to me that they are just tossing around money to make money and/or lose money.

Where within any plan that has been made has the government actually made something that "produces"? As far as I know of basic economics, the only way for the government to pay off it's foreign debts and what not, is to actually produce something that the foreign entities can use. Such as services or materials.

Where is the government supporting this agenda to cause the debt to go the other way?

[Grunthos]

The government's only sources of revenue are taxes, tarriffs, and duties.

[Diniden]

Right, but for stimulus to the economy it needs to provide jobs like it did with the New Deal building roads etc, which was a direct impact on improving productivity in America with faster transportation and power from dams. Lately, it just seems it is throwing money around without actually trying to make a direct impact on productivity lately. For instance, bailing banks is a far cry from directly trying to influence productivity.

But as I say this, I see my question is slightly a "from who's perspective" viewpoint...You could say stimulating certain firms would in the end lead to productivity...but, for some reason how it's been handled so far just feels like throwing around money to try to make money without actually addressing the real issue of not producing stuff.

[Tonus]

Right, but for stimulus to the economy it needs to provide jobs like it did with the New Deal building roads etc,
I agree that we need jobs, but I would not want to go the route of temporary employment on public works projects. For one, it will continue to consume tax dollars at both federal and local levels. And when the projects are completed, those jobs disappear, with almost zero net gain, because the government isn't producing revenue, it is consuming it.

Second, the government generally gets away with accounting bullshit that private businesses cannot even attempt, lest they get hit with investigations and fines and possibly criminal charges. Example-- the current administration is trying to polish the stimulus turd by using the ridiculous measure of "jobs saved or created." How do you measure the number of jobs that you 'saved or created?'

By lying. (http://www.boston.com/business/articles/2009/11/11/stimulus_fund_job_benefits_exaggerated_review_find s/)


Stimulus job boost in state exaggerated, review finds

Errors, incomplete data, estimated positions go into federal report

While Massachusetts recipients of federal stimulus money collectively report 12,374 jobs saved or created, a Globe review shows that number is wildly exaggerated. Organizations that received stimulus money miscounted jobs, filed erroneous figures, or claimed jobs for work that has not yet started.

The Globe’s finding is based on the federal government’s just-released accounts of stimulus spending at the end of October. It lists the nearly $4 billion in stimulus awards made to an array of Massachusetts government agencies, universities, hospitals, private businesses, and nonprofit organizations, and notes how many jobs each created or saved.


But in interviews with recipients, the Globe found that several openly acknowledged creating far fewer jobs than they have been credited for.



One of the largest reported jobs figures comes from Bridgewater State College, which is listed as using $77,181 in stimulus money for 160 full-time work-study jobs for students. But Bridgewater State spokesman Bryan Baldwin said the college made a mistake and the actual number of new jobs was “almost nothing.’’ Bridgewater has submitted a correction, but it is not yet reflected in the report.



In other cases, federal money that recipients already receive annually - subsidies for affordable housing, for example - was reclassified this year as stimulus spending, and the existing jobs already supported by those programs were credited to stimulus spending. Some of these recipients said they did not even know the money they were getting was classified as stimulus funds until September, when federal officials told them they had to file reports.



“There were no jobs created. It was just shuffling around of the funds,’’ said Susan Kelly, director of property management for Boston Land Co., which reported retaining 26 jobs with $2.7 million in rental subsidies for its affordable housing developments in Waltham. “It’s hard to figure out if you did the paperwork right. We never asked for this.’’



The federal stimulus report for Massachusetts has so many errors, missing data, or estimates instead of actual job counts that it may be impossible to accurately tally how many people have been employed by the massive infusion of federal money. Massachusetts is expected to receive an estimated $1 billion more in stimulus contracts, grants, and loans.



The stimulus bill - a $787 billion package of tax breaks, expanded government benefits, and infrastructure improvements - was signed into law in February by President Obama, who said it would create and save jobs by preserving local government services and spurring short- and long-term economic development.


To be sure, the legislation has accomplished an important goal: funding public services facing the ax after the recession created gaping shortfalls in state and local government budgets. So Worcester and Lynn, for example, were able to keep police officers targeted for layoffs, schools across the state lost far fewer teachers, and community agencies preserved staff in the face of mounting demands for social services.



There are two more pages outlining this embarrassment. And keep in mind that this is the Boston Globe, a liberal paper in Massachusetts which is owned by the New York Times. In other words, a paper that is used to praising Obama and ignoring otherwise critical news about the administration. And even they can't soften the impact of this, although they try (see the last paragraph in the quote above; this is another of those fallacies, that the stimulus is saving the jobs of teachers and firemen and so on. Mostly, it is saving the jobs of the army of bureaucrats that infest most government offices, but admitting that wouldn't look good).

Hot Air has been tracking the lies and exaggerations of the "jobs saved or created" ploy on a state-by-state basis. It's staggering in its scope and brazenness. It's also the reason why we can never trust the government to stimulate the economy. You want more jobs? Ease the tax burden on businesses and allow them to keep more of the money that they make. When that happens, business owners don't stash the money and run-- they expand and hire more workers, they raise wages, they increase permanent employment numbers and... get this... they generate more income for working Americans AND more taxes for the government!!!

But that win-win situation doesn't put any extra money in your local congressman's pocket, so he has little incentive to promote the idea.

[Diniden]

Hmmm right, I guess me saying "creating jobs" is still a bit ambiguous and hard to explain how a government can produce jobs that is independent of the governments circle of revenue.

I suppose the difference between something like the New Deal and what is happening now is how the government increased productivity. New Deal provided temporary jobs like constructing roads etc. These roads led to immense improvements in transportation and communication and overall ease to conduct business. It's hard to deny that a proper road system helped boost productivity by great leaps.

So, I guess question in mind is: We have great internal communication, easy contact through transportation etc within the country. So what can the government do to improve business within America now?

I say the government should be looking to ways to improve overseas trading and improve our ability to export goods and lower costs on importing goods. I don't know how that would look or what to do to do so as I have not much experience in the area, but I'm sure $4 billion could figure out a way.

Currently our inability to export goods and our difficulty and costliness on importing goods is one of the largest chinks in our nations economy.

[Shady]

So what can the government do to improve business within America now?

Give individuals tax breaks instead of increases so that money can be put back into the economy through the purchase of goods and services. Help support small business with tax incentives instead of penalties. Small business is the biggest employer of US citizens and accounts for the majority of goods and services produced in the country. Use the tarp money for what it was intended, purchasing of toxic investments and assisting with mortgage companies so that individuals and small businesses can be approved for loans to purchase property.

Currently my family's business is in the worst financial shape it's been since I was born. We fabricate components that are used in a specific kind of small business. People are wanting to continue opening these small businesses, but banks are not approving loans for small businesses to purchase property in which they can conduct this business. That stops the money flow at the very beginning and prevents the purchase of goods and services in multiple directions. This is happening on a much larger scale than just my family's business, it's occurring nationally.

The CEO of Emerson this week stated that he would continue to focus on expanding overseas while not hiring anyone in the US:

Emerson CEO David Farr said that the U.S. government was hurting manufacturers with regulation and taxes and that his company would continue to focus on growth overseas. "Washington is doing everything in their manpower, capability, to destroy U.S. manufacturing," Farr said Wednesday in Chicago at a Baird Industrial Outlook conference. "Cap and trade, medical reform, labor rules."

St. Louis-based Emerson, the maker of electrical equipment and InSinkErator garbage disposals with $20.9 billion in sales for the year ended September, will keep expanding in emerging markets, which represented 32 percent of revenue in 2009. About 36 percent of manufacturing is now in "best-cost countries" up from 21 percent in 2003, according to slides accompanying his speech.

Companies will generate jobs in India and China, "places where people want the products and where the governments welcome you to actually do something," Farr said.

The unemployment rate in the U.S. jumped to 10.2 percent in October, the highest level since 1983. Emerson, which Farr said employed about 125,000 people worldwide, has eliminated more than 20,000 jobs since the end of 2008 to lower expenses.


"What do you think I am going to do?" Farr asked. "I'm not going to hire anybody in the United States. I'm moving. They are doing everything possible to destroy jobs."

"We as a company today are putting our best people, our best technology and our best investment in these marketplaces to grow," he said. "My job is to grow that top line, grow my earnings, grow my cash flow and grow my returns to the shareholders. My job is not to shrink and roll over for the U.S. government."

That is really, really bad.

link (http://www.stltoday.com/stltoday/business/stories.nsf/story/A42DA790430C74BF8625766C0016B2D2?OpenDocument)

[Tonus]

Hmmm right, I guess me saying "creating jobs" is still a bit ambiguous and hard to explain how a government can produce jobs that is independent of the governments circle of revenue.
I don't think that the government should be creating jobs directly. I think that government's job should be to create an environment where businesses and investors want to create jobs and invest in business, and where consumers have the ability to spend. The ideal cycle would be that investors lend money to businesses, which can now hire more people (and pay them better). Those workers now have income, which they spend at other businesses, which see more revenue. This makes those businesses more attractive to investors, and it allows them to hire more people.

The irony is that as you remove financial burdens from people and businesses and investors, they spend more money, which generates more tax revenue, even when you have lowered taxes! Conversely, when you tax investors, they stop investing. When you tax businesses, they won't hire as many people. When you tax workers, they have less money to spend. So although you're getting more tax money per dollar, you're getting fewer tax revenues because money stops being spent.

Government should not be looking at ways that it can hire more people, that is a losing financial proposition. It is much more efficient to look for ways to encourage businesses and investors to spend money and hire workers. You'll never get rich by giving money to yourself.

[Agent Cay]

Give individuals tax breaks instead of increases so that money can be put back into the economy through the purchase of goods and services. Help support small business with tax incentives instead of penalties. Small business is the biggest employer of US citizens and accounts for the majority of goods and services produced in the country. Use the tarp money for what it was intended, purchasing of toxic investments and assisting with mortgage companies so that individuals and small businesses can be approved for loans to purchase property.

And now I think I see the hole we have gotten ourselves into.

If we increase taxes, businesses large and small suffer and get strangled in an attempt to pay off the astoundingly high national debt, prompting them to either go unemployed or take to overseas markets. If we decrease taxes, deficit spending in the government increases, making the problem worse and demanding that we increase taxes on any growing businesses in the next couple of years. And God knows the media is going to show only the worst/most incorrect information from anything done by anyone in government at this time.

We're well-roundedly screwed.

[Dr. L]

And now I think I see the hole we have gotten ourselves into.

If we increase taxes, businesses large and small suffer and get strangled in an attempt to pay off the astoundingly high national debt, prompting them to either go unemployed or take to overseas markets. If we decrease taxes, deficit spending in the government increases, making the problem worse and demanding that we increase taxes on any growing businesses in the next couple of years. And God knows the media is going to show only the worst/most incorrect information from anything done by anyone in government at this time.

We're well-roundedly screwed.

And you, Sir Cay, have hit the nail on the head.

[Grunthos]

And now I think I see the hole we have gotten ourselves into.

If we increase taxes, businesses large and small suffer and get strangled in an attempt to pay off the astoundingly high national debt, prompting them to either go unemployed or take to overseas markets. If we decrease taxes, deficit spending in the government increases, making the problem worse and demanding that we increase taxes on any growing businesses in the next couple of years. And God knows the media is going to show only the worst/most incorrect information from anything done by anyone in government at this time.

We're well-roundedly screwed.

Not at all; you're missing the elephant in the room.

The government needs to
SPEND
LESS
MONEY!

:rolleyes:

[Shady]

And now I think I see the hole we have gotten ourselves into.

If we increase taxes, businesses large and small suffer and get strangled in an attempt to pay off the astoundingly high national debt, prompting them to either go unemployed or take to overseas markets. If we decrease taxes, deficit spending in the government increases, making the problem worse and demanding that we increase taxes on any growing businesses in the next couple of years. And God knows the media is going to show only the worst/most incorrect information from anything done by anyone in government at this time.

We're well-roundedly screwed.

Just a note about the deficit:

What is $1.42 trillion? It's more than the total national debt for the first 200 years of the Republic, more than the entire economy of India, almost as much as Canada's, and more than $4,700 for every man, woman and child in the United States.

It's the federal budget deficit for 2009, more than three times the most red ink ever amassed in a single year.

Treasury figures released Friday showed that the government spent $46.6 billion more in September than it took in, a month that normally records a surplus. That boosted the shortfall for the full fiscal year ending Sept. 30 to $1.42 trillion. The previous year's deficit was $459 billion.

Fiscal 2009 had a deficit more than triple that of 2008. Obama has led us into the trillions with his expensive agenda, and he's not done spending yet. If the health care bill passes, middle class and higher level income families will be paying taxes to fund the government "option" for three years before it even goes into effect.

And what of eliminating pork? After having barely stepped into the oval office, a bill was urgently rushed through congress that contained almost 9,000 unrelated earmarks tacked onto it. Those earmarks totaled $410 billion, almost as much as the deficit for the entire 2008 fiscal year.

Point is, this large imbalance between federal funds being spent compared to funds available is not some necessary evil; this is not generated from some unavoidable vicious cycle. The enormity of the 2009 deficit--and likely those of the next 3 years--is completely man-made, and POTUS planned & approved.

[KB.]

I'm stealing your last few lines and posting it some where else. I'll attribute it to you in a generic, "This is from a friend of mine", way.

[Grunthos]

Another interesting factiod:

October 2009 was the first month of the 2010 fiscal year; the first month of the first budget signed into law by Obama.

October 2009's one-month deficit was larger than the entire ANNUAL deficit for all of 2007... and actual spending in October 2009 went an additional $20 billion further over budget, even with that horrendous anticipated shortfall in place.

[Tonus]

I thought that this was actually his second budget. Congress had held back the 2009 budget via chicanery in order to keep it out of Bush's hands, and it wasn't signed into law until Obama was President.

This one, however, is the first one that he can't try to* foist off on Bush.





* I guess I should qualify this. I'm certain that he has the audacity to try and blame Bush for it. But Obama will be the one who 'owns' this budget, whether he likes it or not.

[Tonus]

Late in the afternoon on Christmas Eve, the US Treasury Department removed the caps on the amounts of taxpayer dollars that can be used to bail out Fannie Mae and Freddie Mac, the mortgage-financing companies that were a part of the real estate collapse that led to the current recession. Why would Treasury do this, when there is still a sizable cushion in the original limits?

Hot Air has an idea...


US uncaps Fannie/Freddie support, announces during Christmas holiday

If an administration wanted to pull a fast one on American citizens and keep a move that puts them on the hook for hundreds of billion dollars as quiet as possible while still disclosing it, when would be the best time to take that action? How about an evening when people all across the country turn off their televisions and laptops to spend time with family and friends, celebrating an important religious holiday? Could any President be as calculating and cold-blooded as to do something like that?

Welcome to the new transparency (http://online.wsj.com/article/SB126168307200704747.html?mod=WSJ_hpp_MIDDLTopStor ies):The Obama administration’s decision to cover an unlimited amount of losses at the mortgage-finance giants Fannie Mae and Freddie Mac over the next three years stirred controversy over the holiday.

The Treasury announced Thursday it was removing the caps that limited the amount of available capital to the companies to $200 billion each.

Unlimited access to bailout funds through 2012 was “necessary for preserving the continued strength and stability of the mortgage market,” the Treasury said. Fannie and Freddie purchase or guarantee most U.S. home mortgages and have run up huge losses stemming from the worst wave of defaults since the 1930s.

“The timing of this executive order giving Fannie and Freddie a blank check is no coincidence,” said Rep. Spencer Bachus of Alabama, the ranking Republican on the House Financial Services Committee. He said the Christmas Eve announcement was designed “to prevent the general public from taking note.”

Treasury officials couldn’t be reached for comment Friday.
Why couldn’t they be reached? Because it was Christmas. The announcement was designed to put them out of reach, just as it was designed to keep the news out of reach from the general public. No one can seriously argue that Treasury and the White House woke up early on Christmas Eve and suddenly discovered a reason to lift the caps on the Fannie/Freddie bailout, after all. This had to be in the works for weeks. However, as the Wall Street Journal also reports, the White House had a deadline for acting unilaterally:The Treasury removed the cap on the size of available bailout funds by amending agreements it reached with the companies in September 2008, when the government seized control of the agencies under a legal process called conservatorship. The agreement allowed the Treasury to make amendments through the end of the year, without the consent of Congress. Changes made after Dec. 31 would likely involve a struggle with lawmakers over the terms.
I’m wondering when Democrats will begin complaining about the “unitary executive” during Obama’s presidency (a concept they didn’t understand in the first place).

What reason would the White House need to lift the caps, anyway? Of the $400 billion authorized by the previous bailout, Treasury has only used $111 billion of it, almost evenly split between Fannie Mae ($60 billion) and Freddie Mac ($51 billion). The WSJ quotes an analyst from Credit Suisse as saying that the larger lending market would find the expansion of the Treasury commitment “reassuring,” but having almost $300 billion left in a line of credit should be pretty darned reassuring on its own. And if a larger commitment was needed, the White House could have set a new limit rather than uncap it altogether.

It looks as though Obama wants to use Fannie and Freddie as proxies for more social engineering and wants to prepare for them to take more losses as a result. That would be the only reason to completely uncap the commitment to cover its losses. After all, the bailout was supposed to help put the two GSAs back into the black, and at the rate they have used that bailout (assuming no improvement), we wouldn’t have to worry about exceeding caps until 2012. I’d bet that the Obama administration retools its foreclosure prevention programs to have Fannie and Freddie buy up the paper and forgive parts of the principal on the loans, and have taxpayers eat the losses on a massive basis.

Update: Business Insider’s (http://www.businessinsider.com/heres-the-secret-justification-for-lifting-the-bailout-caps-on-fannie-and-freddie-2009-12) Joe Weisenthal asked credit analyst Edward Pinto for his analysis, and he also thinks this sets up more massive government intervention and control of the lending markets. Pinto lists five possibilities for action, and concludes:The above actions would preserve and strengthen the government’s involvement and control over the country’s housing finance system and make it harder to reintroduce substantial private sector involvement later on. They would also continue distortions in the marketplace leading to who knows what unintended consequences. Finally these steps would do nothing to deleverage the housing finance system, a key step in returning it to any degree of normality.
Be sure to read it all.

The next time you hear an Obama administration official talk about lowering deficits or 'reining in' the economy or making similar statements, remember this. The administration has deliberately created a method by which they can siphon hundreds of billions (and eventually trillions) of tax dollars to provide home-buying subsidies to American families. Which is the same deal that helped inflate the real estate bubble to its economy-crashing size.

In other words, we're spending even more money in order to create an even bigger financial crisis, and when that one hits we will have even less money available for dealing with it. Or to put it another way, someone has been following the Cloward-Piven playbook to the letter.

[Grunthos]

It's becoming almost impossible to keep track of the sheer number of ways in which this administration sucks. When they are not woefully incompetent, they are actively corrupt.

[Tonus]

Stimulus Funds Went to Nonexistent Zip Code Areas (http://newmexico.watchdog.org/2010/01/03/federal-stimulus-funds-reportedly-spent-in-nonexistent-zip-codes/)

Whoops...


First it was phantom Congressional districts. Now it’s phantom zip codes.

Last month, we reported (http://newmexico.watchdog.org/2009/11/16/obama-administration-reports-25-jobs-saved-by-stimulus-in-nms-22nd-congressional-district-and-thats-not-the-only-whopper/) on federal stimulus money credited with creating jobs in nonexistent New Mexico Congressional districts. Further examination of the most recent report on the recipients and uses of New Mexico’s share of the $787 billion stimulus shows jobs created and money going to zip codes that do not exist.

New Mexico Watchdog broke what became a national news story, and fodder for Jon Stewart and Steve Colbert. The website launched by the Obama Administration to track the destinations of billions of dollars of stimulus funds under the American Recovery and Reinvestment Act showed billions going to nonexistent Congressional districts. The website, recovery.gov (http://www.recovery.gov/Pages/home.aspx), reported $26.5 million going to ten New Mexico Congressional districts that do not exist. Those millions were credited with creating 61.5 jobs. Spadework (http://watchdog.org/2009/11/17/6-4-billion-stimulus-goes-to-phantom-districts/) by our Watchdog counterparts in other states showed a total of $6.4 billion reported as being allocated to 440 nonexistent, or “phantom,” Congressional districts.

The agency charged with tracking the stimulus funds, the Recovery Accountability and Transparency Board, attempted to eliminate this embarrassment by lumping all the billions reported going to nonexistent Congressional districts into a new category called the “unassigned” Congressional district.

Closer examination of the latest recovery.gov report for New Mexico (http://www.recovery.gov/Transparency/RecipientReportedData/Pages/statesummary.aspx?StateCode=NM) shows hundreds of thousands of dollars sent to and credited with creating jobs in zip codes that do not exist in New Mexico or anywhere else. Moreover, funds reported as being spent in New Mexico were given zip codes corresponding to areas in Washington and Oregon.

The recovery.gov site reports that $373,874 was spent in zip code 97052. Unfortunately, this expenditure created zip jobs. But $36,218 was credited with creating 5 jobs in zip code 87258. A cool hundred grand went into zip code 86705, but didn’t result in even one person finding work.

None of these zip codes exist in New Mexico, or anywhere else, for that matter.

The recovery.gov report also credits New Mexico with $131,139, though the zip codes receiving these funds (but creating no jobs) are in fact located in DuPont, Washington, Richland, Washington, and Gales Creek, Oregon.

These errors were found by checking the zip codes reported at recovery.gov against the United States Postal Service’s on-line zip code locator (http://zip4.usps.com/zip4/citytown_zip.jsp). Coming on top of our discovery of millions of dollars reportedly going to ten phantom New Mexico Congressional Districts, this latest discovery confirms that the data released by the Recovery Accountability and Transparency Board, at least for New Mexico, contains serious errors. All told, we have found over $27 million dollars that has been reported as going to either nonexistent Congressional districts or nonexistent zip codes.

As in the case of the phantom Congressional districts, the dollar magnitude of the errors we found in little New Mexico was eclipsed by the repetition of these glaring reporting errors across the nation. If we can find nonexistent zip codes, we have no doubt that our counterparts in other states, which have received much more money, will again be able to repeat and expand upon our results for the Land of Enchantment.

The next quarterly report tracking stimulus funds, and reporting jobs created or saved by expenditure of those funds, is scheduled to be posted by the Recovery Accountability and Transparency Board on January 30, 2010. The reports are docketed for quarterly releases. The discovery of errors, raising questions about the integrity and accuracy of the data, have occurred with the release of every report.

Update West Virginia Watchdog’s Steve Allen Adams (http://westvirginia.watchdog.org/2010/01/04/nonexistant-w-va-zip-codes-receive-stimulus-funding/) reports $28 million in stimulus funds going to what he has discovered are nonexistent zip codes.


The part highlighted in red is just so typical of government (which means it is typical of the sort of government chicanery that candidate Obama promised to make a thing of the past). Hey, we have several billion dollars that we cannot account for, so we'll just file them under "unaccounted for." Problem solved!!!

Remember this when you hear about how part of the health care reform legislation is expected to be paid for through the elimination of waste and inefficiency. Remember this also, when you see those trillion-dollar estimates of the cost of Obamacare, and remember that those are the best case numbers. Numbers that assume no waste and inefficiency.

[Edmaster]

*head on keyboard*

[S Carver Orne]

http://img.photobucket.com/albums/v368/profmgmiller/1249410190085.gif

[Tonus]

File this one under "it would be funny if it wasn't so tragic." Or stupid. Or perhaps a perfect example of the old phrase "the bureaucracy is expanding in order to meet the needs of the expanding bureaucracy." I can't even think of a witty caption, so just read it (http://hotair.com/archives/2010/01/05/california-hoist-by-own-petard-on-porkulus-spending/) and try to stifle a laugh. Or a deep sigh.

Once again-- these are the people who will oversee government-run health care.


California hoist with own petard on Porkulus spending

In today’s Someone Left The Irony On Department, we have the failed state of California and its desperate need to use federal Porkulus money getting tripped up by the very bureaucracy (http://www.mercurynews.com/news/ci_14120167) that has caused the Golden State to teeter into bankruptcy. California can’t start dozens of stimulus-funded construction projects because the myriad agencies that have to approve such efforts don’t have the resources to review the paperwork:Dozens of construction projects funded with federal stimulus money are being delayed in California because the office that oversees historic preservation is overwhelmed with applications, the state’s stimulus watchdog said Monday. …

The state Office of Historic Preservation, an entity of the National Park Service that is an administrative unit of the state Department of Parks and Recreation, is just one of many agencies that must sign off on construction projects before they can begin.

For example, if an alternative energy company is proposing a solar project, the office must make sure the land does not include Native-American artifacts. Similarly, modifying a building that is a registered historic landmark cannot undermine its architecturally significant features.

Chick said many of the delayed projects are small, such as installing a new heating and air conditioning unit. Others are larger infrastructure projects, from a Highway 101 bypass in Mendocino County to rehabilitation of the Pasadena Civic Center, according to lists provided by the inspector general’s office.
At stake is $12 billion in project funding, money the state desperately needs in its financial extremity. It won’t balance the budget — these are not the block grants that allowed California to pretend for another year that it didn’t need to change its ways — but the money would allow the state to avoid paying for its own infrastructure improvements, and will employ some people for short periods of time, putting a dent in benefits expenditures. California needs that and the income-tax revenue more than most other states as it looks at yet another budget gap running into the tens of billions of dollars.

Consider this … karma. California has the problems it does because of an overly-regulated business climate and top-heavy bureaucracies that throw mountains of red tape at its citizens. If the state has this much trouble getting permits and approvals for its own projects, just imagine what private industry business have to do to make use of their own property. Actually, one does not have to imagine it at all. Just take a look at what has happened to California’s economy as legislators engross themselves in critical issues like creating a new regulatory environment for cow tails (http://hotair.com/archives/2009/07/03/video-what-california-lawmakers-are-debating-while-sacramento-burns/) in the middle of an economic and budgetary crisis.

Maybe California should think about dismantling its regulatory regime. Not only would that mean more efficient processing of Porkulus projects, but it would also have a salutary effect on actually stimulating the state economy. That way, California wouldn’t need to beg the rest of the nation for charity.

[Grunthos]

It's not just California, this pile of idiots out here on the Lefty Coast is just leading the wave:

http://www.neptunuslex.com/wp-content/uploads/2010/01/farked.jpg

[Tonus]

Congress has proposed an increase in the nation's debt ceiling (prompting some to ask, what good is a self-imposed limit?). The reason for this, you would suppose, is because we are close to approaching our current limit. Well, that's true, but it's also besides the point. Because as it turns out...

...we're also approaching the proposed limit*. (http://www.google.com/hostednews/afp/article/ALeqM5hEkfx_bpGC-zVoeKNR38gWLcjXdw)

US debt to hit proposed ceiling by end-February: Treasury

WASHINGTON — The US debt is on track to hit a congressionally proposed debt ceiling of 14.3 trillion dollars by the end of February, the Treasury said Wednesday, a day ahead of a key vote to raise it to that level.

"Based on current projections, Treasury expects to reach the debt ceiling as early as the end of February. However, the government's cash flows are volatile, making it difficult to forecast a precise date," the Treasury said in a statement.

The current limit on the public debt of the United States is 12.374 trillion dollars.

The US debt exceeded 12.349 trillion dollars on Monday, according to Treasury data.

The US House of Representatives will vote Thursday on whether to raise the US debt limit to a historic 14.3 trillion dollars, allowing the United States to borrow another 1.9 trillion dollars.

House Majority Leader Steny Hoyer said representatives would take up the measure a week after the Senate approved the higher debt ceiling in a 60-39 vote.

In December, both houses agreed to increase the debt limit by an interim amount of 290 billion dollars to ensure the US government would continue to function.

The Senate also last week passed an amendment to legislation raising the debt ceiling that requires new budget items to be paid for, dubbed "pay-as-you-go."

The measure is intended to prevent the federal government from spending money it does not have and to control the massive US budget deficit.

The House has adopted a similar measure.The "pay as you go" farce is just more of the same nonsense. Let's try to understand this-- the government has self-imposed limits on how much debt it can accumulate. When it approaches those limits, it moves them. As a solution to this bit of irresponsible behavior, congress promises to write a law forcing itself to be more fiscally responsible in the future.

Of course, if they were fiscally responsible in the first place, we wouldn't need to worry about debt limits. And let's remember a couple of other things:

1- the new debt ceiling will probably be reached in a few weeks, and will definitely be reached within a few months.

2- the government's spending projections for the next few years include additional trillions of dollars of debt.

Keep in mind that the Obama administration, like many before it, are talking about reducing the deficit and not the debt. You almost never hear politicians talk about the debt. It's always the deficit. Our debt is projected to continue to grow in increments of hundreds of billions of dollars a month.

When we reach the proposed debt ceiling, the national debt will be equal to one year's worth of our GDP. And we're just getting warmed up.

*Edit: Blargh. (http://finance.yahoo.com/news/Treasury-expects-to-hit-debt-apf-2905598611.html?x=0) The AP corrects itself. We will approach the current ceiling by the end of February, not the proposed limit. Therefore, if we raise the limit now, we'll be okay... for about a year and a half. With that in mind, I'll leave the story above intact, because it doesn't change things much.

[Tonus]

And if the previous post didn't offer up enough good news...

...Social Security will run in the red this year. (http://hotair.com/archives/2010/02/04/social-security-tipping-over-into-the-red/)

Remember all of those times when we were told that SS would remain viable until 2041, or 2030, or 2019, or... whoops! Turns out it'll happen this year!


Social Security tipping over into the red

Last month (http://hotair.com/archives/2010/01/07/social-security-deficit-slides-to-worst-showing-in-a-generation/), we noted that Social Security had delivered its worst performance in decades. Now, Allen Sloan warns investors at Yahoo Finance (http://finance.yahoo.com/focus-retirement/article/108747/next-in-line-for-a-bailout-social-security?mod=fidelity-readytoretire) that the entire program has gone into the red — and will stay there. Get ready, Sloan says, for the mother of all bailouts:Don’t look now. But even as the bank bailout is winding down, another huge bailout is starting, this time for the Social Security system.

A report from the Congressional Budget Office shows that for the first time in 25 years, Social Security is taking in less in taxes than it is spending on benefits.

Instead of helping to finance the rest of the government, as it has done for decades, our nation’s biggest social program needs help from the Treasury to keep benefit checks from bouncing — in other words, a taxpayer bailout.
The only event that might keep this from being the very next bailout would be a faster-than-expected collapse at FHA, which has followed the Fannie Mae/Freddie Mac strategy of buying marginal paper and securitizing it through MBSs. Otherwise, we’re already beginning to bail out SSA, thanks to a generation-long bailout of the federal government by the SSA in the other direction.

Technically, the fund should receive $120 billion in interest payments from the Treasury, which owes SSA for decades of skim repaid only in IOUs. However, the interest itself will only be paid in IOUs. Sloan explains the problem:The first number is $120 billion, the interest that Social Security will earn on its trust fund in fiscal 2010 (see page 74 of the CBO report). The second is $92 billion, the overall Social Security surplus for fiscal 2010 (see page 116).

This means that without the interest income, Social Security will be $28 billion in the hole this fiscal year, which ends Sept. 30.

Why disregard the interest? Because as people like me have said repeatedly over the years, the interest, which consists of Treasury IOUs that the Social Security trust fund gets on its holdings of government securities, doesn’t provide Social Security with any cash that it can use to pay its bills. The interest is merely an accounting entry with no economic significance.
Just to make clear, that $92 billion surplus includes the nonexistent interest payments from Treasury. The fund will go into the red for $28 billion, meaning that we will have our first cash-negative year ever in SSA. It won’t be the last, either.

The crisis in SocSec was supposed to arrive in 2019, according to the CBO in 2008. Who came up with that figure? Peter Orszag, the same man who missed the 10-year deficit projection by over $2.2 trillion in the spring of 2009, and who now runs the Office of Management and Budget. Democrats used that figure, as well as others produced by various sources in the years preceding that analysis, to argue against Social Security reform, and to paint Republicans who warned that the crisis was a lot closer as Chicken Littles or grubby politicians who just wanted to get their hands on Grandma’s Social Security check.

Steve at No Runny Eggs (http://norunnyeggs.com/2010/02/another-look-at-the-mid-term-social-security-crater/) looks at the recalculated projections:Between this fiscal year and FY2019, instead of a cumulative Social Security primary deficit of $100 billion, we’ll have a cumulative Social Security primary deficit of $157 billion. That is, of course, we actually do get all the economic and tax growth that the CBO seems to hope we will. If we don’t, the chart I put together back in September showing just how easy it was to turn the CBO’s hope into red ink as far as the eye can see will be rosy.

That also doesn’t include Obama’s plan for a second round of $250 checks to every Social Security recipient. That is a drag of another $13 billion on this year, which would make this year’s cash deficit somewhere around $51 billion.
This means that the federal government not only can’t rely on SocSec surpluses, which have been used to paper over budget deficits, it will have to increase the federal deficit to make benefit payments from now on. George Bush and the GOP saw this coming, while Democrats like Orszag insisted that we had nothing to worry about. Even if we had a federal government living within its means, this would be a crisis — but with the debt that Obama is accumulating, it’s a fiscal tsunami waiting to crest.
In 2005, George Bush was just the latest President/Presidential candidate to talk about trying to do something about SSA before it was too late. He, just like the others, was vilified by his political opponents and by many economists. SSA would be viable for decades to come, they told us. Al Gore was savaged when he proposed his SS "lock box" during the 2000 campaign. And so on.

In case anyone is wondering about the "paper over budget deficits" part, here's a simplified primer on how SSA is treated. Whenever SSA takes in more money than it pays out, it is required by law to use the surplus to purchase IOUs from the government. The government spends this surplus on budget items, and tracks these IOUs separately from other debt. This is how we managed to run "surpluses" during the Clinton years, even though the national debt continued to increase.

Some people feel that it is silly to track it this way. How can you count this as debt, when it is money we owe ourselves? This is not correct. It is money that the US government owes to its citizens. And now that they've spent it all, guess how they intend to pay us back? That's right, by taking money from us in order to pay back what they borrowed! Aside from the immorality and stupidity of that, there's the additional fact that without the SS surplus, the government will now run even larger debts. Not only can they not hide the real debt by stealing from SSA, SSA now counts as additional debt!

These are the people who want to manage our energy consumption and health care coverage.

[Tonus]

Here we go... (http://hotair.com/archives/2010/03/15/social-security-starts-cashing-in-us-debt/)


Social Security starts cashing in US debt

We’ve noticed the cash shortfalls at Social Security for more than a year, and now they appear to be permanent (http://hotair.com/archives/2010/02/04/social-security-tipping-over-into-the-red/). For the first time, the Social Security Administration will start cashing in its IOUs (http://news.yahoo.com/s/ap/20100314/ap_on_bi_ge/us_social_security_ious) from the Treasury in order to meet its benefits obligations. Unfortunately, the Treasury doesn’t have the cash, either:
The retirement nest egg of an entire generation is stashed away in this small town along the Ohio River: $2.5 trillion in IOUs from the federal government, payable to the Social Security Administration.

It’s time to start cashing them in. … Too bad the federal government already spent that money over the years on other programs, preferring to borrow from Social Security rather than foreign creditors. In return, the Treasury Department issued a stack of IOUs — in the form of Treasury bonds — which are kept in a nondescript office building just down the street from Parkersburg’s municipal offices.

Now the government will have to borrow even more money, much of it abroad, to start paying back the IOUs, and the timing couldn’t be worse. The government is projected to post a record $1.5 trillion budget deficit this year, followed by trillion dollar deficits for years to come.

Social Security’s shortfall will not affect current benefits. As long as the IOUs last, benefits will keep flowing. But experts say it is a warning sign that the program’s finances are deteriorating. Social Security is projected to drain its trust funds by 2037 unless Congress acts, and there’s concern that the looming crisis will lead to reduced benefits.
The IOUs won’t last. Technically, they’re worthless now. The Treasury doesn’t have the cash to reimburse Social Security, and we’ll have to sell more debt on the lending markets in order to finance the benefits in the short run.

Moody’s (http://online.wsj.com/article/BT-CO-20100314-704084.html?mod=wsjcrmain) sees the pressure on the debt as a risk to the US’s AAA credit rating:
A rise in the proportion of its revenue that the U.S. government spends servicing its debt over the next 10-years, as outlined in the federal budget in February, would see the U.S. government’s Aaa rating come under pressure, Moody’s Investors Service said Monday.

Federal debt affordability has “for the time being” not deteriorated, despite the U.S.’s rising deficit, and is not yet at a level that threatens the rating, Moody’s said in its latest quarterly report on Aaa-rated sovereigns. …

And the 10-year outlook in the budget shows a continuous rise in the debt to GDP ratio and in the debt affordability ratio. The outlook shows the ratio of interest to revenue deteriorating to around 18%, which was roughly the peak level when interest rates were high in the 1980s.

“If such a trajectory were to materialize, there would at some point be downward pressure on the Aaa rating of the federal government,” Moody’s said.
A downgrade in our credit rating would mean that we would have to offer higher return rates on our debt. That would cost us more to service in the short run and make retiring the debt an ever-increasing improbability. The debt cycle would continue to escalate as we keep paying benefits with cash we don’t have, adding to the debt and putting our credit at even greater risk.

The wheels have begun to fly off the entitlement juggernaut.

Update: Steve Eggleston has more background (http://norunnyeggs.com/2010/03/the-associated-press-starts-to-catch-up-on-the-social-security-crater/).

For years, the government used the social security surplus as free money. They used it in order to make their deficits appear to be a bit smaller than they were (or in the case of the last Clinton term, make deficits appear to be surpluses). Now the loans require repayment, and a government that never learned fiscal restraint has to pay them back. It's a double-whammy; you have an additional debt to service, with no surplus to help pay it off.

And this comes just as the government warns us that it intends to run massive deficits for the next ten years.

[Grunthos]

Off cliff we goes...

[Edmaster]

Weeeeeeeee.

[Tonus]

Government attempts to double-dip, and is surprised to find that there's nothing available (http://www.politico.com/news/stories/0410/35895.html) when they dip the second time.

Choice quote from the article:


The short-term unemployment benefits bill, which was headed toward final passage in the House on Thursday night, also includes the COBRA health program and a Medicare reimbursement adjustment known as the “doc fix.” The bill bypassed pay-as-you-go rules because it was designated as a temporary “emergency” spending plan.

But now Democrats are stuck.

They have been unable to move a longer-term one-year extension of these programs, passed earlier this session, because they already blew the revenues they had expected to use for this bill. Senate and House Democrats must now find a politically acceptable way to pay for the bill.

The tax money for the original bill was a special tax credit known as “black liquor” on biofuels, but Democrats moved those funds to help pay for the health care reform bill.
In other words, even after they skirted their own Pay-Go rules in order to fund additional spending, they still managed to screw it up by allocating funds to two separate items. Ironically, the money that they intended to allocate to an extension of benefits was redirected to Obamacare... which we were told would not add to the deficit (or even, if I'm not mistaken, would lower the deficit).

[Shady]

Was that...Olympia Snow criticizing this double dip? Really?

[Tonus]

You call it taxes. Government calls it pro-growth revenue. (http://dailycaller.com/2010/05/03/dems-on-obama-fiscal-commission-raise-conservative-hackles-with-talk-of-pro-growth-tax-hikes/)

Dems on Obama fiscal commission raise conservative hackles with talk of ‘pro-growth’ tax hikes

Two immovable facts face Democrats on President Obama’s fiscal commission: They don’t see any way to alleviate the country’s debt without raising taxes, and they know most voters hate the thought of any tax increase.

Leading Democrats on the commission tried during the first week of meetings to finesse their way toward a discussion of what they consider inevitable — by arguing that any tax hikes would be “pro-growth.”

“If we can put forward some practical proposals that control the rate of spending in the future and that raise revenues in a pro-growth way, I think we’ll get a hearing in the Congress,” said Alice Rivlin, a former White House budget director for President Jimmy Carter, who is one of 18 commission members.

If you didn’t read the word “tax” in the previous sentence, that’s because most who favor raising taxes don’t like to use the word. Instead they use “revenue,” as in the money that comes to the government from taxpayers.

Commission co-chair Erskine Bowles made clear last week that any recommendations he puts forth or supports by the Dec. 1 due date will include higher taxes. The three working groups that he set up to meet weekly over the next several months are focused on mandatory spending, discretionary spending and revenue reform.

Any solution is “going to involve revenue, and we have to face up to that,” he said. Bowles, a former White House chief of staff to President Clinton, also followed Rivlin’s tack, arguing that any tax increase would have to be good for the economy, business, job creation, etc.

“I want to make sure that any time we discuss revenues that we don’t do anything that has a negative impact on economic growth,” Bowles said.

Rivlin went so far as to say, at a summit hosted by the Peterson Foundation, “one can make a case for being a little bit conservative, especially on spending.”

Even Senate Minority Whip Dick Durbin, Illinois Democrat, got into the act, telling “bleeding heart liberals” that they should expect cuts to spending on things they value most.

However, conservative tax and budget experts were not overwhelmed

“I have no idea what they’re talking about,” said Doug Holtz-Eakin, a former director of the Congressional Budget Office who was a top economic adviser to Sen. John McCain during his presidential run.

Holtz-Eakin said the rhetorical nods to conservatives – in particular the talk of “pro-growth” tax hikes – are just words until someone takes a policy position.

“I want to see them write it down. Anyone can say that,” he said.

Ryan Ellis, policy director at Americans for Tax Reform, one of the most vigorous anti-tax groups in Washington, said “pro-growth” tax hikes don’t exist.

“They’re all anti-growth, any additional taxes on top of our existing tax burden, by definition,” said Ryan Ellis, policy director at Americans for Tax Reform, a group that is against most tax increases.

“Any time you take tax dollars out of the private economy, you’re taking away the seed corn of economic growth. You’re crowding out the private sector. It’s like taking oxygen away from a fire,” Ellis said. “To talk about doing it in a pro-growth way strikes me as absurd. You’re talking about doing the least amount of damage, not helping anything.”

Roberton Williams, a senior fellow at the Tax Policy Center, has a much different philosophical orientation on taxes than Ellis, but agreed that tax increases would not be “pro-growth.”

A value-added tax (VAT), he said, is the most likely recommendation to come out of the fiscal commission’s liberal wing, at least, because “while it may not be pro-growth at least it’s not anti-growth.”

“It raises a lot of money without affecting what people do and that’s a good thing,” Williams said.

The VAT taxes goods at every stage of production, functioning as a consumption tax that is driven by how much people buy.

Some conservatives like the egalitarian nature of the VAT and are open to replacing the income tax with a VAT. But most believe the Obama White House would only tack it on top of the existing tax structure, creating a large new source of revenue and doing nothing to encourage government belt-tightening.

The White House has offered a dizzying array of explanations about whether or not it plans to consider a VAT. Press secretary Robert Gibbs has denied it is even an option under consideration, while other advisers have openly said it has to be on the table.

As for where the fiscal commission ends up, Rivlin acknowledged last week that “we are not agreed and probably in the end won’t all agree on an exact solution.”

The commission will need 14 of the panel’s 18 members to vote in favor of final recommendations for them to be passed to Congress, where the report would be only advisory and Congress would not be required to vote on it.

Experts agreed that even if the commission ends up deadlocked, it will still have served a purpose.

“Discussions are good,” Williams said. “The more the public understands what the issues are and how big the problem is, the better off we’ll be.”

Holtz-Eakin said he expects the commission to be so divided between those on the left and those on the right that “there’s a chance you’ll get two clearly articulated different plans.”

“And that’s a good start. You’ve got to have a debate about how to solve this problem and specific solutions is way better than general rhetoric,” he said.

Still, many conservatives see the commission as a stalking horse for taxes.

“It’s about finding ways to trick people into thinking about spending, but in reality the only outcome is to increase taxes,” said Ellis.It's almost humorous to read that these discussions are good because they help the public understand the issues. The issues are not being discussed, they are being dressed up to seem like something they are not. This is part of the process of raising taxes, possibly through a VAT. There is a reason that Obama has revised his pledge not to raise taxes on 95% of working Americans, so that his new promise is that he will not raise the income tax.

Tax increase are coming, and they are probably going to be very big. All we're seeing right now is a laying of the groundwork. The administration is trying to see if there is a way to package tax increases so that the public doesn't become even more angry than it already is. Expect a lot more talk of "revenue" and "pro-growth" policies. It would not surprise me if they find a way to relabel the term "VAT" somehow as well.

[Grunthos]

Ooooh, goody, the budget director for Jimmy "economic implosion" Carter is helping to solve the problem!!!

And Erskine Bowles, the guy who convinced Clinton to try the first-ever retroactive tax increase.

[Tonus]

Greek gov't passes austerity package. (http://www.independent.co.uk/news/world/europe/greece-agrees-to-cuts-package-1964747.html) The Dow suffered a sudden and very steep drop, almost 1,000 points (http://money.cnn.com/2010/05/06/markets/markets_newyork/index.htm), and is currently rallying as we near the close of the day, but it looks as if it might wind up with a -400 loss for the day, or worse.

Greek citizens are protesting in anger and there are casualties. (http://news.sky.com/skynews/Home/Business/Greek-Strike-Police-Clash-With-Protesters-Amid-24-Hour-National-Stop-Work-Action-Closes-Airports/Article/201005115625625?lpos=Business_Top_Stories_Header_0&lid=ARTICLE_15625625_Greek_Strike%3A_Police_Clash_ With_Protesters_Amid_24-Hour_National_Stop-Work_Action_Closes_Airports) Quote of the day: "Ordinary workers are furious. Trade unions say their members are having to pay for an economic crisis that has been created by corrupt politicians." After decades of squeezing government for budget-breaking concessions, union leaders are apparently only too happy to throw government officials under the bus when the economy collapses, in large part under the weight of its obligations to those same unions.

Edit: Heh. It's possible that the stock plunge was triggered by a data-entry error that caused Proctor & Gamble's stock to appear to lose 33% of its value within minutes. The stock had dropped from around $60/share to $56/share, but the error made the price show up as $40/share. With the fear over the attempted terror attack in NYC and the problems in Greece, nerves were already pretty frazzled, so it seems the error instigated a panic.

Edit: Confirmed. (http://www.cnbc.com/id/36999483) Press B instead of M, and watch the fireworks!

[Tonus]

Fannie Mae asks for another $8.4 billion (http://politicalticker.blogs.cnn.com/2010/05/10/fannie-asks-for-another-8-4-billion/) in bail out money.


New York (CNNMoney.com) – Fannie Mae requested another $8.4 billion from the federal government on Monday, saying that due to trends in the housing and financial markets, the company expects its deficits to continue.

The government-controlled mortgage giant announced Monday that it lost $13.1 billion applicable to common shareholders in the first quarter of 2010.

The request came just four days after Fannie's twin Freddie Mac also asked for a handout - to the tune of $10.6 billion - after posting an $8 billion quarterly loss.

In using Fannie and Freddie to prop up the mortgage market, the government in December lifted a $200 billion limit on their bailouts, essentially giving the twin housing lenders a blank check. Fannie Mae has already received $76.2 billion from the federal government and Freddie has gotten $50.7 billion.

[Grunthos]

How's this grab ya?

U.S. posts 19th straight monthly budget deficit
WASHINGTON
Wed May 12, 2010 3:15pm EDT

WASHINGTON (Reuters) - The United States posted an $82.69 billion deficit in April, nearly four times the $20.91 billion shortfall registered in April 2009 and the largest on record for that month, the Treasury Department said on Wednesday.

It was more than twice the $40-billion deficit that Wall Street economists surveyed by Reuters had forecast and was striking since April marks the filing deadline for individual income taxes that are the main source of government revenue.

Department officials said that in prior years, there was a surplus during April in 43 out of the past 56 years.

The government has now posted 19 consecutive monthly budget deficits, the longest string of shortfalls on record.

For the first seven months of fiscal 2010, which ends September 30, the cumulative budget deficit totals $799.68 billion, down slightly from $802.3 billion in the comparable period of fiscal 2009.

Outlays during April rose to $327.96 billion from $218.75 billion in March and were up from $287.11 billion in April 2009. It was a record level of outlays for an April.

Department officials noted there were five Fridays in April this year, which helped account for higher outlays since most tax refunds are issued on that day.

But for the first seven months of the fiscal year, outlays fell to $1.99 trillion from $2.06 trillion in the comparable period of fiscal 2009, partly because of repayments by banks of bailout funds they received during the financial crisis.

Receipts in April -- mostly from income taxes -- were $245.27 billion, up from $153.36 billion in March but lower than the $266.21 billion taken in during April 2009.

Receipts from individuals, who faced an April 15 filing deadline for paying 2009 taxes, fell to $107.31 billion from $137.67 billion in April 2009.

The U.S. full-year deficit this year is projected at $1.5 trillion on top of a $1.4 trillion shortfall last year.

White House budget director Peter Orszag told Reuters Insider in an interview on Wednesday that the United States must tackle its deficits quickly to avoid the kind of debt crisis that hit Greece.

(Reporting by Glenn Somerville, Editing by Diane Craft)

http://www.wilmarthcafe.org/forums/showthread.php?p=9294#post9294

[Nyarlathotep]

Not to get too excited. It is a one-time audit. Highlights the lack of information the government has about itself.

Senate votes 96-0 to audit Federal Reserve
The congressional audit would examine the Fed's emergency aid program and disclose previously secret recipients of bailout money.

By David Lightman, McClatchy Newspapers
May 11, 2010 | 4:06 p.m.

Reporting from Washington

The Senate voted 96 to 0 on Tuesday to authorize a congressional audit of the secretive Federal Reserve Board's emergency aid program and full disclosure of who got the money, a plan that could reveal more details about government help for embattled investment firm Goldman Sachs.

Under the plan, Congress' Government Accountability Office would conduct a top-to-bottom audit of all the Federal Reserve's emergency activities since the economic crisis began in December 2007. The Fed also would have to post on its website all recipients of money from the more than $2 trillion in emergency aid that's been disbursed since then.

The GAO also would look into whether the financial deals involved conflicts of interest. It's common for members of the board of directors of the powerful Federal Reserve Bank of New York, for example, also to be executives or directors of banks that got government bailout money.

The Fed also is locked in a court fight over a Freedom of Information Act suit to force it to identify all institutions that secretly got rescue money.

The White House and Fed Chairman Ben S. Bernanke had opposed the Fed audit but relented after two concessions were made: It will be done only once and the list of funding recipients won't appear on the Internet until Dec. 1, rather than 30 days after enactment.

The vote Tuesday was on an amendment to a financial overhaul package making its way through the Senate.

http://www.latimes.com/business/la-fi-0512-financial-overhaul-20100512,0,3266419.story
& other via Google News

[Grunthos]

On the current track, our debt will surpass our entire GDP in a little over 4 years.

http://blogs.telegraph.co.uk/finance/edmundconway/100005702/us-faces-one-of-biggest-budget-crunches-in-western-world-imf/

Exhibit a is the fact that under the Obama administration’s current fiscal plans, the national debt in the US (on a gross basis) will climb to above 100pc of GDP by 2015 – a far steeper increase than almost any other country.

http://blogs.telegraph.co.uk/finance/files/2010/05/USnetdebt.jpg

And that's if Obambi and the Klowns in Kongress don't vote to add one additional dime of fiscal burden.

Like a carbon tax.

[Grunthos]

....or maybe faster...

U.S.’s $13 Trillion Debt Poised to Overtake GDP: Chart of Day

By Garfield Reynolds and Wes Goodman

June 4 (Bloomberg) -- President Barack Obama is poised to increase the U.S. debt to a level that exceeds the value of the nation’s annual economic output, a step toward what Bill Gross called a “debt super cycle.”

The CHART OF THE DAY tracks U.S. gross domestic product and the government’s total debt, which rose past $13 trillion for the first time this month. The amount owed will surpass GDP in 2012, based on forecasts by the International Monetary Fund. The lower panel shows U.S. annual GDP growth as tracked by the IMF, which projects the world’s largest economy to expand at a slower pace than the 3.2 percent average during the past five decades.

“Over the long term, interest rates on government debt will likely have to rise to attract investors,” said Hiroki Shimazu, a market economist in Tokyo at Nikko Cordial Securities Inc., a unit of Japan’s third-largest publicly traded bank. “That will be a big burden on the government and the people.”

Gross, who runs the world’s largest mutual fund at Pacific Investment Management Co. in Newport Beach, California, said in his June outlook report that “the debt super cycle trend” suggests U.S. economic growth won’t be enough to support the borrowings “if real interest rates were ever to go up instead of down.”

Dan Fuss, who manages the Loomis Sayles Bond Fund, which beat 94 percent of competitors the past year, said last week that he sold all of his Treasury bonds because of prospects interest rates will rise as the U.S. borrows unprecedented amounts. Obama is borrowing record amounts to fund spending programs to help the economy recover from its longest recession since the 1930s.

“The incremental borrower of funds in the U.S. capital markets is rapidly becoming the U.S. Treasury,” Boston-based Fuss said. “Do you really want to buy the debt of the biggest issuer?”

(To save a copy of the chart, click here.)

To contact the reporters on this story: Garfield Reynolds in Sydney at greynolds1@bloomberg.net; Wes Goodman in Singapore at wgoodman@bloomberg.net.

Last Updated: June 4, 2010 05:06 EDT


http://www.bloomberg.com/apps/news?pid=20601109&sid=aa0cI64Gx.4E&pos=15

[NervousWreck]

Along these lines, remember the 450000 jobs? 411000 are the census, and this (http://www.nypost.com/p/news/business/two_more_census_workers_blow_the_OqY80N3DBTvL17Vmx KKR0O) is how they count "jobs."

[Grunthos]

Makes you wonder how they're counting dollars, doesn't it?

[KB.]

Along these lines, remember the 450000 jobs? 411000 are the census, and this (http://www.nypost.com/p/news/business/two_more_census_workers_blow_the_OqY80N3DBTvL17Vmx KKR0O) is how they count "jobs."

I just gave my father a stroke with this information.

[NervousWreck]

Hope that wasn't literal.

[Grunthos]

You all realize that the government not only has not yet passed a budget, but has not yet even begun formulating one?

Apparently, some bright boy figured out that if you don't have a budget, you don't have a budget deficit.

Clearly, they hope to get past November without having to vote on a budget or release numbers about how badly overspent we are.

Vote
the
bastards
OUT!

[Tonus]

You all realize that the government not only has not yet passed a budget, but has not yet even begun formulating one?
And without any roadblocks to doing so. Democrats control both houses of congress and the filibuster cannot be applied to the budgeting process. The likeliest probability is the one you mention-- if they produce a budget now, it would probably be used as a bludgeon during the mid-term campaigns.

The nagging question is-- if Republicans make big enough gains that they can either influence or even control the budget process, what makes anyone think that they will actually rein in spending, or even attempt to?

[Grunthos]

Reference:

Cancelled: There Will Be No Congressional Budget This Year
***The Following Is An Important Fiscal Health Announcement***

Washington (Jun 22)
In light of House Majority Leader Steny Hoyer’s (D-MD) announcement this morning that House Democrats will not pass a budget this year – failing to fulfill what he has called “the most basic responsibility” of governing – the following important fiscal health warning has been issued:

THE BUDGET HAS BEEN

CANCELLED

WE REGRET TO INFORM YOU THAT

THE CONGRESSIONAL BUDGET

PLANNED FOR FISCAL YEAR 2011 HAS BEEN CANCELLED DUE TO WASHINGTON DEMOCRATS’ OUT-OF-CONTROL SPENDING SPREE.

AN APOLOGY FOR THIS BETRAYAL OF AMERICAN TAXPAYERS DOES NOT APPEAR TO BE FORTHCOMING AT THIS TIME.

BE ADVISED THAT THE FOLLOWING SERVICES WILL BE INTERRUPTED:

Imposing the fiscal discipline economists say is needed to create jobs and boost our economy

Reining in the out-of-control spending spree that is killing American jobs

Carrying out the “most basic responsibility of governing”

Stopping middle-class tax hikes that will sock family budgets at the worst possible time

Providing the leadership on jobs and the economy that Americans say is sorely lacking

Protecting our kids and grandkids from the enormous debt burden Washington has placed on them


We reserve the right to notify you of additional consequences that may arise in light of this budget failure, which is unprecedented in the modern era. In the interim, please brace for more spending, more debt, more tax hikes, more broken promises.

For families and small businesses looking for a government that listens to the people it serves and respects their hard-earned money, House Republicans are offering better solutions to cut spending now and help small businesses put people back to work.


http://gopleader.gov/News/DocumentSingle.aspx?DocumentID=191653

[Tonus]

France plans to raise the retirement age to 62. (http://www.france24.com/en/20100616-france-raise-retirement-age-62-unions-cry-foul-pensions-reform) The reason should be obvious-- they're on an unsustainable path.

France to raise retirement age to 62, unions cry foul

The French government unveiled Wednesday a proposed reform of the state pension system, raising the minimum retirement age to 62 and introducing higher taxes for the rich in an attempt to tackle the country's ballooning public deficit.

The minimum retirement age in France is set go up from 60 to 62, Labour Minister Eric Woerth said as he announced a sweeping reform of the French pensions system.

“It is imperative that we salvage our pensions system,” he told a news conference Wednesday. “Working longer is inevitable. There is no magic solution.”

He added: "There are two requirements for this reform - it must be both responsible and equitable."

The right to a pension from age 60 has been enshrined since 1982, a legacy of Socialist president Francois Mitterrand's administration.

But with a growing deficit and an ageing population, France’s right-wing government has been keen to press ahead with reforms which are likely to stoke anger in trade unions, who have vowed to fight the changes with strikes and street protests.

A pensions reform bill will be presented to President Nicolas Sarkozy's cabinet next month before heading to parliament in September.

"All of our partners in Europe have done it," Woerth argued. "It is not possible to stay on the sidelines of this movement."

Balancing the books

Speaking after a meeting late Tuesday with Sarkozy to finalise the plan, Woerth said that the reforms would balance the books by 2018.

The government is also planning to extend the minimum period of contribution to social security necessary to qualify for a full pension, from 40.5 years to 41 years and three months by 2012.

At the moment, anyone can retire at 65 on a full pension, even if they have not worked the full 40.5 years. Under the proposed new law this age would be raised to 67 by 2018.

Several new taxes targeting high-income earners and capital income will be introduced to help finance pensions, with a view to raising an extra 3.7 billion euros.

The minister said that the retirement age would be raised incrementally, reaching 62 by 2018 "so as not to upset the plans of French workers who are nearing retirement."

Reforming the country's pension system is shaping to be the centrepiece of Sarkozy's reform agenda as he winds up his term in office and heads for a re-election fight in 2012.The fierce resistance from France's unions should be no surprise. After all, the unions in Greece reacted violently to reforms, even as their nation's economy was on the verge of collapse. Government acts as if it can continue to spend money long after the money runs out, so why wouldn't people believe that and expect it to continue? Especially since politicians will not tell them the truth until things have completely gone to hell. Greece's politicians aren't being honest because it's politically expedient-- they're telling the truth because they have nothing else to tell, since they literally ran out of money.

Keep in mind that Sarkozy is "conservative" in the European sense. In the USA he'd be a staunch liberal democrat. There's a reason that in addition to the pension changes, they are offering a token tax on the wealthy. Redistributionist policies die hard, even when there isn't much left to redistribute (notice that the tax on the rich is expected to raise a relatively paltry 3.7 billion euro).

[Grunthos]

"...The right to a pension from age 60 has been enshrined since 1982..." Wow, all that time, huh? Almost 20 years?

I have T-shirts older than some French "rights." Groovy.

[Grunthos]

Check this out:

http://thehill.com/homenews/house/106905-house-democrats-pass-budget-enforcement-resolution

Friggin cowards.

[Tonus]

Illinois is currently serving as a perfect example of just how tone deaf (http://www.nytimes.com/2010/07/03/business/economy/03illinois.html?_r=3) government can be when it comes to managing money.

Illinois Stops Paying Its Bills, but Can’t Stop Digging Hole

CHICAGO — Even by the standards of this deficit-ridden state, Illinois’s comptroller, Daniel W. Hynes, faces an ugly balance sheet. Precisely how ugly becomes clear when he beckons you into his office to examine his daily briefing memo.

He picks the papers off his desk and points to a figure in red: $5.01 billion.

“This is what the state owes right now to schools, rehabilitation centers, child care, the state university — and it’s getting worse every single day,” he says in his downtown office.

Mr. Hynes shakes his head. “This is not some esoteric budget issue; we are not paying bills for absolutely essential services,” he says. “That is obscene.”

For the last few years, California stood more or less unchallenged as a symbol of the fiscal collapse of states during the recession. Now Illinois has shouldered to the fore, as its dysfunctional political class refuses to pay the state’s bills and refuses to take the painful steps — cuts and tax increases — to close a deficit of at least $12 billion, equal to nearly half the state’s budget.

Then there is the spectacularly mismanaged pension system, which is at least 50 percent underfunded and, analysts warn, could push Illinois into insolvency if the economy fails to pick up.

States cannot go bankrupt, technically, but signs of fiscal crackup are easy to see. Legislators left the capital this month without deciding how to pay 26 percent of the state budget. The governor proposes to borrow $3.5 billion to cover a year’s worth of pension payments, a step that would cost about $1 billion in interest. And every major rating agency has downgraded the state; Illinois now pays millions of dollars more to insure its debt than any other state in the nation.

“Their pension is the most underfunded in the nation,” said Karen S. Krop, a senior director at Fitch Ratings. “They have not made significant cuts or raised revenues. There’s no state out there like this. They can’t grow their way out of this.”

As the recession has swept over states and cities, it has laid bare economic weakness and shoddy fiscal practices. Only an infusion of federal stimulus money allowed many states to avert deep layoffs last year.

Cuts in Work Forces

The federal dollars are nearly spent. Last month, local governments nationwide shed more than 20,000 jobs. Should the largest struggling states — like California, New York or Illinois — lay off tens of thousands more in coming months, or default on payments, the reverberations could badly damage a weakened economy and push housing prices down still further.

“You’re not seeing these states bounce back, and that could be a big drag on the national economy,” said Susan K. Urahn of the Pew Center on the States. “It could be a very tough decade.”

In Illinois, the fiscal pain is radiating downward.

From suburban Elgin to Chicago to Rockford to Peoria, school districts have fired thousands of teachers, curtailed kindergarten and electives, drained pools and cut after-school clubs. Drug, family and mental health counseling centers have slashed their work forces and borrowed money to stave off insolvency.

In Beardstown, a small city deep in the western marshes, Ann Johnson plans to shut her century-old pharmacy. Because of late state payments, she could not afford to keep a 10-day supply of drugs. In Chicago, a funeral home owner wonders whether he can afford to bury the impoverished, as the state has fallen six months behind on its charity payments, $1,103 a funeral.

In Peoria — where the city faced a $14.5 million gap this year and could face an additional $10 million budget hole next year — Virginia Holwell, a trainer of child welfare caseworkers, lost her job when the state cut payments to her agency. She sits in her living room high above the Illinois River and calculates the months of savings left before the bank forecloses on her house.

“I’ve got enough to last until the end of August,” she says, matter-of-factly. “I’m 58 and I’m pretty good at what I do, and I got to tell you, I’m pretty devastated.” There is more at the link. Unlike the federal government, states do not have the freedom to simply shunt debt forward by running massive deficits. As you can see from the article above, though, they can mimick the federal government when it comes to ignoring the problem. What other methods are they using to deal with their enormous (and growing) budget gap? Check these out:

The governor has handed out raises to his staff, some as high as 20%. (http://www.breitbart.com/article.php?id=D9GPQ1FG4&show_article=1)
The state is promising large raises to state union workers. (http://biggovernment.com/jbambenek/2010/07/07/while-illinois-goes-broke-state-union-employees-get-14-raises/)

In the end, we see that the problem is that government has become addicted to spending. Even when faced with massive deficits and an inability to pay for essential services, they continue to pile up more debt. Illinois won't be able to borrow much more, they won't be able to ignore the problem, and the federal government may not have the money (nor the inclination) to bail them out.

We're getting very close to the point where one of the states in the US will be forced into bankruptcy, and the federal government will not bail them out. I don't see how a state like Illinois can simply ignore the problem until the November elections are over. This could be a huge disaster if they try to do just that.

[Diniden]

The interesting thing about all of that though is all the statistics about 'economy' etc, is about government jobs and plans. Should those jobs fail, those people just need to go off and find some form of living away from the government and grow a vegetable or find a niche in marketing somehow.

I think this is just showing our government got so fat it can't support it's own weight anymore. It needs to shed some pounds. Painful to lose weight, but the health benefits will be great and will prevent something disastrous like a heart attack.

Been taking my college government class (which I put off for much too long) and finally got a teacher worth listening to. It makes sense for a state to create fiscal problems for itself, but it's ludicrous what the federal government has gotten itself into through what it interprets it 'should' do through the Constitution...it's absolutely fascinating how the government came to where it is, and it's an absolute mess what the current administration is doing. Can't wait to vote this disaster out of office.

[Grunthos]

Found this on Investors' Busniess Daily... The annual Social Security Report has been mysteriously delayed, with no actual release date announced. It's supposed to come out in April or May, every year.

Are Overdue Reports Concealing ObamaCare Impact On Medicare?
By PETER FERRARA
Posted 07/06/2010 06:04 PM ET


Every year, the Annual Report of the Social Security Board of Trustees comes out between mid-April and mid-May. Now it's July, and there's no sign of this year's report. What is the Obama administration hiding?

The annual report includes detailed information about Social Security and its financing over the next 75 years, produced by the Office of the Actuary of the Social Security Administration.

The Congressional Budget Office reported last week in its Long Term Budget Outlook that Social Security was already running a deficit this year. According to last year's Social Security Trustees Report, that was not supposed to happen until 2015, with the trust fund to run out completely by 2037.

With the disastrous Obama economy, the great Social Security surplus that started in the Reagan administration is gone completely.

Every year, the federal government has been raiding the Social Security trust funds to take that annual surplus and spend it on the rest of the federal government's runaway spending, leaving the trust funds only with IOUs backed by nothing but politicians' promise to pay it back when it's needed. Now even that annual surplus is gone. How soon will the trust funds run out completely now?

President Obama keeps telling us a fairy tale that he saved us from another Great Depression. But he is actually leading us into another Depression.

The National Bureau of Economic Research scores the recession as officially starting in December 2007. Thirty-one months later, with unemployment still near 10% and the work force still declining, the NBER says it still cannot determine an official end to the recession.

The longest recession since World War II previously was 16 months, with the average being 10 months. By next month, it will be twice as long as the previous postwar record since the latest recession started. The markets echoed by many pundits are now suggesting a renewed double-dip downturn may be starting, with the comprehensive Obama tax rate increases next year poised to pour napalm on this developing bonfire.

How soon will the trust funds run out with this utter failure of 1930s-style Obamanomics?

The implications for Social Security aren't what the Obama administration is hiding by delaying the annual trustees reports. Those annual reports also include information regarding Medicare over the next 75 years. What the administration is trying to hide are sweeping draconian cuts to Medicare resulting from the ObamaCare legislation, which the annual report will document.

The administration is trying to delay the report until mid-August, when it's hoping the country will be on vacation and won't notice. Or maybe the delay is because the White House is trying to bludgeon the chief actuaries for Medicare and Social Security into fudging the numbers.

Those chief actuaries are dedicated, career professionals who have worked their way up the bureaucracy over decades.

During the Reagan administration, the congressional Democrat majorities and the New York Times made clear to us that tampering with the work of the government's career professionals, let alone the career number crunchers, would be grounds for impeachment.

I'm not certain the rule of law applies to this administration, where the Justice Department cites "payback time" as its reason for not prosecuting Black Panther Voting Rights Act violations.

The CBO confessed to $500 billion in Medicare cuts in the first 10 years of Obama-Care alone. Based on those calculations, the minority staff of the Senate Budget Committee estimated the Medicare cuts as $800 billion in the first 10 years of implementation and $2.9 trillion over the first 20 years of ObamaCare. Truthful annual trustees reports would further document these cuts.

These draconian Medicare cuts are primarily how the president got his claims that ObamaCare would reduce the deficit by over $100 billion over the first 10 years, and a trillion dollars over the next 10 years. The cuts involve slashing payments to doctors and hospitals for the medical care they provide to seniors, and decimating the private option Medicare Advantage program that close to one-fourth of seniors have chosen for their coverage because it gives them a better deal.

Such Medicare cuts would create havoc and chaos in health care for seniors. Doctors, hospitals, surgeons and specialists providing critical care to the elderly will shut down and disappear in much of the country, and others would stop serving Medicare patients. If the government is not going to pay, seniors are not going to get the medical treatment they expect.

Yes, Medicare is more than bankrupt over the long run and needs a fundamental overhaul. But the answer is not to tell seniors their guaranteed benefits will not be cut while the government refuses to pay doctors and hospitals for their care.

Nor is it to decimate Medicare Advantage, which instead should be expanded to all of Medicare. Nor is it to trash Medicare and use the money for a whole new entitlement instead, which is what ObamaCare does.

• Ferrara is director of entitlement and budget policy for the Institute for Policy Innovation, general counsel of the American Civil Rights Union and a senior policy adviser on health care to the Heartland Institute


http://www.investors.com/NewsAndAnalysis/Article/539411/201007061804/Are-Overdue-Reports-Concealing-ObamaCare-Impact-On-Medicare-.aspx

First, no budget released this year, and now, they're playing Three-Card Monty with vital actuarial info.

And reports are all over the web about the lame-duck spending spree ObamaReidPelosi have planned should the november elections go against them.

[Tonus]

The New York Times writes about a looming budget issue that might be a preview of the problems that will come as Social Security and Medicare become a larger and larger drain on the federal budget. The problem is with government pensions at the state level (http://www.nytimes.com/2010/08/07/your-money/07money.html?_r=1). States have to balance their budgets, therefore they cannot simply brush this problem under the rug the way the federal government does with SS and Medicare.

If the problem is this bad on the state level (where the problem has to be dealt with immediately) imagine how bad it will be on the federal level when government can no longer put it off.

Battle Looms Over Huge Costs of Public Pensions

There’s a class war coming to the world of government pensions.

The haves are retirees who were once state or municipal workers. Their seemingly guaranteed and ever-escalating monthly pension benefits are breaking budgets nationwide.

The have-nots are taxpayers who don’t have generous pensions. Their 401(k)s or individual retirement accounts have taken a real beating in recent years and are not guaranteed. And soon, many of those people will be paying higher taxes or getting fewer state services as their states put more money aside to cover those pension checks.

At stake is at least $1 trillion. That’s trillion, with a “t,” as in titanic and terrifying.

The figure comes from a study by the Pew Center on the States that came out in February. Pew estimated a $1 trillion gap as of fiscal 2008 between what states had promised workers in the way of retiree pension, health care and other benefits and the money they currently had to pay for it all. And some economists say that Pew is too conservative and the problem is two or three times as large.

So a question of extraordinary financial, political, legal and moral complexity emerges, something that every one of us will be taking into town meetings and voting booths for years to come: Given how wrong past pension projections were, who should pay to fill the 13-figure financing gap?

Consider what’s going on in Colorado — and what is likely to unfold in other states and municipalities around the country.

Earlier this year, in an act of rare political courage, a bipartisan coalition of state legislators passed a pension overhaul bill. Among other things, the bill reduced the raise that people who are already retired get in their pension checks each year.

This sort of thing just isn’t done. States have asked current workers to contribute more, tweaked the formula for future hires or banned them from the pension plan altogether. But this was apparently the first time that state legislators had forced current retirees to share the pain.

Sharing the burden seems to be the obvious solution so we don’t continue to kick the problem into the future. “We have to take this on, if there is any way of bringing fiscal sanity to our children,” said former Gov. Richard Lamm of Colorado, a Democrat. “The New Deal is demographically obsolete. You can’t fund the dream of the 1960s on the economy of 2010.”

But in Colorado, some retirees and those eligible to retire still want to live that dream. So they sued the state to keep all of the annual cost-of-living increases they thought they would be getting in perpetuity.

The state’s case turns, in part, on whether it is an “actuarial necessity” for the Legislature to make a change. To Meredith Williams, executive director of the Public Employees’ Retirement Association, the state’s pension fund, the answer is pretty simple. “If something didn’t change, we would have run out of money in the foreseeable future,” he said. “So no one would have been paid anything.”

Meanwhile, Gary R. Justus, a former teacher who is one of the lead plaintiffs in the case against the state, asks taxpayers in Colorado and elsewhere to consider an ethical question: Why is the state so quick to break its promises?

After all, he and others like him served their neighbors dutifully for decades. And along the way, state employees made big decisions (and built lifelong financial plans) based on retiring with a full pension that was promised to them in a contract that they say has the force of the state and federal constitutions standing behind it. To them it is deferred compensation, and taking it away is akin to not paying a contractor for paving state highways.

And actuarial necessity or not, Mr. Justus said he didn’t believe he should be responsible for past pension underfunding and the foolish risks that pension managers made with his money long after he retired in 2003.

The changes the Legislature made don’t seem like much: there’s currently a 2 percent cap in retirees’ cost-of-living adjustment for their pension checks instead of the 3.5 percent raise that many of them received before.

But Stephen Pincus, a lawyer for the retirees who have filed suit, estimates that the change will cost pensioners with 30 years of service an average of $165,000 each over the next 20 years.

Mr. Justus, 62, who taught math for 29 years in the Denver public schools, says he thinks it could cost him half a million dollars if he lives another 30 years. He also notes that just about all state workers in Colorado do not (and cannot) pay into Social Security, so the pension is all retirees have to live on unless they have other savings.

No one disputes these figures. Instead, they apologize. “All I can say is that I am sorry,” said Brandon Shaffer, a Democrat, the president of the Colorado State Senate, who helped lead the bipartisan coalition that pushed through the changes. (He also had to break the news to his mom, a retired teacher.) “I am tremendously sympathetic. But as a steward of the public trust, this is what we had to do to preserve the retirement fund.”

Taxpayers, whose payments are also helping to restock Colorado’s pension fund, may not be as sympathetic, though. The average retiree in the fund stopped working at the sprightly age of 58 and deposits a check for $2,883 each month. Many of them also got a 3.5 percent annual raise, no matter what inflation was, until the rules changed this year.

Private sector retirees who want their own monthly $2,883 check for life, complete with inflation adjustments, would need an immediate fixed annuity if they don’t have a pension. A 58-year-old male shopping for one from an A-rated insurance company would have to hand over a minimum of $860,000, according to Craig Hemke of Buyapension.com. A woman would need at least $928,000, because of her longer life expectancy.

Who among aspiring retirees has a nest egg that size, let alone people with the same moderate earning history as many state employees? And who wants to pay to top off someone else’s pile of money via increased income taxes or a radical decline in state services?

If you find the argument of Colorado’s retirees wanting, let your local legislator know that you don’t want to be responsible for every last dollar necessary to cover pension guarantees gone horribly awry. After all, many government employee unions will be taking contrary positions and doing so rather loudly.

If you work for a state or local government, start saving money outside of the pension plan if you haven’t already, because that plan may not last for as long as you need it.

And if you’re a government retiree or getting close to the end of your career? Consider what it means to be a citizen in a community. And what it means to be civil instead of litigious, coming to the table and making a compromise before politicians shove it down your throat and you feel compelled to challenge them to a courthouse brawl.

“We have to do what unions call givebacks,” said Mr. Lamm, the former Colorado governor. “That’s the only way to sanity. Any other alternative, therein lies dragons.” This kind of problem is going to be spun politically, of course. I don't really feel like poking these retirees in the eye, though. I doubt that any of them were thinking about retirements and pensions when they took these jobs, and a job that promises retirement at 58 with a generous pension sounds almost too good to be true. When you spend decades paying into the system and then have the rug yanked from under you, it feels as if you've been betrayed.

Why did local and state governments offer these contracts, knowing that they do not have the freedom to cook the books the way the federal government can? There are probably a number of reasons, and those range from stupidity to laziness to a lack of foresight to something approaching malice. No one wins. Retirees are seeing their retirement plans altered, and they find themselves at loggerheads with working-class people who resent having to pay more in taxes and get less in services to pay for someone else's "cushy pension." But reality isn't easily dismissed, and states are facing potentially trillions of dollars in deficits, which will have to be made up one way or another. How useful will that generous pension be when costs for basic services skyrocket (while the quality of those services plummets)?

And if that all seems pretty bad and pretty gloomy, remember... this will be peanuts compared to what will happen on a national level when we are no longer able to run from our obligations to Social Security and Medicare.

[S Carver Orne]

There are probably a number of reasons, and those range from stupidity to laziness to a lack of foresight to something approaching malice.

QFT

[Grunthos]

Buying gold and guns, now.

[Edmaster]

It's easy for me as a young person to criticize these pension plans in hindsight. But seriously... retiring at 58? When something sounds too good to be true, it usually is.

Buying gold and guns, now.

I'd recommend silver as well. If you ever needed to trade for small items it is a lot more user-friendly, so to speak. Good luck trying to buy some eggs with a kilobar of gold.

Also, ammunition, but I suppose this goes without saying.

[Tonus]

First the New York Times has an article about the crushing burden of state government pensions, and now the Washington Post has a Column about the problems with Social Security. (http://www.washingtonpost.com/wp-dyn/content/article/2010/08/09/AR2010080905559.html) When even the bastions of liberalism are talking about how our money is running out, you know things are getting tough...


Social Security, the trust fund and funny money

There's real money, then there's funny money -- stuff that looks real but isn't.

Today, let's talk about one of the world's biggest piles of funny money -- the $2.54 trillion Social Security trust fund. It matters now because Social Security revealed plans last week to tap the fund for $41 billion this year and will begin tapping it on a regular basis in less than five years.

This year's cash deficit, the first since the early 1980s and the biggest ever, means the government will have to borrow money to redeem some of the Treasury securities in the trust fund. Even at a time when Uncle Sam is borrowing $1.5 trillion a year to keep his checks from bouncing, $41 billion is real money.

Here's why the trust fund is funny money. Let's say I begin taking Social Security when I hit the full retirement age of 66 later this year. Because its tax revenue is below its expenses, Social Security would have to cash in about $3,400 of its trust-fund Treasurys each month to get the money to pay my wife and me. The Treasury, in turn, would have to borrow $3,400 from investors to get the money to pay Social Security. The bottom line is that the government has to borrow money to pay me, regardless of how big the trust fund is.

It's not surprising that Social Security is now running a negative cash flow -- I predicted a year ago that it was likely to happen this year, and wrote in February that it had happened.

Democrats, for the most part, say everything's fine because the trust fund has a fat balance. Republicans, who were happy to have Social Security taxes subsidize tax cuts for 25 years, have suddenly developed a holier-than-thou fiscal rectitude. They're both wrong -- the Democrats financially, the Republicans morally.

Let me show you in two different ways how useless the fund is. The first is a quote from the introduction to the 2009 Social Security trustees report, the second is the graphic by my Fortune colleague Robert Dominguez that accompanies this article.

Allen Smith, economics professor emeritus at Eastern Illinois University and author of "The Big Lie: How Our Government Hoodwinked the Public, Emptied the S.S. Trust Fund, and caused The Great Economic Collapse," spotted the 2009 quote, and it is telling.

It says: , "Neither the redemption of trust fund bonds, nor interest paid on those bonds, provides any new net income to the Treasury, which must finance redemptions and interest payments through some combination of increased taxation, reductions in other government spending, or additional borrowing from the public."

In other words, the trust fund is of no economic value.

This sentence wasn't in the 2010 introduction, released last week. Treasury says that it stands by the statement but that the Social Security trustees decided not to include it this year because it reiterates the obvious.

Now, to the "Geithner bond," which shows how easy (and useless) it would be for Treasury to stick as many bonds as needed into the trust fund, and then declare Social Security to be sound forever.

You know, of course, why this wouldn't work -- at least, I hope you know. It's because the U.S. government ultimately has to pay its bills with cash, not with its own IOUs. In the long run, you need cash -- real money -- not funny money. Other than being a send-up, this hypothetical Geithner trust-fund bond is no different than the Treasury bonds the trust fund owns, except that it carries a higher interest rate.

There are ways, even at this late hour, to begin turning the trust fund from funny money into real money without unduly stressing the government's finances. (I've discussed them before, and will do so again, but not today.) Given that taxpayers are bailing out the most imprudent companies and people in the country, we damn well should bail out Social Security, the mainstay of low- and middle-income people.

But let's not kid ourselves that a fat trust fund is the solution. When Social Security's cash deficits begin running more than $100 billion a year within a decade, it's going to take a lot of money to keep the checks coming. And it sure won't be funny.

[Tonus]

So I see this story (http://news.yahoo.com/s/nm/us_housing_frank) and wonder if Barney Frank has stumbled upon a mote of sanity.

Democrat Frank says abolish Freddie and Fannie: report

WASHINGTON (Reuters) – Fannie Mae and Freddie Mac should be abolished rather than reformed as part of the Obama administration's planned overhaul of the government's role in housing finance, Rep. Barney Frank, chairman of the House Financial Services committee, said on Tuesday.

"They should be abolished," Frank said in an interview on Fox Business, when asked whether the mortgage giants should be elements in housing market reform.

And then the brief moment of sanity fades and he returns to batshit crazy mode:

"The only question is what do you put in their place," Frank said.

The Federal Housing Administration should be fully self-financing and Freddie and Fannie should be replaced with a new mechanism to help subsidize housing, Frank said in the interview.

"There is no more hybrid private-public," the Massachusetts Democrat suggested. "If we want to subsidize housing then we could do it upfront and let the budget be clear about that."

Fannie Mae and Freddie Mac were government-sponsored enterprises, privately owned companies supported by the government, until the Bush administration took control of the companies in 2008 to save them from collapse.

Frank said that he does believe the federal government should have a role in building affordable rental housing but thinks money should go toward projects by private developers.

Oh well, for just a moment there, you might have thought that someone in government had a clue. So close. We were sooo close!

[Grunthos]

You should have known better going in.

[Tonus]

If anyone decides to blame deficits on Iraq spending (gee, who might do something like that?) point them at this article: (http://www.foxnews.com/politics/2010/08/30/cbo-years-iraq-war-cost-stimulus-act/)

CBO: Eight Years of Iraq War Cost Less Than Stimulus Act

As President Obama prepares to tie a bow on U.S. combat operations in Iraq, Congressional Budget Office numbers show that the total cost of the eight-year war was less than the stimulus bill passed by the Democratic-led Congress in 2009.

According to CBO numbers in its Budget and Economic Outlook published this month, the cost of Operation Iraqi Freedom was $709 billion for military and related activities, including training of Iraqi forces and diplomatic operations.

The projected cost of the stimulus, which passed in February 2009, and is expected to have a shelf life of two years, was $862 billion.

The U.S. deficit for fiscal year 2010 is expected to be $1.3 trillion, according to CBO. That compares to a 2007 deficit of $160.7 billion and a 2008 deficit of $458.6 billion, according to data provided by the U.S. Office of Management and Budget.

In 2007 and 2008, the deficit as a percentage of gross domestic product was 1.2 percent and 3.2 percent, respectively.

"Relative to the size of the economy, this year's deficit is expected to be the second largest shortfall in the past 65 years; 9.1 percent of gross domestic product (GDP), exceeded only by last year's deficit of 9.9 percent of GDP," CBO wrote.

The CBO figures show that the most expensive year of the Iraq war was in 2008, the year when the surge proposed by Gen. David Petraeus and approved by President Bush was in full swing and the turning point in the war. The total cost of Iraq operations in 2008 was $140 billion. In 2007, the cost of Iraq operations was $124 billion.

According to an analysis by the American Thinker's Randall Hoven, the cost of the Iraq war from 2003-2008 -- when Bush was in office -- was $20 billion less than the cost of education spending and less than a quarter of the cost of Medicare spending during that same period.

[Grunthos]

And yielded greater result, too. By nearly any measure you care to count (dollars, deaths, you name it) it's still one of the most cost-effective and successful feats of arms to come down the pike.

[Tonus]

I'm posting this here, less as a criticism of the present administration and more as an example of the kind of ways that government wastes taxpayer money. I doubt that this is the exception, and it's the sort of death-by-a-million-paper-cuts (http://hotair.com/archives/2010/09/13/good-news-feds-spent-18000-to-monitor-negative-media-coverage-of-bp-oil-spill/) spending that not only should be eliminated-- government should not have this kind of freedom to spend in the first place.


Good news: Feds spent $18,000 to monitor negative media coverage of BP oil spill

Actually, it was $18,000 over just two months (http://news.yahoo.com/s/ap/20100913/ap_on_bi_ge/us_gulf_oil_spill_contracts_3), a six-figure rate as an annual salary. But it’s money well spent: Monitoring negative buzz about how Obama stacks up to Bush’s performance during Katrina is an important federal task because, er, well…

Hey — it “created or saved” a job for eight weeks, all right?The federal government hired a New Orleans man for $18,000 to appraise whether news stories about its actions in the Gulf oil spill were positive or negative for the Obama administration, which was keenly sensitive to comparisons between its response and former President George W. Bush’s much-maligned reaction to Hurricane Katrina…

Among all the contracts, perhaps none is more striking than the Coast Guard’s decision to pay $9,000 per month for two months to John Brooks Rice of New Orleans, an on-call worker for the Federal Emergency Management Agency, under a no-bid contract to monitor media coverage from late May through July.

Rice told the AP that he compiled print and video news stories and offered his subjective appraisal of the tone of the coverage. “From reading and watching the media I would create reports,” he said. “I reported either positive coverage, negative coverage, misinformation coverage.”…

The Coast Guard expects BP to reimburse the $18,000, Coast Guard spokesman Capt. Ron LaBrec said.
Why would BP reimburse the Coast Guard for a political favor it was doing for the White House? Especially since, according to a PR firm in Baton Rouge cited by the AP, much of this same work could have been done on retainer for somewhere in the neighborhood of $2,000 to $4,000.

Follow the link for exciting details on other expenditures related to the clean-up, including $52,000 for, and I quote, a “marine charter for things.” Exit question: Is it really worth getting upset about 18 grand at this point? Sure, the outlay was wholly inappropriate, but our federal spending these days exists mainly in the realm of imaginary numbers. Is it worth quibbling over i2 here?It's almost comical that the administration would be worried about media reaction to how they handled the BP spill. Which disaster has gotten more coverage lately? Seems to me that the media has been awash in Katrina remembrances. CNN had a week of coverage, MSNBC had at least one special, Spike Lee's documentary has been playing on cable channels... I'm wondering if there will be this much coverage of the BP spill in five years?

I can't shake this perception that the MSM took it easy on the Obama administration over the BP incident. Is it just a coincidence that shortly after the BP spill, the media is awash in Katrina stories instead? The administration may well have been worried about media reaction given the way Bush was hammered for the slow response to Katrina. It turns out that they had no reason to worry.

[Reserv*ir]

What I'd love is coverage of the coverage covering the coverage of the news.
Simply covering the coverage is so 2000's.

[Tonus]

A disturbing look into the redistributionist mindset, (http://www.washingtonpost.com/wp-dyn/content/article/2010/09/14/AR2010091406838.html?hpid=topnews) courtesy of the Washington Post. Apparently they lean so far to the left that they must have fallen over. Then again, considering the way a tax reduction has been treated by Washington, you get the feeling that this is an opinion that they all share in DC: that it isn't really your money, you greedy scum-sucking taxpayer!

Senate Republicans unveil a plan to make Bush tax cuts permanent

Even as they hammer Democrats for running up record budget deficits, Senate Republicans are rolling out a plan to permanently extend an array of expiring tax breaks that would deprive the Treasury of more than $4 trillion over the next decade, nearly doubling projected deficits over that period unless dramatic spending cuts are made.

The measure, introduced by Senate Minority Leader Mitch McConnell (R-Ky.) this week, would permanently extend the George W. Bush-era income tax cuts that benefit virtually every U.S. taxpayer, rein in the alternative minimum tax and limit the estate tax to estates worth more than $5 million for individuals or $10 million for couples.

Aides to McConnell said they have yet to receive a cost estimate for the measure. But the nonpartisan Congressional Budget Office recently forecast that a similar, slightly more expensive package that includes a full repeal of the estate tax would force the nation to borrow an additional $3.9 trillion over the next decade and increase interest payments on the national debt by $950 billion. That's more than four times the projected deficit impact of President Obama's health-care overhaul and stimulus package combined.

"We have a spending problem. We spend too much. We don't have a taxing problem. We don't tax too little," McConnell told reporters Tuesday. "And if we want to begin to get ourselves out of this economic trough that we're in, the only way to do that is to grow the private sector."

McConnell spoke as senators returned to the Capitol after a six-week hiatus for a final pre-election session that will be defined by a battle over the Bush tax cuts. Unless Congress acts, the cuts will expire at the end of the year, raising taxes across the board.

While Republicans want to preserve all the cuts, Obama has called on lawmakers to extend them only for household incomes under $250,000 a year. That strategy, he argues, would knock hundreds of billions of dollars off the cost of extending the cuts, money that could be used to reduce the nation's debt.

Senate Democrats, while generally supportive of Obama's position, have yet to determine the precise shape of the package they hope to put to a vote in the next four weeks.

The issue dominated a luncheon meeting Tuesday, but Senate Democrats reached no consensus on how to proceed. Some lawmakers want to hold a vote on the Obama plan - which would presumably not achieve the 60 votes needed to overcome a GOP filibuster - and then adjourn until after the election. Others prefer to try to resolve the issue before the current session ends to provide voters with certainty on the matter. But that would require at least a handful of Republicans to agree to a compromise, probably involving a temporary extension of all the tax cuts.

Sen. Olympia J. Snowe (R-Maine) signaled her openness to such a deal Tuesday. "Where we start is to extend all the tax cuts. I think that's important," she told reporters. But she also suggested that she might accept a solution that falls short of a permanent extension of all the Bush cuts - the only approach her more conservative Republican colleagues say they are willing to consider.

A handful of Democrats say they, too, would like to see all the tax cuts extended, at least temporarily, to avoid raising taxes amid an economic downturn - and to blunt GOP charges, in the final weeks before critical elections, that Democrats are raising taxes.

Senate Majority Whip Richard J. Durbin (D-Ill.) said it's an open question whether any tax vote will occur in the Senate before the election. "It's more likely than not, but no final decision" has been made, he said.

Beyond the debate over the Bush tax cuts, dozens of other tax issues also remain to be settled.

For example, without congressional action, millions of taxpayers will owe thousands of dollars in additional taxes this year under the alternative minimum tax. The temporary patch that protected middle-class families from the AMT has expired.

Instead of adopting a measure that would permanently limit the number if taxpayers subject to the AMT, Senate Finance Committee Chairman Max Baucus (D-Mont.) said Tuesday that he could foresee a bill that would limit the number for two years. The latter approach would be less expensive for the government.

Baucus insisted to reporters, however, that Bush tax cuts that benefit middle- and lower-income families should be made permanent, arguing that a temporary extension "is basically just kicking the can down the road to avoid making difficult decisions and creates more problems than it solves by creating more uncertainty."

Depending on how the AMT is addressed, codifying those cuts would add about $1.4 trillion to deficits over the next decade. But, Baucus acknowledged, "there's little talk about how all this is to be paid for."

Asked how McConnell would cover the cost of his proposal, the Tax Hike Prevention Act, aides noted that he has backed a bipartisan plan to freeze spending that would save an estimated $300 billion over the next decade - a drop in the bucket compared with his $4 trillion-plus plan.

For the rest of the cash, McConnell has said he will turn to the same place as Obama: a presidentially appointed, bipartisan deficit commission that is due to issue its report in December.

"This is not going to be your typical commission that's going to issue a report, sit on the shelf and gather dust," McConnell said last month on NBC's "Meet the Press." "We'll wait for their report. And I intend, if it's a responsible report that I can support, to encourage my members to support it."In case anyone is wondering what I mean by the redistributionist mindset, it's simple: the writer of this article laments the increased deficits that will result from keeping certain taxes lower than anticipated. How can we possibly fix that? To paraphrase McConnell: STOP FUCKING OVERSPENDING, YOU STUPID ASSHOLES.

And this whole idea about making 'temporary' or 'permanent' tax cuts is idiotic. If you want to cut taxes, cut taxes. If you want to raise them, raise them. Stop with this 'temporary cuts which eventually expire' bullshit. You know what happened? Taxes were cut, and now there is a debate about raising them. Putting it in those ridiculous terms (do we let the tax cuts expire?) not only is political-weasel-wordplay of the worst sort, it pushes that same narrative, making it seem as if Bush was doing us a favor by letting us keep more of the government's money.

[Tonus]

To put the above in proper perspective: we should not be talking about how letting the tax cuts expire will lead to an additional $4 trillion in deficits, as if the taxpayers are taking money out of congress' pockets. We should be talking about how government wants to raise our taxes by an additional $4 trillion over the next 10 years, and demand to know why they're fishing around in our pockets.

It should be noted that the '$4 trillion in additional deficits' is based on spending levels remaining as they are now... which is trillions more than we were spending just a few years ago. The next time someone tries to impress on you that government needs to spend that money, ask them to explain how it is that we're spending trillions more EACH YEAR than we did back in 2006, yet the economy and the country are in even worse shape now.

Honest, the whole idea behind "temporary tax relief" makes me want to hammer these idiots in the face with a really big shoe. And blaming the taxpayer for growing deficits because we aren't paying enough to cover the wildly irresponsible spending in Washington makes me want to set fire to the fucking place. It's just unreal that the political narrative is how the guys who don't want to rape us economically are the BAD GUYS.

[Edmaster]

http://cnsnews.com/news/article/75198

$800,000... just to teach men how to wash their junk.

Who are we to criticize? It's not like it was OUR money, anyway.

[Tonus]

This one is a bit odd. Whereas the usual adverb (when discussing bad economic news) is "unexpectedly," the Times decides to go with "surprising." But why is it surprising to see bad economic numbers during an economic downturn? And after expressing "surprise" at the lower profit estimates, they then go on to list the reasons for them, and those reasons all seem pretty logical.

Why wouldn't we expect Wall Street firms to post lower profits during an economic downturn? Why is anyone surprised that companies have taken fewer risks during a recession that was triggered by excessive risk-taking? Why is anyone surprised that Wall Street firms are avoiding activities that are about to be outlawed by reform legislation?

None of this should be "surprising." And it's not really bad, either. It stands to reason that one of the effects of forcing Wall Street to be more cautious and responsible is that there will be lower profits and some economic pain as things shake out. If only the government were taking the same medicine, we might have a brighter economic future ahead of us.

Wall Street’s Profit Engines Slow Down (http://www.nytimes.com/2010/09/20/business/20wall.html?_r=2)

Inside the great investment houses on Wall Street, business has taken a surprising turn — downward.

Even after taxpayer bailouts restored bankers’ profits and pay, the great Wall Street money machine is decelerating. Big financial institutions, including commercial banks, are still making a lot of money. But given unease in the financial markets and the economy, brokerages and investment banks are not making nearly as much as their executives, employees and investors had hoped.

After an unusually sharp slowdown in trading this summer, analysts are rethinking their profit forecasts for 2010.

The activities at the heart of what Wall Street does — selling and trading stocks and bonds, and advising on mergers — are running at levels well below where they were at this point last year, said Meredith Whitney, a bank analyst who was among the first to warn of the subprime mortgage disaster and its impact on big banks.

Worldwide, the number of stock offerings is down 15 percent from this time last year, while bond issuance is off 25 percent, according to Capital IQ, a research firm. Based on these trends, Ms. Whitney predicts that annual revenue from Wall Street’s main businesses will drop 25 percent, to around $42 billion in 2010, from $56 billion last year.

While the numbers will not be known until after the third quarter ends and financial companies begin reporting earnings in October, the pace of trading this summer was slow even by normal summer standards. Trading in shares listed on the New York Stock Exchange was down by 11 percent in July from 2009 levels, and August volume was off nearly 30 percent.

“What’s happened in the third quarter is that after a very slow summer, people expected things to come back,” said Ms. Whitney. “But they haven’t, and the inactivity is really squeezing everyone.”

The downward slide on Wall Street parallels a similar shift in the broader economy, which has slowed considerably since showing signs of a nascent recovery this spring. And if banks come under pressure, all but the safest borrowers may struggle to get loans.

With less than two weeks to go in the third quarter, companies will be hard-pressed to fulfill earlier, more optimistic expectations.

“It’s like the marathon: if you’re five miles behind, you can’t make that up in the last 10 minutes of the race,” said David H. Ellison, president of FBR Fund Advisers, a money management firm that specializes in financial companies. Many banks are barely scraping by in traditional Wall Street business.

As a result, executives, portfolio managers and analysts say that even the mighty Goldman Sachs, which posted a profit every day for the first three months of the year, is unlikely to deliver the kind of profit growth that investors have come to expect.

Keith Horowitz, a bank analyst at Citigroup, said he expected Goldman Sachs to earn $7.8 billion in 2010, a 35 percent decline from the $12.1 billion it made last year.

The drop in trading translates into lower commissions for brokerage firms, as well as a weaker environment for underwriting initial public offerings and other stock issues, traditionally a highly lucrative niche.

Banks are also scaling back on making bets with their own money — known as proprietary trading — another huge profit source in recent years that will soon be forbidden under terms of the financial reform legislation passed by Congress this summer.

Indeed, analysts have finally started to bring their forecasts in line with the new reality. On Sept. 12, Mr. Horowitz reduced his estimates for third-quarter profits at Goldman and Morgan Stanley.

Mr. Horowitz had predicted Goldman would make $1.75 billion in the third quarter, or $3 a share; he now expects Goldman’s profit to total $1.34 billion, or $2.30 a share. For Morgan Stanley, his revision was even steeper, with earnings expectations revised downward to $140 million, or 10 cents a share, from $726 million, or 53 cents a share.

Mr. Horowitz’s estimates are considerably lower than the consensus among analysts who track the two companies. If the other analysts revise their estimates closer to his, they would put pressure on the shares.

One of the rare bright spots for Wall Street recently has been the issuance of junk bonds, as ultra-low interest rates encourage investors to seek out riskier debt that carries a higher yield. But that will not be enough to offset the weakness elsewhere, said one top Wall Street executive who insisted on anonymity because he was not authorized to speak publicly for his company, and because final numbers would not be tallied until the end of the month.

To make matters worse, he said, many Wall Street firms increased their work forces in the first half of the year, before the mood shifted and worries of a double-dip recession arose. If activity remains anemic, firms could soon begin cutting jobs again.

“I think the summer was horrible for everyone, and no one expected it to be as bad as it was,” he said. “It’s coming back a little bit in September but nowhere near enough to make up for what happened in July and August.”

The profit picture is brighter for diversified companies like JPMorgan Chase and Bank of America, which have larger commercial and retail banking operations in addition to their Wall Street units, but some analysts say earnings expectations for them could come down as well.

“Estimates still seem a little high, and the revenue story for all the banks is not a good one,” said Ed Najarian, who tracks the banking sector for ISI, a New York research firm.

With interest rates plunging, banks are making less off their interest-earning assets like government bonds and other ultra-safe securities. At the same time, demand for new loans remains weak.

One wild card will be the credit card portfolios at major banks like JPMorgan, Bank of America and Citigroup. As delinquencies ease, Mr. Najarian said, credit losses are likely to decline. That trend helped earnings at JPMorgan in the second quarter, and could be crucial again in the third quarter.

Ms. Whitney says the gloomy short-term predictions foreshadow a series of lean years in the broader financial services industry.

Indeed, she said the Street faced a “resizing” not seen since the cutbacks that followed the bursting of the dot-com bubble a decade ago.

“We expect compensation to be down dramatically this year,” she wrote in a recent report. She predicts the American banking industry will lay off 40,000 to 80,000 employees, or as many as 1 in 10 of its workers.

That may be extreme, but Ms. Whitney argues that the boom years are not coming back anytime soon. As both consumers and companies cut back on debt, and financial reform rules put the brakes on profitable niches like derivatives and proprietary trading, the engines of earnings growth for the last decade will continue to sputter.

[Tonus]

Have we reached the point of no return? (http://www.gainspainscapital.com/index.php?option=com_content&view=article&id=168:three-horrifying-facts-about-the-us-debt-situation&catid=41:currencies&Itemid=72)

Just quoting one part of it, read the rest via the link. Bear in mind that these guys are peddling an investment newsletter, and it may be in their interests to play up the worst aspects of the current financial climate.

#3: The US will Default on its Debt

… either that or experience hyperinflation. There is simply no other option. We can NEVER pay off our debts. To do so would require every US family to pay $31,000 a year for 75 years.

Bear in mind, I’m completely ignoring the debt we took on with the nationalization of Fannie and Freddie, AIG, and the slew of other garbage we nationalized or shifted onto the Fed’s balance sheet. And yet we’re STILL talking about every US family making $31,000 in debt payments per year for 75 years to pay off our national debt.

Obviously that ain’t going to happen.

So default is in the cards. Either that or hyperinflation (which occurs when investors flee a currency). Either of these will be massively US Dollar negative and horrible for the quality of life in the US. But they’re our only options, so get ready.

[KB.]

I'm not an economist by any means but I doubt very seriously that we will ever be able to pay off our debts. What happens when China decides to stop buying it every year? The situation described above is what will need to happen for a one world currency and that is going to happen sooner or later. The only thing that I think has kept it a non-issue for this long is the strength of the US dollar and that strength has been sapped.

[Tonus]

Heh. (http://radioviceonline.com/unemployment-still-at-9-6-private-sector-adds-64000-jobs/)


The September 2010 figures are out, and the summer of recovery has proven to be a dud. Of course, Reuters used the word “unexpected” twice in the first sentence of the first paragraph, and within a few minutes it looks like some editor dropped those words quickly.

The original first paragraph from Reuters, courtesy Ed Morrissey at Hot Air (http://hotair.com/archives/2010/10/08/unemployment-steady-at-9-6-95000-jobs-lost-in-september/).The U.S. economy unexpectedly shed jobs in September for a fourth straight month as government payrolls fell and private hiring was less than expected, hardening expectations of further Federal Reserve action to spur the recovery.
And now the revised first paragraph from Reuters (http://news.yahoo.com/s/nm/20101008/bs_nm/us_usa_economy;_ylt=At4pGRXfS.EnrCrIuQ1m2ESyBhIF;_ ylu=X3oDMTJmbjU2YjhsBGFzc2V0A25tLzIwMTAxMDA4L3VzX3 VzYV9lY29ub215BGNwb3MDMgRwb3MDNgRzZWMDeW5fdG9wX3N0 b3J5BHNsawNlY29ub215c2hlZHM-).The U.S. economy shed jobs in September for a fourth straight month as government payrolls fell and private hiring slowed, hardening expectations for more stimulus from the Federal Reserve to spur the recovery.
I find the entire unexpectedly kerfuffle quite funny. The word is constantly overused by news organizations like the Associated Press and Reuters, and now when first-string bloggers make note of the word usage – and make fun of its use – the organizations continue to use the word only to pull it from copy within an hour or so.

[Tonus]

Not so heh. (http://www.breitbart.com/article.php?id=D9IN65RO0&show_article=1)

72,000 stimulus payments went to dead people

WASHINGTON (AP) - More than 89,000 stimulus payments of $250 each went to people who were either dead or in prison, a government investigator says in a new report.

The payments, which were part of last year's massive economic recovery package, were meant to increase consumer spending to help stimulate the economy.

But about $18 million went to nearly 72,000 people who were dead, according to the report by the Social Security Administration's inspector general. The report estimates that a little more than half of those payments were returned.

An additional $4.3 million went to more than 17,000 prison inmates, the report said. Most of the inmates, it turns out, were eligible to get the payments because they were newly incarcerated and had been receiving Social Security before they were locked up.

In all, the $250 payments were sent to about 52 million people who receive either Social Security or Supplemental Security Income, at a cost of about $13 billion. Other federal retirees also received the payments, but they were not part of the inspector general's review.

Social Security spokesman Mark Lassiter said, "Inaccurate payments are unacceptable. Social Security's Recovery Act payments were 99.8 percent accurate and we quickly collected the majority of the inaccurate payments. Each year we make payments to a small number of deceased recipients usually because we have not yet received reports of their deaths."

The inspector general for the Social Security Administration has been performing an audit to make sure no checks went to ineligible recipients. The latest report was dated Sept. 24 but was just recently posted to the agency's website.

People were eligible for payments if they were getting benefits during any one of the three months before the law was passed in February 2009.

Dead people were ineligible to get the payments. But, the report said, there is no provision in the law to recover payments incorrectly sent to dead people.

"Based on the failure of the SSA to properly check its records, and Congress' failure to fully think through the provisions needed to govern these payments, SSA lost $22.3 million in American tax dollars," said Sen. Tom Coburn, R-Okla. "These findings are yet another example of congressional stupidity and a lack of accountability."

The Social Security Administration said that despite tight deadlines, workers accurately processed more than 99.8 percent of the 52 million stimulus payments.

"We worked with Treasury, developed new processes, and began issuing (payments) about 30 days earlier than the legislatively mandated deadline," the agency said in a written response included in the inspector general's report. "This was a major accomplishment for our agency."

The inspector general's report said that if similar payments are authorized in the future, prison inmates should be ineligible and the government should be able to recover payments made to dead people.

The Social Security Administration agreed with the recommendations.

[Edmaster]

The term "close enough for government work" takes on a chilling tone when you're talking about billions of dollars being spent.

A million here, a million there, and pretty soon you're talking about real money.

[Tonus]

France wants to raise the retirement age from 60 to 62, and the French people are not happy. (http://www.msnbc.msn.com/id/39766772/ns/world_news-europe/)

French strike to save 'birthright' of benefits

MARSEILLE, France — Battling for benefits is a tradition in the Gilly family, passed from generation to generation — as it is for families across the country. And that goes some way toward explaining why the protests against plans to raise France's retirement age have shown such determination and ferocity.

For Gilly and many other Frenchmen and women, social benefits such as long vacations, state-subsidized health care and early retirement are more than just luxuries: They're seen as a birthright — an essential part of the identity of today's France.

The protest against a government plan to raise the retirement age to 62 has special meaning for five members of the Eric Gilly clan who are demonstrating in the streets of Marseille.

"We want to stop working at 60 because it's something our parents, our grandparents and even our great-grandparents fought for," says Gilly, 50, a union representative at Saint-Pierre Cemetery, the largest in this bustling Mediterranean port city.

"And over the years ... you can see that we're losing everything they fought for. And that's unacceptable."

In Marseille, strikes to protest President Nicolas Sarkozy's planned retirement reform have shut down docks, left tons of garbage putrefying on sidewalks and drawn tens of thousands into the streets for each of six protest marches since early September.

Gilly, with huge drums strapped over his shoulders, led the parade for the Workers' Force union Monday. His sister, two daughters and a nephew weren't far behind.

"Unionism, it's in the skin," Gilly said in an interview with Associated Press Television News. "It's more than a passion. When something is wrong or things aren't right, they have to be changed."

The nation usually watches with care over its citizens, who for decades have used street power to help shape French policy, sometimes pulling the rug from under politicians' feet.

Retirement benefits are coveted, by some, perhaps even more than a higher salary, making the issue particularly sensitive. Sarkozy's plan to raise the retirement age hits a nerve deep in the French psyche.

"France is showing some of its old cultural reflexes," said Etienne Schweisguth of the Center for European Studies at the Foundation for Political Science. "When there is something we aren't pleased with we must protest."

Trying to undo what the state wants dates back to an anarchist tradition of the 19th century, when unions first led a struggle against capitalism and a refusal to align with political parties, said Schweisguth. One wing of the hard-core CGT union, which is leading many of today's protests, still looks to that tradition.

Despite the anti-government protests, it is the French state that has for centuries been charged with protecting individuals and their rights.

"The state is the guarantor of the moral good," said Schweisguth, who studies changes in attitudes and values in society.

It was in 1982, under Socialist President Francois Mitterrand, that the minimum age to stop working was lowered from 65 to 60. The measure, emblematic of the 14-year Mitterrand presidency, was adopted by a special ordinance that bypassed parliament.

Sixty has since become a golden number — and the battle cry for entire families fearful of losing benefits bestowed on grandparents, parents or colleagues at work. Including the Gillys.

"This is a family affair because unionism is our big family," said Stephanie, 22, who is among Marseille's striking garbage collectors. "Our elders fought for retirement at 60."

"We have all the generations represented," she said. "There's me, my little sister, Dad. There we go. And then there will be our children, too. We will teach them."

Schweisguth said, that despite the ruckus, strikers represent a minority of the population and that, while polls show backing for such actions, they do not measure the fervor of the backing, which he called "flaccid."

Sarkozy, a conservative, has made pushing the legal retirement age back up a priority.

"The French are moaners, sometimes grouches. But at the same time they're lucid, intelligent and responsible," the daily Le Figaro quoted him as saying in May, when he criticized Mitterrand's 1982 decision. "They will be able to acknowledge that there is no alternative to our reforms."

But Sarkozy is increasingly unpopular, and he may be off the mark.

Gilly, a burly man dressed in red from his baseball cap to his Workers' force union bib, pounds the huge drum hanging from his neck at a street protest against the retirement reform, keeping time to the chorus of voices singing "The International," the Communist anthem.

"You're not really going to push up the age of people who retire with this reform," says his nephew, Mathias Gilly, a retailer. "In reality, it's going to mean a smaller pension for people when they do retire."

Gilly packs up his drum for another day, vowing that he and his family will keep up protests — "for as long as it takes."
Again, we see why any sort of financial/economic reform will be difficult to implement anywhere. In spite of the example of Greece, any attempt at reform will be fought tooth and nail. Trying to raise the retirement age is drawing furious opposition in France. In the USA, few politicians want to even contemplate finding a way to deal with SS and Medicare. They know that they're racing towards a cliff, but no one wants to make needed changes because the large majority of their constituents rabidly oppose it.

[Grunthos]

Lemmings.

[Tonus]

So... having bumped some of those wasteful-spending Democrats from the congressional rolls, Republicans get ready to do some fat-trimming and make some progress on those budget defic-- *SQWAAAAAARRRRRRRRRKKKKK!* <-- record scratch noise

I guess you'll pry that pork out of Mitch McConnell's cold, dead hands! (http://www.politico.com/news/stories/1110/44750.html)

Earmark ban faces test in new Senate

The Senate’s old bulls are preparing to beat back what they see as a direct affront to their authority: a movement by House Republican leaders and conservative senators to force Capitol Hill to end its appetite for pork.

The incoming House speaker, Ohio Republican Rep. John Boehner, has long opposed lawmakers’ tendency to include earmarks for parochial projects in annual spending bills, and wants to end the practice. South Carolina Sen. Jim DeMint, the party purist who helped elect a handful of conservative tea party-backed candidates Tuesday, has vowed to offer an earmark moratorium during the next Senate Republican Conference meeting on Nov. 16.

But Senate Minority Leader Mitch McConnell of Kentucky, along with other Senate leaders from both parties, say that earmarking is a constitutional right and senatorial privilege and show little interest in relinquishing the decades-long practice of inserting pet projects into appropriations bills.

On Thursday, McConnell, who has secured $113 million in earmarks this past year, declined to say whether he’d support DeMint’s moratorium. Instead, he framed the issue as a debate over whether Congress should give the president unchecked spending authority.

“Every president, Republican or Democrat, would love to have a blank check from Congress to do whatever he chose to do on every single issue,” McConnell said after a speech at The Heritage Foundation. “We’ll be discussing the appropriateness of giving the president that kind of blank check in the coming weeks, because that’s really what that issue is about.

“As I think all of you know, you can eliminate every congressional earmark and save no money,” the Republican leader said. “It’s really an argument about discretion.”

DeMint, whose guerrilla tactics have long been scoffed at by senior Senate Republicans, has for years pushed for an earmark moratorium. In the last Congress, the plan was resoundingly rejected, 29-71. Earlier this year, it lost by a 29-68 vote.

This year, DeMint thinks he’s got a better chance — bolstered by a crop of freshmen that vowed on the campaign trail to end the practice.

“Americans just elected numerous senators who pledged to end the earmark favor factory, and Republicans must make good on the promise to stop the wasteful spending,” said DeMint spokesman Wesley Denton.

Nearly all of the 13 new Republicans elected to the Senate have made varying levels of commitments to abolish the pet projects.

If they stick to their word, DeMint could be close to securing a majority vote in the 47-member GOP conference.

But it’s far from clear whether the new senators will follow through on their campaign promises — and whether DeMint, unpopular in his caucus, has the clout to whip up enough votes to put the plan in motion. Complicating matters is the fact that the conference vote will be conducted by secret ballot, meaning that members can escape public scrutiny until the issue is put to a floor vote before the full Senate, where it has little chance of passing.

And even though senators vote for such bans, they don’t always follow through with action. McConnell, after all, has voted for the DeMint earmark moratorium plan on the floor. Other senators, too, have voted for the ban and later requested earmarks.

Iowa Sen. Chuck Grassley voted for the earmark moratorium in the past but still secured $161 million in earmarks in the past fiscal year.

“I square it this way: I want a level playing field for Iowa,” Grassley said in a recent interview. “If we had no earmarks whatsoever, then every state is treated the same. If you’re going to have earmarks, then Iowa isn’t getting earmarks, then we’re getting penalized if states like West Virginia gets billions of earmarks, and I think we should have a level playing field for our taxpayers.”

The day after Democrats’ Election Day drubbing, President Barack Obama said he’d be willing to work with Republicans on an earmark freeze. And McConnell may find himself answering more questions about the proposed ban when the Republican freshman class is installed in January.

While serving in the House in 2010, Sens.-elect John Boozman of Arkansas secured $30 million in earmarks, Roy Blunt of Missouri secured $22.6 million and Jerry Moran of Kansas obtained $18.6 million, according to Taxpayers for Common Sense, which tracks earmarks. On the campaign trail, though, each of them called to restrict the practice.

Tea-party darlings Rand Paul of Kentucky, Marco Rubio of Florida and Mike Lee of Utah all campaigned to end earmarks. At an April primary debate, Paul rattled off a series of earmark abuses: funding for an Amish Country popcorn factory, a Mule Day parade in Indiana and a study on why pigs stink.

“Let’s base our spending on the quality of the project … and not on the seniority of the senators and congressmen. Then it is abused. It is abused repeatedly,” Paul said. “We have to end the abuse, and that’s by ending the system.”

Even establishment candidates like Illinois Sen.-elect Mark Kirk, a five-term congressman, have shunned pet projects. When House Republicans issued a one-year suspension of earmarks last spring, Kirk was one of the first to proclaim his support.

Kirk’s Illinois counterpart, Senate Majority Whip Dick Durbin, has said that earmarks create jobs in his state, and he’s skeptical that some of the new senators will follow through on their promises.

“I think when you find out to help your state get back to work, you need to roll up your sleeves and try to bring federal dollars back home,” he said in a recent interview. “They may have second thoughts at some later time.”

But DeMint said the issue is a clear test of the new face of the Republican Party.

“As a Republican, my mission is this: The party of limited government cannot be led by people who believe that their job is to take home the bacon, and we need to change that culture,” DeMint told POLITICO.
This issue is perhaps more purely a political one than any other. Thus you see the BS excuses being thrown around, mostly along the lines of "if I stop using earmarks, other people have an advantage." Some are already making the argument that if congress doesn't let itself waste money on earmarks, the President will do it instead. Cheap, weak, bullshit excuses.

[Grunthos]

Nice to see how fiscally responsible Democrats are, after promising 'no new deficit spending'...

111th Congress Added More Debt Than First 100 Congresses Combined: $10,429 Per Person in U.S.

Monday, December 27, 2010
By Terence P. Jeffrey

(CNSNews.com) - The federal government has accumulated more new debt--$3.22 trillion ($3,220,103,625,307.29)—during the tenure of the 111th Congress than it did during the first 100 Congresses combined, according to official debt figures published by the U.S. Treasury.

That equals $10,429.64 in new debt for each and every one of the 308,745,538 people counted in the United States by the 2010 Census.

The total national debt of $13,858,529,371,601.09 (or $13.859 trillion), as recorded by the U.S. Treasury at the close of business on Dec. 22, now equals $44,886.57 for every man, woman and child in the United States.

In fact, the 111th Congress not only has set the record as the most debt-accumulating Congress in U.S. history, but also has out-stripped its nearest competitor, the 110th, by an astounding $1.262 trillion in new debt.

During the 110th Congress—which, according to the Clerk of the House, officially convened on Jan. 4, 2007 and adjourned on Jan. 4, 2009--the national debt increased $1.957 trillion. When that Congress adjourned less than two years ago, it claimed the record as the most debt-accumulating Congress in U.S. history. As it turned out, however, its record did not last long.

The $3.22 trillion in new federal debt run up during the 111th Congress exceeds by 64 percent the $1.957 trillion in new debt run up during the 110th.

Although the 111th Congress cast its last vote on Dec. 22, it will not officially adjourn until next week.

Democrats controlled both the House and Senate in the 110th and 111th Congresses.

The 108th Congress ($1.159 trillion in new debt) and 109th ($1.054 trillion in new debt) take third and fourth place among all U.S. Congresses for accumulating debt. In both these Congresses, Republicans controlled both the House and Senate.

Still, the $3.22 trillion in new debt accumulated during the record-setting 111th Congress is more than three times the $1.054 trillion in new debt accumulated by the last Republican-majority Congress (the 109th) which adjourned on Dec. 8, 2006.

Historically, according to the U.S. Treasury, the federal debt did not reach $3.22 trillion until September 1990, during the 101st Congress. Between the first Congress, which adjourned in 1791 leaving behind approximately $75 million in debt, and the convening of the 101st Congress, which occurred on Jan. 3, 1989, the national debt grew to $2.684 trillion.

During the Rep. Nancy Pelosi’s (D-Calif.) tenure as speaker, which commenced on Jan. 4, 2007, the federal government has run up $5.177 trillion in new debt. That is about equal to the total debt the federal government accumulated in the first 220 years of the nation's existence, with the federal debt rising from $5.173 trillion on July 23, 1996 to $5.181 trillion on July 24, 1996.

In her inaugural address as speaker, Pelosi vowed that Congress would engage in no new deficit spending.

"After years of historic deficits, this 110th Congress will commit itself to a higher standard: Pay as you go, no new deficit spending,” she said in an address from the speaker’s podium. “Our new America will provide unlimited opportunity for future generations, not burden them with mountains of debt."


Video and stats at the link.

http://www.cnsnews.com/news/article/111th-congress-added-more-debt-first-100

[Edmaster]

In her inaugural address as speaker, Pelosi vowed that Congress would engage in no new deficit spending.

"After years of historic deficits, this 110th Congress will commit itself to a higher standard: Pay as you go, no new deficit spending,” she said in an address from the speaker’s podium. “Our new America will provide unlimited opportunity for future generations, not burden them with mountains of debt."

I'd laugh if I wasn't seething with rage.

[Shady]

I'd laugh if I wasn't seething with rage.

You have to laugh. It was absurd when she said it, and it's absurd now. Just like "draining the swamp" was/is.

If you don't laugh though, you'll just want to go on a murderous rampage and then they'll call you a "violent racist." Fucking lame-ass tricksters.

[Tonus]

If you don't laugh though, you'll just want to go on a murderous rampage and then they'll call you a "violent racist." Fucking lame-ass tricksters.
Hah, I'm wondering how Dai missed this and didn't make it part of his "right wing rhetoric" rants.

Anyway... what happens when you spend like the federal government does, but you do not have the freedom to ignore the gap between spending and income?

If you're Illinois, you soak the taxpayer. (http://www.foxnews.com/politics/2011/01/12/ill-lawmakers-pass-percent-income-tax-increase/)

Illinois Lawmakers Pass 66 Percent Income Tax Increase

SPRINGFIELD, Ill. -- Democrats in the Illinois Legislature on Wednesday approved a 66 percent income-tax increase in a desperate and politically risky effort to end the state's crippling budget crisis.

The increase now goes to Democratic Gov. Pat Quinn, who supports the plan to temporarily raise the personal tax rate to 5 percent, a two-thirds increase from the current 3 percent rate. Corporate taxes also would climb as part of the effort to close a budget hole that could hit $15 billion this year.

The higher taxes will generate about $6.8 billion a year, Quinn's office said -- a major increase by any measure. In percentage terms, 66 percent might be the biggest increase any state has adopted while grappling with recent economic woes.

It will be coupled with strict 2 percent limits on spending growth. If officials violate those limits, the tax increase will automatically be canceled. The plan's supporters warned that rising pension and health care costs probably will eat up all the spending allowed by the caps, forcing cuts in other areas of government.

Other pieces of the budget plan failed.

Lawmakers rejected a $1-a-pack increase in cigarette taxes, which would have provided money for schools. They also blocked a plan to borrow $8.7 billion to pay off the state's overdue bills, which means long-suffering businesses and social-service agencies won't get their money anytime soon.

House Speaker Michael Madigan, sounding weary, said Republicans should have supported some parts of the plan instead of voting against everything.

"They're on the sidelines. They don't want to get on the field of play," the Chicago Democrat said. "I'm happy that the day has ended."

But Republicans noted they were not included in negotiations. They also fundamentally reject the idea of raising taxes after years of spending growth.

"We're saying to the people of Illinois, 'For eight years we've overspent, now we're going to make it your problem,"' said Rep. Roger Eddy. "We're making up for our mistakes on your back."

The increase means an Illinois resident who now owes $1,000 in state income taxes will pay $1,666 at the new rate. After four years, the rate drops to 4 percent and that same taxpayer will then owe $1,333.

Republicans predict the tax eventually will be made permanent.

"It's a cruel hoax to play on citizens to say this is temporary," said House Minority Leader Tom Cross, R-Oswego.

Democrats bristled at the idea that they are to blame for the state's financial problems, although they've controlled the governor's office and both legislative chambers since 2003.

They said some parts of the problem began under Republican governors and that Republicans backed some of the budgets that increased spending. They argued the national recession sent state revenues into a nosedive and that Democrats already have cut spending by billions of dollars.

"This mess is a mess that is the responsibility of all of us as Republicans and Democrats, of several different governors and part of the mess isn't even anybody's fault," said House Majority Leader Barbara Flynn Currie, D-Chicago.

The new tax money will balance the state's annual budget and let officials begin chipping away at the backlog of unpaid bills. Borrowing money, and then repaying it with a portion of the tax increase, would have allowed those bills to be paid immediately, aiding organizations that provide services for the state but go months without being reimbursed.

The delay and the spending limits are "very troubling" to groups pushing for the state to come up with money to pay its bills, said Sean Noble, policy director for Voices for Illinois Children, a member of the statewide Responsible Budget Coalition. Still, he called the tax increase "an enormous step" toward putting Illinois on sound financial footing.

The proposal passed the House on Tuesday night by a vote of 60-57, the bare minimum. No Republicans backed the measure there or in the Senate, where the measure passed 30-29.

Legislative leaders were eager to pass the plan before a new General Assembly was sworn in Wednesday, taking a slice out of the Democratic majority and removing lame-duck lawmakers who might be willing to support the tax before leaving office.

The governor has refused to discuss the tax proposal publicly, although his aides say he supports it. During his election campaign, Quinn promised to veto any tax plan that was higher than his proposal for a 1-point increase.

Early Wednesday, Quinn's office called the approved measure "strong action" that will strengthen the budget and actually help the state economy.

Republicans accused Democrats of doing irreparable harm to Illinois families and businesses. Business leaders decried the proposal as a job-killer.

"Based on this particular legislation the only businesses that will benefit are the moving companies that will be helping many of my members move out of this particular state," said Gregory Baise, head of the Illinois Manufacturers' Association.

"This is the nuclear bomb of jobs bills," said Sen. Dan Duffy, R-Lake Barrington.

Democrats countered that even with the increase, Illinois' tax rate will be lower than in many neighboring states -- Iowa's top rate is 8.98 percent, Wisconsin's is 7.75 percent. They also maintain that without more money, state government may not be able to pay employees by the end of the year. Major government services might have to be halted, they warn, and groups waiting for state payments will go under.

"The wolf is at the door, ladies and gentleman," said Rep. Greg Harris, D-Chicago.

Spending limits were added to the plan to win the support of some suburban Democrats. Republicans said the limits don't do enough to clamp down.

The limits allow next year's spending to increase considerably so the state can make its required contribution to government retirement systems, pay overdue bills and cover other costs that had been shoved aside. After that, however, spending could not grow more than 2 percent annually for the next three years or else the tax increase would be reversed.

"We're really trying to handcuff ourselves and the governor in our spending," said Illinois Senate President John Cullerton, a Chicago Democrat.There's so much stupid involved in this that it's hard to figure out where to start.

[Edmaster]

So they're blaming fate and inertia, or maybe just laziness? Depends on who you ask, I guess.

[Dr. L]

I wonder how the next elections in Illinois will turn out.

They should have at least thought of wittier excuses than that. "We suck, but guess who gets to pay? :3 "

[Grunthos]

Rahm it through. Voters are too lazy, stupid, cowed, or racist to make sweeping changes in their legislature. So who cares?

[Tonus]

Dick Armey and Matt Kibbe (the heads of FreedomWorks, which apparently continues to attempt to co-opt the Tea Party movement) put forth some ideas for balancing the budget. (http://online.wsj.com/article/SB10001424052748703779704576073750780454850.html?m od=googlenews_wsj) It comes off as something of a conservative's wish list (note his weak approach to cutting defense spending), but it gives an idea as to how out-of-control the federal government has become.


What Congress Should Cut

Let's scrap the Departments of Commerce and Housing and Urban Development, end farm subsidies, and end urban mass transit grants, for starters.

The primary economic challenge today is that our government spends too much money it doesn't have, and it is involved in too many things it cannot do well and shouldn't do at all. This burden is manifested by a $1.3 trillion annual deficit and a $14 trillion national debt. The more pernicious effects of this fiscal drag are unseen: a debased dollar, massive (and hidden) unfunded liabilities, and a crushing burden on would-be job creators.

Milton Friedman correctly argued in 1999 that the "real cost of government—the total tax burden—equals what government spends plus the cost to the public of complying with government mandates and regulations and of calculating, paying, and taking measures to avoid taxes." He added, "Anything that reduces that real cost—lower government spending, elimination of costly regulations on individuals or businesses, simplification of explicit taxes—is a tax reform."

Since 2007, Congress has been on an unprecedented spending binge. That means a first and obvious budget-cutting step would be to return discretionary spending to the baseline before things got so out of control. If Congress returned to the baseline before the supposedly "temporary" stimulus bill of 2009, $177 billion per year would be saved, according to calculations by FreedomWorks based on figures from the Office of Management and Budget and the Congressional Budget Office (CBO). If spending went back to the 2007 baseline, the beginning of the first Pelosi Congress, $374 billion would be saved. Over 10 years, that is $748 billion and $1.56 trillion in savings, respectively.

Repealing ObamaCare is another obvious source of reduced spending. The absurd claim that this government takeover of health care produces budget savings is based on budget gimmickry—such as assumed Medicare cuts that, according to estimates by the Centers for Medicare and Medicaid Services, would put 15% of our hospitals out of business, and thus will never happen. The claim also ignores the historically explosive growth in other similar programs. Medicare grew nine-fold larger than was projected during its first 25 years. In its first 10 years alone, the program experienced a 700% cost overrun.

But let's for the moment accept CBO's numbers on ObamaCare spending. They still mean that repealing the health-insurance exchanges and the premium subsidies, including the expansion of Medicaid, saves $898 billion over 10 years. Repealing the individual mandate alone—and thus reducing rather than eliminating these premium subsidies and Medicaid outlays—would cut $252 billion.

Still more savings can be realized by eliminating taxpayer-funded bailouts. We need to cut the cord between taxpayer wallets and Fannie Mae and Freddie Mac. As Alabama Rep. Spencer Bachus, the new chairman of the House Financial Services Committee, said last March of Fannie and Freddie, "Taxpayers have already contributed more than $127 billion to the bailout and they are on the hook for hundreds of billions more." The CBO estimates that the cost to taxpayers could rise to $389 billion. Others estimate it will take around $1 trillion. Fannie and Freddie need to be broken up and returned to the private sector now.

There's more, much more. Eliminating subsidies to ethanol and for unproven energy technology produces $170 billion in savings over 10 years, according to the Cato Institute's recent "A Plan to Cut Spending and Balance the Federal Budget." Scaling back the number of government employees to fiscal year 2008 will save $35 billion, according to calculations from the office of Wyoming's Rep. Cynthia Lummis.

Other 10-year Cato spending cut estimates: Scrapping the departments of Commerce and Housing and Urban Development saves $550 billion; ending farm subsidies would produce nearly $290 billion. Cutting NASA spending by 50% would save $90 billion. Repealing Davis-Bacon labor rules produces $60 billion. Ending urban mass transit grants would save $52 billion. Privatizing air traffic control, as other nations have done, saves $38 billion. Privatize Amtrak and end rail subsidies and save $31 billion. Reform federal worker retirement, $18 billion. Retire Americorps, $10 billion. Shutter the Small Business Administration, $14 billion.

Defense spending should not be exempt from scrutiny. With such dramatic increases in appropriations, it is not plausible that all resources are being spent prudently. Defense Secretary Robert Gates has proposed savings of $145 billion over five years. That's a start.

Entitlements—56% of the annual budget and growing—are the most difficult but also the most important programs to reform, because the total unfunded liability tops $100 trillion for Social Security and Medicare alone. The federal government does not put these liabilities on the books, but serious budgeting requires that we deal with this ominous long-term burden now.

The most complete work on entitlement reform comes from Wisconsin Rep. Paul Ryan, the new chairman of the House Budget Committee. Mr. Ryan's "Roadmap for America's Future" combines a gradual slowing of Social Security benefit growth with optional personal accounts that seniors would own and control. As for the Big Three health-care programs—Medicare, Medicaid and tax subsidies for employer-sponsored health benefits—he converts them into capped contributions to individuals (part of Medicaid would be block-granted to states).

This is a powerful, patient-driven approach, allowing individuals to take control of their own dollars. In total, the Ryan approach would powerfully realign incentives and would, according to the CBO's analysis of the Roadmap last January, reduce government spending by $370 billion a year in 2020.

We've identified almost $3 trillion in real spending cuts over a decade, and have only scratched the surface. New House rules enable Mr. Ryan to create the conditions for reform via enforceable spending caps on all domestic government spending if Congress fails to produce a budget. He should use this authority to halt the current spending binge.

None of this will be easy. Many will likely demagogue any reduction in the rate of growth of spending as a devastating "cut." But the politics of spending has changed, and there is an expectation among fiscally conservative voters—Republicans, independents, tea partiers and even Democrats—that the government tighten its belt, just as American families have been forced to do. Some in the Republican establishment have already started complaining that this is too politically difficult. These naysayers misread today's political climate. Should they succeed in blocking change, tea party voters will hold them just as accountable as big-spending Democrats.

Notice that after all of that (and many of those proposed cuts will never realistically happen) the sum of spending cuts comes to around $300 billion a year. That still leaves us about $1 trillion short of balancing the annual budget. Yeah, we're pretty well fucked.

[Grunthos]

A graph that makes several things clear:

http://img.photobucket.com/albums/v251/GrunthosToo/obama-deficit4.jpg

Anyone see the problem, here?

[Tonus]

The scary thing is that any chart that shows a surplus during the Clinton years isn't taking into account the debt that is accumulated from spending the SS/Medicare surplus. Those red stripes at the end would be even longer if we were counting actual increases in the national debt, and not just "deficits" that don't take certain variables into account.

Granted, they would not be that much longer, seeing as SS is currently running a deficit of its own...

[Tonus]

And they wonder why we grouse about having to pay more taxes? Chrysler, which got a $15 billion bailout paid with our taxes, spends $9 million on a commercial (http://washingtonexaminer.com/blogs/beltway-confidential/2011/02/chrysler-releases-6m-ad-while-requesting-more-taxpayer-dollars) while their CEO bitches about being saved from bankruptcy. Un-fucking-believeable...

Below is a portion of the piece, the rest is at the link and worth a read.

Chrysler releases $9m Super Bowl ad while requesting more taxpayer dollars

Maybe the ad wasn't an appeal to car buyers, but rather politicians. According to the Detroit News, Chrysler is seeking a better deal on its bailout:
"I am paying shyster rates," Marchionne said, noting that Chrysler had no choice in 2009 but to pay the high interest rates the government set as part of its $15 billion Chrysler bailout. "We had no choice… I am going to pay the shyster loans."

He called the loans "a thorn in my side."

Chrysler's also in talks with banks to refinance its debt and plans to have an "agreement in principle" by end of March, he said.

Marchionne spoke at an auto industry conference sponsored by JD Power at a hotel here ahead of the National Automobile Dealers Association three-day convention. He said he is hopeful that the company can win an agreement in principle for $3 billion in low-cost Energy Department retooling loan — a move that is necessary for Chrysler to win private financing, Marchionne said.That's right: Chrysler took $15 billion from taxpayers, to which it wasn't entitled, and at an industry convention its CEO calls taxpayers a word that is defined as "someone who acts in a disreputable, unethical, or unscrupulous way, especially in the practice of law, politics and used car sales." Message received: "Taxpayers' money saved a car company from bankruptcy and all they got was this lousy Super Bowl commercial."
Memo to the government: next time, stop trying to pick winners and losers. Looks like some of your picks for "winner" turned out to be real losers.

[Reserv*ir]

And they wonder why we grouse about having to pay more taxes? Chrysler, which got a $15 billion bailout paid with our taxes, spends $9 million on a commercial (http://$9%20million%20on%20a%20commercial) while their CEO bitches about being saved from bankruptcy. Un-fucking-believeable...

Below is a portion of the piece, the rest is at the link and worth a read.

Memo to the government: next time, stop trying to pick winners and losers. Looks like some of your picks for "winner" turned out to be real losers.

(fix the link, please)

To think, that was a great commercial they put out, too. They could have put it off for later, though...

[Tonus]

Linked fixed, thanks.

As for the ad, I see it the same way I saw the one from GM where they proudly explained how they had paid off their bailout loans. What they didn't say was that they'd 'paid' them with additional government bailout dollars and received additional tax money, thus putting them in even deeper hock than before.

What I would rather see is advertisements that promote the vehicles and explain to consumers why they should purchase a GM or Chrysler vehicle instead of a Honda or Toyota or Benz, etc. Using national pride as a marketing tool does not make me confident in the product. :hurfdurf:

[Reserv*ir]

Even so, it made me think about taking a trip to Detroit for the first time in, oh...-- ever.
May not have been a good car commercial, but it could be seen as a decent tourism spot for Detroit.

[Grunthos]

Detroit's a festering hole; been there for business, won't willingly go back.

Good Greek food down on Monroe street, but that's about it.

Case in point: The mayor of Detroit is having to virtually give away vacant houses to police and firefighters to try to convince them to actually live in the city.

http://detroit.cbslocal.com/2011/02/07/mayor-pushing-police-to-live-in-detroit/

[Reserv*ir]

Fannie and Freddie phase-out plan due (http://money.cnn.com/2011/02/09/news/economy/fannie_freddie_phase_out/index.htm?hpt=T2)

NEW YORK (CNNMoney) -- The Obama administration will issue a proposal later this week recommending the gradual elimination of government-sponsored mortgage backers Fannie Mae and Freddie Mac, a White House official said Wednesday.

The highly-anticipated "white paper," which is expected to be released Friday, will include three different options for reducing the role government plays in the mortgage market, the official said.

Good? Bad? Hooplah?
I figure it's a step in the right direction, anyways.

[Grunthos]

The concept is fine with me, as they have been disasters... but I have no doubt that a way will be found to make the bad situation even worse in the name of progress.

[Tonus]

This bears watching. (http://hotair.com/archives/2011/02/11/house-gop-back-on-same-page-on-spending-cuts/) Republicans took back the House and gained seats in the Senate largely on a promise to rein in spending, then they promised $100 billion in initial cuts and then... they offered up $32 billion in cuts and tried to return to 'free spending' mode. They had the rug rudely jerked out from under them by many of the new Republicans who decided that honoring the promises that got them elected might be a crazy new idea worth trying out.

So now they're pushing forward with the $100 billion in cuts to cover the next seven months. It's still a pathetically small drop in the bucket, and it's telling that they had to get a cuff on the ear right from the start. I don't think that they should start patting themselves on the back. This is the equivalent of a chain smoker missing one cigarette and proclaiming that he has quit. You've got a long way to go, baby.

[Grunthos]

A long way to go, but still forward progress. Good thing we've got that new skin in the game, huh?

And the only reason, of course, that it's only a drop in the bucket ($100 BILLION, a drop in the bucket!?) is due to the obscene spending that took place under the Dem controlled Congress, especially once Obama got in the game.

$100bn in spending reductions would have eliminated anywhere from 25% to 100+% of the federal deficit under all but Bush's final year in office ($800bn TARP program). All but one of them, war years, too.

Call it first down and 25 after a penalty. It's long yards and only a brief chance to capitalize on possession, but at least they've got the ball.

[Edmaster]

And now Obama wants to do "Cash for Clunkers" with electric cars... ready for it?

"Cash for Plug-ins"

$7,500 rebate to the purchase of a new electric car.

http://content.usatoday.com/communities/driveon/post/2011/02/obama-wants-tax-rebate-not-credit-to-sell-electric-cars/1

Obama's electric car tax rebate idea worries dealers

By Chris Woodyard, USA TODAY

A Michigan senator, picking up themes advanced by the Obama administration, is about to make a run at making incentives to buy electric vehicles a lot more bountiful. But the idea is drawing concern from the nation's car dealers, who are worried about being stuck with the task of trying to make sure buyers are qualified for cash back.

Sen. Deborah Stabenow, D-Mich., is proposing legislation that would give electric car buyers an immediate $7,500 rebate instead of making them wait for a tax credit. She would also extend some of the hybrid tax credits that have already expired.

The bill includes an extension of the hybrid tax credits for heavy-duty trucks, SUVs and cars — which expired last year — until the end of 2014. The credits could be worth up to $100,000. Large trucks that showed appreciable increases in city fuel economy over their previous models (10% to 20%) would be eligible for "hybrid" tax credits.

The measure also asks for sweeping tax subsidies for items ranging from smart grid systems and investments in energy storage properties, as well as $2 billion in grants for more investments in the construction of vehicle batteries.

Stabenow introduced the bill Aug. 5 under a previous session of Congress, according to GovTrack.us. Bills are often reintroduced in new sessions of Congress. The measure aims to make federal subsidies for electric cars more straightforward and consumer-friendly:

The proposals drew a reaction from the National Automobile Dealers Association, which said the tax credit system in place now works and there are worries about whether a tax rebate proposal will put a burden on its members. From NADA's statement:

"It is not reasonable to expect dealers to determine a car buyer's tax status in the showroom. When the specifics are made public, NADA will examine the proposal to determine if it makes sense for consumers and dealers."

Can we get this bozo out of office already?

[Grunthos]

Social engineering at it's worst. From a Michigan (can you say, Detroit?) politician who is part of the Government ownership of GM. Which is building the Volt in Detroit.

Corrupt, much?

[Reserv*ir]

Proposal to Cut Funding to... Teleprompter? (http://nation.foxnews.com/barack-obama/2011/02/15/republican-proposes-cut-funding-obama-s-teleprompter)
The House formally began debate, which is expected to last three days, Tuesday afternoon following some wrangling over the hundreds of amendments lawmakers want to attach to the package. More than 400 amendments were filed Monday night. Among them were a proposal from Rep. Steve Womack, R-Ark., to eliminate funding for the president's Teleprompter and one from Rep. Randy Neugebauer, R-Texas, to strip funding for the alteration, repair or improvement of the executive residence of the White House and instead divert that amount to deficit reduction.

Womack told Fox News Tuesday afternoon that he pulled his amendment because he wasn't able to get an estimate on how much it would save.

"I think we made our point," Womack said. "We're asking people to do more with less. And I think the president ought to lead by example. He is already a very gifted speaker. And I think that's one platform he could do without."

:lol:
That made my day.

[Grunthos]

This wrecked mine:

Anyone who doubts that the trend toward socialism is pushing America toward ruin should examine the historical tables President Obama published Monday along with his $3.7 trillion budget.

In fiscal 2011, according to these tables, the Department of Health and Human Services will spend $909.7 billion. In fiscal 1965, the entire federal government spent $118.228 billion.

What about inflation? According to the Bureau of Labor Statistics' inflation calculator, $118.228 billion in 1965 dollars equals $822.6 billion in 2010 dollars. In real terms, the $909.7 billion HHS is spending this year is about $87.1 billion more than the entire federal government spent in 1965.


http://www.cnsnews.com/commentary/article/jeffrey-socialisms-trajectory-obamas-hhs

[Grunthos]

And this got me even madder... the Pres is pushing an outright lie about his budget proposal.

When does borrowing not create debt? Only in two instances: when one has no intention of paying it back, and when Barack Obama does it. Jake Tapper asked new White House press secretary Jay Carney exactly how borrowing over six hundred billion dollars in the best year of Obama’s ten-year budget projections (using the rosiest of all possible economic assumptions) somehow qualifies as (a) balanced spending and (b) not adding to the national debt. Carney explains how that works:

Video of the President's latest press hack explaining how borrowing additional money to pay the interest on debt you already hold doesn't increase your debt (it does, of course - - it's called 'kiting an account' when you or I do it) at the link.

http://hotair.com/archives/2011/02/17/obamanomics-101-borrowing-to-pay-debt-isnt-debt-debt/

[Tonus]

I'm not going to quote this article here, but it's short and has a pretty startling chart attached. You might want to sit down and grab a bucket before you read it, though...

Here's The Only Chart You Need To See To Understand Why The US Is Screwed (http://www.businessinsider.com/the-only-chart-you-need-to-see-to-understand-why-the-us-is-screwed-2011-2)

[Grunthos]

Here's the chart for the click-through challenged.

http://img.photobucket.com/albums/v251/GrunthosToo/usa-income-statement.jpg

A little quick math reveals that even if we eliminated 100% of our defense spending, we'd only clear half the deficit. As well as putting several million people (direct payroll plus contractors) out of work.



Oh, and that individual income tax that pays 41% of the government's income?

The top 50% of wage-earners pay 97% of that.

The top 1% pay around 38% of the total.

The bottom 50% pay less than 3% of it.

[Agent Cay]

With the risk of the government shutting down in hours' time, a deal is launched... for several days of borrowed time.

http://news.yahoo.com/s/ap/ap_on_re_us/us_spending_showdown

Really, anything I say here's been said before a hundred times over. 32 billion in spending cut, drop in the debt ocean, Democrats still offering no solution on the way out and flinging their poop at the Republicans as they desperately try to fix a broken budget.

[Grunthos]

Shutdown... averted. Obama quick to take credit, then leaves on vacation.

[Tonus]

What a waste of time. A bunch of grandstanding so that the GOP and Obama can pat themselves on the back for 'standing their ground' or whatever bullshit self-promotion they're peddling. And the media is making sure that we see this as a drastic cut or something. From the AP article linked above:

The resulting measure will bleed about $40 billion from the day-to-day budgets of domestic agencies over just the next six months, the biggest rollback of such government programs in history. It allows Speaker John Boehner, R-Ohio, to claim his GOP shock troops had put Cabinet department operating budgets on track toward levels in place before Obama took office. In the end, the White House had to meet Boehner more than halfway on spending.

It's amazing to watch them lay out exactly what he problem is, but not connect the dots. So on the one hand, this is an unprecedented cut in the day-to-day budgets of certain domestic agencies. These cuts, the BIGGEST ROLLBACK IN HISTORY, would drop those budgets down to the levels they enjoyed way way way waaaaaaaaaaaaaaaaaay back in...







...2008.

Thanks, MSM, for making it seem as if clipping a toenail is the same as amputating a leg. Can't risk giving those crazy wingnut tea party people some ammunition, after all!!!

[S Carver Orne]

http://img.photobucket.com/albums/v368/profmgmiller/demspeacock.png

[Grunthos]

Connecting the dots would lay clear the blame... and that they cannot allow until Obama's continued primacy is assured.

[Grunthos]

What a waste of time. A bunch of grandstanding so that the GOP and Obama can pat themselves on the back for 'standing their ground' or whatever bullshit self-promotion they're peddling.

Of course, it doesn't help the process when one group is just bald-faced lying about the goings-on in the negotiations:

Spending cuts, not policy riders, held up a deal, GOP aides say
By Molly K. Hooper and Sam Youngman - 04/09/11 08:26 PM ET

House and Senate negotiators had reached a deal on controversial policy riders late Thursday night, according to a GOP leadership source close to the intense talks that resulted in an eleventh-hour deal to avert government shutdown, despite Democrats’ claims to the contrary.

House and Senate Democratic lawmakers spent most of Friday attacking Republicans for holding up a government funding measure over a controversial social policy rider to defund Planned Parenthood, but a source close to the situation said that Democratic attacks were "just a ruse."


In fact, the issue of how to handle the abortion-related rider was decided Thursday night: The Senate would take an up or down vote on the matter.

But White House officials told reporters early Saturday that funding for women’s health groups was the sticking point.

In the Oval Office, Obama and Vice President Joe Biden told Boehner in no uncertain terms that the president would not sign a deal that included policy riders that cut funding for Planned Parenthood and similar groups, according to the White House.

When Obama's team returned to Capitol Hill late Thursday night, they said they found that the agreement had "not been transmitted" to the staff levels in the same way it had been agreed to in the president’s meeting.

"It was puzzling to all of us," one White House official said.

According the Republican leadership source, Friday negotiations were devoted to "offers and counter-offers" on the amount of spending cuts. Democrats had offered approximately $34.5 billion in cuts, $1.5 billion more than the $33 billion that they had been wed to, until the last few days.

On Friday morning, President Obama called Speaker John Boehner to "express displeasure that the Speaker would not accept the White House’s inadequate spending cuts," the leadership aide explained.

But, again, the White House has a different view of the debate. The size of the spending cuts in the deal, White House officials said, was not in dispute. In fact, the president was willing to go higher than the final figure depending on the composition of the cuts and as long as they did not affect investments that President Obama wanted to protect, the officials said.

Fast-forward 10 hours, and "the White House finally moved up to 38.5 billion in cuts," the Republican source said.

With 90 minutes to go until the federal government shutdown during wartime, House Boehner's Chief of Staff Barry Jackson, marched into the closed-door House GOP conference meeting.

Jackson gave a nod to Boehner, and the top-ranking House Republican announced that they had a deal.

And news of a deal was welcomed by the GOP House lawmakers, anxious to avoid a government shutdown that would leave military troops with half of their paychecks.

That deal set in motion a fast-tracked procedure whereby both chambers of Congress approved a stop-gap spending bill to carry government operations until the deal could be placed into legislative language and introduced three-days before the House would vote on it.

The road to an eleventh-hour deal proved precarious for the newly elected House majority Republicans, who believe that they were sent to Washington with a mandate to shrink the size of government, reduce the debt and spur economic growth and job creation.

Boehner had to reconcile the reality of a wily conference bent on cutting $100 billion in spending from President Obama's 2011 budget request, with the fact that House Republicans only constitute "one-half of one-third of the government," as the Speaker has started to say recently.

In the end – if Congress does approve the long-term bill next week – Boehner will have a model by which to carry out the next big fights over the 2012 budget and raising the debt ceiling, which will need to be done in May.

The Republican leadership aide explained part of Boehner's successful strategy: "From the beginning of this process, Boehner met every week and often more than that with our members, and the freshmen specifically, to update them on where we were, what the strategy was, where we were headed, and to listen to their concerns. Not every member may vote for the final bill, but Boehner kept our team united and the reaction from the large majority of our members was very positive."




Source:
http://thehill.com/homenews/house/155067-spending-cuts-not-policy-riders-held-up-a-deal-gop-aides-say

[Tonus]

Central Falls in Rhode Island might be providing a preview of what is to come for many cities and states:

City in Rhode Island Asks Retirees to Sacrifice (http://www.nytimes.com/2011/07/20/us/20centralfalls.html?_r=1&partner=rss&emc=rss)

CENTRAL FALLS, R.I. — The retirees came from near and far, gathering in a muggy auditorium here to listen to an urgent pitch: give back a big chunk of your pension or risk losing it all.

This city of 19,000 is broke and headed for bankruptcy, partly because it has promised retired police and firefighters millions of dollars in pensions and benefits that it cannot begin to afford.

And so Robert G. Flanders Jr., a state-appointed receiver who is trying to right the city’s finances, found himself on the stage at Central Falls High School on Tuesday, asking retirees to help solve “a horrible dilemma” by giving up a significant part of what they had always assumed was untouchable income.

“No one blames any of you for this situation,” Mr. Flanders told the retirees, many of whom appeared well into their 70s and 80s. “We understand, believe me, that we are asking for great unanticipated sacrifices. But there is simply no money in the city to continue on the current path.”

By way of warning, he pointed to the example of Prichard, Ala., which stopped paying retirees in 2009 after its pension fund ran out of money.

Under Mr. Flanders’s plan, which he calls The Big Ask, some retirees would lose almost half their benefits, with the goal of cutting a total $2.5 million a year in retiree costs. Someone who retired at 55 after 30 years on the job, for example, would see his pension shrink to $21,217 a year, from $40,037.

No recipients, including widows of retirees, would see their pensions cut by more than half or to less than $10,000 a year, said Mr. Flanders, a retired Rhode Island Supreme Court justice. The 141 retirees will have to vote on the proposal in the coming weeks, and he pressed them to accept it, saying bankruptcy could lead to “even more drastic” changes. The city’s annual budget is about $17 million, and it has an operating deficit of about $5 million.There's more at the link.

You begin to see the problem with generous government benefit packages for workers, which are easy to offer and implement because there is little push-back. The recipients are locals, members of the communities. Local governments feel as if they can ignore the inefficiency of many of their plans, and some politicians probably figure that tax revenue can cover any future spending increases. When you're 19 and all you want is to be a police officer, do you really understand that the benefits that you won't collect for another 25-35 years might be an issue? Do you even care?

And then, when you're 65 and the government tells you 'hey thanks for the years of service, but you've got to take a hefty cut in your retirement benefit' are you supposed to nod your head and tell them that it's okay, you understand? Or do you think about the years of service and risks you took and dangers that you faced down, just so that some ambitious young bureaucrat can treat you like a rounding error? Really? You're supposed to smile and turn the other cheek when the local government hires a ringer to tell you that you can accept either a 50% cut or a 100% cut?

It's fair to point out that time after time, their union reps pressed them to accept new CBAs with generous benefit packages, waving off any possible concerns over the future of their benefits. And it wasn't hard to agree, since it seemed that there would always be a revenue stream. So they bargained for shorter careers and bigger pensions and it looked very, very good. It doesn't look very good now, though.

This is where we're headed, and not just in small cities in Rhode Island. Here in NYC people grumble about the poor quality (and sometimes, the lack of quantity) and high cost of many services. But there's no money to spend on those services, because so much of it is tied up in worker benefits. And because those packages are so generous, and the cost of living here is so high, and the quality of life continues to worsen... the people who receive those healthy pensions very quickly go elsewhere and take those dollars with them. It's a recipe for disaster, and it's extremely difficult to face it until it's too late.

[Grunthos]

And the idiot union members, being without the ability to do even simple math without the aid of their union masters, never bothered to try to work out the clear impossibility of it all. They simply believed their owners could milk the rock at the appropriate time, and kept endorsing the demands for both better benefits AND more employees.

If they were dumb enough to believe in things which simple math & a basic knowledge of history could have proved impossible, well, then maybe they deserve to starve.

Too bad it didn't happen before they passed on their faulty genes.

"The union reps pressed them" is no better excuse than "I vas juzt followink orders..."

But as you point out, Tonus, it's YOUR money they are making off with, rather than suffering the costs of their own ignorant greed.

[Grunthos]

SO, the debt limit again got raised, and yet we're still under threat of ratings downgrade - - because the problem wasn't the debt ceiling, it is the debt both present and future - - and the market takes a 300-point shit. People are talking about this month being the beginning of another recession (of course, IGWBF).

Is it time to declare this a failed presidency yet? This guy's making Carter look halfway decent in comparison.

[Edmaster]

In semi-related news, I picked up an SP 2022 and started building my first AR this week.

[Tonus]

It's pretty clear that nothing will be done until we hit the same wall that Greece hit. And if anyone has been paying attention, Greece's response to running out of money and requiring a bailout was... to continue to spend beyond their means and practically demand another bailout. Why? I think that there is still a belief that we can continue to spend beyond our means and that somehow, it will all work out in due time. So the citizens of Greece demand more spending and no cuts, and the politicians oblige.

Same thing is happening here, except that when we hit that wall, there won't be any bailout available. Even if we could eliminate the impact of a US default to the rest of the world, the amount we would need in loans is simply beyond the capacity of the rest of the world to produce. And since a US default won't happen in a vacuum, there won't be any money available.

But yeah, let's pat ourselves on the back because we agreed to shrink the deficit by a miniscule amount. :smithshotgun:

[Grunthos]

Didn't even do that... they managed to marginally shrink the proposed size of future deficit increases.

[Grunthos]

Off the cliff we goes...

[Tonus]

I was reading commentary to the effect that the irony of the current situation is that US bonds might actually hold up well because our economy is in better shape than so many others. Which is actually very bad news. When a massive economy that is on the brink of default is the healthiest one on the planet...

[Grunthos]

Car's out of the ditch, and rolling downhill toward the cliff.

[Tonus]

It's pretty clear that nothing will be done until we hit the same wall that Greece hit. And if anyone has been paying attention, Greece's response to running out of money and requiring a bailout was... to continue to spend beyond their means and practically demand another bailout. Why? I think that there is still a belief that we can continue to spend beyond our means and that somehow, it will all work out in due time. So the citizens of Greece demand more spending and no cuts, and the politicians oblige.
Funny thing about reality... and how it works. (http://www.cnbc.com/id/44758520)

Greece Falls Into 'Death Spiral': Rising Debt, No Growth

Drowning in red ink, Greece has nowhere to turn to revive the economic growth that might put its debt on a sustainable trajectory, reassure angry foreign creditors and offer hope to its recession-weary citizens.

Instead, the country finds itself in a vicious circle—a death spiral, some would say—in which it is borrowing ever more to keep up on its existing debts, crushing growth in the process and thereby worsening its all-important ratio of debt-to-gross domestic product.

Springing the debt trap would not be a miracle cure either: a manageable level of borrowing is a necessary but not a sufficient condition for Greece to start restoring competitiveness and resume growth after three years of economic contraction.

"If there was a deus ex machina tomorrow and you halved Greece's debt-to-GDP ratio overnight, there'd obviously be a huge benefit in terms of cash flow," said George Magnus, senior economic adviser to UBS in London.

"So you can alleviate the financial stress on Greece quite quickly and effectively, but I don't think that in and of itself means the economy is going to grow," he said.

New figures dramatize Athens's bind. As recently as July, the International Monetary Fund was forecasting that Greece would eke out 0.6 percent growth next year. Just 10 weeks later, it reckons the economy will in fact shrink 2.5 percent in 2012 after a 5.5 percent slump this year.

With tax revenues shrinking as the economy shrivels, debt is likely to rise to an eye-watering 173 percent of GDP in 2012 from 162 percent this year.

To illustrate the speed of the deterioration, the IMF based its May 2010 bailout of Greece on forecasts that gross debt would peak in 2012 at 149 percent of GDP.

Dimitris Drakopoulos, an economist at Nomura in London, agreed that it was an illusion to think that the economy was sinking solely under the burden of debt.

"Greece has large structural bottlenecks to growth, and the sustainability of the public finances is only one of the bottlenecks," he said.

Nitty-gritty reforms

Greece has accepted a raft of conditions set by the IMF, European Union and European Central Bank in return for a financial lifeline. These include slashing the public payroll, raising the retirement age and opening up protected sectors of the economy, including trucking and the law, to more competition.

Economists estimate such deep-seated changes could raise total output by 10 percent over 20 years. That is not to be sneezed at. The problem is that measures such as cutting civil service numbers and wages initially take a big bite out of demand.

"All these structural reforms are making things worse in the short term," Drakopoulos said. "Liberalizing the economy, at the start, under this sort of conditions is going to make things more tough for the first few years."

With a low labor force participation rate, thickets of red tape tying business in knots and productivity 30 percent below the EU average, Athens has little chance of battling back to growth by tightening its belt, markets believe.

Under scenarios prepared after a second 109 billion euro bailout-in-principle agreed on July 21, Nomura reckoned Greece would have to run a primary budget surplus—before interest payments—of 5 percent of GDP to stabilize its debt by 2014 and a 9 percent surplus to reduce it to 90 percent by 2031.

"Besides Belgium and Denmark, which have both had average primary surpluses of around 5 percent of GDP for almost 10 years, there are few other examples of advanced economics showing a similar performance," Nomura said in a report.

Grand bargain

In a similar exercise, economists Stephen King and Janet Henry at HSBC calculated that Italy, prior to the economic crisis, needed to run a primary budget surplus of 3.5 percent of GDP to shrink its debt to 90 percent of GDP by 2014.

That figure, they reckon, has now risen to a whopping 20 percent of GDP. No wonder bond markets have taken fright.

Austerity alone was highly unlikely to lower the borrowing costs of the likes of Greece, Italy and Ireland to levels at which they can achieve debt sustainability any time soon.

"Faced with year after year of economic pain, default looks ever-more enticing, particularly if the creditor nations look as though they may otherwise be able to escape with no more than a bloody nose," they said in a report.

Lax lending by euro zone creditor nations, led by Germany, was as much to blame as unbridled borrowing by the currency bloc's periphery, King and Henry argued: "The solution lies in a much greater pooling of sovereignty over bond issuance and fiscal policy."

Holding Germany responsible for the shortcomings of others angers Berlin. But Magnus at UBS agreed that far-reaching changes were needed to address the 'imbalances management problem' between euro zone surplus and deficit countries.

"How do you get growth? It depends partly on micro and structural measures at home to increase supply responsiveness. But it's also down to the external environment and whether the creditor nations of Europe—which is code for Germany really—are willing to change their behavior to allow that growth to happen," he said.

"Germany is a prolific saver and Greece is a prolific borrower. How do you manage that relationship so that the Greeks can borrow less and the Germans don't lend as much? That's ultimately the acid test about whether monetary union will work," Magnus said.
The part highlighted in dark red is important to note. The measures that Greece has to take in order to have a chance at economic recovery will cause a lot of pain in the short term. This should be obvious-- if you've spent a long time running up debt, you'll have to tighten the belt pretty severely when the bills come due. But that doesn't mean that Greek citizens will like it, and that provides opportunities for politicians to promote their careers by making the sorts of promises that caused Greece's problems in the first place.

And since the nation will be down on its luck, they'll be tempted to accept a bad long term deal for the illusion of short term relief.

Also, notice at the end of the article, how there is blame being thrown at Germany for lending to others. They're being criticized for enabling the bad policies that allowed Greece to spend itself into a corner. And there is some truth to that, but what do you think the reaction would be if Germany did the practical thing and refused to lend money to bad creditors? Yeah, they'd be ripped for it and possibly face some kind of retaliation from their neighbors. So the politically-feasible thing to do was to help push Greece closer and closer to the edge of the cliff.

[Grunthos]

Lots of cliffs in Greece.

[Tonus]

Just a reminder that for all of the talk, we're not making a dent in the national debt. And in fact, we're not really making a dent in the deficit either. Republicans are the only ones talking about making meaningful spending cuts, but their actions are not in tune with their words. And yet the media narrative is that the GOP is letting the Tea Party bully them into disastrous spending cuts that will forestall a recovery.

When the people who are still spending too much are accused of being too austere (http://www.investors.com/NewsAndAnalysis/Article/588254/201110170805/The-Austerity-Myth-Federal-Spending-Up-5-This-Year.htm), you know where things are headed...

The Austerity Myth: Federal Spending Up 5% This Year

When Republicans took control of the House in January, they pledged to make deep cuts in federal spending, and in April they succeeded in passing a bill advertised as cutting $38 billion from fiscal 2011's budget. Then in August, they pushed for a deal to cut an additional $2.4 trillion over the next decade.

Some analysts have blamed these spending cuts for this year's economic slowdown.

But data released by the Treasury Department on Friday show that, so far, there haven't been any spending cuts at all.

Higher Spending, Deficits

In fact, in the first nine months of this year, federal spending was $120 billion higher than in the same period in 2010, the data show. That's an increase of almost 5%. And deficits during this time were $23.5 billion higher.

These spending hikes haven't stopped many analysts from claiming that the country is in an age of budget austerity, one that's hurting economic growth.

A July article in USA Today, for example, claimed that "Already in 2011, softer government spending has sapped growth."

Jared Bernstein, former chief economic adviser to Vice President Biden, wrote over the summer that "government spending cutbacks have been a large drag on growth in recent quarters and have led to sharp losses in state and local employment."

Economist and New York Times columnist Paul Krugman argued in September that "the turn toward austerity (is) a major factor in our growth slowdown."

If government spending is related to growth, as these and others claim, then the economy presumably should be growing faster, not slower, given the current higher rates of federal outlays.

State Spending Higher Too

Nor does the claim that state governments sharply cut spending stand up well to closer scrutiny.

Overall state spending continued to climb right through the recession, when all money from state general funds and other funds, federal grants and state bonds is combined.

Total state outlays in 2010 were almost 10% higher than in 2008, according to the National Association of State Budget Officers' annual State Expenditure Report.

And general fund spending — which makes up about 40% of total state spending — is expected to climb 5.2% in 2011 and 2.6% next year, according to the association's latest survey.

NASBO says that states were able to sustain spending growth through 2010 only because the federal government was pumping more money in via the $830 billion stimulus, and that these funds are now all but exhausted.
That's right, the US government apparently isn't gambling enough of our future away fast enough to satisfy the Krugmans of the world. We could've saved the nation if we'd been willing to spend even more of the money that we don't have.

[Grunthos]

/headshake

[Tonus]

Heh, well at least Greece still has us beat (http://www.cnn.com/2011/10/20/business/greece-austerity-strikes/index.html?hpt=hp_t2) for head-in-the-sand posturing. Their parliament barely passed austerity measures, and they are dealing with massive protests, some of which have turned violent.

Mind you, this is a country that has already been bailed out twice and whose options now are tighten its belts to get its finances in order, or have its economy collapse. And they're resisting the former option. And anyone who has been following politics in the USA would recognize that we're doing the same thing.

[Tonus]

Hell of a way to run a railroad...
And on that note...

CA bullet train triples in price, adds 13 years to deployment schedule (http://hotair.com/archives/2011/11/01/ca-bullet-train-triples-in-price-adds-13-years-to-deployment-schedule/)

Remember what I said about how government construction projects tend to run way over-schedule and way WAY over-budget? And how the federal government loves to provide a bit of "startup cash" and then leave the locals with the rest of the bill? Yeah...

When first proposed to taxpayers in 2008, the high-speed rail project in California that would eventually link Los Angeles and San Francisco had a projected cost of $33.6 billion and a delivery date of twelve years. By May of this year (http://hotair.com/archives/2011/05/18/high-speed-de-rail-in-california/), after the Obama administration tossed in $3.5 billion in stimulus money to get the project started, the cost estimate ballooned to $43 billion, the most expensive public-works project in American history. But that now looks like a bargain in contrast to the latest estimate for the bullet train, as reported by the Mercury News (http://www.mercurynews.com/california-high-speed-rail/ci_19236454):Faster than a speeding bullet train, the cost of the state’s massive high-speed rail project has zoomed to nearly $100 billion — triple the estimate given to voters and more than enough to run the entire state government for a year.

What’s more, bullet trains won’t be up and running until at least 2033, much later than the original estimate of 2020, although that depends on the state finding the remaining 90 percent of the funds needed to complete the plan.

The new figures come from a final business plan to be unveiled by the California High-Speed Rail Authority on Tuesday, though some of the details were leaked to the media, including this newspaper, on Monday. Officials at the rail authority did not respond to repeated requests for comment Monday.

Gov. Jerry Brown on Tuesday was expected to endorse the long-awaited plan, the first major update to the project in two years and the last before the federal deadline to begin construction next year. But state legislators, who were already skeptical, will tear through the plan starting Tuesday before deciding whether to start building, or to kill the project.
California has an annual budget of $86 billion this year, which the new estimate exceeds — and they can’t even find the money to fund that. How will California find the cash to fund their bullet train? No one is really sure, although the Mercury News that it will “largely come from borrowing more” in a state whose credit rating is already beleaguered (http://www.treasurer.ca.gov/ratings/history.asp) by their current debt and recurring budget crises.

But the need to move people between the two cities is so great that it justifies the investment — right? Not at all. In an earlier column for The Week (http://theweek.com/bullpen/column/215364/a-high-speed-derailment-in-californianbsp), I pointed out that the fixed-rail service duplicates a wide range of options for air flight between the two cities, with little cost to taxpayers and competitive rates for consumers:California’s high-speed rail project has lots of problems, but its most basic is purpose. The project proposes to connect Los Angeles and San Francisco with an express train that will take two hours and 40 minutes from beginning to end. That sounds good in comparison to the drive, which is approximately six-and-a-half hours, when there is no traffic, or by existing Amtrak service, which takes almost 10 hours to go from Union Station to Moscone Center — and uses two buses.

In contrast, passengers have plenty of choices for direct transportation between the two major metropolitan areas via commercial airlines. Not only does the airline ticket price on Travelocity come in at only a little more than subsidized Amtrak fares for a round trip ($138 as compared to $112), it takes less than half of the time to travel than the proposed “high-speed” rail project does — 75 minutes as opposed to 160 minutes. Consumers can save an average of $20 on fares by booking a flight from less-used Long Beach Airport (adding only 5 minutes to the length of the flight), and still have a choice between three different airlines for non-stop service.

With these choices and convenience, why bother going ground at all?
Let’s also not forget that the fixed track would necessarily parallel the San Andreas fault line (http://hotair.com/archives/2011/05/18/high-speed-de-rail-in-california/) for long stretches, a fault line widely expected to produce an earthquake commonly referred to as “the big one” in the next few decades. The fault-line risk comes into play long before the tracks reach either LA or San Francisco, since the initial spur of the line will connect the thriving and teeming metropolises of … Corcoran and Borden (http://hotair.com/archives/2011/08/14/surprise-california-high-speed-rail-cost-explodes/).

The impulse of children to play with train sets is both cute and educational. The impulse of politicians to play with train sets is only educational for the lessons it teaches taxpayers about their deeper impulses for social engineering and wasting taxpayer money. If California pursues this project, don’t expect the price to remain at $98.5 billion or the train to arrive on time in 2033, either.

Memo to the 99%: this enormous (and literally unprecedented) waste of taxpayer money? It's not being perpetrated by Wall Street. It's being perpetrated by the very people that you think should be given MORE control over MORE of our money.

[Grunthos]

That's because there's no benefit to Wall Street to wasting $100,000,000,000 and 20 years on a conveyance no one will ride.

[Tonus]

Greece staves off impending doom, and riots ensue. (http://www.reuters.com/article/2012/02/12/greece-idUSL5E8DC0AM20120212)

Expect to see more of this. The kicker, of course, is that Greece won't really solve its problems because they simply can't cut enough expenditures fast enough. By waiting until it was too late, they are faced with the prospect of cutting as much as they have to (and watching their economy collapse) or making smaller cuts and going through several cycles of pain (and, ultimately, watching their economy collapse).

The riots, of course, will simply add to the pain. But that has never stopped people from rioting.

[S Carver Orne]

What makes me sad are the people in America who find the riots inspirational and believe they should do the same here.

[Grunthos]

And the fun fact that riots scare off tourists... Greece's only real source of income... that's just icing on the cake.

Brilliant. Liberal brilliance on the scale of the Egyptian Spring.

[Tonus]

There is concern that Greece may drop the Euro as currency and return to the Drachma. This could be good in the long term, in that Greece will have removed the safety net of further bailouts (which isn't really a safety net at all) and have to face their fiscal problems head-on. The bad part would be twofold:

1- Greece wouldn't be doing this with that in mind, and I suspect that the sudden sharp downturn in what is already a bad economy will spark some really bad riots. Greece will have to go through the painful process of restoring its credit at a time when they will be in very bad shape to do so and with an enraged population that will not accept this fate until they've rampaged and made the situation even worse.

(And yet, it's still better than what they'd have to deal with if they keep putting it off.)

2- This wouldn't solve anything for the EU, which in a worst-case scenario may see the Euro destabilized for a short time, which would be disastrous, since Spain and Italy are on the verge of their own Greece-like collapses. Having those both occur suddenly and with no way of offering help, Europe might burn for a short time until, as with Greece, they finally decide to step up and deal with their situation realistically.

I'm finding it difficult to believe that Greece would leave the EU, but some articles/reports are indicating that it is likely, and that it will probably happen before summer is over. How it affects us is difficult to say, as the USA is not in a position to provide much aid, but will probably offer to do so as a political play. Which will simply push us closer to the same ledge that many European countries are about to fall off of.

[Grunthos]

Their problem is structural, not operational. No amount of money thrown at Europe will solve any of their problems, because they are structured as a eater society, not a maker society.

We've the same problem here in the US at the Federal level, and in many states including California. We just haven't quite yet reached the point of running out of other people's money to take and spend quite yet.

Until the structural assumptions are fixed, their (and our) problems are not solvable. nad not delayable much longer.

Supply is limited; demand is not. Tells you which has to govern your behavior right there.

[Tonus]

The next step? (http://www.cbsnews.com/8301-505123_162-57435327/greek-banks-may-be-nearing-complete-collapse/)

Greek banks may be nearing complete collapse

(Money Watch) There are indicators that the run on Greek banks is already over, leaving many institutions near complete collapse. Depositors have pulled out a record amount of money in the last 10 days and there are reports that the ECB is no longer willing to lend to either them or the Greek central bank, which is also in a precarious situation.

Since May 6, depositors fearful over a Greek exit from the Euro have taken more than $6.42 billion out of the nation's banks, with $898 million coming on Monday alone. May 6 was the day of the last round of Greek elections where anti-bailout parties received most of the votes cast. Monday was the deadline for Greece's political parties to form a government. Their failure to do that means a new round of elections will be held on June 17.

Before the May 6 election, Greece's banks had been seeing an increase in deposits. Roughly $2.5 billion had returned to the banks in March and April after international lenders agreed to provide $51 billion of funding to recapitalize the banks. Prior to this run of withdrawals, Greek banks had lost between 25 percent and 30 percent of their deposits since 2009.

The European Central Bank is reportedly refusing an increasing number of liquidity requests from Greek banks. According to reports in the Dutch financial newspaper Financieele Dagblad, the ECB has cut the amount loaned to Greek banks by more than half. At the end of January, the ECB had given Greek banks $93.75 billion in liquidity support. The ECB move came about because Greece has yet to use $32.11 billion of the money it was given to recapitalize the banking system, according to the paper.

Greece's banks are now believed to collectively owe about $128 billion more than their assets are worth, according to the Financial Times.