Big Picture Perspective

I think this piece from the Wall Street Journal provides a nice frame of reference (click here).

U.S. Official Resigns in Protest of Afghan Strategy

Foreign Service Officer Matthew Hoh, a former Marine officer in Iraq, has resigned in protest over our planned escalation in Afghanistan. His background is impressive and his reasons are troubling.

But many Afghans, he wrote in his resignation letter, are fighting the United States largely because its troops are there -- a growing military presence in villages and valleys where outsiders, including other Afghans, are not welcome and where the corrupt, U.S.-backed national government is rejected. While the Taliban is a malign presence, and Pakistan-based al-Qaeda needs to be confronted, he said, the United States is asking its troops to die in Afghanistan for what is essentially a far-off civil war.

Hat tip to Polipundit.com

U.S. Dollar in Decline

As the world begins to to talk about pricing oil in a currency other than the dollar, the dollar has also lost its status as the reserve currency of the world.

Over the last three months, banks put 63 percent of their new cash into euros and yen -- not the greenbacks -- a nearly complete reversal of the dollar's onetime dominance for reserves, according to Barclays Capital. The dollar's share of new cash in the central banks was down to 37 percent -- compared with two-thirds a decade ago...

...Economists believe the market rebellion against the dollar will spread until Bernanke starts raising interest rates from around zero to the high single digits, and pulls back the flood of currency spewed from US printing presses.

"That's a cure, but it's also going to stifle any US economic growth," said Schiff. "The economy is addicted to the cheap interest and liquidity."

Economists warn that a jump in rates will clobber stocks and cripple the already stalled housing market.

"Bernanke's other choice is to keep rates at zero, print even more money and sell more debt, but we'll see triple-digit inflation that could collapse the economy as we know it.

"The stimulus is what's toxic -- we're poisoning ourselves and the global economy with it."

Our rapidly increasing national debt along with expansionary spending policies (causing the U.S. government to print more money while keeping interest rates near zero) is leading the world to believe that we are no longer a reliable source of investment.

Global Warming

Are you feeling the global warming effects? Here in in Illinois we are not....Doesn't seem like the world is experiencing it either...

For the last 11 years we have not observed any increase in global temperatures.

And our climate models did not forecast it, even though man-made carbon dioxide, the gas thought to be responsible for warming our planet, has continued to rise.

U.S. Currency and Financial Stability

The World Economic Forum has come out with their rankings...the U.S. is now ranked 50th in currency stability and 38th in financial stability.

And our Congress continues to spend money that we don't have....don't look for these numbers to get any better any time soon.

Has the Stimulus Bill Helped the Economy?

Early in the year we were told that the massive, pork-laden stimulus bill had to be passed immediately so that our economy could rebound more quickly. The Obama Administration showed us graphs of what would happen with and without the stimulus package. They promised it would "create or save" millions of jobs (never mind that you can't measure "saved" jobs).

Well, if you go back and look at that graph, we WORSE OFF than we would have been WITHOUT that massive spending bill. Except, of course, that our government is further in debt...

click here for graph

Quid Pro Quo...The Washington Way

GE has been closely tied to the government on both climate change and economic recovery issues...now they will benefit if the new Climate Bill passes.

Sen. Barbara Boxer’s climate bill set to be released today contains a provision that will compensate General Electric quite nicely for its lobbying and media efforts promoting climate legislation.

Section 821(c) requires that, by December 12, 2012, the EPA set standards for greenhouse gas emissions from “new aircraft and new engines used in new aircraft.”

General Electric is the world’s largest manufacturer of commercial and military jet engines, a business worth about $12 billion in annual revenues.

So the Boxer bill would compel airlines and the military, when purchasing new aircraft and new aircraft engines, to purchase more expensive “green” engines made by GE, according to standards set by the current and GE-lobbied Obama administration.

Keep in mind that GE CEO Jeff Immelt is member of President Obama’s Economic Recovery Advisory Council.

More evidence that GE’s political action committee (GEPAC) meant what it said in its August 19, 2009 e-mail to employees:

The intersection between GE’s interests and government action is clearer than ever.

Other payoffs to GE will likely be unconvered as Boxer’s bill virtually requires the purchase of other GE products including wind turbines, solar panels and water products.

Payoff? Wall Street Gives Money to Key Senators

From Politico:

Wall Street has showered nearly $11 million on the Senate since the beginning of the year, and more than 15 percent of it has gone to a single senator: Democrat Chuck Schumer of New York.

Schumer’s $1.65 million take from the financial services industry is nearly twice that of any other senator's — and more than five times what the industry gave to any single Republican senator.

...Of the $10.6 million the industry has given to sitting senators this year, more than $7.7 million has gone to Democrats. Schumer got his $1.65 million; his New York colleague Kirsten Gillibrand took in $886,000; Senate Majority Leader Harry Reid of Nevada received $814,000; Senate Banking Committee Chairman Chris Dodd of Connecticut scored $603,000; Colorado freshman Michael Bennet got $401,000; and Agriculture Committee Chairman Blanche Lincoln of Arkansas— who will have a big say on the derivatives portion of regulatory reform — got $336,000.

Foreign Policy Wakeup Call From the French

After last week's speeches at the UN meetings, French President Sarkozy issued a wakeup call to President Obama and other UN figures....

“We are here to guarantee peace. We are right to talk about the future. But the present comes before the future, and the present includes two major nuclear crises. The peoples of the entire world are listening to what we are saying, including our promises, commitments and speeches. But we live in the real world, not in a virtual one. (emphasis added)

We say that we must reduce. President Obama himself has said that he dreams of a world without nuclear weapons. Before our very eyes, two countries are doing exactly the opposite at this very moment. Since 2005, Iran has violated five Security Council Resolutions. [Ed note: Sarkozy then listed international proposals for dialogue with Iran attempted in 2005, 2006, 2007, 2008, 2009.] I support America’s extended hand. But what have these proposals for dialogue produced for the international community? Nothing but more enriched uranium and more centrifuges. And last but not least, it has resulted in a statement by Iranian leaders calling for wiping off the map a Member of the United Nations. What are we to do? What conclusion are we to draw? At a certain moment hard facts will force us to take decisions.

… Secondly, there is North Korea — and there it is even more striking. It has violated every Security Council decision since 1993. It pays absolutely no attention to what the international community says. Even more, it continues ballistic missile testing. How can we accept that? What conclusions should we draw? …”

3 Days to Review Bill Seems Reasonable to Me..

...But apparently not to Senate Democrats. See below. I continue to wonder "what is the rush"? and like many of my fellow citizens, I prefer that my legislators read and ponder bills before voting on them.

Senate Finance Committee Democrats have rejected a GOP amendment that would have required a health overhaul bill to be available online for 72 hours before the committee votes.

Republicans argued that transparency is an Obama administration goal. They also noted that their constituents are demanding that they read bills before voting.

Democrats said it was a delay tactic that could have postponed a vote for weeks.

The Democrats noted that unlike other committees, the Finance Committee works off conceptual language that describes policies — instead of legislative language that ultimately becomes law, and which the GOP amendment would have required.

Democrats accepted an alternate amendment to make conceptual language available online before a vote.

It's great that conceptual language will be available, but that is not the same as the actual law. What is the problem with reading the bill carefully and thinking about it before voting?

CBO: Medicare to Reduce Benefits Under Senate Health Reform Bill

Congress' chief budget officer is contradicting President Barack Obama's oft-stated claim that seniors wouldn't see their Medicare benefits cut under a health care overhaul.

The head of the nonpartisan Congressional Budget Office, Douglas Elmendorf, told senators Tuesday that seniors in Medicare's managed care plans would see reduced benefits under a bill in the Finance Committee.

The bill would cut payments to the Medicare Advantage plans by more than $100 billion over 10 years.

Source: AP

Obama Open to Tax Breaks for Newspapers

This speaks for itself...

The president said he is "happy to look at" bills before Congress that would give struggling news organizations tax breaks if they were to restructure as nonprofit businesses.

"I haven't seen detailed proposals yet, but I'll be happy to look at them," Obama told the editors of the Pittsburgh Post-Gazette and Toledo Blade in an interview.

Sen. Ben Cardin (D-Md.) has introduced S. 673, the so-called "Newspaper Revitalization Act," that would give outlets tax deals if they were to restructure as 501(c)(3) corporations.

See this earlier post for more information.

Barack Obama ready to slash US nuclear arsenal

Scary stuff...

Obama has rejected the Pentagon's first draft of the "nuclear posture review" as being too timid, and has called for a range of more far-reaching options consistent with his goal of eventually abolishing nuclear weapons altogether, according to European officials.

Those options include:

• Reconfiguring the US nuclear force to allow for an arsenal measured in hundreds rather than thousands of deployed strategic warheads.

• Redrafting nuclear doctrine to narrow the range of conditions under which the US would use nuclear weapons.

• Exploring ways of guaranteeing the future reliability of nuclear weapons without testing or producing a new generation of warheads.

The review is due to be completed by the end of this year, and European officials say the outcome is not yet clear. But one official said: "Obama is now driving this process. He is saying these are the president's weapons, and he wants to look again at the doctrine and their role."

The move comes as Obama prepares to take the rare step of chairing a watershed session of the UN security council on Thursday. It is aimed at winning consensus on a new grand bargain: exchanging more radical disarmament by nuclear powers in return for wider global efforts to prevent further proliferation.

President Obama on ACORN

When questioned by George Stephanopoulos today about ACORN, the president responded:

STEPHANOPOULOS: How about the funding for ACORN?

OBAMA: You know, if -- frankly, it's not really something I've followed closely. I didn't even know that ACORN was getting a whole lot of federal money.

He would not commit to cutting funding for ACORN.

ACORN information

If anyone is interested in a timeline and details of ACORN issues, here is an interesting link. Let's hope that ACORN doesn't just change its name and continue its illegal practices (including massive voter fraud).

FDIC Running Out of Money

The FDIC may need to borrow from the Treasury Department to replenish their fund than insures bank deposits.

The FDIC estimates bank failures will cost the fund around $70 billion through 2013. Ninety-two banks have failed so far this year. Hundreds more are expected to fall in coming years largely because of souring loans for commercial real estate.

Laws are for the Rest of Us

We have a law in this country that State Department officials may not attend UN events that are led by representatives of nations who sponsor terrorism. The Justice Department has declared that President Obama can ignore this law.

Presidents of both parties have long protested laws that they see infringing their power to conduct foreign relations. Nevertheless, it is a law, duly passed by Congress.

...many examples of previous administrations of both parties taking a similar view. Among them, Mr. Bush used signing statements to instruct the State Department to interpret identical restrictions as “advisory” rather than mandatory, and his administration sent officials to a Development Program meeting in January.

Congressional leaders are not happy that the Administration has decided it can ignore the law.

The chairwoman of the House appropriations subcommittee that oversees financing for the State Department, Representative Nita M. Lowey, Democrat of New York, strongly objected to the overriding of such statutes by the executive branch.

“This provision is law for a very good reason,” Ms. Lowey said. “There are consequences for being a state sponsor of terrorism. The decision of both the previous and current administrations to disregard this law is unacceptable.”

Young Adults May Pay Disproportionate Amount for Health Care Reform

Part of the reason for this is that young people, as a group, tend to be healthier. Under the current system, insurance costs can be rated depending on your age and health, which means that the younger and healthier you are, the less you pay for insurance. This is because you are less likely to need medical care.

One of the proposals for "reform" will mandate that insurers can no longer charge different levels for different groups of people (e.g. younger people). So, if you average premiums out among the entire population, younger folks will pay more than they need to, in order to subsidize the cost for older people.

Many young people don't have insurance because they don't think they need it or they don't think they can afford it. The new "reform" rules will require them to purchase insurance (the cheapest of which will cost at least $100 per month) or face a fine of $750 to $950 per year.

Doctors May Quit if Health Care Reform Passes

Two thirds of all doctors oppose the health care reform proposals floating around in Congress, according to a recent poll by Investors Business Daily. (Note that the Administration touts support by the AMA, but only 18% of all doctors belong to the AMA).

Worse yet...

Four of nine doctors, or 45%, said they "would consider leaving their practice or taking an early retirement" if Congress passes the plan the Democratic majority and White House have in mind.

Read the whole article.

Congress Concerned About "Czars"

Congressional leaders, including Democrats Russ Feingold and Diane Feinstein, are expressing concerns about the proliferation of "czars" under the Obama Administration. Many czar roles are undefined and do not have oversight outside of the Executive Branch.

Democratic Sen. Russ Feingold of Wisconsin joined the anti-czar chorus Wednesday, asking Obama to detail the roles and responsibilities of all of the czars in his administration and to explain why he believes the use of czars is consistent with the Senate’s constitutional power to offer advice and consent on top-level executive branch officials.

Cap & Trade Will Cost $1761 per Household if Passed

Last spring, the House passed a Cap and Trade bill, which will increase the cost of energy for all of us. This is the intent - they want to force us to reduce consumption by making it very expensive (President Obama and other Democrats have said this explicitly). The bill is currently stalled in the Senate, but there is talk of reviving it.

According to the Obama Administration, the cost to every family would be around $1760 per year...the equivalent of hiking taxes 15%. Read the whole article.

If you read to the very end, you will see a response from the Environmental Defense Fund, which basically says not to worry, because the government will spend all this revenue so it will really benefit you in the end!! Keep an eye on Cap and Trade in case they try to revive it.

Off for the Summer

Sorry we haven't posted this summer...things have been too hectic and we are basically lazy in the summer!! We will be back when Congress resumes sessions in September. Hopefully the Health Care Reform bill(s) are stalled until then.

It is amazing that in all of this talk about reducing health care costs that very few are talking about what is causing the cost increases....namely increases in technology (20 years ago a premature baby or a coronary heart patient would have died but now they can be saved, but someone has to pay for the technology) and the current insurance schemes which divorce cost from payment (for example, if it costs a $10 copay to take my feverish child in to the doctor, well then I will do it immediately, but if it costs $120 which is the likely actual cost, I may wait a few days to see if it is a virus or not). Not to mention defensive medicine...which is when doctors will order every test known to mankind to avoid being sued for overlooking something (no matter how unlikely).

Anyway, if you want to keep up to date on current events, we suggest instapundit.com and
realclearpolitics.com. See you in the fall!!

Scott and Barb

Cost of Proposed Health Care Bill

The Congressional Budget Office (CBO) has released an initial cost estimate for the Kennedy-Dodd Health Care Bill that is being submitted to Congress...

In a nutshell, the bill would ADD $1 Trillion to the federal deficit for 2010-2019 and would only cover an addition 16 million people. Of course, costs will go up if other provisions are added (such as expansion of Medicaid and subsidization for people with low income).

Once the proposal was fully implemented, about 39 million
individuals would obtain coverage through the new insurance exchanges.
At the same time, the number of people who had coverage through an
employer would decline by about 15 million (or roughly 10 percent), and
coverage from other sources would fall by about 8 million, so the net
decrease in the number of people uninsured would be about 16 million.

US Debt Per Household Tops $546,668

The amount of federal U.S. debt per household is now $546,668.

Bottom line: The government took on $6.8 trillion in new obligations in 2008, pushing the total owed to a record $63.8 trillion.

And this is before General Motors and Chrysler, the 2009 Stimulus bill and the 2009 Omnibus bill. Also before any more government involvement in health care, which is coming up soon!!

And this is before additional federal deficits are piled on...remember this chart?

GM=Government Motors?

First we bailed GM out with $17.5 billion last December...then an additional $6 billion in March.

At that time President Obama said "We cannot make the survival of our auto industry dependent on an unending flow of taxpayer dollars. These companies -- and this industry -- must ultimately stand on their own, not as wards of the state."

After GM declares bankruptcy today, the U.S. Government will own 70% of the company, with upwards of $50 billion in federal money being infused into the new GM.

The United States will accept stock in lieu of the cash the company owes, and Washington -- that is, you, the taxpayer -- will become the owner of 70 percent of the new GM. When might the company stand on its own, to paraphrase Mr. Obama? When would the government exit the stage? The (Washington) Post reports today that administration officials hope to depart within five years, but the truth is that nobody knows when or whether taxpayers would recover their investment. (emphasis added)

Not only that, but the deal made goes against U.S. bankruptcy rules by giving other claimants more stock/money than secured bondholders (see earlier posts). And, the Treasury Department has given GM a list of which dealerships must be closed, without ever disclosing any kind of criteria for which should be closed and which should not (profitability is not the criteria, as the list shows).

Also amazing is that the Executive Branch has engineered this entire thing without Congress, even though something like this would traditionally be handled by Congress.

North Korea

On May 25th, North Korea detonated a nuclear bomb reportedly as strong as the bomb that was dropped on Hiroshima.

Global Warming, Climate Change, etc.

Here is some climate change logic for you...

Assume that there really is "global warming" or some kind of catastrophic climate change (even though the climate has changed many times over the millenia).

Then assume that this climate change is primarily cause by humans and our carbon emissions (even though there is evidence to the contrary on this point).

Even if you agree with those two assumptions, our government is not behaving rationally as it tries to "fix" global warming by forcing Americans to "reduce our carbon emissions." Why?

Because China, India and other developing countries will not impose restrictions on their carbon emissions, and they have high levels of emissions!! So we could cut our emissions to almost zero (and we would all be farming and living in poverty to do so) and it still would not "fix" global warming (in 2006 the U.S. emitted 20% of the world total, with China emitting 21%).

The Administration and its Congressional allies are trying to impose a significant carbon price in the U.S. through something like the Waxman-Markey bill, while entering an international negotiation process in which as much as 60% of global carbon emissions could face little to no carbon price. The likely outcome would dramatically tilt the global economic playing field, harming U.S. workers and firms relative to their counterparts in China and India. At the same time, it would make little progress toward addressing the risk of severe global climate change, as a large portion of global carbon emissions would remain effectively uncapped.

From an American standpoint this seems extremely unwise. It is an incomplete climate change strategy, with a hole about how to deal with China, India, and other large developing nations. (emphasis added)

This is from a very interesting and readable article...check it out.

Big Brother Knows What You Should Read...

Keep your eye on the Department of Justice (DOJ): they want to tell some newspapers what kind of editorial content and news they should cover!!

...the DOJ is currently pursuing litigation against two West Virginia newspapers, who have been operating for decades under a joint operating agreement. The DOJ wants to dissolve the agreement because it is dissatisfied with the editorial quality of one of the papers, the Daily Mail. The Newspaper Association of America, in a court filing, explained why that would be a bad idea:

"The government cannot properly base a claim on its negative evaluation of the Daily Mail's content. Nor could it properly seek a judicial decree that more newspaper editorial and news content be published in Charleston then currently exists. No branch of government in this Nation is entitled to determine the type or volume of the editorial and reportorial content of newspapers.

Editorial quality is in the eye of the beholder. One need only contrast 60 Minutes with Entertainment Tonight to see the subjectivity involved. In the field of newspapers, different publications may take vastly different approaches. The New York Daily News is not the same type of paper as the Miami Herald, the New York Times or USA Today, to arbitrarily pick a few. Which newspaper would the DOJ most want the Daily Mail to resemble and have the Court require?"

And don't think they are stopping at newspapers...The Federal Trade Commission (FTC) is thinking about ways to regulate the credibility of bloggers on the net.

Government Workers are Sitting Pretty

Years ago, my Dad suggested I get a job in the government, because they have rich benefits, short hours, and you can't get fired!! I never took him up on this advice, but you can really see how right he was....

A study in 2005 by the nonpartisan Employee Benefit Research Institute estimated that the average public-sector worker earned 46% more in salary and benefits than comparable private-sector workers. The gap has only continued to grow. For example, state and local worker pay and benefits rose 3.1% in the last year, compared to 1.9% in the private sector, according to the Bureau of Labor Statistics (BLS).

But the real power of the public sector is showing through in this economic crisis. Some five million private-sector workers have lost their jobs in the last year alone, and their unemployment rate is above 9% according to the BLS. By contrast, public-sector employment has grown in virtually every month of the recession, and the jobless rate for government workers is a mere 2.8%. For anyone who thinks such low unemployment numbers are good news, remember that the bulging public sector must be paid for with revenues that most governments don't currently have. (emphasis added)

Remember, we pay for those salaries and benefits.

In addition to having recession-proof jobs and rich benefit plans, the public sector unions yield great political power. For example:

The Obama administration is threatening to rescind billions of dollars in federal stimulus money if Gov. Arnold Schwarzenegger and state lawmakers do not restore wage cuts to unionized home healthcare workers approved in February as part of the budget.

California has a huge budget deficit, and unlike the federal government, cannot print money or issue debt to pay for their deficits. But it looks like they won't be allowed to cut public payrolls either, which will make it nearly impossible to get their deficits under control. Not to mention the philosophical issues with the federal government telling a state how to run their business...

Obama Misquotes Health Care Leaders

As you may have heard, the president had a meeting Monday with leaders from 6 major health care organizations. After the meeting, the president made the following statement.

These groups are voluntarily coming together to make an unprecedented commitment,” Mr. Obama said. “Over the next 10 years, from 2010 to 2019, they are pledging to cut the rate of growth of national health care spending by 1.5 percentage points each year — an amount that’s equal to over $2 trillion.”

Well, according to the health care folks, that was NOT what they said. They did agree to work to cut the rate of increase in costs, with the target being that eventually the annual rate of increase would be about 1.5%. That's a lot different than what the president said.

To add to the confusion, the director of the White House Office of Health Reform, said “the president misspoke” on at least 2 different occasions. But yesterday, she took that back and said that the president did not misspeak (wonder what the health care execs think of that!)

This is another case of the president saying something that is not correct, but sounds good. As you read the full article, notice the statement about hospitals putting major construction projects on hold, given all the confusion about what is going to happen in the health care arena.

White House Accused of Threatening Chrysler Debt Holders

Now there are accusations that Steve Rattner, the head of the Auto Industry Task Force (who is also under scrutiny in a probe of kickback schemes involving NY pensions), threatened to destroy the reputation of an investment bank that owns Chrysler debt if they didn't accept the government's plan for divvying up Chrysler (see earlier posts on the flaws in the government's plan).

Perella Weinberg Partners, Lauria said, "was directly threatened by the White House and in essence compelled to withdraw its opposition to the deal under the threat that the full force of the White House press corps would destroy its reputation if it continued to fight. That’s how hard it is to stand on this side of the fence."

...Lauria said his clients "are mainly fiduciaries for pension plans, college endowments, retirement plans and credit unions who invested in low yield supposedly very secure first lien debt" with Chrysler.

...President Obama singled out Lauria's clients for criticism when he announced the Chrysler plan on Thursday.

The White House is denying the report.

Chrysler to file for Bankruptcy

Chrysler announced yesterday that it would file for Chapter 11 bankruptcy. Chrysler and the government were not able to obtain approval of their restructuring plan from some of the senior debt holders.

The principle at stake is the long-standing legal precedent of senior debt holders having first rights to assets of the company that they have lent money to. In the proposed plan, unsecured creditors and union members would jump ahead of the debt holders claims. The debt holder group is divided in it's support of the plan. Those in favor are the large banks (who are receiving TARP and other bailout funds). Those opposed tend to be the smaller hedge funds and private investment firms (which by the way, are investing money for teachers, pension plans retirees and other investors like you and me). Of course, the Obama administration is portraying this group as "speculators who are endangering the future of Chrysler".

Here are the highlights of the plan developed by the Obama administrations auto task force.

1. The $4 Billion that we lent them so far is wiped out. Instead, US gets 8% equity ownership
   
   
2. Current equity shareholders are wiped out, and will have to contribute $600 million to cover pension obligations
   
   
3. UAW Retiree health care fund is currently owed $10.6 Billion by Chrysler. They will receive a $4.6 Billion promissory note to be paid back (with interest) over the next 13 years. In addition, the UAW gets 55% ownership of the company.
   
   
4. Pension obligations are untouched
   
   
5. Amounts owed to suppliers will be repaid over time, with assistance of TARP funds
   
   
6. Secured/Senior Debtholders would forgive $4.9 Billion of what is owed them. They would end up owning $2 Billion of debt from Chrysler (30 cents on the dollar).
   
   
7. Fiat gets 20% ownership now and 15% more later, in exchange for giving technology to Chrysler. (Editorial comment: what are the odds that they get the 15% later if they do not produce the kind of eco-cars that the US government wants them to make?).
   
   
8. U.S. to provide an additional $8 Billion dollars to assist during the transition.
   
   

Link to WSJ article

Mortgage Cramdown Bill Fails

The Senate voted 51-45 (12 Democrats voted with Republicans) against passage of the amendment sponsored by Senators Durbin (IL) and Schumer (NY). As you may recall, this was part of the "mortgage bailout" plan announced several weeks ago. The cramdown would have allowed bankruptcy judges to rewrite mortgage contracts, reducing the principal that would need to be repaid (I wish I could get one of those!). Opponents argue that this would increase the cost of doing business for lenders (banks), who would pass this along by increasing mortgage interest rates in the future.

Over the past few weeks, Senator Durbin has attempted various legislative maneavers to get this passed. For example, he tried to make it part of a bill that was going to increase funding for FDIC insurance. He assumed that there was no way the Senate would not increase funding. However, he was unable to do that.

$100 Million in Budget Cuts - Short Video to Provide Perspective

Only 100 seconds, and is a good visualization.... Video

Government to own 50% of GM?

Private Property. This is one of the founding principles of Western civilization and capitalism. If you borrow someone's private property, you have to pay it back (It's not optional). GM has borrowed $27 billion from its bondholders. If GM cannot repay these debts on time with interest, then according to all the laws of this country and 1,000 years of common-law tradition, GM's assets are legally transferred from the company's equity investors to the bondholders through bankruptcy. Those are the rules (equity is what is "left over" after all other claims have been satisfied). However this Administration does not seem to want to play by the rules.

The U.S. government is demanding a 50% equity stake in the restructured GM. On what basis, you might ask? True, they have put $15 billion into the company, but only after GM should have filed for bankruptcy. In other words, without the government's "help," the bondholders would have gotten 100% of the new company. Now, even though the bondholders (you, me, our pension plans) are still owed $27 billion (almost twice what the government is owed), they (we) are being asked to accept only 10% of the equity in the new GM. So the government get's 50% and the unions get 39%; while the company's legitimate creditor's receive 10%. How fair is that?

Capitalism doesn't work when debts aren't repaid. Capitalism doesn't work when legitimate creditors are put last in line – behind the government and the union. What impact do you think this will have on lenders? Would you be willing to lend money to a company, knowing that the government may come in, disregard your rightful claims and steal your money?

TARP Funds Closer to $3 Trillion than the $700 Billion Passed Last Fall

More troubling news about the TARP bailout (in addition to the fraud investigations and the threats made by the government to banks):

On April 21, the Special Inspector General for the Troubled Asset Relief Program Act of 2009--"SIGTARP"--submitted his quarterly report to Congress on his office's activities in relation to the TARP program. The report is a disquieting document that should be read by every American--certainly be every taxpayer.

The Inspector General's report documents the stunning and at least partly illegal expansion of TARP from the $700 billion originally allocated by Congress to what is now a $3 trillion complex of programs. This chart shows the various programs that are now included within SIGTARP's oversight, and how they have expanded from the initial $700 billion. Note that some of the programs are still incipient; $3 trillion is by no means a final number.

It is also distressing that the Treasury is refusing to tell taxpayers how this money is being spent (this is from the SIGTARP report):

In light of the fact that the American taxpayer has been asked to fund this extraordinary effort to stabilize the financial system, it is not unreasonable that the public be told how those funds have been used by TARP recipients. Treasury is now conducting regular surveys of the banks' lending activities; however, with the exception of Citigroup and Bank of America, Treasury has refused to seek further details on TARP recipients' use of funds.

The entire report is available here.

Proposed Federalism Amendment

A concern of many Americans has been the expansion of power by the federal government. This expansion grew under the Bush Administration, and has accelerated under the Obama Administration.

One idea being floated is a set of amendments to the U.S. Constitution that would clarify and define the power of the federal government vs. the power of the states vs. the rights of the individual.

Here are several links with information about this proposal:

• Opinion piece in Wall Street Journal
• Brief description of proposed amendment(s) with links to video discussion and detail
• Proposed draft of amendment(s) text
  

The process for amending the Constitution is well-defined and fairly arduous. This was intentional - the founding fathers wanted us to be able to change the Constitution, but only after deliberation and with the support of a super-majority of citizens. For information on the process to amend the constitution, go here.

Congress Plans to Avoid Debate on Health Care Reform

The Democratic leaders of Congress are finalizing a plan so that the proposed health care reform will only have to meet 51 votes, not the usual 60 required to cut off discussion. The White House and Congress are using this technique to avoid debate on the matter (since Democrats have a majority in both the House and the Senate).

Health Care reform is an important and complex issue which should be discussed at length before being implemented. It looks like that won't be happening.

Obama Uses 9,000 Gallons of Fuel on Earth Day

President Obama flew to Iowa yesterday to make his Earth Day speech (I think because they have wind power there).

President Obama could have saved at least 9,116 gallons of fuel by giving his speech at the White House – but no wind turbines are manufactured here.

Another case of "do as I say, not as I do?"

Bailout Recipients Continue to Lobby Congress

From the Associated Press:

The top 10 recipients of the government's $700 billion financial bailout spent about $9.5 million on federal lobbying during the first three months of the year.

The biggest spender was bailed-out automaker General Motors Corp., which devoted $2.8 million to lobbying in the first quarter of 2009. It has received $13.4 billion in government loans and could get $5 billion more, according to a government report released Tuesday

It sure seems like our money just flows back and forth between Congress and the bailed out companies!

Your Tax Dollars at Work

One of the concerns about the $750 Billion TARP program (to help stabilize banks) was the difficulty in making sure that the money was spent well. It looks like those concerns were justified:

In the first major disclosure of corruption in the $750-billion financial bailout program, federal investigators said Monday they have opened 20 criminal probes into possible securities fraud, tax violations, insider trading and other crimes.

The cases represent only the first wave of investigations, and the total fraud could ultimately reach into the tens of billions of dollars, according to Neil Barofsky, the special inspector general overseeing the bailout program.

The disclosures reinforce fears that the hastily designed and rapidly changing bailout program run by the Treasury Department and Federal Reserve is going to carry a heavy price of fraud against taxpayers -- even as questions grow about its ability to stabilize the nation's financial system.

The Problem With Congress

Here's another example of how our government works....Congressmen and Senators get contributions from lobbyists and individuals who head companies that the Congress regulates, and then they steer earmarks (your taxpayer dollars) toward these companies.

It's legal as long as no one overtly says "give me this campaign contribution and I'll give you some government money" or "if you won't give me a contribution you won't get any government money"....something which former Illinois Governor Rod Blagojevich forgot.

John Murtha (D-PA) heads the House Appropriations Defense sub-committee and has long been known as someone who uses earmarks to their fullest. According to CBS News, he is currently funneling $31 Million in earmarks to 10 recent donors to his campaign.

The FBI is investigating several lobbying firms that are linked to Murtha.

And CBS News also reports this gem:

The contractor was set to receive $1 million tax dollars. He said the military told him the money would come through a company called Commonwealth Research Institute, whose parent company, Concurrent Technologies, ranked among the largest earmark recipients. Both were set up with Murtha's help in his own hometown. The defense contractor said Commonwealth officials told him to get the money, he should "consider opening an office" in Johnstown, Murtha's hometown, and chided his company for not giving "enough campaign contributions to Murtha," and not making "a showing at Murtha's annual defense contractor fair."

The contractor told CBS News: "I wouldn't do it. We're just not going to play." He didn't get the funds.

Murtha also got $150 Million in federal funding to build an airport near his hometown (newly renamed the John Murtha Johnstown-Cambria County Airport). Only three commercial flights leave the airport on a given day (all headed to Dulles Airport in Washington D.C.), and many of them are half-full. They recently got $800,000 from the Stimulus Bill to repave a backup runway.

School Vouchers Work

The D.C. voucher program has recently been dismantled by the Obama Administration, despite data that shows it is more substantially more effective than the D.C. public schools.

What happened, according to a Department of Education study, is that after three years the voucher students scored 3.7 months higher on reading than students who remained in the D.C. schools. In addition, students who came into the D.C. voucher program when it first started had a 19 month advantage in reading after three years in private schools.

Of course, President Obama's children attend a private school in Washington, and Secretary of Education Duncan did not move his family to Washington partly because of the poor schools.

Over and over again those who are supported by teacher's unions refuse to support charter schools and voucher programs, even though the data shows that students who use vouchers show significant gains over those who do not use vouchers.

Chrysler and GM Given More Taxpayer $$ Today

Chrysler LLC will receive $500 Million more in taxpayer bailouts, and GM will receive $5 Billion more between now and the end of May.

This is in addition to the $17.4 Billion taxpayer bailout last December.

One Example

One of the issues we face in our country is that our politicians rely on contributions from those whom they regulate. This is not an isolated issue - it happens over and over again.

Here is one small example, regarding Chris Dodd - a Democrat from Connecticut who is Chairman of the Senate Banking Committee. He is also known for ranting about the AIG bonuses while trying to hide the fact that he put the amendment in the Stimulus bill that specifically allowed for them (see previous posts).

More than $100,000 of the $1 million Dodd raised in the first three months of this year came from political action committees for the financial, insurance and real estate industries, according to his latest fundraising report. Among his donors were PACs for the American Insurance Association, Mortgage Bankers Association, Vanguard, Oppenheimer Funds, Charles Schwab, Real Estate Roundtable and Ameriprise Financial.

Dodd raised $608,995 from individuals, among them top executives from companies such as Fidelity, Citigroup and Citizens Financial Group. His take from Connecticut residents was $4,250, an especially anemic display of political enthusiasm for the state's senior senator.

Saving Money?

Yesterday, President Obama asked his Cabinet to save $100 Million out of their budgets. While it's always good when the government cuts back expenditures, $100 Million is a tiny percentage of the $1 Trillion operating budget for the cabinets this year alone (it's about 1/10000 of a percent).

So let's not fool ourselves that government spending is being reined in. This year will be the biggest budget in our history, and this year's deficit will by over 4 times larger than last year's deficit.

Spending vs Spending Cuts - In Pictures

Granted, the Heritage Foundation is a conservative organization. However, they do a good job of reporting facts. The numbers are not made up. The picture and example in this post say it all. And just to reiterate. Any money that they do "cut" is not going back to the taxpayers. It is just "less overspending".

We Have More Czars Than Russia!!

The Obama Administration has appointed at least 18 "czars" of various things. We now have a Border Czar, Energy Czar, Urban Czar, Infotech Czar, Faith-Based Czar, Health Reform Czar, new TARP Czar, Stimulus Accountability Czar, Non-Proliferation Czar, Terrorism Czar, Regulatory Czar, Drug Czar, Economic Czar, Car Czar, Guantanamo Closure Czar, etc. etc.

There are reasons to be concerned about this, some of them outlined by Senator Byrd:

Sen. Robert Byrd (D-W.Va.), who for decades has battled White House power and championed congressional clout, is questioning President Obama's appointment of "czars" to oversee key policy areas, including energy and climate.

"The rapid and easy accumulation of power by White House staff can threaten the Constitutional system of checks and balances," Byrd wrote in a letter to Obama. "At the worst, White House staff have taken direction and control of programmatic areas that are the statutory responsibility of Senate-confirmed officials."

$184,000 in Debt Per Person!!

The National Debt is now over $11 Trillion dollars. This does not include unfunded obligations for Social Security and Medicare (all those FICA taxes you are paying have been spent on current budget programs).

The Peterson Foundation estimates that the national debt including these obligations is $56.4 Trillion as of September 30, 2008. That comes out to $483,000 per household or $184,000 for every man, woman and child in this country.

This isn't even counting the debt we are scheduled to pile up this year and next ($3 Trillion more).

Tea Party Protests

Yesterday over 250,000 people in over 800 locations across the country protested the high level of government spending and control in our lives.

Here is a brief sampling (I'm just listing a few headcounts - it would take too much time and space to list them all):

Chicago, IL 4,000 - 5,000
San Antonio, TX 10,000
St. Louis, MO 10,000
Columbus OH 3,500 - 5,000
Rancho Cucamonga, CA 2,000
Fort Worth, TX 4,000 - 5,000
Nashville, TN 10,000
Montpelier, VT 1,000
Denver, CO 5,000
Naples, FL 3,000
Lansing, MI 4,000
Gilbert, AZ 1,000
Colorado Springs, CO 2,500
Johnson County (KC area) 5,000
Liberty Memorial (KC) 5,000
Canton, OH 2,000

And on and on and on....if you want more information, go to taxdayteaparty.com or michellemalkin.com. What's really amazing is the number of small towns that had 200 or 300 or 500 people show up!!

Obama Makes $2.7 Million in 2008

The Obamas reported $2.7 Million in income last year, mostly from sales of his books. They paid $855,323 in federal taxes. They made $4.2 Million in 2007.

Tax Facts

The top 1% of earners (the richest of the rich) pay 40% of all U.S. income taxes.

The top 10% of earners pay 71% of all income taxes.

The bottom 50% of earners pay 3% of all income taxes.

Over 40% of Americans pay no income tax.

Of course we all pay sales tax, FICA taxes, state and local tax, property tax, gasoline tax, liquor tax, etc. etc. As local and state governments struggle to balance their budgets look for these to increase.

April 15th Tea Parties

We attended the Chicago Tea Party at noon today, which was one of hundreds (over 700 total) across the nation today.

There was a peaceful crowd of 4,000-5,000 and several nonpartisan speakers. There was a wide cross section of people there - old and young, blue collar and white collar.

People were very concerned with both the rate of spending our government has embarked on and the government intrusion and control that seems to expand daily.

More Tea Party Protests

This past weekend, several hundred people turned out in Pittsburgh and Lincoln Nebraska to protest government spending.

This Wednesday, April 15, is the day when protests are scheduled across the country. For information, go to www.taxdayteaparty.com.

Media elites from both the left wing and right wing continue to mock the Tea Parties....obviously they don't spend much time with "regular people" or they might have a better understanding of why people are concerned.

U.S. Deficit for FY 2009 Nears $1 Trillion Already

(Reminder: the U.S. Fiscal Year runs from October 1 through September 30th.)

The deficit for the first six months of the fiscal year which began on October 1 was 956.80 billion dollars, according to the Treasury's monthly statement of receipts and outlays...

...The CBO said its budget deficit estimate for fiscal 2009, which ends on September 30, would be four times the 2008 record shortfall and amount to 13.1 percent of the country's total economic output. (emphasis added)

Read the whole thing....

CBO is the Congressional Budget Office. The national debt is now over $11 Trillion and rising rapidly.

Stimulus Bill at Work?

We are now hearing that President Obama sees signs of optimism from the economy. Could it be a result of the actions of Congress and this Administration, in moving so quickly to pass a huge stimulus bill?

The answer is no....stimulus funds are just now starting to percolate down, with many not slated to be spent until 2010 (and 30% slated to be spent after 2010).

White House officials say the bulk of the money will start hitting the streets later this year and early next, with the goal of spending 70 percent of it by the summer of 2010.

Is it possible that we could be in relatively the same economic position without having spent 800 Billion dollars that we don't have? We will never know.

The good news: some of the delay in spending the funds is because state and local officials must show plans for how they will use the money before they can get it.

Bush Deficits vs. Projected Obama Deficits

This is why so many people are upset with what's happening in Washington. From the Washington Post:

U.S. Government Deficits

Data is from the Congressional Budget Office.

Are You Getting Good Information?

If you get most of your news from radio, TV or newspapers, you rely on them as "gatekeepers"...they decide what stories you hear and what stories you won't hear.

Interestingly, a liberal advocacy group called Families USA recently marketed stories on people who lack health insurance....and over 200 media headlines were the result. As a result, we hear over and over about uninsured people and the need for health care reform.

The other day I heard 6-7 headlines on the radio news about people who had been shot in various states...by piling them on one after another, it made it sound like a huge outbreak of violence in this country. I wondered if this was part of a push for greater gun control. In a nation of 300 million people, there are bound to be some problems. When you gather incidents across all states and report them one after another, the perception is that the problem is a big one.

Back to health care....while there are issues with our health care system, it is interesting to look at facts. For example, it is widely reported that 47 million (out of some 300+ million) Americans lack health insurance. According to the Census Bureau, of these 47 million:

• 9.5 million people are illegal aliens
• 8.3 million uninsured people are those who make between $50,000 and $74,999 per year and choose not to purchase insurance
• 8.7 million uninsured people are those who make over $75,000 a year and choose not to purchase insurance

So less than 7% of the population wants insurance and does not have it. The Congressional Budget Office estimates that 45% of those without insurance will have insurance within 4 months. Again, something that we may want to address, but hardly the widespread phenomenon that we are told about.

Just 53% Say Capitalism is Better Than Socialism

A recent Rasmussen phone survey showed 53% percent of Americans prefer capitalism over socialism, while 20% say socialism is better and 27% aren't sure.

Breaking it down by age group, the under-30 crowd prefers capitalism to socialism by only 37% to 33%, with 30% undecided. Thirty-somethings prefer capitalism over socialism by 49% to 26%, and of adults over 40, only 13% believe that socialism is better.

There is a partisan gap as well. Republicans - by an 11-to-1 margin - favor capitalism. Democrats are much more closely divided: Just 39% say capitalism is better while 30% prefer socialism. As for those not affiliated with either major political party, 48% say capitalism is best, and 21% opt for socialism.

Understanding the Financial Crisis

This is a short but good video by Reason TV regarding our strategy for solving the current financial issues.

Pirates!!

Pirates have been seizing ships off the coast of Somalia. The latest ship seized is a U.S. flagged, Danish owned ship that was taking food aid for Somalia and Uganda. 20 American citizens were crewing the ship. There are reports that the crew has re-taken the ship, but they are unconfirmed. A U.S. Navy vessel is on its way to the area.

Last weekend pirates hijacked three vessels, along with another hijacking on Monday. In 2008 there was an outbreak of piracy, which subsided after various countries sent naval ships to the area.

Mexican Trade Tariffs Continue - CEO's tell Government 26,000 Jobs at Risk

As you may recall, back in March Congress passed the Omnibus Budget Bill for 2009. This included an item that eliminated a pilot NAFTA program (prior post).

Over 150 companies which include GE, Walmart and the American Farm Bureau issued a joint letter today urging Washington to quickly end this dispute. They state that it is putting about 26,000 jobs at risk.

Here's another post which is more specific to the Northwest and the impact on it's agricultural exports.

More Tea Party Protests

This weekend there were taxpayer protests in Santa Barbara (500+ people), Charlotte (200 people), Montana (500-1000 people), and Long Island (300 people).

Protests are planned in cities around the country on April 15th. For more information, go to taxdayteaparty.com. This is a purely grassroots effort, with volunteers in many states.

North Korea

This weekend, North Korea launched a long-range rocket, which is commonly believed to be a step toward their ability to launch nuclear warheads.

Also this weekend, President Obama called for the U.S. to lead the way to a world without nuclear weapons.

Obama proposed doing so by reducing America’s arsenal, if not altogether eliminating it; hosting a summit on nuclear security; seeking ratification of the Comprehensive Test Ban Treaty; strengthening the Nuclear Non-Proliferation Treaty; and pursuing a new agreement aimed at stopping the production of fissile materials.

It doesn't seem like a very good time to be talking about reducing our arsenal!

Banks try to repay money

A few banks are repaying the TARP funds that they received last fall from the government. Others are starting the repayment process. According to this, some are being refused....keep in mind that this is one source, but read the whole thing. Very interesting....

Why would the government refuse to be paid back by banks?

Here's a true story first reported by my Fox News colleague Andrew Napolitano (with the names and some details obscured to prevent retaliation). Under the Bush team a prominent and profitable bank, under threat of a damaging public audit, was forced to accept less than $1 billion of TARP money. The government insisted on buying a new class of preferred stock which gave it a tiny, minority position. The money flowed to the bank. Arguably, back then, the Bush administration was acting for purely economic reasons. It wanted to recapitalize the banks to halt a financial panic.

Fast forward to today, and that same bank is begging to give the money back. The chairman offers to write a check, now, with interest. He's been sitting on the cash for months and has felt the dead hand of government threatening to run his business and dictate pay scales. He sees the writing on the wall and he wants out. But the Obama team says no, since unlike the smaller banks that gave their TARP money back, this bank is far more prominent. The bank has also been threatened with "adverse" consequences if its chairman persists. That's politics talking, not economics.

Emphasis added.

Do You Like Your Light Bulbs?

By January 2014, incandescent light bulbs that are 40 Watts or greater will be banned in the United States. This was part of the federal Clean Energy Act of 2007 was signed into law on December 19, 2007.

This will mean that you will only be able to buy compact fluorescent light bulbs from that point onward.

I have tried these light bulbs, and they are very dim, don't last very long (forget the 10,000 hours promised on the package), and require special disposal (they contain mercury, so if people throw them in the garbage instead of taking them to special disposal locations, our landfills will be full of mercury). Also, if you have dimmer switches, they will no longer dim (fluorescent bulbs only go on and off).

Gone Snorkeling....

We are headed out on vacation....Keep an eye on Congress and the 2010 budget for us!!!

A Couple of Quick Items

Earth Hour
Don't forget, tonight is the night of "Earth Hour". If you believe in global warming, you are supposed to turn off your lights for one hour starting at 8:30 pm.

On the other hand, if you haven't drunk the kool-aid yet... you might want to consider turning on every light in the house (grin).

GIVE/SAVE ACT
The GIVE/SAVE act (HR 1388) was passed with the language about MANDATORY service removed. HOWEVER, there is an alternative bill being floated (HR 1444) that has the language back in it. Keep an eye on that one.

Universal Health Coverage
Looks like the House voted that this legislation (part of the 2010 budget process) can be "fast tracked". That means that the Senate can pass it with only 51 votes (not the customary 60). Oh well....

Tea Parties

Here's the website that can help you find any of the April 15 Tea Parties that are being planned. We'll be going. I encourage you to go, and take a friend!

Just When You Thought Government Couldn't Get More Involved in Your Life

California is thinking about banning dark-colored cars, because it takes more energy to cool them via their air conditioning.

The California Air Resources Board has proposed regulations requiring that paint and glazing (on windows and sunroofs) reflect certain amounts of energy, and there is no black paint that will meet these requirements. It's not clear if other dark colors could be made more reflective in order to meet the requirement.

Unfortunately, what California does often affects other states because they are such a huge market.

What Will Happen to GITMO Detainees?

At a press conference on Thursday, National Intelligence Director Dennis Blair talked about releasing some of the detainees at Guantanamo into the U.S. as free men, and also potentially giving them money and/or support to help them out.

During his news conference, Blair also said the Obama administration is still wrestling with what to do with the remaining 240 detainees at the Guantanamo Bay Naval Base, which the president has ordered closed.

Some of the detainees, deemed non-threatening, may be released into the United States as free men, Blair confirmed.

That would happen when they can't be returned to their home countries, because the governments either won't take them or the U.S. fears they will be abused or tortured. That is the case with 17 Uighers (WEE'-gurz), Chinese Muslim separatists who were cleared for release from the jail long ago. The U.S. can't find a country willing to take them, and it will not turn them over to China.

Blair said the former prisoners would have get some sort of assistance to start their new lives in the United States.

"We can't put them out on the street," he said.

Your tax dollars at work.

Your Tax Dollars at Work

Attorney General Eric Holder has issued an e-mail and flyer inviting employees to attend a speech given by Donna Brazile, a Vice Chairman of the Democratic National Committee. Not only are our tax dollars paying her speaker's fee, but Holder's flying encourages all supervisors to grant official time to employees to attend the event (so we get to pay their salaries while they go and listen).

Glad to see the Justice Department is non-political and concerned about spending our money wisely.

Mandatory Volunteerism?

From the American Thinker Blog:

The “Generations Invigorating Volunteerism and Education Act” (GIVE act). HR 1388 has already passed the House and is on its way to the Senate.

You can read the final version of the House bill here. The legislation is a long string of amendments to existing laws that make it almost impossible to understand. (Really. This legislation is incomprehensible. I challenge you to click on this link and try to read the bill.)

There appears to be little volunteerism and almost no education in the bill. But there are a lot of make-work government jobs for doing God only knows what.

Part of it sounds like the CCC (Civilian Conservation Corps from the 1930's) and part of it sounds like socialism. Read the whole thing, and if you don't like it, call your Senator.

401(k) Plans

From Instapundit:

BECAUSE THE STOCK MARKET IS DOWN, people are saying the 401(k) has “failed.”

But the question is, “compared to what?” Public pensions are woefully underfunded — they’re promising defined benefits, but may not be able to deliver. Defined-benefit private pensions are dragging companies like GM, Ford and Chrysler toward bankruptcy. And Social Security is on an unsustainable trajectory, which the political system knows but which politicians can’t bear to confront. At least when 401(k) balances go down, the whole system isn’t rendered insolvent.

Employee Free Choice Act (a.k.a. Card Check) - UPDATE

Today, Senator Arlen Specter (R - PA) announced during a speech in the Senate that he will NOT support this legislation (at this time). Actually, what he said was that he will not vote to stop an expected Republican filibuster. This would have the same effect, as 60 votes are needed to pass the bill.

This comes after reports of activity over the weekend by Starbucks, Costco and Whole Foods to offer a compromise version, which has received a "luke-warm" reception at best.

With the announcement by the Senator, this would be a moot point.

We'll keep an eye on this, and see what happens next.

Prior Post

Bailout for Newspapers?

A bill has been introduced into the U.S. Senate which would allow newspapers to restructure themselves as nonprofit entities, with special tax breaks. They could still run ads, and any money they get from ads would be tax free. Also, they would still charge subscriptions, and that money would also be tax free.

Basically, if this law passes, they would do what they do now, but not pay any taxes.

Wish I could do that....

U.S. Seeks Expanded Power to Seize Firms

From the Washington Post (emphasis added):

The Obama administration is considering asking Congress to give the Treasury secretary unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy, according to an administration document.

The government at present has the authority to seize only banks.

Giving the Treasury secretary authority over a broader range of companies would mark a significant shift from the existing model of financial regulation, which relies on independent agencies that are shielded from the political process.

New Treasury Plan for Banks

Yesterday Treasury Secretary Geithner unveiled the Administration's plan to deal with all of the "toxic" or bad assets held by some banks.

The program intends to use $100 Billion of TARP funds, plus financial guarantees from the FDIC and Federal Reserve, to buy up bad loans and real estate related securities from troubled banks.

In order to succeed, the plan will need to attract private investors to buy the debt, and those private investors will have to accept the U.S. government as a 50-50 partner. Private investors may be leery of the participating, given recent Congressional moves to retroactively change the law and the current bashing of profits and capitalism in Congress and the Administration.

The way it's supposed to work is that the Federal Government and a private investor would jointly buy a "bad loan", thus allowing the bank to get that off of their books. Both the Government and the investor would be taking a risk - if the loan ends up getting paid off, they will profit, but if it does not, then both will lose the money. The hope is that this can help banks rebuild their balance sheets and maybe allow something to be salvaged from the bad loans.

Culture of Corruption

All too often, Congressmen accept donations from those organizations whom they are supposed to regulate. Here is one example - Senator Chris Dodd (D-Conn.), who is also being investigated for getting sweetheart mortgage deals from Countrywide Financial.....this is from a Connecticut newspaper:

Let's take our own U.S. Sen. Christopher J. Dodd as a prime example. As a ranking member of the all-important U.S. Senate Committee on Banking, Housing and Urban Affairs between 2003 and 2008, Dodd accepted donations from the nearly defunct insurance giant American International Group totaling nearly $225,000. In 2008, while we looked to him to represent our best interests, he received $157,194 from a now-quasi-nationalized Citigroup Inc., part of his total annual take of $854,200 from all TARP recipients, according to the Center for Responsive Politics. (emphasis added)

How can he truly represent his constituents' best interests when he is accepting vast sums of money from organizations that the government has assisted through the infusion of federal tax dollars? While legal, an objective observer should question the judgment and ethics of our state's senior senator.

Read the whole thing for more troubling activities by Dodd.

Do As I Say, Not As I Do

I guess the laws are for you and me, not them....

Two Congressmen (Pete Stark, D-CA and Eliot Engel, D-NY) have been claiming Maryland real estate as their primary residences so that they can get a tax break. Aren't they supposed to have residency in the state where they are Congressmen?

California congressman Pete Stark has improperly claimed a Maryland lakefront home (assessed at $1.7 million) as his primary residence in order to qualify for a special real estate tax break...

Earlier this month, Congressmen Eliot Engel, a lifelong resident of the Bronx, was outed for claiming the Maryland real estate tax break on his Maryland home (formerly owned by ABC's Ted Koppel and Wonder Woman Lynda Carter) assessed at $938,000.

TARP Recipients Make Donations to Congress

TARP is the $700 Billion program started last fall and continued under the Obama Administration to help with the banking and credit crisis. Companies who have received TARP funds are continuing to give donations to members of Congress.

While a few big firms, such as Wells Fargo and JP Morgan Chase, have curtailed their campaign giving, others are quietly doling out cash to select members of Congress, particularly those who serve on committees that oversee TARP...

House Speaker Nancy Pelosi and House Financial Services chair Rep. Barney Frank both said recently they won't take donations from TARP recipients. But House Democratic fundraisers have quietly passed the word that the party's campaign committee will resume accepting them—but down the road, not right now.

Weekend "Tea Parties"

Several more taxpayer protests, dubbed "Tea Parties" after the Boston Tea Party, were held this weekend. Ironically, the 40 people who protested the AIG bonuses got national coverage (journalists outnumbered protestors by more than 2 to 1), while the Tea Parties did not.

Orlando, Florida 4,000 people
Raleigh, NC 300-400
Ridgefield, Conn. 200-300
Lexington, KY 1,200 - 1,500
Solomons Island, Maryland 300

Obama Budget Deficits

The budget proposed by President Obama for 2010 and beyond will average $1 Trillion in deficits each year, according to the Congressional Budget Office.

The Congressional Budget Office figures, obtained by The Associated Press Friday, predict Obama's budget will produce $9.3 trillion worth of red ink over 2010-2019. That's $2.3 trillion worse than the White House predicted in its budget.

Worst of all, CBO says the deficit under Obama's policies would never go below 4 percent of the size of the economy, figures that economists agree are unsustainable. By the end of the decade, the deficit would exceed 5 percent of gross domestic product, a dangerously high level.

It took us 40 years to get to a national debt of $11 Trillion. If these plans are adopted, it will take only 9 more years to get to $20 Trillion.

Federal Reserve and Monetary Policy

On Wednesday, the Federal Reserve announced that it would pump an extra $1 Trillion into the economy by buying Treasury bonds and mortgage securities.

"The action makes the Fed a buyer of long-term government bonds rather than the short-term debt that it typically buys and sells to help control the money supply."

Why do we care? There is a risk that these actions could dilute the value of the dollar (which dropped sharply upon this news) and cause inflation in the future.

This is in addition to an "unprecedented expansion of lending by the Fed."

"In effect, the central bank has been lending money to a wider and wider array of borrowers, and it has financed that lending by using its authority to create new money at will..." (emphasis added).

"Since last September, the Fed’s lending programs have roughly doubled the size of its balance sheet, to about $1.8 trillion, from $900 billion. The actions announced on Wednesday are likely to expand that to well over $3 trillion over the next year...The Fed’s action is an expansion of its effort to bypass the private banking system and act as a lender in its own right."

By adding more money to the system, the Fed hopes to head off deflation, but runs the risk of setting off inflation.

This is a complicated issue that many of us don't understand fully.

To start you thinking, try this video (hat tip Anchoress):




Then, for a good basic description of a market economy and how we got to where we are, read this article: The Money Meltdown.

AIG Bonuses - Opinion

Yesterday, Congress passed a bill to tax 90% of the AIG bonuses that were given out last week.

This is the same Congress that passed the Stimulus Bill with the amendment specifically allowing those bonuses a few weeks earlier.

Senator Dodd (D-Conn.) is taking fire for putting the amendment in the bill. Senator Dodd is saying that the Administration and Treasury Department told him to put the bonus language in the amendment. C-SPAN video shows that both Congress and Treasury knew about the bonus amounts by March 3rd.

So, the people responsible for allowing the bonuses are the ones yelling the loudest about them, and now they have passed a law that sets precedent for future laws taxing particular people or industries just because Congress doesn't like how they are acting. That's hypocrisy (and not good leadership).

By the way, regardless of how you feel about the AIG bonuses, the stirring up of a mob mentality (complete with death threats) and Congressmen wanting to release the names of people who received bonuses so people could go to their houses and "protest" is just plain dangerous.

St Patricks Day Milestone

In case you didn't notice, while we were eating corned beef and cabbage and washing it down with green beer the National Debt rolled pass the $11,000,000,000,000 ($11 TRILLION) mark.

Current Debt Level

Your Tax Dollars at Work

470 firms have received taxpayer bailouts. A House Committee has checked the records of 23 of them, and found that 13 of the 23 had unpaid federal taxes of over $220 million.

"Banks and other firms receiving federal money were required to sign contracts stating they had no unpaid taxes...But he said the Treasury Department did not ask them to turn over their tax records."

If the companies knowingly signed a contract with false information, they can be prosecuted for fraud.

AIG Campaign Donations

Here's who AIG made campaign donations to for the 2008 election cycle. AIG continued with contributions even after they received their first set of bailouts last year.

Here's the list of top AIG recipients for the 2008 campaign:

1. Sen. Chris Dodd, D-Conn., $103,100
2. Sen. Barack Obama, D-Ill., $101,332
3. Sen. John McCain, R-Ariz., $59,499
4. Sen. Hillary Clinton, D-N.Y., $35,965
5. Sen. Max Baucus, D-Mont., $24,750
6. Former Gov. Mitt Romney, (R) Pres $20,850
7. Sen. Joe Biden, D-Del., $19,975
8. Rep. John Larson, D-Conn, $19,750
9. Sen. John Sununu, R-N.H., $18,500
10. Former Mayor Rudolph Giuliani (R) Pres $13,200
11. Rep. Paul Kanjorski, D-Pa., $12,000
12. Sen. Dick Durbin, D-Ill., $11,000

Fannie Mae to Double Bonuses Over Last Year

Fannie Mae (while receiving financial backing from the Treasury department of over $200 Billion and asking for $15.2 Billion in taxpayer bailouts) has announced plans to increase bonuses for this year. Bonuses will range from $470,000 to $611,000 per recipient, which is more than double what they were last year.

Rival mortgage lender Freddie Mac, who has also Treasury backing of $200 Billion and has asked for $45 Billion in bailouts, said they were formulating similar plans.

Both organizations cite a need to keep key employees as a basis for these bonuses.

Stimulus Bill Allowed AIG Bonuses

In the midst of all the outrage from politicians at the bonuses recently paid to AIG executives, one fact stands out:

a provision in the Stimulus Bill specifically allows bonuses contracted for on or before February 11, 2009 (all of the AIG bonuses fulfilled this provision).

Who put this provision in the stimulus bill? Senator Chris Dodd (D-Conn.). Interestingly, Senator Dodd received more campaign contributions from AIG than any other congressperson.

Perhaps next time they should read the bill before they vote on it!

In addition, the Administration has known about the bonuses for several months, but concluded that contract law would prohibit them from doing anything about them. That didn't keep them from complaining all day yesterday though.

First Major Shot Fired in Trade War

Apparently, the recently passed 2009 Omnibus Budget/Spending bill included a provision that killed a program that was implemented as part of the 1995 NAFTA (North American Free Trade Agreement). I wonder if anyone even knew it was there. (grin)

So, today Mexico announced that it will retaliate (which it has a right to do so) and increase duties on 90 US products which we export to them (totaling over $2 billion).

Some folks have had concerns about the program, centered around the safety of the Mexican trucking companies. As a result, the program has not had heavy participation.

But I think the posting from the Club For Growth sums it up best... "This didn't have to happen".

Club for Growth post (with link to Wall Street Journa)l

Reuters article

Tea Party Protests

There were several more Tea Party Protests against government spending this weekend. There are many more planned for April 15th across the country.

This weekend's Tea Parties were as follows:

Cincinnatti, OH 4,000 - 5,000 people
Columbus, OH 200
Leawood, KS 110 (4th protest in 4 weeks in KC)
Little Rock, Arkansas 200
Boise, Idaho 100-15o

Congress Keeps Automatic Pay Raises

Congress defeated an amendment last week that would have ended the automatic pay raises that Congress gets.

The automated pay raise was implemented in 1989 so that Congress doesn't have to vote to raise their own pay, which can be politically unpopular.

Budget Deficit Tops $765 Billion So Far

The federal budget deficit for the first 5 months of Fiscal 2009 is at $765 Billion. This is $500 Billion more than the same period last year. (Note: the government fiscal year begins in October).

The Obama Administration estimates the total deficit for 2009 will be $1.75 Trillion. The 2008 deficit was $455 Billion.

Deficits are projected to by larger than ever for the foreseeable future, adding to the overall national debt at an amazing rate.

Former Guantanamo Detainee Heads Taliban Operations

"The Taliban's new top operations officer in southern Afghanistan had been a prisoner at the Guantanamo Bay detention center, the latest example of a freed detainee who took a militant leadership role and a potential complication for the Obama administration's efforts to close the prison. U.S. authorities handed over the detainee to the Afghan government, which in turn released him, according to Pentagon and CIA officials." From an AP report - read the whole thing here.

The Pentagon estimates that 60 former Guatanamo detainees have shown up on foreign battlefields. President Obama signed an Executive Order in January ordering the closure of Guatanamo within a year. He did not specify what would be done with the 250 detainees currently held there.

As long as we try to fight terrorism as a law enforcement issue (rather than a military action), this kind of thing will continue to occur.

35 Counties Account for 50% of Foreclosures

In 2008, only 35 counties (concentrated in California and Florida) accounted for 50% of all foreclosures. Four states (Nevada, Arizona, Florida and California) have the highest foreclosure rates by far.