More Bailouts

Fannie Mae reported a $58.7 Billion loss for 2008, and has asked the government for an additional bailout of $15.2 Billion.

Also, Treasury Department said last week it was doubling its financial support to Fannie Mae and Freddie Mac, to $200 billion dollars each, in an effort to stabilize real estate markets.

General Motors is asking for an additional $16.6 Billion dollars plus $7.5 Billion in loans from the Energy Department to build more fuel-efficient cars (from today's Wall Street Journal - subscription required for link).

Taxpayer Protests Across the Country

Citizens protesting bailouts and government spending showed up in over 40 cities Friday:

Atlanta 300-400 people
Chicago 400+
Nashville 300
Wichita 300-400
Lansing 120
St. Louis 1000+
Oklahoma City 400
Los Angeles
Tulsa 200
Seattle 300
Houston 250
Tempe AZ 150
Sacramento
Denver
San Diego 350
Jacksonville FL 80
Buffalo, NY
Greeneville, SC 1000
Dallas 250

Proposed Ethics Investigation Killed

The House killed a resolution that called for an ethics investigation to probe possible relationships between campaign contributions by lobbyists and the subsequent actions of legislators (such as requests for special projects or earmarks related to that lobbyist).

Earmarks Live On

So much for getting rid of earmarks.....

The Omnibus Spending Bill for 2009 was passed this week with approximately 9,000 earmarks costing all of us $7.7 billion. Included were earmarks from former Senators Obama, Clinton and former Representative Rahm Emanuel. Just a sampling of the earmarks:

• $2.2 million to study grape genetics,
  
• $1.8 million for swine odor and manure management,
  
• $1.7 million for a honey bee laboratory,

Yes, these are small amounts compared to the rest of government spending, but it does add up.

(Earmarks are where spending items are added to a bill to fund specific projects, typically for the legislator's constituency or special interest group.)

Obama's Proposed 2010 Budget

You should be paying attention to this - there are lots of things hidden in the details, including:

• measures to combat global warming that will increase utility rates and energy costs
• increasing foreign aid, with a goal of doubling it
• moves toward expanding government health care
• reducing deductions for mortgage interest, charitable contributions and state and local taxes for wealthier citizens (couples making more than $250,000)

A more detailed plan will be submitted in April. The total budget proposed is $3.6 Trillion, with a planned deficit of $1.75 Trillion (meaning our tax revenues will only be $1.85 Trillion so we have a huge shortfall).

Can We Just Tax the Rich?

President Obama's solution to the deficits and national debt are to raise taxes on the wealthiest 2% of Americans; those whose households earn more than $250,000. He promises not to raise income taxes for anyone else.

Regardless of whether this will have unintended effects (many of these taxpayers are small business owners who may cut back or pass along costs) or whether it is fair (those who make more than $200,000 pay 62% of all federal income taxes), will it even solve the problem?

Even if you took 100% of taxable income from everyone who earned more than $75,000 in 2006, that would yield about $4 Trillion -- the Obama Administration's proposed budget for 2010 alone is $3.6 Trillion. Our national debt at the end of 2009 will be at least $12 Trillion.

And obviously, you can't tax people at 100% or they won't work. So there is no mathematical way that the budget can be balanced only by raising taxes on the rich.

Talk versus Action

Remember these words from Obama in the debates:

"what I've done throughout this campaign is to propose a net spending cut.... What I want to emphasize ... is that I have been a strong proponent of pay-as-you-go. Every dollar that I've proposed, I've proposed an additional cut so that it matches."

That didn't last long. After the 2009 budget was approved earlier this week, President Obama presented his budget for fiscal 2010, showing a net deficit of $1.75 Trillion for just that one year.

It makes our fiscal 2008 deficit look great at a mere $455 Billion (although that was the largest deficit ever at that time).

So our national debt continues to grow....

2009 Omnibus Spending Bill Passed by the House

The U.S. House of Representatives voted 245 to 178 (largely along party lines) to approve a $410 Billion “omnibus” bill combining nine appropriations measures needed to fund the federal government through September, the end of its fiscal year.

This bill is needed because Democratic lawmakers couldn't agree with former President Bush on a budget for this year. They had managed to pass spending bills for the Departments of Defense, Homeland Security and Veteran Affairs, but the rest of the government has been continuing to operate at 2008 spending levels. Some major items of note are:

• $410 Billion in spending, which is an 8.7% increase over 2008
  
• 8,500 to 9,000 earmarks totaling between $5 billion - $7.7 billion
• Travel restrictions to Cuba eased
  
• Washington, DC school voucher program killed
  

The Senate now must consider its own version. Current funding runs out March 6.

Remember, this is in addition to all of the recent spending that has been passed (bailouts, stimulus, etc.).

Budget Deficit vs National Debt

You may have heard the President has set a goal of "reducing the federal budget deficit to $513 Billion by 2013". What does that really mean? First of all, let's define a few terms.

Surplus: Government receives more money than it spends.

Deficit: Government spends more money than it receives in a given year. In order to do so, it must borrow money (go into debt) and then pay interest on that.

Debt: The total amount of money that the government has borrowed over the years, which it has not yet paid back, and is still paying interest on.

Each year since 1969, Congress has spent more money than its income. The Treasury Department has borrowed money to meet Congress's appropriations. The total borrowed is more than $10,000,000,000,000 ($10 Trillion).

Back to the President....

So President Obama's goal is to get the 2013 annual deficit to $513 Billion. Reducing the annual deficit merely slows the pace at which we are adding to our debt. He still plans to spend $513 Billion more than the government will receive in 2013.

This also does not affect the huge deficit incurred this year (at least $1.3 Trillion), or those he will incur in 2010, 2011, or 2012.

For perspective, before now our largest deficit ever was $455 billion in fiscal 2008. Therefore Obama's goal for fiscal responsibility is to have a bigger deficit than any previous Administration's deficit.

By the end of 2009, our national debt will be at least $12.1 Trillion. There is no way to pay that off unless we begin to run budget surpluses.

The 92% Group

A new group, called the 92% Group, is working to oppose the new mortgage plan proposed by President Obama, which helps those who aren't paying their mortgages at the expense of those who are paying their mortgages (see earlier detailed post).

The group is named after the 92% of Americans who are current on their mortgages.

Culture of Corruption

Congressman Charles Rangel (D-NY), Chairman of the Ways and Means Committee since 2006 (this committee writes our tax laws):

• Failed to report $75,000 in income (and thus underpaid his taxes) from a rental property in the Dominican Republic.
  

• Had at least 28 omissions on his financial disclosure forms (required by law for public officials) and failed to account for at least $239,000 in assets.

• Leased 4 rent-controlled apartments (at a low price) from a major real estate developer

• Used his official Congressional stationery to solicit donations for an educational center at the City University of New York that will be named for him.

• Is accused of receiving donations from those who are affected by his committee, including $1 million from one executive who claims that had nothing to do with Rangel's helping to preserve a lucrative off-shore tax loophole.

Senator Chris Dodd (D-Connecticut), Chairman of the Senate Banking Committee since 2006:

• Received favorable (below market) rates and saved $75,000 on two mortgages in 2003 through a VIP program at Countrywide. Countrywide (now owned by Bank of America) has been the focus of allegations that it gave favorable loan terms to lawmakers.

• Received $165,400 in contributions from Fannie Mae and Freddie Mac (the Banking Committee is responsible for overseeing them) -- he received the most contributions of anyone in the House and the Senate (in second place was Barack Obama with $126,349).

• Is being scrutinized for a deal on a house in Ireland, where he declares a value of less than $250,000 for a property that some say would sell for at least $1 Million.
  

Current members of Congress (Republicans and Democrats) have received a total of $4.8 million from Fannie Mae and Freddie Mac from 1989 through 2008.

Representative Charles Murtha (D-Pennsylvania) is under investigation by federal prosecutors for possibly receiving bogus campaign contributions via PMA Group, a prominent lobbying organization headed by a former staffer of Mr. Murtha. Mr. Murtha is the chairman of the House defense appropriations subcommittee.

• In the first half of 2007, the PMA Group and its clients contributed more than $500,000 to three congressmen, including Mr. Murtha.
  

• These lawmakers earmarked more than $100 million in defense spending for PMA clients in the appropriations bills for 2008 (according to a study by Taxpayers for Common Sense, which tracks earmarks).

These issues are investigated by House and Senate Committees, who rarely take action. Neither committee holds public hearings, and they rarely discipline their members.

Just because these are mostly Democrats does not mean that Republicans don't have their issues as well. Former Senator Ted Stevens (R-Alaska) was convicted last fall by a federal jury of five counts of making false statements on his Senate personal financial disclosure forms. He was defeated in his bid for re-election.

Does Foreign Aid Help Africa?

Dambisa Moyo, a native of Zambia with degrees from Harvard and Oxford says no.

When asked "What do you think has held back Africans? " she replied:

"I believe it’s largely aid. You get the corruption — historically, leaders have stolen the money without penalty — and you get the dependency, which kills entrepreneurship. You also disenfranchise African citizens, because the government is beholden to foreign donors and not accountable to its people."

Interesting.

Review of Guantanamo Finds it Meets Geneva Conventions

President Obama ordered a review of conditions at the Guantanamo Bay Detention Facility.

The review showed that Guantanamo does meet the criteria of the Geneva Convention, although they recommended allowing more religious and social interaction for the prisoners in the highest security camps (the most dangerous prisoners).

ACORN Training Begins

Notice how the newscaster uses the term "train homeowners on peaceful ways to remain in their homes".

News report...

TAX Time is Upon Us...

February 15th was the deadline for institutions to provide you the information you need to prepare and file your taxes. Here are a couple of items that you may find helpful.

Volunteer Income Tax Assistance Program

The VITA Program offers free tax help to low- to moderate-income (generally, $42,000 and below) people who cannot prepare their own tax returns.

Early Tax Refund Loans - BEWARE!

Tax return preparers will offer you the ability to receive your "refund" immediately to within 3 days. These are generally not in your best interests.

First of all, the fact that you are receiving a "refund" means that you overpaid your taxes during the year, and provided Uncle Sam an interest-free loan!

Second, it usually takes just a couple of weeks for you to receive your refund (if you file electronically). So why pay the exorbitant annualized interest rates that you are charged for an "early tax refund" of your taxes which you have already overpaid!?

Of course, there may be cases where you really need the money immediately and can't borrow from friends/family. Just be informed/aware of what you are doing.

PS. Clark Howard provides consumer advice on how to save money and avoid scams. He has a syndicated radio-show and has recently added TV. You might want to check him out.

Taxpayer Protests Spring Up Across Country

Many citizens are unhappy with the spending happening in Washington. Protests so far have been held in Seattle, WA (150 people), Denver, Colorado (500+ people), Mesa, Arizona (500+ people), and Overland Park, Kansas (400 people).

More protests are planned in the next few weeks in cities such as Chicago, Washington DC, Atlanta, Dallas, Fayetteville, San Diego, and Omaha.

Snowing in Chicago - May Not Post Today

If there is something you want us to research.... leave a comment or send us an email.

Guess it's time to go out and shovel (again...)

Rick Santelli Speaks His Mind... Instant Classic

Here are some clips from yesterday and today.... I STRONGLY recommend you view these. These are listed in chronological order.

Thursday's Initial Clip (Rick Santelli & the Rant of the Year)

Friday Morning on MSNBC (Debate with Steve Liesman, resident "talking head")

Friday CNBC (with Ken Langone, founder of Home Depot)

Housing Plan Unveiled Yesterday

The president announced his much awaited housing plan on Wednesday. Major items are:

1. $75 billion in direct spending to provide incentives for lenders (and borrowers) to not foreclose or enter bankruptcy
   
   Lenders will be paid $1,000 to $1,500 for each mortgage that they modify. They will receive up to an additional $3,000 over the next 3 years if the homeowner makes all their payments. Borrowers who make their payments could receive a $1,000 reduction in their principal balance each year for the first 5 years. This part of the bill does not provide relief for speculators/house flippers.
   
   The purpose of these incentives is to decrease foreclosures and keep folks in their homes. For neighborhoods that have a large number of "at risk" mortgages, a decrease in foreclosures should stop further declines in housing values. Of course, this is helping many folks who made poor decisions to begin with and there is a high probability that they will not be able to make the payments on the revised mortgage.
   
   
2. Making it easier for people to refinance, assuming they have been "doing the right thing" and are not speculators/house flippers
   
   Interest rates are very low now, and almost everyone would benefit by refinancing their existing mortgage. The problem is that many people do not qualify, because the value of their home has declined so much that they do not meet the existing requirement of 20% equity in their home. This plan loosens that restriction for homeowners whose mortgages are already with Freddie or Fannie.
   
   This part of the plan assists people who have "done the right thing" and are still in trouble due to circumstances out of their control. However, the restrictions are not removed entirely. So, someone who is underwater by more than 5% will not qualify. (eg. Their home is currently valued at $200,000 and they owe more than $210,000).
   
   
3. $200 billion additional investment in Fannie Mae and Freddie Mac
   
   The Treasury will invest $100 billion more in each entity. It also increases the size of the mortgage portfolio that each can keep by an additional $50 billion (up to $900 billion now). This is intended to "prop up" the mortgage market on the whole, and allow Freddie and Fannie to buy more mortgages / mortgage-backed securities.
   


4. "Cram Downs" available for bankruptcy judges to use.
   
   Cram downs allow bankruptcy judges to reduce the outstanding principal and/or change payment terms on mortgages for homeowners filing for bankruptcy. Some argue that this will end up increasing mortgate rates because lenders will charge higher rates overall to cover the risk that bankruptcy judges may decrease the principal.
   

The White House has published an executive summary of the plan (PDF) and an online Q&A.

We Are All Socialists Now....

This is the title of the latest Newsweek cover story.

Government intrusion into our economy has grown. Ten years ago U.S. government spending was 34% of GDP (Gross Domestic Product). Projections for 2010 are for U.S. gov't spending to be 40% of our GDP (40% of our economy). GDP is a measure of the total output of our economy.

European governments, which follow a more socialist model historically, spend about 48% of their GDP. We are catching up!

Spending on entitlement programs (Social Security, Medicare) is going to increase, so the percentage of the economy (GDP) taken by the government will get bigger. Who knows, maybe we will surpass the French!

Unless you believe in socialism, the fact that this is the cover story of a major news magazine here in the United States of America has to make you take pause.

Obama's Actions on Terrorism

Since taking office, President Obama has changed some Bush Administration policies and kept others. Here is a quick summary:

• Signed an Executive Order to close the Guantanamo Bay Detention Center in a year (no details on what is to be done with those who are currently in Guantanamo)
  

• Ordered all interrogations to be done following the Army Field Manual (which is similar to procedures followed by police officers)

• Signed an Executive Order keeping the rendition policy, whereby we can send detainees or "enemy combatants" to foreign prisons for interrogation and detention

• Elena Kagan, President Obama's choice to represent his administration before the Supreme Court, told senators that she believed the government could hold suspected terrorists without trial, a view similar to that of Attorney General Eric Holder during his appointment hearings last month.

• The Obama Administration announced that it would keep the same position as the Bush Administration on state secrets privilege in the lawsuit Mohamed et al v Jeppesen Dataplan, Inc.

• Leon Panetta, new head of the CIA, left open the possibility that the CIA could use aggressive interrogation methods in "extreme cases" with permission from the President, despite the limited menu of techniques that President Obama authorized under new rules issued last month.

GM and Chrysler submit Recovery Plans to Treasury

In the plans they submitted to the government, GM and Chrysler say they need up to $21.6 Billion more in bailout loans. The plans included possible scenarios in the event that either would have to file for bankruptcy protection.

GM has received $13.4 billion so far, and its plan states it needs a total of $30 billion (an additional $16.6 billion). GM also says it needs $7.7 billion in loans from the Dept. of Energy to develop fuel-efficient technology. GM is also seeking over $7 billion from a group of European countries.

Chrysler has received $4 billion so far, and says it needs $5 billion more.

Other items of note:

• GM plans to eliminate 47,000 jobs worldwide. 26,000 of these would be outside of the US.
  
• GM plans to eliminate thousands of dealerships
  
• GM, Chrysler and Ford reached tentative agreements with the UAW on a range of labor cost reductions. These include changes in work rules and cuts in "substitute pay".
  
• The union and automakers are still at odds over how to fund a trust to cover health care costs for retired union workers. The automakers want to use stock for a portion of their cash obligations for this fund. (I'm assuming the UAW wants cold, hard cash.)
  
• The automakers are still working with their bondholders on how to restructure the $29 billion in debt owed to them.
  

Here's a link to an article titled 9 Bailout Surprises from GM and Chrysler.

Are you really surprised?

Recovery Act Signed into Law

The bill was signed this afternoon by the President. Here is a link to the official White House website that it will use to "track/report on" progress to us. Below is a copy of a table from the site that categorizes how the money will be spent.

Not to be picky, but why do they show "Tax Relief" of $288 Billion, and then in the footnotes "take away" $123 Billion, to make the "Net Tax Relief" amount equal to $165 Billion?

Category	Amount ($ Billions)
*Tax Relief	$288
*State and Local Fiscal Relief	$144
Infrastructure and science	$111
Protecting the Vulnerable	$81
Health Care	$59
Education and Training	$53
Energy	$43
Other	$8

* Tax Relief - includes $15 B for Infrastructure and Science, $61 B for Protecting the Vulnerable, $25 B for Education and Training and $22 B for Energy, so total funds are $126 B for Infrastructure and Science, $142 B for Protecting the Vulnerable, $78 B for Education and Training, and $65 B for Energy.

State and Local Fiscal Relief - Prevents state and local cuts to health and education programs and state and local tax

A Good Read

An opinion piece in today's Wall Street Journal puts it well...

"We (Americans) believe that we can get ahead through innovations because the game isn't stacked in favor of the powerful....We are less prone to begrudge our neighbors' fortune if we think it was fairly earned and that it has not come at our expense....

To sustain these beliefs, Americans must see their government play the role of an even-handed referee (emphasis added) rather than be a dispenser of rewards or even a judge of economic merit or contribution. The panicky response to the financial crisis, where openness and due process have been sacrificed to speed, has unfortunately undermined our faith. Bailing out AIG while letting Lehman fail -- behind closed doors -- has raised suspicions of cronyism. The Fed has refused to reveal to who it has lent trillions."

Food for thought...read the whole thing.

Is it Global Cooling or Global Warming?

In the 1970's the "experts" were "warning us" of global cooling and the coming of the next ice age.

30 years later, we are being "warned" of global warming and a rise in sea levels of 20 feet (Al Gore).

Global levels of sea ice decreased last year and was cited as further evidence of global warming. However, since September the increase in sea ice has been the fastest change (up or down) since 1979 and is now the same as it was in 1979.

Some interesting perspective from George Will in this article.

Please note the paragraph about Paul Ehrlich and Julian Simon. I've always loved this story...

Here's an Idea...

Now here's an idea....audit all members of Congress, the President, and presidential appointees. At least then we can make sure they are paying their taxes!!

Follow this link to sign a petition.

Don't Get Too Optimistic

President Barack Obama's aides warned Americans on Sunday not to expect instant miracles from the $787 billion economic stimulus bill he will sign this week, but said it would help eventually.

Stimulus Watch Web Site

Now that the stimulus bill has been passed, Congress and the President are gearing up to spend hundreds of billions of taxpayer money. The U.S. Conference of Mayors has already provided a list of shovel-ready projects in cities around the country that the mayors would like to see funded. President Obama, however, has promised to spend stimulus dollars only on critical projects.

There is a website that "shines the light" on this list of shovel-ready projects. Remember, these projects are not yet part of the stimulus bill. They are candidates for funding.

If nothing else, it is interesting to look at the list to see what the various cities and states have proposed. Who knows, this may end up being something that "takes off" and provides the type of transparency and accountability that is required.

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

This is organized labor's top priority for Congress, and is something that the Obama administration plans to pass in 2009.

Probably the 2 most prominent items in the proposed legislation are card check and forced binding arbitration.

Card Check: This is a union organizing system. If a majority of employees sign a public card in favor of union representation, then the union becomes their representative. There is no secret ballot process.

Forced Binding Arbitration: A new union and management would be forced into binding arbitration if they cannot come to an initial agreement within 120 days.

Some of the major arguments made for/against the legislation are:

For

• Claims that management may use illegal firings and harrassment to intimidate workers who are trying to form unions. The bill would strengthen penalties against employers who break the law.
  

• Claims that even after a union is formed, delaying tactics are used to prevent creating the initial collective bargaining agreement in a timely fashion.
  

Against

• Card Check effectively ends employee rights to private-ballot elections. Union organizers and/or management may intimidate or pressure employees on how to vote. An employee's decision to join a union should be made in private, protected from any coercion by unions, employers or co-workers.
  

• Binding arbitration is nothing less than having two or three people who know very little about an employer's business actually tell that employer how to run it.

Here are some links to sites with further information/opinions:

Heritage Foundation (Against)

American Rights at Work (For)

National Restaurant Association (Against)

Update on Health Care Records Provision in Stimulus Bill

Here is a good summary and explanation of how the government will have access to your medical records. These provisions were noted in an earlier post, and were part of the stimulus bill that just passed.

GM Needs More Money

General Motors, which received $13.4 Billion in taxpayer's funds a few months ago, needs at least $5 Billion more to keep operating past March.

GM needs to file a plan with the Treasury by Tuesday, and its options are to get more money from taxpayers or go through a government-backed bankruptcy reorganization process. Chrysler went through a structured bankruptcy-type process back in 1980.

Bankruptcy does not mean that the company shuts down -- it allows the company to renegotiate contracts (such as those with unions, lenders, and dealers) in order to come up with a viable structure.

GM has not been able to get concessions from the UAW and bondholders in order to improve their financial situation. Talks with the UAW broke down last night. GM owes $47 Billion in retiree health care benefits -- union leaders are hoping that the US government (taxpayers) will take responsibility for part of these payments.

Congress Passes Stimulus Bill

The Democrats in the House and Senate passed the stimulus bill yesterday.

The White House is claiming that it will create 3.5 Million jobs. Cost of the bill (not counting interest that will have to be paid on the debt issued) is $787 Billion.

$9.7 Trillion and Counting

The Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion over the past two years and pledged up to $5.7 trillion more.

The $9.7 trillion in pledges would be enough to send a $1,430 check to every man, woman and child alive in the world. It’s 13 times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office data, and is almost enough to pay off every home mortgage loan in the U.S., calculated at $10.5 trillion by the Federal Reserve.

This is in addition to the bailouts of 2008 and the current stimulus bill.

Trillion With a 'T': How to Spend $1,000,000,000,000

Fox News will air a documentary this weekend. Here are the times:

Saturday, February 14 at 9 p.m. ET
Sunday, February 15 at 3 and 10 p.m. ET

Some Good News.....

Retail Sales for January 2009 UP 1 Percent...

Retail sales for January were up 1 percent from December 2008. This reverses 6 months of monthly declines in sales. Even automobile sales increased 1.6% in January.

However, last months sales were almost 10% lower than January 2008. We'll see what happens over the next few months... The average duration for a recession is 16 months, and this is worse than most. This recession started in December 2007, so we are13 months into it......

Commerce Secretary Nominee - Senator Judd Gregg Withdraws

Sen. Judd Gregg has withdrawn his nomination to be Obama's commerce secretary. In a statement released by his office, the Republican New Hampshire senator cited "irresolvable conflicts" on issues including the economic stimulus package and the Census.

For those of you unfamiliar with the Census issue, here is some background.

The Constitution requires a census of the U.S. population every 10 years. The results of the census can shift billions of dollars in federal funding for items such as schools, roads and job training. The census also determines the number of representatives each state sends to Congress, the composition of the Electoral College and how congressional lines are drawn. So, this is a Big Deal.

The Congressional Black Caucus and other minority groups have protested Senator Gregg's nomination to head the Commerce Department. As a senator he has voted to cut the bureau's funding, which they claim would result in an undercount of minorities. In response, the White House said it would get more directly involved with the Census Bureau, which traditionally falls under the Commerce Department's jurisdiction. This in turn sparked protests from Republicans.

It is important that the Census be scientifically driven and as free from politics as possible. Seven former Census directors -- serving every president from Nixon to George W. Bush -- to sign a letter last year supporting a bill to turn the Census Bureau into an independent agency after the 2010 Census.

Cost Per Taxpayer

The House and Senate have agreed on a $789 Billion spending package yesterday. It will be voted on by both bodies today or tomorrow.

This will cost $7,890 per taxpayer.*

The bailouts last year totaled $1 Trillion 369.9 Billion . That means $13,699 per taxpayer.

Neither of these numbers include the regular government budget, which was $638 Billion in 2008. We should probably expect the budget to be even higher this year.

*This assumes we have about 100 million taxpayers (there were 92.7 million taxpayers in 2006, the latest data available.)

Well Said....

Senators John Kerry (Democrat) & Jon Kyl (Republican) each provide a very good summary of the different perspectives of each party, as they debate the stimulus plan. This is a 5 minute video on YouTube, entitled "A Difference In Ideology".

Read the Fine Print on Health Care in Stimulus Bill

In the "stimulus" bill (H.R. 1 EH, pdf version) are several provisions that will affect your health care from now on. Details can be found in Title XXX -- Health Information Technology and Quality, Sections 3000 - 3010.

1. A federal system will be set up to track all of your medical treatments (pp. 445, 454, 479).

2. A new "National Coordinator of Health Information Technology" will monitor treatments to reduce costs and "guide" your doctor's decisions (pp. 442, 446).

3. If your hospital or doctor isn't a "meaningful user" of the new system, they will face penalties. "Meaningful user" is not defined in the legislation -- the Secretary of Health and Human Services will define what this is and can make this a more stringent definition over time. (pp. 511, 518, 540-541).

4. They will be able to charge providers a fee for this services (which I'm guessing we will end up paying).

A more detailed analysis can be found here and here.

If you don't like this, call or e-mail your Senators and Representative (see links in upper right hand corner). Even though the bill has passed the House and Senate, they have to change it to come up with one version, so they are still working on it.

Census Bureau Reports to White House

A senior White House official announced last week that the director of the Census Bureau will report directly to the White House from now on, rather than to the Commerce Secretary. This is in response to complaints by black and Hispanic leaders about Commerce Secretary nominee Judd Gregg.

The Census information is used for many things, among them congressional redistricting and government spending allocations for virtually everything.

It is important that the Census be scientifically driven and as free from politics as possible. Seven former Census directors -- serving every president from Nixon to George W. Bush -- to sign a letter last year supporting a bill to turn the Census Bureau into an independent agency after the 2010 Census.

Why Save For a Rainy Day?

The current stimulus package contains billions of dollars in transfer payments to the States; many of which are facing large budget deficits. Here is some data about recent spending habits.

• From 2003-2007, spending grew 7x faster than the population and 2x the rate of inflation (see chart below).



• Since 1998, state and local budgets nearly doubled (to $2 Trillion)

Some states save their money and make smart spending decisions. Others use new revenue to increase spending (instead of saving for a rainy day).

For example, California has a $40 Billion deficit and has increased their spending by 40% over the past 5 years. They are requesting bailout money from Washington.

On the flip side, South Carolina recently faced nearly a $500 Million deficit for the current budget year. What did they do? The governer called the state legislature together and they reduced spending (made the tough decisions).

Does is seem fair to you that taxpayers in some states pay their fair share, while those in other states spend more than they pay and then ask for bailouts from the federal government (you and me?)

Source article in the Wall Street Journal

More Info on How Your Money Will Be Spent

Just a few more tidbits from the stimulus bill that the Senate is considering (again, some of these may be worthwhile but aren't going to "stimulate" the economy or create jobs):

$50 Million National Endowment for the Arts
$15 Billion for Pell Grant college scholarships
$4.2 Billion for "neighborhood stabilization activities"
$90 Million to education "vulnerable populations" about Digital TV
$816 Million for renovations to gov't facilities such as the Smithsonian
$1 Billion for Census Bureau
$7.6 Billion for "rural community advancement programs"

Remember, to pay for these things the goverment either raises taxes now or issues debt which will be repaid (with interest) by taxes in the future.

Some Perspective

While times are tough now, I remember my first car loan at 16.9% and our first mortgage at 13.5%. So we did a little research to put the current situation in perspective:


No one can predict the future, and things will probably get worse before they get better, but the economy has a ways to go before it is as bad as it was back in the 70's and 80's.

What's the Rush?

We keep hearing that Congress must pass the stimulus bill immediately or terrible things will happen. "A failure to act, and act now, will turn crisis into a catastrophe." President Obama, February 4, 2009.

Most estimates are that somewhere between 10 to 17 % of the money will be spent in 2009.

A week or two debating and discussing the bill doesn't seem like it will make much of a difference.

Am I the Only Fool Paying My Taxes?

Cabinet nominees: First Tim Geithner (who was confirmed), then Tom Daschle and Nancy Killefer (both of whom withdrew their nominations) have problems paying their taxes (see earlier post for details)...

Now Hilda Solis, President Obama's nominee for Labor Secretary, is under scrutiny both for ties to a pro-labor lobbying organization and for her husband's outstanding tax liens ($6400 which he paid yesterday). In fairness to Ms. Solis, these were her husband's tax debts from his business.

Promises

The campaign promise (taken directly from the Obama campaign website):

Sunlight Before Signing: Too often bills are rushed through Congress and to the president before the public has the opportunity to review them. As president, Obama will not sign any non-emergency bill without giving the American public an opportunity to review and comment on the White House website for five days.

The reality: Yesterday President Obama signed the S-CHIP bill only hours after it was passed by the House. Last week Obama signed the Lily Ledbetter Fair Pay Act only two days after it was passed.

Video "Gov. Mark Sanford talks about the stimulus"

Governor of South Carolina. If you have 10 minutes, he makes some good points.

Video "Gov. Mark Sanford talks about the stimulus"

Congressional Pay Raise

Congress just got their $4,700 pay raise, which brings the annual salary of rank-and-file representatives and senators to $174,000.

They didn't vote on it, as they changed the law in 1989 so they get automatic pay raises.

Good News re. Rainforests

It seems that the rainforests throughout the world are growing back. For every acre of rain forest cut down each year, more than 50 acres of new forest are growing in the tropics on land that was once farmed, logged or ravaged by natural disaster.

More than one way to stimulate the economy

An alternative stimulus plan was outlined today. It would cost half as much as the one passed by the House and being considered by the Senate.

The focus is on putting more money in the hands of taxpayers and businesses (to increase jobs) , to provide a safety net for those hurt worst in this recession, and to fund road repairs and other "shovel ready" projects.

Key provisions include:

• Cut payroll taxes (FICA) in half for one year
• Lower bottom two income tax brackets
• Reduce corporate tax rates and those for small business owners
• Tax credit to people who buy homes in 2009
• Extend unemployment insurance and food stamps in 2009
• Grants to states to build/repair roads & bridges and invest in public transportation
  
• Modernize Defense Department facilities and equipment
• All spending programs to end 3 years after legislation takes effect

Because this was proposed by Senate Republicans, it is unlikely to be adopted.

Treasury Needs to Borrow $493 Billion to Partially cover TARP

The Treasury needs to borrow $493 Billion to partially cover commitments made as part of the "rescue package" passed last fall. They already borrowed a record-breaking $569 Billion in October through December. This borrowing alone will bring the national debt to over $11 Trillion by Spring.

This is BEFORE we even start to borrow money to pay for the "stimulus" package that Congress is currently considering.

This is our money - taxpayers are the ones who will have to pay off this debt (see post below).

Who Is Paying For All This?

$700,000,000,000 ($700 Billion) for the bank/Wall Street bailout last fall (TARP)

$20,000,000,000 ($20 Billion) for Detroit auto-makers (or whatever it ends up being)

$1,000,000,000,000 ($1 Trillion) for economic "stimulus". (Yes, that is 1 million times 1 million).

Have you ever stopped to think "Who is paying for all this?"

Well, I hate to be the bearer of bad news... but it's YOU!

Surprised?

Contrary to what some folks think, the government can't just "create money". It receives current income from taxes (income, corporate, etc..). If that is not enough to cover its needs, it borrows money by selling government bonds. Those bonds are paid back with taxes collected in the future. (Think about yourself. You earn money by working and if you can't pay your bills, you borrow by not paying your credit card balance in full or getting a loan).

What happens when the government is not able to borrow enough money?
(Well, what would you or I need to do?)

Get more income (for the government, this means increasing taxes), cut spending or declare bankruptcy.

The government does have another option that we do not. It can "print money".

This creates inflation (more money chasing the same amount of goods and services, thereby raising prices). This is good for the government, because it can pay off its debt without increasing taxes or cutting spending. It's a bad thing for everyone else, because our money has been devalued. In reality, inflation is just another form of taxation.

Remember, it's your money!

It's our responsibility to ourselves, our children, grand-children and future generations to ensure that it is used wisely.

Job Creation, Stimulus or Pork?

We are told by the Congress that they must pass the $800-900 Billion plan to stimulate the economy and create millions of jobs.

Check out a summary of the bill by House Democrats here (skip past the first three pages and look at the laundry list of spending plans) or the actual bill here (if you are having trouble sleeping).

In case you don't have time to do either, here is just a sampling of items that may be worthy but may not create jobs or stimulate anything:

• $6.2 Billion to weatherize homes for low income families
• $13 Billion in Special Education grants
• $13 Billion in grants for disadvantaged kids
• $87 Billion to states for Medicaid costs
• $79 Billion to states for bonus grants, education, and other stuff
• My personal favorite: $650 million for coupons for Americans who have to buy converter boxes to go from analog to digital TV

See for yourself -- there are over 130 items in the summary. The Senate is deliberating on this today.

Ford Loses $5.9 Billion in Fourth Quarter, Rejects Bailout Money

After posting it's worst annual performance in it's 105 year history, Ford says it can survive 2009 without tapping into its line of credit with the Federal government. It does plan to exercise a $10.1 Billion secured line of credit just to make sure it has the cash on hand; not to fund current operations.

Ford took proactive actions in 2006 to raise $23 Billion, and thus has been able to forego loans from the federal government.

One analyst quoted in the article thinks that they will eventually need the money later this year.

Full article..

If you want to email Ford click here

In the spirit of full disclosure, we own a Taurus and Focus (grin).

"Free Money" - No Thanks

At least 50 banks who qualify to receive federal bailout money have rejected the funds (many of these are community banks). They are concerned about the "strings" being attached to those funds, which would limit thier ability to run the bank as they see fit (i.e. Federal government would place restrictions on certain activities). In addition, there is a provision in TARP that allows the government to unilaterally change the rules.

More Good News from Iraq

Iraqis voted in their elections yesterday -- basically a peaceful process with turnout between 50 and 75 percent, depending on the province.

Thanks to our men and women in uniform for making this possible!