Graph of Recent Federal Deficits

This is why I don't believe the White House when they claim they will fix the deficit "later."

Government Union Jobs Growing

While private industry continues to lose jobs, the number of government jobs continues to increase. This is a problem for several reasons:
1) you can't easily fire people from government jobs (even if they are incompetent or unnecessary),
2) government jobs are now paying more and giving more in benefits on average than the private sector (all of which are paid for by us), and
3) once you have a critical mass of people employed by the government, there is no incentive to reform or improve the efficiency of government.

While the private sector has lost 7 million jobs, the number of public-sector jobs has risen. The number of federal government jobs has been increasing by 10,000 a month, and the percentage of federal employees earning over $100,000 has jumped to 19 percent during the recession. (emphasis added)

Read more at the Washington Examiner: http://www.washingtonexaminer.com/politics/Public-sector-unions-bleed-taxpayers-to-help-Dems-83652517.html#ixzz0eyACifIL

Climategate

You may or may not have heard of "Climategate" -- a series of revelations about how scientific publications and government agencies have been trying to shore up claims of global warming by hiding or misrepresenting data, by not publishing scientific research that doesn't support global warming claims, and by "losing" data so that numbers can't be verified.

Two items that I remember hearing about when the original claims were made have been shown to be untrue:

• The Himalayan glaciers will not disappear by 2035. These claims were made by the IPCC (Intergovernmental Panel on Climate Change) in 2005 but the IPCC now admits they were not backed up by sufficient data.
  

• The IPCC falsely claimed that 40% of the Amazon rainforests would be wiped out if global warming continues - these claims were actually based on a study of logging and burning in forests, and had nothing to do with rainfall amounts or rising global temperatures*.

*Mean global surface temperatures have not risen since 1998, and, by some measures, have dropped since 2001.

If you would like to get up to speed on this issue, here is a good opinion piece that has lots of sources listed at the end.

Deficit Worse Than We Thought

A few days ago I posted on the record-breaking deficits for 2009 and 2010. Now the Obama Administration admits that the budget it is proposing will incur closer to a $1.6 Trillion deficit for 2010. This means that in two years of President Obama and Democrats in charge, our overall national debt will have gone up something like 30%. Here is some detail on action that Congress is likely to take this week.

The debt measure set for a House vote Thursday would raise the cap on federal borrowing to $14.3 trillion. That's enough to keep Congress from having to vote again before the November elections on an issue that is feeding a sense among voters that the government is spending too much and putting future generations under a mountain of debt to do it.

Already, the accumulated debt amounts to $40,000 per person. And the debt is increasingly held by foreign nations such as China.

Passage of the bill would send it to President Barack Obama, who will sign it to avoid a first-ever, market-rattling default on U.S. obligations. Democrats barely passed it through the Senate last week over a unanimous "no" vote from GOP members present.

To ease its passage, Democrats attached tougher budget rules designed to curb a spiraling upward annual deficit - projected by Obama to hit a record $1.56 trillion for the budget year ending Sept. 30. The new rules would require future spending increases or tax cuts to be paid for with either cuts to other programs or equivalent tax increases.

If the rules are broken, the White House budget office would force automatic cuts to programs like Medicare, farm subsidies and veterans' pensions. Current rules lack such teeth and have commonly been waived over the past few years at a cost of almost $1 trillion.

Skeptics say lawmakers also will find ways around the new rules fairly easily. Congress, for example, can declare some spending an "emergency" - a likely scenario for votes later this month to extend jobless benefits for the long-term unemployed.

Health Care Reform Still Lives

Even though most Americans don't want either version of the Health Care Reform bills passed by the House and Senate last year, they are still trying to figure out a way to pass it. But, they don't want to take out the "backroom deals" that were used to get certain Senators and Representatives to vote for the bill!! Here is a short list of some of the deals that are still in play (and remember, when they give money to one group or state, the rest of us have to make up the difference):A $300 million dollar deal for Louisiana to pay for their Medicaid costs

• Exempting Blue Cross Blue Shield of Michigan from a 40 percent tax on insurers that provide expensive health plans (other insurance companies are not exempt, and any insurance company in any state except Michigan is not exempt)
  
• An extra $500 million for Medicaid funding in Massachusetts
• An extra $600 million for Medicaid funding in Vermont
• Exempting labor unions from paying the tax on "Cadillac" (very high benefit) health plans

These are just the most egregious ones....there are many other provisions that are in the 2000+ page bills. One of my favorites is "an item that allows people who have been exposed to asbestos from a vermiculite mine in Libby, Mont., to receive Medicare assistance." Glad we have Federal laws to handle Libby, Montana!!

Options

I am not fond of Republicans or Democrats - both have had their chances to get our government under control, and both have instead chosen to increase the size and scope of our government.
However, I am tired of hearing Democrats paint Republicans as the "party of no" and say that Republicans have not offered alternatives. This is simply not true.

For a look at some Republican alternatives and ideas, check out their "Better Solutions" package and also Paul Ryan's op-ed piece in last week's Wall Street Journal.

There are lots of options for dealing with the issues that face this country - not just one.

Deficits and More Deficits

The Congressional Budget Office predicts the 2010 budget deficit will be $1.35 TRILLION, after a budget deficit in 2009 of $1.4 TRILLION. Yes, that is PER YEAR.

Compare that to the $455 Billion deficit the last year of the Bush Administration, which at that point was the largest deficit in history. That was a horrible deficit - it just looks tiny now in the face of annual deficits that are more than 3 Times the magnitude.

Since 2006, when Democrats took control of Congress (which is where money is spent), the deficit has increased 38%. It took us 60 years to get to a $10 Trillion deficit - we will be at $20 Trillion before you know it!!.

What is sad but funny about the new "spending freeze" proposed by President Obama is that the tiny part of the budget that it will affect (roughly 13%) will be "frozen" at the inflated spending levels of the last year!!

Health Care Reform - Common Sense

I really hope that Congress abandons both of the mammoth versions of Health Care Reform and starts over. Health care is an important issue that needs to be addressed but we need to use common sense when changing the system. An iterative approach makes more sense because the system is complex, most people are happy with their current coverage, and we need to be careful of the “law of unintended consequences.” There are two main problems that need to be fixed: high costs and lack of access.

Rather than have increased government supervision and control of our health care system, there are several things that could be done quickly that would begin to reduce costs. After implementing them, we can then see what further measures would be helpful.

1. Tort reform – health care costs are inflated by the high cost of malpractice insurance plus the need for doctors to practice “defensive medicine” by ordering tests and procedures solely to avoid lawsuits.
2. Increased competition among insurance companies – if we allowed insurance companies to compete across state lines, there would be more options for consumers to choose from and prices would go down. In order to foster this, a role for the federal government might be to profile 10 or 12 standard plans (with a variety of benefit levels and deductible options) that insurance companies would underwrite to, so that consumers could be better able to compare plans and see what they are really getting.
3. Allow smaller companies to band together to get cheaper and better insurance for their employees. Right now, they and their employees are at a huge disadvantage.
4. Continue to encourage people to use Health Savings Accounts to pay for their insurance and medical costs. For people who don’t have employer-provided insurance, this is one way to make buying insurance more feasible.
5. Deal with the issue of preexisting conditions. This can be tricky for a few reasons:
a. Insurance by its very nature is a way of managing risk. Companies in all kind of insurance (auto, life, etc.) charge different rates for those who pose different levels of risk. Without being able to do this, everyone pays a higher price for insurance.
b. If you just say that insurance companies can no longer rate for preexisting conditions or refuse coverage, then people will wait to buy insurance until they are sick (and why wouldn’t they?). This also will increase costs for those who are insured. And I don’t that forcing people to buy insurance just for being a citizen of the U.S. is constitutional.
c. The current system is unfair to those who have kept insurance coverage all their lives, done the right things, but lost their coverage due to loss of employment or other reasons. These people need to be able to get continuation of coverage without being subjected to preexisting conditions carve-outs. Likewise, children should be able to get health insurance (if their parents have it) without being subjected to preexisting conditions.

You could make a law that says if you have had insurance but lost coverage (due to unemployment or early retirement or whatever) then you cannot be refused or penalized for preexisting conditions. I’m sure there are other ideas and options on dealing with this critical issue.

I encourage everyone to contact your Representative and Senators and urge them to take a common sense, iterative approach to Health Care Reform.

Bank Tax - Beware

The new word from Washington is that we need to tax big banks to pay for TARP. While this may feel good from an anger standpoint, we should consider this carefully.

1. This tax would go on banks who did not participate in TARP at all. It would also go on banks who have repaid their TARP money (with interest). And remember that the government forced healthy banks to participate in TARP so that we wouldn't have a "run" on the unhealthy banks.
   
2. The tax would do nothing to get AIG and GM and Chrysler (along with GMAC) to repay the hundreds of billions of dollars we taxpayers loaned them through TARP.
3. The tax would do nothing to get back the hundreds of billions of dollars we taxpayers gave Fannie Mae and Freddie Mac in the past year, nor will it fix the problems in Fannie Mae & Freddie Mac that keep them coming back to us for more bailouts.
4. While it sounds good to tax big banks, guess who ends up paying? When entities have increased costs (like taxes) they pass them along to their customers (you and me).
5. Not only that, but if you want banks to lend more, then why are you taking away from the amount of money that they have to lend?
6. There are no restrictions on what is done with the money raised by this proposed tax – it will just go in the big pot of money that Congress likes to spend.
   

What is really sad about this is that the politicians are trying to make us feel they are doing something by blaming the big banks….all the while their friends at Goldman Sachs and AIG and Fannie Mae continue to rake in the money.

Don’t be fooled by this misdirection.

Openness and Transparency.....

This is unbelievable....makes you wonder what they are hiding. By the way, the reason they are talking about putting a new tax on banks is to help subsidize the bailouts they gave to AIG and the auto companies. (I'm sure you can figure out that any new tax on banks will be passed on to banking customers - we paid the first time in the bailouts and we will get to pay again!).

It could take until November 2018 to get the full story behind the U.S. bailout of insurance giant American International Group (AIG.N) because of an action taken last year by the Securities and Exchange Commission....

....The SEC's decision to approve AIG's request for confidential treatment got scant attention at the time. But it could spark controversy now following the release last week of 14-month-old emails that reveal that some at the New York Fed had discussions with AIG officials about how much information should be disclosed to the public about the Maiden Lane III transaction.

The New York Fed, then led by Treasury Secretary Timothy Geithner, plays a critical role in the world of finance given its close dealings with all the major Wall Street banks, many of which were counterparties of AIG.

SEC spokesman John Nestor declined to comment on the reasons for granting AIG's request to treat the exhibit as confidential.

Bad News for All of Us

There are now more government workers than "goods producing" workers (e.g. manufacturing). In the past year, the only area of job growth in the country has been government jobs.

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? …”