Only two days ago I wrote this post regarding the debt limit talks between Congress and Wonderboy. Since then, he's held yet another press conference after an emergency Thursday morning session, declaring that progress is being made. But he also lashed out at Republicans once again, claiming they were trying to steal money from seniors via Medicare and Social Security to give to wealthy Americans in the form of tax breaks for private jets and the like.
The guy doesn't know when to shut up, does he? Would you negotiate in good faith with a guy who demonized you in public?
Neither would I.
Still, Boehner had claimed that he was optimistic a deal will be made which he can sell to his members, including those who won't vote for tax increases. The new language being used regarding taxes is 'no net revenue increases.'
Sounds like a fig leaf for somebody. Either tax rates and items taxed increase, or they don't. Then people will behave accordingly and the federal government will still collect no more than about 18% of GDP.
I'm so sick and tired of listening to Bloomberg's liberal political retread, the wizened, not-too-bright Al Hunt, and CNBC's "Red" John Harwood telling viewers that taxes just have to be raised because you can't cut spending enough to eliminate deficits.
What nonsense! That seems to be where Democrats show their innate stupidity. They treat tax rates arithmetically, never seeming to comprehend that you get less activity of what you tax. That consumers and producers respond to minimize taxes paid, which is why the long run average is 18% of GDP.
This morning's unemployment news has apparently affected the talks. Boehner has now said no deal is in sight, while June's monthly jobs were a horrifyingly small 18,000 and the unemployment rate is now up to 9.2%.
Wonderboy's labor secretary was on Bloomberg this morning blaming Bush and calling for even more "infrastructure stimulus" spending. The woman just has no clue.
Personally, I was not happy at the thought of a last-minute, desperate grand bargain on the tax code, spending cuts and the debt limit. Too much badly-designed legislation too quickly, all to satisfy a megalomanical president with no real legislative or governing experience.
Oddly, I'm feeling less worried now that Boehner issued his statement that no deal is now imminent.
Allegedly, there's supposed to be another meeting between Congressional leaders and Wonderboy on Sunday.
Stay tuned....
Friday, July 8, 2011
Thursday, July 7, 2011
Us Local Government Pension Costs
Steve Malanga wrote a scary editorial in an edition of last week's Wall Street Journal entitled The Local Government Pension Squeeze. For those who don't take Meredith Whitney's warnings of US city, county and town bankruptcies seriously, consider what Malanga reported.
The featured text box for the article stated this,
"Annual retiree costs for Providence, R.I., now amount to an astounding 50% of city tax collections."
New Haven's Democratic mayor John DeStefano calls municipal employee pay and benefits "the Pac-Man of our budget, consuming everything in sight."
To further understand why Whitney focuses not on state bankruptcies, but local governments, consider this passage from Malanga's editorial,
"Wages and benefits account for 30% of state general fund expenditures, according to date from the National Governors Association. But U.S. Census surveys show that in the typical town or school district, employee pay and benefits can consume from 70% to 80% of the budget.
Pensions are an enormous part of the problem. While pension payments now consume about 4% of state budgets, many municipalities are already spending 15% to 20% of their finances on pension costs."
Here are some additional scary data regarding municipal finances and pension costs,
"Costa Mesa, Calif. (population 110,000) made news earlier this year when it sent layoff notices to 43% of its employees. In 10 years, the city's annual pension bill increased to $15 million from $5 million and now consumes 16% of the city's $93 million budget. In nearby Anaheim, pensions already account for 22% of its $252 million budget. San Jose's pension costs for police and firefighters have quadrupled in a past decade. Without reform, the city estimates that its yearly pension costs, $63 million in 2000, will swell to $650 million in 2015."
San Jose was, as of July two years ago, the tenth-largest US city. It's not some quaint little Silicon Valley town anymore. Yet it, too, despite being populated by so many smart technology employees, is on its way to drowning in municipal pension expenses. Then Malanga provides these data on older cities,
"Elsewhere the numbers are even scarier. Chicago's unfunded public pension fund liabilities are estimated by Joshua Rauh of Northwestern University and Robert Novy-Marx of the University of Rochester at $44 billion—nearly eight times annual city tax revenues. New York City's annual pension contributions were $1.5 billion (6% of city revenues) in 2002. They've exploded to an estimated $8.4 billion (18% of city revenues) in 2012."
So Chicago is, like the state in which it is located, a fiscal basket case.
The delicate ballet of state-local financing isn't typically understood by most voters, which is probably why Whitney's predictions meet with such disbelief. For example, read Malanga's remarks on that subject,
"School districts in New York State contributed $900 million last year to the state's teacher pension system, but districts may have to spend as much as $4.5 billion on pensions within five years to meet rising costs, according to a December 2010 study by the Manhattan Institute. Local property taxes would have to increase an average of 3.5% a year just to pay for those added pension costs, the study estimated.
The budget pain is likely to worsen. Since 2008, states have balanced their own budgets in part by reducing the financial aid they send to municipalities and school districts. And although the main source of revenue for many municipalities—property taxes—kept rising during much of 2008 and 2009 because of multiyear property assessments that stretched back to good economic times, collections are now starting to plummet."
Thus, states are cutting contributions to towns and school districts to balance their budgets, as most are obligated to do. This leaves towns with property tax revenues, which ,thanks to the housing bust, are now headed down, on more recent valuations, instead of up. How to cope? Malanga provides some ugly details right up Whitney's alley,
"Many cities that have employed budget gimmicks in the past have run out of alternatives. To balance its 2010 budget, Providence, R.I., borrowed some $48 million (using its fire stations as collateral); it also drained most of its reserve fund, which shrank to $3 million from $17 million in one year. But the city remains under severe budget pressure—its annual retiree costs now amount to an astounding 50% of its tax collections, according to a new study from the Rhode Island Expenditure Council.
After years of hiring increases, officials surveyed by the National League of Cities estimated that they have cut their work forces by about 9% in the last two fiscal years. More reductions are on the way. Cities like New Haven, Detroit and Chicago are all looking at outsourcing jobs in areas like trash collection or custodial services to the private sector, where costs are generally lower."
Imagine that! Cities actually outsourcing routine services because the private sector provides them, on contract, at lower costs. And unlike municipal unions and their workers, who are difficult with whom to deal and to fire, contracts for services can have performance and penalty clauses, and be re-let on explicit schedules, to prevent uncompetitive cost-creep.
But the overall picture Malanga paints ought to scare everyone. Not to mention put a more appropriate backdrop to the current federal debt limit/spending/tax hike debates in place.
We, as a society, have simply lost the ability, it seems, to save for what we want. Instead, we just promise each other unrealistic financial sums, then borrow and spend them without knowing from where and how the real costs of said promises will met.
Doesn't that sound like a game of financial musical chairs? Or, by it's other name, a Ponzi scheme?
Yes, it does.
The featured text box for the article stated this,
"Annual retiree costs for Providence, R.I., now amount to an astounding 50% of city tax collections."
New Haven's Democratic mayor John DeStefano calls municipal employee pay and benefits "the Pac-Man of our budget, consuming everything in sight."
To further understand why Whitney focuses not on state bankruptcies, but local governments, consider this passage from Malanga's editorial,
"Wages and benefits account for 30% of state general fund expenditures, according to date from the National Governors Association. But U.S. Census surveys show that in the typical town or school district, employee pay and benefits can consume from 70% to 80% of the budget.
Pensions are an enormous part of the problem. While pension payments now consume about 4% of state budgets, many municipalities are already spending 15% to 20% of their finances on pension costs."
Here are some additional scary data regarding municipal finances and pension costs,
"Costa Mesa, Calif. (population 110,000) made news earlier this year when it sent layoff notices to 43% of its employees. In 10 years, the city's annual pension bill increased to $15 million from $5 million and now consumes 16% of the city's $93 million budget. In nearby Anaheim, pensions already account for 22% of its $252 million budget. San Jose's pension costs for police and firefighters have quadrupled in a past decade. Without reform, the city estimates that its yearly pension costs, $63 million in 2000, will swell to $650 million in 2015."
San Jose was, as of July two years ago, the tenth-largest US city. It's not some quaint little Silicon Valley town anymore. Yet it, too, despite being populated by so many smart technology employees, is on its way to drowning in municipal pension expenses. Then Malanga provides these data on older cities,
"Elsewhere the numbers are even scarier. Chicago's unfunded public pension fund liabilities are estimated by Joshua Rauh of Northwestern University and Robert Novy-Marx of the University of Rochester at $44 billion—nearly eight times annual city tax revenues. New York City's annual pension contributions were $1.5 billion (6% of city revenues) in 2002. They've exploded to an estimated $8.4 billion (18% of city revenues) in 2012."
So Chicago is, like the state in which it is located, a fiscal basket case.
The delicate ballet of state-local financing isn't typically understood by most voters, which is probably why Whitney's predictions meet with such disbelief. For example, read Malanga's remarks on that subject,
"School districts in New York State contributed $900 million last year to the state's teacher pension system, but districts may have to spend as much as $4.5 billion on pensions within five years to meet rising costs, according to a December 2010 study by the Manhattan Institute. Local property taxes would have to increase an average of 3.5% a year just to pay for those added pension costs, the study estimated.
The budget pain is likely to worsen. Since 2008, states have balanced their own budgets in part by reducing the financial aid they send to municipalities and school districts. And although the main source of revenue for many municipalities—property taxes—kept rising during much of 2008 and 2009 because of multiyear property assessments that stretched back to good economic times, collections are now starting to plummet."
Thus, states are cutting contributions to towns and school districts to balance their budgets, as most are obligated to do. This leaves towns with property tax revenues, which ,thanks to the housing bust, are now headed down, on more recent valuations, instead of up. How to cope? Malanga provides some ugly details right up Whitney's alley,
"Many cities that have employed budget gimmicks in the past have run out of alternatives. To balance its 2010 budget, Providence, R.I., borrowed some $48 million (using its fire stations as collateral); it also drained most of its reserve fund, which shrank to $3 million from $17 million in one year. But the city remains under severe budget pressure—its annual retiree costs now amount to an astounding 50% of its tax collections, according to a new study from the Rhode Island Expenditure Council.
After years of hiring increases, officials surveyed by the National League of Cities estimated that they have cut their work forces by about 9% in the last two fiscal years. More reductions are on the way. Cities like New Haven, Detroit and Chicago are all looking at outsourcing jobs in areas like trash collection or custodial services to the private sector, where costs are generally lower."
Imagine that! Cities actually outsourcing routine services because the private sector provides them, on contract, at lower costs. And unlike municipal unions and their workers, who are difficult with whom to deal and to fire, contracts for services can have performance and penalty clauses, and be re-let on explicit schedules, to prevent uncompetitive cost-creep.
But the overall picture Malanga paints ought to scare everyone. Not to mention put a more appropriate backdrop to the current federal debt limit/spending/tax hike debates in place.
We, as a society, have simply lost the ability, it seems, to save for what we want. Instead, we just promise each other unrealistic financial sums, then borrow and spend them without knowing from where and how the real costs of said promises will met.
Doesn't that sound like a game of financial musical chairs? Or, by it's other name, a Ponzi scheme?
Yes, it does.
Wednesday, July 6, 2011
More Debt Limit Propaganda from Wonderboy
Following on this recent post, and this one, regarding the summer's main political drama, the US debt limit, it seems timely to write about it again.
After one press conference and an address yesterday afternoon that I skipped, Wonderboy has attempted to cast the issue as GOP Congressional members refusing to raise taxes on the rich.
However, yesterday morning on CNBC, I saw/heard Senator Pat Toomey (R-PA) correctly frame it this way. To paraphrase, he said,
'I've got a list of spending cuts in mind. The Democrats have a list. Compromise would be to agree on some mix of the two lists. Not to suddenly add raising taxes to the discussion. That's not compromise.'
It's a fair point. Further, the responsibility for this mess is Wonderboy's. He's the president. It's his job to get Congress to vote on things he wants, or to get them to vote on what works.
The GOP has an argument which I haven't yet heard them use. To wit, the First Rookie won election almost three years ago, then wasted over a trillion dollars on useless so-called 'stimulus' spending, while ramming through trillions more in longer term spending under the guise of nationalized health care.
The GOP House majority was elected less than a year ago, as were its new Senators. They are the product of voters' more current concerns with spending and size of federal government.
If you go through the recent history of House and Senate votes on various budgets, you'll see that even Democrats in Congress no longer will vote for higher spending or higher taxes, straight up. They know those are not issues on which they'll be re-elected for supporting.
If the president wants to reform the tax code, that's great! The GOP should certainly sit at that table. But as Toomey points out, that's not the same table as the spending-cut table at which the debt limit is being discussed.
It's a testament to Wonderboy's lack of governing or legislative experience that he's decrying smaller total spending cuts which could be achieved to pass a debt limit increase, in favor of some larger targets which are unlikely to be met if they require tax increases or a massive tax code rewrite.
After one press conference and an address yesterday afternoon that I skipped, Wonderboy has attempted to cast the issue as GOP Congressional members refusing to raise taxes on the rich.
However, yesterday morning on CNBC, I saw/heard Senator Pat Toomey (R-PA) correctly frame it this way. To paraphrase, he said,
'I've got a list of spending cuts in mind. The Democrats have a list. Compromise would be to agree on some mix of the two lists. Not to suddenly add raising taxes to the discussion. That's not compromise.'
It's a fair point. Further, the responsibility for this mess is Wonderboy's. He's the president. It's his job to get Congress to vote on things he wants, or to get them to vote on what works.
The GOP has an argument which I haven't yet heard them use. To wit, the First Rookie won election almost three years ago, then wasted over a trillion dollars on useless so-called 'stimulus' spending, while ramming through trillions more in longer term spending under the guise of nationalized health care.
The GOP House majority was elected less than a year ago, as were its new Senators. They are the product of voters' more current concerns with spending and size of federal government.
If you go through the recent history of House and Senate votes on various budgets, you'll see that even Democrats in Congress no longer will vote for higher spending or higher taxes, straight up. They know those are not issues on which they'll be re-elected for supporting.
If the president wants to reform the tax code, that's great! The GOP should certainly sit at that table. But as Toomey points out, that's not the same table as the spending-cut table at which the debt limit is being discussed.
It's a testament to Wonderboy's lack of governing or legislative experience that he's decrying smaller total spending cuts which could be achieved to pass a debt limit increase, in favor of some larger targets which are unlikely to be met if they require tax increases or a massive tax code rewrite.
Tuesday, July 5, 2011
GOP Game-Playing with Budget Cuts
I read with disgust Kim Strassel's recent Wall Street Journal editorial spotlighting GOP House member Frank Lucas, chairman of the Agriculture Committee.
After spending- and deficit-hawk Jeff Flake had done some remarkable work to rein in payments to high-income farmers, Lucas
"swept in and used a procedural maneuver on the House floor to strike the Flake language. This helped ensure that an estimated $160 million in payments would continue to flow to farmers in states like his own, Oklahoma."
Strassel's piece makes the point that, if done correctly, the House spending cuts will be eliminating a lot of useless pork, thus contradicting Wonderboy's concerns that the only cuts are coming to seniors and the like.
Of course, as Strassel emphasizes, even in this era of focus on spending cuts, old GOP House bulls like Frank Lucas still don't get it. This is why voters are so angry. It's why the Tea Party gained so much momentum.
And why, if Boehner continues to let antics like Lucas' continue, the GOP could lose seats in the House next year.
It's time the GOP really meant it when it claims to hear voters and want to cut spending and eliminate nonsensical use of taxpayer funds. The Agriculture department is one which, like Education, could be wiped out and it's debatable that anyone but those collecting payments from those entities would really notice.
After spending- and deficit-hawk Jeff Flake had done some remarkable work to rein in payments to high-income farmers, Lucas
"swept in and used a procedural maneuver on the House floor to strike the Flake language. This helped ensure that an estimated $160 million in payments would continue to flow to farmers in states like his own, Oklahoma."
Strassel's piece makes the point that, if done correctly, the House spending cuts will be eliminating a lot of useless pork, thus contradicting Wonderboy's concerns that the only cuts are coming to seniors and the like.
Of course, as Strassel emphasizes, even in this era of focus on spending cuts, old GOP House bulls like Frank Lucas still don't get it. This is why voters are so angry. It's why the Tea Party gained so much momentum.
And why, if Boehner continues to let antics like Lucas' continue, the GOP could lose seats in the House next year.
It's time the GOP really meant it when it claims to hear voters and want to cut spending and eliminate nonsensical use of taxpayer funds. The Agriculture department is one which, like Education, could be wiped out and it's debatable that anyone but those collecting payments from those entities would really notice.
Monday, July 4, 2011
Is Mark Halperin Right? Is Obama a D**k?
MSNBC suspended Mark Halperin from whatever his role is at the network for replying to Joe Scarborough that Wonderboy was "a d**k" for his remarks regarding the debt limit at his recent press conference.
I must agree with Halperin. Forget his apologies and various backtracking- he was right the first time.
If you saw the First Rookie's act last week, then you know that he lashed out irresponsibly, as usual, at selected targets. Republicans in Congress were blamed for Wonderboy's own party's running up more than a trillion dollars of debt in the past two years. Corporate executives using private aircraft to improve productivity of their employees were scourged for presumed luxury consumption of air travel.
Never one to take responsibility for, well, anything, Obama simply blamed everyone else for any fiscal problems in his administration.
Deficits ballooning? Raise taxes on the rich or those who use things that make them look rich.
By the way, those private aircraft enable businesses to better-manage their operations. And those aircraft provide jobs in manufacture and servicing. Even the machinists' union criticized Wonderboy's thoughtless remarks about those private aircraft.
Spending too high? Demagogue about cutting payments to seniors while so-called 'tax cuts for billionaires' were signed into law last year by.....aah.....him.
Yes, he's a d**k alright. He's not interested in governing America to make it better. He's only interested in advancing his liberal agenda of fiscally wrecking the country while he attempts to remain personally well-liked.
I must agree with Halperin. Forget his apologies and various backtracking- he was right the first time.
If you saw the First Rookie's act last week, then you know that he lashed out irresponsibly, as usual, at selected targets. Republicans in Congress were blamed for Wonderboy's own party's running up more than a trillion dollars of debt in the past two years. Corporate executives using private aircraft to improve productivity of their employees were scourged for presumed luxury consumption of air travel.
Never one to take responsibility for, well, anything, Obama simply blamed everyone else for any fiscal problems in his administration.
Deficits ballooning? Raise taxes on the rich or those who use things that make them look rich.
By the way, those private aircraft enable businesses to better-manage their operations. And those aircraft provide jobs in manufacture and servicing. Even the machinists' union criticized Wonderboy's thoughtless remarks about those private aircraft.
Spending too high? Demagogue about cutting payments to seniors while so-called 'tax cuts for billionaires' were signed into law last year by.....aah.....him.
Yes, he's a d**k alright. He's not interested in governing America to make it better. He's only interested in advancing his liberal agenda of fiscally wrecking the country while he attempts to remain personally well-liked.
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