No Runny Eggs

The repository of one hard-boiled egg from the south suburbs of Milwaukee, Wisconsin (and the occassional guest-blogger). The ramblings within may or may not offend, shock and awe you, but they are what I (or my guest-bloggers) think.

Archive for the 'Politics' Category

May 27, 2009

Wednesday (or is it Thursday?) Hot Read – MKH’s “Are You Ready for a VAT?”

by @ 23:56. Filed under Politics - National, Taxes.

Those who know me know that I have a crush on Mary Katharine Ham. That I find her very attractive does not diminish in the least the brilliance of this tour de force on the onrushing VAT to supposedly pay for health care. Let’s take a few paragraphs from the middle:

Remain extremely skeptical, folks. No matter how much lovely alliteration Obama uses to describe this plan, it’s just another pathway into your wallet for the federal government. It’s just another source to tap for revenue when they’re unwilling to make “tough choices.” It will go up and up, and the relief the nation sees on the corporate income tax or the income tax as a trade-off will be precious little in the Congress we’ve got now.

It should also be noted that the VAT costs $3 billion just to collect in Canada, according to the National Post, on top of the added cost to every single item you buy, every day.

Luckily, because the VAT is a highly visible tax and disproportionately affects the poor, constituents and even their tax-happy Democrat representatives are likely to be wary about enacting one. Heck, even the floating of one might be enough to earn Republicans a few points on the generic ballot.

I hate to have to quibble on a point, but I must. As Charlie Sykes said in his post on this, “Don’t count on it. Just ask smokers.” In fact, depending on the labeling requirements, it can be very easy to hide this (no, I will not say any more; even though I realize that anything I can think of the tax-and-spend-and-tax-and-spend-and-tax-and-spenders can, I’m not in the business of making their jobs easier).

With that out of the way, the fact that every level of production sees a sales tax which is based on the difference of the purchase price of the product (or raw material) and the sale price of the product is a massive drain on the producer. Even a “simple” product like Mountain Dew has 16 different components the bottler has to keep track of.

Related to that, it is impossible to claim that a VAT of X% will not cost more than a end-user sales tax of the same X%. That is becasue not every raw material involved in the manufacture of, say, Mountain Dew has the same number of steps between the individual raw materials and final consumption.

While I won’t steal more of Mary’s content, I do have to comment on another aspect she brought up – the Left’s proposed dual-mode tax scheme. The existence of two different stages of taxation (in this case, wealth-acquisition and wealth-expenditure) makes it easier for government to raise first one stage, then the other. The older among us in Wisconsin remember when the sales tax was a “mere” 4%, and then “temporarily” raised to 5%. In a couple weeks, depending on one’s locale and choice of expenditure, that will be as high as 6.85%. Meanwhile, there’s a new, higher top income tax bracket in that same budget that will hike Milwaukee County’s sales tax rate by a percentage point.

So, what are you still doing here (other than wondering why The Weekly Standard doesn’t offer comments)? Go. Read! NOW!

We’ll know the rest of the sausage tomorrow

by @ 22:41. Filed under Politics - Wisconsin.

WisPoliitcs is reporting that the Dems in the Joint Finance Committee have figured out every other way they’re going to screw the taxpay…er, fudge the numbers in the FY2010-FY2011 budget. Since they don’t want to miss last call while waiting for the Joint Fiscal Bureau to draw up the motions, instead of delaying the start of tonight’s session another 3 hours, they’re supposedly going to show up at the crack of noon to ram it home.

As Asian Badger would say, grab the K-Y.

Revisions/extensions (10:57 pm 5/27/2009) – Speaking of the K-Y, this “compromise” on the elimination of the QEO from WEAC which purports to delay the elimination for a year, isn’t exactly passing the smell test. What I believe will happen is that it will be written in such a way that Doyle can line-item out the delay, while leaving items friendly to WEAC and unfriendly to taxpayers intact.

First, and maybe last, post on Justice-designee Sonia Sotomayor

by @ 22:11. Filed under Lawgivers-In-Black, Politics - National.

Between focusing on the government/UAW takeover of 2/3rds of the Not-So-Big Three, keeping an eye on what the Spendocrats who run the Joint Finance Committee are throwing on the funeral pyre known as the FY2010-FY2011 Wisconsin budget, and preparing for my annual spring walleye hunt, I haven’t exactly been keeping an eye on the nomination of Judge Sonia Sotomayor to replace retiring Justice David Souter. Fortunately, Karl Rove is better-able to handle multitasking. He wrote in tomorrow’s Wall Street Journal regarding the Sotomayor nomination, and what the Senate Republicans can and should do:

The Sotomayor nomination also provides Republicans with some advantages. They can stress their support for judges who strictly interpret the Constitution and apply the law as written. A majority of the public is with the GOP on opposing liberal activist judges. There is something in our political DNA that wants impartial umpires who apply the rules, regardless of who thereby wins or loses.

Mr. Obama understands the danger of heralding Judge Sotomayor as the liberal activist she is, so his spinners are intent on selling her as a moderate. The problem is that she described herself as liberal before becoming a judge, and fair-minded observers find her on the left of the federal bench….

Nonetheless, Republicans must treat her with far more care than Democrats treated John Roberts or Samuel Alito and avoid angry speeches like Sen. Ted Kennedy’s tirade against Robert Bork. The GOP must make measured arguments against her views and philosophy, using her own words and actions.

Indeed, those are wise words for the rest of us right-of-center, words that are echoed by Fox News’ Brit Hume (H/T – Mike)…
[youtube]http://www.youtube.com/watch?v=FDZa2QmezPE[/youtube]

Of course, I expect Shoebox (if he manages to come up for air long enough to comment on this) and the co-bloggers to make further comments about the nomination. Somehow I expect to see that she was confirmed by the time I get back from vacation next week Saturday.

Union battle over Chrysler – revisited

by @ 18:00. Tags:
Filed under Business, Politics - National.

Earlier, I brought you news of three Indiana government trust funds (two pension funds and a construction fund) holding senior secured Chrysler debt that had sued (unsuccessfully, at least at this point) to stop the “sale” of Chrysler to the UAW, the American and Canadian governments, and Fiat because they would get far less consideration than the junior creditor UAW. While reading through the comments at a Hot Air post on the shutdown of GM’s stock-for-bonds offer), what is happening between the UAW’s retiree health-care fund (VEBA) plan and the various pension funds (mostly for the benefit of unionized government workers) hit me like a freight train.

It’s not exactly a battle between the UAW and the government unions. Since VEBAs are not defined-benefit plans, they are not covered by the Pension Benefit Guaranty Corporation. Worse, at least from the UAW’s, and thus the Democrats’, point of view, the VEBA obligations are junior in stature.

Since GM and Chrysler are utterly incapable of meeting their full obligations to the VEBAs ($20 billion and $10.6 billion respectively), even in the event of liquidation, a pair of complicated schemes to make the UAW whole came about. In both cases, the UAW was given preferential treatment over other creditors, including creditors senior to it. What is left unreported is that many of those creditors are the aforementioned pension funds, which would be made substantially-whole by the PBGC.

As I termed it in the comments, it’s the Chicago Double-Tap. Step 1 was to screw everybody to make whole the suddenly-politically-powerful UAW. Step 2 is to make the traditionally-politically-powerful government unions that were screwed whole. Other funds, like Indiana’s road construction fund, and the various 401(k)/403(b)/IRA plans, would still be left hung out to dry. Somehow, I doubt that is an unplanned coincidence.

May 26, 2009

BOHICA – cell-phone edition

by @ 23:53. Filed under Politics - Wisconsin, Taxes.

Kelly William Cobb over at Americans for Tax Reform put up a post outlining just how bad Doyle and the Spendocrats have it for the money of cell-phone users:

  • First, they raided the $20 million left over in the now-sunsetted E911 fund. That’s right; instead of you getting that $20 million overpayment to upgrade the 911 system to allow the dispatchers to find you if you call them on a cell phone, they’re going to spend it.
  • Then, they created a fresh $0.75/line/month tax on both cell phones and landlines to supposedly fund another upgrade to the 911 system. That would replace an existing $0.16/line/month charge on landlines.
  • For the first time, the Universal Service Fund fee of $0.56/line/month will apply to cell phones, to the tune of about $18.8 million/year.

All told, that’s roughly $100 million per year in new cell-phone taxes according to ATR. But wait, it gets worse. First, Rep. Kevin Petersen (R-Waupaca) reports that the Joint Finance Committee raided $11.2 million of the USF fund for public libraries.

Second, forget about that “next-gen” E911 system – Doyle wants to raid that to directly pay for police and fire.

I could bring up what Doyle said in 2003 (again), but like any ‘Rat, he doesn’t care about lying.

Revisions/extensions (12:15 am 5/27/2009) – The Wisconsin State Journal reports (H/T – The MacIver Institute) that the 911 fund diversion would make Wisconsin ineligible for federal grants to help pay for that “next-gen” 911 system, and that including the cell-phone charge as part of that diversion would violate federal law.

Also, since the 911 fund would replace the current $0.16/line/month charge on landlines, that diversion would cause a $7 million local tax increase.

R&E part 2 (10:50 pm 5/27/2009) – I probably should have done this while temporarily at the keyboard this afternoon, but thanks for the link-love, Americans for Tax Reform. Oh well, better late than never.

Meanwhile, WisPolitics is reporting that the rest of the Necro-budget (© Kevin Binversie) will be passed by the Joint Finance Committee tomorrow. Since Democrats control the entire process, what comes out of the JFC is likely what will plop onto Jim Doyle’s desk.

One note; since the Wisconsin line-item veto is still one of the most-powerful in the country, and because Doyle has no respect for the Wisconsin Constitution, it is vital to not only pay attention to the JFC votes, but to the actual verbiage used. Just one item I’m keeping an eye on – the proposed “compromise” from WEAC (the largest teachers’ union) that would delay the elmination of the QEO (the prohibition of work stoppages by teachers as long as a district offered a 3.86% annual total compensation increase) by a year.

As the wheels turn, automaker edition

by @ 21:42. Tags:
Filed under Business, Politics - National.

The first stop is at UAW Motors (formerly known as Chrysler). Reuters reports (H/T – Gabriel Malor) that a District Court case brought by three Indiana trust funds (the teachers’ union retirement fund, the police retirement fund, and a road construction fund) has been rejected, which means the sale of Chrysler to the UAW/Fiat/US government/Canadian government (technically a hearing on that sale in bankruptcy court) will go on as scheduled tomorrow. The trust funds have been arguing that the federal government does not have any authority to give funds to Chrysler to facilitate the sale, which Judge Thomas Griesa sidestepped in his denial of the motion.

The next stop is Govern…er, General Motors, and their agreement with the UAW. Reuters has a comprehensive summary of that. The Cliff’s Notes version (which assumes that GM doesn’t go into bankruptcy; more on that in a bit):

  • In exchange for a $10 billion payment into the VEBA (the retiree health care fund that GM was scheduled to pay $20 billion), the UAW would get a 17.5% common-share stake (with warrants to increase it to 20%), a $6.5 billion, 9% dividend (or $585 million/year) prefered-share stake, and a $2.5 billion note (with an effective APR of 11.1%, and scheduled payments of $1.38 billion in 2013, 2015 and 2017). Previously, GM had offered a 39% common-share stake to the UAW.
  • GM reacquires 5 Delphi plants in Michigan, New York and Indiana.
  • GM will make its small cars at an idled UAW plant, and will reopen 3 additional assembly and 1 stamping plant if sales “beat expectations”.
  • GM will offer buyouts to all its UAW-represented employees.

The $1 billion-17.5% common-share UAW stake would make the common shares worth just over $5.7 billion at issuance of that stake. Reuters notes in that summary that other creditors and the government would get the rest of the common-share stake (more on that in a bit), with no mention of the fate of the current stock. The prior reorganization plan had the government getting 55%, UAW getting 39% in exchange for the $10 billion VEBA liability, unsecured bondholders getting 10%, and the current stockholders getting 1%, with the common shares worth $25.65 billion at issuance assuming the $10 billion-39% common-share UAW stake ratio).

Assuming that the current stockholders would still get 1% of the company, their current $873.1 million net investment (down from $1.25 billion when the previous reorganization plan was announced last month) would dip to $57 million (down from $256 million in the previous reorganization plan, which was rather inflated).

Stop number three is Governme…er, General Motors and the bondholders. Reuters has the interest in the aforementioned $27 billion for 10% stake offer, which expires in a couple hours and requires a 90% acceptance level to stave off bankruptcy, at well under 10%. Meanwhile, Fox Business says that the process could run all the way through the end of the weekend and up to the June 1 GM drop-dead deadline set by the Obama administration.

The final stop is Government (screw it, it’s no longer General) Motors and the government. The New York Times reports that the new deal envisions the federal government taking 70% of the common stock, with another $70 billion-$90 billion in taxpayer money on top of the $20 billion in TARP money already “loaned” anticipated to get GM through the bankruptcy process. Remember that UAW Motors will not be paying back either the $4.3 billion in TARP money that Chrysler received or the $3.2 billion in interim government bankruptcy financing, but will be expected to pay back the $6.2 billion in post-bankruptcy taxpayer money loaned to it. Using that ratio, it looks like there’s $60 billion, give or take $10 billion, down the hole in exchange for $4 billion in Government Motors stock.

Revisions/extensions (10:15 pm 5/26/2009) – DrewM. points us to an interesting quote in The News Organization That Cannot Be Quoted’s™ story from Kip Penniman, analyst for KDP Investment Advisors:

If GM announced they got low single-digit participation, it would be a slap to GM and the absolute response to the Treasury-mandated offer. … A cynical person would say that the offer was set up to ensure GM would go into Chapter 11 and provide the government a scapegoat.

That story also notes that those bondholders with credit default swaps could make up to $2.33 billion in the event of a GM bankruptcy filing. It does not specify what percentage of bondholders has credit default swaps, but under the prior, highly-inflated plan, the at-issuance worth of the bondholders’ equity stake would have been $2.56 billion, and under the current plan (assuming they still get 10% of the equity), the at-issuance worth of that stake would be $570 million. Do remember that the paper value of those bonds is $27 billion.

Further, The Wall Street Journal reports that, unlike the Chrysler offering, the government is going to pay off the secured creditors in full, to the tune of $6 billion.

ObamiNation turning on its master?

by @ 11:32. Filed under Politics - National.

(H/T – Rob Port)

Rasmussen reports that, as part of their daily tracking polls, the Presidential Approval Index (the “strongly approve” minus the “strongly disapprove”) dropped to its lowest number yet for President Obama, a +1 (31% strongly approve, 30% strongly disapprove). Of note, the 31% strongly approve is a new low.

We’re not quite at the overall low differential of +8 (on 4/22) yet, but with total approval at 55% and total disapproval at 44%, we’re close.

NML wants to soak you so it doesn’t have to pay

by @ 10:51. Filed under Choo-choos, Idiotorial of the Day, Politics - Milwaukee, Politics - Milwaukee County, Politics - Oak Creek, Politics - Wisconsin.

(H/T – Patrick McIlheran via Dad29)

Edward Zore, CEO of Northwestern Mutual Life, had perhaps the dumbest letter ever published in yesterday’s Milwaukee Journal Sentinel. Let’s start by fisking said letter:

I am writing to express my support for the creation of a three-county Regional Transit Authority and a viable, dedicated funding source for transit and Kenosha-Racine-Milwaukee commuter rail. As CEO of a major business in Milwaukee County, I know dedicated funding for transit is critical to the future success of my business.

The local business community in Milwaukee is solidly behind the current RTA’s recommendations to shift funding for transit to a dedicated sales tax. Many opponents of this transit proposal argue that shifting transit from the property tax to a sales tax is anti-business or will drive business away. That is categorically untrue.

As one of the commenters over at P-Mac’s place said, I wonder if Zore’s attitude would change if insurance premiums on NML policies were subject to that sales tax. Dad29 notes that businesses like NML pay a lot in property tax, but don’t exactly pay a lot in sales tax.

A quick point or two of order – while there is a 3-county transit authority in the state budget being worked ov…er, on now (and indeed, there is a nascient 3-county RTA now), its sole purpose will be the KRM, and its major funding source would be a massive increase in the car-rental tax (from $2/rental to $16/rental). There also is in that budget a Milwaukee County-only RTA, which would be funded by a 17+% increase in the sales tax (from 5.6%-5.85% to 6.6%-6.85%).

What that sales tax will kill is retail businesses, especially those near the county borders and those specializing in high-cost items. It doesn’t take all that much for someone living in, say, Wauwatosa to go to Brookfield for a fine four-star dinner or a camera and spend less money.

Let’s continue…

Northwestern Mutual has two major offices in Milwaukee County and employs a significant number of residents of Wauwatosa. Our current transit system is so inadequate and obsolete that my employees cannot get from our downtown office to our Franklin location on the Milwaukee County Transit System. The lack of available transit in this region has a much greater impact on my company than a shift in how we pay for transit.

P-Mac points out that the beautiful and recently-expanded Franklin campus is 1 1/2 miles away from the nearest bus stop (Route 27), and well past the point where the sidewalks on 27th St. ends (1 mile, to be exact).

I do have a point of order – there was, for a while, a limited-schedule extension of Route 27, Route 227, that went past the NML Franlkin campus to the Franklin Industrial Park south of Ryan Rd. between 46th St. and 60th St. However, that route was cancelled due to low ridership. Guess not many NML workers rode the bus out to Franklin.

Let’s continue…

Of the top 50 most populated U.S. cities or regions, only seven do not have or are not developing rail transit. Wisconsin is already behind other regions in this regard, and without a stable bus transit system – much less improved transit and commuter rail links connecting Milwaukee to other regions – southeastern Wisconsin will be left behind as the state’s talent pool is attracted to other developing regions. Those remaining in Wisconsin cannot get to their jobs.

STOP THE TAPE!!! Just how are enough NML employees making it out to Franklin for not one, but two good-sized office buildings if one can’t take a bus, train, or sidewalk there? I believe I forgot to mention that there are enough NML employees getting there by car that they built a parking ramp.

As for a commuter train, the closest point of approach for the westernmost rail line, which is used by AMTRAK, is just under 1 1/2 miles. The closest AMTRAK station is 4 1/2 miles away. The closest the KRM, which would be on the easternmost rail line, would get is 4 1/2 miles, with the station being roughly 5 miles away. Further, neither AMTRAK nor the proposed KRM serves (or would serve) Wauwatosa.

P-Mac also hacks away at the idea that light rail would work. Anybody care to guess how much it would take to run a light rail line between Wauwatosa, the downtown Milwaukee NML campus (because we can’t expect NML employees to be bothered by transferring to the streetcar) and the Franklin NML campus?

I’m Sorry

by @ 5:26. Filed under Economy, Politics - National, Taxes.

First, a little music to set the mood:

This week Drudge ran the headline:

Obama Says We’re Out of Money

Oh yeah, big fat surprise that is!  While the headline is a bit out of context in that Obama was discussing health care, the overall take is correct.  Obama recognizes that he has spent more than he has, by a long shot, and realizes that he must find a way to cut costs or increase revenue or leave office with most Americans longing for another Carter term because in comparison, it was nirvana!  The problem Obama has though is that he has no clue how big the hole is that he has dug for himself and the nation.

Back when Obama released his fairy tale titled “A budget proposal,”  I laid out the many problems with his budget and why he would never come close to closing the gaps on the deficits that he has created.  In this post I pointed out several issues that would cause his budget to fail.  As of today we have enough information to conclude that Obama’s budget assumptions have failed on two key issues.

Obama’s budget assumes a dramatic improvement in unemployment rates.  This improvement is key on two fronts.  First, it reduces the outflows of expenses in unemployment compensation.  This is a huge budget item at both the Federal and State level.  Second, when people go back to work, income taxes get paid thus increasing the tax revenue.  Obama’s budget assumptions had the 2009 unemployment rate at 8.1% with 2010 improving to 7.9%.  Of course, the same team that put this budget together was also the team who never saw total unemployment exceeding 8.0% with the enactment of a stimulus package so we know that numbers aren’t really their thing.  The CBOs most recent survey of private sector forecasts of unemployment now shows that the most optimistic assessments have the unemployment rate averaging 8.8% for 2009 and increasing to 9.0% in 2010.

Second, I warned you that Obama’s budget had a wildly optimistic long term interest rate assumptions.  For 2009 the Obama budget assumed the 10 Yr. treasury would be at 2.8%, for 2010 the assumption was 4.0%  Well, get ready, that bubble is about to burst as well. 

This week the Financial Times is reporting that sales of debt for private businesses is again increasing.  While that is good and it shows a data point of improvement in the economy, it’s bad for Obama.  As private enterprise increases its desire for debt, at the same time that the government is having to finance huge amounts of additional debt, the overall demand will cause all interest rates to increase.  Already the 10 yr Treasury which was running  under 3% at the end of April has increased to over 3.4%.  That’s a 20% increase in rates over Obama’s assumptions and we’re barely three months past the date of the assumption issuance.

For the past two years Senator, PEBO and now President Obama has been running from one corner of the globe to another apologizing for what he believes, have been heinous actions by the US. You know, actions like freeing oppressed people, calling evil evil and using our economic tools to encourage dictators (hello Fidel!) to broaden involvement in governments and economies that have created the greatest gulfs between “haves” and “have nots” through the use of government intervention. I watch Obama’s groveling around the world and wonder: “When will he apologize to the American people?”  I doubt his teleprompter will ever allow that to happen!

May 23, 2009

Adding fuel to the barbecue funeral pyre

by @ 18:54. Filed under Politics - Wisconsin.

While everybody else has been getting charcoal and propane for the unofficial start for summer, the Dems on the Joint Finance Committee have been busy working on the budget deficit. Of course, by work, I mean reward their campaign contributors and raid the few funds that have even a pittance of cash.

Greg Bump has been keeping track over at WisPolitics’ Budget Blog. The short version is that criminals (via in-state tuition for illegal aliens, the decriminalization of driving after revokation, and the non-felony welfare fraud), unions (via “prevailing wage” requirements for most public works projects), and homosexuals (via both a sex-neutral domestic partner benefit package for state workers and a homosexual-specific domestic partner registry) are the big winners, while the Attorney General’s office, municipalities, counties, and those who use health care are big losers.

I also recommend reading Rep. Robin Vos’ (R-Racine) Twitter stream.

May 22, 2009

Union battle over Chrysler

by @ 8:53. Tags:
Filed under Business, Politics - National.

(H/T – Alamo City Pundit)

The AP reports that, fresh from a denial by bankruptcy judge Arthur Gonzalez to delay the expedited sale of portions of Chrysler to Fiat, the US and Canadian governments, and the UAW, three Indiana trust funds that held senior secured debt in Chrysler, the Indiana Major Moves Construction Fund, Indiana State Police Pension Trust (both managed by Indiana’s Treasurer, Richard Mourdock), and the Indiana State Teachers Retirement Fund will be appealing to district court to try to stop the sale and the 29-cents-on-the-dollar return for the senior secured creditors.

The Louisville Courier-Journal puts the losses suffered by the teachers’ fund at $4,600,000, the police fund at $147,000, and the road-construction fund at $896,000. The NEA, which just took over operation of the largest teachers’ union in Indiana after possible fraud committed by the union’s insurance arm, can’t be happy about that.

As a result, Treasurer Mourdock has instructed the funds run by his office to not buy any more secured debt from companies receiving federal bailout money. I guess we can now add state/local public capital to the list of capital no longer flowing to bailed-out companies.

The descent to France continues

by @ 7:37. Filed under Business, Politics - National.

(H/T – Rob Port)

Politico found a stupid Florida Dem, Rep. Alan Grayson, wondering how to make Disney World even more crowded. His solution? In the middle of a major recession, demand that companies with more than 100 employees immediately start offering both full-time and part-time employees with at least a year on the job a week of paid vacation, then 3 years after that goes into effect, bump that up to 2 weeks and require companies with 50 or more employees offer both full-time and part-time employees with at least a year on the job a week of paid vacation.

Somebody better ask Milwaukee how that 9-day paid-“sick”-leave deal is going. Last I checked, that wasn’t going so well.

What else should one expect from a Congress that gives itself almost as much vacation time as teachers? Speaking of that, the story finds Sen. Lisa Murkowski (“R”-AK) whining that isn’t enough. I may not have a quarter to give, and even if I did, I wouldn’t give her it, but I can still say, “Call someone who cares.”

May 21, 2009

War on corporations holding back economic recovery – part 2

by @ 19:44. Tags:
Filed under Business, Politics - National.

(H/T – Hot Air Headlines via Flip)

Remember what I relayed from Dad29 in what turned out to be Part 1 of what seems to be an ongoing series? Bloomberg reports that fund managers are now wary of lending money to unionized companies with unfunded pension liabilities because of what happened at Chrysler. Quoting George Schultze, head of Schultze Asset Management, one of the last Chrysler holdouts:

Lenders will have to figure out how to price this risk. The obvious one is: Don’t lend to a company with big legacy liabilities or demand a much higher rate of interest because you may be leapfrogged in a bankruptcy….

It’s terrible precedent. The sad thing is it impacts the manufacturing sector and the companies that have legacy liabilities directly. It will be nearly impossible, or much more expensive, to get secured financing for these type of companies.

I do want you to read the entire article. However, I can’t let the closing paragraph escape notice:

“People are starting to think ‘This is a very activist administration, even more than we counted on,’” said Martin Fridson, CEO of money manager Fridson Investment Advisors in New York. “If it comes down to the interest of creditors or labor unions, the administration is going to override what you thought you could do.”

What’s left of private capital for at-risk companies is about to exit stage left.

How long is that Porkulus supposed to last again?

by @ 16:22. Filed under Politics - National.

(H/T – Mary Katharine Ham)

Buried at the end of a Washington Post story on the failures of the government version of the Porkulus “watchdog” web presence is a telling quote from Earl E. Devaney, the Interior Department inspector general who has been placed in charge of stimulus oversight:

“We have four and a half years to turn this thing into its final product. My intent is not to have people come once and never come back. I want it to be good enough that the citizens who look at this site become the eyes and ears for the [inspector generals] and see things that normally an IG would have to stumble across.”

And here I thought the money was supposed to be spent this year and next.

Obama’s speech – more questions than answers – UPDATE – And straw men a-plenty

by @ 13:51. Filed under Politics - National, War on Terror.

Fausta has a few questions after President Obama’s speech this morning:

So, does this mean the “war on terror” should be called “the war on al Qaeda”?

And the specific statement, “like other prisoners of war”, raises the issue whether the Obama administration is considering changing the detainees’ status to that of POWs….

Closing Gitmo? Where’s the plan?
Supermax prisons taking Gitmo detainees? Which ones?
“New legal regime to detain terrorists”? Where’s the plan?

Very interesting questions. Do read the entire post.

Revisions/extensions (2:06 pm 5/21/2009) – Karl Rove found 5 different straw men in that speech, which he added to his longer list of 2009 Obama Straw Man Watch. My favorite from today:

“And we will be ill-served by some of the fear-mongering that emerges whenever we discuss this issue. Listening to the recent debate, I’ve heard words that are calculated to scare people rather than educate them; words that have more to do with politics than protecting our country.”

Thursday Midday Read – Rick Moran’s “Not Socialism: Gangsterism”

by @ 12:17. Filed under Business, Politics - National.

It is Thursday, so I’m resting from heavy lifting. Fortunately, Rick Moran isn’t. Rick may average a post a weekday, and he does at times have a bit of contempt for social conservatives, but those posts are must-reads.

This one is no different. Rick runs with a letter from a Dodge dealer getting shut off from the Dodge brand with no assistance from Dodge to relieve him of his soon-to-be-worthless inventory of cars and parts into why Obama is able to get away with what he’s doing, to an explanation of why it’s not merely an extension of what Bush did. I’ll give you a mid-post taste:

It can happen because at the moment, the opposition forces are scattered, dispirited, and engaged in a fruitless quest to determine who is a “real” conservative and who is an Obama loving, free market hating, wimpy, squishy RINO.

It can happen because we are barking up the wrong tree when we accuse the Democrats of practicing socialism. Any Chicagoan recognizes what’s going on as pure gangsterism – the application of power through the use blackmail, threats, and pure muscle and the devil take the Constitution, the rule of law, and simple fairness.

Daughter of Waxman-Markey even worse

by @ 7:00. Filed under Envirowhackos, Politics - National.

Last Friday, I gave you the original Heritage Foundation estimates of the economic effects of the Waxman-Markey Cap-and-Trade-Tax plan. Because it couldn’t get enough support from rank-and-file ‘Rats, it went back to the drawing board. The Heritage Foundation found that the effects are even worse the second time around:

  • The cumulative GDP reduction through 2035 increases from $7.4 trillion to $9.6 trillion
  • The average yearly job loss increases from 844,000 lost jobs per year to 1,105,000 lost jobs per year
  • The peak yearly job losses increases from 2,000,000 to 2,500,000

Nick Loris explains:

  • Our original economic analysis had the government auctioning off the allowances (rights to emit) carbon dioxide. The auction revenue, the equivalent of tax revenue, went into the hands of the government, which in turn created more government jobs. In the second version of the bill, the government distributed allowances to various businesses in an attempt to mitigate the near-term economic damage done by the bill. As a result, jobs in the private sector fell less than the original but the government jobs decreased more because the government did not receive the allowance revenue from the auction. Overall employment fell.
  • Think of the allowances given away as subsidies to businesses. When these subsidies stop and allowances begin to be auctioned off, the economy is again “shocked” with higher indirect taxes and businesses must make costly adjustments to this new economic condition.
  • Real GDP losses increase an additional $2 trillion from the bill because investment for businesses is worse under the new bill. Again, the government is not auctioning off the rights for businesses to emit carbon dioxide; they are giving them away in the near-term. These giveaways add to the national debt, crowd out private sector investment and drive up interest rates. Increased interest rates further drive up the debt. This creates a vicious cycle in which businesses significantly reduce their investment. The lack of investment (that drives the overall economy) produces higher real GDP losses and lowers the potential of the overall economy.

But wait, it gets even worse. Rep. John Shadegg (R-AZ) reports that the ‘Rats added, on a party line vote, mandates that all home sales include an energy-efficiency inspection and a study be made in preparation for every product sold in the United States to be labeled as to their CO2 “content” (i.e. how much CO2 is emitted in the manufacture of each product).

Somehow, I think the fine folks at Heritage understated the damage to the economy.

Revisions/extensions (7:42 am 5/21/2009) – (H/T – McQ) I’m suddenly feeling like Billy Mays here. But wait, that’s not all! As part of their Top Ten list, Heritage included this handy graphic showing just how big a bite Cap-and-Trade-Tax will take.

For those of you who missed it, it handily beats food, clothing, furniture, the current cost of household energy, and the average property tax. Of course, those of us in Wisconsin pay a lot more in property tax, but $3,900 even beats that.

Hot Read Thursday – Karl Rove’s “Flip-Flops and Governance”

by @ 6:00. Filed under Politics - National.

Karl Rove lists a whole litany of things that, as Jim Geraghty terms it, reached their expiration date, between the Obama candidacy and the Obama Presidency. I’ll force you over to The Wall Street Journal to read the list, but I will tease you with the close:

Mr. Obama either had very little grasp of what governing would involve or, if he did, he used words meant to mislead the public. Neither option is particularly encouraging. America now has a president quite different from the person who advertised himself for the job last year. Over time, those things can catch up to a politician.

There are two questions:

  • Will those expired statements catch up to Obama before or after 2012?
  • Which group will catch up to him first – the electorate at large or the moonbats that foisted him upon the rest of us?

May 20, 2009

War on corporations holding back economic recovery

by @ 22:38. Filed under Economy, Politics - National.

(H/T – Asian Badger)

Forbes publisher Rich Karlgaard notes something missing from the ingredients that are coming together for economic recovery – CEO confidence. Quoting Rich

The Fed has done its job. (Maybe too well, but that’s another story for another day.) Consumer sentiment and spending have bounced back. The headwinds that remain have less to do with bank stress tests and more to do with CEO mood. The Business Roundtable, which represents big business, reported “record low” CEO confidence in April:

–71% of CEOs plan more layoffs in the next six months.

–Most see declines in capital spending.

–The CEO Economic Outlook Index was negative for the first time.

Why is that so? History provides a guide (again quoting Rich):

In her book The Forgotten Man, Amity Shlaes wrote that the 1937–38 “depression within the Depression” occurred when capital went on strike. President Roosevelt’s willingness to “try anything” (including retroactive taxation, laws against discount pricing and an attempt at packing the Supreme Court) had businesses and their backers so confused over FDR’s rules that they simply withdrew.

This is the risk of President Obama’s willingness to “do what it takes.” Those words sound positive and action-oriented. They really mean “anything can happen.” The tearing up of legal contracts? That can happen. Limits to salary and travel? That can happen. Bullying by the Environmental Protection Agency? That can happen. Nationalization of General Motors and Citigroup? That can happen. Nobody knows for sure what will happen. Government is sorting it out day by day.

There are two things that can happen with a lack of investment from the CEOs and, as Dad29 points out in the comments over at Asian Badger, the corporate bond market, and neither of them are good: increased unemployment as business continue to shed workers, and increased inflation as more money (in this case, caused by an extremely loose Fed bolstered by consumer confidence) chases fewer goods (caused by a lack of capital investment). As they say, those who don’t remember history (or willfully ignore its painful lessons),….

The line must be held here

by @ 21:37. Filed under Politics - National, Taxes.

(H/T – JammieWearingFool, who hasn’t had a Full Metal Jacket Reach-Around in a while)

The News Organization That Cannot Be Quoted™ reports that the Senate, not content with slapping a 3-cent-per-12-ounce tax on sugary drinks to pay for nationalized universal health care, is planning on massive increases in alcohol excise taxes to do the same:

– 17% on hard liquor, from $2.14 per fifth to $2.54 per fifth
– 233% on wine, from $0.21 per bottle to $0.70 per bottle
– 145% on beer, from $0.33 per six-pack to $0.71 per six-pack

Lest one thinks that they’re going to stop there, let’s run the numbers:

– It is estimated that nationalized universal health care will cost $1,500 billion over the first 10 years. We all know that’s a low-ball figure, but let’s run with it.
– The sugar tax would supposedly bring in $50 billion over that 10 years.
– The new alcohol tax would supposedly bring in $60 billion over 10 years.

That leaves, assuming the nationalized universal health care costs aren’t understated and the revenues aren’t overstated, a $1,390 billion hole. Need I remind the bipartisan Party-In-Government that California rejected tax increases yesterday? I seem to recall excessive taxation being the reason why we don’t bow to Queen Elizabeth II.

Yet another reason why I don’t do ads – your Federal government

by @ 21:13. Filed under Business, Politics - National.

(H/T – Robert Stacy McCain)

When I went to BlogWorld in 2007, I remember seeing something about pay-per-post, where companies would pay bloggers to write good stuff about their products. Apparently, the ninnies that can’t read the Constitution over at the Federal Trade Commission just discovered that (either that, or they got into power on 1/20 and got to this point in their checklist). BusinessWeek reports:

But such back-scratching endorsements could become tougher under a coming set of Federal Trade Commission guidelines designed to clarify how companies can court bloggers to write about their products. This summer, the government agency is expected to issue new advertising guidelines that will require bloggers to disclose when they’re writing about a sponsor’s product and voicing opinions that aren’t their own. The new FTC guidelines say that blog authors should disclose when they’re being compensated by an advertiser to discuss a product.

Don’t get me wrong; those that do accept items of value in return for raving about a particular product should disclose that. However, we don’t need the federal government mandating it.

For the record, no corporate entity has ever given me anything in exchange for blog-inches. Of course, the fact that I don’t do reviews has something to do with that.

Bloggers To The NRSC: Stay Out Of Primaries (via Right Wing News)

by @ 11:55. Filed under Politics - National.

I may not be a big blogger, but I wholeheartedly agree with what John Hawkins and Erick Erickson put together:

Dear Senator Cornyn,

We the undersigned believe that the National Republican Senatorial Committee should be committed to serving ALL the members of the Republican Party.

Additionally, the NRSC should be focused on defeating Democrats, not Republicans. Towards that end, we believe it was completely inappropriate for the NRSC to endorse a candidate in the Florida primary race.

Therefore, we request that both you and the NRSC alter your position on the Florida Senate race, maintain neutrality, and promise to spend no money directly or indirectly in that race.

Sincerely yours,

John Hawkins
Right Wing News

Erick Erickson
Redstate

Ed Morrissey
Hot Air

Jon Henke
The Next Right

Eric Odom
American Liberty Alliance

Pamela Geller
Atlas Shrugs

R.S. McCain
The Other McCain, Right Wing News, Not One Red Cent

Dan Riehl
Riehl World View

Jeff Goldstein
Protein Wisdom

Kevin Aylward
Wizbang!

Lorie Byrd
Wizbang!

David Blount
Moonbattery, Right Wing News

Melissa Clouthier
Melissa Clouthier, The Other McCain, Right Wing News

Jeff Vreeland
Tech Republican, President of VM Technologies and IT Chairman for the YRNF

Matt Lewis
Politics Daily

Ned Ryun
The Madison Project

Justin Hart

John Caldwell

Joshua Trevino
Co-founder of Redstate, founder of Treviño Strategies and Media.

Chip Hanlon
Red County

Robert Loewen
President of the Lincoln Club of Orange County

Richard Wagner
Chairman of the Lincoln Club of Orange County

Allow me to add my signature to the list:

-Steve Eggleston
No Runny Eggs

Patients Choice Act announced

by @ 11:09. Filed under Health, Politics - National.

Reps. Paul Ryan (R-WI, and my Congressman) and Devin Nunes (R-CA) and Sens. Dr. Tom Coburn (R-OK) and Richard Burr (R-NC) unveiled the Patients Choice Act earlier today. As part of the publicity push, they wrote an op-ed piece carried by Real Clear Politics. From the beginning of that:

While President Obama may believe the stars are aligned for major health reform this year it is far from certain whether Congress will pass a bill that works. The groups that are most likely to unravel this effort are not the president’s opponents, but his allies. Nothing will rally ordinary Americans against the president’s plan more than his allies arguing too forcefully for a system run by politicians and bureaucrats in Washington – what we call the “public option” in the Obama plan.

It should come as no surprise that this ideologically rigid position is coming under fire. As the Washington Post recently wrote, “the fixation on a public plan is bizarre and counterproductive … It is entirely possible to imagine effective health-care reform – changes that would expand coverage and help control costs – without a public option.”

I’m still sifting through the long summary and the Q&A that Rep. Ryan’s office sent over, so I will be updating this post this afternoon. In the interim, you may as well enjoy them, as well as the short 2-page summary. I wish I could offer you the text, but the Library of Congress’ THOMAS system doesn’t have it up yet.

PCA Q&A
PCA long summary
PCA short summary

My immediate reaction is that this is a far sight better than what the Democrats have been cooking since 1993.

Hot Read Wednesday – RS McCain’s “Toward a More Cynical Theory of Politics”

by @ 6:41. Filed under Politics - National.

How good is Robert Stacy McCain? He takes a perceived personal slight and turns it into an expose into what went wrong for the GOP. The payoff:

Like the corporate manager who loses sight of his responsibility to the customers and to the stockholders, the Republican elite have lost sight of whose interests the party was intended to serve. What is really at issue here is, “Whose party is this?”

Is this a party that belongs to Republican voters? Or is it a party that belongs to the hired consultants and strategists, the think-tank wonks and lobbyists, the Kathleen Parkers and David Brookses? And of these two groups, which is more responsible for the GOP’s recent defeats — the elite or the grassroots? On Election Night, I wrote an American Spectator column with the title, “You Did Not Lose,” which I think accurately answers that question.

Republican voters are more powerful than the Republican elite; the latter are dependent on the former, and not vice versa. If the elite no longer serves the interests of the voters, a new elite can be easily created. Ambitious young Republican political operatives are a dime a dozen in Washington. It is only because the grassroots don’t know their own power that they have put up with the elite’s abuse as long as they have.

Go. Read. Now!

May 19, 2009

Live-blogging the death of useful, roomy cars

by @ 11:06. Filed under Envirowhackos, Politics - National.

I’ve got Fox News on now, and in the pre-show, Major Garrett noted that additional standards will be based on specific types of cars (i.e. bigger cars won’t quite be required to get 39 mpg). Unspoken, but assumed, is that smaller cars would be required to get more than 39 mpg.

It’s been a while since I did a live-blog the old-fastioned way. I don’t feel like firing up the CiL for this. Do hit refresh for the latest, as things are expected to kick off a bit after 11:15 am Central. BTW, I’m taking bets on how late Obama and company will be. I’ve got 9:13 after the appointed time.

11:19 – The captive and greedy automotive execs and the Gorebal “Warming” crowd is waiting. Tick. Tock.

11:20 – That was not a slip of the tongue by Jon Scott – Government Motors indeed.

11:22:44 – Obama finally shows up. Time for intros.

11:23 – First one is a shout-out to Plastic Pelosi (she’s going nowhere, folks). EPA chair, a near-snub of Ahnold in the governor’s intros (Granholm first). Senators missing because they’re screwing those that pay credit card bills on time.

11:24 – First “industry” shout-out to the head of the UAW. The rest of the cabinet now. Since when is HUD part of the “Green Team”? Oh, and where’s LaHood, the RepubicRAT who’s in charge of implementing CAFE?

11:26 – Another shoutout to the UAW before a general one to the cowed and craven. We are setting a national screw-industry-and-motorists standard.

11:27 – Amazing what a little Chicago Way Muscle can do to titans of industry. Oil is Teh Eeeeevil (side note – why not drill here, drill now, drill everywhere, dumbass?)

11:28 – “We’ve known since the oil crises of the 1970s” (and your fellow ‘Rats have been blocking all of the domestic production solutions since then).

11:29 – This is a harbringer of change – “We will not longer accept that government is too small”. (Them’s fighting words)

11:30 – Because of the tyrrany of the bipartisan Party-In-Government, each seeking to implement its own policy, we’re taking the worst of all possible policies. Because we’re giving in to the envirowhackos, they’re dropping their lawsuits.

11:32 – At a time when the domestic auto industry is in painful flux, we’re going to give it the certainty that it’s getting shoved off the cliff and under my bus.

11:33 – You can’t save money if you don’t spend (er, hybrids still don’t make sense).

11:34 – We’ll save 1.8 billion barrels of oil, equivalent to taking 58 million cars off the road (money says they’ll try to take 58 million cars off the road anyway).

11:35 – Mo’ spending money. Plug-in hybrids get a shoutout, as does electrical transmission (er, what about electrical production?)

11:36 – We’re going to break in 8 years what took 80 to build. Call to the ‘Rat version of bipartisanship (bull-fucking-shit)

11:37 – A third specific shoutout to the UAW. They bought the office.

11:39 – We’re not quite out – a shout-out for the only domestic SUV to make the 30 mpg grade – the Ford Escape Hybrid.

11:40 – Major Garrett pointing out that Congress has no role. Translation – the Goron won, and he’s going to ram it straight up the backside. Oh, and whatever we do will be overwhelmed by Red Chinese and Indian pollution.

NOW we’re done.

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