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 – National' Category

May 10, 2010

Well, Which Is It?

by @ 6:59. Filed under Economy, Politics - National.

In his commencement address, Sunday, at Hampton University, Virginia, President Obama told the students that information and acting upon that information, was the key to a successful democracy:

“What Jefferson recognized… that in the long run, their improbable experiment — called America — wouldn’t work if its citizens were uninformed, if its citizens were apathetic, if its citizens checked out, and left democracy to those who didn’t have the best interests of all the people at heart.

“It could only work if each of us stayed informed and engaged, if we held our government accountable, if we fulfilled the obligations of citizenship.”

In what is as rare as Robert Gibbs’ ability to provide a lucid and logical explanation as to what the administration’s policy on terror man made events is, I agree with President Obama.

As you read stories of our country’s founding, you will find that even then, with the relatively rudimentary communication tools, at least as compared to today, information and debates about that information were key to the success of nearly every endeavor of the nation.  Most especially one can see the import that information and debate had on the nation’s founding if you study any of the history of the creation and ratification of the Constitution.

Flash forward to today and you see information having the same place as the corner stone in democracy.  While the tools for disseminating it have changed, information and the debate of information, remains the key to our democracy.  One only need look at “leaders” like Hugo Chavez and how they all attempt to control the flow of information as one of their first acts, to understand how important information flow is to a free people.  Can anyone imagine how a movement without structure could have the impact that the tea party is having, if it didn’t have access to and the means to distribute information in a free and rapid fashion?

Earlier in his speech, President Obama complained about

arguments, some of which don’t always rank all that high on the truth meter.

He added:

With iPods and iPads and Xboxes and PlayStations, — none of which I know how to work — information becomes a distraction, a diversion, a form of entertainment, rather than a tool of empowerment, rather than the means of emancipation.

Really?  Information becomes a distraction?  I guess that might be true if your goal was not debate but to dictate “truth” and “fact” as you want it to be seen.  In that case, conflicting information would certainly be a “distraction.”  However, in any honest assessment of an issue, debate, which nearly by definition, means disagreement is the best way to find answers.  Not to go all Biblical on you this early in the week but have you never heard of iron sharpening iron?

Unfortunately, with a political life that was forged in Chicago, President Obama is used to avoiding debate and only hearing the comforting, echoing applause of support for every socialist idea he puts forth.  “Information” in President Obama’s world is just one more distraction on his way to a “transformed” America.

One last thought…in light of his comments and his knock on the newest information and technology gadgets, has anyone informed the President that we are an information age economy?  Oh, my mistake, I was assuming for a moment that a robust economy was something that the President would want.

May 7, 2010

Another Right Wing News blog temperature check – Immigration edition

by @ 7:27. Filed under Immigration, Politics - National.

Once again, John Hawkins provided an outlet for some of the most influential bloggers on the right side of the blogosphere, as well as Shoebox and me, to weigh in on the issues of the day. This time, the poll concerns immigration. Let’s run through the questions and answers (my choices underlined):

  • Do you approve of Arizona’s new immigration law? (49 votes yes, 1 vote no) -Arizona has pretty much become the crime state of the union thanks to Mexican drug gangs, most of whom are illegal aliens.
  • Would you like to see your state implement something like Arizona’s new immigration law? (49 votes yes, 1 vote no) – Since it’s good enough for Arizona, it’s good enough for Wisconsin.
  • Do you believe Arizona’s new immigration law constitutes racial profiling or discriminates against Hispanic Americans? (2 votes yes, 47 votes no) – No. The Cliff Notes’ version of what it actually does – It authorizes Arizona law enforcement personnel to check into the immigration status of those already lawfully stopped by them if they have a reasonable suspicion about their residency, requires the various local governments of Arizona to actually enforce the law, and puts the “criminal” in “illegal alien” (both being and hiring). That criminality doesn’t go nearly as far as similar provisions in Mexican law.
  • If you had to choose between the following options, which would you prefer? (4 votes comprehensive immigration reform, 46 votes immigration reform that focused on security before addresssing the status of illegals already in the country) – I would actually prefer that the illegals be tossed out as the border is secured, but that’s not the type of “comprehensive immigration reform” that the bipartisan Party-In-Government wants to consider.
  • If we implemented comprehensive reform, which of the following best describes what you think would happen? (39 votes illegals would become citizens, but the border wouldn’t be secured, 10 votes illegals would become citizens and the border would be secured) – History is my guide here. It would be a repeat of 1986.
  • Do you believe the fence on our southern border will be completed while Barack Obama is in office? (0 votes yes, 50 votes no) – I’m not in the bridge-buying business.
  • On the whole, which of these sentiments best describes your thoughts about illegal aliens? (2 votes they make America a better place to live, 47 votes they make America a worse place to live) – Unless they’re completely off-the-grid, they’re committing, at a minimum, identity fraud to remain here.
  • On the whole, which of these sentiments best describes your thoughts about legal immigrants? (49 votes they make America a better place to live, 1 vote they make America a worse place to live) – I unabashedly say this, partly because my grandmother came here from Weimar Germany. Those who come here legally tend to be those who want to better themselves in such a way that betterment extends to the larger community.

    Besides, where else can you have bratwurst one day, corned beef a second, General Tso’s chicken a third, tacos a fourth, veal parmigiana a fifth, jambalaya a sixth, and shish kabobs a seventh, all made by those who can trace their heritage to the points-of-origin of those foods?

  • Do you think the United States is doing a good job of assimilating immigrants? (11 votes yes, 39 votes no) – On the whole, we still are a melting pot. However, the big challenge is not the Hispanic population but the Muslim populatoin.
  • Do you believe that taking a tough line on illegal immigration would be winning issue for Republicans in the 2010 election? (43 votes yes, 7 votes no) – I’m not nearly as certain that it is a winning issue as I am that surrendering would guarantee a permanent Democrat/Socialist majority.

May 6, 2010

Boy, This is Getting Old!

by @ 14:07. Filed under Health Care Reform, Politics - National.

I told you so.

I told you so!

I TOLD YOU SO!

Remember back a few weeks when Henry Waxman had gotten all balled up that AT&T, Verizon and a few others had filed SEC documents noting substantial earnings hits due to the passage of Placebocare?

Remember a few days short of a few weeks ago when Henry became annoyed and called the previously mentioned companies in to testify before Congress because he was sure that their filings were in violation of something that Henry held sacred?

Remember a few days closer to now when Henry cancelled the hearings and claimed that the previously mentioned companies had requested the cancellation because they had come to their senses and were willing to no further impugn Henry’s ability to understand the law he voted for?

Remember after that, when I said this:

But, let me ask you this; which of the following two scenarios do you think is most likely?

Scenario A: Companies who paid a bunch of money to consultants and attorneys for the purpose of understanding placebocare. After getting information that said “bleed red ink NOW”, have now come to the conclusion that they really have no conclusion about the future costs of health care and they’re willing to give Congress the benefit of the doubt on Placebocare?

Or

Scenario B: Henry Waxman had no idea what actually is in Placebocare. After getting his bald head pulled tighter than a pair of lycra pants on Michael Moore, he launched his hearings to make sure people didn’t think Democrats were fools. However, following scalp relaxation therapy, Henry learned that not only were the SEC filings proper, they were required by law. Henry also was told that hearings would only serve the purpose of removing any question that the Democrats had/have no idea what is in Placebocare nor the implications of it on the American people and businesses. Henry, wanting no further embarrassment, decided the cancel the hearings.

Yeah, me too!

OK, well, now read this:

Internal documents recently reviewed by Fortune, originally requested by Congress, show what the bill’s critics predicted, and what its champions dreaded: many large companies are examining a course that was heretofore unthinkable, dumping the health care coverage they provide to their workers in exchange for paying penalty fees to the government.

The announcements greatly annoyed Representative Henry Waxman, who accused the companies of using the big numbers to exaggerate health care reform’s burden on employers. Waxman, chairman of the House Energy and Commerce Committee, demanded that they turn over their confidential memos, and summoned their top executives for hearings.

But Waxman didn’t simply request documents related to the write down issue. He wanted every document the companies created that discussed what the bill would do to their most uncontrollable expense: healthcare costs.

The request yielded 1,100 pages of documents from four major employers: AT&T, Verizon, Caterpillar and Deere (DE, Fortune 500). No sooner did the Democrats on the Energy Committee read them than they abruptly cancelled the hearings. On April 14, the Committee’s majority staff issued a memo stating that the write downs were “proper and in accordance with SEC rules.” The committee also stated that the memos took a generally sunny view of the new legislation. The documents, said the Democrats’ memo, show that “the overall impact of health reform on large employers could be beneficial.”

Don’t doubt me! I know politicians like I know every succulent tongue tingle of a Tanqueray martini, up, with olives!

‘Nuff said!

May 5, 2010

Obey out

I’m sure you’ve heard by now that House Appropriatons Committee chair David Obey (D-Wausau) will not be running for re-election this year. I’ll refer you to Kevin Binversie for the learned explanation of what’s next, but I do have a couple thoughts of my own:

  • Even in a district where, outside Obey, Democrats and liberals have averaged double-digit wins over the last 5 years, with only Justices Michael Gableman and Annette Ziegler breaking through the stranglehold, and perhaps especially in a district where the elderly incumbent hasn’t campaigned in a very long time, a credible multi-prong campaign (this from Sean Duffy) can be very effective. Kevin relayed a story about how this cycle was the first time Obey felt the need to put up a campaign website, and somewhere in my stack of stuff is a story of how the Wausaw Democratic Party office didn’t have any Obey signs on display.

    While Obey had almost $1.4 million cash on hand at the end of the first quarter and Duffy only had $339,000 cash on hand at the end of the first quarter, individual donations for the first quarter were far closer, with Obey having a $253,000-$210,000 advantage. Obey did have a massive $187,000-$9,300 advantage in party/PAC money for the quarter.

  • A huge part of that pressure came from my friends at Americans for Prosperity, especially the Wisconsin chapter, and the members of the Wausau Tea Party. They’ve been targeting Obey for years for his pork-spending ways, going all the way back to 2006.
  • That gaping opening has to put a crimp in what appears to be the Democratic Party of Wisconsin’s plans to have no meaningful primaries this year and attempt to take over the Republican Party’s primaries (which would tend to benefit the likes of Tom Barrett as the sole Dem gubernatorial nominee, and those Republicans, or “Republicans” as the case may be, that wouldn’t otherwise have much of a chance to make it to November and give the Dem opponents greater hope – Mark Neumann, Dick Leinenkugel and Dan Mielke). The legislators (the Poltiico story, which is the first link above, the Milwaukee Journal Sentinel, which is the second link above, and Kevin all mention Senate Majority Leader Russ Decker; Politico also lists several other legislators, some of whom declined in the Journal Sentinel story) are the headliners, but as Kevin points out, they’ve got a “taxing” issue. They also have a visibility issue – a state senator is a virtual unknown to 3/4ths of the district while an assembly member is a virtual unknown to 11/12ths of the district.

    Kevin suggests that a mayor/village president would get in, but they would have an even bigger visibility and monetary disadvantage.

    It is likely that there will be a multi-person primary. The Republicans need only pick up 4 of 99 seats in the Assembly and/or 2 of 17 seats in the Senate to get a majority, and both Republican candidates for governor continue to lead the presumptive Democrat nominee. Even if the Democrats ultimately lose control of the House of Representatives, a tripling of salary and some propsect of being relevant is likely going to get more than one person to bail on the Legislature. Further, Sen. Julie Lassa, as well as any mayor/village president (or nonpartisan county official) won’t have to choose which office to run for.

    Everybody involved has a relatively-short deadline to decide – the filing deadline is July 13.

  • The Journal Sentinel brought a blast from the past. Obey completed graduate work in Soviet politics at UW, but rather than collect the master’s degree, he decided to put that knowledge to work. I’m shocked, SHOCKED to find that out.

While the road appears to be clear for Duffy, who not only has some money and national support (notably from Sarah Palin and the House Conservatives Fund), but also significant in-district support (including the district caucus endorsement), there are still a pair of hurdles. The first is Dan Mielke, who got crushed by Obey in 2008 after running unopposed in the primary, and is back for more. Somehow I doubt the rank-and-file is going to go for Mielke in September given the general lack of support, and the likelyhood of a Democratic primary would tend to prevent Operation Chaos.

The second is the aforementioned Democrat tilt of the district. The Cook Report’s D+3 rating actually understates how dominant the Democrats have been. The Government Accountability Board doesn’t have Congressional district-level results prior to the fall 2004 elections (except for the 2000 fall election), but they do have them for the succeeding elections. The recent results (outside the typical Obey whitewashings):

– 2000 Presidential (prior to redistricting) – Gore +1.40 (compared to Gore +0.22 statewide)
– 2000 Senate (prior to redistricting) – Kohl +35.98 (Kohl +24.51 statewide)
– 2004 Presidential – Kerry +0.86 (Kerry +0.38 statewide)
– 2004 Senate – Feingold +14.35 (Feingold +11.24 statewide)
– 2006 Governor – Doyle +12.35 (Doyle +7.39 statewide)
– 2006 Attorney General – Falk +2.60 (Van Hollen +0.42 statewide)
– 2006 Senate – Kohl +41.93 (Kohl +37.85 statewide)
– 2008 Presidential – Obama +13.19 (Obama +13.91 statewide)

In the five recent contested district-wide non-partisan races (3 state Supreme Court races and 2 state superintendent races), only Justices Annette Ziegler (who did significantly worse than she did statewide) and Michael Gableman (who outperformed his statewide numbers because he is from the district and was facing an appointed Justice from Milwaukee who already lost one Supreme Court race) broke through the liberal stranglehold, with 19-26 point advantages for the liberal candidates in the other 3 races.

That said, recent semi-leaked internal polls reportely had Obey in serious trouble against Duffy. Given the entirety of the potential legislative challengers have similar pork-related problems to Obey, I don’t see a “fresh Dem face” doing any better against Duffy.

I would be remiss if I didn’t mention a couple of non-WI07 items. First, Obey looked and sounded quite worn out. That is not unexpected for a 71-year-old who finally fulfilled a lifelong dream to put the US on the road to CubaCare by hook and by crook. On the other hand, Politico noted that, as late as Tuesday, his campaign staff was hiring.

Second, he is a close confidant of Speaker Nancy Pelosi. Even if the Democrats maintained control of the House come January, it is “not exactly” a given she would continue as Speaker. If she were ousted, allies of hers would likely suffer. I don’t think Obey would take kindly to being either the ranking member on Appropriations or worse, just a member.

Revisions/extensions (10:20 pm 5/5/2010) – With another tip of the hat to Kevin, the Cook Political Report moved the seat from Likely Democratic to Toss-Up.

Also, there’s something I missed in the Journal Sentinel story that Kevin picked up – we might get a third Republican in the race, Rep. Jerry Petrowski (R-Marathon). However, as Kevin notes, if Decker jumps in the House race, Petrowski may well try for Decker’s Senate seat if he’s in the mood for bucking for a promotion.

R&E part 2 (12:16 am 5/6/2010) – Yes, I’m up way too late. However, my man in the know in the Capitol, Lance Burri, has a few words on what it would mean for the two Senate Dems who would be giving up their seat for a shot at the House. He says that, if Decker runs, he knows the Senate Dems are in for a whupping and that he’d be out of the leadership. If Pat Kreitlow runs, he knows he’d be a casualty. Bonus item on Kreitlow – I didn’t know he was considered one of the more vulnerable Dems (I thought that honor went to Jim Sullivan, John Lehman and Kathleen Vinehout), and do remember it takes only 2 of those to fall for the Republicans to take back the Senate.

May 4, 2010

Graphic of the day – the three classes of American business

by @ 15:41. Filed under Business, Politics - National.

Tom McMahon nails it again…

As usual when I “borrow” Tom’s stuff, the comments are off here.

Social Security crater – March 2010 update, and a Roadmap out

by @ 15:27. Filed under Social Security crater.

Before I get to the Social Security Administration’s Office of the Chief Actuary’s score of Paul Ryan’s Roadmap for America’s Future, I do have to recap the March 2010 “Trust Fund” performance. The combined funds took in $51,549 million in total income, including $97 million in “interest”, and paid out $58,296 million. That resulted in a gross monthly deficit of $6,747 million (3rd-worst peformance since monthly records from 1987 became available, beaten only by February 2010 and an anomalous August 1990) and a primary (cash) deficit of $6,844 million (4th-worst performance since 1987, behind the two aforementioned months and December 2009). The 12-month changes in the trust funds were +$102,423 million gross (worst since 12/1997-11/1998) and -$15,833 million primary (worst since monthly records were kept in 1987).

Once again, both components of the fund ran both gross and primary monthly deficits – the Disability Insurance fund ran a $2,881 million gross/$2,902 million primary monthly deficit (12-month deficits of $15,688 million gross, bringing its balance to under $200,000 million, and $26,159 million primary), and the Old-Age and Survivors Insurance fund ran a $3,864 million gross/$3,940 million primary monthly deficit (12-month surpluses of $118,115 million gross and $10,257 million primary, the latter its worst performance since the effects of an anomalous performance in November 1994 were aged off).

That brings me to the OACT’s scoring of the Roadmap. They dusted off their 2009 Intermediate Scenario, plugged Ryan’s proposal into it, and pronounced that it would make Social Security solvent over a 75-year period with no net transfers from the general fund (I can’t stress the “net” enough). How does that happen? Let’s take a look at Ryan’s plan:

  • The big one is the partial-privatization. Starting in 2012, those who hadn’t turned 55 yet could divert a part of their Social Security tax to a personal retirement account managed much like the government employees’ Thrift Savings Plan. That starts at 2% of the first $10,000 of covered earnings and 1% of covered earnings in excess of $10,000 (that indexed for inflation), rising to the maximum 8%/4% in 2042.

    Those who participate would have their “traditional” Old-Age and Survivor Insurance (the main part of Social Security) payments reduced by the percentage of theoretical maximum participation (i.e. those who fully-participate starting in 2042 would receive $0 in “traditional” OASI payments). However, they would receive a guarantee that their account balance at retirement would not be less than their contributions accumulated by the rate of inflation (Consumer Price Index for Urban Wage Earners and Clerical Workers), with Social Security making up any shortfall.

    At retirement, they would be required to purchase annuities that, combined with any OASDI (this includes any disability payments from Social Security) payments, would guarantee them monthly payments of at least 150% of the federal poverty level. The entirety of the personal retirement account, including the annuities, any excess amount after purchase of the annuities, and any pre-retirement death distributions to a designated beneficiary or the estate, would be tax-free.

  • Potentially the most-controversial part is capturing employer-provided health-care benefits in the payroll tax. I’ll let the OACT summary describe it – “Specifically, any cost toward such group health insurance borne by employees would cease to be deductible, and the cost borne by employers would now be allocated to employees as if it had been wages, for the purpose of payroll tax (and later, benefit) calculations. Both employee and employer OASDI payroll taxes would be affected by this proposal.”
  • The first of two elements to make Social Security more “progressive” also may face problems: the top-earning 70% of newly-retiring workers starting in 2018 would have their OASI benefit-growth rates reduced from average wage growth to, those making at least the maximum taxable amount having benefit-growth rate at average CPI growth. Those between the maximum taxable amount and the 30th-percentile would have a sliding-scale reduction of growth to somewhere between CPI and wage growth, and the bottom 30% would see no change.
  • The second “progressive” element would increase OASI benefits for those making less than 200% of the 2009 minimum wage (indexed for wage growth) for more than 20 years, reaching a maximum OASI payment level of 120% of the poverty level (assuming no PSA participation) for those making the 2009 minimum wage (indexed) for at least 30 years.
  • The Normal Retirement Age change would be accelerated from 67 in 2022 to 67 in 2021, and indexed to keep it at 20 years below the life expectancy thereafter.
  • The solvency of the “Trust Funds” would be statutorially-guaranteed at 100% of the following year’s estimated cost (the Trust Fund Ratio), with the Treasury selling bonds to cover the cost. The “Trust Funds” would be authorized to repay that up to the point of the Trust Fund Ratio being a minimum of 125%.

I’ve been a bit too busy to fully take a look at it to see what could be culled and still have it make long-term actuarial sense. The taxation of employer health benefits isn’t “exactly” supportable, and the “Trust Funds” will continue to be raidable. Given the two scenarios that the OACT provided, I don’t know if the solvency guarantee is necessary.

April 29, 2010

Senate horserace update

Well, I can’t exactly call it a horserace yet, unless it’s one to the glue factory, but there are several updates:

  • First, former Doyle Commerce Secretary Dick Leinenkugel launched his spoil…er, campaign, and the initial signs are not exactly encouraging. Even before he got in, Rasmussen had his head-to-head matchup against Russ Feingold as the worst of the three announced challengers at 48% Feingold/37% Leinenkugel/7% somebody else.

    He followed that up with a train-wreck of an opening interview on WTMJ-AM’s Charlie Sykes’ show, in which he defended the dirty Talgo deal, a massive rail network, and a deadly-to-business cap-and-tax scheme. One GOP insider said, “I frankly don’t get it. He has no base; no story to get a base, and no money to put in the race.”

    The latest stake comes from the Sauk County GOP (H/T – Little Miss Sunshine, who completely misread the effect). They have passed a resolution rejecting the Leinenkugel campaign, and plan on putting a similar resolution on the floor of the state convention next month.

  • Speaking of that Rasmussen poll, Terrence Wall is actually starting to close on Feingold now that Tommy Thompson is out of the race. He trailed Feingold 49%/43%/3%. Dave Westlake, on the other hand, continues to lag significantly (49%/38%/4%).
  • Another potential big name has bowed out of running – retiring State Senator Ted Kanavas (R-Brookfield) bowed out. As Patrick McIlheran recorded, Kanavas told Sykes that it would take $5 million to think about taking on Feingold, which he would have had to begin raising long before now.
  • Speaking of money, Feingold added another $1.3 million in donations the past quarter to bring his warchest to $4.3 million. Meanwhile, Wall raised $103,000 and loaned the campaign $1.2 million the past quarter to put his warchest at just over $1 million (and a total of $1.5 million in debt, and Westlake is essentially out of cash (just under $14,000 raised the past quarter, with $2,288 in cash on hand). As Wall told me on the 15th, the Thompson Wait, and a focus on meeting voters, had a significant effect on that.
  • In a bit of (hopefully) good news with a tip of the hat to Owen, WisPolitics is reporting Oshkosh businessman/Tea Party founder Ron Johnson is getting in the race. As I noted on the 15th, WISN-AM’s Jay Weber mentioned that Johnson was allegedly prepared to put a significant amount of his own money (up to $10 million) into the race.
  • The last challenger for Feingold, Tim Michels, is still undecided about entering the race. Michels got smoked by Feingold in 2004 after getting a major upset in a crowded primary, which included semi-official NRSC candidate/car dealer Russ Darrow and state Senator Bob Welch. After the primary, the NRSC pulled out of Wisconsin.

I have a bad feeling if this remains a 4-5 person primary. There is only one Democrat statewide primary on the horizon (lieutenant governor), and the Dems are busy “deconflicting” that so they can meddle in the Republican primaries. Housekeeping note for those of you from out-of-state – while Wisconsin does not have party registration, a voter cannot vote in more than one party’s primary per election.

The death of small business – courtesy PlaceboCare

by @ 13:18. Filed under Business, Politics - National, Taxes.

(H/T – Ed Morrissey)

Chris Edwards over at the Cato Institute found a significant penalty for anybody doing business in the recently-passed PlaceboCare bill – essentially every business transaction aggregating to $600 in a given year must be reported to the IRS and the payee starting in 2012.

First, let’s review the current state of the applicable law (Section 6041 of the Internal Revenue Code) – An entity that, in the course of engaging in a trade or business, pays more than $600 (or less, as noted) in a taxable year of the following categories of payments to an individual (generally-speaking; there are some limited instances where that entity must report payments to a corporation) must report the aggregate amount to the IRS and the payee:

  • Wages
  • Salaries
  • Rent
  • Premiums
  • Annuities
  • Compensations
  • Renumerations
  • Enoulments
  • Dividends (including patronage dividends – threshhold of $10)
  • Interest (threshhold of $10)
  • Royalties (threshhold of $10)
  • Stock ownership plan distributions (threshhold of $0.01)
  • Other fixed or determinable gains
  • Other fixed or determinable profits
  • Other fixed or determinable income

There were a trio of changes buried on page 737 of the 936-page engrossed version of PlaceboCare, specifically in Section 9006, titled “Expansion of Information Reporting Requirements”. In order:

  • A new section (h) is created to require reporting payments made to corporations that do not qualify as tax-exempt organizations. That’s right – rent paid by a business entity to a corporation would have to be reported to the IRS.
  • “(A)mounts in consideration for property” would also have to be recorded and reported. I’m not a tax lawyer, but my read of applicable definitions does not limit this to real estate. Rather, it includes any good purchased for the business, from computers to raw materials to fuel burned in business vehicles. That’s right – if you are a contractor who uses your vehicle for business, and you spend $600.01 at a chain of gas stations owned by a single entity, you must add up the amount and report it to both the IRS and the gas station owner.
  • “(Other) gross proceeds” would also have to be recorded and reported. That captures every business transaction.

When this was part of the original version of PlaceboCare that came out of the House, the Air Conditioning Contractors of America noted the following (emphasis added):

Consider all the payments you make in the course of your business for property, such as computers, software, office supplies, and fuel to services, including janitorial services, coffee services, and package delivery services. If you paid more than $600 over the course of the tax year, you’ll need to file a Form 1099.

Did the roundtrip ticket for your air travel to the ACCA Annual Conference cost more than $600? If you answered yes, then you would have to issue a 1099 to American Airlines. This enormous impact will hit all businesses, but especially small businesses that don’t have a large administrative staff.

Don’t forget that in order to file all these 1099s, you’ll need to collect the necessary information from all your service providers. In order to comply with the law, you would have to get a Taxpayer Information Number or TIN from the business. If the vendor does not supply you with a TIN, you are obligated to withhold on your payments.

April 27, 2010

GM didn’t exactly pay back the loans – expanded version

by @ 22:59. Tags:
Filed under Business, Politics - National.

I really should’ve done this last week, but I really need to walk through the numbers behind Government Motors. First, let’s review what went to General Motors before and during its bankruptcy:

  • The US Treasury provided the following loan facilities to General Motors before and during bankruptcy – a total of $19.76 billion in unsecured and $30.1 billion in senior secured debt facilities ($22.58 billion used), or $49.86 billion offered ($42.34 billion used):
    • $13.4 billion on 12/31/2008
    • $2 billion on 4/22/2009
    • $4 billion on 5/20/2009
    • $0.36 billion for warranty obligations on 5/27/2009
    • $30.1 billion in Debtor-In-Possession facility during the bankruptcy, with only $22.6 billion ultimately used
  • The Canadian and Ontario governments provided the following loan facilities to GM before and during bankruptcy:
    • $6.3 billion in unsecured loans at times unknown
    • $3.2 billion in DIP facility during the bankruptcy, with only $2.7 billion ultimately used

The entirety of the unsecured debt from all governments, except for the $0.36 billion warranty loan (repaid on June 10), as well as a significant portion of the DIP facility, was forgiven to seiz…er, credit bid for 73% of Government Motors (60.8% to the US, 11.7% to Canada). In addition, $1.175 billion of the DIP financing facility ($0.986 billion from the US, $0.189 billion from Canada) remained with Old GM, with first-right claims on the assets generated from its wind-down.

Meanwhile, only $8.9 billion of the DIP facility was tapped during the under-6-week bankruptcy. As mentioned before, $1.2 billion remained with Old GM, to be repaid with the proceeds from its wind-down. The other $7.7 billion of DIP financing used during the bankruptcy was also part of the credit-bid and forgiven outright. The US portion of that is approximately $6.98 billion.

That left $24.4 billion unused in the DIP facility ($22.11 bilion from the US) on July 9, the day before Government Motors assumed its present form. The Treasury and the Canadians could have taken all of that back, but they decided that their new business venture needed $16.4 billion in “seed money”, as well as some help in the creditworthiness department. They structured $8 billion ($6.71 billion from the US) as a “loan” to be immediately used by GM as it saw fit and to be “repaid” from part of the unused DIP facility, with the other $8.4 billion ($7.89 billion from the US) initially requiring Treasury approval to spend but eventually being under GM’s control. The remaining $8 billion of the DIP facility ($7.52 billion from the US) was effectively returned to the loaners (the Treasury and the Canadians) unused either during or after bankruptcy.

So, how far on the hook are we? Let’s review:

  • $19.3 billion in pre-bankruptcy loans forgiven upon exit from bankruptcy
  • $0.99 billion of DIP financing owed by Old GM (likely to be repaid only in part)
  • $6.98 billion of DIP financing forgiven upon exit from bankruptcy
  • $7.52 billion given to Government Motors upon exit from bankruptcy, originally in escrow and now theirs to spend as they see fit
  • $6.71 billion “loaned” to Government Motors upon exit from bankruptcy and “repaid” with other government money

We’re still on the hook for about $42 billion. Meanwhile, the Canadians are still on the hook for about $9 billion. Who here thinks GM is worth $69 billion (the market capitalization required to make the Treasury whole)-$75 billion (the market capitalization required to make the Canadians whole)?

Revisions/extensions (11:53 pm 4/27/2010) – Two more plot twists:

  • (H/T-Phineas) Forbes reports that Government Motors is using this sham of a “loan payback” to justify getting $10 billion from the Department of Energy to retool their plants. Of note, the “sham loan” carried a 7% interest rate, while the DOE loan carries a 5% interest rate.
  • (H/T-Fausta) Fox Business found that, unless Government Motors comes up with $12.3 billion for its pension fund in the next 5 years (with Chrysler UAW Motors needing to come up with $3.4 billion) we’ll be on the hook for most of that shortfall. Fox News analyst James Farrell provides the following scenarios if we still have stakes in Government Motors and UAW Motors when the butchers’ bill comes due in 2014:

    *It can approve the payments to the pensions, which would benefit the union pension holders but reduce the likelihood that taxpayers will get their money back on the involuntary investment made in GM and Chrysler stock as well as taxpayers’ status as lenders to the automakers; OR

    *Decline to address the underfunding and let the plans get involuntarily terminated–costing union members approximately $23 billion in overall lost benefits ($18 billion for GM; $5 billion for Chrysler), and costing the PBGC (taxpayers) approximately $14.5 billion.

    “The only option where GAO sees taxpayers not getting the short end of the stick?” Farrell says. “Praying that the auto companies rapidly return to profitability and find $15.7 billion in excess cash lying around in the companies’ corporate couches between now and 2014.”

Revisions/extensions (5:59 pm 5/1/2010) – I did forget to factor in the value of the $2.10 billion of prefered stock the Treasury has in Government Motors, the 9% annual dividend it is due ($189 million per year, payable each quarter), and the fact that they’ll be holding onto that until at least the end of 2014 and until GM comes up with both the liquidation value ($25/share, or the full $2.10 billion if they get want to get rid of it all) and any unpaid dividend.

GM did pay out the first two scheduled distributions on September 15 and December 15, giving the Treasury just over $81 million. It is unknown at this point whether they paid out the March 15 distribution of just over $47 million. That leaves the minimum payback value of the Treasury’s prefered stock at $3.04 billion.

Also, related to that, the federal government (as well as the Canadians and the UAW VEBA, the other holders of the prefered stock) will hold that prefered stock until at least 12/31/2014, as part of the terms of the seizu…er, creation of Government Motors. It is only at that point when GM can buy out those prefered shares, for the aforementioned $25/share plus any unpaid dividend (at the aforementioned 9% per annum).

April 26, 2010

Not Very Bright, But He’s Happy!

by @ 5:43. Filed under Economy, Politics - National.

To say I’m an “avid” pheasant is a probably an over statement.  I’m probably more in the category of “I really like it” and wished I had more time to pursue the endeavor.  That said, each year for the past several, I truck off to the dead center of South Dakota for a week of chasing “ditch chickens.”  When the weather is bad, it’s a lot of fun.  When the weather is good, like it has been the last couple of years, there is nothing I enjoy doing more….at least not with a group of men!

In the past, I’ve been a tag a long on our trips.  I can’t shoot well, I don’t own a dog, and frankly, I really had no idea how to work the fields properly.  However, over the years, I’ve gotten better at working the fields but still can’t hit the broadside of a barn even though I’ve now got a semi automatic shotgun that allows me to put a lot of lead in the air in the general direction of said “ditch chickens.”

Last year I stepped up my hunting game.  It was probably some form of a mid life crisis but I decided I needed a hunting dog.  After searching some ads and online listings, I found a dog that had some hunting experience, whose owner needed to get him to a new home.  Jake became my hunting partner last fall and after being together only three weeks, one of which included him going to the vet for his “special visit,” we went to South Dakota.

Jake and English Springer and is all nose.  When he gets a scent, nothing can detract him.  That’s a great trait for hunting and he proved it on our first trip.  As an English Springer, Jake is also prone to not having all the synapses firing at the same time.  The net is that Jake is singularly focused and successful in one area; smell and with everything else, he’s just a ditz.  As long as we understand and use Jake’s strengths, we accept his shortcomings.  We refer to Jake as not being very bright, but he’s happy!

On Friday, Vice President Biden was at a Pennsylvania fundraiser where he stated that the economy would soon be generating 500,000 jobs a month!

“Well, I’m here to tell you, some time in the next couple of months, we’re going to be creating between 250,000 jobs a month and 500,000 jobs a month.”

Good ol’ Joe! He’s the same Joe who recently told us that “JOBS” is a three letter word:

Joe’s also the guy who continues to tell people that the loss of 8 millions jobs was actually he and Obama being successful!

Like Jake, Joe has one purpose in life; his ignorant and gaffed filled statements give the media something to focus on other than Obama’s continued inability to execute. As such, Biden serves a useful if not, singular purpose. Also like Jake at our household, I’ve got to believe that each day Biden gets his face in the news, President Obama and other members of the White house say, “He’s not very bright but, he’s happy!”

April 23, 2010

Did Government Motors really pay back its post-bankruptcy loan? Not exactly.

by @ 17:37. Tags:
Filed under Business, Politics - National.

(H/T – Sammy Benoit via Ed Morrissey)

There is something I didn’t know about the Government Motors numbers when I ran them in September – the portion of the Debtor-In-Possession financing unused during GM’s bankruptcy, specifically $16.4 billion total (or about $14.66 in Treasury funds) went into an escrow account and were used to “repay” the post-bankruptcy loans GM had with the Treasury and Canadian governments. Quoting from the year-end 10-K filed with the SEC (emphasis added):

Proceeds of the DIP Facility of $16.4 billion were deposited in escrow and will be distributed to us at our request if the following conditions are met: (1) the representations and warranties we made in the loan documents are true and correct in all material respects on the date of our request; (2) we are not in default on the date of our request taking into consideration the amount of the withdrawal request; and (3) the UST, in its sole discretion, approves the amount and intended use of the requested disbursement. Any unused amounts in escrow on June 30, 2010 are required to be used to repay the UST Loans and the Canadian Loan on a pro rata basis. Any proceeds remaining in the escrow account after the UST Loans and the Canadian Loan are repaid in full shall be returned to us.

In November 2009 we signed amendments to the UST Credit Agreement and the Canadian Loan Agreement to provide for quarterly repayments of the UST Loans and Canadian Loan. Under these amendments, we agreed to make quarterly payments of $1.0 billion and $192 million to the UST and EDC, which began in the fourth quarter of 2009. Upon making such payments, equivalent amounts were released to us from escrow.

In short, the $6.7 billion post-bankruptcy loan should not really have been counted as a “new” loan.

April 21, 2010

Does Any Doubt Remain?

by @ 8:35. Filed under Business, Economy, Politics - National.

The “coincidental” timing of the SEC charges of fraud against Goldman Sachs as Obama launched his effort to further control the banking industry, left many wondering whether there wasn’t a coordinated effort between the White house and the SEC to sway public opinion on the legislation.

Well, wonder no more!

CNBC is reporting that the SEC’s own investigation and interviews have uncovered evidence that will undercut the core accusation of the SEC’s case.

The SEC accuses Goldman of breaching its fiduciary responsibility and committing fraud by not disclosing that a hedge fund was planning to short its offering of mortgage backed securities.  Unfortunately for the SEC, it’s own interviews show that the company who planned to short the CDO specifically met and told the impacted companies, that it was planning to do so.

If Perry Mason were on a murder case where his defendant had been accused of murder but had someone else admitting to the murder, I’ll be he would at least follow up on the lead.  Of course he would because Perry Mason had principles, fought for the truth and wasn’t persuaded by political gain.

There He Goes Again

by @ 5:35. Filed under Elections, Politics - National.

Formulaic – made according to a formula

He inherited the recession

Banks were greedy

Insurance companies are greedy

Tea party people caused divisions in America

Congress was responsible for the back room Placebocare deals

Etc.

Etc.

Etc.

Is there anything negative that President Obama has taken responsibility for?

In a sign of true leadership, President Obama is teaching those willing to learn, the fine art of blaming someone else.  At a fund raiser for challenged California Senator, Barbara Boxer, President Obama laid the blame for her potential defeat squarely on……Boxer’s supporters!

“I don’t want anyone here taking this for granted,” he said at a reception at the California Science Center, the first of a trio of fundraisers Monday night for Boxer and the Democratic National Committee.

“Unless she’s got that support she might not win this thing, and I don’t think that’s an acceptable outcome. So I want everyone to work hard,” the president said.

Just like Obama’s previous deflections, Obama believes that none of the actions of the person responsible for their actions are the reason for the rejection they now face.  No, Boxer’s challenges have nothing to do with her vote on health care or her unblemished support for Obama’s far left agenda.  According to Obama, the sole reason Boxer might lose is a lack of support and effort from her supports.

Just keep dreamin’ those unicorn dreams Mr. President.  November is rapidly approaching!

April 17, 2010

Weekend Hot Read – Doctor Zero’s “The new currency is obedience”

by @ 16:21. Filed under Politics - National.

Doctor Zero’s explanation of why there has been a year-long vitriolic response to the Tea Party is so good, the Hot Air Greenroom version got promoted to HA’s front page. It is harder than usual to choose just a short excerpt because it is THAT GOOD, but I’ll try (all emphasis in the original):

The past two years have seen a profound change occur in the American system. Our basic currency is no longer the dollar. People like Jason Levin understand the nature of our new currency, which is obedience.

Obama Democrats worship central planning. They have repeatedly expressed the belief that only powerful, maternal government can be trusted to allocate the most essential resources, or manage vital industries. The free market is a playpen, filled with the stuff that isn’t serious enough to merit direct control by the Mother State. When a particular toy causes the children of the electorate to scream, it is quickly snatched out of the pen. The free market can’t even be trusted to deal with airline fees for carry-on luggage… which turned out to be a market response to previous government action. You are expected to sit quietly and swallow your tears if Mother State chooses to beat you over the head with one of your toys….

A Russian dissident once said that the gulags weren’t an unfortunate side effect of Communism – they were the point. Jason Levin and his Crash the Tea Party minions understand this, and embrace it, because they hate the people who will be ground into fertilizer for the system they support. By helping to suppress a powerful enemy of the regime, they enjoy the exhilaration of despite, while also serving as volunteer guards for the Treasury where our new currency of obedience is stored.

Again, I recommend reading the entire thing.

April 15, 2010

A Funny Thing Happened on the Way to the Hearings

Right after the signing of Placebocare, several prominent companies including AT&T, Caterpillar and Verizon, noted that they were taking significant financial charges to recognize the new costs imposed by the impostor reform bill. Democrats took offense at the notion that laws that they so vigorously support i.e. Placebocare and SEC full disclosure rules, along with their own ignorance, had set themselves up to be shown as fools. Their solution? Call hearings to discredit and badger the companies giving them the black eye.

Yesterday, we hear that Henry Waxman has decided to cancel the hearings that would have had the previously mentioned companies explain themselves to Congress. Ostensibly, the cancellation was at the request of several of the companies slated to testify. According to Waxman:

“Companies like AT&T, Verizon, and a range of stakeholder associations are hopeful that the benefits of the new law will outweigh the costs,” Waxman stated.

Yeah, I guess that could have happened.  But, let me ask you this; which of the following two scenarios do you think is most likely?

Scenario A:   Companies who paid a bunch of money to consultants and attorneys for the purpose of understanding placebocare.  After getting information that said “bleed red ink NOW”, have now come to the conclusion that they really have no conclusion about the future costs of health care and they’re willing to give Congress the benefit of the doubt on Placebocare?

Or

Scenario B:  Henry Waxman had no idea what actually is in Placebocare.  After getting his bald head pulled tighter than a pair of lycra pants on Michael Moore, he launched his hearings to make sure people didn’t think Democrats were fools.  However, following scalp relaxation therapy, Henry learned that not only were the SEC filings proper, they were required by law.  Henry also was told that hearings would only serve the purpose of removing any question that the Democrats had/have no idea what is in Placebocare nor the implications of it on the American people and businesses.  Henry, wanting no further embarrassment, decided the cancel the hearings.

Yeah, me too!

April 13, 2010

A taxing proposition

If it’s tax time, it’s time to talk taxes. There are four interesting items that popped up the last few days, a Rasmussen poll, a CBS News poll (H/T – Allahpundit), a Milwaukee Journal Sentinel story series, and a video from the Center of Freedom and Prosperity (H/T – Ed Morrissey). Before I get to the meat of the post, I’ll present the video which explains how even those who don’t think the tax code doesn’t impose a significant drag on the economy are ensared by the massive amount of work that is required to comply with a code that requires a handcart to make just the federal portion portable.

[youtube]http://www.youtube.com/watch?v=XX8EswfGKQw[/youtube]

In the CBS poll, very few people across all income levels think they’re undertaxed. Overall, 50% said they pay their fair share, 43% said they pay more than their fair share, and 1% said they pay less than their fair share, the worst fair-share/more-than-fair-share split in that poll since 1997. Interestingly, of those making less than $50,000 per year, despite many having no net federal income tax liability (47% at last count), only 2% said they didn’t pay their fair share. Of course, the 7.65% FICA tax, whatever portion of the federal excise taxes (mostly gasoline, alcohol and tobacco, a total of 0.46% of income in 2007), and whatever state/local taxes they pay put a drag on that.

That ties with the Rasmussen poll, where 66% believe that America is overtaxed, with 25% not believing so. In that poll, a plurality (34%) believe America pays around 30% between federal, state and local taxes, while 26% believe it’s around 20% and 15% believe it’s around 40%. Further, an overwhelming majority (75%) believes the total government take should be under 30%, and a near-majority (43%) believe it should be under 20%. In reality, as of 2007, it was over 37%, not including water bills or state-level unemployment/worker’s compensation.

That leads me to the big enchilada – the Journal Sentinel story, which uses Census data to compare Wisconsin state and local taxes to those in other states, and includes a sidebar story comparing Wisconsin and Minnesota. Dave Umhoefer noted that, once crosses the $30,000 threshhold in Wisconsin, or buys property, the hammer really comes down, and doesn’t stop coming down at a harder and harder rate. My biggest gripe is that he and the rest of the staff didn’t put the taxation in terms of income, so I’ll do that.

According to the Bureau of Economic Analysis, in 2007, the per-capita income in Wisconsin was $36,271, which ranked 26th-highest among the 50 states and the District of Columbia, and was a bit lower than the national per-capita income of $38,615. According to the Census Bureau, the state and local taxes were $23.340 billion, not counting water bills or unemployment/worker’s compensation taxes (which the Census Bureau counts separately). That took 11.49% of income in Wisconsin, which ranks 11th-highest and compares poorly to the average of 10.96% nationwide (note – I sent an e-mail to Dave last night asking whether he added water bills into that, which would make Wisconsin 15th because water bills in Wisconsin are far lower than the national average; I haven’t received a response yet). Specifically, property taxes took 4.14% of income (10th nationally, far higher than the 3.29% national average), sales taxes took 2.19% of income (34th nationally, lower than the 2.57% national average), the gas tax took 0.49% of income (9th nationally, higher than the 0.33% national average), individual income taxes took 3.12% of income (13th nationally, again far higher than the 2.49% national average), the corporate income tax took 0.45% of income (25th nationally, marginally below the 0.52% national average), and vehicle license fees took 0.18% of income (24th nationally, essentially the same as the 0.18% national average).

Fees in Wisconsin, ranging from tuition to school lunch, from hospitals to sewers, but not including utilities or mass-transit, took in $6.079 billion, or 2.99% of income. That was 31st nationwide, and just under the 3.02% national average. Overall, taxes and fees took $29.419 billion in 2007, or 14.49% of income. That ranks 19th, and is significantly higher than the 13.98% average.

Spending by the state of Wisconsin and local governments, which includes $7.166 billion in federal money transfered to the state and local units of government, was $46.612 billion in 2007. While the 22.95% of income ranks 28th, it is still higher than the 22.93% national average. Moreover, because that federal money is not quite what other states received, the $39.446 billion ex-federal-funding spending, which represents 19.42% of income, both ranks 16th-highest nationally and is significantly higher than the national average of 18.91%

Let’s compare that to Minnesota. The per-capita income was $41,108, which ranked 13th and was significantly higher than both the national per-capita and Wisconsin per-capita income. The tax take was $23.665 billion (11.11% of income, 20th nationwide, compared to 10.96% nationwide and 11.49% in Wisconsin), with property taxes taking 2.87% of income (31st, compared to 3.29%/4.14%), sales taxes taking 2.13% of income (36th, compared to 2.57%/2.19%), gas taxes taking 0.30% of income (39th, compared to 0.33%/0.49%), individual income taxes taking 3.39% (9th, compared to 2.49%/3.12%), corporate income taxes taking 0.56% (15th, compared to 0.52%/0.45%), and vehicle license fees taking 0.24% (15th, compared to 0.18%/0.18%).

Fees took in 3.01% of income in Minnesota, which puts the state 30th nationally, and slots between the nationwide average (3.02%) and Wisconsin (2.99%). Overall, the 14.12% of income taken by Minnesota and its locales puts it 24th, a few ticks above the national average (14.12%) and quite a bit better than Wisconsin (14.49%).

Spending in Minnesota follows a similar pattern because like Wisconsin, Minnesota is a “federal net donor” state. The $47.222 billion, including $7.333 billion from the federal government, represents 22.17% of income, good for 35th nationally and well lower than the national average of 22.93% and Wisconsin’s 22.95%. Backing out the federal money brings spending closer to the national average (18.73% versus 18.91%), ranking Minnesota 24th and placing it far better than Wisconsin’s 19.42%).

April 12, 2010

It’s Not How Often But When

by @ 16:10. Filed under Economy, Politics - National.

Last Wednesday, former Fed chairman, Alan Greenspan, testified to Congress about his involvement in the financial wreck that we’re still living through.

Greenspan was question about his decisions and whether those contributed to the bubble burst.  Through out his testimony, Greenspan refused to admit any responsibility or even allow that the Fed’s action may have been at least contributory to the creation of the housing and banking bubble.  In fact, after being pointedly questioned about whether the Feds policy of keeping interest rates low for a historically long time, despite increasing economic activity, Greenspan deflected the accusation.  Rather than the Fed, Greenspan pointed his long bony finger to Freddie MAC and Fannie MAE claiming that they were the cause of the bubble.

Without a doubt, Freddie and Fannie were major factors in the housing collapse.  Without doubt, loaning into the marginal nth of home buyers drove prices up while creating even more risk in the loans that were allowing those purchases to take place.  However, equally without doubt is that a key enabler for this activity was the historically low rates that Greenspan’s Fed maintained. 

Had interest rates been allowed to rise, the marginal homebuyers would have been taken out of the market. Had interest rates risen, more monthly income would have gone towards interest which would have meant less for principle and in turn, less for the purchase price of the house.  For Greenspan not to understand or admit the connectedness of these items saddens me as I had though him to be one of the few beltway folks who were able to rise above their own egos and actually hold to the ideal of “public service.”

At one point in his testimony, Greenspan conceded that he wasn’t always right:

In the business I was in, I was right 70% of the time, but I was wrong 30% of the time

The point that Greenspan misses is not how often you are right but rather, are you right about the important issues. In this case, he clearly wasn’t.   I’d be willing to bet that if you had asked Edward John Smith how often he was correct in his business, he’d of likely told you a percentage much higher than Greenspan’s.  Yeah, lots of good that did the folks on the Titanic and lots of good Greenspan’s batting average did us!

April 6, 2010

“Net Neutrality” down, not out

by @ 12:18. Filed under Business, Law and order, Politics - National.

(H/Ts – Ed Morrissey and Owen)

The DC Circuit Court of Appeals ruled that the Federal Communications Commission does not have the statutory authority to regulate an Internet Service Provider’s network management practices. That regulation is at the surface (do note I didn’t say heart) of “Net Neutrality”.

This is a good thing. Anybody who has tried to download multiple items at once knows what happens when there’s congestion. There are certain web applications, from VOIP phones, to IP-based television (present both on Time Warner in a limited form and on AT&T’s U-verse as its sole video delivery method), that need a certain amount of bandwidth to operate.

While the ruling pretty much deep-sixes the plan to use the FCC to regulate the Internet without any specific statutory authority from Congress, Americans for Prospoerity’s Phil Kerpen warns in his latest podcast that the plan is afoot to try to have the FCC declare the Internet as a “market failure” and reclassify it from a Title I information service to a Title II telecommunications service (i.e. Plain-Old-Telephone-Service), and regulate every aspect.

March 31, 2010

Drill Here, Drill Now Tues…er, Wednesday – Obama “allows” drilling (or does he?)

(H/T – Ed Morrissey)

The Washington Post reports that President Obama announced that he will eventually approve drilling leases well off (a minimum of 50 miles out) the southern East Coast and the Florida Gulf Coast. While it is a good start, the devil, as always, is in the details. First, let’s take a quote from Obama:

“We’ll protect areas vital to tourism, the environment and our national security,” he said. “And we’ll be guided not by political ideology, but by scientific evidence. That’s why my administration will consider potential new areas for development in the mid- and south-Atlantic and the Gulf of Mexico, while studying and protecting sensitive areas in the Arctic. That’s why we’ll continue to support development of leased areas off the North Slope of Alaska, while protecting Alaska’s Bristol Bay.”

Note the word used to describe the new areas – consider. Given Obama’s track record of both shutting down various sources of energy, both oil and coal, and of issuing statements that have expiration dates, I don’t exactly see this as a full return to late-Bush-era Drill Baby Drill proposals.

Then there’s the timing involved. HotAir reader cs89 found this little tidbit in the WaPo story:

If there is enough interest from industry and if the government determines that offshore drilling does not harm the environment or interfere with military activities, the Interior Department intends to hold a 2012 lease sale for exploration 50 miles off the coast of Virginia, as well as a similar one for Alaska’s Cook Inlet.

There’s plenty of time for the “pledge” to reach its expiration date.

March 29, 2010

Polling the Rightosphere – March right-of-center likability edition

by @ 7:30. Filed under Politics - National.

Once again, John Hawkins provided an outlet for the rest of us (or at least the 82 of us from 80 blogs who responded) to give our opinions on 35 different people in the right-of-center sphere. To tease you on the results, I’ll give the top 5 (give or take ties) most popular and least popular, and note that John has the top 10 of each:

Most popular (strongly like plus like votes):
Tied for 4th (74 votes) – Paul Ryan, Sarah Palin and Rush Limbaugh
Tied for 2nd (76) – Marco Rubio and Michelle Malkin
1st (80) – Thomas Sowell (notably, nobody dislikes him; the only reason it’s not 82 is 2 people didn’t give an opinion on him)

Least popular (strongly dislike plus dislike votes):
Tied for 4th (64) – Lindsey Graham, David Brooks and Pat Buchanan
3rd (67) – David Frum
2nd (69) – Arnold Schwarzenegger
1st (71) – Meghan McCain

On page 2 (it’s been a while since I’ve done that split; those of you reading on the feed will need to click here), I’ll give you the Rasmussen-defined “Passion Index” (strongly-like percentage less strongly-dislike percentage) rankings for everybody in the poll:

March 25, 2010

Message to the nutjobs threatening members of Congress

by @ 11:23. Filed under Politics - National.

Knock your fucking shit off NOW! There’s an election in November, and time for the new members of the next Congress to reverse everything the current Congress has enacted and wants to enact.

The New York Times catches up to NRE – admits Social Security is running a cash deficit

by @ 10:50. Filed under Social Security crater.

It’s nice to see The New York Times catch up to what Ed Morrissey and I have been noting since September (with the first alarm bells rung in May), and what the Associated Press noticed ten days ago. I’ll go with Ed’s take on the catch-up:

We’ve been writing about this for the last few years, and when we wrote about it, we presented the entire political backstory, including how Barack Obama’s OMB Director Peter Orszag predicted in 2008, while running the CBO, that this day would come — in 2019. We included mentions of how Harry Reid and other Democrats insisted in 2005 that George Bush was scaremongering when he attempted to reform SSA through partial, elective privatization, and how they assured us that Social Security was safe for decades without reform.

Does the Times mention any of this? Not exactly. In fact, the name “Orszag” doesn’t appear once, nor does the name “Reid.” Guess how many times the name “Greenspan” appears in this article by Mary Williams Walsh? Five:

One thing Ed left out of that – in the FY2010 budget prepared by Orszag, he predicted there would be a $21 billion primary (cash) surplus in Social Security. Depending on whether one believes the OMB or the Congressional Budget Office, the primary deficit is somewhere between $29 billion and $34 billion, or a miss of $50 billion-$55 billion in a program with somewhere around $700 billion of cash outflow.

One more thing – that CBO $29 billion estimate might yet be low – it is unclear whether the money to pay for the second round of $250 pay-o…er, “stimulus” checks that Obama wants to hand out would come out of the “Trust Funds” or the general fund. If it’s the former, it would add another $12 billion to the former estimate, making that hole $41 billion.

Back to Ed:

Forget those two years of black ink, too. That will only happen under the rosiest of scenarios for economic growth and employment. As the recession’s effects continue, people will continue retiring earlier or not going back to work. SSA’s revenues will continue to plateau before dropping steeply as the rest of the Baby Boomers leave the workforce and demand their benefits.

Some people predicted this day would arrive at about this time; those were the people Democrats accused of attempting to frighten seniors out of their benefits. Some predicted that this day wouldn’t come for almost a decade longer than it did and argued that reform wasn’t necessary in 2005, when it may have helped extend SSA’s life. Those are the people making the economic decisions in the White House now.

The country’s in the best of hands.

That leads me to another item from the Times, this one from Monday (H/T – Allahpundit):

That leaves Social Security, the other big entitlement benefits program and one that Mr. Obama has suggested in the past that he is willing to tackle. While its looming problems are not of the scale of those afflicting Medicare, it now stands as the likeliest source of the sort of large savings needed to bring projected annual deficits to sustainable levels, many budget analysts agree.

And, they say, packaging future reductions in the retirement program that Democrats zealously defend with tax increases that Republicans typically oppose would have the makings of a grand compromise to shrink the debt.

“You would think that there ought to be a way to get together and talk about a balanced package of some changes in benefits and some increases in revenues that would actually help Social Security,” said James R. Horney, the director of federal fiscal policy at the Center on Budget and Policy Priorities, a liberal-leaning research organization….

Yet Representative Steny H. Hoyer, the moderate Democrat who is the House majority leader, gave a speech this month in which he called for the two parties to compromise on a mix of tax increases and benefit reductions to avert fiscal chaos. Among his options were proposals to gradually raise the retirement age for future Social Security recipients and to reduce benefits for those with high incomes.

I’ll ignore the misapplication of “moderate” to Hoyer. This was tried in 1983, with benefit reductions (in the form of taxation of benefits, and a raising of the “full-benefits” retirement age from 65 to 67) and tax increases (a 14% increase on both sides of the withholding tax and a 64% increase in the self-employment tax). At the time, it was deemed a “forever” fix. That “forever” fix has lasted 22 years on a combined yearly cash-surplus basis, almost certainly won’t last 30 years for the Disability Insurance portion of Social Security, and likely won’t last 50 for the bigger Old-Age and Survivors Insurance portoin.

I’ll go back to what I said last month when Obama floated the idea of lifting the cap on those taxes out in Henderson, Nevada:

As for Obama’s claim that eliminating the cap would make Social Security solvent long into the future, let’s take a quick look at that. Assuming that it has no effect on on the economy, removing the cap would increase the FICA/SECA tax take by roughly 21%. Some very-back-of-the-envelope number-crunching refreshes my memory of a semi-forgotten study that found that lifting the cap entirely would only delay the inevitable decline and collapse of Social Security by roughly 15 years. Ever-so-conveniently, that would move fund exhaustion barely beyond Obama’s life expectency.

March 23, 2010

Tuesday Hot Read – The Republican Party of Dane County “apologizes”

Lance Burri thoughtfully reposted an e-mail from the Republican Party of Dane County (for those of you outside Wisconsin, that would be the county with Madison as its county seat):

Republican Party of Dane County Apologizes For Its Opposition To Obamacare

We at the Republican Party of Dane County would like to publicly apologize for opposing the Obamacare health care bill. We have now seen the light and support it. There are a few reasons for our change of heart:

The Democrats are correct that the health insurance companies don’t make enough money. Obamacare will be the largest transfer of wealth to the health insurance industry in history. The Democrats are also correct that our budget deficit isn’t large enough. Moody’s has warned that passing this bill will likely cost the United States its AAA bond rating – and we agree with the Democrats in saying “good riddance!”

The Democrats are correct that it’s ridiculous that all Americans now have access to health care. Obamacare will dramatically decrease the number of doctors, and will dramatically decrease the amount of medical innovation in this nation. Who needs new cancer drugs anyway? More than 6% of United Kingdom citizens have reported pulling out their own teeth because they can’t get access to a dentist, despite “universal” health care. That’s the spirit!

Finally, we agree with Democrats that the electoral chances of the Democratic Party in 2010 are far more important than whether a new unfunded entitlement system that we’ll be stuck with forever is good for this nation. They have argued incessantly that even Democratic congressmen who hate the bill should vote for it because of the electoral consequences in 2010 and 2012. Absolutely!

So we applaud the Democratic Party. It takes a great amount of courage to simultaneously put aside the US Constitution, the laws of economics, the negative effects of a bill on the quality of health care in this nation, and the will of the people. Open the fridge and crack open a cold one, Democrats. You’ve earned it!

While you can put all the Republicans who actually live in Dane County in a phone booth, they sometimes do come up with a real winner.

Quote of the day – PlaceboCare edition

by @ 7:15. Filed under Politics - National.

The Godfather of the Badger Blog Alliance, Jib, broke his near-silence with this gem on the passage of PlaceboCare:

I’m not happy and I don’t have much to say except for this:

Dear President Bush,

If you are destined for low approval ratings, this is how you spend political capital. Wish you would have spent yours more wisely.

Toodles,
Jib

Point of order – outside the 2003 tax cuts (and a couple elements of the 2001 edition), the War on Terror, and the aborted attempt to reform Social Security, governing from the Left is pretty much how Bush spent his political capital – from the 2001 stimulus checks (repeated in 2008) to Medicare Part D, from No Child Left Behind to the 2008 stimulus checks, from the pre-TARP bailouts of certain well-connected Wall Street firms to TARP itself (and the attendant bailout of GM and Chrysler, which ultimately begat Government Motors and UAW Motors).

One item – because of a problem with Jib’s template, you have to head to his blog’s home page to comment.

March 22, 2010

Pay No Attention to That Flashing Red Light

From Bloomberg:

Obama Paying More Than Buffett as Bonds Show U.S. Losing AAA

Yup, in short order, we the American taxpayer are paying more than Warren Buffet and his green companies for debt.  Hell, we’re even paying more now than the Germans!

Haven’t the debt markets heard that the deficit problem has been solved?  Yeah, you see, we’re going to pay for 30 million more people to have all the health coverage they want, none of them will pay a dime for it and yet it won’t cost the government an extra nickle.  In fact, they’ve got this health thing so figured out that by paying for more people, we’re actually going to save money as a nation!

OK, to be fair, the article does say that part of the reason that the corporate debt yield is lower than the Treasury is that high credit companies don’t seem to be borrowing as much anymore.  Huh, why do you suppose that is?  Do they know something the Federal Government doesn’t?  Yeah, probably one thing; any money they borrow they’ll eventually have to pay back without the ability to make wage slaves of their customers.

We’re so screwed!

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