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.

May 5, 2010

Obey out

by @ 22:01. Filed under Politics - National, Politics - Wisconsin.

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.

Ask Egg – the glorious return

by @ 19:31. Filed under Ask Egg.

It’s been far too long since I dipped into the proverbial mailbag, but the allregies are in full bloom, and the snark is screaming to be unleashed. Let’s roll.

Dear Egg,

I just can’t help but unleash my inner Alinsky. Whether it’s those redressing their grievances with government, those in the opposition party, allies of this country, or corporations who gave me more money than they gave anybody else, I keep insulting them. HELP!

-Steamrolling in DC

Dear Steamroller,

Allow me to quote your favorite WWF ex-rassler for the advice, “Know your role and shut your mouth.” Otherwise, I’ll be forced to make this little diddy into a full song:

Boots on the throat,
Boots on the throat,
Looking like Stalin with the jackboots on the throat.
With the arm sticking out, nose in the air, boots hit the throat.

-Egg

Dear Egg,

Until recently, I served as a mostly-ineffectual cabinet member of the governor of one party. Since he’s on his way out (let’s not get into why; I truly love the guy even if the people don’t), I’m looking for a new challenge, and I think I found a doozy – run for the Senate nomination of the other party. How can I fool the people into voting for me, at least in the primary?

-Brewing something in Chippewa Falls

Dear Brewing,

Normally, I’d say you’re screwed, blued, and tattooed, but seeing your (former) party is busy clearing its primaries of any and all challengers, run as yourself. By all means defend a tax hike that is responsible for nearly half one of the few remaining Wisconsin gems’ losses. By all means tie yourself to that unpopular governor – after all, their supporters will be free to support you in the primary, and then go home to the most-liberal Senator in the nation.

Oh wait a minute – that plan is falling apart as 1/8th of the state won’t be able to play that crossover game. I should’ve stuck with the default.

-Egg

Dear Egg,

Up until the brain trust in DC convinced me to give up a cushy governor’s job to run for Senate, my subjects loved me. Since then, things have gone downhill, as first my subjects, then the guy who I hugged abandoned me. That tanning cream is telling me, “If you just go rogue,…”

– Tanned in Tallahassee

Dear Tanned,

A prerequisite for going Rogue is not growing government. What, you say? You want to run as an independent? That’s not going to end well. Just ask Ross Perot.

Did you expect any help from The Steamroller? Dude, haven’t you noticed all the bloodstains on the underside of that bus he’s driving? Did you notice his footwear? If he stomps on the throats of a group of people that gave him more money than they gave anybody else, he’s not going to help somebody who hugged him.

One more thing – orange is a fruit, not a skin color.

-Egg

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 30, 2010

Well, There You Go Again!

by @ 12:53. Filed under Miscellaneous.

Repeating the same action and expecting a different outcome is a satirical definition for insanity.  Unfortunately, it is also the definition for many government endeavors…but I repeat myself.

A contributing factor to the economic freefall that we’ve experienced the past two years, is that mortgage companies and mortgage originators, were being leveraged by the Federal government to provide home loans to people who weren’t able to repay them.  Under the guise of a “chicken in every pot” and a “house for every family,” banks were rated on how well they served the low income communities in terms of providing mortgages.  If the banks didn’t rate well, i.e. didn’t make the loans that wouldn’t get paid back, the government could retaliate by keeping them from other programs or denying a merger request.   The result was that many of these loans were those that were part of the real estate collapse which triggered our downturn.

Today’s  USAtoday is reporting that the Treasury Department is now using the FDIC’s former bag of tricks.

The Treasury Department plans to rate mortgage companies on how they treat customers as part of the Obama administration’s $75 billion foreclosure relief effort. The report, which will measure how each company handles borrowers, is expected by July, Treasury Secretary Timothy Geithner said.

Oh, boy, here we go again!  It doesn’t matter whether the decisions are made on solid history and financial grounds, the only measurement will be “how they handle borrowers.”  In other words, if you don’t extend the loan, regardless of the financial situation or capacity of the borrower, you’re toast!

If you thought we were past the housing mess, we’re not!  All we’re doing is queuing it up for another bag of crap at another future date!

April 29, 2010

Hot Air moving on up

by @ 20:24. Filed under Miscellaneous.

Tonight is the big night that Hot Air moves onto Salem’s servers. Since they don’t feel like leaving any comment behind, they’ll be locking things down momentarily.

After that’s done, and the rather-massive database is saved, they’ll copy everything over to the new database and begin the process of having all the Domain Name Servers update. That means that you might see everything on the new server tonight, or you might not. That depends on your ISP.

If you still are not seeing anything new there tomorrow afternoon…

  1. Clear your browser’s cache
  2. Flush your computer’s DNS records (I can’t speak for MacOS/Linux/earlier versions of Windows, but later versions of Windows, open up a command-prompt window type ipconfig /flushdns, hit enter, and then close the command-prompt).
  3. Tell your ISP to update their DNS servers.

Senate horserace update

by @ 15:27. Filed under Politics - National, Politics - Wisconsin.

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.

Open Thread Thursday – Keeping it simple

by @ 9:17. Filed under Open Thread Thursday.

After all, I am a simple man…

[youtube]http://www.youtube.com/watch?v=Xqp1U6RoQaw[/youtube]

I might actually have some material today, but don’t let that stop you from contributing.

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

Ummmmmmmmm

by @ 12:37. Filed under Envirowhackos, Global "Warming".

Just one question:

Will Sting be returning the wealth he’s amassed from selling his music on all of those highly ungreen records and CDs?  Oh, maybe he’s planning on donating it to pay for his “bigger government?”

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.

Hey Rosie!

by @ 6:51. Filed under Miscellaneous.

And all her 911 denier friends….you know that oil rig that exploded and has now sunk in the gulf…..mostly steel!  Worse yet, mostly steel, surrounded by water! 

Imagine that!

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

Thomspon not running for Senate

by @ 15:04. Filed under Politics - Wisconsin.

Tommy Thompson made it official at today’s Madison Tea Party, at the end of a fiery speech in which he tried to make common cause with the roughly 12,000 Tea Partiers. He did not endorse anybody Since I was there, I do have audio of the speech – just click here for it (sorry about the less-than-optimal quality – I was juggling my semi-smart phone, camera and the voice recorder).

After the Tea Party, I did quick interviews with the two announced candidates, Terrence Wall and Dave Westlake (click on the links for the audio). I specifically asked them about the announcement from Thompson as well as their fundraising efforts.

I must also note that while Ron Johnson was one of the speakers, he did not mention one way or the other his possible candidacy.

Revisions/extensions (3:25 pm 4/15/2010) – Fixed the link to the Wall interview. That’s the problem with trying to do things on the laptop with it actually on my lap.

Thompson to endorse Ron Johnson?

by @ 7:29. Filed under Politics - Wisconsin.

That’s the theory from WISN-AM’s Jay Weber unleashed this morning. For those of you who catch this “live”, Weber is exploring this in depth. For those of you who don’t and have to catch the podcast (which should be up about 8:30), the initial theory came in the first half-hour of the show, with the in-depth explanation in the third hour.

The short version of Weber’s theory – Mark Block, the state director of Americans for Prosperity and the organizer of today’s Madison Tea Party, was Thompson’s campaign manager in 1990. Thompson wouldn’t use his speaking slot at the Tea Party to simply say that he’s not running for Senate, and he wouldn’t use it to endorse former Doyle Commerce Secretary Dick Leinenkugel. He noted that Ron Johnson, president of Pacur and founding member of the Oshkosh Tea Party, is also speaking at the Madison Tea Party, and that Johnson previously said that if Thompson wasn’t in the race, he’d jump in. He also noted that Johnson has told GOP insiders that he’s prepared to put $10 million of his own money in the race. That is important because Sen. Russ Feingold raised another $1.3 million in the first quarter with $4.26 million in the bank, and his wealthier announced challenger, Terrence Wall, put $1.2 million of his own money to match that $1.3 million raised. The bad news for Wall is he only has $1 million in the bank.

Related to that, the Oshkosh Northwestern ran a story on Johnson’s interest in the race. Johnson told the Northwestern that his children have grown up and his business is big enough for him to take a leave. His major concern is whether he can put together a campaign staff capable of giving him a legitimate chance of winning. While nearly every recent poll had Thompson beating Feingold in a hypothetical matchup, neither Wall nor Dave Westlake, the other declared candidate, were within hailing distance.

A Funny Thing Happened on the Way to the Hearings

by @ 7:13. Filed under Health Care Reform, Politics - National.

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 14, 2010

Um, Excuse Me But….

by @ 18:52. Filed under Miscellaneous.

Isn’t this called network television?

Wireless TV venture to use free airwaves

Thompson Senate saga to end tomorrow with a no…maybe

by @ 16:38. Filed under Politics - Wisconsin.

If I were truly a good blogger, I probably would’ve had this about the same time that Kevin Binversie and Ed Morrissey did, but I was busy doing my taxes so I would be able to show up at the likely announcement tomorrow.

WTMJ-TV/AM is reporting that former Governor Tommy Thompson is expected to announce something regarding a potential Senate bid tomorrow at the Madison Tea Party. Charles Benson initially reported that a source close to Thomspon said that he would not run, but the Associated Press subsequently quoted Thompson, “The only person who knows what I’m going to do is myself and I don’t know what I’m going to do.”

In anticipation of an actual announcement tomorrow, I will be closing the poll on whether Thompson should run, which is over on the left sidebar, at midnight tonight. I will mention that I chose “He won’t run, but should.”

While much of Thompson’s free-spending record, as well as his infamous “Stick it to ’em” quip to outstate Wisconsinites in the middle of the debate of whether to allow a Milwaukee-area-only sales tax to finance construction of Miller Park, would tend to mitigate against him appearing at a Tax Day Tea Party, he does have some credentials when it comes to school financing. As part of the deal where the state took over 2/3rds of funding, school districts have to have their budgets approved by the district’s electors at an annual meeting, and have to go to a voter referendum to either offer bonds of over $1 million or exceed revenue limits (historically anything more than the Qualified Economic Offer plus increase in enrollment from the previous year).

There are currently two announced candidates, Dave Westlake and Terrence Wall. They have both been rather-heavily courting the Tea Party crowd, and both have said that they would stay in the race even if Thompson enters. Westlake has the more-consistent track record, but he has essentially stopped trying to raise funds after a far-less-than-successful early effort. Wall, who has significant self-financing ability and has had some fundraising efforts, has donated to numerous Democrats.

Meanwhile, Dick Leinenkugel, late of Democrat Governor Jim Doyle’s administration as Secretary of Commerce, and part of the Leinenkugel Brewing family, has broadly dropped hints that he will enter the race for the Republican nomination. If Wall has issues with his donation record, Leinenkugel would have more-significant issues with his record as Commerce Secretary under a Democrat governor, which includes not getting personally invovled in numerous failed attempts to woo and keep companies that don’t serve the wants of government while getting personally involved in a rather-shady Spain-based Talgo train-car deal that was the nail in Milwaukee-based Super Steel. I’ll refer you to Kevin for the both-sides-of-the-street beatdown.

While the WTMJ video report didn’t mention Leinenkugel, it did mention Oshkosh businessman Ron Johnson. Johnson said that, if Thompson didn’t get in the race, he would, but if Thompson did get in, he wouldn’t. I honestly don’t know who Johnson is, so I can’t offer an opinion yet on whether he should enter the race.

Revisions/extensions (4:40 pm 4/14/2010) – WISN-AM’s Mark Belling is talking about this now. He’s saying that while Thompson really wants to run, the rest of his family is begging him to not run.

R&E part 2 (8:12 am 4/15/2010) – A bit more on Johnson, who is a founder of the Oshkosh Tea Party, as well as the theory from WISN-AM’s Jay Weber, that Thompson will endorse Johnson today, here.

April 13, 2010

Tiger Didn’t Learn Anything

by @ 17:04. Filed under Miscellaneous.

I am an avid golfer and fan of the PGA Tour.  I am one of the rare fans who was not enraptured by Tiger Woods even before the scandal that revealed itself shortly after Thanksgiving last year.  I have always felt Tiger was given too much attention when he was not on the leader board.  He has always struck me as someone who was invested in himself to the point of neurosis.

Over the last five months we have gotten to know the unscripted Tiger, and it isn’t pretty. But I must tell you, his behavior during and after last weekend’s Masters disturbed me almost as much as everything he did leading up to that supposedly triumphant return to professional golf.

In Tiger’s pre-tournament press conference, he said some things that really impressed me. He talked about a new respect for the game and a renewed appreciation for what he has been given.  He said this newfound attitude would result in less profanity and more congeniality.  It took him less than two days to backtrack on everything.

It is clear to me Tiger didn’t mean anything he said.  His supposed contrition is all a public relations gimmic.  Anyone who is sincere can change at least for a little while.  Heck, even a New Years resolution is usually carried out for a couple weeks!  The moment things didn’t go Tiger’s way, he was slamming clubs to the ground, and using profane language.  When things don’t go his way, he feels it is his right to poison his surroundings: even what is arguably the most hallowed ground in all of professional sport.

His post-tournament interview was a clinic in arrogance and narcissism.  Here is a man who was living a lie in front of his fans for years.  He has blown his family apart, and cost many people perhaps millions of dollars.  In spite of all that, he was given a tremendous welcome back by fans.  Instead of thanking God for the incredible blessings that have been bestowed upon him, all he could do was complain about a fourth place finish, and try to justify his temper tantrums.

Barring an injury, it is virtually certain that Tiger will rewrite the record books and be regarded as the greatest golfer of all time.  We now know that his character did not grow with his golf swing. I would have thought the crisis in his life would have brought about some significant changes. Obviously I was wrong.

A taxing proposition

by @ 12:52. Filed under Politics - Minnesota, Politics - National, Politics - Wisconsin, Taxes.

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!

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