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.
It is somehow fitting that the Generational Theft Act of 2009 will be passed on Friday the 13th. Seco Tributa and Americans for Tax Reform came up with a very fitting movie promo Photoshop.
Click for the full-size pic
There’s shades of Zucker, Zucker and Abrahams in the credits. Note the transportation and gaffer.
My blogfather Chris has the perfect sticker-sized answer to the Generational Theft Act of 2009, which is in the final stages of setting up for a sink of the fangs into the neck of the economy.
Obama Lied And The Economy Died!
The markets didn’t exactly like the House package, which happened despite bipartisan opposition.
One more tidbit – running with some numbers that Newsmax provided (H/T – Dad29), more than the entire reduction in the cost came from the elimination of tax breaks. They went down from $352 billion (42% of the original $838 billion) to $276 billion (35% of $789.5 billion). That’s a drop of $76 billion, $27.5 billion more than the $48.5 billion reduction in cost.
Mary Katharine Ham has done it again…
[youtube]http://www.youtube.com/watch?v=mzkSFnh7lbQ[/youtube]
Flip Pidot puts the answer in a handy graphic (which you’re going to have to go see yourself). In inflation-adjusted dollars, the “infrastructure/energy” portion of the Generational Theft Act of 2009 (arguably the “stimulative” part of the act) ranks below the Louisiana Purchase, the Moon Race, the first 4 years of the New Deal, and the Iraq War (the other governmental spending on the chart), while each of the remaining 3 components; “wealth redistribution”, “states/human capital” (i.e. government spending money on itself), and interest on the borrowing, each outstrip everything except the New Deal and the Iraq War.
Bonus item – Using the same numbers from Bianco Research (via The Big Picture) that Flip used, the total $1.2 trillion cost of the Generational Theft Act is greater than any “single-event” outlay other than World War II in inflation-adjusted terms.
Revisions/extensions (7:17 pm 1/30/2009) – Link to Flip’s post fixed, but I won’t guarantee success in getting through. All I can say is, “Try, try again.”
Tom McMahon came up with Moneyoply 2009.
As per usual when I borrow his stuff, the comments are off here.
The House version of the Stimulus Act is available for your leisurely reading here. Actually, it’s a great read. In 647 pages you get “boy meets girl,” “boy falls in love with girl” and “boy leaves girl with a life long debt to pay as he ditches her at the restaurant!”
It would be a lot of fun to dissect the bill and point out the inanity of the various appropriations that have been contorted to be considered “stimulus,” but like I said, this sucker is 647 pages and I’ve got other things to do. Still, needing to get a post done for the morning, I decided to start looking at the bill and see what pops up. It only took 22 pages to ferret out the brilliance that the authors of this plan hold.
Skimming off the top: I had barely gotten into the package when I saw this interesting provision:
SEC. 1106. SET-ASIDE FOR MANAGEMENT AND OVERSIGHT.
In this section, the authors have allowed each Federal Department that has oversight over some plan dollars, to set aside .5% to be used for management and oversight of the programs. The total stimulus is currently slated to be $825 billion. Of that, $208 billion is allegedly tax reductions. Taking the most generous approach, that would mean that $617 billion will have the .5% set aside. That amounts to $1.25 billion that goes to increasing funding for government agencies.
Wouldn’t you think that these departments could handle the oversight of these projects with their existing staff? That’s how it happens in fiscally strapped commercial enterprises. I guess this is how jobs are created. No reason for them other than “because we can.”
Skimming off the top (part II): But the $1.25 billion isn’t the only government inflation that is contained in the bill. The next section allocates over $208 million for the inspector general, the next section provides $25 million for the “Government Accountability Office.” Hell, I’d offer to double that amount if they really could provide any government accountability! A few sections later $14 million is set aside for the “Accountability and Transparency Board.” Again, I’d double that if they actually could create any.
Buy America! The bill contains a provision that mandates the purchase of American made Steel for any project that the stimulus pays for. If we really wanted to get the most bang for our buck of course, we’d buy steel from the low cost provider. This being a “stimulus” bill, I suppose that’s too much to expect. What would be reasonable is to have a provision that the pricing can’t be above the national average for the product purchased. Yeah, that would be a reasonable provision.
The Steel provision says that with rare exception, US Steel must be purchased unless it:
increase(s) the cost of the overall project by more than 25 percent.
So let me think through this. If the bid for all other materials comes in under plan, if labor costs come in under plan but steel comes in 300% of normal costs but doesn’t throw the “overall project” into an excess of 25%, we have to buy the American steel? I had heard that the Steel industry was pushing for this provision. With this provision I’m convinced they have pictures of authors Rangel and Waxman with goats…oh wait, Waxman already looks like a goat…never mind!
But Not Too Many Jobs! As you would expect, the bill has a prevailing wage requirement for all “stimulus” projects. Under normal circumstances prevailing wage provisions are inefficient wastes for people who don’t have to worry about fiscal responsibility. In this bill it’s worse.
When supply exceeds demand the situation is generally known as “A buyer’s market.” This term is often used in real estate settings, like today, where many more sellers want to sell than buyers are willing to buy. Typically in these environments, the buyers are able to negotiate much more aggressive prices. They are able to do this because the seller wants the sale and with excess inventory, they know that buyers have lots of options. A similar situation exists in today’s labor market.
With unemployment rates what they are, there are more workers looking for work than employers looking to employ them. Under a free market this should mean that wages will soften to some extent. The authors in their wisdom, have obviously decided that they have some mystical number of jobs that they want to create and that it coincides neatly with the “prevailing wage.” If the markets dictated labor rates for these projects we could not only stretch the dollar further, and perhaps do more projects, but also likely put more people to work….that is if you believe the whole “stimulus creates jobs” fairy tale!
We Still Hate Blagojevich! Here’s a really interesting provision:
None of the funds provided by this Act may be made available to the State of Illinois, or any agency of the State, unless (1) the use of such funds by the State is of the enactment of this Act, or (2) Rod R. Blagojevich no longer holds the office of Governor of the State of Illinois. The preceding sentence shall not apply to any funds provided directly to a unit of local government (1) by a Federal department or agency, or (2) by an established formula from the State.
The Lying Section 1204: This section provides:
The Chairman of the Council of Economic Advisers in consultation with the Director of the Office of Management and Budget and the Secretary of the Treasury, shall submit quarterly reports to Congress detailing the estimated impact of programs under this Act on employment, economic growth, and other key economic indicators.
I’ve already documented here and here how Christina Romer has sold her soul to Obama, making up stories for this stimulus that are not supported by her own research. I hope Patrick Fitzgerald stays busy with Blagojevich while this provision is in place. I hear perjury raps aren’t pleasant!
It only took 22 pages to come across these items, I haven’t even gotten to the actual appropriations detail. I feel a thrill running up my leg as I think about what enlightened idiocy is contained in the remaining 625 pages.
Revisions/extensions (5:01 am 1/27/2009, steveegg) – Not to be outdone by their House counterparts, the Senate also has its own version ready to go. The Senate Consevatives Fund put up a 5-part PDF file of the Senate’s working version. It is a “slightly” smaller read at “only” 434 pages plus a 161-page Appropriations Report.
While by the Constitution the Senate will receive whatever comes out of the House, they also do reserve the right to, among other things, put this in as a substitute amendment. Like Shoebox, I don’t have time to sift through all 1,100-plus pages, but I wouldn’t ignore the Senate’s initial contribution. After all, any changes in the Senate would send it to a conference committee, where the real sausage-making happens. Bills tend to grow in conference committee, and we are talking about the even-freer-spending half of the bipartisan Party-In-Government.
My friends at Texans for Fiscal Responsibility recently sat down with Texas Gov. Rick Perry (R) to discuss the potential federal bailout of state and local governments. Of note, Texas is one of the few states that do not face a massive deficit, mainly because Perry and company told the various state agencies to cut discretionary spending when the first inklings of the economic downturn became apparent.
[youtube]http://www.youtube.com/watch?v=s5EnV4beuo4[/youtube]
I doubt the majority in Madison and the localities here in Wisconsin are paying attention, but they should.
Yesterday, I had a brief piece on Milwaukee County Executive Scott Walker’s refusal to belly up to the bailout teat. Predictably, ALL the teat-suckers, from the usual suspects with Ds behind their name (or those that would have Ds there if the County Board were a partisan office) to the opportunistic “business leaders” who have become dependent on the teat, attempted to throw Walker under the bus. Let me put it this way; they don’t know Scott. He launched a two-front counterattack this morning with WTMJ-AM’s Charlie Sykes. While you listen to a poor-quality rip of the interview (the better-quality version starts at the 37:39 mark of Part 1 of the official podcast), you may as well read the e-mail (“borrowed” from Charlie):
How many people would take a gift of $1,000 and go out and buy a $60,000 sports car? While the gift is nice, it will not make the monthly car payments that are too large for the average budget. The same is true with the (so-called) stimulus package.
Federal money nearly always comes with strings attached. In fact, most federal transportation grants require a 20% (or greater) local match. "Free money" sounds nice but what happens when state and local governments cannot afford the match? If Milwaukee County receives $50 million for infrastructure projects under this formula, taxpayers in the county would have to come up with an extra $10 million. Does anyone think we have an extra $10 million in this budget climate?
A real economic stimulus will put money in the hands of consumers – and not the government. Tax cuts work. They did for Ronald Reagan in the 1980s and they are exactly what John F. Kennedy called for in the 1960s. Each time, our nation got out of a recession by putting more money back into the hands of the taxpayers. The choice is simple: do we bail out failed governments with budget deficits or do we stimulate the economy and put more people back to work with real tax cuts at the federal, state and local levels? I choose the program that truly puts people back to work!
For the “benefit” of the outstate critics (I’m looking directly at you, Recess Supervisor), I’ll twist the knife just a bit – if adding “infrastructure” for the sake of adding “infrastructure” or creating make-work jobs were the solution, northern Wisconsin would be the economic magnet of the world.
I do need to give a shout-out to my county supervisor, Paul Cesarz. At the end of the Milwaukee Journal Sentinel story linked to above, he shows that he also gets the fact that resurrecting the Works Progress Administration will do no better the second time around.
The Milwaukee Journal Sentinel reports that, unlike Gov. Jim Doyle (looking for $3.7 billion) and Milwaukee mayor Tom Barrett (bellying up to the teat with a $599 million “wish list”, quoting the story), Milwaukee County Executive Scott Walker isn’t asking for any federal money despite some serious funding “dilemas”, including the unmentioned multi-hundred-million-dollar pension fuckup from prior years. Quoting Walker:
All we are asking for is “do no harm”. I’m not asking for any nrew projects or things to be done here.
The last thing you want to do is put money in the hands of government (in a recession).
That was in response to Doyle’s and the Wisconsin Counties Association’s request for all of Wisconsin’s 72 counties to belly up with their own wish lists. Of course, the County Board (the ones who gave us that pension fuckup) will likely send their own “wish list”, and thanks to the stupidity of the voters, the spend-and-tax-and-spend-some-more faction does have nearly a veto-proof majority.
My Congresscritter, Paul Ryan, realized the Federal Reserve is playing a very dangerous game with the money printing press. While he still hasn’t quite made the connection to the bailout-palooza he supported, those smarter than I predicted the dire consequences, including flooding the economy with money (which is, by its nature, inflationary) and the potential for “monetizing” the federal debt, back when the original bailout was only being talked about.
William Smith took Chrysler’s $100,000 full-page ad thanking us for giving them $4 billion which ran in USA Today and The Wall Street Journal earlier this week, and made a few corrections…
I especially like how 74% of Chrysler’s workforce sucks down 78 percent of Chrysler’s spending.
Shoebox asked the question. While I can’t officially condone gambling (at least if you use Hot Rod Blago as your bookie), I can officially condone an NRE poll. You can take up to 3, but I will wipe out any multiple answers that include “None of them”.
Which of the Big Three (if any) will be in essentially its pre-12/2008 form come 12/2018?
Up to 3 answer(s) was/were allowed
Total Voters: 75
Loading ...With that, he bowed his head and gave up his spirit. John 19:30
And so it is with George Bush.
Several sources are reporting that President Bush has decided upon a bailout package for the auto industry. The package is said to be as much as $17.4B pending Congress’ approval of the second tranche of TARP funds.
According to the Politico, the loan provisions look very much like the package defeated in Congress last week but, includes the “Corker amendments,” although as part of the “non binding” parts of the loan. As Non binding, the Corker amendment terms will be suggested targets but not absolute requirements.
I’m on record as supporting the government providing debtor in possession financing to support an “orderly” bankruptcy. It sounded recently as if Bush was headed down that path. By having an “orderly bankruptcy,” the companies would get the fund they need to operate while they were put into bankruptcy to do the gloves off negotiation required to get all parties to an agreement that might allow for survival of at least one of the auto makers.
With the announced plan, Bush has let the UAW off the hook in providing any meaningful assistance to the health of the industry. Rather than make requirements of the union issues, he included them as “targets.” These “targets” will get thrown by the wayside the minute that Democrats are faced with the choice of a hostile union or turning the other cheek and making the auto industry nothing more than a vassal of the government.
Revisions/extensions (9:38 am 12/19/2008 – steveegg) – Here’s the video of Bush giving up the ghost (from MSNBC via Allahpundit)
Visit msnbc.com for Breaking News, World News, and News about the Economy
That under-the-bus moment for the Corker amendment suggestion will come at 4:05 pm EST 1/20/2009.
Only Nixon could go to Red China, and only Bush could put the final nail in the coffin of free markets (tombstone shamelessly borrowed from Michelle Malkin)…
R&E part 2 (4:02 pm 12/19/2008 – steveegg) – Lawhawk found the terms of the loans for both Chrysler and GM. The terms of the 3-year loans are as bad as I feared:
– All of the anti-management requirements in the House bill are there.
– The anti-UAW provisions are but “targets” that the Obama administration will judge. Any takers on the equally-vague “fuel efficiency”, “advanced technology vehicles” and “competitive product mix” targets being much more vigorously enforced for the benefit of the Gorebal “Warming” acolytes than the calls for the end of the Jobs Bank or reduction in salaries/benefits to the levels paid by the Japanese Big Three?
– The interest is based on the 3-month LIBOR plus 300 basis points (or a minimum of 5.00%), which changes to the 3-month LIBOR plus 800 basis points (or a minimum of 10.00%) if the loan changes to a Debtor-In-Possession loan. Anybody else find it curious that the Treasury isn’t using the Fed rates?
-The Treasury Department will be, in lieu of taking an ownership stake in Chrysler, tacking on an additional 6.67% in its loans to Chrysler, or $266.8 million (for a grand total of $4,266,800,000).
– The Treasury Department (read, taxpayers) will be taking 20% of the loan GM’s market capitalization (as the “warrant limit” will hit first) in the form of perpetual-term warrants for common shares the Treasury promises not to exercise its right to vote except in cases of a “termination event” or bankruptcy. At last check, the market capitialization of GM was $2.74 billion, which would make that about $548 million.
– Since that “warrant limit” is lower than what the Treasury wants for either the $9.4 billion that is guaranteed to go out the door before Bush leaves or the $13.4 billion that is, in part, held hostage by Congress, the Treasury will be taking an additional amount in loans in a method similar to Chrysler.
– In order for GM to lose the warrants after it pays back the loans, they have to buy back the warrants at the market price. In short, we’re going to be owning GM for a long time.
The good news – cloture on the bill failed in the Senate 52-35.
The bad news – President Bush and the Congressional Democrats are still bound and determined to explicitly bail out the UAW this year.
The ugly news – Once the 111th Congress comes into session on January 6, 2009, the filibuster roadblock will be no more. Let’s review how the bipartisan Party-In-Government will pick up the necessary 8 votes (I will assume that the seat vacated by Barack Obama remains vacated, that Norm Coleman, who voted against this, is seated, and that Hillary Clinton, who voted for cloture, and Joe Biden, who was absent, either remain in the Senate for the first couple days of the 111th Congress or their appointed replacements are seated):
– Harry Reid (D-NV; “No”) – Voted “No” only to keep the possibility of bringing this back in this Congress. When he will be able to get to 60, that will become a “Yes” vote.
– Wayne Allard (R-CO; “No”) – He’s retiring, and the seat will be filled by Democrat Mark Udall
– Joe Biden (D-DE; “Not voting”) – This is a special case; I don’t know whether this seat will be officially vacant come January 6, but if it isn’t, it’s another vote for cloture.
– Ted Stevens (R-AK; “Not voting”) – He was defeated for re-election by Democrat Mark Begich.
– John Sununu (R-RI; “Not voting”) – He was defeated for re-election by Democrat Jeanne Shaheen.
– Gordon Smith (R-OR; “Not voting”) – He was defeated for re-election by Democrat Jeff Merkley.
– Ted Kennedy (D-MA; “Not voting”) – They’ll wheel him in if needed to become vote #60.
– John Kerry (D-MA; “Not voting”) – He’ll definitely show up to vote for the UAW and welfare.
– Ron Wyden (D-OR; “Not voting”) – He’ll be around for the UAW.
Revisions/extensions (8:16 am 12/12/2008) – And the truly-ugly news courtesy CommentGuy over on the linked Michelle Malkin thread: That vote was on the annual AMT “fix”, not the UAW bailout bill. I didn’t see anything that suggested that the UAW bailout bill got appended to the annual AMT fix.
We’re not done yet.
Because I bashed Rep. Paul Ryan (R-WI, my Congresscritter) for his vote on the UAW bailout, it is only fair that I present his side of the argument. From a press release that came into my mailbox a half-hour ago (only stripping off the announcement that it was a statement):
It is clear that the mounting hardships throughout Southern Wisconsin have been downright gut-wrenching. In addition to the imminent closure of the GM plant in my hometown of Janesville and mass layoffs elsewhere, hard-working Wisconsinites are finding it increasingly difficult during this recession to cope with strained credit markets, rising health care costs, and making their monthly mortgage payments.
The American automotive industry is under considerable distress, and various proposals have been put forth to provide aid to those in need. I’ve maintained that any assistance to the domestic auto industry should be drawn from previously approved funds from a U.S. Department of Energy loan package, rather than divert resources from the financial rescue package or rely on additional taxpayer dollars. H.R. 7321 cuts through the bureaucratic red tape and expedites these previously appropriated funds. Because no additional taxpayer dollars were appropriated, I was able to support this legislation.
At the forefront of my mind are jobs in Southern Wisconsin and the retiree commitments to workers that could be placed in jeopardy under certain bankruptcy scenarios. To be clear, this bill is not intended to save the American auto industry and makes no guarantees that layoffs in this industry will end. Congress must stop overselling what it can do. At the very least, I am hopeful that by extending these loans to the American auto manufacturers, bankruptcy will be avoided in the near term and protections for retirees will remain intact.
As Jules Winnfield once said, well, allow me to retort. The UAW workers, who are dwindling in number in Wisconsin with or without the bailout by the way, aren’t the only ones who are hurting. Sending $14 billion of everybody’s money down the rat hole known as GM, Ford and Chrysler just so they can survive the next 3 1/2 months without any permanent reforms, without any assurance that they would ever return to profitability, is the height of stupidity. The market forces are saying that the Big Three are sending too much money out the door in compensation, and the bailout only seriously addresses the white-collar portion (not even half) of that.
I suppose I could give a half-cheer that the bailout is using $25 billion that was already committed to the Big Three, and a quarter-cheer that it leaves $9 billion for the original purpose of plant modernization.
Chapter 11 bankruptcy is not the end of the world. Indeed, many of Ryan’s Republican colleagues suggested that a pre-negotiated Chapter 11 bankruptcy, which would allow the union portion of that compensation to be adjusted with less UAW interference, is the way to go. I agree.
This YouTube video is my insta-reaction to Paul Ryan joining the Democratic caucus in bailing out the Big Thr…er, UAW to the tune of $14 billion (warning, gratutious use of fuck-bombs involved). I especially like the stretch between 1:25 and 1:33 when Butch Coolidge goes ballistic.
Revisions/extensions (9:00 pm 12/10/2008) – I should’ve checked to see if was embeddible before trying to embed it. Sorry about that.
CNN reports on a statement from US Comptroller John Dugan that states that over half of those that had their defaulted mortgages adjusted through the Hope Now Alliance, a coalition of lenders, servicers, investors and counselors, redefaulted on their mortgages within 6 months of having the adjustment. Some numbers from the article:
– So far in 2008, 1.7 homeowners have had their mortgages adjusted through this program.
– 53% of those who had their mortages adjusted in the first quarter of 2008 have redefaulted within 6 months.
– At least 51% of those who had their mortgages adjusted in the second quarter of 2008 have redefaulted within 6 months. This percentage could easily increase, as those who underwent the adjustment in June (and possibly part of May) have not reached the 6-month threshold.
Despite these failures, FDIC chairwoman Sheila Bair wants to extend this program to reduce payments to no more than 31% of gross monthly income by lowering interest rates to 3% and extending the mortgage to 40 years, with the government eating 50% of the loss of those who make it past 6 months without redefaulting to the tune of an estimated $24.4 billion.
Now, what did Albert Einstein say about insanity? I believe it had something to do with doing the same failed thing over and over while expecting a different result.
[No Runny Eggs is proudly powered by WordPress.]
