President Playing Politics with Debt Ceiling

The debt ceiling debate as of this afternoon:  In January, House Republicans passed a budget for fiscal year 2012; Senate Democrats voted it down, and have now gone 817 days without voting on any plan of their own.  House Republicans approved Cut, Cap and Balance last week; Senate Democrats said no; President Obama said he would veto the plan even if it passed.  Speaker Boehner will release a plan today that sets up one vote to increase the debt ceiling this year and one next year, neither of which would include tax increases.  Over the weekend, the President’s true goal was reiterated by Treasury Secretary Geithner, who said on Fox News Sunday that any deal must ”take the threat of default off the table through the next election.”  The administration now has zero credibility when it makes any claim that Republicans are playing politics or are otherwise causing a delay in reaching a deal. 

The history of debt ceiling increases speaks volumes about the motives of the White House in refusing to consider anything but an extension through the 2012 elections.  The debt ceiling has been raised six times since 2007; three times in the 110th Congress and three times in the 111th Congress. On September 29, 2007, it was raised to $9,91 9,815 850; on July 30, 2008, it was raised to $10,615 800; on October 3, 2008, it was raised to $11,315 700; on February 17, 2009, it was raised to $12,104, 789; on December 28, 2009, it was raised to $12,394 290; and on February 12, 2010, it was raised to $14,294 1,900.  The longest period of time is the most recent – from February 2010 to August 2011, or 17 months.  The shortest was two months, from December 2009 to February 2010, and the average has been about eight months. 

The facts disprove any claim from the White House that failing to extend the debt ceiling beyond the election would create market uncertainty or drastic economic consequences.  The lack of a dramatic response from Wall Street today indicates that traders believe a deal will get done; no one cares about how long the debt ceiling is increased.  And the length of time is not relevant to the warnings from the ratings agencies – their larger concern is whether there is a credible effort to reduce the debt; not when or for how long the debt ceiling is raised.

It would be helpful to the national discussion is more Americans were aware of the motivation of the players in the debt ceiling debate.  Critics of the new Republican freshman (virtually all of whom misunderstood the message of last year’s elections) claim the members are not being “flexible,” which is a euphemism for stating that they must accept tax increases as part of any deal.  Very few political analysts are calling out the President for his inflexibility on the length of the deal.  The Republicans are standing up for their principles; the President is only standing up for his re-election.

President Playing Politics with Debt Ceiling

The debt ceiling debate as of this afternoon:  In January, House Republicans passed a budget for fiscal year 2012; Senate Democrats voted it down, and have now gone 817 days without voting on any plan of their own.  House Republicans approved Cut, Cap and Balance last week; Senate Democrats said no; President Obama said he would veto the plan even if it passed.  Speaker Boehner will release a plan today that sets up one vote to increase the debt ceiling this year and one next year, neither of which would include tax increases.  Over the weekend, the President’s true goal was reiterated by Treasury Secretary Geithner, who said on Fox News Sunday that any deal must ”take the threat of default off the table through the next election.”  The administration now has zero credibility when it makes any claim that Republicans are playing politics or are otherwise causing a delay in reaching a deal. 

The history of debt ceiling increases speaks volumes about the motives of the White House in refusing to consider anything but an extension through the 2012 elections.  The debt ceiling has been raised six times since 2007; three times in the 110th Congress and three times in the 111th Congress. On September 29, 2007, it was raised to $9,91 9,815 850; on July 30, 2008, it was raised to $10,615 800; on October 3, 2008, it was raised to $11,315 700; on February 17, 2009, it was raised to $12,104, 789; on December 28, 2009, it was raised to $12,394 290; and on February 12, 2010, it was raised to $14,294 1,900.  The longest period of time is the most recent – from February 2010 to August 2011, or 17 months.  The shortest was two months, from December 2009 to February 2010, and the average has been about eight months. 

The facts disprove any claim from the White House that failing to extend the debt ceiling beyond the election would create market uncertainty or drastic economic consequences.  The lack of a dramatic response from Wall Street today indicates that traders believe a deal will get done; no one cares about how long the debt ceiling is increased.  And the length of time is not relevant to the warnings from the ratings agencies – their larger concern is whether there is a credible effort to reduce the debt; not when or for how long the debt ceiling is raised.

It would be helpful to the national discussion is more Americans were aware of the motivation of the players in the debt ceiling debate.  Critics of the new Republican freshman (virtually all of whom misunderstood the message of last year’s elections) claim the members are not being “flexible,” which is a euphemism for stating that they must accept tax increases as part of any deal.  Very few political analysts are calling out the President for his inflexibility on the length of the deal.  The Republicans are standing up for their principles; the President is only standing up for his re-election.

White House Playing Politics with Debt Ceiling

The debt ceiling debate as of this afternoon:  In January, House Republicans passed a budget for fiscal year 2012; Senate Democrats voted it down, and have now gone 817 days without voting on any plan of their own.  House Republicans approved Cut, Cap and Balance last week; Senate Democrats said no; President Obama said he would veto the plan even if it passed.  Speaker Boehner will release a plan today that sets up one vote to increase the debt ceiling this year and one next year, neither of which would include tax increases.  Over the weekend, the President’s true goal was reiterated by Treasury Secretary Geithner, who said on Fox News Sunday that any deal must ”take the threat of default off the table through the next election.”  The administration now has zero credibility when it makes any claim that Republicans are playing politics or are otherwise causing a delay in reaching a deal. 

The history of debt ceiling increases speaks volumes about the motives of the White House in refusing to consider anything but an extension through the 2012 elections.  The debt ceiling has been raised six times since 2007; three times in the 110th Congress and three times in the 111th Congress. On September 29, 2007, it was raised to $9,91 9,815 850; on July 30, 2008, it was raised to $10,615 800; on October 3, 2008, it was raised to $11,315 700; on February 17, 2009, it was raised to $12,104, 789; on December 28, 2009, it was raised to $12,394 290; and on February 12, 2010, it was raised to $14,294 1,900.  The longest period of time is the most recent – from February 2010 to August 2011, or 17 months.  The shortest was two months, from December 2009 to February 2010, and the average has been about eight months. 

The facts disprove any claim from the White House that failing to extend the debt ceiling beyond the election would create market uncertainty or drastic economic consequences.  The lack of a dramatic response from Wall Street today indicates that traders believe a deal will get done; no one cares about how long the debt ceiling is increased.  And the length of time is not relevant to the warnings from the ratings agencies – their larger concern is whether there is a credible effort to reduce the debt; not when or for how long the debt ceiling is raised.

It would be helpful to the national discussion is more Americans were aware of the motivation of the players in the debt ceiling debate.  Critics of the new Republican freshman (virtually all of whom misunderstood the message of last year’s elections) claim the members are not being “flexible,” which is a euphemism for stating that they must accept tax increases as part of any deal.  Very few political analysts are calling out the President for his inflexibility on the length of the deal.  The Republicans are standing up for their principles; the President is only standing up for his re-election.

To Take or Not to Take … Kids’ Social Security Numbers

Bob Bowdon, author of “The Cartel,” roiled the blogosphere with his posting about Google’s “Doodle-4-Google” art contest.  The original parent consent form included a request for the child’s city of birth, date of birth and last four digits of the child’s Social Security Number.  Bowdon noted that with this information, Google could make a “statistical guess” about the first five digits of a person’s SSN, which of course could be “linked to other databases to target advertising.”  And people thought that Google was only giving away a T-shirt to each state finalist… 

Google’s response to Bowdon’s article was as follows:  “This year we started accepting doodles from kids even if their school hadn’t registered for the contest. To help us keep entries distinct and remove duplicate entries from any particular student, we asked parents for limited information, including the last 4 digits of a student’s social security number. We later updated our forms when we recognized that we could sufficiently separate legitimate contest entries while requesting less information. To be clear, these last 4 digits were not entered into our records and will be safely discarded. The city of birth helps us identify whether contestants are eligible for the contest, as winners must be either U.S. citizens or permanent legal residents of the U.S. The information isn’t used for any other purpose.”

Since Google’s business model is based on advertising (not that there’s anything wrong with that), it was reasonable for Bowdon – and others – to raise questions about the real purpose of requiring so much information just for an art contest.  And while Google’s response states that it can distinguish separate contest entries with less information, the company could have avoided the controversy by taking such steps in the first place.  At the very least, the company should inculcate its employees with more sensitivity to potential pitfalls regarding its business practices; after all, the Google mantra is “don’t be evil.”  Not everything should be about collecting information; it is OK to just have a fun art contest, even if a kid sends more than one drawing.  As Bowdon suggested, click on Bing or Yahoo, and “You just might find what you’re looking for.”

120 Million New Reasons for the One Dollar Coin

MSNBC’s Eamon Javers reported today that there are printing flaws, including blank spaces, in the federal government’s new $100 bills.   The cost of the 1 billion new bills, worth $110 billion, is $120 million.  Javers reported that none of the bills can be circulated until the erroneous currency is separated, which could take up to one year.  While they sort out the good bills from the bad, and determine why they were misprinted, the Bureau of Engraving and Printing will be issuing the older $100 bills.  Officials believe at least 30 percent of the printing run will not be usable; all of them will have to be burned.  The bad bills account for more than 10 percent of the $930 billion in cash being circulated by the government. 

While the report is about $100 bills, they reiterate the rationale for eliminating the one dollar bill and using one dollar coins, a goal that Citizens Against Government Waste (CAGW) has been pursuing for more than a decade.  CAGW’s prior blog posts on the $1 coin in 2010 from April 23, April 29, and May 17 show that replacing the $1 bill with a coin would save taxpayers $522.2 million per year.   That figure comes from an April 7, 2000 Government Accountability Office (GAO) report; savings would likely be much higher today.  The Bureau of Engraving and Printing produces approximately 3.4 billion $1 bills each year, each of which costs 4.2 cents to manufacture.  (By contrast, the $100 bills cost 12 cents each; hence the $120 million cost of production cited in Eamon Javers’ story).  Each $1 bill has a lifespan of approximately 21 months.  By comparison, the $1 coin costs slightly more to produce – 12 to 20 cents – but has a lifespan of 30 years or more.

 Other benefits include savings on the processing of money by banks and businesses.  Coins cost 30 cents per thousand pieces to process at Federal Reserve Banks, compared to 75 cents per thousand for $1 notes.  Large-scale private-sector users reap even more savings.  Processing bills costs them more than 500 percent above processing coins. 

In a letter to the editor of The Washington Post which was published on May 1, 2010, Thomas McMahon, the senior vice president and chief counsel for the National Automatic Merchandising Association from 2002 to 2009, wrote that “Replacing $1 bills, which last about two years, with $1 coins, which last about 30 years, would save taxpayers at least $700 million a year in paper and printing costs. Eliminating the $1 bill would not remove George Washington from our money. His image appears on more than 40 billion quarters.  Compared with trillion-dollar deficits, $700 million is a small sum. But it’s a start, perhaps an important start on the road to improved government efficiency…”

Finally, coins are much more difficult to counterfeit than bills, and certainly easier to produce without blank spaces.

From the Housing Frying Pan into the Housing Fire?

The Troubled Asset Relief Program, lovingly known by its acronym TARP, is set to expire on December 3, 2010. 

The New York Times reported yesterday that TARP may end up costing taxpayers less than originally forescast, an outcome which certainly should not be construed as a reason to make a habit of baling out banks and Wall Street investment firms.

For many Americans, TARP is more than a vote; it is a symbol of big government at its worst, intervening in private markets with taxpayers’ billions to save Wall Street plutocrats while average Americans struggle through the recession those financiers spawned.

Fewer than three in 10 Americans say they believe the program was necessary “to prevent the financial industry from failing and drastically hurting the U.S. economy,” according to a poll in July for Bloomberg News.

Here is a nifty chart they included:

Conspicuously absent from the chart is any mention of the status of the nation’s two giant mortgage twins, Fannie Mae and Freddie Mac.  September, 2010 marked the second-year anniversary of their takeover by the federal government, a move which essentially nationalized the enire home mortgage market.  As CNBC Editor John Carney explained in an August NYT op ed entitled “Too Big Not to Fail,” “Despite their central roles in the housing bubble, the Federal Housing Administration, Fannie Mae and Freddie Mac now back more than 95 percent of new mortgages.”

And Fannie and Freddie had leading roles occupying center stage in the collapse of the housing market, the inner workings of which (or dysfunctions, if you will) are sufficiently esoteric and labrynthine to cause the eyes of the average American to quickly glaze over.  That complexity and impenetrability allowed F & F to operate for decades without adequate congressional or executive branch oversight, and without the merciless oversight of the capital markets themselves.   

Depending upon what they decide to do with Fannie and Freddie, we could very well see Congress, under Republicans, but especially under Democrats, make the housing situation even worse.  Even though the two government-sponsored enterprises have transmogrified into two government-owned-and-operated enterprises, neither the Obama Adminstration nor Congress has moved to find a long-term solution to the woes of Fannie and Freddie Mac, which are also the woes of taxpayers; the two are on track to cost taxpayers $400 billion when all is said and done. 

In fact, it is already clear that the powers that be in Washington, along with their allies the realtors, the homebuilders, the affordable housing advocates, as well as the many Fannie and Freddie hangers-on (who raked in the cash while they were living high on the hog and flying under the radar) are hoping to get the GSE gravy train going again at some point in the future. 

The current posture towards the two was summed up by Joe Weisenthal of Business Insider when he said:

If the Obama administration’s view towards Fannie and Freddie could be summed succinctly, it would be this: Fannie and Freddie are no good anymore, but the underlying premise, government financing for mortgages, is sound.

 
That description should curdle the blood of any taxpayer.

Some, like former Treasury Secretary Hank Paulson, are calling for the shrinking of F & F (CAGW concurs with this apprach, but only as a first step).  Some predict that there will be support from the Obama administration and die-hard GSE acolytes like Cong. Barney Frank (D-Mass.) to wind down the two BIG GSEs and then create lots of LITTLE GSEs (apparently, very bad ideas die hard).

A hybrid model is destined to lead to more distortions, manipulation, political gamesmanhsip, more risk to taxpayers, and eventually meltdown.  The federal government’s interference in the mortgage market has been enormous over the years.  The federal government cannot be in for a little; pretty soon, it is pushing and eventually it simply kicks the door in and is in for the lot.  It is time to force its retreat from the market and usher the private sector back into the market.  

As former Fannie Mae executive Ed Pinto pointed out in his fantastic testimony on September 29, 2010 before the House Financial Services Committee,

Decades of mismanagement by Congress has placed our housing finance system on
government life support. It is now clear that this interference has been both a
failure and unnecessary.

FDIC Chairman Sheila Bair, Acting Director of the Federal Housing Finance Agency Ed DeMarco, and and former Federal Reserve Chairman Paul Volker all agree that the GSE model was an egregious failure.  For better solutions and a revival of a true private market in mortgages, begin by reading American Enterprise Institute’s Peter Wallison’s offering.  His conclusion:

The policy case for government involvement in housing
finance is weak. All the major arguments in its favor have
little or no merit. Moreover, recent history provides two
examples of colossal losses for taxpayers coming directly
from the moral hazard that government support of the
housing market inevitably engenders. Instead of looking at
more plans and proposals to replace Fannie and Freddie
with another government-backed vehicle, Congress
should begin to look seriously at ways to withdraw the
government from the housing-finance market and rely
solely on the private market.

Maybe It’s Because They Had to Pay Stephen Colbert’s SAG Fees!

The Capital News Connection reports today that the cost of running Congress itself has skyrocketed by 89 percent over the last ten years, three times the rate of inflation!

In the current fiscal year, which ends Sept. 30, taxpayers are spending $5.42 billion to run the Second Branch of government. In fiscal year 2000, the same bill came in at $2.87 billion.

Spending increases of 70 percent, 80 percent, 100 percent and even 868 percent took hold across major parts of the institution over the past 10 years. Even those that saw the smallest increases went up by almost 40 percent or more.

In contrast, inflation from 2000 to 2010 was 26 percent, according to the Bureau of Labor Statistics.

The spending increases are outlined in annual legislative branch appropriations bills and documents from the Office of Management and Budget.

“If you compare it to other legislatures around the world, it’s pretty expensive,” John Hibbing, congressional scholar at the University of Nebraska, said in a telephone interview.

There have also been news stories of Congress’ excessive travel, much of the cost of which is hidden and appears to be unlimited.

The timing is interesting; GOP House leadership is announcing that it might cut White House and Congressional budgets in the next Congress:

Cantor, the second-ranking House Republican who would likely become majority leader under a GOP-controlled House, said that a new majority might axe White House and congressional salaries and budgets as part of cost-saving reforms.

“We’re also looking at cutting into, seriously, the budgets in the White House and Congress,” Cantor said Monday evening on CNBC. “The executive wing of the White House, the West Wing, the salaries there, over the the last year, have gone up just $4 million.”469 employees of the White House were paid approximately $38.7 million in combined salary, according to figures released to Congress back in July. Top administration figures like outgoing Chief of Staff Rahm Emanuel and senior adviser David Axelrod earn a maximum $172,200 per year.

Congress spends about $4.4 billion a year on its own operations, part of which goes to salary. If the new GOP majority were to cut staffs, it could also cost jobs for Republican staffers who hope to benefit from the party’s increased control of Capitol Hill, with its increased office positions and committee jobs.

The

A move to cut the White House budget, though, might be seen as a particularly direct shot by a newfound GOP majority against the Obama administration.

 Jim Geraghty at National Review has still more, this is specifically about Sen. Chuck Schumer and his very expensive travels…

 

Congress is Spaced Out

NASA’s Constellation program has come under recent criticism/scrutiny.  Now, it looks like nepotism and cronyism is rearing its ugly head.

In April, the Obama administration rolled out a new plan to replace Constellation with strong investment in new space exploration technologies and commercial crew transportation capabilities that would make exploration more affordable and sustainable.  This initiative met strong resistance from aerospace contractors working on Constellation projects and several members of Congress in whose districts the work is being performed. 

House and Senate committees tasked with oversight and funding of NASA took very different approaches to future space exploration in their NASA authorization bills.  On August 5, 2010, the Senate Commerce, Science, and Transportation Committee reported out S. 3729, which offers a compromise that includes elements of Constellation and the White House’s proposal, but abandons the Ares 1 program.  On July 28, 2010, the House Science and Technology Committee reported out H.R. 5781, which attempts to restore Ares 1 as the centerpiece of NASA’s human spaceflight program. 

CAGW published a full report on Constellation here.

Citizens are used to the old fashioned political patronage and nepotism with the old “you scratch my back and I’ll scratch your back” way of doing business.  An article in National Review Online tells of a bizarre new twist as it  relates to a NASA Authorization bill slated for the House of Representatives this week:

The space subcommittee, chaired by Rep. Gabrielle Giffords (D., Ariz.), tried unsuccessfully to ram this bill through the House in August. Next week, her committee will try again. Why are they doing this?

It would appear to be a combination of nepotism and pork.

Representative Giffords happens to be married to Mark Kelly, an astronaut who has been assigned to the next (and possibly last) space-shuttle mission this fall. Kelly also worked on the old NASA program (not the Ares rocket, but a related part) and has been an outspoken advocate for that unsustainable approach. Yet Representative Giffords has not recused herself on this issue, let alone declined the committee chairmanship, despite the clear conflict of interest.Failure to launch a new strategy for NASA would be bad policy and a waste of tax dollars.

Failure to launch a new strategy at NASA is a waste of time and money.

Spending Revolt Town Hall in Indianapolis

The Council for Citizens Against Government Waste and our coalition partners at www.spendingrevolt.com are holding an online Town Hall for Indiana taxpayers at 7:00 p.m.-8:00 p.m. on Sunday, September 5, which will be streamed live at www.SpendingRevolt.com/townhall<http://www.SpendingRevolt.com/townhall.  We are excited to have Indiana State Treasurer Richard Mourdock live during the Town Hall to answer questions about spending and taxes.  The emcee is Abdul Hakim-Shabazz from WXNT Newstalk 1430, who is the host of one of the most politically influential talk radio shows in the state.

Since the event will be streamed live from the front yard of a local small business owner at 4151 N. Pennsylvania Street in Indianapolis, taxpayers can simply log on from their homes and participate.  Members from the spendingrevolt.com groups have been sponsoring events across the nation to draw attention to the unsustainable levels of government spending.  That includes publicizing the online petition on the spendingrevolt.com website, attending news conferences and other events as the spendingrevolt bus travels around the country, and participating in the online Town Halls.  The Indianapolis Town Hall is the first in a series that will be held in key states around the country.

We encourage everyone to go online on Sunday evening to participate in this important grassroots event.  We want to send a strong message to our elected officials that we are holding them accountable for the use of our tax dollars.  Look for more opportunities to express your concerns over what is happening to your money by checking in regularly at www.spendingrevolt.com.

Federal Spending Rises 16% in 2009

According to a Census Bureau report released on Tuesday, federal domestic spending increased by a record 16 percent to $3.2 trillion in 2009.  The dramatic increase in spending is largely due to a boost in aid to the unemployed and the massive $862 billion economic “stimulus” package.

Unfortunately, the increase in government spending has done little to save the sinking economy, as the unemployment rate hangs near 10 percent and millions of Americans are still struggling to find work.  Rather than readjust its strategy for economic recovery, the Obama administration has stubbornly stayed the course, continuing to dig taxpayers into an even deeper hole.

Not surprisingly, government bureaucrats and contractors reaped most of the benefits from the “stimulus” package.  According to an August 31, 2010 Washington Post article:

Overall, the largest chunk of federal spending – about 46 percent of the $3.2 trillion – went to Medicare, Medicaid and Social Security, entitlement programs that are projected to swell as the population ages.

Pay for federal employees accounted for nearly $300 billion of the spending and nearly half of that went to the Defense Department payroll.

The spending was a boon to the Washington area, the seat of government and home to many of its contractors.

Among the states, per capita spending averaged more than $10,000. But Virginia got almost $20,000 per resident, second only to Alaska. Maryland was the fourth highest at more than $16,000 for each resident, behind Hawaii.

The District was in a class by itself. The Census Bureau calculated the per capita spending at more than $83,000. But that figure was greatly skewed by the concentration of federal agencies in the city.

Virginia was pushed to the forefront of federal spending by the high number of defense contractors and service members living in the state. It saw $67 billion in military spending, a large chunk of the $155 billion the federal government spent in the state in 2009. Only California, New York and Florida got more money overall.

Much of the federal money went to private contractors. In Fairfax County, for instance, almost $40 billion of the $46 billion the federal government spent in the county went to contractors.

In Maryland, federal spending in fiscal 2009 rose 15 percent, to $92 billion. Maryland’s ranking reflects in part a large number of residents who are federal employees. Montgomery County, for example, got $28 billion in federal funds, including $4.6 billion in salaries, almost $3 billion in retirement checks and $17.5 billion in government contracts for various vendors.

The reality of our fiscal crisis is even worse than the Census Bureau suggests.  The reported $3.2 trillion figure does not include interest paid on foreign debt, nor does it include foreign aid, which traditionally accounts for about 1 percent of the federal budget.  

We have a national debt that tops a whopping $13 trillion, an out-of-control spending regime that shows no sign of slowing, and alarm bells sounding from every direction.  When will lawmakers realize enough is enough?

Federal Spending Rises 16% in 2009

According to a Census Bureau report released on Tuesday, federal domestic spending increased by a record 16 percent to $3.2 trillion in 2009.  The dramatic increase in spending is largely due to a boost in aid to the unemployed and the massive $862 billion economic “stimulus” package.

Unfortunately, the increase in government spending has done little to save the sinking economy, as the unemployment rate hangs near 10 percent and millions of Americans are still struggling to find work.  Rather than readjust its strategy for economic recovery, the Obama administration has stubbornly stayed the course, continuing to dig taxpayers into an even deeper hole.

Not surprisingly, government bureaucrats and contractors reaped most of the benefits from the “stimulus” package.  According to an August 31, 2010 Washington Post article:

Overall, the largest chunk of federal spending – about 46 percent of the $3.2 trillion – went to Medicare, Medicaid and Social Security, entitlement programs that are projected to swell as the population ages.

Pay for federal employees accounted for nearly $300 billion of the spending and nearly half of that went to the Defense Department payroll.

The spending was a boon to the Washington area, the seat of government and home to many of its contractors.

Among the states, per capita spending averaged more than $10,000. But Virginia got almost $20,000 per resident, second only to Alaska. Maryland was the fourth highest at more than $16,000 for each resident, behind Hawaii.

The District was in a class by itself. The Census Bureau calculated the per capita spending at more than $83,000. But that figure was greatly skewed by the concentration of federal agencies in the city.

Virginia was pushed to the forefront of federal spending by the high number of defense contractors and service members living in the state. It saw $67 billion in military spending, a large chunk of the $155 billion the federal government spent in the state in 2009. Only California, New York and Florida got more money overall.

Much of the federal money went to private contractors. In Fairfax County, for instance, almost $40 billion of the $46 billion the federal government spent in the county went to contractors.

In Maryland, federal spending in fiscal 2009 rose 15 percent, to $92 billion. Maryland’s ranking reflects in part a large number of residents who are federal employees. Montgomery County, for example, got $28 billion in federal funds, including $4.6 billion in salaries, almost $3 billion in retirement checks and $17.5 billion in government contracts for various vendors.

The reality of our fiscal crisis is even worse than the Census Bureau suggests.  The reported $3.2 trillion figure does not include interest paid on foreign debt, nor does it include foreign aid, which traditionally accounts for about 1 percent of the federal budget.  

We have a national debt that tops a whopping $13 trillion, an out-of-control spending regime that shows no sign of slowing, and alarm bells sounding from every direction.  When will lawmakers realize enough is enough?

It Was Good While it Lasted

Now that Republicans can sniff the possibility of controlling the House they are starting to put forth their policy ideas that look, surprise, identical to how they looked when they lost the House in 2006.  According to Minority Whip Rep. Eric Cantor (R-Va.), one of the policy objectives that is currently on the table is bringing back pork-barrel earmarks.

According to an August 23, 2010 article in the Politico,

“House Minority Whip Eric Cantor (R-Va.) said a House GOP majority will focus on aggressive oversight of the Obama administration, will work to defund the agencies responsible for implementing health care and will push a “zero tolerance” ethics policy. He also said Republicans may roll back their ban on earmarks, as long as the spending items have ‘merit.’”

It looks like House Republicans took a one year moratorium on earmarks to show voters an image that they were fiscally restrained without actually sticking to it.  With leadership like this, it won’t be surprising if we saw Republicans lose control of the House as quickly as they win it.

“Best Of” Sneak Peak

Throughout the summer and early fall of each year, Citizens Against Government Waste (CAGW) releases its analysis of the Senate and House versions of appropriations bills.  These versions offer a glimpse into what will likely be included in the final appropriation bills.  Thus far CAGW has sifted through 11 of the bills, and is working to produce a document highlighting the most egregious projects.

Fiscal year (FY) 2011 is likely to be an unusual year for earmarks, as the House has enacted reforms to limit parochial projects.  On March 10, 2010, House Democrats announced a ban on earmarks directed to for-profit companies, and House Republicans followed suit with a moratorium on all earmarks, with only a handful of Republican members disobeying.  These reforms contributed to a dramatic decline in earmarks in the House bills; dollar totals for earmarks in the eight House appropriations bills approved by subcommittees prior to the August recess decreased by 29 percent, from a total of $2,762,800 in FY 2010 to $1,961,290,000 in the same bills in FY 2011.  Projects declined by 47.8 percent, from 4,677 in FY 2010 to 2,442 in FY 2011.

Unfortunately, as is usually the case in Washington, all good news comes with a catch.  The Senate refused to institute similar reforms, and the lone comparable bill to FY 2010 approved by a Senate appropriations subcommittee, the Transportation and Housing and Urban Development (THUD) bill included a 29.4 percent increase in spending, from $1,700,000,000 in FY 2010 to $2,200,000,000 in FY 2011.  In this single bill, the Senate nearly canceled out the progress made by the House.  When lumped together, the nine bills add up to a 6.8 percent decrease in dollar amount, from $4,462,800,000 in FY 2010 to $4,161,290,000 in FY 2011.

What follows is a sneak peak of the forthcoming report containing the worst of the worst from the FY 2011 appropriation bills thus far.  First up is the House.  In the FY 2011 Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act appropriation bill, House appropriator David Price (D-N.C.) and Reps. G.K. Butterfield (D-N.C.), Bob Etheridge (D-N.C.), and Brad Miller (D-N.C.) requested $349,000 for swine and other animal waste management research at North Carolina State University.  Congressman Price’s website notes that “better research in livestock waste management would improve public health, benefit the environment, and assist farmers.

In the FY 2011 Commerce, Justice, and Science (CJS) Appropriations Act, House appropriator David Price (D-N.C.) and Reps. G.K. Butterfield (D-N.C.), Larry Kissell (D-N.C.), Brad Miller (D-N.C.), John Spratt (D-S.C.), and Melvin Watt (D-N.C.) requested $1,000,000 for the Textile Clothing Technology Corporation in Cary, for textile research programs.  The corporation offers products like the Textile Game, a $600 board game of supply chain management and pipeline performance.  In 2007, the U.S. textile industry’s exports totaled $12.1 billion.  Also in the House CJS bill, House appropriator Sam Farr (D-Calif.) requested $500,000 for bluefin tuna tagging and research at the Monterey Bay Aquarium.  According to the aquarium’s site, it was voted the number one aquarium in the U.S. and the third best family attraction in the country, and draws 1,947,600 visitors annually at a price of $29.95 per adult.  The aquarium could eliminate the burden on federal taxpayers by increasing ticket prices by 26 cents.

In the FY 2011 Interior, Environment, and Related Agencies Appropriations Act, Rep. Tammy Baldwin (D-Wisc.) requested $2,000,000 for the Ice Age National Scenic Trail.  This trail, which totals 1,200 miles and includes public land and state and county parks, charges camping, parking and registration fees, all of which could be raised to cover the $2 million earmark.  Also in the bill, Dels. Gregorio Sablan (D-MP) and Madeleine Bordallo (D-Guam) requested $500,000 for the Mariana Trench Marine National Monument Visitor’s Center.  Located in the south Pacific near Guam and the Mariana Islands, the Mariana Trench is the deepest place on earth.

In the FY 2011 Labor, Health and Human Services, and Education Appropriations (Labor/HHS) Act, Rep. Baron Hill (D-Ind.) requested $2,000,000 for the Center on Congress at Indiana University. The center aims to improve the public’s understanding of Congress, including “public perceptions of Congress, the role of Congress…and the impact of Congress on people’s everyday lives.”

In the FY 2011 House THUD, Reps. Shelley Berkley (D-Nev.) and Dina Titus (D-Nev.) requested $750,000 for the construction of a solar power array at the Three Square Food Bank in Las Vegas.  According to the organization’s website, $1 can provide three individual meals.  Instead of funding a solar power array, the money could be used to provide 2,250,000 meals

Although its output in terms of number of bills produced was smaller than the House, the Senate managed to produce several egregious earmarks.  In the Senate version of the FY 2011 CJS bill, $8,040,000 was added by 10 Senators for fish and shellfish related projects in six states, including $3,000,000 by Senate CJS Appropriations Subcommittee Chairman Barbara Mikulski (D-Md.) and Sen. Benjamin Cardin (D-Md.) for Chesapeake Bay oyster restoration and $400,000 by Senate appropriator Susan Collins (R-Maine) for community based lobster research in Portland.  Also, $900,000 was added for two projects to benefit the shrimp industry, including $500,000 by Senate Appropriations Committee Ranking Member Thad Cochran (R-Miss.) for shrimp industry fishing effort research continuation and $400,000 by Sen. Bill Nelson (D-Fla.) for shrimp industry fishing research.

In the 2011 Senate Labor/HHS Act, Senate Labor/HHS Appropriations Subcommittee Chairman Tom Harkin (D-Iowa) requested $6,000,000 to continue the Iowa Department of Education Harkin Grant program.  Since 2005, $32,633,000 has been earmarked for this narcissistic program.  Also in the Labor/HHS bill, $4,850,000 was added by 13 senators for 18 museum and library projects in six states, including $300,000 by Senate Labor/HHS Appropriations Subcommittee Chairman Tom Harkin (D-Iowa) to automate the circulation system in the Cedar Rapids Library and $100,000 by Senate Appropriations Committee Ranking Member Thad Cochran (R-Miss.) for the Tennessee-Tombigbee Waterway Transportation Museum in Columbus.

The full Pork Alerts can be found on CAGW’s website.

Government Broadband Deployment Report Card: F

The original article by David Williams can also be seen here:

Wastewatcher, August, 2010

To say that the Internet has grown over the past 15 years is an understatement.  According to Internet World Stats, there were 16 million users in 1995 compared to 1.9 billion users in June, 2010, an increase of 11,775 percent.   In addition, the Internet is much faster as a result of the deployment of broadband, and its uses have also expanded exponentially.

Broadband access, which is generally defined as Internet access with a high data rate, as compared to using a modem, is almost considered a “right” by some government officials.

The American Recovery and Reinvestment Act, or “Stimulus Bill,” included $7.2 billion in broadband investment money.  This was the Obama administration’s effort to make sure that every household had access to broadband Internet service.

The funding was divided into two pots of money: $4.7 billion for the National Telecommunications Information Administration (NTIA) to issue grants under a new Broadband Technology Opportunities Program and $2.5 billion for broadband deployment through the Rural Utilities Service (RUS).

NTIA’s prior experience in broadband grants consisted of the Technology Opportunities Program, which spent $233 million from 1994-2004 until it was terminated.  That is only 5 percent of the amount now being provided to NTIA, which has to spend it all by September 30, 2010.

The Department of Commerce Office of Inspector General examined NTIA’s $1 billion Public Safety Interoperable Communications (PSIC) program, which had a three-year funding time frame.  The OIG found that the PSIC grantees are unlikely to finish their projects on time; the release of funds was delayed by six to 12 months as state spending plans also had to be considered; and the environmental impact studies, while necessary, further delayed the awarding of projects.

The RUS Broadband Access Program was established by Congress as part of the 2002 Farm Bill.  Its primary goal is to provide loans to help bring Internet broadband service to unserved rural communities, which are generally defined as communities with populations of less than 20,000.

According to a February 12, 2009 Washington Post article about the RUS broadband program, “Since it began 6 years ago, $1.8 billion in loans have been distributed.  Of the 68 projects funded, 21 are nearly complete and about half have not begun.  An Agriculture spokesman could not confirm whether the rural utilities service program has completed any projects.”  On top of this lack of progress, the broadband access program faces management and agenda problems, which are evident given the more than $30 million in broadband loans that have gone into default.

The first problem with the agenda is that the broadband program has lost its focus on serving rural America.  According to a September 2005 audit by the U.S. Department of Agriculture’s (USDA) inspector general, “RUS has not exclusively served those rural communities most requiring Federal assistance to obtain access to broadband technologies.

Because RUS’ definition of ‘rural area’ is too broad to distinguish usefully between suburban and rural communities, the agency has issued over $103.4 million in grants and loans (nearly 12 percent of $895 million in total program funds) to communities near metropolitan areas… Though the law does not explicitly forbid issuing loans to communities with preexisting service, we question whether the Broadband Loan Program should be providing funds for competition in many of the communities served, while other communities go entirely without service.”

Second, instead of allowing the free market to flourish, the RUS has been subsidizing private companies to provide broadband in neighborhoods that already have service.  The IG report noted “one of the more highly publicized cases, [where] RUS issued loans to a company providing broadband access to affluent suburban communities a few miles outside of Houston, Texas…the subdivisions’ proximity to urban areas also made broadband services available to them through means other than the pilot loan program….We concluded that, in this case, the Government’s loan was not being used to extend service to rural areas that would not otherwise receive access to broadband, but instead to subsidize a company that would have provided the same service without the loan.”

An August, 2010 report by the Government Accountability Office (GAO) noted that there has been lax oversight with the broadband money.  According to GAO, “ To meet the Recovery Act’s September 30, 2010, deadline for obligating broadband funds, NTIA and RUS must award approximately $4.8 billion—or more than twice the amount they awarded during the first round—in less time than they had for the first round. As the end of the Recovery Act’s obligation deadline draws near, the agencies may face increased pressure to approve awards.  NTIA and RUS also lack detailed data on the availability of broadband service throughout the country, making it difficult to determine whether a proposed service area is unserved or underserved, as defined in the program funding notices.

The GAO added that “To address these challenges, NTIA and RUS have streamlined their application review processes by, for example, eliminating joint reviews and reducing the number of steps in the due-diligence review process, and NTIA began using Census tract data to verify the presence of service.”

The GAO report confirmed CAGW’s fears that the program was susceptible to problems such as slipping deadlines and a chaotic award system.   Any decisions on how to make the Internet a better tool should be left in the hands of private industry rather than the government.

Pork Alert Roundup: Recess Edition

The article by Sean Kennedy can also be accessed here:

Wastewatcher, August, 2010

In recent years, Congress has been unable to complete the appropriations process by the start of the new fiscal year (FY), which occurs on October 1.  Unfortunately, this year will not be an exception.

However, there is positive news to report, as the ban on earmarks directed to for-profit companies announced by House Democrats on March 10, 2010 and the moratorium on all earmarks by House Republicans the next day has had a noticeable effect on the appropriations process.  In the eight House appropriations bills approved by subcommittees prior to the August recess, Citizens Against Government Waste found that dollar totals for earmarks decreased by 29 percent, from a total of $2,762,800 in FY 2010 to $1,961,290,000 in the same bills in FY 2011.  Projects declined by 47.8 percent, from 4,677 in FY 2010 to 2,442 in FY 2011.

The three largest reductions in cost included 47.9 percent in the Homeland Security bill, 43.6 percent in the Transportation and Housing and Urban Development (THUD) bill, and 42.7 percent in the Energy and Water bill.  The only House bill to increase in cost thus far was the Labor and Health and Human Services bill, which jumped 18.6 percent.  CAGW’s Pork Alerts detail egregious earmarks found in each of the FY 2011 appropriations bills.

Unfortunately, the Senate failed to agree on any earmark reform, rejecting an amendment offered by Sen. Jim DeMint (R-S.C.) on March 16, 2010, that would have imposed a one-year ban on earmarks.  The THUD bill is the only one comparable to FY 2010 approved by a Senate appropriations subcommittee thus far, and it included a 29.4 percent increase in spending, from $1,700,000,000 in FY 2010 to $2,200,000,000 in FY 2011.  In this single bill, the Senate nearly canceled out the progress made by the House.  When lumped together, the nine bills add up to a 6.8 percent decrease in dollar amount, from $4,462,800,000 in FY 2010 to $4,161,290,000 in FY 2011.

Although only the House has taken positive steps thus far, the true test will come in conference.  The Senate has long been home to Congress’s biggest porkers.  Consequently, the final appropriations bills may not reflect the encouraging trends in the House.  Furthermore, CAGW has highlighted efforts by members of Congress to circumvent their own rules; this behavior is likely to increase in frequency when conferees meet.

With massive deficits projected to continue far into the future, members of Congress should be especially cognizant of the consequence of their actions.  Bringing the final bills closer to the House totals to date would contribute positively to the earmark reform movement and show taxpayers that Congress is serious about cutting wasteful spending.

The “Razorback Subsidy” is a Whole Different Kind of Disaster for Taxpayers

Wastewatcher, August, 2010

President Obama needs to pass a bill, but a powerful chairwoman of a Senate committee, who is in danger of not being reelected, adds a controversial and expensive provision that puts passage in jeopardy.  Conventional wisdom says that the White House cuts a deal.  And, unfortunately, that is exactly what happened at the end of July, when the White House told the Senate Agriculture Committee Chairwoman Blanche Lincoln (D-Ark) that they would still help her obtain $1.5 billion in farm disaster aid if she promised to remove language funding the program from a small business bill.

Sen. Lincoln took the deal.  The bill didn’t pass, but that did not matter much because Sen. Lincoln got an assurance from White House Chief of Staff Rahm Emanuel that the United States Department of Agriculture (USDA) would fund her priority “administratively.”

Unfortunately for Sen. Lincoln, but fortunately for taxpayers, it does not appear that it is even possible to fund this $1.5 billion project administratively.  According to Congress Daily, House Agriculture Committee Chairman Collin Peterson (D-Minn.) has been quoted saying that he does not believe that the USDA has the ability to provide the aid that Sen. Lincoln is seeking.  This is probably not the first time that a false promise was made in politics, but what makes this situation particularly troubling for the taxpayers is the fact that Sen. Lincoln and the White House were willing to bypass Congress’s spending power to find the funding in the first place in order to try and save her job.  An August 25, 2010 New York Times editorial aptly called this fiasco the “Save-the-Senator Program.”

Congress has the power of the purse, and such authority cannot be bypassed.  Under Article 1 [section 9, clause 7] of the U.S. Constitution, “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.”  This means that federal agencies may not spend money for their operations and programs that Congress has not appropriated or specifically authorized, so tapping the taxpayers for $1.5 billion to fund a program “administratively” is not constitutional.

While Sen. Lincoln may want to help some of her constituents, it appears that her priority to fund disaster agriculture assistance cuts off other constituents that have been waiting for payment from the USDA on a separate issue.  According an August 22, 2010 article in The Washington Post, “Black lawmakers note that the administration and Congress have yet to come up with $1.2 billion owed black farmers under the settlement of a major discrimination lawsuit.”

Not surprisingly, the issue is all about political patronage.  The largest likely recipient of this new farm aid would be in Sen. Lincoln’s state.  According to a report by the Environmental Working Group, Ratio Farms, of Helena, Ark., would receive $787,199.

Sometimes things are exactly as they appear.  In this instance, the White House tried to induce embattled Sen. Lincoln to act the way they wanted on a bill, but with authority they did not possess.  Sen. Lincoln and the Obama administration should be ashamed of trying to bypass the constitutional process to score political points.

Fortunately for taxpayers, it looks like trampling the U.S. Constitution has made reelection prospects for Sen. Lincoln even dimmer.  A Reuters/Ipsos poll had Sen. Lincoln trailing her opponent by 19 points in early July.  In contrast, an August 20, 2010 Rasmussen poll showed Sen. Lincoln trailing her opponent by 38 points.

Spending Revolt Bus Across America

Original article by David Williams can be seen here:

Wastewatcher, August, 2010

Fed up with excessive government spending, the Council for Citizens Against Government Waste (CCAGW), Americans for Prosperity, the 60 Plus Association, Concerned Women for America, and AmericaSpeakOn.org have joined forces to create a new website, www.spendingrevolt.com and go on a multi-state bus tour to educate and activate taxpayers.  The wake-up tour is intended to arm Americans with facts and figures about government spending so they can change their spending habits in Washington.  The bus measures 70 feet long and has space for people to write “personal messages” to their elected officials.

The tour started on July 23 in Las Vegas and Reno, Nevada, the backyard of Senate Majority Leader Harry Reid (D-Nev.) and then headed to San Francisco, California, which includes the district of House Speaker Nancy Pelosi (D-Calif.).

I was glad to represent CCAGW and jumped on the bus in San Francisco on August 2.  I rode the bus for four days from northern California south to San Diego.  The following is a summary of the trip:

August 2, 2010 – The day started out in the belly of the beast – San Francisco (Speaker Nancy Pelosi’s district).  City Hall was not exactly packed, but for a city known for its liberal politics we did not expect a huge turnout.

The bus then headed to conservative Walnut Creek, California, across the bay from San Francisco.  The weather was 20 degrees warmer and the city was as different as the weather.  We met with some local residents and candidates next to a 12-foot inflatable ATM machine.  After an hour of political banter we headed to Danville, California to meet with the East Bay Tea Party.  After a short presentation about the bus we went outside and people signed the bus.

August 3, 2010 – The day started out in Sacramento with a phone-in radio interview on KION in Salinas.  The host asked if the bus was going to stop by Salinas.  We had not planned on it but we did anyway because the whole point of the trip is to go where people want to see the spending revolt bus.  Before Salinas we had a press conference at the foot of the State Capitol in Sacramento.

The event started at 11:00 am with California State Senator George Runner (R-17), several assemblymen, and Jon Coupal, President of the Howard Jarvis Taxpayers Association.  After a few quick remarks by the bus crew, the politicians and other citizens signed the bus.

After the press conference, we headed to Salinas to meet talk show host Mark Carbonara and some other folks, including a mayoral candidate.  The day ended with a drive to Modesto to get ready for another long day.

August 4, 2010 – 4:45 am was our wake up call because the local radio station, AM 840, wanted to do live interviews about the bus from 6:00 am to 7:30 am.  Local realtor, Jeff Eichel, allowed the bus to park in front of his business so people could sign the petitions.  There was a steady stream of people but we had to leave at 7:30 am sharp to make the 11:00 am appointment.  This was difficult because so many people came out to sign the bus.

We headed down to Bakersfield and had a quick event before we stopped in Los Angeles for the night.

August 5, 2010 -   We visited Bell, California, a small gritty industrial town just outside of Los Angeles.  Bell has been in the news because the city administrator was being paid $787,000 annually, the Police Chief was on the dole for $457,000, which included 20 weeks paid vacation!  City Council members were also raking in $100,000 while the median income of Bell (population 38,000) was $28,000.  Not knowing how we would be received, we did not stay very long.

All in all, the response to the bus tour has been very positive.  Although many people feel helpless they do understand the need to be informed.
After I got off the bus in San Diego, to speak at the annual meeting of the American Legislative Exchange Council, the bus headed to Palm Springs, California and Arizona.

Future stops for the bus include Ohio, Indiana, Missouri, Arkansas, Tennessee, Florida, South Carolina, North Carolina, and Virginia.

The Great Unraveling Continues…

Original article by Leslie Paige can be seen here:

Wastewatcher, August, 2010

The new summer blockbuster “Inception” features spectacular special effect sequences of towering edifices exploding, crumbling, and otherwise disintegrating in a film that addresses the fine line between reality and a dream state.  Right before the film’s protagonists emerge from medically-induced dream states, they experience instability, turbulence, and ultimately the total collapse of their immediate physical environments.  These sequences, which are awesome to behold on the big screen, are reminiscent of what is happening now in the real world with regard to the fiscal projections made about President Obama’s healthcare bill, only a lot less entertaining.

During the often acrimonious debate over the PPACA (Patient Protection and Affordable Care Act), better known as Obamacare, the Congressional Budget Office (CBO) was required to weigh in on various provisions of the bill.  Unfortunately, CBO is constrained to scoring and delivering opinions about the language it has in hand, and during much of the debate, the legislation featured gaping holes in many sections.  As former Comptroller General David Walker said on March 19, 2010, “…they have handcuffs on and are in a straitjacket.  They are required by law to make certain assumptions that don’t pass a straight-face test.  They’re required by law to assume that Congress is going to do everything they say they’re going to do despite the fact that there’s clear and compelling evidence that they never have and they probably never will in certain regards.  For example, you know, cutting provider reimbursements dramatically.  Well, all right, don’t hold your breath.”

So, as House Speaker Nancy Pelosi (D-Calif.) predicted, Congress had to pass the bill for everyone to find out what was in it.   The fiscal assumptions underpinning the PPACA started to crumble almost immediately after the bill’s enactment.

On April 22, 2010, Medicare Actuary Richard S. Foster revealed that PPACA will increase federal health spending by $311 billion over the next decade and likely much more.

In early August, President Obama and administration spokespersons made a lot of media hay out of the release of the Medicare Trustees’ most recent report on the financial health of the program, claiming that the PPACA will extend the life of Medicare by another 12 years (which isn’t really much to crow about in the first place).  However, in an unprecedented move, Foster issued a separate memorandum, which he mellifluously dubbed “Projected Medicare Expenditures under an Illustrative Scenario with Alternative Payment Updates to Medicare Providers.”

First and foremost, Foster stated, “The Trustees Report is necessarily based on current law; as a result of questions regarding the operations of certain Medicare provisions, however, the projections shown in the report do not represent the ‘best estimate’ of actual future Medicare expenditures.  The purpose of this memorandum is to present an alternative scenario to help illustrate and quantify the potential magnitude of the cost understatement under current law.”

The actuary drew taxpayers’ attention to one of the pivotal spokes in the administration’s reform scenario; the so-called “doc fix.”  A reduction in payments to doctors was supposed to have provided $330 billion over 10 years to offset the costs of PPACA.  The original provision enabling the annual downward adjustments to doctors’ fees was enacted in 1997 as part of the Balanced Budget Act, but starting in 2003, Congress has pushed the politically unpalatable cuts off to the next fiscal year, and they have never been adopted.

The “doc fix” for this year has been punted to December 1, 2010.  The Medicare actuary states the obvious in his report, which is that “Multiple consecutive years of large negative updates are extremely unlikely to occur.  In fact, Congress has overridden all of the scheduled reductions from 2003 through November 2010.  Moreover, the scheduled −23.0 percent update for December 2010 is four times the size of most of those previously avoided.  Despite their improbability, the negative physician updates are scheduled to occur under current law and are therefore included in the Part B estimates shown in the 2010 Medicare Trustees Report.”

The actuary went on to debunk another of the assumptions contained in the Trustees’ report.  Before the passage of the bill, Medicare providers were scheduled to receive annual payment increases based on economy-wide price indices.  The new healthcare law calls for those price increases to be reduced every year for the next 10 years, as an incentive to Medicare providers to ratchet up productivity and squeeze out systemic waste and inefficiencies, an excellent goal considering that Medicare loses at least $60 billion annually to waste, fraud, and abuse.

Unfortunately, the actuary pointed out that, historically, productivity gains in the healthcare sector have been much lower than in other sectors of the economy because of the labor intensive nature of the work.  And when attempts were made to implement cuts to inpatient Medicare services payments between 1998 and 2002, Congress stepped in to waive the reductions.  Even so, nearly two-thirds of hospitals are losing money on Medicare inpatient services today.  The actuary concludes that the reductions are certain to lead to access problems for Medicare patients.  It is highly unlikely that Congress will stand by and allow such a scenario to unfold; political pressure would force them to take action to pay providers more and staunch their exodus from the program.  Another pillar of Obamacare falls apart.

Almost from its inception, the promises and prognostications made by supporters of Obamacare ignored or misrepresented reality.   When President Obama and his congressional allies talked incessantly about bending the costs curve down, claimed costs would be offset, and blindly repeated the mantra that the budget-busting bill would not add to the country’s deficit, critics said “in your dreams.”  Now the critics are right and it is more like “in your nightmares.”

Economy Still Struggling

With  a floundering stock market and persistent unemployment numbers approaching 10 percent, most of you are probably saying, “Duh!”   I agree, but to confirm what seems obvious, The Hill notes that top economists are worried about a double dip recession:

An economist who advised Democrats on the $787 billion stimulus has increased his prediction of the odds of the economy entering a double-dip recession.

Mark Zandi, the chief economist of Moody’s Analytics, pegged the chances of a second recession at one in three. Just a few weeks ago, he saw only a 20 percent chance of another economic slowdown.

He cited weak consumer confidence, nervous businesses and investors, and plummeting home sales to explain the gloomier outlook.

In bizarro world, Vice President Joe Biden thinks that the Democrats are doing a better job than Republicans.  A Politico article states that:

Just hours after Boehner gave a breakfast speech about his party’s plans to revitalize the economy, Biden slammed Boehner and Republicans, saying they lack a real economic agenda that would move the country forward. Calling for “truth in advertising,” the vice president called GOP claims about Bush-era upper-income tax-cuts “a myth,” defended President Barack Obama’s decision to let those tax cuts to expire and mocked Boehner’s demand that Obama dismiss Treasury Secretary Tim Geithner and chief economic adviser Lawrence Summers.

The truth is that both parties are devoid of any ideas.  The Republicans had 14 years to downsize government and did nothing.  The past 2 years has been a spending free for all by the Democrats.  Until spending cuts are instituted (READ PRIME CUTS NOW!), the deficit and debt will continue to spiral out of control.

Boehner Urges Obama’s Economic Team to Resign

This morning, House Republican Leader John Boehner called for the resignation of Treasury Secretary Timothy Geithner and White House economic advisor Larry Summers.  Considering our nation’s fiscal policies are in the gutter, it’s about time for these two ringleaders to be replaced.

According to an August 24 Fox News article, Boehner said:

“We’ve tried 19 months of government-as-community organizer. It hasn’t worked. Our fresh start needs to begin now…We have been told that the president’s economic team is ‘exhausted’ … The worse things get, the more they circle the wagons and defend the indefensible.”

Leader Boehner called on President Obama to stop the upcoming tax hikes scheduled to take place on January 1, 2011 when Bush-era tax breaks will expire.  Obama has vowed to continue tax cuts for individuals earning less than $200,000 and couples making less than $250,000.  But Boehner pointed out that raising taxes on anyone in this kind of economy would have devastating effects on small businesses and would slow the nation’s economic recovery.  According to The Hill:

“One of President Obama’s predecessors once said that ‘an economy constrained by high tax rates will never produce enough revenue to balance the budget, just as it will never create enough jobs,’” Boehner said. “That president was John F. Kennedy. So let me be clear: Raising taxes on families and small businesses during a recession is a recipe for disaster — both for our economy and for the deficit. Period. End of story.”

Congress is expected to being debating tax increases this fall, but with November just around the corner it seems unlikely that any action will be taken before the midterm elections.  This means that lame duck lawmakers might be deciding the fate of our nation’s tax rates. 

I applaud Leader Boehner for urging the White House to clean up its act and halt the upcoming tax increases.  Let’s just hope someone over there is listening…

Monument to Waste?

This is the question on taxpayers’ minds as the nation’s most expensive school prepares to open next month.  An August 22, 2010 Associated Press article about the Robert F. Kennedy Community Schools said the following:

“With an eye-popping price tag of $578 million, it will mark the inauguration of the nation’s most expensive public school ever.  The K-12 complex to house 4,200 students has raised eyebrows across the country as the creme de la creme of ‘Taj Mahal’ schools, $100 million-plus campuses boasting both architectural panache and deluxe amenities.”

Apparently, the days of functional and cost-effective single story cinder block buildings with just the necessities are gone.  Now school districts are spending money they don’t have on “necessities” such as; fine art murals, marble busts, manicured public parks, talking benches, and state-of-the-art swimming pools.

California’s concept of budgeting should be a test case for how to not budget, but rather how to waste federal money.  According to an August 19, 2010 article in the Los Angeles Times, “The federal government recently handed $1.2 billion to California schools to help save teachers’ jobs.”  The construction of a $578 million school does a lot to help fiscal problems.  I sure hope the LA School District has enough sense to abstain from teaching the impressible minds that pass through the half billion dollar doors of the Robert F. Kennedy Community Schools the same financial management concepts they employ.  Let’s hope that the education that the students receive within those walls are as impressive as the building itself.

Are Taxpayers Funding Obama's Propaganda?

Federal contractors receiving money for projects funded by the American Recovery and Reinvestment Act (ARRA)— better known as the $862 billion “stimulus” bill— have been encouraged and, in some cases, required by the administration to post signs that say their work is funded by that specific act.

Why on earth do we need to spend federal dollars on a sign pointing out a “stimulus” project?  Because, according some members of Congress, the White House is strategically using these signs as taxpayer-funded propaganda.

Yesterday, House Committee on Oversight and Government Reform Ranking Member Darrell Issa (R-Calif.) released a 37-page report documenting alleged misconduct by the Obama administration in many of its new-media projects.  The report highlights several instances in which government agencies used taxpayer funds to pay for propaganda signs touting both President Obama and the failed “stimulus” program.

Rep. Issa called on the Government Accountability Office to investigate the allegations and determine if the administration violated federal law by using taxpayer dollars for political purposes.

According to an August 17, 2010 Hill article:

The report points to websites it claims contain false or misleading information, such as Recovery.gov and HealthReform.gov, as well as to a conference call during which a White House staff member urged artists and entertainers to support President Obama’s agenda.

Rather than serve as a tool for strong oversight and transparency, “Recovery.gov became a taxpayer-funded tool to promote false and misleading propaganda to support the Democrat-backed stimulus,” the report states. “The manifest inaccuracies in the data the White House used to justify its economic policies constitutes the dissemination of false propaganda by the federal government.”

Rep. Issa also released a video today titled ‘Signs of a Failed Stimulus,’ criticizing the Obama administration for squandering taxpayer money on the now infamous green “stimulus” signs.  My July 20th blog post noted that more than $20 million have been wasted on these useless signs.

“Using new technologies and the remnants of the most expensive presidential campaign in history, the Obama administration’s use of taxpayer dollars to engage in covert propaganda is disconcerting,” Issa said in a statement. “This new report and a GAO investigation are needed to help shed light on how taxpayer dollars are being spent to illegally further a political agenda.”

Congress is Trippin'

Congress and the White House are trippin’.  Tis the season, right?  August recess.  And, like clockwork, each August the news media sudddenly becomes focused on junkets, or congressional Co Dels and how much they cost.  First Lady Michelle Obama is reaping a media whirlwind over her recent jaunt to Spain.  The whole family heads out for another ten days to Martha’s Vineyard toward the end of August.

Whether it is the first family or congressional junkets…the real question is not “how many trips are they taking?”  What we should be focusing on is “How much do these trips cost taxpayers?”  How much does it cost for Congress to send a scrum of dozens to Copenhagen for a Climate Summit that produces nothing but more hot air?   

The truth is nobody knows.  Taxpayers have no idea what the true costs of congressional and White House travel really is…and that is exactly the way Congress likes it.

Here is what we do know:  congressional travel costs are rising exponentially.  Taxpayers are blocked from having a sightline into those costs so the true costs are a mystery.

Agency bureaucrats and lawmakers and their staffs make it extremely difficult to get a full accounting of the costs, which include airfare (military jets, private, and commercial airplanes), a clear understanding of who is allowed to go along for the ride on the taxpayers’ dime, which costs are allowed to be passed on to taxpayers, whether there are per diems and how those per diems are determined, and the list goes on.

Congress has yet to make an acceptable case for why those costs should be so impenetrable or hidden, other than sheer obstructionism and the obvious fact that they don’t want to have to deal with the political fallout.  And, frankly, there isn’t a case to be made in our opinion, but we haven’t even gotten to the point where they have been forced to answer the question publicly.

 There has to be a concerted and ONGOING effort to get a full accounting of these costs on behalf of taxpayers…not just in August when the news cycle decides that this would make a good story during the summer news doldrums. 

No more hidden accounts…we want those costs itemized on a website (including copies of the actual receipts, detailed explanations of the purposes for the trip, who went along, where they stayed, where they ate, which guests paid their own way, which ones didn’t, how much was reimbursed, etc., etc. etc.) within a short period of time after the trip. 

We also believe that there should be a global on-budget pool of money for congressional travel…with hard caps.  Rep. Walter Jones (R-N.C.) has some legislation that would force more transparency into the process.  These reforms have to be done by statute; we are quite familiar with how Congress systematically shreds its own “rules” with complete impunity.

Once these dog days of August have passed, this issue should not allowed to fade into the woodwork until next August.

If It's Thursday, It Must Be Southern California

Today’s dispatch from David, who is cruising through SoCal, eyeball to eyeball with angry taxpayers, doing radio shows, and educating voters about wasteful government spending on the Spending Revolt Bus Tour (hint: government spending is even worse than you imagined):

4:45 was our wake up call today because we had an appointment at 6 am in Modesto, California.  Jeff Eichel, local realtor, allowed us to park the bus in front of his business so we could get people to sign the petitions and vans.  The local radio station AM 840 promoted the event and there was a steady stream of people.  We had to leave at 7:30 sharp to make our next appointment, but this was tough because so many people came out to sign the bus. 

We scooted down to Bakersfield and had a quick event.  We then headed to Camarillo (just outside of Los Angeles) to park in front of the studio radio host Hugh Hewitt calls home.  After a 30-minute interview we went out to the bus and met more people as they signed the bus.  Another day and more people are coming out to see the bus.  There are quite a few signatures on the bus.

Next Stop:  Bell, California, where taxpayers rose up and threw out their overpaid city officials…a standing O for Bell.  Ever wonder for whom the Bell tolls?  It tolls for thee, taxpayers….do you know how much your city/municipal/county/state officials are being paid.  Time to get educated.

Carolina on Taxpayers' Minds

Link to original article by David Williams here:

Wastewatcher, July, 2010

Rep. James Clyburn (D-S.C.) has never been accused of being a fiscal hawk.  In fact, he is quite well known for bringing home the bacon.  CAGW’s 2010 Congressional Pig Book documented 41 earmarks worth $55 million requested by Rep. Clyburn.
That is why it comes as no surprise that a center named after him, the James E. Clyburn University Transportation Center at South Carolina State University, is being audited.

According to the heraldonline.com, “S.C. State University’s board voted unanimously Tuesday [June 29, 2010] to conduct an external audit on the James E. Clyburn University Transportation Center to find out how millions of state and federal dollars have been spent.  The audit will be the first comprehensive review of the center, through which more than $50 million has flowed since it was launched in 1998. S.C. State leaders have about half that money on hand for the building’s first phase. But they’ve been unable to explain where the rest of the money went.  A previous federal audit on one of the center’s programs, the National Summer Transportation Institute, found the university’s financial records in such disarray accountants couldn’t figure out where millions of dollars went.”

Rep. Clyburn is not new to controversy, or wasteful spending.  His two biggest acts of notoriety have been his support of the original Bridge to Nowhere (The Briggs-DeLaine-Pearson Connector in 2005) and airdropping a $3 million earmark for the First Tee golf program into the fiscal year 2008 Department of Defense Appropriations Act conference report.

Clyburn’s bridge is a three-mile span over the Santee River that would connect the state’s rural communities of Rimini in Clarendon County with Lone Star in Calhoun County.  The connector is part of a proposed 9.6-mile road renovation in Rep. Clyburn’s district.  Rep. Clyburn included $25 million for the project in the Safe, Accountable, Flexible, and Efficient Transportation Equity Act of 2005, arguing that the bridge would bring economic development to the impoverished area and improve the local school system.

Transportation officials estimate that the proposed bridge will cost taxpayers $110. Rep. Clyburn insists the highest projection he has heard is $79 million and says the final number could be lower.  Given the history of government construction projects, this one will not end up costing less than originally projected.  At $110 million, the connector will cost taxpayers $36.67 million per mile or $6,944 per foot.

The bridge project first received taxpayer dollars in 1998, when $6.5 million was included for it in the 1998 Transportation Equity Act for the 21st Century.  Since then, $9.2 million has been spent to conduct feasibility and impact studies.  Combined with the recent $25 million, $34.2 million has been wasted on Clyburn’s Bridge to Nowhere .

Rep. Clyburn could have used the federal funds to pay for improvements to existing roads and bridges in the area.  Just 10 miles down the river from the proposed connector site is the 601 bridge, which is in dire need of repair.

Probably the most bizarre earmark was $3 million for the First Tee program air dropped into the FY 2008 Department of Defense Appropriations Act conference report.  First Tee’s mission, according to its website, is “to impact the lives of young people by providing learning facilities and educational programs that promote character development and life-enhancing values through the game of golf.”

Aside from its inappropriate placement in the defense bill, the First Tee funds were not competitively awarded and are certainly not need-based.  The program has enough green to run ads during nationally-televised professional golf events, has corporate sponsorships from Fortune 500 companies, and boasts some of the sport’s heaviest hitting organizations as “Founding Partners,” Augusta National Golf Club, the Ladies Professional Golf Association, the Professional Golfers’ Association (PGA) of America, the PGA Tour, and the United States Golf Association.

On November 8, 2007, Rep. Clyburn defended his wedge of pork on the House floor, “[T]his request was made by me, and my name is attached to it because I’m very, very proud of it.”  The earmark is not the only project with which his name is associated.  In August, 2007, the City of Columbia Golf Center was renamed the James E. Clyburn Golf Center and a statue of him was erected outside the facility.  First Tee has received $7.5 million in earmarks since 2003.

Fast forward to 2010 and the Transportation Center.   According to the heraldonline.com, “The transportation center was once envisioned as a grand complex for transportation research and study.  But the university now plans in the complex’s first phase to house a maintenance garage for buses and an archive for Jim Clyburn’s papers.”

Congress Calls New Tax Hikes Small Business "Tax Relief"

The House will likely vote this afternoon on H.R. 5982, the Small Business Tax Relief Act, which has speciously been dubbed another “jobs” bill. 

To its credit, H.R. 5982 would eliminate rules in the newly enacted healthcare law that would require businesses will to file a 1099 to the Internal Revenue Service (IRS) for each supplier or service provider to which payments exceed $600 in a single year.  These requirements would burden small businesses, drive up their costs, force them to fill out more paperwork and tax forms, and cause them to devote more time and resources to dealing with bureaucratic red tape instead focusing on job creation. 

However, H.R. 5982 replaces the 1099 requirement with $149 million in tax increases over 10 years.  Instead of assisting small businesses and encouraging private-sector investment and job creation, H.R. 5982 directs a vast majority of funds to state and local governments for infrastructure projects and doubles spending on welfare programs.  The bill provides up to another $5 billion for a welfare emergency fund, doubling a new welfare program created by the “stimulus.”

Spending on state and local governments and welfare is offset in the legislation with a series of international tax changes that will stifle U.S. economic growth, investment and global competitiveness.  While the bill makes international tax adjustments, it fails to address the American corporate tax rate which is the second highest among the nation’s trading partners. 

The national debt has soared to $13 trillion, unemployment hangs near 10 percent, and yet lawmakers forge ahead on their reckless spending spree at the expense of taxpayers.  Calling this legislation a “jobs” or “tax relief” bill when it consists of bloated spending and tax hikes is an insult to struggling Americans who know that jobs will only be created when individuals and businesses are given a break from Congress’s profligate behavior.   

Lawmakers should be focused on cutting taxes and reducing spending, instead of adding more money to the deficit and continuing down a dangerous path of tax-borrow-and-spend policies.

The Public Sector "Haves" Get Richer Benefits Too…

Today’s WSJ delves into the divide between the level of benefits for public sector workers and their private sector counterparts, adding to that sinking feeling that the “haves” in this country are those living larg(er) off the dwindling revenues generated by beleaguered taxpayers . 

The time is rapidly approaching when adjustments will have to be made to bring the wages, salaries and benefits into line at the state and the federal levels. 

State budgets are in extremis and taxpayers are outraged that they are now being forced to underwrite what they increasingly view as overly generous pay and benefits.  There is no question, too, that the tax burdens of state taxpayers in many states are anticipated to rise to pay the their state’s overspending:

Mr. Burtless said that as state and local budget strains continue, governments’ relatively generous benefits packages could come under the knife. “Right now, a lot of states and localities are facing extremely severe long-term fiscal problems. One of the big sources…is this employee-benefits package,” he said.

When it came to paying premiums for family policies, the government and private sector were more closely aligned: Businesses paid 70% of premiums, while governments paid 73%.

But government workers took advantage of health-care programs available to them more often than private-sector workers. While 83% of public employees tapped into employer medical plans, only 73% of private-sector workers did.

Meanwhile, nine out of 10 government employees had retirement plans available to them, compared with 65% of private-sector workers. And 95% of government workers participated in the provided retirement plans, while 76% in the private sector did .

Governments’ richer benefits packages extend to low-wage workers much more often than in the private sector. In the public sector, 69% of workers who earned in the lowest quarter of wages were eligible for medical benefits, compared with just 38% in the private sector.

Low-wage government workers also benefited from employers picking up 89% of the tab for their individual policies, the same share as the highest-paid employees. Private-sector employers paid 77% of the premium for low-wage workers, less than the 82% they chipped in for their highest-paid workers.

Low-wage public-sector workers also had better access to retirement plans: 74% were eligible, compared with 40% in the private sector.

Just Say "NO" to the Alternate Engine

I am going to keep this blog posting short and (bitter)sweet.  We could be in the endgame for the alternate engine.  House Defense Appropriations Subcommittee Chairman Norm Dicks (D-Wash.) has indicated that he will not include funding for the alternate engine for fiscal year 2011.  Rumor is that an amendment will be offered to put the funding back in.  Yesterday (July 26, 2010) the Council for Citizens Against Government Waste sent the following letter:

It has come to the attention of the Council for Citizens Against Government Waste (CCAGW) that an amendment will be offered to the fiscal year (FY) 2011 Department of Defense Appropriations Act in the Defense Appropriations Subcommittee to include funding for the Joint Strike Fighter alternate engine.  Secretary of Defense Robert Gates and President Obama have made it clear that the bill will be vetoed if there is money for this unnecessary and expensive alternate engine.

 CCAGW has long opposed the alternate engine both due to its status as a massive earmark and on the merits, which have been soundly argued by the Pentagon and independent defense experts.   We are writing this letter to reiterate those objections, and also to inform you that any Republican who offers or co-sponsors an amendment to fund the alternate engine would be adding an earmark to the bill, which would be a violation of the Republican pledge not to request earmarks for FY 2011.  We urge you to abide by the language of the earmark moratorium and to live by the spirit of the moratorium by refusing to offer an amendment and by voting against any amendment that is offered. 

 In addition, any Democrat who offers, co-sponsors, or votes for the amendment would also break their self-imposed prohibition not to earmark funds for for-profit entities.

 CCAGW will be watching this vote closely, and we hope that we can thank you for sticking to your principles and avoid having to let the taxpayers know that you or any of your colleagues have violated your word on earmarks.

Time to stop playing games and kill this project for good.

Green "Stimulus" Signs Put Taxpayers in the Red

Rep. Aaron Schock (R-Ill.) has come up with a brilliant way to save taxpayer money: stop spending millions of “stimulus” dollars on signs touting unnecessary (and frankly embarassing) American Recovery and Reinvestment Act projects.  Why Congress and the Adminstration would even want to call attention to these wasteful projects in the first place is beyond me.  But why they would recklessly spend more than $20 million on propaganda is just mind-boggling. 

Rep. Schock’s bill, H.R. 5679, the End the Stimulus Advertisement Act, would prohibit funding for any additional “stimulus” signs, and would reduce the budgets of each federal agency by the amount they have already spent on these signs.  H.R. 5679 was this week’s winner of the Economic Recovery Working Group’s YouCut initative. 

Republican Whip Eric Cantor said:

This week’s winner, a proposal developed by Aaron Schock, was an idea that we saw from dozens of email submissions.  These bright green signs are impossible to miss, but they don’t do anything to spur job creation or economic growth of any kind.  As YouCut voter Leslie wrote, “it’s bad enough that they wasted my kids’ money on the stimulus, but now they are wasting even more of my kids money to brag about it.”

Sadly, this common sense idea was defeated in the House last week despite receiving bipartisan support, with all House Republicans and 11 Democrats voting for the proposal.  Rep. Schock is currently collecting more co-sponsors for the bill and hopes that the legislation will eventually pass. 

Americans are tired of watching their hard-earned dollars squandered on useless signs.  When will Congress get the (bright green) message?

At Least Someone on Capitol Hill Wants Spending Limits

Following the complete farce of “deeming” the approval of a budget resolution by Democrats in Congress, which meant that the House and Senate Appropriations Committee had no guidance on spending limits, all 12 Republican members of the Senate Appropriations Committee demonstrated a rare sense of fiscal responsbility by writing to Committee Chairman Daniel Inouye (D-Hawaii) asking for a freeze in non-defense spending as the committee’s discretionary spendingcap.  The Republicans’ letter noted that discretionary spending increased by 17 percent over the past two years, a figure that jumps to 84 percent including stimulus spending. 

The letter is from a group of senators that does not exactly include pantheons of fiscal prudence, as Ranking Member Thad Cochran (R-Miss.) was identified in Citizens Against Government Waste’s 2010 Congressional Pig Book as the biggest porker in Congress, with $490 million in earmarks.  But it shows that at least some members of Congress hear the outcry from taxpayers that enough is enough, and it is time for Washington to make the tough choices on spending that individuals, families and businesses are all being forced to do during these difficult economic times. 

The letter from the Senate Republicans appropriators is a welcome opportunity to restrain the massive growth of government spending.  A similar spending freeze has been approved by a bipartisan majority of senators through votes on the Sessions-McCaskill amendments that have been offered on the floor of the Senate; yet the Democratic leadership has refused to agree with this approach, and the lack of a budget resolution has forced the appropriators to act unilaterally.

A CBS News poll released on Tuesday, July 13, revealed that President Obama’s rating is tied for his all-time low of 44 percent.  The poll found that 52 percent believe that he has not spent enough time on job creation, and 56 percent agree that the stimulus has not had any impact on the economy, up 12 percentage points from an April CBS News poll.  In regard to whether the government should spend money or cut taxes to stimulate the economy, 53 percent said cut taxes, and 37 percent said spend money.  Within that question, 70 percent of Republicans and 55 percent of independents preferred cutting taxes, while 50 percent of Democrats thought spending should be the answer. 

There are two additional ways in which taxpayers can continue to make excessive spending a vital issue in this election year.  Both involve encouraging candidates to commit themselves to cut wasteful spending before the election so they can carry out those promises after the election.  First, ask candidates to sign the Council for Citizens Against Government Waste’s (CCAGW) “No Pork Pledge,” and second, sign the spending limit petition at spendingrevolt.com, which is co-sponsored by CCAGW.