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.

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.

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.

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.”

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.

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.

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…

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.

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.

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?