About That 26 Million....

The Foreclosure Settlement reached last week by 5 major banks and 49 States looks to be a decent deal for a lot of people affected by some pretty shoddy work by the banks, and a good deal for the banks since it limits liability they'd face from individual states.

There is of course, some political points to be scored from it also. In Wisconsin Democrats immediately jumped on Gov. Scott Walker for the fact that $26 million of the State's cut of the pie is going to go to cover a budget shortfall.

Newpapers jumped on it as a flip-flop, after he'd criticized a previous governor for wasting the tobacco settlement funds by putting them into the general budget to shore up a (much bigger) deficit.

Being of a generally rational mind, I though that was probably a bad idea, but also understanding partisanship, I decided to look up the terms of the settlement, and see how he could get away with such a dastardly deed.

As it turns out, it only took 1 search with Google to find out he was actually putting the money where the settlement said it should go. ZeroHedge has a nice little breakdown of how the settlement money is divided.

Specifically, from Zero Hedge:

$3.5bn will go to state and federal governments to repay public funds lost as a result of servicer misconduct and to fund housing counselors, legal aid and other similar public programs.

Wisconsin's share of that 3.5 billion is 31.5 million. Of that $5.5 million is going into various programs across the state, the other $26 million is going to the general fund, to "repay public funds". What a concept, actually using the money where the settlement said it should go.

I understand Wisconsin Democrat's problem with this; they spent years raiding transportation, retirement and patient settlement funds to play 3 card monte with the budget and make it look good. The idea of actually putting money where it is designated to go is somewhat of a foriegn concept to them.

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Wisconsin Senate Passes Budget Bill

The Wisconsin Senate passed a budget repair bill, on a straight party line vote, with no input from the minority party, no floor debate between the parties.

Confused? That was May 12, 2008. About an hour after a conference committee made up only of Democrats and Governor Jim Doyle's staff came up with a repair bill it was brought to the Senate floor, and voted on with two readings, no amendments allowed, and no input from the minority party. The bill passed on a 17-16 vote with 0 Republicans voting for the bill, and 1 Democrat voting against it.

The GOP knew they'd lose the vote, and knew there was nothing they could do about the bill, but did their jobs and voted. Then, in 2010 they beat the Democratic party over the head with it to take control of both chambers and the governors mansion.

The Wisconsin Jewish Conference has a nice summary of the bill and timeline of it's passing, and the vetoes the (then) Governor used to reshape it.

State Representative (now State Senator) Leah Vukmir had this take on the bill. It's a warning from 3 years ago that this year's day of reckoning was coming.

That folks, is how our Democracy works. If the current bill is so flawed, the Democrats have about 18 months to sell that case to the voters, and take back control and undo the bill. I think the problem is they know the majority of the voters like the bill. In 10 or 12 months they won't be able to show that it wasn't a workable solutions, and that the state is still spiralling out of control.

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Illinois Budget Solution Found!

The solution to Illinois' budget woes (another 8.5 billion in debt) has become clear since last Friday. Tourism is the answer. If we can get enough states to follow the lead of Wisconsin; as Indiana did today; and export their Democratic representives to Illinois in a few months we should be able to make a lot of extra money on hotel, restaurant and transportation taxes, helping to fill that shortfall.

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Tighten Your Belts

Remember last week when the President told us DC had to tighten their belts, and feel the pain of the rest of us.

He lied.

He's taken his belt off, put on a pair of over sized sweat pants, and is doing a tour of the DC area All You Can Eat buffets.

That wasn't his only less than intellectually honest statement concerning his budget. In trying to explain away $1.56 Trillion in debt, Mr. Obama claims that he inherited a $1 trillion deficit. That's true, except the real "long term" deficit was about $560 in Bush's last budget. The rest was one time bank and auto bailout money.

Obama doubled down on that in his first budget, with $787 billion (now $850B) in stimulus money to come up with a $1.43 trillion dollar deficit for FY 2010, or a real deficit of about $640B. The 2011 budget he has proposed now has nearly $1.6 trillion in debt, yet no "one shot" stimulus type budget buster. So in just 3 fiscal years he's found a way to just about triple the real deficit.

But it's not just that deficit increase, included in that budget is tax increase averaging over $110 billion per year, meaning he's accelerating spending even faster than it looks like when you just see the raw numbers.

Most folks with any common sense would look at the results of the bail out era and realize that the bailouts and stimulus haven't worked. Stabilizing automakers and banks was supposed to trickle down to other manufacturers and employers, and make money available for hiring. Yet unemployment is up about 40% since we went Kenysian on the economy. Another huge dose of federal spending isn't going to fix that. It will make it worse.

The stimulus hasn't created private sector jobs, it's expanded government jobs, which just means the government needs more money to satisfy itself. Most of those jobs are at the state and local level, so after you get the whammy of new federal spending, your state and local taxes will have to go up to pay for those jobs no longer funded by the feds.

The tax increases are targeted directly at the group that creates self sustaining private sector jobs. 75% of the people who make over $200,000 a year are self employed as Type S corporations, small businesses. What do those folks do when they see an extra $8-10K a year in taxes? They either don't hire more people; and unemployment stays high; don't buy new equipment for their business; which impacts other businesses; or just shut down because the tax increases don't make running their own business worthwhile anymore.

The President's budget has a $5000 tax credit for hiring people, but in the small business world it will mean nothing, it won't cover the tax increases in the budget, or come close to the expenses of a new employee in most businesses. Large corporations might benefit some from it, but it will be negligible for them, also. The place I'm working this week found it cheaper to cut two full time jobs and have the rest of the folks in that group work four hours of overtime a week. I doubt a $5K tax credit would have kept those two on the job.

Even if those seeing the increases do as the Kenysians would like to think, and just take it out of their own pocket, it still has an impact. If you remove $150 from my wallet every week how do I adjust? Well, I probably go out to dinner 2 less times per week and kill a trip to the book store.

So what I've really done is taken that money away from other businesses. Multiply that by a few million people and all of the sudden it means unemployed waiters, waitresses, bus boys and cooks and clerks. As those restaurants and other businesses close it means less local tax income, since empty commercial real estate pays a lower rate than property generating income.

Or maybe they just won't invest as much, which means that the $110 billion in taxes doesn't go into the markets, keeping them lower, and every one's 401K suffers.

Remind me again why these tax increases are going to help.

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The Joker Is In DC

The Joker has taken over DC. Well, not really, it's just President Obama. He touted the {false} 5.7% increase in GDP last quarter as a good start to recovery. He failed to acknowledge that the growth occurred at the wholesale level, with manufacturers cleaning out their warehouses on the cheap to fatten their end of year bottom lines. Retail sales, and wages, housing sales and auto sales weren't up enough for the 5.7% to be a real indicator of recovery.

After talking about the increase in GDP he went into comedian mode, talking about how cutting the deficit was as important as growth in our recovery. He's correct, but what's funny is he's no proposing anything that will do it.

His first proposal, offered up right before the State of the Union address is a "discretionary spending" freeze that only affects about 1/2 of discretionary spending, and only adds up to about 1% of his projected budget deficit.

His second statement is that the 1990's "Pay-Go" program has to be brought back. Funny, Mr. President, but your party promised us that 3 years ago when they were sworn in as the leaders in Congress. It supposedly happened, too, except that it's got so many holes in it Swiss Cheese is jealous. Now evidently they really mean they are going to raise taxes cut some spending to pay for every new program. Starting in 2011, probably, with the programs passed in 2010.

Finally, the toothless "Presidential Commission" on spending cuts, that would come up with ways to trim the deficit and present them to Congress; where by law, they can have no force, and be ignored.

As Charlie Sykes often says, when you are a politician, and want to look like you are doing something about a problem, you appoint commission.

The original idea was a bipartisan Congressional group, that would have presented the cuts and taxes increases as an up or down vote bill to both chambers, with no changes. Like the base closing commissions of the 1990's. The problem was Democrats didn't want to go on record acknowledging that Social Security and Medicare are unsustainable, and the GOP didn't want to give bipartisan cover to huge tax increases. So that idea died in the Senate.

The truth is that if the deficit is to be reduced even to George W. Bush levels social programs are going to have to be part of the equation, they are the majority of the budget at this point. There will also have to some targeted tax increases, also. Who knows, maybe the 40% of filers who pay a negative income tax (they get more back than they pay) will have to see their tax refunds welfare checks reduced a little bit by trimming the generous Earned Income Tax Credit.

If the President is serious, he'll have to come up with a new budget for FY 2011, one without 1.4 trillion in red ink. At least if he wants anyone to believe he's serious. Because you have to ask yourself, if 2009's 1.3 trillion deficit was due to the $850 billion dollar stimulus, why does 2010, without a stimulus have a bigger deficit? Where'd all that money go this year?

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Senate Says No

The Obama strategy of bipartisanship is starting to make itself a little more clear. The President wants the GOP to be no where near a room where decisions are made on what he thinks will be popular programs and initiatives, but if it's going to be something unpopular, or require an unpopular action, he'd like the cover of bipartisan support.

That was the idea behind the Deficit Reduction Task force. It was to be made up of a group of Senators and Congressmen from both parties, slightly weight to the Democrats and their majority. The group would come up with a list of budget fixing ideas, vote on them with a bare majority needed to pass the group, then present them to Congress as a "bipartisan fix".

The reason for the task force is easy, the Democrats, specifically the President, want the cover of bipartisanship before they present a laundry list of tax increases they believe are necessary to fix the budget.

The President's problem is that the Senate Republicans saw through that smokescreen and said no, and probably shockingly to the President, the left is balking also. It seems they don't want the GOP involved in any negotiations on how to fix Social Security and Medicare, which have to be on the table to fix the budget.

Welcome to reality Mr. President, and your lack of gravitas in the Congressional arena is beginning to show. It appears that the reality that you can't freeze discretionary spending and balance a budget that's off by a trillion bucks has set in. Now, faced with a tough choice on how to do it, instead of making a decision and presenting it, you've once again tried to defer to others, this time though, they aren't so willing to do your bidding.

The truth is health care reform is going to seem like a walk in the park compared to fixing the structural imbalance in our budgets. While Pelosi and Reid are more than happy to be your point folks on health care, that's because that project can be spun as a positive, even with it's tax increases.

Fixing the budget, though, can't be spun that way. Tough cuts have to happen, and tax increases, especially the payroll taxes for Medicare and Social Security, will probably have to be part of the equation. Along with them is a likely cut of some sort in benefits. Pelosi and Reid can already see the commercials come election time, and don't like them, so they won't be giving you the cover you want.

So what should the President do? Well, Wednesday he's got the bully pulpit of his State of the Union address. That would be a good place to challenge Congress to come up with a plan for fixing the budget. His proposed freezes starting in 2011 are a nice gesture, but they aren't enough to do any real good. He should propose a few specific cuts in the budget as places to start.

My guess is he won't. Mr. Obama has proven one thing his first year in office, when it comes to talking he's got a huge game. When it comes to leading, making decisions, and getting the ball rolling in the right direction, he can't do it, and won't be pushed into it.

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Good Health Care Reform Reading

Need some good reading on health care reform? Try the Director of the Congressional Budget Office's blog. That's right, the director of the CBO has a blog.

Here's his preliminary analysis of the House proposal. Cheaper health care is going to increase the deficit over a trillion dollars? So much for President Obama's "revenue neutral" promise.

Here's the Director's letter to Charlie Rangel, explaining the budget consequences of just the insurance mandates in the bill. Just this portion increases deficits by a trillion dollars over 10 years!

Want to be scared? Here's his long term budget outlook. Keep in mind, it's based on current programs, not including the proposed legislation on health care. As he points out, current mandatory program spending (Social Security, Medicare, etc) is unsustainable. Now we want to add a hundred or so billion to that unsustainable trajectory each year.

A few things about the CBO, it's a non-partisan office. Congress in the past has agreed to use CBO estimates; not congressional staff estimates; when deciding what something will cost. The Democrats have tossed that idea out the window on health care reform. They don't want you to get someone elses numbers.

One of the problems with CBO scoring is that it uses "static" numbers to do it's calculations. It's almost always overestimated the effect of a tax increase, and the amount of deficit added by tax breaks.

In the case of health care, their trillion dollar increase in the deficit is based on the idea that none of the folks getting hit with a surtax on their income will adjust their income to reduce that tax burden. History shows us the vast majority of them will, and the amount of taxes collected will be considerably lower than what's projected.

Before you believe what your Congressman, Senator or President are telling you about the health care reform, check out those links. Then ask yourself, are you willing to pass that much deficit on to your children and grandchildren, since they'll be the one's paying for it.

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Mind Your Helm

Many years ago I learned how to steer a ship. Not a boat, a ship. And I didn't get to cut my teeth on a small one, instead it was 54,000 tons of prime US steel named USS New Jersey.

I got that experience at probably the worst time you could learn to drive something large and lumbering, when it was moving slowly, and had a lot of restrictions on what you could do.

At 25 knots New Jersey steered like a dream, 15 degrees of rudder was probably too much for most turns. But try driving something almost 900 feet long, drawing 30 some feet of water at 5 knots, and all of the sudden 15 degrees of rudder was needed just to correct your course. Turn off a few of the propellers to save fuel and then all of the sudden maybe 20 degrees or more was needed.

Where am I going with this? Our President, of course. It seems that like me, he didn't start to learn to steer on anything small, say a Senate Committee or governorship. He decided he wanted to drive a big ship right away (I didn't get a choice). Much like my early turns on the helm, the President seems to be given to over use of his rudder, sending things turning wildly. The problem is that it takes much more work to correct for oversteering than the initial mistake.

I was lucky, I was surrounded by results oriented people as I learned to drive a big ship. Their goal was to teach me how to do it right, and safely. Unfortunately for Mr. Obama, he's surrounded himself with agenda oriented people, who don't seem to care about the results, as long as they include their agenda item.

I was lucky to have people who would tell me to check my rudder, and mind my helm when I started drifting. Mr. Obama seems to have people that don't really care how far he swings the ship, as long as they hit their course eventually.

I do, however, understand the politics of what they are doing. There is a reason that a 3.6 trillion dollar budget was tossed out their for this year. Trying to push his expansion of government next year, with primaries for everyone in the House and a third of the Senate wouldn't work. They'd get eaten alive. So do it now, while you can. And, because once a social program is started it's nearly impossible to kill, better to try starting them when you have the best chance.

I will say this, I never had enough balls to tell the Officer of the Deck my rudder was at 15 degrees when it was at 25. Why? He had a repeater in front of him and could see what I was doing. The American people have one too, the press, the CBO, OMB, and they've all said we will be running huge deficits, TRILLION DOLLAR plus deficits most of the next 10 years. Yet Mr. Obama had the balls to tell us all on TV and in his online chat today that his budget gets us back to fiscal responsibility. When? Sorry, Mr. President, you are a bald faced liar, your own 10 year budget plan proves it.

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Erica Jong... Fear of Math!

Erica Jong has an article up at the Huffington Post that made me laugh, hard, about her lacking skills at both research, and math. You'd think an author, who posts to the internet could use Google or Wikipedia to check her facts.

"Why I Am So Afraid" shows the depths of despair of guilty liberal elites when they realize the Democrats are shooting themselves in the foot (again).

First, let's get to Erica's deficiencies. According to her, we are spending $12 Billion A DAY in Iraq. I'll do the math for her, that comes out to 4.3 trillion dollars a year, 50% more than the entire US Budget for FY 2008. Even 10-12 million a day would be hard to figure, since that would have 75% of the defense budget and off budget requests being spent there. But hey, what's being off by a factor of 1000 matter when you are making a point, right.

Erica also thinks we spend more on war than our people:

If anyone in Washington read history, they'd understand that any empire that spends more in war than on its people eventually goes down in flames.

Only one problem with that theory, we aren't close to spending as much on the war in Iraq, or the military in general, as we do on people. Mandatory Spending for 2008's budget was listed at 1.79 trillion dollars, while the discretionary portion (which includes much more than war) was 1.14 trillion. Social Security alone was higher than the DoD budget and GWOT budget combined!

If you add in HUD, Transportation, Education, Labor and Interior budgets to money spent on "people" and subtract the debt from mandatory spending, you end up with about 70% of the federal budget going to people, and 30% going to not only war, but everything else.

But then, why both fact checking, or even writing factual articles, when the lemmings that read it believe everything you say. (You can check my numbers, lest I call you lemmings.)

Now, on to the real issues she's dealing with. The real problem she's having though, is that Hillary and Barack are beating each other to death in the primaries, and letting John McCain grow his lead over both of them. Had she just said that, and not bothered with the Bush bashing hyperbole and LIES her article might have had some merit. Instead, it's another joke of a post at Huffington.

If you want to get into the other aspect of her post, the characterizations of Clinton and Obama as a beaver and a stallion, go check out Brainster.

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