Update: Senator Lugar of Indiana changes his tune on House spending cuts bill in the Senate

Update: GOP Sen. Lugar says he'll support House Republican spending cuts


Sen. Richard Lugar (R-Ind.), who faces a Tea Party-backed challenge in his 2012 primary, has withdrawn his stated opposition to House-passed spending cuts.

Lugar said Tuesday afternoon that he made a mistake when he told reporters earlier in the day that he would oppose H.R. 1, the House GOP plan to cut an additional $57 billion from the 2011 budget.

“I’m going to vote with the Republicans on the issue when H.R. 1 comes up,” Lugar said. “If it’s strictly an affirmative vote, I will be for H.R. 1 because all the Republicans will be voting for H.R. 1.”

Lugar said he does not like the “formulation” of the spending cuts passed by the House and would like Congress to go even further to cut the deficit.


Republican Sen. Lugar to oppose House GOP's $61B spending cuts

Sen. Richard Lugar (R-Ind.), the most senior member of the Senate Republican conference, said Tuesday he will oppose the House-passed proposal to make drastic cuts to the federal budget.

He is the first Senate Republican to publicly state his opposition to a plan that Democrats have blasted as “reckless.”

Lugar, who is facing a Tea Party-backed challenge in the 2012 Indiana Republican primary, is taking a political risk. But he and other centrist Republicans have concerns about steep spending cuts that will eliminate funding for some federal programs in mid-year.

Senate Majority Leader Harry Reid (D-Nev.) has pledged to schedule an up-or-down vote on the House-passed plan to put centrists on the record about whether they support it or not.

“The plan the Tea Party pushed through the House is an irresponsible plan,” Reid said Tuesday. “It’s a reckless plan. It’s dangerous for the health of our economy and certainly the citizens of our great country.”

Sen. Scott Brown (R-Mass.) has criticized cuts to the Low Income Home Energy Assistance Program that benefits many constituents in his home state, where the temperature plummets in the wintertime.

The House bill would eliminate funding for the Corporation for Public Broadcasting and Planned Parenthood. It would also cut substantially from the federal nutrition program for women, children and infants.

HUH? Obama Administration to promote financial capabilities among high-schoolers.

Obama Administration Announces Start of Student Exam Window for 2011 National Financial Capability Challenge


Challenge Prepares Students for Secure Financial Futures; Runs March 7 – April 8

WASHINGTON – Today, high school-aged students across the country will begin taking an voluntary online exam as part of the 2011 National Financial Capability Challenge. The Challenge is designed to enhance the financial capability of high school-aged youth across the United States by strengthening their knowledge of the basics of saving, budgeting, and investing.

"All of us - parents, educators, policymakers and students - share the responsibility to ensure that young people in our country learn a set of practical skills that will help them navigate important personal financial decisions,” said Treasury Secretary Tim Geithner. “This Challenge will help students understand basic finance. It will help them understand what it means to save for retirement. And it will help them understand the risks and benefits associated with debt from things like car loans and credit cards. Empowering students with this knowledge is important for the long-term strength of our economy.”

“Our goal is for every student in the nation to get a world class, well-rounded education,” said Education Secretary Arne Duncan, “and that includes preparing them to make critical financial decisions. I hope the Challenge not only helps high school students get smart about money, but encourages more states and schools to make financial education a priority in classrooms as early as kindergarten.”

If those who forget history are doomed to repeat It, then what happens to those who never learned it to begin with?

The Soak-the-Rich Catch-22

Tax reduction thus sets off a process that can bring gains for everyone, gains won by marshalling resources that would otherwise stand idle—workers without jobs and farm and factory capacity without markets. Yet many taxpayers seemed prepared to deny the nation the fruits of tax reduction because they question the financial soundness of reducing taxes when the federal budget is already in deficit. Let me make clear why, in today's economy, fiscal prudence and responsibility call for tax reduction even if it temporarily enlarged the federal deficit—why reducing taxes is the best way open to us to increase revenues.
—President John F. Kennedy,
Economic Report of the President,
January 1963

If only more of today's leaders thought like JFK. Sadly, in the debate over whether to extend the 2001 and 2003 tax cuts, and if so whether the cuts should be extended to those people who are in the highest tax bracket, there is a false presumption that higher tax rates on the top 1% of income earners will raise tax revenues.

Anyone who is familiar with the historical data available from the IRS knows full well that raising income tax rates on the top 1% of income earners will most likely reduce the direct tax receipts from the now higher taxed income—even without considering the secondary tax revenue effects, all of which will be negative. And who on Earth wants higher tax rates on anyone if it means larger deficits?

Columnist Kimberley Strassel discusses Nancy Pelosi's plan to have a tax vote before November, and OpinionJournal.com assistant editor Allysia Finley reports on the battle to reform state spending.

Since 1978, the U.S. has cut the highest marginal earned-income tax rate to 35% from 50%, the highest capital gains tax rate to 15% from about 50%, and the highest dividend tax rate to 15% from 70%. President Clinton cut the highest marginal tax rate on long-term capital gains from the sale of owner-occupied homes to 0% for almost all home owners. We've also cut just about every other income tax rate as well.

During this era of ubiquitous tax cuts, income tax receipts from the top 1% of income earners rose to 3.3% of GDP in 2007 (the latest year for which we have data) from 1.5% of GDP in 1978. Income tax receipts from the bottom 95% of income earners fell to 3.2% of GDP from 5.4% of GDP over the same time period. (See the chart).

These results shouldn't be surprising. The highest tax bracket income earners, when compared with those people in lower tax brackets, are far more capable of changing their taxable income by hiring lawyers, accountants, deferred income specialists and the like. They can change the location, timing, composition and volume of income to avoid taxation.

Just look at Sen. John Kerry's recent yacht brouhaha if you don't believe me. He bought and housed his $7 million yacht in Rhode Island instead of Massachusetts, where he is the senior senator and champion of higher taxes on the rich, avoiding some $437,500 in state sales tax and an annual excise tax of about $70,000.

Howard Metzenbaum, the former Ohio senator and liberal supporter of the death tax, chose to change his official residence to Florida just before he died because Florida does not have an estate tax while Ohio does. Goodness knows what creative devices former House Ways and Means Chairman Charlie Rangel has used to avoid paying taxes.
The stern of John Kerry's yacht

In short, the highest bracket income earners—even left-wing liberals—are far more sensitive to tax rates than are other income earners.

When President Kennedy cut the highest income tax rate to 70% from 91%, revenues also rose. Income tax receipts from the top 1% of income earners rose to 1.9% of GDP in 1968 from 1.3% in 1960. Even when Presidents Harding and Coolidge cut tax rates in the 1920s, tax receipts from the rich rose. Between 1921 and 1928 the highest marginal personal income tax rate was lowered to 25% from 73% and tax receipts from the top 1% of income earners went to 1.1% of GDP from 0.6% of GDP.

Or perhaps you'd like to see how the rich paid less in taxes under the bipartisan tax rate increases of Presidents Johnson, Nixon, Ford and Carter? Between 1968 and 1981 the top 1% of income earners reduced their total income tax payments to 1.5% of GDP from 1.9% of GDP.

And then there's the Hoover/Roosevelt Great Depression. The Great Depression was precipitated by President Hoover in early 1930, when he signed into law the largest ever U.S. tax increase on traded products—the Smoot-Hawley Tariff. President Hoover then thought it would be clever to try to tax America into prosperity. Using many of the same arguments that Barack Obama, Nancy Pelosi and Harry Reid are using today, President Hoover raised the highest personal income tax rate to 63% from 24% on Jan. 1, 1932. He raised many other taxes as well.

President Roosevelt then debauched the dollar with the 1933 Bank Holiday Act and his soak-the-rich tax increase on Jan. 1, 1936. He raised the highest personal income tax rate to 79% from 63% along with a whole host of other corporate and personal tax rates as well. The U.S. economy went into a double dip depression, with unemployment rates rising again to 20% in 1938. Over the course of the Great Depression, the government raised the top marginal personal income tax rate to 83% from 24%.

Is it any wonder that the Great Depression was as long and deep as it was? Whoever heard of a country taxing itself into prosperity? Not only did taxes as a share of GDP fall, but GDP fell as well. It was a double whammy. Tax receipts from the top 1% of income earners stayed flat as a share of GDP, going to 1% in 1940 from 1.1% in 1928, but at what cost?

We all know that there are lots of factors influencing tax revenues from the rich, but the number one factor has to be the statutory tax rates government tells the rich they have to pay. Not only do the direct income tax consequences of higher tax rates on those in the highest brackets lead to higher deficits, the indirect effects magnify the tax revenue losses many fold.

As a result of higher tax rates on those people in the highest tax brackets, there will be less employment, output, sales, profits and capital gains—all leading to lower payrolls and lower total tax receipts. There will also be higher unemployment, poverty and lower incomes, all of which require more government spending. It's a Catch-22.

Higher tax rates on the rich create the very poverty and unemployment that is used to justify their presence. It is a vicious cycle that well-trained economists should know to avoid.

Wall Street Journal

Democrats Refuse To Produce A Budget For 2010, Harper Says Move Lacks Priorities

The Hill is reporting:

House Democrats will not pass a budget blueprint in 2010, Majority Leader Steny Hoyer (D-Md.) will confirm in a speech on Tuesday.

But Hoyer will vow to crack down on government spending, saying Democrats will enforce spending limits that are lower than what President Barack Obama has called for.

In the scheduled address to the progressive think tank The Third Way, Hoyer will acknowledge that the lower chamber will do things differently this election year.

“It isn’t possible to debate and pass a realistic, long-term budget until we’ve considered the bipartisan commission’s deficit-reduction plan, which is expected in December,” according to Hoyer’s prepared remarks that were provided to The Hill.

The House has never failed to pass an annual budget resolution since the current budget rules were put into place in 1974. Hoyer this spring noted that the GOP-led Congress didn’t pass a final resolution in 1998, 2004 and 2006.

The House will put forth a “budget enforcement resolution” rather than a budget blueprint that looks beyond next year and calculates five or 10 years’ worth of deficit figures.

The House’s “enforcement” — or deeming — resolution will endorse the goals of the president’s fiscal commission and reiterate the commitment to vote on its recommendations after the midterm elections. And it will also set limits on discretionary spending “that require further cuts below the president’s budget,” according to the speech.

“This budget enforcement resolution will enforce fiscal discipline in the near term while the fiscal commission works on a long-term plan to get our country back to fiscal health,” Hoyer’s remarks state.

Mississippi Congressman Gregg Harper was not pleased with the announcement.

“The Democratic leadership in Washington has no budget for the federal government and this is because they are unwilling to take ownership of the massive budget gaps they have created," Harper said in a statement.

“Last year, the leadership spent $11,988 per household, money that we did not have. Now the President and the Democratic-led Congress continue to spend nearly $4.8 billion per day and our country has yet to see many optimistic shifts in unemployment.

"Taxpayers deserve a fiscally responsible budget that spends less, cuts taxes and reduces our national debt.”

We’re too broke to be this stupid

STEYN: Beleaguered taxpayers may finally put a stop to the sheer waste of government spending

by Mark Steyn
Back in 2008, when I was fulminating against multiculturalism on a more or less weekly basis, a reader wrote to advise me to lighten up, on the grounds that “we’re rich enough to afford to be stupid.”

Two years later, we’re a lot less rich. In fact, many Western nations are, in any objective sense, insolvent. Hence last week’s column, on the EU’s decision to toss a trillion dollars into the great sucking maw of Greece’s public-sector kleptocracy. It no longer matters whether you’re intellectually in favour of European-style social democracy: simply as a practical matter, it’s unaffordable.

How did the Western world reach this point? Well, as my correspondent put it, we assumed that we were rich enough that we could afford to be stupid. In any advanced society, there will be a certain number of dysfunctional citizens either unable or unwilling to do what is necessary to support themselves and their dependents. What to do about such people? Ignore the problem? Attempt to fix it? The former nags at the liberal guilt complex, while the latter is way too much like hard work: the modern progressive has no urge to emulate those Victorian social reformers who tramped the streets of English provincial cities looking for fallen women to rescue. All he wants to do is ensure that the fallen women don’t fall anywhere near him.

So the easiest “solution” to the problem is to throw public money at it. You know how it is when you’re at the mall and someone rattles a collection box under your nose and you’re not sure where it’s going but it’s probably for Darfur or Rwanda or Hoogivsastan. Whatever. You’re dropping a buck or two in the tin for the privilege of not having to think about it. For the more ideologically committed, there’s always the awareness-raising rock concert: it’s something to do with Bono and debt forgiveness, whatever that means, but let’s face it, going to the park for eight hours of celebrity caterwauling beats having to wrap your head around Afro-Marxist economics. The modern welfare state operates on the same principle: since the Second World War, the hard-working middle classes have transferred historically unprecedented amounts of money to the unproductive sector in order not to have to think about it. But so what? We were rich enough that we could afford to be stupid.

That works for a while. In the economic expansion of the late 20th century, citizens of Western democracies paid more in taxes but lived better than their parents and grandparents. They weren’t exactly rich, but they got richer. They also got more stupid. When William Beveridge laid out his blueprint for the modern British welfare state in 1942, his goal was the “abolition of want.” Sir William and his colleagues on both sides of the Atlantic succeeded beyond their wildest dreams: to be “poor” in the 21st-century West is not to be hungry and emaciated but to be obese, with your kids suffering from childhood diabetes. When Michelle Obama turned up to serve food at a soup kitchen, its poverty-stricken clientele snapped pictures of her with their cellphones. In one-sixth of British households, not a single family member works. They are not so much without employment as without need of it. At a certain level, your hard-working bourgeois understands that the bulk of his contribution to the treasury is entirely wasted. It’s one of the basic rules of life: if you reward bad behaviour, you get more of it. But, in good and good-ish times, who cares?

By the way, where does the government get the money to fund all these immensely useful programs? According to a Fox News poll earlier this year, 65 per cent of Americans understand that the government gets its money from taxpayers, but 24 per cent think the government has “plenty of its own money without using taxpayer dollars.” You can hardly blame them for getting that impression in an age in which there is almost nothing the state won’t pay for. I confess I warmed to that much-mocked mayor in Doncaster, England, who announced a year or two back that he wanted to stop funding for the Gay Pride parade on the grounds that, if they’re so damn proud of it, why can’t they pay for it? He was actually making a rather profound point, but, as I recall, he was soon forced to back down. In Canada, almost every ethnocultural booster group is on the public teat. Outside Palestine House in Toronto the other week, the young Muslim men were caught on tape making explicitly eliminationist threats about Jews, but c’mon, everything else in Canada is taxpayer-funded, why not genocidal incitement? We’re rich enough that we can afford to be stupid.

It’s not so much the money as the stupidity, which massively expands under such generous subvention. When it emerged that President Barack Obama had appointed a Communist as his “green jobs czar,” I carelessly assumed it was the usual youthful “idealism”: no doubt Van Jones, the Communist Obama appointee in question, had been a utopian college student caught up in the spirit of ’68 and gone along for the ride. A passing phase. Soon grow out of it. But, in fact, Mr. Jones became a Communist in the mid-nineties, after the fall of the Soviet Union. He embraced Communism after even the commies had given up on it. Like the song says, he was commie after commie had ceased to be cool. On Fox News, Glenn Beck made a fuss about it. But the “mainstream” media thought this was frankly rather boorish, and something only uptight right-wing squares would do. I mean, what’s the big deal? True, everywhere it’s been implemented, Communism causes human misery—not to mention an estimated 150 million deaths. But it doesn’t make you persona non grata in the salons of the West. Quite the opposite. The Washington Post hailed the grizzled folkie Pete Seeger as America’s “best-loved commie”—which, unlike “America’s best-loved Nazi,” is quite a competitive title. Even so, why would you stick a commie in the White House and put him in charge of anything to do with jobs, even “green jobs”?


Well, because “green jobs” is just another of those rich-enough-to-be-stupid scams. The Spanish government pays over $800,000 for every “green job” on a solar-panel assembly line. This money is taken from real workers with real jobs at real businesses whose growth is being squashed to divert funds to endeavours that have no rationale other than their government subsidies—and which would collapse as soon as the subsidies end. Yet Tim Flannery, the Aussie climate-alarmist who chaired the Copenhagen racket, says we need to redouble our efforts. “We’re trying to act as a species,” he says, “to regulate the atmosphere.”

Er, “regulate the atmosphere”? Why not? We’re rich enough to be stupid with the very heavens.

In his book The Tyranny of Guilt: An Essay on Western Masochism (La tyrannie de la pénitence), the French writer Pascal Bruckner concludes by quoting Louis Bourdaloue, the celebrated Jesuit priest at the court of Louis XIV, who preached on the four kinds of conscience: 1) the good and peaceful; 2) the good and troubled; 3) the bad and troubled; 4) the bad and peaceful. The first is to be found in Heaven, the second in Purgatory, the third in Hell, and the fourth—the bad but peaceful conscience—sounds awfully like the prevailing condition of the West at twilight. We are remorseful to a fault—indeed, to others’ faults.

It’s not just long-ago sins like imperialism and colonialism and Eurocentric white male patriarchy and other fancies barely within living memory. Our very lifestyle demands penitence: Americans have easily accessible oil reserves, but it would be wrong to touch them, so poor old BP have to do the “environmentally responsible” thing and be out in the middle of the Gulf a mile underwater. If you’re rich enough to be that stupid, what won’t you subsidize? The top al-Qaeda recruiter in Britain, Abu Qatada, had 150,000 pounds in his bank account courtesy of the taxpayer before the comically misnamed Department for Work and Pensions decided to cut back his benefits.

The green jobs, the gay parades, the jihadist welfare queens, the Greek public sector unions, all have to be paid for by a shrinking base of contributing workers whose children and grandchildren will lead poorer and meaner lives because of the fecklessness of government. The social compact of the postwar era cannot hold. Across the developed world, a beleaguered middle class is beginning to understand that it’s no longer that rich. At some point, it will look at the sheer waste of government spending, the other shoe will drop, and it will decide that it no longer wishes to be that stupid.

Macleans

YouCut: Gimmick or Good Idea? (Video)

The House GOP’s YouCut program is gimmicky, sure, but savvy, too.

In 2006, with a flashy, YouTube-mimicking cover, Time magazine declared you — “Yes, you,” they wrote — their Person of the Year. Frank Rich of the New York Times called it a “cover stunt,” one that revealed the dead-tree weekly’s “desperation” to “appear relevant and hip.”

House Republican whip Eric Cantor has been subject to similar eye-rolls from the Left for YouCut, his office’s anti-spending overture to plugged-in Americans. But while the program is a tad gimmicky, it’s also politically and technologically savvy.

Cantor debuted YouCut earlier this month. Its premise is simple: Each week, Americans can vote for their favorite of five potential spending cuts on the web (or via text message to 68398). Cantor works to bring the winner to the House floor. With one click, you can help to shape the House GOP agenda.

“It allows us to focus on out-of-control federal spending, the number-one issue for millions of Americans,” Cantor says. “For us, it is an unprecedented online project. So far, we’ve received over 500,000 votes. The response has exceeded all of our expectations.”

Some critics, such as economist Mark Lieberman of Fox Business Network, have criticized Cantor for “ceding” power to “Internet browsers” and ignoring the argument of Edmund Burke that legislators should be strong figures, not simply delegates who act according to the popular will. But YouCut is hardly the start of direct democracy in Washington. Instead, it is a way for the House GOP to prick the Pelosi machine, hand in hand with frustrated citizens.

“It is important for Republicans to demonstrate that we want to engage with the public,” Cantor says. “The public wants to participate. This country, and the rest of the world, is now communicating 24-7, so you have to embrace that; you can’t avoid it.” Every day, he adds, he becomes more involved with social-media tools such as YouTube, Facebook, and Twitter.

“YouCut’s focus like a laser on spending is why it has been wildly successful,” says David All, the founder of TechRepublican.com. “People are deeply interested in this, and there is a hunger out there to be involved and at the table. They want to know, and change, what’s happening in Congress. YouCut’s ability to adapt to the quick news cycle — a new winner and resolution every week — says a lot about where House Republicans are at.”

Not surprisingly, some Democrats have slammed YouCut. They seem quite nervous about the GOP out-hustling them in the wired arena. “First, this is not American Idol or Dancing with the Stars,” snapped Rep. Alcee Hastings (D., Fla.). “This is America’s legislature. For all we know, on YouCut, Osama bin Laden could be voting. Please know that a handful of organized, gotcha Republicans are not going to control this legislature.”

Read more at NRO





YouCut: Gimmick or Good Idea?

Government Spending Definitions: Social Security: Pass it On

Social Security was started by President Roosevelt in 1935 to provide a savings account for retirees and help the disable, widows and fatherless children. The program has grown to become the largest government program in the world.

The costs of Social Security might be the straw that breaks the camel’s back. In this case, the camel is The United States Economy. Due in large part to irresponsible management of the Social Security Trust Fund, the account where social security tax dollars are deposited.

How did this happen? Let’s keep this in a real world scenario by using the example of a large family of five.

Five kids are all working. Each one chips in $500.00 per month to an account for their retired parents. The parents receive $2,500 each month to live on which is amble amount for them to eat and live. Several years later, three of the kids also retire. These kids didn’t not have children of their own. They can no longer afford to chip in $500.00 per month to the parents retirement account. Thus, the parents account shrinks to $1,000 per month to live and eat on. However, the three kids also need to live off of the $1,000 per month. Now five adults are living off of $1,000 per month to live and eat.

This example is much better than what has happened to Social Security in this country. Since 1935, workers have had money taken out of their paychecks to be put away in a Social Security savings account for them to retrieve when the worker retires. However, the government spent all the money on government programs. Since the Social Security Account is empty, Congress has borrows or prints the money to put money back into the Social Security Account for the benefactors to receive payments each month.

To illustrate what our government has done, lets use our family as an example again.

When all five children were working they put $500.00 per month into a retirement account for the parents to live on. Instead of giving the money to the parents, the children borrow $2,500 each month. They used the $2,500 per month in cash to pay for the loan payments which at first only cost a few hundred dollars a month. This way they had extra cash in the account each month. So they used the extra money to help other elderly couples in the neighborhood pay their expenses.

Soon, the interest payments on borrowing $2,500 per month grow to equal the $2,500 in cash the kids put into the account. Thus, the cash put into the account only paid for the interest on the loans. The bank stopped lending money and parents suddenly lost their $2,500 per month retirement checks to live on.

Where are we today with the Social Security System? Say three of the kids retire. They can’t afford put in $500 per month. Thus, the cash account that received $2,500 per month and was being used to pay off the $2,500 per month in loans payments is not going into a cash negative position. With three kids retiring, they can't put $500 per month into the account. The account and bank payment is now a negative $1,500 per month due to their retirement.

The bank will soon be looking to foreclose on the kids assets like taking their homes to pay off the loans. The situation is even worse. The parents have no money to live on. The three kids have no money to live on. The two remaining kids are going to retired soon as well with no money to live on.

That's good way to illustrate the state of our Social Security Account today.

The kids made a very bad mistake that effected their retirement. Taking out the loans to pay for other elderly neighbors is valiant and moral ideal, but their actions resulted in dire consequences in the long-term for themselves.

The United States Government is facing a similar scenario. They spent all the Social Security tax money on government programs. They borrowed money to pay for the recipients Social Security benefits. Today, the tax money taken in each year is now less because more people are retiring. Thus, Congress has to borrow more and more money to pay for benefits and interest payments.

This situation will add trillions of dollars to the National Debt, that is if we can borrow and print this much money. If we can’t, take a look at Greece today.

Visualizing Obama's Budget Cuts

Despite The Spin: Still Government Motors

From Forbes:

GM is paying back Uncle Sam to shake him down for more money.

GM CEO Ed Whitacre announced in a Wall Street Journalcolumn Wednesday that his company has paid back its government bailout loan "in full, with interest, years ahead of schedule." He is even running TV ads on all major networks to that effect--a needless expense given that a credulous media is only too happy to parrot his claims for free. Detroit Free Press' Mike Thompson, for example, advises bailout proponents to start "warming up their vocal chords" to jeer their opponents with chants of "I told you so."

But before belting out their victory aria, GM-boosters ought to hear the whole story--not just the fairytale version about Government Motors' grand comeback that Mr. Whitacre is feeding them.

But when Mr. Whitacre says GM has paid back the bailout money in full, he means not the entire $49.5 billion--the loan and the equity. In fact, he avoids all mention of that figure in his column. He means only the $6.7 billion loan amount.


But wait! Even that's not the full story given that GM, which has not yet broken even, much less turned a profit, can't pay even this puny amount from its own earnings.

As it turns out, the Obama administration put $13.4 billion of the aid money as "working capital" in an escrow account when the company was in bankruptcy. The company is using this escrow money--government money--to pay back the government loan.

GM claims that the fact that it is even using the escrow money to pay back the loan instead of using it all to shore itself up shows that it is on the road to recovery. That actually would be a positive development--although hardly one worth hyping in ads and columns--if it were not for a further plot twist.

Sean McAlinden, chief economist at the Ann Arbor-based Center for Automotive Research, points out that the company has applied to the Department of Energy for $10 billion in low (5%) interest loan to retool its plants to meet the government's tougher new CAFÉ (Corporate Average Fuel Economy) standards. However, giving GM more taxpayer money on top of the existing bailout would have been a political disaster for the Obama administration and a PR debacle for the company. Paying back the small bailout loan makes the new--and bigger--DOE loan much more feasible.


In short, GM is using government money to pay back government money to get more government money. And at a 2% lower interest rate at that. This is a nifty scheme to refinance GM's government debt--not pay it back!

GM boasts that, because it is doing so well, it is paying the $6.7 billion five years ahead of schedule since it was not due until 2015. So will there be an accelerated payback of the rest of the $49.6 billion investment? No. That goal has been pushed back, as it turns out.

In order to recover that investment, the government has to sell its equity. It plans to do that only when GM becomes a publicly traded company once again. GM was hoping to turn a profit by the end of 2010 and float an initial public offering this winter. However, GM Chief Financial Officer Chris Liddell, when queried about that timeline a few days ago, demurred. The offering will be made, he said, "when the markets and the company are ready."

(Take that, taxpayers!)

Financial Regulation: The foxes are guarding the hen house

This post from CleanGovernmentNow on the upcoming hearings and financial regulation:

Are We At Farce Yet? The Show Trial of Goldman Sachs


What could possibly be more tragic than a 1400 page financial reform bill written by some of the key architects of financial ruin: Chris Dodd, Barney Frank and Timothy Geithner ?

How about a convenient show trial for Goldman Sachs, one of biggest beneficiaries of the bailout these clever men cooked up?

On the one hand, you have a handful of elite, well-connected financial intermediaries and their investing clients that loaded up on smart gimmicks that were too clever by half. These derivatives instruments went poof when underlying real estate values declined more than expected. In a normal world, this would mean those dabbling in these hot potatoes would get burned. But lo and behold, these cats, who are perfectly capable of fattening themselves up for slaughter, were saved from their own idiocy by the bailout of their chief casino on credit -- AIG.

That was the tragedy. It is a tragedy that continues with an effort by Dodd, Frank, Geithner to play house to the Wall Street whales -- for a cut of the take of course.

Now comes word that one of the main beneficiaries of the AIG bailout -- Goldman Sachs -- might have done something that might have looked like something that might be connected to something that could possibly be interpreted as greedy speculation.

What I do know is that the timing and subject matter has all the earmarks of a show trial meant to distract from a far greater set of sins that took place within the government before, during and after the financial crisis.

Democrats Have Increased Taxes by $670 Billion and Counting…

List Includes 14 Tax Hikes Totaling Over $316 Billion on Middle Class Families.

Since January of 2009, President Obama and Congressional Democrats have enacted into law gross tax increases totaling more than $670 billion, or more than $2,100 for every man, woman and child in the United States. The list of tax increases includes at least 14 violations of the President’s pledge not to raise taxes on Americans earning less than $200,000 for singles and $250,000 for married couples.



TAX INCREASES ENACTED

•New tax on individuals who do not purchase government approved health insurance

•New tax on employers who fail to fully comply with government health insurance mandates*

•New 40% excise tax on certain high cost health plans *

•New ban on the purchase of over the counter drugs using funds from FSAs, HSAs and HRAs*

•Increase the Medicare tax on wages and self employment income by 0.9% and impose a new 3.8% surtax on certain investment income (for individuals over $200,000 and couples over $250,000)

•Increase, from 7.5% to 10% of income, the threshold after which individuals can deduct out of pocket medical expenses*

•Impose a new $2,500 annual cap on FSA contributions *

•New annual tax on health insurance *

•New annual tax on brand name pharmaceuticals *

•New 2.3% excise tax on certain medical devices *

•New 10% tax on indoor UV tanning services *

•New tax on insured and self insured health plans *

•Double the penalty for non qualified HSA distributions *

•Eliminate the deduction for expenses allocable to Medicare Part D subsidy

•Limit the deduction for compensation to officers, employees and directors of certain health insurance providers

•Require information reporting on payments to corporations

•Impose additional requirements for section 501(c)(3) hospitals

•Make “black liquor” ineligible for cellulosic biofuel producer credit

•Codify economic substance doctrine and impose penalties for underpayments

•Tobacco tax increase and expanded enforcement authority*

•Repeal guidance allowing certain taxpayers to claim losses of an acquired corporation

•Federal Unemployment surtaxes extended through June 2011 *

•Delay of rules to reduce the double taxation of worldwide American employers until 2018 (worldwide interest allocation)

•Delay of rules to reduce the double taxation of worldwide American employers until 2021 (worldwide interest allocation)

TOTAL = $670.341 BILLION AND COUNTING…

*VIOLATES PRESIDENT’S PLEDGE TO NOT INCREASE TAXES ON MIDDLE CLASS

Click here to see a breakdown of the numbers from the U.S. House Ways and Means Committee

CBO: Health Bill Would Force Families to Buy Insurance Costing a Minimum of $12,000 Per Year--Whether Government or Employer Helps Them or Not

Congressional Budget Office Director Douglas Elmendorf testifies before the Senate Budget Committee on Jan. 28, 2009. (AP File Photo/Pablo Martinez Monsivais)(CNSNews.com) – If Congress passes the Senate health-care plan, according to an analysis by the Congressional Budget Office, American families will be required by federal law to buy a federally approved health insurance plan that will cost a minimum of $12,000 per year--and, on average, will cost $15,000 per year -- whether their employer or the government helps them with the premium or not.

Beginning in 2014, the Senate plan would require all individuals to buy health insurance. Anyone who does not obtain insurance through an employer would be forced to buy it out of their own pocket. Families of four that make up to 400 percent of poverty level--currently $88,200 per year--would receive a subsidy from the government to help pay for their premiums. That subsidy would attenuate as their income increased and would disappear when their income reached the 400 percent of poverty level.

Families earning more than $88,200 a year (or whatever 400 percent of the poverty level equals in any given year) would be entirely on their own. Under the Senate bill, employers would not be required to purchase health insurance for their workers, and if they decided not to do so, the maximum penalty they would have to pay would be $750 per year for each worker they did not insure who subsequently received a federal subsidy to buy insurance. The $750 penalty on employers who decided not to insure their workers would be far less than they would pay in premiums for the $12,000 minimum required plan.

According to the CBO analysis, the insurance plans the Senate bill would require families to purchase would cost an average of $15,200 per year in 2016.

CNS News

Potential Slaughter Rule has Congress in an uproar. Will moderate Dems really dare go along with this?

Dems are trying to push through Obamacare by any means necessary. Are they really this out of touch? They will lose big in November anyway. Surely they know that now, and are willing to try passage of the controversial legislation by using the kamikaze effort now being touted as the Slaughter Solution.

As some obviously still believe Health Care Legislation will never be overturned, and will be widely accepted once enacted, you might say they are willing to become martyrs for the cause.

The Slaughter Solution is explained briefly in this Washington Examiner article published on 3/10/10:

Would House Speaker Nancy Pelosi and her fellow House Democratic leaders try to cram the Senate version of Obamacare through the House without actually having a recorded vote on the bill?

Not only is the answer yes, they would, they have figured out a way to do it, according to National Journal's Congress Daily:

"House Rules Chairwoman Louise Slaughter is prepping to help usher the healthcare overhaul through the House and potentially avoid a direct vote on the Senate overhaul bill, the chairwoman said Tuesday.

"Slaughter is weighing preparing a rule that would consider the Senate bill passed once the House approves a corrections bill that would make changes to the Senate version.

"Slaughter has not taken the plan to Speaker Pelosi as Democrats await CBO scores on the corrections bill. 'Once the CBO gives us the score, we'll spring right on it,' she said."

Each bill that comes before the House for a vote on final passage must be given a rule that determines things like whether the minority would be able to offer amendments to it from the floor.

In the Slaughter Solution, the rule would declare that the House "deems" the Senate version of Obamacare to have been passed by the House. House members would still have to vote on whether to accept the rule, but they would then be able to say they only voted for a rule, not for the bill itself.

Now comes Republican Senator's, including Mississippi Senator Roger Wicker to warn House Democrats that reconciliation in the Senate will be fought tooth and nail.

President Obama's Final March is in full effect, and Republican Congressman's switchboards are lighting up after Obama and the DNC put out an email this week asking supporters who have signed up to the Democrat's Organizing For America emails to call their Congressman, even going so far as to provide phone numbers.


As Thomas Paine said, "These are the times that try men's souls. The summer soldier and the sunshine patriot will, in this crisis, shrink from the service of their country; but he that stands it now, deserves the love and thanks of man and woman."

Or as my grandfather used to say, "stand for something, or fall for anything."

If your into charts and analysis then try this

I'm a chart and graph kind of fellow. I'm a visual rememberer, guess I like the pretty colors. This Heritage Foundation analysis has plenty. But, it is also good if you look at books for more than pretty pictures.

Obama Budget Raises Taxes and Doubles the National Debt

by Brian M. Riedl

Abstract: President Obama declared: "I didn't come here to pass our problems on to the next president or the next generation--I'm here to solve them." Yet rather than "solve" the runaway spending that is projected to cause historic deficits, the President's budget doubles down on it with trillions of dollars in new spending and taxes, culminating in a doubling of the national debt. Heritage Foundation economic policy expert Brian Riedl lays out how a $3 trillion tax hike and an additional $74,000 debt burden on every U.S. household will affect the country--and why Congress should reject President Obama's budget proposal.

When he released his new budget proposal on February 1, President Barack Obama asserted that the government "simply cannot continue to spend as if deficits don't have consequences; as if waste doesn't matter; as if the hard-earned tax dollars of the American people can be treated like Monopoly money; as if we can ignore this challenge for another generation."[1]

Yet the President's new budget does exactly that-- raising taxes by $3 trillion and federal spending by $1.6 trillion over the next ten years. If enacted, this budget would increase the 2010 deficit to more than $1.5 trillion, and leave a deficit of more than $1 trillion even after an assumed return to peace and prosperity. Overall, the President's budget would double the national debt over the next decade.[2]

President Obama's Budget

•Would permanently expand the federal government by 3 percent of gross domestic product (GDP) over 2007 pre-recession levels;

•Would raise taxes onall Americans by nearly $3 trillion over the next decade;

•Would raise taxes for 3.2 million small businesses and upper-income taxpayers by an average of $300,000 over the next decade;

•Would borrow 42 cents for each dollar spent in 2010;

•Would run a $1.6 trillion deficit in 2010--$143 billion higher than the recession-driven 2009 deficit;

•Would leave permanent deficits that top $1 trillion as late as 2020;

•Would dump an additional $74,000 per household of debt into the laps of our children and grandchildren; and

•Would double the publicly held national debt to over $18 trillion.

Source: Heritage Foundation calculations based on U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2011 (Washington, D.C.: U.S. Government Printing Office, 2010), pp. 146-179, Tables S-1 through S-14. Also includes the cost of House-passed cap-and-trade bill, which President Obama endorsed yet excluded from his budget tables.

Before the recession began, annual federal spending totaled $24,000 per household. President Obama would hike that spending above $36,000 per household by 2020--an inflation-adjusted $12,000-per-household expansion of government. (See Chart 1.) But even these steep tax increases would not finance all of this new spending: The President's budget would lead to trillions in new debt over the next decade. Read the rest of the article and see the graphs and charts at The Heritage Foundation.

November can't get here quick enough.




 

Republicans double down on Democrats earmark move

House Democrat David Obey must feel a little sick to his stomach about right now. A day after he announced a ban on earmarks for private companies, Republicans will up the ante calling for a prohibition on all targeted spending projects.


Roll Call reports

House Republican leaders plan to call for an immediate, across-the-board earmark ban during a special meeting of the GOP Conference on Thursday, according to a draft of a joint leadership statement obtained by Roll Call.

Their proposed moratorium would include tax and tariff-related earmarks.

“We will support changing the official rules of the House Republican Conference to incorporate such a moratorium when a special conference meeting on the matter takes place Thursday,” the release said.

A majority of the Republican Conference must vote in favor of the proposal in order to change their internal rules. Republicans are scheduled to discuss the possibility of implementing the earmark ban at 3 p.m. Thursday in the Capitol Visitor Center.

Nicely played, gentlemen. Nicely played.

Is Greece the Future of America?

by Sheldon Richman
Future of Freedom Foundation

It may be possible to look into America’s future. How? Watch what’s going on in Greece. According to the Washington Post, “Greece needs to raise about €23 billion [more than $31 billion] in April and May to pay debts coming due. Greek officials say that either is impossible, or would require punitive interest rates — making it harder to bring the budget under control — unless Europe helps out.” So the Greek government awaits a bailout from Germany and France, but first it has to impress them that it is serious about fiscal austerity.

The Greek welfare state’s annual deficit is about 13 percent of its GDP and its accumulated debt is 113 percent of GDP. Meanwhile, the U.S. government’s overall debt is now on track to reach 90 percent of GDP by 2020, more than $20 trillion. Just last week the Congressional Budget Office said that over the next decade, the annual budget deficit will be $1.2 trillion more than the Obama administration has guessed. The ten-year figure is now projected to be $9.76 trillion. The annual deficit is about 10 percent of GDP.

Government spending is rising — and the new entitlement called health-care “reform” hasn’t passed yet. That’ll be good for a couple of trillion over the next decade.

The economic consequences of all that are likely to be dire. As the government tries to borrow more money, both to finance its programs and to pay the old debt that’s coming due, it will have to promise a better return to nervous lenders, such as China. But raising the interest rate will push other borrowers’ rates up, which in turn will put a damper on economic activity. Unemployment will grow and revenues will shrink, but entitlement programs, such as Medicare and Social Security, will keep growing. They already face tens of trillions of dollars in unfunded liabilities and are heading toward bankruptcy. Military spending will also increase, along with most other government spending.

What will the politicians do when they find interest payments swallowing the budget, leaving them less and less money to shower on political supporters? They might resort to higher taxes, which would further dampen economic activity. They might get the Federal Reserve to monetize the debt through inflation; but that would wreak economic havoc. Politicians aren’t likely to cut spending because it would jeopardize their careers. At that point, the government might default on its debts, a step that has much to recommend it.

Thus, the welfare state is a fiscal failure.

The welfare state has long been presented as the viable “third way,” a happy medium between laissez faire — full separation of state and economy — and state socialism — government control of the economy. Advocates of individual liberty have emphasized that the welfare state violates freedom because government takes wealth from those who produce it and transfers it to favored groups. Defenders have responded that the welfare state embodies compassion: people with means give to those less fortunate. But forced transfers through government are not true compassion. A virtue like compassion requires free choice, but government gives you no choice. So the compassion of the welfare state is counterfeit. It’s more about distributing goodies at others’ expense to win votes for politicians.

Historically compassion had little to do with government programs for the poor and social insurance for the working and middle classes. Beginning as far back as Queen Elizabeth I poor laws were intended to control people who were potential sources of social strife; and social insurance beginning in Bismarck’s German welfare state was calculated to make working people dependent on the government. In both cases the free society was subdued for the sake of those in power.

Now it is clearer than ever that the welfare state is not only morally flawed, it is also fiscally unsustainable. Politicians will always have an incentive to spend, while hiding the costs or pushing them onto future generations through debt. But reality doesn’t go away. It comes back to bite in unexpected ways.

We’re seeing it in Greece today. Tomorrow it will be other European welfare states. Then, if nothing changes, it will be America’s turn.

Program Will Pay Homeowners to Sell at a Loss

By DAVID STREITFELD

In an effort to end the foreclosure crisis, the Obama administration has been trying to keep defaulting owners in their homes. Now it will take a new approach: paying some of them to leave.

This latest program, which will allow owners to sell for less than they owe and will give them a little cash to speed them on their way, is one of the administration’s most aggressive attempts to grapple with a problem that has defied solutions.

More than five million households are behind on their mortgages and risk foreclosure. The government’s $75 billion mortgage modification plan has helped only a small slice of them. Consumer advocates, economists and even some banking industry representatives say much more needs to be done.

For the administration, there is also the concern that millions of foreclosures could delay or even reverse the economy’s tentative recovery — the last thing it wants in an election year.

The New York Times

Pitching for America

By Patrick J. Buchanan

It was Father’s Day, 1964, when the Phillies’ Jim Bunning, a father of seven, took the mound against the Mets.

Ninety pitches later, Bunning had struck out 10 and allowed not one batter to reach first base. Twenty-seven up, 27 down. The first perfect game in 86 years in the National League, and the finest hour of the Hall of Famer’s baseball career.

Beginning last week, Jim Bunning took the Senate floor for five straight days to object to Harry Reid’s call for unanimous consent to waive through a $10 billion spending bill. First, the Kentucky senator demanded, show me how we’re going to pay for it.

His own leadership abandoned Bunning. Susan Collins of Maine assured the Senate and country that Republicans did not back their colleague: “Senator Bunning’s views do not represent a majority of the caucus. It’s important that the American people understand that there is bipartisan support for extending these vital programs.”

Vital programs?

Had Bunning blocked rescue flights to Port au Prince or Santiago, or ammunition for the Marines in Marja?

No. Bunning had held up for a couple of days a vote on a $10 billion bill to extend unemployment benefits, make payments to doctors under Medicare and extend satellite TV to rural America. Reportedly, some 2,000 Transportation Department workers were furloughed for a few days.

“If we cannot pay for a bill that all 100 senators support,” Bunning said, “how can we tell the American people with a straight face that we will ever pay for anything?”

Good question.

Indeed, the behavior of senators suggests that neither party appreciates the depth of the crisis we are in or the pain that will be required to get us out. Last week, Bunning did more than any senator in many moons to raise the consciousness of the country to the magnitude of the deficit-debt crisis.

His taking to the barricades may have inconvenienced some, but Bunning forced us all, briefly, to stare into the chasm.

Consider. Congress this year will spend $1.6 trillion more than it collects in revenue, with the largest outlays in that FY 2010 budget for defense at $719 billion and Social Security at $721 billion.

Thus, if the U.S. Government on Oct. 1, 2008, had shut down the Pentagon and furloughed every soldier and civilian here and around the world, and announced that it would not send out a Social Security check for a full year to any of the 50 million retired and elderly, we would still be $160 billion short of balancing the budget. If you zeroed out federal benefits to veterans for a full year, that, added in, would bring us close.

Such is the magnitude of the fiscal crisis facing the country.

To balance the budget this year would require a 43 percent across-the-board cut in every category of federal spending — defense, Social Security, Medicare, Medicaid, Homeland Security, highways, etc. — or, if one used taxes alone, a 72-percent increase in federal tax revenues.

Budget cuts of that magnitude are impossible. They would cause a revolution. And any attempt at tax hikes of that magnitude would drain off all available consumer capital and hurl the economy into another Depression.

For the foreseeable future, then, this nation is going deeper into debt.

And when Harry Reid and colleagues wave through yet another $10 billion for unemployment checks and making sure farm folks get yard dishes to see reruns of “The Sopranos,” the United States must go to Beijing, Tokyo or Riyadh and borrow the money.

That is the hole we are in.

And when one stares at some of those budget numbers, the priorities of the Obama administration seem almost surreal.

In George W. Bush’s last full year in office, we spent $29 billion for “international affairs.” The lion’s share of that was foreign aid. In FY 2011, the year for which Congress has begun to budget, spending for international affairs and foreign aid is to jump to $54 billion and continue to surge through the Obama years.

What is the rationale for the United States, the world’s greatest debtor nation, putting itself deeper in debt to China to send foreign aid to nations that will never repay us and that vote habitually with China and against us in the United Nations?

This city does not seem to grasp that the days of wine and roses are over. We are not in the 1950s or 1960s anymore. Then, we could throw open our markets to imports from the world. Then, we could dish out foreign aid and fight wars in Vietnam with 500,000 men, while maintaining 50,000 troops in Korea and 300,000 in Europe.

America is headed for a time when, like the British Empire, she is going to have to make painful choices, or have them forced upon us.

He may have been booed all last week, but Jim Bunning pitched one of the best games of his career.

Patrick J Buchanan

The Growth of Dependency on Government Threatens the Future of American Democracy

Today marks the seventh year that we have published the Index of Dependence on Government. And, for seven years running, our Index shows growing dependence. The Index now stands at 240, up from a value of 19 in 1962, or a nearly 13 fold increase since the Kennedy administration. The rate of growth, however, actually has increased over the last eight years. That period saw the second highest rate of growth in dependency creating programs: since 2001, the Index has increased 31 percent. Most disturbing of all, all of the evidence points to even more rapid increases in dependency ahead, which well could threaten democratic government.

From virtually the first day of his presidency, Barack Obama and his top deputies have advanced programs and initiatives that deepen and expand American citizens’ dependency on government. From new federal programs designed to boost economic activity to health care reform that could place the U.S. government at the center of the nation’s health care system, the central thrust of policy since January 2009 has been to increase Americans’ daily dependency on Washington.

However, the rapid expansion of dependency-creating programs did not begin with Barack Obama’s inauguration. Indeed, President Obama inherited substantial momentum toward greater dependency on government from the George W. Bush Administration and prior governments. President Bush’s years saw growth in all dependency creating categories, but particularly in programs aimed at health, education, and working-age income support.

The Heritage Foundation

Safety Is Issue as Budget Cuts Free Prisoners

By MONICA DAVEY

In the rush to save money in grim budgetary times, states nationwide have trimmed their prison populations by expanding parole programs and early releases. But the result — more convicted felons on the streets, not behind bars — has unleashed a backlash, and state officials now find themselves trying to maneuver between saving money and maintaining the public’s sense of safety.

Jessica R. Cooper, a Michigan prosecutor, urges a more careful approach to releasing prisoners.

In February, lawmakers in Oregon temporarily suspended a program they had expanded last year to let prisoners, for good behavior, shorten their sentences (and to save $6 million) after an anticrime group aired radio advertisements portraying the outcomes in alarming tones. “A woman’s asleep in her own apartment,” a narrator said. “Suddenly, she’s attacked by a registered sex offender and convicted burglar.”

In Illinois, Gov. Patrick J. Quinn, a Democrat, described as “a big mistake” an early release program that sent some convicts who had committed violent crimes home from prison in a matter of weeks. Of more than 1,700 prisoners released over three months, more than 50 were soon accused of new violations.

An early release program in Colorado meant to save $19 million has scaled back its ambitions by $14 million after officials found far fewer prisoners than anticipated to be wise release risks. In more than five months, only 264 prisoners were released, though the program was designed to shrink the prison population by 2,600 over two years.

The New York Times