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Tuesday, June 30, 2009

120 Days Later

Yesterday marked the 120th day since passage of the stimulus bill, and was the date by which States were to have committed 50% of the stimulus funds they are scheduled to receive. A new report from Smart Growth America says the states have fallen far short of this goal, and have missed some valuable opportunities over the last three months:
SGA released "The States and the Stimulus" on Monday to coincide with the 120-day deadline for states to commit 50 percent of the ARRA money they are scheduled to receive. The report sought to answer three questions regarding states and urban areas' use of ARRA funds: Is the money being used to create jobs and new transportation options; are the recipients meeting ARRA's objectives; and, is the decision making process transparent and accountable?

Among the major findings is that almost one-third of the $6.6 billion for the ARRA Surface Transportation Program is going to new road and bridge projects despite multi-trillion dollar backlogs on needed road repairs. Also, only $185 million of the $8.4 billion in ARRA funding for public transportation projects has been allocated so far. As a result, the ARRA objectives of creating jobs and modernizing the transportation system are not being met as quickly as they could be, according to the report.

The report also found that transparency is lacking because many project choices are made public only after the decisions to select them have been made. Also, there is no clear expression of goals the projects should meet, and few or no repercussions for failing to meet those goals.
While the full report does not have State-by-State profiles, you can compare how New Hampshire compares to her neighbors through a series of charts and other data sets.

Cap and Trade

By now, much has been written with regards to the Cap and Trade bill recently forced through the House of Representatives by the Administration and Nancy Pelosi.

From a fiscal stand point, Congressional Budget Office estimates that the legislation will cost over $22 billion annually by 2020 certainly raise read flags.

Further, the predicted costs makes it all the more troubling that, much like the stimulus legislation, there is no way our elected representatives were able to read this massive bill before 219 of them voted to pass it.

Not only did Congressional Democrats write in a 300 page amendment at 3AM the day the bill passed, the final text of the legislation wasn’t posted for public consumption for the first time until this morning – over three days later.

The total number of pages: 1,428

Monday, June 29, 2009

McCain Speaks Out on Organized Labor's Influence

Senator John McCain today sounded off against what he sees as the excessive influence of organized labor over the Obama Administration’s policies. From Politico:
"The unions are running a lot of this administration," McCain said during an appearance said during an appearance on the Mike Broomhead show on local radio station KFYI.

"Look what just happened with Chrysler and General Motors," McCain added.

McCain referenced the auto bailouts as well as President Obama's push for a healthcare reform package that includes a public (or "government-run") option for consumers as examples of union influence on the administration.
Having donated over $8 million to the President’s campaign, in addition to thousands of man-hours, it is no surprise that organized labor is looking for something in return.

It appears the President is looking to repay the debt by running the nation’s tab.

Sunday, June 28, 2009

A Debt the Founder's Wouldn't Believe

Senator Gregg continues to call attention to the run away spending of the Obama Administration and Democrats in Congress. What follows is a recent op-ed written by the State’s Senior Senator:
A Debt the Founder's Wouldn't Believe

In a 1789 letter to James Madison, Thomas Jefferson wrote: "The earth belongs to each of these generations, during its course, fully, and in their own right. The 2d. generation receives it clear of the debts and encumbrances of the 1st. The 3d of the 2d. and so on. For if the 1st. could charge it with a debt, then the earth would belong to the dead and not the living generation. Then no generation can contract debts greater than may be paid during the course of its own existence."

What would Thomas Jefferson think today, as the Obama administration puts this generation on a path to drive the debt sky-high, effectively leaving our children and grandchildren to foot the bill?

Over the past 40 years, U.S. debt has averaged 36% of our gross domestic product. Because of the current economic downturn and the fact that the government has had to serve as a lender of last resort to stabilize the financial system, we are seeing what should be only a short-term spike in our debt levels.

By the end of this fiscal year, our publicly-held debt will be about 57% of GDP. This is not a good situation, but a temporary spike in debt can be managed, just as it was in the past when we were facing the crises of World Wars I and II, the Civil War and the War of Independence. In those instances, debt was rapidly paid off during the postwar periods.

Under President Obama's budget plan for the nation, this debt will not be rapidly paid off once the recession ends. Instead, it will continue to mushroom, driven by the president's new proposed spending that we cannot afford, which comes on top of looming entitlement spending we are already facing as the baby boom generation moves into retirement.

Because of this spending, we will have budget shortfalls, or deficits, averaging $1 trillion each year for the next 10 years.

Since the president's budget does not propose to ask Americans today to pay for that additional spending through taxes, the only way for the U.S. government to get that money is to borrow it, which means adding to, not reducing, the debt. By the end of the budget period as proposed by the president, the debt will have skyrocketed to 82% of GDP, which is simply not sustainable.

Interest payments on that debt will soon be the largest single item in the federal budget — more than $800 billion per year in 10 years' time. That will eclipse what we will spend on national security, and is four times as much as we will spend on education, energy and transportation combined.

These are not abstract numbers, either — the debt will have an effect on every American. In 2019, under the president's plan, each U.S. household's share of the federal debt held by the public will be $133,000 — more than many Americans owe on their mortgage.

Passing a huge, unaffordable, debt-ridden government on to our children — a terrible thing for one generation to do to another — is only one of the troublesome aspects of this situation. The other reason for serious concern is our standing in the global economy, and most importantly, with our creditors.

Currently, the U.S. government has the highest possible credit score — a AAA from credit rating agencies such as Moody's and Standard & Poor's — so the debt issued by the U.S. Treasury is considered a very safe investment and is purchased by individual investors, public and private entities, and governments around the world.

U.S. Treasury debt is a desirable commodity, and that has helped to keep U.S. interest rates low.

In recent news, Standard & Poor's issued an early warning about the AAA rating of the United Kingdom, indicating that it might reduce the U.K.'s rating within the next two years. S&P has downgraded Ireland's debt rating twice so far this year.

What does this mean?

When a country's bond rating is downgraded, lenders will have less confidence that the country can repay its debt, and that country will have to borrow at higher interest rates.

Could this happen to the United States?

I certainly hope not, but China, our biggest creditor, is becoming increasingly concerned about our lack of fiscal discipline and the impact that continued excessive borrowing will have on the value of Treasuries that China holds.

A former adviser to the Chinese Central Bank recently said publicly that "the U.S. government should not be complacent," and noted that China has alternatives to buying U.S. Treasuries — that it could invest its money in safer vehicles.

If the Chinese start to reduce their purchases of our government securities because of our need to borrow increasing amounts of money to finance all the spending that the president has proposed, we will have to start offering higher interest payments to potential lenders to make our securities more attractive.

As that interest on U.S. Treasuries goes up, so does the financial burden on taxpayers in the next generation. This would hit the next generation with a double whammy — unnecessary debt we're already incurring, plus higher interest rates on our borrowing.

Right now we are on a perilous and unsustainable fiscal course, which, if left unchecked, will lead to some disastrous results — devaluation of the dollar, massive inflation and a confiscatory tax rate on our children that will destroy any hope for the same economic opportunities and lifestyle that we have enjoyed.

But that is exactly the plan the president has laid out. The Obama budget does nothing about the health care and Social Security costs that the credit rating agencies have warned about.

The current budget plan puts us in over our heads, fiscally speaking, and we cannot continue to ignore the warning signals. Thomas Jefferson was right — no generation should take on more debt than it can pay off during its lifetime — and we should take his wise words to heart.

Saturday, June 27, 2009

GOP Radio Address Focuses on Obama's Unemployment Numbers

House Minority Leader John Boehner (R-OH) gave this week's Republican radio address and focused his remarks on the continued rise in unemployment despite the big spending of Congressional Democrats designed to prevent such increases.

The AP reports:

"The president and Democrats in Congress claim this spending binge is necessary to put Americans back to work," House Republican leader John Boehner said Saturday in the Republican radio and Internet address. "They promised unemployment would not rise above 8 percent if their trillion-dollar stimulus was passed.

The administration was wrong, Boehner said. "Unemployment has soared above 9 percent. And now the president admits that unemployment will soon reach double digits.

"After all of this spending, after all of this borrowing from China, the Middle East, our children and our grandchildren, where are the jobs?" he said.

Since President Barack Obama's stimulus plan to trigger job creation was passed, the economy has shed 1.6 million jobs. The administration has focused instead on its estimate that the stimulus has created or saved 150,000 jobs.

Here is the YouTube of Rep. Boehner's remarks:

Friday, June 26, 2009

Blaming the Cost of Health Care Reforms on … Facts?

Tasked with providing, “objective, nonpartisan, and timely analyses to aid in economic and budgetary decisions,” the Congressional Budget Office (CBO) can correctly be called the government’s accountant. They are responsible for producing a “score,” or cost estimate, for each bill considered by the full membership of either the House or Senate.

When calculating a bill’s cost, the CBO operates using an established set of rules and formulas (written by Congress, the White House Office of Management and Budget, and the CBO itself) designed, “to ensure consistent treatment of spending authority, appropriations, and outlays across programs and over time,” according to the CBO Director.

As has been widely reported, the CBO recently issued their estimates for the two major health care reform bills circulating in the Senate, and the results weren’t pretty – ranging from about $1 trillion for Senator Kennedy’s (D-MA) HELP Committee bill to $1.5 trillion for the bill moving through Senator Baucus’ (D-MT) Finance Committee.

Unfortunately, this “just the facts, ma’am” approach to cost estimation isn’t sitting well with the Obama Administration or Congressional Democrats, leading ABC News to ask:

Is President Obama preparing to dismiss whatever price tag the Congressional Budget Office eventually places on the final draft of the congressional Democrats’ health care reform proposal?

The reason politicians and their staffers are wondering is because for the first time, last night the president expressed frustration at the way CBO – long regarded as a fair and non-partisan arbiter – makes its analyses.

President Obama’s Budget director, Peter Orszag, is former CBO director. But in recent weeks as the CBO has provided $1-$1.6 trillion estimates for two draft health care reform bills, some Democrats have claimed the CBO analyses aren’t fair.
The President contends:
"It doesn't count all the savings that may come from prevention, may come from eliminating all the paperwork and bureaucracy because we've put forward health IT, it doesn't come from the evidence-based care and changes in reimbursement that I've already discussed about."

Continued the president, "the Congressional Budget Office, the CBO, which sort of polices what all various programs cost, they're not willing to credit us with those savings. They say, ‘That may be nice, that may save a lot of money, but we can't be certain.’"
The Administration and Democrats in Congress realize that after the record spending of the last few months, the American public is unwilling to accept another massive government spending program. As such, for PR purposes only, they argue the CBO should reduce their factually based cost estimates by the best guesstimate offered by the bill’s proponents.

This is nothing more than fuzzy math and shoddy accounting – at the expense of the nation’s long-term fiscal solvency.

"Tossing Money"

A new STEWARD radio spot, Tossing Money, began airing across the New Hampshire today:

Here is the Union Leader editorial Fred references in the spot:
President Obama said last Monday that his stimulus package has already created or saved 150,000 jobs. He lied.

We can say that with confidence because there is no possible way the President can verify that figure. Reporters have requested proof from the administration for a week and have received none. The figure is an estimate based on an economic model. It is not a fact; it is a theory. But the President presented it as fact, meaning that he lied.

CBS News reporter Wyatt Andrews noted last week, "The President's top economic adviser readily agrees those 150,000 jobs come from an estimate. So why does the President present the figures as fact?"

San Francisco Chronicle finance columnist Kathleen Pender had a column last week headlined, "Jobs from the stimulus hard to find." She wrote that the federal Web site listing stimulus-related job openings had listed only 84. None was in California, the most populous state.

Pender asked Christina Romer, chairman of the President's Council of Economic Advisers, how unemployed Americans could find stimulus jobs. Romer replied, "This is designed to heal the whole economy. They can obviously try, if they are construction workers, to look for jobs."

The stimulus is a joke. We are tossing our money into a giant pit. Actually, we are paying a handful of people to toss our money into a giant pit.

Who is Writing the Health Care Reform Bill?

As President Obama continues to push the Congress towards a massive overhaul of the nation’s health care system, various outlets have begun looking into the campaign finance records of the key Senators involved in the legislation.

The AP reports:
Influential senators working to overhaul the nation's health care system have investments and family ties with some of the biggest names in the industry. The wife of Sen. Chris Dodd, the lawmaker in charge of writing the Senate's bill, sits on the boards of four health care companies.

Members of both parties have industry connections, including Democrats Jay Rockefeller and Tom Harkin, in addition to Dodd, and Republicans Tom Coburn, Judd Gregg, John Kyl and Orrin Hatch, financial reports showed Friday.
Senator Max Baucus (D-MT), the Chairman of the powerful Senate Finance Committee, one of two Senate Committees that will have to approve of any overhaul bill, has also received substantial support from the health care industry, reports the Billings Gazette:
As Sen. Max Baucus has taken the lead on health reform legislation in the U.S. Senate, he also has become a leader in something else: campaign money received from health and insurance industry interests.

In the past six years, nearly one-fourth of every dime raised by the Montana Democrat and his political action committee has come from groups and individuals associated with drug companies, insurers, hospitals, medical supply firms, health service companies and other health professionals.

These donations total about $3.4 million, or $1,500 a day, every day, from January 2003 through 2008.

Baucus, who chairs the Senate Finance Committee, which is drafting a major health care reform bill this month, insists that this cascade of money is not unduly influencing his work.
Neither of these reports contend that any of the Members mentioned have acted improperly. They simply point out that there are significant interests at play, beyond those of the public.

Wednesday, June 24, 2009

"Economy in Shambles"

From CNBC:
In a live interview on CNBC today, Warren Buffett said there has been little progress over the past few months in the "economic war" being fought by the country. "We haven't got the economy moving yet."

While the economy is a "shambles" and likely to stay that way for some time, he remains optimistic there will eventually be a recovery over a period of years.

Buffett says the nation should concentrate on creating jobs. ...

Taking a firm position in an ongoing debate in the financial markets, Buffett says he's not concerned at all about deflation, but does think inflation will be a problem in coming years.
Thankfully, despite Buffet's assessment, the Administration, "is not ready to offer a second stimulus plan even though the economy continues to struggle."
The president said Tuesday that more time is needed to assess the effectiveness of the $787 billion economic stimulus plan enacted early this year. Obama said the nation's unemployment rate is likely to exceed 10 percent, although he originally predicted it would not go over 8 percent.

At a White House news conference, he said that neither he nor the American people are satisfied with the rate of economic recovery. But he said he remains hopeful that conditions will improve over time.

Stimulus Job Count Regulations

Making it easier for the Obama Administration to fudge the numbers of jobs “saved or created” by the stimulus package, the White House has issued regulations granting the states substantial leeway in counting stimulus jobs, reports the Wall Street Journal:
All we're asking them to do is a simple headcount; tell us how many people you hired," said Rob Nabors, the deputy director of the [Office of Management and Budget], in an interview.

Recipients won't be asked to grapple with complicated estimates, he added. Instead, they may use their best guess whether a job would have been created or saved in the absence of a recovery plan, and to not count it if they are uncertain.

Philip Mattera, research director for the economic development research group Good Jobs First, said the method appeared to be "a bit impressionistic" and presented pitfalls. "One is the risk of unreasonable reporting; the other risk is how the whole system is perceived because of the possibility of unreasonable reporting," he said.

Craig Jennings, a senior policy analyst at the nonpartisan OMB Watch, also said the new guidance could allow state officials to use their own definition for the number of hours in a "full-time equivalent" job, thus making it possible to credit stimulus projects for more employment.

OMB officials said the method was the easiest and quickest way for recipients to give the required information, and that making the reports publicly available allowed anyone to question them.
So in the interest of "ease and quickness," the Administration is allowing states of offer their best guesstimate as far as how many people this massive government program is able to employ.

Moreover, these regulations further the argument that the Administration has created a situation, with regards to the job estimates, where they cannot be wrong.

If the states overestimate, it appears as though the stimulus has worked.

If the estimates come in low, the Administration can blame the "inaccurate or imperfect" procedures used by the states.

New STEWARD Television Spot

This new television spot from STEWARD of Prosperity will begin airing today across New Hampshire:

Keep an eye out for it and let us know what you think. Also, WMUR picked up the spot and did a piece on it during last night's broadcast:

Tuesday, June 23, 2009

Senator Gregg Takes on the Stimulus Road Signs

Yesterday, Senator Judd Gregg introduced the “Axe the Stimulus Plaques Act,” legislation to prohibit the use of stimulus funds for the signs that are popping up on road sides across the country advertising taxpayer spending on stimulus projects.

Here are the Senator’s comments on the bill:
Our nation continues to confront an economic crisis that is affecting the livelihoods of all Americans. Unfortunately, the American Recovery and Reinvestment Act has been a disappointment so far. It has done little to address this ongoing crisis, create jobs, and turn around our nation’s economy. Moreover, recent reports about wasteful spending of stimulus funds are concerning, especially when families in New Hampshire and across the country are tightening their belts and trying to stretch their own dollars.

Considering the disappointment surrounding the stimulus bill, it flies in the face of reason that signs are being constructed at a price tag of reportedly $300 each for lawmakers to pat themselves on the back about this legislation. To spend taxpayer dollars on signs touting the American Recovery and Reinvestment Act at each and every project does nothing for households who are struggling to get by or for those who’ve lost their jobs during the economic downturn. These signs are simply for political self-interest, and it’s about time they stop so that stimulus dollars can be put to better use.

Stimulus Popularity Continues to Wane

The continued stream of stories related to projects funded by the stimulus, coupled with the failure of the legislation to halt the rise in unemployment, appear to be taking their toll on the popularity of the stimulus package, a new Washington Post ABC New poll found:
Barely half of Americans are now confident that President Obama's $787 billion stimulus measure will boost the economy, and the rapid rise in optimism about the state of the nation that followed the 2008 election has abated, according to a new Washington Post-ABC News poll.

Overall, 52 percent now say the stimulus package has succeeded or will succeed in restoring the economy, compared with 59 percent two months ago. The falloff in confidence has been sharpest in the hard-hit Midwest, where fewer than half now see the government spending as succeeding. In April, six in 10 Midwesterners said the federal program had worked or would do so. ...

With unemployment projected to continue rising and fears that the big run-up in stock prices since February may have been a temporary trend, fixing the economy remains the most critical issue of Obama's presidency -- and retaining public confidence in his policies is an important element of his recovery strategy.

The shift in public assessments of the stimulus package has clear political ramifications: At the 100-day mark of Obama's presidency, 63 percent of people in states that were decided by fewer than 10 percentage points in November said the stimulus act had or would boost the economy. Today, in the telephone poll of 1,001 Americans conducted Thursday through Sunday, the number has plummeted to 50 percent in those closely contested states, with nearly as many now saying the stimulus program will not help the national economy.

The falloff since April cuts across partisan lines. Confidence in the package's effectiveness has dropped from 81 percent to 73 percent among Democrats and from 32 percent to 26 percent among Republicans. Among independents, it has dropped from 56 percent to 50 percent. What was once a clearly positive assessment of the program among independents (56 to 39 percent) is now an almost even split (50 to 47 percent).
Here in New Hampshire, the most recent STEWARD poll found only 39% of the State’s registered voters believe our representatives in Congress acted in the State’s best interest when supporting the bill.

Mr. Gibbs Goes to South Africa

After just six months on the job, and at a time when most Americans are cutting back on their summer vacation plans, White House Press Secretary Robert Gibbs is lobbying his boss for a taxpayer funded trip to South Africa so he can take in the World Cup. Here is the video:

And the transcript from yesterday's press briefing:
Q Robert, there's a report by ESPN that's getting widespread pickup. This is a year out, but I have to ask the question nonetheless -- the President's plan on going to South Africa for the opening of the World Cup. Is this travel in the planning?

MR. GIBBS: Well, though you wouldn't know it from my physique, as a former college soccer player, I asked the scheduling office about this, as well. (Laughter.) What's so funny?

Q What position? Midfield?

MR. GIBBS: Goalkeeper. Go figure, right. (Laughter.)

Q Now it makes sense. (Laughter.)

MR. GIBBS: Sort of look, and I see it all -- I asked specifically that, as well, in order to get my seat early. I'm told from scheduling that the President has accepted a meeting with the head of FIFA World Cup, but we have not yet altogether made plans -- though I can assure you that a small group of us have assembled in order to move the President in that direction.

Q Tickets --

MR. GIBBS: Exactly. I've got four right up close.
Of course, from an Administration that believes "date night" should include a flight to New York – this sort of a story is no longer much of a surprise.

Monday, June 22, 2009

Nothing to "Call Out" Yet, Apparently

While it is expected that President Obama would defend the signature accomplishment of his young term in office, for him to argue that every stimulus project funded thus far has been worthwhile may be a bit of a stretch:
It's been four months, and still President Obama has yet to criticize publicly a single project from the $787 billion economic stimulus spending package, despite his Feb. 20 pledge that if federal or state agencies tried to slip any bad spending through, he would "call them out."

With 20,000 expenditures approved, the complaints about bum projects are piling up. Sen. Tom Coburn, Oklahoma Republican, released a report last week identifying 100 projects he said were wasteful or silly. But the Obama administration has refused to accept any of his criticisms and is defending the spending, from bike paths to turtle bridges to $300 road signs advertising that stimulus money paid for the project.
At the same time, yet another pesky USA Today report shows that funding for projects overseen by the Army Corps of Engineer’s may not be based on need as much as which members of Congress sit on the agency’s oversight board:
President Obama and Democratic leaders in Congress say the $787 billion stimulus package didn't contain any money for projects requested by members of Congress. However, the stimulus law directs the corps to spend its extra funding on current projects — which were all selected by Congress in past spending bills.

The states getting the most money — California, Mississippi, Illinois, Texas and Florida — all have lawmakers serving on the appropriations committees. The seven states getting no corps stimulus funding include Michigan, which has the nation's highest unemployment rate but no members on the energy and water spending panels in either chamber.

Sunday, June 21, 2009

Providing Some "Reason" to the Stimulus

The Reason Foundation, a nonprofit free market think tank, has put together an in depth, section by section, look at the stimulus. As can be expected from a report written from a free market perspective, the author’s have found some fault with the legislation. The report’s conclusion provides an example:
The American Recovery and Reinvestment Act largely just provides general funds to government agency budgets, bloating the already large bureaucracy. The stimulus bill does not focus on fiscal responsibility, but rather makes the government even larger, funding many untested programs that could significantly add to government waste. From funding the War on Drugs to Comparative Effectiveness Research, the policy implications of the stimulus spending will leave a permanent stamp on the future of the American economy and society.

A significant portion of the money in stimulus was directed towards expanding the size of government by over $97 billion. This money creates 30 new programs that dramatically increase the role of government in the lives of individuals and operations of businesses. The new programs are 18 percent of the spending in the stimulus bill. These programs largely focus on increasing government funding of energy related projects and providing social services, with $16.1 billion being given to energy projects.

The unfortunate thing is that the spending won’t be limited to just this money. Those energy projects never existed before and won’t be over within one or two years. In this way the government has committed itself to long-term funding of billions of dollars worth of projects and programs. That’s $16.1 billion that will be needed from the next budget and the budget after that for years to come.
That said, the Foundation’s report is certainly worth a look. They provide researched spending breakdowns be section and commentary discussing how each dollar will, or will not, stimulate the economy.

Saturday, June 20, 2009

Futher Waste Warnings

Warnings of billions of dollars in waste, fraud, and abuse from the stimulus bill persist:
Swindlers, con men, and thieves could siphon off as much as $50 billion of the government's planned stimulus package as the money begins flooding the economy in coming months, according to David Williams, who runs Deloitte Financial Services Advisory and counsels clients on fraud prevention. …

Earlier this month, FBI Director Robert Mueller warned the nation to brace for a potential crime wave involving fraud and corruption related to the economic stimulus package. "These funds are inherently vulnerable to bribery, fraud, conflicts of interest, and collusion. There is an old adage, that where there is money to be made, fraud is not far behind, like bees to honey," Mueller said.
Watch Williams’ full MarketWatch interview here:

Friday, June 19, 2009

Summer Jobs

As a part of President Obama’s renewed job creation efforts, he announced earlier this month plans to use portions of the stimulus to create 125,000 summer jobs for the nation’s teenagers. Apparently the teens in Oak Harbor, Washington haven’t heard:
In a down economy, you’d think young people would be fighting for jobs. But in Oak Harbor, that’s far from the case.

The first Oak Harbor stimulus-funded employee reported to duty Tuesday, but the city still has 18 positions available, paid for by the American Recovery and Reinvestment Act of 2009.

Mayor Jim Slowik made a public plea to local youth to apply for the temporary summer jobs during his closing remarks at a recent City Council meeting.

To date, only two of the 20 temporary summer jobs are filled.

“Many of the applicants don’t qualify, or they’re not interested in that type of work,” said Gerri Garcia of WorkSource Whidbey. “We’ve kind of been struggling.”
Would be interesting to know if other communities around the nation are having similar results?

Thursday, June 18, 2009

Governor Sanford Update

Although his three-month fight to refuse some of the stimulus funds appears to be coming to an end, South Carolina Governor Mark Sanford continues to be one of the legislation's most vocal critics.

Here he is discussing the situation on Fox's "Hannity:"

Wednesday, June 17, 2009

More on the Stimulus' Unemployment Provisions

One of the most well publicized fights to emerge since the passage of the stimulus has been a few of the nation’s governors protesting the law's unemployment provisions.

As you will remember, the governors were upset because regulations requiring an increase in benefits would result a corresponding business tax increase to offset the costs.

In recent days, however, a new complaint has emerged from the folks who are supposedly benefiting from the increases:
Under the economic recovery plan, laid-off workers have seen a $25 weekly bump in their unemployment checks as part of a broad expansion of benefits for the poor. But the law did not raise the income cap for food stamp eligibility, so the extra money has pushed some people over the limit.

Laid-off workers and state officials are only now realizing the quirk, a consequence of pushing a $787 billion, 400-page bill through Congress and into law in three weeks.

And for people hurt by the change, there's no way around it.

"Everybody tells you, 'Yeah, I can understand why you're frustrated. It doesn't sound right.' But nobody knows where to go," said Mark Milota, 47, of Marietta, Ga., who was laid off in November from his job at a medical billing company. …

Milota said he was told that, without the stimulus money, he would have received about $300 a month in food stamps.
A sneaky way for the Administration to offset the costs of the massive spending package, or simply further proof the legislation was forced through Congress much too quickly and with no concern for unintended consequences?

Safe to assume the latter.

Continuing along this vein, the New York Times Small Business blog has an interesting piece explaining, “How the Stimulus Package Discourages Hiring:”
And now, thanks to the stimulus package, unemployment insurance has been extended as much as an additional 20 weeks. If you’ve had to lay off 10 people, this could easily result in additional taxes of $10,000, $50,000, or even $100,000. It’s a time bomb that won’t go off until after employers get their contribution-rate increase in November, but it will go off.

And therein lies the final irony: Even after the economy improves, I’m going to think long and hard before I hire anyone. Thanks to the stimulus package — the stimulus package — the costs, paperwork, and legal exposure associated with hiring employees is on the rise. I’m not saying the package is all bad, but it does make it less appealing for small businesses to hire more people, or even to offer health insurance, for that matter.
The whole piece is worth a read.

Tuesday, June 16, 2009

Sen. Coburn's Report

Today, one of the U.S. Senate’s fiscal pit bulls, Senator Tom Coburn, M.D. (R-OK), released a report examining 100 wasteful projects funded by the stimulus package. In his introduction to the report, entitled “100 Projects: A Second Opinion,” Coburn writes:
Earlier this year, Congress was quick to pass the American Recovery and Reinvestment Act, or stimulus bill that promised to jumpstart the economy and put Americans back to work by spending $787 billion on “shovel-ready” projects across the country.

There was no question that the nation’s economic condition demanded bold action. Nor is there any question that the massive amount of stimulus spending so far has created some new jobs. Yet, as recent statistics have shown, the jobs that may have been created or saved from the stimulus are not offsetting the millions of jobs that our economy is still hemorrhaging. In my estimation, Congress chose the wrong approach to stimulating the economy by spending money we don’t have on things we don’t need. Real stimulus includes lowering the tax and regulatory burden on hardworking families and businesses, which creates good jobs for the long term. …

Earl Devaney, head of the Recovery Act Accountability and Transparency (RAT) Board, estimates that at least $55 billion of the money may be lost to waste, fraud and abuse. Unfortunately, we all have come to expect waste and mismanagement when Washington spends money. But this time the expectation must be different. When ordinary Americans are laid off or lose their jobs, they are losing more than just income. They are losing their health insurance, as well as their ability to pay their mortgages, to send their kids to school, or even provide necessities like food and shelter.
Although he opposed passage of the stimulus, Coburn contends that the purpose of this report is not to prove the legislation is failing, but instead to, “educate taxpayers, policymakers and the media on lessons that can be learned from some of the early missteps and prevent other questionable projects from moving forward.”

At about 45 pages, the report will take significantly less time to read that the 1000-plus page stimulus bill. If you only have a few minutes, however, Coburn’s top-ten provide frustratingly humorous glimpse at the sort of wasteful spending that has become commonplace in the Nation’s Capital.

On a positive note, Coburn took a closer look at 18 projects in the Northeast region and none of those funded in New Hampshire appear to have reached his wasteful spending threshold.

Monday, June 15, 2009

Damage Control

Yesterday, Vice-President Biden was on NBC’s Meet the Press to discuss, among other topics, the impact of President Obama’s stimulus package. The Vice-President spent a significant portion of the interview defending the Administration’s stimulus-related employment assertions versus reality – as shown in this well-circulated graph:

(The blue lines represent the Administration’s unemployment predictions with (dark blue) and without (light blue) the stimulus package, compared to the maroon dots that represent the actual numbers.)

Host David Gregory pushed the Vice-President to explain the assertion that the package, “could keep unemployment at 8 percent and then it would go down after that.” Gregory continued, “In fact, it's now at 9.4 percent. Was it oversold?”

Biden responded, “No. What we did is we took the econometric models that were used by businesses as well as academics. At the time no one realized how bad the economy was. The projections, in fact, turned out to be worse. But it was--we, we, we took the mainstream model as to what we thought and everyone else thought the unemployment rate would be.”

The exchanged continued:
MR. GREGORY: Right. But the, but this package was sold on the premise that it would in fact keep unemployment at 8 percent. It's exceeded that...

VICE PRES. BIDEN: It wasn't sold on that. It was sold on it would create...

MR. GREGORY: That's what the [Council of Economic Advisors'] report said, Mr. Vice President.

VICE PRES. BIDEN: No, it said it would--what would happen was it would save or create jobs. It's doing that. It is doing that. Everyone guessed wrong, at the time the estimate was made, about what the state of the economy was at the moment this was passed. Now, we're going to recalibrate this in terms of what we've inherited, what in fact is going on out there. But look, the bottom line is that jobs are being created that would not have been there before.
Of course, everyone didn’t guess wrong. In fact, all but three Republicans in both the House and the Senate argued this plan wouldn’t work and proceeded to vote against it.

Moreover the Congressional Budget Office told the lawmakers and President Obama on at least two occasions that this package would be bad for the economy in the long run.

It is clear that the Administration understands that this is their policy and their problem. The stimulus was created, marketed, and bought by President Obama and Congressional Democrats on behalf of the nation’s taxpayers.

Now that the results are not materializing as promised, and those same taxpayers are starting to question this “investment,” the Administration has shifted gears to damage control.

Here is a video of the stimulus segment. Visit Meet the Press for more.

Friday, June 12, 2009

Voters Agree Government Spending Hurts the Economy

The majority of voters say that increased government spending hurts the economy, according to a new poll released yesterday by Rasmussen.
Most voters (53%) believe increases in government spending hurt the economy, according to a new Rasmussen Reports national telephone survey.

While that result is unchanged from last month, it’s up five points from 48% in January.

Just 27% now say increased government spending helps the economy, and 10% say it has no impact.
Moreover, Rasmussen also found, “Fifty-one percent (51%) of Americans favor an across-the-board tax cut for all Americans to stimulate the U.S. economy.” Only 26% of adults believe President Obama has delivered on his campaign promise to cut taxes for 95% of Americans.

Thursday, June 11, 2009

Mark Salter on the President's PAYGO Plans

In an article for AmericaSpeakOn.org this morning, Mark Salter, Senator John McCain’s former chief of staff and senior advisor to the Senator’s Presidential campaign, attempts to sum up the frustration felt by many American’s concerning President Obama’s apparent hypocrisy on fiscal matters.

While the President has called on Congress to reinstate PAYGO rules – generally meaning new spending must be offset by spending reductions in other areas or with tax increases – Salter notes that in this case, as far as the President’s policies go, “consistency matters much less than audacity.” He writes:
Why, of course, we'll pour hundreds of billions into the banking business, the insurance business, and the automobile business. And take another $1.5 to $2 trillion to enact his promise to change fundamentally the way health care is provided in this country. And send Congress a $3.5 trillion budget, more than a third of it paid for with borrowed money. And spend $800 billion to stimulate the economy, much of it after the economy has recovered and on projects of suspect merit. And sign a bloated omnibus appropriations bill with a price tag of more than $400 billion. … But, by God, Congress better start exercising a little fiscal discipline around here or this country is going to be in a hell of fix.
Salter continues this dripping sarcasm throughout the article – and with good reason. As the chart below shows, President Obama has already put this nation on shaky fiscal footing. Calls for a new era of fiscal discipline, especially though reforms rife with massive loopholes, ring pretty hollow at this point.

Wednesday, June 10, 2009

"What if We Did Nothing?"

As the nation’s unemployment rate continues to climb towards ten percent, the public is truly starting to question the job creation potential of President Obama’s stimulus package.

According to a new poll, almost half of Americans do not believe the stimulus is creating jobs. Even Congressional Democrats, such as Senate Finance Committee Chairman Max Baucus, are questioning the Administration’s claims:
You created a situation where you cannot be wrong. If the economy loses 2 million jobs over the next few years, you can say yes, but it would've lost 5.5 million jobs. If we create a million jobs, you can say, well, it would have lost 2.5 million jobs. You've given yourself complete leverage where you cannot be wrong, because you can take any scenario and make yourself look correct.
Even still, the President is standing by claims that the legislation has already saved 150,000 jobs. He is even upping the ante, vowing to save or create an addition 600,000 jobs through the summer.

Unfortunately, Vice President Biden was unable to provide much comfort to those looking for real results from the Administration:
Vice President Joe Biden said on a Monday conference call with reporters that it was “above [his] pay grade” to explain in detail the methodology the White House uses to estimate the number of jobs created or saved by the economic stimulus legislation, but stressed that there had been no “reasonable” challenges to the estimates.

During the call, Biden said that the stimulus package, which was signed into law in February, saved or created 150,000 in its first 100 days, and he outlined White House plans to accelerate the pace so that 600,000 more jobs will be saved or created in the second 100 days this summer. …

“I’m sorry I’m not an economist,” Biden said as he was describing the methodology. “My background is foreign policy and the constitution. “
Meanwhile, a new video making the rounds on the web raises an interesting question – what if we did nothing?

Tuesday, June 9, 2009

Auto Parts Industry Lines Up for a Bailout

Where will the bailouts end? FOX reports that even though the Obama administration set aside a $5 billion federal program to help auto parts manufacturers and distributors, they’re back at the trough looking for billions more!
Automotive parts suppliers plan to seek an additional $8 billion to $10 billion in loan guarantees to help them weather a bleak auto sales environment and the bankruptcy court restructuring of major customers GM and Chrysler.
Looking for bailout bucks is a new habit that the private sector seems to have trouble breaking. When will the politicians in Washington stand up for the taxpayers and say enough is enough?

Monday, June 8, 2009

Obama Administration Acknowledges Stimulus Growth Projections Were Hyped

AP reports on President Obama’s public relations push to put a fresh spin on his stimulus package. Obama’s solution: to follow-up on the initial burst of stimulus spending with…more stimulus spending! But taxpayers won’t be fooled.
From AP:

The economy has shed 1.6 million jobs since the stimulus measure was signed in February, far overshadowing White House announcements estimating the effort has saved 150,000 jobs. Public opinion of Obama's handling of the economy has declined along with the jobs data. For the first time, the administration admitted the economic forecasts it used to sell the stimulus were overly optimistic.

As 42% of Americans now express disapproval of his handling of the economy – an uptick of 12 points since February – it’s not surprising to see Obama and his damage control team in full panic mode.

Thursday, June 4, 2009

Neither Financial Stability Nor Healthy Economic Growth

Echoing Congressional Budget Office warnings, Federal Reserve Chairman Ben Bernanke cautioned lawmakers Wednesday, “Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth. Maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance.”

Testifying before the US House of Representatives’ Budget Committee, Bloomberg reports:
Bernanke’s comments signal that the central bank sees risks of a relapse into financial turmoil even as credit markets show signs of stability. He said the Fed won’t finance government spending over the long term, while warning that the financial industry remains under stress and the credit crunch continues to limit spending. …

The budget deficit this year is projected to reach $1.85 trillion, equivalent to 13 percent of the nation’s economy, according to the nonpartisan Congressional Budget Office.

“Either cuts in spending or increases in taxes will be necessary to stabilize the fiscal situation,” Bernanke said in response to a question. “The Federal Reserve will not monetize the debt.”