Cash for Caulkers Boondoggle in Texas

By now, most of us have heard of the Cash for Caulkers scheme (if not, you can read more about it here).

Turns out, like much of the stimulus cash, these funds are being wasted on mostly administrative costs. The latest example out of Texas has that state spending $2 million to weatherize 7 homes. An average cost of $285,000 per home!

For more, check out this video from Fox News' "Cashin In."

More on the Willy-Nilly Stimulus Bill(y)

The Washington Examiner asks:

Has the American Recovery and Reinvestment Act -- known more commonly as the stimulus -- been a well-intentioned failure as a jobs-creation bill, or is it a huge porky slush fund that was created without much thought?

and answers:

President Obama promised that his stimulus package would be, among other things, "targeted." Our own Mark Hemingway reported recently a study of stimulus spending that demonstrated there is no rhyme or reason to stimulus spending in terms of local unemployment. ...

Nothing in the data suggests that higher-unemployment states are more likely to get larger amounts of money per capita. It appears that very little thought went into directing funds toward the states most in need of jobs during the first round of stimulus funding, which ended September 30.

Here is the graph Hemingway constructed to demonstrate his point:

("Each square represents a state (or D.C.), and each state sits along the two axes based on its unemployment rate and its amount of stimulus spending per congressional representative. (Congressional Districts contain roughly the same number of people nationwide).")

"Senate Plan will Cost NH"

That is the headline to a quick story in today's Union Leader as well as the simple message from the president and general manager of Anthem Blue Cross Blue Shield to NH's health insurance customers:

[E]xcise taxes on expensive health plans and a tax hitched to the ranks of those covered by not-for-profit insurers in each state both will add costs to local consumers and employers.

The tax on so-called Cadillac health plans will hit the state because health care costs in the area are high, a fact reflected both in medical bills and insurance premiums.

[President and general manager Doug] Wenners said disproportionately large numbers of both small and bigger businesses offer plans that will exceed the thresholds at which the excise tax begins to apply -- $23,000 per family, and $8,500 per individual.

The state will also be hit by a higher than average share of a national tax that raises a total $6.7 billion, but exempts those covered by not-for-profit plans. A higher percentage of people are insured by for-profits in New Hampshire than in any other state, Wenners said.

$4 Billion More in Earmarks

Remember that?

President Obama again broke that pledge today by signing a defense appropriations bill chock full of pet projects and pork barrel spending, much of which has nothing to do with national defense.

The Wall Street Journal reports:

But the earmarks in the defense-spending bill could point to a longer-term clash between lawmakers and Mr. Obama, who campaigned on a pledge of changing the way Congress allocates earmarks. Mr. Obama has said that earmarks can be a waste of government funds and wants more public information about how they are awarded by Congress.

Member of Congress in both parties defend the use of earmarks and say that they are often for worthy projects.

Among the earmarks in the Defense bill: $18.9 million for the Edward M. Kennedy Institute for the Senate sponsored by Sen. John Kerry (D., Mass.); a $23 million item for the Hawaii Healthcare Network, sponsored by Senate appropriations Chairman Daniel Inouye (D., Hawaii); a $20 million appropriation for the National World War II museum in New Orleans, by Democratic Sen. Mary Landrieu and Republican Sen. David Vitter of Louisiana; and $5 million for a Heritage Center at San Francisco's historic Presidio, an item included by House Speaker Nancy Pelosi in her "community funding requests." ...

As usual, many of the top recipients of earmarks in the defense bill were high-ranking appropriators: Mr. Inouye got 37 earmarks totaling $198.2 million, while ranking Republican Thad Cochran (R., Miss.) got 45 totaling $167 million. Mr. Inouye also is chairman of the defense subcommittee, and Mr. Cochran is the ranking member.

On the House side, defense subcommittee chairman John Murtha (D., Pa.) sponsored 23 earmarks totaling $76.5 million, while ranking Republican C.W. "Bill" Young got 36 totaling $83.7 million, according to Taxpayers for Common Sense.

Line by line, huh? Maybe next year, but not holding our breath.

Chat With Governor Lynch Today

This morning (Monday December 21, 2009) at 10am Governor Lynch will take part in an online chat hosted by the Live Free or Die Alliance. This is your chance to question the Governor directly with regards to the overspending in Concord and the 38 new taxes and fees (including the new LLC tax) instituted to pay for it all.

Here is how the LFDA describes the chat:

The LFDA will host its inaugural online chat event with Governor John Lynch on December 21st at 10:00am. Former Governor Steve Merrill will participate as Moderator in what is sure to be an informative session on the issues facing the state.

Anyone can participate in this live chat event. Once you are logged in, you'll be able to email your questions in to Governor Lynch directly about state and community issues that affect you, and listen live as he answers.

Visit the LFDA now to register and take part in today’s chat!

More Data Suggests Politicalization of the Stimulus

A report released by the Mercatus Center at George Mason University suggests stimulus dollars thus far have been doled out without regard to the levels of unemployment in a particular area. Instead, the report found, "Democratic districts received 1.6 times more awards than Republican ones" and "Democratic districts also received 1.89 times more stimulus dollars than Republican districts."

It had been reported from the beginning that the stimulus was crafted to reward favored industries. This news that distribution is also favoring a particular party is yet another strike against the increasingly unpopular bill. Fox News reports:

"You would think, right, that if the administration believes in its theory that government money can create jobs, they would spend a lot of money in districts that have high unemployment," study co-author Veronique de Rugy said. "We found absolutely no relationship. It just kind of shows that the money is spent kind of randomly."

Rather, the study found that Democratic congressional districts received 1.89 times more money than GOP districts. The average award for Democratic districts was $439 million, while the average award for Republican ones was $232 million.

On average, Democratic districts also got 152 awards, while Republican ones got 94.
The data is sure to fuel skepticism about the $787 billion stimulus bill passed in February that only garnered three Republican votes. While the administration claims it has created 640,000 jobs, critics point to the still-soaring 10 percent unemployment rate in arguing that the stimulus has had a nominal effect.

Oddly, the Mercatus study found far more stimulus money went to higher-income areas than lower-income areas.

"We found no correlation between economic indicators and stimulus funding. Preliminary results find no effect of unemployment, median income, or mean income on stimulus funds allocation," the report said.

Hate to Say We Told You So

Ten months since passage of the federal stimulus bill, the concerns expressed by many that the funds were simply an expensive, short-term fix are coming to fruition (emphasis ours):

The summer of 2009 was a boom time for Pike Industries and other paving firms in the state as $130 million in federal stimulus funds poured into the state, the equivalent of a full year of spending for the state Department of Transportation's typical highway and bridge program.

But with $110 million of the highway stimulus already spent or committed under the American Recovery and Reinvestment Act, prospects are not as bright for the coming construction season.

"We had a good year and I'm a big fan of what the stimulus did for us. The state Department of Transportation did a great job of getting the stimulus money out in a timely manner so it could have an immediate impact. But next year looks pretty bleak with only $20 million left," says Christian Zimmermann, Pike's CEO.

Democrats' LLC Tax

The New Hampshire chapter of Americans for Prosperity has a solid write up on the proposed LLC tax and an important call to action for anyone concerned with preserving small businesses in New Hampshire:

Mark your calendar for December 16, 2009 and promise yourself that you and others will take the time to testify at the only public hearing for the 5% Tax on LLC’s and Partnerships which the Department of Revenue Administration (DRA) plans to hold at 10:00am at their Concord office on 109 Pleasant Street.

This past June, when the NH Legislature was voting on HB2, the state budget, some powerful Democrats decided to slip into the bill a 5 % interest and dividends tax on individuals for any distributions they receive from a Limited Liability Corporation (LLC) and Partnerships, this is an Income Tax!

Because this was slipped into HB 2 at the eleventh hour, there was no ability for our taxpayers to testify on this issue. Now, the DRA has written the rules for this 5% tax on all LLC’s and Partnerships throughout New Hampshire.

There are well over 10,000 LLC’s and Partnerships in New Hampshire made up of small business men and women who are about to get a wakeup call from big brother; “You owe us more money!” ...

This is a game that different state agencies play with public hearings on rule making; if you wrap the hearing around holidays no one will show up and the proposed rules will slide under the radar screen and be approved, which will carry the same impact as law. The state is not serving our taxpayers by allowing mischief like this to happen, it is wrong and must stop.

Wednesday's hearing will be held at 10am at the Department of Revenue Administration's Concord office at 109 Pleasant Street. Please attend if you can.

Also, consider signing this petition started by two New Hampshire small businessmen concerned with the impact of the new LLC tax.

$1.8 Trillion in New Debt

Hoping to somehow avoid an election year backlash over the ballooning federal debt, Democrats in Congress plan to lift the debt ceiling by $1.8 trillion before the end of the year.

Yes, you read that sentence correctly. Only in Washington:

In a bold but risky year-end strategy, Democrats are preparing to raise the federal debt ceiling by as much as $1.8 trillion before New Year’s rather than have to face the issue again prior to the 2010 elections.

“We’ve incurred this debt. We have to pay our bills,” House Majority Leader Steny Hoyer told POLITICO Wednesday. And the Maryland Democrat confirmed that the anticipated increase could be as high as $1.8 trillion — nearly twice what had been assumed in last spring’s budget resolution for the 2010 fiscal year.

The leadership is betting that it’s better for the party to take its lumps now rather than risk further votes over the coming year. But the enormity of the number could create its own dynamic, much as another debt ceiling fight in 1985 gave rise to the Gramm-Rudman deficit reduction act mandating across-the-board spending cuts nearly 25 years ago.

The one positive that may come of this debt allowance may be Senator Gregg's intention to attach his deficit reduction task force legislation to any bill containing a ceiling increase.

Stimulus Investigations

Elected officials in both Houses of Congress are calling for investigations into how millions in stimulus dollars have been spent.

In the Senate:

Sens. John McCain and Tom Coburn are singling out 100 examples of stimulus spending they call unnecessary and unlikely to create many jobs.

In a report released today, the two Republicans take aim at grants for the arts and academic research projects, spending to boost tourism and leisure facilities, and administration and advertising costs associated with the $787 billion stimulus package. Water taxis, “little-used” bridges and “low-priority” renovations to roads, buildings and airports also come under fire.

A research project to study young adults’ use of malt liquor and marijuana as well as a National Institutes of Health grant looking at the connection between female college students’ alcohol consumption and casual sex both score highly on McCain and Coburn’s list of dubious spending. …

The duo, who have railed against “wasteful spending” in recent years, put out their “stimulus checkup” shortly before President Barack Obama made a speech at the Brookings Institution outlining new job-creation proposals.

McCain, from Arizona, and Coburn, from Oklahoma, say the projects they’ve identified “raise questions about how stimulus money has been used so far.”

And in the House of Representatives:

Four Republican lawmakers demanded an audit of President Obama's $787 billion stimulus program on Wednesday following reports of exaggerated or inaccurate accounts of the number of jobs created.

Reps. Joe Wilson of South Carolina, Jack Kingston of Georgia, Mark Souder of Indiana and Jeff Miller of Florida called for the creation of a bipartisan commission to investigate the effects of the stimulus bill.

"It's time for Congress to demand answers on behalf of the hardworking taxpayers that we represent," Wilson said. "The misnamed stimulus is one of the largest spending bills in our nation's history and it is critical that American taxpayers receive adequate answers as to the whereabouts of stimulus funds."

Wilson's bill would create a 10-member panel appointed by the president and congressional leaders that would determine how many jobs have been created and the effectiveness of measures taken to prevent improper payments. Then the commission would recommend what changes could be made to save or create more jobs and prevent mismanagement of the funds.

The call for an audit came as news broke that a public relations firm headed by Mark Penn, Hillary Clinton's former campaign strategist, received nearly $6 million in stimulus funds to save three jobs -- a report Penn's company called "fundamentally inaccurate."

Try as they might...

Although Democrats in Congress and President Obama continue to stress the supposed need for and importance of a second stimulus, it seems the public remains unconvinced:

[A] new Rasmussen Reports national telephone survey finds that just 22% of Americans favor providing federal bailout funds to states with serious financial problems. Fifty-eight percent (58%) oppose giving bailout money to financially troubled states.

On top of that, 56% of Americans oppose the passage of another economic stimulus package this year. While House Speaker Nancy Pelosi and other congressional Democrats are hoping to spend more to combat unemployment, just 33% favor another stimulus plan.

Thirty-six percent (36%) of voters believe the first stimulus plan passed in February has helped the U.S. economy, but 34% say it has hurt the economy.

Most Americans (53%) believe the U.S. economy will be helped more by decisions made by business leaders to help their own businesses grow rather than by decisions made by government officials. Just 29% say decisions made by government officials to help the economy grow will do more.

By a 59% to 24% margin, voters believe that an increase in government spending will hurt the economy.

Obama on the Second Stimulus

Speaking today before the liberal think tank Brookings Institute, President Obama issued his strongest call yet for a second stimulus bill.

In response, Senator Gregg had this quip to offer, "At least the president's proposal will result in one new job — he'll need to hire a magician to make this new deficit spending appear fiscally responsible."

STEWARD will be keeping an eye out for other statements from state officials signaling their support, or lack thereof, for this next round of federal spending.

Despite Republican criticism concerning record federal deficits, Obama said the U.S. must continue to "spend our way out of this recession" as long as so many people are out of work. More than 7 million Americans have lost their jobs since the recession began two years ago, and the jobless rate stands at 10 percent, a statistic Obama called "staggering."

Congressional approval would be required for the new spending, the amount unspecified but sure to be at least tens of billions of dollars.

"We avoided the depression many feared," Obama said in a speech at the Brookings Institution, a Washington think tank. But, he added, "Our work is far from done."

It was the third time in a week the president had presided over a high-profile event on jobs, responding to rising pleas in Congress that he spend more time discussing unemployment as midterm election season draws near.

Obama proposed new spending for highway and bridge construction, for small business tax cuts and for retrofitting millions of homes to make them more energy-efficient. He said he wanted to extendeconomic stimulus programs to keep unemployment insurance from expiring for millions of out-of-work Americans and to help laid-off workers keep their health insurance. He proposed an additional $250 apiece in stimulus spending for seniors and veterans and aid to state and local governments to discourage them from laying off teachers, police officers and firefighters.

He did not give a price tag for the new package but said he would work with Congress on deciding how to pay for it.

Proposals in Congress being advanced by Democratic leaders that cover much the same ground would add up to $170 billion or more. Administration aides suggested the infrastructure proposals alone being weighed by the president could cost about $50 billion.

That's Some Return on Investment

A new, quick, analysis of the stimulus' job production numbers has shown one heck of an ROI thus far:

The Obama Administration is touting that their stimulus program has saved or created 640,329 jobs since it was enacted back in February through the end of October. This number is updated and posted on the Administration’s recovery.gov web site. That amounts to $246,436 per job based on the $157.8bn that has been awarded so far! Total compensation earned by the average payroll employee during October, on an annualized basis, was $59,867. If the government had simply used the funds awarded so far to pay for a year’s worth of labor, that would have paid for 2.6mn jobs!

It will be interesting to see what the Democrats do to improve that statistic in the next stimulus package they push.

Policy U-Turn

Former Congressman Charlie Bass had an op-ed in yesterday's Roll Call, co-authored with Grover Norquist, the founder of the DC based think tank Americans for Tax Reform. Certainly worth a read:

Earlier this year, in the effort to turn our economy around and spur job growth, our leaders in Washington, D.C., were faced with two very different policy paths. Down one path was a return to the old-school big-government, big-spending, anti-corporate policies of the late 1970s — a path once thought to be relegated to the ash heap of history. The other path was one that has been blazed by most of the industrialized world at this point — a path that recognizes that lower corporate taxes are essential to competitiveness in this global economy, and that lower taxes create jobs. Unfortunately, President Barack Obama and Congressional Democrats chose the big-government, big-spending, anti-corporate path — and the results have been disastrous.

The approach of Obama and the Democrats has failed to turn the economy around, and, in fact, has resulted in an unemployment rate of at least 10 percent — a 26-year high. Indeed, despite administration claims about jobs saved or created, 2.8 million jobs have been lost since the stimulus became law. While the trillion-dollar “stimulus” has failed to deliver the jobs the administration promised, it has, unfortunately, succeeded in ballooning our nation’s deficit and piling on to a sky-rocketing national debt.

If we want an economic turn-around, then it is time for a policy U-turn.

Anti-corporate populism is certainly en vogue today. Some of the ire is well-deserved — the greed of a handful of corporate leaders is, in part, responsible for the economic troubles we face today. Unfortunately, however, much of this anti-corporate populism is the product of opportunistic politicians desperate to find someone to blame.

The truth is we cannot have meaningful job creation without policies that create an environment in which companies can grow and prosper, and a critical component of such an environment is a reduction in the corporate tax rate.

The United States was once the global leader in creating a tax environment that encouraged economic growth and created jobs. Indeed, it was the U.S. under Ronald Reagan in 1986, joined by the Margaret Thatcher-led Great Britain, which started the global wave of corporate tax cuts. The 1986 cuts, which lowered the top rate from 46 percent to 34 percent, marked the largest cut in the corporate rate since the tax was created in 1909.

As recently as 1980, the top corporate tax rates in industrial countries averaged 50 percent. Where Reagan and Thatcher led, however, the rest of the world followed. In fact today, the average top corporate tax rate for countries in the European Union is now 24 percent.

Cutting the corporate tax rate has proven to be a powerful force in spurring economic growth and development. According to Daniel Mitchell at the Cato Institute, the reason is simple. “Thanks to globalization,” he wrote, “it is much easier for capital to cross national borders, and investors naturally prefer lower-tax jurisdictions.”

Unfortunately, the U.S. has fallen far behind our global competitors in this critical economic trend that we once spearheaded. The top corporate rate in the U.S. has actually ticked up from 34 percent in 1986 to 35 percent today. In fact, our top corporate rate is now the second highest among countries in the Organization for Economic Cooperation and Development. Ireland, by contrast, has a top corporate rate of just 12.5 percent.

Cutting the corporate tax rate does not necessarily mean a drop in the revenue generated by the tax, just as raising the rate does not necessarily result in an increase in revenue. According to the nonpartisan Tax Foundation, “Many people would expect high tax rates to yield high tax revenues, but the reverse is often the case. Collection data from 2002 (most recent) demonstrate that many countries with high corporate tax rates — such as the U.S., Germany, and France — have lower-than-average corporate tax collections as a percentage of total tax collections. In fact, of the 13 states with above-average corporate tax rates, nine of them have below-average collections.

The converse is also true: Of the 15 states with below-average corporate tax rates, six of them (including Ireland, which has the lowest corporate tax rate in the OECD) collect higher-than-average revenue. In fact, only 13 of the 30 OECD countries meet traditional expectations by matching their high corporate rates with high corporate revenue or their low corporate rates with low corporate collections.

Democratic opposition to reductions in the corporate tax code and protectionist economic policies that they advocate simply ignore global economic realities. These positions may sell well to their liberal base, but the implementation of these policies is stunting economic growth and putting American businesses at a strategic disadvantage in the international marketplace.

Indeed, almost every economist agrees that the anti-trade, anti-corporate policies currently advocated by the Democrats costs jobs.

To grow the economy and create jobs, we need policies that encourage the growth of private business — not the growth of federal government. Cutting the corporate tax rate will spur economic investment and allow businesses to grow and add new jobs. The road back to a strong economy is a long one, but we won’t ever get there if we continue policies that keep us headed in the wrong direction.

Investor's Business Daily Slams "Job Summit"

IBD isn't expecting much from today's White House job summit and they weren't afraid to say so in a column posted last night. Certainly worth a quick read.

The White House will hold its jobs summit Thursday. Don't expect this administration, so deeply devoted to government, to actually do anything that will create jobs for a country so in need of them.

Earlier this week, we published a chart showing the percentage of each president's Cabinet appointments with prior private sector experience going back to the first Roosevelt administration.

It was no surprise that not a single White House in more than a century has had a smaller ratio than the current administration. Only the Kennedy — less than 30% — and Carter — just over 30% — administrations were close to the Obama mark of less than 10%.

It is the height of hubris for an administration in which fewer than one in 10 Cabinet appointments have private-sector experience to hold a meeting with the goal of creating jobs.
The government, from lawmakers to bureaucrats, does not create jobs. It can move jobs from the private sector to the public through tax-and-spend wealth redistribution policies. But because government spending crowds out private investment, it is not a wealth creator and therefore cannot be a job creator.

Government is often a job killer. Economist Richard Rahn noted during the last Bush presidency that "government spending reduces more jobs in the private sector than it can create in the government sector."

"Countries with large government sectors," such as France and Germany, Rahn said, "tend to have much higher unemployment rates than countries with smaller government sectors."
Economic reality won't matter at the summit, though. What matters are appearances.

The White House wants to make a show of doing something, especially after its policies have done nothing to boost growth or stop the job losses. It would like to erase from public memory the utter failure of the $787 billion stimulus legislation approved just after Barack Obama took office. The administration knows its claim that thousands of jobs have been created or saved by the stimulus is bunk. And it knows the public knows.

But the stench of failed government solutions will remain.

Thursday's summit will be too heavy with union executives and eggheads whose experiences don't go beyond the academy. Neither group has a shining record of creating jobs, and their presence virtually ensures that little worthwhile will be considered.

Organized labor, for instance, contributes to unemployment. Its demands for above-market wages and lavish benefits mean that companies often can't afford to hire as many workers as they want.

Fed’s ‘Backdoor Bailout’ Benefits Wall Street, not Main Street

A great read from STEWARD's Penny Wise:

Democrats in Congress have been more than happy to faithfully vote for President Obama’s massive bailouts and federal spending spree, which has mostly enriched bankers, financiers and shareholders, but not helped small businesses and Main Street America. This is especially true in New Hampshire, where taxpayers are on the hook for far more than their fair share of the spending, and businesses are still looking for credit to create new jobs.

Healthy New Hampshire banks have received close to $41 million from the federal Capital Purchase Program (CPP) to support the economy in the state. Based on New Hampshire’s size and the $204 billion spent on the CPP portion of the Troubled Asset Relief Program (TARP), New Hampshire’s share should have been almost $983 million. That’s a difference of $942 million that taxpayers in New Hampshire are covering to support economic recovery in other states.

This all gets worse, as a report from the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) details the handling of the bailout of insurance company AIG. The report states:

* Questions have been raised as to whether the Federal Reserve intentionally structured the AIG counterparty payments to benefit AIG’s counterparties — in other words, that the AIG assistance was in effect a “backdoor bailout” of AIG’s counterparties.

* Then-Federal Reserve Bank of New York (FRBNY) President Timothy Geithner and FRBNY’s general counsel deny that this was a relevant consideration for the AIG transactions. Irrespective of their stated intent, however, there is no question that the effect of FRBNY’s decisions — indeed, the very design of the federal assistance to AIG — was that tens of billions of dollars of government money was funneled inexorably and directly to AIG’s counterparties.

* FRBNY’s decision to treat all counterparties equally (which FRBNY officials described as a “core value” of their organization), for example, gave each of the major counterparties (including the foreign banks) effective veto power over the possibility of a concession from any other party. This approach left FRBNY with few options, even after one of the counterparties indicated a willingness to negotiate concessions.

Simply put, FRBNY refused to negotiate with financial institutions willing to take less than full value on credit default swaps with AIG and instead paid all institutions 100 cents on the dollar, costing taxpayers “tens of billions.”

Republican Congressman Darrell Issa detailed the extent of the give-away by stating, “Behind closed doors and with no approval from Congress, the FRBNY added an additional $13 billion of debt on the backs of taxpayers to give a backdoor bailout to AIG’s creditors, including Goldman Sachs, Merrill Lynch, Société Générale and Deutsche Bank. The lack of transparency and accountability in this transaction is disturbing enough. However, there is evidence that this $13 billion expenditure was entirely unnecessary. All of this begs the question why the FRBNY would not drive a better bargain for the American taxpayer.”

Even more amazing is that the Treasury Department recently held a forum on small business financing. In prepared remarks for the forum, Secretary Geithner said the purpose of the forum was “to make sure we are doing everything possible to get credit flowing to small businesses that are seeking to expand and create more jobs.”

The problem for businesses in New Hampshire is that nearly $1 billion of credit that could be used in the state went to banks in other states ($942 million) – all on the heels of egregious taxpayer sell-outs like the “backdoor bailout” for AIG’s clients.

The Treasury Department took tax dollars from Granite Staters and gave it to reckless Wall Street financiers. In less than a year, that took a firm like Goldman Sachs from the endangered species list to paying out billions in bonuses. So while TARP and “backdoor bailouts” may be credited with boosting the stock market and making shareholders richer, small businesses continue to twist in the wind. Hard-working New Hampshire residents are stuck with the bill — and far too many remain unemployed.