Obama has stated his intention to shut down federal subsidies to private student loan lenders and go exclusively with direct federal loans.
It should save $5 billion a year for the taxpayers and lower interest rates for students, so everyone wins….Except, of course for the private lenders, who are basically parasites anyway, so it doesn’t bother me.
I believe taht he can do most of this through executive order, which is a good thing.
SecDef Gates says, and I agree, that the non-disclosure agreements that he required participants to sign made the process work better:
“[It] was critically important as we considered dramatic changes in the way we were going to procure things and programmatic changes to specific programs was that we be able to have those deliberations among the senior military and the senior civilians in the department without the newspapers printing, every single day, the results of our deliberations the preceding day,” Gates said last week, speaking at the Naval War College, Newport R.I.
Gates took the unusual step earlier this year of requiring everyone involved in the 2010 budget deliberations sign nondisclosure agreements. The 2010 defense budget had already become politically hot well before deliberations began in earnest when news got out that the Joint Chiefs of Staff had prepared a draft budget request of $584 billion (an 8 percent increase over 2009), putting the incoming Obama administration into the position of having to “cut” defense. The Obama administration’s 2010 defense budget request is $527 billion.
The military budget process has become so politicized and pork laden that it was the only way to get things done.
You can read his speech, but here is the nickel tour:
Additions:
Reductions:
Surprise, he’s saying that Dick Cheney’s brainchild when he was Bush I’s Sec Def, using the Department of Defense as a way to reward political contributions privatizing functions and expanding the number of contractors, does not work.
Kills:
I love his money quote:
Sixth, and finally, we will significantly restructure the Army’s Future Combat Systems (FCS) program. We will retain and accelerate the initial increment of the program to spin out technology enhancements to all combat brigades. However, I have concluded that there are significant unanswered questions concerning the FCS vehicle design strategy. I am also concerned that, despite some adjustments, the FCS vehicles – where lower weight, higher fuel efficiency, and greater informational awareness are expected to compensate for less armor – do not adequately reflect the lessons of counterinsurgency and close quarters combat in Iraq and Afghanistan. The current vehicle program, developed nine years ago, does not include a role for our recent $25 billion investment in the MRAP vehicles being used to good effect in today’s conflicts.
Further, I am troubled by the terms of the current contract, particularly its very unattractive fee structure that gives the government little leverage to promote cost efficiency. Because the vehicle part of the FCS program is currently estimated to cost over $87 billion, I believe we must have more confidence in the program strategy, requirements, and maturity of the technologies before proceeding further.
(emphasis mine)
This translates to, “They are not worth much in a counter-insurgency scenario, and once again the Lead System Integrator (LSI) model of procurement has given us an overpriced piece of crap.”
*Full disclosure, I worked on the Future Recovery and Maintenance Vehicle, FRMV, “wrecker” variant of the FCS-MGV† from 2003-2006 at United Defense (later BAE Systems after the Carlyle Group sold me to buy Dunkin Donuts).
†Future Combat Systems-Manned Ground Vehicle. These are the ones that are the tanks and APCs. As opposed to the various unnmanned vehicles, networking technologies, etc. that form the full FCS along with the MGVs.‡
‡Yes, I have worked everywhere. Maybe I can’t hold down a job, but more likely this has been my role as “technical hit man”, where you are parachuted in to take care of a specific need.
The Future Combat System Manned Ground Vehicles (FCS MGV)* are on the chopping block, though it still looks like the howitzer version, the NLOS-C (shown) will still be procured.
The program is over budget and behind schedule, and the vehicles, originally in the 17 ton class (stripped for transport) and C-130 transportable, and now a 27 ton concept requiring larger transports, so this is not unforeseen.
The supporters of the program are claiming that :The development of the FCS network is linked to the development of FCS Manned Ground Vehicles. Each MGV acts as a node in the ground based aspect of the network. So cutting MGVs reduces the viability of the network,” but truth be told, if the communications suite can be developed, it can be retrofitted to the legacy fleet and give the desired situational awareness.
There are really only 2 downsides that I see, that the troop carrier FCS MGV, the ICV, carries more troops than the Bradley, which has always been light in that department, and the legacy systems require more fuel and maintenance (the specs for the FCS MGV on maintenance are pretty amazing).
Canceling the MGVs would also serve to put the Pentagon, and the defense industry, on notice about cost and schedule creep, which is desperately needed because the weapons system development process is completely broken.
*Full disclosure, I worked on the Future Recovery and Maintenance Vehicle, FRMV, “wrecker” variant of the FCS-MGV† from 2003-2006 at United Defense (later BAE Systems after the Carlyle Group sold me to buy Dunkin Donuts).
†Yes, I have worked everywhere. Maybe I can’t hold down a job, but more likely this has been my role as “technical hit man”, where you are parachuted in to take care of a specific need.
It looks like one Republican may actually vote for Obama’s budget.
Of course, it’s Rep. Joseph Cao (R-La.), who beat William “Dollar Bill” Jefferson in the general election after he was indicted for corruption.
Of course, the district that elected him went 74% for Barack Obama, and he is probably still hearing complaints about allow Eric Cantor to twist his arm into voting against the stimulus.
Because that’s what the Pension Benefit Guaranty Corporation (PBGC), the government insurance fund for defined benefit retirement programs, did last year, just before the stock market crashed.
The reason given by the Bush Evil Minion™ Charles E.F. Millard was that the PBGC needed better returns to shore up its trust fund, because of all the companies going bankrupt and welshing on their pension obligations.
It may be true that they actually bought into the idea that they could get better returns, even in a stock market that was clearly overvalued and with an economy already shocked by the housing cost, but my money is that the real reason was that it was an election year, and they saw the signs of a stock market drop, and they wanted to push some money into the market quickly in order to keep everything afloat until after the election.
In either case, it should be noted that the PBGC’s trust fund is like a drop in the ocean compared to that of Social Security, and if they thought that it could effect the markets, just imagine what the multi-trillion Social Security fund would do.
In fact, it’s so large, that it would drive the stock market up upon being invested in the market, and when a large population cohort started to retire, it would drive it down, giving the Baby Boomers that wonderful “buy high, sell low” feeling.
Governor Paterson had been opposed to such taxes, suggesting that it would lead the wealthy to leave the state, but has not capitulated to progressives in the state, who were opposed to the draconian cuts in services that a “no-tax” solution would have required.
Even with this increase, 8.97% from 6.85% for income over $½ million, the top tax rate in New Jersey, is higher, and in any case, if people want to leave New York because it’s too expensive, they already have.
Nice to know that the political forces in New York State who work for the other 99% of the population can actually get meaningful change….for 3 years at least, as the tax is temporary….for now.
AIG director named to Obama tax task force.
For all I know, Martin Feldstein, who has been on the AIG board is a good person, certainly, I have come across generally favorable reviews of his works.
That being said, the atmospherics here are unbelievably stupid.
My Head Hurts.
It looks like the financial meltdown, and the reduction in tax revenues for local and state authorities have lead to a reevaluation of incarceration policies, which have led the US to have the largest prison population of any society in history: (Gulag nation)
For nearly three decades, most U.S. states have dealt with lawbreakers in two ways: Lock more of them up for longer periods, and build more prisons to hold them. Now many governments, out of money and buried under mounting prison costs, are reversing many of those policies and practices.
Some states, like Colorado and Nevada, are closing prisons. Others, like Kansas and New Jersey, have replaced jail time with community programs or other sanctions for people who violate parole. Kentucky lawmakers passed a bill this month that enhances the credits some inmates can earn toward release.
Obviously, it’s depressing that it’s taken a fiscal crisis to interject some sanity on the entire issue of over imprisoning our population, but I’ll take what I can get.
Hopefully this can make a dent in the “prison-industrial complex.”
So, we now have a New York Post reporter breathlessly reporting that he is planning a “secret” tax hike on the rich.
Well, considering the fact that the Wall Street masters of the universe upon whom he hoped to fund his reelection bid are now less popular than either Dick Cheney or a case of the clap,* this is not surprising, though according to Dicker, Paterson wants to appear to be against the tax hikes while pushing them through, which indicates once again that he has the political instincts of Kathleen Kennedy Townsend, or a packet of Fleishmann’s active dry yeast.*
My guess is that he’s flailing around because the polls show him being crushed by Andrew Cuomo in the primary, and by Rudolph Guiliani in the general by numbers that exceed what a banker can supply to him by the way of campaign funds.
*For some reason, I always confuse the two.†
†I love it when I get to “twofer” footnotes.
Money is tight, but the tanker replacement is probably a better buy than the F-35 or the F-22, and will save money in the long run.
I wonder if this proposal to delay procurement is a negotiating tactic, or if the OMB figures that by that date, the A330 would be competing against the 787, which is qualitatively superior, as opposed to the 767, which was pretty much worse in every metric.
Not unexpected, but the budget deficit jumped 10% because taxes have fallen to a 14 year low.
Like I said, the solution here is inflation to wipe out bad debts, and the deficits are going to do that sooner rather than later, because we’re not going to see a this resolve itself in the US, or overseas in the near future, as evidence by the cratering confidence numbers globally.
With Chinese exports falling sharply, 25.7% year over year, and the rest of the world seeing similar numbers, they are in no position to drive a recovery either.
Consumers are vanishing worldwide, and there is no sign of a recovery in the US, particularly in real estate, where S&P is warning of downgrades of, “9,430 classes from 1,077 U.S. first-lien Alt-A RMBS transactions issued in 2005, 2006, and 2007”, and builder loans threatening to take down banks that weren’t playing with funky financial instruments.
On the brighter side, it looks like the SEC might reinstitute the ‘Uptick Rule’ on short selling.
I’d like to see aggressive prosecution of market manipulation techniques like “naked” short selling too, but I am not holding my breath.
If Wall Street were investigated by Patrick Fitzgerald, I’m pretty sure that you would see tens of thousands of prosecutions.
In energy, the week economy has driven oil down.
Also, it appears that there are more stupid people than I thought, because the dollar fell as people left its safe haven, it appears that this was largely a result of Pandit’s delusional memo saying that Citi is going to rake in the bucks this quarter.
Specifically, Senator Max Baucus (DINO-MT), who thinks that making people pay income tax on their healthcare benefits is preferable to raising taxes on the well-to do:
Currently, the portion of health benefits that are covered by a person’s employer is tax-free income. Baucus said last week that taxing those benefits should be considered. That way, health care reform would be funded with health care dollars.
Baucus says taxing health benefits wouldn’t necessarily be harmful to lower- and middle-class Americans.
If it won’t be harmful, then I’m Karl Rove’s secret love child.
Of course this will harm “lower- and middle-class Americans”. That’s what its intention is: Tax the poor to keep a tax break for the rich.
I understand that you won’t find a flaming liberal representing Montana. I get that, and if he were low on the seniority totem pole, I might let it slide, but he’s 7th in seniority, and so is chairman of the Senate Finance Committee.
Unfortunately, his next election will be in 2014, but this guy needs to be kept away from the machinery of government to the maximum degree possible.
There is a reason that Baucus is whoring for rich people from one of the poorer states in the nation, as the Wiki notes, 91% of his donations in 2008 came from out of state, so his money comes from bankers, insurance companies, etc., and he is offering them a return on his investment.
The catch? Engines are not included.
So, it’s a $70 million (A-model) or $80 million (B-model) paperweight.
That’s clear.
As Bill Sweetman notes:
I’m inclined to believe the GAO at this point.
Seriously, the report is brutal:
Advocates of restructuring or cutting back on FCS will find ammunition in the draft report. In it, GAO asserts that FCS is “unlikely to be executed” for the $159 billion the Army says it will cost, a source said, citing the draft.
Moreover, and perhaps more relevant to the current decision-making within the Pentagon, GAO states that the Army has already spent 60 percent of its FCS development funds even though “the most expensive activities remain to be done before the production decision” in 2013.
GAO contends that the funding situation will deteriorate for FCS as the program’s costs will likely grow at the same time as competition for federal funds tightens, a source said.
The report also cites what it calls “actual immaturity” in the program, according to sources. Calling the network performance “largely unproven,” GAO says the Army has failed to convincingly demonstrate that FCS designs will meet their requirements, a source told ITA.
I am completely not shocked at this. I worked on the program, and it was over ambitious, and managed under the now discredited Lead System Integrator (LSI) concept, which been universally unsuccessful.
It’s no surprise that this whole program has turned into a clusterf^%$.
This is long overdue.
The free market mousketeers have been claiming for some time that outsourcing to the private sector gets better services for less, and that is a lie.
Obama’s order of a comprehensive review of government contracting processes, along with his directive that “inherently governmental” functions remain in government is a very good step.
And maybe even less popular than Dick Cheney, according the the latest Marist poll, 26% favorable, with the poll showing him being trounced by Andrew Cuomo in the primary, and being soundly beaten by Rudolph Guiliani in the general.
I think that his slime campaign against Caroline Kennedy is a part of this, but his bleatings about how you can’t raise taxes on the rich, or they will leave the state, is what really put people over the edge.
His argument is, of course, completely absurd. No one lives in in New York, or at least no one lives in New York south of Albany, because it’s a low cost place to live.
What’s interesting here is that there are a lot of conservatives in New York, particularly in Long Island and upstate, and there is a long tradition of conservatism in those areas, and they hate him too.
I think that this is significant because people are finally beginning to understand that keeping taxes low on rich folk buggers the rest of society (without lube).
After 30 years of soak the poor (and middle class) tax policies, people are finally starting to get it.
As for what looks like a soon to be former Governor Paterson, who missed this shift, and looks like he might be crushed by it, the great Gary Larson put it best:
We have some change we can believe in, Obama is calling for an end to federal subsidies to private student loan providers.
Seeing as how the private system has resulted in:
It makes a lot of sense to stop subsidizing providers of an inferior service.
Obama would use the money saved for Pell Grants.
It’s a decent plan, though once again, it appears to not go quite far enough.
He is also estimating a decent bit of revenue from a carbon cap-and-trade system, which I think is in error. He underestimates the costs of enforcement, speculative pressures, and evasion, which is why I favor a straight carbon tax.
Louisiana has gotten $130 billion in post-Katrina aid. How is it that the stars of the Republican austerity movement come from the states that suck up the most federal money? Taxpayers in New York send way more to Washington than they get back so more can go to places like Alaska and Louisiana. Which is fine, as long as we don’t have to hear their governors bragging about how the folks who elected them want to keep their tax money to themselves. Of course they do! That’s because they’re living off ours.
You go, girl.