Category: Budget

Bad Idea Stopped, For Now

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It appears that the Congressional Democrats killed a proposal to convene a special Social Security task force, at least in the near term.

There will not be any announcement of such a body at the “fiscal responsibility summit”, and this is a good thing.

The solvency of Social Security is the least of our worries right now, the public already pushed back on this in 2005 when Bush tried it, and people are looking at their 401(k)s right now, and want no part of privatization.

Handing off social security to wall street is a bad idea.

Expanding the sorts of wages covered by social security, and dropping the earnings limit may not be a good thing, but the “a bipartisan group take up the issue and devise a plan” people like Representative Ellen O. Tauscher, chairwoman of the New Democrats coalition, have one plan:

  • Give the money to Wall Street.
  • Extract campaign contributions from Wall Street Bankers.

Further raising the retirement age, reducing benefits, and/or handing the money to investment bankers, which is what the “Social Security Reformers” really want is a bad idea.

Just look at Chile’s privatized pensions.

The problem is 40 years in the future, and if one were simply to drop the cap on the employers portion of social security taxes, and expand the wages that are covered, there are an awful lot of wages to fat-cats that don’t count, and the problem is solved.

When You Give a Child a Loaded Gun

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Let me be clear here, the metaphor implies no adult supervision, I am not making a comment on children and their parents going to the shooting range, or enrolling a kid in a gun safety class, or going hunting with the kids.

In this case, the metaphor refers to California, where a juxtaposition of heavily gerrymandered districts, term limits, and a requirement for a 2/3 super-majority to pass any taxes, have handed a loaded revolver to the most wingnutty of ‘Phants.

Seriously, when you combine the unbalanced districts with the super-majority, and then throw in a dash of “no respect for the legislature as an institution,” because they are limited to 6 years in the statehouse, and 8 years in the state senate, and you have a heady brew.

The Dems, and Ahnuld Schwartzenegger, need to have a club to beat Republicans around the head and shoulders, I would suggest an out of cycle redistricting.

To avoid the appearance of impropriety, have as a requirement, “The length of the borders shall be the minimum practical,” which means that the districts will be mathematically as contiguous as is possible.

House-Senate Stimulus Bill Reports Out

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That was fast, I think that the deal may have been negotiated on the way to the conference room.

Basic changes are (unless otherwise noted, changes are from the House):

  • Size, down from the $820 billion (House) to $838 billion (Senate) 50 789 billion.
  • Retains the AMT tax cut put in by the Senate. ($70 billion, not stimulative)
  • Cuts in grants for broadband build out in rural areas remains, but has been trimmed a bit.
  • The Senate tax provisions allowing losses to be carried further forward by businesses was limited to only small (under $5 million/year receipts) businesses.
  • The car purchase tax credit, proposed by my Senator* Barbara Mikulski which would allow consumers to write off interest on auto loans, was shrunk to just cover sales and excise taxes.
  • The house flipping tax credits were trimmed. Instead of a $15,000/10% tax credit, the existing $7500 tax credit, which is actually a loan, it has to be repaid over time, was extended a year.
  • Thank goodness, the house flipping tax credit was a really bad idea.)
  • Individual tax credits were reduced from $500/$1000 per person/couple to $400/$800.
  • Grants to state governments and grants for school repairs were trimmed from $95 bllion to $54 billion.
  • Extend and increase unemployment benefits.

I’m not particularly impressed, but it’s better than doing nothing.

*And I wish that she wasn’t.

Economics Update

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The budget deficit is exploding, with the annual total now looking to be around $1 trillion:

The excess of spending over revenue in January rose to $83.8 billion, compared with a $17.8 billion surplus in the same month a year earlier. Spending gained 30.6 percent, while revenue dropped 11.4 percent. Corporate tax revenue in the past four months is down 44.3 percent from a year earlier

, and if we weren’t at risk of entering a deflationary spiral, I’d be concerned about inflation.

Speaking of deflationary spirals, the trade deficit hit a 6 year low, not because we are exporting more, but because no one is buying anything.

No one is borrowing to finance, or refinance their homes either, with U.S. mortgage applications falling to an 8-year low.

Overseas, we have the Bank of England predicting that inflation in the UK will be ½% two years from now. Me, I’m expecting deflation, and the stagnant GDP that goes along with it.

The UK economy is even more heavily underwater, than that of the US, so it’s likely to get even worst there.

Further east we have the Russian bond market completely seizing up.

In energy and currency, we have oil down on reports of diminishing demand, and the dollar up on reports that the conference committee has cut a stimulus deal. (More on that later)

Maybe Because She Didn’t Want Someone Ratting Out Bath Iron Works

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It appears that one of the sticking points on the stimulus package was that Senator Susan Collins insisted on stripping whistleblower protections from contractors from the conference report.

Considering the history waste, fraud, and abuse at BIW, the largest private employer in the state, I could see how the distinguished gentlewoman from Maine might not favor transparency.

New York Dems to Gov. David Paterson: Drop Dead

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Well, it’s clear that New York Governor David Paterson is in trouble.

First, he gets outed as releasing personal information about Caroline Kennedy in order to derail her Senate bid, and now Democrats are rebelling against his budget, because they think that it is stupid to slash services for 90% of the population to the bone in order to keep income tax rates on the rich low.

They are proposing an increase in state tax rates on earnings about $¼ million a year, from 6.85% it goes to 8.25% for $250-500K , 8.97% for $500k-1m , and 10.3% above $1M.

I think that the conflict here is that, following the support after Spitzer left office, Democrats are unsatisfied with Paterson, who has seemed to spend his time cozying up to the state ‘Phants and to Wall Street with his plan or draconian cuts and tax increases or new taxes on sweet drinks and music downloads.

Why? Because he is either a liar or an idiot:

Another question mark concerns Governor Paterson. He has sent mixed signals in private and in public on the matter, saying on the one hand that he thinks raising taxes would cause wealthy people to move out of New York, and on the other hand that all options to plug the budget gap have to be on the table.

Rich people live where they want, and New York City and its environs, and this is where the high-rollers live, already live in one of the most expensive places in the world.

If they wanted to move to save a few bucks, they already would have done so.

Seriously, what are they going to do, move to New Jersey?

My theory is that he wants to have an enormous war chest when the primary rolls around to scary away opponents, and enormous war chest means Wall Street bucks.

Considering the performance of Wall Street in the public mind, and the fact that leading rival, New York State Attorney General Andrew Cuomo, just announced in investigation of Merrill’s recent bonuses, which both makes Paterson look like a turd, and Cuomo look like a hero.

Just Shoot Me!

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It looks like executive pay caps in the stimulus will be dropped because the so-called fiscal hawks think that they will cost too much:

Unfortunately, [Representative Brad] Sherman told me that he believes the executive compensation limits added to the Senate’s stimulus are going to get removed during conference talks with the House. The reason: a new Congressional Budget Office estimate that the pay caps will cost the government $10.8 billion in lost tax revenue over the next 10 years.

“The plan is to take out the executive compensation provisions … and blame the Republicans for setting out the level [of $800 billion]” for the final version of the stimulus, Sherman said.

Gaah!!!!!!!

Hopefully, We Can Unfrack This in the Conference Committee

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So, based on my not so informed analysis, what the Senate now has a deal on sucks. It appears that the only criteria used by those “wise people” in the middle was what had extensive lobbying support.

Cuts:

  • Aid to states.
  • Education funding.

Kept or increased:

  • More tax cuts.
  • Increased funding on the census. (Like that’s going to help now?)
  • Subsidies for digital TV receivers. (Whiskey tango foxtrot)?
  • More tax cuts.
  • The $15,000 house flipping tax credit.

Total spending is down by around ¼, and tax cuts are up.

Without some Republican style shenanigans in the conference committee (how about stripping out all the tax cuts?) this will really suck.

Republicans Formally Come Out in Favor of Syphilis

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Mark Steyn supports Syphilis and other STDs because they might prevent people from having sex outside of wedlock:

Nancy Pelosi, Speaker of the House, is on TV explaining the (at this point the congregation shall fall to its knees and prostrate itself) “stimulus.” “How,” asks the lady from CBS, “does $335 million in STD prevention stimulate the economy?”

“I’ll tell you how,” says Speaker Pelosi. “I’m a big believer in prevention. And we have, er… there is a part of the bill on the House side that is about prevention. It’s about it being less expensive to the states to do these measures.”

Makes a lot of sense. If we have more STD prevention, it will be safer for loose women to go into bars and pick up feckless men, thus stimulating the critical beer and nuts and jukebox industries. To do this, we need trillion-dollar deficits, which our children and grandchildren will have to pay off, but, with sufficient investment in prevention measures, there won’t be any children or grandchildren, so there’s that problem solved.

I really cannot read this as anything but an endorsement of STDs, and this is not The Onion.

H/t Booman Tribune.

Rank and File House Dems Want Tax Cuts Out of Stimulus

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After the stimulus proposal got no Republican votes at all, it appears that the rank and file house Democrats are telling their leaders that they have no interest at all in making nice:

Rank-and-file Congressional Democrats had been willing to give Republicans the business tax cuts and other provisions they wanted in the stimulus. That is, up until every single one voted against the bill on the House floor Wednesday.

Now, in both the House and the Senate, angry members are lobbying Democratic leaders to yank those tax breaks back.

I would agree. All that kowtowing to the ‘Phants does is make your policy prescriptions worse.

There is no common ground on which to negotiate. Republicans at the national level, particularly in the House of Representatives, have no interest in making things better while they are in the minority.

Canada: the Libs Cave

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So the liberals wimp out, and Michael Ignatieff, showing all the moral courage and intellect he showed when he supported the invasion of Iraq gives Stephen Harper’s merry bunch of radicals a “Get out of Jail Free” card, as New Democratic Party leader Jack Layton so ably noted.

What did he get? It appears that he got a statement from the Canadian finance minister that he was, “open to opposition suggestions.”

Ignatieff does not get it, but he just sold the country down the river, and the coalition cannot be reformed in the foreseeable future, so the Conservatives get to continue their goal of making Canada just like Texas.

Politically Kosher: Don’t Mix Meat and Milk

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Sometimes, the pork in the stimulus package is beef.

In this case it was an attempt by the Dairy industry to have the government purchase about 300,000 of milk cows and sell them to slaughter houses in order to arrest the recent declines in the cost of milk.

The dairy farmers wanted this, but the beef farmers did not, and when all was said and done, it ended up on the cutting room floor, but not before I made hay of the situation.

Don’t have a cow, man!

My First Take on Obama’s Broadband Plan

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I like it, because the telecommunications companies don’t:

The grants would be conditioned on companies building so- called open-access networks, which would allow other companies to offer competing service over the same lines.

The telcos want free money, which is what they got when the Clinton administration was trying to build out what they still called the, “information superhighway,” and they used the money for mergers.

They spent very little time or effort making broadband widely available, they used the money to reinforce their monopoly advantages.

I could be wrong, but if the incumbent providers don’t like it, it’s a pretty good indication that this is good policy.

Because They Still Won’t Vote For It

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So while Barack Obama is meeting with Republicans to get support for the stimulus package, John Boehner has already instructed his caucus not to vote for it.

A bright spot in all this is the report that Obama told the ‘Phants at a meeting to go pound sand on low income tax cuts.

They are claiming that it’s “Welfare”, though Ronald Reagan called it the “Earned Income Tax Credit,” and strongly supported it.

H/t Americablog for the pic.