Category: Government
The Onion, America’s Finest News Source
Hoovervilles, Again
That’s Favelas to my Brazilian* friends.
It looks like an increasingly large number of municipalities have started offering services to tent cities erected by the homeless on public land, as opposed to the old policy of evicting the residents, because they have no resources to address the explosion of the newly homeless.
*If you are asking how many is a “Brazilian”, you must have been a senior Bush admistration official.
How About Just Dropping the Maximum Payroll Tax Limit
You know, when the Wall Street Journal is discussing how the the increasingly excessive pay for executives is endangering Social Security, it’s time to do something.
We are not talking about the Workers’ Daily World here, or even the New York Times. We are talking about the daily voice of “rich pig capitalism”, and they are talking about how much this is damaging to society:
…
Executives and other highly compensated employees now receive more than one-third of all pay in the U.S., according to a Wall Street Journal analysis of Social Security Administration data — without counting billions of dollars more in pay that remains off federal radar screens that measure wages and salaries.
…
The growing portion of pay that exceeds the maximum amount subject to payroll taxes has contributed to the weakening of the Social Security trust fund. In May, the government said the Social Security fund would be exhausted in 2037, four years earlier than was predicted in 2008.
(emphasis mine)
Here’s a solution, have the employers portion of social security apply to all forms of remuneration that could be construed as wages, with out a top end to be taxed, and have the employee portion kick in above $1 million a year.
You could call it the They Who Must Not Be Named, Terell Owens, or Bernie Madoff tax.
Seriously, wages in this case are zero sum. When these guys get more, the rest of us get less.
Doubling Down on Failure
The California state pension fund, CALPERS, has decided that since it lost so much money on risky investments last year, it’s going to invest in even riskier investments this year in an attempt to catch up.
When you do this at a casino, it’s called “Paying the Casino Boss’s Daughter’s Tuition.”
Zimbabwe Update
Well, the drafting of a new constitution is a complete mess, with ZANU-PF busing in thugs to disrupt the charter meeting.
In a darkly humorous development, it appears that ZANU-PF did not think it out fully, as they did not include transport back home for their thugs, who were stranded for a few days at the hotel at which the meeting is being held.
From the other side, there have been threats of boycotts from civil society groups, who claim that they have not been fully included in the process, and that parliamentarians have complete control of the process.
As a historical aside, this sort of stuff makes the US Constitutional convention, which was conducted in secret, look awfully attractive.
In terms of the current government, it appears that ZANU-PF is engineering trumped up charges against MDC members of parliament, in order to get them suspended, which, if done in sufficient quantities, would flip control of the chamber back to the ZANU-PF.
Notwithstanding the rhetoric about an inclusive government, I really don’t think that there will be any progress without a some external entity, and South Africa is the entity best suited to this, having a boot on Mugabe’s neck to coerce “good faith” moving forward.
Finally, it appears that the situation in the Zimbabwean diamond mines is getting worse. While the government has agreed to remove the army from the mines, “in phases”, but the army has refused to leave.
The Shoe Drops on Obama’s Corrupt Former Car Czar
It looks like New York Attorney General Andrew Cuomo is negotiating with Steve Rattner over his role in the state pension fund pay-for-play scandal.
The move of power from the cabinet, which is vetted by Congress, to the staff, like the “Car Czar”, and other similar positions, is something that has been ongoing for decades, and it is a bad thing for governance.
Fitch Downgrades California to Just Above Junk
It’s down to BBB.
Obama to California: Drop Dead*
I can;t say that I blame Barack Obama on the decision not to provide aid to California.
Unlike the situation with some cities in the 1970s, where much of the problem came from the fact that they were taxed to create suburban and exurban sprawl, getting little in return, California has had a failed government for at least the past 30 years, and the people who committed this crime are not the politicians, though they have been willing accomplices, but rather the whole population of the state, who have, though overuse and abuse of the initiative process, created this situation.
It’s not just prop 13, which capped property taxes to the benefit of corporate land owners, it’s a whole series of policies that have created mandates on the budget without a way to generate revenue.
I would suggest, in a sort of “fighting fire with fire” way, that someone in California circulate a new petition for a law that would require that anything passed by the initiative process that still has the force of law be brought up for a new vote every 10 years, or more accurately, every general statewide election closest to 10 years, so as not to have to pay for special elections, just the cost of putting it on the ballot.
I think that there would be a lot of trash that would be discarded, but would not be by the cowards in California state politics.
*Here is the historical reference to New York’s budget crisis in the 1970s.
Oh Lord, Won’t You Buy Me a Mercedes Benz (Zimbabwe Edition)
So it now appears that foul play has been ruled out in the Tsvangerai crash, and MDC official Roy Bennett has been released from custody.
That being said, Mugabe’s attempts to maintain his political power have gotten truly surreal:
On his first day as education minister in a government so broke that most schools were closed and millions of children idle, David Coltart said he got a startling invitation.
“Come and get your brand-new white Mercedes,” an official told Mr. Coltart, a veteran opposition politician, as President Robert Mugabe peered down from a portrait on the minister’s office wall.
The offer of an E-Class Mercedes to every minister in the month-old power-sharing government was vintage Mugabe, an effort to seduce his political enemies with the lavish perks he has long bestowed on loyalists.
(I would have offered him silver, or metallic blue, myself.)
I’m an optimist, and see this as a sign of weakness.
Mugabe had previously dismissed the MDC entirely, and how he is trying to bribe them.
Economics Update
Calculated Risk’s semi regular review of credit conditions is showing a bit of a tightening. Nothing major, but when you start with awful, it’s worse.
That being said, it sucks to be Japan, as they just swung to their first trade deficit in a decade, and it’s a record too.
Meanwhile, the impending wave of impending loan defaults on commercial real estate appears to be starting in Cleveland and Detroit.
It is also looking like treasury bonds are falling, which means that yields are rising, implying that the markets are expecting interest rates to climb.
In energy, it appears that OPEC is looking at cutting production again, and it’s member states are not cheating on production quotas, or at least cheating on them less than is expected, so oil is up today.
In addition, the upward trend in gasoline prices over the past few months continues unabated.
In currency, we continue to see a flight to safety, which is driving the dollar up, and the Canadian dollar hit a 4½ year low against the USD.
Fire Robert Gates Today
There is a fight brewing about whistleblowers in government service, and Robert Gates is fighting tooth and nail to stop meaningful whistleblower protections.
This is more than a fairness issue, this is a national security issue. The government, including defense and intelligence, simply do not work, and much of this comes from a lack of accountability, which has gotten worse over the past 8 years because of secrecy fetish of Bush and His Evil Minions™.
Excessive secrecy is a far greater threat to our national security than is excessive disclosure.
Competition For Thee and Not for Me
As part of his initiative to make state government more efficient, New Jersey Governor, and former chief of Goldman Sachs, John Corzine is is looking to mandate competition for almost all goods and services that are purchases.
But, there is one exception, municipal bonds….You know, where companies like Goldman Sachs make an awful lot of money managing the sales of these instruments, and competitive bidding does save money:
Competitive bond offerings force banks to line up on an advertised day and submit the lowest interest-cost bid to win underwriting business. In a negotiated sale, states and cities decide in advance which banks will market the bonds. Underwriters have promoted the no-bid method, saying it allows them to get the best prices for issuers by tailoring the debt to specific types of investors.
Bid sales saved issuers 17 to 48 basis points, “on average and all else equal,” according to a study published in the Winter 2008 issue of the Municipal Finance Journal. A basis point is 0.01 percentage point. On $100 million of debt, the savings mean $1.7 million to $4.8 million less interest over the life of a 10-year bond.
I guess that his buddies at Goldman Sachs are suffering under the restrictions Obama has placed on executive compensation.
Rod Blagojevich Convicted By State Senate
So he has been removed from office, and Pat Quinn, the Lt. Governor, assumes his powers.
Good. Not only do we have cloture, but I don’t have to struggle with spelling “Blagojevich” any more.
Obama Considering Ditching Karzai
Not a bad idea, since Karzai and his people are about the only people on the face of the earth worse at governance than Bush and His Evil Minions™:
The Bush administration’s close ties to the corrupt and ineffective Karzai government kept it in power long past its expiration date. During his tesimony, Gates wouldn’t say corruption reached into the “highest” levels of the Afghan government when prodded by one senator, settling for a more political “high levels” of government.
Since the Afghan people view the government in Kabul as corrupt, our propping it up does us no favors. Which is one of the reasons why Obama’s choice for Afghanistan/Pakistan special envoy, Amb. Richard Holbrooke, is such welcome news. Speaking last year at CSIS, Holbrooke made it clear he views Karzai as part of the problem, not the solution. He said the U.S. must stop trying to bolster the Karzai government in Kabul, which he called “weak and corrupt,” and focus more on governance in the provinces. “I don’t believe you can have a strong unitary government running the country from Kabul, its going to be a loosely governed country.” There is little risk of Afghanistan fragmenting, like so many feared might happen in Iraq, he said, as Afghans do not have “separatist tendencies.”
Gee, you think?
FWIW, I do not think that this was malice on the part of Bush, just an unwillingness to admit error.
I’m beginning to think that the willingness to admit error is among the rarest, and most beneficial, traits in a politician.
Iraq Denies License to Blackwater
Iraq has notified the State Department of their decision, and the U.S. government will not renew their contract.
Hopefully, this is the start of a more general withdrawal of the use mercenary forces by the U.S. government.
Of course the problem is not limited to combat contractors (mercenaries), it’s also increasingly obvious that the explosion of contractors throughout the bureaucracy has created an explosion of fraud, waste, and abuse.
DNI Would Minimize Contractors
Adm. Dennis Blair, the nominee for Director of National Intelligence, told the Senate Select Committee on Intelligence that, “one of his first duties if confirmed will be to transfer to federal employees any ‘inherently governmental’ work being done by contractors:
Blair said the government should rely on contract interrogators only in special circumstances, such as when a suspect speaks an obscure dialect.
“My strong preference is that interrogators in the intelligence world be a professional cadre of the best interrogators in the business,” Blair told the Senate Select Committee on Intelligence during his nomination hearing.
Committee chairwoman Sen. Dianne Feinstein, D-Calif., said she supported Blair’s call to reduce the intelligence community’s reliance on contractors. She referred to a 2007 Office of the Director of National Intelligence study that found that 27 percent of the intelligence work force is comprised of contractors, and an individual contractor costs the government $80,000 more on average than a career employee.
“I find this unacceptable,” Feinstein said. “Hiring contractors to interrogate detainees and contract psychologists to evaluate [them] is just the wrong thing for the government to do.”
Now if only we can apply this to the rest of the government, particularly the DoD.
CBO Estimate for This Year’s Deficit
The Post-Soviet Politicians are Dancing to a Non-Existent Tune
I used to think that John Paul II’s jihad against the church working for the poor, going so far as to expel priests who were causing right wing despots grief, which pretty much repudiated 1800 years of church history was an anomaly.
JP2 clearly hated the Soviets, he hated communism, and it left him with an antipathy to anti-poverty action by the Roman Catholic Church.
I had kind of hoped that other folks who objected to the excesses of Communism, and those excesses are legion, had found perspective if they had remained in leadership positions.
Now, in the middle of the greatest economic crisis in 3 generations, we are seeing leaders who grew up in former communist nations trying to turn to Hoovernomics, because they have a visceral revulsion to anything that remotely looks like economic management by the state.
It doesn’t matter if the most successful model in fixing this has been the Swedish model, state capitalization and take over followed by sale when the conference is over, it’s just too pink for them.
In the first case, we have Czech President Vaclav Klaus, who appears to be trying his level best to destroy any coherent EU response to the economic crisis:
Klaus, an admirer of Milton Friedman and Margaret Thatcher, says “excessive state intervention” and “irresponsible increases of state expenditures” are behind the global financial crisis, according to an October commentary he wrote for Mlada Fronta Dnes newspaper.
Hoovernomics as driven by what are now archaic anti-Soviet and anti-Communists.
And let us not forget Angela Merkel, who is content to (mis)manage the largest economy in the EU, and also continues to go the Hoovernomics route:
With battle lines sharpening, the German government appears determined to resist calls to spend an additional €40 billion to fight its way out of the recession, according to officials attending a meeting in the Chancellery in the past week.
It appears that in the case of Merkel, there has been extensive lobbying from what amounts to the German Chamber of Commerce to lower taxes, but that is were she wanted to be in the first place, until other EU members dope slapped some sense into her.
I’m wondering how true this is of a generation that lived through a revolution.
If the US founding fathers were the exception, we were very, very lucky.
More State Budget Worries
This time, it’s significant declines in state lottery revenues.
Any state with a balanced budget amendment will see things get much worse, and the handful of states without that need to act like it. (Washington State comes to mind)