Recently in It's The Spending, Stupid! Category

Every story we hear coming out of the once Golden State gives us more insight into the coming collapse of California. What's worse is the state government, including the legislature and the governor, is doing everything it can to hasten the process. How is it that it can't see the very actions it's been taking are only making things worse while those it chooses to ignore are the ones needed to set things back on the path to prosperity?

As more than one pundit has stated, California does not have a revenue problem but a spending problem. Even the once-and-again governor Jerry Brown knows the state is in a deep fiscal crisis, but his solution is raise taxes again. This after the last tax increase failed to raise the projected revenues, leaving the state with a $16 billion budget deficit. Whether he and the rest of the tax-and-spend Democrats realize it or not, they're on the wrong side of the Laffer Curve, meaning even if they continue to raise taxes, revenues will be well below projections. At this point the taxes have become punitive and outright confiscatory, punishing financial success. Once you start doing that people either stop trying or they leave. In the case of California, it's both. And it's not just those providing jobs who are packing up and leaving, so are many of the workers, including illegal immigrants. The net population change has shown more than 4 million more people have left California than have entered over the past 10 years. And this figure does not include the illegal immigrants, many whom are heading back home because there's no work to be had in the economic wasteland that is California.

Other states have been struggling with economic crises, including New Jersey. It is here where we see the difference in approaches taken to solve fiscal problems. Governor Chris Christie dove head first into the problem, understanding New Jersey's fiscal crisis was due to runaway government spending at all levels and overreaching public employee union demands. He went after both and managed to cut spending and dial back a lot of the union benefits that were unsustainable, particularly during this ongoing recession. As the piece linked above stated, "More states are realizing that the road to fiscal hell is paved with progressive intentions." Christie gets it. Brown does not.

There was also another thing Christie did that Brown did not: Canceled a multi-billion dollar commuter rail project between New Jersey and New York City that his state could not afford. He knew it for the money-wasting boondoggle it was and wanted nothing to do with it. Brown on the other hand, caved in to federal demands and decided to go ahead with a high-speed rail project that is doomed to fail before the first rail tie is laid down, committing California to billions upon billions of taxpayer dollars it doesn't have for a project no one (except the watermelon environmentalists) wants or needs. What use is a high-speed train to nowhere? (The initial stretches will be built out in economically depressed and less urban and suburban areas. Why would they need such a train when the only place it will take them is to another economically depressed area?)

Need more proof California is heading to an inevitable financial meltdown? Then look at the local level where municipalities are struggling to meet unrealistic demands from their public employees and the state. Here's an example:

A mere handful of people are left to hear the San Jose city manager offer the latest bleak financial news: the state of California was clawing back tens of millions of dollars more, and "140 employees have been separated from the city." (New times call for new euphemisms.) A pollster presents his finding that, no matter how the question is phrased, the citizens of San Jose are unlikely to approve any ballot measure that raises taxes. A numbers guy gets to his feet and explains that the investment returns in the city's pension plan are not likely to be anything near as high as was assumed. In addition to there not being enough money in this particular pot to begin with, the pot is failing to expand as fast as everyone had hoped, and so the gap between what the city's employees are entitled to and what will exist is even greater than previously imagined. The council then votes to postpone, for six weeks, a vote on whether to declare the city's budget a "public emergency," and thus to give to the mayor, Chuck Reed, new powers.

The relationship between the people and their money in California is such that you can pluck almost any city at random and enter a crisis. San Jose has the highest per capita income of any city in the United States, after New York. It has the highest credit rating of any city in California with a population over 250,000. It is one of the few cities in America with a triple-A rating from Moody's and Standard & Poor's, but only because its bondholders have the power to compel the city to levy a tax on property owners to pay off the bonds. The city itself is not all that far from being bankrupt.

--snip--

[Mayor Chuck Reed is] a Democrat, but at this point it doesn't much matter which party he belongs to, or what his ideological leanings are, or for that matter how popular he is with the people of San Jose. He's got a problem so big that it overwhelms ordinary politics: the city owes so much more money to its employees than it can afford to pay that it could cut its debts in half and still wind up broke. "I did a calculation of cost per public employee," he says as we settle in. "We're not as bad as Greece, I don't think."

We're not as bad as Greece. Not exactly an overwhelming vote of confidence from the mayor, is it? San Jose isn't the only municipality facing the same kind of crisis. It is, unfortunately, an all too common problem across the state.

Stockton is on the verge of bankruptcy. Vallejo's government is all but shut down after that city's bankruptcy in 2008, with police and fire departments gutted, a relocated city hall with few staff, and a general feeling of hopelessness.

Eighty percent of the city's budget--and the lion's share of the claims that had thrown it into bankruptcy--were wrapped up in the pay and benefits of public-safety workers. Relations between the police and the firefighters, on the one hand, and the citizens, on the other, were at historic lows. The public-safety workers thought that the city was out to screw them on their contracts; the citizenry thought that the public-safety workers were using fear as a tool to extort money from them.

Since the bankruptcy, the police and fire departments have been cut in half; some number of the citizens who came to [city manager] Phil Batchelor's office did so to say they no longer felt safe in their own homes. All other city services had been reduced effectively to zero. "Do you know that some cities actually pave their streets?" says Batchelor. "That's not here."

Is this is what is in store for other cities and towns in California? Yes, unless things change and the public employee unions either give up their over-the-top compensation (which has put municipalities into these dire fiscal straits) or are broken or decertified. Otherwise California has no chance at all.

Frank Luntz of the Washington Post has an interesting piece dealing with the 5 Myths About Conservative Voters. Luntz attempts to address those myths that Democrats believe about conservative voters.

For the most part I agree with his points, but at times he gets a little mushy as if he doesn't want to offend the sensibilities of his liberal readers. On his very first "busted" myth he doesn't quite make the connection between what conservatives want in regards to government and what it means.

Conservatives care most about the size of government.

Today, conservatives don't want a reduced government so much as one that works better and wastes less.

In a poll we completed among self-identified conservatives just before the 2010 elections,"efficient" and "effective" government clearly beat "less" and "smaller" government. For conservatives, this debate is less about size than about results, along with a demand that elected officials demonstrate accountability and respect for the taxpayer, regardless of whether they're spending $1 million or $1 trillion.

--snip--

It used to be that conservatives supported smaller government on theoretical grounds: The bigger the government, the smaller the citizen; government should only do for people what they truly cannot do for themselves; government isn't the solution, it is the problem.

I think Luntz missed the point. A government that works better and wastes less will be smaller. There won't need to be nearly as much government (and attendant bureaucrats) in order for government to perform its functions. One begets the other.

We want smaller government because it costs less and is more efficient. If being more efficient and less costly creates a smaller government, so be it. Just so long as they stop wasting taxpayer dollars on things we neither need or want.

(H/T Maggie's Farm)

Received by way of a co-worker:

Just a note of reality that our liberal family and friends probably don't know or care to admit.

As a pilot I get e-mail notices from Air Traffic Control whenever there is a significant impact on airspace. The most common is when airspace is shut down due to a presidential visit.

I have never received so many as these past two years during which the current resident of the White House has made multiple trips weekly via Air Force One for campaign/fund raising stops all around the country. I most frequently get notices that impact NY and Boston. These trips involve multiple government aircraft to haul all the staff, security personnel, and accompanying entourage along with the presidential limo and numerous support vehicles - all on the taxpayer's dime. In other words, your dime and mine.

Burning literally tons of fossil-based jet fuel, it costs roughly $180,000 per hour to run Air Force One alone, not counting all the other support aircraft and vehicles. A separate giant C-5 cargo plane burning equal tonnage of fossil fuel always accompanies the presidential 747 to carry the limo and Secret Service vehicles. This doesn't even take into consideration the thousands of unreimbursed state, county, and local man hours and fuel costs for police cars, helicopters, buses, vans, delivery trucks, etc. expended on additional security, traffic and crowd control.

On just Thursday this week, both New York and Manchester/Nashua [New Hampshire] airspace will be shut down for presidential campaign stops. So, let's understand the actual financial statement here - political campaign fundraising (A) going to the president's reelection (B) and party war chest (C) - not the federal treasury (D) or local budgets (E) - is being funded from the federal treasury (D) and local budgets (E). Does anybody here see the obvious disconnect?

So if we're going to talk about deficit reduction and carbon footprints, let's get serious here.

When both George H.W Bush and George W. Bush were in office they would visit the family vacation home in Kennebunkport, Maine, just a hop, skip, and a jump from the former Pease Air Force Base (now a commercial airport and an Air National Guard airfield) in New Hampshire. There was little disruption of commercial and general aviation traffic and security was easier as there was still a military presence at the field and at the nearby Portsmouth Naval Shipyard. I have a feeling the Bushes were far more cognizant of the inconveniences and the cost their presence caused and worked to keep it to a minimum. Not so with the present occupant of the White House.

I've covered the decline of Detroit more than once, covering the various reasons for its precipitous fall from grace.

It's decline continues as the Democrat policymakers continue their experiment to create a socialist utopia. Too bad it's been failing and in such a spectacular fashion that it's impossible to hide. No amount of dissembling and sleight-of-hand can point observers away from the obvious: Detroit is dying and it's the fault of the Progressives who have been running the city for decades.

They have implemented just about every socialist program, regressive 'redistributionist" tax, and punitive business regulation on their wish list upon the city and its residents and the results are clear to see: Detroit has gone from the richest city in the US (per capita) to the second poorest. (Only Cleveland beat them out for that honor.) Detroit can stand as an example of what the rest of the nation will look like if Obama and the rest of the Progressives get their way. The socialist experiment has failed and no amount of window dressing can change that, no matter how hard the MSM tries.

One of the most difficult concepts that many people have problems understanding is that of diminishing returns. This applies to many different areas in our lives and in our society. I don't know whether it's a lack of education, a failure in their upbringing, or something inherently lacking in the people themselves. Perhaps it's a little of all three.

Going hand in hand with this concept is one that has many of the same roots - perceived risk - something that has driven some folks into action to get the government to "Do Something!" about something that is a minor issue at best.

In case you're wondering, however briefly, how this particular subject came up, it was during a discussion at work about this post from FuturePundit dealing with the declining return on investment from electrical power efficiency.

My employer is always looking for ways to reduce our energy usage, something that appeals to the frugal Yankee in me. Over the past five or six years a number of measures have been taken to reduce our electrical usage, including the use of more efficient lighting at all levels, timers on our existing electric water heaters to shut them off when no one is in the building, on-demand water heaters replacing the older tank-type water heaters as they wear out, more energy efficient refrigerators (used for both food and for storage of certain manufacturing substances...though not in the same refrigerator!), and motion sensors to shut off lights in rooms when no one is in them, just to name a few of the improvements undertaken. All of this has helped reduce our electricity usage by over 20% as compared to 6 years ago. Will further investment reduce our electrical usage any more than it has? Sure it will, but (and it's a big 'but') we won't see anywhere near the savings we already have unless we spend a lot more money than has already been spent. We have reached the point of diminishing return. We'd need to spend many times more than we already have in order to achieve a small fraction of the savings already made. From a financial point of view the return on investment makes no sense, meaning further investment in this effort will not result in energy savings equal to what was spent to achieve them. Or put more simply, we'll spend more than we'll save. It's not worth it.

OK, back to the subject at hand.

We've seen more than a few times where some project has reached its original goals, whether it's a cleanup of some Superfund site or the closing of a municipal landfill. Ninety-nine point nine percent of the contaminants were cleaned up or the landfill might leak 0.001% of the liquids or decomposition products from the landfill. But for some folks that isn't good enough. They want 100%. Never mind that achieving that last little bit will cost as much, if not more, than what has already spent. Never mind that it will likely be the taxpayers footing the bill. Never mind that in the end it won't make one bit of difference. The project has blown past the point of diminishing returns and spending any additional money won't help...other than to make the folks bitching about it feel better. (It would be cheaper to give them some mood-elevating drugs to do that than wasting taxpayer dollars to 'fix' the last little iota of the problem.)

We see this lack of understanding about diminishing returns in all kinds of places and situations. It is also where the problem with perceived risk comes into play.

One of the biggest disservices ever perpetrated upon the public is the notion that life should be totally risk free. This meme started some time in the 1960's. (Yes, I know drives to improve safety started long before that, but the 100% risk free crap started in the late 60's/early 70's.) There's nothing wrong with reducing risk. But to think life can be made 100% risk free is ludicrous. It can't be done. But that doesn't stop people from trying to do so anyways. I wouldn't mind that so much if those same people understood the difference between real risk and perceived risk. The problem is that they don't and because of that lack of understanding money is wasted on slight risks while major risks are ignored.

An example:

Which entails more risk to life and limb: Driving a car or flying on a commercial airliner?

The answer is, of course, driving a car. (There were over 32,885 traffic fatalities in 2010, with many times that number of injuries. As an aside, that number is the lowest number of fatalities since 1949 despite more miles being traveled then ever before, giving us the lowest fatality rate ever.) But people perceive flying as more dangerous. Yet how many fatalities have there been in the US due to commercial airliner crashes over the past few years? None. A person is far more like to be injured or killed driving to or from the airport than they are by flying on a commercial airliner, but they're more afraid of dying in a plane crash. It's all perception, not reality.

Let's try another:

One person lives near a nuclear power plant. Another lives near a coal-fired power plant. Which one is at a higher risk of cancer, injury, or death?

The answer is the person living near the coal-fired plant. The effluvia from the smokestack and any runoff from the ash pile are a far greater hazard than anything coming from the nuclear plant under normal circumstances. Yet people perceive the nuclear power plant will cause them to get cancer and other illnesses. Even after the Three Mile Island accident there were no increases in cancer or other radiation related illnesses. (Some initial studies stated there were, but review of those studies by the CDC found some creative editing of the health statistics to 'prove' the case. Once all the raw data was reanalyzed those alleged increases in cancer cases disappeared.)

Over the years it seems to me the the perceived risks have received far more attention (and money) than actual risks. Efforts will be made to reduce risks that have little actual impact, but large risks will be ignored.

For instance, the NHTSA wants to ban the use of cell phones and other electronic devices by drivers of cars and trucks. All kinds of efforts are being made to codify that ban in to law across the nation despite the fact that the actual percentage of accidents caused by these distracting gizmos is unknown. The perception is that these devices are leaving a swath of death and destruction along the highways and byways of the nation to rival those caused by drunk driving. The NHTSA reports that 3092 traffic deaths were caused by distracted driving in 2010. That's one out of every eleven fatalities. How many of those were due to cell phone use or texting? The NHTSA doesn't actually say, though the article linked implies all of them were (but there was no actual number cited). The implication is that this is a major risk and that the government must "Do Something!' even though the actual risk is quite small.

But will the government spend a dime on something like removing homes from flood plains or barrier islands, obviating the need to constantly pay out to rebuild them again and again after they are destroyed? (Disclaimer: The gubmint did do that after the Mississippi River floods in 1993, relocating a number of towns to higher ground because it was cheaper to do so rather than paying out the flood insurance claims again and again and again and again, ad infinitum.)

Or will money be spent on things like crumbling roads and bridges, things that endanger us all? We must remember incidents like the Mianus River Bridge collapse on I-95 in Connecticut, the I-35 bridge collapse in Minneapolis, or the Nimitz Freeway collapse during the Loma Prieta earthquake in 1989 , all of which killed and injured motorists. (The Nimitz Freeway collapse occurred because necessary upgrades to the highway support pylons were postponed.) How many other others are out there waiting to happen because we haven't spent the necessary funds to reduce a very real risk? Maybe this is due to the opposite of perceived risk, where people see no risk and therefore think nothing needs to be done, yet the risk exists and is higher than many of the perceived risks people waste time and money dealing with. How much did these real incidents cost compared to what it would have cost to fix the problems in the first place? Do I really need to answer that?

The people need to learn how to discriminate between real risk and perceived risk, and to understand the relationship to diminishing returns. Otherwise we will continue to ignore real risks and waste ever more money on things that are minimal risks at best.

I got a bit of sticker shock today when I pulled up to the gas pump at our local BJ's Discount Club.

The Thursday before Christmas regular was $3.079 per gallon. Today, just a day shy of two weeks later, it was $3.229, an increase of 15¢. Asking around it turns out the price went up just yesterday by 7¢. Other prices around the area had jumped as high as $3.279.

It made me wonder why, considering oil prices haven't gone up nearly enough to generate that much of a price increase. Heating oil prices haven't increased as they would have had there been a crude oil price increase. Then I remembered: no more subsidies for the ethanol used in gasoline.

Gee, it didn't take long for that little gem to work its way through the supply chain, did it? Of course if it were the reverse, with subsidies starting, we wouldn't see a price drop at all, would we?

UPDATE 1/5/12: I drove by the same gas station today and the price had gone up an additional 7¢ to $3.299.

Don Surber gives us a list of the Ten Things Obama Got Wrong, though I think he could have easily gone well past ten to fifty or a hundred.

A few of my favorites:

2. He got Obamacare wrong. Along those lines, President Obama saw how Hillarycare went and decided to do the opposite. Or likely more accurately, the president heard that Hillary lost on health care because it was written in the White House. He decided he would do it differently and have it written by Congress. This was a formula for failure because he lost control of the bill. This meant he was putting his name and reputation on the line for something he never wrote. And what was written was a mess.

Don acts as if this were unusual for the Presdient, but it's not. Most of the programs and ideas and other acts he should have handled himself he handed off to his czars or Pelosi & Reid. In effect, he phoned it in, voting 'present' when his position doesn't really allow him to do that. Then again, that's how he's handled things most of his adult life. Why change now?

3. He got the economy wrong. He overestimated its strength and went full-speed ahead with spending. Budgets for agencies were doubled as liberals wanted to have a field day regulating everything. But tax revenues tanked. That $400 billion deficit he campaigned against tripled. Guess what? The public noticed. So did S&P. He is now President Downgrade.

No argument there. But then he has no real understanding of how an economy works, only how it's supposed to work according to Leftist ideology. Too bad for him the economy itself shows just how wrong Leftist economics can be. Not that I expect him to learn that lesson as he's not exactly known for being open minded, particularly when it come to anything that conflicts with his beliefs.

4. He got the stimulus wrong. The $787 billion stimulus was a grab bag of political kickbacks papered over with an unnecessary, ineffective and ill-advised tax cut. The unemployment rate would have gone to 9% if we do nothing, he said. We did something and it hit 10%. Again, people noticed.

If every penny of that stimulus had been spent on upgrading or repairing infrastructure, then it's possible the economy could have been turned around. (I still have doubts about that, but I'm willing to admit I could be wrong.) But of all that money, only $55 billion was spent on infrastructure. That's just under 7% of the total stimulus. Seven percent. Where did the rest go? To cronies and supporters who had more to do with creating this lengthy on-going recession than helping us get out of it.

One last one:

10. He got TV wrong. It's called overexposure.

I think just about everyone is sick and tired of seeing him read from his teleprompter, particularly since he's not really saying anything new. It doesn't help that he's now been on the presidential campaign trail for 4 years since he really doesn't know how to do anything else.

It seems yet another EU country is reconsidering its reliance upon the euro. This time around, it's France.

Not that France's economy was all that great before they switched from the franc to the euro. The issues with the euro has merely made it worse.

The French have growing reservations about the euro: 36% want to withdraw from the eurozone and go back to the franc, the old national currency; 4% have no opinion, which means that they don't warmly support the single European currency; 44% say it is a handicap in the present context of a world economic crisis; 45% say it doesn't serve the national interests of France; and a staggering 62% say it is damaging the average French family's standards of living and purchasing power.

With the economies of Portugal, Ireland, Italy, Greece, and Spain teetering on the edge due to steep sovereign debt with little means of paying it off. These nations are depending upon the rest of the EU and the IMF to bail them out even though some of them haven't managed to trim their government spending to sustainable levels. A bailout will only delay the inevitable, not prevent it.

I saw this ad on TV for the first time the other night. It's to the point and describes our fiscal problems in language even Congress and Obama can understand.


Our government is addicted to spending money we don't have, the same disease that has been such a big affliction in the EU.

It is said the truly smart will learn from the harsh lessons of others' failures. I can say that one member of the WP clan is that smart, that being the youngest of the WP sisters. (As she says, she made her own mistakes while growing up that our parents never found out about.)

It would be great if the political class presently ruling the US was as smart as my youngest sister. Unfortunately they are not.

They see the economic meltdown occurring in the Euro-zone, yet refuse to learn the lessons countries like Portugal, Ireland, Italy, Greece, and Spain are teaching us, the primary one being that eventually you will run out of other people's money to fund all the wonderful social programs that have been used to bribe the electorate.

Italy is the latest to teeter on the brink of insolvency, and should it go over the edge it is quite likely it will pull the rest of the Euro-zone with it. Greece's default damaged the European economy yet it has only a fraction of the GDP of Italy. Should Italy default Europe will take an additional $2 trillion hit it cannot afford. Is it any wonder Germany is considering abandoning the Euro and going back to the mark? Can anyone deny that this problem has been driving the British public to demand a referendum about whether or not to remain in the EU? At least those two countries see the problem and realize they'll have to bankrupt themselves in a doomed effort to prop up economic policies from Brussels.

But too many of our own politicians at the state and federal level, regardless of party, seem oblivious to the fact that unless we make some drastic changes in how our federal government taxes and spends we will be headed down the same path. Labor leaders ignore the fact that neither businesses or taxpayers are a bottomless source of funds, shortchanging their own members by making promises no one can keep.

Should the US fail to put its financial/economic house in order, and right quick, it will pull the world economy down with it into a depression unlike any we've seen before.

Many reasons have been put forward to explain California's expanding fiscal disaster. Many have pointed to the California Assembly, a string of spendthrift governors, mandated spending due to voter initiatives, public employee unions, and, believe it or not, air pollution. But it all boils down to hubris.

But one of the biggest reasons has to be the the exploding and unsustainable level of spending at the local level, where safety services (police and fire departments) and the educational systems took up bigger and bigger portions of town and city budgets, particularly when it came to entitlements like pensions. It finally reached a breaking point when the national and state economies went into deep recession and tax revenues turned from a torrent to a trickle.

From 2002 to 2008, the states had piled up debts right alongside their citizens': their level of indebtedness, as a group, had almost doubled, and state spending had grown by two-thirds. In that time they had also systematically underfunded their pension plans and other future liabilities by a total of nearly $1.5 trillion. In response, perhaps, the pension money that they had set aside was invested in ever riskier assets. In 1980 only 23 percent of state pension money had been invested in the stock market; by 2008 the number had risen to 60 percent. To top it off, these pension funds were pretty much all assuming they could earn 8 percent on the money they had to invest, at a time when the Federal Reserve was promising to keep interest rates at zero. Toss in underfunded health-care plans, a reduction in federal dollars available to the states, and the depression in tax revenues caused by a soft economy, and you were looking at multi-trillion-dollar holes that could be dealt with in only one of two ways: massive cutbacks in public services or a default--or both. Whitney thought default unlikely, at least at the state level, because the state could bleed the cities of money to pay off its bonds. The cities were where the pain would be felt most intensely. "The scary thing about state treasurers," she said, "is that they don't know the financial situation in their own municipalities."

So demands from the state also added to the economic troubles facing the municipalities at a time when they had no spare funds to expend, adding an even greater burden on them and on the taxpayers supporting them. Another issue that hurt was the collapse of housing prices, meaning property tax revenues would oscillating, but with a downward trend, as tax rates fell behind the change in property values. Some property owners just stopped paying their taxes as they had no means of paying them or their mortgages as they saw their jobs disappear, and with them, their incomes. It was a "perfect storm" of economic problems that drove the municipalities and the state towards the fiscal brink. In California it was even worse because it is so dependent upon income taxes, one of the most volatile of taxes. Very high sales taxes also added to the burden, driving many people to cut back on their discretionary spending in an effort to keep their families clothed, housed, and fed. Revenues plunged even farther.

But California, at all levels, didn't seem to be willing or able to do the one thing that might have helped make ends meet - cut spending. We certainly haven't seen it at the state level, with the California Assembly making a lot of noise about cutting spending, but increasing it and a number of taxes at a time when neither will solve the problem.

And so the path to fiscal destruction is becoming steeper and the juggernaut that is default is picking up momentum. It seems such an unfitting end to a state that once held so much promise.

I sacrificed otherwise useful time and watched the President's speech to a joint session of Congress. Did I hear anything unexpected? Not really, except for...

"...pass this bill right away."

Claims that everything in his plan would be paid for rang hollow, particularly when he explained where the money would come from: thin air. The so-called "savings" from the debt-reduction boondoggle, really a reduction in the amount of money the government was going to spend that it didn't have, can in no way be considered as a means of paying for the American Jobs Act.

Unfortunately his speech sounded more like a campaign speech than a policy speech, slamming Congressional Republicans for being obstructionist. I think I would be obstructionist too if I knew the 'plan' the President has put forward won't work and will cost too much. (I think Obama defines 'obstructionist' as Republicans who won't do what he tells them to do.)

One thing that clued me in that Obama really doesn't understand why businesses hire was his plan to reduce taxes on small businesses, one cut mentioned being payroll taxes paid by employers, citing the tax reductions as a means to induce businesses to hire more employees. But businesses don't hire employees to get a tax break that won't cover the cost of hiring. Businesses hire when they need more people to meet increased demand for goods or services, period.

While I agreed with him that our infrastructure needs a serious overhaul, I believe it's too little too late. Stimulus 1.0 should have put almost all $878 billion towards infrastructure improvements, not the measly $55 billion actually spent on it. Stimulus 2.0 will be throwing more money we don't have after the original money we didn't have and I think it will have an even smaller effect, except for expanding the deficit.

On more than one occasion he made mention of fairness and fair play. Unfortunately I think his definition of those terms is far different from just about everyone else's. It has nothing to do with equal opportunity and everything to do with equal outcome. Unfortunately he will get his equal outcome if he gets his way, all of it bad.

I think it's about time I start drinking heavily....

Listening to the plans President Obama has made to address the jobs problem, it is no surprise to anyone that he really doesn't have a plan, or at least not a new one.

If his $878 billion stimulus program had been used to actually address a number of problems within the country, those primarily being our crumbling infrastructure, rather than using it for political patronage, we might not have as much of an economic problem as we presently face. But far too many of us knew very little of that money would be used to stimulate anything but the growth of the federal government.

Will Obama's September 8^th speech try to make a case for spending even more money we don't have to pay for more political patronage? If history is any indication, then the answer is likely yes.

What the president really needs to do (but won't) is to rein in his renegade agency heads (NLRB or EPA, anyone?) who are making sure it's damn difficult for anyone to create jobs...except for government jobs.

What the president needs to do is to get the government out of the way of free enterprise to let it do what it does best - create jobs.

What the president needs to do is fire all his czars and advisers because, quite frankly, they have no idea what they're doing. Most of them are academics with little, if any, real world experience doing things like running businesses or meeting payrolls or dealing with an ever increasing avalanche of government regulations and paperwork that does nothing but cost time and money to deal with yet add little of benefit to anyone except bureaucrats.

What the president needs to do is realize that one of his predecessors, Ronald Reagan, was right when he said to America "Government isn't the solution. Government is the problem."

What the president needs to understand that no one in government, and I mean no one is either smart enough or wise enough to run the American peoples' lives. After all, everyone in government is having a hard enough time running their own lives, let alone those of 300,000,000 other people in this country. Every government that has tried to do so has ultimately failed, resulting in widespread misery. Quite often those governments end with fatal results for members of those governments.

What the president needs to understand that no one in government, and I mean no one, is either smart enough or wise enough to run the American economy. History is littered with plenty of examples to show this is true. Unfortunately the president and many in Congress have ignored this truth, figuring that this time they'll get it right. (They won't.)

All I expect from the president during his speech is more of the same old crap he's taken from the FDR, LBJ, and Karl Marx playbooks, just put in new wrappings and hyped by the Lame Stream Media.

In other words, "There's nothing to see here, folks. Move along!"

One of the things said about blogging is that bloggers shouldn't apologize for not blogging. Normally I would agree with that, but not this time.

It isn't that I haven't had anything to write about (quite the contrary). It isn't that I've lost interest (I haven't). It's merely that life has intruded, leaving me with far less time to write anything worthwhile.

Over the past couple of weeks or so I have been getting home late, usually from some kind of meeting of a town committee or board, though once because I had to make an unexpected trip to the WP In-Laws to pick up BeezleBub and we didn't get back until 10:30PM. At that point I was just too darned tired to do anything but go to bed.

It's been these little things that have contributed to my lack of posting anything inciteful, witty, or outright offensive (at least offensive to the Left). I've resorted to borrowing heavily from humorous e-mails or Facebook postings to make sure this blog stays active. I'm going to have to do that one more time as I had yet another late evening. But at least this is educational in that it makes our nations' fiscal problem a little easier to understand.

Received via e-mail:

Federal Budget 101

The U.S. Congress sets a federal budget every year in the trillions of dollars. Few people know how much money that is so we created a breakdown of federal spending in simple terms. Let's put the 2011 federal budget into perspective:

U.S. income: $2,170,000,000,000

Federal budget: $3,820,000,000,000

New debt: $ 1,650,000,000,000

National debt: $14,271,000,000,000

Recent budget cut: $ 38,500,000,000 (about 1 percent of the budget)

It helps to think about these numbers in terms that we can relate to. Let's remove eight zeros from these numbers and pretend this is the household budget for the fictitious Jones family.

Total annual income for the Jones family: $21,700

Amount of money the Jones family spent: $38,200  

Amount of new debt added to the credit card: $16,500  

Outstanding balance on the credit card: $142,710

Amount cut from the budget: $385

So in effect last month Congress, or in this example the Jones family, sat down at the kitchen table and agreed to cut $385 from its annual budget. What family would cut $385 of spending in order to solve $16,500 in deficit spending? 

It is a start, although hardly a solution. 

Now after years of this, the Jones family has $142,710 of debt on its credit card (which is the equivalent of the national debt). 

You would think the Jones family would recognize and address this situation, but it does not. Neither does Congress. 

The root of the debt problem is that the voters typically do not send people to Congress to save money. They are sent there to bring home the bacon to their own home state. 

To effect budget change, we need to change the job description and give Congress new marching orders. 

It is awfully hard (but not impossible) to reverse course and tell the government to stop borrowing money from our children and spending it now. 

In effect, what we have is a reverse mortgage on the country. The problem is that the voters have become addicted to the money. Moreover, the American voters are still in the denial stage, and do not want to face the possibility of going into rehab. 

Yup. I'd say the above pretty much explains it in terms we can all understand.

The irony of this? I received this by way of the very liberal parent of a friend of mine. It's a shame she hasn't been able to integrate this little bit of education into her view.

This rant by a small business CEO tells it like it is, something the folks inside the Beltway no longer seem to understand. Do they really think "incentives" to hire will induce business to hire anyone? Businesses hire only when they need more people, not because the government provides some kind of lame incentive to do so.


If the government really wants to give businesses an incentive to hire, then maybe it should get the hell out of the way. Maybe government should stop sucking so much money out of the economy that there's less available to invest or to buy goods and services that create the demand for more jobs. Maybe rogue government agencies should be reined in before they do irreparable damage to the businesses that actually create the jobs.

After all the dire predictions 'they' made about what would happen if Congress didn't raise the debt limit, it turns out they were wrong.

The President got his debt limit increase, but the stock market and at least one financial institution - Standard & Poor's - apparently didn't see it as a solution, and rightfully so. The stock market headed downwards, wiping out a year's worth of gains. Standard & Poor's is still threatening to drop the government's credit rating from AAA to AA or AA+ because of the government's continuing spendthrift ways.

The increase in the debt limit didn't solve the problem we're facing. It merely delayed the inevitable. Former Arkansas Governor Mike Huckabee offered an analogy that illustrated the problem perfectly.

Raising the debt limit solves the government's spending problem like raising the maximum legal blood alcohol content will solve the drunk driving problem.

I'd say he nailed it.

Over the past year and a half I've listened to a large number of people disparaging the Tea party movement. Most of them have been card-carrying Democrats (or at least those with the belief they know how to spend my money better than I do). Others have been RINOs or part of the so-called "Establishment" Republicans.

The Tea party has been excoriated in the press, with the New York Times, the Washington Post, and a number of other media organs of the Left leading the way. Washington politicians and other Beltway insiders have derided the Tea party as "hobbits", "terrorists", "Nazis", "racists", "jack-booted thugs", and a whole host of other derogatory labels.

As the volume of hateful rhetoric aimed at the Tea party and its supporters has increased, it has made me and others realize that the groups making these accusations must be really getting nervous. As one commenter to this piece wrote, "If you're getting a lot of [flak], you must be over the target." And so it must be as the Tea party gains supporters throughout the country at a local, state, and national level because they're tired of being ignored by the Coastal elite and the Beltway intellectuals.

My most memorable run in with an unabashed Tea party hater took place at our business when one of our customers went on a rant about "those goddamn Tea partiers wanting to take everything away from us!" There was no way I could not respond, so I asked her where she'd gotten that idea. Apparently she'd read it in the paper, in this case the Boston Globe. (One must remember, the Globe is owned by the NYT and has the same editorial policies as its parent corporation.) I calmly informed her that if her opinion was based solely on what she'd read in the Globe, then she'd been misinformed and lied to. She saw the Tea party as a bunch of religious fundamentalists bent on depriving the poor, doing away with Social Security and Medicare, and undoing decades of civil rights advances. I had to remind her that many of the civil rights advances came from the GOP, not her sainted Democrats. I reminded her the KKK were primarily Southern Democrats, not Republicans. I reminded her it was the Democrats who started us down this path of unsustainable spending going all the way back to FDR. I reminded her that it was LBJ who decided his Great Society was the answer to all of our society's problems, that it had failed miserably, and that it was funded by stealing from the Social Security trust fund.. I reminder her it was the Democrat majorities in Congress going back to 2007 that multiplied the annual deficits to many times that of all of Dubya's deficits combined.

I gave her the URL for the Contract From America website which explains the Tea party platform, none of which deals with social issues she claims the Tea party is involved with. She wasn't interested. Instead she chose willful ignorance and adherence to libelous propaganda from those who do not have her best interests at heart.

Maybe she will care when the country is unable to pay its bills and all of the government support she is 'owed' ends because there's no money left to pay for it all. Maybe she will care when all "the rich" she's constantly complaining about are either driven into bankruptcy or flee with their wealth to friendly climes and no one is left to pay for everything she is owed.

But I'm not holding my breath.

UPDATE:It appears Senator John Kerry has decided to add fuel to the fire by expressing his opinion that the media should not give equal time to those "absolutely absurd notions" voiced by the Tea Party because their opinions "are not factual."

What a putz.

The pols in Washington are still going at it hammer and thongs, and after weeks of debate and rhetoric they have been unable to come up with a workable compromise about the debt ceiling, out of control government spending, and a push to raise taxes.

But a group of five ordinary citizens were able to work out how to solve the problem in only an hour.


It seems to me we've been looking in the wrong place to find the answers needed to fix this problem. Some will claim their solutions are overly simplistic and overlook the nuances and complexities of the problem. But that is the problem. Those 'nuances and complexities' are what make it seem impossible to solve the problems. The folks in Washington tend to forget that no matter what they do, someone somewhere is going to be inconvenienced or hurt. The trick is that maybe we have to ignore that situation or any solution will be impossible. And then everyone will be hurt, possibly to a level not seen since the Great Depression. That is no solution.

What say you?

If we want to save billions of taxpayer dollars, stop the negative effects of government interfering with market forces, and let food prices seek their own level, then maybe it's time to get farmers off the federal dole.

While some may decry such an action as being against the interests of small family farms, those same folks speaking out against such cuts don't understand that it isn't the small family farms receiving the benefits of the government subsidies and tax breaks, but the large agribusiness corporations. They don't need those subsidies and shouldn't be receiving them because in the long run all they do is raise food prices (and the taxes keeping them there) to the detriment of everyone else, including the small farmers.

Government subsidies obviously aren't necessary for food production: people have fed themselves and traded their surpluses for thousands of years. The system doesn't help consumers. Reducing supplies and imposing price floors obviously are bad deals for the hungry. Paying off farmers might lower some prices, but steals back through taxes any benefits received by consumers. Agricultural subsidies are designed by farmers for farmers.

But which farmers? Not the idyllic family farmer. The majority of payments go to farms with average annual revenue exceeding $200,000 and net worth around $2 million.

Many of the subsidies date back to the Depression and the reasons for them no longer exist, but here we are seventy years later and we're still paying for them.

Before anyone gets on their high horse about saving the American farm, we should look at what happened when another country eliminated farm subsidies, in this case, New Zealand.

In 1984, New Zealand's Labor government ended all farm subsidies, which then consisted of 30 separate production payments and export incentives -- a striking action given that New Zealand was five times more dependent on farming than the U.S. economy.

A report from [2001] from the country's main farmers' group, the Federated Farmers of New Zealand, documents what happened:

While land prices initially fell after reform, by 1994 they had rebounded and remain high today.

The predicted farm bankruptcies never materialized -- with just 1 percent of farmers going out of business.

The value of farm output soared 40 percent in constant dollar terms since the mid-1980s and agriculture's share of national output rose from 14 percent to 17 percent today.

Since subsidies were removed, productivity in the sector has risen 6 percent annually -- compared with just 1 percent before reform.

New Zealand's farmers have competed successfully in world markets against subsidized producers in much of the rest of the world.

Can anyone successfully argue that we shouldn't do the same thing, and quite likely, see exactly the same results? Oh, I'm sure someone will try, particularly the folks from the "corporate farm" lobby. But maybe it's time we wean these folks off the government teat and let them succeed or fail on their own rather than allowing them to continue dipping into the taxpayer's wallets.

I must admit to being on the edge of Debt Crisis Fatigue after being bombarded by Obama, the Democrats, and the media for months on end about our impending doom if Congress doesn't pass an increase in the already outrageous debt limit.

I might not have nearly as much of a problem with Congress doing so if the Spender-In-Chief were willing to support spending cuts equal to the increase in the limit, but we all know there's no way he'll do that.

In truth, I don't like the idea of raising the debt limit even one penny. History shows us the promises made by Congress to cut spending if only the debt limit is raised have never been kept. All we've ever seen from such promises is more taxes and more spending. The promises made aren't any more real than the old "The check's in the mail" dodge, except that we're talking trillions of dollars, a number that doesn't seem to faze Obama or Congressional Democrats, but scares the bejeezus out of just about everyone else.

It's ironic, considering that many of the same people pushing for increasing the debt limit were vehemently against it the last time the issue came up. The difference this time around? Last time it was a Republican in the White House while this time it's a Democrat, and he's asking for an increase that is far greater than the last one.

Talk about a double standard.

If the President and his Democrat cronies won't control their insatiable appetite for running up the national credit card, particularly if they're not the ones who will have to pay the bill, then it's up to the GOP and the Tea Party to do it form them. Better it be done now than when it will be so painful that it brings the economy down even more than it already is. Obama and the Dems aren't willing to admit that the credit card company (that means us, folks) aren't willing to raise their credit limit until they pay off what they've already charged. Until then it will have to be as so many of we so-called "little people" do under these circumstances - pay cash, or do without.

The national credit card is maxed out and the issuers - We The People - are saying "Enough!"