Latest global warming scare: internet & power disruptions

Not satisfied with scaring you about oceans rising, glaciers melting, more powerful hurricanes, droughts, floods, famine, cats & dogs living together, the global warming cultists have more doom & gloom in store because of “climate change” – internet and power disruptions. Oh, the humanity! With all of the above soundly debunked (well, maybe not the dogs & cats living together thing), they needed something, anything, to really invoke fear. And what could be more fearsome than disruption of your internet connection? Crap – there goes my Facebook and Netflix! (story here from The Telegraph)

Already the transport sector is preparing for temperatures above 104F (40C) this summer, which could lead to breakdowns on the railways.

Speaking at Blackfriars Station in London, which Network Rail is currently fitting with solar panels and rainwater harvesting systems in order to be more resilient against power cuts, Ms Spelman said the UK is already investing £200 billion (US$287B) over the next five years.

But that will not be enough to stop economic impacts of climate change if it is invested in the wrong areas.

She warned of intense rainfall, droughts and heatwaves in the next 50 to 100 years because of man-made global warming. The signal from wi-fi cannot travel as far when temperatures increase. Heavy downfalls of rain also affect the ability of the device to capture a signal.

For a country like Britain, with a GDP of roughly $2T (compared to the US GDP of $14T), $287B is a big chunk of change to waste on global warming scares. In other words, we need to savage the economy so you don’t lose your WiFi connection. Algore approves, of course.

How long before this idiocy becomes the subject of a congressional investigation…

The Sticky Note campaign

Been to a gas station or grocery store lately? How’s that hopeNchange thing working out for ya? If you’re frustrated with high prices on just about everything, here’s a way to vent that frustration and get a message out (story here).

This time around, the Tea Party is taking action to draw attention to the fact that Barack Obama is gouging Americans by making sure gas prices are high by causing war in Libya, not opening Alaska to drilling and saving our national energy reserves to power Chinese tanks after China’s inevitable invasion of the U.S. We spoke with Chris Lotto, Arizona activist and co-creator of the “The ‘Hope and Change’ Sticky Note Campaign,” a movement that places anti-Obama sticky notes on gas pumps.

Last Saturday afternoon, Lotto, who lives in Phoenix, launched the Facebook call to “Purchase a pad of large sticky notes. Write on each one, “How’s that Hope & Change working out for you?” Every time you stop to fill your vehicle with gas, place your sticky note somewhere on the pump before you drive away. DO NOT be destructive in ANY way! Place your sticky note somewhere, so as not to impede the next customer’s ability to read the pump’s digital readout.”

By the end of this week, the page had over 8,000 fans who had sent out over 50,000 invites to join and dozens of pictures were rolling in of notes placed on gas pumps from Ohio to Wisconsin to Texas.

Hmmm. Sounds like fun. Here’s a related site for “Liberty Guerillas.”

Part of the charade employed by the existing Regime is to continue to make people believe that they are alone in their dissent and/or dissatisfaction with the ruling class. They need to isolate you and make you feel YOU are the outlier. A recent example is the derision lobbed at those who questioned Obama’s background and credentials.

This has been written about extensively in various professional military training manuals. It has also been the subject of many papers, dissecting the evolution of an underground movement that overthrew an entrenched Regime, where to outsiders, the “sudden collapse” of an oppressive regime catches them by surprise, when in fact, it was predictable all along.

The reason for the “sudden collapse” is that the group knowledge finally reached a tipping point, where the “dissenters” realize that they are the MAJORITY, not the minority as the Regime would have them believe.

Sticky notes, as advocated at gas pumps and on stores shelves, represent what is known as “Counter propaganda”.

It will be interesting to see if this gathers momentum and has any legs.

The sticking-political-messages-on-other-people’s-commodities tactic shows no sign of abating. It’s a long way to 2012, and the GOP proper has completely lost control of its constituency, so everyone should prepare for what’s probably going to be the most ugly election in recent history, and, with every free surface in the nation plastered with neon squares, I mean literally ugly.

We live in interesting times, folks…

After SC Tax vote, Amazon says UP YOURS!

Amazon.com is the largest and most successful on line marketplace with 33,700 employees and over $34B in revenue. One of the biggest reasons most people shop on the internet is the lack of sales tax on purchases – in most instances. Of course, state governments lament this “loss of revenue” and they have been looking hard at legislating this advantage away from internet merchants (more here). Amazon has been the obvious #1 target of the taxers and they have vowed to fight efforts to tax on-line purchases (more here).

One of the ways states can currently collect sales taxes from internet purchases is if the seller has a presence in the buyer’s state. For example, if you purchase an item from Amazon that comes from one of their affiliates and that affiliate has an outlet in your state, you pay the sales tax. One of the ways Amazon has fought this is to simply close their affiliate program in the states that enact on-line taxing legislation. According to this story Amazon has upped the ante with the state of South Carolina. After the legislature approved an internet tax, Amazon cancelled a project for a distribution center in Midlands. The plant is under construction and was anticipated to provide over 1200 jobs.

South Carolina lawmakers’ decision to deny a sales tax break for online retailer Amazon.com will cost Lexington County more than 1,200 jobs, but the effects could ripple across the state.

Some say the incentives were unfair to established brick-and-mortar retailers while others maintain the reneged deal will cause other industries to pause before bringing their business to South Carolina.

Amazon.com decided after the vote to cancel $52 million in procurement contracts and remove all job postings from its website for the Midlands plant, effectively saying goodbye to South Carolina.

Newly-elected republican governor Nikki Haley applauded the decision, saying that South Carolina wants to “level the playing field” for business. Ugh!

That did little to change Gov. Nikki Haley’s stance, and she applauded the House’s 71-47 decision in a visit to Charleston on Thursday.

‘When you come to South Carolina, we’re going to give you a fair competitive marketplace to do business, and we’re always going to take care of businesses that are in town,’ she said. ‘By allowing Amazon to get a tax break that we’re not giving to any other business in our state destroys what I am saying.’

Haley said retail is different from manufacturing because its jobs are subject to higher turnover and lower pay. ‘It is not a Boeing. It is not a BMW,’ she said during the Free Enterprise Foundation’s awards luncheon at The Citadel.

Amazon is not a Boeing or BMW so we don’t need their business? Those 1200 jobs are low-paying with high turnover – you know, the kind that Americans won’t do but Mexicans will. Great job, governor!

Spending cuts – how about this approach?

Thomas Sowell is a brilliant economist and social commentator. His commentary rarely contains invective and he generally presents a common sense, libertarian point of view. With all the talk (and no action) about spending cuts and getting the federal budget under control, Sowell presents a more rational approach. While his suggestions won’t eliminate the deficit, they present a path of least resistance to beginning the process that is so desperately needed. (more here)

My plan would start by cutting off all government transfer payments to billionaires. Many, if not most, people are probably unaware that the government is handing out the taxpayers’ money to billionaires. But agricultural subsidies go to a number of billionaires. Very little goes to the ordinary farmer.

Big corporations also get big bucks from the government, not only in agricultural subsidies but also in the name of “green” policies, in the name of “alternative energy” policies, and in the name of whatever else will rationalize shoveling the taxpayers’ money out the door to whomever the administration designates, for its own political reasons.

The usual political counter-attacks against spending cuts will not work against this new kind of spending cut approach. How many heart-rending stories can the media run about billionaires who have lost their handouts from the taxpayers? How many tears will be shed if General Motors gets dumped off the gravy train?

It would also be eye-opening to many people to discover how much government money is going into subsidizing all sorts of things that have nothing to do with helping “the poor” or protecting the public. This would include government-subsidized insurance for posh and pricey coastal resorts, located too dangerously close to the ocean for a private insurance company to risk insuring them.

This approach would not only circumvent the sob stories, it would also circumvent the ideological battles over whether to cut off money to Planned Parenthood or National Public Radio.

The money to be saved by cutting off agricultural subsidies to the wealthy and the big corporations is vastly greater than the money to be saved by cutting off Planned Parenthood or National Public Radio, much as they both deserve to be cut off.

And what about the 3rd rail programs like Social Security and Medicare? Most politicians have declared these “off the table” as far as discussions of budget cutting. But they can be modified as well.

Social Security and Medicare are supposed to be among the most difficult programs to cut without ruinous political consequences. However, it is not necessary to attack all the spending on these programs in order to make big savings.

Instead of attacking these programs as a whole, what is far more vulnerable is the compulsory aspect of these programs. If Medicare is so great, why is it necessary for the government to force people to be covered by Medicare as a precondition for receiving the money they paid into Social Security?

Many people with private health insurance would rather continue to rely on that, instead of being trapped in Medicare red tape. It is not a question of taking away Medicare but allowing people to opt out, saving the taxpayer from having to subsidize something that many people don’t want.

It is not a question of forcing people off Social Security either. But private retirement accounts can offer a better deal.

Even someone who retires when the stock market is down is almost certain to get a bigger pension from a decent mutual fund than from Social Security.

By giving young people the option, while continuing to honor commitments to retirees and those nearing retirement age, the sob story defense of runaway spending can be nipped in the bud.

Sounds simple. You have to wonder why no one is thinking in these terms.

Politician: Detroit “deserves” bailout or something

Detroit, home of the “Big 3″ US auto manufacturers (2 of which are on government life support), is the epitome of failed government social policies. Mired in political corruption (more here and here), with an abysmal school system (more here) and fleeing population, the city has become an economic and industrial wasteland (more here and here). While mayor Dave Bing deserves some credit for at least trying to turn things around, others in the city government believe that Detroit deserves a taxpayer bailout (story here from the Detroit News). Huh? WTF?

Councilwoman JoAnn Watson is reiterating her call for a government bailout of Detroit, saying the city that built the middle class deserves as much help as Wall Street or General Motors.Addressing the City Council today during Mayor Dave Bing’s budget presentation, Watson gave a spirited pitch for federal funds to help the city whose population declined 25 percent since 2000 to 713,777.

“We are worth it. We are worth at least as much as General Motors or Chrysler or the Wall Street bankers,” Watson said. “It was this city that built military vehicles for World War II. It was this city that (invented) the middle class and the five-day work week.

“We should not be in a position to be victims. We are victors. And we should demand respect.”

General Motors received $52 billion in government aid, while Chrysler received $12.5 billion, according to published reports. Mayor Dave Bing has traveled to Washington, D.C., repeatedly seeking more federal funds for Detroit.

Watson has floated the idea for years. The liberal magazine the Nation named Watson one of its 14 MVPs in 2009 for promoting a “multifacted Detroit Marshall Plan to revitalize her economically battered city.”

In the past, Watson has said the city deserves at least $1 billion.

Declared a “Model City” by the LBJ administration in the 1960′s, Detroit has received hundreds of millions in taxpayer funding. And now Detroit demands “respect.” How sad…

For a pictorial view of this disaster see these photo essays:

• The Ruins of Detroit
• Detroit vs Hiroshima 65 years later

Last minute deal averts government “shutdown” – FAIL

Congressional leaders and the regime cut a last minute deal to fund the federal government through the end of the fiscal year and avoid a government shutdown. With the democrats whining about “extreme” cuts, seniors being starved, and women being denied health care, the spineless republicans scaled back their budget cut proposals. Everyone involved has been patting themselves on the back claiming some sort of victory. BFD.

In a previous post I said that no one was serious about cutting the deficit. In case you were starting to believe the democrat’s “extreme” blather or the republican’s boasts of meaningful spending cuts, here are a couple of stories to bring this political kabuki theater of the absurd into perspective. While our political “leaders” were scrambling to avoid a federal shutdown, the federal government was spending outlandish and obscene amounts of your money (more here from CNSNews).

The federal government spent $142.3 billion on Thursday alone, according to the Daily Treasury Statement released at 4:00 pm on Friday afternoon.This $142.3 billion in spending took place on a day when the White House and congressional leaders were deadlocked over whether to cut between $33 billion and $40 billion in federal spending for the rest of the year.

To fund the $142.3 billion it spent on Thursday, the U.S. Treasury borrowed $132.8 billion during the day by selling new debt instruments—and almost all of these ($129.9 billion) were short-term Treasury bills that mature in one year or less.

By far, the federal government’s top expense on Thursday was paying off old debts that came due and that the government had a legal obligation to meet. During the day, Treasury reports, it paid off $130.75 billion in Treasury securities that had matured.

So in one day the government spent more than 3 times the paltry amount of “extreme” and “meaningful” cuts negotiated by the politicians. And the vast majority of that spending was servicing the debt. Yeah, that will get us out of trouble. This is like someone who makes $50K/yr, spends $90K/yr, and has $350K in debt saying, “Jeez, I need to save some money; I think I’ll skip lunch at McDonalds one day this week.”

And here’s another helpful little factoid (story here from CNSNews).

The federal debt increased $54.1 billion in the eight days preceding the deal made by President Barack Obama, Senate Majority Leader Harry Reid (D.-Nev.) and House Speaker John Boehner (R.-Ohio) to cut $38.5 billion in federal spending for the remainder of fiscal year 2011, which runs through September.The debt was $14.2101 trillion on March 30, according to the Bureau of the Public Debt, and $14.2642 on April 7.

Since the beginning of the fiscal year on Oct. 1, 2010, the national debt has increase by $653.4 billion.

The next political battle will be when congress takes on raising the debt ceiling, which will be reached sometime in the middle of May. Two things you can bet on – the wailing & gnashing of teeth by the democrats and the spineless republicans caving in. They will raise it and the destructive spending will continue.

BOHICA!!

Moron of the Day: Alec Baldwin

Alec Baldwin was in Washington for Arts Advocacy Day to lobby congress against cutting funding for the arts – you know, things like this and this. In an interview with CNS News, he said that the financial crisis has prevented our dear comrade leader from “doing any new spending.” Huh? WTF? Apparently Baldwin is not familiar with this:

No new spending?

 

Emmy award-winning actor Alec Baldwin told CNSNews.com on Capitol Hill that he believes the financial crisis has “crippled” President Barack Obama, preventing him from doing any “new spending.” Baldwin also said Obama has been doing “a lot” of “back-peddling” because he’s had to spend his whole first term “trying” to correct America’s course financially.

Following his appearance on Capitol Hill at a press conference with Senator Dick Durbin (D-Ill.) and Rep. John Larson (D-Conn.) about campaign finance reform, CNSNews.com asked Baldwin if President Obama has lived up to his expectations.

“Well, I mean, I think so because I think that when you come into office and you want to put your mark on things — this is just my opinion, when you want to put your mark on things, you want to be able to spend. And what’s crippled Obama’s administration, as far as I’m concerned, is the financial crisis and it’s prevented him from doing any new spending,” said Baldwin, who publicly supported Obama in the 2008 Presidential election.

“He’s not able – if the country was as flush as it was under Bill Clinton and he had money — these things cost money — he could have made more of a mark,” said Baldwin. “I think right now he’s had to do a lot of counter-punching; a lot of back peddling. He inherited this crisis from Bush and Paulson. He had to extend the TARP. I think it’s been very difficult for him to spend his whole first term trying to, you know, correct our course financially. I think a second term of Obama, we’ll see a lot more of what we want to see from him.”

As you can see from the graph, Alec, our dear comrade leader has spent mountains of money – most of it borrowed. Yeah, he’s been correcting our course financially all right – dope…

No one is serious about cutting the federal budget

This Friday is the deadline for congress to pass another continuing budget resolution to avoid a “shutdown” of the federal government (more here). The republicans are eager to impose budget “cuts” which the regime and the democrats characterize as “extreme” (more here). Of course this absurd political kabuki theater could have been avoided if the previous congress had done their job and passed a budget for 2011. Spineless republicans, who gained control of the House in the last election largely on the promise of fiscal responsibility, initially proposed $100B in spending cuts to the current budget and are now dialing back their proposal after being demonized by democrats and the state-run media. It appears that the magic number to reach a compromise is now around $33B. And just how significant is this figure? This story (from CATO) explains it:

Today the Cato Institute placed an ad in major newspapers highlighting specific spending cuts that policymakers should make to restore our country’s fiscal sanity and economic stability. Our public call for policymakers to demonstrate leadership on spending cuts comes in the midst of the on-going battle on Capitol Hill over funding the government for the remainder of fiscal 2011.

A graphic at the top of the ad measures the $61 billion in cuts that Republicans have proposed against fiscal 2011 estimates for total spending, the deficit, and interest on the debt. As the graphic shows and the ad notes, it is clear that “leaders and members of both parties are in deep denial about the fiscal emergency we face.”

There are news reports that Republican and Democrat negotiators are heading toward a compromise figure of $33 billion in spending cuts. Let’s put that figure in perspective alongside the GOP’s original proposal to cut a whopping $61 billion:

This is not serious

Record spending levels…trillion dollar plus deficits…mountainous debt…a weak economy…

What, Congress worry?

Kind of puts it into perspective, doesn’t it? And what about that government shutdown? Rep. Mike Pence (R-TX) sums it up nicely (more here):

“…if congress can’t cut $61 billion from the budget, the government should be shut down.”

Here’s a great idea: Shut it down. After all, it doesn’t shut down completely – just “non-essential” services. (Don’t you just love that phrase? If they’re non-essential, why do they exist in the first place?) People will still get their social security, medicare/medicaid, and welfare checks. Taxpayers will still pay their taxes. Better yet, lets give the entire government a 21 month vacation – just keep a skeleton crew in DC. Congress could meet with their constituents, campaign for the 2012 elections, schmooze with lobbyists, whatever; then come back and start fresh in 2013. Twenty one months free of government FAIL – imagine the savings to the taxpayer!

Big government gets bigger – A nation of takers

This piece (by Stephen Moore at the WSJ) is a must read. Mr. Moore says that we have become a nation of takers, not makers. And he is 100% spot on.

If you want to understand better why so many states—from New York to Wisconsin to California—are teetering on the brink of bankruptcy, consider this depressing statistic: Today in America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million). This is an almost exact reversal of the situation in 1960, when there were 15 million workers in manufacturing and 8.7 million collecting a paycheck from the government.

It gets worse. More Americans work for the government than work in construction, farming, fishing, forestry, manufacturing, mining and utilities combined. We have moved decisively from a nation of makers to a nation of takers. Nearly half of the $2.2 trillion cost of state and local governments is the $1 trillion-a-year tab for pay and benefits of state and local employees. Is it any wonder that so many states and cities cannot pay their bills?

Every state in America today except for two—Indiana and Wisconsin—has more government workers on the payroll than people manufacturing industrial goods. Consider California, which has the highest budget deficit in the history of the states. The not-so Golden State now has an incredible 2.4 million government employees—twice as many as people at work in manufacturing. New Jersey has just under two-and-a-half as many government employees as manufacturers. Florida’s ratio is more than 3 to 1. So is New York’s.

At one time the US was the world’s leading industrial powerhouse. In fact, our industrial prowess was the primary reason we were able to defeat the Axis powers in World War 2. The Allies (especially France & Britain) were on the verge of defeat before America entered the war. Militarily the US was woefully unprepared for war at the end of 1941. It was our overwhelming industrial might that made the difference. Unfortunately we could not do this today – we’ve gone from a nation of makers to a nation of government drones.

Even more sad, the trend for more government continues as more college grads consider government employment.

Don’t expect a reversal of this trend anytime soon. Surveys of college graduates are finding that more and more of our top minds want to work for the government. Why? Because in recent years only government agencies have been hiring, and because the offer of near lifetime security is highly valued in these times of economic turbulence. When 23-year-olds aren’t willing to take career risks, we have a real problem on our hands. Sadly, we could end up with a generation of Americans who want to work at the Department of Motor Vehicles.

Moore ascribes some of this to productivity gains in the private sector, perhaps allowing business to do more with less. This is exactly opposite of government where the overall trend is to accomplish less with more.

The employment trends described here are explained in part by hugely beneficial productivity improvements in such traditional industries as farming, manufacturing, financial services and telecommunications. These produce far more output per worker than in the past. The typical farmer, for example, is today at least three times more productive than in 1950.

Where are the productivity gains in government? Consider a core function of state and local governments: schools. Over the period 1970-2005, school spending per pupil, adjusted for inflation, doubled, while standardized achievement test scores were flat. Over roughly that same time period, public-school employment doubled per student, according to a study by researchers at the University of Washington. That is what economists call negative productivity.

But education is an industry where we measure performance backwards: We gauge school performance not by outputs, but by inputs. If quality falls, we say we didn’t pay teachers enough or we need smaller class sizes or newer schools. If education had undergone the same productivity revolution that manufacturing has, we would have half as many educators, smaller school budgets, and higher graduation rates and test scores.

The same is true of almost all other government services. Mass transit spends more and more every year and yet a much smaller share of Americans use trains and buses today than in past decades. One way that private companies spur productivity is by firing underperforming employees and rewarding excellence. In government employment, tenure for teachers and near lifetime employment for other civil servants shields workers from this basic system of reward and punishment. It is a system that breeds mediocrity, which is what we’ve gotten.

Most reasonable steps to restrain public-sector employment costs are smothered by the unions. Study after study has shown that states and cities could shave 20% to 40% off the cost of many services—fire fighting, public transportation, garbage collection, administrative functions, even prison operations—through competitive contracting to private providers. But unions have blocked many of those efforts. Public employees maintain that they are underpaid relative to equally qualified private-sector workers, yet they are deathly afraid of competitive bidding for government services.

President Obama says we have to retool our economy to “win the future.” The only way to do that is to grow the economy that makes things, not the sector that takes things.

Well said, Mr. Moore, well said…

Top execs score big $$ as Fannie & Freddie swirl in the toilet

The BOHICA goodness that is Fannie Mae and Freddie Mac continues (more here, here and here). As these two giant turds swirl around a flushing financial toilet, their top executives are collecting big paychecks (story here from the NYT). Since the government (that means you, the taxpayer) took over these two FAILs in 2008, we have pumped almost $154B into this toilet with no end in sight. This is the epitome of government double down on FAIL.

Regulators have approved generous executive compensation at Fannie Mae and Freddie Mac, the taxpayer-backed mortgage finance giants, with little scrutiny or analysis, according to a report published Thursday by the inspector general of the Federal Housing Finance Agency.

The companies, whose fates are to be decided by Congress this year, paid a combined $17 million to their chief executives in 2009 and 2010, the two full years when Fannie Mae and Freddie Mac were wards of the state, the report found. The top six executives at the companies received $35.4 million over the two years. Since Fannie Mae and Freddie Mac were taken over in September 2008, the companies’ mounting mortgage losses have required a $153 billion infusion from taxpayers. Total losses may reach $363 billion through 2013, according to government estimates.

Charles E. Haldeman Jr., a former head of Putnam Investments, the giant fund management concern, joined Freddie Mac as its chief executive in 2009. He made $7.8 million for 2009 and 2010. Fannie Mae’s chief is Michael J. Williams, who has worked at the company since 1991. He received $9.3 million for the two years. Company officials declined to comment.

With hundreds of billions in government support necessary to keep the companies running, questions are arising about the nature of the pay packages and how performance goals are determined. The pay was approved by the housing finance agency, which is charged with conserving the assets of Fannie and Freddie on behalf of taxpayers.

Of course this is nothing new for Fannie & Freddie, which have been run like patronage mills for politically-connected plunderers. Using Enron accounting schemes, Clinton appointee Frank Raines skated away with over $90M in salary & “bonuses” after 5 years at Fannie. He and corruptocrat senator Chris Dodd also got sweetheart VIP loans from Countrywide pal Angelo Mozilo, who was recently fined $67.5M for securities fraud and insider trading violations.

The response from the FHFA (Federal Housing Finance Agency), government overseer of Fannie & Freddie, is not surprising. Apparently we need to pay big for quality management or the taxpayers will be harmed.

Edward J. DeMarco, acting director of the Federal Housing Finance Agency, testified before Congress on Thursday about proposals to overhaul Fannie and Freddie. “I am concerned that legislation to overhaul the compensation levels and programs in place today with the application of a federal pay system to nonfederal employees carries great risk for the conservatorships and hence the taxpayer,” he said.

Last year, Mr. DeMarco testified that the executive compensation plans at Fannie and Freddie were designed to achieve the goals of the conservatorship and “align executive decision-making with the long-term financial prospects of the enterprises, and minimize costs to the taxpayer.”

Because shares of both Fannie and Freddie have little value, the companies’ executive compensation consists solely of cash paid out in base salary, deferred salary and long-term incentive pay.

One thing that Mr. DeMarco is forgetting here is that since the government has taken over these two turds, these executives are government employees. So his argument about attracting top management geniuses to “minimize costs to the taxpayer” is fallacious.

Why not find a retired business person with a track record of saving failed companies to take over and do what really needs to be done with Fannie & Freddie – shut them down with a minimal loss to the taxpayers. Someone like Herman Cain would probably do the job for nothing. Actually I’d rather see Mr. Cain in the White House.

Michael Moore: All your wealth are belong to us

Just for the record, I’m posting this more for the humor factor than anything else. Film producer and barrage balloon for leftist dogma, Michael Moore says that the money held by the wealthy doesn’t belong to them. It belongs to “us” – a “national resource.” (story here from Michelle Malkin)

Really Michael? And I suppose that includes your wealth?

In the space of 1 minute and 20 seconds this buffoon manages to regurgitate almost every talking point of the Communist Manifesto. What Michael and others like him don’t realize is that they probably would never survive in a communist society. Just read We the Living by Ayn Rand for a testament of what communism is really about…

FAIL: SEC fails audits seven years in a row

The U.S. Securities and Exchange Commission (SEC) was established in 1934 following the crash of the stock market. Its primary responsibility is the enforcement of federal securities laws and regulating the securities industry, the nation’s stock and options exchanges, and other electronic securities markets. While it may have done a decent job in the past, its recent performance (since about 2000) has been less than stellar, to put it mildly. It has been asleep at the switch for some of the biggest scandals and financial failures of the century and it has failed its own audits seven years running (story here from the NYT).

If a company’s financial reporting were so bad that its auditor had pointed out significant weaknesses in its accounting for seven years running, the Securities and Exchange Commission would most likely be all over it.

But what if the company were the S.E.C. itself?

Since the commission began producing audited statements in 2004, the Government Accountability Office has faulted its reporting almost every year. Last November, the G.A.O. said that the commission’s books were in such disarray that it had failed at some of the agency’s most fundamental tasks: accurately tracking income from fines, filing fees and the return of ill-gotten profits.

“A reasonable possibility exists that a material misstatement of S.E.C.’s financial statements would not be prevented, or detected and corrected on a timely basis,” the auditor concluded.

Since 2000 its budget has tripled and its staff has ballooned to almost 4000 employees.

…the S.E.C. is far from starved for money. Its $1.1 billion budget in 2010 was 15 percent higher than the $960 million it received the year before — and nearly triple its $377 million budget in 2000.

Representative Spencer T. Bachus, the Alabama Republican who is chairman of the House Financial Services Committee, said last week that the tripling of the S.E.C.’s budget occurred in a period that included some of the agency’s biggest failures — the Ponzi schemes of Bernard L. Madoff and R. Allen Stanford and the collapse of Bear Stearns and Lehman Brothers.

FAIL.

With the Dodd/Frank boot-to-the-face avalanche of new financial regulation coming into play, the SEC is about to become even more powerful – and costly.

Dodd-Frank did authorize a doubling of the commission’s budget, to $2.25 billion, over the next five years — without providing the money for it. It also authorized the commission to spend as much as $100 million beyond its operating budget for new technology systems.

Anticipating new employees, the S.E.C. has been busily leasing more office space — an effort that has drawn the attention of the agency’s inspector general. Last week, he began investigating the S.E.C.’s decision last July to lease more than a million square feet of prime office space in Washington, one of the largest federal leases in a decade.

Within a few months of that decision, its prospects for bigger budgets fading, the S.E.C. began negotiations to return some of the leased space. The latest inquiry is the second investigation of the S.E.C.’s leasing practices in a year. Last September, H. David Kotz, the inspector general, reported that a lack of adequate policies led the agency to make lease payments that could have been avoided, including more than $15 million for space in Manhattan that no S.E.C. employees have occupied in the last five years.

Typical. Government. FAIL. With no end in sight…

US still gives “foreign aid” to China – Huh? WTF?

There’s little doubt that China has become a major player in the world economy. While using virtual slave labor to flood the world marketplace with cheap goods, their own markets are all but closed to foreign trade. Foreign companies (including US companies) have packed up and moved to China to take advantage of cheap labor and try to gain a foothold in the Chinese marketplace.

While the Chinese economy has shown signs of weakening in recent months, they are still buying US long term debt and have even offered to bail out the failing EU. So the question of the day is this: Why is the US still sending foreign aid to China? (story here from Investor’s Business Daily)

While Chinese President Hu flaunted his country’s power during his Western tour, his No. 2 economy raked in billions in Western aid. That’s right. We’re still subsidizing China. Why?According to the Organization for Economic Cooperation and Development, foreign aid to China totals $2.6 billion a year. The biggest donor is Japan, followed by Germany, France and Britain, then the U.S. All of these countries, meanwhile, are in debt to China and running massive deficits.

U.S. aid, at $65 million a year, is relatively small thanks to sanctions imposed following Beijing’s 1989 military crackdown on pro-democracy demonstrators at Tiananmen Square. Still, why are we sending China any succor at all?

OK, so $65M a year is chump change when you consider we spend about $50B (that we don’t have) on foreign aid. But why are we giving anything at all to China? Especially when we’re essentially borrowing it from them in the first place. Couldn’t that $65M be better spent, say, on cancer research? With an average tax liability of approximately $10,000 per family, $65M represents the sweat equity of about 6500 US families to pay for this foolishness.

If the government is really serious about cutting spending, here’s a no brainer…

Dear comrade to propose even more deficit spending

Imagine this scenario: You get a brilliant idea that you can beat the odds in Las Vegas. You mortgage your home to the hilt, empty your savings accounts and your kid’s piggybank and drop it all on a single roll of the roulette wheel. Naturally, you lose everything. So, what now? Well, being broke you don’t have a lot of options. But if you’re a bureaucrat and you’re playing with someone else’s money, the answer is simple – double down. That’s essentially what our dear comrade leader will be suggesting in his upcoming State Of The Union (SOTU) speech. Because he’s, you know, focused like a laser on the economy (story here from the WSJ).

President Barack Obama will call for new government spending on infrastructure, education and research in his State of the Union address Tuesday, sharpening his response to Republicans in Congress who are demanding deep budget cuts, people familiar with the speech said.

Mr. Obama will argue that the U.S., even while trying to reduce its budget deficit, must make targeted investments to foster job growth and boost U.S. competitiveness in the world economy. The new spending could include initiatives aimed at building the renewable-energy sector—which received billions of dollars in stimulus funding—and rebuilding roads to improve transportation, people familiar with the matter said. Money to restructure the No Child Left Behind law’s testing mandates and institute more competitive grants also could be included.

“Targeted investments.” Isn’t that what his mega-”stimulus” was supposed to do? It’s clear now that the “stimulus” only stimulated trillions of new debt and was a total FAIL. It’s clear that the government only created government jobs while killing private sector employment. The regime’s economic “geniuses” predicted that unemployment would be around 7% right now, yet it continues to hover around 9.5% – higher than they predicted it would be without “stimulus.” With the national debt breaching $14T there’s nothing left to spend.

It is also anticipated that the dear comrade will propose “significant” budget cuts. We’ll just have to wait for the details to see how serious he is about this. I have my doubts.

While proposing new spending, Mr. Obama also will lay out significant budget cuts elsewhere, people familiar with the plans say, though they will likely fall short of what Republican lawmakers have requested.

In arguing that U.S. competitiveness is at stake, Mr. Obama plans to use his nationally televised speech to try to frame the spending debate with Republicans that is expected to dominate Congress in the coming months. “We seek to do everything we can to spur hiring and ensure our nation can compete with anybody on the planet,” Mr. Obama said Friday after touring a General Electric Co. plant in Schenectady, N.Y. He cited clean-energy manufacturing, infrastructure and education as keys to competitiveness.

Previewing the expected theme of his speech, Mr. Obama on Friday appointed GE Chief Executive Jeffrey Immelt to lead a new President’s Council on Jobs and Competitiveness.

Commenting on the new advisory panel, Senate Minority Leader Mitch McConnell (R., Ky.) said that unless its “first recommendations are to reverse the damage the policies of the last two years have done to the business climate, job creation and the exploding national debt, I fear it will do more to create good public relations for the White House than good jobs for struggling Americans.”

Republicans are casting the White House’s pivot toward competitiveness as an excuse for bigger government and more spending. They say a surge in federal spending and a $1.3 trillion budget deficit are impeding job creation, and dramatic spending cuts are needed immediately.

While House republicans are calling for $100B in spending cuts this year, I hold no hope that they have the guts to do what really needs to be done. Cutting $100B from a $4T budget (with $1.3T in deficit spending) is not significant. That’s 2.5% – pretty much a rounding error. It’s like trying to use a band aid when you really need a tourniquet.

UPDATE: I found this post over at Powerline pretty interesting. The graphic clearly shows the effects of massive government “stimulus” on job growth.

Yet if there is one thing we know with an empirical certainty, it is that increasing federal spending will not, on balance, create more jobs. Of course, whenever the government spends money someone is employed, or, at least, gets to cash a check. This is what Obama had in mind when he said–in a moment of supreme cluelessness–”spending equals stimulus.” What Obama apparently does not understand is that government spending consumes resources, often inefficiently, that could better be used elsewhere. Whenever the government wastes resources, the country grows poorer and job growth is suppressed. This, in crude terms, is why the ballooning public expenditures of recent years have not caused a boom in the job market.

It is blindingly obvious that spending does not equal stimulus, and increasing federal spending will not create jobs. There are two possibilities here. One is that Obama is one of the last people in America who have not figured this out. The other is that Obama knows his proposals are dumb, from an economic standpoint, but doesn’t care. The one thing that more government spending will accomplish is to slide more money to Barack Obama’s cronies and to various constituencies of the Democratic Party. Maybe that is all Obama ever wanted.

Good points.

Dear comrade leader touts China’s new jet orders – uh, what new jet orders?

The big news this past week was the visit to the White House of Chinese president Hu Jintao. Our dear comrade leader pulled out all the stops, treating his counterpart to a lavish state dinner (more here). At a followup press conference the regime released a “fact sheet” touting the sale of 200 aircraft from Boeing as a $19B deal with the Chicoms. You know, like this was all worked out over a plate of Hunan Beef with vegetables from the White House garden. A big win for American business. According to this story (from the Seattle Times), this was nothing more than regime spin on old news.

The deal President Hu signed does not include any new jet orders.

Delivering the formal approval during Hu’s visit is designed to make the Chinese government appear responsive to U.S. concerns about the balance of trade.

However, all of the airplanes in the sale were announced and booked by Boeing as firm orders over the past four years. Chinese airlines had already paid nonrefundable deposits and signed contracts for the jets, most of them as far back as 2007.

The White House announcement said the total value of the orders was $19 billion.

But that’s the list price, which airline customers never pay.

Based on market data from aircraft-valuation consultancy Avitas, the actual price for those 200 planes is about $11 billion.

Hmmm. Sounds like a little embellishment from the regime – especially for a deal it had little or nothing to do with.

Boeing was left rather embarrassed Wednesday as its public-relations team faced skeptical press questioning of an announcement the company had little to do with, one that was merely political window dressing for President Hu’s state visit.

Alan Tonelson, a research analyst with a foundation attached to the U.S. Business & Industry Council, which represents small to medium-sized U.S. manufacturers critical of Chinese trade policies, called the announcement political “fakery.”

“The president should get out of the business of trumpeting phony export deals that won’t create a single new job, and get serious about combating the Chinese predatory trade policies,” said Tonelson.

An administration with laser-like focus on American business interests…

Illinois pounds taxpayers with 66% income tax increase

With a hat tip to the hideous 111th congress, the Illinois legislature passed, and governor Pat Quinn signed, a whopping tax increase on personal and corporate income. The 66% increase in personal income taxes (from 3% to 5%) and 49% increase in business taxes (from 4.8% to 7%) vaults Illinois to the top nationwide in combined personal and corporate taxes. Of course, since businesses only pass their taxes along to consumers as a cost of business, the taxpayers of Illinois will bear this burden as well (story here).

Closing out a contentious lame-duck legislative session, Illinois Democrats handed Gov. Quinn a major political victory early Wednesday by voting to raise the state income tax by 66 percent and buy him some financial stability for his first full term in office.

The state Senate voted 30-29 at 1:20 a.m. to send the tax-hike package to the governor about 10 minutes after paramedics carried state Rep. David Miller (D-Lynwood) off the Senate floor on a stretcher.

Miller was taken to St. John’s Hospital, but as of 6 a.m., he had been released, according to hospital spokeswoman Sherry Puccetti. Puccetti said she believed he was treated for dizziness.

Miller, the Democratic candidate for state comptroller in the November elections, collapsed at about 12:45 a.m. while watching the Senate debate. The 48-year-old lawmaker’s sudden illness cast a pall over the tax vote.

The boost in the amount the state withholds from workers paychecks from 3 percent to 5 percent would drain $800 from the household budget of a family earning $40,000 a year and take effect immediately if the governor signs off.

The tax vote represented only part of what Quinn, House Speaker Michael Madigan (D-Chicago) and Senate President John Cullerton (D-Chicago) sought to shore up an expected $15 billion budget deficit.

Also included in the toxic legislation was authorization to borrow an additional $4B to cover out of control state employee pension obligations – in other words, to kick the can further down the road. Clueless majority democrats lamented the fact that they might have “left something on the table” as they considered even more pain for the taxpayers.

“It wasn’t easy, but we made it through. We accomplished a lot,” said Madigan, who passed the tax hike by a razor-thin 60-57 margin in his chamber. “We could have accomplished more.”

After the Senate vote on the income-tax hike, senators approved a $4 billion borrowing plan already approved by the House that would cover what the state owes this year to its five pension systems.

In the House, the budget vote followed roughly 90 minutes of debate in which ruling Democrats argued there was no other alternative but to raise the income tax to fund vital state-funded human services and education programs afloat.

“Illinois is in crisis, absolute financial crisis, and there is no way we can dig ourselves out of the crisis without increased revenues,” said House Majority Leader Barbara Flynn Currie (D-Chicago), the bill’s chief House sponsor.

Of course spending cuts don’t come to mind with these morons. The $15B deficit is a result of years of profligate spending, political corruption, and unrealistic benefit concessions to the public employee unions. But let’s pound the taxpayers to make up for it. BOHICA!

Meanwhile this has not gone unnoticed by surrounding states who are hoping to capitalize on the anticipated exodus of businesses and wealth producers from dysfunctional Illinois (story here from the WSJ).

Illinois this week earned the honor of becoming the first state in 2011 to sock it to taxpayers, passing a tax hike the size of Lake Michigan. Citizens cried out, legislators deflected, but the most interesting response came from neighboring Wisconsin, where newly elected GOP Gov. Scott Walker had three words for Illinois businesses: “Escape to Wisconsin.”

Across the country, dozens of new governors are taking office, fine-tuning state-of-the-state addresses, polishing budgets. With each event we are seeing a growing national divide.

On one side are wide swathes of the country that this past midterm elected reformers intent on slashing spending and reviving growth. On the other are the holdout pockets—Illinois, California, Massachusetts, Connecticut—drifting further into the abyss of tax and spend. The chasm has huge implications, not just for local and regional politics but for Washington.

Mr. Walker is painting that gulf as big as the Grand Canyon, this week blitzing the Chicago media markets to let suffering Illinois businesses know that while their governor, Pat Quinn, levies a 50% increase in corporate income taxes, Wisconsin is working to enact the total elimination of corporate income taxes for two years for firms that migrate. The “Escape to Wisconsin” line comes from an old tourism campaign, but Mr. Walker thinks it sums up the business choice perfectly. “We’re going to send out that line to every employer in the state of Illinois,” he tells me.

And Wisconsin isn’t the only state willing to siphon off Illinois wealth producers. Indianna Governor Mitch Daniels, a potential 2012 republican presidential candidate, has been doing it for years.

Indiana GOP Gov. Mitch Daniels, who has spent six years taking competitive advantage of dysfunctional neighbors, jokes that living next to Illinois is like “living next to the Simpsons.” He attests to the benefits, noting that Illinois-based Caterpillar recently chose to direct a major investment to build locomotives to Muncie, Ind. And while he recognizes he’s now got some competition, he sees the combined force of reformers in Wisconsin, Michigan and Ohio creating a “divide that could operate long-term in the Midwest’s favor.”

Many states have slashed budgets and used pro-growth tax policy to revive their fortunes. No state has taxed and spent itself to prosperity. As the road that Indiana and Wisconsin and Ohio are on diverges ever more successfully from that of high-tax states, Mr. Daniels says the pressure for change in the latter will grow: “The federal system has a wonderful built-in self-correction mechanism.”

By perpetuating the corrupt Chicago machine-driven government, the taxpayers of Illinois only have themselves to blame. Will they reject their hideous government or leave for friendlier environs? Only time will tell but the clock is ticking on the fiscal collapse of the state economy. If things keep going the way they are, it won’t be long before the rest of us will be forced to bail them out.

UGH…

US Debt hits $14T: regime economic advisor – We need MORE!

The accumulated US National Debt officially reached $14 TRILLION at the end of 2010 (US Debt Clock). Since October 1, 2007 the government has added $5T in debt. Let me repeat that. In a little over 3 years our government has added FIVE TRILLION DOLLARS to the national debt (story here).

The latest posting today of the National Debt shows it has topped $14 trillion for the first time.

The U.S. Treasury website today reported that as of last Friday, the last day of 2010, the National Debt stood at $14,025,215,218,708.52.

It took just 7 months for the National Debt to increase from $13 trillion on June 1, 2010 to $14 trillion on Dec. 31. It also means the debt is fast approaching the statutory ceiling $14.294 trillion set by Congress and signed into law by President Obama last February.

The federal government would have to stop borrowing and might even default on its obligations if Congress fails to increase the Debt Ceiling before the limit is reached.

Some Republicans in the new Congress have said they’ll seek to block an increase in the Debt Ceiling unless a plan is in place to significantly reduce federal spending and unfunded government liabilities on entitlement programs such as Social Security and Medicare.

So how do you think the regime wants to handle this? By increasing the debt ceiling of course.

White House economic adviser Austan Goolsbee warned yesterday that it would be “catastrophic” if the U.S. Government were to default on its financial obligations.

“That would be the first default in history caused purely by insanity,” said Goolsbee of plans to block an increase in the Debt Ceiling.

Did it ever occur to these “geniuses” that maybe we should stop spending what we don’t have? That this whole thing is f**king insanity? Uh, no. Will the new republican majority finally put the brakes on runaway government spending? I guesss we’ll see but I’m certainly not hopeful. (more here)

During the midterm campaign, Republicans assured voters that they would put an end to the free-spending ways of Barack Obama and the Democratic majority. Now that they have taken control of the House, that fiscal discipline will be put to the test sooner rather than later. Republicans have to draft a budget for the remainder of FY2011 after Democrats failed to do so with large majorities, and that will also mean taking into account the rapidly-approaching debt ceiling. Will Republicans allow more borrowing or hold their ground on demanding deep cuts in government spending instead?

There are two problems here, one short-term and one long-term.  The national debt will rise above the limit increased last year by Democrats at the end of their spending spree in short order, and the question of defaulting on debt service becomes real and could create a lot of economic damage.  However, increasing the debt limit essentially puts off the inevitable, and it also allows Congress to procrastinate on the only long-term solution, which is to cut spending.  Refusing to raise the debt limit would force the federal government to stop spending or create a default, but much of that spending occurs through entitlements — which means that the only real way to meet the current debt limit in the short term would be to severely cut non-entitlement areas, which would probably require significant cuts at the Pentagon.

Look for congress to continue to kick the can down the road on this. They simply don’t have the guts to do what really needs to be done.

The Third World of California

Victor Davis Hanson is an historian, professor, and brilliant commentariat on social and political issues. While his political writings lean decidedly to the right (even though he is a registered democrat), it is his social commentary, particularly on his home state of California, that I find fascinating. This piece (from NRO) describes the disturbing decline of rural California and its stark contrast to the urban centers which are typically the face of the Golden State. (This is a somewhat lengthy article but worth the time. Please read the whole thing.)

The last three weeks I have traveled about, taking the pulse of the more forgotten areas of central California. I wanted to witness, even if superficially, what is happening to a state that has the highest sales and income taxes, the most lavish entitlements, the near-worst public schools (based on federal test scores), and the largest number of illegal aliens in the nation, along with an overregulated private sector, a stagnant and shrinking manufacturing base, and an elite environmental ethos that restricts commerce and productivity without curbing consumption.

On the western side of the Central Valley, the effects of arbitrary cutoffs in federal irrigation water have idled tens of thousands of acres of prime agricultural land, leaving thousands unemployed. Manufacturing plants in the towns in these areas — which used to make harvesters, hydraulic lifts, trailers, food-processing equipment — have largely shut down; their production has been shipped off overseas or south of the border. Agriculture itself — from almonds to raisins — has increasingly become corporatized and mechanized, cutting by half the number of farm workers needed. So unemployment runs somewhere between 15 and 20 percent.

Many of the rural trailer-house compounds I saw appear to the naked eye no different from what I have seen in the Third World. There is a Caribbean look to the junked cars, electric wires crisscrossing between various outbuildings, plastic tarps substituting for replacement shingles, lean-tos cobbled together as auxiliary housing, pit bulls unleashed, and geese, goats, and chickens roaming around the yards. The public hears about all sorts of tough California regulations that stymie business — rigid zoning laws, strict building codes, constant inspections — but apparently none of that applies out here.

At crossroads, peddlers in a counter-California economy sell almost anything. Here is what I noticed at an intersection on the west side last week: shovels, rakes, hoes, gas pumps, lawnmowers, edgers, blowers, jackets, gloves, and caps. The merchandise was all new. I doubt whether in high-tax California sales taxes or income taxes were paid on any of these stop-and-go transactions.

In two supermarkets 50 miles apart, I was the only one in line who did not pay with a social-service plastic card (gone are the days when “food stamps” were embarrassing bulky coupons). But I did not see any relationship between the use of the card and poverty as we once knew it: The electrical appurtenances owned by the user and the car into which the groceries were loaded were indistinguishable from those of the upper middle class.

By that I mean that most consumers drove late-model Camrys, Accords, or Tauruses, had iPhones, Bluetooths, or BlackBerries, and bought everything in the store with public-assistance credit. This seemed a world apart from the trailers I had just ridden by the day before. I don’t editorialize here on the logic or morality of any of this, but I note only that there are vast numbers of people who apparently are not working, are on public food assistance, and enjoy the technological veneer of the middle class. California has a consumer market surely, but often no apparent source of income. Does the $40 million a day supplement to unemployment benefits from Washington explain some of this?

Do diversity concerns, as in lack of diversity, work both ways? Over a hundred-mile stretch, when I stopped in San Joaquin for a bottled water, or drove through Orange Cove, or got gas in Parlier, or went to a corner market in southwestern Selma, my home town, I was the only non-Hispanic — there were no Asians, no blacks, no other whites. We may speak of the richness of “diversity,” but those who cherish that ideal simply have no idea that there are now countless inland communities that have become near-apartheid societies, where Spanish is the first language, the schools are not at all diverse, and the federal and state governments are either the main employers or at least the chief sources of income — whether through emergency rooms, rural health clinics, public schools, or social-service offices. An observer from Mars might conclude that our elites and masses have given up on the ideal of integration and assimilation, perhaps in the wake of the arrival of 11 to 15 million illegal aliens.

California does not care whether one broke the law to arrive here or continues to break it by staying. It asks nothing of the illegal immigrant — no proficiency in English, no acquaintance with American history and values, no proof of income, no record of education or skills. It does provide all the public assistance that it can afford (and more that it borrows for), and apparently waives enforcement of most of California’s burdensome regulations and civic statutes that increasingly have plagued productive citizens to the point of driving them out. How odd that we overregulate those who are citizens and have capital to the point of banishing them from the state, but do not regulate those who are aliens and without capital to the point of encouraging millions more to follow in their footsteps. How odd — to paraphrase what Critias once said of ancient Sparta — that California is at once both the nation’s most unfree and most free state, the most repressed and the wildest.Hundreds of thousands sense all that and vote accordingly with their feet, both into and out of California — and the result is a sort of social, cultural, economic, and political time-bomb, whose ticks are getting louder.

This is not only happening in California and there are interesting parallels with the demise of the Soviet Union (more here).

Hanson’s description of modern California would be a fitting updated version of my observations of the Soviet Union in the early 1980s.  The analogy is not exact, of course, because the political and economic systems, and the root causes, are so different.

But the result is the same.  An increasing inability of the economic system to support the agenda of the first world cities and political elites.

Writes Hanson:

Hundreds of thousands sense all that and vote accordingly with their feet, both into and out of California — and the result is a sort of social, cultural, economic, and political time-bomb, whose ticks are getting louder.

It can’t last another decade.  You are my witnesses.

Indeed…

Our temporary tax code

If there is one thing that is killing the economic recovery, it is the uncertainty of what is going to come from government. Businesses are sitting on upwards of $2T that could be used to invest in jobs and expansion. They’re not investing because they don’t know what bullshit tax and regulatory policy is coming next that could have a negative impact on their bottom line. According to this article (from the WSJ), a huge part of that uncertainty is caused by our temporary tax code.

Welcome to the world of the temporary tax code.

In the late 1990s, there were typically fewer than a dozen tax provisions that had just a limited lease on life and needed to be renewed every year or so.

Today there are 141.

Now Congress, taking up a deal worked out between the Obama administration and Republican leaders, is poised to turn the whole personal income-tax system into something of a temporary structure. The plan embraces a broad range of provisions—an extension of Bush-era rates, a new estate-tax formula—but for only two years. A payroll-tax cut in the bill is for a single year.

This means that if the compromise passes largely intact, the U.S. will have no permanent regime governing levies on salaries, capital gains and dividends, the Social Security tax, as well as a slew of targeted breaks for families, students and other groups. This on top of dozens of corporate-tax provisions that already were subject to annual renewal.

The level of uncertainty, unusual for developed nations, complicates planning and discourages hiring and investment, many economists and corporate executives say.

This uncertainty hits hardest in the worst of all places – small businesses, which generate the bulk of employment.

Small business is often looked to as a source of job growth. But the latest monthly survey by the National Federation of Independent Business, a small-business advocacy group, found that 75% of owners felt it wasn’t a good time to expand, and one in five said the main reason was doubt about policy environment, including taxes.

For smaller companies, tax uncertainty could be an incentive to expand overseas rather than in the U.S., according to Tom Duesterberg, president of the Manufacturers Alliance, a group representing medium-size firms. Companies “can’t wait until all these [tax] questions are resolved,” he says. “They are not going to wait until all that definitively happens. They have to deploy cash, please their shareholders and expand and grow.”

Probably the biggest impact has been with the Estate Tax (Death Tax). There was no Estate Tax in 2010 but that will very likely change as congress ponders several options.

Perhaps nowhere has tax uncertainty been felt more intensely this year than in the estate tax, always a controversial matter.

A 2001 law lowered its rate and increased the exemption in steps, with the tax lapsing in 2010 and then, unless Congress acts, returning in 2011 at a 55% top rate on estates of $1 million or more. The unusual hiatus coupled with a far more costly tax as soon as 2010 ended gave “just an unbelievable Alice-in-Wonderland aspect” to planning for certain well-to-do families, says Bruce Stone, a Miami-area estate lawyer.

Sales of a life-insurance policy commonly used for estate planning rose 22% in the first nine months from a year earlier, and their death-benefit coverage was up 30%. Though the policies can also be used for other purposes, part of the jump seemed clearly to be for hedging against the possible estate-tax jump in 2011.

In a few cases, the uncertainty drove people to ponder extreme measures to avoid a tax hit for heirs.

David Drouhard, a Washington-state farmer who is 56, received a diagnosis of advanced kidney cancer 14 months ago and faced a grim set of treatment choices. Most offered little chance of extending his life more than 18 months, although an immunity-boosting drug held out some hope. Mr. Drouhard says he worried that inaction on the estate tax would force his family to sell his wheat and alfalfa farm, now worth about $3 million, to pay taxes if he died in 2011.

After much deliberation, Mr. Drouhard decided to take the immunity-boosting drug, but with a caveat: “I said, ‘If we don’t see results from the first series [of treatments], I’m going to stop,”‘ he says. “I try to take care of my family, so why not go ahead and die instead of living another six months.” He has responded well to the treatment, but adds: “I think it’s wrong that you have to make that kind of decision.”

The compromise Congress is weighing this week would set a top estate-tax rate at 35% and the exemption at $5 million.

But this would be for just two years. Just as this year, a failure by Congress to act then would cause the tax to then revert to a top 55% rate and $1 million exemption, in this case in 2013.

Revamping the tax code should be job one for the coming congress and the regime. We’ll see if they’re really serious about economic recovery or just paying lip service to it. We should hold their feet to the fire.

Extending unemployment biggest boost to economy? Really?

With the failure of the “stimulus” package and unemployment hovering near 10% for almost 16 months, congressional democrats, statist pundits and our dear comrade leader are changing their message. According to Joe “Smartass” Biden the “stimulus” has worked but the regime just hasn’t been able to convince us stupid Americans of this. Now with the biggest tax increase in history on the horizon (if the Bush tax cuts are allowed to expire), the regime has cut a deal with congressional republicans to extend the tax rates for 2 years in exchange for a one year extension of unemployment benefits (more here).

To overcome the opposition of fiscal hawks to adding another $56B to the deficit, the regime has taken a new position – unemployment is actually a boost to the economy (story here from the American Thinker).Wait, WHAT?? So does this mean that we need more unemployment to recover the economy? Really?

President Obama, Nancy Pelosi, Joe Biden, Rachel Maddow, various economists dependent on government funding, and other die-hard Keynesians all proclaim that unemployment-compensation payments promote economic growth. Just yesterday, President Obama told Tampa station WFLA:

“It’s probably the biggest boost that we can give an economy because those folks are most likely to spend the money with businesses, and that gives them customers.”

In July, Speaker Pelosi (D-CA) said of this measure:

“It injects demand into the economy, and is job creating. It creates jobs faster than almost any other initiative you can name…”

Earlier this month, she repeated this mantra adding that unemployment benefits help “reduce the deficit” and that “history shows” tax cuts do not create jobs.

It is no wonder these ‘friendly fascists’ ardently defend these expenditures to the extent they do, considering that the number of unemployment-check recipients has quadrupled since Rep. Pelosi was sworn in as Speaker of the House. And since that date — January 4, 2007 — the unemployment rate has more than doubled and our national debt has ballooned by 59.6%.

Unemployment compensation falls in the realm of government-administered anti-poverty programs. While most people generally support the idea of this “safety net”, the details — how it’s funded, who qualifies, for how long, for how much, and other terms — are points of difference. Unemployment benefits are transfer payments, where government takes from A and gives to B. Transfer payments, whether constitutional or not, are a cornerstone of Obamanomics and currently comprise over two-thirds of all federal outlays.

In touting the macroeconomic benefits of unemployment compensation payments, Obama, Pelosi, et al. display ignorance regarding — or, at least, discount the importance of — production, the process of converting factors of production (inputs) into goods and services (outputs). Instead, their focus is misplaced on consumption and finding ways to increase our desire to consume. They act (and legislate) as if employment has no connection to production.

Just a reminder: these economic idiots have never held a real job in their entire lives. They have never run a business or managed a payroll. To think that government taking from working people and giving to non-working people is somehow an economic stimulus is not only specious, but downright dangerous.

Fundamentally, President Obama, Speaker Pelosi and their ilk fail to understand wealth and how it is created. Our well-being depends on wealth. Wealth, as Mr. Tamny wrote, “results from the matching of good ideas and hard work with capital.” Capital comes from savings. Savings come from delayed consumption. The more government extracts from the private sector, the less we have to save, invest, spend, or donate. And, not incidentally, improvident spenders are more likely than penny pinchers to end up on the government dole. Redistribution of wealth via transfer payments, per Mr. Tamny, “fosters no new production, and with that, no subsequent demand.”

The policies to promote maximization of production are no mystery. It’s pretty straight-forward, really, if this government would quit meddling in markets and bashing business and focus instead on essential services, the safeguarding of production and private property being among them. On this, Peter Ferrara at American Spectator recently wrote:

“What actually drives economic recovery and growth is increased production, which results from increased incentives to produce, and reduced costs burdening production. That involves reduced tax rates, which allow producers to keep a higher percentage of what they produce. It also involves reduced regulatory costs and reduced costs of government spending…But Obama refuses to consider any of this because it involves reducing rather than expanding the power of government, and he is rigidly opposed to that ideologically… This doesn’t mean we should not extend unemployment benefits. It just shows that Obama and the Democrats have no understanding of how to promote economic growth and recovery.”

On one of Mr. Ferrara’s excellent points above, tax rates, it should be noted that the U.S. imposes “the second-highest overall corporate rate among industrialized countries.” Lowering taxes rates-permanently, not temporarily–on American businesses and income earners (read: wealth producers) would be a good place to start down the road to higher production and employment.

Left unmentioned in the article is the disastrous impact of extending unemployment benefits on state budgets (more here and here).

Powerful democrats help Chinese get “stimulus” money

Just in case you thought that the $814B “stimulus” was supposed to help the US economy and “save or create” (fund, lives touched, whatever) US jobs, here’s an article that might leave you scratching your head. While the content of the article is not terribly surprising (you know, sweetheart deals for companies and lobbyists who threw cash at congress and our dear leader), the source and negativity of it certainly are. It’s from MSNBC – a member in good standing of the regime’s Propaganda Ministry.

Top Democratic fundraisers and lobbyists with links to the White House are behind a proposed wind farm in Texas that stands to get $450 million in stimulus money, even though a Chinese company would operate the farm and its turbines would be built in China.The farm’s backers also have close ties with Senate Majority Leader Harry Reid, D-Nev., who, at the height of his hard-fought re-election bid this fall, helped blunt congressional criticism over stimulus dollars possibly going to create jobs in China by endorsing a proposal by the Chinese company to build a factory in his home state. Although his campaign received thousands of dollars in donations from the wind farm’s backers and Reid stood on stage with them at a campaign event they hosted, his office declined to answer any questions about the wind farm’s organizers or their plans for Nevada.

It is being planned by an unusual joint partnership between the U.S. Renewable Energy Group, a Dallas investment firm with strong ties to Washington and the Democratic Party, and A-Power Energy Generation Systems, an upstart Chinese supplier of wind turbines. Filings with the Securities and Exchange Commission indicate the Chinese are bringing financing and the turbines.

What the Americans are supplying is the local know-how and political clout in Washington, where decisions on how to distribute billions in loan guarantees, stimulus grants and financial incentives are made.

So the “stimulus” money for the US part of the deal is going to lobbyists, power brokers, Harry Reid and government apparatchiks. Yeah, that will certainly stimulate the economy.

The investment group’s public face is often Cappy McGarr, a wealthy Texas philanthropist, investor and longtime fixture in Democratic politics, who has given heavily to Democratic candidates across the country and was an early backer of President Barack Obama’s presidential campaign. Joining McGarr in Dallas is Ed Cunningham, a former executive for several large Western entertainment companies in China, a 2002 Democratic senatorial candidate and a former member of Obama’s national finance committee.

Two registered lobbyists with a long history of involvement in Democratic politics, G. John O’Hanlon and Moses Boyd, are the group’s anchors in Washington. O’Hanlon has been a party operative since the 1980s — a protégé of Democratic heavyweight Terry McAuliffe — and has given hundreds of thousands of dollars to Democratic causes. Boyd is a former senior Democratic Capitol Hill staffer turned lobbyist.

McGarr married into Democratic Party royalty — his wife’s uncle is legendary Democratic power broker Robert Strauss — and has made his own name as a big-time donor to the party and candidates across the country. McGarr and his wife, Janie Strauss McGarr, have given more than $375,000 to various Democratic candidates and political action committees since 2006, according to Federal Election Commission records. That doesn’t include the $50,000 he donated to Obama’s inauguration and $50,000 to $100,000 in donations from others that he “bundled” for the Obama campaign.

All told, these four and their spouses have given more than $1.8 million in campaign donations since 1990, with McGarr and his wife accounting for more than half of that.

“That would place them among the top 100 donors of hard money overall,” said Sheila Krumholz, executive director of the Center for Responsive Politics, an independent research group that tracks campaign finance and how it affects elections and public policy.

The important question, however, is not how much they have given, Krumholz said, but “What does this buy them with each individual target of their largesse?”

Indeed. And in this case, the power brokers, U.S. Renewable Energy Group, will pick up a $245M “developer fee” – from “stimulus” money, not the Chinese. They invest little or no money of their own, grease a few palms in Washington, call in a few chits, and voila – $245M. Sweeeeeeet!

Looks like the Chinese have figured out how to do business in America. Find the right people, spread a little wealth, and grab some taxpayer money to fund a “green” business on US soil.

BOHICA – Here comes housing bubble Part 2

By now it’s pretty clear that the collapse of the housing bubble, created by foolish government policy, was largely responsible for the economic disaster we’re in. Fannie Mae and Freddie Mac failed spectacularly after gorging on toxic loans which may ultimately put taxpayers on the hook for up to $1T. While they continue to suck up more taxpayer bailouts (more here and here) for their worthless portfolios, the government has not addressed the core issue of promoting home ownership for all (more here).

With Fannie & Freddie already overstuffed with bad paper, one would think that there just isn’t room to continue this horrendous home ownership for all nightmare. But we’re talking about the federal government here – there’s always room for more FAIL. According to this article (from the American), the government has been playing hide the salami behind the scenes by getting the FHA to pick up where Fannie & Freddie left off. BOHICA!

It is hard to believe, but it looks like the government will soon use the taxpayers’ checkbook again to create a vast market for mortgages with low or no down payments and for overstretched borrowers with blemished credit. As in the period leading to the 2008 financial crisis, these loans will again contribute to a housing bubble, which will feed on government funding and grow to enormous size. When it collapses, housing prices will drop and a financial crisis will ensue. And, once again, the taxpayers will have to bear the costs.

In doing this, Congress is repeating the same policy mistake it made in 1992. Back then, it mandated that Fannie Mae and Freddie Mac compete with the Federal Housing Administration (FHA) for high-risk loans. Unhappily for both their shareholders and the taxpayers, Fannie and Freddie won that battle.

Now the Dodd-Frank Act, which imposed far-reaching new regulation on the financial system after the meltdown, allows the administration to substitute the FHA for Fannie and Freddie as the principal and essentially unlimited buyer of low-quality home mortgages. There is little doubt what will happen then.

Since the federal takeover of Fannie and Freddie in 2008, the government-sponsored enterprises’ (GSEs’) regulator has limited their purchases to higher-quality mortgages. Affordable housing requirements Congress adopted in 1992 and the Department of Housing and Urban Development (HUD) administered until 2008 have been relaxed. These had required Fannie and Freddie to buy the low-quality mortgages that ultimately drove them into insolvency and will cause enormous losses for the taxpayers.

The latest regulatory change does not reduce the total losses that taxpayers will suffer from HUD’s policies; those losses, estimated at about $400 billion, are baked in the cake. But the higher lending standards now required of Fannie and Freddie should reduce future losses.

Not so for the FHA. While everyone has been watching Fannie and Freddie, the administration has quietly shifted most federal high-risk mortgage initiatives to FHA, the government’s original subprime lender. Along with two other federal agencies, FHA now accounts for about 60 percent of all U.S. home purchase mortgage originations. This amounts to more than $1 trillion and is rising rapidly. The administration justifies this policy by saying it is necessary to support the mortgage market, yet borrowers are once again receiving high-risk loans.

OK, so I guess there were no lessons learned from the first housing bubble. Let’s just continue these idiotic lending policies and see if we can achieve a catastrophic FAIL. Perhaps a total collapse of the US economy. Thanks to the Dodd-Frank fiscal irresponsibility bill (more here, here and here), this is a distinct possibility.

The Dodd-Frank Act, however, exempts FHA and other government agencies from appropriate standards on mortgage quality. This will give low-quality mortgages a direct route into the market once again; it will be like putting Fannie and Freddie back in the same business, but with an explicit government guarantee.

For example, thanks to expanded government lending, 60 percent of home purchase loans now have down payments of less than 5 percent, compared to 40 percent at the height of the bubble, and the FHA projects that it will increase its insured loans total to $1.34 trillion by 2013. Indeed, the FHA just announced its intention to push almost half of its home purchase volume into subprime territory by 2014-2017, essentially a guarantee to put taxpayers at risk again.

We simply cannot afford more FAIL like this.

President calls for 2 year wage freeze on federal employees – BFD

In a symbolic gesture to show that he at least thinks about the economy-killing federal deficits and unsustainable debt load run up by his regime, our dear comrade leader is proposing a 2 year wage freeze for federal employees. (story here) The freeze would only affect Executive branch employees and excludes most military personnel. Sounds like he’s bringing his “laser-like” focus on the economy to the fore.

President Barack Obama on Monday proposed a two-year freeze of the salaries of some 2 million federal workers, trying to seize the deficit-cutting initiative from Republicans with a sudden, dramatic stroke. Though signaling White House concern over record deficits, the freeze would make only a tiny dent in annual deficits or the nation’s $14 trillion debt.”Small businesses and families are tightening their belts,” Obama said in brief remarks at the White House. “The government should, too.” The administration said the plan was designed to save more than $5 billion over the first two years.

The proposal, which must be approved by Congress, would not apply to the military, but it would affect all others on the Executive Branch payroll. It would not affect members of Congress or their staffs, defense contractors, postal workers or federal court judges and workers.

Obama’s move was an attempt to get in front of Republican plans to slash federal pay and the workforce next year, when they will flex more legislative muscle than now. It came a day ahead of Obama’s meeting at the White House with both Republicans and Democratic leaders — his first with Republicans since the midterm elections — and two days before the deadline for recommendations by his deficit-reduction commission.

All I can say is BFD – the supposed $5B “savings” over two years is not even worth mentioning. (more here)

Actually, it will make a miniscule dent in $2 trillion in deficits.  If the savings get calculated over two years, then we have to do the same with the deficits they supposedly address.  The savings, assuming they actually occur, will amount to a reduction of 0.25% in the biennial deficits.  Calling it a drop in the bucket is an insult to both drops and buckets.  It’s a single grain of sand from the coast.

But I guess it’s the thought that counts – you know, federal employees “sharing the pain” and all. As this piece (from the NYT) painfully tries to find any “positive” spin on our dear comrade’s plan – it’s like a fart in a gale storm.

“The hard truth is that getting this deficit under control is going to require some broad sacrifice, and that sacrifice must be shared by employees of the federal government,” Mr. Obama told reporters. He called federal workers “patriots who love their country” but added, “I’m asking civil servants to do what they’ve always done” for the nation.

The pay freeze amounted to an opening bid as the president and Republican Congressional leaders begin jousting in earnest over tax and spending policy. It also illustrated how Mr. Obama can use his office on occasion to get ahead of newly elected Republicans; they had been talking about making such a move when they assume control of the House and additional Senate seats in January.

Yeah, good luck with that. He’s such a bloody genius, isn’t he?

Of course the public unions and left wing pundits are predictably not happy with all this talk of “shared sacrifice.” After all, these are public servants we’re talking about here – “patriots.” BLECH…

John Gage, president of the 600,000-member American Federation of Government Employees, called the decision “a slap at working people. … To symbolically hit at federal employees I think is just wrong.” He said the move would not really save as much as the White House claims because federal employees often get just a fraction of projected raises.

Colleen Kelley, head of the 150,000-member National Treasury Employees Union, said union officials would try to derail the proposal in Congress. She may find some sympathy with union-friendly Democrats still in control for another month.

“We’re going to do everything we can to make this not happen and to explore all our options,” Kelley said.

Given that this only affects Cost Of Living Adjustments (COLA), federal employees could still see increases through step increases (pay grade) and bonuses. So will there be any actual “savings?” Don’t count on it – federal employees take care of their own.

Will we actually see this cost savings?  Probably not.  Gabriel Malor received an official explanation given to federal employees today, which assured them that the freeze “will not impact step increases or bonuses for federal workers.”  It applies to cost-of-living increases, mainly.  If an agency wants to give a worker an increase, they just need to increase their pay grade or boost their bonuses to make it happen.

So don’t worry fellow patriots, we’re just freezing your COLAs – you’ll still get your step increases and bonuses. Bonuses? Huh? WTF?

With all of this onerous shared sacrifice, one wonders if more federal employees patriots will be compelled to cheat on their taxes. I really feel for these patriots – the tears are running down my legs…

Clueless congressman wants to extend unemployment for another year

The unemployment extension (to 99 weeks) mandated by congress is about to run out. With time running short during the lame duck session, at least one clueless congressman is proposing to extend unemployment benefits yet again – this time for a whole bloody year. Of course, there’s no mention of how to actually pay for it (according to PayGo rules) so it simply piles onto the already unsustainable deficit. BOHICA! (story here from The Hill)

Senate Finance Chairman Max Baucus (D-Mont.) introduced legislation Monday night that would provide long-term unemployed workers with benefits through the end of next year, with the program expected to lapse Tuesday.

Baucus told The Hill Monday night he wants to move quickly on the measure and “will try every way I can to get this passed.”

Whether the bill is pushed through as a stand-alone or as part of a larger tax or other legislative package, the federal program that provides jobless benefits for those whose 26 weeks of state benefits have ended, up to 99 weeks in states with the highest levels of unemployment, will expire Tuesday, affecting 800,000 by the end of next week and 2 million by the end of December.

The bill, which isn’t paid for, is estimated to cost about $56.4 billion, slightly below other estimates of between $60 billion and $65 billion, or about $5 billion a month. The Baucus bill would cost about $4.33 billion per month.

Baucus isn’t the only brain-dead senator as there are at least 27 more who are pushing for this. No doubt there will be some squishy RINOs who will go along with this too.

Earlier Monday, 27 Senate Democrats called for a one-year extension of the program in a letter Monday to Baucus and Senate Majority Leader Harry Reid (D-Nev.).

“As our nation continues to battle high unemployment rates, we must act immediately to continue vital safety net coverage for those most in need,” the letter said.

Safety net indeed. This will stimulate nothing – it will only prolong the agony and add to the stunning deficit run up by this hideous congress. It will also add to state deficits as they are responsible for unemployment benefits as well (more here and here).

Again, trying to address a spending problem with more spending. If you really want to address this mess, you need to actually stimulate the economy. Here’s DaMook’s 6 point plan for the economy:

1. Roll back federal spending and employment to 2008 levels. Freeze it there for 3 years.
2. Repeal obamacare.
3. Repeal Dodd/Frank financial regulation.
4. Extend the Bush tax cuts at all levels – permanently.
5. Roll back EPA and other government lunacy regulation to pre-2008 policies.
6. After all of that is done, send congress home for a 1 year vacation and declare a 1 year moratorium on federal regulation.

Then we can start talking about shrinking the federal leviathan.

UAW scores big with GM IPO

When the regime turned US bankruptcy law on its head with the bailout of GM, investors and taxpayers were big losers. GM’s stock and bondholders, you know, the ones who had actually lent money to the company, had to take a 1-100 reverse stock split on their investments (more here). Most were wiped out in the government enforced process. As an aside, the very GM execs who were responsible for the company’s failure reaped big bonuses in this perverted “bankruptcy” (more here).

Now that the “new” GM has held its IPO (more here), the government has recouped about 30% of the taxpayers’ “investment” while the original creditors got virtually nothing. One group however, will ultimately get the best deal of all – the unions. It appears that the regime engineered this deal so the unions would win while everyone else loses (story here).

General Motors Co.’s recent stock offering was staged to start paying back the government for its $50 billion bailout, but one group made out much better than the taxpayers or other investors: the company’s union.

Thanks to a generous share of GM stock obtained in the company’s 2009 bankruptcy settlement, the United Auto Workers is well on its way to recouping the billions of dollars GM owed it — putting it far ahead of taxpayers who have recouped only about 30 percent of their investment and further still ahead of investors in the old GM who have received nothing.

The boon for the union fits the pattern established when the White House pushed GM into bankruptcy and steered it through the courts in a way that consistently put the interests of the union ahead of many suppliers, dealers and investors — stakeholders that ordinarily would have fared as well or better under the bankruptcy laws.

“Priority one was serving the interests of the UAW” when the White House’s auto task force engineered the bankruptcy, said Glenn Reynolds, an analyst at CreditSights. The stock offering served to show once again how the White House has handsomely rewarded its political allies, he said.

The union’s health care and pension trust fund earned $3.4 billion through the sale of one-third of its shares in GM last week. Analysts estimate that it would break even if it sells the remaining two-thirds of its shares at an average price of $36 — close to where the stock traded shortly after the offering hit the market. GM shares closed at $33.45 on Wednesday.

For taxpayers to break even, by contrast, the stock would have to rise to at least $52 and by some estimates as high as $103 — levels that would take years to achieve.

And the ones who actually had money invested will never come close. They’ll be extremely lucky to get 30% of their original investment.

Perhaps the biggest losers are the investors in the old GM. None of the bankrupt company’s previous stockholders got any money, while the claims of thousands of investors who purchased the company’s bonds are still being kicked around in a Manhattan bankruptcy court.

“It gives outraged flashbacks to the old GM bondholders,” who remain mired in the bankruptcy proceedings and are unlikely to recover more than 30 percent of their investments, Mr. Reynolds said.

He compared the deal to the corrupt crony capitalism in Russia under President Vladimir Putin.

The White House “took a page out of the Putin political asset reallocation and reward system” when it engineered the deal, he said.

Mr. Reynolds also described the White House deal as a combination of “Boss Tweed on steroids” and “Hugo Chavez on meds,” as far as the bondholders are concerned.

This should come as no surprise to anyone. Unions overwhelmingly supported our dear comrade leader’s campaign and continue to support the regime’s policies. This is nothing more than payback for that support.

Want a “party house?” Become a foreclosure squatter

In these times of financial strife, while many people are losing their homes to foreclosure, others are more than willing to take advantage of the situation. According to this story (from NBC LA) if you want to have a free “party house,” go ahead and just move into one that’s been abandoned due to foreclosure. It’s especially nice if you chose one of the many “MacMansions” available – you know, the $1M plus palaces.

In an upscale enclave in the San Fernando Valley, there’s a new neighbor on the block. He drives a big Mercedes, sometimes a fancy SUV and residents say he’s been living in a three-story mansion, which was empty and going into foreclosure.

His name is Dawud Walli, and neighbors say he moved into a huge empty home last July, furnishing nearly every room of the house.

“We feel unsafe. We can’t sleep. We have families,” say some of the residents who live nearby.

They say Walli made this a party house.

Inside, we found booze and condoms scattered about. But no one really knew what went on here, because some of the windows were covered with tape and garbage bags.

“They don’t want to make contact with the neighbors. They do not want to make eye contact with you. They do not talk to you,” says someone who lives nearby.

Prosecutors say this is happening across Southern California.

And when the cops went to check on neighbor’s complaints, they were presented with a fake lease. They shrugged and went away – Oh well…

“It’s just amazing how nervy they can be: presenting false leases,” says Rodriguez.

Police believe that’s what Walli did. When neighbors asked police to evict him, he showed the cops a lease, which says he was renting from the owner…

Authorities admit squatters usually get away with it, partly because they know how to work the system.

Yeah, because in this “system,” the authorities are too lazy to investigate. In this case, the neighbors and media did it for them.

But the residents in this community are now fed up with squatters. They tell us that this has happened five times in their neighborhood in the last year.

“A house becomes vacant and the next thing you know, there’s a moving truck and people start moving in,” said one resident.

They were determined to get Walli out, after seeing him come and go for months They got the owner of the empty house to change the locks, and chain the front door and they got the cops to post “no trespassing” signs.

The guy finally got the message that the neighbors weren’t giving up so he bugged out – probably for another abandoned mansion. Because he can. Because the authorities won’t do anything about it.

Police had opened an investigation into Walli, but now tell us that because he agreed to move out, they did not charge him with a crime.

Authorities tell us that most high-end squatters never get charged.

Kudos to the neighbors. The “authorities” should be taken to the woodshed.

The tax increase sucker play

Back in February our dear comrade leader created the National Commission on Fiscal Responsibility and Reform (more here) to make recommendations on how to reduce the gargantuan economy-killing deficits imposed by the democrat-controlled congress and the comrade himself. While the commission is mostly bipartisan and actually contains some fiscal hawks (like Tom Coburn), one has to question how serious our comrade leader was about deficit reduction given that he appointed former SEIU chief Andy Stern as a member of the commission (more on Stern here and here). Stern can be counted as a sure vote against any recommendation that contains even a hint of fiscal restraint.

The commission is supposed to issue their list of recommendations next month and there have already been some revelations as to what we can expect. According to this story (from the WSJ), revenue (tax) increases will surely be part of the commission’s recommendations. This is certainly to be expected but will tax increases actually do anything to reduce the deficit? According to the article’s authors, they will probably increase the deficit because as history has shown, congress will spend any increased revenue – and then some.

The draft recommendations of the president’s commission on deficit reduction call for closing popular tax deductions, higher gas taxes and other revenue raisers to drive tax collections up to 21% of GDP from the historical norm of about 18.5%. Another plan, proposed last week by commission member and former Congressional Budget Office director Alice Rivlin, would impose a 6.5% national sales tax on consumers.

The claim here, echoed by endless purveyors of conventional wisdom in Washington, is that these added revenues—potentially a half-trillion dollars a year—will be used to reduce the $8 trillion to $10 trillion deficits in the coming decade. If history is any guide, however, that won’t happen. Instead, Congress will simply spend the money.

In the late 1980s, one of us, Richard Vedder, and Lowell Gallaway of Ohio University co-authored a often-cited research paper for the congressional Joint Economic Committee (known as the $1.58 study) that found that every new dollar of new taxes led to more than one dollar of new spending by Congress. Subsequent revisions of the study over the next decade found similar results.

We’ve updated the research. Using standard statistical analyses that introduce variables to control for business-cycle fluctuations, wars and inflation, we found that over the entire post World War II era through 2009 each dollar of new tax revenue was associated with $1.17 of new spending. Politicians spend the money as fast as it comes in—and a little bit more.

We also looked at different time periods (e.g., 1947-2009 vs. 1959-2009), different financial data (fiscal year federal budget data, as well as calendar year National Income and Product Account data from the Bureau of Economic Analysis), different lag structures (e.g., relating taxes one year to spending change the following year to allow for the time it takes bureaucracies to spend money), different control variables, etc. The alternative models produce different estimates of the tax-spend relationship—between $1.05 and $1.81. But no matter how we configured the data and no matter what variables we examined, higher tax collections never resulted in less spending.

Surprised? I’m not. For decades the federal leviathan has grown in size, scope and power. The bureaucrats in DC have lost touch with reality because most of their policies only affect the little people as they have largely exempted themselves. Tax cheats abound – including the Treasury Secretary himself and the architects of tax and spend policy. This is not a revenue problem, it’s a spending problem.

We suspect that voters intuitively understand this tax and spend connection, which is why there is such hostility to broad-based tax increases. “Polls consistently find that a majority of Americans believe any new taxes will be spent by the politicians,” pollster Scott Rasmussen told us recently in an interview.

The grand bargain so many in Washington yearn for—tax increases coupled with spending cuts—is a fool’s errand. Our research confirms what the late economist Milton Friedman said of Congress many years ago: “Politicians will always spend every penny of tax raised and whatever else they can get away with.”

Precisely – a sucker play…

CA borrows $40M A DAY to pay unemployment

Extending unemployment benefits (up to 99 weeks) sounded like a great idea but it is proving to be a fiscal disaster for many state governments (previous post). Using fiscal chicanery and accounting practices that would put the average person in jail, congress and the regime have tried to soften the blow of the recession. As we all know, the federal government can run staggering deficits year to year but state governments cannot. So when congress mandates extensions to unemployment, state governments must find ways to fulfill their part of this obligation. They can pull money from other programs, increase unemployment taxes on employers, or borrow from the federal government (or all of the above).

At least 32 states have borrowed almost $41B from the federal government to cover unemployment payments. According to this story, California, a state with 12.5% unemployment and a $20B budget deficit, is now borrowing $40M a day to cover its unemployment obligation.

With one in every eight workers unemployed and empty state coffers, California is borrowing billions of dollars from the federal government to pay unemployment insurance.

The Los Angeles Times reports that the state owes $8.6 billion already, and will have to come up with a $362-million payment to Washington by the end of next September.

The continued borrowing means federal unemployment insurance taxes are going to increase, upping the annual payroll costs $21 a year per worker.

California tops the list of 32 states that have borrowed a total of $41 billion to pay claims.

The state took out its first loan from the federal government early last year, to deal with rising payment of benefits and number of claims.

At $40M a day, that works out to about $1.2B a month or $14.4B a year – just for unemployment. And they’ve already borrowed $8.6B. Am I the only one who sees a problem with this? Apparently the voters of California don’t.

And for an eye-opening look at the size and scope of the CA state government, here’s a list of state government agencies.

Voters in CA & NY – We want more FAIL

While voters across the country more or less roundly rejected democrats and their failed socialist agenda on election day, those on the left and lefter coasts (NY and California) proved that they are gluttons for even more punishment.

In NY (results here) the republicans picked up 5 House seats but 21 incumbent democrats, including corruptocrat Charlie Rangel, won by mostly wide margins. They elected corruptocrat Andrew Cuomo for governor, although his challenger Carl Paladino was certainly no prize, and both democrat senators were re-elected. In the state legislature dems retained their huge majority and it looks like they may gain control of the senate for the first time since the ’60s.

California voters elected Jerry (Moonbeam) Brown as governor and re-elected Barbara Boxer to the senate. Inexplicably bucking a nationwide trend against incumbency, every incumbent (republican and democrat) retained their seat in the House races. The real kicker however, came in the form of the adoption of Prop 25 and the rejection of Prop 23. The passage of Prop 25 essentially provides an overwhelmingly democrat legislature an open checkbook with the state budget (with its $20B deficit). Prop 23 would have suspended the state’s draconian carbon emission regulations, which have been driving businesses out of the state, until unemployment (currently at 12.5%) reaches 5%. What the hell are these people thinking??? Roger Simon (from Pajamas Media) has this to say about the election:

Is the Golden State hopeless and headed for bankruptcy?  After the 2010 election, it doesn’t need a forty-plus year resident like me to state the obvious — and how!

Yes, last Tuesday, running counter to most of the rest of country, the citizens of one of the most beautiful and bountiful pieces of real estate on Earth, not to mention many of the globe’s most innovative companies, simply stuck their heads collectively in the sand and said: Bring it on!

Now sure, Whitman and Fiorina weren’t the greatest campaigners since Harry Truman. But come on — look at the alternatives.  Jerry Brown and Barbara Boxer were already proven adherents of economic catastrophe.  They have neither the will nor the motivation to turn things around.  They were both elected with the unstinting support of the very unions whose bloated pension plans created the current intractable financial crisis in the first place. Bankruptcy looms.

Call it bankruptcy or call it shmankruptcy, you either can pay your bills or you can’t.  California, which has already suffered the ignominy of paying many through IOUs, is heading for a situation where no one will take its IOUs.Now — and here is the nub of my piece — whatever you do when this happens, do not allow anyone to bail us out. Not one penny.  Not the federal government, the Heart Fund, the Community Chest, the World Bank, UNICEF, or even George Soros. Do not take up a collection in your places of worship or set up a food bank.  And above all, do not make California into some giant state version of General Motors.  It didn’t work for the auto company and it will not work for us.

The only solution is for California to suffer — and to suffer badly.  The citizens of this state need a serious beat down. This was the place where Jane Fonda popularized “No gain without pain.”  Well, time for the pain.  Remember the “Summer of Love”?  Time for the “Summer of Tough Love.” And the Winter, Fall and Spring as well.

And here’s a look at both states from Fred Siegel at the City Journal.

…another division is likely to compete for center stage in the next two years: the split between, on one side, California and New York—two states, deeply in debt, whose wealthy are beneficiaries of the global economy—and, on the other, the solvent states of the American interior that will be asked to bail them out. This geographic division will also pit the heartland’s middle class and working class against the well-to-do of New York and California and their political allies in the public-sector unions.

While most of America turned toward the Republicans in this election, Democrats strengthened their hold on California and New York. In California, they won all the statewide offices and even made gains in the legislature, prompting the Orange County Register to describe the Republicans as having been reduced to “almost total irrelevancy in Sacramento.” In New York, Democrats similarly swept all the statewide offices and may have held on to the state senate, too, though three contests are still too close to call. Those three races are all that stand between New York’s GOP and a similar irrelevancy.

The mood in much of the rest of the country was quite different. In the nation’s interior, Republicans gained ten governorships and may have picked up as many as 20 state legislatures. In traditionally blue Minnesota and Wisconsin, both houses of the legislature are now in Republican control. This sets up what could be an ugly fight in which a Tea Party–inflected national Republican Party, encouraged by its strength in the interior states, forces California and New York—now heavily dependent on federal subsidies—to reduce their spending sharply. The coastal giants would no doubt respond by threatening defaults, which could affect the credit standing of the entire country, since many of the bonds are held by foreign investors. The upshot would likely be a high-stakes conflict about free trade, globalization, social class, race, illegal immigration, and public-sector unionism.

Given the mood of the rest of the country and the popularity of reformers like NJ Gov. Chris Christie, how likely will it be that the rest of us want to bail out CA and NY? Especially when their citizens have brought this upon themselves?

Not me – how about you? Let them fail…

GM could be free from taxes “for years” – Huh? WTF?

When General Motors went through bankruptcy and became Government Motors, GM bondholders, you know, the ones who actually had money invested in the company, were kicked to the end of the line. The federal government (thanks to a $60B taxpayer bailout) ended up with 61% of the company. The Canadian government ended up with 12% and the unions got 17.5% while GM bondholders got 10% – 10 cents on their investment dollars. Government involvement basically turned the bankruptcy process on its head.

Over the last year: the regime’s “car czar,” Steven Rattner, resigned under a cloud of suspicion, GM (and the Treasury Dept.) lied about paying back its government loans, GM execs who were responsible for the collapse of the company scored huge bonuses, and their “car of the future” has been exposed as a lemon and a fraud. That’s quite a record of achievement there…

But there’s more. According to this story (from the WSJ), it looks like GM will benefit from unusual tax breaks that could allow them to operate essentially tax free for years.

GM, which plans to begin promoting its relisting on the stock exchange to investors this week, wiped out billions of dollars in debt, laid off thousands of employees and jettisoned money-losing brands during its U.S.-funded reorganization last year.

Now it turns out, according to documents filed with federal regulators, the revamping left the car maker with another boost as it prepares to return to the stock market. It won’t have to pay $45.4 billion in taxes on future profits.

The tax benefit stems from so-called tax-loss carry-forwards and other provisions, which allow companies to use losses in prior years and costs related to pensions and other expenses to shield profits from U.S. taxes for up to 20 years. In GM’s case, the losses stem from years prior to when GM entered bankruptcy.

Usually, companies that undergo a significant change in ownership risk having major restrictions put on their tax benefits. The U.S. bailout of GM, in which the Treasury took a 61% stake in the company, ordinarily would have resulted in GM having such limits put on its tax benefits, according to tax experts.

But the federal government, in a little-noticed ruling last year, decided that companies that received U.S. bailout money under the Troubled Asset Relief Program won’t fall under that rule.

“The Internal Revenue Service has decided that the government’s involvement with these companies, both its acquisitions plus its disposals of their stock, means they should be exempt” from the rule, said Robert Willens, a New York tax consultant who advises investment banks and hedge funds.

The government’s rationale, said people familiar with the situation, is that the profit-shielding tax credit makes the bailed-out companies more attractive to investors, and that the value of the benefit is greater than the lost tax payments, especially since the tax payments would not exist if the companies fail.

GM declined to comment.

Essentially this amounts to a $45B “gift” from the taxpayers and brings the bailout total to over $100B. Another example of “too big to fail” brought to you by our federal government. Must be nice to have friends in high places…