Category ►►► Retiring Ruminations

July 13, 2011

Look What We Made the Obamacle Do, Part Two

Econ. 101 , Fed Spending: to Infinity and Beyond! , Presidential Peculiarities and Pomposities , Retiring Ruminations
Hatched by Dafydd

I seem to have dropped a casual bombshell in the sister-post to this, and I ought to cite a source.

After writing the following --

Money comes into the American treasury all the time: quarterly tax payments, corporate taxes, employee withholding, sales of government property, fees, licenses, and so forth. I understand that such continuous income greatly exceeds the bare-bones payment obligations of the United States government -- entitlement payments and debt service. In other words, we have enough revenue to meet those obligations; just not enough to meet them in addition to all the other expensive projects that the Obamunists want to fund at the same time...

-- I received a comment from a frequent commenter who raised the obvious question: Was my back-of-the-thumbnail guesstimate about income and outgo correct? MikeR asked,

You made a claim that there is enough money to cover our bare-bones obligations. I have heard otherwise: That in the month of August, we would essentially have to choose between paying our soldiers, Social Security, and debt service. Did you have a source?

Ask and ye shall receive. I found this on the American Spectator blog, posted today:

But, assuming the debt limit is reached and the Treasury has the power to privilege certain bills over others, there's no doubt that it's within it's power to pay Social Security recipients. The federal government will take in about $172 billion in August, and owe roughly $307 billion. It will have no problem paying the interest on the debt (about $30 billion) and Social Security recipients (about $50 billion).

But what about "paying our soldiers?" The author of the Spectator blogpost, Joseph Lawler, digs deeper:

Bloomberg Businessweek has created a debt ceiling prioritization calculator, using figures from the Bipartisan Policy Center. Using broad categories, it shows which items the government could continue to fund past the deadline while avoiding a default on the debt. By BPC's calculations, it would be possible to continue paying not only for Social Security and the interest on the debt, but also Medicare, Medicaid, unemployment insurance, active duty military pay, TANF [welfare], food stamps, and Homeland Security emergency preparation and response, with billions left over just in case.

Joseph Lawler is the managing editor of the American Spectator; Bloomberg L.P., which publishes Bloomberg Buisinessweek (formerly BusinessWeek), is nearly entirely owned (88%) by Michael Bloomberg, the current Mayor of New York City and a flaming Democrat, for all that he ran for the mayorship as a "Republican." He, his company, and the magazine are hardly likely to tilt towards tea partiers, conservatives, or actual Republicans. I think it safe to trust them all on this point, which constitutes an admission against the Left's interest.

(To be a compleat completist, another commenter, LarryD, posted much of this same information in a comment to the previous post; and MikeR himself found a similar story here.)

Just remember: When in doubt, always trust Big Lizards; we may not always be right, but we're never wrong. (And Power Line. And Patterico's Puntifications, of course; trust them too. And even Beldar, when you can scrape the crust off'n him; but that's a whole 'nuther box of fish.)

Hatched by Dafydd on this day, July 13, 2011, at the time of 4:59 PM | Comments (5)

July 12, 2011

Look What We Made the Obamacle Do!

Econ. 101 , Fed Spending: to Infinity and Beyond! , Presidential Peculiarities and Pomposities , Retiring Ruminations
Hatched by Dafydd

First it was "Hope and Change," where any kind of change would make things better, any government spending at all would be "stimulative," and hope arose from the mere fact that a man who called himself "post-partisan" and "post-racial" had planted himself in la Casa Blanca. Under his reign, the oceans would subside, the Earth would heal, and like Milo Minderbinder's M&M Enterprises, everybody would have a share.

This idyllic intro-interlude quickly morphed into "gangster government," as Michael Barone put it: a lethal combination of legal bribery from unions and other special-interest groups, followed by wholesale privileges (literally, "private laws") granted to favored constituencies, from auto-worker unions, to teachers, to gays, to federally privileged minorities, to Silicon Valley billionaires, to silicone-mountain Hollywood elites. The president had discovered that democracy is messy, and even those who disagree with Obama are allowed to vote, protest, organize, and voice their opinions.

Faced with such disunity and "chaos" coming from bitter people who cling to their religion and their guns, what was a newly anointed Keeper of the Vision supposed to do? Naturally he had to turn to criminal mobs to appease the liberal mobs who made him -- and who could break him just as easily.

But at last, after years of increasingly dirty (and incompetent) governance coupled with crony "capitalism," the administration of Barack H. Obama slithered into its third and terminal phase: extortion government, in which the President of the United States directly threatens to inflict grievous damage, in a planned and calculating way, upon the most vulnerable of his own people -- unless his political opponents kow-tow to his every demand. (Actually, as Barack Obama considers himself a "fellow citizen of the world," perhaps he doesn't consider them "his people" in the first place.)

In a sense stronger than merely symbolic, Barack Hussein Obama has become Maximilien François Marie Isidore de Robespierre, architect of the French Revolution, the bloodiest community-organizing mob action in history.

Witness: France during the Terror had the guillotine, the "national barber;" America, held hostage, has the deficit -- the national credit card. The administration has maxed out the national credit card (even gone over the limit), and the president is beside himself that he cannot continue charging, charging, and charging to pay for his caviar tastes in government largess.

So today, in a fit of pique, Obama threatens that unless Republicans agree immediately to a Brobdingnagian hike in the national credit card's credit limit and to trilliions of dollars in new taxes and spending, he will deliberately, and with malice aforethought, refuse to send out Social Security and Veterans Benefits checks.

From CBS:

"I cannot guarantee that those checks go out on August 3rd if we haven't resolved this issue. Because there may simply not be the money in the coffers to do it," Mr. Obama said in an interview with CBS Evening News anchor Scott Pelley, according to excerpts released by CBS News.

"Look what you made me do!"

But of course, the administration is responsible for all federal spending. Congress can only appropriate; it's up to the Executive actually to send out the checks. And that means the president has the legal authority and obligation to prioritize spending.

In this case, he has the duty to privilege certain spending -- interest and principal payments to bond holders and "entitlement" payments to seniors and veterans, among others -- over other types of spending, including payments to doctors and hospitals under ObamaCare; block grants to states; foreign aid; funding of Fannie Mae and Freddie Mac, paying vendors and federal contractors; paying for travel by government employees (including the president, Mrs. President, and their posse/entourage); money to the National Science Foundation, the National Institutes of Mental Health, the Corporation for Public Broadcasting, and every other federally funded foundation or institute (no matter how worthy); and even paying federal workers.

Not to mention the hundreds of billions of dollars appropriated by Congress every year for porkbarrel projects in the districts of powerful representatives and senators.

Money comes into the American treasury all the time: quarterly tax payments, corporate taxes, employee withholding, sales of government property, fees, licenses, and so forth. I understand that such continuous income greatly exceeds the bare-bones payment obligations of the United States government -- entitlement payments and debt service. In other words, we have enough revenue to meet those obligations; just not enough to meet them in addition to all the other expensive projects that the Obamunists want to fund at the same time. (What's most galling, of course, is that Barack Obama himself and his cronies in Congress are the very culprits who brought on this terrible financial catastrophe in the first place. "Look what I made you make me do!")

The obvious solution presents itself.

Every large corporation must have a budget; and every such budget must, among other requirements, prioritize the corporation's financial obligations: What gets paid first? What gets paid second, third, nth? I suspect that if a publicly traded corporation was so mismanaged that it didn't even have a contingency plan for what bills to pay if it experienced a sudden revenue shortfall, not only would it be liable for massive lawsuits, but the SEC and the Justice Department might open a criminal investigation of the corporate officers.

Thinking of the federal government as the nation's largest (if not the world's largest) corporation, then mustn't it, too, have a heirarchy of payments to guide the president during a temporary shortfall? Isn't the obvious lack of such an emergency plan, resulting in threats to withhold pledged funds to those who could literally die from such embezzlement -- which is what the president's threat amounts to -- the very definition of financial malfeasance and nonfeasance?

But this sort of hysterical extortion is the liberal's stock in trade. I cannot begin to count how many times a Democratic governor or mayor has responded to reduced revenues by threatening to furlough police and firefighters first, before even considering laying off the thousands of non-essential government workers, from state license form filler-outers and scrutinizers, to inspectors who prowl neighborhoods to make sure nobody has the wrong kind of front lawn or too high a fence, to complicated "diversity" (affirmative action) schemes, to pothole repair, to state highway construction, to light rail, to establishment of new state parks, to city-hall barbers, to spiraling billions to state "education" funding.

It's a vile and shabby trick: Pandering to the liberal mob, Obama attacks the weakest and most vulnerable citizens by directly threatening them with penury and starvation unless Republicans cave. "Nice pension you have there; sure would be a shame if something was to happen to it..." Such intimidation of America's own citizens is so thuggish, so antidemocratic, so unAmerican that it easily rises to the level of high crimes and misdemeanors in the meaning of Article II, Section 4 of the Constitution.

Any ordinary person would burn with shame to threaten the old, the sick, and wounded vets just to enact his pet policies, against the clearly expressed will of the people. I can only conclude that Obama's narcissism is so advanced that he has become a functional sociopath -- the anti-Clinton -- literally incapable of feeling anybody's pain, responsive only to his own sense of aristocratic entitlement and his outrage at being thwarted.

Obama's "audacity" is positively brazen; it doesn't even occur to him to conceal his real motivation. He nakedly commands this issue to go away until after his presumed re-coronation next year:

Mr. Obama has repeatedly said he wants a deal that would allow the U.S. to avoid confronting the issue again until after the 2012 elections and vowed on Monday that he would "not sign a 30-day or a 60-day or a 90-day extension."

He insists that both sides "put politics aside" -- and simply enact the Democratic minority agenda. There's post-partisanship for you, Chicago style. What's next? Will President B.O. take a page from the National Lampoon? "If Republicans don't raise taxes and jack up the debt ceiling, we'll kill this dog!"

November 2012 cannot come soon enough. I only wonder... if Barack Obama continues on the path he has trodden for the past two and a half years, will he become the first incumbent president to lose all fifty-seven states?

Cross-posted on Hot Air's rogues' gallery...

Hatched by Dafydd on this day, July 12, 2011, at the time of 4:36 PM | Comments (6)

March 31, 2011

The Pension Suspension Is Killing Us!

Econ. 101 , Retiring Ruminations , Tax Attax
Hatched by Dafydd

Budget negotiations between California Democrat-retread Gov. Jerry Brown and the legislative Republicans have collapsed. (Surprise, surprise on the Jungle River Boat ride tonight.)

Brown recognizes (or claims to recognize) that the biggest problem in the Leaden State (formerly the Golden State) is too darned much spending; yet for political reasons -- mainly because his own Democratic Party would never accept such a solution -- he doesn't want to close the "$26 billion abyss" in the budget on spending cuts alone. So in addition to proposing some cuts ($11.2 billion, or 43% of the deficit), Brown also seeks to extend a series of "temporary taxes" due to expire this year.

And therein lies the dilemma: Under California's constitution, raising taxes requires a 2/3rds vote in both chambers. But despite Democratic gains in the 2010 elections, the current party mix is as follows:

Lead-in paragraph:

California State Legislature party division
Chamber Democrats Republicans Votes needed for
Democrats to raise taxes
State Senate 25 (62.5%) 15 (38.5%) 2 more votes
State Assembly 52 (65.8%) 27 (38.5%) 1 more vote (or 2, if vacancy filled)

In other words, Democrats alone do not have enough votes to extend those taxes; and so far, the Republicans have held firm, casting not a single vote for the extensions. Besides, again for political cover, Gov. Brown wants the state's voters to approve the tax extension (that is, the tax increase from what current law mandates starting in July). Thus, what the Democrats actually want to pass is a bill that would place on the June 7th, 2011 state ballot an initiative to extend the temporary, two-year tax increases imposed in 2009 for an additional five years. That ballot currently has only local issues; but the legislature can put statewide legislative initiatives onto the ballot if they act by tomorrow, Friday, April 1st, I believe.

(Does anybody doubt that in 2016, Jerry Brown, if he's still governor, or any other Democrat will demand that we "extend" the tax increases for an additional five or ten or twenty years? "With such a whopping huge deficit in 2016," he or she will wail, "we mustn't even think about tax cuts for California fat cats!")

However, at the moment, the Cal-GOP legislators won't give Brown his initiative, either. Nor is it even likely to pass, even if Democrats find a way to shoehorn it onto the June ballot:

The bigger problem is whether Democrats could drum up enough votes among a cash-strapped electorate to pass a tax increase, especially without the backing of any Republican lawmakers.

A Public Policy Institute of California poll released March 23 showed voter support for the proposal waning. While 66 percent of likely voters agreed with the plan in January, only 51 percent still thought it was a good idea by March.

The survey also showed likely voters divided on how to balance the budget, with 41 percent saying they preferred a mixture of cuts and tax increases, and 40 percent favoring the so-called “all-cuts” solution.

“They seem to be convinced it will not pass,” said Tony Quinn, co-editor of the California Target Book in Sacramento. “They’ve probably got internal polling data saying that if they don’t have Republican votes, voters won’t pass it.”

That's a fifteen-point drop in support for the tax extensions in just two months. Most Californios understand that there are three proximate causes for the reality-warping state deficit... and "undertaxation" is not among them:

  • The refusal by Democrats to rein in spending on so-called "entitlements," most especially including unfunded public-employee pension plans.
  • A stifling regulatory regime, still expanding, that is tying down California businesses like the Lilliputians tying down Lemuel Gulliver with a million regulatory threads... to the point where, as Robert Anton Wilson put it, "Everything not compulsory is forbidden; everything not forbidden is compulsory." And in fact, some forbidden things are nevertheless compulsory, as regulatory worlds collide.
  • One of the most business-hating tort environments in the United States suing more and more local companies out of California and into Oregon, Nevada, and other nearby states.

By an amazing coincidence, the three most potent, greedy, and narcissistic special interests within the California Democratic Party are public-employee labor unions, who demand that all pensions and benefits be sacrosanct, no matter how big a hole they blow in the state budget; ultra-liberal government regulators, appropriators, and other rent-seekers, who think Capitalism is out of control and needs to be under the thumb of the State; and plaintiff civil trial-lawyers, who loot the state to the tune of billions of dollars by filing bogus class-action lawsuits and ridiculous personal injury, medical malpractice, and consumer product safety claims (the only lawsuits they seem to have no interest filing are claims of legal malpractice).

And by a second amazing coincidence, those issues are precisely the Rubicon that the Democrats in the state legislature will not cross: public-employee pensions and benefits, regulation and welfare entitlements, and tort reform. Hence the "unexpected" collapse of budget negotiations.

Long term, the biggest problem is probably pensions; in February of last year, the American Enterprise Institute published a detailed calculation of just how much unfunded liability public pensions have dumped on the states, and specifically on California in the present case:

As the largest state, California not surprisingly has the largest absolute public pension funding shortfall at $454 billion, followed by New York with $284 billion and Illinois with $208 billion. Figure 4 shows the market value of unfunded pension liabilities by state.

In case you're interested, here's "figure 4":

Unfunded public pension liabilities by state

Republicans have specifically targeted out-of-control public pension plans, and that is one of the shoals upon which negotiations foundered:

The GOP had pushed for pension reform for public employees, a hard cap on state spending, and a loosening of the state’s regulatory climate. Democrats said the Republican demands were unreasonable, while Republicans blamed the state’s public-employee unions and trial attorneys for sinking the negotiations.

“As a result of these groups’ refusal to challenge the status quo, it has become clear the governor and legislative Democrats are not in a position to work with us to pass the measures necessary to move California forward,” said Republican state Sen. Anthony Cannella in a statement.

So there we are. The California budget is shattered by a budget chasm the size of the Valles Marineris on Mars. The deficit is primarily fueled by public pensions, overregulation, and a trial-lawyer's wet dream of a tort system. But the Democrats utterly refuse to touch any of those three causes, because they would have to defy the most powerful and aggressive special interests within their own party.

The Democrats' solution? Balance the budget on the backs of California taxpayers: When liberals are in charge, Econ. 101 is invariably trumped by Politics 101.

In the end, California voters will have their say; and Gov. Jerry Brown will very likely have to find a way to close the gap without raising taxes that are already unconscionably high. But how long will those same voters who reject tax increases and endless spending nevertheless keep reflexively reelecting the party that is completely and impulsively defined by the mantra "tax, borrow, and spend?"

Hatched by Dafydd on this day, March 31, 2011, at the time of 7:33 PM | Comments (0)

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