Many states have a constitutional requirement to balance their budgets while the federal government has no such limitation.  As such, a number of stately are longingly looking toward Washington to throw some cash their way so they don’t go bankrupt.  It is not going to get better.

If you think Washington awash in debt, is a problem, it is chump change compared to what is brewing at the state level.  Trillions in unfunded pension liabilities are looming and those who are benefiting from those generous plans or who are going to, don’t care about the rest of us who have to pay for them and then go provide for ourselves.

Lawsuits are starting to be filed to stop states from altering the terms of these plans.  The time to act is sooner rather than later, but that is lost on one teacher in Colorado who says, “Why is the state so quick to break its promises.”  Perhaps we should explore how these promises were made, in both directions. 

Unions backed Democrats almost exclusively.  Democrats riding union support into office had a debt to repay.  They repaid it by supporting the kinds of contracts that the unions wanted and the unions returned the favor with their loyalty.  Who paid the bill?  The rest of us.  How much say did we have in the process, next to none.  In private industry, unions negotiate with management.  Unions have almost no say in who gets hired into management and will sit across from them at the bargaining table.  So the adversarial relationship has management supporting the shareholders and unions backing the workers.  As management became more enlightened and took better care of their employees, the need for a union middleman faded away.  That is why in private industry union representation is down to about 7% and falling while in the public sector is around 37% and growing.

The public employees argue that their generous pension plans is merely deferred compensation to make up for their salaries during the time they worked.  The only problem is that the unions did a good job not only on the pensions but on the salaries as well, so that the average public sector employee makes about 34% more than his private sector counterpart.  Fair being fair, our public sector friends would probably recognize their good fortune and agree to help fix the problem, right?  No chance.  As one put it, “I shouldn’t be responsible for past pension underfunding and foolish risks managers made with my money long after I retired,”  Okay, let’s give that a closer look.

Why do you think the pension is underfunded?  Could it be that the government entity could not afford to make the extravagant  payments the union contract required and still balance the budget?  If they tried to raise taxes to cover the shortfall then even the unions with all their political muscle couldn’t get those responsible re-elected.  So it was better to sweep it under the rug for a future administration to deal with.  What about those risky investments?  Well, with risk goes reward.  If you need bigger payoffs on your pension assets to make up for the shortfalls in funding that you didn’t want to make, you may take bigger chances to make a bigger payoff.  But if you are wrong, instead of fixing the problem, you make it worse.  So the real problem is that the unions and the politicians they fought to elect negotiated contracts that were unrealistic and unsustainable.  What does the union member say. “I’ve got mine, you go get yours.”

What are some of the onerous changes that states are asking for?  In New Jersey, Chris Christie asked for a one-year freeze on public employees pay and for them to contribute 1.5% of their salary toward their retirement.  Outrageous!  How about in Colorado where they asked for a 2% cap in the Cost of Living Adjustment (COLA) for retirees instead of 3.5%, in an environment with 0% inflation.  Dastardly!  One individual’s justification was that he does not and cannot pay into Social Security so the pension is all retirees have to live on.  He fails to point out that being prohibited from contributing to Social Security puts 6.2% more of his salary in his pocket, since he pays no Social Security taxes, and if he had the self discipline to take that and invest it in the Dow Jones Industrial Average he would have far more money of his own than he would ever get from Social Security.

This problem is not going away.  Once upon a time, public sector employees did earn less in salary than those in the private sector, but those days are long gone.  They earn more, can retire earlier, can retire with more money for longer periods of time and put the burden on all taxpayers who have to cover their pension while providing for their own.  Their “too bad” attitude is shameful.

Democrats think they have a winner.  They want to lather on some more financial regulations because regulators dropped the ball on enforcing what already exists.  So as conservatives point out that what they are proposing is unnecessary or won’t work, they can gleefully say, “Republicans are for the fat cats, while we’re for the little guy.”

Broken Regulations

Harry Markopolos recognized within “minutes” that Bernie Madoff was a fraud.  He took his case to the SEC and was promptly ignored.  He took it to Forbes magazine…not interested.  Bernie Madoff himself was surprised how long it took to be found out. 

So what does the SEC do now?  It initiates a case against Goldman Sachs where professionals on both sides of a transaction knew what they were getting into.  One side bet on housing prices continuing to rise, the other betting the bubble would burst.  The decision on pursuing this was voted 3-2, with three Democrats voting in favor of pursuing the case, and two Republicans voting against.  It must be the Democrats looking out for the little guys and the Republicans looking out for evil Wall Street, right?

John Paulson is the investor who allegedly played unfairly by being able to choose the securities that went into the investment that Goldman Sachs allegedly didn’t disclose to the other party.  Mr. Paulson hasn’t been charged with anything.  Mr. Paulson also contributed $30,400 to the Democratic Senatorial Campaign Committee last June.  If you recall Jon Corzine, former Democratic Senator and Governor of New Jersey, used to be the chairman of Goldman Sachs.  The new head of the SEC enforcement division in the Obama Administration, Adam Storch, is a former Goldman Sachs Vice President.  So who’s in bed with Wall Street? 

Democrats Need a Diversion

With almost every measure of public opinion on government appointment sinking to all time lows, the Democrats need to ramp up the class warfare machine to find anything that will gain traction with the public.  They know they can’t fight on the facts so they have to start the fog machine.  Typical Saul Alinsky’s Rules for Radicals stuff.

Conservatives must focus the debate on the issues and not shrink from the fight.  It is far too easy to show that Big Government (Obama) and Big Business (GE, et al) are really partners in dividing up the spoils amongst themselves and telling the rest of us how to live our lives.

Remembering Reagan

Ronald Reagan famously said that the statists believe:

“If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

There is currently no more telling example of this than Senator Chuck Schumer bloviating about Spirit Air Lines charging passengers for carry on baggage.  He wants to introduce legislation prohibiting this.  Hey, Chuck, if you don’t like Spirit charging you for your carryon bags, pick another airline!  That’s how markets work.  But the genius that is Washington is, NO we have to regulate that!  So the idiots would pass a law prohibiting charging for carryon bags and the airlines will respond by raising ALL ticket prices to compensate.  So instead of my having a choice of carrying a bag on board or saving the money, or choosing another airline altogether, the government will make everything equal and more expensive.

So, Chuck, how are you and your pals doing as far as growing the economy and getting the unemployment rate down?   Maybe you should spend some time on that, no?

President Obama has just created a panel to figure out how to get our debt under control.  Even when he makes a decision, such as this one, it is to pass the buck to someone else to do the heavy lifting.  His attempt to overhaul health care turned into the Harry and Nancy Show.  Obama campaigned and gave speeches while Pelosi and Reid shut out the Republicans and created the bill that could not be passed.  Obama is now trying to put lipstick on that pig, by calling for a bipartisan meeting.  But instead of starting over and getting ideas from everyone, they are basically going to pick over the stinking corpse of the bill that the Democrats could not get passed.  It is obvious that the real objective is to either get some Republicans to sign on or to use the meeting as a club to beat the Republicans as the “party of No.”

Stop Me Before I Spend

This president can’t seem to control himself and he finds that he painted himself into a corner.  If he tries to raise taxes on those who make less than $250,000 per year he will be breaking a major campaign promise.  If he stops spending on his own, he will lose the left which is about the only support he has remaining.  So he calls in Alan Simpson and Erskine Bowles to co-chair a committee charged with making the president a tailor made fig leaf, to allow him to cut spending and raise taxes, while shrugging his shoulders and saying, “I can’t go against the excellent advice of this august commission.”

If he wants to cut spending, he can just cut spending.  He doesn’t need a commission to do so.  How about an across the board spending freeze, except for national defense, until the economy grows enough to balance the budget and not with gimmicks like increasing discretionary spending now 24% and then saying you will freeze that same spending for the next three years?  How about freezing government hiring?  How about returning $500 billion in unspent stimulus money and $400 billion in repaid TARP money, plus interest, to the Treasury?  Don’t hold your breath.  That would require someone with executive experience who knows how to make a decision, rather than deliberating, like a legislator.  Sarah Palin comes to mind, as does George Bush (I & II), Bill Clinton, Ronald Reagan.  These experienced executives knew how to put together a budget and make decisions.  Chris Christie in New Jersey was just sworn in last month as governor and he immediately identified the problem as too much spending and got to work cutting it back.  All that President Obama seems to know how to do is talk. 

If we start advertising now, we may get enough resumes to review to find a replacement by 2012.

The Incumbent Protection Act, aka McCain-Feingold, took a big hit yesterday from the Supreme Court.  It is particularly timely with so many incumbents nervously eying the exits.  The McCain-Feingold bill prohibited corporations and unions from “electioneering communications” within in 30 days of a primary, or 60 days of a general election.  Those time limits probably match pretty nicely with when most people start paying close attention to elections.  So if this kind of communication is cut off, who is left with the power of name recognition?  That’s right, the incumbent and that is probably why 90% of incumbents are re-elected.

Outrage on the Left

President Obama immediately came out swinging saying it was a victory for “big oil, Wall Street banks, health insurance companies, and other special interests.”  He somehow overlooked the SEIU union whose president topped the list of visitors to the White House.  Unions will have unfettered communications as well.  Chuck Schumer promises hearings and the Naderite Public Citizen group is proposing a constitutional amendment banning free speech for “for-profit” corporations.  I’ll give you a moment to ponder that; a constitutional amendment to eviscerate the First Amendment.

The Momentum is Building

On April 15 it will be the first anniversary of the Tea Parties that were held across the country.  Let’s raise a cup of tea, that the Ship of Liberty that was foundering on the rocks may at last be turning it’s guns on the enemy and turning the tide of battle.  Virginia, New Jersey, a close loss in NY23, Massachusetts, the First Amendment, the momentum is building.  But let’s not forget the words of Churchill:

Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning. — Winston Churchill

Don’t let up until we have our country back.

The New York Times had some, what was to me, shocking news today.  The article said that there was now consensus that the Obama stimulus plan was working.  Is this the same kind of consensus that man-made global warming was settled science, despite the glaring evidence that carbon dioxide emissions continue to grow while the globe stopped warming ten years ago?  This is also close on the heels of breaking stories of extraordinary misinformation if not outright deceit on how the $787 billion is being spent.

Smoke and Mirrors

Early on in the article we have this gem:

“The legislation, a variety of economists say, is helping an economy in free fall a year ago to grow again and shed fewer jobs than it otherwise would. Mr. Obama’s promise to “save or create” about 3.5 million jobs by the end of 2010 is roughly on track, though far more jobs are being saved than created, especially among states and cities using their money to avoid cutting teachers, police officers and other workers.”

There is no mechanism that exists to measure a job saved. None.  So how do they do it?  It goes something like this:

“Here, Mr. Stimulus Funds applicant, I have this check for you for $642,000.  No can you tell me, if I give this to you, how many jobs would you create or save?”

“Create? Er, none.”

“Hmmm,” the bureaucrat mutters, staring down at the check in his hand, “what about jobs you would save?  You know, if I don’t give you this nice, rather large check, how many of your people would you be forced to lay off?”

“Oh, I get it,” the potential recipient says with a wink and a smile, “probably all of them!”

The bureaucrat scribbles down a number, and hands over the check, walking away shaking his head.

That’s about how it’s done.  The government surveys the people getting the money and asks them what would have happened if they didn’t get the stimulus.  And what would you expect them to say?  Keep the check?

Revenue Starved States

What a concept, “Revenue Starved States.”  The article complains that not enough money was provided to “Revenue Starved States.” Does he mean states like California and New York?  I believe the correct term is states where spending is out of control.  It means states where taxes are so high that people are moving out in droves, and among them the “wealthy” people they love to tax to the eyeballs, meaning a dramatically shrinking revenue base.  After all, if one of the wealthiest people in the state, who is part of the group that pays 70% of the taxes, moves out of the state or (out of the country when it gets bad enough), that means a lot of people are going to see their taxes raised to make up for it.  So the statists seem to think a stimulus package that keeps these bloated bureaucracies fat, dumb and happy is the way to go, until when exactly?

The Multiplier Fallacy

The other great fraud being foisted on us is the multiplier effect, where for each dollar of stimulus money spent more than a dollar of economic activity results:

That sort of impact is what makes federal aid to state governments rank high in economists’ reckoning of the stimulus value of various proposals. Every dollar of additional infrastructure spending means $1.57 in economic activity, according to Moody’s, and general aid to states carries a $1.41 “bang” for each federal buck.

Even more effective are increases for food stamps ($1.74) and unemployment checks ($1.61), because recipients quickly spend their benefits on goods and services.

Okay, then how is this for a solution.  Let’s spend $10 trillion on infrastructure, food stamps and unemployment checks, since they will result in $15 trillion or so in economic activity, because of the multiplier, right?  For that matter, let’s have the government spend $100 trillion and we’ll really be rocking.

Where’s the So Called Consensus

From what I read in the article, there was only one economist that could be called a conservative, Martin Feldstein, that they were willing or able to quote, and this was his take on the stimulus.

While some conservatives remain as skeptical as ever that big increases in government spending give the economy a jolt that is worth the cost, Martin Feldstein, a conservative Harvard economist who served in the Reagan administration, said the problem with the package was that some of its tax cuts and spending programs were of a variety that did little to spur the economy.

“There should have been more direct federal spending that would have added to aggregate demand,” he said. “Temporary tax cuts and one-time transfers to seniors were largely saved and didn’t stimulate spending.”

That’s it?  That’s the consensus?  It seems to me that he is pointing out what was wrong with the package rather than what was right.  He was in the Reagan administration and he knows what works: permanent cuts in marginal tax rates. Those dreaded tax cuts for the “rich.”  The thing is that when the people above the subsistence level get to keep more of what they earn, yes it does belong to them and not to the government, they tend to invest it, which means the provide capital to businesses that grow and create jobs.  Yes, capitalism.  What the stimulus does is take money away from these people, or borrows it and steals it from future generations, and gives that money, as in the example above, to highway projects, food stamps and unemployment checks.  The first of these may create jobs until the road project is completed, but the latter two only increase the dependency of those recipients on the government.  So how exactly does the stimulus plan that puts money into a highway project and unemployment benefits, help a banker who got laid off?  How does it help the unemployed executive from United Technologies?  It doesn’t.  It’s like a drug fix.  You may feel good for a while, but then it wears off and you need another fix.

The Genius of Government

You would think that with all the examples of government planning lying on the waste heap of history, the statists will finally catch on that they can’t successfully pick the winners and losers in an economy.  Government has to get out of the way and let the market work.

Government must be drastically cut down to size.  Think of the popular TV show “The Biggest Loser.” Picture the governments of the United States, California, New York, New Jersey, Rhode Island, Michigan, Nevada, for starters, as contestants.  Let’s see who can lose the most weight.  Ready? Go.

Over the past eleven months, have you ever gotten a feeling that you are watching a magician, rather than a president run our country?  As any practitioner of the art of the illusionist will tell you, one of the key things is to keep the audience distracted.  Have them watch the left hand, while the right is slipping the coin into the pocket.  The Obama Administration is about to unleash their greatest trick yet, trying Khalid Sheik Mohammed in civil court in New York for the 9/11 attack on America.  Why?

The Greatest Show On Earth

The trial will become an absolute three ring circus, with all the world watching closely.  The liberal pundits say, “this is our chance to show the world our justice system.  We can demonstrate how civilized we are, and show the Muslim world how fair we are.”  Really?

Remember to the footage in the Muslim world immediately following the collapse of the World Trade Center towers.  They were dancing in the street, laughing and singing, shouting praise to Allah.  What do you think the reaction will be if Khalid Sheik Mohammed, jumps up in court and screams out, “Kill the infidels! This is a fraud meant to disguise these devil’s tricks!”  Do we let him ramble with a global audience?  Do we have the bailiffs wrestle him to the ground?  Do we put him in restraints for the rest of the trial?  Who exactly is going to show the world what?

We Have No Secrets

In a civilian trial there is a process called discovery, where the defense is told everything the prosecution plans on bringing to court, including witnesses, so that the defense has a chance to prepare their rebuttal case.  How much of the CIA’s methods and contacts are we prepared to reveal to the world and to Khalid Sheik Mohammed’s allies?  Or, how much are we not going to use in order to protect that information and at the same time increase the chances that he will be acquitted?

Can Anybody Say O.J.?

Do you remember the O.J. Simpson trial?  A slam-dunk if ever there was one.  There was blood evidence, DNA evidence, means, motive, opportunity, it couldn’t get any easier.  But what happened?  Judge Lance Ito, lost control of his court room in the klieg lights of national television.  One of O.J.’s attorneys or advisors told O.J. to stop taking his arthritis medication  so his hands would swell and then the famous glove trick, abra cadabra, “If the glove doesn’t fit, you must acquit.”  What happened after that trial?  Dancing in the streets of the black community.

The Jury Pool

Are Muslims going to be excluded from the jury pool?  If so, on what grounds and would a judge allow it?  In the O.J. case we had what was called jury nullification, where a jury handed up a verdict not based on the evidence presented, but based on a social determination.  O.J. was a symbol for all black men put on trial and all past injustices.  He was a sports hero to millions and he wasn’t going down, no matter what.  What if a someone with strong beliefs sees disrupting the outcome of the trial as the new jihad?  Don’t use suicide bombers in New York, that’s so Middle East, let’s kill them softly by getting Khalid Sheik Mohammed acquitted or a give them a hung jury.  What better way to humiliate the Great Satan.  It will be like David and Goliath all over again.

The Real Trial

Or is it really the Bush Administration that Obama wants to put on trial?  The Obama administration’s popularity is sinking link a stone.  The stimulus package was a bust.  Cap and Trade is a disaster.  Health care a debacle.  Tea Party’s are breaking out all over.  The Democrats got trounced in Virginia and New Jersey, and even New York’s 23rd is still alive as recounts have dramatically closed the gap. A show trial of the Bush Administration is just what the Obama Administration needs to keep the focus off what they are really doing.

This is a tragedy and a travesty and there should be no end to the shame heaped upon this administration if they follow through on this.

In an op-ed piece in the New York Times, entitled, “What You Might Not Know About the Recovery,” that might more appropriately be entitled, “What I Don’t Know About the Recovery,” Joe Biden educates us on the stimulus.  It’s typical after the fact political obfuscation to try to convince people that they are not really seeing what they see with their own two eyes.

He begins in typical fashion going back to when he and Barack Obama took office, but avoids mentioning President Bush by name:

We still have a long way to go, but clearly we are closer to recovery today than we were in January.

This is a true statement, but I would argue that this is in spite of the $787 billion of our money squandered on the stimulus plan, while Mr. Biden says it is because of it.  It is instructive to see how someone begins their defense of an issue and Mr. Biden begins by saying that not all of our $787 billion is being spent on pork barrel projects.

Notwithstanding this progress, the nature of the Recovery Act remains misunderstood by many, and misconstrued by others: critics have suggested that the entire $787 billion is being spent on pet programs. As the person leading the administration’s efforts to put the Recovery Act into effect, I want to set the record straight.

He takes up the position that the statists typically do, that we are too stupid to understand.  This is complex stuff, America, way over your head.  You need us in the political class to take care of this for you.  Notice he didn’t say there was no pork barrel spending.  He says that not the entire $787 billion is being spent on pet projects. (Don’t forget the $30 million for Nancy Pelosi’s salt marsh harvest mouse).  Feel better?

Tax Cuts?

He says the single largest part of the recovery act is tax cuts, more than one third.  Huh?  Does he mean the $8 per week in lower payroll taxes?  That’s going to stimulate the economy?  At the same time they are finding trillions, TRILLIONS, in new taxes and spending through Cap and Trade, Heath Care reform, allowing the Bush tax cuts to expire, that will dwarf the paltry $8 per week that people are probably saving, rather than spending, if they even notice it at all.

Transfer Payments

The second largest chunk, Mr. Biden tells us, is for transfer payments.  In other words, money from the federal government given to state and local governments. Where do all governments get their money from?  Us.  So taking our money in federal taxes and giving it to state and local governments helps us exactly how?  Don’t forget the portion of each dollar that gets lost along the way as each bureaucracy handles it.

What are these transfer payments going to be used for?  Uncle Joe tells us:

The money is allowing state governments to avoid laying off teachers (14,000 in New York City alone), firefighters and police officers and preventing states’ budget gaps from growing wider.

The dictionary defines recovery as returning to health, consciousness, etc.  This part of the stimulus does nothing to stimulate the economy.  It’s another one of the Obama administration’s wonderful fictions about saving jobs.  As the economy continues to shed jobs even above the level that the Obama administration told us it would go without the stimulus Biden boasts that they saved the jobs of government workers; union workers; Democratic voters.  Also it helps bloated state governments that have mismanaged their finances from having to make fiscally responsible decisions but keeping them fat, dumb, and happy.  By the way, which states seems to be in the most financial trouble?  California, New York, New Jersey, Michigan?  Aren’t those all “blue” states?  So is the Obama adminisitration helping America or helping themselves?

On Track?

Mr. Biden says that we are on track and that 25% of the funds have been committed.  What exactly does that mean, committed?  If you go to Recovery.gov, you will see that as of this week, only 8.5% of the money has actually been spent.  Give Mr. Biden a calculator, please.  With the three chunks that the Vice President says comprise the stimulus: tax cuts, transfer payments, and infrastructure projects, and that signs of recovery are due to the stimulus, how can the stimulus have that kind of affect when only 8.5% of the money has been spent?

The Resiliency of the American Economy

The American economy is the envy of the world.  It is resilient beyond description.  It is recovering on its own, despite government interference, and the government meddling that caused this recession.  The American people are no longer being fooled by the smooth talking Barack and Joe Show.  A Rasmussen poll shows that only 25% of the American people believe that the stimulus has helped the economy.  If that’s not bad enough 31% say that the stimulus has actually hurt the economy.  On top of that 45% say the rest of the stimulus should be cancelled.

The Stupid American People

With 92% of the stimulus yet to be spent 9% more Americans say cancel the rest than say to keep going.  So Mr. Biden grabs the op-ed page of the New York Times to, sigh, lecture the American people once again on how they misunderstand, and misconstrue what your benevolent, socialist leaning government is trying to do for you.  How ungrateful can you be?  If you people don’t get it, then the president and vice president will just have to take over the rest of the economy and set you all straight.  They will tell you how much you can earn, what cars to buy, what food to eat, what kind of light bulbs to put in your house, control how much energy you can use in your house through the smart grid, what medical treatment you can have, and when you have to die.

The Sleeping Giant Awakes

The American people have been charmed by Barack Obama as he is a very charming man.  He is an historic president.  But they are starting to notice the tea parties, the abdication of the main stream media to do their job, the warnings about what is happening to their country and they are starting to pay attention.  The more they see and hear the more Obama’s approval ratings drop.  So he pushes harder and faster.  It will be a close race to see if President Obama, Nancy Pelosi and Harry Reid can ram through their agenda and slam the door behind them, or if we can wrestle back control of our liberties and send these people packing.

It’s time to brush off the Constitution, read the 10th amendment, and start stripping the federal government back down to the size the founders envisioned.  That will give more power to the states and the people and make government more accountable.  Face it, when your Congressman represents several hundred thousand constituents and their voice is only one of 435 in the House of Representatives, is it any wonder that the founders gave them only the powers spelled out in the Constitution.  They believed that effective government has to be responsive to the people.  That is impossible in Washington.  It is too big.  It is run by too many unelected career bureaucrats.  It has too much power to tax us, regulate us, spend our tax dollars on things to which we are morally opposed, and interfere with our liberties.

This is a critical time in our history and time to roll back the unrelenting growth of government and shrink it down to size.