And So I Go: Yesterday, Today and Tomorrow

Posts Tagged ‘Congress

  • This video reminded me of the home child care workers who were forced to join the union and pay dues totally against their will.  These people are thugs and any union members who follow their bosses lead in the actions they back are thugs too.

Now the international union  is planning to attack Boeing Air Craft for building a plant in South Carolina a Right to Work State (meaning a person is not forced to join a union in order to get a job! as is the case in union states such as California)  he reason the union thugs give for going after Boeing is because they build a new plant in South Carolina “deliberately” instead of building another one in California.    There were no jobs lost in the Boeing Plant in California because of this move!  The California plant is going strong with no plans to shut it down or move it!   So, this is just an example of union thuggery and by going after a big outfit like Boeing the union bosses hope to warn other companies from moving to Right to Work states.  THIS EFFORT IS BEING LEAD AND ENCOURAGED BY THE NATIONAL LABOR RELATIONS BOARD.  OBAMA RECENTLY APPOINTED A FORMER UNION BOSS TO THE NLRB !

We the People have got to be vigilant and watch these underhanded tactics.  It is especially important that decent union members who are indeed the majority begin to recognize what their bosses are doing and demand changes from within.  BB)

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A Historic Flood of Red Ink | The Weekly Standard.

Obama has cause a historic flood of red ink and his latest budget will put our nation $7 TRILLION  further in debt (he is trying to tell us it will “save” $3 trillion!).  Yet this “Thing” rather than sticking to his own business is sticking his nose and his political organization Organizing for America in the middle of  a battle to save the state of Wisconsin.   There are simply no words for Obama  anymore, simply none that I and my dictionary find adequate at any rate.

 

The following article from the Weekly Standard is an eye opener.  I have only copied over a portion of the article so to read the entire article do click the reference above.  BB

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Let’s try to put that into historical perspective (the source for all of these figures is the White House Office of Management and Budget’s historical tables):

* In actual dollars, President Obama’s $4.4 trillion in deficit spending in just three years is 37 percent higher than the previous record of $3.2 trillion (held by President George W. Bush) in deficit spending for an entire presidency. It’s no small feat to demolish an 8-year record in just 3 years.  (And yet the MSM aren’t saying a word about this.  In fact they are out there praising their presidents efforts at “budget reform”. BB

* In inflation-adjusted dollars, President Obama’s $3.8 trillion (in constant fiscal-year 2005 dollars) in deficit spending in just three years is nearly double our $2 trillion (in constant fiscal-year 2005 dollars) in deficit spending in the five fiscal years during which we were fighting World War II (FY 1942-46). It’s no small feat to nearly double the United States’ inflation-adjusted deficits during the largest conflict in human history, and to do so in less time than it took American GIs to fight that two-front war.

* As a percentage of the gross domestic product (GDP), President Obama’s average annual deficit spending is 9.7 percent of GDP. That’s higher than during any single year of the Great Depression, the Cold War, the Korean War, or Vietnam. In fact, the only deficits in more than 200 years of American history that have exceeded even 6 percent of GDP have all involved either the Civil War, World War I, World War II, or President Obama.

* In average annual deficit spending as a percentage of GDP, the nearby chart shows how President Obama stacks up against other presidents who have served during the past four decades.

* The Obama deficit legacy, moreover, will be felt well beyond his tenure in office, especially if that tenure extends beyond a single term. First, Obama’s spending through 2012 essentially doesn’t include Obama-care. The CBO projects that Obama-care will increase spending by more than $2 trillion in the overhaul’s real first decade (2014 to 2023). That’s more than $2 trillion that could -otherwise be used to pay down the debt, rather than allowing the debt to rise continually and then piling a massive new entitlement program on top of it.

Second, President Obama’s gargantuan deficit spending will hamstring future efforts to make ends meet. Under Obama’s own projections, interest payments on the debt are on course to triple from 2010 (his first budgetary year) to 2018, climbing from $196 billion to $685 billion annually. Under his projections for 2018, interest payments on the debt will exceed all defense spending, including wartime spending. Think about that: In the first budgetary year after the next presidential term, our creditors are projected to get more money than our military.

At the end of 2008, just before President Obama took office, the national debt was $9.986 trillion and 69 percent of GDP. Under his projections, eight years later it will be $20.825 trillion and 104 percent of GDP. That’s right: Our debt will soon exceed our national economic output for an entire year. And that’s even if you believe the president’s rosy projections of 4 percent real GDP growth over the next four years, considerably higher than the 2.7 percent achieved over the past quarter-century and the 3.2 percent over the past half-century.

To correct our course, we need to advance real entitlement reform and repeal the looming entitlement that could be the boulder that breaks the camel’s back: Obamacare. House Republicans need to produce a serious budget that offers real entitlement reform, as they appear poised to do. (I very much disagree with this authors opinion because the Old Dog Republicans are pansy butts too!  BB) Actually enacting entitlement reform, however, will require presidential leadership. The most effective champions of bold fiscal prudence on Capitol Hill and in the statehouses, respectively, have been Representative Paul Ryan and Governor Chris Christie. In the wake of President Obama’s wildly unprecedented deficit spending, such leadership is now needed at the presidential level.

Jeffrey H. Anderson was the senior speechwriter for Secretary Mike Leavitt at the U.S. Department of Health and Human Services.

Republican Sellout Watch | Cato @ Liberty.

As most of you know I was royally peed off when the lame duck

Republicans caved and gave Obama everything  and more. Those miserable whimps!  So now we have come to the new House and the new Republicans and I am afraid to hope.  the first problems is the debt ceiling and raising it.  I say NO! NO! NO!  Let our so-called credit rating fail.  Not one thing  will happen to the life of Brenda B or Joe Blow.  the only thing that will happen is that maybe the rest of the world will have to find some other soft touch country to extort billions from year after year.  Maybe it will mean our politicians in Washington will not be able to take their little all expense paid overseas junkets and be sucked up to in order to sucker these political thieves into giving up more billions of our money to pay the host countries for their free golf holidays.  Abut aside from that the world will not end!

 

What may happen is that our politicians will have to get serious bout cutting or the government will shut down.  Frankly I personally could easily see the country getting by with out the Education Department for half a year or forever.  then there is the Transportation Department that I fail to see any real need for. Perhaps some politicians in congress can google “ineffective government programs” like I did and find 341,000 entries.  This would be a good place to start in making cuts!

 

So here I sit watching the big whigs and experts and good old boys tell me again and again how we can not allow the United States to hit bottom by not lifting the Debt Ceiling.  I say a big BS to you all.  BB

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Republican Sellout Watch

Posted by Daniel J. Mitchell

Grousing about the GOP’s timidity in the battle against big government will probably become an ongoing theme over the next few months. Two items don’t bode well for fiscal discipline.

First, it appears that Republicans didn’t really mean it when they promised to cut $100 billion of so-called discretionary spending as part of their pledge. According to the New York Times,

As they prepare to take power on Wednesday, Republican leaders are scaling back that number by as much as half, aides say, because the current fiscal year, which began Oct. 1, will be nearly half over before spending cuts could become law.

This is hardly good news, particularly since the discretionary portion of the budget contains entire departments, such as Housing and Urban Development, that should be immediately abolished.

That being said, I don’t think this necessarily means the GOP has thrown in the towel. The real key is to reverse the Bush-Obama spending binge and put the government on some sort of diet so that the federal budget grows slower than the private economy. I explain in this video, for instance, that it is simple to balance the budget and maintain tax cuts so long as government spending grows by only 2 percent each year.

It is a good idea to get as much savings as possible for the remainder of the 2011 fiscal year, to be sure, but the real key is the long-run trajectory of federal spending.

The second item is the GOP’s apparent interest in retaining Douglas Elmendorf, the current director of the Congressional Budget Office.

Many of you will remember that the CBO cooked the books last year to help ram through Obamacare. Under Elmendorf’s watch, CBO also was a relentless advocate and defender of Obama’s failed stimulus. And CBO under Elmendorf published reports saying higher taxes would improve economic performance.

But Elmendorf’s statist positions apparently are not a problem for some senior Republicans, as reported by The Hill.

The new House Budget Committee chairman, Rep. Paul Ryan (R-Wis.), gave a very public endorsement of the embattled head of the Congressional Budget Office during his first major speech as committee head Wednesday night. …“You’re doing a great job at CBO, Doug,” Ryan said after receiving the first annual Fiscy Award for his efforts at tackling the national debt. He added that he looked forward to crunching budget numbers with him in the future.

In the long run, the failure to deal with the problems at CBO (as well as the Joint Committee on Taxation) may cause even more problems than the timidity about cutting $100 billion of waste from the 2011 budget. Given the rules on Capitol Hill, it makes a huge difference whether CBO and JCT are putting out flawed numbers.

I’ve already written that fixing the mess at CBO and JCT is a critical test of GOP resolve, and I actually thought this would be a relatively easy test for them to pass. It is an ominous sign that Republicans aren’t even trying to clean house.

Big Nannies of the Year – Michelle Malkin – National Review Online.

When we have one too many government employees for getting the specified job done  they have nothing to do but push pencils and complain that their job responsibilities are too heavy and that they require an assistant.  This  continues and continues and continues until we now have our federal government made up of a million or more pencil pushers.  Requirements for any given job, especially at the top rank, is knowing the man who does the hiring or a person of higher rank than him.  Hell, you don’t even have to know how to say or spell the name of the  position you are going to fill someone will check the right box for you.  AND, you certainly needn’t concern yourself about the required functions of that position because they are unimportant as you have your own agenda.  This then is the nanny State.  The United States governments at all levels are crowded with these  creatures who know better what is best for the public than the public itself.  This article lists some really unbelievable Nannies,  the only thing is that the are real and they are functioning alive and well in real time for your and my benefit and good.  BB

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December 29, 2010 12:00 A.M.

Big Nannies of the Year
God save us from more busybody bipartisanship in 2011.

It was a nefarious year for nettlesome busybodies employed by the Nanny State. Here are the top power-grabbers of 2010 — those who just can’t leave us alone:

New York City mayor Michael Bloomberg
Two feet of snow paralyzed trains, buses, snowplows, and emergency vehicles in the Big Apple this week. Perhaps if Bloomberg — the nation’s top self-appointed municipal food cop — spent more of his time on core government responsibilities instead of waging incessant war on taxpayers’ salt, soda, trans-fat, and sugar intakes, his battered bailiwick would have been better equipped to weather the storm.

Transportation Secretary Ray LaHood
He proposed meddling mileage taxes, mused about a system to track drivers’ routes, lobbied for high-speed-rail boondoggles, and promoted a “livability initiative” to limit suburban growth and force suburb-dwellers into public transportation. Then America’s driving czar floated a plan to disable cell phones in automobiles. LaHood backed off that creepy crusade, but he is still intent on waging war against drivers who choose to use cell phones, entertainment systems, and GPS devices on the road. Just last week, the unstoppable control freak proposed a new rule banning truck and bus drivers from any use of cell phones while driving — including emergency calls on hands-free devices. His anti-car agenda is stuck in overdrive.The city of Cleveland (Cleveland by the way is one of those Rust Bel;t cities that is just about flat on it’s can with unemployment in double digits so naturally all the government can think to do is make it more difficult for the economy and their city to get up off of it knees.  BB)
The green police in this Midwestern metropolis made headlines in February with an intrusive plan to roll out snooping trash cans — “smart” rubbish bins bugged with electronic identification chips and bar codes to monitor residents’ recycling habits. Violators could be fined $100. Federal stimulus money has gone to fund a similar program in Dayton, Ohio. The technology originated in Germany, was adopted by eco-authoritarians in England (where at least 500,000 trash cans now have snitch chips embedded in them), and has spread across Europe. Welcome to the age of Bin Brother.

The city of San Francisco (Another  city now flat on its back and on life support in a state in the same morbid condition.  BB)
The board of supervisors recently took the “happy” out of McDonald’s Happy Meals by forbidding all restaurants to offer toys with children’s meals that exceed limits on calories, fat, salt, and sugar. Even the mayor of the People’s Republic of San Francisco opposes this latest food-control scheme. But the bossy City by the Bay continues to assault consumer freedom with bans on everything from plastic bags to pet sales to soda pop. This summer, Mayor Gavin Newsom issued an executive order banning Coke, Pepsi, and Fanta Orange drinks from vending machines on city property. The decree dictates that “ample choices” of water, “soy milk, rice milk, and other similar dairy or non-dairy milk” must instead be offered. (Have you ever tasted soy milk? YUCK! BB  ) It’s not clear how vendors will be able to circumvent the city’s hostility toward plastic bottles. Maybe beverages will be served straight out of those noxiously trendy reusable cloth bags?

The architects of Obamacare
After ramming a trillion-dollar package of unconstitutional federal health mandates down our throats, they said children and seniors would be saved, we could keep our doctors, costs would go down, and the economy would get a boost. Reality: Premiums have continued to skyrocket. Insurers nationwide have dropped child-only plans in the individual market. Obamacare taxes forced the AARP to raise its members’ rates. Hospitals have stepped up layoffs and shutdowns. And millions of Americans have been able to keep their doctors and coverage only because their employers, unions, or health-care providers begged the feds for special waivers. Heckuva job, health bureaucrats.

First lady Michelle Obama and former governor Mike Huckabee
Mrs. Obama first played the childhood-obesity card in September 2009, as a rationale for using her office to crusade for taxpayer subsidies for the Olympics bid of her hometown, Chicago. Her argument: Kids would stay fat, lazy, and uninspired if the Daley machine didn’t get its share of massive sports corporate welfare. Next came Mrs. O’s push for the $5 billion expansion of federal child-nutrition programs. As I first reported in February 2010, the legislation was a pet project of the Service Employees International Union, which seeks to swell the ranks of dawn-to-dusk year-round public-school food-service workers, who organize under the progressive activist slogan “serving justice and serving lunch.” In addition to school breakfasts and lunches, the kiddie-food patrol is now pushing subsidized dinners and summer food service to create a “stronger nutrition safety net.” 

Nanny State Republican Mike Huckabee, who used his bully pulpit as Arkansas governor to campaign for Big Government–endorsed “healthier living” in public schools and private life, naturally sided with Mrs. Obama — and took a swipe at Sarah Palin last week for criticizing the White House’s usurpation of parental responsibility and rights. Huckabee scoffed at the idea that the feds are “trying to force the government’s desires on people.” But school bake sales are already under siege, and Mrs. Obama’s childhood-obesity task force has already called for new and dramatic controls on the marketing of unhealthy foods. Did Huckabee miss (or does he agree with) Mrs. Obama’s officious rallying cry on child nutrition: “We can’t just leave it up to parents”? God save us from more busybody bipartisanship in 2011.

— Michelle Malkin is the author of Culture of Corruption: Obama and His Team of Tax Cheats, Crooks & Cronies. © 2010 Creators Syndicate, Inc.

CBO on Fannie, Freddie and Mortgage Finance Options | Cato @ Liberty.

One of the many messes the unhousebroken Obama Administration and Democratic Congress has made for  We the People to clean up is the full federal ownership of the two giant mortgage companies Fannie Mae and Freddy Mac.  These companies under the influence of Rep. Barney Frank and Senator Chris Dodd have gobbled up every toxic mortgage  mortgage bankers made in order to make the initial profit and knowing they could then sell them to Fannie or Freddie.    It is probably the biggest mess this last democratic congress has made that we really can not just simply  de-fund and therefore destroy as may be the case with Obamacare and some other stupidities.  So what will the next Republican controlled House Congress do with the mess?  This is the advise of the non-partisan Congressional Budget Office which has consistently;y advised against the government control of these once privately held  companies.

CBO on Fannie, Freddie and Mortgage Finance Options

Posted by Mark A. Calabria

Just in time for the holidays,CBO  ( Congressional Budget Office) has released its analysis of the costs and benefits of various alternatives to our current system of mortgage finance, particularly the role of Fannie Mae and Freddie Mac.

The report examines three possibilities:

  1. A hybrid public/private model in which the government provides explicit guarantees on privately issued mortgages or MBSs;
  2. A fully public model in which a wholly federal entity would guarantee qualifying mortgages or MBSs; or
  3. A fully private model in which there would be no special federal backing for the secondary mortgage market.

The report doesn’t really push one option over another, but simply lays out the advantages and disadvantages of each.  Some highlights worth keeping in mind as the debate continues into the new year:

“Relying on explicit government guarantees…would also have some disadvantages…If competition remained muted, with only a few…firms participating in the secondary market, limiting risk to the overall financial system and avoiding regulatory capture could be difficult…federal guarantees would reduce creditors’ incentive to monitor risk. Experience with other federal insurance and credit programs suggests that the government would have trouble setting risk-sensitive prices and would most likely end up imposing some cost and risk on taxpayers. In addition, a hybrid approach might not eliminate the frictions that arise between private and public missions.”

“Privatization might provide the strongest incentive for prudent behavior on the part of financial intermediaries by removing the moral hazard that federal guarantees create.  By increasing competition in the secondary market, the privatization approach would reduce the market’s reliance on the viability of any one firm. Private markets may also be best positioned to allocate the credit risk and interest rate risk of mortgages efficiently, and they would probably be more innovative than a secondary market dominated by a fully federal agency. Further, privatization would eliminate the tension between public and private purposes inherent in the traditional GSE model.”

It is worth remembering that over the years, the CBO has actually been quite strong in warning against the dangers of the GSE model.** Sadly Congress simply chose to ignore those warnings.  Here’s hoping that the CBO has little more influence on this issue than they’ve had in the past.

**The government-sponsored enterprises (GSEs) are a group of financial services corporations created by the United States Congress. Their function is to enhance the flow of credit to targeted sectors of the economy and to make those segments of the capital market more efficient and transparent. The desired effect of the GSEs is to enhance the availability and reduce the cost of credit to the targeted borrowing sectors: agriculture, home finance and education. Congress created the first GSE in 1916 with the creation of the Farm Credit System; it initiated GSEs in the home finance segment of the economy with the creation of the Federal Home Loan Banks in 1932; and it targeted education when it chartered Sallie Mae in 1972 (although Congress allowed Sallie Mae to relinquish its government sponsorship and become a fully private institution via legislation in 1995). The residential mortgage borrowing segment is by far the largest of the borrowing segments in which the GSEs operate. GSEs hold or pool approximately $5 trillion worth of mortgages

U.S. Deficit Commission Recommends Changes to Social Security – FoxNews.com.

This article from FOXNEWS Home page.   I personally am all for every one of them except I don’t think they have gone far enough.  Yes, I will be “hurt” by some of the cuts and my children even more so.  BUT, my grandchildren and great grandchildren will not have to pay  my debts and the debts of my generation.   What do you think?  BB

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U.S. Deficit Commission Recommends Changes to Social Security

Published November 10, 2010

| FoxNews.com

A draft proposal by the deficit commission suggests curbing Social Security benefits and raising the retirement age.

AP

A draft proposal by the deficit commission suggests curbing Social Security benefits and raising the retirement age.

A draft proposal by the deficit commission suggests curbing Social Security benefits and raising the retirement age.

The co-chairmen of the panel appointed by President Obama to cut the U.S. deficit recommend raising the retirement age to 68. It is currently 67 years for retirees to receive full benefits. The panel leaders also propose reducing the annual cost-of-living increases in Social Security.

The increase to age 68 would be implemented by 2050 and then would increase again to 69 by 2075. A “hardship exception” would be provided for certain occupations where older retirement would be unrealistic.

According to a source who spoke to Fox News, the 18-member panel led by former Wyoming Republican Sen. Alan Simpson and former Clinton Chief of Staff Erskine Bowles, also may propose reducing the base rate on corporate taxes, phasing in spending cuts over time, reducing foreign aid by $4.6 billion, freezing federal salaries for three years and banning congressional earmarks. It is unclear how the commissioners would define a congressional earmark.

The proposal would also set a tough target for curbing the growth of Medicare. And it recommends looking at eliminating popular tax breaks, such as mortgage interest deduction. The plan also calls for cuts in farm subsidies and the Pentagon’s budget.

The goal is to reduce $1 trillion-plus budget deficits. The panel, which was meeting Wednesday, was expected to provide a full set of recommendations on Dec. 1.

But any recommendations require a supermajority of 14 members of the panel for approval and that seems unlikely.

Cuts to Social Security and Medicare are anathema to liberals on the panel. Conservatives have difficulty with options on raising taxes.

“This is not a proposal I could support,” said Rep. Jan Schakowsky, D-Ill. “On Medicare and Social Security in particular, there are proposals that I could not support.”

“It’s a very provocative proposal,” said GOP Rep. Jeb Hensarling of Texas. “Some of it I like. Some of it disturbs me. And some of it I’ve got to study.”

Speaking to reporters after the draft leaked, Bowles said it would be great if Congress could come to some agreement about the plan before the next term, but said there is no need to vote on anything right now. The approved proposals would have to go to the Senate for a vote before heading to the House.

Bowles said he is certain that this is a real plan that Congress can work from, and the draft will help “educate the American people” as to the “massive” task before them.

Bowles also joked that he and Simpson are now headed into “the witness protection program.”

“This is the first time in my memory in Washington … where it’s all there. We have harpooned every whale,” Simpson added.

 

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Another article with comments from some deficit commission members comments:

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  • Commission Offers Controversial Solutions to Axe Deficit — Members Balk

    by Trish Turner | November 10, 2010

    AP Photo

    AP Photo

    The top Republican and Democrat on President Obama’s bipartisan deficit reduction commission introduced an ambitious draft proposal Wednesday to slash the nation’s deficit by by $4 trillion over ten years, but both chairmen conceded that the focus is more on starting a national debate rather than actually accomplishing legislative action this year.

    The draft, laid out in detail to commission members during two closed-door, hours-long sessions, spares virtually no “sacred cow” programs, proposing dramatic changes to Social Security, once called the “third rail” of politics, pushes for limits to Medicare, axes the popular mortgage interest deduction in favor of lower income tax rates for all, freezes Defense Department salaries and bonuses for three years and noncombat pay at 2011 levels for the same period, and the list goes on.

    Sen. Kent Conrad, D-ND, a commission member, did not sound confident that 14 of the 18 members could agree on any proposal in order to move it to a vote in Congress. “We’ve had trouble getting 14 people to agree on what time of the day to meet,” the Budget Committee Chairman said.

    The often-comedic co-chairman Alan Simpson sheepishly exited the meeting, telling reporters, “We’re entering the witness protection program,” referring to his fellow co-chairman and proposal author Erskine Bowles, former chief of staff to President Bill Clinton.

    Commissioners mostly commended the chairmen for attacking the problem and offering real, detailed solutions, but to a letter, not one member embraced the proposal, though Simpson and Bowles said they did not expect that. Still another member, Rep. Jan Schakowsky, D-Ill., called the Social Security changes “a nonstarter.”

    Schakowsky questioned the equity in the cuts, noted the “growing gap between rich and poor in this country,” and said, “This is not at all something I could support.”

    Outside the bipartisan group, members slung arrows at the draft proposal, as well. Sen. Bernie Sanders, I-Vt., decried the plan as “extremely disappointing and something that should be vigorously opposed by the American people. The huge increase in the national debt in recent years was caused by two unpaid wars, tax breaks for the wealthy, a Medicare prescription drug bill written by the pharmaceutical industry, and the Wall Street bailout.”

    But some members cautioned against snap judgments. Sen. Tom Coburn, R-Okla., a member of the panel, said, “The greatest national security threat facing America today is our national debt and a Congress that has avoided tough choices for decades. The discussion draft describes some of the tough choices facing Congress and the nation,” and warned, “I would encourage taxpayers to view with great suspicion the beltway, interest group culture that often prefers demagoguery over honest debate. In the real world, no family facing tough economic times has the luxury of treating portions of their budget as sacrosanct. Neither should Congress.”

    Simpson encouraged people to read the proposal and said there is more than enough time for Congressional action, saying he and Bowles “laid it all out on the table. Let the American people start to chew on it..As I say, we didn’t leave anybody out of the crosshairs.”

    But Sanders was having no part of that, particularly the Simpson-Bowles proposal for Social Security that gradually increases the retirement age for benefits, possibly to 69 by 2075. Sanders blasted, “It is reprehensible to ask working people, including many who do physically-demanding labor, to work until they are 69 years of age. It also is totally impractical. As they compete for jobs with 25-year-olds, many older workers will go unemployed and have virtually no income. Frankly, there will not be too much demand within the construction industry for 69-year-old bricklayers.”Commission Executive Vice President Bruce Reed told reporters that the panel intends to reconvene next week to get down into the details of the draft document and offer alternative proposals. And though he said members are still aiming to have a plan released on December 1, Reed did acknowledge that if members do not agree, the co-chairmen will certainly promote their own product separately to the American people.

  • Read more: http://politics.blogs.foxnews.com/2010/11/10/commission-offers-controversial-solutions-axe-deficit-members-balk#ixzz14zxDHCBX

    » Is America Becoming A House of Cards? – Big Government.

    This is a very good article from Big Government  (of course most of them are so if you don’t subscribe to Big Government you certainly should).   I am posting this one in it’s entirety (with my comments natch!)  because it is a good reminder of where we are now, how we got here and our possible future.  That future is very very close to happening.  All it will take is China and the other lenders, or I should say “supporters of  America’s outrageous spending, to stop buying our Treasury Notes.  China is the biggest and all they have to say is “No more!”.    I haven’t read anywhere that they have done so as yet, but I have read hints  and rumors that the China is very upset with our out of control government spending.

    I am sure most of you have seen the latest Americans for Prosperity ad   showing a Chinese teacher telling his students that Americans now work for them.  This is so true!  I believe it is impossible to buy anything that isn’t made in China.    I have always bought American when I could get what I wanted and the quality I wanted.  I was willing to pay more for the product, but it has become next to impossible to find the Made in America label.  So the  ad certainly is correct because we are working for them now.

    The following article reminds us again why we are a House of Cards, or soon will be.  BB

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    Is America Becoming A House of Cards?

    by Of Thee I Sing 1776

    House of Cards: – “a speculative scheme that depends on unstable factors that the planner cannot control,” (WordNet – Princeton University). While we don’t believe America has, by any stretch of the imagination, yet become a house of cards, we do strongly believe the federal government and state and local governments have been, for a long time, pursuing policies that fit that definition to a tee.  And, according to last week’s Rasmussen Poll, two thirds of Americans described as likely voters sense that something is very wrong and, what is worse, could, if triggered by any surprise world event, spin out of control.

    3915448471_0594be5397

    They are very worried about the course we are on, and, we believe, with good reason. Notwithstanding President Obama’s lament last week that the public has become disenchanted with the Administration and the Democratic Congress because “we’re hard-wired not to always think clearly when we’re scared,” we believe the people are thinking quite clearly because they know there is really something about which to be scared.   ( Americans are too stupid to understand all that The One has done for them!  That’s why they voted for all those Republicans and not because Americans actually do understand very well what Obama and the Democrats have done to our nation.    He still doesn’t get it.  He isn’t faking and neither is he in denial because to be in denial a person really does see the truth but is trying not to.  Obama actually believes what he is saying and that he has given Americans so much good and they just don’t understand and appreciate his efforts .  BB)

    We don’t want to dismiss all that is positive about our economy.  As Fed Chairman Bernanke testified before the U.S. House Committee on the Budget on June 9. “Our economy is large, diversified, and flexible; our financial markets are deep and liquid;” and, as Bernanke correctly points out, in the midst of financial turmoil, global investors have continued to view Treasury securities as a safe haven…at least, so far.   But we wouldn’t break out the champagne just yet.  And we’re willing to bet Chairman Bernanke doesn’t see much about which to celebrate either.

    He ended his testimony with the warning (certain to be ignored, at least by the current Congress) “that history makes clear that failure to achieve fiscal responsibility will, over time, sap the nation’s economic vitality, reduce our living standards, and greatly increase the risk of economic and financial instability.”  (IN his latest reports to the Congress he has tried again to make this fact understood.  But with the Senate in Dems control and Obama’s veto there is much the House can do but refuse to pass spending bills for Obama’s programs.  there is only one problem with that strategy:  These programs have been scattered thru out the government in many agencies  so they will get funding no matter what the Congress tries to do.  The only thing that will stop these programs is complete repeal of the bills creating them.  BB)

    As we noted in last week’s essay, “unsustainable” seems to be the new buzzword in Washington.  What the government is, and has been, doing is clearly unsustainable. Chairman Bernanke knows it, and we believe the Congressional Budget Office and the vast majority of the American public knows it as well.  (I am so tired of hearing Congressmen and Obama use the word “unsustainable” and then go out and pass a bill spending more money that must be borrowed from other nations.  BB)

    The White House projections for economic growth upon which estimates of future deficits and public debt are predicated are optimistic to the point of wishful thinking.  The Administration assumes five consecutive years of annual GDP growth in excess of 3.5 percent beginning this fiscal year (which began one month ago).  That is beyond a very bullish  near term expectation of economic growth, and its authors, who have access to statistics of past economic results, must know the premises to be false. Projections of that kind from any public corporation in the private sector would trigger SEC scrutiny (assuming the SEC was doing its job) to make sure the private company warned the public as soon as it had knowledge that its projections could not be achieved. Very stiff penalties would await the private firm that made irresponsible projections that it could not achieve.

    Consider the consequences.  Each 1.0 percent shortfall in GDP growth compared to these assumptions results in a substantial further deterioration in the national deficit and, therefore, the national debt as well.  With the government currently borrowing approximately 40 cents of every dollar it is currently spending, any further escalation of our deficit and, hence, our public debt portends a very rocky future, one that all but guarantees that our children and grandchildren will not fare as well as their parents – a first in American history.

    The American public cannot take much comfort from the Administration’s projections for inflation either.  The government’s projections of future deficits and public debt are, of course, dependent on the actual rate of economic growth as well as the actual rate of inflation The concern looking forward is compounded when considering the White House projections for inflation together with their projections for GDP growth.  Not only does the nation have to achieve GDP growth in excess of 3.5 percent for the next five years, but also, if the Administration’s forecast is to be achieved, we have to hold inflation below 2.1 percent every year for the next decade.  That is a very tall order, not achieved in any recent 10-year period, and especially so with an Administration and a Democratic controlled Congress that shows virtually no restraint in spending.

    If these projections are achieved America will be able to breathe a sigh of relief.  If, however, they prove to be as fanciful as on their face they appear, then the economy the country is building for posterity may well prove to be a house of cards.

    Government, at all levels, but unfortunately not the American economy, has been on an incredible growth spurt. In recent years, it is government that has been growing at an unprecedented and an unsustainable pace.  The public sector has been, at all levels, growing impressively (well, maybe not so impressively, but certainly rather spectacularly).  Public payrolls have grown, as have public health-care and retirement benefits all of which, in the final analysis, are paid for with the taxes paid by private sector wage earners whose jobs have been dwindling, as have their benefits.  (This is due to the unionization of public employees.  The teachers unions, the transportation workers unions, the garbage collectors unions  and all the others have We the people over a barrel.  they get what they want or else they shut the services the government privates down.  The average public employees salary is $70,000 a year as compared to us Joe’s working our buns off in privately owned businesses who average $45,000 a year.  And that doesn’t include the generous  benefits like premier healthcare, vacations and days off with pay and a whole range of goodies.  BB)

    Public sector health benefits frequently require little or no deductible and little or no co-pay and public sector retirement benefits are often predicated on the highest salary earned (usually the salary earned during the last working year or two prior to retirement).  To justify these lavish tax-funded benefits, the public sector pension programs are invariably based on economic assumptions or investment returns that are just as unrealistically optimistic as the Administration’s budget and inflation assumptions.   The liabilities incurred by the cities and states whose employees are the beneficiaries of this largesse are generally cast in concrete. The growth assumptions for investment earnings, of course, are not.  They are, to borrow from the house-of-cards definition, truly a speculative scheme that depends entirely on factors the planners cannot control.  For example, these pension funds typically are predicated on long-term investment growth of 8 percent.  Typical bond yields are, today, around 2 percent and, according to Bill Gross of PIMCO, one of the largest and most successful fixed income fund managers, public sector pension programs are typically weighted 60 percent toward equities and 40 percent toward bonds or fixed-income investments.  These bond yields require a long-term return on equities of around 12 percent for these pension plans to meet their projections.  Unfortunately, the current yield of the S&P 500 (the broadest equity index) is barely 2 percent.  Dividends would have to grow, according to Gross, by 9-10% a year to hit that target.  And, to make matters worse, the further the government succeeds in pushing down bond yields, even more unrealistic return assumptions from equities are required.  These kinds of returns bear no basis to reality, and yet public officials use them in order to justify the benefit packages they give to their friends in the public sector unions.  That is why public sector benefit and pension plans are the major contributors to the red ink in which state and municipal governments are drowning…red ink estimated to now be running about $3 trillion.  These plans are, in fact, built on a house of cards.

    We have another structural problem that raises the specter of a future built on a house of cards.  As we blithely continue with our statist European-model entitlement policies we will require a strong ratio of new tax-paying workers entering the work force to balance out the aging workers who are exiting the work force and retiring. We are now entering a cycle where, for the next decade or so, nearly 80 million baby boomers will begin retiring and collecting their social security checks and calling on the health-care establishment to care for them under Medicare, a program already facing future insolvency and under further strain as a result of Obamacare.  While America enjoys, relative to our European trading partners, a larger 18-to-38 year old population, the positive infusion of young workers into our system is largely driven by prior immigration into the United States.

    Our indigenous (non-immigrant) birth rate is about the same as the weak birth rates found in virtually all industrialized European countries today and America, in reaction to the huge illegal immigration problem we have and which successive. Administrations have refused to address, is in danger of becoming an anti-immigration country. Nothing could be more self-defeating.  Without the population growth provided by legal immigration, the imbalance of aging, retired Americans compared to young workers who are required to support them will produce a crisis from which there may be no escape.

    The current American birth rate without the larger families produced by new arrivals in the United States will not support the entitlements we owe to senior America. And without a steady stream of new, taxpaying workers offsetting the ever-growing steady stream of retiring workers, our economy could sag, if not collapse, of its own weight.

    We began by stating that we do not believe that the American economy is built on a house of cards…not yet anyway.  But our economy (in fact any country’s economy) is always a work in progress; it is being built every day.  The decisions we make today will, indeed, determine whether what we are building is a future with a strong foundation, or, is instead, a future built on a house of cards.

    by Hal Gershowitz and Stephen Porter


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