Posts Tagged ‘fiscal restraint’

USDA intern program spent $2 M, hired ONE intern

August 10, 2012

The USDA released a report this morning of an audit done by the Office of Inspector General.

One of their findings? An intern program that got two million bucks – and hired one intern.

From their executive summary:

We continue to find that OCIO’s efforts should have been strategically planned, prioritized, and managed in order to be more effective. First, we found that several of OCIO’s projects did not meet the purposes outlined in the Congressional request for funding or address the Department’s most critical IT security concerns. For example, OCIO funded an intern program for a total of $2 million which, while funded as a security enhancement project, only resulted in one intern being hired full-time…

Sounds like a job for Frugal Dougall!

(h/t Liberty News)

Wall Street Journal: What Austerity?

August 25, 2011

Wednesday’s Wall Street Jouranl contained an editorial piece titled “What Austerity?”

The very pointed piece starts like this:

 
With the recovery sputtering, the White House and its allies have been blaming government spending cuts, or what the neo-Keynesians call “fiscal contraction.” This is a dubious economic theory even if spending were being cut, but yesterday’s mid-year report from the Congressional Budget Office shows definitively that there’s been nothing close to contraction in Washington.
 
That’s the real news in the CBO numbers, which show that spending in fiscal 2011 (which ends on September 30) will hit a new high of $3.6 trillion, up $141 billion from 2010. That’s higher than the previous record in 2009 of $3.5 trillion, which was supposed to be the peak of the “temporary” stimulus spending.
 

Ouch. Did you realize that total federal outlays have increased by about one-third in just four years, something unmatched since the “Great Inflation” of the 1970’s.

The piece continues:

Give President Obama and the two Pelosi Congresses credit for this much: They said they would spend our way out of recession, and they sure gave it the old Beltway try. The problem is that we got the spending without the promised economic growth.

Double-ouch. Spending is up again, and while there are relatively modest increases in military spending (and make no mistake – defense spending absolutely needs to be scrutinized) the biggest increases are “Medicare, Medicaid, and the usual panoply of entitlements and other payments to individuals.”
 
Referencing the recent CBO report, the authors point out that the slightly sunnier picture (very slight) is “based on assumptions that will never come true.” It assumes, they said, that federal spending will suddenly come to a screeching halt and grow by only $12 billion in 2012. Right. Both Obama and the Demorat-controlled Senate want to INCREASE spending.
 
They continue:

The rest of CBO’s fantasy forecast comes from what it says will be “the sharp increases in revenues that will occur when provisions of [the Bush era tax cuts extended last year] expire.” So CBO estimates that federal taxes as a share of GDP will leap to 19% in 2013 and 20.2% in 2014 from 15.3% today. And we are supposed to believe that economic growth will soar to 4.4% and 5% in 2014 and 2015 after huge tax increases on capital gains, dividends, small businesses and workers in 2013. Beam us up, Scotty.
 

The editorial concludes like this:

The real story told by the CBO report is that the federal government is still pursuing a very loose fiscal policy, despite lamentations from Democrats and the Keynesian economists who populate Wall Street. The best that House Republicans have been able to do so far is to battle Mr. Obama and Senate Democrats to a draw, delaying tax increases until 2013 and preventing even larger spending increases. To really control Washington’s appetites, the voters are going to have to back up their message in 2010 with reinforcements in 2012.

I couldn’t agree more.

Jim Matheson, king of spin

October 8, 2010

If you can’t run on your record of voting for the stimulus, for Cash for Clunkers, and for Nancy Pelosi, then by golly, spin, spin, spin.

Congressman Jim Matheson is deflecting and twisting when he tells Utah Policy Daily that his GOP opponent, Morgan Philpot “is saying things that are just not true – like his ad that says I’ve only sponsored two bills” in 10 years in the U.S. House. “That is demonstratively false – I’ve done a lot more than that.” Except what the ad actually said was that he had only PASSED two bills while in the US House.

Matheson also has a new ad out that says he knows “Every penny counts” – so surely that’s why he voted to raise the debt ceiling twice in the last year, or why he has twice earned the “Big Spender” rating from NTU. He also asserts that he didn’t vote for a bailout and while it’s true he didn’t vote for TARP, he DID vote for the stimulus package. And son of stimulus. And son of stimulus 2……

Matheson – whose campaign is almost completely funded by outside PACS – also sent out fundraising letters decrying FreedomWorks “coming to Utah.” These are people “who know nothing about what matters to Utah families.” Really? Really?!*I* am FreedomWorks in Utah, Mr. Matheson. I DO know what matters to Utah families. I write about what matters to Utah families. I advocate for what matters to Utah families – and guess what – it’s not more debt and failed stimulus programs. It’s surely not the Pelosi/Reid/Obama debacle Matheson so clearly favors. Larry Jensen is FreedomWorks in Utah. He lives in Salt Lake County and works for Utah families and their rights every single day. Darcy Van Orden is FreedomWorks in Utah. Becky Pirente is FreedomWorks in Utah. All Utah residents, all here, on the ground working to keep the freedoms you and your fellow Democrats seem so intent on wrenching from us. WE are the ones placing signs, walking neighborhoods and talking to people. And we do know Utah.

Taxes, taxes and more taxes

October 5, 2010

(Clever little Internet ditty)

Tax his land, Tax his bed, Tax the table, At which he’s fed.

Tax his tractor, Tax his mule, Teach him taxes Are the rule.

Tax his work, Tax his pay, He works for peanuts Anyway!

Tax his cow, Tax his goat, Tax his pants, Tax his coat.

Tax his ties, Tax his shirt, Tax his work, Tax his dirt.

Tax his tobacco, Tax his drink, Tax him if he Tries to think.

Tax his cigars, Tax his beers, If he cries Tax his tears.

Tax his car, Tax his gas, Find other ways To tax his a**.

Tax all he has Then let him know That you won’t be done Till he has no dough.

When he screams and hollers; Then tax him some more, Tax him till He’s good and sore.

Then Tax his coffin, Tax his grave, Tax the sod in Which he’s laid…

Put these words Upon his tomb, Taxes drove me to my doom…’ When he’s gone, Do not relax, Its time to apply the inheritance Tax.

Sales Tax
School Tax
Liquor Tax
Luxury Tax
Excise Taxes
Property Tax
Cigarette Tax
Medicare Tax
Inventory Tax
Real Estate Tax
Well Permit Tax
Fuel Permit Tax
Inheritance Tax
Road Usage Tax
CDL license Tax
Dog License Tax
State Income Tax
Food License Tax
Vehicle Sales Tax
Gross Receipts Tax
Social Security Tax
Service Charge Tax
Fishing License Tax
Federal Income Tax
Building Permit Tax
IRS Interest Charges
Hunting License Tax
Marriage License Tax
Corporate Income Tax
Personal Property Tax
Accounts Receivable Tax
Recreational Vehicle Tax
Workers Compensation Tax
Watercraft Registration Tax
Telephone Usage Charge Tax
Telephone Federal Excise Tax
Telephone State and Local Tax
IRS Penalties (tax on top of tax)
State Unemployment Tax (SUTA)
Federal Unemployment Tax (FUTA)
Telephone Minimum Usage Surcharge Tax
Telephone Federal Universal Service FeeTax
Gasoline Tax (currently 44.75 cents per gallon)
Utility Taxes Vehicle License Registration Tax
Telephone Federal, State and Local Surcharge Taxes
Telephone Recurring and Nonrecurring Charges Tax

Not one of these taxes existed 100 years ago & our nation was the most prosperous in the world.
We had absolutely no national debt, had the largest middle class in the world, and Mom stayed home to raise the kids. What the heck happened?

(Psst: It’s called DC-itis. There is a cure. It’s called the ballot box.)

David Walker and financial boondoggles

September 16, 2010

David Walker, former Comptroller General of the United states, was in town recently to talk at Senator Orrin Hatch’s “Economic Summit”.

Walker served as Comptroller General and head of the Government Accountability Office (GAO) from 1998 to 2008. Appointed by President Bill Clinton, his tenure as the federal government’s chief auditor spanned both Democratic and Republican administrations.

Normally a 15-year position, Walker stepped down after ten years when he was personally recruited by Peter G. Peterson, co-founder of the Blackstone Group, and former Secretary of Commerce to lead his new foundation. The foundation distributed the film I.O.U.S.A. that looks at the alarming financial situation we find ourselves in.

Walker has compared the present-day United States with the Roman Empire in its decline, saying the U.S. government is on a “burning platform” of “unsustainable policies and practices with fiscal deficits, expensive overcommitments to government provided health care, swelling Medicare and Social Security costs, the enormous expense of a prospective universal health care system, immigration, and overseas military commitments threatening a crisis if action is not taken soon.”
In 2007, Walker called the Medicare Part D program “probably the most fiscally irresponsible piece of legislation since the 1960s. I would argue that the most serious threat to the United States is not someone hiding in a cave in Afghanistan or Pakistan,” he continued “but our own fiscal irresponsibility.”

“I’m going to show you some numbers…they’re all big and they’re all bad,” he told CBS. “You know the American people, I tell you, they are absolutely starved for two things: the truth, and leadership. What’s going on right now is we’re spending more money than we make…we’re charging it to a credit card…and expecting our grandchildren to pay for it. And that’s absolutely outrageous.” He was clearly able to read the writing on the wall when he continued: “The fact is, is that we don’t face an immediate crisis. And, so people say, ‘What’s the problem?’ The answer is, we suffer from a fiscal cancer. It is growing within us. And if we do not treat it, it could have catastrophic consequences for our country.” The cancer, Walker says, are massive entitlement programs we can no longer afford.

“It’s the number one fiscal challenge for the federal government, it’s the number one fiscal challenge for state governments and it’s the number one competitive challenge for American business.”

In an ironic twist, Senator Hatch voted for Medicare Part D.

Time for Emergency Economic Reform

September 7, 2010

A year ago, I blogged about Indiana’s governor, Mitch Daniels and the coming “reality check” for state budgets. He said then: “State governments will soon have to choose between a major downsizing or consigning themselves to permanent decline. Wishing for an improbably huge boom while chasing your own tail through self-destructive taxes won’t prove much of a strategy.”

Today in the Wall Street Journal, Governor Daniels is even more pointed. He calls for a “time-limited, emergency growth program aimed at triggering new private investment” and says that should be a primary goal of the next Congress.

He clearly outlines where we are nationally and it’s not a pretty picture – anemic growth, the failure of trickle-down government spending, job creation being stalled by big-government policies like Obamacare and government recovery projections that rely on rates of growth we have not seen in 50 years. Those rates, by the way, only pull us back from “catastrophe” to “disaster”, and still allows debt to rise to almost 90% of GDP. It’s not a real “fix” – only a vibrant, extended boom can pull us back from true catastrophe – and banking on that is like depending on the lottery for your retirement plan.

Governor Daniels suggests:
*A payroll tax holiday of the Social Security tax for one year, offset twice over through a combination of the following policies:

*Impoundment power - once again authorizing the president to SPEND LESS than Congress appropriates
*Recall federal funds – rescind unspent TARP funds and hundreds of billions in unspent funds from previous appropriation bills
*Federal hiring and pay freeze – better yet, a 10% cut, then freeze
*A “freedom window” for energy companies that would allow them to proceed immediately with new job creation
*Accelerated or full expensing of business investment, something that is rumored to be under discussion right now.

He shares the following story:

Ronald Reagan enjoyed telling of the elderly Blitz victim rescued from her demolished London flat in World War II. A fireman found a bottle of brandy under the ruins of her staircase and offered her a nip for her pain. “Leave it right there,” the matron ordered. “That’s for emergencies.”

Governor Daniels concludes:

With or without Democratic help, Republicans should step forward with these or superior ideas. A stagnant, impoverished America will not be a greener or safer or fairer place. Grown-ups make trade-offs. Pass the brandy, then let’s get busy.

California’s pension cliff

August 30, 2010

Governor Arnold Schwarzenegger penned an op-ed for the Wall Street Journal last week that lays out the stark reality of California’s budget crisis. Bluntly stated, without significant public pension reform, the state budget is shot all to heck – leading to its inevitable demise.  “Here’s the plain truth,” says Schwarzenegger. “California simply cannot solve its budgetary problems without addressing government-employee compensation and benefits.”

Right now, 80 cents out of every government dollar is being spent on public employee compensation and benefits. The costs over the last decade rose THREE TIMES faster than revenues. There must be trade-offs, so on the chopping block has been higher ed, state parks and even one of California’s sacred cows – environmental protection.

It gets worse. According to the governor, “much bigger increases in employee costs are on the horizon.” He continues:

Thanks to huge unfunded pension and retirement health-care promises granted by past governments, and also to deceptive pension-fund accounting that understated liabilities and overstated future investment returns, California is now saddled with $550 billion of retirement debt.

The cost of servicing that debt has grown at a rate of more than 15% annually over the last decade. This year, retirement benefits—more than $6 billion—will exceed what the state is spending on higher education. Next year, retirement costs will rise another 15%. In fact, they are destined to grow so much faster than state revenues that they threaten to suck up the money for every other program in the state budget.

Over the last TWO years, the private sector has seen the loss of almost 1.2 MILLION jobs in California. The public sector? Virtually none. 401K’s have declined 20% nationally since 2007. Public sector? Up in value, to the point that in California public employees who retire at age 55 can look forward to a million bucks for their retirement.

Before he signs a state budget, Governor Schwarzenegger insists that the Democrat-controlled California assembly:
#1: Reverse the massive and RETROACTIVE increase in pension formulas enacted 11 years ago.
#2: Prohibit “spiking” – the practice of giving someone a big raise in his last year of work so his pension is boosted.
#3: Require public pension funds to make truthful financial disclosures to the public.
#4: Require public pension funds to use REALISTIC projected rates of return.
#5: End the “annuity give-away” they passed in 2003.
#6: Require employees to up their contributions.
#7: End the immoral practice of pension fund board members accepting gifts or even campaign contributions from lobbyists, salesmen, unions and other special interests.
#8: Establish a rainy day fund.

So far, his demands are falling on deaf ears. The Washington Examiner published a piece two days before the Guv’s op-ed titled “California rejects even modest pension reform.” In fact, recent California legislation allows government employees to PAD their pensions during their last year on the job. “We should be taking away the candy, not adding more,” Marcia Fritz of the California Foundation for Fiscal Responsibility complained to the Los Angeles Times.

There is one state, though, that has addressed the pension black hole. Any guesses? Yep – it’s Utah. In March, the state legislature became the first in the nation to pass a major overhaul of the state’s defined benefit pension system after it lost 30 percent of its assets ($4 billion) in the stock market. All current employees are “held harmless” and will continue in the current system. All new workers hired after July 1, 2011 can choose to enroll in either a 401(k) or a hybrid pension system that caps state contributions at 10 percent of employees’ salaries – no matter what the stock market does.

I admit – this one flew under my radar during the last session. I went to a couple of committee meetings where it was discussed and heard blah, blah, blah, actuarial tables, blah, blah. I did understand Representative John Dougall who said something like this on the House floor: “Without these changes, pensions blow a HUGE hole in the state budget and we go bankrupt.” (Dougall didn’t think Utah’s changes went far enough, by the way.)

According to the Washington Examiner,

Utah state Senator Dan Liljenquist, who sponsored the legislation, said it was the only way to honor current pension commitments and also keep unfunded pension liabilities from bankrupting his state.

Other states have tried increasing retirement age, scaling back retiree benefits, freezing cost of living increases and requiring employees to start contributing to their pension plans, but hybrid plans like Utah’s are increasingly viewed as the best way to keep government promises to current employees while scaling them back to sustainable levels for future workers.

We’ve completely eliminated the pension-related bankruptcy risk. This is exactly what California needs to do,” Liljenquist told The Examiner, adding that all the public unions in Utah were initially opposed to the idea. “But they eventually realized that we preserved benefits for current employees, and if we go bankrupt, all pensioners will be out of luck.”

Contrast that with California’s irrational ability to make even minor adjustments to its unsustainable pension system, virtually guaranteeing its own demise.

I still don’t fully understand all the ins and outs of pension systems – but I do recognize a broken, unsustainable system when I see one. I don’t buy for one second the line that “California is too big to fail” (nor do the companies leaving CA and flocking to Utah, apparently). I wish Governor Schwarzenegger luck in pulling his state back from the brink.

Pay up.

August 26, 2010

Your share is $42,285. Scott Tipton, GOP Congressional candidate in Colorado tries to collect in this clever campaign ad. Not many takers. (OK, none)

LA-la land aka California

August 23, 2010

AP photo

News hit this weekend of the so-called “Taj Mahal” public school in the Los Angeles school district that costs more than a half a billion dollars.

The AP reported:

Next month’s opening of the Robert F. Kennedy Community Schools will be auspicious for a reason other than its both storied and infamous history as the former Ambassador Hotel, where the Democratic presidential contender was assassinated in 1968. With an eye-popping price tag of $578 million, it will mark the inauguration of the nation’s most expensive public school ever.

Designed to house 4200 students, K-12, it includes “fine art murals” (within reach of the kindergarten kiddies, I wonder?), a marble memorial, a “manicured public park” and a state-of-the-art swimming pool.

Joe Agron, editor of a school construction journal said “Districts want a showpiece for the community, a really impressive environment for learning.” Ben Austin, who sits on the CA Board of Education was not nearly as enthusiastic. “Parents aren’t fooled,” he said. “New buildings are nice, but when they’re run by the same people who’ve given us a 50 percent dropout rate, they’re a big waste of taxpayer money.”

But wait.  Won’t all educational problems be solved if we just throw more money at them? Not so. This is an experiment that has been tried before. In 1998, the Cato Institute summarized a wildly ambitious project in Kansas City.

For decades critics of the public schools have been saying, “You can’t solve educational problems by throwing money at them.” The education establishment and its supporters have replied, “No one’s ever tried.” In Kansas City they did try. To improve the education of black students and encourage desegregation, a federal judge invited the Kansas City, Missouri, School District to come up with a cost-is-no-object educational plan and ordered local and state taxpayers to find the money to pay for it.

Kansas City spent as much as $11,700 per pupil–more money per pupil, on a cost of living adjusted basis, than any other of the 280 largest districts in the country. The money bought higher teachers’ salaries, 15 new schools, and such amenities as an Olympic-sized swimming pool with an underwater viewing room, television and animation studios, a robotics lab, a 25-acre wildlife sanctuary, a zoo, a model United Nations with simultaneous translation capability, and field trips to Mexico and Senegal. The student-teacher ratio was 12 or 13 to 1, the lowest of any major school district in the country.

The results were dismal. Test scores did not rise; the black-white gap did not diminish; and there was less, not greater, integration.

Even if you take test scores and drop-out rates out of the equation, the simple fact is California is broke. In May, state revenues were reported at $3.6 billion below estimates. In June, Money News reported that Jean Ross, executive director of the California Budget Project, said: “We are on the verge of system failure.” “Think of it as Greece on the Pacific,” starts the article. They are crippled by pension pay-outs, have delayed payments to various programs including schools already functioning and are selling off state assets to help bridge the budget gap.

With a $19 billion budget shortfall, did LA really need a $578 million school? Is it one more example of living in la-la land?  Or maybe it’s just one more example of politicians who can’t look past the next election or their desire to legacy-build.


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