Well, time for a phony government shutdown. I say phony because all essential, and many non-essential, functions of government will keep ticking away. The media will be filled with pictures of the Statue of Liberty being shut down and commentators damning Republican members for their “intransigence” in not recognizing that every whim of Obama is eternal law. All humbug. Continue reading
Well, the Land of Lincoln, and the home state of the South Side Messiah, has another distinction:
llinois’ credit rating has taken another hit. Standard & Poor’s Ratings Service downgraded the state from an “A” rating to “A-minus”, making it the worst in the country.
The New York ratings firm’s ranking means taxpayers may have to pay tens of millions of dollars more in interest when the state borrows money for roads and other projects.
The downgrade is the latest fallout over the $96.8 billion debt to five state pension systems.
The downgrade now ties Illinois with California, but California has a positive outlook.
Illinois’ fragile overall financial status netted it a negative outlook, putting it behind California overall.
The ratings came out now because Illinois plans to issue $500 million in bonds within days.
Finally…we beat California at something.
I have written before of a truly wacked out nostrum popular among bloggers on the Left in this country to have a coin minted with a trillion dollar value in order to “solve” the debt crisis. Go here to read my post on the subject. Now economist Paul Krugman, Nobel laureate and barking mad Leftist moonbat, has endorsed the proposal:
Enter the platinum coin. There’s a legal loophole allowing the Treasury to mint platinum coins in any denomination the secretary chooses. Yes, it was intended to allow commemorative collector’s items — but that’s not what the letter of the law says. And by minting a $1 trillion coin, then depositing it at the Fed, the Treasury could acquire enough cash to sidestep the debt ceiling — while doing no economic harm at all.
So why not?
It’s easy to make sententious remarks to the effect that we shouldn’t look for gimmicks, we should sit down like serious people and deal with our problems realistically. That may sound reasonable — if you’ve been living in a cave for the past four years.Given the realities of our political situation, and in particular the mixture of ruthlessness and craziness that now characterizes House Republicans, it’s just ridiculous — far more ridiculous than the notion of the coin. Continue reading
Well the so-called Fiscal Cliff was avoided through the mechanism that I predicted back in November:
What will happen I suspect is that the fiscal cliff will be avoided through taxes increasing on “the rich”, that will produce revenue that amounts to a rounding error in today’s federal budget, with completely illusory spending cuts. In short, the can will be kicked down the road. Unfortunately for the nation, the end of the road is almost here.
85 Republicans in the House voted for the Fiscal Cliff deal, and 151 voted against it. The Deal passed courtesy of 172 Democrat votes in the House.
The main terms of the agreement are as follows:
1. The Bush tax cuts were made permanent for single filers below 400,000 and married filers below 450,000.
2. The Alternative Minimum Tax has been permanently fixed by adjusting it for inflation.
(I would note that these portions of the deal should be considered as victories for the GOP. Permanently extending the Bush tax cuts for 98% of the population takes away from Democrats the opportunity to use this as a stick against Republicans. The Republicans have fought for a permanent inflation fix to the the Alternative Minimum Tax since it was first proposed in 1969.)
3. Yet another showdown over mandated spending cuts was set up for two months down the road.
4. The tax increases on those earning over 400,000 for single filers and 450,000 for married couple will bring in an estimated 35 billion a year.
5. Capital gains tax will go from 15-20 percent on those earning 400,000 for single filers and 450,000 for married couples.
6. The Estate Tax goes from 35%-40%. (The estate tax only applies to estates over five million dollars.)
7. Factoring in the estate tax increase and the capital gains tax increase estimated additional taxes come to 60 billion a year. For comparison purposes the deficit last year was 1.2 trillion dollars. Continue reading
In the Age of Obama, California under Governor Moonbeam is a reliable predictor of where the nation is headed: Bankruptcy.
On Tuesday, California released a report that revealed state tax revenues have plummeted even further below Gov. Jerry Brown’s (D) estimates, even after residents voted to increase taxes via Proposition 30 in November’s elections.
At the end of November, “taxes were 3% short in the fiscal year that started in July,” which is “a gap of $936 million.” The state was 0.7% short a month before.
H.D. Palmer, a spokesman for the state’s Department of Finance, spun the poor numbers by saying Facebook’s stock vested earlier than expected, and “boosted October taxes higher, while decreasing November revenue.”
But the report found that tax revenues were below estimates nearly across the board, as total “year-to-date revenues are $936 million below the initial forecast.”
According to the report, personal income tax revenues were “$827 million below the month’s forecast of $4.387 billion.” Sales and use tax receipts “were $9 million below the month’s forecast of $1.601 billion” and the year-to-date sales tax revenue was $8 million below forecast. Continue reading
The idea of minting trillion-dollar platinum coins has been a lunatic nostrum of the wacked out left for about a year. Today Brad Plumer on the wonk blog at the Washington Post looks at this scam:
Enter the platinum coins. Thanks to an odd loophole in current law, the U.S. Treasury is technically allowed to mint as many coins made of platinum as it wants and can assign them whatever value it pleases.
Under this scenario, the U.S. Mint would produce (say) a pair of trillion-dollar platinum coins. The president orders the coins to be deposited at the Federal Reserve. The Fed then moves this money into Treasury’s accounts. And just like that, Treasury suddenly has an extra $2 trillion to pay off its obligations for the next two years — without needing to issue new debt. The ceiling is no longer an issue.
Another fine, and timely, econ 101 video from the Center for Freedom and Prosperity. When future historians write the history of the Obama administration, and what a sad farce that tale will consist of, I think they will stand aghast at all the borrowed money poured out by the Federal government with virtually zero positive impact on the economy. In regard to Keynsian economics, the Obama administration is proof that one of Karl Marx’s maxims has proven to be a largely accurate observation on human affairs: Hegel remarks somewhere that all facts and personages of great importance in world history occur, as it were, twice. He forgot to add: the first time as tragedy, the second as farce. Continue reading
My beloved State of Illinois is a shining example of what not to do if a state wishes to be prosperous, cursed as it is with probably the worst state government in the Union. George Will sums up the state of my State in a column this week:
After trying to tax Illinois to governmental solvency and economic dynamism, Pat Quinn, a Democrat who has been governor since 2009, now says “our rendezvous with reality has arrived.”
Actually, Illinois is still reality-averse, so Americans may soon learn the importance of the freedom to fail in a system of competitive federalism.
Illinois was more heavily taxed than its five contiguous states (Indiana, Kentucky, Missouri, Iowa, Wisconsin) even before January 2011, when Quinn got a lame duck Legislature (its successor has fewer Democrats) to raise corporate taxes 30% (from 7.3% to 9.5%), giving Illinois one of the highest state corporate taxes, and the fourth-highest combination of national and local corporate taxation in the industrialized world.
Since 2009, Quinn has spent more than $500 million in corporate welfare to bribe companies not to flee the tax environment he has created.
Quinn raised personal income taxes 67% (from 3% to 5%), adding about $1,040 to the tax burden of a family of four earning $60,000. Illinois’ unemployment rate increased faster than any other state’s in 2011.
Its pension system is the nation’s most underfunded, and the state has floated bond issues to finance pension contributions — borrowing money that someday must be repaid, to replace what should have been pension money it spent on immediate gratifications.
Go here to read the depressing rest. Illinois is now rated A2 by Moody’s, the lowest credit rating of any state. When it lowered Illinois’ bond rating Moody’s made the following observation:
Illinois’ general obligation bond rating was lowered to A2 from A1 on January 6 because of the state’s failure last year to implement solutions to its largest credit challenges: severe pension under-funding and chronic bill-payment delays. It remains to be seen whether the state has the political will to impose new pension reforms and other measures that restore fiscal strength in the near term.
Not a chance. No serious reforms will be undertaken until State payroll checks begin to bounce. Illinois has the worst, most feckless political class in the country. Louis XV, he of apres moi le deluge, was a dedicated reformer compared to the idiots, crooks and empty suits who misgovern the Land of Lincoln.
In 2011 the Fed purchased 61% of all debt issued by the Treasury Department.
The Federal Reserve is propping up the entire U.S. economy by buying 61 percent of the government debt issued by the Treasury Department, a trend that cannot last, Lawrence Goodman, a former Treasury official and current president of the Center for Financial Stability, writes in a Wall Street Journal opinion article published Wednesday.
“Last year the Fed purchased a stunning 61 percent of the total net Treasury issuance, up from negligible amounts prior to the 2008 financial crisis,” Goodman writes.
Goodman also warns that U.S. economy and markets are “at risk for a sharp correction” if conditions aren’t “normalized.”
“This not only creates the false appearance of limitless demand for U.S. debt but also blunts any sense of urgency to reduce supersized budget deficits.” Continue reading
My beloved state of Illinois has a terrible economy, and a shrinking tax base but that is apparently no problem for the bi-partisan pirates who have been plundering the Land of Lincoln for decades:
When Republican state Rep. Roger Eddy announced his retirement from the House Thursday, you could hear the “ding, ding, ding” of a slot machine all the way from Springfield.
Eddy hit the pension jackpot.
He is retiring early from the House to run the Illinois Association of School Boards, which, among other activities, lobbies the Illinois Legislature. His start date is July 1 — although now that he’s leaving the Statehouse before the end of the spring session, he said it’s likely he’ll work for the association before July.
Why the sudden defection? One likely reason: He’ll be much richer in retirement, thanks in part to taxpayers.
In his new job, Eddy will not only stay in the Teachers’ Retirement System, he can collect more in benefits from it. He has been working both as a state representative and superintendent for Hutsonville Community Unit School District 1. He has been part of TRS through his Hutsonville job, where he earned a salary of $107,400. His new salary is expected to be at least $200,000, and his pension will be based on that.
Illinois Statehouse News reported that Eddy’s pension as school superintendent would have been about $70,500 a year. It will climb to at least $141,000 in his new job. His predecessor at the IASB, Mike Johnson, is earning an annual pension — get ready to swallow hard — of $193,273, according to TRS.
But that’s not the end of Eddy’s pension largesse. He’ll be eligible in two years to begin collecting a pension of about $24,000 a year from his nine years of part-time work in the Legislature. Illinois Statehouse News projected his lawmaker pension carries a lifetime value of $584,273. Eddy is 53 years old. Continue reading
The second in my ongoing series on the Obama record as President, the first part of which may be read here, leading up to the election in November. Few things show more graphically the disaster of the Obama presidency than the debt he has piled on this nation. This week the Obama Debt reached a grim milestone, as he surpassed the debt run up by his predecessor George W. Bush in eight years. That right-wing news organization CBS News, gives us the forbidding numbers: Continue reading
It should be the highest ambition of every American to extend his views beyond himself, and to bear in mind that his conduct will not only affect himself, his country, and his immediate posterity; but that its influence may be co-extensive with the world, and stamp political happiness or misery on ages yet unborn.
Mark Steyn at National Review Online, notes that the fiscal lunacy of the Obama administration and the HHS Mandate are linked:
As for us doom-mongers, at the House Budget Committee on Thursday, Chairman Paul Ryan produced another chart, this time from the Congressional Budget Office, with an even steeper straight line showing debt rising to 900 percent of GDP and rocketing off the graph circa 2075. America’s treasury secretary, Timmy Geithner the TurboTax Kid, thought the chart would have been even more hilarious if they’d run the numbers into the next millennium: “You could have taken it out to 3000 or to 4000” he chortled, to supportive titters from his aides. Has total societal collapse ever been such a non-stop laugh riot?
Yeah, right.” replied Ryan. “We cut it off at the end of the century because the economy, according to the CBO, shuts down in 2027 on this path.”
The U.S. economy shuts down in 2027? Had you heard about that? It’s like the ultimate Presidents’ Day sale: Everything must go — literally! At such a moment, it may seem odd to find the political class embroiled in a bitter argument about the Obama administration’s determination to force Catholic institutions (and, indeed, my company and your company, if you’re foolish enough still to be in business in the United States) to provide free prophylactics to their employees. The received wisdom among media cynics is that Obama has engaged in an ingenious bit of misdirection by seizing on a pop-culture caricature of Republicans and inviting them to live up to it: Those uptight squares with the hang-ups about fornication have decided to force you to lead the same cheerless sex lives as them. I notice that in their coverage NPR and the evening news shows generally refer to the controversy as being about “contraception,” discreetly avoiding mention of sterilization and pharmacological abortion, as if the GOP have finally jumped the shark in order to prevent you jumping anything at all.
It may well be that the Democrats succeed in establishing this narrative. But anyone who falls for it is a sap. In fact, these two issues — the Obama condoms-for-clunkers giveaway and a debt-to-GDP ratio of 900 percent by 2075 — are not unconnected. In Greece, 100 grandparents have 42 grandchildren — i.e., an upside-down family tree. As I wrote in this space a few weeks ago, “If 100 geezers run up a bazillion dollars’ worth of debt, is it likely that 42 youngsters will ever be able to pay it off?” Most analysts know the answer to that question: Greece is demographically insolvent. So it’s looking to Germany to continue bankrolling its First World lifestyle.
But the Germans are also demographically exhausted: They have the highest proportion of childless women in Europe. One in three fräulein have checked out of the motherhood business entirely. A nation that did without having kids of its own is in no mood to maintain Greece as the ingrate slacker who never moves out of the house. As the European debt crisis staggers on, these two countries loathe each other ever more nakedly: The Greek president brings up his war record against the German bullies, and Athenian commentators warn of the new Fourth Reich. The Germans, for their part, would rather cut the Greeks loose. In a post-prosperity West, social solidarity — i.e., socioeconomic fictions such as “Europe” — are the first to disappear.
The United States faces a mildly less daunting arithmetic. Nevertheless, the Baby Boomers did not have enough children to maintain mid-20th-century social programs. As a result, the children they did have will end their lives in a poorer, uglier, sicker, more divided, and more violent society. How to avert this fate? In 2009 Nancy Pelosi called for free contraceptives as a form of economic stimulus. Ten thousand Americans retire every day, and leave insufficient progeny to pick up the slack. In effect, Nancy has rolled a giant condom over the entire American economy. Continue reading
Unfortunate indeed is the country that forgets this sage piece of advice from Mr. Micawber: Continue reading
As intensely frustrated as I get at the idiocy frequently shown by government here in the US, for truly high handed over the top governmental lunacy we can rarely compete with the Europeans:
This week alone has seen a ratings downgrade for Spain as well as a threat by agencies to review France’s AAA status — and the markets have taken notice. Once again, it would seem, ratings agencies are making things difficult for European countries.
European Internal Market Commissioner Michel Barnier is considering a move to ban the agencies from publishing outlook reports on EU countries entangled in a crisis, according to a report in Thursday’s issue of the Financial Times Deutschland newspaper.
In an internal draft of a reform to an EU law applying to ratings agencies obtained by the paper, Barnier proposes providing the new EU securities authority, the European Securities and Markets Authority (ESMA), with the right to “temporarily prohibit” the publication of forecasts of a country’s liquidity.
The European Commission is particularly concerned about countries that are negotiating financial aid — for example from the euro rescue backstop fund, the European Financial Stability Facility (EFSF), or the International Monetary Fund (IMF). A ban could prevent a rating from coming at an “inopportune moment” and having “negative consequences for the financial stability of a country and a possible destabilizing effect on the global economy,” the draft states. Continue reading