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Posts Tagged ‘Fiscal Responsibility’
June 3rd, 2011 at 4:17 pm
Ditching Obama’s “Bumpy” Road to Recovery

If you’ve ever had the misfortune of drifting off the highway, chances are you’ve been instantly reminded by the deep grooves on the other side of the white line.  When your car crosses over them a deep, sickening rattle shakes your vehicle.  It’s a warning that you’re about to leave the road and enter a crash zone.

Most people have to fight to urge to overcorrect.  Austan Goolsbee, President Barack Obama’s chief economist, would probably reclassify the loud death tones as just “bumps along the road” and keep driving.

That’s effectively what Goolsbee is doing by claiming that the nearly 80 percent drop in jobs created from April to May are just 200,000 or so “bumps” in the White House’s empirically indefensible road to recovery.

Like an absent-minded professor ignoring the warning signs of an impending car wreck, Goolsbee and Co. are driving the American economy off the road and into a ditch.  Unemployment is anchored at 9.1 percent.  The stock market is falling with every new round of bad economic news.  Rating agencies are downgrading America’s economic outlook because of its lack of fiscal responsibility.

There are two ways to stop bumping over the warning grades.  Either get back on the highway or leave the pavement entirely.  By sticking to his present course, President Obama is steering the nation’s economy into a serious wreck.

April 1st, 2011 at 1:38 pm
Rubio Charts Own Course with Tea Party

Freshman Senator Marco Rubio (R-FL) is taking a much more traditional approach than colleague Rand Paul (R-KY) when it comes to proving his Tea Party credentials.  Paul continues to thumb his nose at the GOP establishment by founding the Senate’s Tea Party caucus, and feeding speculation he may run for president in 2012.

Rubio didn’t join the Senate Tea Partiers, and until recently has been publicly silent about his immediate intentions.  That changed with a recent column in the Wall Street Journal demanding major budget changes.

Interestingly, Paul is building a national brand while Rubio focuses on few – but profound – policy statements.  In an age of 24 hour media, Rubio’s statesmanlike approach could be an indication of very good things to come.

September 25th, 2010 at 2:49 pm
Bell, CA Officials Arrested in Corruption Sweep

The saga of the systemic corruption of public finances in the City of Bell, CA, is not over.  Earlier this week Los Angeles police officers arrested eight current and former Bell officials on charges of misappropriating upwards of $5.5 million in public funds.

It’s often said that if private business owners kept their books like the government does, there would be lots of CEOs in prison.  With the Bell scandal showing that fraud is criminal no matter who does it, the people who’ve grown rich at the public’s expense should start looking over their shoulders.

The cops – and the pitchforks – are coming.

May 20th, 2010 at 5:02 pm
The Beginning of an Economic Avalanche?
Posted by Troy Senik Print

No, I’m not referring to the recent precipitious decline in global stock markets (though there may be a connection). Instead, I’m talking about the tidal wave of state pension obligations that threaten to put the country’s entire economic infrastructure in peril. From a story in today’s Financial Times:

Joshua Rauh, associate professor of finance at the Kellogg School of Management at Northwestern University said that, without reform, some state pensions might run out within the decade. By 2030, as many as 31 states may not have the money to pay pensions. And, if these funds exhaust their assets, the size of payments for the benefits they have promised will be too large to cover through taxes, putting pressure on the federal government for a bail-out that could potentially cost more than $1,000bn, he says.

For those of you not accustomed to the British rendering, that last number would normally be referred to stateside as a jaw-dropping “trillion” .

But how could this scenario have ever gotten this far? The FT piece explains:

Estimates put the unfunded liabilities at between $1,000bn and $3,000bn after years of states promising benefits but not contributing enough in both good times and bad to cover them.

Many states base their calculations on an 8 per cent annual return and use an accounting method called smoothing, which staggers gains and losses over several years, two factors that some observers warn could mask the size of the shortfalls. The problem has come to the fore with the financial crisis and recession. Pension funds, like most money managers, suffered losses. The tax revenues that fund annual contributions to pensions, along with essential services such as healthcare and education, have plummeted, leaving little room to reimburse the losses.

Assuming that governments can get themselves out of this morass before it’s too late, the only way to prevent a reoccurence is to switch public-sector pensions from “defined benefit” plans to “defined contribution” plans. Mort Zuckerman did a good job of showing why over at U.S. News and World Report earlier this week:

[New York City] pensions are “defined benefit” plans, which are more expensive since they guarantee specific benefits on retirement.

On the other hand, private sector workers in the survey were mostly in “defined contribution” plans, which means that, unlike their cushioned brethren in the public sector, they do not have a pre-determined benefit at retirement. If New York City were to require its current workers to pay contributions toward health insurance equal to the amounts paid by the employees of local private sector firms, the taxpayer savings would approximate $628 million a year. In New Jersey, [Governor Chris] Christie says government employee health benefits are 41 percent more expensive than those of the average Fortune 500 company.

We know when the next bubble is coming.  But with the coming attractions provided by belligerent bureaucrats in Greece, which American politician will be the first to throw himself in front of the union gravy train?

May 13th, 2010 at 7:59 pm
Chris Christie Plants the Flag
Posted by Troy Senik Print

Come next January, a bevy of new Republicans in Washington are going to face the question that dogged Bill McKay, Robert Redford’s character in “The Candidate”, after finally winning office: “What do we do now?”

The Obama agenda leaves so little room for compromise with the center-right that the GOP has found it both politically expedient and ideologically consistent to throw up a wall of opposition. But when they have at least partial control of the reigns of power, that dynamic will change.

Conservatives searching for a role model when it comes time to lead should look to New Jersey Governor Chris Christie, who in only a few months has demonstrated the precondition of effective leadership in this age of runaway government: a spine of steel. Per a story in today’s edition of the Hill:

As the United States watches a debt crisis in Greece like a fiscal oil spill, waiting to see where it will spread first and when it will make landfall on our shores, Christie is tackling the nation’s worst state deficit — $10.7 billion of a $29.3 billion budget. In doing so, Christie has become the politician so many Americans crave, one willing to lose his job. Indeed, Christie is doing something unheard of: governing as a Republican in a blue state, just as he campaigned, making good on promises, acting like his last election is behind him.  

Upon taking office Christie declared a state of emergency, signing an executive order that froze spending, and then, in eight weeks, cutting $13 billion in spending. In March he presented to the Legislature his first budget, which cuts 9 percent of spending, including more than $800 million in education funding; seeks to privatize numerous government functions; projects 1,300 layoffs; and caps tax increases.

Much like Rudy Giuliani’s quest to rescue New York City from its own excess in the 1990s, Christie’s crusade shows a politican willing to sacrifice his career in order to save his constituents.  It’s a model for politicans from Greece to California. And soon it will be a model for the entire nation.