Running Scared

 

Johnny take a walk with your sister the moon

Let her pale light in to fill up the room

You’ve been living underground, eating from a can

You’ve been running away from what you don’t understand.

            —U2, Mysterious Ways

 

Brand new year: same old, same old.

By now you’ve heard that Congress managed to avoid the “fiscal cliff,” a supposedly imminent disaster.  It did so via a 154-page bill that was initially passed in the Senate at 1:39 a.m. Tuesday morning, just three minutes after it was made available to the membership for review.  The House passed it later Tuesday morning, and the President signed it on Wednesday, both in violation of pledges to have any legislation available for a minimum public review period before taking any action.

This is how out of control the District has become: passing bills in the middle of the night that no one can possibly have read, purportedly to resolve some sort of emergency crisis.  Worse, the so-called emergency is one of Congress’ own making, in no small part to a courage void in the GOP leadership.

Flashback to the summer of 2011.  The Beast was butting up against what was then a debt ceiling of $14.3 trillion (ah, the good old days).  Congressional Republicans, pushed by Speaker of the House John Boehner (R-OH), caved in to the Obama administration and agreed to a stopgap measure that allowed for immediate and future increases in the debt limit in exchange for modest spending cuts identified now and larger spending cuts to be hashed out by an unconstitutional “supercommittee,” whose decision would be final and binding on the rest of Congress.  Of course, I and others pointed out at the time that the spending “cuts” were illusory; those that were identified were miniscule and spread over ten years (i.e., they were really small reductions in future spending increases), and the larger cuts to be determined by the supercommittee would never come to pass.

This 2011 deal amounted to a Wimpy-style payment plan in which they agreed to debt (read: spending) increases now in exchange for a promise to discuss spending cuts later.  The debt ceiling was increased to $14.7 trillion, then $15.2 trillion, then to its current level of $16.4 trillion.  Meanwhile, the supercommittee met a grand total of five times, and predictably failed to reach any agreement on additional future spending cuts.  All the while, Obama got to campaign for re-election without having to face his base over reductions in government giveaways.

This is what the Democrats call “bipartisan cooperation”:  they get what they want right now, and then renege on what they promised to give the Republicans in the future in exchange.

Fast-forward to December 2012.  The stick that was supposed to have driven the supercommittee was the 2011 plan’s provision for an automatic $1.2 trillion in essentially across-the-board spending cuts, effective January 2 of this year (so-called “budget sequestration”).  This was the self-policing mechanism Congress set up in an attempt to manage its lack of discipline and fortitude when it comes to spending issues.  Yet with the January 2, 2013 deadline known to all, Congress went 14 months—not coincidentally, through the entire 2012 election cycle—and did exactly nothing about it.  By December, the Beast was once again butting up against what was now a $16.4 trillion debt cap, facing expiration of the Bush-era tax cuts, and staring down the barrel of automatic budget cuts, all of which were issues Congress itself created.  This is the “fiscal cliff” no one in Congress had the temerity to face.

And this is what I can’t understand:  why were Congressional Republicans so afraid of this?  My problem with the debt deal back in 2011 was that even the automatic sequestration didn’t go nearly far enough.  You want to cut $1.2 trillion (really $120 billion each year for 10 years)?  Fine.  You want to have to shut down for awhile rather than continue to borrow insane amounts from the Chinese?  Great.

But instead, just as they did in 2011, when it came time to cross bayonets and do political battle, Speaker Boehner and the GOP leadership abandoned the field.  The deal they agreed to Tuesday, in an effort supposedly to deal with the District’s fiscal irresponsibility, raises taxes with essentially no corresponding spending cuts (current CBO estimates score it 10:1 taxes to cuts), and further delays any discussion of either the debt ceiling or the cuts called for by the automatic budget sequestration agreed to in 2011.  In other words, once again Republicans took the bait and agreed to actual tax (again, read: spending) increases now in exchange for a promise to discuss spending cuts later.  Moreover, as with anything the District does, this one is laden with totally unrelated pork; in this case, millions in special tax candy for Hollywood, NASCAR, Puerto Rican rum makers, and biofuel producers.  In all, this plan will actually add some $4 trillion to the debt, again according to CBO.

Crazy.

I’ve seen defenders of this tell us to relax, that this is really just a return to the Clinton-era tax rates, and don’t we recall how prosperous that time was?  That forgets, of course, that the 1990s were largely still benefitting from an economy that had been revived under Reagan.  But more importantly, this argument really misses the point, which should be getting our fiscal house in order.  It would be one thing if we were talking about matching 1994 taxes against a return to 1994 spending, but we’re not.  In constant 2005 dollars, the federal budget in 1994 was a little over $1.8 trillion, versus about $3.3 trillion for fiscal 2011; we’re spending roughly twice today what we were spending under Clinton.  The national debt in 1994 was under $5 trillion, less than one-third what it is today.

This week’s deal does nothing—nothing—to address this country’s budget problem.  Boehner says he’s now done trying to negotiate directly with Obama, but that’s too little, too late.  He’s once again given Obama what he wants in the way of raising taxes, while putting off the real issue in reliance on a false promise that real spending cuts will be discussed sometime in the future.  This is the same stunt Obama pulled on him in 2011, and frankly it’s the same stunt the Democrats pulled on Reagan in 1982, and again on Bush 41 (remember “read my lips”?) in 1990.

And the engorgement of the Beast ratchets ever upward.

Fixing this problem requires having the maturity and political courage to stand up to Obama and insist on actually making significant spending cuts; not hypothetical reductions in future spending increases, but real cuts that take effect now.  Including defense.  Sadly, few in the GOP seem inclined to grow a backbone any time soon.  Thursday morning they re-elected Boehner as Speaker, with even Majority Leader Eric Cantor (R-VA), (former?) Tea Party darling Michele Bachmann (R-MN), and former VP candidate Paul Ryan (R-WI) voting in favor.  Beltway politics over principles, as usual.  So I assume we’ll continue to see more of the same, which means little or no opposition from an opposition party that controls a sizeable majority in the House.

Retreat.

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The Monkey On Our Back

Whoa, you like to think that you’re immune to the stuff, oh, yeah

It’s closer to the truth to say you can’t get enough

You know you’re gonna have to face it, you’re addicted to love

            —Robert Palmer, Addicted To Love

 

Hi.  My name is John Q. Public, and I have a borrowing/spending problem.

As we approach the silly spending season, it struck me as eerily timely to see my Tuesday Houston Chronicle running multiple stories and columns dealing with debt and dependency on others.

A front page piece discussed local lawmakers’ initiative to take on the paycheck lending industry.  To be sure, these folks are basically loan sharks, but in Texas at least, their business is perfectly legal; they make “advances” against future paychecks on a two-week turnaround, charging exorbitant fees and interest in the process.  But no one is making people sign up for these things.  The article tells story after story about people taking out one loan, then a second to pay the first, and so-on—and they even admit that “I knew what was going on.”  Yet somehow it’s always the lender’s fault when irresponsible adults sign up for agreements to borrow money they can’t pay back.

The article also suggests that it is somehow unfair that payday lenders charge higher fees in Texas where they are unregulated than they do in, say, Oklahoma, where the fees are capped.  How so?  Do borrowers have some right to be loaned that money (and to be loaned that money at the same rate charged somewhere else)?  What if the lenders just decided not to lend in Texas at all?  The fact that the market—when left to its natural state and not artificially limited by legislative price controls, which is what fee caps are—will bear a certain price is neither fair nor unfair.  The market is what it is, and the transaction is voluntary; if you don’t like the fee, don’t take out the loan.

A second front page article discussed welfare, and made the point that fewer people in Texas are receiving welfare payments today than 10 years ago.  Of course, the Chronicle spins it differently, saying that “cash aid for poor Texans fell while poverty rose,” as though having fewer people on welfare is a bad thing.  The main gist of the article is that it is unfair that the qualifying income threshold in Texas is lower than in other states, because it is depriving people of access to welfare payments.

And finally there was the usual column from Paul Krugman, who finally came out of the closet and said out loud what he’s said implicitly for years: deficit spending is OK because the government can just print more money.  Never mind the economics, for Krugman there isn’t even a moral issue with either borrowing money you simply never intend to pay back, or with incurring a debt that will have to be repaid with devalued dollars (that’s what happens when you just print “money”) by future generations who had no say in the borrowing.

What’s really troubling here is the common thought thread running through all three pieces.  Whether you’re talking about personal loans, welfare, or government debt, there is a growing worldview that you are simply entitled to live off of other people’s assets.  As a society we’re infected with this kind of thinking that rather than live within our means, we can simply take from others (whether at a personal micro level or at a national macro level) in order to fund a lifestyle we cannot afford.

Life’s pretty good here in the U.S. relative to the rest of the world, even if you’re “poor.”  As I’ve pointed out before, even the majority of the “poor” in the U.S. have computers, Internet access, color TVs, cable or satellite service, and cell phones.    Over 99% of all U.S. households have a refrigerator and TV.  75% have air conditioning.  The median household—not to mention the wealthy—has more than one flat-screen TV, and more than one car.

But at what cost?

This idea that we can live lavishly beyond our means is dangerous and unsustainable.  Yet it’s almost ubiquitous.  Consider that today total personal debt in U.S. is around $15.9 trillion.  $13 trillion of that is mortgage debt, fueled by federally-mandated unsafe lending practices designed specifically to facilitate home ownership by people who by definition couldn’t afford it (hence the mortgage crisis of 2007-08).  Another $847 billion is credit card debt.  Per citizen, the cumulative total is about $50,000–$3,000 more than our GDP per head, meaning we spend more than we produce, and in fact our average personal debt alone is right at our median income.

It wasn’t always like this.

In 2000, just 12 years ago, total personal debt was about $8.4 trillion, roughly half of what it is today.  $6.7 trillion of that was mortgage debt, again roughly half today’s figure.  Credit card debt was just $676 billion.  Per citizen, we each owed on average $29,000, 40% less than we do today.

If we look back further, today’s picture looks even worse.  In 1968, total US credit card debt was about $8 billion in current dollars; just 1% of what it is today.  In 1950 (I couldn’t readily find 1968 numbers, but you’ll get the idea) total US mortgage debt was a little less than 15% of GDP, but by 2004 it had risen above 60% of GDP.  Today it’s about 87%.

Our combined private and public debt is an unimaginable $32 trillion, by orders of magnitude the largest debt any group of human beings has ever owed in the history of mankind.  And yet we continue to borrow and spend, totally oblivious to the hole we are digging for ourselves and generations to come.

We have become, both individually and collectively, addicted to debt.  And unfortunately, our economy is now based almost entirely on this kind of debt spending, making it a house of cards; we’re creating the illusion of an economy by spending—both micro and macro—money We.  Do.  Not.  Have.  And what’s lost on the debtor-victim mongers and the Krugmans of the world is that incurring debt means you’ve taken money from someone else; sooner or later they’re going to want it back (and, I think most of us would agree, if you borrowed it from them you have a moral obligation to pay it back), typically with interest.

Where’s that money going to come from?

You’re not going to get it from the people taking out paycheck advance loans—if they had the money they wouldn’t be doing that in the first place.  You can’t get it by taxing the rich—as I’ve pointed out before, you could tax everyone making over $200,000 at 100%, take every dime, you’d net less than $2 trillion, which would barely cover the interest.  You could  walk away—that’s basically what Greece is trying to do.  You could only service the interest—again with borrowed money—until some undefined future date that never comes.  Or you could take the Krugmanian approach of simply printing money to pay it back.  But each of these “solutions” is just another form of the same inherent evil of taking from others.

If you default you’ve breached your agreement and taken directly from the lender.  If you delay, you shift the burden of repayment to future generations, literally mortgaging your children and grandchildren to finance your lack of self-control.  If you just print money, the increased supply necessarily devalues the currency, and the inevitable inflation that results is essentially a tax; although you don’t see it in the form of a bill from the IRS, you nevertheless surely pay it as it becomes more expensive to buy bread and gas.  And although this “tax” hits everybody, the really sick part is it’s regressive in that it has a greater impact the poorer you are:  I can afford a $10 loaf of bread, but a single mother working cleaning office buildings can’t.

We as individuals and as a country need to do some serious looking in the mirror.  The first step to recovery is admitting you have a problem.

************************

BENGHAZI UPDATE: It’s been 81 days since the attack on sovereign U.S. soil that killed four Americans, apparently while the White House watched in real time, and the President still hasn’t addressed the American people on it.

Of Moochers And Looters

They found the old man out in the back with a shovel in his hand

Thirteen rusty mason jars was just dug up out of the sand

And they all went crazy and they beat the old man, and they picked him up off the ground

Threw him in the swamp and stood there and laughed as the black water sucked him down

Then they turned around and went back to the shack and picked up the money and ran

They hadn’t gone nowhere when they realized they were runnin’ in quicksand

They struggled and they screamed but they couldn’t get away, and just before they went under

They could hear that old man laughing in a voice as loud as thunder.

            —The Charlie Daniels Band, The Legend Of Wooley Swamp

 

The other day I wrote about the U.S. becoming a nation of moochers and looters, and I want to get a little more into what I meant by that.  Consider those two terms:

mooch  (mōōch)  v.  to get (food, money, etc.) by imposing a burden on another

loot (lōōt)  v.  to take goods by force; to plunder

Now let’s put them in a little context.

There are currently about 313 million people in the U.S.  According to the Bureau of Labor Statistics, as of October we had a total civilian noninstitutional population (basically everyone 16 or older not in the armed forces) of 243,983,000; that’s the theoretical labor pool.  Of that, BLS tells us we have a total labor force of 155,641,000, a labor participation rate of 63.8%.  That figure is down from a high of over 67% in the late 1990s, the culmination of steady gains since World War II.

What this means is we now have over 36% of our population that is theoretically of working age—over 88 million people—but simply isn’t working.  These aren’t the “unemployed,” because to count as unemployed in the BLS statistics you have to have been seeking work.  Those people are included in the 155 million+ workforce.  No, this 88 million represents people in addition to the “unemployed”; 88 million people who are neither working, nor making any effort to work.   True, some of those 88 million are retired or disabled, but that doesn’t account for all of them—in fact, the labor participation rate of those 55 and older is actually increasing.  The continuing decline in labor participation is attributable, in large part, to people just dropping out of the workforce altogether.

In other words, they produce nothing.  They contribute no good in economic terms, and they add essentially nothing to government revenue.

But they do consume.

Which brings me to the flip-side of the equation.  As of June, we had over 46 million people—roughly 15% of the total population—on food stamps.  In 2011 70 million were enrolled in Medicaid, the federally-compelled, state-administered, government-subsidized medical insurance program for indigents.  5.6 million people currently collect unemployment insurance benefits.  4.5 million receive direct federal welfare under the Temporary Assistance to Needy Families (TANF) program, the successor to Aid to Families with Dependent Children (AFDC).  I’m not going to begin to dig up how many millions are receiving some form of state-administered welfare.

But there’s more.

Although the Lifeline program is decades old (as are Medicaid, etc.), under that program there are currently 12.5 million people with free cell phones and minutes, courtesy of the federal government.  As many as 2.5 million have two or more such phones.

81% of those with student loans advocate government-subsidized forgiveness of those debts.  In other words, they took the money and don’t want to have to pay it back; they want the government to pay it back for them.

We have had federal farm subsidies since the Great Depression; subsidies that were intended not only to supplement farm incomes, but to artificially boost prices by reducing supply.  In other words, the federal government bribes farmers not to produce.  Currently we spend $20 billion annually on this.

The Department of Energy has made some $34.5 billion in “loans” to “green energy” companies that in many cases have no market for their products; but a number of them are owned by huge Obama financial backers.  DOE claims that program has “created or saved” 60,000 jobs—even taking that dubious boast at face value, that’s $575,000 per job.  What is undeniable is that that program has seen to date eight bankruptcies, at least two insolvencies, three rounds of layoffs, and at least four companies outsourcing some or all of their business.

All of this costs money.  Food stamps alone cost over $75 billion in 2011.  Medicaid cost $404 billion in 2010.  Total student debt is $1 trillion, so at a default rate of around 10% that’s another $100 billion.  TANF was down, but still nearly $10 billion in 2011.  Cell phones were another $1.6 billion.  As noted above, there’s another $20 billion in farm subsidies, and $34.5 billion in green energy seed money.

That’s nearly three-quarters of a trillion dollars a year in just these programs I’ve named above.  Where do you suppose that money comes from?

I deliberately left out Medicare and Social Security—what I’ve set out above does not include any programs into which the recipients at least theoretically have “paid in.”  They are programs whereby the recipients are inherently taking money extracted from others.  So to those takers I ask: By what right do you take from those who produce in order to fund your consumption?  What is your claim on the product of the labor of others?  Does the fact of your need impose upon them a debt that they owe?  What have you provided in return?

For those of you who are not recipients but nevertheless support these programs out of some sense of social conscience I ask:  By what right do you seize others’ property in order to fund by force the charity you deem a social imperative?  Does your need for self-righteousness entitle you raid my bank account so you may rest comfortable in the illusion that you have helped your brother (what is really you forcing me to help your brother at gunpoint)?  Is it right that you should feed your sense of moral superiority, or assuage your guilt over having more than others, by taking from me to give to someone else?

I agree that we as people should help our neighbors.  But that help ceases to be alms when its giving is not voluntary.  Suppose the productive simply said I quit and stopped working.  Suppose business owners decided to close their doors rather than employ people who would earn wages for you to confiscate in the form of taxes in order to give it to people who had not earned it.  What then?  Would the takers’ need to consume and your need to feel charitable permit you to force us all back to work in order to fund your programs?

Living at the expense of others, with no value given in return for what you take, is mooching.  Money extracted at the point of a gun is loot, and its extraction is theft, regardless of the alleged altruism behind it.

**********************

BENGHAZI COUNT:  Forget General Petraeus’ affair–it’s a lurid smoke screen intended to distract you from what matters.  It is now 64 days and counting since our consulate and CIA compound in Benghazi were attacked and four Americans killed while intelligence and possibly the White House itself watched live via spy drone, and the President has still not addressed the nation and told us what happened.

FEMA Looting

“If you believe you may seize my property simply because you *need* it, well then so does any burglar.  The only difference is a burglar doesn’t ask my permission.  If you feel you have the right to use force against me, then show it for what it is:  bring guns.”

            —Jason Beghe as Henry Rearden in Atlas Shrugged II: The Strike

 

Let me say up front that my prayers go out to everyone in the Northeast affected by Hurricane Sandy.  As a Gulf Coast resident and veteran of both riding out and running from hurricanes, I understand that these storms, even if not of the “major” variety, are a big deal.  For my friends in that area, I pray you are all safe, and that you are able to return to some degree of normalcy as soon as possible.  For the rest of us, I urge everyone to find a way to contribute, whether it’s a monetary donation to the Red Cross dedicated to relief in that area, or sending supplies, or if you are close enough, contributing time and effort to the rebuilding process.

What I have to say today is going to be unpopular.  Some of you will call me callous or inhuman, which is why once the political train on this issue started sliding backwards a hundred or more years ago there was little anyone could do to stop it.  But I’m not running for office, and I’m not here to say what’s popular, but to say what’s right.  And my touchstone in that respect is always the United States Constitution.  So here it is:

Neither FEMA, nor any other agency of the federal government, should provide one dime of funding for relief or recovery from Hurricane Sandy.

But Rusty, you just told us your prayers go out to these people, and you urged us all to help them?!?!  Aren’t you being a hypocrite?

Indeed, I did.  And no, I’m not.

We should be reaching out to help those in need.  But that is a voluntary duty that arises from our humanity, not a compulsory obligation to be forced upon us by virtue of citizenship.  The fact of the matter is charity—which the government can only dole out from what it takes from others by force—is simply not a proper function of the federal government.

The Federal Emergency Management Agency, or FEMA, was created by Jimmy Carter in 1979, although its antecedents stretch back the better part of a century or more.  It is charged with providing emergency response and funding to states for cleanup and recovery from natural disasters.  And because its function is tied directly to events that involve large-scale destruction and casualties, it is inherently subject to being treated as something of a political candy jar; what politician wants to risk being painted as uncaring after denying a request for federal disaster relief from people who are without a home, food, water, and fuel?

So those relief requests come to be seen as an entitlement.  Why, of course the federal government is going to provide financial assistance, because it always does.  We see that today in the rhetoric associated with New York’s request that the federal government cover 100% of the estimated $6 billion in rebuilding costs following Hurricane Sandy (as an aside, FEMA’s budget for all of 2008 (the most recent year I could find) was only $5.8 billion, so Governor Cuomo is effectively asking that FEMA’s entire annual allotment be spent on his state alone).  New Jersey Senators Robert Menendez and Frank Lautenberg wrote in their request to Obama,  “[w]e understand the federal share is typically 75 percent of these total costs . . .”  Former DHS official Matt Mayer said that “Seventy-five percent is a floor, not a ceiling.

Share.  Floor.

Federal funding of most, if not all, of the costs is viewed as a given.  So four days before an election, President Obama really doesn’t have any choice but to grant the request, and Governor Romney has no choice but to keep his mouth shut about it.

The problem is, there’s no constitutional authority for FEMA’s existence, much less its funding of state disaster relief.

Professor Walter Williams, in multiple essays collected in Liberty Versus The Tyranny Of Socialism, outlined repeated instances in our history where the unconstitutionality of federal charitable relief has come up.  James Madison—who, as its primary author, might be regarded as having a certain insight into what the Constitution does and does not provide—objected to an appropriation to aid French refugees in 1794, saying, “I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents.”  Jefferson likewise was at a loss to find authority for federal charity in the Constitution.  Put in the more directly applicable context of domestic disaster relief, in 1796 Representative William Giles of Virginia objected that an appropriation for the relief of fire victims was unconstitutional.  Ninety years later, Grover Cleveland vetoed drought aid for Texas farmers on the same basis.

There just isn’t a Constitutional basis for federal disaster relief.  The General Welfare clause can’t get you there.  As I’ve said too many times to re-link to, if the General Welfare clause allows the federal government to do anything it thinks is good or right, then the rest of the detailed enumerated powers become meaningless; the Constitution could simply have said Congress shall have the power to enact any such legislation it finds is in the general welfare, and been done with it.  Both Madison and Jefferson cautioned that “general welfare” had to be understood in connection with, and limited by, the enumerated powers.  Furthermore, in its common sense understanding, “general welfare” refers to those acts that benefit everyone, not some isolated segment of the citizenry.

And don’t even try the Commerce Clause.  As I’ve explained repeatedly, and as appears many times in the Federalist Papers, the Commerce Clause was simply intended to prevent economic Balkanization that would result if one state could impose protectionist tariffs on goods from another state.  If was never intended to use federal money to rebuild housing.

President Cleveland correctly predicted the entitlement mentality that would result once the federal government got into the business of providing disaster relief:  “Federal aid in such cases encourages the expectation of paternal care on the part of the Government and weakens the sturdiness of our national character, while it prevents the indulgence among our people of that kindly sentiment and conduct which strengthens the bonds of a common brotherhood.”  Charity rightly resides locally, with neighbor voluntarily helping neighbor.  It is not, and should not be, the function of the federal government to elicit that charity by force, taking money from people in Colorado, Nevada, and Ohio, and giving it to people in New York.

But that’s where we are now.  And although you’ll accuse me of being cynical and callous, here’s the real rub.   These disasters such as hurricanes on the East and Gulf Coasts, earthquakes on the West Coast, tornadoes in the central plains, are all predictable, known hazards (indeed, sports teams in these areas often celebrate their association with these disasters in their nicknames: Hurricanes, Cyclones, Crimson Tide, Green Wave)For those who choose to live in places like Florida, for example, we can’t predict the exact time, but we can say with 100% certainty that someday a hurricane will come; that’s part of the risk you accept when you choose to live there.  Even in the Northeast, this is not the first time New York and New Jersey have been hit by a hurricane, nor will it be the last.  You can’t prevent it, but you can take measures to mitigate its impact.  You can build shelters and stockpile supplies.  And as my contracts professor used to tell us in discussing how contracts allocate risk, “Wars happen.  Insurance is available.”

But what unlimited federal disaster relief funding does is allow people to use the force of the federal government to shift their risk and cost burden to others.   With FEMA, people can populate areas with known, certain natural disaster risks, ignore those risks and take no measures ahead of time to mitigate or insure against them, then take money from everyone else–under the disguise of altruism and humanitarianism–to pay for the damage when it happens.

Stripped of its camouflage, in any other context, that’s called “looting.”

Holding People Accountable

“Knox, for the ninth time, there is no bat.  If there were, we would find him, we would arrest him.”

            —Pat Hingle as Commissioner James Gordon in Batman

 

I’m going to make a bit of a strange connection, but stick with me here.  It’s all about accountability.  Just ask Obama.

Speculation and accusations continue to swirl around the White House over Benghazigate, as the President’s position that he didn’t know anything and couldn’t do anything and never lied about anything becomes increasingly untenable.  Perhaps the most fundamental problem Obama faces is that even in his world, he can’t blame this one on Bush, since the Libyan Spring took place on his watch and with his overt support; under Bush we had no consulate in Libya for terrorists to attack.

Having painted himself into a corner, Obama has now been forced to acknowledge that the Benghazi incident reflects some potentially serious problems.  Speaking on MSNBC’s Morning Joe on Monday, Obama said that “[I]f we find out that there was a big breakdown and somebody didn’t do their job, then they’ll be held responsible.”

This somebody will be held responsible line sounded like something I’d heard from this administration before.  So I did a little digging, and shockingly, this isn’t the first time Obama has said something about holding people accountable.  Indeed, he’s said it many times, in many different contexts.  Here’s what I could find without too much work:

On the banking industry:

And when we learn that a major bank has serious problems, we will hold accountable those responsible[.]”  February 24, 2009 address to joint session of Congress;

On burning Korans:

We will take the appropriate steps to avoid any recurrence, including holding accountable those responsible.”  February 23, 2012 letter to Afghan President Hamid Karzai

On the economy:

One nice thing about the situation I find myself in is that I will be held accountable.”  February 2, 2009 on NBC’s Today

On Operation Fast & Furious:

There may be a situation here which a serious mistake was made, and if that’s the case then we’ll find out, and we’ll hold somebody accountable” (eerily similar to the Benghazi statement).  March 22, 2012 interview on Univision

On security leaks:

[S]ince I have been in office, my attitude has been zero tolerance for these kinds of leaks[.]”  Obama during June 8, 2012 press conference; Senior Adviser David Plouffe “[O]bviously people need to be held accountable if they did something wrong.”  June 17, 2012 interview with CNN’s Candy Crowley.

Perhaps the most interesting to me, however, is President Obama’s statement about accountability in his discussion of the Stimulus during his February 24, 2009 address to a joint session of Congress:

“That is why I have asked Vice President Biden to lead a tough, unprecedented oversight effort—because nobody messes with Joe.  I have told each member of my Cabinet as well as mayors and governors across the country that they will be held accountable by me and the American people for every dollar they spend.”

Every member of his Cabinet will be held accountable for every dollar they spend, huh?  Well, that got me wondering again how that whole Department of Energy green energy stimulus giveaway program was going.  So in the interest of accountability, I thought it might be time for an update of the green energy subsidy casualty list I published back in February.

UPDATE: A123 Systems—Bankrupt, October, 2012

A123 began in 2001 from a research lab at MIT on $100,000 in federal seed money.  In 2009 it received $249 million in DOE loan money to develop electric car batteries for the Fisker Karma (which later proved to have serious defects resulting in the recall of all 239 Karmas produced).  This, despite public admissions in their SEC filings that they had “never been profitable.”  A123 is $144 million in debt and filed for bankruptcy on October 16.

UPDATE: Abound Solar—Bankrupt, July 2012

Abound was a Colorado-based manufacturer of thin-film solar panels.  In December 2010, it received $400 million in DOE loan guarantees, about $70 million of which it cashed in.  Unable to compete, and unable to find a buyer for itself as a going concern, Abound filed for bankruptcy liquidation on July 2.

UPDATE:  Solar Trust of America—Bankrupt, April 2012

This one didn’t get much press.  Oakland-based Solar Trust of America holds the development rights for the Blythe Solar Power Project in Southern California.  It received $2.1 billion in DOE loan guarantees in April 2011, but ran short of cash when its 70% majority owner—German company Solar Millennium AG—filed for bankruptcy in Germany in December.  Solar trust filed for bankruptcy in the U.S. April 2.

Ener1—Bankrupt, January 2012

Ener1 was a New York-based parent company of a firm that received $118 million in federal “stimulus” grants to produce electric car batteries in part for the Fisker Karma (see below), a deal that ultimately fell through in favor of A123 (see above).  Ener1 filed for bankruptcy in January.

Beacon Power—Bankrupt, October 2011

Beacon received $43 million in DOE loans.  Beacon declared bankruptcy in October 2011, and began selling off its assets in December.

Evergreen Solar—Bankrupt, August 2011

Evergreen was a Massachusetts-based manufacturer of solar panels.  It received government grants including an estimated $5.3 million in federal “stimulus” money.  Evergreen went bankrupt in August 2011, and in November sold its assets to a Chinese firm.

Solyndra—Bankrupt, August 2011

You all know the Solyndra story.  Solydra netted a $535 million loan over the objections of financial analysts, and the debt was later restructured to move taxpayers behind Obama bundler George Kaiser in the creditor queue.  Solyndra declared bankruptcy in August 2011, and later sold its assets for pennies on the dollar to a new outfit also partly owned by Kaiser.

Spectrawatt—Bankrupt, August 2011

Spectrawatt was a New York-based manufacturer of silicon cells used in solar panels.  It received $500,000 in “stimulus” grants in June 2009.  Spectrawatt filed for bankruptcy in August 2011, and was bought by a Canadian firm.

Nevada Geothermal—Insolvent, October 2011; UPDATE: Auditors Doubt Viability, July 2012

Nevada Geothermal is a Nevada-based geothermal energy company that received $66 million in federal grants, and another $79 million in DOE loans; loans it immediately used to pay off or renegotiate other loans that were or were about to be in default.  A July 4, 2012 report said internal auditors were questioning the firm’s viability going forward: “[M]aterial uncertainties case significant doubt on the company’s ability to continue as a going-concern.”

Amonix—Layoffs, January 2012; UPDATE: Closed Main Plant, July 2012

Amonix was a California-based solar systems manufacturer with a plant in Nevada, partly owned by Obama mega-bundlers John Doerr, Daniel Weiss, and Steve Westly.  Amonix received $5.9 million in federal “stimulus” grants in 2010.  It laid off two-thirds of its workforce in January, and closed its main plant in July.

Sunpower—Insolvency/Layoffs, November 2011

Sunpower, yet another California-based solar firm, received a $1.2 billion DOE loan in September 2011.  Barely a month later, it announced hundreds of millions of dollars in losses, and that it was “reorganizing” and cutting jobs.  It is now owned by the French oil giant Total, without whose backing it would be bankrupt.

Fisker Automotive—Layoffs, February 2012

Fisker Automotive is a California-based manufacturer of luxury electric cars.  It received a $529 million DOE loan to produce its $102,000 Karma, which it manufactures in Finland.  After producing—then recalling—a grand total of 239 units, Fisker announced in February that it was laying off employees in its Delaware and California locations.

Hundreds of billions of your tax dollars at risk or gone, on a program that’s seen eight bankruptcies and counting, at least two insolvencies, and three sets of layoffs and plant closures.  That’s in addition to jobs being sent overseas (Fisker) or entities being taken over by foreign ownership.  All to “create”—giving the administration the most charitable benefit of the doubt—a few hundred jobs.

Yet neither Secretary Stephen Chu or anyone else has been fired or even taken to task by the administration.  Come to think of it, I don’t recall anyone getting fired over banking failures, burning Korans, the economy, or security leaks, and only one low-level scapegoat firing in Fast & Furious.  And my bet is as long as Obama is in office, no one gets fired over Benghazi.

Maybe “holding people accountable” doesn’t mean what the Obama administration thinks it does.

Paul Krugman And The Government Spending Panacea

I was looking for love in all the wrong places

Looking for love in too many faces

Searching their eyes, looking for traces of what I’m dreaming of

            —Waylon Jennings, Looking For Love

 

Dr. Keynes—er, Krugman—is at it again.

His latest piece “Looking to the iPhone for Economic Stimulus” focuses on a JPMorgan report predicting that Apple’s introduction of the iPhone 5 may provide a boost to GDP.  And there, Professor Krugman thinks he’s found a clever bit of intellectual judo.

Ah-ha,” he says.  “People spending money to buy iPhones means a boost to GDP.”  Krugman extrapolates from that that spending in the abstract equals growth.  And if you think that’s a good thing, he argues, then you should support increased government spending.

Gotcha, you small-government simpleton.

If only it were that easy.

To begin with, Krugman—as usual—plays it loose with the facts, complaining that government employment and public investment have “plunged,” and implying that this plunge is the culprit delaying any recovery.  In reality, the August jobs report showed total government employment dropped a whopping 7,000 jobs since July, a total of three hundredths of one percent (0.03%).  Not exactly “plunging.”  Federal government employment actually rose by 3,000.  Viewed a little longer term, total government employment has hovered between 22,000,000 and 21,900,000 over the last year, and it’s down a grand total of 0.75% since August 2011.  The notion that public sector employment is “plunging” is simply false.

Nor is it clear what “public investment” Krugman thinks is “plunging”; he must have missed the $800 billion “stimulus,” the nearly $500 billion in TARP bailouts and government takeovers, and the $2.5 billion in failed green energy startup loans to Solyndra and other Obama bundler ventures.  Unless, of course, what he means is that public spending has “plunged” since these massive projects, in which case he’s just engaging in the ancient Left fallback of “you didn’t spend enough.”  And isn’t it interesting that Krugman argues that government spending is needed now to prompt recovery from what he repeatedly refers to as a “depression,” when he has previously contended that “the stimulus worked.”

What is true is that neither government employment nor public investment have really done anything to pull the economy out of the now nearly four-year long recession.  That’s a fact that is more than a little inconvenient for Professor Krugman, so he does what he always does, which is ignore it and tell you a lie that supports his fetish for more government.

To his credit, Krugman correctly notes two critical factors in economic growth.  On the one hand, Apple’s launch of the iPhone 5 is predicted to have a significant positive impact.  Why?  Because it gets people out into the market spending money.  Krugman gets this.  On the other hand, Krugman also correctly observes that companies are sitting on a lot of cash and not making investments in their businesses, and the lack of jobs as a result means that consumers aren’t spending.  But Krugman fails to make the connection between the launch of the iPhone and business reinvestment, nor does he ask the critical question why businesses aren’t reinvesting.

The iPhone 5 represents an example of innovation; Apple has created a product people want, which is why they will line up to buy it, thus generating spending and positively impacting growth.  There would be more of that kind of thing if businesses were reinvesting their capital.  But they’re not, and the reason they’re not is that they’re uncertain about the future, particularly as it relates to how much of their cash the government is going to take, and how much of their cash they’re going to be forced to spend complying with additional government regulation.

And this is where Krugman fundamentally misses the boat.  Businesses and consumers aren’t spending, so his solution is for government to fill that spending void.  The problem with this kind of thinking is that all spending is not equal.  When businesses and consumers spend, they’re spending their own money; it is a true injection of activity into the marketplace.  Government, however, doesn’t have its own money to spend.  It can only spend what it takes from businesses and consumers (or, alternatively, what it borrows, another favorite remedy of Krugman).  Not only does government spending merely put back into the market capital that government took out of the market, but it’s this very threat that government will increase taxes in order to fund additional spending that makes businesses and consumers hesitant to spend in the first place.  Even if you accept Krugman’s core premise that government spending is just as good as private spending—which it’s not—by relying on government spending you’re perpetuating the underlying problem that private concerns have less and less to spend on their own.

Krugman admits the economy will recover on its own.  What he’s advocating is make-work; the artificial creation of jobs to do work that the market at present does not need (if it needed them, the jobs would already exist and be filled).  That is not a sustainable economic model.  Furthermore, by shifting spending from the private sector to government, you move from a model where the decisions that drive the economy are spread across millions of decision makers engaging in billions of small-scale transactions, to a model where the entire economy depends upon a few gigantic decisions made by a tiny handful of government masterminds.  This hyper-concentrates risk, while minimizing the number of opportunities for successful innovation.

Darwin would not approve.

Finally, it is apparent that Professor Krugman has never actually seen the Constitution.  There is no provision authorizing the federal government to take money from the citizens for the purpose of spending it in order to stimulate the economy artificially.  The regulation of interstate commerce was never meant to make the federal government the driver of the economy.  What it was meant to do is to get protectionist state governments out of the way so that private citizens could engage in that trade that best fit their individual needs and furthered their individual desires and ambitions.  That is what a free market economy is, and it is how we function best.

Professor, government is the problem, not the solution.

And I can think of about 16,000,000,000,000 additional reasons government does not need to spend more.

**************************

EDITOR’S NOTE: This marks the 150th installment of Chasing Jefferson.  Thanks for your continued support and encouragement–keep spreading the word, and keep the discussion going.

RDW

Back, Jack, Do It Again

You got to know when to hold ‘em, know when to fold ‘em

Know when to walk away, and know when to run.

            —Kenny Rogers, The Gambler

Last week, the President was on the campaign trail trumpeting the 2009 auto bailout as a huge American success, and said he wants to do the same thing in every other American industry:

“When the American auto industry was on the brink of collapse, more than a million jobs at stake, Governor Romney said, let’s ‘let Detroit go bankrupt.’  I said I believe in American workers, I believe in this American industry, and now the American auto industry has come roaring back and GM is number one again. So now I want to do the same thing with manufacturing jobs not just in the auto industry, but in every industry. I don’t want those jobs taking root in places like China. I want them taking root in places like Pueblo.”

Obama’s defenders like MediaMatters have tried to water this down by making the case that he was talking about restoring jobs through eliminating tax breaks for outsourcers, and not about nationalizing industries.  But that begs the question when he says “I want to do the same thing”: same as what?  Obama didn’t eliminate tax breaks in an effort to stop outsourcing by automakers.  The only thing he did was the 2009 bailout/takeover.

So what of this tale of this great success he wants to repeat?

Obama boasts that the “American auto industry was on the brink of collapse,” and that “more than a million jobs [were] at stake,” obviously attempting to imply that he saved the entire industry.  Really?  Then how come the only action he took was with GM and Chrysler?  Big players, to be sure, but they hardly comprise the entire industry, even here in the U.S.   What about that little outfit in Dearborn, Michigan called the Ford Motor Company?  Ford didn’t take a dime of bailout money, and with 2011 net income of just over $20.2 billion—up from $6.5 billion in 2010—they’re doing just fine, thank you.  What about Mercedes-Benz, which operates a manufacturing plant for its M-Class SUV (among other products) outside Tuscaloosa, Alabama?  No bailout money for them.  Toyota builds its Tundra and Tacoma pickups in San Antonio, Texas, and has parts factories in Alabama, Indiana, Kentucky, and West Virginia.  BMW manufactures its X-series SUVs in South Carolina.  Honda has plants in Alabama, Indiana, and Ohio.  Hyundai has a manufacturing facility in Huntsville, Alabama.  No bailout money for any of them.  Obama’s suggestion that his bailout saved the entire American auto industry is at best a gross exaggeration.

And what about these “million jobs at stake”?  General Motors had a grand total of 215,000 employees in 2009 (it has a similar figure of about 207,000 today).  Chrysler had another 47,000 in 2009 (about 51,000 today).  That’s barely a quarter-million jobs, by my poor Rice math, but here’s the dirty little secret:  fewer than half those jobs were in the U.S.  Indeed, of GM’s 215,000 employees, only 77,000—barely 1/3—were in the U.S.  Chrysler doesn’t report a U.S./non-U.S. breakdown, but even indulging in the unlikely assumption that all of them were in the U.S., that’s still only about 125,000 jobs total.  Obama claims “a million jobs [were] at stake,” but the true number maxes out at about a tenth of that figure, and even that is accepting that every single one of those jobs was at risk, and would have been lost, but for Obama’s action.

Sorry, but Obama wasn’t stopping outsourcing by bailing out and taking over GM and Chrysler; at best he was subsidizing it.

The truth is, Obama fundamentally misunderstands the nature of “outsourcing,” and of business in general.  Businesses exist to make a profit for the shareholders, not to provide employment for a favored segment of the population.  Rational behavior dictates that assuming the requisite skill sets are available and the logistics are possible, businesses will hire the least expensive labor force they can.  This is a good thing, because lower labor costs both enhance profit to the shareholders—thus encouraging more investment in businesses—and lower prices for consumers.

In the specific case of the auto industry, the primary driver of labor expense is the exhorbitant demands of the UAW.  Look again at the locations where automakers other than those locked in Detroit are making their products in the U.S.:  Alabama, Indiana, Kentucky, Ohio, South Carolina, Texas, and West Virginia.  This is no coincidence.  Except for Ohio and West Virginia, all of these are “right to work” states, meaning the manufacturers by law don’t have to deal with the UAW.

Ironically, Chrysler itself exposed the core flaw in the bailout logic in its 2011 10-K filing with the SEC:

“The automotive industry is highly competitive, particularly in the U.S., our primary market. Moreover, we believe aggregate manufacturing capacity in the global automotive industry substantially exceeds demand, particularly over the past several years. We have a relatively high proportion of fixed costs and may have significant limitations on our ability to reduce fixed costs by closing facilities and/or reducing labor expenses.”

Chrysler confirms that labor costs are hurting its competitive position, and its ability to reduce those costs by closing facilities or reducing wages is limited; i.e., being chained to the UAW impairs its ability to compete (hence its economic woes leading to the bailout in the first place—ditto GM).

But perhaps more interesting is the lead-in premise: the industry is highly competitive, and reflects substantially excessive supply.  In other words, Chrysler, an organization supposedly saved from extinction by Obama, says that one of the problems with the auto industry is that there are too many manufacturers!!!  Taking Chrysler’s statement at face value, Obama’s bailout really helped perpetuate both problems: it propped up two manufacturers in an industry where there are too many manufacturers to maintain long term profitability, and it continued a labor structure that leaves manufacturers too little flexibility to reduce costs in response to the competitive situation presented by excess supply.

The only way to sustain this kind of model is through repeated government subsidies—that’s what nationalizing is.  That’s what Obama did, and that’s what he says he wants to repeat with other industries.  And while you’re contemplating that, consider that the current estimate is that U.S. taxpayers will ultimately lose $25 billion on the GM proposition alone.  With just about right at $16 trillion in existing debt—not including unfunded liabilities like Social Security and Medicare—just how many more industries can we afford to repeat Obama’s “miracle”?

Any responsible hunter will tell you that sound game management sometimes requires you to thin the herd.  Too many animals stresses resources and leaves too little to eat, and all of them suffer as a result.  The same principle applies in business: sometimes you have to let the weak go so that the stronger and more competitive can prosper, and everyone benefits in the long run.

Back To The Future

 

Don’t look back, a new day’s breakin’

It’s been too long since I felt this way

I don’t mind where I get taken

The road is callin’, today is the day.

            —Boston, Don’t Look Back

In keeping with his campaign theme of “Forward”—never mind forward to where, just damn the torpedoes, man—President Obama has taken to the campaign trail claiming that Mitt Romney wants to take the country back to the 1950s.  Can’t blame the man really.  When you can’t run on your record, you don’t want anyone looking at the past even one iota.  Of course, implicit in that message is that the past is a bad thing; the 1950s couldn’t possibly have been a better time than now.  After all, time moves forward, and all progress is inherently positive, right?  Who would ever want to go back?

Who, indeed.

Consider a few comparisons.

Total unemployment today stands at a stagnant 8.3%.  While women fare slightly better than the overall number at 7.9%, blacks lag far behind at a staggering 14.4% (real unemployment, of course, is far worse than that, but the data don’t reach back far enough to make that comparison).  Just using the “official” numbers, over the course of the 1950s, total civilian unemployment averaged 4.51%.  For women it was 5.01%.  Blacks again lagged behind, but at 8.23% in the 1950s their unemployment situation was almost half what it is today.  Who would want to go back to that?

In 1950, the federal government spent $1.6 billion on welfare.  In 2010 that figure was an astonishing $502.3 billion.  Much of that metastasizing is due to the creation of Medicare and Medicaid in the mid-1960s as part of LBJ’s “war on poverty.”  The same initiative introduced the federal food stamp program, whose enrollment has ballooned to an unbelievable 46 million participants; that’s 14.6% of the population, or roughly 1 in every 7.  I suppose you could argue that it’s an improvement over 1950 that we have programs in place to provide so much more help to our fellow citizens in need.  Most of us, however, would define “progress” as seeing more Americans having jobs, rather than more of them having food stamps.

In a not-unrelated development, the U.S. national debt in 1959 was just under $285 billion, or about $1500 per man, woman, and child in this country at that time.  Today that debt stands at an astronomical $15.9 trillion—meaning every child born in the U.S. today draws his or her first breath already over $50,000 in the hole (and that’s without college loans)—and it’s climbing faster than anyone can count.  That’s the largest debt ever incurred in the history of the universe, and it’s more than fifty times what it was at the end of the 1950s.  Cast the blame for that where you want, there’s plenty to go around.  My point here isn’t who’s responsible—although Obama has done nothing but accelerate this problem—but to point out the fact of the very sharp difference between our debt situation today and what it was in the 1950s.  Can’t say our fortune’s improved much.

In 1950, single-parent homes made up 10.9% of all households with children.  In 2008, that figure had effectively tripled to 29.5%.  Not surprisingly, this trend corresponds with an upward trend in divorce rates, which were just over 10 per 1000 married women in 1950, but right about 20 per 1000 in 2000.  And the news is even worse—far worse—in the black community, where some researchers claim that today 72% of black babies in the U.S. are born to unmarried mothers.  This phenomenon has predictable and tragic consequences, according to Children—our investment.org:

63% of youth suicides are from fatherless homes;

75% of adolescents in chemical abuse centers come from fatherless homes;

80% of rapists with anger problems come from fatherless homes;

85% of all youths in prison come from fatherless homes.

That may be moving forward, but it can’t be good.

Other comparisons are less quantifiable, but worth considering.  I would argue that the U.S. was much more respected globally in 1950 than we are today.  True, in 1950 we had to deal with the Soviet bloc, but while there was genuine ideological rivalry there, I don’t think there was an utter contempt or disregard.  Hugo Chavez and Mahmoud Ahmedinejad would never have run their mouths in 1950 the way they do today.

Leaving aside the McCarthy issue—another debate for another time—our political discourse, and indeed our social interactions with each other, were much more civil, and our social mores were better anchored.  We could disagree vigorously, but it would never have occurred to anyone that they might be called a slut/slutty flight attendant on the national airwaves.  Kids didn’t have go to school with one hand permanently clutching their pants to keep them at least as high as the bottom of their butt.

Elvis was the King, and no one had yet been subjected to Lady Gaga.

I’m not so naïve to think that the 1950s was some utopia plucked straight out of Leave It To Beaver.  Nor would I deny that there’s been much legitimate, beneficial progress over the last 60 years.  I wouldn’t give back the civil rights gains won by people like Rosa Parks, Dr. Martin Luther King, Jr., and Rep. John Lewis (D-GA), and I don’t long for the days of Jim Crow.  Certainly I recognize there have been giant leaps in medicine and technology that have made our lives much easier and healthier than life in the 1950s.

But before you dismiss it completely, think hard; maybe in many respects the good old days weren’t so bad after all.

You Spent What?

 
“It’s only m-m-m-money.”
—Bill Murray as Frank X. Cross in Scrooged
This is your federal government at work.
Recent news events have revealed the massive GSA—ironically, that’s the Government Services Administration, the agency charged with, among other things, overseeing federal spending to avoid waste and fraud—boondoggles in Vegas ($823,000 for 300 employees to attend a conference) and Hawaii (five employees stayed a week on the taxpayer dime for a one-hour groundbreaking ceremony).  Yesterday we learned that the District has been funding such critical projects as a study into erectile dysfunction, and whether people tell the truth in surveys about their sex habits.
And you thought Kinsey was dead.
These GSA binges and federally-funded prurient academic exercises are not isolated incidents.  They are indicators of a culture of entitlement that is endemic in the District.  The politicians and bureaucrats that make up the Beast have long come to view the federal taxpayer as an unlimited sugar daddy into whose pocket they may dip at their pleasure either for personal indulgences or for Scooby Snacks to dole out to their cronies.  Even the few half-decent that are left are forced to try to get as many federally-funded goodies as they can, simply to recapture for their constituents what they can of money that’s going to be spent somewhere no matter what.
But some of this is just inexplicably stupid.
Consider Senator Tom Coburn’s (R-OK) annual  “Wastebook,” which chronicles some of the more egregious examples every year.  These are not necessarily the biggest-ticket items (although some are HUGE), but some of the more bizarre.  I’ve excerpted some of the 100 items from this year’s list below out of just three agencies (numbers in parentheses correspond to the spot on Coburn’s list).
Pakistan and Other Inexplicable Foreign Aid–USAID
Many of us wonder why, at a time when we borrow some 40 cents or more of every dollar we spend, we give hundreds of billions of dollars to foreign countries.  It’s not exactly buying us a lot of friends.  But look at some of the foolishness on which it’s spent:
 
The Mango Man (2)—The US Agency for International Development spent $30 million in 2011 to aid Pakistani mango farmers.  This stems from a four year $90 million program begun in 2009 to boost hiring and sales in five product areas.  By 2011, USAID had abandoned four: leather, livestock, textiles, and dates.  Instead it focused on the fifth product, mangoes, with a goal of boosting sales 20% by providing farmers with equipment to clean, freeze, and store the fruit.  But the one farmer who actually received the equipment couldn’t operate it due to defects, and now many farmers who undertook loans based on the promise of increased productivity are now facing default.  Thanks for the help.
 
Sesame Street (13)—USAID contributed $10 million to remake Sesame Street in Pakistan.  Like Elmo is going to stop some kid from joining Al Qaeda.
 
“Green” Pumps (35)—USAID spent $12 million in 2011 ($23 million over 3 years) in a failed effort to upgrade irrigation pumps with newer more energy efficient models, again in Pakistan.  The original plan was to replace 11,000 pumps, but current estimates are that only 1500 will be replaced by the end of the program.  Shockingly, despite a nearly 90% reduction in the program’s output, there will be no change in the final bill to the taxpayer.
 
Casualty Buyoffs (90)—USAID paid $15 million in 2011 ($52 million since 2007) to assist families of civilians killed in Afghanistan.  But inspectors have reported that the program is not on target to achieve its main goal, is failing to reach the most eligible recipients, and involves huge amounts of food that is rotting before it can be distributed.  Again, thanks for the help.
Drugs, Diversions, and Perversions–NIH
One of my favorite categories is that collection of expenditures devoted to the trivial and sometimes twisted study of sundry pastimes and behaviors.  Not only are all of these of dubious utility and almost certainly outside the proper bounds set under the Constitution, but many you just have to wonder who comes up with this?
 
Boob Tube (17)—The National Institutes of Health gave a $702,558 grant in 2011 ($1.3 million to date) for researchers at Penn State University to study the effect of TV on rural Vietnamese families.  These are people so remote and so poor that the researchers not only had to provide the TV sets, but gasoline generators to power them (so much for reducing carbon emissions).  In such locales one wonders what programming they can pick up; maybe they can get Bill Maher on HBO via satellite.
 
Birds ‘n Bees (23)—NIH gave another grant of $175,587 in 2011 ($356,933 to date) to the University of Kentucky to stuck the effect of cocaine on the sex habits of Japanese quail.  Really?  Query how they’re conducting this study with federal money, given that possession of the cocaine presumably needed to do it is a federal crime.
 
Smoking Hookahs (63)—NIH gave a $55,382 grant to Virginia Commonwealth University to study hookah smoking among Jordanian students.  Don’t we all sleep better knowing our government is on top of this?
 
Monkey See, Monkey Poo (91)—In my personal favorite, NIH contributed $592,527 for researchers in Atlanta to study the communications skills of chimpanzees who throw their feces.  Yep, what survey of wasteful government spending would be complete without an entry on your federal tax dollars being given to someone who wants to study shit-throwing monkeys? (Yes, I know they’re technically apes)
I ask again:  who comes up with this stuff?
Miscellaneous Stupidity–NSF
Then there’s the just plain silliness coming out of the National “Science” Foundation:
 
Dance The Night Away (66)— The National Science Foundation NSF spent $300,000 to create an interpretive dance presentation on the origins of matter.  I’m not even making that up.
 
Improving Government (80)—NSF gave a $425,642 grant for a study with the rather presumptuous goal of informing local politicians in India how to improve their own local elected officials.  How is this a National Science Foundation function?  [As an aside, Senator Coburn further points out that India, the world’s fifth-largest (and one of the fastest-growing) economy and a major sovereign holder of our debt, receives over $120 million in US aid annually.]
 
Thor’s Blankets (94)—NSF spent $338,998 as part of a multi-year grant to study the impact on Icelandic commerce of women’s work in textiles from 874 A.D. to 1800 A.D.  Who (outside of Iceland, if even there) gives a crap about ancient Icelandic commerce?  And again, how on earth is that a function of the National Science Foundation, much less the United States federal government?
Yes, folks, this is the District at work, and it shows you just how totally out of control it is.  True, there are much bigger-ticket items like the unconstitutional and totally dysfunctional Social Security, Medicare, and Medicaid programs.  But you have to look at some of these line items and ask whether there’s anyone left on either side of the aisle minding the store?  Is there anything the District won’t fund?
I don’t care what your political persuasion is, if there isn’t at least one thing on this list that really, really pisses you off, then I can’t help you.

That Giant Sucking Sound

Listen (shhhhh) to what the flower people say
Listen (shhhhh) it’s getting louder every day.
—Spinal Tap, (Listen to the) Flower People
I think Ross Perot just might have been right about that giant sucking sound south of the border, although this time it’s not NAFTA that’s causing it.
It’s not getting a ton of national run—yet—but an investigative report aired last week by WTHR 13 in Indianapolis attempts to shed light on a massive illegal alien tax scam.  At the core of the matter are refunds given out by the IRS under the Additional Child Tax Credit, which allows even families that pay zero in taxes to claim up to $1,000 per child; in cases where this results in a negative tax liability, the IRS actually sends the filer a check.  According to the WTHR report, huge numbers of illegal aliens are using this program to collect billions in federal dollars.
The problem itself isn’t new.  Back in 2011, the Treasury Inspector General for Tax Administration issued a report titled “Individuals Who Are Not Authorized To Work in the United States Were Paid $4.2 Billion in Refundable Credits.” 
The title alone says a mouthful, doesn’t it?
The data from the Inspector General’s report reveals that in 2010, of 3 million returns filed under an Individual Taxpayer Identification Number—a substitute for a Social Security number issued for tax filing purposes, and almost exclusively to illegals—less than a quarter paid any taxes, while over two-thirds claimed the ACTC credit.  $4 billion in ACTC credits were paid out, against $870 million in tax payments collected, for a net outgo of $3.13 billion.    
In 2010 alone.
That’s right, your federal government in 2010 took over $3 billion from you and just gave it away to illegal aliens.  This happens every year.  Between 2005 and 2010, over $7 billion in ACTC refunds was handed out to people who are in this country illegally.  And the problem is getting drastically worse, as ACTC payments to illegals have risen over 400% (from $927 million in 2005 to $400 billion in 2010) over that time.   The IRS has been made aware of the issue, and the Inspector General has made specific recommendations for dealing with it; yet the IRS simply shrugs and says “that’s just the way the law is, nothing we can do about it.”
Funny how that hasn’t seemed to stop the Obama administration in any other area.
Congressional Republicans have tried to do something about this problem with the law this spring, but have been blocked by the usual suspects.  Senate Majority Leader Harry Reid (D-NV) says restricting these credits to citizens unfairly targets children of poor Hispanic workers, many of whom were born here and are therefore citizens, even if their parents are not.  Leticia Miranda, senior policy advisor for La Raza—always known as a staunch advocate of our Constitution and U.S. sovereignty—says it’s “outrageous and it’s crazy” to impose the burden of removing these credits from people making close to minimum wage and raising children in this country.
Well, that’s where the WTHR report gets interesting.  It seems that not all of these children about whom Senator Reid and Ms. Miranda are worried are actually in the U.S.  In fact, many of them aren’t even the children of the illegal aliens claiming tax credits for them.  According to the WTHR report, it is commonplace for those claiming ACTC credits under an ITIN to claim credits for children still in Mexico (or wherever their country of origin is), or for nieces and nephews.  The report cites one example where four different illegals filed returns claiming 20 children at a single trailer home address—all of whom are actually in Mexico, according to the illegal whose address it actually is—totaling $29,000 in tax refund payments.  In another example, an illegal says he received a $9,000 refund including tax credits for his children living in Indiana and four nieces and nephews still in Mexico.
This, of course, is what happens when you create an entitlement-welfare culture.  If the government is going to provide everything for free, people will come with their hands out.  When you combine that with the inefficiency and incompetency that is inherent in any government bureaucracy, and it’s only a matter of time before they figure out how to cheat the system.  We already provide food stamps, free public schools, and free hospital care for illegals.  Now we’re literally handing out free money for anyone bold enough to tell the lie.  Yet somehow it’s the wealthy who already pay the vast majority of the tab for all these freebies that are the villains. 
It’s outrageous and crazy, all right.  But there are a couple of additional nuggets in this tale that you might overlook.
First, these people are filing tax returns and receiving refund checks.  Those checks have to be sent somewhere.  What this means is the United States federal government—you know, the one so desperately insisting that the border is secure and that defending that border is its province alone—knows who and where these people are.  Yet it does absolutely nothing about it.  Nada.  It just keeps cutting the checks, redistributing (in many cases because of outright fraud) money it took from you by force to people who have no legal right to be here in the first place.
The other interesting tidbit here lay in the concept of the Individual Tax Identification Number.  Illegal aliens aren’t eligible for a Social Security number, yet are required to file income tax returns (let’s just leave aside the inherent nonsequitur in that).  To do that, they have to obtain this ITIN.
An I.D.
A freaking federal I.D.
Now, these are people who, almost by definition, are the poorest of the poor.  Bereft of resources.  Making close to minimum wage, according to La Raza’s Leticia Miranda.  Indeed, much of the justification for those who oppose reforming the system is the need created by these people’s abject poverty.  Yet when it is necessary for them to obtain a federal handout, they don’t seem to have any trouble obtaining the required I.D., even when to do so they have to—at least ostensibly—risk arrest and deportation.
Contrast this reality with the shrill hypothetical complaints many of these same people on the Left make that requiring a simple I.D. to vote is too onerous a burden to place on blacks and other minorities.  They can’t afford it.  They can’t get to the government office that gives them out.  Well, some 2 million illegal aliens a year manage to overcome those obstacles when it’s time to collect free money.
That giant sucking sound?  That’s your money heading south, and with it, your country.  Meanwhile, the voting conga line forms to the Left.

Listen (shhhh).