Chicago Republicans

That's a featured story headline from the July 8, 2009 edition of USA Today.  While only about $17 billion of Porkzilla, I mean, the American Recovery and Reinvestment Act of 2009, better known simply as, the Stimulus Bill, has actually been delivered to local governments, the vast majority has gone to areas that supported the President last November.  Keep in mind that the Stimulus Bill contained $787 billion in spending which means that five months after being signed into law just over 2% has actually been delivered.  Can someone explain to me, coherently, why we had to rush this through Congress?  I digress.

USA Today performed an analysis of the money delivered thus far.  Counties that supported Obama last year have reaped twice as much money per person from the administration's stimulus package as those that voted for his Republican rival.  The reports show 872 counties that supported Obama received about $69 per person, on average. The 2,234 that supported McCain received about $34.

However, we have no need to worry - "There's no politics at work when it comes to spending for the recovery," White House spokesman Robert Gibbs says.  This boggles the mind and begs the question, "Just how dumb does Obama think we are?"

Perhaps we're not dumb, but, he knows that the state run media (ABC, CBS, NBC, CNN, MSNBC, NY Times, etc.) will overlook this story.  Kudos to USA Today for digging to learn the truth about stimulus spending and for having the onions to print a story that casts aspersions on the President.

However, it didn't begin and won't end with the Stimulus Bill.  USA Today also looked into existing federal allocations and changes Obama made.  They found that, according to spending reports from the U.S. Census Burea, the counties that voted for Obama collected about 50% more government aid than those that supported McCain.

What's really at work here?  For anyone who grew up in Illinois, especially around Chicago, it's simple - payoffs.  Obama is rewarding those counties that supported him in hopes of getting their vote again and punishing into submission those that didn't.  Whenever the discussion among friends leads to the dirty style of Chicago politics I counter with, "Thank goodness no one from Chicago ever rose to national political prominence!  Oh, wait . . ."  I think I'll bring this article along for the next dialogue.

Sources:

http://www.usatoday.com/news/washington/2009-07-08-redblue_N.htm

http://www.usatoday.com/news/nation/2009-07-07-stimulus_N.htm

http://en.wikipedia.org/wiki/American_Recovery_and_Reinvestment_Act_of_2009

 

South Carolina's Republican Governor Mark Sanford disappeared for 5 days and could not be found. Initially, he said he was hiking on the Appalachian Trail, but it turns out he went to Argentina to see a woman with whom he was having an affair.

The dilemma for Republicans is that Sanford is one of the best Governors. He is one of the best actual fiscal conservatives in the country. He had the wisdom to recommend rejecting $700 million in federal stimulus money. He understood the free money will be spent on hiring personnel and creating departments which is good in the short-term, but disasterous in the long-term.

Government only grows, head count and departments are never cut. So all the opportunities created this year will be liabilities in perpetuity.

Sanford exemplified uncommon wisdom and true leadership on many core Republican values, but it turns out he is all too human.

If Sanford does not resign, it will be interesting to see how the voters react. Will Republicans vote for a flawed individual who works to serve the interests of the people?

Dim lights

 

The latest economic news has been impressive: over 150,000 jobs were "saved or created" last month; banks are starting to repay the TARP money, even at a "profit"; congressional spending will be on a "pay-go" basis. These statements are misleading at best yet the media is reporting them as signs of a desperately wished for recovery. How the White House reports on the economy is exactly how I report on my spending at home. I am the spender and my husband is the saver. Let me reveal a home budget secret - whenever I spend money outside of our budget, I don't tell my husband how much I spent, I tell him how much I saved! Even he is impressed by my ability to find a bargain, but holds firm that I am still spending By my budget rules, I can then put that savings into my "income" line. I am still trying to convince my husband of all the money I have "earned" over the years. Why are Americans willing to believe this administration's explanations? Let's look first at the latest job report. It is virtually impossible to measure how many jobs are actually saved and yet all Obama has to do is say that since job loss predictions were higher than actual losses, these jobs are saved and therefore can be counted on the plus side. Claiming that this is the worst financial crises since the Depression helps inflate the dire predictions in the first place. However, Obama promised that the stimulus would keep unemployment at 8% but the numbers are now topping 9.4%. Yet, he is arguing that this is proof the stimulus is working and we should wave the wand and ramp up the stimulus so we can "save" 600,000 more jobs. I use that same logic when I defend my budget-breaking based on all the great deals I can get now, alleging long run gains while ignoring the cost of spending money that isn't there. I am thankful that my husband understands the concepts of debt and interest.

The real magic comes when we can turn our "savings" into income. Ten banks announced they are paying back TARP funds, in large part to relieve themselves of the administration's controls. The administration has gone so far as to claim that these returns on the government's investment are turning a "profit", as if the rate of return wasn't already calculated in the original loan. Given that there is still an additional $650 billion outstanding, I don't see the profit part unless these repayments, although less than accounted for, were more than expected. The real illusion is that the repayments are not going to repay the American taxpayer, they are now going to fund the Treasury Department which will continue to administer funds and control banks. By this accounting, in my home budget, I should take what I saved, call it income and, Abracadabra! put it into a special Starbucks fund. This is all being done to convince taxpayers (voters) that the administration's plans are working.

This ability to convert "lower than expected losses" into "gains" has greater ramifications than merely being a shell game. Polls show that Americans are beginning to resist the government's insistence on increased spending and are making it clear that now is not the time to overhaul health care, let alone nationalize it. To appease these concerns, Obama announced that the stimulus budget will be based on "pay as you go" - no dollar goes out unless there is one coming in. This all sounds very responsible, if not fiscally conservative, yet it is not really about reducing spending. The trick is that as long as you can "add" income, you can argue you have more to spend. There are two ways we can appear to add income - increase taxes and other revenue or, by my own home budget magic, count savings. Presto! Changeo! now there are funds for national health care. Even I have not mastered that trick.

The stimulus bill, tattered and smacked around though it was, is passed and signed. We're already into multi-billion dollar second helpings for some automakers. Suddenly, the word "trillion" is more common in everyday conversation, as in "multi-trillion dollar spending package."  On the other side, healthy banks that don't want the bailout funds are given little or no choice (if you think tyranny too strong a term for this policy, what do you call it?).

Zoom in a bit and look at the economic stimulus as if affects Chicago. Here, you see the end result of public works rhetoric. Think of the Bean in Millenium Park, or the use of TIF funds, or any other Daley escapade. Our city government giggles away over-budget expenditures and the enrichment of friends and family who win city contracts. These same people, who are willing to spend millions to get elected to jobs paying much less, are now going to run the system that pulls our economy back on track. Stop me if you've heard this one before.

These are taxpayer-funded projects, enabled by a healthy economy in which private citizens can afford to pay for these necessities, either now or in the future.  When a municipality talks about "revenues," they mean taxes. Somewhere, actual commerce, wealth, jobs, etc. must be created.

And so the impetus now, as always, is with the entrepereneur. To a city government mishandling privatization (see Stephen's post below), I ask: will we punish her or him for creating real job growth? Or will we take more of that wealth away out of "fairness" and a desperate need to plug holes in the next budgetary boondoggle?