GM goes down like Frazier - Fox News: "General Motors prepares bankruptcy protection announcement."  Happy now, Michael Moore?

The house with a million balloons

I go to the movies about once a year and last night I caught Pixar's wonderful new offer: "Up."  The story had this sad undercurrent of a curmudgeon widower trying to fulfill a promise to his late wife which was constantly counterbalanced by a pudgy sidekick, a talking dog, and a colorful big bird.  Excellent movie on so many levels.  Plus, I saw the version using Disney's 3D technology which made it an extra-special treat.

"Treat!?!"  I mean, "delight."

The government just put another 50-large on your credit card - USA Today: "Leap in U.S. debt hits taxpayers with 12% more red ink."  "Taypayers are on the hook for an extra $55,000 a household to cover rising federal commitments made just in the past year..."  Ah, the kids are good for it.

Not as complicated as you might think - Over at Maggie's Farm, Roger is telling everyone (especially Republicans) that Obama is not playing a deep game.  Enough with the car dealerships already.

Laodicean - I was going to blog more tonight but I got totally caught up in the National Spelling Bee on ABC tonight.

Impulsive legislation now, cost considerations later

As the national debate on health care reform gains speed, everybody's looking at Massachusetts' experiment in mandated health insurance. From today's Boston Globe there's an article titled "Costs snarling health overhaul – Study finds more are struggling to pay; gains at risk in state's foray into insurance." Here's a telling passage:

While the state is facing cost challenges, he said, implementation of near-universal coverage in 2006 still put consumers here in a better position than in other states. "We should be lucky enough to have those problems [nationally]," Altman said of the challenges outlined in the Urban Institute survey. "If we get to a point where everyone is insured, then we can move on to worry about the affordability of care."

We're not buying a wedding cake here. We're talking about irreversible federal legislation that will dramatically alter how one-sixth of the economy operates. The only issue worth consideration is how to pay for national health care before we indulge in self-congratulation. As usual, the curse of "good intentions" is leading the debate towards the easy work of expanding coverage before considering the costs involved. It's dessert before dinner.

All this, of course is lost on Ted Kennedy who has an opinion piece in today's Globe with five principles of health care reform, only one of which is related to the cost. Predictably, the old chestnuts of "fraud, abuse, and red tape" are rolled out. Let's be honest: fraud and abuse have been around since shipbuilders supplied the Greeks with boats for the Battle of Salamis. New data technologies may help but the main drivers of rising health care costs are an aging population and advanced medical technologies. The irony that Ted Kennedy fails to grasp is that the very technology that has helped him to battle brain cancer would be unavailable for most Americans under a national health care program, no matter how much he wishes otherwise.

One-hundred percent GDP

It's hard to fathom these numbers, but the United States is approaching a new benchmark: we'll soon owe an amount equal to everything we make in a year. From Financial Times: "Exploding debt threatens America"

Under President Barack Obama's budget plan, the federal debt is exploding. To be precise, it is rising – and will continue to rise – much faster than gross domestic product, a measure of America’s ability to service it. The federal debt was equivalent to 41 per cent of GDP at the end of 2008; the Congressional Budget Office projects it will increase to 82 per cent of GDP in 10 years. With no change in policy, it could hit 100 per cent of GDP in just another five years.

A government debt burden of that [100 per cent] level, if sustained, would in Standard & Poor’s view be incompatible with a triple A rating," as the risk rating agency stated last week.

When bond ratings drop, it becomes more expensive to borrow money since creditors get worried about getting paid (see: General Motors.) Investors are already getting skittish because it looks like we're going to monetize our debt by driving up inflation. A lot.

The fact that the Federal Reserve is now buying longer-term Treasuries in an effort to keep Treasury yields low adds credibility to this scary story, because it suggests that the debt will be monetised. That the Fed may have a difficult task reducing its own ballooning balance sheet to prevent inflation increases the risks considerably. And 100 per cent inflation would, of course, mean a 100 per cent depreciation of the dollar.

Megan McArdle weighs in:

Eventually the treasury has to roll that debt or pay it off, and if interest rates spike, that can prove catastrophic--just ask Argentina.

Well, Obama promised he wouldn't raise taxes on Americans making under a quarter-mil, but with those darn rich entrepreneurs squeezed along with greedy corporations, there are no jobs and (surprise!) tax revenues are way down. Any other tricks we can try to pay for everything? Enter the value-added tax trial balloon, which will dramatically drive up the cost of buying anything.

To recap: we have pending high inflation + a national sales tax gumming up the cogs of commerce, the rich are hiding their money in the Cayman Islands instead of investing in demonized business, and government borrowing is getting more expensive as interest rates climb. And all this is occurring on the cusp of the entitlement bomb. None dare call it "stagflation" or make comparisons to Jimmy Carter...yet.

Related – Certain states have high tax rates, but they're broke! Wha happened?

Metaphor of the day – Some North Korean official: "We've been living under U.S. sanctions for decades, but have firmly safeguarded our ideology and system while moving our achievements forward. The U.S. sanctions policy toward North Korea is like striking a rock with a rotten egg."

I suppose I should say something about Sotomayor - Well, she seems a reasonable pick for the Supreme Court. There are some cases with which I would disagree (author's rights, reverse discrimination) but nothing disqualifying. And I'm going to refer back to something I wrote back when Democrats were filibustering judical nominees: the President won the election and the executive branch gets to fill the judiciary. Those are the rules.

Sports sports sports sports - I got some stuff goin' on today so enjoy "Top 10 iconic trophies" via Real Clear Sports.

"The longer changes are postponed, the more wrenching they will be" - Robert Samuelson once again discusses the entitlement crisis.  I think he stole this line entirely from me: "The government bonds in these trust accounts will be presented to the Treasury for payment.  Those payments can be financed in only three ways: bigger deficits, higher taxes or spending cuts."  Pick your poison, America.

Happy Memorial Day - My son marched in my town's parade playing "It's a Grand Old Flag." Now I'm watching the (delayed) NASCAR race.

Have a great weekend - I'm going to visit Mom so I'll be back in time for the NASCAR race.  Peace out, y'all.

A company from the era of the Charleston and silent movies

If there's one thing that this blog might be known for, it's my steadfast opposition to a certain program that originated during the Great Depression and has no place in modern society. Now everybody is wringing their hands that General Motors is going to go bankrupt. Here are the other companies that were part of the Dow Jones Industrial Average the year that General Motors joined back in 1925:

American Can
General Electric Company
U.S. Realty *
American Car & Foundry
General Motors Corporation *
U.S. Rubber
American Locomotive
International Harvester *
U.S. Steel
American Smelting
Kennecott *
Western Union
American Sugar
Mack Trucks
Westinghouse Electric
American Telephone & Telegraph
Sears Roebuck & Company
Woolworth
American Tobacco
Texas Company *

"American Smelting?" My point here is that as new businesses rise, old businesses fall. Instead of worrying about the demise of GM, we should be nurturing the next Microsoft. General Motors is like something from a bygone era:

Impervious to irony

WSJ: "Obama signs credit-card overhaul legislation into law"

WASHINGTON -- President Barack Obama put his signature on legislation Friday clamping down on credit-card companies' ability to boost interest rates and slap higher fees on consumers, a measure long-sought by the White House but reviled by the banking sector.

"We're not going to give people a free pass, and we expect consumers to live within their means and pay what they owe, but we also expect financial institutions to act with the same sense of responsibility that the American people aspire to in their own lives," Obama said at a signing ceremony in the Rose Garden.

Ha ha ha! What a joker. By the way, did I say the United States is following California into a hole? Maybe I meant the United Kingdom: "Britain's debt omen"

Even the White House concedes that U.S. debt held by the public as a share of GDP will hit 70% in fiscal 2011, by far the highest level since 1951 and up from 40.8% in 2008, before declining. (See nearby chart.) But that forecast beyond 2011 depends on very rosy assumptions about renewed growth and future spending restraint.

The dollar's standing as the world's reserve currency gives the U.S. somewhat more protection against losing its AAA rating. But the world's creditors are making their own judgments about U.S. fiscal credibility on a daily basis, and those judgments will show up in the value of the dollar and the yields on Treasury debt. Those investors didn't like what they saw yesterday, perhaps because they think the British are showing where out-of-control spending leads.

Next stop: taking Hawaii to the international pawn shop.

Memorial Day weekend is almost here

A book to avoid – A NY Times reporter writes a book saying: "Ooops! We're bankrupt! How'd that happen?" Well, Megan McArdle unpeels the onion on a guy with a six-figure salary living well beyond his means. When your Amazon book page has a discussion forum titled "What a jerk" – well – you're a jerk.

Show me the way to the Granite State – Boston Globe: "Senate approves sales tax hike." At No Looking Backward, Bruce derives the equation for the New Hampshire Retail Radius.

Don't forget the Internet. This past Christmas, I made my first major electronics purchase through Amazon and not only did I avoid sales taxes but I got free shipping. There will be more of that, you betcha.

Power to the (stupid) people

Despite the near-unanimous urging of all the major California papers, voters in the Golden state overwhelmingly rejected a whole range of tax increases to close a yawning state deficit. The LA Times moaned: "California voters exercise their power – and that's the problem."

Say Anything sums up the mood of Californians and the disconnect of the mainstream media:

The context is simple - not only are the people of California selfish in denying their politicians more of their money, they’re just plain too stupid to understand the complexities of what they’re voting for. Taxes are good for you, you stupid little people.
…
By the way, nowhere in the article do they interview anyone who might explain why people are sick to death of the state sucking them dry.
Read the whole LA Times article. It’s as good an example of elitist arrogance and sneering condescension from both the left and the main stream media as you’ll find anywhere.
Voters exercising their rights. The nerve.

Look on California and tremble America. Because if you believe, as Megan McArdle does, that "California is completely, totally, irreparably hosed" then historian Victor Davis Hanson has some really bad news for you:

One would hope this is wake-up call for Obama. His proposals will put the federal government a year or two away from a California-style reckoning. For now, the slash and burn tax approach to "them" (the top 5%) has assured the people that they can spend all this borrowed money on health care, education, cap and trade, and free this and free that. But in about a year's time, as the deficits and interest rates mount, the fed will start looking everywhere for cash, and Obama's "95% of you will get a tax credit" will go the inoperative way of military tribunals and rendition, and we will start to see a real pushback against taxes.

Gold and guns are starting to look like a good investment.

The illusory two-state solution - Jeff Jacoby has a great article today about the Israel/Palestine debate and how everybody thinks the "two-state solution" is a great idea.  Well, everybody but the Palestinians: "Peace isn't an Arab goal."

Rationed care, part 2 - The Wall Street Journal essentially echoes a post I had the other day that health care reform will inevitably lead to limited care to keep costs down: "How Washington rations."

Goin' broke - John Stossel: "The Medicare Ponzi scheme"

They're sensitive about unsecured loans to deadbeats – Atlantic: "Why credit card companies are so mean."

GM = Government managed - Wizbang: "US government to buy GM if it declares bankruptcy"

Must love dogs - I have a standing bet with a guy at work (for a Coke) that Michael Vick will never, ever return to the NFL after serving his sentence for running dog fights.  Well the guy's putting on the suit of contrition: "Vick to work with Humane Society."

Yeah, that's not going to do it.  No team is going to take this guy just to see the field littered with hundreds of Milk Bones thrown by angry spectators.

If only I had been more irresponsible

I keep my credit card charges low and pay off my balance every month.  Therefore, I must be punished: "Credit card industry aims to profit from sterline payers."  Actually, I'm not too frightened because I can't see how credit card companies can bring back annual fees and add-on charges without inviting a consumer revolt.  Hey, man, cash is fine with me.

Don't mess with Texas

There are a lot of interesting stats in this WSJ opinion piece on how low tax states (e.g. Tennessee) are doing much better than high tax states (e.g. New Jersey.) But this statistic is hard to believe:

Texas created more new jobs in 2008 than all other 49 states combined.

How cow, can that be true? Amazing.

Double the estimate, double the fun

Right Wing Nuthouse has "CBO estimates on Obamacare top $1 trillion": "That $1 trillion is a number the Congressional Budget Office is looking at right now. Estimates by others have used $1 trillion as a starting point and go up to $1.5 trillion."

Hmmm...I'm experiencing deja vu here. DC Examiner: "Universal coverage? First, look at the disaster in Massachusetts": "Just a year after the universal coverage law passed, The New York Times reported, state insurers were already jacking up rates to twice the national average."

In other words, no matter what they tell you: double the cost as the baseline minimum.

Mortgaging away our money and freedom

In today's WashPost, Robert Samuelson runs the numbers on "Obama's risky debt"

At best, the rising cost of the debt would intensify pressures to increase taxes, cut spending -- or create bigger, unsustainable deficits. By the CBO's estimates, interest on the debt as a share of federal spending will double between 2008 and 2019, to 16 percent. Huge budget deficits could also weaken economic growth by "crowding out" private investment.

At worst, the burgeoning debt could trigger a future financial crisis. The danger is that "we won't be able to sell [Treasury debt] at reasonable interest rates," says economist Rudy Penner, head of the CBO from 1983 to 1987. In today's anxious climate, this hasn't happened. American and foreign investors have favored "safe" U.S. Treasurys. But a glut of bonds, fears of inflation -- or something else -- might one day shatter confidence. Bond prices might fall sharply; interest rates would rise. The consequences could be worldwide because foreigners own half of U.S. Treasury debt.

This economic gamble in America is based on the concept that we're "too big to fail." Recent history suggests that's a dangerous assumption.

Over at Volokh, there's a post titled "The coming explosion of federal spending" and it concludes with a concept I've explored before when it comes to entitlement spending. When huge portions of the federal budget go on autopilot – that is, pensions, Social Security, Medicare, and interest on the national debt – what does that portend for the future of representative democracy?

It's important to recognize that the gargantuan deficits and looming fiscal crisis likely to result from the Administration's spending plans are just one part of the danger we face. Such massive increases in federal spending also exacerbate the more general problems caused by expanding government control over society. In particular, growing federal spending and regulation will make it even more difficult for rationally ignorant voters to impose meaningful democratic control on public policy. And they will provide numerous opportunities for interest groups to exploit the growth of government for their own benefit, at the expense of the general public.

With the level of borrowing we're taking on, it's not so difficult to see a tipping point where our foreign policy is constrained by international creditors while domestic policy is steered (even more) by banks and lenders. For example, is it such a stretch to imagine that China could own such much U.S. debt that they would attack Taiwan without fear of retribution? What about when the government needs to borrow more money to pay for Social Security Treasuries and the lenders demand higher rates? Our fiscal irresponsibility and failure to address real problems in entitlement spending will subjugate America to the sway of its creditors.

We're putting on the handcuffs.

The Mamas and the Papa's lesser-known song - Opinion Journal: "California reckoning"  Meanwhile, Polipundit has lots of pictures of an anti-tax rally in the Golden State.  I like the one with the Ah-nold overtones: "Don't be a girly man!  Terminate 1-af" which, IIRC, are the tax hike referendums on the state ballot.

Health care reform = rationed care

Get ready for more stories like this, from the Boston Globe: "Hospital strains to cut elder care costs"

Massachusetts General Hospital launched a pathbreaking effort to cut medical costs by reducing hospital stays and emergency room visits by the frail elderly - an initiative that underscores just how hard it will be for the medical industry to make good on its promise to President Obama to pare healthcare spending by $2 trillion over the next decade.

The Globe also has an incredulous editorial about Obama's plan to prestidigitate savings from the current health care system: "$2 trillion saved, just like that?"

The hard truth is that America is aging and Obama is trying to constrain health care costs just as the wave of Baby Boomers is poised to join Medicare. This is like trying to cut gas costs while everybody's crowding onto the bus. And I'm not saying it's not worthwhile to cut health care costs; I'm just saying that there will be inevitable sacrifices to quality. So don't act shocked.

Analogy of the day - Joe Biden : Neil Kinnock :: Maureen Dowd : Josh Marshall

Williams Trivia tonight

I have a trivia game starting at midnight and it's traditional to adopt a team name based on a cultural reference. This year, I'm going with "The lobster's in the pot. Devour! Devour!"

If health care reform doesn't work, we're doomed

Here's David Brooks with "Fiscal suicide ahead" on why it's a longshot:

If you read the C.B.O. testimony and talk to enough experts, you come away with a stark conclusion: There are deep structural forces, both in Medicare and the private insurance market, that have driven the explosion in health costs. It is nearly impossible to put together a majority coalition for a bill that challenges those essential structures. Therefore, the leading proposals on Capitol Hill do not directly address the structural problems. They are a collection of worthy but speculative ideas designed to possibly mitigate their effects.

The likely outcome of this year’s health care push is that we will get a medium-size bill that expands coverage to some groups but does relatively little to control costs. In normal conditions, that would be a legislative achievement.

But Obama needs those cuts for his whole strategy to work. Right now, his spending plans are concrete and certain. But his health care savings, which make those spending plans affordable, are distant, amorphous and uncertain. Without serious health cost cuts, this burst of activism will hasten fiscal suicide.

In related news, less than a week after healthcare industry leaders promised big savings, they were saying "not so fast": "Health Care Leaders Say Obama Overstated Their Promise to Control Costs." Maybe it would have been prudent to get the health care savings up front before we spent the money we don't have.

Whew... - Thank heaven the weekend is here.  I'm tired.

Red ink rising, part 2 - The entitlement crisis in horrifying chart form, via Q&O.  (HT: Maggie's Farm)

Red ink rising

Jacob Sullum on Reason Online: "Obama pretends to be frugal as we sink deeper in debt"

This year, the Associated Press notes, "the government will have to borrow nearly 50 cents for every dollar it spends." Even with optimistic economic assumptions, the Obama administration projects budget deficits of more than $500 billion every year from 2010 to 2019, totaling $7.1 trillion in additional debt at a time when Social Security and Medicare spending will be skyrocketing due to the retirement of baby boomers-a problem Obama has not begun to address.

"We can no longer afford to spend as if deficits do not matter and waste is not our problem," the president said last week. "We can no longer afford to leave the hard choices for the next budget, the next administration-or the next generation." I wish that Obama had some influence on the one who is setting the administration's fiscal policy.

It seems like the man has a problem with simple math.

Apple takes a bite – There are a couple entries on this list of the ten biggest tech failures of the last decade have a common theme. Vista, Zune, Palm, even Sirius XM went up against Apple's technology and lost. (HT: Real Clear Markets)

You ain't seen nothin' yet (deficit-wise)

From Heritage:

The year when Social Security begins to spend more than it takes in, 2016, is by far the most important year. From that point on, Social Security will require large and growing amounts of general revenue money in order to pay all of its promised benefits. Even though this money will technically come from cashing in the special issue bonds in the trust fund, the money to repay those bonds will come from other tax collections or borrowing. The billions that go to Social Security each year will make it harder to find money for other government programs or require large and growing tax increases.

As I've noted, the trajectory for the federal government, even before Obama's spending spree, is towards a system of tax collection on the revenue side and payments to seniors and bankers (for interest on the national debt) on the expenditure side. Discretionary spending? Um...no.

Put it on the credit card - Examiner editorial: "Feds are broke but keep right on spending"  (HT: Gateway)

Also, Jennifer Rubin notes that economists don't believe any of the administration's assumptions: "I don't know how the Obama team intends to avoid the inevitable math."  Well, Jen, the same way he's going to pay for his health care program: magic!  Embrace the unicorn.

The entitlements that won't be there

WSJ: "Medicare,Social Sec Trusts Dwindling Faster Than Expected"

Social Security and Medicare trust funds are expected to run out of money sooner than expected, a report released Tuesday shows.
The report, from the programs' trustees, shows that expenses will exceed tax revenues for Medicare's hospital insurance fund in 2017, two years earlier than was estimated in a 2008 report.
Social Security's trust fund is expected to be exhausted in 2037, four years earlier than last year's estimate. Social Security's expenses are expected to outpace the program's tax income by 2016. On a 75-year horizon, Social Security would need additional revenue equivalent to $5.3 trillion in today's dollars to pay all scheduled benefits.
The report "once again reminds us that the longer we wait to address the long-term solvency of Medicare and Social Security the sooner those challenges will be upon us and the harder the options will be," U.S. Treasury Secretary Timothy Geithner said in response to the data.

Megan McArdle follows up with "The Problem with Social Security"

This year the "it's fine" arguers have a tough uphill climb. The year that Social Security goes bankrupt and cuts benefits by 25% moved up four years, to 2037. The surplus fell 25%. The date that Social Security starts becoming a drain on the general fund, rather than subsidizing it, moved forward a year, to 2016. And suddenly these dates don't sound so comfortably far off, do they?

She refers to the automatic benefit cuts that kick in (by law) once the SS Trust Fund is exhausted. The problem with the "it's fine" argument is that it misrepresents the health of the Social Security system which could alter saving behavior today:

The political risk is that whatever the economic theory, we will not politically be able to continue benefits at planned levels. People who counted on those benefits will thereby be made much worse off, because they will have saved too little on the assumption that the benefits would be there.

Without reform, every worker 40 and under in American can expect only 75% of promised benefits. Forbes wants to let you know that there's a future as a Walmart greeter waiting: "Kiss retiring at 67 goodbye."

Extra – The Trustees' full report is here. (pdf)

More - Red State notes that the SS surplus has been used to hide the true size of the federal deficit. In 2016 (previously 2017), the money stops flowing in and starts flowing out.

Going for the Scrabble record: "Zawahiri in Quetta"

Where does Pakistani Intelligence rate on the credibility index? Somewhere between Joe Isuzu and Nancy Pelosi, I think. Still.....

Ayman al-Zawahiri, al Qaeda's No. 2 leader, the most wanted terrorist after Osama bin Laden, with a $25 million bounty on his head, is holed up near Quetta, Pakistan, according to a highly placed Pakistani intelligence source.

Let's get those satellites lined up.

Detroit's tailspin

Head of bankrupt company about to announce that company is bankrupt: "GM CEO Signals Bankruptcy Becoming More Probable"

In related news, will Ford be punished for running a responsible company, one that pays its debts and such? That's what it looks like.

Amazing Race finale – Another Race wraps up in Hawaii

This is the season finale and I have to say as a long-time fan that this is one of the best Races I've seen. None of the teams were so grating to wish for their early departure (e.g. Rob & Amber) although there were some clear favorites. I'm kinda rooting for Margie and her deaf son Luke to win tonight, even though they occasionally played upon the "I've got a handicap but I can still race" angle (e.g. Charla & Mirna). Tammy & Victor make a good team, but I feel these Chinese-Americans were helped considerably by three legs in China. Jaime & Cara could be the first all-female team to win the Race tonight.

OK, starting out: teams must make their way from Beijing to Maui, Hawaii where they need to find a clue box on the beach. Airplane reservations are not available until the morning, so everybody's bunched on the same flight to Maui. It looks like Team Ginger abandoned their backpacks at the airport, which can't please the TSA. Once at the beach, each team must prepare a pig for a luau and then carry the 140-pound pig 200 yards down the beach. Team Say What arrives last but they totally pass the other two teams who can't seem to handle the weight of the pig. It helps that they carried the pig on their shoulders while the others used their arms in a dead-weight lift.

After this task, teams must take a watercraft to McGregor Point and search among 100 buoys in the ocean for the next clue. Margie & Luke arrive first and find the clue pretty quick. Tammy & Victor are next, followed by Jaime & Cara in their green bikinis. Back at the beach, Team Say What head to the next task where there's a bunch of surfboards. Team Ginger finds the next buoy clue followed closely behind by Team Esquire. Everybody is pretty close together.

At the clue box, it's the Roadblock: one team member must search among a pile of hundreds of surfboards to find pictures relating to the previous eleven legs of the Race and then arrange them in chronological order. Luke chooses to do this one and he's doing a fantastic job, stacking them in correct order effortlessly. Meanwhile, the other two teams are having taxi problems. The cab driver for Jaime & Cara takes them to the wrong place and then his dispatcher yells on the radio that she is not Team Ginger's "personal concierge." Awk-ward! Tammy & Victor arrive at the surfboards next while Team Ginger is nowhere in sight.

After such a perfect run, Luke gets hung up on the last two surfboards and just starts putting up random pictures that have nothing to do with the Race. He needs the foot massage and fried seafood from the Beijing leg but he puts up a surfboard with a Grateful Dead skull. Victor is quickly gaining ground. He finishes first and Team Esquire heads to the Finish Line at a golf course.

As Tammy & Victor head off, Luke helps Jaime with the first surfboard. In exchange, she shows him the fried scorpion board and they both (finally) finish the Roadblock. But Tammy & Victor are fighting no traffic in a cab that needs no gas, so they arrive first and win the Amazing Race. Jaime & Cara arrive next, followed by Margie & Luke, who is beating himself up for missing the surfboard Roadblock. But there's a tearful resolution at the mat as Luke thanks his remarkable mother for everything she's done.

Final standings:

#1 – Team Esquire – Tammy & Victor – WINNERS OF THE AMAZING RACE
#2 – Team Ginger – Jaime & Cara
#3 – Team Say What? – Margie & Luke

Time to clean house, Massachusetts-style

Just when I thought things couldn't get any more surreal in the Bay State, they find new ways to dig deeper and waste taxpayer money. From the Boston Globe "Little Dig in danger"

The cost of the MBTA's plan to build a 1.1-mile bus tunnel under downtown Boston has now officially grown to $2.1 billion, nearly $1 billion more than the estimate from 2006. Just a few months ago, in December, the project budget was about $1.5 billion.

Two billion dollars to go a single mile! There's a little less than 70,000 inches in 1.1 miles, so that means it's costing thirty grand to go every inch.

Friday's report downgraded the project's rating, meaning the Massachusetts Bay Transportation Authority will not qualify for a 60 percent federal match unless it can prove the state has the money to pay its share and operate the transit system without falling deeper into financial ruin.

Massachusetts just raised the sales tax to close the state's deficit and the Turnpike Authority is a complete mess. There's no way we can pay for Little Big Dig. It's time to throw the bums out, like this guy suggests:

As I read in the Globe of yet another back-door fleecing of the struggling taxpayers by our impossibly arrogant lawmakers ("Pension boost aids lawmakers"), I am left to wonder: Just what will it take to get voters to stop rubber-stamping these folks into office?

Hopefully those officials who are up for reelection next time will find out.

Enough already.

Hamsher serves up the baloney

I rarely check out the Lefty blogs since they're heavy on self-satisfying outrage and short on intellectual honesty. The "reality based community" rarely lives there. But since no issue animates me like Social Security reform, I followed the links on Memeorandum first to this David Broder article titled "Nation ripe for entitlement reform":

Last week, in a courageous break with party solidarity, the House majority leader, Steny Hoyer, reiterated his support for the commission idea, suggesting that along with the overall health-care reform Obama has put on the agenda, Congress tackle Social Security.

As Hoyer pointed out, the options for dealing with Social Security "are well and widely understood. We can bring in more revenues. We can restrain the growth of benefits, particularly for higher-income workers, while we strengthen the safety net for lower-income workers. And/or we can raise the retirement age, recognizing that our life expectancy is significantly higher today."

"What is missing here," he said, "is not ideas. It is political will," and the degree of trust between the parties that would permit successful bargaining.

Jane Hamsher of Firedoglake rolls out the familiar snark that "five guys in Congress" want to kick Grandma into the street:

The Social Security trust fund will take in a hundred billion more than it pays out this year, but since we'll blow it on increased defense spending, little old ladies must eat cat food to make David Broder happy.

That much is true: at least for a couple more years the Social Security Administration – which long ago recognized the need to build up a surplus to handle the Baby Boomers – is running a surplus. But this logic is the same as a guy jumping off a 50-story building and halfway down saying: "So far, so good!" We go "splat" around 2017:



At that tipping point, the Social Security Administration will start cashing in all the Treasury bills they've been squirreling away and the Federal government will have to pay them. This means only three options: higher taxes, less spending, or even more borrowing. And that last option is becoming increasingly more expensive as President Obama sets the nation up for decades of trillion dollar budget deficits. There is no amount of defense spending cuts that can fill the hole created by the unfunded liabilities of entitlements, much less the interest on the national debt in the U.S. budget.

Nevertheless, Hamsher insists that Americans don't want to see Social Security benefits cut. Surprising, I know! She backs this up with a poll:

But all that aside, where does Broder get the idea that the nation is "ripe" for this? A poll conducted last month by the National Committee to Preserve Social Security and Medicare finds that 14% of Americans think it is in a state of crisis, and 5.5% are in favor of reducing benefits.

Really? The National Committee to Preserve Social Security said that? Firedoglake would have burned off a day's worth of posts if the NRA presented a poll on gun rights and tried to pass it off as disinterested research. Geez. It really makes no difference that people want to keep their benefits if the nation can't afford to pay for all the stuff it promised.

But a bunch of extremist GOP demagogues are in favor of it, and Steny Hoyer has opened the door, so that means America is "ripe."
I've sampled the people currently drinking beer in my kitchen, and America thinks David Broder needs to get out more.

Back to form: demonize and belittle all those who would disagree instead of debating the issue (as the comments below Hamsher's post will further attest.) In reality (there's that word again!) there's a growing coalition including former comptroller general David Walker and former CBO director Alice Rivlin who have launched a "fiscal wake-up tour" to alert Americans to the rising tide of debt on the horizon.

It's OK, Jane. Math is hard.

The ol' Friday night news dump - It'll make the little-read Saturday paper and then it's "old news" by Sunday: "Official who OK'd Air Force One flyover resigns"

Silly fun - Sleeveface

Money's gettin' more expensive - Remember this post "Running out of suckers"?  The suckers are catching on: "The government had to pay greater interest than expected in a sale of 30-year Treasurys.  That is worrisome to traders because it could signal that it will become harder for Washington to finance its ambitions recovery plans."  With trillion-dollar deficits as far as the eye can see, the borrowing has only begun.

Help a fellow blogger out - Matt Hoy is unemployed.  That sucks.

Spending is easy. Cutting budgets is near-impossible.

Only hours after President Obama announced “savings” of $17 billion in a $3.4 trillion budget, Congress lined up stop even that drop in a bucket.

Here in the People’s Republic of Massachusetts, the head of the Turnpike Authority abruptly resigned from his post yesterday because he couldn’t do the job he was asked to do. The MTA is carrying a $2.4 billion debt so Alan LeBovidge was brought in to cut costs. But when he tried to reduce the MTA’s workforce, his move was blocked:

After being told for more than a year that reducing staff was a priority, he was recently told to hold off on laying off toll-takers, long seen as a symbol of the agency's excessive reliance on expensive labor.

LeBovidge then shut off the lights on the Zakim bridge to save $5000/month but even that minor action was reversed by the Patrick administration. Finally, he refused to pay overtime to fill in for the toll takers who called out sick on Easter resulting in mile-long lines at the tolls. Since he couldn’t make any cuts, the only thing left for Massachusetts to do is (surprise!) raise tolls and taxes.

LeBovidge’s resignation was “effective immediately” and he seemed eager to get to the golf course.

Extra - Another Massachusetts budget priority: free cars!

Stuffed up and fatigued

I'm sick, probably with allergies.  So how about some links?

Jeff Jacboy in the Boston Globe: "Liberal bias isn't killing newspapers"  On a related note, my trivia comrade sent along "The red ink press" on how national papers are heading the way of the horse and buggy.

Ace: "Why are reporters pretending they don't know Obama will raise taxes on the middle class?"

WashPost: "Lawmakers seeking consensus on Social Security overhaul."  Good luck with that.

Arlen Specter is friendless in Washington.  What will Pennsylvania do?

I love Scrubs and tonight was the final episode with Zach Braff.  Word is that it's still up in the air whether it will return next year as a revamped show with the new interns.

Technical paper of the day – From MIT International Review: "Finding Osama bin Laden: An Application of Biogeographic Theories and Satellite Imagery"

A blog firing on eight cylinders – Found via Kaus, the automobile-themed The Truth About Cars has everything you want to know about the decline of Detroit. Plus, any blog that makes a sly Elvis Costello reference can't be all bad.

Running out of suckers

Suddenly all this borrowing seems like a bad idea. Hot Air: "Even the NYT now worries about debt."

Every Ponzi scheme has to find new suckers, after all, and this one’s no different. The escalating deficits will cost the Ponzi structure, though, in interest payments down the line. Right now, we pay about $172 billion a year to service our debt, or roughly 5% of our annual federal budget. By 2019, we’ll be paying over $800 billion a year in interest alone, or over 20% of our annual federal budget in today’s dollars, according to the CBO.

That $800 billion a year doesn't pay for safe streets or education or even a shiny new aircraft carrier. In ten years we'll be paying $800 billion a year for...nothing. But at least we can keep borrowing, right?

In the end, no amount of political spin can convince bond purchasers to soak up all the red ink gushing from the U.S. budget.

Uh-oh.

France lowers taxes to spark job growth

Boston Globe: "France tax cut will give diners a break"

The French government is offering some good news for tourists and beleaguered consumers in France: The price of dining out is expected to go down soon.
The value-added tax, which is applied on a range of items in restaurants, will be reduced to 5.5 percent from 19.6 percent, beginning July 1, the office of President Nicolas Sarkozy said last week.
The change, presented as a "contract for the future" between the government and the hospitality industry, includes a commitment by restaurateurs to pass along the tax savings in the form of lower menu prices.
The reduction could also improve the dining experience before the bill is presented. The agreement on taxes accompanies a goal of adding tens of thousands of jobs in the sector, which restaurateurs say will lead to improvements in service.
The additional hiring would be paid for in part by increased restaurant revenues, the government said.

Imagine that. Here in America, Sizzler would be looking for a government bailout.

Amazing Race update – Still in China

If you remember last week's leg, this is a continuation leg: teams arriving at the mat were surprised to learn from Phil that they were still racing. Teams arrived in this order: Team Ginger, Team Say What, Team Esquire and Team Sistahs. After finding the Beijing leg is still not over, teams headed to a store to find a Travelocity gnome. They carry this product placement to the Forbidden City.

Once at the Detour, teams may choose: Beijing Opera or Chinese Waiter. The first involves getting made up in traditional Chinese opera costume while the latter involves taking orders in a restaurant in Mandarin and correctly repeating them to the cook. Tammy & Victor speak Chinese so guess which one they chose. Victor says: "If we can't do this task, Mom and Dad will kill us." Team Sistahs and Team Say What are both lathering on opera makeup. Team Ginger, who left the mat first, are bringing up the rear.

Team Esquire finish the Detour first and head to the next clue box which is also the U-Turn. This is an opportunity for a team to make subsequent teams go back and do the other Detour. Tammy & Victor decide that Kisha & Jen are too athletic and they don't want to be involved in a foot race at the end. They U-Turn Team Sistahs which is going to hobble them seriously on this leg. Team Esquire then arrives at the Roadblock and it involves eating some street food which includes fried larvae, grasshoppers, scorpions, and starfish. Yum!

Of course Team Sistahs can still come from behind because Team Ginger can't get a taxi and when they do they go to the National Opera House instead of the Beijing Opera. Throughout the Race, they've been perpetually annoyed that people don't speak English and taxis won't stop when they beckon. I'm sure the ex-cheerleaders are used to getting cabs in America but their charms are lost on foreign cabbies.

Tammy & Victor finish their Roadblock and head to the Pit Stop at the Bird's Nest, the site of the 2008 Olympics. All the other teams are searching for the clue box. Eventually Margie & Luke find it and they're quite relieved to see they were not U-Turned. Team Ginger still can't find the next clue box back at the opera house. Team Sistahs find they've been U-Turned then do the Chinese restaurant task. It takes them several turns but eventually they finish taking orders, then head back to the clue box, before continuing to the Roadblock. In the interim, the clueless duo of Jaime & Cara still can't find the clue box; they claim it's been "three hours" since they left the opera house.

After finally finding the clue box, Team Ginger arrives at the eating Roadblock just as Jen is halfway through her meal. Team Sistahs finishes first but Team Ginger isn't far behind so it looks like it's going to come down to who gets the better taxi driver. Jen drank so much water during the Roadblock she simply has to stop to go to the bathroom. As a result, Jaime & Cara slide into third place coming "just seconds" (according to Phil) ahead of Kisha & Jen. Team Sistahs are eliminated.

Final standings:

#1 – Team Esquire – Tammy & Victor
#2 – Team Say What? – Margie & Luke
#3 – Team Ginger – Jaime & Cara
#4 – Team Sistahs – Kisha & Jen - PHILIMINATED

Next week – Season finale in Hawaii.

Hey, I know that song

I was sitting in church this morning and, during an interlude, the music director started playing "American Tune" by Paul Simon.  I thought to myself: "What a strange selection for church."  After the benediction, I asked her what song she had been playing and she said "O Sacred Head, Now Wounded."

Sure enough, my Billboard book reveals for "American Tune": "based on the classical piece 'O Sacred Heart' by Johann Sebastian Bach."  So there you go.

Unclear on the concept

CNN's main headline this morning: "Confirmed H1N1 cases stand at 787, WHO says"

Much smaller side story: "Flu hysteria is real danger, some say"  Some say!

Couldn't even spare a whole penny

This is a great representation of how much the federal government spends, how much it overspends (i.e. the deficit) and how meaningless a $100 million budget cut is:



HT: Megan McArdle

An inconvenient truth - Engineers love this cartoon.

Why won't these numbers add up? - I've been spending the last two days working on a homework problem for one of my classes, but I just can't the "correct" answer.  I think there's a typo in the book or something.

Speaking of imaginary numbers, the Massachusetts government finds that everytime they check the state coffers for money, there's less than they thought.  Boston Globe: "State revenues continue free fall - Collections at least $300m short."