Half Million

Today, my counter went over 500,000 views.  The blog started in September of 2008 as a way of speaking out about politics run amuck.  I was worried about the possibility of electing a man with almost zero experience and about whom we had little or no background information.  It turns out that is one of the key issues today as well.

More interesting stats (interesting to me) – This is the 330th post; There have been an average of just over 500 views per day and a post about every 3 days.

I took a screen shot of the statistics for today showing a number over 500,000.  Maybe I’ll celebrate tonight and not write a post.  Thanks for taking the time to view.

How to Cut the Budget – Part 3

In the last two “How to Cut the Budget” posts, here and here, I suggested that we can significantly cut our Federal Budget and showed examples of how it might be done.  Let me give you one more small thing that we could do that would lower the cost of our government.

Repeal the Davis-Bacon Act.  The Act requires that almost any job done with any Federal funds will be done with workers paid the “prevailing wage.” Prevailing wage is a union driven price for labor that is usually far higher than the wage commonly paid for similar work in the area.  There is a huge bureaucracy in the Department of Labor that does nothing but publish the “prevailing wages” and police jobs that are built even partially with Federal Funds.  I misspoke.  Actually there are three huge bureaucracies:  The Department of Labor, The Employee Standards Administration, and The Wage Hour Division.  If you want to see why it costs twice as much as it should to build a government building (almost any building with Federal Dollars contributed to its funding), just  search out the “prevailing wage” in your county and compare that with local common wage rates.  In my county in Oregon, most carpenters are paid around $20 per hour.  The Davis Bacon rate (wage plus required benefit allowance) is $40.01.

Don’t get me wrong.  We won’t balance the budget on repeal of Davis-Bacon.  We won’t balance the budget by cutting the entire Department of Labor Budget of  about $14 Billion.   However, we do around $125 Billion of public construction each year so saving even a quarter of that by repealing Davis-Bacon is significant.  It would be about 1% of the total budget.

Since the 1980 White House Conference on Small Business, I have been trying to find someone who could give me a good reason why this act should not be repealed. Haven’t heard a good reason yet.   If you have one, have at it.  In the meantime, consider that this is a single vestage of the past that has hung on like much of our government.  If you ask yourself why we have not repealed the Davis-Bacon Act, you must also ask:

1.  Why do we subsidize farmers to grow corn for ethanol (which costs more to produce than the energy to produce it)?

2. What business is it of the Federal Government how much I pay to an employee?  Isn’t a Federal Minimum Wage Law illegally usurping the power of the state (visit the 10th Amendment and ask just how much the Feds should be involved in most of their activities)?

3. Why should the Federal Government be involved in financing schools?  Does the Constitution suggest that our Federal Government is somehow responsible for paying for locally run schools?

4.  If the Department of Energy has yet to produce a single ounce of oil, why do we spend about $30 Billion a year on a department that was created in 1977 to help us achieve independence from foreign oil?

5.  Why do we tolerate a government purchasing system that makes it almost impossible for small businesses to sell goods to Federal Government Agencies?

6.  Why do we need to spend hard earned tax dollars (and lots of fake money, like the 41% annual budget deficit) to protect citizens of Libya from their ruler?

The list goes on forever.  I think it illustrates that cutting the 10% every year for 5 years is both doable and might even get us back to prioritizing how we spend our tax dollars.  Wouldn’t it be refreshing to have our money spent on appropriate uses and then used effectively to achieve our goals for government.

How to Cut the Budget – Part 2

In “How to Cut the Budget” I suggested that we cut 10% per year for 5 straight years to get back to a balanced budget.  If you listen to those entrenched in the system, you would believe that this is impossible.  Not the 10% for five years.  Just cutting 10% once is impossible, they say.  I actually think they are right.   If they are unwilling to do things different from what they have in the past, it may well be impossible.  However, if they are willing to try something different, they just might find that it can be done.  Witness Sandy Springs, Georgia……

Two things in the video that struck home with me were:

None of their employees have “defined benefit” pension plans, only “defined contribution” or 401k plans.  The cost of “defined benefit” plans is driving up the price of government as fast as anything.  It may not be easy, but every government at every level could get an actuary to determine the cost to convert from defined benefit to defined contribution.  They could then set a standard as to how much can be contributed in the future to the value currently held by each employee and start the transition.  The cost would begin to go down immediately and would accelerate in its downard cost push for many years to come.  It would then be possible to budget.

Second, was the statement that ” the difficulty is……..simply the political situation.”  The real barrier to running effective governments is not a lack of ideas.  The Public-Private Partnership Model is just one idea.  It is not a lack of skills.  It is not even a lack of desire.  It is politics.  Public Employee Unions don’t want to lose power.  Politicians don’t want to lose power.  Those entrenched in the system don’t want change.  That is a tough hill to climb, but, with the political will, it can be done.

Bipartisan B.S. – Just Another Campaign Speech

Mr. Obama lied.  He does not want a bipartisan debate about how to reduce our huge national debt (as he claimed on Wednesday).  What he wants is to be President for four more years.   Since he is already campaigning, he is afraid of losing control of the debate.  How do I know?  He told us on Wednesday in his speech at George Washington University.

Just Another Obama Campaign Speech

If he truly wanted a bipartisan debate, he would have congratulated the Republicans and especially Congressman Paul Ryan for the proposal they have put forward to cut about $6 Trillion from the deficit over the next ten years.  He would have said it contained a lot of good ideas and was worthy of consideration and debate. Instead, he said this:  “One vision has been championed by Republicans in the House of Representatives and embraced by several of their party’s presidential candidates.  It’s a plan that aims to reduce our deficit by $4 trillion over the next ten years, and one that addresses the challenge of Medicare and Medicaid in the years after that.

Those are both worthy goals for us to achieve.  But the way this plan achieves those goals would lead to a fundamentally different America than the one we’ve known throughout most of our history.

A 70% cut to clean energy.  A 25% cut in education.  A 30% cut in transportation.  Cuts in college Pell Grants that will grow to more than $1,000 per year.  That’s what they’re proposing.  These aren’t the kind of cuts you make when you’re trying to get rid of some waste or find extra savings in the budget.  These aren’t the kind of cuts that Republicans and Democrats on the Fiscal Commission proposed.  These are the kind of cuts that tell us we can’t afford the America we believe in.  And they paint a vision of our future that’s deeply pessimistic.”

If he had wanted to work with the Republicans, he would not have lied about Mr. Ryan’s Plan.  He purposely stated it would cut $4 Trillion over the next ten years. He did that so his slight of hand would allow him to get away with saying that HIS proposal would cut $4 Trillion over the next 12 years.  He wanted it to sound like his plan was as good at cutting deficits but would do so without all the cuts that spare “rich people” while hurting the rest of us.  In fact the Ryan proposal targets $6 Trillion in reductions.

If he is not campaigning, why did he label Mr. Ryan’s plan as both flawed and “…embraced by several of their party’s presidential candidates”?

If he truly wanted a bipartisan debate, he would have pointed to reasons for our debt that grew out of actions of members of both parties and some reasons beyond the control of either party.  Instead, he said this:  “But after Democrats and Republicans committed to fiscal discipline during the 1990s, we lost our way in the decade that followed.  We increased spending dramatically for two wars and an expensive prescription drug program – but we didn’t pay for any of this new spending.  Instead, we made the problem worse with trillions of dollars in unpaid-for tax cuts – tax cuts that went to every millionaire and billionaire in the country; tax cuts that will force us to borrow an average of $500 billion every year over the next decade.

To give you an idea of how much damage this caused to our national checkbook, consider this:  in the last decade, if we had simply found a way to pay for the tax cuts and the prescription drug benefit, our deficit would currently be at low historical levels in the coming years.

Of course, that’s not what happened.  And so, by the time I took office, we once again found ourselves deeply in debt and unprepared for a Baby Boom retirement that is now starting to take place.  When I took office, our projected deficit was more than $1 trillion.”

In other words, to encourage bipartisan debate, he states that the trouble we are in was caused by George Bush and the Republicans.  I’m sure that will get the Republicans in the mood to work with Mr. Obama and the Democrats.  Also, he invoked the favorite political tactic of demonizing “the rich,” and showing the real victims to be children with dreaded diseases.  That sort of posturing will also make working with Republicans more difficult.   As an aside, for such an eloquent man, it is puzzling what he meant by saying, “….our deficit would currently be at low historical levels in the coming years.” Currently or in coming years?  Is this double-speak intentional so he can’t be tied down to his statements?

Mr. Obama was not in the least interested, in December, when his Deficit Reduction Commission proposed deep cuts.  He proved it, not by just ignoring their report, but, by offering a 2012 budget proposal that projected a one year addition to the deficit of $1.6 Trillion.  He only became interested in cutting the deficit when it became politically expedient to respond to the Ryan Budget Proposal.  His speech on Wednesday was more about campaigning for President than it was about reducing the deficit.  He is nothing if not a politician.  He even called himself one in his speech when he said, “And without even looking at a poll, my finely honed political skills tell me that almost no one believes they should be paying higher taxes.” (bold emphasis is mine).

What he says is politically motivated and is not necessarily in line with what he believes or does.  Or, it at least it looks that way.  Want an example?  Here are Mr. Obama’s thoughts on the debt limit in 2006, when he voted against increasing the debt ceiling (a view with which I agree):

“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.”

In 2007 and in 2008, when the Senate voted to increase the limit by $850 billion and $800 billion respectively, Obama did not bother to vote. (He did vote for TARP, which increased the debt limit by $700 billion.)  Because it was the Republicans who wanted to hold back on raising the debt ceiling this year, he was, obviously for political reasons, opposed to what the Republicans wanted and in favor of increasing our debt.

My conclusion is that we need to pay little or no attention to what Mr. Obama says while we look at what he has done and what he is actually doing now.

How to Cut the Budget

The 2011 Federal Budget is about $3.8 Trillion, of which, spending exceeds income by about $1.56 Trillion.  So we are in deficit spending mode to the extent of 41% of the budget.

 

 

 

Some questions….

If your small business was running 41% in the red, would you:

a.  Cut your spending by 3%;

b.  Argue with your wife about whether to cut the budget or just raise prices to your customers;

c.  Counterfeit money to pay your debt?

d.  All of the above;  or

e.  Hire an expert to write a dispassionate plan to work your way out of debt; or

f.  try something else?

If you answered “d. All of the Above,” you probably work in Washington, D. C. or, more specifically, are in Congress or the White House.  Who else could get away with such stupid (and illegal) “solutions”???

If you answered “e. Hire an expert to write a dispassionate plan to work your way out of debt,” you are probably the Republicans in the House of Representatives who have asked Representative Paul Ryan to prepare such a plan.  I like Congressman Ryan’s Plan better than anything else I have seen come out of Washington in quite a while.  Or maybe you would call on Thomas Sowell and use his plan.

Here is my plan “f.”

Cut the budget of every single operation of the U.S. Government 10% in 2012.  Then cut 10% more in 2013.  Then do it again in 2014, 2015, and 2016.  Cutting 10% from each previous budget for 5 years will take 41% off of the original budget.  Problem solved.  We are now in the black or so close that the budget deficit is effectively gone.

I can hear the screams now, “Meat Ax,” “Hatchet Man,” etc.  In fact, those wielding the real “Meat Ax” are those who spend huge amounts more than they take in each year.  Those are the people piling up the debt that will eventually bankrupt the nation.  When that happens, little things like 10% cuts will seem like kid’s play.

Before you start to say that 10% a year is unrealistic or that it will cut some programs that shouldn’t be cut while leaving others that should, let me give you a few reasons why I think this will work.

1.  Everyone is treated equally. This isn’t playing favorites like only increasing taxes on the “rich” or only cutting programs that support “women’s health.”  If you can cut 10% from your budget at home, why can’t Congress and the President do the same?

2.  Everyone knows what is coming.  If the 5 year plan starts today, everyone knows what their budgets will be in each new year for five years.  That gives time to plan.

3.  More importantly, it requires you to prioritize what is to be funded and what isn’t.  Is Federal support of ethanol really as important as maintenance of the nations bridges?  How does a new National Park at Mount St. Helens stack up against funding the Centers for Disease Control?  These are questions worthy of debate.

4.  The questions are not so important, however, that they should stop all cuts until they are decided.  This is the current state of political gridlock.  All we get now is more delay, more debt, and more assurance that we will bankrupt the nation.  By making the 10% cuts it will force decisions.  Politicians need a push.

5.  I almost hate to add this, but, we are so conditioned to our government’s economic illiteracy, I need to.  We need to motivate our elected officials to balance the budget.  I’m not sure I like legislating a “balanced budget.”  That is a bit too short term a solution for me.  I do think we might try limiting the term of any Congressman, Senator, or President to “x” years after failing to balance a budget.

The idea is to steadily get back on sound financial footing.  We can do this if we set a plan in motion that gets us to our goal incrementally.  However, it needs to be uncomfortable.  No gardener ever created a beautiful landscape without pulling more weeds than she wanted to.  No budget will be balanced without discipline and some pain.

Wimps, all.

In the fall of 2010, the voters of our fair land sent what I thought was a pretty strong message.  They said, I think, “Our government is spending too much money.”  So how is that message being received in Washington?

Bankrupt Politicians trying to bring us down with them

Mr. Obama is not worried about deficit spending at all and really wants to cut nothing until after the 2012 election.  He proposed a budget that would cut $1.1 Trillion over the next 10 years.  He has structured it that way so that no taxpayer (except maybe a few of those evil “rich” ones) will feel the pain until he is no longer in office. He can promise $1 trillion in debt reduction without having to accept the pain.  That he saves for those who follow him.  Doesn’t that sound like what he has blamed Mr. Bush for doing about a thousand times?  Oh, and if that sounds like some serious cutting, think about this:  In the next 10 years, our government is scheduled to spend about $35 Trillion, so $1.1 Trillion would amount to a whopping 3% cut.  If he doesn’t have the courage to cut at least 10%, in my humble opinion, he does not deserve to be President.  You can’t tell me that you have not had to cut at least 10% from your budget during this Recession.  Well, I guess if you work for Mr. Obama’s government, you might not have had to face what the rest of us have.  Did I forget to mention that our current budget is $1.5 Trillion in the red.  That means all Mr. Obama wants is for us to print just a little less money than we currently print to stay in business.  Shameful.

The Republicans in Congress only wanted to cut $61 Billion for the rest of the year.  Let’s see.  To be charitable, we could say on an annual basis that would be like cutting $136 Billion from the $3.8 Trillion budget or 3.5%.  Whoopee.  Run a 30+% deficit and solve the problem with a 3.5% budget cut.  It must have taken a lot of courage to come up with that huge sacrifice.

And the Democrats in Congress wanted to cut about half as much as the Republicans.  Even more gutless.  More Shameful.  I don’t wonder why Congress has anywhere from a 60% to a 73% DISapproval rating (pick your poll).

“Last night was a perfect example of Democrats and Republicans coming together, working tirelessly to hammer out a deal and making the tough choices to live within our means. We all know that we face tough challenges ahead, from job creating and growing our economy, to educating our children and reducing our deficit, and we must continue to work together to achieve those goals and deliver for the American people.”   –  Dan Pfeiffer, White House Communications Director

I want to barf.

You might like to look at Congressman Paul Ryan’s budget proposal.  At least it makes a serious effort to address long term financial issues.  But then, since it is not calculated based on short term political calculations it doesn’t really stand much of a chance.  How can we change this?

How Smart Are Our Teachers???

We entrust our teachers to open the eyes of students.  We task them with showing our students the value of knowledge and how studying and learning will lead the way to a successful career and life.  You would think that teachers, as a group, would be smarter and more open to learning, than the average person.  Since teachers and teacher’s unions have been in the news lately, I have a few questions.

1.  Why are the teacher’s unions fighting so hard?

The law just passed in the Wisconsin legislature and signed by Governor Walker bans the Union “check-off.”  That means that members of the public employee unions will not see their dues payments automatically withdrawn from their pay.  Now, not all union members will decide to pay their dues.  Union leadership will have fewer dollars to pay themselves and fewer dollars to buy influence.  Just consider that 93% of all public employee union political contributions last election went to Democrats.  If you assume that less than 93 % of union members are Democrats, it stands to reason that quite a few will not want to see their union dues paid to candidates or causes against their will.  Teachers are a diverse group and many don’t like the way their forced union dues are being used.  Many will withhold their dues payments.  Almost half of Wisconsin’s union members voted Republican so this represents a potentially huge loss of union funding and power.  How much will the teacher’s unions lose in dues payments?  Is it enough to fight over?

2.  Why is the Wisconsin situation unique?

It isn’t.  In fact, many states have laws that limit the power of unions.  Ever since the Taft-Hartly bill passed in the late 40s, closed shops have been illegal.  That means that it is illegal to require union membership to hold a job at a workplace with union represented employees.  Through many years, liberal lawmakers have been able to corrupt the intent of Taft-Hartley by making it legal to contract with a company (or government agency) to require that employees in a union shop abide by union rules, including the payment of unions dues. Many states already have laws like the one just passed in Wisconsin and many more are planning to pass similar laws.  Should the unions be worried?

3.  Why is private industry union affiliation shrinking so throughout the country?

Increasingly, workers have seen that they are not being represented by their unions.  Union dues take a big chunk out of wages.  Not all members support the politics of their unions and don’t want their money spent to back political goals that do not align with theirs.  Though public employee unions are the one area where unions are actually growing, not shrinking, it looks like that too will soon change.  Take the example of the teacher’s union in my town.  The union is pushing for increases in pay and benefits that will only be affordable to the School District if they eliminate 40 teacher positions.  That means that union action will cost 10% of the member-teachers their jobs.  Most of those in the 10% will think twice before joining a union again.  In a couple of years the contract will be negotiated and a new group of maybe 10% will be disenfranchised.  In general, unions have shifted focus from working to improve working conditions for members to working to increase the political power of the unions.  Many job holders (witness the 46% noted above) are not happy with the new direction.  Is government employment the only place Unions still have something to offer to workers?

4.  Why do we still think of teaching as a profession rather than just an occupation?

We don’t.  Since teachers have joined unions, much of the general public has begun to view them as job holders, not professionals.  Teachers were held on a pedestal as examples of the noble profession dedicated to the welfare of their students.  Today they are often seen as dissatisfied, self-interested workers.  An interesting result is that rather than encouraging teachers to excel and lead the way to higher learning, we see a body of people seeking the lowest common denominator.  Joe Klein, the former head of New York public schools recently revealed that over the past ten years, more teachers in their system have died on the job than have been fired.  He confessed that it was almost impossible to fire a teacher.  Why?  Tenure.  Once hired and after a very short period, teachers are granted tenure which basically means they have a job for life.  Name any other profession where that situation exists*. Originally, the argument for tenure was “academic independence.”  It was thought that a professor could only be an independent thinker if he was freed of the worry of his views offending his superiors.  How interesting is it that today we have turned that original idea on its head.  Today, tenure is buying us teachers, most of whom think alike (at least in public) and toe the union line so they don’t run afoul of their real bosses, the unions.  Do other professionals have tenure or guaranteed jobs?  Doctors can, and do, lose licenses or get fired for substandard work.  Attorneys get disbarred or let go by their firms for poor or unethical work.  Where else but in the schools can you bring your problem with alcohol to work and not be fired without a process that takes as much as a couple of years?  Unionized teachers are professionals?

5.  Are many, if not most, teachers being ‘worked’ by the unions?

For a good part of the past generation or two, teachers have not had the respect or pay that their vital role in society should garner them.  Now because of a few bad actors and the actions of most teacher’s unions, a backlash is forming that will further hurt teachers.  Teachers joining unions (though often against their will) to fight for more pay and benefits during a recession is a dumb move.  The unions, through the power of their money and through peer pressure, are pushing demands that most teachers know are not reasonable.  I would hope most teachers would have more sense and would speak up in their unions to express their displeasure.  The general  workforce, 10% of which is out of work, is not likely to sympathize with teacher’s union members who complain that they have to live with only a 2% cost of living increase.  I think teacher’s unions are going a long way to paint a very negative picture of teachers today.  I think teachers are being ‘worked’ by their unions. Maybe laws like the new one in Wisconsin will limit the numbers of teachers being preyed upon by the unions.  I hope so.  Since I believe most teachers are dedicated to helping youth, it will be a big step forward if they are not represented by unions.  The president of the NEA said, “When school children start paying union dues, that‘s when I’ll start representing the interests of school children.”  Is that what teachers really want?

* – bonus points if you mentioned Supreme Court Justices.