The Cynical Economist

From CNSNews
By Matt Cover
June 25, 2012

“The vast majority of current programs are focused on making poverty more comfortable … rather than giving people the tools that will help them escape poverty.”

The federal government is not making much headway reducing poverty despite spending hundreds of billions of dollars, according to a study by the libertarian Cato Institute.

Despite an unprecedented increase in federal anti-poverty spending, the national poverty rate has not declined, the study finds.

“[S]ince President Obama took office [in January 2009], federal welfare spending has increased by 41 percent, more than $193 billion per year,” the study says.

Federal welfare spending in fiscal year 2011 totaled $668 billion, spread out over 126 programs, while the poverty rate that remains high at 15.1 percent, roughly where it was in 1965, when President Johnson declared a federal War on Poverty.

In 1966, the first year after Johnson declared war on poverty, the national poverty rate was 14.7 percent, according to Census Bureau figures. Over time, the poverty rate has fluctuated in a narrow range between 11 and 15 percent, only falling into the 11 percent range for a few years in the late 1970’s.

The federal poverty rate is the percentage of the population below the federal poverty threshold, which varies based on family size.

While the study concedes that some of the increased spending under Obama is a result of the recession and the counter-cyclical nature of anti-poverty programs, it also finds that some of the increase is deliberate, with the government having expanded eligibility for welfare programs.

In fiscal year 2008, anti-poverty spending was $475 billion. In fiscal year 2009, when Obama took office, it had risen to $590 billion.

“But the dramat­ically larger increase also suggests that part of the program’s growth is due to conscious policy choices by this administration to ease eligibility rules and expand caseloads,” the Cato report says. “For example, income limits for eligibility have risen twice as fast as inflation since 2007 and are now roughly 10 percent higher than they were when Obama took office.”

In fact, the study points out that according to the administration’s own projections, federal welfare spending is unlikely to decline even after the economy recovers – further evidence that not all of the increase in spending is recession-related.

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From Washington Examiner
by Joel Gehrke

Department of Energy officials gave a New Hampshire-based biofuel company access to $80 million for a Michigan project that has already fallen short of job creation expectations, despite receiving another $40 million in state and DOE subsidies.

“In September 2008, Mascoma [Corp.] pledged 70 jobs at the plant by the end of 2012. On Feb. 29 of this year, Mascoma reported to the MEDC that only three jobs had been created by the grant,” the Capitol Confidential (Mich.) reports today.”The company has been given the full $20 million from the state.”

Mascoma, a renewable energy company that specializes in cellulosic ethanol, received another $20 million for research and development from the Energy Department in 2008.

The company warned the federal government, in its SEC filing, that it has “no experience in the markets in which we intend to operate” — which perhaps explains why it only created three jobs from 2008 to 2011, despite promising to create 70 jobs, according to Capitol Confidential. That means that the Michigan government and DOE, in combining to give the company $40 million in 2008, spent $13.3 million on each job.

Even so, DOE signed an $80 million cooperative agreement with Mascoma in December, 2011. “Biofuels hold great potential, not only for reducing our dependence on foreign oil, but also for creating new jobs and economic opportunities for America’s rural communities,” Valerie Reed, the Acting Biomass Program Manager in Office of Energy Efficiency & Renewable Energy of the DOE said at the time.

Biofuels, in general, may ‘hold great potential’ for job creation, but what about creating three jobs in three years suggests to DOE that Mascoma in particular should receive another $80 million in taxpayer money?

From WP Politics 
By Kimberly Kindy, Scott Higham, David S. Fallis and Dan Keating,
Published: June 24

In January 2008, President George W. Bush was scrambling to bolster the American economy. The subprime mortgage industry was collapsing, and the Dow Jones industrial average had lost more than 2,000 points in less than three months.

House Minority Leader John A. Boehner became the Bush administration’s point person on Capitol Hill to negotiate a $150 billion stimulus package.

In the days that followed, Treasury Secretary Henry M. Paulson Jr. made frequent phone calls and visits to Boehner. Neither Paulson nor Boehner would publicly discuss the progress of their negotiations to shore up the nation’s financial portfolio.

On Jan. 23, Boehner (R-Ohio) met Paulson for breakfast. Boehner would later report the rearrangement of a portion of his own financial portfolio made on that same day. He sold between $50,000 and $100,000 from a more aggressive mutual fund and moved money into a safer investment.

The next day, the White House unveiled the stimulus package.

Boehner is one of 34 members of Congress who took steps to recast their financial portfolios during the financial crisis after phone calls or meetings with Paulson; his successor, Timothy F. Geithner; or Federal Reserve Chairman Ben S. Bernanke, according to a Washington Post examination of appointment calendars and congressional disclosure forms..

The lawmakers, many of whom held leadership positions and committee chairmanships in the House and Senate, changed portions of their portfolios a total of 166 times within two business days of speaking or meeting with the administration officials. The party affiliation of the lawmakers was about evenly divided between Democrats and Republicans, 19 to 15.

The period covered by The Post analysis was a grim one for the U.S. economy, and many people rushed to reconfigure their investment portfolios. The financial moves by the members of Congress are permitted under congressional ethics rules, but some ethics experts said they should refrain from taking actions in their financial portfolios when they might know more than the public.

“They shouldn’t be making these trades when they know what they are going to do,” said Richard W. Painter, who was chief ethics lawyer for President George W. Bush. “And what they are going to do is then going to influence the market. If this was going on in the private sector or it was going on in the executive branch, I think the SEC would be investigating.”

Boehner, now the speaker of the House, declined to discuss his transactions. His spokesman said they did not pose a conflict because a financial adviser executed them and they were made in diversified mutual funds. Other lawmakers also said their financial advisers handled their trades. They said that the timing of the trades and the conversations was “coincidental” and that they did not adjust their portfolios based on what they were told by the administration officials.

Questions about conflicts of interest and possible insider trading on Capitol Hill prompted Congress to pass the Stock Act this year. The act specifically bans lawmakers, their staffs and top executive branch officials from knowingly using confidential information gleaned from their legislative roles to benefit themselves, their family members or friends.

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FINAL Final_MAP Report

CBO: Federal debt to double in 15 years

The federal government is staring at a disastrous fiscal picture with debt approaching 200 percent of GDP within two decades if Congress doesn’t change course on spending and taxes, according to the latest analysis by the Congressional Budget Office released Tuesday.

CBO analysts said the downturn and Congress’s response have been devastating for the government. Federal debt as a percentage of GDP — a standard measure of a government’s debt burden — stood at 40 percent at the end of 2008. But it will top 70 percent by the end of this year, and is only headed higher unless Congress changes course. The ratio could double by the middle of the next decade and will have topped 200 percent of GDP — twice the size of the projected U.S. economy — by 2037.

Lawrence H. Summers say – “It is time for governments to borrow more money” -  LOL 

…………….There is, of course, still the question of whether more borrowing will increase anxiety about a government’s creditworthiness. It should not, as long as the proceeds of borrowing are used either to  future spending or raise future incomes.

Australia’s triple-A rating at risk: report

Standard & Poor’s has warned it could cut Australia’s coveted AAA rating if the federal government abandons plans to return the budget to surplus in response to a global recession triggered by the European debt crisis, a local newspaper reported.

Government Down $16 Billion on GM Bailout

Mitt Romney maintains that “President Barack Obama is holding on to the government’s stake in General Motors to avoid an embarrassing financial loss before the election, and says he’d sell the stock quickly if he wins the White House,” according to the Detroit News, which recently interviewed the Republican presidential candidate.

May auto sales disappoint as demand slows

New auto sales came in weaker than expected in May, driven by disappointing results from General Motors, Toyota and Chrysler that showed industrydemand slowed from the first four months.

The sales results, when combined with Friday’s anemic jobs report, suggested the industry could face hurdles in its recovery from a recession four years ago that dragged GM and Chrysler into bankruptcy.

JILL AND MICHELLE ‘WOULD NOT HAVE ANY CHANCE’ WITHOUT GOVT. - Thanks to the government and affirmative action, we now have the most incompetent president and vice ever…they themselves admit it…

“I know, literally, Barack and I talk about it. Neither one of us would have had any shot,” Biden said. “The same with our wives. Both wives are smarter than both of us. Literally, these very accomplished women would not have any chance without some help.”

Open Job At Boston Law Firm Pays Just $10,000 Per Year 

Larry O’Bryan, one of the firm’s partners, said he’s received about 32 applications for the $10K per year job, since posting it one week ago. He said that while the pay is low, the lawyer who is eventually hired will gain valuable experience.

Facebook’s $74,000-a-year INTERNS: Website lifts the lid on salaries at social network

Software engineers – or coders – are the most valuable workers because they turn the ideas fired at them by Zuckerberg and his executive team into reality

Buyers’ remorse for California’s ‘bullet train to nowhere’

California voters are experiencing buyers’ remorse over a $68.4 billion (£44.4 billion) high speed rail project which critics say risks becoming a “bullet train to nowhere.”

Secret mission accomplished: America’s mysterious space plane to land after a YEAR in orbit – and no one knows what it did up there

The U.S Air Force’s highly secret unmanned space plane will land in June – ending a year-long mission in orbit.

The experimental Boeing X37-B has been circling Earth at 17,000 miles per hour and was due to land in California in December. It is now expected  to land in mid to late June.

At launch, the space plane was accompanied by staff in biohazard suits, leading to speculation that there were radioactive components on board.

How Curt Schilling helped push Rhode Island into a budget crisis

His video game company now a bust, the former Boston Red Sox pitcher leaves the state on the hook for more than $100 million

From NRO
By Patrick Brennan

Their excesssive demands squeeze local governments.

Terry List, a teacher in Saginaw Township, Mich., has a depressing lesson for her students: “I would not recommend to my pupils to become a teacher in Michigan.”

What’s discouraging her? A proposed pension-reform bill in Michigan would derail her plans to retire — at age 47.

After these rapacious reforms, List would have to work another 16 years, to age 63, in order to earn her retiree health-care benefits. “I understand we have to tighten our belts,” she laments, “but we don’t have to use a tourniquet and cut off the blood supply entirely.” Under the reforms, such a tourniquet means she could still retire now and have a guaranteed income for the rest of her life, but she’d have to pay for her own health care until age 65 — like, you know, most Americans.

………………………………………

Until recently, employees of the Massachusetts Bay Transportation Authority enjoyed “23 and out” pensions. No matter when they began their careers, they could collect nearly full pensions after 23 years on the job. (That has been raised to the a punishing figure of 25 years, and now with a minimum age of 55 before they can collect.) Perhaps the most famous member of the organization that negotiated these benefits, the Boston Carmen’s Union, is Patrick Bulger, son of longtime Massachusetts state-senate president Billy Bulger. The younger Bulger retired from the Carmen’s Union at 43 and began collecting an annual pension of $41,000. Plus cost-of-living adjustments. For the rest of his life.

It’s hard to justify such benefits when the rest of America relies on 401(k)s, Social Security, and Medicare, making their effective retirement age, on average,  63 — and soon to rise. Public employees retire still very much in their working years. Even though they’re guaranteed financial security for life, some of them in “retirement” go on to lucrative jobs in the private sector — or, more disturbingly, back in the public sector. Take retired MBTA manager Michael Mulhern, age 48, who now enjoys a $130,000-a-year pension — and earns $225,000 a year as executive director of the MBTA’s retirement fund.  

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As a 2007 GAO report explains, rising health-care costs make these promises extremely difficult, almost impossible, to account for — when state and local governments even bother. They usually don’t. Few still rely on pay-as-you-go budgeting for pensions, though it remains common for health care.  

By almost every measure, public-sector unions have managed to extract excessive levels of retirement benefits from governments, whose obligations have been vastly increased by the early ages at which the benefits can be claimed. That the benefits enjoyed by public employees already are more generous than anything the average American knows, and that they can enjoy them at an age when the average American is still working, isn’t just adding insult to injury. It’s adding kerosene to tinder.

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