REP. ROY BLUNT TAKES TARP MONEY

Rep. Roy Blunt is currently the best bet the Republican Party has to hold onto retiring Sen. Kit Bond’s seat. And if his current voting record is any indication….this is a sad moment for Missouri Republicans. Rep. Blunt is a rather remarkable example of a WAFFLER!

Back in 2008, Rep. Blunt voted for the $700 billion dollar Wall Street bailout. Rep. Blunt was fixing the credit system at that time. Then two months later in 2009, he voted against the stimulus bill along with the rest of his party. This time he was a shining example of standing up against wasteful government spending. This fiscal conservative (who abhors taxation) also voted to tax any bonus given by a company receiving TARP funds at a rate of 90%. He was showing his indignation at taxpayer money being used to pay bonuses for failed performances.

What he probably doesn’t want you to know is that he received $1500 from a U. S. Bancorp PAC in February. U.S. Bancorp has also received TARP funding. So the question that we as voters need to ask is this: How is it morally defensible to tax bonuses at 90% (because the money was paid for by taxpayers) when you take $1500 from a bailed out company for your upcoming campaign?

Now this is wrong! And all politicians and both political parties should either return contributions from bailed out firms or make an equal donation to charity. Politicians from both parties have received contributions from these companies but Rep. Blunt is the only Missouri politician to do so.

Please feel free to call Rep. Blunts’ office at (202) 225-6536 to tell him that you don’t approve of him accepting money from TARP recipients in the future. Ask him to donate the $1500 he received in February to the American Red Cross for flood relief victims. And then think about your next vote for US Senator.

OOOOPS!

"It [the stimulus bill] includes ....$140 million for something called 'volcano monitoring....Instead of monitoring volcanoes, what Congress should be monitoring is the eruption of spending in Washington, D.C."

Louisiana Gov. Bobby Jindal, February 24, 2009 in the Republican Response to the Presidential Address

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"Alaska's Mount Redoubt volcano erupted five times overnight, sending an ash plume more than 9 miles into the air in the volcano's first emissions in nearly 20 years.

Ash from Alaska's volcanos is like a rock fragment with jagged edges and has been used as an industrial abrasive. It can injure skin, eyes and breathing passages. The young, the elderly and people with respiratory problems are especially susceptible to ash-related health problems. Ash can also cause damage engines in planes, cars and other vehicles.

Alaska Airlines on Monday canceled 19 flights in and out of the Anchorage international airport because of the ash."

AP reports, March 23, 2009



We as Americans have to understand that not ALL government spending is either wasteful or bad. What is "pork" in one man's district can save lives in another! (I wonder if Sarah Palin approves of spending tax dollars on Hurricane Monitoring?)

AIG: SPILT MILK

We’ve all been taught that old adage about “crying over spilt milk”. Now when your kid spills milk on the carpet you really don’t have an option about whether you clean it up or not. You’ve got to! And you can’t spend three days deciding whether it’s better to mop up the mess with a paper towel or terrycloth bath towel. The important thing is to get that spill cleaned up as quickly as possible, by any means available before it does lasting damage. And no matter how great a job you do at cleanup, it’s going to leave stains and there’s going to be a sour milk smell for a long time to come. That’s what AIG really is… a great big, expensive mess of spilt milk!

There has been a lot of angry commentary on the bailout and bonuses of AIG. The general consensus is that Pitchforks and boiling oil are none too good for the executives receiving outrageous bonuses for losing company money! Congress is screaming for blood. But most legal experts agree: a poorly written contract that gives more to the employee than the employer is still a binding contract. Blame the idiots who wrote the contract for AIG a year and a half ago. (You might also have the Dept. of Justice check out whether any criminal actions of fraud were involved on the part of those same dumb AIG officials! Just in case.) But bottom line is that those contracts are legally binding no matter how much they smell. The real irony would be if we spent more on legal fees fighting the payment than the payment actually amounted to.

Many are advocating that we let AIG fail. But as we saw with Lehman Brothers, letting a major “too big to fail” company go under, sends massive shock waves through the financial community. And since AIG is THE largest insurer in the world, we would be looking at an unprecedented financial disaster. Why? Because AIG insures 81 million people with life insurance world wide for a grand total of over 1.9 trillion dollars. AIG also insures businesses against loss, movies against injuries to stars, gulf oil platforms against hurricane damage. If it becomes apparent that the parent company is going under, then a “run” on the policies could start. If all 81 million people decided to cash out their policies at once, it would get very expensive! Financial institutions all over the world would be scrambling to find the cash. This would necessitate selling off bonds which would then freeze up the bond markets. Credit markets would follow soon after. Think of it as Financial Armageddon on a global scale! We may not like this scenario, but since we as a nation decided in the 90’s that financial institutions could “self-regulate” and did nothing to stop the growth of AIG…we must live with the milk we spilt! At least until we have time to disassemble the AIG monster carefully without harming the markets.

So we have to clean up the mess. That requires that we understand exactly how we got into this mess to begin with. Many on the left will try to blame Bush for this, but the truth is that the real start of the problem traces back to Alan Greenspan and Bill Clinton in 2000.

That’s when President Clinton signed an Omnibus Spending Bill to keep the government running at the end of the fiscal year. That Bill contained the COMMODITIES FUTURES MODERNIZATION ACT OF 2000. This new law de-regulated trading of energy futures and insurance policies. (This same act was also responsible for the ENRON fiasco.)

What this Act did for AIG was to allow them to sell a type of insurance policy known as “credit default swaps”. Much like a fire insurance policy on your house, this let an investor purchase policies to insure bonds against loan defaults. Unlike your home policy, this type of bond insurance was left completely unregulated. Investors could purchase insurance on bonds they didn’t even own. This meant that companies like AIG would write credit insurance many times over on the same bond. Many of these bonds were tied to home mortgages. When the housing market went belly up, AIG was in the position of paying out on these bonds. ALL OF THEM! It’s a little like an insurance company having to pay me and ten other investors because YOUR home burned down. These multiple, unregulated transactions broke the financial back of AIG.

It should be noted that the sponsors for this legislation were: “Rep. Thomas W. Ewing (R-IL) and cosponsored by Rep. Thomas J. Bliley, Jr. (R-VA) Rep. Larry Combest (R-TX) Rep. John J. LaFalce (D-NY) Rep. Jim Leach (R-IA) and never debated in the House.[2]

The companion bill (S.3283) was introduced in the Senate on December 15, 2000 (The last day before Christmas holiday) by Sen. Richard Lugar (R-IN) and cosponsored by Sen. Peter Fitzgerald (R-IL) Sen. Phil Gramm (R-TX) Sen. Chuck Hagel (R-NE) Sen. Thomas Harkin (D-IA) Sen. Tim Johnson (D-SD) and never debated in the Senate.” (You should note that this Act is an excellent example of the type of deregulatory advice advocated by John McCain’s chief economic advisor, former Sen. Phil Gramm.)

So now that we have the milk spilt all over the floor and are spending huge amounts of money to save AIG, we must determine how to keep this from happening again. The bonuses paid out are annoying, unpatriotic and detestable on many levels; but it’s still milk already spilt. Our focus must be on how to keep this from happening again.

Obviously, we must relearn the mantra of the past, “A business too big to fail is too big”! You really have no right to complain about the mess on the carpet if you give an unsupervised child a gallon of milk to drink from the bottle. You give the child a sippee cup and you watch him with it so he doesn’t destroy the carpet. In a similar manner, the government must be given and must use an oversight authority to keep corporations small enough not to create a systemic risk to our overall economy if they fail. That means Congress needs to start writing new regulations immediately.

This re-regulation has always been a campaign promise of President Obama but timing was not on his side. Two months into an administration is barely enough time to learn your way around the White House, to say nothing of fixing decades of de-regulation. Current proposals include increasing the Federal Reserve’s oversight to include commercial banks, security companies and insurance companies (which are generally regulated by the states). Hedge Funds and securities companies will face stricter disclosure requirements.

Recently, President Obama stated: ““

We now know from painful experience that we can no longer sustain 21st-century markets with 20th-century regulations….Strong financial markets require clear rules of the road, not to hinder financial institutions but to protect consumers and investors and, ultimately, to keep those financial institutions strong.”

Let us hope that our political leaders keep focused on the most important aspect of the AIG mess….fixing it so it never happens again!

SIN TAXES AND PROP BETS

"SIN TAXES" are in for legislators this year! In these times of ballooning deficits, lawmakers are looking at legalizing a variety of activities such as pot and Internet gambling for the expressed purpose of taxing the activities to increase revenue. It's an interesting idea. The truth is that these activities are easily found all over the country. Prohibition hasn't seemed to limit the availability of any of the them. Many people are upset that billions of dollars are spent on these items and none of it comes back to the government as tax revenue.

Recently this discussion came up at a poker table I was sitting at. The start of the conversation was not these specific activities but instead the age-old question of: Do taxes hurt business or do they actually help grow the economy?

The Right will tell you that tax increases diminish the desire of Americans to make a profit because it's "all going to the government." ANY new tax on business will hurt the economy in a recession and will probably drive the business into immediate failure!

The Left counters by pointing out that taxes were higher under Clinton and the economy prospered. Raising taxes lets the government build infrastructure and fund education, all of which increase the ability of the country to make money.

It's a hard argument to either prove of disprove. Finally it was suggested that perhaps we should try an experiment. What a poker player calls a "prop" bet. Prop bets are based on a particular proposition. "I'll bet you $5 that I can eat 25 hotdogs in 10 minutes" is an example of a prop bet. If I'm right and I can eat the hotdogs in the time limit, I win $5. If I'm wrong about my proposition, you win $5.

Prop bets could be applied to economic policy. The Right says taxes kill business and also disapprove of activities such as gambling, porn and drugs. Here's a somewhat tounge-in-cheek proposition that would allow Conservative America to put your money where your mouth is. Legalize these three activities as a test case, tax them heavily and if the Conservative Right is correct; the country should see a huge decline in porn traffic, marijuana usage and internet gambling.

Just think, you'll be able to go to church some Sunday morning and exclaim, "The strip club down the street is closing because of the new taxes!" "The McSmitty Brothers have stopped smoking pot because the sales tax is too high!" It could be a whole new world and you will have the added satisfaction of knowing that your ideas on the dangers of taxation were correct.

On the other hand, if (and I know this is a long shot) taxation doesn't hurt business, then we have a LOT of "Sin Tax" revenues coming in at a time we need to raise all the money we can!

We laughed at this (both conservative and liberal players) for the rest of the night. Then today just for grins I thought I would see if I could determine just how much money this could raise. (Asking people to guess the amount might make a great prop bet for the next game.)

The results were rather astounding.

If marijuana were legalized then it is estimated that $7.7 Billion dollars would be saved by eliminating enforcement, incarceration and prosecution of marijuana crimes. If you taxed the drug at the same rate as cigarettes & alcohol (other Sin Tax items) you would raise $6.2 Billion dollars in revenue for a combined total of revenue and savings of $13.9 Billion dollars

Estimates for the revenue from taxing on-line poker sites is $5.2 Billion dollars.

And an 18% tax on the porn industry would raise $2.4 Billion dollars.

So the final terms of this Economic "Prop Bet" between the Conservative Right and the Liberal Left would make it the largest prop bet of all time! Conservatives would be betting the demise of these unappealing industries against projected revenues of $21.5 Billion dollars in taxes to prove the point: Taxation kills business and hurts the economy.

Seems like this would be a win/win for the country. We're not taxing any business that the Right wouldn't like to see killed anyway. And it could save a lot of time in Congress. There's a lot of arguing over whether taxes help or hurt. This "bet" could end the partisan philisophical arguing and let them get on to something more important...like pragmatic governing!

PORK AND THE EYE OF THE BEHOLDER

There has been a lot of talk lately concerning "earmarks" and Congress. "Pork Barrel Spending" is what many Republicans refer to it as! Yet in conversation, most people really aren't very sure of the exact definition of the term "earmark".

For the record, "earmark" refers to money appropriated by a single member of Congress and directed to a specific destination by that member. Often it will benefit a contributor to that politician in some way. For years, the member of Congress did not even have to publicly acknowledge that he/she had requested the money. It was a very secretive process that was very useful in earning good will with high dollar contributors.

That secrecy is what led to our current distaste with the process. Because while the process HAS been abused (frequently by both sides of the political aisle) the truth is that many of those earmarks provide much needed help to state and local governments.

You see "pork" is often in the eye of the beholder. Let's look at a recent example raised by Louisiana Gov. Bobby Jindal. In his response to President Obama's recent speech, he labeled as wasteful, money "earmarked" for volcano monitoring.

"Instead of monitoring volcanoes, what Congress should be monitoring is the eruption of spending in Washington,"

Jindal said. It sounds kind of silly. VOLCANO MONITORING! Sort of a geophysical hall monitor funded by wasteful politicians.

But if you live in any of the states that currently have active volcanoes (Washington, Alaska, Hawaii, California and anyone close to Yellowstone National Park) you might think this extra $140 million dollars is money well spent....no matter how it got in the budget! Some have suggested that if the money to monitor volcanoes is cut that we should cut an equal amount from the National Weather Service's Hurricane Prediction budget.

Gov. Jindal didn't complain about one of the wasteful earmarks mentioned recently by Sen. John McCain. Sen. McCain wants to know why $6.6 million dollars has been appropriated for termite research in New Orleans! During these trying economic times, why spend that much money on studying bugs? Gov. Jindal's silence speaks volumes. You see, there are few termites in Arizona, but it is widely speculated that termites in New Orleans contributed to the failure of the levees. So Gov. Jindal for some odd reason doesn't see this as wasteful. Pork is always in the eye of the beholder.

The real problem with earmarks is not necessarily the money...it's the accountability. In the past, there was no way to track what had been added and who it had been added by. And that's all changed now. Democrats have instituted a rule that requires all appropriation earmarks to be made public. This doesn't mean that there will be no future abuse. It doesn't mean that the process does not still need more modification. But we need to remember that all earmarks are not bad. Getting rid of ALL earmarks is a little like throwing out the baby with the bathwater.