February 9th, 2010
Open Source & Copyright Free
Debt Held by the Public
It’s hard to see the red stop light when one is wearing rose-colored glasses.
Federal Construction Bids for Me but Not For Thee
One year ago, Obama signed an executive order that changed how federal construction projects would be handled for a long time.
Slapshot: Little Robby the Weatherboy
Robert Kennedy Jr. just doesn’t get it.
Appointment Watch from ALG Research
This week ALG Research looks at the Assistant Attorney General for the Tax Division.
Too Hot Not To Note: Africagate: top British scientist says UN panel is losing credibility
Jonathan Leake, Environmental Editor at the Times Online, reports on the current climate scandal on African reporting by the UN.
Debt Held by the Public
By Robert Romano
Last week, Moody’s issued a very public warning against the profligate spending of the federal government just a day after the Obama Administration released its ten-year budget plan that will add some $10.634 trillion to the national debt by 2020. According to the warning, “If the current upward trend in government debt were to continue and become irreversible, the [nation’s Triple-A debt] rating could come under downward pressure.”
When asked about the prospect of the U.S. losing its Triple-A rating, Treasury Secretary Timothy Geithner, speaking on ABC News’ “This Week” said, “Absolutely not... That will never happen to this country.” Never?
Clearly uncomforted by Secretary Geithner’s dismissal of the problem, the Washington Examiner’s Mark Tapscott compared Geithner to the last emperor of Rome swearing up and down that Rome would never fall. The comparison is fitting. After all, the U.S. is not immune to the laws of gravity. This nation can be bankrupted, it can fail, and it is foolish to proclaim that it cannot.
Never say never, Mr. Secretary.
This year alone, the White House’s Office of Management and Budget (OMB) projects that Congress will add some $1.556 trillion to the national debt, which today totals $12.4 trillion. By the end of Fiscal Year 2011, the national debt will probably surpass 100 percent of the Gross Domestic Product, reaching an all-time high of $15.144 trillion.
In its primer on the national debt, “A Double-A USA?”, the Wall Street Journal argues that the U.S. must bring down drastically the ratio of “debt held by the public” to Gross Domestic Product. It also suggests that the “U.S. isn’t in imminent danger of losing its Aaa rating, and it won’t do so even in the medium or long term if our political class responds in the right way.”
But what of the debt-to-GDP problem? Particularly, it argued in favor of utilizing the “debt held by the public” figure, currently at about $8 trillion, as opposed to the total national debt, which is $12.383 trillion, when discussing the dangers of sovereign default. Why?
Because more than $4 trillion that has in essence been pillaged from the Social Security Trust Fund and other government accounts represent “promises that politicians have made to taxpayers and can repudiate.” Therefore, that figure should not be utilized when publicly comparing the national debt to the economy’s ability to pay it back.
Only, it hasn’t been repudiated. Nor is it politically likely that it will be repudiated any time before the actual national debt surpasses 100 percent of the GDP. Indeed, Barack Obama promises to borrow an additional $2.873 trillion from Social Security and other government accounts through 2020 to finance government spending.
At the end of Fiscal Year 2009, which ended on September 30th, the “debt held by government accounts” stood at $4.331 trillion. It’s been called “money owed to ourselves.” In essence this is money owed to the American people. Money that was taxed on the promise to be paid back in retirement benefits, but was instead raided and now, having been spent, may forever be lost.
But, it is still real money. The total national debt still represents nearly $12.4 trillion more spent than was taken in via revenue. Congress really spent that money.
The government will keep “debt held by government accounts” on the books, even if it has no intention of ever paying it back, if for no other reason than to keep those books sound and to leverage it to finance the budget. Even if by doing so, it is merely engaging in a funny con-game; accounting gimmickry that would make Bernie Madoff blush.
That is, if there is even any money left to raid. Consider this, as reported by USA Today, “Social Security's annual surplus nearly evaporated in 2009 for the first time in 25 years as the recession led hundreds of thousands of workers to retire or claim disability… The impact of the recession is likely to hit the giant retirement system even harder this year and next. The Congressional Budget Office had projected it would operate in the red in 2010 and 2011, but a deeper economic slump could make those losses larger than anticipated.”
If the U.S. were going to repudiate the Social Security IOU’s, now would be the time. These losses to Social Security are coming harder — and sooner — than previously expected. And millions of Baby Boomers are retiring or are about to retire.
Or else, it would be high time to immediately present a plan that balances the budget and pays down the national debt. Before it is too late and the nation’s credit rating really is downgraded.
The Obama Administration, for its part, assumes substantial growth over the next ten years, an average of 4.97 percent every single year. According to the White House, with its rosy glasses, the total national debt will not surpass 100 percent of the GDP until 2013, and the “debt held by the public” will never surpass it.
The assumptions are absurd. The government assumes an almost 1:1 ratio between deficit-spending and economic growth: $10.634 trillion in new debt will equal $9.555 trillion in economic growth through 2020. That assumes that all of the money will be invested and, further, that over 90 percent of it will be invested profitably such that it will generously grow the economy.
Only, that money is not being invested, nor will it become profitable, because it will increasingly be spent on the collapsing entitlement system. So-called “mandatory” spending will increase from the current annual $2.123 trillion for 2010 to over $3.384 trillion for 2020.
The Journal puts the lie the OMB’s rosy scenario: “These White House estimates are surely understated if current U.S. policies continue. The Obama budget assumes its tax increases won't affect investor behavior or reduce growth. Passing ObamaCare would send the debt ratio even higher, probably past 100% within a few years as spending soared and the illusionary cost savings failed to appear.”
To make matters worse, net interest owed on the national debt will grow from the annual $188 billion in 2010 to over $840 billion in 2020. And, that’s a conservative estimate, assuming that the nation manages to keep its Triple-A debt rating between now and then, and that interest rates on that debt do not radically jump as result.
Apparently, it’s hard to see the red stop light when one is wearing rose-colored glasses.
Robert Romano is the ALG Senior News Editor.
http://blog.getliberty.org/default.asp?Display=2012
Federal Construction Bids for Me but Not For Thee
One year ago this past Saturday President Obama signed an executive order that reshapes the bidding process for federal construction projects in a manner that is heavily weighted in favor of unionized companies.
This was done as a sop to labor bosses who have thus far failed to win passage of The Employee Free Choice Act (EFCA), despite large Democratic majorities in both congressional chambers. Free market groups have vigorously opposed the card check and binding arbitration components of the bill, which they argue would further burden business in a challenging economic climate.
The executive order signed on Feb. 6, 2009 calls for project labor agreements (PLAs) to be used when the cost to the federal government exceeds $25 million. PLA’s are set up as multi-employer, multi-union, pre-existing agreements designed to harmonize labor relations between construction trade unions and contractors.
Nationwide about 16 percent of the nation’s private construction workforce is unionized. This means PLAs could be used to discriminate against the more than eight of out of 10 construction workers who are not part of a union, as some critics have observed.
In his analysis of the order, Maurice Baskin, the legal counsel for Associated Builders and Contractors (ABC), wrote:
“The Order will result in widespread discrimination against the many construction workers who do not belong to unions, and denies their right to Freedom of Association and Equal Protection. The Order will cause money to be unfairly taken from such workers and funneled into under-funded union pension plans, from which the workers can receive no benefits. The Order will increase costs to the federal taxpayers by arbitrarily limiting competition for federal construction work.”
But PLAs would actually open the way to greater efficiency and diffuse labor disputes, President Obama maintains in his order.
“The use of a project labor agreement may prevent these problems from developing by providing structure and stability to large-scale construction projects, thereby promoting the efficient and expeditious completion of federal construction contracts, the order says. “Accordingly, it is the policy of the federal government to encourage executive agencies to consider requiring the use of project labor agreements in connection with large-scale construction projects in order to promote economy and efficiency in federal procurement.”
As the U.S. Senate prepares to vote on the nomination of a labor nominee who favors administrative action over congressional approval, it is worth examining how the president has oriented himself in light of legislative setbacks.
Craig Becker, a general counsel to the Service Employees International Union (SEIU) and the AFL-CIO could possibly be confirmed as soon as Monday. In his academic writings, he has argued in favor of securing major policy changes through non-legislative means.
The year-old PLA order, which has received very little press attention, demonstrates that the administration is working to advance paybacks to union bosses in much the same spirit that Becker has suggested.
Obama’s maneuvering comes at a disconcerting moment for organized labor. For first time in American history, most union members now work for the government, according to the Bureau of Labor Statistics (BLS). As it is, only about 8 percent of private sector employees are members of unions.
PLA opponents suspect that construction unions are now pushing for these agreements as a way to reinvigorate their depleted ranks and to bolster their underfunded pension plans. ABC officials have a detailed explanation of the likely motivations.
But the final word on PLAs could be delayed until after the mid-term elections. Obama and his congressional allies have run into unexpected opposition as the final rule on implementation of the EO has yet to be written. The Department of Labor (DOL) was forced to pull back on a PLA in New Hampshire last year when North Branch Construction, a Concord, N.H.-based general contractor and ABC member, filed a bid protest claiming the PLA restricted competition.
“This was the first time a PLA done under the new executive order and they [the administration] made several mistakes here,” said Brett McMahon vice-president of Miller and Long, a Maryland-based concrete construction company.
“They declared in the procurement document that you had to have done three PLA projects in order to qualify, which makes no sense because that says nothing about your capabilities as builder and it says that in practice union companies could bid.”
Moreover, the General Services Administration (GSA) did not have any clear guidelines with regard to PLAs, since the Federal Acquisition Regulation (FAR) agency has not issued any final rulings, he continued.
“So they basically jumped the gun before any final ruling came out and DOL decided to cancel the project instead of setting a bad precedent,” said McMahon, who is also an ABC member.
But PLAs remain in motion in at least three sites in Washington D.C. and in other states. A complete list can be found here.
If Obama succeeds in pushing through PLAs, they will come at the expense of American taxpayers and the larger workforce, according to a new study from the Beacon Hill Institute (BHI) shows that PLAs would increase construction costs anywhere between 12 and 18 percent in comparison to projects that are not subjected to union rules.
Other pro-union executive orders remain in force including one that rescinds requirements for workers to be informed of their right not to pay a portion of union dues to political activity they do not support.
Suddenly, the left seems keen on the idea executive power activity unfettered by popular consent.
http://blog.getliberty.org/default.asp?Display=2011
Little Robby the Weatherboy
By Carter Clews
Suppose you were trudging through (or, worse yet, shoveling out of) two-to-three feet of a record-setting snowfall (for the second time in ten weeks), and some idiot told you that it never snowed anymore in your neck of the woods – and worse yet, he knew the real reason: global warming.
Well, if you live in the Washington, D.C., area, you’re the guy (or gal) knee-deep in white stuff. And that idiot is Robert F. Kennedy, Jr. That’s right, the snot-nose, spoiled-brat little know-it-all spawn of Bobby and Ethel who spent his childhood cascading down the snow-covered slopes of Hickory Hill -- so the nanny or butler could pull his sleigh back up the snow-covered crest, with him perched imperiously upon it, no doubt.
Here’s Little Bobby’s own account, written just 15 months ago, of his much-lamented marsh mellow world of yesteryear. I’ve bold-faced my favorite paragraph to make sure you don’t miss the trust-fund bantling’s afflatus (or, would that be effluvia?) as to what caused an end to his idyllic winter wonderland:
“In Virginia, the weather also has changed dramatically. Recently arrived residents in the northern suburbs, accustomed to today's anemic winters, might find it astonishing to learn that there were once ski runs on Ballantrae Hill in McLean, with a rope tow and local ski club. Snow is so scarce today that most Virginia children probably don't own a sled. But neighbors came to our home at Hickory Hill nearly every winter weekend to ride saucers and Flexible Flyers.
“In those days, I recall my uncle, President Kennedy, standing erect as he rode a toboggan in his top coat, never faltering until he slid into the boxwood at the bottom of the hill. Once, my father, Atty. Gen. Robert Kennedy, brought a delegation of visiting Eskimos home from the Justice Department for lunch at our house. They spent the afternoon building a great igloo in the deep snow in our backyard. My brothers and sisters played in the structure for several weeks before it began to melt. On weekend afternoons, we commonly joined hundreds of Georgetown residents for ice skating on Washington's C&O Canal, which these days rarely freezes enough to safely skate.
“Meanwhile, Exxon Mobil and its carbon cronies continue to pour money into think tanks whose purpose is to deceive the American public into believing that global warming is a fantasy.”
Now, I’ll let you pause a second to contemplate Little Robby’s revelry – including the highly unlikely imagery of Uncle President “standing erect” as he rode a toboggan (which can reach speeds of 15 to 20 miles per hour on an average slope) whilst “never faltering.” Really, Robby, not even an occasional shift of weight or bended knee? Sounds like brother David wasn’t the only member of the RFK clan snorting the white stuff.
But, let’s get back to the bottom line. Just think, were it not for those big nasty meanies at Exxon Mobil – and their “carbon cronies” (a catchy alliteration no doubt supplied by one of Little Robby’s highly paid ghost writers) – there would still be snow at Hickory Hill, Ballantrae Hill, and all of the other in-crowd hot spots where Little Robby, Uncle President, Daddy Attorney General, and the inevitable Eskimos used to frolic in the fresh-fallen cover. (All of this while we gloveless waifs watched in envy, longing for the days when global warming would prevent us from freezing our keisters off.)
Let’s face it: Robert Kennedy is an idiot. When he is not cutting backroom deals with El Dictador Supremo Hugo Chavez to make millions on phony oil-for-the-oiless scams, he is flying around the world in his private jet to admonish us all for wasting energy. But, wherever he is, you can be sure there is one place he isn’t: out in the parking lot with you shoveling out from under two-to-three feet of snow he assures us all doesn’t really exist. Punk.
Carter Clews is the Executive Editor of ALG News.
http://blog.getliberty.org/default.asp?Display=2010
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Appointment Watch: Smith
The mainstream media continue to ignore President Obama’s appointment of bizarre personnel to run the government. Personnel is policy. That being the case the American people need to know about these appointments. This week we look another Obama appointee. This is not an isolated incident or an occasional bad apple. This appointment is representative of the appointments he is making with little or no push back from the Senate during the confirmation process.
Mary L. Smith, Assistant Attorney General for the Tax Division, U.S. Department of Justice
- Smith doesn’t have relevant tax law experience.
- Smith hasn’t worked on any cases either with or before the Internal Revenue Service.
- Smith hasn’t even taken one continuing legal education classes on tax law issues.
- Smith’s nomination is pending before the full Senate.
This is just a sample of the type of people President Obama is placing in positions of power within his Administration. If you want more information please visit: http://www.getliberty.org/content.asp?pl=187&contentid=187.
Next week we will examine one more. Those who are interested in exclusive information before it reaches the public, please contact Don@getliberty.org.
http://blog.getliberty.org/default.asp?Display=2009
ALG Editor’s Note: In the following featured article from Times Online, Jonathan Leake reports on the current scandal inside the United Nations’ climate panel on Africa reporting.
Africagate: top British scientist says UN panel is losing credibility
Jonathan Leake, Environment Editor
A LEADING British government scientist has warned the United Nations’ climate panel to tackle its blunders or lose all credibility.
Robert Watson, chief scientist at Defra, the environment ministry, who chaired the Intergovernmental Panel on Climate Change (IPCC) from 1997 to 2002, was speaking after more potential inaccuracies emerged in the IPCC’s 2007 benchmark report on global warming.
The most important is a claim that global warming could cut rain-fed north African crop production by up to 50% by 2020, a remarkably short time for such a dramatic change. The claim has been quoted in speeches by Rajendra Pachauri, the IPCC chairman, and by Ban Ki-moon, the UN secretary-general.
This weekend Professor Chris Field, the new lead author of the IPCC’s climate impacts team, told The Sunday Times that he could find nothing in the report to support the claim. The revelation follows the IPCC’s retraction of a claim that the Himalayan glaciers might all melt by 2035, dubbed 'Glaciergate' by commentators.
The African claims could be even more embarrassing for the IPCC because they appear not only in its report on climate change impacts but, unlike the glaciers claim, are also repeated in its Synthesis Report.
This report is the IPCC’s most politically sensitive publication, distilling its most important science into a form accessible to politicians and policy makers. Its lead authors include Pachauri himself.
In it he wrote: “By 2020, in some countries, yields from rain-fed agriculture could be reduced by up to 50%. Agricultural production, including access to food, in many African countries is projected to be severely compromised.” The same claims have since been cited in speeches to world leaders by Pachauri and Ban.
Speaking at the 2008 global climate talks in Poznan, Poland, Pachauri said: “In some countries of Africa, yields from rain-fed agriculture could be reduced by 50% by 2020.” In a speech last July, Ban said: “Yields from rain-fed agriculture could fall by half in some African countries over the next 10 years.”
Speaking this weekend, Field said: “I was not an author on the Synthesis Report but on reading it I cannot find support for the statement about African crop yield declines.”
Watson said such claims should be based on hard evidence. “Any such projection should be based on peer-reviewed literature from computer modelling of how agricultural yields would respond to climate change. I can see no such data supporting the IPCC report,” he said.
The claims in the Synthesis Report go back to the IPCC’s report on the global impacts of climate change. It warns that all Africa faces a long-term threat from farmland turning to desert and then says of north Africa, “additional risks that could be exacerbated by climate change include greater erosion, deficiencies in yields from rain-fed agriculture of up to 50% during the 2000-20 period, and reductions in crop growth period (Agoumi, 2003)”.
“Agoumi” refers to a 2003 policy paper written for the International Institute for Sustainable Development, a Canadian think tank. The paper was not peer-reviewed.
Its author was Professor Ali Agoumi, a Moroccan climate expert who looked at the potential impacts of climate change on Tunisia, Morocco and Algeria. His report refers to the risk of “deficient yields from rain-based agriculture of up to 50% during the 2000–20 period”.
These claims refer to other reports prepared by civil servants in each of the three countries as submissions to the UN. These do not appear to have been peer-reviewed either.
The IPCC is also facing criticism over its reports on how sea level rise might affect Holland. Dutch ministers have demanded that it correct a claim that more than half of the Netherlands lies below sea level when, in reality, it is about a quarter.
The errors seem likely to bring about change at the IPCC. Field said: “The IPCC needs to investigate a more sophisticated approach for dealing with emerging errors.”
