Thursday, February 26, 2009

It's Good to Be Ranking

As I had mentioned when he got the nod, our Representative Scott Garrett is likely to get more opportunities to talk about the financial crisis now that he is Ranking Member of the committee which oversees the capital markets, as well as Fannie Mae and Freddie Mac. Well, as derided as it is at times, there is no more widely read newspaper than USA Today.

Today, they published an Op-Ed from Garrett about his opposition to further bailouts of the banks. Once again, he showcases his sarcastic/snarky side. Who knew?

Here's the Op-Ed:

President Obama's address to Congress on Tuesday night foreshadowed the next development in the Troubled Asset Relief Program (TARP) blockbuster series — TARP II: Bigger and Badder.

Unfortunately, as tends to be the case with most sequels, this one promises to be worse than the original. The lead characters might have been replaced with different actors (Barack Obama is now playing the role of the president, and his dutiful Treasury secretary sidekick is Timothy Geithner, who played a supporting role in the first feature), but the plot and outcome, like most sequels, has the potential to be even worse than the first.

Supporters of further government intervention shout cries of "government responsibility." They claim it's the government's "responsibility" to use as much money as needed to correct the ills of the marketplace.

Well, so far, we've had a government bailout of Bear Stearns, Fannie Mae and Freddie Mac, American International Group, the automakers and banks in general — through TARP. We've also spent about a trillion dollars in various "stimulus" packages over the past year. At the signing of the stimulus package last week, the president hinted that this spending might not be enough, leading to the rise in speculation about stimulus II.

If the first three or four trillion dollars didn't do the trick, what makes us think the next trillion will fix things?

Japan spent an entire decade in the 1990s chasing that level of "enough" spending. The Japanese accumulated a massive level of debt, but it never was quite "enough" to reach the magic level to trigger an immediate economic turnaround. If more money were simply the answer, we'd already be out of this mess.

Additional government intervention does nothing to strengthen our financial markets or encourage private investment. By sending mixed signals to Wall Street, Washington is causing capital to remain on the sidelines. We don't need, nor can we afford, continued ad hoc government interference.

Until investors are clear about the government's intention with regard to future market interference, including ceasing the selection of winners and losers in the market, confidence will not be restored to the financial sector. Government should unleash the potential of private capital by getting out of the way.

Wednesday, February 25, 2009

Garrett Gets $14.7 Million in Earmarks

Today, Representative Scott Garrett did two things: He called on President Obama to cut more spending from the budget, and voted against the $410 billion spending bill with some of Garrett's $14.7 million in earmarks for FY 2009.

Here's Garrett's quote to Jessica Coomes of the Express-Times:
"Let's start it right now," Garrett said about trimming the debt. "...That would've been a great way to add some substance to his remarks last night; unfortunately, he didn't do it."
Practice what you preach. Garrett had initially touted requesting $24.8 million.

It's been shown time and again that earmarks don't make certain taxpayer dollars are being spent most efficiently or that we're even spending on things the agencies want. The whole process raises questions:
  • Why was Hackettstown Community Hospital chosen instead of Valley or Pascack Valley?
  • Other than being born there, why choose out of district Englewood Hospital's bloodless surgery program over Hackensack University Medical Center's, which has a branch in District?
  • Why does Garrett keep getting money for a program the Army ended two years ago? Or is it something pushed by a lobbyist that Garrett agreed to without consulting the Pentagon, again?
  • What about the other $10 million he signed on to? Does the Pentagon actually want what he bought them?
To be fair to Garrett, he wasn't alone in requesting many of these earmarks. In addition, many of the programs sound worthy, which is often a hangup for folks, including myself at times. Garrett also isn't the worst, by far, about earmarking.

All of that said, the bottom line is that we're talking about a systemic problem of allocating money with no accountability for results. As much good as some of these earmarks may do, we can't be assured we got the best bang for our buck.

Monday, February 23, 2009

Garrett Hearts Beer Brewers and Drinkers

Here's a measure I hope Representative Scott Garrett can help get passed, and a tax break I think most of us can get behind. The day before Valentine's day, Garrett joined a number of Representatives in co-sponsoring a bill calling for the Federal Excise tax on beer to be slashed in half (Rep. Bill Pascrell was an original co-sponsor).

This is much more about jobs and fairness than the penny or two per bottle the tax costs us as consumers. Using the most recent numbers I could find, as it stands now, the average micro-brewery in the US is paying an average of about $16,584 in federal excise taxes on their product, in addition to their income taxes and myriad of state, county and local taxes.

Beer is easily one of the most overtaxed consumer products in America.

Having known more than a few people that have worked at breweries, especially the micro variety, they are often times staffed by part-timers passionate about the craft and the product they produce. Kids working their way through college. Parents making a little income on the weekend. This kind of targeted tax break could be a huge boost to these small, passionate, job producing businesses.

Garrett and Pascrell taking up this cause now comes at important time for all of us who like well crafted beer. In a time of economic downturn and increased raw material costs, states like Oregon have gone off the deep end by considering increasing their excise tax 1,900% ($49.61 per barrel from $2.61). Other states like Idaho, Kentucky and New York either have or are thinking about increasing excise taxes even further.

With breweries as close as New York threatening to close due to their state's actions, New Jersey's relatively low excise tax could attract new business. If breweries really do close their doors, it's not hard to imagine their equipment finding it's way to New Jersey. Every time I see an abandoned factory here, I think about a brewery I used to frequent in Michigan that was able to turn an eyesore into a community gathering place.

Granted, we'd have to deal with our regulatory mess that somehow has only fostered 14 breweries in a state with almost 9 million people, but that's another post for another day.

In the meantime, cheers to Garrett for joining Pascrell in this effort.

Thursday, February 19, 2009

Garrett, Earmarks and Donations

Over at the, Thurman Hart has a great story about the impending doom several of our Representatives face in what appears to be a donation for earmarks scandal. Our own Representative Scott Garrett received $500 from the PAC associated with this group. However, there doesn't seem to be an easily traceable link between Garrett and PNA.

That said, there is a fairly easy link that can be established between the $1 million and $1.5 million dollar earmarks I had written about a while back: Both Imperial Machine & Tool, Inc and Dewey Electronics had Capitol Resources Washington Representation LLC listed as their lobbyists in the House.

Readers may remember, Dewey Electronics received Garrett's earmark after the Army had already informed them two years ago that they were ending the program. Garrett had received $4,500 in donations from Dewey's executives over the years. While donations from Capitol over the years come to $500, a lobbyist of record in the Senate for Dewey was SISCORP.

At one time SISCORP had an individual named Robert M. Meissner working for them, who has donated $3,455 in recent years to Garrett listing SISCORP as his employer. However, Robert M. Meissner is only currently listed under Capitol as a lobbyist, a company which he founded. Senate records indicate Capitol set up shop back in 2002.

This just seems incredibly shady, especially since SISCORP's Robert M. Meissner donates from a street address in Fairfax; while Capitol's donates a few dollars here and there (none to Garrett) from a PO Box in Arlington.

Kind of fishy, don't you think?

I'd like to believe Garrett wouldn't work to secure an earmark for $8,500 in donations. I'd also like to believe that Meissner isn't intentionally trying to skirt FEC, House and Senate regulations. There could actually be an easy explanation for it.

Unfortunately, because the entire process is so tainted at this point the questions alone need to be raised in the interest of good government.

Congress needs to accept responsibility for us even having to wonder. Back in November, as part of the election, people demanded more transparency. Obviously, we're starting down that road, because a couple of years ago this post would have taken me two months instead of a couple of hours. However, we have a long way to go.

Wednesday, February 18, 2009

Garrett Still Doesn't Get Housing Crisis

With President Obama announcing his latest plan to stop foreclosures, by allowing certain people to refinance their mortgages through Fannie Mae and Freddie Mac, it makes sense Representative Scott Garrett would find himself in the news. Seeing as he's the Ranking Member of the subcommittee that oversees Fannie and Freddie, it makes perfect sense. Here's Garrett's quote on the plan from CQ Politics:
“I think that this plan will only delay inevitable future waves of the foreclosure crisis, rather than stem the tide,” said New Jersey Republican Rep. Scott Garrett , a member of Frank’s panel. “It provides no incentives or rewards to those homeowners who have been diligently making their mortgage payments, or to those who recognized their financial constraints and chose to rent a home rather than buy one.”
CQ should have given him the proper title, but that aside, it gives another example of why Garrett simply does not get a major factor in the housing crisis. I've never understood why the Republican party has taken the stance the housing crisis was caused solely by people who failed to recognize "their financial constraints".

The bottom line is that the numbers so many mortgage brokers showed people did work, at first, but that they didn't have to worry about when they wouldn't because they'd be able to refinance before then.

I know, because I was at one point trained to do this as a loan originator. It's one of the things I'm absolutely the proudest about being a complete and utter failure at; I never closed a loan and actually talked people out of refinancing. However, lots of people found this was an easy way to make money, and I suppose I could have, too, if I didn't have a conscience.

60 minutes had an amazing piece on the system and the bank that ultimately brought down Wachovia: World Global.

Watch CBS Videos Online

While I doubt Garrett will actually watch it or believe it, it's how it worked. It concerns me greatly that to this date I have yet to see a substantial press clipping or speech acknowledging the systemic practice of getting people into these loans. Garrett sits at the crossroads of our economic recovery, yet seems unwilling to look at where we really were in order to prevent us from ever traveling that path again.

Monday, February 16, 2009

Garrett Gets His Susan Powter On

Maybe I'm dating myself slightly, citing the slightly scary woman screaming at us to "Stop the Insanity", but that's the first thing that came to mind when reading the opening of the latest Op-Ed by Representative Scott Garrett published by the Record.
AN APHORISM most often attributed to Albert Einstein goes: "The definition of insanity is continuing to do the same thing over and over again, and then expecting different results." By this definition, then, the "stimulus" package approved by the House Friday (and which also seemed headed toward Senate approval late Friday) is fiscal insanity.

It's amazing how the arguments of the minority party mirror each other in such a bi-partisan manner. Democrats were saying the same things about Iraq and all of the budgets Garrett voted for over the years. Let's not dwell on that, shall we, because Garrett's own words in essence shoot down the entire Op-Ed a bit further down.
Among economists who study fiscal policy closely, the evidence is conclusive: Massive increases in deficit spending during a recession do not stop a recession and can, in fact, be very harmful to a nation's finances in the long run.

The odd thing about this is that Garrett goes on to cite the tax cuts passed around the 1981 and 2003 recessions as what should be given credit for pulling us out of those recessions. This is a bit misleading.

The tax cuts Reagan passed in 1981 led to our national debt exploding 186% by the time he left office. The interesting thing is that the Bush tax cuts "only" led to 48% explosion in the national debt. If you went to the Midwest, you'd find plenty of people that would say we've never recovered from 2003.

The bottom line is that both parties are addicted to deficit spending, they just have different names for it. Garrett and his gang want you to believe you're getting something for nothing, while your grandchildren will be asking you what they're paying for. Meanwhile, the Democrats are telling you what you're getting, and hoping you'll explain it to your grandchildren for them.

For another take on Garrett's piece, check out clammyc's post over on Blue Jersey.

Wednesday, February 11, 2009

Gitmo Nimby

Update: clammyc over at Blue Jersey has the whole letter, and a rather interesting/funny take on things.

With the Senate getting all the press the last couple of days, Representative Scott Garrett and the Republican delegation decided to put together a letter to President Obama. Their cause, no Gitmo detainees transferred to New Jersey. From the Courier Post:
The letter also chides Obama for not spelling out what he would do with the prisoners at the U.S. naval base at Guantanamo Bay, Cuba, when the holding facility in the base is closed in a year as per a Jan. 22 executive order from Obama.

"We are concerned this could result in the detainment of the terrorists at facilities within the United States. As such, we request you not send any of the Guantanamo Bay detainees to the State of New Jersey," the congressmen wrote, citing legal and security problems associated with such a move and the "understaffed and under-funded" federal prison system in the state.
What's conveniently left out of the press stories (the Express Times picked this up as well), and one has to assume the letter, is that New Jersey doesn't have a maximum security facility in the state.

It's unlikely, should they come, that these guys would be transferred into a rinky dink holding facility while they await trial. And should they be convicted, they'd be shipped to a special little corner of Colorado called the ADX, which was featured on 60 Minutes.

Other than to get a couple press stories (check) and a blog post or two (check), I can't really understand the point of what definitely seems to be a partisan letter writing campaign. Granted, we can't say for certain they won't end up here, along with the jobs needed to upgrade facilities to house them, but the Republican delegation has got to have better things they can spend their time on.

Tuesday, February 10, 2009

Retire Garrett Hosting an Event

The folks over at the new Retire Garrett site are hosting a Town Hall meeting to kick off their campaign against Representative Scott Garrett.
The purpose of the Take Back the 5th Town Hall is to raise awareness of Congressman Scott Garrett’s horrendous voting record, find someone to challenge Garrett in the 2010 election, and start preparing for the 2010 election campaign. The town hall will feature speeches by 5th District public officials, a discussion on campaign strategies for the 2010 election, and an interactive debate on politics, government, and society.
The event is being held March 1st. I'll be in DC for a conference, but will post any news that comes out of the event. Those interested in attending can get details from the site.

Wednesday, February 4, 2009

Garrett vs. SEC & Madoff

It didn't take long for the appointment of Representative Scott Garrett as Ranking Member of the committee overseeing the capital markets to pay dividends in terms of exposure and the chance to speak. Garrett's committee held a hearing today looking into the SEC's failure with regard to the Bernard Madoff scandal.

In Garrett's opinion, Madoff was able to do what he did due to a lack of communication and execution by the SEC. From his opening statement (posted in its entirety below):
There is discussion of "gaps" in our current regulatory scheme that need to be filled to prevent cases like this from happening in the future. I don’t believe that is the case. Each and every one of Mr. Madoff’s relevant businesses fell under the jurisdiction of one or more financial regulators. Given what we currently know about this situation, I do not believe there was a regulatory gap that needs filled with more, often excessive regulation. Rather we should be focused on ensuring that current regulations are being met and that proper oversight is occurring.
Garrett's opening statement, and subsequent comments as reported by the New York Times and Wall Street Journal, were restrained compared to others. Rep. Gary Ackerman had the quote of the day, as reported by Herb Jackson:
"Your value to the American people is worthless," Rep. Gary L. Ackerman, D-N.Y., told a panel of SEC department heads who said they could not explain what happened because of the ongoing investigation. "We thought the enemy was Mr. Madoff. I think it's you."
It's unbelievable that Madoff could get away with this, and it seems, the SEC did nothing for so long. For comparative purposes, direct costs and insurance claims for 9/11 were between $57 and $85 billion. Madoff's scam is estimated at $50 billion now, with Markopolos promising there are more funds yet to come forward.

When Madoff goes down, it should be interesting to see how he's prosecuted and what he gets. The idea that one man's greed could do as much damage to the economy as the hijackers leads me to believe he should be treated the same; and those at the SEC who sat on information should be charged as accomplices.

Here's Garrett's statement:

“Thank you, Chairman Kanjorski, for holding this important hearing today. I am excited about the opportunity to work more closely with you to ensure the long-term viability of our capital markets. I also want to thank all of the witnesses for their testimony.

“There is discussion of "gaps" in our current regulatory scheme that need to be filled to prevent cases like this from happening in the future. I don’t believe that is the case. Each and every one of Mr. Madoff’s relevant businesses fell under the jurisdiction of one or more financial regulators. Given what we currently know about this situation, I do not believe there was a regulatory gap that needs filled with more, often excessive regulation. Rather we should be focused on ensuring that current regulations are being met and that proper oversight is occurring.

“It appears the failure came from a lack of coordination or basic information sharing between agencies, specifically the different divisions within the SEC as well as FINRA.

“The failures at the SEC that allowed Madoff to continue to operate his Ponzi scheme for many years did not come from a lack of agency funding or authority but in performing and executing the responsibilities under the powers it had.

“We cannot end all fraud nor guarantee these changes would have prevented it. However, under appropriate due diligence, at least in this case, it appears that the improprieties would have been discovered earlier. But for the fact that Mr. Madoff came out and confessed, this scam would still be going on as far as we know.”