Why Deficits Matter

The news today about Social Security should remind all of us why deficits matter. From the AP:

The retirement nest egg of an entire generation is stashed away in this small town along the Ohio River: $2.5 trillion in IOUs from the federal government, payable to the Social Security Administration.

It's time to start cashing them in.

For more than two decades, Social Security collected more money in payroll taxes than it paid out in benefits — billions more each year.

[snip]

For more than two decades, regardless of which political party was in power, Congress has been accused of raiding the Social Security trust funds to pay for other programs, masking the size of the budget deficit.

This is part of the reason I'm so frustrated with the Republican Party. Yes the Republicans. When the calendar flipped to January 2001, they supplanted the PAYGO Republicans of the '90's with the "Deficits Don't Matter" Republicans of the 2000's, many of whom are still there.

Repeatedly voting for deficit spending, the news on Social Security is a reminder that each one of the caucus who held office in the 2000's should be removed. Representatives like our own Scott Garrett voted to add $1.8 trillion to the on-budget deficit himself. That was in just four years, and doesn't include Iraq or Afghanistan.

Now out of power, the Republicans on the Hill have taken a "Born Again" deficit-hawk stance in the press that's about as flimsy as wet newspaper. Garrett and others still assail PAYGO budgeting, preferring to borrow instead of plugging tax loopholes. They also completely ignore, and even defend, the harmful financial consequences of programs like Medicare Advantage.

While it's nice that Garrett and the Republicans feel an election year is a good time not to pursue earmarks, most of these Representatives were the biggest pigs at the trough for the better part of a decade. One can't forget Garrett acquired earmarks for a program after the Army had ended the program and the recipient announced the end to their stockholders.

I'm sure the Republicans will grab this report and run with it in their fiscally irrational stance against health insurance reform. If they really cared about deficits, they'd look at the billions in deficit reduction as a good thing.

But what are facts but a nusance to the practitioners of partisan politics? Voters need to be reminded of this, constantly, heading into the fall.

Republicans' Publicity Stunt

Well, today Republicans launched their latest publicity stunt. Today's "We're Fiscal Conservatives, we promise" moment: Republicans placed a self-imposed ban on earmarks. From the AP:

The move is an election-year appeal to voters frustrated with Washington's free-spending ways. But it is a one-year pause, not a permanent ban.

I've written many times about how much I dislike earmarks, however this is nothing more than a publicity stunt. They ban them for a year, possibly get the House back, and then have folks like our Representative Scott Garrett go right back to sending money to programs people don't want.

This politically motivated "moratorium" has been brought about from the same Republicans that vote against PAYGO on a regular basis. This is the fundamental problem Republicans have had for the last decade, they govern by soundbite instead of sound policy.

While one can only hope voters recognize this as the stunt it is, the only meaningful way to ban earmarks is to legislatively eliminate them. If the Democrats had any gumption, they would get an up or down vote on a five to ten year moratorium and see what happens.

Garrett vs. Lowering the Deficit

What is the one plan that successfully lowered the federal deficit?

PAYGO.

What does our Representative Scott Garrett consistently vote against?

PAYGO.

I've written about this before, especially lamenting what happened to the Republican Party.

As the Tea Party people start their convention, if they really are mad as hell about the size of deficits, they need look no further than Garrett and his fellow Republicans that served from 2002-Present (including Dick Armey). They were the ones to abandon PAYGO, allowing the deficit to grow, and they are the ones who keep voting against it.

While Garrett has previously said PAYGO only justifies increasing taxes, history tells another tale. When instituted by REPUBLICANS, it took a few years, but in the late 1990's we actually started running surpluses and paying down our debt. Garrett's brand of Republicans decided in 2002 this wasn't a good idea.

Here's how Alan Greenspan explained it:

However, the brief emergence of surpluses in the late 1990s eroded the will to adhere to these rules, which were aimed specifically at promoting deficit reduction rather than at the broader goal of setting out a commonly agreed-upon standard for determining whether the nation was living within its fiscal means. Many of the provisions that helped restrain budgetary decision making in the 1990s--in particular, the limits on discretionary spending and the PAYGO requirements--were violated ever more frequently; finally, in 2002, they were allowed to expire.

Reinstating a structure like the one provided by the Budget Enforcement Act would signal a renewed commitment to fiscal restraint and help restore discipline to the annual budgeting process. Such a step would be even more meaningful if it were coupled with the adoption of a set of provisions for dealing with unanticipated budgetary outcomes over time.

As I've noted before, it was Garrett's freshman year in Congress that he went along with the Republicans and their "Deficits Don't Matter" mentality.

Now, Garrett and the others are trying to tap into the populist outrage against government debt, while continuing to vote against the only thing that really works to reduce the deficit. It is the height of hypocritical political opportunism, and if these Tea Party people actually care about facts, they need to call out all 179 Republicans that voted against PAYGO.

Unfortunately, I doubt that will ever happen, because the Tea Party's "esteemed" leader was the one running the show when PAYGO was canned to begin with. I don't doubt these Tea Party people really are outraged, what I doubt is that their leadership's intentions are more than simply lining their own pockets, like Ralph Reed opposing Indian casinos.

Garrett Fails Purity Test

The announcement of the Republican Purity Test is further proof of how far from an inclusive party the Republicans have gone, and how far the authoritarians written about by John Dean have come. Instead of allowing people to choose their own Representatives, the powerful few want to dictate to the masses from their pirch in Washinton.

How'd that work out for you kids up in NY 23?

If this goes through, gone will be the future Tom Keans. Gone will be the Marge Roukemas and Leonard Lances and Frank LoBiondos. Gone will be the Teddy Roosevelts and the Abraham Lincolns.

Depending on how seriously they took this rule, gone would be Representative Scott Garrett.

While I doubt Garrett would fall from favor with this crowd, let's look at the pledge line by line to see where he gets tripped up, through a strict constructionist view (8 of 10 to pass):

(1) We support smaller government, smaller national debt, lower deficits and lower taxes by opposing bills like Obama’s “stimulus” bill;

Garrett, and every other Republican that voted for a Bush Budget fails on multiple fronts on this one. They exploded the deficit and the national debt. Many also voted against PAYGO, which would make new spending deficit neutral, and in many cases voted against tax cuts for actual small business owners (the non-publicly traded type).

Epic fail.

(2) We support market-based health care reform and oppose Obama-style government run health care;
(3) We support market-based energy reforms by opposing cap and trade legislation;
(4) We support workers’ right to secret ballot by opposing card check;
(5) We support legal immigration and assimilation into American society by opposing amnesty for illegal immigrants;

Garrett's been clear on all of these, so that's a pass.

(6) We support victory in Iraq and Afghanistan by supporting military-recommended troop surges;

This one is a mixed bag. They supported going to war with less than what the military wanted, but voted for the surge. I suppose, they could say, they'll only listen to the military after the civilians like Rumsfeld mess things up. I suppose Garrett passes.

(7) We support containment of Iran and North Korea, particularly effective action to eliminate their nuclear weapons threat;

In order to contain Iran and North Korea effectively, we need to engage them as Reagan engaged the Soviet Union. While the Republicans interpreting this little test probably won't see it this way, Garrett and many others have been on record against engagement, and therefore should fail this one.

That's two fails.

(8) We support retention of the Defense of Marriage Act;

Republicans used to stand for all men and women being treated equal, however that's no longer the case. Special interest fundraising based discrimination has turned into party dogma. Garrett's on board with this.

(9) We support protecting the lives of vulnerable persons by opposing health care rationing and denial of health care and government funding of abortion; and

By arguing the status quo, as they do in point 2, Garrett and the rest of those that would profess these ideals are actively supporting corporate America dictating who gets what care. On top of that, they also fail point one yet again with point two, because it protects taxpayer rip off programs like Medicare Advantage.

The third fail.

(10) We support the right to keep and bear arms by opposing government restrictions on gun ownership.

Really? With a blanket statement like that Republicans seem to want to arm every convicted violent criminal on parole? Wow. Since I don't know if Garrett would back that, we'll leave this one as an uncertain.

As I said, those who would dictate from the top what the party means instead of leaving it to their members, are unlikely to boot Garrett. That said, it's also important to look at this pledge with what it's missing:

• No commitment to a balanced budget;
• No commitment to eliminating waste;
• No commitment to veterans;
• No commitment to innovation;
• No commitment to education;
• No commitment to the environment;
• No commitment to a brighter future, only opposition.

This little Purity Test simply reinforces the image of Republicans as the party of No.

It also is a dangerous development. More on this topic to come soon...

Garrett Talks Health Care

Representative Scott Garrett chats with Fox 5 about his vote against the health care bill. Garrett talks almost exclusively about Medicare Advantage as his reason, which as I've written before can currently charge taxpayers up to a 40% mark up on services.

It's good to see Garrett using the full term, as opposed to earlier, but I still can't understand how someone who claims he is a fiscal conservative can defend taxpayers paying up to 40% more than something actually costs for anything.

Although the House bill is dead in the Senate, taking the 40% mark up will be out no matter what bill comes back to the House for reconciliation.

While Garrett claims the program will be taken from those enrolled, nothing in the bill eliminates the program. What it eliminates is the 40% mark up. Now should insurance companies only participate due to their ability to gouge taxpayers, one could see them cease to offer the program, as the Chief Actuary for Medicare and Medicaid noted.

That aside, Garrett's interview is interesting in that it shows his true feeling on the Bill and overhaul in general.

Garrett's $339 Billion Distortion

It's been a while since we've needed a piece like this, but as the Health Insurance debate heats up, one had to guess at some point Representative Scott Garrett was going to start spinning like a top again.

At issue is a floor speech made yesterday, that will also likely be included in this week's Garrett Gazette to mislead constituents. The focus of the speech is a report by HHS Chief Actuary Richard Foster. It has become a rallying cry to those opposed to the health insurance overhaul.

Might as well get into the speech:

According to that chief actuary whom I just mentioned, total spending on health care would actually increase by $750 billion more than if we did nothing at all.

This is the second to last true statement in the speech, an average of $75 billion a year for 10 years.

From Garrett:

You see, the real overall cost of this bill would be $1.2 trillion.

From the Actuary:

We estimate that Federal expenditures would increase by a net total of $861 billion.

That's the $339 billion distortion. Not only is Garrett's gross cost more than $100 billion higher than the Actuary's gross ($1,035 billion), he doesn't mention the savings. It's wholly dishonest of Garrett not to mention the savings.

From Garrett:

After all of this spending, there would still be around 20-some-odd million uninsured Americans. So, for those folks who are trying to keep score of all of this, that comes out to be about $35,000 per uninsured person out there.

First off, the "20-some-odd million" includes illegal immigrants, per the Actuary, so I guess it's nice Garrett's calling them Americans.

Second, based on the above correction in numbers saying that all of the money spent is only to insure the uninsured (which it's not), the cost OVER TEN YEARS is roughly $25,000 per person, or an average of $2,500 per year per newly insured person. Garrett seems back to making up five figure distortions again.

From Garrett:

Now, another promise that the President made was that he said, ‘‘if you like your current coverage, you keep it.’’ Well, again, look back to that government actuary whom we talked about before. According to that chief actuary, that’s not true if you’re a senior on Medicare, because 8.5 million seniors on Medicare today would lose their current coverage, and they would be forced into some different coverage.

This is Garrett scaring seniors again. Readers may remember Medicare Advantage is one of Garrett's favorite taxpayer fleecing programs. He conveniently left out Advantage, from Medicare Advantage, when saying these words.

The reason is because it's inconvenient for him to acknowledge that, according to the Actuary, once insurance companies can't charge the government up to a 40% mark up on the same services provided as Medicare they're likely to reduce their available plans.

Seniors will be able to get the same services, it's just that Medicare won't be billed 40% extra for the same services, thus saving taxpayers money. The Actuary and the CBO see this as a good thing. And Garrett claims to be a fiscal conservative?

From Garrett:

The chief actuary says the cuts could force such organizations, such as nursing homes and home health agencies, to leave the Medicare program and, thus, ‘‘possibly jeopardizing access to care for beneficiaries.’’

Readers have to remember that if Garrett had his way, nursing care could be dropped by insurers anyway. Kind of a tough call, but as the Actuary actually said that we'll give this one to Garrett.

I've written before how this speech structure is an effective way to misrepresent the truth: book-ending the misrepresentations with facts to give credibility to the misrepresentations. The added twist here is that Garrett's talking about a report based on a bill that does not exist anymore, and won't be voted on.

And the spin goes on...

Christie's Room(s) at the Inn

Update: Hotwire lays out the trips; Blue Jersey promoted a thoughtful comparison between Christie and Sharpe James.

I'm going to flat out say it, Chris Christie is not the sharpest politician in the world.

From the AP:

On trips in 2007 and 2008, his top deputy, Michele Brown, also exceeded the guidelines after Christie approved her requests for rooms in the same five-star hotels where he was booked.

The vouchers show Christie and Brown stayed at the NineZero Hotel in Boston on Oct. 16, 2007 and each billed taxpayers $449 plus taxes and fees for their rooms, more than double the government allowance for a Boston hotel room at the time, according to a General Services Administration travel reimbursement table.

You can't claim to be fiscally conservative, and then act like it only applies to everyone else. To make matters worse, in addition to Christie taking taxpayers for a ride, Christie approved his assistant doing it, too.

In fairness to Christie, he's said he couldn't find a room. Although the Red Sox were playing in the playoffs that night (was he there?) and Tori Amos was in town (or there?), it's unlikely every affordable hotel in Boston was booked on a Tuesday night. In fact, Christie has a demonstrated history of this sort of blatant waste, exceeding federal limits on 87.5% of his trips.

Then, going back to things you should think about, the AP article points out some interesting timing:

Christie made a mortgage loan to Brown five days after they returned from Boston, on Oct. 22, 2007. He failed to report the loan on federal ethics forms and on his 2007 federal income tax returns, omissions he later described as a mistake. Brown has since resigned and joined a private law firm.

While no one is saying that Christie and Brown have had an affair, he should have realized at some point in time, such a coincidence in timing would sow seeds of doubt in the public's mind.

So not only does he abuse taxpayer dollars, he doesn't think.

New Jersey has a long and sorry history of politicians who don't think, which is part of the reason we're in the mess we're in. While people are already seem burned out over the campaign, it will be interesting to see how the public reacts.

Garrett for Wasting Tax Dollars

One of the perplexing things about Representative Scott Garrett is that he chooses to advocate for practices that waste taxpayer money, while slamming waste in other programs. I've written before about Garrett's affinity for Medicare Advantage, which has been documented to cost taxpayers more than it should. Yet Garrett gripes about Medicare costing too much.

Today, Garrett sent an e-mail defending his opposition to reforming Federal Student loans. Here's part of his logic:

On Thursday, the House passed a bill (H.R. 3221) that will, if signed into law, eliminate private loans with federal guarantees, replacing such loans entirely with the government’s Direct Loan program – in other words, removing the optionality of the public option – at a cost of $1 trillion over the next ten years.

What Garrett conveniently fails to mention is that enacting this policy is actually saving taxpayers billions. From the CBO:

H.R. 3221 would make several changes to the federal student loan programs, including the Federal Perkins Loan Program. As shown in Table 2, CBO estimates that, on net, those changes would reduce federal costs by $40.7 billion over five years and $74.8 billion over 10 years.

So once again, we have Garrett defending taxpayer money flowing into private hands at a higher cost than we should be paying for the service we're receiving.

Adding insult to the injury of honest debate, Garrett relates his argument to the health care debate and justifying his opposition to the public option.

The student loan public option should serve as a cautionary and instructional tale for Congress and the American people as we continue to discuss ways to reform the health care system.

Garrett's right, the cautionary tale here is that without reform, we're going to continue spending more than we should. That's fine with Garrett, the question should be put to his constituents, is that okay with you?

The Tea Parties

Yesterday, in addition to being tax filing day, also became national "teabagging" day as thousands took to the streets to protest having to pay taxes. It's interesting that those leading the charge are many of the same people that looked the other way while the Bush Administration and his Republican Congress were saying deficits don't matter.

Our own Representative Scott Garrett got in on the action, mentioning the tea parties in an Op-Ed he got published in the Herald News.

Americans recognize that the government needs their tax dollars to function and provide essential programs for our country, and Americans have always been willing to pay their fair share.

As nice a statement as it is, the "fair share" thing depends who you're talking to.

The reason our District gets crushed by the AMT is because getting rid of it would force taxes and/or borrowing up for the rest of the nation. There was the thought of taxing 5,000 or so hedge fund managers like normal people, which actually would have been a huge step toward repealing the AMT, but Garrett and others rejected the approach. Is that fair?

And what's essential?

You're reading this, so you're benefiting from the investment of taxpayers in the 60's, 70's and 80's to build the technology and backbone of the Internet.

On top of that, chances are, you honed your reading skills thanks to the investment of those taxpayers working when you were a kid. And there's no doubt many of us survived childhood due to vaccines that were funded by taxpayers from the 1920s to present day.

If you're at your job, it's roads and transit that others paid for to get you there. Ever pay to pave your driveway? Imagine having to pave your own road to work.

And we all cheered when Captain Richard Phillips was rescued, but we can't forget that taxpayers footed a lot of bills to get the SEALS to where they needed to be to take those shots, starting in kindergarten.

Now, there's no doubt the government spends a lot of money it doesn't need to. Programs like Medicare Advantage, where taxpayers are paying more for services than they should be, are ripe throughout government. Any meaningful change in tax and spending policy has to start by sifting things like that out. However, we're coming out of eight years of tax cut and spend, which eliminated not only deficit hawks but true fiscal conservatives in government.

In addition to no-bid contracts, earmarks tend to be a top waste of money, or at the very least one of the biggest ways of preventing us from making sure we're getting the best bang for our buck. Unfortunately, there are only 35 Representatives who don't request earmarks.

If you're one of the teabaggers reading this, then hold your own Representative accountable. If they're earmarking, they're not helping reduce government spending. If they're talking about eliminating national programs, they're talking about raising your local taxes. If they're talking about giving you tax cuts, but won't cut programs we don't need like the F-22, they're talking about taxing your grandchildren.

Protests like yesterday don't mean anything when people re-elect their own elected officials 90% of the time. The whole mess is our own fault, and it hardly started with Obama. Sure, Republicans seized and nourished the rage, but that's the greatest con-job of all since they were the ones handing out no-bid contracts in Iraq and were in control of Congress and regulation agencies when things started falling apart in the financial sector.

The partisanship, the name calling, all of it needs to stop. We're in a hole we allowed ourselves to be put in, and now we're going to have to dig ourselves out. It is possible we will, but the anger expressed yesterday needs to be transformed from name calling into concrete ideas. And voters need to wake up and realize where we're at has been decades in the making, and it's likely going to take a decade to fix.

Republican Budget Bonanza

Well, with the Budget Spin wars going in full steam, I figured I'd print off the President's Budget, the CBO's estimate on the President's Budget, and the Republican Alternative introduced by Representative Scott Garrett and his Republican colleagues yesterday. It's interesting to sit and have all the documents on the desk at the same time.

Both proposals are disappoinging in that neither even pretends to attempt to balance the budget. As I wrote in an earlier post, both parties are addicted to deficit spending, it's just a matter of what they're borrowing for.

While Obama's budget has been scrutinized a lot, we knew where he was coming from because he's been talking about it since 2007. Even though there's no shot of the Republican Budget passing, it's interesting to now see where their conversation starts:

The budget gives priority to the Federal Government’s most important obligations, national defense, veterans’ benefits, and homeland security activities. All other appropriated spending is level-funded for fiscal years 2010-14, and then increased at a moderate rate through 2019.

So the party of Eisenhower and his warning against the military industrial complex has completely embraced a defense only spending mentality. It's unfortunate that Republicans see our military spending as a jobs programs. Money to get more teachers? Doctors? Green Collar? Nope.

It's also interesting to see their views on return on investment. In their argument in support of more drilling and against the cap and trade proposal (which, thankfully, is going nowhere fast), they cite "studies" that for every $1 billion invested in big oil, 5,400 jobs are created. That's spending $185,000 to create one job.

The SBA, whose budget is frozen by the Republican "vision", creates a job for every $50,000 lent, at a cost of around $200. Either way you look at it, Republicans are embracing a jobs figure that costs between 370% to 92,600% more to create a job.

That's not ensuring our tax dollars are being spent wisely, but it's consistent with other schemes like Medicare Advantage or hiring Blackwater to handle security, where taxpayers pay more for service than if the government did it itself. That's not fiscal responsibility, it's fiscal fleecing, and Republicans want to return to being trusted stewards?

Adding insult to injury is their tax proposal, which throws everyone into an AMT like structure by eliminating deductions, credits, etc. It also makes permanent things like the competitive advantage they gave foreign companies and taxing firefighters at a higher rate than hedge fund managers.

No one can argue that Obama's budget is fiscally responsible, doubling the national debt in ten years, although still less than Reagan in terms of percent. Unfortunately, the Republican alternative still adds roughly 50% to the debt over ten years, while continuing many of the policies and objectives that got us in this mess in the first place.

At some point, somebody is going to have to put our fiscal house in order, maybe before our grandchildren die.

Garrett on AIG

Representative Scott Garrett has had a number of good quotes printed today regarding the AIG mess. Here's a sampling:

From the Associated Press:

"Part of me wants to say to some of the loudest critics, 'What did you expect and why weren't you asking more questions before?' I would argue that the real outrage now is the $170 billion of taxpayer money that's been pumped into this company and to what effect," he said.

From Voice of America:

"Why didn't [Treasury] Secretary [Timothy] Geithner raise this issue just last week with the president when we knew he was briefed in detail about the bonuses from the CEO of AIG? What about the fact that the Fed [i.e., Federal Reserve, the nation's central bank] and the administration still have not outlined an exit strategy from this whole situation? "

The problem here is that Republicans are doing a little bit of revisionist history when it comes to TARP. Garrett, to his credit, was against all the bailouts all of the time.

However, I keep seeing Republicans doing their best to make it seem like it wasn't President Bush who started this whole thing. Or the fact after the House defeated the first bailout, it caved a few days later.

Unfortunately, both parties are guilty of creating this mess. The contracts were known about since before TARP I, and we still gave them money. This is a bi-partisan mess, and it doesn't do the nation any good for the Republicans to be dancing around while the nation burns.

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.

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.

Toll Roads and Bailouts

I'm kind of glad that economists are starting to take a breath and realize the bailout program being crammed down Washington's throat as a "the only way" situation may not be. Governor Corzine told us here in NJ the only way to balance our state's budget was to lease or privatize our toll roads. Didn't happen, and we're still kicking.

People need to raise questions, loudly, about the wisdom of this plan. Simply deferring to Treasury Secretary Paulson's experience with Goldman Sachs as being all knowing is a dangerous path to take. So far, this is one of my favorite challenges to the plan:

For somebody like me who believes strongly in the free market system, the most serious risk of the current situation is that the interest of a few financiers will undermine the fundamental workings of the capitalist system," wrote University of Chicago Business School Economist Luigi Zingales, in a short essay titled "Why Paulson is Wrong" cited by Mallaby and a raft of other economics blogs across the ideological spectrum. "The time has come to save capitalism from the capitalists.

Should these large companies fail, the idea that other smaller competitors won't step up and give those with good credit loans runs counter to our American experience and the nature of our economy. This bailout plan is awful, and while still is likely to go through, it seems the reason they're trying to rush Congress through it is to prevent people from asking questions. The reality is, it's a handout to the bad actors on Wall Street who put profit over prudence. They made this bed.

When Do We Call BS?

With bailout after bailout after bailout being announced, when do we as taxpayers get to call bull manure?

Very rarely do I praise something Representative Scott Garrett says, but in a press release reported by the Express-Times I think he hit the nail right on the head:

We were assured that the government intervention on behalf of Bear Stearns was necessary in order to avoid a complete financial collapse," Garrett said in a press release. "Rather than stem the tide, the government bailout of Bear Stearns opened the flood gates.

Now, with a massive fund being assembled for even more bailouts, the American taxpayer could be on the hook for upwards of $500 billion when you add all the bailouts together. That's roughly the same amount as the Iraq War, and neither expenditure has proven an effective use of our money. What's even more frightening is the fact a trillion is not unthinkable for both the bailouts and Iraq.

Here's how the Washington Post describes the massive fund:

The plan involves using hundreds of billions of dollars in government funding to buy bad loans, leaving banks with more money and fewer problems, according to two sources familiar with what was said at the meeting.

Do you get that? We the taxpayer are sending money down a hole, with no chance of being repaid as we were with Crystler. What do we as taxpayers want with a bunch of bad loans? Those that made these bad decisions, based on greed over principle, are being rewarded because they're having their good loans left in their hands.

This is where the American people need to call bull manure.

First off, it represents the end of capitalism as we know it. The idea that Wall Street firms will no longer have to worry about whether they're making good decisions, because now everybody knows the Treasury will bail them out if they don't, won't have any restraint on bad decisions.

It will simply be a get as much money as possible before crashing, call Uncle Sam for help at the crash, and continue forward. Don't think that's how Wall Steet sees it? Then how else could anyone explain an 800 point increase over the last two days with no nuts and bolts economic data out. It's all based on the knowledge they can go back and do what they've been doing.

Sure, there are those like Representative Barney Frank who will say "oh, the Treasury won't use this authority." He said that with Fannie and Freddie, and he was being disingenuous then and those advocating this plan are being disingenuous now.

People have got to learn, whether it is with stuff like the Patriot Act or these bailout bills, if the government is asking for the authority to do something they are going to use it when they get it.

Our Representative's job is to protect us, and represent our voice on the Hill. As much as it pains people to give him credit at times, and as wrong as he often is; Garrett being against government getting bigger is exactly the perspective we need now. The more bad debt we assume, the less government is going to be able to do and the more of our taxes are going to simply pay off bad loans and decisions made in the private sector. It's lunacy.

We're already massively in debt. Roughly 30% of our taxes go to pay off debt (a lot of which Garrett voted for). Now, with the hundreds of billions in lending we're having to borrow from China and Russia to loan to companies who made bad decisions, with no discipline, that 30% could easily top 50% of taxes. What school of business teaches this as a prudent economic model?

People who want things like national healthcare or a stronger defense establishment or whatever, have to recogognize that Washington going forward with this plan is going to destroy our ability to pay for the things we need and want. We shouldn't be throwing good taxpayer money after bad private sector decisions.

But the greed goes on...

Garrett Award from Those Accused of Fraud

I completely forgot about this: While poking at the award Representative Scott Garrett just received, the folks over at Retire Garrett pointed out that back in 2006, the folks at Citizens Against Government Waste were cited in a Senate report for committing fraud against taxpayers. From the Washington Post in 2006:

Five conservative nonprofit organizations, including one run by prominent Republican Grover Norquist, "appear to have perpetrated a fraud" on taxpayers by selling their clout to lobbyist Jack Abramoff, Senate investigators said in a report issued yesterday.

The report includes previously unreleased e-mails between the now-disgraced lobbyist and officers of the nonprofit groups, showing that Abramoff funneled money from his clients to the groups. In exchange, the groups, among other things, produced ostensibly independent newspaper op-ed columns or news releases that favored the clients' positions.

[snip]

The report bolstered earlier revelations that Abramoff laundered money through the nonprofits to pay for congressional trips and paid Norquist to arrange meetings for Abramoff's clients with government officials including White House senior adviser Karl Rove.

This reaffirms my criticism of Garrett turning to Grover Norquist for talking points after I exposed the New York Times study he was citing as being fabricated.

While it doesn't change the fact that I like CAGW's Pig Book, this does shed some light on why they oppose those deficit neutral bills. While it appears no charges were ever brought, considering this was at the height of the Bush Administration's politicization of the Justice Department, we can't be surprised.

Garrett Wins Award

Representative Scott Garrett has once again won the "Taxpayer Hero" award from the Citizens Against Government Waste. I'm actually a very big fan of this groups Pork Book. As reported by Herb Jackson:

Votes defined by the group as pro-taxpayer included extending tax cuts, blocking expansion of children's health insurance, and eliminating funds for a museum dedicated to the Woodstock festival.

It's important to remember, this is an award based on votes, and doesn't take away points for wasteful earmarks, like Garrett getting money for a research project the Army had informed the manufacturer they didn't want. That said, while so many groups base their rankings on a handful of votes, CAGW uses 100 to come up with their score. I don't agree with a handful on the list (they're against deficit neutral bills), but you can read the list here and decide for yourself.

Garrett vs. Medicare - Again

Back when I was busy pointing out the misleading and patently false arguments being made by Representative Scott Garrett with regard to SCHIP, one of his more cynical defenses was that seniors would lose coverage if the bill was passed.

Garrett was laying the foundation of the argument currently being used in defense of Medicare Advantage, one of Garrett's favorite taxpayer fleecing programs. Garrett argued against reforming the program then, and was one of 59 Representatives to vote against fixing it last week.

The bill he voted against also prevented doctors treating the elderly from having to take a 10% pay cut for their services, which would have created fewer choices for seniors. However, as commonsense and fiscally sound as this bill is, the President is threatening a veto. Here's how Herb Jackson summed up the President's stance on the bill:

The White House complained in a statement this week that the bill pays for restoring the doctors' fees by reducing subsidies for Medicare Advantage, an experimental privately managed insurance program for about 2.3 million elderly residents nationwide.

Here's what the CBO said about Medicare Advantage in April 2007:

Such growth, under current payment policies, increases net costs to Medicare because payments made to Medicare Advantage plans exceed costs under the traditional fee-for-service program.

Defending a program that sucks more money out of the trust than is needed to deliver care, to guarantee a profit margin to vendors regardless of their performance, is an absolutely ridiculous position. Part of me kind of hopes that AARP will put Garrett and the other 58 folks in their magazine and explain to people how they were defending bankrupting Medicare.

Garrett may someday realize that consistently voting to have taxpayers pay more for services than things cost is not being a fiscal conservative. $900 hammer anyone?

Will the Borrowers Win Again?

Back in December, I wrote about how Representative Scott Garrett had joined the tax cut and borrowers in voting against meaningful AMT reform. Well, today he did it again.

Once again, the $61.5 billion in projected borrowing to provide relief to 20 million families is being off-set by targeted tax increases directed at 5,000 or so hedge fund managers. Here's how the AP explains it:

The offsets in the package before the House Wednesday include a measure that would raise $31 billion over 10 years by increasing the tax rate on the share of investment profits received by private equity and hedge fund managers, also known as carried interest. Managers of private equity and hedge funds are now generally taxed at the 15 percent capital gains rates on the profits they share instead of the 35 percent individual income tax rate that would normally apply to high-income individuals. The bill would tax most of their profit-sharing income at the higher 35 percent rate.

That's right, there are roughly 5,000 people paying an average of $620,000 less in taxes than they would be if they were taxed like normal people. Many Americans won't make that much money over 20 years of work, let alone skip the taxes annually.

As a deficit hawk, it's extremely frustrating to watch this debate every year. The dream used to be getting the Democrats around to supporting balancing the budget. Then, almost as soon as it happened, the Republicans became the deficit spending lovers. What gives?

While I haven't seen a comment from Garrett this time around, Representative Jim McCrery provides a decent soundbite as to the Republican logic:

Republicans believe that Congress should not raise taxes on one group of
taxpayers in order to prevent an increase on another set of taxpayers.

So instead, Republicans want to raise the taxes on entire future generations payable to the Chinese?

Taxes today are about 25% higher than they need to be because of interest due on previous deficit spending. How high are we going to go if these special interest driven partisan games continue?

The RSC Action Plan

I was looking over the new Action Plan from the Republican Study Committee, and noticed something odd. Part of the action plan is the following:

We will not wait on the Democrat Majority to end "Bridges to Nowhere" and "Monuments to Me"—we declare an immediate earmark moratorium and pledge to reform the system.

On their website, the RSC has a list of members who have sworn off earmarks. What's interesting about the list is our Representative Scott Garrett has not taken the pledge. I suppose it would be difficult for him to take the pledge when he's advocated for a $1.5 million earmark for a program after the Army ended it.


Beyond that, the Action Plan seems to be little more than a commitment to the Bush priorities over the last few years. Herb Jackson summed up the plan on Sunday in The Record.

The right-leaning Republican Study Committee issued an action plan that, among other things, calls for tighter controls on spending, looser controls on oil companies and agencies gathering intelligence on suspected terrorists, eliminating the alternative minimum tax, putting welfare-like restrictions on food stamps and housing assistance, and requiring people who are not elderly, young or disabled to work to get government help.

Among other things, it's disturbing to me that in a time of economic downturn, the RSC would advocate taking food stamps and Section 8 housing away from families in need. Here's how the RSC sums up their belief:

Such reforms will ensure a more stable environment for low-income children by encouraging their parents to marry and raise them in two-parent homes.

Nothing like stigmatizing those who need help in these economic times. The USDA has a fact sheet here, which highlights among other things this little tidbit of information:

The Food Stamp Program is a program that supplements the food purchasing power
of low-income Americans. The average time a food stamp recipient stays on the program is 9 months.

The RSC is declaring war on a largely short term, underutilized program (65% of those eligible), where 75% of the participants are children. Average monthly participation in the Food Stamp program has increased 50% since 2001, now covering 1 in 11 Americans in a given month. A large part of the reason for the increase are the very economic policies the RSC fought for.

This is the classic political bait and switch. Unfortunately, history shows this is an effective way to distract voters from things like the $15 billion in fraud the RSC allowed to occur or the deficit they exploded while in the majority.

Although touted as returning Republicans to their roots, there's nothing about balancing the budget, staying out of individuals' lives, or defending the Constitution involved in the plan. In a number of instances, it's the exact opposite. Since the RSC can't stand on their record, it's interesting to see them attack the results of the policies they have implemented over the years.

I guess we'll all have to wait and see how short term the American voter's memory is.