The S.F. Chronicle has an article today that notes that if California, in attempting to close a $16-21 billion deficit cuts too much funding from education and health care programs, it will lose additional stimulus money.
How ironic.
The stimulus bill requires that state spend a minimum amount of money on certain projects, and if the state cuts spending below that amount, they will have violated the terms of the stimulus agreement, and will have the money taken away. So, California, trying to cut spending in the face of a dramatic deficit, will be punished for trying to do what Washington can't do: live within their means. The states are required to have a balanced budget, Washington is not. Congress passed a stimulus bill earlier this year that directed funds to states and cities for specific purposes, which was the first mistake of this whole mess. Instead of directing the money to be used for specific purposes (and threatening states and cities to abide or else), Congress should have just given each state a lump sum and let them decide what's best. Instead, we get Congress dictating to states how to use the money, which ends up causing a big mess. From labor groups lobbying the Administration in protest of previous wage cuts, to not allowing cities to swap transportation funds, even if they have no projects to fund, to governor's rejecting stimulus money because it creates a future unfunded mandate on certain programs.
The OMB has noted that stimulus money cannot be used to pay down debt, but only for spending on specific programs as directed by Congress and the Administration. So, what happens if a state has to cut money from these programs below the requirement set by the legislation in order to balance their budget? Will the Federal government really take away that stimulus money because states are bound to balance their budget?
California Assembly Speaker Karen Bass has already said that she doubts this deficit can or will be met through tax increases, and she also notes that spending cuts will be severe, especially if Propositions 1A through 1E fail next week, which is likely. Instead, Bass was in D.C. to get the Federal government to provide a guarantee on new "Revenue Anticipation Notes" that she hopes will get the state through whatever length of time is needed.
What in the world is going on here? California needs to make spending cuts to balance their budget. Those spending cuts, however, may impact the ability of California to receive stimulus money, money that is being relied on by California to help off-set that budget deficit; if the stimulus money gets pulled, that would make the deficit situation even worse. So, California wants to issue short-term borrowing notes, backed by the Federal government, so that it can borrow even more money, at much higher interest rates than before, to balance the budget today but at at the likely loss of revenue in the future due to interest payments. This is nothing short of an unmitigated disaster.
You know what, screw the stimulus money- it's a sham anyway that is not even coming close to meeting anything that this economy is "so urgently" needing. Furthermore, the Administration has admitted that unemployment will still likely rise this year, even if the economy meets the Administration's wildly optimistic and unlikely growth expectations this year. Even before the stimulus was passed, the Administration said that unemployment without the stimulus would hit near 8.8% by the end of next year, guess what, we're at 8.9% right now. California should just reject all of the stimulus money, and be thankful that it will not be beholden to the wishes and whims of this Administration as it dictates to states how to run their own business. After all, it's worked so well for the auto industry and their creditors.
Thursday, May 14, 2009
Tuesday, May 12, 2009
Someone will pay for this
This is amusing.
Someone, somewhere inside the Administration apparently didn't get the memo that the Federal Government must step in do something about this, costs be dammed. According to the Administration, that view came from an unnamed agency inside the Federal government.
I'm guessing that whoever wrote that memo is not long for his job. After all, who cares about science when there's a special interest group to cater to; I mean, look how the Administration caved in on Yucca Mountain- I'm gonna bet that the Administration has no plans of reimbursing ratepayers for those lost costs that were recovered from ratepayers to fund studies and move forward on building the repository at Yucca Mountain. It's only about science when they agree with the science.
Update- Environmental Capital has more on the memo and EPA's new position on carbon (endangerment doesn't mean regulation). It also notes that the Administration admitted that the document was prepared by someone at OMB and is based on a multitude of opinions from throughout the government. According to the post, the memo notes: “The amount of acknowledged lack of understanding about the basic facts surrounding [greenhouse gases] seem to stretch the precautionary principle to providing regulation in the face of unprecedented uncertainty." In other words, the EPA, and by extension the Administration, went ahead with a policy based on politics.
An Environmental Protection Agency proposal that could lead to regulating the gases blamed for global warming will prove costly for factories, small businesses and other institutions, according to a White House document. ... The document, labeled "Deliberative-Attorney Client Privilege," says that if the EPA proceeds with the regulation of heat-trapping gases, including carbon dioxide, factories, small businesses and institutions would be subject to costly regulation.
"Making the decision to regulate carbon dioxide ... for the first time is likely to have serious economic consequences for regulated entities throughout the U.S. economy, including small businesses and small communities," the document reads.
Someone, somewhere inside the Administration apparently didn't get the memo that the Federal Government must step in do something about this, costs be dammed. According to the Administration, that view came from an unnamed agency inside the Federal government.
I'm guessing that whoever wrote that memo is not long for his job. After all, who cares about science when there's a special interest group to cater to; I mean, look how the Administration caved in on Yucca Mountain- I'm gonna bet that the Administration has no plans of reimbursing ratepayers for those lost costs that were recovered from ratepayers to fund studies and move forward on building the repository at Yucca Mountain. It's only about science when they agree with the science.
Update- Environmental Capital has more on the memo and EPA's new position on carbon (endangerment doesn't mean regulation). It also notes that the Administration admitted that the document was prepared by someone at OMB and is based on a multitude of opinions from throughout the government. According to the post, the memo notes: “The amount of acknowledged lack of understanding about the basic facts surrounding [greenhouse gases] seem to stretch the precautionary principle to providing regulation in the face of unprecedented uncertainty." In other words, the EPA, and by extension the Administration, went ahead with a policy based on politics.
Friday, May 8, 2009
There is a word for this type of activity
It's called extortion.
From the L.A. Times:
"The Obama administration is threatening to rescind billions of dollars in federal stimulus money if Gov. Arnold Schwarzenegger and state lawmakers do not restore wage cuts to unionized home healthcare workers approved in February as part of the budget."
As part of the budget deal passed earlier this year, the legislature cut
$74 million from its budget that would have helped pay workers that care for low-income and elderly Californians. The Department of Health and Human Services, at the request of, surprise, the SEIU, sent a letter to the Governor saying that if he didn't reinstate those lost wages, California would see $6.8 billion less in stimulus money. Nevermind that the state is already facing a $23 billion shortfall in revenues this summer and could go "broke."
Yes, this is nothing short of extortion- the Federal government, at the request of the union, is threatening the state to comply or else. The Federal government is threatening to withhold a significant amount of money to the state, all to show how far this Administration will go to bend at the will of the unions, the economy be damned. They've already catered to the unions on Chrysler, so it's no surprise that they would cater to the unions on this.
Not to mention allowing GM to simply stop the Saturn line, which, as the Newsweek article explains, was once the next big step in U.S. automaking, but soon found itself mired and stuck in union anti-competitiveness assurances (or, as Mickey Kaus puts it, "Could it have been that Saturn's success--in a plant where workers traded inflexible work rules for responsibility and job satisfaction--threatened the hide-bound Wagner Act rulebooks of all of the UAW's other locals? So that the UAW pressured Saturn to build cars outside of its Spring Hill, Tennessee home--while it supported GM in systematically starving Saturn of new products? Just asking!"). Once GM announced the end of the Saturn line, as part of their post-bailout plan, the Administration quickly bestowed upon them another batch for federal funds to keep GM going.
Again, not that the Administration really cares about the viability of the automakers, all the Administration cares about is the continued support of the unions, at the expense of the automakers, and the American public at large, who will be on the hook for all of this.
From the L.A. Times:
"The Obama administration is threatening to rescind billions of dollars in federal stimulus money if Gov. Arnold Schwarzenegger and state lawmakers do not restore wage cuts to unionized home healthcare workers approved in February as part of the budget."
As part of the budget deal passed earlier this year, the legislature cut
$74 million from its budget that would have helped pay workers that care for low-income and elderly Californians. The Department of Health and Human Services, at the request of, surprise, the SEIU, sent a letter to the Governor saying that if he didn't reinstate those lost wages, California would see $6.8 billion less in stimulus money. Nevermind that the state is already facing a $23 billion shortfall in revenues this summer and could go "broke."
Yes, this is nothing short of extortion- the Federal government, at the request of the union, is threatening the state to comply or else. The Federal government is threatening to withhold a significant amount of money to the state, all to show how far this Administration will go to bend at the will of the unions, the economy be damned. They've already catered to the unions on Chrysler, so it's no surprise that they would cater to the unions on this.
Not to mention allowing GM to simply stop the Saturn line, which, as the Newsweek article explains, was once the next big step in U.S. automaking, but soon found itself mired and stuck in union anti-competitiveness assurances (or, as Mickey Kaus puts it, "Could it have been that Saturn's success--in a plant where workers traded inflexible work rules for responsibility and job satisfaction--threatened the hide-bound Wagner Act rulebooks of all of the UAW's other locals? So that the UAW pressured Saturn to build cars outside of its Spring Hill, Tennessee home--while it supported GM in systematically starving Saturn of new products? Just asking!"). Once GM announced the end of the Saturn line, as part of their post-bailout plan, the Administration quickly bestowed upon them another batch for federal funds to keep GM going.
Again, not that the Administration really cares about the viability of the automakers, all the Administration cares about is the continued support of the unions, at the expense of the automakers, and the American public at large, who will be on the hook for all of this.
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