Obama Promised to Lower Taxes, Will Raise Them Instead

Vindication of how dumb voters are and how dumber our politicians are when it comes to slogans and promises:

Only five months after Inauguration Day, the focus of Washington’s economic and domestic policy is already shifting. This reflects the emergence of much larger budget deficits than anyone expected. Indeed, federal deficits may average a stunning $1 trillion annually over the next 10 years. This worsened outlook is stirring unease on Main Street and beginning to reorder priorities for President Barack Obama and the Democratic congressional leadership. By 2010, reducing the deficit will become their primary focus.

Why has the deficit outlook changed? Two main reasons: The burst of spending in recent years and the growing likelihood of a weak economic recovery. The latter would mean considerably lower federal revenues, the compiling of more interest on our growing debt, and thus higher deficits. Yes, the President’s Council of Economic Advisors is still forecasting a traditional cyclical recovery — i.e., real growth of 3.2% next year and 4% in 2011. But the latest data suggests that we’re on a much slower path. Probably along the lines of the most recent Goldman Sachs and International Monetary Fund forecasts, whose growth rates average about 2% for 2010-2011.

Do Democrats Pose Hurdles for Obama’s Agenda?

Will Democrats truly pose hurdles for Obama?

WASHINGTON — As Congress tackles President Barack Obama’s top two domestic priorities — climate change and health care — he faces some of his most serious challenges from fellow Democrats.

The narrow passage Friday of an environment bill came with nearly one in five Democrats defecting, and only after supporters from coal-producing and agriculture districts won concessions that eased the impact on business and aggravated some environmentalists. Prospects for the measure remain uncertain in the Senate, even though Democrats hold a 59-40 voting majority.

Some Democratic defections were to be expected. Republicans’ argument that the cap-and-trade program would effectively impose a national energy tax on consumers and businesses was a message likely to resonate in conservative congressional districts won by moderate Democrats in the past two elections.

Why Obamacare may be Flatlining

Hooray!

So what just happened? How is it possible that Democrats cruised to a huge victory on Election Day in November 2008 and are yet again unable to make good on their top legislative priority? Why are the ghosts of Bill Clinton’s 1994 healthcare reform debacle suddenly flitting about Capitol Hill? What happened was the Great Recession, the political impact of which the Obamacrats completely misunderstood. Oh, they knew the financial and economic crisis helped sweep them to office. That part they got just fine.

But they also assumed that the downturn would create such a sense of economic insecurity that time would be ripe for the sort of expansive, government-led healthcare changes that the party has been dreaming of for two generations. Instead, the Great Recession made healthcare less of a priority for voters than economic recovery — as fast as possible, please — and job creation. A recent spate of polls shows concern about healthcare (and climate change and pretty much everything else) lagging concern about unemployment. Healthcare lags concern about the shocking enlargement of the federal budget deficit, which has grown partly due to government actions — such as the $800 billion Obama stimulus package — to deal with the recession, as well as by the decline in tax revenue caused by the downturn itself.

Pension costs can ruin cities and states

Indeed.

California has exerted a weird, hypnotic pull lately, as Americans have watched the Golden State roll toward what might just be financial Armageddon. The state government is facing a $24 billion deficit, but Democrats and Republicans in Sacramento, Calif., are showing very little ability to get the problem solved.

As a result, California is “less than 50 days away from a meltdown of state government,” the state controller said last week.

It’s hard to know whether to stare in horror or avert your eyes.

Our advice: Stare. Because in California’s example, there are lessons for Minnesotans and North Dakotans to learn.

One such lesson has to do with public-employee pensions and a state’s fiscal health. California faces unfunded public employee retirement benefits of somewhere between $300 billion and $1 trillion, a panel discussion at the Milken Institute’s State of the State Conference concluded in May.

Obama Picks DOJ Tax Division Head, Never Practiced Tax Law

Oh goody!

Democrats on the Senate Judiciary Committee voted today to move ahead with the nomination of Mary Smith to head the Justice Department’s Tax Division, over Republican objections that Smith lacks significant relevant experience.

At a committee meeting, three Republican senators spoke against Smith, noting that she has never held a job specializing in tax law. She has never written or spoken on tax issues, does not have a specialized degree, and has never taken a continuing legal education course in tax law, said the committee Ranking Member Jeff Sessions (R-Ala.).

“Tax law is very specialized and it’s certainly not an area where you learn on the job,” Sessions said. He argued that Smith could be an embarrassment to the administration, saying, “You should not put people in a job they’re not prepared to handle.”

Sen. Tom Coburn (R-Okla.) called Smith the “worst choice” that President Barack Obama has made in all of his appointments. Sen. Jon Kyl (R-Ariz.), the Republican whip, said there must be “thousands of highly experienced tax lawyers who would love to have a job like this.”

No Democrats spoke in defense of Smith before voting for her, though Chairman Patrick Leahy (D-Vt.) noted that the committee has received letters supporting her nomination ….

Smith is a partner at Schoeman Updike Kaufman & Scharf in Chicago. … The committee voted 12-7 along party lines to send Smith’s nomination to the full Senate

Person to Head GM Restructuring is a Thirty-Something Law Student

Trust your government
They know better than you

Imagine you had to pick someone to shepherd a gigantic multinational corporation through a bankruptcy in order to salvage it. Would you look for someone with extensive experience in the firm’s industry, or would you prefer someone with demonstrated savvy on Wall Street in turning around troubled firms? If the firm made cars, perhaps you could think of it as a choice between a Lee Iacocca or a Mitt Romney.

Or, maybe, you’d just pick someone from the mail room, as Barack Obama apparently has in the GM bankruptcy:

It is not every 31-year-old who, in a first government job, finds himself dismantling General Motors and rewriting the rules of American capitalism.

But that, in short, is the job description for Brian Deese, a not-quite graduate of Yale Law School who had never set foot in an automotive assembly plant until he took on his nearly unseen role in remaking the American automotive industry.

Nor, for that matter, had he given much thought to what ailed an industry that had been in decline ever since he was born. A bit laconic and looking every bit the just-out-of-graduate-school student adjusting to life in the West Wing — “he’s got this beard that appears and disappears,” says Steven Rattner, one of the leaders of President Obama’s automotive task force — Mr. Deese was thrown into the auto industry’s maelstrom as soon the election-night parties ended.

“There was a time between Nov. 4 and mid-February when I was the only full-time member of the auto task force,” Mr. Deese, a special assistant to the president for economic policy, acknowledged recently as he hurried between his desk at the White House and the Treasury building next door. “It was a little scary.”

Scary? Well, yes, and not just for Mr. Deese, whose executive experience actually is less than Obama’s. He’s never run any business, let alone worked in the auto industry. He joined the Hillary Clinton campaign by taking a hiatus from law school, which he began after working as an assistant to Gene Sperling, now an advisor to Tim Geithner. His entire resume consists of campaign work.

Perhaps Deese will do a good job, but I’m not terribly sanguine about the prospects of GM prospering under the guidance of someone who hasn’t ever met a payroll or sold a car. A President who took his own job seriously would never have appointed a second-tier adviser to this position. A national media who took their jobs seriously wouldn’t let him get away with it, and don’t count this NYT piece in their favor. They give a glowing report to this political-hackery appointment.

Obama Admin Accidentally Posts Secret Nuclear Sites

The Federal government cannot keep top-secret nuclear sites an actual secret
And now we’re surprised to trust them with collecting our health information into one national database???

The federal government mistakenly made public a 266-page report, its pages marked “highly confidential,” that gives detailed information about hundreds of the nation’s civilian nuclear sites and programs, including maps showing the precise locations of stockpiles of fuel for nuclear weapons.

The publication of the document was revealed Monday in an on-line newsletter devoted to issues of federal secrecy. That publicity set off a debate among nuclear experts about what dangers, if any, the disclosures posed. It also prompted a flurry of investigations in Washington into why the document was made public.

NYC Taxes People in Homeless Shelters

Compassion from a liberal city!

The Bloomberg administration has quietly begun charging rent to homeless families who live in publicly run shelters but have income from jobs.

The new policy is based on a 1997 state law that was not enforced until last week, when shelter operators across the city began requiring residents to pay a certain portion of their income. The amount varies based on factors that include family size and what shelter is being used, but should not exceed 50 percent of a family’s income, a state official said.

Vanessa Dacosta, who earns $8.40 an hour as a cashier at Sbarro, received a notice under her door several weeks ago informing her that she had to give $336 of her approximately $800 per month in wages to the Clinton Family Inn, a shelter in Hell’s Kitchen where she has lived since March.

“It’s not right,” said Ms. Dacosta, a single mother of a 2-year-old who said she spends nearly $100 a week on child care. “I pay my baby sitter, I buy diapers, and I’m trying to save money so I can get out of here. I don’t want to be in the shelter forever.”

How Does Obama’s Bullying of Investors Affect America?

A pithy observation:

Does Obama’s bullying of investors portend real problems for the US?
Johnathan Pearce (London) Globalization/economics • North American affairs

I have not written about the subject of the Chrysler bailout so far since, not being close to the action in the US, I did not feel I had much to say that was not already voiced by the US blogs. But it does occur to me that there is a general problem right now in the way that the US administration – and arguably the UK one as well – has been acting in respect of bailouts of certain industries, such as carmakers as well as banks. What do I mean? Well, this report (H/T: Instapundit) suggests there is real fear about the “Nixonian” tactics employed by Mr Obama’s administration against bond-holders who have been angered by the expropriation of their capital via the Chrysler bailout.

For those who have not been following this story, bond-holders have been pushed to the back of the queue, as far as potential recovery of capital is concerned, with the auto union membership getting preferential treatment. Maybe Mr Obama figures that investors can be rained on right now because it is more important to get the votes and support of traditionally Democrat-leaning car workers. With mid-term Congressional elections a couple of years away, he will have his sly, Chicago machine-politics mind working out how to garner important support in the event that the US economy is still sluggish by that time. But pissing off investors – such as, let it be noted, pension funds – is not smart. The US requires large amounts of capital for any economic recovery that may take place. Ask yourself one of the most basic questions any investor should ask: can I get my money back if I need to? If the answer is no or only maybe, and if there is the threat of governments robbing investors, then less investment occurs. The problems of such behaviour explain why, for example, Africa has been such a bad investment bet for so many years.

It is an ugly business. Part of the trouble with the automakers is that even if they had been put into a Chapter 11 bankruptcy process, with the banks and bondholders put on a more even footing for any recovery of assets, there is still the issue of what to do about the enormous unfunded pension obligations that these heavy industrial companies have. It is the same with airlines and steel. I have heard it said of British Airways – to take a UK example – that is is a pension scheme that happens to have a lot of aircraft. The pension tail can wag the corporate dog. And that is a hideous issue to deal with against the background of an ageing population. So in fairness to US policymakers, running down Chrysler involves dealing with a lot of tricky contractual issues.

Even so, it strikes me that the Obama administration is showing a level of political ruthlessness and “bugger-the-investor” attitude that is hardly going to endear people towards investing in that economy. My fear is that Mr Obama is making the cynical calculation that memories will fade; after all, how many investors in the UK remember how the Blair government, in the form of the charmless Stephen Byers, the-then industry minister, shafted investors in Railtrack?

Like I said, an ugly business.

Obama’s Supporters Surprised He’s a Class Warrior (duh)

So…those who voted for (D) during the 2008 Presidential race were voting for a Dumbass?

Among those affected by such changes would be some of Mr Obama’s most powerful supporters in the election, such as Eric Schmidt, Google’s CEO, and other “Silicon Valley” executives whose profits are mostly made abroad. They were taken aback when the President blasting companies for “shirking” their responsibilities by avoiding tax.

New York Democratic congressman Joseph Crowley said closing the loophole would hurt Citigroup Inc., his New York district’s largest employer.

It has also dawned on wealthy Americans who flocked to the Obama campaign of “Hope” and “Change” that the president opposes the “trickle down” theories that have guided US economics since President Ronald Reagan was elected with a mandate to slash taxes.

He warned that by the time he was done with them, Silicon Valley and Wall Street would remain large parts of the US economy, but not “half of our economy”.