Free Markets, Free People

PAYGO

Quote of the Day–Nancy Pelosi’s final lie edition

Seriously, this is just a shameless lie.  Nancy Pelosi at her final news conference as Speaker of the House summing up the House’s priorities under he leadership:

"Deficit reduction has been a high priority for us. It is our mantra, pay-as-you-go."

No. It hasn’t.

When the Pelosi Democrats took control of Congress on January 4, 2007, the national debt stood at $8,670,596,242,973.04. The last day of the 111th Congress and Pelosi’s Speakership on December 22, 2010 the national debt was $13,858,529,371,601.09 – a roughly $5.2 trillion increase in just four years. Furthermore, the year over year federal deficit has roughly quadrupled during Pelosi’s four years as speaker, from $342 billion in fiscal year 2007 to an estimated $1.6 trillion at the end of fiscal year 2010.

~McQ

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Pelosi’s propaganda piece

If you’ve ever wondered what pure “spin” looks like, you have as your most current example an article under Nancy Pelosi’s name in USA Today.  It is a marvel of context free and, frankly, fact free verbiage designed to do nothing more than paint an alternate picture of reality.  It is an attempt to effect how history will be written.  And it is laughable on its face.

Essentially what Pelosi does is provide a list of discredited Democrat talking points in essay form, never once acknowledging that most if not all have been debunked, shown to be untrue or simply a figment of very fertile imaginations.

My favorite part is where the soon to be minority leader, if that, finally lays out the welcome mat for Republicans – after 6 years of all but shutting them out of the Congressional process.

And, in the running for the most appalling lie among many is this line included after Pelosi lists the “accomplishments” of the 111th Congress:

And we did all of this while restoring fiscal discipline to the Congress by making the pay-as-you-go rules the law of the land.

Good lord.  An estimated 6 trillion in further debt heaped upon the country during her watch and she has the audacity to play the PAYGO card?  This and the previous Congress under Democratic rule have been the most profligate in our history.  And Ms. Pelosi attempts to say everything has been paid for?  

Democrats – if you keep this person in your leadership after her 4 years as the Speaker what little is left of your tattered credibility is as good as gone.  She is divisive, extreme, partisan to a fault and the perfect leader to ensure you don’t see a majority in the House again for a decade or so.  She is the gift that keeps on giving for the GOP.

~McQ

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It’s the voters, not us …

In another variation of the “it’s not the message, it’s the delivery”, Nancy Pelosi has informed the world that, “we haven’t really gotten the credit for what we have done”. 

Well Ms. Pelosi, you will get all the credit you deserve on November 2nd.

Pelosi’s remarks reflect a growing trend of frustration expressed by Democratic leaders on Capitol Hill and at the White House. Senate Majority Leader Harry Reid (D-Nev.) said last week that Democrats’ biggest failure in this election has been not to adequately sell their accomplishments to voters …

You simply cannot be any more disconnected than this.  3 trillion in debt, almost 10% unemployment and the Democrats 18 month priority?  A monstrosity of a healthcare bill that will increase the deficit.

Another note to Ms. Pelosi – it’s hard to grab “credit for what you’ve done” when every single candidate out there is running away from those “accomplishments”.    Nope – what they’ve “done” is exactly what they’ll be receiving credit for on election day.

By the way, Ms. Pelosi – PAYGO has been a raging success, hasn’t it?

~McQ

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Speaking of pensions and unions

If you loved TARP, were enamored with the government bailout of banks and financial institutions and orgasmic at the government takeover of GM and Chrysler, you’ll love this as well:

Here, let me lay it out for you – if Bob Casey can push this through Congress and rescue private union administered pensions via taxpayer money, what has been set? Why precedent, of course.
Now refer to the story about California just below this one and tell me what the number you see there amounts too.  If Congress grants relief to union administered pensions, it’s only fair that it do the same with those owed by state governments who are also upside-down on pension benefits to the tune of multiples of billions of dollars (in CA’s case 500 billion), right?  I mean can you expect California’s pension debt to be characterized as anything other than a “crippling expense” that “threatens” the financial viability of the state and “the jobs of its employees?”  Yeah, I can’t either.  But I can imagine California and other states petitioning the federal government under the same provisions this plan uses to rescue private union-administered pension plans.  Can’t you?
$8 -10 billion cost.  What a load of crap to begin with.  And then add the more than probable addition of state pension funds.  But, of course, you can count of PAYGO being duly invoked and used on this one, can’t you?  Yeah, in the pig’s other eye.
~McQ

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Greenspan: Treasury yields “canary in the mine”

Former Federal Reserve chief Alan Greenspan has commented on the recent sale of treasury bonds we commented on here and talked about on the podcast. They have him worried:

Former Federal Reserve Chairman Alan Greenspan said the recent rise in Treasury yields represents a “canary in the mine” that may signal further gains in interest rates.

Higher yields reflect investor concerns over “this huge overhang of federal debt which we have never seen before,” Greenspan said in an interview today on Bloomberg Television’s “Political Capital With Al Hunt.”

“I’m very much concerned about the fiscal situation,” said Greenspan, 84, who headed the central bank from 1987 to 2006. An increase in long-term interest rates “will make the housing recovery very difficult to implement and put a dampening on capital investment as well.

When investors go to bonds, they’re looking for security. If they want higher risk, stocks are ready when they are. What Greenspan is talking about is this:

The Treasury Department sold $42 billion in 5-year notes on Wednesday at 2.605%, higher than traders had anticipated. Bidders offered to buy 2.55 times the amount debt being sold, the lowest since September. That metric of investor demand also compares to 2.74 times on average at the last four sales of the securities, all for the same amount. Indirect bidders — a class of investors that includes foreign central banks — bought 39.6% of the offering, compared to an average of 49.6% of recent sales and the lowest since July. Direct bidders, including domestic money managers, purchased another 10.8%, versus 9% on average. After the auction, yields remained sharply higher in the broader government-bond market as corporate and other higher-risk debt drew investors away from Treasurys. Yields on 10-year notes, which move inversely to prices, rose 13 basis points to 3.81%.

Says Greenspan:

“I don’t like American politics and what’s happening,” Greenspan said.

Historically, there has been “a large buffer between the level of our federal debt and our capacity to borrow,” he said. “That’s narrowing. And I’m finding it very difficult to look into the future and not worry about that.”

Well join the club – I don’t like what’s happening either. Nor do a whole bunch of other Americans. And a clue to our addled leftist friends – it has nothing to do with the race of our president. Instead it has to do with the ideology that he and Democratic leadership are pursuing to the detriment of the country and its solvency.

Back to the line I italicized in Greenspan’s statement. What does it mean? The obvious – continued economic problems, continued high unemployment and slow expansion. The message? The debt is out of hand, and it isn’t being addressed in any meaningful way.

For instance:

The Obama Administration is asking for $2.8 billion to help with ongoing disaster efforts in that Caribbean nation, responding to the devastating earthquake that struck Haiti in January.

“This request responds to urgent and essential needs,” wrote President Obama in a letter sent to Congressional leaders last week. “Therefore, I request these proposals be considered as emergency requirements.”

Let me translate that for you: “Therefore, I request that these amount of money needed for these proposals not be paid for, with the cost of the bill simply added to the deficit.”

That’s what “emergency” spending means in the Congress. It doesn’t go on the yearly deficit figure, but it does get added to the overall federal debt.

Now for those who are going to scream, “but Bush did it with the war”, I agree. Yes, he did it. And doing that was wrong. Clear enough? So whether it is for war or relief, it needs to be “on budget” – that’s if all the nonsense for Obama and the Democrats about PAYGO is to be believed.

Another example:

Last week Democrats in the House approved a $5.1 billion emergency disaster bill to pump more money into FEMA. While there weren’t any pork barrel items attached to that bill, the Democrats did add on a $600 million Summer Youth Jobs initiative, along with $60 million for a small business loan program.

And the $5.1 billion disaster aid had the necessary verbiage to keep it “off budget”.

“EMERGENCY DESIGNATION – SEC. 102. Each amount in this Act is designated as an emergency requirement and necessary to meet emergency needs pursuant to sections 403 and 423(b) of S. Con. Res. 13 (111th Congress), the concurrent resolution on the budget for fiscal year 2010.”

In other words, the cost does not have to be offset.

Unacceptable. Unacceptable when George Bush and the GOP did it. Unacceptable when Barack Obama and the Democrats do it.

They need to understand and be reminded that such avoidance of the PAYGO law requiring new spending be offset by cuts elsewhere is to be followed to the letter. Certainly there may be real emergencies, but the money spent is just as real. If we have emergencies that require immediate spending, then fine – give Congress some time (90? 120 days?) to find the offsets. But this nonsense about whatever they decide to call an “emergency” is off budget – to include wars – has to stop and stop now.

The money spent is real, the debt becomes larger – the fact that politicians pretend it doesn’t add to the deficit is insane and borders on criminal fraud and is certainly no better than Enron accounting.

~McQ

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PAYGO Is A No Go

You remember the clip the other day in which President Obama told us that Americans were tired of politicians who “talked the talk” about fiscal responsibility, but didn’t “walk the walk”.

Well PAYGO, recently signed into law – and short for pay-as-you-go – requires revenue (spending cuts elsewhere or tax increases) be identified to pay for whatever Congress passes. That’s the “talk the talk” part.

Heh … there is no “walk the walk” part – on their first chance to actually “walk the walk” the House bailed.

Democratic leaders said extensions of unemployment insurance and COBRA healthcare benefits should be emergency spending that isn’t subject to the pay-as-you-go statute, which requires new non-discretionary spending to be offset with spending cuts or tax increases.

We all know, that in the budget that is now out there, cutting $53.3 billion in spending elsewhere would simply be impossible, right?

Oh, wait – you know, if they put that freeze on non-discretionary spending in place now and didn’t wait a year while they raise that spending a reported 82% (gotta love that bit of smoke and mirrors, don’t you?) this year, I’d bet they would find those cuts that would match that spending.

The more you watch these people do business the more you come to understand why they’re where they are and not running a real business. And House Democrats aren’t the only ones:

Senate Majority Leader Harry Reid (D-Nev.) is also pushing for emergency extensions of the unemployment and COBRA benefits not subject to pay-go requirements.

The only difference is Reid will most likely do it in a separate bill with the “emergency” disclaimer to bypass PAYGO.

Judd Gregg gets it right:

Republicans voted en masse against the pay-go legislation, criticizing Democrats for including language that would allow exemptions to it. Sen. Judd Gregg (R-N.H.) said Democrats’ move to bypass pay-go using emergency exemptions proves that the pay-go law is just a “political statement, not a substantive event.”

“They continue to claim some sort of fiscal discipline … when in fact they basically keep spending money like drunken sailors,” Gregg said.

Drunken sailors only spend what is theirs and what they have in their pocket, so in reality, it is an insult to sailors, drunken or otherwise, to compare them to the profligate deficit spenders in Congress busily talking the talk, but rarely walking the walk.

~McQ

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The “Jobs” Bill Sham

Yes, another in a long line of spending bills which has a purported purpose it won’t accomplish.  What it will accomplish is an increase in the debt.

None other than Nancy Pelosi is troubled by the fact that it appears the proposed “jobs” bill being rushed through Congress doesn’t create, uh, jobs.

The White House session with congressional leaders was supposed to be a step toward bipartisanship, with a focus on jobs. But Pelosi made it clear that there’s disagreement, even among Democrats.

White House economic advisers Christina Romer and Larry Summers defended the administration’s proposal to give employers a $5,000 credit for each new worker they hire as well as help with Social Security taxes.

Pelosi countered that no one she’s consulted believes that the plan will actually lead to the creation of new jobs, sources said.

“She questioned the efficacy of it,” one Democratic aide said.

For once, Pelosi is right – any jobs created will be at the margins. In fact, the centerpiece of the “jobs” bill is – wait for it – and extension of unemployment benefits.

And, of course, you remember the big “we’re concerned about the deficit” announcement not long ago where Congressional Democrats again said they were instituting PAYGO (a means of forcing Congress to pay for new spending by cutting the budget elsewhere or raising taxes) as a means of controlling it? Yeah, except for this boondoggle. Here’s from the last page of the draft bill:

(a) IN GENERAL.–One-half of the amounts in each of titles V and VI are designated as an emergency requirement pursuant to section 4(g) of the Statutory Pay-As-You-Go Act of 2010, and designated as an emergency requirement pursuant to section 403(a) of S. Con. Res. 13 (111th Congress), the concurrent resolution on the budget for fiscal year 2010.

In case you’re wondering what titles V and VI are, Jamie Dupree fills us in:

Title V of the jobs bill deals with expiring tax credits and tax breaks known as “tax extenders” – which Congress constantly renews every year or two, always resisting talk of making them permanent.

Those provisions are said to be worth about $33 billion, so one half of that would go to the deficit.

Title VI of the draft bill centers around extended jobless benefits and extra health (COBRA) provisions for the unemployed. That’s another big chunk of money.

The estimated total for the bill is $104 billion with little if anything in it which will actually create jobs.

~McQ

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Embracing Paygo

Republicans and some allies are criticizing President Obama’s proposal for “pay as you go” rules that only cover new and expanded entitlement spending. They rightly point out that legislators can get around these new rules with budgetary tricks like relabeling spending so that “PAYGO” rules don’t apply.

But some on the Right have also warned that paygo will just lead Democrats to pass higher taxes. I’m not convinced that that’s a bad thing.

Don’t get me wrong: I don’t like taxes. But deficit spending is taxation — deferred taxation, with interest. If the government is going to spend a bunch of our wealth on things other than emergencies, enlightened fiscal conservatives should want the American people to see the price tag, the sooner the better.

Otherwise we’re going to continue this business of borrowing from our children to pay for our reckless spending today – that’s what a lot of those tea partiers were protesting against, wasn’t it?

So fiscal conservatives should propose even more comprehensive and stringent paygo legislation than the Democrats have. Force the Democrats to put it all on the table – lock in tax hikes or spending cuts, now.

We’re going to have to do pay the piper at some point, so how does it help to wait until a real fiscal emergency is upon us?

The longer we wait to pay for it through direct taxation, the more time we give the spenders to come up with clever ways to conceal the cost – whether through inflation, or carefully targeted taxes designed to create as little political backlash as possible. Paygo creates forced errors.

If the Democrats decide to cover the gap with tax increases, that’s an issue for 2010 and beyond. Every new big spending plan, like the Obama health care plan, comes with a surefire tax increase in the near future. And as Californians recently showed the country, even Lefty voters don’t like the prospect of actually paying for all those neat programs for which they voted.

Sure, it’s self-serving for Republicans who engaged in no small amount of deficit spending themselves to suddenly find religion on the need for a balanced budget.

But there are good reasons to suspect that this level of deficit spending (and the necessary money-printing that has followed) is going to hit us in all kinds of unpleasant ways. If we don’t commit now to eventually paying off these debts, the problems will get even worse.

So let’s do something about it – or turn the heat up on the Democrats until they do something about it. Let’s give them all the paygo and fiscal discipline they can handle, and then some.