After the nation was warned just a few months ago that a massive $5 billion bailout with taxpayer cash was absolutely necessary to avoid a “disastrous” bankruptcy at Chrysler, the Obama Administration has now orchestrated, well, a bankruptcy.

Chrysler in Intensive Care

At the time of the bailout many observers noted that Chrysler’s problems – cars that too few wanted, made by too many workers in too many factories – had not been fixed.  This was just a temporary band-aid they said.  Management wasn’t retooled.  The United Auto Workers didn’t change their ways.  The products were the same old cars buyers previously shunned.  So just how was this supposed to work??

Well, as we now know the band-aid didn’t work, and the Administration now admits the patient needs major surgery.  At one level this is just a classic example of government kicking a difficult problem down the road using taxpayer money.  But at another level this is a lesson about our brave new Obama world.

Dr. Obama, Dr. Obama   To the Emergency Room Stat!
When I heard about the bankruptcy I thought “sad, but at least the taxpayers will now get to own the New Chrysler – for whatever that’s worth – in return for their $5 billion investment.”  Then I read the details of what the crack team of finance doctors in the Administration had done.  Anyone know a good malpractice attorney?

For those of you not steeped in corporate finance, there is a simple and basic principle concerning how a business raises money to finance its affairs (its “capital structure”):  Risk vs. Reward.  For example, to raise money the business may take out bank loans, issue bond debt and issue stocks.  The banks don’t get paid much for loaning their money to the business, but in the event of bankruptcy their debts are “secured” by the business assets, and they get paid back first.  The Banks’ investment is the safest.

Bondholders, being in the middle, get a bigger return when the business is successful, but in bankruptcy they get paid back only after the banks.  And who knows, there may not be enough money to pay them back.

Finally, there are stocks.  Stock investors get paid out last in bankruptcy so this is the riskiest way to invest money.  If things go badly, and the company goes into bankruptcy, they may not get any money back at all.  But they should get the biggest return if the business performs well.

Q.  So what happened in the Chrysler bailout?

A.  When the taxpayers were forced to put up their $5 billion a few months ago what place did they take in the capital structure?  They were in the middle – after the banks, but ahead of the stockholders.  OK.

Q.  So what is happening in the Chrysler bankruptcy?

A.  Because the bailout band-aid failed to stop the bleeding, it was time for the various capital providers to line up to get back as much value as they could.  We would have expected the banks and the hedge funds (the senior “secured lenders”) to get their money back first.  If there was any money leftover it would go to the taxpayers, being in the middle.  And if any more money was left over it would go to the stockholders.

Further, if there was not enough money to pay off the senior lenders or the taxpayers, they would be given the residual equity of the business.  Alternatively, if some outside entity, like Fiat, came in and contributed fresh money to Chrysler, they could receive some or all of the residual equity for their new investment.  That’s how it works for a bankrupt patient in a real corporate hospital.

But this is now Obama-land.

When They Showed Me the Bill I Almost Fainted
As it turns out, here’s what is actually happening.  It’s not for the squeamish:

The senior lenders will get approximately $2 billion in return for their $7 billion in loans to Chrysler, taking a loss of $5 billion.  And then they walk away; no future equity.  Go home.  Ouch!

The taxpayers get zero – that’s zero as in zilch, zip – for their $5 billion bailout.  And, they and are going to pony up $6 billion more, in return for 10% of the future equity.   Double ouch!!

The old shareholders?  They are wiped out.  Go home.  At least this part is as it should be.

Fiat, the Italian Auto Company, is putting up no money in exchange for 35% of the future equity, presumably for their future management and for funding the start up of the New Chrysler.  I don’t know if 35% is the right number, but at least it passes the snicker test.

So that’s it, right?  $6 billion in new money from the taxpayers, $10 billion in loan losses from the taxpayers and lenders, the old stockholders wiped out and 45% of the future equity handed out.

But wait! Are you doing your math??  Where is the remaining 55% of the ownership??  Oh.  Well you see it was given to the United Auto Workers Union.  The majority of the company was handed on a platter to the UAW; and they had no money in the game, and are putting no new money into the deal.  But they get 55% !!

Now why in the world would the lenders turn and run like yellow dogs with tail between legs and take a $5 billion loss??  They have the senior secured position.  This is very, very strange.  Well, you see, some of the lenders – the banks -  got TARP money.  So they are now simply puppets of the government.  But what about the other lenders, the hedge funds?  Why did they agree?  Well, they didn’t!!  They had no intention of taking 29 cents on the dollar, so they protested.  You see, they had crazy notions that the historical rule of law and how secured lending works would prevail.  But not in Obama-land; he stuffed them.

And just why did the UAW get more than half the company for free?  Because, they are loyal Democrat Party supporters, of course.  They will claim they “gave up” their VEBA claims (employee retirement).  However, this is simply factually incorrect.  Under law they have no claim on the assets of Chrysler superior to the lenders.  None.  That’s why Obama had to strong-arm the TARP’d lenders into agreeing, overruling the hedge funds.  Second, that VEBA claim was $4 billion.  Get your calculators out.  Anyone want to tell us why the UAW gets 55% of Chrysler for a $4 billion claim, that was actually worthless, and the taxpayers get just 10% for losing their $5 billion plus a fresh $6 billion!!??!!  Answer:  Because they have no choice in Obama land, that’s why!!

In Obama-land:  UAW 1, taxpayers 0.

When government steps in like this and dictates economic winners and losers it has a very chilling effect on bankers’ and investors’ future decisions to lend and invest money, crushing economic growth and prosperity.  This is why socialist economies grow slowly, or not at all.

Just today, Warren Buffet, a part-time Obama adviser,  came out and said exactly this.  Sadly, in Obama-land you taxpayers and the private sector have no choice right now…unless you are getting a Chicago style political payoff like the UAW.

Well, at least Chrysler finally got the surgery it needed; the doctors cut the taxpayers heart out.

During his meeting with the Oversight Panel Secretary Geithner gave strong assurances that he and his bureaucrats could manage the whole economy, would eventually “think through” incredibly complex issues, and finally develop workable processes and standards, more than seven months after the government began handing out Billions of TARP dollars.

But then, after the Oversight Panel meeting, he spoke at another event where he was asked about the latest Treasury Dept. scheme, a plan to form partnerships with private investors to buy the bad mortgage assets from the banks.  The deal, as announced, requires the private investor to put up only 7%, with government loans and guarantees compiling the remaining 92%.

Why, Geithner was asked, were private investors necessary?

Instead of quoting his answer, we provide this 83 second video in which Geithner expresses – with some considerable passion – his belief that the same government bureaucrats and regulators he claimed were ready and able to manage all the banks and “the whole economy,” were incapable of determining the value of groups of mortgages and would, without the participation of private investors, “substantially overpay.”

This meeting serves as a textbook example of why America’s founders wrote the Constitution to charter a government with a few, limited powers and functions.

Those powers did not – and still do not – include bailing out failed financial institutions. Further, this hearing demonstrates why the attempt to replace liberty with the exercise of vast government power is sure to fail.

Oversight Panel members asked Geithner several questions about TARP policies in dealing with banks and institutions.  Each time his answer, phrased several different ways, was that their questions were irrelevant or unanswerable because his job was to restore “the economy as a whole,” rather than consider specific institutions.

For example, panel member Sununu asked what criteria would be used to determine if an individual bank would be permitted to repay the TARP funds it had received:

GEITHNER: They’re going to have to make that judgement.

SUNUNU: Who’s going to have to make that judgment?

GEITHNER: The relevant federal banking regulatory agency will make that judgement…

SUNUNU: We’re going to ask the regulators [government employees trained to interpret banking regulations] to make a subjective judgment about whether or not our national system of credit and lending is working?

GEITHNER: No, I didn’t mean to imply it that way.  They’re going to have to make a judgment if it’s tenable or makes sense for that institution.  I was just trying to underscore the fact that the basic objective, guiding what we do, is to make sure the system is working as a whole. I understand your concern.  Everyone wants clarity and objectivity and because they’re working through this now, I can’t tell you today whether they’re going to meet that test [clarity and objectivity] but you’ll know that relatively soon.

Secretary Geithner finished up his answer by telling Sununu that the bureaucrats who were still trying to work these issues out – Seven months after the start of this program – were:

…careful, thoughtful, pragmatic people and they’ll get it right.

Geithner has disclosed that after seven months and nearly $700 Billion dollars have been handed out, he and the gang of government regulators still do not know what they’re doing, and still have not developed objective criteria or procedures!

Since the only assessment he considers valid is “the economy as a whole” then he is effectively unaccountable, because there is no predetermined standard “the economy as a whole” is supposed to meet.   If the economy improves he will take credit, or, if it gets worse he will claim it would have been much worse without his TARP program.

We citizens and taxpayers have no option but to trust Geithner to direct all the major banks and assess the state of the whole economy.  There is no competition when government runs things.  You can’t take your business elsewhere.

President Obama intends to run the nation’s health care and energy sectors the same way, with government bureaucrats chaotically evolving the rules and procedures as they go along.

The Obama gang has been carpet-bombing the media with derisive commentary regarding the hundreds of Tax Day Tea Parties held on April 15 in every state.

The official Obama doctrine is that these protests  don’t count because they are “orchestrated” stunts contrived by the Republican Party.

Don’t believe it.  The Republicans are nearly as guilty of profligate waste as the Democrats, and you’ll see few Republican office holders at the Tea Parties.

Why the Tea Parties?  Several recent government actions have outraged tens of millions of Americans.  One, is the staggering increase in government borrowing and spending being undertaken by the Obama Administration.

During his campaign, Barack Obama denounced the Bush Administration every day for running “irresponsible deficits.”  Obama’s campaign web site includes this attack on Senator McCain:

McCain Offers Four More Years Of Soaring Deficits. Just like George Bush, McCain budget plan offers four more years of soaring deficits, which the non-partisan Tax Policy Center said McCain’s tax plan would add $3.4 trillion to the debt over the next decade…

It turns out that a $3.4 Trillion debt increase over a decade would have been a bargain!

By the Obama Administration’s own, absurdly optimistic estimates, his frenzied borrowing and spending binge will add $3.4 Trillion to the debt, not over the next decade, but by next Valentines day!

The chart compares the deficit spending of the Bush era with the first two deficits of the Obama era.

The Obama Administrations first two annual deficits will add up to more than the sum of all the deficits run during the previous three administrations:

• the GHW Bush Administration; 1989- 1992
• the Clinton Administration, 1993 – 1997 (surpluses in 1998, 1999 & 2000)
• the GW Bush Administration, 2002 – 2008 (surplus in 2001)

The President says the increasing cost of health care programs, Medicare and Medicaid is the government’s biggest fiscal problem.  But Obama’s own optimistic budget projects that over his four year term the cost of Medicare and Medicaid will increase by 33%, while the cost of interest on the national debt will increase by 47%, and beginning in 2012 interest will cost more than Medicare.

We can only hope that tens of millions of Americans show up for Tax Day Tea Parties and get the attention of the arrogant, clueless Congress.  Liberty Works will be covering the Tax Day Tea Party at the State Capitol in Sacramento, CA.

It’s Day 4 of the Great AIG Horsewhipping.

.

It’s an all too familiar stunt: politicians attempting to dodge accountability and elevate perceptions of themselves by stampeding to the cameras to bellow their sanctimonious indignation at an easy target who’s already down and out of public favor.

This time the faux outrage was aimed at AIG and it’s CEO Edward Liddy.  AIG, after receiving the largest bailouts from the Treasury and Federal Reserve, paid some $165 Million in bonuses to the very same alleged “idiots who ruined the company.”

Our purpose here is not to defend the people of AIG who surely made huge mistakes.  Our purpose is to point out the motives of, and the diversionary tactics  used by politicians from the President to Senators and Congressmen who are equally if not far more accountable for the nation’s economic misery.

President Obama’s televised comment was typical of those heard from dozens of Politicians:

This is a corporation that finds itself in financial distress due to recklessness and greed…its hard to understand how dirivative traders warranted any bonuses, much less $165 Million in extra pay.  How do they justify this outrage to taxpayers who are keeping the company afloat…I’ve asked Secretary Geithner to pursue every single legal avenue to block these bonuses and make the taxpayers whole.

Yesterday, AIG C.E.O. Edward Liddy was hauled into a Congressional committee hearing to face abuse, ignorant questions, petulant challenges and moralistic accusations from show-boating politicians, who should have bowed their heads in shame.

It turns out that Mr. Liddy, 63,  has  been with AIG only six months and is in no way responsible for its meltdown.   He’s an experienced, seasoned executive who has been both CFO and CEO of Allstate Insurance.  He was semi-retired when the phone rang and Treasury Secretary Henry Paulson asked him to take on a nearly impossible and thoroughly thankless job: Extricate AIG from the derivatives trading business that brought it to insolvency, while keeping the healthy parts of the company profitable so they could survive, eventually repay government loans,  and save thousands of jobs.

It’s interesting to compare Mr. Liddy’s experience and qualifications with those of his politician-attackers.  Congressman Lynch of Massachusetts, one of the most abusive in yesterday’s hearing, was an iron worker and then a mid-level official in the iron worker’s union until he was elected to the state legislature in 1994, and then to Congress in 2002.  Obviously, he has no executive experience that would rival Mr. Liddy’s.

Another hostile inquisitor was Congressman Barney Frank.  As a career politician, in his State’s legislature and Congress since 1973, Frank has always dodged the accountability that executives like Mr. Liddy accept every day.  If one member of Congress is most responsible for the mortgage blight caused by Fannie Mae and Freddie Mac, it would have to be Barney Frank, Chairman of the House Committee charged with supervising and Regulating Fannie and Freddie.

And President Obama, who has no executive or management experience at all, would be completely over his head if he attempted to do what Mr. Liddy is doing at AIG.

Mr. Liddy, who  will receive no bonuses and is being paid all of $1 per year, patiently explained to the committee the circumstances that led to payment of the bonuses.  Yes, bonuses went to individuals who worked in the AIG derivatives trading unit that caused Billions in losses that brought the company to insolvency and dependence on massive government bailouts.

Why?  Because after due consideration Mr. Liddy decided the least risky way to manage and eventually to “unwind” or dispose of the complex, and intertwined groups of toxic, derivative investments was to assign the tasks to some of the same people who had assembled them in the first place.  Most of these people would have left AIG many months ago.  But Mr. Liddy’s predecessor offered them “retention bonuses” in exchange for staying on long enough to maintain and eventually “unwind” the “books of business” they were most familiar with.

Some retention bonuses  were paid to people who recently left the company because those folks had completed their “unwinding” assignments to the satisfaction of senior AIG management and overseers from the Federal Reserve and thus had earned the agreed upon bonus.

The alternative, bringing in new people who may have had relevant experience but were unfamiliar with AIG’s specific “books of business” was, in Mr. Libby’s judgment, more risky and could have resulted in much greater cost to the government.

Now, we don’t know if Mr. Liddy made the best decision.  We do know that Barack Obama and the bloviating Senators are not qualified to second-guess Mr. Liddy’s decision.  We do know he has far more credibility than any of them, and for that reason alone, deserves the benefit of the doubt.

We also know the cost of the AIG bonuses, called an “irresponsible waste of taxpayer money” by Obama and his allies in Congress, equals about two tenths of one percent of the cost of Obama’s Big Stimulus (B.S.), passed a month ago.  The stimulus was hyped as so urgent it had to be passed in a few hours, before any Senator or Congressman had read its thousand pages, when the one and only copy still had hand written corrections, cross-outs, and margin notes.

For those politicians who are accountable for The Big Stimulus (B.S.) to feign outrage at the cost of the AIG bonuses is like a man who smoked in bed and set his house on fire berating the firefighters for trampling his $20 rose bush.

One is reminded of the words of Jesus in Mathew 7: 3

Why do you look at the speck of sawdust in your brother’s eye and pay no attention to the plank in your own eye?

Update:

This morning Senator and Democrat Party Leader Chris Dodd admitted that he included fine print in the Big Stimulus (B.S.) that specifically authorized and permited payment of bonuses to AIG Derivative traders.

ILMP uses a well-worn leftist tactic, rolling scores of false assertions, and miss-statements of fact into a few pages so that it takes hundreds of hours to compose corrections by compiling all the data.  Our counter-tactic will be to dispute key assertions, upon which most of the rest of the assertions rest, starting with this one:

…for far too long, the resilience, optimism, and industriousness of the American people have been frustrated by irresponsible policy choices in Washington. Prudent investments in education, clean energy, health care, and infrastructure were sacrificed for huge tax cuts for the wealthy and well-connected.

Obama’s intent is to plant in the mind of the reader the perception that there has been a trade-off, that Congress and previous presidents faced a choice between tax cuts and “prudent investment” and that they chose the tax cuts, and that as a result the government didn’t collect enough revenue and had no money to increase spending or  “prudent investments.”  Obama and The Left identify Reagan era tax cuts as the beginning of the this, “far too long” problem.  Under Reagan all tax bracket rates were reduced.  The top  bracket was reduced from 70% to  28%.

If we accept the conclusion that too little tax revenue and too little spending caused all our nation’s problems, then of course the Obama agenda of tax increases and oceanic increases in spending makes sense.

Income Tax Revenue 1984 - 2008

As the chart demonstrates, income tax revenue began to increase dramatically, just after the Reagan tax cuts were implemented.  Revenue actually went down just after the first President Bush broke his “no new taxes” pledge and joined Congressional Democrats in raising rates.

The only significant tax revenue decline over the past quarter century resulted not from tax cuts but from a recession caused by the bursting dot-com stock bubble and the 9-11 terrorist attacks.  Two years later, Congress and President Bush implemented significant cuts in all tax bracket rates, and in the rates for Capital Gains and Dividends.  Only then did the economy begin to recover from the Dot-com-911 recession, generating increasing tax revenue for the government.

Since last fall tax revenue has been falling, but not because the rates are too low.  The rates the same as they were when revenue was higher, and rising.   Revenue is falling because a severe recession has, again, lowered taxable income.

As the data demonstrates, declining tax revenue cannot be the cause of America’s economic problems.  But it clearly is possible that  government has caused problems by collecting TOO MUCH from tax payers, especially small businesses.

In the next post we’ll examine spending data and show how it also contradicts Obama’s assertions.

President Obama’s Fiscal Responsibility Summit bamboozled the stupefied national media into reporting on deceptive campaign-style hype as if it were a serious policy meeting.

Chutzpah (pronounced and sometimes spelled “hutzpah”) is a Yiddish term meaning shameless, brazen temerity, combined with contempt for the intelligence of others.  Perhaps the most famous description of Chutzpah came from humorist and author Leo Rostin:

Chutzpah is that quality enshrined in a man who, having killed his mother and father, throws himself on the mercy of the court because he is an orphan.

By hosting a “Fiscal Responsibility Summit” at the White House, President Obama has surpassed all rivals and earned the title of Chutzpah Grand Champion for all time.

Barack Obama:

• Promoted the $787 Billion “Stimulus” package, the largest spending Bill in American history.
• To a meeting of Democratic Congressmen said:  “Then you get the argument that this is not a stimulus bill, this is a spending bill.  What do you think a stimulus is? [laughter]  That’s the whole point. [more laughter] no, seriously.  THAT’S THE POINT!
• Added $1.3 Trillion, plus interest, to the government’s debt in just three weeks.
• Gleefully promises to spend Trillions more in borrowed money on a constellation of stale, discredited, social engineering schemes and causes.
  

Barack Obama then convened a “summit” to hector the rest of America about “fiscal responsibility!”  The Chutzpah is simply breathtaking! This is like the Hooters girls scolding the church choir for immodest robes, or the Jim Beam Company ordering employees to attend an AA meeting in the distillery tasting room!

Here are some excerpts from Pesident Obama’s speech at the Fiscal Responsibility Summit:

My administration came into office one month ago in the depths of an economic crisis unlike any that we’ve seen in generations.  And we recognized that we needed to act boldly, decisively and quickly — and that is precisely what we did.

They did indeed act quickly.  Under Obama’s leadership the Congress that still hasn’t produced the regular budget for the current fiscal year, which began October 1, slammed together $787 Billion in extra spending, mostly on liberal priorities that have been proposed for years but couldn’t survive the regular legislative process on their own merits.  This monstrous act of bold fiscal incompetence was completed so quickly there wasn’t even time to print the final version of bill before the vote.  The only copy was a previous version with handwritten corrections, cross-outs, and notes in the margins.  No Congressman or Senator who voted for the stimulus had read it.

This administration has inherited a $1.3 trillion deficit — the largest in our nation’s history — and our investments to rescue our economy will add to that deficit in the short term.

The President and his media spokespeople repeat this “inherited deficit” claim every day, hoping to persuade us that it is verified fact.   But Without the Big Bailout, that Obama fully supported during his campaign and has vowed to spend in its entirety, the inherited portion of the deficit would have been about $600 billion.

During Obama’s four years as a Senator he did absolutely nothing to reduce the deficit except call for cutting off support for the Iraq operation, just as the troops were engaged in the intense combat phase of the spectacularly successful surge strategy that has brought peace and stability to Iraq.  Abandoning Iraq might have reduced the deficit by about $75 Billion, while setting off a firstorm of horrific consequences.

He never advocated any specific cuts to the budgets of any federal department or agency.  Indeed, he campaigned on promises of Trillions in new spending!  Portraying himself as the victim of someone else’s negligence is fraudulent, to say the least.

We also have long-term challenges — health care, energy, education and others — that we can no longer afford to ignore.

Energy is a challenge only because Obama and his supporters plan to restrict or even ban cheap, abundant, domestic sources of energy and spend Billions of tax dollars on dubious, politically correct “alternative” energy and conservation schemes.

Education is a challenge because no matter how consistently they fail, the same federal programs, bureaucracies and teacher unions continue to enjoy ever increasing support from the federal budget. Obama is a staunch supporter of these special interests.

Health care is indeed a challenge after decades of bone-headed government programs, regulations, restrictions and mandates imposed on health care providers and health insurance carriers.  Obama’s solution is for government to assume even more power, and take ove health care responsibilites for tens of millions, or even hundreds of millions of people who are now covered by private insurance.

But I want to be very clear…we cannot, and will not, sustain deficits like these without end.

After just promising to spend hundreds of Billions more on health care, energy and education this assertion was utterly preposterous!

We are paying the price for these deficits right now.  In 2008 alone, we paid $250 billion in interest on our debt — one in every 10 taxpayer dollars.

In the first 20 days of his Presidency Obama  added over $1.2 Trillion to the federal debt.  That increase, plus the deficits already baked into the budget will increase this interest cost by 50%, to about $375 Billion, in just two years.  And that’s before the borrowing Obama just promised, to pay for government health care, even more subsidies to failing education programs, and a new alternative energy program.

…today I’m pledging to cut the deficit we inherited in half by the end of my first term in office.

OK, he claims to have “inherited” a deficit of $1.3 Trillion.  Half of that would be $650 Billion.  The chart below shows the deficits during the Bush years, that the Obama campaign characterized as irresponsibly huge.

Obama is claiming credit in advance for “reducing the deficit” to 43% more than the largest Bush deficit.  Obama’s amazing speech continued…

To start reducing these deficits, I’ve committed to going through our budget line by line to root out waste and inefficiency…And already we’ve seen how much money we can save, just in the last 30 days.

Take one example — the Department of Agriculture has moved some of its training programs online, saving an estimated $1.3 million a year.  They’re modernizing their financial management system, saving an estimated $17.5 million.

This would be a real knee-slapper if it weren’t so arrogantly contemptuous of us, the audience he was speaking to.  The Dept. of Ag. will save $19 Million on training and bookkeeping.  But every year the same department hurls nine hundred times that amount at farming companies to subsidize their businesses!

The reason Obama talked about saving relative nickels and dimes on training instead saving serious money on farm subsidies is to avoid a fierce backlash from an entrenched special interest constituency who would lose it’s annual handout.  It’s the special interest spending that grows government, not the lack of on-line training.

Obama went on to claim that:

…we are making important progress towards fiscal responsibility this year in this budget.

With this preposterous claim Obama surpassed every politician in history in The Great Chutzpah Competition!

The Bottom Line

Even as he TALKS about “fiscal responsibility” President Obama is racing to spend this government into an unprecedented financial crisis.  It will take decades for America to recover from the damage being done right now, in Washington.

Before Congress passed the so-called “stimulus” the Administration and the Democrats hectored us continuously with urgent warnings of economic doom if it wasn’t passed immediately.

For example, David Obey, Chairman of the House Appropriations Committee said, in response to Conservative objections:

Another week that we delay is another 100,000 more people unemployed.  I don’t think we want that on our consciences.

House Speaker Nancy Pelosi, arguably the second most powerful Democrat, behind President Obama, told Fox News:

We were — we will lose half a million jobs a month the longer we go without a package.

These comments were designed to deceive the public into believing that passing this legislation would bring about immediate results, that layoffs would all but cease and jobs would become secure.

But now that the Trillion Dollar Borrow and Spend measure has passed, the urgency has drained from from the political-media establishment.  Obama Advisor David Axelrod was typical of the new, leisurely tone when he appeard on Fox News Sunday, and was asked how Americans would know if the so-called stimulus package was working and how to measure it.  Axelrod responded…

Well, I think that there’ll be signs of activity very quickly. As you know, the package will help fund infrastructure programs and other programs that are ready to go around the country.

Let’s deal with the myth that there are infrastructure projects that are “ready to go” or “shovel ready.”   The first step in a government infrastructure project is to appropriate the funds to pay for it.  After funding is secured the following steps begin

1. Complete the Environmental Impact Report (EIR): 6 to 24 months.
2. Respond to protests and lawsuits from so-called “environmental groups” that always attempt to derail every construction project before it gets started: months to years.
3. Complete planning and engineering and in some cases acquire land:  Months to years
4. Conduct the convoluted government bid process to select a contractor to do the work: Up to a year.

Steps 1 – 4 cannot possibly be completed in less than 24 months and usually take a lot longer.  These steps rarely begin until Congress appropriates funds for the project because there usually is no money to pay for them before the appropriation.

Axelrod predicted “signs of activity” rather than listing any construction projects because he knows no workers will be hired and no work other than paperwork will begin for a long time.

If there were any “shovel ready” projects, where workers could be hired immediately, the Obama Administration and the media cheer-leaders would be telling us about them – over and over.  Camera crews would be sent to project sites to interview the contractors and the smiling workers, excited about getting started.

Axelrod’s answer continues…

But it’s going to take time for that to show up in the statistics. The president has said it’s likely to get worse before it gets better. It is true that without this program, it could be — it could be much, much worse.

And so I don’t expect the [unemployment] arrow to bend down by the end of the year, but I do expect the rise in unemployment to be retarded by the things that were done this week.

So, the language has radically changed from hopeful urgency, to grim acknowledgment of a lot of misery ahead, with millions more layoffs to come.

The Stimulus is a hoax.  Obama and the Democrats used the economic downturn as a pretext to bury  dozens of expensive, liberal boondoggles in emergency legislation they claimed had to be enacted to prevent, in Obama’s words, “turning a recession into a catastrophe.”

Over the next two years, leading up to the mid-term elections, the Administration and the media will claim that even more jobs would have been lost had Congress not decided to borrow an additional Trillion Dollars.  The media will help by contriving lists of “jobs saved” by this gargantuan bill. Hopefully, the voters will see through these claims and begin to demand repeal of the stimulus before all the cash is squandered.

Repeal The Stimulus!

It’s not too early to get started.  Urge your friends to  contact  Senators and Representatives and demand repeal of the Stimulus.

To figure out what this means the one would have to

• read section 5302 of title 49, US Code to learn what kinds of grants are authorized, and
  
• Read section 5307 of Title 49, US Code to learn what types of grants 80% of the money is to be spent on, and
• Read subsections i, l,  and j to see what kinds of grants are prohibited, and
• Read section 5340 to learn how 10% of the funds are to be spent, and
• Read section 5311 to learn how the last 10% of funds are to be spent.

To be careful and thorough a Senator or Congressman should look into the history of each of these grant programs and determine if they have been efficient and cost effective in the past.

Conscientious due diligence on just this portion of one paragraph could take a Senator or Congressman and his staff two or three days to complete.   And this is about 1/3 of one page, out of a thousand page bill, with thousands of references to other laws and programs.  Nobody in the Administration or Congress had the time to study all the government departments and agencies and programs that are to receive extra funds to see if determine if they had been good stewards of the funds they had already received.

The best word to characterize voting for this gargantuan spending bill without making any effort to understand what’s in it:  Negligence.

The version passed by the Senate was not the same as the version passed by the House, even though President Obama, out on the campaign trail where he is obviously most comfortable, spoke of “IT” as if there was only one bill.

A Conference Committee, representing the two houses of Congress, met for all of 18 hours, to reconcile the differences between the two bills, each almost a thousand pages long.  The very first copy of the final, thousand page bill hasn’t even been produced yet.   The document the House and Senate voted on, which can be downloaded from Speaker Pelosi’s website, has handwritten notes indicating the changes made by the Conference Committee.  Here are a couple of sample pages:

No Senator or Congressman knows everything in the final version of the bill, because there simply hasn’t been enough time enough time for them to read it.  Below is the Senate’s Oath of Office.  Does voting to  spend $1 Trillion on programs not authorized by the Constitution, without even reading details, violate this oath?

I do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter: So help me God.

The man behind Senator Reid, beaming like a proud father, is Senator Chuck Schumer.

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$9,048,000,000, to carry out the purposes of the Federal Buildings Fund, of which not less than $1,400,000,000 shall be available for Federal buildings and United States courthouses, not less than $1,200,000,000 shall be available for border stations, and not less than $6,000,000,000 shall be available for measures necessary to convert GSA facilities to High-Performance Green Buildings…

That’s NINE BILLION DOLLARS, not to buy or build, but to “convert” buildings, by adding politically correct “green” stuff. 

To put this massive sum in perspective consider this shopping center, The Mall of Cincinnati, with almost 1.2 million square feet of store space.  Located 15 miles northwest of downtown Cincinnati, Ohio, this is the largest shopping center in the Tri-State Region. It’s for sale, for $12 Million.  You could purchase 750, major, regional shopping centers like this one, for what Congress is about to spend to convert existing buildings to “green buildings.”

This huge shopping cneter is for sale for less than 1% of the $9 Billion politicians are about to spend on “green” retrofits for government buildings.  And by the way, that $9 Billion is only one percent – 1% – of the current total price tag for The Big Stimulus, the largest load of pork in the history of the world!

President Obama addressed the economic crisis this morning:

The economic crisis we face is unlike any we’ve seen in our lifetime. It’s a crisis of falling confidence and rising debt.

If it’s a crisis of “rising debt” then how will you solve it by adding an additional Trillion Dollars in debt?

Obama Continued…

A failure to act, and act now, will turn crisis into a catastrophe and guarantee a longer recession, a less robust recovery, and a more uncertain future. Millions more jobs will be lost. More businesses will be shuttered. More dreams will be deferred.

When the President says “act” he means Congress must pass the largest single borrow-and-spend bill in American History, mostly an assortment of ineffective social engineering schemes long favored by liberals.  Since this didn’t have to happen, and since it was caused by government intervention, it’s already a catastrophe.

More from Obama’s remarks:

That’s why I feel such a sense of urgency about the Economic Recovery and Reinvestment Plan that is before Congress today. With it, we can save or create more than three million jobs, doing things that will strengthen our country for generations to come.

But this so-called “plan” is still evolving in the Senate, and then, if it passes the Senate, it  must be reconciled with the House version through a the usual erratic process of political horse trading.   How can the President possibly know how many – if any – private sector jobs will be “saved or created” when he doesn’t yet know what the final bill will include?

Of course, no matter how high unemployment soars after the bill passes, Obama and the Democrats, with vigorous support from the establishment media, will claim the toll would have been even greater had their massive borrowing and spending had not “saved” millions of jobs.

And by the way…Won’t the “generations to come” be a bit resentful that our generation borrowed an extra Trillion Dollars for them to pay off?

Now, in the past few days I’ve heard criticisms of this plan that echo the very same failed theories that helped lead us into this crisis – the notion that tax cuts alone will solve all our problems…

Tax cuts did not cause the credit bubble and reckless mortgage lending that led to this crisis.  The notion that none of this would be happening had we paid higher taxes is absurd.  And, nobody claims that tax cuts alone can solve all of America’s problems.

Nor is there any reason to believe this giant spending binge will solve even some of America’s problems.  It will simply divert resources that would otherwise fund private sector investment, innovation and job creation to the same discredited schemes Democrats have promoted for eighty years.  The record of these failed programs – the 45 year War on Poverty has already cost more than $4 Trillion and poverty is still winning -  demonstrate that government has a very poor track record when it comes to solving problems.

I reject that theory, and so did the American people when they went to the polls in November and voted resoundingly for change.

Obama’s campaign speeches always criticized President Bush and the Republicans for running deficts for seven years. How many of those voters expected that electing Obama would cause a deficit in 2009 that exceeded the total of all seven Bush deficits?

Be assured, if so-called “stimulus” borrowing, diverting resources from the private sector to the government sector, had ever increased employment, profits, retirement savings,  household income or wealth Obama and the Democrats in Congress would stampede to the cameras to tell us exactly when and by how much.  In reality, there are no examples of past successes that would lead to the conclusion that the government can improve economic conditions or increase employment by borrowing and spending an extra Trillion Dollars.

Gallop Poll Dated February 1:

Do you think Congress should pass Obama’s economic stimulus plan basically as Barack Obama has proposed it, pass it but only after making major changes, or reject this plan?

• • Pass as proposed: 38%
  • Pass, but only after major changes: 37%
  • Reject: 17%

This is a stunning deterioration in public confidence in Obama’s stimulus.  Less than two weeks ago it won 66% approval.

CNN Fact Check: The [GOP Ad's] Claim That Obama Would Spend A Trillion Dollars More Is “Misleading” Because It Doesn’t Take Into Account The Savings From Other Policy Changes Obama Is Calling For. Verdict: Misleading. The figure McCain gave is based on his campaign’s tally of the costs of numerous programs Obama has discussed, but ignores the savings from other policy changes Obama is calling for.”

Then it goes on offense:

McCain Offers Four More Years Of Soaring Deficits. Just like George Bush, McCain budget plan offers four more years of soaring deficits, which the non-partisan Tax Policy Center said McCain’s tax plan would add $3.4 trillion to the debt over the next decade…

Update: Click to see a revised deficit chart as of the end of the 2010 fiscal year (9/30/2010)

Obama Deficit projection

President Obama has not proposed any spending cuts, except to order his appointees at the Pentagon to study and recommend cuts in military funding that would not take place until next year.   With the Obama Stimulus plan passed by the House last week, and the bank bailout, 2009 will be the largest deficit ever.  The chart compares what the Obama campaign called  the “soaring” deficits of the Bush years with the projected deficit this year.  The comparisons are for the government’s fiscal years, from October 1 through September 30.