I am exagerating about the date 514 years from now, but consider that until recently most historical accounts of the Great Depression give FDR credit for ending it.  There have been books like The Forgotten Man which set the record straight, but few probably read this.  However nearly seventy years after the depression ended two UCLA economists place the blame where it belongs…on FDR.

“The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes,” Cole said. “Ironically, our work shows that the recovery would have been very rapid had the government not intervened.”

This is interesting in that the research was published in 2004 and I only heard about it on talk radio (Jim Quinn).  Perhaps in a prophetic moment the authors made this statement four years before our current economic meltdown and politicians’ weak attempts to “fix” the problem.

“Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump,” said Ohanian, vice chair of UCLA’s Department of Economics. “We found that a relapse isn’t likely unless lawmakers gum up a recovery with ill-conceived stimulus policies.”  [emphasis added]

While it is refreshing that the record is starting to be set straight my guess is that most school history books, if they teach about the Great Depression at all, still give credit to FDR.  Perhaps students should learn about this historical period in their economics class rather than U.S. History.

The framers wrote the Constitution to provide for a separation of powers, or three separate branches of government. Each has its own responsibilities and at the same time they work together to make the country run smoothly and to assure that the rights of citizens are not ignored or disallowed. This is done through checks and balances. A branch may use its powers to check the powers of the other two in order to maintain a balance of power among the three branches of government. The three branches of the U.S. Government are: Legislative, Executive, Judicial

For this system to work and in turn ensure that we all enjoy our freedoms each branch is expected to battle to maintain their power to balance the power of the other branches.  What will happen when one branch absorbs more and more power at the expense of another branch with little or no balance from the other branch?  Until recently the answer to that question has been one of theoretical discussion, but now we are seeing a seemingly concerted effort to increase executive power while most of Congress bickers seems oblivious to the usurping of power;

The passage of Obamacare had numerous reasons for us to dislike it and since it was passed we have gotten a good look at what’s in it (thanks Nancy Pelosi) including giving almost unlimited power to HHS Secretary Kathleen Sebelius.  Sebelius used that power to cut an Obamacare program to provide long-term health insurance coverage for Americans.  This followed on the heels of her WARNING to health insurance providers not to blame increased premiums on Obamacare or in other words forgo their constitutional right to free speech.  By the way the health insurance premiums for Americans rose 9 percent this year.  You’ll be able to keep your health insurance plan…if it still exists AND you can afford it.  Another unusual perk that Congress gave the executive branch in Obamacare is a pre-approval of billions of dollars in spending circumventing the constitutional provision of an annual budget passed by the House of Representatives.  Why would Congress give the executive branch such power?

One of most bizarre (and pathetic) pieces of legislation was the Dodd/Frank financial bill; a bill written by arguably the two most culpable actors in the 2008 economic meltdown.  Part of the legislation created the Consumer Financial Protection Bureau (CFPB)which was described by opponents as,

“This is a regulatory agency with unparalleled powers, including consolidated and expanded regulatory authority over credit and debit cards, mortgages, student loans, savings and checking accounts, and most every other consumer financial product and service. Essentially, all consumers’ money falls under bureau purview unless it’s under a mattress…With a battalion of bureaucrats at the ready, and a budget of $500 million, the CFPB is busily gathering intelligence on most every type of financial firm and preparing regulatory sorties under existing laws.”

– Diane Katz –

The CFPB’s actions have ZERO Congressional oversight provisions, in other words Congress can take no action to reel in the agency.  In fact the budget for CFPB is not even controlled by Congress, but rather it is controlled by the Federal Reserve which you ought to know is not a government entity.  To paraphrase we now have an agency with unlimited powers over the banking agency without any responsibility to report to elected officials, oh and we pay for it.  Why would anyone give the executive branch this kind of power?

How about Obama’s extra-Constitutional use of “Czars” to push his agenda?  In October Judicial Watch released a report about Obama’s czars;

 ”Many of these ‘czars’ are unconfirmed by the Senate and are largely unaccountable to Congress. Further, their activities are often outside the reach of the Freedom of Information Act (FOIA), creating a veil of secrecy about their precise role in the administration…Czars appointees have seized unprecedented control over major aspects of government policy and programs. In some instances, unconfirmed czars have authority, in seeming violation of the U.S. Constitution, over certain Senate-confirmed officers…A number of the czars have been linked to scandals, thefts and kickbacks, flagrant and offensive statements, conflicts of interest, and radical leftist political ideologies and policies…Barack Obama’s unconstitutional use of czars to help run his administration is at odds with republican, limited, and accountable government. Obama has simply installed his radical leftist allies in various positions of power while thumbing his nose at Congress and the American people. As we document in this report, too many of these czars have proven to be corrupt or radicals (or sometimes both). No wonder the Obama administration fights tooth and nail to allow these czars to operate in secret. Nevertheless, Judicial Watch managed to develop this comprehensive list of czars as part of efforts to ensure government accountability.”

The Obama administration seems to have taken the motto, ”If at first you don’t succeed in Congress, legislate from the executive branch through the agencies.”  The most recent example is regarding his most recent stimulus program (which he misnames the Jobs Bill) and his failure to gather support for the plan.  Fox News reported Obama’s comments that he was,

“instructing his staff to move forward on job-creating initiatives without congressional approval where possible. The White House announced steps to speed environmental and other regulatory approvals for 14 public works projects across the country.  ‘We’re not going to wait for Congress,”

This follows actions by the House to reign in Obama’s EPA and their actions to implement Cap and Trade even though passage of the legislation was soundly defeated in Congress.  The House voted (Republicans and even 19 Democrats) to ban the EPA’s passage of greenhouse gas regulations.  There has not been any action in the Senate as Harry Reid seems to be willing to give the executive branch more power even though this legislation has broad bipartisan support.  Why would anyone give the executive branch this kind of power?

President Obama ran his 2008 campaign on ending the wars in both Iraq and Afghanistan; not “winning” the wars, just ending them.  Here we are nearly three years into his term and the conflicts, if anything, are getting much worse as our enemies seem to be energized by Obama’s lack of commitment to winning.   The anti-war presidential candidate has turned into the war president with additional military action in Libya.  Admittedly he has some authority to take action when America is threatened, but must get Congressional approval after 90 day.  Even Obama’s PR network, MSNBC, seems perplexed by this stance,

“Obama’s stance is striking: not only hasn’t he addressed the question of congressional authorization, but acting without it appears to be at odds with what he stood for when he ran for president.  ‘The President does not have power under the Constitution to unilaterally authorize a military attack in a situation that does not involve stopping an actual or imminent threat to the nation,’ Obama told the Boston Globe in 2007.  Obama has not argued that Gadhafi is “an actual or imminent threat” to the United States, only to the Libyans who oppose him.”

And more recently he is sending more troops to “advise” in Uganda…because our national interests are at stake there.  It turns out he is not against the use of force, just using force where we actually have national interests.  Yet Congress sits by and by virtue of their silence gives the executive branch more power.

The American Thinker listed a number of predictions regarding what Obama would do when he faced a Republican majority in the House and most of them agreed that he would work through the federal government’s bureaucracy,

 ”John Fund believes that Obama 2.0 will rely on executive orders and rule-making to circumvent Congress. Fund sees signs of this approach in a new Labor Department plan to make life even more miserable for business through a variety of means not resorted to by previous administrations, Republican or Democrat. Conversely, monitoring of unions will be weakened by transferring the responsibility for whistle-blowing investigations from OSHA to a department charged with scrutinizing unions. Given the added workload from OSHA, union-monitoring (how union leaders spend workers’ dues, for example) will inevitably be weakened.

Charles Krauthammer foresees that Obama will also exercise his control over the fourth branch of government — the bureaucracy, the regulations, and the rules it lives to proliferate — to power his agenda for the next two years. Obama the poker player has already tipped his hand. He is using bureaucratic edict to advance card check, bypassing a Congress that resisted union demands to bring about card check via legislation.

That strategy is tailor-made for Obama. Rules accumulate stealthily under the radar screen. They are incomprehensible, and most people’s eyes glaze over them anyway. Even many of the politicians responsible for passing the Patient Protection and Affordable Care Act (aka ObamaCare) admitted that they did not bother to read the bill. Business groups might fish them out, but these will be portrayed as greedy people who want to exploit workers, despoil the environment, and plunder the nation to line their wallets.

The rules and regulations are going to come fast and furious.  We are laboring under a massively expanding regulatory regime that has extended its tentacles into numberless nooks and crannies across our nation (and the playing field has widened with the takeover of two car companies, ObamaCare, and the new rules-laden Federal Regulations Bill). Big Brother has become Big Bully.  Obama focuses his regulatory imperialism on labor and environmental issues, defying the will of the people. Last year, he warned Congress that if it did not pass cap and trade, his EPA would bring it about via rules and regulations — Congress be damned…”

Actually we’re damned…Vladimir Putin must be impressed.

WHERE IS JOHN GALT?

George W. Bush achieved a similar price drop by rescinding a presidential order (his father’s) to open up drilling which eased market fears about events in the Middle East and reduced price speculation. Bush’s action was a supply side action as consumers and investors felt that there would not be any significant interruption of the supply of oil. Obama, being the most brilliant man ever elected president, did Bush one better. He and his czars have actually been constructing road blocks to traditional energy exploration and production in the United States in favor of “renewable” sources. Obama’s action has caused a change in the demand.

You may ask whether folks have just gone out and bought Government Motor’s Chevy Volt, or started walking to work, or maybe just properly inflated their tires. If you thought that you’d be wrong. It seems that the demand has been reduced because the economy is so bad. Here is the AP’s unbelievable headline:

The upside of economic worries: Lower gas prices

The following excerpt is the article’s third paragraph:

“Economist Philip Verleger equates it to ‘a stimulus program for consumers,’ leaving them more money for clothes, dinners out and movies. Over a year, a 50 cents-per-gallon drop in gasoline prices would add roughly $70 billion to the U.S. economy.”

I guess it is a stimulus for those of us fortunate enough to still have jobs. I would rather, however, not benefit from the destruction of others and to their benefit the AP did acknowledge this later in the story. Perhaps I expect too much from media; no I don’t expect too much I hope for better and am always disappointed. This would have been a great opportunity to provide readers some information about economics and contrast the Bush versus Obama lowering of gasoline prices. Instead the AP filled the article with vacuous quotes from people who, surprise surprise, offered how lower gas prices will benefit them.

Can a Pulitzer Prize be far away for these writers?

Or a Nobel Prize in economics…they seem to give those away to just about anybody.

John Galt [Ayn Rand] summed up my position on the issue;

“I swear, by my life and my love of it, that I will never live for the sake of another man, nor ask another man to live for mine.”

The Great Vilsacko performs his money magic trick.

I am currently reading Return to Prosperity by Phd economist Arthur Laffer and I’ll review the book as usual after I finish it, but a recent statement by President Obama’s Agriculture Secretary had me referring to the “Econ 1” phrase Dr. Laffer uses frequently when describing politicians lack of knowledge that is taught in a basic economics class. Secretary Vilsack appeared on MSNBC’s Morning Joe to tout the benefits of the Supplemental Nutrition Assistance Program (“SNAP” or Food Stamps as we used to call it). Vilsack called SNAP the “most direct stimulus you can get into the economy during these tough times.” I guess that he also considers the fact that America has vastly increased the number of people “stimulating” the economy as 1 in 7 people are in the program. Let that sink in…NEARLY 15 PERCENT OF OUR FELLOW AMERICANS GET FOOD FROM THE GOVERNMENT!

What ever happened to the desire to teach a man to fish rather than giving him a fish? Vilsack was not satisfied with his statement about the “stimulating” effects of enslaving our fellow citizens with handouts and added this gem,

“Obviously it’s putting people to work. Every dollar of SNAP benefits generates $1.84 in the economy . . . If people are able to buy a little bit more in the grocery store and then someone’s got to stock it, shelve it, package it, process it, ship it, all of those are jobs.”

That convinced me! For every dollar of SNAP government money an additional 84 cents is generated!  His number was so exact; down to the penny therefore it must be true!  This is perhaps the greatest economic discovery on Earth! Why don’t we give EVERYBODY SNAP benefits? Think how fast the economy will recover if everyone got free food. This is exciting for me! (you can see how excited I ambecause I am using so many exclamation marks! – see I did it again) I ran some rough numbers using Mr. Vilsacks ratio of one dollar generates $1.84 into the economy to see how much free food needs to be given away to fix the economy:

• Our debt is around $14 trillion
• A Harvard University study determined that we pay approximately 23 percent in federal taxes (that’s income tax, fuel taxes, corporate taxes passed on to the consumer, other hidden taxes, etc.)
• In order to get $14 trillion in revenue we need to “stimulate” the economy using the Vilsack Plan by around $56 trillion dollars (that’s $14 trillion divided by the tax rate – I rounded to 25%) or esenntially we need to have $56 trillion income to put $14 trillion in the Treasury.
• Since the Vilsack Plan pays $1.84 for every dollar infused into the economy we only have to give out $30 trillion dollars in free food to fix the economy! (that’s $54 trillion divided by 1.84).

In order to simplify the calculations I ignored the administrative costs associated with the SNAP program and assumed that all the folks who help administer the program do it for free.  Simple and yet effective. I would suggest to Mr. Vilsack that if the tax rates were increased to 100 percent we would not have to spend as much money to fix the economy. We’d only need $7.5 trillion in free food give aways. No wonder these brilliant folks are in charge of the economy. They are so smart.

A nagging question keeps popping up from the back of my mind. I should push it back down, but sometimes logic and Econ 1 principles just cannot be ignored. So Mr. Vilsack where did you get the money to give away under SNAP? Did you not have to first take money away from some other citizen who earned the money in order to give to another person (we’re not even sure they are all citizens)? Why is better to take money away from someone who earned it? Could they not have spent the money themselves and generated the same result? Are you not taking the purchasing power away from one person and giving it to another who did not earn it? At what point will the wage earner figure out the scam and decide to go for SNAP instead of working or go Galt?

There is still one nagging question that I have.  Why won’t anyone, just once, ask one of these guys where their numbers come from.

Welcome back my friends to the show that never ends

We’re so glad you could attend

Come inside! Come inside!

Come inside, the show’s about to start

guaranteed to blow your head apart

Rest assured you’ll get your money’s worth

Guaranteed to blow your head apart

- – Emerson, Lake and Palmer (edited)

Now that another “stimulus” has passed Congress and Obama has signed both political parties are, on the surface, claiming victory.  I guess they have won at the cost of our country’s future.  The Democrats got the ability to spend more money, the Republicans avoided raising taxes, and Obama gets to put all this behind him until way after the 2012 presidential elections.  I, however, feel as though they have “just pissed on my leg and told me it was raining.”  Here’s the deal in a nutshell as I see it:

• The debt ceiling gets raised around $2,000,000,000,000.00 (that’s 2 TRILLION DOLLARS)
  • Translation:  Obama and Congress (both Republicans and Democrats) get to borrow an additional $2 trillion to spend over the next 16 months in addition to the trillions they are already spending.
  • Translation:  The Washington spending issue disappears for both side during the next election cycle.  Neither side wants America to see their paying for votes.
• They will cut spending around $2 trillion over the next ten years.
  • Translation:  This gives them plenty of time to either retire, come up with shifty accounting to show “cuts”, and kick the can down the road.
  • Translation:  The Republicans can pretend to look strong to the TEA Party folks about all the cuts.
  • Translation:  The Democrats can wink and nod at the left and whisper that there will be no cuts.
  • Translation:  Obama’s chances of being elected have just gotten way better.
• A super committee comprised of an equal number from each party will decide where to cut.
  • Translation:  Secret back-room deals.
  • Translation:  The Republicans will select RINOs and the Democrats will select whiners both sides seeking plenty of microphone time.  God help us but you know that snivelling fool Chuckie Shummer will be selected. 
  • Translation:  Obama gets to keep his hands clean and can take credit, place blame, or just whine about the deadlock. 
  • Translation:  A future Congress can simply change the law hoping that we forget.
• There must be a vote on a Balanced Budget Amendment.
  • Tricks to look for:  It will pass, but not take effect for a decade when most of these folks are counting their gold (they wouldn’t invest in the dollar that they have destroyed).
  • Tricks to look for:  Obama will veto it picking out some provision that is racist, unfair, favors the rich, or some other of his pandering rhetoric.  Congress will not have to take it up again as they will have fulfilled their obligation.
  • Tricks to look for:  The legislation will be loaded up with so much crap that even conservative Republicans won’t support it. Yes there are still a few conservative Republicans.

Maybe someone can try to convince me that this is a good deal.  It just doesn’t look that great from my living room!

Guaranteed to blow your head apart

You can read the original post here.

                                              – - Brit Hume

Mr. Hume of course was discussing President Obama as he continues to wiggle to be all things to all people while refusing to lead on important issues as a world leader should. Obama has become the quintessential politician whose sole goal seems to be getting reelected. As of this writing and reported in The American Thinker, Obama has made 31 fundraising trips so far in 2011. This is above and beyond the numerous rounds of golf.

I heard Mr. Hume’s quote driving to work this morning and found the visual it created for me humorous, scary, and concerned for the fate of our republic with Obama at the helm. Actually since he is in constant campaign mode he is not at the helm. I am not sure who is. One has to wonder at what point do his fellow Democrats tire of his finger pointing at them (they are part of Congress too) and finally take a stand for the separation of powers. I have not seen any spine yet. As I read the paper during lunch I was struck by a number of stories that demonstrate Obama’s dual prom date theme in just one section of the paper on just one day.

The first story is interesting in that the Obama Administration signaled that if requested by Iraq American troops would be left in Iraq to “train security forces” through 2012. This seems like something that George W. Bush would do not Obama who ran on an anti-Iraq war platform. Perhaps Obama is counting on you misremembering his promise to end the war and bring the troops home as his Democrat/liberal base wants. What are the chances that he’ll redefine “war” (like he did in Libya) and reclassify the “troops” left behind as “advisors” like has been done when we don’t want to admit to having troops somewhere (sounds a little like JFK and Vietnam). My only hope is that the troops left behind are not so compromised by ridiculous rules of engagement that their lives are at risk.

The second story is a little further south where the United States Navy captured a Somali man thought to have ties to terrorists. The man was interrogated and gave up “important intelligence about al-Qaida” before being transferred to New York to face charges. The terrorist, not a citizen of the United States, was read Miranda rights, even though he is not a citizen of the United States, and will be afforded all rights of American citizens when he is tried in civilian courts, even though he is not an American citizen. Lest you think that Obama is taking the “high road” in this case you should know that the captured man was held and interrogated for two months aboard the Navy ship before he was charged with a crime. I guess some rights are more important than others.

We move from Somalia to space…the final frontier where Obama had decided that NASA should scrap the shuttle program, become ambassadors to the Muslim world, and collect climate data to support Al Gore’s man-made global warming scheme. A reduction in the size of NASA would create some savings, however, a recent poll by the Pew Research Center indicates that 58 percent of Americans believe that it is “essential” that the United States be THE leader in space. Obama is a far cry from JFK.

And at last Obama is getting serious, really serious this time about the debt limit. Contrary to his views when a new senator and opposed raising the debt ceiling he now cannot wait for a higher credit limit. Obama plans a “summit” to meet with congressional leaders to discuss the plans. Lest they forget, this is the same Obama that decried the fact that he was home tackling the big issues (“I did bin Laden”) while they were shirking their duties. Lest the Republicans forget Obama will set himself up with a bully-pulpit and carefully seat members of Congress in front who he’ll lambast in front of his fawning media. Only time will tell whether the Republican leadership will show some spine. Remember they won’t have teleprompters.

“President Obama’s handpicked economic advisers waited until the Friday before the long Independence Day holiday weekend to release a report showing how bankrupt the economic “stimulus” was. It cost taxpayers $278,000 per added or saved job. As The Weekly Standard’s Jeffrey Anderson noted, “(T)he government could have simply cut a $100,000 check to everyone whose employment was allegedly made possible by the ‘stimulus,’ and taxpayers would have come out $427 billion ahead.” Consider “outlandish” redefined.”

“While President Barack Obama seeks a world free of nuclear weapons — by reducing the U.S. arsenal – other nations are busily bolstering their nuke know-how.  Defense Secretary Robert Gates notes in an interview with Newsweek that North Korea is developing a road-mobile intercontinental ballistic missile, a big step from its fixed-launch-pad-based Taepodong ICBM. These mobile missiles would be far more difficult to spot or track, even with “eyes in the sky.”  Meanwhile Iran is well on its way to producing enriched uranium far beyond what’s needed supposedly for nuclear plant fuel. Which also might explain why oil-rich Saudi Arabia — no friend of Iran — reportedly plans to build up to 15 nuclear power plants by 2030 at a cost of up to $100 billion, says Peter Brookes of the New York Post.  Yet amid growing world nuclear proliferation, Team Obama committed the U.S. to the New Strategic Arms Reduction Treaty with Russia, which amounts to no meaningful weapon cuts for the latter but reduces U.S. warheads and eliminates 25 percent of America’s launchers. Shrewd.  U.S. strength, not deferentialism, ended the Cold War with Russia. President Obama bargains from a position of weakness and expects other nations to follow suit. Is the outcome at all surprising?”

It is getting harder and harder to resist the temptation to surmise that Obama may not have the best interests of America in his heart.  How could someone of his age display such economic and foreign policy naivete?

The latest episode of Phrase-e-ology is from the business section and was startling in that it seems to be making the case for the sluggish recovery as the “new normal” rather than the direct result of bad economic policy from the Obama White House.  As if this is now how we should expect recoveries to unfold.  Even as Obama’s economic advisers abandon his ship for academia (they’re much better at theory than reality) the “new normal” may actually be some sub-standard level that he can actually achieve…as long as he can fool the electorate that they are doing better…

“there is too little to show for all the stimulus the government’s provided to resuscitate the economy.”

“Economic weakness doesn’t mean a disaster for investors. But it does mean a readjustment in bullish thinking.”

“reduced growth expectations should weigh on equities through the summer. There’s a shift back toward the thinking of the “new normalists,”

“In other words, there’s a return to concerns that growth will be impaired as Americans struggle to pay down extraordinary levels of debt, while unemployment remains high and credit still tight.”

“Now, almost two years into the recovery, the economy has displayed growth a lot like the “new normal” course.”

“During the first year of recovery, U.S. GDP advanced only 3 percent, or less than half the normal pace of the usual post-recession period, according to Standard & Poor’s. The economy will complete its second year of recovery at the end of this month, and it appears GDP will be 2.7 percent versus the typical 4.1 percent”

If I may paraphrase…Obama spent way too much money (the “extraordinary levels of debt), has done nothing to get out of the way of the private sector for growth (that’s the high unemployment), and has created such uncertainty that banks won’t lend money and businesses don’t want to borrow it anyway (that’s the tight credit).  Since the Democrats/Republicans can not control their spending and printing more money has not helped, they just redefine what constitutes a good recovery.  I wish that I could screw up and simply redefine my goals to show a “new normal.” 

This stuff can only happen in Washington!

1. Returnable or negotiable in kind or by substitution, as a quantity of grain for an equal amount of the same kind of grain.
2. Interchangeable
3. of goods or commodities; freely exchangeable for or replaceable by another of like nature or kind in the satisfaction of an obligation

Synonyms:  changeable, commutable, compatible, converse, convertible, equivalent, exchangeable, interconvertible, mutual, reciprocal, reciprocative, same, substitutable, synonymous, workalike

Quote:

“People think this tax is for Social Security. But tax monies are really fungible. They get raided all the time.”

– Eugene Ludwig

Example 1:  The Obama Administration has been trying to trumpet the “success” of the Obama/Geithner Stimulus billion dollar boondoggle officially know as the American Recovery and Reinvestment Act (“ARRA”) and the push for “shovel ready” jobs in which to invest.  The most touted and visible projects were highway and roadway infrastructure projects famous for their large, $10,000 signs proclaiming ARRA as the funder.  Obama promised that this massive infusion of tax money would improve our crumbling infrastructure.  The “brightest” president and treasury secretary seemed to have forgotten the basic principle that money is fungible and can move around. 

Two economists, Timothy Conley and Bill Dupor, took a detailed look at ARRA and its impact on spending and jobs.  What they found is a perfect demonstration of the fungibility of money,

“Upon acquisition of ARRA funds for a specific purpose, a state or local government could cut its own expenditure on that purpose. As a result, these governments could treat the ARRA dollars as general revenue, i.e. the dollars were effectively fungible.”

In other words state and local governments did not increase their spending on infrastructure with the ARRA money, but used the ARRA money INSTEAD of their local dollars for infrastructure and redirected the local dollars that would have been spent on infrastructure on other budget shortfalls,

“States were able to re-purpose some ARRA dollars. For example, despite the fact that the ARRA gave states $22 billion, of the total $28 billion available, through September of 2010 to spend on infrastructure, the number of highway, bridge and street construction workers, nationwide, fell dramatically over the past several years.”

Here are some examples of what the states were able to do upon getting loads of ARRA money;

• In Texas, ARRA dollars arrived and simultaneously the number of Texas highway, bridge and street construction workers declined. Employment in that sector fell from 34,600 workers in May of 2008 to 28,500 workers in May of 2010. Total capital outlay on highways in Texas ( scal year ending on August 31) went from $3.38 billion in 2009 to $2.82 billion in 2010. This decrease in state expenditures occurred even though Texas spent $0.70 billion in ARRA highway funds during 2010.  The Texas government responded to its receipt of ARRA highway dollars by cutting Texas’ own contribution to highway spending, which freed up state dollars to boost suffering state finances.
• The State of New York provides a second example.  For the year ending in May 2009, which contains only three months of the ARRA period, the New York Department of Transportation capital project spending was $3.42 billion. For the year ending in May 2010, in which ARRA spending was in full swing, this spending was $3.47 billion (i.e. nearly unchanged). On the other hand, the US Department of Transportation reported that it outlaid $522 million in ARRA monies to New York by May of 2010. Interestingly, the reduction in state transportation dollars simultaneous with its spending of ARRA dollars may not have been planned in advance by the state government; the planned 2009-2010 budget allocated $3.95 billion towards transportation capital spending. This was nearly $500 million more than it actually spent.
• Michigan provides another example. For the fiscal year ending on September 30, 2009, Michigan’s revenue from Federal aid had increased by $189.2 million over the previous fiscal year; however, over the same horizon, capital outlays had risen by only $17.4 million. What might explain this gap? Taxes and miscellaneous revenues received by the Department fell by $140.6 million relative to the previous scal year. The US DOT reported that it outlaid $110 million to Michigan through September 2009, $105 million of which was FHA money.
• The Ohio Department of Transportation (2010) provides spending details for its 2009 fiscal year, which began on July 1, 2008. It reported $935 million in ARRA stimulus dollars for scal year 2009, which represented a 54 percent increase in Federal funding relative to 2008. However, capital outlays increased by only $183 million over the same period.

Basically the fungibility of money allowed the states to substitute the ARRA money for the state money which was used elsewhere.  If that isn’t bad enough Conley and Dupor estimate that ARRA created/saved 450,000 jobs (these were limited to public sector or government jobs) while Obama/Geithner eliminated/forestalled ONE MILLION private sector jobs.  We need more stimulus like we need more rain.

Example 2:  Politicians like to walk the fine line between many issues trying to both please one constituent while not ticking of another.  One area where they are, on paper, consistent is when swearing that federal tax dollars will not be spent on abortions.  Remembering that money is fungible this statement, on paper, is perhaps true, but providing tax dollars to agencies that perform abortions allow them to move their other dollars to fund abortions and using federal dollars for other services.  Planned Parenthood is the larges abortion provider in the country.  The most recent annual report available (FY 08/09) show revenues of nearly a billion dollars with the government contribution of over $360 million.  Do you have any doubt that should Planned Parenthood lose their government money, fewer abortions would be performed?  Why don’t we try it for a year and see what they do?

Example 3:  I know that he is dead, but Yasser Arafat is a good example of a third world scum bag who provides a good example of money’s fungibility.  It is estimated that the Palestinians receive over ONE BILLION DOLLARS in foreign aid each year.  No one is quite sure where that money goes and somehow Arafat accumulated a great deal of wealth before his death.  You could easily substitute Mr. Arafat for Saddam Hussein of Iraq and the “Oil for Food” program,

“It began as a U.N. humanitarian aid program called “Oil-for-Food,” but it ended up with Saddam Hussein pocketing billions to become the biggest graft-generating machine ever and enriching some of America’s most forceful opponents at the United Nations.  Plus, some evidence suggests that some of the money ended up in the hands of potential terrorists who are opposed to the United States.”

We need to remember this the next time our government give aid to dictators in Egypt, Syria, Pakistan, Mexico, etc…and especially the United Nations. 

Example 4:  This last example is the sad, sad story of former Republican Congressman Tom DeLay.  In DeLay’s case the fungibility of his money (campaign contributions that he administered) was deemed “money laundering” and was recently convicted in Texas.

“In the trial, DeLay’s lawyer argued that the $190,000 in corporate donations that DeLay gave to to the Republican National Committee (RNC) through his state political action committee, Texans for a Republican Majority, was not the same money that the RNC later sent to state candidates in Texas at DeLay’s direction. The jury disagreed, essentially deciding that DeLay attempted to use the RNC as an end run around Texas campaign finance laws.”

I have known non-profit groups that maintain numerous bank accounts keeping thier money separate in an attempt to comply with the constraints of different funding sources and to hide the fact that…

MONEY IS FUNGIBLE!

One certainty in government work is that if you apply common sense and go out on a limb you WILL, at some point, be punished.  You are most likely protected and will not be fired, but they’ll beat you down so that you’ll never give in to the temptation of logical thinking again.  In fact many will not make a decision unless it is clearly written in regulations.  So the cycle becomes creating cumbersome rules that attempt to cover the bases thus creating the scenario where common sense cannot be used when faced with the unforeseen circumstance.  An offshoot of this is the ever-detailed requests for more information. 

I remember a case where I was a member of a technical committee considering new rules for a particular heavily regulated industry.  There was concern that a critical component of their structure would eventually be buried and it would be impossible to access it for inspection.  The group proposed requiring that the industry keep samples of the component in similar conditions of the buried components and periodically test them. 

That does not sound unreasonable, except that there were no scientific protocols for collecting, maintaining, and testing these components.  There is an organization called the American Society of Testing Materials (“ASTM”) that provides detailed procedures for such activities, though not this process.  Our requirements would force owners to take on considerable expense and open them to potential significant liability (if materials failed) without any scientific basis by which to conduct or evaluate the results of the tests.  That sounds unreasonable and as we discussed this most members were persuaded that this was stupid.  We did have one hold out.  He drove me absolutely nuts and while I can no longer remember his name I remember his response when I told them that any results without a scientific basis were NOTHING!  His response; “Yeah but at least we have something.”  At least we have something!  .

A recent article provides a great example of how government regulations can never cover all scenarios.  The Federal Highway Administration issued regulations requiring bigger and more readable road name signs.  That sounds reasonable and localities have until 2018 to comply.  Heck there was probably even “stimulus” money available for new signs.  Two unseen factors were the cost (I believe that the cost for NYC was in the tens of millions of dollars) and places where the new bigger signs interfere with the décor of some communities. 

Enter the citizens of Ardmore, Pennsylvania where they have “small green and gold signs that have marked streets…for nearly a century.”  The residents are balking at both the cost and the intrusion of the feds into their community.  This sounds rather frivolous, but the residents are taking this seriously as one was quoted;

“The loss of these signs, to me, would be an epic tragedy.  Let’s pray the tragedy is avoidable, but only if the community and its elected representatives and staff work together.”

I think a 2,000+ page Obamacare bill approaches the epic tragedy level though I freely admit to not having seen those green and gold signs.  My community is swapping their blue signs for newer blue signs.  They creatively put up the old signs up for sale.  In an attempt to do some good, the Federal Highway Administration is causing some trouble for many communities during tough economic times.

Since I mentioned Obamacare I should mention that some of the early requirements are already having an impact on businesses.  Much news was made when McDonalds came out and said that they were dropping health care coverage for many employees because of the new mandates.  Since, perhaps, it was an election year McDonalds received a waiver from the rules.  In fairness the White House has issued over 220 waivers.  Many of his biggest contributors and supporters like unions have secured the waivers.  I could not find any data on what justified the waivers or whether any had been requested and not granted. 

Why would such a well thought out piece of legislation cause so many problems so fast?

Why am I not surprised?

This post was updated on January 27, 2011 and you can follow this link to read it.

Ahmadinejad says Iran may end enrichment…

It’s just cheaper to buy it from Russia

Texas ed board adopts resolution limiting Islam…

Council on American Islamic Relations (“CAIR”) promises to sue and that heads will roll

Feds join fraud case targeted at Mayo…

Miracle Whip could not be reached for comment

Some executions held up by shortage of drug…

Lead, bullrope, and electricity are still available

Barack Obama promises you can keep your health insurance…

At least until we put your insurance company out of business and you have to take Obaminsurance.

Suspect Denies Owning Cocaine In His Butt…

Representative Barney Frank could not be reached for comment.

White House chief of staff: Emanuel out, Rouse in…

 Sorry we meant “Ruse.”

White House: Stimulus law working as promised…

and the recession is over and unemployment won’t go above eight percent and this is the first time this has ever happened and you can keep your health care and no one in the middle class will see their taxes increase and I’ll post bill for at least five days before they are voted on…

 Supplies of gas up, so prices go down…

but that would mean Reagan and free market supporters are right.  We’d better hide this story before the people find out.