Mitch Daniels in the governor of a state, Indiana. It’s a well run midwestern state. Has a AAA credit rating, as contrasted to say the bankrupt state of California. Mitch offeres the Community Organizer in Chief some advice in today’s WSJ, “Time for Emergency Economic Reform.”

Like any good leader he assesses the situation: dire. “Funneling borrowed billions to government workers hasn’t stimulated anything where it counts in the private sector.” Yep, that’s right Obama still thinks the government creates prosperity! He goes on to state that the impending and yet uncertain regulatory and tax regiemes are holding back investment and jobs. This is like the announcement of an impending rule change in the midst of a chess match. Damn if the match doesn’t stop until certainty of rules is restored!

He emphasizes the lack of growth necessary to get us even to break-even, to avoid national bankruptcy. We are currently at half the growth necessary to achieve disaster “with debt rising to 90% of GNP.”

Mitch offers a few specifics to counter the impending catastrophe:

• Payroll Tax Holiday of one year offset easily by a combination of the following:
• Impoundment Power: the president spends less than Congress has authorized on any number of programs which the taxpayers would never miss.
• Recall federal funds. Rescind unspent TARP funds, now in the hundreds of billions.
• Federal hiring and pay freeze. Cut the fat cats by 10% and freeze going forward. This may get the bloated bureaucracy more in line with the private sector that really produces wealth!
• Initiate a “freedom window” of regulatory forbearance in which job killing regulation is stopped.
• And, encourage business investment with accelerated write offs.

All, save for the frist and last, could be permanent reforms which get us back on track. Suffice to say we are in deep trouble and emergency solutions are in order and way overdue.

Today’s WSJ pens a great editorial on the subject, “Stimulus Pushers.” As the title suggests, Hussein Obama is the dope pusher further addicting these leftists spendthrifts with a high powered dose of bailout. The addicts don’t care about the hidden costs or the consequences; they just want the fix.

A few principled governors like Haley Barbour of Mississippi are pushing back. The federal government is hijacking state budgets. Rick Perry of Texas is in disfavor with the DC crowd so Texas gets penalized in the legislation. What’s astounding in this is the sheer hubris, the sheer abuse of power with the simple justification that the leftists have the power.

Two points are clear: One, this stimulus only postpones the day of reckoning for these bankrupt states. And, two, these parasites if left unchecked will eventually kill the host—the private sector that pays taxes will no longer be able to afford the excessive pay and benefits sucked up by the public sector. Atlas will indeed shrug!

For Nevadans, Reid must go, and the Pelosi’s democratic lackeys must be defeated. By piling up deficits and debt they are stealing from our children and grandchildren, the height of immorality!

In a well-reasoned WSJ op ed, Unemployment Benefits Aren’t Stimulus, Laffer shows that welfare makes work less attractive. Historically he charts the unemployment rate against the unemployment benefits:

“While the unemployed may spend more as a result of higher unemployment benefits, those people from whom the resources are taken will spend less. In an economy, the income effects from a transfer payment always sum to zero. Quite simply, there is no stimulus from higher unemployment benefits.

“Given the massive inefficiencies the government creates in securing resources from the private sector, there may also be a large negative income effect over wide ranges of stimulus spending. This is the proverbial “toll for the troll.” These massive inefficiencies could lead to lower output.

“To see these effects clearly, imagine a two person economy in which one of the two people is paid for being unemployed. From whom do you think the unemployment benefits are taken? The other person obviously. While the one person who is unemployed may “buy” more as a result of unemployment benefits, the other person from whom the unemployment sums are taken will “buy” less. There is no stimulus for the economy.”

Art concludes by saying the $3.6 Trillion already spent would have better been used as an 18 month tax holiday! I disagree with this, time limited tax relief begets time distorted economic activity. Permanent entitlement cuts along with permanent tax cuts are what’s needed to restore economic and fiscal sanity.

You should perhaps know a few facts about Solyndra: It is a solar-panel manufacturer in Fremont, California. It has a new partially constructed facility that will provide 3000 temporary construction jobs in Fremont and it is expected to provide 1000 production jobs. It has accumulated debt of $557 million and paid for the new plant with $535 million of last year’s $787 billion stimulus package. Oh, by the why, Price Waterhouse & Coopers the auditor questions its ability “to continue as a going concern.”

Now, do you expect an equity return on that investment? That is a return commensurate with the high risk nature of the investment? You shouldn’t because while you have supplied the bulk of the capital it is in the form of debt. If anything you will get a debt return despite your equity type risk. The real return if any is ever made will go to the equity investors.

Now, a couple more facts: The sun doesn’t always shine on solar panels. To date solar panel generated electricity needs taxpayer subsidy to make any economic sense whatsoever. (So you and yours will also subsidize Solyndra’s customers, for which you will only get billed!) And, I saved the best for last: Hussein Obama visited Solyndra’s plant today, as an adjunct to his trip to generate bucks for Barbara Boxer’s senate campaign. (See: Debra Saunders’s The Obama Mantra: Bill, Baby, Bill in the May 27th RCP.)

Still feel good about that investment?

Wall Street owns the Democrats but often assumes the role of the pet dog, simply for political reasons. As previously mentioned in my December 12th post, Democrats got 11 of the top 15 aggregate contributions given by Wall Street. As Kevin Williamson reports in his NRO post Paying for the Privilege, Goldman Sachs gave 73% of its campaign cash to the Democrats and the VC guys gave 75%!

“But if the Democrats are gluttons for Wall Street money, Wall Street is a glutton for punishment: The president and his party in Congress are engaging in truly dishonest demagoguery — asNational Review has noted, TARP losses aren’t coming from the banks, but from largely Democratic messes including AIG, the automakers’ bailouts, and Rep. Barney Frank’s beloved foreclosure-prevention program. But even as the Democrats demonize Wall Street and vilify Big Business in general, the pinstripes-and-obscene-bonuses set continues to write big checks to Obama’s party.”

So mean old Joe Biden can posture and puff all he wants in Obama’s charade. Wall Street gets what it wants in good times and bad, the Democrats do Wall Street’s bidding. So the lap dog doesn’t mind being kicked occasionally, after all he is extremely well-fed and well-housed!

I sure hope Dede doesn’t sign Barack’s web page!

Tom Motherway

Well, with the lapse of time, the unemployment above 10%, and several funny-paper headlines about jobs created or saved, we saw the administration touting 1 million jobs in October and www.recovery.gov suggesting only 528,916 as of the same month. Silliness aside, the job numbers are terrible. What’s worse is that 2010 is an election year!

What to do, what to do? MSNBC reports January 12th: “White House changes stimulus job accounting”  ”New method will make it impossible to track ones saved or created” Henceforth it will only be a matter of counting jobs funded by the stimulus. “Recipients of recovery money no longer have to show that a job would have been lost without stimulus help, and they no longer are require to keep an ongoing tally of jobs saved or created. The new rules allow stimulus recipients to limit the job tally to quarterly reports, making it impossible to avoid double-counting a job that was created in one quarter and continued into the next.” These new rules were quietly published last month in a memorandum to the federal agencies.

The sad part of this is already being seen on the state side of the stimulus. The beggar states like California are in hock up to their eyeballs with nowhere to turn just when the stimulus money is about to run out! More deficit and more debt is becoming unpopular with the voters, especially in an election year when memories are not all that short, so it’s a hot potato for Obama. What may happen is the second part of a double dip recession. And this dip will be caused or greatly exacerbated by  the Obama-Reid-Pelosi team.

Bottom line: the quiet change of the stimulus jobs accounting rules really shows these leftists to be the despicable charlatans that they are.

Tom Motherway

We are well aware of the $1.42 Trillion 2009 federal deficit and the $12.3 Trillion national debt growing at over a Trillion a year. But not counted in these numbers are the unfunded liabilities for social security and medicare estimated in June of 2009 at $107 Trillion!

At the state level the estimated 2010-11 aggregate deficits of 48 states are $350 Billion, bonded debt has soared to $1.9 Trillion. But the unfunded pension and health care liabilities are estimated by Cato at some $1.4 Trillion nationwide. Cato recently analyzed state and local compensation, fully half the respective budgets, and found that they greatly exceed private compensation, are dramatically excessive in terms of pensions, healthcare, and paid leave and are greatly influenced by public employee unions!

So while Barack Hussein Obama and his “Keystone Cops” are piling on deficits in terms of Obamacare, non-stimulus, and earmarks, unemployment is at 10%, the banks would rather invest in Treasury notes than lend to small businesses, and government revenue is sinking at both the federal and state levels. On top of all this, our largest creditors, like China, are questioning our ability to repay our debts!  What does Obama do? He goes to Copenhagen and with Clinton pledges $100 Billion a year to the developing nations!

I keep thinking I’m having a bad dream. How can these droids do what they are doing? If you are already wounded, why would you continue shooting yourself in the foot? California, the spend and spend poster child, will ask Obama for assistance with its $21 Billion current deficit without getting its fiscal house in order. I’m just waiting for Obama to ask California for assistance with the nation’s $1.42 Trillion current deficit without getting its fiscal house in order!

If we were to properly account for the unfunded liabilities and add proper provisions for them on a current basis, then add that to the current operating costs along with any legally obligated amortization of the term debt, neither would the combined governments be able to generate enough tax revenue to service current expenses, nor would they be able to borrow sufficient sums to cover those expenses. Simply stated, they are poor credit risks. China has stated as much!

There you have it. Technically no bankruptcy, nonetheless both the federal government and the state governments are bankrupt! Our children, grandchildren and great-grandchildren will pay the price for this immorality.

Tom Motherway

Barack Hussein Obama has taken this addiction-dependency technique to a new level, he has addicted the states! A lesson in drug pushing is in order here: first, the drug pusher always purports to solve problems and make people happy; next, the drug pusher always gives a few free samples, small at first but growing in dosage; finally, the pusher has his mark dependent and the price becomes exorbitant. Now, the drug pusher is merely a capitalists, taking a risk to sell a limited commodity to a market he has created. His motivation is merely money.

The Democrats from Roosevelt on have charged a much higher price than mere money, they have demanded the voters’ freedom. They give welfare in exchange for votes and compliance. The masses do what they are told lest they lose the largess!

Obama has addicted the states with his non-stimulus stimulus, $200 billion was to go to the states to solve the common mess generated by their overspending. Rather than clean up the spendthrift ways they added new programs. There were also federal strings attached that required matching state funds or prohibitions against cutting spending on programs funded with stimulus money.

So with 10% unemployment, falling property values,  and concomitant declining sales taxes, income taxes and property taxes, the states face deficits estimated at $260 Billion for 2010-2011, without accounting for the unfunded pension liabilities. California is the poster child, now bankrupt and facing a $21 Billion deficit; its Governor Schwarzenegger will now go hat in hand to Barack Hussein Obama begging for another fix; lucky he’s a RINO and lucky Comrade Pelosi is running the House. But there are ten other states relatively close to California’s fiscal demise. It’s fair to say that 20% of the states are seriously addicted to federal dependency.

Kudos go to two states that refused the drug pusher. “Just Say No Awards” go to Mitch Daniels of Indiana and Rick Perry of Texas who had the foresight to turn down their share of the $7 Billion for unemployment insurance which came with continuity strings attached. The weekend WSJ editorial states the case well.

So what have pusher Obama and his Democratic minions wrought? Has he destroyed our federal system? The US Constitution limits federal powers to those specifically delegated with all others reserved to the states or the people. When he’s finished, will there be any reason to have state governments?

Tom Motherway

Jack Kelly incisively states the case in his November 30th post in Real Clear Politics, Note to Obama: Only Private Sector Creates Wealth, Jobs. A healthy host can support a lot of parasites; a sickly host cannot, so try to keep the host healthy.

Yet Obama is hell bent for leather to milk the host dry: phony stimulus, bondholder bailout, Obamacare, cap and trade, mortgage subsidies, ad infinitum.

The unemployment rate reached 10.2 percent this month, more than two percentage points higher than Mr. Obama’s economic advisers predicted it would if his $786 billion stimulus bill were passed. The Associated Press, in reporting Tuesday on disappointing third-quarter economic numbers, noted some economists expect it to reach 11 percent by next summer. That would be the highest since the Great Depression.

The stimulus failed chiefly because it was designed more to reward the president’s political allies than to fight the recession. But the stimulus failed also because stimulus funds were used to preserve jobs state and local governments could no longer afford because of falling tax revenues. The private sector has borne more than 100 percent of the job loss because state and local governments have added 110,000 jobs, according to an August report by the Nelson A. Rockefeller Institute of Government.

A job’s a job, right?

Not exactly. Preserving government jobs may deepen the recession because government workers are not engaged in wealth creation and their salaries must be paid by people in the private sector who are.

So we have Obama, Reid and Pelosi with the Democratic left taking the country 180 Degrees off course-expanding government. For the economy to grow, government must shrink. Will someone please tell Obama to stop killing the host!