Thursday, January 5, 2012

Beyond Insanity - The Atrocities Of The American Political Class

Every month we review the latest political class insanity that we have come across since the last insanity report. These instances of political class insanity are often silly, stupid, and baffling. They usually involve ridiculous wastes of taxpayer wealth in areas that affect very few Americans. They often would be humorous if they were not so idiotic and wasteful.

However, we just as often come across political class behavior that exceeds the ridiculous, inane level of insanity and enters the truly atrocious realm. This realm involves blatant disrespect for the letter and spirit of our nation's laws and regulations and the unfettered selfishness of those that we have entrusted our government responsibilities. The latest atrocities include the following:

- Fannie Mae and Freddie Mac were the two government organizations that had more to do with the Great Recession and collapse of the U.S. mortgage and housing market than any two entities in the world. As a result of their incompetence and corruption, they were central players in the financial collapse that has led to unheard of levels and lengths of high unemployment, the decimation of the U.S. housing industry, and the near collapse of the U.S. banking industry.

Worst of all, these two government organizations have already required the U.S. taxpayer to fork well over $100 billion worth of bailout money to keep both entities solvent. These two companies received more TARP bailout money than any other bailed out bank or financial institution.

It is highly likely another $100 billion worth of taxpayer wealth will eventually be expended to keep them out of bankruptcy. This  bailout could eventually come out to about $1,800 for every American household.

When U.S. banks received bailout money from the taxpayers via TARP, they were required to impose salary limits on their top executives. That was viewed as a penalty for screwing up their companies so badly that the government and U.S. taxpayer had to bail them out.

We review all this in order to appreciate the atrocity outlined in a CNN/Money online article from November 15, 2011.  According to the article, the top five executives at Fannie Mae received $33.3 million in 2009 and 2010 and the top five at Freddie Mac received $28.1 million. These numbers do not include potentially more in deferred compensation. Each company has set pay targets of as much as $17 million for its top managers for 2011.
 
Makes you wonder why the Occupy Wall Street people are not protesting at Fannie and Freddie's headquarters. While the TARP requirements stipulated that financial organizations that were still receiving taxpayer bailout money limit their executives' pay levels, this apparently does not apply to government organizations. While many banks have already returned their TARP money, with interest, Fannie and Freddie continue to suck bailout money out of the American taxpayer. While the housing industry continues to limp along, Fannie and Freddie executives have had no success, or possibly no desire, to fix what ails the mortgage and housing industry.
 
And the worst atrocity of all, the Obama administration and Congress have shown no desire, ability, or interest in fixing Fannie and Freddie, allowing billions of taxpayer dollars to disappear every month.
 
- Although the amount of taxpayer money being wasted is relatively small in this second atrocity, the reason for the waste certainly crosses the line into an atrocity. It is no secret that China is a strong and rising economic and political power. It holds upwards of a TRILLION dollars of our national debt, putting it in a position to leverage that debt over us to its advantage. 
 
China has grown its manufacturing base at the expense of our domestic manufacturing base, contributing to our high level of sustained unemployment. China has been growing its economy by incredible levels year over year for quite a while while U.S. economic growth has been anemic for the past three years, growth that is unlikely to get much better in the foreseeable future.
 
Given the current situation between us and China, why in the world is the U.S. government giving China four million dollars a year in one of its foreign aid programs?  Makes no sense, given the power and growth of the Chinese economy. Since the Chinese have enough money to continually buy our Federal bonds and debt, why are we sending them millions of dollars? Makes no sense, since our political class adds a at least a TRILLION dollars worth of debt to our national debt every year.
 
A government bureaucrat, Nisha Biswal, the assistant administrator for the U.S. Agency for International Development, tried to justify the $4 million program by stating in the article that the aid supports U.S. values and interests. What might be a better use of the money, vs. what Nisha Biswal wants to do with it, is to go out and hire 40 or 50 teachers for use inside this country. What might be better use might be to help some U.S. homeowners who are having mortgage issues to keep their homes. What might be a better use would be to feed some of our own homeless that go hungry everyday.
 
The money, $4 million, is not a lot relative to the big government spending picture. However, $4 million could do a lot more for a small sample of U.S. citizens than what very little use it has by giving it to one of our biggest and richest economic competitors for the wishy-washy objective of "support U.S. values and interests." China could not care less about those values and interests. Continuing to execute this program is truly an atrocity.





However, one area has avoided most of this malice, namely the Federal government work force. According to a recent MSNBC report, drawing on Bureau of Labor statistics:
  • The number of people working for the Federal government has grown 12% since the Great Recession in 2007. In other words, despite the worst economic downturn since the Depression, the Federal government grew by a double digit increase.
  • At the same time, employment in the rest of the country and economy has dropped 5%.
  • But it gets worse. While the rest of America suffers with high unemployment and higher underemployment, the number of higher salaried Federal employees has increased even faster, 14.8% since 2007.
  • These statistics have lead to unemployment rates that are more than 30% lower in the greater Washington D.C. area vs. the rest of the country.
Thus, the Americans that actually fund government employees' salaries and benefits are suffering far more than the employees that actually work for the Federal government. Something is atrociously wrong with this equation.

- The next atrocity was uncovered in an October 22, 2011 article in the Chicago Tribune. Recall that the state government of Illinois, home state of the Tribune, is facing a large, ongoing financial crisis caused by its revenue tax stream not being close to covering its expense and cost obligations. Earlier in 2011, the state legislation significantly raised both business and personal income taxes in a failed attempt to close that budget gap.

Well, one reason they may be having financial problems is because of situations like the one described in the Tribune article:
  • Two Illinois teacher union lobbyists, both of whom had no prior teaching experience, were allowed to count their years as Illinois teacher union employees toward a state teacher pension once they served a single day of substitute teaching in 2007.
  • Steven Preckwinkle, the political director for the Illinois Federation of Teachers, and fellow union lobbyist David Piccioli were the only people who took advantage of a small, temporary window opened by the Illinois legislature and governor a few months prior to their day of substitute teaching.
  • The legislation enabled union lobbyists to get into the state teachers pension fund and count their previous years as union lobbyists, not teachers.
  • Preckwinkle's single day in the classroom allowed him to pick up 16 years of previous union lobbyists work, not classroom teaching, to count towards a teachers pension. He's 59, and at age 60 he'll be eligible for a state pension based on the four-highest consecutive years of his last 10 years of work. Based on his lobbyists salary history so far, he could earn a pension of about $108,000 a year, more than double what the average teacher receives, despite being in the classroom for only one day. This does not include the $93 he made for his one day of substitute teaching.
  • Over the course of their lifetimes, both men stand to receive more than a million dollars each from a state pension fund that has less than half of the assets it needs to cover promises made to tens of thousands of public school teachers.
These are the highlights but the details in the article are extensive and equally atrocious. They include a summary of how the teachers' union lobby made significant political contributions to the Democrats that control Illinois state government. How this loophole was temporary and most people were not aware of it, except for those few that took advantage of it. The conclusion being that the loopholes were a quid pro quo for the campaign contributions.

Atrocious political class behavior and a total disrespect for the heavily taxed citizens and businesses of Illinois. A state government rapidly heading towards insolvency and the politicians in Illinois still take time to cater to their own selfish interests and those of their financial supporters.

The details of the atrocity can be found at http://www.chicagotribune.com/news/local/ct-met-pensions-teacher-perk-20111023,0,6972290,full.story

- And finally we come across another Federal government program that is rife with waste, fraud, and criminal activity. The Washington Examiner, in a November 30, 2011, examined the food stamp programs in Virginia, Maryland, and D.C. using official government statistics and findings. Not unexpectedly, much like the vast amount of fraud, waste, and criminal activity found in the Social Security, Medicare, and Medicaid programs, the Federal food stamp program apparently also wastes billions of taxpayer dollars every year.

The article found that when the Maryland authorities looked at a sample of food stamp recipients, they found evidence of fraud in 25% of the cases in 2011. Virgina found evidence of fraud in 16% of their sample cases, and D.C. found a whopping 38% evidence of fraud in the sample they examined. 

The article points out that these three government entities appear to be some of the worst in the country from a waste perspective. However, even if the rest of the country is only half as bad, it is not a stretch to estimate that 10-15% of all taxpayer dollars spent on food stamps in this country is lost to criminal activity and waste.

Despite this atrocity of fraud and waste, prosecution of the offenders appear to be almost nonexistent. According to the article, Maryland had over 645,000 people receiving food stamp support in 2011. However, despite finding evidence of fraud in 25% of those cases in sampled, only seven people were prosecuted in court in 2011 and only 113 other cases were settled out of court. These 120 cases account for only .07% of the estimated total number of fraud cases in the Maryland food stamp program (25% of 645,000 divided into 120). Atrocious.

The details of the fraud and waste can be found at http://washingtonexaminer.com/local/dc/2011/11/maryland-virginia-top-nation-food-stamp-fraud/1962111

It is this kind of atrocious incompetence by the political class and the government programs it operates that infuriates the American taxpayer. Wasteful spending, out of integrity behavior to help out political friends and lobbyists, sending taxpayer money overseas to our economic competitors while Americans suffer at home, taking care of their own government bureaucracy friends at government operations like Fannie Mae and Freddie Mac, and allowing the government bureaucracy to needlessly grow on the backs of struggling taxpayers.

As stated in our opening paragraph, political class insanity is one thing. Political class atrocity is a whole new animal, one that we should not have to tolerate. Step 39 from "Love my Country, Loathe My Government" would be a good first step to eliminating government atrocities in our lives.

Step 39 would impose strict term limits on all Federally elected positions. Our current political class establishment tolerates its own atrocities, time to get a new establishment put in place with the mandate to stop both the insanity and atrocities that came before it.



Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:

http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment/

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