But let’s quickly get into this month’s political class insanity because over the past month or so there has been a lot of it was Washington implodes into a useless pile of incompetence:
1) One of the most frequent topics in this blog is obviously wasteful, useless, and senseless government spending. And the worst kind of wasteful spending is government spending that occurs for no purpose at all. It is one thing to waste money to the tune of hundreds of billions of dollars a year that provide some benefit to Americans, e.,g. Social Security, Medicare, etc. It is another thing to spend money on nothing.
Ronald Reagan captured that thought long ago when he said: “Nothing lasts longer than a temporary government program.” But fortunately, President Trump finally killed one of those temporary government programs that had gone on for almost two decades longer than necessary:
According to reporting from the Allen B.West website:
- Back in the late 1990s, everyone was worried that computers would crash over the so-called Y2K crisis, the fact that when the calendar rolled over from 1999 to 2000 no one knew what that impact would have on computers in every aspect of life.
- Companies, charities, government entities all put together massive task forces and efforts to ensure that their computer systems were ready to handle the rollover into the new century.
- Fortunately, nothing catastrophic happened and life went on into the new century, computers still humming along.
- Unfortunately, no one suspended the Federal government’s Y2K effort and 17 years later it was still sucking up government resources and taxpayer wealth, according to a recent Bloomberg report.
- That is until the Trump administration finally announced that the massive amount of paperwork and resources still required by the Federal bureaucracy for the Y2K problem, 17 years after it turned out not to be problem at all, will finally be terminated.
- The Federal Office of Management and Budget said that getting rid of the Y2K requirements and other senseless government reporting requirements would save tens of thousands of man-hours a year across the entire breadth of the Federal government.
- According to the Trump administration, it is hoping that such house cleaning of unnecessary programs will continue down into the bowels of the entire government bureaucracy, saving even more taxpayer wealth.
- What took so long? Are we saying that no one in the Bush or Obama administration had the insight or will to say, hey Y2K is over, no problem, let’s stop worrying about it and using government resources to manage a non-existent problem?
- If it took 17 years to recognize the uselessness of this effort, a very obvious waste of money, is it even possible for government bureaucrats and politicians to weed out equally useless but not so obvious government wasteful spending?
- And finally, remember when Obama promised that he would go through “the Federal government budget line by line” to weed out wasteful spending? Kind of thinking he never did that if he let this obvious useless spending go on for the entire eight years of his Presidency.
2) It is pretty obvious that Washington has no idea how to manage a budget and spending, a reality that Obama demonstrated so ably when he almost doubled the national debt in 8 years while getting nothing accomplished: our nation’s infrastructure (roads, bridges, dams) is falling apart, our schools continue to under educate our kids, our military is not prepared for an extended battle time, etc.
But it is also apparent that state level politicians across the country are not much better at financial management either, according to a recent article by Reuters:
- Despite a growing economy, state government pension systems saw their unfunded liabilities increase 17% in fiscal 2015.
- Those unfunded liabilities now total $1.1 TRILLION.
- According to the Pew Charitable Trusts analysis, the large increase is due mostly to smaller than expected investment returns, with median overall investment returns coming in at 3.6% vs. the median assumed rate of 7.6%.
- In a single year, "In aggregate, the funded ratio of these plans dropped to 72 percent in 2015, down from 75 percent in 2014."
- Other factors contributing to the increase in unfunded liabilities was the reality that state governments still are not funding the pensions at the promised rate and an Oregon court restored cost of living adjustments which increased the Oregon liabilities by $5 billion.
- New Jersey has the worst funded pension system with only 37% of its liabilities funded while South Dakota is in the best shape with 104% of its liabilities funded.
- Preliminary analysis of 2016 data shows the trend accelerating with an expected $200 billion increase unfunded liabilities, getting the total to $1.3 TRILLION.
- To theoretically cover the shortfall, every American household would have to write a check for over $10,000.
3) Let’s stay with political class fiscal mismanagement for the last piece of insanity today. Many liberal politicians continue to push for a $15 minimum wage across the country. Rather than let the market set the cost of labor, the liberal politicians think they know what is best from an economic perspective, as if running up a national debt of $20 TRILLION qualifies them as some sort of economic gurus.
We have previously reported on instances across the country where local governments have already pushed the minimum wage to $15 with catastrophic effects. Businesses either cut hours of employees to stay profitable, they cut benefits of employees to stay profitable, they cut jobs to stay profitable, or they mechanized jobs to reduce their labor costs. Thus, many people who were happy to get paid at a $15 an hour rate are not happy anymore since they either have fewer hours, fewer benefits, or have lost their jobs altogether.
Consider the real life case of a Seattle pizza worker who lost his job after Seattle raised the minimum wage in that metro area, as reported by the local Fox 13 TV outlet and Ashley Dobson on the Red Alert website on April 30, 2017:
- Initially, pizza shop worker Devin Jeran was quite excited about getting a raise to $15 an hour for his work in a local franchised pizza shop.
- Unfortunately, he will only get that higher wage until August when the owner of the pizza ship will shut down the pizza shop, unable to afford and pay the higher wages.
- For Mr. Jeran, the reality of having a higher salary but not having a job because of the higher mandatory salary has set in: “If that’s the truth, I don’t think that’s very apparent. People like me are finding themselves in a tougher situation than ever.”
- The owner tried to stay in business by raising prices, cutting hours, and doing some of the work herself to save money but none of that worked enough to offset the $15 minimum wage requirement.
- As a result, eleven employees will lose their jobs in August because of a political action that they had not voice or choice in.
That will do it for today’s insanity. As you can see, fiscal political class insanity exists from useless Federal government programs to the fiscal crisis of state government to the economic insanity of local governments. More insanity to follow.
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