September, 2012 Political Class Insanity - Part 2: Solyndra Revisited, The Best Jobs In The World Are GSA Jobs, And Lost Money In California

Yesterday, we covered the first set of political class insanity acts that we have uncovered over the past month or so. Unfortunately, as time goes by, it seems we need more and more space just to cover the increasing insanity, idiocy and wasteful ways of our politicians. Thus, today is the carry over from yesterday's first set of the latest shenanigans from Washington and politicians all over:

- Most knowledgeable Americans are aware of the incredibly disastrous Solyndra escapade. In this example, we have reviewed the gory details many times:

• Solyndra, a California solar panel company, was given a Federal government/Department of Energy loan guarantee of over half a billion dollars, a loan guarantee that went south along with the taxpayer funding when Solyndra proved to be incapable of competing in the solar panel market.
• Another investor in Solyndra, with strong ties to the Obama administration, illegally had its investment priority put in front of the American taxpayer's, resulting in taxpayers receiving nothing in return after the bankruptcy proceedings of Solyndra divvied up the remains of the business.
• The biggest advocate for giving Solyndra the loan guarantee was a high ranking employee in the Department of Energy whose wife worked for the law firm that Solyndra used, a clear conflict of interest.
• The loan guarantee was made prematurely from a financial due diligence perspective because the President and his advisers wanted the loan guarantee to conform to his political photo op schedule, not the needed financial review schedule. This premature action resulted in the loss of over a half billion dollars worth of taxpayer wealth.

This is all serious stuff. However, to understand the true insanity of how our politicians cavalierly flushed half a billion dollars down the cronyism drain, consider the insulting quotes that have come to light from the actual emails that were generated as a result of Solyndra:

• The Office Of Budget Management was one of the government organizations that was not allowed to complete its analysis on the wisdom of the Solyndra loan. However, when it finally finished its analysis, an email from one of its analysts, Kelly Coylar, sent out an email with her estimate of what the American taxpayer might lose as a result of the Solyndra financing: "Expected loss: $385 million principle plus deferred interest." Thus, at least someone in the Federal government knew what was going to happen. Unfortunately, Ms. Coylar was not in a position to avoid the loss of hundreds of millions of dollars.
• Another investor in Solyndra, Brad Jones, who was an advisor with Solyndra investor Redpoint Ventures, emailed that the Federal loan guarantee for Solyndra would be a positive move for Redpoint. However, even Mr. Jones knew any government investment in Solyndra was a stupid idea: “I can’t imagine it’s a good way for the government to use taxpayer money.”
• Thomas Baruch, who was the founder of the investment firm CEMA Capital, which was another private investor in Solyndra, is quoted in an email discussing how getting taxpayer money out of Washington was as important as actually succeeding in the marketplace: “Getting business from Uncle Sam is a principal element of Solyndra’s channel strategy.” You know you do not have a viable business model and product when getting free Washington money is critical to your success.
• This importance of Federal government financing was reinforced by an email from Solyndra CEO Chris Gronet that he wrote on October 9, 2009: "The Bank of Washington continues to help us!" What a disgrace that he viewed taxpayer money as a piggy bank for his company. That is how far from reality and success in the marketplace this project had strayed when it took down half a billion dollars of taxpayer wealth.

You can see many other disgraceful, attitudes, quotes, and the actual emails at the following web page:

http://blog.heritage.org/2012/08/03/the-10-most-revealing-solyndra-emails/?utm_source=twitterfeed&utm_medium=twitter

How disgusting that business leaders, political cronies, and politicians can toss around hundreds of millions of dollars of taxpayer wealth as if they were in a nickel/dime poker game.

- Over the past few months we have covered the fiscal collapse and coming insolvency of various levels of California state governments, mostly as a result of wasteful spending over the decades by the California political class:

• A southern California city was rocked by scandal a few years ago when it came to light that the politicians in that city were making hundreds of thousands of dollars a year to perform their duties, payment levels that were orders of magnitude greater than what most other local politicians are paid.
• Two large California cities, Stockton and San Bernadino, and other smaller California towns, have filed for bankruptcy as a result of having paid their current and retired city employees too much in salary and job benefits.
• Another southern California city revealed earlier this year that it sometimes paid it lifeguards over $200,000 a year, more than three times the average U.S. household income and orders of magnitude higher than your average lifeguard around the nation.
• The Associated Press recently reported that Hermosa Beach, a 1.3 square mile California town, was paying the two supervisors of its "meter maids" almost $100,000 a year and paying the rest of its meter maid staff an average salary of $75,000 or so, simply for writing parking tickets.

Thus, it is no surprise that towns, counties, and the state government are in deep, deep financial trouble. But in these times of tight tax revenue and revenue shortfalls, a recent audit of California state government financials found that the state is so poorly operated that the audit uncovered the fact that the state government has pots of unknown money laying about unused:

• $54 million was found in the California’s State Parks Department as the department planned to shut down 70 park facilities and was actively soliciting private donations to keep those same facilities open.
• Another $113 million was located in a bottle recycling program which had previous been reported as broke.
• As a result of these and other embarrassing discoveries of lost money, Governor Jerry Brown has called for a more detailed look into the state’s controller’s office, which is responsible for managing the state's financials.

What a disgrace. As California schools are closed, public servants like police and fire fighters are laid off, as social services are cut, it turns out that California has more money than it thought but just cannot find it. This insanity was neatly summed up by Nicholas Johnson, vice president for state and fiscal policy for the Center on Budget and Policy Priorities, to comment, “When a state’s revenues have been hammered as hard as California’s have during the last few years, the reasonable expectation would be that state officials are finding every last dollar before going after services with a meat cleaver.”

That would certainly be a reasonable expectation for everyone, except those that are in the political class.

- Keeping in mind a previous government spending scandal where General Services Administration (GSA) employees threw themselves a lavish, $832,000 Las Vegas party using taxpayer wealth and the average household income in this country is about $50,000, consider more depressing and despicable spending, again courtesy of the GSA. These findings came about by an investigation by WUSA Channel 9 in D.C. using GSA payroll official records and reported in the Washington Free Beacon on August 6, 2012:

• Although GSA employees make up only 1% of the Federal government workforce, GSA bonuses made up 10%  of Federal government bonuses paid out in 2011.
• A number of 2011 GSA employee bonuses were worth $50,000 or more.
• One GSA employee received an $80,000 bonus, in addition to $180,000 in salary and other compensation.
• The analysis found widespread abuse of GSA overtime pay including one instance where a GSA electrician received an $84,000 salary plus $115,000 in overtime and a $4,600 bonus.
• Two GSA air conditioning mechanics earned total pay of $130,000 and $201,000.
• The director of the Federal Acquisition Service made $257,000 2011, which included more than $63,000 in overtime pay and a $7,100 bonus.
• An environmental specialist at the Federal Acquisition Service received a $3,500 bonus on top a of $117,000 salary.
• Another “greening officer” at the GSA Public Buildings Service (PBS) earned a $150,000 base salary and a $7,500 bonus.
• A “gardener inspector” earned $90,000 in total pay, including more than $15,000 in overtime and a $2,500 bonus. Unbelievable.
• Three painters were paid about $80,000 each, which included bonuses averaging about $2,700 and overtime pay ranging from $12,000 to $16,000.
• One plumber made nearly the equivalent of his base salary ($51,000) in overtime pay ($45,000).
• An electrician earned a base salary of $93,000 and received $87,000 worth of overtime pay, as well as a $3,400 bonus.
• In an ironic twist, in the midst of this disgraceful spending, the GSA “cash control officer” in the GSA office of the chief financial officer earned just $41,000 total pay, including $432 worth of overtime and no bonus.

I had always thought that best job in the world was being a Washington politician. However, based on these payroll records, it might not be too bad of a gig to be a plumber, painter, electrician or just about any employee at the GSA. Ridiculously bad set of payment priorities in the midst of almost 13 million American taxpayers out of work and unemployed.

That is enough political class insanity today. Unfortunately, we will need another day to cover all of the insanity and goofball actions from around the country that occurred this past month. We will do that tomorrow along with providing some suggestions on how to stop the insanity of the American political class, insanity we can no longer afford to finance and insanity we should never be forced to endure in the first place.

We invite all readers of this blog to visit our new website, "The United States Of Purple," at:

http://www.unitedstatesofpurple.com/

The United States of Purple is a new grass roots approach to filling the office of President of The United States by focusing on the restoration of freedom in the United States, focusing on problem solving skills and results vs. personal political enrichment, and imposing term limits on all future Federal politicians. No more red states, no more blue states, just one United States Of America under the banner of Purple.

The United States Of Purple's website also provides you the formal opportunity to sign a petition to begin the process of implementing a Constitutional amendment to impose fixed term limits on all Federally elected politicians. Only by turning out the existing political class can we have a chance of addressing and finally resolving the major issues of or times.

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/

Why California Is Failing While Wisconsin Is Succeeding

Last week we compared the relative economic situations of three states: Florida, New Jersey, and California (http://www.loathemygovernment.blogspot.com/2012/07/state-level-economic-musings-california.html). Florida fared the best in our analysis, with unnecessary government costs being cut, funding for education being increased, no taxes being raised, but essential government functions still operating. This has resulted in Florida making some of the best improvements in its economy and unemployment rate in the country.

We concluded that New jersey Governor Chris Christie was making all of the right moves to get that state economy moving again but was facing a long tradition of the state overspending its tax stream and raising taxes to cover the shortfall. Its economy has been slow to recover but at least the governor is doing the right things.

The basket case of the three was California. Tax shortfalls, underperfoming schools, budget overruns, good sized cities declaring bankruptcy (San Bernadino and Stockton), an out migration of better off citizens and business, a general malaise throughout the state and its population. However, we did present a rather radical plan from famed economist Arthur Laffer to help pull the state's economy and state government out of the ditch. However, it is doubtful the state's political class is willing or able to accomplish such a feat.

If we had waited a few days, we could have included some other worthwhile advice on how to fix this broken state, courtesy of an article and analysis in the L.A. Times:

 (http://www.latimes.com/news/opinion/commentary/la-oe-malanga-wisconsin-california-bankruptcies-20120717,0,5879241.story).

It has been my experience that the L.A. Times is a left leaning, Democratic Party preferring publication. So when it sings high praise for the economic progress and approach of a REPUBLICAN governor from another state, I sit up and take notice since complimenting a Republican anything is rather rare in a main stream media publication like the Times.

The Republican being complimented is Governor Scott Walker of Wisconsin. As you may know, Walker just prevailed in a bitter recall election that was headed by state government unions in the state. The unions were against many of the changes that Walker had pushed through the state legislature that would have reduced the power of state government workers in the state.

The Times article, "California, Look To Wisconsin," made the following points:

• Walker argued that the biggest beneficiaries of his budget reform plans would be cities, towns and school districts, which would gain the ability to cut costs without having to negotiate every change in compensation or work rules with local unions.
• This legislation specifically eliminated collective bargaining by government workers for benefits and required greater contributions from them towards their pensions.
• Once his plan was enacted into law, Wisconsin citizens quickly found out that state employee unions had used its power to force local school districts to provide health care insurance coverage only through a nonprofit insurer affiliated with the union.
• Once the state allowed bargaining on health care contracts, school boards began competitively bidding out their health insurance, which hopefully would reduce costs.
• According to the Times' article, just two months after Walker's reforms took effect, 23 Wisconsin school districts had redone their insurance contracts, saving $16 million, or an average of $211 per student.
• The MacIver Institute in Wisconsin estimated that if all the state's districts were able to negotiate similar deals once their contracts with the union-affiliated insurer expired, schools, and Wisconsin taxpayers, could save $186 million.
• The Milwaukee Journal Sentinel reported that the city of Milwaukee would save as much as $36 million in its next budget by using the new bargaining leverage the Walker reforms provided.
• This flexibility allowed the city to avoid having to implement layoffs of city workers.
• However, the Milwaukee school system was not so lucky since it had agreed to a contract with its teachers' union just before the reforms took effect and thus, were locked into an existing contract. The school board asked for concessions from the union, the union refused, and the school board was forced to layoff 519 people which included 334 teachers. The Times article estimates that if the union had made the concessions, 200 teacher jobs could have been saved.

Great success story. Government employees still get a robust set of benefits, state and local governments and school districts get financial relief, teachers stay on the job, and the strain of ever increasing taxes on residents is eased. Walker has successfully bent the so-called "cost curve" downward with minimal pain and maximum benefits to a wide range of constituencies.

California, not so much. According to the Times' article:

• Average annual pay for a California local government employee rose 60% between 1999 and 2008, far higher than the inflation rate over that time.
• For a perspective, that rise is about 70% more than the increase in private sector pay levels in California over the same frame.
• The annual cost of funding pensions in California's 20 largest cities has gone from $1.3 billion in 1999 to $5.1 billion 2011, according to a study by Stanford University professor Joe Nathan, an annual growth rate of more than 11%.
• No city government's revenue stream is increasing anywhere near that much, meaning that at some point something in the current process has to snap.
• The article points out that cities like San Jose, California do not have the flexibility that Wisconsin local governments have. In San Jose, the average annual cost of employing a city worker, including benefits, has risen to an unbelievable cost of $142,000, resulting in San Jose laying off 2,000 employees and cutting back on parks, libraries and other services over the past three years.
• The city of Stockton, California has already declared bankruptcy, driven by the fact that for every wage dollar it spends, it now has to spend another dollar to cover city employee benefits. This has required the city to layoff 25% of its fire and police force over the past few years but even that was not enough to avoid going bankrupt.

The Times article concludes with this appraisal of California's budget problem: "Without pension reform in Sacramento, and with local contracts that make it impossible to cut costs without concessions from unions, cities and school districts in the Golden State are left with few good choices to balance their budgets." Not a good situation to be in because at some point, California local and city governments end up being little more than collection agencies for bad union contracts while schools, teachers, parks, and other important government functions get emasculated.


Florida figured it out, Wisconsin figured it out. Any human organization, whether it is a nonprofit, a small business, an international conglomerate, a family household, or a government entity, has to live within its budget and available resources. If it does not, the ever escalating cost curve and ever present economic reality and limits will eventually lead to the collapse of that human organization.


How soon will it take California, and more importantly Washington D.C., to understand that "economies cannot tax themselves to prosperity." At some point, and hopefully before it is too late, both California and Washington need to wake up to the fact that spending has to match up with revenue, that is simply a fact of life.




We invite all readers of this blog to visit our new website, "The United States Of Purple," at:


http://www.unitedstatesofpurple.com/


The United States of Purple is a new grass roots approach to filling the office of President of The United States by focusing on the restoration of freedom in the United States, focusing on problem solving skills and results vs. personal political enrichment, and imposing term limits on all future Federal politicians. No more red states, no more blue states, just one United States Of America under the banner of Purple.


The United States Of Purple's website also provides you the formal opportunity to sign a petition to begin the process of implementing a Constitutional amendment to impose fixed term limits on all Federally elected politicians. Only by turning out the existing political class can we have a chance of addressing and finally resolving the major issues of or times.


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 http://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/