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This is the sixth list this month in our monthly series of political class insanity. This insanity takes many different forms and includes wasteful spending, stupid/idiotic quotes, ineffective or no solutions for citizens’ issues, and operation of inefficient and ineffective governments. Unfortunately, the pace of insanity seems to be accelerating every month with no relief in sight.
Today, we will focus on the horrible government economics of government entities around the country, the horror created by short sighted, greedy, and corrupt members of the American political class. Apparently, bad financial management is not unique to Detroit politicians. While reviewing the following list of impending government disasters, keep in mind that some politicians in government want to send money to Detroit to bail it out of its incompetence.
This would be a very bad idea since Detroit is highly unlikely to be the only victim of its' politicians. Would all of these other impending disasters also be given bailout relief from other taxpayers? And if not, who would decide what government entities are rescued, at least temporarily, and which ones would be allowed to die off.
Kind of like what the Federal government and Washington politicians did during the Great Recession, arbitrarily deciding which banks died (Lehman Brothers, Bear Sterns, etc.) and which lived (Citi Bank, Bank Of America, etc.), usually basing their decisions on how much campaign funding each banking entity gave them in the previous election.
So, let’s get started. Most informed Americans now know that political incompetence, economic ignorance, and widespread political corruption have led Detroit to declare bankruptcy when it reached the obvious conclusion that it had neither the assets or tax revenue stream to resolve the debt, economic, and cultural hole the local politicians had dug for the city.
But Detroit was neither the first major city to declare municipal bankruptcy (e.g. Stockton, California had already declared bankruptcy) or, according to an article from the Washington Examiner, the last. The article reviewed the work of Moody's Investors Service, a major bond-rating agency, which recently issued a report identifying 9 mostly famous and large sized American cities that are in trouble from a of credit-worthiness perspective.
In general, the most dire, underlying problem affecting the financial viability of these cities is their underfunded and over promised pension liabilities for retired city employees. Moody‘s pointed out in their analysis that many of these cities‘ pension liability calculations may be severely deficient and are reporting pension funding levels that are not correct
"The purpose of the [analysis] adjustments is to provide greater transparency and comparability in pension liability measures for use in credit analysis," said Timothy Blake, a Moody's managing director.
The article makes sure to point out that the following cities are not facing immediate danger of going into bankruptcy. However, the Moody’s analysis should be a danger sign for the following cities’ voters and citizens because they are the ones that are going to get hit with the consequences of any bankruptcy fallout.
Highlights of the Moody’s analysis singles out the following nine American cities as being on shaky economic and pension funding grounds, all the result of political class greed and incompetence:
Chicago
- Moody's downgraded The Windy City's credit rating by three notches in mid-July.
- The primary reason for the downgrade is the $19 billion in unfunded pension debt.
- In an ominous sign, the Chicago mayor, Rahm Emanuel, has told Chicago city employees that they should sign up for Obama Care’s health insurance exchanges, with the implication being that the city will try to find a way to dump the health care insurance of the city’ employees onto the Federal government and Federal taxpayer to save money.
- As proof of this likely need, the article cites a Pew study that reports Chicago's retiree health benefits are exactly 0% funded. In other words, not a single dollar has been set aside in savings against a future $1 billion health care insurance liability.
- Since Illinois is facing a $97 billion unfunded pension liability of its own, it is highly unlikely that the state government is going to bailout the city of Chicago.
Portland, Oregon
- Moody's has found a slew of economic problems in Portland since it is reviewing the city's credit rating for its general obligation bonds, tax obligation bonds, housing bonds and redevelopment bonds.
- The article quotes another Pew analysis that shows Portland "had virtually no assets" to offset unfunded liabilities of $2.3 billion just for its pension and disability plan for police and firefighters.
- In other words, the city is paying for the retirement costs of those uniformed employees on a pay-as-you-go basis, meaning its politicians have not been able or willing to stow away funding in past years for future retirement needs of these city employees.
Omaha, Nebraska
- Omaha has managed to ring up more than $1.4 billion in pension liabilities and it has only enough cash saved to pay about 43% of those costs, according to Pew.
Minneapolis, Minnesota
- Minneapolis could be facing a credit downgrade from Moody's in the near future.
- The city has more than $700 million in unfunded pension liabilities, causing Moody’s to take another look at the city‘s financials and general obligation debt
Cincinnati, Ohio
- Moody's recently downgraded Cincinnati, as a follow up to when its analysis placed the city on the list of possible downgrades back in April.
- Not surprisingly, Moody’s cited pension debt as the main reason for dropping the credit rating for Cincinnati's bonds.
- "The outlook on the city of Cincinnati is negative, reflecting our expectation that the city will continue to face budgetary pressure stemming from required pension contributions to the City Retirement System and potential long-term pressure from its exposure to statewide, multi-employer, cost-sharing pension plans," Moody's wrote.
- The city's unfunded pension liability tops $700 million.
Providence, R.I.
- Although not facing an immediate downgrade from Moody’s, according to the article, the city has one of the worst-funded pension systems of any major city in the U.S.
- Its pension funding ratio, the percentage of pension debt versus current assets to pay those debts, of 42%, makes Providence's pension mess even worse than Chicago's.
- The city may have recognized that its financials are in bad shape since 1) it recently suspended annual cost-of-living adjustments for city employee retirees and 2) now requires all former workers older than 65 to switch to Medicare instead of receiving health benefits from the city. Thus, much like Chicago, the city is looking for ways to dump its municipal costs onto the Federal government taxpayer.
Trenton, N.J.
- Moody's is currently reviewing general obligation bonds issued by Trenton's public school system.
- A downgrade on those school bonds would follow in the footsteps of a citywide ratings downgrade that hit in 2011.
- Much like Chicago, Trenton may not be able to get help from other government entities since the home county of Trenton, Mercer County, had its credit rating knocked down a notch by Moody's earlier in 2013.
Santa Fe, New Mexico
- In putting Santa Fe "on notice" a few months ago, Moody's noted the severity of the city's pension problems. Moody's ranked the city of Santa Fe as the worst in the country, saying it has net pension liabilities equal to six times its operating revenue.
- Moody's is also reviewing two other cities in New Mexico and the credit rating for Santa Fe County.
Charleston, W.Va.
- Like Providence, Charleston is another state capital that made the articles top nine list of infamy despite not attracting direct scrutiny from Moody's -- right now.
- The reason the city made this list is that Charleston has the worst-funded pension system of any major city in the United States, possessing only 24% of the necessary funds to cover its $337 million in pension debt.
- Like Chicago and Trenton, Charleston won't be able to look to other levels of government for help. Its home state of West Virginia is dealing with its own pension crisis with only Illinois having a worst funded ratio of its state pension plans.
Sad, sad, sad. Short term thinking politicians have been making silly and financially dangerous concessions to city unions over the decades to ensure that they have union support when election time rolls around. Now, those checks and promises are coming due and the resources and tax streams are nowhere to be found.
Tomorrow, we will look at even more political class insanity in this area where we review other government entities in detail that are likely to pull a “Detroit” in the next few years. They cannot all be bailed out by the Federal government and Federal taxpayer, there are just too many cases of political promises run amok. And whenever that happens, it is the average taxpaying citizens that get screwed, not the culprits at city hall, in the state house, and in Washington.
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:
Term Limits Now: http://www.howmuchworsecoulditget.com
http://www.reason.com
http://www.cato.org
http://www.robertringer.com/
http://www.youtube.com/watch?v=08j0sYUOb5w
Yesterday, we covered the first part of this month’s political class insanity. We saw how the private sector was not doing just fine, despite President Obama’s misperception of reality, reviewed how despite thirty years of government intervention in the housing market home ownership is right about where it was in 1982, and a variety of other instances of idiocy. We continue today with some more bad politicians acting badly:
1) Congressman Steve LaTourette was recently quoted in the Huffington Post, relative to the polarization and gridlock in Washington and the non-resolution any of our issues: “The current atmosphere, it’s a little bit like an alcoholic in my mind. I think the place (D.C/ politics) has to hit bottom before they realize they’ve got a problem and get it fixed.”
Let’s see: $16 TRILLION in national debt, 43 consecutive months of unemployment over 8%, our national credit rating already downgraded once, health care costs still going through the roof, public schools still disgracefully under educating our kids, leaky borders, U.S. embassies under siege, no national strategic energy plan in place, etc. Does he mean we have not yet hit bottom? How much worse can it get before the bottom shows up?
2) Talking about dysfunction, Lauren Grey has lived in the United States since she was four years old. At that time, her parents were granted an E-2 visa that allows them and their dependent children to stay in the United States indefinitely if the operate a business.
But the law and regulations are written so poorly that when those dependent children reach the age of 21, they are no longer covered by the visa and must leave the country. Thus, unless Lauren can get a green card, she must leave the country by her 21st birthday. On face value this makes no sense, breaking up families and making someone leave the country after living her for 17 years and educating her to become a productive member of society.
However, even more outrageous is that her parents initially tried to get her a green card nine years ago. However, the Federal government is so incompetent that it is still processing this request. I wonder if the same people working on this visa request are the same people that will take six years to write the Dodd-Frank regulations. Disgusting customer service and incompetence.
3) According to a new history book, “Presidential Perks Gone Royal,” by Robert Keith Gray, the Obama administration and family has been the most expensive White House operation in the history of the country:
- Taxpayers spent $1.4 billion dollars on everything from staffing, housing, flying and entertaining President Obama and his family just in 2011.
- In comparison, British taxpayers spent just $57.8 million in total on the whole royal family last year.
- Gray writes that Obama isn’t the only President to have taken advantage of the expensive trappings of his office. But the amount of money spent on the first family, he argues, has risen tremendously under the Obama administration and needs to be reined in.
- According to Gray, Obama has the largest staff in the history of the White House who are being paid at the highest wages ever.
- Included on the largest staff ever is a full time dog attendant for the First Family’s dog that reportedly makes $102,000 a year.
Ridiculous waste of taxpayer money in these hard economic times. If Obama wants to talk about “fairness,” maybe he should start by setting a good example within his own organization and its own bloated budget.
4) According to the website, Bankrupting America, the current set of politicians in Washington are not only delinquent in setting a budget for 2013, they are also technically breaking the law. Consider the following missed deadlines and the laws/statutes they violated, as documented by Bankrupting America:
- Missed Deadline #1: White House Fails To Submit Budget On Time. “The White House told Congress on Monday that its budget will be late this year, meaning President Obama once again will miss the deadline set in law. Congressional officials said the President now will send up his budget on Feb. 13, which is a week later than the usual date. The law requires the budget be sent by the first Monday in February.” (Stephen Dinan, The Washington Times, 1/23/12). The President Is Required To Submit His Budget Outline By The First Monday Of February. (Congressional Research Service, 1/28/04, p.2)
- Missed Deadline #2: Senate Budget Committee Fails To Submit A Budget Resolution. According to the Library of Congress website, the Senate Budget Committee failed to vote on a budget resolution. (Library of Congress Website, Accessed 9/9/12). A Draft Budget Resolution Is To Be Submitted To The Senate By April 1. (Congressional Research Service, 1/28/04, p.6; U.S. Senate, Committee on the Budget, Website, Accessed 9/9/12).
- Missed Deadline #3: Congress Fails To Pass A Budget. (Library of Congress Website, Accessed 9/9/12). The House And Senate Are Required To Pass A Budget Resolution By April 15. (Congressional Research Service, 1/28/04, p.6)
- Missed Deadline #4: House Appropriations Committee Failed To Report All Of The FY 2013 AppropriationsBills. The House Appropriations Committee only passed eight of the 12 appropriations bills by June 10, 2012. (Library of Congress Website, Accessed 9/9/12). The House Appropriations Bill Is Supposed To Report The Final Appropriations Bill By June 10. (Congressional Research Service, 1/28/04, p.6; U.S. Senate, Committee on the Budget, Website, Accessed 9/9/12)).
- Missed Deadline #5: U.S. House Failed To Finish Work On The FY 2013 Appropriations Bills. As of June 30, the House had passed only five of the 12 appropriations bills. (Library of Congress Website, Accessed 9/9/12). The U.S. House Is Supposed To Submit The Final Appropriations Bill By June 30. (Congressional Research Service, 1/28/04, p.6; U.S. Senate, Committee on the Budget, Website, Accessed 9/9/12)).
- Missed Deadline #6: The OMB Failed To Report Its Mid-Session Review On Time. “The Obama administration has missed another annual budget deadline, failing to send Congress a mid-session budget review before July 16. The Office of Management and Budget (OMB) confirmed Monday that the deadline for the review, due every year on that date, was not met this year.” (Erik Wasson, The Hill, 7/16/12). The White House Is Supposed To Submit The Mid-Session Review By July 15. (Committee on the Budget, Website, Accessed 9/9/12)).
- Missed Deadline #7: White House Misses Sequestration Transparency Act Deadline. “The White House announced that it will not meet Friday’s deadline to make public what plans it will put into place to deal with the massive defense cuts coming at the end of the year. The announcement comes shortly after President Obama signed into law the Sequestration Transparency Act that requires him to submit a report to Congress detailing the impact of his ‘sequester’ on defense and non-defenseprograms – cuts that were triggered after the so-called Super Committee to come up with a debt deal last year.” (Fox News, 9/7/12).
Come on guys. One of your primary responsibilities as Federal government employees is to establish, pass, and execute a fiscally responsible budget. Besides passing laws, there is nothing as important as budgeting and protecting the integrity of taxpayer wealth. Other Federal politicians have been doing this successfully for centuries. Why are you so inept at doing the same? Without a budgeting process, expenses and costs get out of control which is probably why we now have a national debt of over $16 TRILLION.
5) Yesterday, we talked about how Russian President Vldamir Putin was enriching himself and his life style as a major Russian politician. Unfortunately, that same maladay seems to have also infected many American politicians lately:
- According to an Associated Press report from September 10, 2012, Federal agents arrested the mayor of New Jersey's capital, Trenton, on corruption charges, alleging he agreed to accept bribes in connection with a proposed parking garage that was actually a law enforcement sting operation.
- In a September 21, 2012 Assoicated Press article we learned that former Detroit mayor Kwame Kilpatrick is going to court for a corruption trial that could land him in prison for more than 10 years. Patrick is accused of collecting hundreds of thousands of dollars in bribes, kickbacks, and other favors. His father, Bernard, is a co-defendant.
I guess politicians are the same all over, from Moscow to Trenton to Detroit: power corrupts but power also attracts the corruptible.
6) On September 13, the U.S. Environmental Protection Agency (EPA) sent an internal email to its staff under the subject line “Hispanic Heritage Month.” The email featured a picture of infamous communist advocate Che Guevara with the slogan “hasta la victoria siempre,” or “on to victory, always.”
What type of person was Guevara? Consider his own words:
- “Hatred as an element of struggle; unbending hatred for the enemy, which pushes a human being beyond his natural limitations, making him into an effective, violent, selective, and cold-blooded killing machine.”
- “I ended the problem with a .32 caliber pistol, in the right side of his brain…. His belongings were now mine.”
Just the type of role model I want my government to operate under. Pathetic.
There you have it. Another month of incompetence, idiocy, wasteful spending, arrogance, and outright criminal behavior. The American political class marches on.
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 our 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
