Posts Tagged ‘wall street journal’

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Congressional misuse of taxpayer provided travel funds

Wednesday, September 1st, 2010

The Wall Street Journal reported yesterday that at least six lawmakers are under investigation for misusing taxpayer money intended for overseas travel expenses (Congressional rules allow members of the House and Senate to receive daily allowances for meals, cabs and other official travel-related expenses).

The House Ethics Committee is looking into whether some of these funds were instead used to purchase gifts, or pay for spouses’ travel.

According to The Journal, the amount allotted can “add up to more than $1,000 a trip for longer visits to expensive regions.” But as it is common for lawmakers’ “meals and expenses [to be] picked up by other people, such as foreign government officials or U.S. ambassadors…That can leave lawmakers with leftover money [which they] routinely keep or spend on gifts, shopping or to cover their spouses’ travel expenses, according to dozens of current and former lawmakers.”

While several Members have been questioned by Ethics — including Reps. Robert Aderholt (R-AL), G.K. Butterfield (D-NC), Alcee Hastings (D-FL), Solomon Ortiz (D-TX), Joe Wilson (R-SC), and former Rep. Mark Souder (R-IN) — some staff are questioning whether the alleged misuse of taxpayer dollars really warrants an investigation, According to The Journal, a spokeswoman for one of the Members said: “Focusing on personal purchases under $2 while over 14 million Americans are out of work does not reflect the priorities of the American people.”

We agree that Congress should be concentrating on our greatest economic and fiscal challenges. And it is important to note, as did The Journal, that there is currently “no system for lawmakers to return excess travel funds when they return to the U.S.”

But if Washington is unwilling even to control its spending on the small things ($2 bucks!!), how are American taxpayers supposed to trust them to tackle the country’s nearly $13.4 trillion debt?

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Latest ‘state bailouts’ create even bigger problems for some

Wednesday, August 11th, 2010

This week, the House of Representatives interrupted its “August Recess” to rush back to Washington to pass yet another ‘emergency’ bailout; this time, a $26-billion spending package the nation cannot afford, to supplement pay for state workers the states cannot afford.

Even the states themselves are beginning to share their concern with this unsustainable cycle of continued ‘emergency’ federal bailouts:

According to today’s Wall Street Journal, this latest state bailout will force many states to spend more – not less – and drive them further down a path of unsustainable spending.

Governor Haley Barbour of Mississippi did the math and figured out his state will be worse off. Mr. Barbour says the bill will force his state “to rewrite its current year [fiscal 2011] budget. Preliminary estimates of the Mississippi Department of Finance and Administration show that we will now have to spend between $50-100 million of state funds—funds that must be taken away from public safety, human services, mental health and other state priorities and given to education—in order for an additional $98 million of federal funds to be granted to education. There is no justification for the federal government hijacking state budgets, but that is exactly what Congress has done.”

For Texas, and only Texas, this funding rule will be in place through 2013. This is a form of punishment because the Beltway crowd believes the Lone Star State didn’t spend enough of its 2009 stimulus money. Apparently Texas politicians have been clinging to the quaint notion that the government should try to live within its means.

Texas Governor Rick Perry is also opposed to this new “assistance” from the federal government. He understands that one-time payments that force permanently higher state obligations are a windfall for government employees. But if given the choice, taxpayers would just say no.

Click here to read the entire article.

Today’s Cleveland Plain Dealer tells a similar story:

By approving $26 billion in new spending nationally, Congress will ensure that Ohio gets more than $880 million. Yet much of that is supposed to help states with Medicaid budget shortfalls, a problem Ohio doesn’t have.

More than $880 million in fresh economic aid is coming to Ohio thanks to Congress — whether Ohio needs it all or not.

“But state Republican lawmakers suggested that however the money is used, it could put Ohio in a bind later because the state will have expanded programs it could not afford in the first place. When the money runs out, the state’s looming problems will be hundreds of millions of dollars deeper, they said.”

Click here to read the entire article.

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Unemployment rate remains at 9.5%

Friday, August 6th, 2010

In another round of disappointing jobs news, the Labor Department’s July unemployment report shows that the recovery remains sluggish. Here’s a roundup of stories addressing the numbers:

The Washington Post reports:

The nation’s economy continued to sputter as private-sector employers added just 71,000 jobs in July, according to a report released Friday by the Labor Department.

The small increase in private-sector employment was more than offset by the loss of 143,000 temporary Census jobs, and the nation’s unemployment rate remained unchanged at 9.5 percent. Overall, the nation shed 131,00 jobs in July.

Bloomberg commented that recovery will take time:

Joblessness, which reached a 26-year high of 10.1 percent in October, will take time to recede as the number of previously discouraged jobseekers returning to the labor force exceeds the number of available jobs.

Revisions of June’s unemployment numbers were also released.  According to the Wall Street Journal:

The June data was revised down significantly. Payrolls fell 221,000 that month, more than the 125,000 drop previously reported, as only 31,000 jobs were added in the private sector.

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ICYMI: “Stressed States Are Forcing Workers to Retire Later”

Monday, August 2nd, 2010

Today’s Wall Street Journal highlights the harsh reality facing state government workers and their retirement benefits:

Lawmakers in at least 10 states have voted this year to require many new government employees to work longer before retiring with a full pension, or have increased penalties for early retirement. A similar proposal is pending in California. Mississippi, already among the states requiring more years of service for a pension, is weighing the additional step of increasing its retirement age.

Though lengthening lifespans have been expected to pressure pension systems, the looming fiscal predicament has emboldened lawmakers to demand more years from employees. Also, as many American states cut services, scrutiny has fallen on the compensation of public workers.

Changes to the retirement age won’t solve the most immediate financial problems that now face some public-pension systems, mostly because adjustments generally affect new workers. They aren’t expected to pay off for decades.

But generally, proposals have moved past resistance, partly because they apply to new hires. “People care most about things that affect them immediately,” said Mr. Burnett of Missouri.

In Europe, proposed changes to the retirement age are part of a broad effort to rein in the costs of a social safety net that has long been one of the world’s most generous. Changes would affect workers broadly, not just public workers.

The recent economic downturn has caused strife for state budgets across America. For FY2011, 46 states are on track to spend more than they will take in and will be forced to make tough choices to close their budget gaps. The longer states wait to deal with overspending, the harder and fewer their choices will be.

Click here to read the entire article.

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A growing choir of concern about uncertainty

Tuesday, July 27th, 2010

Yesterday we wrote about how uncertainty is keeping employers from hiring new workers. The Wall Street Journal’s “Real Time Economics” blogger Kathleen Madigan had a similar post yesterday afternoon, concluding uncertainty is “the mantra of this economic cycle.” Madigan also suggests “squabbling in Washington” is keeping businesses from hiring.

Michael Moran, an economist for Daiwa Capital Markets agrees: “Uncertainties regarding the costs of health care under the new structure approved by Congress, along with potential increases in taxes and limits on carbon emissions, are probably restraining corporate investment.”

And last week, BusinessWeek had an excellent piece on the uncertainty principle in which Barclay’s Larry Kantor compared today’s situation to the malaise of the 1970s (when Washington policymakers couldn’t get a handle on inflation).

Kantor warned, “It’s going to be difficult to sustain a bull market, because there’s a lack of full confidence in policymakers to get it right.”

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State News Roundup

Friday, July 23rd, 2010

Here’s a look at some of this week’s most interesting, and consequential, budget- and economy-related issues in the 50 states:

The Richmond Times Dispatch published a staggering break down the typical Richmond, Virginia family’s share of federal, state, and local government debt.

Discussing unemployment benefits, the Las Vegas Review Journal asks why can’t we just “pay for the $34 billion extension rather than putting it on the national credit card.”

In reaction to state unemployment numbers, the Las Vegas Review Journal lamented that, at a record 14.2%, Nevada has the highest unemployment rate in the country.

The Denver Post welcomes the President’s deficit commission’s dire warnings.  Citing our growing national debt, the paper says the country needs a wake-up call.

Facing massive budget deficits, cities around the country are being forced to outsource some of the most services, reports the Wall Street Journal.

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Economists debate stimulative effects of unemployment benefits

Monday, July 19th, 2010

Alan Blinder, a Princeton University economics professor, has a piece in The Wall Street Journal today arguing that spending on unemployment benefits is one of the best job creators out there. (House Speaker Nancy Pelosi made the same argument earlier this month.)

The crux of Blinder’s argument is that unemployment benefits are a much better way to stimulate demand — the process of getting individuals to spend money — because the people who receive the benefits have little income and will be forced, out of necessity, to spend the money they receive. In the same piece, Blinder also argues that tax cuts are not effective at stimulating demand.

But last week, in a piece also in The Wall Street Journal, economist Arthur Laffer presented a compelling argument that this is not the case. Laffer explained that people who earn less money are not as likely to spend it, for various reasons. “Studies have shown that previous stimulus spending—much of which was also targeted for the poor and unemployed—was to a large extent saved and not spent,” Laffer stated.

It’s important to keep in mind that there is a difference in believing that further extending unemployment (from the current level of up to 99 weeks) is the “right” thing to do and believing that it is stimulative.

For another view on the “stimulative” effects of extending unemployment benefits, check out this post from Veronique de Rugy, an economist at the Mercatus Center.

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State news roundup

Thursday, July 8th, 2010

Here is our weekly look at some of this week’s most interesting, and consequential, budget- and economy-related issues in the 50 states:

Yesterday, the Denver Post reported that Denver Mayor John Hickenlooper warned that the city faces a $100-million budget deficit next year.  The deficit, $20 million more than projections in April, will force the city to make significant cuts.

A recent Wall Street Journal article explained that across Detroit, citizens are volunteering to provide basic services that the city can no longer afford on its own.

According to the Wall Street Journal, programs implemented by states to increase lending to cash-strapped entrepreneurs have been so popular that states are now struggling to keep up with demand in the face of impending budget cuts.

The Pittsburgh Post Gazette reported late last week that Pennsylvania state lawmakers passed a $28-billion budget, meeting their deadline for the first time in eight years.  The budget is 0.6% higher than last year’s and includes no tax increases.

Paul Davidson writes in the USA Today that up to 400,000 city and state workers could lose their jobs as city and state governments work to close their growing budget shortfalls.

With many state government workers facing possible layoffs as a result of massive deficits, the Wall Street Journal observes that capital cities across the country are beginning to feel the squeeze.

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U.S. calls for spending as world calls for cutting

Thursday, July 1st, 2010

As Washington continues to debate how much more to spend on attempts to stimulate the U.S. economy (see an earlier discussion between New York Times columnist Paul Krugman and former Federal Reserve chairman Alan Greenspan), for German chancellor Angela Merkel the question is not how much to spend. but how much to cut.

USA Today reports how European leaders are acting quickly on controlling deficit spending while the U.S sits idly.  “The Europeans are not waiting for a (fiscal) commission, or the next election, or some kind of alignment of stars. They don’t believe they have any time to waste and are pushing forward now.”

The Chicago Tribune pointed out that you know the U.S. has gone down the wrong road when spendaholic European governments are lecturing the country on fiscal responsibility.  The article stresses that the rest of the stimulus should be spent before pouring on even more deficit spending.

In reaction to the G-20 meetings, the LA Times reports that the G-20 conference reached a compromise to halve the budget deficits by 2013.  In response to the agreement, Canadian Prime Minister Stephen Harper remarked, “We must recognize that our fiscal health tomorrow will rest in no small measure on our ability to create jobs and growth today.”

CBS News commented that President Obama stood alone at the G-20 conference in his push for continued stimulus spending.  However, this argument did not take hold as other countries put reducing the debt as their top priority.

Last week, Reuters reported that European Central Bank President Jean-Claude Trichet commended Germany’s plant to cut their budget by $80 billion euros.  Trichet noted he did not believe the austerity measure would bring the country to stagnation.

According to the Wall Street Journal, Merkel argued that increased spending could exacerbate the country’s rising public debt.  She prefers that Germany continue to focus on export growth.

European Union officials supported Germany’s push for fiscal discipline, and in a letter to G-20 nations Wednesday, said the recovery was happening faster than expected and the time for stimulus spending is over.

The Hill newspaper recently called the U.S. “isolated” in its continued pursuit of deficit spending in attempt to spur economic growth, noting that Germany, France, Great Britain, Canada and Japan all have plans to reduce spending.

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POLL: Public Pulse

Tuesday, June 29th, 2010

A recent NBC/Wall Street Journal asked adults whether the federal government should spend more in an attempt to help the economy – even though it would further add to the deficit and debt

Only 34% said the government should act regardless of deficits — about the same number (35%) as a year ago. 63% said the government should worry about deficits, up from 58% a year ago.



 
Also according to NBC and WSJ, 34% of Americans are “enthusiastic” about a Congressional candidate that says he or she will cut spending. 35% are “comfortable” with such a candidate; 15% have reservations and only 8% are “very uncomfortable.”


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