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Warning: If you want to drive yourself crazy, subscribe to Jack Dean’s email alerts about pensions. He distributes from ten to twenty newspaper headlines and articles a day from around the country - about pension plans, how much pension trusts have declined in value, and how various cities, counties and states are responding. Just glancing through these articles can give you serious heartburn. Not just because of the loss of value of the various pension portfolios, but also because of the expectations of government employees and the actions of politicians in response.
Following are some randomly selected examples of the news reports. Read ‘em and weep:
…Economic shifts mean big changes for those who want their golden years to be golden. 401(k) match: gone; pension: what pension? - Home values: gasp…Disappearing pensions. Evaporating 401(k) matches. A Social Security system headed for trouble. This isn’t going to be your parents’ retirement.(The Salt Lake Tribune, 02/20/2009)
City unfunded pension liability is up 80 percent: According to the City of Pensacola’s comprehensive financial reports, the unfunded liability for the pension funds is much greater than it was in 1998: General Pension 1998 unfunded liability…increased: $21,084,000, 72%. (ricksblog.biz, February 19th, 2009)
Huge pension fund losses could require reforms. Stock market hammers county employees’ retirement program…Drastic changes to the county’s employee pension plan could be coming as a result of huge losses in the pension fund on Wall Street in recent months, officials say…The pension fund, estimated at $8.4 billion last year, has lost about $2.5 billion of its value in the last six months as a result of a downturn in the market… (San Diego, North County Times, February 19, 2009)
Pa.’s pension funds show a $28 billion drop. (Philadelphia Inquirer, Feb. 18, 2009)
The influence of public-sector unions … in California and New Jersey leads to unsustainably generous benefit and pension packages… (Liberty Magazine, March 2009, Vol. 23, No. 2).
Among the states, the question is no longer, who’s most likely to succeed? It’s who is most likely to default? However, it’s not just government employees who should be worried. Employees in private industry also have reason to be concerned.
General Motors has become the poster child for the consequences of catering to the demands of the unions over the years – to satisfy unrealistic demands for pension and health care benefits for their members. The company can no longer meet these demands and is on the verge of going under. If that happens, who will continue to pay the retirement and health care costs for the auto workers?
People may think the government will cover it. After all, Congress established a special pension liability fund for that purpose, right? Indeed they have, the Pension Benefit Guarantee Corporation (PBGC). Its website tells us that PCBG “is a federal corporation…It currently protects the pensions of nearly 44 million American workers and retirees in more than 29,000 private single-employer and multiemployer defined benefit pension plans. PBGC receives no funds from general tax revenues. Operations are financed by insurance premiums set by Congress and paid by sponsors of defined benefit plans, investment income, assets from pension plans trusteed by PBGC, and recoveries from the companies formerly responsible for the plans.”
The problem is that the PBGC doesn’t have nearly enough money to cover the potential losses of all the pension plans in the U.S., which add up to something in the trillions of dollars.
So, where will they turn when the PBGC runs out of money? Obviously to the government, and our ever-accommodating political leaders will be only too willing to turn on the spigot of free money to solve the problem. The response of choice has become to have the federal government either borrow the money or print it, and I have little doubt they will do so again.
In the meantime, government employees keep turning to the cities, counties, states and the feds, expecting them to guarantee their losses.
A popular retort to someone who was bossy used to be, “Who was your slave last week?” This seems like a pretty good response to the unions. We may not be their slaves, but government employees often seem to think the public should beggar themselves to support their retirement benefits. Not that they haven’t earned them. They have. But taxpayers are rapidly reaching the limit of their willingness and ability to continue underwriting funding of employee pension trusts when they decline in value. Especially, since most people who work in the private sector don’t have anything close to the benefits of government employee pension plans. .
There was a time when the compensation of government employees was much less than that of workers in private industry. The tradeoff was to exchange higher pay for security and benefits. However, that situation has changed. Today, those who work for government have better benefits and pensions than most people in the private sector. Yet, the general public is invariably expected to pick up the tab when the pension trusts of government employees experience losses.
It’s heartbreaking to watch helplessly as an out-of-control political leadership systematically dismantles the political and economic structure of the most successful nation in history. In the span of my lifetime, I have witnessed the transition of America from a “can do” to a “gimme” society.
The blame can be pretty well laid at the feet of a political class that is not just uninformed but is largely so ignorant that they have no clue about the consequences of their actions, or don’t care. Unfortunately, there’s plenty of culpability to go around, including both the Democrat and Republican parties, and lest we forget, the voters who elect them.
Now signed into law, the stimulus bill continues to be analyzed, and the list of changes to our nation’s economic system that Obama is ushering in keeps growing at one of the most troubled times in our history. Following are just some examples of the many provisions that have absolutely nothing to do with stimulating the economy:
>More than $3 billion for “neighborhood stabilization” and Community Development Block Grant funding.
>$1.3 to bail out AMTRACK, which has never made a profit.
>$1 billion for educational programs, including courses on sexually transmitted diseases.
>$20 million for restoration of wetlands (in Nancy Pelosi’s district).
>$45 million for ATV-four-wheeler trails.
>$200 million for a low-pollution, coal-fired power plant (in the president’s home state of Illinois).
>$200 million for computers in community colleges.
>$50 million for the National Endowment of the Arts.
>Over $650 million to help consumers buy digital TV converter boxes.
>$8 billion for a high-speed-rail between Disneyland (in Orange County, CA) and Las Vegas.
Both Obama and Speaker of the House Nancy Pelosi have been quoted as saying, “We won,” meaning they, that is, the Democrats, have the right to do anything they want and that those who disagree with them should not try to make any changes to the legislation or object. But, they fail to comment on the fact that not one member of Congress read the stimulus bill before voting on it. Not one.
It’s extremely troubling, even frightening, to realize that this is the way the people we trust to represent us operate, especially considering that about half the members of the Senate and around a third of those in the House of Representatives are lawyers. How often do attorneys advise us not to sign anything, ever, without reading it first? Yet, those same attorneys who would advise clients to always read documents before signing them were perfectly willing to approve a 1073-page bill without having read it or even knowing what was in it.
Furthermore, in direct contradiction of all the talk about bi-partisanship, the Democrats in the House shut their Republican counterparts out of the process of writing the stimulus bill, going so far as to hold closed-door meetings without them when the final version was written.
After all the hype about urgency, instead of immediately signing the bill, President Obama took the weekend off in Chicago and scheduled a media event for the following Tuesday to sign it in Denver. So, although the emergency was touted as being so dire that the bill had to be passed immediately, as soon as it was approved by Congress, the urgency suddenly seemed to fade.
President Obama promised, among other things, that his government will be open and transparent, that there would be no more secrecy, that the public would have five days to look at the “stimulus” bill before it was voted on, that the public would know what’s in it, and that it would not include any pork. All of which has proven to be untrue.
My take is that Obama may be the most arrogant president in our history, which I suspect will catch up with him at some point. Leading the nation is not a footrace but a long-distance run that requires staying power and patience, and that can’t be based on hype and showmanship indefinitely.
I’m heartbroken and saddened by the seemingly unbridled march toward socialism that now appears to taking place in America, and I worry for my children and grandchildren, who may never know the freedom and opportunity that my generation has always been able to take for granted.
GUEST COMMENTARY
By Andy Caldwell
Executive Director
COLAB
It has been suggested by some in Sacramento that our Legislature needs the equivalent skills of a Captain Chelsey Sullenberger, the heroic pilot who landed his plane in the Hudson River. I take this to mean that the best Sacramento can hope for is a crash landing?
Carrying this analogy forward, I would maintain that unlike the wild birds that served to force the aforementioned crash, what the State of California has run into is a huge flock of trained homing pigeons, aka, special interest groups. These homing pigeons are trained to always come back for more. More money, influence and power. And for this reason, they have clogged the economic engine and undermined the structural and fiscal integrity of our once great State.
I would hope that instead of continuing our tradition of feeding the pigeons only to face additional crash landings in the future, we would do something altogether different. What we need is a Contract with California! A blue print for our State to follow that would serve in the context of our analogy as an emergency landing to clean out the engine of pigeon feathers and pigeon remains, and give us the opportunity to refuel our engines.
We need new jobs, energy supplies and investment to get us out of this slump.
In other words, let us rid ourselves of the things that are artificially draining our economy and begin to embrace business development and investment that will serve to raise revenue, not by raising taxes on existing businesses, but by generating new tax revenue.
Back in the early 1990’s we were in a recession that was adroitly analyzed by Peter Uberroth and a Commission he chaired. Their most apt diagnosis? “California was not suffering from a recession as much as we were suffering from self-inflicted blows to our own economy by our own government”. Things have only changed for the worse!
Let us not forget that the State of California was in dire financial straits while the California economy was still doing great! The only delay in the realization of this crisis was by means of phony budgets based on rosy predictions, massive debt deferral and sleight of hand.
It is time we address some real issues, regardless of how unpopular and politically incorrect they may be.
Here is my opinion as to what should be on the list:
1. Change the State Laws that affect pension obligations to public employees. Specifically, defined benefit pension plans must be eliminated as they are bankrupting us. Elected officials should have full control of retirement plan funds and related disbursements instead of retirement boards dominated by union members.
2. Agree to a sales tax hike only for a mere six months to give voters enough time to vote on a hard budget cap. If the budget cap is approved, we give them two additional years. But, we exempt auto sales from the sales tax. No income tax surcharge. No vehicle license fee increase. No increase in gasoline tax.
3. We repeal AB 32 and the Diesel Engine Rule. Unnecessary and unaffordable. AB 32 forces us to artificially constrain manufacturing and industry back to 1990 levels, when this is our best paying job sector. Diesel Engine Rule creates multi-billion dollar impact to construction, transportation and farming with limited benefit to public health. Defer instead to National Standards for compliance.
4. We reform CEQA. Have it apply to new projects only that extend urban boundary lines and services to rural areas. In other words, urban infill development becomes exempt. Also exempt all State approved/funded transportation and local government infrastructure projects.
5. Curtail new Waste Water Discharge Standards for new construction, septic systems and rural properties (farms and ranch lands). Complete overkill in terms of cost benefit. Let local communities figure out if they have a local problem and address it on a local basis.
6. Cut back authority of CA Coastal Commission. They should have jurisdiction in those communities that do not have an approved coastal plan. In jurisdictions with an approved plan, any appeals or challenges of projects can proceed to court.
7. Curtail State ESA provisions that give greater precedence to species over humans. Example given: No water will be cut off from urbanites and farmers in deference to listed species, especially water that is paid for via contract.
8. We open up State waters for oil and natural gas. Example given, we override the State Lands Commission and the Coastal Commission and approve the PXP slant drill project in Santa Barbara County that has the support of the entire county, including the environmental community. This project alone will add $3-5 billion to the State’s economy, with no adverse impacts. While we are at it, we also approve projects by Venoco in our county that will bring in billions more.
9. Eliminate prohibition against new nuclear power plants. Why continue to subsidize alternative energy supplies that do not pencil out and ignore the cleanest, most renewable and most potent form of energy known to man?
10. General Principles: Take a lesson from other States in order to learn how to be business friendly. Refuse to lead the country with new legislation that will only add to our economic misery. Invest in infrastructure. Reduce State mandates upon Schools, Cities and Counties. Restore funding to local governments and boards and downsize State government accordingly.
No economic recovery is possible unless Consumers resume spending on big ticket items – autos, homes, white goods and consumer electronics.
Consumers, particularly the recently retired or those in the Red Zone prior to retirement – have seen their home equities disappear and their 401k accounts decimated.They are saving or limiting their spending to essentials only – no big ticket items — because they fear outliving their retirement assets.Add to that the small and large businesses that are reducing staff because consumers are not spending, and you have the Perfect Economic Storm.
With $700 Bn in TARP funds and a proposed $825 Bn in stimulus funds, not to mention the funds lent to AIG and the automotive industry, one would think that the US government could fix the mess.And, the government is obligated to fix the mess, because it created it by turning our banking system into a form of welfare to fund insupportable mortgage loans.
However, the stimulus program that is proposed falls far short of the mark. The US is planning to run a Trillion dollar deficit each year for the next few years.The proposed stimulus plan focuses on government spending programs and social welfare programs.Less than 10% of the proposed $825 Bn plan — $20 Bn for Science and Technology and $50 Bn for alternative energy — will create jobs in the near term.The infrastructure spending doesn’t kick in until 2010, and nothing really is present to create the sustainable means to pay off the debt needed to get the plan in place.
Here are a few thoughts to consider that will actually work:
1.Home Equities – Take a major part of the stimulus fund and underwrite the renegotiation of all existing, conventionalperforming mortgages and home equity lines.
Example: With 20% equity into a $200,000 home, a consumer feels as if he has an asset of $40,000 towards retirement or for a housing upgrade.The $160,000 mortgage at say, 6%, 30 years, costs about $900/month.With a 40% decline in housing value, this same consumer has a ($40,000) asset – the home, now worth $120,000 on the market against the $160,000 mortgage.Why would the consumer even consider paying his underwater mortgage on time, let alone spend on other big ticket items?
If the mortgage is renegotiated at 80% of the current value of the house – i.e. $96,000 at say 3.5%, 40 years – the monthly payment drops to $325, and the consumer feels as if he has a $24,000 asset towards retirement.The Bank takes a Principle and Interest hit, the consumer takes an Equity hit, but has $575 a month in his pocket to spend.Enough to stimulate consumer spending.And, the US Treasury keeps the banks solvent by underwriting their losses with both capital infusion and Tax Code incentives.
The Tax Code can also be changed so that the additional money in the hands of the consumer is his to spend.There are a host of mechanisms to lock the consumer into living in a home that has been the subject of a renegotiated loan – an exercise left to the experts at Treasury.
Why focus on all existing, conventional performing mortgages and home equity lines?Simply because that is where 90% of all mortgages are.
2.Small and Large Businesses – The US Corporate Tax rate of 35% is ridiculous in the face of the existing economic meltdown.In the services-oriented businesses, now dominant in the US economy, the lion’s share of business costs are people costs.Halving the Corporate Tax rate to 17.5% would save and create far more than the paltry 4Mjobs that are supposed to be created by the $825 Bn stimulus plan.While you are at it, I would suggest halving the Payroll tax for both workers and businesses for all of 2009 and 2010.That should get more monthly money into the hands of workers and make it possible for businesses to retain workers and to add staff as business revenues pick up.
Reignite small and large business by expanding R&D tax credits, raising the limits of capital that can be expensed each year, and expanding working capital funding to operations-cash-flow- positive businesses.
3.Decimated 401ks – The stock market responds positively to only two factors – certainty and positive earnings.
The uncertainty in the markets today, as measured by the Volatility Indices, is close to unprecedented heights.TARP was (is) a good idea.Get on with the original program to sequester underperforming assets in our financial institutions, and clean up the Balance Sheets of the five major banks involved in the famous Paulson “take it or leave it” meeting in September 2008. The caveat is that this time the banks need to commit to aggressively making solid well-underwritten loans to businesses and consumers, instead of buying up other financial companies.
Positive business earnings will take a few quarters to be realized after Corporate and Payroll Taxes are reduced.But, the stock market can be positively affected earlier by eliminating the Capital Gains and Dividend taxes.It should be possible to recover the 50% + losses in most 401ks by 4Q’10 if Corporate, Capital Gains and Dividend Tax cuts are implemented ASAP.
While you’re at it, I suggest eliminating Income Taxes on Interest Income as well.This will help banks and other financial institutions who issue Certificates of Deposit attract new deposits.
4.Income Taxes - Nothing works faster to get money into the hands of working consumers than a cut in the marginal tax rate.Since Subchapter S owners and LLC small businesses pay taxes on their profits as individuals, a cut in the marginal tax rate would be an added stimulus to businesses, as well as getting money into the hands of working consumers.
As a student of Real Politics, I understand the sensitivity to the economic class warfare issues that are so popular during a campaign.However, the campaign is over, and now results are needed.Here’s my suggestion – Income <$50,000, 0% Tax; $50,000 to $250,000, 12.5% Tax; $250,000 to $2,500,000, 17.5% Tax;>$2,500,000, 22.5% Tax.
History has proven that with cuts in the Marginal Tax Rate, the overall tax revenue into the Treasury increases over the long-term. This is so because of the ability of businesses and working consumers to use the additional money in their hands far more effectively than government can use the money.
Unemployment Benefits - Extending unemployment benefits for another 13 or 26 weeks is a good idea to help job seekers during this tough time.Add some dollars to that amount to fund retraining in true growth areas, such as health care for our aging population, and I think that the money will be well spent.
Simple message: 1) underwrite Bank renegotiations of all existing conventional, performing mortgages to get immediate money into the consumers hands and to replace some of his lost home equity, 2) dramatically cut Corporate, Payroll and Marginal Tax rates, 3) eliminate Capital Gains and Dividend taxes and Income Tax on Interest income, and 4) use the expected Trillion dollar deficits to create sustainable job creation and the long-term increases in tax revenues needed to pay down the debt.
Thank you for your service to our Country and Good luck.
After generations of excessive spending, America has entered what is perhaps the most dangerous period in its history. Congress has passed the biggest spending bill ever, to the tune of almost a trillion dollars, an amount of money that’s really too big to truly appreciate or understand. Think of it this way: one trillion is a million times a million, or a thousand times a billion. Still hard to grasp, isn’t it?
Thinking about it another way, USA Today recently reported, “The federal government spent $952 billion in 2007 on elderly benefits.” That includes an average social security payment of $13,184.
However, the issue is not just about the growth of government and intrusion into our lives. It’s about much more. It’s about how much money is spent to support the services and activities of government and where it comes from.
The problems cannot be fixed with hype and salesmanship. That only goes so far, and when the string runs out, the administration and the nation will pay a big price, which will inevitably show up in the form of inflation.
As the stimulus bill moved through Congress, the U.S. Treasury has been preparing for a record debt sale to finance the cost. However, one of the problems is that Americans don’t have the resources to buy enough Treasury notes to cover the tab, which forces us to look to The Federal Reserve Bank and foreign investors and that increases the cost.
The Financial Times recently observed: “At the end of February, the Treasury will start selling seven-year notes every month for the first time since the issue was discontinued in 1993. Sales of 30-year bonds will double to eight times a year and the Treasury will say in May whether the bond will be sold every month.”
“For Barack Obama’s administration, the step-up in borrowing costs comes as it is fighting to secure an $800bn-plus fiscal stimulus, and is likely to need many hundreds of billions more to fund a banking sector clean-up.”
“Traders are particularly concerned about the appetite for Treasuries among foreign investors, who hold more than half the outstanding $5,500bn ($5.5 trillion) in Treasury debt.”
“In recent years, demand for US government debt has been stoked by developing countries running huge trade surpluses with the US and recycling their dollars by buying Treasuries. (Think China). However, many are facing growing pressure to stimulate their own economies and are seeing their current account surpluses decline as global demand diminishes.”
In other words, we are financing an unprecedented amount of spending with borrowed money. That drives up the cost of borrowing and deprives capital markets of funds that are badly needed for the budget and to “stimulate” the economy.
What happens if the market does not soak up all the debt that’s needed to finance the entire stimulus effort, even with higher interest rates? The alternative is to print money and simply put it into circulation to pay the bills. Nice trick if you can get away with it, right?
But, not so fast. There’s a penalty for doing this. It’s called inflation. But, not the sort of creeping inflation we have become accustomed to living with for the past fifty years. It will be more like the double-digit inflation during the Carter administration, including interest rates that soared to over 20 percent.
So, what can we expect?
Commenting on the situation, Dick Morris recently noted, “So Barack Obama and the Democrats are selling soothing syrup to their political base at a price of massive inflation and agony in the future. What Franklin Delano Roosevelt said in the first inaugural address holds doubly true today: ‘Faced by the failure of credit, they have proposed on the lending of more money.’” Morris has further stated in interviews that he expects the annual inflation rate to jump to around 20 percent in a couple of years because of the stimulus bill.
If that happens, it will impact every aspect of American life, from the value of savings and investments to the price of food. However, an even greater fear is that we could slip into the astronomical rates of hyperinflation if we don’t stop infusing massive amounts of debt and fiat currency into the U.S. monetary system.
Turner Catledge, a journalist during the Roosevelt era, described the pattern used by FDR’s administration to sell his legislative proposals to the public as follows: “First there is the early ‘idea’ period, when either the President or some group of his associates hatches the rather rough for of what is to be attempted. Then there is the selling stage, in which the person or the group who thinks up the idea has to ‘sell’ it to the other. There follows in third place the ‘method’ stage when the modus operandi is evolved. Then there comes the final ‘publicity’ stage when the program is announced and the argument is submitted both to Congress and the public in behalf of its adoption.”
Sound familiar? It should. It’s the tried and true formula being used by Obama and his administration to panic the public into accepting the so-called stimulus package that has been wending its way through Congress.
Economist Walter Williams observed: “The stimulus package being discussed is politically smart but economically stupid. It’s that bedeviling, omnipresent Santa Claus and Tooth Fairy problem again. … A far more important measure that Congress can take toward a healthy economy is to ensure that the 2003 tax cuts don’t expire in 2010 as scheduled. If not, there are 15 separate taxes scheduled to rise in 2010, costing Americans $200 billion a year in increased taxes. In the face of a recession, we don’t need that.”
And, columnist Michelle Malkin noted: “Bashing Rush Limbaugh last week, Obama urged GOP lawmakers to ignore the voices of obstructionism and sign on to his behemoth stimulus package: ‘We shouldn’t let partisan politics derail what are very important things that need to get done.’ … History has shown us that ‘Get Things Done’ is mindless liberal code for passing ineffective legislation and expanding government for government’s sake.”
In an open letter disseminated by the Cato Institute, two hundred economists stated, “More government spending by Hoover and Roosevelt did not pull the United States economy out of the Great Depression in the 1930s. More government spending did not solve Japan’s ‘lost decade’ in the 1990s. As such, it is a triumph of hope over experience to believe that more government spending will help the U.S. today.”
In short, the stimulus package proposed by Congress is being hyped as the way to spend our way to prosperity. The president has been telling us that if we don’t act immediately, the nation may never recover from its present condition, which he has characterized as the worst economy since the Great Depression. However, if it is really possible to spend our way out of a recession, why are there business cycles at all?
People instinctively know that panicking in an emergency does not solve anything. As a matter of fact, it makes it worse. Panic short-circuits clear thinking and induces action without sufficient facts, especially in complex situations that present a variety of alternatives. And, the worst situation of all is when leaders panic.
President Obama’s image is that of a cool customer who keeps his head under pressure. Yet, he has repeatedly appeared in press conferences and public appearances, telling us that the situation with the American economy is so urgent that if we do not act immediately, we will never recover. I don’t see that as leadership. True leaders try to keep everyone else from overreacting and losing control.
Unfortunately, the initial response of the Bush administration was to immediately push through the $700 billion bailout package and spend the first $350 billion without any accountability. It’s clear that it did not work, yet we are being told that we need more of the same. The reality is that neither Bush nor Obama have provided any clear recommendations about how the causes of the financial crunch that brought the economy down can be fixed, because they don’t know. I would prefer to see our leaders try to keep the public calm while they go about the business of methodically working to solve the problem.
The public, who generally have more sense than their political leaders, appear to agree. Polls now report that the majority of Americans either want to see major changes to the current stimulus plan or they reject it outright.
Politicians can call it stimulus or they can call it change, but it’s just more of the same old tax and spend approach, and the American people know it.
When House Democratic Leader Nancy Pelosi unveiled the Democrats’ “Honest Leadership, Open Government Act” in January, she declared: “Today, Democrats are here to make a Declaration of Independence from special interests,” saying in part:
“…corrupt government undermines our values. We come here today to support those values, and to lay out an agenda for a new era of honest, open, and transparent government.”
“For years, Democrats have called for an end to the Republican culture of corruption.”
“Democrats are leading the effort to turn the most closed, corrupt Congress in history into the most open and honest Congress in history.”
“Taken together, Democratic proposals will lead this country in a new direction, put an end to business as usual, and make certain this nation’s leaders serve the public’s interest, not the special interests.”
Consider the records of some of the people who were selected for key positions in the new administration:
Bill Richardson, Governor of New Mexico: Withdrew as the nominee for the post of Commerce Secretary because of a grand jury investigation into contracts in his state being awarded to political donors.
Tom Daschle, former Senator and Senate majority leader: Failed to pay taxes on unreported income, primarily for the personal use of a car and driver provided to him by a private equity firm. The New York Times reported, “He paid some $140,000 in back taxes and interest…to settle several tax problems – and he acknowledges owing more.” Unable to adequately justify his ethical lapse, Mr. Daschle withdrew his name from consideration for secretary of Health and Human Services.
Tim Geithner, recently confirmed as Treasury Secretary of the Obama Administration: Prior to being confirmed by the Senate, he acknowledged that he had failed to pay some $34,000 in payroll taxes on his income for the four years, 2001-2004, in spite of the fact that his employer had advised him in writing of his obligation and gave him the money to pay the taxes. He also wanted his accountant to claim the cost of sending his son to summer camp as a business expense.
Nancy Killefer, nominated to be the deputy director for management at the Office of Management and Budget and the first chief performance officer for the federal government: Her failure to pay employment taxes for household help for a year-and-a-half resulted in the D.C. government filing a $946.69 tax lien on her home in 2005. As assistant Treasury secretary during the Clinton administration, she was the chief operating officer of the Treasury Department.
Eric Holder, recently confirmed to be the U.S. Attorney Journal: played a leading role in Bill Clinton’s pardon of billionaire Marc Rich, who fled the country to escape prosecution for tax evasion, racketeering and trading with the enemy. The U.S. pardon attorney testified that when the White House sent Rich’s name over for consideration on Clinton’s last day in office, there was no mention of Rich being a fugitive and that he was not eligible for a pardon because he never took responsibility for his actions or served any sentence.
The Associated Press reported: President “Obama also issued an executive order barring any former lobbyists who join his administration from dealing with matters or agencies related to their lobbying work. Nor could they join agencies they had lobbied in the previous two years. However, Obama’s choice to become the No. 2 official at the Defense Department, William J. Lynn III, was recently a lobbyist for military contractor Raytheon. And, William Corr, tapped as deputy secretary of Health and Human Services, lobbied through most of last year as an anti-tobacco advocate.”
Leon Panetta: Approved as Director of the Central Intelligence Agency, in 2008 he earned more than $700,000 in speaking and consulting fees, with some of the payments coming from troubled financial firms and a firm that invests in contractors for federal national security agencies.
There are more, but these nominees and appointees illustrate that, given the new administration’s track record so far, it certainly doesn’t look like the end of business as usual. The culture of corruption continues apace, notwithstanding the change that Obama promised, starting with an administration that looks very much like a retread of the Clinton years.
Unfortunately, House Leader Pelosi is only half right: Neither political party has changed the culture of corruption in Washington and both appear to have turned corruption into an art form.
We were titillated for weeks by the antics of Rod Blagojevich (Blago), the former governor of the state of Illinois. Nonstop media coverage followed his every move: jogging, holding press conferences, making TV appearances, all in an effort to escape the inexorable process of impeachment and avoid prosecution for his reported attempt to extort money and favors for appointing a replacement to fill Barack Obama’s seat in the U.S. Senate.
Although Blago managed to outmaneuver his political opposition by successfully appointing Roland Burris, the former Attorney General of Illinois, to the U.S. Senate, his outlandish behavior accomplished little else beyond making him the butt of jokes and ridicule.
Is the public really interested in this clown or was the intense media coverage due more to the herd mentality of the news outlets, reporting stories they think are good for their ratings? Switching channels doesn’t help, because the coverage is generally universal, with around-the-clock newscasts. How many people endured the coverage about Blago only because it was necessary to get the news that actually interested them? My guess is most viewers.
On the day his impeachment trial began in the Illinois state senate, Blago appeared on Good Morning America, The View, Larry King, and Glenn Beck. While the state’s senators were considering his case, he was in Manhattan, moving from one studio to the next, comparing himself to Martin Luther King, Ghandi, Nelson Mandela and a host of other heroic figures, including fictional movie characters, rationalizing and justifying his behavior at every turn. The New York Times reported, “…throughout the day, Mr. Blagojevich spoke to anyone who would listen of the unfairness of the removal he was facing, one he considered absurdly outside the boundaries of the nation’s laws and mores.”
But, Blago persisted, seemingly without shame or embarrassment. Is he really so thick that he can not see how he looks to others? Apparently he is. But, he’s not the only one. The media is routinely besieged by people who are seeking their fifteen minutes of fame, which an eager public is all too often willing to watch. The excesses of celebrity have overrun our culture. No act of pandering seems to be outside the bounds of propriety any longer. There is an unending stream of would-be celebrities, all clamoring and competing for attention.
However, the lesson of Blago is about more than celebrity. His antics have also been shining the bright light of disclosure on the dysfunction of the nation’s political class and our political process. For years, the public has been subjected to a never-ending parade of politicians, Republican and Democrat alike, who have questionable ethics or are just plain dishonest. They take advantage of their positions in government to feather their personal nests with favors, money, influence and perks that far exceed anything their constituents can ever hope to have, even in their wildest dreams.
One positive aspect of Blago’s nonsensical behavior is the exposure he has given to unethical and dishonest politicians in general. Not all politicians fit these criteria, of course, but the potential for abuse of power is ever present, including perennially trying to keep the public from knowing what they are doing.
Blago’s compulsive drive for the spotlight was so damaging to his legal defense that his attorney took the unusual step of withdrawing from representing him.
The former governor is gone from the daily news, but rest assured, he will be back to entertain us from time to time, until he is ultimately indicted and probably tried on the charge of attempting to sell a seat in the U.S. Senate.
In a 59 to zero vote, the Illinois state Senate found this feckless politician guilty of abuse of power, but, sadly, there will continue to be many more like him in the future. The state’s Democratic Lt. Governor, Patrick Quinn, was immediately confirmed to replace Blagojevich as governor, and in a separate vote of the state Senate, Blago was barred from ever again holding public office in the state of Illinois.
However, we haven’t heard the last of this character. In the meantime, we can all move on to the next breach of ethics or abuse of power that captures the headlines and fills our T.V. screens.
Blago is indeed bizarre, but so are American politics in general.
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