MyGovCost News & Blog

EPChe: An Expensive, Oppressive Agency Gets a Symbol


Tuesday September 25th, 2012   •   Posted by Lloyd Billingsley at 9:25am PDT   •  

Susie Goldring, a “management analyst” with the Environmental Protection Agency, recently decided her co-workers needed catch-up on Hispanic culture. So she put together a fact sheet and tacked on a photo of a Che Guevara mural and his slogan, “Hasta la victoria siempre.”

When the Che hit the fan, Goldring said she had no idea who the man in the mural was, a rather unlikely claim, though ignorance is not a new problem among federal government employees. Victoria Rivas-Vazquez, an EPA spokeswoman, said it was all a mistake, sent out “without official clearance.” That too may be doubted. In some ways, Che Guevara is a good fit for the EPA.

Nobody voted for Che Guevara, a self-appointed member of the Communist vanguard who dismissed democracy as a bourgeois contrivance and supported one-party dictatorship. The EPA, likewise, never appeared on a ballot. President Richard Nixon created the agency, which duly became a bastion of watermelon environmentalism: green outside, red inside. Consider the EPA enforcement style:

“It is kind of like how the Romans used to conquer villages in the Mediterranean — they’d go into a little Turkish town somewhere and they’d find the first five guys they saw and they’d crucify them. Then that little town was really easy to manage for the next few years. And so, you make examples out of people who are, in this case, not complying with the law. You find people who are not complying with the law and you hit them as hard as you can and you make examples out of them. There’s a deterrent effect there.”

Thus spake Obama appointee Al Armendariz, PhD., an EPA regional boss and former professor of environmental and civil engineering at Southern Methodist University. Armendariz was also a consultant to a national environmental group and a local activist. The crucifixion speech forced his resignation but there can be little doubt that the EPA vanguard, like Che Guevara, believes it knows what’s best for everyone.

They demonize those trying to maximize our energy reserves through fracking. Add complete ignorance of the reality that all human activity involves environmental tradeoffs. The massive EPA itself, with more than 17,000 employees and a budget of nearly $8.5 billion, may be accurately described as a “polluter.” Add the arrogance of power, with no checks and balances by way of voters, and you get a facsimile of the Guevara style, hasta la victoria siempre.

The Multiplier for U.S. Debt Spending


Sunday September 23rd, 2012   •   Posted by Craig Eyermann at 12:42pm PDT   •  

How much economic growth does the U.S. get for every new dollar it borrows?

That’s an important question to answer and really, it all comes down to what’s called the multiplier, which can be described as the value of extra economic activity that is generated for every new dollar that is spent, with a multiplier equal to 1.0 indicating that no extra economic activity was generated through the new spending.

In trying to sell President Obama’s “stimulus” plan after he first came into office in 2009, then chief economic adviser Christine Romer said the economic multiplier for the kind of debt-financed spending was 1.57, which means that for every new dollar that the U.S. would borrow to spend, the economy would generate $1.57 in new economic activity.

Did Americans get that kind of return in higher GDP? To find out, we’ve run some numbers covering the period of time since President Obama was sworn into office on January 20, 2009 through June 30, 2012, the end of the most recent quarter for which we have a good estimate of the nation’s GDP.

The United States government has, through June 30, 2012, borrowed some 5.23 trillion U.S. dollars, which has all been spent. Meanwhile, the Gross Domestic Product of the U.S. has only increased by 1.52 trillion dollars in that time, which we’ve measured from December 31, 2008 through June 30, 2012.

So by our math, the average multiplier for the U.S. government’s debt spending during that time is 0.29, far less than the value of 1.0 that would indicate that all this debt-financed government spending had only a neutral effect upon the economy. Put another way, for every $3.43 the U.S. government has borrowed during President Obama’s tenure in office, the nation’s GDP has increased by just $1.00 – a lousy rate of return on the government’s debt-financed “investments”.

Speaking of which, the value of the national debt now exceeds 103% of the nation’s income. On December 31, 2008, that figure was an “affordable” 75.4%.

More on that later….

America’s Doctor?


Friday September 21st, 2012   •   Posted by Lloyd Billingsley at 10:45am PDT   •  

In the latest campaign in the battle over government monopoly health care, what some call “socialized medicine,” one potentially strategic player has been missing in action. That would be Regina M. Benjamin, MD, the 18th Surgeon General of the United States. That office began in 1798 with the U.S. Marine Hospital Service, launched to provide health care to sick and injured merchant seamen. As the official story confirms, it grew into a vast and unwieldy federal public health bureaucracy that has also served as a bully pulpit.

The Surgeon General determined that smoking is bad for your health, a favorite cause, along with AIDS, of C. Everett Koop, Surgeon General under Reagan. Surgeon General Joycelyn Elders (1993-94) was a supporter of “Hillarycare,” the government monopoly health scheme promoted by President Clinton’s wife, who held no public office at the time. Elders also promoted drug legalization (her son served time for dealing cocaine) and masturbation. President Clinton first defended then fired her. Perhaps recalling that controversy, President Obama has not deployed the current incumbent, Dr. Benjamin, as a high-profile barker for Obamacare. Neither has he reformed an office and service that is “America’s Doctor” only in a ceremonial sense.

Neither Dr. Benjamin nor the uniformed corps of 6,500 “public health professionals” over which she presides will be making house calls on those who now lack health care due to unemployment. They cannot get care from a grandiose public service their taxes support. Neither can they get care from the U.S. military, which willingly treats wounded civilians abroad, and whose Corps of Engineers works on their levees.

In reality, convicted murderers get better medical care than working Americans, who must even pay for criminals’ sex-change operations and legal bills.  If that absurd disparity does not amount to abuse, it’s hard to imagine what might qualify. Such abuse could be rectified without current schemes for government monopoly health care. Begin by deploying the military as a kind of Medecins Sans Frontiers on the domestic front. For its part, a largely ceremonial and bureaucratic public health service could be recast to apply practical medicine for individuals, just as it did at the outset. That would make “America’s Doctor” more than a figurehead, a wasteful bureaucracy, and a bully pulpit.

U.S. Debt Bigger than GDP


Thursday September 20th, 2012   •   Posted by Craig Eyermann at 6:15am PDT   •  

Terrence Jeffrey of CNSNews.com reports:

According to the most recent official estimate by the federal Bureau of Economic Analysis, the Gross Domestic Product for 2012 will be $15.6061 trillion–or about $440.5 billion less than the $16.0466 in debt that the federal government had accumulated as of the close of business on Monday.

In other words, the debt is now approximately 103 percent of GDP.

The U.S.’ debt-to-income ratio is up from roughly 75% at the end of December 2008.

Meanwhile, President Obama doesn’t seem to be too aware of just how big the United States’ total public debt outstanding has become:

Might we suggest that the President pay more attention to the U.S. Treasury’s The Debt to the Penny and Who Holds It web site?…

Why Feds Won’t Sell GM Stock


Wednesday September 19th, 2012   •   Posted by Lloyd Billingsley at 9:21am PDT   •  

The U.S. Treasury Department has invested $50 billion in the General Motors bailout and now owns 26.5 percent of GM stock, about 200 million shares and more than one-fourth of the company. GM was happy to get the taxpayer dough but now wants the government to sell its stock. Trouble is, the government won’t comply. What’s the deal here?

According to news reports GM executives complain that the heavy government ownership “hurts the company’s reputation and its ability to attract top talent due to pay restrictions.” So apparently even $50 billion federal bailouts come with strings attached that are not beneficial to the company. That reality apparently got lost on the front end.

The Feds say selling the GM shares would mean “huge investment losses,” according to one report. At current share price of about $24.14, the feds would lose about $15 billion. To break even on the bailout GM stock would need to more than double to $53 a share. GM sales are up only 11 percent over last year, according to the company, so such a jump is unlikely.

The bailout may have hurt GM’s reputation, “Government Motors” and all that. President Barack Obama, however, relies on the bailout to enhance his own reputation as The Man Who Saved America. So no mystery he’s not eager to sell. His view of the role of government also comes into play.

He doesn’t want the government to maintain a level playing field. Rather, he wants the federal government to pick winners and losers in the marketplace. That comes through in the GM bailout and Solyndra, an outfit that failed spectacularly despite more than $500 million in stimulus money. Another Obama connection got stimulus money for biofuel, which the Navy buys at many times the cost of conventional fuels.

The President of the United States likes the idea of Government Motors. That’s why the Treasure Department won’t sell its 200 million GM shares.  This development comes as GM shuts down production of the Chevy Volt, an administration favorite, due to slow sales.

Financial Crisis and Leviathan


Monday September 17th, 2012   •   Posted by Lloyd Billingsley at 2:54pm PDT   •  

On a recent C-SPAN show, Richard Cordray, director of the federal Consumer Financial Protection Bureau,  (CFPB) confirmed that the new federal agency that hasn’t done much in its first 14 months except expand an already bloated and wasteful government during a recession. The CFPB is the result of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act and claims to be “focused on one goal: watching out for American consumers in the market for consumer financial products and services.”

“Beginning in 2007, the United States faced the most severe financial crisis since the Great Depression,” the CFPB explains. “Millions of Americans saw their home values drop, their savings shrink, their jobs eliminated, and their small businesses lose financing. Credit dried up, and countless consumer loans—many improperly made to begin with—went into default. Today, we’re still in the process of recovering.” Further, “In June 2009, President Obama proposed to address failures of consumer protection by establishing a new financial agency to focus directly on consumers, rather than on bank safety and soundness or on monetary policy.”

No hint that government policy, regulation or failure could have played any role whatsoever in the financial crisis. No mention of the Community Reinvestment Act, despite considerable evidence that the 1977 Carter-Era CRA, with its lax lending standards, is a key part of the problem.

In the government view, the financial crisis is entirely the work of powerful, predatory companies, and the only solution is a new federal government agency, without which consumers are helpless.  The CFPB’s sole big victory is an agreement with Capitol One to refund $150 million in fees and pay a fine of $25 million. That has not resolved any crisis and the bureau’s aggressive style will further complicate lending, increase costs, drive lenders into other fields, and leave consumers with fewer choices.

Opponents charge that the CFPB duplicates the work of existing bank regulators and the Federal Trade Commission. They were right. The CFPB is pure government building, larding Leviathan through a crisis government played a major role in causing. Relief is not on the way but look for more CFPB on C-SPAN.

Federal agencies are easy to start but practically impossible to abolish, regardless of performance. CFPB staff’s high salaries and gold-plated benefits are paid out of taxes on working Americans. Bureau bosses have a vested interest in the preservation and expansion of their new federal agency, a stake in the continuing crisis.

Who Owns the U.S. National Debt? Summer 2012 Edition


Sunday September 16th, 2012   •   Posted by Craig Eyermann at 11:14am PDT   •  

Through 30 June 2012, the U.S. government had racked up some $15.855 trillion in debt. The chart below shows to whom most of it was owed:

Summer 2012: To Whom Does the U.S. Government Owe Money?

Although the United States’ total public debt outstanding has now exceeded 16 trillion dollars, at least as of 31 August 2012, the relative percentages for the major holders of all the debt issued by the U.S. government shown above are likely unchanged.

Taking that larger national debt figure into account, as well as the likely growth in the number of U.S. households, we estimate that the current national debt burden per U.S. household is roughly $131,113. Over the last four years, that’s up by $49,129 per U.S. household from the $81,984 per U.S. household figure set in 2008.

Data Sources:

U.S. Treasury Department. Major Foreign Holders of Treasury Securities. Accessed 8 September 2012 (with data shown through 30 June 2012).

U.S. Treasury Department. Monthly Statement of the Public Debt of the United States, June 30, 2012. Table III – Detail of Treasury Securities Outstanding, June 30, 2012.

Stumping for Waste: Amtrak Subsidies Become a Campaign Issue


Wednesday September 12th, 2012   •   Posted by Lloyd Billingsley at 10:05am PDT   •  

Last year 30 million passengers road Amtrak, which on September 10  announced monthly ridership records for the last 11 months. That should come as no surprise with gasoline above $4 a gallon in much of the country. But Amtrak bosses, doubtless looking for more federal handouts, left out a few realities.

Last year Amtrak lost more than $450 million and the federal government pitched in $562 million just to keep the operations side rolling. Tack on $650 million for capital costs in 2011 and you have the better part of Amtrak’s $1.5 billion subsidy, about $50 per ticket. The massive federal subsidies continue regardless of ridership levels and other developments.

Despite its monopoly, Amtrak lost nearly $1 billion – $834 million, more than $80 million a year – on food and drink services since 2002, much of it due to fraud and theft. Despite federal dollars Amtrak is cutting key services in some areas and late arrivals continue to be a problem. Even seven-figure subsidies can’t make trains arrive on time.

Amtrak has become a campaign issue with Vice President Joe Biden who describes himself as “the biggest railroad guy you’ve ever known,” stumping for the subsidized system that recently renamed a station after him. Republicans claim they want to end Amtrak subsidies and privatize the system. In June, however, the GOP-controlled House increased Amtrak’s overall funding by $384 million to offset reductions in operating subsidies. That doesn’t sound like privatization.

One pro-Amtrak editorial conceded that “Even with a major infusion of federal funding Amtrak would be years away from matching European passenger rail systems, which include bullet trains that can run at top speeds in excess of 200 mph.” Speed and ridership aside, Amtrak remains years away from breaking even and that is unlikely to change.

California, meanwhile, wants to build a bullet train and in near-bankruptcy looks to federal funds. A major champion of the project is governor Jerry Brown, a former presidential candidate who in his first stint as governor during the 1970s pushed for California to have its own space program.

An Inside Look at the U.S. Debt Ceiling Crisis of 2011


Tuesday September 11th, 2012   •   Posted by Craig Eyermann at 6:22am PDT   •  


Bob Woodward has a new book out, The Price of Politics (review), taking an inside look at the U.S. debt crisis from the summer of 2011, where the federal government came within just $5 billion, or just half a day’s worth of its typical spending, of defaulting on its debt payments. While much of the focus on the story has been on its revelations that President Obama had no “Plan B” in case the deal being negotiated by congressional leaders broke down, which led to his being dressed down directly to his face by a congressional staffer, perhaps the most disturbing excerpt provided by the Washington Post from Woodward’s book involves how the crisis finally played out in the mind of U.S. Treasury Secretary Timothy Geithner:

Geithner thought there was one other consideration. He did not mention it to anyone, not even the president, but he had thought about it a great deal. It was not just that Obama faced an economic choice or a political choice. He faced a moral choice.

The president should not put himself in the position of saying unequivocally that he would veto, Geithner concluded, for one simple reason: No one could be sure how to put the American or the global economy back together again. The impact would be calamitous.

“And the people who would bear the pain of that would be the people less prepared,” Geithner told others, “less able to absorb that cost. It would be something you could not cure. It is not something you can come back and say, a week later, ‘Oh, we fixed it.’ It would be indelible, incurable. It would last for generations.”

Obama never had to confront the veto question. A few days later, House Republicans dropped their insistence on the two-step plan. The final plan accepted a debt limit increase that would take the country through the 2012 presidential contest. It also postponed $2.4 trillion in spending cuts until early 2013.

The long-term deficit crisis had not been solved, but merely put off, leaving the United States at the edge of the fiscal cliff, where it remains today.

Perhaps the most disturbing element of this story, aside from the documented failures of leadership and the fact that it will resurface within weeks after the November 6 election, is that the U.S. Treasury Secretary never thought to provide this kind of council regarding the consequences of defaulting to the President, or anyone else, while the crisis was ongoing. And that is yet another failure of leadership.

Government Needs Volte-Face on Electric Car Incentives


Monday September 10th, 2012   •   Posted by Lloyd Billingsley at 10:51am PDT   •  

Electric cars have been around for more than 100 years but now the federal government “incentivizes” them, as politicians like to say. Electric vehicles (EVs) purchased in 2010 or after may be eligible for a federal income tax credit of up to $7,500. (The credit amount varies based on the capacity of the battery.) But even a tax break of that magnitude has failed to transform one electric vehicle into a best seller with American motorists.

Last year the highly touted Chevy Volt failed to meet sales expectations and that trend continues. General Motors aimed for global sales of 60,000 Volts, with 45,000 in the United States. GM expected 35-40,000 U.S. sales in June but through July only 10,666 Americans bought a Volt, which can travel only 38 miles on battery before it needs a plug-in.  The sales slump has prompted General Motors to halt Volt production for a month, the second time this has happened.

Problems with Volt go beyond its limited range. The electric motor does not pollute, it is true, but the electrical plant that charges the battery does generate emissions. That reality does not show up in federal incentives. Neither does the reality that the electrical grid was not constructed for the charging demands of electric cars. These tend to be charged at night, when alternative sources such as solar and wind are not effective. Batteries do not last forever and disposal can be a problem. Likewise, biofuels enjoy federal incentives but also have an environmental downside. Government needs to see the big picture.

“Government investment needs to spur technological development, not simply entrench and institutionalize first-generation efforts to ‘green’ the car culture,” explains Dr. Amy Kaleita. “Policy makers shouldn’t promote electric vehicles until the energy sector overall becomes less reliant on high-carbon sources. They should also incorporate a holistic approach to renewable fuel policy that looks at more than carbon emissions but factors such as water and land use.”

Spurring technological development, and making better use of our own energy reserves, would be a better plan than $7.5 billion in wasted subsidies for a policy and product Americans aren’t buying.

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