Patton: Throwing Good Money After Bad

By Doug Patton December 6, 2011 7:59 am

The Los Angeles Times is impressed with the patriotism of Atanacio Garcia. The paper reports that for the last two years, the 84-year-old San Antonio, Texas, veteran and retired postal worker has been sending fifty dollars a month of his pension money to Washington, DC. For what possible purpose? To reduce the national debt.

“I’m a believer in our country,” says Garcia, a father of five who has lived for decades in the same two-bedroom home, and who collects aluminum cans for extra money. He says he intends to contribute “until the debt is paid or until I die.” He also admits that he usually votes Democrat.

Fifty years ago, when America’s national debt was a paltry $300 billion, President John F. Kennedy established a fund to allow Americans to contribute to its reduction. Since then, Kennedy’s successors, Democrats and Republicans alike (although Dems are currently far in the lead in the race to turn America into Greece), have spent so much more of our tax money than they were allotted that most of us can no longer even comprehend the amounts.

As author and columnist Mark Steyn has observed, “Trillion used to be a term used by Carl Sagan or Stephen Hawking to describe the distance to far-off galaxies. Now, it’s become a common part of our daily discussions of the federal budget!”

Running such staggering numbers can be instructive, however, once you figure out how many zeros there are in a billion (nine) and a trillion (twelve). Consider this: Mr. Garcia donates $50 per month, or $600 per year, to the fund. At that rate, it would take him 2,500,000,000 years just to pay off this year’s deficit. That’s two billion, five hundred million years! And that would be with no interest added on.

Put another way, it would take Garcia nearly seven million years to pay off what our government will spend today over and above what it takes in.

Of course, the well-intentioned Mr. Garcia is not alone in his desire to help reduce the national debt by sending in his own money. The Times story reports that “hundreds of public-spirited Americans have sent money, from pocket change to million-dollar checks.” The Bureau of Public Debt claims that individual donations over the years have ranged from a single penny to $3.5 million.

Time for some more hard, cold math. Since JFK signed that legislation a half-century ago, $83 million has been collected. Sounds impressive, right? I don’t know about you, but eighty-three million dollars still looks like a lot of money to me. Not in Washington, where our elected officials rack up debt faster than the Obamas rack up vacation miles on Air Force One. When that entire $83 million — so lovingly sent in over the last 50 years by well-meaning little old ladies and patient patriots like Atanacio Garcia — is applied to the debt, it covers approximately 30 minutes of the annual deficit created by this government.

Which brings us around to the hypocrisy of billionaires like Warren Buffett, whose calls for higher taxes on the mega-rich are really just calls for higher taxes on the middle class. Because, you see, there are not enough rich people to make a dent in the national debt. In fact, confiscating every dime 81-year-old Warren Buffett has accumulated over a lifetime of work would fund Barack Obama’s bloated bureaucracy for less than a week! And Buffett knows it. Which is why he won’t write that big check.

My advice to Mr. Garcia and anyone else contemplating throwing good money after bad: give it to your favorite charity. Give it to your church. Give it to a homeless shelter supported by private donations. Give it to your family. Stop giving it to the government. I cannot think of a worse waste of revenue than sending it to the bottomless pit of quicksand that is Washington, DC. You would be better off burning it. That’s what they will do with it.

Doug Patton describes himself as a recovering political speechwriter who agrees with himself much more often than not. Now working as a freelance writer, his weekly columns of sage political analysis are published the world over by legions of discerning bloggers, courageous webmasters and open-minded newspaper editors. Astute supporters and inane detractors alike are encouraged to e-mail him with their pithy comments at dougpatton@cox.net.

Detroit Lays Off Public Workers

More bleak news out of Detroit, where Mayor Dave Bing announced he would have to cut 9 percent of the city’s public work force—about 1,000 employees—in an attempt to save money. The layoffs will save about $14 million by June, but that alone won’t be enough to balance the budget. Bing said the city could run out of money by spring and be $45 million short by the middle of next year. He also called for pay cuts, higher health-care contributions, and a corporate tax increase to make up the difference.

Read it at The New York Times

November 19, 2011 8:34 AM

Detroit mayor: 1,000 job cuts amid budget crisis

By AP Staff November 18, 2011 1:20 pm

DETROIT (AP) — Detroit plans to cut 1,000 jobs by early next year to help deal with the city’s budget crisis and avoid the possibility of a state-appointed emergency financial manager, Mayor Dave Bing announced Friday.

The mayor’s office said in a statement that layoff notices will be delivered the week of Dec. 5. Bing said the cuts, which represent 9 percent of the city’s about 11,000 employees, will save about $12 million.

“Solving our cash crisis requires a combination of concessions and tough cuts,” Bing said. “Layoffs will be strategic. We will limit the impact on residents, protecting core services like police and fire protection as much as we can.

“Our fiscal crisis will require everyone to share in the sacrifice. We need support from our residents to help push our unions, businesses, vendors and elected officials to enact the common-sense changes we need.”

On Wednesday, Bing said in a TV and radio address that the city faces a $45 million cash shortfall by the end of its fiscal year in June.

Bing said the positions will be eliminated by Feb. 25. He said additional 2,000 positions have been eliminated since he took office in 2009. And he has outlined concessions needed from unions representing municipal employees, such as ending furlough days and making pension reforms, to save $40 million.

Bing also ordered an immediate hiring freeze for all civil service positions except the Detroit Water and Sewerage Department. He said the department was exempted because of court orders involving its operation.

NEW APPROPRIATIONS BILL, SAME BUDGET GIMMICK

Jason Delisle | November 8, 2011

This year looked like a golden opportunity for Congress to show taxpayers what the Federal Housing Administration’s loan guarantees really cost and budget accordingly. But lawmakers are about to let the opportunity pass by.

In the coming days, the House and Senate will negotiate a fiscal year 2012 funding bill for the Department of Housing and Urban Development as part of larger appropriations bill. Both the House and Senate assume that the FHA’s single-family mortgage insurance program, which provides default guarantees to lenders making mortgages to first-time and lower-income homebuyers, will earn a $4.4 billion profit. The funding bills then “spend” those supposed profits on other programs.

Trouble is there aren’t actually any profits to spend and lawmakers know it. A Congressional Budget Office estimate sent to House budget committee chairman Paul Ryan (R-WI) earlier this year shows FHA’s $233 billion in new loan guarantees won’t earn a profit – they will cost taxpayers $3.5 billion. That estimate uses “fair-value” accounting instead of accounting rules under the 1990 Federal Credit Reform Act.

Fair value accounting more fully reflects the risk that taxpayers bear when the FHA backs mortgages. It shows that taxpayers subsidize homeowners when the FHA charges below-market rates for loan guarantees. (CBO provided a similar estimate in 2006.)

To be sure, the estimate showing FHA profits is the official one – and that’s what defenders of the status quo will argue. But lawmakers aren’t powerless in the face of such a claim.

The House-passed fiscal year 2012 budget resolution allows the chairman of the budget committee to use a “fair-value” estimate of FHA’s costs (or any loan program for that matter) when enforcing appropriations limits. Such an estimate has been available from the CBO for months. Someone in Congress – particularly a member of the Appropriations Committee – should stand up for it.

Jason Delisle is the Director of the Federal Education Budget Project at the New America Foundation.

Lawmakers Aim to Stop Defense Cuts if Debt Panel Fails

By  and 
Published: November 4, 2011
WASHINGTON — As pessimism mounted this week over the ability of a bipartisan Congressional committee to agree on a deficit-reduction plan, lawmakers began taking steps to head off the large cuts in Pentagon spending that would automatically result from the panel’s failure.

Members of both parties and both chambers said they increasingly feared that the 12-member committee would be unable to bridge deep partisan divisions and find $1.2 trillion in deficit reduction as required under the law that raised the debt ceiling and createdthe committee in the summer.

As talks sputtered, one panel member publicly lamented that the process was not working, and the group was chastised by a bipartisan group of budget experts at a public hearing for failing to show progress. Several members of Congress, especially Republicans on the House and Senate Armed Services Committees, are readying legislation that would undo the automatic across-the-board cuts totaling nearly $500 billion for military programs, or exchange them for cuts in other areas of the federal budget.  READ MORE >>>

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