Over Half of our Civil Servants in Congress are Millionaires

Posted by PITHOCRATES - January 12th, 2014

 Week in Review

People who work in government were once called civil servants.  Because they worked for us.  Or, in today’s parlance, they were our bitch.  But over time our government workers no longer wanted to be called civil servants.  As they grew to feel to be our superiors.  Part of a privileged class.  Or, in today’s parlance, we became their bitch.  And if you don’t believe it just compare our earnings to theirs (see Now, most members of Congress are millionaires by Emily Heil posted 1/9/2014 on The Washington Post).

It’s official — Congress is a millionaires’ club. For the first time ever, most members of Congress are worth at least a cool million…

Also worth noting: the analysis shows Rep. Darrell Issa (with a $464 million fortune) is triumphantly back at the top of the list of wealthiest members, a spot the California Republican and car-alarm mogul had enjoyed for years, before being bumped by Rep. Mike McCaul (R-Texas).

So most members of Congress (i.e., our civil servants) are millionaires.  But note how they make it sound like all of these fat-cat politicians are Republicans.  Building on the stereotype that Republicans are for rich people.  While Democrats are for the working man.  However if you follow the link in this Washington Post (a paper that leans left) article you’ll come to this chart.

Median Net Worth of Current Congress Members R2

My, how about that?  Democrats have a higher median net worth than Republicans.  And Democrats got even richer than Republicans in 2012.  And yet they say the Republicans are the party of the rich?  Clearly that isn’t the case.  The Democrats are the party of the rich.  For they are richer than Republicans in Congress.  Despite the richest guy in Congress being a Republican.  Who, it should be noted, made his money in the private sector.  Not like so many others who go to Congress poor.  And leave millionaires.

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Greedy Public Sector Unions in San Francisco demand Taxpayers pay them More

Posted by PITHOCRATES - July 7th, 2013

Week in Review

FDR was pro-union.  He was all for tearing businesses a new one when it came to collective bargaining.  For he didn’t like those royalists.  Greedy businessmen who put their profits ahead of their employees.  While making them work in horrible conditions.  For long hours.  For little pay.  The greedy little profit whores they were.  But FDR drew a line when it came to government workers.  Because taxpayers pay government workers.  And it just didn’t look right for government unions to call the taxpayers greedy little profit whores.  So FDR opposed unionizing government workers.  Because you just can’t have government workers tear the taxpayers a new one to enrich themselves at the taxpayers’ expense.  Something was just wrong with that.  But that was then.  This is now (see San Francisco Bart rail strike ends as contract extended posted 7/5/2013 on BBC News US and Canada).

San Francisco Bay’s transit rail service has resumed after two labour unions called off a strike.

The four-day walkout came to an end after both sides in the Bay Area Rapid Transit (Bart) dispute agreed to a one-month extension of the current contract while bargaining continues…

Talks between the two sides had resumed as early as Tuesday, but key sticking points include salaries, as well as employee costs for pensions and healthcare…

Bart has said workers from the two unions earn on average $71,000 (£47,500) in base salary and $11,000 in overtime annually…

The president of one of the striking unions, the Amalgamated Transit Union, struck a defiant tone.

“We’re not going to let them hijack us and the riding public,” Antonette Bryant said, as she apologised to commuters for the disruption.

So these union workers make $88,000 between base salary and overtime.  Being that train schedules are pretty fixed so must that overtime.  That’s well above the median household income of about $50,000.  Yet on top of that $88,000 they get pension and health care benefits.  And some pretty nice ones at that.  Which is why everyone wants to get into these unions.  While most Americans have to put something aside for their retirement from that median household income.  As well as pay a percentage of their health insurance premium.  Unlike public sector unions.  Who just have to go on strike to get the city to increase taxes on the taxpayers.  So the city can afford to pay those generous pay and benefit packages.

Hijack the riding public?  By opposing these union demands management is trying to prevent the unions from hijacking the riding public.  For when you add in the pension and health care benefits they’re already making about twice what the riding public is earning.  Making it difficult to call the taxpayers the greedy little profit whores here.  Yet they are because they won’t consent to pay more.  Which they can do by only having less in their personal lives.  Which certainly isn’t fair.  Especially considering that a lot of these people don’t even ride the damn trains.

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NHS Doctor Shortage and High Costs of National Health Care reduce Staffing Levels in Hospitals on Weekends

Posted by PITHOCRATES - June 1st, 2013

Week in Review

Health care workers in the National Health Service (NHS) are government workers.  And one thing we know about government workers is that they don’t like working on their time.  They don’t like working after hours during the workweek.  And they especially don’t like working the weekend (see NHS risk of death from elective surgery far greater at end of week, study finds by Denis Campbell posted 5/28/2013 on theguardian).

Patients who have planned surgery near the end of any week or at weekends are at greater risk of dying than those operated on at the start of the week and especially on Mondays, research reveals.

These risks have been rated “very alarming” by patient safety campaigners, and judged unacceptable by the Royal College of Surgeons (RCS).

The findings come as NHS chiefs try to devise ways of ensuring that the health service offers high-quality care across the entire week, in response to a growing body of evidence showing that a shortage of experienced doctors on duty at the weekends heightens the risks of a poor outcome for patients.

It is only common decency.  If these health care workers can do their job in the normal workweek then patients ought to be able to do the same.  Have their surgery and be gone by the weekend.  Because health care workers have lives, too.  And they don’t want to waste it by taking care of burdensome patients on their time.

The study is significant since it is the first to suggest that patients in Britain are more likely to have an “inferior outcome” if they undergo elective surgery later in the week.

Until now concern has focused on high death rates among patients admitted as emergency cases at weekends – dubbed the “weekend effect” – which is often attributed to a lack of consultants on duty on Saturdays and Sundays.

You see, the problem in national health care is that it costs a lot of money.  Especially when you have an aging population.  Where more people leave the workforce than enter it.  Shrinking the tax base.  And these retirees go on to live a long life in retirement.  Instead of dying quickly to save precious health care money.  No, these people live so long that they can have heart attacks, cancer and dementia.  A single patient can have all of these afflictions today.  And that costs a lot of precious health care money.  Which they just don’t have.  So they have to ration what they do have.  To make their limited resources cover more people.  And one way of doing that is short-staffing hospitals on weekends.

[Paul] Aylin [a clinical reader in epidemiology and public health at Imperial College London] said he could not be sure what lay behind the trend. But he said that as the first 48 hours after surgery were critical to patients’ chances of recovery, the poorer care available at weekends – fewer staff, less experienced staff, perhaps less access to diagnostic tools or emergency surgery – was a likely explanation. Those who had surgery on a Friday would stay in hospital over the weekend…

Peter Walsh, CEO of the patient safety group AvMA, said day-dependent differences in the risk of death of as much as 44% were very alarming” and underlined the need to make the NHS a truly seven-day service.

Operating a good service only on weekdays was a completely out of date notion, he said, adding that patients due to have elective surgery on a Friday could ask instead to undergo it earlier in the week…

Sir Bruce Keogh, national medical director of NHS England, said the service was “committed to providing safe care for all patients, regardless of when they receive their treatment”.

Keogh added: “We have established a forum to develop viable financial and clinical options to help our NHS provide more comprehensive services seven days a week. This forum will report back in the autumn.”

Asking people to reschedule their surgeries may help some.  But if everyone does this will they just reduce staffing levels at the end of the week?  Which would kind of make the problem worse.  And it’s not much of an option for people being rushed to the hospital in an ambulance at the end of the workweek.  For those patients to be so inconsiderate as to have their near-death illness or accident at the end of the workweek.  These people will just have to plan their illnesses and accidents better.  Yeah, that may be hard.  But health care resources don’t grow on trees in the NHS.

Financial options?  You know what that means.  Greed.  Making a profit on the sickness of others.  The thing they want to stop in the United States with Obamacare.  And here the British are using it to try and fix their ‘part-time’ NHS.  That prefers not to work weekends.

The proponents of Obamacare see Obamacare as only a temporary layover on the way to single-payer.  Or national health care itself.  Like the NHS.  Where all of our health care workers will be government workers.  And one thing we know about government workers.  They don’t like working on their time.  Not after hours during the workweek.  Or weekends.

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The Energy Sector in the Canadian Economy masks the High Cost of their Public Sector

Posted by PITHOCRATES - July 7th, 2012

Week in Review

The economic numbers in Canada are pretty good.  Even better than America.  And there is one reason for that.  Canada embraces the energy sector.  And they are bringing to market what all modern economies need.  Fuel.  And the economic growth in this one sector makes up for a lot of bad policy elsewhere (see Unions out of sync with economy by DANIEL FONTAINE posted 7/7/2012 on Vancouver 24 Hours).

If it were not for the extraction of natural resources such as oil, coal and natural gas, would Canada really be an economic powerhouse? Many leading economists remain skeptical.

Strip out raw material exports and Canada suddenly becomes just a middle-of-the-pack nation struggling with a serious productivity problem. That’s why this is not the time for any level of government to open up the wallet book and undertake a massive spending spree.

Unfortunately, the need to keep costs in check appears to be lost on a growing number of public sector unions in the Western world. That includes right here at home in British Columbia.

For example, unionized liquor store employees belonging to the B.C. Government and Service Employees’ Union are on strike this week demanding even higher wages and better benefits. This is despite the fact union officials openly admit unskilled employees in government liquor stores make starting wages and benefits well above similar jobs in the private sector.

The BCGEU argues that liquor stores are making Victoria lots of money; hence they deserve a bigger slice of the pie. But what they fail to acknowledge is that government makes profits off the taxes they charge on alcohol, not on who actually sells the product. Having public versus private sector employees sell liquor actually cuts into government’s bottom line.

FDR, liberal icon and America’s 32nd president, opposed government workers unionizing.  He was a fan of unions in the private sector.  But not the public sector.  Because there was a lot of political capital in attacking industrial fat-cats oppressing their workers to make a buck.  But the government pays their workers with taxes.  Meaning the greedy fat-cats oppressing these workers are the taxpayers.  And when you’re trying to grow the size of government it doesn’t help to attack the people paying those taxes.  Especially when you’re trying to raise their tax rates to pay those higher wages and better benefits.  For it just doesn’t sound right calling someone greedy when they refuse to enjoy their lives less so others can enjoy their lives more.

And it just can’t continue.  Forever granting higher wage and benefit packages.  Paid for with ever higher tax rates.  Because to generate tax revenue you need two things.  You need a tax rate.  And economic activity.  Higher taxes, though, reduce economic activity.  Which reduces tax revenue.  Keep doing this and you end up like the social democracies in Europe in the throes of a sovereign debt crisis.  Unless you are blessed with vast energy resources for export.  And your government embraces the energy sector to bring those resources to market.  Like they have in Canada.  The one truly bright spot in their economic picture.

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Even Democrats are Complaining about the High Cost of Government Workers Bankrupting their Cities and States

Posted by PITHOCRATES - April 29th, 2012

Week in Review

So who isn’t paying their fair share?  I know who you’re probably thinking.  And if you are you’re wrong.  For here it is direct from a Democrat mayor’s mouth (see Steven Malanga: How Retirement Benefits May Sink the States by STEVEN MALANGA posted 4/27/2012 on The Wall Street Journal).

Chicago Mayor Rahm Emanuel recently offered a stark assessment of the threat to his state’s future that is posed by mounting pension and retiree health-care bills for government workers. Unless Illinois enacts reform quickly, he said, the costs of these programs will force taxes so high that, “You won’t recruit a business, you won’t recruit a family to live here.”

We’re likely to hear more such worries in coming years. That’s because state and local governments across the country have accumulated several trillion dollars in unfunded retirement promises to public-sector workers, the costs of which will increasingly force taxes higher and crowd out other spending. Already businesses and residents are slowly starting to sit up and notice…

Government retiree costs are likely to play an increasing role in the competition among states for business and people, because these liabilities are not evenly distributed. Some states have enormous retiree obligations that they will somehow have to pay; others have enacted significant reforms, or never made lofty promises to their workers in the first place.

Indiana’s debt for unfunded retiree health-care benefits, for example, amounts to just $81 per person. Neighboring Illinois’s accumulated obligations for the same benefit average $3,399 per person…

Back in Illinois, Dana Levenson, Chicago’s former chief financial officer, has projected that the average city homeowner paying $3,000 in annual property taxes could see his tax bill rise within five years as much as $1,400. The reason: A 2010 Illinois law requires municipalities to raise the funding levels in their pension systems using property tax revenues but no additional contributions from government employees. The legislation prompted former Chicago Mayor Richard Daley in December to warn residents that the increases might be so high, “you won’t be able to sell your house.”

What was that about the 1%?  Just who is it living off of the generosity of the 99%?  Who isn’t paying their fair share?  And is asking others to pay far more than their fair share?  Who is it that has pension and retiree health care plans worth several trillions of dollars?  All funded by tax dollars from the 99%?  As well as the 1%?  Our government workers.  That’s who.  Those people who have made themselves more equal than the 99%.  Even though they claim to be a part of the 99%.  While living more like the 1%.  But one thing you can say about the 1%.  They’re not bankrupting their cities and states like these government workers are.  Or destroying our lives to pay for their lives.

You want to talk class warfare?  Let’s talk class warfare.  The richest 1% pay approximately 30% of all federal income taxes.  The richest 10% pay approximately 70% of all federal income taxes.  And we don’t pay any of these rich people with our taxes.  They get it however they get it.  But they don’t get it from us.  The taxpayers.  So they providing a huge net good for us.  Paying the lion’s share of taxes.  And not taking our money from us.  And yet these are the people that we vilify.  While those who are harming us the most get a free pass.  Now that’s some clever class warfare.  Making it sound like it’s the rich who are oppressing the middle class.  While it is the wealthy government class oppressing the middle class.  And they do it very well.  You’ll hear people everywhere say that the government should stick it to the rich.  But they never say a word about these government workers who live a better life than they do.  Even though they are paying for that better life.  Through ever higher taxes.

So when your property taxes go up think about your retirement plans.  And though you may not have much be comforted in the fact that your government workers do.  Thanks to you.  So even though you may not be able to travel the world in your retirement you’ll know that somewhere a retired government worker is.  Because that’s only fair.  And being fair is important.  Fair share sacrifice.  That’s all they want.  As long as, of course, your share of sacrifice is greater than theirs.  The wealthy government class.

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Our Favorite Athletes are Part of the 1% and try to Minimize the Taxes they pay just like those on Wall Street

Posted by PITHOCRATES - March 25th, 2012

Week in Review

Don’t think high taxes influences behavior?  Of course, no one cares about the evil 1%.  Those greedy Wall Street types that don’t pay their fair share of taxes.  But you know who else is in that greedy 1%?  Your favorite athletes.  And guess what?  They want to hold on to their earnings just like those greedy Wall Street types (see Professional Athletes’ Big-League Tax Bills by Jay MacDonald posted 3/15/2012 on Yahoo! Finance).

Behind every sports star who’s hauling down the big bucks is a keen-eyed certified public accountant quick-stepping through a maze of state and local income taxes imposed on nonresident athletes, commonly known as the “jock tax.”

Professional sports players get taxed by pretty much every city and state in which they play, says Ryan Losi, CPA and executive vice president of Piascik & Associates, a Glen Allen, Va., accounting firm that represents more than 70 professional athletes.

“NFL players typically file in 10 to 12 jurisdictions. NBA is somewhere between 16 and 20. MLB is somewhere between 20 and 26, and the NHL is between 14 and 16,” says Losi.

Professional sports players are great big cash piñatas to these city and states that chronically over spend.  They all want a piece of these guys.  To make sure they pay their ‘fair share’ of taxes.  While they can before some career-ending injury puts an end to this gravy train.  But because these players could lose millions in future career earnings because of a career-ending injury, they want to keep their money.  For they may never be able to get another job.  Sure, some may move into the front office.  Some may move on to coaching.  But few will earn the kind of money they did during their short careers.  So they want to keep as much as they earn.  To take care of their wife and kids.  And have enough for their retirements.  Which can be rather long for these worn out and injured bodies.  So they just don’t sit by passively while every taxing authority is shaking them down for everything they’re worth.

The lion’s share of most players’ income, their salary, is taxed in the city and state where the team is based. But income from other sources, including endorsements, personal appearances, dividends and interest income, is taxed in their state of residence.

This is the reason New York Giants quarterback and Super Bowl MVP Eli Manning lives in Hoboken, N.J., instead of in the Big Apple. It’s simple arithmetic, says Raiola.

“If he were a resident of New York, he’d pay 8.97 percent New York state tax and another 3.78 percent New York City tax on top of that, not only on his wage income but also his endorsements and investment interest,” he says. “In New Jersey, he only pays 8.97 percent…”

Taxes — or the lack of them — may also have had something to do with NBA all-star and 2010 free agent LeBron James’ choice to play for the Miami Heat instead of the New York Knicks. Losi points to Florida’s lack of a state income tax.

“That may have been one of the factors that led LeBron to choose Florida versus New York,” says Losi. “Ten percent of his first contract was going to be the difference. For him, it was an extra 5 (percent to) 9 percent difference in tax. That’s real money.”

New York City may be the greatest city in the world but the rich pay an enormous amount of taxes to live there.  So many chose not to.  In fact, a lot of athletes chose where they live and raise their families based on their total tax burden.

Professional golfers, tennis players and other athletes who compete on the world stage often leave a third or more of their earnings in the local coffers.

“Whenever they play in foreign countries, they have to pay taxes in that jurisdiction, and the tax liability is much bigger than the 5 (percent) to 10 percent state tax. It’s usually in the 30 (percent) to 40 percent bracket,” says Losi. “Usually it’s withheld in their prize money, and they can file a nonresident return if they think they might have a refund coming.”

Because the United States is one of the few countries that taxes all personal income regardless of source, some pro sports stars who compete internationally actually have a financial disincentive to make their home in America.

“If they’re (not U.S. citizens or green card holders) and they’re not planning to stay here more than 183 days out of the year, from a tax perspective it absolutely makes sense to not live in the U.S.,” says Losi. “All the foreign golfers who come here to play, if they want all of their foreign prize money and endorsement money to be taxed, all they have to do is hang out here for 183 days.”

Being an athlete competing at the level that makes them millionaires is not an easy life.  While others look forward to weekends, holidays and vacations to kick back and relax and recharge their batteries with copious amounts of alcohol and enormous quantities of fattening foods these athletes don’t.  They often work on weekends and holidays.  And when they’re not working they’re practicing.  Where their practice is often more intense than their competition.  This is their life.  This is how they become elite athletes.  And their reward?  To be whacked open like a cash piñatas by the taxing authorities so the politicians they serve can take their money and spend it to buy votes for the next election.  And forcing them to choose where to live based on who will penalized them the least for being really good at something.

This is not a meritocracy.  Where we reward people for achievement.  This is out of control government spending to maintain a privileged class.  Politicians.  And government workers.  Who live and feed off of taxes.  To fund their class warfare that makes these privileged few secure in their class.

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Jobs and Unemployment, Taxpayers and Tax Consumers

Posted by PITHOCRATES - March 19th, 2012

Economics 101

The Privileged Class enjoys the Good Life Today by Buying Votes with Government Benefits

Jobs are everything.  They pay your bills.  They pay the government’s bills.  And they pay for all those government benefits.  Especially those government benefits.  Which are little more than a pyramid scheme.  Where the few collecting those benefits are at the top of the pyramid.  And those with the jobs paying the taxes to fund those benefits are at the bottom.  And every good pyramid scheme needs to do one thing.  To keep the base growing at a greater rate than the top grows.

Why do politicians do this?  Give out so many benefits?  Simple.  For votes.  Specifically, to buy votes.  We’ve come a long way from the Founding Fathers’ America.  Adam Smith’s invisible hand and free market capitalism.  Representative government.  The things that let all people enjoy life.  Not just the noble class.  This change began in England.  Ironically with the noble class.  Who presented Magna Carta (1215) to King John.  Saying they paid the taxes.  So they were going to have a say in how the king spent those taxes.  As well as protect their privileges and liberties.  And Parliament was born.  Changing England forever.  The American Founding Fathers built on this.  And improved on England’s form of government.  The constitutional monarchy.  By getting rid of it.  Along with heredity power.  And the nobility.  The Founding Fathers had put an end to privilege.  Pity it didn’t last.

There has always been a privileged class.  And there will always be one.  There will always be a small elite group trying to live a privileged life.  Once we called them the aristocratic landowners.  Today we call them politicians and government workers.  Who are a little craftier than their landowning forbears.  For they just can’t have the right last name.  Or marry a good last name.  Because, technically, there is no aristocracy these days.  No.  They need the taxpayers to vote them this good life.  And fund it.  By paying higher taxes.  Which means the taxpayers will live less of a good life to give the politicians and government workers their privileged life.  Hence the government benefits.  And the buying of votes.  Because no taxpayer in their right mind will sacrifice their good life to support a privileged class.  The nobility wouldn’t do it for King John in 1215.  And taxpayers won’t do it now.  So the privileged class buys votes with these benefits.  Particularly from those who don’t pay taxes.

Jobs Matter because the Taxes of the Taxpayers have to balance the Consumption of the Tax Consumers

There are two types of people in the world.  Those who like high taxes.  And those who don’t.  Those who like them are the politicians and government workers who live a privileged life.  And, of course, those who don’t pay taxes but receive government benefits (another steadily growing group).  These are the tax consumers.  Then you have those who don’t like high taxes.  Those with real jobs in the private sector.  The taxpayers.  As government grew from our Founding so did the number of tax consumers.  Which, of course, required more taxes.  And higher tax rates.  On the shrinking group of people with jobs paying the taxes.  To support the growing group of politicians, government workers and recipients of those government benefits consuming those taxes.

This complicates the pyramid scheme.  As you have fewer people supporting more people each taxpayer has to pay a larger and larger share of the tax burden to support the tax consumers.  Meaning you have to increase tax rates further.  Which isn’t easy to do.  Worse, as workers pay more in taxes they have less to spend in the economy.  Thus reducing economic activity.  Businesses hire fewer workers.  As more businesses go through this the unemployment rate begins to rise.  Which means, of course, the number of taxpayers begins to fall.  Making it harder to provide the taxes for the tax consumers.  A group that continues to grow even when the unemployment rate rises.  Because government is like a bacteria.  It takes on a life of its own and grows simply by splitting and creating new bureaucracies.  A growth that never stops.  And soon the rate of that growth overtakes the growth rate of the taxpayers.  Violating the one cardinal rule of pyramid schemes.  Keeping the base growing at a greater rate than the top grows.

This is why jobs matter.  For everyone.  The taxpayers.  And tax consumers.  Because the taxes of the taxpayers have to balance the consumption of the tax consumers.  A fact lost on many voters.  Who don’t understand (or don’t care) that the freer their ride the less free the life of the taxpayer.  Who believe these government benefits can keep coming no matter how many people are working.  They are perfectly all right with the unemployment rate going to 100%.  And having the government provide everything free of charge.  But government can’t do this.  Even with the power of the printing press to print money and give it away.  Because if no one works who is going to build the houses we buy with that free government money? 

Taxpayers voting on How the Government Spends their Money ensures Responsible Government Spending

Someone has to work.  Because houses (and the other things we buy) don’t spontaneously appear.  So who will build them?  Would you labor to build something when the government gives you money?  Even if you don’t have to work?  Probably not.  The only reason we work is for a paycheck to buy the things we want.  The more things we want the harder we work.  That’s incentive.  Take it away and no one will work.  Just as if you tax someone too much you’ll take away their incentive to work harder.  And to vote to raise taxes.  Which is why jobs matter.  Because they pay the bills.  They pay your bills.  They pay the government’s bills.  And they pay the bill for all those government benefits.

Politicians can buy votes by giving away more government benefits.  Converting taxpayers into tax consumers.  Preserving their privileged life.  However, there is a limit to this.  Because as you convert taxpayers into tax consumers you reduce the tax revenue to pay for those benefits.  Especially during periods of high unemployment.  And if they raise tax rates to make up for the reduction in taxpayers this will increase both the rate and duration of unemployment.  By increasing the cost of doing business.  And leaving workers with less money to spend.  Both of which reduce sales revenue.  And the need for workers.  Over time this combination of high spending obligations and low tax revenue can have dire consequences.  And can bankrupt cities.  States.  Even countries.

This is why the nobles met King John on the field of Runnymede.  And presented him Magna Carta.  The nobles were paying a lot of taxes for the king’s wars on the Continent.  If the king continued he could have bankrupted them.  So by making the king apply his Great Seal to Magna Carta they were forcing him to, among other things, spend responsibly.  As they, the taxpayers, now had a say in how the king spent their taxes.  The only way to ensure responsible government spending.  And when politicians and government workers maintain their privilege by having those who don’t pay taxes vote to raise taxes on those who do it removes all responsibility from government spending.  So they spend.  And they tax.  To pay for that spending.  Hurting job creation in the process.  Which is a very big problem.  For jobs are everything.

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The Federal Debt and Public Sector Grow, American Exceptionalism Declines

Posted by PITHOCRATES - April 4th, 2011

Obama sets Spending Record, Maxes out Uncle Sam’s Credit Card

As Congress battles over a budget, Timothy Geithner goes back to Congress and warns them that the world as we know it will end unless they increase the debt ceiling.  I’m paraphrasing, of course (see U.S. will hit debt ceiling by May 16, Geithner warns Congress by Jim Puzzanghera posted 4/4/2011 on the Los Angeles Times).

The Treasury Department had estimated that the nation would reach its $14.29-trillion debt limit between April 5 and May 31…

The Obama administration is pushing Congress to increase the debt limit, as it has done 75 times since 1962. The nation has never failed to increase the limit, Geithner said.

But the nation has never spent money it doesn’t have like the Obama administration has.  After some 2 years in office Obama has added about $4.3 trillion to the national debt.  That’s pretty impressive for just two scant years.  And how does that compare with his predecessors?  George W. Bush‘s added $4.2 trillion in eight years.  Bill Clinton added $1.4 trillion in his eight years.  Ronald Reagan added $1.6 trillion in his eight years.  And Reagan is always attacked with the ‘sure he saved the economy and increased GDP but at what cost’ line implying he did it with reckless and irresponsible spending by mortgaging our future.  But Reagan’s debt was chump change compared to the Obama $4.3 trillion added in only 2 years.  Yet the Reagan debt was bad.  While the Obama debt is nothing to worry about.  Funny how that works. 

One thing for sure, Obama sure likes to spend other people’s money. 

Renewable Energy Subsidies are a Slush Fund for Democrats

So what are we spending so much money on?  Oh, lots and lots of things.  Some big (Obamacare).  Some small.  So small that when you look at it as a line item you say, sure, that’s a lot of money, but in the grand scheme of things, it’s chump change.  Like the debt Reagan added rebuilding the American economy and winning the Cold War.  Or solar energy subsidies (see Get A Tax Break For Going Green In 2011 by Ashlea Ebeling posted 4/1/2011 on Forbes).

When [a retired couple], N.J., both 73, file their 2010 tax return this spring, they’ll be getting a $15,000 federal tax credit for going solar. They were expecting to get an additional $11,000 state rebate too, but newly-elected Republican Gov. Chris Christie raided the N.J. Clean Energy Fund last year to help balance the state budget, so the pot of rebate money ran dry. Yet even without the promised state rebate, [they] calculate that their $50,000 investment will be paid off in five years thanks to the federal tax credit and other incentives.

He’s already watching his meter send electricity he generates back to the power company; he figures he’ll save $1,600 a year in electricity bills. And he stands to get up to $6,500 a year for 15 years in state-legislated solar renewable energy certificates…

Okay, so we have a retired couple who could afford to spend $50,000 on solar panels that will never pay for themselves in energy savings unless they live another 32 years in retirement.  You know, that is an awful return on investment.  Which explains why no one is making this investment.  Unless the government gives them about $100,000 in the next 15 years on top of the $15,000 federal tax credit.  And the $11,000 state benefits.  All to save $1,600 a year.  What a scam.

This may stimulate the economy locally for a short time, but it just adds to the debt.  And the long term problems will be far greater than the short term benefits.  Then again, 73 year old people won’t be around to face those problems.  But you can bet that they will be voting for the party that just dropped a boatload of money into their laps to spend in their retirement years.  Let’s not forget that the senior population is growing greater than the younger population.  And they vote more.  So you can see that although the return on investment on solar energy is awful, it pays huge political dividends.  And that’s what it’s all about.  Not the environment.

Obamacare is a Slush Fund for Democrats

And speaking of really enjoying those retirement years, here’s a little pork buried in Obamacare just coming to light (see Uncovered: New $2 billion bailout in Obamacare by Byron York posted 3/31/2011 on The Examiner).

Investigators for the House Energy and Commerce Committee have discovered that a little-known provision in the national health care law has allowed the federal government to pay nearly $2 billion to unions, state public employee systems, and big corporations to subsidize health coverage costs for early retirees.

The legislation called for the program to spend a total of $5 billion, beginning in June 2010 — shortly after Obamacare was passed — and ending on January 1, 2014, as the system of national health care exchanges was scheduled to go into effect.

In other words, if you support Obamacare, we’ll take care of you.  As we always do.  And that’s why they fight for the public sector workers like they do.  They get a lot of union dues and foot soldiers.  In return the government throws them a bone.  Like an additional $5 billion in health care subsidies.

Where is the money going?  According to the new report, the biggest single recipient of an early-retiree bailout is the United Auto Workers, which has so far received $206,798,086.  Other big recipients include AT&T, which received $140,022,949, and Verizon, which received $91,702,538.  General Electric, in the news recently for not paying any U.S. taxes last year, received $36,607,818.  General Motors, recipient of a massive government bailout, received $19,002,669.

The program also paid large sums of money to state governments.  The Public Employees Retirement System of Ohio received $70,557,764; the Teacher Retirement System of Texas received $68,074,118; the California Public Employees Retirement System, or CalPERS, received $57,834,267; the Georgia Department of Community Health received $57,936,127; and the state of New York received $47,869,044.  Other states received lesser but still substantial sums.

But payments to individual states were dwarfed by the payout to the auto workers union, which received more than the states of New York, California, and Texas combined.  Other unions also received government funds, including the United Food and Commercial Workers, the United Mine Workers, and the Teamsters.

Remember the GM bailout?  Obama screwed the GM bond holders.  He called them greedy.  Humiliated them for trying to keep their contract rights.  The Obama administration sent these ‘first in line’ in bankruptcy to the end of the line.  Even behind the UAW who had no investment in GM.  Obama gave the UAW free shares of stock just for being who they were; contributors to the Democrat Party.  When the company went public again, the UAW was able to reap a fortune on that stock gift and fund their poorly funded pension fund.  And now this.  More tax dollars gifted to them for being good Democrat Party contributors.  This time to pay for health care costs of early retirees.  Lovely. 

Privileged life is good.  Obama takes care of the privileged.  And all you have to do is vote for him.  And give him a piece of your union dues.

The Public Sector Grows, the Private Sector Shrinks

But this government generosity is getting out of control.  People see the gravy train.  And they’re getting on it (see We’ve Become a Nation of Takers, Not Makers by Stephen Moore posted 4/1/2011 on The Wall Street Journal).

If you want to understand better why so many states—from New York to Wisconsin to California—are teetering on the brink of bankruptcy, consider this depressing statistic: Today in America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million). This is an almost exact reversal of the situation in 1960, when there were 15 million workers in manufacturing and 8.7 million collecting a paycheck from the government.

It gets worse. More Americans work for the government than work in construction, farming, fishing, forestry, manufacturing, mining and utilities combined. We have moved decisively from a nation of makers to a nation of takers. Nearly half of the $2.2 trillion cost of state and local governments is the $1 trillion-a-year tab for pay and benefits of state and local employees. Is it any wonder that so many states and cities cannot pay their bills?

The problem with this trend is that the government doesn’t pay for these government workers.  The taxpayers do.  The people with private sector jobs.  And as the public sector (i.e., government) grows, the smaller the private sector gets.  Which has to fund an even greater public sector by ever greater taxes.  But the more taxes we pay the more sacrifices we have to make.  Our lives grow more austere.  While the public sector lives a far more comfortable life than ours.  The government will be the first to condemn this income disparity when they can attack some corporation.  But it’s a different story when the well-to-do are their own people.  So they try to hide this wealth transfer.  Well, they try to hide it from the makers.  Not the takers.

Don’t expect a reversal of this trend anytime soon. Surveys of college graduates are finding that more and more of our top minds want to work for the government. Why? Because in recent years only government agencies have been hiring, and because the offer of near lifetime security is highly valued in these times of economic turbulence. When 23-year-olds aren’t willing to take career risks, we have a real problem on our hands. Sadly, we could end up with a generation of Americans who want to work at the Department of Motor Vehicles.

Public sector workers will bitch and moan about their jobs.  How they can earn more in the private sector.  Of course, they never leave the public sector.  Because the pay and benefits in the private sector suck compared to what they get in the public sector.  And no one ever fires them or lays them off.  That’s why they don’t ever give up those jobs.  Even college graduates have learned this.  And to guarantee those sweet jobs you know they will become lifetime Democrat voters.

Over the period 1970-2005, school spending per pupil, adjusted for inflation, doubled, while standardized achievement test scores were flat. Over roughly that same time period, public-school employment doubled per student, according to a study by researchers at the University of Washington. That is what economists call negative productivity.

Why, then, is the answer to our educational woes always more spending?  Because there are a lot of teachers.  Who pay a lot of dues.  That go straight to the Democrat Party.  In exchange for more government spending on education.  Always for the children.  Yet the money never seems to make it to the classroom.  Based on the test scores.  But the money keeps flowing.  So the Democrat Party can always count on the teachers’ vote.

Most reasonable steps to restrain public-sector employment costs are smothered by the unions. Study after study has shown that states and cities could shave 20% to 40% off the cost of many services—fire fighting, public transportation, garbage collection, administrative functions, even prison operations—through competitive contracting to private providers. But unions have blocked many of those efforts. Public employees maintain that they are underpaid relative to equally qualified private-sector workers, yet they are deathly afraid of competitive bidding for government services.

So you could say these public sector workers are 20% to 40% overpaid, couldn’t you?  I mean, in the private sector, it’s the rare person who can demand 20% to 40% more than the going market salary or wage.  People just don’t choose to pay more.  Do you?  Do you hire a plumber whose rates are 20% to 40% higher than the going rate?  No, I doubt you do. I’ve even known union construction workers who hire nonunion workers to work at their house.  Because they, too, don’t want to pay more than they have to.  But public sector workers think they deserve this higher pay and benefits.  As does the federal government.  Who steps in to fight a governor (Scott Walker) who is trying to balance his state’s budget.  Why?  Because public sector workers are loyal Democrat voters.  And donors.  Via their automatically deducted union dues.

The Shining City upon a Hill to become Ordinary?

The national debt is growing out of control for a good reason.  Spending.  Now we’ve had spending in the past that was necessary.  But much of the spending in the last 2 years has had a higher purpose.  To fund the growing public sector.  And to buy loyal Democrat voters.  With the growth in entitlements consuming an ever larger part of the budget, that leaves little for the business of politics.  So they must borrow.  And borrow they do.  More than ever before.  They’ve added more in 2 years than George W. Bush, Bill Clinton and Ronald Reagan did in their 8-year terms.  And they’re begging Congress to raise the debt ceiling so they can keep on spending.

The future isn’t looking so bright.  Perhaps this marks the beginning of the end of American Exceptionalism.  The point on the historical timeline when we stopped being that shining city upon a hill.  When we became ordinary.  With our best days long behind us.  I hope not.  But it’s been done before.  Great civilizations have come and gone.  Done in by an ever growing public sector that bankrupts nations.  Even empires.  No one is immune.  Not even that shining city upon the hill.

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