Meh Culpa

Calfornia Proposition 1C snatches $5 billion from the mouths of babes and children

Here they go again.  Arnie and the Legislature are using 1C to borrow from our children and their children and their children’s children.  1C borrows $5 billion from future lottery profits,  while taking 20 to 30 years to pay off the debt,  yet the proposition is being sold as a way to balance the budget. Over the long term passing 1C means that it’s going to make future budget balancing acts even more difficult.

What gets me is that this measure isn’t just a one-time deal, though no one really mentions that point.  1C allows borrowing from the lottery at any time in the future, which means the “loans” to the General Fund may never end, and the children of California from 5 to 21  wouldn’t be getting the Lottery money due their educational institutions.  Oh yeah, as long as  the debt needs repaying, that’s what the Lottery will do instead of abiding by the will of the voters who passed the Lottery measure for K through JC Education back in the 1980’s.

The politicians in Sacramento, especially the *cough*Republican minority*cough,* are all about taking Educational funding away.  It’s always the first thing to go.  And now it’s going ‘way back in the future.

The legislative analyst takes pains in the subjunctive to say that the state might not borrow from the Lottery after all, in which case it might cover future payments the General Fund provides for Education.  Yeah, right.   (Sorry for being all cynical, but the subjunctive doesn’t cover the concrete, it is the stuff of daydreamy maybes.  Castles in the Air, so to speak.)

As if we need more, there’s another problem: The General Fund that’s borrowing from the Lottery to balance a massive deficit would have to make up for payments the Lottery would usually make.  Sound convoluted?  It is.

Plus, if the money isn’t there now,  I doubt the General Fund can make up the balance owed from 2009-10 next year.  Maybe there would be enough money in the General Fund for a payback in some decade or other, but probably not this one. Which means trying to find the money from another program certain politicians like to cut from the General Fund (See 1E and Inside Governor Hoover’s Budget Revise*).  Funny, you don’t see the Gov’nor taxing the people who can most afford it. A Randian** Republican to his core,  Ahhhnold insists on screwing over The Little Guy and The Little Kids and the Disadvantaged Through No Fault of Their Own.

How much sense does this measure make so far?

For creative accountants, it’s great because it  means balancing the budget on paper.  But  it may also make  us less competitive in the future by taking brain candy from the babies’ mouths.  Frankly speaking, the 8th largest economy*** in the world  needs its competitive features, but we’ve been slipping for over a decade.   Considered the high-tech state, California is about 46th in the country in terms of schools’ technology access and use and the state cannot afford to lose what little it has.    Personally, I think passing 1C will help guarantee more slippage.

I don’t think we  can we afford more of what 1A / 1B  promises our kids and possibly their kids and grandkids–less rather than more.

Can you tell I’m voting NO?


* Most spectacularly (for anyone who doesn’t want to read much more): “[I]nstead of temporarily cutting various services, the Governor’s revised budget would cut them permanently, particularly in programs like Medi-Cal, In-Home Supportive Services, SSI/SSP, regional centers, Cash Assistance Program for Immigrants. …The vast majority of those cuts would be implemented regardless of the outcome of the May 19 ballot measures.” He’s also raising fees for residents of veterans’ homes.  Despicable.

** See also “The Troubled Economics of Ayn Rand.”

*** In 2007.  Whaddaya wanna bet we’re about 10th or 11th this year?

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May 16, 2009 Posted by | borrowing, California, conservative, Democrats, Depression, Economy, Education, far right, politics, poltical theories, Republicans, social theories | , , , , , , , , , , , | Leave a comment

Get Your Populist Rage Here: AIG to pay $165 million in bonuses

(UPDATE below)

Under Geithner and Summers, the government claims helplessness, but I don’t think they are helpless.  And they had to know this was coming.  The government–meaning we taxpayers, y’all–owns 80% of AIG, so how could they not know?  It was back in the day that these bonuses were set up for the same guys who played with swaps and derivatives and left AIG  teetering on the brink of disaster. The company was essentially bankrupt.

But that’s not all.  According to the NYT:

A.I.G. had set up a special bonus pool for the financial products unit early in 2008, before the company’s near collapse, when problems stemming from the mortgage crisis were becoming clear and there were concerns that some of the best-informed derivatives specialists might leave. It locked in a total amount, $450 million, for the financial products unit and prepared to pay it in a series of installments, to encourage people to stay.

After this, two more bonuses are to be paid in July and September to the tune of $220.4 million.  AIG’s CEO, Edward M. Liddy, has written to Geithner saying the salaries of these execs in the Financial Products Division have been trimmed to $1, but who the heck cares?  AIG was brutally mismanaged and this sort of payoff, this heinous payoff, is part and parcel of that folly. Of course,  Liddy argues that AIG is contractually obligated, and furthermore without bonuses these “talented” execs who caused the problem would walk.

I say: let ’em go.  Liddy’s position is morally bankrupt and pretty stupid.  There are more talented execs where those came from.  MBAs are everywhere, dontcha know.  Look in the unemployment lines.

I also say the government should take over AIG–because taxpayers aren’t getting their money’s worth when shareholders aren’t wiped out,* execs earn hundred of millions in bonuses and get to keep their jobs.

When will we ever see a return on OUR investment?

Like, never.

We’re going to be asked to give up portions of so-called entitlement programs, such as Social Security, which income is the only thing between many elderly women and bone-scraping, marrow-sucking poverty. In early January Obama said he wants to overhaul both Medicare and Social Security.  So we get Universal health care, but not really?  How does that work exactly?  Whence comes the money?

Don’t get me wrong, I think health care is a human right.  We citizens have made a contract with our government** in which we give up some rights (say, by paying taxes) and by doing so receive something in return from our government. The old theories considered that receiving social order was enough, but they imply that everyone acquires equal benefit, or as Hobbes would say: the “right to all things.” (Ha.)  If health care is a right, I don’t think government is working as well for everyone in the United States as it is in other industrialized nations.  Last year, about 75 million people in the US didn’t have enough insurance or they didn’t have any at all.  Imagine what that statistic is now that so many people are unemployed.  (<—- Scary, but elegant graphic.  Makes me want to move.)

So, yeah.  I don’t think AIG has a right to exist as an autonomous entity any longer. I think the leviathan has gorged itself aplenty and should be absorbed by the government. We have more important ways to spend our money–by taking care of our own.

UPDATE: Robert Reich on AIG, an excerpt:

The bonuses are part of employee contracts negotiated before the bailouts. And, in any event, Liddy explained, AIG needs to be able to retain talent.

AIG’s arguments are absurd on their face. Had AIG gone into chapter 11 bankruptcy or been liquidated, as it would have without government aid, no bonuses would ever be paid (they would have had a lower priority under bankruptcy law that AIG’s debts to other creditors); indeed, AIG’s executives would have long ago been on the street. And any mention of the word “talent” in the same sentence as “AIG” or “credit default swaps” would be laughable if laughing weren’t already so expensive.

This sordid story of government helplessness in the face of massive taxpayer commitments illustrates better than anything to date why the government should take over any institution that’s “too big to fail” and which has cost taxpayers dearly. Such institutions are no longer within the capitalist system because they are no longer accountable to the market. To whom should they be accountable? As long as taxpayers effectively own a large portion of them, they should be accountable to the government.

But if our very own Secretary of the Treasury doesn’t even learn of the bonuses until months after AIG has decided to pay them, and cannot make stick his decision that they should not be paid, AIG is not even accountable to the government. That means AIG’s executives — using $170 billion of our money, so far — are accountable to no one.


* Funny how that works.  In a normal capitalist world, shareholders would lose their investment when the company goes under.
** Remember John Locke and Jean-Jacques Rousseau?

March 15, 2009 Posted by | bailout(s), Economy, Executive branch, Obama administration, politics, recession, social theories, Treasury, unemployment | , , , , , , , , , , , , , , , , , , , , , , , , | 8 Comments

Another scary moment

In which I agree with Michelle Malkin 😉 :

Democrats and the White House have reportedly hammered out an automakers’ bailout plan.

The snort-worthy promise: More “oversight.”

Because, you know, Congress has proven so competent at providing “oversight” of all the other bailouts this year.

Malkin’s got this cute little graphic of little  dark guy–probably an oversight, the kind with a different definition, but also the way Congress tends to do business lately–sticking up little blue guy holding a bag of cash.  It’s called “socialism.”  This is where Michelle’s opinions and mine diverge.  Although I’m not a Marxist sort of girl,  socialism, especially democratic socialism, doesn’t scare me so much.  It’s not like fascism, or the communism that arose from a vanguard party in Russia; nor is it like exactly like  direct democracy.  It’s a theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole. I don’t mind the community having political power or owning the means of production and distributing the wealth equally.  It’s very early Christian.  You know, Acts of the Apostles  (2:44 – 45) and such. Unfortunately, because of an innate human tendency towards corruption and greed, the distribution of wealth part doesn’t always seem to work out well in practice.  I think that was in Acts, too (5: 1 – 11).  As you might imagine, I don’t have many Ivan Boesky moments. I don’t think you can be greedy and feel good about yourself.   Not really.

Anyhow, like Malkin I’m not big on the bailing out the Big Three. I don’t think Congress will oversee anything at all, just as they haven’t with the other bailouts.  I also don’t think  two of the Three will survive  even, with a vast infusion of taxpayer dollars.  Ford is the healthiest, so maybe it should stick around. Not that I’m a big fan of Ford’s–my auto mechanic brother used to used to say FORD  stood for  “Fix Or Repair Daily”  and our family’s cars lived up to the acronyms– the automaker simply has the best chance of surviving.  I would hope, however, that Congress and any bankruptcy court worth its salt and pepper would remember to salvage GM’s parts business, without which no one will have parts to repair their existing cars.  But the rest of GM is probably just this side of moribund, while Chrysler might as well be in rigor mortis.  I don’t think they’re worth the cost of saving.

In my daydreams, workers will continue to provide for their families because the nation is funding the retooling of dead auto manufacturing plants as well as the development of vehicles beyond the our favorite hybrids.  B-E-Y-O-N-D.   That’s crucial.   Personally, I’m all for the air car with a prettier shell.

Just think about it.   The air car, which gets over 100 mpg,  has been in development since the 1990’s.  According to the manufacturer’s web site,  the car  can run on a variety of fuels–gasoline, ethanol, bio-fuel, propane–up to 96 mph for a range of 800 to 1,000 miles.  The tank takes eight gallons of gas, which currently runs about $1.70 in my town.  The car itself will sell in the US for under $18,000.  And the Big Three turned down a deal with the inventor of the Air car, Guy Negre, years ago.  (How dumb was that?!)  As Senator Bill Nelson (Dem – FL) said in November, “Why should we be pouring taxpayer money into an automobile industry that has continued to resist higher miles per gallon, which has led us in part to the problems we’re in?”

Update: A reader kindly provided me with several URLs on the subject: MDI, Zero Pollution Motors, the blog Pneumatic Addict (clever, yes?) by Joe in Brooklyn, and Compressed Air Powered Vehicles by the friendly reader whose gender I won’t presume to guess.


See also this August 2002 article: “The Quest for the Fuel Efficient Car” by Ralph Nader

December 8, 2008 Posted by | bailout(s), Chrysler, Congress, Economy, Ford, fuel efficient cars, GM, MDI, social theories | , , , , , , , , | 2 Comments