Apparently the Grinch does have a heart after all?

Newton Gingrich, who is said to be the Tea-Part choice (it’s good the paper muffles my chuckles) for the Republican ticket for November is angry over cuts Mitt Romney made while Governor. Which I find funny because Gingrich said himself cutting waste and fraud in the Medicare and Medicaid program would save $1 trillion over 10 years.

I disagree with much of what Mitt Romney has to say as I have pointed out on many occasions, but this piece in the New York Post that Gingrich is trying to use against him in Florida (a big Jewish population no doubt) is one where I cant fault Mittens. Apparently, in 2003 as governor of Massachusetts, Romney cast a veto that would nix $600,000 in additional funds for poor Jewish nursing-home residents to get kosher meals.

Romney said it “unnecessarily” would lead to an “increased rate for nursing facilities”. That is because of the costs of Medicade and what it was doing to the budget. We are talking about Medicade here; which means we are talking about government money. Romney’s spokesman defended his opposition, saying the state was in crisis and the kosher funding veto was needed to head off higher reimbursement rates for Medicaid.

Of course there was stiff opposition. Jeffrey Goldshine, the retired CEO of a company that operated a kosher facility in Massachusetts said this when being interviewed by the NYPost: “I was outraged. For the elderly Jewish residents of a nursing home that have always been kosher — they should be entitled to continue.”

There was also Brooklyn state Assemblyman Dov Hikind, an Orthodox Jew and Newt Gingrich supporter, who also had this to say: “People who are kosher — it’s not a choice they have, everybody understands what kosher is. You have huge communities of Jews who eat only kosher and you have a huge community of senior citizens”.  

Let me state that I have no religious background nor preference and I feel no religion should be upheld by government and this veto by Romney is no exception. Then you have a Mormon in Mittens who is not only making cuts to Old Jewish folks but Catholics as well according to Newt (who is a Catholic) at a recent campaign stop in Pensacola: “Let me note in passing that Romney as governor imposed on Catholic hospitals provisions against their religious strictures” said at a campaign stop in Pensacola.

We can debate what waste is and we know what’s fraud, but when do you have to make tough decisions as to what to cut? Gingrich wants to make serious cuts to save money as he sees half a Trillion annually in savings on the budget if you modernize. How do you suppose you “modernize” and “cut waste and fraud in Medicade” if you never have to make the tough decisions? You don’t. Newt has no plan to shrink government and this proves he doesn’t even want to make the tough decisions when its time to break out a scalpel.

For Newton to somehow say on the stump: “he (Romney) has no understanding of the importance of conscience and importance of religious liberty in this country” because Romney made cuts to Medicade is insane. Of course it’s not popular. The Assemblyman and retired CEO of the Kosher Company illustrate that. I see it this way; no religion or beliefs should be paid for by government across the board. Secondly, Newt is using fear to drive voters. He even used the infamous “I know of a” to strike his point. “And in at least one parish I know of, the priest talked about the danger of a dictatorship that imposed anti-religious standards in all of us.” Stop it Newt.

Lastly, since there is “huge communities of Jews who eat only kosher” as the Assemblyman says there is, I would suggest they ought to pick up the check and not the government. This goes for all religious beliefs when it comes to Medicare. If I fault Romney for anything in this, it is simply not reaching out to said  community, thus giving them a chance to help.

If Gingrich is running to cut government and restore fiscal responsibility, why does he chastise thou that do? He went after Mittens for his experience at Bain he goes after his for cutting Medicare expenses when he was Governor. I think there is much bigger issues to cut besides Kosher food from Medicare as i think there is more honorable things than basically being a corporate raider, but Mitt's work history and his balancing budgets is in the realm, I don't think you can say the same for the Grinch. Maybe is realm truly is on the moon?

Pimp My Crony Capitalist Ride: Starring Prez Obama

There is something about a true free market that is romantic and optimistic, so much so that it arouses the deepest emotions in all of us if we imagine the boundless possibilities. The simplicity and beauty of a true free market is that way because it’s derived from nature itself. Its self correcting, rewards hard work and due diligence but also poetically enough; punishes and discards the losers and Mal-investment. You could call it Darwinian, and it can be cruel but more than anything it you have to call it fair.

Now comes what we have – crony capitalism. American capitalism today and for over a century has been anything but free. The system we have in place today is corrupt and has been completely hijacked by the collusion between big business and legislators on the take. I’m not talking about the overt sleazy ones either; im talking about almost every single one of them outside of maybe a Ron Paul. Capitalism today is being destroyed by itself. We are eating our own. Corporations are collectively smarter than politicians. Politicians also need money. Corporations need favorable legislation and thus what we have today is a shell of a free market.

The overt transparency of fraud became evident in the Obama administrations predecessor (the Bush Administration) who used the wars in Iraq and Afghanistan and disasters like Katrina to facilitate no bid contracts and cost plus contracts with huge corporations like Bechtel and Dick Cheney’s former company Halliburton (do i really need a cite or link here). There was also Treasury's Hank Paulson (former Goldman CEO) giving his former cohorts on Wall Street inside information as to governments plans weeks and months before things happened during the financial crisis of 2008. Not nearly as talked about but equally suspect was the 1 Trillion dollar (and counting) Medicare prescription-drug benefit that facilitated a giant subsidy to thepharmaceutical industry. Maybe it’s the rise of the information age, maybe its our system finally coming undone; either way this type of corruption is something I have never seen or read about since the days of the industrial revolution.  

 

This current administration is no stranger to this corruption either (just look at his past contributors). In fact, what we are seeing under this administration is unprecedented on the subject of crony capitalism and that's saying alot considering Bush's track record. . 

One of the most notorious cases has been the solar company out of California, Solyndra. This was a company that received a 535 Million dollar loan from the federalgovernment in 2009 - spent 1 Million dollars in lobbying in 2010 – then went bankrupt in 2011. This put US taxpayer’s on the hook for the 535 Million dollar loan. Solyndra was also influential in the Presidents (who toured Solyndra in 2010 and tabbed it a success) election as its board contributed large sums of money from their own accounts. We also learned via the Tribune Washington Bureau that the Department of Energy employee who helped monitor the Solyndra loan guarantee was one of Obama's top fundraisers.

Solyndra however doesn’t touch the GM scandal. As I pointed out before, the US buying a stake in a company and having it competing with other company’s in the same industry who is not back by the federal government is not supposed to happen. Talk about an UN-leveled playing field? But it did.

GM saw what the Prius was doing a decade ago and for years wanted to get into the hybrid market but never could gain traction. So it concentrates on the next big thing, the electric car. This drive towards the electric car breeds the conception of the Chevy Volt. In September in 2008, the Volt was unveiled. By this time, GM is failing and on its death bed. Nine months later enters Obama and his blank check.   

So here the President sits with a gigantic stake in GM. It’s actually us, the taxpayer with the giant stake, but for the sake of the argument, it is Mr President since he has our check book…we just pay the bills (but only some as we have annual trillion dollar deficits). This could go on forever.

Let’s reset. It’s 2009 and with the US tax payers on the hook for GM, and the economy in the tank, Obama puts together the: Presidents Economic Recovery Board. On that board he appoints several giants across the commerce spectrum; one of them is GE Chairman and CEO Jeffery Immelt. GE is known for many things and being a conglomerate, it is obviously diversified. One of the technologies GE is bullish on is Wind Turbines (read green energy) so it makes sense when you take into account this administrations feverish green outlook. GE is also smart, they havent grown to their size and scope being naive; so they do not take risks that aren’t highly calculated.

So what happens in 2010 is pretty interesting. Remember Jeff Immelt? He cuts a deal with GM to have GE  buy 12,000 Chevy Volts by 2015. This is the same Chevy Volt that there is no demand for, the same vehicle that has serious questions about its reliability and its safety. Yet, one of the richest, most diverse corporations in the world decides to replace half of its fleet with a car that is still much in question? How does Obama show his gratitude, for buying into this boondoggle? He gives Immelt a promotion. One might start to ask themselves, how does a Chairman and CEO of GE…receive a promotion? Simple, President Obama Gave him another chair, and made him Chairman of the: Council on Jobs and Competitiveness on January 21, 2011.

My Congressional representative (3^rd district of PA) Mike Kelly, who is a car dealer himself, had this to say recently about the Volt and Administration:

 

“This is a halo car, not so much for General Motors , but for this administration,” Mr Kelly Said. “If GM thought this was such a good investment, they would have launched it themselves many years ago. If these cars are so great and so marketable, why do we have to subsidize them so heavily?”

 

Here you have a sitting President with a green agenda buying with US taxpayers a stake in an American company GM who sells cars in the US against other US car manufacturers with no federal coffers to dip into. That is the first strike. Then you have said President in a cozy relationship with a CEO of a company like GE (who also has green interest) buying an enormous amount of cars off of GM, who is backed by the federal government. I mean, why not the Ford Fusion Hybrid? They are an American automaker as well and the Fusion Hybrid is actually a better car, according to many industry experts. Strike Two.

Last but not least is ethics. How can a President (who came in loaded with a cabinet of Wall Street insiders) so stuck in a jobs rut side with a company that has been shipping some of its businesses and jobs offshore all the while using tax loopholes to escape paying taxes while using the Volt as another tax win with its tax credits? Or how can we cut joint venture deals with the Chinese to sell the Volt; then to only have the Chinese steal the technology to turn around and use it against us like they have on so many other occasions across multitudes of industry. It’s pretty obvious that the end game is this: GM must succeed for the President to succeed, regardless of how it’s done. The ends justify the means. The government picking and choosing winners, betting on what technology they think is the best option instead of the market place is why Obama strikes out on this matter.   

There have been numerous examples of crony capitalism over the years but we are seeing some pretty alarming examples at the height of our elected representatives over the last decade, and the corruption starts at the doorstep of 1600 Pennsylvania Ave. This isn’t a partisan problem; this is a national, state and local problem; as this affects all of us and at every level of our government. If it happens there and is so visible, imagine what we don’t know about? We can call it crony capitalism or call it a plutocracy or a plutarchy but whatever you do; do not call it capitalism and never under these conditions dare call this market free.

GM and the US taxpayers are at the halfway point to break even on GM

It was learned this week that the US tax payers are still missing the repayment of 132 Billion dollars from  TARP, which was launched in 2008. In a report issued Thursday by Christy Romero, who is the acting special inspector general for the Troubled Asset Relief Program. The Program, as we all recall, was to save the financial sector from themselves because of their addiction to the derivatives game (think World Series of Poker).

In 2009, the remaining cash in TARP was split between a variety of business (mostly banks) but there sat GM. Facing Chapter 11, GM was first rebuked then denied by the President. GM had to do what any failed business has to do, it had to file for bankruptcy and they did; wiping out all the stockholders who stocks were completely vaporized into worthless pieces of paper. Then after filing and less then a month off of the stock exchange; GM reemerged with an infusion of American taxpayers borrowed capital. With backing of the US and Canadian government; GM was now owned more by the state then it was private investors.

Fast forward to this week. Here is what President Obama had to say in the State of the Union Address:

On the day I took office, our auto industry was on the verge of collapse. Some even said we should let it die. With a million jobs at stake, I refused to let that happen. In exchange for help, we demanded responsibility. We got workers and automakers to settle their differences. We got the industry to retool and restructure. Today, General Motors is back on top as the world’s number one automaker. We bet on American workers. We bet on American ingenuity. And tonight, the American auto industry is back. 

This is classic example of where politicians say things that are rather hallow but are not completely false, so in lies some grey area (wiggle room). Mr Obama actually did refuse to help GM at first. So therefore, President Obama only refused to let them fail, well... only after he first refused to help. He can say it was because he "demanded responsibility" but the truth of the matter is; he was weighing the political capital in letting it fail or saving it. Being one of the most anticipated Presidents in decades, he wasnt about to start out his presidency by backing a losing horse. Think about it, organized labor are as close to the Democratic hip as the Evangelicals are to the Right's, so for him to not having saved it from the jump means he was weary of the public's growing anger towards the bailouts. 

As far as the 1 million jobs, it is including all the suppliers and they wouldnt have all lost work. There is many small businesses across the country that feed off the automotive industry but many of them would have survived because most of them are diversified enough to withstand the hit. Its also worth noting that even if GM did face liquidation, another automotive company would have stepped in and bought the brand. Thus many jobs would have been saved if not most; even without the bailout.

As far as GM being some kind of triumph or success story... you give me any business and dump 34 Billion dollars of outside investment money into it that costs said company nothing; Ill build you a success story too. Who couldnt, with that type of Capital/lottery/welfare? Now, about the American auto industry being back? In the words of the immortal Lee Corso: not so fast my friends. According to the US Treasury, US Taxpayers would need to sell its GM stocks at $53 per share to break even. Friday, January 27th it closed at $24 per share. How long do we have to wait to see if this investment at least breaks even? Being GM is the "worlds number #1 car-maker" now, don't ya know...lets hope its sooner rather then later. 

In defense of Obama (allow me to explain)

Let me start out by saying, that feels weird uttering out that title to myself. For those that don’t know me... I’m not a liberal, far from it. For those that do, know I would consider myself a Libertarian and Libertarianism is rooted in logic. Freedom across the board seems to be the "fairest" premise one can have in such an unfair game that is politics. With that said, I see a lot of venom spit at the President in terms of his economic approach that I don’t think is quite fair. Again, before you bitch slap your monitor - allow me to explain.

Much has been made recently about the Presidents accumulation debt. We have seen 5 Trillion added onto the 10 Trillion of national debt since he came into office in January 2009, that's no cheap date. So let there be no doubt that the spending is spiraling out of control going forward.  However, the attempt to put this on one man and his quest to outspend any president in history doesn't make him a Marxist as some would like to believe he is; it makes him a loyal solider. First a very crude and broad history.

A curious thing happened during the early 80's... GDP started to escalate as the country found itself in the midst of an economic growth period unlike anything it has seen in decades. One could point to Nixon ending Bretton Woods in the early 70's as a precursor to this expansion but that is another topic for another day. The reality was the country was booming. However, with that came enormous amounts of debt. So much so that the National debt ballooned from 1 Trillion in 1980 to 4 Trillion by 1988; so this explosion of growth came with a price tag (on a credit card).

Even though the debt was piling up as long as the economy kept building and building like it always has, there would be nothing to worry about. So the federal outlays began to climb and so did the deficits. Bill Clinton had his time to shine as being the only president in four decades to pass a balanced budget, although that was much to do because of the tech boom and the validation and explosion of a new business and platform: the Internet. Then the subsequent NASDAQ crash came in 2000, right when the economy was heading into recession.Ouch.

Then something changed. George Bush Jr was elected and began to rapidly increase spending on new entries to the budget like the Prescription drug plan (entitlements or votes) and Homeland Security (not sure what that still does to this day) while cutting taxes in the midst of a recession. Then we added two wars on two separate fronts and before you knew it we had doubled the debt from roughly 5 to 10 trillion in his eight years and oh yhea, the housing bubble bursts bringing on one of the worst financial calamities since the 30's.  And if that wasn't enough, right before his leaving of office the great recession came and wreaked havoc on our economy on all fronts (except for those at the very top) causing us to pass TARP while most taxpayers getting what amounts to a welfare check of 300-1200 Dollars from the Economic Stimulus Act.

Enter the "O" man. Right out of the gate, Mr Obama pushed through a 780+ Billion dollar stimulus bill which had much of the nation in an uproar based on the preconceived notions upon his entering of office. That stimulus act, like George Bush's before him, had large lump of tax credits worth 250 Billion, so it wasn't all spending parse. President Obama's budgets, although record setting high nominally; were in-line with the last budget of President Bush. The subsequent Obama budgets after his first were (and estimated) to be in the 3.5 to 3.7 Trillion dollar range. President Obama therefore is no bigger of a spender than President Bush if you account for the history seen below.

A large part of the deficit spending has to do with the walloping the middle class took as it affected the receipts. The last three years (2009-2011) receipts were roughly 400 billion lower then they were in all three years before (2006-2008). At the same time the outlays keep increasing. This creates tremendous deficits. But, it wasn’t like Obama came in with a blank check. In fact, Obama's first budget had actually less spending than Bush's last year in office. Obama's final budget is actually only 200 billion more than Bush's final budget (and Bush's biggest to be fair). 

So, if President Obama doubles the national debt, he will just be doing his part to continue the legacy that was put in place before him started in the early 80's by Ronald Regan. This is no disrespect to George Bush nor is this some type of vindication for Mr Obama; its simply setting the record straight. If anything, this points to a bigger problem, regardless of who sits in the oval office and its pretty straight forward. We have too many bills and not enough income. How we bridge this gap, will be the most vital national issue of the next decade. Keynesian economics appears to have reached its saturation point. We either slash spending or we dramatically raise taxes... or invent the internet again.