Greenspan ducks and weaves on deficits
As a fiscal conservative, I have to take Alan Greenspan to task for his testimony before the Senate, at least as it was reported in the New York Times, when he was charged with being complicit in the return of large deficits.
Greenspan has come under fire for his support of Bush’s plan to privatize Social Security. The premise for Bush’s plan is that there is a Social Security crisis because expenditures will exceed income in 2018 or thereabouts. That really isn’t a crisis for Social Security because it has a stockpile of Treasury Bills it’s been buying with the surplus revenues received through Social Security payroll taxes over the years.
That could be a problem for the federal government when Social Security cashes in on the Treasury Bills. The reason the federal government is in bad shape is because of the rampant deficit spending in which it has engaged for the past 25 years, with a brief respite in the second half of the 90s. The return to deficit spending over the past 5 years is due in good measure to the Bush tax cuts. The Bush tax cuts were greenlighted by Greenspan. That Greenspan would participate in trying to disguise the federal general fund’s problems as a Social Security problem is particularly repugnant since Greenspan, during the Reagan years, was responsible for increasing the payroll taxes as a way to make Social Security fiscally solvent.
Now, consider what a remarkable bait and switch Greenspan would have pulled off if Social Security benefits are reduced because of Bush’s talk of a crisis:
What has just happened if that comes to pass? Greenspan has helped use the more regressive Social Security taxes to pay for Bush’s tax cuts for the very wealthy. Quite a trick.
Now, on Greenspan’s defense for greenlighting the Bush tax cuts:
he supported Mr. Bush’s tax cuts because almost all budget analysts were forecasting trillions of dollars in surpluses that never materialized.
As events turned out, federal deficits rose as tax revenues plunged for three years in a row and spending grew on everything from war costs in Afghanistan and Iraq to education and homeland security. What was expected to be a $5.6 trillion surplus by 2011 is now expected to be at least a $4 trillion deficit by 2015 if Mr. Bush’s tax cuts are made permanent.
“We were confronted at the time with an almost universal expectation amongst experts that we were dealing with a very large surplus for which there seemed to be no end,” Mr. Greenspan told members of the Senate Select Committee on Aging.
Why that’s just hogwash. It was pretty clear by 2001 that the dotcoms were tanking. Throughout the 2000 Presidential Campaign, Bush repeatedly said that the economy was about to falter.
I may be bragging, but I knew deficit spending was just around the corner. And Greenspan’s presumably smarter than I am. I probably can’t lay this one at Greenspan’s feet, but I do recall that a proposal to amend the tax cut legislation was voted down that would have added a trigger removing the tax cuts if deficits returned. So the tax cut proponents were quite cognizant of the likelihood of deficit spending being caused by those tax cuts.
I’m afraid I tend to go on and on about deficit spending. For at least the past 15 years, it’s been my #1 political concern. I vote for the candidate that, in my opinion, is most likely to pay down the debt. That’s why I voted for Perot in ’92 and ’96 (silly as it seems now). From my perspective, the Boomers are mortgaging GenX’s future, and that’s simply unacceptable.
Inspector General Bill passes House
The Associated Press is reporting that the Inspector General bill has passed 98-0. Should be interesting to see what the Senate thinks of this thing. Of course, the only time they’ll get to consider it is in Conference Committee.
And, is it just me, or are AP stories on Indiana politics consistently less informative than stories from local reporters? (Probably it’s my own bias and it’s one of our local reporters writing for the AP.)
Lugar & Bayh ask FCC to respect Indiana Do Not Call
According to James Wensits of the South Bend Tribune, Senators Lugar and Bayh have asked the FCC not to preempt Indiana’s do not call list. It’s good to see bipartisan support on a no-brainer like this. I think most Hoosiers would agree they don’t want Indiana’s do-not-call law watered down in favor of the Consumer Bankers’ Association’s request to be permitted to make telemarketing call on the basis of an “established business relationship” consisting of nothing more than a citizen paying a bill or using a credit card sometime in the prior 18 months.
Indy Star on AG Contract for Civil Suits
The Indianapolis Star has an Editorial about the Attorney General’s insider deal outsourcing civil suit defense to a recent deputy AG formerly in charge of the in-house defense of such cases. The editorial board is not amused. They point out that outside competition was all but nonexistent and that ethics review was illusory. Pretty poor performance, they say, for folks who ran on an ethics platform.
For my own part, I simply don’t see the source of the savings in outsourcing a core function of the AG’s office. I think either the contract will run over, the level of service will be cut back, or the contracting law firm will take a big financial hit trying to fulfill the contract.
Update The Indiana Law Blog has more.
Indy Star on DNR Firings
Tammy Webber, for the Indianapolis Star has an article entitled, Natural resource managers fired. Mitch Daniels’ new DNR chief, 32 year old Kyle Hupfer formerly of Ice Daniels, fired “Paul Ehret, deputy director of regulation; Stephen Sellers, communications; Eric Myers, Heritage Trust and Natural Resource Foundation; Mike Nickolaus, oil and gas; Harry Nikides, soil conservation; Randy Braun, soil conservation; John Tryon, human resources; Janet Parsanko, deputy director and general counsel; Barbara Moore, land acquisition and Burney Fischer, forestry.”
Sellers, DNR spokesman for 10 years and editor of the agency’s magazine, “Outdoor Indiana,” said Hupfer’s cuts “went very deep, beyond what the Democrats did 16 years ago.”
“This was not a question of weeding the garden, this was a question of chopping down mature trees,” Sellers said. “You’re talking about some really talented and dedicated people.”
I think the jury’s still out, but I suggested back in January that a good way to tell whether Our Man Mitch was shaking up Indiana Government for good purposes or bad was to look at whether FSSA or DNR and IDEM suffered more of a shake up. I may be entirely out of line with this, but I view a shake up at FSSA as a badly needed change to a dysfunctional agency. I view a shake up at DNR as Mitch’s attempt to make it safe for business to pollute, thereby lining their pockets at public expense. To be fair, he’s not laying off of FSSA either, but it seems like the harshest personnel actions have been taken against DNR and IDEM.
HB 1262 – Bankruptcy Exemptions
The debtor exemption bill passed Second Reading in the Senate as Engrossed Version, House Bill 1262. Debtors will enjoy an exemption to execution on their property to satisfy a judgment or exemptions in bankruptcy in the following amounts:
Here is a provision I’m not sure about though. It’s talking about personal property being sold to satisfy a lien:
If indebtedness secured by a valid lien is chargeable against the proceeds of the sale, a bid may not be accepted if the bid is less than the sum of the amount of the indebtedness secured by the lien and the exempt value of the property.
So, let’s say you have a lien in the amount of $20,000. Say the debtor has a car worth $15,000 securing the lien. Is this provision saying that a secured creditor can’t force the sale of the car for $15,000, exempt the first $8,000, and pay the creditor the remaining $7,000? Because, as I read that provision, you can’t sell the personal property for less than $28,000 (the sum of “amount of secured indebtedness” + “exempt value of the property.”) That doesn’t seem right. Hopefully I’m misreading the provision.
Inspector General – Second Reading
On Second Reading, the House accepted Speaker Bosma’s Amendment to SB 18 – the inspector general bill. The basic structure of the Inspector General bill remains the same. However, with Speaker Bosma’s amendment (crafted by Rep. VanHaaften), the appellate court judge who reviews the Governor’s petition to have the IG appointed special prosecutor has the option of appointing an elected prosecuting attorney instead. However, the elected prosecuting attorney can’t be from the county in which the alleged crime was committed (because the elected Prosecutor has already reviewed the case at the IG’s request and decided not to prosecute.)
Representative Day’s Amendment was narrowly defeated 46-49. It would have left all of the beneficial aspects of the Inspector General Bill in place with the only change being that the Inspector General would be appointed by an appointment committee consisting of: the deans of the Schools of Law at Bloomington, Indianapolis, Valpo, and Notre Dame, along with the president of the Indiana State Bar Association, the executive director of the Indiana prosecuting attorney’s council, and the Chief Justice of the Supreme Court. So, it’s pretty clear that proponents of the bill want the IG to be directly under the thumb of the Governor. And that is really questionable, out of recognition that maintaining a separation of powers is critical to limiting the potential for abuse by any one branch of government. It’s also questionable in that the IG cannot be a force to counter corruption in the Governor’s office should it ever arise.
Update: The Indiana Law Blog has more.
Daniels administration looking for ways to cut Medicaid
Jennifer Whitson of the Evansville Courier Press News has an article entitled State Urging Medicaid Changes. In it, she notes that there is an effort to cut Medicaid’s 10% growth rate in half. Medicaid constitutes a $1.4 billion per year expense to the state, or 12% of the state budget.
Senator Miller’s SB 292 died in her own committee. It would have given the Governor the authority to cut optional services (those not mandated by the federal government, but offered by the state of Indiana.) Senator Miller says that the idea would have been more popular had the bill specified the optional services that could be cut. However, the stuff that could be cut without much pain would also be the stuff that doesn’t cost much in the first place. Mitch Roob, head of FSSA, announced some ways to save, but I can’t say I understood what most of them meant. Sounded like bureauspeak to me.
Lifetime Healthcare for Ex-Legislators
Kevin Corcoran has an article in the Indianapolis Star this morning entitled, Bosma: Now not time to end costly health plan
The Republican leader of the Indiana House has killed proposals to cut back or eliminate taxpayer-subsidized health care for former legislators, even though several Republicans in key races were elected last fall after campaigning for the changes.
Speaker Brian Bosma, R-Indianapolis, who was swept into power after his party took control of the chamber last fall, acknowledged that offering lifetime health care to former lawmakers has become costly and hard to justify.
But he said now is not the time for legislative action.
. . .
The benefit is available to former lawmakers, their spouses, surviving spouses, divorced spouses and dependents. Twenty-two former lawmakers and one ex-lawmaker’s surviving spouse are signed up, House and Senate records show.
I’m not necessarily concerned about the the expense to the state, which the article mentions is a drop in the bucket compared to overall expenditures. My main concern is how this sort of thing insulates legislators from the concerns of average Hoosiers. If you aren’t faced with the full force of significant annual health insurance premium increases, your inclination to regard them as a problem is not as great.
Update: A few hours after posting this, I ran across a healthcare plan suggested for Members of Congress a couple of years ago by Michael Thomas in an online forum in which I participate.
At the beginning of each term each member would be assigned to a health care plan in proportions mirroring the situtations of average Americans; some will get unlimited budgets, some will be enrolled in PPOs or HMOs, and some will have no insurance and would have to present themselves to the DC public hospitals for treatment.
Members seeking care outside of their designated plan would be subject to immediate forfeiture of all of their assets and sentenced to life without parole. Medical providers providing care beyond that authorized would have their licenses revoked. The thought is that, if we already had the best and most equitable possible health care system, nothing would change. However, if there was room for improvement, you can bet we’d find it very quickly under that system.
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