By Warner Todd Huston

My good friend, Ken Marrero over at Blue Collar Muse, did some  interesting research into where the money from Tennessee's share of the so-called stimulus payoff ends up going. Ken notes that there is a lot of money floating around but little of it goes to stimulate the economy. In fact, it seems that the lion's share goes to government and its grasping needs as opposed to the economy.

According to Marrero, The Volunteer State stands to have a windfall of $3,779,708,000 thanks to the pork-laden bill passed by Congress and President Obama. The list of payouts is impressive, but it really does show that only a small amount of the total could be considered an economic stimulant.

The list of recipients is instructive:

$771,610,000 on Education
$171,678,000 on "General Purpose"
$1,100,000,000 for Medicaid
$10,200,000 for the Foster Care system
$71,988,000 to mass transit capital grants
$20,394,000 to "clean water" programs
$57,814,000 to drinking water programs
$97,467,000 to something called "weatherization"
$59,065,000 to the state energy program
$7,199,000 for immunization
$2,614,000 for elderly nutrition
$41,932,000 to child care
$19,699,000 to the shadowy idea of "community services"
$2,069,000 to the "temporary emergency food assistance program"
$2,064,000 for emergency food and shelter
$11,500,000 for vocational rehabilitation
$174,210,000 for K thru 12 education
$50,386,000 for school improvement
$236,163,000 goes to the individuals with disabilities act

… well, this is just a tiny slice of the list that Marrero gives us — he also goes into detail about the items above. What his work does show is that few of these projects are economic projects. Instead what they are is grist for the mill of big government. Little of this money seems to be going to the economy in the form of helping business, assisting people with loans, or creating solid, long-term jobs.

In summation, Marrero says:

"Our totals are quite interesting.  Of our total $3,779,708,000 - $1,246,017 goes to various Education programs, $1,100,000,000 goes to Medicaid leaving just $1,433,691,000 to spend on everything else.  Almost two thirds of the money is excluded from stimulating the Economy in just two general items.  Of the monies left, $771,282,000 also fails to stimulate the Economy, $662,409,000 falls under the “Maybe” category and only $12,979,000 has the appearance of true Stimulus spending."

But Tennessee is no different than any other state in this regard. Obama and his minions in Congress did nothing to stimulate a flagging economy. This bill is meant for one thing and one thing only: to enlarge government and infuse the people's money into dubious programs of little worth as a way to self-perpetuate government.

This porkulus bill is more proof than ever that we now have a government of the government, by government, and for the government. And like cancer it grows to kill its host.

About the author
Warner Todd Huston is a Staff Writer for the New Media Alliance, Inc. (http://www.thenma.org/). The New Media Media Alliance is a non-profit (501c3) national coalition of writers, journalists and grass roots media outlets

Posted by Walt as Economics, Obama Watch at 2:53 PM EST

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By Alan Caruba

On “Jeopardy”, the popular quiz show, they have a category called “Stupid Answers” in which the answer is so obvious, posed in the question, that it is virtually impossible to get it wrong.

Unfortunately, we are afflicted by too many stupid answers to very real issues and needs, the most fundamental of which is energy. At the very heart of our society and economy is the dependence upon and need for uninterrupted and increased energy, primarily electricity.

The answers we have been hearing are the worst possible. Over and over again we are told that the U.S. must become more dependent on “alternative, clean” energy, meaning solar and wind energy. These represent about 1% of all the energy the nation consumes at present. Neither comes close to the energy produced by coal which represents over 50% of all the electricity we consume daily. Nuclear produces an additional 20%.

The utility that serves much of New Jersey, my home State, Public Service Electric & Gas recently ran an advertisement headlined “Caution: Blackouts Ahead…” The ad said that “The experts responsible for maintaining reliability on our electric grid flatly predict that we are risking catastrophic power outages in New Jersey if we don’t upgrade our system.”

In the great national debate about the nation’s infrastructure, perhaps no other issue is of more importance, other than the way electricity is produced, than the way it is delivered. Those power lines are the very heart of the way our nation functions. PSE&G is ready to spend $750 million to upgrade its part of the grid, estimated to begin suffering overloads in 2012. Opposing those upgrades is a phalanx of environmental organizations and a regulatory approval process that borders on the insane.

In the meantime, the cost of solar energy credits in New Jersey has jumped to as much as $675 a megawatt-hour for 2009. The credits are paid to solar developers for the energy they produce over a year. The purpose is to boost solar energy production despite the fact that it is the least efficient and most costly way of providing electricity.

Take away the credits and the utilities could spend that money on expanding existing coal-fired and nuclear plant production. This is the classic stupid answer to a real need.

Within the energy industry, all of this is well known. Last August, writing for a leading website devoted to the industry, EnergyPlus.Net, Joseph Welch, the CEO of ITC Holdings Corporation, wrote that “the probability of a second devastating blackout is very likely”, recalling one that five years ago left 50 million Americans in the northeast and Midwest without electricity in the largest blackout in North American history.

A partial, but stupid answer was provided by the 2005 Energy Act requiring reliability standards for the transmission grid, while at the same time dispensing federal largess to solar, wind, biofuel, thermal, and other forms of energy of dubious value. In the meantime, as Welch points out, the growing energy demand “is expected to increase 30% by 2030.

The Obama administration’s energy advisors, cabinet secretaries, and others, including the President, are all on record as opposing coal-fired electricity generation. Many of the nation’s governors remain opposed to coal-fired plants. And America is home to the greatest deposits of coal to be found anywhere in the world!

Yet another stupid answer is the idiotic notion that we can “conserve” our way to energy independence. The prospect of a ban on the sale of incandescent light bulbs as a means to conserve electricity is as idiotic as it gets. Fluorescent bulbs all contain mercury and will require a Hazmat team to clean up the mess if you break one.

As my friend, Michael J. Economides, an editor of EnergyTribune.com, pointed out in mid-2008, “Energy cannot be generated from nothing”, adding that “The next four decades are good for a dozen recessions if it’s business as usual, or for a constant downturn, if American politicos actually apply what they have been saying.”

The smart answers to America’s energy needs include opening oil drilling in the Alaska National Wildlife Reserve, on the nation’s vast continental offshore areas estimated to contain billions of barrels plus vast natural gas reserves. The smart answer is to begin yesterday to upgrade and expand our electrical grid system. The smart answer is to encourage the mining of our nation’s coal reserves. The smart answer is to build more coal-fired and nuclear plants.

Who opposes this? The Sierra Club, Friends of the Earth, and the Environmental Defense Fund, to name just three organizations dedicated to destroying the nation’s economy and its ability to provide energy to its people. Who opposes this? Ask the new Secretaries of Energy, the Interior, and the Director of the Environmental Protection Agency.

The next time one of these people, including the President of the United States of America, claims that global warming requires that we all freeze in the dark, impeachment proceedings should begin immediately.

Posted by Walt as Economics, Oil Production at 9:28 AM EST

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Washington, D.C. - At least $8.6 billion of President Obama’s proposed $1.2 trillion stimulus plan is meant to fund dubious special interest policy initiatives of environmental activists and should immediately be jettisoned, says Deneen Borelli, full-time Fellow with the Project 21 national black leadership network.

"It's outrageous that taxpayer money is slated to be used to fund the agenda of environmental special interest groups.  These special interest groups are using global warming alarmism to fund dubious projects while discouraging the use of fossil fuels," says Borelli.  "If liberal lawmakers really cared about stimulating the economy, they would remove rules and regulations that block the development of more fossil fuels.  This would provide good-paying jobs and lower energy costs for Americans.  Instead, they appear only interested in using their combined force of money, power and influence to fleece taxpayers of their money and their freedom."

Among the green earmarks in the bill legislation cited by Borelli:

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Posted by Walt as Economics, Environmental Issues, Global Warming, Obama Watch at 8:45 AM EST

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By Alan Caruba

In 1939, ten years after the crash on Wall Street, the Secretary of the Treasury, Henry Morgenthau, Jr., told the House Ways and Means Committee:

“We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong…somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises…I say after eight years of this administration we have just as much unemployment as when we started…And an enormous debt to boot!”

Does history repeat itself? Yes, it does. And there is every appearance that the White House and the Congress intends to repeat many of the errors of the last Depression that came to be known as Franklin Delano Roosevelt’s New Deal.

With exquisite timing, after ten years of research, professor of history, Burton Folsom, Jr. has published “New Deal or Raw Deal? How FDR’s Economic Legacy has Damaged America” ($27.00, Threshold Editions).

To get an idea of just how bad the U.S. economy was during the 1930’s, Folsom notes that, even though the U.S. had budget surpluses in 1930 and 1931, government spending “ballooned and far outstripped revenue from taxes.” It was the Wall Street Crash of 1929 that precipitated the Depression, but it was FDR’s

Initially voted into office in 1933, from 1937 to 1939 “the value of all stocks dropped almost in half…Car sales plummeted one-third in those same years, and were lower in 1939 than in any of the last seven years of the 1920s. Business failures jumped 50 percent from 1937 to 1939; patent applications for inventions were lower in 1939 than for any years of the 1920s. Real estate foreclosures, which did decrease steadily in the 1930s, were still higher in 1939 than in any years during the next two decades.”

FDR was an enormously popular President in his day. His photo could be found everywhere in people’s homes and apartment, in barbershops, in businesses, and just about anywhere people gathered, but he not only did not solve the nation’s economic problems, he made them worse with the help of a Congress. By 1936 Congress was totally dominated by the Democrat Party in ways that exceeded any previous party for 150 years.

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Posted by Walt as Economics, Obama Watch at 8:29 AM EST

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By Thomas E. Brewton

The OECD Secretary-general seems not to understand the first and foremost responsibility of banks.

The Wall Street Journal carries the following brief interview note:

Angel Gurria, secretary-general of the Organisation for Economic Co-operation and Development, says the economic crisis will hit bottom in the last quarter of 2009, with a meager recovery starting in early 2010.

“2009 will be a very bumpy and bad year,” Mr. Gurria said. “2010 will be weak, but positive and in the black.”

Asked what sectors of the economy will drive the recovery, Mr. Gurria said: “Frankly the guys in the banks have to start doing their jobs again and start lending.”

A major contributor to the collapse of the financial community is the widely held attitude expressed by the Secretary-general that a bank's job is to lend money.  Arguably, it was precisely the urge to lend at the highest possible rates of return that led banks and other financial institutions to acquire too many high risk assets.

Secretary-general Gurria is not alone in demanding that banks lend money now and in ways that government directs, regardless of risk.  Influential members of Congress, including Congressman Charles Rangel and Senator Charles Schumer, have said the same things in recent weeks.  In earlier years, Congressman Rangel was an instigator of the Community Reinvestment Act requiring banks to make a certain percentage of their loans to uncreditworthy borrowers in high-risk neighborhoods.  Those borrowers figure prominently among loan defaults now plaguing the banks.

Perhaps it's unfair to attribute that frame of mind to liberal-progressivism, but it most assuredly is not a conservative attitude.  Conservatism, in its Burkean, best sense, means respect for history and for tradition, without which society and enterprise easily become disoriented and distressed.

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Posted by Walt as Banking, Economics at 12:01 PM EST

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By Thomas E. Brewton

A brief historical overview of changing banking practices abetted by the Fed's inflationary expansion of the currency.

The main effect of the Fed's current moves is to bail out the financial institutions. That's what opponents of creating the Fed feared in 1913.

The Fed's acting as lender of last resort to tide banks over periodic panics was, in 1913, vastly different from today. Banks then were more prudent, confining their lending to short-term self-liquidating advances, usually with maturities no longer than 90 days. Moreover, borrowers were expected to clean up their credit lines, that is, to pay loan balances down to zero at least once a year to demonstrate the strength of their balance sheets.

In the late teens and early 1920s, the only collateral eligible for rediscount at the Fed was bankers acceptances (export-import financing with maturities again of maximum 6 months) and commercial notes representing domestic shipments of goods to creditworthy companies. Not even Treasury Bills were eligible for rediscount in the Fed's early days. The effect was to confine commercial banks to financing agriculture and commerce. This tended to limit bank credit expansion to the underlying real growth of business.

Today, as the newspapers tell us in profusion, lenders are heavily involved in originating obligations with maturities up to 25 years.

When inflation began to take off around 1969, banks began to talk about "liability management." Old line relationship bankers had been schooled to know each corporate client intimately and to stick with that client through the ups and downs of the economy. After 1969 the game shifted to finding new sources of bank funds to carry new types of lending. Banks became something analogous to traffic directors for funds coursing around the world via 24/7 satellite networks.

Two major developments triggered this transition.

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Posted by Walt as Banking, Economics at 2:06 PM EST

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By Thomas E. Brewton

As prolongation of the 1930s Depression and stagflation in the 1970s demonstrated, Senator Obama’s announced policies are a prescription for economic disaster.

Keynesian economic doctrine, not under that name, but in substance, is back in the news in a truly menacing way. Senator Obama proposes to repeat the policies of Franklin Roosevelt’s New Deal that turned an ordinary two-year recession into an eight-year disaster, with unemployment rates continuously in the high teens.

The key elements of Senator Obama’s proposed economic policies, as in the New Deal and the stagflation of the 1970s, are much higher taxes, along with a pervasive increase of business regulations and price controls in healthcare and energy (which sharply depress business activity and employment rates), full-frontal embrace of labor unions (which will push up wages and benefits to levels deterring profitable expansion of industrial production), and massive new government deficit spending (which will accelerate the already dangerously high rate of inflation and devaluation of the dollar). Carried out as he proposes, Senator Obama’s polices will lead us again into the swamp of stagflation.

The basic thrust of Keynesianism is the belief that control of the economy must be collectivized at the Federal level, because private business is incapable of providing full employment, and because the proper goal of economic policy must be thwarting greedy businessmen to attain so-called social justice: equal distribution of income and wealth, without regard to merit, capability, or hard work.

Not surprisingly the New York Times editorial board and the Times’s propagandist Paul Krugman are prominent Keynesian enthusiasts.

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Posted by Walt as Economics, Presidential Race, Social Security, Taxes at 11:23 AM EST

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By Thomas E. Brewton

Why does much of New Orleans still look as if the 2005 devastation of Hurricane Katrina had occurred just a few weeks ago?

Huge areas of New Orleans still are wastelands. New Orleans's liberal-progressive-socialist Senator Mary Landrieu has grabbed far more than her share of Congressional pork. Hundreds of millions of Federal dollars spent for rehabilitation have produced far too little beneficial result. People were without electric power for months; the police department contained more thieves than honest law enforcers; drug-dealing and prostitution remain major enterprises; and the city still retains its crown as the nation's murder capital.

One of the city's few "legitimate" businesses is casino gambling.

City and state administrations have yet to coordinate rebuilding plans, as politicians fight over who gets what share of the spoils.

The best that the city's Mayor Nagin can do is to demand that the Democratic-socialist Party presidential candidates pledge to send even more pork to New Orleans.

What accounts for this dismal record?

The answer is simple. New Orleans abandoned God and personal moral responsibility, turning instead to worshipping the atheistic, secular political state. That secular god has failed miserably, notoriously so in the aftermath of Katrina.

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Posted by Walt as Economics, Government Corruption, Natural Disasters at 12:02 AM EDT

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By Thomas E. Brewton

Today's clamor for more regulation of financial institutions to prevent another subprime mortgage meltdown is an exercise in self- deception.

Congress, led by Representative Barney Frank, is planning to overhaul regulation of the financial community, and Treasury Secretary Paulson has already proposed a broad program for that purpose.

No doubt, much of what is proposed is needed. But it should be obvious from repeated experience over the decades that regulations alone will not prevent periodic economic booms and busts.

Only by dealing with the root cause will we moderate economic cycles. And that root cause is the ineluctable human tendency to over-expand bank credit when the money supply is artificially enlarged.

Today's proposed subprime mortgage regulations may prevent tomorrow's repetition of that phenomenon, but they will have no restraining impact upon whatever the next speculative bubble may be. Sarbanes- Oxley regulation was instituted after the dot.com bubble-burst and the corporate collapse of Enron, but it had no restraining effect upon the speculative housing bubble, of which subprime lending is merely a symptom, not a cause. Before that, we had the speculative explosion of commercial real estate over-building that ended with the collapse of the savings and loan institutions in the 1980s.

Beginning with our nation's first financial panic in 1819, similar boom-and-bust patterns appear every five to ten years, except in extraordinary circumstances such as wartime.

In one respect, Karl Marx's economic analysis was on the mark.

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Posted by Walt as Communism, Economics at 11:46 PM EDT

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From 1789 to 1815 Congressmen received $6.00 daily, but only on the days they showed up. From 1815 to 1855 Congressmen received a modest salary, compared to the massive salaries of the Congressmen today. In 1855 their salaries increased to $3,000 annually. Then in 1865 they gave themselves a 66% increase to $5,000 annually. 6 years later they boosted their salaries another 50% to $7,500 per year. The American People became so outraged by the greed that congressmen were showing, that congress was forced to take a 33% paycut, which lasted 34 years until 1907, at which time they gave themselves another 50% increase back to $7,500 annually. They took two other paycuts, both of which were during the Great Depression, for a total of 15%. These are the only 3 times in American History that any Congressmen have ever taken salary cuts.

In 1935, Congress voted themselves a 19% increase, then they didn't receive another pay raise until 12 years later, when they gave themselves a 25% increase in 1947. In 1955 Congress gave themselves a whopping 80% increase. In the years 1987, and 1991 Congress received 2 raises per year. 3% + 20% in 1987, and 4% and 25% in 1991. Within the last 10 years Congress has raised their salaries 8 times for a total of 26%. While the lowest paid American Workers have only received 1 raise within the last 10 years.

In the last 25 years Congress has seen 18 salary increases totaling 277%. While the lowest paid American Workers have only seen 5 wage increases in 25 years totaling a mere 166%. In the last 25 years the cost of living has increased 251%. The Minimum Wage has not been increased since 1997. While Congressmen's pay has increased 8 out of the last 10 years. To see what Minimum Wage would be, if Congress had given American Workers the same amount of increases they took, click here.

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Posted by Walt as Economics, U.S. Political Issues at 7:42 AM EDT

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