AIG circus a sleight of hand diversion from Obama budget antics?


There is no doubt a gullible media is being lead on a leash in feigned outrage over the AIG fiasco. Currently the Senate is performing a political dance before the cameras with their investigative hearing, replete with Congressional threats of subpoena and (unConstitutional) targeted taxes on the bonus recipients.

Consider that we were told in no uncertain terms that the 2% of the Omnibus pork was too petty to consider important, one has to wonder why .00095 percent of the AIG $173b bailout *is*. Afterall, is it not “stimulus” to put cash into the hands of the private sector to reinvest?

Then, to further demonstrate the utter disconnect from logic, no one is bothering to whine about the upcoming Fannie/Freddie bonuses. Granted, the amount of the individual bonuses on tap for the GSE execs is less cash than the AIG employees… but then that brings to mind the joke punchline, “Madame, we’ve already determined what you are. Now we are just haggling over price.”

Congress and Obama are turning somersaults to keep this as the upfront, 24/7 news story. And I have to wonder if it’s deliberately done so that the American voter will be distracted from the genuine giraffe in the room… the Obama 2009 budget.

Apparently, the Obama economic gurus have finally discovered math. As I pointed out in my March 3rd post on Obama’s fuzzy math – their entire budget was founded on an economic recovery that could only be construed as fantasy seen thru rose colored glasses.

But, quietly slipping under the news radar in the past couple of days, is the revelation that their assumptions had little to do with economic reality.

Two stories hit on St. Paddy’s day… first, Obama’s director of the Office of Management and Budget, Peter Orszag, admitting the Obama budget didn’t factor in a declining government revenue.

President Obama’s budget chief said Tuesday that he expects a forthcoming government revenue estimate to reflect a worsening economic picture.

“The numbers will be more negative than anticipated,” said Peter Orszag, the director of the Office of Management and Budget, referring to a “re-estimate” that will be released later this week or early next week by the Congressional Budget Office. Orszag expects the CBO numbers to show declining government revenue because the fourth quarter of 2008 came in “much weaker than anticipated” and that information was not factored into CBO’s earlier estimates.

Despite that day’s revelations of fuzzy math and shorted revenue, Obama simultaneously was making full useage of his bully pulpit – launching an aggressive campaign offensive to bolster congressional supporters and marginalize opponents.

Millions of campaign supporters are receiving e-mails urging them to call members of Congress. Groups allied with the White House are running ads scorning the president’s foes. States that were closely contested in the 2008 election are again getting visits from Obama.

On Thursday, Obama will even turn up in Jay Leno’s studio to appear on “The Tonight Show.” Candidates have often used late-night talk shows to highlight their lighter side, but no sitting president has ever appeared on one, NBC said.

The return to campaign-style tactics is intended to pressure lawmakers to back Obama’s plans in Congress, particularly his $3.6-trillion budget. That would be a tough sell in any environment, with lawmakers and industry lobbyists skeptical of sweeping and costly plans to revamp healthcare, convert to alternative fuel and stabilize the financial sector.


Even as Obama positions himself as a post-partisan leader who wants to cooperate with Republicans, his White House is operating in a more combative fashion, and it has been consulting with allied groups aiming to marginalize the Republican Party leadership.

In addition to damning ads, Obama’s making use of his grassroots minions, including Americans United for Change and… the latter who sent out an email to 5 million members, describing the budget bluepring as “ambitious, amazing and unapologetically progressive.”

David Plouffe, Obama’s campaign manager… and apparently one of the few of his close circle that didn’t score a WH position… and Mitch Stewart, director of Organizing for America, reactivated the campaign voting base. They sent out 13 million emails, asking the recipients to lobby their lawmakers for Obama’s budget, and his “broader agenda”.

Now, with an economy not performing up to their predicted snuff, Obama’s “broader agenda” really needs to make up some revenue to hold together his dreams of “remaking America”. And perhaps, at the heart of that, lies the snake in the grass… cap and trade.

But the Obama attack machine may find some of it’s own in their sights since eight Democrats have joined with 25 Republicans in opposing Obama’s attempt to speed thru his cap-and-trade proposal. This obviously presents a serious obstacle to Obama’s big government agenda, and it’s attempt to steal money with his climate change money making machine.

But this WH admin isn’t thwarted easily. Instead, Obama senior officials, led by Rahm’bo Emmanuel, are busy thinking up ways around the bipartisan dissent by using the Budget Reconciliation Process – a method to enact revenue and spending legislation that cannot be filibustered in the Senate – effectively cutting the Republicans out of the input process, and only requiring 51 votes instead of the needed 60. With 58 Senate seats, the Dems still need two Republican supporters to block a filibuster.

This was the same process used by Dubya to get his signature tax cuts thru, and both Clinton and Reagan for their deficit reduction packages. But in this case, this isn’t sitting well with many…. and for a variety of reasons. Per Lori Montgomery’s WaPo article yesterday:

Senior members of the Obama administration are pressing lawmakers to use a shortcut to drive the president’s signature initiatives on health care and energy through Congress without Republican votes, a move that many lawmakers say would fly in the face of President Obama’s pledge to restore bipartisanship to Washington.

Republicans are howling about the proposal to expand health coverage and tax greenhouse gas emissions without their input, warning that it could irrevocably damage relations with the new president.

“That would be the Chicago approach to governing: Strong-arm it through,” said Sen. Judd Gregg (R-N.H.), who briefly considered joining the Obama administration as commerce secretary. “You’re talking about the exact opposite of bipartisan. You’re talking about running over the minority, putting them in cement and throwing them in the Chicago River.”


“I’m aware and the president is aware of the concerns that have been expressed, especially by Republicans, about its use,” Orszag told reporters at a luncheon organized by the Christian Science Monitor. “We’d like to avoid it, if possible, but we’re not taking it off the table at this point.”

Besides disgruntled GOP lawmakers, cut out of the process, many moderate Dems aren’t inclined to support the budget reconciliation method of ramming thru Obama’s agenda… saying the liberal wing empowerment would damage Obama’s promise to reach across the aisle.

Sen. Blanche Lincoln (D-Ark.) said reconciliation would send the opposite message, creating “kind of a divisive atmosphere.” Lincoln, a member of the Senate Finance Committee who has been working for months with GOP colleagues to lay the foundation for health-care reform, said circumventing that painstaking process “would just be sticking them in the eye.”

Lincoln is one of seven Democrats who last week joined 21 Republican senators in declaring their opposition to using reconciliation to expedite Obama’s plan to auction off permits for the release of greenhouse gases such as carbon dioxide, a proposal known as cap and trade. That legislation “is likely to influence nearly every feature of the U.S. economy,” the letter says, adding that any move to put it on a fast track or to limit debate “would be inconsistent with the administration’s stated goals of bipartisanship, cooperation, and openness.”

Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, which is handling health care, also has spoken against reconciliation, arguing that he would rather have a health-care plan that can win broad, bipartisan support than a narrowly drawn proposal passed only by Democrats. Sen. Kent Conrad (D-N.D.), chairman of the Senate Budget Committee, has argued against reconciliation as well.

“There are many more problems with using reconciliation than is commonly appreciated,” Conrad said yesterday, after he and House Budget Committee Chairman Rep. John M. Spratt Jr. (D-S.C.) met with Obama at the White House. The topic of reconciliation came up “in passing,” Conrad said, but no decisions were made.

One big problem, Conrad said, is that reconciliation was conceived as a way to force hard budget choices, such as tax increases or spending cuts, not as a means to advance substantive legislation.

But there’s always a political mudpie to be slung. Proponents of the budget reconciliation point to what they view as Republican hypocrisy, noting that Bush tax cuts legislation using the same method. To them, I have this to say… there’s a huge difference between tax cuts, and Obama’s “remaking of America” via his budget. Most notably, tax cuts do not translate to altering this country into a Euro-socialist nation.

The decision to push the legislation thru via budget reconciliation has not yet been made… but it most definitely is remaining on the table, and supported by Democratic leadership in the House… aka Pelosi.


Another undisclosed fly in the ointment of Obama’s anticipated revenue figures is their deception of the costs to Americans with this cap and trade proposal. WSJ laid out the anticipated income in their Feb 27th op-ed, “An Inconvenient Tax”.

You don’t even have to burrow into yesterday’s budget fine print to discover the “climate revenues” section, where the White House discloses that it expects $78.7 billion in new tax revenue in 2012 from its cap-and-trade program. The pot of cash grows to $237 billion through 2014, and at least $646 billion through 2019. If this isn’t tax revenue, what is it? Manna from heaven? The offset from Al Gore’s carbon footprint?

If it brings in revenue that the government then spends, it’s a tax, and politicians should start referring to it as such. The Administration in fact projects that these “climate revenues” will become the sixth largest source of federal receipts by 2019, outpaced only by individual and corporate income taxes, payroll taxes for Social Security and Medicare and (barely) excise taxes. We’re supposed to be living in a new era of fiscal honesty, so let’s start with cap and trade.

Of course it’s easy to see why Democrats don’t want the public to think of cap and trade as a tax. Tax increases aren’t popular, as Mr. Gore learned when he and Bill Clinton tried to impose a BTU tax in 1993. The complex cap-and-trade tax would ripple throughout the energy chain and ultimately the entire economy. All consumers, not just “the rich,” would pay more for goods and services that use carbon energy — though some would pay more than others. A majority of those “95% of working families” probably lives in the middle of the country that relies far more on manufacturing and coal-fired power than do the better-off coastal regions.

A cap and trade policy undoubtedly translates to increased taxes across the board – on every taxpayer in the nation, regardless of income level. During troubled economic times, this increased tax hardship can seriously affect not only the individual’s ability to pay, but affect the very stability of business expenses. The increased costs of energy may push some living at the financial edge over the cliff.

Even the Obama administration has finally copped to misrepresentation of the costs of these tax hikes to America. Yesterday – while Obama was setting his Alinsky-style campaign machine in motion – the deputy director of the White House National Economic Council, Jason Furman, stated the energy tax scam… er, scheme… would actually be triple the original estimates.

The deputy director of the White House National Economic Council, Jason Furman, is giving us a glimpse at the real number, telling Senate staff the energy tax scheme would actually raise “two-to-three times” the budget’s official $646 billion revenue estimate. Dow Jones reports that 5 people at the meeting confirmed the statement—we can be pretty sure he said it.

It make sense, because the budget estimate was only half the official score from the Congressional Budget Office for last year’s Lieberman-Warner bill, even though the Obama version is designed to have much steeper costs because it requires steeper emissions cuts.

If Furman is right that the real tax hike would be two or three times the official budget estimate—and it’s likely still a lowball—that would mean the actual tax hike would run well into the trillions, roughly between $1.3 trillion and $1.9 trillion between fiscal years 2012 and 2019 by Furman’s own estimate.

The White House claims that this massive gusher of new tax revenue would be dedicated to tax relief, but judging by the budget that’s just a PR gimmick. More than 42 percent of the “tax cuts” in the Obama budget—according to its own official estimates—go to people who don’t pay taxes. Call it a handout; call it a welfare check; call it social spending; don’t call it a tax cut, though, because it means the burden of the federal government on people who actually work, save, invest, and build wealth will be higher than ever before.

One would think that old saying, “blood from a turnip” may apply….

But never mind about that little reality. If there is genuine trouble on the budget passage horizon, I have little doubt that Rahm’bo and Obama will embrace the “budget reconciliation” method to advance the agenda. Congress and this WH administration have already demonstrated that negative public opinion about bailouts and spending do little to slow down the spending spree. Afterall, in their arrogance, they know what’s best for us, and our opinions be damned.

But it looks like they’ll try to slide this thru the back door, keeping the media and American distracted with the Congressional circus about bonuses.


Read Senator Jim Inhofe (R-Okla.) floor comments this AM

“In this time of recession and economic pain, the Administration and proponents of mandatory global warming controls now need to be honest with the American people. The purpose of these programs is to ration fossil-based energy by making it more expensive, and therefore less appealing for public consumption. It is a regressive tax that imposes a greater burden (relative to resources) on the poor than on the rich. That is because the poor spend a larger percentage of their income on energy costs than the rich.

“There is nothing in it for taxpayers, consumers or the climate. If it is time for anything, it is time for us to get realistic about these policies, and focus on what is achievable, both globally and domestically, to help bring down energy costs to consumers and make us more energy secure so the American public doesn’t get yet another raw deal.

“Let us be honest. The total costs of the program will be well over the $646 billion when you factor in the private sector mandates and the total costs to reduce emissions. If past economic models are any indication, the total costs of a program could be 3 times more expensive than what the Administration’s numbers predict. And the Administration’s numbers of just the auction revenues aren’t small, roughly $80 billion per year.”

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With bonuses it’s not the money but the message it sends. Why are companies who rely on taxpayers money to bail them out due to their mistakes reward the very people who got them into that mess with big bonuses? As soon as someone takes money from the taxpayer – whether it’s an individual on benefit or a big company – as far as I’m concerned they lose the free market independent priviledge of being act to spend their money as they see fit. I would like governments go further and regulate such bonuses so they are only paid on profit created rather than automatically written into contacts irrespective whether their actions contribute to screwing their company. Particularly golden handshakes should be illegal. It’s pretty galling for workers who are laid off to see execs get pay huge sums when they have tanked the company.

Some people reckon you have to have these bonuses and golden handshakes in order to keep these talents execs. Well sorry – but they aren’t talented if this is the reckless damage they have been doing to their company profits and vialibility. If they want to work overseas then let ’em – and good riddance as there are plenty of other people waiting who are no doubt more talented or at least not as incompetent as these idiots. Execs already get paid very well and sure they should get big bonuses IF the company they work for does well. That’s not jealousy – that good common sense and old fashion work ethics. Surely it’s not rocket science is it?

I”m not talking about Obama and Fannie/Freddie. I’m talking about all companies. The government alrady inserts itself into private contractual agreements. You can’t just make any old agreement – it has to be lawful. And who comes up with laws etc? The government needs to be the referee and like any good referee then need to know when to intervene and when not to. As I say – AIG and the rest including Freddie etc have lost their right when they stuck their hand out. If we had a total free market – then we would also have cartels and insider dealing etc. Pay is already regulated but clearly greed and failure is being rewarded. You may be feel okay with that – I’m not.

I’m saying that Government is there to regulate and contracts have to be lawful. Would you wish for the minimum wage to be abolished? Allow insider-trading? Allow cartels? There are many aspects of companies and individual to do with work that is regulated. In some areas it is too much and too bureaucratic. Irrespective whether Obama is using this as a red herring for something etc – doesn’t make it any less of a scandal. In this case the horse has already bolted. What I am talking about is for the future – as the problem of fat cats has been around for a while and people are sick of it. If done properly this wouldn’t effect companies which do make profits – as their bonuses would be legit.

Don’t you find it morally wrong that people get fat bonuses which is not linked to actual performance? Look at the bonuses that have pay to the failing US car makers! No wonder America is losing it’s way when it’s work ethic and sense of fair play has gone down the toilet. People have found ways to either purposefully run companies down or ensure they get out and get paid millions ib bonus. I also thought a bonus was extra payment for doing a good job and was linked to the company’s overall performance.

If you regulate (and I know you are squeamish about regulation) this – and put incentive to make money personally is based on actual performance then the US and the West would be better off.

Screw the flippin’ bonuses, what about all the damn money AIG spent overseas?

Washington is looking more and more like South Park.