Skip to comments.Bipartisan Insanity: More bailouts, spending, taxes & mandates
Posted on 06/27/2012 2:16:52 PM PDT by Hunton Peck
A few weeks ago, Politico lavishly praised bipartisanship in Washington saying Dont look now, but the Senates actually working. The story could have been subtitled Taxpayers, grab your wallets, because bipartisanship in Washington usually leads to bigger government.
Today, we are learning about the latest example of bipartisan insanity as we hurry toward the fiscal cliff. As most Americans are rightly focused on the impending Obamacare court decision, Democrat and Republican leaders are quietly planning to combine a new highway bailout with a student loan bailout. All of this is to be paid for by raising new taxes and raiding private pensions. Adding to this mess, a reauthorization of the federal flood insurance program may be added to this mega-bailout bill, with a new mandate that requires more people to purchase flood insurance even if they live in very low risk areas.
Highway spending is traditionally limited to only to the amount collected in gas taxes, which go into the highway trust fund. However, Congress has so rapidly increased highway spending that they have blown through the trust fund, already requiring about $35 billion in taxpayer bailouts since 2008. Now they are pushing a new two-year highway bailout, which will likely require another $14 billion transfer of general revenue taxes to the trust fund.
The potential deal, which will extend the supposedly temporary student loan subsidies for roughly two percent of the population, will likely be paid for by reducing contributions to private pensions. The tradeoff goes like this: Congress lets businesses change the way they calculate funding requirements so that they can put less money into their pension systems, and the money they dont put into pensions gets taxed and generates $9 billion in new tax revenue. Congress is compromising the solvency of private pension systems to get more tax dollars.
This $9 billion windfall could prove very costly. According to the Joint Committee on Taxation, the legislation would strip $36 billion away from pension contributions over the next ten years. But nothing else about these pension funds will have changed these companies will still owe the same amount of money to the same number of people, and their same investments will still earn the same rate of return. The difference is, there will be less money available to pay benefits when they come due.
By compromising the solvency of private sector pension benefits, Congress is setting the stage for a federal private pension bailout. When companies cant pay their retirees, they will turn to the Pension Benefit Guaranty Corporation (PBGC), a federal agency that ensures the solvency of private pensions. Last year the PBGC reported a $26 billion deficit, the 10th consecutive year of deficits. When private pensions run dry because of gimmicks like the one included in this bill, and pension benefits cannot be paid, its likely that taxpayers will foot the bill.
As the Society of Actuaries warned yesterday, these pension accounting gimmicks would lead to the cost of transparency of plan funded status and potential increased consequences of plan default. Fitch Ratings has also sounded the alarm on this scheme, stating: we believe the proposed change could raise the risk that companies with large pension deficits could dig larger holes by using loosened assumptions to delay necessary funding we note that short-term reductions in cash funding requirements can deepen plan deficits and ultimately lead to more long-term cash flow uncertainty.
Setting aside the reckless way Congress is financing lower student loan interest rates, the policy of artificially low interest rates is itself damaging to higher education. The federal governments virtual take-over of the student loan industry has contributed to the unprecedented rise in college tuition.
Federal student loan debt already tops $1 trillion and the federal government is the originator of almost 93% of new student loans taken out each year.
The ballooning of federal student aid has almost certainly inflated college tuition prices. Were it not for the 379% increase (in real, inflation adjusted dollars) in total federal student aid since 1991, it is unlikely that the average annual tuition at public, 4-year colleges would have risen the full 126 percent that it did over that same period.
In a free market, the price of education would reflect the higher earning potential that the education provides. But although average tuition has more than doubled thanks to federal subsidies, since 1991 the median household income of those with bachelors degrees has actually slightly decreased by 0.6 percent. Meanwhile, the steep increase in tuition has shut the door for some of the very same students the government aims to help through federal aid and student loans.
Republicans were elected in 2010 with a mandate to stop the bailouts and stop the spending. But backroom deals like this that saddle our children and grandchildren with unsustainable debt for short-term political gain will squander the voters trust.
As I have often said, Im willing to work with members of either party to advance the cause of liberty and limited government that our Constitution was created to protect. But as usual in Washington, bipartisanship is a code for: big government wins, taxpayers lose.
I had many debates with lib trolls at the Wall Street Journal about the PBGC. It's been insolvent for years due to unionized companies collapsing under onerous union obligations and wages. Go to the PBGC web site and look at their annual report, but make sure to have a few cold ones around to calm down afterward.
I just posted about this regarding SCOTUS & Obamacare decision:
If overturned HR 3200’a Sec 164, Reinsurance Program for Retirees [labor-union retiree med benefit bailout clause] will be fully subsidized by WH using stimulus/slush fund, possibly via the Pension Benefit Guaranty Corporation (taxpayer-subsidized bureaucracy):
Taxpayers and the Future Sector (young voters) still get screwed with these bills, have their IRAs, limited savings & incomes robbed due to insolvent unicorn-like Rat Union pension/benefits promises.
We pay, and the Democrats still get Tax funded campaign contributions funneled through pub union dues, even those from Rat union Retirees (they still pay dues, even tho retired)...
HR 3200a Sec 164
HR 3200s Sec 164....
From your link, page 74 of Pension Benefit Guaranty Corporation Annual Performance Report [PDF]
REASONABLY POSSIBLE EXPOSURE TO LOSS BY INDUSTRY Dollars in millions FY 2011
Manufacturing * $120,690
Transportation, Communication and Utilities ** $50,133
Wholesale and Retail Trade $12,218
Health Care $8,818
Finance, Insurance, and Real Estate $5,953
Agriculture, Mining, and Construction $3,426
* Primarily automobile/auto parts and primary and fabricated metals
** Primarily airline
Follow Sen. DeMint on Twitter.
The Arizona Ruling by THE NINE SUPREMES (actually 8) has proven that we no longer have a US Constitution.
Hence, it is pointless to talk about a Court Dictate on Obamacare being anything but a dictate of the polarized Court.
We also have a Rogue Dictator, and a Rogue Obama-Rifles Attorney General Leader.
Preference is not the issue. What the Court has already Dictated on Obamacare will be the issue.
The further destruction of the US Constitution is the most probable dictate that the Court will hand down on Thursday, as this will be the last dictate of this past year, and hence they cowardly will release their worst dictate on their last day in session.
Since Obamacare of ANY sort will financially destroy America, our options are limited to Congressional ABOLISHMENT of all of Obamacare, or for we, the people, to begin the tedious process of convening peaceful State Constitutional Conventions, and splitting the former USA into multi-State Regions.
For almost 80 years we have been saddled with the failed Keynesian Economic System. It has bankrupted the US Federal Government.
The derivatives of the WW2 Wage and Price Control Dictates are as follows: Medicare, Medicaid, Romneycare and Obamacare.
All of these vote-buying gimmicks are funded by debt created by the failed Keynesian Economic System.
Currently this Debt is charged to those who cannot vote: our Grandchildrens future descendants.
This Debt is the Federal Grandchildrens Tax, or FGT, to distinguish it from the FIT, or Federal Income Tax, which only 51 % of us are required to pay.
The Silent Majority is silent no more.
There will be additional calls for State Constitutional Conventions if the Republicans try to preserve or retain ANY of Obama or Romneycare.
Obamacare is the Death Knell for America. It must be ABOLISHED FOREVER if America is to survive.
If Obamacare does survive, then I favor Regional Areas/Republics of the former United States of America. I think the States that the XL Pipeline will run through makes excellent sense for one Region, called The Texas Region. The Mississippi Region would be those States that the Mississippi River runs through. Pacific and Atlantic Regions are obvious, as are the Rocky Mountain States.
In this way people could vote with their feet and move to a greater or lesser degree of personal Liberty.
The Great Experiment of forcing the United States of America back into the European Feudal System began with FDRs Social Security System and will end in failure with Obamacare.
There is no need for armed conflict, as we have already tried that horrific method with our bloody Civil War.
Just peacefully hold State Constitutional Conventions, split up the former USA into multi State Regions, and then hold Fourth of July Remember When Days once a year, as we thank our lucky Stars that we in NO WAY are like Europe.
If we were a Nation of Laws, we could survive.
We, instead, have become a Nation of Lawyers, and thus survival is not possible.
Lawyers do not obey the laws, they just change their interpretation of the laws to suit themselves. For example, Remember the Arizona Law! would make an appropiate State Constitutional Convention poster.
During the State Constitutional Conventions and split up of the former USA, we need to designate a multi-State Region just for Lawyers. They could then Keynesian themselves to their hearts content.
The Region that I will choose will be based on The Invisible Hand of Samuel Adams Free Market, with NO safety net.
Think it over, as it will take years to complete all of the State Constitutional Conventions.
Thus, we have time to plan to do it RIGHT, (pun intended), and throw the Liberal cartons of useless Tea millstones back into the Sea of European Feudalism/Socialism that they so richly deserve.
We must design our Multi-State Regions/Republics so that the disaster of RINO-morphing, and creeping Keyneism does not occur again.
Without an effective Check and Balance System each Multi-State Region/Republic will not survive, as has been proven in the present USA by the efforts of RINO-Democrat-Liberal Agenda Media Triangle of Doom that we have today.
There is still hope if we can DUMP Romney by having the Delegates vote to ABSTAIN on the first Ballot in Tampa.
If Romney becomes the Nominee, Obama wins big in November, just like he did against Lame-Brain McCain in 2008, and it will be GAME ON Time for us FReepers here in the former USA.
BTW, Im dusting off my Tri-Cornered Hat, will dig out my copies of The Federalists Papers, and for Patriotic Flair, may even make a few quill pens!
Let us build a more perfect Union! Long live the Second Republic of TEXAS!
BTW, BTW, to the BIG BROTHER Lurkers: save your expensive Obamadrones for the continuous, and now SCOTUS-approved, invasion of the Mexican Drug Lords into Southern Arizona.
We will be no bother to you as we will be more peaceful, and more patriotically joyful than a GSA Convention in Las Vegas when we hold our many State Constitutional Conventions.
Yall come by now, hear?