The Loudest Cricket

The federal government spends more than it makes, the states do the same but don’t have the luxury of printing money.  Not to be outdone, city governments have overextended themselves and, like the states, are facing a financial crisis of their own, thanks to collapsing property values.  The cities have no excuses, they knew this was coming but didn’t prepare.  Instead of reducing spending in other ares, they will threaten to cut fire and police services unless the people agree to a tax hike.  While the crisis was avoidable, the resulting government response was unavoidable.

While the State of the Union, the State of the State, and the State of the City (Detroit) may all be in dire straits, Oakland County is financially sound.  Why?  Fiscal responsibility, especially in the area of entitlements:

County employees have been switched from expensive defined-benefit pensions to 401(k)-type retirement accounts so taxpayers aren’t saddled with employee costs after they retire. Similarly, employees receive health savings accounts that they can take with them into retirement, relieving county taxpayers of post-employment health care costs.

County residents won’t be burdened with supporting the ever-increasing, ever-aging retiree community.  If we could get the city, state, nation, and automakers on a similar plan, the economy would be in a lot better shape.

Granholm gave her last State of the State address last night and I wasn’t “blown away.”  She still thinks that the government can create jobs, but the seven years of administration has shown that to be false.  She’s finally calling for major reform, about five years too late.  And she sounds a lot like Obama:

Granholm defended her record as governor, saying that when she was elected seven years ago, “we knew things were bad; we just didn’t know how bad they would become. No one did.”

Many people knew how bad things were.  Ford certainly knew and took steps to avoid bankruptcy and government take-over.  After listening to her speech, with all the jobs created (or saved), the state of the state sounded like it was in good shape.  As State House Republican Leader Kevin Elsenheimer put it:

“She left the impression Michigan’s unemployment rate was 4 or 5 percent. What she didn’t say was jobs in Michigan are created by entrepreneurs, not government.”

In 2009 alone, Michigan’s unemployment increased by over 4%, going from 10.2% to 14.6%. Businesses don’t want to come to Michigan because of over-regulation, hostile labor force, and crumbling infrastructure.  The only one she addressed was our poor roads, which is the least of the problems.  The good news – we only have one more year of Granholm.  The bad news – we have three more years of Obama.

Yet another “unexpected” economic downturn:

The number of newly laid-off workers filing initial claims for jobless benefits rose unexpectedly last week, evidence that layoffs are continuing and jobs remain scarce.

I don’t know which group has a worse track record – climate scientists or economists.

If we are indeed coming out of the year-long recession, it’s not just a jobless recovery but property values continue to fall.  City governments are not better at controlling spending than the states or feds.  It’s hard to find a fiscally responsible politician at any level of government.  Troy’s solution is to raise taxes.  They are threatening to close the civic center, library, and nature center as well as lay off some cops unless a millage is passed.  I’m sure that last one was thrown in to scare the residents into voting for the proposal.

Congress.  Entitlement programs such as Social Security and Medicare are pyramids schemes.  Social Security itself is so large that it makes Bernie Madoff’s enterprise look like a child’s lemonade stand.  Despite what Al Gore said in 2000, the money is already spent.  The only thing in his “lockbox” was a bunch of IOUs:

Since Social Security’s inception, the President, the Congress and even the Social Security Administration itself have told workers that their “contributions” were being “invested” and held in completely safe “trust funds,” when in fact those funds have all been spent — usually the very minute, the very hour, the very day they were deposited in the Treasury Department’s bank account.

The trust funds consist of nothing more than IOUs the government has written to itself. In the case of Social Security, the IOUs are actual pieces of paper kept in filing cabinets. In the case of Medicare they are mere computer entries. Although we call these IOUs “bonds,” they really aren’t bonds in any meaningful sense of the word. They cannot be used to purchase anything. They cannot be sold on Wall Street. They cannot be sold to foreign investors. They are no more valuable than the IOUs Bernie Madoff wrote to himself.

DemCare is just another ill-advised, unaffordable, unsustainable entitlement Ponzi scheme.  No thanks.

Or at least dig up, stupid.  $3.8 trillion in spending, a third of which we don’t have so will need to be borrowed.  Helluva line of credit.  At some point, the governments – federal, state, and local – will have to learn to spend within our means.  Michigan is in the same predicament that California finds itself – more and more spending while tax revenues are down and lawmakers are (rightfully) reluctant to raise taxes.  All leading to serious budget deficits.  The difference between the feds and the states is that Washington can print more money to pay for its excesses.  We’re lucky the states can’t do the same thing.

The mood in Michigan may be low enough that the voters will opt for a constitutional convention.  People are fed up with the actions and inaction of Lansing.  The list of issues mentioned in the article contains everything from tax reform to education reform to gay marriage.  One thing missing is to make Michigan a “right-to-work” state.  That alone would be enough for me to vote yes on Proposal 1.

Finally, a report on the economy that does not include the word ‘unexpectedly’, but maybe it should since it’s positive news.  Last quarter, the economy grew at an annual rate of 5.7%.

How’s that speedy, behind-closed-doors, union-approved GM bankruptcy working out?  Not so good for Delphi salaried retirees, some of whom will face up to a 70% reduction in pension payouts.  Here’s why:

Because roughly half of the 8,400 people who spent years working alongside colleagues from what is now General Motors Co. are the unlucky few forced to pay the price for extricating GM and Delphi, the automaker’s former parts unit, from bankruptcy hell. As many as 14,000 more would-be Delphi retirees face similar fates, thanks to backroom dealing by Treasury Department officials who played favorites in rushing GM through bankruptcy.

But union workers are safe:

Delphi’s hourly workers and retirees, represented chiefly by the United Auto Workers and International Union of Electrical Workers, were spared a similar fate. GM (at the prodding of Treasury, whose auto task force called the shots) moved to a) protect union workers whose leaders b) ardently support an Obama administration that c) needs every union vote it can get in the swing states of Michigan (UAW) and Ohio (IUE and UAW).

I guess the salaried employees should have joined the union.