“Whimsically Persnickety” is not a partisan blog. Instead, it is a blog that examines public policy in the interest of the people that pay for the public officials and benefit from their decisions. “Whimsically Persnickety” is not a fulltime or daily blog, but a common observer of local politics of southeast Wisconsin, the state of Wisconsin, and the United States.
After seeing the Wisconsin state deficit spiral out of control to the tune of nearly $7 billion, the bureaucracy of the local and state governments expand obscenely, and the tax levies increase in several communities on the local level as well as statewide, “Whimsically Persnickety” endorses Scott Walker for governor of Wisconsin.
Scott Walker’s leadership of Milwaukee County has been a bright spot in a state that has become a tax hell. Walker has been able to avoid raising taxes and has been able to effectively cut unnecessary items from the Milwaukee County budget. He has done this despite working with a Milwaukee County Board of Supervisors that has been rather hostile toward most of his proposed budget cuts. Its chairman, Lee Holloway, has been one of Walker’s most consistent critics.
Walker’s combination of refusing to increase taxes, accept temporary federal stimulus money, and add unnecessary items to the county budget have enabled Milwaukee County to run a budget surplus in a state that has consistently seen its fiscal number run in the red.
Walker has left the option of school choice as one to be pursued with greater vigor. This has not made him friends within WEAC, but instead offers an alternative for families of students that live within sub-par school districts. This position offers a choice to people that previously did not have a choice when it came to education.
Scott Walker will have a difficult time should he win election in 2010, but he inherited a bloated Milwaukee County bureaucracy and has managed it superiorly. The state of Wisconsin needs this management in order to raise and exceed the existing standards and credibility set by the current administration.
Showing posts with label Economics. Show all posts
Showing posts with label Economics. Show all posts
Saturday, May 30, 2009
Saturday, February 28, 2009
Bernie Madoff and the Federal Government
By now, people all across America has heard of the curious, perplexing, and devastating story about the Bernie Madoff scheme that lost money for many investors that had been giving Mr. Madoff their trust with their funds. They were intrigued by Mr. Madoff’s advertisement that he could provide ten percent returns on their investments. Many high-profile people sought to invest in these terms only to find that Mr. Madoff was merely putting on a front.
Mr. Madoff did not have the money behind the investments to give back to his clients. If they had all cashed out at once even a year ago, he would not have had enough money. Sure, he was sending them statements on their earnings, but it was simply a piece of paper. When the bottom of the housing market dropped out this past fall, Mr. Madoff’s clients wanted to cash out and take back their money. There was one little problem: he did not have it and he had been lying to his clients for years that he did have it. Now Mr. Madoff is awaiting trial.
The federal government is now taking quite an investment from the taxpayers and from foreign nations buying American bonds. The American Recovery and Reinvestment Act, after calculating the interest that goes along with the spending in the bill itself, will cost approximately $1.3 trillion. Under the Bush Administration, the federal budget transitioned from running a surplus to running a deficit where the government was spending between three and four percent of its GDP in red figures. In other words, if one were to make $10 a day, it would be comparable to spending $10.30 to $10.40 per day. It does not sound like a big deal in that context, but take it to what the 2008 figures were: $2.9 trillion in spending versus $2.5 trillion in revenue. That is about $400 billion in deficit for just that one year.
Under President Obama’s new proposed budget and after the new American Recovery and Reinvestment Act of 2009 has been signed into law, federal deficit spending will increase to about 13 percent of the American GDP. This does not include the new idea of federal assistance in refinancing sub prime mortgages to protect homeowners from foreclosure. Going back to the $10 per day example: that would be like spending $11.30 per day and running $1.30 in the red every single day.
So the federal government is somehow going to convince Americans to continue to give Uncle Sam more money and convince other nations such as China to buy American bonds to help bankroll these new programs with the guarantee that Americans and foreign investors will see a return in their investments.
Does this not sound a little too similar to the Bernie Madoff story? Is this not like a poker player trying to bluff a pair of sixes to appear as four of a kind? The current administration and Congress will try to sell this as a temporary deficit that promises to yield returns that will increase the GDP and cure the federal deficit.
Will the federal government have a sealed indictment if they have to turn to its clients and say they do not have the money to return the investment?
Mr. Madoff did not have the money behind the investments to give back to his clients. If they had all cashed out at once even a year ago, he would not have had enough money. Sure, he was sending them statements on their earnings, but it was simply a piece of paper. When the bottom of the housing market dropped out this past fall, Mr. Madoff’s clients wanted to cash out and take back their money. There was one little problem: he did not have it and he had been lying to his clients for years that he did have it. Now Mr. Madoff is awaiting trial.
The federal government is now taking quite an investment from the taxpayers and from foreign nations buying American bonds. The American Recovery and Reinvestment Act, after calculating the interest that goes along with the spending in the bill itself, will cost approximately $1.3 trillion. Under the Bush Administration, the federal budget transitioned from running a surplus to running a deficit where the government was spending between three and four percent of its GDP in red figures. In other words, if one were to make $10 a day, it would be comparable to spending $10.30 to $10.40 per day. It does not sound like a big deal in that context, but take it to what the 2008 figures were: $2.9 trillion in spending versus $2.5 trillion in revenue. That is about $400 billion in deficit for just that one year.
Under President Obama’s new proposed budget and after the new American Recovery and Reinvestment Act of 2009 has been signed into law, federal deficit spending will increase to about 13 percent of the American GDP. This does not include the new idea of federal assistance in refinancing sub prime mortgages to protect homeowners from foreclosure. Going back to the $10 per day example: that would be like spending $11.30 per day and running $1.30 in the red every single day.
So the federal government is somehow going to convince Americans to continue to give Uncle Sam more money and convince other nations such as China to buy American bonds to help bankroll these new programs with the guarantee that Americans and foreign investors will see a return in their investments.
Does this not sound a little too similar to the Bernie Madoff story? Is this not like a poker player trying to bluff a pair of sixes to appear as four of a kind? The current administration and Congress will try to sell this as a temporary deficit that promises to yield returns that will increase the GDP and cure the federal deficit.
Will the federal government have a sealed indictment if they have to turn to its clients and say they do not have the money to return the investment?
Saturday, January 31, 2009
Lessons from the Greatest Generation
In 1994 a book titled The Death of Common Sense: How Law is Suffocating America written by Phillip K. Howard was published. Howard’s essential point from this book was to describe how bureaucracy and technicalities have grown to dominate the legal profession and public policy. Common sense, he argues, often is jettisoned by lawyers and judges in favor of finding technicalities that are not always in the best interest for all parties involved. He cites many examples throughout his book that illustrate this point of how technicalities and red tape prevented the intervention of common sense.
Common sense is a line of thinking that is generally understood to mean a social norm regarding certain topics. For example, a common sense approach to healing a problem related to sore feet would be to examine whether or not shoes are appropriate for the feet. Along the same line of thinking, in order to purchase a new pair of shoes, one would assume that the consumer making the purchase would do so with money that he or she already has.
The idea of common sense when used to describe such a line of thinking has long since died along with those who grew up understanding this as a way to live life safely and thoughtfully. The area in which this is especially true is economics. In the economic crisis that ballooned in 2008, plenty of blame was assigned to various people and organizations. The reasons for the collapse are very detailed (too long to list in this post), but the overriding theme was one of a lack of common sense.
People of the so-called “Greatest Generation” experienced economic turmoil that dwarfed the current economic strife. While they were in their childhoods and adolescent years, unemployment and inflation were incredibly high. The “Greatest Generation” grew during this era and saw what life was like with the bare essentials. They also saw how the uncertainty of how to pay the next month’s rent affected the daily spending habits of the American public.
People of this generation grew up with a keen understanding of the distinction between what was a “want” and what was a “need.” They carried this principle with them as they grew into adulthood after World War II. In the late 1940s and into the 1950s, they had their own children. This trend of the baby boom was reflective of the economic tide as well. The economy was healthy, jobs were available, and the financial comfort level of the average American household was much higher than it had been when they were younger.
The concept of purchasing a home became much more commonplace. Buying a second car for ease of transporting a household was no longer an absurd purchase. Televisions, additional appliances, bicycles, and other luxury items were rapidly increasing because the people could afford to buy them. The children borne to the Greatest Generation, the Baby Boomers, saw this as they were growing and enjoyed the life of comfort that they had as children.
When the Baby Boomers became adults, a new wave of culture also began to dominate the United States. This culture was a renewed sense of individualism and it leaped from the shoulders of the comfortable 1950s. They had grown up enjoying the comforts of their own home and two cars. This mentality was in part responsible for the idea that they needed to purchase a home. This occurred and people were purchasing first homes at much younger ages than their parents had. The children of the Baby Boomers also grew older with a similar mentality.
The children of the Baby Boomers are the people who are purchasing their first homes now. This appears to be fine on the surface, but it is different from the way the Greatest Generation purchased their homes. The Greatest Generation was full of people who were reluctant to purchase a home until they had the assets to back their purchase. They had grown up in the financial strains of the Great Depression and knew that taking a huge risk for the benefit of owning a home was not worth the cost of possibly not being able to pay for it should difficult times occur again.
This concept of buying a home or car with a loan dominates contemporary society. Considering the environments in which people are raised, this is no surprise. The concept of renting a home as opposed to owning a home raises a disparity in social status. Two people sharing one car is not the social norm. Would it not be more comfortable to just have two cars?
Amongst all the finger-pointing that has occurred in the wake of the current financial crisis, many Americans have neglected to point the fingers at themselves. Did they really need to buy that $220,000 first home when they are in the second year of a career making $45,000 annually? Did they really need to purchase a car with no down payment? Did they really need to buy that new plasma screen television when they were already paying the minimum payment on their credit cards? The concept of “buy now, bill me later” has led to the current economic mess.
Americans will learn from this and hopefully take a lesson from the Greatest Generation. In his Inaugural Address, President Barack Obama stated “In reaffirming the greatness of our nation, we understand that greatness is never a given. It must be earned.” This is a worthy sentiment that Americans must embrace. The Greatest Generation understood it. Perhaps instead of pointing the fingers at Wall Street, lending institutions, and the government, people will heed President Obama’s statement that greatness is not given, but earned. Home ownership and the second car should not be a necessity for a 22 year old. Financial responsibility, sound judgment, and a renewal of common sense should instead be a necessity.
Common sense is a line of thinking that is generally understood to mean a social norm regarding certain topics. For example, a common sense approach to healing a problem related to sore feet would be to examine whether or not shoes are appropriate for the feet. Along the same line of thinking, in order to purchase a new pair of shoes, one would assume that the consumer making the purchase would do so with money that he or she already has.
The idea of common sense when used to describe such a line of thinking has long since died along with those who grew up understanding this as a way to live life safely and thoughtfully. The area in which this is especially true is economics. In the economic crisis that ballooned in 2008, plenty of blame was assigned to various people and organizations. The reasons for the collapse are very detailed (too long to list in this post), but the overriding theme was one of a lack of common sense.
People of the so-called “Greatest Generation” experienced economic turmoil that dwarfed the current economic strife. While they were in their childhoods and adolescent years, unemployment and inflation were incredibly high. The “Greatest Generation” grew during this era and saw what life was like with the bare essentials. They also saw how the uncertainty of how to pay the next month’s rent affected the daily spending habits of the American public.
People of this generation grew up with a keen understanding of the distinction between what was a “want” and what was a “need.” They carried this principle with them as they grew into adulthood after World War II. In the late 1940s and into the 1950s, they had their own children. This trend of the baby boom was reflective of the economic tide as well. The economy was healthy, jobs were available, and the financial comfort level of the average American household was much higher than it had been when they were younger.
The concept of purchasing a home became much more commonplace. Buying a second car for ease of transporting a household was no longer an absurd purchase. Televisions, additional appliances, bicycles, and other luxury items were rapidly increasing because the people could afford to buy them. The children borne to the Greatest Generation, the Baby Boomers, saw this as they were growing and enjoyed the life of comfort that they had as children.
When the Baby Boomers became adults, a new wave of culture also began to dominate the United States. This culture was a renewed sense of individualism and it leaped from the shoulders of the comfortable 1950s. They had grown up enjoying the comforts of their own home and two cars. This mentality was in part responsible for the idea that they needed to purchase a home. This occurred and people were purchasing first homes at much younger ages than their parents had. The children of the Baby Boomers also grew older with a similar mentality.
The children of the Baby Boomers are the people who are purchasing their first homes now. This appears to be fine on the surface, but it is different from the way the Greatest Generation purchased their homes. The Greatest Generation was full of people who were reluctant to purchase a home until they had the assets to back their purchase. They had grown up in the financial strains of the Great Depression and knew that taking a huge risk for the benefit of owning a home was not worth the cost of possibly not being able to pay for it should difficult times occur again.
This concept of buying a home or car with a loan dominates contemporary society. Considering the environments in which people are raised, this is no surprise. The concept of renting a home as opposed to owning a home raises a disparity in social status. Two people sharing one car is not the social norm. Would it not be more comfortable to just have two cars?
Amongst all the finger-pointing that has occurred in the wake of the current financial crisis, many Americans have neglected to point the fingers at themselves. Did they really need to buy that $220,000 first home when they are in the second year of a career making $45,000 annually? Did they really need to purchase a car with no down payment? Did they really need to buy that new plasma screen television when they were already paying the minimum payment on their credit cards? The concept of “buy now, bill me later” has led to the current economic mess.
Americans will learn from this and hopefully take a lesson from the Greatest Generation. In his Inaugural Address, President Barack Obama stated “In reaffirming the greatness of our nation, we understand that greatness is never a given. It must be earned.” This is a worthy sentiment that Americans must embrace. The Greatest Generation understood it. Perhaps instead of pointing the fingers at Wall Street, lending institutions, and the government, people will heed President Obama’s statement that greatness is not given, but earned. Home ownership and the second car should not be a necessity for a 22 year old. Financial responsibility, sound judgment, and a renewal of common sense should instead be a necessity.
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