Candidate Obama said he would “transform the Untied States of America” and unfortunately this is the one promise he kept.  Two and one half years into his presidency, the National Debt has climbed to 100% of our Gross Domestic Product (GDP) for the first time since World War II; GDP growth for the first six months of this year has been a meager 0.8%; we continue to run a $1.5 trillion annual deficit, essentially growing the Debt by 10% versus the 0.8% GDP growth; 25 million Americans are unemployed, under-employed or have dropped out of the work force; 45 million Americans are on food stamps; and now Standard & Poor’s (S&P) has downgraded our country’s credit rating from AAA to AA+ for the first time in our history.  America has truly been transformed!

I could add to this list a number of foreign policy decisions that have elevated our enemies and trashed our long-time allies, but the economic failures of this president are more striking and more easily understood.  His $900 billion economic stimulus bill did little more than pay the salaries of state workers for one year and increased the Debt.  His re-distributive one-time programs of cash for clunkers and mortgage-restructuring failed and added to the Debt.  The overbearing healthcare legislation, that the Congressional Budget Office now says will increase the cost of healthcare, did nothing but create uncertainty for business.  Massive new and restrictive regulations from the Environmental Protection Agency (EPA) and Congress, when under full Democratic control, has forced private capital to the sidelines and almost completely stalled economic growth.  These are only some examples of Mr. Obama’s transformation of our country.

S&P warned us several months ago that our credit rating was in danger of a downgrade and pointed to the lack of leadership in Washington, D.C. as the main problem.  Mr. Obama still does not get it.  His reaction to the weak GDP growth and recent slide in the equities markets was to blame the earthquake in Japan, the economic problems in Europe and the uprisings that formed the Arab Spring.  His supporters are already saying publicly that Obama inherited a situation that was “worse than we thought.” Translation – blame former President Bush.  Mr. Obama will not take responsibility for a failing economy that he has managed since January of 2009 and it is this clear lack of leadership that is at the root of S&P’s downgrade.

The truth is that Mr. Obama’s socialist experiment of hyper-spending has done nothing more than add $4.5 trillion, or 45%, to the Debt since taking office.  He has over regulated the economy into a private sector coma.  It is time for real leadership and a return to free market capitalism. S&P made that clear with its downgrade.

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On Wednesday, President Obama attended a gala celebration in Chicago to celebrate his fiftieth birthday one day early. Attendees paid $35,800 a ticket to bask in the light of their Messiah, and to mingle with musical stars Herbie Hancock and OK Go.

Meanwhile, outside the Obama bubble, the stock market heralded President Obama’s 50th birthday with a 512 point decline — more than 10 points for each year he’s been alive. It was the Dow’s worst day since the 2008 financial crisis.

Many Americans find the President amiable and charismatic. That said, results are all that count, and by this measure, the President has fallen well short of the mark.

For those still blaming President Bush for an economy that has been all but stagnant for nearly three years of Obama’s management, the numbers speak for themselves:

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You can sum up in one word why Republicans find it tough to build public support for major spending cuts before the debt limit might be raised.  That word is “secrecy.”

By agreeing to closed-door meetings, Republicans enabled President Obama to mislead the country about his positions and to mischaracterize the GOP’s goals.  Using his bully pulpit, the President can promote a false picture of what’s gone on outside of the public view while the other side is muted.

Obama’s messaging has been trumpeted loudly by the media.  Meanwhile, details leaked from the meetings that don’t jibe with his message have gone mostly unheralded. Those details reveal that the “cuts” Obama supposedly would accept are mostly an agreement that politicians would reduce spending years from now—but almost nothing would happen any time soon.

For example, Obama’s supposed willingness to raise the age of Medicare eligibility?  Turns out it wouldn’t happen until 2029, and then it would rise by only one year, to age 67. That ballyhooed $1 trillion in “agreed” spending cuts?  Turns out to be maybe $55 billion, with only $2 billion of that in the first year.

Oh, and by the way, the President also wants over $100 billion in new spending added to the package.  No wonder the White House insisted on secrecy in its budget talks!

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All anybody in Washington can talk about these days is the debt limit or debt ceiling – the total amount of money the federal government is authorized to borrow at any given time. After a decade in which spending increased by more than 60 percent in inflation-adjusted dollars and the debt limit was raised no fewer than 10 times, the government is about to max out its $14.3 trillion credit line, leading to fears that Washington is going to default on its bonds, stop cutting Social Security checks, and destroy the economy more than it already has.

But the current debate over the debt ceiling is full of malarkey for at least three reasons.

1. August 2 is a phony deadline. Treasury Secretary Timothy Geithner has pushed back the drop-dead date when the U.S. finally reaches its limit a bunch of times already: March 31, April 15, May 31 were all cited as deadlines before August 2 was inked in as Armageddon. But this time, he means it, man, really.

2. Reaching the debt ceiling is NOT the same as defaulting on our debt – which would indeed be catastrophic.

Think about it: You can max out your credit cards but as long as you keep paying the minimum amount due each month, your creditors don’t go crazy. Interest on the debt is a small fraction of total outlays and the government has a series of tools – from using cash on hand to selling assets to scrimping on nonessential payments – to make sure interest payments are made and seniors aren’t put on an all cat-food diet.

3. Legislating-by-Panic is no way to run a country. The reason we’re in this mess is because government can’t stop spending. And the government can’t even pass a budget on a year’s notice. But we’re expecting them to come up with a good plan for the country’s borrowing in a couple of weeks? Trying to force through an expansion of the country’s credit line by promising cuts in spending down the road is exactly why we’re in this situation to begin with.

It makes far more sense to do something like sell some TARP assets — the government is sitting on $320 billion in outstanding direct loans and equities investments — to cover interest payments through the end of the fiscal year than to force Congress and the president to come up with a budget that cuts spending — and borrowing — for real, next year, not is some distant future.

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A Facebook posting from Illinois State Senator Sam McCann:

I am at my desk here on the floor of the IL Senate. We are in the midst of voting on FY2012 Budget Bills. You may ask yourselves how I have time to make this post when I perhaps should be weighing the merits of the facts contained within the individual bills so that I can make thoughtful, educated votes, for you, the taxpayers for whom I work. And you would be wise to ask that question. And I have the answer for you: I have NO BILL LANGUAGE TO READ!!!!! You are reading correctly. The bills we are voting on are AMENDMENTS to previously filed bills (many of which are SHELL Bills to begin with).

The Amendments become the Bills themselves. And it was JUST MINUTES ago that the Chicago Democratic Machine-controlled Democrat Caucus came out of a back room filing these bills AND immediately calling them for votes. Not only has there NOT been a week or three days or 24 hours or even one hour of SUNLIGHT on any of this budget language, there has not even been one minute. NOT ONE MINUTE!!!! They not only have not had time to print it out, it DOES NOT EVEN EXIST IN THE ELECTRONIC RECORD. Not only can I not pull up the language or any analysis on my “special Senate computer”, there is nothing on the IL General Assembly website.

Furthermore, I don’t believe there is anything even on the rank-and-file Democrats’ desks, either. It is all talking points from their leadership. I am not trying to sound partisan. I was elected by the people of the 49th District and I work for ALL THE PEOPLE OF THE 49TH District. I wake up in the morning and am proud to consider myself an American and an Illinoisan before anything else. But I have to tell you something: this is sickening. It is appalling. At a time when the People of the state are demanding balanced budgets and wise stewardship of their tax dollars, the majority party is choosing to continue to engage in bullying and blind-voting instead of conversation and negotiation.

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Are we headed for more political business as usual, where Republicans give up too much and get too little back in the debt-ceiling fight? Friday’s papers are loaded with stories on the GOP giving up Paul Ryan’s Medicare-reform package. It’s being called “political reality.”

But let me ask this: Will they also give up any attempt to slow Medicare spending in the next couple of years, at least a down-payment on the budget deficit?

And I don’t see much talk anymore about tax reform as part of the new package. But the economy still needs an incentive jolt, which could be supplied at least by dropping the business tax rate.

Conservative Canadian Prime Minister Stephen Harper is moving to a 15 percent corporate tax rate. We’re still at 35 percent. Canada’s open for business. Are we?

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I tuned in for the first GOP debate held in South Carolina. Everyone did fine. I laughed, I cried, and had some chicken nuggets. A few at the podiums were more polished than others. Pawlenty seemed to distance himself from the pack in key places. Overall, the opinions and styles were as numerous as the questions being asked. Having said that, none present tonight showcased the ability or the talent to go all the way. Even a wounded Obama is still a formidable Obama, and a sitting president has a four year record to run on — good, bad, or indifferent. And when you don’t point out the bad, that leaves the good and the indifferent.

Certainly, President Obama will have the biggest and shiniest trophy in which to hold and parade around the country: Osama bin Laden. And what a trophy it is. President Obama was in charge when the most wanted person on earth was finally brought to justice. Obama will go down in presidential history as the owner and author of one of the greatest foreign policy achievements in our nation’s history. Undoubtedly he should win an easy ….. Wait a minute: Didn’t George H.W. Bush also receive similar praise for assembling and leading a multi-national military force against Saddam Hussein in the first Persian Gulf War?

The Republican candidates must not fall for the trap of having the foreign policy angle used against them. As if questioning the president on his foreign policy agenda is now all the sudden not an option. There are plenty of past and current decisions in which to choose from that shows President Obama’s lack of strategic insight. More importantly, they must not allow it to prevent them from discussing the real issue in America and for Americans.

The Republicans may not have a trophy such as OBL but they do hold kryptonite and it’s called the economy.

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P.J. O’Rourke in The Weekly Standard:

President Obama has contempt for real money. And why not, since his government has the power to print all the fiat money he wants? Power is the politician’s paycheck. Power gets politicians all the good things money can buy and plenty of other things as well. Businessmen work for money because money gives them mastery over their own lives. Politicians work for power because power gives them mastery over the lives of others.

Obama, in pursuit of power, has been as greedy and irresponsible as any Wall Street tycoon in pursuit of money. After short-selling Hillary Clinton, he used the insufficient capital of one term in the U.S. Senate to engineer a highly leveraged buyout of the Democratic presidential nomination followed by a hostile takeover of the Oval Office. His political thinking is full of shady derivatives. His economic policy is a risky collateralized debt obligation. His campaign promises are junk bonds.

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As we have opined in the recent past, we believe the Ryan budget plan is still a work in progress and not a panacea for the nation’s budget, deficit and debt woes.  It is, however, the first serious congressional attempt to identify most (not quite all) of the structural issues that play havoc with the integrity of our national fisc, and advance serious steps to reform these fiscal time bombs that are ticking loudly and rapidly. We believe almost everyone now hears the ticking, except those who live and work in the isolation of 1600 Pennsylvania Avenue.

President Obama seems to have his eyes focused like a laser on the rapidly advancing 2012 election season, and has responded to the Ryan budget proposal with campaign-crafted rhetoric that unblushingly stakes out political battle lines rather than serious alternatives.  His twofold objective is to try to cut Ryan off at the knees before too many people rally behind the Wisconsin congressman’s approach to budget reform, while simultaneously staking out for himself a strong populist position for the upcoming election.  Keep in mind that Ryan proposed a detailed framework for the 2012 budget.  Obama not only did not make a Presidential proposal, he made a campaign stump speech.

Sadly, this is no time to be playing politics with the budget.  Last week, April 18^th, Standard & Poors put the U.S. Government on notice that it risks losing its AAA credit rating unless policy makers agree on a plan by 2013 to reduce budget deficits and the national debt.

“If an agreement is not reached and meaningful implementation does not begin by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer ‘AAA’ sovereigns,” New York-based S&P said in a report that maintained its top rating on U.S. long-term debt while lowering the outlook to “negative” for the first time.

The Treasury Department scoffed at the S&P outlook complaining that the rating agency “underestimates” U.S. leadership. Obama’s chief economic adviser, Austan Goolsbee also rejected the S&P’s negative outlook, calling it a “political judgment” that he said doesn’t deserve “too much weight.”  Well, given that Standard and Poors has determined that the U.S. fiscal profile is meaningfully weaker (emphasis added) than that of peer AAA sovereigns, we wouldn’t be quite as dismissive as the Administration’s folks at Treasury and the Council of Economic Advisors.  The S&P forecast is based on an experienced and independent view of today’s sovereign bond markets and can’t be brushed away with the back of the hand.

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While the national seasonally-adjusted unemployment rate is 1.5 percentage points higher than during President George Bush’s last full month in office, life is surprisingly good for folks living near the Beltway. On an unadjusted basis and as of February 2011, the unemployment rate of the Washington D.C. metropolitan area was 3.6 percentage points lower than the national average. The gap between Washington’s local unemployment and the national rate is higher than it ever was during the Bush administration.

National Minus D.C. Metro Unemployment Rates (Not Seasonally Adjusted), Source: U.S. Bureau of Labor Statistics

According to The Economist, the Washington D.C. metro area accounted for 6% of the nation’s job growth over the past year, in an area that holds just 2% of the country’s population. In the one-year period ending January 2011, the S&P/Case-Schiller Index of home prices fell nationally by 3% for 20 large cities, whereas it rose 3.6% for the D.C. metro region. In 2009, the region’s GDP grew at +2.2%, compared with the overall United States’ -1.7%.

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By all means, let us pursue the president’s new approach to the budget, the Orwellian ‘reduce spending in the tax code’. But, wherever will we find good examples of wasteful ’spending in the tax code’?

Hey, look here! The Feds are taking your money to create 1,000 jobs! Of course, these jobs wouldn’t exist without this wealth transfer, and are mostly temporary anyway. But, still, it’s only $2 million per temporary job. Guess we’ll make the cost up in volume.

And T. Boone only wants a billion dollars. Then he promises to quit. Really. He’ll be the first.

The Nation also joins in:

[T]he primary problem facing clean alternative energy is the ‘price gap’—they are still more expensive than fossil fuels. As I’ve outlined in these pages previously (see “The Big Green Buy”), economies of scale, along with subsidies and planning, will help close this price gap. Only when clean technologies—like wind, solar, hydropower and electric vehicles—are cheaper than other options will global capitalism make the switch away from fossil fuels.

Of course, the sun doesn’t always shine and the wind mostly doesn’t blow so windmills and solar panels require massive redundancy as well as enormous swathes of land, and wind- and solar-powered electricity are just as old as the coal-fired variety, just practical losers. Those are possibly greater challenges than a mere ‘price gap’, and indeed they make this idea of comparing renewables with hydrocarbons as if they were apples to apples endearingly absurd.

But, anyway. While ‘planning’ is euphemistic for preferences and mandates, here you also see green econ 101 amid the author’s ostentatious advertisement of having escaped brushing up on the actual experience and history of these boondoggles.

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The state of our national government is in shambles. We are so far removed from the traditional political divide. To explain what is going on in Washington would require use of a metaphor such as The Mariana Trench to explain it. The Democrats might as well be speaking Mandarin and the Republicans, Latin. The American people as a consequence are, of course, def, blind, and dumb. Our politics has really devolved into the ‘us-them’ model and the only real losers are the American people.

The Republicans, led by House Speaker Boehner, promised a principled stand against spending. Their target at first was $100 billion, than $60 billion before settling for roughly $36 billion. While that was disappointing to many, it did show life on the side of the Republicans. It turns out now that all of it was a lie. A numbers game with no real impact on the budget or the deficit: CBO Says Budget Deal Will Cut Spending by Only $352 Million. Remember this was touted as an “historic” budget deal.

Here’s how the great game was played.

All the cuts in the deal aren’t equal. The ones that matter most are the cuts in discretionary spending that reduce the budget baseline in future years. Even with more the details of the deal released early yesterday morning, the exact numbers are still shrouded in confusion, but it is clear the cuts are much less than meets the eye — the gimmickry is not merely around the edges.

The $38.5 billion includes real cuts, but also a dog’s breakfast of budgetary legerdemain. According to the Associated Press, the deal purports to save $2.5 billion “from the most recent renewal of highway programs that can’t be spent because of restrictions set by other legislation.” It gets another $4.9 billion by capping a reserve fund for the victims of crime that also wasn’t going to be spent this year — a long-standing trick of appropriators. The Washington Post reports that a notional $3.5 billion cut from the Children’s Health Insurance Program “would affect only rewards for states that make an extra effort to enroll children. But officials with knowledge of the budget deal said that most states were unlikely to qualify for the bonuses and that sufficient money would be available for those that did.” And so on. There’s realism and then there’s cynicism. This deal — oversold and dependent on classic Washington budget trickery — comes too close to the latter. John Boehner has repeatedly said he’s going to reject “business as usual,” but that’s what he’s offered his caucus. It’s one thing for Tea Party Republicans to vote for a cut that falls short of what they’d get if the controlled all of Washington; it’s another thing for them, after making so much of bringing transparency and honesty to the Beltway, to vote for a deal sold partly on false pretenses. (National Review)

Then you have the most partisan and socially dividing president in American history adding fuel to the fire.

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Politicians, being what they are, tend to have an inflated view of what they can do. Some claim to create jobs while others claim to raise taxes. In truth, they are limited to passing political laws. Once enacted, those laws run into the laws of economics – which have never been repealed and have been largely the same since the beginning of time. The results are often different than those intended – and so it is for Jerry Brown, whose policies fly in the face of economics and Californians are paying the price.

Few can doubt the magnitude of the economic problems facing our once Golden State. Unemployment is above 12% and underemployment is above 20%. Over 1.3 million less people are employed today than a decade ago. California homeowners have lost over $1.7 trillion in equity in the last 4 years – an amount nearly equal to the entire state economy. That combination has resulted in California suffering the worst of the nation’s foreclosure crisis including startling figures such as in Fresno, where 46.7% of the mortgages are under water, i.e. the mortgage is larger than the home value.

California businesses face taxes among the highest in the nation, even higher regulatory burdens and, just around the corner, potentially large workers’ compensation rate increases. It’s no wonder CEO Magazine ranks California 51st in the nation (behind Puerto Rico) as a place to do business.

All combined, these economic problems have resulted in revenue problems for California governments because people without jobs don’t pay taxes; homeowners without equity spend and borrow less; and businesses with mounting costs have lower profits. That’s economics – not politics.

For Jerry Brown, however, economics remains a mystery to say the least.

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The flyers and handouts and signs and banners are up at my local elementary school.  Seven teachers are scheduled to be fired on June 30th because — big surprise — there’s just not enough money to keep them.  So stand up for these beloved teachers — and they are beloved — by writing to the local School Board rep and demanding that cuts take place somewhere else.

Oh, and parents, while you’re at it, put pressure on your state legislator to vote in favor of Jerry Brown’s tax increase extension.   That would be the 5-year extension Brown failed to ram through the legislature — an even longer extension than voters smacked down in a proposition vote in 2009.   That way we can keep these teachers at further expense to our pocketbooks and the California economy.  Not that this is a scare tactic, but it is a scare tactic.  You don’t want your kid to be in a 39-student classroom, do you?  Do you?  Because the sky IS falling.

Because God forbid that the Teacher’s Union should make concessions.

In talking with unnamed Administrators they said the cuts could easily come from within Los Angeles Unified School District (LAUSD) at many different levels.  What needs to happen is that the Board needs to communicate directly with the teachers and administrators in the trenches to learn what could be cut.   That, of course, would be far too easy.

Instead, the union trumpets the fact that everyone — from lunch personnel and bus drivers to rank-and-file teachers — voted to increase the number of unpaid furlough days from seven to eleven.  So while this is technically a cut, it’s a selfish one.  Why?  Because all it does is give teachers four extra vacation days, while chiseling on the kids.  The ballsy, and morally upstanding move, would have been to cut salary by the same percentage while actually providing instruction.  You know, being devoted to the kids.

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The media are reporting that if a governmental shutdown occurs, it will affect only “nonessential services and personnel.” Now, call me superficial, but I have a question:

At a time when we face a $1.4 trillion deficit this year alone, why are we funding anything or anyone that is admittedly “nonessential”?

I have been pondering an analogy that ought to be easy for anyone to grasp. Let’s compare the current congressional battle over federal spending with a hypothetical family feud over your own household budget.

Suppose you and your spouse are arguing about your finances. You have discovered, to your horror, that you are spending $1,400 per month over and above your total household income. Terrified, you inform your spouse that this is completely insane and unsustainable, and that it must stop immediately.

Your spouse nods in nominal agreement — but then digs in his or her heels against every single specific spending cut that you propose.

Knowing of your partner’s stubborn, spendthrift ways, you eventually propose just $100 in reduced spending. That would still have you falling behind each month by $1300, but at least it’s a start. However, your spouse is outraged and rejects the figure out of hand; it’s “draconian,” and would undermine the profligate lifestyle to which you’ve become accustomed.

You argue, and argue, and argue. Getting nowhere, and desperate for any point of agreement, you say: “Look, can’t we cut just $61 from our monthly spending? We both know that this won’t even make a dent in our obligations, but at least it might slow our rush toward bankruptcy, if only by a few days.”

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In the wake of the passage of a continuing resolution (C.R.) by the House and the Senate, that will keep the federal government running for another three weeks, Republican leaders and fiscally conservative members of Congress appear to be not getting along.

A group of 54 House Republicans voted against this latest C.R., which cut $6 billion in spending, up from the six members who voted against the first resolution two weeks ago. House Republicans like Michele Bachmann (MI), Mike Pence (IN), and Jeff Flake (AZ), and Senate Republicans like Jim DeMint (SC), Rand Paul (KY), and Marco Rubio (FL) voted against the stopgap measure.

These fiscal conservatives, supported by the Tea Party, have been critical of the Republican leadership’s decision not to use the C.R. spending plan as leverage against the Democrats and the White House on the defunding issues, such as the over $105 billion in continuing Obamacare spending, and funding for Planned Parenthood. Conservative critics of Speaker John Boehner (OH) and House Majority Leader Eric Cantor (VA) say that failure of the leadership to act now with deep cuts will lead Republicans on the path to becoming the minority once again. In addition, conservatives worry that if Republican leaders are happy with “chump change” spending cuts, as they “compromise” with the Democrats, they will be likely to cave in when discussions begin about the debt ceiling within a couple of weeks.

Further, those voting against the C.R. are focused on the importance of seizing the day, or capitalizing on the emotional energy coming from the Tea Party now. Congressman Pence stated, “By giving liberals in the Senate another three weeks of negotiations, we will only delay a confrontation that must come.”

In the Senate, Marco Rubio articulated his frustration with the political games in Washington in an interview with conservative talk host, Mark Levin. Rubio has remained steadfast in his belief that Washington politicians from both parties need to change their behavior. Clearly, holding the federal government together two weeks at a time is not what he had in mind when he ran for the Senate.

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From The Denver Post:

After spirited debate Monday, Denver’s City Council voted 10-3 to tentatively approve a 6.6 percent raise for the next sitting council and every other elected official — an increase to be delayed for half of their four-year terms.

The city is facing a $100 million budget shortfall for the 2012 budget and has a structural budget problem that, if not addressed, could balloon into a $500 million deficit by 2030.

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Despite the economic climate and anti-tax wave rolling across the country, New York is once again proposing tax hikes on tobacco. Senate Bill S. 2981 would add an additional $1.65 tax to the already staggering $4.35 the state levies in taxes on a pack of cigarettes—a move likely to upset smokers in the Empire State and potentially deliver little additional revenue to the state’s coffers.

Since raising its tobacco tax last year, New York has seen cigarette sales plummet, as of November 2010, by a whopping 27 percent. Meanwhile, both Pennsylvania and Vermont have seen their cigarette sales rise as New Yorkers looking for a bargain have crossed the border to load up on smokes, thus depriving the state of revenue some had hoped would help it close its yawning budget gap.

Some observers believe that this time, if another hike is put through, the state could actually lose money.  Several Northeastern states– New Jersey, New Hampshire and Rhode Island– have been exploring the idea of reducing the tax they levy on each pack of cigarettes to spur economic recovery and enhance revenues.  A recent study conducted in New Hampshire demonstrated that a 10 cent cut could result in additional tax money flowing to the state’s treasury.

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In today’s The Wall Street Journal:

The unions say they are ready to accept concessions, yet their actions speak louder than words. Over the past three weeks, local unions across the state have pursued contracts without new pension or health-insurance contributions. Their rhetoric does not match their record on this issue.

Local governments can’t pass budgets on a hope and a prayer. Beyond balancing budgets, our reforms give schools—as well as state and local governments—the tools to reward productive workers and improve their operations. Most crucially, our reforms confront the barriers of collective bargaining that currently block innovation and reform.

When Gov. Mitch Daniels repealed collective bargaining in Indiana six years ago, it helped government become more efficient and responsive. The average pay for Indiana state employees has actually increased, and high-performing employees are rewarded with pay increases or bonuses when they do something exceptional.

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