When you find yourself in a hole, grab a shovel!

Well folks, the educational amendment that I told you about in The Showdown at High Noon has been passed into law.  This is the educational amendment, originally included in a War Supplemental bill, that unfairly targeted Texas and provides $10B in educational funding and another $16.1B to help fund state's medicare responsibilities.

However, this "emergency spending" amendment is no longer part of the War Supplemental bill, but is now part of HR 1586, which was originally a bill in March 19th, 2009 that was to be used to limit the amount of bonuses received by TARP recipients, but is now part of the FAA  Air Transportation Modernization and Safety Improvement Act.  And like the original bill, this one maintains it's crusade against Texas, by making them the only state not eligible for funds.  Again we have a bill which includes for unrelated funding begs the question, what does educational and Medicare funding have to do with FAA Modernization?

Interesting note:  The latest version of HR 1586 passed the senate under the name of "_____ Act of _______".  You read that right, this bill passed the Senate with no name.  The Obama Congress, in such a rush to pass this emergency spending, did not even take the time to give the bill a name.  In such a rush that M. Speaker Pelosi demanded the House had to be recalled so as to pass this bill immediately and without time to give the bill a proper name.  Don't believe me?  Check the link that has the text of the bill from Govtrack.us, in which the Short Title, Section 1 states that this Act may be cited as 'XXXXXXAct ofXXXX’.  Anyone else getting those "We have to pass the bill before we can find out what's in it" vibes again?  I guess we have to pass this bill before we can name it this time. 

What does this money do?  Make no mistake folks, the educational portion of this bill ($10B) is a financial bailout for the teacher's and government employee unions after having been threatened with layoffs in the wake of state budgetary financial concerns.  The sole purpose of this bill is to 1. Prevent the lay off of additional teacher union employees. 2. Rehiring of teacher union employee previously laid off, and 3. Sustainability of current union benefits packages and perks.  This money comes on top of the $53.5B teachers union bailout from the State Fiscal Stabilization Fund, some of which hasn't even been spent yet.

Now before anyone starts blasting me on "Don't you think teachers deserve to be paid for the advancement of our youth?", the answer is yes I do, but I believe that they should be paid fairly and within reason.  For years, teacher and government employee's unions have forced states into contracts that they can no longer afford, especially in today's current financial situations.  There are ways to keep teachers employed, but still allow for the states to make much needed budget cuts.

Let us take the case of the Milwaukee school board (MSB)as an example.  The MSB proposed an amended health care plan that would instituted co-pays and would have saved an estimated $47.2M.  Now, most of us that have health care are required to provide a co-pay for our health benefits, but the teacher's union refused to bargain with MSB, thus resulting in the layoff of 428 teachers.  Read that again, rather than to adopt a health care plan that most of American's deal with on a daily basis, they opted for the layoffs, yet the unions were not held to blame.  Instead, it became a cry of "Save our Teachers, Save our Children, Save our Future".  The teachers union had it within their power to prevent this layoff, but choose not to!  It's not like their benefits were being reduced to unusable levels, this is a plan condition that most Americans utilize.

What other "benefits" were the union trying to protect?  The reinstatement of coverage for Viagra.  Again, I can't make this stuff up people.  The Milwaukee Teachers Education Association (MTEA) went to a judge to order the MSB to reinstate the drug at a cost of $786,000 per year.  Now, call me cynical, but my thoughts are that the inability to get an erection is not really a "health concern".  If you really are so hard up (pun intended) for this medication, then you should fund it yourself.  The cost of this unnecessary drug comes at a cost of 12 first year teachers, but I guess erections trump jobs when it comes to the union.

The second part of this bill ($16.1B) will be used to help fund state's inabilities to meet their Medicare responsibilities.  However, this funding won't even come close to covering many states responsibilities for just this year.

Using Arizona as an example, earlier this year, the Arizona legislature attempted to cut costs by scaling back Medicare eligibility and eliminating the Kids Care programs, however, upon passage of Obama Care, it was mandated that all future Federal Medicare dollars were contingent on states maintaining existing programs at current levels.  While this bill includes $236M in supplemental funding for the Arizona programs, it is estimated that it will cost $400M just to maintain the program thru June 30th, 2011 and does nothing for the estimated $1B gap expected in the next fiscal year.

So, the new federal policies have put Arizona (and other states) between a rock and hard place.  They cannot afford to keep up their entitlement programs as they currently stand, but if they make any cost cutting measures to try and bring the fiscal situation under control, then they would be cutting themselves off from any additional funding from the fed to support those programs going forward.  Simply put, who holds the deficit once this money goes away?  It won't be the fed, but instead the states who are already burdened with rapidly growing budget deficits, partially due in part to federal policies.  Sen. Russell Pearce (R-Mesa) has went on record stating:

We'd be better off not to take the stimulus", going on to state that Arizona could achieve greater savings if they were freed from all the federal constraints that accepting the stimulus would put on them.

So what is the price for this "latest of government bailouts?"  Congress has stated it has been paid for by closing a "tax loop-hole" for businesses doing work overseas and by a $12B cut to the Food Stamps program in 2014.  They also claim that this isn't a bailout, but instead "a jobs saving measure". 

So each piece in part, first the "tax-loop hole".  This change will now require that all businesses pay tax on proceeds made internationally, where as they used to be able to claim this as tax deduction for business expense.  While this may sound good for the "keep work in America" crowd, let's look at that.  Company A builds a factory in China, with the express purpose of supplying China with it's product.  As it creates, and sells, it's product, it is subject to Chinese taxation, which because they are a foreign (US) company, pays a higher tax rate that Chinese based companies.  Once they have paid that tax on their profits in China, they must then turn around and pay US tax on that same money.  Now let us be clear about something, businesses never pay taxes.  Business taxes are paid either by passing that cost on to the consumer (if tax goes up, price of product goes up to compensate),  paid at the cost of the employee, either in reduction of wages or layoffs to compensate, or paid by investors in companies thru lower investment earnings as profit is used to pay those taxes.  It doesn't take a rocket scientist to know that none of those three options provide for any growth or benefit to our economy.

Now the cut to food stamps program.  While the libertarian in me hates any type of entitlement program, you think I would be supportive of this measure, but I'm not.  It's not the cuts in the program that I disapprove of, but instead the method of the cut:  Use the money now, make the cuts later.  This is akin to telling a car company to go ahead and give you a car to drive now, because in 2014, you will be reducing your gas and housing budgets by $20,000, so the car will paid for.  While this would get you laughed out of any retailer on the face of the earth, this seems to make perfect since to our government.

Lastly, this is NOT a job saving's measure.  Yes, it will save the jobs of those in unions, but at the cost of the nation's economy and debt burden.  The members of those unions are overly benefited, which results in a disparity between the labor and the cost.  If you "save" a job that is over paid, do you really save anything at all?  Again looking at the Milwaukee teachers union, the union members average a salary of $56,000 per year, with a $40,000 benefits package PLUS a health care plan that costs $26,000 (compared to $14,500 for private employees) for a total compensation package of  $122,000 per year.  I'm all for giving teachers what they deserve, they are a hard working bunch, but their compensation must be at a rational, sustainable level commiserate with other Americans.  If this money could be saved, what other jobs could be opened up in the form of new school programs?  If state taxpayers were not forced to pay the taxes required to fund this exorbitant packages, how much of that money left in the taxpayers pocket would be injected back into the economy, thus providing for other jobs.  The questions are endless.

So, I ask you, when you find yourself in a hole, what do you do?  Well, if you are the federal government facing a huge financial and budgetary hole, you grab yourself a shovel and start digging, mostly into the back pockets of the taxpayer.  When you are a state with disastrous entitlement programs that are not sustainable or achievable (think California or New York) or beholden to union contracts that are neither rational or fair, you grab yourself a shovel and start digging into the Federal reserve, which in turn uses it's shovel against the taxpayer.  I for one do not approve of my money being used to bail out those states in which I do not reside, nor do I approve of the Fed using me as it's personal piggy bank for programs that do not work and will bankrupt this country.  However, the only way I know to stop it, is to take away the shovel.  Hopefully, we will do just that in November.


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