Saving Grace – California Fiscal Crisis
July 14, 2009
By Padmini Arhant
The beautiful Golden State pawned over obstinate leadership and legislature in Sacramento. If the minority representatives and the head of the state confined to their political dictum and ideology, the majority on their part let the myopic view of the state of affairs undermine the social challenges confronting the constituents.
There were too many opportunities aided with pragmatic solutions to resolve the ever-rising budget shortfall (previously at $24.3 billion and now increased to $26.3 billion deficit) without draconian cuts hurting the weak and the most vulnerable in the society.
Sometimes, when there is intellectual deficiency in the leadership to deal with crisis, a wise option for the authority in power is to display humility, heed to genuine concerns and adhere to remedy offered to the problems rather than a Kamikaze approach headed for a disaster. Although, the leadership ignoring sound advice implies personal egocentric satisfaction, the false notions and misguided policies rejecting the population’s misery have led to the status quo.
Sacramento could have averted California fiscal debacle back in November 2008 when the path towards the state budget appeared difficult and beckoning swift reactionary measures to reign in on the economy tumbling downhill. Instead, the legislature and the leadership stalled action with no respect for the constitutional rule of law mandating the state budget reconciliation by a deadline. The reality being the deadlines have come and gone with no state budget in place.
To reiterate earlier statements, the embarrassing performance by the entire legislative force with the head of the state leading in this respect squandered taxpayers’ valuable resources in political bickering, finger pointing and even assigning the duty to the taxpayers/voters through Special elections on May 19, 2009.
Since Sacramento abdicated their legislative responsibility to approve a functional state budget and a rescue plan for the following year, California is in dire fiscal state with a direct impact on the national economy. The only action from Sacramento seen thus far is the sedative talks to calm anxious residents dependent on social programs and services and the rest of the population eager for the state’s economic recovery.
Contemporary politics seeks comfort in lip service rather than concrete action focused on relief to the victims. With no end to the on-going tug ‘o war, the ruthless slashing of funds continues with respect to education, health care, environment and the overall economy wounding the present and the future of the society.
In the absence of state budget for the fiscal year, the state treasury forced to issue IOUs declined encashment by the major bailed out banks defaulting on their lending commitment during taxpayer bailout to stimulate the local and national economy. The cumulative effect of the incompetence in Sacramento obvious in the degradation of the once stellar credit rating of the Golden State possibly reduced to junk status in the near future.
As experienced by the national economy, budget financing and legislative funding for reform and economic revival depend on both revenues and savings through spending cuts. The recommendations to raise income taxes from the following sources at the bare minimum slighted when it could have adequately provided for the budget shortfall.
Tobacco and alcohol tax, Vehicle registration fee and most importantly closing loopholes for the Corporations evading state income taxes through tax havens, collecting hefty fines from the environmental polluters i.e. oil, aviation and automobile industry, overhauling of the criminal justice system viz. the state prisons absorbing enormous amount of the budget to name a few.
The administration’s cavalier approach in demolishing the society’s foundation i.e. education, health care, and small businesses…with merciless withdrawal of funds from the budget indicates governance in the barricades, the elitists out of touch with the plight of the populists.
Why California is important for the Naitonal Economic Recovery?
Source: Wikipedia.org – Thanks
Gross domestic product (GDP)
California is responsible for 13% of the United States’ gross domestic product (GDP). The state’s GDP is at about $1.7 trillion (as of 2006).
The GDP increased at an annual rate of 3.1% in the first quarter of 2005.[13]
According to the California Department of Finance, if California were an independent state, it would have had the seventh largest economy in the world.
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California is the epicenter for Science, Technology, and Entertainment besides representing every other sector —
Finance, Manufacturing, Construction, Health, Education, Hospitality, Energy as the pioneer of Green Technology, Environment, Trade, Transportation and Utilities, Information dealing with Motion Picture Broadcasting, Publishing, Internet businesses and Telecommunications to Agriculture and Mining are some of the many core activities creating jobs and contributing to the National GDP.
The impressive growth in California during the Silicon Valley boom stunningly boosted the National GDP with the state experiencing labor capital depletion in many industries. Subsequently the profit earnings in the California technology sector from 2002 to 2007 contributed to the stock market rally with the trend continuing until date. One of the reasons for the current enlarged National Unemployment figures is the double-digit jobless rate in California and the budget crisis exacerbating the national productivity.
With the escalating job losses and the stalemate in Sacramento holding the state budget and the children’s future hostage, the national economy will further deteriorate if the California budget shortfall not met immediately.
The taxpayers’ bailout of the finance sectors and the automobile industry with no accountability or transparency deprived the states like California from receiving generous federal funding to various programs. These bailouts primarily passed to enable liquidity in lending and job protection across the nation. Again, the proof of the pudding reflected in the dismal unemployment figures arising from defaults by the finance sector withholding lending to small and medium businesses as well as the average consumers.
Such violation of trust by the finance sector has attributed to poor consumer spending adversely affecting the retail sector with a ripple effect on the entire economy.
So much for the free market integrity and reliability in turning the economy around through capitalist mechanisms, that is generating job losses rather than job creation.
California on the other hand could emerge out of the existing crisis with federal assistance and approval of $26.3 billion in borrowing at nil interest rate. The amount returned progressively through state bonds over a set period would benefit both the state and the national economy in alleviating the financial meltdown. The Federal Reserve and Treasury could lend the necessary amount to California recovery plan from the residual amounts of the previously approved financial bailouts and TARP funds returned by some Investment banks like Goldman Sachs.
Meanwhile, the citizens of the great Golden State must engage in changing the political system with efficient bipartisan legislature and leadership in Sacramento. When the programs and services restored to benefit the people of the state, the interim relief and long-term stability to the nation’s largest GDP growth state is inevitable.
If the Federal Reserve or the Treasury unable to provide any relief to California then,
Considering the grave fiscal scenario facing the state of California, the SOS from the citizens of this state require urgent action by the Congress, Senate and the White House in the swift approval of the amount – $26.3 billion. Unfortunately, any opposition to the financial aid will have serious political backlash in 2010 and 2012 elections – demonstrated by the electorate during the special elections on May 19, 2009 rejecting both political parties for their insensitivity to the crisis.
As for the head of the state – The actions or the lack thereof until now evidenced in the areas identified below –
Following the electorate dismissal in the Special elections on May 19, 2009, the Governor appointed committee has business representatives with deep pockets favoring their own agenda against the less fortunate citizens to resolve the budget crisis, confirming the authority’s allegiance to the special interests.
The disingenuous remarks on the immigration issue related to the undocumented workers without any progress in issuing drivers license that could have not only generated state revenue but also moved the matter from the back burner is yet another political gimmick.
Recently the Governor’s controversial posturing threatening to fingerprint i.e criminalize the food stamp recipients targeting the disabled, the jobless and the elderly as the means to detect alleged fraud and forgery in an effort to saving costs against above mentioned nominal tax increases is beneath the humanitarian character and deplorable on all accounts.
The opposition minority has no time left to procrastinate by wasting taxpayer dollars to defend the ‘so-called’ fiscal-responsibility when the exercise proven counterproductive.
Similarly, the ruling majority must review and revise the union based workers’ and state employees’ disproportionate employment benefits costing taxpayers excessively, more relevantly in the public safety employment, and other government jobs.
A dilemma for the California voters is, if the right pledged to the appeasement of the Corporations investing thousands of dollars in political campaigns and legislative matter, the left compensated with the Unions and Corporations’ influence on the legislative issues.
Therefore, it is in the best interest of the nation to reform private contributions in political campaigns and promote public financing to implement checks and balances apart from maintaining costs at all levels of the electoral process. Also, the open primaries in the state elections will facilitate moderate representation from the right.
Given the unacceptable partisanship creating gridlocks and a colossal failure to balance the budget, it is appropriate for the State of California to end the term of the administration and those responsible in leading the state from prosperity to an economic ruin.
Effective immediately, the countdown begins for Sacramento to follow the guidelines by sparing the education, health care, energy, environment and all the essential programs and services benefiting the people and enacting the relevant tax increases with the elimination of redundant spending in other areas.
It’s incumbent on Sacramento to finalize on the meaningful state budget in order to settle the debts to different creditors and restore the pre-recession California image and credit ratings.
Thank you.
Padmini Arhant
Pulse of the Economy
June 11, 2009
By Padmini Arhant
With a finger on the pulse of the economy, the recent reports on employment, housing, financial and stock market post stimulus funding worth $787 billion approved by Congress in February 2009, has drawn both praise and criticism from different quarters. The praise is always welcome and encouraging for any administration and the Obama administration is no exception to the rule, particularly when they are relentlessly engaged in stabilizing the economy as the top priority.
Whereas, the criticism aimed at the President is no revelation considering the partisan Washington atmosphere. The results thus far, indicate the current national unemployment rate at 9.2% against 8% in the pre-approval stimulus package forecast. Further, the reports reveal the economy shed 1.6 million jobs with the White House claiming 150,000 jobs saved since the passing of the stimulus measure. Obviously, it’s a contentious issue for all Americans receiving pink slips for paychecks and IOU’s in the state of California respectively.
The main criticism being the Obama administration’s optimistic approach in selling the stimulus plan not correlating with the job market results, a fair analysis is due to clarify doubts and speculations on the stimulus plan prospects and its effect on the economy.
According to the White House and other reports, only $44 billion i.e. 5.6% spent from the $787 billion stimulus funds with an accelerated investment committed this summer. In light of the above scenario, the 150,000 jobs rescued towards 5.6% funding is a confirmation of President Obama’s cautious and calculated expectation from the economy.
Even at the present conservative trend, the job market results for the remaining 94.4% of the stimulus fund upon targeted investment should adequately restore the employment rate from the growing underemployment and unemployment status with a combined saved and created job ratio yielding approximately 2,528,571jobs in a similar environment.
It is not uncommon for the critics and analysts to focus on the dismal job market figures affected since the onset of the economic recession in December 2007. The skeptics’ myopic view neglecting economic progress in other areas is attention worthy. Various reliable sources confirmed the financial sector strengthening with the bailout funds interjection in an effort to amortize the toxic assets from the sub-prime mortgage debacle. The leading financial institutions such as Bank of America, J P Morgan and Chase and other banks in the top ten range enabled capital management viability proven in the balance sheets.
The rapid foreclosures primarily responsible for the declining housing prices nationwide conversely contributing to the median home prices plateau with the 47 percent foreclosed homes resold in the entire Bay Area in April 2009 compared to 52 percent in February 2009 – indicating the desirous regress in foreclosures and signs of early recovery in the housing market.
The reports also confirm the home sales and value up for month and down for the year attributing to the Obama administration’s strategy of “the combination of lower prices, average mortgage rates of 5 percent or less for smaller loans, and a new $8,000 federal tax credit for first-time buyers” in the anemic housing market.
When the foreclosures pervasively diminished or extinguished nationwide with the stimulus programs, the housing market rebound will be visible motivating the lenders to participate in the melting liquidity market. However, caution required with the rising bond market’s pressure on interest rates imperative in alleviating the housing market crisis.
In the stock market – the significant gains by the commodity market and technology sector reflected in the recent rally is invigorating. Other industries lagging behind in performance likely to benefit from the steadily easing financial market credit crunch, promoting private sector investments directly related to boosting the job market, housing market and consumer spending essential for speedy economic recovery.
As for the quasi investment deals in the GM takeover causing pandemonium among the well-wishers across the aisle, the taxpayers’ financial commitment to rescue jobs slighted for political bickering. The ‘bankruptcy’ triggered cynicism about the government imprudence in investment goals with taxpayer dollars, while conveniently ignoring the fact that the auto industry problem originated during the former administration’s era and their $17 billion initial investment in the corporation set for failure.
Ironically, the temporary and modest government intervention in the free market characterized as ‘nationalization’ of industries necessitating required action from colossal mismanagement.
Meanwhile, the Obama administration’s objective in the GM deal to avert the deepening crisis in the frail industry challenged by the competitive global market is a thoughtful approach. Now with taxpayers as the majority shareholder in the once iconic corporation the management goals anticipated to synchronize with the twenty first century demands ensuring excellence in purpose, productivity and profitability.
Moving on to the other pertinent and popular health care issue debated and discussed to reject rather than embrace the premise of the President Obama’s health care plan – choice, affordability and quality, the perfect remedy to relieve the economy from the health care burden costing the nation in trillions while leaving the uninsured in millions.
Despite the innuendoes and insinuations about the mounting debt, the investments miscategorized as ‘squandering’ in the national economy ranging from health care, education, energy, environment, housing to financial sector and other industries is a pledge towards substantial economic security for the present and future generation.
The controversy surrounding the diverse investments costs applied to two particular sources viz. borrowing from China and tax hikes on the corporations and wealthy groups. Contrarily, the tax breaks to the top ten percent in the highest income bracket and corporations evading tax through tax havens with limited free market regulation or deregulation in the past eight years aside from being counterproductive resulted in approximately $9.5trillion dollars national debt with a cumulative effect on the status quo of the economy.
There was no clamor over the increasing liabilities on the baby boomers and the younger generation in the extravagant spending on illegal wars with a guarantee to fund itself from oil revenues in Iraq…an unequivocal myth until date.
Then the financial sector bailout with respect to AIG and oligarchs to a tune of $700 billion and more in 2008 with no accountability or transparency exacerbated the liquidity crisis against the intended proposal. Interestingly, the past events currently dismissed as irrelevant claiming that Obama administration disavow the incidents pertaining to the prior administration yet owe an explanation for the phenomenal deficit, the previous administration’s legacy to its successor.
Only if the opposition’s present vigilance on fiscal responsibility existed from 2000-2008, perhaps the People’s Republic of China and The Kingdom of Saudi Arabia would be vigorous competitors to the world financier ‘The United States.’
The demands from the conservative right exceedingly high launched with rhetorical comments and negative attacks such as “false Prophet’s failed Presidency.”
In the absence of any ideas and solutions to the burgeoning crises created by the previous administration’s historical blunders serving testimony to the beacon of incompetence and failures in Presidential history, the political posturing is paradoxical.
With respect to the economy in the ‘Golden State of California’, the clock is ticking for the state and the local government authorities to resolve the budget crisis and close the $24 billion deficit in the state budget and $73 million in the San Jose City budget.
Even though the strategy in both situations is scrambling to wipe the deficit by any means with mostly eliminating the vital services and benefits to the weak, the poor and the vulnerable, the repercussions of draconian cuts with no tax increases will far outweigh the immediate illusory results not barring the political risks in the 2010 gubernatorial elections.
Following the special election results on May 19, 2009, it’s incumbent on the state legislature to adopt several guidelines and viable options provided by concerned citizens through many sources in resolving the fiscal crisis. There is no patent right on the thoughts in the matter affecting the entire state and the community at large. It is a patriotic and civic duty of every citizen volunteering suggestions to deal with the stalemate confronting the California state legislature.
Governor Arnold Schwarzenegger’s recent comments on undocumented workers and their plight aptly placed the sensitive immigration issue in perspective. It’s time for the Governor to translate into action by issuing drivers license to the undocumented workers in the State of California that would not only aid the budget but also enhance the opportunity as the preliminary step towards legalization of the Californian residents.
More often, the leadership is subject to test the will, wisdom and courage against the odds exclusively the unpopular decision eventually ending in greater good for all.
I wish Governor Arnold Schwarzenegger and Mayor Chuck Reed of San Jose ‘Good Luck’ in their decisions appropriate to defend many but might offend few in the process.
Thank you.
Padmini Arhant
Bailout Débācle
March 22, 2009
By Padmini Arhant
The past two weeks dominated with AIG and oligarchs debating over the controversial $165 million and now increased to $218 million bonuses to executives instrumental in driving the insurance giant to the brink of collapse along with the financial markets of the world.
As usual, Washington vs. Wall Street dispute contributed to media frenzy and aptly reflected in the roller coaster performance of the stock market. The interesting factor in the blame game is those pointing fingers at others fail to acknowledge that remaining fingers are pointing towards them as they are equal partners in this charade.
By now, well-educated American taxpayers upon the quest to secure their future convinced that both Wall Street and Washington have serious credibility issues in wealth management and nation governance.
The back and forth allegations in the political crossfire reveals the true sense of Washington politics and Wall Street free market systemic corporate management failure. Again, the beneficiaries in this deal are the legislators responsible for the bailout approval and the corporations rewarded with taxpayer’s funds for unprecedented incompetence in modern economic times.
They are the beneficiaries because the legislators secured their emoluments by rushing the operating budget $410 billion omnibus bill ladened with pork projects to the tune of $8 billion to curb ‘government shut down’ rather than passing the required operating budget and isolating the earmarks spending for individual scrutiny through separate legislation.
The Corporate executives in due diligence spared no opportunities to collect remuneration, bonuses retrospectively and in the foreseeable future to maintain their status among the top 10% wealthiest hierarchy.
Let’s not forget in the Darwinian "Survival of the fittest contest" the weak, fragile and frail average taxpayer doesn’t stand a chance against the ferocious Corporate executives (compared to sharks) and Capitol Hill crusaders.
Events unfolding in the entire scenario deserves attention from every citizen involuntarily pledged to carry the burden of national debt currently projected at $9.3 trillion i.e. $1 trillion budget deficits every year for a decade, 2010-2019.
It is worth examining the role of legislators, corporations and lobbyists in securing taxpayer bailouts more prevalent in the past year 2008 and continuation of it in 2009. Prior to the diagnostic procedure, it is essential to shed light on the alliances forged by the key cabinet members and Wall Street merchants.
According to http://www.wsws.org/articles/2008/sep2008/paul-s23.shtml – Thank you.
Published by the International Committee of the Fourth International (ICFI)
Who is Henry Paulson?
By Tom Eley, 23 September 2008
Henry Paulson rose through the ranks of Goldman Sachs, becoming a partner in 1982, co-head of investment banking in 1990, chief operating officer in 1994. In 1998, he forced out his co-chairman Jon Corzine “in what amounted to a coup,” according to New York Times economics correspondent Floyd Norris, and took over the post of CEO.
Goldman Sachs is perhaps the single best-connected Wall Street firm. Its executives routinely go in and out of top government posts. Corzine went on to become US senator from New Jersey and is now the state’s governor. Corzine’s predecessor, Stephen Friedman, served in the Bush administration as assistant to the president for economic policy and as chairman of the National Economic Council (NEC). Friedman’s predecessor as Goldman Sachs CEO, Robert Rubin, served as chairman of the NEC and later treasury secretary under Bill Clinton.
Agence France Press, in a 2006 article on Paulson’s appointment, “Has Goldman Sachs Taken Over the Bush Administration?” noted that, in addition to Paulson, “[t]he president’s chief of staff, Josh Bolten, and the chairman of the Commodity Futures Trading Commission, Jeffery Reuben, are Goldman alumni.”
Prior to being selected as treasury secretary, Paulson was a major individual campaign contributor to Republican candidates, giving over $336,000 of his own money between 1998 and 2006.
Since taking office, Paulson has overseen the destruction of three of Goldman Sachs’ rivals. In March,
Paulson helped arrange the fire sale of Bear Stearns to JPMorgan Chase. Then, a little more than a week ago, he allowed Lehman Brothers to collapse, while simultaneously organizing the absorption of Merrill Lynch by Bank of America. This left only Goldman Sachs and Morgan Stanley as major investment banks, both of which were converted on Sunday into bank holding companies, a move that effectively ended the existence of the investment bank as a distinct economic form.
In the months leading up to his proposed $700 billion bailout of the financial industry, Paulson had already used his office to dole out hundreds of billions of dollars. After his July 2008 proposal for $70 billion to resolve the insolvency of Fannie Mae and Freddie Mac failed, Paulson organized the government takeover of the two mortgage-lending giants for an immediate $200 billion price tag, while making the government potentially liable for hundreds of billions more in bad debt. He then organized a federal purchase of an 80 percent stake in the giant insurer American International Group (AIG) at a cost of $85 billion.
These bailouts have been designed to prevent a chain reaction collapse of the world economy, but more importantly, they aimed to insulate and even reward the wealthy shareholders, like Paulson, primarily responsible for the financial collapse.
Paulson bears a considerable amount of personal responsibility for the crisis.
Paulson, according to a celebratory 2006 Business Week article entitled “Mr. Risk Goes to Washington,” was “one of the key architects of a more daring Wall Street, where securities firms are taking greater and greater chances in their pursuit of profits.” Under Paulson’s watch, that meant “taking on more debt: $100 billion in long-term debt in 2005, compared with about $20 billion in 1999. It means placing big bets on all sorts of exotic derivatives and other securities.”
According to the International Herald Tribune, Paulson “was one of the first Wall Street leaders to recognize how drastically investment banks could enhance their profitability by betting with their own capital instead of acting as mere intermediaries.” Paulson “stubbornly assert[ed] Goldman’s right to invest in, advise on and finance deals, regardless of potential conflicts.”
Paulson then handsomely benefited from the speculative boom. This wealth was based on financial manipulation and did nothing to create real value in the economy. On the contrary, the extraordinary enrichment of individuals like Paulson was the corollary to the dismantling of the real economy, the bankrupting of the government, and the impoverishment of masses the world over.
Paulson was compensated to the tune of $30 million in 2004 and took home $37 million in 2005. In his career at Goldman Sachs he built up a personal net worth of over $700 million, according to estimates.
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Washington and Wall Street Analysis:
By Padmini Arhant
The beginning of the chain link usually found on the campaign trail, when corporations fund election campaigns through donation loopholes despite contribution limits by electoral commission and reign in on the successful candidate for the entire term.
After all, in the contemporary world focused on “What’s in it for me” deals, there is no free lunch with the exception of debt-consumed public yearning for believable change and better future offer available resources in terms of time, energy and money during the electoral process and beyond.
Who gets preference by the elected officials in the so-called democracy?
Indeed the Corporations due to the inter-dependency of sweetheart deals and brokering that take place throughout the election campaign. The deafening noise in the Capitol Hill about identifying the guilty party and pursuing disastrous course of action such as 90% tax on AIG bonuses after having approved without any stipulations predictably backfired at the victims none other than the average American taxpayers, presumably the majority shareholder at 80% of the multinational conglomerate.
In a bizarre development, more appropriately deterioration of the bailout fiasco, the headlines, news across the nation reverberate…
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AIG sues its biggest shareholder – us
By David S. Hilzenrath, Washington Post – March 21, 2009. Thank you.
As AIG takes billions of dollars from the federal government to stay afloat, it is suing the government for millions more.
The big insurer is trying to recover $306.1 million of taxes, interest and penalties from the Internal Revenue Service. Among other things, AIG is contesting an IRS determination last year that the company improperly claimed $61.9 million of tax credits associated with complex international transactions.
AIG has also asked a court to make the government reimburse it for money spent suing the government.
Given that the government owns 79.9 percent of AIG and has been using taxpayer money to fill a seemingly bottomless hole at the company, the lawsuit might seem like a case of biting the hand that feeds it. But an
AIG spokesman said the company has an obligation to press its case.
AIG believes it overpaid the IRS, and it “has a duty to its shareholders, including the government and other shareholders, to insure that it pays the proper amount of taxes,” spokesman Mark Herr said by e-mail.
Washington tax lawyer Martin Lobel agreed with that assessment.
‘If in fact they honestly believe that they’re entitled to a refund of those taxes, it would be a breach of their fiduciary duty not to” sue, Lobel said.
“On the other hand, the sense of entitlement from AIG is awesome,” Lobel said.
Because the dispute pits the government against a company that has essentially become a ward of the government, the only clear winners are likely to be lawyers, legal experts said. The legal expenses could consume millions of dollars, they said.
Lawyers at the firm Sutherland Asbill & Brenan, which is representing AIG, did not respond to an interview request.
For partners of similar stature to those representing AIG, fees can run $700 to $900 an hour, said Dan Binstock, managing director of BCG Attorney Search, a legal recruiter.
AIG’s dispute with the IRS focuses on taxes for 1997 and dates at least as far back as March 2008.”
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L.A. congresswoman defends actions
Husband Linked to Bank that got AID
By Richard Simon – Los Angeles Times – March 14, 2009 – Thank you.
Excerpts from the article:
Rep. Maxine Waters, D-Los Angeles, on Friday defended her efforts to help minority-owned banks – including one with ties to her husband – scoffing at the notion that she, a liberal Democrat, could influence George W. Bush’s presidential administration in deciding what financial institutions would receive bailout funds.
Waters, a senior member of the congressional committee that, oversees banking, has come under scrutiny because OneUnited Bank, on which her husband Sidney Williams had been a board member and stockholder, received $12 million in bailout funds. The money was provided in December, three months after Waters helped arrange a meeting between officials from the bank and other minority-owned institutions and Treasury representatives.
“I followed up on the association’s request by asking Treasury Secretary (Henry) Paulson to schedule such a meeting, as did other members of Congress,” she said.
She said she did not attend the meeting. She released letters by the National Bankers Association requesting the meeting and following up on it – signed by the group’s incoming Chairman Robert Patrick Cooper an officer with OneUnited.
Waters said the decision to provide bailout funds to OneUnited was “based on the merits of the bank’s request, not based on anything said at the September meeting and not based on political influence.”
She said that she has fully disclosed her husband’s ties to the bank. Williams served on the bank board until early last year and held at least $500,000 in investments in the bank in 2007, the most recent year for which public financial disclosure statements are available.
Waters could not be reached for an interview Friday. OneUnited Chief Executive Kevin Cohee said Friday he didn’t have time to speak with a reporter.
Melanie Sloan, executive director of the watchdog group Citizens for Responsibility and Ethics in Washington, said she found Waters’ behavior “inappropriate and certainly has the appearance of impropriety, even if it doesn’t rise to the level of an actual conflict-of-interest under House rules.”
Sloan said Waters’ comments that the meeting focused on the general problems of minority-owned banks “don’t seem credible” in light of statements from Treasury officials that the session became a discussion of one bank’s troubles. “At a minimum, Treasury officials should have been apprised of her interest in the bank before the meeting took place.”
Waters’ efforts, she said, raise a question: “How many members of Congress are having meetings with the Treasury Department pleading for funds for certain banks?”
“Treasury has said they’re going to list the lobbying contacts,” Sloan said.”
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Voice of the Electorate:
San Jose Mercury News – Readers’ Letters – March 18, 2009
Obama’s earmarks stance disappoints
I am disappointed that President Barack Obama backed off his campaign pledge to eliminate earmarks. The process subverts democratic government by avoiding votes on specific issues. It encourages our representatives to compete to spend more—if they fail to “bring home the bacon,” they may be seen as ineffective and not be re-elected. The further we move from specific votes for specific programs, the less inclined people are to support the government and the more inclined to resist taxes.
We must promote responsible stewardship. While many of the projects are meritorious, that hardly means they should be funded. Tax dollars are a scarce resource and every expenditure should be carefully scrutinized. Obama was right on this issue during the campaign; he is sliding off track now.
Christopher K. Payne
Stanford
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Ethical Lapse
By Padmini Arhant
The sparring political factions, the far left and the far right along with the centrists is in a strange dilemma today as they witness their reflection in the image of the accused parties in the most expensive soap opera entertainment.
As more Washington and Wall Street scandals are exposed, the more disingenuous the legislators appear to be in their pledge to turn the nation around.
An average citizen struggling to make ends meet asked the following questions –
“Why should I vote for anyone in the next election when I see politics as usual prevailing over the promised inevitable change?
Can the elected officials with public housing, guaranteed regular and several other sources of income, supreme health care, and free transportation relate to the suffering population dealing with job loss, foreclosure and other miseries?”
Unfortunately, the Washington atmosphere is secluded as elitist not making connection with the plight of the populist. The deepening of the recession combined with the multi-trillion dollar national debt forecast is a matter of great concern for the vast majority of population in precarious economic conditions due to job insecurity and declining prospects all around.
The American electorate enthusiastically elected the new administration with the hope to experience the “change” they deserve and the recent events are adversarial to the optimism built during the campaign.
Campaign promises involved Accountability, Transparency and changing Washington by eliminating corruption, cronyism and conventionalism. The passing of the $787 billion stimulus bill and subsequently the $410 billion omnibus spending bill loaded with earmarks confirms the status quo in Washington.
The pet projects, however meritorious they might be, cannot be more important than supplementing K-12 educational funding by retaining qualified teaching professionals and providing after school sports activities for students from lower income families and scores of other important social services for the constituents in California and other states.
It is obvious throughout the legislative process from the authorization of illegal invasion of Iraq war to Wall Street bailouts that lawmakers as representatives of the electorate in a democracy no longer consider it important to peruse the budget and other legislative bills because of the voluminous content. Hence, hastily resort to wasteful spending at taxpayers’ expense.
With the national debt projection in multi-trillion dollars, the wasteful spending in billions doesn’t seem to matter to the sponsors of the pet projects. Apparently, $8 billion added to the national debt for projects experimenting swine odor, road to nowhere, monuments ‘supposedly creating jobs’ when the industries are crumbling apart clearly signifies misplaced priorities by the legislators expected to be in touch with reality of their respective constituency.
The people are hurting and their mere existence is challenged by the hour while Washington and Wall Street continue to engage the nation in burgeoning financial crisis through legal and constitutional confrontations of the bailout débācle.
Perhaps it is time for the victims and the lame duck, the average taxpayers to rise to the occasion and execute power in the mid-term election to restore democratic values, ethical and moral standards desperately lacking in the corporate and political system.
It is best to eradicate the narcissistic culture that permeates the surroundings like weeds destroying the grassland and fertile grounds.
Evidently change is necessary and necessity is the mother of invention.
Thank you.
Padmini Arhant
Earmarks, Pork-barrel Spending
March 8, 2009
By Padmini Arhant
The budget vote delayed due to enormous ‘pork’ in the $410 billion spending bill. The defenders of various pork projects may have their own justification.
Nevertheless, Washington must relinquish wasteful spending through several pet projects carried out on behalf of lobbyists by lawmakers concerned about their own job security in the future elections.
As stated earlier in the article “Omnibus Spending” on the website www.padminiarhant.com , the nation is grappling with dire economic situation due to significant job losses and housing crisis at this time and families are desperately seeking relief from both free market system and the government.
Unfortunately, the free market system dependent on taxpayers’ bailout is barely capable of remaining solvent despite unprecedented capital infusion in modern financial history. The root cause of all these problems attributed to lack of ethics, accountability, transparency and importantly executive management failure.
The critics of taxpayers’ bailout argue in favor of non-interference in the market economy on the assumption the system would correct itself in due course. They fail to recognize the fact that the economic meltdown commenced in the early 2000, though the impact was not acknowledged up until late 2007.
During that limited or non-regulatory period, the capitalist system had ample opportunities to review and reassess their performance and prepare them for the worst scenario.
However, it did not happen, even though Wall Street witnessed and experienced the collapse of Enron, WorldCom, Tyco, Global Crossing all in the year 2002 resulting from failed Corporate management, unethical accounting practices and blatant greed.
Somehow, the free market advocates seem to have forgotten these events because of their inability then to envision the domino effect on the entire economy in the immediate future. Another reason for the denial of economic crisis previously was the skyrocketing of the technology stocks combined with oil and defense stocks at the phenomenal cost of American taxpayers’ dollars and human lives in Iraq war.
The financial sector created its own superficial boom during that time with the concoction of subprime mortgages and diverse toxic assets bundled together and sold by the hedge fund managers in the overseas markets. This entire taking place while the past administration was preoccupied in the implementation of unjust Iraq war.
It is unequivocally a miserable failure on the part of the predecessors in Federal Reserve, Treasury department as well as the Securities Commission primarily responsible for monitoring and evaluating the daily market events and executing necessary precautionary measures to prevent the economy from overheating.
Surprisingly, with the history of ‘Great Depression’, Oil crisis, economic recessions, one would assume that the authorities would remain alert and watch over the economy with prudent advice against extravagant spending in unnecessary wars or at least demanded the administration engaging in wasteful spending provide legitimate cost and benefit investment analysis.
The gridlock in Washington or State legislature is contributed by political ideologies resisting flexibility to resolve any crisis. The fiscal conservatives steadfast against tax increases, the predominant revenue source for any government, consistently target essential programs designed to promote consumer spending vital for economic recovery.
Similarly, the spendthrift legislators on both aisles with a penchant for pet projects or pork spending refuse to yield to frugality and prioritize their commitments to lobbyists and local governments assuring their re-election over national interest.
The electorate voted for Change in 2008 and change has hope only with representatives in Congress and Senate quitting habits that create rather than solving crisis.
It is evident that the $410 billion spending bill is injected with significant pork projects and it would be appropriate for the sponsors to present cost / benefit ratio in monetary terms to justify inclusion in the bill.
Again, these projects must be evaluated to benefit the taxpayers and the nation as a whole rather than the individuals regardless of them being legislators or the lobbyists.
The lawmakers have lately advised ordinary citizens to downsize their lifestyle according to their means, the same should apply to them as any sermons, preaching, and advice is meaningful when individuals demonstrate through action.
After all, shouldn’t one practice what they preach others?
No matter how one circumvents the legitimacy of earmarks particularly at these tough economic times, it is inappropriate now and in the future to squander taxpayers’ dollars for far-fetched projects with beneficiaries being the authorizing entity and/or special interests rather than the entire nation.
Please refer to the following articles from other sources for data confirmation on earmarks / pork barrel spending.
Thank you.
Padmini Arhant
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Senate Republicans force delay on budget vote:
GOP Members want to offer Amendments on $410 billion plan criticized for Pork – By Andrew Taylor,
Associated Press – Thank you.
Washington – Senate Republicans, demanding the right to try to change a huge spending bill, forced Democrats on Thursday night to put off a final vote on the measure until next week.
The surprise development will force Congress to pass a stopgap-funding bill to avoid a partial shutdown of the government.
Republicans have blasted the $410 billion measure as too costly. But the reason for GOP unity in advance of a key procedural vote was that Democrats had not allowed them enough opportunities to offer amendments.
Majority Leader Harry Reid, D-Nev., canceled the vote, saying he was one vote short of the 60 needed to close debate and free the bill for President Barack Obama’s signature.
The 1,132-page spending bill is stuffed with pet projects sought by lawmakers in both parties.
Democrats and their allies control 58 seats, though at least a handful of Democrats oppose the measure over its cost or changes in U.S. policy toward Cuba. That meant Democrats needed five or six Republican votes to advance the bill.
None of the GOP’s amendments is expected to pass, but votes on perhaps a dozen are now slated for Monday night, Reid said.
The huge, 1-132-page spending bill awards big increases to domestic programs and is stuffed with pet projects sought by lawmakers in both parties. The measure has an extraordinary reach, wrapping together nine spending bills to fund the annual operating budgets of every Cabinet department except for Defense, Homeland Security and Veterans Affairs.
Once considered a relatively bipartisan measure, the measure has come under attack from Republicans – and a handful of Democrats – who say it is bloated and filled with wasteful, pork-barrel projects.
The measure was written mostly over the course of last year, before projected deficits quadrupled and Obama’s economic recovery bill left many of the same spending accounts swimming in cash.
To the embarrassment of Obama – who promised during last year’s campaign to force Congress to curb its pork-barrel ways – the bill contains 7,991 pet projects totaling $5.5 billion, according to calculations by the GOP staff of the House Appropriations Committee.
Sen. John McCain, R-Ariz., Obama’s opponent in last fall’s presidential campaign, called the measure “a swollen, wasteful, egregious example of out-of-control spending.”
The earmarks run the gamut. There’s $190,000 for the Buffalo Bill Historical Center in Cody, Wyo., $238,000 to fund a deep-sea voyaging program for native Hawaiian youth, agricultural research projects, and grants to local police departments, among many others.”
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Further Excerpt of the article –
Sen. John McCain blasts $237,500 for Japantown museum – By Frank Davies, Mercury News Washington Bureau – Thank you.
Reps, Zoe Lofgren, D-San Jose, and Mike Honda, D-Campbell, secured that money to help the museum.
Honda, who is Japanese American, – “Jap. Museum boost tourism (thus jobs) in SJ Japantown, last of 3 authentic US Japantowns, Zoe & I proudly supported its funding.”
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Omnibus Spending
March 5, 2009
March 5, 2009
It has been the topic of the day and rightfully so. The American taxpayers’ wallet is drained for various bailouts from financial institutions to auto industry and others waiting in line for their respective turn.
Is it the present administration’s fault that the nation is dependent on borrowings and charity?
The response varies as it depends on the network and the guests appearing on the programs to discuss economy, finance and stock market.
Those nostalgic about the previous administration claim that it is entirely the current administration’s fault.
For some reason their calculation of the incumbent administration in office since swearing in i.e. January 20, 2009 up until now works out to three months, unless they have a custom made calendar that converts every year into leap year with some months extending beyond thirty one days and somehow only the Democratic administrations are privileged to such magical occurrence.
To shed light on the relevant topic of spending bill $410 billion approved by the Senate and awaiting the President’s signature, there appears to be some legitimate concerns regarding the infamous “earmarks” or “pork barrel” issue that always finds its way into every legislative bill.
According to news media, 40% of GOP members and 60% of Democrats are responsible for the estimated 8,570 earmarks worth $7.7billion . The following article supports it.
March 4, 2009
Senate votes to keep earmarks in bill – By David Espo, Associated Press – Thank you.
“The Senate voted overwhelmingly to preserve thousands of earmarks in a $410 billion spending bill Tuesday, brushing aside Senator John McCain’s claim that President Barack Obama and Congress are merely conducting business as usual in a time of economic hardship.
McCain’s attempt to strip out an estimated 8,500 earmarks failed on a vote of 63-32.
The Arizona’s senator’s proposal also would have cut roughly $32 billion from the measure and kept spending a last year’s levels in several federal agencies.
Last year’s Republican presidential candidate said both he and Obama pledged during the campaign to “stop business as usual in Washington,” and he quoted the president as having said he would go line by line to make sure money was spent wisely.
The White House has said Obama intends to sign the legislation, casting it as leftover business from 2008. Spokesman Robert Gibbs pledged Monday that the White House will issue new guidelines covering earmarks for future bills.
McCain’s proposal drew the support of 30 Republicans and two Democrats, and the outcome reflected the enduring value of earmarks to lawmakers. While polls routinely show these pet projects to be unpopular, local governments and constituents often covet them.
The maneuvering came on legislation to assure continued funding for several federal agencies past March 6. At $410 billion, the bill represents an 8 percent increase over last year’s spending levels, more than double the rate of inflation.
Republicans made two other attempts during the day to reduce spending in the bill, but failed both times.
Sen. Dan Inouye, D-Hawaii, chairman of the Senate Appropriations Committee, said McCain’s call to hold spending level with a year ago “doesn’t account for inflation.”
As an example, he said some programs would have to be cut if federal workers were to receive a pay raise.
The House passed the legislation last week, and Democratic leaders are working to clear it without changes so the president can sign it by Friday.
While Republican opposition in the House focused more on the bill’s overall spending, McCain and allies turned the Senate spotlight squarely on earmarks.
“How does anyone justify some of these earmarks:
$1.7 million for pig odor research in Iowa;
$2 million ‘for the promotion of astronomy’ in Hawaii;
$6.6 million for termite research in New Orleans;
$2.1 million for the Center for Grape Genetics in New York,” he said.
He also noted the legislation includes 14 earmarks requested by lawmakers for projects sought by PMA Group, a lobbying company at the center of a federal corruption investigation. Sen. Tom Coburn, R-Okla, said he would seek to have them removed.
Taxpayers for Common Sense estimates the legislation contains 8,570 disclosed earmarks worth $7.7 billion. House Democrats declined to provide an estimate of the number of pet projects in the bill, and put their cost at $3.8 billion.”
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Analysis:
It is evident from the article and news media discussions that this particular bill primarily aimed at stimulating the economy has some of its priorities mixed up. As stated earlier in my article “Economic Recovery Plan” earmarks or estimates for pet projects is a contentious issue with notable reasons for objection by some lawmakers.
This is no longer a partisan issue as both parties have participants in varying percentages responsible for wasteful spending. On the one hand, we have economic turmoil with American families receiving pink slips instead of paychecks and children literally dependent on charity for survival.
There are worse situations like in the golden state of California, northern Californian school district is forcing K-12 students in public schools to stay home on Friday, making it a four-day week due to again “messed up priorities” by the State legislators. The victims in the merciless fund slashing are none other than the educators and students.
Qualified teachers’ job contracts are terminated because of severe cuts in essential programs like education. The head of this state living up to the reputation of the title “Terminator” leaving students seeking help from parents, peer group, neighbors, and strangers/aliens on the cyber space or even outer space.
Do the pet projects’ sponsors have any idea how desperate the situation is for those struggling to make ends meet particularly with a fear mongering of the “socialism” concept by the capitalist panderers denying the failure of capitalism in the absence of regulatory process?
What does this mean to parents dealing with job insecurity and lack of support to take care of the children on the day, they should be in school?
Hoping the children will be protected by guardian angels while they are at work and risking visits from a social worker on accounts of child neglect and possible abuse.
Those who lack the support of extended family relying on hired help in this perilous economy have to choose between the safety of their children and the tight family budget, since borrowing is out of question with indefinite freezing of the credit market to families and small businesses.
One might assume the federal aid to states should address these problems. Even though the federal aid has been approved for this purpose, whatever benefits allocated for education and relief to families in the federal stimulus package is siphoned off by the state budget targeting the same programs.
The state legislators had to emerge victorious in the long fought battle to balance the budget using people at the bottom of the socio-economic scale as the sacrificial lambs.
Obviously, on the other hand both state and federal lawmakers favoring the pet projects vigorously debate in the House and the Senate floor to defend their own jobs as pet projects is an insurance for re-election in their constituency.
If surplus funds are the reasons for earmarks, why not allocate those funds to the deserving entity i.e. the taxpayers in the economy. It would make sense for taxpayers to use their own money to spend on their dependents’ education, health care and housing payments.
It is conclusive that earmarks like the ones highlighted in the articles should have never been inserted in the first place, and now regardless of whose business is being taken care of i.e. whether previous or present administration, the burden is squarely on the taxpayers with the passing of this bill loaded with unnecessary and meaningless pet projects.
American taxpayers were promised on the campaign trail about the elimination of earmarks by both parties and now is the time to honor that commitment without any reservation.
In the real world, students can enroll in the best educational institutions only upon excellent academic achievement, similarly secure dream jobs (during the glorious days) and stick with it purely on competence.
Unfortunately, the entities to whom the criteria should apply i.e. Washington and Wall Street are exempt from performance based hiring or firing despite their successful duo disastrous mismanagement of the world’s economic power, the U.S. economy.
Taxpayers as voters have the power to promote and implement the agenda in 2010 to realize the campaign slogan “Change is effective when it happens from the bottom up and not from the top bottom.”
Thank you.
Padmini Arhant
Presidential Communication
February 26, 2009
From: President Barack Obama
To: Padmini Arhant
Sent: Wednesday, February 25, 2009 1:14:20 PM
Subject: My address to Congress
Padmini —
Last night, I addressed a joint session of Congress for the first time. To confront the serious economic challenges our nation faces, I called for a new era of responsibility and cooperation. We need to look beyond short term political calculations and make vital investments in health care, energy, and education that will make America stronger and more prosperous well into the future. Watch a few highlights from my address and share it with your friends now: A little more than a month into my administration, we’ve already taken bold steps to address our urgent economic problems. Through the Recovery Act, the Stability Plan, and the Housing Plan, we’re taking the immediate necessary measures to halt our economic downturn and provide much-needed assistance to working people and their families. But to set our country on a new course of stability and prosperity, we must reject the old ways of doing business in Washington. We can no longer tolerate fiscal deficits and runaway spending while deferring the consequences to future generations. That’s why I pledged last night to cut our deficit in half by the end of my term. Achieving that goal will require making sacrifices and hard decisions, as well as an honest budgeting process that is straight with taxpayers about where their dollars are going. Watch some key moments from my address now: http://my.barackobama.com/presidentialaddress Central to this plan will be a renewed commitment to honesty and transparency in government. Restoring our country’s economic health will only happen when ordinary citizens are given the opportunity to hold their representatives fully accountable for the decisions they make. I look forward to continuing to work with you as we bring about the change you made possible. Thank you, President Barack Obama —————————————————————————————————————————– Response to Communication: From: Padmini Arhant To: President Barack Obama Sent: Thursday, February 26, 2009 11:00:27 AM Subject: Re: My address to Congress Dear Mr. President, Your address to Congress and American taxpayers was impressive and right on target. However, any commitments towards short-term goals and long-term vision are authentic and acceptable with less skepticism when backed by specifics. I’m sure your administration will forward necessary details in the near future. As for my continuing contribution to your administration; With all due respect, to you and the office of Presidency, I request clarifications regarding your expectations from me. It would be immensely helpful if you could please define my role and make it official to enable me in providing you unwavering support and service throughout your Presidency and beyond. I hope you understand my predicament. Look forward to your response in this regard. As your vehement supporter, I wish you nothing less than phenomenal success in all your endeavors. Thank you. Best Wishes Padmini Arhant |
California Budget Deficiency
February 20, 2009
At last, after a prolonged melodramatic stunt by lawmakers the California state budget concluded as a major achievement!
The review of the proposed budget appears to be nothing but analogous to a dish prepared for starved patrons by reluctant chefs deliberately ignoring the recipe provided to them while using the ingredients to serve themselves their own favorite dish.
Does this come as a surprise?
Not in this era of special interests and politicians cozying with one another on the maxim “You scratch my back and I’ll scratch yours.”
The worst victims of this fundamental fiscal policy are the children and students, the future taxpayers of this economy.
Does this bother any of those advocates involved in merciless slashing of funds to K-12 and college education?
If it did, they would not have propagated such ideology and as for those to allow this to happen simply suggests their complicity to this charade.
Perhaps, the concerned policymakers could not arrive at a decision to balance the budget up until twenty-four hours ago because they were too busy devising a plan to keep them in power and protecting their own families with children attending private schools or schools not hit by severe funding cuts.
What about them targeting social welfare programs affecting the elderly, sick, disabled, unemployed, veterans and other dependents?
Should we assume the lawmakers could not relate to this segment of the population because fortunately for them they do not have or know anyone in vulnerable position, hence the end justifies the means.
The defenders of the disproportionate funding to the criminal justice system in the budget safeguard their interests at the expense of kids kicked off the welfare and students struggling to meet college expense with some winding up in the overcrowded prison system thus making the so-called reformers’ jobs secure.
That’s why these beneficiaries of dysfunctional democracies display their titles and flex muscles to quell dissent by alienating citizens of diverse background during any crisis.
They conveniently forget the fact that people of ethnic origin are also part of the society making significant contributions in every aspect particularly as taxpayers and their role is not limited to being the benefactors and lately campaign donors as well as volunteers during elections and beyond.
Ironically, legislators have successfully defended corporations by granting them generous leeway as they realize that corporations’ profit will serve the lawmakers during election campaign through donations and ordinary citizens whose votes ultimately grant them power are left to fend for themselves in the tough economic times.
As stated earlier on several occasions, the democratic system essentially run by corporations and the power brokers at the state and federal level prioritizing self- interest over national interest and the electorate forced to be accustomed to this general trend.
Who are the real beneficiaries in this budget?
It is certainly not the disadvantaged and bereft population in requirement of present government assistance to enable them to be future providers of the economy. The other interesting factor in both state and federal dramatic unfolding of legislative approvals is spot the lame duck in this game.
During the captivating rule of the previous administration, the former President George W. Bush mischaracterized as the lame duck, though the majority Democrats would have appropriately fit the profile due to unprecedented use of vetoes exercised by the then Chief Executive at the White House on most issues regarded detrimental to the subjects of the kingdom.
One would assume that gaining majority rule in both houses and the executive branch at both state and federal government is a guaranteed victory in legislative matters. It remains a wishful thinking for one while the other regardless of status quo prevails in failed ideology against pragmatism.
Therefore, the lame duck in the game is none other than the electorate at the bottom of the socio-economic scale and the weak representatives lacking courage to fight for the cause and the purpose of their election to power in a democracy.
In essence, ballots cast by ordinary citizens elevate individuals to power and these elected officials preoccupy in strengthening their own position in office with political bargains even if similar measures overrides the promises on the campaign trail.
Either way, the victims are invariably the electorate granting authority to ambitious political minds often negotiating constituent’s future for personal gains.
Is there a hope to break the chain link for ordinary citizens in a democracy?
“Impossible is written in fool’s dictionary." In any active democracy, the people possess power to ensure fulfillment of electoral commitments by political leaders favoring the electorate and not any special interests or themselves.
Unfortunately, in this budget decision the stalemate was unnecessary as it was with the passing of the federal economic stimulus package. Whenever a minority poses a threat to majority on genuine solutions to problems created by failed policies, it is red alert for electorate to eliminate blockades through elections confirming the power and strength of democracy.
How does the budget impact the ordinary electorate living paycheck to paycheck and families dependent on social programs and public school education?
With deep cuts in education including hikes in college tuition fees and social programs, the average Californians penalized with tax increase via sales tax, vehicle license fee and reduction of dependent benefits from $300 to $100.
The thoughtful policymakers in return decided to redirect the hard fought funding to Corporations via undue credits and maintenance of horse race grounds over education and other essential social services.
Diversion of spending cuts from future taxpayers to benefit self serving interest groups definitely speaks volume on priorities by fiscal conservatives.
Not all those vehemently opposed to socialism are entirely objectionable to redistribution of wealth as long as the recipients are their own kind focused on wealth amassment at the expense of struggling majority.
In fact, voter rejection of two-thirds majority approval in state and federal legislative matters will permanently remove gridlocks in a democratic process besides successfully replacing any need for Open Primaries in the state elections.
It is time for the worst affected groups in the current budget proposal to coalesce and act decisively against willful negligence of issues ranging from education, social programs, environment, and energy… by elected representatives especially with options available to balance the budget.
We sure have a budget to justify the role of government despite the huge deficiency and failure to address the needs of the distressed population.
Democracy best served when the governments of the people run by the people and for the people.
Thank you.
Padmini Arhant
Balancing California Budget
February 12, 2009
The golden state is in deep economic crisis, sharing the status quo of the nation.
As per Wikipedia.org – California would have the 7th highest GDP in the world if thought of as a country (not including the US as a whole, if so, it would be 8th).
A great state like California being the epicenter for – besides earthquakes,
Technology
Biotech and stem cell research
Entertainment symbolized by Hollywood
Diverse talent and skill pool making outstanding contributions in various fields.
Yet, the fundamental responsibility of the state government to balance the budget postponed indefinitely due to partisan politics with Republican minority misusing the two-third majority approval against the incumbent Democrats in the legislature.
As a result, the taxpayers of the economy are abandoned and the entire population is at the mercy of the minority rule upholding the conventional ideology against contemporary wisdom.
It is Déjà Vu for those following the federal government struggle to get the economic stimulus bill approved by both Houses of Congress.
The dilemma of balancing the budget with the political parties’ resistance to compromise is a daunting task for any administration. It is beyond comprehension that failed policies and inconvenient principles continue to dominate the center stage at both state and federal level in legislative matters.
California budget deficit currently at $42 billion with unemployment skyrocketing to 9.3% and expected to worsen by the year-end;
Clearly, the economic recession is widespread and taken severe toll on the present and future taxpayers of the economy.
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Challenges:
How does the state reduce the budget deficit of $42 billion?
Generally, the options would be exploring ways to generate revenues and cutting costs proven liabilities with no income or other benefits to the taxpayers of the economy.
Revenues:
How does the state generate revenues?
Usually, the government revenue sources are taxes paid by individuals and Corporations.
They are in the form of income tax, estate tax, corporate tax, payroll tax, sales tax, customs and excise duty on export and import items as well as fees and charges for any government provided services. If the state has other assets in the form of government bonds and treasury bills, they comprise negotiable instruments to borrow money.
In addition, the government could potentially expect income from investments in industries via quasi contracts, state run institutions, sale and/or leasing of government land to private sectors and trade goods and services with neighboring states or foreign governments. Some states find ways and means to share natural resources with their neighbors within and outside the nation for income.
Then, a federal aid to boost social services, health and educational programs is other channel for financial assistance.
Obviously tax increases is the common strategy for meeting budget shortfall. If income and aid are available from stated sources, then funding expenses is affordable.
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Spending or Costs Elimination:
In this category, the lawmakers vehemently opposed to tax increases propose massive cutbacks and reduction in spending by a sweeping shutdown of essential services and programs with dire consequences in the long term.
Ironically, investment in education, health, housing, energy and environment are easy targets as “wasteful spending” for legislators in opposition to tax hikes during budget crisis. Those policy makers fail to understand the importance of protecting and nurturing the beneficiaries of these programs as they contribute to the economy today and tomorrow as taxpayers.
Lately, legislators have taken a swipe at education or investment in public school systems at both state and federal levels. It is tragic that such measures are even contemplated leave alone legislated in the industrialized and advanced nation that should be leading the world in K-12 educational program.
The public school system in the State of California and across the nation is in shambles. The infrastructure and the general classroom environment are in desperate need of face-lift to improve academic performance by students of all socio economic backgrounds.
Every dollar spent in a child is an investment in future.
Complete overhauling is required in areas like classroom size, materials including new Textbooks, enriched curriculum with emphasis in Math and Science, Music and Arts, Sports facilities, recruitment of qualified teaching staff, Teachers’ salary, training and professional development, new energy efficient buildings regardless of districts and zones in every state.
Undoubtedly, education must be a priority with K-12 system being the foundation for young minds entering the academic world. The reason United States is lagging behind in international standards is due to neglect of our school system particularly the early learning stage (K-12) when the opportunity to help every student thrive is available to educators.
Therefore, the state and the federal government are obligated to enhance achievements in educational programs through investments in the state-of-the-art educational system.
Similarly, health, housing, energy and environment are equally important as the taxpayers benefit from adequate health care, proper housing, affordable energy, clean and safe environment.
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Pragmatic Solutions:
The best option to reconcile California budget is to consider both tax increases and costs reduction as suggested by many analysts and experts on this issue.
According to the analysis by San Jose Mercury News, February 8, 2009
Budget spending outpaced inflation and state’s growth.
Interestingly, the social services and K-12 education received proportionately less funding as compared to the extra spending identified in Criminal Justice, health care and filling the gap for the reduced vehicle license fee in the analysis of actual spending in 2007-2008.
First, action is required to identify the revenue sources via tax increases.
1. Marginal increase in Sales Tax of goods and services including the sales on the cyberspace would provide an even tax distribution for the society.
2. Increasing Vehicle License fee for all is necessary to address the massive deficit. In this context, it is important to raise another explosive issue of undocumented workers in California without drivers’ license or vehicle registrations.
Issuing drivers license and allowing all undocumented workers to register their vehicles would not only generate income for the state, it would also strengthen state and national security with the documentation of all residents in the state.
Subsequently, acquiring vehicle insurance by the undocumented workers would minimize the burden on registered owners in addition to stimulating the economy through insurance industry.
At present any vehicle registration or insurance by undocumented workers carried out in a back alley manner depriving the state due proceeds.
3. Target items for tax increase to reduce health care costs such as tobacco, hard liquor products and items subject to possible health abuse.
4. In the establishment of social standards, tax increases on winnings through gambling and advertisement sales of pornography (assumed to be a multibillion dollar industry) is justified to make way for important social services and programs.
5. Review and revise taxation policy for California Corporations hoarding income in tax havens along with their offshore subsidiaries.
6. Airport tax, Port fees, dutiable goods, customs and excise duty are other sources of revenue.
7. Increase tax on entertainment industry to pay for education, kids welfare, community hospitals, colleges and institutions.
8. Specific environmental protection act by levying heavy penalties on environmental pollution (air, land and sea) through negligence such as oil spilling, carbon emissions and violation of aviation standards.
9. Marginal increase in gasoline tax would enable energy efficient programs such as solar, wind and hydro thermal power.
10. Last but not the least, leasing government land to corporations and scientific institutions, university laboratories or airline industry with enforcement of strict environmental regulations, not excluding sale of government assets no longer useful in the short or long run.
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Costs Reduction:
Criminal Justice System:
A thorough examination of the Criminal Justice system is necessary from the analysis and news reports.
The State must devise a mechanism to reduce prison population through major social reforms at all levels beginning with the juvenile detention center.
Further, the parole system, three strikes law and other misdemeanor charges reassessed and offenders deployed in monitored community services rather than crowding prisons is the ideal strategy to cutback spending.
Health Care:
Healthy Approach to reducing health care costs –
Medicaid for senior citizens and economically disadvantaged population.
Promoting preventive care with immunizations.
Early diagnosis of diseases through annual or bi-annual medical checkups and
Subsidized prescription drugs through tax incentives to pharmaceutical and bio-tech industry are few possibilities to deal with health care crisis.
Counseling services and Therapy for psychological and other mental health problems as a preliminary screening process to ease the substantial costs in this regard.
General well being encouraged through active life combined with healthy diet in schools and other areas of the community.
Vehicle License Fee backfill – To be reinstated as outlined above.
General Government – Electronic record keeping and updating technology would considerably improve efficiency and prohibit excessive spending in administrative services.
Higher Education – Engagement in community development activities in return for student loans is a progressive cost recovery scheme.
Transportation – Cost savings methods and effective transportation means aimed at conservation of time and energy recommended for this expense.
Resources and environment – Best to follow guidelines suggested above for environment.
All other costs and spending not discussed or highlighted must be carefully reviewed and those proven redundant with no benefit to taxpayers or the State eliminated to reconcile the budget.
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Time for Action by California Legislators
Investment in better education and all of the essential services means building future with healthy, responsible and productive citizens as opposed to increasing prison population demanding major diversion of funding to criminal justice system.
There is an urgency to underscore the fact that not all taxpayers necessarily benefit and appreciate the frugal tax savings by preventing tax increases because such action favors the wealthy minority while leaving the majority marginalized in a society.
If the legislators really care for their constituents and the state/nation they pledge to serve, they need to pause and reflect on the realities of depriving majority of the population to decent lifestyle and economic prosperity, the predominant cause of the current sluggish consumer spending.
Often, provision of unemployment and social security benefits, Medicaid, health insurance, food stamps…dismissed as socialized enigma in a Capitalist economy. Unfortunately, a reminder is required that subscribers of these benefits and services ultimately contribute to the success of the capitalist system as consumers of various products and services.
As stated earlier in the blogpost titled Redistribution of Wealth, Oct 31, 2008, www.padminiarhant.com
Promoting economic status as highlighted above…
Eventually, create a fair system of sharing the economic burden by all rather than only by the affluent ones.
Such farsighted and permanent solutions are in direct contradiction to the myth and misnomer of the doctrine against short term tax increases essential to combat severe economic recession.
Socialism, Marxism may well be the nemesis to Capitalism,
Capitalism cannot thrive without consumerism – – That is the fact
California budget crisis must be resolved with no further delay.
It is time for legislators to set the priorities right to fit in with the new millennium goals.
Thank you.
Padmini Arhant
Reconciliation and Approval of Economic Recovery Plan
February 10, 2009
President Barack Obama’s candid appeal to Congress and Senate via press conference confirms the White House commitment to relieve severely hurting citizens from the agonizing pain of the ailing economy.
The legislators resisting compromise to the stimulus package obviously do not share the pain of their constituents. If they did, they would have no objection to essential and guaranteed investments specifically identified for job creation in President Obama’s plan.
It is frustrating that partisan politics remains a force to reckon with for the electorate in a democracy.
Tragically, ideology leads the way to oppose a bill designed to assist every taxpayer who is also the consumer and most importantly a voter from becoming a recipient of food stamps.
The excerpt from a recent article titled –
“Billions in aid to states cut amid struggle over stimulus”
By Associated Press, February 8, 2009.
“President Barack Obama and Senate Republicans bickered Saturday over his historically huge economic recovery plan after states and schools lost tens of billions of dollar in a late-night bargain to save it.
Forging compromise –
The compromise reached between a handful of GOP moderates led Susan Collins of Maine, the White House and its Senate allies stripped $108 billion in spending from Obama’s plan, including cutbacks in projects that likely would give the economy a quick lift, like $40 billion in aid to state governments for education and other programs.
Yet, it retained items that also probably won’t help the economy much, such as $650 million to help people without cable receive digital signals through their old-fashioned televisions or $1 billion to fix problems with the 2010 Census.
Among the most difficult cuts for the White House and its liberal allies to accept was the elimination of $40 billion in aid to states, money that economists say is a relatively efficient way to pump up the economy by preventing layoffs, cuts in services or tax increases.”
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Reality Check:
Now, any rational citizen regardless of party affiliation should ask the following questions to the GOP moderates seemingly endorsing the bill.
Where are the priorities?
Is helping people receive digital signals through their old-fashioned televisions and a staggering $1 billion to fix problems with the 2010 Census more important than investment in education, easing the burden on states to lift economy by preventing layoffs, cuts in services and tax increases?
Do GOP members realize the reason behind colossal defeat in the 2006 and 2008 election?
The American electorate is tired and bogged down with Washington’s immature revengeful tactics in the approval of legislative matters concerning the lives of every citizen.
Ironically, all those legislators against the approval of this bill targeting the future of our nation with respect to education, job creation and needful services forget that their jobs are also on the line in the process.
If they presume Capitol Hill to be a comfort zone for a specified period and expect immunity from the economic crises, they are being delusional as the electorate has choices to reject such representation in a democracy.
Where was the hype and concern when the previous administration committed the nation to a reckless war that has virtually bankrupted our economy?
Whatever happened to the various failed stimulus packages without any accountability to taxpayers or the oversight committee passed by the Bush administration and approved by the same legislators in opposition to the current one committed towards education and aid to states to revive the economy by preventing layoffs, cuts in services or tax increases?
The irresponsible conduct to block the bill simply suggests that come 2010 the democratic system would be better off with an alternative political party pledging support to the people and engage in constructive rather than destructive role in nation building.
Similar dilemma experienced in the State of California where the budget crisis has reached a point of no return due to political dogma upheld against pragmatic solutions.
The electorates are viewing the entire situation at both state and federal level and will deliver their decision in the ballot in less than eighteen months.
Despite presentation of this bill in the most cohesive manner, all those legislators on both sides prolonging the approval are not only jeopardizing the opportunity to help every constituent from economic failure but also their own career as an elected official to serve the people and the nation in crisis.
It is the duty of every public servant to recognize the plight of their population and heed to the call to oblige urgent needs by approving the stimulus bill particularly the aid to states that are broke along with education, jobs, services and tax modification.
There is no time for procrastination and all that is required is action. Unfortunately, the Presidency of Barack Obama with unprecedented transparency is subject to undue scrutiny for political strategies.
The campaign trail promises prior to election to office whether it is the House or Senate always remains a distant memory with "business as usual " demonstration upon becoming Senators or the House of Representatives.
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Decisive Action:
The economic recovery plan aimed at job creation, assistance to states sharing status quo of the nation, improvement of infrastructure and commitment to revival of education, energy, health care is the step in the right direction.
It is imperative for both Democrats and Republicans to get on board in a bipartisan effort and approve the bill without elimination of prudent investments mistaken for wasteful spending. The job losses in Indiana, near double-digit unemployment in California are real problems felt by hard working people across the nation.
The proposed bill with taxpayers’ dollars invested for taxpayers’ benefits is undergoing intensive criticism by lawmakers primarily responsible for allowing the previous administration to squander economic surplus along with exhaustion of national reserves and treasury in wild adventures as the signature mission of the Republican era.
President Barack Obama’s administration did not create this economic catastrophe. They have inherited it upon election to the office on January 20, 2009. Nevertheless, the rhetoric in the Senate and the House mocking hope and change in a theatrical manner is reflective of the opposition role to make noise, create roadblocks and exacerbate the crisis with an adversarial action or inaction.
Only if such fervor and excitement displayed during the approval of mass financial bailout worth a whopping $700 billion and the unlimited commitment of resources in an unnecessary war in Iraq by the Bush administration there would be no debate or discussion for any economic stimulus package today.
It is apparent from those legislators’ reluctance to acknowledge the realities that they prioritize their own needs to remain in power over their constituents’ hardships and suffering in a debilitating economy.
The electorates have a clear choice in the next election to remember those who care and reject those who abandon them during harsh crises.
Political parties might survive on rhetoric and empty promises but people cannot wait until political factions make up their mind for decisive action required to avert Armageddon upon failure to approve the authentic economic recovery plan by President Barack Obama.
Thank you.
Padmini Arhant
Senate Debate on Economic Recovery Plan
February 7, 2009
The Senate is engaged in vigorous debate over the economic stimulus package from President Barack Obama.
It appears there is massive confusion in the determination of priorities on this bill. The honorable Senators are concerned about the effectiveness of this bill given the magnitude and the urgency to address serious challenges facing our nation.
Individual viewpoints during debate are healthy and sometimes serve the purpose to remain objective.
However, in this particular process overindulgence could lead to distraction and become counter-productive.
After viewing the Senate discussion of the bill, it is apparent that Senators are yet to configure the policies and programs to achieve the pertinent goals.
For instance, there is mix up between creating jobs and dealing with foreclosures. In order to target the specifics of the current economic recession, let us breakdown the various components in requirement of stimulus and revival.
The consensus is to have a stimulus plan that yields the desired result of averting further economic meltdown by setting the pace for recovery.
As stated earlier in the economic recovery plan posted on February 3, 2009 the culminating factors of the economic crises are;
Housing market, Job market and Stock market.
Housing market – It is important that foreclosures are dealt with effectively and refinancing opportunities made available to homeowners in dire state.
Current plan has $15,000 in tax credits for new homebuyers in an effort to improve the housing prices through home sales. Unless and until the existing homeowners rescued from losing homes through foreclosures and others with affordable mortgage payments to adjust the deficiency in home value, any measures in this sector will be futile.
At the same time, an amendment to the debated stimulus bill to handle foreclosures saving approximately 1.5 million families from this crisis is a repetitive exercise as claimed by those Senators in opposition to this amendment.
The reason being, as articulated by the Senators against the amendment, The Troubled Assets Relief Program (TARP) worth $700 billion was committed for this purpose along with bailout of financial institutions.
Accordingly, $50 billion was allocated towards foreclosures and restructuring of mortgage programs.
Therefore, it is imperative to derive that $50 billion from the previous TARP fund and apply towards the revival of housing market crisis. It is quite possible that $50 billion will not be adequate to provide instant relief but action recommended than inaction.
More reason to verify the exact distribution of the previous TARP fund i.e. $700 billion bailout and redirect any unused portion towards challenges such as housing market and consumer spending.
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Objectives of the Stimulus/Recovery Plan:
The primary focus of the current stimulus package must be job creation, aid consumer spending and investments with safe returns.
Job creation: President Barack Obama’s proposal aims for creation of 3 million jobs through various avenues such as —
Direct investments in public works projects i.e. repair and reconstruction of infrastructure across the nation.
Tax incentives and financial assistance to small businesses and corporations with limited resources.
Minimize payroll tax to curb mass layoffs.
Restore manufacturing jobs with necessary financial assistance and modified tax structure.
Consumer spending: The stimulus package offers relief to consumers with tax credit of $500 for individuals and $1000 for couples. It is essential for consumers to utilize the credits towards consumption of goods and services rather than reducing personal debts as again that would be beneficial to the financial institutions, the major contributor of the economic recession.
It is worth remembering that the Bush administration experimented with this stimulus strategy last summer, i.e. 2008 with $300 rebate per child and a cap on annual income of the family. Obviously, the trial and error method did not payoff due to neglect of other crisis like housing, stock and financial markets.
The lesson learned is to treat housing, job, financial and stock market crisis individually and isolate them from one another even though they comprise the entire cause of the economic recession.
Other ways to trigger consumer spending is to ease the burden on families with energy costs i.e. heating homes around this time of the year is significantly high and reduction of surcharges and taxes on the energy bill will provide relief to population in the worst affected regions of the country.
Consumers represented across the social and economic spectrum in a society range from youth population to families, senior citizens and self-employed individuals…
Any tax benefits and financial assistance should be inclusive of all potential consumers to obtain maximum gains.
Investments with safe returns: All investments must produce optimum returns, secured with viable collaterals and subject to rigorous oversight. Most importantly, the investment must generate jobs and/or income for taxpayers as well as create opportunities to tackle other issues like health care, energy and education.
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Partisan Politics vs. National Interest
It is common knowledge that the two major political parties have unique positions on fiscal policies.
The Republican Party is vehemently opposed to tax increases to reaffirm the political platform of the party, while scouring for wasteful spending.
Fiscal responsibility is necessary for a nation saddled with alarming deficit. Nevertheless, desperate times call for desperate measures. Now is the moment to rescue the nation with prudent investments and techniques to revitalize growth in all sectors.
During elimination of costs proven liabilities, diligence is required from legislators to distinguish investments from wasteful spending. Funding National Endowment for Arts is a worthy cause as it promotes creative and Performing arts besides employment opportunities for a significant population who are ultimately taxpayers in the economy.
Sometimes, political debates overshadow the ambition to resolve major national crises.
The Democratic Party must be committed towards immediate mission to revive the economy and therefore abstain from elaborate spending spree on frivolous projects that form the basis for unnecessary political debates.
Compromise on both sides by finding common ground to restore consumer and investor confidence is vital for economic recovery.
With mass layoffs, collapse of housing, financial and manufacturing sectors… partisan politics is symbolic of Washington and it is time to get past conventional ways to demonstrate that representatives in the House and Senate care for their constituents, the real victims of the economic catastrophe.
Conciliatory effort and collective action from all sides is what required to helping our nation survive the worst economic period in recent times.
The Senators can confirm their willingness to work together for national interest by approving the President’s recovery plan.
Taxpayers as electorate are viewing the situation with the hope that policy makers will put aside their differences and reject political scores by pledging support to the job creation proposal from President Barack Obama.
Thank you.
Padmini Arhant