Debt Day Comes Sooner This Year

by Congresswoman Michele Bachmann

For Americans from coast to coast, Sunday, April 26 marked our nation's Debt Day. Debt Day is the day during the fiscal year – which runs from October 1, 2008 to September 30, 2009 this year – on which government spending exceeds revenue for the first time during the year.

Last year's Debt Day fell more than three months later, on Aug. 5.

Judging by the penchant for spending we've seen from Congress and the White House, I think it's safe to say that this infamous day will be creeping earlier and earlier for the next several years. It's simply another symptom of a government that spends too much, borrows too much, and taxes too much.

I come from the strong Minnesota culture of thrift, spending only what I truly can and eschewing debt. But, the trend in Washington is just the opposite. It’s very much a “spend now, and our children will pay later” attitude. That’s why I voted against the trillion-dollar-plus so-called stimulus bill, the nearly-half-a-trillion “omnibus” spending bill, and the multi-hundred billion-dollar Wall Street bailouts.

It’s high-time your family budget took priority here in Washington – and that means not just looking out for your finances today, but also looking out for your children’s futures.

US Congress Holds A 'Monopoly' On Debt

Click on the above title to see the post by Andy Aplikowski of the Residual Forces blog.

You may click here to see the article by Rep. Michele Bachmann (R-MN06)

Newest National Debt Statistics posted November 2008

Here are the newest National Debt statistics available for the month of November 2008 from www.treasurydirect.gov

Debt held by the public (Dec. 11, 2008):
$6,390,881,581,542.01

Intragovernmental holdings (Dec. 11, 2008):
$4,207,003,477,916.77

Total Debt (Dec. 11, 2008):
$10,597,885,059,458.78

Since Oct. 1, 2008 - the National Debt has increased:
$573,160,162,546.29

In the month of November 2008, taxpayers shelled out:
$18,558,733,892.95 in interest payments.

Total amount paid in interest on the National Debt since the Oct. 1, 2008 beginning of the 2009 fiscal year: $37,543,039,529.24

Total amount paid in interest on the National Debt in fiscal year 2008: $451,154,049,950.63

Gifts to reduce the public debt, October 2008: $32,849.95
Gifts to reduce the public debt, Fiscal Year 2008: $2,189,358.89

If you don't like these numbers, we can change them. Call your Congressman at the Capitol Switchboard number (202)224-3121 and urge them to balance the federal budget. Bailouts won't fix the economy, balancing the federal budget will.

MinnPost: Will Obama Plug Minnesota's Budget Deficit?

(The last thing we need is yet another government bailout - this time to bailout government! - ed)

Will Obama plug Minnesota's budget deficit?

By David Brauer Published Mon, Nov 24 2008 3:33 pm
www.minnpost.com

Although Recountpalooza has at least another month to run, Minnesota's looming budget deficit has begun to move up the charts. Opinion seems to be calcifying around a $4 billion gap, or as MPR's Bob Collins notes, about 11 percent of the state's general fund budget.

Even if Democrats somehow get around Gov. Pawlenty's rock-ribbed opposition to tax hikes, they could probably only raise a billion — roughly a quarter of the shortfall. Most of the rest would come from cuts.

At the federal level, we're all Keynesians now. There's widespread agreement that another massive fiscal stimulus is needed, with resulting debt repaid when times are good. (I know; click your heels and you'll be in Kansas on the latter point.)

But local officials and some analysts note a paradox: as the feds pump money into the system, state, county and city governments will pull it out via spending cuts and tax hikes. As New York county exec Tom Suozzi notes in Politico this morning:

"States and localities must, by law, balance our budgets every year, leaving us
no choice but to make difficult decisions. These efforts are necessary in the
short term, but we are undoing any national efforts to stimulate the economy."

Minnesota's constitution requires budget balancing. The only escape hatch has been a bonding bill, which historically is limited to 3 percent of general fund spending, far short of the cutting to come.

Re-enter the feds. We know they can borrow, so they could take states off the constitutional hook. Local-government support might not create new jobs, but teachers, cops and medical staff at least wouldn't lose theirs.

I asked U.S. Sens. Amy Klobuchar and Norm Coleman how they stood on fiscal stimulus for local governments, and sought comment from Al Franken as well. I also left a message with St. Paul DFL Congresswoman Betty McCollum, who sits on the House Appropriations Committee, a key stop for such legislation.

So far, only Klobuchar has gotten back to me. Here's her statement:

President-elect Obama has assembled not just an A economic team, but an A+
economic teams. His economic job-creation plan is good for Minnesota, with its
focus on energy and infrastructure jobs.

It’s also important for this plan to include options for assistance to
state or local governments. I believe Barack Obama shares this view.

For example, he has proposed that the Federal Reserve and the Treasury
should work together to provide a funding backstop to the state and municipal
government debt market similar to the program already implemented for the
commercial paper market. This would be designed to protect taxpayer resources
while ensuring that state and local governments can continue to provide vital
services to their residents.

Lowering borrowing costs is nice, but pretty thin soup compared to the direct $50 billion subsidy Suozzi proposes.

On a per-capita basis, Minnesota could get about a billion in such a plan (which would trickle down to localities if state local-government aid isn't whacked, which it almost certainly will be otherwise).

Again, a billion wouldn't close the state deficit, but it would be a big leap forward. The last time the state faced a billion-dollar shortfall, no one expected a Washington assist given George W. Bush's ideology. Will Barack Obama provide change, or more of the same?

I'm Not Running Against John Kline

In response to those who have contacted me regarding my alleged write-in campaign against John Kline, I am not waging a write-in campaign against the Congressman. I do not live in his district so I cannot even vote for him. My previous post in response to "Why Kline Voted Yes" on the bailout bill has caused an inadvertant error in the blogosphere. There is another guy running a write in campaign against Kline, and it was mistakenly attributed to me because of my post.

While I seriously disagree with the Congressman on this particular issue - he has been a stellar conservative on other issues like opposing earmarks and opening up domestic drilling. If I lived in his district, he would still have my vote.

For those who came here to see the "goods" on the Congressman and why I would wage a write-in campaign against him, I'm sorry to disappoint.

As for a future Congressional bid in Minnesota's 4th Congressional District, I won't rule that out in the future. No write-in this year - Ed Matthews has my vote!

Jeffrey S. Williams
National Debtbusters

A Letter to My Congresswoman

Written on Oct. 2, 2008 at 10:14 p.m.

Dear Congresswoman McCollum:

I find it amazing that you have already voted to increase our National Debt by $700 Billion, and the fact that you are even considering supporting an even bigger bill of $810 Billion is completely unthinkable.

It's bad enough that we pay nearly $500 Billion each year on the interest on our National Debt but you want to raise that to $600 Billion. How much Federal Spending is enough? I highly encourage you to vote NO on the Wall Street bailout package. It's time we have some financial responsibility back in Washington and New York. Main Street American's right here in St. Paul, your home district, cannot afford this.

In addition, I would like to know your reasoning behind the vote, and what you plan on doing to eliminate our national debt. Please put it in writing to me at:

(Edited)

Sincerely,

Jeffrey S. Williams
Constituent

AZ Rep. Shadegg Takes on Treasury Sec. Paulson

Ariz. Rep. John Shadegg Takes on Henry Paulson
Tuesday, September 30, 2008 11:37 AM

By: Jim Meyers
www.Newsmax.com


“The sky is not falling,” declares Rep. John Shadegg, and Congress will act to deal with the economic crisis without giving Treasury Secretary Henry Paulson a “blank check.”

The Arizona Republican writes in Monday’s USA Today: “Every Republican who voted against the Emergency Economic Stabilization Act on Monday believes that Congress must address this crisis. They take it seriously and stand ready to vote for reasonable legislation…

“Paulson’s $700 billion plan was fundamentally flawed. The bill asked for a blank check. It did not specify which assets could be purchased or the procedure by which they would be purchased…

“Secretary Paulson is getting a lesson in civics. The world he has entered is different than the wheeling-and-dealing Goldman Sachs world where he made his fortune.”

Shadegg called for the suspension of the “mark to market” accounting rule that requires mortgage-backed securities to be valued at “fire-sale prices.” That would help prevent the current crisis from reoccurring, but Shadegg said it is “incomprehensible” that Paulson and Congressional Democrats refused to include such a provision in the bill.

He also called for an increase in the Federal Deposit Insurance Corp.’s $100,000 limit on coverage to alleviate the concerns of millions of Americans, and said “it’s hard to imagine why anyone would oppose such a change.”

Rep. Shadegg, who was first elected in 1994 and has held a number of GOP leadership positions in the House, concluded: “We have ample time to reach an acceptable compromise if all parties act in good faith. The Democratic House majority can move to reconsider its bill if Speaker Nancy Pelosi will allow an amendment to improve it by making changes, including those I have outlined.

“This market can be solved in the very near future, and the market will come back.”

The Bailout Is a Band-Aid

The Bailout Is a Band-Aid: Housing Crisis Needs to Be Fixed
Thursday, September 25, 2008 4:18 PM

By: Christopher Ruddy
www.newsmax.com

Yesterday Sen. Orrin Hatch was hitting the airwaves.

The subprime crisis, he said, was the fault of the Clinton administration, who he said created the subprime mortgage crisis.

Other Republicans have been laying blame on the financial crisis on minorities and illegal immigrants who got mortgages they simply couldn’t pay. They offer no statistical proof on this point.

Nor does the usually sensible Senator Hatch offer evidence when it comes to pointing the finger at the Clinton administration.

The attempt to deflect blame for the crisis is not simply wrongheaded; I think it will compound Republican political woes and bring us disaster again in November.

Doesn’t Hatch and Co. know that Bill and Hillary Clinton voters in the swing states will decide who becomes the next president? They are wary of Obama, but love the Clintons and remember the good economic times of the’90s.

As a conservative Republican of the Reagan type, I find myself in this odd place cheering on some of the sensible things I hear from Democrats.

Barack Obama said any bailout to Wall Street must not be simply a cash payout or a loan, but be treated like an equity investment in these firms. We want our money back and then some. Yes to that, I say.

And demands by House Democrats that the secretary of the treasury alone not be given a blank check for more than a trillion dollars of our money, and that we have complete transparency in the transactions, I say yes to that, too.

Fiscal responsibility, transparency and accountability — aren’t these things Republicans believe in?

The Democratic complaints about the Bush plan shows that our government is working. The executive branch tried to put a gun to the head of Congress and told them, “Sign this check or the whole U.S. banking system will collapse.”

Congress didn’t blink.

Don’t get me wrong. I am for a bailout, but one that is sensible and is a win-win for Wall Street, Main Street investors and taxpayers like you and me.

But remember the government bailout plan proposed by the president and modifications supported by the Democrats won’t fix the underlying problem: the housing market collapse. Home prices are continuing to fall, and fewer people are buying homes than ever. Foreclosures will continue.

Unless this underlying problem is fixed, the economic symptoms will continue. There are some remedies. But before I get to them, let’s review what has happened.

The Federal Reserve under Alan Greenspan gave the U.S. economy shock treatment back in 2001 and 2002 when it lowered interest rates to 1 percent — the lowest Fed Funds rate in recent history.

By pushing the pedal to the metal and backed quietly by the White House, the Fed injected massive liquidity in the U.S. economy, creating the largest asset bubble in history, according to the Economist magazine.

Incredibly low rates by the Fed were accompanied by an acceptance of the central bank for all sorts of exotic mortgage loans. No down payments. Interest only. No job and income verification. Get the picture?

Compounding this irresponsibility was then the “greed factor” that kicked in at several levels.

First were the local banks and mortgage companies that pushed mortgages, notably adjustable rate ones that offered extremely low introductory rates, and gave them to buyers who would not be able to pay back once the rates adjusted up.

Well rates have adjusted up and the crisis hit.

Many mortgage providers also encouraged loan applicants to lie about incomes and qualifications to approve these mortgages.

Wall Street as a whole had little role at this stage. But later, Wall Street took these mortgages, which had been rolled up into collateralized debt instruments, better known as mortgage backed securities, and sold them off to investors globally.

Wall Street failed to compute the risks involved in these securities. It was a failure, not a crime.

But many Wall Street firms, hedge funds and other investments took incredible, unwarranted risks using these securities. These firms would borrow money at low rates — say 4 percent — and invest in CDOs paying 6 to 7 percent. This small difference in rates of 2 to 3 percent, the arbitrage, would throw off enormous returns, especially considering little or no money had been placed on the table to buy the securities.

I have been told that Lehman and AIG played this leveraging game, investing only $1 for every $30 they held in such toxic suggestions. Again, what they did was not a crime. They took enormous risk and reaped huge returns — for a while.

Now they want us to pay for the huge losses that ultimately fell upon them.

Washington played a role in the mess too. The White House pushed for easy money and easy lending practices, many weighted in favor of the banks and lenders and against the consumer.

Congress, dominated largely by Republicans from 1994 to 2006, did an awful job in oversight. This is especially true after President Bush took the oath of office.

When Bill Clinton was president, the Republicans acted beautifully, working diligently to keep President Clinton on a center-right economic course. The results were great.

This seems like ancient history, but it’s important to have a clear picture of how we got into this mess. It may help us get out of it.

First, we need to know the “crisis” the Bush administration presented to us just last week is not a crisis that just popped up. It was apparent to many two years ago the real estate market was in a bubble and would bust.

And when the Fed moved in 2004 and raised rates from 1 percent to 5.25 percent by 2006 — a more than 400 percent increase in two years, it also led directly to those adjustable mortgages re-adjusting at very high rates. Homeowners got struck hard — with monthly mortgage payments on medium size homes mushrooming literally overnight.

The Fed increase rates started the credit crisis. The first tremors were apparent over a year ago when the Fed took emergency steps to give banks liquidity.

It’s important to remember that most adjustable mortgages created in the boom years still have not reset – and will continue doing so through 2011.

This problem will worsen unless Washington tackled the underlying problems.

The first thing the Fed must do to reduce the continuance of the problem is drop rates. It doesn’t have much wiggle room, because the dollar needs to be protected, but a small decrease in rates could have an enormous impact on those readjusting mortgages.

The second-most-important thing to do is for Congress to give a significant tax credit for new home buyers. Congress just passed a $7500 tax credit for new home buyers, though it’s not actually a credit but a loan at no interest.

The famed economist Edward Leamer of UCLA’s Anderson School says a $25,000 tax credit to new home buyers would put an immediate end to the fall in home prices. He suggests it would spur economic activity and government tax revenues would grow, more than covering the cost of the program.

Already home prices have fallen to reasonable prices and it should be a buyer’s market. But government can spur home buyers who keep staying on the sidelines think prices will fall more.

If this is done, home prices will stabilize and likely begin rising. All of the sectors that relate to the housing market will find relief.

And, most important, the value of those mortgage backed securities will increase as the underlying mortgages become current. Foreclosures will also abate.

The key to solving the financial crisis is not to simply send a blank check to Wall Street, but to get consumers buying homes again.

AP: Steel pennies make cents to lawmaker

The following Associated Press story appeared on page 3A of the Wednesday May 7, 2008 issue of the St. Paul Pioneer Press.

WASHINGTON - Further evidence that times are tough: It now costs more than a penny to make a penny. And the cost of a nickel is more than 7-1/2 cents.

Surging prices for copper, zinc and nickel have some in Congress trying to bring back the steel-made pennies of World War II, and maybe using steel for nickels, as well.

"With each penny and nickel we issue, we will be contributing to our national debt by almost as much as the coin is worth," said Rep. Luis Gutierrez, D-Ill., who chairs the House panel that oversees the U.S. Mint.

Copper and Nickel prices have tripled since 2003 and the price of zinc has quadrupled.

A penny, which consists of 97.5 percent zinc and 2.5 percent copper, cost 1.26 cents to make as of Tuesday. And a nickel - 75 percent copper and the rest nickel - costs 7.7 cents, based on current commodity prices, according to the Mint.

That's down from the end of the 2007, when even higher metal prices drove the penny's cost to 1.67 cents. The cost of making a nickel then was nearly a dime.

Gutierrez estimated sriking the two coins at costs well above their face value set the Treasury and taxpayers back about $100 million last year alone. A lousy deal, lawmakers have concluded. On Tuesday, the House debated a bill that directs the Treasury secretary to "prescribe" - suggest - a new, more economical composition of the nickel and the penny. A vote is expected later in the week.

Unsaid in the legislation is the Constitution's delegation of power to Congress "to coin money (and) regulate the vlaue thereof."

The Bush administration, like others before, chafes at that.

Mint Director Edmund Moy told House Financial Services Chairman Barney Frank, D-Mass., that the Treasury Department opposes the bill as "too prescriptive" in part because it does not explicitly delegate the power to decide the new coin composition.

Sen. Wayne Allard, R-Colo., is expected to present the Senate with a version more acceptable to the administration in the next few weeks.

Other coins still cost less than their face value. The dime costs a little over 4 cents to make. The quarter costs almost 10 cents. The dollar coin, meanwhile, costs about 16 cents to make, the Mint said. - Associated Press