Monthly Archives: March 2009

Fixing The Hidden Homeless Problem? No, Throwing Money At The Non-Existent Homeless Problem

Government Incompetence, Government Waste

Maybe, in the fury over federal bailout dollars spent on AIG bonuses, someone should stand up and ask whether this $600K in stimulus money is well spent:

The Town of Union is getting $578,661 in federal Recovery Act funding for a homeless problem that may not exist within its borders.

The money is coming from the federal Housing and Urban Development program to pay for homeless prevention and emergency shelter programs.

Union did not request the money and does not currently have homeless programs in place in the town to administer such funds, said town Supervisor John Bernardo.

“We were surprised,” Bernardo said. “We’ve never been a recipient before.”

Bernardo said he isn’t aware of any homeless issue in the largely suburban town.

This illustrates a major problem with the way that any ultra-large organization accomplishes tasks. The organization has far too many levels, departments, subsidiaries (if you can define the local-state-federal governments as a subsidiary relationship — I’m stretching slightly here), and egos. You have people who have mandates that certain things get done, but if there’s not adequate communication between all the players, the wrong things will be done.

The act of trying to unwind this money will be gargantuan. Is it some Congressman’s earmark? Maybe, but since we don’t have any real way to track earmarks, it may never be proven. Is it some mid-level HUD bureaucrat who “had to spend his money” and said that Union, NY sounded like a worthwhile recipient? Did someone within Union put in this request without telling anyone?

Which is why, of course, they aren’t going to try to unwind the slime trail. It’s only $600,000, after all. HUD, even though the town doesn’t have any programs designed to alleviate the nonexistent homeless problem, suggests that they find a way to spend the money:

“We hope and encourage these new grantees to develop creative strategies for the funding,” Glantz said of Union’s homeless grant.

Funny how cavalier they are about wasting other peoples’ money.

If I accidentally give myself an extra $10,000 on my tax return, will the IRS suggest I come up with creative strategies to use the improper funding? Didn’t think so…

I guess it’s only the spending that they’re willing to waste, they want to make sure the get every penny of revenue out of us.

Hat Tip: Paul Jacob

Brad Warbiany
https://thelibertypapers.org/

Stephen Colbert Goes Galt

Politics

Last week, Stephen Colbert put his spin on the whole “Going Galt” meme:

Even though I like Rand’s ideas alot, I think Colbert hits the nail on the head. In the end, I think that a lot of this “going galt” stuff is just talk that will amount to nothing.

UPDATE (Brad Warbiany): Fixed formatting issue with video. Again, apologies to Comedy Central for stripping the top & bottom bars. One of these days I’ll figure out why your embeds are breaking our theme, but until then, I hope readers will click over directly.

Doug Mataconis
http://www.belowthebeltway.com

Sacha Baron Cohen Makes “Queer” Pass at Ron Paul

Culture

Two of my favorite former presidential aspirants have now been punked by Sacha Baron Cohen. Those who thought the Borat scene with Bob Barr funny (modified YouTube below) may find even the thought of this one even funnier. Here’s how Slate describes (movie spoiler warning) the scene with Ron Paul for the upcoming movie Bruno:

Cut to a nondescript hotel suite where Bruno sits across from Ron Paul. After a brief exchange of pleasantries, a light blows out on the set. Bruno apologizes for the technical difficulties and suggests that he and Paul wait in the other room while the crew fixes the light.

The other room, it turns out, is a bedroom. The lighting is low, and the film is now grainy-not unlike a sex tape-as it cuts to a hidden spy camera. It’s a classic shot, just like something you’d see from someone in Film School. There’s a spread of Champagne and strawberries and caviar on a table.

Bruno tells Paul to make himself comfortable. Paul sits down on the bed. Bruno turns on some music and starts dancing. Paul is visibly uneasy but doesn’t say anything at first. He picks up a newspaper and pretends to read it. “You can tell at each weird gay detail, he [chalks] it up to, This guy is European,” says one of the attendees.

Finally, Paul asks what’s going on. “Don’t worry about it, Dr. Paul,” says Bruno, who then unbuckles his belt and drops his pants. At that point, Paul snaps up and storms out of the room.

As Paul is walking away, you can hear him say, several times, something like, “This guy is a queer!” “The word queer comes out of his mouth three or four times,” says an attendee.

As I was driving from Atlanta to Birmingham today, I heard on the radio that Cohen also punked the Alabama National Guard. It seems that Cohen may have actually spent more time around the Alabama Guard than Dubya.

A tip of the hat to Marc Gallagher.

Stephen Gordon
http://stephengordon.com

Angry About The AIG Bonuses ? Blame Washington

Economics, Government Regulation, Politics

As the Obama Administration tries to manage the blowblack from the revelations about the bonuses paid to AIG employees last week, it’s becoming exceedingly clear that this is a controversy created largely thanks to the incompetence and grand-standing at all levels of levels of government.

First of all, there’s the fact that Tim “Turbo Tax” Geithner approved the latest round of AIG funding without taking any steps to deal with the issue of the bonuses:

President Obama, seeking to quell anger from taxpayers whom he soon may have to ask to support another bailout, on Monday called for trying to block the $165 million in bonuses that American International Group paid to reward top executives even after taking billions of government bailout dollars.

Mr. Obama called the move an “outrage,” but administration officials spent hours Monday attempting to explain why Treasury Secretary Timothy F. Geithner gave AIG a new payout this month even though the bonuses had been on the books since last year.

Moreover, it’s clear that the issue of the bonuses themselves has been known in Washington since at least last September:

For all of the furor since details of the bonuses became public over the last several days, the issue of retention payments to A.I.G. employees globally has been percolating publicly since A.I.G. was bailed out in mid-September. About $1 billion in retention payments for 2008 and 2009 are in question, but the controversy involves about half of that, about $450 million over two years, that was intended for employees of A.I.G.’s financial products unit. That unit was the source of the financial derivatives blamed for the near-collapse at the heart of the economy’s downturn.

The Treasury and Federal Reserve officials said they had known about the bonus program as far back as last fall.

And, as if that’s not enough, only last month Congress passed and the President signed the stimulus bill, which included an Amendment that directly addressed the very issue we’re dealing with today:

While the Senate was constructing the $787 billion stimulus last month, Dodd added an executive-compensation restriction to the bill. That amendment provides an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009” — which exempts the very AIG bonuses Dodd and others are now seeking to tax.

The amendment made it into the final version of the bill, and is law.

Separately, Sen. Dodd was AIG’s largest single recipient of campaign donations during the 2008 election cycle with $103,100, according to opensecrets.org.

All of which leads to a question that needs to be answered by the Obama Administration and everyone in Congress whose beating the drum on this issue:

Why did it take so long for the president and senior lawmakers to get so worked up? More troubling, why did it take so long for them to discover AIG planned to give huge bonuses in the first place?

So, when you’re listening to politicians trying to exploit populist anger over the idea that a company that received a taxpayer-funded bailout paid out millions of dollars in bonuses, remember this —- the politicians who are acting angry now, are the same ones who let it happen.

It’s also worth taking note of the identity of those who have received campaign funds from AIG. As they say, money talks, others walk

Doug Mataconis
http://www.belowthebeltway.com

Spot The Flaw In Ezra Klein & Kevin Drum’s Reasoning

Credit Crisis, Economics, Fiscal Policy, Government Incompetence, Politics, Theory and Ideas

Here we go — unfortunately I have to quote this nearly in its entirety, or the error will not be quickly apparent.

Noam Scheiber says “our political system isn’t ideally suited to dealing with financial and economic crises.” Ezra Klein begs to differ:

Indeed, I think our political system is actually fairly well-designed for short-term crises. The problem is long-term crises like global warming or health costs. As Peter Orszag wrote back on his CBO blog, “our political system doesn’t deal well with gradual, long-term problems” that require “trading off up-front costs in exchange for long-term benefits.” Few Congressmen want to raise taxes tomorrow to reduce carbon a decade from now. Lots of Congressmen don’t want the economy to collapse if they have to run for reelection next year. For that reason, I’m much more confident in the system’s ability to react agilely and seriously to the economic crisis than global warming. The economic crisis, after all, threatens their reelection. Incumbents often don’t survive depressions. Conversely, I think conventional wisdom is that it’s fixing global warming, rather than global warming itself, that poses the largest political threat to incumbent legislators.

I think that’s right. In fact, I’d go further: not only can we respond fairly well to short-term crises, we actually have responded fairly well to the current economic meltdown. There have been plenty of miscues and half measures along the way, but in the space of 18 months the Fed has created an alphabet soup of term lending facilities; Fannie Mae, Freddie Mac, and AIG have been nationalized; interest rates have been reduced to near zero; TARP was passed and hundreds of billions of dollars pumped into the banking system; the Fed has launched plans to rescue the commercial paper market, the money market, and the consumer loan market; FDIC insurance has been raised to $250,000; Detroit has been bailed out; and an $800 billion stimulus measure has been passed. Some of these actions might have been late or misguided — it could hardly be otherwise considering the depth and freakishness of the financial implosion — but all things considered, the willingness of our political system to deal with this crisis hasn’t been all that bad. If we could muster half this much energy, mistakes and all, on behalf of global warming I’d be ecstatic.

A hole like this is big enough to drive a truck through.

Consider the premise that both of them seem to take for granted — Klein explicitly and Drum implicitly. Legislators, due to electoral incentives, are unwilling to take politically risky positions even if they’re in our long-term best interest. They fail to do so, even if it means letting festering problems* go unsolved, because the benefits are far off in the future but the cost and political risks are immediate.

So what’s the converse of this belief? Legislators will take short-term positions that are politically rewarding today even if it means that they will be creating or exacerbating problems for people down the road. That’s the flaw. You can’t accept the former paragraph without accepting this statement. Legislators and public officials are notoriously short-term thinkers. They’ve shown time and time again that they’re willing to spend today what need not be repaid until the next election cycle.

Drum quotes approving about the new alphabet soup of bailout and stimulus packages, and throwing billions after billions at shoring up AIG, Fannie and Freddie. In fact, his only criticism is that some of it might have occurred later than he would have liked. What’s noticeably missing from the analysis are questions of moral hazard and long-term debt. He seems to accept the rationale that it’s more important to start acting boldly and immediately, and only question whether we’re acting intelligently as a secondary matter. This is the exact sort of political incentive that our legislators and public officials are responding to. Spend today, and deal with it tomorrow.

When they suggest that our legislators ignore long-term problems for short-term politics, I completely agree. In fact, for that reason I suggest that their short-term actions are suspect as well, because they make those short-term decisions with a blind eye to long-term consequences.

Is government good at dealing with short-term or long-term crises? No. As with anything else, government is going to take the easiest and least painful way out, even if it’s not the best way.
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Brad Warbiany
https://thelibertypapers.org/
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