Taxpayer Dollars Spent On Food Stamps Has Doubled Since Obama Took Office – 100% Increase – Estimated Cost Over Next 10 Years Is $770 Billion

June 8, 2012

WASHINGTON, DC – The vast majority of federal spending in the Senate farm bill, which is estimated to cost over $100 billion annually, is going toward food stamps, representing a 100 percent increase since President Barack Obama took office, according to Alabama Republican Sen. Jeff Sessions.

“This legislation will spend $82 billion on food stamps next year, and an estimated $770 billion over the next ten years. To put these figures in perspective, we will spend $40 billion federal dollars next year on roads and bridges,” said Sessions, the ranking member of the Senate Budget Committee.

“Food stamp spending has more than quadrupled since the year 2001. It has increased 100 percent since President Obama took office,” he said.

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More Federal Government Debt Racked Up In Last 15 MONTHS Under Obama Than In Previous 195 YEARS Under 43 Presidents

June 3, 2012

WASHINGTON, DC – The Republican-controlled House of Representatives, which took office in January 2011, has enacted federal spending bills under which the national debt has increased more in less than one term of Congress than in the first 97 Congresses combined.

In the fifteen months that the Republican-controlled House of Representatives–led by Speaker John Boehner–has effectively enjoyed a constitutional veto over federal spending, the federal government’s debt has increased by about $1.59 trillion.

Article 1, Section 9, Clause 7 of the Constitution says: “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” A law appropriating money cannot be enacted unless it is approved by the House.

The approximately $1.59 trillion in new debt accumulated since the Republican-controlled House gained a veto over federal spending legislation is more than the total increase in the federal debt between 1789, when the first Congress convened, and October 1984, when the 98th Congress was nearing the end of its second session.

Rep. Frederick Muhlenberg of Pennsylvania served as speaker in the first Congress. Rep. Tip O’Neill of Massachusetts served his third term as speaker in the 98th Congress.

When Boehner became speaker on Jan. 5, 2011, the federal government was operating under a continuing resolution that had been passed on Dec. 21, 2010 by a lame-duck Congress. That CR expired on March 4, 2011.

On March 1, 2011, Boehner agreed to a new short-term spending deal with President Barack Obama and Democratic congressional leaders to keep the government running past the March 4, 2011 expiration of the old CR. Since March 4, 2011, federal expenditures have been carried out under a series of CRs approved by both the Republican-controlled House and the Democrat-controlled Senate and signed into law by President Obama.

At the close of business on March 4, 2011, the total federal debt was $14,182,627,184,881.03, according to the Treasury Department’s Bureau of the Public Debt. At the close of business on May 31, 2012, it was 15,770,685,085,364.14. That is an increase of $1,588,057,900,483.11—in just 15 months.

All of the debt accumulated by the federal government throughout the history of the country did not exceed $1.588 trillion until October 1984.

Under the Republican-controlled House, the federal debt has been increasing at an average pace of about $105.9 billion per month.

Frederick Muhlenberg served two non-consecutive terms as speaker–in the first and third Congresses. At the end of the first Congress, in 1791, the total debt of the federal government was about $75.5 million, according to the U.S. Treasury.

Tip O’Neill served as speaker in the 95th through 99th Congresses, from 1977 through 1986.

At the end of September 1984, during the 98th Congress, the total national debt was approximately $1,572,266,000,000.00, according to the Treasury Department’s Monthly Statement of the Public Debt for that month. At the end of October 1984, it was $1,611,537,000,000.00, according to the Monthly Statement of the Public Debt.

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Hope & Change: Obama Has Outspent Last Five Presidents – COMBINED

June 1, 2012

WASHINGTON, DC – President Obama has shelled out more in federal spending than the five presidents that came before him.

A new chart by the Comeback America Initiative (CAI), a non-partisan group dedicated to promoting fiscal responsibility by policymakers, shows federal spending by president as a percentage of GDP, and it doesn’t reflect well on Obama.

“There has been a dramatic increase in spending under the Obama administration,” David Walker, Founder and CEO of CAI, told Whispers. “Most of it is attributable to year one of his presidency and the stimulus… but President Obama has continued to take spending to a new level.”

Federal spending was close to 20 percent under the Carter administration, dropped to 18 percent under Clinton, and is currently at an incredible 24 percent of GDP. According to the Congressional Budget Office, federal spending may hover around 22 percent for the next decade.

Federal spending is also higher this year than any year since 1949. The last time spending was higher—in 1946, it was 24.8—the country was just coming down from the exorbitant rates of spending during World War II.

GOP presidential candidate Mitt Romney has said he would cut federal spending down to just 17 percent of GDP.

President Obama is facing some heat over the economy Friday after a depressing job report showed the jobless rate climbed to 8.2 percent in May.

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Time Bomb: US And UK Banking Regulators Force Banks To Purchase Government Debt

May 31, 2012

WASHINGTON, DC – US and European regulators are essentially forcing banks to buy up their own government’s debt—a move that could end up making the debt crisis even worse, a Citigroup analysis says.

Regulators are allowing banks to escape counting their country’s debt against capital requirements and loosening other rules to create a steady market for government bonds, the study says.

While that helps governments issue more and more debt, the strategy could ultimately explode if the governments are unable to make the bond payments, leaving the banks with billions of toxic debt, says Citigroup strategist Hans Lorenzen.

“Captive bank demand can buy time and can help keep domestic yields low,” Lorenzen wrote in an analysis for clients. “However, the distortions that build up over time can sow the seeds of an even bigger crisis, if the time bought isn’t used very prudently.”

“Specifically,” Lorenzen adds, “having banks loaded up with domestic sovereign debt will only increase the domestic fallout if the sovereign ultimately reneges on its obligations.”

The banks, though, are caught in a “great repression” trap from which they cannot escape.

“When subjected to the mix of carrot and stick by policymakers…then everything else equal, we believe banks will keep buying,” Lorenzen said.

Institutions both in the U.S. and abroad have been busy buying up their national sovereign debt for years, he found.

Spanish banks bought 90 billion euros worth while Italian firms picked up 86 billion euros just between November and March. Even in the UK, which has avoided a debt crisis as it is outside the euro zone and able to set its own monetary policy, banks have increased holdings of gilts by 100 billion pounds over the past few years.

And in the U.S., banks, though having “comparatively low holdings” of Treasurys, have bought $700 billion of American debt since 2008.

“Ask the simple question: Why are banks buying sovereign debt when yields are either near record lows, or perhaps more interestingly, when foreign investors are pulling out?” Lorenzen wrote.

He thinks he has the answer.

For one, the European Central Bank’s [cnbc explains] Long-Term Refinance Operations provided guarantees for the debt, which Lorenzen deems a “heavily sweetened form of financial repression given the pressure banks were under” to buy.

“Banks have ended up buying bonds at yields where they would happily have sold them only a few months prior,” he said.

Moreover, banks are allowed to not count the sovereign debt against their Basel capital requirements. Also, Lorenzen argued, European banks have escaped the onus of stress tests this year, a less-than-subtle hint that authorities are willing to tolerate a bit of looseness in banks so long as they are helping to stave off a full-blown debt crisis.

“One doesn’t have to be too cynical to hypothesize that all the disclosures on sovereign exposure have become a bit of a political liability at a point in time where the only buyers in size of periphery sovereign debt are periphery banks funded by the ECB,” he said.

“As long as funding for sovereigns in markets remains in jeopardy, and as long as there is no clear move towards proper fiscal solidarity in Europe, we reckon there will be a strong political incentive to make banks captive buyers. That implies a move away from marking sovereign debt to market, away from raising risk weights, away from capital ratios that don’t risk weight assets and away from stress tests incorporating government bonds.”

For investors in bank bonds, the news is good — for now.

“As long as policy remains to sustain the status quo, bondholders should come out fine. Conversely, if the burden becomes too great, then the alternative will most probably involve a radical departure from current convention — to the detriment of bondholders,” Lorenzen said.

“We suspect this binary outcome requires a political judgement that many funds are not particularly well placed to make.” he added. “Instead of those economics, accounting and finance degrees perhaps you should have done political science after all.”

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Broke: Detroit Michigan May Turn Off Half Its Streetlights

May 24, 2012

DETROIT, MICHIGAN – Detroit, whose 139 square miles contain 60 percent fewer residents than in 1950, will try to nudge them into a smaller living space by eliminating almost half its streetlights.

As it is, 40 percent of the 88,000 streetlights are broken and the city, whose finances are to be overseen by an appointed board, can’t afford to fix them. Mayor Dave Bing’s plan would create an authority to borrow $160 million to upgrade and reduce the number of streetlights to 46,000. Maintenance would be contracted out, saving the city $10 million a year.
Enlarge image Detroit May Go Dark

Detroit after dark, which may go darker. Photographer: Garry Owens/Gallery Stock

Other U.S. cities have gone partially dark to save money, among them Colorado Springs; Santa Rosa, California; and Rockford, Illinois. Detroit’s plan goes further: It would leave sparsely populated swaths unlit in a community of 713,000 that covers more area than Boston, Buffalo and San Francisco combined. Vacant property and parks account for 37 square miles (96 square kilometers), according to city planners.

“You have to identify those neighborhoods where you want to concentrate your population,” said Chris Brown, Detroit’s chief operating officer. “We’re not going to light distressed areas like we light other areas.”

Detroit’s dwindling income and property-tax revenue have required residents to endure unreliable buses and strained police services throughout the city. Because streetlights are basic to urban life, deciding what areas to illuminate will reshape the city, said Kirk Cheyfitz, co-founder of a project called Detroit143 — named for the 139 square miles of land, plus water — that publicizes neighborhood issues.
Rethinking Detroit

“It touches kids going to school in the dark,” said Cheyfitz, chief executive of Story Worldwide Ltd., a New York marketing company. “It touches midnight Mass at a church. It touches businesses that want to stay open past 9 p.m.”

Bing in 2010 began an independent project called Detroit Works to sort ideas on how to reconfigure the city for residences, businesses, green space and even agriculture, a plan due in August.

Meantime, Brown said, the city will fix broken streetlights in certain places even as it discontinues such services as street and sidewalk repairs in “distressed” areas — those with a high degree of blight and little or no commercial activity.

Bing’s plan requires state legislation to create the lighting authority. Governor Rick Snyder supports the plan, said his senior policy adviser, Valerie Brader.
Dark Portents

There’s already experience snuffing out streetlights within Detroit’s borders. Highland Park, a 3-square-mile city encircled by its larger neighbor, removed 1,100 of 1,600 streetlights last year, after piling up a $4 million debt to DTE Energy. The move saves $45,000 a month, said Alejandro Bodipo-Memba, a spokesman for the company.

Only major streets and intersections remain lit in the city of 12,000, once home to Chrysler Group LLC’s namesake car manufacturer and Henry Ford’s first moving assembly line. Mayor DeAndre Windom, 45, said residents at first complained, though few do now. He’s considering grants and private funding to relight darkened streets

Colorado Springs pulled the plug on 9,000 of its 25,600 lights in 2010 to save $1.3 million, said David Krauth, a city traffic engineer. Some were relit as revenue improved, though 3,500 remain dark, saving about $500,000 a year, he said.

In Detroit, some streets have no working lights. Many appear dim or are blocked by trees. And some areas with mostly vacant lots are well-lit.
Night Terrors

A single, broken streetlight on the northeast side brings fear to Cynthia Perry, 55. It hasn’t worked for six years, Perry said in an interview on the darkened sidewalk where she walks from her garage to her house entrance.

“I’m afraid coming in at night,” she said. “I’m not going to seclude myself in the house and never go anywhere.”

In southwest Detroit, businesses on West Vernor Highway, a main commercial thoroughfare, have sought $4 million in private grants to fix the situation themselves. The state would pay $2.5 million, said Kathy Wendler, president of the Southwest Detroit Business Association.

Jamahl Makled, 40, said he’s owned businesses in southwest Detroit for about two decades, most recently cell-phone stores. He said they’ve have been burglarized more than a dozen times.

“In the dark, criminals are comfortable,” Makled said. “It’s not good for the economy and the safety of the residents.”
Antique Lamps

North of there, on a stretch of West Grand Boulevard, the bases of light poles show where thieves tore out the wiring.

As many as 15,000 Detroit streetlights use 1920s technology, according to a 2010 study by McKinsey & Co. Upgrading the system would cost $140 million to $200 million, and $5 million more to operate than the $23 million now spent annually, the report said.

Besides streetlights, the Detroit lighting department provides electricity to 144 customers that include Detroit schools, Wayne State University and local government offices. Almost 22 percent of the city’s electric bills were unpaid, the McKinsey report said.

That’s just one reason Detroit is digging out of a $265 million deficit and saddled with more than $12 billion in long- term debt. To avoid a state takeover, Detroit agreed in April to have its finances overseen by a nine-member board appointed by the city and the state.
Civic Obligations

Delivering services to a thinly spread population is expensive. Some 20 neighborhoods, each a square mile or more, are only 10 to 15 percent occupied, said John Mogk, a law professor at Wayne State University who specializes in urban law and policy. He said the city can’t force residents to move, and it’s almost impossible under Michigan law for the city to seize properties for development.

Mogk said landowners can demand many times what property would fetch on the open market.

“There are tremendous political, administrative, financial and, to some degree, legal obstacles,” Mogk said. “Unless you phase out a neighborhood altogether, you still need lighting, and waste pickup and police and fire protection.”

As Detroit’s streets go dark, some of those neighborhoods may fade away with the dying light.

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Pending Fiscal Crisis – Tax Increases And Spending Cuts On The Near Horizon – Congress To Decide How US Can Best Continue Spending Money It Doesn’t Have

May 23, 2012

WASHINGTON, DC – For Congress, the outlines of the pending fiscal crisis are clear: Don’t do a thing, and watch the economy slip into a double-dip recession early next year. Or cancel the looming tax increases and spending cuts, watch the deficit rise, and push the government ever closer to a European-style debt crisis.

That decision was put in stark terms Tuesday by the Congressional Budget Office, which in a new analysis said the economy will plunge into a recession early next year if Congress lets taxes rise and spending be cut, as called for under the law.

But if Congress changes the law to keep taxes low and spending high, it could add more than half a trillion dollars to the deficit in 2013, marking a fifth straight year of trillion-dollar deficits and risking the patience of the country’s creditors.

The CBO numbers come just as the debate is heating up on Capitol Hill over how to handle the looming “fiscal cliff,” which Congress created by continually pushing off tough decisions on both taxes and spending.

Senate Majority Leader Harry Reid, Nevada Democrat, signaled Tuesday that he will allow the automatic spending cuts called for in last year’s debt deal to go into effect — culling billions of dollars from defense and domestic spending — unless Republicans agree to allow taxes to increase on at least some taxpayers.

“If Republicans want to walk away from the bipartisan spending cuts agreed to last August, they will have to work with Democrats to replace them with a balanced deficit-reduction package that asks millionaires to pay their fair share,” Mr. Reid said.

Republicans remain adamant that the lower income- and investment-tax rates passed in 2001 and 2003 under President Bush, and extended in 2010 under President Obama, must be extended again.

“No economy can sustain such a hit without being hurled into recession,” said Sen Orrin G. Hatch, the ranking Republican on the Senate Finance Committee, which oversees tax policy.

One thing both sides say they agree on, however, is the need to act now.

Last week, House Speaker John A. Boehner kicked off the conversation, drawing a line in the sand in saying that he won’t allow another increase in the federal government’s debt ceiling unless it’s matched dollar-for-dollar with future spending cuts — just as the 2011 debt deal was.

Mr. Boehner also signaled he was open to ending some special tax breaks, as long as the money was used to bring down tax rates for everyone. He acknowledged there would be some who would pay more and some who would pay less.

But Democrats said much of the extra money the government would generate by closing those loopholes should go to funding the promises already made on spending, such as Social Security, Medicare and regular domestic spending.

The government was projected to see a large surplus at the end of the Clinton administration, but several economic downturns, two wars, several rounds of tax cuts and trillions of dollars in new domestic spending erased the surplus and have left the government deeply in debt: $15.715 trillion as of Monday.

And for the past three years, as political gridlock has become the rule in Washington, lawmakers have put off decisions on cutting spending or raising taxes, leaving everything to bite at the beginning of 2013.

The list of expiring laws reads like a taxpayer’s worst nightmare: The alternative minimum tax would bite ever deeper, last year’s 2-percentage-point payroll-tax cut would disappear, business-investing tax breaks would end, and almost all of the 2001 and 2003 tax cuts would expire. Meanwhile, some tax increases from Mr. Obama’s health care law are slated to begin biting in January.

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Debtor’s Prisons In US – Breast Cancer Survivor Jailed At Taxpayer Expense In Illinois For Not Paying Bogus $280 Hospital Bill

April 22, 2012

ILLINOIS – How did breast cancer survivor Lisa Lindsay end up behind bars? She didn’t pay a medical bill — one the Herrin, Ill., teaching assistant was told she didn’t owe. “She got a $280 medical bill in error and was told she didn’t have to pay it,” The Associated Press reports. “But the bill was turned over to a collection agency, and eventually state troopers showed up at her home and took her to jail in handcuffs.”

Although the U.S. abolished debtors’ prisons in the 1830s, more than a third of U.S. states allow the police to haul people in who don’t pay all manner of debts, from bills for health care services to credit card and auto loans. In parts of Illinois, debt collectors commonly use publicly funded courts, sheriff’s deputies, and country jails to pressure people who owe even small amounts to pay up, according to the AP.

Under the law, debtors aren’t arrested for nonpayment, but rather for failing to respond to court hearings, pay legal fines, or otherwise showing “contempt of court” in connection with a creditor lawsuit. That loophole has lawmakers in the Illinois House of Representatives concerned enough to pass a bill in March that would make it illegal to send residents of the state to jail if they can’t pay a debt. The measure awaits action in the senate.

“Creditors have been manipulating the court system to extract money from the unemployed, veterans, even seniors who rely solely on their benefits to get by each month,” Illinois Attorney General Lisa Madigan said last month in a statement voicing support for the legislation. “Too many people have been thrown in jail simply because they’re too poor to pay their debts. We cannot allow these illegal abuses to continue.”

Debt collectors typically avoid filing suit against debtors, a representative with the Illinois Collectors Association tells the AP. “A consumer that has been arrested or jailed can’t pay a debt. We want to work with consumers to resolve issues,” he said.

Yet Illinois isn’t the only state where residents get locked up for owing money. A 2010 report by the American Civil Liberties Union that focused on only five states — Georgia, Louisiana, Michigan, Ohio, and Washington — found that people were being jailed at “increasingly alarming rates” over legal debts. Cases ranged from a woman who was arrested four separate times for failing to pay $251 in fines and court costs related to a fourth-degree misdemeanor conviction, to a mentally ill juvenile jailed by a judge over a previous conviction for stealing school supplies.

According to the ACLU: “The sad truth is that debtors’ prisons are flourishing today, more than two decades after the Supreme Court prohibited imprisoning those who are too poor to pay their legal debts. In this era of shrinking budgets, state and local governments have turned aggressively to using the threat and reality of imprisonment to squeeze revenue out of the poorest defendants who appear in their courts.”

Some states also apply “poverty penalties,” including late fees, payment plan fees, and interest when people are unable to pay all their debts at once, according to a report by the New York University’s Brennan Center for Justice. Alabama charges a 30 percent collection fee, for instance, while Florida allows private debt collectors to add a 40 percent surcharge on the original debt. Some Florida counties also use so-called collection courts, where debtors can be jailed but have no right to a public defender.

“Many states are imposing new and often onerous ‘user fees’ on individuals with criminal convictions,” the authors of the Brennan Center report wrote. “Yet far from being easy money, these fees impose severe — and often hidden — costs on communities, taxpayers, and indigent people convicted of crimes. They create new paths to prison for those unable to pay their debts and make it harder to find employment and housing as well to meet child-support obligations.”

Such practices, heightened in recent years by the effects of the recession, amount to criminalizing poverty, say critics in urging federal authorities to intervene. “More people are unemployed, more people are struggling financially, and more creditors are trying to get their debt paid,” Madigan told the AP.

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