One-Third of Florida cities on the verge of bankruptcy?

/in , /by

Detroit and seven other cities that have declared bankruptcy since 2010, is it time to look at Florida? Florida at the state and local levels are burdened by what destroyed Detroit – the growing costs of retirement and medical costs for government retirees coupled with shrinking revenues.

According to the PEW Center on the States, “States continue to lose ground in their efforts to cover the long-term costs of their employees’ pensions and retiree health care … In fiscal year 2010, the gap between states’ assets and their obligations for public sector retirement benefits was $1.38 trillion, up nearly 9 percent from fiscal year 2009. Of that figure, $757 billion was for pension promises, and $627 billion was for retiree health care.”

As revenues decline public employee pension promises and healthcare accounts are increasingly underfunded. Florida is no exception.

Florida cities and counties are already under pressure for funds as a growing number of foreclosures and high unemployment plague the state. RealityTrac.com reports, “Of the total 167,680 vacant foreclosure properties nationwide, Florida documented the most by far of any state, with 55,503, accounting for 33 percent of the national total … Florida accounted for 85 of the top 100 zip codes in terms of total owner-vacated foreclosures, led by zip code 34668 in the Tampa-St. Petersburg-Clearwater metropolitan statistical area.”

The Leroy Collins Institute in a 2013 report concluded, “The LeRoy Collins Institute and Florida TaxWatch have documented the perilous financial positions of around one-third of Florida’s municipal pensions. Many of these cities have recognized their funding problems and are taking action to address their pension costs.”

PEW reports:

Although Florida consistently paid, or exceeded, its full annual pension contribution in all but one year from 2005 to 2010, the state was 82 percent funded in fiscal year 2010 and faced a $27 billion funding gap—down from fully funded just two years earlier. Most experts agree that a fiscally sustainable system should be at least 80 percent funded. The state also had a $5 billion bill for retiree health care costs, none of which was funded, well below the 8 percent national average in 2010.

Florida lawmakers approved pension benefit cuts in 2011, including requiring employees to contribute to their pension benefits for the first time and trimming annual cost-of-living increases. A circuit court judge ruled in 2012 that the contribution requirement was unconstitutional, throwing the future of the benefit reforms in doubt.

PEW states, “Florida was a solid performer at how it managed its long-term liabilities for pensions but was cause for serious concern for how it handled its bill for retiree health care.”

Many city, county and school board employees depend on the Florida Retirement System (FRS) for retirement benefits and medical costs. The FRS investment funds have come under criticism for how it rates its return on investments.

Mary Ellen Klas from The Tampa Bay Times, in February 2011, reported:

From Hialeah to St. Petersburg, Florida’s cities and counties face a “ticking time bomb” of debt because they do not have enough money to pay future pensions and health care benefits already promised to current employees, according to a report released Wednesday from the LeRoy Collins Institute.

The worst offenders — Bradenton, Hollywood, Hialeah, Miami, Cape Coral and Titusville — owe retirees between one and four times in health care benefits than the money they now spend on their total budgets.

Miami, for example, owed about $100 million a year in retiree health care and pension payments in 2009, but set aside only $74 million, or 74 percent of what they owed. St. Petersburg owed $51 million that same year, but had set aside about $40 million. The shortfall forces cities to find other funding sources.

These warning are eerily similar to the predictions for Detroit. The time bomb is getting closer to exploding.

RELATED COLUMNS:

Miami-Dade Fire Rescue Begins “Rolling Brownouts”

Detroit not alone under mountain of long-term debt

Are US banks enabling manipulation on a vast scale?

/in , , /by

Geo Intelligence states, “Top economists, financial experts and bankers say that the big banks are too large … and their very size is threatening the [US] economy.”

On June 27, 2013 Representatives Alan Grayson (D-FL), Raul Grijalva (D-AZ), John Conyers (D-MI) and Keith Ellison (D-MN) sent a letter to Federal Reserve Chairman Ben Bernanke. The letter states, “We write in regards to the expansion of large banks into what had traditionally been non-financial commercial spheres. Specifically, we are concerned about how large banks have recently expanded their businesses into such fields as electric power production, oil refining and distribution, owning and operating of public assets such as ports and airports, and even uranium mining. [Isn’t that a national security issue?]”

Grayson, et. al. note, “Here are a few examples. Morgan Stanley imported 4 million barrels of oil and petroleum products into the United States in June, 2012. Goldman Sachs stores aluminum in vast warehouses in Detroit as well as serving as a commodities derivatives dealer. This ‘bank’ is also expanding into the ownership and operation of airports, toll roads, and ports. JP Morgan markets electricity in California.”

Grayson, et. al write, “According to legal scholar Saule Omarova, over the past five years, there has been a ‘quiet transformation of U.S. financial holding companies.’ These financial services companies have become global merchants that seek to extract rent from any commercial or financial business activity within their reach.  They have used legal authority in Graham-Leach-Bliley to subvert the ‘foundational principle of separation of banking from commerce’. This shift has many consequences for our economy, and for bank regulators. We wonder how the Federal Reserve is responding to this shift.” Read more.

ProPublica is tracking where taxpayer money has gone in the ongoing bailout of the financial system. The ProPublica database accounts for both the broader $700 billion stimulus bill and the separate bailout of Fannie Mae and Freddie Mac. According to their data: 927 banks received  $606B of which $366B has been returned. The banks revenues are $116B showing a total net to date of a minus $124B.

Following is the ProPublica list of Florida banks/mortgage servicers that were bailed out (those in RED failed to repay the government and resulted in a loss):

1st United Bancorp  
Alarion Financial Services  
Allstate Mortgage Loans & Investments, Inc.  
Bank United  
Bayview Loan Servicing, LLC  
Biscayne Bancshares, Inc.  
Capital International Financial, Inc.  
CenterState Banks of Florida, Inc.  
Central Florida Educators Federal Credit Union  
Coastal Banking Company  
Community Bancshares Of Mississippi, Inc. (Community Holding Company Of Florida, Inc.)  
Community Credit Union of Florida  
First Community Bank Corp of America  
First Federal Bank of Florida  
First Southern Bancorp  
Florida Bank Group, Inc.  
Florida Business BancGroup  
Florida Housing Finance Corporation  
FPB Bancorp  
GulfSouth Private Bank  
Gulfstream Bancshares  
Highlands Independent Bancshares  
Iberiabank  
IBM Southeast Employees’ Federal Credit Union  
Marine Bank & Trust Company  
Naples Bancorp  
Ocwen Financial Corporation, Inc.  
Pinnacle Bank Holding Company  
Premier Bank Holding Company  
Q Lending, Inc.  
Quantum Servicing Corporation  
Regent Bancorp  
Seacoast Banking Corp  
Seaside National Bank & Trust  
TIB Financial Corp  
U.S. Century Bank

 

For the full list of banking institution in the United States that received taxpayer bailouts click here.

Public buses: The poster child for government waste

/in , , /by
scat logo

Sarasota County Area Transit logo

Florida has many public transportation systems. The most common are buses. Public bus systems rarely pay for themselves. Rather they are heavily subsidized by the federal, state and local government. The system that WDW – FL analyzed was the Sarasota County Area Transit bus system or SCAT. SCAT is one of the better run bus systems for a medium sized Florida county.

After reviewing the data provided to WDW – FL  (available to the Sarasota County Commissioners) by SCAT our analysis found:

SCAT in FY 2013 lost $22.59 million (operating minus fairs). The loss was covered by federal ($3.2M), state ($2.6M) and local ($16.8M) taxpayer revenues. SCAT lost $1.02M per route or approximately $7.28 per passenger.

To break even the county would have to raise the fees by approximately $7.50 per passenger.

To determine if this system was cost effective and to aid our analysis we asked a series of questions about SCAT to Sarah Blanchard, AICP from SCAT. Blanchard provided us with the following answers.

1.     How many passengers annually by year for the past 5 years?

See PowerPoint Ridership below:

For a larger view click on the image.

2.     What is the cost of salaries, benefits and retirement costs in the numbers?

Salaries and Fringes are identified in the following table.

 

FY2007

FY2008

FY2009

FY2010

FY2011
Salaries & Fringes $9,819,784  $10,675,148  $10,996,414  $11,111,303  $10,988,695

 

3.     Are SCAT personnel under the Florida Retirement System or a 401k plan?

Yes. All SCAT personnel are under the Florida Retirement System (FRS). NOTE: The FRS Investment Plan is a “defined contribution retirement plan” qualified under Section 401(a) of the Internal Revenue Code.

4.     What are the rider fees over the past 5 years?

See below PowerPoint Total Operating Revenues by Funding Source. The area in green represents Farebox, Passes, and Services.

operating revenue slide

For a larger image click on the slide.

5.     What is the capital costs over the past five years?

Capital costs for the past five years are identified in the following table.

Capital

FY2007

FY2008

FY2009

FY2010

FY2011
Federal Funds $4,474,463  $383,876

 $1,999,171

 $862,937

 $8,133,077
State Funds $190,238  $333,915

 $76,880

 $254,732

 $549,652
Local Funds $1,784,090  $332,768

 $1,144,849

 $672,506

 $2,049,307

 Total

 $6,448,791  $1,050,559

 $3,220,900

 $1,790,175

 $10,732,036

 

6.     What do hybrid buses cost versus normally aspirated buses?

The following pricing is extracted from most recent SCAT Purchase Orders for buses. These are average pricing and represent base price plus amenities.

Hybrid Diesel Electric 29 – 35 Foot: approximately $585,000 (2011 pricing)

Low Floor Diesel 40 Foot: approximately $422,000 (2010 pricing)

7.     How many buses does the county own?

SCAT owns 121 vehicles (65 Fixed Route, 8 Commuter Buses, 48 Paratransit).

8.     What does it cost annually to operate a single bus hybrid and normally aspirated?

Average cost

2006 Hybrids Cost Per Mile is 0.33

2006 Diesels  Cost Per Mile is 0.24

2009 Hybrids Cost Per Mile is 0.17

2011 Hybrids Cost Per Mile is 0.08

RELATED COLUMNS:

Public Buses and Blackout Windows: What are they hiding behind those Foster Grants?

IG Report: Florida state college presidents living like kings

/in , , , /by

Governor Rick Scott requested the Office of the Inspector General to review the compensation for Florida’s twenty-eight (28) State College Presidents. What the IG found in its Report #2013-12 is enlightening given the rising cost of higher education and growing student loan debt to pay for a college degree.

The IG report found:

  •  The total compensation reported for the twenty-eight (28) state college presidents in FY 2012-2013 ranged from $143,866 to $630,157 for a reported total of
    $9,811,292 paid from state appropriated funds, student fees, auxiliary funds, direct support organizations’ funds, grants and other non-state college funds.
  • State college presidents’ reported compensation included some or all of the following:  salary,  annuities,  deferred  compensation,  vehicle  provisions,  housing allowances, major medical insurance premiums, leave, incentives, and other compensation/benefits including annual physical exams, cell phones, internet access, relocation expenses, and memberships/dues.

  • Some college presidents receive post-employment perquisites including but not limited to the transfer of ownership of the vehicle provided by the colleges to the president, computer equipment, one year sabbatical with full pay and benefits, or health insurance for life after employment with the college ends.

The IG reported, “One statute limiting the amount that can be paid for the presidents’ salaries from state appropriated funds. We also noted that each of the twenty-eight (28) state colleges reported compliance with this statute to the Division as required. However, we found that: 1) there were no standardized parameters for boards of trustees to use to determine the reasonableness of the total compensation for the state college presidents or the factors upon which the total compensation is based; and, 2) the forms and amounts of compensation varied across colleges.”

The IG noted, “Instances where the total value of the presidents’ compensation was not readily transparent in that many of the contract terms did not contain assigned values. Some contract terms contained benefits payable to the presidents for life or benefits not yet earned making it difficult to ascertain the full financial obligation on the colleges from these  contracts.”

Concerning severance pay, the IG noted:

The twenty-eight (28) state college presidents’ contracts were reviewed for compliance with Section 215.425, F.S., and we noted that the contract language for severance pay varied across colleges. For example, some of the state colleges have presidential contracts that contain severance pay language if the president separates from the college “without cause”; some contracts address severance pay if the president separates from the college “for cause”; some contracts were silent about the conditions when severance pay was paid; and, some contracts, as written, were contrary to statute because the amount exceeded the limits outlined in statute.

Finally the IG found, “Only eight (8) of the twenty-eight (28) colleges tied the presidents’ contracts to performance.”

Sounds like Florida’s state college presidents are living like kings.

Danger: Public-private partnerships come to Florida

/in , , , /by

Governor Rick Scott signed into law HB 85 – Public-Private Partnerships (PPP or P3) on June 27th, 2013. HB 85 states:

Public-Private Partnerships: Provides legislative findings & intent relating to construction or improvement by private entities of facilities used predominantly for public purposes; provides for procurement procedures, requirements for project approval, project qualifications & process, notice to affected local jurisdictions, comprehensive agreements between public & private entities, use fees, financing sources for certain projects by private entities, & applicability of sovereign immunity for public entities with respect to qualified projects; authorizes counties to enter into public-private partnership agreements to construct, extend, or improve county roads; provides requirements & limitations for such agreements; provides procurement procedures; requires fee for certain proposals; revises limit on terms for leases that Orlando-Orange County Expressway Authority may enter.

HB 85 takes effective on July 1, 2013

According to Joan Veon, author, journalist and expert on globalization, “Public- Private Partnerships are one of the most effective tools that are used by the globalists to implement Agenda 21 Sustainable Development, with the goal of destroying the structure of governments that represent the people, and puts profits and resources in the hands of those private interests.”

The below video is by Cassandra Anderson, based on an interview with Veon discussing public-private partnerships.

According to Veon:

The public part of the Public- Private Partnership (PPP or P3) is the government, which becomes corrupted and no longer represents the taxpayers, when it accepts funding from private interests. Further, the government becomes silent against abuses to the public when they have been compromised by PPP business arrangements, and, worse yet, may also sell off resources and utilities that were owned by the taxpayers. The government does this because they are broke and more taxation is unpopular.

The private part of the PPP is often a combination of these entities: * Corporations (usually multinational) * Foundations (like Rockefeller) * Associations * Universities * Any entity with a lot of money * Non-Governmental Agencies (NGO’s). NGO’s are usually environmental agencies, like the Sierra Club and the Nature Conservancy.

The private stakeholder in the business arrangement always has profit as its goal, not service. Service was formerly the role of the representative government. The assets that once belonged to the taxpayers are then transferred to private interests, in a transfer of wealth through the assets, to private parties that seek profit at any price. Frequently, deceit, deception and distortion are used to fleece the taxpayer into this ‘solution’ for governments that are broke.

American local, county, state and the federal governments have gone broke and are ripe for the sale of their assets to PPP’s because of deficit spending, and a lack of economic common sense. John Maynard Keynes promoted deficit spending to Roosevelt as a way to escape the Depression. This results in diluted government and loss of power.

For more information on PPP’s and related topics visit www.womensgroup.org.

Florida 2013 Economic Freedom Legislative Scorecard released

/in , , , /by

Americans for Prosperity released its 2013 Economic Freedom Scorecard. The scorecard grades more than 3,000 individual votes on twenty legislative issues. Each of the AFP 2013 legislative priorities is included on this scorecard, as well as any additional issues that the AFP communicated support or opposition for during the 2013 session.

The AFP 2013 legislative priorities were based on their Five for Florida plan, which focuses on the principle of economic freedom and outlines policies that make a state more economically free.

Fifty-three legislators received A+ scores, designating them Champions of Economic Freedom.  Additionally, there were nine As, twenty-three Bs, twelve Cs, eight Ds, and fifty-four Fs.

Read the full scorecard, including the issues and explanation of the grades below.

About AFP-Florida

Americans for Prosperity is a grassroots movement of over 2.3 million activists nationwide who advocate and promote limited government, lower taxes, and more freedom. We have more than 146,000 activists across the state of Florida who are taking action every day on behalf of the free market movement and influencing decision makers.  Whether it’s calling members of congress, gathering with fellow activists, or attending an AFP event in their neighborhood – AFP activists are making a difference in the fight against big government on the local and national level.

We encourage you to join the more than 146,000 members of AFP in Florida and the 2.3 million activists nationwide on the front line in the fight against big government. As an AFP activist we will provide you with action alerts that allow you to contact your elected officials, updates on how you can promote limited government, and the tools to make your voice heard.

IG Report: Millions in tax refunds to illegal aliens to insure “job security” for IRS employees

/in , , /by

The Treasury Inspector General for Tax Administration in 2012 conducted an “audit based on information forwarded to us by a U.S. Representative and a U.S. Senator. The information forwarded were complaints by two Internal Revenue Service (IRS) employees alleging that IRS management was requiring employees to assign Individual Taxpayer Identification Numbers (ITIN) even when the applications were fraudulent.”

The audit report titled “Substantial Changes Are Needed to the Individual Taxpayer Identification Number Program to Detect Fraudulent Applications” found in part:

  • IRS management is not concerned with addressing fraudulent applications in the ITIN Operations Department because of the job security that the large inventory of applications to process provides.
  • Management is interested only in the volume of applications that can be processed, regardless of whether they are fraudulent.
  • IRS management has indicated that no function of the IRS, including Criminal Investigation and the Accounts Management Taxpayer Assurance Program, is interested in dealing with ITIN application fraud.
  • In the meantime, there is a potential that erroneous tax refunds are going to non qualifying individuals, allowing them to defraud the Federal Government of billions of dollars.

According to the report, “Some of the deficiencies we raise in our report have been brought to management’s attention long ago. Some were raised in a September 2002 report issued by an IRS-initiated Task Force. However, management has failed to take sufficient action to address those deficiencies.”

The Blaze reports, “The IRS sent more than $46 million in tax refunds to 23,994 “unauthorized” alien workers who all listed the same address in Atlanta, Ga., in 2011, according to an audit report by the Treasury Inspector General for Tax Administration (TIGTA). However, the Atlanta address that received millions of dollars in refunds was not the only address apparently housing thousands of “unauthorized” aliens. In fact, it wasn’t even the only address in Atlanta that was claiming such a situation.”

CNSNews.com breaks down the report:

The IRS sent 11,284 refunds worth a combined $2,164,976 to unauthorized alien workers at a second Atlanta address; 3,608 worth $2,691,448 to a third; and 2,386 worth $1,232,943 to a fourth.

Other locations on the IG’s Top Ten list for singular addresses that were theoretically used simultaneously by thousands of unauthorized alien workers, included an address in Oxnard, Calif, where the IRS sent 2,507 refunds worth $10,395,874; an address in Raleigh, North Carolina, where the IRS sent 2,408 refunds worth $7,284,212; an address in Phoenix, Ariz., where the IRS sent 2,047 refunds worth $5,558,608; an address in Palm Beach Gardens, Fla., where the IRS sent 1,972 refunds worth $2,256,302; an address in San Jose, Calif., where the IRS sent 1,942 refunds worth $5,091,027; and an address in Arvin, Calif., where the IRS sent 1,846 refunds worth $3,298,877.

Illegal refunds to illegal aliens to insure job security. Senator Rand Paul raise this concern when he alluded to a “culture of corruption” where IRS union employees are using their positions to target those against big government so they can keep their jobs. This report appears to provides credence to Senator Paul’s statement.

Four Words to Watch in the Immigration Debate

/in , , , , , , , , /by

This column courtesy of the Heritage Foundation:

The Senate will begin debate on the Gang of Eight’s immigration proposal next week. Here are four words to watch out for as the Senators make their case—and warnings about what they might mean.

1. COST

“Cost” is one word that should come up in the immigration debate, because the Gang of Eight’s amnesty proposal has a cost that is simply too high for Americans to bear. Heritage analysis found that amnesty would cost taxpayers trillions of dollars.

Amnesty means that illegal immigrants become legal—and become eligible for Obamacare benefits, Social Security, welfare, and Medicare. But they won’t pay enough into the system in taxes to cover the cost of all these benefits, meaning the rest of the taxpayers will have to bear the burden. This simply isn’t fair to hard-working Americans.

2. BORDER

Despite claims of security—and talk of amending the bill—the Gang of Eight immigration bill doesn’t secure the border. Instead, it “delivers nothing new—other than the promise of spending a lot more money and running up our debt.” As James Carafano, Heritage’s E. W. Richardson Fellow, explains: “Amnesty immediately creates an incentive for illegal border crossings and overstays. Thus, the bill’s strategy would drive up the cost of securing the border.”

3. AMNESTY

Heritage President Jim DeMint has said that it’s a false choice for people to say that amnesty is necessary to immigration reform. Amnesty encourages more illegal immigration, and that is not what immigration reform is supposed to do.

Former Attorney General Ed Meese, Heritage’s Ronald Reagan Distinguished Fellow Emeritus, reminds us that America has tried this before, and it didn’t work:

Today they call it a “ road-map to citizenship.” Ronald Reagan called it “amnesty.” And he was right. The 1986 reform did not solve our immigration problem—in fact, the population of illegal immigrants has nearly quadrupled since that “comprehensive” bill.

4. “COMPREHENSIVE”

Beware the word “comprehensive.” As Meese notes above, the amnesty of 1986 was also called a “comprehensive” approach to immigration reform. It doesn’t work, and it’s not what we need. We need a separate, step-by-step approach to immigration reform. An approach that works—that the American people can trust—would start with reforming the legal immigration system and enforcing the security measures that are supposed to be in place.

Read the Morning Bell and more en Español every day at Heritage Libertad.

What Is The Debt Ceiling and why should I worry?

/in , , , /by

[youtube]http://youtu.be/zVFFO64OAQ4[/youtube]

The following is from the Heritage Foundation:

A new video by Bankrupting America uses humor to call attention to an issue that is anything but funny, and why it matters for every American household.

Recent Heritage research reveals how the rising national debt hurts American families, including:

  • Higher interest rates on mortgages, car loans, and other loans make it more costly for families and businesses to borrow money.
  • Higher debt and higher interest rates mean more tax dollars must be used to pay the government’s interest expense, leaving less money available for other priorities like national security and making it harder to keep future taxes from rising.
  • Less economic growth means fewer jobs, lower wages and salaries, and fewer opportunities for career advancement.

Over the next few weeks, Members of Congress will be deciding what their priorities for spending reduction will be in connection with any vote to increase the debt ceiling sometime this fall. The debt ceiling vote likely presents an opportunity for real spending restraint this year.

Anyone following the shocking IRS scandal has fresh and frightening evidence of the dangers of a massive, over-reaching, highly intrusive federal government. This is yet another reason to cut spending: Washington has a problem respecting fiscal sense and citizens’ freedoms.

The first step to solving it? Shrink the monster down to size with real spending cuts.

It’s a goal many claim to work toward, yet few seem committed to achieving. Choices presented by the debt limit debate can force both parties to trim down the federal budget—if they don’t get sidetracked.

HOLDING THE LINE: There are refreshing examples of principled leadership among members of Congress committed to getting spending under control. Currently, Senators Rand Paul (R-KY), Ted Cruz (R-TX), and Mike Lee (R-UT) are working hard to prevent any backdoor effort to increase the debt limit without spending cuts.

Cruz_screenshotWhen it comes to holding the line on new spending, Senator Tom Coburn (R-OK) and five other Senators recently announced their intention to object to consideration of legislation that spends new money unless it also trims the federal budget in other areas. Their goal is to “no longer spend money we do not have to pay for programs we do not need.”

The secret to controlling spending: To get spending under control, you have to know where the dollars are spent.

Medicare, Medicaid and Social Security make up 45 percent of our national budget, as this recent chart shows. Millions of at-risk citizens depend on these programs, and Congress has yet to take the steps needed to reform and preserve them so they benefit those most in need and are affordable for current and future taxpayers.

To fix entitlements and get spending under control, only certain policy changes will make a difference. Key examples of transformative reforms are outlined generally in the landmark Saving the American Dream plan, and more specifically in “Six Bipartisan Entitlement Reforms to Solve the Real Fiscal Crisis.”

While members of Congress may be tempted to fold on the challenge of getting spending under control, now is the time that they as the leaders they were elected to be and deal with balancing the national budget in 10 years.

Read the Morning Bell and more en español every day at Heritage Libertad.

How did we become addicted to big government?

/in , , , /by

The growing national scandal surrounding the IRS targeting individuals and organizations with a certain political stand is endemic of big government. This large bureaucracy is fulfilling its role as the keeper of the big government keys. But how did America get to this point of a huge and intrusive government?

Social Security is perhaps the best example of  how Americans become addicted to big government, especially tax giveaways and the enshrined systems that sustain them. America’s addiction to government control over its citizens has increased to the point that today many are dependent on federal handouts to maintain their health, happiness and well being.

Karl Marx said, “Religion is the opiate of the people.”

Today, “Big government is the opiate of the people.”

Let’s review a brief historical perspective on how America got here and then open up the much needed national discussion on the need for big government. 

We the people began to embrace big government 104 years ago with the founding of the Intercollegiate Socialist Society (ISS) in New York City on September 12, 1905 in Peck’s Restaurant. An organizational meeting was held and Jack London was elected President with Upton Sinclair as First Vice President. The ISS was established to, “throw light [in America] on the world-wide movement of industrial democracy known as socialism.” Their motto was “production for use, not for profit.”

Production for use, not for profit is the prime goal of big government.

So how could socialists begin selling big government and its redistribution of wealth ideology? First they had to gain unfettered control of production. On February 3, 1913 Congress passed and the states ratified the Sixteenth Amendment to our Constitution. Congress grabbed control of production via the federal income tax. America taxed its productivity by tapping every American’s wages. With the millions, then billions, and now trillions of dollars that Congress collected, they could entice or even force the strongest American to take the big government drug.

Then on April 8, 1913 Congress passed and the states ratified the Seventeenth Amendment to the Constitution which transferred U.S. Senator Selection from each state’s legislature to popular election by the people of each state. These two events made it much easier to collect and distribute big government as now Senators were no longer loyal to their state legislatures or primarily concerned with state sovereignty. Now U.S. Senators, along with U.S. Representatives, saw the value of spreading  the big government drug amongst the people in return for votes.

During the Great Depression Congress created the first “opiate for the masses” and named it Social Security. It was to be a social insurance program run by government, in other words guaranteed government largesse for life. The Social Security Act was signed into law in 1935 by President Franklin Roosevelt. He and Congress said this new drug would keep those unemployed, retirees and the poor financially secure. He called it the New Deal. All we needed to do was just pay in and all would be well.

In 1937 the United States Supreme Court in U.S. vs. Butler validated the Social Security Act and stated that, “Congress could, in its future discretion, spend that money [collected from the income tax] for whatever Congress then judged to be the general welfare of the country. The Court held that Congress has no constitutional power to earmark or segregate certain kinds of tax proceeds for certain purposes, whether the purposes be farm-price supports, foreign aid or social security payments.” All taxes went into the general fund.

Testifying before the Ways and Means Committee of the House of Representatives in 1952, the chief actuary of the Social Security Administration said—“The present trust fund is not quite large enough to pay off the benefits of existing beneficiaries”—those already on the receiving end, in other words. In 1955 chief actuary believed that it would take $35 billion just to pay the people “now receiving benefits”.

In 1935 under the Social Security program the Congress included the Aid to Families with Dependent Children Act (AFDC). During the late 1950s many states realized that this act, while created to help widows with children, was being used to subsidize women having children with men they were not married to. Louisiana alone took 23,000 women off the AFDC act rolls based upon their immoral behavior.

Arthur S. Flemming, Department of Health and Human Services under President Dwight David Eisenhower

In 1960 Arthur S. Flemming, then head of the Department of Health and Human Services under President Dwight David Eisenhower and a key architect of Social Security, issued an administrative ruling that states could not deny eligibility for income assistance through the AFDC act on the grounds that a home was “unsuitable” because the woman’s children were illegitimate. In 1968, the United States Supreme Court’s “Man-in-the-House” rule struck down the practice of states declaring a home unsuitable (i.e., an immoral environment) if there was a man in the house not married to the mother. Thus, out-of-wedlock births and cohabitation were legitimized. In very short order, the number of women on welfare tripled and child poverty climbed dramatically. The assault on the family was on and Congress and the Supreme Court were co-pushers of this new government largesse drug called AFDC.

In effect big federal government became the pimp, the homes of single mothers became the brothels and the fathers became the Johns. The children begotten by these women became the next generation of big government addicts. Just as a baby born to a mother doing crack is addicted to cocaine, so too are these children born with a lifetime addiction to the onerous and destructive drug – big government.

Then Congress added a new ingredient to the powerful Social Security drug called Medicare on July 30, 1965.

Congress created Medicare as a single-payer health care system. Medicare was for those over 65 years old and was signed into law by President Lyndon B. Johnson. President Johnson called it part of his Great Society program. Congress immediately got more addicts to begin taking this drug. At the same time Congress added a second even more powerful ingredient to this drug called Medicaid. This new ingredient brought into being an entirely new distribution system – all of the states of the union. Even though this new program violates state sovereignty it was passed anyway, in no small part because Senators were no longer accountable to the State Legislatures but rather committed to pushing government largesse.

The states were now helping pay for and distribute this powerful and expensive big government designer drug. The drug was offered to low-income parents, children, seniors, and people with disabilities. Congress now had more people on the Social Security drug than ever before. Congress had turned a corner – addiction to government largesse was now imbedded in our society. But Congress was not finished for it kept looking for more clients until we now know that the estimated unfunded liabilities for these four drugs are:

• Social Security – $10.7 trillion

• Medicare Parts A and B – $68 trillion

• Medicare Part D – $17.2 trillion (created in just 3 years)

America’s addiction to big government will cost our children and grandchildren an estimated $95.9 trillion dollars. The gross domestic product of the entire world in 2007 was $61 trillion. Big government is the true opiate of the people. The following is a quote from a May 26, 1955 Herald-Tribune News Service article:

“Seven Amish bishops appealed to Congress today to exempt members of their church from receiving any benefits of the Social Security program. They are willing to continue paying Social Security taxes, however . . . . The bishops made it clear that no elder of the church would think, today, of applying for Social Security or any other government benefits. They want the law changed, they said, to ‘remove temptation’ from their children and grandchildren.”

The IRS scandal may be the straw that breaks the back of big government. It may even bring down the Sixteenth Amendment?

The cost of amnesty

/in , , , , , , , /by

A new study by the Heritage Foundation on the cost of amnesty will reveal the following:

The immigration debate is about to get a lot more concrete.

Lawmakers need to be honest about the cost of their proposed immigration plans—and a new study due out today from The Heritage Foundation calculates the cost to taxpayers of granting amnesty to unlawful immigrants.

Yesterday on ABC’s “This Week with George Stephanopoulos,” Heritage President Jim DeMint said:

The study you’ll see from Heritage this week presents the staggering costs of another amnesty in our country and the detrimental effects, long-term, that that will have. There’s no reason we can’t begin to fix our immigration system so that we won’t make this problem worse. But the bill that’s being presented is unfair to those who came here legally; it’ll cost Americans trillions of dollars; it’ll make our unlawful immigration system worse.

Watch Jim DeMint talk about the cost of amnesty on “This Week”

DeMint previewed the study, conducted by Heritage senior research fellow in domestic policy Robert Rector, who studied the cost of amnesty under a similar proposal in 2007. DeMint said:

The way that we calculated the cost, and I read the study over the weekend, I don’t think anyone can argue with it. If you consider all the factors related to the amnesty—and believe me, this is comprehensive, that it will have a negative long-term impact on our gross domestic product. We just want Congress for once to count the cost of a bill. They are notorious for underestimating the cost and not understanding the consequences.

Heritage’s Jason Richwine, the senior policy analyst in empirical studies, says the new report will be a “resounding rebuttal to the claim from amnesty supporters that a long waiting period between the initial amnesty and citizenship will eliminate any major costs to taxpayers.”

This window of ineligibility for many government services has led supporters to argue that an amnesty will not be costly. There are two problems with this argument. First, households headed by illegal immigrants today consume some government services and pay far less in taxes….The second problem with the view that amnesty would not be costly because of the waiting period is rather obvious: After the waiting period is over, lifetime costs will be substantial.

To make sure that costs are counted accurately, Richwine says, “The estimates for the final period in our research will be calculated beginning 14 years after the initial amnesty, which is the point at which recipients could become naturalized citizens.”

Heritage’s cost analysis is unique. DeMint dismissed the idea that the Congressional Budget Office (CBO) could be trusted with calculating the bill’s costs, because it is bound by the way that Congress asks it to add the numbers. He said:

CBO said Obamacare wouldn’t cost us anything—they’re basically puppets of the Congress and the assumptions that they put in the bill. Heritage is the only organization that has done an analysis of the cost. Unlawful immigrants make up about 2 percent of our GDP, and they consume most of that. If you consider all the factors of amnesty and unlawful immigration, the cost will be in the trillions of dollars over the lifetime of these unlawful immigrants.

DeMint said that Members of Congress must read the Gang of Eight immigration proposal to make sure they know what is on the table.

“I think if people read the bill, that it will be blocked,” he said. “Because once you get into it, just like Obamacare, it is not the way it’s being advertised.”

To read the full study click here.

Read the Morning Bell and more en español every day at Heritage Libertad.

Tax Day 2013: America waking up with a case of an in the red Monday

/in , , , /by

The following is courtesy of the Heritage Foundation:

Americans are waking up today to the worst “case of the Mondays” they’ll have all year: It’s Tax Day.

Most Americans dread Tax Day, and for good reasons. Beyond the huge tab Americans pay to the government, the tax code is so complex that it’s difficult to figure out what we owe to the IRS. This is a pain for taxpayers and a huge drain on the economy.

According to the federal Taxpayer Advocate in its 2012 report, Americans’ cost of complying with today’s complex tax code totaled $168 billion in 2010. That’s almost as large as the impact of the Obama tax hikes in fiscal year 2013, and twice the size of sequestration this year [see chart].

It takes taxpayers 6.1 billion hours—or 51 hours per household—to complete all the required filings. That’s more than six full eight-hour working days per household!

The compliance burden comes on top of the direct financial cost of $3.5 trillion in federal spending. In 2012, Washington collected $20,000 in taxes for every household in America. But Washington spent nearly $30,000 per household.

TaxDay_403

Americans pay high taxes as it is, and with the 13 tax increases that hit this year, tax revenue is growing beyond its historical average as a share of the economy. But Washington’s deficits continue, because spending keeps going up.

Future Tax Days promise to be even worse because of the tax increases from the fiscal cliff deal and from Obamacare. Taxpayers will start seeing these costs when they do their tax returns next April and in future years.

Too much taxing and spending is bad for the nation. Americans are right to be concerned about how the President and Congress allocate their hard-earned money. As the above infographic shows, 45 percent or almost half of all spending went toward paying for Social Security and health care entitlements. Without reforming these massive and growing programs, Washington will have to borrow increasing amounts of money, piling debt onto younger generations and putting the nation on a dangerous economic course.

Growing government spending threatens current and future taxpayers with higher taxes. Congress should reduce spending and prevent any more tax increases. Congress also needs to reform the tax code so it is less of a burden on the American people.

Tax day is a real drag, but it doesn’t have to be this bad. Learn more at savingthedream.org.

Read the Morning Bell and more en español every day at Heritage Libertad.

Bring it on! Let’s talk fairness in tax policy (+ video)

/in , , , , , /by

April is National Tax Burden Month. As part of the WDW – Florida campaign to educate you, the taxpayer, on issues surrounding the tax debate we provide this column on “tax fairness”.

What does fairness mean when applied to federal, state and local tax policy?

President Obama and those in the Occupy Wall Street movement have focused on “fairness” in federal tax policy. Fairness is a word with many meanings and was used to raise taxes on those making more than $450,000. But what is fair?

Recently AFP Foundation Director of Policy, James Valvo, had the opportunity to sit down with Arthur Brooks, President of the American Enterprise Institute. Dr. Brooks shared his insight and research on the moral argument of fairness, and why economic freedom and earned success is the most “fair” concept of all.

In the video below, Dr. Brooks demonstrates what a powerful impact taxpayers can have in framing the debate on tax fairness.

Dr. Brooks uses a human research test to determine fairness as a counter to the current class-warfare rhetoric.  He argues that based on research Americans believe in a system where hard work is valued and rewarded, and that this message can have a tremendous impact if presented in this “real fairness” light.

Watch the video interview with Dr.  Brooks from AEI:

ABOUT AMERICANS FOR PROSPERITY:

Americans for Prosperity (AFP) is committed to educating citizens about economic policy and mobilizing those citizens as advocates in the public policy process. AFP is an organization of grassroots leaders who engage citizens in the name of limited government and free markets on the local, state, and federal levels. AFP grassroots activists advocate for public policies that champion the principles of entrepreneurship and fiscal and regulatory restraint. To that end, AFP supports:

  • Cutting taxes and government spending in order to halt the encroachment of government in the economic lives of citizens by fighting proposed tax increases and pointing out evidence of waste, fraud, and abuse.
  • Removing unnecessary barriers to entrepreneurship and opportunity by sparking citizen involvement early in the regulatory process in order to reduce red tape.
  • Restoring fairness to our judicial system.

Read more: http://americansforprosperity.org/about/#ixzz2QF1dLBD2

ABOUT AMERICAN ENTERPRISE INSTITUTE:

The American Enterprise Institute is a community of scholars and supporters committed to expanding liberty, increasing individual opportunity and strengthening free enterprise. AEI pursues these unchanging ideals through independent thinking, open debate, reasoned argument, facts and the highest standards of research and exposition. Without regard for politics or prevailing fashion, we dedicate our work to a more prosperous, safer and more democratic nation and world.

AEI is a private, nonpartisan, not-for-profit institution dedicated to research and education on issues of government, politics, economics and social welfare. Founded in 1938, AEI is home to some of America’s most accomplished public policy experts.

Read more: http://www.aei.org/about/

Rubio: Obama’s budget is a blueprint for a recession

/in , , , , /by

Washington, D.C. – U.S. Senator Marco Rubio (R-FL) issued the following statement regarding President Obama’s budget:

“President Obama’s budget is a blueprint for a recession. Filled to the brim with middle class tax hikes and debt spending, the recycled liberal ideas in his budget have failed time and again to create real vibrant economic growth for the American people. Our nation needs a plan that reflects the principles of limited government, free enterprise and a strong national defense.

“President Obama’s plan taxes and punishes American success, and it encourages long-term dependency on government. The President already got $600 billion in tax increases from the fiscal cliff deal struck in January, which I opposed. Now he wants over $1 trillion more in taxes on retirement savings, small businesses and job creators who can’t afford to hire because they’re burdened with new costs as they scramble to figure out just what’s in ObamaCare. It will never even come close to balancing our budget in the next ten years, leaving it up to future generations to figure out how to stop Washington from spending more money than it takes in.

“While the President’s budget attempts to address some of the defense cuts imposed by sequestration, I am concerned that it does nothing to reverse the damaging impact that cuts have already had on our military readiness. America is becoming less capable of projecting power and deterring conflict wherever it arises. For example, despite almost daily evidence of the increasing threat to the United States posed by rogue states with ballistic missiles, the President’s budget cuts spending on missile defense.

“A solid budget proposal – like the one House Republicans submitted last month – would develop American energy projects like the Keystone XL pipeline, fundamentally reform the tax code, eliminate job-crushing regulations, cut wasteful spending, and ensure we have the military needed to keep Americans safe. We need to enact policy that allows for income mobility and empowers economic opportunity. The Obama budget fails to do all of this. On the bright side, after arriving 65 days late, the budget proposal is useless considering the House and Senate have already proposed and passed budget resolutions.”

The Heritage Foundation analyzed President Obama’s budget and published “Five key things to know about President Obama’s budget“:

1. It hikes taxes by $1.1 trillion.

Heritage’s Curtis Dubay says: “There was little doubt that President Obama would propose a huge tax hike in his budget. It is a bit surprising, however, that the total tax increase he proposes is almost double what he claims it to be.”

Dubay explains where all the tax increases come from—including the “Buffett Rule,” capping tax deductions, and hiking the cigarette tax and the death tax.

BudgetGuide_Snippet_V2

See an extended version of this infographic

2. It underfunds defense.

Heritage’s Patrick Louis Knudsen explains that “While boosting domestic spending, the President remains indifferent to national security needs. His proposed defense spending, though somewhat higher than sequestration levels, remains inadequate.” Baker Spring says, “The result is going to be a defense posture that is too small in terms of both personnel and force structure, does not include modern weapons and equipment, and does not provide adequate levels of training and maintenance.”

3. It doubles down on Obamacare.

The Obama budget actually expands parts of Obamacare and even includes new changes to Medicare that create two sneaky new “taxes” on seniors. Obamacare’s “malignant new entitlements—its health insurance subsidies and Medicaid expansions—start in this 2014 budget,” Knudsen reminds us.

With their implementation, the misnamed Affordable Care Act will add a distinctly unaffordable $1.8 trillion in federal spendingthrough 2023. Equally important, Obamacare commandeers the health care sector with a massive program that further distorts the market, intrudes on the doctor-patient relationship, and dismisses personal and religious liberty.

4. It doesn’t balance and never will.

As Knudsen says, “Because the budget never balances—it doesn’t even try—debt remains at dangerously elevated levels.” See how Obama’s non-balancing budget compares to the plansin the House and Senate, as well as Heritage’s Saving the American Dream plan.

5. It’s irrelevant.

The President’s budget is more than two months late. The House and Senate have already passed their own budgets, and the next step is for the two chambers to come together to see if they can hash out a budget that both chambers can pass. At this point, why is the President bothering?

Rubio introduces “Refund Act” to empower states to help pay down the national debt

/in , , , , /by

U.S. Senator Marco Rubio today introduced the Returned Exclusively For Unpaid National Debt (REFUND) Act. This legislation would allow states to identify and return unwanted federal funds to the federal treasury in order to help pay down the $16.7 trillion national debt. The REFUND Act has 16 original cosponsors in the Senate and a companion bill, H.R.282, has already been introduced in the U.S. House of Representatives by Representative Chuck Fleischmann (TN-3).

“Excessive spending is fueling our growing debt, yet states have little say in what happens to federal money if they choose not to spend it,” said Rubio. “The REFUND ACT can help end the ‘use-it-or-lose-it’ mentality which encourages states to take debt-financed money from Washington. Instead it will empower them with a way to help slow the steady rise of the national debt.”

“Many state officials and leaders realize the national debt is an increasing burden to our children and grandchildren and want to help stop Washington’s spending spree to help alleviate that burden. The REFUND Act will give states an opportunity to end the practice of spending money we don’t have and serve as an incentive for them to help pay down the debt and re-embark on a path toward economic growth and opportunity.”

The REFUND Act would allow any state to designate federal funds as “unwanted” through a resolution from the state legislature, which would then be allocated towards debt reduction at the Treasury Department. The REFUND Act would require that an annual report be submitted to Congress each year detailing the amount deposited by each state. The REFUND Act has been endorsed by the Council for Citizens Against Government Waste (CAGW) and the National Taxpayers Union (NTU).

Original cosponsors of the REFUND Act are Senators Lamar Alexander (R-TN), John Barrasso (R-WY), Roy Blunt (R-MO), Saxby Chambliss, (R-GA), Dan Coats (R-IN), Tom Coburn (R-OK), John Cornyn (R-TX), Mike Enzi (R-WY), Jim Inhofe (R-OK), Johnny Isakson (R-GA), Mike Johanns (R-NE), Ron Johnson (R-WI), Mitch McConnell (R-KY), Rand Paul (R-KY), Jim Risch (R-ID) and David Vitter (R-LA).

The question is will the states put the best interests of the American people first? Or will they keep the money.

Many times state political leaders argue that if we don’t take the money it will go to another state. Now, that excuse could become invalid. Let’s see if this gets passed in a divided Washington, where two thirds of the politicians want more taxes and more spending.