Obama's Health Care Plans Contradict Obama's No Tax Pledge

You could have seen this coming a mile away as there was no way that President Obama could promise to overhaul health care in the United States without taxing everyone, above and beyond his claim that 95% of Americans would not see tax increases.

The great unknown of the health-care debate as it unfolds in the months ahead is whether the current political landscape will prove more hospitable to mandates, cost controls and tax increases -- all measures now on the table that helped doom the Clinton plan,” Shailagh Murray writes for The Washington Post. “Passage of a health-care bill of the scope Congress is contemplating would be an extraordinary feat, but it is fraught with political peril, win or lose. . . . Republicans are betting that the specter of ‘big government’ can still unsettle voters.”

With each new detail, a new ad campaign is born. (And just wait until the funding mechanisms -- read: taxes -- fall into place.

“Democratic leaders in both houses said they would require individuals to carry insurance and employers to help pay for it. But they have yet to decide how to raise the necessary tax revenue,” Robert Pear writes in The New York Times. “Leaders in both chambers said they wanted to establish a new public health insurance program, which would compete with private insurers. But they have not settled on the details.”

He already broke that promise with the S-CHIP legislation, in enacting an increase in federal tobacco taxes, but the costs involved in the health care legislation are staggering, even by Obama's own standards (enacting trillion dollar deficit spending is insufficient).

Meanwhile, the Administration's claims that they would abide by pay as you go, is a futile grasp at claiming fiscal responsibility. The Administration engaged in fiscally irresponsible actions from the moment it took office by engaging in massive spending on pork projects that sap the private sector all while enriching those on the government dole. At the same time, the Administration's projections have been shown to be seriously flawed, which exacerbates the deficits going forward because if unemployment is higher than projected, revenues are decreased and the pressure on government programs, including unemployment is that much higher. It's a fiscal time bomb, and an objective reading of the economic figures would show that this Administration has failed miserably.

What makes the health care reform so misguided is that Americans already have access to health care - it's the cost that has Democrats playing games here. They can't and wont go after fixing Medicare and Medicaid - the existing government entitlement programs despite the dire funding problems with those two programs, but are seeking to massively expand government health care. Unless and until they show that they can fix the existing programs, efforts to expand government health care should be resisted.

Outrage Over the Phony Outrage In Congress Over AIG Bonuses

I'm outraged over the outrage being expressed by President Obama and Congress over the "discovery" that AIG executives were receiving more than $165 million in bonuses and that they're now demanding that the executives give back the money or that Congress will ram through a new tax provision to strip them of the money by imposing a 100% tax.

The rising congressional fury came as it was revealed that 73 AIG employees - from the toxic financial-products unit - snagged bonuses worth at least $1 million each, after taxpayers pumped in more than $170 billion to save the company.

With fury over the bonuses boiling over in every corner of the Capitol - and the White House revealing last night that President Obama didn't know about the payouts until Thursday, the day before the checks were mailed - lawmakers drew up plans to tax from 91 to 100 percent of the big payouts.

They pledged to act immediately to push the measure through Congress.

"If you don't return it on your own, we will do it for you," warned Sen. Charles Schumer (D-NY) in a speech.

Senate Majority Leader Harry Reid (D-Nev.) called the thought of executives keeping the bonuses "repulsive" and called it a sign of "greed and corruption on Wall Street."

Classy.

Possibly illegal.

And it's definitely two-faced. I don't expect Congress to give back their salaries for sending the economy into a tailspin and taking on such massive amounts of debt for porkbarrel spending and decades of social programs that have failed to achieve any of their goals (and the only solution being spending even more money because only money can solve the problems alleged).

Congress and the President knew that AIG would have to dole out these bonuses. They didn't do anything when writing out the bailout. At the time of the original bailouts, Congress could have required that the bailout money would not go to providing executive compensation or deferred compensation to its employees. That would have been acceptable.

Trying to tax the bonuses out of existence is a poor idea, and will likely slam everyone in the industry because the legislation needs to be sufficiently broad so as to avoid Constitutional law arguments.

People who are busy complaining and showing their outrage over the bonuses and claiming that this rewards incompetence ought to remember what they were saying when the same people - particularly in Congress were quick to provide hundreds of billions of dollars in bailouts to reward incompetence by propping up businesses that were failed or failing - including the automakers, financial giants like AIG, Citibank, Washington Mutual, Goldman Sachs, etc.

The bailouts reward failure.

The homeowner mortgage bailouts (both of them) reward failure by allowing borrowers who benefited from increasingly lax lending standards imposed on the banks by Congress and the President for years on end in the name of affordable housing to renegotiate their loans on terms more favorable than those people who scrimped and saved and did everything possible to continue paying their bills on time.

Do these people have short memories, or are members of Congress simply engaging in the typical demogoguery that one has come to expect? I would bet the latter.

I'm not alone in thinking that this is a whole bunch of faux outrage. Michelle Malkin also slams Congress and the President for their asinine statements. She also points out that many of the same people in Congress complaining about the bonuses aren't exactly clamoring to give back the AIG campaign contributions or roll back the automatic Congressional pay raises. Funny how that works.

And no one seems to know where all the hundreds of billions in bailouts have gone, let alone the $150 billion provided to prop up AIG to keep it from failing (which it still is). We're finding that the collapse is still occurring, just on a far slower pace that continues to require attention. And taxpayers continue to get soaked by a flawed policy that never should have been considered in the first place.

UPDATE:
Redstate and Instapundit also weigh in.

UPDATE:
Congress will be grilling AIG CEO Edward Liddy today. I'm sure that they'll try and make him rend garments, wear sackcloth, and tithe large sums to the Treasury, but in the end, Congress knew that they created this mess, and now they're putting the onus on AIG to fix it.

UPDATE:
Don Surber points out that it was just days ago when Press Secretary Robert Gibbs came to the podium to assure all Americans that the AIG money was being spent properly. When asked on March 2, 2009, Gibbs said yes. Now? Apparently Obama thinks there's political leverage to be had throwing AIG and contract law under the bus. GOPers are right to raise hay over this. What did the Administration know, and when did they know it. And why are they continuing to filet AIG when no one is bothering to do the same to Freddie Mac, even though they've got the same bonus provisions?

UPDATE:
Fannie Mae is also in on the retention bonus deal. They became a wholly owned subsidiary of the US government courtesy of their bailout/destruction of the real estate lending business, and yet where is the scrutiny of that organization by Congress? Again, the compensation packages are chump change compared to the hundreds of billions sunk by taxpayers to bail out these entities and businesses from their bad business decisions (and encouraged to do so by Congress).

Rumor Mill: Geithner Replacement Possible?

The problem isn't just that Treasury Secretary Tim Geithner has shown himself to be incapable of dealing with the huge financial mess on his hands - a mess that he's been deeply involved with as a member of the NY Fed going back to 2007, but that he lacks all the support staff because the Obama Administration has yet to nominate people to all the subordinate positions.

So, for Henry Blodget to note unconfirmed rumors from within the Administration that Geithner may or should be ousted in favor of someone else, in this case, Obama's car czar Steve Rattner, must be taken with a grain of salt.

A friend reports chatter within the Obama administration that Tim Geithner was a bad choice for Treasury Secretary and that Quadrangle partner Steve Rattner (currently the car czar) was brought in partly to have a good relief pitcher on hand.

This doesn't surprise us: We think that, in this crisis, Tim Geithner is clearly the wrong man for the job. But this is also only unconfirmed chatter at this point.

The problems boil down to two interrelated problems.

First, the Obama Administration is tying both hands behind its back by not proffering nominees for consideration by the Senate for confirmation. Whether that is due to their inability to find candidates or that the candidates chosen do not meet the vetting standards in place is irrelevant. The vetting process itself is highly flawed and the President has failed to address this given that more than a thousand positions have yet to be filled at this late date throughout his Administration.

The Treasury Department is tasked with solving the current economic woes, and yet the Administration has not found the time to find candidates to fill Geithner's subordinate positions? That's a failure of focus and judgment on the part of the Administration. Shifting Rattner to Geithner's position doesn't solve the underlying inability to fill Treasury Department positions. They still need to be filled, and Obama is setting Geithner up for failure by choosing not to fill those positions in a deliberate and timely manner. How exactly can any Treasury Secretary operate when he or she lacks the staff to provide the policy positions and act as a sounding board to insure that the day-to-day operations proceed according to the Administration's own policy objectives?

The second problem is Geithner's own shortcomings, which began with his tax troubles, and extend to his inability to come up with a coherent policy to deal with the credit crisis.

Taken together, this mess shows that Obama's character and judgment remain as they have been since he first announced his intention to run for the President - seriously flawed and wanting.

UPDATE:
Politico notes that the Obama Administration has tried to make a point of not choosing lobbyists for Administration positions, and that this has hampered the nomination process. What undermines the Administration position is that they have seemingly picked and chosen when to follow their own rule and when to ignore it completely.

This is yet another example of the rule of unintended consequences. In claiming that he would clear government of lobbyist influences, he's emptied government of people needed to run those same agencies and departments. The real test should be conflicts of interest - not whether someone has been a lobbyist.

Pres. Obama to Address the Nation on Budget Issues

Barreling ahead on a mammoth agenda, Barack Obama is ready to offer a detailed sketch of the first year of his presidency, casting the nation's bleeding economy as a tangle of tough, neglected problems.

In a prime-time speech from the House of Representatives, Obama will make his case Tuesday that much more has to be done to turn around the economy — a message he knows he must explain.

White House spokesman Robert Gibbs said Tuesday that Obama will provide more details about his financial stability plan and measures to help the economy while delivering "a sober assessment about where we are and the challenges we face."

"He'll say we're on the right path to meeting these challenges, and there are better days ahead," Gibbs said.

Already, the nation is nearly dizzy keeping up with what's emerged from Washington during Obama's first weeks as president, from a staggering $787 billion stimulus plan to a revamped bailout for the financial sector to a rescue plan for struggling homeowners.

The president has also said reforming health care, including burgeoning entitlement programs, is a huge priority.

Although Obama is too new in office to be delivering a State of the Union address, his speech will have all the same trappings. It comes two days before he delivers a budget blueprint to Congress. Unlike that detail-driven document, his address will be broad, spelling out what he wants and how he will do it.

The economy, in its worst tailspin in decades, will dominate. Obama will touch on foreign policy, but that will largely be left for other upcoming speeches. This will not be a rollout of one policy initiative after another.

Obama will make clear that the trillion-dollar-plus deficit is one he "inherited." In other words, he wants to remind people that President George W. Bush and the previous Congress left him a big hole, forcing him to pursue the costly stimulus package.

The president will push for movement on ensuring health coverage for all Americans. He will seek to expand educational opportunities, and diversify the country's energy sources, and contain sacred entitlements like Social Security, and halve the soaring budget deficit in four years.

Interesting that only a Democrat would feel that if you inherit a trillion dollar deficit that the way to get out of it is to spend almost a trillion dollars more -- a trillion dollars that will actually cost taxpayers more than 1.5 trillion, and which the non-partisan congressional budget office says will NOT stimulate the economy and WILL hurt the economy in the long run.

So what is in Pres. Obama's new plan?

A $410 billion spending bill unveiled yesterday will fund the US government for the rest of the fiscal year - and kick in $2.2 million for the Center for Grape Genetics in upstate New York.

The measure comes just days after the $787 billion economic-stimulus package was signed; it'll be voted on by the House later this week.

But it's not all nuts and bolts - there's plenty of pork, like the millions for the grape center in Geneva, NY, thanks to Sen. Chuck Schumer, and Reps. Maurice Hinchey and Michael Arcuri.

Other New York earmarks include: $143,000 for Manhattan's American Ballet Theatre "for educational activities"; $214,000 for Stony Brook University "to teach scientists how to effectively communicate with the public and the press"; and $950,000 for a Poughkeepsie pedestrian bridge.

The measure also includes $500,000 for a Senate "pilot program" to defray the cost of mass-mail postcards notifying constituents of town-hall meetings.

Its a shame. The democrats cannot help themselves in loading up on pet projects and pork. There is no fiscal responsibility in Washington. While the President held a "fiscal responsibility summit" yesterday, Michelle Malkinpoints out, the President has been anything but:

President Obama just finished up his opening remarks at a “fiscal responsibility” summit to address skyrocketing budget deficits.

How about paying your own damn bills first, Mr. President?

There’s yet another new report of Obama campaign/DNC unpaid bills — this one from Springfield, Illinois. Obama owes the city at least $65,000 for overtime and other costs.

That’s in addition to the nearly $2 million Obama still owes the city of Chicago.

And the $24,000 Obama owes the city of Philadelphia.

Deadbeatonomics for He, but not for thee.

Change -- all that is left in my pockets after an Obama Administration -- that you can believe in.

Taxing Times in New York

Democrats in the state legislature are planning to soak the "rich"? Check.

Are they considering imposing tolls on East River Bridges and/or raise payroll taxes considerably to finance the MTA which faces a budget hole? Check.

Meanwhile, Governor Paterson has gone ahead and given raises to quite a few people on the Second Floor despite directives to state agencies to curtail raises. It's funny how that works, despite the huge gaping budget hole that New York faces.

This should come as no surprise then: Andrew Cuomo is looking like he'd crush Paterson in the latest polling. In fact, Cuomo looks like he'd crush anyone in the upcoming elections, including Rudy Giuliani.

Still, Paterson has to govern for the moment, and he's been dealt a rough hand by the recession which has battered the golden goose for state revenues: Wall Street and those bonus babies that get huge bonuses on an annual basis for their work. Now, with the revenues gone because of the 2008 toxic paper crisis and the meltdown of multiple financial companies, the state's answer is to tax many of these same people even higher than before to make end's meet.

Paterson is busy blasting the misleading union ads decrying budget cuts in health care. Has anyone in the media bothered to call out both the governor and the unions for their misleading statements regarding budgets - the state's budget is an increase over last year, and yet the unions are screaming that they're cutting the budget by billions and the governor proclaims that he's cut the budget.

In fact, he took his case before the annual Black and Puerto Rican Caucus banquet where he slammed the unions in gloriously un-PC fashion:

And I must tell you in all honesty, I have to go home and ask myself that every night. … I am trying as are all of you to balance this budget fairly. But we’ve been dealt a bad hand. … This is a difficult time, and we will work this out, and we will work it out together.

And listen: I don’t care how many commercial how many commercials you all pay for, I don’t care how many points you all make me lose in the poll, and I don’t care how many blind people you roll out in wheelchairs, I’m going to get this budget balanced, and I’m going to get it balanced by April 1.

It's all nonsense; the state is spending more money than last year, but just not as much as they had hoped to spend. It's that difference that is called a budget cut and far too many New Yorkers will fall for the fear and loathing by those effective union ads and push the legislature to "restore the cuts" when there was no such thing. If the state really sought to cut the budget and restore fiscal sanity, they would not impose a budget larger than last year. It would not only save billions of dollars, but would avoid new taxes and fees to make up the shortfall in revenues anticipated by the increase in state spending in the governor's proposed budget.

The MTA is a morass of fiscal irresponsibility and the state will sooner impose the payroll taxes, sending businesses fleeing than to impose tolls on the East River bridges, including the Brooklyn Bridge, Manhattan Bridge, Queensboro Bridge, Williamsburg Bridge, and the Harlem River bridges.

If you're wondering where your Obama tax cuts are about to go, there's your answer. It's just going to end up in the state tax coffers. You've just witnessed the tax shell game.

UPDATE:
And how could I have forgotten Paterson's call to impose and collect taxes on porn.

The Runaway Pork Train Continues

The Democrats continue demanding that this massive load of pork, redistribution of wealth and a not so stealthy overhaul of medical care be passed immediately. House Majority Leader Nancy Pelosi is looking to get this massive pork offal passed as quickly as possible so that she can jet off to Rome, Italy. What's more important? Pelosi's travel plans or close study of the largest spending plan in the history of the nation? Pelosi's travel plans of course.

This is a 1,000+ page monstrosity and I doubt any member of Congress has actually read all of it. Many members in the House may never get the chance to read this mess before they are asked to vote on it because Pelosi has gone back on her pledge to get them a clean copy of the bill on which they are to vote.

Sen. Frank Lautenberg (D-NJ) notes that many wont get a chance to read the bill. Even if they're provided copies, I doubt many have read all of the summations of this bill given that they are so substantial in and of themselves let alone the budget projections that show what a mess this bill makes of the economy going forward and the true cost to the nation. It isn't merely the $789 billion right now, but the $2.3 trillion or more that future generations of Americans will be paying off (if at all).

It's hysterical to hear about how the Obama Administration blames President Bush for leaving him with a trillion dollar deficit, and yet Obama is about to triple it in one fell swoop with this stimulus package, even as the Democrats ponder a follow on stimulus package that would be nearly as costly. The CBO doesn't take kindly to any of this either, and has a handy dandy graphic to highlight what this does to 2009 alone. How is any of this fiscally responsible.

It isn't.

That's why so many people are starting to balk at the package. Sen. Harry Reid doesn't know if he's got the 60 votes needed to close debate and bring the measure to a floor vote. Now that Sen. Judd Gregg is back in consideration after bailing on the Commerce Secretary nomination over the porkfest and census data grab by the White House, the numbers are even tighter.

UPDATE:
Will the stimulus stimulate the economy? Nope.

The compromise economic stimulus plan agreed to by negotiators from the House of Representatives and the Senate is short on incentives to get consumers spending again and long on social goals that won't stimulate economic activity, according to a range of respected economists.

"I think (doing) nothing would have been better," said Ed Yardeni, an investment analyst who's usually an optimist, in an interview with McClatchy. He argued that the plan fails to provide the right incentives to spur spending.

"It's unfocused. That is my problem. It is a lot of money for a lot of nickel-and- dime programs. I would have rather had a lot of money for (promoting purchase of) housing and autos . . . . Most of this plan is really, I think, aimed at stabilizing the situation and helping people get through the recession, rather than getting us out of the recession. They are actually providing less short-term stimulus by cutting back, from what I understand, some of the tax credits."

It's also curious to watch Democrats cheer the tax cuts that might provide $500-600 to many Americans when they pooh-poohed the same when President Bush offered additional rebates in that amount last year. In fact, Michelle Obama lambasted the Bush tax break, claiming that the $600 would buy only a pair of earrings. The Anchoress has more, but what is also important is that the federal government is going to provide tax breaks at a time when the states are looking to raise taxes to cover their costs.

Consider that New York City has already stated that they're not going to give the expected property tax rebates. That's roughly $400 per homeowner. In New Jersey, Gov. Corzine has contemplated something similar, and the property tax relief in New Jersey would have exceeded the amount provided by the Obama tax cut. In other words, taxpayers in many parts of the country will never see the benefit of the tax cuts because localities are busy raising taxes or cutting rebates that siphon off still more taxpayer dollars. It's a shell game, and no one can keep track of where all the money is going.

UPDATE:
The House has voted to pass this porkfest 246-183. All GOPers and seven Democrats voted against (one Democrat voted "Present"). It was bipartisan opposition to this mess.

Obama Blasts Critics and Uses the Fear Card

President Obama is getting a wee bit testy these days because everything isn't exactly going to his plan. His cabinet nominees have this nauseating tendency to avoid paying their tax obligations or reporting their income properly. His stimulus plan is receiving strong opposition because people see for the porkfest it is.

He claims that people are basing their opposition on phony and debunked economic theories.

"Don't come to the table with the same tired arguments and worn ideas that helped to create this crisis," the president said at the House Democrats' annual retreat in Williamsburg.

"We're not going to get relief by turning back to the very same policies that, for the last eight years, doubled the national debt and threw our economy into a tailspin," he said. "We can't embrace the losing formula that says only tax cuts will work for every problem we face, that ignores critical challenges like our addiction to foreign oil, or the soaring cost of health care, or failing schools and crumbling bridges and roads and levees.

"I don't care whether you're driving a hybrid or an SUV -- if you're headed for a cliff, you've got to change direction."

The Democrats welcomed the president with frequent interruptions for applause as he took on criticisms of the bill.

Obama said he valued "the constructive criticism and healthy debate that's taking place around this package," but added that speedy passage of the bill was essential.

"We're not moving quickly because we're trying to jam something down people's throats," he said. "We're moving quickly because if we don't, the economy's going to keep getting worse."

Really? How about the theory he's resting his entire plan on - that massive government deficit spending will reduce the effect of the recession or keep it from getting worse. It seems that his theory has been debunked as well; folks who have studied FDR and the Great Depression note that FDR's spending plans and economic policy actually made the Depression last longer and more severe.

Obama's modeling his plans on FDR. He's throwing the money around in ways that drunken sailors could only dream.

Obama has an obligation to show us what his plan will do for America not only in the next nine months, but in the future when the bill comes due for his outrageous spending.

He is using fear to drive Congress to pass this legislation despite the fact that the overwhelming majority of the spending isn't stimulus but pork and massive spending increases that wont take effect until well after the recession is over.

No critics are talking about just providing tax cuts; President Obama is making strawman arguments that obscure his real intentions.

Obama rejected calls for more tax cuts and significant slashing of the bill's more than $800 billion price tag, and said complaints the package was a spending bill rather than a stimulus bill were off base.

"What do you think a stimulus bill is?" he said. "That's the point."

No, a stimulus bill is one where the spending is to occur when and where it's needed; not to fund every pet project under the sun, which is precisely the case with this porkfest.

Obama warns that if the porkfest isn't passed, things will get much worse. Imagine if FRD said that the only thing we have is fear itself. That's Obama's case in a nutshell.

UPDATE:
Consider the Japanese example. Japan engaged in a massive spending program to lift the country out of a recession. Only problem - it didn't work.

Japan’s rural areas have been paved over and filled in with roads, dams and other big infrastructure projects, the legacy of trillions of dollars spent to lift the economy from a severe downturn caused by the bursting of a real estate bubble in the late 1980s. During those nearly two decades, Japan accumulated the largest public debt in the developed world — totaling 180 percent of its $5.5 trillion economy — while failing to generate a convincing recovery. Now, as the Obama administration embarks on a similar path, proposing to spend more than $820 billion to stimulate the sagging American economy, many economists are taking a fresh look at Japan’s troubled experience

Which failed economic theories are we talking about? Obama wants people to think that the GOP and his critics are pushing failed economic theories, when we can see with great abundance that Obama's spending plan has been tried before and has failed miserably.

And yet, Obama wants us to believe that the porkfest be passed now (actually on Monday because he and his fellow Democrats are whooping it up at a lavish retreat this weekend and can't be bothered with the day to day business of running the country - and yet they railed on at length over businesses that do the same (hold retreats and company gatherings).

Rich Lowry has it right, Obama is using faith based economics to demand passage simply because he won. More to the point, Don Surber notes that Obama is fast becoming Eric Cartman before our eyes - that we must respect his authoritay. If you don't like what Obama says, tough. That's his position, and he's sticking with it even as most Americans don't want to see the bill passed in its current form.

Slublog at Ace has more.

UPDATE:
Via joel comes this funny video: Stimulis: Because all economies have performance issues

Where Are All The Fiscally Responsible People?

Are they an endangered species? Are there any fiscally responsible politicians left in the country? Is anyone actually going to stand up against the grossly irresponsible spending package that President Obama and Congress are about to embark upon?

There are plenty of dispirited Republicans out there who don't know where to go now that they lack the numbers in Congress to mount a credible response or filibuster measures that they oppose. There's a good reason for this.

The Republicans lost their bearings over the past decade. They fell into the same spending habits of the Democrats that they once abhorred. There was a time when Republicans stood for fiscal responsibility. No longer.

Now, they're pushing the same kinds of economic rubbish that Democrats push; but Republicans fail because they just can't spend nearly as much as Democrats propose.

That has to change if Republicans want to gain seats in 2010 or mount a credible campaign in 2012.

It starts with a broad-based counter to the porkfest "stimulus" package that is anything but.

It starts with the recognition that the recession isn't because of a failure of the market, but because the market has reasserted itself after years of distortion by government policy.

The problem is that the GOP leadership isn't listening. They're unable to put together a coherent message, let alone agree on a message.

If the idea is to get the GOP to have a strong comeback in 2010, they have to start attacking Obama's socialist policies now. That starts with opposing the porkfest that the media and Congress claims is a stimulus package.

It means acting like fiscal conservatives and demanding accountability. The reason that GOP was sent into the wilderness is because they abandoned the notion of fiscal responsibility, among others. Fiscal responsibility is a message that resonates with most Americans. Start with that. Add in national defense and national security, and you've got a trifecta of interrelated issues that can actually result in gaining seats in 2010 because we know that Obama is going to spend like there's no tomorrow and will speed redistribution of wealth despite its corrosive and destructive effect on those who actually produce wealth in the nation.

The Non-Stimulus Stimulus Porkfest

Where to begin with the mess that Congress and President Obama are about to ram through.

Let's start with the overt racism, sexism, and abject stupidity of how the money will be spread around.



That's Robert Reich, Obamas economic advisor, who's busy calling for a limitation on where the money goes. Forget people who are actually experienced and qualified for the jobs. They want to spread it to those who don't.

That's also Charlie Rangel, he of the massive tax evasion and ethics entanglements, who's busy talking of how the money will be spread around - wealth redistribution and socialism.

Then you have Rep. David Camp (R-MI) getting the Thomas A. Barthold, Deputy Chief of Staff of the Joint Tax Committee (a nonpartisan committee established by the House and Senate) to agree that there is absolutely no statistical evidence that the stimulus package they're discussing will create a single job or grow the economy by one iota.

No one wants to address the fact that for a stimulus package that is supposed to provide immediate assistance, so much of the package is postdated for 2010 and 2011, when most economists agree the recession will have already passed.

No one wants to address the fact that the underlying causes of the fiscal mess was the result of the mortgage meltdown spurred by Congressional and overtly political demands that affordable housing go to those who could not actually afford to repay those homes, especially when the market sagged and/or interest rates reset.

For President Obama, who claims that rebuilding and improving infrastructure is absolutely necessary for economic growth and to kickstart the economy, why then is only $40 billion of the $825 billion going to infrastructure projects?

Of the $825 billion bill, only $40 billion - less than 5 percent and less than $1 billion per state - is earmarked for transportation and transit.

But it would take more than $70 billion a year in new spending to even begin to do the asset upgrades that the Department of Transportation says the nation needs.

Worse, the bill pretends that run-of-the-mill work such as paving and surfacing is a radical investment in the future. With much of the meager $800 million a state going for that, the bill would barely let us keep up with current neglect, never mind make real improvements.

Then there's the bill's emphasis on "shovel-ready" projects, directing states to "initiate" the spending of roughly half the infrastructure money in the first four months or lose it. Problem is the best projects to support the private-sector economy might not be the easiest, quickest and cheapest.

Another issue: The bill's muddled definition of "infrastructure." Its $15 billion worth of spending on public and "affordable" housing, for example, is actually social spending.

Since when is social spending actually infrastructure spending, unless you're redefining the terms so that they are meaningless.

Reich's outtakes above also go to how Obama wants to insure that infrastructure spending takes into account the social costs. That stands cost-benefit analysis on its head, and shows that the Democrats are looking to use the stimulus porkfest to redistribute tax money - and money that the government doesn't even have - to satisfy their constituencies without regard to the fiscal responsibility they have to the nation and all taxpayers. It is the height of fiscal irresponsibility.

Mark Levin takes apart the porkfest and the socialists pushing this stimulus package despite the abject lack of evidence that it will do anything to stimulate the economy.

UPDATE:
President Obama is pushing for swift action on the porkfest, arguing that it is absolutely necessary to jump start the economy. I don't see any case being made that this particular piece of legislation will do anything to improve the economy one bit.

UPDATE:
There's also nothing Republicans can do in all this. They simply don't have the numbers in Congress to make a difference. They could vote against the porkfest and it still wouldn't matter as it would still pass handily. Of course, that would enable them to claim fiscal responsibility from the tax and spend Democrats, but I doubt they'll manage that. They could also vote present on this and other fiscally irresponsible measures, but again, I doubt that the GOP has the discipline to see that through.

It's also important to note that will all the talk of bipartisanship, it's all unidirectional. GOPers must cross the line to see the Democrat position, or else no deal. If you suggest otherwise, you're told to shove off.

The California Tax Man Holdeth

If you were expecting a tax refund in California, you're going to have to wait a while longer. The state is essentially out of money and can't cover the tab to return your money to you.

Controller John Chiang said Friday he must delay $3.7 billion in payments next month because lawmakers have failed to address California's growing deficit.

With a $41.6 billion shortfall over the next year-and-a-half, the state is on the brink of issuing IOUs.

Chiang says his office must continue education and debt payments but will defer money for tax refunds, student aid, social services and mental health programs.

A severe drop in revenue has left the state's main bank account depleted. The state had been relying on borrowing from special funds and Wall Street investors; those options are no longer available.

California's profligate spending has created the conditions for a massive deficit when revenues fall short - when Wall Street and business suffers. There's no one to take up the slack in revenues, so the state faces a massive deficit.

California hopes for a federal bailout, which might balance the budget this year, but does nothing to alleviate the long term structural deficit which caused the current problems. Excessive spending is to blame for the current mess, not a lack of revenues. Spending has been out of control in California, just as surely as it has been in New York and New Jersey, which aren't far behind in the budget mess. None of these states will take the actions necessary to correct the fundamental problems with their respective state budgets, and will instead offer up cheap platitudes and claims that they are being fiscally responsible by not increasing the upcoming fiscal year budgets by as much as they had previously intended. Note that these states will increase spending when they don't have the revenues coming in.

Taxpayers will end up bearing the brunt of the mess as always. Should the federal government bail out California or any of the other fiscally irresponsible states, taxpayers from those states who controlled spending will be subsidizing the bad habits of others and the lessons will not be learned.

SOS 2009: New Jersey In Trouble

I think it's rather fitting that New Jersey Governor Jon Corzine's state of the state address is being linked at the following URL: http://www.nj.gov/sos2009/

SOS is rather fitting, considering the dire straits of the state budget. Corzine talks about how he's doing his best to reduce the pain on New Jersey taxpayers while maintaining or increasing services.

This year, Corzine will have to not only deal with the state budget fiasco, but to run for reelection against Republican Chris Christie, the former US Attorney who helped convict numerous New Jersey politicians engaging in corruption and graft.

I will have details of the speech and a critique when the transcript is available.

UPDATE:
Here's the text of the speech. Lovely platitudes and fawning praise for incoming President Barack Obama:

People also came together last November 4th, when our citizens in record numbers voted overwhelmingly to elect Barack Obama our next president.

In doing so, our voters embraced a new vision for America -- a progressive vision we share in New Jersey. In fact, it's a vision we've been working to achieve for three years --
... a vision that we must responsibly share our economic bounty ... that all of our children deserve a thorough and efficient education ... that health care is a right ... that we have a moral responsibility to be good stewards of the Earth.

Barack Obama's vision is our vision.

And now, thankfully, starting next Tuesday, New Jerseyans have a partner in Washington -- a partner who will join us in pursuing a common vision.

How exactly is Obama going to save the state? Billions of dollars to bail out the state's massive budget deficits? We know that Corzine isn't going to cut spending to get revenues in line with spending. He's already pushed more taxes and fees, so tax and spend is the name of the game, and he's counting on Washington Democrats to pave the way to still more spending.

The national unemployment rate has soared to over 7%, with expectations of a 9% to 10% rate in the year ahead. Our citizens' economic security has been compromised.

Our people did not cause this meltdown -- its causes are beyond their control and are national ... even global ... in scope.

Democrats contributed mightily to the meltdown by demanding the extension of credit to those who were incapable of repaying loans, and when real estate prices began an inevitable correction, everything went sour.

By the close of the calendar year, the deepening recession had required us to cut spending by another $800 million. That's a total of $1.4 billion in cuts in this fiscal year alone.
Let me repeat -- $1.4 billion ...
... not in the rate of growth, but in absolute dollars.

It's been painful, and we've had to make many ugly choices. But together with my partners in the Legislature, we are making the hard choices.

The state budget is bigger this year than it was last year; and the upcoming fiscal year plans on being no different. All the talk about cuts is just that. They're not actually cutting budgets, but reducing the increase in spending year over year. It's still increasing, but just not as much as various groups have wanted.

This is a shell game, and state taxpayers are paying through the nose.

The state authorized billions more for school construction, but anyone following state school construction knows that billions were spent and a fraction of the projects listed ever reached completion. Scandals, corruption, and a failure to properly figure how much projects would cost sapped the funds, and the state fell short of its prior goals.

The new borrowing isn't going to be any different.

However, the line of the day has to be this for its utter cluelessness:

Today, New Jersey's unemployment stands at 6.1% -- nationally, the rate is 7.2%. Make no mistake --as long as one New Jerseyan is unemployed, we have work to do.

This is a call for unending government interference in the marketplace - because there is no such thing as zero unemployment. There is always going to be a segment of the population between jobs or are on unemployment at any one time. Corzine's using this as an excuse to increase state spending.

It is regrettable that over a period of at least 15 years, when the sun was shining and the economy was strong, New Jersey failed to put its financial house in order ... particularly our public pension system.

It's only because of today's financial crisis that I've recommended giving local governments the option of deferring a percentage of their employee pension payments.

To be sure, I have demonstrated a commitment to the solvency of our pension system.

Okay, make that another line of the day, since Corzine has gone on the record saying that municipalities could avoid their pension payment obligations so as to avoid requiring higher property tax payments from taxpayers already suffering under the highest tax burdens in the nation. He says otherwise in today's speech, but the net effect is that municipalities are being told that they don't have to worry about their pension obligations.

For most of the past 15 years, Democrats have ruled the roost in Trenton, and state spending has outstripped revenues and one-shots, borrowing tricks, and fiscal irresponsibility has been the name of the game. Corzine has been no different.

If he truly is serious about squaring the budget mess, propose a zero-growth budget. You wont see him do it, because he really isn't as interested in fiscal responsibility as in being reelected, and he's got state workers to woo.

He further claims that the state workforce has been slashed, but that too is questionable.

According to the State, there were 80,122 on the state payroll as of January 4, 2008. There were 80,744 on the state payroll as of January 1, 2007. Curiously, the 2006 workforce document sheds still more light on state workforce numbers.

For January 8, 2004, there were 79,298 people on the payroll; 82,538 as of January 7, 2006; and by January 1, 2008, the number was expected to grow to 84,401. In other words, the state workforce was expected to grow 6.4% from 2004 onwards. Any cuts to the size of the workforce are a reduction in the growth - not in absolute terms.

A Budget So Perilous Gov. Paterson Increases Its Size

New York Governor David Paterson, a Democrat, talks about how the state's fiscal condition is perilous and that the state has to do more to keep from sliding into a financial abyss.

Gov. David Paterson sees New York's condition as "perilous,'' but the courage to balance the government's budget and priorities can create "a brighter, smarter future,'' though it could take months and even years.

In his first State of the State address, Paterson called Wednesday for "shared sacrifice'' for a future where everyone has access to health care, excellent education and a good job and will breathe clean air and use clean energy.

"We still do not know the extent of the economic chaos that awaits us,'' Paterson told a joint session of the state Legislature. Noting New York entered a recession in August, he said an estimated 225,000 New Yorkers could lose their jobs before the crisis is over, and "the pillars of Wall Street have crumbled.''

Paterson already proposed a $121.1 billion budget for the upcoming fiscal year, up 1.1 percent, that includes layoffs, a cut in school aid and 88 new or higher fees.

"We cannot solve our problems overnight or without sacrifice -- they run too deep for that,'' Paterson said. "These problems may last for many more months or even years. But we can solve them.''

Funny then, that the state's budget is higher this year than last by more than a billion dollars and that much of that increase is the result of higher fees and taxes.

Paterson's trying to have it both ways - grow state government all while claiming that he's being fiscally responsible. The sad fact is that by New York standards, he's actually as fiscally responsible as they've come over the past several decades (including Republicans like George Pataki and Democrats like Mario Cuomo and Eliot Spitzer). He's increasing the size of the state budget, but just not as much as the rate of inflation. All the usual suspects - leftists, the unions, lobbyists - will raise a great stink about how their programs are being cut, even though they will still see more money this year than last.

New York truly is in bad financial shape, but Paterson's proposals aren't the solution; they're only sending the bill on to the taxpayers in the form of higher taxes and fees at a time when they can ill afford them.

The state is in such bad financial shape because Wall Street stopped being its cash cow/piggy bank. It isn't feeding Albany with its tax revenues fast enough, so they have to make the money up elsewhere, hence the taxes and fee proposals, including one on soft drinks.

NJ Gov. Corzine Contemplates Budget Cuts

Are they really budget cuts or are they reductions in the increase in state spending from previous projections? That's the problem when some of these articles are published without any relevant context.

Gov. Jon Corzine (D), has stated that he'd like to see budget cuts in a number of areas.

Some of the areas identified for cuts by Governor Corzine:

The state’s contribution into the employees’ pension fund: $115.6 million
New Jersey Motor Vehicle Commission: $10 million
Management salaries: $15.7 million
Executive branch employee salaries: $6 million
New Jersey Stem Cell Research Institute: $13.7 million
Cancer research grants: $7 million
Homeland security grants: $1.4 million
Office of the Child Advocate: $1 million
Office of the Public Advocate: $2.6 million
State comptroller: $1.5 million
Garden State Parkway and New Jersey Turnpike feeder-road maintenance program: $4 million
Hunters and anglers fund: $1 million
Law enforcement training and equipment: $882,000
Governor’s Literacy Program: $700,000
Mosquito control: $257,000
Department of Transportation ride-sharing program: $240,000

One that should draw a huge red flag? He's looking to cut pension payments by nearly $116 million. That's on top of the already massively underfunded state pension system. Nice. In other words, Corzine is looking to make the pension timebomb in New Jersey even worse by calling for cuts there. Don't hold your breath to see that happen though; the unions would never allow that to happen. The unions also will not discuss givebacks or reductions to their gold plated benefits packages going forward either, despite the fact that the state cannot afford them.

Another program to watch? The state is looking to cut the Stem Cell Research Institute Funding by $13 million. Why is that a red flag when I've repeatedly counseled that the state shouldn't have been involved in it in the first place? Simple. It's very hard to eliminate programs once they've been placed on the budget. Corzine has tried to spend hundreds of millions in debt financing to make the stem cell research center work, but taxpayers voted that down. He's settled instead for spending state money on the program when the state simply doesn't have the money. Now, he's forced to take action. Again, watch proponents try to keep the funding where it is.

Had the state not funded the stem cell research institute in the first place, there would be tens of millions available for other more crucial programs or lower debt financing or other benefits that accrue to taxpayers by the state not spending money it doesn't have and/or taxpayers whose wallets are not even lighter than they already are.

I'm still not sure what the office of the public advocate is, and why it is needed when it handles many of the same functions as the Attorney General's office (particularly the Division of Consumer Affairs).

Meanwhile, one agency that isn't seeing its budget cut? Global Warming. Nice.

UPDATE:
Instapundit links. Thanks. By the way, I'm a finalist in the 2008 Weblog Awards Best Small Blog category (as listed as A Blog For All). If you're so inclined, send your votes my way early and often (Chicago rules apply).

Also, keep in mind that Corzine's other great plans for the budget in New Jersey include telling municipalities to not fully fund their pension obligations either. For someone who is supposedly a financial wizard, he appears to be made of the Bernie Madoff mold.

States Halting Road Projects Due To Budget Troubles

The New York Times reports that states are halting road projects due to budget troubles.

California, which has suspended nearly $4 billion in public works projects, is one of a half dozen states delaying or halting projects because of capsizing budgets, an inability to attract investors to the municipal bonds used to bankroll many projects and a reduction in gasoline tax revenues — which underlie a lot of transportation financing.

The American Association of State Highway and Transportation Officials has identified 5,000 transportation projects nationwide that lack the dollars to proceed; many of them, like the $730 million project here to add 10 miles of high-occupancy-vehicle lanes to the 405 Freeway — Mr. Schwarzenegger’s backdrop on Monday — have been stopped midstream.

“They just haven’t been able to find the resources,” Tony Dorsey, the spokesman for the association, said of the halted projects.

More than 40 states are struggling with revenue shortfalls, and lawmakers across the country are cutting, taxing and pleading their way toward solvency. Fixing bridges, expanding highways and other infrastructure projects have faced the same fate as government entitlement programs, state jobs and other items.

Jeffrey Caldwell, a spokesman for the Virginia Department of Transportation, said, “Projects not currently under construction or significantly far in the development process were either delayed or completely removed from plans for future construction.”

Wait a moment. Weren't all these politicians claiming that they'd be spending all kinds of money to rebuild, rehabilitate and construct new road and infrastructure projects to stimulate the economy? President-Elect Obama and his fellow Democrats have been floating the idea of a massive stimulus package that would spend billions on road and infrastructure projects.

So, why exactly are all these states cutting back on road projects due to the budget troubles?

Seems that reality has a way of adjusting budget forecasts. The states realize they simply can't afford to do those road projects at the same time as funding the out of control entitlements that hamstring state and federal budgets because of a failure to fully fund pensions over the years and a failure to rein in spending year after year.

Les Saboteurs Hit French Railways

The strikes rippling across France continue for an eight straight day, and things have gotten quite dangerous. Saboteurs are attacking the vaunted French rail system, setting fires all over the system, and in one instance damaging signals along 30 km of rail.

Sarkozy has his hands full, as the mayhem spreads throughout the country. So much for the workers' paradise:

The national rail service, S.N.C.F., blamed the fires on a “concerted act of sabotage” and said there were several blazes along rail lines, including one that damaged 30 kilometers of a signal network.
S.N.C.F. also reported the deliberate shutting of signal switches and arson attacks on cables.

Dominique Bussereau, the state secretary of transport, denounced the fires as “grave and reprehensible” acts that appeared to be coordinated.

Top union officials also condemned the arson attacks. Bernard Thibault, secretary general of the CGT union, told the Europe 1 radio station that to attack the rail lines during a social conflict was "certainly destined to bring discredit to the profession."

That's right - it's all about discrediting the profession Monsieur Thibault. What about safety, security, and the fact that you've got members of your union destroying government property and putting lives in jeopardy? Well, speaking of putting lives in jeopardy, you've got walkouts by other unions, including firefighters:

Along with rail managers, two representatives of the labor ministry and the state transport secretariat were involved in negotiations today. The government’s participation was one of the key demands of unions.

On Tuesday, President Nicolas Sarkozy broke his silence on the strike and urged transport workers to return to work. On that day, civil service employees, including primary school teachers, firefighters, newspaper printers and weather service employees, walked out in a separate dispute over job cuts.

The unions are so deeply entrenched in the past, that any change is fought tooth and nail. Violence is not uncommon in the French work disputes.

The Bill's Been Due

New Jersey has a deficit of at least $38 billion dollars. Does anyone think that Gov. Corzine will be able to restructure that debt to cut it by half if he's continuing to propose new programs? What kind of financial wizardry would it take to cut the debt by half? Wishing it away will not make it happen.

A new report shows New Jersey's record debt is now above the $38 billion mark, a figure Governor Corzine has vowed to slash in half with a yet-to-be disclosed "financial restructuring" plan that includes toll hikes.

The new total debt number comes just as Corzine is ramping up his effort to convince residents that toll increases are the best way to fix the state's financial problems. He is expected to roll out details of the plan in early January.

The governor and others have warned that New Jersey's mountain of debt will hamper its ability to build roads and schools, or adapt to other public needs, like health care for low-income children. This year, the state paid $3.1 billion for its annual debt, or nearly 10 percent of the state's budget.

In all, New Jersey residents face both the fourth-highest total debt and per-capita debt burdens in the nation, according to the report compiled by the New Jersey Commission on Capital Budgeting and Planning.

The debt translates into $3,700 for every man, woman and child living in New Jersey, the governor said. It also means the first $600 of every state tax bill goes to paying down the debt, he said.

State debt has ballooned in the past decade, and no one in Trenton has bothered to utter the phrase "fiscal responsibility."

It's so much easier for Trenton to spend taxpayer money than it is to do the fiscally prudent thing of cutting spending.

And therein lies the rub.

Much of what Corzine is likely to propose is hikes in fares, tolls, and other revenue generating means - taxes. Cutting spending or restructuring how the state spends its money isn't likely to generate much traction or support. Abbott districts don't want to see their gravy train end, despite the fact that the billions spent on redistributing all that money has not improved education in the state.

The elimination of one-shots may have stopped that tiresome and fiscally irresponsible stop-gap maneuver that included obtaining a lump-sum payment from the tobacco lawsuit settlement to cover a budget gap a few years back. All those one-shots meant that politicians got to avoid making tough decisions on what programs to cut or taxes to raise for another year.

The bill has been due for some time, but it has gotten to the point where even the Democrats are realizing that something has to be done. I fear that Corzine will respond as many other Democrats have done in the past - raising taxes and fees rather than cutting unnecessary and wasteful programs.

Corzine Plays Grinch With State Workers

New Jersey state workers used to have the day after Thanksgiving off as a paid holiday. Gov. Jon Corzine said that the policy would end after last year. State workers are busy complaining about the change.

New Jersey state workers already have 13 paid days off in addition to their vacation time. That's not the part of the story that I found most fascinating.

It was this:

Carla Katz, the president of CWA Local 1034, the largest New Jersey state workers union local, said there's practical reasons to closing state offices the day after Thanksgiving, such as saving money by turning off lights and heat in state buildings for four days.

"The decades-long tradition of allowing for a Thanksgiving holiday -- when schools are closed, kids are home from college for the long weekend and people travel to be together -- is a family friendly tradition that should continue to be honored," Katz
said.

That is one irony laden quote. Katz has been romantically linked to Corzine, but that's not the part that really strikes my fancy.

It's the part where she says that the state could save money by closing offices and turning off lights and heat in state buildings for four days.

If the state can save money by shutting down for the four day holiday weekend, how many hundreds of millions could be saved if the state shut down for far longer? Given the state's huge budget deficits - which range into the tens of billions of dollars, maybe the state would improve its fiscal shape if Trenton shut down the state offices, especially the Legislature, for an extended period.

Not only would the state save tons of money in the process, but the Legislature would not have the opportunity to proffer another tax and spend scheme in the process.

The NJ Pension Gap

Welcome to the world of fiscal accountability in New Jersey. Let's go back to the days of Christie Todd Whitman, who first noticed that there was a pension shortfall of $2.8 billion, and used borrowing to make up the gap. The shortfall was there because prior administrations had failed to fully fund the pension fund.

The problems were only to get worse.

Next up came Donald DiFrancisco, James McGreevey, and Richard Codey, who all ignored the warning signs and the dot.com bust, which eliminated the so-called $5 billion surplus. What did these administrations do? They not only stopped funding the pension fund, but increased the benefits to pensioners by 9%. The combination meant that the discrepancy between what was in the fund and its obligations would not only widen, but accelerate.

The gap is now at $33 billion. That's nearly as large as the state's annual budget.

The blame game in Trenton has lots of finger pointing between the Treasury Department which is supposed to manage such things, and the Legislature, which is required to meet the state's obligations.

Gov. Corzine is not only stuck with this mess, but he's trying to do it on the cheap. Even though he recognizes the problem, he's not fully funding this year's obligations, let alone making up for the shortfall from prior years.

What can and should be done? Well, there are no easy answers, and if you're one of the people who are relying on the pension fund, you might not like the possibilities.

1) Amend state law and the state constitution to reduce the pension benefits to manageable levels and force a shift from defined benefit plans to defined contribution plans. This is the same kind of shift that has occurred in the private workforce, and would alleviate many of the concerns with the pension plan going forward. The problem is that the unions hate these kinds of changes and would fight it tooth and nail every step of the way. I would give the odds on such a change about 100-1.

2) Cut state jobs. New Jersey continues to tack on more state jobs even as the state's population declines. This untenable situation means that the state continues to spend ever more money despite having less coming in. The tax situation is out of whack, and the state spending needs to be brought under control. Cutting state jobs would work, but only in conjunction with other changes. Odds: 50-1 (same problems with unions, but unions have a tendency to hang new workers out to dry and want to protect the entrenched old timers' benefits).

3) Cut state spending and redirect money to pension funds. This means giving up pet projects and other initiatives. That new stem cell research facility? Well, sounds great until you realize that there's no money to pay for it despite it having the backing of the governor. The state must reprioritize its spending habits, and get back to basics.

Fund the pension fund. Fund the transportation trust fund. Address property tax reform and education funding in a comprehensive manner that is not only equitable, but gets the state out from under crushing Abbott rules that have done nothing to improve the education in those areas. Odds 25-1. Abbott rules have court backing and it means the legislature must decide to take on the courts, which is no mean feat. Cutting spending and eliminating pet projects means that the pork doesn't get delivered and campaign promises go unfulfilled.

The article suggests that the state should consider one-shots to get the pension system funded, such as selling/leasing the Turnpike. Funny thing about those one-shots is that they never work. All that will do is reduce the number of assets available to the state and the state will need to make the money up in another fashion. Transportation funding should come from any change in the status in the Turnpike. It shouldn't go into a general fund or address the pension problems. One of the reasons that the state is in this mess is because the state was playing with the money. Dedicated money streams would guarantee that various items would be funded and if there are shortfalls, the difference must be made up from the general fund. Surpluses shouldn't be treated as slush funds, but kept for rainy day for the individual revenue streams.

House of Cards

New Jersey's house of cards, otherwise known as the state budget and fiscal outlook, is a very fragile thing. The latest sign that the situation is out of hand is a report by the New York Times indicating that the state has been shortchanging the pension fund by billions of dollars. This means that not only are the pension funds underfunded but that the operating budgets are in danger as well.

In 2005, New Jersey put either $551 million, $56 million or nothing into its pension fund for teachers. All three figures appeared in various state documents — though the state now says that the actual amount was zero.

Recycled Money The phantom contribution is just one indication that New Jersey has been diverting billions of dollars from its pension fund for state and local workers into other government purposes over the last 15 years, using a variety of unorthodox transactions authorized by the Legislature and by governors from both political parties.

The state has long acknowledged that it has been putting less money into the pension fund than it should. But an analysis of its records by The New York Times shows that in many cases, New Jersey has overstated even what it has claimed to be contributing, sometimes by hundreds of millions of dollars.

The discrepancies raise questions about how much money is really in the New Jersey pension fund, which industry statistics show to be the ninth largest in the nation’s public sector, with reported assets of $79 billion.

State officials say the fund is in dire shape, with a serious deficit. It has enough to pay retirees for several years, but without big contributions, paid for by cuts elsewhere in the state’s programs, higher taxes or another source, the fund could soon be caught in a downward spiral that could devastate the state’s fiscal health. Under its Constitution, New Jersey cannot reduce earned pension benefits.

The Times’s examination of New Jersey’s pension fund showed that officials have taken questionable steps again and again. The state recorded investment gains immediately when the markets were up, for instance, then delayed recording losses when the markets were down. It reported money to pay for health care costs as contributions to the pension fund, though that money would soon flow out of the fund. It claimed it had “excess” assets that allowed it to divert required pension contributions to other uses, like providing financial assistance to poor school districts.

Trenton is blaming the Treasury Division officials while Treasury is blaming the Legislature for directing them to take these actions. Either way, this double whammy is going to leave taxpayers on the hook to make up the shortfall.

And we all know what that means. More taxes.

Gov. Corzine has been warning that the pension system is in crisis, but he's not willing to take the political hit necessary to get the state on a sound fiscal footing. He's unwilling to cut state jobs and reduce state expenditures all the while promising (and getting) property tax reform in the form of higher sales tax rates to curb the growth in property taxes for the next couple of years. He's also looking at one-shots to get the budget in line, but that will not provide a permanent fix.

Cutting state spending is the only way to achieve a sound fiscal picture for New Jersey, but that is not going to happen with the legislature and governor wedded to the unions and state workforce.

The Latest UMDNJ Scandal

Announced with great fanfare three years ago, the high-tech research center at the University of Medicine and Dentistry of New Jersey was to be built with $21 million in federal grants and would play an important role in the fight against bioterrorism and deadly infectious diseases.

But almost immediately, a top- ranking university official began trying to move the project out of Newark to Picatinny Arsenal, 30 miles away, as part of a deal that would financially benefit his neighbor.

"Why they did what they did, I don't know," said Bruce C. Vla deck, the university's interim president. "Clearly they put the plans ... on hold while they ran around on all these other wild goose chases. It cost us over a year cer tainly."

The story of the research lab, now three years behind schedule, is detailed in a trove of new documents obtained after a lengthy court battle by The Star-Ledger.

The records paint a picture of a state institution in which high-paid administrators chased state grants they didn't need, built buildings that now seem pointless and em barked on bizarre schemes -- like moving a bioterror lab without telling the officials who funded it.

New Jersey and corruption continue to be perfect together. The University of Medicine and Dentistry of New Jersey is at the heart of a huge scandal in its own right, with the school acting as a breeding ground for corruption and shady dealings. Consider that $110 million was spent on a cancer research center building that now sits empty because no one thought about paying for the operation of the building. This comes at a time when the state is considering spending millions on stem cell research using bond acts. Or that other buildings on campus are being used in a limited fashion.

Or, consider that the state spent millions on a bioterror lab, and then state officials tried moving the location from where the NIH grant put it in Newark to the Picatinny Arsenal. If the lab isn't built on schedule, the state stands to lose millions in grant aid for the project.

None of this is prudent.

None of this is sound fiscal policy.

It's about spreading the money around and no one in the state government thinks of the consequences of the profligate spending. No one.

Not the governor.

Not the legislature.

And most voters have tuned out all the scandals because they think this is all we can or should expect of New Jersey politicians.