WHITE HOUSE AND SENATE AVOID "FISCAL CLIFF", BUT WILL HOUSE BITE OR BARF?

Fiscal-Cliff Focus Moves to House

WASHINGTON—The fiscal-cliff deal is now in the hands of the House, which convenes New Year's Day to consider a budget agreement that would boost income-tax rates for the first time in 20 years—but only for those with the highest incomes—maintain unemployment benefits, and limit the spending cuts that were looming as part of the cliff.

The Senate cleared the package 89-8 more than two hours into the New Year on Tuesday after President Barack Obama and Senate leaders finalized its contents.

The House convenes at noon Tuesday and its next steps are uncertain. Supporters of the compromise hope the big bipartisan vote of approval in the Senate would help propel the measure through the House and onto Mr. Obama's desk for his signature by Thursday.

Conservative Republicans, however, are dismayed the compromise raises tax rates and doesn't include more cuts in federal spending. House Speaker John Boehner (R., Ohio) has raised the possibility the House could amend the bill and send it back to the Senate.

House Republican leaders have made no decisions about how quickly to act, not wanting to get out ahead of their rank-and-file lawmakers, who want time to review the deal. Democrats are expected to deliver enough votes to help secure passage, assuming Mr. Boehner takes up the same package that cleared the Senate.

The delay in approval meant that the U.S. technically went over the fiscal cliff at midnight, but with U.S. markets closed Tuesday, the impact of missing the deadline could be minimal. What damage the wrangling has caused—to the 2013 tax-filing season and consumer confidence—is already assured.

The compromise was prepared for the Senate floor after Vice President Joe Biden, who brokered the deal with Senate Minority Leader Mitch McConnell (R., Ky.) traveled to the Capitol for a New Year's Eve meeting with Senate Democrats, including many who harbored reservations about the deal.

"This shouldn't be the model for how to do things around here," Mr. McConnell said on the Senate floor shortly before the vote. "But I think we can say we've done some good for the country. We've taken care of the revenue side of this debate."

One of the most strident opponents to the bill was Democratic Sen. Tom Harkin of Iowa. Speaking on the Senate floor shortly before the vote occurred, he railed against the compromise saying it benefited the wealthiest Americans at the expense of those who could afford it least.

"Maybe now we are all believers of trickle-down economics. Not I," Mr. Harkin said, declaring he would vote against the legislation.

In addition to Mr. Harkin, seven other lawmakers voted against the bill. They were: Democratic Sens. Tom Carper of Delaware and Michael Bennet of Colorado and Republican Sens. Charles Grassley of Iowa, Mike Lee of Utah, Rand Paul of Kentucky, Marco Rubio of Florida and Richard Shelby of Alabama.

Major elements of the compromise would:

Permanently raise tax rates to 39.6% on income over $400,000 for individuals and $450,000 for jointly filing couples.

Raise taxes on capital gains and dividends for those households, from the current 15% to Clinton-era levels of roughly 20%.

Limit the value of personal exemptions as well as the value of itemized deductions, two restrictions that would kick in at $250,000 for individuals and $300,000 for married couples filing jointly. Those limits disappeared in 2010.

Set the estate tax rate at 40% on estates over $5 million, up from the 35% that applies now to those over $5.12 million. That isn't as high as the 45% rate Mr. Obama sought with a $3.5 million exemption.

Delay for two months part of the $110 billion in spending cuts that otherwise would have taken place in early January—cuts that would be replaced by tax increases and cuts in other programs.

It continues an existing pay freeze for members of Congress for the current fiscal year, but doesn't extend the pay freeze for federal government workers.

The bill also included a measure preventing a sharp increase in the price of milk that was feared early in the new year, and extending some other agricultural programs through September. The last five-year farm bill expired at the end of last September as lawmakers were unable to reach a deal on the sweeping legislation.

Left out of the bill were any disaster-relief funds to help assist the recovery effort from the devastation caused by Superstorm Sandy across the Eastern U.S. in October. The Senate passed a bill last week providing $60 billion in emergency relief, but the House has yet to act to bring forward similar legislation.

The wider deal doesn't do much to control the U.S.'s long-term budget woes, which are driven largely by entitlement spending, especially on health care, left untouched in this agreement. And depending on the budget math and the ultimate fate of the spending cuts, it may not do much for the short-run deficit either.

By waiting until the last minute, and by cutting a deal on a much smaller scale than either side once envisioned, Washington also deferred many of its thorniest questions, though perhaps for only a few weeks. In late February of early March, the Treasury Department will run out of extraordinary measures to deal with the government's borrowing limit—which it otherwise would have reached on Monday—and Congress would need to approve an increase.

The delay in the spending cuts will run out about the same time. In effect, Congress has delayed the fiscal cliff by erecting a new and potentially more dangerous one.

Mr. Biden, asked about the outlook for the compromise, told reporters that his long experience on the Hill taught him two things. "You shouldn't predict how the Senate is going to vote before they vote—you won't make a lot of money," he said. "And you surely shouldn't predict how the House is going to vote. But I feel very, very good."

Asked what pitch he made to liberals who were skeptical of the deal, Mr. Biden said he told them, "This is Joe Biden and I'm your buddy."

The changes in tax rates that were agreed to between Messrs. Biden and McConnell would raise roughly $600 billion in new revenue over 10 years. While that would represent the largest tax increase in decades, it would be less than 20% of the revenue that would have come in if policy makers allowed all the current tax breaks to expire on New Year's Eve.

The Biden-McConnell deal is a classic compromise that included something for everyone to love—and hate. The key question is whether the positive components and the pressure of the Jan. 1 deadline are enough to neutralize the parts that raise objections. If not, attacks from the left and right could combine to topple the deal.

For Republicans, the bill includes the bitter medicine of the first income-tax rate increase since 1993, a violation of the anti-tax orthodoxy that has defined their party. On the other hand, it would codify the Bush-era lower income-tax rates for most Americans as permanent law, ending the recurring battles over how long they will endure.

For Democrats, the bill's tax increase makes good on their party's marquee promise in the 2012 election to raise taxes on upper-income Americans and not the middle class. But many Democrats, especially liberals, were infuriated that the bill set the income threshold as high as $450,000.

Heading into a meeting with Mr. Biden and Senate Democrats, Sen. Clare McCaskill of Missouri said, "Nobody's happy—that means it's probably a compromise."

But Sen. Barbara Boxer (D., Calif.) said that Mr. Biden at the meeting told Democrats that the compromise advanced Democratic Party principles. "He told us we can stand proud and tall that a lot of our values were protected," said Ms. Boxer.

"There are many, many reasons people don't like the proposal but there is very close to unanimity that it's better than going over the cliff," Sen. Charles Schumer (D., N.Y.) said after the meeting. "There are disagreements on this provision, that provision and other provisions are large and wide but the number of people who believe we should go over the cliff rather than vote for this is very small."

One sticking point in the talks had been automatic spending cuts, known as the sequester, set to take effect in coming days.

Republicans had insisted the cuts of $24 billion be offset with savings in other areas. The White House wanted some of the offset to be in the form of tax increases, not just other spending cuts.

The deal pays for delaying the sequester with a mix of new taxes and spending cuts, according to several congressional aides.

Of that $24 billion cost, $12 billion would come from a shift in the rules affecting workplace-based 401(k) plans. The change would allow plan holders to roll their 401(k) assets into a Roth IRA plan, which would require them to pay taxes up front on any gains in their plan. The benefit for investors would be that disbursements from Roth plans in retirement are tax free.

In effect, the move provides more up-front revenue to the Treasury, but potentially at the cost of revenue over the long term—as taxes paid when individuals make withdrawals from their 401(k) plans would likely be far greater.

Other elements of the deal could be costly. It calls for a permanent fix to the alternative minimum tax, a one-year extension of unemployment insurance benefits, and a five-year extension of other tax breaks. Among them are tax credits for families of modest means, including one for college tuition, and an expanded earned income tax credit, which provides cash to working poor families who don't earn enough to pay income taxes. It also would block a scheduled cut in Medicare payments to doctors for one year.

The deal taking shape also would include tax breaks adopted by the Senate Finance Committee earlier this year, aides with knowledge of the talks said. Among them was a one-year extension of the tax credit, with slight modifications that would allow wind-farm developers to claim the credit for projects that begin construction by Jan. 1, 2014.

Some Democrats and liberal activists said they believe the White House gave up too much, weakening Democrats' position heading into next round of budget talks with Republicans. "It's not a good deal if it gives more tax cuts to 2% and sets the stage for more hostage taking," Richard Trumka, president of the AFL-CIO, said in a Twitter message.

Opposition to the deal also came quickly from conservatives. Heritage Action, a conservative political group, urged senators to vote against the bill and said it would be a "key vote" in its ratings of lawmakers.

"This kick-the-can approach, necessitated by a president who refuses to stop campaigning and start seriously addressing our nation's fiscal problems, is not an adequate solution to America's coming fiscal crisis, which is a result of overspending, not under-taxing," the group said in a written statement.

KENTUCKY "PISSED" AWAY ALMOST ONE AND HALF BILLION DOLLARS IN ECONOMIC INCENTIVES TO CREATE JOBS. GO FIGURE!

Kentucky spent $1.29 billion on economic development incentives over last decade
By John Cheves

FRANKFORT — Kentucky has spent $1.29 billion on economic development incentives over the last decade, mostly in the form of tax breaks to companies that pledged to create jobs, according to a new report shared Thursday at a legislative hearing.

The 577 companies that took incentives reported creating 55,173 jobs in the state from 2001 to 2010, more than two-thirds of them in the manufacturing sector. The gross cost per job was $23,385, according to the report by Anderson Economic Group of Chicago.

The General Assembly ordered a study of the state's incentives programs in 2011.

Testifying Thursday, senior consultant Caroline Sallee said her firm's findings had gaps. It's impossible to know how many jobs would have been created anyway if the state hadn't offered incentives, she said. And it's hard to say, when considering the total cost of incentives, what the state simultaneously gained from those jobs through taxes it collected from workers and the money they spent in their communities, she said.

"What should give you comfort is that we feel the gross cost is not that high," Sallee told the Interim Joint Committee on Economic Development and Tourism. "If anything, the actual net cost is lower."

Lawmakers said the report left them satisfied with the incentives offered by the state Cabinet for Economic Development and Tourism, Arts and Heritage Cabinet.

"I do think Kentucky is moving the ball more forward than we get credit for," said House Speaker Pro Tem Larry Clark, D-Louisville.

Among the report's other conclusions:

■ Kentucky lags behind a peer group of 13 other states in the Southeast and Midwest, including its neighbors, in knowledge-based jobs, which the consultants defined as jobs in advanced manufacturing, life sciences or communications technology. These jobs tend to pay the highest wages.

About 5 percent of Kentucky workers are employed in the knowledge-based sector, compared to 8 percent on average in the peer states. Kentucky spends competitively on its research universities, but graduates often leave the state to pursue jobs elsewhere. Kentucky does not aggressively leverage its incentives at the universities in ways that stimulate private research-and-development start-ups, as North Carolina does.

"There appears to be something of a brain drain here," said Jason Horwitz, senior analyst at Anderson Economic Group.

■ Kentucky pays Economic Development Secretary Larry Hayes $250,000 a year, which is $100,000 more than the average for his counterparts in peer states. However, some of the other states may offer additional compensation for their officials that could not easily be identified, the consultants said, and it's possible that Hayes' job duties may be more demanding in some way.

■ Kentucky is a tax-friendly state for businesses. The overall share of business profits taken as taxes in Kentucky is 18.2 percent, compared to 19.3 percent on average for the peer states.

However, that means Kentucky offers tax breaks against a tax rate that's already lower than the regional average, the consultants said. Meanwhile, Kentucky is not competitive in two areas important to corporate leaders looking for locations: infrastructure, such as roads and Internet access, and an educated workforce.

Kentucky should throw less money at businesses and invest more in schools, vocational training, transportation and high-speed Internet access, said Jason Bailey, director of the Kentucky Center for Economic Policy in Berea.

"That trade-off is not debated enough around here," said Bailey, who attended the hearing. "We have to understand that tax breaks result in less revenue. That affects our ability to pay for the fundamental things we expect government to provide, such as infrastructure and education — things that businesses benefit from just as much as individuals do."

Read more here: http://www.kentucky.com/2012/07/19/2264034/kentucky-spent-129-billion-on.html#storylink=cpy

Watch POTUS Barack Obama's "America Jobs Act" Joint Address To CONgress LIVE Here.

Kentucky Revenue Receipts In Upswing. Is This Real Or Political "Memorex"?

Kentucky state revenue up in July
Written by Mike Wynn

FRANKFORT, Ky. — Modest economic gains helped revenue in the state's General Fund continue to grow at a steady pace during the first month of the 2012 fiscal year, according to figures released Wednesday.

The state Budget Office issued its monthly revenue report showing that receipts in the General Fund totaled $693.2 million in July, a 6.9 percent increase over July 2010.

The results bolster last week's forecast of a $192 million General Fund surplus this fiscal year.

State Budget Director Mary Lassiter said receipts have improved for the past five quarters thanks to stronger economic activity.

Still, Gov. Steve Beshear must cut $169 million in spending to balance the enacted budget, and federal stimulus money will not be available to shore up expenses next year.

“While we are cautiously optimistic about the revenue outlook, we still have a challenge ahead to balance the budget this fiscal year,” Lassiter warned in a news release.

The current spending plan projects a 1.3 percent increase in revenue for fiscal year 2012, which ends June 30. Budget officials said the General Fund can now meet that goal with only 0.8 percent growth over the remainder of the year.

According to July's report, sales tax revenue increased 6.8 percent, receipts from individual income taxes were up 11.5 percent and corporate tax revenue surged 183.4 percent.

The lottery and the coal severance tax also yielded stronger revenues, but receipts from cigarette and property taxes were down.

“What we believe ... is businesses are returning to profitability,” Lassiter said. “The employment numbers are not coming back as we would expect them to be as the economy recovers, but businesses are paying more business taxes because they are more profitable.”

Revenues in the state Road Fund also gained ground in July. Receipts totaled $104.7 million, an increase of 2.3 percent compared to July 2010.

Lassiter said motor vehicle usage receipts, which rose 9.4 percent, played a key role in July figures. Fuel tax revenue also climbed 3.8 percent.

The Road Fund will meet budgeted projections even if receipts remain flat the rest of the year, the report said.

Last week a group of economic analysts serving on the state Consensus Forecasting Group predicted that Kentucky will collect more than $9 billion in General Fund receipts this year, exceeding the budget's original estimate of $8.87 million.

Among the largest upward revisions, corporations and limited liability entities were projected to exceed original estimates by $95.4 million and $82.2 million respectively.

Economists also predicted that revenue in the Road Fund will exceed original estimates by 83.3 million in fiscal year 2012.

“There is always uncertainty and there may be more uncertainty now than in other periods, but that was the first look of the next biennium of that group,” Lassiter said. “It is what it is for now.”

Rand Paul Rightly Blames Debt Ceiling "Compromise" For Market Turmoil.

Paul partly blames debt deal for market turmoil
By ROGER ALFORD

HARTFORD, Ky. (AP) -- U.S. Sen. Rand Paul partly blamed the deal that raised the country's debt ceiling for turmoil in financial markets, telling constituents in his home state of Kentucky that investors need clarity from Washington.

"The way the stock market does better is that it needs better signals from us, and one of those signals would be to get our fiscal house in order," Paul said during a town hall meeting in the western Kentucky city of Hartford, which bills itself as the "home of 2,000 happy people and a few soreheads."

More than 100 people, some of them clearly sore about the declines on Wall Street, crowded into a room at City Hall to quiz Paul about the debt ceiling deal, which he opposed. Paul said the deal does nothing to balance the federal budget. Instead, the tea party favorite said it adds at least $7 trillion to the nation's debt over the next decade.

"What America needs is a solution, not a deal," Paul said. "That sounds sort of clever, but it's true. We need a real solution to tell the world, to tell investors that we're going to do something."

He said most of the problems in the U.S. financial markets were caused by economic uncertainty in Europe.

Paul received robust applause when he called again for the resignation of Treasury Secretary Timothy Geithner, complaining that the national debt has risen sharply and the economy has struggled under his leadership.

Bob Clements, pastor of Hartford United Methodist Church, said people in the community are frustrated by the political gridlock in Washington.

"I think what people are looking for is for the politicians to get something done, and to get something done soon," Clements said.

Paul told constituents that he is always open to discussions with Democratic leaders who hold sharply different views on how to resolve the debt crisis.

"I will tell you that I do listen to both sides," he said. "I offered to vote for several of the Democrat plans if they would have just attached a balanced budget (provision), that would have balanced gradually over seven or eight years. People say I'm unwilling to compromise. That's just untrue."

Senate Republican Leader Mitch McConnell and Paul have been hosting town hall meetings across the state, and appeared jointly for two such get-togethers in Owensboro Tuesday morning.

McConnell, who helped to broker the debt ceiling compromise approved just over a week ago, has been telling constituents that the deal could lead to "significant entitlement reform" to help rein in federal spending and to make changes that will be necessary to preserve Medicare and Social Security.

"We have to adjust the trajectory of these very significant entitlement programs, or they're not going to be there at all," McConnell said during a question-and-answer session in Winchester on Monday that ended with a standing ovation.

"Anyone who tells you we don't need to do anything with entitlements is not telling you the truth," McConnell said. "They are clearly on an unsustainable path."

Paul echoed those sentiments at the town hall in Hartford, where one resident, 87-year-old Gurley Martin, yelled across of crowd of more than 100 people that Paul should be president.

"I couldn't have done anything better myself," said Martin, a tough talking military veteran who ran against Paul in the Republican primary last year. "For a while, I thought he was going to be a wimp, but he has proven himself to be a man."

Owensboro businessman Steve Wiggins asked Paul what people can do to help him in Washington.

"Send reinforcements," Paul responded without hesitation.

"Ultimately, you are going to need a new leader for this country," he added later.

Paul is an eye surgeon who ran a private practice in Bowling Green before being elected to the Senate. He told reporters that people are deeply troubled about the economy and want their national leaders to offer meaningful solutions. He said one of the most obvious solutions is to limit federal regulations that are smothering businesses and preventing them from expanding their work forces.

Both Paul and McConnell have been ardent critics of federal health care changes that they say will further drive up the nation's debt and add financial burdens to businesses at a time when they need to be adding jobs. Both want the health care law repealed.

At the Hartford town hall, Jefferson County resident Krystal Cox questioned why Paul wanted the repeal, saying that she, as a cancer survivor, is unable to get health coverage now but would be able to under the new system.

"I don't think `Obama Care' should be repealed," she said, using the term critics have applied to the health care law.

Paul referred to the law as a new entitlement program that drives up spending. He said he would prefer to add Medicare recipients to the same health plan provided to members of Congress.

Breaking News: Harry Reid Picks Patty Murray, Max Baucus And John Kerry To Serve On Senate Debt "Super Committee". Who Will Mitch McConnell Pick? Stay Tuned.

Senate Majority Leader Harry Reid plans to tap Sen. Patty Murray (D-Wash.) to serve as the co-chair of the deficit reduction super committee. His other two picks will be Sens. Max Baucus (D-Mont.) and John Kerry (D-Mass.), according to Democratic sources.

For more, check out our friends at Politico(.com).

Not Buying What CONgress Conjured Up As Debt "Compromise".Wall Street (DOW JONES) Drops 634 Points -- WORST In A Very Long Time. More Drops To Follow. Watch News Video.

You Should Not Be Surprised That Former White House Adviser, David Axelrod, Blames "TEA Party" For S&P Downgrade. Watch Video.

Following The Lead Of World Street And Deciding Not To Be FOOLED By The Debt Ceiling "Compromise", Standard And Poor's (S & P) Downgrades America's Credit Rating!

Check the story out here, and watch the news video below:

Economists Say U.S. Debt May Not Be As High As You Think. Well, Knock Me Over With A Feather!

(U.S. debt compared to other nations).
Economists say U.S. debt may not be as high as you think
By James Rosen

WASHINGTON — Economists dismayed by the debt-ceiling pyrotechnics on Capitol Hill and at the White House say that political leaders' failure to deal with the short-term crisis bodes poorly for their ability to confront another looming fiscal disaster.

And the problem is compounded, many economists say, by how the United States calculates its debt.

In trying to understand the debt ceiling — a subject many people had never considered before this summer — it helps to know a few things about the layers that make up the United States' $14.34 trillion mountain of debt.

The U.S. blends two kinds of debt, and some economists say that makes little sense. Moreover, we don't even have a good way of paying back one of those types of debt. More on that later.

The first type of debt is what the government owes to outside bondholders: individuals, pension funds, other groups and foreign governments. The second type is a sizable amount of intra-governmental debt, or obligations of the Treasury Department to various trust funds — basically what we owe ourselves.

Alex Brill, an economist with the American Enterprise Institute, a conservative research center in Washington, said that counting external and internal debt together didn't make economic sense and blurred the real fiscal situation the U.S. faces.

"Not all of the debt is the same, and it doesn't all matter the same," Brill said. "What really matters is debt held by the public."

Those are the outside bondholders, and they take up about two-thirds of the total U.S. debt. As of Monday, the most recent date for which the Treasury Department provided figures, the U.S. owed $9.75 trillion to them.

Almost one-third of the U.S. debt — $4.59 trillion — is in the form of IOUs dedicated to programs such as Social Security, Medicare and the pension plans for federal workers and military personnel. That's what the United States owes its citizens.

As an analogy, Brill suggests thinking of a family that's facing medical bills now and college bills in the future. Say the family has set aside $3,000 for college costs, encounters a $13,000 medical bill, pays $10,000 of it with a credit card and uses the college savings to pay the rest.

That family's real debt is $10,000, but the Treasury Department's method of calculation would place it at $13,000.

While the family does need to replenish the college savings, the movement of money within its personal accounts doesn't affect its credit score.

"When you blend this real debt with the kind of accounting debt where the left hand borrows from the right hand, you end up with something that's completely meaningless in economic terms," Brill said.

This practice enables some lawmakers to exaggerate the severity of the problem that underlies the debt-limit impasse.

For example, Sen. Jeff Sessions, an Alabama Republican, told Fox News earlier this month: "The debt as it exists today — 95 percent of GDP — is so high, economists tell us it's dragging down (economic) growth at least 1 percent."

But considering only the $9.75 trillion that's owed to bondholders, the U.S. debt is 65 percent of the GDP; still worrisome, but nowhere near the 140 percent level that's fueling the Greek debt crisis or the 100 percent-plus levels of other troubled European governments.

This kind of distinction, though, provides little solace in the face of the coming entitlement crisis just a few years down the road.

President Barack Obama and lawmakers are struggling to agree on a debt-ceiling hike before next Tuesday, which would allow the government to borrow more money in order to fund a more than $1 trillion budget deficit.

As they wrangle, they're only tenuously offering solutions to entitlement obligations that are many orders of magnitudes more. Those obligations eventually will total at least $60 trillion.

"This huge debt burden won't bankrupt the country on Aug. 3, but it does demonstrate that there is an enormous and growing problem that gets much harder to deal with the longer it is left unaddressed," said Christopher Frenze, a former staff director of the American Action Forum, a conservative policy institute in Washington.

That coming threat stems from another issue, the IOUs to ourselves.

For years, increased spending has forced the government to raid federal trust funds. It takes payroll tax revenues earmarked for Social Security or Medicare, for instance, and uses them to cover unrelated expenses. But it doesn't have a way to pay back the money.

It would be as if a family kept a budget on paper that put aside set sums each month for defined needs, but it spent all that money and more in its daily activities.

Kenneth Rogoff, a Harvard economist who's advised U.S. government leaders, views the debt-limit crisis as concealing a deeper dilemma: Americans expect federal benefits they're not willing to pay for.

"We're on a completely unsustainable path," Rogoff said. "People are just convinced the government doesn't need any money. They're mad at all the borrowing, but they get even madder when taxes go up or they don't get the programs they like."

Read more: http://www.mcclatchydc.com/2011/07/26/118283/economists-say-us-debt-not.html?storylink=addthis#.TjRQrWHrxPM.facebook#ixzz1TcT4hAVt

"Where Are The Shovel-Ready Stimulus Projects?"

Commentary: Where are the shovel-ready stimulus projects?
By Victor Davis Hanson

HUNTINGTON LAKE — Our politicians love soaring platitudes followed by little, if any, follow-up. The more Americans are promised shovel-ready stimulus projects, new sources of power and other fantasies, the more we accept that bureaucracy, regulations, lawsuits and impact statements will prevent much from ever being done.

The president himself, after demanding nearly a trillion dollars in borrowed money for the budget, confessed that his "shovel-ready" projects proved not so shovel-ready after all. Much of the vast sums of borrowed money instead went to subsidize nearly insolvent pensions, entitlements and bloated state budgets.

Unemployment is still at 9.2%, with nearly 50 million people on government-subsidized food stamps -- even as American infrastructure is crumbling, the private sector is moribund, and national timidity prevents any new large, visionary construction.

Prior generations gave us space projects; ours is about ending them. Boeing once ruled the skies; now the government sues to stop Boeing from opening a new plant.

But it was not always so. A hundred years ago, the Big Creek Hydroelectric Project here in the central Sierra Nevada Mountains of California was the nation's first large effort to generate electricity from falling water -- to provide electric power for a growing Los Angeles nearly 250 miles away.

Industrialist and entrepreneur Henry Huntington conceived the gargantuan effort, begun in 1911. In just 157 days, a supply railroad up the mountains was built with picks, shovels and horse-drawn scrapers by thousands of workers struggling at over 6,000 feet in elevation.

In just two years, electricity was flowing southward from a new powerhouse generating unit at Big Creek that harnessed San Joaquin River water released from the new Huntington Lake reservoir.

Huntington's dream project -- eventually expanded, and today managed by the Southern California Edison power company -- would eventually encompass six major lakes, 27 dams, and 24 powerhouse generating units that repeatedly capture the descending High Sierra water to generate over 1,000 megawatts of clean electricity.

The interconnected lakes store precious water for 1 million acres of irrigated California farmland thousands of feet below. The thriving High Sierra sailing, sports and tourist industry grew up around the new lakes and roads. Far from destroying the environment, the Big Creek project created beautiful alpine reservoirs and gave millions of middle-class Californians access for the first time to the beauty of the Sierra Nevada Mountains. Few appreciate that the entire project was built with private funds.

How did our ancestors -- poor and with limited technology -- so quickly create such a vast project, which today probably would pose insurmountable challenges to their far richer high-tech descendants?

They were far more in need and far more self-confident than we are today -- acting when they were 80% sure of success rather than endlessly talking and delaying in expectation of an always-elusive 100% certainty.

In 1911 there was a desire for the new wonders of electricity, but no prior generation to have supplied it. Today, we take the power for our iPads and video games for granted, and are more likely to nitpick the environmental and social sensibilities of past generations who gave us what we so nonchalantly use in the present.

Quite simply, Big Creek could not be built today in the United States. Environmentalists would claim that the pristine nature of the San Joaquin River would be unnecessarily altered, citing a newly discovered colony of spotted newts or dappled dragonflies in the way of the proposed penstocks. Unions would demand blanket representation without elections -- and every imaginable compensation for such hazardous duty.

Workers would apply for stress-related disability benefits given the dizzying heights and the dank subterranean mining. Government regulators and inspectors would outnumber project engineers. Private entrepreneurs world never risk such a chancy investment without ironclad government guarantees of profits despite enormous cost overruns. And the public would be as skeptical of the risk as they would be eager to enjoy its dividends when completed.

The Big Creek project, like the Panama Canal, the Hoover Dam, the San Francisco Bay and Golden Gate bridges, and the interstate highway project were the work of confident but less wealthy bygone generations. They understood man's ceaseless elemental struggle against nature to survive one more day, and did not have the luxury to second- and third-guess the work of others before them.

We should remember the lesson of Henry Huntington's Big Creek Project, started 100 years ago this year, as we let rich irrigated farm acreage lay idle and pass on exploiting new oil and gas fields -- preferring to argue endlessly over how to redistribute our inherited but ever-shrinking national pie.

Read more: http://www.mcclatchydc.com/2011/07/30/118242/commentary-where-are-the-shovel.html#ixzz1Tc5ZXaoN

In Case If Y'all Are Keeping Track, It Is True "President Reagan [Raised The Debt Ceiling] 18 Times; George W. Bush Did It Seven Times," As Stated By POTUS.

Go here to check it out.

ROBERT SAMUELSON: Government Has Promised More Than It Can Deliver And Look At Us Now.

A huge blunder
Government has promised more than it can deliver and look at us now
By ROBERT SAMUELSON

WASHINGTON — We in America have created suicidal government; the threatened federal shutdown and stubborn budget deficits are but symptoms. By suicidal, I mean that government has promised more than it can realistically deliver and, as a result, repeatedly disappoints by providing less than people expect or jeopardizing what they already have. But government can’t easily correct its excesses, because Americans depend on it for so much that any effort to change the status arouses a firestorm of opposition that virtually ensures defeat. Government’s very expansion has brought it into disrepute, paralyzed politics and impeded it from acting in the national interest.

Few Americans realize the extent of their dependency. The Census Bureau reports that in 2009 almost half (46.2 percent) of the 300 million Americans received at least one federal benefit: 46.5 million, Social Security; 42.6 million, Medicare; 42.4 million, Medicaid; 36.1 million, food stamps; 3.2 million, veterans’ benefits; 12.4 million, housing subsidies. The Census list doesn’t include tax breaks. Counting those, perhaps three-quarters or more of Americans receive some sizable government benefit. For example, about 22 percent of taxpayers benefit from the home mortgage interest deduction and 43 percent from the preferential treatment of employer-provided health insurance, says the nonpartisan Tax Policy Center.

“Once politics was about only a few things; today, it is about nearly everything,” writes the eminent political scientist James Q. Wilson in a recent collection of essays (“American Politics, Then and Now).” The concept of “vital national interest” is stretched. We deploy government casually to satisfy any mass desire, correct any perceived social shortcoming or remedy any market deficiency. What has abetted this political sprawl, notes Wilson, is the rising influence of “action intellectuals” - professors, pundits, “experts” - who provide respectable rationales for various political agendas.

The consequence is political overload: The system can no longer make choices, especially unpleasant choices, for the good of the nation as a whole. Public opinion is hopelessly muddled. Polls by the National Opinion Research Center at the University of Chicago consistently show Americans want more spending for education (74 percent), health care (60 percent), Social Security (57 percent) and, indeed, almost everything. By the same polls, between half and two-thirds of Americans regularly feel their taxes are too high; in 2010, a paltry 2 percent thought them too low. Big budget deficits follow logically; but of course, most Americans want those trimmed, too.

The trouble is that, despite superficial support for “deficit reduction” or “tax reform,” few Americans would surrender their own benefits, subsidies and tax breaks - a precondition for success. As a practical matter, most federal programs and tax breaks now fall into one of two categories, each resistant to change.

The first includes big items (Social Security, the mortgage interest deduction) whose benefits are so large that any hint of cuts prompts massive opposition - or its specter. Practical politicians retreat. The second encompasses smaller programs (Amtrak, ethanol subsidies) that, though having a tiny budget effect, inspire fanatical devotion from their supporters. Just recently, for example, the documentary filmmaker Ken Burns defended culture subsidies (“an infinitesimally small fraction of the deficit”) in The Washington Post. Politicians retreat; meager budget gains aren’t worth the disproportionate public vilification.

Well, if you can’t change big programs or small programs, what can you do? Not much.

If deficits were temporary - they were certainly justified to temper the recession - or small, they would be less worrisome. That was true for many years. No more. An aging population and uncontrolled health costs now create an ongoing and massive mismatch between spending and revenues, even at “full employment.” The great threat is a future debt crisis, with investors balking at buying all the Treasury bonds the government requires to operate. So President Obama and Congress face a dilemma: The more they seek to defuse the economic problem of too much debt, the greater the political risks they assume by cutting spending or raising taxes.

Stalemate reigns. House Budget Committee Chairman Paul Ryan’s proposed 2012 budget forthrightly addresses health spending but doesn’t make any cuts in Social Security. Ryan’s plan would ultimately gut defense and some valuable domestic programs; it wouldn’t reach balance until about 2040. Compared to Democrats, however, Ryan is a model of intellectual rigor and political courage. Obama would run huge deficits from now to eternity; the Congressional Budget Office has projected $12.2 trillion of added debt from 2010 to 2021 under his policies. Obama urges an “adult” conversation and acts like a child, denying the unappealing choices.

Government is suicidal because it breeds expectations that cannot be met. All the partisan skirmishing over a federal shutdown has missed the larger issue: whether we can restore government as an instrument of progress or whether it remains - as it is now - a threat.

Senate Tax Cut Deal Will Give POTUS Barack Obama Cover For 2012 Race.

Tax-cut deal could revive Obama's chances in 2012
By Margaret Talev

WASHINGTON — President Barack Obama's tax-cut deal with Republican lawmakers may help him lay the groundwork for his political revival heading into his 2012 re-election campaign — if it strengthens the economy as intended.

If economic forecasters are right, the deal will help the economy grow and could lower unemployment sharply over the next two years. That's the kind of record that can help first-term presidents win re-election even after rough midterm elections: Consider Ronald Reagan and Bill Clinton.

Obama needs to think strategically. A McClatchy-Marist poll last week showed that only 42 percent of voters — and 39 percent of independents — now approve of his job performance, and that if the election were held today, he'd be vulnerable.

However, the public really likes this tax-cut deal _ 60 percent approve and only 22 percent oppose it, according to a Pew Research Center poll released this week, a finding echoed Wednesday night by a Wall Street Journal/NBC survey that found approval of the tax cuts at 59 percent.

That poll also bolstered the potential political upside for Obama: 64 percent thought Obama had learned the correct lessons from the November midterm elections.

Moody's Analytics, a leading forecaster, projects that the tax-cut deal will boost economic growth next year by a full percentage point and add 2.6 million jobs to payrolls, driving down the unemployment rate to 8.7 percent from 9.8 percent today.

This Obama-revival strategy works only if the economy improves.

"If things get better, he will point to this," said political analyst Stuart Rothenberg. "If the economy comes back, he is going to be able to cite this and everything else he did over the past couple of years. He'll say, 'See, it's this compromise that did it.' "That's a big if," Rothenberg said of the economy. "That's the giant cloud over the re-election."

Obama's concession to Republicans to extend tax cuts for the rich drew criticism from liberals, who called him weak. However, cutting this deal also may help drive a wedge into the GOP presidential primary process, as potential GOP hopefuls position themselves on the compromise.

Among them, Mitt Romney and Sarah Palin have spoken against the deal, while Mike Huckabee and Tim Pawlenty appear to support it. Sen. John Thune, R-S.D. said it's "politically expedient" to criticize the deal from the sidelines, but Rep. Mike Pence, R-Ind., declared Wednesday that the compromise "is a bad deal for taxpayers, will do little to create jobs and I cannot support it."

Distancing himself from liberals, meanwhile, could revive Obama's appeal to centrist Democrats and independents who backed him in 2008 but who have cooled to him since — he'll need them again to win in 2012.

"He's got some Republicans in an awkward position of having to support the compromise, which doesn't necessarily work well with the tea party movement, so he's putting a bit of a wedge in the GOP," said Lee Miringoff, the director of the Marist Institute for Public Opinion at Marist College in Poughkeepsie, N.Y.

"And he's showing his bipartisanship. The cost is liberal Democrats, his party's base. In the long run, he probably figures that doesn't become a problem."

In addition, independent voters in the latest McClatchy-Marist poll said they consider reducing the deficit a much higher priority for the next Congress than cutting taxes, by 55 percent to 20 percent.

"To be successful, two things have to happen on the economic front: the jobs picture has to improve and there has to be some focus to the deficit," Miringoff said.

Betting on an economic turnaround and pledging debt-cutting initiatives next year, Obama recently has courted centrists.

He began a four-hour meeting Wednesday with the chief executives of major corporations by touting the tax cut deal's expected benefits for the economy. And he emphasized that "the primary engine of America's economic success is not government. It's the ingenuity of America's entrepreneurs. It's the dynamism of our markets."

Obama last week hosted Bill Clinton at the White House, and even gave the former president a long solo at the podium to bless the tax deal and Obama's acumen in crafting it.

Rothenberg said while it's tempting to read lots of strategy into Obama's tax deal, the decision was shaped by Republicans' apparent willingness to let unemployment benefits and middle-class tax cuts die unless they got the low tax rates they wanted for the rich.

"He avoids the worst case, which is a tax increase for everybody. He did what he had to do. He did what a leader does. This was kind of an adult doing what he had to do.

"He's clearly trying to redefine the administration as more reaching out to Republicans and bringing in CEOs, but I don't think that's going to be a never-ending direction of the administration," Rothenberg said. "I expect him to go back and forth on this. And there are going to be instances when he has to keep the base happy.

"I don't think this redefines who he is, and there's a long way to go before 2012."


Read more: http://www.mcclatchydc.com/2010/12/15/105369/tax-cut-deal-could-revive-obamas.html#ixzz18HoGd253

Holy Cr*p. All That TARP Money May Be For Naught. Listen To Neil Barofsky, The 39 Year Old Responsible For Administering The Funds.

Ohio Governor NOW Wants Slots, Too.

Read more, and let the jocking begin for which state will out gamble the other.

The United Staes Senate Joins The House In Passing "Cash For Clunkers" Bill. Here's Your Chance To Buy That Newer Car, Folks. Watch News Video & Read.

Read more here, and watch the news video below:

Is Stimulus Spending Unconstitutional? Your Answer May Depend On What You Think The "General Welfare" Clause Of The Constitution Means.

Nation is on the wrong path with stimulus spending
By JOHN DAVID DYCHE

Lyndon is getting a new walking path between Whipps Mill Road and North Hurstbourne Lane. Lucy, a black Labrador-mix who loves walking there, will be tail-wagging happy. She, like most Americans, enjoys such seemingly free government gifts without worrying about their perilous implications for the country's fiscal and political prospects.

Federal stimulus money to the tune of $616,000 will fund the path. The $787 billion stimulus passed by congressional Democrats and signed into law by President Obama is, according to this newspaper, "aimed at jump-starting 'shovel-ready' projects." But Metro Parks has not mapped the path's precise location, may take until March to get permits and bids, and will likely not begin work until later in 2010.

Perhaps such procrastination partially explains why the administration recently admitted its rosy projections that passing the stimulus would keep unemployment below 8 percent were "clearly too optimistic." Unemployment is now 9.4 percent.

Presidential economic advisers also claimed the stimulus would create 3 to 4 million jobs by 2010's end. Obama, who eloquently orates about accountability, now puts primary emphasis on the elusive concept of "jobs saved."

Lyndon's new path and stimulus projects like it are obviously not performing as promised. Even more disturbing is how they are being paid for. Obama and the Democratic Congress are borrowing sums that dwarf even the excesses of former President George W. Bush and his Republican Congresses.

This fiscal year's deficit is projected at a record $1.84 trillion — more than four times last year's. Obama estimates that deficits will total $7.1 trillion over the next decade, but the Congressional Budget Office more realistically predicts $9.3 trillion. The national debt is $63.8 trillion. Federal obligations for debt, retirement benefits and other government promises total a staggering $545,668 per household.

Lacking sufficient funds, the U.S. will borrow from China and other increasingly skeptical lenders to pay for luxuries like Lyndon's little walkway. Our children and grandchildren will have to pay back the unimaginable debt with which we are saddling them. Of course, the fallout from their forebears' financial irresponsibility could first consume them in revolution, ruin or tyranny, as happened to several other once-great societies past.

Obama and congressional Democrats are making an already awful situation exponentially worse. But their reckless borrowing and spending begs a much bigger question that most politicians of both parties prefer to ignore. By what constitutional authority does the federal government build paths in Lyndon and other such purely local projects in the first place?
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The answer is that there is no such legitimate legal power. Forgetting about this fundamental principle is one reason we have brought our government to the brink of disaster.

The stimulus drafters did not bother to include any statement of constitutional grounds in its interminable and impenetrable text. Congress cannot credibly contend that building a path in Lyndon is an exercise of its power to regulate commerce among the several states. It must therefore undertake such ill-advised actions under Article I, Section 8, Clause 1 of the Constitution which empowers Congress to tax and spend to "provide for the … general welfare of the United States."

Alexander Hamilton and James Madison disagreed about the original meaning of this "general welfare" clause. Hamilton thought it allowed Congress to spend on essentially anything, but Madison believed it limited the legislature to the specific powers enumerated in other constitutional clauses.

Since 1936, when another charismatic Democrat was spending wildly to stimulate the economy, the Supreme Court has sided with Hamilton. "The power of Congress to authorize expenditure of public moneys for public purposes is not limited by the direct grants of legislative power found in the Constitution."

Quoting from that decision, former Justice Sandra Day O'Connor correctly observed in 1987, "If the spending power is to be limited only by Congress' notion of the general welfare … [it] 'gives power to the Congress to tear down the barriers, to invade the states' jurisdiction, and to become a parliament of the whole people, subject to no restrictions save such as are self-imposed.'"

Borrowing from foreigners to build paths in Lyndon is not only bad policy, but ought to also be unconstitutional. Returning to the original ideals of a limited national government would do more to put America back on a sound economic footing than the stimulus ever will. Both political and constitutional resistance are required to secure American liberty from Obama-style statism.

Lucy may like Lyndon's new path, but the country is clearly on the wrong one.

John David Dyche is a Louisville attorney who writes an occasional political column in Forum. His biography of U.S. Sen. Mitch McConnell, "The Leader," appears in bookstores this week. His views are his own, not those of the law firm in which he practices. Read him on-line at www.courier-journal.com; e-mail: jddyche@yahoo.com.

Editor's comment: While at first glance it looks like Congress' power to spend is limitless, as Founding Father Alexander Hamilton sees it, I take the view that another Founding Father James Madison may have the correct view that such power is limited.

What do you think?

Every Time You See Kentucky Chief Justice John Minton, Thank Him. Below Is One Reason Why.

From the H-L:

Justice right to look after taxpayers

Who knew the chief justice of the Kentucky Supreme Court would have to spend his time telling contractors they must really, truly follow the law and honor the contracts they sign?

But that's just what Chief Justice John Minton is doing, and we should be grateful to him.

To review: When Minton took on his job, he inherited the $880-million courthouse building campaign begun by his predecessor, Joseph E. Lambert.

Herald-Leader reporters examining these projects found that construction managers on the no-bid jobs weren't getting bonds to fully insure their work, even though the contracts clearly required them.

In March, an attorney Minton engaged to review the program issued an opinion requiring 100 percent bonds immediately.

Some construction managers still have not complied, and Minton has told the judge-executives in the counties involved to write "default letters" to those contractors.

Amazingly, several of those judge-executives are mad at Minton, not the construction managers, according to minutes of a meeting last month.

They say that under Lambert, Garlan VanHook — the former facilities manager for the Administrative Office of the Courts, which oversees the projects — told construction managers they needed only bond their fees, about 5 percent of the project.

The county executives say that bonds put up by subcontractors on the courthouse projects are protection enough. (Executives from three counties, Hancock, Fleming and Allen, agreed with Minton and defended his position. "Just because it's been done wrong, doesn't mean it should continue," argued Allen County Judge-Executive Bobby Young, according to the minutes.)

There are at least two problems with this.

First, as was explained in the meeting, subcontractor bonds protect the construction manager but not the owner — the county.

Second, every contract for a courthouse project clearly requires 100 percent bonding to fully protect the county — taxpayers in the end — if the construction manager fails.

This would matter anywhere in government but especially so in the court system. Where does it leave us if the courts can't protect citizens and follow the law?

"I am not willing to continue in a system that puts the taxpayers and counties at risk. I am concerned enough to take the heat to do it right," Minton told the county executives, according to the minutes.

Good for him.

The judge-executives should take his remarks to heart and give more consideration to protecting taxpayers in their counties than contractor profits.

Steve Beshear's Racing Plan Chances Will Be Hurt Without David William's Proposal. Read More Below.

Racing officials dispute Williams' plan
By Gregory A. Hall

Racing industry officials said this week that state Sen. President David Williams' proposal to boost purses without expanded gambling wouldn't work.

Williams' plan would tax lottery tickets, out-of-state betting on Kentucky racing and devote $19 million in existing tax revenues tax that currently go to the general fund from the horse industry.

Williams' projections show $83 million for the industry, of which nearly $70 million would go to horse race purses and $13 million would go to breeders' incentives.

But Ellis Park owner Ron Geary complains that Williams' plan doesn't provide revenue to help fund struggling tracks' operations outside of purses, let alone start to make up for years of losses due to casino competition.

"We need a comprehensive solution," he said. "We have to have some time to come back and from my perspective I don't see how his proposal even gives us a chance to do that."

Geary said his Henderson, Ky., track will close unless Gov. Steve Beshear's bill to allow video lottery terminals is approved. Beshear hasn't included Williams' plan on the agenda for the special session that begins Monday. Williams has said leaving his proposal out will hurt the chances of Beshear's own plan.