Witch’s Will For A Snowy January Morning
My Pick Of The Litter Today
Illinois gets downgraded by Moody’s
Say, remember when the state of Illinois took the Democratic approach to fixing their budget woes by raising taxes? The debt problems of the Land of Lincoln would disappear, Governor Pat Quinn argued, if the state hiked corporate and personal income tax rates by as much as two-thirds. The extra revenue would stabilize the state’s fiscal footing and pull them from the brink of financial disaster.
How well did that work out? As the Wall Street Journal reports today, Illinois debt has now been downgraded to the lowest rating of all 50 states by Moody’s:
Though too few noticed, this month Moody’s downgraded Illinois state debt to A2 from A1, the lowest among the 50 states. That’s worse even than California. The state’s cost of borrowing for $800 million of new 10-year general obligation bonds rose to 3.1%—which is 110 basis points higher than the 2% on top-rated 10-year bonds of more financially secure states.
This wasn’t supposed to happen. Only a year ago, Governor Pat Quinn and his fellow Democrats raised individual income taxes by 67% and the corporate tax rate by 46%. They did it to raise $7 billion in revenue, as the Governor put it, to “get Illinois back on fiscal sound footing” and improve the state’s credit rating.
So much for that. In its downgrade statement, Moody’s panned Illinois lawmakers for “a legislative session in which the state took no steps to implement lasting solutions to its severe pension underfunding or to its chronic bill payment delays.” An analysis by Bloomberg finds that the assets in the pension fund will only cover “45% of projected liabilities, the least of any state.” And—no surprise—in part because the tax increases have caused companies to leave Illinois, the state budget office confesses that as of this month the state still has $6.8 billion in unpaid bills and unaddressed obligations.
Another state tackling debt and budget issues went another direction, and Moody’s noticed the difference — and the WSJ warns Wisconsin voters to take a look at the alternative:
In contrast to the Illinois downgrade, Moody’s has praised Mr. Walker’s budget as “credit positive for Wisconsin,” adding that the money-saving reforms bring “the state’s finances closer to a structural budgetary balance.” As a result, Wisconsin jumped in Chief Executive magazine’s 2011 ranking of each state’s business climate—moving to 17th from 41st. Illinois dropped to 48th from 45th as ranked by the nation’s top CEOs.
Yet Mr. Walker, who balanced the budget without new taxes, is the governor facing a union-financed attempt to recall him from office this year. If Wisconsin voters want to see where a state ends up without the kind of reforms that Mr. Walker made, they need only look to the Greece next door.
Dan Mitchell says that the Illinois approach only exacerbated the problem by feeding the spending addiction rather than starving it:
In other words, higher taxes led to fiscal deterioration in Illinois, just as tax increases in Europe have been followed by bad outcomes.
Whenever any politician argues in favor of a higher tax burden, just keep these two points in mind:
1. Higher taxes encourage more government spending.
2. Higher taxes don’t raise as much money as politicians claim.
The combination of these two factors explains why higher taxes make things worse rather than better. And they explain why Europe is in trouble and why Illinois is in trouble.
They may finally be getting the message in Illinois. Republicans in the state legislature, outnumbered though they may be, have started an effort to repeal Quinn’s tax hikes. The failure of Quinn in Illinois does provide a valuable example of how not to address a fiscal crisis brought on by overspending, and one that voters in every state should study carefully.
Stories/Articles You Might Find Interesting – or not
Pleading the fifth – Gunwalker witness refuses to testify
Patrick J. Cunningham, chief of the Criminal Division of the U.S. Attorney’s Office in Arizona, is invoking his Fifth Amendment rights and declining to testify about Operation Fast and Furious in front of the House Committee on Oversight and Government Reform.
Cunningham’s attorney Tobin Romero suggests his client is being scapegoated:
“Department of Justice officials have reported to the Committee that my client relayed inaccurate information to the Department upon which it relied in preparing its initial response to Congress. If, as you claim, Department officials have blamed my client, they have blamed him unfairly.”
Romero claims Cunningham did nothing wrong and acted in good faith, but the Department of Justice in Washington is making him the fall guy, claiming he failed to accurately provide the Oversight Committee with information on the execution of Fast and Furious.
“To avoid needless preparation by the Committee and its staff for a deposition next week, I am writing to advise you that my client is going to assert his constitutional privilege not to be compelled to be a witness against himself.” Romero told [Congressman Darrell] Issa.
This schism is the first big break in what has been a unified front in the government’s defense of itself in the gun-running scandal. Cunningham claims he is a victim of a conflict between two branches of government and will not be compelled to be a witnesses against himself, and make a statement that could be later used by a grand jury or special prosecutor to indict him on criminal charges.
Romero’s letter to the Oversight Committee points out that the gunwalking plot began in 2009, and notes that Cunningham did not join the U.S. Attorney’s Office in Arizona until months later, in 2010. Romero’s insistence that his client could not have been involved in the creation and approval of Fast and Furious seems like an airtight alibi. However, what he knew after he became chief of the Criminal Division of the U.S. Attorney’s Office in Arizona — and chose not to act upon — could indeed lead to administrative action or criminal charges.
Labor Union leaves bluegreen alliance over Keystone disagreement
The BlueGreen Alliance, a coalition of environmental groups and labor unions, confirmed LIUNA’s exit Friday afternoon.
“The BlueGreen Alliance regrets the decision of the Laborers’ International Union of North America to leave our strategic partnership of labor and environmental organizations,” the group’s executive director, David Foster, said in a statement.
The move underscores the intense political divide among unions over the pipeline, which would carry oil sands crude from Alberta, Canada, to refineries along the Gulf Coast.
AFL-CIO President Richard Trumka said earlier this month that the group’s membership has been unable to come to a unified position on the pipeline.
Lower Than Low
Congress’s approval ratings can’t get much worse. How many incumbents could lose their seats?
The ABC News/Washington Post and CNN/Opinion Research national polls released this week that show Congress’s job-approval rating dropping to record low levels are barely creating a ripple—because the news is not new. With the exception of the immediate aftermath of extraordinary events like 9/11, the public routinely holds Congress in, as they say, “minimum high regard.” But now, the new norm is record lows. Both polls showed that upwards of eight of 10 Democrats, Republicans, and independents alike disapprove of the institution—an instance of rare agreement for three such disparate groups.
What is new is that in recent months, the long-held distinction between how voters see Congress overall and how they view their own members of Congress seems to be diminishing as well. An NBC News/Wall Street Journal survey in August found that 54 percent of respondents would choose the option (if it were on the ballot) to defeat every single member of Congress, including their own. Only 41 percent would not do so. Now, routinely, when voters are given the choice of reelecting their own (unnamed) member of Congress or choosing to “give a new person a chance,” majorities opt for the latter.
One of the more unfortunate trends in recent years has been that Washington and the political world have increasingly looked at politics and policy on a single lateral partisan or ideological plane, without considering other possibly important dimensions. Too many view everything on a left-right ideological axis or on a Democratic-Republican plane, viewing every issue or development as a zero-sum game. If we can make the other side look bad on this issue or subject, we will look better, they reason.
Political operatives and reporters, cable political shows, and Internet blogs tend to feed this tendency. Members of Congress gamely go along with it. Little appreciation exists for how much these attacks damage the institutions or the process. Lawmakers seem unaware that they are also inflicting damage on themselves. The cumulative impact of this mutually assured destruction is that congressional service that used to be viewed back home as a pedestal may start looking like a ditch; the advantage of incumbency, in other words, can become a disadvantage.
Something To Think About
Fox Host Can’t Contain Frustration During Actual Eye-Rolling Interview With Debbie Wasserman Schultz
If you follow politics, you’ve probably seen a lot of interviews where the interviewee refuses to answer the questions and instead spews only talking points. If those interviews frustrate you, get ready to pull out your hair when you see this one with DNC Chair Debbie Wasserman Schultz.
Indiana Democrats abandon ship. Again.
Like indignant toddlers stomping off to avoid a fair, yet unwinnable, fight, Indiana Democrats are staging another tempered walkout over pending Right to Work legislation; illustrating once again the Democrats’ definition of compromise — rewriting the Democratic process until it suits. Or, maybe Indiana Democrats simply tripped and fell out of the Statehouse in the hullabaloo of abandoning their jobs.
It’s hard to trump Indiana Democrats’ brazen five-week stint at an Illinois hotel, thwarting a vote on the same legislation in 2011. Having exhausted the general assembly’s patience with more delays, calls for referendum, amendments, debates, Democrats again find themselves desperate to avoid the inevitable — the democratic process known as a vote. Even the $1000 dollar anti-bolting fine now imposed on members each day they skip work is not enough to force Democrats back to the job they are paid to do. And, a few thousand dollars in fines does seem a pittance, after all, considering millions in political coffers are at stake.
Today, the Indiana unions who fill Democrat coffers at the expense of workers’ paychecks are threatening more compromise – inconveniencing thousands of football fans, tourists, and vendors by blocking the streets to the Indianapolis Hoosier Dome on Super Bowl Sunday. These tactics, among others, are one reason a majority of citizens in Indiana voiced their support of RTW in 2010 by overwhelmingly voting Republican control of the State’s general assembly.
The majority of Hoosiers are well aware that convincing capable individuals they are incapable of representing their own best interest remains the siren song of Democrats and unions alike. Democrats prove this by their very indignation over RTW legislation. After all, the legislation in no way denies the right to organize. So why the uproar, unless the very survival of unions is dependent on mandatory membership, coerced representation, and confiscated earnings, millions of which are doled out to Democrat candidates. Maybe unions simply aren’t the champions of workers they claim to be.
Not The Conservative Movement’s Finest Hour
By Peter Wehner
know that the conventional wisdom is that in answering last night’s question from CNN’s John King, about whether he had asked his then-wife to enter into an open marriage, Newt Gingrich “hit it out of the park.” He certainly brought the GOP audience to its feet. He’s winning praise from all sides for how he turned the question into an assault on the mainstream media.
I accept the fact that Gingrich helped himself politically with his answer. He may even win the South Carolina primary tomorrow. (Indeed, I think it’s quite likely that will occur.) But I do think that it’s useful to excerpt the debate transcript and analyze what it might tell us.
Here’s how the exchange went:
MR. KING: As you know, your ex-wife gave an interview to ABC News and another interview with The Washington Post, and this story has now gone viral on the Internet. In it, she says that you came to her in 1999, at a time when you were having an affair. She says you asked her, sir, to enter into an open marriage. Would you like to take some time to respond to that?
MR. GINGRICH: No — but I will. (Cheers, applause.) I think — I think the destructive, vicious, negative nature of much of the news media makes it harder to govern this country, harder to attract decent people to run for public office. And I am appalled that you would begin a presidential debate on a topic like that. (Cheers, applause.)
MR. KING: Is that all you want to say, sir?
MR. GINGRICH: Let me finish.
MR. KING: Please. (Boos, cheers, applause.)
MR. GINGRICH: Every person in here knows personal pain. Every person in here has had someone close to them go through painful things. To take an ex-wife and make it two days before the primary a significant question in a presidential campaign is as close to despicable as anything I can imagine. (Cheers, applause.) My — my two daughters, my two daughters wrote the head of ABC, and made the point that it was wrong, that they should pull it. And I am frankly astounded that CNN would take trash like that and use it to open a presidential debate. (Cheers, applause.)
The language Gingrich used to describe the media – “destructive,” “vicious,” “negative,” and guilty of reporting “trash” — is typical of the understatement we’ve come to expect from him. But I want to focus on Mr. Gingrich’s claim that to report this story two days before the South Carolina primary is “as close to despicable as anything I can imagine.”
Really? Anything Mr. Gingrich can imagine? More despicable than, say, rape? Or murder? Or genocide? Or – just to pull an example out of mid-air — serially cheating on your wives? And to do so when you’re, say, Speaker of the House? During the impeachment of Bill Clinton over crimes that grew out of an affair with an intern? Reporting that story was more despicable than any of these things?
I’m sorry, Gingrich supporters throughout the land, but words have meaning. And for Mr. Gingrich to make the claim he did – and to win thunderous applause for it – is both amazing and somewhat dispiriting.
The part that expressed how I feel about this the most was this:
It was quite revealing to me that Mr. Gingrich, in his answer, didn’t show any contrition or remorse. Instead, he reacted with indignant self-righteousness. So think about this: Mr. Gingrich, a candidate for the presidency, is enraged because the press interviewed his ex-wife and, in the process, has drawn attention to his own infidelity and mistreatment of his ex-wife, which no one disputes. And in all of this the injured party isn’t Marianne Gingrich but rather Newt Gingrich. The offending party isn’t the former speaker; it’s the press for daring to raise this matter.
Winners and Losers in online piracy battle aka SOPA – PIPA
What’s Going On In The World?
Europe Downgrades Ratings AgenciesPARIS — The sting caused by Standard & Poor’s downgrade of nine euro zone countries and the euro zone’s temporary bailout fund is not mellowing with time.
There is a growing backlash in Europe over the power of the international ratings agencies, including calls to set up a home-grown alternative to the U.S.-based big three — S.&P., Moody’s Investors Service Inc., and Fitch Ratings — and advice from central bankers that investors, in the meantime, pay them less attention.
In a speech in Tokyo on Friday, Michel Barnier, European Commissioner for internal market and services, said the agencies needed to be more transparent and financial institutions were “much too reliant on ratings, which should be reduced.”
Way to go! If you don’t like the ratings form your own rating company to comply with your wishes. Might not have much credibility though.
Image of the day from the animal kingdom:
Okay, jokes over. This has ceased to be amusing!
Quote For Today:
The mystery of government is not how Washington works but how to make it stop. ~ P. J. O’Rourke