Earmarks and the F-35

A House plan to eliminate earmarks that largely benefit military contractors has made headlines the past couple of days. But these earmarked projects make up only $1.7 billion of the federal budget. The Washington Post’s Dana Hedgpeth reports on a much bigger instance of government waste:

Michael Sullivan, the U.S. Government Accountability Office’s top analyst on Lockheed Martin’s jet fighter, also known as the F-35 Lightning II, told the Senate Armed Services Committee in a hearing that the cost of the program has increased substantially and that development is 2 1/2 years behind schedule. Read more »

Health Care Reform = No Immigration Reform

Lindsey Graham

So writes the New York Times’ Julia Preston, reporting on talks between Barack Obama and South Carolina GOP Sen. Lindsey Graham — the one senate Republican in support of immigration reform:

But Mr. Graham, in a statement, said he had told Mr. Obama “in no uncertain terms” that the immigration debate “could come to a halt for the year” if the president moved to pass health care legislation by a method known as reconciliation, which requires a majority of 51 senators instead of 60 and would in practice require no Republican votes.

The White House has been laying the groundwork for a possible reconciliation vote since losing its supermajority in January after the Massachusetts Senate election and finding no Republican support. There was no indication Thursday that Mr. Obama would reconsider that in light of Mr. Graham’s warning. Read more »

Well, Here’s One Kind Of Public Option

It looks like the U.S. Senate will tack student loan reform onto their final health care bill after all, reports the New York Times’ David Herzenhorn and Tamar Lewin. So if the bill passes, the federal Education Department would administer all federal student loans instead of subsidizing private banks to handle some of these loans. Also, the education provisions in the bill would increase money for Pell grants, the Education Department’s main grant program to help students pay for college.

I’m not a big fan of attaching provisions to bills that have little to do with the overall bill. But the current student loan system is notably bad and the upper chamber’s recent track record suggests they might not otherwise do an up-down vote on stand-alone student loan reform.

Earmarks: Government’s Most Overrated Problem

The New York Times’ Eric Lichtblau reports that House Democratic leaders have banned budget earmarks provided for government projects handled by for-profit companies. These earmarks are mostly no-bid military contracts that lawmakers write for home-district defense contractors.

The earmark ban is a worthy response to a recent Office of Congressional Ethics Report that documented the snug relationship between defense lobbyists and lawmakers on the House appropriations subcommittee on defense. But it’s hardly a landmark for either lobbying and ethics reform or fiscal responsibility. Read more »

Obama And The Awful Student Loan System

There’s been talk that the Obama administration will use the final health care legislation bill as a vehicle to reform the awful, wretched, wasteful, unfair and embarrassing federal student loan system. But Lori Montgomery and Shailagh Murray of the Washington Post say it’s probably not going to happen:

Democratic leaders met for a second day Wednesday with administration officials, including White House Chief of Staff Rahm Emanuel, in the office of House Speaker Nancy Pelosi (D-Calif.), but reached no decision on the student loan measure. One participant said a consensus appeared to be emerging that it would be unwise to risk the health-care bill by including the education measure.

This makes sense in theory: student loan reform has very little to do with health care reform. But Obama and Congress better accomplish student loan reform in 2010. Read more »

And You Thought Washington Was Bad

Pat Quinn

The Chicago Tribune’s Ray Long, Monique Garcia and Bob Secter have a good report on Illinois Gov. Pat Quinn’s proposal to raise the state income tax rate from three percent to four percent (or as the paper more dramatically puts it: a 33 percent raise). Quinn is proposing this because on July 1, the deadline for the Illinois governor to sign a balanced budget, the state is expected to have a $13 billion deficit. That’s an astonishing deficit for a state government that spends about $26 billion a year.

Quinn, up for election this year, has predictably run into opposition from state Republican lawmakers also up for reelection. But even the Illinois Democratic Speaker of the House, Mike Madigan, (speaker of the house since 1983), says, “The people of America don’t want tax increases…they’re hurting.” The Tribune, though, outlines why Illinois needs to raise taxes. A proposed no-tax hike budget would, for example, result in 17,000 teachers getting laid off. Read more »

What Now For Tim Geithner

John Cassidy’s New Yorker profile of Tim Geithner mostly makes a single argument, with that argument contained in the  sub-head: “Timothy Geithner’s financial plan is working — and making him very unpopular.” This has become the prevailing wisdom on the Geithner beat — summarized equally well a few weeks ago by the Wall Street Journal’s Deborah Solomon. This part of Cassidy’s conclusion, though, is fresh and interesting: Read more »

Stopping the Complexity Machine: Elizabeth Warren Calls for a New World in Consumer Lending

By Marci Greenstein

When it comes to protecting citizens from unfair credit card and lending practices, what does the chair of the panel overseeing the $700 billion bailout of Wall Street want? She wants Congress to cut through the “complexity machine” created by the financial industry – in the form of hidden fees, arbitrary rate hikes, and unintelligible, lengthy, one-sided contracts for credit cards, homes loans and cars. Elizabeth Warren wants to make obtaining credit simple, clear, and fair.

Elizabeth Warren

“I expect to pay for what I get, but I don’t want to be tricked.”  That was the message, delivered with extraordinary clarity by the Harvard Law School professor, a noted expert on bankruptcy law and chair of Congress’ TARP oversight panel, to an audience March 11 at the New America Foundation’s Washington, D.C. offices.

According to Warren, the “complexity machine” got started in the 1980s as banks began complicating and increasing the small print in credit card and other lending agreements. Read more »

Jihad Jane as an Opportunity, Not Just a Threat

Sure it’s creepy when American citizens start working with overseas terrorist organizations, even when they’re people as clearly unstable and “wanna-be” prone as Colleen LaRose.  LaRose’s advantage (let’s stop giving her the benefit of an attractive pseudonym right now) to certain Islamic terrorists was that she wouldn’t stand out in places like Sweden, where she allegedly planned to commit murder.   But consider what a huge opportunity for the FBI and other intelligence agencies, which certainly have no shortage of Americans of European descent working for them.  The FBI has shown itself very skilled at introducing undercover agents into organized crime syndicates, the Hell’s Angels, and drug cartels.  Who’s to say they can’t work a few fake Jihad Joes into the mix?

They Want to Pay the Money Back?

A national infrastructure bank – government-backed and -administered – would create jobs, encourage competition among states and localities, and force local leaders to make responsible decisions.  In the Washington Post, Harold Meyerson looks at Los Angeles’s surprising plan for light rail and buses to ease that city’s congestion and then brings the conversation back around to a national infrastructure bank:

At bottom, the problem is that we don’t have much in the way of institutions of public finance. Rep. Rosa DeLauro, a Connecticut Democrat, has been trying to establish a national infrastructure bank since 1994. With $25 billion in public funds, such a bank could leverage far greater amounts in loans for badly needed construction projects.

The kicker is how some members of Congress reacted when LA’s leaders said they wanted to take out a loan rather than get money from Washington outright:  they laughed.  If our political leadership would take a closer look at DeLauro’s proposal, we all could be laughing our way to the bank — a bank that works for all of us.

Public Pension Fund Managers: Old Age Should Be an Adventure

Why do I keep expecting government officials to behave rationally with the people’s money?  Many state pension fund officials are still betting on stocks and high-risk investments, reports Mary Williams Walsh of the New York Times, just scant months after these same funds took massive hits from investments in . . . stocks and high-risk investments.  While claiming their portfolios are “aimed at diversification,”

public pension funds are trying a wide range of investments: commodity futures, junk bonds, foreign stocks, deeply-discounted mortgage securities and margin investments.

This is the same strategy that helped decimate pension funds in California and Florida.  And state pension funds are often intertwined with operating cash (in case you weren’t already concerned).  Some states are more creative and choose real diversity for their investments, but Williams Walsh’s reporting shows that too many are trying to win in the short term.  They’re liable to lose what millions of teachers, police, firefighters, paramedics, nurses, and social workers are owed in the long run.  Federal rules are needed — and soon.