Posts Tagged ‘Budget’

Groundhog Day on the Aegean

Monday, February 23rd, 2015

Greece two weeks ago: “We will not negotiate this people’s pride and dignity.”

Greece today: “Yes, Master! We’d love to grovel some more if you continue tossing pennies into our cup!”

“As far as we can tell, the Greek government hasn’t achieved even a single one of its aims so far. The bailout was extended by four months, but in spite of a few cosmetic changes to the wording accompanying it (e.g. the ‘troika’ has been renamed ‘the institutions’), it is still precisely the same bailout agreement as before.”

This is an event completely unforeseen by everyone except anyone paying the slightest bit of attention to previous installments of Greek Bailout Kabuki. For all the bluster, it’s not like Greece had many options other than to get down on all fours and really lick boot, since it was slated to run out of cash tomorrow.

Naturally anyone who was foolish enough to believe Syriza’s promises (the technical term for such people is “rubes”) is hopping mad. “It’s as if [Greek PM Alexis] Tsipras, [Greek Finance Minister Yanis] Varoufakis and the others are telling me: ‘We believe that you are stupid…and you will believe whatever lie we tell you.’” The fact Syriza was elected at all is pretty much testament to the well-grounded accuracy that belief. That, and, oh, every single piece of news out of Greece since the Euro debt crisis struck, as long as that lie involved Greece continuing to spend money like drunken sailors with a stolen credit card and never having to pay their debts back.

The open secret, of course, is that Greece will never repay its debt. “We have to be realistic here. Greek debt is now 175 percent of gross domestic product (GDP); it’s higher than it was when this whole business first started.” (Well, by one measure. Another puts Greek debt at 317% of GDP.) Yeah, that’s what happens when you continue to run huge deficits even under your “austerity” budgets.

As I previously wrote:

I’m sure Syriza would love to implement their pie-in-the-sky big spending socialism, but their real goal is to lie to the Greek people long enough for the EU to write at least one more check, and lie to the EU about implementing reform long enough to cash it. Since Syriza only recently came to power, they probably want keep the farce rolling long enough to feather their own nests with Euros before engineering a grexit. After all, center-right parties got their turns at the public graft trough; why not the far left?

And back on December 29 I wrote:

So we’ll see another election, and if Syriza wins we’ll see another round of demands for more bailouts and debt writedowns, with Greece threatening yet again to exit the Euro. We’ve seen this movie before. The most likely outcome is that another cabal of EU-phillic insiders in the Greek government will engineer a last-minute cave-in to demands from Brussels and Frankfurt, ram another toothless austerity measure through parliament in exchange for still more credit (and perhaps even a small symbolic measure of debt forgiveness), dissolve the government again following the inevitable public outrage, then have the Greek bureaucracy ignore even those woefully inadequate reforms, setting the stage for the farce to repeat itself in another 12-18 months, or until mean old Aunt Angela finally cuts up the credit card.

Behold The Amazing Person’s uncanny powers of prophecy! Like Groundhog Day, it’s gotten remarkably easy to predict exactly what’s going to happen. Different people may occupy the Prime Minister’s office, but all them invariably wake up to the political equivalent of Sonny & Cher singing “I Got You Babe.”

It looks like the only I thing I was off on was the piddling four month extension rather than twelve, and the fact that Syriza didn’t even get the tiny fig-leaf of symbolic debt reduction. I guess that request for reparations from Germany rubbed Angela Merkel the wrong way. Too bad Greek PM Alexis Tsipras failed to heed Basil Fawlty’s eminently sensible advice…

Highlights from Governor Abbott’s State of the State Address

Wednesday, February 18th, 2015

Texas Governor Greg Abbott gave his State of the State address yesterday, and there’s plenty to talk about. Some highlights:

  • “Last week, Comptroller Hegar reported that sales tax revenue in January increased by 11 percent, surging to an all-time record. It’s the 58th consecutive month of year-over-year sales tax growth.”
  • “But the best way to create more jobs is to permanently reduce the business franchise tax.I will reject any budget that does not include genuine tax relief to Texas employers and job creators. I will also insist on property tax reduction. It’s time for property owners – not government – to truly own their property. My plan calls for a $2 billion reduction in the business franchise tax and a $2.2 billion reduction in the property tax burden.”
  • “To keep Texas the premiere model for opportunity, we must constrain the size of government and maximize the liberty of individuals. To protect taxpayers from government growing too big, we need a constitutional amendment that limits the growth of the state budget to population growth plus inflation.”
  • “To keep Texas the premiere model for opportunity, we must constrain the size of government and maximize the liberty of individuals. To protect taxpayers from government growing too big, we need a constitutional amendment that limits the growth of the state budget to population growth plus inflation.”
  • “Many of us have ridiculed states like California and Illinois as bastions of failed big government. You’ll be surprised to learn that Texas has more full-time state employees per capita than California and Illinois. That’s shocking – it must be changed. That’s why my budget requires most state agencies to reduce their general revenue spending by three percent.”
  • “I will expand liberty in Texas by signing a law that makes Texas the 45th state to allow Open Carry.”
  • So far it seems that Abbott is serious about governing as he campaigned…

    Greece Declares Independence From Reality

    Monday, February 9th, 2015

    Newly installed Greek Prime Minister Alexis Tsipras gave a speech in which he basically declared “Screw your stupid economic reality! We’re still giving everyone a free unicorn!”

    Remember that Greece is not just broke, but deeply in debt, has a declining economy, only a few weeks of money left, and the specter of a possible bank run for of people wanting to get ahead of a Euro-exit.

    So naturally Tsipras is promising Greeks a T-bone in every pot.

    “Syriza’s pledges to the electorate include a freeze on pension cuts, a property tax overhaul, free electricity to those who have been cut off, reinstating jobs and raising the minimum wage.”

    “‘The (bailout deal) has been abolished by popular mandate,’ Tsipras said. I’d love to see someone try that “abolished by popular mandate” as a reason to stop making their car payments.

    “We will not negotiate this people’s pride and dignity.” Yes, because spendthrift wastrels can have all the pride and dignity they can eat.

    The EU is is not amused. How can they, when Syriza’s policies seem completely disconnected from reality?

    In a lengthy list of policy actions, Tsipras also said the government plans to restore the tax-free threshold for individual workers to 12,000 euros a year and gradually raise the minimum wage to 751 euros a month through 2016. Both measures would breach the conditions of the bailout.

    Tsipras said he’s committed to maintaining balanced budgets and wants to negotiate terms that will make Greece’s debt sustainable.

    That’s like saying “I’m absolutely committed to eating eating a 72 oz steak every day, and to losing weight!”

    Oh, and he’s also demanding reparations from Germany for World War II. Good luck with that.

    Is Tsipras really that disconnected from reality? Well, he is a far-leftist (which in the context of Europe and Greece means that he probably makes Obama look like Dick Cheney). But a little further down in that Bloomberg piece, you get this:

    Behind the public rhetoric, the Greek government has shifted to a more cooperative tone in recent conversations with the troika, according to an official representing the creditors. Greece has been told it needs to ask for a formal extension of its existing bailout deal in order to receive financing, said the official, who asked not to be named because the discussions are private.

    It’s probably your classic “Clevon Little holding a gun to his own head” bluff. I’m sure Syriza would love to implement their pie-in-the-sky big spending socialism, but their real goal is to lie to the Greek people long enough for the EU to write at least one more check, and lie to the EU about implementing reform long enough to cash it. Since Syriza only recently came to power, they probably want keep the farce rolling long enough to feather their own nests with Euros before engineering a grexit. After all, center-right parties got their turns at the public graft trough; why not the far left?

    Will the EU call their bluff? The whole purpose of the bailout regime was for insiders and bankers to dump their exposure to Greek default onto the taxpayer, something that’s largely been accomplished. These days I suspect very few of Europe’s banks hold much Greek debt (some of whcih may have ended up in various pension funds, where unrealistic promises and chronic underfunding may force managers to chase extremely risky bonds for the high yields). A grexit would put an economic hurt on Europe, but probably not one that would last terribly deep or long. A Greek economic collapse following leaving the Euro would be terrible for Greece, but would probably prod the other PIIGS into continuing to get their economic houses into something resembling order.

    How bad would a grexit be for Greece? Really, really, really bad. The modern European cradle-to-grave welfare state is unsustainable, and attempts to keep the goodies flowing even after the state is bankrupt will ruin more than one nation. It’s just that Greece managed to get there first.

    The farce is going to end very, very badly for average Greeks, but it always was. The only question is just how many bodies will be on the floor at the end of the final act…

    Greece’s Insoluble Problem

    Thursday, February 5th, 2015

    Greece’s left-wing Syriza party was swept into power by promising voters they could have their cake and eat it too. The problem is that not only is there no cake to eat, but Greek already owes more money than it can repay on all the cake they’ve already eaten.

    The European Central Bank announced that it will no longer accept junk-rated Greek bonds as collateral. That may be why Greece’s new finance minister is already backtracking on election promises:

    His party, Syriza, told voters it would demand a debt reduction; now Mr. [Yanis] Varoufakis says it will settle for a debt restructuring. Syriza said it would end austerity; Mr. Varoufakis now says he will run a primary budget surplus even if that means dropping other commitments in the party’s campaign manifesto.

    Will Syriza keep promises made to the EU and the ECB any more than they kept their promises to Greek voters? Of course not. Greece is addicted to excessive government spending the way a junkie is addicted to heroin. In this sense, Syriza’s willingness to shamelessly lie to both voters and Eurocrats is what makes them the embodiment of modern Greece.

    Running an actual budget surplus, as Varoufakis is almost pledging, would go a long way toward solving Greece’s problems. (My understanding is that he means Greece will have a budget surplus before debt payments are taken into account, which means they’ve really slowed down the rate at which they’re digging their own grave…) But neither Greece’s voters nor its ruling class want the nation to live within its means. As I have noted time and time again, Greece has never practiced real austerity, which is cutting government outlays to match receipts. Greece’s budget deficit was 12.2% of GDP in 2014. (If it seems like I repeat a lot of this information in many of my updates on Greece’s debt crisis, it’s because I do, mainly because MSM reports seem to omit mention of these centrally crucial facts…)

    Greece’s participation in the Euro has harmed it by distorting its economy and making its export uncompetitive. That’s a problem, but that’s not Greece’s central problem, which is a dogged unwillingness to live within its means. It’s that addiction to deficit spending that has Syriza talking of defaulting on its debts. And it’s addicted to deficit spending because the modern European cradle-to-grave welfare state is unsustainable.

    But here’s the kicker: Neither leaving the Euro nor defaulting solves Greece’s central problem, or even provides temporary relief.

    Leaving the Euro doesn’t solve the problem, because Greece’s debts will still be denominated in Euros. Creditors who hold Greek debt won’t be content to be paid in devalued drachmas, so Greece will still be on the hook for what they’ve already spent.

    Defaulting will only make their predicament worse, because then no one will be willing to lend Greece money to continue their ruinous deficit spending.

    Doing both and printing drachmas to continue spending will only result in hyperinflation. The Greeks can ask Venezuela how that’s working out for them.

    If any Greek political party pledged to undertake real reform, reign in the Greek welfare state and end deficit spending, it’s escaped my attention. I suspect Greeks will have to experience a lot more economic pain, and no small measure of ruin, before undertaking the only obvious path to fiscal stability.

    Texas vs. California Update for January 29, 2014

    Thursday, January 29th, 2015

    To a certain extent, this Texas vs. California roundup is incomplete, since we’re hot and heavy into the new legislative session and I haven’t had a chance to fully digest the proposed budget numbers yet. By the Legislative Budget Boards numbers, they’re only projecting a 1.5% increase in the 2016-2017 biennium budget over 2014-2015. But see the first link…

  • Setting the story straight on the Texas budget. TPPF uses a different baseline…
  • California’s public employee unions would prefer that you not know how well they’re compensated.
  • How California’s public employees use sick leave to spike their pensions.
  • Supreme Court may take on California union mandatory dues case.
  • Though not nearly as bad as California, Texas state and local public employee pensions are also in need of reform.
  • California’s Kern County declares a fiscal emergency over dropping oil prices. “Collapsing crude prices are squeezing the finances of Kern County, home to three-fourths of California’s oil production.” Thankfully, oil and gas extraction is a lot more widespread in Texas.
  • The City of Sacramento’s unfunded liabilities have reached $2.3 billion. (Hat tip: Pension Tsunami.)
  • “Fresno? No one goes to Fresno anymore!” Except for job growth percentage, that is, where Fresno outpaced Silicon Valley.
  • Remember the Newport Beach police department firing a whistler-blower? Via Dwight comes a followup: “A husband and wife who sued Newport Beach and its police department for alleged retaliation and wrongful termination have settled their lawsuits for $500,000, according to city officials.”
  • “Physician-assisted suicide has returned to California’s political agenda.” Well, why not? California’s ruling Democrats have been attempting fiscal suicide for well over a decade now…
  • Toyota breaks ground on its new Texas headquarters.
  • A public school in California is having a Hijab Day.
  • In Which I Point To Hot Air’s Venezuela Update and Say “What He Said”

    Thursday, January 22nd, 2015

    It was about time to do another update on Venezuela’s failing socialist economy when I dropped by Hot Air and saw that Ed Morrissey had already done all the heavy lifting for me:

    “The currency in what should be the richest country in South America has collapsed, as well as its economy, under the dual weight of falling crude prices and the Chavista socialism that has been choking the country for more than a decade.”

    More:

    Venezuela’s Chavista policies have always ignored economic reality. Socialism is a fantasy economic system, especially as implemented by Hugo Chavez and Nicolas Maduro.

    The difference between Venezuela and the nanny-state petro-economy in Norway is that the latter preserves itself by respecting private property and foreign investment. From the beginning, Hugo Chavez attacked both, nationalizing oil production and criminalizing private investors as part of his “Bolivarian” revolution. When it did that, it chased off the talent needed to run oil production and the investment needed for all other kinds of goods and services. For a short period of time, their oil revenue allowed it to succeed in ignorance. When that failed, Chavez and now Maduro reacted to those predictable consequences by predictably imposing all sorts of rationing mechanisms which only decreased incentives for production and investment, especially in the legitimate economy. Now that the price of oil has collapsed, so has the official Venezuelan economy — and a populace used to a high standard of living now endures massive shortages and ever-increasing oppression to cover it up.

    Morrissey, in turn, quotes a big chunk of this Matt O’Brien piece in the Washington Post:

    Venezuela’s government is running a 14 percent of gross domestic product deficit right now, a fiscal hole so big that there’s only one way to fill it: the printing press. But that just traded one economic problem—too little money—for the opposite one. After all, paying people with newly-printed money only makes that money lose value, and prices go parabolic. It’s no wonder then that Venezuela’s inflation rate is officially 64 percent, is really something like 179 percent, and could get up to 1,000 percent, according to Bank of America, if Venezuela doesn’t change its byzantine currency controls.

    What he said. Er, both of them.

    Texas vs. California Update for January 6, 2014

    Tuesday, January 6th, 2015

    Here’s your first Texas vs. California update of 2015:

  • Real personal income increased by 1.4% in Texas in Q3, the most of any state. And that with the oil bust just starting to bite, which I’m guessing helps explain why South Dakota’s personal income decline by .2%. (Well, that and getting six inches of global warming in September….)
  • Texas was the number one magnet state in the country for people moving here yet again.
  • “The real reason for the tuition increase is that the UC system needs funds to bail out the mismanaged pension system that covers retired employees of its ten campuses.”

    This is all the result of the regents’ irresponsible oversight. In 1990, UCRP had 137 percent of the assets it needed to meet its obligations, so regents suspended employer and employee contributions to the pension fund. State legislators also stopped allocating money to UCRP. This “pension contribution holiday” lasted 20 years. To top it off, during this period, university officials boosted pension benefits a half-dozen times. By 2012, more than 2,100 UC retirees were each collecting six-figure pensions for life.

    (Hat tip: Pension Tsunami.)

  • Former Pasadena (California) employees arrested on 60 count, $6 million embezzling charges. (Hat tip: CalWatchdog.)
  • More on outrageous California pensions: “In 2013, an assistant fire chief in Southern California collected a $983,319 pension. A police captain in Los Angeles received nearly $753,861.” (Hat tip: Pension Tsunami).
  • California’s doomed high speed rail boondoggle breaks ground today.
  • More on the same theme from Twitter:

  • Opponents of California’s statewide plastic bag ban have gathered 800,000 signature for a referendum to overturn it, which will also keep the law from going into effect on July 1.
  • California charity hospitals to be sold to for-profit company to keep them open.
  • Greece Inches Closer to the Endgame

    Monday, December 29th, 2014

    Just because the European Debt Crisis hasn’t been in the headlines much as of late doesn’t mean it’s gone away.

    Greece’s government has fallen again and they’ll be holding general elections next month. “Opinion polls point to a victory by the radical leftist Syriza party, which wants to wipe out a big part of Greece’s debt, and cancel the terms of a bailout from the European Union and International Monetary Fund that Greece still needs to pay its bills.”

    The problem is that Greece wants to continue spending other people’s money to prop up a bankrupt welfare state, and the rest of Europe has decided they would really prefer to stop pouring money down that particular rathole. Syriza is against “austerity,” which is to say they oppose the Greek government even pretending to practice fiscal restraint. Because pretending is all they’ve done.

    Remember, real austerity is reducing outlays until they match receipts. All those “austerity” street protests were over lowering Greece’s budget deficit from 9% of GDP to 7.5% of GDP. The rest of Europe didn’t ask them to stop digging their own grave, they just asked them to dig more slower. And this year, Greece’s budget deficit stood at 12.2% of GDP. Evidently even fake austerity is too much to ask of them; even the illusion of fiscal restraint is intolerable. This is why all news that Greece has “balanced” next year’s budget should be taken with several grains of salt.

    So we’ll see another election, and if Syriza wins we’ll see another round of demands for more bailouts and debt writedowns, with Greece threatening yet again to exit the Euro. We’ve seen this movie before. The most likely outcome is that another cabal of EU-phillic insiders in the Greek government will engineer a last-minute cave-in to demands from Brussels and Frankfurt, ram another toothless austerity measure through parliament in exchange for still more credit (and perhaps even a small symbolic measure of debt forgiveness), dissolve the government again following the inevitable public outrage, then have the Greek bureaucracy ignore even those woefully inadequate reforms, setting the stage for the farce to repeat itself in another 12-18 months, or until mean old Aunt Angela finally cuts up the credit card.

    Europe has had several years to acclimate itself to the fact the Greece might exit the Euro, and the possibility of a “grexit” has been priced into the markets for some time now. I do not pretend to understand the intricacies of the European banking system, but my impression is that much of the “stress testing” of European banks this year was to prepare for one or more of the PIIGS leaving the Euro. I suspect that the European elite have minimized their own exposure to a Greek default (which is really all they care about), and that the EU and the European Central Bank has found new, sneaky ways to put taxpayers on the hook for any possible sovereign defaults, strengthening the banking system without addressing Europe’s long-term economic problems (unsustainable levels of debt to support cradle-to-grave welfare states for shrinking populations).

    It would be great if Greece actually undertook real structural reforms of their bloated, dysfunctional government, but I see precious little evidence that they’ve actual done so. Expect more pain ahead, and at least one more bailout…

    Texas vs. California Update for December 4, 2014

    Thursday, December 4th, 2014

    It’s another Texas vs. California update!

  • The real reason the University of California system is raising taxes: “The real driving force behind the tuition hike is the university’s woefully underfunded pension system, which currently serves 56,000 retired employees. It’s a generous system, despite some reductions the university made for new hires in recent years. An Associated Press analysis found 2,129 retired UC employees collect pensions of more than $100,000 a year; 57 receive more than $200,000; and three receive more than $300,000.” (Hat tip: Pension Tsunami.)
  • Here’s the rare Texas vs. California item where both Texas and California get dinged: “Calpers holds about 75% of its portfolio in stocks and other risky assets, such as real estate, private equity and, until recently, hedge funds, despite offering benefits that, unlike IRAs or 401(k)s, it guarantees against market risk. Most other states are little different: Illinois holds 75% in risky assets; the Texas teachers’ plan holds 81%.”
  • A look at the relative pension costs of three bankrupt California cities: San Bernardino, Stockton and Vallejo. (Hat tip: Pension Tsunami.)
  • Magpul, is moving its headquarters from newly gun-hostile Colorado to Austin. This is on top of moving its manufacturing facilities to Wyoming.
  • “Something is happening in California. An unstoppable movement for reform is building, attracting support from conscientious Californians.” Much as I’d like to believe it, I remain skeptical that real education and pension reform can happen in California as long as it remains a one-party Democratic state… (Hat tip: Pension Tsunami.)
  • How California’s three-decades old Proposition 65 is threatening to bankrupt small businesses and enrich trial lawyers.
  • California: Roads? We don’t need no stinking roads. 57% of San Diego County’s projected infrastructure spending is on mass transportation…and critics are saying that’s not enough.
  • I’m surprised that I stumbled on this piece on the Newport Beach Police Department before Dwight did:

    In recent years, daily examples of faithful public service inside the Newport Beach Police Department (NBPD) have been overshadowed by alarming corruption. City officials ignore or downplay the misconduct, but NBPD bosses turned the agency into a darker, stupider version of Animal House. Court records and internal documents show the city’s boys in blue have accepted gratuities in exchange for favors, gotten frat-boy drunk at work, lied under oath, passed out confidential information to pals, encouraged oral sex from female job applicants, committed wild adultery on duty, doctored official reports, hurled feces, dished out horrific domestic violence against wives and girlfriends, engaged in intoxicated bar fights, issued criminal threats, vandalized property, converted powerful agency spy equipment to personal use, and rigged promotion systems to ensure mostly see-no-evil, management-loyal employees rise–and let the hijinks continue.

    Plus open war against whistle-blowers.

  • Speaking of public employees behaving badly, from Dwight comes this story of LA firemen being investigated for faking certifications.
  • Texas home sales reach their highest level in five years.
  • The headquarters of national buyer’s co-op NATM Buying Corp. is moving from Long island, New York to Irving, Texas.
  • Finally, in case you missed it a few days ago, three Texas budget links from the Texas Public Policy Foundation:

  • A detailed call for greater transparency in the Texas budget
  • A look at what an actual conservative Texas budget would look like; and
  • A real Texas Budget Worksheet, with historical budget data.
  • Texas vs. California Roundup for November 26, 2014

    Wednesday, November 26th, 2014

    Who knows how many people will read this in the rush of Thanksgiving travel:

  • Texas’ economy continues to kick ass.
  • In fact, Texas set a record for new jobs for the third month in a row. (Hat tip: The Twitter feed of Texas’ incoming governor.)
  • Texas also leads the nation in oil and gas jobs created. (Hat tip: Texas’ incoming Comptroller.)
  • CalPERS retirees will soon soon outnumber active workers. (Hat tip: Pension Tsunami.)
  • California’s death by pensions.
  • Bankrupt San Bernardino caves in to CalPERS.
  • Still, court rulings make it possible that bankrupt cities may shed pension obligations in the future.
  • You know how California’s Prop 30 tax hikes in 2012 were supposed to prevent university pension hikes? Guess what? “Despite the massive tax hikes ostensibly to keep higher education affordable, the University of California Board of Regents just announced a sizable increase in tuition.” Let’s hope that students at California universities learn the proper lesson: tax hikes are never temporary.
  • Indeed, tuition will increase around $15,000 by 2019.
  • The underfunded liabilities across all California pension systems adds up to $130 billion.
  • Pension crisis divides California Democrats on UC tuition hikes.
  • Demands from union-backed environmental group torpedo plans for a Japanese-owned factory in Palmdale, California.
  • Education reform loses in California.
  • California is spending $33 million to get rid of 800 non-endangered birds.
  • Costa Mesa motel residents sue over a law requiring them to move every 30 days.
  • Some Tweets: