One Nation Under Debt

by Gerri Willis

Our debt crisis reminds me of this moment from Gulliver’s Travels:

Gulliver is us – literally hamstrung by debt carried away by our own spending!

Think about it. Our country has the biggest economy on the planet. We're a giant, but we're held down by trillions of tiny obligations.

The problem with this is that it limits what we can do.

It means some things are just off the table.

What if, for example, Hurricane Katrina happened right now? That’s a $135 billion tab for clean up and rebuilding.

Or what if the devastating Japanese earthquake and tsunami occurred in California instead of Japan?

That was over $300 billion in damages.

And it's not just natural disasters that sport these big tabs for government.

What about war?

We paid $823 billion for the Iraq war in actual expenditures between 2001 and 2012.

The Afghanistan war - $557 billion during the same period, and oh, remember we fought these at the same time!

Look, I’m not saying we should create a budget for the next war. But we have to be flexible enough financially to underwrite one.

What if Iran bombs us tomorrow?

It's the same reason you get insurance - just in case something happens.

Then there are the projects you do because you want to - the ones that make your heart soar.

Remember this?

John F. Kennedy on May 25, 1961: “I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth. No single space project in this period will be more impressive to mankind or more important to the long-range exploration of space. And none will be so difficult, or expensive to accomplish.”

Just eight years later, man walked on the moon.

President Kennedy set that goal, and we achieved it.

And it was expensive.

The Apollo program that took us to the moon cost over $100 billion in today's dollars.

But last July we saw the space shuttle blast off for the last time.

NASA's been grounded. Today the shuttles are sitting in museums because the President doesn't believe we can afford to dream.

It's appalling.

We need to constrain spending on the things we aren't so keen on bankrolling - Solyndra, the GSA's Vegas vacation.

So we can pay for the things we truly need and want.

Now that the fight over the debt limit is heating up again, Speaker of the House John Boehner gave us this perspective today:

“We shouldn't dread the debt limit. We should welcome it. It's an action-forcing event in a town that has become infamous for inaction.”

This debt fight has been playing out for a year. All we've gotten is gridlock, and short-term solutions.

It's time for Washington to realize now is the time for action.

Go big, and go bold.

Obama Campaign Gone Wild

by Gerri Willis

The Obama administration trying to pivot back to the economy today after spending a week talking about social issues.

The campaign has just launched a new wave of attack ads against Mitt Romney. This latest ad says Romney is a job killer. The ad blames Romney for the closing of GST Steel and the loss of 750 jobs.

Here's the real story:

The struggling steel maker was bought by Bain capital in the late 1990’s. Romney approved of the deal at the time.But the factory eventually went through bankruptcy, and closed.

This is a critical narrative for the Obama campaign as it seeks to paint Romney as vulture capitalist - a job killer - not a job creator.

The problem with the ad is Romney had already left Bain capital to go run the Salt Lake City Olympics in early 1999. The bankruptcy and layoffs at GST Steel happened after that in 2000 and 2001.

Even the President's traditional allies in the national news media say the claims Romney was responsible for closing the plant were flat out false. The Washington Post's fact checkers giving the ad three Pinocchios!

On one of the morning shows today, car czar Steve Rattner called the claims "unfair".

But it's not just calling Mitt Romney a job killer - where the Obama campaign stretches the truth - it also does it when claiming the President himself is a job creator.

On Friday we told you about how the Obama administration claims to have helped a man get a job. The only problem is, it looks like the guy wasn't unemployed in the first place!

ABC News first reported the story of Brian Slagle - an auto worker in Ohio – who was scared to death when he lost his job - until President Obama helped him get it back.

Only problem is... Slagle has apparently been employed ... Since 2006!

The Obama campaign dodged questions on the issue and Slagle isn't talking either.

Both of these ads are part of a multi-million dollar TV ad blitz in several key swing states. And we are about to be hit in coming months with all kinds of ads as the campaign continues to heat up.

They should come with a disclaimer: Viewer discretion advised.

Obama's Smoke and Mirrors Economy

by Gerri Willis

More bad news on the economy today.

Business hiring is stalling, according to a private sector employment report.

We gained just 119,000 private-sector jobs last month. That's far short of estimates. And far short of what the economy needs despite what the Administration says.

The President has really only had one successful jobs program: Convincing people they can't find a job.

Adults dropping out of the labor force account for 80% of the unemployment rate's dropping from 10% to 8.2% today.

People actually working or looking for work is near a 30-year low.

And in spite of this, after weeks, months, years of failing economic policies, today Barack Obama leads or is tied with his opponent in the polls.

How can he pull this off?

Deception and distraction.

We'll start with deceptive statistics.

As you know, every week the government tells us how many people filed for unemployment benefits for the first time.

By looking at where that number goes week to week, we can get an idea of whether we're gaining or losing jobs.

The number is critical. The markets move on the data. Bad news can turn the day into a disaster for your 401k.

In its wisdom, the government actually reported the numbers twice: First an estimate, then the revised,

This year, we've had 15 straight revisions higher on the numbers. Of the last 59 weeks, 58 weeks have been revised higher.

Seems to me like in a perfect world the revisions down and up would even out, but that's not the case.

And, it's raising serious questions about the credibility of the government's numbers.

Some serious analysts are asking whether the Department is wearing rose-colored glasses.

But the President's favorite way to win in the polls while losing control of the economy: Distraction.

Like yesterday, while protesters are in the streets, rallying against economic issues like household income dropping over four thousand dollars on the President's watch, he makes a surprise visit to Afghanistan.

And, oh yeah, lots of ads taking credit for killing Bin Laden, like this:

“But he reasoned ‘I cannot in good conscience do nothing.’ He took the harder and the more honorable path, and the one that produced in my opinion the best result.”

All this hoopla despite the fact jobs and the economy are voters' number one issues.

By a margin of ten to one, economic issues trump security and foreign policy.

Afghanistan is the latest distraction. Watch for Obama to resurrect more of his top hits as we near the election.

Issues that don't even make this list: The so-called "war on women." Whether his opponent is a caring dog-owner. Or how many years of tax returns he releases.

This November, don't get deceived, and don't be distracted. If you do, you'll have one more "D" in store for you. Debt.

Five trillion added on the President's watch so far.

Obama's "Forward" Slogan is all Backwards

by Gerri Willis

Now that he’s officially campaigning for re-election, the President's put out a seven-minute video of his accomplishments. I guess there wasn't enough to make it an even ten? He’s revealing his one-word campaign slogan, "Forward."

Have a taste:

Narrator: “The President's stimulus plan saved up to 4.2 million jobs, including teachers, construction workers, police and firefighters working to build a stronger America.

Pres. Obama: I believe America is on the way up. Thank you, God bless you, God bless the United States of America. [Vis: Forward]”

I've got a much better slogan for the President: Backward.

That's his economic policy in a nutshell. What do you call raising taxes in the middle of a recovery?

He's signed 21 tax hikes into law in the last three and a half years.

And the worst of them haven't even gone into effect yet.

And that doesn't count the expiring tax cuts this President has vowed to not renew.

What's the impact? Our growth last quarter was a paltry 2.2%.

Unemployment stuck above 8%. And it doesn't stop there.

The President's sliding backward on health care. You remember his promises on what Obamacare would do:

“Our approach would preserve the right of Americans who have insurance to keep their doctor and their plan. It would reduce costs and premiums for millions of families and businesses. … our approach would bring down the deficit by as much as $1 trillion over the next two decades.”

While in reality the cost of Obamacare is rising.

And the cost of your health-care premiums have only gone up since it was passed!

Over two thousand dollars for the average family.

Finally, the President is backward on energy.

Gas was a $1.84 when Obama took office.

Today it's $3.82.

It's more than doubled!

All the while millions of barrels of oil are off-limits in ANWR, off the coasts, in the Gulf of Mexico.

Instead of common-sense solutions like approving the Keystone pipeline, the President throws away hundreds of millions of dollars on green energy failures like Solyndra.

But there is one way the President is very "forward" thinking: the national debt. It's up nearly 47% since the President took office.

He's going to pay for all these programs by pushing the bill forward, onto our children, our grand-children.

But beyond this, there's one more "forward" connection you might not have thought of.

The great leap forward.

China's clever branding for a country trying to make the transition to modern society.

But Mao Zedong's government takeover of farming back in 1958 was disastrous. Millions died.

"Forward" just isn't a good rallying cry.

At least we told you about it.

Forewarned is forearmed.

The Obama Economy - By the Numbers

by Gerri Willis

Mitt Romney essentially now declaring victory in the Republican Presidential Primary.

After sweeping all five races this week, he used his acceptance speech to pose the most important question of the campaign:

“Four years ago, Barack Obama dazzled us in front of Greek columns with sweeping promises of hope and change. But after we came down to earth, after the celebration and parades, what do we have to show for three and a half years of President Obama? Is it easier to make ends meet?”

Based on the numbers, the answer for most Americans is no. Since Obama took office, unemployment is up. You know that. You know it's harder to find a job.

But here's the really disturbing trend: The labor force participation rate. It's how many people are working, or are unemployed but looking for a job.

And this drop shows you people haven't just lost jobs. They've lost hope. Hope of ever finding work.

Labor participation is now at its lowest levels in 30 years since before women got into the labor force in masse.

And look at the change in wages. Adjusted for inflation, you've lost $3.23 off your weekly paycheck. That's $168 you won't earn this year. If just you lost that much, it may not feel devastating. But spread that wage cut across every working American.

That's a crisis.

It all adds up to this. After three and a half years of Obama in office, you are less likely to have a job, you're less likely to even consider yourself employable, and if you are lucky enough to have a job, you're making less money.

Here's a test on the President's record. Tell me when Obama said this:

“That we are in the midst of crisis is now well understood. ... Our economy is badly weakened. Homes have been lost; jobs shed; businesses shuttered. Our health care is too costly; our schools fail too many.”

That's the President's inauguration speech. Day one of the Obama Administration.

Is it any less true today? Consider what Obama said when he became the Democratic candidate for President in 2008.

“We Democrats have a very different measure of what constitutes progress in this country. We measure progress by how many people can find a job that pays the mortgage; whether you can put a little extra money away at the end of each month.”

That's how we all measure progress, and you Mr. President have come up far, far short.

When you go to the polls this November, ask yourself this:

“Are you better off than you were 4 years ago? Is it easier for you to go and buy things in the store than it was 4 years ago?”

Shareholders Strike Back

by Gerri Willis

At Citigroup's annual meeting, owners of the stock voted 55 to 45 against a $50 million executive pay package, including $15 million for CEO Vikram Pandit.

This is all thanks to the Dodd-Frank financial overhaul law.

Buried in its 2,300 pages is a requirement for public companies to hold "say on pay" votes for executive compensation.

Now, the vote is non-binding, but the chairman of Citigroup Dick Parsons said he took it seriously, and promised the board would consider it carefully.

Shareholders have every right to be upset with Vikram.

Over the last decade, Citigroup has had the worst stock price performance of the big banks, but consistently had some of the highest executive compensation.

Citi shares up slightly today, but they're down more than 80% since the financial crisis hit.

They're down 93% from 2006.

Last year, Pandit got a $1.7 million salary, plus a $5.3 million cash bonus, and he got a $40 million retention package that pays out through 2015.

Getting a bonus should be a piece of cake for these execs, too, since the standard for the payout is an earnings track record half of what it was in 2009 and 2010 when the economy was in the tank.

Whoa! Don't get too ambitious!

Look, to be fair to Pandit, for 2009 and 2010, he accepted just a buck in salary.

But to be fair to shareholders, Citi's quarterly dividend is one penny.

At the start of this week, Citigroup announced its first-quarter profit had fallen two percent from a year earlier on a paltry one percent rise in revenue.

The Federal Reserve turned the company down on its request for a share buyback or dividend after Citi flunked the central bank's stress test in March. And don't forget the bank was one of many bailed out during the financial crisis.

Some people bridle at anyone earning millions of dollars a year, but not me.

If you can grow sales, boost the bottom line, raise the share price, then by all means you've earned a fat paycheck.

But what we can't do is reward mediocrity and failure.

There's a lot not to like about Dodd-Frank - about 2,299 pages' worth if you ask me - but shareholder "say on pay"? That's OK with me.

Last year shareholders voted down just two percent of executive pay plans. Maybe this is the start of a new trend.

Tracking the Pork

by Gerri Willis

If you thought the GSA Vegas Vacation was bad, just wait until you hear what Congress is doing with your tax dollars!

You may want to sit down for this...

Citizens Against Government Waste has published its latest edition of the "Pig book”, a report tracking Washington Pork spending since 1991.

Let's start with the good news...

The amount of earmarks in fiscal year 2012 is way down from 2010.

In fact, the number has decreased by more than 98 percent to just 152.

The cost is also plummeting.

The amount of tax dollars destined for pet projects down 80 percent to just over three billion dollars.

The authors of the report credit the new class of deficit hawks in Congress, and the "ban" on earmarks.

But three billion dollars is still a lot of money, which begs the question... If there's a "ban”, what are we spending this money on?

I'm glad you asked...

Some of the biggest offenders - Defense.

For example, Congress appropriated 255 million dollars to upgrade the army's M1 Abrams tank.

But here's the thing: the Pentagon wants to halt production on these tanks!

The report pointed out those members of Congress who were the most vocal supporters of this pork came from districts where the parts will be made.

Other ridiculous defense spending: 239 million dollars for cancer research and 120 million dollars for alternative energy research.

Both of which should never be the military's job, and that research is already being conducted elsewhere!

Speaking of energy, other pork projects include nearly 14 million dollars on Hydropower Construction, three and a half million dollars for the National Fish Hatchery and three million dollars for Aquatic Plant Control.

I don't even know what half this stuff is!!!!

Get this one: nearly 115 million dollars has been donated to the United Nations Democracy Fund despite never being asked for!

Another over-the-top gift: a nearly six million dollar award for an East-West Center in Hawaii meant to improve relations among Pacific nations.

It is well known to be a pet project of Senator Daniel Inouye.

You may have noticed that's the first name I’ve mentioned in connection with these earmarks.

There's a reason for that. This Pig Book used to be a public shaming for lawmakers spending ridiculous amounts of public money on their home districts.

The downside of the "ban" on earmarks is members of Congress have not gotten rid of them entirely. They've just gotten better at hiding them.

The report says: "the supposed lack of earmarks resulted in a completely opaque process. Since earmarks were deemed to be non-existent, there were no names of legislators, no information on where and why the money will be spent, and no list or chart of earmarks in the appropriations bills or reports."

Oh, good. Just what we need. Less transparency in Washington!

And members of Congress wonder why only 12 percent of Americans approve of the "job" they're doing.

Obama's Bad Math

by Gerri Willis

President Obama speaks about the Buffett Rule in the Eisenhower Executive Office Building on the White House complex in Washington. Tax Day Eve. Ugh. I don't know about you but the whole season gives me the willies.

I use an accountant so I don't go through every detail myself, but I do cringe waiting for the death sentence. What do we owe and who to?

No matter how much I finesse my withholding, it always seems like I am writing a check this time of year.

I think most Americans, at least the half of us paying federal income tax, feel the same way, which is why I was amazed when the President started talking about tax hikes - during tax season.

His proposal - called the Buffet Rule - would require millionaires to pay a minimum in federal income taxes of 30%.

A Senate vote on the Buffett Rule is expected to fail.

The President has been campaigning on the Buffett tax for a couple of weeks now.

And while the White House's initial reasoning for such a tax was it would help retire our nation's $16 trillion debt. Well they've backed off that a little bit because it's not really true.

Buffett tax revenues would be a drop in the bucket raising just $47 billion over a decade, while Mr. Obama's budget adds nearly six and a half trillion to the debt over the decade.

According to some, the tax would cover just 17 days of increased deficit under the Obama tax plan. So what's the point again?

When his advisor David Axelrod spoke on the tax on Fox News Sunday, you could hear the waver in his voice as he tried to explain the wisdom of suggesting tax hikes during tax season:

“But nobody can argue -- nobody can argue, Chris -- nobody can argue that it makes sense for people who are making $1 million a year or more to pay less than the average middle class worker in this country. So, it both helps us stabilize the deficit and ensures amount of fairness in our tax system.”

Pardon me, Mr. Axelrod, but the reality is this: The wealthy already pay most of the income taxes collected in this country.

The top ten percent pay over half of all federal taxes - the top one percent over a quarter!

And according to the Tax Foundation, millionaires paid an average tax rate of 25 percent - more than three times the average tax rate for a family earning between 50 and 75 thousand dollars.

Let's recognize the Buffett tax for what it is: an election year campaign slogan aimed at firing up the left and winning over the middle class.

Fortunately, most folks can see through this kind of thing.

At least the viewers of this program are smart enough to see through it.

Instead of one-off ideas adding more burden to an already overwhelming tax code, why don't we simplify the tax code and make it fairer for everybody.

Maybe a first principle should be that everybody has to pay something.

Give Parents a Choice!

by Gerri Willis

One of the most contentious issues in public education in this country, in addition to teachers unions, is school vouchers.

But to me, it's pretty straight forward. Vouchers help parents pay for private schools - giving their kids more opportunity, and in some cases, a safer choice - without putting their retirement on the line, and going broke in the process.

And I’m not alone in that thinking. Nineteen states and Washington D.C. have a voucher system or similar program, according to the Wall Street Journal.

In fact, in some cases now, these vouchers can be used for state apprenticeships and college courses.

Wisconsin is home to the nation's oldest voucher system.

With over 20,000 students participating - the average cost is about six thousand dollars. That state concentrates its dollars on lower income families. In big cities like Milwaukee, families making less than $70,000 a year are the only ones eligible.

And the use of vouchers has skyrocketed since 2010 with more than 220,000 students currently enrolled in these programs.

Since then, states like Virginia, Florida and Indiana have created or expanded their programs.

Louisiana will soon have the nation's largest voucher program once the governor signs it into law next week.

The overhaul would mean upwards of 380,000 students would be eligible for the program - up from 1,800 in 2009.

Like I said, I think the upside of these vouchers is pretty clear: an opportunity to escape poor-performing schools, but it also greatly saves taxpayer money.

Yes - for the state government - often these private school vouchers are cheaper than sending a kid to public school.

Let's look back at Louisiana. Currently the state spends about $8,500 a pupil to educate public-school students, but only about $4,500 on voucher students.

Sounds like a win-win to me.

To be fair, there are conflicting studies on the academic benefits of these vouchers, but all I know is if my kid felt safer and happier going to school... at an institution that would put him or her on a better path for the future... that's all the research I need.

Giving families options when it comes to their children's education can only help in the long run.

Now is the Time to Buy!

by Gerri Willis

I couldn't blame you if you had completely written off the housing market.

After all, it's been six years since the market was at its peak. And since that time, prices have fallen nearly 35%. 8.2 million homes have gone into foreclosure. Collectively, we owe $700 billion more than our homes are worth.

It's been the single worst housing crisis ever. Even the depression didn't take down so many middle class households. And, still, there's an overhang of unsold inventory sitting on bankers' balance sheets. Some families squat on properties that they long since stopped paying for, waiting for the sheriff's knock on their doors to evict them.

And yet, there are signs this market is mending.

True, some cities and regions are still fighting declining prices, but in other places, prices are firming, even mending. Denver, Phoenix and even Detroit are posting small price gains. Existing home sales in February were up 9% from the same month a year ago.

To be sure, fully a quarter of the homes bought in February were purchased by investors, but who can quibble with the details of who's buying, when you know that purchases will eventually raise prices for everybody?

Demand is also spiking from international buyers. The Chinese have become the second biggest group of offshore real estate buyers because outsiders can see what we Americans can't - the housing market won't stay in the dumpster forever, and that buying low and selling high is a strategy for success in any market.

A turn in the market has been predicted by far more sophisticated housing analysts than me, but I am encouraged by what is going on in the jobs market.

This week's ADP hiring numbers show what we've been waiting for - a strong jobs report that shows payroll expansion beyond just the smallest of companies. More and more mid-sized and large companies are hiring.

The government's monthly rate and payroll expansion numbers have posted improvements for three straight months.

At the end of the day, it will have to be jobs that bring us out of the housing mess because the only thing any banker respects when it comes to handing out mortgages is a steady and consistent paycheck.

I think we may well be at the precipice of that recovery. Prices overall probably won't rise this year, but they could next year, or the year after that.

Housing is too big and important a market to write off forever. The number of people who have made their fortunes from the industry or simply bought their primary home at an opportune time and hung on for a rising tide of prices to lift their fortunes are many.

In short, it may well be the time to start looking for that first home or second or third to grab the best price possible.

Don't believe me? Look at what happened to the people who exited the stock market after the 1997 selloff and never came back. They've missed some historic gains.

Much of life comes down to timing and in the housing market the clock is ticking down to a more normal market where you'll pay more for that dream house. The choice is increasingly yours: wait and pay or strike early and get a bargain.


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