Monday, March 4, 2013

March Sadness

The Oscar telecast is over for another year, the NHL is at the half way point of their shortened season, Downton Abbey is over until next winter, and Tony Villar’s days are numbered as mayor of Los Angeles. But the main reason there is such March sadness, this first week of March, is the dysfunctional mess of our federal government.

PRESIDENT OBAMA called for “smarter government” in his State of the Union address. But Congress is about to enact $85 billion in across-the-board budget cuts that could be called “dumber government.”

The so-called sequester is the latest fiasco as the country lurches from one budget crisis to the next. It would force government agencies to cut the biggest, most visible items in the budget, like the size of the Army. It would also cut long-term investments in people and research — canceling summer internships, new student hires, and training programs for federal employees. But the sequester won’t do anything to attack the real waste and inefficiency in government programs.

That’s because the national budget process has become completely dysfunctional. The executive branch undergoes an annual farce in which government officials prepare detailed estimates of how much it will cost to run their organizations. Congress ignores most of this effort, and instead, tapes together budgets based on the previous year’s spending. Federal agencies also conduct an elaborate process to evaluate how well they are performing. But Congress provides money almost regardless of the evaluation. To get around budget caps, which are supposed to limit the amount of spending each year, Congress uses a number of tricks. For example, it has appropriated trillions for the wars in Iraq and Afghanistan in more than 30 “emergency” supplemental funding bills, even though this mechanism is supposed to be used for events like Hurricane Sandy.

Worst of all, it’s impossible to keep track of what our tax revenue really buys. Federal accounting systems provide no management information and are unsuited to make decisions based on efficiency. Most agency budgets are simply long itemized lists of salaries and expenses. You can drill down to the cost of a pencil, but there is no mechanism for calculating costs by the type of service delivered, such as the cost of processing veterans’ benefits.

The so-called sequester won’t do anything to attack the real waste and inefficiency in government programs. That’s because the national budget process has become completely dysfunctional. The lack of a functional budget and absence of financial information has lowered the quality and increased the cost of federal government services almost across the board. Federal agencies operate in a fog of uncertainty, unsure how much money they will have for next year — or even next month. This short-termism also plays right into the hands of private contractors. Government agencies don’t have the leverage to negotiate long-term deals, so they rush to disburse unspent money in the last two weeks of the year. The interruptions in funding delay routine maintenance for roads, buildings, and equipment. They undermine employee morale, retention, hiring, and training.

Until every citizen takes the responsibility to notify their representatives in Washington this must end, it will never end. It could be a long 2013.

FROM THE 70-PAGE SEQUESTRATION ORDER that went out late Friday: "The law requires the president to issue a sequestration order today canceling $85 billion in budgetary resources across the federal government for FY 2013. Specifically, OMB calculates that, over the course of the fiscal year, the sequestration requires a 7.8 percent reduction in nonexempt defense discretionary funding and a 5 percent reduction in nonexempt nondefense discretionary funding. The sequestration also requires reductions of 2 percent to Medicare, 5.1 percent to other nonexempt nondefense mandatory programs, and 7.9 percent to nonexempt defense mandatory programs."

GREENWATCH! -  "Australian climate on 'steroids' after hottest summer: The Bureau of Meteorology has confirmed the three summer months ending February 28 were the hottest season ever recorded in Australia, leading the government's Climate Commission to label it the 'Angry Summer' ... 'The Australian summer over 2012 and 2013 has been defined by extreme weather events across much of the continent, including record-breaking heat, severe bushfires, extreme rainfall and damaging flooding,' the report said. ... Australia experienced its hottest ever average national maximum temperature on January 7 of ... 104.5 Fahrenheit, while 44 sites, including Sydney and Hobart, recorded all-time high temperatures in the summer. The report said there have only been 21 days in 102 years where the average maximum temperature for the whole of Australia has exceeded [102.2 F] and eight of these happened in the summer just gone."

SIREN: CHINESE ARMY TIED TO CYBERATTACKS - "On the outskirts of Shanghai, in a run-down neighborhood dominated by a 12-story white office tower, sits a People's Liberation Army base for China's growing corps of cyberwarriors. The building ... is the headquarters of P.L.A. Unit 61398. A growing body of digital forensic evidence ... confirmed by American intelligence officials ... leaves little doubt that an overwhelming percentage of the attacks on American corporations, organizations and government agencies originate in and around the white tower.

"An unusually detailed 60-page study, to be released Tuesday by Mandiant, an American computer security firm, tracks for the first time individual members of the most sophisticated of the Chinese hacking groups ... to the doorstep of the military unit's headquarters. The firm was not able to place the hackers inside the 12-story building but makes a case there is no other plausible explanation for why so many attacks come out of one comparatively small area."

PROFITS UP; JOBS NOT - "With the Dow Jones industrial average flirting with a record high, the split between American workers and the companies that employ them is widening and could worsen in the next few months as federal cuts take hold. ... With millions still out of work, companies face little pressure to raise salaries, while productivity gains allow them to increase sales without adding workers. ... The result has been a golden age for corporate profits, especially among multinational giants that are also benefiting from faster growth in emerging economies like China and India."

CITIZEN GEITHNER: Beginning in early March, former Treasury Tim Geithner will conduct a series of university seminars on financial crises - all closed to press and off the record and done for no fee. The focus of the seminars will be on advancing academic research on crisis prevention -- and the craft of crisis response - so that future policy makers can draw on his ideas, and the public can use to better understand how and why governments act in crisis. Geithner has committed to do such sessions at Harvard, MIT, Northwestern, Princeton, and the University of Michigan. Additional schools will be added in the coming months.
"Geithner has retained the Harry Walker Agency to represent him in handling his paid speaking engagements. Beyond the university seminars and the paid speeches, he also expects to do some engagements for nonprofit organizations and charities for no fee.

2016 WATCH - Marco Rubio courts Wall Street: The rising GOP star ... has quietly met with some of the most powerful GOP backers in the world of high finance. The roster includes Blackstone Chief Executive Stephen Schwarzman, KKR CEO Henry Kravis and senior executives at Goldman Sachs and Barclays Capital ... Rubio has gotten backing from big Wall Street titans before, notably hedge fund manager and billionaire Paul Singer. ... 'It was a first date. And he's doing lot of them,' said a person familiar with Rubio's meeting with Schwarzman, who heads one of the biggest private equity firms on Wall Street. The person ... said Schwarzman was 'favorably impressed' with Rubio but remains uncommitted for 2016. 'Rubio has a very strong sense of himself and positioned himself very early on immigration reform, which Republicans desperately need,' this person said. ...

"Sen. Rand Paul was in New York City on Monday, meeting privately with a range of donors and political operatives before an appearance at the New York Meeting, a conservative gathering in Midtown where candidates have a chance to network. Rep. Paul Ryan of Wisconsin is expected [in NYC] in the coming weeks ... Ohio Sen. Rob Portman, in his role at the National Republican Senatorial Committee, has also been in New York meeting with donors. And Louisiana Gov. Bobby Jindal is due here for a Republican Governors Association fundraiser in a few weeks."

BIRTHDAYS THIS WEEK – Birthday wishes and thoughts this week to: Melissa Duran …famous San Jose Shark fan, Alan Greenspan (87), Jim Rice (60), Sharon Stone (55, Shannon Tweed (56), Carrie Underwood (30).

AUTO BUFFS – The anticipated introduction of the new 2014 Corvette Stingray convertible will be released this Tuesday at the Geneva Switzerland Auto Show.
The drop-top model shares the dramatic body styling of the coupe, but with a folding fabric top. Underneath its skin is the new Chevy LT1 6.2 liter V-8 with 450-hp.  No word yet on pricing or availability.

COLLEGE HOCKEY PICK OF THE WEEK – Friday March 8, 7:00 PM, ET, HGTV; the ECAC playoffs begin with a first round matchup in Canton, New York. Colgate University Raider’s (14-16-4) vs. St. Lawrence University Saints (16-14-4). St. Lawrence is the higher seed but will be in trouble without their captain, senior Kyle Flanagan. St. Lawrence has lost three in a row without their star. Still we like the Saints to win Game 1 of the best of three series, 3 – 1.  (Season to date (7-3)

THE SWAMI’S TOP PICKS:  ice – (ECAC) St. Lawrence 3 Colgate 1, (NHL) Boston 5 Toronto 3, hoops – (Big East) Georgetown 75 Syracuse 70.   Season to date (59-30)

DRIVING THE WEEK - President Barack Obama holds a Cabinet meeting this afternoon ... House this week is expected to vote on a bill to fund the government through September (more on which below) ... ISM nonmanufacturing on Tuesday at 10 a.m. EST expected to dip slightly to 55 from 55.2 ... ADP employment on Wednesday at 8:15 a.m. expected to decline to 170K from 192K ... Initial jobless claims at 8:30 a.m. Thursday expected to rise to 355K from 344K ... BLS jobs report on Friday at 8:30 a.m. expected to show a gain of 160K with no change to the 7.9 percent jobless rate.

Senate Banking has a hearing on Thursday at 10 a.m. on the Bank Secrecy Act ... House Financial Services has a hearing Tuesday at 10 a.m. reviewing current monetary policy and Wednesday at 10 a.m. on GSE reform.

Next week; movie, book reviews and Dear Rink Rats.

Until Next Monday, Adios!

Claremont, CA
March 4, 2013

#III-46, 151

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