Showing posts with label Steve Malanga. Show all posts
Showing posts with label Steve Malanga. Show all posts

Saturday, June 1, 2013

Harrisburg PA Securities Fraud Just The Tip Of The Government Bond Fraud Iceberg

"Misleading public statements"? "Incomplete information"? Gee, isn't that the same fraud our elected officials specialize in these days, from an IRS official pleading the Fifth Amendment while asserting she's innocent to a Secretary of State stonewalling with "What difference does it make?" how someone who reported to her died?

Steven Malanga for The Wall Street Journal here:

With Harrisburg, however, the SEC has gone further and charged the city government with "securities fraud for its misleading public statements when its financial condition was deteriorating and financial information available to municipal bond investors was either incomplete or outdated." The SEC says this is the first time the regulator has "charged a municipality for misleading statements made outside of its securities disclosure documents."

The Harrisburg charges are part of a broader SEC effort to scrutinize state and local government issuers in the nation's $3 trillion municipal-bond market. "Anyone who follows municipal finance knows that budgets can sometimes be a work of fiction," says Anthony Figliola, a vice president at Empire Government Strategies, a Long Island-based consulting firm to local governments. "Harrisburg is the tip of the iceberg."


Wednesday, October 24, 2012

Conservatives Have Become Wrong-Headed About Taxes

Conservatives have become wrong-headed about the tax code.

Steven Malanga provides an exasperating take on "tax reform", here, which was really a liberal Democrat conceit from the beginning but became a so-called conservative one under Ronald Reagan, who was, need we remind everyone, a "former" Democrat:


Most conservatives (though certainly not most Republicans) have come to see the range of incentives and exemptions in the tax code as wrongheaded, including those for businesses which smack of little more than corporate cronyism. This is in sharp contrast to 1986, when many Republicans in Congress resisted reform until a popular GOP president came along willing to take on the business community.

Sacre bleu. The liberal Democrats are nothing if they are not great simplifiers, and if conservatives join them in that enthusiasm, it doesn't mean they are right. Little ideologues all, regardless of party.

Prior to the income tax, a president had to be a pretty smart cookie to figure out all the ins and outs of the tariff system if he wanted his federal government to have enough revenue to continue operations. By 1909, however, the whole country seemed to have wound down so far intellectually that it was just too tired to carry on any longer with that rigorous enterprise and bowed instead to the simplicity of an income tax. Tax reformers today, take note. It doesn't speak well of you that you admit the code is too much for you.

Actually real conservatism opposed the income tax way back when not because it would grow too complex but because it was wrong. When amending the constitution is necessary in order to make something legal, conservatives' first instinct is always to question the advisability of the idea before they conclude there is a defect in the constitution requiring a remedy. The income tax was one such idea. It took four years to gain ratification in the states. As an invention of progressivism the income tax eventually worked a revolution in government by allowing government to grow to gargantuan size with a ready pool of available cash, stolen by force from the population's income. And it is no coincidence that the first major expenditure financed by the income tax was US entry into The Great War. Not long after which came The Great Depression. If progressive ideas were good ones, no one seems to have paid much heed to the early evidence to the contrary.

Every effort by the people since the introduction of the income tax to obtain deductions, exemptions, credits and other incentives in the tax code should be understood by conservatives as wholesome reactionary, counter-revolutionary, rear-guard opposition to what the income tax represents, but today you can hardly find a conservative who will even entertain the idea of overthrowing the income tax, let alone any other of the so-called "achievements" of the progressive era. In fact, some so-called conservatives have become veritable cheerleaders for the income tax. Rush Limbaugh, for one, can't seem even to imagine an America without one for the first 137 years of its existence. An originalist in name only is he.

The problem with so-called Reagan conservatism, then and now, is that it makes peace with the tax code, just as it does with the social welfare state, including Social Security and especially Medicare. Mitt Romney and Paul Ryan actually campaign on just such a platform of preserving Medicare for future generations. As Reagan compromised in the direction of liberalism in the 1986 tax reform, so will they.

These people wouldn't know conservatism if it ran up and bit them in the ass.

Tax reform is a fool's errand. You can't "reform" something which is fundamentally wrong in the first place.

Wednesday, October 10, 2012

Steve Malanga Thinks Romney Flips To Tax Deduction Caps To Avoid A Bloody Fight

Here, for Real Clear Markets:


Pressed to explain last week how he would lower tax rates without sacrificing revenues, Mitt Romney suggested that he might cap tax deductions at $17,000 per return. This was entirely different from his earlier suggestion that he'd eliminate some of our dizzying array of tax deductions in pursuit of a simpler and more economically efficient tax system with lower rates but fewer write-offs.

In his latest proposal for reform that started out as a way to simplify our tax system, Romney would make it more complex. The political virtue of this new approach is that it lets him preach lower rates without identifying specific deductions he'd eliminate, and therefore without incurring political opposition from interest groups that fight to protect those deductions. But it's a stretch to call this tax reform as it's generally understood.

You will read the rest of the article in vain looking for any discussion of the fact that when the much vaunted lower tax rates which came in the 1986 tax reform disappeared under Clinton, the deductions which went away in 1986 were no longer present to protect taxpayers from the full force of the those rate increases.

The presence of many deductions in the tax code represents the political success of the American hatred for taxes. They constitute rear guard actions, reactionary impulses if you will, against an otherwise intractable imposition of unconstitutional coercion and immoral inequality before the law. It is unjust to charge some taxpayers more than others.

Tax reform as we know it is a fool's errand for conservatives. Reagan, Kemp, Bushes I and II and now Romney are all to one degree or another really liberals with respect to the tax code, dancing around the fact that the income tax itself was the innovation in American history. They play with the details, protraying their proposals as conservative now and again, without ever coming to the root of the matter that the introduction of the income tax was a revolutionary impulse and was itself just one in a series of many radical changes foisted on the American people during the Progressive era.

When conservatives in our time begin to roll back those assaults, then we may legitimately speak of "reform". Until then, Romney's waffling between eliminating deductions or capping them is significant only to people without a long view of the matter.

Wednesday, July 18, 2012

Getting Out While The Getting's Good: Decade-Long Retirement Spree Exacerbated Unfunded Liabilities

So says Steven Malanga for RealClearMarkets, here:

From 2001 through 2010, the number of government workers or their beneficiaries receiving pensions from state and municipal funds soared by 2.3 million, or 38 percent, to 8.25 million. During that time, total government workers active in pension funds increased by just 5 percent. As a result, the ratio of public employees still working to those retired fell by a full half worker during the decade, from 2.3 to 1.8. The outflow of money from funds soared, doubling from $100 billion paid to beneficiaries in 2001 to $200 billion in 2010 (the latest year comprehensive statistics are available). ...


Since we haven't set aside enough money to fund these beneficiaries, the massive outflows of funds are troubling. In 2001, governments and workers contributed $65 billion toward pensions while $112 billion went out the door, counting not only payments to beneficiaries but other kinds of withdrawals too. In 2010, workers and government contributed $125 billion to the funds, thanks largely to a sharp increase in contributions from governments (that is, taxpayers), but $213 billion exited the funds.

Wednesday, April 25, 2012

US States are in a Heap of Debt Trouble: $8 Trillion Worth


In a less than $2 trillion budget world at the state level.

Because of promises to pay for pensions and healthcare for retired public employees out of future tax revenues, the big squeeze is on, according to Steven Malanga, here:

From 2008 through 2010 (the latest year data are available), state spending rose to $1.9 trillion, from $1.7 trillion. ... 

Several years ago, for instance, the treasurer of Cook County, Ill., Maria Pappas, demanded that all of Cook's municipalities report their debt to her. It wasn't easy. They began with bonded debt, then totaled up pension liabilities, then found they had lots more they'd promised to workers for health care. ...

We couldn't get a handle on just how much debt states and their municipalities have accumulated unless every county treasurer does what Pappas did. But just what we can estimate in bonded debt and unfunded pension and health care promises for retirees now totals about $8 trillion. That's a lot of future state and municipal tax revenues already accounted for.

What's that familiar refrain we keep hearing at the federal level, that a present Congress can't bind a future one?

So how can present municipal and county governments bind the taxpayers to pay in future for unfunded promises in the present, huh?

Wednesday, July 27, 2011

The Home Appraisal Business Has Been Screwed Up Since the 1930s

For all the gory details of yet one more long, failed experiment in fascism, American style, see the story by Steven Malanga, here.

Wednesday, June 29, 2011

Liberals Blame Bill Clinton for Housing Bubble

The Financial Crisis Inquiry Commission, under Phil Angelides who had a testy, partisan, op-ed in The Washington Post yesterday, in its report sought to blame Wall Street for leading the way to the housing bubble, not government policy as mediated through the likes of Fannie Mae.

Gretchen Morgenson of The New York Times has begged to differ, and Steven Malanga provides a timely and sympathetic review of a new book she co-authored which uncovers a major impetus to the housing bubble in the administration of none other than Bill Clinton, who took a weaker form of liberalism under George Herbert Walker Bush and ran with it:

Reckless Endangerment locates the origins of the crisis in the ironically named Federal Housing Enterprises Financial Safety and Soundness Act of 1992, which was supposed to protect taxpayers from big losses by Fannie and Freddie. That law pushed the institutions into affordable housing lending and prompted Fannie in particular to adopt a strategy to disarm critics by continually arguing that efforts to rein in the company's operations, such as requiring it to back its mortgage purchases with more capital, would only hurt the goal of expanding home ownership. "You should rejoice in Fannie Mae and Freddie Mac rather than fight them," Fannie's chief executive, James Johnson, told the New York Times.

In the wake of the 1992 legislation, Fannie Mae created the Housing Impact Advisory Council, an assembly consisting of low-income housing advocacy groups and mortgage lenders. Fannie Mae also began supplying grants to the housing groups, like ACORN, which a few years earlier had criticized the GSEs in the press as "strictly by-the-book" interpreters of underwriting standards whose young underwriters, "are not sensitized to the existence of redlining, be it racial or geographic." Now Fannie was singing a different, more cooperative tune, and its new council, Morgenson and Rosner write, evolved into "the centerpiece" of President Clinton's 1994 National Partners in Homeownership program, a "disastrous homeownership policy" that played a crucial role in inflating the housing bubble.

With The Nation pinning financial deregulation on Bill Clinton in recent days, liberalism's not having a good start to the summer.

If Bill Clinton were smart, he'd respond to all this by blaming Bush, or hope people still have enough money left to go to the beach and read trashy novels instead.