Politicalmonkey2010

The Truth Shall Set You Free…It might piss you off first, but it will set you free.

Archive for August, 2011

Who is Rick Perry?

Posted by politicalmonkey2010 on August 14, 2011

Rick Perry

(This is intended to be a running commentary on Rick Perry, complete with links at the bottom of the posting, Originally published on 8/14/2011 updated 8/15/2011,8/17/2011,8/23/2011, 9/1/2011)

The Republican field continues to swarm with ideology and mediocrity at best, full of rhetoric and little substance, enter Texas Gov. Rick Perry.

He has never lost an election, including an elementary school contest for “king” of the Paint Creek School Carnival.  He secured that win by handing out pennies for votes.  Perry started his career in Texas politics as a Democratic state legislator and was even the Texas chairman of Al Gore’s 1988 presidential campaign. Already a conservative Democrat, he switched to the GOP and in 1990 was urged by party figures in the state, including longtime Bush strategist Karl Rove, to run for state agriculture commissioner.

After two terms as agriculture commissioner, Perry was elected lieutenant governor in 1998, then took over two years later as the state’s chief executive after Bush was elected president.

Perry has been governor for over 11 years, under his leadership Texas can boast the following:

  • A quarter of Texans lack health insurance coverage, the highest share in the country.
  • Texas ranks 47th in the country for the level of state spending on schools.  Texas state capitol in Austin saw thousands of protesters descend on the grounds for a rally against a proposed $10 billion—yes, billion—in education cuts to the state. Representatives from 300 school districts, students, teachers, parents, and others marched and called on Perry to use the state’s “rainy day fund” to cover the shortfall in schools rather than lay off a projected 189,000 education workers.  The New York Times called Perry’s impending cuts “the largest cuts to public education since World War II.”  Of course, the budget cuts are still coming.  Aside from the impact such layoffs will have on the economy, since a good chunk of the new jobs Perry touts as part of his economic miracle were in schools, there’s the actual impact on the state’s students. It’s not just public schools that take a hit—universities will see their budgets slashed and financial aid eliminated for 43,000 students.
  • Texas ranks highest in the country for the levels of toxic chemicals released into the water and carcinogens released into the air.  BP spill was still churning oil into the Gulf of Mexico, Perry called it “just an act of God” and warned against any “knee-jerk reaction” that might include things like halting deepwater drilling until the dangers could be assessed. Unsurprisingly, Perry also got $129,890 from the oil and gas industry for his last reelection campaign.
  • Under Gov. Perry Texas has had the most active death-penalty regime in the country –  232 people, more than any other governor in history. (The previous record, 152, was held by George W. Bush.) He remains embroiled in controversy over the 2004 execution of Cameron Todd Willingham. Perry removed three appointees from the Texas Forensic Science Commission just days before the board was going to investigate a flawed arson investigation in Willingham’s case.  “Outside of Texas, the name Cameron Todd Willingham did not mean much to most people until the fall of 2009. In a 17-page article published by The New Yorker magazine, a curious and brave woman, a brilliant fire expert, and an investigative journalist re-opened the case against this man who was put to death for killing his children. The ‘classic arson case’ was picked apart, revealed to have been based on junk science and a misguided sense of expert intuition.  Proof of the flawed fire investigation had been rushed to Rick Perry and the Texas Board of Pardons and Parole before the execution, to no avail. Five years later, the article uncovered new evidence to all but confirm what a number of people had suspected for years: That the state of Texas had executed an innocent man.”   Just last month, he executed Humberto Leal Garcia Jr., a Mexican citizen, over the objections of the Mexican government, his own president, and the International Court of Justice. Even George W. Bush, in 2005, ordered all states to comply with the international law mandating consular access to officials from their home country for foreign nationals. Rick Perry was the only one not to comply.
  • Texas now has among the most narrow Medicaid eligibility standards in the country.
  • Texas has the fourth- highest poverty rate.
  • Texas ranks the seventh-highest teenage birth rate.
  • Texas has the lowest rate of people over 25 with a high school degree.  Interestingly, Perry did not apply for federal “Race to the Top” education funds because he said it would force national standards upon Texas.
  • Texas spends the least of any state on mental health care.
  • Texas ranks second to last in the percentage of the population covered by employer health insurance.
  • Under Gov. Perry’s direction, Texas has refused to enforce federal emissions rules for power plants and refineries.
  • Texas has also faced a $27 billion budget shortfall this year for the 2012-13 biannual budget.

Eyebrow raising comments and actions from Gov. Perry –

Perry said last year that Texas could have the right to secede: “If Washington continues to thumb their nose at the American people, you know, who knows what might come out of that. But Texas is a very unique place, and we’re a pretty independent lot to boot.” He later clarified that he didn’t support secession.

Perry declared a a bill to require all women to have an ultrasound before they can get an abortion was the first major bill debated in the House, as an “emergency”.  As Texas State Representative Carol Alvarado noted in that session, the bill’s author didn’t understand how intrusive his own bill was. She gave the legislature an in-depth description of a trans-vaginal sonogram, which would be required for women eight to 10 weeks pregnant. “This is not the jelly on the belly that most of you think, she said as she held up a vaginal probe. ‘This is government intrusion at its best.’” The bill has no provision for victims of rape or incest. It does, however, give Perry more social conservative credentials to trumpet on the campaign trail.

Perry recently said he wanted Roe v. Wade overturned so states could decide for themselves. But then he declared his support for a federal constitutional amendment that would overturn Roe and ban abortion nationwide.

Consistency doesn’t matter, apparently, when it comes to abortion or women’s bodies.

In 2007, campaigning in Iowa for former New York mayor Rudy Giuliani, Perry said “George Bush was never a fiscal conservative — never was.” In his 2010 book “Fed Up!” Perry complains Bush “turned a blind eye to undisciplined domestic spending.’  In that book, Perry calls Social Security “a failure,” and proposes the adoption of a constitutional amendment to limit federal spending.

Eyebrow raising comments and actions from Gov. Perry he is going to have to explain to the right wing –

  • Gov. Perry was in support of in-state college tuition for the children of illegal immigrants, saying those young people have lived in Texas for years, are on the path to citizenship, have studied hard and should be encouraged to get education or vocational training.
  • Perry wrote a letter to Congress in 2008 urging it to pass a bill to save the national and global economy. But he contends that he didn’t necessarily mean the $700 bailout that Congress eventually approved.
  • Perry’s core constituency is conservative evangelical Christians, but he has supported some measures that clashed with their beliefs. In 2007, he signed an executive order requiring all girls entering the sixth-grade to be vaccinated against a virus that can cause cervical cancer. The Legislature promptly blocked Perry’s order.  Perry recently explained that on a call in talk show ““I’m one of the first to say we didn’t approach this issue right at all,” Perry told the caller who asked about the vaccine. “We shouldn’t have done it with an executive order. We should have worked with the legislature.”  That might come as a surprise to the Texas legislators who have heard Perry insist he was right about the executive order as recently as September 2010.
  • On August 6, Perry and right-wing evangelical leaders are sponsoring a a prayer rally in Houston’s Reliant Stadium dedicated to “the One True God through his Son Jesus Christ.” Perry’s message on the event’s website reads:  “Right now, America is in crisis: we have been besieged by financial debt, terrorism, and a multitude of natural disasters. As a nation, we must come together and call upon Jesus to guide us through unprecedented struggles, and thank Him for the blessings of freedom we so richly enjoy.” Seems that Gov. Perry has forgotten there are other religions in the US besides Christianity….except that isn’t really true… Perry is a friend of the Aga Khan, the religious leader of the Ismailis, a sect of Shia Islam that claims a reported 15 to 20 million adherents worldwide. Sprouting from that friendship are at least two cooperation agreements between the state of Texas and Ismaili institutions, including a far-reaching program to educate Texas schoolchildren about Islam. Perry was quoted at the official Ismaili website as saying at the signing ceremony that “traditional Western education speaks little of the influence of Muslim scientists, scholars, throughout history, and for that matter the cultural treasures that stand today in testament to their wisdom.”
  • Perry has also ruffled feathers with social conservatives in recent days by saying that under 10th Amendment principles, gay marriage in New York didn’t bother him. After all, Perry endorsed former New York mayor Rudy Giuliani in the 2008 presidential race, who is hardly considered a social conservative.
  • Perry has also drawn criticism for his plans for the Trans-Texas Corridor, a failed cross-state toll road that drew criticism from rural property owners and immigration foes, because the plan involved a partnership with the Mexican government.

It’s the Economy Stupid

While Gov. Perry likes to boast about Texas’ low taxes, scant regulation and limited public services, the truth is Perry-jobs are really ‘jobettes,’ offering low pay, no benefits and no upward mobility. In fact, under Rickonomics, Texas has added more minimum wage jobs than all other states combined.  Even as Texas added those “jobettes,” its unemployment rate magically increased to 8 percent from 7.7 percent—and 23 states have a better employment rate than the miraculous Texas.

Perry says he is the best job creator in the race and that low-tax, low-regulation Texas created about 40 percent of all the new jobs generated in the United States over the past two years.  Here’s the truth:  Texas has benefited from the federal government’s expansion of the military and also from the expansion of the oil industry, which was due to international and national factors, not Perry’s policies.

Here are the numbers, which come from the federal government’s Bureau of Labor Statistics: Between the beginning of 2008 and the end of 2010 (the latest data available), Texas created about 75,000 jobs. That makes it one of the few states with any job creation at all over that time. But federal, state and local government hiring accounted for 115,000 new jobs in Texas, while private industry shed about 40,000 jobs.   Perry and his state have also benefited significantly from the kind of federal spending he’s now trashing as a presidential candidate hoping to appeal to conservative Republicans. Federal spending in Texas amounts to more than $200 billion per year, according to the New York Times, on account of several big Army bases, a heavy NASA presence, and other federal installations. That’s about 5.2 percent of all federal spending. Texas also accepted $6.4 billion in federal funds from the unpopular 2009 stimulus program championed by President Obama, according to the Washington Post In the past two years, according to the Austin American-Statesman, almost half of the state’s job growth came in the education, health care, and government sectors. Notice a pattern? These are all sectors that depend, at least in part, on government support. And Perry has taken full advantage of public spending—he managed to fill in Texas’ previous budget shortfall by taking $6.4 billion in Obama stimulus money, more than all but two governors. But that’s all coming to a close: After facing a projected $27 billion deficit for 2012-2013, and with no further stimulus in sight, Perry and Republicans in Austin resorted to sweeping cuts to Medicaid and education in their most recent budget.

The state’s unemployment rate of 8 percent compares favorably with the national rate of 9.2 percent, but Texas’ rate has stubbornly stuck at or above that level since September 2009.  In May, some 985,656 Texans were unemployed, virtually unchanged from a year ago, according to the Texas Workforce Commission. Texas accounted for about 1 of every 14 jobless Americans in May.  And Perry’s critics question the kind of jobs being created in the state.  Texas and Mississippi are tied, at 9.5 percent, for the highest proportion of hourly workers earning at or less than the federal minimum wage of $7.25 per hour.

According to the U.S. Bureau of Labor Statistics, 550,000 Texans earned no more than the minimum wage in 2010, and the number of Texas workers earning the federal minimum wage or less was greater than the totals for California, Florida and Illinois combined.

Lori Taylor, associate professor in the Bush School of Government and Public Service at Texas A&M University, cited these reasons for Texas’ lower wages: a younger, less educated workforce and a lower cost of living.

The state’s workforce will age, but the proportion of adults without a high school degree is projected to increase from 12 percent today to 30 percent in 2040 if current trends continue, according to the state comptroller’s TexasWorks study in 2008. That study of the state’s future workforce predicts another 30 percent of the 2040 labor force will have only a high school diploma and no training for a high-tech economy.  But keep in mind…education has been cut and will continue to be cut under Gov. Perry.

Attacking the Fed – Perry’s Ignorance of MonetaryPolicy

Perry’s first pronouncement on the Federal Reserve as a presidential candidate was a convoluted mouthful of economically illiterate posturing. When asked his opinion of the Fed, Perry said of chairman Ben Bernanke, “If this guy prints more money between now and the election … we would treat him pretty ugly down in Texas. Printing more money to play politics at this particular time in American history is almost treacherous—or treasonous.” To Tea Partyers and government-bashers, Perry’s jabs at the Fed might sound like a welcome challenge to an omnipotent federal agency that routinely manipulates the economy. But if Perry wants to be taken seriously by business leaders and investors—who control a wee bit of the campaign money he’ll no doubt be asking for—he might want to take a crash course on the Fed and monetary policy.  Most economists feel that the Fed’s aggressive intervention in the economy since 2008 has been a necessary evil that helped prevent a financial panic and a full-blown depression. The Fed is also the only part of the government that seems capable of doing anything at all to help the economy, since every other part of Washington is paralyzed by political dysfunction.

Even Republicans are having a hard time swallowing Perry’s rhetoric..

Karl Rove, a Fox News commentator and formerly Bush’s chief political adviser, said Perry was wrong to separate himself from Bush because he should be trying to expand his support as widely as possible. Rove also took issue with Perry’s comment that Federal Reserve Chairman Ben Bernanke, who was appointed by Bush, was developing economic policies that were almost “treasonous.”

Rove said, “Governor Perry is going to have to fight the impression that he’s a cowboy from Texas. This simply added to it.”  Peter Wehner, another former Bush adviser in the White House, said in a Commentary essay that Perry’s remark about Bernanke was “the kind of blustering, unthinking comment that Perry’s critics expect of him.”

Social Security

Asked by Ben Smith whether Social Security should be replaced with state-based benefit programs, as Perry once suggested in a Newsweek interview, the governor hedged.  “I’m for having a conversation with the country about how we find some solutions,” he said at the Iowa state fair. “Having the states doing it is one of the ways.”

The Chinese Connection – Perry Doing Business with the Enemy?

Perry announced that telecommunications firm Huawei Technologies would base its U.S. operations in Plano in Oct. of 2010.  Perry made time for a dinner with Huawei’s chief executive, Ren, according to a news release. The Chinese executive is a former leader in the People’s Liberation Army who helped oversee the Chinese military’s telecom intelligence in the 1980s, according to a Rand report. Huawei disputes this, saying he helped lead an engineering department of the PLA. His company had grown rapidly to become the world’s third-largest telecom equipment provider, with about 1,100 jobs in North America. It opened its first research office in Texas in 2001.Perry praised the company’s “really strong worldwide reputation” and its chairman, Ren Zhengfei, whose straight talk he said reminded him fondly of West Texans.  That’s nice but I don’t think the average West Texan has had both the George W. Bush and Obama administrations had concluded that the global telecom giant poses a potential cyber-security risk to the U.S. military and businesses.

  • Three times since 2008, a U.S. government security panel has blocked Huawei from acquiring or partnering with U.S. companies because of concerns that secrets could be leaked to China’s government or military.
  • In 2005, a Rand report questioned Huawei’s “deep ties with the Chinese military, which serves a multi-faceted role as an important customer, as well as Huawei’s political patron and research and development partner.”
  • In 2008, the Committee on Foreign Investment in the United States, a multi-agency government panel, blocked Huawei’s plan to buy 3Com.
  • In late 2009, The Post reported, the National Security Agency privately urged senior executives of AT&T not to purchase Huawei equipment for a planned phone network. The article reported that U.S. officials feared that Chinese intelligence agencies could insert “digital trapdoors” into Huawei’s technology to serve as secret listening posts in the U.S. communications network.” AT&T did not discuss the warning but later announced it had chosen other providers.
  • In August 2010, eight Republican senators, including Jon Kyl of Arizona and Richard Shelby of Alabama, urged the Obama administration to investigate Huawei’s effort to sell equipment to upgrade Sprint Nextel’s mobile network. They argued that Huawei’s involvement “could create substantial risk for U.S. companies and possibly undermine U.S. national security.” The Committee on Foreign Investment rejected Huawei’s partnership with Sprint later that year.

Perry has made international recruiting a centerpiece of his economic policy, and more than two dozen Chinese companies now have a Texas presence. China is the state’s third-largest export-import partner.

Yet, when asked several times about China – US relations on the Laura Ingram show, the Governor came up short with concrete answers…

Laura: Is a rising China good for the United States? And if not, what are you going to do about it?

Perry: We’re going to have to deal with China. We’re going to have to trade with them. China disregarded the world for millennium. They lived in their own little world. We can’t afford to do that. We’re going to have to deal with China—

Laura: What does that mean?

Perry: We’re going to have to find ways diplomatically and financially, economically—

Laura: What does that mean? Those are broad generalities. I need specifics on this show….People are concerned that they’re going to surpass us militarily, probably economically if we don’t turn things around. As President of the United States how would you take a different path from George Bush and this president on China?

Perry: Well one of the ways we do it is by getting the economy going. Because the fact of the matter is if you don’t have a strong economy your foreign policy means nothing.

(snip)

Perry: China needs to hear from us ‘listen, we will do trade with you, we will be a partner in trade with you, but you cannot steal our intellectual property.’

And this:

Laura: Do you think our trade policies have been working for the American family, vis-à-vis China, or many of the other countries that are growing their economies incredibly fast right now?Perry: I don’t think our trade policy has been working for years, frankly, from the standpoint of being in the best interest of our families. Do we need to trade? Absolutely. Am I a free trader? Yes. But I am a fair trader.

Bilderberg Connection

For all the conspiracy loving theorist out there..this little item will wet your appetite..

He said he was invited to the Bilderberg meeting and attended out of curiosity. “I found it to be an interesting group of people. I have yet to find out why they want to keep it a secret,” he said. “I haven’t been invited back and that was 5 years ago, so I guess I didn’t impress them.”  The caller focused on the Amero, a supposed Euro-like common currency for the Nafta countries.  Perry said, “I agree with you, that doesn’t appeal to me at all either.”

Foreign Policy “My faith requires me to support Israel”

His faith may require him to support Israel, but he had better understand the consequences.  The middle east is literally teetering, and a misguided foreign policy would have consequences felt around the world.  Mr. Perry had better revisit the 1967 borders and have a come to Jesus meeting that these were the original borders of Israel.  Such a simplistic statement I am assuming means he has absolutely no working knowledge of the middle east and Israel aside from the fact that Israel has one of the fattest wallets in the lobbying community.

I could not end this post without addressing financing..follow the money

Nearly half of the $102.8 million that Perry raised from 2001 through 2010 came from 204 “mega-donors” who contributed $100,000 or more, according to Texans for Public Justice, a watchdog organization that monitors state political contributions.  His biggest contributors include Houston home builder Bob Perry, who made national headlines by helping finance a political attack on former Democratic presidential nominee John Kerry, and Harold Simmons, a Dallas multibillionaire who is developing a controversial nuclear waste disposal site in West Texas.   Keep your eyes on the money..more to come.

***UPDATE*** Following the Money

Who donates to Gov. Perry?  and Why?

  • Let’s talk a little bit more about that nuclear waste site which Mr. Simmons stands to profit from…do you know what happens to folks who get in the way of a business deal in Texas?  Bobby Gregory was one of two people on the eight-member panel known to oppose allowing out of state imports.  Gov. Perry offered him a prestigious appointment as a regent of a state university to get him out of the way. Under Texas law, Gregory could not hold two state-appointed positions requiring Senate approval at the same time, and so taking the regent job would have required him to leave the waste commission.  He declined the offer, and his term expired Aug. 31, 2011.
  • John McHale, an entrepreneur from Austin, Tex wrote a check to Gov. Perry for $50,000 – ironically n May 2010 an economic development fund administered by the governor’s office handed $3 million to G-Con, a pharmaceutical start-up that Mr. McHale helped get off the ground. At least two other executives with connections to the firm had also given Mr. Perry tens of thousands of dollars like  David M. Shanahan, who also has a significant ownership stake in the company. He is also the founder and president of Gradalis, a biotech firm based in Dallas that received a separate $1.75 million grant from the state’s technology fund in February 2009. Campaign finance records show that Mr. Shanahan contributed $5,000 in 2007 and then $10,000 to the governor in November 2009.   Then there is James R. Leininger, a San Antonio businessman who has given more than $230,000 to Mr. Perry, he has an interest in Gradalis.
  • Mr. Perry has raised at least $17 million from more than 900 appointees or their spouses, roughly one dollar out of every five that he has raised as governor.
  • Appointees of the State Parks and Wildlife Commission and the board of regents of Texas A&M, Mr. Perry’s alma mater have donated more than $4 million to his campaigns for governor.
  • Need help from Gov. Perry’s signature projects like the Texas Enterprise Fund and the Texas Emerging Technology Fund?  The enterprise fund, which is intended to be a deal-closing tool for the state as it competes for jobs, has dispensed $435 million in grants to businesses since 2003. The technology fund, which has doled out nearly $200 million to companies since 2005, has a similar job creation mandate.  More than a quarter of the companies that have received grants from the enterprise fund in the most recent fiscal year, or their chief executives, made contributions to either Mr. Perry’s campaign dating back to 2001 or to the Republican Governors Association since 2008, when Mr. Perry became its chairman.
  • Need a job, want an appointee position? Then donate!  Te Teacher Retirement System, a $110 billion pension fund that is among the nation’s largest have at least four top donors or fund-raisers serving on the board.   Mr. Perry’s trustees leaned on the fund to invest more money with hedge funds and private equity firms.  In 2009 an investment manager at the fund, Michael Green, wrote to a board trustee saying that the fund’s chief investment officer had pressed him and other employees to set aside their objections to such investments, including allocations to two firms whose partners and former partners have donated more than $1 million to Mr. Perry’s campaigns.  Mr. Green’s boss, he wrote to the trustee, told him: “This is the way business is done.”
  • In 2005, when the TXU Corporation, a utility based in Dallas, sought permits to build coal-fired power plants, Mr. Perry issued an executive order for a review panel to fast-track the application. In the months that followed, current and retired TXU executives, as well as the company’s political action committee, sent Mr. Perry more than $100,000 in donations, including one check dated the same day as Mr. Perry’s order. Mr. Perry’s office said at the time that the order was unrelated to the contributions. A state judge later blocked the order, ruling that Mr. Perry had overstepped his authority.
  • In 2003, after a rash of mold-related lawsuits against home construction companies,  Perry created a state board, the Texas Residential Construction Commission. The most generous contributor?  Bob Perry(not related), a homebuilder who has contributed more than $2 million to the governor over his career.  The legislation creating the board also sharply limited the rights of homeowners to sue contractors for faulty construction, shunting most disputes to the commission. After its passage, Bob Perry and his wife sent two $50,000 checks to the governor’s campaign. Three weeks later, the governor appointed an executive of Perry Homes, Bob Perry’s company, to the commission, which was abolished in 2009.
  • Perry’s top 50 donors, who collectively gave more than $21 million to Perry, and found that 34 received some benefit from Perry’s administration or the state, including grants, contracts and appointments. The donor list was compiled by the nonprofit Texans For Public Justice.
  • Twenty-three donors won Perry’s appointment to state boards, often the boards of regents at the University of Texas or Texas A&M.
  • Roughly one in three of the top Perry donors had business interests that secured grants, tax subsidies or project approvals under his administration, the Post review found.
  • Five donors gained both an appointment and a state boost to their specific company or interests.
  • Holt, who owns the nation’s largest Caterpillar dealership, urged Perry to lure a Caterpillar manufacturing plant to Texas, and a company official told reporters in an interview last year that such a plant would help the dealership get equipment. Perry’s office agreed in 2008 to award an $8.5 million incentive grant for a proposed new Caterpillar factory promising 1,714 jobs. Holt said in an e-mail that the plant’s move to Texas would not directly benefit his dealership.  That’s a little hard to believe.
  • In 2005, the governor tapped the Texas Enterprise Fund — an economic development fund he created — for its largest grant to date: $50 million to a joint research venture between Texas A&M University and a fledgling biotech company, Lexicon, that promised to create 1,616 jobs. Lexicon got $35 million of the grant. The company’s investors included a Texas congressman and two others who were among Perry’s top donors.  One was Robert McNair, an investor and former energy executive, who has given $330,000 to Perry. McNair controlled 9.3 percent of Lexicon’s stock at the time of the state grant.  Recently, Lexicon backed off on its jobs promise. The Texas media reported last year that Perry had renegotiated the deal with Lexicon so that Texas A&M took responsibility for creating more of the promised jobs over a longer time period.
  • Americans For Rick Perry reported raising $193,000 over eight days in June, according to its filing with the Federal Election Commission. Most of the money came from reliable Perry donor Harold Simmons of Dallas, who gave $100,000. Simmons won state approval under Perry’s administration to build a nuclear waste disposal site in West Texas that experts say could eventually be worth billions of dollars to Simmons. Other contributors to Americans for Rick Perry include $50,000 from Universal Computer Systems, which is headed by major Perry donor Bob Brockman of Houston and $25,000 from Withers Energy Corp., headed by blue-chip Perry backer John Speer of Cypress, Texas. Americans for Rick Perry is promoting Perry’s candidacy for president.
  • Texas business legends Peter Holt, owner of the San Antonio Spurs, and Billy Joe “Red” McCombs, an auto and real estate magnate and former sports team owner, are typical of the large campaign donors who helped Perry raise more cash than any Texas governor. Together, these two men with diverse business interests personally donated more than $936,000 to Perry’s campaigns, in a state that does not limit the amount individuals can donate to local politicians.
  • Mr. Perry has benefited not only politically in terms of financial contributions but also personally…take the time to read this: http://www.texastribune.org/texas-politics/2012-presidential-election/perry-scored-land-deals/

Check back often, as I will update this blog as more information becomes available, it’s going to be an interesting political season.

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http://www.salon.com/news/politics/war_room/2011/08/16/rick_perry

http://www.nytimes.com/2011/08/21/us/politics/21donate.html?_r=1&pagewanted=1

http://trailblazersblog.dallasnews.com/archives/2011/07/big-dollar-rick-perry-supporte.html

http://articles.boston.com/2011-08-21/news/29912338_1_texas-governor-perry-spokesman-state-posts

http://www.votesmart.org/finance.php?can_id=15373

http://www.politico.com/news/stories/0811/62092.html#ixzz1W7ph4tfF

http://www.reuters.com/article/2011/09/01/us-usa-campaign-perry-dump-idUSTRE78053Z20110901?feedType=RSS&feedName=politicsNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Reuters%2FPoliticsNews+%28News+%2F+US+%2F+Politics+News%29

http://www.washingtonpost.com/politics/rick-perrys-donors-fare-well-texas-style/2011/08/18/gIQABHU9tJ_story.html?wprss=rss_politics

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Debt Ceiling and the US Debt Downgrade – Self Inflicted Wound

Posted by politicalmonkey2010 on August 6, 2011

(Originally published on Aug. 6, 2011, updated Aug. 8, 2011)

What is the issue?

US Debt Downgrade:  History, Cause and Effect

The United States has lost its top AAA credit rating for the first time, in a move that could severely undermine the recovery of the world’s largest economy and prompt further calamitous falls on world stock markets next week.

History of the US Debt

The full faith and credit of the U.S. was established by Alexander Hamilton’s 1790 push to have the fledgling federal government assume and pay back debts that states incurred during the Revolutionary War. It has gone largely unquestioned since, with just the occasional hiccup, including a 1979 debt-ceiling argument that delayed a few payments.

Recent demographic and economic changes, in particular the aging population and ballooning health-care costs, have made the long-term U.S. picture an ugly one, a problem exacerbated by a deep recession, which cut tax receipts and prompted a flood of fresh debt-financed spending.

What is the debt ceiling exactly? It’s a cap set by Congress on the amount of debt the federal government can legally borrow. The cap applies to debt owed to the public (i.e., anyone who buys U.S. bonds) plus debt owed to federal government trust funds such as those for Social Security and Medicare.

The first limit was set in 1917 and set at $11.5 billion, according to the Center for a Responsible Federal Budget. Previously, Congress had to sign off every time the federal government issued debt.

How is the ceiling determined? They don’t admit it, but lawmakers tacitly agree to raise the debt ceiling every time they vote for a spending hike or tax cut.

“Congress has already passed and the president has already signed legislation that increases spending or decreases revenues. Those decisions have already been made,” said Susan Irving, director for federal budget issues at the Government Accountability Office.

So in reality arguing over the debt ceiling is essentially arguing over whether to pay the bills the country has already incurred.

How many times has the ceiling been raised? Since March 1962, the debt ceiling has been raised 74 times, according to the Congressional Research Service. Ten of those times have occurred since 2001.

Graphic Presentation of Debt and Deficit

What is the difference between Debt and Deficit?

The deficit is the difference between the money Government takes in, called receipts, and what the Government spends, called outlays, each year.  Receipts include the money the Government takes in from income, excise and social insurance taxes as well as fees and other income. Outlays include all Federal spending including social security and Medicare benefits along with all other spending ranging from medical research to interest payments on the debt. When there is a deficit, Treasury must borrow the money needed for the government to pay its bills. We borrow the money by selling Treasury securities like T-bills, notes, Treasury Inflation-Protected securities and savings bonds to the public. Additionally, the Government Trust Funds are required by law to invest accumulated surpluses in Treasury securities. The Treasury securities issued to the public and to the Government Trust Funds (intragovernmental holdings) then become part of the total debt.  The debt can be viewed is as accumulated deficits.

30 year snap shot from Ronald Reagan to present…

Spending under Reagan averaged 22.4% of GDP, well above the 1971–2009 average of 20.6%. Yes, much of this was for defense, but almost everything went up during his Administration. Farm subsidies, for example, rose 140%. If you lower taxes and don’t trim expenses, there is only one way to make up the difference: by borrowing. The national debt tripled, from $712 billion in 1980 to $2 trillion in 1988.

Tax hikes and spending restraint under George H.W. Bush and even more so under Bill Clinton brought the problem under control and in the late Clinton years even produced a budget surplus. Then came the George W. Bush tax cuts, expanded health care benefits and two wars—all unpaid for—without any tax increases. The result: the surplus disappeared, and by 2008, the debt had ballooned to $10 billion. The final blow was the financial crisis and recession, which meant that federal tax revenues collapsed, followed by more tax cuts and stimulus spending. The debt rose to its current $14.3 trillion.

With federal taxes at 15% of GDP, a historic low, and spending at 24% of GDP, there is really no conceivable way to close the gap without increasing taxes—either raising rates or eliminating deductions and loopholes

Cause of the Downgrade

Intro:

This Congress,  has proved to be purely motivated by fear of losing Tea Party and Conservative America’s vote has at every opportunity been an obstructionist force.  As Sen. Minority leader Mitch McConnell said the GOP’s goal is to make Obama a one term President, and to achieve that goal they are more than willing to sacrifice the American economy.

Coming three days after the conclusion of the exhausting showdown over the debt ceiling increase, the S&P announcement was a thumbs-down on Washington from a major Wall Street voice.

“The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed,” the S&P wrote. “The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. Despite this year’s wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge.”

Right on cue Sen. Jim DeMint (R-S.C.), who opposed the deal to raise the debt ceiling, used the downgraded credit rating to call for the ouster of Treasury Secretary Timothy Geithner. “The President should demand that Secretary Geithner resign and immediately replace him with someone who will help Washington focus on balancing our budget and allowing the private sector to create jobs,” DeMint said in a statement.

S&P took no stand on revenue increases or spending cuts. They took no stand on defense cuts versus entitlements cuts. They only say that we must get our house in order.

· The downgrade reflects our opinion that the fiscal consolidation plan
that Congress and the Administration recently agreed to falls short of
what, in our view, would be necessary to stabilize the government’s
medium-term debt dynamics.
· More broadly, the downgrade reflects our view that the effectiveness,
stability, and predictability of American policymaking and political
institutions have weakened at a time of ongoing fiscal and economic
challenges to a degree more than we envisioned when we assigned a
negative outlook to the rating on April 18, 2011.
· Since then, we have changed our view of the difficulties in bridging the
gulf between the political parties over fiscal policy, which makes us
pessimistic about the capacity of Congress and the Administration to be
able to leverage their agreement this week into a broader fiscal
consolidation plan that stabilizes the government’s debt dynamics any
time soon.

In an unusual Saturday conference call with reporters, senior S.& P. officials insisted the ratings firm hadn’t overstepped its bounds by focusing on the political paralysis in Washington as much as fiscal policy in determining the new rating. “The debacle over the debt ceiling continued until almost the midnight hour,” said John B. Chambers, chairman of S.& P.’s sovereign ratings committee.  Another S.& P. official, David Beers, added that “fiscal policy, like other government policy, is fundamentally a political process.”   Once again, emphasizing that it is not the finances as much as the politics, the obstructionism that plagues this country.

China, the world’s largest holder of US debt, condemned the “short-sighted” political wrangling in the US and said the world needed a new and stable global reserve currency.  In a comment article the official Xinhua news agency said China had “every right now to demand the United States address its structural debt problems and ensure the safety of China’s dollar assets. International supervision over the issue of US dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country.”

Interesting note,  China’s leading credit rating agency Wednesday (2 days prior to  S& P) downgraded U.S. sovereign debt after putting it on negative watch last month. The Dagong Global Credit Rating Company, which lowered the United States to A+ last November after the U.S. Federal Reserve decided to continue loosening its monetary policy, announced a further downgrade to A, indicating heightened doubts over Washington’s long-term ability to repay its debts.

“The squabbling between the two political parties on raising the U.S. debt ceiling reflected an irreversible trend on the United States’ declining ability to repay its debts,” Dagong Chairman Guan Jianzhong told CNN.

“The two parties acted in a very irresponsible way and their actions greatly exposed the negative impact of the U.S. political system on its economic fundamentals,” he said.

The filibuster, historically employed about once a decade, is now a routine procedure that allows the minority to thwart the will of the majority. In 2009, Senate Republicans filibustered a stunning 80% of major legislation.

The downgrade from S&P has been brewing for months. S&P’s sovereign debt team, led by company veteran David T. Beers, had grown increasingly skeptical that Washington policy makers would make significant progress in reducing the deficit, given the tortured talks over raising the debt ceiling. In recent warnings, the company said Washington should strive to reduce the deficit by $4 trillion over 10 years, suggesting anything less would be insufficient. Remember Pres. Obama originally offered $4 trillion and that was rejected by the GOP.

Effect

US treasuries, once seen as the safest investment in the world, are now rated lower than bonds issued by countries such as the UK, Germany or France. The move is likely to raise borrowing costs for the US government, companies and consumers.  If, as a result of these congressional antics, interest rates on America’s debt rise by 1% —in other words, if the world asks for just a little bit more interest to lend us money—the budget deficit will rise by $1.3 trillion over 10 years. That would more than wipe out the entire 10 years of cuts proposed in the debt deal.

The downgrade will force traders and investors to reconsider what has been an elemental assumption of modern finance.

For an American economic recovery that can’t find much traction, and could do more damage to investors’ increasing lack of faith in a political system that is struggling to reach consensus even on everyday policy matters. It could lead to the prompt debt downgrades of numerous companies and states, driving up their costs of borrowing. Policy makers are also anxious about any hidden icebergs the move could suddenly reveal.

A key concern will be whether the appetite for U.S. debt might change among foreign investors, in particular China, the world’s largest foreign holder of U.S. Treasurys. In 1945, foreigners owned just 1% of U.S. Treasurys; today they own a record high 46%, according to research done by Bank of America Merrill Lynch.

The U.S. debt downgrade could pose another hurdle for battered state and local governments.

Fifteen states could lose their triple-A rating, including Maryland, New Mexico, South Carolina, Tennessee and Virginia, increasing borrowing costs at a time of fiscal strain for municipal governments, analysts say.

Analysts consider these states vulnerable to a downgrade because many of them rely heavily on federal spending on programs such as Medicaid or are home to thousands of federal employees. If Washington reacts to the downgrade with big cuts in spending, including layoffs of federal workers, than these states could face acute fiscal strains that warrant a downgrade.

“The downgrade of U.S. federal debt could result in de facto credit downgrades of some state-level…debt, which has been priced and rated as if the federal government were the backer of last resort,” Jason Schenker, president of Prestige Economics LLC, wrote in a note to clients Saturday.

Mr. Schenker said the cost of refinancing debt is likely to become more expensive, which “could result in a further bleeding of state and local government jobs.”

The only sure municipal candidates for a downgrade, according to S&P, are public-housing agencies that provide low-income housing and “generally move in lockstep with the sovereign rating and would be downgraded appropriately.”

U.S. Federal Reserve Chairman Ben Bernanke described very well, in Congressional testimony last month, the role U.S. Government debt plays in the interest rate charged for other loans/debt.

Bernanke said U.S. Government bonds are considered the lowest-risk bond investment class in the world, and serve as a benchmark for interest rates for other, more-risky bond and asset classes. If investors can’t count on the safety of U.S. debt, they would ask for higher interest on that asset class, pushing up the interest rates on other assets, among other ripple effects, he said.

In layman’s terms, many lenders will say, “Hey, if a U.S. Government bond is now a riskier investment, the money we lend you for your 30-year home mortgage is now a riskier investment, so I have to charge you a higher rate of interest. Sorry, but those are the market conditions today.”

As of Friday, the average interest rate for a 30-year, fixed-rate mortgage was 4.31 percent; for a 15-year mortgage, it was 3.48 percent, as tabulated by bankrate.com. For a 48-month new car loan, it was 4.85 percent; for a 48-month used car loan, it was 4.37 percent. For credit cards, for borrowers with outstanding credit, it was 10.83 percent.

In short, S&P’s downgrade may very well increase the borrowing costs for governments, businesses, home buyers, and consumers — something that would further slow the barely-growing U.S. economy, complicating policy makers’ efforts to increase job growth and address the nation’s biggest problem — its high 9.1 percent unemployment rate.

It’s possible the blow in the short run might be more psychological than practical. Rival ratings firms Moody’s Investors Service and Fitch Ratings have maintained their top-notch ratings for U.S. debt in recent days.

***UPDATE*****

Monday, Aug. 8, 2011

Even with a weekend for people to digest the information, the results on the first trading day was catastrophic, no doubt the European crisis was a factor.

Moody’s  Investors Service weighed in and explained Monday why it was sticking with its triple-A bond rating and negative outlook for the United States— setting itself apart from Standard & Poor’s.  Its negative outlook, which it also assigned on Aug. 2, was due to political squabbling in Washington — the biggest potential threat to the bond rating.

“We expect the economic recovery will continue and additional budget deficit reduction initiatives will be put in place by 2013,” said Moody’s, in its report on Monday. “The political parties now appear to share similar deficit reduction objectives.”

But Moody’s also said, “However, the disagreement between the two parties over the means by which to achieve deficit reduction and the difficulties experienced in reaching a compromise on raising the debt ceiling highlight the risks of political polarization. This uncertainty is among the drivers of our negative outlook.”

All three major U.S. stock indexes sank between 5% and 7%, pushing the Dow below 11,000 for the first time since last November.

U.S. stocks have fallen 15% during the past two weeks.

Though observers said S&P’s downgrade shouldn’t matter all that much, the market wasn’t buying it.

The Dow Jones industrial average (INDU) sank 635 points, or 5.6%, to 10,810.

The S&P 500 (SPX) lost 80 points, or 6.7%, to 1,120.

And the Nasdaq Composite (COMP) dropped 175 points, or 6.9%, to 2,358.

The sell-off was worse than the 512-point drop stocks experienced only three trading sessions ago.

Few companies were spared. All members of the Dow 30 and all members of the S&P 500 traded lower.

Financial stocks were among the hardest hit, with Bank of America (BAC, Fortune 500) plunging 20%, and Citigroup (C, Fortune 500) and Morgan Stanley (MS, Fortune 500) dropped roughly 15%.

The VIX (VIX) — Wall Street’s so-called “fear’ index — jumped 44% to 45.98, the highest level since early 2009.

“Investors are having one reaction to the downgrade: sell first and ask questions later,” said Paul Zemsky, head of asset allocation with ING Investment Management.

Gold futures for December delivery surged $61.40, or 3.7%, to top $1,713.20 an ounce as investors sought additional safe havens.

“The downgrade just put investors on an already-heightened state of alert,” said Rob Lutts, chief investment officer of Cabot Money Management. “People are exiting any equities they have, and selling off any assets that have any risk exposure.”

European stocks ended the session sharply lower. Britain’s FTSE 100 (FTSE) dropped 2.7%, the DAX (DAX) in Germany sank 4.7% and France’s CAC 40 (CAC) dropped 4.2%.

Meanwhile, Asian markets ended deep in the red. The Shanghai Composite retreated 3.8%, the Hang Seng in Hong Kong and Japan’s Nikkei each fell 2.2%.

Bonds: Currencies and commodities: The yen and the Swiss franc — perceived to be two of the world’s safest currencies — rose against the dollar.

Standard & Poor’s Ratings Services on Monday downgraded the credit ratings of Fannie Mae and Freddie Mac and other entities linked to long-term U.S. debt.

S&P also lowered the ratings for: farm lenders; long-term U.S. government-backed debt issued by 32 banks and credit unions; and three major clearinghouses, which are used to execute trades of stocks, bonds and options.

All the downgrades were from AAA to AA+, reflecting the same downgrade S&P made of long-term U.S. government debt on Friday.

The downgrade of the mortgage giants Fannie and Freddie reflected their “direct reliance” on the U.S. government, S&P said.

The U.S. government rescued the two mortgage giants in September 2008 and has funded them since the financial crisis. Fannie and Freddie own or guarantee about half of all U.S. mortgages and nearly all new mortgages. So if the U.S. government can’t pay its bills, neither can Fannie and Freddie.

It’s unclear how the lower credit rating would affect consumers. The downgrade applied only to corporate bonds, not the mortgage-backed securities that Fannie and Freddie issue.

Sources:

http://money.cnn.com/2011/01/03/news/economy/debt_ceiling_faqs/index.htm

http://www.rollcall.com/news/Standard-Poor-debt-ceiling-credit-rating-downgrade-208046-1.html

http://www.guardian.co.uk/business/2011/aug/06/us-credit-rating-downgrade-china

http://www.whitehouse.gov/the-press-office/2011/04/13/fact-sheet-presidents-framework-shared-prosperity-and-shared-fiscal-resp

http://online.wsj.com/article/SB10001424053111903366504576490841235575386.html

http://online.wsj.com/article/SB10001424053111903366504576492032031492642.html

S & P Report:  http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-Type&blobcol=urldata&blobtable=MungoBlobs&blobheadervalue2=inline%3B+filename%3DUS_Downgraded_AA%2B.pdf&blobheadername2=Content-Disposition&blobheadervalue1=application%2Fpdf&blobkey=id&blobheadername1=content-type&blobwhere=1243942957443&blobheadervalue3=UTF-8

http://edition.cnn.com/2011/BUSINESS/08/02/china.us.rating/index.html

http://www.ibtimes.com/articles/193579/20110806/downgrade-standard-mortgage-rates-car-loans-auto-loans-and-poor-s-debt-aaa-aaa-s-p-interest-ownage.htm

http://www.nytimes.com/2011/08/07/business/a-rush-to-assess-standard-and-poors-downgrade-of-united-states-credit-rating.html

http://www.fareedzakaria.com/home/Articles/Entries/2011/8/4_The_Debt_Deals_Failure.html

http://money.cnn.com/2011/08/08/markets/markets_newyork/?hpt=hp_p1&iref=NS1

http://money.cnn.com/2011/08/08/news/economy/moodys_rating_downgrade/index.htm?iid=Popular

http://www.usgovernmentspending.com/federal_budget

http://www.usgovernmentspending.com/budget_battle.php?year=2011_2016&disp=12&units=b&fy=fy12

http://www.treasurydirect.gov/news/pressroom/pressroom_bpd08052004.htm

http://www.forbes.com/feeds/ap/2011/08/08/real_estate-financials-us-debt-rating-s-amp-p_8608744.html

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