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Bay Bridge Keeps Right On Corroding


Wednesday June 10th, 2015   •   Posted by K. Lloyd Billingsley at 2:35pm PDT   •  

CalTrans_200As we have repeatedly noted, the stylish new eastern span of the San Francisco-Oakland Bay Bridge was 10 years in the making, a whopping $5 billion over budget, and yet riddled with safety issues. We have done our best to keep up with the problems, but they keep on coming.

As Jaxon Van Derbeken notes in the San Francisco Chronicle, about one-fourth of the steel rods that anchor the bridge’s town are in sleeves “flooded with corrosive salty water,” one of them up to five feet, and this was a critical threat” that compromises the very integrity of the new span. The 120 sleeves that encase the rods are designed to prevent damage from a major earthquake, which the Bay Area has had before and will doubtless experience again. As Van Derbeken observes, “salt is known to accelerate corrosion, which attacks metal over time and has been linked to numerous disasters,” such as the ruptured oil pipeline in Santa Barbara.

CalTrans boss Malcolm Dougherty told reporters the bridge’s foundation could never be fully watertight. But the bridge’s foundation structure has “sensitivity to water getting to some components,” therefore a solution was needed. This is the same Caltrans boss who in a 2014 Sacramento hearing said “the bridge is safe” so many times that then state senator Mark DeSaulnier asked him to stop. In the two hearings he chaired, DeSaulnier heard now Caltrans bosses, pushing to complete the project, compromised public safety by ignoring problems with welds, bolts, and rods. And they gagged and banished engineers, scientists and experts who had a problem with it. One whistleblower called for a criminal investigation, but that never took place. In effect, it was the bridge to no accountability, and that should come as no surprise.

During the hearings DeSaulnier let slip that his main problem with the safety issues was that they made people adverse to taxes, which in his view were needed for new infrastructure projects. DeSaulnier is now a member of Congress and he is sure to fit right in with the tax-and-spend squad.

Social Security Disability Waste


Saturday June 6th, 2015   •   Posted by Craig Eyermann at 6:34am PDT   •  

SocialSecurity When we surveyed the state of Social Security’s Disability Insurance program’s finances earlier this week, we didn’t realize that there would be breaking news regarding a high level of easily preventable waste in the program. Stephen Ohlemacher of the Associated Press reports:

Social Security overpaid disability beneficiaries by nearly $17 billion over the past decade, a government watchdog said Friday, raising alarms about the massive program just as it approaches the brink of insolvency.

Many payments went to people who earned too much money to qualify for benefits, or to those no longer disabled. Payments also went to people who had died or were in prison.

In all, nearly half of the 9 million people receiving disability payments were overpaid, according to the results of a 10-year study by the Social Security Administration’s inspector general.

The 9 million recipients of Social Security is an interesting number in the context of analysis recently provided at Political Calculations, which estimated that a little over 10 percent of that figure actually represents people who were effectively “dumped” into Social Security’s disability program after their long-term unemployment benefits ran out, as the disability insurance program’s eligibility requirements and oversight were apparently relaxed in the period following the December 2007 economic recession.

Ohlemacher goes on to quantify both how much money Social Security paid out in disability benefits in 2014 and also how much those who receive its disability benefits are paid annually:

Social Security paid out $142 billion in disability benefits last year. Unless Congress acts, the trust fund that supports the disability program will run dry sometime during the final three months of 2016, according to projections by the trustees who oversee Social Security. At that point, the program will collect only enough payroll taxes to pay 81 percent of benefits.

That would trigger an automatic 19 percent cut in benefit payments. The average monthly payment for a disabled worker is $1,165, or about $14,000 a year.

Doing some quick math, when Social Security’s Disability Insurance trust fund is fully depleted, as expected sometime in the final three months of 2016, the average monthly payment for a disabled worker would drop to $943.65, putting his or her annual income from the program at about $11,324 per year.

Something very similar will happen in less than 20 years when Social Security’s Old Age and Survivors Insurance Trust Fund is depleted. Only then, the cuts will be larger and will affect every American who receives Social Security benefits. Including people who are receiving Social Security benefits today, who can reasonably expect to live at least another 20 years, whose retirement benefits will then be cut by somewhere between 23 percent and 26 percent.

What Social Security Trust Fund?


Tuesday June 2nd, 2015   •   Posted by Craig Eyermann at 6:43am PDT   •  

Alan Greenspan, who served as the chairman of the Federal Reserve from 1987 to early 2006, has an interesting perspective on Social Security’s Trust Funds:

Nicholas Ballasy of PJMedia reports:

Alan Greenspan, former chairman of the Federal Reserve, said a Social Security Trust Fund does not exist and that the U.S. is “way underestimating” the size of its national debt.

“The notion that we have a trust fund is nonsense – that trust fund has no meaning whatsoever except for the fact as an all private fund to benefit programs, if it runs out of money, you can only pay out in cash flows that come in but the probability that will happen is not particularly high,” Greenspan told the Fiscal Summit held by the Peter G. Peterson Foundation.

“That means the trust fund is a meaningless instrument that has no function ... it’s exactly the same thing as current expenses.”

The Social Security and Medicare Trustees 2014 annual report said while legislation is needed to address all of Social Security’s financial imbalances, “the need has become most urgent with respect to the program’s disability insurance component. Lawmakers need to act soon to avoid automatic reductions in payments to DI beneficiaries in late 2016.”

Speaking of Social Security’s Disability Insurance (DI) Trust Fund, Political Calculations projects that the DI trust fund will be fully depleted either in October 2016 or shortly afterward:

rise-and-fall-ss-disability-insurance-trust-fund-2001-01-thru-2015-03-projection-to-2017-01

That’s some nine years earlier than Social Security’s actuaries projected back in 2008, and four years earlier than they projected in 2009, just before the official end of the Great Recession. When the DI Trust Fund is depleted, under current law, the cash payments received by all the program’s beneficiaries will be reduced by roughly 20 percent.

The Bipartisan Policy Center has listed a number of the actions that President Obama proposed in his 2016 Budget to address the impending shortfall.

Wasting Taxpayer Dollars on Wasted Senators


Monday June 1st, 2015   •   Posted by K. Lloyd Billingsley at 11:05am PDT   •  

CASenate_200California state senators draw six-figure salaries plus gold-plated pensions, plus an impressive array of benefits that includes a car allowance. Some of those senators like to get drunk, and when they do, California taxpayers will now be footing the bill to drive them home. As Alexei Koseff and Jim Miller observe in the Sacramento Bee, the Senate “hired two part-time employees to provide late-night and early-morning rides for members while they are in Sacramento, a 24-hour service that follows high-profile drunken driving arrests involving lawmakers in recent years.”

The “special services assistants,” hired in February, work in the Senate Sergeant-at-Arms Office and get paid $2532 a month to provide “ground transportation” for senators. Senate bosses say it’s a “security issue,” but a man who turned down the job told the Bee reporters that the service was to give senators rides “just if they were drinking too much,” and a senate staffer confirmed that the intent of the service was to prevent drunk driving. Apparently these legislators lack the restraint to refrain from getting drunk in the first place. Once plastered, these politicians are apparently unable to call a cab or tap a non-drunk friend for a ride home.

As Koseff and Miller note, new Senate boss Kevin De Leon cut 39 administrative jobs last November, but apparently the needs of Senate drunks took precedent over further cuts. In recent years, four legislators have been busted for drunk driving, three on streets near the state capitol. One of those arrested on DUI charges was Senator Roy Ashburn, a Bakersfield Republican. The problem, however, goes beyond legislators.

In 2011, police arrested state Director of Finance Ana Matosantos for driving under the influence, and with her registration expired. “My decision to drive last night was reckless and irresponsible,” she said in a statement. “I accept full responsibility and there is no excuse for my actions.” Likewise, the decision to hire drivers for drunken senators is reckless and irresponsible. There is no excuse for it.

Shutting the Barn Door after the Horse Has Bolted


Thursday May 28th, 2015   •   Posted by Craig Eyermann at 6:51am PDT   •  

13529734_S“Shutting the barn door after the horse has bolted” is an old American/English idiom that the Cambridge dictionary describes as meaning “to be so late in taking action to prevent something bad happening that the bad event has already happened.”

Who knew that the American and English farmers of yesteryear had such insight into the problems plaguing the modern day implementation of ObamaCare? Investor’s Business Daily describes a new chapter in the ongoing tragedy that is the implementation of President Obama’s Affordable Care Act (ACA) in “ObamaCare Exchanges Are a Model of Failure“:

Waste: After spending billions on state-run ObamaCare exchanges, the federal government is only now writing clear rules on how that money can be spent, while half of the exchanges head toward bankruptcy.

State-run exchanges were supposed to form the beating heart of ObamaCare. And the Obama administration dumped almost $5 billion in an effort to make it a reality.

The results have been a disaster.

Of the 37 states that received $2.1 billion in grants to establish an exchange, only 17 did so, and they got an additional $2.7 billion from the feds.

Of those 17, two went bankrupt in the first year. One of them, Oregon, had received a $60 million “early innovator grant.” Residents of those states now use the federal Healthcare.gov site.

But wait, it gets worse! IBD goes on to report that a number of the remaining states that still operate their own Affordable Care Act exchanges, such as California, Minnesota and Washington, may now be violating federal law in attempting to keep their ACA exchange “marketplaces” afloat:

A memo from Health and Human Services’ Inspector General Daniel Levinson warns that some of the remaining may be violating federal law in an effort to stay afloat.

ObamaCare told the states that they’d get plenty of federal money to help them set up their exchanges—but not run them. And starting this year, the state exchanges had to be self-financing—they had to pay their own way out of exchange fees or other funding sources.

Any federal grant money left over could be used only for things other than operations and maintenance.

As the IG explains, the rules on what these states can spend federal money on are vague, and as a result the exchanges “might have used, and might continue to use, establishment grant funds for operating expenses.”

Washington’s exchange, it found, has plans to spend $4 million of its remaining federal grant money on printing, postage and bank fees....

A memo from Health and Human Services’ Inspector General Daniel Levinson warns that some of the remaining may be violating federal law in an effort to stay afloat.

ObamaCare told the states that they’d get plenty of federal money to help them set up their exchanges—but not run them. And starting this year, the state exchanges had to be self-financing—they had to pay their own way out of exchange fees or other funding sources.

Any federal grant money left over could be used only for things other than operations and maintenance.

As the IG explains, the rules on what these states can spend federal money on are vague, and as a result the exchanges “might have used, and might continue to use, establishment grant funds for operating expenses.”

Washington’s exchange, it found, has plans to spend $4 million of its remaining federal grant money on printing, postage and bank fees.

The IG characterized this is “a significant matter” that requires “immediate attention.”

Which is why we’ll soon have clear rules written for how the funds established to set up and operate ObamaCare exchanges may be spent, just a little over five years after the Affordable Care Act became law and two years after its exchanges began operating. That’s some bureaucracy in action!

Obamacare Expands Misery Beyond Death


Tuesday May 26th, 2015   •   Posted by K. Lloyd Billingsley at 11:10am PDT   •  

Medi-CalSquareLogo_200As this column has noted, Emily Bazar of the California Health Care Foundation’s Center for Health Reporting has been working three shifts documenting the abuses of Covered California, a wholly owned subsidiary of Obamacare. These abuses include a dysfunctional computer system that cost nearly $500 million, cancellation of health insurance without notice when people report changes in income, difficulties leaving Covered California when people go on Medicare, and so forth. For Bazar, this added up to “widespread consumer misery,” and as she now observes, the misery doesn’t stop when people die.

Covered California placed some enrollees in Medi-Cal, the state’s version of the federal Medicaid program. This scheme seeks repayment of many medical costs, primarily those incurred after age 55. “It’s called the Estate Recovery Program,” Bazar explains, “and under Obamacare it just got bigger and its reach broader.” Someone might not ever seek medical care under Medi-Cal, and never even see a doctor, but their family could face bills after they die. The state could seek recovery of premiums it paid to the plan. The federal government requires states to recoup certain costs from the estates of some Medicaid beneficiaries after they die. Trouble is, California is among 10 states that seek repayment beyond the federal minimum. Therefore, Bazar explains, your estate will be expected to pay back the value of ALL coverage you receive after 55. If the estate does not have sufficient assets, the state may require heirs to sign a “voluntary lien” on a home.

Obamacare “has raised the stakes significantly” with more than 3.5 million Californians joining Medi-Cal since January 2014, bringing total enrollment to 12.1 million people, one in four more than 55 years of age. By Bazar’s count, a full 80 percent of Medi-Cal enrollees are in managed care and subject to estate recovery. As she explains, “your post-death bill will automatically be based on the monthly payments made to your plan—whether you use any medical services or not.”

Some politicians believe this unfairly targets low-income seniors and seek a shield from recovery. Trouble is, Bazar notes, “Gov. Jerry Brown vetoed a similar measure last year.” So reform is unlikely, and Obamacare will be mounting a surge as the nation’s misery index.

What if the United States Defaulted on the National Debt?


Saturday May 23rd, 2015   •   Posted by Craig Eyermann at 3:30pm PDT   •  

pf_cover What would happen if the U.S. government defaulted on making payments on any portion of the $18.1 trillion it has borrowed?

That’s a question the Federal Reserve asked not so long ago, and just in case this might someday happen, the Fed created an emergency plan to deal with the situation. Reuters reports:

In a June 2014 letter to Treasury Secretary Jack Lew seen by Reuters on Monday, Republican Representative Jeb Hensarling of Texas said his staff had reviewed the Fed’s unclassified plans for how to handle a default. (bit.ly/1GZDmKo)

The plans included scheduling new payment dates for defaulted securities, Hensarling said in the letter which was also signed by Republican Representative Patrick McHenry of North Carolina.

The New York Fed, which carries out the will of the Fed in financial markets, would also conduct “business as usual” with regard to accepting Treasury securities as collateral, according to the letter....

In an effort to try to maintain calm on Wall Street, the U.S. central bank could lend investors money after taking Treasuries as collateral under so-called repo transactions, Hensarling said. The Fed also proposed “compensatory payments” for investors who were paid late.

In practice, the potential disruption to U.S. and global markets stemming from a hypothetical default by the U.S. government on its national debt would be minimized as the Fed would take over some of the U.S. Treasury Department’s role in ensuring that the full faith and credit of the U.S. government would be maintained by, in effect, insuring it.

But perhaps the most interesting aspect of the Fed’s emergency plans that Representative Hensarling revealed in his letter to the Treasury Secretary is that under the law, the U.S. Treasury may prioritize paying the holders of U.S. government-issued bonds and notes over other kinds of liabilities, such as government-employee health insurance and pensions, which would avoid an actual default on the national debt altogether.

To put that more simply, the only reason that the U.S. Treasury would default on the national debt would be because it chose to put the interests of people like the bureaucrats who work in the federal government ahead of the interests of the people who loaned it the money it needs to sustain the excessive spending managed by the bureaucrats who work in the federal government.

Spring 2015: To Whom Does the U.S. Government Owe Money?


Tuesday May 19th, 2015   •   Posted by Craig Eyermann at 6:29am PDT   •  

On Friday, 15 May 2015, the U.S. Treasury identified the national origins of the major foreign holders of debt issued by the U.S. government through the end of March 2015, the halfway point of the federal government’s fiscal year. With that information, we can now update our chart showing just who has loaned the U.S. government money in the Spring of 2015:

spring-2015-to-whom-does-the-US-government-owe-money

The big news is that debt held by “Mainland China” has once again edged out the total U.S. government-issued debt holdings of Japan to reclaim its undisputed spot as the biggest foreign owner of the U.S. national debt. That China is the largest foreign holder of that debt was never really in dispute, however, because the figure for Mainland China omits the amount of U.S. debt held by Hong Kong, which has been under Chinese rule since 1997.

Collectively, foreign entities hold about 47 percent of all the U.S. government’s “Debt Held by the Public”, which totaled $13.099 trillion on 30 March 2015.

Domestically, the big story about the U.S. national debt is that it has been essentially frozen at $18.152 trillion since 13 March 2015, which is when the total public debt outstanding of the U.S. government hit its statutory debt ceiling. Since that time, the U.S. Treasury has been playing something of a shell game to hold the U.S. national debt at that level, replacing the holdings of debt held by entities it controls with I.O.U.s as it continues issuing new debt to other holders.

In our chart above, that shell game shows up as a decrease in the amount of debt that appears to be held by the U.S. Civil Service Retirement and Disability Fund, which appears to have fallen from $857.2 billion, the amount it was reported as holding at the end of the U.S. government’s 2014 fiscal year, to $818.2 billion just six months later. What that change means is that in just the first 14 days after the U.S. national debt hit its statutory ceiling, the U.S. Treasury exchanged at least $39 billion of short-term debt that came due in the holdings within the U.S. Civil Service Retirement Trust Fund with I.O.U.s so it could continue issuing new public debt to other parties.

That situation will change suddenly and dramatically when the U.S. Congress acts to increase the nation’s statutory debt ceiling, which will likely happen as it progresses toward passing a budget for the first time since 2009. When that happens, the U.S. Treasury will rush to exchange the I.O.U.s that it has issued into the accounts it controls with newly issued U.S. government debt securities. When that happens, it will be as if the U.S. national debt had never been frozen at 18.2 trillion dollars.

Data Sources

Federal Reserve Statistical Release. H.4.1. Factors Affecting Reserve Balances. Release Date: 2 April 2015. [Online Document]. Accessed 15 May 2015.

U.S. Treasury. Major Foreign Holders of Treasury Securities. Accessed 15 May 2015.

U.S. Treasury. Monthly Treasury Statement of Receipts and Outlays of the United States Government for Fiscal Year 2015 Through March 30, 2015. [PDF Document].

Cross posted at Political Calculations.

Bay Bridge Not Over Water, Corrosion Troubles


Monday May 18th, 2015   •   Posted by K. Lloyd Billingsley at 6:18am PDT   •  

NewBayBridge_200As we have noted many times, the new eastern span of the San Francisco Bay Bridge was 10 years in the making and a whopping $5 billion over budget, but all that time and money could not guarantee safety for the public. Before he moved to Congress in recent elections, state senator Mark DeSaulnier held hearings in which Caltrans whistleblowers called for a criminal investigation. None took place, but the safety issues persisted, with cracked welds and problems with bolts and rods. And now as CBS reports, one of the Bay Bridge’s anchor rods failed a major test. The rod “moved easily when tugged on, which may mean it corroded from exposure to water and fractured. Significant levels of corrosive chloride were found in some sleeves that hold 25-foot long steel rods at the base of the tower.” As many as 100 rod sleeves were affected, according to the CBS report.

The Toll Bridge Program Oversight Committee approved $4 million to study the problem. According to Committee chairman Steve Heminger, if it were an “ongoing intrusion,” this would be a serious problem “and would require an investigation of the foundation itself.” In 2013, 32 rods failed and that required an investigation costing $45 million. None of this was supposed to happen, and as Mark DeSaulnier has lamented, “it’s frustrating that there’s never been anyone in the management of the bridge who has been held accountable.” Key Caltrans boss Tony Anziano conveniently retired.

According to state transportation officials, the bridge remains safe, but around the Bay Area some aren’t so sure. As we noted, UC Berkley structural engineering professor Abolhassan Astaneh-Asi declines to use the bridge. Meanwhile, demolition of the old span continues, and companies such as Google, who seek to use private ferries for their employees, must contend with the Water Emergency Transportation Authority. During a five-day trial, the WETA has ruled that Google workers will not park in the Harbor Bay Ferry lot.

Big Brother Barges Into the Bathroom


Wednesday May 13th, 2015   •   Posted by K. Lloyd Billingsley at 10:49am PDT   •  

ccarb_logo_200When it comes to intrusive government, California is plunging to new depths, as Daniel Weintraub notes in the Sacramento Bee. “For Californians who fear big government, this might sound like the ultimate nightmare: An unelected board and its vast scientific bureaucracy is going to force us to pay more to wipe our butts.”

The “unelected board” is the California Air Resources Board (CARB) armed with the Global Warming Solutions Act of 2006, which as Weintraub charitably puts it, “put a price on carbon dioxide and other greenhouse gas emissions” to encourage industry and consumers “to use products that can be made with less harm to the environment.” Headed by unelected regulatory zealot Mary Nichols, CARB deploys onerous regulations that drive up the price of gasoline, a burden on the working poor and middle class. More recently, as Weintraub explains, “has studied the numbers on toilet paper’s contribution to climate change” and decided that the plant of Kimberly-Clark creates the fewest greenhouse gasses. Proctor & Gamble, the only other company that makes toilet paper in California, claimed that its product was better, so CARB attempted to recalculate its benchmark for “water absorbency.” But Kimberly-Clark cried foul and is trying to overturn the ruling.

Weintraub laments that simpler approaches such as a carbon tax or permit sale were not politically feasible. “So this is where we are today, with state officials sticking their noses in our bathrooms, studying the relative fluff and absorbency of toilet paper and assessing the damage each kind of tissue does to the environment.” This axis of bad legislation, unelected bureaucrats, and regulatory zealotry, as Weintraub says, will force us to pay more to wipe our butts.

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