MN-02 : Does Harvard Study Prove Kline Right About Earmarks ?

A case study in logic, goes something like this :

John Kline is a human being.
Women are human beings.
Therefore, John Kline is a woman.

If you accept that logic, then consider this ...

John Kline opposes earmarks since they “are based on a member's seniority, committee assignment or party affiliation.”
A Harvard study states that obtaining a chairmanship on a “powerful congressional committee” actually damages corporations within the states that receive these federal dollars.
Therefore, John Kline’s opposition to earmarks benefits Minnesota.

In both examples, the logic is faulty.

Yet, that is the assessment suggested in a recent Letter to the Editor proclaiming that “A new Harvard Business School study shows how John Kline’s “no earmark” policy benefits Minnesota.”

I am not sure if the writer read the Do Powerful Politicians Cause Corporate Downsizing?
report, but its basic question was “Does public sector spending complement or crowd out private sector economic activity?”
John Kline is not mentioned ... nor is his "no earmark" policy ... in fact Minnesota is barely a sidenote.

The report analyzed over 42 years of earmarks and various changes of committee chairman and determined that corporations in those states invested less in their business than they may have otherwise.
But what does that mean ?
Well, the report states … “a key feature of our data is that firm-level figures reflect capex, R&D, payout, employment, and sales growth aggregated across all operations of the firm, including divisions located in other states. … To the extent that portfolio capital has greater mobility across states than across countries, the impact of fiscal stimulus may be weaker at the state level than the national level.”
Further, the report states : “This suggests the crowding out of private investment is particularly pronounced in industries operating at a high level of capacity where competition for additional factors of production including facilities and specialized capital is expected to be strong.”
My interpretation : if labor and resources are constrained in one state, a company may increase in another state … thus the corporation may grow in total, but not necessarily in the state that received federal funds. Hence one of the reasons why the military industrial complex has operations in virtually every state … when “labor gets tight”, they can re-align.

The report concludes : “Our results demonstrate that the average firm retrenches in the face of government spending shocks, but it is certainly possible (and perhaps likely) that some individual firms do in fact benefit from these spending shocks.”

The report uses as an example that Alabama had not had a chairman of a powerful committee until Senator Richard Shelby (R-AL) came into power. For example, Shelby’s $15 million earmarks went specifically to the construction of housing and facilities for lower income families … the result was that another Alabama company that produced prefabricated homes saw a decline in activity.
Now, is that bad ?
Do you want mobile homes in your community or brick and mortar homes … plus the mobile home business has had significant changes in profitability and demand caused by a number of other factors (most notably interest rates), so it is difficult to know what the demand in Alabama would have been without Shelby’s earmark.

What the report really confirmed is something that has been widely reported – the largest of recipients of earmarks are Hawaii, Alaska, Mississippi, West Virginia, and Alabama: All states which had powerful congressional chairmen over the sample period.

Thus the problem is not earmarks, but that certain individuals look first and foremost to their state and not to the overall country.

It’s the people that are the problem … not necessarily the earmark process. Yes, so Richard Shelby (R-AL) is a problem … there are many examples that taxpayers should be concerned. Senate appropriator Daniel Inouye (D-Hawaii). then-Senate Appropriations Committee Ranking Member Ted Stevens (R-Alaska), Senate Agriculture Appropriations Subcommittee Ranking Member Thad Cochran (R-Miss.), and Robert Byrd (D-WV) have created imbalances.
But if I think of long-serving Senators that could impact this situation, I think of Ted Kennedy and John Kerry, Democrats representing Massachusetts and John McCain and John Kyl, Republicans representing Arizona. In terms of earmark dollars, Massachusetts comes in at 27 yet based on population it should be 13 ( in effect a negative 14) while Arizona is #25 in terms of earmark dollars and #21 in population (a negative 4) … so there are examples of Senators that are not abusing the system. FYI : Minnesota is #37 in earmark dollars while #20 in terms of population ( and coming in second to Indiana as having the worst relationship.)

Returning back to the LTE writer’s assessment, NO, Mr. Kline’s “no earmark” policy DOES NOT benefit Minnesota … if Alabama is not building mobile homes, that does not mean that Minnesota is.
What it does mean is that certain states are getting more federal investment than we are.

The real question is : Is there a better way to ensure that the dollars are invested for the greatest need and purpose ?

John Kline’s “no earmark” policy does not address that … in some ways, the analogy would be that Honor Students are punished when other students abuse the system … the report clearly shows that Minnesota is not abusing the system, yet our dollars are helping other states.

There are some better approaches.
When will the Republicans put some serious fiscal conservatives like Jeff Flake (R-AZ) on the Appropriations Committee ? He has been repeatedly rejected by GOP leadership yet that would be the first step in stopping wasteful government spending.
How about rotating committee assignments, so that no one holds a committee chairmanship for longer than two years ?
How about a maximum amount that any Senator or Representative can request ?
How about getting Senate Republicans to reach agreement with House Republicans on what their earmark policy will be ? Who will control Senators Shelby, Cochran, et al ?
How about Enhanced Rescission Authority legislation ?

Or, something that Mr. Kline could do without the Republican Party approval … following the Tim Walz Transparency process … request input from constituents … give a hard review … and then report back what you will recommend.

But doing nothing, is just that … Mr. Kline your “no earmark” policy does nothing.

All that said, Mr. Kline has opposed earmarks that benefit Minnesota, yet he has been a strong supporter of earmarks that the Pentagon does not want … C-17 cargo plane, F-22 fighter, F-18 fighter, or even alternate engine for the Joint Strike Fighter.

In the end, let’s ask Mr. Kline : How will your crusade change the process ?

MN-02 : Kline Needs A New Stump Speech

Why is it that whenever I hear John Kline speak, the memorable quote “The negativity in this town sucks" pops into my head ?

Minnesota sports fans are all too familiar with the Rick Pitino’s words that he used after a tirade against Boston media and fans; as it is often played on KFAN radio to protest anything bad happening in Minnesota sports.

The message is clear … things are not as bad as it seems but if the messengers repeat gloom and doom, people presume the worst.

That’s Mr. Kline (R-MN-02) objective … he wants everyone to blame all of America’s problems on Speaker Pelosi and President Obama … never mentioning the Bush years … which coincided with his years in Congress.

Mr. Kline’s most recent press release states “More than a year after majority leadership enacted their budget-busting government stimulus plan, the national unemployment rate remains nearly two percentage points higher than the White House predicted, and 15 million Americans are still looking for work.”

Mr. Kline is right … the Obama Administration did predict a lower number … the fault goes to the Administration for providing too optimistic a forecast. But part of the reason may be to halt the “negativity” that was engulfing the country. This overshot may be more about the difficulty in economic forecasting than the efficacy of the stimulus … but more on that later.

In January 2009 when President Obama was sworn in, the global economy was in the midst of a recession, credit markets were frozen and the financial institutions faced the prospects of huge losses.

The first step to recovery had to be to calm financial markets. That has worked. On Friday, the Dow Jones hit "11,000 with less than 10 minutes left in the session, then closed at 10997, a gain of 70 points for the day.”
That was the first time since September 2008 (during the tenure of President Bush) it had eclipsed 11,000 … in other words, the stock market has recovered nicely under President Obama.

The second step was to halt the bleeding at the state level. So for example, schools got funding to stave off laying off teachers … such as Second District schools :
$ 16,707, 809 for Independent School District 196

$ 10,065,132 for Independent School District 833

$ 7,240,714 for Independent School District 191

$ 6,439,165 for Lakeville Area School District

$ 5,546,590 for Independent School District 112

$ 4,245,664 for Shakopee School District

$ 3,967,430 for Prior Lake - Savage School District

$ 3,704,868 for Independent School District 192

$ 3,226,995 for Hastings Independent School District 200

$ 3,107,745 for Independent School District 656

$ 2,731,768 for Independent School District 659

$ 2,482,639 for Independent School District 199

$ 2,128,638 for New Prague Independent School District 721

$ 1,805,686 for Waconia Independent School District 110

$ 1,280,181 for Independent School District 256

$ 1,040,109 for Watertown-Mayer School District

$ 993,932 for Independent School District 717

$ 959,295 for Belle Plaine Independent School District 716

$ 737,393 for Montgomery-Lonsdale Schools 394

$ 696,034 for Carver County Independent School District 108

$ 584,770 for Independent School District 2397

$ 540,819 for Cannon Falls Independent School District 252

$ 523,237 for Independent School District 255

$ 490,079 for Zumbrota-Mazeppa School District 2805

$ 449,678 for Waterville-Elysian-Morristown Schools 2143

$ 383,269 for Kenyon-Wanmingo School District 2172

$ 307,866 for Independent School District 195

$ 275,163 for Goodhue Independent School District 253

$ 163,166 for Cleveland Public School District 391


All parents (and taxpayers) understand that these federal dollars saved schools from having to make choices that they did not want to make.

And just this week, Governor Pawlenty and MN-DOT released the highway construction projects … once again, the stimulus helped create jobs that otherwise may not have occurred.

Regardless of how it is characterized, the stimulus has done its part to stop the jobs freefall that was inevitable … the key question is would the number of job losses had been greater or lesser without the stimulus … on that, the simple answer is: it worked.

Yes, no one will be satisfied until all Americans that want a job can get one … sadly, we must accept the fact that some of those jobs that have moved overseas may never return. Therefore, job retraining programs being offered thorough the Minnesota’s Technical College programs -something that again the stimulus helped fund – offer great opportunities for workers.

Jobs will come once business are confident and demand is in place.
More good news here.
The Bureau of Economic Analysis reports : reports "Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 5.6 percent in the fourth quarter of 2009. In the third quarter, real GDP increased 2.2 percent."

Comparing that data to the last year during the Bush Administration, the Bureau of Economic Analysis reports "Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 6.3 percent in the fourth quarter of 2008".
Yep, Bush left us with negative GDP and Obama has already righted that ship.

Another measurement, the Commerce Department reported that U.S. wholesalers have now had eleventh straight monthly increase in sales.

We're not out of the woods, but the vector is turning in the right direction.
Local jobs could still be a problem ... especially for Minnesota ... that's why H.R. 4812, Local Jobs for America Act would ensure that those teaching and firefighters will stay employed a little longer.

Yes, Mr. Kline ... it's time to retire that "negativity" speech ... although in fairness, for the Second District, your performance has been pretty "negative" ... you voted against these programs. And your "Pork-free diet" has only hurt the District.

MN-02: Kline Needs to Support Local Jobs for America Act

Congress was able to take a much needed breather after the passage of the H.R.4872 Health Care and Education Affordability Reconciliation Act of 2010 to spend some time in their districts talking with their constituents.

No doubt they heard that legislation will help America’s families in the future, but Minnesotans are still concerned about today’s job market.
There was some good news on Friday, as the U.S. Bureau of Labor Statistics announced that 162,000 jobs were created in March, the largest monthly job gain in three years and that sets the vector in the right direction. A vast improvement from when 700,000 jobs a month were being trimmed and the Recovery Act deserves credit for increased economic activity as it continues to restore confidence in families and businesses.
Minnesota’s own State Economist Tom Stinson noted that economic signs now are far better than those seen last summer and credits the Federal stimulus as a spending tool that has had a big impact on turning the economy around. He further stated that “without federal action we’d be losing jobs big time. The recession would have been extended for a year, at least.”
Even Governor Tim Pawlenty’s commissioner of the Office of Budget and Management, Tom Hanson, agrees that the federal stimulus money has had a positive impact on putting signs of life back into Minnesota’s economy.

Good signs .. but Minnesota, as well as other states, are facing a severe budget problem. The Minnesota legislature has agreed to a $35 million dollar reduction in the budget for public safety … and $111 million net reduction in FY 2010-11 aid to local governments (with a $186 million reduction in FY 2012-13). Meanwhile, the University of Minnesota might solve its budget shortfall by cutting the pay of its 18,000 employees and St. Cloud State University says state budget cuts are forcing the school to close more than 10 percent of its programs. Local school boards are looking at layoffs and increased class sizes due to funding constraints.

This is troubling.

John Kline (R-MN-02) is the Ranking Minority Member of the House Education and Labor Committee which could do something to address this.

The Committee’s Chairman, George Miller (D-CA) reacted to the employment numbers, “we are not out of the woods yet. All across the country, local communities are announcing layoffs of thousands of teachers, public safety officers and other vital personnel because of tight budgets. These layoffs threaten to reverse today’s positive economic report and stall the real progress we are making. House Democrats and a bipartisan group of mayors introduced legislation to create one million public and private sector jobs to help restore vital services that families and local communities rely on.”

Representative Miller gets it … Representative Miller has authored legislation that could help Minnesota as it slowly recovers.

H.R. 4812, the Local Jobs for America Act – developed with mayors, county officials and others such as National League of Cities (NLC) President Ron Loveridge, Mayor, Riverside, California - would, for the first time in decades, provide municipalities and counties with flexible and direct fiscal assistance focused on saving and creating jobs.
Although just introduced, the bill already has 105 co-sponsors.

It has some very good components that will help Local communities.
The Local Jobs for America Act will fund salaries for 50,000 on-the-job private-sector training positions to help local businesses put people back to work; $500 million to retain, rehire, and hire firefighters; $1.18 billion to put 5,500 law enforcement officers on the beat; and more.
The short term result is that by increasing employment in local communities, families will be able to start spending again at their neighborhood businesses and favorite restaurants. This will help spur additional jobs for local small businesses.
The long term results will be seen from the $23 billion funding to help states support 250,000 education jobs.
Cuts to America’s educational system – be it K-12 or advanced programs – will only prolong the country’s problems. The “old economy” has seen its jobs move overseas … it’s the next generation jobs will come from creative, high-I.Q. risk-takers that will raise capital for their ideas and commercialize them. America needs education and training to grow innovative new companies and as President Obama has said “the nation that leads the clean energy economy will be the nation that leads the global economy. And America must be that nation.
Further, in President Obama’s State of the Union address, he said “In the 21st century, one of the best anti-poverty programs is a world-class education.” This is not a Democrat idea … it is the same goal that George H. W. Bush and others have exposed … an America where the schools help “to make America No. 1 in math and science.”
The equation is simple: investments in Jobs and Education produce prosperous communities.

It’s time to put the partisan bickering aside !
Mr. Kline, please become a co-sponsor of this legislation … or if you have a better idea, offer your own that will help Minnesota and the nation.
This is your committee … this is your job !
Small business and local business needs your support !

MN-02 : Kline on the Stimulus - Abject Failure

John Kline (R-MN-02) responded to a question on Tim Penny’s radio program on the effects of the stimulus calling it an “Abject Failure”.
The question did not have the follow-up that was required … namely why did it fail and who is at fault.
The answer is John Kline.

Why John Kline … well first, he voted For the failed economic stimulus and now is watching other districts begin to recover.

Yep, if the discussion is about an “Abject Failure” of an economic stimulus, then it should be no surprise that the Recovery Rebates and Economic Stimulus for the American People Act of 2008 was a BIG Failure. This was not a surprise as the Congressional Budget Office and the Joint Committee on Taxation (JCT) estimated that H.R. 5140 would increase budget deficits by $152 billion in 2008 and by a net amount of $124 billion over the 2008-2018 period. You remember that stimulus complete with a $300 to $1200 rebate check … there was little complaining then … but fiscal conservatives warned of its flaws. Also not getting a lot of attention was the provisions that raised the loan limit (from $362,790 to $729,750) for the Federal Housing Administration’s (FHA’s) single-family program --- which no doubt eventually contributed to another piece of legislation that Kline supported. Yep, Kline voted For the Emergency Economic Stabilization Act of 2008 which is better known as TARP.
The objective of Bush’s stimulus was a few pennies to regular people in hopes that they would spend coupled with Tax Breaks for business. However, there was no incentive for the business to take immediate action. Business may elect to wait until customer activity picks up before deciding to increase employment or investment in equipment/facilities … hence it failed and a new stimulus was initiated by President Obama.

Now, that Obama is president, Kline has now voted against the American Recovery and Reinvestment Act of 2009. The Wall Street Journal accessed Obama’s stimulus as just starting out: Most of the stimulus spending so far has gone to state and local governments to plug holes in their schools, Medicaid and unemployment-benefits budgets. Spending on infrastructure projects is expected to pick up in 2010. About $180 billion of the funds allocated to various projects has been paid out. Tax cuts worth about $93 billion have also taken effect. An additional $320 billion in spending hasn't yet been handed out. A further $195 billion in tax cuts are due to flow through tax returns.

The Obama stimulus is working … as the NYT opined “There is virtually no dispute among economists that the stimulus prevented a bad recession from becoming much worse. Among other things, it has preserved or created 1.6 million to 1.8 million jobs, according to various private sector analyses, and it is expected, ultimately, to add a total of roughly 2.5 million jobs.”

It’s way too early to call Obama’s stimulus an “Abject Failure” unless you reside in Minnesota’s Second District where John Kline is not getting any funding. Contrast the Second District with Tim Walz’s First District.
For example, the Recovery Act includes funding to help grow the emerging health IT industry which is expected to support tens of thousands of jobs ranging from nurses and pharmacy techs to IT technicians and trainers and South Central Technical College was awarded $4,506,101 . South Central President Keith Stover said "These new programs are designed to provide Southern Minnesota with the education necessary to achieve high-wage positions within the health care sector." Rep. Tim Walz said in a statement praising the funding "Not only will this funding create immediate jobs for program instructors, it will ensure that students and workers will have access to the training that will help them get high-paying jobs in new sectors of our economy."
That’s not the first time, South Central Technical College got grant money. WIRED (Workforce Innovation in Regional Economic Development) through the U.S. Department of Labor awarded $70,000 to fund the Shared Work Pilot Program.

And also this week, the U.S. Department of Agriculture as part of the American Recovery and Reinvestment Act announced that Southwest Minnesota Broadband Group (SWMBG), composed of the communities of Jackson, Lakefield, Windom, Round Lake, Bingham Lake, Brewster, Wilder, Heron Lake and Okabena, has been awarded $12.7 million in grant and loan funds to expand broadband Internet access in the region. The grant and loan combination along with private investment will provide high-speed Internet, voice and cable television to the participating communities.
These programs are available, but is Kline exercising any political effort to “stimulate” the Second District ? Voters in the Second District must look at the First District and wonder “why not us?”

Actually, he seems to be more concerned that Governor Pawlenty has planned to use federal monies to resolve the Minnesota budget problem. Kline said he may vote against the spending even if the governor needs it to balance the state budget. ‘‘There’s a big difference between opposing something and, once it becomes law, getting our share,’’ said Tom Hanson, Pawlenty’s main budget adviser.

Mr. Hanson, welcome to John Kline’s world … opposing Obama takes precedence over what Minnesotans need.
One observation that is becoming clearer every day is that John Kline's time in Congress has been an “Abject Failure” for the Second District.

Politico Bachmann Puff-piece Fails on Follow-up Questions

Daniel Libit of Politico was granted an interview
with Congresswoman Michele Bachmann (R-MN-06). Since the Congresswoman is very selective about who gets interviews, it is disappointing that such a well-regarded news service would not confront her answers with her votes.

From the article, she responds to a question of what she will do when she gets back home :
Bachmann: … Every weekend now when I go home, I will go to the grocery store, I’ll buy food for the family. We have five kids and 23 foster kids that we raise. So I go to the grocery store and buy a lot of food.
Politico: How much is your bill usually?
[SNIP]
Bachmann: Oh, coupons, generic brands, I don’t get the fluff. I’m just buying staples. It’s always boring when Mom goes to shop, the kids like when Dad goes to shop. And it was $79 for three bags of groceries, and I went home and told my husband, "I just feel for families of young children right now, because energy has had a direct impact for increases in the prices of food."

Let’s ignore the implication that there are 28 children at her table, and focus on how she “feel for families of young children right now.”

In all our communities there are families struggling … her district is not immune to foreclosures and food shelf shortages.

But her votes do not support families.

Consider Food, Conservation, and Energy Act of 2008 which she consistently voted against even when a majority of Republicans voted in Favor of this legislation.
The bill devotes about two-thirds of its funds to nutrition programs such as food stamps and healthy school snacks.

Or this week, where twice she voted Against the Emergency Extended Unemployment Compensation Act of 2008. The vote indicates that a veto could be overridden thanks to the number of Republicans who recognize the impacts to American families. The funds for this program are already available, and by authorizing this expenditure, could actually stimulate the economy --- maintaining jobs and providing for families.

Politico fell for her Motherly talk without looking at her votes.

Coleman, Senate Foreclosure Bill – Another Misdirected Bailout

This being an election year there is little surprise that the US Senate is on fast track with a stimulus package of tax incentives for homeowners, homebuilders, and investors.

There is no doubt that there is a foreclosure crisis … but the remedy that Norm Coleman and the Senate are developing offers rewards to those that have not been affected.

Congressman Keith Ellison blogged "For far too long this administration has allowed Wall Street to pursue the politics of greed, the true cost of which we can now see in the form of devastated communities, homeless families, and shattered neighborhoods."

How true !

Senator Coleman also recognizes the problem, but his solution is tilted to the un-needy and business interests.
On the overview, the proposals being discussed may look appropriate but ask yourself Ellison’s key question will this "help our families pay their mortgages and stay in their homes ?"

Coleman’s SAFE Act proposal includes a number of ideas that appear to be in the final version being discussed.

The Senate proposal has a price tag of $10.848 with no offsets, so it’s all borrowed funds.

Coleman calls for a temporary expansion of the Net Operating Loss Carryback tax provision to help businesses affected by the housing downturn. That has the largest price tag in the bill at over $6 billion dollars. Who would this help ? Well, if you are a homebuilder who had profits in 2004 or 2005, you could get that tax payment back. (To answer Ellison’s key question will this help our families pay their mortgages and stay in their homes? Nope ! )

Coleman’s proposal to issue $10 billion in mortgage revenue bonds is still in the bill. The devil is in the details as this includes bonds for multifamily rental housing. The key question is who will own the multiple-family rental properties and are multiple-family properties the target that is in jeopardy of foreclosure?

To encourage the purchase of homes already in foreclosure and of homes on which foreclosure has been filed, a $7,000 tax credit for buyers will be available. This is actually less than the $15,000 tax credit that Coleman proposed. Since many foreclosed homes are from speculatively built homes, this is essentially the government (meaning all us taxpayers) offering an incentive for people to purchase -- in other words, the wealthy may get a better deal. Price tag $1.63 Billion.

Lastly, and totally inappropriate, is $1.476 Billion for property tax relief for those taxpayers that do not itemize deductions. This is wrong on so many reasons. First, people like myself who paid off their mortgage and now claim the standard deduction, just got another tax savings … and my home is not about to be foreclosed. Second, property taxes are used to fund state and local governments … what does the Federal Government have to do with that? Also, just because a property is foreclosed, that doesn’t relieve the bank from being liable.

Helping out the banks and homebuilders should not be the objective. The Economic Stimulus Act of 2008 (which I opposed) already included raising the government-sponsored enterprise (GSE) to well over half-million dollar homes whereas the average home is maybe $200,000. The Senate was discussing raising this limit to $730,000.

The Senate bill, as being finalized, will not include allowing bankruptcy judges to affect a contract term … which is too bad as that could have impacted 600,000 foreclosures (Minnesota expects to have in excess of 35,000 foreclosures this year.)

The Senate bill is too expensive and does not help those that need help.

The unwise Senate bill should be put on the back burner while the House moves forward the FHA Housing Stabilization & Homeownership Retention Act. There are many good provisions of this proposal such as affecting owner-occupied principal residences only (no investors, speculators or second homes). Because this is a shared program between borrowers and lenders the $10 billion cost over five years would have minimal downside risk. The potential benefit is between one and two million loans (and helps these families stay in their homes), protect neighborhoods, and help stabilize the housing market. The House bill answers Ellison’s question.

Minnesota’s representative on the House Financial Services Committee is Congresswoman Michele Bachmann. Bachmann touts herself as a fiscal conservative and as such she should be working hard to promote the House bill.

The outcome is easily forecast … the politicians will announce with much fanfare how they’ve heard from their constituents and have responded with a good bill … the question will be which constituent ... the the home-building industry or homeowners threatened with foreclosure ?

How much is that Prebate Check Worth ?

When mail from the IRS arrives in my mailbox, it gets my immediate attention. Yet when I opened the Economic Stimulus Payment Notice from the IRS, my first thought was “How much did this mailing cost????”. Well, according to IRS spokesman John Lipold “notices are going out this month to an estimated 130 million households who filed returns for the 2006 tax year, at a cost $41.8 million.” So add $41.8 million onto $168 Billion that Bush has already approved.

Two thoughts.
First, at a Congressional hearing the IRS was questioned about scams yet, the IRS notice fails to warn consumers about that. The IRS response at the hearing was that Congressmen may want to include a warning in their mailings to their constituents.

Second, for a Congress member to issue that mailing it would be through the Franking Privilege. Karl Bremer penned an interesting article on how members of the Minnesota delegation use franked mail.

When Congressmen issue a mailing the cries arise from the opposition party that the incumbent is just trying to pander to the voters. Recently letters to the editors have appeared in Winona and Mankato newspapers chastising Congressman Tim Walz for a mailing that was sent discussing the Economic Stimulus Package. Not mentioned was that in 2005, then Republican Congressman Gil Gutknecht sent out 174,770 pieces of franked mail.

One of the concerns with franked mail should be whether it is target marketing or necessary information for constituents.
During the past decade, Members of Congress have begun patronizing innovative mailing list vendors to ensure that the mailings are sent to the right people. I found it interesting in 2006, that since I have a rural route address, I received a mailing from then Congressman Gutknecht concerning his ethanol legislation while friends in urban centers received mailings on illegal immigration. True, both are voter education, but I felt like a target.

In the House, the franked mail postage allowance is based on the number of addresses in each Member's district. Each Representative's mail allowance is combined with allowances for office staff and official office expenses to form a Member's Representational Allowance (MRA). Members may spend any portion of their MRA on franked mail, subject to law and House regulations. Within the limits of their MRA, House Members are not restricted as to the total amount they may spend on mass mailings.

Managing the MRA should be a fair tool for how well the Congressman is committed to exercising fiscal restraint. Many offices use funds still unexpended near the end of the year to stock up on supplies, upgrade or pay off existing equipment, and give staff bonuses.

In 2007, the Member's Representational Allowance was roughly $1.34 million ranging from $1.07 to $1.78 million. Congressman Walz reported that he will return approximately $100,000 in unspent funds from his 2007 MRA to the U.S. Treasury.

Next time voters in the Second District hear John Kline complain about earmarks they need to remind him of his 509,784 pieces of franked mail that he sent out in 2005 and question why his MRA spending was in excess of 96% of the maximum budgetary amount. A true fiscal hawk would find ways to trim his own budget ... like Rep. Virgil Goode (R-VA) who did without $518,036 of his MRA. Leadership begins by example.

= = =
And a follow-up comment concerning the Economic Stimulus which I opposed as wasteful spending. More proof that it was unwise, as the Center on the Budget estimates that Minnesota could lose $151 million dollars depending upon how it handles the bonus business depreciation.

And remember this is a Prebate … in other words, this is monies that you will receive in 2008 based on the assumptions that you will earn that payment when you report your income taxes in April 2009. Worse yet, the funding is from borrowed money … borrowing that will have to be paid by future generations.

Will Congress go Wimpy with Economic Stimulus Legislation ?

“The nine most terrifying words in the English language are, 'I'm from the government and I'm here to help.'” – Ronald Reagan, U.S. President

"I will gladly pay you Tuesday for a hamburger today." -- J. Wellington Wimpy, a character in the old Popeye comic strip.

For those of you to young to know Wimpy, he was a habitual deadbeat mooch, so widespread was his reputation for continually deferring his financial obligations that he had difficulty borrowing enough for lunch.

Congress must have missed the news, but it looks like they may be offering a free lunch ... not for the needy, but for the protected masses.

Yesterday, The Wall Street Journal reported “CBO [Congressional Budget Office] foresees a fiscal 2008 deficit of $219 billion, or about 1.5% of GDP. That's up from $163 billion last year, or 1.2% of GDP, and up about $65 billion from what the CBO projected as recently as last August. Most of the change from August is due to the one-year Alternative Minimum Tax fix passed in December -- the previous "baseline" assumed 23 million new AMT victims would be welcomed into the fold this year.”

This means that once again the deficit will increase from the prior year.

Now, that projection was before today’s news that economic stimulus package has been devised that would give most tax filers refunds of $600 to $1,200 and also provides tax incentives for businesses. Or as The Wall Street Journal reports “generous tax breaks” for business.

That’s the hook. Like a good game of switcheroo, the headline is tax rebates, but the tax give-aways get buried in the story. What should be a short term, temporary fix to address housing/energy consumer issues may be being used to apply significant changes to benefit business. At this stage, it may be too early to know the details but there was consideration of a number of changes including how long a business may carry forward losses. Some of these changes may have little to do with what caused the economic slowdown yet certain members of Congress have a propensity to exploit the situation.

In fact, under the guise of the economic climate, a number of bills have been introduced.
H.R. 5109 The Economic Growth Act of 2008 which is cosponsored Michele Bachmann and John Kline and has as one of its main points to lower the Corporate Tax Rate to 25% (effectively a 28% rate cut);
HR 5105 which besides the same Corporate Tax Rate cut also includes the elimination of the Estate Tax and makes the Bush Tax Cuts permanent.
HR 4995 which is cosponsored Michele Bachmann and John Kline and also includes the Corporate Tax Rate reduction.

It was just last year that President Bush was uttering the phrase "income inequality" acknowledging that corporate executives bonuses and golden parachutes have gotten out of hand.
Now, we have Republicans in Congress pushing to reduce Corporate taxes instead which I have previously discussed as illogical.

The proposed plan is that business will get 1/3rd, yet since the changes involve the tax code, there is no incentive for the business to take immediate action. Business may elect to wait until customer activity picks up before deciding to increase employment or investment in equipment/facilities.

The missing piece is the lack of extension of unemployment insurance and food-stamp benefits. These programs would have caused an immediate impact. That is a double-whammy. By not including these in this legislation while the problem grows means that there may be need to address this in a few months.

In my view, this plan will only add to the deficit without generating maximum benefits. If business needs incentives, Congress should consider waiving the Social Security matching portion for all new hires – this would encourage businesses that will increase employment levels as business picks up. (Since Social Security is currently “loaning” money to the government for other operations, this deficit will be increased based on true government spending – not being hidden by borrowing Social Security funds.)

This plan must be approved by Congress. Legislation that is passed in haste, can cause more harm than good. Let’s heed Reagan’s words, Government may not solve this problem, but could actually make things worse.

Congressman Tim Walz stood for fiscal responsibility in his AMT vote (and a survey of Republicans supported his vote ). Congressman Walz needs to exercise the same discipline … as certainly, Bachmann and Kline will reward business.

As those of us who remember the Popeye cartoons will recall, Wimpy was usually refused … and it’s time that Congress not be Wimpy.