THIS BLOG IS ON THE MOVE

We packed up the blog and moved it over to the mother-site of MyGovSpending.

Catch up with the latest from Vince at Mygovspending.com/government-spending-watch

Better yet, CLICK HERE

DEFICIT HAWK - DAVID WALKER

David Walker is a Name-to-Know in the battle for governmental financial responsibility.  He knows what he's talking about. He was head of the US General Accounting Office under both Clinton and W before he left to fight deficits full-time at the Peter G Peterson Foundation. Now he's pursuing the same mission leading the Comeback America Initiative.

If you've seen the movie IOUSA, you've seen David Walker in action.  If you haven't check it out.

Take his Fiscal IQ quiz then read his explanation at the end.  Don't worry about your score.  Think of it as an exploratory mission, not a mission of conquest.

Also, he's attempting to forge a bi-partisan coalition.  To do that, each side has to see him as hitting the other side with at least as much pain as they think they are taking.

And remember that a point or two he presents as fact are actually opinions. I was tweeked a bit along the way, but hey, I'm an adult...one who believes in freedom of expression.  So I didn't get all bent out of shape even though I disagree with a point or two.

His goal is deficit reduction, almost whatever it takes to get there.  That might be different than you or I. That's OK.

I suggest that you take his quiz.  It's good stuff.

RHODE ISLAND UNION BOSS: "THEY ARE NOT ACTING LIKE DEMOCRATS"

Pensions and retirement funding are the core of this nation's looming financial difficulties. Rhode Island stands tall and faces the problem.

In spite of most expert opinion, national politicians have not yet deemed Washington finances as worth the effort to fix.

Rhode Island decided it no longer has the luxury of waiting.  It has long possessed one of the least financially prudent state governments.  

Two key points:

* Dems pulled a Nixon-in-China and "disrespected" their union base to get the job done.

* Younger state workers broke with their unions and supported the plan. They'd rather have some state pension  than none. 

Click here to read this great story in Stateline.

And click here to keep up with public policy pension news at PensionTsunami.

TEA PARTY THOUGHT INFILTRATES FRENCH ACADEMIA

Theo Vermaelen, a professor of the elite French University Insead, illustrates a central point regarding government and human nature.

Incentives matter.  For politicians, too.  He says we should pay them for fiscal discipline.

His plan is to compensate politicians with bonds issued by the countries they rule. Then they bear the risk of their actions in the form of actual, real financial losses. 

Professor Vermaelen writes that this "could be used to provide a counterweight to politicians' tendency to buy votes with other people's money".  Does that sound Tea Party-ish to you? It does to me.

His sentiments are a reaction to what insurers refer to as moral hazard.  Politicians are inclined to take more risk with taxpayer money because spending increases their pleasure (chances of re-election) more than the pain of the bills they incur.  After all the bills could be pushed into the future seemingly forever. 

Professor Vermaelen's comments trigger a second thought, this one a mere synaptic stroll: politicians often do not represent their constituents well. Economists refer to this as the agency problem. 

People (taxpayers or stockholders) may think they've hired an agent (politicians or management) to carry out their instructions faithfully. But the agent has his or her own personal goals that often conflict with their employer.  Those personal goals get in the way.  Hence, in the political case, runaway spending results.

And this leads to a third closely related point: government has its own economic interests separate from its citizens.  When those interests are not perfectly aligned, government pursues its objectives first. Citizens are treated as neglectable supplicants.

Read Professor Theo Vermaelen's piece. http://online.wsj.com/article/SB10001424052970204903804577082493104507200.html?mod=opinion_newsreel

FIX THE NATIONAL DEBT 1

By gosh, do it your way.  Spend a few quick seconds on this first-of-a-series.  

We've built a website to help you design the government you want.  Deficits. Debt. Taxes. Government Spending. It's your money.

Before you know it, you will have designed a better government budget than your elected representatives.  AND we'll get your instructions to them.

Click here to Fix the National Debt.  Oh, and click the "Open Notes" link first when the page opens.

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SUPERCOMMITTEE FAILS - CURRENT BUDGET CAN REDUCE DEFICIT MORE THAN 'GO BIG'

The experts over at the Concord Coalition do good work on the federal budget.  They are budget hawks and well worth listening to.

They note that doing nothing will balance the federal budget (excluding interest costs) by 2014.

Doing nothing unleashes automatic tax increases and smaller spending cuts.  Past tax reductions are scheduled to expire as is the "doc fix" which temporarily increases Medicare payments to physicians.

The automatic tax hikes may be part of the reason that SuperCommittee Dems didn't negotiate.

Concord is promoting strict pay-as-you-go rules as a one path toward a budget fix. It's a piece Washington needs - crisis or no.

http://www.concordcoalition.org/issue-briefs/2011/1122/super-committee-gave-congress-cant

SUPERCOMMITTEE SELF-SABOTAGE?

Democrats want the SuperCommittee to fail, according to Steve Moore of the Wall Street Journal.  He spoke with four of the six Republican members and reports that the six Democratic members have not offered any serious entitlement reform - which is where the big bucks lie.

His sources say Democrats have been offering less than $1 of spending cuts for each $1 of tax increases.  The bipartisan Simpson Bowles commission last year, widely thought to be an excellent model for the SuperCommittee, came up with $3 of spending cuts for each dollar of tax increases. 

Moore explains that election year politics are getting in the way of a deficit reduction deal.  The logic is that if Republicans do not agree to a SuperCommittee deal, Obama can run against a "Do Nothing" Congress.  If the Republicans DO agree to tax cuts, that is expected to weaken Republican unity enough that Obama can romp to victory.  lET'S 

Previously federal, state, and local governments have put each family on the hook for $800,000 of government debt beyond the $1.3 million in taxes that a family earning $75,000 yearly will already pay over its career. 

Time is ticking toward the next financial crisis. The political clock is running much slower than the economic clock.

Could it be that representative democracy has run aground, laden with special interests, dreamy ideals, self-righteousness, and blind ambition? 

For this observor, more direct democracy is growing in appeal.