Andrew J. Coulson
We do not claim that the school funding system… is fundamentally flawed, only that there is no correlation at all between the level of per pupil funding and educational outcomes. —Deloitte
Hahahahaha! Ha! Haha! Haaaaaah. Okay. Now a little context.
Last November, the British government “published” a study of its state school system that it had commissioned from the accounting firm Deloitte. Maybe “published” is too strong a word, since there was apparently no press release, no news conference, no effort of any kind to make the public or the media aware of its existence. Perhaps that’s because the study found no correlation between spending and achievement in Britain’s state schools, and the current government’s policy is to increase spending on state schools in an effort to be seen to be doing something.
The sad thing is, the same fundamentally flawed funding systems and dysfunctional political incentives exist in the United States, too… and with much the same effect:
Hat tip: Joanne Jacobs.
View full post on Cato @ Liberty
By Julian Sanchez
For years, top officials at the Department of Homeland Security have touted “fusion centers“—designed to share security information between state, local, and federal government agencies— as a “vital tool for strengthening homeland security,” a “proven and invaluable tool,” and “one of the centerpieces of our counterterrorism strategy.” But a blistering new bipartisan Senate report paints a radically different picture, exposing these centers as a costly boondoggle that flouted civil liberties safeguards, lacked basic accountability, and produced “intelligence” that was overwhelmingly useless or irrelevant—or as one particularly candid official put it, “a load of crap.”
How costly are they? Incredibly, DHS can’t even say for certain: Estimates of federal spending on the centers range from $289 million to $1.4 billion. Given that most states had a distinct shortage of real terrorists to keep tabs on, much of that money went to purposes utterly unrelated to actual counterterrorism analysis. One center blew $75,000 on dozens of flat-screen televisions, supposedly for an intelligence training program that never materialized. Now the TVs are being used to display calendars, and for “open-source monitoring”—also known as “watching the news.” Other popular purchases included Sport Utility Vehicles, laptops, and high tech surveillance toys for ordinary law enforcement—many of which were then given away to other local government agencies.
How useless are they? One official estimated that 85 percent of the reports they produced were of no benefit whatever, and the large majority of reports were unrelated to terrorism. Most of these weren’t published or circulated for months, and they often just regurgitated information from public press reports. Almost all these reports came from centers in just three states: Most of the 77 fusion centers produced little or nothing at all. Sorry, make that 68 fusion centers—it turns out the official DHS tally included several that didn’t actually exist.
Unsurprisingly, DHS “struggled to identify a clear example” in which fusion center intelligence helped identify any actual terrorists—and indeed, may have hampered effective counterterrorism by clogging the intelligence arteries with “predominantly useless” information. To keep justifying those millions of taxpayer dollars, however, DHS touted bogus “success stories,” like a report that sowed panic over a Russian cyberattack on a city’s water system—a cyberattack that had never happened. When internal assessments began to reveal the ineffectuality of fusion centers years ago, DHS hid the results from Congress—and kept on praising them publicly.
Of course, civil liberties groups have been warning for years that fusion centers are more likely to facilitate improper monitoring of citizens than legitimate security goals. And the Senate report shows they had reason to worry. One key DHS official revealed a disturbing view of he value of intra-agency “cooperation” when he noted that “We had fire [departments] — one of the few people who can enter your home without a warrant is a firefighter.” One notorious fusion center report suggested that Libertarian Party members, Ron Paul supporters, and individuals flying the Gadsden Flag popular with Tea Partiers were likely to be violent extremists. Many reports were shelved because they documented only innocent, protected First Amendment activity—but the information in them was often retained anyway, in potential violation of the Privacy Act.
Yet perhaps because those earlier criticisms fit the familiar narrative of the “privacy versus security” debate, less attention was devoted to the more basic question: Do these programs actually provide any security? Are the hundreds of millions in taxpayer dollars being spent on fusion centers making us any safer?
Unfortunately, this is something of a pattern—one I noted in National Review back in 2010. Utter the words “terrorism” or “national security” and even the most ardent deficit hawks are often cowed, fearful of being branded “soft on terror” if they dare to question whether the latest urgent effort to “do something” is really doing anything useful with taxpayer dollars. Cash-strapped local agencies and D.C. intelligence contractors are only too happy to accept funds unburdened by accountability. The result, as my colleague John Mueller has exhaustively documented, has been a decade of waste: Hundreds of billions squandered on one faddish new program after another, invariably touted as “vital” and “life-saving” when a veil of secrecy kept anyone from checking those dramatic claims—and all too often exposed, much later, as a costly gift to terrorists that had rendered us less safe by diverting resources and wasting the time of intelligence agents.
Perhaps, finally, Congress is ready to get serious about cost-benefit analysis, even for programs sporting a “security” label. That this report got published suggests that at least a few federal legislators care about finding effective ways to keep us safe—not just throwing our money away in a desperate attempt to look tough. Alas, the final “Recommendations” section seems geared toward finding a way to “fix” fusion centers rather than scrapping them. The “toughest” move now would be to admit that the centers are a failure, at least as a counterterrorism tool, that they’re unlikely to ever provide an intelligence benefit that remotely justifies their costs, and stop throwing good money after bad.
View full post on Cato @ Liberty
William L. Gensert
During last night’s debate, Barack Obama, the greatest man to have ever walked the face of the earth, went down in flames. Mitt Romney destroyed him in the first debate. As a political junkie, I have seen my share of debates; my favorite was Reagan/Carter in 1980, which Reagan won handily.
Yet, this was an even more impressive victory for Romney. He appeared to have everything over a petulant and unprepared opponent, who seemed to think — as he does with all things, that his mere presence, the brilliance of his aura, would guarantee a victory — that he was so much better than Romney that it would be easy — that he didn’t have to work for it — didn’t have to study.
When you spend 4 years with a compliant media, you never need to be well versed on policy and detail, and he assumed it would be the same last night. Obama thought he won before he walked in the door and was surprised that he would actually have to contend.
Talk about taking an opponent lightly, Obama acted as if he was going to be debating an empty chair — not realizing for a moment, he was the empty chair.
Clint Eastwood is looking smarter and smarter by the day.
Running on empty, uninformed and without ideas for the future, Barack Obama lost the debate in a rout — to a polite and insistent Mitt Romney who seemed to know every number and every statistic.
For the entire summer the President has been complaining that Romney has no plan, but last night, the ‘man without the plan’ was Barack. Not only that, but he seemed lost as well, almost tired (must be all that golf) — and at times, every bit as petulant and thin-skinned as he is reputed to be. The President was ill-equipped, clueless and arrogant — who wouldn’t want another 4 years of that?
"Obama made a lot of great points tonight. Unfortunately, most of them were for Romney," tweeted comedian Bill Maher.
If you’ve lost Maher…
Instead, the President gave us " New Economic Patriotism" as a reason to spend and tax more, which is his plan for the future — his plan for everything…it was sad. And if the man wasn’t such an arrogant, nasty ideologue when the deck is stacked in his favor, I would feel sorry for him.
He didn’t defend himself or his record and didn’t have any new ideas, choosing instead to double down on more government, more spending — and more of him.
Romney was forceful, energetic and informed — Obama was disoriented, tired and lacking focus.
Romney controlled the pace and the discussion, while Obama looked, not like an incumbent, but a challenger. Michelle should sit Barack down and tell him that it is not 2008 anymore. He is the incumbent; he can’t talk about the nation’s suffering without people asking why he didn’t do anything about it for 4 years.
Romney gave the country a 5-point plan for his first term. Obama? He gave the nation the famous Barack sneer and a whine about still having 5 seconds left on the clock.
Well, Mr. President, it seems your time has run out.
Statistics: Posted by yoda — Thu Oct 04, 2012 6:24 am
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Eight signs the system is broken
Simon Black on OCTOBER 2, 2012
October 2, 2012
Here are a few interesting tidbits to chew on:
1) In the land of the free, there are now more than 760 incarcerated inmates for every 100,000 citizens. This is more than 5x the 1980 average, and it far surpasses the number (560 per 100,000) that Stalin threw in the Gulag at the peak of Soviet terror.
2) Apparently, Americans are getting more interested in snitching on each other. According to Google Trends, internet searches for terms such as “IRS reward” (and related keywords) have exploded since 2008, and especially this year.
3) Last month, a school district in California sold $164 million worth of bonds at 12.6% interest; this is more than Pakistan, Botswana, and Ecuador pay in the international bond market.
4) Based on the Treasury’s most recent statistics, US government interest payments to China will total at least $26.055 billion this year. The real figure may be much higher given that China has been purchased Treasuries for decades, back when interest rates were much higher. They’re still getting paid on those higher rates today.
Even still, this year’s interest payment to China totals more than ALL the silver that was mined in the world last year.
5) In August 2008, just before the Lehman Brothers collapse, the number of employed persons in the United States was 145.47 million persons. Over the subsequent years, the employment figure dipped to as low as 139.27 million. Today it stands at 142.1 million.
Even if this is considered recovery, to ‘rescue’ those 2.8 million jobs, it took the federal government an additional $6.421 trillion worth of debt ($2.3 million per job), and a $1.9 trillion (203%) expansion of the Federal Reserve balance sheet.
6) Meanwhile, despite trillions of euros in debt and bailouts, the unemployment rate in the eurozone just hit a record high of 11.4%… and a second Spanish bailout is now imminent.
7) Inflation in Zimbabwe (3.63%) is lower than inflation in the UK (3.66%, August 2011-July 2012).
Last week, the French government reached a ‘historic’ budget compromise, shooting for a budget deficit that’s ‘only’ 3% of GDP. This is based on an assumption that the economy will grow by 0.8%.
In other words, France’s official public debt (which is already at 91% of GDP) will increase by 2.2% of GDP next year amid flat growth. And this is what these people consider progress.
Statistics: Posted by yoda — Tue Oct 02, 2012 12:37 pm
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Broken America: The towns left in financial ruin
First came the US sub-prime mortgage meltdown. Now entire towns are declaring bankruptcy.
GUY ADAMS LOS ANGELES SATURDAY 07 JULY 2012
They were hanging up the bunting in Mammoth Lakes this week, celebrating Independence Day in the traditional small-town fashion. First, locals queued up for an eat-all-you-can-eat "pancake breakfast". Then they took part in a fiercely contested "hot-dog-eating contest". Finally, after witnessing the annual town parade, the community oohed and aahed over a short but patriotic fireworks display.
Yet behind the show of civic pride lay a palpable sense of unease. For all the conspicuous consumption of junk food, and the proudly worn stars-and-stripes paraphernalia, locals were grimly aware that their picturesque resort, in California’s Sierra Nevada mountains, was making headlines for all the wrong reasons.
The previous day, local councillors voted unanimously to seek bankruptcy, after Mammoth Lakes found itself facing a bill of $43m (£28m) from a botched property deal. The town, in winter a popular ski destination, became the state’s second municipality in a less than a week to suddenly declare itself insolvent. Officials issued a statement claiming "bankruptcy, unfortunately, is the only option left", after a court ordered it to immediately pay the $43m to its largest creditor. It remains unclear how local police, firefighters, and core services will continue to be funded.
Mammoth’s debt, which amounts to roughly $5,000 for every man, woman and child who lives there, and is more than twice the council’s annual operating budget, arose in the most parochial of fashions: the town was successfully sued for breaking a contract with a local real estate firm which wanted to build a hotel complex near its small airport. But fallout from its troubles is being felt far and wide.
The insolvency occurred just days after Stockton, a commuter town east of San Francisco, became the largest US city in decades to file for insolvency, having built up debts of between $500m and $1bn. Worried analysts are now wondering if the two quick-fire bankruptcies represent the start of an ugly trend that could be about to accelerate – with devastating effects.
Fears over civic bankruptcies stretch back to December 2011, when a high-profile Wall Street analyst called Meredith Whitney caused an overnight panic in the municipal bond market, which underpins America’s public fortunes, by telling the TV news show 60 Minutes that she believed that there were going to be "50 to 100 sizeable defaults" by debt-ridden cities in the not-too-distant future.
Whitney claimed the nation’s local administrations were operating in a collective deficit of something like half a trillion dollars. In addition, they had underfunded pension liabilities of another $1.5 trillion. If large numbers were to fall into insolvency, and begin defaulting on bond payments, she believed the financial system could suffer meltdown on a scale similar to the sub-prime mortgage crisis.
Since 2007, a series of small cities – from Westfall in Pennsylvania, to Moffett in Oklahoma, and Prichard in Alabama – have found themselves in court declaring "Chapter Nine," the part of the US bankruptcy code applicable to municipalities. Whitney believed that trickle could become a flood. And if a meltdown were to happen, she said that it would gather pace in the state with the nation’s highest public debts and most dysfunctional government: California.
Little wonder, then, that the sudden bankruptcies of Mammoth Lakes and Stockton have raised eyebrows. Some experts say they are at the extreme end of a trend which, while serious, can be avoided through fiscal reform in a now-growing economy. Others, shaken by Stockton’s attempt in court this week to become the first US city to impose losses on bondholders, wonder if Whitney was right – and if an entire house of cards is about to fall.
Richard Ciccarone, a specialist in municipal bond research for McDonnell Investment Management, is among the optimists. But he recently analysed 2011 data from 124 of 500 Californian cities. He told The Independent that around a dozen (roughly 10 per cent of his sample) are now "extremely vulnerable" to bankruptcy.
In seeking to identify candidates for civic insolvency, he looked for low liquidity levels, steep declines in home values and a high "public safety ratio," the portion of spending that a city devotes to police and fire services. "When cities cut budgets, police and fire tend to be the last to suffer," he says.
Administrations most vulnerable to insolvency spend up to 80 per cent of budgets on "public safety," Ciccarone says. When further squeezed, they can end up in a sort of fiscal death spiral: cutting public safety budgets increases crime and makes them less attractive places to live, meaning that affluent residents move, further reducing tax revenues. "We saw a similar process happening in the Rust Belt, in the 1970s and 1980s," he says.
One such city is Stockton, whose current difficulties stem from years of short-sighted policymaking which has left the city of 300,000 residents facing an annual bill of $20m to merely service its soaring debt. For years, it pursued a policy similar to that of Vallejo, a Californian neighbour which went bankrupt in 2008: at almost every opportunity it granted inflation-busting pay rises to police, firefighters, and other public workers, without raising taxes on residents.
In boom years, as property tax revenues soared, that profligacy seemed appropriate. Stockton’s house values quadrupled between 2000 and 2006, allowing the city of 300,000 residents to spend like a drunken sailor: $47m on a loss-making sports arena, $100m on a smart marina. But with the bust, home values fell back to 2000 levels and revenues fell accordingly.
The city was left with foreclosure rates of just under ten per cent, 15 per cent unemployment, and no way to meet the financial obligations it had built up during the good times. It began reducing retiree medical benefits, closing parks and libraries, and sacking police and fire officers. Crime rose, poverty grew, and a vicious circle began to turn.
Mark Paul, co-author of a book called California Crackup: How Reform Broke the Golden State and How We Can Fix It, argues that the seeds of the bankruptcies of Stockton, and to a lesser extent, Mammoth Lakes are rooted in Proposition 13, a ballot measure passed in 1978 which froze property taxes and introduced a requirement that a two-thirds majority in the state’s Senate vote for any major tax increases.
Despite passing the law, Californians continued to demand expensive services, causing city, state and regional administrations to slowly clock up ever-greater debts. Twenty-five years into that experiment, he says that if more bankruptcies are now to be avoided, with the wider calamity that could bring, he says residents must confront an awkward reality: good government never comes for free.
"A something-for-nothing mentality is encouraged by our system," he says. "That will only change when politicians start being honest and tell people that if they want proper services they have to be prepared to pay for them. The recession pulled the covers off problems which have been festering for a long time.
"At the moment, everyone is left wondering who is going to be next to bear the brunt of the pain."
The towns left in financial ruin
The biggest city in the US to run out of money so far, it listed a debt of $1bn in its bankruptcy application last month
Mammoth Lakes, California
The ski town filed for bankruptcy this week after losing a legal fight costing twice its annual budget
West Fall, Pennsylvania
The economy was doing well in this small town yet its $20m debt still proved too big for it to cope with
Jefferson County, Alabama
Failure to restructure $3.1bn bonds on its sewers sent its finances down the drain
Central Falls, Rhode Island
Went broke last year due to its massive pension bill for the baby boomers among its 18,000 citizens
Debt led to police officers being laid off, fire stations being closed, and cuts imposed on other services in 2008
Raised 78 per cent of its income from speeding tickets – until a state-imposed ban on the fines made it insolvent in 2008
When town ran out of money for pensions in 2009, it simply stopped paying them, but that was not enough
Statistics: Posted by yoda — Sat Jul 07, 2012 9:12 am
View full post on opinions.caduceusx.com
Broken Promises: Pensions All Over America Are Being Savagely Cut Or Are Vanishing Completely
How would you feel if you worked for a state or local government for 20 or 30 years only to have your pension slashed dramatically or taken away entirely? Well, this exact scenario is playing out from coast to coast and in the years ahead millions of elderly Americans are going to be affected by broken promises and vanishing pensions. In the old days, things were much different. You would get hired by a big company or a government institution and you knew that the retirement benefits that they were promising you would be there when you retired in a few decades. Unfortunately, we have now arrived at a time when government institutions and big companies have promised far more than they are able to deliver, and "pension reform" has become one of the hot button issues all over the nation. Many Americans that have been basing their financial futures on their pensions are waking up one day and finding that their pensions are either gone or have been cut back dramatically. According to Northwestern University Professor John Rauh, the latest estimate of the total amount of unfunded pension and healthcare obligations for state and local governments across the United States is 4.4 trillion dollars. America is continually becoming a poorer nation and all of that money is simply not going to magically materialize somehow. So where is that 4.4 trillion dollars going to come from? Well, either pension benefits are going to have to be cut a lot more all over America or taxes will need to be raised dramatically. Either way, we are all going to feel the pain of these broken promises.
There simply is not enough money out there to keep all of the pension commitments that have been made. Something has got to give. In the end, millions of elderly Americans will likely be plunged into poverty as pensions disappear.
Some local governments around the nation are already declaring bankruptcy and are either eliminating pensions or are cutting them very deeply. Just check out what just happened in Central Falls, Rhode Island….
For years, city officials promised robust union contracts and pensions without raising revenue to pay for them. Last August, the math caught up with them. Central Falls was broke, its pension fund short $46 million. It declared bankruptcy.
"My daughters grew up here, went to school here. It’s all gone," said Mike Geoffroy, a retired firefighter.
He said he could not make the payments on his house after his pension was cut by $1,100 a month.
When will the math catch up with the city where you are living?
For years and years most of our state and local politicians have been ignoring this problem. But eventually a day comes when you simply cannot ignore it any longer.
Check out what Pensacola Mayor Ashton Hayward said about the situation in his city recently….
"When our annual pension liability is more than our yearly property tax revenues, we have to do something"
Keep in mind that taxpayers don’t get any new services for money spent on pensions. It is money that goes straight into the pockets of retired workers. State and local governments are desperately trying to pay retired workers what they are owed and fund ongoing government functions at the same time, but many have reached the breaking point.
All over the country, state and local governments are going broke. The following is from a recent article by Duff McDonald….
Alabama’s Jefferson County has actually gone bankrupt. Stockton, California is all but ready to do the same. And all you have to do is look to Detroit—or any of the nearby auto towns named after a Buick model of one sort or another—and you see fiscal crisis playing out right now. Look in your own backyard—or at the potholes on your neighborhood roads—and you will likely find the same.
Things are so bad in Stockton, California that they are actually skipping debt payments….
The city of 290,000 that rode the wave of the housing boom in the late 1990s and early 2000s now finds itself littered with foreclosed homes, saddled with pension, health care and other obligations it can’t afford, and unable to pay its bills.
The City Council voted last month to suspend $2 million in bond payments and begin negotiations with bond holders, creditors and unions.
And did you notice what is being blamed for the financial problems in Stockton?
Pension and healthcare benefits.
Sadly, we are seeing pension nightmares erupt all over the nation right now.
For example, check out what is happening to the Public School Employees’ Retirement System and State Employees’ Retirement System in Pennsylvania….
PSERS had an accrued unfunded liability of nearly $26.5 billion, the amount of money the fund is short to cover existing retirement benefits. That hole is expected to grow to $43 billion by 2019. SERS is $12.5 billion in the red, and that shortfall is expected to climb to nearly $18 billion by 2018. Unless the stock market makes giant sustained gains, taxpayers will have to refill those funds.
That doesn’t sound good at all.
In California, the Orange County Employees Retirement System is estimated to have a 10 billion dollar unfunded pension liability.
How in the world can a single county be facing a 10 billion dollar hole?
This is madness.
The state of Illinois is facing an unfunded pension liability of more than 77 billion dollars. Considering the fact that the state of Illinois is flat broke and on the verge of default, it is inevitable that a lot of those pension obligations will never be paid.
In fact, there are going to be a whole lot of broken promises all over the country.
Pension consultant Girard Miller told California’s Little Hoover Commission that state and local government bodies in the state of California have $325 billion in combined unfunded pension liabilities.
That comes to about $22,000 for every single working adult in the state of California.
So where is all of that money going to come from?
But at least most state and local government employees are still covered by pension plans, even if they are failing.
In the private sector, pension plans are vanishing at lightning speed.
According to the Boston College Center for Retirement Research, the percentage of workers in America covered by a traditional pension plan fell from 62 percent in 1983 to 17 percent in 2007.
That isn’t just a trend.
That is a tidal wave.
And many of the private pension plans that still exist are massively underfunded. For example, Verizon’s pension plan is underfunded by 3.4 billion dollars.
So what should Americans do in light of all this?
Well, the number one thing to realize is that the pension plan you have been counting on could disappear at any time.
We live in an economic environment that is extremely unstable, and about the only thing you can count on in this environment is rapid and dramatic change.
Do not plan your financial future around a pension plan. If you do, you are likely to be bitterly disappointed.
Americans that plan to retire in the coming years should do their best to try to fund their own retirements.
Unfortunately, most Americans are not putting away much of anything for retirement. As I have written about previously, one study found that American workers are $6.6 trillion short of what they need to retire comfortably.
Over the next 20 years approximately 10,000 Baby Boomers will be retiring every single day.
A lot of them are going to be blindsided by empty pension funds and broken promises.
We are facing a retirement crisis of unprecedented magnitude, and there is not much hope in sight.
And if there is a maor stock market crash, things are going to be much, much worse.
Most pension funds and retirement plans are heavily invested in the stock market. If we were to see a major financial crisis like we saw back in 2008 it would be absolutely devastating. Millions of Americans could see their retirement plans wiped out in short order.
Once again, please do not place your faith in the system.
If you do, you are likely to end up holding a bag of broken promises.
A gigantic tsunami of unfunded pension obligations is coming. A lot of state and local governments are going to go broke. A lot of promises are going to be broken.
If you hope to retire any time soon, you better plan on being able to take care of yourself.
Statistics: Posted by yoda — Mon Mar 12, 2012 4:57 pm
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