Presenting Obama's Plan To Bail Out The (Otherwise Perfectly Solvent) States

Tyler Durden's picture

We all know by now that Meredith is a witch: an unpatriotic, racist bitch, who eats kittens for breakfast, who deserves to be grilled by Joe McCarthy's exhumated corpse for telling communist truths, pardon, lies (just a Freudian slip dear Department of Central Planning and Internet supervision), and who will soon be accused of having unprotected (yet arguably consensual) sex with a Swedish man. But just in case she is on to something, here comes the president's plan to bail out the (otherwise perfectly solvent and all, we promise) states. The NYT reports that "President Obama is proposing to ride to the rescue of states that have borrowed billions of dollars from the federal government to continue paying unemployment benefits during the economic downturn. His plan would give the states a two-year breather before automatic tax increases would hit employers, and before states would have to start paying interest on the loans." But where are the details you may ask? Patience grasshopper: they will be included in the latest budget proposal which has been delayed for nearly half a year now as the printer ran out of zeroes. "The proposal, which administration officials said would be included in
the 2012 budget that the president is scheduled to unveil next week, was
greeted coolly by Republicans on Capitol Hill, who warned that the plan
would ultimately force many states to raise their unemployment taxes in
the years to come." Ah yes, the Republicans - those paragons of sound financial judgment and sounder virtue. After all who can forget whole "Tea Party thing" which did so much to prevent the incurrence of a few hundred billion in additional debt over the next decade to pay for the latest Russell 2000 at 36,000 hairbrained ponzi scheme concocted by Rudolph von Bernankestein.

More from the NYT on why QE3.1 - the Muni Edition (not to be confused with QE3.7 the MBS edition, or the QE3.495 the ICE gold margin requirement edition, and most certainly not with QE3.495,440,559 the "Kill the David Einhorn shorts" edition) is just around the corner:

Administration officials will make the case that the plan helps the economy and states in the short run, while bringing overdue changes to the unemployment insurance system in the long run. And Republican lawmakers could find themselves under pressure from Republican governors, whose states owe the federal government billions of dollars.

The administration is also betting that employers will back the proposal, especially in states where their taxes would otherwise go up. Michigan, for instance, owes the federal government $3.7 billion it borrowed to pay unemployment benefits. Under current law the state would be forced to pay $117 million in interest to the federal government this fall, and the federal tax on employers would automatically step up each year to repay the debt.

The state’s newly elected Republican governor, Rick Snyder, has been lobbying for relief; his press secretary, Sara Wurfel, said that while they would need to see the details of the plan, they would “very likely welcome the much-needed relief.”

Robert Gibbs, the White House press secretary, said, “We are giving help to some states who have had to borrow and not been able yet to pay back.”

The states are in a tough spot. Many entered the recession with too little money in their unemployment trust funds, and they quickly ran through what little they had as unemployment rose and remained stubbornly high month after month.

So, uh, can we all drop the pretense and agree that while certainly scaring the children (who will all need PhDs in number theory in a few years just to count to the debt target, pardon, limit) and the idiots, Meredith has been pretty much spot on?

In fact, we can even forgive her for telling Congress to fuck off with their witch hunts:

Citing scheduling conflicts, Ms. Whitney has declined an invitation to appear before the panel of the House Oversight and Government Reform. But the subcommittee’s chairman, Representative Patrick T. McHenry, Republican of North Carolina, said that would not dissuade him from investigating her record.

“This isn’t a gotcha thing, but she’s going to be part of the hearing, whether or not she participates,” he said. “If she doesn’t want to come forward in a venue like this, that makes a statement.”

And some more details on how Obama will arrive in one of Blackhawk Ben's stealth Commanche gunships:

In his budget, officials said, Mr. Obama will call for deferring interest payments on the debt and postponing the automatic tax increases. Then, in 2014, to bring that money back into federal coffers, the administration proposes to raise the minimum level on which employers pay taxes.

Current law requires states to collect unemployment taxes on at least the first $7,000 of income; that minimum has not been raised in decades.

The president’s proposal would raise that minimum taxable wage base to $15,000. The rate of the federal portion of the unemployment taxes would then be lowered, so the proposal would not raise federal taxes on states that do not owe the federal government money. But it would speed the rate at which states that do owe money repay the federal government, and allow states to collect more unemployment taxes to rebuild their trust funds if they do not lower their tax rates.

It was that prospect — that the higher wage base would lead to higher taxes for states after 2014 — that drew rebukes from Republicans in Congress.

Don't worry children. It is for your own good. Plus if this plan falls through, the world will end. And yes, Meredith is certainly a witch and should be burned at the stake. Surely she will be able to fly away to safety due to the null hypothesis of her witchiness, and if she actually does burn: well, mistakes were made...

 

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mcguire's picture

kick the can down the road until world war 3 starts, then everyone takes a haircut.. austerity in peace is a hard sell, but austerity in war.. that is patriotism.  and if that fails, just use the old "they left the children to die on the cold floor" ploy..

http://www.youtube.com/watch?v=fVE8rV3-Zos

mcguire's picture

off topic: hilarious max keiser quotes from today on blythe masters:

blythe masters as the modern marie antoinette, says "let them eat plastic rice, let them eat derivatives of representations of virtual food... on farmville..."

"she's sick.. she is trying to mate with a credit derivative, and she gave birth to a swap"

http://www.youtube.com/watch?v=i-B2V2l_6QE

Thomas's picture

By bailing out the states we can preclude the necessary changes until its too late. I can taste vomit in my mouth.

SpeakerFTD's picture

Give the Tea Partiers some credit.   Their guys shot down the Patriot Act today.  Baby steps.

hack3434's picture

Yet the body scanners are still up.

A Nanny Moose's picture

Again....baby steps. Rome was neither built, nor burned in a day. The bureaucrats run the show.

 

blindfaith's picture

baby steps...optimism indeed.  Look at the nonsense these bozos are debating now...not a damn thing that is going to cure any current physical problem this nation has.   Spin wheels, look busy, do nothing.

I have two very good friends on the hill, one Democrat and one Republican that work for committees and or Senators over the last 25 years.  They both tell me the same thing, tearfully,...NOTHING IS CHANGING!  The new crop is just like the old crop.  30 seconds in town and the powers in DC had them. ANY OF YOU who expect that any of these new politicians are going to do YOU bidding will be fooled once again.  They both tell me that the corruption, greed, and dishonesty on the hill is so bad that both are thinking of quiting, they can't stand it anymore.  AND these are two fine, fine people that we don't need to loose.  And, we have the balls to point a finger at other nations.

My God, who knows...maybe 2012 really is not a joke and the government knows it and just wants to keep the lid on things until then.

AS for Rome, they intended to leave a legacy, they planned that...are we?  Or will we just be a flash in the night?

Cardinal Fang's picture

Oh, shut up! There is no such thing as a bureaucrat we cannot afford to lose. I am always amazed at people who are somehow disappointed that the government can't fix anything. This level of naivete is astounding.

holmes's picture

Two gov't beaurocrats who can't take it anymore after 25 years of aiding and abetting the great Ponzi. How noble, how courageous. Or maybe, the Gov't pension is kicking in?

Zon's picture

Except the majority of democrats voted no, while 100 plus republicans voted yes. Also, so called Queen of Tea party Michelle Bachmann voted yes to extend the patriot act

nmewn's picture

The Tea Party doesn't have "a leader"...and refuses to accept one...and in so dong, scares the hell out of both sides.

Which is what we want...isn't it?

nmewn's picture

"puhleeze stop drinking tea party koolaid."

This coming from a guy with an Adolph Hitler avatar who never passes on a chance to screech joo!!!...LOL.

By the way...I never click on links by people I don't trust...you fall into this category...but I see "koch-industries" in the link.

So apparently your premise is, if one is wealthy they should not fund causes with which they hold a common view with those who are less wealthy. So you would feel the same way about your brother nazi Soros?

Koolaid indeed.

midtowng's picture

No. The Democrats shot down the Patriot Act today.

Bob's picture

Credit where credit is due.  Props to the Tea Party.

Likewise to Kucinich and other so-called liberals who provided the bulk of the votes. 

lizzy36's picture

Stunned that the morally inclined Bill Gross (certainly NOT part of the money and greed culture) frontran another government bailout. Stunned.

sunny's picture

Kittens??  Really?  No one saw that coming, how were we to know?

sunny

 

StychoKiller's picture

She turned me into a newt!  (But I got better!) :>D

pleseus's picture

Here comes the Federal Bailout of States.  QE3 will consist of muni bonds, mortgage and other shit junk purchases.  Bill Gross is jacking off in his Newport Beach mansion right now.

Founders Keeper's picture

[Here comes the Federal Bailout of States.]---pleseus

"More" Federal Bailouts of States, I think you intended.

He who pays the piper, calls the tune. The states should be flatly rejecting any and all Federal money. The first state to do this will be the winner.

 

blindfaith's picture

your are joking right?  Even the mighty righteous South Carolina, Tennessee, and Texas will step up to the plate and cry loud and long that they won't take a penny in public, but grab it like a hungry raccoon and run when you look away.

sun tzu's picture

You mean they are grabbing back their own money that was taken by the federal government in the first place. It's the Obama welfare states like Maryland and Virginia that are pigs at the federal trough

New_Meat's picture

"Here comes the Federal Bailout of States."

Federal bailout should come with consequences--like, 'ok, but you are grounded and can't be a state for a while.'

http://www.congress.org/congressorg/bio/userletter/?letter_id=6393966166

- Ned

Kali's picture

Another nail in the coffin for small bizzes.  Higher unemployment taxes, probably MUCH higher in the near future.  There is no way to plan for the future of a business in this climate.  And people wonder why there are no jobs?  The Feds aren't bailing anyone out, the taxpayers are bailing everyone out. 

sun tzu's picture

It's not the taxpayers money. It belongs to 0bama

Hulk's picture

Glad to hear Meredith told them to fuck off...

Kali's picture

+ 1 fat middle finger

I am a Man I am Forty's picture

why, let her get her ass up to congress and give her dog and pony show so she can talk her book, the woman doesn't mind slobbering all over the mic on cnbullshit every chance she gets plus it will help her business, truth is she doesn't have her shit together on the muni bond stuff, u can take that to the bank

even though ca and illinois should implode she still doesn't know what she is talking about

so far, she is wrong, $6M in defaults this year in a $2T market

 

traderjoe's picture

Long some muni's I take it?

Yes, the defaults are coming. You take one major muni BK/default, and the market will go bidless. Just like auction rate securities...

I am a Man I am Forty's picture

yes!  but not ca il or nj, sold those near the peak of the bond market, i only care about defaults, i don't care if interest rates go up, i will invest in more munis when the price is right, but that ain't now

 

thanks for asking!

sun tzu's picture

I'm sure you did. Everyone sells at the top on the internet

Hephasteus's picture

While bench pressing 350 lbs.

sun tzu's picture

I suppose you have your shit together. You're just jealous that nobody wants to see your ugly ass slobbering over the mic

I am a Man I am Forty's picture

you don't know what i look like so fuck off

sun tzu's picture

Did I piss off your ugly ass face? boohoohoo asswipe

Chump's picture

You are not very Sun Tzu-ish.  More Jersey Shore-ish, really.

Misean's picture

It's not a loan, just a deferment of borrowed UE benifits. Once everyone blows through their benefits and is on food stamps, then the State governments can charge sales tax on food, and these taxes and their steady increases can be added directly to the COLA on the food stamp cards. And Benny can install new warp cores on the printer matrix to pay for it all. Perhaps he can power those warp cores with solar cells...

Cursive's picture

Is this like a mortgage payment holiday for the states?  Once again, our leaders have one set of rules while the common folk are held to a higher standard.  WTF all of this shit.  Let's just skip to the Red Money proposal.  I only ask that the Red Money proposal include the abolition of the FRB and the IRS.  Reboot this pathetic clusterfuck.

Founders Keeper's picture

[I only ask that the Red Money proposal include the abolition of the FRB and the IRS.  Reboot this pathetic clusterfuck.]---Cursive

Thanks for your post, Cursive.

I expect things will get a lot more clusterfucky before the reboot.

For instance, I expect a lot more "holidays": bank holidays, foreclosure holidays, unemployment holidays, stock market holidays, election day holidays, etc.

 

StychoKiller's picture

Throw in some state funerals for VIPs of every persuasion, AND IT'S PARTY TIME! :(

Mercury's picture

Any state that accepts this federal largess will be that much closer to suicide.  After this they will have that much less control over their own affairs...

One government to rule them all

One government to find them

One government to bring them all

And in central planning bind them

nmewn's picture

"Any state that accepts this federal largess will be that much closer to suicide."

Our new governor here (Fla.) just proposed the largest budget cut in our states history. Our last governor (Crist) accepted the "shovel ready jobs stimulus" from Barry...which of course only delayed the inevitable adjustments that must be made.

Now, the gnashing of teeth and rending of clothes begins in earnest ;-)

weinerdog43's picture

And yet, his proposal has an increase of about 100 extra staff for his office.  Nice. 

Austerity for thee, but not for me.

nmewn's picture

Sometimes it takes a bigger crook than the ones that are there now weinie...he's cutting 8600, a good start...maybe his 100 is for security ;-)

Watch and learn.

jmc8888's picture

I guess I never really realized that now (well not now...technically soon...but not yet....maybe) our Federal Gov't is in the usury business bleeding our states.  The Federal Gov't would then turn around and pay the banksters off for its loans. The situation the banks created through capturing federal employees to open their playgrounds, and the havoc it ultimately wrecks(ed), then turns what Hamilton did on his head.  Instead of federal gov't clearing the way for states to survive by taking buzz cut loans onto the federal books, instead they would be on the hook so the federal gov't would survive. (who then in turn is on the hook so the banksters survive).  Instead of the federal gov't as a force for enabling the American spirit, it would instead crush it.  Again, for the banks.  I'm picturing Spaceballs and the giant Vacuum.

Of course that's only if the federal gov't throws the states to wolves.  They haven't yet, but it's all set up to happen at some point....just maybe not now.

Glass-Steagall

 

Shameful's picture

Mhhh, waiting for that budget.  Expecting it to be big and beefy...bigger, longer, and uncut.  No crony capitalist left behind, no crook left in the cold.  I can only hope that it's introduction starts with "Excuse me while I whip this out".

As to the increase in 2014, whatever.  I have all of 0 concern for 2014.  If Zimbabwe Ben and the Bailout Boys haven't slagged the dollar and plunged us into a nightmare economic hellstorm by then, I will be to busy dancing a jig dancing a jig to care about it.  If my wages still buy food and fuel in 2014 I'll be a happy camper.

Misean's picture

"Expecting it to be big and beefy"

They make pig out of beef now? Is that one of those hedonic adjustment substitution things?

Sheepneck's picture

"Zimbabwe Ben and the Bailout Boys"

Sounds like a really bad garage band.