Tag Archives: Debt

News

Obama and family bill taxpayers for 17 lavish vacations

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FrontPage Magazine explains.

Excerpt:

When the president’s 13-year-old daughter, Malia, took a Spring Break trip to Mexico with 12 of her friends and 25 Secret Service agents–one that reportedly cost taxpayers $2.5 million–it was covered by the mainstream media. AFP filed the initial report, and the story was subsequently picked up by Yahoo, the Huffington Post, and the International Business Times, as well as foreign publications, such as Daily Mail, the Telegraph and The Australian.

Yet by the same evening, all of the stories had been removed from each of those sites. The updated links either directed one to a site’s home page or 404 error pages, reading “page not found.” What happened? The White House got a compliant media to scrub the story. Kristina Schake, Communications Director to the First Lady, confirmed this to Politico: “From the beginning of the administration, the White House has asked news outlets not to report on or photograph the Obama children when they are not with their parents and there is no vital news interest. We have reminded outlets of this request in order to protect the privacy and security of these girls.”

Again, such concerns for the safety of First Family members are entirely legitimate. Yet some questions remain unanswered. Why would the president allow his daughter to travel to Mexico despite a Texas Department of Public Safety warning not to go there because “cartel violence and other criminal activity represent a significant safety threat, even in some resort areas”? Why was it necessary to include a dozen friends, making the trip more expensive and security far more complicated? Why are members of the mainstream media taking marching orders from the White House? Why did the trip costtaxpayers $2.5 million?

Perhaps, as the saying goes, the apple doesn’t fall far from the tree. Last week, Judicial Watch released a report revealing that First Lady Michelle Obama’s trip to Costa Del Sol, Spain in 2010 cost taxpayers $467,585. Again, no reasonable person begrudges a woman in the public spotlight some rest and relaxation. But as the New York Times reports, part of that R&R included a stay at the “five-star Hotel Villa Padierna near Marbella, where at least 30 rooms were reserved for the entourage, including those for security. The hotel is one of Spain’s more luxurious establishments, with rooms ranging from $500-a-night to a $6,600 suite with 24-hour butler service.”

Furthermore, Mrs. Obama is hardly reticent when it comes to taking vacations. Her February 2012 trip to upscale Aspen, Colorado, for a President’s Day ski weekend with daughters Sasha and Malia, marked the 16th vacation (the updated number is now 17) taken by Obama family members in just over three years, not including visits to the Camp David compound, or short trips like a New York City “date night” taken in May 2009. Nor is the First Lady or the president seemingly concerned saddling taxpayers with the cost of flying separately to the same vacation sites. It cost taxpayers $100,000 when the First Lady jetted to a 2010 Hawaii vacation ahead of her husband, and several thousands more when the First Lady traveled to a Martha’s Vineyard vacation on a separate government jet only four hours prior to the president’s trip there. While at Martha’s Vineyard, the First Family stayed at Blue Heron Farm, a property that reportedly rents for approximately $50,000 per week. And on a trip to Maine in July of 2010, the President’s dog, Bo, and his handler traveled on a separate plane to that destination.

Such a penchant for extravagance has added up to some pretty daunting numbers. The UK’s Daily Mail, citing White House sources who referred to the First Lady as “a vacation junkie,” claimed Michelle Obama had “has spent $10 million of U.S. taxpayers’ money on vacations alone in the past year”–as of August 2011. The unnamed source further notes that Mrs. Obama also enjoys “drinking expensive booze during her trips. She favors martinis with top-shelf vodka and has a taste for rich sparking wines.”

We are now approaching a $16 trillion dollar national debt, with $8 trillion of it accumulated between the time when the Democrats took over the House and Senate in January 2007 to now. You would think that we might see some awareness of the situation from the man in charge. But he seems to be oblivious to what real Americans are facing as they try to make ends meet.

News

Another looming debt crisis: law school students racking up $100,000+ in debt

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Consider this scary article from the Competitive Enterprise Institute. (H/T Hans)

Excerpt: (links removed)

Federal financial aid policies haveencouraged law students to borrow increasing amounts to attend law school, despite the glut of lawyers (oddly, government policies encourage more people to go to law school, driving up law schooltuition, even as the Obama administration seeks to cut back on vocational education aimed at training the skilled blue-collar workers who are in desperately short supply in much of the country). The result, says law professor Brian Tamanaha, is a “Quickly Exploding Law Graduate Debt Disaster” in which most recent graduates of many law schools will never be able to pay off their staggering student loan debt. At the liberal Balkinization blog, Tamanaha notes that the average student has over $100,000 in debt just from law school at many schools…

[…]As one commenter noted earlier, federal financial aid and student loans have driven up law school tuition and student loan debt: “education loans . . . often have implicit government guarantees,” even those not explicitly backed by the government. As a result, “like the GSE’s, the supply of credit for education loans has continued to expand. So in a way colleges and universities, public and private have been in a bubble akin to the housing bubble. The benefits to the institutions are irresistible and so there is no way they will try to reign in costs and thus tuition. Not as long as students are willing and able to borrow.” When the bubble pops, taxpayers will be on the hook for countless billions of dollars (many graduates already are not repaying their student loans). “Why is college so expensive? A new study points to a disconcerting culprit: financial aid,” notes Paul Kix on page K1 of the March 25 Boston Globe. I and professors and education experts commented earlier on that study at Minding the Campus. Other studies also have concluded that increased federal financial aid, such as student loans, drives up college tuition, and you can find links to some of them here.

[…]When law school graduates are unable to pay off their student loans, lenders will come after their elderly parents who co-signed for the loans.  As the Washington Post notes, “Americans 60 and older still owe about $36 billion in student loans . . . Many have co-signed for loans with their children or grandchildren to help them afford ballooning tuition.”

According to the liberal New York Times, law schools do a woeful job of preparing students to practice law.

Excerpt:

The lesson today — the ins and outs of closing a deal — seems lifted from Corporate Lawyering 101.

“How do you get a merger done?” asks Scott B. Connolly, an attorney.

There is silence from three well-dressed people in their early 20s, sitting at a conference table in a downtown building here last month.

“What steps would you need to take to accomplish a merger?” Mr. Connolly prods.

After a pause, a participant gives it a shot: “You buy all the stock of one company. Is that what you need?”

“That’s a stock acquisition,” Mr. Connolly says. “The question is, when you close a merger, how does that deal get done?”

The answer — draft a certificate of merger and file it with the secretary of state — is part of a crash course in legal training. But the three people taking notes are not students. They are associates at a law firm called Drinker Biddle & Reath, hired to handle corporate transactions. And they have each spent three years and as much as $150,000 for a legal degree.

What they did not get, for all that time and money, was much practical training. Law schools have long emphasized the theoretical over the useful, with classes that are often overstuffed with antiquated distinctions, like the variety of property law in post-feudal England. Professors are rewarded for chin-stroking scholarship, like law review articles with titles like “A Future Foretold: Neo-Aristotelian Praise of Postmodern Legal Theory.”

So, for decades, clients have essentially underwritten the training of new lawyers, paying as much as $300 an hour for the time of associates learning on the job. But the downturn in the economy, and long-running efforts to rethink legal fees, have prompted more and more of those clients to send a simple message to law firms: Teach new hires on your own dime.

“The fundamental issue is that law schools are producing people who are not capable of being counselors,” says Jeffrey W. Carr, the general counsel of FMC Technologies, a Houston company that makes oil drilling equipment. “They are lawyers in the sense that they have law degrees, but they aren’t ready to be a provider of services.”

[…]Consider, for instance, Contracts, a first-year staple. It is one of many that originated in the Langdell era and endures today. In it, students will typically encounter such classics as Hadley v. Baxendale, an 1854 dispute about financial damages caused by the late delivery of a crankshaft to a British miller.

Here is what students will rarely encounter in Contracts: actual contracts, the sort that lawyers need to draft and file. Likewise, Criminal Procedure class is normally filled with case studies about common law crimes — like murder and theft — but hardly mentions plea bargaining, even though a vast majority of criminal cases are resolved by that method.

[…]“We should be teaching what is really going on in the legal system,” says Edward L. Rubin, a professor and former dean at the Vanderbilt Law School, “not what was going on in the 1870s, when much of the legal curriculum was put in place.”

Not only that, but the marketplace is saturated with lawyers already. When supply increases and demand decreases, prices fall. The new batch of lawyers are not going to be able to command the same salaries as the old batch.

News

Would the Buffett Rule “stabilize our debt and deficits”?

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The Buffett Tax (click for larger image)
The Buffett Tax (click for larger image)

The Wall Street Journal assesses Obama’s claims about the Buffett Tax.

Excerpt:

Forget Warren Buffett, or whatever other political prop the White House wants to use for its tax agenda. This week the Administration officially endorsed what in essence is the Obama Rule: Taxes must be high simply to spread the wealth, never mind the impact on the economy or government revenue. It’s all about “fairness,” baby.

This was long apparent to those fated to closely watch the 2008 campaign, but some voters might have missed the point amid the gauzy rhetoric about hope and change. Now we know without any doubt. White House aides made it official Tuesday in their on-the-record briefing on the new federal minimum tax that travels under the political alias known as the “Buffett rule.”

The policy goal is to impose an effective minimum tax of 30% on the income of anyone who makes more than $1 million a year. When President Obama first proposed this new minimum tax he declared that the rule “could raise enough money” so that we “stabilize our debt and deficits for the next decade.”

Then he added: “This is not politics; this is math.” Well, remedial math maybe.

The Obama Treasury’s own numbers confirm that the tax would raise at most $5 billion a year—or less than 0.5% of the $1.2 trillion fiscal 2012 budget deficit and over the next decade a mere 0.1% of the $45.43 trillion the federal government will spend. When asked about those revenue projections, White House aide Jason Furman backpedaled from Mr. Obama’s rationale by explaining that the tax was never intended “to bring the deficit down and the debt under control.”

So if it doesn’t do what Obama says it’s supposed to do, what would really do?

The Buffett rule is really nothing more than a sneaky way for Mr. Obama to justify doubling the capital gains and dividend tax rate to 30% from 15% today. That’s the real spread-the-wealth target. The problem is that this is a tax on capital that is needed for firms to grow and hire more workers. Mr. Obama says he wants an investment-led recovery, not one led by consumption, but how will investment be spurred by doubling the tax on it?

The only investment and hiring the Buffett rule is likely to spur will be outside the United States—in China, Germany, India, and other competitors with much more investment-friendly tax regimes. The Buffett rule would give the U.S. the fourth highest capital gains rate among OECD nations, according to a new study by Ernst & Young, to go along with what is now the highest corporate tax rate (a little under 40% for the combined federal and average state rate). That’s what happens when politicians pursue fairness over growth.

When you make it less attractive for people with capital to invest their capital here at home then they will take their capital and invest it abroad. What Obama’s proposal accomplishes is to outsource jobs – the exact thing that he is always complaining about. It’s higher taxes and more regulation, especially EPA regulation, that causes capital (and consequently jobs) to move overseas. If you want capital to come into America, you lower the tax rates.

In other news, the Obama administration is suing a company owned by Warren Buffett for unpaid taxes.