Understand and Prepare for a New Economy

When times are tough, what's one supposed to do? I'm trying to figure that out. But, I can assure you this is not the answer:

The Navajo Nation opened its first casino last week and, according to The Associated Press, did very well on its first day of operation. Navajo Nation President Joe Shirley told the AP people pumped $1.2 million in cash into the slot machines on the first day alone.

That's amazing to me - $1.2 million into slot machines at a casino east of Gallup. And, we wonder why we have an economic crisis on our hands. Speaking of which, here's a couple of videos to add perspective to the current situation:



Now, that you've had yourself a giggle, here is something to sober you up:



[Hat tip: NewMexiBank (formerly NewMexiKen, but now in line for a lucrative bailout)]

If you're looking for something a little more substantial in the way of video information to understand our economic predicament, then I HIGHLY RECOMMEND watching Chris Martenson's crash course video series. Mind you, this is not something to be done in two minutes before moving on to reading your next blog. It's a series of videos that all told will take three hours to view, but I promise they are well worth your time.

If nothing else, you need to watch the seven minute segment on the Brief History of U.S. Money. The partisans among us - myself included - love to point the fingers across the aisle to explain the mess we're in, and in so doing infer that our party has the answer. However, it is clearly becoming evident that this mess has been decades in the making.

I've given you a lot to look at, so I won't plan on blogging again until Monday. But, I wish you and yours a Happy Thanksgiving on this... my 1,000th post.

The "Me First" Governor's Final Snub

If Governor Bill Richardson is indeed appointed Commerce Secretary, then the big question that remains is whether for once he will put New Mexico before his own self interests:

"If the governor is called to the Cabinet, I'm ready to step in and lead. And there will be a very smooth transition," the woman who could soon be the state's first female governor said in her first news conference since word broke that Gov. Bill Richardson could be the next U.S. commerce secretary.

"It's an exciting challenge, and I'm ready for it," [Lt. Governor Diane] Denish told reporters before touring a veterans integration center in Albuquerque.

Later Monday, Richardson spokesman Gilbert Gallegos referred questions about the commerce job to aides to President-elect Barack Obama, but said Richardson and Denish have spoken in general terms during the past week about the potential for a transition.

"Gov. Richardson believes the lieutenant governor is prepared to be a very good governor," added Gallegos — though he said Richardson is looking forward to delivering his annual State of the State Address to lawmakers Jan. 20.

And, there it is. That final parting shot at the Lt. Governor, and more importantly all New Mexicans... "Richardson is looking forward to delivering his annual State of the State Address to lawmakers Jan. 20. "

Really?

January 20th is the day when all eyes will be turned toward Washington D.C. Regardless of which way you voted, there is no denying that the inauguration of our nation's first African-American President is a momentous occasion.

Equally important, albeit on a more local scale, is the fact that January 20th would be the first date in New Mexico's history that the State of the State Address would be given by a female Governor. Yet, Governor Richardson is actually considering giving his farewell address on that date. Why?

What could an outgoing Governor, who has been only an infrequent visitor to the state over the last two years, possibly have to say that is so important? His years in office have set the stage for what promises to be one of New Mexico's most difficult economic periods, and no self-aggrandizing parting words are going to alter that legacy.

The 2009 State of the State address is not going to be a time for looking back, but a time for facing the numerous hurdles ahead. The make-up of the Legislature in the Senate and the House has drastically changed - both on the Democratic and Republican sides. The budget outlook is looking bleaker everyday with oil and gas prices dropping precipitously from one moment to the next, and municipalities across the state are projecting budget shortfalls as a result of declining property and gross receipt tax revenues.

Yet, rather than giving New Mexicans a chance to hear what our new Governor plans to do about it, Governor Bill Richardson is planning to take the stage one more time. A man abandoning the ship as we head into the storm, and he wants to tell us how to navigate. If Richardson gives the 2009 State of the State, he will confirm what we've all known all along. It was never about us. It was always about him.

Richardson as Commerce Secretary

My thoughts on Governor Richardson as Commerce Secretary... it's not a bad choice.

It goes without saying that I'm no fan of Governor Richardson; however, to the extent that the primary goal of the Commerce Secretary is to "to foster, promote, and develop the foreign and domestic commerce" of the United States, there could be worse choices than Bill Richardson. The Governor's actions, which have put us down the road of financial disaster here in NM, have more to do with his spend, spend, spend approach to government, and less to do with his ability to promote New Mexico to outside businesses - both foreign and domestic.

Quite to the contrary, he has done a pretty good job of promoting New Mexico - albeit because it was in his own self-interests to do so. With Bill Richardson as Commerce Secretary, New Mexico will land on the radar of many global companies. On the other hand, if Bill Richardson were up for Treasury Secretary, I'd be scared.

Although, to be honest, I don't believe it matters greatly who President-elect Obama appoints to his cabinet with regard to economic policy. My personal feeling is that we are in for an extremely rocky ride for the next three or four years, and there is no quick fix. It has very little to do with which party is in office, and everything to do with us paying for an economic boom fueled by debt that has now collapsed.

Ironically enough, the answer coming from Washington is to bailout financial institution after financial institution - CitiGroup is the latest to receive $306 Billion. The rationale being to put money back into the system for the banks to lend. However, that makes no sense when you consider the fact that the banks need the bailouts because they made bad lending choices, but hey, what do I know? It's not like I'm a banker or economist.

In my humble opinion, anything that gets Governor Richardson out of New Mexico as soon as possible is a good thing. With Richardson out, we've got a chance at trying to cut the waste out of government to get the budget back to where it can be supported. Of course, if the budget is not cut, there is only one option left - raiding the permanent fund once again. Something Bill Richardson proved very adept at doing in the past.

Watch Out! Here Comes the Tax Man

Are you feeling the squeeze? The economic pressures keep increasing. The Dow Jones took another dive finishing at 7,552 - a five and a half year low. To put this in perspective, in October of last year it was trading at over 14,000. It has lost nearly half its value in a little over a year. In other words, the market has lost TRILLIONS of dollars in value. My gut says that before the end of 2009 we'll see the Dow hovering at 5,000. Mind you, I'm not an economist or market professional, but then again a lot of those folks predicted the bottom to be around 8,000.

The hit to the economy is not just paper losses. We're losing real jobs. The jobless rate is at a 16 year high and climbing:

The US has been rocked by the fastest weekly rise in unemployment in 16 years.

New claims filed for unemployment insurance zoomed last week to 542,000, the highest since the summer of 1992, when the nation was recovering from a recession, the Labor Department said.

The latest news on the crucial jobs market was worse than analysts expected. Meanwhile the numbers continuing to draw jobless benefits climbed to more than four million, the highest in just over a quarter-century.

So, what's next? Well, it looks like the tax man is coming. Yeah, you're probably thinking. We all know that. The tax man is coming to tax the rich. Uh, think again. The tax man is coming for everyone [cue ominous music] - the rich, the tired, the poor, our huddled masses are all about to be taxed a little more:

Since the study findings were released last fall, education advocates have been pushing for use of the new formula. Despite approval from the state House last winter, a measure on the funding formula died in a Senate committee.

The biggest problem was where to get the additional money. Now advocates think they've found a solution.

Bud Mulcock, with the New Mexico Coalition of School Administrators, said a 1 percent increase in the state's gross receipts tax could raise between $470 million and $475 million.

He suggested money raised from a tax increase be dedicated to schools and not directed to the state's general fund. That would ensure the money goes to education and would also be a selling point to the public, he said.

That money, Mulcock said, not only would pay to implement the funding formula, but also would ensure no cuts are necessary for the following year. "It's a bold stroke," he said, "but I think it's a time for bold strokes."

Yup, no doubt about it. During the toughest economic times to hit our country in a quarter century, increasing gross taxes on everybody in New Mexico by over 15% is definitely a bold move. Before you start leaving me nasty comments that the proposed tax increase is only one percent, remember that adding a percentage point to a tax in the five to seven percent range is a huge tax increase. And, it is going to hit the poorest amongst us the hardest.

Mark my words, this is only one of many new taxes which will be pushed. In addition to the tax and fee increases we'll see being pushed statewide, you are going to have regional (think rail runner and spaceport) and municipal tax increases to cover the budget shortfalls from the spending spree of prvious years.

The Important Work of State Government

Very often the important work performed by state government and its various commissions gets a bad rap. It's really not right. The different branches of government and the various commissions formed and funded by taxpayers tackle some of the most important issues facing our society.

For example, consider that in these times of economic crisis, with people wondering how they're going to keep a roof over their families' heads and food on the table, a brave group has spent time, energy and money (reimbursement for mileage and meeting expenses ???) to solve one of the biggest concerns facing most New Mexicans (subscription):

Well, whoopi ti yi yo — New Mexico finally has a state cowboy song.

Well, almost. It still has to be voted on by the Legislature during its 2009 session.

Called "Under New Mexico Skies," the song was written and sung by Syd Masters of Edgewood.

The song was chosen by a small group of intrepid members of the New Mexico Music Commission who gathered at the Bataan Memorial Building in Santa Fe Wednesday morning, armed with chocolate and cookies. They listened to recordings from 26 entrants in the contest.

Yeah, thank goodness for state government. It's good to know that the state legislature will be setting aside time during the 2009 session to deal with this important issue.

Tucked Away in Bailouts

Just keep this in mind that every time the D.C. folks talk about the urgent need for bailouts:

Tucked in among billions of U.S. taxpayer dollars to bail out Wall Street are a few crumbs for the people — not for the folks who took out risky mortgages or who thought someone else would pay off their credit card bills, but for that tiny slice of America that bicycles to work.

The Bicycle Commuter Act was among hundreds of earmarks federal lawmakers buried in the fine print of House Resolution 1424, aka the $700 billion bailout. It provides a way for employers to give bicycle commuters a whopping $20 a month as a tax-free fringe benefit. It’s not a lot of money, expected to cost the nation a mere $1 million a year, but it has the potential to be a big deal for bike commuters.

Mind you, I'm not against people biking to work, but was giving these folks an extra $20 a month really a priority considering everything facing our nation? I don't think so.

Obama Please Take Our Governor

So, let's see if I'm understanding this correctly... New Mexico is facing a half a billion dollar shortfall (subscription) that threatens education funding:

New Mexico faces the prospect of a larger than expected budget shortfall this year because of declining energy prices and the economy continues to weaken.

Senate President Pro Tem Tim Jennings sent a letter Monday to public school and higher education officials warning that revenues could run $500 million short of what's needed to cover spending in the current budget year. Lawmakers were told last month the budget shortfall was at least $200 million to $250 million.

"I'm really afraid that we could be in a place where they have the perfect storm," Jennings, a Roswell Democrat, said in an interview.

He and other lawmakers say all areas of government should prepare for possible cutbacks because of the bleak revenue outlook. Public schools and higher education account for three-fifths of spending from the state's general budget account.

And, Governor Bill Richardson's immediate focus is to do WHAT? (subscription)

Gov. Bill Richardson has abandoned plans to build a $25 million state-of-the-art equestrian center at Mesa del Sol in Albuquerque and instead wants to put it at Expo New Mexico, home of the State Fair.

"Gov. Richardson decided to locate the new equestrian center at Expo New Mexico as part of a larger effort to redevelop the property following the loss of the Downs at Albuquerque," Richardson spokesman Gilbert Gallegos confirmed Monday.

"While Mesa del Sol is an attractive location, the governor's immediate focus is on transforming Expo so it will thrive as a cultural and entertainment destination for all New Mexicans," Gallegos said. "A state-of-the-art equestrian center will be part of the new Expo New Mexico's future."

For the sake of New Mexico, everyone please write President-elect Obama and ask him to appoint Governor Richardson to something... anything, and the sooner the better.

You're Reading the Small Print, Right?

Uh oh, the banking situation is getting worse, not better, and guess who is going to get stuck with the bill not once, but twice:

Citigroup is reneging on a promise it made to tens of millions of credit card customers in good times.

After pledging that it would no longer reserve the right to raise interest rates at any time for any reason, Citigroup now plans to start raising rates for customers who have not had an increase in at least two years. The move appears to backpedal from a commitment that Citigroup executives made to Congress in early 2007 when they tried to fend off greater regulation by promising not to raise rates until an account expires.

Citigroup attributed its decision to the “difficult market environment,” suggesting that the cost of the program — on top of sharp increases in its borrowing costs and severe anticipated losses — cut too deeply into profits. The bank said the policy change would only partly offset a $1.4 billion third-quarter loss for its credit card unit. However, it declined to provide specific figures.

That's right, first the taxpayers are going to have to pay for the bailout for generations to come, and now we get hit with larger fees. This news breaks at the same time we learn that Citi is going to layoff another 50,000 people:

Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz) said on Monday it plans to cut about 50,000 jobs as souring economies and global credit conditions cause the U.S. bank with the farthest reach worldwide to retrench. The cuts are expected in the near-term and are on top of the roughly 23,000 jobs eliminated by the second-largest U.S. bank between January and September.

Do I have a problem with a private company making staff layoffs, or increasing the fees for their services? Normally, the answer would be, "No." However, that answer becomes more complicated when the company is a recipient of a federal bailout with my tax dollars.

In these dire economic times, you have to wonder who would want to go into banking? Well, it turns out its hard to find a business that would not like to go into banking. My suggestion, you better start paying close attention to the legalese mailers you get from your credit card companies, or you are going to open a statement and be unpleasantly surprised by the fees you find.

A final note: You can avoid the higher fees if you let your lender know that you reject them and close your account paying off your remaining debt according to the original terms (i.e don't be late). The irony of this is that this means less lending, the precise thing the whole bailout was intended to avoid.

Government Response to Eclipse

Reading the article in today's Albuquerque Journal, I was struck by two ridiculous statements made by government officials (subscription). First, this from state Department of Workforce Solutions spokeswoman Carrie Moritomo:

As of Thursday, it was unclear whether Eclipse employees were eligible for unemployment benefits, said state Department of Workforce Solutions spokeswoman Carrie Moritomo. "I don't know what their employment status is," she said. "We have not been in contact with Eclipse."

The employees haven't been clearly laid off, as was the case in August when close to 800 Eclipse workers lost their jobs in Albuquerque. But since applications for unemployment benefits are considered on a case-by-case basis, Moritomo said Eclipse employees could apply and see what happens.

This is a classic case of government ineptness. Mind you I'm not attacking Carrie Moritomo, she's just relaying what someone up the chain told her she had to say, but you've got to wonder which goofball in state government told her to say it. The Eclipse folks just worked for two weeks without getting paid. Contrary to popular belief, these are not "high wage" jobs. Now, basically all of the employees are two weeks in the hole, and the state can't figure out whether they are deserving of unemployment - Give Me a Break!

I wrote yesterday that the economy is about to get worse before it gets better, and this example of government ineptness is just another perfect example of why.

Ok, now let's move to the second ridiculous statement of the day by a government official:

Eclipse is also two months behind on rent payments to the city's aviation department for its use of four buildings totaling 175,000 square feet at the Sunport, said department planning manager Jim Hinde.

However, the company is current on its payments for its $45 million in industrial revenue bonds issued through the city, said Deirdre Firth, a manager in the city's economic development department.

IRBs cannot be used to meet payroll, she said. Money from IRBs can only be used for equipment and facilities. Firth also said, "We want to assure the people of Albuquerque that there are no city tax dollars at risk in this project."

I know Deidre Firth can't possibly think we're as stupid as her statement makes us seem to believe. There is no doubt in my mind who dictated that statement - Mayor Martin Chavez. Well, they may want to think twice before making another one like that. First the obvious, if Eclipse is behind on its rent payments to the city, and it goes under then there are lost taxpayer dollars.

Second, the "investment" that IRBs that represent, have been spent on equipment and facilities that will never generate revenue for the city if Eclipse shutters its facility, so the city tax dollars are DEFINITELY aAT RISK.

And, we've not even mentioned the $19 million in taxpayer funds invested by the state. The folks over at Eclipse are good people who tried something entrepreneurial that looks like it is going to fail. No big deal, that's par for the course. What's wrong with this equation is the government's involvement using taxpayer dollars.

Look for more problems down the road, or should I say up in space.

If The Feds Buy Credit Card Debt

It looks like there is going to be a change in how that bailout money is spent:

But Paulson said the administration has decided that the original focus of the bailout program — the purchase of distressed mortgage-backed securities and other troubled assets on the books of banks — will not be employed. He said the administration has changed the emphasis because of a need to get money into the financial system much more quickly because of a worsening credit crunch. Setting up a purchase program for the bad assets was taking too much time, officials said.

Some lawmakers applauded Paulson's switch, saying the administration was finally recognizing that its initial plan was flawed.

"I am glad that Secretary Paulson and the rest of the Treasury team have finally seen the light," said Sen. Charles Schumer, D-N.Y. He said he would still like to see more strings attached to make sure banks use their bailout money to increase loans.

Paulson also said the administration was exploring the possibility of setting up a program in conjunction with the Federal Reserve that would provide support for the $1 trillion market in securities that fund such vital consumer products as credit cards, auto loans and student loans. About 40 percent of consumer credit is supplied through the sale of these securities that are backed by payments consumers make on their credit cards and other loans.

Okay, I was adamantly against the bailout when it was being used to buy mortgage defaults. But, at least there was some sense to the argument that long term the value of those mortgages could increases in value.

But, now the feds are talking about buying credit card, student and auto loans? The first two are known as unsecured loans, which means there is nothing of value backing them up. You can't repossess the meal someone charged on their credit card last week, nor can you take back their education. The auto loans are not much better as they represent loans against an asset of rapidly depreciating value.

If you thought the housing market collapse was bad. Wait until the credit card and auto loan markets collapse, and they will. After all, if people are not going to pay back the loan to keep a roof over their heads, do you really think they'll pay back the loans on their credit cards. Whatever "investment" the government makes in the loans will never be re-couped.

However, probably scarier is the fact that government officials are now admitting that the plan that they hatched less than 30 days ago isn't working. Remember, this was sold to us as "a must happen plan" to prevent the collapse of the economy. We were told that people much smarter than us understood the intricacies of the economy and what would work to stabilize the markets. Now, we're being told the same thing again.

Am I the only one who gets the feeling that the federal government is sitting at a roulette wheel with the last of their savings and saying, "Put it on red. Okay, let's try black. Can I get an advance, I know I'm about to get lucky?"

This all about to get much worse.

Have They Lost Their Mind?

An article on Tuesday in the Journal indicated that the City of Albuquerque is already projecting that they will be unable to meet their current financial obligations (subscription):

Albuquerque's system of public financing for campaigns could run out of money before surviving its first mayoral race.

Interim City Clerk Randy Autio estimates that the "Open and Ethical Elections" fund will contain about $1.4 million in April, when the first payments to candidates are expected. The election will be next fall.

Each person who opts into the voluntary system is supposed to get $1 per registered voter. In the mayoral race, that would add up to about $328,000, though the number of voters might grow before campaign season.

If at least five people choose public financing, there wouldn't be enough for the mayoral campaigns, let alone City Council candidates.

The city has been setting aside about one-tenth of 1 percent of its general fund budget to pay for the public campaign financing.

Amid a budget crunch at City Hall, councilors are debating what to do.

Which makes you wonder... How the heck, "amid a budget crunch," could they possibly be considering asking taxpayers to foot the bill to build an arena? (subscription):

City Hall could finance a $344 million events center and hotel complex by imposing a new one-eighth percent gross-receipts tax and by tapping revenue generated by the project — but it would need to find other money for related improvements.

And the city must also be willing to use its existing tax revenue as a "backstop" in case the new tax isn't enough to pay off the debt, according to a financial analysis by the firm Piper Jaffray.

City Hall would need to find separate funding for about $53 million in related improvements around the project's Downtown site, such as a canopy over the railroad tracks, plazas, road improvements and parking garages, the report said. City officials say the state government is one potential source for that money, plus some of the city roadwork would have to be done even if the project isn't built.

The financial overview by Piper Jaffray was presented to the City Council's finance committee this week. The full council will hear about it in a study session Thursday and in a presentation at Monday's regular City Council meeting.

Piper Jaffray was hired by the development team designing and studying the feasibility of a Downtown event center and hotel. The work of Piper Jaffray, along with all the other consultants, is being reviewed by an independent team with no stake in the project, according to the city Department of Municipal Development. RBC Capital Markets, for example, is reviewing the Piper Jaffray report.

The city hasn't decided whether to move forward with the project.

Am I missing something here? What's there to decide? The City of Albuquerque doesn't have money to cover current commitments. How in the world can it be considering adding more? Oh wait, that's right. "City officials say the state government is one potential source for that money." Only one problem with that logic. The state government coffers are running dry due to the rapidly declining prices of oil and gas.

Education + Work Ethic = Achievement

A week ago, American Home filed bankruptcy. Yesterday, Circuit City filed bankruptcy - before the Holiday Season with serious ramifications for retail property owners:

U.S. shopping center and mall property owners took a thumping on Monday as investors feared Circuit City Stores Inc's (CC.N: Quote, Profile, Research, Stock Buzz) bankruptcy filing would usher in more failures and take property owners down with them.

It has been reported that next quarter Eclipse Aviation might be closing shop. In China, people are abandoning the cities and moving back to the countryside. This is not just a U.S. recession. This is a major world recession, and giving AIG another $27 billion is not going to keep it from happening.

The government restructured its bailout of American International Group Inc, raising the package to a record $150 billion with easier terms, after a smaller rescue plan failed to stabilize the ailing insurance giant.

The Federal Reserve and the Treasury Department announced the new plan on Monday as AIG reported a record third-quarter loss of $24.47 billion, largely from write-downs of investments.

The new package, at least $27 billion more than was previously extended, will leave the government exposed to billions of dollars of potential losses.

I was on the phone with a friend, and I predicted as a nation we could hit 10% unemployment before we hit the bottom. A bottom I don't expect us to hit until after the 4th Quarter of 2009. This year's retail holiday season could be one that shrinks for the first time in a long time, and my guess is that next year will be worse.

I'm a naturally optimistic guy, but there is a difference between being an optimist and a dreamer. Now, I do have one really big fear - newly elected New Mexico Democrats will overreach. Contrary to what some folks might suggest, I don't think the Democrats need to "shut up about winning the election and go about maintaining the status quo."

They won, they're entitled to try their way. After all, campaign promises were made, and they are going to have to try and deliver on some of them. That's not the problem. I think it's a mistake, but hey, I'm obviously in the minority. The real problem is if they try and deliver on ALL of them. It is not possible.

Take cap and trade legislation on oil and gas for instance. I've mentioned once before that this was on the table for the legislative session. The thing is, there couldn't be a worse time than right now to pursue this type of the legislation:

"If policy makers ignore the global nature of climate change, it will drive U.S. companies to relocate overseas to low-cost nations where there is little or no environmental regulation," Mullikin said. "This relocation fails to accomplish the goal of reducing global greenhouse gas emissions, and will likely make global emissions worse."

For example, Mullikin said that China's carbon dioxide (CO2) emissions increased more in one year (2006-2007) than U.S. emissions have increased in the last decade (1997-2007). In 2007, China passed the United States and now accounts for 18 percent of the world's CO2 emissions, releasing over 800 million metric tons more CO2 than the United States last year.

The shift of clean, regulated American industry to nations with little to no environmental regulation will result in lost U.S. jobs. Proposals like a cap and trade program will also increase energy prices for consumers.

A study by the National Association of Manufacturers showed the potential impact that federal cap and trade legislation could have on New Mexico, particularly if developing nations do not agree to reduce their emissions:

• New Mexico is at risk of losing over 11,000 jobs and up to $1.2 billion in gross state product by 2020;
• New Mexico's household income could decrease by almost $2,300 a year by 2020;
• Electricity prices in New Mexico are estimated to increase by up to 133 percent by 2030, while gasoline prices are estimated to rise by up to 140 percent.

Can you imagine the loss of 11,000 jobs and $1.2 billion in gross state product on top of the economic recession/depression we are about to experience? Four or five years from now, while the rest of the country is experiencing an economic rebound, New Mexico could very well be falling further into a depression because some folks decide to regulate and tax our biggest economic contributors out of existence.

That's my greatest fear.

Of course, there is a light at the end of the tunnel. And, it comes from an interview that Peter St. Cyr did with Democratic State Treasurer James Lewis:

Lewis tells us he's looking at the election of the 44th President of the United States in its historical perspective. He says the country has come along way since the Jim Crow laws, used to block African Americans from voting. Lewis even reminded us that before the 1965 Voting Rights Act his relatives were prevented from voting because they didn't know how many "bubbles were in a bar of soap."

"This is a proud moment for me," said Lewis. "It's a sense of achievement."

Lewis says any young person who goes out and gets a good education and has a strong work ethic can achieve anything they want.

We have come a long way, but let's not forget how we arrived here. The secret is in Lewis' last sentence above: education + work ethic... not government bailouts and additional regulation. If more Democrats keep this in mind, we just may be okay.

Federal Government Intervention to Hit New Heights

Or could it be called New Lows?

With the country continuing deeper into a recession, it is expected that one of President-elect Obama's first actions will be to work with Congress to expand a second round of bailout packages (subscription):

Obama was elected on a promise of change, but the nature of the job makes it difficult for presidents to do much that has an immediate impact on the lives of average people. Congress plans to take up a second economic aid plan before year's end — an effort Obama supports. But it could be months or longer before taxpayers see the effect.

Don't be fooled. They may call it a "second economic aid plan," but the ugly truth is that it is the nationalization of yet another industry - the automakers:

In late breaking news, Treasury Secretary Paulson has announced a new plan to expand TARP coverage.

Congress was behind the push as Pelosi, Reid Press for TARP Aid for Auto Industry.

House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid sent to send a letter to Treasury Secretary Henry Paulson urging him to assist the Big Three auto makers by considering broadening the $700 billion Troubled Asset Relief Program to help the troubled industry.

The two top Democratic leaders in Congress are likely to make the request in a letter to the White House, which could be forwarded as soon as Saturday afternoon, said individuals familiar with the matter. President-elect Barack Obama is generally supportive of the appeal, but at the moment is moving on his own track to assist the industry, these individuals said.

Mr. Obama is scheduled to meet with President George W. Bush at the White House Monday.

Though the administration is reluctant to widen the program to cover autos, there has been discussion among Bush officials of expanding use of the $700 billion to buy equity stakes in a range of financial-sector companies, moving beyond just banks and insurers. The focus would be on assisting companies that provide financing to the broad economy, such as bond insurers and specialty finance firms such as General Electric Co.'s GE Capital unit, CIT Group Inc. and others, individuals familiar with the matter said.

I doubt this will all have an immediate effect on the daily lives of you and me, but make no mistake the impact of these flawed decisions will impact the lives of our families for generatiosn to come.

Fairness Doctrine a Real Danger to Free Speech

With Democrats taking control, one of the biggest fears starting to emerge is that the Fairness Doctrine could be crammed down our throats in an effort to "balance" free speech. At the center of the debate is our own Senator Jeff Bingaman, a major proponent for bringing back the Fairness Doctrine:



I can't imagine a worse idea. Let's reflect on this for a moment. We just had a tremendous Democratic sweep in New Mexico and throughout the country. That sweep occurred without any mandate dictating the content of conversation on a given station. People on both sides of the aisle should be able to agree that our current system works. If it's not broken, why fix it?

Now consider the problems with a mandate of "fair and balanced" programming. In a nutshell, such a dictate is subjective, not objective. Worse, it is a subjective measure to be determined by the government. Remember my warning that control of government swings like a pendulum from the right to the left, and eventually back again.

I do not want extremes on either side (or moderates for that matter) dictating what I can and should be listening to... or reading... or watching. I can make that decision on my own, thank you very much. And based on the number of comments left on this blog by those who disagree with me, you can as well.

We should never give up the right to think for ourselves.

Speculation on Obama's New Mexico Appointment

Is Governor Bill Richardson going to take a cabinet secretary position in President-elect Obama's administration? I think it depends on which one he is offered. If Bill Richardson were offered the position of Secretary of State, I think he would jump at the chance. It's a high profile position in a tumultuous time that would allow him to travel the world and play the Diplomat - both things he loves to do.

However, I don't see him chomping at the bit for any of the other cabinet positions. Instead, if he serves on the transition team, it would be more likely for him to encourage our next President to appoint Senator Bingaman as Secretary of Energy.

Senator Bingaman has always been something of a policy wonk. He has served for a very long time as Chairman or ranking member of the energy committee. He was instrumental with Senator Domenici in crafting and passing the last energy bill, and after serving 25 years in the Senate, he is in the sunset of his career. So, why not go out with a bang?

We are at a critical juncture with regard to energy policy in this country, and being at the helm as Secretary of Energy during this historic time could provide a lasting legacy for Jeff Bingaman - a man who spent much of his political career in the shadows of Senator Pete Domenici.

What would Governor Richardson do if this were to happen? He would naturally appoint himself to the position of U.S. Senator. Normally, this goes over with voters like a ton of bricks. But, as much as it pains me to admit it, I think the voters of New Mexico would likely forgive Richardson this transgression, and he would gain membership in the world's most exclusive club that he could in all likelihood keep until the end of his career.

Lt. Governor Diane Denish would take over as Governor and appoint State Auditor Hector Balderas as Lt. Governor. Denish is going to be a formidable candidate in 2010, and adding a Hispanic Northerner like Balderas to the ticket will make her that much stronger. Their biggest problem will be overcoming the looming budget crisis that they will inherit from the departing Richardson.

Now, I'm sure I'm not the only one who has thought of this scenario. In fact, I'd be willing to bet that this scenario has crossed NM House Speaker Ben Lujan's mind:

If Gov. Bill Richardson is appointed to serve in the administration of Democratic presidential candidate Barack Obama - should Obama win Tuesday's general election - New Mexico could find itself reaping the benefits.

That's according to House Speaker Ben Lujan, D-Santa Fe, a longtime Richardson ally who recently told the Journal a Washington D.C. job could be the governor's for the taking.

"I think if (Richarsdon) wants it, Senator Obama would find a place for him in the White House," Lujan said. "With him being in the Cabinet or being part of the national administration, it would be very beneficial to our state."

See, it makes perfect sense for Speaker Lujan to push for Richardson to take a position with the administration. With Richardson out of the way, Congressman-elect Ben Ray Lujan would be the Democrats natural choice to replace Bingaman when he does decide to retire. And, we all know that his father has always done a heck of a job of clearing out the candidate field for his son.

Of course, the biggest question is if Governor Richardson and Senator-elect Tom Udall are sworn into the Senate on the same day, who gets stuck with the role of the Junior Senator from New Mexico? On second thought, based on personalities, it's not hard to figure out who would steal the limelight from whom.

I usually resist making predictions, but it's not too difficult to envision this scenario playing out.

The Day After Thank You

I'd like to personally send a heartfelt thank you to all who ran this past election cycle and congratulate those who won from the White House all the way down to the County offices. It takes a tremendous personal commitment to run for office, and the act of campaigning is a public service in and of itself. Our Democracy would crumble without people stepping forward and submitting themselves to what is admittedly a grueling process.

Voter turnout for the 2008 election is projected to be largest ever:

America voted in record numbers, standing in lines that snaked around blocks and in some places in pouring rain. Voters who queued up Tuesday and the millions who balloted early propelled 2008 to what one expert said was the highest turnout in a century.

It looks like 136.6 million Americans will have voted for president this election, based on 88 percent of the country's precincts tallied and projections for absentee ballots, said Michael McDonald of George Mason University. Using his methods, that would give 2008 a 64.1 percent turnout rate.

"That would be the highest turnout rate that we've seen since 1908," which was 65.7 percent, McDonald said early Wednesday. It also would beat the old post World War II high of 63.8 percent in the famed 1960 John F. Kennedy-Richard Nixon squeaker. The 1908 race elected William Howard Taft over William Jennings Bryan.

The total voting in 2008 easily outdistanced 2004's 122.3 million, which had been the highest grand total of voters before.

That's a good thing. No, make that a great thing. It mean the vast majority of Americans are engaged, and as history has shown us time and time again, when Americans are engaged and fully committed we prevail. We have a lot of challenges facing us in the coming months and years, but I have every confidence that when all is said and done we will once more come out on top. It's the American way.

Will Fraud Win the Election?

I've written numerous times about voter registration fraud this election cycle. Most recently about the the Obama campaign worker visiting from California who is (was) planning on voting absentee in New Mexico. Does that mean that I'm worried that fraud will win this election? In a word, "No."

However, I am concerned about the lack of interest in preventing and prosecuting voter fraud. When we start ignoring the little crimes, we create an environment that allows lawlessness to flourish. Before the Republican presidential primary campaigns had gotten underway, I was a big fan of Rudy Giuliani's. I was a fan not because of the leadership he showed post-9/11 (albeit admirable), but because of the leadership he showed pre-9/11. Specifically, the leadership in fighting crime in New York City.

Since I started attending New York University in the pre-Giuliani period, I experienced first hand the deterioration of a great city by the decision of previous administrations to ignore the little crimes (i.e. turnstyle jumping in subways and agressive panhandlers). I also saw the post-Giuliani improvement by concentrating on ridding the city of those crimes.

Now, this is not to say I stayed a fan of Giuliani as the campaign continued. I didn't. He lost me because of his interest in continuing taxpayer funded abortions. Notice, I didn't say his pro-choice stance, which I disagreed with but was willing to ignore - politics is all about compromise.

What does this all have to do with the outcome of today's election? Well, I do believe on a national basis we are going to see a Democratic sweep (hey, I'm partisan, but I'm also a realist), and I do believe the Democrats will be in a position to institute wide-scale change. I just don't believe we will all be better of as the result of it.

One of my fears is that while these changes are going on, those in power will become less and less concerned with the integrity of the process, and when that happens what starts as a little voter fraud will eventually snowball into wide-scale fraud that will result in the collapse of a system (think housing and stock markets).

Regardless, of which side of the aisle you are on, if you believe in a Democratic process, you better take an interest in the integrity of that process. Remember, balances of power shift all of the time. It is up to those in power to enforce the rules of the game. After all, keep in mind that power shifts are like a pendulum, the further they shift to the left in one cycle means the further they will shift to the right in another cycle. And, you won't like the results when that shift occurs again if institutional fraud is part of the game. And you know what? Neither will I.

Non-Resident Obama Campaign Workers to Vote in New Mexico

As we come into the final hours of the campaign, Palestra.net confirms at least one Obama campaign worker who is here temporarily has registered to vote in New Mexico and requested an absentee ballot. This particular worker has such deep ties to California, where he lives and works, that only two months ago, he served as a California delegate to the Democratic National Convention.

According to comments made in an interview County Clerk Maggie Toulouse Oliver admits that out of state non-residents can register and vote in this election. Ms. Toulouse Oliver goes on to say:

It's not so much that it's allowed, that it is not enforced. There's really no enforcement measurement in place to evaluate whether someone's submitting a registration based on a temporary address.

In the interview, Secretary of State Mary Herrerra confirms what we all know. Namely, that these visiting out of state campaign workers should not be voting in our elections. The Obama campaign refused to confirm how many out of state workers, they've brought into New Mexico.

It remains to be seen whether or not the mainstream media will pick up this story. If they do, they should ask the Obama campaign in New Mexico to release a list of all out of state temporary workers, so that can be compared to our voter rolls.

Middle Class Income Cap Continues to Drop

I love it when I'm right. If you watch me on KOB-TV's Eye on New Mexico tomorrow morning at 10:00 a.m., one of the topics you'll here me discuss is the rapidly declining middle class income cap. In order to stir the fires of class warfare, Senator Barack Obama first indicated that he would only be increasing taxes on those making over $250,000 per year in order to "redistribute wealth."

In his 30 minute Barackomercial, he dropped that number down to $200,000. His running mate, Senator Joe Biden, has moved that cap even lower to $150,000, and now campaign surrogate, Governor Bill Richardson, has it pegged at $120,000 per year.



Think about this for a minute. We're still in the campaign phase, and on a daily basis the Obama campaign is increasing the number of people who will see their life savings redistributed.

Mark my words, if Obama is elected, it won't be long before that number is lowered to $100,000. To put that in perspective, consider that if you have a household with two experience teachers or police officers or firefighters, they will probably be earning over a $100,000 a year. Obama and his friends want to see their "wealth" redistributed.