Tax the Rich - Not Me

It's kind of amusing that Democratic politicians love to campaign on a platform of "taxing the rich," but when push comes to shove, the rich ones don't like to pay their own taxes:

Former Sen. Tom Daschle, tapped by President Obama to lead his healthcare reform campaign, failed to pay more than $128,000 in taxes in the three years before Obama nominated him in December to head the Department of Health and Human Services.

The disclosure -- involving unreported income and the use of a car and driver provided to Daschle -- comes 2 1/2 weeks after Obama's choice to head the Treasury Department, Timothy Geithner, admitted that he had not paid about $43,000 in taxes.

I think someone should introduce a law that elected officials who advocate and pass higher taxes should be automatically audited, and if it is discovered they have failed to pay their taxes, the penalty should be 25 times that of an everyday citizen.

We Ain't See Nothing Yet

Yesterday, I wrote that despite the fact the we are facing a half billion dollar deficit, the first thing the legislature did was to increase spending for the session by nearly 6%. As an aside, you've got to wonder how they can say with a straight face that they canceled webcasting for fiscal reasons.

Well, it looks like the budget shortfall is not the only hit New Mexico is taking. In fact, when you factor in the other losses, you realize that New Mexico is not short half a billion. We're actually out billions upon billions of dollars (subscription):

New Mexico's permanent and pension funds reported combined losses of $11.6 billion in 2008 as nearly one-third of their value was swept away by a dramatic market downturn.

The state's two big pension funds — managed by their own boards for retired state workers and schoolteachers — suffered major setbacks that could lead to legislative changes in benefits with an eye toward long-term solvency.

The Public Employees Retirement Association, or PERA, posted a one-year loss of nearly 32 percent, slipping from $13.3 billion to $8.9 billion. The Educational Retirement Board, or ERB, dropped from $9.4 billion at the beginning of the year to $6.6 billion at year's end.

"There aren't even good adjectives to describe what's gone on nationally," said New Mexico Investment Officer Gary Bland.

The state's two largest permanent funds — public money from income sources such as oil and gas royalties that is set aside for investment — started the year at $15.3 billion. As of Dec. 31, 2008, the funds totaled $11.1 billion.

The Land Grant Permanent Fund and Severance Tax Permanent Fund generate money for public schools, state hospitals and jails and other basic government operations. They make yearly distributions based on an average of the previous five years. For that reason, the 2008 downturn could be felt for years.

Now, a quick look at the earmarks for New Mexico in the "economic stimulus package" makes it clear that nowhere near $12 billion is about flow back into the state:

Below are the figures given by the three representatives from numbers provided by the Ways and Means, Appropriations, and Energy and Commerce Committees:

Transportation Total

Highways & Bridges $281,158,912

Transit Capital Grants $24,066,600

Clean Water State Revolving Fund $28,496,754

Total $333,722,266

K-12 Education FY 2009 FY 2010 Total

Title 1 $53,207,000 $53,207,000 $106,414,000

Individuals with Disabilities Act $46,615,000 $53,669,000 $100,284,000

Educational Technology State Grants $3,873,149 $3,873,149 $7,746,297

Education Modernization, Renovation, and Repair $114,687,000

Total $329,131,297

Higher Ed Total

Education Modernization, Renovation, and Repair $39,619,000

Aid Available Recipients Average Award

Pell Grant Max Award of $5,350: Award Year 2009 ‐ 2010 $188,365,171 $52,096 $3,616

Early Childhood FY 2009 FY 2010 Total

Head Start $2,949,834 $2,949,834 $5,899,668

Child Care & Development Block Grant $8,908,267 $8,908,267 $17,816,534

Total $23,716,202

Community Services FY 2009 FY 2010 Total

Community Services Block Grant $2,847,778 $2,847,778 $5,695,556

Seniors FY 2009 FY 2010 Total

Low‐Income Home Energy Assistance $5,058,116 $5,058,116

Elderly Nutrition Services $806,764 $806,764 $1,613,528

Total $6,671,644

Healthcare FY 2009 FY 2010 Total

Preventive Health and Health Services Block Grant $2,279,422 $2,279,422 $4,558,843

Federal Funding for State Medicaid Costs $528,486

Total $5,087,329

State Fiscal Stabilization FY 2009 FY 2010 Total

State Fiscal Stabilization Fund $209,642,000 $209,642,000 $419,284,000

Employment and Training $15,888,368

Make Work Pay Tax Credit Eligible Workers

684,000

Relief for Jobless Workers Total Eligible Recipients

$25/Week Increase in Unemployment Benefits 70,351

Emergency Unemployment Compensation Program 13,756

Justice Assistance Grant (JAG) Funding $46,361,350

That would be just one reason that bailout upon bailout isn't going to work. There just isn't enough money out there to make up the losses. More importantly, 2009 is shaping up to look worse than 2008.

Try Doing Your Homework

Somebody please call the Legislature and remind them we're in an economic crisis situation here with a half a billion dollar shortfall that is in all likelihood going to get worse. A cursory review of some of just two of the bills to be introduced so far this session indicates that they're in denial.

Let's start with the Feed Bill, the bill that funds the session. In 2007, the last 60-day session, the amount of the Feed Bill was $7,874,100. This year, a year in which government is supposed to be cutting back on unnecessary expenditures, the Feed Bill for the session is $8,326,734. That's right, the first bill the legislator approves and the Governor signs is a bill that increases spending by nearly half a million dollars. Or, put another way, they convened and connived to increase spending by nearly six percent. What budget shortfall, right?

Of course, it's not just the Feed Bill that should raise some eyebrows. Take a look at this gem of a proposal to spend $500,000 of New Mexico taxpayer's funds (hat tip: Monahan):

MAKING AN APPROPRIATION FOR THE BEN LUJAN LEADERSHIP AND PUBLIC POLICY INSTITUTE AT NEW MEXICO HIGHLANDS UNIVERSITY.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. APPROPRIATION.--Five hundred thousand dollars ($500,000) is appropriated from the general fund to the board of regents of New Mexico highlands university for expenditure in fiscal year 2010 for the Ben Lujan leadership and public policy institute to continue collaborative programs, to explore New Mexico policy issues and to develop a curriculum for use by New Mexico schools dealing with youth entrepreneurship. Any unexpended or unencumbered balance remaining at the end of fiscal year 2010 shall revert to the general fund.

Okay, let's ignore the blatant attempt to get funding approved by creating a new policy institute in the name of the Speaker of the House - my stomach just turned. Instead, let's focus on the fact that there is ABSOLUTELY NO NEED for taxpayers to pay $500,000 to have a curriculum developed for use by New Mexico schools to teach youth entrepreneurship.

I know this for a fact. See, there is this little thing called Junior Achievement that has been around that has been providing a proven curriculum to do just that since 1919. Heck, the legislature recognized their contribution to New Mexico for the last 15 years in 2007 (I'll have to look it up) in a Senate Memorial. I know. I was there with JA of New Mexico President at the time to receive the memorial from Lt Governor Diane Denish - I'm a past-president of JA.

Moving Towards Nationalization as Alarming Rate

When the federal government gave the first bailout to banks, it began to slide down a slippery slope. Now, we're tumbling at full-speed:

But if hundreds of billions of dollars of new investment is needed to shore up those banks, and perhaps their competitors, what do taxpayers get in return? And how do the risks escalate as government’s role expands from a few bailouts to control over a vast portion of the financial sector of the world’s largest economy?

The Obama administration is making only glancing references to those questions. In an interview Sunday on “This Week” on ABC, the House speaker, Nancy Pelosi, alluded to internal debate when she was asked whether nationalization, or partial nationalization, of the largest banks was a good idea.

“Well, whatever you want to call it,” said Ms. Pelosi, Democrat of California. “If we are strengthening them, then the American people should get some of the upside of that strengthening. Some people call that nationalization.

“I’m not talking about total ownership,” she quickly cautioned — stopping herself by posing a question: “Would we have ever thought we would see the day when we’d be using that terminology? ‘Nationalization of the banks?’ ”

To answer Speaker Pelosi''s question, everyone who opposed the first round of bailouts thought we would see that day. Expect the nationalization of banks to occur in the next 12 -24 months, and expect other industries to follow shortly thereafter.

Boy, I hope I'm wrong.

Representative Janice Arnold Jones Caught On Tape

Well, actually, not yet... But, it looks like on Monday you'll be able to catch Representative Janice Arnold-Jones on tape:

Arnold-Jones, an Albuquerque Republican, bought a webcam and set up her own Web site that will allow her to stream live video and audio over the Internet from the two committees on which she sits -- Taxation and Revenue and Voters and Elections. You can visit the Web site by clicking here.

She plans to begin broadcasting online when both committees meet for the first time -- tax and revenue Monday at 1:30 p.m. and voters and elections Tuesday at 8:30 a.m. The only remaining question is whether legislative leaders, including House Speaker Ben Lujan, will try to stop her.

I can't imagine the Speaker will try and stop her. My only hope is that in addition to streaming, it's recorded so that we have the option of watching according to our own schedule.

It Sure Would Take a Lot of Chutzpah

I can't help but wonder if Governor Bill Richardson will bring up a push for ethics reform (subscription) in his State of State address today:

It's a $1.7 million mystery.

Several people who might be in a position to clear it up say they don't know anything; others aren't talking.

It all plays out against the backdrop of an ongoing federal pay-to-play investigation that derailed Gov. Bill Richardson's nomination for U.S. commerce secretary.

The first chapter began in the fall of 2003, when Richardson was collecting money for his Moving America Forward political action committee and starting another related organization called the Moving America Forward Foundation.

Both were aimed at increasing voter participation among minorities.

But unlike the higher profile PAC, the foundation mostly operated under the radar. To date, the foundation has never publicly revealed who donated the more than $1.7 million that IRS filings show it raised in the 2004-07 tax years.

Because the foundation was formed as a "public charity," it is not legally required to publicly disclose individual contributors or say exactly how those tax-deductible contributions were spent.

The PAC operated under different rules and was required to make detailed public disclosures to the state.

The foundation's board of directors reads like a Who's Who of Hispanic leaders in Albuquerque and included several Richardson political advisers.

Two board members didn't return phone calls from the Journal. Three others told the Journal last week they had no real involvement with the organization and didn't know who its donors were.

It Sure Would Take a Lot of Chutzpah

Bank of America Credit Card Policy Tantamount to Fraud

Tomorrow Barack Obama will officially become our 44th President, and his top priority will be to deal with the economic mess in which we now find ourselves:

President-elect Barack Obama will demand that banks receiving public support step up lending, top advisers said on Sunday, as they promised to make restoring the flow of credit a top priority for the new US administration.

“I think he is going to have a strong message for the bankers,” David Axelrod, a senior Obama strategist told ABC’s This Week. “We want to see credit flowing again. We don’t want them to sit on any money that they get from taxpayers.”

Lawrence Summers, the incoming director of the National Economic Council, told CBS’ Face the Nation that banks receiving public injections of capital would be “expected to lend above their baseline levels”.

Well, before the federal government hands out anymore taxpayer money to banks, I think they ought to take a good hard look at some of the deceptive, and dare I say it, fraudulent practices of America's largest banks.

Let's just take Bank of America for example. Bank of America is poised to receive another $20 billion in bailout dollars from America's taxpayers:

Two weeks after closing its purchase of Merrill Lynch at the urging of U.S. regulators, the government cemented a deal at midnight Thursday to supply Bank of America with a fresh $20 billion capital injection and absorb as much as $98.2 billion in losses on toxic assets, according to people involved in the transaction.

The bank had been pressing the government for help after it was surprised to learn that Merrill would be taking a fourth-quarter write-down of $15 billion to $20 billion, according to two people who have been briefed on the situation, in addition to Bank of America's rising consumer loan losses.

The second lifeline brings the government's total stake in Bank of America to $45 billion and makes it the bank's largest shareholder, with a stake of about 6 percent.

But, here's the thing... While Bank of America is securing billions upon billions of dollars in bailout money from the taxpayers, they are also scamming credit card holders. To illustrate my point, please read the letter below that I filed this weekend with the Comptroller of the Currency among others:

Dear Comptroller of Currency:

I am writing to request an investigation into what I believe to be an intentionally fraudulent and predatory practice by Bank of America and their credit card division to raise interest rates on consumers who in good faith pay their bills on the due date printed on their statement. Like millions of Americans, I pay the vast majority of my bills online. With the shortened period that most credit card companies are now allowing from invoice date to due date, it seems like the only way to ensure your payment is received by the due date.

On my most recent statement, I noticed that the special 2.99% promotion I was enjoying had jumped to 14.99%. As I always pay my bills on or by the due date, I called Bank of America to inquire what caused the interest rate to rise 500% in one months time. They explained that although my payment was indeed made on the due date shown on my previous statement, December 14, 2008, that it was not processed until the next day, December 15, 2008. For this reason, I was charged a $39.00 late fee and saw my interest rate increase exponentially.

It turns out that December 14, 2008 was a Sunday, and Bank of America does not process payments received on a Sunday.

So, the question is raised, "Why would Bank of America intentionally set a Sunday due date if making payment on this date is going to cause the consumer to be considered late?" When I spoke to the customer service representative, I was told that when I logged online to pay my bill, there was a disclaimer that it would not be processed on time. Of course, by that point in time there is absolutely no way to make a timely payment on the account - because Bank of America purposely set the due date to fall on a SUNDAY. In fact, he told me, even if I had paid the bill on Saturday, the day before it was due according to my statement, it still would not have been processed in time.

On the back of every Bank of America Statement is the following written statement:

Payment Due Dates and Keeping Your Account in Good Standing
Your Payment Due Date will not fall on the same day each month. In order to help maintain any promotional rates, to avoid the imposition of Default Rates (if applicable), to avoid late payment fees, and to avoid overlimit fees, we must receive at least the Total Minimum Payment Due by its payment Due Date each billing cycle and you must maintain your account balance below your credit limit each day.

It does not state that if your Payment Due Date falls on a weekend, you should make your online payment on the business day prior to the Payment Due Date. Each and very statement includes an "Important Information About Your Account" section, and although there are several messages printed, not one of these messages tells you to note that your Payment Due Date this month falls on a Sunday, and you should pay on the business day before in order to remain in good standing.

Now, I am fortunate. I have enough good credit that I'm able to transfer this debt to another credit card company at an equally low rate of interest and avoid falling prey to Bank of America's attempt to defraud. However, I would imagine that in these tough economic times millions of other Americans do not have the same option. As such, and in light of the billions in federal bailout funds that Bank of America has received, I strongly urge you to investigate this practice by Bank of America to purposely set their Payment Due Dates to fall on a Sunday.

Sincerely,

Mario Burgos

Now, keep in mind, I've defended just about every type of lending practice out there. I honestly don't have a problem with lending institutions charging what some may see as exorbitant rates. I believe that the borrower has a responsibility to act prudently. However, this institutionalized practice by Bank of America in an attempt to defraud must be investigated, prosecuted and, I can't believe I'm about to say this... It must be regulated.

A Nation of Excess Capacity

Yesterday's comments included two from younger conservative readers lamenting the fact that the Republican Party's elected leaders in Washington are going to go along with whatever increased spending package is proposed. They rightfully worry that they will bear the burden of these ongoing "bailouts" in the form of higher taxes in years to come.

Another frequent commenter feels I'm just showing a lack of understanding in how the whole economic stimulus process works:

The idea is to, for example, start building light rail for mass transit. We'll have to hire people to build the cars, and produce the track, and grade the roadbed, and install the track, and buy cement and wallboard to build the stations ... which means that other people will be hired to make the cement, and produce the wallboard, and they in turn will go to Target or Wal-Mart and buy clothes and stuff, so those places will hire salespeople, and people will have to be paid to make the clothes ... and around it will go.

But, here's the thing... this 1930's approach of the government putting the country to work will not work the same today for a very simple reason. We've got too much excess capacity. Think about it for a minute, and you'll understand.

First, let's take a look at the rate of growth of the average roof over the average head:

The average American house size has more than doubled since the 1950s; it now stands at 2,349 square feet. Whether it's a McMansion in a wealthy neighborhood, or a bigger, cheaper house in the exurbs, the move toward ever large homes has been accelerating for years.

Now, consider what all of that extra space has meant. It translated into a boom for the consumer markets as we purchased more furniture, electronics, appliances, etc. to put into those rooms. Not to mention the significant increase in spending we incurred to heat/cool these homes, or bring in additional services cable/satellite services. Yet, when you really think about it, there is no true need for the extra space.

Okay, now let's move to what's in the driveway:

One of the most striking changes in the landscape of American travel over the last quarter-century has been the near doubling (181-percent increase) of household vehicles. The rate of increase in cars, vans and sport/utility vehicles for personal travel is six times the rate of population increase. In 1969, 72.5 million household vehicles served 197.2 million people. In 2001, 203.9 million household vehicles served 277.2 million people.

Much of this growth has been in households with multiple vehicles. Whereas the number of households with one car remained about the same over the last 30 years or so (30.3 million in 1969 and 33.7 million in 2001), the number of households with three or more vehicles increased nearly nine times (from 2.9 million in 1969 to 25.3 million in 2001).

Do we really NEED three or more cars per household? Keep in mind that cars are also built to last much longer than their predecessors. A car today is built to go at least a 100,000 miles. But, how many people do you know that keep their cars until they pass that mark? I'm willing to bet in the future you will find you know a lot more.

I could go on and on with different facts about the sizes of tv's, or the number of computers, or even the number of phone lines per household, but I think you get the idea.

Then there is the one obvious point that no one seems to be talking about. Who has lost the most money in this economic collapse? It's the baby boomers. As a cohort, they had amassed the largest amount of wealth the world had ever seen, and article after article talked about how the boomers would be spending and transferring that wealth.

But, they've watch 30% - 40% of that wealth go up in smoke. Now, do you really think they are going to go out and take jobs building light rails, or do you think they are going to buckle down and cut unnecessary spending? Yeah, I'm betting on the latter. See , with age, comes wisdom. And, as they enter the last quarter of their lives, they are likely to look back and reflect on the following:

In the 20th century, Americans, Europeans, and East Asians enjoyed material and technological advances that were unimaginable in previous eras. In the United States, for instance, gross domestic product per capita tripled from 1950 to 2000. Life expectancy soared. The benefits of capitalism spread more widely among the population. The boom in productivity after World War II made goods better and cheaper at the same time. Things that were once luxu­ries, such as jet travel and long-distance phone calls, became necessities. And even though Americans seemed to work extraordinarily hard (at least compared to Europeans), their avid pursuit of entertainment turned media and leisure into multibillion-dollar industries.

By most standards, then, you'd have to say that Americans are better off now than they were in the middle of the last century. Oddly, though, if you ask Americans how happy they are, you find that theyre no happier than they were in 1946 (which is when formal surveys of happiness started). In fact, the percentage of people who say theyre very happy has fallen slightly since the early 1970s -- even though the income of people born in 1940 has increased, on average, 116 percent over the course of their working lives.

Oh, and I almost forgot to mention. All of this extra capacity has been bought and built on credit. So, where does all of this leave us? Back to the drum I've been pounding for the last several months. No matter how many trillions the government tries to throw at this problem, the paradigm has forever been changed. They're just not going to restart the economy of old. It no longer exists.

At the end of the day, there is only one thing we count on. The more the government spends today, the more our children and grandchildren will have to pay it tomorrow.

Where Will the Stimulus Go?

Congress is expect to throw hundreds of billions of dollars at the collapsing economy in order to turn it around:

House Democrats are circulating an $825 billion economic stimulus measure that emphasizes health care, education and highway construction as well as tax cuts for individuals and businesses.

A summary of the measure shows spending totaling roughly $550 billion and tax cuts of $275 billion, although the totals are expected to shift considerably as Congress works on the bill.

But, it won't work. For the first time since the Great Depression, several generations who have never experienced a serious economic downturn, are going to become conservative in their spending and saving habits. You can give these folks $500 or a $1,000 in stimulus, and all the first thing they are going to do is use it to pay off mounting debt. The second thing they'll do is save it in case the situation gets worse.

To compound problems, the federal money is going to flow down to the states. However, the states, facing serious problems of their own will not spend the money on new projects. Instead, they will use the lion share to fix current budget shortfalls.

This is all doomed to failure, which means several more rounds of economic stimulus will be tried.

NM Senate Proving Camera Shy

Yesterday afternoon I thought enough of the Senate Democrats call for full transparency in the confirmation process of gubernatorial appointees to do a rare midday post. I went so far as to title the post, What's the Governor Trying to Hide? Unfortunately, it looks like this is a case of what's good for the goose is NOT good for the gander:

I just saw a Capitol maintainance worker taking down the cameras in the Senate gallery that had been purchased and installed for the purpose of webcasting state Senate floor sessions.

Last month I reported that the state Senate leadership had decided not to start webcasting this year despite the fact that the full Senate last year voted overwhelmingly to Webcast and had already spent $30,000 to buy and install cameras for that purpose.

With new instances of scandal breaking daily, you'd think everyone in government right now would be working overtime to make the process as transparent as possible - not the either way around.

What's the Governor Trying to Hide?

I can't believe what I just read in a press release issued by the Senate Democrats:

Today I conveyed a request to the Governor asking that he reconsider his lack of support for the Senate Rules Committee's new confirmation process a process which reflects the deepening sensitivity to ethics and good governmental conduct in the State. Last year the Committee brought greater accountability and credibility to the confirmation procedure, said Senator Linda M. Lopez (D-Bernalillo-11), but our efforts were brought to a halt when the Governor ordered the Department of Public Safety to stop making appointee background checks available to the Committee.

What possible reason could the Governor have to keep the committee responsible for confirming appointments in the dark? Without checks, there are no balances.

Bahrain Investors Collect NM Taxpayer Funds

Some people may be worrying about grand jury investigations, but whatever the grand jury finds is nothing compared to what the Rio Grande Foundation is likely to dig up:

Even some of the [State Investment Council's (SIC)] smallest acquisitions look questionable. Take for instance, its investment in Small Smiles. The SIC's 2007 annual report showed an investment of an unstated sum in this New Mexico company. By directly contacting the venture capital firm that handled this investment, the Rio Grande Foundation learned that about $500,000 New Mexico taxpayer dollars have been invested in Small Smiles. The SIC itself had not been able to answer this question.

Contrary to the SIC's annual report, Small Smiles, is not a New Mexico company. It is a national chain of low-income dental clinics owned by a bank in Bahrain. Furthermore, at the time half a million taxpayers dollars were going to help Arab investors, Small Smiles was being blasted in an Emmy Award winning investigative television series called "Drilling for Dollars."

Small Smiles clinics in the Washington, D.C. area were exposed for abusing children by strapping them to "papoose boards." Small Smiles had engaged in unethical billing practices. Parents came forward with complaints of unnecessary dental work being performed on their children without their consent.

Geez, forcing unnecessary procedures on children in order to line their pockets, it doesn't get more evil than that. As to the use of papoose boards to perform unnecessary dental work, okay, I was wrong it does get more evil.


Mind you, I'm the father of two young boys. My oldest needed to have a dental "appliance " installed at the age of four to correct a problem. It was not a fun experience for him, but I was there the entire time to hold his hand. I can't imagine how he would feel about me or the dentist if we had allowed him to be strapped into a papoose board. I'm thoroughly disgusted.

How is it that the SIC has had so many questionable (I'm being kind here) and ill-fated investments? Well, you might remember that it has been standard policy under the Richardson administration to fire those advisors who did not want to issue rubber stamp endorsements of shady (okay, sugar-coating is not really my style) deals that Governor Richardson wanted to see approved.

That's right, I said, "Deals that Governor Richardson wanted approved." After all, the Governor is the chairman of the SIC. Now, in light of all of the recent scandals, you may be wondering if the Governor has ever received any campaign contributions from anyone connected to Small Smiles.

Well, I'm glad you asked. As it turns out, the Chairman and CEO of the holding company for Small Smiles is Michael Lindley of Nashville, Tennessee. Mr. Lindley did indeed donate a $1,000 to our Governor's presidential campaign. He also gave a $1,000 to Congressman Ben Ray Lujan's campaign.

Of course, my guess is that our Speaker of the House Ben Lujan solicited the funds on his son's behalf. After all, other than the imprisoned former State Senator Manny Aragon, the only other elected official to recieve funds cycle after cycle from Small Smiles in New Mexico is Speaker of the House Lujan.

Now, I'm sure none of this is tied to pay-to-play in New Mexico. It's probably all just some strange coincidence.

Things That Don't Make Sense

Sometimes you encounter things that just don't make sense. Usually, they are lone encounters that leave you shaking your head and wondering. But, sometimes they come one after another.

Gary King announced today that he will support several ethics reform proposals in the upcoming legislative session, and Gov. Bill Richardson, whose administration is the subject of a federal pay-to-play investigation, promptly did the same.

Ok, let's state the obvious first. A Governor who has had to turn down a presidential cabinet appointment and retain a prominent attorney in light of the unethical pay-to-play conduct of his administration, has no business announcing his support for ethics reform. In a moment of rare candor on national television, that may come back to haunt him, Richardson admitted that donors have been able to buy "an edge" in his administration [a MUST READ ARTICLE]:

For his part, the governor, who declined to be interviewed, has maintained that campaign donations do not influence his decisions. In at least two cases, he canceled state contracts his political supporters had won after the deals became public. He also gave back a $10,000 contribution from a company that won a contract to provide health care to prisoners.

Yet in an interview on NBC in 2007, Mr. Richardson acknowledged that giving money to a politician gives the donor “a little bit of an edge.”

“I don’t give any extra access to somebody that contributes,” he said. “But I’ll remember that person, and I’ll say: ‘Jeez, that guy helped me. Maybe I can help them.’ ”

Of course, you can't conduct this style of government without the tacit consent of our top prosecutor. That's why our current Attorney General, like the one before him, should also not be making announcements regarding ethics reform proposals. Since being elected, Gary King has made a lot of noise about investigations, but any real law enforcement in the way of indictments has been sorely missing. If the Attorney General is not going to enforce the current laws on the books by putting criminals behind bars, then he has no business pushing a new set of laws.

Speaking of ridiculous new laws. Take a look at what the Farmington City Council is proposing:

The Farmington City Council is scheduled to vote Tuesday on whether to outlaw "high gravity beer" -- beer with an alcohol content of more than 7.9 percent -- and on a ban of selling "fortified" wine containing more than 14 percent alcohol in an effort to curb public drunkenness, the Farmington Daily Times reported.

Somebody please sit these folks down for a drink and explain the realities of life. A drunk is a drunk. We're talking about someone with a dependence on alcohol. They will drink until fully inebriated regardless of the alcohol content of a particular beverage.

Sometimes, you really have to wonder what these elected officials are drinking thinking.

On the way to 10% Unemployment

Looks like my prediction of 10% unemployment may happen even faster than I originally thought:

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.

December was already at 7.2%:

The nation's unemployment rate bolted to 7.2 percent in December, the highest level in 16 years, as nervous employers slashed 524,000 jobs. The labor market is expected to remain weak as mass layoffs continue.

Interesting times.

Disagreeing with the Economists

I'm bearish on the economic situation. Apparently, I see it as even bleaker than the economists giving speeches (subscription):

Wells Fargo, a conference sponsor, expects the United States to lose 5.5 million jobs before the economy recovers in the second half of 2009, making this the worst recession since the 1930s. The United States lost about 2 million jobs in 2008.

The University of New Mexico Bureau of Business and Economic Research, another sponsor, believes New Mexico lost jobs in the fourth quarter of 2008 and will lose more jobs for at least the first three quarters of this year.

"New Mexico's economy is not yet in a recession," said BBER economist Larry Waldman, who defined a state-level recession as two consecutive quarters of declining employment. "(But) it's coming."

That would make this the first time New Mexico has joined the United States in a recession since the 1950s, according to the BBER.

Even so, BBER expects the state recession to be mild. Waldman said job growth should average a negative 0.2 percent in 2009. Personal income, which grew an estimated 5.4 percent in 2008, should grow only 1.9 percent in 2009.

Waldman said Albuquerque lost jobs in the third quarter, probably lost jobs in the fourth quarter and may not see job growth until early next year. Data for the fourth quarter is not yet available.

He said Santa Fe could rebound as soon as the second quarter of 2009 after spending three quarters in a recession.

They're not painting a pretty picture, but they're more optimistic than I am. See, I don't think it matters how much money the government throws at the economy over the next two years. We're not going to see a rebound until 2012. Heck, we're not even going to hit bottom until second quarter of 2009.

Why? Simple, people are scared, and more importantly, they are debt laden. So, if they start earning more or receiving tax rebates, they are going to either save them, or use them to pay down debt. The result of this is the we will continue to see a decline in consumer spending.

By the third quarter of 2009, expect all of those people laid off in 2008 to see the end of their unemployment benefits and severance packages. That's when the real hurt will begin. The fourth quarter holiday season of this new year will significantly top the losses of this last one, and in the first two quarters of 2010, we will see even greater layoffs and bankruptcies.

But, then again, what do I know. I'm not an economist. Have a great day.

The Rest of the Story

Looks like the New Mexico Independent left off the rest of the story in their ethics reform discussion with the Center for Civic Policy.

Matt Brix, policy director for the Center for Civic Policy, tells the Independent he’s hopeful that the ongoing federal investigation into how CDR Financial Products won more than $1.4 million in state contracts could lead to new momentum for enacting ethics reform legislation in New Mexico.

“I certainly hope the Legislature will see fit to approve much-needed ethics reforms like contribution limits, an independent ethics commission and an expansion of public financing,” Brix wrote in an e-mail to NMI. “After all, New Mexico is one of the last remaining states without contribution limits and independent oversight of both the executive and legislative branches.”

They left out the ironic part. The part that reminds everyone that an organization funded by the Center for Civic Policy is under investigation by the Attorney General for ethically questionable and potentially illegal campaign practices:

Attorney General Gary King today answered erroneous reports that his office was somehow backing away from its request to the Secretary of State's Office to require a non-profit group to report campaign expenditures and abide by other requirements under the Campaign Practices Act and Lobbyist Regulation Act.

"Despite some reports to the contrary, we fully support our earlier position in a letter that the Secretary of State's Office needs to tell the New Mexico Youth Organization (NMYO) to immediately comply with the law," says Attorney General King. "Due to the spread of misinformation there seems to be some thought that my office had "disavowed" our letter or told the Secretary of State to "ignore" our advice, that is just not true. Those words were used, however, by others who support the NMYO."

The AG also says, "If the Deputy Secretary of State thought we had instructed him to simply ignore our letter, then that was a misunderstanding on his part of what was said."

Following receipt of a letter from the Center for Civic Policy (CCP), the Secretary of State's Office forwarded the letter to the AG's Office. In the letter, the CCP set forth a number of claims supporting NMYO's actions and urged the Secretary of State not to grant the AGO's request. Before they made a decision to disregard or follow the AG's advice, the SOS was asked to let the AG's office closely examine the CCP's claims and report back. That is where the issue stands today.

NMYO is responsible for a number of messages distributed publicly that targeted state Legislators. The group claims that the mailers it sent out were not campaign materials. The Attorney General disagrees.

"There's an old saying that if it walks like a duck and quacks like a duck, then its probably a duck," say AG King. "And I think we know a duck when we see one."

Quack.

Richardson's Economic Abilities

Ever since I read Governor Bill Richardson's withdrawal statement, something has been gnawing at me. At first I couldn't figure out what it was, but now I think I've isolated the culprit. It's this statement by Governor Richardson (subscription):

"As you might expect, I am disappointed in this turn of events. There were a lot of ways in which I thought I could help the country in this time of financial crisis. Sometimes your own dreams and plans must take a back seat to what is best for the nation.

There are three sentences in the selection above, and only one of them has an iota of truth. The part about being disappointed about the turn of events. That's completely believable. I'd be willing to believe that anyone who has had to retain legal counsel on the chance that they will be brought before a grand jury would be "disappointed in the turn of events."

But, the second and third sentences are classic Bill Richardson. Statements with no basis in reality. Does anyone actually believe that Governor Bill Richardson is one of the guys who could help the country come up with a solution to a global financial crisis. Gosh, I hope not.

Let's just look at the simple facts. Even President-elect Obama choose to announce his economic team separate from his selection of Bill Richardson as Commerce Secretary. Why? Well, there is nothing in Governor Richardson's resume which indicates that he knows the first thing about managing an economy. Quite to the contrary, during a time of unbelievablely high tax revenue, Governor Richardson has spent us into a half a billion dollar budget shortfall.

Granted, he is in good company. There are 44 other Governors who have the same miserable economic track record.

The states’ fiscal problems are continuing into the next two years. At least 38 states have looked ahead and anticipate deficits for fiscal year 2010 and beyond.[1] These gaps total almost $80 billion — 17 percent of budgets — for the 30 states that have estimated the size of these gaps and are likely to grow as gaps are re-estimated in the next few months.

Figure 2 shows the size and duration of the deficits in the recession that occurred in the first part of this decade, and estimates of the likely deficits this time. This recession is more severe — deeper and longer — than the last recession, and thus state fiscal problems are likely to be worse.

The fiscal situation is going to get worse in New Mexico, and we have Governor Richardson to thank, along with some other elected officials, to thank for the pickle in which we currently find ourselves.

As to the Governor's statement about the Secretary of Commerce job being his dream gig. Let's get real. His dream gig was to become President. That didn't happen. His next big hope was to be named Secretary of State, but that was a bust as well. Then, with an impending financial crisis in New Mexico and a threat of prosecution for rampant pay to play policies, his goal was simply just to get out of Dodge. But, I don't think anyone would mistake that for his dream.

As to putting the nation first... Well, if there is one thing Governor Bill Richardson has proved over his tenure in office, it is that putting others ahead of himself has never been his priority.

Denish's Silence to be Her Undoing

It's everywhere. Governor Bill Richardson got the boot from the cabinet secretary position because the FBI is not able to give Richardson a “clean political bill of health.” Do I think this is the first step to re-uniting Bill Richardson and Manny Aragon? No. However, I do think this is a devastating blow for Lt. Governor Diane Denish.

Lt. Governor Denish was poised to become the first female governor of New Mexico, but in one fail swoop that has all changed. My guess is that Governor Richardson will now finish out his term and attempt to save what is left of his legacy. That means switching all of those reporters he has gathered over the years into overdrive efforts to redirect the focus away from the indictments and on to more flattering topics.

Of course, the Lt. Governor could save her political future by coming out on the attack and blow the whistle on Richardson's antics, but that's just not her style. Sure, there was that whole pinching episode...

The lieutenant governor of New Mexico, Diane Denish was quoted in the Albuquerque Journal saying she avoids standing or sitting near Richardson because of his physical manner, which she said was not improper but was "annoying." The governor, she said, "pinches my neck. He touches my hip, my thigh, sort of the side of my leg."

On repeated occasions, Richardson has been pressed by reporters or Democratic activists on whether his personal conduct can withstand public scrutiny.

But, even then, the Lt. Governor had been careful not to call anything Governor Richardson did "improper." She preferred to think of it as simply "annoying." As this scandal plays out, most likely the final major scandal of the Richardson administration, expect the Lt. Governor to remain silent on the impropriety of pinching donors.

After all, it's no secret that Lt. Governor Denish has been rather aggressive in her own rights in securing a rather impressive war chest over these last few years. But, as one of the Lt. Governor's esteemed colleagues pointed out, taking large sums of money is only about charging for access.