Tuesday, February 3, 2009

Baby, It's Cold Everywhere

This blog has taken a special interest in former Majority Leader Daschle's nomination for Secretary of Health and Human Services, due to my background in actually providing health care for humans.

It was initially thought here that the coup de grace would be the revelation that even after Mr. Daschle paid his back taxes, he neglected to pay his Medicare surtax of 2.9%. Doesn't he know? He voted for that revenue raiser as a Senator.

Questions have been raised about both the thoroughness of the Obama team's vetting process and the President's interest in hewing strictly to his theme of ultra-high ethical standards.

Before Mr. Daschle resigned today, Nancy Killefer withdrew her candidacy for first chief performance officer for the federal government. Here is her situation, as reported by the Huffington Post.

The AP reported that on March 7, 2005, the D.C. Department of Employment Services slapped a tax lien on her home in the upscale Wesley Heights neighborhood. The local government alleged that beginning three years after she left the high-powered Treasury post she failed to pay unemployment compensation tax for a household employee. She failed to make the required quarterly payments for a year and half, the D.C. government said, whereupon a lien for $946.69 was placed on her home.

That sum included $298 in unpaid taxes, $48.69 in interest and $600 in penalties. Killefer didn't get the lien extinguished for almost five months, until July 29, 2005.

During that period, Killefer and her husband, an economics professor, had two nannies to help care for their teenage son and daughter, and she had a personal assistant to run things when she was on the road, she told Harvard business students back then.
Bobby Tucker, chief of D.C.'s unemployment insurance tax division, said filing tax liens is "not a common practice" for his office. D.C. law authorizes such liens when an employer "neglects and refuses" to pay the levy that helps pay for unemployment benefits for those laid off or fired. Tucker said his auditors have discretion to use tax liens based on "the number of attempts to collect contributions owed, whether or not the employer responds to written attempts, phone calls and-or in-person visits" to collect the tax.

From today's Huffpo update:

It wasn't clear whether the administration was aware of Killefer's tax errors before Obama named her. Gibbs refused to say what administration vetters knew about the problem or when. Gibbs maintained that Obama has confidence in the vetting system. But late on the day Killefer was first named, an administration official asked an AP reporter how the AP had found the tax lien against her.

Not encouraging. Here we have the Treasury Secretary, for whom Mr. Obama fought hard, overseeing the IRS despite being a tax chiseler/cheat/ignoramus; the health care czar/presumptive HHS Secretary, who had Mr. Obama's full and repeated support as recently as yesterday; and the first "chief performance officer" of the Federal Government, all bloodied over tax issues.

Both the "stimulus" program and the bank rescue program are floundering. Different trial balloons and senatorial proposals come and go. Gone are the heady days after the election in which giddy Democrats agreed to work day and night to get a stimulus bill to the new President on or around Inauguration Day.

This blog has consistently argued that on the core financial matters of the day, which are the Great Recession and the insolvency of the money-center financial institutions, the Obama Administration was going to be similar to the Bush team. So it has gone. There was no plan other than to follow the Bush-Reid-Pelosi plan of last year to give a one-time tax break and to fiddle while the banks burned, and to also include a large amount of spending that is both unfunded and for the most part in line with traditional and modern Democratic priorities but is not customized to stimulate. And so the markets continue to meander; the hoped-for Obama-mania/FDR-JFK-style inspiration peaked on or before Election Day, perhaps when Mr. Obama began acting like the economic affairs President before he was inaugurated, and as usual, economic reality drives the markets. Hope is rapidly fading that Barack Obama can make the recessionary tides recede other than on their own pace. In the meantime, please ask yourself what to do with your money when you just know that Citigroup and Bank of America are insolvent, and Wells Fargo and JPMorgan Chase may be as well.

Barack Obama said on the campaign trail that Americans would have to tighten their belts. He should continue on that theme, especially now that Mr. Bush still is blamed by the public for the economy. We need an old-style capitalist society built on saving, not consumption, and therefore on equity, not debt. If Mr. Obama, who by multiple accounts is quite a bright and well-informed President, can propound that theme over and over again, he will find a receptive public. The rest will fall in place, no matter exactly what is done to the banks.

Copyright (C) Long Lake LLC 2009

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