Federation of Connecticut Taxpayer Organizations

The National Debt has continued to increase an average of
$3.83 billion per day since September 28, 2007!
Concerned? Then tell your Elected Officials in Washington!

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TAX TALK NOVEMBER 24, 2009

Federal� and State governments throughout the country are being crippled by insurmountable debt, public sector unions, and corruption.� Earlier this year I wrote an article captioned STATES AND TOWNS IN CRISIS - BAILOUT OR BANKRUPTCY. ��The following lends insight into the more recent revelations of the financial tsunami facing our nation and our State.� How is your state or town doing?� What are your thoughts on the issues.� Let us know!

Contained in this edition of Tax Talk:

� Geithner, Corruption, and the Fed

� Audit Faults New York Fed in AIG Bailout

� U.S. Fund for Bank Deposit Insurance Falls Into the Red

� Plundering California, Public-sector unions have brought the state to its knees

� California's debt continues to climb

� Connecticut may face $3.4 billion 2012 deficit

� Governor Rell Writes Legislators Warning of Bond Outlook Downgrade

� Wave of Debt Payments Facing U.S. Government

� State tax collections in steep drop

� Homebuyer Tax Credits Threaten the FHA

� From The National Taxpayers Union-Save Taxpayers $300 Billion and Eliminate TARP!

� STIMULUS WATCH: Did White House overplay job data?

� Goldman Sachs will pay TWENTY THREE BILLION DOLLARS in Bonuses

� Report: Government Wasted $98 Billion, Wasted Taxes Grow By $26 Billion

� Task force to take up financial fraud cases, Group is created in response to wrongdoing that fed economic crisis

� Prosecutors called a former Louisiana congressman's corruption the most extensive in the history of Congress.

� A look at economic developments around the globe

Geithner, Corruption, and the Fed November 21, 2009 by Dan Mitchell

Tim �Turbotax� Geithner is getting attacked on the Hill because of the weak economy, but he should be condemned for the corruption and favoritism he displayed while head of the New York Fed during the financial crisis. The New York Times recently reported how much of the money wasted on AIG actually was designed to go in the pockets of Geithner�s friends and cronies in the banking sector:

The Federal Reserve Bank of New York gave up much of its power in high-pressure negotiations with the American International Group�s trading partners last year, according to a government report made public on Monday. Just two days before the New York Fed paid AIG�s partners 100 cents on the dollar to tear up their contracts with the insurance giant, one bank volunteered to take a modest haircut � but it never got the chance. �Goldman Sachs and the top French bank regulator. They argued, with others, that it would be improper and perhaps even criminal to force AIG�s trading partners to bear losses outside of bankruptcy court. The banks and the regulator were confident that the New York Fed was not willing to push AIG into bankruptcy, because earlier in the fall the New York Fed had stepped in with $85 billion to prop up the insurer. �The Fed �refused to use its considerable leverage,� Neil M. Barofsky, the special inspector general for the Troubled Asset Relief Program, wrote in a report to be officially released on Tuesday, examining the much-criticized decision to make AIG�s trading partners whole when people and businesses were taking painful losses in the financial markets. There have been suggestions that the Fed chose to negotiate weakly, Mr. Barofsky said, to give a �backdoor bailout� to AIG�s banks. He said Mr. Geithner and the Fed�s lawyers had denied this, but added that �irrespective of their stated intent,� there was no doubt about the result: �Tens of billions of dollars of government money was funneled inexorably and directly to AIG�s counterparties.�

http://danieljmitchell.wordpress.com/2009/11/21/geithner-corruption-and-the-fed/

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Audit Faults New York Fed in AIG Bailout, New York Times,�

17 Nov 2009 |By: Mary Williams Walsh The Federal Reserve Bank of New York gave up much of its power in high-pressure negotiations with the American International Group�s trading partners last year, according to a government report made public on Monday.� Continued at �.. http://www.cnbc.com/id/33985080/site/14081545

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U.S. Fund for Bank Deposit Insurance Falls Into the Red, New York Times, Nov 24, 2009� ERIC DASH The government-administered insurance fund that protects depositors fell $8.2 billion into the red for the first time since the fallout from the savings-and-loan crisis of the early 1990s as the pace of bank failures accelerated in the third quarter. �. It was the first time the F.D.I.C. fund�s balance has been negative since the early 1990s, as the pace of bank failures accelerated in the third quarter. Continued at �. http://www.nytimes.com/2009/11/25/business/economy/25fdic.html?hp

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Plundering California, Public-sector unions have brought the state to its knees. 23 November 2009, Steven Greenhurt,

In Orange County,�� the average pay and benefits package for firefighters was $175,000 per year. Firefighters, like all public-safety officials in California, also receive a gold-plated retirement plan: a defined-benefit annual pension that offers 90 percent or more of the worker�s final year�s pay, guaranteed for the rest of his life (and the life of his spouse).

The economy is struggling, the unemployment rate is high, and many Americans are struggling to pay the bills, but one class of Americans is doing quite well: government workers. Their pay levels are soaring, they enjoy unmatched benefits, and they remain largely immune from layoffs, except for some overly publicized cutbacks around the margins. To make matters worse, government employees�thanks largely to the power of their unions�have carved out special protections that exempt them from many of the rules that other working Americans must live by. California has been on the cutting edge of this dangerous trend, which has essentially turned government employees into a special class of citizens. Continued at �.�� http://www.city-journal.org/2009/eon1123sg.html

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California's debt continues to climb http://www.mcclatchydc.com/economy/story/79387.html

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Connecticut may face $3.4 billion 2012 deficit BY SUSAN HAIGH, ASSOCIATED PRESS , Nov 19, 2009 HARTFORD � Connecticut law�makers learned Wednesday that the state�s budget woes may get much worse in 2012, possibly grow�ing to $3.4 billion from the current $385 million.� Both the governor�s budget office and the General Assembly�s Office of Fiscal Analysis told legislative budget committees they expect the deficit will reach $3.2 billion to $3.4 billion.� �We�re in a world of hurt,� Robert Genuario, Gov. M. Jodi Rell�s budg�et chief and head of the Office of Policy and Management, said. By 2012, the budget experts said, the state will have spent all of its budget reserves and federal stimu�lus funds.� In addition, payments will begin coming due on money the state has borrowed to bal�ance the current, two-year, $37.6 billion budget.� Geary Maher, the OFA di�rector, said lawmakers face the prospect of having to cut state spending by more than 18 percent or raise taxes by about the same amount if steps are not taken before 2012. Continued at �.. http://www.norwichbulletin.com/homepage/x1076977167/Connecticut-may-face-3-4-billion-2012-deficit

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Governor Rell Writes Legislators,

Warning of Bond Outlook Downgrade

Move from �Stable� to �Negative� is �Alarm Signal We

Cannot Afford to Ignore,� Governor Tells Lawmakers

See� report from Moody�s

Moody�s said the downgrade was motivated in large measure by the new, two-year state budget, which relies excessively on borrowing and one-time fixes to close a deficit of about $8.5 billion. Governor Rell, who refused to sign the budget into law, said the report is clear evidence that further reductions in state spending are necessary. Continued at �. http://www.ct.gov/Governorrell/cwp/view.asp?A=3675&Q=449704

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Wave of Debt Payments Facing U.S. Government By EDMUND L. ANDREWS, Nov 23, 2009, New York Times - WASHINGTON � The United States government is financing its more than trillion-dollar-a-year borrowing with i.o.u.�s on terms that seem too good to be true. But that happy situation, aided by ultralow interest rates, may not last much longer. Treasury officials now face a trifecta of headaches: a mountain of new debt, a balloon of short-term borrowings that come due in the months ahead, and interest rates that are sure to climb back to normal as soon as the Federal Reserve decides that the emergency has passed.Even as Treasury officials are racing to lock in today�s low rates by exchanging short-term borrowings for long-term bonds, the government faces a payment shock similar to those that sent legions of overstretched homeowners into default on their mortgages.

With the national debt now topping $12 trillion, the White House estimates that the government�s tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically. Other forecasters say the figure could be much higher. In concrete terms, an additional $500 billion a year in interest expense would total more than the combined federal budgets this year for education, energy, homeland security and the wars in Iraq and Afghanistan. Continued at �. http://www.nytimes.com/2009/11/23/business/23rates.html?_r=1

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State tax collections in steep drop - Tax revenue dropped by 11% in 44 states in the third quarter according to the Rockefeller Institute By Aaron Smith, CNNMoney.com staff writer, November 23, 2009, �..Among the different sources of tax revenue, corporate income tax suffered the biggest decline, down 19.4% in the third quarter, the Rockefeller Institute said. Personal income tax fell 11.4% and sales tax collections dropped 8.2%. The institute blamed the declines on the weak job market. The nationwide unemployment rate rose to 10.2% in October, a 26-year high. Tax revenues will continue to be weak in the fourth quarter, the report found. Continued at �. http://money.cnn.com/2009/11/23/news/economy/rockefeller_state_tax/index.htm

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From the Wall Street Journal on Line�..A recent government audit concluded that the FHA would run out of money in 2011 and need a federal bailout if we have a protracted recession-

Homebuyer Tax Credits Threaten the FHA, Nov 23, 2009, By ROBERT C. POZEN, �chairman of MFS Investment Management and senior lecturer at Harvard Business School, is the author of "Too Big to Save? How to Fix the U.S. Financial System" (Wiley, 2009).

��. The problem is that the FHA insures mortgages of homes below certain price levels with such a low down payment that it can be funded solely by the refundable tax credit. �..�� Here's how the credit allows buyers to avoid putting their own money at risk. Suppose a couple making $60,000 annually buys a home worth $200,000. They can get an FHA-insured loan if they put down 3.5% of the purchase price, about $7,000. The couple will also need to come up with another $1,000 in closing costs, for a total of $8,000. The couple can either dip into savings or borrow that money from relatives or somewhere else on a temporary basis.� After closing, the couple can quickly obtain the $8,000 refundable tax credit to pay off their temporary loan (or replenish their savings). In effect, they will have bought a home without putting any of their own money at risk. Owners who don't sink their own money into a house are much more likely to default on the mortgage.� The FHA already is facing a rising number of serious problems on its insured mortgages. Last week the agency reported that its cash reserves dropped to 0.53% of the $685 billion of total loans it insurers. This is well below the 2% federal law requires the FHA to have in reserves.� Beyond these reserves, the FHA has roughly $28 billion in a capital surplus fund, established by Congress to absorb losses on insured mortgages over the next 30 years. With the reserves and capital in hand, agency officials believe they have enough cushion to avoid needing a federal bailout. But a recent government audit concluded that the FHA would run out of money in 2011 and need a federal bailout if we have a protracted recession.� Continued at �. http://online.wsj.com/article/SB10001424052748704335904574497692260915588.html?mod=googlenews_wsj

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From The National Taxpayers Union

An Open Letter to the United States Senate:

Save Taxpayers $300 Billion and Eliminate TARP!

http://www.ntu.org/main/letters_detail.php?letter_id=714

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STIMULUS WATCH: Did White House overplay job data?

By MATT APUZZO � Nov 18, 2009

WASHINGTON � The government watchdog overseeing economic stimulus spending said Thursday that, in its rush to take credit for saving hundreds of thousands of jobs, the Obama administration was overly confident in its job-counting and did not acknowledge significant errors in the figures. Numbers released last month identified more than 640,000 jobs linked to stimulus projects around the country. Despite warning signs that the numbers were flawed, the White House said the public could have confidence in them and they proved the administration was on track save or create 3.5 million jobs by the end of next year. Continued at �. http://www.google.com/hostednews/ap/article/ALeqM5jMNoef6xDenBbHWO0Im6rIjDmAgAD9C2SEHG0

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$$$$Goldman Sachs will pay

TWENTY THREE BILLION DOLLARS in Bonuses$$$$

Protesters lash out at Goldman, By Kevin Sieff in Washington,� November 16 2009 22:16 | Last updated: November 16 2009 22:16

A crowd of protesters converged on the Washington DC office of Goldman Sachs on Monday, carrying �wanted� signs bearing the face of Lloyd Blankfein, the bank�s chief executive�.. I�ve watched my congregants lose their homes and their jobs,� said Charlotte Dots, a reverend from Bloomington, Illinois. �All while Goldman Sachs plays our economy like a casino.��. Mr Blankfein became a lightning rod for criticism after he said last week that�s he�s �doing God�s work�. That comment to the Sunday Times � and analysts� estimates that the company will pay more than $23bn in bonuses � has incited small demonstrations outside Goldman�s offices across the country. One group made their way to Mr Blankfein�s Manhattan home last week, giant squid in hand. Continued at �. . http://www.ft.com/cms/s/0/05985428-d2ec-11de-af63-00144feabdc0.html?nclick_check=1

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Report: Government Wasted $98 Billion, Wasted Taxes Grow By $26 Billion, HOPE YEN, Associated Press Writer, November 18, 2009

WASHINGTON -- More than $98 billion in taxpayer dollars spent by government agencies was wasted, much of it on questionable claims for tax credits and Medicare benefits, representing an increase of $26 billion from the previous year.

In all, about 5 percent of spending in federal programs in fiscal year 2009 was improper, according to new details of a government financial report that were released Tuesday. Saying the overall error rate was similar in 2008, officials attributed the $26 billion jump to some changes in how to define improper spending as well as an increase in overall spending due to the recession.

President Barack Obama is expected to sign an executive order within the next week aimed at cracking down on government waste and fraud, particularly in Medicare and other benefit programs. In the 2009 report, the government officially reported questionable Medicare payments of roughly $36 billion, but that amount will be revised upward to about $48 billion next year as the Health and Human Services Department fully converts to a new methodology that imposes stricter documentation requirements.� "We need to protect taxpayer dollars," Peter Orszag, director of the Office of Management and Budget, told reporters. "Every dollar that goes to the wrong recipient or in the wrong amount is a dollar not available to help an unemployed worker, or to invest in education or key priorities of the administration." Under the executive order, every federal agency would have to maintain a Web site that tracks improper payments, error rates and outstanding payments.� Continued� at �� http://www.clickondetroit.com/money/21647334/detail.html

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Task force to take up financial fraud cases, Group is created in response to wrongdoing that fed economic crisis

By Zachary A. Goldfarb, Washington Post Staff Writer,� November 18, 2009

Top Obama administration officials on Tuesday announced a new federal task force to combat financial fraud after deciding that the number and complexity of investigations linked to the economic crisis require a more coordinated response from government agencies. Created by executive order, the Financial Fraud Enforcement Task Force targets fraud related to mortgage lending and modification, securities law, stimulus spending and the government's bailout of the financial sector. "This task force's mission is not just to hold accountable those who helped bring about the last financial meltdown, but to prevent another meltdown from happening," Attorney General Eric H. Holder Jr. said at a news conference at the Justice Department. http://www.washingtonpost.com/wp-dyn/content/article/2009/11/17/AR2009111703980.html

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Prosecutors called a former Louisiana congressman's corruption the most extensive in the history of Congress.

Corruption lands ex-Louisiana congressman 13 years
Washington Informer, By MATTHEW BARAKAT � AP,� Nov 17, 2009

Prosecutors called a former Louisiana congressman's corruption the most extensive in the history of Congress.His punishment delivered a similar message.� William Jefferson, who famously hid $90,000 cash in his freezer, was sentenced on Friday, Nov. 13 to 13 years in prison for taking bribes, the longest term ever imposed on a congressman for bribery.� The Democrat who represented parts of New Orleans for nearly 20 years was convicted in August of taking about $500,000 in bribes and seeking millions more in exchange for using his influence to broker business deals in Africa. Jefferson is appealing the conviction.� U.S. District Judge T.S. Ellis III said public corruption was "a cancer on the body politic." "There must be some sort of greed virus that attacks those in power," said Ellis, who lamented that so many other congressmen have been convicted on similar charges.� But the other punishments weren't quite as severe. For example, former Rep. Randy "Duke" Cunningham, R-Calif., was sentenced to more than eight years in prison after pleading guilty in 2005 to taking $2.4 million in bribes from defense contractors. Former Rep. Bob Ney, R-Ohio, was sentenced to 2 1/2 years in prison for taking bribes from lobbyist Jack Abramoff, and ex-Rep. James Traficant, D-Ohio, served a 7-year sentence after being convicted in a 2002 trial of bribery and racketeering. Article continues at �..
http://www.washingtoninformer.com/wi-web/index.php?option=com_content&view=article&id=2515:corruption-lands-ex-louisiana-congressman-13-years-&catid=61:national&Itemid=151

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A look at economic developments around the globe

By The Associated Press (AP) � Nov 20, 2009

A look at economic developments and activity in major stock markets around the world http://www.google.com/hostednews/ap/article/ALeqM5hixr2M_Qx1JQ-RsMvvAlU1RwLPiwD9C2PT780

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