Americorps Begins $234M Handout to Community Groups

WASHINGTON — The government took the first step Monday in expanding the AmeriCorps program, awarding grants to nonprofits and other organizations to put 57,000 AmeriCorps members to work in communities around the country.

The grants, totaling $234 million, are the first to be released under a new law aimed at tripling the national service program by 2017. States and territories will also get an additional $129 million for AmeriCorps slots. Officials expect to have a total of 85,000 people enrolled in the program this year.

AmeriCorps participants mentor children, clean up parks or buildings and weatherize homes for the poor among other activities. Some get a living stipend while they are working for up to a year. Most participants, who are predominantly 18 to 26, get about $11,800.

Teach for America, the program that trains top college students to teach in poor communities, received the largest grant—$11.4 million for 6,621 AmeriCorps members. It’s just one of hundreds of national and local organizations, state service commissions, religious groups and other institutions getting the awards from the federal Corporation for National and Community Service.

In April 2009, President Barack Obama signed a law to gradually increase the size of the Clinton-era AmeriCorps to 250,000 enrollees from 75,000. The measure outlines five broad categories where people can direct their service: helping the poor, improving education, encouraging energy efficiency, strengthening access to health care and assisting veterans.

Because of the law’s focus, programs that help veterans were among the newest recipients of AmeriCorps grants. Operation Welcome Home, run by the California Department of Veterans Affairs, will get almost $560,000 for 80 AmeriCorps members who will help returning service members in California with the transition back to civilian life.

Is the Left Pushing for Violence in America?

By Matt Welch

Via commenter Smoovev comes the latest example of well-respected former war correspondent Chris Hedges advocating political violence in America:

Here’s to the Greeks. They know what to do when corporations pillage and loot their country. They know what to do when Goldman Sachs and international bankers collude with their power elite to falsify economic data and then make billions betting that the Greek economy will collapse. They know what to do when they are told their pensions, benefits and jobs have to be cut to pay corporate banks, which screwed them in the first place. Call a general strike. Riot. Shut down the city centers. Toss the bastards out. Do not be afraid of the language of class warfare—the rich versus the poor, the oligarchs versus the citizens, the capitalists versus the proletariat. The Greeks, unlike most of us, get it.

Greek rioters have killed three so far.

Hedeges’ recent apocalyptic tear (which has resonance for at least some libertarians, not to mention Pagans) includes urging on sabotage two months ago, and calling corporations “little Eichmanns” last week. And this is no fringe character here–Hedges continues to receive respectful hearings in the Washington Post, Philadelphia Inquirer, Vancouver Sun, et al, and just last week he was named a finalist for the L.A. Press Club’s Online Journalist of the Year. You will search in vain for any mention of Hedges by the scores of journalistic commenters who have been warning for more than a year now (inaccurately, in my opinion) about impending political violence, inciteful right-wing rhetoric, and borderline sedition.

FDIC: ‘Problem’ Banks at 775


WASHINGTON—A total of 775 banks, or one-tenth of all U.S. banks, were on the Federal Deposit Insurance Corp.’s list of “problem” institutions in the first quarter, as bad loans in the commercial real-estate market weighed on bank balance sheets.

Poor loan performance in other sectors also continued to hurt banks, with the total number of loans at least three months past due climbing for the 16th consecutive quarter, FDIC officials said in a briefing on Thursday.

“The banking system still has many problems to work through, and we cannot ignore the possibility of more financial market volatility,” FDIC Chairman Sheila Bair said.

There were 702 on the FDIC’s “problem” bank list at the end of 2009 and 252 at the end of 2008.

FDIC officials said they expected the number of failed banks to peak this year after climbing steadily over the past three years. Regulators have shut 72 banks so far this year, more than double the number closed by this time last year. Ms. Bair said regulators were preparing for a steady pace of additional closures through the end of the year. A total of 237 banks have failed since the beginning of 2008.

The failures continue to strain the FDIC’s fund to protect consumer deposits, although officials signaled they were confident they had enough cash on hand to deal with the expected spate of failures, without having to assess new fees on the banking industry. The agency’s deposit insurance fund stood at negative-$20.7 billion at the end of the first quarter, a slight improvement from the end of 2009.

“We have the necessary industry-funded resources to complete the cleanup,” Ms. Bair said, in a reference to the fees that the agency assesses on banks for insuring their deposits.

Banks, squeezed by problem loans and the continued recession, responded by reducing their lending. The industry’s total loan balances grew by 3% during the quarter, but the increase was due to accounting changes that required banks to bring securitized assets back onto their balance sheets. Without taking into account these accounting changes, lending would have declined for the seventh straight quarter, as banks cut back across most major lending categories.

“There is a lot of credit distress still in the mortgage-portfolio area,” FDIC Chief Economist Richard Brown said at the FDIC briefing.

FDIC officials said they saw some signs for optimism. The total $18 billion, first-quarter profit reported by U.S. banks and thrifts was the highest since the first three months of 2008 and more than triple the profit recorded in the first quarter of last year. More than half of insured banks reported growth in net income during the quarter—the highest level in more than three years—and firms set aside less money to reserve for future losses.

The FDIC data suggested that the largest U.S. banks were faring better than their smaller rivals. The former enjoyed the largest year-over-year increase in earnings and saw the biggest reduction in loan-loss reserves, or the money they must set aside to account for future, expected losses on loans. Ms. Bair said the rate of decline in lending by larger banks also slowed in each of the past two quarters.

Obama’s Thuggocracy

By Andrea Tantaros-

From the G.M. bondholders, to the Black Panthers at polling stations, to ACORN to the mobs showing up at the homes of private citizens, Obama is running a Hugo Chavez-style thuggocracy.

This past Sunday, in one of the most aggressive and offensive intimidation tactics to date, hundreds of members of the largest union – the SEIU – stormed the front yard of Bank of America deputy general counsel Greg Baer’s home. The angry mob had bullhorns, signs and even broke the law by trespassing to bully Baer’s teenage son, the only one home at the time, who locked himself in the bathroom out of fear.

This is what unions do. They pressure politicians into spending too much. They push government into bad policy decisions. They sacrifice the private sector for the public sector. And now, they trespass and break the law only to scare the children of private citizens to get their way.
If you think the unions are working along, think again.

These protests, the ones storming Wall Street bank lobbies and now the private homes of bankers, are likely being carefully coordinated with the White House to increase their profile against the financial fat cats and help pass disgraced Connecticut Senator Chris Dodd’s financial regulatory bill.

Remember, when the White House visitor records were finally made public, it was SEIU boss Andy Stern who was the most frequent guest.

There are also no coincidences in politics. The bill passed the Senate last night.

From the G.M. bondholders, to the Black Panthers at polling stations, to ACORN to these assaults on private citizens, Obama is running a Hugo Chavez-style thuggocracy. Like Chavez, he gets non-official “allies” to act as his henchemen and do the intimidation work. Obama provides the narrative and tells the story of “greed” while the SEIU provides the muscle. This is about power, not prosperity.

This time it’s gone too far.

Unions see the writing on the wall. The goose that laid the golden egg is bleeding on the operating table – and they’re the ones who killed it. They are bankrupting local and state governments, and putting a strain on the federal budget. Unions have also put us at a major trade imbalance. The stimulus has gone to create more public sector union jobs. These jobs cost on average, 30K more than their private sector equivalents.

Take New York State, for example, once upon a time there was manufacturing, a robust Wall Street engine of growth, Fortune 500 companies aplenty. That “Empire State” is no more. The unions lobbied to ensure that these companies were taxed to death and made it extremely challenging to do business — so much that it became easier to do business in communist China.

Let’s be clear, I’m not defending Bank of America. I’m defending the American tax payer from organized labor who has bled them dry and the politicians who have been too weak to stand up to their gangster ways.

Unsurprisingly, the SEIU has made no apology for their behavior toward Baer’s family. Their spokespeople argue that the protest was over home foreclosures under Bank of America’s watch, but that still doesn’t give them the right to break the law. It also doesn’t allow them a carve out like they demanded in the health care bill for their costly Cadillac insurance plans. It’s absurd that in a recession, the unions feel they deserve special treatment because they are connected to the party in power. If that’s what they’re arguing they need to stand up and say it.

In this economy, you can’t punch someone without feeling it yourself. Punch the bank, they stop making loans, thus hurting the private sector. Punch the private sector, you hurt the markets. Hurt the Street and you hurt the pensions funds, in fact, the very same ones unions are going gangster to protect.

We now know, there is nothing they won’t do, nobody the unions won’t intimidate. And the president, who promised to preside over an administration free from special interest influence, should be held accountable. As long as we continue to feed the unions, the country will continue to decline. It’s time to stand up to this behavior with the same muscle they’ve used to bully our country all these years and send a message loud and clear: we will not be intimidated.

Andrea Tantaros is a conservative columnist and contributor.

Who Will Bail Out America?

By Peter Ferrara

Social Security, Medicare and the retirement of the baby boom generation wasn’t enough of a burden for the American taxpayer. We will now be paying as well for the generous pensions of Greek bureaucrats retiring in the warm Mediterranean sun at age 55, thanks to the foresighted leadership of our very own international statesman, Barack Obama.

Just last year President Obama proposed, and his overwhelmingly Democrat Congress approved, an additional $100 billion line of credit from the USA to the International Monetary Fund (IMF). On Sunday, the IMF approved a contribution of $40 billion to the Greek bailout, with America voting yes for yet another raid on its own taxpayers.

But this is only the beginning. What the trillion dollar Euro bailout fund has done is to create the perverse incentives of Too Big to Fail for fiscally irresponsible Eurostates. Do those literally murderous Greek rioters look ready to accede to austerity budgets with massive tax increases and massive benefit cuts? Political leaders in the Mediterranean states in particular, faced with short-term financial and political pressures, will be too tempted to put off the pain a little longer, hoping that EU bailouts will save them in the end. Indeed, voters in Spain, Italy, Portugal, and elsewhere may well think they should get their share of those bailout funds too, voting out leaders who try to be responsible, and voting in the worst demagogues trying to take advantage of the situation to gain political power.

Imagine if each of the American states could run deficits with a federal bailout fund to back them up. Could we count on the voters of California, New York, New Jersey, Michigan, and Illinois to support candidates promising crippling austerity budgets, with draconian benefit cuts and skyrocketing taxes, so they can do the responsible thing? This is the system the EU has just adopted. What that means is get ready for still more IMF bailouts financed by American taxpayers.

Unemployment Still Rising

Yet, America is still plagued with its own problems, poised soon enough for yet another ride down the roller coaster. The unemployment report just last Friday showed unemployment rising again in April, from 9.7% to 9.9%, almost two and a half years now after the recession began in December, 2007. Since World War II, the average recession has lasted 10 months, and the longest has been 16 months. Yet, 28 months after the last recession began, unemployment is still 10% and rising.

And that is only scratching the surface. Besides the 15.3 million officially unemployed, the army of the underemployed included 9.2 million described by the Bureau of Labor Statistics as “working part time because their hours had been cut back or because they were unable to find a full time job.” Another 2.4 million were marginally attached to the labor force, meaning they were not in the labor force, but “wanted and were available for work, and had looked for a job sometime in the prior 12 months.”

That leaves a total of nearly 27 million Americans still unemployed or underemployed. With a labor force of 154.7 million, that translates into a total underemployment rate of 17.4%. Moreover, of the officially unemployed, close to 50%, or 6.7 million, were long-term unemployed, meaning they had been unemployed for 27 weeks or more, the highest total since the recession began over 2 years ago, and still rising.

While President Obama and his party-controlled media ballyhooed the 290,000 new jobs created in April, 66,000 were temporary census workers. Moreover, that is still not enough new jobs created to reduce unemployment. Given the natural rate of new entrants to the work force, close to twice that many must be created each month to reduce the unemployed.

The Recovery: Hopelessly Too Little, Shamelessly Too Late

Yes, with the U.S. economy growing again, economic recovery is technically underway. But that is an inevitable, natural, cyclical recovery, as I predicted in this column over a year ago. The notion that the economy was going to tumble ever downward without some magic from Obama the Magnificent was always a fairy tale bedtime story for small children and their mental equivalents. As mentioned above, the average recession since World War II has been 10 months, and those recoveries were not due to magical Big Government rescues.

The way to evaluate the current recovery is by comparison to other recoveries after downturns of similar magnitude. Historically, the deeper the recession the stronger the snapback recovery. The Bureau of Economic Analysis reports that economic growth in the first 3 quarters after the 1981-1982 recession was 5.1%, 9.3% and 8.5%. Yet, economic growth in the first 3 quarters after this last recession was 2.2%, 5.6% and 3.2%, not even half as much.

Moreover, in 1984, real economic growth boomed by nearly 7%, the highest in 50 years. That recovery then lasted 92 months without a recession until July, 1990, when the tax increases of the 1990 budget deal killed it. This set a new record for the longest peacetime expansion ever, the previous high being 58 months. During that recovery, the economy grew by almost one-third, the equivalent of adding the entire economy of West Germany, the third largest in the world at the time, to the U.S. economy.

Real per capita disposable income grew by nearly 20% during that boom, meaning the American standard of living increased by that magnitude. Real median family income had declined by almost 10% from 1978 to 1982, with income falling by 14% for the bottom 20%. But in a stunning reversal, real median family income grew by 11% during the recovery, with incomes increasing by 12% for the bottom 20%. The poverty rate, which had started rising despite trillions spent on the war on poverty, reversed and declined every year during the recovery as well.

Note also that the 1981-1982 recession resulted because Reagan had to slay a historic inflation. Inflation roared over 1979 and 1980 by 25% (11.6% in 1979 and 13.5% in 1980), after accelerating throughout the 1970s. But Reagan backed strict monetary policies at the Fed reining in the money supply, and inflation was slashed in half by 1983 as a result to 6.2%, and by half again in 1984 to 3.2%. Every school of economic thought, from Keynesian textbooks to the most free market “Austrian” economics of Friedrich Hayek and Ludwig von Mises, preaches that ending inflation inevitably produces a period of unemployment and recession.

In diametrically opposing contrast, instead of ending a historic, raging inflation, like Reagan, President Obama is creating one.

Indeed, everything critical to the American economy of today is the reverse of what it was during the economic boom starting in 1983-1984, reflecting that President Obama’s policies are the opposite of Reagan’s. Interest rates were heading sharply lower back then from historic highs, with the prime rate peaking at 21% in 1980. Today, as the Wall Street Journal commented on May 1, “[T]he Fed has held short-term interest rates at close to zero for 16 months. The only question is how soon and how high rates will rise.”

Moreover, the 1983-1984 recovery was launched just as the Reagan marginal tax rate cuts became fully effective. But today we are set for historic tax rate increases to kick in next year. While the Tax Foundation reports that the top 1% of income earners already pay more in federal income taxes than the bottom 95%, President Obama says their taxes should be raised even more so they can pay their “fair share.” So next year, capital gains tax rates will soar by close to 60%, tax rates on dividends by roughly 200%, and the top income tax rate by close to 30%.

In addition, as the 1983-1984 recovery launched, “an era of deregulation was lowering costs across most industries,” as the Journal also commented, whereas today, “Washington is raising costs for business by expanding its regulatory reach via tougher antitrust enforcement, mandates on health care and energy, more political limits on telecom investment, restrictions on bank lending, and much more.”

What this means is that instead of sustained recovery, what we are heading for is Art Laffer’s Coming Crash of 2011. President Obama’s economy is at its peak performance right now, however stunted that is.

President Obama’s Grecian Formula

For 2009, Greece’s budget deficit came in at 13.6% of GDP, and its national debt grew to 115% of GDP. President Obama has America on this exact same track. Our budget deficit for this year is nearly 11% of GDP. By 2020, according to the CBO, America’s net national debt held by the public would be 90% of GDP. Total gross federal debt, which includes such items as the debt held in the Social Security trust funds (real debt that will have to be paid in the future), would be 122% of GDP.

But it’s even worse than that. For the top 1% will get their revenge for President Obama’s tax piracy. Instead of raising revenues through his top income tax rate increases, he will be lucky if revenues do not decline. For capital gains alone, every tax rate increase over the last 40 years has produced less revenue rather than more. President Obama’s class warriors also do not understand that dividend payments will collapse next year as a result of their tax increases, and so will revenues from taxes on those dividends.

Lower than expected revenues, even if they do not absolutely decline, will mean still higher deficits and debt. Even more so as net interest spending increases as a result. If interest rates rise more than the modest increases President Obama’s budget projects, even more likely with the growing world debt burden, then the vicious death spiral takes another tumble downward.

If the economy turns downward in 2011 rather than upward, then all of this will explode out of control right there. America will also be effectively defenseless at that point, for we will not be able to borrow the still greater funds that would be necessary for any protracted conflict. (Is that what the ultraliberal President Obama and George Soros planned all along to get America “under control,” so to speak?). That condition of vulnerability, of course, again just the opposite of President Reagan’s peace through strength, invites war.

If the totally irresponsible new Obamacare entitlements end up costing more than planned when they start in 2014, as is likely, the phrase “adding fuel to the fire” seems inadequate. How about firebombing the fire?

And we haven’t even factored in renewed inflation yet. The EU bailout only encourages weak monetary policies from the European Central Bank, and further extended lax policies by the Fed. If this finally leads to inflation, as it did in the 1970s, the Fed would be faced with either raising interest rates, contributing to extended economic weakness and downturn, or letting inflation roar, until it returns to 1970s levels, or worse.

Maybe that is why the price of gold is already higher than the S&P 500. The truth is we are on the path to a worldwide flight from increasingly irresponsible fiat currencies. This is well beyond the issue of a declining or even collapsing dollar.

Even the shortsighted stock market, which usually looks only about 6 months ahead, is signaling trouble. For all the talk of a booming stock market recovery over the last year, it has never returned near to its peak over 14,000. It is stuck hovering about 25% below that peak. With the above economic prospects, there is no longer enough upside in trying to game the stock market to milk any remaining short-term gains.

Rest assured that when the credit markets tell America “No Mas” to record-shattering borrowing, there will be no one to bail out the USA. No one is big enough to even try it. Rather, the vultures will circle.

The only possible bailout will come on Election Day, 2010. Unless the American people send a message that rocks Washington like never before, 2012 may well be too late.

Of Course GM did not pay back their loan so fast….

From Reason T.V.
by Nick Gillespie

General Motors CEO Ed Whitacre has bragged in TV commercials and newspaper columns that GM has paid back its bailout “in full and ahead of schedule.”

As with the Pontiac Aztek, an ugly exterior masks an ever darker problem: Whitacre is being fanciful to the point of deceit. GM received $50 billion in TARP funds (never mind that TARP was only supposed to cover financial institutions). About $7 billion of that came in the form of a straight-up, low-interest loan. And about $13 billion came in the form of an escrow account.

So how has GM, which lost $38 billion in 2007 even as it sold 9.4 million cars, paid back its debt? It took money from the escrow account to pay back the $6.7 billion loan.

Do you remember when you were a kid and your parents gave you $20 to buy them a Christmas present? You bought them something worth $3 and pocketed the rest? That’s what GM has just done.

Oh, and do you remember when you hit your parents up for college? GM has applied for a $10 billion, low-interest loan from the government to modernize its plants so its cars will meet new federal mileage standards.

If you think all this constitutes paying back their debt in full and ahead of schedule, you might want to check out the new line of GM cars. And hope that the company’s safety engineers are better at math than their CEO.

Approximately 1.35 minutes. Written and produced by Dan Hayes, Meredith Bragg, and Nick Gillespie.