Bankrupting America’s Spending Daily

| April 24 2013

Spending Daily | April 24, 2013

“Sheriff Joe” Avoids Sequester Furloughs

ABC News reports, “The automatic federal spending cuts known as the sequester are forcing thousands of government employees – from air traffic controllers to White House staff – to take unpaid days off. As White House Press Secretary Jay Carney put it, ‘everyone’s affected by this.’ Well, maybe not everyone. One executive branch leader has found a way to make the cuts without forcing people out of work: Vice President Biden. Like most of the federal government, the office of the vice president is subject to across the board spending cuts, but an administration official tells me Biden’s office has been able to do what the FAA – and president’s own staff – have been unable to do: make the required spending cuts without furloughing any employees. The VP’s office, I am told, is not furloughing anybody and not requiring any staff to take pay cuts. They have found other ways to make the required budget cuts. The VP’s office won’t say how they have made the cuts.”

 

“Flying The Government Skies”

The Wall Street Journal editorializes, “As travellers nationwide are learning, the White House has decided to express its dislike of the sequester—otherwise known as modestly smaller government—by choosing to cut basic air traffic control services. … Ponder this logic, if that’s the right word: The sequester cuts about $637 million from the FAA, which is less than 4% of its $15.9 billion 2012 budget, and it limits the agency to what it spent in 2010. The White House decided to translate this 4% cut that it has the legal discretion to avoid into a 10% cut for air traffic controllers. Though controllers will be furloughed for one of every 10 working days, four of every 10 flights won’t arrive on time. …The White House claims the sequester applies to the budget category known as ‘projects, programs and activities’ and thus it lacks flexibility. Not so: This is a political pose to make the sequester more disruptive. … The White House could keep the controllers on duty simply by allocating more furlough days to these other non-essential workers. Instead, the FAA is even imposing the controller furlough on every airport equally, not prioritizing among the largest and busiest airports. San Francisco’s Napa Valley airport with no commercial service will absorb the same proportion of the cuts as the central New York radar terminal, which covers La Guardia, JFK and Newark International, as well as MacArthur, Teterboro, New Haven, Republic and other regional fields.”

 

“White House says open to legislation to halt FAA furloughs”

Reuters reports, “The White House said on Tuesday it would be open to legislation to put air traffic controllers back to work full-time as key U.S. senators demanded more information about the impact of furloughs on safety and air operations. … ‘If Congress has another idea about how to alleviate the challenges that sequester has caused for the FAA and for American travelers, we are open to looking at that,’ White House spokesman Jay Carney said, referring to $85 billion in federal budget cuts that began in March. But Carney said the administration’s first preference still is for a comprehensive budget deal with a “balanced” package of spending cuts and tax increases.”

 

FAA: 1,200 Flights Delayed Monday Due to Sequester

According to The New York Times, “The furlough of air traffic controllers delayed more than 1,200 flights on Monday, the first weekday of the unpaid leaves, the Federal Aviation Administration said Tuesday as lawmakers criticized the agency for how it was handling the automatic budget cuts. Apart from the furloughs, the F.A.A. counted more than 1,400 delays for weather and other reasons. On Tuesday, it said there were delays in the New York area and in Washington because of ‘staffing challenges,’ but it did not say what fraction of the delays were due to furloughs. … FlightStats.com, a company that monitors airline performance, counted nearly 7,000 delays on Monday, from all causes. A company spokeswoman, Sarena Regazzoni, said that the number ‘seems heightened but not excessive.’” Yesterday CNBC’s Jim Cramer commented that the FAA’s instructing pilots to blame delays on the sequester as “a little disingenuous.” Watch the clip here.

 

Reid: Replace Sequester with “War Savings”

According to The Hill, “Senate Majority Leader Harry Reid (D-Nev.) announced Tuesday that the Senate will begin considering a replacement for most of the $85 billion automatic spending cuts known as the sequester. Senate Democrats will now move a bill using war savings to pay for the sequester. In 2013, the Pentagon has said it has saved some $81 billion that it would otherwise have spent on the war in Afghanistan if not for President Obama’s decision to drawdown the U.S. troop presence.” So how is it that we can use fake money to offset real spending cuts? Click here to read more from Bankrupting America.

 

Members of Congress Get Free Airport Parking

Bloomberg reports, “How do you get the best parking spot for free at Reagan National Airport? Become a member of Congress. Lawmakers benefit from the perk that could generate more than $700,000 in revenue for the Metropolitan Washington Airport Authority.”

 

Fisker: “The Solyndra of the Electric Car Industry”

The New York Times reports, “ No one answers the phones these days at Fisker Automotive. Its visionary founder has quit; its employees have been laid off or put on furlough without pay. Production of its sleek plug-in hybrid car, the Karma, ended months ago. Veering on the edge of bankruptcy, without a buyer in sight, Fisker has become — to lawmakers and others — the Solyndra of the electric car industry. Not only private backers but millions of dollars in government loans gave life to a company, some would argue, that was a shaky investment from the start. No electric vehicle initiative backed by Washington seems more of a debacle than Fisker, which was given a $529 million federal loan in 2009 to advance the project. Two years later, after Fisker repeatedly missed production targets and other deadlines, the Energy Department suspended the loans. … ‘The government is playing in a space where they have to recognize their limitations,’ said Van Conway, a corporate restructuring executive in Detroit. ‘Whatever they spent on Fisker was just not going to be enough.’ … Bankruptcy now appears unavoidable, and a political reckoning is coming. Mr. Posawatz and Mr. Fisker are among the witnesses expected to testify at Wednesday’s hearing by the House Oversight and Government Reform subcommittee.”

 

Obama Administration Was Warned About Fisker

NPR reports, “Newly released documents show that the Obama administration was warned as early as 2010 that electric car maker Fisker Automotive Inc. was not meeting milestones set up for a half-billion dollar government loan, nearly a year before U.S. officials froze the loan after questions were raised about the company’s statements. An Energy Department official said in a June 2010 email that Fisker’s bid to draw on the federal loan may be jeopardized for failure to meet goals established by the Energy Department. Despite that warning, Fisker continued to receive money until June 2011, when the DOE halted further funding. The agency did so after Fisker presented new information that called into question whether key milestones — including launch of the company’s signature, $100,000 Karma hybrid — had been achieved, according to a credit report prepared by the Energy Department. … In the June 2010 email, Sandra Claghorn, an official in DOE’s loan program office, had written that Fisker ‘may be in limbo due to a lack of compliance with financial covenants’ set up by the Energy Department to protect taxpayers in the event of default. Another document, from April 2010, listed milestones that Fisker had not yet met. Aoife McCarthy, a spokeswoman for the Energy Department, said the June 2010 email was taken out of context.”

 

How Fisker Came Unraveled

The Wall Street Journal reports, “For a few months in 2012, Bruce Simon, the chief executive of gourmet food retailer Omaha Steaks International Inc., drove a $100,000 plug-in hybrid electric car known as the Fisker Karma. No longer. Mr. Simon says his car broke down four times over the span of a few months. Each time, Fisker Automotive Inc. picked it up and sent it by trailer from his home in Omaha, Neb., to a dealer in Minneapolis. The Karma was ‘so vulnerable to software errors, and the parts used were of such poor quality that eventually I insisted they take the car back and return my purchase price, which they did,’ he says. ‘It’s a real shame, the car itself was beautiful.’ The near collapse of the Anaheim, Calif., company—it missed a loan payment on Monday, earlier dismissed most of its staff and has hired bankruptcy advisors—comes as affluent buyers like Mr. Simon have turned away from the once promising startup and falling gasoline prices have chipped away at demand for electric cars. … Its biggest single investor was the U.S. In 2009, the Obama administration’s interest in cultivating electric cars got the untested Fisker loans totalling $529 million, more than the company had initially requested, and an amount that encouraged private backers to chip in more funds. At one point, backers valued the company at $1.8 billion.”

 

Obama Reaches Out to GOP on Deficit Talks

POLITICO reports, “President Barack Obama is reaching out to Republican senators — the most receptive participants from his recent ‘charm-offensive’ dinners — to jump-start talks to reach a ‘grand bargain’ on entitlements, spending and taxes, according to White House and Congressional officials. Obama — fighting against steep odds to reach a big legacy deal on deficits and debts — has personally pressed Congressional leaders for another shot at reaching an agreement similar to one that fell apart during negotiations with Speaker John Boehner (R-Ohio) in 2011. Chief of staff Denis McDonough and his deputy Rob Nabors have been consulting behind the scenes with Senate Minority Leader Mitch McConnell (R-Ky.) and other leaders to create a list of possible deal-makers who would attend a preliminary meeting with top Obama fiscal and economic advisers to gauge areas of potential agreement. Obama himself isn’t likely to attend the first sit-down, expected soon.”

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