The New Testament book of Matthew contains a well-known allegorical tale known as the “Parable of the Ten Talents.” In this story, Jesus told of a man who entrusted his property to three servants while he was away. One servant was given five silver talents; another two; and a third one. The first two servants put that which their master had given them to good use, and doubled his money while he was away. The third servant, who had been given but one talent, buried the valuable quantity of silver to preserve it until his master returned, neither risking its safety nor putting it to good use while its owner was away.

Upon his return, the two servants who had taken that which he had entrusted them with and used it wisely during his absence presented their master with their earnings. He replied to each, “Well done, my good and faithful servant! You have been faithful with a few things; I will put you in charge of many things.”

The third servant, who had merely protected that portion of his master’s wealth with which he had been entrusted, presented the single talent upon the man’s return. Seeing this, the master flew into a rage, chastising the “wicked, lazy servant” for allowing cowardice and irresponsibility to prevent his putting the master’s money to good use and ordering the servant to surrender his talent to the servant who had proved his resourcefulness and trustworthiness by doubling his master’s five talents.

The moral of this New Testament parable – be a good steward of a little and you will be trusted with more, but poor stewardship will lose you the privilege of being trusted with anything in the future – is recalled to mind by the federal government’s current attempt to take over the American health care system. The 33 years Medicare has been in existence have provided the federal government with an opportunity to demonstrate what type of steward its legislators and bureaucrats will be of a national health care program millions of Americans are trusting for their coverage and care.

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Yesterday, Federal Reserve Chairman Ben Bernanke gave his semi-annual report on monetary policy and the economy to the Senate Banking Committee. With the hot Beltway topic being the health care overhaul President Obama is so desperate to get passed and signed before more people find out what the effects of such a policy will really be, a few Senators had questions for the Chairman about the fiscal implications of the three dueling health care bills being written in the House and Senate, all of which have been criticized by elected Democrats and the director of the non-partisan Congressional Budget Office alike for being costly expansions of government that will do nothing to reduce the cost of health care or to cover the millions of American uninsured.

At that hearing, Texas Republican Kay Bailey Hutchison made this spot-on comment:

[O]ne thing we’re trying to do is just slow this down enough that we can find the information and have the best facts that we can. And setting an arbitrary August deadline seems to many of us to be very unwise because so much could happen that would be irreversible if we really do change our health care system to this extent with the costs and in a hard economic time, anyway.

And many of us are concerned, as well, that employers are going to be encouraged to just drop health care coverage, pay the fine, and let people go into the public system, which then becomes a bigger burden on the government, but also the beginning of rationed health care, in many views.

So I thank you for saying that we ought to be very careful before we do add more entitlements to our health care system, and I hope you will work with us, as we are able to get more and more information about the — the real long-term consequences.

Below the fold, a couple more noteworthy points from Hutchison and Evan Bayh (D-IN), as well as Bernanke’s noteworthy answers.

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Awesome video illustration on the federal budget deficit and the shrieks about Bush and the shrugs over Obama. Who says math can’t be fun?

*cross posted @

What was it that touched off today’s market rally? According to the UK Telegraph, it was due to analyst Meredith Whitney’s urge to buy Goldman Sachs. Why is Whitney so confident about Goldman Sach’s future performance?

Our more bullish outlook on Goldman Sachs shares is deeply rooted in our sustained bearish stance on the U.S. economy and the state of U.S. financials at large. Specifically, we expect a tsunami of debt issuance from federal/sovereign, state, and local governments ramping up debt issuance to fund woefully underfunded budget gaps. In addition, we expect corporate debt issuance to be at least 60% as strong as peak cycle levels, reflecting sizable debt maturity rolls. What’s more, given fewer players in the market, not only is GS benefiting from market share gains on these products but more widely in the derivatives products.

It’s an ill wind that blows no good. This is one case where GS investors are going to make out like bandits because of a continuing bad economy and an unprecedented level of borrowing. Good news, huh?

This may be the right time to buy shares of Goldman Sachs - provided you haven’t lost your job or exhausted your savings.

And you can thank Barack Obama

In today’s “Weekly Republican Address,” House Republican Leader John Boehner asks, “Where are the jobs?”

It’s a good question. After all, to justify spending trillions of borrowed money on President Obama’s so-called stimulus, energy and health care bills, Obama and the Democrats promised the unprecedented spending would create jobs:

The president and Democrats in Congress claim this spending binge is necessary to put Americans back to work. They promised unemployment would not rise above 8 percent if their trillion-dollar stimulus was passed.

But our nation has lost nearly three million jobs this year. Unemployment has soared above 9 percent. And now the president admits that unemployment will soon reach double digits.

After all of this spending, after all of this borrowing from China, the Middle East, our children and our grandchildren, where are the jobs?”Where are the jobs?”

You can watch Leader Boehner’s address in the following video:

Here’s another question. Why do Congressional Democrats continue to pursue economic, health care, energy, and  environmental policies that will destroy more American jobs and drive future generations into deeper debt?

This comes as a surprise to no one of course, except for an Obama administration which seems to believe that taxes can stay at more or less current levels despite their extraordinary spending binge. Instead, history suggests that if Washington wants to run historically-high deficits, then much higher taxes inevitably follow:

As Blodget says:

We don’t know about you, but we’re not excited about the apparent correlation here between massive government debt and deficits (blue and dotted blue lines) and sky-high marginal tax rates (red).

Yes, in previous eras, it appears that high taxes preceded the exploding debt and deficits. But we have this sneaking suspicion that that apparently comforting pattern will be reversed this time.

I suspect President Obama will wait to push for a massive tax increase until his lame duck term.

Today is a big day for the Blue Dog Democrats. They’ve spent the first 6 months of this administration supine, voting for whatever spending Barack Obama and Nancy Pelosi told them to. As a result, the federal deficit is approaching $2 trillion - with nothing to show for it. All along, Barack Obama has paid lip service to the Congressional budget rule known as PayGo. Today, with much fanfare, Obama called for PayGo to be enshrined into law. You might cynically point out that it has been a rule in the House since the Democrats retook Congress in 2006, and ask why you should expect it to lead to smaller deficits once it is a law.

You would be right to ask the question. But beyond that, you ought to note that PayGo doesn’t even apply to one major category of spending: discretionary spending. It applies only to direct spending (ie, entitlements such as Social Security and Medicare). And Obama has also specifically asked for 4 exceptions to the rule. As a result, the new ‘PayGo’ has more holes in it than swiss cheese.

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The Spectator’s Phil Klein alerts us to the release of the Annual Report of the Social Security and Medicare Boards of Trustees. The Trustees have found that due to the recession, benefits paid out are overtaking revenues brought in even faster than projected. The trust funds for these programs will be bankrupt sooner than expected but more importantly, the programs will become a serious drain on the federal budget far sooner than that. That’s because long before the trust funds are exhausted, Uncle Sam will need to take money from general revenues to ‘repay’ the trust funds.

For years we heard that the trust funds masked the true size of federal deficits; that’s because the government borrowed from the those funds to cover current federal expenditures. Sooner than expected, the flow of funds will reverse, and we’ll be forced to spend hundreds of billions in general revenue to pay for entitlements.

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Courtesy of the House Republican Conference.

It’s no secret to anybody who’s been paying attention to budget numbers that the United States, with a current GDP of just under $14 trillion, is $52 trillion in the hole in one specific area: Medicare and Social Security payments owed to those who have already prequalified by paying into the system.

You can flip and fudge the numbers any way you want; no matter what, that’s some real money we’re talking about right there — and that’s just what’s already owed folks who are over 22 and in the workforce or have already retired, all having paid into the system at some point. The program could be ended today, and that’d be the unfunded liability we the taxpayers are facing: $52 trillion!

A Lack of Choice You Probably Didn’t Know About

Here’s something you might not know: the federal government skirts around this issue when doing its budgeting by counting Medicare and Social Security as “liabilities,” rather than “debts,” because those who are or will be eligible for returns under the programs have no actual binding or contractual right to those returns. That’s why you hear so much about a $7 trillion-ish national debt — that additional $52 trillion is left out of the discussion through a nefarious governmental play on words!

Here’s something else you might not — actually, probably don’t — know: Current and future Medicare costs for those already owed benefits make up over 60% of that liability ($32.3 trillion). Given this, you might think it a good idea to opt out of a Medicare program that probably won’t be solvent enough to cover the costs of your care as a retiree, in favor of a Health Savings Account or some other less costly, more efficient health insurance plan, which you can help pay for with your meager Social Security benefit checks.

Unfortunately, that’s not an option under federal law. Whether there’s money to fund your Medicare or not, once you’re retired, you’re legally required to accept Medicare as your health coverage. If you try to turn down Medicare Part A and go with another, more cost-effective (and higher quality) form of coverage, you officially forfeit your ability to collect on the Social Security benefits you paid into your entire working life!

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According to Forbes Magazine, the Obama administration is overestimating the number of homeowners who will be helped by their mortgage plan. Instead of helping 9 million homeowners as Obama claims, the greatest number that could be helped is closer to 5 million:

President Barack Obama plans to spend $275.0 billion to rework or modify up to 9.0 million troubled American mortgages, but his program isn’t likely to help anywhere near that many people.

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Gov. Mark Sanford (R-SC) sent a letter to the South Carolina General Assembly today in which he outlined his intent to request a waiver from the Obama administration that would allow him to use the $700,000,000.00 in Porkulus cash due his state “to pay down South Carolina’s sizable debt and contingent liabilities,” rather than to fund new pork-barrel, make-work projects.

Sanford has said he will refuse the portion of Porkulus funds that carry with them the requirement that the state expand unemployment benefits, but the fact that he is accepting them at all is somewhat of a surprise to me, as he had, it seemed, been hinting that he would be refusing to accept them altogether (hence the inclusion of the Clyburn Clause in the Porkulus bill, which allows state legislatures to override executives who refuse Porkulus funds). Here’s what he had to say on the topic:

Our objections to the so-called stimulus bill have been well-chronicled for the way it spends money that we don’t have and for the way that this printing of money could ultimately devalue the American dollar.

Those of us opposed to this package lost the debate on these merits, and I now think it is important we look for creative ways to apply and use these monies in accordance with the long-term interests of our state.

Color me, well, whelmed with the decision not to leave it up to the legislature, but to go ahead and apply for the federal cash with the stated intent of simply trying to direct it better than other states intend to. I’ve got an email in to a contact within the administration, and will be sure to update this when he gets back to me.

Several days ago I wrote about the toothless and useless ‘Blue Dog Democrats,’ who strut around bragging about their commitment to balanced budgets, but who regularly take a dive when told to. Apparently their liberal masters have told them it’s time to shut up and get in line.

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It looks like not all Congressional Democrats are prepared to march in lockstep with Barack Obama into a brighter future:

Rep. Paul Kanjorski (D-Pa.), who chairs the Financial Services subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, said on C-SPAN that Democrats have “lost our way” and “shouldn’t be pressed by silly deadlines” of getting the bill into law by the Presidents Day recess.

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