New Fiscal Year Quotes

Most people who win the lottery are exactly as they were prior within a few years if they are not worse off. The fiscal management skills that lead one to give over daily money for scratch-offs will also cause the new money to vanish.

if there was any loose money lying around, the people in government would find a way to spend it. The worst sin in the bureaucracy was to give money back because it meant the bureaucracy’s budget could be reduced the following year. If at the end of the fiscal year they hadn’t spent all the money in their budget, there would be a rush to buy new office furniture, take a trip at the taxpayers’ expense, or spend the money on something else, just to assure their budget wouldn’t be smaller in the future. The idea of returning money to taxpayers once it had been collected from them had never come up before.

I don’t know the answer, but I know that the fiscal cliff is real. It can’t be discounted like Y2K fears. In 2008, for the first time in my career, my clients were really scared. We are three years from the bottom of the market, and they’re still scared. “New home construction in our area is picking up, and my client in the business wants to hire more people to handle the demand. But what if the economy falters? He would have to let them go. At 70, he doesn’t have the heart to face that, so he makes do with less. “A New York client in the vending business wants to hire young adults to help him expand his business. If he pays them fifty thousand dollars, it will cost him close to ninety thousand after taxes and mandatory health benefits. It’s just not worth it. “My clients are suffocating under the blanket of excessive regulations, taxes, and the biggest impediment to growth and expansion, uncertainty.” Mac’s voice softened. “My biggest fear is that I don’t have the answer and I don’t know how to help them.

Maastricht had three significant side-effects. One of them was the unforeseen boost it gave to NATO. Under the restrictive terms of the Treaty it was clear (as the French at least had intended) that the newly liberated countries of eastern Europe could not possibly join the European Union in the immediate future—neither their fragile legal and financial institutions nor their convalescent economies were remotely capable of operating under the strict fiscal and other regulations the Union’s members had now imposed upon all present and future signatories. Instead, it was suggested in the corridors of Brussels that Poland, Hungary and their neighbours might be offered early membership of NATO as a sort of compensation: an interim prize. The symbolic value of extending NATO in this way was obviously considerable, which is why it was immediately welcomed in the new candidate member-states. The practical benefits were less obvious (unlike the damage to relations with Moscow which was real and immediate). But because Washington had reasons of its own for favouring the expansion of the North Atlantic Defense community, a first group of central European nations was duly admitted to NATO a few years later.

Lynum had plenty of information to share. The FBI's files on Mario Savio, the brilliant philosophy student who was the spokesman for the Free Speech Movement, were especially detailed. Savio had a debilitating stutter when speaking to people in small groups, but when standing before a crowd and condemning his administration's latest injustice he spoke with divine fire. His words had inspired students to stage what was the largest campus protest in American history. Newspapers and magazines depicted him as the archetypal "angry young man," and it was true that he embodied a student movement fueled by anger at injustice, impatience for change, and a burning desire for personal freedom. Hoover ordered his agents to gather intelligence they could use to ruin his reputation or otherwise "neutralize" him, impatiently ordering them to expedite their efforts. Hoover's agents had also compiled a bulging dossier on the man Savio saw as his enemy: Clark Kerr. As campus dissent mounted, Hoover came to blame the university president more than anyone else for not putting an end to it. Kerr had led UC to new academic heights, and he had played a key role in establishing the system that guaranteed all Californians access to higher education, a model adopted nationally and internationally. But in Hoover's eyes, Kerr confused academic freedom with academic license, coddled Communist faculty members, and failed to crack down on "young punks" like Savio. Hoover directed his agents to undermine the esteemed educator in myriad ways. He wanted Kerr removed from his post as university president. As he bluntly put it in a memo to his top aides, Kerr was "no good." Reagan listened intently to Lynum's presentation, but he wanted more--much more. He asked for additional information on Kerr, for reports on liberal members of the Board of Regents who might oppose his policies, and for intelligence reports about any upcoming student protests. Just the week before, he had proposed charging tuition for the first time in the university's history, setting off a new wave of protests up and down the state. He told Lynum he feared subversives and liberals would attempt to misrepresent his efforts to establish fiscal responsibility, and that he hoped the FBI would share information about any upcoming demonstrations against him, whether on campus or at his press conferences. It was Reagan's fear, according to Lynum's subsequent report, "that some of his press conferences could be stacked with 'left wingers' who might make an attempt to embarrass him and the state government." Lynum said he understood his concerns, but following Hoover's instructions he made no promises. Then he and Harter wished the ailing governor a speedy recovery, departed the mansion, slipped into their dark four-door Ford, and drove back to the San Francisco field office, where Lynum sent an urgent report to the director. The bedside meeting was extraordinary, but so was the relationship between Reagan and Hoover. It had begun decades earlier, when the actor became an informer in the FBI's investigation of Hollywood Communists. When Reagan was elected president of the Screen Actors Guild, he secretly continued to help the FBI purge fellow actors from the union's rolls. Reagan's informing proved helpful to the House Un-American Activities Committee as well, since the bureau covertly passed along information that could help HUAC hold the hearings that wracked Hollywood and led to the blacklisting and ruin of many people in the film industry. Reagan took great satisfaction from his work with the FBI, which gave him a sense of security and mission during a period when his marriage to Jane Wyman was failing, his acting career faltering, and his faith in the Democratic Party of his father crumbling. In the following years, Reagan and FBI officials courted each other through a series of confidential contacts. (7-8)

The notion that property is the means to all other means was ruled out by the new radicals. The deep seated ressentiment towards private property, indeed towards anything private, blocked the conclusion that follows from any impartial examination of wealth-producing and freedom-favouring mechanisms: an effective world improvement would call for the most general possible propertization. Instead, the political metanoeticians enthused over general dispossession, akin to the founders of Christian orders who wanted to own everything communally and nothing individually. The most important insight into the dynamics of economic modernization remained inaccessible to them: money created by lending on property is the universal means of world improvement. They are all the blinder to the fact that for the meantime, only the modern tax state, the anonymous hyper-billionaire, can act as a general world-improver, naturally in alliance with the local meliorists - not only because of its traditional school power, but most of all thanks to its redistributive power, which took on unbelievable proportions in the course of the twentieth century. The current tax state, for its part, can only survive as long as it is based on a property economy whose actors put up no resistance when half of their total product is taken away, year after year, by the very visible hand of the national treasury for the sake of communal tasks. What the un-calm understands least of all is the simple fact that when government expenditures constitute almost 50 per cent of the gross national product, this fulfills the requirements of actually existing liberal-fiscal semi-socialism, regardless of what label is used to describe this situation - whether people call it the New Deal, 'social market economy' or 'neoliberalism'. What the system lacks for total perfection is a homogeneous worldwide tax sphere and the long-overdue propertization of the impoverished world.

proper legal structure. The best structure is that of the Mondragon companies, which do not allow workers to own a tradable share of equity. Instead, in addition to their wages they each have an internal capital account the value of which depends on the business’s performance and on the number of hours the member works. A new member has to pay a large entrance fee, most of which is credited to his internal account. He receives interest at the end of every fiscal year, but he cannot withdraw the annually accumulating principal from his account until retirement. Almost all profits are divided between these individual accounts and a collective account that helps ensure the company’s survival. No buying or selling of shares takes place in this scheme, so it’s difficult for the firm to lose its worker-controlled status. Not until 1982, however, did the internal-capital-accounts legal structure exist in the United States (and then only in Massachusetts); prior to that, worker cooperatives had to make convoluted use of other categories, which sometimes made them vulnerable to degeneration.113 In any case, the survival rates of contemporary cooperatives put the lie to traditional theories of cooperatives’ unsustainability, for they appear to have higher rates of survival than conventional firms. During the 1970s and early 1980s, the death rate for co-ops in France (due either to dissolution or to conversion into a capitalist firm) was 6.9 percent; the comparable rate for capitalist competitors was 10 percent. A study in 1989 found much higher failure rates for capitalist companies than cooperatives in North America.114 A study conducted by Quebec’s Ministry of Industry and Commerce in 1999 concluded that “Co-op startups are twice as likely to celebrate their 10th birthday as conventionally owned private businesses.”115 A later study by the same organization found that “More than 6 out of 10 cooperatives survive more than five years, as compared to almost 4 businesses out of 10 for the private sector in Québec and in Canada in general. More than 4 out of 10 cooperatives survive more than 10 years, compared to 2 businesses out of 10 for the private sector.”116

The Chinese renminbi was fixed against the dollar from July of 2005 until June 2009. With a fixed exchange rate, a currency’s value is matched to the value of another single currency or to a basket of other currencies. So when a country pegs its currency to the dollar, the value of the currency rises and falls with the dollar. This action helped China survive the global financial crisis. But China removed the dollar peg after the global financial crisis ended last year. Meanwhile, Japan has also seen the value of the yen grow stronger. With the U.S. economy continuing to lag and growing fiscal uncertainty in European countries, the yen has continued to gain strength because it was the only currency that was stable. So countries like China expanded their purchases of the yen, resulting in the yen’s appreciation. As the yen continued to rise against the dollar, the Japanese government intervened in the currency market in September for the first time since March 2004. This is not the first global currency war the world has seen. In 1985, the finance ministers of West Germany, France, the U.S., Japan and the UK gathered at the Plaza Hotel in New York to sign the Plaza Accord. Under the deal, the countries agreed to bring down the U.S. dollar exchange rate in relation to the Japanese yen and German mark. As the recent currency war continues to spread around the globe, some countries are now saying that there is a need for a new Plaza Accord to stabilize the world economy and the global financial market.

As he had learned during the formative years coming up, you really didn’t have to sweat the work—it just sort of flowed around you, nothing but meetings, talking heads, and staff work delegated down the food chain. The other stuff was out of the senior manager’s playbook: Once a year, either propose an amorphous new “program,” or close down an existing program in a display of efficiency and fiscal rectitude; be sure to fire one or more struggling underlings each quarter to prove you’re a leader; and know that there is no limit to obsequiousness and flummery when dealing with superiors. It was really quite easy. The

DATE: August 13, 1992 TO: Senior Managing Directors, Managing Directors, Associate Directors FROM: Alan C. Greenberg You are correct! It is exciting to be associated with Bear Stearns. The first six weeks of our new fiscal year have been a continuation of last year’s record-breaking performance. Top talent continues to join us and it looks like our head count will soon exceed the number we employed in October, 1987.

Lucent, Not Transparent In mid-2000, Lucent Technologies Inc. was owned by more investors than any other U.S. stock. With a market capitalization of $192.9 billion, it was the 12th-most-valuable company in America. Was that giant valuation justified? Let’s look at some basics from Lucent’s financial report for the fiscal quarter ended June 30, 2000:1 FIGURE 17-1 Lucent Technologies Inc. All numbers in millions of dollars. * Other assets, which includes goodwill. Source: Lucent quarterly financial reports (Form 10-Q). A closer reading of Lucent’s report sets alarm bells jangling like an unanswered telephone switchboard: Lucent had just bought an optical equipment supplier, Chromatis Networks, for $4.8 billion—of which $4.2 billion was “goodwill” (or cost above book value). Chromatis had 150 employees, no customers, and zero revenues, so the term “goodwill” seems inadequate; perhaps “hope chest” is more accurate. If Chromatis’s embryonic products did not work out, Lucent would have to reverse the goodwill and charge it off against future earnings. A footnote discloses that Lucent had lent $1.5 billion to purchasers of its products. Lucent was also on the hook for $350 million in guarantees for money its customers had borrowed elsewhere. The total of these “customer financings” had doubled in a year—suggesting that purchasers were running out of cash to buy Lucent’s products. What if they ran out of cash to pay their debts? Finally, Lucent treated the cost of developing new software as a “capital asset.” Rather than an asset, wasn’t that a routine business expense that should come out of earnings? CONCLUSION: In August 2001, Lucent shut down the Chromatis division after its products reportedly attracted only two customers.2 In fiscal year 2001, Lucent lost $16.2 billion; in fiscal year 2002, it lost another $11.9 billion. Included in those losses were $3.5 billion in “provisions for bad debts and customer financings,” $4.1 billion in “impairment charges related to goodwill,” and $362 million in charges “related to capitalized software.” Lucent’s stock, at $51.062 on June 30, 2000, finished 2002 at $1.26—a loss of nearly $190 billion in market value in two-and-a-half years.

The devices the Republicans used are variations on a theme going back more than 150 years. They target the socioeconomic characteristics of a people (poverty, lack of mobility, illiteracy, etc.) and then soak the new laws in “racially neutral justifications—such as administrative efficiency” or “fiscal responsibility”—to cover the discriminatory intent. Republican lawmakers then act aggrieved, shocked, and wounded that anyone would question their stated purpose for excluding millions of American citizens from the ballot box.12

America had become an ice cream society in the last years of the twenties, thanks in large part to Prohibition. Bars and fine lounges in hotels sold ice cream, because they could no longer sell liquor, and dairy bars began to crop up all over the country. It was an incredible era. The straitlaced Cal Coolidge, who assured the nation that his fiscal probity had brought prosperity here to stay, moved the White House to the Black Hills of South Dakota for the summer and celebrated the Fourth of July by parading around in a cowboy costume. Babe Ruth signed a three-year contract with the Yankees for the stupefying figure of $70,000 a year. Lindbergh flew nonstop from New York to Paris. Al Jolson sang in the first talking pictures. And—wonder of wonders—in 1929 the Chicago Cubs won the National League pennant! Big

The losers, according to the Times: “People Buying Health Insurance,” “Individual Taxpayers in the Future,” “The Elderly,” “Low-Income Families,” and people in high-income, highly taxed states like California and New York. “In the long run, most Americans will see no tax cut or a tax hike,” the Washington Post wrote in its own analysis.38 The final loser was the US Treasury, and government itself: by the end of the fiscal year in which the bill went into effect, the deficit had grown to $779 billion.39

Poland’s political volatility made it a more attractive candidate for a monopoly.8 From the moment Torsten arrived, Polish officials faced so many crises that the right person would be able to slip them a match monopoly without much scrutiny. The government was in chaos. The final borders of the Second Polish Republic had been established two years earlier, and the new constitution just a year before that. The reborn interbellum Poland was fractured into competing sects. President Gabriel Narutowicz had been assassinated in late 1922, and the country had sworn in four different prime ministers that year (and another two the following year). At first, it wasn’t even clear to Torsten which officials he should approach, or who was in charge. Then, through the bedlam, Torsten met Dr Marjam Glowacki, a senior finance ministry official. The two men immediately bonded and became friends. Torsten appeared to be a distinguished businessman with extensive experience in international finance. Their talks moved quickly. Dr Glowacki saw that a significant loan from International Match could resolve many of the country’s humanitarian and fiscal needs. Even a few million dollars would greatly assist Polish reparations from the world war.

Berning concluded that he couldn’t run the risk of using Ivar’s new numbers. He simply had to find a way to send the Wisconsin regulators something that added up at least $4,400,000, the amount Lee Higginson already had told investors was International Match’s income. In an extraordinary auditor-to-client letter, Berning wrote to Ivar on December 11, that “In view of the fact that the circular stated that the earnings for the first six months ‘were in excess of $4,400,000’, I thought it best to increase this amount slightly.” Increase this amount slightly? Yes, at Berning’s request, Ernst & Ernst reported net income for International Match of $4,475,000, a nice round number that was higher than the income Ivar and Lee Higginson previously had reported to investors. In a letter to Lee Higginson, Berning did not highlight the fact that he had adjusted the earnings. Instead, he merely noted, somewhat opaquely, that “the figures shown on the attached are subject to any necessary adjustment upon the final closing of the books of the various companies at the end of the fiscal year.”60 Meanwhile, Berning and Ivar still had not met in New York. Berning summed up his most recent work in a letter to Ivar: “It is therefore to be sincerely hoped that the enclosed will be the final chapter with respect to the State of Wisconsin.”61 Indeed, with the “adjusted” numbers, it was.

That the New Deal should have been bigger, sooner, is a conclusion of long standing: John Maynard Keynes told Roosevelt he needed to approximately double the rate of “direct stimulus to production deliberately applied by the administration” in 1934, at a time when Roosevelt had reduced such expenditures in response to political pressure just like the kind that later came from Grassley or King.29 Roosevelt soon moved in the direction that Keynes suggested, getting the so-called big bill—amounting to nearly $5 billion—from Congress and allowing him to create the WPA to employ Americans nationwide under the direction of Harry Hopkins. But a few years afterward, once recovery seemed well under way, Roosevelt again cut relief spending—again in response to political pressure. For many economists—including Keynes—that premature reduction in fiscal stimulus was the cause of the 1937‒1938 recession.30 Only after making that fiscally cautious error did the Roosevelt administration adopt a deliberately Keynesian budget. Soon afterward, mobilization for war began.31 In 1941 Hopkins took a new job, directing Lend-Lease operations; Congress approved nearly $50 billion for the program—an order of magnitude more than the “big bill” that created the WPA.32 So when Grassley says the war ended the Depression, he is not stating an argument against the New Deal: he is stating an argument for a bigger New Deal, an argument that New Dealer Harry Hopkins at WPA should have had a budget more like World War II–era Harry Hopkins at Lend-Lease.33

From that moment on the majority always votes for the candidate promising the most benefits from the public treasury with the result that Democracy always collapses over a loose fiscal policy, always to be followed by a Dictatorship." [Written by Professor Alexander Fraser Tytler, nearly two centuries ago while our thirteen original states were still colonies of Great Britain. At the time he was writing of the decline and fall of the Athenian Republic over two thousand years before.] What

This has led to several years of discussion about stronger economic governance, albeit with only limited progress. The most consequential element has been the creation of a banking union, which provides an integrated set of supervision and bailout mechanisms. Nonetheless, the consequence of all of these developments has been to move Emu into a new phase of its existence, where the pressures of very negative market forces have exposed the limitations of the asymmetric design laid out in the Maastricht Treaty. In so doing, Eurozone members have been forced to reinforce their commitment to the euro, and strengthen a number of key aspects of their economic and fiscal integration.

The legislation, essentially bipartisan, drives new fiscal policies, tax changes, also rules of corporate governance, and deregulation. Alongside of this began the very sharp rise in the costs of elections, which drives the political parties even deeper than before into the pockets of the corporate sector. The parties dissolved, essentially, in many ways. It used to be that if a person in Congress hoped for a position such as a committee chair or some position of responsibility, he or she got it mainly through seniority and service. Within a couple of years, they started having to put money into the party coffers in order to get ahead, a topic studied mainly by Tom Ferguson. That just drove the whole system even deeper into the pockets of the corporate sector, increasingly the financial sector.

The full employment advocates’ optimism, even if genuine, could not possibly have been more misplaced, as the context of the Carter administration’s other actions in the fall of 1978 quickly revealed. Almost simultaneous to the passing of the full employment bill, Carter announced a three-part anti-inflation strategy that included restrictive fiscal and monetary policy, voluntary wage-price guidelines, and regulatory reform—almost all of which cut against the spirit of the original Humphrey-Hawkins Full Employment Act. Congress, for the first time since it went Democratic in 1932, passed a tax cut not to redistribute wealth but to give relief to the upper middle class, suggesting a very new mood among Democrats more broadly. With inflation climbing into the double digits in 1979 (topping out at 13.5 percent in his last year in office), Carter had, according to Herbert Stein, “assumed the look of a conservative in economics.

As he had learned during the formative years coming up, you really didn’t have to sweat the work—it just sort of flowed around you, nothing but meetings, talking heads, and staff work delegated down the food chain. The other stuff was out of the senior manager’s playbook: Once a year, either propose an amorphous new “program,” or close down an existing program in a display of efficiency and fiscal rectitude; be sure to fire one or more struggling underlings each quarter to prove you’re a leader; and know that there is no limit to obsequiousness and flummery when dealing with superiors. It was really quite easy.

In retrospect, The General Theory would set the intellectual agenda for Friedman’s entire career, but when it appeared, he barely noticed. As Keynes’s ideas were making landfall in American universities, Friedman offered a course through the Columbia University extension school that was a throwback to the early 1930s. Focused on individual demand curves, individual marginal utility, and individual economic decision-making, Friedman’s course, Structure of Neo-classical Economics, made no mention of business cycles, national income, or current economic conditions. Drawing on the approach pioneered by Knight and Simons, it placed the question of “how free enterprise system solves economic problem” front and center.45 At the same time, Friedman did offer an implicit critique of the fiscal revolution, particularly Hansen’s concept of secular stagnation. Picking up a theme from Knight, Friedman told his class, “Once wants are satisfied, new wants are going to be formed; the process of want formation is part of the basic drive.”46 There were two critical implications. First was that perpetual wanting would keep economies always in motion: “Impossibility of completely satisfying all wants. If the greatest want is the desire for new wants … the notion of satiety is silly.” It was more than a philosophical point. Not only was it impossible for the economy to stagnate, but it would be impossible to design a government program that would adequately satisfy wants, which tended to continually increase. Friedman drew out the second implication in another comment. “Attitude toward all policies will be affected by our ideas concerning wants,” he argued.47 In a letter to Arthur Burns, he was more direct. Reflecting on a road trip to visit Rose’s family, he wrote, “The whole West, particularly California, and more particularly Southern California, gives you the feeling that the frontier is not yet gone and makes you feel like telling the stagnationites to come out and take a look.”48 Although he worked for the New Deal, Friedman was not a New Dealer. Nor was he a Keynesian. He thoroughly rejected the ideas that would most profoundly shape economics in the years ahead.

In the course of the 1960s, the left adopted almost wholesale the arguments of the right,” observed Daniel Patrick Moynihan, a domestic policy adviser to all three of the decade’s presidents. “This was not a rude act of usurpation, but rather a symmetrical, almost elegant, process of transfer.” Exaggerating for effect—but not to the point of inaccuracy—Moynihan remembered that by decade’s end, “an advanced student at an elite eastern college could be depended on to avow many of the more striking views of the Liberty League and its equivalents in the hate-Roosevelt era; for example that the growth of federal power was the greatest threat to democracy, that foreign entanglements were the work of demented plutocrats, that government snooping (by the Social Security Administration or the United States Continental Army Command) was destroying freedom, that the largest number of functions should be entrusted to the smallest jurisdictions, and so across the spectrum of this viewpoint.”2 Driven primarily by the expanding war in Vietnam, this new current on the left took up individualistic and anti-statist themes that were once the province of the right. Another part of this convergence was the rise of the economics profession. The new economics appeared a success on its own terms; growth had picked up across the Kennedy years. By 1965, GNP had increased for five straight years. Unemployment was down to 4.9 percent, and would soon drop below the 4 percent goal of full employment. As James Tobin reflected, “economists were riding the crest of a wave of enthusiasm and self-confidence. They seemed, after all, to have some tools of analysis and policy other people didn’t have, and their policy seemed to be working.”3 With institutional economics a vanquished force, most economists accepted the tenets of the neoclassical revolution: individuals making rational choices subject to the incentives created by supply and demand. Approaching policy with an economic lens cut across established political lines, which were often the creation of brokered coalitions, habit, or historical precedent. Economic analysis was at once disruptive, since it failed to honor these accidental accretions, and familiar, since it spoke a market language resonant with business-friendly political culture.4 Amid this ideological confluence, Friedman continued his dour rumblings and warnings. Ignoring the positive trends in basic indicators of economic health, from inflation to unemployment to GDP, he argued fiscal demand management was misguided, warned Bretton Woods was about to collapse, predicted imminent inflation, and castigated the Federal Reserve’s basic approach. Friedman’s quixotic quest—and the media attention it generated—infuriated many of his peers. Friedman, it seemed, was bent on fixing economic theories and institutions that were not broken.