Wisconsin School District Looking At Surplus, China Buying More U.S. Debt Than Originally Disclosed, and George Will Eviscerates Government Sponsored Home Ownership

Hey remember that catastrophe that was supposed to occur when Wisconsin governor Scott Walker eliminated public employee's (except police and fire fighters unfortunately) right to bargain collectively a few months back?  Well one school district appears to be saved from a large budget shortfall because of it, via the Washington Examiner:

The Kaukauna School District, in the Fox River Valley of Wisconsin near Appleton, has about 4,200 students and about 400 employees. It has struggled in recent times and this year faced a deficit of $400,000. But after the law went into effect, at 12:01 a.m. Wednesday, school officials put in place new policies they estimate will turn that $400,000 deficit into a $1.5 million surplus. And it's all because of the very provisions that union leaders predicted would be disastrous.In the past, teachers and other staff at Kaukauna were required to pay 10 percent of the cost of their health insurance coverage and none of their pension costs. Now, they'll pay 12.6 percent of the cost of their coverage (still well below rates in much of the private sector) and also contribute 5.8 percent of salary to their pensions. The changes will save the school board an estimated $1.2 million this year, according to board President Todd Arnoldussen.

In the past, Kaukauna's agreement with the teachers union required the school district to purchase health insurance coverage from something called WEA Trust -- a company created by the Wisconsin teachers union. "It was in the collective bargaining agreement that we could only negotiate with them," says Arnoldussen. "Well, you know what happens when you can only negotiate with one vendor." This year, WEA Trust told Kaukauna that it would face a significant increase in premiums.

Now, the collective bargaining agreement is gone, and the school district is free to shop around for coverage. And all of a sudden, WEA Trust has changed its position. "With these changes, the schools could go out for bids, and lo and behold, WEA Trust said, 'We can match the lowest bid,'" says Republican state Rep. Jim Steineke, who represents the area and supports the Walker changes. At least for the moment, Kaukauna is staying with WEA Trust, but saving substantial amounts of money.

Despite their bitching, teacher unions don't represent students, they represent teachers.  That's why they are "teacher" unions.  Here in Pennsylvania, state higher education institutions are raising tuition and APSCUF (the faculty and coach union) has agree to no pay increases but it will be made up for in the next two years.  Do they seriously think they are doing students a favor?  All in all, I don't blame the union, it is their job to get teacher's better pay.  I blame the law that forces the university system to have to bargain with the union.  APSCUF president Steve Hicks is actually a pretty funny guy, but he blatantly lies to students when he says he is looking out for them.  Nothing aggravates me more than to see students wearing "I support APSCUF buttons).

There was some concern about a month back that China was beginning to dump its large stash of U.S. Treasuries.  This dumping was supposed to put enormous pressure on interest rates and cause them to rise (which of course would be a good thing as it would more expensive for the U.S. to keep borrowing money).  Well in typical China fashion, they of course were skewering the official statistics:

(Reuters) - The rules of Treasury auctions may not sound like the stuff of high-stakes diplomacy. But a little-noticed 2009 change in how Washington sells its debt sheds new light on America's delicate balancing act with its biggest creditor, China.
When the Treasury Department revamped its rules for participating in government bond auctions two years ago, officials said they were simply modernizing outdated procedures.
The real reason for the change, a Reuters investigation has found, was more serious: The Treasury had concluded that China was buying much more in U.S. government debt than was being disclosed, potentially in violation of auction rules, and it wanted to bring those purchases into the open - all without ruffling feathers in Beijing.

And of course Turbo Tax Timothy Geithner won't dare do anything about this illegal procedure because God forbid we end our addiction to borrowing and debt.

George Will has a wonderful column in the Washington Post today taking the idea of government promotion of home ownership to town:

The 1977 Community Reinvestment Act pressured banks to relax lending standards to dispense mortgages more broadly across communities. In 1992, the Federal Reserve Bank of Boston purported to identify racial discrimination in the application of traditional lending standards to those, Morgenson and Rosner write, “whose incomes, assets, or abilities to pay fell far below the traditional homeowner spectrum.”
In 1994, Bill Clinton proposed increasing homeownership through a “partnership” between government and the private sector, principally orchestrated by Fannie Mae, a “government-sponsored enterprise” (GSE). It became a perfect specimen of what such “partnerships” (e.g., General Motors) usually involve: Profits are private, losses are socialized.

Under Johnson, an important Democratic operative, Fannie Mae became, Morgenson and Rosner say, “the largest and most powerful financial institution in the world.” Its power derived from the unstated certainty that the government would be ultimately liable for Fannie’s obligations. This assumption and other perquisites were subsidies to Fannie Mae and Freddie Mac worth an estimated $7 billion a year. They retained about a third of this.
Morgenson and Rosner report that in 1998, when Fannie Mae’s lending hit $1 trillion, its top officials began manipulating the company’s results to generate bonuses for themselves. That year Johnson’s $1.9 million bonus brought his compensation to $21 million. In nine years, Johnson received $100 million.

Fannie Mae’s political machine dispensed campaign contributions, gave jobs to friends and relatives of legislators, hired armies of lobbyists (even paying lobbyists not to lobby against it), paid academics who wrote papers validating the homeownership mania, and spread “charitable” contributions to housing advocates across the congressional map.
By 2003, the government was involved in financing almost half — $3.4 trillion — of the home-loan market. Not coincidentally, by the summer of 2005, almost 40 percent of new subprime loans were for amounts larger than the value of the properties.

To back up Will, Mark Perry provides this wonderful graph:

And Barney Frank will still sit on his ass and claim Fannie and Freddie had barely anything to do with the crisis.