KAPT Scandal Worsens: No money in "Trust Fund"

The much beleaguered KAPT program has been losing money and drawing down the value of the little understood "Unclaimed Property Fund" for several years, but that is not news. What is alarming is how bad the situation has become.

One phone call to the Kentucky Finance and Administration Cabinet yielded some very interesting numbers. Here's how the phone call went with spokeswoman Jill Midkiff:

KP: What is the value of the Unclaimed Property held by the state of Kentucky?

JM: As of last Friday the account for abandoned property held $118,695,719.00.

KP: That is significantly less than the $150 million Jonathan Miller insists is in there. How could there be such a discrepancy?

JM: I couldn't speculate.

KP: Does this $118 million represent actual dollars in a bank account or has the money already been spent and this is just a number on a balance sheet?

JM: It's a bookkeeping mechanism. The controller's office calls them "book dollars."

So for accuracy's sake, the fund that Jonathan Miller says backs up the controversial KAPT program has NO VALUE. To place value in it, General Fund dollars must be used. That is what happened on December 1, 2004 when KAPT raided the General Fund of $13.7 million dollars. That is what will have to happen to the tune of $50 million by 2020 according to the actuarial report. This settles it. The controversy is over. The 9000 contract holders must be made whole, but to continue the program and open the state to further losses makes absolutely no sense. The pending lawsuit is the work of Treasurer Jonathan Miller and Attorney General Greg Stumbo. Every citizen of the state should urge the Attorney General to end this lawsuit and let this money loser die.

State Media Doesn't Get KAPT Story Right

After a temporary injunction ruling Friday, Kentucky mainstream media outlets continue their poor coverage of the KAPT scandal. Broadcast reports spread the bogus concept that the General Assembly "raided" money from KAPT and the program's contract holders and missed the fact that the ruling was a temporary one. Most importantly -- and this is the concept that no one in mainstream media land has bothered to look at -- the true value of the unclaimed property fund continues to be grossly exaggerated by Jonathan Miller with no scrutiny.

The focal point of the argument is how much money backs up the money-losing KAPT program. Miller insists that it is around $150 million. This is an extremely liberal valuation that someone should challenge the Treasurer to prove. The fact of the matter is that he wouldn't fare very well under such a challenge. And when "Unclaimed Property" comes up short in paying off program losses, KAPT comes after taxpayers. That is a hit the General Assembly is trying to cushion and one that, apparently, Miller and the mainstream media want you to face.

Lexington Mayor 2006 Update

Speculation continues to run rampant about what conservative candidate will come forward for the quickly approaching 2006 elections.
There are indications that an alternative candidate is close to making a decision, but I still say that Warren Rogers is the man for the job.
The word from the Sixth district GOP Lincoln Day Dinner is that he has not ruled it out. Stay tuned...

If You Hate Republicans...

You are really going to hate this: Kentucky Republican Voice, the biggest website for Republicans in the state, is now a BLOG.

Schiavo Redux: At Ease, Soldier

Reports are going around on the internet about an elderly Lagrange, Georgia woman who is being starved to death by her family despite the fact that she is not terminally ill, or in any kind of vegetative state. I spoke to Pam Shivers of Georgia Right to Life and she informed me that a court order has restored the woman's food and water. Right to Life is monitoring the case and, for now, the call to arms isn't necessary.

Given the quick reaction, though, heaven help the next person who decides to get rid of a relative a la Terri Schiavo.

Worse: Media Distortions on Social Security

Media bias is the most insidious when it is subtle. If I say George W. Bush, our idiot president, that is much less harmful than if I George W. Bush, whose policies the bipartisan AARP has deemed harmful to poor seniors. The first is a personal slur that anyone would notice. The second would be noticed only by those who realize there is little "bipartisan" sentiment in the liberal AARP organization.
More insidious is the bias shown in an AP article printed in the Courier Journal this morning that states, without attribution, that President Bush offered a plan to Congress that would lower the Social Security payments for everyone under 55.

From the Article:------------------------------
Bush urged Congress in January to approve legislation that would create permanent financial solvency for Social Security, and include an option for younger workers to set aside a portion of their payroll taxes for personal investment. In exchange, all workers under 55 would receive lower benefits than they are now guaranteed under the law.
-------------------------------
What the reporter is referring to is a technical change to benefits that would cause them to not rise as fast over time as they do now. President Bush has not made this, or any other, proposal and to suggest that he did would be, sad to say, a lie.

Chandler Changes Mind on Financial Literacy?

After several weeks of campaigning against investment in U.S. financial markets and insisting that the looming insolvency of Social Security should be solved by enormous tax increases, Rep. Ben Chandler (D-KY) voted yesterday to create a national Financial Literacy Month.
The problem with this vote is that Chandler's campaign against Social Security reform depends heavily on a lack of understanding of the financial concepts involved.

KAPT Scandal Update

The preliminary court ruling today didn't grant AG Greg Stumbo's request to allow future raids on the taxpayer funds by KAPT but it did allow his effort to prevent the General Assembly from recovering the money that was confiscated last summer. So the KAPT scandal heads to court.

KEPT Men In Court

Attorney General Greg Stumbo has received a temporary injuction this afternoon preventing taxpayers of Kentucky from receiving back the $13.7 million confiscated by state Treasurer Jonathan Miller last summer to prop up the money-losing KAPT program.
A statement from the Franklin county Circuit Court said that the TRO was granted "in part" and no further details were immediately available.
AG Stumbo and Miller are doubtless gleeful that they get to keep your money for now.

KEPT Men: They Play, You Pay

Kentucky's Extravagant Politicians Tax (KEPT) continues to pile up on the backs of Kentuckians as Attorney General Greg Stumbo and Treasurer Jonathan Miller go to court today at 2:00 pm to raid Kentucky's General Fund of $13.7 million. They say they want the money to prop up the money-losing KAPT program.
The KEPT men claim in a court document that Kentucky's citizens will suffer "immediate and irreparable injury" unless they are allowed to confiscate these millions of dollars. Meanwhile, we continue to pay the legal expenses for the KEPT Men to run their flim-flam operation to support their political aspirations. Stay tuned for details.

CORRECTION

Well, it turns out that ABC News was partially right. The Terri Schiavo "GOP Talking Points Memo" turns out to have been written by the legal counsel to Sen. Mel Martinez (R-FL). Brian Darling was the author of the very stupid memo and deserves to be thrown under the bus for his role in this fiasco.
In the aftermath of this story that became a story because a stupid Republican staffer lied, we can only hope that a lesson is learned. As one who jumped on this story and ripped Harry Reid, who I preferred to have as the villian in all this, I apologize. Similarly, all the Democrats who lined up to rally behind Bill Clinton when the media was "lying" about his relationship with an intern named Monica should be understanding, but won't be. That's just politics.
After years of watching top liberals stretch truth to oppose the President on taxes, the environment, labor issues, national defense, and entitlement reform, etc. we trusted the GOP Senators when they said they didn't write the poorly crafted memo. Those Republican Senators trusted their staffers. One staffer lied. That's the story. Again, apologies to liberal media outlet ABC News and apologies to obstructionist Sen. Harry Reid.
But don't get the big head, boys. We have a lot of serious work to do.

Campaign 2006: Target Jody Richards

The bitter obstructionism plaguing Frankfort ripped a large hole in the Democratic Party's House majority in 2004 when voters handed Kentucky's Republican minority a net of seven new seats in the lower chamber. Rudderless Democrats nearly toppled their Speaker, then passed their long-overdue budget in this year's session.
GOP strategists have long considered the House a two cycle opportunity for creating a majority. Democrats cooperated nicely by childishly refusing budget meetings and shutting down even the simplest of Governor Fletcher's re-organization bills. Several times during the 2004 election season, observers wondered how House Speaker Jody Richards (who didn't face opposition in 2004) would fare in an electoral challenge given his role in the imploding Democrats' declining support with voters.
They will soon have an answer.
Bowling Green Attorney JB Hines has filed his intention to run against Jody Richards in the Novermber 2006 election. Hines brings a wealth of knowledge to his bid for the House. As a young man, he worked in Japan teaching English. He has a masters degree in Public Administration from Western Kentucky University in addition to his law degree from University of Louisville. Hines serves on the Government Relations Committee of the Bowling Green Chamber of Commerce and practices law with the firm Travelsted and Crocker in Bowling Green.
Mr. Hines will be my guest this afternoon on WEKY 1340 AM to discuss his candidacy and it's statewide implications. The program airs from 5:15 pm to 6:15 pm.

Fake Memo Story: Dead Tree Media Catching Up

ABC News continues to post its fake "GOP Talking Points Memo" contrived to embarrass Republicans over their efforts to save Terri Schiavo, but the search for truth isn't going away. The Washington Times is the latest to pick up the trail and it seems to lead to Senate Minority Leader Harry Reid. We will keep you posted, but suspect that this story will soon take on a life of its own.

WFA: Saving $100 Million From the Herald Leader

We mentioned the Lexington Herald Leader editorial from Saturday in which they accused the General Assembly of "raiding" Big Education of $13.7 million (KAPT) and $82 million (The Student Loan People). The facts are rolling in, and it doesn't look good for The Herald Leader. The KAPT situation is well documented; even the Courier Journal spanked Jonathan Miller and Greg Stumbo for their grandstanding and hypocrisy. The story behind the $82 million is more of the same, but with a twist.
On its face, this bogus "raid" is somewhat less controversial than the KAPT scandal. The $82 million represents redeemed bonds that the Kentucky Higher Education Student Loan Corporation (KHESLC) requested for the purpose of college loans to low income people with no plans to go to college (yes, you read that right). The request was denied. End of controversy. The Governor denied the request by allocating the $82 million elsewhere in his budget proposal and the House and Senate rightly agreed.
But here is the twist: how absurd is it that the Herald Leader and the (KHESLC) want to squander $82 million dollars on student loans to people who don't plan to go to college? The desire to help more low income people attend college is laudable, but let's be serious. We don't make a difference by doling out more student loans. There are ample financing opportunities (the least preferable are loans, for heaven's sake!) for higher education. The difference should be made on the front end with young children by implementing higher standards. And that doesn't cost any money. In a time when huge numbers of Kentucky high school graduates must take remedial courses to get up to speed in college, our problem is certainly not that we don't have enough student loan money. The Education Industrial Complex only understands how to pander and beg for more money without ever demonstrating value for that money. Governor Fletcher deserves praise for saving this money.

GOP To Start Playing Hardball?

Here is an interesting article that suggests midterm Congressional elections could be a knockout for Republicans next year. The premise is that Bush won 41 House districts that are held by Democrats; the conclusion that Republicans would do well to focus on those. Given that obstructionism in the Senate is shaping up to be a key issue for or against Democrats (heaven help them if they use Harry Reid's nuclear option on the Senate), the guess here is that Dems have a lot to lose if Social Security reform breaks the logjam and passes despite their best efforts. While Bush has played rope-a-dope, House Democrats have made outlandish claims in support of the unsustainable status quo. If the President comes off the ropes and sticks it to reform opponents, they could well be seeing stars for years to come.

More Controversy With State Education Dollars

The Lexington Herald Leader on Saturday April 2 accused the General Assembly of "raiding" the Kentucky Higher Education Student Loan Corporation of $82 million in addition to the $13.7 million it claims was "raided" from KAPT. Given that we have already established that the KAPT scandal was, if anything, a raid on the General Fund by KAPT, we were suspicious of this new, much larger, figure. Executive Director Joe McCormick of the Kentucky Higher Education Authority stated that federal money directed toward the KHESLC in the amount of $16 million in the current biennium and $66 million in the next was shifted away from the KHESLC. Further questioning, however, got him started in on how KAPT has never used general fund dollars (which it certainly has) so the interview was ended. The surprising amount of difficulty in locating supporting evidence for this claim of "raiding" is most curious. We will keep you posted as this mystery unfolds.

Kentucky Focus on Kentucky Progress

Did the interview, got the t-shirt: now you can listen to me being interviewed about the state budget and Social Security reform. Here is the link.

Lexington Native, Episcopal Bishop Calls Jesus Gay

Lexington (Ky) native and the first openly homosexual Episcopal Bishop strongly suggested to a Massachusetts congregation that Jesus Christ may have been a homosexual.

And they say conservatives are overreacting to the "homosexual agenda."

Dick Morris and George Bush are Both Wrong

Political Commentator Dick Morris, famous first for letting his girlfriend-for-hire talk to President Clinton on the telephone and more recently for predicting early on that President Bush would win re-election, has turned in the worst column we have seen him write. Unfortunately, his advice to Bush on Social Security reform is only necessary because the President botched the explanation of Personal Savings Accounts (PSA). America understands there is a looming crisis with outflows set to exceed inflows in less than a decade. Outside partisan roadblocking, Americans understand that something must be done but there has been no leadership on what, how, or why from the White House or, obviously, from the opposition Democrats who were for Social Security reform before they were against it.

And that is George Bush's fault. He missed the key point of the PSA (that they will solve the funding problems of Social Security) and the opposition is more than happy to hang this around his neck. If he is going to be hassled for promoting free enterprise, he might as well promote it correctly.

PSA's save Social Security from insolvency in three steps: stopping the annual raid on surpluses while we still have them, letting individual choice create better returns to bring the system into balance, and reducing the need for taxes to fund future Social Security liabilities.

Stopping the annual raids: Payroll tax dollars meant for the Social Security Trust Fund are currently dumped into the General Fund and spent immediately. Creating optional PSA's would necessitate those dollars not needed for paying current liabilities to be placed in the PSA's. So honest accounting is advanced immediately by drying up the slush fund. When the program runs out of annual surpluses and starts borrowing to replace and then dole out the previously- raided Trust Fund, the government will already be weaned off that "funding source" and the transition will be somewhat easier than if we wait and go cold turkey when the inflows of payroll tax dollars become insufficient to meet current needs. This "transition" will happen under virtually any scenario and difficult choices will have to be made anyway. A little restraint now will make that an easier price to pay than it would be with further delay.

Individual Choice = Better Returns: PSA's will give every American the right to become a stakeholder in the future of Social Security. If you choose to fund a PSA with your payroll tax dollars, then the formula for your future benefits can be reduced by what you aren't contributing to the general pool. Compounded gains in your PSA over time will have little difficulty exceeding the paltry returns in the current system several times over. As a result, PSA holders will have less dependence on general payroll tax funds when they start drawing benefits. This leaves more money for those who need it (disabled, survivors, etc.). This key point is missed in virtually all discussion of reform and the President's opponents are making the most of the oversight. Meanwhile, if the misunderstanding is not corrected we all stand to lose.

Reduction of Future Payroll Taxes: As greater success is witnessed among those with PSA's, the need for payroll taxes to fund benefits will diminish. That is what the major opponents to reform are afraid of. What is President Bush's excuse?

Reform Wars: AARP v. USA Next

AARP has been one of the most successful marketing organizations in the history of the world. It has also been very active in promoting liberal causes like gun control, tax increases, universal government healthcare, homosexual marriage, and keeping the death tax, and, interestingly, perpetuating the double taxation of Social Security benefits for senior citizens.
Now it's leaders want to keep younger Americans from having the opportunity to have fully-funded Social Security in the future without massive tax increases now. As Democrat members of Congress spread out through the country scaring people about Social Security reform, they often have an AARP representative in tow. AARP receives tens of millions of taxpayer funded federal grants each year. So you don't have to wonder who is paying for their politic activism: you are!
USA Next is trying to spread the word about why AARP is so active against reform and they have the battle scars to prove it. Molly Ivins and Maureen Dowd hate USA Next. Get the picture?
This will be a titanic struggle and a very interesting sideline fight in the reform wars. Conservative versus Liberal organizations in a blood feud. Charlie Jarvis of USA Next says AARP bears primary responsibility for Social Security's problems. AARP spokesman Steve Hahn counters "our members still view AARP as the most credible source when it comes to Social Security."