Programming Note

Light blogging until Sunday, as Mrs. Daddy and I visit some vineyards and enjoy the Central Coast of California. Also looking forward to a return visit to a monument to both ego and greatness, the Hearst Castle.

Some Good News Today

And I am not talking about Ted Cruz' victory in the Texas Senate primary. Even though I am happy to hear of Mr. Cruz' victory and his conservative bona fides.

In Georgia, a one cent sales tax for "transportation infrastructure" went down to defeat.

Metro Atlanta voters have rejected a penny sales tax referendum that would have helped pay for billions in transportation projects over the next decade, according to unofficial returns
. . .
The referendum was a draw for many voters in Tuesday's primary election. The issue was on the primary ballot in 12 districts around the state, where it also largely went down to defeat. The Atlanta region stood the most to gain.
. . .
Tea party members, the state NAACP and the Sierra Club comprised an unlikely coalition that opposed the referendum, relying on e-mail and social media to urge voters to defeat the measure.

Now if we could only get the Sierra Club to oppose the high speed choo choo project here in California. Normal environmental impact requirements are of course going to be waived for a rail line that won't even use electricity as its power source. Not a peep from the state Sierra Club.

Georgia is very different from California, but I don't think there is anywhere in the country where a broad based sales tax increase could pass right now.

Government Schools - Jim Crow, Pedophilia and Racism

Item 1. In Louisiana, the law firm of Blackwell and Associates is sending threatening letters on behalf of teacher's unions to small private schools, threatening to sue them and prevent Louisiana students from leaving public schools under a voucher program that lets children leave failing schools. (You can contact the law firm at the link.) From the Pelican Post:

The letter goes on to insist that each school inform the Department of Education that it will not accept funding through the voucher program until the legal challenge has been resolved. Failure to do so by Friday, July 27 at 4:00 P.M. will result in the union instituting litigation against the school.

Clint Bolick, Vice President for Litigation at the Goldwater Institute in Arizona, has argued and won landmark cases in state and federal court on behalf of school choice programs around the nation. “In over two decades of school choice advocacy, I’ve never seen thuggery of this magnitude. What the unions can’t accomplish in the courtroom, they’re trying to achieve through bullying schools whose only offense is offering educational opportunities to children who need them.”

The teacher's have already lost the first round of this case in appeals court, this tactic, is intended to slow the program down "by any means necessary," according to the threatening letter. As the WSJ points out, it used to be slave holders and later Jim Crow that sought to prevent black children from learning to read, now its the teachers unions.

Item 2. In New York City a teacher in Queens had a sexual relationship with a 13-year old girl and sent her inappropriate messages through email and Facebook.Of course, he wasn't fired for this offense merely removed from the classroom. It may be many years before the taxpayers stop paying his salary.

Another example from 2007: Teacher William Scharbach was found to have inappropriately touched and held young boys. "Respondent's actions at best give the appearance of impropriety and at worst suggest pedophilia," wrote the arbitrator—before giving the teacher only a reprimand. The teacher didn't deny the touching but denied that it was inappropriate.

Why does this happen? The teacher's unions insist on arbitration for all allegations of teacher misconduct including sexual predation. With arbitrators beholden to the unions for their pay, teachers will be sitting in jail before they are ever off the payroll.

Item 3. In Tennessee, the State Board of Education overruled the Nashville's board of education denying Great Hearts Academy authority to open a charter school. The reason for the initial denial is rooted in race based politics; Critics said Great Hearts’ schools would lack diversity and some of its potential students would not have transportation to get there. (Source: The Tennessean) Race based decision making has no place in America, but we are a long way off. The public education system continues the most backward part of government.

Weekend Round Up

I'm closing out the weekend with a round up on a few issues that have captured my interest but were more than adequately covered elsewhere. First, Dan Cathy had this to say in an interview in Baptist Press.

"We are very much supportive of the family -- the biblical definition of the family unit. We are a family-owned business, a family-led business, and we are married to our first wives. We give God thanks for that."

Of course, he was pilloried for this and was slandered for making "anti-gay" comments. KT notes that there is not a single sentiment about gays in that statement. Rahm Emmanuel famously stated that Chick-Fil-A does not represent Chicago values (see picture below.) The leftist diatribe and invective from elected officials reminds me of totalitarian regimes where punishment of businesses for incorrect thought is the norm. Mark Steyn, of course, hits it out of the park.

Meanwhile, fellow mayor Tom Menino announced that Chick-fil-A would not be opening in his burg anytime soon. “If they need licenses in the city, it will be very difficult,” said His Honor. If you’ve just wandered in in the middle of the column, this guy Menino isn’t the mayor of Soviet Novosibirsk or Kampong Cham under the Khmer Rouge, but of Boston, Massachusetts. Nevertheless, he shares the commissars’ view that in order to operate even a modest and politically inconsequential business it is necessary to demonstrate that one is in full ideological compliance with party orthodoxy. “There is no place for discrimination on Boston’s Freedom Trail,” Mayor Menino thundered in his letter to Mr. Cathy, “and no place for your company alongside it.” No, sir. On Boston’s Freedom Trail, you’re free to march in ideological lockstep with the city authorities — or else. Hard as it is to believe, there was a time when Massachusetts was a beacon of liberty: the shot heard round the world, and all that. Now it fires Bureau of Compliance permit-rejection letters round the world.

Sad but true.

Meanwhile, the flagging economy is both good and bad news. Bad news, because people are suffering. GDP growth fell to 1.5% last quarter and job creation is not keeping up with population growth as evidenced by the employment-population ratio. This means that those seeking first time jobs, like my son, and those long term unemployed, like friends of mine, are going to have a harder time finding work. The good news is that people have mostly given up on blaming Bush for the economic conditions and this may be what it takes to get Obama out of the White House and the Democrats out of the Senate so that sensible economic policy can be pursued. But its not a guarantee, the Republicans under Bush pursued some ridiculous policies that rightly got them broomed out of office. From The Hill:

The poll, conducted for The Hill by Pulse Opinion Research, found 53 percent of voters say Obama has taken the wrong actions and has slowed the economy down.

The overall Presidential poll numbers don't seem to be trending yet, but history shows that economic conditions have a significant, but not overwhelming effect on the election.

Meanhwile, Mayor Bloomberg, has carried the definition of the Nanny State to its logical and absurd extreme. Here is the actual headline:

Mayor Bloomberg pushing NYC hospitals to hide baby formula so more new moms will breast-feed.

Regulating breast milk production? Hizhoner has become self-parody. His obsession with everything relating to bodily health belies an underlying mental disorder.

Have a great week. I will be vacationing in San Luis Obispo later this week, so the blogging will be light after Tuesday.

If you don't toe the party line, Rahm will have to enforce some Chicago values on your business.

Gold Standard Debate on the Right

One of my favorite economists and bloggers, John H. Cochrane, argues against the gold standard in today's WSJ.

Let's start by clearing up some common misconceptions. Congressman Ron Paul's attraction to gold, and Federal Reserve Chairman Ben Bernanke's biggest criticism, is that a gold standard implies an end to monetary policy and the Federal Reserve. It does not.
. . .
A gold standard does not eliminate debt crises or debt-induced inflation. No monetary system can absolve a nation of its fiscal sins.
. . .
Why not the old version? Most of all because the value of gold is poorly linked to other prices in the economy, which is what we want to stabilize. Fixing the price of gold today would do little to control the general price level. There are two big reasons for the disconnection between gold and other prices.

I mostly agree with Cochrane's criticisms, but still a support a return to the gold standard. Cochrane proposes inflation indexed bonds that would be tied to the consumer price index. He states that the purpose of monetary policy is to ensure price stability. Since gold is not well tied to the prices of consumer goods in the economy, he argues that it is a bad choice as a standard vis-à-vis price stability.

My objection to the current regime is that the federal reserve can manipulate the currency to the benefit of the big banks, in a largely undetected way. A gold standard doesn't fully prevent manipulation, but limits the scope of debauchery. To use Cochrane's own example, if the Fed issues more currency than it has reserves to redeem, it will eventually provoke a run on convertibility which will require a public devaluation. Such devaluations would serve as a public shaming that the Federal Reserve had mismanaged the currency.

Further, gold is tied to significant commodities that make a up key portions of the CPI. For example, gold and gasoline prices have shown a much narrower range of ratios than either commodity has to the dollar. Under Cochrane's proposal there is no reason to believe that either the bonds or the CPI itself wouldn't be subject to manipulation. Since Cochrane's proposal is "rule" based, I have no faith in it. The federal government and Federal Reserve has shown a disdain for what we would regard as rules. For example, we know that the Federal Reserve has loaned money to non-bank businesses who quickly put together an "industrial bank" and who would have been otherwise ineligible. While technically not a violation of the Code of Federal Regulations, this also shows a Fed that is operating well beyond its founding parameters.

There should be no doubt that a gold standard isn't going to bring nirvana. We have had booms and busts with or without the gold standard. Since going off the gold standard hasn't brought price stability or the end of booms and busts, and has undermined our faith in fair play in the economy; a return seem in order.

Weekend Music Chill

This weekend's music goes out to Elizabeth Warren.



In all seriousness, Cher is one of the great performers of all time. Mrs. Daddy and saw her in concert in San Diego and she put on a show for the ages. She came out with a new even more fabulous outfit every two numbers and her voice was as strong as ever. Here is some of her more recent work.

Financial System Supply-Chain Cross Contagion and Zombies

Many critics of today's economic policies of heavy indebtedness and unfunded future liabilities are in effect stating that there is a cascading risk due to increasing government debt burden. Tea partyers recognize the risk and call on government to end the binge because a bill will come due some day, and the collapse will be ugly. We foresee a situation such as San Bernadino writ large, where entire state governments and even the federal government is unable to keep its legal obligations.

The global economy is also showing signs of cascading risk related to Financial System Supply-Chain Cross-Contagion (H/T ZeroHedge). The study is a bit long to digest for one blog article, and I admit to not having read even half of it. However, I believe I understand the key concepts presented and they do not paint a pretty picture. The central theme is that a global supply chain, with Just-in-Time logistics presents an unstable system that a financial crisis could cause to collapse. Given such a collapse, even if the financial crisis were resolved, it would be difficult to quickly restart manufacturing. Further, the collapse in the global supply chain would have a feedback effect that would exacerbate the crisis. From the overview:

As the globalised economy has become more complex and ever faster (for example,
Just-in-Time logistics), the ability of the real economy to pick up and globally transmit supply-chain failure, and then contagion, has become greater and potentially more devastating in its impacts. In a more complex and interdependent economy, fewer failures are required to transmit cascading failure through socio-economic systems. In addition, we have normalised massive increases in the complex conditionality that underpins modern societies and our welfare. Thus we have problems seeing, never mind planning for such eventualities, while the risk of them occurring has increased significantly. The most powerful primary cause of such an event would be a large-scale financial shock initially centering on some of the most complex and trade central parts of the globalised economy.

The argument that a large-scale and globalised financial-banking-monetary crisis is likely arises from two sources. Firstly, from the outcome and management of credit over-expansion and global imbalances and the growing stresses in the Eurozone and global banking system. Secondly, from the manifest risk that we are at a peak in global oil production, and that affordable, real-time production will begin to decline in the next few years. In the latter case, the credit backing of fractional reserve banks, monetary systems and financial assets are fundamentally incompatible with energy constraints. It is argued that in the coming years there are multiple routes to a large-scale breakdown in the global financial system, comprising systemic banking collapses, monetary system failure, credit and financial asset vaporization. This breakdown, however and whenever it comes, is likely to be fast and disorderly and could overwhelm society’s ability to respond.

This scenario looks eerily like the Lockdown scenario in the Federal government's Project Horizon strategic planning documents. In that case terrorism causes a global collapse of trade that has predictable effects of decades long drop in living standards. In such an environment, we might see a flight to stability and an attempt to move source selection and end item manufacture close to consumer markets. I surmise that some part of the recent increase in U.S. manufacturing output is related to risk aversion by business leaders. Airbus has selected Mobile, AL as a new manufacturing site. Less well publicized, Apple is increasing its reliance on U.S. manufacturing.

I have no data to suggest that manufacturers are becoming more risk averse by laying in larger inventories to support potential interruptions of supplies. If we had the kind of crisis envisioned above, such a strategy might be seen as a worthwhile hedge, even though costly. But all hedges against risk carry some cost. Today, the potential cost of a rapid world-wide financial and supply chain contagion appears to be vastly underestimated, so the cost-benefit trade off of maintaining high inventories is skewed.

At a personal level, we joke about preparing for a zombie apocalypse; but much of the thinking that goes into disaster planning could serve one well if there was even a temporary collapse in global trade. Carrying high personal inventories of spare food stuffs, water, gasoline, generators and other means of preparedness has a cost. Given the current fragility of the global economy, with its high levels of debt and tight integration, personal preparedness is needed.

A Real Liberal Health Care Bill

Signing a bill that still won't cover everyone and will drive up costs.

I have wondered why liberals have allowed the Democratic party to destroy their good name over health care. If you look at the goals of liberals in the health care debate and then look at the result of the health care law, the two couldn't be further from each other. So I was thinking about the health care law I would pass if I were a liberal. These would be my liberal goals.

• Ensure everyone can afford health insurance.
• Ensure that those with pre-existing conditions are covered.
• Reduce the cost of health care to the average American.
• Ensure that any law doesn't reward corporations at the expense of taxpayers.
  

We might debate the wisdom of these goals; but if this were the liberal position, I could respect that. We could write a pretty simple health care law, not a 2700 page monster. The key policy prescriptions:

• Provide a federal subsidy for the "working poor" to buy health care if they lack it. Continue to use Medicaid for the rest of the poor.
• Make insurance portable between employers, so those with pre-existing conditions can keep their insurance when changing jobs.
• Provide a subsidy for those with pre-existing conditions, if they haven't already obtained insurance.
• Subsidize college education for doctors and nurses, reducing price by increasing supply.
  
• Limit the ratio of administrators to doctors at hospitals and reduce paperwork needed for doctors, reducing price by reducing cost.
  
• Create a special H-1B visa category for doctors, nurses, physicians assistants, and nurse practitioners, to increase the supply of providers, reducing price by increasing supply.
• Don't have an individual mandate or any of the other sops to various insurance and big pharma lobbies.
  
• Allow the re-importation of drugs from countries where price controls artificially reduce their cost of drugs at the expense of Americans, reducing the price of drugs.

Nowhere in this plan would a good liberal mess with what was already working for most Americans, who were generally happy with their insurance prior to the ACA.

When the dust settles on this statute, if it is not repealed, there will still be a significant portion of Americans who will lack health care coverage. Amazing. 2700 pages and the Democrats masquerading as liberals couldn't manage to cover all Americans for health care. They also increased the costs, and caused many Americans to lose their employer provided coverage. I await a liberal response as to how this furthers the ends envisioned by liberalism.

Quote of the Week

Comes from Neil Barofsky (pictured), former Inspector General for the TARP program, from a New York Times article.

"The suspicions that the system is rigged in favor of the largest banks and their elites, so they play by their own set of rules to the disfavor of the taxpayers who funded their bailout, are true," Mr. Barofsky said in an interview last week. "It really happened. These suspicions are valid."

The regulators at the SEC and Treasury are in on this scam, and Democrats and Republicans alike are guilty. Democrats however, committed the latest foul with their passage of Dodd-Frank, which perpetuates Too Big To Fail. (Peter, a friend of mine noted that any justification of monopoly on a basis other than consumer choice, like TBTF, is ripe for collapse.) But none of these bank shenanigans would be sustainable without a compliant Federal Reserve, manipulating the currency to keep Wall Street and the Big Banks afloat. This is why I have been converted to a gold standard enthusiast. The gold standard carries its own problems, but at least it prevents the kind of currency manipulation that leads to the financial crises that continue to plague the industrialized world.

H/T Dean. Also, I have at times castigated the NYT for its reporting, but bringing these issues to light is what a free press is all about.

I can't resist one more quote.

“So much of what’s wrong with Dodd-Frank is it trusts the regulators to be completely immune to the corrupting influences of the banks,” he said in the interview. “That’s so unrealistic. Congress has to take a meat cleaver to these banks and not trust regulators to do the job with a scalpel.”

Judge Posner on Smart Phone Patents

If a tree falls in the woods, but does no damage, should there be a lawsuit? This thought experiment is proposed by Berkeley law professor Peter Menell in a WSJ article that explains the thinking of Judge Richard Posner regarding the proliferation of smart phone patent lawsuits. I will admit to having been puzzled about these suits. I am a believer in protecting intellectual property rights, but it seemed that the protagonists were using the courts to gain competitive advantage they had not earned in the market place. What I did know, was that as a consumer, my choices were being constrained by injunctions over patents. Reading a little about Posner's thinking clarified the issue for me. Regarding all of the arcane claims in a suit between Apple and Google:

But Judge Posner boiled it down to a straightforward conclusion. In his opinion, he said the companies failed to marshal plausible experts and theories to calculate damages for alleged infringement, and in any event, companies shouldn't be able to win injunctions on patents involving technologies that have become part of an industry standard.

His harshest words perhaps were for Apple's claims that Motorola should pay it significant sums or should be banned from selling certain smartphones. "The notion that…minor-seeming infringements have cost Apple market share and consumer good will is implausible [and] has virtually no support in the record," he wrote.

. . .

Judge Posner is one of the founders of a school of thought that says that legal problems are often best understood when seen through the lens of economics. In this case, he questioned whether using the federal court and its resources to handle these types of disputes was economically efficient. That notion is woven throughout the opinion.

Sounds good to me. If Apple can keep Samsung tablets off the market through judicial fiat, how are consumers made better off? If Apple can't show harm, and its hard to believe they can, given the sales of iPads, then why are they in court?

California tea party Conundrum

As a tea partyer in deep blue California, it may seem that we have limited ability to influence elections. Gerrymandering keeps almost all House, Assembly and State Senate races non-competitive. However, ballot measures and local races still provide an opportunity to make our voices heard and to beat the entrenched labor/big-government establishment. Temple of Mut has provided a public service by previewing the November ballot issues; but I wanted to add a few thoughts on issues and races that matter in San Diego in particular.

Proposition 30. Jerry Brown's "temporary" tax hikes initiative. This is an easy No recommendation from the tea party. But I doubt that the final vote will even be close. Billed as another "for the children" initiative, I think that scam is up. (As satirized in a recent Hitler parody, the voters are wise to the whole "They'll put free hookers and cocaine on our health plan as long as we say it's for the children" line.) The cram down on the high speed rail while the state is going broke isn't going to help this effort. Neither will the report that reveals that the top paid legislative staffers in Sacramento are getting big pay raises. Of course, the bulk of the pay raises are going to the top 1% of the staff, just kidding, I think it is the top 5%. If I were in charge of advertising, I would lead with particular tidbit about legislative staff pay raises in a campaign against the tax hikes. It also helps that another tax measure to increase almost everyone's taxes, Proposition 38 is also on the ballot. Even those making as little as $7,300 will get hit by Prop 38. To be fair about who gets a tax increase, Brown's Proposition 30 also raises everyone's taxes through a sales tax increase.

San Diego Mayor - Carl DeMaio. The SCTRC does not endorse candidates, so this my personal recommendation. With the public employees unions and the California PERBerts challenging Proposition B in court and its attendant the cost savings in court, the city will need a vigorous advocate in the Mayor's office. Even opponents of the measure admit that it will save the taxpayers money. I have no doubt that Bob Filner would seek to gut the legal defense of the measure as well as any implementation. Reforming pensions is vitally important to the long term financial health of the city. Carl DeMaio strongly supported the measure and has been an advocate for the taxpayers in general. He first won my support for his vigorous opposition to Proposition D, in contrast to most other San Diego establishment politicians.

Brian Bilbray for Congress. This stance is also controversial with some of my fellow tea partyers. Despite his appearance at a Repeal Obamacare rally, Bilbray doesn't really light the fires for us tea party types. But I have never before been a single issue voter, but the so called Affordable Care Act has made me one. The ACA is actually an unaffordable sop to lobbyists and special interests that true liberals ought to be opposing, not just those on the right. The 52nd Congressional race is one of the few that matter in California. It is a competitive race. Brian Bilbray has promised to vote for repeal and Scott Peters has endorsed the ACA. How much clearer could our choice be? I am asking tea partyers and libertarians who aren't enthused to get behind Bilbray anyway. I will be donating to him and to Romney and Bilbray on the theory that the ACA will do decades worth of damage to the country if not repealed soon.

Enemies List?

Richard Nixon was rightly excoriated for keeping an enemies list. Barack Obama seems to have gone Nixon one better, keeping a kill list, of enemies, some of them U.S. citizens, that he can have whacked. However, because keeping an enemies list is just too much fun, Obama appears to have one of those as well. From the WSJ's Kimberly Strassel.

This column has already told the story of Frank VanderSloot, an Idaho businessman who last year contributed to a group supporting Mitt Romney. An Obama campaign website in April sent a message to those who'd donate to the president's opponent. It called out Mr. VanderSloot and seven other private donors by name and occupation and slurred them as having "less-than-reputable" records.
. . .
Now Mr. VanderSloot has been targeted by the federal government. In a letter dated June 21, he was informed that his tax records had been "selected for examination" by the Internal Revenue Service. The audit also encompasses Mr. VanderSloot's wife, and not one, but two years of past filings (2008 and 2009).
. . .
Two weeks after receiving the IRS letter, Mr. VanderSloot received another—this one from the Department of Labor. He was informed it would be doing an audit of workers he employs on his Idaho-based cattle ranch under the federal visa program for temporary agriculture workers.

As the villain in Goldfinger famously told James Bond: ‘Mr Bond, they have a saying in Chicago: “Once is happenstance. Twice is coincidence. The third time it’s enemy action.” Not only in Chicago, but if the shoe fits?

In this most transparent administration ever, do you think that we'll ever get an answer as to why Mr. VanderSloot is being targeted by not one, but two federal agencies? Will the miserable hack who runs the Justice Department do anything to help him if these investigations did not follow due process?

Weekend Music Chill

The events in Colorado have dampened my spirits. I thought it appropriate to share this music from one of the great voices of the 20th century. Certainly more so than the more popular music I normally post.

Here is Mahalia Jackson with Trouble of the World from the movie Imitation of Life (a movie that was ahead of its time):



Here she is performing "Be Still my Soul"



I usually can't listen to the second hymn without crying.

Don't Care What You Call It - Obama's Vision is Fundamentally Flawed

In the 2008 election, Obama promised to fundamentally transform America, his words. Conservatives have made much of his words and many have said that he is a socialist. I don't really care what it's labeled, it's fundamentally opposed to the vision of America that the founders laid down. I don't think that Obama hates America, so much as he hates a traditional vision of America, where the private sector (businesses, non-profits, faith based organizations, public service associations and individuals) are the primary change agents in making America a better place to live. He believes that these institutions can't be trusted to be fair, that only government can. Of course, this flies in the face of centuries of experience, in which government is the most unfair, because it is the most corrupt. Tocqueville, in his famous work, Democracy in America, discusses some of these institutions. From a summary of the work:

Non-institutional factors which help to maintain freedom in the United States are the right of association, the freedom of the press, and‹most importantly‹religion. Associations are an excellent tool to combat individualism and to allow people to exercise their freedom by taking a part in politics. The press is intimately connected to associations in that associations need a means of communicating with their members and also a means of spreading their message to the public as a whole. In America, religion is much more than another type of association and is highly beneficial both politically and societally. Religion teaches people how to use their freedom well. Since the government provides no absolute standards, it is necessary that religion provide some moral boundaries. As Tocqueville remarks, "Despotism may be able to do without faith, but freedom cannot. . . . How could a society escape destruction if, when political ties are relaxed, moral ties are not tightened? And what can be done with a people master of itself if it is not subject to God?" (Chapter 9). By bringing people together in a community of common belief, religion also combats individualism. Furthermore, religion is practically the only means of counteracting the materialistic tendencies of democratic peoples. Religion turns peoples minds beyond the physical, material aspects of life to the immortal and eternal. So strongly does Tocqueville see the necessity for such a force in democratic society that he warns society's leaders not to try to disturb the people's faith, for fear that "the soul may for a moment be found empty of faith and love of physical pleasures come and spread and fill all."

KT had a great graphic that spells out Obama's vision, it is satire of course, but contains truth as well:


When Obama goes off teleprompter his real thoughts towards what most people believe is good about this country come out. His famous "bitter clingers" remark was an early example. His remarks about how we should be grateful to government for building roads and therefore pay more taxes is part of a larger narrative that we need to give more power to government.

This is what I find so disturbing about the President, he unapologetically believes that government is the real source of all that is good in this country and we believe otherwise. It is a an argument over the philosophical foundation of society. This makes the election in November very important. The promise to fundamentally change America is a promise to make government central to every aspect of American life.

For the record here is what he said, note the class warfare rhetoric and the assumption that government must fix the problems of the middle class.

The Effrontery of "You Did Not Build That"

Here is the President, telling entrepreneurs that they didn't build their business on their own.



The full text, so that we are not taking this out of context.

There are a lot of wealthy, successful Americans who agree with me because they want to give something back. They know they didn’t — if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own. I am always struck by people who think, “It must be because I was just so smart.” There are a lot of smart people out there. “It must be because I worked harder than everybody else.” Let me tell you something: There are a whole bunch of hardworking people out there. If you are successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business, you did not build that–somebody else made that happen. The Internet did not get invented on its own. Government research created the Internet so that all the companies could make money off of the Internet. The point is that when we succeed, we succeed because of our individual initiative, but also because we do things together.

Where to start? This is rich, of course, coming from a guy who didn't build a thing, who didn't even get decent grades in college for all we know. But the outrage is really about his tone of arrogance in telling us that unless we support his big fat welfare state, we are being ungrateful to our third grade teacher. Entrepreneurs know who helped them and they already said thanks. And all of us know that some government is necessary. We know that government establishing a rule of law, including contract law, and preventing corruption are key features that allow business to succeed. We wouldn't mind paying for government that was limited, small and worked; a government that stayed within its constitutional boundaries and its means.

• We wouldn't mind paying taxes if they actually built roads and dams. But as Mark Steyn reports, Obama's Deputy Assistant Secretary of the Interior has promised that "You will never see another federal dam." Ever.
• We wouldn't mind paying taxes if they weren't squandered on green energy projects that lined the pockets of the President's campaign donors.
• We wouldn't mind paying taxes if they weren't used to enable Mexican drug lords to gun down U.S. agents.
• We wouldn't mind paying taxes if they didn't support an increasingly corrupt welfare state.
• We wouldn't mind paying taxes if the government schools actually educated our kids.
• We wouldn't mind paying taxes if the President supported the rule of law and didn't pass laws through executive order.
• We wouldn't mind paying taxes if the military wasn't used as social experiment in diversity and biofuels.
• We wouldn't mind paying taxes if state workers didn't have better salaries, benefits, pensions and job security than the average taxpayer.
  
• We wouldn't mind paying taxes if the President wasn't so arrogant about demanding that we should pay more.

Bending Down the Cost Curve at the Expense of Innovation

The ACA is supposed to "bend down the cost curve" of health care. After all, it is the Affordable Care Act. But consider this from today's WSJ:

Drug makers including Eli Lilly & Co., Pfizer and Johnson & Johnson have spent hundreds of millions of dollars pursuing what could be the first treatments to address the underlying mechanism of Alzheimer's disease.

Soon they'll know whether those bets have paid off and they have the industry's next blockbusters—or just the latest debacles.
. . .
The market for drugs that could treat the underlying process and at least slow the disease's steady march is estimated by analysts to be $10 billion a year or more, up from $3 billion a year currently. Drugs on the market now are considered of limited effectiveness and treat the symptoms of the disease for a limited period of time.

So shouldn't these companies be punished for driving up the cost of health care? Isn't our nation and indeed our world better off if these companies get rewarded with fat profits if they find a cure to Alzheimer's disease. And after sinking those hundreds of millions into the search for such a cure, isn't it just and fair that they should? But this administration will swiftly seek to limit the cost of the new drugs because government is involved in every decision. This could kill innovation. So what's it going to be? Do we want innovation or do we want 1950s medicine, because it was cheaper?

As an added cost, those Alzheimer's patients that survive longer will disproportionately spend more on health care and since government is either funding it through Medicare or subsidizing that expense through the exchanges, isn't that another argument against allowing drug companies to develop new cures? This is just one evil among many with the ACA. Government involvement in cost control creates incentives to limit life saving.

Prosecuting Medical Marijuana - O > W

The President has broken so many campaign promises, its hard to keep track. But it is hard to top the degree to which he has broken his promises regarding medical marijuana. Here is what Candidate Obama said in 2008.

"What I’m not going to be doing is using Justice Department resources to try to circumvent state laws on this issue simply because I want folks to be investigating violent crimes and potential terrorism. We’ve got a lot of things for our law enforcement officers to deal with.”

Of course, that promise has gone the way of other Obama promises. From the LA Times:

The federal government is moving to shut down the nation's largest and highest-profile medical marijuana dispensary operation, filing papers to seize properties in Oakland and San Jose where Harborside Health Center does business.
. . .
"The city of Oakland has developed a system to assure such distribution occurs according to state law in a fair and orderly process," Nancy Nadel, member of the Oakland City Council and vice mayor of the city, said in a statement. "It is most unjust to our citizen patients and distributors who have followed local guidelines to be harassed and treated as criminals by federal officials."

U.S. Attorney Melinda Haag, stated that she is targeting Harborside precisely because it is big. It is big, because it operates in an a trustworthy and above board manner. This appears to be consistent with the President's disdain for successful businesses. But, I digress.

Of course, where would administration lies and broken promises be without dissembling by the Attorney General.

"We limit our enforcement efforts to those individuals, organizations that are acting out of conformity with state law," Mr. Holder told a House Judiciary Committee oversight hearing.

As to that O > W comparison?

Many of California’s most prominent and well-respected medical cannabis dispensaries and related facilities — including Oaksterdam University, Berkeley Patients Group, and Harborside Health Center (HHC) — flourished under the George W. Bush administration. But they’ll be lucky to survive President Barack Obama’s first term,” writes NORML Deputy Director Paul Armentano.

For you conservatives who might not care about this issue, Gonzales v Raich is the precedent that allows the feds to prosecute dispensaries operating within state law. It was used as part of the constitutional argument made for Obamacare. That Justice Roberts called it a tax still means we are only one Supreme Court vote away from a unlimited federal power under the commerce clause. I am asking that conservatives and tea partyers make common cause with marijuana proponents; this is a state's rights and commerce clause issue. H/T for this article to StoptheDrugWar.

For those who might not be regular readers of this column or BeerswithDemo, Dean has developed a running list of areas of policy where Obama has exceeded Bush, and not in a good way. It started out as O=W, but soon Obama outdid the former President in so many negative ways.

Here is a sample list, to which we are adding the prosecution of medical marijuana issues.

losing Keeping open Gitmo.

Ending Formalizing the indefinite detention of suspected terrorists.

Ending Maintaining military tribunals.

Discontinuing Continuing other Bush-era policies like rendition, Project Gunrunner and TARP.

Ending Throwing into warp drive the politicization of the Justice Department under the leadership of the biggest hack in the administration.

Interpreting the Patriot Act to collect information on people via mobile phone geolocating

Engaging in an act of war against a country that posed no threat whatsoever to the U.S. with without the consent of Congress.

Swift Painfully slow response to national disasters.

Ending Maintaining the practice of signing statements.

For you visual types, how about a federal government - Goldman Sachs Venn diagram? (thanks, W.C. )

Signing off on predator drone strikes for the ostensible purpose of assassinating a foreign head of state. And then doing so.

Using executive orders and administrative actions and generally subverting the role of Congress in order to enact his agenda.

Shutting down Operating a seeming revolving door between the White House and Wall Street and K Street.

Signing legislation that would allow the military to indefinitely detain terror suspects, including American citizens arrested in the United States, without charge. Got 4th amendment? Not anymore, you don't.

Authorizing a program to assassinate American civilians.

Actually authorizing a drone strike hit that killed American-born Anwar al-Awlaki and Samir Khan (from this point forward, we never... never want to hear a peep about water-boarding)

And adopting another Bush-like tendency in combating the war on terror: refusing to provide the legal justification for the killing of U.S. citizens.

Message to Liberals - Unions Are Destroying Government

Liberals who want government to take over ever larger parts of the economy have an enemy, public employee unions. The poor service and high costs associated with public employee unions makes government the unaffordable source for services.

Exhibit 1: Charter School Successes. Charter schools are outperforming public schools. There, I said it. There will be lots of criticism that this isn't proved, but even The Economist is conceding that when states get the law regarding charter schools right, they out perform. Further, they deliver superior performance at lower cost. First on the performance.

The Credo study has been criticised for not comparing the results of children who have won charter-school lotteries with those who have not—a natural experiment in which the only difference between winners and losers should be the schooling they receive. Such studies suggest that charters are better. For example, a lottery study in New York City found that by eighth grade (around 13), charter-school pupils were 30 points ahead in maths.
. . .
Credo finds that students in poverty and English language learners fare better in charters. And a national “meta-analysis” of research, done last year for the Centre on Reinventing Public Education in Seattle, found charters were better at teaching elementary-school reading and mathematics, and middle-school mathematics. High-school charters, though, fared worse. Another recent study in Massachusetts for the National Bureau of Economic Research concluded that urban charter schools are shown to be effective for minorities, poor students and low achievers.
. . .
Massachusetts, meanwhile, has had excellent results and is strict about the schools it allows to operate; the state will step in and close an underperforming school at short notice. Caps on the number of charters in a state drag down performance as much as lax oversight, because they cramp the diversification of the market and discourage investment. Bad laws make bad charter schools.

Further, in Colorado, we have seen that charters can deliver for significantly less than public schools. The reasons are that the unions push for levels of staffing and benefits that are unaffordable. Further, the state educracy imposes unreasonable rules on education. If liberals want government to deliver education, they need to support reforms that mimic free markets, like open enrollment across district lines and within districts and giving principles full control of budgets and the ability to hire and fire. Liberals need to stare down the unions if they care to save public education and force reform. Parents are voting with their pocket books when they can afford to do so and abandoning public education. What's your answer, liberals?

Exhibit 2. Bankrupt Municipalities. California now has four cities that have filed for bankruptcy. I will concede that union pensions are not the sole cause, but they are contributing factors. Bob Beckel keeps saying that this isn't the unions fault, because elected officials negotiated these contracts in "good faith bargaining." There are a number of flaws with this logic. First, the politicians did not negotiate in good faith; they are afraid of union dues funding campaigns against them. Second, the pension benefits don't accrue until long after they have left office. This is why government employee pay and benefits should not be negotiable, but set by law. This is how the federal government does things, and I have yet to hear a liberal complain that the federal work force is "oppressed." Stockton and San Bernadino in California and Scranton in Pennsylvania are the biggest recent municipal trouble spots. Consider this from San Bernadino:

Two years ago, Husing told city leaders to consider dismantling the city's police and fire departments and instead contract with the county sheriff and fire agencies. Public safety accounts for nearly 75% of the city's general fund budget.

"The costs for police and fire have tended to crowd everything else out," Husing said. "They immediately started attacking the idea. It just shows how powerful those unions have been in that community."

Police union President Steve Turner said officers have done more than their share to help bail out the city, agreeing to a temporary 10% cut in compensation. He discounted the escalating employee pension costs, which are expected to increase from $6.5 million to $7.5 million this fiscal year, as a major contributor to the city's financial woes.

"Public pensions are not what's breaking the bank in this city," he said. "It's the mismanagement. Spending money like there's wheelbarrows of it."

Given that the city's budget shortfall is $45.8 million, he may have a point about the pensions, specifically, if he's telling the truth. But if the city is facing a 15% increase in public pensions in a single year, that sure isn't helping. The OC Register has a different take:

For example, San Bernardino's contribution rate to its "public safety" – police and firefighter – pension payments for fiscal 2012-13, which began July 1, is estimated at 30 percent. But for employees classified as "Miscellaneous," the contribution is 17 percent. In that city, 75 percent of the budget goes for "public safety." Which means 23 percent of the city budget goes to police and fire pensions, money not available for other services.
This was the result of the "pension spiking" for public-safety employees that occurred in many localities beginning in 1999, and which we warned about at the time. There had to be a day of reckoning, especially after the dot-com bust of 2000-01 and the housing meltdown of recent years diminished the investment returns for pension funds. This is that day.

Further, why would outsourcing public safety to the county save so much money? Clearly, labor costs are a big deal. If you are a liberal, consider this. You want cities to do more for there residents, but no one is going to vote to allow that if it means cutting police and fire protection. In one bankrupt city, this now takes up 75% of the budget due to high labor costs. Labor and pension costs are going to eventually drive out every service cities attempt to provide. What is the liberal solution, more taxes? Do the people of San Bernadino, a large percentage with underwater mortgages really need to pay more taxes? I await an answer.

Weekend Music Chill

Dean's music post from last weekend reminded me of this excellent tune from Mr. Steve Earle:

Chart of the Day - Employment Ratio Has Never Recovered

The pathetic job numbers have been much ballyhooed, so I won't go much into that, other than to say the key issue is that job creation isn't restoring employment to pre-recession levels. I have always focused on the labor force participation rate in prior articles, but the employment-population ratio caught my attention recently as another important statistic. It is defined as the percent of those over 16 years old who are working. I don't know if that includes those on disability or not. Many economists consider this the most reliable indicator of economic health.


Under Reagan and Clinton, this ratio increased to a peak of 64.6% in early 2000. The current downturn saw the ratio drop significantly; BUT IT HAS NOT RECOVERED! Sorry to shout. This is why everyone feels so miserable about the economy. Regardless of the official unemployment rate, the low percentage of people with jobs has persisted. The gap is a permanent wedge of unemployed that is setting us up for long term social problems. The President thought it more important to focus on passing a health care law that was a sop to interests groups that contributed to his party than in dealing with what is turning into a long term national disgrace. Young college graduates with few prospects became a class of dependents that harm the national economy for years to come. I know this isn't sexy, but the President's policies are responsible for the failure of the economy to recover. We can not afford his re-election.

Not Winning

The President's decision to push tax increase rhetoric is puzzling to me. Team O may believe they are firing up the base, but after several years of dismal economic results, it's hard to believe that the public is going to think that increasing taxes is a good plan. I think that the public has come to understand that increasing taxes on the wealthy, is only laying the groundwork to increase taxes on the middle class. From the LA Times:

Polls generally show voters are happy to tax the rich, with majorities agreeing with the president that those with the highest incomes should pay more taxes.

At the same time, polls also show that Republicans do better when they frame upper-income tax increases as a threat to small businesses, a group that voters tend to like. "No one should see an income tax hike next year — not families, not small businesses and other job creators," Senate Minority Leader Mitch McConnell (R-Ky.) said Monday.

The article doesn't say which polls, so I question their veracity. Further, and more importantly, Obama is certainly not serious about his proposal on two counts. The increases are not going to be passed in the House this year. But even if Obama squeaks through to re-election, passing his proposal would signal the death knell for the Democratic party. Why? Because the increase in top capital gains taxes and dividend taxes from 15% to 30% and 43.4% respectively. This will cause a big sell off in the stock market, as investments become much less productive. A stock market sell off will in turn harm the economy. The fallout in 2014 elections after 6 straight years of abysmal economic performance by Obama would be a catastrophe for the Democrats. This is why I don't think he is really serious.


This news comes as Romney and the Republicans outpaced the Democrats and Obama in June fund raising $105 million to $71 million. Polling is very close, with the WaPo reporting a 47-47 tie among registered voters. However, I keep thinking that gives Romney the advantage, because I expect two things to happen. First, undecideds tend to break for the challenger. Second, I think likely voter energy is still with the Republicans; the Supreme Court ruling and Obama outrages over attacking the Catholics are sure to fire up the Republican base.

However, it remains to be seen if Romney can put together an effective positive message for himself that also attacks the President. I was impressed with the speed of his counterattacks earlier in the campaign. Perhaps his team is strategically planning where to release their prodigious funding to best advantage. For the moment, no one is winning this race; but I believe that Romney has some fundamental advantages.

Enforcing the Penalty (or Tax) in the ACA

I have always felt that as a practical matter, the ACA mandate was too weak to cause significant numbers of citizens to buy health insurance who weren't already doing so. More confirmation from the WaPo:

The penalty will be fully phased in by 2016, when it will be $695 for each uninsured adult or 2.5 percent of family income, whichever is greater, up to $12,500. The nonpartisan Congressional Budget Office estimates that 4 million people will pay the penalty that year.

The law, however, severely limits the ability of the IRS to collect the penalties. There are no civil or criminal penalties for refusing to pay it and the IRS cannot seize bank accounts or dock wages to collect it. No interest accumulates for unpaid penalties.

So how can the IRS enforce the mandate? Scary letters and threats to withhold tax refunds.

The law allows the IRS to withhold tax refunds to collect the penalty, and most filers get refunds. This year, 77 percent of the 135 million individual income tax returns processed by the IRS qualified for a refund. The average refund: $2,707.

However, knowing that the law's penalties can be avoided will cause people to behave differently and they will make sure they aren't owed a refund if they haven't paid for insurance. This will further drive down federal revenue, because those refunds are an interest free loan to the U.S. Treasury. Seems like the insurance companies who wanted more "customers" as part of the law are about to get stiffed.

I think the Democrats knew this when they passed the bill, in spite of not reading it. For political reasons they didn't want increased IRS enforcement to be associated with the law. When significant numbers of people start to dodge the law in this predictable manner, which will be reported in the press as "surprising" or "unexpected," there will be calls to change the tax code to actually implement enforcement. This will be done by attaching a rider to a budget reconciliation bill passed on Christmas eve to take effect on January 1st. Happy New Year's, m*****-f*******s, will be the message of the Congress to American citizens, if we don't get this thing repealed.

ACA Anti-Tax Protest Rally - Bilbray Also Speaks - UPDATE

I attended the Anti-Tax Rally today in downtown San Diego held in front of the County Administration Building. Brian Bilbray was clearly the most famous speaker invited. He is in a competitive district, as I have previously discussed. The rally started with doctors in white lab coats speaking about the harm done to health care under the law. Doctor Gary Gonsalves led off the doctors segment. (It seems that Obama's stunt at the White House has made it de rigueur to put the docs in lab coats.


Among the issues raised by the doctors were the further insertion of bureaucracy between doctors and patients, the stripping of medicare, and the imposition of more regulations that will discourage doctor and exacerbate a doctor shortage. The last doctor to speak was Dr. Gina Loudon, who was the most exciting doctor speaker, befitting her role as radio personality. She pointed out that the GOP has not always been consistent in opposing an expansion of government which led her to work in the tea party movement, as opposed to mere Republicanism. (I agree.)

Dr. Gina Loudon talks about her tea party experience.

Many of the argument about health care proffered by speakers have been covered in some of my previous posts. But I also heard some new ideas for reforming health care and health insurance.

1. Let credit card companies manage Health Savings Accounts (that use pre-tax dollars) because they are good at detecting fraud. Further, allowing HSAs to roll from year to year would encourage people to shop around and reduce health costs. As a current user of a flexible spending account for some of my health care, I like this idea. But, the current system pushes me to spend all my eligible funds in one year, leading to some wasteful spending.
2. Get the states and the AMA out of nursing licensing. Doctors and hospitals are capable of judging the quality of nurses, this just restricts supply.
3. Get the AMA out of limiting doctor licensing and medical school accreditation, because they have a vested interest in decreasing the supply of doctors.

I was very interested to hear Brian Bilbray's take on the law. He made great points. I know he has offended some purists who believe that nothing in the law should be retained because it is an affront to freedom. I agree, but politics is the art of the possible. Bilbray makes the very good point that right now, coverage for pre-existing conditions and children to age 26 are very popular parts of the legislation. But he made the point that those good ends could still be achieved without the monstrosity of so many new taxes and fees in the law. He hammered at the tax theme. He also pointed out that the law is a sop to to lawyers and insurance companies who wrote the law at the expense of the American people. His opponent, Scott Peters, is fully supportive of the law, so even if you challenge Bilbray for not being tough enough in standing against the law, his vote will be for repeal, but a Peters vote would not be. More prominent members of the tea party do not agree with my assessment of Bilbray, you can read the opinion here.

Brian Bilbray addresses tea party rally against ACA taxes.

Nick Popaditch, was a much more dynamic and absolutist opponent of the bill. I cannot do justice to his speaking style. However, he made this great point. When the leftists like Obama and Pelosi argue their positions they attack their fellow Americans. In arguing that the reason for the mandate is because of "free riders," they are attacking their fellow Americans who have exercised their God-given right not to purchase health insurance. The attacks on Americans exercising their rights is a hallmark of this administration, my opinion. (My answer for the free rider issue? Allow insurance to offer catastrophic coverage and allow hospitals to be aggressive in collecting from dead beats who can pay.)

Nick Popaditch decries the attacks on Americans by supporters of the ACA.

A few other thoughts. Chief Justice Roberts came in for more than a little criticism. His logic that the law is a tax, does not square with the Congressional language. That is legislating from the bench, as some speakers pointed out. All in all, it was an inspiring rally that is one small piece of the larger movement to limit government.

Frequent commenter arhooley also attended; she had this to say.

I just got back from it, and although it was great, I'd like to see one change at these Tea Party rallies: a secular or agnostic Tea Party speaker. Maybe even an ex-liberal. There are plenty of us out here, and we don't always feel we're being addressed or included in speeches laden with calls to religion. An added bonus is that we're not all preaching to the choir; we know how to talk to liberals about the supposed generosity of Obamacare and similar laws and movements.

I agree about not preaching to the choir, but have to say that many of the doctors couched their discussion in non-partisan, less political terms.

UPDATE

Shane Atwell also blogged about the event. He reminded me of a point made by Popaditch that I forgot to include. We can't protect people from making bad economic choices. (He used the decision to buy a Chevy Volt as an example, to much laughter.) This is a big part of the leftist argument for government regulation of health care. If people were required to suffer the consequences of poor choices, like going bankrupt as a result of foregoing health care insurance, then they might make better choices.

The U-T's Craig Gustafson has an article about the event as well. He quotes the Scott Peters campaign's insistence that somehow Bilbray is a tea partyer now. For better or worse, that is patently untrue.

ACA Tax Protest - Saturday, July 7, 9:00 a.m.

Join tea partyers and Congressman Bilbray at the San Diego County Administration Building at 1600 Pacific Highway, San Diego, 92101 tomorrow at 9:00 a.m. to protest the punishment inflicted on us by the Orwellian named Affordable Care Act (ACA). Good to see Congressman Bilbray earning my vote. From the U-T:

Also scheduled to address the crowd are retired Marine Gunnery Sgt. Nick Popaditch, an Iraq and Persian Gulf War veteran who is challenging Democratic Rep. Susan Davis, Stephen Guffanti of Tri-City Tea Party, and Rhonda Deniston, Brian Brady and Gary Gonsalves of Stop Taxing Us.

In a statement, Deniston said local activists were disappointed in the manner in which the health care overhaul was passed and believe it will be destructive to the economy and job growth. Tea party members and even some elected officials across the nation maintain the law is unconstitutional regardless of the majority opinion handed down by Justice John Roberts, who sided with the high court’s liberal bloc.

And in more Crappy Choo Choo News

The California Senate passed an $8 billion dollar approval to start the ill fated high speed choo choo project by a bare 21-19 majority, with four Democrats dissenting from the party line. Pretty apt description from the Sacramento Bee article:

Among Republicans in opposition was Sen. Tony Strickland, who criticized a willingness by the Legislature to reduce spending elsewhere while finding money for high-speed rail.

"I think this is a colossal fiscal train wreck for California," he said.

The bill was introduced with little notice following the 4th of July holiday and passed on Friday to avoid the news cycle, I believe. The $8 billion is intended to fund the first 130 miles of track from the bustling urban centers of Madera to Bakersfield. From the LATimes:

The project had become increasingly controversial as Democratic senators from around San Francisco and Los Angeles asked why construction was was set to start with a 130-mile stretch in the Central Valley.

"The ridership is not in the Central Valley," said Sen. Leland Yee (D- San Francisco), speaking Thursday night. "The ridership is along the 101 corridor," referring to the U.S. highway stretching from the Bay Area to Los Angeles.

What's the over/under on the number of miles that actually get built for $8 billion? My guess is 22 miles. How did I arrive at this figure? I took the cost per mile and multiplied by three because its a government project. Then I remembered that I am a natural born optimist, so I multiplied that result by two.

Weekend Music Chill

Going back for some relaxing music that Mrs. Daddy can enjoy with me. Here is Sergio Mendes and Brasil 66 with Mas Que Nada:



And here he is years later with the Look of Love and Fool on the Hill.

Happy Independence Day

The words of the Declaration of Independence continue to inspire after more than two centuries. It's words and principles inspire the tea party movement and I believe is a source of discomfort to those on the left, even if they won't admit it.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.--That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, --That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed.

I hope you have a great 4th of July with your family and remember that we celebrate the founding of a Republic based on neither ethnic nor racial qualities, but on enduring principles that lay the foundation for liberty and prosperity.

Bankruptcy - No Pension Panacea

In the 2010 San Diego City Council race, and in previous mayoral campaigns, the idea of bankruptcy for San Diego has been proffered. However, neither Vallejo, which survived bankruptcy, nor Stockton, now going through bankruptcy have demonstrated that public employee pensions can be discharged in bankruptcy court, at least in California. In California, after the Vallejo experience, the state passed laws requiring that cities contemplating bankruptcy enter into a mediation process. This requires that the city negotiate in good faith with creditors prior to entering bankruptcy proceedings. One group for whom there is no negotiation are the labor unions pensions. From Reuters:

Calpers and unions around the country have made it clear they see a pension as an iron-clad right, one that's legally protected even in a bankruptcy.

Whether pensions are contract rights, which can be changed, or property rights, which are protected under the U.S. Constitution, has never been tested in court.

My question is what happens when the pension costs exceed all other sources of revenue? Who pays then? In Providence, RI, the answer seems to be that if the money is really gone, then the city will have to go to court. From the New York Times:

. . . the Providence City Council signed off on a plan to end, for now, annual cost-of-living increases for about 3,000 retired police officers, firefighters and other employees getting city pensions. The change would save about $16 million in the 2013 fiscal year, the mayor said; cost-of-living increases would be reinstated once the retirement system is 70 percent financed, which could take well over a decade. The change would also apply to current city workers once they retire.

In an interview at City Hall last week, Mr. Taveras, a first-term Democrat, said he “absolutely” expected a lawsuit to delay the freeze on cost-of-living increases for pensioners. But he said he saw no alternative for the city of 178,000 short of receivership, which would allow for a bankruptcy filing.

“It could drag out,” the mayor said of the expected legal battle. “But if we can’t reform our pensions, I don’t see how we can move this city forward. You could raise taxes, but I don’t think you can raise taxes enough to cover the cost of this.”

This case might make it to the Supreme Court on the theory that the city, as an extension of the state is violating the 10th amendment of the constitution:

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

I quoted the entire amendment, bu the key passage is "Law impairing the Obligation of Contracts." There are a number of counter-arguments, but I expect this to hit the Supreme Court sooner or later.

Affordable Care Tax

After the Supreme Court ruled on the ACA, I opined as to how the decision wasn't as horrible as we might have feared and a little about why it might have gone that way. However, I believe I might have been misunderstood, the decision contravenes reasonable constitutional principles. The Congress explicitly stated that the penalties in the ACA are not a tax; the Congress should have been hoist on its own petard and the entire law declared unconstitutional because they also refused to include a severability clause. The Democratic congress that passed this law dared the Supreme Court to rule in a consistent manner and the Chief Justice blinked. Despite the silver linings, this is no victory for the constitution.

CA-52 - A Competitive California House Race?

My home got redistricted into House CA-52, which was a boon for me as I had previously resided in Susan Davis' district, which was heavily gerrymandered to ensure that no Republican would ever seriously challenge her. (She has never fallen below 60% in any election effort.) Now I live in one of the few competitive districts in California, featuring a race between Brian Bilbray (R) and Scott Peters. Peters, former city council member from La Jolla, edged out environmental activist and former assemblywoman, Lori Saldaña for second place in the "open" primary system.

Brian Bilbray has been my Congressman before, when I lived at a different address in San Diego, so its kind of strange seeing his name on the ballot again, after I had moved into a Democratic district. Honestly, he has never been my favorite Republican member of Congress; but to be fair, he has always been in districts with substantial numbers of Democrats.

Meanwhile, Scott Peters has taken flack for his terms as council member and as port commissioner. Dave Maass takes up the issue of how the campaign will play out in the most recent issue of San Diego City Beat. Based on interviews with both Peters and Bilbray he sees Bilbray attacking Peters for his part in the current pension mess in San Diego, with Peters claiming that he was on the council that started to fix it. Bilbray also stated that he would attack for Peters being self funded, pouring his own money into the campaign. I think that is a laughable non-issue, Peters has plenty of other baggage and certainly many Republicans have been self funded.

But Maass makes the good point that it is going to be difficult for Peters to distance himself from pension issues. Saldaña attacked along these lines as well, so the meme is out there, as my kids like to say. Peters believes he can set the record straight, but in an interview with the La Jolla Light, Peters labels "The reconfiguration of “The Throat” (the once precarious and highly congested intersection of Torrey Pines Road and La Jolla Parkway)," as his most significant achievement while in office. Hardly resetting the narrative.

The OBRag holds out Scott Peters as a solid Democrat, with "solid Democratic values." Which is really my problem with him, becausem as defined by the left, solid Democrat means unwilling to tackle the nation's fiscal crisis with anything more than doubling down on current policy.

• Unapologetic about supporting the ACA, which represents a doubling down on a regulated utility approach to health care insurance that so far has just increased costs.
• Unwilling to discuss alternative approaches to Medicare's delivery model. Tinkering with prescription costs isn't going to solve the problem of unfunded entitlements in the system. Paying for "outcome based" health care isn't going to deliver cost reduction either. Further, no Democrat has really proposed a serious reform along these lines.
  
• Saying that social security isn't in that bad of shape.

Ultimately, we aren't going to repeal the ACA and start over on serious health care reform with Democrats in control of the House. This is the main reason I oppose Scott Peters. But could the Democrats please get serious about the looming financial crisis. Medicaid expansion is unlikely to move forward as planned given the Supreme Court ruling, but look at the rest of these liabilities and ask why they isn't serious discussion on the left about what to do.

Scott Peters dismisses Paul Ryan, but he and his fellow Democrats aren't offering any serious alternatives to the entitlement problem. See also KT Cat's blog.