Fiscal Toboggan Ride Assured

The news from tonight's WSJ web site is that a deal has been struck to avoid the "fiscal cliff."  As previously predicted, it changes little in the grand scheme of things, other than my debt clock at right will continue to move in the upwards direction for a decade or more.  Here is the analysis of the results.

The deal doesn't do much to control the U.S.'s long-term budget woes, which are driven largely by entitlement spending, especially on health care, which were left untouched in this agreement. And depending on the budget math and the ultimate fate of the spending cuts, it may not do much for the short-run deficit either. 

By waiting until the last minute, and reaching a deal on a much smaller scale than either side once envisioned, Washington also deferred many of its thorniest questions for perhaps as little as a few weeks. In late February of early March, the Treasury Department will run out of extraordinary measures to deal with the government's borrowing limit—which it reached on Monday—and Congress would need to approve an increase.

Welcome to government by crisis, lurching from one deadline to the next with no plan to solve the long term issues and not even a budget against which to measure progress.  By ensuring a series of legislative crises, the Congress and the President are guaranteeing that a real crisis will develop.  With public and private debt levels high and inflation heating up, there are no reserves to deal with fresh economic pressures.  I went grocery shopping for New Year's supplies, buying things I haven't bought in a while, and I was shocked at how much prices have risen on some items.  I don't care what the official numbers say, my experience is telling me that they are understating inflation right now.

Next crisis, the debt ceiling increase.

Unspoken in the Debate About Gun Controls

The President has promised to put his "full weight" to pass gun control legislation which proposals will likely include the usual suspects of an "assault weapons" ban, whatever that is, background checks, and assorted other restrictions.  The debate over guns will involve the left waiving the bloody shirt of the Newtown shootings while proposing legislation that will do little to prevent future occurrences.  I say that because, from what I can gather, the perpetrator had no criminal record, did not own the guns he used and of course violated a number of other "gun controls" including bringing a gun onto school property.  Beyond confiscation of all firearms, how will new laws prevent a similar attack?

Here is what the left will be thinking, but will not say openly; there is no legitimate reason to own guns.  Dana Sherne published an article on Policymic that almost says as much. They won't say so openly, because they know it evokes massive reaction that impedes their goal of banning firearms.  But they believe that only the government should have such weapons, make no mistake.  Why this is so has to do with the left's self identification with victimhood.  Gun owners tend not to be victims and in fact because gun owners are viewed as strong and competent, they are loathed on the left. 

But those on the right won't speak the full truth either.  There are a number of very impolitic reasons to own guns that don't get uttered publicly, only self defense and hunting are discussed.  However, I am considering buying guns for reasons of insurance.  First, there is the "zombie apocalypse" scenario; more accurately, the total break down of law and order, that is always possible due to some catastrophe.  Who doesn't believe that you will need a gun under those circumstances?  Nobody wants to say that guns are insurance, because it makes you sound like a crazy survivalist.  But insurance is about being prepared, and frankly guns need to be part of your thinking in case the world goes to hell.

The other aspect of insurance is even more unspeakable in polite company.  Ours is a government made of flawed human beings.  It is highly unlikely, but still possible, that it could deteriorate into a dictatorship.  Guns would be necessary to protect oneself from such a tyranny or to even actively fight back.  No one cares to utter these fears in open debate, but they are valid considerations.

So we will get some kind of ineffective legislation that slightly erodes our rights and sets dangerous precedents for further erosions, as the President refuses to let the crisis of the Newtown shootings go to waste.  But the measures will be ineffectual and in a few years we will have another mass killing at a school.  But that's what we expect when the President puts his "full weight" behind a bill.  Kind of like the affordable care act, we will get a contradictory and ultimately ineffective outcome that attacks our basic freedoms.

The Fiscal Cliff is Your Fault

. . . and mine as well.  Why? Because we have not made up our minds about the overall direction of government.  We have elected a divided government.  The President won re-election with a small majority, not a mandate, even though the radical change he desires would require a mandate.  In the meantime, the House continues under Republican control, with a healthy majority.  We the people have spoken, and said, we're not sure what we want.

Further, the political coalitions that form the basis of the two parties obscure the real desires of the electorate.  For example, the Republican party gets outsized support from agricultural communities that are very socially conservative.  However, they are also huge net recipients of government aid in the form of crop insurance or price supports.  So farm state Republicans have an incentive to trade pork for farmers rather than reducing spending.  On the Democratic side, Hispanics and Blacks voted decisively against gay marriage in California in 2008; even while they elected Democrats who have worked to undermine Proposition 8.  Silicon valley entrepreneurs gave heavily to Obama in 2008, despite the predictable result that stifling regulation would stunt new business development in this country.

It will take a crisis to cause the nation to coalesce around a path forward.  In the meantime, the problem gets worse.  The debt clock on the right side of my blog is not going to go backwards any time soon.  If it reverses at any time this decade, I will be shocked.

The result of the fiscal cliff talks are fairly predictable as a result.  There will be tax rate hikes, because Obama is ideologically wedded to the idea and he has an advantage in the negotiations.  But the hikes, whether on $250,000+ or $400,000+, will not produce the revenue predicted.  Even if the predicted revenue did materialize; it wouldn't make much difference in the long term deficit.  The official estimate is that the rise would produce $950 billion in revenue over ten years.  Sounds like a lot, but when put on an annual basis, it doesn't even cover one month's worth of deficit spending.

Meanwhile, whatever spending cuts are proposed will be back loaded; which means they will never be put into effect.  The only sensible outcome appears to be that the useless payroll tax cut will expire.  Useless, because the cut was always known to be temporary, and therefor blew a hole in the social security accounting without actually adding any jobs; it's purported purpose.  Businesses aren't going to hire because of a temporary reduction in labor costs, and they didn't.

Regardless of the exact outcome of a deal, or a temporary measure that gives more time to negotiate, we can expect no meaningful progress on debt reduction.  With debts mounting throughout the Western world, there are no reserves to handle the next crisis.

Programming note: I intend to post regularly again.  If you have been visiting, looking for new posts, I am sorry to have had none.  My personal circumstances left me with little time and energy for blogging, but I feel refreshed from some time off over Christmas and ready to hit it again.

Weekend Music Chill

Last week I posted covers of these two 90s hits.  Seems a shame not to post the originals.

Nirvana - Smells Like Teen Spirit



Soundgarden - Black Hole Sun

Weekend Music Chill

I am going with two covers by the same artist, this weekend.  Here is Paul Anka covering Soundgarden and Nirvana.

Black Hole Sun



Smells Like Teen Spirit



I hope you enjoy these jazz renditions as much as I have. I have been playing them off and on for the last two weeks.

San Diego Economy and My Son's Union Job

After about a year of looking for work, my youngest son (M) got two job offers within a matter of a week.  The first was with a fast food outlet and the second with a grocery chain.  Signs that the local economy is picking up?  I hope so.  The alternate explanation is that hiring by local stores, ramping up for Christmas, left other openings in the economy.

My son shares my political philosophies, but he didn't hesitate to take the union grocery job as the better offer of the two.  It didn't help that the fast food outlet seemed to have challenges with its hiring process, a week after their offer, he still didn't have a start date.  I am leaving store names off this story to respect his privacy.

Meanwhile, the grocery chain made it clear that the sooner he joined the union the better it would be, so it was off to Mission Valley.  They asked him to donate to their political fund, which he declined; but it was good to see that no undue pressure was placed on him.

When he came home, I told him that now that he had joined the union, I expected him to go on strike if it came down to it.  By joining, he had made a promise and keeping one's word is more important than our personal political beliefs.  I have lived through the 2003-2004 grocery strike in this city and think the union made a terrible decision; but that is irrelevant to M's personal circumstances.  The 2003-2004 strike went on far too long, and I believe the union suffered long term damage.

If the union could provide more reliable and more productive workers, they would be doing employers a service that justifies higher wages over the non-union competition.  But no one argues this is the case, do they?

I am hoping that the local economy is turning around; people have suffered long enough over the last four years.

Weekend Music Cill

This weekend we are doing a covers edition.  Mrs. Daddy asked to hear Last Kiss by J. Frank Wilson the other night and it reminded me that this song has one of the greatest covers of all time; far exceeding the original in my opinion.

First, the original.  

Here is Eddie Vedder and Pearl Jam putting his unique vocal style and touch on this tune.

Hotels, Politics and San Diego

Looking for local news to blog about, I notice the extent to which news regarding rich hoteliers looms large locally.  Perhaps because tourism is so important to the local economy, we see so many stories.

1. Evans Hotels was recently granted an extension to the lease of the Bahia Resort land on Mission Bay for another 21 years under circumstances that call into question the real motives of the council. Andrew Keatts at VOSD has the story.  The $75,000 annual payment doesn't seem like much for such a choice location, but I am no expert. I really distrust any "public-private" venture.  Rich business interests can easily use influence and donations to get good deals that wouldn't be available in a free market where another private party owned the land.  I would like to see the city sell the land at auction and use the money to make up pension shortfalls. 

2. Dave Maass seems to have taken a particular dislike to Doug Manchester, local financier famous for developing the Manchester Hyatt downtown, ever since Manchester purchased the U-T.  Most recently Maass reported that Manchester's company's admitted to violating FCC regulation on cell phone boosters.  I have responsibility for cell phone contracts where I work, so I can understand Manchester's frustrations with coverage.  But we successfully worked with a vendor to fix the problem, we never considered taking matters into our own hands, even though we had access to technology to do so.  But Maass seems really intent on making Manchester look bad, so I wonder where that animus comes from.

3. I previously posted about Filner's illegal attempt to repurpose hotel tax revenue for "public safety."  The tax was approved by the city council prior to Filner's inauguration, another 39 years, to be specific.  It is highly unlikely that the new mayor could make such a change now, according to the VOSD, because of the restrictions on fees that can be passed without a public vote. 

Why do hotels attract attention, political and otherwise in San Diego?  I guess, because that's where the money is.

Thinking About 2014 Elections in San Diego

Two local elections to watch in 2014.

Let's see how Scott Peters does without a national Democrat trend at his back in the CA-52.  I predict that multiple Republicans will find the prospect of challenging Peters to be enticing and will jump into the race.  Peters won by slightly more than 2% of the vote, and there shouldn't be any more redistricting in the interim.  I predict another close race.  Fans of limited government should be looking for a fierce candidate who will take up consistent fiscally conservative positons to challenge Peters.  In other words, someone unlike Bilbray.  It is possible he might run again; his comments that he lost due to the tide, which may contain some truth, make me wonder if he will run again.

City Council District changes:

Council Districts in 2010

Council District in 2012

Source: San Diego City Map Gallery.

The other interesting development is that Lorie Zapf now lives in Council District 2, where Kevin Faulconer is term limited out in 2014.  I have read that she expects to run for that seat in 2014 and will not move from her current home in Bay Ho.  Whether the new district will be more or less Republican remains to be seen.  However, Kevin Faulconer did win handily in the June 2010 primary with 61.5% of the vote.  The new district loses Downtown and picks up Bay Park, where I reside, and Bay Ho, where Zapf resides.  I would expect Zapf to have an advantage.

I need to pay more attention to the city council and local issues, because I don't trust the new mayor to implement Prop B to save the city money.  Further, we often have a better chance to have an influence in local elections.

Fiscal Cliff? Not Really - But Republicans are on the Defensive

I watched Brit Hume on O'Reilly tonight and had to agree with his simple analysis of the so called fiscal cliff situation.  Obama is showing his native arrogance because he correctly assesses that he has the advantage in these negotiations.  Two bad things will happen that Republicans don't like, tax rates will increase and defense spending will be cut.  Only one thing will happen that Democrats don't like, Medicare will be cut, and Republicans will take the blame for it.  Further, the public is set to blame Republicans right now, because they can't get their act together on messaging.  Hume blames the MSM, but I think its time to quit doing that.  The MSM is an arm of the left, just get used to it; point it out occasionally, but deal with it.

What's to be done?  Boehner truly has a weak hand, he has to keep his members in line, and they are always worried about the next election.  My strategy would be to stall.  Keep passing short little extensions of the status quo and kicking the can down the road a bit.  Use the time to get the messaging better and trumpet what you are willing to do.  For example, phasing out deductions for the rich will raise revenue in a static analysis.  It eventually needs to be done in order to keep marginal rates low anyway.  So the Republicans need to tout how they are reformers of the status quo and are also putting revenu on the table.  If only, if only, the President would do something about spending.  Just give us a little more time to persuade him.

The fiscal cliff's worst impact will be to the economy over marginal tax rates.  I have looked at the military cuts, and they are mostly back loaded.  Some will immediately take effect and there will be a great hullabaloo, but I don't take them seriously, especially in the long term.  The regulatory cliff will probably be far worse for the economy.  Obama will unleash the EPA and the Labor department on American businesses soon.  With Europe tipping into recession, this will be a bad time for the economy.

Republicans need to avoid blame for this by being very careful about how they handle the fallout over the negotiations.  Obama clearly wants the negotiations to fail, to force the GOP's hand.  Stalling would seem to be the order of the day.

Glad to be back blogging again after a hiatus for a tough class.  I wrote a paper on cloud computing security that proved more difficult than expected.  I am no expert, but I think the opportunity exists for the government to safely use cloud computing.  However, I am concerned about how the government would implement security measures, and more importantly, monitor for security.  This is the direction the current administration intends to go, so it will be an interesting ride.