Why Republicans Are Content to Sequester

It's the only way they can get Obama and the Democrats to cut spending.  I just assumed that the Republicans had given away the farm on the first sequestration deal, because my concentration has been elsewhere.  (The good looking Chief pictured in this post died last Friday, he was not my Dad, but certainly a father-figure in my life.)  An article by Ralph Benko in Forbes alerted me to the reality of the tax deal.

I reviewed a summary of tax law changes at Yahoo Finance.  The bad news is that the top rate increases from 35% to 39.6%, but that is not even that bad of news.  It affects married filers with income over $450,000, and frankly they will find ways to avoid that tax.  That group's capital gains rate will increase to 23.8% (20% + 3.8% for mediscarce).  Meanwhile, 99% of the Bush tax cuts are made permanent.  The payroll tax was restored to its historic rate of 6.2%, from the useless and temporary cut to 4.2%.  This will slow the hemorrhaging in the Social Security account and ensure that lower income Americans are also paying taxes.   Best of all, the indexing for alternative minimum tax was made permanent and little was changed in the gift and estate tax rules. Benko wrote that Boehner scored a huge victory, because the tax deal deprives Obama and the Democrats of the revenue to fund their agenda.

Enter sequestration.  Since the Democrats have expended their ammo by cutting the tax deal and "taxing the rich," there is little revenue for them to offer for deficit reduction.  The administration deliberately prevented the Defense Department from planning for sequestration at the start of this fiscal year, thinking the Republicans would blink.  They have not.  The cuts imposed are going to be very painful in the short term, but that's only because Obama's lack of leadership are forcing a 10% across the board cut to be executed in the second half of the fiscal year, making it look like a 20% cut, for the time being.  But some of the problems with military spending have little to do with readiness.  Retiree health care costs now consume 10% of the military budget, $59 billion, up from $20 billion only a decade ago.  Military pay raises have outpaced inflation over the same period.  In the decade ending in 2009, military pay had grown 52%, while civilian wage inflation over the same period was 38%.  The other big headache is that the military operation are heavy users of petroleum based fuels.  Operations and maintenance is the biggest defense budget category and the high price of fuel contributes.  In my opinion, reducing training tempo, deferring maintenance and releasing soldiers and sailors is where they will find the big money to pay for the cuts.

So the Republicans believe that they can live with defense cuts, while other programs favored by the Democrats also get axed.  Defense spending was overdue for a pullback, the country does so after every wartime period.

Of course, none of this deals with the real fiscal threats, social security, mediscarce and medicaid.  Looking at the graph below, if you count interest on the national debt as a transfer payment, then transfer payments, mostly from the young to the old, consume 60% of the federal budget:

If we don't get those under control, squabbling over the other 40% won't really make much of a difference.

Betting on America

I have read a lot of woeful talk from conservatives and libertarians in the wake of Obama's victory, the fiscal cliff negotiations and the debt limit deal, GOP softness on amnesty and the leftist grab for guns.  I think optimism is more appropriate for two broad reasons. First, the might of American capitalism is likely to bail out Obama from his own folly.  Second, the United States retains all the key advantages in the global economy.  If time permits, I might also add that the changes we have seen aren't as drastic as the press would have us believe.

Ayn Rand was the first writer to alert me to the irony that capitalism is so powerful that it can sustain huge amounts of government interference before it ceases to be an engine of growth.  This is unfortunate, because it begets the leftist fantasy that there is no limit to the amount of plunder they can extract from the economy without killing it.  Of course, the redistributive ethic of this President couches the argument in the name of "fairness," but what is really fair about stealing the hard earned wealth of one group and giving it to another?  But we appear nowhere near such an end.  Huge finds of oil and natural gas in North America are making chemical manufacture and similar industries viable again.  The oil and gas boom is by itself an engine of economic growth.  Eventually, the oil from Canada's tar sands will find its way to market.  There is nothing Obama or Hillary Clinton can ultimately due to stop it.  This will benefit America either through trade with Canada or to the extent that the oil comes through our lands.  Manufacturing is also increasing in America as companies realize that separating engineering design teams from the factory doesn't always work.

America's natural advantages are also great.  First, we have a high birth rate compared to the nation's that we compete with on a global scale, although not on an absolute scale.  Germany will not sustain its high rates of growth when its birth rate is at 1.4, among the lowest in the world, for example.  Next, the competitive advantage that Asian nations have in wage rates is eroding rapidly.  Coupled with transportation costs, the cost differential of producing products in China is diminishing.  Manufacturing wages in America have been stagnant for almost a decade while Chinese wage manufacturing wage inflation has been close to 15% for the same period.  Additionally, the advantage of cheaper labor is eroded as less labor is used in each unit produced.

Finally, in spite of increased regulation and a capriciousness, Obama has not killed freedom nor the rule of law in this country.  It remains the best place on earth to live, which is why it attracts the best people from around the globe.  We desperately need to reform our immigration policy to allow more educated and skilled immigrants to come here.  I don't think that will happen until we deal with the illegal immigrant situation.  That's why I am hopeful for a deal that gets the border really secured and doesn't grant citizenship to illegals (there has to be some price for their illegal entry).

Weekend Music Chill

Light posting lately due to difficult personal circumstances not appropriate for the blog.  I wanted to do a covers edition, as I really like this classic 60s hit.  First we have the Mamas and the Papas doing California Dreamin'




I wanted to post Jann Arden's cover, but I can't find video for it. If you have a Rhapsody subscription, you can find it here. As a substitute, here are the Beach Boys doing a very credible job with the same song.

County Pension System Risks vs 401

The U-T has a great article on changes in the portfolio mix of the San Diego County employee pension fund.  In 2009, the county fired the fund manager after losses totaling $2 billion in 2008.  Assuming that the fund had about $9 billion at the time, that is a loss of 22%, compared withan an S&P loss of 37% for the same year.  Taken in context that doesn't seem that bad.  The new fund managers have shifted the mix to include emerging market debt (Russia, Brazil and Mexico) as well as in hedge funds.  I find the 2 basis point (2%) management fee in the new contract to be too high.  Fees are a drag on performance, and frankly, the county should be shooting for something closer to 1%.   Correction: A commenter on sdrostra pointed out that two basis points is .02%, not 2%. I should have checked the math. The fees compare favorably with the Federal Government's Thrift Savings Plan.   I wouldn't mind hearing from any professional financial planners on this subject.  I am not qualified to say whether the investment strategy is good or not, I just know that above average returns generally do not prevail.

Which brings me to my main arguments for 401 style pensions. Inevitably, these fund managers are going to have a bad year, no matter how well they are doing now, and taxpayers will foot the bill.  The entire system is rigged so that the taxpayer shoulders all the risk, but the fund manager and employee beneficiaries are guaranteed their pay days.  Further, as we have seen with CalPERS pensions, which invested $500 million in green energy in 2010, investments can be influenced by political considerations, again to the detriment of the taxpayers, who are on the hook for losses.

However, under a 401style plan, employees shoulder the risk, but they can adjust their individual pension risk to their personal situation, shifting more to bonds as they approach retirement, for example.  Further, they can protect themselves by managing their own investments and avoiding high fee management firms.  This way taxpayers are protected and employees can be as well.  The counter-argument is that individual employees may not invest wisely, but I think that is changing as financial literacy is more common in the general population.  Should taxpayers take all the risk just because some employees will be foolish?  Further, the union could do an actual service to the employees by providing them with sources of financial advice.

Vocabulary clarification, I use the term 401 style, because government employee defined contribution plans are considered 401(a) plans, not 401(k) which are private sector plans.

News Round Up

Republicans appear to be bowing to the inevitable and are moving towards a debt limit increase.  But at least it appears they will be requiring that the Senate pass a budget as part of the deal.  This is as much as could be hoped for, I guess.  I have posted about this twice and am feeling a little prescient.

The Algerian hostage deaths, horrific as they seem, could have been much worse; and the jihadists did little to advance their cause and are dead.  Almost 800 hostages were freed prior to the final bloodbath.

Relatedly, the WSJ has a great article by Max Boot on myths we believe about guerillas and terrorists.  A few tidbits:
1. Most guerilla movements end in failure.
2. Few movements are successful by using terrorism abroad.
The whole thing is worth a read as all the world's armed conflict has entered an era of guerilla warfare.

I missed "Gun Appreciation Day" today.  Of course, the media focused on the five injuries that occurred at gun shows today, even though none were life threatening. Relatedly, former NY Police Chief, Willie Bratton, no friend of gun rights, is quoted in the WSJ about preventing gun violence:

But the gun reform that truly gets Mr. Bratton fired up is one you don't hear much about these days. It is what he calls "certainty of punishment," or stricter gun-crime sentences. 

"People are out on the streets who should be in jail. Jail is appropriate for anyone who uses a gun in the commission of an act of violence. Some cities have a deplorable lack of attention to this issue," he says, citing Philadelphia.

Indeed, I don't have the statistics, but am willing to bet that most gun violence is committed by persons with a prior criminal record.  However, it turns out that 60% of criminals were legally permitted to own a gun at the time they committed their crime (see page 4 of the link).  This is because many felonies get plea-bargained to misdemeanors, allowing violent criminals to retain their rights.  We need a policy on such plea deals and certain jail time for crimes committed with guns.  Meanwhile, the NRA's membership is soaring.

Update on GOP Debt Limit Strategy

I put a short post on Wednesday that the Republicans ought to get a little something out of the debt limit rise.  Keith Hennessey has an Op-Ed at the WSJ that lays out an even better strategy.  The whole thing is worth a read, but the gist of goes like this:

1. Obama can have a choice of real spending cuts and he gets a long term debt limit rise.  Alternatively, he can have a three month debt limit increase, if he doesn't want to get serious.
2. Republicans would only guarantee enough votes to allow the measure to pass, making Democrats responsible for raising the ceiling.  To date, House Democrats have been shielded from this bit of unpleasantness.

Keeping the focus on the debt every three months will suck the air out of any other Obama agenda item.  So will meaningful spending reductions.  Both options are great.  I doubt the GOP will be that smart.

Weekend Music Chill

My sources for new music come from all over. Fellow blogger Aaron at Magic Blue Smoke tweeted a link to music by Parov Stelar an electro-swing artist.  Liking it and especially the music videos, with cuts from the kinds of movie musicals my Mom loves.

Booty Swing



Chambermaid Swing

Filner's Start in Office

. . . is not that great.  I was happy he is stopping medical marijuana outlet harassment by the city, but is that really a burning issue?  Beyond that Filner's start in office has not made me optimistic.

1. He cancelled new managed competition actions, claiming that more study is needed and that service levels have suffered.  The Miramar landfill competition and street sweeping services were won by city workers, but at lower cost to the city; why is Filner complaining?  There is no evidence of correlation between over paying for a service and better levels of service. Kudos to Kevin Faulconer for seeking to push ahead anyway.
2. He "plans to reorganize land use and redevelopment functions under a new Department of Healthy, Safe and Livability Neighborhoods."  Stand by for any new construction to become more difficult.  Just what a struggling economy needs. 
3. He has called for scaling back a state water project that will bring badly needed water to Southern California.  My water bill is very high already, despite cutting back, why doesn't the mayor care about that?
4. I haven't seen any proposals on how to keep spending under control or what his plan is for dealing with a projected deficit.

I am skeptical of his promise in his state of the city address to freeze pensionable pay for city workers.  It would be great if he did, but I am willing to bet that doesn't happen.  Any takers?

On a side note, his comments that the Chargers weren't leaving were welcome, but why is that the headline in the U-T?  Didn't the mayor talk about more important items.  

GOP Strategy on the Debt Ceiling

Based on past experience and Obama's better political position, it is clear that the Republicans are ultimately going to pass some debt ceiling rise.  Since this is foregone, they should get something out of it.  Going for something small but symbolic, like gutting a death panel, or some cost saving measure as part of the package where Obama would be hard pressed to explain a veto seems best.  Maybe something arcane, like directing a change to the way that CPI is calculated, but which will help reduce the growth of entitlements.

Second, they should pass the law at the last possible minute, to give the Senate and Obama little chance to deal with the result.  By making small progress, they can claim some victory while forcing Obama's hand and preventing a public relations disaster.

Obama's posturing about the debt ceiling is a hint that he knows he is in a weak position with respect to the timing that GOP House could use.

However, given their track record, I expect bellicose threats and promises by the Republicans followed by a humiliating collapse with little accomplished.  Somebody needs to remind me why I registered Republican in 2008.

Some Useful Statistics in the Gun Control Debate

From the FBI's Uniform Crimes Reporting Database (click to enlarge):  (H/T Magic Blue Smoke)

1 Populations are U.S. Census Bureau provisional estimates as of July 1 for each year except 2000 and 2010, which are decennial census counts.
2 The murder and nonnegligent homicides that occurred as a result of the events of September 11, 2001, are not included in this table.
3 The crime figures have been adjusted.

Emotionalism is the friend of politicians pushing an agenda.  If you view the entire table, no category of crime is increasing, including murder.  What national crisis needs to be solved with bold new action?  Aren't we solving it already, with slow steady progress?  The murder rate dropped from 9.3 per 100,000 to 4.7 per 100,000 during this period.

More on Demography

I posted last week about trends in world depopulation, and how America needs immigrants as a result.  In a review of a book by Jonathan V. Last, Heather Wilhelm argues that even having a high immigration rate won't necessarily hold off the impacts of low birth rates forever, because it is a global trend.  Further, because the causes of low birth rates (i.e. below replacement levels)  are cultural, and immigrant women assimilate the culture, their birth rates drop as well.  Near the end of the review, she gives us this food for thought:

The best arguments for having children, unfortunately, run opposed to modern, secular American culture. Good reasons to have kids tend to be about delayed gratification, prioritizing family, putting others first, transmitting serious values and beliefs, focusing on something larger than yourself, and understanding the difference between joy and fun. Perhaps this is why, as Last notes, "American pets now outnumber American children by more than four to one." It's also why, if American fertility continues to slide -- and, as the author notes, that's still an "if" at this point -- there's little the government can do.

Indeed there is not.  Just one more area where culture has its consequences.  The falling birth rate is going to wreck the welfare state, and world wide, not just in America.  We are already getting a taste of it now, as the demographic bulge of baby boomers starts to enter retirement and medicare costs continue to ramp skyward.  Immigration could hold off the trend for a while, but eventually birth rates must return to sustainment levels for modern humanity to survive.

Brown Planning Pay Raises for State Workers

At least that's my take on these comments, as quoted in the U-T article headlined "NOT ALL PROP. 30 TAX HIKE MONEY GOING TO SCHOOLS."

Brown’s proposed $97.7 billion general fund budget assumes no state employee raises beyond those already required in union contracts. But contracts for all but two of the state’s 21 bargaining units are set to expire by July 2, and the Legislature now has a supermajority of labor-friendly Democrats.
At a news conference, Brown said he didn’t budget raises for fear that it could set an expectation for any specified amount.
“Collective bargaining means you got to meet in good faith, listen to the other side, and you go back and forth,” he said. “We have to enter those negotiations with an open mind, though we have to live within our means. So, I don’t want to put too many of my cards on the table.”

The Governor is signaling that he is ready to grant pay raises by these comments.  How could anyone with a shred of common sense think otherwise?  His comments about a specific amount remind me of an old and bad joke about an older profession than politician.  The only question we are debating now is how much; how much will the governor pay back the unions for their support of him.

Meanwhile all those commercials about strict accountability to ensure that Prop 30 cash went to the schools are swept into the dustbin  like so much election day confetti.

Towards the end of the article Brown equates government spending with investing and argues that government is how a free people act together.  He claims that he will spend the increased tax revenue wisely.  Unfortunately, the budgeting process in this state is largely illegitimate.  Big chunks go to education, but the state continues to rank low in educational attainment.  Further, huge amounts of education spending never makes it to the classroom, only 61% in fact.  Higher education spending has the effect of perpetuating a left wing ideology and to stifle dissent.  How is that legitimate?

The state has made the cities and counties its vassals, providing insufficient funding for required programs, loading another $5.3 billion on them, another source of illegitimacy.  Health and Human Services is the second highest category, behind K-12, yet California never participated in the welfare reform that the rest of the nation underwent in the Clinton years.  How is unreformed welfare spending legitimate?

Here is the actual budget summary, note all the hikes in spending:

Strange Bedfellows Say ACA and Defense Spending Incompatible

David Brooks and Mark Steyn aren't normally fellows that reach similar conclusions, but they have within days of each other, opined that the U.S. can afford entitlement spending, especially on healthcare, or current military spending, but not both.  Both commentaries are prompted by considering what the nomination of Chuck Hagel for Defense Secretary might mean.  Here is Brooks:

Medicare spending is set to nearly double over the next decade. This is the crucial element driving all federal spending over the next few decades and pushing federal debt to about 250 percent of GDP in 30 years.. . .As the federal government becomes a health care state, there will have to be a generation of defense cuts that overwhelm anything in recent history. Keep in mind how brutal the budget pressure is going to be. According to the Government Accountability Office, if we act on entitlements today, we will still have to cut federal spending by 32 percent and raise taxes by 46 percent over the next 75 years to meet current obligations.. . .Chuck Hagel has been nominated to supervise the beginning of this generation-long process of defense cutbacks. If a Democratic president is going to slash defense, he probably wants a Republican at the Pentagon to give him political cover, and he probably wants a decorated war hero to boot.

Mark Steyn is more entertaining, but reaches the same conclusions:

That’s why Obama’s offered him the gig. Because Obamacare at home leads inevitably to Obamacuts abroad. In that sense, America will be doing no more than following the same glum trajectory of every other great power in the postwar era.. . .You can have Euro-sized entitlements or a global military, but not both. What’s easier to do if you’re a democratic government that’s made promises it can’t afford — cut back on nanny-state lollipops, or shrug off thankless military commitments for which the electorate has minimal appetite?

Mark Steyn also agrees that Defense spending needs to be cut on the theory that it is not very effective at winning wars, despite the lopsided advantage in technology and material that America has.  I agree, actually, but as usual, the Administration is acting childish, proposing across the board cuts, so that all programs will limp along, spending money, but not delivering anything, because they have all been cut.  We need more big cuts to failed programs in Defense in order to save money for research and for programs actually working.  For example, in 2011, the Joint Tactical Radio System was cancelled, because defense planners bet against the market about the need for a software radio that could do everything.  See an excellent analysis at Ars Technica.

Ultimately, America is going to have to decide if it wants fewer soldiers and sailors, because the big bill comes from the cost of labor.  Defense isn't immune to the same analysis that face many other businesses.  Fewer soldiers mean we can't put boots on the ground again like we did in Iraq.  That may or may not be a good thing, depending on your point of view.  But we are going to have to live with toppling dictators, if we choose, but not controlling the outcome, like in Libya.  Rather than shaping the post-war landscape, like in Iraq.  Given the expense of the latter, one might argue that boots on the ground are a luxury we can no longer afford.  However, adversaries are going to notice, and it will change the calculus of world politics.  If you think America is the source of all that's wrong in the world, you might like that.  I think it will make the world more dangerous; but I also think we never thought hard enough about what force composition and programs were necessary for our national security strategy and ended up wasting a lot of money as a consequence.

The IRS Issues Even More Health Insurance Rules

CNS News is reporting on the IRS' efforts to ensure that employers don't avoid compliance with ACA requirements.  The IRS is issuing regulatory rulemaking to make everything clear, in a tersely worded 144 page notice.  Here is a little excerpt

   Section 4980H generally provides that an applicable large employer is subject to an assessable payment if either (1) the employer fails to offer to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage (MEC) under an eligible employer-sponsored plan and any full-time employee is certified to the employer as having received an applicable premium tax credit or cost-sharing reduction (section 4980H(a) liability), or (2) the employer offers its full-time employees (and their dependents) the opportunity to enroll in MEC under an eligible employer-sponsored plan and one or more full-time employees is certified to the employer as having received an applicable premium tax credit or cost-sharing reduction (section 4980H(b) liability).
Generally, section 4980H(b) liability may arise because, with respect to a full-time employee who has been certified to the employer as having received an applicable premium tax credit or cost-sharing reduction, the employer’s coverage is unaffordable within the meaning of section 36B(c)(2)(C)(i) or does not provide minimum value within the meaning of section 36B(c)(2)(C)(ii).  As noted, an employer may be liable for an assessable payment under section 4980H(a) or (b) only if one or more full-time employees are certified to the employer as having received an applicable premium tax credit or cost-sharing reduction.
  The assessable payment under section 4980H(a) is based on all (excluding the first 30) full-time employees, while the assessable payment under section 4980H(b) is based on the number of full-time employees who are certified to the employer as having received an applicable premium tax credit or cost-sharing reduction with respect to that employee’s purchase of health insurance for himself or herself on an Exchange. In contrast, an employee’s receipt of a premium tax credit or cost sharing reduction with respect to coverage for a dependent will not result in liability for the employer under section 4980H. Under section 4980H(b), liability is contingent on whether the employer offers minimum essential coverage under an eligible employer-sponsored plan, and whether that coverage is affordable and provides minimum value, as determined by reference to the cost and characteristics of employee-only coverage offered to the employee. Section 4980H(c)(4) provides that a full-time employee with respect to any month is an employee who is employed on average at least 30 hours of service per week. An applicable large employer with respect to a calendar year is defined in section 4980H(c)(2) as an employer that employed an average of at least 50 full-time employees on business days during the preceding calendar year. For purposes of determining whether an employer is an applicable large employer, full-time equivalent employees (FTEs), which are statutorily determined based on the hours of service of employees who are not full-time employees, are taken into account.

It goes on like this for another 100 or more mind numbing pages.  The law will predictably do nothing to improve health care in this country, because it is too complex for anyone to understand or comply with.  If I were running a business, I would just say forget it, drop all coverage, pay my fine and raise my prices to make up for the lost profit.

Predictably, fewer Americans will have health insurance after this law goes into full effect.

Weekend Music Chill

Heard some interesting, newish music from Fleet Foxes.  Their sound reminds of 60s folk music at times.

Helplessness Blues



Mykonos

Odds and Ends

The administration's proposals on guns fills many Americans with fear and loathing.  Especially odious is the idea that the President will restrict our rights unilaterally through executive orders.  I look forward to seeing him getting smacked down in the courts.  Further, his efforts will damage the rest of his political agenda. Good. I view his entire agenda with equal distaste.  He doesn't have the best interests of the country at heart; rather he sees his Presidency as a quest for social justice.  His pre-2008 comments that he was in favor of higher capital gains tax rates was enough proof for me; he said that he didn't care if the higher rates raised less revenue, he wanted them higher in the name of fairness.  This sent the clear signal that his agenda is based on animosity towards particular groups.

 The Under Secretary of Defense issued a memo today, authorizing the military departments to take actions to deal with the threat of sequestration, including freezing new hires; canceling certain types of new contracts and furloughing civilian employees for up to 22 days.  (Can't find a link.)  Typically, the mainstream media has mostly ignored the issue and there has been some inaccuracies in the reporting of the issue.  The Washington Post reporting that the Pentagon will take immediate action.  In fact, according to the memo, the military services are directed to consider those actions.  Whether they do so has not been determined.  Whenever, I see press reports about matters of which I have knowledge, I am always amazed at the inaccuracies I find.  Makes me wonder about the rest of the news I read.

Meanwhile, the issue of the national debt continues to be ignored.  See clock at right.  And since we can't deal with that issue, everything else pales by comparison.

Locally, Bob Filner has said that he wants to stop city legal action against local pot dispensaries.  He has said that the City Attorney should end such prosecutions.  San Diego City Beat reporter Dave Maass tweeted  

Filner says Goldsmith doesn't realize he's the lawyer and the city is the client.
— Dave Maass (@DaveMaass) January 9, 2013

While I agree with the idea that medical marijuana should be dispensed according to state law, I don't think the mayor has the right to remove prosecutorial discretion from the city attorney.  Is this what we want out of city government, the politicization of prosecutions?  Filner's proposal to change the city's laws regarding medical marijuana dispensaries seems a more sensible approach than bullying the City Attorney.

I owe a post on an issue involving the AT&T cell tower in Point Loma and an update on the Bay View Plaza in Bay Park. So far, no news on the latter and not much news on the former.

Demography and Destiny

Slate reports some facts that I knew were coming for some time.  They have not not received widespread attention.  In addition to passing through the 7 billion mark for world population last year,

It took humankind 13 years to add its 7 billionth. That’s longer than the 12 years it took to add the 6 billionth—the first time in human history that interval had grown. (The 2 billionth, 3 billionth, 4 billionth, and 5 billionth took 123, 33, 14, and 13 years, respectively.) In other words, the rate of global population growth has slowed. And it’s expected to keep slowing. Indeed, according to experts’ best estimates, the total population of Earth will stop growing within the lifespan of people alive today.

For those challenged by calculus, this means that we already have evidence of a slowing rate of growth, which eventually becomes no growth at all.

This means that all the doomsayers from Malthus to Paul Ehrlich will be proved wrong in the lifetime of my children.  I am sorry that my Uncle Paul, who first argued this issue with me when I was a youngster, isn't alive for me to say I told you so.

More importantly, it points to the need for the United States to solve its illegal immigration problem, so that we can get on with the business of encouraging legal immigration of skilled workers that we need.  From the same Slate article:

Instead of skyrocketing toward uncountable Malthusian multitudes, researchers at Austria’s International Institute for Applied Systems Analysis foresee the global population maxing out at 9 billion some time around 2070. On the bright side, the long-dreaded resource shortage may turn out not to be a problem at all. On the not-so-bright side, the demographic shift toward more retirees and fewer workers could throw the rest of the world into the kind of interminable economic stagnation that Japan is experiencing right now.

The United States has clear advantages in attracting new migrants that would overcome these difficulties.  We have freedom of expression, rule of law and relatively reasonable levels of taxation and regulation.  But all of these advantages are under assault by this administration.  Given future world trends, freedom turns out to be a competitive advantage for attracting human capital.

Meanwhile, the Republicans should cut a deal on immigration with Obama that ties liberalization of rules on current illegals to proof that the border is secure.  This would put the Democrats in a bind, because they don't really want the border secured.  The sort of unskilled migrants that are of low value to our economy are seen as future Democrats, in my opinion.  So the Democrats want more of them to reside in the country.  Sane immigration policy would be encouraging highly skilled immigrants to come here, say from India and China perhaps, and would keep out those likely to be unemployed and consuming social safety net benefits.

Wrong!

Pension Shortfall in Illinois - Implications for California

Sooner or later you run out of other people's money, Margaret Thatcher is quoted as saying about socialism.  In Illinois, the day is coming sooner than in other states.  The pension shortfall for state workers is at $95 billion and growing at $17 million per day.  The WSJ calculates that this works out to $7300 for every man woman and child in the state.  Governor Quinn called for an emergency panel that would come up with some recommendation that would become law unless the legislature vetoed it.  If that sounds un-democratic and un-republican, to you, you're not alone.  For once I agree with a labor leader on the issue:

Daniel Montgomery, president of the Illinois Federation of Teachers, said he and other public-sector union leaders were staunchly opposed to Mr. Quinn's last-minute plan. 

"They abdicate their responsibility. They're elected to solve the problems of the state. Now they're saying: Let's create a commission of people who don't even have to be elected, who aren't responsible to anyone, and who may not know anything about the issue—and whatever they say becomes law," Mr. Montgomery said.

Precisely.  But hey, the lame duck session that failed to produce any kind of solution had time to address that most pressing problem, driver's licenses for illegal immigrants.  That's right, can't deal with a pension crisis but you can deal with a subject better left to the incoming legislators.  Governor Quinn said he will be happy to sign it.

Meanwhile, California's population isn't growing like it used to, with far less growth in the 0 to 10 age range than before.  How is this related?  Demographic imbalance exacerbates pension problems, whether for state workers or social security recipients.  So I expect Californians having fewer children in school to eventually translate to fewer workers to support the same number of state employees.  Because the state isn't going to reduce its employee count in the face of declining population.

Declining migration and falling birthrates have led to a drop in the number of children in California just as baby boomers reach retirement, creating an economic and demographic challenge for the nation's most populous state. 

But what really scared me for the future of the state's economy was this bit:

With more than 90% of the state's children under age 10 born in the state, "the majority of the next generation of workers will have been shaped by California's health and education systems,"

Given California's infamous inability to educate our youth, we are in deep trouble.

ACA Taxes and Impacts Coming My Way and Yours

I already have been hit with fallout from the so called Affordable Care Act.  The maximum amount that you can set aside, tax free, for out of pocket medical expenses is being reduced from $5,000 to $2,500.  My medical coverage doesn't include dental and vision and has some other limitations, so this means that I will pay more my health care this year. Thank you, Democratic party. What crap, why should the cost of health care increase under this bill.

Some other gems are coming our way:

• Medicare withholding from wages goes up by 0.9 percent and there is a new 3.8 percent tax on investment income for those making more than $200,000.  Families making that much are hardly rich. 
• The threshold for deducting medical expenses will increase from 7.5 to 10 percent of income.
• Medical device manufacturers face a new tax.

Of course, in 2014, if you don't have a qualified plan, expect interaction with the IRA.

Good thing we've had a chance to read the bill, to find out what's in it.

Weekend Music Chill

This weekend's music is dedicated to the spirit of resistance to illegitimate authority. See previous post.  Here is Steve Earle with Copperhead Road, a repeat for me, but it fits my mood.



Here is Muse with Uprising:

Time to Buy Guns

. . . and lots of them.  The Washington Post is reporting that the administration wants to make it hard for you to get guns and will include requirements for a mental health check to purchase a gun.  In Joseph Heller's novel, Catch-22, a bombardier thinks to avoid further combat duty by claiming insanity due to combat stress.  But the fact that he fears the real dangers of combat proves his rationality, and he is therefor clearly not insane, according to "Catch-22."  Similarly, the mental health check provision of any proposed legislation will be the mirror image.

Gov't agent: Why do you want a gun?
Me: To defend myself and to maintain my rights.
Gov't agent: The government will do that for you, therefore you clearly aren't in good mental health,  you fail the mental health check and therefore you shouldn't be allowed to buy a gun.

I have never owned a gun in my life.  I never really felt the need. But if Obama wants to take away my right to buy guns, then clearly I need one.  How's that for Catch-22?

Many rural state Democrats aren't going to be down with such a broad assault on gun rights.  Our coalition can definitely defeat Obama on this.  It will feel good, because when he wins, his gloating is distasteful.

No Year's Resolutions

I stopped making New Year's resolutions a long time ago.  Most of what I want to accomplish in my life changes little from year to year, so I don't see the point.  For example, the purpose of this blog, from my first post in 2008 remains the same:

I started this blog to champion the principles upon which our nation was founded, as informed by my Christian belief. I intend to champion free markets, free trade, and freedom of speech, equal justice for all human beings and a constitutional republic with powers of the government strictly limited. I will propose paths forward for those who believe that expanding government is the chief threat to the freedom and wealth of the world today.

However, the new year is a decent time to reflect on how we have done and think about what we might do differently.  For example, there is some debate about rebranding the tea party movement, as the left has had some success in tarnishing our image.  If others in the movement wish to do so, I would be supportive.  My first attempt at an agenda that captured my belief that economic liberty issues should take center stage was called the Freedom Coalition Agenda, it is occasionally updated and is linked at the top of the page.  It was originally meant to be an agenda for libertarians inside the Republican party, but it certainly could be an agenda for Democrats and independents who dislike the direction the left is taking the country.

As for rebranding, distancing ourselves from the Republican party will allow us to retain independence and allow us to attract new followers.  If that means a new name, because the Tea Party has come to mean a subset of the GOP, then I am in favor.  Even though I am a Republican, I am not enthusiastic about the party, because too many elected officials are wedded to some aspect of big government.  As to a new name, Freedom Coalition seems too stilted; but something evocative of a coalition dedicated to liberty is needed.  Liberty Coalition?  I still don't like it.  Your suggestions are welcome.