Government Gangsterism in San Diego

The news of indictments involving associates of Mexican businessman Susumo Azano makes for entertaining reading.  There is a trail of illegal campaign donations to various mayoral candidates funneled through a straw-donor and a social media guru.  The U-T is all over the story, with the best overall description of the case published in Sunday's paper.  I also want to give credit to Dave Maass, formerly of San Diego City Beat, who first broke the story of questionable campaign contributions by Azano in 2012.  The alleged motive for illegally funneling campaign contributions was so that Azano could slow down water front projects and gain a controlling interest in them after they ran into political trouble. From the U-T:

The prosecutor’s statement for the first time specifies a larger motive behind the financing scheme — creating California’s version of Miami’s tropical playground. 

While federal authorities have not identified the donor, court documents contain enough detail to indicate it is José Susumo Azano Matsura, a wealthy Mexican citizen who supplies surveillance equipment to the Mexican military and owns construction companies based in the state of Jalisco. 

The prosecutor said a candidate — who sources have identified as former Mayor Bob Filner — told the businessman that he didn’t have jurisdiction over the bayfront, but he may be able to help by holding up development of the Navy Broadway Complex so the businessman could gain control of the lease.

Further, one of Azano's associates, Ernesto Encinas, allegedly wanted to ensure that the new mayor installed a police chief to his liking in return for the contributions.

The motive of Encinas, who retired from the department in 2009 and now owns security consulting businesses, apparently was to install a new chief more amenable to issues surrounding alcohol licenses and entertainment venues to help his businesses.

Now these guilty parties are innocent until proven otherwise.  But the U.S. District Attorney would not have presented the indictments if their theory of the crime was not credible, and that is the real crime.  The rule of law is degenerating both nationally and locally when the success of business ventures is dependent on the good will of elected and appointed officials.  It opens the door for further corruption when we lack clear standards and processes that allow projects to go forward.  I wrote earlier about Filner's penchant for interfering with already approved projects.  The U-T chronicled a long list of its own.  Does anyone doubt that Filner lacked the power to disrupt the bayfront project?

Now there is news that Filner was quietly trying to remove Police Chief Landsdowne. It is not proved or known whether this was in response to Encinas' request.  But why should it matter.  The police view on licensing shouldn't be based on personal opinion or personalities, but on objective criteria such as arrests in the area for drunk and disorderly, or number of noise complaints.  The fact that a credible theory of the crime includes the belief that officials can get with arbitrary rulings to benefit themselves or their cronies is evidence of that we are on a road to tyranny.  Hayek knew what he was talking about.

What You Should Be Reading

• Leslie Eastman reports on how the Tea Party is much more alive and well than you think, with a great round up.
• Dean reinforces my point about lack of rule of law and gangsterism at the national level in the Obama administration.  Where is that guy that made the crappy YouTube trailer that caused our Ambassador in Benghazi to get killed, anyway?
• The twitter feed from @DaveMaass, who succinctly broke down the key elements of today's scandal and has links to key documents.
• China is halting banking transfers according to Forbes.  With all the developing world's currencies tanking, I can't help but think that there are fundamental problems with the international monetary order that are being covered up.  ZeroHedge refutes the idea that banking transfers are being halted, but opines that there are liquidity problems in China. 

Is Kashkari's Approach a Winner for Cal GOP? UPDATE - Announcement

I have a lot of respect for Steven Greenhut, who covers California politics very well, and founder of CalWatchdog.  Imagine my surprise when I saw an article in which he touted Neel Kashkari (pictured) as the best Republican candidate for Governor, running against Jerry Brown in 2014.

Enter 40-year-old Neel Kashkari, an Orange County financial executive of Indian descent who led the Troubled Asset Relief Program (TARP) during the Bush administration. He has been canvassing the state, meeting with Republican leaders in Sacramento and building the foundation of a campaign. He has garnered a little insider-GOP buzz, although he has yet to announce his candidacy.
It’s odd that the Republicans’ most promising potential contender is a political novice who once voted for Barack Obama and is best known for heading a federal bank bailout program that generates much hostility among GOP voters. It’s either a sign of the party’s desperation or proof of its new-found openness to new messaging.

Something has to change for the Republican's fortunes to change in California, but running a candidate likely to antagonize your base doesn't seem the way to go. What does Kashkari have to say that does resonate with the base?  From the Mercury-News:

He  [Kashkari] claims that Brown hasn't adequately tackled California's biggest problems: the nation's highest poverty rate, the fifth-highest unemployment rate, and schools that rank toward the bottom.
"The narrative that 'California is back' is outrageous,'' he said. "The people on the street definitely know better."
He likened Brown to a teenager who shovels the state's mess under the bed to make the room look clean.

Making the connection between Democrat/leftist policies and greater unemployment is very important.  Those at the bottom rungs of the economic ladder make the mistake of voting Democrat, often because they think it will help them.  Of course, when jobs, especially entry-level jobs, dry up, those at the bottom are hurt worst.  Democrats believe that promised generous government benefits promised will turn these voters into reliably Democratic voters. Pointing out the flawed logic is important to breaking the left's grip on this state's politics. From the same article:

HIGH-SPEED RAIL: Kashkari calls it “the biggest example we have of misplaced priorities in our state.” He calls Brown’s plan to divert carbon emission cap-and-trade revenue to the project a “gimmick,” nothing more than a Band-Aid on an imaginary financial plan.

Some of the articles I have read on Kashkari emphasize the fact that no Republican is likely to unseat Brown for Governor, and go on to say that what matters is the primary message from the top of the GOP ticket.  Emphasizing economic issues and being a social moderate make Kashkari attractive to Greenhut:

On the surface, Kashkari seems right out of the moderate camp reminiscent of failed multimillionaire candidate Meg Whitman. He is advised by former aides to Arnold Schwarzenegger and Mitt Romney. A former Goldman Sachs vice president in San Francisco, he favors abortion rights and gay marriage.
But, after a 45-minute interview with him on Monday, I thought he had something lacking in many California GOP moderate candidates: passion. Most interestingly, Kashkari is packaging Republican issues in a way that’s designed to appeal to people who wouldn’t normally vote for Republicans.

I am not ready to endorse Kashkari, especially given his involvement in TARP and his vote for Obama, but his approach to California politics is worth considering.

UPDATE

It's official.

It will take a lot of work to turn CA around, but we can do this. And we must. Join us at http://t.co/rXUUjDZQsl pic.twitter.com/9ETneEaXmD
— Neel Kashkari (@neelkashkari) January 22, 2014

What You Should Be Reading

• Negocios Loucos describes the absurd lengths to which the government is involved in verifying the source of his down payment for a home.  More police state nonsense revealed in what should be a source of joy, buying a home. It is indeed crazy business.
• Dean keeps us updated on the Governor Brown's latest antics with his High-Speed Choo-Choo Update.  Could this get repealed at the ballot box?
• Leslie predicts that the Drought Crisis will bring new regulations.  

Influencing the Culture - Economics of Divorce

Fellow SLOB blogger, KTCat, rightfully points out the overwhelming number of correlations between cultural dysfunction and economic blight both in the U.S. and overseas.  He asks tough questions and gets on my case over drug legalization because I believe he sees it as another step backward in maintaining a culture that caused our country to become a great and wealthy country.  The culture is at least partially the product of the incentives that the populace operates under.  For example, we subsidize single parenthood through AFDC and low and behold we get more of it.  We should ask what incentives could be changed to start to change the culture.  I have also been surveying some blogs that focus on culture for some of the answers.  I offer some ideas for your consideration.

Divorce.  The U.S. Census Bureau reports that children of divorce are more likely to live in poverty.  What causes divorce?  I don't know all of the reasons, but we know that divorce was less likely in times past.  Maybe the question we should be asking is what prevents divorce.  It turns out that the extent to which courts enforce alimony and child support increases the probability that a woman will seek divorce.  H/T Dalrock.  Dalrock points out that the authors of the study think this is a good thing, because it allows mothers to have more leverage over fathers in marriage.  Why this is good is not explicitly stated.  Any discussion of reducing the rate of divorce has to start with reducing the incentives, including alimony which typically goes to the woman, because woman tend to marry up.

Single Parenthood.  The divorce rules will also provide an incentive for men to avoid marriage as well.  The greater the potential financial penalty in a potential divorce, the less willing will men be to enter into marriage.  Given the average woman's desire to have offspring and the uncertainties of birth control and the lack of opprobrium surrounding extramarital sex, there are powerful incentives for men to avoid marriage.  Changing the ground rules in family court might help change these incentives.  Perhaps the old rules requiring a cause of action for divorce would apply if one of the aggrieved parties desired alimony or child support.  Flimsy reasons for divorce provided by supposedly Christian mommy-bloggers might not look so attractive if no child support or alimony were forthcoming.

Penalizing Marriage. The ACA encourages divorce because of the way that subsidies are tied to the poverty level.

Any married couple that earns more than 400 percent of the federal poverty level—that is $62,040—for a family of two earns too much for subsidies under Obamacare. "If you're over 400 percent of poverty, you're never eligible for premium" support, explains Gary Claxton, director of the Health Care Marketplace Project at the Kaiser Family Foundation.
But if that same couple lived together unmarried, they could earn up to $45,960 each—$91,920 total—and still be eligible for subsidies through the exchanges in New York state, where insurance is comparatively expensive and the state exchange was set up in such a way as to not provide lower rates for younger people. 

The tax code overall is mixed regarding penalties and bonuses for getting married.  Continuing to ensure that there is no penalty for marriage is helpful.

These are a few ideas that come to mind.  I am not so naive as to believe that economic incentives by themselves will change the culture, and surely not in the short term.  But I notice that people respond to incentives in the long run.

What You Should Be Reading

• If you want Christian perspective on culture that is not polluted by the screed of feminism, then try KTCat, Dalrock and Sunshine Mary.
• Dean is back, noting the falling U.S. economic freedom index.
• In a small blow for economic freedom, federal judges overturned ridiculous FCC rules on net neurality.
• The City Journal because it has excellent in depth policy discussion that will get you thinking.
• Legal Insurrection documents the administration's march towards Hugo Chavez style thugocracy, with its proposed rules to quash conservative groups' tax exempt status, while leaving leftists' untouched.

Mexican Vigilantes, the War on Drugs, and Gun Rights

Armed vigilantes are battling drug cartels in Mexico.  Business Insider has a great set of photos about recent events.

The WSJ also reported on the vigilantes successful take over of Neuva Italia, a small town in Michoacan.

Hundreds of armed vigilantes stormed a town in rural Mexico on Sunday morning, forcing out most of its local government, witnesses said, and declaring they were close to ousting a powerful drug cartel that has menaced the region.
The takeover occurred in the southern Mexican town of Nueva Italia and was led by one of the area's so-called self-defense groups: armed squads of vigilantes that are making fast gains in some areas against organized-crime groups that Mexico's security forces have failed to defeat.

The LA Times is reporting that the vigilantes are holding 11 local police in custody, whom they blame for collusion with the Knights Templar drug cartel.

Vigilantes in Nueva Italia say they are liberating the area from the cartels.

This has implications for U.S. policy.

First, our brain dead drug policies are partly to blame for the situation.  Legalization of marijuana and other drugs would vastly reduce the money available to the cartels to fund weapons buys.  I don't approve of abusing drugs, I just know that preventing drug abuse through police enforcement is a cure worse than the disease.

Second, the government is ineffective in Mexico at maintaining the law.  It must take high levels of fear and frustration to get ordinary people to turn to vigilantism to defeat criminal gangs.  This is one reason why citizens have an inherent right to possess firearms; you ultimately can't fully rely on government to protect you.  Governments the world over have failed to keep weapons out of the hands of criminals, no amount of wishful thinking will change that.

Third, the anarchy in Mexico doesn't bode well for our ability to maintain economic ties, which depend on a reasonable ability to cross the border with goods and services.  The worse the anarchy, the tougher we will end up making the border crossing.

What You Should Be Reading

• WC Varones details the disappointment of a few folks who are actually helped by the ACA and details more flaws in the system.
• Ari Fleischer rebuts Obama on the roots of income inequality.
• The latest polling on the San Diego Mayoral race; because electing a junior council member who was Filner's closest ally on the council would be a travesty.

Weekend Music Chill

Holidays are over, we are back at work.  Time to mellow out with The Wallflowers.

One Headlight.



Three Marlenas.



I especially like the pictures of Marlene Dietrich in the second video.

What You Should Be Reading

Dalrock on Feminism. I stumbled across a blog I really like, linked at right, Dalrock.  He blogs from a Christian male perspective and takes on even the modern church when needed.  I find his perspective refreshing.  I love the title of a recent post, Feminist are ugly.  (Although he could have titled it, Why feminists are ugly.) Essentially, feminists deny that women should show love through service to their families.  This withholding of love hurts the women it is supposed to help and turns them ugly.

The real reason feminists are ugly has nothing to do with their physical appearance. [But I notice that they are often physically ugly as well.]  Feminists are ugly because they are miserly with love.
. . .
Cooking is an act of love, an act of service to others.  It is an opportunity to care for others in a very fundamental way, to literally nourish them through the work of your own hands.  This is precisely what troubles the modern woman so much about cooking (or cleaning, or changing diapers).  Serving others in the mind of a feminist is an indignity, so cooking, cleaning, or any other act of service and love is the object of revulsion.

Spanish feminists urge banning of book urging wives to be submissive.

Author of said book, 'Cásate y sé sumisa, Constanza Miriano.

Dean on High Speed Choo-Choos. It seems that no court ruling, no amount of illegality can stop the spending when you are a beloved leftist program.

Oh, California high-speed choo-choos, we just can’t quit you as we are hopelessly addicted to wasteful and completely counterproductive public works projects. You keep this up and you just might supplant 2009’s $780 billion American Recovery Act aka Porkulus as #1 in our hearts.
The level of corruption, deception, mendacity and willful suspension of disbelief contained herein makes this probably a done deal.

The Popping of the College Bubble.  One of the least reported, but most important trends is that college is a bad deal for most students.  The college bubble has been far worse than the housing bubble.  The latest from the WSJ:

A college degree's declining value is even more pronounced for younger Americans. According to data collected by the College Board, for those in the 25-34 age range the differential between college graduate and high school graduate earnings fell 11% for men, to $18,303 from $20,623. The decline for women was an extraordinary 19.7%, to $14,868 from $18,525.
Meanwhile, the cost of college has increased 16.5% in 2012 dollars since 2006, according to the Bureau of Labor Statistics' higher education tuition-fee index.
. . .
We now have more college graduates working in retail than soldiers in the U.S. Army, and more janitors with bachelor's degrees than chemists.

What You Should Not Be Reading.

• Anything involving Dennis Rodman.
• Robert Gates' memoirs, because if he was so butt-hurt about Obama's mismanagement, he should have quit a lot sooner.

Rescind Egregiously Stupid Tax - San Diego Linkage Fee

Rare is the day when we have the ability to directly rebuke the stupidity of our city council; but that day would be today.  Two months ago I pointed out the uselessness of linkage fees in alleviating affordable housing problems, even if that is the stated purpose of the tax.  Felipe Monroig of the SD County Taxpayer's Association showed that most of the money actually goes to helping the homeless through "transitional" housing assistance,  a large disconnect from helping the "working poor" finding affordable housing.  Meanwhile, the fee has a negative impact on development by raising "linkage fee" taxes paid by developers by over 350%.

But there is still time to kill this tax, former Mayor, Jerry Sanders, writes in the Pomerado News:

We have less than a month — until January 23 — to collect 34,000 valid signatures of voters living in the City of San Diego. Once we do, the council will have to rescind its ill-conceived decision or put the issue before voters in June 2014.
. . .
This jobs-killer also is a zombie tax because it will continue to automatically increase year after year without any review or approval by elected officials.

His article links to the Stop the Jobs Tax web site, which gives information on how to sign the petition and of course, how to donate.  They also debunk some myths about the tax.

Despite numerous requests for information to verify this claim [that the money is leverage with federal and state dollars], the proponents of the jobs tax have provided little statistical data to support this claim. Additionally, the annual revenue estimated from this tax is too small to make much of a difference. In fiscal year 2013, for example, less than $1 million was raised.  Even the Housing Commission acknowledged that at projected peak revenue, the tax would only provide 100 homes a year noting that over 45,000 people are waiting for subsidized housing.
. . .
According to many economists, San Diego is already at a competitive disadvantage, and this tax increase makes it even more difficult to create and attract new jobs. In fact, San Diego is the only city in the entire region that charges this kind of tax for subsidized affordable housing.  Most competitor regions across the nation do not charge this tax.

This is NOT what the linkage fees will be used for. 

(Used by permission of Mjbeal  [CC-BY-SA-3.0], via Wikimedia Commons)

But the bottom line is that restrictive land use policies decrease the availability of housing which in turns drives up prices and makes it less affordable.  Nothing short of allowing more housing development is going to make a dent in the affordable housing problem in San Diego.  It's a good day when we can directly challenge the collective ridiculousness of a leftist shakedown.

New Year's Revolutions

I like the AT&T commercials with the little kids being questioned by the moderator.  One of the more recent offerings involves the concept of a New Year's Revolution:



That kid to the left looks like he might want to pick a different revolution, but it got me thinking that sometimes the accumulation of small change is sufficient to defeat the forces of tyranny.  Just like eating too many jelly beans over time will pack on the pounds.

The purpose of this blog is to educate and advocate for freedom.  The forces of tyranny have been very busy during the Obama administration, so I am convinced of the need to make the case for freedom.  Many of my friends and fellow SLOBs paint a grim picture of lawless tyranny out of control, with .  While I don't deny the myriad and putrid ways in which this administration and the previous one have undermined the rule of law in this country, the march of technology and the impulse to freedom keep eroding the seeming victories of would-be oppressors.  Some examples:

• Freedom of speech continues to come under assault, especially on college campuses, as our good friends at Legal Insurrection keep pointing out.  But we have never had such a great opportunity to actually make the voices of ordinary citizens and students heard as in this era.  Blogs, Twitter, Facebook and other social media allow the citizenry to curb the impulse to suppress speech that is in the hearts of the leftists.  Yes, attempts at suppressing speech continue unabated, see Handle's Haus for an impressive compendium of recent efforts. However, the very fact that he can publish the list and link to so many rebuttals is proof that technology is keeping freedom of speech alive.
• While Bernanke and now Yellen have debased the currency and taken money out of your pockets and into the hands of bankers, alternatives to protect your hard earned cash exist.  Bitcoin is an example of smart people realizing that the stated inflationary policy of all government issued currency czars erodes the value of your wealth.  For a useful explanation of Bitcoin and some of its limitations, see The Economist. While Bitcoin may have fatal flaws, eventually some cryptographic based currency will give fiat a "run for its money."  In the meantime, gold has held its value like it has for millennia, see Matthew 2:1-9.  A free market in reputable gold coins exists to offset the dangers of paper money.
• The more the oppressors succeed, the more they fail.  The ACA is a prime example of course.  I have read of doctors who don't take insurance any more and wondered if this is a trend?  By accident, I met a pediatrician on a bus trip who doesn't take insurance and said that her practice isn't suffering one bit, as she has lower overhead.  As the ACA destroys health insurance, the number of doctors who opt out of the system will cause it to collapse.  We have to be ready with our free market alternatives when that happens.

Be of good cheer, the forces of tyranny are being outwitted world-wide and will not prevail.  Sometimes the revolution comes in the form of small jelly beans that have the accumulated affect of weighing down the system.

What You Should Be Reading

• KT continues to show the myriad ways that the culture contributes to poverty, through single mommy families, in yesterday's post.
• Dean gives out the Walter Duranty Putridity in Journalism Award. Cato agrees with him on the winner, who is?  Read the link to find out.  Hint: He claims to be "conservative." 

Weekend Music Chill

We are on vacation in Arizona and still celebrating Christmas, so I am posting some more Christmas music for the weekend.

Here is Mannheim Steamroller with Angels We Have Heard on High



Road Dawg turned me on to Trans Siberian Orchestra.



Happy New Year.  Hope your Christmas was great.  Mrs. Daddy loves Christmas lights, so the videos are for her as well.

42 Grandchildren for 100 Grandparents

Mark Steyn nails the demographic problem behind recent financial crises.  He points out that in Greece there are only 42 grandchildren for every 100 grandparents.  In such a society, who will pay for the pensions of the not so elderly? (Many Greeks retire at 50.)  Some key quotes:

Look at it another way: Banks are a mechanism by which old people with capital lend to young people with energy and ideas. The Western world has now inverted the concept. If 100 geezers run up a bazillion dollars' worth of debt, is it likely that 42 youngsters will ever be able to pay it off?
. . .
If the problem with socialism is, as Mrs. Thatcher says, that eventually you run out of other people's money, much of the West has advanced to the next stage: it's run out of other people, period.
. . .
The notion of life as a self-growth experience is more radical than it sounds. For most of human history, functioning societies have honored the long run: It's why millions of people have children, build houses, plant trees, start businesses, make wills, put up beautiful churches in ordinary villages, fight and, if necessary, die for your country.

My friend KT would look at the problem as having its roots in our culture, much like Steyn does.  I am not so sure, because this demographic trend seems a feature of post-industrial economies.  Russia, Japan, China and Germany all have this problem.  India does not, but it has not pulled most of its people out of poverty yet.  America's demographic problem has been mitigated by immigration from poor countries.

The subject of how subsidies and immigration policy affect birth rate are subject for another day.  Suffice to say that cradle to grave "safety nets" create disincentives to having children to take care of us in our old age.

Merry Christmas

We celebrate the birth of Jesus today by giving each other gifts and well wishes, because God has richly blessed us through the gift of the Savior's birth.  This is a great and blessed country, in part because we have followed the teachings of Jesus.  I sincerely hope you are feeling God's blessing today.

Please enjoy some great Christmas music.

If You Really Cared About Income Inequality - Tea Party Prescription

I have been stewing about the President's latest "pivot," this time to income inequality, for a while.  First, it isn't necessarily a problem. Second, Obama has no real solutions.  Income inequality is a problem per se, it depends on the source of the inequality.  If it is caused by a privileged class entrenching its grip on a not-so-free economy, like crony capitalist third-world economies, then this is fundamentally unfair.  But if caused by the inevitable winners and losers in a free-market economy, then we shouldn't care so much, in fact, we should rejoice that our system rewards endeavor.

By the way, actual income inequality is NOT increasing.  The welfare state and progressive taxation have vastly reduced the gap between the poor and everyone else.

According to Messrs. Ohanian and Hagopian, once the effect of taxes and transfer payments is taken into account, "inequality actually declined 1.8% during the 16-year period between 1993 and 2009, when the Gini coefficient dropped from .395 to .388."

Unfortunately, government policies are increasing pre-tax/pre-entitlement inequality (as defined as "earned income" inequality for this discussion).  There is some real evil going on that could be addressed to improve actual fairness and improve economic growth.  Here are some liberty movement suggestions.

End the Fed and Return to a Gold Standard.  The Federal Reserve lends Wall Street bands money at below market rates that they use to fund loans.  This is supposed to help the economy, but it just concentrates wealth in Wall Street which then gets bailed out when it makes bad bets.  If you want to really stop the shenanigans that funnel wealth to people who don't produce anything, return to the gold standard and disband the federal reserve system.

The biggest source of income inequality.

Stop Raising the Minimum Wage.  Raising the minimum wage reduces the opportunity for lower skilled and teens to enter the workforce and start making their way up the economic ladder.  Moving people into the workforce begins lifelong upward mobility. By raising the minimum wage, we keep youth out of the labor market.

Introduce Competition into Education. Students are graduating from college and high school without discernible skills that allow them to enter the work force.  This was not alway so.  There was a time when a high school diploma indicated familiarity with basic math, reading and writing skills and at least a rudimentary knowledge of science.  No more.  Employers can no longer count on even college graduates being able to perform basic tasks needed in business.  This is the result of a century of monopoly in education.  Government schools have failed us.  Competition would restore the incentives for parents to be involved in education choices for their kids, and the result would cause employers to start to trust diplomas again.

Fix Immigration Policy to Favor Skilled Immigrants.  Amnesty for unskilled farm laborers is the opposite of this idea.  The United States is still the land of opportunity when compared to the rest of the world, even if our absolute level of opportunity has declined under Obama's leftist policies.  Bringing skilled immigrants to our country allows various tech teams to stay together and provides all sorts of additional jobs for native Americans as well.  However, if we limit immigration to unskilled farm workers, then we are bending the income curve to increase inequality.  If the President really care about income inequality he would have included a vast expansion of H-1B and other avenues to bring the skilled and wealthy, because he is such a smart policy dude.  Unfortunately, he did not.

Repeal the ACA.  There are plenty of incentives for people at the lower end of the income ladder to reduce their income in order to qualify for subsidies, including married couples getting divorced to reduce their household income.  The ACA is contributing to a rise in inequality by reducing the incentives for those in lower to middle income brackets to increase their income.

Of course, the President isn't really serious.  He is just making another speech about something he chose to ignore for five years, much like immigration.  But if we would like a larger middle class and economic growth, then my tea party policies should be considered.

Public Employee Pension Roundup - Illinois, Detroit Update

Here is a summary of key areas in the fight to prevent state and local public employee pensions from bankrupting governments.

Detroit. Judge Stephen Rhodes will rule today at 10:00 a.m. (EST) on whether the city is eligible to enter bankruptcy.  From the LATimes. Most legal experts expect Rhodes to declare that Detroit is eligible for bankruptcy protection.  A ruling to enter bankruptcy would give emergency city manager Kevyn Orr leverage to bargain with unions over pension reductions or to make unilateral changes.  Whether such changes would be constitutional would be decided later.
UPDATE:  The NYTimes is reporting that Detroit is insolvent and eligible for bankruptcy:

Judge Steven W. Rhodes of the United States Bankruptcy Court, found that Detroit was insolvent and that the pension checks of retirees could be cut during a bankruptcy proceeding, a crucial part of his decision

I had not expected that a ruling on pensions to be part of the judge's ruling.  USAToday has some amazing facts about Detroit's situation including the fact that it has three times as many retirees as workers.

Illinois. As I discussed earlier, the state is poised to vote on huge pension reform and the outcome is in doubt.  A vote is expected in both the state House and Senate, also today.  The outcome is clouded because Republicans who normally would vote for such a measure will be helping the state's Democratic governor.  My answer, be known as the party of principle, it works better for you in the long run.  Meanwhile, some Democrats will have to vote against the unions for this to pass.    More detail on the plan:

About $90 billion to $100 billion of that savings is expected to come out of the wallets of state workers, teachers outside Chicago and public university employees. The other $60 billion to $70 billion in savings is expected to come from the state owing less as it seeks to pay down the pension debt sooner — a move akin to a homeowner saving money by paying down the principal on a mortgage more quickly.

UPDATE:  The WSJ is reporting that pension reform has passed the Illinois state legislature.  The Chicago Tribune reported that the House voted 62-53 in favor and the state Senate passed with a 30-24 vote.  In reviewing the details in the Tribune article, I am inclined to agree with Brian Brady, frequent SD Rostra commenter and blogger, that the reform doesn't go far enough.


San Diego. Proposition B remains held up in administrative limbo by the California Public Employment Relations Board (PERB), no relation to Bob Filner.  Craig Gustafson reports in the U-T that the key cost saving measure of Proposition B has been implemented.

. . . the city and its unions reached a deal earlier this year on a five-year freeze on the pensionable pay of current city workers, a provision in the ballot measure that is projected to save the city nearly $1 billion over the next three decades. By agreeing to terms, the city has locked in those savings even if Proposition B is later found to be illegal.

Unfortunately, the city may have to wait until April 2015 to get a ruling.  Implementing remaining pieces of the proposition may become an issue in the mayoral campaign. Meanwhile, the city of San Diego chose to settle a lawsuit where the city tried to get the city employees to be responsible for half of any shortfall in the pension funds investment rate.  I am concerned, as is the U-T editorial board, that this signals a lack of willingness on the city council to tackle tough pension issue.

California. The mayor of San Jose, Chuck Reed, is attempting to put pension reform on the state ballot in 2014.  Reed is a Democrat, like Governor Pat Quinn of Illinois.  The Pension Reform Act of 2014 would give cities more flexibility in changing pension retiree health care rules for future retirees.  The public employee unions are actively opposing the plan of course.

“What they’re trying to do is overturn decades of case law, Supreme Court decisions and change the California constitution to allow public employers to either change, cut or eliminate public employees’ pensions in the middle of their career,” said Dave Low, executive director of the California School Employees Association and chairman of Californians for Retirement Security, a coalition of public employees and retirees.

Exactly.  Of course we need to change decades of case law because these retirement benefits are unsustainable if we are to have government perform any function at all.

Rhode Island. In the mostly Democratic state of Rhode Island, the legislature passed pension reform in 2011 that included a temporary halt in cost of living increases and moving part of the retirement to a 401(k) style plan.  From the state's web site:

The Rhode Island Retirement Security Act of 2011 as Amended includes language that: 

• Suspends  new  cost‐of‐living  adjustments  (COLAs)  to  retirees’  benefits  until  the system is better funded but provides for an intermittent COLA every five years until 80% funded.
• Moves all but public safety employees to hybrid pension plans.  
• Increases minimum retirement age for most employees not already eligible to retire.
• Preserves accrued benefits earned through June 30, 2012. 
• Begins to address independent local plan solvency issues.

Recent complaints about the investment strategy pursued by the state's treasurer do nothing to change the basic impetus for pension reform.  There are allegations by a long time financial industry critic, "Ted" Siedel on inappropriate investing in hedge funds that result in hefty Wall Street fees. (Hedge funds received over half of the fees paid out by the pension fund last year.) However, 401(k) style pensions could reduce the opportunity for abuse, if employees are given the opportunity to choose their own fund in which to invest.  More important to note for supporters of pension reform, the legal struggle over pension reform in Rhode Island continue two years later, with no end in sight.

Lesson learned: You have to be in this fight for the long haul.

What You Should Be Reading

• San Diego blogger W.C. Varones asks if media bias has any impact on economic performance? Fascinating answer.  Maybe it can benefit your market timing.
• The VOSD takes a look at a San Diego couple's questions about the ACA.  It quickly gets complicated.  Note how the question of subsidy isn't fully resolved. 

Weekend Music Chill

We have been doing some road-tripping lately and it reminded me of all the times I hit the road when I was in the Navy.  In the day, The Boss was on my favorite cassettes.  Here are two of my favorites to drive to:

Sherry Darling.

Cadillac Ranch.

When Pension Reform Goes Bipartisan

Eventually the mathematical results of under-funding ever more generous pension benefits for state and local employees becomes a problem for Democrats too.  Illinois legislators are expected to vote this week on pension reform that would pare back pension benefits in three important ways.

• Reducing cost of living increases.
• Increases retirement age.
• Capping the salary amount available for pension calculations.

There are few other means short of bankruptcy that can be used to reduce pension obligations.  However, Illinois has rejected attempts at pension reform before, so the path to success in the legislature is not certain.  Of course, the state employee unions are waiting to sue if a pension reform measure passes.  This is one of the most important long term issues for state and local government.  Without pension reform here in California and San Diego, the state and city governments will eventually have no money for basic services.  Rahm Emmanuel, not known for his tea party rhetoric, made the same point.

The [state] agreement also is expected to provide a template for Chicago Mayor Rahm Emanuel to follow for his city, which for years has paid far less into its retirement system than needed to keep it solvent. City payments to local pension funds are set to more than double to nearly $1.1 billion starting in 2015. Mr. Emanuel has warned that if changes aren't made, the city will face a combination of property-tax increases and cuts in services, equating the scheduled increase to the cost of having 4,300 police officers on the street.

It is important to note how a deal was reached among Illinois legislative leaders.

Labor officials excluded from the talks found out about the eventual Wednesday breakthrough from reporters. 

. . .   

“I think it’s going to be difficult,” said Sen. Linda Holmes, D-Aurora, a member of the pension conference committee and supporter of labor’s arguments in pension talks. “I’m uncomfortable they didn’t have a seat at the table when they’re the people who’ll be impacted by this.”

If Democratic politicians feel the need to exclude labor from pension reform talks, then the situation must certainly be dire.  Illinois is paying a 2% premium on its bonds while pension reform remains unresolved. (California and Michigan are paying about a half-percent premium, source: WSJ.)  

This is one of the key issues of our day, because the proper functioning of government is being put at risk by the expense of public employee pensions.  I support Kevin Faulconer for mayor of San Diego, primarily because I am convinced he can be trusted to continue the fight to reform pensions that was approved by voters under Proposition B.  Alvarez' response on this issue does not "inspire confidence" as a U-T editorial put it.  I would prefer to deal with our pension problems before they become a crisis like Illinois' and Chicago's.

What You Should Be Reading

• Victor Davis Hanson provides the most complete compendium of Obama-fail I have seen assembled in one column.  
• In the same vain, Charles Krauthammer outlines the utter lawlessness of this administration and its Democratic allies in the Congress.  The destruction of the rule of law under Obama is frightening, it troubles me greatly that this doesn't get more attention, we are on the path to dictatorship; our long history has made us believe we are immune, we are not.
• Local blogger KTCat reminds us of the real spirit of Thanksgiving in light of the President's request that we "talk about healthcare" at Thanksgiving dinner.  After the ACA fully crashes and burns, what will you do? Great question. 

Happy Thanksgiving

Dean has been saying for some years that Thanksgiving is the best holiday of the year, gathering with family, having a great meal and watching football.  I hope you find much for which to be thankful this Thanksgiving.  This is a great country country (beautiful too, as my recent vacation reminded me) and we should thank God for all we have.

What You Should Be Reading

I took a real vacation and paid only a little attention to the political world and made no attempt to blog.  It was worthwhile to re-unite with my oldest son and enjoy some of God's creation and some good man-made stuff too.  Mrs. Daddy and I loved the colder and wetter weather we encountered, not typical of Arizona.

We visited historic Jerome, AZ, where everything is reputed to be haunted, even the hamburger joint.

And we hit the trails to enjoy the local beauty of Sedona, AZ.  

And didn't neglect man-made pleasures either. Famous Pizza had great pizza and craft beer on tap including quite a few San Diego offerings.

In the meantime other San Diegans kept up the good work on keeping tabs on our state and local government.  

• Dean posted his latest entry in the long running saga of the California high speed rail debacle.  Was Judge Kenney's ruling that funding must halt and that the High-Speed Rail Authority had abused its discretion a death blow?  Read and judge for yourself.  The U-T has the full story.
• Felipe Monroig, president of the San Diego County Taxpayers Association, has done a public service by pointing out that the so-called linkage fee revenue isn't spent on affordable housing for the working poor, as the council debate would lead you to believe.  The Voice of San Diego's in depth analysis of the issue is also a public service.  Bottom line, most of the money goes to the homeless, not affordable housing for the working poor.
• The U-T reports that San Diego home prices increases are slowing. This is good news.  All of the conditions that caused the housing bubble and subsequent collapse in 2008 are still present.  Artificially high housing prices are not healthy for the economy.
• College Insurrection reports on how the ACA is affecting students at SDSU, bottom line: unintended consequences not making health care more affordable.

California - Arizona and Tourism

Light blogging for the next few days, because we are heading to Arizona.  To launch this road trip here Swell performing a song that only recently became a favorite, "California, Arizona."

I am told that open carry is fairly common in Arizona, as well as some other cultural differences from my home town of San Diego.  That should provide fodder for a future post as well.

We are heading for the tourist resort town of Sedona.  Here in San Diego, the tourism dollars are apparently not flowing in as fast as our city fathers the hoteliers would like.

The city council has bought into this line of reasoning and approved the release of the Tourism Marketing District dollars even though a lawsuit challenging the legitimacy of the tax is pending.  The council vote was 8-1 in favor of releasing the money.  David Alvarez continued supporting Bob Filner's position that the money should not be released.  I also oppose the tax, but not for the reasons that Filner did, I just think the tax itself is illegal.

I would hope that the hospitality industry leaders would come to their senses over the current structure of the tax and propose a different process that doesn't leave them open to legal challenge, and indeed disengages them from city council politics.  If they don't, then the likes of Filner and Alvarez will continue to demand concessions demanded by labor unions in order for funds to be released to promote tourism.

I would like to see Kevin Faulconer propose an alternate way ahead, as well.

What You Should Be Reading

• Legal Insurrection because it is entertaining, and I was extensively quoted on the mayoral race, dang it.
• California rejects the President's plea to let people keep their insurance, because the fix is only temporary.  H/T LegalInsurrection.  

Now the Hard Part - San Diego Mayor's Race Part II

Although Kevin Faulconer achieved a 43% total in the first round of San Diego's mayoral special election, there is little guarantee that he will be elected mayor in the runoff next February.  There are some reasons to believe that an energetic and motivated effort will be required for Faulconer to win.

• Turnout for Tuesday's election was only 35%, not the 44% predicted by the registrar.  Low turnout favors Republicans as their voter are more consistent in getting to the polls.
• Voter registration in San Diego. Democrats 40% to Republicans 27%.
• Labor put together a good ground game for Alvarez and will do so in the runoff.
• Latinos, who traditionally have below average turnout will be motivated to elect San Diego's first Latino mayor in David Alvarez.

This is not to say that Faulconer can't or won't win.  Brian Brady at sdrostra has some great analysis on what Faulconer can do.  I am adding my own thoughts as well.

• Remind voters that the Democrats are responsible for this mess in the first place by putting up a known pervert in Filner.  
• Though not a local issue, per se, attack the Democrats on the ACA issue to further weaken their brand name.
• Identify Alvarez as Filner's closest ideological ally on the city council.  
• Tout Faulconer as the man to save the taxpayer's dollars.  He will fight for managed competition and pension reform.  Alvarez doesn't care about the taxpayer's interests on these issues and will seek to gut managed competition like his pal Filner.
• Tout Faulconer as the steady guy to bring competence to the council.  Emphasize Alvarez' relative inexperience.  Quickly seize on any unforced error to reinforce the image of inexperience. 

I am deathly afraid of revisiting financial ruin on our city if the unions call the shots at city hall.  Electing Faulconer is an act of self-preservation.

What You Should Be Reading

• Speaking of the toxicity of the ACA for Democrats, Dean explains why the healthcare.gov fiasco may actually get even worse.
• Holman Jenkins advises the GOP on how to fix the ACA. Jenkins is often brilliant and his column today is one example.  The core of his plan would be to offer low-cost high-deductible  plans and call it an expansion of ACA options to give Democrats political cover to vote for it.  Read how it actually destroys the ACA, but in a good way.
• San Diego Rostra, if you want insider peaks at San Diego politics from a Republican perspective.
• This interactive map of the election results by precinct from inewsource.org.

Update: Faulconer in Early Lead, Fletcher and Alvarez Neck and Neck

Honestly, I could have written that headline two days ago, but the early returns almost exactly match the late polling:

Faulconer 45% (Last poll 40%)
Fletcher    25% (Last poll 24%)
Alvarez    23% (Last poll 22%)

UPDATE with overnight results.

Faulconer: 43.6%
Fletcher:     24.3%
Alvarez:      25.6%

Looks like Alvarez takes second, but there are still 35,000 ballots to count. Headline is that Alvarez is the second place finisher.

End of Update.

I don't think this bodes well for Alvarez as he needs a very strong showing among Latinos to beat Fletcher.  However, given the close start it will be a long night.  I don't intend to stay up for it, because Faulconer is going to face a run off and that's what I needed to know.

Faulconer tweeted about his early lead:

KF 45 percent!! pic.twitter.com/jMxexPCZYU
— Faulconer for Mayor (@Faulconer4Mayor) November 20, 2013