Damn Lies

My progressive friends, for the most part, are happy to point to graphs and tables which reveal that the reason for the huge deficits created in the last three years lies at the feet of the much hated George W. Bush, and before him, the Dark Lord, Ronald Reagan.

My conservative friends have, at their fingertips, equally compelling charts, trendlines, and datasets that lay the blame squarely on Barack Obama and his compliant side-kick, Congressional democrats, who wish to take more money out of the pockets of the earners and give it, in larger chunks, to the non-earners.

While the two sides fiddle, Rome burns.

It really doesn’t matter now who spent the money that our country doesn’t have anymore. We can blame the recession, which has reduced GDP to the point that the economy cannot pay for our future expenditures, or we can blame the tax cuts that reduced federal revenues during these perilous times. From this sofa, the situation is two sides of the same coin. That is, no matter how it is sliced, we tried to have it both ways. We wanted to drive that Cadillac without making the payments, and our buddies in Congress gave us the keys.

The only statistics that matter now are the ones that tell us that we cannot sustain this level of spending. The only question remaining is the point in time when the people we elected to give us anything we wanted finally realize that they cannot fulfill their promises. After that, the only question is whether our nation will have enough time, and the national will, to solve the problem.

Promises are going to have to be broken, either voluntarily, and in a controlled fashion, or involuntarily, with the subtlety of a dull knife. We cannot remain on this path.


Man-Made Chicanery

William Galston has put up a timely post at the New Republic website which absolutely nails the current debacle in Washington. If I may quote liberally from his post, which should be read in its entirety:

Raising the debt ceiling is a man-made crisis amenable to straightforward policy remedies. Political will is all that is lacking. Not so the economic crisis that our preoccupation with fiscal policy has temporarily obscured.

…The IMF recently conducted a comparative study of ten post-war economic recoveries seven quarters after the business cycle trough, or recession’s end. Its findings for the United States are stunning. For employment and household finances, the current recovery is the weakest since the end of World War Two. For the business and financial sectors, it’s the strongest. The banks, recipients of lavish public funds and guarantees during the meltdown, are reporting a rapid recovery from their lows in profits, loan charge-offs, and equity-to-asset ratios. Meanwhile, growth in employment, disposable personal income, personal savings and consumption, and total GDP all anguish. Needless to say, investment in structures—residential and non-residential—comes in dead last. Were it not for a strong performance in equipment, software, and exports, the current recovery would barely have a pulse. The IMF study does nothing to weaken the increasingly credible thesis that downturns induced by financial crises differ structurally from those in normal business cycles.

…At the same time that the business and financial sectors are becoming decoupled from employment and household balance sheets, gaps among different parts of our population are growing. A report just out from the Pew Research Center shows that while the median net worth of all U.S. households declined by 28 percent between 2005 and 2009, the figure was 53 percent for African Americans and 66 percent for Hispanics. And these percentages mask an even more troubling reality: The assets of black and Hispanic households have just about been wiped out.

…This painfully slow recovery is rending the fabric of American society. In turn, these growing socio-economic gaps are contributing to the rising polarization of our politics and declining trust in government—developments that will make it even more difficult to forge agreements on the policies we’ll need to get out of this deep hole. No doubt adverse trends in the global economy are making things even worse. But in the end, our economic crisis is a governance crisis. The stalemate over the debt ceiling is a symptom of this systemic fact.

Note well his words: our economic crisis is a governance crisis.

The ABC Dilemma of Health Reform


Today’s Wall Street Journal has two columns regarding the state of health care reform, here and here. The second link discusses health care ‘reforms’ in New York, and how the concepts of community rating and guaranteed issue, while noble in intent, distort the marketplace. Further distortions arise when states mandate fringe coverages that are neither necessary to a healthy life nor applicable to the majority of insureds. Add to the mix laws that prevent insurers from selling policies across state lines and it becomes clear that regulation stultifies the marketplace.

The first link is to an article so brief, and yet so profound, that one wonders why action has not been taken. That action has not been taken surely illustrates the yawning gap that separates those who wish to make their own decisions from those who wish to increase their reliance on the bounties of the government.

Since the WSJ now operates behind a pay wall, the first article is copied below. I hope Rupert doesn’t mind….




/* Style Definitions */
{mso-style-name:”Table Normal”;
mso-padding-alt:0in 5.4pt 0in 5.4pt;

The ABC Dilemma of Health Reform

There is widespread agreement with the principle that our health-care system needs to be reformed. But our representatives and our neighbors have much trouble in reaching agreement on the particulars. There have been many legislative bills offered and hundreds of amendments with no clear path to a resolution.

Health-care systems everywhere encounter cost overruns and rationing devices, like queues, in their diverse attempts to deliver products for which demand has long grown faster than other economic sectors. Why is it so difficult to find the private and public means, the combination of markets and government assistance, that enables a preferred outcome to emerge?

This question has a simple answer that plagues health care everywhere.

The health-care provider, A, is in the position of recommending to the patient, B, what B should buy from A. A third party—the insurance company or the government—is paying A for it.

This structure defines an incentive nightmare. You do not have to be an economist to realize that, when phrased in this way, nobody knows how to solve this problem. Hence the many experiments, all of which have been deemed less than satisfactory.

I don’t know whether this problem has a solution. If it does, I think it requires us to find mechanisms whereby third-party payment is made to the patient, B, who in turn pays A, supplemented with any co-payment from B for services. Hence, from the moment B seeks services from A both know who is going to be paying A for what is delivered. A and B each has need for what the other brings to the table, and this structure carries the potential for nurturing the relationship between A and B. B is empowered to become better informed about the services recommended by various A’s that he might choose among, and the A’s might find it particularly important to build good reputations with B’s.

—Mr. Smith, the 2002 Nobel Laureate in economics, is professor at Chapman University.




Two Pages In The Wall Street Journal

Two pages in today’s Wall Street Journal encapsulate, for this observer, the dilemma our politicians face as federal spending spins out of control. 

Page A4:

Jobless Rate is Key to Fate of Democrats in 2010

…But one item may prove key: the national unemployment rate, which hit a 26-year high last month at 9.8%

…President Obama and the Democrats are all the more exposed on the jobs front because they touted the $787 billion economic-stimulus bill as a way to curb job losses.


It has been noted that the real unemployment rate in this country is currently 17%. Given the horror of that statistic, and the implications of long-term unemployment that crosses all demographic lines, one would think that getting people back to work immediately would be paramount.

Another article:

Arizona Sheriff’s Powers Cut

The Obama administration is curbing the powers of an Arizona sheriff who has led one of the most contentious fights against illegal immigrants.

Under an agreement involving local enforcement of federal immigration laws, Shefirr Joe Arpaio’s deputies will no longer have the authority to arrest suspected illegal immigrants in the streets in the course of their duty.

Unlike other participating in the program, Mr. Arpaio will be restricted to determining the immigration status of inmates booked into Maricopa county jails.

…Homeland Security Secretary Janet Napolitano ordered a comprehensive review of the 287g program shortly after taking office.

So the Feds are arbitrarily defining police powers in local jurisdictions. Hhhmmmmm

Page A5

Violent Deaths Shock Chicago Into Action

…Derrion Alberts, 16 years old, was beaten to death seven blocks from his school last month. A recording of the attack was posted online and widely viewed.

…Between September, 2008, and September, 2009, 398 Chicago students were shot…

…In response to the violence, Chief Executive Officer of Chicago Public Schools…announce a safety and security strategy that will target nearly 10,000 high-school students identified as at risk of becoming shooting victims. The project will connect some of them with mentors and part-time jobs in hopes of keeping the teens off the streets. The $30 million annual cost will be paid for by federal stimulus grants.

Stimulus grants for shovel ready projects? For infrastructure? Already committed, just not spent? Sounds like there is a pool of money sitting in a secret vault in Washington where certain social goals can be funded, regardless of their stimulatory (or not) effects.

FAA Stimulus Recipients Got Low Priority Ratings

More than $270 million in stimulus grants awarded by the Federal Aviation Administration have gone to projects that scored below the agency’s own threshold for weeding-out low-priority proposals…

The FAA typically steers grants to projects scoring above 41 on a scale from 1 to 100. For stimulus grants, the FAA raised the threshold to 62.

See above. This stinks, to me, of earmarks. Yet again, our elected officials cannot resist the urge to plunder our national wealth to reward their parochial minions.

From this man’s perspective, we have not learned from the lessons of the economic collapse.

Santayana was right…


Using the Constitution When It Suits

It’s safe to say that Jim Clyburn is not very happy with Governor Sanford and those that support the governor’s position on the stimulus funds. In fact, sometimes, it sounds like Mr. Clyburn is pretty damn mad that he cannot reach down into his carefully drawn district and make things happen the way he would like for them to happen. In that respect, to be fair, he’s not really much different from most of the elected-for-life politicians that inhabit Washington. Sometimes, it seems that personal relationships are more important that principal principle. And sometimes, politicians get a bit confused on which principles they stand on.

Here’s Rep. Clyburn, discussing the governor’s position, as quoted in a post from the Palmetto Scoop:

Whether or not you agree with Gov. Mark Sanford’s staunch opposition to accepting $700 million in federal stimulus money, this one thing is for certain: It has a lot of people on both sides of the issue angry.

Congressman James Clyburn — who has a propensity to “Hulk out” — was chief among those who has recently expressed outrage. Clyburn’s anger stemmed from the belief that Sanford’s rejecting the stimulus funds would result in up to 4,000 public school teachers losing their jobs.

Only, Clyburn’s directed the bulk of his rage at Attorney General Henry McMaster and Sen. Lindsey Graham.

Over the last several weeks and without even going to court—the proper venue to determine constitutionality of federal laws—[McMaster, Sanford and Graham] have gone out of their way to ensure that South Carolina continues its long history of providing a minimally adequate education,” Clyburn said, referring to measures by McMaster and Graham to clarify who, exactly, controls the discretionary money.

Got that? The federal courts are the proper place to determine the constitutionality of federal laws. Very reasonable position, in my humble opinion.

But then there is the issue of the legislation proposing statehood for the District of Columbia.  Rep. Clyburn has long been a supporter of statehood for the District despite the fact that the constituionality (there’s that word again) of the legislation is extremely doubtful. The Justice Department, over the past 40 years and several presidents, has cautioned that the proposed legislation will not pass muster in the courts. No matter. Observe in this report from PowerLine the willful disregard of the Constituion:

The Washington Post reported this morning that Attorney General Holder has rejected the legal opinion of the Department’s Office of Legal Counsel (OLC) that the D.C. voting rights bill pending in Congress is unconstitutional. As Ed Whelan explains, the new OLC–led by deputies selected and appointed by the Obama Administration–reached the same conclusion that the OLC has since the early 1960s (according to Ed), namely that the bill is unconstitutional.

Unhappy with that answer, Holder turned to the Solicitor General’s office to ask whether it "could defend the legislation if it were challenged after its enactment." Holder wasn’t asking the SG’s office whether the bill was constitutional, but rather whether a non-frivolous argument could be made in defense of its constitutionality. The SG’s office said one could be made.

But Holder is sworn to uphold the Constitution. One might have hoped that he would interpret this duty to mean taking positions consistent with office charged with making that determination for the Department (the OLC), an office that he testified "has probably the best lawyers in the Department." Alternatively, one might have hoped that, if Holder rejected the view of that office, he would do so based on sound advice that the bill in question is constitutional. Instead, as noted, he reversed the OLC based only on advice that a contrary view of the Constitution is not frivolous.

A lawyer representing an ordinary client is free, and may in some cases be obligated, to take weak but non-frivolous legal positions to promote a client’s interests. But the United States is not an ordinary client. And the Department of Justice should be what its name says, not the Department of Promoting the Political Goals of the President. As Andy McCarthy puts it, " the Justice Department is supposed to take the most legally sound position, not any position preferred by the president that may pass the laugh-test."

One does not expect to hear Rep. Clyburn demand, in the context of DC statehood, and with the words he used so powerfully when attacking Gov. Sanford and the state Attorney General, to wit: "… without even going to court—the proper venue to determine constitutionality of federal laws…" that the Congress of the United States follow the law of the land when acting in pursuit of their political goals.

Sadly, the pursuit of power trumps principle every time……