Monthly Archives: October 2011

Metaphors

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The current administration set up, a short while ago, a Web site intended to facilitate the efforts of those seeking Federal employment.  In doing so, the administration internalized a task that had been handled by Monster.com.

The proxy server did not receive a timely response from the upstream server.

This is an all too common complaint about that new USAJobs Facebook wall.  After a multi-million dollar, two-year to “upgrade,” Office of Personnel Management’s new site has less capability and reduced reliability compared to Monster’s original site.  Additionally, not everyone is convinced the price tag for these two years is justifiable.  “I might make some people mad if I say this, but without knowing the specifics of the contract I can’t really see something like this costing over half a million dollars,” Zach Katkin, President and CEO of Atilus, notes.

At the end of 2008 and start of 2009, the government passed TARP, a $780 billion bailout package for failing businesses.  The package was originally intended to buy all the “toxic assets” (credit default swaps, mortgage backed securities, and other even more esoteric debt instrument derivatives) from vulnerable financial institutions to facilitate their recovery.  Then it was morphed—without Congress’ involvement—into outright bailouts of financial institutions deemed to special to be allowed to fail and go through bankruptcy proceedings, and it was expanded in scope to include bailing out car companies and unions.  Thus was born the whole too big to fail thing and the moral hazard stemming from that, demonstrated by all the demands by other businesses, and even individual Americans, for similar bailouts.

Early in 2009, the government passed the Stimulus Bill, a nearly trillion dollar spending package intended, in the finest Keynesian tradition, to stimulate the economy and promote job growth.  The government even guaranteed that this package would keep national unemployment below 8.5%.  National unemployment soon peaked over 10%, and it’s been above 9% ever since.  But we got those trillion dollars successfully spent, and our national debt successfully ballooned.

In 2010, the government passed the Patient Protection and Affordable Care Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act on the claim that health care costs for Americans and our businesses would go down drastically and on the claim that Americans would see more transparency in our business transactions and gain protection from the nefarious machinations of our financial institutions.  The response since has been rising insurance costs, to the point the HHS has threatened to bar insurance companies from Obamacare’s insurance exchanges if they don’t straighten up and fly right.  In addition, small business employers are saying, in droves (30% of them, and rising), that costs for the insurance coverage they’re required to provide will be so high when this part of the law takes effect, they’ll be forced to stop providing insurance coverage at all.

Further, small businesses are facing nearly $3,000 per employee in incremental compliance costs due to Dodd-Frank’s reporting requirements.  And Dodd-Frank hasn’t yet had even half of its required rules written.

And we get great ideas like this one from Rep Jim Moran (D, VA):  “The banks aren’t doing it, but the federal government can borrow money at three-and-a-half percent today. They should use that money to refinance every home mortgage, and that would put $750 billion into homeowners pockets.”

We’ve been getting “The proxy server did not receive a timely response from the upstream server” messages since well before the botched USAJobs effort.

Desperation

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Here come the character assassinations. The lead paragraph in a Politico article says this:

During Herman Cain’s tenure as the head of the National Restaurant Association in the 1990s, at least two female employees complained to colleagues and senior association officials about inappropriate behavior by Cain, ultimately leaving their jobs at the trade group, multiple sources confirm to POLITICO.

The rest of the article contains…carefully unnamed sources and cynically unsubstantiated “facts.”  We get those “multiple sources” from that lead paragraph.  We get a “lengthy roster of former board members, current and past staff and others,” also carefully unidentified.  We get constant repetition of the original allegation, but oddly, no corroborating facts.  We get Cain saying, in response to a interviewer’s question, that he can’t comment “until I see some facts or some concrete evidence” and being accused of being evasive for the dastardly crime of declining to speak in ignorance.  And so on.  They did bury some identified sources on the last page of their article: “Ron Magruder, Denise Marie Fugo and Joseph Fassler, the chair, vice chair and immediate past chairman of the National Restaurant Association board of directors at the time of Cain’s departure, said they hadn’t heard about any complaints regarding Cain making unwanted advances.”  How inconvenient to their thesis.

Is there anything substantive to this matter?  We’ll never know from this level of journalism.  On the other hand, was the purpose here to reveal critical facts about a man’s character, or simply to create doubt through innuendo?

Another assassination attempt is Roger Simon’s, carried out recently on CNN Live (follow the link, and have your browser allow popups—the video is in one.  Simon’s remarks occur at about the 7:10 mark, and sorry about the leading ad):

[W]hy would Perry use [the Birther “issue”] in the primaries…? Well, it’s because being extreme perhaps and a little bit racist perhaps gives you good bona fides in a Republican primary — shows him you’re on the same side as they are.

And there has been for some time, now, the misleading statements about the opposition’s performance.  For instance, we have the following from David Axelrod, as he insists that Republicans, generally, are deliberately trying to trash our economy (again, apologies for the leading commercial, and these particular remarks occur about three quarters of the way through the interview).

They don’t want to cooperate. They don’t want to help.  …so you have to ask a question, are they willing to tear down the economy in order to tear down the president or are they going to cooperate?

We also have the President and his recently begun drumbeat about do-nothing Republicans.  He blames do-nothing Republicans for blocking “jobs” bills, saying, “Over and over, they have refused to even debate the same kind of jobs proposals that Republicans have supported in the past – proposals that today are supported, not just by Democrats, but by Independents and Republicans all across America.”  He blames do-nothing Republicans for blocking his $447 billion “jobs” bill.  And so on.   Of course, he ignores the fact that the do-nothing Republicans passed a budget, in their first month in the present Congressional session, that would have produced jobs and started bringing down the national debt.  He ignores the fact that it was those oh, so active Democrats that refused Sen. Mitch McConnell’s attempt to honor Obama’s “Pass this bill now” demand and bring that expensive jobs bill to a prompt vote, choosing instead to wait until they were ready to play their political games with it.  He ignores the fact that the do-nothing Republicans have passed jobs bills and jobs-related bills that address the excessive regulations that inhibit small businesses and their hiring.  He ignores the fact that every one of these bills, including that budget bill, sit in the activist Democrat Senate being studiously ignored.  He ignores the fact that that same activist Democrat Senate has refused even to attempt a budget bill of its own for the last 900 days.

Finally, there’s the just plain silly.  We get for instance, Cokie Roberts, on ABC News’ “The Green Room,” extolling the virtues of our present overly complex, loophole-laden tax system (again, sorry for the leading ad):

I think we will see the flat tax crash and burn once again. You know, look – the reason America has used the tax code for social good is because we like the private sector. And so Western Europe has basically embraced socialism to do all of these things. What we have embraced is have business do all our health care and our universities and our arts and all of that, and our housing, with garden apartments for middle class people and all of that. And you know, you might like or dislike that, but that’s a result of the tax code and that is something Americans tend to like a whole lot better than having government do it.

We’re only in the primary season, too.  The actual campaign will be…interesting.

Supports and Consequences

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Rep. Collin Peterson (D, MN) has proposed a Dairy Market Stabilization Program to replace existing Dairy Product Price Support and Milk Income Loss Contract Programs, but the debates surrounding the proposal misses a key point.

“The Dairy Market Stabilization Program [proposed by Peterson] is specifically designed to increase milk prices,” the Consumer Federation of America says.  “As milk and dairy prices increase, low-income consumers are hit especially hard.”  National Taxpayers Union, Americans for Tax Reform, and Citizens Against Government Waste warn of other results.  Artificially propping up milk prices “will ratchet up budgetary pressures on the government’s food and nutrition programs.”  Further, the DMSP, if passed, would empower government to limit how much milk is to be produced given falling profits; this is intended to strengthen a “safety net” for a government-favored group.

While these are valid arguments; they don’t go far enough.  The key point is the long list of unintended consequences of this sort of program and of subsidies in general.  One narrow consequence has to do with this: the CBO estimates that the DMSP would save us taxpayers $167 million over five years.  How much would we save if we didn’t have any of these three subsidies?

Another consequence comes from this effort to “help strengthen a vulnerable dairy sector.”  Dairy wouldn’t be a vulnerable sector except that government subsidies have protected it from the strengthening and hardening that competition produces.  The sector is soft and “vulnerable” as a direct result of its having become dependent on government for its “protected” profits and its protection from the risk of failure.

This stems from another unintended consequence.  The bailouts of 2008 and 2009 have simply fostered an environment wherein everyone feels entitled to a bailout; no one should have to suffer the consequences of their own decision-making, or even of plain bad luck (and note carefully that a hand up is not a bailout).  All of us are entitled, goes the new plaint, to having taxpayers indemnify us from life.  However, something that was a mistake the first time is not made correct by repeating it.  It remains a mistake.

Yet another consequence is that ratcheting up of budgetary pressures on the government’s food and nutrition programs that was warned of above.  The NTU, ATR, and CAGW are right as far as they go, but they miss the larger point, one hinted at by the CFA: the subsidies, including other subsidies that would be cascade victims of particular subsidies’ budget pressure, all drive up—by design—prices that consumers, including poor consumers, must pay.  (And so we have food stamp programs, and other food and nutrition programs, to help those poorer consumers pay those artificially inflated prices….)

There’s another unintended consequence.  Consumers—taxpayers—in return for our tax money being taken away from us to pay these supports, have even more of our money taken away from us by our having to pay those artificially high prices that are the goal of these supports.  We’re forced to pay twice for the same milk.

There’s the unintended consequence of the moral hazard involved.  Industries that are protected from failure, government-favored small businesses that are protected from failure, have no incentive to control their own costs, have no incentive actually to compete.  They get high prices (which we must pay, both through those high prices and through the epicycles of subsidies on top of subsidies to prop up those prices and then to help others pay those propped up prices), and they have high costs with which to “justify” those high prices.  This is related to those original mistakes of the 2008 and 2009 bailouts.  How can a businessman, or an investor in that business, or a lender to that business, assess his risk accurately when there is no downside from risk?  Another aspect of the moral hazard question is this: one justification for the supports is that dairy farmers would go out of business without them.  But if they can’t compete, why should they be in business?  Why does any particular business or industry have an inherent right to exist, regardless of market competition forces?  Who decides which business or industry should be artificially continued?

Finally, here is a consequence almost as bad as the moral hazard one, a consequence with more concrete and immediate impact on our pocketbooks.  Supporters of the DMSP worry that were there a repeat of 2009’s economic dislocation (we’re out of that one?), a repeat of the problem of falling milk prices coupled with abruptly rising input prices, “I fear we could lose half our dairies,” as Congressman Peterson puts it.  But why did those input prices rise?  One (but not the only) reason is ethanol subsidies.  These diverted food corn away from the dairy herds (and other cattle herds, and people): nearly 30% of corn went to fuel production in 2009; that expanded to 35% in 2010.  The effect from seemingly unrelated subsidies on those input prices for milk production is apparent.  This diversion, in cascading unintended consequence, reduced our supply of food, raised the price of that food that we must pay, and drove cost increases in those food stamp subsidies.

Who is Serious about Solutions?

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Let’s look at the offers.  The Democratic Party Senate hasn’t offered a budget in nearly three years.  The last budget proposal proposed by President Obama, last winter, was laughed out of the Senate 97-0.  Not even the do-nothing Democrats took it seriously.

On the other hand, the newly elected Republican House of Representatives, flush with modern Conservatives, passed a budget largely developed by Budget Committee Chairman Paul Ryan (R, WI) in their first month in office.  It’s lain dormant in that Democrat’s Senate, where the Senate Majority Leader, Harry Reid (D, NV), has steadfastly refused even to let it come to the floor for debate, much less be voted up or down—or a counter proposal made.

What have the President and his fellow ProgressivesDemocrats offered in response?  Straw men attempting to deflect the discussion away from the issues: “We should not be in a race to the bottom where we take pride in having the cheapest labor and the most polluted air and the least protected consumers,” President Obama said from the campaign trail at a recent San Francisco fund raiser.  Of course, modern Conservatives, and Republicans, agree with him.  Who, indeed, has proposed such a thing?  This is simply an attempt to change the subject, driven by the fact that the Obama team has nothing to offer beyond their mantra of more spendinginvestment and more taxes.

Another straw man is this chestnut: “Despite what some Republicans have argued, I believe that we have to ask the wealthiest Americans and biggest corporations to pay their fair share by giving up tax breaks and special deductions.”  He doesn’t consider that the top 10% paying 70% of the nation’s income taxes to be their fair share.  He also carefully elides the fact that his proposals go far beyond eliminating deductions and loopholes—they include outright rate increases.  He does consider the bottom 50% paying 3% to be paying their fair share.

On the other hand, President Obama did offer, last month, a $447 billion Jobs Bill, and he insisted “Pass this bill now.”  Never minding that the proposal had little that would generate jobs, but it did have considerable spending and the requisite tax increase, Senate Minority Leader Mitch McConnell (R, KY) agreed that it should be debated and voted on, and he attempted to honor Obama’s “request.”  The White House, though, promptly objected, claiming that an actual vote was just a “political stunt,” followed by Reid refusing to allow the vote.  Only later did Reid bring the bill to the floor, and it was promptly voted down, with Democrats agreeing with the Republicans that the bill was a bad idea.

The Democrats also insist, especially in the aftermath of their “Jobs” Bill failure, that the Republicans are the Party of No, and they have no ideas—only obstruction.  But this ignores the fact that the (Republican) House of Representatives has already passed at least seven jobs and jobs-related bills, of which exactly zero have been taken up by Reid’s Democratic Party Senate.  This also ignores the fact mentioned above that that same Senate hasn’t even troubled itself to propose any kind of budget, much less one that might do some jobs creation good.

And there’s the simply inane.  We have Reid, in a speech on the Senate floor saying with an absolutely straight face, “it’s very clear that private sector jobs are doing just fine. It’s the public sector jobs where we’ve lost huge numbers.”  Reid said this after the August jobs report had come in with zero private sector jobs created for that month, and with a national unemployment rate over 9% and 14 million Americans without any employment, much less in the private sector.  Additionally, from the start the Obama administration has been more interested in fixing blame (it’s all Bush’s fault, even now, three years later) than they have been in fixing the problem.

And there are the plain ad hominem attacks, which aside from their dishonesty, simply demonstrate the lack of solutions, the absence even of ideas.  For instance, members of the Congressional Black Caucus have called black conservatives like Herman Cain and Allen West (R, FL) oreos, they have accused the Tea Party of being racist, and one member consistently referred to the Tea Partiers as tea baggers. And there’s the plain race-baiting of the Progressives: Rep Elijah Cummings (D, MD) said in a recent Press Pass interview, “I think when [Tea Party members] can vote for a Herman Cain and hear him say the things that he says they feel like, ‘Well, you know, I can, I support this guy and… so it shows that I’m not racist and I’m supportive.'”

In sum, one of these groups emphasizes class warfare divisiveness and evasion of the problems facing us, and the other group offers unification and solutions.  For one group, it’s the rich vs. the rest of us.  Only the definition of “rich” floats at convenience: it’s those who make more than $250 thousand one day, it’s the fat cat millionaires and billionaires another.  For another group, it’s a matter of all of us being in this together, with solutions that affect all of us and that benefit us all.  One example of this is in Ryan’s speech on “Saving The American Idea” at The Heritage Foundation: “Rather than raising taxes and making it more difficult for Americans to become wealthy, let’s lower the amount of government spending the wealthy now receive[,]” and “…true sources of inequity in this country – corporate welfare that enriches the powerful, and empty promises that betray the powerless.”  And this is that budget bill and those jobs bills that have been passed out of the House of Representatives and that the Senate refuses to consider.

Chinese Danegeld

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Once you pay the Danegeld, you never get rid of the Dane, goes the saying.  It’s appropriate that this European saying, originating in an ancient attempt to buy off (Danish) Vikings—which, of course, kept the Vikings coming—is being demonstrated today in Europe.

In the aftermath of the European Union’s massive bailout of the Greeks on the backs of European taxpayers and banks, EU leadership is going hat in hand to China asking for funding for the European Financial Stability Fund (EFSF).  China is insisting, though, on far more than just the usual concrete guarantees of a decent return that any investor will demand of a potential business partner who is unreliable.  China is demanding a muzzle on European speech.  If China agrees to participate, apparently, the EU must, in return, abjectly surrender its right to criticize Chinese manipulative monetary policy.

It remains to be seen whether the EU will knuckle under on this.  However, their respect for free speech never has been strong.  Just ask Geert Wilders, the Dutch Parliamentarian who was hailed into court over a four-year period for the heinous crime of criticizing Muslims, and in the height of irony, banned for several months from entry into Great Britain, his presence representing a “threat to one of the fundamental interests of [British] society.”

The Chinese are demonstrating yet another price, an unintended price, of bail outs.  And what price will they demand next?