Monthly Archives: March 2013

Obama’s Other Face

Posted on by
1

President Barack Obama is giving the appearance of wanting a bipartisan, compromise deal on our budget, deficit, and debt.  Is this real, this time, or just another version of the idle chit-chat and outright lies he’s passed off for the last five years?

The Wall Street Journal offers some metrics for assessing his behavior this time around.

  • Will he drop his demand for a tax increase outside of tax reform?  This has no chance of passing, and his continued insistence will poison the chance of any budget deal.  On tax reform he has willing GOP partners in Ways and Means Chairman Dave Camp and Ohio Senator Rob Portman, but the formula has to be lower rates in exchange for fewer loopholes.  Any additional revenue will have to come from the faster economic growth that will follow.
  • Will he agree to a flexible, generous guest-worker program on immigration?  The AFL-CIO wants a restrictive program with a political body determining when there is a labor shortage and how many visas can be granted in specific industries.  Anything close to the AFL-CIO plan won’t stop the flow of illegal immigrants coming to the US for work, but it ought to kill reform in Congress.
  • Will he put more than token entitlement reforms on the table?  As we wrote last week (“Obama’s Not So Grand Offer,” March 8), the President’s Medicare proposals don’t begin to solve the health-care spending problem.  Short of Paul Ryan’s premium-support plan, the only chance for reform worth the name is “comprehensive cost-sharing” that forces individuals to confront at least some of the costs of their own care.

These sound like a pretty good test to me.  It looks, from the Senate Democrats’ budget proposal, like he’s failed the test.

More Regulation Foolishness

Posted on by
Reply

This one isn’t as egregious as the idiocy described at Coyote Blog‘s place, but it’s bad enough.

Think about the expanse of…something…between the sidewalk in front of your house and the curb of the street.  Some towns have the sidewalk and the curb immediately adjacent to each other, but in most urban areas, this is a three- to five-foot wide strip in which most folks plant grass as an extension of their yard.  Ron Finley, though, plants a garden in his strip (parkway, as it’s known in Los Angeles) in LA, and he advises others on how to do the same.

Except that there are LA regulations against just up and doing that.

City code forbids residents without special permits to plant much of anything besides grass in curbside areas, making many of the gardens illegal.

After receiving citations from the city, Mr Finley persuaded officials to waive the $400 permit fee he was supposed to pay to install drought-resistant, aesthetically pleasing plants up to 36 inches tall outside his own home.  But he is still trying to get the city to approve a greater variety of plants for these spaces.

Never mind that such gardens are highly patriotic,

Urban farming isn’t new, dating back at least to World War I, when the government encouraged Americans to become more self-sufficient by planting “liberty gardens[,]”

they’re against the rules.

In fairness to LA, though, there is an effort to get a little bit more sensible here.

A spokesman for the district’s city councilman, Herb Wesson, said city staffers are working on revising current policy to let residents make more use of the parkways [those strips] “where appropriate.”

It remains to be seen, though, what the city’s definitions of “where,” “appropriate,” and “more use” will turn out to be, as well as the rationale for same.

A Cascade

Posted on by
Reply

…that needs to be encouraged.

Since the DC Circuit’s ruling that the Obama “recess” appointments to the NLRB were unconstitutional—the Senate actually being in session at the time—some 87 enterprises, including a few unions, are citing the ruling in their lawsuits to overturn a variety of the NLRB’s actions.  After all, with the board lacking a quorum, it was legally powerless to do anything at all.

The actions these enterprises are seeking include overturning/blocking union elections, undoing penalty payments to fired workers, halting subpoenas, and so on.

Here’s the cascade: 10 or more NLRB regional directors are argued also to be illegally appointed since they were seated by Obama’s unconstitutionally manned NLRB.  Extending from this, those regional boards’ decisions also must be voided, since those rulings were issued by illegally constituted regional boards.

Lafe Solomon, NLRB acting General Counsel, objects.

It’s already having a huge impact.  At every stage…we’re seeing attacks….

Indeed, as the WSJ reports,

The surge of challenges tied to the court ruling is overwhelming the NLRB, a federal agency that referees disputes between companies and employees.  Working through them is delaying resolution of cases alleging unfair labor practices, including whether workers can fairly hold union elections[.]

There’s no doubt the new workload is inconvenient to the Federal government.  That’s just too bad.  The inconvenience of our employee, the government, can never be an excuse for its behaving illegally.  Our employee, through the NLRB, brought the present inconvenience on itself through its patently illegal behavior.

The NLRB—Solomon—is merely blaming the employer for the employee’s own inconvenience.

You Dumb ….

Posted on by
Reply

That’s what New York State Supreme Court Judge Milton Tilling said to New York City’s lame duck mayor, Michael Bloomberg, on the latter’s…ill-advised…”sugary drink” ban.

Tilling opened his opinion by noting, correctly, the irrelevance of Bloomberg’s “obesity epidemic” motive for the ban—the question before him was simply the legitimacy, the legality, of the ban itself.  Motives, say I in expansion of Tilling’s point, are appropriate considerations only in determining sanctions, given a finding of illegality; they never can be justification for the illegality.

[The city does not have authority to] limit or ban a legal item under the guise of ‘controlling chronic disease,’ as the [city’s health department] attempts to do.  One of the fundamental tenets of democratic governance here in New York, as well as throughout the nation, is the separation of powers.  No one person, agency, department or branch is above or beyond this.

[The City Charter does not grant the health department] sweeping and unbridled authority to define, create, authorize, mandate and enforce [health codes governing food establishments and food preparation.  The soda ban] would not only violate the separation of powers doctrine, it would eviscerate it.

The judge’s beef here is that the health department just up and did the ban.  The ban was never approved by the city council.  The city’s elected representatives are the only ones who can create city law.  In fact these representatives had already explicitly rejected similar ban efforts.

Further, the Bloomberg Ban was unconstitutionally vague, capricious, and stupid.  (OK, I added that last part.  There is no Felony Stupid bar in New York’s or our Federal Constitution.)

The plaintiffs in this case pointed out that

…the Rule exempts soy based milk substitutes, but other milk substitutes such as almond, hemp and rice milk are not exempt.  The Rule also does not preclude unlimited free refills or multiple purchases of 16-oz. beverages or providing unlimited sugars after purchase at the regulated businesses….

And so on.  Tilling agreed.

The court finds that the regulation herein is laden with exceptions based on economic and political concerns. … The statement of financial costs related to the chronic epidemic [by the defendants] further evidences a balancing being struck between safeguarding the public’s health and economic considerations.  This is impermissible….

Further (the motive rejection above notwithstanding),

…the stated premise of…the Rule is to address the rising obesity rate in New York City. … The Rule is nevertheless fraught with arbitrary and capricious consequences.  The simple reading of the Rule leads to…uneven enforcement even within a particular City block, much less the City as a whole.  Furthermore…the loopholes in this Rule effectively defeat the stated purpose of the Rule.  It is arbitrary and capricious because it applies to some but not all food establishments in the City, it excludes other beverages that have significantly higher concentrations of sugar sweeteners and/or calories on suspect grounds, and the loopholes inherent in the Rule, including but not limited to no limitations on re-fills, defeat and/or serve to gut the purpose of the Rule.

 

Tilling’s ruling can be read here or here.

Federal Government’s Current Policies

Posted on by
Reply

…and our future.  David Greenlaw, James D Hamilton, Peter Hooper, and Frederic Mishkin, in an op-ed in last Friday’s Wall Street Journal had some thoughts.

Research we have recently presented at the US Monetary Policy Forum leads us to conclude that, as debt grows relative to GDP, rising interest rates could bring the debt-to-GDP ratio up to 176% in 25 years, and even higher under less favorable assumptions about unemployment and the current-account deficit.

They explain:

[C]ountries with gross debt above 80% of GDP and persistent current-account deficits—as is currently the case in the United States—face sharply increasing risk of escalating interest payments on their debt.  This means even higher budget deficits and debt levels and could lead to a fiscal crunch—a point where government bond rates shoot up and a funding crisis ensues.

And

Given the Federal Reserve’s greatly expanded balance sheet…more than $3 trillion today, there is an additional factor that could exacerbate inflation expectations—Fed remittances to the US Treasury.  If interest rates climb higher over the next few years, this could lead to substantial losses on the Fed’s holdings of Treasurys and mortgage-backed securities, losses that could approach several times the size of Fed capital.

Never mind that this bust of capital would violate the Fed’s own rules imposed on non-government banks.  And it would violate Dodd-Frank rules.

But President Barack Obama wants to keep borrowing and to keep inflating private lending—the housing market “recovery,” you see.

Which brings up another risk that Greenlaw, et al., didn’t mention—all that pushed-for private/commercial lending at today’s artificially low rates.  That’s generally long-term lending (those mortgages, and business lending for construction and plant expansion). But when interest rates rise, as they must, those private/commercial lenders will be forced to borrow at tomorrow’s rising interest rates while still locked into today’s low rates on the loans they’ve let.  Can you say, “S&L collapse?”

We really need adult leadership in the White House.