Wednesday, February 26, 2014

'BREAKING: John Dingell (D-MI) Fulfills Promise To Limit Himself To 29 Terms In Congress"

'I promise to serve only 29 terms in Congress
and not a second longer!'
This 'headline' was posted by a very funny and sharp-witted guy who goes by the handle @iowahawkblog, David Burge on Twitter Monday when long-term Congressman John Dingell of Michigan announced his retirement.

He was the longest-serving Congressman today. 29 terms equates to 58 years.

Know what was happening 58 years ago when he was first elected to Congress from the Detroit area? Detroit was still a bustling mecca for the best cars made in the world for one thing.  Ike was still in the White House.  We were just born.

In other words, that is a long, long time for anyone to serve in the public trust in any elective office, isn't it?

Henry Waxman of California announced his retirement recently as well. He was 'only' elected in 1974 after President Nixon resigned as one of the Watergate Babies who set out to change the world in many ways.

If you have only read about Watergate in the history books or watched it in the movie 'All The President's Men' with Robert Redford, you really have no idea of just how really long ago 1974 was from today in 2014.

So what?

We think serving in any elective capacity beyond 12 years is too much. No matter how brilliant, no matter how effervescent your fertile mind is, no matter how important you think you are to the future of the Republic...12 years is just about the maximum amount of time serving in public service we can think of for any sane human being.

After all, working in Washington DC on Capitol Hill really is 'la-la land' where the rules of gravity, physics and economics just don't seem to apply. It is a place where people should go to work and do the public's business...and then go home and get a real life.

We don't mind if people change jobs in the public sector over the course of their lifetime. Some people just are better at doing the public duty than others.

We sat next to Paul Coble of Raleigh last weekend at a function. He is now serving on the Wake County Board of Commissioners. He has been the Mayor of Raleigh and served on the City Council before that. He made a run for Congress in 2012 but lost in the primary.

The only elected local office he has not run for is the Wake County School Board. He has served the public a long time in a variety of elective offices.

The key difference is that he has started as a freshman on both the City Council and County Commissioners and worked his way up to his seniority positions in both. He has kept his day job which is important since we think it is critical that elected officials have to live under the same laws and regulations they pass, good and bad.

The insularity of Capitol Hill can (usually) blind long-term incumbents to the realities and consequences of their actions taken in Congress. Add in the gerrymandered districts where they usually don't have a primary or general election opponent and you know what Lord Acton says about that: 'Power corrupts and Absolute Power corrupts absolutely'.

We think had Mr. Dingell had to have worked as an executive in any of the industries that he sometimes mercilessly brought before his infamous 'Oversight and Investigations Subcommittee of the House Commerce Committee', he would have sung a lot of different tunes as an elected Congressman.

One of his chief staff guys told me the only thing worse than him driving up to see a potential victim was Mike Wallace knocking on your door and saying: 'Hello. I am Mike Wallace with '60 Minutes'. We would like to ask you a few questions if you don't mind'. 

We think Mr. Waxman may have sung a different tune had he worked in any of the health care industries that he consistently hamstrung and tied into knots with his incessant expansion of the federal role into health care in America. Try to imagine, if you are in any of the health care or medical device fields, Henry Waxman running any of the administration or executive functions of any health company first and then being able to pass much of his legislative agenda later as a Member of Congress.

There is a world of difference between the 'la-la land' of utopian dreams on Capitol Hill and the real-world, real-life implementation of those laws in day-to-day business functions.

On the other hand, right here in North Carolina, we have had several sterling examples of responsible citizens 'taking their turn' as one of our friends calls it, to run for elective office, get elected, serve a few terms and then, self-determined, leave office on their own terms.

Speaker of the North Carolina House, Thom Tillis, told his constituents he would only serve 4 terms or 8 years in the North Carolina legislature when he ran in 2006. NC Republicans had been in the majority for the better part of the past 140 years but he helped devise a plan to capture control of the legislature in 2010 after which he was catapulted to the Speaker's chair.

He could have stayed there for the rest of his life perhaps. He held to his self-proclaimed term limits and announced he would not be running for re-election in 2014. He is now running for the US Senate.

Ruth Samuelson of Charlotte is another example of a citizen-politician 'doing the right thing' and 'taking her turn' at elective office and then living in the real world. Ruth served a couple of terms on the Mecklenburg County Commission from 2000-2004 and then was elected to the NC House in 2006. She worked with Mr. Tillis to bring about the first Republican control of the North Carolina legislature since just after the Civil War and was in a position to run for Speaker after Mr. Tillis declared his intentions to run for the US Senate.

She decided not only to not run for the Speakership, but she decided to not run for re-election in 2014. She had served a good 8 years in elective service in Raleigh on top of her 4 years at the local level so she may have hit that proverbial 12-year 'maximum utility' standard we alluded to before.

We worked for a gentleman businessman for 10 years in the US Congress, Alex McMillan of Charlotte. From the day he was elected, he always said he would not serve more than 12 years if re-elected that many times. He made it to 10.

In 1993, he made the decision that he had done what he could to bring fiscal sanity and financial responsibility to the federal budget among other things and decided to retire after his term was up in 1994.

'Would you be upset if the Republicans take over control of the US House in 1994 for the first time since 1954?' I asked him upon his declaration of retirement, full well-knowing that no sane person in their rational mind in 1993 would have ever thought Republicans had a smidgen of a chance to win control of Congress after 40 years in the wilderness.

'Maybe...for about 10 seconds. It is time to move on. I've done what I could and I have the rest of my life to live with my family and friends' was his honest answer.

Of course, lightning struck and the Republicans under Newt Gingrich took over for the first time in 40 years with a net gain of 54 seats and the Second Republican Revolution was underway. But Congressman McMillan retired with his integrity intact and the knowledge that he had, indeed, 'taking his turn' to serve in the public trust and try to make things better for all of us.

One thing many people don't realize or remember from that 1994 election (mainly since many of them were not born or were in grade school at the time) is that all of the incoming Republican freshman in the election of 1994 signed a pledge to limit their terms to 3 terms or 6 years. Meaning ALL of them would voluntarily retire at the end of the 2000 session if they were re-elected in the meantime.

Care to guess how many of the 73 freshman GOP House Members who signed that voluntary 3-term limit pledge actually honored it, assuming they were still around in 2000 after 2 re-elections?

5. Less than 7% of them. That is pitiful.

If you are not going to honor such a self-imposed requirement, don't sign the pledge! Just stay for 29 terms like John Dingell or 40 years like Henry Waxman.

The point of all this is to say that there are good people out there willing to serve the public in elective office. Some of them also have the right perspective that politics is part of their life, not ALL of their life.

Those are the people you want to elect to public office, on both sides of the aisle. Ask them this election season and see what they have to say BEFORE you vote for them.

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Saturday, February 22, 2014

'Spending Is Austerity! Imbalance Is Balance! Red Is Blue!'

'Spending is Austerity! Raising Taxes
Is Cutting Taxes! Imbalance Is Balance!'
'With 2015 budget request, President Obama will call for an end to austerity' screamed the headlines of a recent Washington Post article about President Obama's budget submission to Congress on March 4.

What 'austerity' is the President talking about????

We have embarked on perhaps the largest and greatest economic fiscal expansion of federal spending and federal debt assumption under his Administration since the Great Depression!

It is like the USA has been trying to garner the gold medal for fiscal recklessness for all-time!

This headline made us think of several other 'headlines' the Washington Post might be 'screaming' in the near future:
  1. 'President Obama calls for more regulation of American business since we have not had enough over the past 5 years!'
  2. 'President Obama calls for more federal involvement and bailout of American business since we have not had enough over the past 5 years!'
  3. 'President Obama calls for more wall-to-wall coverage of the Winter Olympics at Sochi since we obviously have not had enough over the past 2 weeks!'
Here are the salient facts about President Obama's actual record on all things related to the national debt and federal budget and deficits, again from our friend and fellow budget-hawk and truly reasonable fellow, Chuck Blahous:

'This morning’s Washington Post contained a front-page article that included the following sentence: “With the 2015 budget request, Obama will call for an end to the era of austerity that has dogged much of his presidency and to his efforts to find common ground with Republicans.”

Rather than engage in a semantic discussion about what constitutes an “era of austerity,” over at e21 I simply present the salient facts of the US budget for readers who may be unfamiliar with them.

  • Deficits: Since 1947 the four largest deficits run by the US government, as a percentage of the economy, were in fiscal years 2009, 2010, 2011 and 2012—the first term of the Obama Administration. These deficits ranged in size from 6.8 percent to 9.8 percent of GDP. The previous annual record was 5.9 percent in 1983.
  • Spending: Since 1947 there have been only three fiscal years in which the US government spent more than 23 percent of our total national economic output—2009, 2010 and 2011, the first three years of the Obama Administration. 1982 and 1983 come in fourth and fifth. CBO projects that sixth through eighth place will belong to 2022, 2023 and 2024 (until later years produce even higher deficits)
  • Debt: Federal debt held by the public stood at 39 percent of GDP in 2008. It is now more than 73 percent of GDP, its highest point since 1950, and is projected to rise further in the future.
  • The future fiscal imbalance: CBO finds that the long-term fiscal imbalance is attributable to projected cost growth in Medicare, Medicaid, Social Security and the Affordable Care Act. The Obama Administration advocated successfully for the enactment of the ACA and the expansion of Medicaid. Medicare savings were legislated but these savings are being spent on a new federal health program rather than being used to improve federal finances. Social Security’s financing shortfall has been permitted to grow well beyond the largest size that lawmakers have ever previously closed
  • Major policy decisions: The most important fiscal policy decisions made in recent years under the Obama Administration include:

    1) The passage of the ACA, which increased projected spending in the fastest-growing component of the federal budget;

    2) The 2009 stimulus law, the costs of which were added to the deficit;

    3) A two-year cut in the Social Security payroll tax, which was added to the deficit; and

    4) The permanent extension of most previously-legislated tax reductions.

    These deficit-increasing policies are together several times greater in magnitude than occasional instances of fiscal discipline (sequestration). 

In sum, federal fiscal policy decisions in recent years added enormously to deficits and have produced the highest levels of spending, deficits, and debt relative to GDP since the aftermath of World War II.

I leave it to others to determine whether this can reasonably be termed “austerity.”

Here's what we collectively don't get about Progressive Liberals: They say they are 'for' Keynesian economic policy....but they act like they have never read anything he ever wrote or, at best, only half of it:

They say:

 'We can't cut spending in a recession! We need that stimulus 
to grow the economy and create new jobs!'

Ok, we get that. It has been used many times in the United States and around the globe post-Depression era.

What Progressive Liberals often fail to include in their economic stimulus package are significant tax cuts which were ALSO part of Sir Keynes formula for recovery after a recession.  The Obama Administration offered small targeted tax cuts but when coupled with their passage of Obamacare and other tax hikes, they are responsible for perhaps the greatest tax hikes overall in American history, precisely at the wrong time according to Sir Keynes.

(Keynes died as an out-and-out millionaire. He was a full-blooded capitalist and speculator, you know.)

Now that we are over the financial crisis of 2008 and 2009, and, apparently in President Obama's world, in a 'robust recovery' (God help us if he ever says we are only in a 'fair' recovery), Progressive Liberals say:

'We can't cut spending now either!!!!

What they have failed to comprehend from even a cursory reading of Sir John Maynard Keynes' general theory is that in a recovery, government is supposed to raise taxes AND cut spending to head off incipient inflation as the demand for money goes up when people start investing and spending again.

Progressive Liberals apparently went to only 1/2 of the classes on Keynesian economics...the half that said to increase spending...and they took that to mean 'Always!'

They get it only about a quarter-right: They like to raise federal spending, and they like to raise taxes (on rich people mostly) anytime: good economy, bad economy, or a flat stagnation economy such as the one we have today and have had for the past 5 years.

Let's face it: progressive liberals like to spend other people's money! It is that plain and simple.

How about them apples for all you Keynesians out there?

We suggest that if you are going to be a 'true' Keynesian, at least follow what he says: cut taxes/raise spending in a recession; raise taxes/cut spending in a recovery.

Otherwise, don't refer to your economic policies as 'Keynesian'.

That would be like modern-day Lutherans saying they are 'exactly like Martin Luther' or modern-day Calvinists saying they are 'just like John Calvin' without actually doing or saying exactly what they said long ago.

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Thursday, February 20, 2014

Raising the Minimum Wage

The Congressional Budget Office (CBO) has been causing a lot of waves lately.

First, CBO threw a wrench in the rollout of Obamacare by saying that despite everyone's great intentions, 31 million people will still be uninsured by 2023 despite spending anywhere from $1.2 trillion to $3+ billion in deficit-financed, debt-increasing subsidies and other costs related to full implementation of the ACA.

Oh, yeah...CBO also says that Obamacare is causing a net reduction in full-time equivalent workers of close to 2.5 million people as well.

With this report just published, CBO has now stuck its finger in the eye of the Obama Administration that wants to raise the minimum wage to $10.10 across all of America after signing an executive order that raises the federal minimum wage paid to civil servants to that level.

CBO pretty clearly says this about raising the minimum wage to $10.10/hour right out of the chute on the first page:
'Once fully implemented in the second half of 2016, the $10.10 option would reduce total employment by about 500,000 workers, or 0.3 percent, CBO projects. As with any such estimates,however, the actual losses could be smaller or larger; in CBO’s assessment, there is about a two-thirds chance that the effect would be in the range between a very slight reduction in employment and a reduction in employment of 1.0 million workers'
(Talk about covering your bets on all sides of the wager! But the chances are pretty high, according to CBO, that a significant number of jobs will be lost as a result of the higher minimum wage)

In other words, raising the cost of doing business in any fashion, whether it is in the form of regulations, taxes, or forced higher input costs such as a higher minimum wage reduces the number of jobs available for the roughly 20 million un- and under-employed Americans we have in this country today.

One thing that gets lost whenever we talk about raising the minimum wage, an emotional issue to be sure, are some of the basic facts of the issue.  Fortunately, we had the chance to ask learned people in Washington who spend all their lives looking at one particular aspect of any economic problem such as the minimum wage in America what their research showed instead of having some talking head try to tell us what they think we should believe.

There are lots of things to consider but here are just a few of the ones we have wondered about over time.
  1. How many people are we talking about anyway?
  2. How many young people right out of college or high school are affected versus older adults with families?
  3. How many people stay at the minimum wage level, or near that level, the majority of their working days?
These are all bottled up under the umbrella of 'fairness' but they are all very separate issues that seem to cry out for different solutions and proposals to be offered to address each one in kind.

Since we always think visuals work better than forcing people to dig through dense prose, especially on complex budget/economic matters, we thought we we would post a catchy chart for you below to take a look at before reading the full text at the blogsite 'Political Calculations'.

Obviously, the largest number of people who are affected by the minimum wage are aged 16-24. Over 2 million people in 2010 in this age group were being paid the minimum wage during the year.

As you can see from this fancy doughnut chart, the number of people at the minimum wage steadily declines as you go up the age cohort ranges. 242,000 Americans across the nation aged 45-49 are at the minimum wage; 91,000 Americans aged 60-64 make the minimum wage.

Based on population distribution, that would mean a state such as North Carolina might have perhaps 7260 workers aged 45-49 making the minimum wage;  2730 people aged 60-64 make the minimum wage.

When we were young and inexperienced in most everything during high school and college, we were just glad to have a job of any kind in the summers. We flashed tar on the roofs of the American Tobacco warehouses in downtown Durham in the middle of August when it was 100 degrees in the shade and the humidity was about 95%...and it was not raining. We loaded empty bottle crates at the local Coca-Cola Bottling Company back when 'recycling' meant re-washing all of the glass bottles instead of dumping bazillions of PET plastic bottles into the trashcan. We worked in construction and somehow didn't cut off both hands and feet with circular saws or smash all fingers with 32-oz hammers.

We were lucky. We had a family that supported us and paid our bills. The money we made at minimum wage was spending money for us and millions of other young people as well.

It seems to us that these over 1 million young people working at the minimum wage should be treated differently than older people stuck at minimum wage jobs at the very least. One thing we have always been eager to see what would happen in actual operation would be for some state such as North Carolina to get a waiver for a period of several years to allow teenagers aged 16-19 to be paid a lower wage than the minimum wage, the so-called 'sub-minimum wage' from the past, and see if it leads to a massive increase in the number of jobs available to teenagers of all races and socio-economic backgrounds.

We think it would. Many business people tell us they would hire more teenagers in sort of an apprenticeship mode if they could hire them at less than the minimum wage and give them some very helpful real-world work experience.

If it does lead to substantial numbers of teenagers being gainfully employed in jobs where they can learn the value of showing up on time, being able to read and write clearly and communicate with others and working hard, then that would seem to have societal benefits that will last far into the future.

The second thing we were always interested in was this: 

'How many people start at the minimum wage and stay at that level for their entire working lives?'

From a somewhat more dense report, take a look at this Bureau of Labor Statistics report: 'Do Some Workers Have Minimum Wage Careers'?

Two conclusions from their study are as follows:
'They found that 63 percent of the minimum-wage workers in their sample were employed at higher-than-minimum wage jobs 1 year later. Also, Bradley R. Schiller found that “only 15 percent of the 1980 entrants still had any (minimum wage) experience after three years, “which suggests that long-term minimum wage employment is rare.
There still remains the very real problem of older adults staying at or near the minimum wage for most of their working careers. The BLS report states that most people move onwards and upwards from the minimum wage after an entry-level job that gets them in the workforce but there is 'the non-trivial fraction of workers who spend substantial portions of their post-school career on minimum or at near-minimum wage jobs....We find that workers with such minimum wage careers are drawn from demographic groups with generally low wages; women, minorities and the less-educated.'

If we continue to have 30-50% of all students who enter the 8th-grade drop out before they graduate from high school, that is going to be a very difficult cycle to break. Education, or lack thereof, almost always seems to be part of the equation when it comes to poverty in America

One final observation that we have always found intriguing is this: 'If you want to pay anyone more than the minimum wage, you are more than free to do so at your place of business or in your home. 

Nothing is stopping you from doing so, you know. If you want to earn less profit or have less money in your pocket vis-a-vis those mean people who don't want to pay a higher minimum wage, that is entirely your right and you have the freedom to do so each and every day of the week, month and year.

You may even attract better workers from your competitors or neighbors who fail to match your $15/hour wage pay to your lower-skilled worker. People should be falling over themselves to get to your place of business or home at a 50% premium in pay, shouldn't they?

We don't have all the answers or else we would run for the White House and tell everyone our great secret solution. However, we do think that the debate over the minimum wage is far more nuanced than advocates and antagonists want you to believe and that we need more clever and nuanced solutions to address the problem.

Having some of the facts at hand might help everyone debate the thorny issue of raising the minimum wage and other issues better. We think. It is such a novel concept, yes?

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Friday, February 14, 2014

Which Founder of the United States Said What

'We The People...Need A Compromise!'
One of the most interesting things we get to do on a regular basis is invite constitutional scholars to speak to undergraduate and older adult leaders who should run for public office one day.

Stewart Harris is one of those folks. He teaches at the Appalachian Law School in Grundy, VA which is about as far west as you can go in the state and not be in Kentucky.

He is affiliated with the Center on the Constitution at James Madison's Montpelier which means that he knows a lot about the Constitution, its inner workings and meanings and its history.

He recently visited North Carolina and got all snarled up in the recent snowstorm, which to someone from the mountains of western Virginia must have looked rather tame by comparison.

But he said something that caught our attention. We thought we would share it with you.

He said he loves talking to people who insist they know what the 'original intent' of the Founders of the United States was and what they would want for America today.

First of all, you have got to wonder how many people have ever actually read the Constitution from stem to stern. With comprehension. Not just a cursory reading.

Second, you have to wonder how they are able to divine exactly what John Adams, James Madison and Alexander Hamilton were thinking 227 years ago when they were in Philadelphia drafting and debating the new Constitution after the abysmal failure of the Articles of Confederation for the 8 years prior to then.

But the question that Stewart says always trips people up is this:
'WHICH Founder are you talking about?'
Mr. Harris goes on to explain that 55 different people attended at least one session of the Constitutional Convention in Philly; 33 actually signed the final document before it was sent off to the states for ratification.

In each of the 13 states, ratifying conventions were held where several hundred delegates nationwide at the time got to express their opinion of the new Constitution and 'what the vision for America's future would look like under it'.

All of these hundreds of delegates at the state and national level were 'Founders' in some sense of the word or another, weren't they?

So which Founder are people talking about when they say: 'I am for Constitutional principles, just like our Founding Fathers!'?

Are these 'original intent' people saying they want to follow the Constitution 'as written'? In which case, they have the very problematic problem that the US Constitution, as great as we think it is today, at its core made 100% sure that slavery would be the law of the land for at least 20 more years. Only one specific amendment is mentioned in the Constitution and that is the one that said NO amendment to abolish slavery during that time could be considered by Congress.

The one issue the Founders did not really solve in the beginning at all was the issue of slavery. In fact, they 'punted' on it very much like our elected representatives, senators and Presidents have 'punted' on the issue of entitlement spending in the US since about 1980 or so.

Very tough political issues get kicked down the road to the 'next generation' to solve, don't you know.

These men, as educated and brilliant as they could be at the time, hated each other over time! Jefferson hated Hamilton; Hamilton hated Jefferson; Adams hated Jefferson; Adams hated Hamilton and Jefferson and Hamilton both hated Adams with passion.

There is also the troubling problem that the Anti-Federalists hated the Constitution, even though many of them fought in the War Against British Imperialism. Some, such as George Mason of Virginia, participated and contributed greatly in the 4-month debate in Philadelphia only to not sign it because it lacked a Bill of Rights that would be added later after ratification by 9 of the 13 states.

Was the Anti-Federalist/Bill of Rights advocate George Mason not a 'Founder' of this country?

Remember Patrick Henry, 'Give me Liberty or Give me Death!'? He was all for the Revolutionary War but he was decidedly against the passage of the Constitution in its victorious aftermath. He was a 'Founder' too, wasn't he?

The fact of the matter is that the delegates to the Constitutional Convention in Philadelphia in 1787 and the ratifying conventions for the next 2 years really did not agree a whole heckuva lot on a whole lot of specific things. The Southern slave-holding states sure as heck didn't agree with the abolitionist sentiments of many in the north. The big states looked down upon the small states with disdain and little respect for what they could bring to the new nation.

So, which 'Founder' do you think you agree with when or if you state that you 'support what the Founders wanted as expressed and written in the US Constitution'?

Alexander Hamilton, close confidant to General Washington, agreed with his boss that a new muscular central government was crucial to the survival of the American Republic, especially when they remembered how hard it was to provision, re-supply and re-stock the Revolution Army under the pitifully weak Articles of Confederation. Are you 'for' Hamilton's principles that are reflected in the Constitution?

Thomas Jefferson wasn't even there in Philadelphia in person since he was in Paris begging for money for the new Republic and trying to work on trade treaties to bolster commerce for American raw materials. But he was there in spirit as he corresponded abundantly with James Madison, the Architect of the Constitution many consider him. Both Mr. Jefferson and Mr. Madison favored a weaker federal government with more power to the states and both regretted the passage of the Constitution later in their careers.

Except when they both became President, that is. Then they wanted to use every executive power in the Constitution to advance their political goals and agenda. Of course.

By the way, for the record, Mr. Hamilton 'won' on almost every score when it came to having a strong muscular central government. He assumed all the debt from the states; he started the first central bank (think 'Federal Reserve'); he started the Coast Guard, the US Mint and virtually everything that goes into being the Secretary of the US Treasury, perhaps the most important of all Cabinet functions today.

There is almost no vestige of the agrarian, 'small government' utopia envisioned by Mr. Jefferson and Mr. Madison. Anywhere in the nation today.

And yet, despite all of their profound differences, the delegates to the constitutional convention somehow found a way to come to a collective decision to pass the Constitution and get on with starting the greatest country the world has ever known.

Here's the over-arching principles we think the Founders actually agreed upon at Philadelphia in the hot, smelly summer of 1787. See if you think any of these should be the underlying principles we should try to emulate today:
  1. 'We need a government so we can defend our nation against foreign aggressors!'
  2. 'We need a government to regulate commerce and protect the rule of law!'
  3. 'We need a government that forces us all to compromise even when we really don't want to compromise at all!'
  4. 'We need a government that does not put all of its power of the hands of one person who could become a tyrant like the King of England!'
  5. 'We need a government that solves our national problems so we can live our lives in peace back home in the states with 'freedom and justice for all'!' (words not in the Constitution, by the way)
Everything else, it seems to us, is fluff and puff.  We think these are the true underlying principles our Founders were operating under because let's face it, if they didn't get their act together in 1787, France or England was going to invade them and take over the rich new assets of America and/or we were going to destroy our economy with hyper-inflation and seriously depreciated currency.

Something had to be done. The US Constitution is a product of that urgency to 'get something, ANYTHING! done!'

Our Founders fought like cats and dogs over how they wanted to be governed. Just like we are doing today on a daily basis.

It might help if we had our generation's versions of George Washington, Alexander Hamilton, Thomas Jefferson and James Madison serving in Congress and the White House. Who would they be? Colin Powell, Bill Gates, Oprah Winfrey and Jon Stewart?

Whenever you encounter someone who says they are for 'constitutional principles', ask them the question that Stewart Harris asks people he encounters on a regular basis. 'WHICH Founder are you talking about?'

You ought to have some pretty interesting discussions thereafter.

* You can follow Stewart Harris by clicking on the following links:
Stewart Harris, Professor of Law, Appalachian School of Law
Your Weekly Constitutional Website:
Your Weekly Constitutional Facebook Page:
Your Weekly Constitutional podcasts:
Your Weekly Constitutional Twitter:

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Thursday, February 13, 2014

'Politics: What You Are Willing To Give Up. Policy: What You Want'

'Social Safety Net'...or
...'The Ladder of Opportunity'?
Chris Saxman, a friend of ours and a former member of the Virginia House of Delegates, had this to say about politics vs. policy recently:
'Politics is not about what you want; it's about what you are willing to give up.'
'Policy, on the other hand, IS about what you want.'
There is a lot packed into that statement, yes? We have spent 235 years of American history now trying to figure out what we want to be as a people, as a society and as an economy. We are not sure if we have answered it yet.

We may never answer it fully. One of the beauties, and frustrations, of American democracy is that we do tend to go along the pendulum swing of wanting more government to less government back to more government on a regular basis. At the state level, federal level and local level.

There is always that constant tension between individual freedoms and collective well-being, isn't there?

Keith Hennessey posted another wonderful insight exposing this tension, 'Ladder vs. Safety Net' that pretty much gets to the heart of the discussion about whether the ACA, or Obamacare, does more to widen the safety net for millions of Americans or whether it traps them on the lower rungs of opportunity which we all want for everyone.

We would like to take it a step further and point out why Obamacare did not 'reform' health care in any meaningful sense of the word. In fact, as each successive story comes out highlighting yet another problem with Obamacare from the rollout to the cancellation of millions of policies to the reduction of 2.5 million full-time job equivalents (FTEs) in the most recent CBO report, we think it is only a matter of time before the political pendulum starts to swing back against Obamacare and the majority of Americans support either its repeal or drastic restructuring.

President Obama is constantly doing the Australian backstroke every week it seems as he refuses to enforce the provisions of the signature law he pushed for in his first year as President. This week he said he was not going to enforce the mandate on medium-sized business.

Even the flipping WASHINGTON POST said President Obama is setting a very dangerous precedent for future Republican Presidents, mostly, to selectively decide which parts of federal legislation they will 'faithfully execute'...and which ones they won't.

Just try to imagine any future President 'selectively' saying: 'Oh, those protections on abortion coverage...I will just ignore them!' or 'Those environmental protection things passed by Congress...forget it, I am just going to ignore them and let everyone and any business pollute as much of our air and water as they want!' or something to that effect.

The nation would go bonkers. Why not with President Obama's unilateral actions on the ACA?

Getting back to the tradeoffs that Mr. Saxman mentioned must be in any good political compromise, there is absolutely nothing, nada, zero, zippo that the PPACA, now known just as the ACA, has done to arrest the upwards cost-drivers inherent in the American health care system. Professor Donald Taylor of the Sanford Public Policy School at Duke University has written about this in his blog and in his book, 'Balancing the Budget is a Progressive Priority' (2012)

In the context of Mr. Hennessey's work noted above, the ACA or Obamacare pretty much promised the world to everyone...and didn't tell anyone of any of the downside costs it would demand.

'All Safety Net, All The Time' should have been the tagline for President Obama and the Democrats who passed it in 2010, many of the same red-state Democrat Senators such as Mark Pryor (Ark); Mary Landrieu (LA) and Kay Hagan (NC) who are doing a vigorous backstroke to distant themselves from Obamacare every chance they can.

PriceWaterhouseCoopers produced a report in 2010 titled 'The Price of Excess: Identifying Waste in Healthcare Spending'.

They concluded, as many others have as well, that the definable 'wasteful spending' in the American health care system is about 50% of all expenditures across the nation.

There are 3 buckets of waste: Behavioral; Clinical and Operational. You can read the report yourself and fill yourself in on their findings.

We have pointed out the fact in previous posts that if everyone got serious about their own health and 1) lost 25 pounds; 2) quit smoking; 3) quit over-drinking; 4) stopped eating Twinkies and chips by the ton and 5) exercised 30 minutes per day, maybe 30%, perhaps 40% or even 50% of our health care costs related to diabetes, cancer and heart disease would evaporate into thin air.

So we agree with PriceWaterhouseCooper on their first point. The question is how to get there.

The other two points are where we think Obamacare failed miserably to wrench all of the clinical and operational waste out of the US healthcare system.

Further national and state tort reform would have been a good start but the trial lawyers were too strong of a lobby to defeat so the ACA skipped over that one like it was a hot potato. Missed opportunity #1.

Relieving doctors and administrators of the virtual mountain of paperwork and recording they have to do every day would have been a good start as well. However, according to some, physicians and providers spend over 25% of their day just doing paperwork....when they could be doing something more important like treating patients! Missed opportunity #2.

Tied in with more acute tort reform efforts is the thorny issue of 'defensive medicine'. Defensive medicine falls into the same category of interpretation being in the eye of the beholder not totally dissimilar from Justice Potter Stewart's famous observation that while defining hard-core pornography is hard to do, 'I know it when I see it!'

Some peg defensive medical costs at 5% of all medical costs today. Hundreds of doctors and healthcare providers told me personally during my two stints on Capitol Hill that they routinely prescribed 20% of their procedures solely to protect themselves from litigation later.

So who knows for sure. We do know that there is some substantial part of healthcare costs in America that were not unwound by Obamacare and in some cases, may have been exacerbated.

The point here is that President Obama is unwinding his own signature piece of legislation as we speak, mostly because it is unworkable and detrimental to so many millions of people and businesses, large and small.

The next effort to 'Reform Health Care in America' (and you know it has to happen soon) has to focus on wrenching every available dollar now wasted in current American healthcare spending first and foremost or else we will never get out of this healthcare maelstrom in which we find ourselves today.

Good legislation always entails what each side is forced to give up to get what they want.

Former Congressman Alex McMillan, for whom I worked many years, used to say when everyone went to the Rose Garden at the White House with big smiles on their faces, both Democrat and Republican:

'There's a terrible piece of legislation there. No one is unhappy with the outcome'

How true that is. The ACA was just the latest example of such dreamy-eyed and Alice in Wonderland thinking.

It is time for adults to come in and run our national government again by making the hard choices for us.

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Thursday, February 6, 2014

CBO: 'Obamacare Kills Millions of Jobs'

'Unintended Consequences of ACA'
Politically, the recent CBO report on Obamacare's impact on jobs is a nightmare for every Democrat who voted for it in 2010. It is also a nightmare for President Obama who really doesn't have to care very much about it or his poll numbers anymore because he can't get defeated in the next election, now can he?

'Obamacare Will Cost Millions of Jobs!' will be tattooed on every Obamacare elective supporter's forehead, all of them Democrats since no Republican supported it. The Senators and Congresspeople who voted for it in 2010 and have been defending it ever since can not run away from it; they voted for it plain as day and it is theirs to own and run on, not away from.

Here's the CBO Report for you to read in its entirety. We always encourage everyone to read the original documentation and not rely on what Rachel Maddow, Sean Hannity or Dana Carvey, er..Jay Carney, the White House spokesman, try to tell you what the CBO report means.

Starting on page 117 and ending on page 127, 'Appendix C: Labor Market Effects of the 
Affordable Care Act: Updated Estimates' will do its absolute best to explain what Obamacare will do to the US labor market in excruciating detail...or make your eyes turn inside and out in the process.
'CBO's updated estimate of the decrease in hours worked translates to a reduction in full-time equivalent employment of about 2.0 million in 2017, rising to about 2.5 million in 2024, compared to what would have occurred in the absence of the ACA.'
There you go, in black and white.  2 million jobs lost in 2017; 2.5 million in 2024. Right from the same CBO that the Obama White House depended on to defend the passage of the ACA in 2010 which said, in all due respect and seriousness, that the ACA would lower spending on health care and help reduce the deficit.

We remain skeptical of the claim that the ACA will ever save any money anywhere for any government entity. Say we are from Missouri and leave it at that. Or buy this bridge we have to sell you in the desert.

Two very smart friends of ours have written serious yet understandable critiques of the ACA effect on employment after these CBO numbers came out last week.

Chuck Blahous, whom we have referenced before, wrote this piece for e21, a publication from the Manhattan Institute, 'The ACA IS Driving People Out Of The Workforce' 

Keith Hennessey wrote this piece: 'Obamacare's Trap' which builds on some of the arguments made in the Blahous piece.

Essentially both are saying that there are huge tax implications that come into play for 1) middle-income people thinking about leaving their place of employment with health care coverage provided by their employer and 2) lower-income folks thinking about working harder or longer hours or have a spouse take on a second job and moving up the income/wage ladder.

The conclusion is that the ACA sets up this somewhat complicated marginal tax benefit conundrum for such people but which gets solved every single day by each individual based on the very simple question they will ask when face with such a choice:
'Will I or my family be bringing home more money or less money if we cut our hours back or we take on a second or third job?'

Economists try to make this more complicated than it really is.  Some of the best 'cost/benefit analysts' in the country or around the world are people who can very easily calculate the effect on their household income if they earn more/less money versus taking more/less governmental assistance.

Same with any businessman or individual. People look after their self-interest first; they have to.

White House spokesman Dana Carvey, er...Jay Carney has been tap-dancing like Mr. Bojangles trying to put a positive spin on these devastating CBO numbers by saying the ACA 'frees up workers' to be able to leave jobs they hate and follow their dreams doing something else.

'Well, bust my buttons! Why didn't you just say so in the first place?' like the gatekeeper in The Wizard of Oz?  

If the ACA was sold as a 'portable health care package' such as the IRAs and 401ks before it, then it may have broadened its appeal to even recalcitrant Republicans in the beginning.

But it wasn't.

The difference is that there is a significant federal taxpayer subsidy in every ACA health care plan for people under a certain income level that is not available to anyone who sets up an IRA or 401k for themselves and their family.

Where is the line drawn between 'following your own dreams' and having a sufficient federal taxpayer subsidy from the rest of American taxpayers to buy health care such that you decide you just will drop out of the workforce altogether?

We have heard the ACA being described as 'Medicaid Plus' where it provides service and coverage just above the level and quality of care offered to Medicaid patients..except ACA participants pay for a significant part of their coverage in monthly premiums whereas Medicaid patients don't.

Read the CBO report and the Blahous and Hennessey pieces in their entirety and see what you think. We think the 'joblessness lock' coined by Mr. Blahous and the 'trap' described by Mr. Hennessey are very real and unfortunate by-products and end-results of the ACA.

Do we really need any federal policies that accelerate or accentuate the 'reduction' of the number of jobs or numbers of hours worked in America today? Under- and un-employment are perhaps the worst thing that can happen to any individual in America and to our nation as a whole.

The ACA is proving that the 'Law of Unintended Consequences' is still applicable to federal legislation.  Not that that is any great surprise to is just the nature of the beast.

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Sunday, February 2, 2014

Fun With Numbers...and Perhaps Too Much Spinning?

'Let's see: The unemployment rate is
great...because I say so!'
We have long been fascinated by the ability of political partisans to 'spin' facts and figures to their particular benefit.

Some are very good at it and get paid huge sums of money to do so for their particular client or party. Some are just great at 'shading the truth'; 'gilding the lily' or 'looking at the facts with rose-colored glasses'.

It is almost part of the political DNA of political candidates in this country to do so in order to get elected.

'Perception is reality' Lee Atwater used to say all the time.

If you can convince the majority of people that your view of the truth is the real truth, then you will get elected...regardless of whether it is technically 'true' or not.

The only problem is that 'looking through rose-colored glasses' when it comes to the facts of the matter doesn't do a whole heckuva lot to help the average American learn or understand what is going on in America today. 'Gilding the lily' doesn't help the average American understand what it will take to get us back to where we all want to be: living in a vibrant, growing economy that generates millions of new jobs so everyone can get back to work and provide for their families.

Case in point:  2 completely different interpretations of the recent unemployment numbers.

The national unemployment rate has been steadily dropping over the past 4 years as the economy tries to slowly recover from the massive recession and real estate/economic crash we suffered in 2008-2009.

From a high of 10% in 2009, it is now about 6.7% which looks like significant improvement on the face of it.

But is it, really?

Generating unemployment figures is not an exact science.  There is no central computer system collecting data on every single person in this country who is either employed, looking for a job or who wants a job but has given up his/her search because of the difficulty of finding a job in a still depressed economy.

Such data is collected from numerous surveys that are conducted monthly by the Bureau of Labor Statistics (BLS) which is considered as a 'representative sample' of the labor situation across the nation in specific and as a whole. It is presented every month and testimony is taken at the Joint Economic Committee in the US Congress for anyone brave enough to sit through them month-after-month-after month. (We have done so...and they are not always 'scintillating' or even 'interesting' discussions)

The debate ever since President Obama took office in 2009 in the midst of the depths of the Great Recession has been over this:
'Have his policies 'worked' to alleviate massive unemployment...or have people just withdrawn from the workforce by the millions frustrated by the lack of jobs due to a stagnant economy?'
The Raleigh News and Observer today had the following opinion piece, 'McCrory makes rosy, but questionable claims on jobs front' claiming that Governor Pat McCrory, the North Carolina Governor for just over 1 year now, is making a specious claim that his policies and the policies of the GOP state legislature have significantly reduced the state's unemployment rate.

State Senator Josh Stein, the presumptive Democrat candidate for NC Attorney General in 2016, sent out the following statement (*see below) following his appearance on the CBS Evening News claiming that Governor McCrory's claim ignores the fact that '95% of the unemployment rate reduction is due to lower labor participation rates'.

Well, which is it then? Is the unemployment rate 'going down' a good thing because more people are finding productive work or is it just a mirage obfuscating the fact that many frustrated people are just not looking for work any longer?

Why is it that when President Obama announces the 'tremendous progress' his Administration has made in lowering the unemployment rate to 6.7%, there is barely a peep from the news media or the Democrats about the tremendous increase in the numbers of people who are dropping out of the labor force like flies, completely frustrated by the lack of job opportunities they can find?

But when a Republican Governor makes the same claim to support his/her politics, he/she is excoriated as in the N&O opinion piece?

Look, we don't like partisans on either side 'gilding the lily' or outright 'lying' about the facts when it comes to politics. We 'get' that is how it has been played ever since the beginning of our Republic. (If you don't believe it, read any of the biographies we have noted in the margins of this blog and see how Hamilton and Jefferson, primarily, perfected the art of 'selective argumentation' if you will)

But at least be consistent, for goodness sakes! On both sides of the aisle.

If you need one more data point why so many people are leaving both established political parties and registering 'Unaffiliated' or 'Independent', add this one to the list.

If Governor Pat McCrory in North Carolina can't claim the reduction in unemployment due to the rapid rise in the numbers of people leaving the workforce, then neither can President Barack Obama at the national level.

We think that the impact of federal policy on the economy far outweighs the impact of any state's economic policy, although high-tax states such as New York and California are providing ample evidence that people will move to lower tax and lower-regulated states once the burdens on business get too onerous.

We happen to believe that the American people will positively burst into spontaneous job creation mode the moment they collectively believe that they can invest with confidence that they can do so without fear of more taxation and regulation taking away their hard-earned profits and benefits, assuming their new investment is successful that is.

Just ask any businessperson today how many people they would hire if they did not have to worry about complying with Obamacare...the numbers are staggering.

The labor participation rates might then skyrocket when people start to see opportunities to be re-employed once again. The 'official' unemployment rate might initially pop back up..but wouldn't that be better than the current situation?

* Newsletter from NC State Senator Josh Stein

January 28, 2014

Dear Neighbors,
Last night, CBS Evening News aired a story on unemployment in our state, calling North Carolina “ground zero.” Along with Governor McCrory, I was interviewed in the report, the clip of which is attached below.

The segment failed to explain why our state’s unemployment rate has fallen faster than other states. Unfortunately, more people are giving up and dropping out of the labor force in North Carolina than in other states and more than at any other time in state history. Even as our population grew by 100,000 people last year, our workforce shrank by 115,000 as long-term unemployed stopped looking for work. There were 9,000 fewer people employed in our state at the end of 2013 than at the beginning. One Harvard economist concludes that the decline in labor force participation explains 95% of drop in our unemployment rate. These statistics should not be celebrated.

A second point that bears underscoring is the cost to North Carolina and our people by Governor McCrory and the General Assembly making North Carolina the only state in the nation last year to reject our own tax dollars in extended benefits for people who were actively looking for work after being laid off through no fault of their own. Our state leaders would rather take our own money out of our economy (to the tune of $1.5 billion last year) and spend it in other states around the nation, instead of here at home, where it could have helped 170,000 North Carolina families pay their rent or their mortgage, buy food, get gas or groceries and helped small businesses and the state economy at the same time.

I regret that this short-sighted decision was made by our state government. Fortunately, Senator Kay Hagan is trying to fix this issue in federal legislation that is being debated in Congress. I encourage you to contact your federal representatives if you agree that North Carolina workers should be included if extended benefits are renewed.



P.S. Here is a link if you want to listen to a recent interview on WRAL’s NC Policy Watch in which I discuss the recovery, teacher pay, and the ongoing problems at DHHS.

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