Free Markets, Free People

Daily Archives: May 22, 2009

Newspeak Update: Spending Cuts = Dictatorship

Bizarro world continues unabated. The logic behind this assertion is … uh, “subtle” to say the least (my emphasis):

First, on “constitutional dictatorship,” there is, somewhat surprisingly, Minnesota, where Gov. Tim Pawlenty, a favorite of the Repblican right wing (assuming there is anything else than a right wing in the GOP these days) is apparently going to use all of his powers under the Minnesota have exercised such powers, but Pawlenty’s exercise in unilateral government seems to be of a different magnitude. Perhaps we should view Minnesota as having the equivalent of a Weimar Constitution Article 48, the “emergency powers clause” that allowed the president to govern by fiat. Throughout the 1920s, it was invoked more than 200 times to respond to the economic crisis. Pawlenty is sounding the same theme, as he prepares to slash spending on all sorts of public services. The fact that this will increase his attractiveness to the Republican Right, for the 2012 presidential race that has already begun, is, of course, an added benefit, since one doubts that he is banking on a political future within Minnesota itself (which didn’t give him a majority at the last election; he was elected, as was Gov. Rick Perry of Texas, only because of the presence of third-party candidates). One might also look forward to whether he will refuse to certify Al Franken’s election to the Senate even after the Minnesota Supreme Court, like all other Minnesota courts, says that he has won. Whoever thought that Minnesota would be the leading example of a 21st-century version of “constitutional dictatorship” among the American states?

I don’t know who Sandy Levin, the author of the above screed, is but I have to believe he has become lost in his own rhetoric. We are honestly being asked to accept the premise that a Governor, using his constitutionally-approved and legislature-granted powers, is somehow a “dictator” for … slashing spending in a time of budget shortfalls?

Gov. Tim Pawlenty promised Thursday to bring Minnesota’s deficit-ridden budget back into balance on his own if the session ends Monday without an accord, using line-item vetoes and executive powers to shave billions in spending.

[…]

Pawlenty held out the possibility of a negotiated agreement, but said he was prepared to use vetoes, payment suspensions and so-called unallotment to cut the two-year budget to $31 billion. That’s about $3 billion smaller than the slate of spending bills sent to him.

The move infuriated Democrats who run the Legislature. House Speaker Margaret Anderson Kelliher of Minneapolis dubbed Pawlenty “Governor Go It Alone.” Pawlenty shot back that without the step Kelliher would be “Speaker Special Session.”

“There will be no public hearings. There will be no public input. There will just be a governor alone with unelected people whispering in his ear of what to cut and what not to cut,” Kelliher said, calling it “bullying.”

Apparently this is exactly what Levinson and the Minnesota left want us to believe — i.e. that using duly constituted powers is the equivalent of behaving as a dictator. How utterly ridiculous.

If this were a situation where the governor was unilaterally deciding to burden the taxpayers more, or he was singling out a particular group of people to bear the brunt of arbitrary government rules, I could see where the dissenters here would have a point. If the executive branch suddenly declared, without any legislative input, that English was the official language of Minn. and no other languages would be recognized anywhere in the state upon penalty of law, then, legally granted powers or not, I would understand and support Levinson et al.

Instead, the perfectly preposterous idea that balancing a state budget, using the very powers granted the governor to accomplish the task, is now deemed the equivalent of the Weimar Republic emergency powers (you know, the ones that allowed Hitler to declare himself supreme dictator over Germany).

To be sure, the focus of this vitriolic (and, I’d say, hysterical) attack on Pawlenty stems from his threatened use of “unallotment” powers:

The procedure exists under state statute, and “the first prerequisite to unallotment is that the Commissioner of Finance ‘determines that probable receipts for the general fund will be less than anticipated, and that the amount available for the remainder of the biennium will be less than needed.”

Then the ball is in the governor’s court:

“After the Commissioner of Finance determines that the amount available for the biennium is less than needed, the governor must approve the commissioner’s actions before the commissioner can either reduce the amount in the budget reserve or reduce allotments.”

The Legislature is consulted but does not have any power or ultimate say in the governor’s actions. The process starts at the beginning of the next fiscal biennium, which means that Pawlenty won’t enact anything until July 1. And what he’ll do is anyone’s guess.

“Depending on what he does with line-item vetoes, I figure we’ll see anywhere from a half a billion to $2 billion in unallotments,” Schultz said. “It’s unprecedented in dollar amount and in willingness to use it.”

Is it good policy or politics?

Schultz points out that unallotment is on the books for “emergency conditions” in which “the Legislature can’t do its job,” such as a budget forecast that comes out when lawmakers aren’t in session.

But in Schultz’s opinion, Pawlenty is “creating the emergency conditions that allow him to use it.”

“He appears to not want to negotiate in good faith,” Schultz offered. “Working with the Legislature is supposed to be a cooperative venture, not a take-it-or-leave-it one.”

The problem, of course, is that the legislature keeps sending a bill that proposes more spending than Minnesota’s revenues will allow. Because the governor and the legislature can’t agree on identifying new revenue sources (e.g. Leg. wants to tax the rich, Gov. wants to borrow against tobacco settlement), then the two sides are at an impasse. Despite what some might say, a proposed $3 billion deficit with no budget alternative in place does represent a fiscal emergency. After all, the money has to come from somewhere, or the services (giveaways, or whatever) will have to be cut, and the government may be forced to shut down. Why that doesn’t represent a fiscal emergency of the very type contemplated by the unallotment statute remains a bit of mystery for us less hysterical folks.

Jumping out the weeds, and regardless of how one might view the necessity of spending more or less via the Minnesota budget, I am simply flabbergasted that anyone could possibly suggest that forcing the government to spend less is in anyway, shape or form equivalent to dictatorship. To accept such premise is accept the idea that government spending is the sole source of freedom. I categorically reject any such notion. And if dictatorship is to be defined as standing in firm opposition to it, then sign me up.

GM To Be “Chryslered”

I hesitate to call it bankruptcy when it is really a sham of a bankruptcy. In fact, it is the same sham that Chrysler has undergone:

The government previously indicated that it planned to take at least 50 percent of the restructured company, and likely would take the right to name members to its board of directors, as it has at Chrysler, where the government will control four of nine seats.

The United Auto Workers retiree health fund is set to own as much as 39 percent of the restructured GM, in exchange for giving up its claim to at least $10 billion that the company owes it. Yesterday, the union announced that it reached an agreement with GM that will reduce the company’s labor costs.

Still unknown is what part the Canadian government might play in the ongoing GM restructuring.

GM operates several plants north of the border. The Canadians agreed to invest about $3.5 billion in the Chrysler restructuring and control one of the nine board seats.

Sound familiar? So government will now have 5 of 9 board seats, the union has a huge share of the company and bondholders?

The chief obstacle to an out-of-court settlement for GM remains: There has been no agreement between the company and the investors who hold $27 billion worth of GM bonds.

Under orders from the Obama administration, GM has offered to give the bondholders a 10 percent equity stake in the restructured company in exchange for giving up their bonds.

That’s the offer made and, as you might imagine, bondholders are resisting this. That, of course, gives the administration the same excuse it used to take Chrysler to bankruptcy under its apparently newly written rules which gave government the lion’s share of ownership.

As you might imagine, not everyone is happy. And since this “bankruptcy” is now being politically managed, more politicians are getting into the act.

For instance, on the subject of cutting Chrysler dealerships:

There are also challenges outside court. Chrysler has moved to close 789 dealerships on June 9. But Sen. Kay Bailey Hutchison (R-Tex.) has introduced legislation that would withhold federal funding if the automaker does not give dealers an extra 60 days to close down operations and sell remaining inventory. Her amendment has won the backing of a number of other senators.

Should such legislation pass, you can expect something similar with GM.

And some Democrats aren’t particularly happy either:

Judiciary Committee chairman Rep. John Conyers Jr. (D-Mich.) said he hopes to meet with White House officials today to discuss changing Chrysler’s bankruptcy plan and GM’s future. Conyers did not outline what he wanted, but a nine-person panel he assembled for a hearing yesterday offered a hint. Liberal consumer advocate Ralph Nader, a conservative Heritage Foundation analyst and minority auto dealers all criticized the automakers’ restructuring.

Conyers and other committee members attacked the administration for abusing bankruptcy laws, unfairly eliminating dealerships and jeopardizing consumer safety.

Yup, looks like the political bureaucracy is kicking into high-gear and you can just imagine how well this is going to work out, can’t you? That and the fact that contracts will never be viewed in the same light again have to make you fear for our economic future.

Sin Taxes To Fund Health Care?

First they came after the smokers. But I didn’t say anything because I don’t smoke. And then they came after the soda drinkers, and I didn’t say anything because I rarely drink soda.

But then they came after beer, but I couldn’t do anything because the precedent had been set (with apologies to Pastor Martin Niem√∂ller).

Yes, sinners, you are going to pay for health care. You and the evil rich. “Sin” taxes are seemingly the chosen method of this administration for paying the bill for the upcoming health care debacle.

Consumers in the United States may have to hand over nearly $2 more for a case of beer to help provide health insurance for all.

Details of the proposed beer tax are described in a Senate Finance Committee document that will be used to brief lawmakers Wednesday at a closed-door meeting.

Taxes on wine and hard liquor would also go up.

Apparently they’re still discussing sugary drinks as well (although it seems diet drinks are not yet on the table) because, you know, obesity is a problem and since government will be paying for all of this (can taxing Oreos be far off?).

But remember:

“If you make less than a quarter of a million dollars a year, you will not see a single dime of your taxes go up. If you make $200,000 a year or less, your taxes will go down.”

Unless, of course, you’re a smoker, a fattie or a boozer (or, heaven forbid, all three).

~McQ