Free Markets, Free People

Daily Archives: April 6, 2010

Dear Bad Guys – we welcome chemical and biological attacks

I’ve always been a fan, when talking national defense and deterrence, of telling potential enemies what our strategies are. It helps them formulate their plans on how to best attack us without receiving the most devastating response. For instance, our new unilateral nuclear use strategy:

It eliminates much of the ambiguity that has deliberately existed in American nuclear policy since the opening days of the cold war. For the first time, the United States is explicitly committing not to use nuclear weapons against nonnuclear states that are in compliance with the Nuclear Nonproliferation Treaty, even if they attacked the United States with biological or chemical weapons or launched a crippling cyberattack.

Those threats, Mr. Obama argued, could be deterred with “a series of graded options,” a combination of old and new conventional weapons. “I’m going to preserve all the tools that are necessary in order to make sure that the American people are safe and secure,” he said in the interview in the Oval Office.

Well if that’s true, Mr. Obama, why change our nuclear strategy? You see, in terms of a nuclear arms strategy, “ambiguity” is a feature, not a bug. But when you announce to anyone who can put anthrax in an envelope – or better yet weaponize it and introduce it into the US population via terrorist proxies – that if we find out who you are, you don’t have to worry about nukes, well that may make such an attempt at least appear to be somewhat survivable. And for zealots and other nutballs, that’s all it takes.

Certainly nuclear weapons are fearsome, but their history – their two uses – show them to be just another method of killing in war. For instance between Hiroshima and Nagasaki – the two cities bombed with nuclear weapons – about 105,000 died. That’s a horrific total granted, until you consider the 149,000 to 165,000 estimated to have died in the  conventional bombings of Tokyo and Dresden. Obviously Tokyo was done over an extended period but Dresden wasn’t.

I also know that nuclear weapons are significantly more powerful now than then – significantly. But they come in various sizes, yields and means of delivery. No one wants to use them but that “ambiguity” about their use has certainly served us well to this point. So why the change? What is served – in terms of our national security – by changing it? How are we made safer when you tell potential enemies “hey, if you’re in compliance with the Nuclear Non-proliferation treaty and decide to use chem or bio on us, we will not nuke you?”

“Oh,” they answer, “well then let’s see how we can comply with that new strategy shall we?”

Obama claims he would retain the right to reconsider the use of nukes. Really? So what is the new strategy again? Is that unambiguous ambiguity I hear?

He also claims that his strategy will “edge” the world closer to making nuclear weapons obsolete. Will it? What it will most likely do is make chem and bio weapons the next bad guy growth industries.  Oh, and if you don’t have nukes, there’s no reason to fear them.  If you use chem and bio weapons on us – just as long as you’re in compliance with the non-proliferation treaty, mind you – we’ll only use conventional weapons in return (since we have no chem or bio weapons with which to answer in kind).

This isn’t a strategy, it’s a unilateral weakening of our national security. If the law of unintended consequences runs true to course, we’ll see that played out in a chem or bio attack on America or Americans somewhere.

Our enemies and potential enemies need to understand that if they strike us they will reap the whirlwind – potentially.  When the whirlwind is unilaterally downgraded to a dust devil, it makes them think an attack (a chem or bio attack for heaven sake) may be survivable, and that’s not a thought we should be putting in their heads.

Tell me where I’m wrong.



Speaking of pensions and unions

If you loved TARP, were enamored with the government bailout of banks and financial institutions and orgasmic at the government takeover of GM and Chrysler, you’ll love this as well:

Here, let me lay it out for you – if Bob Casey can push this through Congress and rescue private union administered pensions via taxpayer money, what has been set? Why precedent, of course.
Now refer to the story about California just below this one and tell me what the number you see there amounts too.  If Congress grants relief to union administered pensions, it’s only fair that it do the same with those owed by state governments who are also upside-down on pension benefits to the tune of multiples of billions of dollars (in CA’s case 500 billion), right?  I mean can you expect California’s pension debt to be characterized as anything other than a “crippling expense” that “threatens” the financial viability of the state and “the jobs of its employees?”  Yeah, I can’t either.  But I can imagine California and other states petitioning the federal government under the same provisions this plan uses to rescue private union-administered pension plans.  Can’t you?
$8 -10 billion cost.  What a load of crap to begin with.  And then add the more than probable addition of state pension funds.  But, of course, you can count of PAYGO being duly invoked and used on this one, can’t you?  Yeah, in the pig’s other eye.

Government unions and politicians – an unaffordable mix

Yesterday I noted that Massachusetts is faced with figuring out how to handle the Cadillac tax among its government workers.   Many of the very expensive plans are found among municipal workers, most negotiated by government unions representing the workers.

There’s another ticking time bomb out there that isn’t getting the press it deserves which too can be laid at the feet of unions which represent government workers and gutless politicians who can’t say no with your money.  California provides a good example:

The state of California’s real unfunded pension debt clocks in at more than $500 billion, nearly eight times greater than officially reported.

That’s the finding from a study released Monday by Stanford University’s public policy program, confirming a recent report with similar, stunning findings from Northwestern University and the University of Chicago.

To put that number in perspective, it’s almost seven times greater than all the outstanding voter-approved state general obligation bonds in California.

Those are the facts, stated simply.  It provides an example of absurd extravagance within the public sector and now a huge level of debt on those unfunded promises – and that’s what we’re talking about here – of $500 billion.  Where will California get the money, since these promises are contractual obligations and it can’t print money?

From, increased debt, cuts in other state services or increased taxes or all three, that’s where.  David Crane explains how the state ended up in this condition, using GM as an example:

How did we get here? The answer is simple: For decades — and without voter consent — state leaders have been issuing billions of dollars of debt in the form of unfunded pension and healthcare promises, then gaming accounting rules in order to understate the size of those promises.

As we saw during the recent financial crisis, hiding debt is not a new phenomenon. Indeed, General Motors did something similar to obscure the true cost of its retirement promises. Through aggressive accounting, for a while it, too, got away with making pension contributions that were a fraction of what it really needed to make, thereby reporting better earnings than was truly the case.

But eventually the pension promises come due, and for GM, that meant having to add extra costs to its cars, making its prices less attractive to consumers and contributing to its eventual bankruptcy.

Issue debt, spend the money, game the accounting system, look surprised when the obligations come due and blame your predecessors.  The new way in American politics.  As we saw with the charade of health care reform, it is alive and well and pumping out more unfunded entitlements as we speak.

But sticking with the case of California, Crane (who, btw, is a special adviser to the Governor on jobs and economic growth) gets to the heart of the matter, something I see more and more of:

Last summer Gov. Arnold Schwarzenegger proposed exactly that. Since then? Silence. State legislators are afraid even to utter the words “pension reform” for fear of alienating what has become — since passage of the Dills Act in 1978, which endowed state public employees with collective bargaining rights on top of their civil service protections — the single most politically influential constituency in our state: government employees.

Because legislators are unwilling to raise issues that might offend that constituency, they have effectively turned the peroration of Abraham Lincoln’s Gettysburg Address on its head: Instead of a government of the people, by the people and for the people, we have become a government of its employees, by its employees and for its employees.

This isn’t at all uncommon among state, local or the federal government.  And it is an ever increasing base – the one sector still hiring throughout the recession is government.  What Crane points out is a problem everywhere.  Pension funds, in many cases are underfunded.  Government employees have union negotiated benefits that are unaffordable given the current fiscal climate and are most likely unaffordable even in good economic times.  Gutless politicians, especially those who count on those public sector unions for support on election day, refuse to address and act on the problem.

And taxpayers?  Again, these are contractual obligations – if the money’s not there, it has to come from somewhere.  Any guesses who ends up holding the bag?

If public service is about serving the public, my guess is the public is going to want to know why their servants make more than they do and have better benefits as well?  The answer is found under the roof of your state legislature where politicians use your money, as well as obligating you to future debt, to buy the support of the government unions.

Heck of a scam if you can pull it off, huh?  And to this point, they have.




Chart of the day – debt controlled by foreign governments

There’s been a lot of discussion about how much of our debt is controlled by foreign governments.  The answer is found in this chart.  In short a lot (more than half) and growing.

The significance?  A sort of unacknowledged elephant in the room:

While the ownership of our debt may be theoretically neutral, there is a case to be made that this debt reliance gives significant bargaining power to individual foreign governments.

In the world of international politics, nothing is “theoretically neutral” that can be used as an advantage against another country. In the case of our debt we are handing out that ability each and every time we spend more than we have and ask foreign governments to finance it. Another in a seemingly endless number of reasons to cut spending, stop borrowing, pay off our debt and get our financial house in order.



Individual mandate unenforceable? Ask the IRS

If there is any doubt about the individual mandate being enforceable, the chief of the IRS certainly sees no problem:

Individuals who don’t purchase health insurance may lose their tax refunds according to IRS Commissioner Doug Shulman. After acknowledging the recently passed health-care bill limits the agency’s options for enforcing the individual mandate, Shulman told reporters that the most likely way to penalize individuals that don’t comply is by reducing or confiscating their tax refunds.

“These are not the kinds of things we send agents out about,” Shulman said. “These are things where you get a letter from us. Congress was very careful to make sure there was nothing too punitive in this bill.”

Well, I guess that depends on how you define “punitive”.  But be advised – others may claim the individual mandate is unenforceable.  The IRS doesn’t share that belief.