Questions and Observations

Free Markets, Free People

Why it is so hard for government to quit spending

It’s hard, in a nutshell, because no one wants to see their favorite programs defunded.  The system encourages politicians to pander to these constituencies for votes.  The result is ever increasing spending while both the public and the politicians claim to be for spending cuts.

A perfect example of the process can be found in microcosm in Chicago, where, to save money in the wake of intemperate government spending, the school system plans on closing 54 schools.  The constituency affected are not going to let this go quietly.  Even though the plan would save the city $600 million over 10 years and certainly help close the 1 billion dollar shortfall it suffers, the people (voters and teacher’s unions) who don’t want those schools closed are taking their protest to the politicians (aldermen) who depend on their votes.

The problem now being realized with the process described above is there’s a thing called “reality” that intrudes on this system of ever increasing spending to satisfy the demands of ad hoc constituencies.  It’s called economics.  And it has laws that resist being broken.  Laws such as you can only spend more than you have for so long before you can’t get anymore to spend.  And at a local level, where a city government can’t print money, that reality has come to bear on the process that the city of Chicago has indulged in for so long.

It can’t afford the process any longer.  And that means the process and its cycle will, of necessity, have to be broken if the city isn’t to become another Detroit.  In the case of the school closings in Chicago, the only question that remains is whether or not the politicians, in the face of opposition by a coalition of voters/unions/politicians, will do what is necessary or  – as we see on a national level time after time – endeavor to find a way to satisfy the coalition and kick the can down the road?

To the story:

Chicago Public Schools officials ended months of speculation when they released the list of 54 schools the city plans to close, but the pushback against Mayor Rahm Emanuel and his schools chief is likely just starting to ramp up.

As word of the schools on the long-awaited closings list trickled out Thursday, parents, teachers and community members — some furious, some in tears — vowed to fight the closings. One group took a bus of people to protest in front of the homes of school board members, and some parents spoke of a lawsuit. The Chicago Teachers Union already had scheduled a mass protest march through downtown for next week.

"We are the City of Big Shoulders and so we intend to put up a fight," union President Karen Lewis said. "We don’t know if we can win, but if you don’t fight, you will never win at all."

Emanuel and schools CEO Barbara Byrd-Bennett say the closures are necessary because too many Chicago Public School buildings are half-empty, with 403,000 students in a system that has seats for more than 500,000. But opponents say the closures will further erode troubled neighborhoods and endanger students who may have to cross gang boundaries to attend school. The schools slated for closure are all elementary schools and are overwhelmingly black and in low-income neighborhoods.

About 30,000 students will be affected by the plan, with about half that number moving into new schools.

So 30k out of 403k will be effected in a school system that appears to have a declining population.  Any sensible person would understand that even if money wasn’t a problem, at some point adjustments would need to be made. 

But we’re a schizo population who somehow believes – even as our reality  reminds us in our own lives daily that we’re delusional – that we can have our cake and eat it too. 

This problem and the reality aren’t unique to Chicago:

Chicago is among several major cities, including Philadelphia, Washington and Detroit, to use mass school closures to reduce costs and offset declining enrollment. Detroit has closed more than 130 schools since 2005, including more than 40 in 2010 alone.

The problem is, however, pretty unique to cities who’ve followed that process I described above and, for the most part, have been “blue” strongholds for decades.  Reality is weighing in on their misguided governance with a vengeance.

What’s interesting is it is pitting blue against blue (blue city government against teacher’s unions, etc.).  And, it also has a coterie of politicians who refuse to accept reality because, well because it could cost them their jobs and the perks that come with it:

The issue has again pitted Emanuel against the Chicago Teachers Union, whose 26,000 members went on strike early in the school year, idling students for seven days. Chicago aldermen and other lawmakers also have blasted the plan.

Of course they have.  Common sense and reality say the plan is the way to go. 

But we all know, in the world of politics, common sense was killed off decades ago and reality is ignored as long as possible.

And look at the result.

~McQ

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Obama’s Middle East policy is a disaster

Do you remember the promises?  When Obama took over, the Middle East would come to love the US again.  As Obama, famously declared in his 2009 Cairo speech, his election meant a “new beginning” with the Muslim world.

The truth, however, is much uglier:

President Obama’s first journey to Israel as president comes amid earth-shattering change in Middle East, much of it for the worse. The Arab Spring, which once raised hopes of freedom and dignity, has diverged onto the dark path of Islamist authoritarian rule. In Syria, tens of thousands of people have died in a bitter civil war that might have recently seen its first use of chemical weapons. And Iran continues its march toward nuclear weapons capability, heedless of international condemnation. Obama’s effort to seek peace between Palestinians and Israelis is in tatters.

And Libya?  One word: “Benghazi”.

How about the much anticipated and promised love fest that would occur after that mean old George W Bush was retired and The One waved his mighty hand and blessed his own Middle East policy?  Yeah, it hasn’t quite worked out that way:

According to the latest survey by the Pew Research Center’s Global Attitudes Project, confidence in Obama in Muslim countries dropped from 33% to 24% in his first term. Approval of Obama’s policies declined even further, from 34% to 15%. And support for the United States in Egypt, Jordan, Lebanon and Pakistan is lower today than it was in 2008 in the closing year of George W. Bush’s administration.

Israel, our closest and most important ally in the area isn’t much enamored with Obama:

Of all the strained relationships in the Middle East, the partnership with Israel is the most important and potentially the most easily repaired. Obama is not popular in the country. A poll released last week showed he had a scant 10% approval rating in Israel, with an additional 32% saying they respect but don’t like him.

And, if the tactic of stiffing Israel had the intent of winning popularity among Palestinians, that too hasn’t worked:

If Israelis don’t like Obama, Palestinians are even less favorable.Washington’s perceived failure to take a harder line with Israel over the final status of Jerusalem, and U.S. opposition to President Mahmoud Abbas’ successful campaign for higher Palestinian status in the United Nations, have engendered a deep sense of frustration. Passions spilled over in Bethlehem this week, when young Palestinians defaced a billboard with Obama’s image and burned pictures of him in the streets. Obama’s symbolic nods to Israel’s history are likely to raise Palestinian ire even further.

In fact, none of the administration’s policy initiatives have had any positive impact, or, for the most part, any impact at all (despite a fawning media telling us how wonderful a SecState Hillary Clinton was, this is her legacy too).

So, what will Obama do today in Israel?  What he usually does.  Make a speech:

The hope that Obama will say the right things in Thursday’s speech at Jerusalem’s convention center is negated by doubts he will follow through. The president has to assure Israelis and Palestinians that he is still engaged if the peace process has any chance of moving forward. In part, this means convincing them that he still matters.

Key point emphasized.  If you’ve watched Obama even casually over the past years, you can’t help but have noticed that he’s very strong on “talking the talk”, but hardly ever “walks the walk”.  He doesn’t know how.

And there’s absolutely no reason this particular issue will see him even attempt it now.  Oh, he’ll say the “right things”. That’s what he does. His problem is he never then does the “right things”.  Rhetoric is his action.  It’s for the history books, not as a guide to leadership.  He’s not a leader.

But you know that.  And the results of that lack of leadership are evident for all to see in the Middle East.

~McQ

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Economic Statistics for 21 Mar 13

Here are today’s statistics on the state of the economy:

Initial jobless claims rose 2,000 to 336,000. The 4-week average fell 7,500 to 339,750, while continuing claims rose 5,000 to 3.053 million.

The Philadelphia Fed Survey jumped 14.5 points in March, to a positive reading of 2.0.

Existing home sales rose 0.8% in February, to an annualized pace of 4.98 million, thanks to a rise in the supply of available homes.

The PMI Manufacturing Index Flash fell 0.3 points in March, to a still-positive 54.9.

The FHFA House Price Index rose 0.6% in January, up 6.5% on a year-over-year basis.

The Bloomberg Consumer Comfort Index fell 2.3 points to -33.9 in the latest week.

The Index of Leading Economic Indicators, which indicate economic conditions six months from now, rose a better-than-expected 0.5% in February.

~
Dale Franks
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I’m live on Medium!

The guys who created Twitter and Odeo have moved on to a new venture, which, based on their track record, may show us the way to the future of online writing and publishing. It’s called Medium.Com, and it really is a different model of online writing that aims to promote better writing to more eyes.

I’ve been following Medium from it’s beginnings, and I finally received my invitation to start writing on medium.  I’ve got two articles up. One attempts to answer the question "Is Star Trek socialist?" and the other looks at what I’m learning as I start looking for a new car. Both are a bit tongue and cheek.

The way it works is that you can recommend articles you like. The more recommendations an article gets, the more visible it becomes to readers. Good articles get promoted to the top.

It’s a fascinating idea, and the track record of the guys who created it is pretty good. It may be a glimpse into the future of online writing.

By the way, if any of you like to write, and are a car person, I’ve created a collection called The Joy of Automotion that anyone can contribute to.

~
Dale Franks
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Calling all Nannies

A new study that is sure to make Mayor Michael Bloomberg and other health nannies wet their britches in thanks is out:

New research finds that the consumption of sugary drinks and sodas contributes to about 180,000 obesity-related deaths around the world — including the deaths of about 25,000 adult Americans — each year.

According to a new study presented on Tuesday at a meeting of the American Heart Association, one out of every 100 obesity-related deaths around the world can be tied to sugary drinks, which directly exacerbate health conditions like diabetes, heart diseases, and cancer. Specifically, the over-consumption of those beverages increased global deaths from diabetes by 133,000, from cardiovascular disease by 44,000 and from cancer by 6,000.

So, 180,000 out of what, 6 billion?  And 25,000 in the US in a population of 300 million.

Can you say “statistically irrelevant”?  I knew you could.

But the “if our draconian measures can save even one life” crowd will see this as the means to more control, just watch.  It’s just predictable (your health is now a “growth area” for control freaks and nannies).

Don’t believe me?

The experts who contributed to the study explained that’s a big issue because those calories don’t provide any nutritional value, and policymakers should focus on helping encourage Americans to cut back:

“One of the problems of sugar-sweetened beverages is that we don’t seem to compensate as well for the calories as we do for solid foods,” [Rachel K. Johnson, a professor of medicine and nutrition at the University of Vermont] said. “In other words, when we consume sugar-sweetened beverages we don’t reduce the amount of food we consume.

Johnson cautioned the study didn’t prove cause and effect, just that there was an association between sugared-drink intake and death rates.

Singh, the study’s co-author, said that taxing sugary drinks in the same way as cigarettes, or limiting advertising or access, may help reduce usage.

“Our study shows that tens of thousands of deaths worldwide are caused by drinking sugary beverages and this should impel policy makers to make strong policies to reduce consumption of sugary beverages,” Singh said.

~McQ

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Feinstein’s assault weapons ban will not be in final Senate bill

Emily Miller, writing in the Washington Times, reports:

Gun control efforts on the nation level lost a major battle when Senate Majority Leader Harry Reid told a bereft Sen. Dianne Feinstein Monday that her so-called assault weapon ban bill was getting pulled from the gun package coming to the floor next month. Her legislation, which passed the SenateJudiciary Committee last week by a straight party line vote, is the only one of the four gun-related bills that passed out of committee that Mr. Reid axed.

Mrs. Feinstein insists she will not be ignored. The California Democrat plans to bring two amendments up during the gun votes — to ban firearms that have one cosmetic feature that makes them resembles military weapon and magazines that hold more than 10 rounds. Mr. Reid said Tuesday that “her amendment, using the most optimistic numbers, has less than 40 votes — that’s not 60.”

However, Mr. Reid’s calculation was really less about vote counting and more about keeping the majority in the upper chamber.

“The Democrats know that Feinstein’s ‘assault weapon’ ban is suicide at the polls for them come 2014,” Alan Gottlieb, the founder of the Second Amendment Foundation told me Tuesday. “It is so extreme that even the Democratic leadership in the Senate doesn’t want it as part of their package.”

So ‘whoohoo’, huh?  Yeah, sort of, but Miller entitles her piece “RIP national assault weapons ban”.  RIP?  Hardly.  If you think Democrats, or at least Feinstein, are going to quit on this, you’re wrong.  Just consider how long they pushed for government mandated health care.  The fact that they couldn’t muster 40 votes in the Senate is, to those who would take your guns, another temporary setback.  Despite the fact that studies have shown no positive link a decline in gun violence and the last assault weapon’s ban, they’ll continue to try.  Trust me on that.  This isn’t about safety, it’s about controlt:

Mrs. Feinstein insists she will not be ignored. The California Democrat plans to bring two amendments up during the gun votes — to ban firearms that have one cosmetic feature that makes them resembles military weapon and magazines that hold more than 10 rounds.

Right now Democratic Senators are reading the electoral tea leaves and know that such a vote, at least for those in states where their seat isn’t safe, is electoral poison.  As soon as they see or feel that the electorate’s opinion has shifted, they’ll gladly vote for such a ban.  The lack of votes isn’t about principle, it’s about keeping their jobs.

“The Democrats know that Feinstein’s ‘assault weapon’ ban is suicide at the polls for them come 2014,” Alan Gottlieb, the founder of the Second Amendment Foundation told me Tuesday. “It is so extreme that even the Democratic leadership in the Senate doesn’t want it as part of their package.”

Mr. Obama does, of course. And so they’ll continue to try.  And they’ll use the incremental approach instead.

And there’s something else to consider here – the politics of the Reid move.  He’s taken the step of removing the most controversial parts of the gun control attempt.  But there’s still more for the Senate to consider.  And Reid is trying to use his removal of the “extreme” parts to demand a corresponding move (i.e. “compromise”) from the GOP in support of what’s left.

The background check bill is the most contentious of those three, and lawmakers are still working behind the scenes to find a compromise that can garner 60 votes in the chamber.

Sen. Joe Manchin III, a West Virginia Democrat who has been trying to work out a compromise, said Tuesday he was optimistic on that front.

“I’m still working very hard, and hopefully reasonable people will look at reasonable proposals and something will happen,” he said.

And what would that compromise bring?

Currently, all sales by licensed firearms dealers must go through background checks, but transactions between private individuals do not. Lawmakers are looking for a way to extend checks to almost all transactions without also creating a record-keeping system that gun rights supporters fear could turn into a gun registry.

How could it not turn into a defacto“gun registry”?

And who wants to bet that some GOP Senators end up supporting it?

~McQ

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Economic Statistics for 19 Mar 13

Here are today’s statistics on the state of the economy:

Housing starts rose a bit in February, to a 0.917 million annual rate, while building permits rose sharply to a 0.954 million rate.

In weekly retail sales, ICSC Goldman reports a 1.4% weekly sales increase, and a 2.3% year-on-year increase. Meanwhile, Redbook says sales rose a moderate 2.9% on a year-ago basis.

~
Dale Franks
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Are we looking at a Cyprus moment here?

I have to preface this by saying absolutely nothing would surprise me any more.  Since this administration has come into office, what would have, or should have been, unthinkable previously has not only happened but has been cheered by a certain element of our population.  ObamaCare is the most visible evidence of this.  But there is plenty of other stuff too.  Drone strikes on US citizens are “okay”, i.e. “legal”.  Speaking of “legal” how about this:

The Obama administration is drawing up plans to give all U.S. spy agencies full access to a massive database that contains financial data on American citizens and others who bank in the country, according to a Treasury Department document seen by Reuters.

The proposed plan represents a major step by U.S. intelligence agencies to spot and track down terrorist networks and crime syndicates by bringing together financial databanks, criminal records and military intelligence. The plan, which legal experts say is permissible under U.S. law, is nonetheless likely to trigger intense criticism from privacy advocates.

More shredding of Constitutional guarantees.  And what do we hear for the most part?  A collective yawn.

We’ve all seen what has happened on Cyprus with the government imposing a “levy” on savers.  A “levy”.  Outright theft is what it is.  And even while they’ve lowered the amount of the “levy” they’re still imposing it.

Couldn’t happen here, could it?  Don’t bet on it.  What other government is desperate for revenue?  And where is it that 19 trillion dollars exist that is currently out of their reach?

Try 401(k)’s. Katie Pavlich has the story:

As a reminder, the United States government has been eying and researching how Americans use their 401k plans for quite some time now. Recently we saw the U.S. Consumer Financial Protection Bureau suggest the government help “manage” retirement plans.

The U.S. Consumer Financial Protection Bureau is weighing whether it should take on a role in helping Americans manage the $19.4 trillion they have put into retirement savings, a move that would be the agency’s first foray into consumer investments.

“That’s one of the things we’ve been exploring and are interested in in terms of whether and what authority we have,” bureau director Richard Cordray said in an interview. He didn’t provide additional details.

The bureau’s core concern is that many Americans, notably those from the retiring Baby Boom generation, may fall prey to financial scams, according to three people briefed on the CFPB’s deliberations who asked not to be named because the matter is still under discussion.

The retirement savings business in the U.S. is dominated by a group of companies that handle record-keeping and management of investments in tax-advantaged vehicles like 401(k) plans and individual retirement accounts. The group includes Fidelity Investments, JPMorgan Chase & Co. (JPM), Charles Schwab Corp. (SCHW) and T. Rowe Price Group Inc. (TROW) Americans held $19.4 trillion in retirement assets as of Sept. 30, 2012, according to the Investment Company Institute, an industry association; about $3.5 trillion of that was in 401(k) plans.

So we have a new government agency (created in 2011) looking for a job to justify its continued existence and an administration and political elite looking for revenue while over 19 trillion dollars lays in front of them.  The statement “the …. bureau is weighing whether it should take on the role of helping Americans manage [their] retirement savings” should send shivers down your spine.  Why do they feel the need to consider such a thing?

Well, it’s because you need their protection:

This agency, created by the 2010 Dodd-Frank-Act, is very concerned about how safe your retirement savings are. They are apparently concerned that retiring baby boomers may become victims of financial scams.

That’s right, it’s save the geezers instead of the children.  You’re simply too dumb to manage the account you’ve spent your entire working life amassing.  You have to have government help to do it and that means what?  Government access and, one would assume, at some point government permission to spend your dollars.  How else does government save you from “scams”  (you know, like Social Security)?

You sputter, “but they have no right…”.  Since when has government really been concerned with rights?  If it can give spy agencies access to your financial records “legally” to combat terrorism, how big of a stretch is it to believe they’ll grant another agency access to your financial records (401(k)) to combat “scams?”

And, with the camel of government’s nose under the tent, how long before that access turns into some sort of “levy” for this service they provide that you never asked for?

~McQ

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