Toby's Opinions

Housing Market Graph Update

2011-08-20T17:58:00.000-07:00

Hat tip: JP's Real Estate Charts

It looks like we are finally back to about where the market should have been by now based on historical real estate values. However, with the glut of foreclosures on the market or soon to be on the market, and the excess supply of housing that must be soaked up, the market could drop further or it could take several years before the market starts heading back up again.

See my previous posts on the mortgage collapse/correction:

Oct 4, 2008 Where is the defense of free markets?!

Nov 21, 2008 Deregulation vs. Fannie & Freddie

Feb 21, 2009 Housing Price Decline Not Done Yet

Feb 21, 2009 Sowell: Housing Crisis Caused By Government

Mar 25, 2009 Obama puts troublemaker in charge

Feb 13, 2010 2 Graphs: Jobs and Housing prices

VIDEO: Soak the rich! Oops.

2011-08-20T15:25:00.000-07:00

I haven't posted anything in a while because I don't think anyone really reads my blog but myself. But I was reading back some of my old posts from 2008 and 2009 and found them very informative. :) I found a lot of facts, events, stats, graphs, and videos that I had completely forgot about. So, if nothing more than to catalog my thoughts so I can review them again in the future, I'm going to try to start posting to my blog again.

First up, I have to post a video from back in March by Bill Whittle, who demonstrates how bankrupt the idea is that if we'd just soak the rich, we'd have plenty of money for the government. Enjoy.

We Are Over-educated

2010-12-23T19:01:00.000-08:00

I've come to the conclusion a few years back that way too many people are going to college. Sure, some jobs require advanced training, but the traditional college degree seems like about the least effective way to get trained to do a job. And many college degrees are about worthless in terms of getting a real world job. We are wasting so much money and early life productivity with so many students wasting 2-6 years borrowing money instead of making money. If they were able to start saving 10 years earlier (5 years of college + 5 years to pay off college debts) and use the magic of compound interest over time, and add 5 more earning years, there's a good chance they could come out ahead. I've seen statistics that only somewhere around 30% of the jobs really require a college degree while well over half of high school graduates at least start college, and that something like 60% of college graduates currently work in jobs unrelated to their college degree.

Anyway, I saw this article which confirmed everything I have been thinking. Please read it and tell me whether you think higher education system and the messages we tell our young adults need changed or not.

Sarah Palin's Qualifications

2010-11-20T14:32:00.000-08:00

I've never understood why so many people think that Sarah Palin is not qualified to be president.

I'll certainly agree that she did not do well in some of the interviews during the 2008 campaign, and while many of her Facebook posts are actually very strong on policy, as have some of her op-ed's in the Wall Street Journal and on National Review and some of her speeches, she needs to improve at speaking as eloquently as a tv commentator.

But from a standpoint of previous government experience, an objective look arguably makes her as qualified if not more qualified than Bill Clinton in 1992, Howard Dean and John Edwards in 2004, and Mitt Romney, Hillary Clinton, and Barak Obama in 2008.

I know that sounds odd, but read this piece on Conservatives4Palin.com and tell how that doesn't stack up to the experience of the candidates I listed above.

Bill Clinton lost a U.S. House race in 1974, was Attorney General of Arkansas from 76-78, and was elected Governor of a simarly small state with a smaller budget than Alaska's (although he did serve 3 1/2 terms as governor). Howard Dean was a Vermont House member for 4 years and then Lieutenant Governor of Vermont for 5 years before serving for a little over 2 terms as governor of Vermont, one of the smallest states in the Union where the governorship is not very powerful. John Edwards only previous political experience after his 2-decade career as an ambulance chaser was that he narrowly won a U.S. Senate race in 1998 and thus had served part of 1 Senate term. Romney's only prior government experience was a failed US Senate run in 1994 and 1 term as Governor of Massachusetts. Hillary Clinton, apart from being Bill Clinton's wife, only had experience in an official capacity as U.S. Senator for 8 years. And of course Barak Obama was only a State Senator in Illinois, and spent less than 2 years in the U.S. Senate before making running for President a full-time job.

If those are all perfectly fine resumes in order to be President, I don't know why Sarah Palin's resume as PTA member, city council member, long time mayor of fastest growing city in Alaska, Alaska Oil and Gas Commissioner, and most popular Governor in the U.S. (at the time she was picked as the VP candidate by McCain in 2008) isn't sufficient. If you don't like her, then fine, you can say that. If you think she could have done better in the Katie Couric interview, then fine, even she admits that. If you buy into all the media bashing she has taken and find her controversial and don't like her style, then fine, I readily admit the media hyperventilates about her. But don't say she is not qualified. Objectively, she is qualified. She hasn't spent 30 years in the Senate like McCain or 2 full terms as Governor of a populous state like George W. Bush, or served as Vice President for 8 years like George H.W. Bush and Al Gore, but her qualifications fit right in with the rest of the candidates I mentioned earlier.

Afghanistan Media Messaging Failure

2010-11-20T13:57:00.000-08:00

This poll is infuriating. Well, not the poll itself, but what it tells us about the utter failure of the U.S. and NATO to communicate to the local Afghans.

The poll says that 92% of Afghan men in the Taliban strongholds of the Helmand and Kandahar provinces HAVE NEVER EVEN HEARD OF 9/11!!!! Unbelievable.

It is definitely hard to win the hearts and minds of Afghans to side with us instead of the Taliban when they are completely unaware of why we have our military in their country! If they are unaware of 9/11, then I think it's safe to say they have not heard even the most basic messaging from the U.S., and could not view our military there as anything else but an unprovoked invasion by a foreign military.

If I was in charge of the U.S. military, the first thing I would have done way back in 2001 is air drop in hundreds of thousands of tiny radios with enough batteries to last a couple years and then start broadcasting a message that could be picked up on those radios. I also would have dropped millions of leaflets over every single town or village until in would be almost impossible for anyone in the region not to understand what provoked us to come there and why they should side with us instead of the Taliban, or at least why they should moderate the Taliban and kick out all the Al-Qaeda types.

I know literacy it very low in the rural Afghanistan regions, so I'm not sure if distributing a newspaper would have helped much (that actually goes for the leaflets too), but I would have tried that too.

Getting the messaging right from the start could have saved thousands of U.S. soldiers and Afghan civilians lives.

Dream Act a Nightmare?

2010-11-20T13:12:00.000-08:00

The Dems are back during the lame duck session and Harry Reid is following through on his pandering to the Hispanics during his recent campaign, and will bring up the DREAM Act for a vote again. On the surface, the DREAM Act sounds reasonable, and is supposed to give illegal aliens who entered the country as kids and have completed college or served 2 years in the military a path to citizenship. But consider some of these details:

1. The DREAM Act Is NOT Limited to Children, And It Will Be Funded On the Backs Of Hard Working, Law-Abiding Americans

2. The DREAM Act PROVIDES SAFE HARBOR FOR ANY ALIEN, Including Criminals, From Being Removed or Deported If They Simply Submit An Application

3. Certain Criminal Aliens Will Be Eligible For Amnesty Under The DREAM Act

4. Estimates Suggest That At Least 2.1 Million Illegal Aliens Will Be Eligible For the DREAM Act Amnesty. In Reality, We Have No Idea How Many Illegal Aliens Will Apply

5. Illegal Aliens Will Get In-State Tuition Benefits

6. The DREAM Act Does Not Require That An Illegal Alien Finish Any Type of Degree (Vocational, Two-Year, or Bachelor’s Degree) As A Condition of Amnesty

7. The DREAM Act does not require that an illegal alien serve in the military as a condition for amnesty, and There is ALREADY A Legal Process In Place For Illegal Aliens to Obtain U.S. Citizenship Through Military Service

8. Despite Their Current Illegal Status, DREAM Act Aliens Will Be Given All The Rights That Legal Immigrants Receive—Including The Legal Right To Sponsor Their Parents and Extended Family Members For Immigration

9. Current Illegal Aliens Will Get Federal Student Loans, Federal Work Study Programs, and Other Forms of Federal Financial Aid

10. DHS Is Prohibited From Using the Information Provided By Illegal Aliens Whose DREAM Act Amnesty Applications Are Denied To Initiate Their Removal Proceedings or Investigate or Prosecute Fraud in the Application Process

Here's a press release with more details on all these points. The devil is always in the details.

The U.S. Budget Trends

2010-11-07T00:37:00.000-07:00

I looked up the recent years of federal spending. We are spending a LOT more while revenues have dropped over the past couple years. You have to start looking at these numbers to start getting the concept of how bad of a situation we are in. In 2009, revenues were $2.165 trillion and on the spending side just the categories of Social Security, Medicare, Health (includes Medicaid), and Income Security (unemployment insurance, federal pensions, housing assistance, food stamps, etc.) added up to right around $2 trillion. People complain about war spending in Iraq and Afghanistan, but those are only $100-150 billion annually. I say "only" only in comparison to the rest of the massive amount being spent. With the deficit at $1.5 trillion, even if you stopped the wars tomorrow and could save all the money being spent on them, you would have only cut out 10% of the deficit.


Year            Receipts    Outlays    Surplus or Deficit(−)
2008            2,523,999   2,982,554    -458,555
2009            2,104,995   3,517,681    -1,412,686
2010 estimate   2,165,119   3,720,701    -1,555,582

By the way, the last Republican Congress' budget for fiscal year 2007 (before Democrats won in 2006 and took office in 2007 and created the 2008 budget) was $2.7 trillion. Bush's first budget was in 2002. We did not like that he let the budget increase so fast. But he signed off on a spending increase from $2 trillion to $2.7 trillion, an increase of $700 billion, in 6 years. The Democrats and Obama have increased spending by $1 trillion in just 3 years! And this as revenues were dropping.

Overall, spending has over doubled since 2001 even as revenues are currently only 9% higher than 2001.

Some Ideas for Reducing Government Spending

2010-11-07T00:19:00.000-07:00

Matt Moon at The Next Right gets more specific with ideas that Republicans could push for:

What are some budgetary principles that should be communicated by Republicans to the American people?

* The Solution Principle: Every challenge facing the American people does not require a federal office and federal funding.
* The Priorities Principle: Every family and every business has to balance their checkbooks, their revenues with their expenses. Through good times and bad times, families and businesses have to sacrifice what they might want and prioritize their spending. The government should operate like any prudent family or business does, and prioritize.
* The Investment Principle: The American people are "forced to invest" their income into government. Each taxpayer is, therefore, a shareholder in government. Because taxpayers have invested their money into government, taxpayers deserve the best return on their money. This means the "portfolio of investments" (otherwise known as government projects and agencies) must be reviewed carefully and objectively in order for the government to fulfill their due diligence.

How can we turn those principles into solutions? The answer is to do what's difficult, not easy (i.e. earmark moratoriums), and be innovative about our budget from both procedural and substantive points of view:

* Follow the lead of Paul Ryan and his "Roadmap for America's Future" when it comes to restructuring our entitlements.
* Don't allow earmarks to be placed during conference committees between the House and Senate.
* Install a biennial budgeting process, something promoted by Senator George Voinovich (R-OH), while also requiring supermajorities to increase in a fiscal year after a budget has been passed (for legitimate emergencies).
* Separate capital budgets from operating budgets for each department. Long term projects are very different from short term day-to-day costs.
* Instead of an executive Chief Performance Officer that gets to pick and choose what works and what doesn't under subjective criteria, have Congress create a Congressional Agency Performance Office that has some independence (like CBO) to constantly scrutinize the operations of all government agencies.
* On capital projects that go to specific state and local governments, quasi-agencies, and companies, start a Congressional Office for Spending Oversight. Just like every business has control officers, this independent office should scrutinize long term projects' spending practices. This can allow Congress to reward under-budgeted projects and punish over-budgeted projects.
* Not only should spending be posted online before it's passed. It should also be posted online when it's spent. Just like many state governments have done, the federal government's checkbook should be posted online.

Updated Employment Chart for Post WWII Recessions

2010-11-04T18:09:00.000-07:00

Hat tip: rentbits.com

Reducing Deficits Requires Cutting Entitlements

2010-11-04T17:56:00.000-07:00

See Philip Klein' piece in The American Spectator which points out that getting the deficit under control requires cutting the big 3 entitlement programs (Social Security, Medicare, and Medicaid) that compose almost all of the mandatory spending that is 59% of our budget. There's this nice graph there:

Letter to Editor: Don't Buy Defazio Spin

2010-09-25T11:55:00.000-07:00

This is my letter to the editor about my local congressional race:

Disciplined and Engaged Teachers Perform Best

2010-08-22T13:23:00.001-07:00

This report by the LA Times is a must read on education.

It presents the case for "value-added" testing of teachers. That is, given how the teacher's students scored entering the year, how well did they score at the end of the year? Did the teacher improve the students rankings or let them slide?

This seems like an obvious way to identify poor performing teachers. Give them a year or two to improve or else and if they don't, let them find another line of work.

But the teachers unions are staunchly opposed, and shortsightedly so. They seem to take the position that anything that might give a reason for one of their dues-paying members to be fired is unacceptable. But if they'd think for a second longer, new teachers would have to be hired to take the fired teacher's place, so the union would add another member to replace the one they lost. So why are they so opposed? Maybe they just want to resist anything that would put more pressure on their teachers to perform? In either case, the teacher's unions do not have the best interest of the kids at heart.

If education was not run as a government monopoly, private schools would naturally find the most effective ways to recruit and/or train the most effective teachers in order to gain the trust of parents. Metrics for measuring teacher performance would be a no-brainer. On the cost side of things, private schools would have an incentive to keep costs as low as possible to maximize profit. As usual, the free market would naturally provide the proper incentives to find the most efficient way to hire the best staff to achieve the best results.

Better yet, private schools would naturally develop metrics to advertise to parents to earn their business. These metrics could then be used to apply to all teachers across public and private schools.

I strongly favor the idea of dividing up the current education spending into a per student amount and simply providing a voucher for that amount to every student's parent(s) so they can decide where to send their kid(s) and pay for schooling and transportation. Parents get to keep any leftover money as an incentive to find the best value. Let all the public schools compete with private schools and any new market competitors to provide the best education! I believe scores would dramatically improve in just a few years, and that the voucher amounts could even gradually be brought down as the system became much more cost efficient. Market competition would provide a better service for a better price, just like it usually does.

Getting back to the LA Times article, I found it satisfying that they confirmed much of what I've been saying for years and years. For example:

• Contrary to popular belief, the best teachers were not concentrated in schools in the most affluent neighborhoods, nor were the weakest instructors bunched in poor areas. Rather, these teachers were scattered throughout the district. The quality of instruction typically varied far more within a school than between schools.

• Although many parents fixate on picking the right school for their child, it matters far more which teacher the child gets. Teachers had three times as much influence on students' academic development as the school they attend. Yet parents have no access to objective information about individual instructors, and they often have little say in which teacher their child gets.

• Many of the factors commonly assumed to be important to teachers' effectiveness were not. Although teachers are paid more for experience, education and training, none of this had much bearing on whether they improved their students' performance.

Other studies of the district have found that students' race, wealth, English proficiency or previous achievement level played little role in whether their teacher was effective.

I've always held that the best teachers are not measured by years on the job or by amount of training. Just about any person who has graduated high school should have the knowledge necessary to teach elementary school. What makes a good teacher is learning how to maintain discipline in the classroom, engaging the students with critical thinking and asking them why, and motivating students to enjoy learning. There are some good teaching strategies, such as different ways to explain concepts and recognizing how different students learn, that can be taught in universities and teaching workshops. But mainly it comes down to how motivated the teacher is and how much they demand that students demonstrate they've learned the material through a variety of ways. That is what makes a good teacher.

University Gay Thought Police

2010-07-29T00:29:00.000-07:00

For all those who naively support non-discrimination codes and think you have nothing to fear from homosexual activists, check this story out. It is to the point where a public college in Georgia will not give you a counseling degree if you think homosexuality is immoral. Note in the CNN video below that the one lady says it's OK to have whatever beliefs you have, but expressing them is a behavior that is inappropriate and needs remedial training. I'm not kidding.

Shirley Sherrod and Teachable Moments

2010-07-27T21:27:00.000-07:00

There's a lot that could be said about the Shirley Sherrod incident that was all over the news last week. For those who don't follow politics, here's a quick summary. It all started when Andrew Breitbart posted the following video in this post at BigGovernment.com:

This video excerpt appears to show blatant racism by Shirley Sherrod, USDA Georgia Director of Rural Development, towards a white farmer, presumably while acting as a government official.

The video quickly went viral through the blogosphere and the reaction was swift. Within a few hours, Tom Vilsack, the Secretary of Agriculture, had forced Sherrod to resign. Contrary to what is widely believed, Fox News did not air anything on the matter until AFTER Sherrod had already resigned. See this post at Johnny Dollar for an incredible list of media outlets that got this part of the story wrong.

That evening, the NAACP even piled on with the following statement:

We concur with US Agriculture Secretary Vilsack in accepting the resignation of Shirley Sherrod for her remarks at a local NAACP Freedom Fund banquet.

Racism is about the abuse of power. Sherrod had it in her position at USDA. According to her remarks, she mistreated a white farmer in need of assistance because of his race.

We are appalled by her actions, just as we are with abuses of power against farmers of color and female farmers.

Her actions were shameful. While she went on to explain in the story that she ultimately realized her mistake, as well as the common predicament of working people of all races, she gave no indication she had attempted to right the wrong she had done to this man.

The reaction from many in the audience is disturbing. We will be looking into the behavior of NAACP representatives at this local event and take any appropriate action.

We thank those who brought this to our national office's attention, as there are hundreds of local fundraising dinners each year.

The next day, the NAACP posted a second statement retracting their first, and posted the full 43 minute video, linked here:

The full video put the previous excerpt in a very different context. I have watched the full 43 minutes, and the full story Sherrod tells starts with her youth and the horrible racism she experienced at that time. Her father was one of the leading black members of their community in Georgia. He was murdered when she was 17 and a grand jury would not indict his white murderer because he was black, even though there were 3 witnesses. Shortly after, she recounts an incident where KKK members circled the front of their house as she hid in the house and her mother confronted them on the porch with gun in hand. Numerous black members of the community circled the intruders and forced them to leave.

Before that, Sherrod was itching to leave the South and head north. But given what had happened, she resolved herself to stay and fight for change. She then says her intention for a long time was to help black folks. Later she was working at a non-profit and ran into the first time that a white family in danger of losing their farm asked for help. She struggled with her (understandable) racial animosity toward whites and didn't initially help the white farmers as much as she could have, instead sending them to a white lawyer, one of their "own kind". That is the part the initial video excerpt showed.

However, she goes onto say that was the point it was revealed to her that it wasn't just about black and white, but rich and poor. When the white farmers called back later saying the lawyer hadn't helped them much, she went to bat for them and helped them save the farm from bankruptcy. She ends up later saying that we have to get to a place where race exists, but it does not matter.

The story as a whole is a story of her life and how she overcame much of the resentment she had from the racial events that happened during her youth.

The media coverage rapidly switched the other way, calling for Sherrod to be given her job back, and slamming Breitbart and Fox News for a vicious attack on Sherrod. Sherrod has almost achieved sainthood status.

I have already linked to the Johnny Dollar piece that showed that the attack on Fox News was unwarranted. As far as I can tell, the news shows played it safe and were trying to fact check it before running anything. It is true that Bill O'Reilly had already taped a segment in which he called for Sherrod to be fired, but that hadn't even aired by the time that Sherrod had been forced to resign. The following day, O'Reilly apologized for not doing his homework.

In Breitbart's defense, he says the two excerpts he showed in his original post was all that he had at the time. Here he is on Hannity's TV show explaining how he came by the video -- this aired the day after the BigGovernment post:

Breitbart can be blamed for not being more careful before posting the excerpts he had, but the same video clip that he saw also fooled the Obama administration, the NAACP, Rachel Maddow, Bill O'Reilly, and countless others. Most importantly, Breitbart did not force her to resign without so much as allowing her to explain the comments (like the Obama administration did) and did not condemn her despite having the full video in his possession (like the NAACP did).

Unfortunately, Breitbart has never apologized for the initial post, knowing what he knows now about it. Breitbart maintains that his whole point was to point out the hypocrisy of the NAACP in its attack on the Tea Parties, which is in fact the point he was trying to make. He still thinks that the murmurs of agreement and laughter among the crowd prove his point, that the NAACP was approving of the racist treatment of the white farmers before they could have known the whole story of her change of heart.

In my opinion, I did not find Sherrod's 43 minutes objectionable as a whole. I would point out, though, that if any white person had talked about blacks the way she did (e.g., "own kind"), they would have been forced to resign for that alone. And it is clear to me, even as she shared her story, that she still sees everything through racial lenses. For example, at one part of the speech, she accuses Republicans of opposing the health care bill because Obama is black.

I am also disturbed by further statements that Shirley Sherrod has since made which show she is still not to the point where race exists but doesn't matter to her. Here is one such clip (jump to 1:50):

I've seen several other problematic statements and may post them if I run across them again.

In addition, further information about the Sherrod's and one particular quote from her husband are also cause for concern:

VIDEO: Paul Ryan talks Spending and Deficits

2010-07-27T21:20:00.000-07:00

HotAir posted a good clip of Paul Ryan doing a good job communicating about the budget on Chris Matthews show.

Visit msnbc.com for breaking news, world news, and news about the economy

Milton Friedman Explains Spending

2010-04-01T01:35:00.000-07:00

I stumbled across a simple but illuminating article at BigGovernment.com from Nov. 2009.

Thomas Del Beccaro does a great job explaining why any large organization inevitably has more bureaucratic inefficiencies. He notes that large companies struggle with bureaucracy too but because of the profit motive do the hard work to keep waste in check. Then he explains how large government programs have neither the motive nor the ability to minimize fraud and waste. And he quotes the great Milton Friedman giving this crystal-clear explanation:

“There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money. Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost. Then, I can spend somebody else’s money on myself. And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch! Finally, I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government.”

Kucinich on Stossel

2010-03-21T08:03:00.000-07:00

This week's Stossel (on Fox Business network) talked a lot about Cleveland, and what was wrong with the city. The city's population was something like 2 million around 1950, but has dwindled by more than half, and is now ranked by some publications as the worst city in America. Stossel's proposition was that it was higher taxes, excessive regulations, and inefficient government services that caused the decline.

Stossel brought on the former mayor of Indianapolis, another city located in the region but which has been doing well. In the 90's, that mayor had privatized many functions that the government used to do -- golf courses, waste disposal, etc. He said they started looking through the phone book, and if at least 3 private businesses offered the same service as the government, they privatized it.

But to get to the point of my post, I was interested to learn that nutcase House Democrat and former presidential candidate Dennis Kucinich was the former mayor of Cleveland. In fact, he was the mayor at a time when Cleveland defaulted on their debts back a couple decades ago because he refused to sell city property or reduce government spending.

At the end of Stossel's show there was a Q&A segment with the audience. One of the members asked Kucinich what he didn't like about privatization. Kucinich said that the problem with privatization is that private companies want to make profits and that to do so they will lower workers' wages and raise prices.

So while I always thought of private businesses as entities that are forced to earn business by offering the best service at the best price, I realized that a lot of people focus instead on their incentives to keep labor costs down and profits up as a bad thing.

The problems I see with this "Kucinich view" (which I fear is shared by way too many Americans):

1. Businesses that cannot compete (offer a desired good or service at a price people are willing to pay) go out of business. Government services that can't compete (offer as good of quality service at the same or lower cost than private business) don't go away. They stick around and continue to offer worse service at a higher cost.

2. Government wages that are higher than the private labor market rate are really benefiting those workers at the cost of taxpayers. How is that fair to the taxpayer?

3. Why should government's goal be to keep public sector wages higher? Shouldn't the goal be to offer public services at the lowest cost? Wouldn't this include keeping labor costs down? Of course the government will always be forced to pay wages competitive with the private sector in order to recruit and retain public sector employees, but what is the argument for paying wages higher than that?

4. Government takes from taxpayers via force (threat of fine or imprisonment) in order to provide services, so when it uses taxpayer money to fund services that a taxpayer doesn't want or use, it is really stealing from the taxpayer or forcibly directing what they spend their money on. That is why government services should be limited to core public services that are truly serving a very high percentage of taxpayers.

5. Profits are kept in check by competition. It is a very rare instance where a business has no competition (a monopoly). Businesses can only make a profit to the extent they can keep costs down better than their competition (operate more efficiently) or are willing to accept a lower profit margin.

6. Wage rates are also maintained by competition. Businesses cannot retain quality employees without paying as much as their competitors are paying.

7. For those that think that non-profits or government can provides services at a lower cost to the taxpayer because they aren't taking a profit, that assumes (most of the time incorrectly) that the waste and inefficiency in government or a non-profit entity is less than the profit margin of the more efficient for-profit business. But what if, for example, a business with a 8% profit margin runs a service 15% more efficiently than government?

I believe the fairest and most efficient economic system is the free market where wages and prices are dictated by market forces -- that is, in the labor market, what employers are willing to pay and employees are willing to work for, and in the markets for goods and services, what the buyer is willing to pay and the seller willing to sell for. Government should reasonably minimize the amount of interference via regulation, and only provide core public services like roads, police, and parks that for various reasons are better offered by government than by private businesses.

VIDEO: Ryan at Rules Committee Sums Up

2010-03-20T16:26:00.000-07:00

If there should be an individual mandate, it should be to watch this presentation by Rep. Paul Ryan at the House Rules Committee today (obviously before word spread that Pelosi has dropped DemonPass).

My comment on health care at HotAir

2010-03-20T15:57:00.000-07:00

Below is my comment at a HotAir post about Paul Ryan decimating Louise Slaughter in an argument about Medicare.

But first, the video of the takedown:

The fact is that SS and Medicare are going bankrupt. Medicare costs are growing beyond ability for government to pay.

Cuts will HAVE TO BE MADE at some point. The question is whether to start now so we can adjust gradually and lessen the pain, or whether we continue to bury our heads in the sand and end up with abrupt cuts when the bill comes due.

A second question is what is the most efficient way to keep services up and costs down. And in my opinion, that is through reverting back to utilizing the free market as much as is possible given the current state of things.

Honestly, the best two things I can think of that government could do IF they wanted to mandate something that would lower health care costs are steps that would get consumers more skin in the game:

1. Mandate that all insurance plans have minimum percentage-based co-pays.

For instance, instead of paying somewhere from $0-$30 to go see the doctor, you pay a minimum of 10%-30%. Say you had to pay 20%. Now instead of just going to a doctor and not caring what it costs (say $200) because you pay $20 no matter what, if you pay 20% you now look around for the best price because if you can find a doctor that you like that charges $140 instead of $200, you only pay $28 instead of $40. The competition which drives down costs plus the higher amount that you’re chipping in will reduce insurance rates to save you net cost overall.

In the same way, X-rays and MRI’s and all other medical tests should be paid for on a percentage basis. This gives the users of the services the motivation to shop around for the best price at a quality they are comfortable with.

The market competition will bring down prices, and it doesn’t need everyone in the system to be price conscious. Just as with any other good or service, everyone will benefit from the efforts of the folks who are price conscious.

2. Mandate that all medical care providers post prices or offer on the spot quotes.

Without price visibility, consumers are unable to make informed decisions that include price. Right now, most people go find the best quality care they can and don’t worry about price, because they think someone else (insurance) is paying. There is simply not enough incentive or understanding for people to think through it and say,

“Yeah, I’m going to put in the hours of effort it takes calling my providers and insurance to find out what the best cost is for this visit or procedure, because even though it costs me the same either way, I know that it will ultimately raise my insurance rates if I don’t shop around for the best price.”

Until the health care system gives the consumers of health care both the price visibility and incentive to shop around and/or consume less, costs will continue to increase at an unsustainable rate.

I read a figure somewhere last year, and I wish I could find it again, that back in the 60’s, individuals on average paid for 60% of health care expenses out of pocket. Now they only pay about 10% out of pocket, the rest is covered through insurance (and even the cost of that is hidden through the employer-based system). No wonder we consume 3 times as much health care in number of procedures per person that we did in 1980!

VIDEO: Hitler on ClimateGate

2010-02-28T13:46:00.000-08:00

Warning: the subtitles include profanity at least 3 times.

Other than that, I found it hilarious. Hat tip to Neptunus Lex.

C4P on Bastiat's Broken Window Fallacy

2010-02-28T13:32:00.000-08:00

Doug Brady and Conservatives4Palin.com has a nice post from last year that I ran across that includes a more contemporary paraphrase of Bastiat's Broken Window Fallacy, as well as a John Stossel video on it.

Henry Hazlitt, an economist who was influenced by Bastiat, explained the broken window fallacy in his book, Economics in One Lesson. Here’s the relevant excerpt:

A young hoodlum, say, heaves a brick through the window of a baker’s shop. The shopkeeper runs out furious, but the boy is gone. A crowd gathers, and begins to stare with quiet satisfaction at the gaping hole in the window and the shattered glass over the bread and pies. After a while the crowd feels the need for philosophic reflection. And several of its members are almost certain to remind each other or the baker that, after all, the misfortune has its bright side. It will make business for some glazier.

As they begin to think of this they elaborate upon it. How much does a new plate glass window cost? Two hundred and fifty dollars? That will be quite a sun. After all, if windows were never broken, what would happen to the glass business? Then, of course, the thing is endless. The glazier will have $250 more to spend with other merchants, and these in turn will have $250 more to spend with still other merchants, and so ad infinitum.

The smashed window will go on providing money and employment in ever-widening circles. The logical conclusion from all this would be, if the crowd drew it, that the little hoodlum who threw the brick, far from being a public menace, was a public benefactor.

Now let us take another look. The crowd is at least right in its first conclusion. This little act of vandalism will in the first instance mean more business for some glazier. The glazier will be no more unhappy to learn of the incident than an undertaker to learn of a death. But the shopkeeper will be out $250 that he was planning to spend for a new suit. Because he has had to replace the window, he will have to go without the suit (or some equivalent need or luxury). Instead of having a window and $250 he now has merely a window. Or, as he was planning to buy the suit that very afternoon, instead of having both a window and a suit he must be content with the window and no suit. If we think of him as part of the community, the community has lost a new suit that might otherwise have come into being, and is just that much poorer.

The glazier’s gain of business, in short, is merely the tailor’s loss of business. No new “employment” has been added. The people in the crowd were thinking only of two parties to the transaction, the baker and the glazier. They had forgotten the potential third party involved, the tailor. They forgot him precisely because he will not now enter the scene. They will see the new window in the next day or two. They will never see the extra suit, precisely because it will never be made. They see only what is immediately visible to the eye.*

VIDEO: Paul Ryan at Health Care Summit

2010-02-28T04:35:00.000-08:00

Paul Ryan does an excellent job of summarizing the budget gimmickry and issues with the current health care bills. It amazes me that the conversation could just go on without addressing these numbers. Obama just said that he had some problems with Ryan's numbers and moved on to another Democrat to speak about something else.

I hate the format where each speaker gets to talk for a set period of time, and there's very little back and forth actually hashing out any issues. And the whole summit, Obama gets to constantly frame the discussion after every Republican speaks.

In this case, there should have been considerable discussion addressing the points that Paul Ryan made.

By the way, I wish the Republicans had tried a lot harder to pin down Reid and Obama by asking them both to commit to not passing a bill using reconciliation or signing a bill that was passed using reconciliation. It would have made headlines if while being pressed hard Obama and Reid refused to make that commitment during the bi-partisan summit. It would have exposed how much of a sham the summit was. I'm willing to bet that if the Democrats think they have the votes to pass the Senate bill in the House, and a 2nd bill in both houses that would pass the Senate via reconciliation, that they will jam in through in the next few weeks.

2 Graphs: Jobs and Housing prices

2010-02-13T14:41:00.000-08:00

Powerline blog has a great post with two informative graphs.

1. A graph of job gains or losses per month. It shows the natural cycle already starting trending upwards before Obama's policies could have had any effect. It's always important to keep in mind the business cycle's trends when evaluating whether policies have helped or not.

2. A graph of the housing market, asjusted for inflation, since 1900. It makes it clear how government policies and lower lending standards and easy money policies and the market irrationality caused by opaque mortgage-backed securities and their derivatives had thrown housing prices completely out of whack. They are only now back down near, but still higher, than the historical average. Based on this graph, you could expect anything from a stabilization in prices in the near future to a further pendulum swing down another 20-30%.

Obama's Jobs Proposals

2010-01-30T17:43:00.000-08:00

In the State of the Union address on Wednesday, and again at the Republican annual conference meeting on Friday, President Obama outlined several proposals for a "jobs bill". I'm trying to think through the pros and cons of each.

1) An up to $5000 tax credit for businesses for each employee hired in 2010.

2) A payroll tax refund (dollar for dollar) for employers who give raises to employees earning under $100,000 for the amount of the raise that is greater than the rate of inflation.

3) Eliminate the capital gains tax for small business investment.

4) Take $30 Billion returned from the Wall Street banks, and give it to community banks to start lending to small businesses again.

(well, I've typed out the proposals, but gotta run for now -- will analyze later)

Here's some more proposals from the meeting with Republicans on Friday:

5) A "modest fee on the nation's largest banks and financial institutions to fully recover for taxpayers' money that they provided to the financial sector when it was teetering on the brink of collapse, and it's designed to discourage them from taking reckless risks in the future."

6) "I propose that we close tax loopholes that reward companies for shipping American jobs overseas, and instead give companies greater incentive to create jobs right here at home."

7) "I've proposed a 3-year freeze in discretionary spending, other than what we need for national security... that's consistent with a lot of the talk... we can't blink when it's time to actually do the job."

8) PAYGO rules -- just passed in Senate.

9) Bipartisan fiscal commission -- I'm going to establish one by executive order, after one died in the Senate the other day. "I hope you participate fully..."

Obama goes on to health insurance, but I don't have time to fisk it all.

International Welfare Creates Dependency Too

2010-01-23T21:30:00.000-08:00

Bret Stephens takes the occasion of Haiti's plight to remind people that long-term Foreign Aid (as opposed to short-term emergency humanitarian assistance which almost everyone supports) is part of the problem.

Take something as seemingly straightforward as food aid. "At some point," Mr. Shikwati [, a Kenyan economist,] explains, "this corn ends up in the harbor of Mombasa. A portion of the corn often goes directly into the hands of unscrupulous politicians who then pass it on to their own tribe to boost their next election campaign. Another portion of the shipment ends up on the black market where the corn is dumped at extremely low prices. Local farmers may as well put down their hoes right away; no one can compete with the U.N.'s World Food Program."

Foreign Aid more often than not destroys the local production capacity of the items being provided as aid, and thus creates dependency instead. And to make matters worse, it always props up corrupt local politicians who use their power in the aided country to direct aid for political reasons, or make money off the aid using various schemes, such as buying and running the trucking companies that actually deliver the aid.

American foreign aid, apart from emergency aid like in Haiti right now, in my opinion, should be carefully limited to forms that promote local good governance and increased production capacity in the aided country. Otherwise, it does more harm than good.

The reasons that poor countries are poor is directly due to their economic and government systems. There are numerous examples of countries quickly rising out from the third to first world in a matter of a decade or two with free markets and protecting property rights. The ones that stay mired in poverty are almost all characterized by corrupt governments and dysfunctional economic systems. Foreign investment is almost non-existent in these countries.

Those core reasons for why a country remains poor are by-in-large harmed by long-term foreign aid.

BigJourn: Fisking AP ClimateGate Article

2010-01-09T14:33:00.000-08:00

On Andrew Breitbart's new BigJournalism.com website, there is a great fisking of the big AP writeup immediately after the ClimateGate scandal broke back in December 2009.

The AP's article probably had the largest reach of any writeup on the scandal, as it was no doubt featured prominently in most newspapers around the country as well as on countless news aggregator websites.

The AP assigned 5 reporters to the article, who reviewed the emails and got comment from only 4 scientists, taking pains to point out that the one AGW (anthropogenic global warming) skeptic was not a true scientist, even though the other quoted scientists were not in the field of climatology either. Further they distort what the scientists said, or at least what their positions were when contacted by the Big Journalism article's authors, to downplay the significance of the ClimateGate emails and computer code.

The AP article is also conspicuous in who it did not quote, including any of the Global Warming crowd who wrote the emails and computer code, or any of the skeptics who are frequently mentioned in the emails. I'll give them the benefit of the doubt that with the computer code, the AP just hadn't had enough time to have computer programmer pore through all the code yet.

Here's the link to the Big Journalism article.

Be sure to read it. Articles like these are crucial to understanding the bias inherent in supposedly "objective" news reporting.

The biggest error by the AP is in coming to such sweeping and pre-judged conclusions as the headline "Science Not Faked..." when that remains to be seen. There have been many articles since ClimateGate broke which question some of the data itself, and not much can be determined for sure until these Global Warming scientists open up their data and climate models for independent review. The AP headline could have just as easily and validly have been "Scientists' Methods & Motives Now In Question".

Real Health Reform

2009-12-24T15:42:00.000-08:00

Reason has a pretty good summary of what real market-based health reform would look like.

House & Senate Health Care Bill Details

2009-12-24T15:05:00.000-08:00

The AP did a fair job of summarizing the Senate and House health care bills.

The Senate Democratic bill (Patient Protection and Affordable Care Act):

WHO'S COVERED: About 94 percent of legal residents under age 65—compared with 83 percent now. Government subsidies to help buy coverage start in 2014. Of the remaining 24 million people under age 65 left uninsured, about one-third would be illegal immigrants.

COST: Coverage provisions cost $871 billion over 10 years.

HOW IT'S PAID FOR: Fees on insurance companies, drugmakers, medical device manufacturers. Medicare payroll tax increased to 2.35 percent on income over $200,000 a year for individuals, $250,000 for couples. A 10 percent sales tax on tanning salons, to be paid by the person soaking up the rays. Cuts to Medicare and Medicaid. Forty percent excise tax on insurance companies, keyed to premiums paid on health care plans costing more than $8,500 annually for individuals and $23,000 for families. Fees for employers whose workers receive government subsidies to help them pay premiums. Fines on people who fail to purchase coverage.

REQUIREMENTS FOR INDIVIDUALS: Almost everyone must get coverage through an employer, on their own or through a government plan. Exemptions for economic hardship. Those who are obligated to buy coverage and refuse to do so would pay a fine starting at $95 in 2014 and rising to $750.

REQUIREMENTS FOR EMPLOYERS: Not required to offer coverage, but companies with more than 50 employees would pay a fee of $750 per employee if the government ends up subsidizing employees' coverage.

SUBSIDIES: Tax credits for individuals and families likely making up to 400 percent of the federal poverty level, which computes to $88,200 for a family of four. Tax credits for small employers.

BENEFITS PACKAGE: All plans sold to individuals and small businesses would have to cover basic benefits. The government would set four levels of coverage. The least generous would pay an estimated 60 percent of health care costs per year; the most generous would cover an estimated 90 percent.

INSURANCE INDUSTRY RESTRICTIONS: Starting in 2014: no denial of coverage based on pre-existing conditions. No higher premiums allowed for pre-existing conditions or gender. Limits on higher premiums based on age and family size. Starting upon enactment of legislation: children up to age 26 can stay on parents insurance; no lifetime limits on coverage.

GOVERNMENT-RUN PLAN: In place of a government-run insurance option, the estimated 26 million Americans purchasing coverage through new insurance exchanges would have the option of signing up for national plans overseen by the same office that manages health coverage for federal employees and members of Congress. Those plans would be privately owned, but one of them would have to be operated on a nonprofit basis, as many Blue Cross Blue Shield plans are now.

HOW YOU CHOOSE YOUR HEALTH INSURANCE: Self-employed people, uninsured individuals and small businesses could pick a plan offered through new state-based purchasing pools. Would generally encourage employees to keep work-provided coverage.

DRUGS: Grants 12 years of market protection to high-tech drugs used to combat cancer, Parkinson's and other deadly diseases. Drug companies contribute $80 billion over 10 years with the majority of the money used to limit the prescription coverage gap in Medicare.

CHANGES TO MEDICAID: Income eligibility levels likely to be standardized to 133 percent of poverty—$29,327 a year for a family of four—for parents, children and pregnant women. Federal government would pick up the full cost of the expansion during the first three years. States could negotiate with insurers to arrange coverage for people with incomes slightly higher than the cutoff for Medicaid.

LONG-TERM CARE: New voluntary long-term care insurance program would provide a basic benefit designed to help seniors and disabled people avoid going into nursing homes.

ANTITRUST: Maintains the health insurance industry's decades-old antitrust exemption.

ILLEGAL IMMIGRANTS: Would be barred from receiving government subsidies or using their own money to buy coverage offered by private companies in the exchanges.

ABORTION: The bill tries to maintain a strict separation between taxpayer funds and private premiums that would pay for abortion coverage. No health plan would be required to offer coverage for the procedure. In plans that do cover abortion, beneficiaries would have to pay for it separately, and those funds would have to be kept in a separate account from taxpayer money. Moreover, individual states would be able to prohibit abortion coverage in plans offered through the exchange, after passing specific legislation to that effect. Exceptions would be made for cases of rape, incest and danger to the life of the mother.

____

The House bill (Affordable Health Care for America Act):

WHO'S COVERED: About 96 percent of legal residents under age 65—compared with 83 percent now. Government subsidies to help buy coverage start in 2013. About one-third of the remaining 18 million people under age 65 left uninsured would be illegal immigrants.

COST: The Congressional Budget Office says the bill's cost of expanding insurance coverage over 10 years is $1.055 trillion. The net cost is $894 billion, factoring in penalties on individuals and employers who don't comply with new requirements. That's under President Barack Obama's $900 billion goal. However, those figures leave out a variety of new costs in the bill, including increased prescription drug coverage for seniors under Medicare, so the measure may be around $1.2 trillion.

HOW IT'S PAID FOR: $460 billion over the next decade from new income taxes on single people making more than $500,000 a year and couples making more than $1 million. The original House bill taxed individuals making $280,000 a year and couples making more than $350,000, but the threshold was increased in response to lawmakers' concerns that the taxes would hit too many people and small businesses.

There are also more than $400 billion in cuts to Medicare and Medicaid; a new $20 billion fee on medical device makers; $13 billion from limiting contributions to flexible spending accounts; sizable penalties paid by individuals and employers who don't obtain coverage; and a mix of other corporate taxes and fees.

REQUIREMENTS FOR INDIVIDUALS: Individuals must have insurance, enforced through a tax penalty of 2.5 percent of income. People can apply for hardship waivers if coverage is unaffordable.

REQUIREMENTS FOR EMPLOYERS: Employers must provide insurance to their employees or pay a penalty of 8 percent of payroll. Companies with payrolls under $500,000 annually are exempt—a change from the original $250,000 level to accommodate concerns of moderate Democrats—and the penalty is phased in for companies with payrolls between $500,000 and $750,000.

Small businesses—those with 10 or fewer workers—get tax credits to help them provide coverage.

SUBSIDIES: Individuals and families with annual income up to 400 percent of poverty level, or $88,000 for a family of four, would get sliding-scale subsidies to help them buy coverage. The subsidies would begin in 2013.

HOW YOU CHOOSE YOUR HEALTH INSURANCE: Beginning in 2013, through a new Health Insurance Exchange open to individuals and, initially, small employers. It could be expanded to large employers over time. States could opt to operate their own exchanges in place of the national exchange if they follow federal rules.

BENEFITS PACKAGE: A committee would recommend a so-called essential benefits package including preventive services. Out-of-pocket costs would be capped. The new benefit package would be the basic benefit package offered in the exchange.

INSURANCE INDUSTRY RESTRICTIONS: Starting in 2013, no denial of coverage based on pre-existing conditions. No higher premiums allowed for pre-existing conditions or gender. Limits on higher premiums based on age.

GOVERNMENT-RUN PLAN: A new public plan available through the insurance exchanges would be set up and run by the health and human services secretary. Democrats originally designed the plan to pay Medicare rates plus 5 percent to doctors. But the final version—preferred by moderate lawmakers—would let the HHS secretary negotiate rates with providers.

CHANGES TO MEDICAID: The federal-state insurance program for the poor would be expanded to cover all individuals under age 65 with incomes up to 150 percent of the federal poverty level, which is $33,075 per year for a family of four. The federal government would pick up the full cost of the expansion in 2013 and 2014; thereafter the federal government would pay 91 percent and states would pay 9 percent.

DRUGS: Grants 12 years of market protection to high-tech drugs used to combat cancer, Parkinson's and other deadly diseases. Phases out the gap in Medicare prescription drug coverage by 2019. Requires the HHS secretary to negotiate drug prices on behalf of Medicare beneficiaries.

LONG-TERM CARE: New voluntary long-term care insurance program would provide a basic benefit designed to help seniors and disabled people avoid going into nursing homes.

ANTITRUST: Would strip the health insurance industry of a long-standing exemption from antitrust laws covering market allocation, price-fixing and bid rigging. The bill also would give the Federal Trade Commission authority to look into the health insurance industry at its own initiative.

ILLEGAL IMMIGRANTS: Would be barred from receiving government subsidies but permitted to use their own money to buy coverage offered by private companies in the exchange.

ABORTION: Private companies in the exchange could not offer plans covering abortion if those plans received federal subsidy money. Most plans in the exchange would be affected, because most consumers in the exchange would be using federal subsidy money to buy coverage. The new government plan could not offer abortion coverage. Insurance companies would be permitted to offer supplemental abortion coverage in separate plans that people could buy with their own money. Use of federal money for abortion coverage would be limited to cases of rape, incest or danger to the woman's life.

VIDEO: 8 Ways Government Spending Hurts

2009-08-18T02:38:00.000-07:00

Newt on Health Care Rationing

2009-08-17T00:45:00.000-07:00

Newt Op-Ed in LA Times

Stossel Quoting Milton Friedman

2009-08-14T00:01:00.000-07:00

“Two simple observations are key to explaining both the high level of spending on medical care and the dissatisfaction with that spending. The first is that most payments to physicians or hospitals or other caregivers for medical care are made not by the patient but by a third party—an insurance company or employer or governmental body. The second is that nobody spends somebody else’s money as wisely or as frugally as he spends his own.”

References
* Stossel's blog post
* Friedman's 2001 Article on the Cure for Health Care

VIDEO: C-SPAN Caller Explains Townhall Protests

2009-08-09T10:43:00.000-07:00

This caller is right on the money, describing perfectly the problem with the way the Democrats are trying to push through these massive bills while limiting debate and condescendingly telling us what is in the bill and why we should support it instead of fielding a fruitful conversation about the bill, and hearing constituents concerns. Some townhall protesters are overly combative, but many are just frustrated when they take the extra effort to find out where a townhall is, get there early, have trouble getting in, want to make their voices heard, but then instead get DNC talking points from their representative instead of a constructive give and take.

VIDEO: Peter Schiff on MSNBC

2009-08-08T21:55:00.000-07:00

Peter Schiff is right on the money in this interview, when he is allowed to speak. He is saying everything I've been screaming (figuratively) for the last few years.

Schiff is running for Senate against Chris Dodd in Connecticut in 2010. I so hope he can win. We need an eloquent spokesman for free markets in the federal government somewhere.

Health Care Letter to My Congressmen

2009-08-08T11:20:00.000-07:00

Thank you for hearing me out on a issue that I am very passionate about. I have not been able to find any townhalls that you will be at, so I am writing this letter.

The primary problem with our current health care system is cost increase. The other major issue, insurance coverage, is in large part a result of the high cost as well. We need to attack high cost first.

Unfortunately, all of the Democrats' plans that I have seen would exacerbate the problem instead of fix it!

The high costs are a direct result of a mostly 3rd party payer system. The more government has gotten involved with Medicare, Medicaid, SCHIP, coverage mandates, and allowing frivolous lawsuits, the higher costs have gone.

This is what happens whenever government subsidizes something or mandates loans or coverage. It always artificially increases demand and thus costs.

We've seen it happen in higher education. Government increasingly subsidizes tuition and provides subsidized or low cost loans which increases higher education demand, and the prices (including tuition) have skyrocketed.

We've seen it happen in the housing market, where an asset bubble was pushed up by government strongly encouraging and even arm-twisting banks into offering subprime, interest only, and low/no down-payment loans in the name of "affordable housing". It resulted in the housing crash which, combined with opaque use of derivatives and severe misjudging of risk on Wall Street, has directly led to our current economic recession.

One can argue whether the benefits obtained by the government-caused higher costs are worth it, but it is indisputable that the government is fueling a good portion of the higher costs. If cost is the big issue and we want to bring down the costs while improving efficiency and leaving the utmost freedom of consumer choice, then we need to take steps to stop government from distorting the markets and allow a free health care market to work.

Imagine for a moment if we had grocery insurance. Food is just as important as health care, right? What if your employer took some of what he could have paid you in wages and, just like health insurance, bought you grocery insurance. Everyone has the right to eat! Universal grocery insurance is a human right! You could use your insurance to go to the store and pick up whatever food you needed or wanted. No prices were posted in the store, and clerks would look at you like something was wrong with you if you asked how much something cost. You just payed a fixed copay per grocery store visit (or no copay at all!). What do you think would happen to cost?

Grocery shoppers would pay no attention to prices and would pick up far more than they needed. The increased demand, and the increased demand for more expensive items, would make total food costs EXPLODE! Pretty soon, the big bad grocery insurers would have to start limiting what food items they would cover, and denying coverage to the heaviest eaters. And Congressmen like yourself would be oblivious to how you caused the problem and would throw a fit about the evil insurance companies.

That is where we are in the health insurance system right now. Remember that the big issue is high costs, and the Democrats' non-solutions are to mandate that insurance companies cover everyone, mandate that they cover more procedures, mandate that small businesses pay more into the system (which will lower wages or hours or cost jobs), and set up a subsidized public plan that will drive private insurers out of the market and into government-controlled insurance.

And for those who say some compromise like goverment-sponsored co-ops could compete on a level playing field with private insurers, I would point them back to Fannie Mae and Freddie Mac. Those GSE's sure turned out well. Would the co-ops really get no unfair help from the government at taxpayer expense? Would they be considered "too important to fail"?

Democratic proposals would INCREASE costs, not help bring them down!

Democrats are veering us down a dangerous road where the government, instead of the market, will be responsible for holding costs down. Government cost controls are ineffienct and totally inconsistent with freedom. Do we really want to head down a road where a panel of government bureaucrats will end up deciding what procedures are covered. Governement rationing in order to keep costs down is inevitable if we go the Democrats route. They may not be proposing a NICE board like they have in the UK right now, but once costs keep going up, they will be forced to propose it then. It is a slippery slope.

The market efficiently rations care based on the price system. As with programs like food stamps, the poor could receive health care stamps (perhaps deposited into their own HSA?) to purchase health care.

Remember, the problem is costs. The solution to bringing down costs is to shift more of the cost visibility and responsibility to consumers. We could pay less in insurance rates if we bore a higher percentage of the cost for each procedure, just like in my grocery insurance example. Catastrophic health insurance would of course need to cover a high percentage of costs, but if there were better price visibility and consumers paid 30-50% of the non-catastropic costs at time of service, they would have a much stronger incentive to limit unnecessary or borderline necessary care, and to search out the most cost effective care.

And of course, no plan to reduce cost should exclude health care litigation reform.

Please consider pushing for health care reform in a much more market-centered approach.

VIDEO: Dems Plan For Single Payer Health Ins.

2009-08-03T03:06:00.000-07:00

VIDEO: Stossel's 20/20 Previews ObamaCare

2009-08-01T12:44:00.000-07:00

CBO: ObamaCare Bends Cost Curve $820B - In Wrong Direction

2009-07-30T00:16:00.000-07:00

HotAir has the details here.

For more background, see previous HotAir post here.

Basically, if you look at this chart of the CBO's numbers and add up all the additional federal health spending for the next 10 years, it adds up to $820 Billion (after subtracting $219 Billion in Medicare cuts). Unrelated tax increases of $581 Billion during those 10 years may mean the federal deficit will only go up by $239 Billion, but it doesn't mean that doesn't mean that ObamaCare is almost deficit neutral. It means that he is going to jack up taxes on "the rich" in order to pay for a massively expensive expansion of federal health care spending. Instead of bending the cost curve down, Obama is bending it up. The CBO numbers clearly show that federal health spending will accelerate over time. And that is assuming the CBO is right, and not undershooting the eventual costs by a factor of 7 like happened with Medicare.

The chart is originally from Keith Hennessey.

Stossel: Insurance Hides Costs

2009-07-21T23:53:00.000-07:00

Here's a good column from John Stossel from a couple weeks ago.

It really zeros in on the point I've repeatedly made that the cost problem with health care is the lack of a normal market, where consumers make hardly any choices at all based on cost. Most cost decisions are made inefficiently through third-parties, mainly health provider administrators, health insurance companies, and employers. The patient and doctor much of the time have no idea what anything truly costs.

It is very difficult to have a cost-efficient system when users of the system, the consumers and providers (patients and doctors) are completely oblivious to price.

See my grocery insurance analogy in the middle of this previous post.

Also see this American Spectator article on health care myths.
(hat tip Hotair)

Bernanke's Exit Strategy

2009-07-21T04:23:00.000-07:00

I have noted before that while I supported the Fed increasing the monetary supply during the financial crisis last fall, I am greatly concerned about where all that money is going to go once the economy starts to recover and hundreds of billions of dollars that are sitting on the sidelines right now in bank reserves start getting lent again. It could be a recipe for huge inflation.

Fed Chairman Ben Bernanke has an encouraging column in the Wall Street Journal today on how they plan to avoid hyper inflation.

The question rumbling around in my head now is what side effects the inflation fighting policies will have. I will have to study it more.

Sotomayor's Big Fib

2009-07-15T01:51:00.000-07:00

Powerline has the exact quotes from Sotomayor's 7/14 testimony and the original quote, with context, of (one of) the "wise Latina" speeches.

The point is that Sonia Sotomayor, in her previous speeches, quotes Sandra Day O'Connor and then explicitly disagrees with her (O'Connor says a wise man and a wise woman would come to the same judicial conclusion on a case, while Sotomayor said she disagrees and that she would hope that a wise Latina woman would more often than not come to a better conclusion than a white male). Today, she acts like she was agreeing with O'Connor. It is a flat out lie, and I'm suprised some of the GOP Senators did not call her out more forcefully on it.

Nearly All UO Professors are Democrats

2009-07-15T00:01:00.000-07:00

Here's an interesting article by a University of Oregon journalism student, who was attacked for noting in the student newspaper that only 2 of 111 professors in the departments of journalism, law, political science, economics, and sociology were registered Republicans.

If you haven't attended a public university lately, I can vouch that what Dan Lawton describes at the UofO is very similar to what I found at Oregon State University where I attended until 2003, though as a Computer Science major almost all of my computer classes were non-political.

VIDEO: Dancing Babies

2009-07-11T16:19:00.000-07:00

Government Borrowing Drains Business Investment

2009-07-07T23:30:00.000-07:00

This article at RealClearMarkets by Louis Woodhill of The Club for Growth does a pretty good job explaining why government spending never does much to stimulate the economy, and in fact (if you accept that the government is less efficient at creating jobs than the private sector given the same amount of dollars invested) destroys more jobs than it creates.

The money government spends does not grow on trees or fall like manna from heaven. It does not appear out of nowhere. Sure, it can be printed, but you can only do so much printing of money before you start devaluing your currency and investors worldwide start pulling their money out of the dollar, at which point the dollar collapses and drags the economy down with it. Bernanke's Federal Reserve has printed about $1 trillion since last fall, but the banks in trying to right themselves have in total increased their capital reserves by about $800 billion, so they have mostly offset each other. Look for inflation to ramp up once the banks start lending more again, later this year or sometime next year. Watch closely to see how well Bernanke can head off inflation at that point.

The second way government can obtain money to spend is via taxes, but Obama was so adamant about only raising taxes on those making over $250,000 that he cannot politically get away with raising taxes on incomes below that level. And even if he taxed those making over $250,000 at 100%, he could not generated nearly enough money to pay for all his spending. In any case, he hasn't raised any taxes yet, but between the energy cap-and-tax that might pass Congress soon and the expiration of the Bush tax cuts looming in the next couple of years, the expectation of higher taxes is already changing economic behavior with those most likely to have their taxes raised starting to spend less, which doesn't help consumer spending, which is what keeps businesses in business employee people.

(calculate your potential new tax burden at taxfoundation.org if cap-and-trade passes -- mine will be a little over $1000 per year)

But the third and primary way government is getting the money to spend right now is by borrowing. As Woodhill points out in the article I linked to above, government borrowing means investors buying government bonds instead of using that money for private investment. The more the government borrows, the less private business investment (PBI) there is. The less PBI there is, the less jobs are created. This is exactly why the number of public sector jobs is growing while the number of private sector jobs is shrinking. IT IS BECAUSE OF ALL THIS BORROWING AND SPENDING!

Think about it, Obama. You suck all the private investment out of the economy, and then you scratch your head wondering why the economy is shedding jobs as a whole even as your stimulus dollars are directly creating some jobs. It's because you are preventing more jobs from being created through reducing PBI than you are creating/saving through increased government spending. In the meantime, you consolidate more power in Washington along with all the corruption, fraud, waste, red tape, and loss of freedom that goes along with it.

What we should be doing is encouraging PBI, by steps such as:

Reducing the Capital Gains Tax Rate (to encourage investment)
Reducing the Corporate Tax Rate (highest in the world)
Minimizing government borrowing as much as possible
Making the Bush tax cuts permanent (so "the rich" will be more likely to invest money instead of keeping it in short term savings to prepare to pay higher taxes)
Stop preventing higher domestic energy production

Instead Obama is doing exactly the opposite, out of "fairness" no doubt. He is:

Proposing to let the 2003 Capital Gains Tax Rate Cut lapse
Proposing to leave the Corporate Tax Rate at 35% and tighten the screws down even HARDER on companies who make profits overseas, which will drive more jobs out of America (already there was a story yesterday of a Canadian company that was incorporated in Deleware but is changing status so its headquarters are now in Canada which has a corporate tax rate in the low 20's)
Spending like there is no tomorrow, and he will have to borrow more and more as the Porkulus spending ramps up even more later this year and into the next, not to mention other spending like a $600 billion "down payment" on health care deform
Proposing to let the Bush tax cuts expire for those in the top income brackets
Taking no action to allow any energy production other than uneconomical "green energy" to expand, while at the same time raising energy costs through cap-and-tax which will raise costs for almost all businesses and decrease their ability to keep/hire employees

Obama and the Democrats are busy enacting exactly the wrong policies. If Woodhill is right, unemployment is headed for 14% by next year.

O'Grady: A Little History Lesson on Appeasement

2009-07-06T22:40:00.000-07:00

Mary Anastasia O'Grady has another great article in the Wall Street Journal today about Honduras and how we let Chavez bully his way to dominance in the region by appeasing him.

Hat tip to Fausta

Job Losses for All Post WWII Recessions

2009-07-04T05:24:00.001-07:00

Via Calculated Risk

VIDEO: Reason TV on a New New Deal

2009-07-04T04:39:00.000-07:00

Think about it. There were lots of sharp recessions both before and after the Great Depression. Why is it that the one that FDR tried "bold persistent experimentation" during was the one that morphed from a sharp recession into the Great Despression? Why would we ever want to copy what FDR did while he presided for his entire 12 years over a dismal economy? If 12 years wasn't enough to turn it around... maybe you should try something different. Stop the bold governmental experimentation and let market forces steer the recovery and you would be back on your feet in 2-3 years max. Here's Reason TV's video on the subject:

For a refresher course on Keynesian economics, also watch this video from CATO's Daniel Mitchell.

Obama to Block G8 Sactions on Iran?!

2009-07-03T23:49:00.000-07:00

Haaretz reports that while there is significant momentum for the G8 to impose new sanctions on Iran, the U.S. is "working behind the scenes to prevent new sanctions from being imposed against Iran."

(Hat tip to HotAir)

Apparently, Obama is still stuck on the crazy notion that he can talk the Supreme Leader of Iran to give up nukes, and doesn't want to antagonize Iran.

Idiot! Khamenei and Ahmadinejad will never give up the nukes. Negotiations with them are worthless. Regime change is the only chance to stop them short of military action. Mousavi is still hanging on, and Khatami just spoke out against the regime. Rafsanjani is almost certainly opposed but must not have enough support in the Assembly of Experts to oust Khamenei. Right now is exactly the right time to put MORE pressure on the regime and bolster the opposition in any way possible.

Instead Obama is putting blind faith in his ability to negotiate with the current regime when it doesn't have a chance of success. In the meantime, he won't even allow sanctions to go forward to put more pressure on the regime. Dimplomacy is only successful when it is backed up by credible threat of military or economic force.

And if I am right so far, then all of the election protestors are about to become martyrs with no help at all from the U.S.

Now I know what living during Carter's presidency must have been like.

================================================================
For those that need a primer on Iran's Government, first this Wikipedia graphic:

Note that the Supreme Leader has control of the military and the judiciary, and also has almost complete control over the 12 member Guardian Council. He appoints 6 members directly and appoints the Head of the Judiciary who nominates the other 6 members of the Guardian Council, subject to Parliament's approval. The Guardian Council, in turn, controls the elections. All candidates for Parliament, President, or the Assembly of Experts must first be approved by the Guardian Council.

The Assembly of Experts is a 86 member body that meets twice a year whose sole purpose is to appoint and monitor the Supreme Leader. They apparently have the power to remove the Supreme Leader if "the Leader becomes incapable of fulfilling his constitutional duties, or loses one of the qualifications mentioned in the Constitution, or it becomes known that he did not possess some of the qualifications initially..." I assume this could be done on a majority vote. Reform-minded Rafsanjani is currently head of the Assembly of Experts, and appears to have a majority of the members on his side. However, it is unclear if that means enough support that they could ever oust the Supreme Leader. Rafsanjani recently called an emergency meeting of the Assembly of Experts. However, all notes are classified and only viewable by the Assembly Members and the Supreme Leader, so its hard to say what they discussed. The Assembly of Experts has never publicly opposed a Supreme Leader on any matter.

Obama's EPA Puts Politics Ahead Of Science

2009-07-03T23:30:00.001-07:00

Kimberly Strassel has a must read column at the WSJ on a man named Alan Carlin who works at the EPA and was silenced when trying to put out a report that recommended the science behind man-made global warming be revisited (given new peer-reviewed research that has cast doubt on the theory and the fact that temperature have been going down for 10 years which was not predicted by the computer climate models that most climate scientists were relying on).

One of the Democrats' favorite lines about the Bush EPA was that they were putting politics ahead of science. Well, emails have been uncovered from Carlin's superior telling him to drop it because, "The administrator and the administration have decided to move forward on [classifying carbon as an] endangerment, and your comments do not help the legal or policy case for this decision. . . . I can only see one impact of your comments given where we are in the process, and that would be a very negative impact on our office."

In other words, the EPA has already decided to move forward on this, so do not bring up any science that will conflict with their already-made decision. The EPA administrator could be really unhappy with us about that.

Incredible.

VIDEOS: Obama is a Big Fat Liar

2009-07-02T02:30:00.000-07:00

Guy Benson from NRO has Obama ads from last year's presidential campaign posted that illustrate that yet another one of Barack Obama's promises comes with an expiration date.

Obama constantly ripped McCain for proposing to tax employer-provided health insurance. Of course what McCain was proposing was leveling the playing field where instead of only giving a tax DEDUCTION to those who get their health insurance through their employer, EVERYONE would get a $5,000 tax CREDIT. As I've noted before, I think over 95% of people would get a better tax scenario under McCain's plan. And it would be exactly the right step to move toward a much better functioning health insurance market.

What Obama is now refusing to take off the table is just a plain old tax increase on employer provided benefits in order to fund his health care reforms. He's not simply restructuring the tax treatment to level the playing field as McCain proposed.

Oregon Bans Field Burning

2009-07-02T00:18:00.000-07:00

Field burning is already one of the most heavily regulated activities imaginable. Farmers must pay $10/acre, not burn within buffer zones along major highways, standby ready for countless hours in hopes that they will get the call that they can burn a field, and post flaggers at both ends of any adjacent roads that will be impacted by smoke. The Oregon Dept. of Agriculture (ODA) monitors weather conditions and only allows burning on about 10 days each summer during the best wind conditions possible to achieve good lift and transport of the smoke out of the area.

Over 500,000 acres used to be burned annually, but since legislation in 1991 phased that down, a maximum of 65,000 acres can now (before the just passed ban) be burned. The total acres burned for most of this decade averaged around 50,000 acres, dropping to 32,000 in 2007 and 38,000 in 2008.

The Oregon Department of Agriculture - Natural Resources Division's Smoke Management Program publishes an annual summary report on field burning. The ODA has Nephelometers, to measure smoke impact, located in Portland, Salem, Corvallis, Carus, Lyons, Sweet Home, Eugene, and Springfield. Going back to 2002, with only the exceptions of 2 hours in Corvallis (2006), 2 hours in Eugene (2005), 4 hours (2005) and 1 hour (2002) in Springfield, and 1 hour in Carus (2004), the only nephelometers to record any smoke at all were in Sweet Home and Lyons. The smoke impact is reported as light (no impact to visibility), moderate (12 miles visibility), or heavy (5 miles visibility). Since 2002, about 2/3 of the measured smoke impact is light and 1/3 is moderate. Obviously, there are other areas that would have been affected by smoke and not measured, but there is no way that field burning smoke, measured at about 2% of air pollution each summer, is today a major problem.

The annual summary reports also list the number of complaints broken down by city. Unfortunately, they are not broken down by day so that they can be cross-referenced to see if there was even any open field burning on that day. Eugene, who remember has only had 2 hours of measurable smoke since 2002 and none in the last 2 years, is consistently a top complainer, registering 134 of 463 total complaints in 2008 and 368 of 776 in 2007. Sweet Home and Lyons, in comparison, have relatively few complaints.

The field burning ban will force farmers to use more pesticides and increase ground tillage, expanding even more the summer haze of dust that now comprises 80% of summer air pollution. Even with these more expensive measures, crops will not grow as cleanly and some farmers will be driven out of business.

Heritage: Medicare has HIGHER Admin Costs

2009-06-28T00:01:00.000-07:00

Over the past couple weeks of the health care debate, I have continually heard the claim that a public option could lower health care costs by reducing administrative costs, and the evidence for this is supposedly that Medicare has much lower administrative costs than private insurance.

However, the fact is that Medicare's administrative costs on a PER PERSON BASIS are actually HIGHER than those of private insurance. All the rhetoric lately of Medicare having lower admin costs is because they are taking the admin costs as a percentage of the total dollar amount spent for admin plus paying claims. Because Medicare pays more in claims per beneficiary, the admin costs are divided into a much larger denominator than private insurance's. In fact, the more fraud, waste, and abuse there is in Medicare, the lower their admin costs are as a percentage!

Read the entire Heritage memo here:
http://www.heritage.org/Research/HealthCare/wm2505.cfm
June 25, 2009
Medicare Administrative Costs Are Higher, Not Lower, Than for Private Insurance

Money quote is:

The fact is that, in recent years, Medicare administrative costs per beneficiary have substantially exceeded those costs for the private sector, this despite the fact that, as critics note, private insurance is subject to many expenses not incurred by Medicare. Contrary to the claims of public plan advocates, moving millions of Americans from private insurance to a Medicare-like program will result in program administrative costs that are higher per person and higher, not lower, for the nation as a whole.

And here's the Heritage graphics:

Hat tip to Tom Bevan at RealClearPolitics where I spotted this first.
http://www.realclearpolitics.com/articles/2009/06/27/the_adminstrative_cost_benefit_myth_97193.html

Deficit Spending & Shedding Jobs

2009-06-27T22:59:00.000-07:00

Two graphs I've got to catalog on my blog before I forget where I found them.

First is a graph of the Bush era deficits compared against the CBO and White House estimates under Obama, courtesy of Heritage and the Washington Post.

The second graph is the most recently updated unemployment figures from Innocent Bystanders

VIDEO: Democrats Hypocrisy on Medicare Cuts

2009-06-21T22:51:00.000-07:00

Democrats screeched for years while Bush tried to make modest reforms (tens of Billions of dollars) to limit the explosive cost growth of Medicare. Now the Democrats are proposing $622 Billion in cuts!

Check out this montage on YouTube.

Amazing. This is almost as bad as the Democrats hypocrisy on the Iraq War.

IBD: Breakdown of the Health Uninsured

2009-06-21T21:41:00.000-07:00

Make sure to read this IBD editorial.

This is in line with analysis I have seen before, that if you take out illegal aliens, those who can afford health insurance but decide not to purchase it, and those who are only temporarily without insurance while between jobs, the number of uninsured drops from 47 million to somewhere in the 10-20 million range, depending on the estimate. You can cut the number down even further if you exclude the people who are eligible for government programs but have not taken advantage of them. After all of this, you end up with 2-5% of the population that is uninsurable or falls into a gap where government assistance still does not help enough to afford insurance in states with expensive health insurance.

If you wanted to attack these reasons for uninsurance, you would:

Enforce immigration laws.

Enact some form of an individual mandate to purchase at least basic catastrophic health insurance (with similar justifiction to mandating all drivers maintain car insurance, although I would be really nervous that this mandate would not be structured right). Withhold employee's portion toward paying for this from paycheck similar to FICA witholdings.

Increase health insurance portability, mainly by breaking the link between jobs and health insurance. The best step to take to achive this is to level the playing field by extending a tax deduction or credit for health insurance to everyone, not only those who receive insurance through their employer (this is what McCain proposed during the 08 presidential campaign). Employers could still provide benefits that helped pay for your insurance, but instead of being stuck with the employer group one-size-fits-all plan, you would have much a better choice to pick the best plan for you from your employer or the private market.

Do a better job educating those eligible for public assistance.

Enact free market reforms to bring down the cost of health insurance. Expand HSA's, encourage insurance companies to increase copays and make them percentage based (so consumers have incentives to shop around for best value) in exchange for lower insurance premiums, and encourage health providers -- and other private groups -- to increase price and quality transparency so that consumers can truly choose the best value for them. Reduce the number of mandates. Allow individuals to purchase health insurance across state lines. Enact tort-reform to cap the amount of non-economic awards in frivolous lawsuits -- every dollar that doctors have to pay in liability lawsuit awards or for liability insurance is a dollar that is passed along to consumers in the form of higher health insurance premiums. Stop cost-shifting the failing Medicare program's costs to the private insurers by underpaying doctors for care provided to Medicare patients -- this forces providers to raise prices for everyone else to stay afloat, inflating health insurance premiums in the private individual and group markets. Allow nurses and physician assistants to provide more care that they are capable of providing instead of mandating that only a more expensive doctor can provide it.

Netanyahu's Vision for Middle East Peace

2009-06-14T22:24:00.000-07:00

Israel's Prime Minister Benjamin Netanyahu gave a speech on his vision for peace with the Palestinians. For anyone not familiar, he gives a good overview of the history of the conflict and all the major issues.

For Netanyahu's reputation as a "hardliner", I have trouble finding fault with ANY of his requirements for peace. Given the Arabs' desire to eliminate the state of Israel, it is understandable that he asks for a disarmed & peaceful Palestinian state.

Bush's 2004 D-Day Speech

2009-06-06T19:49:00.000-07:00

I ran across this interesting article describing George W. Bush's 2004 D-Day speech, which was barely covered because Ronald Reagan had passed away that very morning. Make sure to read all the way to the end.

"Our boys had carried in their pockets the book that brought into the world this message: Greater love has no man than this: that a man lay down his life for his friends. America honors all the liberators who fought here in the noblest of causes."

Turning then toward Chirac, Bush delivered the speech's kicker. "And America would do it again, for our friends."

The field of green was silent for a moment before the aging audience broke into heartfelt applause. Chirac, clearly moved by Bush's words, approached the American president, grasped both his hands, and for a poignant moment, did not let go.

Dude, Where's My Stimulus?

2009-06-06T13:48:00.000-07:00

I know, I know. Unemployment is a lagging indicator, and not the best measure of whether recent stimulus has kicked in. Nevertheless, it is insightful to compare the current numbers against what was promised by Obama and his economic team while pushing the $787 billion Porkulus bill back in January & February. It is becoming much harder for Obama to claim his government spending is doing much good, and all the negative consequences of out of control (and inherently inefficient) government spending -- massive borrowing (higher interest rates) and printing of money (inflation) and raising taxes (obvious negative impact to those who are taxed more) -- will start to be felt more and more all the time.

Hat tips: Innocent Bystanders & HotAir

Also, see my previous post on the Obama administration's claims

Ted Kennedy's Health Care

2009-06-01T01:42:00.000-07:00

Here's my comments at the HotAir Green Room post by Karl.

Pawlenty stymies DFL in Minnesota

2009-05-24T13:35:00.000-07:00

Ed at HotAir has the details.

Here is my comment

VIDEO: California's Path to Economic Ruin

2009-05-23T00:59:00.000-07:00

From Reason TV this time, another must watch video detailing the problems of out-of-control spending in California under the Governator. It includes several clips of Tom McClintock who was the 3rd candidate in the 2003 recall election in California, with 13% of the vote. I remember at the time that I had really wished McClintock could have won, but that Arnold was probably the best you could expect out of California.

What is so disappointing about Schwarzenegger is that I thought he would be so much better on economic issues. In 2003, I had recently watched the entire Free To Choose series by Milton Friedman from 1980, which had recently been made available online. When Friedman did an updated series in 1990, Arnold Schwarzenegger actually INTRODUCED THE SERIES.

The idea that such a huge fan of Milton Friedman would now be leading California as governor toward economic peril through uncontrolled increases in government spending must have Friedman churning in his grave (Friedman passed away a couple years ago, may he RIP).

Schwarzenegger followed this up with pretty solid rhetoric during the 2003 recall campaign, and seemed to be true to his word initially. But after he got his hat handed to him by the unions because they spent HUNDREDS OF MILLIONS of dollars to defeat his 2005 series of ballot initiatives (a level a spending the unions ironically could not have done had Proposition 75 passed, requiring union employees to opt-in in order for their union dues to be used for political purposes), he seemed to do a complete 180 and focus only on getting elected again in 2006.

He seems to have taken the approach that the people of California had spoke in 2005, and so he was going to give them what they wanted. I'm not sure if he just wanted to be popular, or look out for his political career, or if he truly believed all his talk about "the people" in the 2003 recall race, but since that defeat in 2005, he has lost all conservative tendencies whatsoever and is now worse for the Republicans than ever because he will get Republicans tagged with the blame as California suffers. Much better to have stood strong on conservative principles even if it would have led to an election defeat in 2006 (which I don't think it would have -- the 2005 propositions may have been defeated, but he was still popular enough). Instead, he is helping tear apart the Republican party from within.

It's a sad thing to watch. Sure, governing is tough, and it requires tough decisions, especially when they are the right but not popular decisions.

Why, Arnold, are you acting like such a political girlie man?

VIDEO: Cheney at AEI on National Security

2009-05-22T22:10:00.000-07:00

This is a must watch speech. Former VP Dick Cheney gives an excellent speech reminding us all why we have avoided another attack on the homeland since 9/11.

Obama Spends His Own Money Like Crazy Too

2009-05-18T02:23:00.000-07:00

You've got to take a look at this. It looks like Obama has spent well beyond his means until he struck gold with book royalties in 2005. The article points out that Obama has never had to face the consequences of reckless spending in his personal finances. The problem is that there is no similar path out of debt for the U.S. as a whole. It's a scary thought.

VIDEO: Mitchell on Obama's Deferral Proposal

2009-05-11T23:41:00.000-07:00

"Do you believe in evolution?"

2009-05-07T01:18:00.000-07:00

Here is my comment at HotAir on the post where Chris Matthews asks Rep. Mike Pence (R-Indiana) if he believes in evolution (trying to use that somehow to discredit Pence on carbon cap-and-trade legislation by establishing Pence as 'anti-science').

Science is limited to what can be observed, measured, repeated, and empirically verified. It cannot prove anything about the past. Science only gets us as far as proving facts about the present. Those observed processes must then be extrapolated into the past to try to explain how past events occurred, with varying levels of validity or certainty. Assumptions about the past must be made, such as the rate things decay today is the rate they have always decayed, and no catastrophic events (like say a worldwide flood) occurred.

A creationist and an evolutionist will almost always agree on the hard facts of what can be observed, like current rate of decay, what material fossil bones are made of, deviation within a species, etc. Where they vary is once they take the hard data and try to interpet it and develop an overarching theory or framework to explain the past and predict the future.

The theory of evolution is not science any more than ID or creationism is. It is a pretty poor theory chocked full of holes. I have heard 3 hour lectures describing instance after instance of known scientific knowledge that the theory of evolution can not explain.

There is, at best, VERY LITTLE support in the fossil record for a slow evolution from one species to another. On the contrary, the fossil record shows an overwhelming abundance of specific current or extinct species with basically no intermediate species to speak of. It became such a problem for evolutionists that they had to evolve their own theory by saying that ALL of the change from one species to another came in quick short bursts that would have left no trace in the fossil record.

To be sure, Creationism assumes there is a God who created all living things, and this is FAR outside the reach of science. But that does not mean that science disproves God, only that science has nothing to say about the existence of God. Remember science is only the observation and empirical verification of the natural world as it operates today. It does not attempt to explain the supernatural.

Similarly, Intelligent Design assumes there is a designer. From my perspective though, ID is quite different from Creationism and assumes much less. The basic crux of the theory is that the more and more we learn about how complex our natural world is, the more and more ludicrous it becomes to try to assert, as evolution does, that it all happened by chance. When you drive through a city and take note of all the building and roads, it is obvious that there was intelligent design behind the city. The city, even if you gave it billions of billions of years, would never have sprung up there by itself with no intelligent direction. To believe that it would have is the definition of crazy. And yet that it was those who believe in evolution would have us believe, that even at the cellular level, where a cell itself is thousands of times more complex than a major city, all of that just happened to align itself by chance, and take every step of the evolutionary ladder by chance without ever failing and snuffing life back out. It is scientific evidence itself that inspires belief in ID. Creationism is an extension on ID in that it asserts much more about who the Designer was, and how He designed it.

It is evolutionists, though who are most closed minded. They immediately rule out the supernatural, and dogmatically mandate that everything must be explained in the natural. They venture far beyond the limits of science into the realm of whacky theory, and hide behind the badge of science all the while. And worst of all, they militantly try to snuff out any opposing view, keeping a fascist grip outlawing opposing theories in the universities, and refusing to debate ID proponents or Creationists.

What are they afraid of? If their theory is so foolproof, why not debate the Creationists and expose their silly theories for the fraud that they think they are. Oh, that’s right, because when they tried that 30 years ago, they got their clocks cleaned by the Creationists.

Exit question: When was the last time you actually heard ANY scientific debate at all on the actual evidence itself?

Another comment from later on:

The problem I see with evolution is that it requires a lengthy chain of events to all be true, where if any one of them is not true, the entire theory fails. Whenever I have dug into or heard discussion and summaries of the ACTUAL SCIENCE, and especially the points put forth by Creationists or other skeptics, my take is that the theory of evolution is so full of holes and specific pieces wholly unsupported — and close to disproved — by the evidence, that I think it takes far more faith to believe in the theory of evolution than it does to believe that God created the universe.

Evolution’s answer always seems to be that if you allow enough time, anything is possible. If you try to point out how unique life is, and how improbable it is that random chance is responsible for what we scientifically observe today, the evolutionist just ups the ante and says, “See how amazing this process of evolution is!

Many a evolutionist is so convinced that their theory is correct that it seems impossible to find any way to falsify it. I think a revealing question to put to an evolutionist is what would it take to convince them that their theory is false.

"The Language of Healthcare 2009”

2009-05-05T21:40:00.000-07:00

Politico is reporting on a confidential report prepared by Republican consultant Frank Luntz for Congressional Republicans that outlines the best political language for Republicans to employ on Healthcare Reform. It includes this interesting list:

Luntz’s 10 pointers in “The Language of Healthcare 2009”:

(1) Humanize your approach. Abandon and exile ALL references to the “healthcare system.” From now on, healthcare is about people. Before you speak, think of the three components of tone that matter most: Individualize. Personalize. Humanize.

(2) Acknowledge the “crisis” or suffer the consequences. If you say there is no healthcare crisis, you give your listener permission to ignore everything else you say. It is a credibility killer for most Americans. A better approach is to define the crisis in your terms. “If you’re one of the millions who can’t afford healthcare, it is a crisis.” Better yet, “If some bureaucrat puts himself between you and your doctor, denying you exactly what you need, that’s a crisis.” And the best: “If you have to wait weeks for tests and months for treatment, that’s a healthcare crisis.”

(3) “Time” is the government healthcare killer. As Mick Jagger once sang, “Time is on Your Side.” Nothing else turns people against the government takeover of healthcare than the realistic expectation that it will result in delayed and potentially even denied treatment, procedures and/or medications. “Waiting to buy a car or even a house won’t kill you. But waiting for the healthcare you need – could. Delayed care is denied care.”

(4) The arguments against the Democrats’ healthcare plan must center around “politicians,” “bureaucrats,” and “Washington” … not the free market, tax incentives, or competition. Stop talking economic theory and start personalizing the impact of a government takeover of healthcare. They don’t want to hear that you’re opposed to government healthcare because it’s too expensive (any help from the government to lower costs will be embraced) or because it’s anti-competitive (they don’t know about or care about current limits to competition). But they are deathly afraid that a government takeover will lower their quality of care – so they are extremely receptive to the anti-Washington approach. It’s not an economic issue. It’s a bureaucratic issue.

(5) The healthcare denial horror stories from Canada & Co. do resonate, but you have to humanize them. You’ll notice we recommend the phrase “government takeover” rather than “government run” or “government controlled” It’s because too many politician say “we don’t want a government run healthcare system like Canada or Great Britain” without explaining those consequences. There is a better approach. “In countries with government run healthcare, politicians make YOUR healthcare decisions. THEY decide if you’ll get the procedure you need, or if you are disqualified because the treatment is too expensive or because you are too old. We can’t have that in America.”

(6) Healthcare quality = “getting the treatment you need, when you need it.” That is how Americans define quality, and so should you. Once again, focus on the importance of timeliness, but then add to it the specter of “denial.” Nothing will anger Americans more than the chance that they will be denied the healthcare they need for whatever reason. This is also important because it is an attribute of a government healthcare system that the Democrats CANNOT offer. So say it. “The plan put forward by the Democrats will deny people treatments they need and make them wait to get the treatments they are allowed to receive.”

(7) “One-size-does-NOT-fit-all.” The idea that a “committee of Washington bureaucrats” will establish the standard of care for all Americans and decide who gets what treatment based on how much it costs is anathema to Americans. Your approach? Call for the “protection of the personalized doctor-patient relationship.” It allows you to fight to protect and improve something good rather than only fighting to prevent something bad.

(8) WASTE, FRAUD, and ABUSE are your best targets for how to bring down costs. Make no mistake: the high cost of healthcare is still public enemy number one on this issue – and why so many Americans (including Republicans and conservatives) think the Democrats can handle healthcare better than the GOP. You can’t blame it on the lack of a private market; in case you missed it, capitalism isn’t exactly in vogue these days. But you can and should blame it on the waste, fraud, and abuse that is rampant in anything and everything the government controls.

(9) Americans will expect the government to look out for those who truly can’t afford healthcare. Here is the perfect sentence for addressing cost and the limited role for government that wins you allies rather than enemies: “A balanced, common sense approach that provides assistance to those who truly need it and keeps healthcare patient-centered rather than government-centered for everyone.”

(10) It’s not enough to just say what you’re against. You have to tell them what you’re for. It’s okay (and even necessary) for your campaign to center around why this healthcare plan is bad for America. But if you offer no vision for what’s better for America, you’ll be relegated to insignificance at best and labeled obstructionist at worst. What Americans are looking for in healthcare that your “solution” will provide is, in a word, more: “more access to more treatments and more doctors…with less interference from insurance companies and Washington politicians and special interests.”

In general these strike me as good tips. However, I am concerned by a couple things.

First, I'm leary that following these talking points too closely without explaining the economics behind the assertions will come across as too political, but maybe I'm wrong and all the ignorant folks out there will be swayed by personalized anecdotal arguments.

Second, you don't have to rest your entire argument on, or lead your arguments with economic theory, but it is important to educate people on the subject. Otherwise, you are just fighting a war of words with the Democrats. The key is to find ways to briefly yet convincingly put forth the economic arguments in a way that bolsters your overall argument and educates the public.

What is wrong with, for example, after explaining what single payer government-controlled health-care would look like, educating folks on why their health insurance premiums keep going up at 5 times the rate of inflation. I will attempt to do so briefly here. (well, it turns out to be not-so-brief, so this is a horribly bad example of what I was just saying, but please read on)

What if we purchased food the way we purchase health care? Your employer would provide you with a food insurance plan where you paid a $1 copay for every food item you bought regardless of its actual price. There would be no prices posted in the stores. In fact, it would be hard to find any employee in the store who could tell you how much any particular food item actually cost. When you asked them, they would look at you like something was wrong with you and say, "Why do you care, your insurance covers it anyway." Furthermore, if a grocery store sold you food that made you sick, you could sue the pants off them and a jury would award you $20 million, so they would make sure to only stock the shelf with the best produce possible, would throw away anything that even might be questionable, and would purchase massive amounts of liability insurance as well. What would happen to the cost and availability of food in such a system?

Well, with no price transparency, most people would go to the nicest or most convenient store and purchase whatever they thought they wanted/needed without regards to price. People would purchase more food than they would otherwise because the true cost is hidden from them at the point of purchase. The food insurance companies would enact clunky ways to try to keep costs in check (not nearly as effective as each consumer being careful to get the best bang for the buck with their own money) by putting maximum prices on each food item that the grocery store could bill them for and trying to deny insurance coverage to those who were purchasing the most food. The government would step in and either mandate the insurance companies cover the heavy food consumers or offer government food insurance for the uninsured. It would cost the grocery stores far more to stock the shelves with food items because they would have to factor in all the preventative throwing away of questionable food and the steep liability insurance.

Prices would soar steadily as all these inefficiencies ballooned the costs. Insurance companies would have to keep raising rates to stay in business, and employers would not be able to keep footing the entire bill for insurance, resulting in employees feeling the more visible pain of more and more being withheld from their paychecks to pay for insurance. While most people (at least those that have insurance) are satisfied with their access to and choices for food, they are constantly irritated by the rising insurance costs and worried about those who can no longer afford insurance.

So what is the solution? Should the government take over and provide universal food insurance for all? People would be tempted to support it because on the surface it appears less would come directly out of their pocket. Those who pay little or no taxes would be especially supportive since food basically becomes free for them. But has the government really done anything to decrease the overall cost of the system? No! In fact, by shielding more and more of cost from directly influencing consumer decisions, they will have exacerbated the cost problem as people take advantage of free (at least at the point of purchase) food. In order to prevent costs from exploding, the government will have to ration in some fashion the amount of food each person can have. They will start telling grocery stores they will only be reimbursed a certain amount for each food item. Each time the costs keep rising and government deficits increase, the government will ratchet down the amount they will reimburse for each food item. Grocery stores' profits will vanish. To stay in business they will start offering to sell some food types to those willing to pay with their own money, and will start refusing to sell to those with government insurance. Of course the government can not allow this and will mandate that no one can buy food outside the universal food insurance system. While people are demanding more food, stores are going out of business. Growing demand coupled with shrinking supply creates food shortages. At first people start growing hungry. If something is not changed soon, people will start starving to death.

Ok, so universal government-controlled food insurance is not a good solution. What's the alternative. How about returning to a market-based approach where prices do their job of most effectively allocating resources, coupled with governemnt assistance for those truly in need. This is exactly how food is purchased right now! Everyone pays full price for their own food, and government provides assistance to the needy through food stamps. (food is a bit different than health care in that just about everyone does need catastrophic health insurance to help with a major medical situation)

How do we get from here to there. In my food insurance example, you want to shift the price visibility back to the point of purchase. You want to post prices back on the shelves. You want to encourage employers to shift from footing the bill for food insurance to increasing the employees wages by a similar amount. This creates a vibrant insurance market with competition that keeps insurance prices down. Each person buys the right amount of insurance for them, instead of an inefficient one-size-fits-all approach of your employer deciding what insurance coverage you get (which may be less insurance than you want or more than you need). You want to limit lawsuit payouts to a fair and reasonable amount so that grocery stores do not need to spend vast sums of money on liability insurance. Now that poeple are faced with much or all of the true cost of purchasing a food item, they will spend their money much more wisely and efficiently than they spent the insurance company's money. With a more price efficient system in place, the reduction in insurance costs and taxes leaves plenty of room in the budget for the great majority of families to purchase all the food they need. Those who are less fortunate and truly need assistance are given food vouchers (food stamps) to purchase food like everyone else.

In health care, the policy changes should be:

Increase price visibility by strongly encouraging doctors to be able to provide patients with on-the-spot price quotes and/or a menu of prices for each medical procedure. For any medical service that in not an emergency, patients would be able to shop around for the best price/quality combination they were comfortable with. There is no reason that patients should be getting an MRI at one hospital for $2000 when a hospital 20 miles away, in some cases, may only charge $1200 for an MRI.

Increase the implementation of Health Savings Accounts which provide individuals with lower insurance rates in exchange for higher copays and deductibles, thus increasing the price at point of purchase. This will help prevent people from overburdening the system with unnecessary care. For all care that is truly needed, the patients will be willing to pay from the nest egg saved up in their HSA.

Revise the tax code to stop encouraging everyone to get their health insurance through their employer. Currently, health insurance is only tax deductible if provided through your employer. It doesn't make sense, and it's not fair to those who don't get their health insurance through their employer. Most employers do not provide you with car insurance, renters insurance, homeowners insurance, flood insurance, life insurance, or disability insurance. Some may provide some limited amount of those, usually for additional withholding from your paycheck, but none of those are tax-advantaged. Employer-provided health insurance is ubiquitous primarily because of the tax deductibility in the current tax code. The biggest problems with employer-provided health insurance are that it hides more of the true cost of health care (when all it really does is reduce your wages by the amount that your employer foot for health insurance -- you would be better off with the higher wages and purchasing your own insurance), and it is not portable between jobs (when was the last time you had to switch your car insurance plans when you moved to a different job). The deductibility also benefits those with higher incomes who are in higher tax brackets more than those with lesser incomes in lower tax brackets (someone in the 35% tax bracket with a $1000/mo. health plan gets a $350 tax break, while someone in the 15% tax bracket with the exact same $1000/mo. health plan only gets a $150 tax break) and encourages expensive gold-plated health plans with little or no copays, otherwise known as first-dollar coverage (an employer is more likely to provide a more expensive plan when they can deduct the cost of the plan from their taxes). John McCain had a very generous plan in the 2008 presidential campaign to replace the current tax deductibility for employer-provided health insurance with a $5000 refundable tax CREDIT for EVERYONE. That means unless you were in at least the 25% tax bracket AND your employer was withholding at least $1667/mo. for your health plan, you would have been better off with McCain's plan. I don't know what the exact numbers are, but I have to believe it would have been above 95% of people that would have been better off with the $5000 tax credit.

Cap the amount of pain and suffering damages (those above and beyond any medical costs that a medical provider is liable for because of a mistake) that juries can award to $250,000.

Reduce some of the mandates for insurance companies to cover stuff like sex-change operations.

Get the government out of the business of providing health insurance as much as possible and instead provide those who need assistance with "health stamps" to go buy their own insurance and/or health care.

VIDEO: Reason TV on D.C. Voucher Cut

2009-05-05T00:24:00.000-07:00

This video is a must watch. Nothing makes me angrier than the way Democrats and liberals pay lip service to education being "for the kids", when in reality they keep throwing more and more money at an inefficient and failing school system just to pacify their teacher union base. Note that in the case of the D.C. vouchers, the $7,500 voucher is much CHEAPER than the $14,000 per student that the failing D.C. public school system spends. Parents LOVE the program because they can send their kids to a better school. The kids test scores go up. It sounds like a win-win-win.

But the teacher's unions want to keep the government monopoly over public schools. The unions don't want to lose their power by losing union members (teachers) to private schools. The teachers like all the benefits and job security provided by the union and don't want to have to compete for their jobs by doing a good job like all of us out here in the non-unionized private sector have to do. The teacher's unions and Democrats are either completely ignorant of the facts or don't give a damn about the students. While a lot of teachers are probably just acting out of selfish ignorance, I think the union leaders and liberal politicians fall into the latter category. They know their policies are not the best for the kids, but are best for themselves and their own hold on power.

When the average public school in the country spends over $10,000 per student and the average private school tuition is less than $4000, why wouldn't a $5000 voucher per student for every student across the country make sense? Keep the public financing but give the choice to parents. We could cut our education spending in half while improving test scores and providing all parents with the choice of which school is best for their kid. The good public schools would still do fine if they are good enough for parents to choose to send their kids there. It's a win all around, except for the government monopoly and teacher's unions.

Sorry for going off. I promised a video:

I have to follow up by venting a bit of frustration with some of the parents in the video. While I can understand their enthusiasm for Obama for other reasons, I cannot understand why the parents could not see the voucher cuts coming. I cannot understand why over 90% of parents in highly African-American sections of cities across the country keep voting for liberal Democrats. At least for those who want school choice, why, why, why can't they see that it is the Republicans that stand with them for a better education system for their kids? The parent in the video wants to ask Obama why. I want to ask her why she voted for Obama. Does she really not know what Obama's policies are? What will it take for people's eyes to be opened?

While I'm at it, why haven't the Republicans gone full bore in trying to highlight the cut of the voucher program and attempted to partner with these voucher supporters like those in the video to put the political pressure necessary to keep the program. In addition to fighting for conservative principles in education and being the right thing to do for the kids and for the country, it would also be a great opportunity to make inroads into the black community. Who cares if these aren't people who will likely vote Republican in the next election? If you ever want to win these people over, you've got to start somewhere, and there couldn't be a better place to start than with helping these parents provide a significantly better life for their kids!

Liz Cheney: We Did Not Torture

2009-04-26T19:31:00.000-07:00

Follow this link to HotAir and watch Norah O'Donnell debate Liz Cheney (Dick Cheney's daughter) about interrogation techniques. It really encapsulates most of the arguments on both sides. Liz Cheney provides one of the best and most complete arguments for our enhanced interrogation program after 9/11 that I've heard in years.

While you're there, be sure to follow Allahpundit's link to HotAir archives from 2006 which has audio of Bill Clinton scoffing at the idea that you wouldn't have 100% agreement that it would be OK to rough a guy up a little if an attack was imminent and we had someone in custody who knew the details and wouldn't talk, and that was the only way to get the information out of him and prevent the attack.

Note that this is before the liberals (and McCain) got going with their argument that "torture" does not work and/or does not produce reliable information.

The only difference I can see between Bill Clinton's described scenario and what the Bush administration was faced with was Clinton did specify in his definiton of "imminent" that we knew an attack was going down within 3 days. The problem with Clinton's definition is that it is very difficult to guage how "imminent" an attack is before the high-value terrorist detainee talks. It is reported that when they tried to interrogate Khalid Sheikh Mohammed and asked him if any further attackes were planned, he said something to the effect of "You will soon find out." In that situation, the responsible course of action for our national security apparatus to take is to assume that an attack is imminent. There could have been another attack within days or weeks, or it could have been months or even year(s) away. We did not know, but we knew we had someone in Khalid Sheikh Mohammed who did. Anyone who says they would not aggressively interrogate in this scenario to obtain the information necessary to protect Americans from another attack has no business being in charge of our national security. And any country who acts like they wouldn't have done at least as much as we did in an identical scenario is lying.

Obama refuses repayment of TARP money

2009-04-05T17:15:00.000-07:00

If this doesn't send shivers down your spine, it should. I was really worried about how Obama would handle the increased government power that Bush was forced to hand over to Obama after Bush's response to the financial crisis last fall with TARP, and this is a NOT a good sign. It's starting to smell like socialism, or if not, at least WAY to much government intrusion into the private sector.

Obama is fanning the flames of panic and public outrage to build the case for government power to regulate Excecutive pay. Then he is trying to tell Michigan what type of autos to build, and threatening bank CEO's in an attempt to exert power over the financial industry. Now he won't let banks who were forced by Paulson to take TARP money to repay it, because he doesn't want to lose his power over the bank!

If we let him takover his favorite 3 industries -- health care, education, and energy -- what will be left of the economy that isn't larglely controlled by government?

If a pollster called me today, I would definitely say the country is headed in the wrong direction.

Gun Statistic Is A Flat Out Lie

2009-04-03T23:38:00.000-07:00

HotAir highlights a Fox News report debunking a widely-cited statistic that 90% of all guns recovered at crime scenes and raids on drug cartels in Mexico are from the U.S. The statistic makes it sound like the U.S. is the overwhelming supplier of firearms to Mexican drug cartels. Supposedly, they just come up into some of the border states, buy a bunch of guns, and then drive them back to Mexico.

The problem is that the statistic, when stated this way, is flat out false. Fox News did some digging and found that Mexico's own numbers show that only 17% of such firearms are traced to the U.S.

Because of gun regulations in the U.S., guns manufactured in the U.S. have good markings that make the guns traceable. Mexico submits about 1/3 of the guns they find, the ones that have good markings, to the U.S. to see if they can be traced. About half of these guns are successfully traced, and it is of that subset, the ones that Mexico has pre-screened to be most likely to be from the U.S., that 90% are traced to the U.S. This proves nothing more than that the U.S. originated guns are more easily traced than the other 83% that came from black markets around the world, which is a good thing. It allows for more effective efforts to stem the flow from the U.S.

So you have quite a stark difference between the lie, "90% of the guns recovered by Mexico in drug cartel busts are from the U.S.," and the truth, "only 17% of the guns recovered can be traced back to the U.S."

Be wary when you hear statistics bandied about, even by politicians where you would think, "They wouldn't say that unless there was a strong element of truth to it, right?" You think that they wouldn't dare to say something so blatantly false that could be so easily disproved. But the media, save Fox News and some bloggers, does not do its job in this country, and so the politicians can get away with it, and so they will keep repeated outrageously misleading statistics.

The Economist Has Buyer's Remorse

2009-03-29T16:04:00.000-07:00

After endorsing Obama during the campaign, The Economist is the latest in in a string of people that have become disenchanted with Obama.

Ed Morrissey at HotAir has the details and analysis.

AP: The White House Fudges Stimulus Estimates

2009-03-27T22:58:00.001-07:00

The AP actually wrote some good analysis explaining how Obama's "Bold Claims of Stimulus Jobs Can't Be Measured"

Some of my favorite assumptions behind the White House's estimate of 3.5 millions jobs being saved or created:

For every two jobs directly created by the stimulus spending, a third job will be indirectly created. The 2-to-1 ratio is rough and varies considerably by sector.

A tax cut has only one-quarter of the value of a spending increase of the same size, in terms of expanding the economy.

Every dollar spent on unemployment benefits is worth $1.63 of quick economic expansion. Food stamps boost the economy even more.

What planet are these people living on?!

AIG Losing Executives

2009-03-27T22:48:00.000-07:00

If you want a completely new perspective on the AIG bonuses, try reading Jake DeSantis' Resignation Letter.
(or click on the first result from this Google Search if you are not a resgistered member of NYTimes.com)

Follow that up with news of more AIG employees jumping ship.

This is exactly what I predicted would happen back on March 21st:

Second, AIG needs to be able to retain its valuable employees. It is simply not fair to blame the entire Financial division at AIG for the decisions a few executives likely made. My understanding is that most all of the executives that were most responsible for misjudging risk and overselling their financial products have been let go. You simply cannot lose all the employees in a division of a company and expect the company to be able to continue to function well, and we REALLY need AIG to be able to continue to function, at least for now. How well would the company you work at function if 80% of the employees left all at once? When AIG started to realize how bad of shape all the investment banks were in, and that they themselves were headed for insolvency as a result, they were afraid many of their employees would leave the company. How many employees would stay at the company and have their reputations sullied by their continued association with AIG if they were not promised additional compensation in return? In early 2008, AIG offered retention bonuses to anyone who would stay until March 2009, and more bonuses for those who would stay until 2010. We just hit the round of bonuses that were due on March 15, 2009, and the bonuses were paid as promised. It is important to realize that the bonuses were NOT performance bonuses, they were retention bonuses. These valued employees that may have had little if any responsibility for the financial crisis were promised bonuses if they would stay on at AIG. They fulfilled their part of the contract, and their contracts should be honored. It is VERY DANGEROUS to go down the road of breaking contracts. Government is supposed to help enforce voluntary contracts, not force companies to break them.

Discussion: Government Taking Over?

2009-03-27T22:04:00.000-07:00

Here's a good discussion that got going on one of my friend's Facebook page:

Kyle Miller's Notes
"The Way I See It" - #35
Tue 3/24/09 8:12am

U.S. seeks expanded power to seize firms (http://www.msnbc.msn.com/id/29847658)

Is anyone paying attention out there????? Does this latest "political move" scare anyone else? Where will it end??

This article tries to portray the government as "protecting" the interests of the American people by "managing" financial institutions to keep them solvent. Don't let the wool be pulled over your eyes! This is nothing more than a move to control our financial system from Washington and set up a Nationalized Banking system so the GOVERNMENT controls our banking infrastructure.

The sub-title of this article even states this gross understatement claiming, "Goal is to limit risk to broader economy". What a crock!!

Is that along the same lines as "Gun control goal is to limit firearms in the hands of criminals"??? Yeah, like that's worked really well.

This is typical of a liberal regime. The American people are too stupid to handle their own business so we, the smart, intellectual, educated, responsible government lackies will step in and remove the knife from the stupid kid in the room. COME ON PEOPLE!!!!!

If the government starts controlling our banks - our economy will most certainly take a nose dive. Anyone else care to notice what happened to the DOW today when this news came out? Yeah...like whenever Obama speaks...it took a dive. When just yesterday, all the liberal drive by media types were trying to give Obama the credit for a 7% increase in the DOW! When did Bush ever get recognition for the DOW going up??? No, the only news we ever heard when the DOW went up was how the rich fat cat oil companies were supposedly lining their already silk pockets. But when the DOW goes up under the almighty Obama regime, it's because it's a victory for Obama and his policies.

Wave bye-bye to competitive rates for loans! Wave bye-bye to banks investing in their local communities. Bye-bye capitalism! It was great to have you here, but you threaten a tyrannical leaders control over a nation, so you must go. You will be missed, but we won't be allowed to mourn your absence, because we'll be told that socialism is now "Modern" European Socialism and that it's for our best interest.

WAKE UP PEOPLE!!!!!!!!!!!

Kyle Miller at 8:20am March 24
And again...there's apparently no time for discussion or review of this policy. Just like the $800 Billion bailout plan it HAS to be done NOW or else...I fear this is becoming an all too common theme with the Obama regime to force feed liberal agenda's down the throat of the American people. They're supposedly voting on this measure THIS WEEK! So EVERYONE needs to call their representatives and tell them to VOTE NO on this unprecedented government control.

Tobias Wilson at 12:49pm March 24
Hello Socialism.... i hope that at least one reporter at the primetime news conference will ask the president "isn't your plan too much like socialism!"

Kyle Miller at 1:22pm March 24
They might try...but if you remember back to the election process, we're not allowed to ask that question because the WORLD is socialist now, and we should be more like "Modern Europe". I don't want to be more like Europe, and the questions from the right will continue to be ignored because this President feels he has won political equity because the majority (all be it a majority by a small margin) of the American people voted him President.

Toby Bierly at 2:17am March 25
Treasury Secretary Geithner is still trying to work out details for the proposal -- as far as I know, it hasn't been presented to Congress at all yet. An initial proposal could be sent to Congress later this week. I think this is prompted more than anything by the failure of Lehman Brothers last year, and underscored with the recent furor over AIG bonuses. I think most people who have studied the issue carefully would agree that letting Lehman Brothers fail the way it did greatly destabilized the financial markets. That said, I do not really trust the Treasury department to know the right action to take. Any such proposal MUST be very carefullly thought out and fully deliberated, and there should be clear checks on the Treasury's power and clear guidelines on exactly what would trigger the need for Treasury to take action with someone like a Lehman Brothers. It should be very limited in scope and only ever used as a measure of last resort. I don't trust Congress to get it right.

Kyle Miller at 10:36am March 25
Well here's my concern...government intervention, at any level, no matter how "noble" always opens the doors to more and more regulation. DEregulation is a term that isn't in their vocabulary. So if it starts here, where does it end?

My opinion, is that if companies like AIG, Lehman Bros, etc fail, then they fail. Will it hurt the economy? Yes. Will it hurt the global economy? Yes. But growing pains are never easy. Why do we have the success we do today? Because of the stock market crash. Am I saying we need to have another crash of that magnitude? No. But what I do believe is that having a natural "reset" of financial companies failing that got greedy and "got it wrong" should fail so that better run companies can rise up.

I read an article the other day talking about why we can't allow AIG to fail, and the ONLY reason they could come up with is because of the shear volume of cash they circulate around the world. So if they fail they fail. Will it hurt? Yes. Like anything that grows strong it must have a pruning period. If I ran a vineyard and just let the dead vines stay connected to the live vines, the live vines are gonna eventually die and my whole crop will be lost. The dead vines must be cut away so that the healthy vines can flourish.

Government intervention at any level only means one thing, control. And once they have a little, they'll lobby and push and pull till they get even more. It's a never ending cycle.

If anything, if they truly want to set up an "oversight" committee, a third party private organization should be brought in to oversee and review their finances. I mean, if I buy a ton of stuff with a credit card, and then decide to tell the credit card company, "I'm sorry, I don't have the money to pay you." Do you think they're just gonna say, "Ok, no problem." and be done with it? No!

They're gonna hit my credit score from every which way they can and make it impossible for me to obtain another line of credit with any other lender.

Why shouldn't the same principal be applied to these companies?? We like to think these companies are run by the smartest people who have the "little man's" best interest at heart. And the truth is, they could care less about the little man, and are run by regular people just like you and me that get greedy, get powerful, and think they're indestructable. They should have to pay the same price ANY OTHER COMPANY OR PERSON WOULD HAVE TO PAY. And if that means the company goes down the toilet, and their stocks are worth $0 then so be it.

Toby Bierly at 9:49pm March 25
Here's a good description of the type of risk that the feds would have been taking if they let AIG fail: http://www.portfolio.com/views/blogs/market-movers/2009/03/17/why-aig-wasnt-allowed-to-fail?tid=true

We are talking about a possible meltdown of the entire global financial system. Think of the frozen credit market last fall and expand that throughout the entire financial system. Major economies could contract by 25-50% like happened to the U.S. at the start of the Great Depression.

Believe me, I'm a free market guy, and in 99% of cases I say if a company cannot manage itself properly, it should be allowed to fail. This to me is an exception to the rule.

And it's REALLY SCARY, because creates a situation where there is enough agreement that the government needs to take action that the government will take action, and it's about a 30% chance they actually make the right moves

Toby Bierly at 10:02pm March 25
By the way, I think you make a lot of good points, but blaming greed is anti-capitalist. Every company tries to make money. That is the entire point, isn't it? Every company tries to maximize profit and grow. And it is usually healthy, because in order to grow in a free market, you have to offer services that others are willing to pay for. The beauty of a free market system is that it typically channels everyone's self-interest in service of their fellow man.

The more relevant point is that they "got it wrong". Even those with the best of intentions can get it wrong. And if they got it wrong, they deserve to fail. But my argument is not based on what AIG deserves, but what is best for the economy as a whole, and I do not think a completely dysfunctional financial system helps anyone. That is the risk that a failed AIG poses. We are not talking about pruning the vineyard, we are talking about taking a machete to the completely wipe out a huge part of the vineyard!

Toby Bierly at 10:11pm March 25
One area I bet we are in TOTAL agreement on is the necessity to stop Obama from passing his proposed budget through Congress. Radically shifting people toward government provided health insurance (the only way they can "cut costs" is by denying care, either directly for certain procedures or indirectly through price controls which result in supply shortages), wasting hundreds of billions on ineffiicient and more expensive alternative energies, mindlessly throwing more federal money at schools when we already spend by far the most per student in the world, and increasing taxes on all fossil fuels and on "the rich" in the middle of a recession are ALL the EXACT OPPOSITE of what we should be doing.

Kyle Miller at 11:02am March 26
And I guess the idea of total economic meltdown is where we would have to disagree then, because I'm of the opinion that no matter how much it hurts, it needs to be done or else the core issue will never be truly dealt with and the cancer will be allowed to continue.

If the government steps in, does it REALLY stop the potential for an economic meltdown or only slow it? I mean, if a balloon has a hole in it, tape will stop the outflow of air for awhile, the fact still remains that there's a hole in the balloon and air is going to eventually expose the weakness and pop.

When I say greed, I'm not referring to a companies right to make a profit or expand or grow. I'm all for that. What I'm referring to is when certain CEO's start making selfish decisions because it will benefit THEIR OWN personal bottom line, no matter the cost. Enron is a perfect example, and I'm sure we'll find out that AIG had a lot of the same characteristics.

Kyle Miller at 11:05am March 26
You are right that we agree that more money is not the answer. Neither is increased taxes. If they want to really stimulate the economy, put more money on a regular basis in the pockets of the American people, and that's accomplished by letting them keep more of their monthly paycheck.

All these "stimulus checks" do is increase the spending for that quarter. It's not ongoing, sustained spending, it's a little blip in the overall financial system for that year.

Regardless, I think we have to realize that this President is going to spend us into the largest fiscal deficit in the history of our country. And then the next four presidents are going to have to work to try to fix it.

Toby Bierly at 9:51pm March 26
When the credit markets froze last year, it wasn't because there weren't plenty of credit-worthy institutions; it was because everyone got spooked after Bear Sterns and AIG had to be bailed out with loans and guarantees, and then Lehman failed. With such big names dropping like flies, and with so many smaller institutions being affected, no one knew who it was safe to lend to, and whether or not the government would step in. It was a crisis of confidence.

If the government had not injected some of the TARP I funds, the credit market would have stayed frozen, and it would have resulted in a cascade of banks all across the country failing. That in turn would have caused a swell of business failures and lack of new business startups, and unemployment would have skyrocketed as GDP fell.

This phenomenom of cascading bank failures is what started the Great Depression, when more than half the banks in the U.S. failed and the economy shrunk in half.

Toby Bierly at 9:59pm March 26
On CEO incentives, it is true that a lot of board of directors who make most of the decisions are focused on whatever short-term incentive plans that will help them meet short-term growth goals, and in doing so can sacrifice, purposefully or not, long-term growth and/or stability of the company. Those incentives need to be changed. The biggest question is how to do so. I don't really want the government stepping in and mandating what a good bonus program is. That gives them too much power, and they will likely mess it up and politicize it. We somehow have to get the power back in the hands of shareholders with enough education and intiative to police the companies they own. This is barely being talked about though.

Stimulus checks give an artificial boost to GDP for a quarter or two, and hurts long term growth because of deficit spending. Sooner or later the goverment has to increase tax revenues or print the money which stifles the economy or results in inflation.

Toby Bierly at 10:09pm March 26
But the recent "stimulus" bill was not even much stimulus; it was the next 5-8 years of Democratic spending jammed into one huge pork-laden bill that no one bothered to read, merely labeled as stimulus. Most of the spending is not even scheduled to happen in the next year, thus most of the quote "stimulus" will likely occur after the economy has already started recovering (assuming Obama doesn't screw things up so bad that we have not started recovering by then).

What will happen is that Obama will raise taxes, but tax revenues will not increase significantly because of weak economic growth. And then we will be forced to print money which will sharply increase inflation (back to the 70's!) and devalue the dollar. If that happens enough, we could risk a run on the dollar. Then our money will be worth much less and you will see prices go up and standards of living decline.

Kyle Miller at 7:51am March 27
Agreed. :-)

Toby Bierly at 9:10am March 27
Thanks for "listening". I don't know hardly anyone who wants to talk about politics. Almost everyone is ignorant of or apathetic about public policy, usually uninformed because they are too busy, have "more important" things to do, don't see how it affects them, assume it will all sort itself out without their help, find it excessively boring, desperately want to avoid any disagreement or arguments, find it too confusing, or just plain don't care.

Kyle Miller at 9:21am March 27
LOL - you're right...I run into that issue as well...although I have tagged quite a few people in this note that usually do have strong opinions, none of them have responded. Maybe cause they don't share the same view, or are just tired of the debate. :-) I'm never too tired of the debate, especially when it's about a President I so vehemently disagree with. :-) Feel free to tag me in any notes you post regarding political issues, I'm more than willing to chime in! :-)

Toby Bierly at 8:53pm March 27
What I would really like to focus on is sharing ideas with those who aren't necessarily political. I'd like to expand the discussion to include as many people as possible. It seems like the only people you can find to talk politics with are those already informed or involved. But who we need to reach are the great mass of people that don't pay much attention by somehow creating a place where those who do have some interest are comfortable speaking up and entering the conversation.

Toby Bierly at 9:53pm March 27
Geithner to Seek Power Over Hedge Funds, Derivatives
http://news.yahoo.com/s/bloomberg/20090326/pl_bloomberg/a0v_8uopk2a0

Here's the broad outline of what Geithner is proposing. Not sure quite what to think on this yet. I think it is appropriate for the government to set some sensible rules for large financial institutions, the equivalent of saying to an individual, "No you cannot use $10,000 equity in your home to borrow $300,000 to start a business."

Although government doesn't need to do that for an individual because it is so obvious a risk that no one would lend him the money. I think the same principle would work with investment banks and other large financial firms if there was enough transparency that people could accurately assess the risk.

One of the major untold stories of the financial collapse was that the government approved credit rating agencies like S&P and Moody's were WAY off giving Mortgage Backed Securities AAA ratings (the best).

Toby Bierly at 10:03pm March 27
Maybe the best answer is to require financial institutions to release more information to give proper transparency in the market. Buyers should always be presented with sufficient information about what they are buying.

Obama puts troublemaker in charge

2009-03-25T01:04:00.001-07:00

This is unbelievable. One of the guys most responsible for our financial crisis is being promoted by the Obama Administration

“We created Home Possible Mortgages so more lenders can say ‘Yes’ to more borrowers,” said David Stevens, senior vice president of single family sourcing at Freddie Mac. “Home Possible is what our lenders tell us they need to compete in today’s market: a flexible, easy-to-use mortgage uniting Loan Prospector’s ease and efficiency with exceptionally low-downpayments and flexible credit. Perhaps no other mortgage product launched in recent memory will enable our lenders to reach and help as many additional borrowers as Home Possible.”

See my previous posts on the mortgage collapse/correction:

Oct 4, 2008 Where is the defense of free markets?!

Nov 21, 2008 Deregulation vs. Fannie & Freddie

Feb 21, 2009 Housing Price Decline Not Done Yet

Feb 21, 2009 Sowell: Housing Crisis Caused By Government

AIG News

2009-03-23T00:15:00.000-07:00

AIG losing top talent Nov 2008

AIG having trouble untangling businesses and selling Dec 2008

Democrats complaining about retention bonuses Dec 2008

Rep. Elijah Cummings letter to AIG CEO Edward Liddy Dec 2008

AIG losing "best in the business" as Liddy offers $450 for them to stay Dec 2008

It was common knowledge back in 2008 that these AIG bonuses were planned, and many of the executives would have left the company by now if they had not been promised the bonuses. Many of them were working for $1 a year and their only compensation for the last year or so were these bonuses. The Democrats are hypocritically demagoging the issue when they act like they just found out about them.

Republican capitalize on CBO numbers

2009-03-22T00:06:00.000-07:00

The following is my comment that I submitted to this blog post on MSNBC's First Read Blog listing a few quotes from John McCain, John Thune, and John Boehner about the CBO estimates for Obama's montrous budget. You have to read through some of the comments (almost all liberal) to get an idea of what I was responding to.

Obama and the Democrats are proving that while there are enough moderate Republicans that even under a Republican president and Congress, spending can go up if there is not the political will to fight off Democrats' attacks and find places to cut spending, Democrats are 10 times worse when it comes to big spending. Trusting Democrats to limit spending is truly putting the fox in charge of the hen house.

The Iraq and Afghanistan wars have cost approx $100 billion per year, which is chump change compared to the TRILLIONS that Obama is planning to spend, and much less than the other increases in spending over the past 8 years. Through 2007, annual spending had gone up by about 1 Trillion dollars while federal revenues increased by $700 Billion. The deficit was actually down around something like $150 until the housing market collapse.

The Bush tax cuts spurred the economic growth that led to the significant increase in government revenue. You can't call raising more government revenue through lower tax rates generational theft. Indeed, higher taxes that stunt economic growth "steal" a ton of money from future generations. Most of the comments here act like tax rates have no effect on economic growth.

Honestly, it really irks me when people say something like, "Well, we didn't hold down spending with Republicans in charge. Lets give the Democrats a chance." The problem was not the Republican party as a whole, but a lack of Bush using the veto pen, and the moderate Republicans who would never go along with cutting spending. As soon as you single out something to cut spending on, you are instantly targeted by those who benefit from that spending. Name one area in any government budget that doesn't seem like a good idea at some level.

Have you ever thought about how hard it is politically to try to cut housing subsidies, welfare payments, unemployment benefits, social security benefits, food stamps, health insurance like medicaid or medicare, funding for national parks, or even something like the National Endowment for the Arts? I'm not saying Republicans couldn't have done a better job, but come on, does anyone seriously think that Democrats do a better job of holding the line on spending than Republicans.

For those most upset about increased federal spending over Bush's tenure, the obvious answer was to vote for more conservative Republicans and for John McCain.

At the end of the day, during Bush's tenure, there were only 2 years where Republicans had a big enough Senate majority (55-45) in order to be able to pass stuff through without Democratic support, and even then there were enough moderate Republicans that we couldn't even get to 50 on no-brainers like ANWR & making tax cuts permanent, much less hold the line on spending.

Again, the obvious answer for those concerned about spending was to vote a few more conservative Republicans into the Senate, and then press Bush hard to cut spending, or if that failed, wait and elect John McCain.

MUST READ: Krauthammer on AIG

2009-03-21T21:52:00.000-07:00

Charles Krauthammer sums up the Obama administration's performance so far, and places the triviality of the AIG bonuses in some much needed perspective.

Obama Ducks Responsibility for AIG

2009-03-21T13:51:00.000-07:00

Did anyone catch this from the other day? Someone sent me a link to a new Republican ad about the AIG bonuses. Near the end, Obama actually says, quote:

Listen, I'll take responsibility. I'm the president. It's my job to make sure that we fix these messes even if I don't make them.

Do I really need to comment about this blatant double-speak? It double-speaks for itself.

Contrast this to President Bush. Whenever Bush said he took responsibility for something, he never tried to dodge responsibility at the same time. Frankly, Bush was way too quick to always say he took responsibility, which many people would take as an admission of guilt. Bush's biggest political problem was always that he was too much of a stand-up guy. Full pardon for Scooter Libby? No, he had to respect the DC jury's verdict. Put public pressure on Gov. Blanco in Louisiana to allow federal assistance faster during Katrina? Nope, he respected the Constitution, kept the dispute private, and then fell on his sword to "take responsibility" for something that truly was not his fault. He would not insert politics into a disaster like Katrina, but his political opponents had no qualms about doing so, and his entire second term and Republican control of Congress was sacrificed as a result (sure, there were other major factors like Iraq, but Katrina was the pivotal moment that Bush lost another 10-15% in support).

By the way, Chris Dodd is quite the white liar in this clip too. Notice that he repeatedly says that the restrictions on bonuses were in the original bill, when he knows full well that he stripped them from the bill during conference at the request of the Treasury department, who correctly noted that it would be illegal to break the retention bonus contracts.

It is also a bad idea. While I don't like the idea of part of my taxes going to pay for bonuses at a failing company at the heart of the financial crisis, please hear me out on why I think they should be allowed to stand.

First, AIG is far from the most culpable entity in the financial crisis. They were basically the insurance company that is taking the hits when the disaster struck. Think of the case of a hurricane, where insurance companies can end up paying out a lot of money as a result. Some insurance companies promise more coverage than they can deliver given a large enough disaster and large enough insurance claims. That is what happened to AIG here. One could make a credible argument that AIG's insurance offerings to the huge investment banks is one significant factor that encouraged the investment banks to over-leverage themselves as far as they did. To the extent that is true, go ahead and cast blame at AIG, but basically I see them the same way as I see insurance companies that misjudge risk and oversell insurance policies to beachfront homeowners in Florida.

Second, AIG needs to be able to retain its valuable employees. It is simply not fair to blame the entire Financial division at AIG for the decisions a few executives likely made. My understanding is that most all of the executives that were most responsible for misjudging risk and overselling their financial products have been let go. You simply cannot lose all the employees in a division of a company and expect the company to be able to continue to function well, and we REALLY need AIG to be able to continue to function, at least for now. How well would the company you work at function if 80% of the employees left all at once? When AIG started to realize how bad of shape all the investment banks were in, and that they themselves were headed for insolvency as a result, they were afraid many of their employees would leave the company. How many employees would stay at the company and have their reputations sullied by their continued association with AIG if they were not promised additional compensation in return? In early 2008, AIG offered retention bonuses to anyone who would stay until March 2009, and more bonuses for those who would stay until 2010. We just hit the round of bonuses that were due on March 15, 2009, and the bonuses were paid as promised. It is important to realize that the bonuses were NOT performance bonuses, they were retention bonuses. These valued employees that may have had little if any responsibility for the financial crisis were promised bonuses if they would stay on at AIG. They fulfilled their part of the contract, and their contracts should be honored. It is VERY DANGEROUS to go down the road of breaking contracts. Government is supposed to help enforce voluntary contracts, not force companies to break them.

Third, the government is using AIG as the linchpin for the world financial system. If AIG collapsed completely, or if it was unable to continue to function, the entire world financial system could collapse. This has wide ranging political and economic ramifications that greatly affect the U.S. Our government is basically backstopping AIG so AIG can make good on its insurance claims made by banks all over the world. Unless you want the government to inject capital directly into foreign banks by some yet-to-be-determined formula or risk worldwide financial system failure by letting foreign financial institutions collapse, you have to let AIG continue to fulfill its role with government backing, no matter how distasteful this may be. And for AIG to continue to fulfill its roll, you need the employees with the technical know how to stay with the company. Thus the point of the retention bonuses.

Fourth, when we are talking about avoiding chaos with $185 Billion (with a B), $165 Million (with a M) is a relatively minor concern. Why should I be outraged about $165 Million when we are talking about government bailouts in the TRILLIONS, new government spending in the TRILLIONS, and an increased federal budget that will lead to TRILLIONS in deficits over the next several years. And those are three DIFFERENT instances of TRILLIONS, not 3 different ways to describe the same Trillion. $165 Million is a bargain if it means the $185 Billion was managed 0.1% better than it otherwise would be.

At the end of the day, both Congress and the White House knew about the bonuses well in advance, and thought it would be illegal to require AIG to break those contracts, and knew that would cause unneccessary employee turnover at the embattled company at exactly the wrong time. AIG is being run by a former CEO who came out of retirement and is working for a penny a year. He felt that he was contractually obligated to pay the bonuses, and though he said in Congressional testimony that he would have structured the bonuses differently, he expressed concern that he could lose people that he needs to help run the company.

Obama, for his part, instead of taking true responsibility for knowingly allowing the bonuses to go forward, or showing true leadership by bucking popular opinion when popular opinion is uninformed and misguided and explaining why the bonus payments were allowed to procede, is just following the political winds and trying to duck responsibility. This is both dishonest and cowardly.

If you're ready to grab your pitchfork, consider first for yourself whether you've heard any analysis like this at all, or whether you are just following the stampede to crucify AIG.

MUST SEE: Media Malpractice DVD

2009-03-14T15:38:00.000-07:00

This is a rare opportunity to get a comprehensive look at various news outlets' treatment of an event over a several month period. I just ordered my copy of the DVD.

Click the image to see the trailer, get more info, and order the DVD.

Thoughts on embryonic stem cell research

2009-03-09T21:23:00.000-07:00

1) Bush did not make embryonic stem cell research illegal, he merely ordered that federal funding would not be available for future embryonic stem cell lines, so that our tax money would not be promoting the harvesting of embryos. Privately funded research could still move forward.

2) My understanding is that embryonic stem cell research has been highly unsuccessful so far, resulting mosty in cancerous tissue, while adult stem cell research, which does not require embryos to be destroyed, has proved very promising. Although researchers have found a way to use adult stem cells to replace the need for embryonic stem cells, the flat-earth Democrats are still stuck in the past.

Government Spending

2009-03-09T21:22:00.001-07:00

Every dollar that is spent by the goverment must first be taxed, printed, or borrowed. All 3 public revenue sources suck vitality from the private economy through reduced incentives for economic activity (taxed), increased inflation (printed), or reduced private investment capital (borrowed).

Obama Makes Up Health Care Stat

2009-03-06T21:56:00.000-08:00

Is a bankruptcy really caused every 30 seconds by the cost of health care?

That is one of the outrageously misleading claims President Obama made in his remarks at his Health Care Summit yesterday.

I haven't had a chance to check out the others, but this one is patently false.

First off, lets calculate what this would mean. A bankruptcy every 30 seconds would mean approximately 1 million bankruptcies in a year. In the latest statistics on bankruptcies, the number grew from about 700,000 in 2007 to just over 1 million in 2008.

So to believe Obama's claim that a bankruptcy is caused every 30 seconds by health care costs, you would have to believe that 100% of bankruptcies are caused by high health care costs.

This leads to the question of what percentage of bankruptcies were caused by a major illness. Supporters of increased government involvment in health care like tax-dodging Tom Daschle have repeatedly claimed that about half of bankruptcies are caused by high health care costs.

The claim seems to be based on a Harvard study published in 2005 of over 1700 bankruptcies from 2001. The authors of that study, titled "Illness and Injuries As Contributors to Bankruptcy", very clearly intended to maximize the number of bankruptcies that could be claimed to have a medical cause.

The report is convincingly refuted by Gail Heriot, a University of San Diego professor of law, in 2005 right after it was published.

Even though the authors claimed that 54.5% of bankruptcies had a medical cause, buried in the report itself is the fact that only 27% of the bankruptcies even had unreimbursed medical expenses greater than $1000 over the 2 years prior to the bankruptcy!

Only 28.3% of those studied claimed themselves that their bankruptcy was substantially caused by illness or injury. The report failed to examine how many of those 28.3% actually had crushing amounts of medical expenses that could be considered the primary cause for the bankruptcy.

Careful examination of the study thus leads to the conclusion that no more than a quarter, and probably much lower, of bankruptcies in 2001 were truly caused primarly by excessive health care costs. Obama's statistic is off by at least a factor of 4.

You might say, "Well, even if it is 200 thousand instead of 1 million bankruptcies that are caused by bankruptcies, that is still a lot." True it is still a lot, but a further question is how many of the people that filed for bankruptcy had health insurance, and how many were uninsured, because only the uninsured would really be helped by universal health insurance coverage.

The fact is that the great majority of all bankruptcies are caused by lost wages, and the greatest effect that illness or injury has is in limiting the ability to work. This factor will not be fixed by more generous health insurance.

If Obama is worried about the number of bankruptcies, he needs to ask himself how many more Americans he will push out of work and possibly drive into bankruptcy when his oppressively higher taxes, which he will try to enact in order to pay for his health care proposals, hobble the economy.

Forbes: Repeal Mark-to-Market for Assets

2009-03-05T21:03:00.000-08:00

Steve Forbes has been calling for Mark-to-Market to be repealed since before the financial crisis last fall. He repeats himself very convinicingly in the Wall Street Journal today.

Back when the $700 billion TARP program was being debated during the heat of the presidential campaign, Newt Gingrich was calling for Mark-to-Market to be based on a 3-year rolling average.

In the wake of the accounting scandals of Enron, WorldCom, etc. earlier in the decade, the Bush administration, along with Congress, tried to tighten up accounting standards. As part of this whole push, the SEC re-instituted Mark-to-Market accounting. The rule says that if you are holding something that drops in value, you have to reflect that loss of value in your net worth. For banks, this loss of value increases their capital requirements, the amount of cash on hand they must keep to meet their obligations.

So when the housing market started falling, any banks with Mortgage-backed securities had to start marking down their asset values. Because of the lack of transparency as to which MBS's were solid and which were in trouble, no one was willing to buy any of them and the MBS market collapsed. Regulators forced banks to mark their MBS's down by as much as 80%, even when the underlying mortgages had only dropped less than 10%. Banks were hit with the double-whammy of being unsure who it was safe to lend to as well as having their capital requirements dramatically raised. As a result, the credit market froze, and the wider economy soon began to be affected by the lack of credit. Businesses startups could not find funding, and existing businesses had trouble finding short term payroll loans, or loans for projects to expand their business.

Mark-to-Market does not make sense for troubled Assets whose underlying value has not dropped nearly as much as the short-term distressed value. It is pro-cyclical. That is, it increases banks' ability to lend when the market is going up, further inflating asset bubbles, and hurts banks' ability or willingness to lend when the market is going down, greatly exacerbating financial distress.

Mark-to-Market was finally discontinued in 1938 near the end of the Great Despression, after helping cause the financial crisis at the start of the Depression. It was just reinstituted in 2007, just in time to help kick-start this recession.

Steve Forbes also casts blame for removing the uptick rule on short selling, a practice where someone borrows a stock and then sells it, assuming the price will drop so they can buy the stock at a lower price to repay the original lender, pocketing the difference between what they sold it for and what they paid to buy the stock back. The uptick rule said that you could only do this after the stock price had risen, stopping investors from being able to artificially drive down the price of a stock by repeated short-selling. You can see that without the uptick rule, there is a perverse incentive for short-sellers to pick a stock and drive it down as much as possible.

Forbes also blames the SEC for not properly enforcing the rule against naked short selling, where a trader doesn't even bother to borrow a stock before short selling it. I have no idea how much this happened, but to the extent it did, it would drive stocks down.

From a political perspective, on these specific accounting and enforcement rules, you can fairly blame the Bush administration, but an equal amount of blame must go to Democrats and the Obama administration. I am not aware of a single Democrat that has called for a change to these rules. Only free-market conservatives have been talking about this. Democrats are too busy blaming "greed on Wall Street" to realize that bad goverment regulations and rules are 10 times worse.

This is much more complicated than who is for regulation and who is against regulation. Conservatives believe that a proper role of government is to ensure orderly markets and aggressively prosecute those who break the law and try to profit by illegal means. To the extent that smart & effective regulations are necessary to accomplish this, conservatives fully support regulation. But when regulations are unnecessary, don't make sense, reduce economic stability, or are economicly harmful, conservatives oppose them.

These are important rules at the heart of the financial crisis, and they are barely being talked about. If this isn't evidence of the need for a better medium to include all Americans in a more serious and constructive dialogue about the best way forward, I don't know what is. Instead, we get lost in all this nonsense of which politician said what, how long will Obama's popularity last, is the Republican party down for the count, etc. The coverage of the presidential election was 3/4 about the horse race (who was campaigning where, what the latest polls were) and only 1/4 about which policies were best.

WSJ: The Obama Economy

2009-03-04T19:40:00.000-08:00

"The market has notably plunged since Mr. Obama introduced his budget last week, and that should be no surprise. The document was a declaration of hostility toward capitalists across the economy." see the full article

Bastiat: What Is Seen And What Is Not Seen

2009-03-02T22:02:00.001-08:00

I cannot think of a better essay that should be read by all right now than Frederic Bastiat's What Is Seen and What Is Not Seen. His simple yet thorough examples are clear and understandable to the average person, and many are uncannily applicable to the current debates our coutry is having right now.

Bastiat was a French economist and statesman from the mid 19th century who led the fight against socialism at that time. He has the same unique ability that Milton Friedman had of taking complex economic issues and breaking them down into understandable terms.

I found amusing his exasperation at the end of the 3rd section in his essay which dealt with Taxes:

Good Lord! What a lot of trouble to prove in political economy that two and two make four; and if you succeed in doing so, people cry, "It is so clear that it is boring." Then they vote as if you had never proved anything at all.

Trust me, read it and I think you will gain a much better understanding of economics. Don't delay. Go read it now!

Sowell: Housing Crisis Caused By Government

2009-02-21T23:42:00.000-08:00

I am utterly disgusted with the braindead way that people will accept the premise that "we tried the free market with no regulation for the last 8 years and look where it got us." Obama, other Democrats, and so many in the media incessantly repeat some variation of this premise. Every conservative argument for free markets is met with a response that the free market was how we got into this mess, and the voters just voted for change. It makes me want to puke.

The voters voted for Obama and Democrats because the country and the economy had been talked down for 6 years, so Bush's numbers were really low, and we were in the middle of a financial crisis. Every similar situation in American history has resulted in the party that did not have the presidency winning the presidency. Simply put, a lot of ill-informed voters made a big mistake.

The most maddening part of all is that the financial crisis was caused by the housing bubble bursting, and the primary culprits responsible for the housing bubble were DEMOCRATS! Thomas Sowell has a great piece on this.

We truly have put the foxes in charge of the hen-house. The Democrats primarily caused the problem, and then won an election because the Republicans had the presidency when the consequences hit. It is as if the guard-dog let the fox slip by him and nab a hen, so the farmer puts the fox in charge of hen-house security because the guard-dog wasn't doing a very good job.

Krauthammer Hits Obama on Diplomacy Blunders

2009-02-21T23:28:00.000-08:00

Krauthammer hits Obama pretty good on his foreign policy blunders so far.

All of Charles Krauthammer's articles are well-worth reading.

I don't agree with him 100% of the time, but he is one of the smartest guys around. Thomas Sowell is another.

Housing Price Decline Not Done Yet

2009-02-21T22:20:00.000-08:00

Hat tip to Save The GOP where I found the above chart.

As you can see from the chart, from 1997 to 2007, we did not just have a housing bubble, but rather a housing spike. Prices spiked by over 80% and are only half-way back to historical levels. The spike was caused mostly by a combination of the following factors:

The growth of subprime loans and other poor lending/borrowing practices
The increase in flipping houses and other speculation, especially in certain markets
The expansion of Fannie Mae & Freddie Mac into the subprime market, fueled by primarily Democratic support for "affordable housing"
The increasing volume of foreign capital from the trade deficit that was used to invest in the US housing market
The "easy money" policies (i.e., low interest rates) by Alan Greenspan at the Federal Reserve during the early part of the decade

Throwing money at this problem at this point is a losing battle, and it is bad policy as well. Do we really want to attempt to spend enough taxpayer money to prop up the housing market well above its historical level? To do so would be to continue to allocate more dollars toward housing than is necessary, leaving less in everyone's pocket to spend on other needs/wants.

A lot of people have been priced out of the market (especially under traditional lending standards like 20% down!), and a housing market correction back to more historical levels will allow many to buy their first house or upgrade to a better one at a lower cost.

The faster the market is allowed to correct and stabilize at a more historical level, the faster people will have the confidence to jump back into the market and buy a house. No one wants to buy a house if they think its value is going to drop by another 30-50%. Once people see that prices have stabilized at what seems like a bargain price, they will start buying houses again. The longer we prevent this from happening, the longer there will be negative spillover effects throughout the rest of the economy.

However, the housing correction is massive enough it has already caused the financial crisis. Too many banks had too many Mortgage-backed Securities (MBS's) which, with the falling housing prices and the complexity of how mortgages are packaged, sliced, and repackaged, no one knew the price of. Since banks were holding significant levels of MBS's, and other banks didn't know how much they were worth, there was a crisis of confidence and lending between banks ground to a halt, resulting in the frozen credit market. The government had to take action to thaw the market to avoid a severe economic shock.

So the government must keep a close eye on the effects of the housing correction, and make sure it does not trigger a disaster, but otherwise the correction should be allowed to proceed.

Once the correction has brought prices back down near historical levels, that is the point at which more government action might be justified in order to prevent an over-correction.

Paul Ryan: Return to stagflation?

2009-02-14T18:40:00.000-08:00

Paul Ryan, Republican US House Representative from Wisconsin, is quickly becoming one of my favorites.

He has an Op-Ed in the NY Times yesterday that is right on the money.

Increased government spending is at best a short term boost to GDP at the larger expense of long term capital and investment. Government spending is very inefficient -- approximately 30% of every dollar that flows through Washington is wasted on administrative costs. I say wasted because all those administrative costs are completely avoided if people simply keep more of their own money and spend it directly. In addition, the government can only spend money after it taxes, borrows, or prints it. Lets take those one at a time:

1. Higher tax rates hurt the economy by discouraging higher productivity. If you could work additional hours at your job, make extra effort to educate yourself more, or install automation or technology to increase your business' productivity, but half of every dollar of increased income is taken by the government, you may not make that extra effort or investment. If the government raises the tax rate by 3% or 5%, more and more extra effort or investement is not undertaken, and the productivity of the economy as a whole suffers. Additionally, more money flowing through Washington means more government power and instrusion on citizens' lives, a loss of freedom. What proponents of larger government spending really believe is that they know better than taxpayers what their money should be spent on.

2. Borrowing money hurts the government's financial standing, and costs taxpayers hundreds of billions in interest annually. Borrowing is limited by how much money our citizens and other countries have to lend, and if we get so overburdened by debt that lenders lose confidence that lending to America is a safe investment, we are really in trouble. As Ryan points out in his Op-Ed, many other countries do not have the money to lend right now, so we may have trouble finding enough money to borrow to finance all this government spending. Anything that is borrowed today will have to be paid back by future generations which will be a significant drag on our economy at that time. The current rate of borrowing is completely unsustainable in the long term.

3. Printing money will cause inflation. If there is more money to spend, prices are driven up in the same way having extra money passed out to bidders at an auction would result in higher bids for auction items. At the end of the day, bidders simply paid more for the same items, and each individual dollar was less valuable and had less purchasing power. Inflation really hits the elderly and others on fixed incomes, as well as those on tight budgets, and eats away at investment income. Owners of real assets, such as real estate or equipment, are better off after inflation because they can now sell their assets at a higher price. So inflation hurts low income earners worst and helps more wealthy owners of real assets. While I actually agree with the concept of pumping more money into the financial system to stabilize it last year by counteracting the credit crunch, I don't know if anyone has a grasp on whether we've printed too much, too little or about right so far. What I do know is that as soon as confidence rebuilds and money starts coming off the sidelines, we must aggressively slow down the rate of printing money or risk double-digit inflation.

The lessons from the Japanese over the last 2 decades, and from the Stimulus checks sent out in 2001 and 2008, are that one time payouts to citizens only cause a small short-term increase in GDP from the short term spending, and hinder rather than help overall economic growth.

These lessons are completely lost by President Obama and Democrats in Congress, who are much more interested in pushing through a Democratic wish-list of spending projects while they have the votes and enough political cover from Obama's recent election victory and non-stop fear-mongering.

Schiff: No Magical Cure for Recession

2008-12-27T10:19:00.000-08:00

Peter Schiff in the Wall Street Journal today gives a good overview of our current economic situation and what will work best in the long term.

I completely agree with every thing Peter says, at least on overall economic theory and long term effects on the economy as a whole.

What I'd like to hear more discussion about is whether there are ways to minimize individual short-term pain without disproportionately sacrificing long term national economic growth. For those that have lost jobs or had to close their businesses, they don't want to hear that the economy will be better in a year or two if they just sit tight. I realize the economic reality for the country as a whole, but what are some conservative policy options that can best limit the pain for individuals hardest hit by the recession while having the least negative impact on national economic recovery and growth?

A secondary question that has been rolling around in my conservative mind is this: with the productivity lost by people being unemployed, is there a level of unemployment where it can be economically justified to increase government spending in the short term on something like infrastructure projects in order to better utilize the labor resources of the country? There are infrastructure projects that need to be done sooner or later; does it make sense to accelerate the schedule and do more now? I recognize their are costs to this approach, namely the government having to tax, borrow, or print money (which sucks money from taxpayers or investors, or increases inflation), individuals being delayed from finding another private sector job (or increasing skills to find a higher-paying one), the tendency for short-term government programs to become long-term ones, and the opportunity for pork and wasteful spending (if new projects are thought up just as a way to spend more money as a "stimulus").

A third idea that I've been trying to consider is the right monetary policy the Fed should employ. If you are a Milton Friedman fan, then you know that he blamed the Great Depression most of all on Monetary Policy. The Fed back then shrunk the money supply and primarily caused the huge number of bank failures (something like 50% of banks failed) and greatly deepened the recession. Friedman said that the Fed should have flooded the market with liquidity. That seems to me to be what the Fed is doing right now. I understand that will risk inflation once the economy starts to recover, but isn't that the point at which you could pull back on the money supply? You can't magically make the economy better in the long run by increasing the money supply, but can't you counteract the effects of the credit crunch and asset bubble bursts, and then counteract them again when the credit crunch eases and asset values start to recover?

I have seen several good articles and videos convincingly arguing against a stimulus program that simply calls for tax "rebate" checks or increased government spending, but I am having trouble finding any in-depth debate exploring other policy options in more detail.

Stein: "I'm more in `like` with my country"

2008-12-27T01:28:00.000-08:00

Joel Stein from the LA Times fesses up on how liberals really feel about America.

He's more in love with Sweden. There's about 15 countries that he sounds like he'd rather have been born in, mostly in Europe. According to him, saying that America is the greatest country on earth is stupid talk.

Of course there's no recognition of America's lead role as the defender of freedom around the world for at least the last 70 years; of the countless lives America has sacrificed for the sake of freedom in Europe, the Pacific, Korea, Vietnam, Panama, Kuwait, Iraq, Afghanistan. There is no expression of thankfulness that we got to the atomic bomb before Germany or Russia did (think of how differently those 2 countries would likely have used that power). No gratitude that it was the U.S., not the Soviet Union that won the cold war.

VIDEO: Failure of Keynesian Economics

2008-12-23T19:37:00.000-08:00

Daniel Mitchell from the Center for Freedom and Prosperity, and CATO:

To Rebuke Or Not To Rebuke

2008-12-21T01:51:00.000-08:00

A Florida church has made national news by sending an ultimatum letter to a lady to cease fornicating. See the background story here, the HotAir post here, and my comments here. (P.S. Allahpundit is an atheist and thus his interest in posting the story, if you can't immediately tell from his tone).

Bush Interview w/ National Review

2008-12-08T22:52:00.000-08:00

Byron York and Rich Lowry's talk with the President.

Very interesting to get the President's perspective on things.

New Housing Market Plan

2008-12-07T15:46:00.001-08:00

Good analysis of the housing market right now.

Real Climate Science

2008-12-07T13:22:00.000-08:00

Here's an article about the 2nd annual ICCC.

Deregulation vs. Fannie & Freddie

2008-11-21T23:40:00.000-08:00

Here's a good discussion on the subject which I participated in (my screen name is "willamettevalley").

Auto Worker Compensation, Walmart vs. Costco, Health Care

2008-11-21T21:03:00.000-08:00

I signed up to blog over at The Next Right.

Here's my first post and comments. I apologize for the other commenter's language.

VIRAL: A Little Gun History Lesson

2008-11-20T22:56:00.000-08:00

Got this email forwarded from a friend. Fact-checked it as good as I could. I did cut out some questionable Australia statistics which Snopes has partially debunked. The Australia part has been floating around since 2001. The rest seems to have gone viral sometime late in 2007 as best I can tell. I wholeheartedly agree with the sentiment. Here it is:

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In 1929, the Soviet Union established gun control. From 1929 to 1953, about 20 million dissidents, unable to defend themselves, were rounded up and exterminated.

In 1911, Turkey established gun control. From 1915 to 1917, 1.5 million Armenians, unable to defend themselves, were rounded up and exterminated.

Germany established gun control in 1938 and from 1939 to 1945, a total of 13 million Jews and others who were unable to defend themselves were rounded up and exterminated.

China established gun control in 1935. From 1948 to 1952, 20 million political dissidents, unable to defend themselves, were rounded up and exterminated.

Guatemala established gun control in 1964. From 1964 to 1981, 100,000 Mayan Indians, unable to defend themselves, were rounded up and exterminated.

Uganda established gun control in 1970. From 1971 to 1979, 300,000 Christians, unable to defend themselves, were rounded up and exterminated.

Cambodia established gun control in 1956. From 1975 to 1977, one million 'educated' people, unable to defend themselves, were rounded up and exterminated.

Defenseless people rounded up and exterminated in the 20th Century because of gun control: 56 million.

You won't see this data on the US evening news, or hear politicians disseminating this information.

Guns in the hands of honest citizens save lives and property and, yes, gun-control laws adversely affect only the law-abiding citizens.

Take note my fellow Americans, before it's too late!

The next time someone talks in favor of gun control, please remind him of this history lesson.

With Guns...........We Are 'Citizens'.
Without Them........We Are 'Subjects'.

During W.W.II the Japanese decided not to invade America because they knew most Americans were ARMED!

Note: Admiral Yamamoto who crafted the attack on Pearl Harbor had attended Harvard U 1919-1921 & was Naval Attaché to the U. S. 1925-28. Most of our Navy was destroyed at Pearl Harbor & our Army had been deprived of funding & was ill prepared to defend the country.

It was reported that when asked why Japan did not follow up the Pearl Harbor attack with an invasion of the U. S. Mainland, his reply was that he had lived in the U. S. & knew that almost all households had guns.

If you value your freedom, Please spread this anti-gun control message to all your friends...!

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FYI, the exact quote from numerous sources for Admiral Yamamoto was: "You cannot invade the mainland United States. There would be a rifle behind every blade of grass."

And here's another money quote:

"Laws that forbid the carrying of arms . . . disarm only those who are neither inclined nor determined to commit crimes . . . Such laws make things worse for the assaulted and better for the assailants; they serve rather to encourage than to prevent homicides, for an unarmed man may be attacked with greater confidence than an armed man." --Thomas Jefferson

Please, No Bailout for Detroit

2008-11-20T22:15:00.000-08:00

I was listening to the Jim Bohannon Show on the radio and wrote him an email with the following points. The points may seem a little incoherent without the context of the discussion on the radio, but here they are:

Foreign-owned car companies are still American companies. They have American plants that employ American workers that build cars for the American market. When foreign companies have physical money-making assets in America, it makes them much more reliant upon us than it makes us reliant upon them. The assets are physically in OUR country. Foreign goverments are much less likely to take actions against our interests if they have investments in our country. Would you pick a fight with someone who had some of your valuable possessions?

It's not like consumer demand for autos will go away completely. Sure, demand is down right but it will bounce back, and demand for car repair services will remain too. If one or more of the "Big 3" lose market share, that is because people are freely choosing to buy other companies cars. If one companies went out of business completely, the rest of the companies would be strengthened.

There will still be a need to build cars. The question is really who builds them where. Michigan, with their anti-business policies and over-protection of the harmful auto unions (harmful to running a profitable business) will lose jobs, but numerous other states where Toyota, Honda, and Nissan produce cars will gain jobs. A bailout will simply subsidize Michigan's bad choices and transfer the costs of their economic decisions to the rest of the US taxpayers.

Sure, the credit crunch hurt the auto industry as a whole, and the weakest companies may not, and should not survive, at least not without restructuring. We've got to get away from subsidizing bad businesses and thereby removing the incentive for change.

A bankruptcy would help the Big 3 break free of some of the crippling constraints put on them by the unions. The Big 3 total labor cost per employee is $73/hr., while Toyota, Honda, and Nissan average $44/hr, and the average American worker recieves $29/hr. Chrysler employees get 35 days of paid vacation/holidays per year. Employees are paid even while laid off, and there are even more retirees receiving generous pensions than there are employees receiving generous pay for 35-40 hrs/week of work.

The Big 3 also suffer from a productivity gap with the Toyota, Honda, and Nissan. The Big 3 have been getting better but still lag behind. That is, they take 20% more worker hours to produce a vehicle.

Given all of this, I am opposed to my money going to pay union salaries and benefits in Michigan.

Here are a few more thoughts beyond what I wrote to Jim Bohannon:

I am not without sympathy for those in Michigan and elsewhere around the country whose jobs would be affected by this, but the effect is not the "3 million" jobs being bandied about. That figure includes any job that is related to the Big 3 automakers, including repair centers and dealerships around the country. The fact is that if Big 3 cars will still need to be repaired, and if Big 3 dealerships close, then Toyota, Honda, Nissan, etc., will open more dealerships as their market share increases. And consumers will end up with cheaper, more reliable cars.

Further, if any of the Big 3 go bankrupt, it would not mean that every auto worker would lose their jobs. Obviously some would, but most won't. And whoever is satisfying consumer demand for autos and increasing market share will be hiring employees too.

The trouble some auto companies are having is simply not the same systemic threat that the financial sector crisis posed.

UPDATE: Romney concurs