30 July, 2009

States in a Fiscal Hole They Dug

States in a Fiscal Hole They Dug
Steve Chapman
Thursday, July 30, 2009

Everywhere you look, states are being crunched by fiscal emergencies that range from painful to excruciating. California, which has been paying bills with IOUs, is now preparing to close state parks and furlough state employees -- which is what you have to do when your budget deficit is bigger than the entire budget of some states.

It's not alone. "At least 39 states have imposed cuts that hurt vulnerable residents," trumpeted a recent report from the liberal Center on Budget and Policy Priorities. California, New York and Delaware have approved income-tax increases, and Pennsylvania and Illinois are considering doing likewise.

We all know the reason for the squeeze: An unexpected, severe national recession has dried up revenues just when states need funds to help out-of-work citizens. That's true: You would expect the worst downturn in decades to have a negative effect on tax collections. But it's a long way from the whole truth.

The crisis in state budgets is not an accident, and it wasn't unforeseeable. For years, most states have spent like there's no tomorrow, and now tomorrow is here. They bring to mind the lament of Mickey Mantle, who said, "If I knew I was going to live this long, I'd have taken better care of myself."

If they had known the revenue flood wasn't a permanent fact of life, governors and legislators might have prepared for drought. Instead, like overstretched homeowners, they took on obligations they could meet only in the best-case scenario -- which is not what has come to pass.

Over the last decade, state budgets have expanded rapidly. We have had good times and bad times, including a recession in 2001, but according to the National Association of State Budget Officers, this will be the first year since 1983 that total state outlays have not increased.

The days of wine and roses have been affordable due to a cascade of tax revenue. In state after state, the government's take has ballooned. Overall, the average person's state tax burden has risen by 42 percent since 1999 -- nearly 50 percent beyond what the state would have needed just to keep spending constant, with allowances for inflation.

Even low-tax states like Texas and Nevada have followed the same course. No one has been inclined to say, "Taxpayers don't need to send us more money. We've got plenty."

All that growth should have been enough to pay for essential programs and furnish ample reserves, allowing state governments to weather a downturn without major adjustments. But the states put a priority on burning through all the cash they could get. Last year, they spent about 77 percent more than they did 10 years before.

California illustrates the problem. Adam Summers of the libertarian Reason Foundation in Los Angeles has calculated that if it "had simply limited its spending increases to the 4.38 percent average annual increase in the state's consumer price index and population growth each years since fiscal year 1990-91, the state would be sitting on a $15 billion budget surplus right now."

Illinois is another problem child. The state's general fund appropriation is some two-thirds higher today than it would be if the state had just kept those outlays in line with inflation over the last two decades. That increase, as in California, is the difference between a gaping deficit and a comfortable surplus.

Then there is New York. Last fall, Democratic Gov. David Paterson called for an end to the "unsustainable growth in state spending" in recent years. Since the mid-90s, he noted, the state budget has doubled, outstripping the inflation rate by nearly twofold. And New York was not exactly notorious for its frugality 15 years ago.

Unlike the federal government, states can't simply run deficits indefinitely. For that reason, they have a powerful duty to pile up surpluses during fat years, which would allow them to make up the revenue that goes missing during lean years. But for many lawmakers, the future extends only to the next election. So any money they have, they feel an insatiable need to lavish on someone.

Politicians are happy to blame the recession for depriving citizens of programs they have come to expect. The recession didn't create the gap between state government commitments and state government resources. It only exposed it.


07 July, 2009

In Search of Dignity

July 7, 2009
OP-ED COLUMNIST

In Search of Dignity

When George Washington was a young man, he copied out a list of 110 “Rules of Civility and Decent Behavior in Company and Conversation.” Some of the rules in his list dealt with the niceties of going to a dinner party or meeting somebody on the street.

“Lean not upon anyone,” was one of the rules. “Read no letter, books or papers in company,” was another. “If any one come to speak to you while you are sitting, stand up,” was a third.

But, as the biographer Richard Brookhiser has noted, these rules, which Washington derived from a 16th-century guidebook, were not just etiquette tips. They were designed to improve inner morals by shaping the outward man. Washington took them very seriously. He worked hard to follow them. Throughout his life, he remained acutely conscious of his own rectitude.

In so doing, he turned himself into a new kind of hero. He wasn’t primarily a military hero or a political hero. As the historian Gordon Wood has written, “Washington became a great man and was acclaimed as a classical hero because of the way he conducted himself during times of temptation. It was his moral character that set him off from other men.”

Washington absorbed, and later came to personify what you might call the dignity code. The code was based on the same premise as the nation’s Constitution — that human beings are flawed creatures who live in constant peril of falling into disasters caused by their own passions. Artificial systems have to be created to balance and restrain their desires.

The dignity code commanded its followers to be disinterested — to endeavor to put national interests above personal interests. It commanded its followers to be reticent — to never degrade intimate emotions by parading them in public. It also commanded its followers to be dispassionate — to distrust rashness, zealotry, fury and political enthusiasm.

Remnants of the dignity code lasted for decades. For most of American history, politicians did not publicly campaign for president. It was thought that the act of publicly promoting oneself was ruinously corrupting. For most of American history, memoirists passed over the intimacies of private life. Even in the 19th century, people were appalled that journalists might pollute a wedding by covering it in the press.

Today, Americans still lavishly admire people who are naturally dignified, whether they are in sports (Joe DiMaggio and Tom Landry), entertainment (Lauren Bacall and Tom Hanks) or politics (Ronald Reagan and Martin Luther King Jr.).

But the dignity code itself has been completely obliterated. The rules that guided Washington and generations of people after him are simply gone.

We can all list the causes of its demise. First, there is capitalism. We are all encouraged to become managers of our own brand, to do self-promoting end zone dances to broadcast our own talents. Second, there is the cult of naturalism. We are all encouraged to discard artifice and repression and to instead liberate our own feelings. Third, there is charismatic evangelism with its penchant for public confession. Fourth, there is radical egalitarianism and its hostility to aristocratic manners.

The old dignity code has not survived modern life. The costs of its demise are there for all to see. Every week there are new scandals featuring people who simply do not know how to act. For example, during the first few weeks of summer, three stories have dominated public conversation, and each one exemplifies another branch of indignity.

First, there was Mark Sanford’s press conference. Here was a guy utterly lacking in any sense of reticence, who was given to rambling self-exposure even in his moment of disgrace. Then there was the death of Michael Jackson and the discussion of his life. Here was a guy who was apparently untouched by any pressure to live according to the rules and restraints of adulthood. Then there was Sarah Palin’s press conference. Here was a woman who aspires to a high public role but is unfamiliar with the traits of equipoise and constancy, which are the sources of authority and trust.

In each of these events, one sees people who simply have no social norms to guide them as they try to navigate the currents of their own passions.

Americans still admire dignity. But the word has become unmoored from any larger set of rules or ethical system.

But it’s not right to end on a note of cultural pessimism because there is the fact of President Obama. Whatever policy differences people may have with him, we can all agree that he exemplifies reticence, dispassion and the other traits associated with dignity. The cultural effects of his presidency are not yet clear, but they may surpass his policy impact. He may revitalize the concept of dignity for a new generation and embody a new set of rules for self-mastery.

02 July, 2009

Memorization & Knowledge? So overrated...

My favorite part: This is the sort of thing Justice Ruth Bader Ginsburg described in the text as just the workings of politics. Writing in Slate, Yale Law faculty member Emily Bazelon goes further. She laments that the promotion test rewarded memorization and that it favored "'fire buffs' -- guys who read fire suppression manuals on their down time."
She is outraged that a fire department might want to promote firefighters who know more about suppressing fires, rescuing victims and protecting their colleagues rather than simply promote a predetermined number of members of specific racial groups whose self-appointed political spokesmen back the politicians in office.


Firefighter Case Shows Seamy Side of Racial Politics

Michael Barone
Thursday, July 02, 2009

The Supreme Court's decision in Ricci v. DeStefano, the case of the New Haven firefighters, was a ringing endorsement of the Civil Rights Act of 1964's ban on racial discrimination and a repudiation of Supreme Court nominee Sonia Sotomayor's decision in the Second Circuit U.S. Court of Appeals. While five justices flatly rejected Sotomayor's ruling, even the four dissenters wouldn't have let stand her ruling allowing the results of a promotion exam to be set aside because no black firefighter had a top score.

Ricci is also something else: a riveting lesson in political sociology, thanks to the concurring opinion by Justice Samuel Alito. It shows how a combination of vote-hungry politicians and local political agitators -- you might call them community organizers -- worked with the approval of elite legal professionals like Sotomayor to employ racial quotas and preferences in defiance of the words of the Civil Rights Act.

One of the chief actors was the Rev. Boise Kimber, a supporter of Mayor John DeStefano. The mayor testified for him as a character witness in a 1996 trial in which he was convicted of stealing prepaid funeral expenses from an elderly woman. DeStefano later appointed Kimber the head of the board of fire commissioners, but Kimber resigned after saying he wouldn't hire certain recruits because "they just have too many vowels in their name."

After the results of the promotion test were announced, showing that 19 white and one Hispanic firefighter qualified for promotion, Kimber called the mayor's chief administrative officer opposing certification of the test results.

The record shows that DeStefano and his appointees went to work, holding secret meetings and concealing their motives, to get the Civil Service Board to decertify the test results. Kimber appeared at a board meeting and made "a loud, minutes-long outburst" and had to be ruled out of order three times.

City officials ignored the inconvenient fact that they had hired an independent and experienced firm -- this is a thriving business -- to draw up a bias-free test and paid a competing firm to draw up another test. Its head testified that the first firm's test was biased without seeing it. The board capitulated and decertified the test. DeStefano was prepared to overrule it if it had gone the other way.

Such is governance these days in a liberal university town. It may remind some of us old enough to remember of the machinations and contrivances of Southern white officials and agitators employed to prevent blacks from registering and voting.

This is the sort of thing Justice Ruth Bader Ginsburg described in the text as just the workings of politics. Writing in Slate, Yale Law faculty member Emily Bazelon goes further. She laments that the promotion test rewarded memorization and that it favored "'fire buffs' -- guys who read fire suppression manuals on their down time."

She is outraged that a fire department might want to promote firefighters who know more about suppressing fires, rescuing victims and protecting their colleagues rather than simply promote a predetermined number of members of specific racial groups whose self-appointed political spokesmen back the politicians in office.

Bazelon and Sotomayor, who voted to uphold the city's decertification of the promotion test, are typical of liberal elites who are ready to ratify squalid political deals -- and blatant racial discrimination -- in return for the political support and the votes that can be rallied by the likes of Kimber. You supply the numbers on Election Day, and we'll supply the verbiage to put a pretty label on your shenanigans.

Usually the people who are hurt by this are not as sympathetic as Frank Ricci, the dyslexic firefighter who paid a friend $1,000 to read the training manuals and studied hard enough to get the highest score on the test.

But I think we ought to reserve some of our sympathy for the purported beneficiaries of this wretched discrimination, the black firefighters. Their champions -- Kimber and DeStefano, Bazelon and Sotomayor -- are telling them that their way up in life should not be determined by the content of their character or by mastery of their worthy craft, but by the color of their skin. Not by a fair and unbiased test, but by dishonest wire-pulling and threats of political retaliation.

Thanks to Justice Alito, for pulling back the curtain and showing the ugly reality of racial discrimination in America today.


30 June, 2009

Reaction to the New Haven firefighter case

On Race, the Slog Goes On
George Will
Monday, June 29, 2009

WASHINGTON -- Although New Haven's firefighters deservedly won in the Supreme Court, it is deeply depressing that they won narrowly -- 5-4. The egregious behavior by that city's government, in a context of racial rabble-rousing, did not seem legally suspect to even one of the court's four liberals, whose harmony seemed to reflect result-oriented rather than law-driven reasoning.

The undisputed facts are that in 2003 the city gave promotion exams to 118 firemen, 27 of them black. The tests were prepared by a firm specializing in employment exams and were validated, as federal law requires, by independent experts. When none of the African-Americans did well enough to qualify for the available promotions, a black minister allied with the seven-term mayor warned of a dire "political ramification" if the city promoted from the list of persons (including one Hispanic) that the exams identified as qualified. The city decided that no one would be promoted, calling this a race-neutral outcome because no group was disadvantaged more than any other.

The city's idea of equal treatment -- denying promotions equally to those deemed and those not deemed qualified -- was particularly galling to Frank Ricci, who had prepared for the exams by quitting his second job, buying the more than $1,000 worth of books the city recommended, paying to have them read onto audiotapes -- he is dyslexic -- and taking practice tests and interviews. His efforts earned him the sixth-highest score.

He and others denied promotions for which their exam scores made them eligible sued, charging violations of the Constitution's guarantee of equal protection of the laws and of the 1964 Civil Rights Act. The city argued that if it had made promotions based on the test results, it would have been vulnerable under the 1964 act to being sued for adopting a practice that had a "disparate impact" on minorities. On Monday, the court's conservatives (Anthony Kennedy writing for the majority, joined by John Roberts, Antonin Scalia, Clarence Thomas and Samuel Alito) held:

The rights of Ricci et al. under the 1964 act were violated. The city's fear of a disparate impact litigation was not unfounded, but that did not justify the race-based response to the exam results because New Haven did not have "a strong basis in evidence" to believe it would be held liable. There is such evidence only if the exams "were not job related and consistent with business necessity, or if there existed an equally valid, less discriminatory alternative" that would have served the city's needs but that it refused to adopt.

"All the evidence demonstrates that the city rejected the test results because the higher scoring candidates were white." The city's criticisms of the exam "are blatantly contradicted by the record." And "the city turned a blind eye to evidence supporting the exams' validity" (emphases added).

Ruth Bader Ginsburg, joined in dissent by John Paul Stevens, David Souter and Stephen Breyer, rejected the majority's conclusions root and branch. She cited a federal report from the early 1970s about discrimination in hiring firefighters, disputed even the "business necessity" of the exams' 60/40 written/oral ratio and defended the integrity of New Haven's decision-making -- rejecting Alito's concurrence, which dwelt on the rancid racial politics of the Rev. Boise Kimber. Alito concluded that "no reasonable jury" could find that the city possessed a "substantial basis in evidence to find the tests inadequate."

Scalia, concurring separately, said Monday's ruling "merely postpones the evil day" on which the court must decide "whether, or to what extent," existing disparate-impact law conflicts with the 14th Amendment guarantee of equal protection of the law. Conceding that "the question is not an easy one," Scalia said: The federal government is prohibited from discriminating on the basis of race, so surely "it is also prohibited from enacting laws mandating that third parties" -- e.g., a city government -- "discriminate on the basis of race." Scalia added:

"Would a private employer not be guilty of unlawful discrimination if he refrained from establishing a racial hiring quota but intentionally designed his hiring practices to achieve the same end? Surely he would. Intentional discrimination is still occurring, just one step up the chain."

The nation shall slog on, litigating through a fog of euphemisms and blurry categories (e.g., "race-conscious" actions that somehow are not racial discrimination because they "remedy" discrimination that no one has intended). This is the predictable price of failing to simply insist that government cannot take cognizance of race.

22 June, 2009

The "Uninsured"

I really like the illustration regarding the photograph changing every six months...

Taking a Razor to the President's Plan

George Will
Sunday, June 21, 2009

WASHINGTON -- To dissect today's health care debate, the crux of which concerns a "public option," use the mind's equivalent of a surgeon's scalpel, Occam's razor, a principle of intellectual parsimony: In solving a puzzle, start with the simplest explanatory theory.

The puzzle is: Why does the president, who says that were America "starting from scratch" he would favor a "single-payer" -- government-run -- system, insist that health care reform include a government insurance plan that competes with private insurers? The simplest answer is that such a plan will lead to a single-payer system.

Conservatives say that a government program will have the intended consequence of crowding private insurers out of the market, encouraging employers to stop providing coverage and luring employees from private insurance to the cheaper government option.

The Lewin Group estimates that 70 percent of the 172 million persons privately covered might be drawn, or pushed, to the government plan. A significant portion of the children who have enrolled in the State Children's Health Insurance Program since eligibility requirements were relaxed in February had private insurance.

Assurances that the government plan would play by the rules that private insurers play by are implausible. Government is incapable of behaving like market-disciplined private insurers. Competition from the public option must be unfair because government does not need to make a profit and has enormous pricing and negotiating powers. Besides, unless the point of a government plan is to be cheaper, it is pointless: If the public option conforms to the imperatives that regulations and competition impose on private insurers, there is no reason for it.

The president characteristically denies that he is doing what he is doing -- putting the nation on a path to an outcome he considers desirable -- just as he denies any intention of running General Motors. Nevertheless, the unifying constant of his domestic policies -- their connecting thread -- is that they advance the Democrats' dependency agenda. The party of government aims to make Americans more equal by making them equally dependent on government for more and more things.

Arguments for the public option are too feeble to seem ingenuous. The president says competition from a government plan is necessary to keep private insurers "honest." Presumably, being "honest" means not colluding to set prices, and evidently he thinks that, absent competition from government, there will not be a competitive market for insurance. This ignores two facts:

There are 1,300 competing providers of health insurance. And Roll Call's Morton Kondracke notes that the 2003 Medicare prescription drug entitlement, relying on competition among private insurers, enjoys 87 percent approval partly because competition has made premiums less expensive than had been projected. The program's estimated cost from 2007 to 2016 has been reduced 43 percent.

Some advocates of a public option say health coverage is so complex that consumers will be befuddled by choices. But consumers of many complicated products, from auto insurance to computers, have navigated the competition among providers, who have increased quality while lowering prices.

Although 70 percent of insured Americans rate their health care arrangements good or excellent, radical reform of health care is supposedly necessary because there are 45.7 million uninsured. That number is, however, a "snapshot" of a nation in which more than 20 million working Americans change jobs every year. Many of them are briefly uninsured between jobs. If all the uninsured were assembled for a group photograph, and six months later the then-uninsured were assembled for another photograph, about half the people in the photos would be different.

Almost 39 percent of the uninsured are in five states -- Florida, Texas, New Mexico, Arizona and California, all of which are entry points for immigrants. About 21 percent -- 9.7 million -- of the uninsured are not citizens. Up to 14 million are eligible for existing government programs -- Medicare, Medicaid, SCHIP, veterans' benefits, etc. -- but have not enrolled. And 9.1 million have household incomes of at least $75,000 and could purchase insurance. Those last two cohorts are more than half of the 45.7 million.

Insuring the perhaps 20 million persons who are protractedly uninsured because they cannot afford insurance is conceptually simple: Give them money -- (refundable) tax credits or debit cards (which have replaced food stamps) loaded with a particular value. This would produce people who are more empowered than dependent. Unfortunately, advocates of a government option consider that a defect. Which is why the simple idea of the dependency agenda cuts like a razor through the complexities of this debate.


09 June, 2009

Pay-as-you-go

I think this is a fantastic idea, and a real step in the right direction.  The government has to get a grip on spending.  Typically pay-as-you-go laws are dangerous because rather than cutting existing spending to pay for new initiatives, the legislature just raises taxes.  I'm not sure that is an option at the moment given Obama's pledge not to raise taxes on 95% of Americans and the fact he has already raised taxes on the remaining 5% by letting existing tax cuts expire.  Kudos to Obama for making an effort to reign in runaway spending.

One caveat here:  unless a mechanism exists to alow a reduction in overall spending, all the president has done is freeze spending at the highest level in our nation's history.

Obama pitches pay-as-you-go plan for Congress

WASHINGTON – President Barack Obama on Tuesday challenged Congress to pay for new increases in federal benefit programs as it goes rather than sink the nation deeper into a debt, calling it a matter of public responsibility.

Republicans lashed back that Obama is no voice of fiscal restraint as the deficit soars.

The president's plan would require Congress to pay for new entitlement spending, such as health care, by raising taxes or coming up with budget cuts — a "pay-as-you-go" system that would have the force of law. Under the proposal, if new spending or tax reductions are not offset, there would be automatic cuts in so-called mandatory programs — although Social Security payments and some other programs would be exempt.

Not noted by the president: Tuesday's plan is a watered-down version of the so-called "PAYGO" rules proposed just last month in his own budget plan.

That version would have required, on average, all affected legislation to be paid for in the very first year. The new plan only requires such legislation to be financed over the coming decade. That mirrors congressional rules and reflects the likelihood that health care reform will add to the deficit in the early years.

Obama said the principle is simple: Congress can only spend a dollar if it saves a dollar somewhere else.

"It is no coincidence that this rule was in place when we moved from record deficits to record surpluses in the 1990s — and that when this rule was abandoned, we returned to record deficits that doubled the national debt," Obama said, flanked at the White House by supportive Democratic lawmakers.

"Entitlement increases and tax cuts need to be paid for," he said. "They're not free, and borrowing to finance them is not a sustainable long-term policy."

Republican leaders, critical of the Obama-championed $787 billion stimulus package and other deficit spending, called the president disingenuous.

"It's as if the administration and these Democrat leaders are living in an alternate universe," said House Republican Whip Eric Cantor of Virginia. "The quickest way to save money is to stop recklessly spending it."

The pay-as-you-go rules would not apply to discretionary spending — the portion that Congress decides how to spend each year — which accounts for almost 40 percent of the budget, said Peter Orszag, the administration's budget director.

Obama's call for binding legislation comes as a reward to moderate-to-conservative "Blue Dog" Democrats who are big believers in pay-as-you go. Their votes were crucial to passing a congressional budget blueprint that generally follows Obama's budget.

The House and Senate already have their own PAYGO rules, but have routinely found ways around them. For example, a bill to effectively double GI Bill education benefits was enacted last year because of a loophole in congressional rules.

Obama's "PAYGO" plan would also require future tax cuts to be financed by tax increases elsewhere in the code, though exceptions are made for extendingPresident George W. Bush's 2001 and 2003 tax cuts, as well as other tax cuts that are scheduled to expire.

The federal deficit is on pace to explode past $1.8 trillion this year, more than four times last year's all-time high.

The deficit figures flow from the deep recession, the Wall Street bailout and the cost of the economic stimulus bill. Obama has defended the massive stimulus plan as essential to helping pump some life back in the economy, one that is still shedding jobs but showing more signs of life in recent weeks.

"The fact is, there are few who aren't distressed by deficits," Obama said. He said restoring a pay-as-you-go method under law would force lawmakers to deal not just with the politics and crises of the day, but also remain fixed on the nation's long-term financial health.

08 June, 2009

Yay, let's celebrate the fact judges appear to be biased by gender...

 I love the portion in red - the author thinks this study proves that diversity of judges is a good thing.  I think it proves only that judges need to base their their legal reasoning to the law, regardless of their gender.  If the findings were truly based on legal reasoning, there wouldn't be any correlation between the gender of the judge and the judge's findings.  That study should be very concerning to anyone who want the law to be enforced equaly and fairly.  What happened to "justice is blind"?

Have We Got a Deal For You

Have We Got a Deal For You
George Will
Sunday, June 07, 2009

WASHINGTON -- "I," said the president, who is inordinately fond of the first-person singular pronoun, "want to disabuse people of this notion that somehow we enjoy meddling in the private sector." He said that in March, when the government already owned 80 percent of AIG, Fannie Mae and Freddie Mac. "When a difficult decision has to be made on matters like where to open a new plant or what type of new car to make, the new GM, not the United States government, will make that decision." But the government is GM's largest shareholder, customer, tax collector, regulator, partner in determining employees' compensation, protector of dealers and pension guarantor. GM's other large owner, the United Auto Workers, is increasingly a government dependant.

Yet Steve Rattner and Ron Bloom, two of the president's fixers of Detroit, recently wrote in USA Today that government "will play no role" in running GM. They were not under oath.

"What we are not doing -- what I have no interest in doing -- is running GM," says the president who, when not firing GM's CEO, purging its board of directors and picking new members, is designing new products (imposing fuel economy requirements that will control size, weight, passenger capacity and safety). The president, overcoming his professed reluctance to run GM, resembles the journalist Don Marquis when, after a month on the wagon, he ordered a double martini and exclaimed: "I've conquered my goddam willpower."

Washington mandates that Detroit must build cars for which there is much less demand than Washington demands that there be. Then Washington tries to manufacture demand with a $7,500 tax credit for purchasers of the electric Chevrolet Volt, supposedly GM's salvation. So, GM is to be saved by a product people will not buy without a cash incentive larger than the income tax paid by 83.4 percent of America's families.

It is reasonable to assume that GM will become profitable -- if you make unreasonable assumptions about annual vehicle sales and GM's share of the market. Besides, the government that runs Amtrak (which has lost $23 billion, in today's dollars, just since 1990) vows to make GM efficient.

But one reason Amtrak runs on red ink is that legislators treat it as their toy train set, preventing it from cutting egregiously unprofitable routes. Will Congress passively accept auto plant-closing decisions? Rattner says Washington's demure vow is: "No plant decisions, no dealer decisions, no color-of-the-car decisions." He is one-third right. Last week, under the headline "Senators Blast Automakers Over Dealer Closings," The Washington Post reported, "Because the federal government is slated to own most of General Motors and 8 percent of Chrysler, some of the senators said they have a responsibility, as major shareholders do, to review company decisions."

The pressure to politicize the economy is spreading. John Sweeney, head of the AFL-CIO, and Gerald McEntee, head of the American Federation of State, County and Municipal Employees -- which is government organized as an interest group to lobby itself -- have demanded the resignation of two directors of Citigroup. Their premise is that businesses receiving direct government subventions should conform to the wishes of the president's allies.

GM is adopting new ways to lose money: Responsive to its UAW masters, GM is moving from China to America the production of some components of one Chevrolet model. Says UAW President Ron Gettelfinger, "It should be built here if it's going to be sold here." That principle, now successfully asserted, means economic autarky -- the end of international trade, and of prosperity.

The government's $50 billion -- so far -- acquisition of the shadow of GM will injure, with unfair financial advantages, the surprisingly healthy U.S. auto company, Ford. Of course, the government does not intend that injury, any more than it intended to cause protests in Mexico over the high price of corn tortillas, a result of Washington's mandate that Americans burn corn (ethanol) in their cars.

Washington's "rescue" of GM began because GM is "too big to fail," and bankruptcy is (well, was) "unthinkable." Big? GM's market capitalization, $375.8 million on Wednesday, is about the size of California Pizza Kitchen's ($340 million) -- is it too big to fail? -- and one-eleventh that of Harley-Davidson ($4.3 billion). Fail? If GM has not already failed, New Coke was a success.

The administration is determined to prop up GM as a jobs program for the UAW and Midwestern states rich in electoral votes. This frenzy will intensify as the administration's decisions deepen the debacle.

02 June, 2009

GM - Government Motors


The New York Times



June 2, 2009
OP-ED COLUMNIST

The Quagmire Ahead

On Jan. 21, 1988, a General Motors executive named Elmer Johnson wrote a brave and prophetic memo. Its main point was contained in this sentence: “We have vastly underestimated how deeply ingrained are the organizational and cultural rigidities that hamper our ability to execute.”

On Jan. 26, 2009, Rob Kleinbaum, a former G.M. employee and consultant, wrote his own memo. Kleinbaum’s argument was eerily similar: “It is apparent that unless G.M.’s culture is fundamentally changed, especially in North America, its true heart, G.M. will likely be back at the public trough again and again.”

These two memos, written by men devoted to the company, get to the heart of G.M.’s problems. Bureaucratic restructuring won’t fix the company. Clever financing schemes won’t fix the company. G.M.’s core problem is its corporate and workplace culture — the unquantifiable but essential attitudes, mind-sets and relationship patterns that are passed down, year after year.

Over the last five decades, this company has progressively lost touch with car buyers, especially the educated car buyers who flock to European and Japanese brands. Over five decades, this company has tolerated labor practices that seem insane to outsiders. Over these decades, it has tolerated bureaucratic structures that repel top talent. It has evaded the relentless quality focus that has helped companies like Toyota prosper.

As a result, G.M. has steadily lost U.S. market share, from 54 to 19 percent. Consumer Reports now recommends 70 percent of Ford’s vehicles, but only 19 percent of G.M.’s.

The problems have not gone unrecognized and heroic measures have been undertaken, but technocratic reforms from within have not changed the culture. Technocratic reforms from Washington won’t either. For the elemental facts about the Obama restructuring plan are these: Bureaucratically, the plan is smart. Financially, it is tough-minded. But when it comes to the corporate culture that is at the core of G.M.’s woes, the Obama approach is strangely oblivious. The Obama plan won’t revolutionize G.M.’s corporate culture. It could make things worse.

First, the Obama plan will reduce the influence of commercial outsiders. The best place for fresh thinking could come from outside private investors. But the Obama plan rides roughshod over the current private investors and so discourages future investors. G.M. is now a pariah on Wall Street. Say farewell to a potentially powerful source of external commercial pressure.

Second, the Obama plan entrenches the ancien régime. The old C.E.O. is gone, but he’s been replaced by a veteran insider and similar executive coterie. Meanwhile, the U.A.W. has been given a bigger leadership role. This is the union that fought for job banks, where employees get paid for doing nothing. This is the organization that championed retirement with full benefits at around age 50. This is not an organization that represents fundamental cultural change.

Third, the Obama approach reduces the fear that impels change. The U.S. government will own most of G.M. It would be politically suicidal for the Democrats, or whoever is in power, to pull the plug on the company — now or ever. Therefore, the current managers can rest assured that they never need to fear liquidation again. There will always be federal subsidies for their own mediocrity.

Fourth, the Obama plan dilutes the company’s focus. Instead of thinking obsessively about profitability and quality, G.M. will also have to meet the administration’s environmental goals. There is no evidence G.M. is good at building the sort of small cars the administration demands. There is no evidence that there is a large American market for these cars. But G.M. now has to serve two masters, the market and the administration’s policy goals.

Fifth, G.M.’s executives and unions now have an incentive to see Washington as a prime revenue center. Already, the union has successfully lobbied to move production centers back from overseas. Already, the company has successfully sought to restrict the import of cars that might compete with G.M. brands. In the years ahead, G.M.’s management will have a strong incentive to spend time in Washington, urging the company’s owner, the federal government, to issue laws to help it against Ford and Honda.

Sixth, the new plan will create an ever-thickening set of relationships between G.M.’s new owners — in government, management and unions. These thickening bonds between public and private bureaucrats will fundamentally alter the corporate culture, and not for the better. Members of Congress are also getting more involved in the company they own, and will have their own quaint impact.

The end result is that G.M. will not become more like successful car companies. It will become less like them. The federal merger will not accelerate the company’s viability. It will impede it. We’ve seen this before, albeit in different context: An overconfident government throws itself into a dysfunctional culture it doesn’t really understand. The result is quagmire. The costs escalate. There is no exit strategy.

01 June, 2009

Criticize, then Confirm

Sotomayor: Criticize, then Confirm
Charles Krauthammer
Friday, May 29, 2009

WASHINGTON -- Sonia Sotomayor has a classic American story. So does Frank Ricci.

Ricci is a New Haven firefighter stationed seven blocks from where Sotomayor went to law school (Yale). Raised in blue-collar Wallingford, Conn., Ricci struggled as a C and D student in public schools ill-prepared to address his serious learning disabilities. Nonetheless he persevered, becoming a junior firefighter and Connecticut's youngest certified EMT.

After studying fire science at a community college, he became a New Haven "truckie," the guy who puts up ladders and breaks holes in burning buildings. When his department announced exams for promotions, he spent $1,000 on books, quit his second job so he could study eight to 13 hours a day, and, because of his dyslexia, hired someone to read him the material.

He placed sixth on the lieutenant's exam, which qualified him for promotion. Except that the exams were thrown out by the city, and all promotions denied, because no blacks had scored high enough to be promoted.

Ricci (with 19 others) sued.

That's where these two American stories intersect. Sotomayor was a member of the three-member circuit court panel that upheld the dismissal of his case, thus denying Ricci his promotion.

This summary ruling deeply disturbed fellow members of Sotomayor's court, including Judge Jose Cabranes (a fellow Clinton appointee) who, writing for five others, criticized the unusual, initially unpublished, single-paragraph dismissal for ignoring the serious constitutional issues at stake.

Two things are sure to happen this summer: The Supreme Court will overturn Sotomayor's panel's ruling. And, barring some huge hidden scandal, Sotomayor will be elevated to that same Supreme Court.

What should a principled conservative do? Use the upcoming hearings not to deny her the seat, but to illuminate her views. No magazine gossip from anonymous court clerks. No "temperament" insinuations. Nothing ad hominem. The argument should be elevated, respectful and entirely about judicial philosophy.

On the Ricci case. And on her statements about the inherent differences between groups, and the superior wisdom she believes her Latina physiology, culture and background grant her over a white male judge. They perfectly reflect the Democrats' enthrallment with identity politics, which assigns free citizens to ethnic and racial groups possessing a hierarchy of wisdom and entitled to a hierarchy of claims upon society.

Sotomayor shares President Obama's vision of empathy as lying at the heart of judicial decision-making -- sympathetic concern for litigants' background and current circumstances, and for how any judicial decision would affect their lives.

Since the 2008 election, people have been asking what conservatism stands for. Well, if nothing else, it stands unequivocally against justice as empathy -- and unequivocally for the principle of blind justice.

Empathy is a vital virtue to be exercised in private life -- through charity, respect and lovingkindness -- and in the legislative life of a society where the consequences of any law matter greatly, which is why income taxes are progressive and safety nets built for the poor and disadvantaged.

But all that stops at the courthouse door. Figuratively and literally, justice wears a blindfold. It cannot be a respecter of persons. Everyone must stand equally before the law, black or white, rich or poor, advantaged or not.

Obama and Sotomayor draw on the "richness of her experiences" and concern for judicial results to favor one American story, one disadvantaged background, over another. The refutation lies in the very oath Sotomayor must take when she ascends to the Supreme Court: "I do solemnly swear that I will administer justice without respect to persons, and do equal right to the poor and to the rich. ... So help me God."

When the hearings begin, Republicans should call Frank Ricci as their first witness. Democrats want justice rooted in empathy? Let Ricci tell his story and let the American people judge whether his promotion should have been denied because of his skin color in a procedure Sotomayor joined in calling "facially race-neutral."

Make the case for individual vs. group rights, for justice vs. empathy. Then vote to confirm Sotomayor solely on the grounds -- consistently violated by the Democrats, including Sen. Obama -- that a president is entitled to deference on his Supreme Court nominees, particularly one who so thoroughly reflects the mainstream views of the winning party. Elections have consequences.

Vote Democratic and you get mainstream liberalism: A judicially mandated racial spoils system and a jurisprudence of empathy that hinges on which litigant is less "advantaged."

A teaching moment, as liberals like to say. Clarifying and politically potent. Seize it.

28 May, 2009

Who does Sotomayor empathize with? Who cares!

This idea of judicial "empathy" is driving me nuts.  We are trying to find a US Supreme Court Justice, not a personal life coach.  These are the folks who are supposed to interpret the law, not twist the law to accommodate those who are worthy of empathy.  As John Roberts said,  "Somebody asked me, you know, 'Are you going to be on the side of the little guy?' And you obviously want to give an immediate answer. But as you reflect on it, if the Constitution says that the little guy should win, the little guy is going to win in court before me. But if the Constitution says that the big guy should win, well, then the big guy is going to win, because my obligation is to the Constitution. That's the oath. The oath that a judge takes is not that 'I'll look out for particular interests.' . . . The oath is to uphold the Constitution and laws of the United States, and that's what I would do."

Exactly.

Commentary: Who does Sotomayor empathize with?

By Leslie Sanchez




WASHINGTON (CNN) -- The Obama administration has no intention of pushing comprehensive immigration reform any time soon, but with his nomination of Judge Sonia Sotomayor to the Supreme Court, the president may have found a suitable consolation prize for the Hispanic community.

A prize is due. Hispanics gave 67 percent of their votes to President Obama, delivering key states like Colorado, Nevada and New Mexico to his electoral column, and sending him two new Democratic senators and three new House Democrats from those states alone.

But the problem with identity politics is that not just any Hispanic will do. Obama made clear he wanted to pick a justice who would have empathy for those whose cases come before the court.

As impressive as Sotomayor's life story is, it remains to be seen whether she truly has the much-talked-about "empathy" for Hispanic values and dreams.

If Sotomayor is truly representative of our values, she will understand that the entrepreneurial spirit is alive and well in the Hispanic community and is our best hope for moving Hispanic households solidly into the ranks of the American middle class.

In a study earlier this year, HispanTelligence, the research arm of Hispanic Business magazine, confirmed that there are at least 2.2 million Hispanic-owned businesses in the U.S., generating about $388 billion in combined revenue.

Empathy with the lives of millions of Hispanics today means that she must appreciate the impact of federal, state and municipal tax and regulatory schemes on individuals and small businesses alike. Her writings should reflect the view that access to the marketplace is a constitutional guarantee no less important than freedoms of speech, religion or assembly.

If she understands the hopes and aspirations of the Hispanic community, she should have a record of interpreting the Commerce Clause of the Constitution in ways that encourage individual risk-taking, free enterprise and job creation, not in ways that discourage it.

Likewise, Sotomayor should show evidence of being suspicious of government's power. Many Hispanics are fresh from regimes where the rule of law has been crushed or never existed; we know that with centralized power comes arrogance, and that bureaucracies inevitably become cold, callous, unyielding and corrupt.

She should be imbued with a core appreciation that our Constitution establishes a government of limited, enumerated powers, and should have a record of writings and decisions that support the conclusion that she will err on the side of limiting, not expanding, the powers and influence of government.

Like all other immigrants, Hispanics came here with the hope of acquiring property for themselves and their children. We treasure as sacred our own homes, farms and land, and we know there is often little practical difference between broad government restrictions on the use and enjoyment of that property and its being taken outright.

As a Supreme Court justice, Sotomayor should believe, as we Hispanics do, that the Constitution affords us due process and just compensation in either case -- and that no property should be taken unless there is a legitimate public use.

As everyone knows, at the core of the Hispanic experience are our families and the opportunity to freely exercise our religion. The next justice, if she is empathetic to our lives and values, will protect the sanctity of the family and of life itself.

Obama's nomination of the first Latina to the Supreme Court is a historic moment that has moved each of us, but our pride will be fleeting if she doesn't really share Hispanic values.

The opinions expressed in this commentary are solely those of Leslie Sanchez.