Freedom Line Blog

Is there any promise that Barack Obama has kept as President?  He certainly made plenty of them, only to break them.

Now, it appears that we have two more.  Two very big ones.  Testifying before the House Budget Committee this week, Medicare Chief Actuary Richard Foster was asked a series of “true” or “false” questions by Rep. Tom McClintock (R – California).  Replying to McClintock’s question whether Obama’s famous pledge that “If you like your present health insurance, you can keep it” was true or false, Foster replied, “not true in all cases.”  And when asked whether ObamaCare would reduce costs as he explicitly guaranteed, Foster replied, “I would say false, more so than true.”

If the political left clings to their “Bush Lied!” belief, where are they now and what do they have to say about Barack Obama?  Just curious.

The nation’s capital is abuzz today over President Obama’s Wall Street Journal commentary, “Toward a 21st Century Regulatory System.” Astonishingly, Obama actually praises America’s free market system as “the greatest force for prosperity the world has ever known” while promising regulatory reform:

I am signing an executive order that makes clear that this is the operating principle of our government.  This order requires that federal agencies ensure that regulations protect our safety, health and environment while promoting economic growth.  And it orders a government-wide review of the rules already on the books to remove outdated regulations that stifle job creation and make our economy less competitive.  It’s a review that will help bring order to regulations that have become a patchwork of overlapping rules, the result of tinkering by administrations and legislators of both parties and the influence of special interests in Washington over decades.”

Whether Obama speaks honestly, or simply seeks to deceive the electorate in anticipation of 2012, lies beyond our powers of divination.  The available evidence, however, justifies extreme skepticism.

One cause for doubt stands out immediately.  In identifying examples of the federal regulatory state run amok, the best Obama can do is point to saccharine, saying that the Food and Drug Administration (FDA) permits it for consumption in coffee while his Environmental Protection Agency (EPA) labels it a “dangerous chemical.”  That’s it?  That’s the best example he can cite?

Just one month ago, Obama’s own Federal Communications Commission (FCC) flagrantly defied two-to-one public opposition, a unanimous Court of Appeals and a bipartisan group of 300 members of Congress by voting to regulate the Internet via “Net Neutrality.” Obama claims in his column that he aims to prevent “regulations that stifle job creation and make our economy less competitive,” but that’s exactly what “Net Neutrality” will do.  The FCC seeks to regulate an Internet sector that has thrived over the past two decades precisely because the federal government has refrained from interfering with regulations such as this.  The result will be fewer incentives for continued Internet investment, expansion and innovation, as well as declining service as capacity fails to keep pace with demand.

Additionally, Obama’s Labor Department seeks to impose “card check,” which will end secret ballot voting in union elections, and his EPA seeks to impose global warming carbon cap-and-tax regulations.  Both of those agenda items failed miserably in Congress even when controlled by Democratic supermajorities, but Obama’s regulatory agencies now seek to impose them anyway.

So Obama talks a good game in today’s op/ed.  But unless he issues an immediate cease-and-desist order on “Net Neutrality,” card check and cap-and-tax, his words will prove just as meaningless as his other broken promises.

According to a blogger at the Huffington Post California just inaugurated a “Right-Wing Republican” as governor.  He’s referring to Jerry Brown, aka ‘Governor Moonbeam’ and the man proposing sharp cuts, tax increases, and budget raids to balance the state’s deficit-ridden balance sheet.   In HuffPo world, that combination merits being tarred and feathered as the second coming of another rock-ribbed fiscal conservative, outgoing governor Arnold Schwarzenegger.

Please.  If Brown’s budget proposal looks suspiciously similar to Schwarzenegger’s it’s because there are precious few options for governors of any party to try.  Sure, nobody thinks they’ll actually solve the problems, but that’s because actually solving California’s budget woes will take some serious undoing of cherished political prizes.

Republicans want to hang onto the 2/3 requirement for passing a budget and maintaining Prop. 13’s cap on property taxes, while Democrats act as though rich (i.e. working) people will pay any price to live within a 100 miles of a beach and subsidize a green welfare state.  Neither party is serious about making investments in the state’s infrastructure (e.g. road, power, and water grids), a precondition for economic and social improvement.

The only way California heals its self-inflicted budget wounds is if it repeals all of the constitutional amendments mandating budget appropriations.   To do that, Republicans will likely have to agree to end Prop. 13’s property cap, a move that would likely increase property taxes.  Though unpalatable to many, removing the cap would return discretion to counties and cities (historically better than Sacramento at balancing budgets) while giving voters an outlet for their displeasure with the next Election Day.

None of this will be easy or popular.  Then again, neither is California politics.

In October 2003, tough-talking optimist Arnold Schwarzenegger unseated bland public union yes-man Gray Davis as Governor of California in a revolutionary special recall election.  Today, Schwarzenegger departs with a depressed 22% approval rating that serves as a warning for Republican newcomers in Congress and across the 50 states against the perils of go-along-to-get-along “bipartisanship.”

During his first two years in office, Schwarzenegger maintained a confrontational demeanor that California desperately needed as it hurtled toward its current disastrous state.  In March 2004, for instance, he famously ridiculed California’s milquetoast political class as “girlie-men.”

Unfortunately, four common-sense and ultimately necessary ballot initiatives that he supported failed in November 2005.  Instead of sticking to principles, Schwarzenegger opted for “bipartisan” political expediency and personal survival.  What followed was a shameful litany of global warming bills, ObamaCare-like proposals, lack of leadership and tax hikes.  His capitulation provided a short-term payoff via reelection in 2006, but ultimately proved disastrous for himself and the state.  Today, despite Schwarzenegger’s early promise, California is in even worse shape than when he entered office.  And jaded voters witnessed yet another sad example of a politician who promised to change the political culture, only to allow the political culture to change him.

Schwarzenegger’s failure, however, provides a helpful cautionary guide for incoming Republicans this new year.  Namely, sacrificing the principles that got you elected at the tempting altar of “bipartisanship” will only deepen our nation’s current difficulties and eventually doom you politically.

In a not-quite-as-bad-as-reported op-ed in the Los Angeles Times, State Treasurer Bill Lockyer (D-CA), downplays the Golden State’s fiscal outlier status among the several states.  Setting aside some of his premises, it’s worth zeroing-in on a paragraph that should be the starting point for debates on spending at any level of government.

Fiscally, we have to get smarter, think longer and stop hoping for a miracle. Californians have to assume more responsibility for deciding what they want government to do and how much they’re willing to pay for public services. We have to design a saner system for financing public schools.

Like a majority of voters everywhere, Californians are attracted to pricey programs, but are allergic to their costs.  Ergo, budget deficits.  With House Republicans facing a divided Senate and a liberal President, making a commonsense case for balancing spending with revenues will be the single most important task during the next Congress.  Let’s hope fiscal conservatives at all levels of government are united on this front.

After the public death of the omnibus spending bill and a retreat on opposition to tax cuts, why in the world won’t the Democrats running the U. S. Senate simply go home for the holidays?  It’s obvious that a majority of Americans are just plain tired of them, and want to move on.  Yet, here we are on the precipice of another bitter policy fight as Democratic Majority Leader Harry Reid (D-NV) readys two more contentious bills for floor votes.

The DREAM Act promises to give backdoor amnesty to tens of thousands of illegal immigrants in exchange for getting a college degree.  The other bill would repeal the military’s ‘don’t ask, don’t tell’ policy regarding homosexual service members.

Really?  With nearly double-digit unemployment and a trillion dollar budget deficit, these are the kinds of evergreen, polarizing issues the Senate needs to pass judgment on before it takes a three week vacation?

Forget the shenanigans.  The Senate should extend the continuing resolution to fund the government and get out of town.  We could all use a break.

H/T: The Daily Caller

Amid solid recommendations to put Medicare and Medicaid on a sustainable financial path, Obama Debt Commission member and Roadmap author Rep. Paul Ryan (R-WI) staked out very defensible ground for today’s conservative leaders to Roll Call’s Mort Kondrake:

And the incoming chairman of the House Budget Committee described himself as having been mentored by the late Rep. Jack Kemp (R-N.Y.), believing in “a prosperous opportunity society built atop a solid safety net.”

“I am not a laissez-faire, Hobbsian libertarian,” he told me. “I believe in a circumscribed safety net, one that helps people get back on their feet and is there for people who can’t help themselves. But I believe in a pro-growth, limited-government, free-enterprise society that encourages people to make the most of their lives.”

Anyone else for a one-on-one debate between President Barack Obama and Rep. Ryan on healthcare reform next January?

Jerry Brown, the once-and-future governor of California, has precious little time to shore up his legacy.  Next month, he’ll retake office and be at the center of the nation’s worst state government budget crisis.  Most think he’s in the pocket of the public employee unions who spent millions supporting his campaign.  California’s Victor Davis Hanson posits a different possibility.

If the liberal Brown were to now take on out-of-control public spending, he would be immune to the charges of callousness that destroyed multimillionaire outgoing Gov. Arnold Schwarzenegger and would have likewise smeared Republican billionaire gubernatorial candidate Meg Whitman had she won. Perhaps given that California already has the highest sales, income and gas taxes in the nation, Brown could shrug and say that any more tax increases would set off an even greater stampede out of the state.

And at 72, the once overly ambitious Brown — who ran for the presidency three times — can forget about leapfrogging into the White House. The question now is Brown’s final legacy, not his next career move. We know from the implosion of the European Union that unchecked big government inevitably leads to public insolvency. But does it also ensure, Brown might ask, moral bankruptcy?

In a postmodern world of omnipresent cheap consumer goods and all sorts of government-subsidized cradle-to-grave perks, can “small is beautiful” Jerry Brown teach Californians not just that too much stuff is no longer affordable or sustainable, but, at a deeper level, that our out-of-control excesses, appetites and dependencies are no longer good for our souls?

Before he chose politics Jerry Brown spent time in a seminary discerning whether he had a vocation to the priesthood.  If he wants to be remembered as one of the state’s greatest leaders perhaps he would do well to remember that being fiscally responsible isn’t just good politics, it’s also good morals.

Sign of the times from today’s New York Daily News:  “Federal Workers Rage Over President Obama’s Two-Year Wage Freeze.”

Let’s see…  Federal employment has grown 17% since 2007, and federal employees’ total compensation has risen 37% in the past decade (compared to 9% for private sector employees), according to The Wall Street Journal and USA Today.  Further, average federal employee compensation reached $123,000 in 2009, more than twice the $61,000 earned by the average private employee.

So in what moral universe are federal workers justified in reacting to a very modest two-year wage freeze proposal with “rage” and by labeling it a “slap” when they haven’t faced the brutal layoffs, salary reductions and cuts in health coverage their private counterparts must endure?  A majority of Americans surveyed favor federal workforce reductions and salary cuts, so perhaps they should behave less like spoiled Greek, French and English rioters and instead express gratitude to American taxpayers who continue to subsidize their relative good fortune.

A survey of Democratic 2010 campaign operatives shows 64% of those polled said the Tea Party was a source of enthusiasm for the GOP, not division.  Perhaps now the politicians and pundits trying to blame tea partiers for everything from falling short of a GOP Senate majority to racism will now find a new hobby.

The limited government movement continues to pick up steam as the newly empowered congressional Republicans aim to rein in federal spending.  But while Tea Party members may favor GOP candidates, don’t be surprised if failing to make progress on spending reform leads to more contested GOP primaries in 2012.

H/T: Politico

On today’s Foundry blog at the Heritage Foundation there is a crisp analysis of the cost-cutting decisions being weighed by states threatened with billions in rising health care costs under ObamaCare.  With a massive, mandatory expansion of Medicaid rolls beginning in 2014, state budget writers are seriously considering dropping out of the Medicaid program in order to avoid bankrupting their treasuries.

Granted, it’s outrageous that the liberal elites running Washington, D.C. are forcing state governments to spend more of their taxpayers’ money on health care.  After all, the States didn’t get to vote on ObamaCare.  But too often in this debate there’s a simple – though difficult – solution that up until now hasn’t been mentioned.

Opt out.  The only way the federal government can dictate spending and policy decisions to the states is if the states agree to the terms.  Those terms are buried in the fine print of federal programs that condition receipt of federal money on compliance with federal policies.  Like dramatically increasing Medicaid rolls.

Though opting out of Medicaid will be difficult because it also means losing the matching funds that come with it, the renewed control over a state’s budget should give state legislators much more room to maneuver during this era of dwindling tax receipts.  Governments, like individuals, need options.  Opting out of Medicaid is an important first step to regaining state sovereignty.

If getting a House chairmanship were as automatic as moving from ranking member of the minority to chairman of the majority, then Representatives Ron Paul (R-TX) and Paul Ryan (R-WI) would be resting easy today.  Rep. Paul is the ranking Republican on the subcommittee with oversight responsibility of the Federal Reserve, a role the Austrian economist would relish.  For his part, Rep. Ryan is the ranking Republican on the powerful Budget Committee, the body empowered to make significant changes in public policy through the budget writing process.

Both men have reason to doubt an unchallenged assent to power because both are on record with radical plans to shrink the size of government.  Paul is sure to refile legislation to audit the Fed, a proposition that may gain popularity with the Fed’s announcement to add nearly $1 trillion to the national debt.  For his part, Ryan’s Roadmap to America’s Future is a comprehensive vehicle for delivering sustainable government programs that leave room for entrepreneurship and growth.

Voters had their say on Tuesday.  Now, it’s time to see how many fiscal conservatives in the newly enlarged GOP caucus are willing to elevate two of the most ardent foes of big government to consequential leadership positions.

Laying out his interpretation of California’s electoral decisions on Tuesday, Governor-Elect Jerry Brown is hinting that his third term in office may not be all tax-and-spend.

Brown headed a Democratic ticket Tuesday in blue-leaning California, where voters resisted the “red tide” of Republican victory sweeping the nation. He added that the message from voters was clear: “The voters last night turned down a mere $18-a-year (car) tax by about 60 percent, so I would say that the electorate is in no mood to add to their burdens.”

He said Californians passed Proposition 25, which ends the two-thirds legislative majority for passing a state budget, while also approving Proposition 26, which calls for a two-thirds vote to pass fees.

“The taxpayers gave – and they also took away,” he said. “On the one hand, people said, ‘by majority give us a budget’ and on the other, they said, ‘don’t pick my pocket.’

“What we have to do is win the confidence and trust of the people of California,” he said. That, he added, will require competing groups – Republicans, Democrats, labor unions and business – to “push toward a common interest.”

If California does get a reformed liberal as a budget trimmer, it will be more than the state deserves, and a tentative step in the right direction.

H/T: San Francisco Chronicle

In an interview with the Wall Street Journal’s John Fund, retiring Rep. Brian Baird (D-WA) shares some thoughtful insights about what went wrong for Democrats the last two years.  From appallingly bad advice from so-called strategists (e.g. “voters don’t care about deficits”) to an “authoritarian” leadership that demanded blind loyalty from members, Baird’s interview could be read as a warning to the incoming Republican majority.  Common sense in rules and policy is a non-partisan winner.

Most revealing are the ideas Baird has for tackling entitlements:

In his new book, “Character, Politics and Responsibility,” Mr. Baird argues that in order to afford caring for the needy, liberals will have to challenge “unsustainable entitlements.” “I would eliminate the concept of entitlements and move to needs-based social insurance,” he says. “The key is to both promote personal responsibility while lowering expenditures by not promising or giving money or other benefits to those who don’t need it.”

Too bad Baird won’t be around to make that case inside Congress.

In another fascinating article from Reason Magazine, three policy experts explain how governments in Canada, New Zealand and post-WWII America slashed government spending and spurred economic growth.  Each expert highlights the strategies used to achieve the respective financial miracles, but one from Canada deserves special mention:

In assembling these cuts, (Canadian Finance Minister) Paul Martin didn’t follow the usual pattern of consulting interest groups one by one. Instead, he held four televised regional consultations in which various lobbyists, experts, and ordinary citizens contended with one another. Martin also spoke directly to the public about what was needed to turn Canada’s budget around. In October 1994, his Department of Finance published a report, A New Framework for Economic Policy, showing that in order to keep the ratio of debt to GDP from rising, government had to run a substantial surplus on its program budget—that is, have revenues significantly exceeding state expenditures.

Public debates used to be a spectator sport in the civilized world.  (Remember reading about the Lincoln-Douglas debates?)  If Republicans win back control of at least one house of Congress, it would behoove their leadership to find ways to nationalize spending issues with public debates.  And, if members of Congress are too afraid to step forward and defend principles, they should consider sponsoring debates featuring lobbyists, policy wonks and activists.

We all know who votes for whom.  Let’s get them in the same room, on camera and hear their pitch.

Interesting reading from MSNBC.com explains that 46 states, plus the District of Columbia, already have internet sales taxes on the books.  However, most businesses with an online presence either don’t know or don’t pay.  In many circumstances the sales tax (as it’s called when the seller collects and reports the tax) is turned into a use tax (i.e. shifting collection and reporting to the buyer.)

The State of Alabama is apparently sending out notices for residents to pay up – for purchases over the last three years.

Here’s a list of states considering more direct legislation in order to recoup the estimated $8.6 billion in lost “revenue.”

‘Amazon laws’

States that are currently considering requiring out-of-state retailers to collect sales taxes on online transactions:

• California
• Connecticut
• Illinois
• Iowa
• Maryland
• Minnesota
• New Mexico
• South Carolina
• Tennessee
• Vermont
• Virginia
• Wisconsin

Oh, joy.

In a year or two, we may look back on the City of Bell public employee compensation scandal as the modern day equivalent of Upton Sinclair’s The Jungle.  Both stories showed the general public how bad a particular industry behaved, and prompted serious, far-reaching reforms.

The chief villain in the Bell fiasco (so far) is its former city manager Robert Rizzo.  At the time of his resignation, Rizzo was making close to $800,000 a year, and due to earn hundreds of thousands of dollars a year from his public employee pension.  Now that he’s retired, the pension is kicking in – and so are taxpayers in cities that share Bell’s pension pool.

That means that Hesperia, CA, is on the hook for $80,000 of Rizzo’s estimated $600,000 a year pension (not to work!), even though it fired Rizzo after his four year stint ended in 1992.  Taxpayers in Rancho Cucamonga will be paying $160,000 of the bill, with Bell and other cities who never even hired Rizzo chipping in the rest.

And remember, the estimated $600,000 is owed to Rizzo – by law – every year for the rest of his life.  After being fired by at least two of the cities that hired him.  Insane.  Public employee pension reform may not be a “sexy” issue on the campaign stump, but it is certainly a topic that is sure to get people’s attention during this era of runaway government spending.

The Bell scandal may be the the last, best chance to reign in the power of the public employee unions before they ruin the American economy.

Maybe this was one of the reasons Robert Gates decided to stay on as Defense Secretary when Barack Obama became president.  Faced with budget deficits and needing funding for two wars, Gates is setting his sights on reducing the waste, fraud and abuse in military bureaucracy and contracting.

Rest assured, the Gates cuts will not imperil soldiers in the field.  In an eye-opening column by Ralph Peters, the Defense Secretary’s war on waste is an admirable contribution to the government-wide belt-tightening that needs to be done.  Peters highlights five key targets:

1. A reduction in the amount of overpaid contractors currently making up 39% of the Defense Department workforce
2. Pink slips for an overabundance of senior brass and staff
3. Eliminating redundant information technology offices
4. Curbing expensive self-studies that provide little value
5. Closing the Joint Forces Command, an ineffective inter-branch agency with no mission

According to Peters, Gates can prove there’s bite to his bark if he can get JFCOM closed despite the howls from its Virginia-based congressional delegation.

Stay tuned.

Thanks be to Hugh Hewitt who today highlights a multi-level government project to build a $50 million safety net 20 feet below the Golden Gate bridge to catch would-be suicide jumpers.  Apparently, about two dozen people a year jump to their deaths from one of San Francisco’s most popular attractions, and I’ll be the last person to quibble with the notion that every life is worth saving.

But as Hewitt points out, even the interest on $50 million could do a lot to reduce the conditions that create a suicidal decision.  Much like the economy, it would be nice if the people running government at all levels would concentrate more on creating the conditions for success instead of constructing elaborate safety nets when regulations fail people.

While I’m glad to see the Bay Area concerned with preserving at least one form of human life from senseless destruction, surely $50 million could do more good for more people than stringing out a last-ditch safety net for about 25 people a year.

H/T: Washington Examiner

Once CFIF reported on the outrageous compensation packages of top city officials in Bell, CA, the city council announced the following resignations just after midnight today: Chief Administrative Officer Robert Rizzo ($787,637 annual salary); Assistant City Manager Angela Spaccia ($376,288); and Police Chief Randy Adams ($457,000).

Although none of the three will get severance packages when they leave, all will get substantial taxpayer-funded pensions not to work.

Rizzo would be entitled to a state pension of more than $650,000 a year for life, according to calculations made by the Times. That would make Rizzo, 56, the highest-paid retiree in the state pension system.

Adams could get more than $411,000 a year.

Spaccia, 51, could be eligible for as much as $250,000 a year when she reaches 55, though the figure is less precise than for the other two officials, the Times said.

The reason these pensions are so high is simple.  In California, many state workers get pension awards based on their highest income earning year.  All the years of lower pay – decades’ worth! – are ignored.  Since the pension amount is a percentage of the worker’s best paid year, abuse is rampant.

Anyone familiar with the system knows a police officer, firefighter, state nurse or other public employee who arranges to get tons of overtime during their last 1 to 3 years of service.  Since overtime boosts a person’s highest annual income amount, it inflates the resulting pension percentage.  This allows thousands of California public employees to retire in their 50s making hundreds of thousands of dollars per year – for life – not to work.

In fact, that’s exactly the kind of retirement Bell Police Chief Randy Adams was enjoying when Bell officials approached him for the job.  Adams had retired as the police chief of Glendale, CA, and said he would only work for Bell if the city paid both his $165,000 annual salary and the amount he was making in retirement.  If we subtract $165,000 from his annual compensation of $457,000, we can see that Adams was making $262,000 a year in retirement.

This is insane.  The public employee unions who negotiate these kinds of ridiculous contracts – and the politicians who sign off on them – have corrupted both the budget process and the integrity of their offices.  A reckoning is coming at all levels of government for precisely this kind of behavior.  The “Bell Three” are just the first of many to be rung out of office.

H/T: FoxNews.com