Writing in the NY Times, an MIT Professor for the Sloan School of Management, Simon Johnson explains how bad budget deficits will be if we allow the Bush tax cuts to continue.  Basically he tells us, if we fail, it will only be due to the fact that taxes aren’t high enough and we’re not spending enough money on the right things. (here):

According to the Congressional Budget Office, extending all the Bush tax cuts would add $2.3 trillion to the total 2018 debt. The single biggest step our government could take this year to address the structural deficit would be to let the tax cuts expire. Such a credible commitment to long-term fiscal sustainability should reduce interest rates today, helping to stimulate the economy….

According to Mr. Johnson, even though critics say letting the tax cuts expire would retard growth, that money could be used more effectively (he continues):

…If the goal is to boost growth and employment immediately, it would be better to let the tax cuts expire and dedicate some of the increased revenue to real stimulus programs…

You mean, stimulus programs like “Cash for Clunkers” (NBER working paper here)?

…Our empirical strategy exploits variation across U.S. cities in ex-ante exposure to the program as measured by the number of “clunkers” in the city as of the summer of 2008. We find that the program induced the purchase of an additional 360,000 cars in July and August of 2009. However, almost all of the additional purchases under the program were pulled forward from the very near future; the effect of the program on auto purchases is almost completely reversed by as early as March 2010 – only seven months after the program ended….

Or how about the stimulus plan we were told would keep unemployment rates to 8% (DA Post here), while they currently hover around 10% (here):

…in August, and the unemployment rate was about unchanged at 9.6 percent, the U.S. Bureau of Labor Statistics reported today.

Or…maybe the government takeover/purchase of GM (post here):

…in reality, the US Treasury through pressure by the Obama administration spent $50 billion dollars to own 61% of the shares.  With roughly 500 million shares available, this means the US government current owns 305 million shares.  At the current stock price today of .375 dollars, their 50 billion dollar investment is worth roughly 115 million dollars….

Or maybe controlling healthcare costs by passing a bill no one understands…. which has already started failing as insurers have already started raising rates more than goverment predictions (post here):

…The economics and logic of these required rate increases are undeniable.  If someone, in this case the government through force of law, tells a private business that they must increase their spending, under force of law, some, if not all, of those new expenditures will be passed on to consumers…

So to sum up Mr. Johnson, even though evidence, extremely recent evidence, demonstrates what economic thinkers have told us for centuries:  government can not create jobs – the problem doesn’t lie with government spending, but instead in allowing people to keep their own money.

I don’t know when we start understanding what Albert Einstein expressed so eloquently so many years ago, “The definition of insanity is doing the same thing over and over again and expecting different results.” but let’s hope it’s soon.

For more, excellent Cato article The Stimulus: The Government Job Creation Myth

As most know, late last week, smaller health insurance companies sent out press releases detailing a simple fact – when mandates increase, so will premiums (via WSJ here):

…Aetna Inc., some BlueCross BlueShield plans and other smaller carriers have asked for premium increases of between 1% and 9% to pay for extra benefits required under the law, according to filings with state regulators….

To most, this might seem an obvious consequence of the legislation.  The economics and logic of these required rate increases are undeniable.  If someone, in this case the government through force of law, tells a private business that they must increase their spending, under force of law, some, if not all, of those new expenditures will be passed on to consumers (WSJ continues):

…Weeks before the election, insurance companies began telling state regulators it is those very provisions that are forcing them to increase their rates….

…Aetna, one of the nation’s largest health insurers, said the extra benefits forced it to seek rate increases for new individual plans of 5.4% to 7.4% in California and 5.5% to 6.8% in Nevada…

…Regence BlueCross BlueShield of Oregon said the cost of providing additional benefits under the health law will account on average for 3.4 percentage points of a 17.1% premium rise for a small-employer health plan…

…In Wisconsin and North Carolina, Celtic Insurance Co. says half of the 18% increase it is seeking comes from complying with health-law mandates….

Not only should this seem obvious, but in a free country, any company should be able to set their rates for their services.

This of course assumes you don’t work for the government – then the news is shocking (WSJ continues):

…The White House says insurers are using the law as an excuse to raise rates and predicts that state regulators will block some of the large increases.

“I would have real deep concerns that the kinds of rate increases that you’re quoting… are justified,” said Nancy-Ann DeParle, the White House’s top health official. She said that for insurers, raising rates was “already their modus operandi before the bill” passed. “We believe consumers will see through this,” she said….

Not only shocking – but so wrong that even more force is needed.

Enter the Department of Health and Human Services threatening private business, for making private decisions, solely because those decisions disagree with the government’s predictions (via HHS website – bold added):

It has come to my attention that several health insurer carriers are sending letters to their enrollees falsely blaming premium increases for 2011 on the patient protections in the Affordable Care Act.  I urge you to inform your members that there will be zero tolerance for this type of misinformation and unjustified rate increases….

…We estimate that that the effect will be no more than one to two percent….

…Given the importance of the new protections and the facts about their impact on costs, I ask for your help in stopping misinformation and scare tactics about the Affordable Care Act.  Moreover, I want AHIP’s members to be put on notice: the Administration, in partnership with states, will not tolerate unjustified rate hikes in the name of consumer protections….

Think carefully about some of  these words/phrases used by government officials against private businesses in a free country: zero tolerance, misinformation, not tolerate, unjustified….all for raising theirs rates at a greater rate than the government assumed.

Maybe it’s just me, but when the government threatens people for fishy emails, then moves forward to threaten private business for deciding what to charge for their services…. well, it certainly doesn’t appear to be a free society.

As Thomas Jefferson stated so many years ago:

When the people fear their government, there is tyranny; when the government fears the people, there is liberty.

It the state of MO, like other states with large cities, St. Louis & Kansas City both have local earnings taxes.  Meaning, in St. Louis at least, by merely working inside the city limits of St. Louis, you have an additional 1% income tax.

Enter the voter initiative (whole thing here via ):

…Proposition A wouldn’t repeal the tax, but it would give residents in the two cities a chance to vote every five years starting in 2011 on whether to continue the tax. If voters approved a repeal of the tax, it would be phased out over 10 years, at one-tenth of a percent each year.

The measure also bans any other cities from enacting an earnings tax….

Seems pretty benign, though I’m sure legal challenges will surface if Prop A passes…. assuming of course Missourians are allowed to vote at all.

Enter Kansas City government with union backing:

KANSAS CITY (AP) — Kansas City’s city attorney has filed a lawsuit seeking to block a November ballot measure that would allow residents of Kansas City and St. Louis decide whether to keep their cities’ earnings tax….

A group called Let Voters Decide submitted the ballot measure after the petition drive. The suit was filed on behalf of acting Kansas City city manager Troy Schulte and Pat Dujakovich, president of the Greater Kansas City AFL-CIO, both as private citizens….

What’s their main complaint?

…The lawsuit argues that the required elections would cost both St. Louis and Kansas City about $500,000, and neither city would be compensated for the cost.

According to the suit, Proposition A “becomes a de facto appropriation by voters statewide on Kansas City funds for the purpose of this (local) election.”…

But…

…Let Voters Decide spokesman Marc Ellinger said the measure wouldn’t require either city to pay for a local election if they just wanted to skip the vote and let the tax phase out automatically….

Please don’t get me wrong here, Kansas City might have a good legal basis for their arguments, but I’m unsure we should be living in a government which chooses to sue the state in order to specifically prevent voters from casting their ballots.

Maybe I’m off here, but I always thought for a law to be challenged it had to exist first, then harm would have to exist to give any client standing.

Of course don’t tell that to the President or Arizona either, but I’m digressing.

The point is only that when the government seeks to actively prevent your voice from being heard through ballot initiatives, people should be concerned.

What’s going on around the web?

Jon Stewart on the “Mosque @ Ground Zero” (here).  Well worth the 6 minutes and highly illuminating.  While all news reports seem to state the same “Mosque @ Ground Zero” it’s more appropriate to say the truth:  it’s an Islamic Cultural Center close to ground zero – not on it.

Maybe it’s just me, but there seems to be a lot of faux outrage on this one.

@ ScienceBlogs.Com they have a bizarre reading of what they are calling a bizarre reading (here):

CNSNews, formerly the Christian News Service, has the most bizarre way to frame Judge Walker’s Prop 8 ruling that I’ve seen yet:

U.S. District Judge Vaughn R. Walker, who ruled last week that a voter-approved amendment to California’s constitution that limited marriage to the union of one man and one woman violated the Fourteenth Amendment of the U.S. Constitution, based that ruling in part on his finding that a child does not need and has no right to a mother. Nor, he found, does a child have a need or a right to a father….

But if you go to the full article on CNSNews, they are specifically disputing claims the judge used in “finding of fact” papers, which ultimately were then used as justification for his ruling.

So while I probably don’t agree with CNSNews 99% of the time, they didn’t frame anything.  They didn’t make any assertions.  A judge, wrote papers which are now considered legal facts (as if a jury had made the same decision) & CNSNews responded directly to those papers.

Even if you disagree with CNSNews, I think the judge is the one who framed the debate, they just followed it by responding directly to them.

In Psychology news, apparently they’re running out of problems.   Even as the DSM has grown from 182 disorders and 34 pages long in 1968,  to 297 disorders in 886 pages in 1994 (via Wiki here), it’s not big enough.

Speakers on Sunday at the 118th Annual Convention of the American Psychological Association have a new scourge to talk about:  super heroes in comic books (via EScienceNews here):

Watching superheroes beat up villains may not be the best image for boys to see if society wants to promote kinder, less stereotypical male behaviors, according to psychologists who spoke Sunday at the 118th Annual Convention of the American Psychological Association. “There is a big difference in the movie superhero of today and the comic book superhero of yesterday,” said psychologist Sharon Lamb, PhD, distinguished professor of mental health at University of Massachusetts-Boston. “Today’s superhero is too much like an action hero who participates in non-stop violence; he’s aggressive, sarcastic and rarely speaks to the virtue of doing good for humanity. When not in superhero costume, these men, like Ironman, exploit women, flaunt bling and convey their manhood with high-powered guns.”

The comic book heroes of the past did fight criminals, she said, “but these were heroes boys could look up to and learn from because outside of their costumes, they were real people with real problems and many vulnerabilities,” she said….

Even if I were to accept the idea that everything they are stating is true in that a) today’s superheroes are giving superheroes a bad name & that b) this affects some percentage of readers – the numbers are still too low in my estimation to warrant further research.

I mean really, what exactly is the percentage of population who routinely read comic books?

& out of all of them, not all will be effected in the same way, while most will not be impacted either way (other than knowing the comic book material itself).

My point is that while figures aren’t easy to come by, we’re probably talking about less than 1 percent of the population who routinely read comic books and only a very small percentage of them will ever be overly effected by it.

Maybe it’s just mean, but seems like a waste of time and research money.

Side note: for a better understanding of the pressing issues facing pyschology today, there is a great article via FAQs.org via The Skeptic Magazine here.

Lastly, will Israel attack Iran (debate via The Atlantic here):

In the few days since the current issue of The Atlantic came out, Jeffrey Goldberg’s cover story, “The Point of No Return,” has already prompted sharp thoughts, big feelings, and intense discussion. Among the early responses, we’ve seen a quick, widespread recognition of scope of Goldberg’s reporting and the depth of his analysis. Fred Kaplan comments over at Slate….

I don’t always concur with Mr. Goldberg, but his analysis is spot on.  The question isn’t whether Israel will do it, but when (assuming Iran continues forward with their ambitions).  The possible results of Israel having a neighboring country whose leaders have consistently espoused the complete removal of Israel and all Jews from the area, puts them at a risk level where the alternatives are limited.

To put it another way – Israel’s government, the US government, the Russian government…. all of them have the primary responsibility of keeping their nation secure & a nuclear Iran not only makes Israel quite a bit less safe, but increases the risks of a nuclear bomb being released to a degree which is simply too high for Israel to ignore.

As ABC News reports, parts of Arizona’s recently enacted immigration statutes have been suspended by a federal judge (whole thing here):

Arizona’s tough new immigration law was just hours away from taking effect when a federal judge issued an injunction today blocking key portions of the law from being enforced.

Among the provisions U.S. District Judge Susan Bolton put on hold are the “reasonable suspicion” section that would allow police to arrest and detain suspected illegal immigrants without a warrant and a provision making it illegal for undocumented day laborers to solicit or perform work.

Bolton also stayed part of the Arizona law requiring immigrants to carry federal immigration documents.

Based upon the likelihood that these provisions could be used by officers to wrongly detain legal residents.

Next steps? Arizona will likely appeal and lose that appeal at the 9th Circuit Court.  The final arbiter of course being SCOTUS if they decide to take the case upon any further appeals.

Legally speaking, it’s an interesting question.  Basically, one of the powers the federal government holds is over immigration status and therefore it can be legally argued that Arizona has overstepped its authority (regardless of whether legal citizens will be wrongly detained).  However, does this mean a state has no resource against illegal aliens if the federal government is doing a poor job at the very responsibility they are stating they have absolute authority over.

More interesting I think will be the upcoming round of debates on a continuing question:  What is judicial activism and who is and isn’t exactly against it?

& the question isn’t an easy one.   Two fairly recent decisions can illustrate the complexity.  For most of recent memory, conservatives have been leading the charge against judicial activism.  But take a case like Kelo v New London where conservative outrage notwithstanding, the court followed the restraint pattern by enforcing prior precedence.

Move forward to McDonald v the City of Chicago and whether conservatives think so or not, a federal decision has invalidated a law the citizens of Chicago seemed to agree (based upon the fact they have recourse through voting)…. this would be judicial activism.

In most people’s minds it seems judicial activism is only wrong when a law your side has passed met its end through the legal system, otherwise it’s always wise restraint or cautious interference.

But let’s call it what it is:  judicial activism is when the court system invalidates the will of the voters.  This is true whether they invalidate gun laws, marriage statutes or amendments, immigration laws, sodomy laws, marijuana laws, and on and on and on.

Let’s further assume no one is really against all judicial activism.  I think most reasonable people can agree that say if judges were to invalidate the intermittent of Japanese-Americans during WWII, it would’ve been both activist and morally correct.  Even if most people couldn’t agree on that, we can all envision unjust laws which should not stand.

If we can allow for that definition, the maybe we can change the question as well.  Instead of – are you for or against judicial activism – to – how and when should judges be activist; we might begin to move towards a more reasoned debate.

So let’s call this one what it is – judicial activism and ask, should it have been used?  Why/why not?

I for one want to see judicial activism to always err on the side of individual rights and freedoms, not collections, groups, NOGs, nor government agencies.  This case gives me pause either as I am supporting of Arizona’s rights, the freedom of those individual voters to enact the laws they wish, but also am against current immigration policy.  For now, the voters spoke and I would err on the side of those individuals.

Others of course will draw the line in different places.

What’s important however is that we understand the line exists, instead of continuing to pretend it moves based upon our wishes.

more here on the debate: Reason’s July Cover Story Conservatives v. Libertarians

Well, the verdict is in. The Republicans are being cast as the party of no.  The party without ideas.  The party of obstruction.

Please make no mistake about it, this marketing push isn’t really about obstruction, but about the upcoming elections.  Just as President Clinton did brilliantly prior the 1996 elections when he cast all Republicans as following Newt Gingrich and obstructing spending laws, the Obama administration is moving forward in much the same pattern.

This is possible because the White House, regardless of occupant, has historically been able to control the news cycle.  In my opinion, this should be an indictment on journalism as a whole when alternatives which exist aren’t being reported, but simply put:  when the President talks, news happens.  When your normal representative talks, you’re lucky if you even hear about it.

It worked during the Clinton Administration on spending, it worked during the Bush (43) Administration on the Patriot Act, & it certainly might work again this time. Irregardless, the campaign is back and in high gear (here via USA Today):

…”Too often, the Republican leadership in the United States Senate chooses to filibuster our recovery and obstruct our progress,” Obama said. “And that has very real consequences.”…

Or here via NY Times blog, here via WaPo, & on and on and on…

From a critical point of view however, obstructionist should not automatically be a pejorative.   Without analyzing what exactly is being obstructed, this is little more than name calling.

As an example, if say in the 1940s Congress was actively trying to “obstruct” the internment of thousands of innocent Japanese-Americans, this would not only be a moral good, but any thoughts to compromise solely to be seen as a non-obstructionist would be wrong.  What would be a compromised alternative?  House arrest?

Additionally, we have to be on the lookout for the differences between the marketing of bills and their actual language.  Think of the new health care legislation.  President Obama’s promises of more health care for all at cheaper prices, simply don’t seem to be fulfilled by the 2500 page law passed… or maybe they are being fulfilled, but like the Patriot Act, no one really knows what the new legislation actually means (here via Cato):

…The Patient Protection and Affordable Care Act represents the most significant transformation of the American health care system since Medicare and Medicaid. It will fundamentally change nearly every aspect of health care, from insurance to the final delivery of care.

The length and complexity of the legislation, combined with a debate that often generated more heat than light, has led to massive confusion about the law’s likely impact….

Or on yesterday’s Meet The Press Rep. Van Hollen stated (transcripts here via MSNBC):

…The frustration is there are lots of important bills to push for jobs that are sitting over in the Senate.  But it’s not the fault of the Democratic leadership in the Senate.  I mean, frankly, you know, John Cornyn and his allies have been trying to block a whole lot of very important jobs measures.  We in fact sent a piece of legislation over very recently that would remove these perverse tax incentives to ship American jobs overseas, that give American corporations a bonus if they ship American jobs overseas….

Just like health care, the basic idea that our representatives are working on private job creation incentives is a good one.  But just like the Obama Administration’s promises on health care, Rep. Van Hollen is selling us a job creation bill which has little chance of actually creating jobs.

To translate – what they mean by “removing incentives” is to increase taxes on businesses who outsource.  Now, some may want this to happen for various reasons, but the economics are pretty straight forward.  Tax increases have never increased jobs & forcing a tax such as this could actually result in companies simply moving their head quarters as well.

To be fair, there are bills I don’t believe the Republicans should block, for instance the extension on unemployment benefits (though it seems likely to pass soon: here via The Hill).

Yes, the point isn’t that the Republicans are doing the right thing and the Democrats are failing at every single step, the point is only intended to remind us of the old saying about representative governance:

The people will get the government they deserve.

& so long as we allow marketing campaigns to have more force in elections than critical analysis does, we will likely continue to be disappointed.

Come on…. we can’t find any good justices to nominate to SCOTUS?  This is what… the third (including the previous administration) uninspired justice nominated in just 5 years.

For such a prestigious and life long appointment, we should expect much better (via Cato here):

Elena Kagan, President Obama’s nominee for the Supreme Court, seemed to shock many people when she dodged questions about the Declaration of Independence during her testimony before the Senate Judiciary Committee…

DA posts here & here

Via Freakanomics here, which will hopefully put to rest the idea that nurses go on strike to “help” patients, from the NBER paper:

…Controlling for hospital-specific heterogeneity, patient demographics and disease severity, the results show that nurses’ strikes increase in-hospital mortality by 19.4% and 30-day readmission by 6.5% for patients admitted during a strike, with little change in patient demographics, disease severity or treatment intensity….

Robert Reich via Salon.com here demonstrates once again how much politics effects his economic analysis.  According to him, this whole economic mess, including a potential backslide can be blamed solely on deregulation:

…starting in the late 1970s, and with increasing fervor over the next three decades, government did just the opposite. It deregulated and privatized. It increased the cost of public higher education and cut public transportation. It shredded safety nets…

Which he believes is causing greater wage disparities:

…We’re back to the same ominous trend as before the Great Recession: a larger and larger share of total income going to the very top while the vast middle class continues to lose ground….

Because with deregulation, of course, companies can become EVIL:

…Companies were allowed to slash jobs and wages, cut benefits and shift risks to employees (from you-can-count-on-it pensions to do-it-yourself 401(k)s, from good health coverage to soaring premiums and deductibles)….

I submit what Mr. Reich fears is freedom – freedom of business owners to hire and fire as they wish, freedom of employees to change jobs easily (401K allows this, pension does not), just freedom.

Secondarily, you can see in his writing that the only thing the government has ever done wrong, is by not getting involved enough.  He doesn’t mention government meddling, deficit spending, enormous new health care expenses, entirely new federal agencies which more money will be needed, idiotic regulations like a moratorium on all oil drilling due to one company’s failure….

Nope, for Mr. Reich, it’s all because the government hasn’t taken enough control over the little people.

Via Cato here, more news on the Obama Administration’s transparency:

The Social Security’s trustees’ annual report is, by law, supposed to be published by April 1. This year, however, the trustees have postponed its release indefinitely. The program’s financial condition continues to remain hidden from public view — and by many accounts will continue to be so until the end of the fiscal year….

Wonder if Reich views this as an issue?

Boxer might lose?!?!  In what has to be either a sign of the end times or a sign of our bright future, Senator Barbara Boxer is in a tight race against former HP CEO Carly Fiorina (via the Atlantic here):

The latest Field poll looks a bit troubling for Sen. Barbara Boxer: she leads her Republican opponent, former HP CEO Carly Fiorina, by just three percentage points (47% to 44%)…

San Fransisco’s City Council, in an attempt to prove themselves the absolutely dumbest people on Earth, might ban the sale of pets (via Huffington Post here):

…If the ordinance passes San Francisco could be the first city in the nation to ban the sale all pets except fish….

The IMF tells the US to slow down on spending (via the Hill here):

The United States must rein in its deficits sooner than President Barack Obama wants, the International Monetary Fund (IMF) said Thursday.

In an annual report on the U.S. economy, the IMF said the U.S. faces a “central challenge” in implementing a “credible fiscal strategy” to ensure that public debt is put on a sustainable path without putting the economic recovery in jeopardy….

The NSA responds to the WSJ article (posted here yesterday) concerning the “Perfect Citizen” program (via the Atlantic here):

Today’s Wall Street Journal article by Siobhan Gorman, titled “US Plans Cyber Shield for Utilities, Companies,” is an inaccurate portrayal of the work performed at the National Security Agency. Because of the high sensitivity surrounding what we do to defend our nation, it is inappropriate to confirm or deny all of the specific allegations made in the article. We will, however, provide the following facts: PERFECT CITIZEN is purely a vulnerabilities-assessment and capabilities-development contract. This is a research and engineering effort. There is no monitoring activity involved, and no sensors are employed in this endeavor. Specifically, it does not involve the monitoring of communications or the placement of sensors on utility company systems. This contract provides a set of technical solutions that help the National Security Agency better understand the threats to national security networks, which is a critical part of NSA’s mission of defending the nation. Any suggestions that there are illegal or invasive domestic activities associated with this contracted effort are simply not true. We strictly adhere to both the spirit and the letter of U.S. laws and regulations….

I’m not saying I automatically disagree that their statement is completely accurate, but we should not forget the NSA is the same agency who for years denied even having something like Echelon.