Tim Bishop has submitted legislation to punish firms that use overseas call centers. He is desperate. He needs an issue that he hopes will sneak him past the electorate into office for another two years. Outsourcing worked for him last time, so he is trying to put lipstick on that pig and pass it off as bold, new thinking. What I am thinking is when is Tim Bishop ever going to represent the people who actually live in his district?

How many call centers are in his district that are threatening to move overseas? How may call centers are trying to decide between locating in his district or locating in India? If the answer to either of the above questions is none, why is he spending time on this?

Over twenty years ago, while working at Citibank, they had a customer service center for credit cards in Melville. For cost reasons they were looking at shutting it down and moving it. I was asked to provide an analysis of the telecommunication costs in an effort to keep it in place. Based on the customer distribution, I showed that its current location was the best choice from a telecommunications basis, but it was not enough to offset the people cost. The alternatives considered were Maryland, South Dakota and Nevada. India was not on the list. But if you were a customer service rep on Long Island who didn’t want to move, was the fact that the job was staying in America, give you consolation? Your job went away

So what is Tim Bishop doing starting a trade war with India? How does that help his constituents?

 ”Outsourcing is one of the scourges of our economy and why we are struggling so to knock down the unemployment rate,” said Bishop.

In a previous post on Mr. Bishop’s insightfulness I pointed out that the largest Toyota factory outside of Japan is in Georgetown, Kentucky. Through a new free trade agreement that plant will now begin exporting Toyotas from the U.S. to South Korea. If Toyota didn’t outsource those jobs to the U.S. but kept them in Japan, there would be 7,400 fewer Americans employed in Kentucky than there are today. So how does Bishop square this with his statement that outsourcing is a scourge and contributes to unemployment when this is proof of the opposite? Perhaps if our tax structure wasn’t so abysmal, other companies would locate their factories here? But we have one of the highest corporate tax rates in the world, so why build here? But when was the last time you heard Tim Bishop pounding the podium for lower tax rates?

With the stimulus plan, Congressman Bishop voted to spend a trillion dollars across the country to be paid for by whom? Well, consistent with the Democratic message of “tax the rich”, when compared to other states, New York is relatively rich, so we get a bigger share of the bill and a smaller cut of the benefits. How did Congressman Bishop’s vote help his district? Most of the money that did come here went to people who already had a job, and a union card, the teachers. Who is backing Mr. Bishop on his phone center folly? The Communication Workers of America. Bishop knows he needs union muscle if he has a prayer of getting reelected.

He also likes the idea of the payroll tax holiday and tells people at his town hall meeting, not to worry about the Social Security Trust Fund losing important funding, that money will come from elsewhere. Where exactly? Does Mr. Bishop have some magic beans or a goose laying golden eggs like a gatling gun? We’re broke thanks to Mr. Bishop and his pals spending, spending, and spending.

So Tim Bishop looks out for Tim Bishop first, Nancy Pelosi second, and if he can help his constituents cut through some bureaucratic red tape, cut through it but not eliminate it, he will do so. But he needs something, anything, to take the voters eyes off his dismal record in Congress, so let’s try another new twist on outsourcing, whether it is germane to his constituents or not. After all, where else is Tim Bishop going to land a job that pays $174,000 a year with his resume?

That’s my opinion; I’d like to know yours. Please comment below.

Drawing by Red State

Okay, so we have heard Harry Reid, flanked by Durbin and Schumer, scold the Republicans for stonewalling. Today we learn the news that another Democrat was bluff called to find they have nothing.

The Republicans passed a budget. Harry Reid didn’t even bother, for over two years he didn’t even try. President Obama presented a budget, pulled it back, then submitted  another. Harry Reid put it up for a vote and couldn’t pass it; he didn’t even vote for it himself. No one did. It failed 97-0.

The Republicans passed a solution called Cut, Cap, and Balance. Harry Reid held a vote to not vote on it. There is sat in the Senate while President Obama and Harry Reid said the Republicans wouldn’t compromise, they were the captives of the Tea Party. But the real question is compromise with what? Reid had nothing.

The Republicans passed another solution and sent it to the Senate and again, Harry Reid tabled it. We then had the somber press conference where Reid, Durbin and Schumer talked about those stubborn Republican extremists. Reid then crafted his own solution and the House immediately put it for a vote. What a concept, actually voting on a measure from the other side. It went down in flames and it was bipartisan 246-173. Now the test was whether Harry Reid could pass Harry Reid’s bill in the chamber Harry Reid controls. No. Or should I say that President Obama stopped tweeting long enough to call Reid and tell him to hold off on the vote, giving Harry a fig leaf to save him from the embarrassment of not being able to pass anything.

What is galling is how the main stream media is lapping up whatever slop the president and Harry Reid serve up. They can’t get anything passed and somehow it is the House that passes bill after bill to govern, that is holding things up.

November 2012 is coming and Harry Reid will remain in the Senate regardless, but if we are smart we can push him to a back bench by replacing enough Democratic senators and then we can finally get our fiscal house in order.

That’s my opinion; I’d like to know yours. Please comment below.

Photo by Bill Herndon

As the drama unfolds regarding the debt limit, the American people are probably unaware of a subtle distinction. When the House of Representatives passed Cut, Cap, and Balance and sent it to the Senate, it was not voted down in the Senate. Instead the Senate voted to table it, pigeon hole it, lock it in a drawer, do everything they could not  to actually debate it and vote on it. Why?

The reason why is that twenty-three Democrat senators are up for reelection in 2012 along with ten Republicans (see here). With sixty-six percent of the American people in favor of Cut, Cap, and Balance, if Harry Reid allows a vote on the measure to actually take place, one of two things happen. One, it passes and then President Barack Obama stands alone between paying the government’s obligations, many that he saddled us with, or running out of money. Two, it doesn’t pass and every Democrat who is up for election that votes it down, has that on their record and Reid will lose control of the Senate in 2012.

Now we Americans can sit back and watch the drama unfold. We can watch the ratings agencies Moody’s and Standard & Poors downgrade our debt and try to survive until 2012 when we have a chance to vote on our government again. Or we can act now and raise our voices. Call Harry Reid’s office (202) 224-3542, light up his switchboard. Demand that an honest debate and vote, up or down, be held in the Senate on Cut, Cap, and Balance. Tell him we are tired of his bravado that this bill or that coming from the people’s House is “dead on arrival”. Tell him we are tired of his failure to pass a budget saying it would be “foolish” to pass a budget at this time. Tell him that in a time of crisis we don’t want our Senators huddled in the cloak room, we want them on the floor debating the issue and voting on it. Harry Reid hasn’t passed anything to resolve the problem the country is facing.

After you have called Harry Reid’s office call your own Senators and deliver the same message, debate and vote, don’t threaten and obstruct.

That’s my opinion; I’d like to know yours.  Please comment below.

K-12 education is in trouble. A recent report on schools in New York City said that of the 60% or so of students who actually graduate, about half need remedial classes before they can perform at the college level. We have a Department of Education that has spent over $1 trillion since it was created by President Jimmy Carter and school performance has declined.

A conference was held in Denver bringing together the Department of Education, school administrators and teachers’ unions to discuss school policy and what to do to improve education. Education Secretary Arne Duncan told the assembled, “Collectively, you have the power to stop our nation’s educational demise.” Collectively; that word keeps popping up in the speeches of President Obama and his administration. The reality is that this nation wasn’t built by the collective. It was built by individual initiative and drive, where one great idea was built upon another, not by group think, but by free thinking.

The Obama administration hailed the summit as a fresh start to kick off education overhaul efforts looming in Washington, especially delicate negotiations over how teachers should be paid and evaluated. Participating school districts agreed to send a teacher, an administrator and a school board member to hear presentations from a dozen school districts that have accomplished school overhauls agreed to by all three groups. – Kristen Wyatt, Associated Press

Does anyone see any mention about students or learning in that quote? It focuses on teachers. How to pay them and how to evaluate them; it is about the unions, not the students. The delicate negations about pay (unions favor) and evaluation (unions oppose) has nothing to do with our children learning. The unions can run all the TV and radio ads they want about “the children” but when you hear the tag line about who paid for the ad, it is not about the children.

In other parts of the country, Republican governors are going on the offensive to really fight for the students. They are challenging the principle of teacher tenure and in some cases even the right to collective bargaining for the teachers. This will be a very intense fight, but the governors are up to the challenge.

“It’s practically impossible to remove an underperforming teacher under the system we have now,” said Gov. Brian Sandoval of Nevada, lamenting that his state has the lowest high school graduation rate in the nation.

The teachers’ unions are firing back:

“Why aren’t governors standing up and saying, ‘In our state, we’ll devise a system where nobody will ever get into a classroom who isn’t competent’?” said Dennis Van Roekel, president of the National Education Association. “Instead they are saying, ‘Let’s make it easy to fire teachers.’ That’s the wrong goal.”

Let me take a shot at that question. Teachers’ unions, for years, have been arguing for smaller class sizes. To create smaller classes you have to break up larger classes. In doing so, you need to hire more teachers (read: dues paying union members). In hiring more teachers you have to go deeper into the labor pool to find them. Net result, the overall quality of the teachers goes down. The second point, is that Mr. Van Roekel never speaks to a teacher’s performance after he gets into the classroom. If that teacher was competent going in, but because of tenure becomes a slacker, there is almost no getting him out.

The argument that the unions often put forth and even their members repeat it is that, in tough times what is going to prevent an administration from firing a teacher that is at the top of the pay scale? If the only thing that is eliminated is tenure, that is a valid argument. What must be done is abolishing teachers’ unions. Because if a highly qualified teacher is not allowed to perform at their full potential because of union rules, they can be priced out of the market. For example, Jaime Escalante, the math teacher portrayed in the movie Stand and Deliver was talented enough that he wanted to teach math to as many as fifty students in a class. The union fought him because they had work rules limiting class size to thirty-five. If a Jaime Escalante can teach as many students as three tenured but ineffective teachers, why would a district fire him over salary? Keep him, pay him 50% more and fire the three incompetent teachers and everyone comes out ahead. Teachers would want to work there because it is challenging, not drudgery. Parents would want to live in that district because their kids get a great education (increasing the value of their homes as well). And the district could save money by hiring fewer teachers but paying them more.

As Albert Einstein said, “We cannot solve our problems with the same thinking we used when we created them.” By asking the teachers’ unions to solve the problem they helped create is foolhardy. If you don’t like the cars built by the United Auto Workers, you can buy a car built by a non-union car company. If you don’t like what the unions are doing to your child’s education, what do you do, get another child? It’s time to stand up for our children. We owe them a future. We don’t owe the teachers’ union members a living. And if those teachers are truly professionals, they don’t need a union either.

That’s my opinion; I’d like to know yours.  Please comment below.

Bailouts

I’ve seen Tim Bishop’s new ad to help re-elect him to Congress.  He glares into the camera and says “no more bailouts.”  Having voted with the Democratic leadership (Nancy Pelosi) more than 97% of the time, who is Tim Bishop running against, himself?  Is this another “I voted for the bill before I voted against it?”

• Tim Bishop voted for TARP. 
• Tim Bishop voted against repealing the rest of TARP and returning the money to taxpayers. (HR 4173 [Roll Call 967]. The House defeated an attempt to repeal the Troubled Asset Relief Program and lower the national debt limit)
• Tim Bishop voted for the bailout of GM and Chrysler rather than letting them go through bankruptcy. 
• He voted yes on a bill to modify bankruptcy rules to avoid mortgage foreclosures.  A fellow Democrat who also voted in favor of the bankruptcy bill said, “Rep. PETER WELCH (D, VT-0): Citigroup supports this bill. Why? They’re a huge lender.”  Wow, Tim Bishop is really tough on those Wall Street banks. 
• Tim Bishop voted for the stimulus package that cost more in one year than the entire War in Iraq and has failed.  Unemployment is almost 10% when we were told the stimulus would cap it at 8%.  The administration keeps telling us about “jobs saved,” something that no one can measure, but they don’t tell us how many jobs were actually created which is a statistic that can be measured.  Why?  (Hint: 3 million jobs have been lost since stimulus signed)

So the guy who helped give us all these bailouts is now talking tough that he is protecting us from bailouts.

Credit Cards

His ad then goes on to say how he is protecting consumers and their credit cards.  One of the features he voted for is to cap the interest rate on credit cards at 16%.  Well that sounds good, but what is so magical about 16%?  Why not 17%, why not 12%?  Wait a minute, New York State used to have a cap on credit card interest rates of 12%, but then we got the Jimmy Carter economy where interest rates skyrocketed.  What happened then?  Major banks with credit card operations in New York state moved to other states that had no limit.  I worked at Citibank shortly thereafter, and they picked up their operations and moved them to South Dakota and Nevada.  New York lost thousands of jobs.  So what Mr. Bishop wants to do is place a limit at the federal level so those tricky people in South Dakota and Nevada can’t steal jobs from New York.  So instead, if we get another Carter economy, those jobs will go overseas.  But wait, doesn’t his commercial say he will create jobs here, not overseas?  What it proves is that Tim Bishop doesn’t understand economics and free markets, which he opposes.

Does Tim Bishop know what he’s talking about, or just waiting for the next instructions from Nancy Pelosi?

Back on the campaign trail where he feels comfortable that he knows what he is doing, Barack Obama traveled to Las Vegas to stump for Harry Reid.  Harry Reid used to be a boxer and when he told Barack Obama this he said, “Barack, I wasn’t the fastest.  I wasn’t the hardest-hitting, but I knew how to take a punch.”  Based on all the legislation that has been passed since 2008 that an  overwhelming majority of the American people have opposed, makes one wonder if Harry Reid took a few punches too many.

Shortly after taking office and settling into his “bash business” mode Obama blasted businesses for their extravagant meetings held in places like Las Vegas.  Someone then whispered in the president’s ear that extravagant business meetings in Las Vegas were good for Las Vegas and Harry Reid. Oops.  And there you have the crux of the problem.

What, exactly, is government’s role to tell private companies how to spend their money?  What is the role of governments to say to a BP, “Give us the $20 billion, or we’ll take it from you,” as was attributed to Joe Biden, without first going to court?  What is the role of government to say to its citizens, you must buy this health care product or pay a fine?  Well in Hugo Chavez’s Venezuela, it is probably all fine and dandy, but in America?

Barack, the standup comic, used the analogy that he and Harry Reid had mud on their shoes, were pushing hard to get the car back on the road, and were making progress little-by-little and when they finally got one wheel on the pavement the Republicans want to throw the car into reverse.  Really?  I would compare it more to conservatives telling everyone to get out of the car and help push, instead of waiting for Nancy Pelosi to come back from Dunkin Donuts with free food for all the overweight union bosses jammed in the car squawking that they didn’t do manual labor.  Their contract didn’t call for pushing cars out of ditches. 

So, while this car should have been out of this ditch and well down the road by now, Harry and Barry will try to convince us that what they’re doing is absolutely brilliant; it’s just that we are too stupid to see it.  After all, it took the greatest president in history, FDR, over eight years and a World War to get us out of the Great Depression, so relax we have another 6 ½ years to go.

Imagine what would have happened if the ever resilient American economy was allowed to work on its own without all the government intervention in the 1930s.  Perhaps the Depression would have been shorter like the recession of 1920-1921, and perhaps we would not have had World War II, and Fannie Mae, and a bankrupt Social Security, and a couple of generations later all of us swimming in debt.  It’s time the tow truck of the most powerful economy on the face of the earth to come along and be allowed to do its job.  Tell Harry and Barry to go sit down on that stump over there, and watch how it is really done.  “You’re making a mess of yourselves and embarrassing the rest us.”

The New York Times had some, what was to me, shocking news today.  The article said that there was now consensus that the Obama stimulus plan was working.  Is this the same kind of consensus that man-made global warming was settled science, despite the glaring evidence that carbon dioxide emissions continue to grow while the globe stopped warming ten years ago?  This is also close on the heels of breaking stories of extraordinary misinformation if not outright deceit on how the $787 billion is being spent.

Smoke and Mirrors

Early on in the article we have this gem:

“The legislation, a variety of economists say, is helping an economy in free fall a year ago to grow again and shed fewer jobs than it otherwise would. Mr. Obama’s promise to “save or create” about 3.5 million jobs by the end of 2010 is roughly on track, though far more jobs are being saved than created, especially among states and cities using their money to avoid cutting teachers, police officers and other workers.”

There is no mechanism that exists to measure a job saved. None.  So how do they do it?  It goes something like this:

“Here, Mr. Stimulus Funds applicant, I have this check for you for $642,000.  No can you tell me, if I give this to you, how many jobs would you create or save?”

“Create? Er, none.”

“Hmmm,” the bureaucrat mutters, staring down at the check in his hand, “what about jobs you would save?  You know, if I don’t give you this nice, rather large check, how many of your people would you be forced to lay off?”

“Oh, I get it,” the potential recipient says with a wink and a smile, “probably all of them!”

The bureaucrat scribbles down a number, and hands over the check, walking away shaking his head.

That’s about how it’s done.  The government surveys the people getting the money and asks them what would have happened if they didn’t get the stimulus.  And what would you expect them to say?  Keep the check?

Revenue Starved States

What a concept, “Revenue Starved States.”  The article complains that not enough money was provided to “Revenue Starved States.” Does he mean states like California and New York?  I believe the correct term is states where spending is out of control.  It means states where taxes are so high that people are moving out in droves, and among them the “wealthy” people they love to tax to the eyeballs, meaning a dramatically shrinking revenue base.  After all, if one of the wealthiest people in the state, who is part of the group that pays 70% of the taxes, moves out of the state or (out of the country when it gets bad enough), that means a lot of people are going to see their taxes raised to make up for it.  So the statists seem to think a stimulus package that keeps these bloated bureaucracies fat, dumb and happy is the way to go, until when exactly?

The Multiplier Fallacy

The other great fraud being foisted on us is the multiplier effect, where for each dollar of stimulus money spent more than a dollar of economic activity results:

That sort of impact is what makes federal aid to state governments rank high in economists’ reckoning of the stimulus value of various proposals. Every dollar of additional infrastructure spending means $1.57 in economic activity, according to Moody’s, and general aid to states carries a $1.41 “bang” for each federal buck.

Even more effective are increases for food stamps ($1.74) and unemployment checks ($1.61), because recipients quickly spend their benefits on goods and services.

Okay, then how is this for a solution.  Let’s spend $10 trillion on infrastructure, food stamps and unemployment checks, since they will result in $15 trillion or so in economic activity, because of the multiplier, right?  For that matter, let’s have the government spend $100 trillion and we’ll really be rocking.

Where’s the So Called Consensus

From what I read in the article, there was only one economist that could be called a conservative, Martin Feldstein, that they were willing or able to quote, and this was his take on the stimulus.

While some conservatives remain as skeptical as ever that big increases in government spending give the economy a jolt that is worth the cost, Martin Feldstein, a conservative Harvard economist who served in the Reagan administration, said the problem with the package was that some of its tax cuts and spending programs were of a variety that did little to spur the economy.

“There should have been more direct federal spending that would have added to aggregate demand,” he said. “Temporary tax cuts and one-time transfers to seniors were largely saved and didn’t stimulate spending.”

That’s it?  That’s the consensus?  It seems to me that he is pointing out what was wrong with the package rather than what was right.  He was in the Reagan administration and he knows what works: permanent cuts in marginal tax rates. Those dreaded tax cuts for the “rich.”  The thing is that when the people above the subsistence level get to keep more of what they earn, yes it does belong to them and not to the government, they tend to invest it, which means the provide capital to businesses that grow and create jobs.  Yes, capitalism.  What the stimulus does is take money away from these people, or borrows it and steals it from future generations, and gives that money, as in the example above, to highway projects, food stamps and unemployment checks.  The first of these may create jobs until the road project is completed, but the latter two only increase the dependency of those recipients on the government.  So how exactly does the stimulus plan that puts money into a highway project and unemployment benefits, help a banker who got laid off?  How does it help the unemployed executive from United Technologies?  It doesn’t.  It’s like a drug fix.  You may feel good for a while, but then it wears off and you need another fix.

The Genius of Government

You would think that with all the examples of government planning lying on the waste heap of history, the statists will finally catch on that they can’t successfully pick the winners and losers in an economy.  Government has to get out of the way and let the market work.

Government must be drastically cut down to size.  Think of the popular TV show “The Biggest Loser.” Picture the governments of the United States, California, New York, New Jersey, Rhode Island, Michigan, Nevada, for starters, as contestants.  Let’s see who can lose the most weight.  Ready? Go.