With the economy in shambles and his campaign sound bites and early interviews as president coming back to haunt him, President Obama has ramped up the class warfare rhetoric. Let’s put the lie to these strategies.
New Jersey
Photo by cursedthing
We saw the beginnings with the Battle of Wisconsin. The one place were unions were growing robustly was in the public sector, surpassing the private sector for the first time in 2009. But then 2010 happened.
Phot by Amanda M Hatfield
Congressional members high tailed it out of Washington after passing a debt limit agreement, but Democrats Steve Israel and Tim Bishop wasted no time in holding a press conference at MacArthur airport on Long Island to blame Republicans for a crisis they created.
It cries out for an intervention. It is almost like a 1950s horror movie where the victim/villain begs for help to stop him before he runs amok and kills again. With a monstrous $14 trillion in debt and Democrats and Republicans about to do battle to increase that amount even more, newly elected Republican governor Rick Scott of Florida turns down white elephant spending on high speed rail, $2 billion worth. But instead of agreeing that Governor Scott’s decision was a prudent one in today’s times, Democrats Chuck Schumer and Frank Lautenberg waddle up to the trough, snorting in glee as they bury their faces in the slop and with the excess dripping off their chins, look into the camera and say, bad for Florida, goooooood for New York and New Jersey.
The order in the Middle East has been crumbling, but it seems that the only place President Barack Obama knows where to lead is on the dance floor or when ramming through his socialist programs. When it comes to real solutions to fix the economy or on foreign policy he is utterly lost.
Ah, the romance of rail travel. From Murder on the Orient Express to From Russia with Love to White Christmas to Some Like It Hot there is something alluring about a train. But for all those warm feelings it’s time to recognize that we are in the 21st century and to leave trains to the movies.
Many states have a constitutional requirement to balance their budgets while the federal government has no such limitation. As such, a number of stately are longingly looking toward Washington to throw some cash their way so they don’t go bankrupt. It is not going to get better.
If you think Washington awash in debt, is a problem, it is chump change compared to what is brewing at the state level. Trillions in unfunded pension liabilities are looming and those who are benefiting from those generous plans or who are going to, don’t care about the rest of us who have to pay for them and then go provide for ourselves.
Lawsuits are starting to be filed to stop states from altering the terms of these plans. The time to act is sooner rather than later, but that is lost on one teacher in Colorado who says, “Why is the state so quick to break its promises.” Perhaps we should explore how these promises were made, in both directions.
Unions backed Democrats almost exclusively. Democrats riding union support into office had a debt to repay. They repaid it by supporting the kinds of contracts that the unions wanted and the unions returned the favor with their loyalty. Who paid the bill? The rest of us. How much say did we have in the process, next to none. In private industry, unions negotiate with management. Unions have almost no say in who gets hired into management and will sit across from them at the bargaining table. So the adversarial relationship has management supporting the shareholders and unions backing the workers. As management became more enlightened and took better care of their employees, the need for a union middleman faded away. That is why in private industry union representation is down to about 7% and falling while in the public sector is around 37% and growing.
The public employees argue that their generous pension plans is merely deferred compensation to make up for their salaries during the time they worked. The only problem is that the unions did a good job not only on the pensions but on the salaries as well, so that the average public sector employee makes about 34% more than his private sector counterpart. Fair being fair, our public sector friends would probably recognize their good fortune and agree to help fix the problem, right? No chance. As one put it, “I shouldn’t be responsible for past pension underfunding and foolish risks managers made with my money long after I retired,” Okay, let’s give that a closer look.
Why do you think the pension is underfunded? Could it be that the government entity could not afford to make the extravagant payments the union contract required and still balance the budget? If they tried to raise taxes to cover the shortfall then even the unions with all their political muscle couldn’t get those responsible re-elected. So it was better to sweep it under the rug for a future administration to deal with. What about those risky investments? Well, with risk goes reward. If you need bigger payoffs on your pension assets to make up for the shortfalls in funding that you didn’t want to make, you may take bigger chances to make a bigger payoff. But if you are wrong, instead of fixing the problem, you make it worse. So the real problem is that the unions and the politicians they fought to elect negotiated contracts that were unrealistic and unsustainable. What does the union member say. “I’ve got mine, you go get yours.”
What are some of the onerous changes that states are asking for? In New Jersey, Chris Christie asked for a one-year freeze on public employees pay and for them to contribute 1.5% of their salary toward their retirement. Outrageous! How about in Colorado where they asked for a 2% cap in the Cost of Living Adjustment (COLA) for retirees instead of 3.5%, in an environment with 0% inflation. Dastardly! One individual’s justification was that he does not and cannot pay into Social Security so the pension is all retirees have to live on. He fails to point out that being prohibited from contributing to Social Security puts 6.2% more of his salary in his pocket, since he pays no Social Security taxes, and if he had the self discipline to take that and invest it in the Dow Jones Industrial Average he would have far more money of his own than he would ever get from Social Security.
This problem is not going away. Once upon a time, public sector employees did earn less in salary than those in the private sector, but those days are long gone. They earn more, can retire earlier, can retire with more money for longer periods of time and put the burden on all taxpayers who have to cover their pension while providing for their own. Their “too bad” attitude is shameful.
Democrats think they have a winner. They want to lather on some more financial regulations because regulators dropped the ball on enforcing what already exists. So as conservatives point out that what they are proposing is unnecessary or won’t work, they can gleefully say, “Republicans are for the fat cats, while we’re for the little guy.”
Broken Regulations
Harry Markopolos recognized within “minutes” that Bernie Madoff was a fraud. He took his case to the SEC and was promptly ignored. He took it to Forbes magazine…not interested. Bernie Madoff himself was surprised how long it took to be found out.
So what does the SEC do now? It initiates a case against Goldman Sachs where professionals on both sides of a transaction knew what they were getting into. One side bet on housing prices continuing to rise, the other betting the bubble would burst. The decision on pursuing this was voted 3-2, with three Democrats voting in favor of pursuing the case, and two Republicans voting against. It must be the Democrats looking out for the little guys and the Republicans looking out for evil Wall Street, right?
John Paulson is the investor who allegedly played unfairly by being able to choose the securities that went into the investment that Goldman Sachs allegedly didn’t disclose to the other party. Mr. Paulson hasn’t been charged with anything. Mr. Paulson also contributed $30,400 to the Democratic Senatorial Campaign Committee last June. If you recall Jon Corzine, former Democratic Senator and Governor of New Jersey, used to be the chairman of Goldman Sachs. The new head of the SEC enforcement division in the Obama Administration, Adam Storch, is a former Goldman Sachs Vice President. So who’s in bed with Wall Street?
Democrats Need a Diversion
With almost every measure of public opinion on government appointment sinking to all time lows, the Democrats need to ramp up the class warfare machine to find anything that will gain traction with the public. They know they can’t fight on the facts so they have to start the fog machine. Typical Saul Alinsky’s Rules for Radicals stuff.
Conservatives must focus the debate on the issues and not shrink from the fight. It is far too easy to show that Big Government (Obama) and Big Business (GE, et al) are really partners in dividing up the spoils amongst themselves and telling the rest of us how to live our lives.
Remembering Reagan
Ronald Reagan famously said that the statists believe:
“If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
There is currently no more telling example of this than Senator Chuck Schumer bloviating about Spirit Air Lines charging passengers for carry on baggage. He wants to introduce legislation prohibiting this. Hey, Chuck, if you don’t like Spirit charging you for your carryon bags, pick another airline! That’s how markets work. But the genius that is Washington is, NO we have to regulate that! So the idiots would pass a law prohibiting charging for carryon bags and the airlines will respond by raising ALL ticket prices to compensate. So instead of my having a choice of carrying a bag on board or saving the money, or choosing another airline altogether, the government will make everything equal and more expensive.
So, Chuck, how are you and your pals doing as far as growing the economy and getting the unemployment rate down? Maybe you should spend some time on that, no?
President Obama has just created a panel to figure out how to get our debt under control. Even when he makes a decision, such as this one, it is to pass the buck to someone else to do the heavy lifting. His attempt to overhaul health care turned into the Harry and Nancy Show. Obama campaigned and gave speeches while Pelosi and Reid shut out the Republicans and created the bill that could not be passed. Obama is now trying to put lipstick on that pig, by calling for a bipartisan meeting. But instead of starting over and getting ideas from everyone, they are basically going to pick over the stinking corpse of the bill that the Democrats could not get passed. It is obvious that the real objective is to either get some Republicans to sign on or to use the meeting as a club to beat the Republicans as the “party of No.”
Stop Me Before I Spend
This president can’t seem to control himself and he finds that he painted himself into a corner. If he tries to raise taxes on those who make less than $250,000 per year he will be breaking a major campaign promise. If he stops spending on his own, he will lose the left which is about the only support he has remaining. So he calls in Alan Simpson and Erskine Bowles to co-chair a committee charged with making the president a tailor made fig leaf, to allow him to cut spending and raise taxes, while shrugging his shoulders and saying, “I can’t go against the excellent advice of this august commission.”
If he wants to cut spending, he can just cut spending. He doesn’t need a commission to do so. How about an across the board spending freeze, except for national defense, until the economy grows enough to balance the budget and not with gimmicks like increasing discretionary spending now 24% and then saying you will freeze that same spending for the next three years? How about freezing government hiring? How about returning $500 billion in unspent stimulus money and $400 billion in repaid TARP money, plus interest, to the Treasury? Don’t hold your breath. That would require someone with executive experience who knows how to make a decision, rather than deliberating, like a legislator. Sarah Palin comes to mind, as does George Bush (I & II), Bill Clinton, Ronald Reagan. These experienced executives knew how to put together a budget and make decisions. Chris Christie in New Jersey was just sworn in last month as governor and he immediately identified the problem as too much spending and got to work cutting it back. All that President Obama seems to know how to do is talk.
If we start advertising now, we may get enough resumes to review to find a replacement by 2012.
