Archive for the ‘pro-union policies’ Category

IRS targets Obama’s enemies in extraordinary scandal

May 18, 2013

“We are in the midst of the worst Washington scandal since Watergate. The reputation of the Obama White House has, among conservatives, gone from sketchy to sinister, and, among liberals, from unsatisfying to dangerous. No one likes what they’re seeing. The Justice Department’s assault on the associated Press and the ugly politicization of the Internal Revenue Service have left the administration’s credibility deeply, possibly irretrievably damaged….Something big has shifted. The standing of the administration has changed. As always it comes down to trust. Do you trust the president’s answers when he’s pressed on an uncomfortable story? Do you trust his people to be sober and fair-minded as they go about their work? Do you trust the IRS and the Justice Department? You do not.” Peggy Noonan, ‘This Is No Ordinary Scandal’, The Wall Street Journal, May 18, 2013

President Obama, albeit sheepishly, acts as though these scandals are unconnected to the White House.Like the chief of police in Casablanca he is shocked, shocked, to discover in the newspapers what has happened! President Obama, however, is deeply connected to these scandals. He is not a bystander, like you and I. This happens to be his administration. The Justice Department and the IRS are his executive agencies. He runs and oversees them.

In this column, I focus on the IRS scandal, once again. For it is much the more serious of the two. There are two parts to the IRS scandal. The first is the obviously deliberate and targeted abuse harassment and attempted suppression of conservative groups. The second is the auditing of taxes of conservative political activists.

In order to suppress conservative groups the IRS demanded donor rolls, membership lists, data on all contributions, names of volunteers, the contents of all speeches made by members, Facebook posts, minutes of all meetings, and copies of all materials handed out at gatherings. When asked what its members were reading, one group responded: The U.S. Constitution! Now I can assure you from first hand experience that these questions are not routinely requested by the IRS. When The Locke Institute applied for 501 (c) 3 status in 1994, it took about a year to secure that status. But the questions were always fair and politically unbiased. And that was during the administration of President Bill Clinton, who was not above a dirty trick or two to harass his supposed enemies.

The second part of the scandal is the auditing of political activists who have publicly opposed the administration. Such politically-oriented audits constitute the use of government power to intrude on the privacy and shackle the political freedom of American citizens. The purpose is to overwhelm and intimidate – to kill the opposition, audit by audit by audit. Such behavior is to be expected of such low-lives as Vladimir Putin, Tsar of All the Russias. Perhaps now it must be expected by such low-lives as President Obama, Tsar of the United States of America.

Shame on you Barack Obama! You disgrace the high office that you are privileged to hold.

Obama confronts a bleak second term

April 30, 2013

Barack Obama ran a carefully orchestrated 2012 re-election campaign. For any one who bothered to read or to listen carefully, however, Obama had remarkably little to say on what he would do during his second term, should he be re-elected.

So it comes as no surprise to discover that Obama has only one policy initiative – immigration reform – that stands even a remote chance of passing into law, unless the House of Representatives falls into Democratic Party hands in November 2014. The optimism about immigration reform stems not from any leadership from Obama, but from concern within the Republican Party about losing Hispanic voters, many of whom should find a natural position within the GOP.

After winning a marginal tax rate increase on individuals earning in excess of $400,000 per annum, Obama’s economic policies are in disarray. The sequester, that he had signed into law was allowed to take place, so far with minimal harm to the economy. His attempt to use his presidential powers to impose maximum harm on U.S.citizens – a strange presidential tactic do you not think – failed when a vote-conscious Congress moved to protect the flying public and Obama had to confirm their intervention. He has no chance whatsoever of imposing any additional taxes on Americans – rich or poor – unless he accepts major tax reforms designed to bring down rates while eliminating exemptions. And that he will not do.

His ineffectual attempt to tighten gun laws, even following the gift-horse of the Newtown massacre, has ended in ignominious defeat in no small part at the hands of Democratic members of the Senate. That policy will not be revived certainly prior to 2015.

His parody of a foreign policy is collapsing before his eyes as Bashar Al-Assad openly flaunts the use of chemical weapons jeering at Obama’s non-existent red-line. His shift of emphasis away from the Middle East to Asia is stymied as long as the Syrian civil war results in cataclysmic death rates and as al-Qaeda watches hopefully for chemical and biological weapons’ pickings from the disintegration of what once could be called a country.

Sadly for the United States, President Obama looks increasingly like a man in an empty suit, bereft of ideas, unwilling to take time out from fund-raising to do the heavy lifting of policy formation is a divided government. The President, in short, has decided to coast through his second term.

Bring on the clowns!

Hat Tip: Edward Luce, ‘All Obama’s manoeuvres lead back to impasse’, Financial Times, April 29, 2013

Francois Hollande and the French economy both down the drain

April 27, 2013

Francois Hollande is down and out in Paris, his popularity rating as President having fallen faster and further than that of any other president since the Fifth Republic began in 1958.

The reason for his decline and fall is the progressive socialist agenda that he touted during the election campaign and that he has attempted clumsily to pursue since gaining office. The French economy has seized up in response to his anti-business rhetoric, unemployment now stands at 11 per cent, and the targeted reduction in the budget deficit to 3 per cent of gross domestic product by the end of 2013 has already been abandoned. That target will not be achieved during a progressive’s presidency.

The 75 percent top marginal income tax rate that he imposed immediately upon accessing the Elysee Palace succeeded in driving a number of top companies and a number of top celebrities into exile in other grateful European Union countries. The increased tax rate failed to generate any net revenue as tax avoidance and tax exile escalated in response to what is widely considered to be government theft.

In December 2012, France’s constitutional council provided Francois Hollande with a second chance when it ruled that the 75 per cent tax rate was unconstitutional and noted that no individual tax should exceed 66.6 per cent. Alas! progressives are not to be deterred by such rulings. Caught between political betrayal and folly, Mr. Hollande naturally chose folly.

On March 28, 2013, Hollande announced that the 75 per cent tax rate would still be imposed on incomes in excess of E1 million, but that they would be paid for by firms rather than their employees. Clearly this stupid man has no understanding of the nature of tax incidence, in particular of the conditions required for an income tax increase imposed on an employer not to be passed on in a salary reduction to an employee.

Why are progressives always so ignorant of basic economics? My former colleague Gordon Tullock explained the lacuna by noting that no good economist could ever be a progressive.

Obama patronizes federal workforce

April 7, 2013

As a consequence of the spending cuts imposed on the federal workforce at the initiative of the Obama administration, many federal workers face unpaid furloughs. Obama willingly signed this bill into law in January 2013.

Supposedly to share the hardship about to be experienced by such workers and their families, Barack Obama has decided to return 5 per cent of his annual salary to the Treasury, a gesture that has been matched by several of his cabinet members. In Obama’s case, the gesture is insulting. A drop of $20,000 in an annual salary of $400,000 for a family that lives entirely on public welfare is patronizing in the extreme.

And his annual salary is only the tip of the Obama’s annual returns. During the first three years in office, Obama and his wife reported income of $8 million, largely from royalties on his memoirs which were best sellers because of his political fame.

And very soon, the Obama’s will progress from being rich to being filthy rich. Bill Clinton earned $89 million is speaking fees in his first 11 years out of the White House, averaging an indecent $189,000 per appearance. Obama is likely to exceed that sum, as the first half-black president of the United States.

The fact that Obama is remitting such a pittance back to the Treasury matters a lot because he won the 2012 presidential election largely in the ‘fair shakes’ empathy department. Even his pathetic gesture is better than that of some of his rich Democratic Party cronies. Nancy Pelosi, whose net worth last year was estimated to be at least $26 million, has stated that ‘taking a pay cut would not respect the work we do and is beneath the dignity of the job.’ Well everyone is entitled to their opinion!

‘During World Wars I and II, there were ‘dollar-a-year men’ who left lucrative private-sector careers to serve their country in Washington. If Obama really wants to share in the furloughed workers ‘sacrifice’, he should follow that honorable example and give back all but a dollar of his $400,000 salary. When he leaves office, he’ll be able to earn it back with a couple days’ work.’ Dana Milbank, ‘A 5% pay cut? That’s rich’, The Washington Post, April 7, 2013

Stockton, CA declares bankruptcy in order to stiff bondholders

April 2, 2013

On Monday April 1, 2013 federal bankruptcy judge, Christopher Klein allowed Stockton, California to proceed with Chapter 9 bankruptcy. The profligate San Joaquin Valley city of 300,000 is the largest city in the United States ever to declare itself bankrupt.

Stockton is a union-controlled city, whose largest single creditor is the California Public Employees’ Retirement System (Calpers). The city intends to deploy Chapter 9 bankruptcy to stiff capital market creditors in order to protect its workers’ over-generous pensions. Assured Guaranty and National Public Finance Guarantee, which insure about $260 million of the city’s bond debt, pulled out of negotiations after the city council refused to haircut the city’s single largest creditor,Calpers.

Meanwhile, Stockton was proposing to hair-cut, by 80 per cent, the $125 million in principal on pension obligation bonds that it had issued in 2007 to pay an overdue bill to Calpers. The city claims that its workers and residents have already paid their ‘fair share’ (note how these Obama weasel-words are now entering the nation’s lexicon) and that the time has come for capital creditors to cough up.

In reality, the most significant ‘concessions’ from big labor involved the cutting of bonus pay for things like handling a canine. Many of these fringe benefits had never been formally approved by the city council. Pensions for new workers were modestly trimmed and ‘Lamborghini’ retiree benefits entitling workers who had been employed for only six months to free lifetime medical care, were to be phased out.

In truth, the only way Stockton can solve its self-induced financial problems – in or out of bankruptcy – is to haircut its $147 million unfunded pension liability. Pensions account for 40 per cent of its annual payroll costs. The average firefighter can retire at age 50 with an annuity equal to 90 per cent of his highest year’s salary, including various bonus pay categories.

Stockton cut its workforce by one-third but still ran up a $25 million deficit in 2012. Even if it completely defaults on the $200 million it owes in principal and interest on its pension obligations, it still projects a $100 million deficit over the coming decade.

Calpers threatens to tie Stockton up in court forever and a day if it even attempts to cut pensions. The city is terrified of upsetting this big labor 600 pound gorilla. All of which leaves the city’s bondholders as the likeliest target. Unions have the power, and their view is that their benefits are forever and everyone else’s contract is negotiable.

There is a silver lining in such clouds. How many profligate, union-controlled cities like Stockton will ever be able to make bond issues to cover future debts? Cash flow will control, as it always does, once the California dirty-tricks bankruptcy process is finally over.

Fool me once, shame on you. Fool me twice, shame on me!

Joe Biden: Dominique Strauss-Kahn to the power of 10

March 27, 2013

Dominique Strauss-Kahn was criticized in May 2010 for partying in a swanky New York hotel to the tune of $3,500 per night. At that time, DSK was a presidential candidate in upcoming French elections. He was widely recognized as an insightful economist who had earned a reputation at the IMF for helping to steer Western economies through the 2008 financial crisis.He was expected to win the presidential elections.

In February 2013, Joe Biden, an equally aging Vice President, known primarily for his ability to plagiarize the speeches of others and for a younger second wife who hikes her skirts as she walks in the Inaugural Parade, spent one night at a swanky London hotel, racking up a bill of $485,000 followed by a one night at a swanky Paris hotel, racking up a bill of $585,000. Some night, one might think, some one night stand!

At a time when so many American families are struggling in an economy slowed down by the poor economic management of Obama and Biden, it is disgusting to discover that an aging, second-rate nobody can spend taxpayer monies so extravagantly on one night stands, living it up as though there is no tomorrow.

‘Hey big spender, come spend a little time with me!’

Tell me it ain’t so, Joe

White House falls on hard times

March 8, 2013

President Obama has targeted the sequester directly onto the White House. In a noble gesture in the direction of austerity, the President has canceled all tours of the White House. Busloads of children scheduled to visit Washington for the Cherry Blossom Festival will now be denied a visit to the free public housing enjoyed by the Obama family. As luck will have it, there are plenty of public building projects available just across the river. And no doubt they are in much better condition than 1600 Pennsylvania Avenue.

One waits with baited breath for the next phase in Obama-austerity. No more date nights out at a cost of tens of thousands of dollars in secret service protection. No more Hawaiian family vacations costing millions of dollars a wallop out of the taxpayers’ pockets.No more vodka-laced golf trips to Florida and California unless they are paid for fully by Tiger Woods or Oliver Stone. The Obama children out of private school and relocated into the D.C. public school system, lunching, to their delight, on fries, hot dogs and carbonated sodas.

Seemingly, the White House is not yet right out of money. It is happily throwing $57 million down the drain by funding pottery classes in Morocco. It continues to employ three calligraphers at a cost of $277,000 per annum. Come to think of it, how many tours of the White House at a cost of $18,000 a week, could be restored if Obama had thought to eliminate those worthless contributions?

But then there must be some perceived harm. Otherwise why would Obama – like Henry II after eliminating Thomas Beckett – wear a hair-shirt and lash his body until it bleeds – to ask God for His forgiveness for the White House-imposed sequester. After all, the Messiah did it to himself!

Hat Tip: Kimberley A. Strassel, ‘Jumping the Sequester’, The Wall Street, Journal, March 8, 2013

Obama plays the political gridlock game

March 5, 2013

With the January 1, 2013, tax revenues in his pocket, it is now clear that President Obama has decided to play the political gridlock game.

The objective of this game is to proffer policy proposals that have no prospect of legislative success. The president’s aim is to achieve a Democratic Party majority in the House of Representatives in 2014, and then to unleash progressive socialism across the nation throughout the final two years of his rule.

If his Democratic majorities are sufficiently large, Obama may ask Congress to initiate the repeal of the 22nd Amendment, in order for him to run for the presidency for a third and perhaps even a fourth term, thus emulating his great progressive predecessor, FDR.

Obama’s political gridlock game has been exposed by The Washington Post, a newspaper that is located deep inside Obama’s trouser pockets and is far from generally hostile to his administration.

“The article says that shortly after finishing his speech on Election Night last year, Mr. Obama called Mrs. Pelosi and Steve Israel, who runs the Democratic House re-election campaign, to discuss 2014. The strategy fits Mr. Obama’s unprecedented new effort to raise $50 million in $500,000 chunks to fund Organizing for Action (OFA), which will spend millions in GOP-held districts. Mr. Israel says he met in January with Jim Messina, Mr. Obama’s 2012 campaign manager who now runs OFA,to discuss the 2014 races.” ‘Obama’s Pelosi II Strategy’, The Wall Street Journal, March 5, 2013

So informed readers can now watch the unfolding of the Obama strategy. No legislation on spending cuts without significant additional tax revenues; no immigration reform without leap-frogging of illegal applicants over legal applicants; no gun law reform without a ban on all multiple-chamber weapons.

The GOP will have to tread warily in order to avoid such Obama foot-traps. The best response is for the House to prepare a high quality tax reform and spending reduction bill designed to take the United States to budget balance by the mid-2020′s. Such a bill should be supported by extensive publicity and promoted by a world-class orator.

If Obama’s strategy succeeds, the United States as we have known it, will cease to exist. It will be replaced by a progressive socialist republic, and the Joad families of this country will be migrating outwards, as best they can to Australia, New Zealand, and Canada and other countries that have avoided the social democratic disease.

Grapes of Wrath in reverse: Joad families flee California

March 4, 2013

During the Great Depression, some 1.3 million Americans flocked to California from the nation’s heartland. To keep out the so-called Okies, the state enacted a law barring indigent migrants. Los Angeles set up a border patrol on the city limits. John Steinbeck epitomized the migration in his novel, The Grapes of Wrath.

Now the migration has reversed. Over the past two decades, a net 3.4 million individuals have fled California for other states. Most such migrants – like the Joads of the 1930′s – are low to middle income with relatively little education.Typically, they are employed in agriculture, construction, manufacturing, hospitality and, to some extent, natural-resource extraction. Their median household income is $40,000 – two-thirds of the state median – and some 95 per cent earn less than $80,000. Only one in ten has a college degree, compared with 30 per cent of California’s population. And 40 per cent of those fleeing for the heartland are Hispanic.

These households for the most part are fleeing the economic consequences of progressive policies. Zoning laws, favored by liberals to control urban sprawl, have driven up house prices for the well-off, increasing income-based segregation and inequality. Housing in California, on average, is 2.7 times more expensive than in Texas, where progressive policies are rare on the ground.

Progressive labor policies have succeeded in destroying hundreds of thousands of manufacturing jobs across California. These traditionally were the entry jobs for the Joads of this world. One third of these opportunities no longer exist.

In a sharp reversal of the 1930′s, Texas and the Sun Belt have supplanted California as a magnet for jobs and people, while California has become the nation’s leading jobs’ exporter.

Such reverse migration from progressive to conservative states surely is not a pattern for which the Progressive Movement would like to be remembered.

Hat Tip: Allysia Finley, ‘The Reverse-Joads of Ca;ifornia’, The Wall Street Journal, March 5, 2013

Obamacare kills small-business full-time hires

February 23, 2013

The Grim Reaper is on the march once again. President Obama routinely kills private sector jobs as he pursues socialism through whatever channel is available. And Obamacare is an invaluable channel for him to vent his wrath on laissez-fairecapitalism across the United States.

From January 1, 2014, Obamacare requires firms with 50 or more ‘full-time-equivalent workers to offer health plans to employees who work more than 30 hours a week. Employers who cross the 50 employee threshold and fail to offer health insurance confront a $2,000 annual penalty for each uncovered worker beyond 30 employees.So, by hiring the 50th worker, the firm pays a penalty on the previous 19 workers as well.

As is too frequently the case when socialists legislate to control the private sector, enormously high perverse incentives are created. Thousands of small businesses will confront a $40,000 tax penalty should they expand and hire a 50th worker. A simple example illustrates the magnitude of the disincentive to expand.

Suppose that a firm with 49 employees hires a new worker for $12 per hour for 29 hours per week.There is no Obamacare health insurance requirement. Now suppose that that worker moves to 30 hours per week, becoming ‘full-time, under the Act. This triggers the full penalty. So, in order to obtain 52 hours of extra work from that worker, the extra cost rises from $12 per hour to %52 per hour. In terms of rational choice, what would you expect profit-seeking firms to do?

Well the answer is already there for all to see. Although Obamacare starts in 2014, the measurement period utilized by the Feds to determine a firm’s average number of full-time employees, began on January 1, 2013. And here is what is happening, most especially among fast-food restaurants that typically register annual profits of only between $50,000 to $100,000.

In a growing number of McDonalds and Burger King outlets, each such outlet hires employees to operate the cash register or to flip burgers for 20 hours per week. Those worker then head to the other outlet for another 20 hours per week. This exchange of employees avoids the Obamacare health insurance/tax. Many other such outlets are now known as the 49′ers because they cap their employees at 49. Businesses that hire young less-skilled workers put a ceiling on the work-week below 30 hours. These firms are known as the 29′ers.

Among the fast food franchises that now engage in such rational behavior are: McDonalds, Burger King, Red Lobster, KFC, Dunkin’ Donuts, Taco-Bell, Red Lobster and Olive Gardens. And they are just the trail-blazers among the small business sector.

Note that once one outlet adopts such a policy, others are compelled to follow or to run a high risk of liquidation. Margins are narrow in the fast food industry and outlet liquidation is always high.

Give Barack Obama credit. He really knows how to destroy capitalism. Lenin did it through inflation. Obama does it through his signature health program.

Hat Tip: ‘Obamacare and the 29ers’, The Wall Street Journal, February 23, 2013


Follow

Get every new post delivered to your Inbox.

Join 68 other followers