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A couple of weeks ago Amazon offered a very good price, $20 off, on the Roku HD Player. Since I live on a farm and our house is more than a quarter of a mile off the road, my options are limited. We have DSL but it is relatively slow and occasionally erratic. Recently our service has improved but YouTube videos still stutter. Recently my son figured out that NetFlix works just fine with our DSL connection. So I took the chance and bought the Roku player. I figured that this device is simple enough for my wife. It worked great. I watched two movies without a single stutter. The Roku channels that depend on podcasts or YouTube are still problems but Netflix and the audio channels work great. I am still working on the wife training.

I was looking at HeathCare.gov today. It is a pretty site. I was researching information about how the recent legislation impacted HRA and HSA accounts so I decided to give this site a try. It did not have anything. Their insurance finder looked intriguing so I decided to give it a test run. Since I used ehealthInsurance to get my last health insurance policy, I was hoping that they would provide something even better than eHealthInsurance. The worst case scenario I expected is that they would clone eHealthInsurance. However, they chose to provide me with several completely useless suggestions, like check into getting insurance at work. If you are looking for health insurance, HealthCare.gov insurance finder is a complete waste of time.

Recently I started reading The Forgotten Man and was struck with some of the similarities between the Hoover and Obama presidencies. I was also struck how both administrations have been stuck by unintended consequences. The Smoot–Hawley Tariff Act was supposed to protect American jobs and farmers. The unintended consequence was that it reduced exports dramatically and generally blamed as one of the leading causes of the Great Depression. The Obama policies during the first two years seem to have generated similar unintended consequences. The stimulus package was supposed to create jobs and lead us out of the recession. The unintended effect is the near panic over the size of the deficit and the size of government spending. Although the Obama administration has talked the talk about jobs, the actions by the EPA and the Drilling Moratorium have been unintended job killers. The longer we go without a jobs recovery the more likely we are going to Hoover comparisons and posts like Mister, we’ve got a man just like Herbert Hoover again…

I woke up this morning thinking about Proposition 8 and jury duty. The people in California were asked to make a judgment on the definition of marriage and they did. Judge Walker has determined as his principle fact that “Proposition 8 enacts, without reason, a private moral view that same-sex couples are inferior to opposite-sex couples”.

If there are so many people in California displaying this irrational behavior, how does Judge Walker plan to select a jury? It is without reason to assume that jurors’ will not involve their private moral views in their deliberations of serious crimes. Having served on juries in the past I can say that private moral views play important part in the decision making and the jury selection. In one jury selection process I was asked by the prosecutors if I had a “moral” problem with handing out a death sentence. In the Proposition 8 case Judge Walker has chosen to denigrate a vary large group people who exercised their civic duty in good faith. There is no middle ground on his disdain for this group of prospective jurors. It is truly ironic that shortly he will be calling on this group of irrational citizens to fill his juries. I suspect that these Californians are now wondering if they are incapable of making the “correct” decision on something as simple as the definition of marriage, how can anyone presume they can make a decision on the crimes of murder or theft?

I think the appropriate response by Judge Walker to Proposition 8 should have been to place an injunction on issuing any new marriage licenses in California and to stop enforcement of laws requiring marriage licenses. If moral reasons are not valid reasons for regulating marriage, we are left with a regulation that is an anachronism from the past. I have been married 27 years. I know where my driving license is. I hang my college degrees on the wall. I do not have a clue where my marriage license is. If I was not required to get a marriage license when I got married, I would not have gotten it. Marriage licenses are vanity plates. The judge had the opportunity to step back from the present and future controversies by declaring marriage regulations null and void. If California wants to continue to get the tax revenue from marriage licenses, legislators will figure out how to get the various parties to play well together. Which ever way this ruling goes in the upper courts, the bond between church and state on regulating marriage is defunct.

Cross posted on the article, Requiem For An Ideal, at doczero.org.

Although I respect Bill Gates and Warren Buffett’s past accomplishments, this attempt by them to get billionaires to pledge $125 billion to charity is not the best use of our billionaires talents. Although there are many worthwhile charities, the greater good for this country would be served by creating sustainable, long-term jobs. It is these “good jobs” that the people want and need. Nurturing new businesses that create these jobs is a natural match for some of these billionaires. In my opinion these billionaires have a much greater chance of creating good jobs than any charity or government program.

If we can avoid the broad brush caricature of the Tea Party that the Tea Party wants a smaller government regardless of the consequences and the Progressives have never seen a large Federal or state spending program that they did not like, I can see some common ground between the two groups. Yesterday I got a copy of The Forgotten Man and it reminded me of the dual meaning of this title. For Progressives they feel their programs are protecting the forgotten man while the Tea Party folks think they are the forgotten man. Another area where they share common ground is their disgust in the performance of the President.

This is the second installment of the Ohio Famer series. The form and voice of this post is to pay homage to a group of citizens who early in our country’s life engaged in passionate yet civil debates about the best form of government for our new country. They argued their case for the best form of government via letters to the local newspapers. These letters came to be known as the Anti- Federalist papers.

In my last letter, Ohio Farmer I, I discussed the inevitability of austerity measures at the local, state, and federal levels. In this letter I will document what I believe are the underpinnings of this crisis and how we might go back and embrace some of the concepts of our Anti-Federalists as way to move forward to sustainable government.

In the Anti-Federalist paper, Federal Farmer I, the author included a quote from Alexander Pope that underlines the pragmatic nature that even Anti-Federalist people viewed their government.

For Forms of Government let fools contest; whatever is best administered is best.

So although an Anti-Federalist like the Federal Farmer would naturally like to see limited federal powers, he also wanted to see a more effective government than the Articles of Confederation was allowing. The grand compromise was to create a federal government with limited powers and all other powers were to remain with the people. It took almost no time for Congress and the judicial system to start chipping away at the concept of limited Federal powers. Initially the efforts by Congress to expand their legislative power were hampered because they had to show to the courts that a restriction of liberty was reasonable.  Finally in the 1930s, the Supreme Court forever changed the concept of liberties residing with the people and began limiting when it was necessary for the government  to justify to a court its restrictions on the liberties of the people. In 1955 the Warren Court made the presumption of constitutionality of laws duly enacted by Congress effectively irrebuttable. Although Randy Barnett argues in his paper, Scrutiny Land, for an alternative approach that is more case specific, the present situation is that our liberties have been transferred to Congress to do as they see fit with almost no opportunity to contest the constitutionality of the law. The big problem with the transfer of liberties is the transfer of power that goes with it. With the transfer of power from the citizen to the federal branch complete, it is not surprising that we find ourselves in a financial mess. The balance of power has shifted to the federal branch. If there was an Anti-Federalist alive today, they would immediately recognize our failures at fiscal prudence with Social Security, Medicare, Medicaid, and our national debt as the same problems they saw with the British government. They would undoubtedly remind us that the need for the citizen to keep their liberties is to save Congress from itself. The issue of liberty is not so much about possessing freedom as it is about reducing the opportunities for bad government. All of our entitlement programs are duly enacted laws and complete failures at fiscal responsibility. With this type of power Congress is born to fail. The only question is when is it going to happen. A Congress with more restrictions and less power has less opportunities for major social achievements.  However if Congress plays by the rules, social achievements and good government are still a likely outcome and sustainable through recessions. That is a lot better than what we have right now.

As Eileen Norcross explains in her paper, Fiscal Evasion in State Budgeting, there is a wide range of “gimmicks” that loosely describes a range of
choices including school aid cuts, sales tax holidays, increased borrowing, delayed tax refunds, delayed payments to vendors, and pension deferrals. These same “gimmicks” are also used at city, county, and federal levels. Although she argues for more research we will undoubtedly need to stop using these “gimmicks” long before the research is completed. All of our governments have a desperate need for simplicity in financing so the executive branch and legislative branch can make good decisions.

As a path forward we should:

1. Start banning many of the budget “gimmicks” as part of our austerity programs.
2. Although it will be difficult for Congress to stomach, we need to set our entitlement programs apart from the political process. As an example Medicare should be reformed outside of health care reform and Medicaid. Social Security funds should not be an excuse to spend more money from our operating budget.
3. Legislators should be prevented from attaching earmarks to these entitlement programs financing.
4. Public service pension fund benefits should be voted on by referendum.

The form and voice of this post is to pay homage to a group of citizens who early in our country’s life engaged in passionate yet civil debates about the best form of government for our new country. They argued their case for the best form of government via letters to the local newspapers. These letters came to be known as the Anti- Federalist papers.

To the Editor of the Goshen Gazette,

Recently David Goldman at the Asia Times argued that banks would not allow a default by our city and state governments because of the impact of the defaults would have on the banks. In this article he said,

 

It’s not about the impact on the real economy (the attendant cut in public services and public employment), it’s about the effect that such defaults would have on the banks.

In fact, that’s a good rule of thumb. If it’s going to hurt the banks, it’s probably not going to be allowed to happen.

I agree with his point that the banks will  try to do everything in their power to avoid having a city or state to fail however I do not see that they have a choice in the matter. In this crisis the issue of whether to provide municipal financing is a relatively minor issue. Across the country the voters have largely rejected tax increase proposals. This leaves our legislators without a choice, spending cuts are inevitable. The only questions that remain unanswered are what programs do we cut and by how much. Resolving this issue will undoubtedly be very messy.

An interesting irony in this crisis is my belief that our elected legislators are particularly ill-suited for the job at hand. When I was a young man there seemed to be a multitude of legislators from both parties who not only campaigned for a more efficient government but applied the political pressure to make government actually work better. As the years went by and our legislators continued to drink heavily from the “deficit spending” Kool-Aid,  “deficit spending” went from a tool to stimulate an economy during a depression to a perpetual facet of our federal budget. Legislators from both parties paid lip service to balancing the budget but they made almost no effort to do anything about it. It was the next administration’s problem. Passing laws dependent on overly optimistic estimates of reduced spending became the norm and one of the many ways they could avoid voting on spending cuts. In fact almost all of the “spending cuts” over the last forty years have not actually cut spending but postponed the spending to later years. These legislators knew we would eventually have to pay for their lax budgeting practices but with a wink and a joke they hoped it would not occur during their term in office. We got away with these budget failures because we are the largest economy in the world and we were pretty effective competitor in the world market. However we might have reached our peak in the world market place and the willingness of foreign countries to finance our debt might have finally reached its limit. It looks like we have finally reached our budget doomsday and the best team we can put on the field is a group whose most redeeming quality is their inability and unwillingness to control spending.

The new twist to this crisis is that the budgeting illness that started at the federal level has mutated and infected our state and local governments. Three of our most important states, California, Illinois and New York, are for all practical purposes bankrupt. California paid their vendors in 2009 with IOUs. Despite the embarrassment of paying in IOUs the budget crisis is unresolved. Illinois has been paying their vendors late all year and the governor of New York vetoed 6900 bills to balance the budget. These states are not alone. There are 46 states with budget deficits. Not only do they share huge operating budget deficit problems but many states have a huge pension fund liability problem, too. To compound the budget deficit issue Medicaid costs are dominating the lion share of many state budgets. Without the 2009 stimulus money many states would have been forced to severely cut back Medicaid. Without additional federal money in 2011, many states will be forced to cut back on Medicaid. Some states have already decided that they have no choice but to cut back Medicaid. If the state tax revenue situation does not improve dramatically real soon, the state budget deficit issue will likely force at least one state into some form of “managed bankruptcy” within a year. This in turn might start a cascade of municipal failures. It could get pretty chaotic. Some legislators will work to manage the situation but it appears that many legislators would rather take their chances in bankruptcy then betray their constituencies. Although there might be some banks who have a good business reason to help the cities and states out, this is a life or death situation for politicians and constituencies. This situation may be too hot to handle for the banks.

It is my hope and prayers that we can find a group of legislators with the courage to put good government and budgeting over politics. Good government should always trump politics.

Here’s The Real Reason Cities And States Would Never Be Allowed To Default
Joe Weisenthal
Wed, 07 Jul 2010 17:49:48 GMT

A comment I made on the post, Pity the Poor Keynesians.

I work for a small business and our number one issue is that our sales are down from last year. The one strategy that has worked for us has been to reduce costs and become more efficient. This strategy appears to be a very common business strategy in 2010. Neither the latest stimulus or the previous stimulus during the Bush administration have shown any resemblance of increasing aggregate demand in areas that translate into increased sales for our business. Increased governmental spending during a recession as a way to stimulate the economy is a policy attributed to Keynes. At its core this policy depends on tricking the consumer to spend more. If the consumer goes along with the trick then each dollar spent by the government should result in several dollars of increased consumer spending. Unfortunately the consumer did not take the bait in 2008, 2009, or 2010. In this recession the Keynesian multiplier looks like it is yielding less one.  In other words we got less than a dollar benefit for every dollar spent.  This should not be surprising since most of the stimulus money was spent on government transfers payments rather than spending on infrastructure such as roads. Although the Keynesian economists claimed that spending on transfer payments should have the same effect as spending on infrastructure, the results for this economy seem to indicate otherwise. Considering that it has become cool to be frugal and pay down debts, it is unlikely that continued use of deficit spending to stimulate the economy will ever work with this group of consumers. This leaves our Keynesian supporters in a quandary about future spending plans to increase consumer spending and reminds me of this quote.

Insanity: doing the same thing over and over again and expecting different results.
Albert Einstein

Since the government plans are not working and our government doesn’t have a clue on how to fix the economy, businesses are left to deal with their problems in what ever way they can. Since businesses are facing a lot of operational, financial, and regulatory risks, it is likely that they will continue to focus on cost control and avoid making major commitments. That is not hard to figure out. There are so many risks out there right now it is unlikely you will hear them singing, “Happy days are here again!”, any time soon.   What you saw from businesses in the first six months of 2010 is probably what you will see for the entire year. It is a given that there will be no jobs recovery in 2010. What may be unexpected is that the dropping business and consumer confidence is pointing to a stalled recovery scenario for 2011. Considering the budget deficits facing most of the states and the likelihood of a stalled economy,  the economy is likely to get uglier in 2011 and 2012 rather than better.