The Truth About What’s Coming Along With Our Attempts to Avoid “The Fiscal Cliff”

There’s a GREAT, albeit FRIGHTENING article in today’s (Friday, November 23^rd, 2012) Wall Street Journal, written by by Holman Jenkins. It's titled None Dare Call It Default (http://professional.wsj.com/article/SB10001424127887324352004578136931848743300.html?_nocache=1353809241142&user=welcome&mg=id-wsj&mg=reno64-wsj)

This is a MUST READ, especially for ALL current and future Civil Servants (cops, firefighters, teachers, etc.) because it clearly explains what “entitlement reform” will mean to YOU and I.

Many public sector workers (especially state and city workers) don’t believe such “entitlement reforms” will impact us much at all, perhaps some cuts in Social Security, some reductions in Medicare, or at the least some increased costs, BUT few accept the very painful reality that more and MORE local Municipalities (states & cities) will be forced into bankruptcy to escape the pension obligations they over-promised to public sector workers!

Jenkins starts out by explaining what the “fiscal cliff” IS and isn’t; “America's fiscal cliff is an artificial crisis. We have no trouble borrowing in the short term. But at some point the market will demand evidence that long-term balance is being restored. President Obama said in his first post-election press conference that he doesn't want any proposals that "sock it to the middle class." He knows better. A long-term socking is exactly what's coming to the middle class, which must pay for the benefits it consumes.”

Then noting that a few years back a 50% federal tax hike would continue to fund BOTH our current AND future entitlement expenditures, but that, “Today, a 50% tax increase would be needed just to meet the government's current spending, never mind its future obligations.”

He then notes that, “One way or another, then, entitlements will be cut. Don't call it default. The correct term is entitlement reform.”

Jenkins wryly notes, “You saw this day coming and saved for your own retirement... Taxpayers accept the risk of future tax hikes that may make the decision to save seem foolish in retrospect.”

Now THIS is the part of “entitlement reform” that will undoubtedly impact public sector workers – the “money shot”; “According to economists Robert Novy-Marx and Josh Rauh, state and local taxes would have to increase by $1,385 per household immediately to make good the pension promises to state and local workers, including firefighters and cops. That's not going to happen given all the other demands on taxpayers. Default, in this case, is the proper word for cities and states using bankruptcy to repudiate their pension obligations.”

Did you get that last part?

The cost per household (nearly $1400/year above the other increases to fund Obamacare, Medicare, Social Security, etc.), is NOT going to happen!

Jenkins is only the FIRST to honestly note that cities and states will be left with ONLY ONE option related to deal with these over-extended pension promises – Municipal DEFAULT, or "bankruptcy," which will able them to “repudiate their pension obligations.”

As for the “free lunch” of “Obamacare,” again, Jenkins tells the stark truth that NO politician will; “Under the Paul Ryan plan, the affluent would pay more. Under the Obama plan, the affluent would flee Medicare to escape the waiting lists, shortages and deteriorating quality as Washington economizes by ratcheting down reimbursements to doctors and hospitals. Don't call either default. You don't have a legally enforceable right to the free care you imagined you were promised.”

Jenkins adds, “Don't go running to a judge when this doesn't pan out. The courts do not overrule changes in government policy just because citizens find their promised free lunch isn't forthcoming. Nor will it be fruitful to appeal to politicians' sense of "fairness." Politicians can be relied on to do what will get them re-elected. And, believe it or not, that is the good news.

“If politicians weren't eager to be re-elected, the trust necessary to be an investor would vanish altogether.”

The only thing I disagree with that seems implied here is that things might have been different under Romney/Ryan.

But how could they have been?

The fiscal realities were going to be the same, the “fiscal cliff” would STILL be looming. Romney/Ryan offered Americans a bitter pill, one that was highlighted by the likes of Scott Walker in Wisconsin.

NOW, Democrats are going to eagerly sign onto policies that will deliver EVERYTHING that Holman predicts, but try and blame it all on the miserly Republicans “driving a hard debt deal.”

The plain truth IS that we’re all in for some unprecedented pain and a future of paying much more and getting back much less in “entitlements.”

JMK

Could Bain Have Saved Hostess?

Right about now I'm betting that the 18,500 Hostess workers would love to have an outfit LIKE a Bain Capital step in and "reorganize" that company, even if (perhaps ESPECIALLY if) it resulted in a "leaner, meaner" (as high as maybe a 10,000 to 12,000 member) workforce...which is what Bain did - "made companies profitable again by slashing the bloated workforces of the companies it bought." Like most such places, I'm sure any manager could tell you, "We could do the same amount of work and deliver the same amount of output with 9,000 workers.” I'd bet 10,000 to 12,000 workers would be more than adequate.

Ironically enough, the Teamsters Union recently put out this statement that clearly lays the blame for Hostess' demise and the loss of some 18,000 jobs at the feet of the BCTGM (Bakery, Confectionary, Tobacco and Grain Millers International Union);

“...In fact, when Hostess attempted to throw out its collective bargaining agreement with the Teamsters in court, the Teamsters fought back and won, ensuring that Hostess could not unilaterally make changes to working conditions during the several months’ long legal process that recently ended. Teamster Hostess members were allowed to decide their fate by voting on the final offer conducted by a secret mail ballot. More than two-thirds of Hostess Teamsters members voted with 53 percent voting to approve the final offer.

“The BCTGM chose a different path, as is their prerogative, to not substantively look for a solution or engage in the process. BCTGM members were told there were better solutions than the final offer, although Judge Drain stated in his decision in bankruptcy court that no such solutions exist. Without complete information, BCTGM members voted by voice votes in union halls. The BCTGM reported that over 90 percent rejected the final offer and three of its units ratified the final offer.
“On Friday, November 9th, the BCTGM began to strike at some Hostess production facilities without notice to the Teamsters despite assurances they would not proceed with job actions without contacting the Teamsters Union. This unannounced action put Teamster members in the difficult position of facing picket lines without knowing their right to honor such a line without being disciplined.

“As is our longstanding tradition, Teamster members by and large are honoring Bakery Worker picket lines when encountered and complying with their contractual obligations when not encountering picket lines. The BCTGM leaders are putting Teamster members in a horrible position – asking them to support a strike that will put them out of a job when they haven’t even asked all their members to go on strike.

“That strike is now on the verge of forcing the company to liquidate – it is difficult for Teamster members to believe that is what the BCTGM Hostess members ultimately wanted to accomplish when they went out on strike. We may never know unless the BCTGM members, based on the facts they know today, get to determine their fate in a secret ballot vote. Teamster members would understand that the will of the BCTGM Hostess membership was truly heard if that was the case.”

That’s an astounding statement from the Teamsters, as it’s so rare to see one Union throw another under the bus, but the Teamsters claim that the BCTGM threw the Teamsters under the bus first.

Bottom-line, workers aren’t investors or shareholders, UNLESS they actually purchase shares in the company they work for. Even then, their loyalty MUST BE split. As an investor/shareholder their PRIMARY focus MUST be on profitability and the Company earning returns for its shareholders. As workers, they are free agents selling a commodity (labor) in an open labor market. They willingly accept the market price offered for that job. A Police Officer in Broward County FL, doesn’t have to accept the $28,000/year salary, he can move to Chicago or New York to earn more as a Policeman. The same is true for these “bakers.”

Now, apparently, those baking jobs will be done in China or Surinam at a better return for shareholders. American consumers primarily care about price and availability, so it’s doubtful there’ll be much of an outcry by consumers “willing to pay a little more to save a few such jobs,” especially when quality isn’t compromised in the cost-cutting.

JMK

The End of Religion in Politics?

In the wake of election 2012, there’s been all sorts of hand-wringing by both Moderate/Libertarian Republicans and Religious Conservatives, with each blaming the other for the defeat, and BOTH seeming to believe this election was “the end of the world.”

This sort of DEFEATISM is DUMB.....The view that "once we head down an anti-freedom/pro-big government path we cannot turn back," isn't just hopelessly idiotic, it's also NOT based on any evidence at all. The Left said "We'd never recover from Reagan," and the Left came back stronger, winning the Presidency and BOTH Houses of Congress in 1992. Then Conservatives said, “We'd never survive 8 years of Bill Clinton,” but they came back stronger than ever and took back all 3 branches from 2000 until 2006.

In this recent election, Conservatives failed to sell their agenda...that's on us. Believe me, I know tons of cops and firemen in NYC who said stuff like, "This guy Romney scares me...if he gets in, there goes the unions." MOST people are very self-centered. And THAT, coupled with this view of minorities as "takers" (pushed by a few Republicans) is dopey! Fact is, senior citizens white, black and other voted for their free stuff, while poor people white, black and other voted for theirs, just as union members of ALL backgrounds voted for what they saw as "their best interests." Conservatives HAVE to do a better job of appealing to more people and talking as though Asians, blacks and Hispanics somehow "don't belong" is dumb strategy. The liberals were able to turn the phrase "take back America" (for traditional values) into a "racially exclusionary message against minorities by rich, white Republicans"...and the Conservatives failed to effectively deal with that.

ONE very serious problem Conservatism faces is its “religion problem.” Conservatives and the GOP effectively marginalized themselves this time around, by NOT fighting hard enough for principles and making clear how UNIVERSAL those principles are AND by failing to rein in religious extremists (like the rape-obsessed Todd Akin and Richard Mourdock). By NOT distancing themselves from such views, the GOP effectively allowed those kinds of extremists to slime the entire Party. Those sorts of views SHOULD have no place in the GOP going forward....UNLESS, of course, they want to continue to lose elections...

Moreover, the idea that there is a renewed assault on the Constitution amounts to absurd fear-mongering. After all, technically, Social Security, Medicare, Medicaid, foreign aid, among other longstanding government programs could ALL be considered, to varying degrees, “unconstitutional.” From an Originalist perspective, American Presidents have been disregarding that document for decades. Obama has been as fortunate as Ronald Reagan! Reagan ran against a ruined Jimmy Carter, than an incompetent lackey in Walter Mondale...Obama took on the ancient and sad-sack John McCain and then got to take on a Mitt Romney who had DONALD TRUMP making robo-calls for him, while extremists like Todd Akin & Richard Mourdock did their best to paint the entire GOP as a "rape-supporting American Taliban." Akin and Mourdock almost certainly cost the likes of George Allen, Linda McMahon and Tom Smith (PA) votes and cost the GOP any shot at reclaiming the Senate. In the meantime, we're having the biggest oil and natural gas boom under Obama! (SEE: http://www.ft.com/intl/cms/s/0/8c2bcdf2-2c9f-11e2-9211-00144feabdc0.html#axzz2C7r4jZFf  - US to be World’s Top Energy Producer)....More illegal aliens have been deported, ALL of the Bush foreign policies were followed and sadly he's doubled down on the Bush-Pelosi-Reid economic policies! Obama's NOT the antichrist....he's actually G W Bush the 2nd!

Supporters of the Akin/Mourdock viewpoint are now howling that, “Obama is trying to destroy America’s moral and spiritual values.” I completely disagree with that and here's why; we as individuals each owns our own life...ONLY I can surrender my spiritual and moral values...they CANNOT be taken away by others. Moreover, a growing majority of Americans seem OK with abortion on demand - it's been the law of the land for nearly 4 decades...and we're still standing. Today, more Americans are supporting equal treatment for gays. That's why the likes of Todd Akin and Richard Mourdock are so harmful to the GOP...they are so out of step with the prevailing American viewpoint that they ARE seen as "an American Taliban" - that is, a majority of American today see those views ("rape is a legitimate form of conception," "homosexuality is an abomination that should not be protected by law," etc) as akin to the Medieval views of the Taliban overseas. Conservatives MUST focus on their economic agenda and avoid such divisive social views...if they're going to be serious about actually winning elections in the future.

One of the problems that Conservatism faces is that too many Conservatives want smaller government, EXCEPT it seems, when that government can be used to enforce religious mores. I can't help seeing that as somewhat hypocritical. If we want government OUT of our economy, OUT from the business of helping some by harming/taking from others, then we SHOULD want them OUT of such local issues as abortion, gay rights, etc. To me, a more consistent Libertarian platform would better serve the GOP and Conservatism as a whole.

No person or government can “destroy our moral and spiritual values.” That’s an empty, meaningless charge.

For me, such things are an entirely personal matter. I also tend to think that a lot of Americans seem to pine for a yesterday and an America that never really existed. For instance, America was NEVER, nor is it today, "A Christian nation." It’s always been an open nation with a secular government, albeit one with a preponderance of Christians early on. Its two primary Founders, Jefferson & Franklin were both "non-denominational Deists," which amounts to irreligious hedonists. Ben Franklin was the veritable Silvio Berlusconi of his day! Franklin had affairs (often with Married women) well into his seventies, Jefferson reviled the day's "Christians," calling them "Paulists," and took the sayings of Jesus of Nazareth and separated them from what he called "the fictions of the Bible" (the miracles, etc) and let them stand alone as a philosophy (SEE: The Jefferson Bible http://www.amazon.com/Thomas-Jefferson-Bible-Morals-Nazareth/dp/1599868415).

AND to be fair, Obama has been a "Johnny come lately" to supporting same sex Marriage, although he's been a stalwart supporter of unfettered abortion...very much like Catholic Joe Biden, Catholic Nancy Pelosi and many other mainstream politicians....along with a very sizable chunk of the electorate.

Religion just doesn’t hold the sway over people it once did. Today, only 44% of Catholics believe that a "good Catholic" cannot vote for a pro-choice politician, while 53% believe one can! Moreover, 68% of American Catholics believe that one can be a "good Catholic" while disagreeing with the church's position on abortion, in Britain only 1 in 14 Catholics believe in the Catholic Church's view that bars abortion under all circumstances and in Australia, 72% of Australian Catholics say that the decision to have an abortion "should be left to individual women and their doctors. On gay Marriage, a recent Gallup poll found that 51% of American Catholics believe that same-sex marriage should be legalized. Pro-abortion, pro-gay rights, etc., are really all very private social issues.

Individually, each and every one of us has the right to oppose abortion...and simply choose NOT to have any, but we don't, nor should we seek the right to restrict other people's ability to decide for themselves on such a matter. Personally,

I guess I'm far more Libertarian than Conservative, I'm pro-abortion (until the child can survive outside the womb, appx 21 weeks), pro-gun, pro-gay, pro-death penalty and generally against most governmental overreach. I don't want to legislate that those who oppose such things be forced to avail themselves of guns, abortions, etc. I merely seek government NOT to make laws that would restrict the rights of those who do prefer to own guns, have abortions, etc.

Looking at those numbers should make clear that the "severe social conservatism" of Todd Akin & Richard Mourdock is a losing hand. Not only do most Americans appear to find their obsession with "rape as conception," "legitimate rape" and "conception via rape as God's will" offensive and "out of touch" with prevailing values, there appears to be little to nothing that can be done to convert a sizable portion of the electorate to those pro-big government, anti-individual liberty positions.

Conservatives often decry “moral relativism,” BUT, morality IS generally "relative"....that is, morality is relative to culture and other prevailing factors.

As an example, the Islamic moral code, embodied in Sharia Law is virtually incompatible with existing Western morality, although, existing Western morality would be incompatible with the Western morality of the Middle Ages. Most Westerners find the idea of stoning women who commit adultery and homosexuals to death repulsive, just as they tend to find things like "Honor Killings" and beheading murderers, rapists, etc (I'm kind of OK with beheading murderers, but still find most of Sharia's morality far too draconian even for my own tastes). HOWEVER, even here in the U.S. we find people often willing to abandon principle (moral strictures like it's wrong to depend on your neighbors when you're able enough to depend upon yourself) and the legions of people who could still be productive but rely on Social Security, Medicare, Medicaid, Food Stamps and even public employee pensions (there's been no shortage of such workers cheating to get tax-free disability pensions SEE: http://www.huffingtonpost.com/2012/05/22/lirr-pension-fraud-scheme-ten-retirees-amnesty_n_1536759.html) prove that for many of us, "right" and "wrong" are relative to our own self-interests. Indeed, many people have an almost limitless ability to rationalize/justify what appears to be in their immediate self-interest. I suppose that's a bit of "moral relativism" at work, in and of itself. We were once a much more agrarian and thus communally bound, or interconnected society, where people truly cared about each and every one of their neighbors. With industrialization, mechanization and ultimately the Information Age, we've become much more socially isolated, less interconnected and thus less decent to each other. Despite all this, both sides of the ideological spectrum STILL cling to ideologies that rose up during a much more agrarian age. Those conditions simply DON’T exist anymore and thus, we aren't the same people anymore either.

We are, in many ways, less connected, less religious and in many ways, less decent to each other and while much of that is lamentable, the progress made over the last century is undeniable – life IS qualitatively better than it was in 1912.

STILL, did the election of 2012 signal the end of the relevance of religion in politics? It certainly seems like it SHOULD HAVE, to those who’re paying attention...and I say, Let’s hope so!....But I fear it isn’t.


JMK