Issue 2 - Imperfect but Necessary

Senate Bill 5 and Issue 2 have nothing to do with Ohio's budget deficit. That issue was addressed in an already passed state budget. The intent of these  initiatives is to deal with budget issues facing local government entities including school systems, townships, villages and cities. Ohio has no more bail out money.  The hope is that Issue 2 will give the local governments the tools by which to better manage local finances.

Let's start with the police and firefighters. Notwithstanding Issue 2, they are not allowed to strike in Ohio. Under the current system, they enter into collective bargaining with their local government. If no agreement can be reached, then the matter is referred to binding arbitration conducted by an outside arbiter. The arbiter then makes a decision which is binding on the parties.

The problem is the arbiters, some of whom come from as far away as California, often decide the issues based on pay scales and salaries from parts of the country where the cost of living is substantially higher than here. The only thing the arbiters DON"T take into consideration is the ability of the local government entity to pay. So when recommendations are made, the local government entity has only two choices, lay off the safety forces at the expense of the less senior employees, or start an endless cycle of property tax levies or sales tax initiatives to get the money. At the end of the day, those are regressive taxes and hurt the poor and the elderly disproportionately. That is the Draconian choice Issue 2 eliminates. It leaves the ultimate decision on wages and benefits to the local government entity.

State university employees also use an arbitration process both for faculty and non-certified unions, but they can strike. YSU is notorious for this, and the end result is ALWAYS higher tuition to pay for what are disproportionate salaries of university professors. The argument is ALWAYS they can make more money elsewhere, and they could leave their jobs for higher pay in New York City. They won't leave though, if they can get New York City salaries and live in Youngstown where the cost of living is among the lowest in the nation. Those are the sweetheart deals Issue 2 wants to eliminate by outlawing strikes by university personnel.

Issue 2 also equalizes benefits for unionized state employees to the private sector.  It requires a minimum of 10% contribution to health care, and 15% to pension.  It also attempts to eliminate the undue burden placed on local governments for cash in pension bonuses from unused sick days and vacation days.  In the private sector, it is use it or lose it.  These types of pension bonuses cost the Cincinnati $93 million this year.  This has to stop.

Secondary schools are directly targeted by Issue 2, also eliminating the right of teachers to strike. But it goes further by ending tenure and salary increases based on longevity rather than teaching ability. This is the most controversial of the provisions. Being married to a teacher, I know about nepotism and favoritism played by local school boards. The popular line for Issue 2 proponents is that the teacher of the year can be laid off in favor of someone who has been there a long time. What they don't tell you is that the teacher of the year is probably a cheerleading coach, and hiring decisions by many school systems is based on what a teacher can coach rather than what a teacher can teach. Not to mention that person who gets a bur up his/her butt and runs for school board because Mrs. Jones gave little Johnny a C in English. Guess who is going to lose her job with no recourse? This is the problem part of Issue 2. Merit pay is a good idea, but in Issue 2 it is ill conceived and not well thought out.

The Plain Dealer, the Columbus Dispatch, and the Cincinnati Enquirer have all endorsed Issue 2, stating that it has its problems, but the issues facing local governments and school systems are critical and we are better off with it that without it.

I agree. While I have major problems with the tenure/seniority for primary school teachers found therein, the balance of the provisions are necessary and timely. My wife retires at the end of next year so she will not have to deal with those seniority provisions and the huge number of lawsuits that I see stemming from the "merit pay" provisions. If what I think is going to happen does happen, teachers will be striking notwithstanding as some of these goofy school boards start to throw their weight around. The law will be adjusted accordingly as the coming abuses begin to surface.

Finally, the main reason I support Issue 2 is that it gives public employees the right to opt out of mandatory withholding of union dues from their paychecks. Union bosses and political slush funds make those involved with big business look like a walk in the park. The abuses are many and well documented. Notwithstanding what the law currently says, unions take money from those who might have a different political view, and support left wing candidates directly and indirectly, not to mention liberal issues and causes including pro-choice and pro-illegal immigrant endeavors. In addition, in Ohio, 99% of all union political contributions go to Democratic candidates, who in turn repay the union by granting excessive pay raises and benefits. It is a racket in a vicious circle.

I am going to vote YES on Issue 2 on November 8.

America's Challenge: Prosperity Through Structural Change

The economic storm clouds have been billowing and blowing around America for the past several years. Record numbers of Americans are living in poverty. Middle class Americans have lost at least $14 trillion in home equity value over the past seven years. Unemployment is rampant among those under the age of twenty five. It is tragic in the same age group within the minority community. Under employment is everywhere you look. 

At the same time, farmers are complaining that the flow of illegal immigrants has slowed to a trickle while Americans are ignoring those now vacated jobs. In addition, many skilled trade jobs are screaming for employees and they just aren't there. On a personal level, I have been looking for someone to install some indoor lighting in my house and it has been like pulling teeth trying to get anyone to come out and do it.

I have been writing for several months now that this is not your father's recession. To use the vernacular, this time it's different. While those responsible for monetary policy have lowered interest rates to almost negative numbers punishing the investment class, and those responsible for fiscal policy have looked at wasted "stimulus" spending while the national debt is at crisis levels as Europe teeters on collapse, the stuff that needs to be done is being ignored either by ignorance or design...and I suspect a good dose of both.

Once again I am raising the hue and cry that the problems with the American economy, and indeed America herself, are systemic. You can tinker with spending and printing money and interest rates all you want, it won't make it better. Unless the structural issues are addressed, we will continue to flounder in ways unknown in the country up until now.

Therein lies the appeal of Herman Cain. He has confounded the pundits with his 9-9-9 plan which even the most cursory inspection demonstrates it would be politically infeasible to implement. On the other hand, the fact that he has proposed a structural solution to a known problem, a disastrous tax code, is enough to make America sit up and take notice. No, America may not like THIS plan, but it at least it satisfies our sense that the problems lie elsewhere than spending money to hire more teachers or police...the "temporary" solution.

Structural change is needed in tax policy, energy policy, trade policy, environmental policy, and foreign policy to make this country work. We need to address social attitudes as well. Getting your hands dirty needs to be elevated to a respected way to make a living. The be all and end all of success is not a college education in liberal arts. As I told my son, a college education entitles you to nothing. It is just another tool in your box to help you make a living. In my practice, some of my wealthiest clients barely finished high school.

The job of American government is to create an environment for individual success. What needs to be done is no secret, and if done correctly, there will be screaming from both sides of the political spectrum. Yes, General Electric and IBM should be paying taxes, but so should the 47% of working Americans who don't. Yes, universal health care is a worthy goal, but suffocating American business and creating an environment where Walmart has ceased providing health care to those who need it most is inexcusable. And energy independence, the cornerstone for future American prosperity, will require silencing the environmental extremists among us while letting those who are doing the fracking know that they better not frack the water tables.

I believe that America is up to the challenge. So let's stop crying in our beer, and go do it.

Occupy Wall Street: Feeding the Mob

The Occupy Wall Street “movement” has been front and center in the media. After watching it for awhile, the only conclusion that can be reached is that it is not the grass roots spontaneous populist uprising the news dudes want to portray. Drooling news commentators like Anderson Cooper and his associates at CNN are harboring memories of the 1960’s. Oh how wonderful. Nancy Pelosi was positively orgasmic as she nominated these folks for sainthood. But they are wrong, and they know it.

Start with the premise that Barack Obama was a community organizer. If you ever wondered what a community organizer did, look at the Occupy Wall Street crowd. That’s what community organizers do. Is Barack Obama behind this thing? Maybe! Are his campaign people and Acorn crowd behind this? Probably! These guys can organize a crowd with a tweet or an email. The demonstrators will show up at the drop of a hat. All you have to do is tell them where and when.

Unfortunately, the Democratic left has a problem. In addition to Nancy Pelosi and GE’s Jeff Imelt embracing these folks, so has the Communist Party and the Nazi’s. The intolerance of the left is rearing its ugly head in some of the most anti-Semitic rhetoric I have heard in a long time. Blaming Wall Street has become equated with blaming the Jewish bankers. One employee of the Los Angeles school system got on television and said the Zionist Jews need to be run out of the country. The signs are rampant at the demonstrations.

Nancy Pelosi and Harry Reid called the Tea Party racist without one shred of evidence. They stated that they must be racist because the Tea Party wanted smaller government and a balanced budget. Now the darling of the Tea Party is Herman Cain, a conservative black entrepreneur. What is the solution to this progressive dilemma? Call Herman Cain racist. One commentator stated that racism is never stronger than when it comes from a black man. Really?

The press has ignored the racist, bigoted, and violent commentary coming out of the Occupy Wall Street folks. Beheading the bankers is my favorite. The press is also ignoring that funding for these activities is coming from every union between the AFL-CIO and the SEIU.  That's certainly not spontaneous. 

It’s called feeding the mob. It’s dangerous. Killing the Jewish bankers and businessmen is a familiar refrain…in Weimer Germany and early 20th century Russia. This is bad stuff. The press can play the populist spontaneity angle all they want, but I know intolerant leftist violent bigots when I see them.

Is it representative of all the people marching in the streets? Of course not.  Many of these folks have legitimate complaints.  Many mirror the opinions of the Tea Party.  But when the left starts to march, watch out.  Feeding the mob is dangerous.  Community Organizers may think they know how to strike a delicate balance between legitimacy and lunacy, but then again.....

Is America in Decline?

Is America really in decline? The Drudge Report posted an editorial from the British paper The Financial Times entitles America Must Learn to Manage It’s Decline. The author claims that America must come to accept its decline in the world or risk having it worse than it is. He cited the United Kingdom in 1945 in coming to terms with the demise of Pax Britannia. He also stated that Britain prospered economically once it accepted its reduced role in the world.

Well, we aren’t Britain at the end of World War II which was dealing with massive destruction of its industrial capacity, an empire torn apart by the war, economically bankrupt, and incapable of reconstructing itself let alone any other part of the world. The British Empire didn’t decline. It collapsed in the war. Just like the Habsburgs and the Austro-Hungarian Empire did at the end of World War I. War is funny that way.

The fact that this editorial appeared in the Financial Times is indicative of how the world currently views Obama’s America. He views America as being in a zero sum game. Although he says he wants America to be number one, as in all things Obama, his actions are those of a person trying to manage a shrinking economy and shrinking power. And just in case it didn’t happen by itself, he would institute policies to make sure that it does.

America will never be a second class country. We are the third largest country in the world by population (behind China and India). We are blessed with abundant natural resources although Obama and his EPA cronies are doing their best to put them out of reach. The rest of the world still comes here for our universities and educational opportunities. Although the country is broke, most of our citizens are fairly well off and we still maintain a vibrant middle class contrary to progressive rhetoric.

That doesn’t mean other countries won’t advance as they achieve economic success based on one form of capitalism or another…whether it is state capitalism in China or crony capitalism in Russia or hard working capitalism like in India. After World War II, the United States was the only game in town. No one could expect that to last.

But just because other countries are finally achieving success doesn’t diminish our relevance or importance in the world. We have first and foremost a Constitution, Rule of Law, and a stable political system. The current gridlock in Washington isn’t a sign of our weakness. It is a sign of our strength. As the saying goes, we will finally stumble upon the correct policy after all others have failed. Notwithstanding the Standard and Poor’s debt downgrade, America is the ONLY safe haven in the financial world. That is the strength of our system and of our national character.

The risk of American decline will not be found in foreign countries overtaking our hegemony. The risk is found from within. Don’t listen to Obama. Don’t be fooled by utopian promises. Unlike Obama who has preyed on people’s fears, equality in America doesn’t mean that all people should have the same…that’s communism. In America, we are created equal by God who has given us equal opportunity to pursue life, liberty and the pursuit of happiness. Our strength is in striving to give everyone an equal opportunity, equal life chances. We obviously don’t always achieve that, but we try. That is the great American quest.

America in decline? That will happen only if we choose to let it happen.

"Occupy" These Three Things to Fix the Economy

In the midst of the Occupy something or other “movement”, I am stunned at the lack of understanding of the American system exhibited by these folks. Some want all debts forgiven. Others want the banks to be dismantled. Still others want all income to be equal. Another group wants doctors to only make $28,000.00/year. Others think that aliens are controlling all the corporations. Oh my. What have we wrought?

Obviously economics is not these folks' strong suit. For that matter, most of us are lacking in the fundamentals as to how our economic system works. That is why the times we are living in are so hard. People don’t know where to look for solutions, so they look in all the wrong places.  Here are two definitions just for the hell of it. Fiscal policy has to do with government spending and taxing policy. Monetary policy has to do with how the Federal Reserve sets interest rates, bank reserve requirements, and the increase and/or decrease of the money supply.  That was simple, wasn't it? 

Our economy cannot be fixed until the powers that be realize that this time monetary and fiscal policy will not work. Under normal circumstance and normal recessions fiscal and monetary policies work to a degree and can be very helpful. But this isn’t a normal recession. Someone has let the air out of the balloon. Changes in monetary and fiscal policy are simply moving deck chairs on the Titanic. Raise taxes on the rich to “stimulate” the economy under these circumstances is robbing Peter to pay Paul. It is smoke and mirrors with no substance and may actually be harmful as the most productive in our economy are penalized.

Our economy is in systemic trouble. There has to be a change in priorities in order to fix things. Some of these changes will be painful…and others will be exciting and challenging and will represent a rebirth of American greatness.  All of them will be controversial because many political policies have become dogma and border on religion.  That is dangerous.

Start with fairness. Obama and friends get on television night after night and talk about the rich paying the fair share of taxes. When 50% of working Americans pay no taxes and the top 10% of wage earners pay more than 80% of collected income taxes, Obama is right. Just not in the way he thinks. While the blame game may prove popular to a degree, he is doing a disservice to the country by lying. The tax code needs to be reformed so everybody pays something. I don’t care if it is even a hundred bucks. REVISE THE TAX CODE.

Energy is the lifeblood of America. We are regulating ourselves out of business while our competitors pay lip service at the altar of environmentalism but then do whatever they want. Leading by example doesn’t cut it. We need to normalize energy policy in our country allowing for the production of domestic energy, including coal, natural gas, and off shore oil. I am also for alternative energy development. The government can push the country in that direction with reasonable tax incentives…but it CANNOT continue to regulate our country into oblivion based on some speculative junk science which over and over again is proven to look good in theory, but is not borne out by the empiric evidence. THE CURRENT ENERGY POLICY IS THE DEATH KNELL OF OUR ECONOMY.

As an appendage to our dysfunctional, ideological energy policy, General Electric closed its last light bulb plant in the United States and moved production of the new “green” light bulbs to China. Until the government gets tough with China, requiring it to float its currency like all of the other world players, we will continue to lose business and jobs to the Chinese. Add to that tough, enforceable intellectual property laws, maybe then we can make some headway.

I keep talking and nobody listens. Benanke and crew can continue to quantitatively ease the money supply. Obama and crew can continue to rail against the rich. The “occupy” jack asses can continue to call for dismantling the nuclear power plants. It will make no difference.

1) REFORM THE TAX CODE.

2) ALLOW FOR DOMESTIC ENERGY PRODUCTION

3) NORMALIZE FAIR TRADE WITH CHINA

Do these three things, and we are back in business.

Obamacare Meets the Supremes

In a stunning reversal of strategy, this past week the Obama administration changed its health care law strategy by asking the United States Supreme Court to agree to hear the challenge to its constitutionality sooner rather than later. Up until now, the strategy had been stall and delay. The administration believed that a delay in the decision to possibly late 2013 would allow it to get by the election before implementation of its provisions, plus allow promulgation of the associated regulations making it difficult for the court to overturn Obamacare. Now it is expected the Supreme Court will issue a decision on Obamacare around June of next year, just in time for the election.

There have been three appellate hearing on the matter. The 6th Circuit in Ohio ruled 2-1 in favor of the law. The 11th Circuit in Atlanta ruled 2-1 against the law. The 4th Circuit in Virginia refused to hear the case stating that the parties had no standing to challenge it because it didn’t take effect to 2014. It took no position on its constitutionality or lack thereof. The Virginia and Ohio decision were straight party line. The fly in the ointment for Obama was the Atlanta decision where a Clinton appointee sided on the side of unconstitutionality.

Originally the administration indicated it would appeal the Atlanta decision to the entire panel of 11th Circuit judges. There are eleven of them. But they counted up the votes, and decided they couldn’t win there, and it would actually bolster the opposition challenging the law. Those of you who followed Bush v Gore in 2000 should feel right at home at the 11th Circuit, which helped Bush be declared the winner of the hotly contested Florida primary.

The Supreme Court is a center right court, with Justice Kennedy being the swing vote between the four liberal justices and the four conservative justices. The issue is simple, can the United States government force a citizen to buy a product it does not want while outlawing all other reasonable alternatives. The liberals have gone orgasmic claiming the Commerce Clause of the Constitution has expanded to such a point that government does have the authority. Those opposing state that if this law stands, the government can force individuals to buy or not buy anything if it serves the “social good”, whatever that means. My money is on the opposition.

This is the big enchilada for Obama. All other issues pale in comparison to his administration’s signature piece of legislation. Everything else he has done is haunted by the shadow of this 2400 page disaster which sets up a bureaucracy the likes of which this country has never seen before, enforced by the power of the Internal Revenue Service.

Obama’s supporters claim this is no different than Social Security and Medicare. They are wrong. In those programs, there was a benefit for everyone where there was none. In Obamacare, there are winners and losers. Most of the country has good health care plans and ends up at the losing end of the stick, and they are unhappy. At the height of the debate, 75% of Americans opposed it. Today, it is around 60%.

Obama’s people believe that it will be a political boon to the President if the law is upheld. And if the law is defeated, it would rally his base to re-elect him in order to make sure the next Supreme Court appointee will be liberal, and shift the balance on the court.

That is a bonehead position, and they are wrong. If the law is upheld, the right will rise up and show up at the polls unlike anything this country has seen before to politically get rid of it. If the law is overturned, the right will be celebrating in the streets, and still show up in droves to get rid of Obama.

One last thing!!! Obama shouldn’t be too sure to count on at least four votes in the Supreme Court. At the end of the day, these folks are independent lawyers and judges. Political leanings are one thing, but they also are trained to enforce and interpret the law according to the Constitution. They don’t live in a vacuum, and are well aware of the problems in the country and the political unpopularity of Obamacare. You may see a 6-3 decision, or even a 7-2 decision against the law. One of my friends who is the most liberal person I know told me that he admires the tea party. I asked him why. He said that there is very little difference between progressive Democrats and libertarian Republicans. They wanted the government out of their lives in the era of the 60’s protests, and they want the government out of their lives now.

And of course there was that little matter of the President of the United States dissing the Supreme Court on national television at a State of the Union Address no less. As they say….what goes around, comes around. It’s not nice to fool Mother Nature, or the Supreme Court.  Hi boys...good to see you.  Make some arguments.