General Motors Corp., nearing a federally imposed deadline to present a restructuring plan, will offer the government two costly alternatives: commit billions more in bailout money to fund the company's operations, or provide financial backing as part of a bankruptcy filing, said people familiar with GM's thinking.
The competing choices, which highlight GM's rapidly deteriorating operations, present a dilemma for Congress and the Obama administration. If they refuse to provide additional aid to GM on top of the $13.4 billion already committed they risk seeing an industrial icon fall into bankruptcy.
Some experts and members of Congress say bankruptcy reorganization is the surest way for GM to cut costs and become viable. But it could be a politically unpalatable development during a recession that already has thrown millions of workers out of jobs.
Treasury Department officials believe GM needs at least $5 billion more in U.S. loans to keep operating beyond the first quarter, said people familiar with the situation. . . .
This stimulus package is filled with wasteful spending. Take the money on electronic health records, money that will supposedly make the system much more efficient. Here is the problem: if it paid to make these investments, why wouldn't the insurance companies and doctors already be doing this? They want to make money, and if the benefits outweighed the costs, wouldn't they find it in their interests to do this?
In the legislation passed late Friday, Congress approved spending about $19 billion over the coming years on electronic health records and an additional $1.1 billion on research comparing which treatments work best for a particular disease. . . .
Axel Leijonhufvud was one of my favorite professors at UCLA. He is a very thoughtful man. He has a piece here:
What is the difference [with this recession]? It resides in the state of balance sheets. The financial crisis has put much of the banking system on the edge – or beyond -- of insolvency. Large segments of the business sector are saddled with much short-term debt that is difficult or impossible to roll over in the current market. After years of near zero saving, American households are heavily indebted. The holes that have opened up in the balance sheets of the private sector are very large and still growing. A recent estimate by Jan Hatzius and Andrew Tilton of Goldman Sachs totes up capital losses of $2.1 trillion; Nouriel Roubini thinks the total is likely to be $3 trillion. About half of these losses belong to financial institutions which means that more banks are insolvent – or nearly so – than has been publicly recognised so far. So the private sector as a whole is bent on reducing debt. Businesses will use depreciation charges and sell off inventories to do so. Households are trying once more to save. Less investment and more saving spell declining incomes. The cash flows supporting the servicing of debts are dwindling. This is a destabilising process but one that works relatively slowly. The efforts by financial firms to deleverage are the more dangerous because they can trigger a rapid avalanche of defaults (Leijonhufvud 2009). . . .
I disagree with him on the issue of saving, simply because I think that the government's measure of saving is so incredibly poor -- leaving out the net worth that people have in their houses as well as money put in investments such as stocks. I also disagree with Axel on the causes of this (as I have written in my many op-eds).
A copy of the final bill (still marked up with editing notes on it) is available here. Not only did they give people fewer than 20 hours to look at this, they also didn't even have a clean copy to look at. This monstrosity is entitled "American Recovery and Reinvestment – Conference Report."
Do these Democrats realize how bad it is to make regulations retroactive? Some companies, such as Bank of America, take over companies at the request of the Feds and find that they are now in bad shape because of that so they take the government funds. Now they face these stupid retroactive regulations.
The provision, inserted by Senate Democrats over the objections of the Obama administration, is aimed at companies that have received financial bailout funds. It would prohibit cash bonuses and almost all other incentive compensation for the five most senior officers and the 20 highest-paid executives at large companies that receive money under the Treasury’s Troubled Asset Relief Program, or TARP.
What are the costs for the stimulus bill past the first two years? Congressional Budget Office estimates the impact of permanently extending the 20 most popular provisions of the stimulus bill. The costs are truly staggering. The true 10 year cost of the stimulus bill $2.527 trillion in in spending. Heritage is wrong to include the interest costs in its discussion (it is really double counting).
Why Senator Judd Gregg Dropped the Commerce Secretary Nomination
John Fund at the WSJ has this:
. . . . My own sources say the unilateral decision of the Obama White House to transfer oversight of the Census to the White House was the final straw in Mr. Gregg's disillusionment with the idea of joining the Obama cabinet. CNN's Jessica Yellin confirmed that view last night when she reported: "Sources close to Senator Gregg say the bigger issue for him was the White House's effort to take control of the census."
The dispute became a dealbreaker for the Gregg nomination after it became clear liberal groups haven't given up their dream of using computer models and "sampling" techniques to adjust the Census count upward to make up for supposedly "missing people" not picked up by Census enumerators. Those "adjusted" numbers would have real political significance because they are used to redraw Congressional and state legislative districts and allocate federal money.
White House Press Secretary Robert Gibbs insisted that "historical precedent" exists for the White House to ride close herd on the Census, but every living former Census director supports a pending bill in Congress to make the Census an independent agency and further insulate it from politics.
When President Obama met with Senator Gregg at the White House on Wednesday, he could have simply told him he hadn't known of the White House power grab and that the Census Bureau would continue to report directly to the Commerce Secretary. But he didn't, which played a major role in Mr. Gregg's decision to withdraw. Given a choice between his vaunted "new politics" and the left-wing pressure groups that were demanding White House influence over the Census, Mr. Obama made a clear choice to side with the liberal base of his party.
Paul Helmke, president of the Brady Campaign to Prevent Gun Violence, which opposes open-carry laws: "We don't want more people carrying guns either openly or concealed because the more guns you have in a situation, the more likely you are to get gun violence."
Is there some evidence that Helmke can provide that these individuals are involved in needless or harmful gun violence? If so, I would like to see it. Take Florida for example, 166 firearms related violations that produced revocations out of 1.465 million people that have been given permits. That is a rate of 0.01 percent.
NCSU students want to pack heat on campus Posted: Feb. 10, 2009 RALEIGH, N.C. — Some North Carolina State University students are wearing empty gun holsters on campus this week to protest a state law prohibiting them from carrying concealed weapons on campus. "Everyone should be given a right to defend themselves no matter where they are," said Daryl Johnson, a member of Students for Concealed Carry on Campus, a national group that gained attention in the wake of the massacre of 32 students on the Virginia Tech campus in April 2007. "We are just trying to show that we are law-abiding citizens. We carry off campus, or we support carrying off campus," Johnson said. Nearly 128,000 concealed carry permits have been issued in North Carolina since 1995, including 8,300 in Wake County, according to the State Bureau of Investigation. About 20 members of Students for Concealed Carry on Campus are taking part in the empty holster protest this week, he said. Similar protests are expected on other college campuses in North and South Carolina and Virginia, he said. . . . .
"Progressives" attacking Cass Sunstein's appointment from the Left
Cass is a true academic in that he is open minded and willing to discuss issues. I might not agree with him, but he is smart and willing to discuss any issue. My guess is that these progressives are unlikely to find anyone who could champion many of their views as well as Cass can. Cass probably agrees with them on a lot more issues than they realize, but they have so little understanding of what cost-benefit involves they think that anyone who is willing to consider both the costs and benefits from regulation is their enemy. Possibly that tells us something about how small they think the benefits from the regulations are. Anyway, here is something today from Bloomberg.
Cass Sunstein, the new president’s choice to oversee rules for everything from global warming to workplace safety, may be a regulatory sheep in wolf’s clothing.
Sunstein’s support for cost-benefit analysis, balancing the costs of proposed federal rules against their benefits, makes him look more like an industry-friendly Bush appointee than a crusader for reining in corporations, some supporters of President Barack Obama say.
As head of the Office of Information and Regulatory Affairs, Sunstein, a Harvard Law School professor, would be the arbiter of debates on rules for auto safety, environmental protection, union organizing and dozens of other issues. Some critics question his commitment to imposing tougher standards on companies. . . .
Might this be the reason that Obama is pushing for the stimulus bill to be passed so quickly?
The Democrats have apparently hidden all sorts of liberal agenda items in the stimulus bill. Slate has this:
Now, though, Congressional Democrats want to encourage states to expand their [welfare] caseloads, offering billions of federal dollars in the "stimulus" package as an incentive to do so. But wait, if states expand their welfare caseloads as the Dems want, they'd lose the "caseload reduction credit," since their caseloads would not, in fact, have been reduced. They might then have to start enforcing the "work activity" requirements on those caseloads. Can't have that! That might discourage states from expanding welfare, for one thing, since enforcing work requirements costs money, and states have no money. And Congressional Money Liberals** never liked work requirements much in the first place. The last thing they want to do is increase them. (Their whole theory is that the many single-mom recipients are "hard-to-employ" types with "multiple problems" who basically need to be supported on the dole.) What's a good Money Liberal to do?
Tragically, no one from either party is objecting to the health provisions slipped in without discussion. These provisions reflect the handiwork of Tom Daschle, until recently the nominee to head the Health and Human Services Department.
Senators should read these provisions and vote against them because they are dangerous to your health. (Page numbers refer to H.R. 1 EH, pdf version).
The bill’s health rules will affect “every individual in the United States” (445, 454, 479). Your medical treatments will be tracked electronically by a federal system. Having electronic medical records at your fingertips, easily transferred to a hospital, is beneficial. It will help avoid duplicate tests and errors.
But the bill goes further. One new bureaucracy, the National Coordinator of Health Information Technology, will monitor treatments to make sure your doctor is doing what the federal government deems appropriate and cost effective. The goal is to reduce costs and “guide” your doctor’s decisions (442, 446). These provisions in the stimulus bill are virtually identical to what Daschle prescribed in his 2008 book, “Critical: What We Can Do About the Health-Care Crisis.” According to Daschle, doctors have to give up autonomy and “learn to operate less like solo practitioners.”
In rolling out his overhaul of the financial rescue yesterday, Treasury Secretary Timothy F. Geithner lambasted the Bush administration's response to the crisis over the past year.
"Policy was always behind the curve, always chasing the escalating crisis," Geithner said, criticizing his predecessor, Henry M. Paulson Jr. "The emergency actions meant to provide confidence and reassurance too often added to public anxiety and to investor uncertainty."
But yesterday, Geithner seemed to be following the Hank Paulson playbook, according to a wide consensus on Wall Street, in Washington, and beyond. . . . .
Probably a little less than 15 years ago when my children were little and we were all living in Swarthmore, PA I saw this hysteria first hand. When you have a lot of little kids over there is always the chances of accidents occurring. One time I was walking by the bathroom and noticed a disturbing smell. Well, it turns out that multiple children had used the toilet without flushing it. The problem? They were fearful that we were running out of water. Absurd. This was in very green southeastern Pennsylvania. Anyway, I was reminded of that story when I saw this:
PSYCHIATRISTS have detected the first case of "climate change delusion" - and they haven't even yet got to Kevin Rudd and his global warming guru.
Writing in the Australian and New Zealand Journal of Psychiatry, Joshua Wolf and Robert Salo of our Royal Children's Hospital say this delusion was a "previously unreported phenomenon".
"A 17-year-old man was referred to the inpatient psychiatric unit at Royal Children's Hospital Melbourne with an eight-month history of depressed mood . . . He also . . . had visions of apocalyptic events." . . . .
Orange County (Ca) Sheriff Sandra Hutchens is facing real political problems for arbitrarily restricting issuance of Concealed Handgun permits
Sheriff Sandra Hutchens has been restricting the issuance of concealed handgun permits since she became sheriff. There has been no evidence that the permit holders have created any sorts of problems. But what has particularly strange is her battle with the County board of supervisors, with charges of spying on supervisors notes by her staff and claims that she has tried to intimidate others.
Stimulus bill to regulate the cost effectiveness of medical treatments provided by private health insurance?
Ugh? Why would the stimulus bill regulate the cost effectiveness of medical services by private doctors to patients covered by private health insurance? This is just Obama's way of putting private insurance companies out of business. We already had the massive health insurance regulations imposed as part of the financial bailout bill last October (something designed to dramatically increase the cost of private health insurance). The Democrats seem to want to destroy the private system to increase support for a government takeover.
Can Obama get the census directly overseen by the White House?
Strangely, Obama doesn't seem to trust his newly nominated Secretary of Commerce and the guy isn't even confirmed yet. Possibly one of the couple most important jobs of Commerce is to oversee the census, so much of the government depends on that being done properly. Well, it turns out that the Obama wants the White House and not the new Secretary of Commerce to run the census. There is only one little proble: the law seems to say that its the Secretary's job.
Congress has “directed” in Title 13 that the Census be carried out by the Bureau of the Census “as an agency within, and under the jurisdiction of, the Department of Commerce.” 13 U.S.C. 2. The Secretary of Commerce is directed to carry out the duties of this title and while he can delegate “the performance of such functions and duties,” he can only do so to “officers and employees of the Department of Commerce.” 13 U.S.C. 4. So what Obama is doing by having the Census Bureaus report directly to the White House is not authorized by federal law. Also, only “sworn officers and employees of the Department or bureau” are allowed to examine individual census reports. This is part of the confidentiality requirements of Section 9 of the law. Depending on what kinds of reports and information would be given to the White House, there could also be a violation of this confidentiality requirement.
It also contains an unprecedented level of transparency and accountability, so that every American will be able to go online and see where and how we're spending every dime. What it does not contain, however, is a single pet project, not a single earmark, and it has been stripped of the projects members of both parties found most objectionable. . . .
Releasing prisoners from prison will have "no adverse impact on public safety"
One could make a few different arguments for releasing prisoners early from prison, but claiming that there will be "no adverse impact on public safety" is absurd. No increase in crime from reducing the penalty from committing crime? This is simply not serious. This quote is from the NY Times, which doesn't seem to have any problem with the claim.
The California prison system must reduce overcrowding by as many as 55,000 inmates within three years to provide a constitutional level of medical and mental health care, a federal three-judge panel tentatively ruled Monday.
Relying on expert testimony, the court ruled that the California prison system, the nation’s largest with more than 150,000 inmates, could reduce its population by shortening sentences, diverting nonviolent felons to county programs, giving inmates good behavior credits toward early release, and reforming parole, which they said would have no adverse impact on public safety. . . .
As the final push for the 778 page, $827 billion stimulus package faces votes today and tomorrow in the Senate, President Obama is hammering is opponents and pushing hard for the bill. On Friday, Obama pointedly reminded Republicans that he won the November election and had the right to get his policies enacted. But the stimulus bill bears little resemblance to his campaign promises. It bears little resemblance his many promises he made just a month ago.
If Obama claims a mandate, shouldn’t it be related to what he campaigned on? . . .
These pictures were obtained here. If Gerald Ford had hit is head, I somehow suspect that the comedians would have had a field day with it. When Ford slipped on some wet steps while deplaning Air Force One, that single incident was fodder for political comedians such as Chevy Chase for years. If George W. Bush had hit his head, I suspect that the same thing would have occurred. Remember Bush passing out because he choked on a pretzel during January 2002? There were a huge number of political jokes about it. It will be an interesting academic exercise to see how many late night jokes there will be regarding Obama hitting his head while leaving Marine One. Obama is essentially the same height as George H.W. Bush (6' 1" to 6' 2") and Ronald Reagan (6' 1").
Speaking of Chevy Chase, his recent comments about using humor on Saturday Night Live to destroy a candidate's credibility might be relevant here. When commenting on Tina Fey's portrayal of Sarah Palin he said:
"I want her to decimate this woman. This woman is, I can't believe there hasn't been more about it. ... It's just unbelievable to me this woman is actually running for vice president."
Chase also claimed that unlike other guests Lorne Michaels had nothing written for Palin when she appeared on SNL: “What was brilliant about (‘SNL’ chief) Lorne (Michaels) was that he had nothing written for Sarah . . . ."
Andrew Breitbart's piece here asks the right question. Indeed, my piece that should come out at Fox News today makes a similar point.
Can we all agree that the "hope, "change" and "transparency" part of the Barack Obama media carnival is officially over, and it's finally time that we start holding our new president accountable? . . .
The Obama administration's economic stimulus plan could end up wasting billions of dollars by attempting to spend money faster than an overburdened government acquisition system can manage and oversee it, according to documents and interviews with contracting specialists.
The $827 billion stimulus legislation under debate in Congress includes provisions aimed at ensuring oversight of the massive infusion of contracts, state grants and other measures. At the urging of the administration, those provisions call for transparency, bid competition, and new auditing resources and oversight boards.
But under the terms of the stimulus proposals, a depleted contracting workforce would be asked to spend more money more rapidly than ever before, while also improving competition and oversight. Auditors would be asked to track surges in spending on projects ranging from bridge construction and schools to research of "green" energy and the development of electronic health records -- a challenge made more difficult because many contracts would be awarded by state agencies. . . .
Sen. John Thune (R-S.D.) on Tuesday introduced the Respecting States’ Rights and Concealed Carry Reciprocity Act (S.371), a bill that would allow people to carry lawfully concealed firearms across state lines, while at the same time respecting the laws of the host state.
“South Dakota is a state with responsible laws allowing citizens to protect themselves with concealed weapons,” Thune said. “Law-abiding South Dakotans should be able to exercise the right to bear arms in states with similar regulations on concealed firearms.” . . .
"We are going to ban all earmarks -- the process by which individual members insert pet projects without review," he explained. "We will create an economic recovery oversight board made up of key administration officials and independent advisors to identify problems early and make sure we are doing all we can to solve it."
Stopping just short of a take-it-or-leave-it stand, Obama has mocked the notion that a stimulus bill shouldn't include huge spending. He's also defended earmarks as inevitable in such a package. And he's pointedly reminded Republicans about who won the November election. . . .
We are going to have to eliminate out moded programs and make the ones that we do need work better.
Now, with all this new spending, can someone point to one of the outmoded domestic government programs that Obama promised to eliminate.
Bloomberg points out what Obama proposed at the end of the election:
During the presidential campaign, Obama, 47, proposed a $175 billion plan with tax-rebate checks for consumers as well as spending on school repairs, roads and bridges, aid to states, and tax credits for job creation. . . .
Now look at the bill without the tax-rebate checks and tax credits for job creation and 4.73 times the spending.
Weird politics in the Democratically controlled Pennsylvania House of Representatives
Should politicians in Pennsylvania's House be employed by lobbyists while they are state legislators? From the Philadelphia Inquirer:
HARRISBURG - For 10 1/2 minutes, it appeared that the state House of Representatives would operate for the next two years under a new, iron-clad ethics rule barring members from being paid by lobbying firms. The idea received a unanimous vote - 198-0 - late Wednesday as representatives were setting internal operating rules for the new legislative term.
Then Democrats had second thoughts and flexed their majority muscle, 100-98, to undo the measure, which could have cost several legislators lucrative side jobs.
The episode raises questions about whether legislators are indeed being paid to lobby. It also amounted to a public embarrassment for Democrats, who control the lower chamber.
"Incompetence is the kindest word you can use to describe this," said Tim Potts, co-founder of Democracy Rising Pennsylvania, a Harrisburg-area public interest group.
Here's how the situation, unusual even by Harrisburg standards, unfolded:
At 8:47 Wednesday night, the House voted overwhelmingly to suspend its rules and allow a vote on a just-drafted amendment. Less than 90 seconds later, members unanimously endorsed this simple restriction: "Members may not receive compensation for affiliating with or being employed by a lobbying firm registered with the Department of State."
Then Democrats, who hold a 104-99 majority, started asking themselves what they had really voted on. Democratic staff lawyers weighed in. At 9:06, the House voted to revote on the measure and later, along mostly party lines, ruled that what they had passed only minutes earlier was actually unconstitutional.
"This was a bright-line standard that legislators shouldn't be paid by lobbyists," said Rep. John Maher, a Republican from Pittsburgh who offered the rule change. By defeating the idea, Maher said, Democrats "trampled on the public's faith in the House." . . . .
John Tierney has done a great job pointing out the problems with Obama's science advisor, John P. Holdren. This is one of the guys who famously bet Julian Simon during the "energy crisis" in the 1980s. Tierney notes:
In 1980 Dr. Holdren helped select five metals — chrome, copper, nickel, tin and tungsten — and joined Dr. Ehrlich and Dr. Harte in betting $1,000 that those metals would be more expensive ten years later. They turned out to be wrong on all five metals, and had to pay up when the bet came due in 1990.
Tierney also goes after Holdren for his attacks on Bjorn Lomborg.
Amazed how lucky I am that I have had jobs where I could just think about whatever I wanted to think about. I have published over 90 articles in academic journals. I received my Ph.D. in economics from UCLA in 1984.