Even The Federal Courts Are Part Of The "Main Project"

In several posts (here and here) I have drawn attention to the "main project" of government, in which all government personnel are engaged, namely the project to grow the government.  Are even the Federal courts part of the main project?

Last Friday Raymond Dowd, an executive of the Federal Bar Association, sent to Emil Arca,  President of the Lawyers Chapter of the Federalist Society in New York, an invitation to an event yesterday with the title "Is Our Federal Justice System Being Dismantled?", subtitled "A report from Capital Hill on the budget battles, judicial vacancies, and adequate judicial pay."   Dowd asked Arca to "make sure that the Federalist Society sends a representative to this event."  Arca sent the invitation to (among others) me, and as a result the guy they got from the Federalist Society was me.

The event was held at the newer of the two Federal courthouses in Manhattan (500 Pearl Street), an over-the-top Taj Mahal of a building, and in the so-called "ceremonial courtroom" -- a stunningly opulent overuse of Federal taxpayer money that makes me uncomfortable every time I go there.   In attendance were many of the judges, both from the Southern and Eastern Districts of New York. (I did not see any from the Second Circuit.)  The speaker was Bruce Moyer, identified as Government Relations Counsel for the Federal Bar Association.  Moyer started his talk by making clear that the FBA is a 501(c)(6) organization, that is, an organization explicitly allowed to engage in lobbying.  And he is the chief lobbyist.

And now to the main topic.  It seems that the so-called "sequester," or 3% cut in some Federal discretionary spending, applies to the Federal court system.  But Moyer claimed that for various reasons, such as only starting in the middle of the year and only applying to certain things (like, you can't cut judges' pay), it therefore really is much more than that for the pieces actually cut.  Maybe even 8%!!!!!  Well, the solution is at hand.  A $74 million supplemental appropriation bill has been presented in Congress.   And now to rally the troops.  Light up the phones!  Call your Congressman!  Call your Senators!  Write letters!  We must get more money for the courts!

At the end of the speech Moyer made the mistake of asking for questions.  So I put my hand up and got called on first.  I didn't write my question down word for word, but here is a paraphrase:

Isn't the problem for the Federal court system not too little money, but rather a wildly over-expanded mission?  And isn't the solution not more money to try to accomplish this mission, but rather shrinking the mission?  The drug war uses up about 30% of the resources of the Federal court system and is a complete waste of time.  If the drug war were ended the Federal court system would have about 30% overcapacity.  If the resources of the Federal court system are strained as you say, why aren't you lobbying to end the drug war?  Why are there some 4000 Federal crimes -- an approximate number because no one is even able to make an exact count?  Why is installing a toilet of more than 1.8 gallon flush a Federal felony?  Why is spreading dirt on your property without an EPA permit a Federal felony?  Why, other than pure human jealousy and vengence, is so-called insider trading  by a non-insider "tippee" a Federal crime?  Currently the resources of the US Attorney of the Southern District of New York and of the Southern District Federal court are to a huge extent consumed by the non-insider insider trading jihad, with no one even able to offer any rational explanation of why this is a matter of Federal criminal interest.  So what are you doing to lobby Congress to get the mission reduced so that the Federal courts can accomplish it with the abundant resources they already have?

Around that point I stopped, figuring it should be someone else's turn.   (For those interested, the answer in summary was, "That's a very provocative question.  If you have suggestions of what we should lobby for, please submit in writing and we will take up in our committees and decide after appropriate process whether we will do it or not.")  Perhaps one thing I didn't ask but should have is this:  If you think the Federal courts should get another $74 million this year, exactly which other programs or expenditures should be cut to provide this money?  Or, if nothing should be cut, do you believe that we just have an infinite credit card here?

After that the event proceeded to other questions, most of which were of the form of "How can I best help to lobby for this money?"   Nobody but me seemed to be in the slightest way uncomfortable about all of this taking place in the ridiculously over-the-top ceremonial courtroom that looks like something out of Versailles.

So the answer to the question is, unfortunately, yes, the Federal courts are part of the "main project." 

The Defined Benefit Pension Death Spiral, Detroit And California Edition

The defined benefit pension plan is the ultimate mechanism yet devised by politicians to make unsustainable giveaways to favored constituencies today and hide the costs from the citizenry until long after the politicians are gone.  If not assiduously funded on real assumptions (in the real world, there is no actual example of this occurring) such plans in the public sector are forms of slow-acting Ponzi schemes that can take 50 or more years to play out to their final crash.   A few small California cities (Vallejo, Stockton, San Bernardino) have been the first to hit the wall, but now we have a much bigger crash victim:  Detroit.

On Friday Detroit, via its new emergency manager Kevyn Orr, put out a 134 page report entitled "City of Detroit Proposal for Creditors."  Follow the link to get your very own copy.  It is a real eye-opener in many respects, but mostly in revealing the extent to which vast pension liabilities have been taken on and hidden from the citizens.  

First, an overview of Detroit's finances.  Its annual budget is a bit over $1.1 billion, down from almost $1.4 billion as recently as 2008.  Trouble is, it can't raise even the $1.1 billion in taxes.  The biggest source of revenue is a city income tax of 2.5%, raising $233 million in 2012.  But that 2.5% rate is the highest in Michigan, and the number of jobs in Detroit is dropping precipitously (from 354,000 in 2000 to 280,000 in 2012), so revenue from the income tax is dropping.  Meanwhile, property values in Detroit are virtually nothing, so there is no potential for getting money from that source.  Property tax revenue has dropped from $155 million as recently as 2008 to a projected $135 million for 2013 (page 44).

As to the defined benefit pension plans, Detroit's two main plans have most recently been reporting Unfunded Actuarial Accrued Liability of around $645 million (page 31).  If you amortize that over 30 years it's around $20 million a year.  Add in the cost of new accruals at around $30 million a year, and you get a required payment of $50 million a year, which by the way, Detroit did not make last year and is not going to make this year.  But are the assumptions real?  The main assumptions are laid out at page 31 of the report, including a 7.9% interest rate for one plan and 8% for the other.  Redo the UAAL with real assumptions and now you get --  UAAL of $3.5 billion!  What does that mean in terms of a required annual payment?  Go to page 109, and the answer is -- $200 million to $350 million per year.  That's as much as 30% of revenue, when Detroit does not have enough revenue to pay operating expenses.  This is not going to happen.  Detroit has hit the wall.

The gist of this report is that Detroit is about to open a negotiation with creditors, and proposes to treat pension plans as unsecured creditors who will get an undetermined "cents on the dollar" payment pro rata with all other unsecureds.  Meanwhile, pension benefits continue to be paid, and the value of assets in the pension trusts is dropping rapidly (the value of the assets in the trusts has dropped by some $1.7 billion over the past 5 years - page 24).  So even though Detroit has hit the wall, we have a likely long negotiation ahead of us.  And even after the negotiation is concluded, it will again be a long time before we know how Detroit's retirees will fare.  Maybe the trusts will just keep paying until they run out of money, and after that, everybody gets nothing.  But any way you look at it, the majority of the existing pension promises in Detroit are illusory.  Meanwhile, it took the destruction of the city to get to this point.

Out in California,  things are almost as bad, with the wall gradually coming into view out there on the horizon for those willing to look.   Recall that back on April 2 I commented on  Paul Krugman's March 31 column about California, titled "Lessons From a Comeback." Krugman is all excited that California, having greatly raised income tax rates for high earners in a November 2012 referendum, is now predicting a budget surplus.  He's not paying attention to the fact that the tax increases were retroactive to January 1, 2012, and therefore gave the victims no opportunity to take evasive action as to the first year's income subject to the new rates.  He's also not paying any attention to the pension funding issue.  Let's see how the second year works out. 

So how are those defined benefit pension plans doing in California?  Here at Fox News on June 12, Elizabeth MacDonald reports that Moody's has now come up with its own criteria for evaluating defined benefit pension obligation.  Result?  The unfunded liabilities for state and local plans in California go from the previously-reported $128.3 billion to $328.6 billion.  On a per capita basis, that's more unfunded liability than Detroit, although California is a richer place.  Overall, they have a long way to go before they run out of cash; but individual cities and towns can be in far worse shape than the average.  For example, under the Moody's criteria, Los Angeles' funded ratio falls from 77% to 50%, almost $50 billion short.  That's rather dangerously close to death spiral territory.  But this will play out over many, many years.

And back in Illinois, the state legislature adjourned for the year without doing anything about pension funding.  The governor is trying to get them back for a special session. 

Global Warming Fools And Dupes, And Some Real Science

Here's a little global warming round-up, covering the range from the fools and dupes to some real science. 

In the fools and dupes category, we have Robert Redford, with an op-ed in USA Today of June 11.  Redford is sorely disappointed at the lack of action from the President and Congress on the issue.  He calls for action to shut down coal-fired power plants and to set state-specific limits on carbon emissions.  (Somehow he doesn't mention my proposal to ban Hollywood actors from flying on private jets or owning more than one home of no more than 5000 square feet.)  After all, he's so smart that he knows that the weather is controlled by mankind's use of carbon-based fuel to generate electricity.

Pouring more carbon pollution into the sky is setting the table for growing intensity of extreme weather, with more persistent drought, devastating wildfires, costly floods, scorching summers and storms that punish more with each punch.

Of course, there isn't the slightest evidence that increased carbon in the atmosphere has anything to do with extreme weather, but why should that interfere with his program to take away electricity from the little people? 

In the somewhat less of a fool and dupe category, we have Mayor Bloomberg of New York putting out on June 11 a 400 page report called "A Stronger, More Resilient New York," proposing some $20 billion of new government spending initiatives to strengthen New York's defenses against coastal flooding.  Coastal flooding is a bona fide risk for New York City (we are on the coast, after all), but this report is filled with endless drivel about global warming and wildly ridiculous projections of sea level rise from the UN IPCC reports.  Well, to Mayor Bloomberg's great credit, at least he doesn't propose to fix the supposed problem by doubling everyone's cost of electricity, which is the utterly nonsensical approach taken by California.  Anyway, in the highly likely event that the sea level continues to rise a few inches a century as it has since the last ice age, and even if the sea level doesn't rise at all, some of these additional defenses could well be a good idea.  Of course, the ability to spend money on such projects is probably going to be eliminated by increasing costs of public employee pensions and benefits, so we probably don't need to pay much attention to this.

If you have some tolerance for actual science on this subject, there is a video on the web of a lecture, about an hour in length, delivered in Hamburg, Germany in April by Professor Murry Salby of Macquarie University in Sydney, Australia.  Here is a guy who, in my humble view, knows what he is talking about.  The presentation is fairly mathematical, but at base is a comparison of IPCC models, and their predictions of disaster, with observations.  The takeaway is his quote at the very end from Richard Feynmann:  "If it disagrees with the observations, it's wrong."  The divergence between observations and the IPCC models is becoming rather too great to ignore at this point.

And on the same point, here is a post today at Watts Up With That from Christopher Monckton of Benchley titled "No significant warming for 17 years 4 months."   Monckton's post is filled with lots of good data and graphs, although there are plenty of other good ones out there as well.  How people like Redford could still believe in the direct CO2-temperature link when we now have over 17 years of the most recent data disproving it, is beyond me.

Here is a link to the video of Salby's presentation: 

http://youtu.be/2ROw_cDKwc0

The Government Is Not Capable Of Being Apolitical - Part II

A few weeks ago, as the IRS scandal was getting going, I wrote a post titled "The Government Is Not Capable Of Being Apolitical," containing the following statement: 

The corollary is that there is no such thing as a neutral apolitical actor or agency in the government. All government personnel are part of the main project, spoken or unspoken, to grow the government and to attack or destroy its enemies. It's like the sun coming up in the east.

If you think that somehow the government consists of neutral, apolitical experts just doing their jobs, or if you even have any skepticism about my proposition, you might want to take a look at this article today from Robert Anderson of Pepperdine Law School.  Anderson has taken some time going through the Federal Election Commission database to compile some statistics about political contributions of lawyers working for various Federal agencies.  How about the IRS, for example:

The results for the IRS were striking. Of the IRS lawyers who made contributions in the 2012 election, 95% contributed to Obama rather than to Romney. So among IRS lawyers, the ratio of Obama contributors to Romney contributors was not merely 4-to-1 at previously reported, but more like 20-to-1. The ratio of funds to Obama was even more lopsided, with about 32 times as much money going to Obama as to Romney from IRS lawyers.

A chart attached to the post shows that Anderson identified some 40 IRS lawyers in the database as having contributed to one or the other presidential campaign during the 2012 cycle, of whom 38 contributed to Obama and 2 to Romney.  So is it any wonder that when President Obama gave his August 21, 2010 radio address warning of "attack ads run by shadowy groups with harmless-sounding names," his team of supporters at the IRS took that as their cue to go after the government's enemies?

Do you think that maybe the IRS is somewhat unique in this respect?  Don't kid yourself.  Many agencies are even more lopsided, if that's even possible.  For example, at the Department of Education, 47 lawyers contributed to Obama, and not a single one to Romney.  Same thing at the NLRB -- not a single contribution to Romney (and 44 to Obama).   Of 90 lawyers from the EPA identified in the study as making contributions, it was 86 to 4 for Obama.  The only Department or Agency under 70% for Obama is the Department of Defense at 68%.  Justice was at 83.95% for Obama.

I have no doubt whatsoever that every one of the Obama supporters (and probably some of the very few Romney supporters as well) is part of the "main project" -- growing the government and attacking or destroying its enemies.  Do you have any doubt?  On what basis? 

Yes, Universal Government Snooping Is A Problem

I don't mean to brag, but on May 1 in a post entitled  "Things The Government Gets Wrong by 180 Degrees -- Privacy" I did write:

[Y]ou have no choice but to assume that the government is monitoring all your financial transactions and phone calls behind your back. 

And sure enough, the big news of the past week is that, yes, the government is indeed monitoring all of your financial transactions and telephone calls behind your back.   Oh, and add to that, all of your e-mails and other use of the internet.  I didn't mention those pieces only because they were so obvious as to go without saying.

The government's defense, articulated by the President on Friday June 7, is basically that this is necessary to guard you against terrorism and we have all kinds of oversight and protections in place, which, unfortunately, we can't tell you about.   You may be surprised to hear that I give that defense some credit.  Guarding the people against terrorism is actually one of the few constitutionally legitimate things that the Federal government does.  I take an extremely skeptical view of whether it is necessary or useful for the Federal government to monitor all of everyone's financial transactions, phone calls, and internet activity in order to guard against terrorism, but I don't have all the information needed to make an informed decision, nor any way to get the information to become informed.

But there are very serious problems with the government monitoring all the activities of everyone all the time.  The main one is, they are just not capable of resisting the temptation to misuse the information for political advantage.  And make no mistake, the information is highly valuable for political purposes, in two ways.  First, this detailed information is useful in providing those in power with particulars on who their voters are, to enable the more precise direction of advertising and more effective get-out-the-vote efforts.  Information advantages deriving from the vast trove of data could easily be worth 5 to 10% of the vote, plenty to swing close elections. 

More perniciously, the information can be used to target and destroy political adversaries.  It could easily be used to uncover such things as old extra-marital affairs, or visits to illicit internet sites, by political adversaries, to be leaked at a critical moment on the eve of an election.  Or for that matter, to commence an investigation or a prosecution against an adversary.  Professor Jacobson points out the linkage between the vast data mining exercise and the "everything is a crime" world view that motivates today's Federal criminal code, where felonies include hundreds of things you would never imagine, from installing a toilet with greater than 1.8 gallon flush to spreading a dump truck load of dirt on a wet spot on your property where mosquitoes are breeding.  The gun laws are enormously complex and almost impossible to comply with perfectly.  James Rosen of Fox News learned recently that his newsgathering was characterized as a Federal felony in a Justice Department affidavit seeking court approval for access to his personal information.  You may think that you are law-abiding, but you may be regularly committing multiple Federal felonies that you never imagined existed. 

Some supporters of the data mining program are surprisingly naive about its dangers.  Take for example, the Wall Street Journal editorial page, which today downplays the significance of the data mining with this response: 

[T]he paradox of data-mining is that the more such information the government collects the less of an intrusion it is.  These data sets are so large that only algorithms can understand them.  the search is for trends, patterns, associations, networks.  They are not in that sense invasions of individual privacy at all.

Well, what exactly keeps them from putting the words "Mitt Romney" or "Rand Paul" or "Ted Cruz" into their search algorithm and seeing what comes up?  The answer is, nothing.  Remember that J. Edgar Hoover famously gathered dirt on Martin Luther King for purposes of using it when it became politically advantageous.  Now the potential dirt is all pre-gathered.  But only those in power have access.

Meanwhile, just as this data mining scandal is getting some play, there are two vast expansions of Federal data gathering in the works, with few even paying attention.  One is the so-called "border security" provisions of the proposed immigration reform bill, containing provisions intended to make it impossible to work in the United States without data on employer and employee being entered in the vast Federal data trove.  The other is Obamacare, by which all medical records are to be added.  There's one with tremendous potential in political opposition research!  

Well, rollback of this stuff is not going to happen any time soon.  What you need is advice on how to foil it!   Here from Kit Lange of Victory Girls is the latest on how to use the telephone and the internet without reporting your every move to your FBI minder.  In the financial arena, the simple answer is to use cash.  I wonder when they are going to move to make that illegal.

The Early Returns Are Not Looking So Good For Obamacare

There's been a great back and forth in the blogs over the past couple of weeks over the early returns on Obamacare implementation.    It began when something called "Covered California" issued a press release on May 23 announcing the results of bidding for the cost of new compliant health insurance policies to be available next year to Californians in the individual market.  Covered California is the name for California's version of the Obamacare insurance exchange for those who don't have health insurance through their employer.

If you read the press release, the situation looks like a great triumph.  Many rates will actually go down!  

“This is a home run for consumers in every region of California,” said Peter V. Lee, Executive Director of Covered California.  “Californians should be proud of how not only health plans in this state, but doctors, medical groups and hospitals have stepped up – and creating a market that will allow millions of consumers to enroll in affordably priced products. Because of that, we will be able to deliver exceptional value, low rates, access to health care in every region of the state, and a solid platform to achieve the dream of providing quality health care for all Californians,” Lee said.

Statist commentators like Paul Krugman of the New York Times and Ezra Klein of the Washington Post promptly joined in claiming great success.

Well, not so fast.  Next to join the discussion was Forbes columnist Avik Roy on May 30.  He took the actual numbers put out by Covered California and compared them to policies available today in the individual market from the internet site eHealthInsurance.com.  Result:  rates for the young and healthy on the individual market will increase by 64 - 146%.   

Klein's response was that Roy's numbers did not include about 25% of applicants through eHealthInsurance.com who are not qualified for its low rates due to various existing health issues.  In today's market, they either can't buy insurance at all, or else must pay dramatically higher rates.  True enough.  But that leaves about 75% who will be subject to, on average, a doubling of their rates.  

The problem here is that the people whose rates are about to double are not all just going to go along with it and buy the new Obamacare insurance with all the required coverages (free birth control!).  Since Obamacare outlaws all non-compliant health insurance, the available option is to decline to buy insurance, pay the tax penalty, and wait until you get sick.  Supposedly the whole idea of Obamacare was to solve the "problem" of 50 million +/- of people without health insurance.   The solution was a mandate to buy insurance, the cost of which, our President promised, would go down.  But if the cost goes up, and if the only teeth of the "mandate" are a tax penalty that is far less than the cost of the insurance, and if insurers are required to sell you "insurance" after you get sick, why would any sane person do this?  Isn't it just about a sure thing that the number of uninsured is about to soar?  

Time to place your bets.