Annals Of Government Orwellianism

Back in the late 90s, for several years running, I wrote a series of articles titled "Top Ten Federal Government Efforts To Suppress Free Speech."  A couple of those articles are here and here.  And I must say there were plenty of good instances to choose from.  Well, things haven't gotten any better.

You may be thinking that the biggest threats to free speech today are on university campuses, where chalked words like "Trump 2016" can bring outraged cries from offended students for a crackdown, which cries then get a sympathetic ear from the university administration.  It's ugly, but there is no actual legal requirement that a private university give free rein to dissenting opinions.  

Governments are a different story.  Can a government in the United States, state or federal, actually seek to suppress speech that dissents from an official government line?  I mean, don't we have a First Amendment?  Government-backed speech suppression efforts are of course far more pernicious than any similar private efforts because they come backed by the government's coercive powers.  But, equally of course, such suppression is everywhere.  For today, I'll give just a couple of examples.   As always with the government, the speech sought to be suppressed contravenes the official government line on some subject.  And the official government line as always is part of the "main project" of the government, that is, the ongoing effort to use government resources to propagandize the people into supporting, or at least not opposing, the ongoing growth and expansion of the government and its powers.

Up in Westchester County (the first county immediately north of New York City) they have a long-running dispute with the federal housing bureaucracy (HUD) over whether and where to build subsidized low-income housing.  As readers here know, I have long characterized subsidized low-income housing in wealthy areas as "the worst possible public policy," because it costs enormous amounts of money for small numbers of "beneficiaries," and then traps those beneficiaries in poverty for life.  HUD's core business is foisting the "worst possible public policy" on more and more places in the U.S., and of course it needs more and more subsidized housing in more and more places in order to grow its mission and its budget.  In 2006 they sued Westchester to force it to provide more subsidized housing in wealthy areas, and in 2009 then-County Executive Andy Spano (a Democrat) settled that case with an agreement to do so.  Part of the settlement imposed a "monitor" on Westchester, supposedly to be sure it is complying with its obligations under the agreement.  The "monitor" is a guy named James Johnson, a partner of the Debevoise law firm who previously held various positions in the Clinton administration in the 90s.  After the settlement, Spano promptly lost the next election to a guy named Rob Astorino, a Republican, who then became County Executive in 2010 and continues in that job.  You won't be surprised to learn that Astorino has been in a continuous tussle with Johnson ever since.

A couple of weeks ago Johnson filed a 55 page "report" with the Judge supervising the case, who is Denise Cote.  Oh, she also held positions in the Clinton administration before being appointed to the bench by Clinton.  The gist of the "report" is that Astorino has been repeatedly speaking out in opposition to HUD and its agenda for Westchester, and this somehow constitutes a violation of the settlement; and therefore the court must order Astorino and Westchester to stop their opposition to HUD's agenda for Westchester and speak in accordance with the HUD party line. 

Stanley Kurtz of National Review has been all over this story, including a comprehensive recent article on March 30.  Here is Kurtz's take on the "monitor"'s latest gambit:

The Federal Monitor wants to force Astorino, the man who has led public resistance to Obama’s de facto takeover of local governments, to repudiate his own claims and parrot the administration’s line instead. In effect, they want a court to order Astorino to stop criticizing Obama’s HUD and start advertising HUD’s own views. This is truly Orwellian stuff, a frightening demonstration of how the expansionist regulatory state ultimately chokes off political speech itself.

HUD is upset that Astorino keeps saying that it is trying to override Westchester's zoning and force Westchester to build not just the 750 subsidized units that are part of the 2009 settlement, but thousands of additional units at a cost of a billion dollars and more.  As part of getting HUD grants (you should never have taken that money, Westchester!) the county has to submit a periodic report called the "AI."  In its reports, Westchester keeps saying that its zoning is not racially discriminatory.  And HUD keeps "rejecting" the reports, and demanding more and more "analysis" of a long list of additional factors.  Astorino believes that they will keep "rejecting" the reports until Westchester confesses that its zoning is discriminatory and agrees to build vast additional amounts of HUD housing.  So, should Astorino, an elected official, be allowed to express his views on what HUD is really trying to accomplish with this?  

Here is an excerpt from what the "monitor" proposes as the remedy that he wants the court to order:

[T]he Monitor recommends that the Court and County take steps to ensure that the public is accurately informed about the terms of the Settlement and that the public receives an education campaign that honors the letter and spirit of Paragraph 33(c) [of the settlement agreement].  Those steps include . . .  (e) hiring, within 30 days of the issuance of this report, a public communications consultant that will craft a message and implement a strategy sufficiently robust to provide information broadly to the public that describes the benefits of integration, as required by Paragraph 33(c). Within 30 days of the hiring of a public communications consultant, the County should submit a plan for a public education campaign to the Monitor for approval. 

Orwellian indeed!  You must conduct a public relations campaign in your name, and it must say what we want it to say, and you must submit what you plan to say to us, and we get to approve or disapprove.  Sorry, Westchester, but it's time to get away from this HUD thing entirely and stop taking their money.

In the whole affair, I do have one criticism of Astorino, which is over how he pitches his message. Rob, instead of focusing only on oppressive federal overreach and the overriding of local zoning, why don't you also point to your neighboring county Manhattan (just about 4 miles away at the closest point) and ask how HUD-supported public housing there is doing at promoting HUD's supposed goals of increasing integration and lessing income inequality.  If subsidized housing led to more racial integration, why are the HUD-supported projects in Manhattan islands of racial segregation?  Why is the private housing in Harlem today far more integrated than the HUD-supported projects?  And if subsidized housing led to lessening of income inequality, why does Manhattan, with far more than its share of public housing, have the highest income inequality in the country?  And why are the HUD-supported projects, 40 and 50 and 60 years after their construction, still islands of poverty in the midst of the wealthiest county in the country?  Rob, you are right on this and they are wrong.  Keep fighting!

And, if you think it would be hard to top that one in the annals of government Orwellianism, then consider the current efforts of the climate campaigners to silence any dissent from the orthodoxy that government must take over at least the entire energy sector of the economy, if not the whole economy, in order to "save the planet."  Back last spring, Senator Whitehouse of Rhode Island embarked on a campaign to try to get the Justice Department to prosecute (criminally!) so-called "climate deniers" (dissenters from government-backed orthodoxy) under the RICO statute.  Then, at a Senate hearing last month, under questioning from the same Senator Whitehouse as to why the Justice Department hasn't done anything about "the climate denial scheme," AG Loretta Lynch responded that the matter had been "discussed" and referred to the FBI for consideration.  Meanwhile last week, even as the Manhattan Contrarian was pointing out that the government was relying on altered data in its brief to the DC Circuit seeking approval of an EPA plan to shut down the coal industry, AG Eric Schneiderman of New York was announcing the newfound support of 15 other AGs for his "investigation" of Exxon Mobil over insufficient obeisance to climate orthodoxy.   So where is this one going?  As far as I know, at least since the days of Eliot Spitzer, no company even remotely near the size of Exxon Mobil has ever been investigated for anything by the New York AG without paying at least $100 million in protection money and issuing a mea culpa.  There is no reason to think that this one will end any differently.

So welcome to the new world, where everyone must toe the government line, and say only what the government wants said.

Why Isn't The $15 Minimum Wage Effective Immediately?

If you're in a trendy, happening coastal city these days, you know that the progressive cause of the moment is raising the minimum wage to $15 per hour.  And thus the poor will magically be raised up to prosperity, paid for entirely by evil exploitative employers who up until now have been woefully underpaying their workers.  Seattle led the way in the higher minimum wage movement in 2014 by raising its minimum to $15, followed closely by San Francisco.  And now New York, not about to be embarrassed by being behind the curve on trendy progressivism, is in the process of enacting its own $15 minimum wage.  As reported by the New York Post on Friday (uh-oh, that was April Fools' Day; but the news conference was on the previous day, March 31, and I think it actually happened) Governor Cuomo has announced that he is "near" a budget agreement with state lawmakers that includes a $15 minimum wage for our state too.

But here's the funny thing:  even though each of these trendy progressive jurisdictions claims to have enacted a $15 minimum wage, none of the new wage requirements has actually gone into effect.  Instead, all of them are scheduled for multi-year phase-ins, with full effectiveness of the $15 level at least several years away in each case.  According to the website of the mayor of Seattle here, its $15 minimum first takes effect on January 1, 2017, but only for employers with 500 or more employees who provide no medical insurance.  Large employers who provide medical insurance get longer, and smaller employers get longer still, so that many employers get until 2021 to reach the $15 level.  The San Francisco $15 minimum, passed by voters in a referendum in November 2014, only kicks in on July 1, 2018.   And in New York, the proposal is for a complicated patchwork of mandates varying by size of employer, location in the state, and maybe other factors.  The earliest $15 minimum will be in New York City in 2018.  Even the very prosperous immediate suburban counties will get at least two additional years, and further upstate, even longer. 

OK, here's my question:  If enacting a minimum wage just redistributes free money from evil, exploitative employers at no real cost to anyone, why not make it effective immediately?  What are you afraid of?  To put it bluntly, is there a down side here, or isn't there?  And if there is a down side, how does putting the increase off by two years (or four, or six) make that down side any less?

The fact that the enacted increases in the very most progressive jurisdictions in the country will only take place several years out is a clear admission that even the most ardent proponents of the increases understand that of course there is a down side.  And in addition, they also admit there is a downside when they draw the line on the increase at $15.  If there were no downside, then the minimum should be at least $20.  I mean $30.  I mean $100.  Or whatever.

And if there is a down side, on whom does it fall?  On the 20-year-old white college kid from a prosperous family whose parents can call in connections to get him a job even at the new raised minimum?  Or on the 20-year-old non-college-attending black kid whose parents have no connections to call in?  If you don't think the answer to those questions is completely obvious, you might consider the February 20, 2016 editorial from the New York Times titled "The Crisis Of Minority Unemployment."   Citing a study from something called the Great Cities Institute of the University of Illinois at Chicago, the Times points out that in recent years in New York and Los Angeles, close to 30% of black men aged 20 - 24 have been out of both work and school; and in Chicago the figure has been closer to 50%.  And those figures are before any recently-enacted minimum wage increases.  With a high enough minimum we could get those young-black-male unemployment rates to close to 100%!  The Times, of course, is an advocate of the $15 minimum wage.  Don't worry; according to the Times, we could mitigate the effect of the higher minimum wage with employer subsidies paid for with free federal money from the infinite credit card.

By delaying the effective date of the minimum wage increase, I think the proponents are trying to make it so the public will not perceive the cause and effect between the change in the law and the increase in minority unemployment many years later. 

But the $15 minimum wage has the potential to greatly enhance the visible contrast between the high-tax high-spend high-regulation "blue model" jurisdictions, and the low-tax, low-spend low-regulation "red model" jurisdictions.  So far, you really need to be a follower of the statistics to understand how much more successful places like Florida and Texas have been in recent years than places like New York and Illinois.  To all appearances, for New York, the City is doing rather well, and living here you don't realize that upstate is rapidly hollowing out and overall the population of the state has stagnated for decades.  Similarly in Illinois, the Loop and North Side of Chicago seem just fine, while no visitor would ever travel down to the dozens of square miles of abandonment on the South Side.  Losing population?  If you hang out where everybody hangs out, it's imperceptible to the eye.

But if places that enact the $15 minimum suddenly have black youth unemployment and idleness rates 10 and 20 and even 30 percent higher than other places that don't, that will be very hard not to notice.  Will it happen?  The obvious prediction is that it will.  As noted here several months ago, in Puerto Rico, where the federal minimum wage even at $7.25 per hour is around 70% of the median wage, the labor force participation rate is a full 20 percent below the rate on the mainland (42% versus 62%).  Why will the result be any different in New York, San Francisco, or Seattle?       

The Joke Of Criminalizing Money Laundering -- Part II

Who was it who first came up with the bright idea that if we just criminalize something called "money laundering," and make all the banks involuntary deputies of law enforcement, spying on their customers behind their backs 24/7, we can put a stop to all the nefarious criminality and perfect the world?  The game started with the disgusting Bank Secrecy Act back in 1970, and moved to a new level with the USA PATRIOT Act in 2001.  Today, banks in the U.S. file close to 2 million annual "Suspicious Activity Reports" on their customers.  Did they file one (or a hundred) on you?  You don't know, because they're not allowed to tell you. 

Did you notice that along the way the law enforcement authorities have achieved victory in the drug war?  Yeah, neither did I.  And drug dealing at least involves substantial amounts of real money.  Nobody can even give a coherent explanation of how a money laundering regime that can't make a dent in the multi-billion dollar drug business is supposed to stamp out terrorism, which generally does not involve any substantial amounts of real money.  In this post last June I called criminalization of "money laundering" a "joke" and "an exercise in total futility."  Of course, it may not seem like a joke to people like former House Speaker Denny Hastert, who found himself prosecuted for "money laundering" for engaging in the distasteful but otherwise perfectly legal activity of paying blackmail.  And then there are the banks, who have paid, in the aggregate, in excess of $20 billion in fines over the past decade for supposedly violating anti-money-laundering regulations.  For example, HSBC paid a fine in excess of $1.9 billion in 2012, said to arise mainly out of dealings in Mexico.  (You mean they have drug dealers down there?  Who knew?)

Bringing us up to date on the activities of our genius government, the Wall Street Journal yesterday helpfully carried a front-page article headlined "U.S. Terror-Finance Rules Drive Money Underground."   And guess what?  It seems that after paying the 20 or so billion, the banks have decided that it pays not to take chances, and they have moved to declining to do business with any potential customer who looks the least bit sketchy.  

U.S. banks have closed thousands of accounts held by people and organizations considered suspicious, high-risk or difficult to monitor—including money-transfer firms, foreign banks and nonprofits working abroad. Closing accounts for fear their customers may be up to no good evicts from the financial system the innocent as well as those the U.S. government would most like to watch, a consequence not anticipated by Washington.  Comptroller of the Currency Thomas Curry this month acknowledged the potential danger. “Transactions that would have taken place legally and transparently may be driven underground,” he told an international conference of bankers and regulators in Washington.  

Really, who could have guessed that such a thing might happen?

The Journal reporter then tracks the activities of one Abdi Warsame, a Somali native who works for a Midwestern money-transfer company.  Seems that the company has been shut out of the banking system.  No problem!  Warsame neatly stacks and wraps some tens of thousands in mid- to high-denomination dollar bills, packs them into his luggage, and flies off to Dubai.  Along the way, he files all the appropriate forms with the U.S. and Dubai authorities and goes through all the security and customs checks.  Upon his arrival in Dubai, the money disappears into the underground system.  Congratulations to our genius government functionaries!  Really, where did they think this was going?

But don't worry -- as reported here just a few days ago, the government geniuses already have the new plan at the ready, namely the abolition of cash.  Yeah, that'll work!  It's like they have never heard of Bitcoin.  Or then there's my favorite, gold.  At the current price of about $1250, $1 million in gold weighs about 50 pounds -- not so much more than $1 million in hundred dollar bills (which weighs about 20 pounds).  OK, it's a little awkward, but still not so much that you can't get it into your carry-on bag for the flight to Dubai. 

Government-Tampered Temperature Data Goes To The DC Circuit

In a famous column in 2006 titled "How to identify American totalitarians," author Dennis Prager quoted what he called the old Soviet dissident joke: "In the Soviet Union, the future is known; it’s the past that is always changing."  Prager cited examples of the likes of the ACLU and anti-smoking activists brazenly altering things from the past to support their narratives.  But of course the far more serious totalitarian threat comes when the government makes up facts about the past in its quest to expand its own power and take freedom away from the people.

Now, our own government would never do anything like that, right?  Right??????  If you think that, then you obviously haven't been reading my long-running series titled "The Greatest Scientific Fraud Of All Time," the most recent entry of which (Part IX) appeared in December.  That series has included links to some dozens of articles and blog posts where mostly independent researchers have gone out and compared raw temperature data from hundreds of places around the globe to the current data sets published by our government functionaries at the likes of NASA and NOAA.  And somehow, when these comparisons are made, the results are always the same, over and over again: the government agencies have altered older data to be cooler, thereby introducing into history exaggerated warming trends not present in the raw data.

As just a few examples from the series, in Part IX I linked to descriptions by German journalist Gunter Ederer describing the recent (November 2015) work of Professor Friederich Ewert that included checking raw data of large numbers of randomly-sampled stations against current NASA-GISS data.  In Part III I discussed the work of a guy named Paul Homewood as to massive lowering of old temperatures from Paraguay and other locations.  In Part II I dealt with the extensive work of a blogger named Tony Heller in documenting literally dozens of instances of lowering old temperatures from around the world.  Follow this link to get an idea of the massive extent of this.  Consider this from the description by Ederer of Ewert's 2015 work:

Ewert painstakingly examined and tabulated the reams of archived data from 1153 stations that go back to 1881 – which NASA has publicly available – data that the UN IPCC uses to base its conclusion that man is heating the Earth’s atmosphere through the burning of fossil fuels. According to Ederer, what Professor Ewert found is “unbelievable”:

From the publicly available data, Ewert made an unbelievable discovery: Between the years 2010 and 2012 the data measured since 1881 were altered so that they showed a significant warming, especially after 1950. […] A comparison of the data from 2010 with the data of 2012 shows that NASA-GISS had altered its own datasets so that especially after WWII a clear warming appears – although it never existed.”

Ederer writes that Ewert particularly found alterations at stations in the Arctic. Professor Ewert randomly selected 120 stations from all over the world and compared the 2010 archived data to the 2012 data and found that they had been tampered to produce warming.

(The work of Ederer and Ewert is in German, but the above can be found at NoTricksZone here.)

Now, what could be the purpose of the government altering temperatures of the past substantially downward?  Really, does anybody care what the temperature in Nome, Alaska was in 1910?  Well, there is the fact that EPA has declared to the world in its 2009 "Endangerment Finding" that CO2 from fossil fuels is a danger to humanity because it is warming the planet.  And EPA has used that "Endangerment Finding" as the basis for what it calls its "Clean Power Plan," (CPP) otherwise known as a massive seizure of power unto EPA, a federal takeover of the electric-power generating sector of the economy, as well as an effort to shut down the entire American coal industry from mining through power generation.

In one of the more consequential litigations going on in the country right now, some 27 states, plus numerous utilities that burn coal and numerous coal companies have sued EPA in the DC Circuit seeking invalidation of the CPP.  Early this year those petitioners asked the DC Circuit to stay the CPP pending the result of the litigation, and the DC Circuit refused the stay; but then the petitioners went to the Supreme Court for the stay, and in February they got it.  Now the case is before the DC Circuit for consideration on the merits.  And a couple of days ago there arrives on my desk a copy of EPA's main brief in the case justifying its position that the CPP is a valid exercise of its authority.  The brief is a massive effort at impenetrability, 175 pages of bureaucratic doublespeak.  But as relevant to this post, we find this at page 9:

Climate change is already occurring.  Nineteen of the twenty warmest years on record have all occurred in the past twenty years, and 2015 was the hottest year ever recorded.  Recent scientific assessments have found that climate change is damaging every area of the country.  80 Fed. Reg. at 64,686-88.  These assessments make clear that substantially reducing emissions now is necessary to avoid the worst impacts.

And what is the support for that statement that "2015 was the hottest year ever recorded"?  A footnote gives us these two links: https://www.climate.gov/news-features/videos/2014-global-temperature-recap; https://www.climate.gov/news-features/featured-images/no-surprise-2015-sets-new-global-temperature-record.  These are precisely the government press releases based entirely on the altered surface-temperature record discussed above.  And, despite the vast amount of discussion all over the web about the data alterations and the fact that they always go one direction and that the alterations turn a record that does not support the government's narrative of unusual warming into one that seemingly does, this brief simply does not mention the subject of the alterations at all.  The altered record is just presented to the DC Circuit as incontestable fact.  Hey, it comes from the perfect, all-knowing government functionaries!

Also somehow completely omitted from the government's brief is any mention of the satellite and balloon data sets that are inconsistent with and contradict the surface temperature record on which the government relies.  In a post on January 22 titled "It's Easy To Prove Your Hypothesis If You Just Pretend That The Adverse Evidence Does Not Exist," I commented on the very NOAA press release now used by EPA as the support for its position in court:

Everybody who follows this also knows that the ground-based thermometer records have been greatly "adjusted" by the people who publish them, and that all or nearly all of the increase in temperatures in recent years is in the adjustments and not present in the raw data.  So wouldn't you think that NOAA in its release would at the minimum acknowledge the existence of the other contrary data and attempt somehow to deal with the contradictions?  Well, take a look at that release; and, if you will, follow the link through to their full end-of-2015 Report.  You will not find the slightest mention that the satellite or balloon data even exist.  And of course that also means that you will not find any attempt to explain the discrepancies between and among data sets, or to justify why one is better than others.

That post also includes a chart of the satellite and balloon temperature data as presented by John Christy of UAH in his recent Congressional testimony.  The chart shows that the satellite and balloon temperature sets agree closely during the periods for which they co-exist.  Now, the satellite and balloon data sets on the one hand, and the altered surface temperature data set on the other hand, cannot both be right.   The government's presentation only of the one record it prefers, known to be filled with massive alterations all going the direction it needs them to go to support the narrative, without any mention or discussion of discrepancies as against other data sets, is the height of unethical conduct.

On the other hand, this approach maximizes the government's chance for success in a huge seizure of power.  Do they really care about anything else but that?  

Science Versus Orthodoxy Enforcement In The World Of Nutrition

Readers interested in the subject of orthodoxy enforcement in fields marching under a supposed banner of "science" are undoubtedly aware that the problem extends far beyond the archetype of anthropogenic global warming (AGW).  I've previously written several times about orthodoxy enforcement in the area of nutrition and dietary guidelines, including in January a review of the recent book by Nina Teicholz called "The Big, Fat Surprise."   

This subject is back in the news.  In early April, something called the Consumer Federation of America has scheduled its big annual National Food Policy Conference.  Ms. Teicholz was to be one of the speakers.  Late last week, she got disinvited.  Politico had the story on Friday:

In a sign that the nutrition space is as defensive as ever, Nina Teicholz, an author who has publicly criticized the science behind the government's low-fat dietary advice, was recently bumped from a nutrition science panel after being confirmed by the National Food Policy Conference. . . .  The event is set to take place in Washington next month. . . .  Teicholz said she was disinvited after other panelists said they wouldn’t participate with her.     

Now, you might ask, how does it even happen that we have something described as "national food policy" that rises to a level that we need to have "national food policy conferences"?  Aren't the American people capable even of eating on their own without incessant meddling from government busybodies?  Really, those are excellent questions.  Nobody even knows where the government claims to have gotten the authority to issue dietary guidelines and otherwise meddle in "food policy."  Try to find that one in the Constitution!  But once they got into the field, you can be sure that the bureaucrats and the lackeys they fund want to crush anybody who dares to undermine their authority and prerogatives. 

It seems that Ms. Teicholz has lined up some funding from something called the John and Laura Arnold Foundation to promote her countering of official government diet dogma.  Is there any problem with that?  Arnold is a former hedge fund guy who seems to have made his money mostly in oil and gas trading -- in other words, not a guy with any particular interest in the food business that he is pushing.  (Although, suppose he had such an interest; why would that be a problem either?)  A prior article from Politico from last October describes the horror of government lackeys and minions that any private actor may get to have some say on their turf.  For example, there's this from former government Dietary Guidelines panel member Barbara Millen:

[Teicholz's] effort is being bankrolled by billionaire Houston philanthropists, John and Laura Arnold. . . .  The lobbying alarms some who fear it will further politicize a process that informs nearly every aspect of how Americans eat, from what millions of school children are fed each day and the advice doctors give to their patients.  “It’s dangerous and it’s harmful,” Dietary Guidelines panel member Barbara Millen said of the campaign.

You see, in the world view of Millen and her ilk, government getting into an area in which it has no business whatsoever is completely apolitical, whereas any private actor trying to make a private pitch to the citizenry is "politicization" that is "dangerous and harmful."  Government meddling, after all, has nothing to do with politics, but is just the perfect, all-knowing experts (such as, of course, Ms. Millen herself) directing the stupid populace to do what the experts know is the right thing.

Or consider this from Marion Nestle of NYU, another draftsperson of the prior criminally-incompetent government dietary guidelines:

Marion Nestle, a New York University nutrition professor who took part in drafting previous guidelines, also questions whether Teicholz, who has staked out such a strong point of view, can be a credible advocate for science.   “How can she be so certain?” Nestle asked, referring to Teicholz’ advocacy of a diet high in saturated fats. “What I find so distressing is that this just further confuses the public.”

Yes, according to Nestle, the mere staking out of a "strong point of view" disqualifies any and all private persons from having a say in the public debate.  On the other hand, being one of the people responsible for prior government guidelines that are now shown to have been dead wrong and to have contributed to epidemics of things like obesity and diabetes -- and having a powerful interest to be sure that your prior incompetent work doesn't lead to professional disgrace -- that's not disqualifying at all!  Hey, Nestle was working for the government at the time.  The government is perfect by definition!

Teicholz had a very apt comment on the situation:

“Silencing the conversation won't work forever.”

She's right about that.  But meanwhile, the taxpayer-funded grants continue to flow to the Millens and Nestles of the world.
 

What Are Illinois's And Chicago's Options After The Latest Pension Ruling?

Last May I reported on a decision from the Supreme Court of Illinois that struck down as unconstitutional (under the Illinois State Constitution) a pension reform law that the Illinois legislature had enacted in 2013 in an attempt to rescue the state's woefully underfunded employee pensions.  A few days ago another Illinois statute, this one enacted in 2014 and intended to effect a similar rescue of various pension plans of the City of Chicago, reached the Illinois Supreme Court, and promptly met the same fate.  Here is a copy of the court's new decision.    

How badly funded are Illinois's employee pension plans?  Even though they put out regular annual reports, it's hard to get an exact handle on that because the reports are so lagged.  This article from Crain's Chicago Business from October 2015 takes numbers from the then-recently-issued annual reports for 2014.  According to the article, as of the end of 2014 the Illinois pension plans were the worst-funded of any state's in the country, at 39.3%.  That's the most recent number we have, now about 15 months old; but that was after the big run-up of the stock market in 2014.  From the beginning of 2015 to now the market has been nearly flat (as against assumed annual returns of 7-8%), and Illinois and its municipalities have continued to fail to put in so-called "actuarially required" contributions.  The funds could easily be less than 35% funded today, maybe even closer to 30%.  At that level, no amount of a booming stock market by itself will ever rescue these funds.

The hurdle that the rescue statutes need to clear is the provision of the Illinois Constitution (Article XIII, Section 5) that reads as follows:

Membership in any pension or retirement system of the State . . . shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.

As I pointed out in the May 2015 article, the best hope the legislature would have of trying to meet the constitutional test would be to pass a statute that explicitly protected all benefits accrued up to the effective date of the statute, and altered only benefits going forward from that date.  But, for reasons that I don't understand, the legislature did not attempt to meet that criterion in its initial 2013 statute, nor did it try to meet the criterion in the 2014 statute at issue in the new case.  For example, as set forth in the Supreme Court's decision,

The provisions in Public Act 98-641 . . . reduce the value of annual annuity increases, eliminate them entirely for certain years, postpone the time at which they begin, and completely eliminate the compounding component. The Act expressly states that these changes “apply regardless of whether the employee was in active service on or after the effective date of this amendatory Act."

In other words, they tried to cut pension payments even for those who had already retired, and therefore whose pension benefits, like it or not, were already fully accrued.  In partial defense of the legislature, this statute had already been enacted at the time of the Illinois Supreme Court's prior decision in 2015.  But still, I would have thought they would at least have made an effort to segregate out those cuts that only applied to as-yet-unaccrued benefits, in an effort to get those sustained; but they did not do that.

And now, with two rather angry and impatient, and unanimous, Illinois Supreme Court decisions on the books, the prospects for getting the court to recognize the already-accrued versus yet-to-be-accrued distinction have to be diminished.  Pension crises move with agonizing slowness, but some are predicting that the earliest of the Illinois funds to run out of money and start bouncing checks could hit that point in the early 2020s.

So Illinois has now lost three full years in its attempts to reform its pensions, and with each passing year its options get fewer and worse.  Of course, what the employee unions want is massive tax increases.  Short of that, what's left?

• A reform that recognizes the already-accrued/yet-to-be-accrued distinction.  At this point, such a reform would basically have to end future accruals, perhaps by replacing the defined benefit plans entirely with defined contribution plans.  The Illinois Supreme Court should approve this, but that doesn't mean that they will.
• Massive firings of senior employees and replacing them with new employees who have only defined contribution plans.
• Or, Illinois and Chicago can just stop putting money into the plans and see what happens.  When New Jersey recently tried that approach, its Supreme Court upheld the governor.  Will Illinois's do the same?

Meanwhile, Chicago's population, after what had seemed to be a turnaround, appears to have resumed its long-term decline.  Chicago's population reached its peak in 1950 at 3,620,962, and then went into an extended decline.  By 1990 it was 2,783,911.  After a small recovery in the 90s, decline resumed.  By 2010 the population was 2,695,598.  The Census Bureau has not yet released a 2015 estimate for Chicago, but just a few days ago it released an estimate for Cook County (the county that includes Chicago) that showed the entire county losing population.  Previously, Chicago's losses had been more than offset by gains in the remainder of Cook County. 

If you move your business into Illinois or Chicago, you voluntarily agree to take on the burden of the underfunded pensions, meaning that you agree to pay taxes now and in the future for services that were rendered in the past when you weren't around.  Now, why would rational people do that?