All The Federal "Privacy" Regulations Are Worse Than Useless

By now you've probably heard of the big data breach at credit reporting agency Equifax.  It apparently occurred back in July, but the details are only now coming out.  Numbers in the range of 143 million have been mentioned for how many consumers have been subjected to compromise of their personal data, including their name, addresses, date of birth, and social security number (aka your "personal information").  The combination of these things in association with each other is what enables the opening of a credit account in your name.

When comparably large data breaches occurred a couple of years ago at Yahoo and Target, you knew you were at risk if you did business with those companies; and if you did, you could rightfully blame yourself.  But, you say, you've never had any dealings of any kind with Equifax.  Therefore, your information cannot possibly be at risk.  Wrong.  Pretty much every bank, credit card company, mortgage lender, car finance company, or credit provider of any type shares your personal information with Equifax.  Without your permission.  Indeed, even over your specific objection.

The New York Times today has no fewer than three big articles on the Equifax breach, one on page A1, and two more on the front page of the Business Section.  The article on page A1 is headlined (in the online version) "Equifax Hack Exposes Regulatory Gaps, Leaving Consumers Vulnerable."  The theme, you will not be surprised to learn, is that the problem was caused by insufficient government regulation:

Despite the wealth of sensitive information in its databases, Equifax, in essence, falls through the regulatory cracks.  The dangers of such lax oversight became apparent on Thursday when Equifax disclosed that hackers had compromised the personal and confidential information, including Social Security numbers, of nearly half of the American population.

"Falls through the regulatory cracks"?  "Lax oversight?"  Funny, but as far as I've been able to observe over the past multiple decades, the credit reporting business has been the subject of one big federal statutory and/or regulatory initiative after another.  First there was the Consumer Credit Protection Act of 1968, followed quickly by the Fair Credit Reporting Act of 1970, which has subsequently been amended several times.  The FCRA gave regulatory jurisdiction to the Federal Trade Commission, which has issued multiple rounds of regulations.  Then there was a big statutory addition made by the Gramm-Leach-Bliley Act in 1999, followed by additional rounds of regulations from the FTC.  The Dodd-Frank Act in 2010 added yet more statutory provisions, and brought in another regulator, the Consumer Financial Protection Bureau, with its own rounds of regulations.  Are you now telling us that all these layers and layers of statutes and regulations have given us nothing but a bunch of "cracks" for our information to slip through right into the hands of the bad guys?

The problem, of course, is that all the rounds of statutes and regulations have been completely incompetent.  The chance that the next round will be any less incompetent is approximately zero.  With so many regulations the details have become mind-numbingly complex, but the bottom line is that you have no ability whatsoever to limit access to your information only to the people and companies of your choice.  Nor can you find out any comprehensive list of who has access to your personal information or what they are doing with it.

The statute most specifically focused on the privacy of your personal information was Gramm-Leach-Bliley (GLBA).  Here is a summary of the GLBA privacy provisions from the Electronic Privacy Information Center.  GLBA is the source of the requirement for all those "privacy notices" that you get regularly from your banks and credit card companies and insurers.  Have you ever read one of them?  I'll bet the answer is no.  And you are right not to.  They all start out saying that "you have options," but then seem to exempt from the opt outs anything of any significance.  Somewhere in every one of them it will say either that we use your information to "manage our business" or "as permitted by law" or some other empty phrase that lets them do whatever they please without giving any specifics.  As an example (and not meaning to pick on them specifically) here is the relevant part of the Citibank privacy statement currently available at their website:

Citi uses the information we collect about and from you to provide services, to manage our business and to offer an enhanced, personalized online experience on our site and third-party websites.

The information we collect allows us to:

• Recognize you when you return to our site so we can personalize your experience
• Process applications and transactions
• Respond to your requests
• Recognize and provide you account related benefits and information on our sites.
• Provide you more relevant product and service offers on our sites and in other advertising

We may also use personal information we have about you such as your email or postal address to deliver advertising to you directly or on third party websites.

Try reading that a few times and see if you can figure out where they tell you that they give your personal information to Equifax (and for that matter Experian and TransUnion).  Or where they tell you that Equifax, Experian and TransUnion in turn sell your personal information to data aggregators and brokers who then sell it to all kinds of other people and entities for all kinds of other unspecified purposes, like:

• Governments at all levels for whatever they feel like doing with it, including snooping on you behind your back without a warrant.
• Private investigators for whatever they do with it.
• Law firms (my old law firm subscribed to one of these services).
• Others?  I've demanded a complete list from my bank, from each of the three credit bureaus, from some of the data aggregators (like ChoicePoint) and others.  None will respond.

Here's another page from EPIC, this time about ChoicePoint.  Haven't heard of them?  Here's an example of what they sell:

ChoicePoint sells a wide array of information to the government, including:  Credit headers, a list of identifying information that appears at the top of a credit report. This information includes name, spouse's name, address, previous address, phone number, Social Security number, and employer.

Wait, where did they get that information to sell?  You guessed it.  If you think that a big piece of the holes in the GLBA are to enable the government to circumvent the pesky Fourth Amendment requirements for court-approved warrants if they want to investigate you, you are now starting to catch on.  Enabling you to protect yourself against fraud is not one of their priorities.

By the way, ChoicePoint had a big data breach in 2004, and then another one in 2008.  

So is there anything you can actually do to protect yourself against misuse of your personal information?  Yes:  put a "freeze" on your credit.  If you haven't done it yet, you should do it promptly, with each of the three credit bureaus.  But don't do it online.  Try to do it online, and they will of course demand your social security number in order to proceed.  Don't give it to them.  They will promptly re-sell it.  Write them a letter.  It's some work, but it can be done. 

The New York Mayoral Election

It's hard to believe that it has been almost four years since hard leftist Bill de Blasio was elected Mayor of New York City; so the next election is rapidly approaching.  (We hold our elections for City offices in these bizarre odd off-years.)  Indeed, there are Democratic and Republican primary elections next week, September 12.  Of course, Mayor de Blasio is running for re-election.

You will be shocked to learn that yesterday the New York Times endorsed de Blasio in the primary.  They used the occasion to take a swipe at those who had predicted disaster from having a socialist ideologue in Gracie Mansion:

When Bill de Blasio took office in 2014 as the most left-wing mayor in New York’s modern history, skeptics forecast disaster. In the post-Giuliani and post-Bloomberg era, they predicted, the city would roll back to the chaotic 1970s, when crime rates soared, garbage piled high in the streets, corporations fled to leafier environs and municipal bankruptcy loomed. 

And then they proceeded to gloat with a round of "I told you so":

None of those dire warnings became reality. New York remains, on the whole, well run. Crime has continued its remarkable decline. Garbage is collected as efficiently as ever. The local economy is humming, and municipal finances are sound, with steady budget surpluses. Most unions representing city workers are content.

Well, I can't speak for all of the "skeptics" they are referring to, but here at the Manhattan Contrarian we certainly did not predict immediate disaster.  That's not how socialist death spirals work.  From my post on November 4, 2013, the day before the last election:

The good news is that even the worst left-wing policies do not lead to immediate economic collapse, but rather to slow gradual decline.  It took decades of Rockefeller/Wagner/Lindsay overtaxing and overspending before New York City lost 10% of its population in the 1970s, and that one proved possible to correct.  Still, you would think we had learned those lessons.

Or, from my post of June 16, 2016:

[I]ncreased government spending and tightening government control of an economy in the "socialist" model reverses the positive incentives of the private ownership/free exchange model (aka "capitalism"), undermines the dynamic of economic growth, and causes a gradual but then accelerating decline of the real economy.

At Pravda, of course, they have never made the effort to observe the real world and see that this is how it works.  Anyway, as mere Mayor of New York City, de Blasio has not been in a position to put in place the true socialist agenda that he would like.  New York Magazine has a remarkable interview with de Blasio on September 4 that reveals a small piece of where de Blasio would like to take us if only he could:

[Q]  In 2013, you ran on reducing income inequality. Where has it been hardest to make progress? Wages, housing, schools?
[A]  What’s been hardest is the way our legal system is structured to favor private property. I think people all over this city, of every background, would like to have the city government be able to determine which building goes where, how high it will be, who gets to live in it, what the rent will be. I think there’s a socialistic impulse, which I hear every day, in every kind of community, that they would like things to be planned in accordance to their needs. And I would, too. Unfortunately, what stands in the way of that is hundreds of years of history that have elevated property rights and wealth to the point that that’s the reality that calls the tune on a lot of development. . . .  Look, if I had my druthers, the city government would determine every single plot of land, how development would proceed. And there would be very stringent requirements around income levels and rents. That’s a world I’d love to see. . . .  It’s not reachable right now. And it leaves this friction, and this anger, which is visceral.

So, lacking the legal ability to impose the Venezuelan model upon us, what have we gotten from de Blasio?  A few of the highlights:

• He has repeatedly proposed increasing city income tax rates on top earners.  But that requires approval from the state legislature, where the Senate is controlled by the Republicans.  So these proposals have gone nowhere.
• Three issues have been repeatedly identified by the Manhattan Contrarian as the most important issues for a New York City mayor to address:  (1) overspending on K-12 education (roughly double the national norm per pupil); (2) overspending on Medicaid (again, close to double the national norm per beneficiary); (3) and wildly overgenerous and under-funded defined benefit pension promises for the workforce.  De Blasio has done nothing whatsoever to address or make progress on any of these issues.
• As you might expect, the City budget and employee headcount have exploded on some kind of auto-pilot during de Blasio's mayoralty.  Nicole Gelinas reports in the New York Post on August 27 that the budget has increased some 14.6% in inflation adjusted dollars (from $76.2 billion to $87.3 billion) since de Blasio took office.  And, from the New York Times, October 16, 2016: "New York City is undergoing a rare explosion in city government: More people now work for the city — 287,002 full-time employees as of July — than at any other point in its modern history, with thousands more scheduled to join them."  Nobody knows what these people do, or can notice any difference in increased or improved services from the hiring binge.
• We got universal pre-K!  Great!  Of course, before de Blasio, the City already provided free pre-K for poor people.  So this was for the non-poor.  Oh, and also for the teachers union -- the largest contributor to de Blasio's campaigns -- which got a few thousand new dues-paying members.  The budget impact was about 1% of the City budget, mostly funded by the State.
• "Income inequality" was de Blasio's signature issue.  Has it gotten worse or better during his tenure?  Worse of course, according to a Manhattan Institute study in December 2016.   ("Income inequality has actually gone up in New York City since Mayor de Blasio took office vowing to tackle the problem, according to a new report by the Manhattan Institute.")  Was there ever a chance that pre-K education -- or any other de Blasio initiative -- would have a noticeable positive effect on income inequality in less than about 25 years (if ever)?
• Spending on the homeless has about doubled (still only about 2% of the budget).  The number of homeless has of course gone up.  Has any government program ever improved (let alone cured) the problem that it supposedly was set up to address?

To de Blasio's credit, he has not significantly restrained policing, and crime has continued to fall.

Look around, and things definitely appear to be doing remarkably well.  If you want my opinion, that comes from a combination of (1) de Blasio not being able to implement the most destructive policies that he would like to implement, such as much higher taxes and abolition of private property, and (2) the destructive effect of higher spending and more wasteful programs being relatively minor and slow moving so far.  Some day, probably when the stock market inevitably takes a big hit, the pension expense will suddenly soar and the extra employees will become unaffordable.  Most likely, that will not occur until long after de Blasio has left office.

Meanwhile, de Blasio has an energetic if long-shot Republican opponent named Nicole Malliotakis.  If you would like to contribute to her campaign, you can go to this site.

Labor Day Thoughts

As a starting proposition, who could be against low-paid workers getting a raise?  Especially when the bosses are rich capitalists making millions?  

On the other hand, it doesn't necessarily follow that labor unions on the Wagner Act model are the answer to those questions.  After the passage of that statute in 1935, the American manufacturing sector rapidly unionized, with union representation of workers in the U.S. reaching a peak of about 35% of the labor force in the mid-1950s.  If you looked around in the 1950s and 60s, it would have been easy to think that unionization had been a big success.  Unionized workers earned substantial premiums over the non-unionized, with additional "benefits" (pensions, healthcare) as well, and even some arguable safety improvements attributable to union efforts.

And then there started the very gradual implosion.  As I observed in this post back in 2015, "Gradually, the unions put their employers out of business."  That post focused on the steel industry, where by 2015 all of the major unionized producers had gone bankrupt with the exception of U.S. Steel, while the non-union producers survived and grew to some extent (against very tough foreign competition).  The story in many other big industries has been similar:  autos and auto parts, tires and rubber, mining, construction.  By 2016, according to the latest data from the BLS, the union percentage of the private sector labor force had fallen to only 6.4%, and was continuing to fall year after year.  Check out this piece from Oren Cass on Friday in the City Journal on the perverse incentives of adversarial Wagner Act style unionization.  It's not that the unions don't continue to organize; and they rarely get thrown out of a company once organized.  It's that the unionized companies are severely disadvantaged in a competitive marketplace, and they gradually downsize and/or go out of business.  Also, there is very little "union premium" in wages left to point to, especially after you net out union dues.

Over in the public sector, there is no discipline of the competitive marketplace.  State and local governments don't (and maybe can't) go out of business.  For many years after the Wagner Act, most state and local governments continued to resist unionization.  After all, in the public sector, there is no "greedy capitalist" to blame for paying substandard wages.  But the restraints on public sector unionization gradually fell off in the 1950s through 70s.  Those latest BLS data show the public sector unionization rate at 34.4%, approximately the all-time record.

But without the discipline of the marketplace, the public sector union movement has fallen into inevitable excess and abuse.  You people around the country undoubtedly have your own examples, but here are a few from the union capital of New York:

• Municipal unions are by far the largest contributors to political campaigns in New York City, and have near complete control over the City Council.  After a couple of decades of Republican mayors, the union-favored candidate (de Blasio) won the last (2013) election for mayor, and is heavily favored this time around.  Shortly after taking office in 2014 he awarded billions of dollars in retroactive raises to the major municipal unions -- raises that had been resisted for years by his predecessor.
• All the municipal unions have massively underfunded defined-benefit pensions, with costs deferred well into the future but poised to explode upon the taxpayers when least expected.
• While Google and Uber and others proceed rapidly toward the enormously complex goal of achieving the driverless car, down in the New York subway running a subway train along a completely pre-determined guideway with nothing else on it takes two people -- one to start and stop the train, and another to open and close the doors.  Discussions of automating these functions never even get started.  Nobody but the insiders knows what comparable overstaffing exists out of sight in the rest of the system.
• Unionized construction of major projects like subway and water tunnels somehow costs five to ten times comparable costs from other international cities like London, Paris and Milan.
• Teachers are almost completely insulated from serious evaluation, and literally can't be fired after a brief probationary period, no matter how incompetent or ill-suited to the job.  Unionized public schools far underperform their non-unionized competition, to the severe detriment of the many low income students trapped in the system.
• Teachers unions, with massive contributions to politicians and clear support of the mayor, fight a largely-successful and never-ending effort to slow the development of the non-union competition, such as charter schools.

And many, many more examples could be cited.

But there is a huge and little-recognized problem with public-sector unionism, which is a First Amendment issue.  In New York as in most other states, workers in unionized public sector workplaces are compelled to support the union.  Under Supreme Court precedent, workers who dissent from the union's political agenda -- almost always, support of Democratic candidates -- can get themselves exempted from having to pay their portion of the union dues that goes to explicitly political activities.  But many people in the unions have a fundamental disagreement with the entire public sector union mission, and with the many excesses and abuses (like most of those cited above) that arise from the collective bargaining efforts rather than only from the explicitly political activities.  Aren't even the collective bargaining efforts also inherently political, and don't they equally implicate First Amendment principles?  

In a case called Abood back in 1977, the Supreme Court answered that question "no," and upheld the right of public sector unions, against a First Amendment challenge, to collect from dissenting members all dues except those relating to explicitly political matters.  But those who think that public sector unions are an entirely bad idea that they shouldn't be compelled to support have continued to press the issue.  Three years ago a case potentially raising the issue called Harris v. Quinn reached the Supreme Court; but the Court ducked the issue.  However, in a concurrence, five justices (you can guess who -- Alito, Roberts, Scalia, Thomas and Kennedy) suggested that they would be willing to reconsider Abood.  Then last term a case called Friedrichs reached the Supreme Court, squarely presenting the core issue of Abood.  The court below (Seventh Circuit) had felt bound to follow Abood.  But when the case got to the Supreme Court, Justice Scalia had died.  The result was a one-line per curium affirmance:

The judgment is affirmed by an equally divided Court. 

Well, now we have Justice Gorsuch.  A new case called Janus raises the same issue as Abood and Friedrichs, and the lawyers have filed a petition for certiorari.  How serious is this?  Well, consider this article from today's New York Post titled "UFT may have to dramatically slash $182 million budget":

The United Federation of Teachers is drafting plans to dramatically slash its $182 million budget — anticipating a Supreme Court ruling that would bar mandatory deduction of union dues from government workers’ paychecks to support union activities, The Post has learned.  The ruling could deliver a severe blow to union budgets by reducing membership and revenues by millions of dollars.

That's quite a reaction, considering that the Supreme Court hasn't even yet granted cert.  However, the smart money is clearly betting that the Court will take Janus and that Abood will be reversed.  The results over a period of years could be a shrinkage of the public sector union movement by half or more.  My sympathies clearly lie with the taxpayers -- and even more importantly, with the students -- in this matter.

Two Narratives That Won't Die: Which Is Crazier?

There's the narrative of "the Trump campaign colluded with Russia to hack the election."  And then there's the narrative of "Trump obstructed justice by telling Comey to go easy on Flynn" or maybe "by firing Comey."  How many news stories have you read in the months since the election promoting one or both of these two narratives?  500?  1000?  More?  Do you think that the people promoting these narratives would be feeling a bit embarrassed by now?

But of course it's the opposite.  Even today, long after both narratives have completely fallen apart, their promoters -- and particularly the nutcases at the New York Times -- continue their desperate search for some crumb to report to keep one or the other of these narratives alive.  Which of the two is crazier?  You be the judge!

And thus on the front page of the New York Times for August 29 we learn that their crack team of reporters has finally gotten their hands on a real live email showing that Trump colluded with the Russians.  Or something like that.  The story, headlined "Trump Associate Boasted That Moscow Business Deal ‘Will Get Donald Elected,'" is by Matt Apuzzo and Maggie Haberman.  It seems that the Trump Organization has produced emails to the House Intelligence Committee in connection with the ongoing investigation of Russian "meddling" in the 2016 election, and involvement of the Trump campaign in same, if any.  The Times reporters have managed to get access to some of the emails.  What is the best they can find in this trove of information?

It's a November 3, 2015 email from a guy named Felix Sater to Michael Cohen, one of the in-house counsel at the Trump Organization.  The Times's characterization:

A business associate of President Trump promised in 2015 to engineer a real estate deal with the aid of the president of Russia, Vladimir V. Putin, that he said would help Mr. Trump win the presidency. 

The text of the email?:

Michael I arranged for Ivanka to sit in Putin's private chair at his desk and office in the Kremlin.  I will get Putin on this program and we will get Donald elected. . . .  I know how to play it and we will get this done.  Buddy our boy will become President of the USA and we can engineer it.  I will get all of Putins team to buy in on this . . . .  

Well, did anybody ever follow up on this, and did anything happen with it?  

There is no evidence in the emails that Mr. Sater delivered on his promises, and one email suggests that Mr. Sater overstated his Russian ties. In January 2016, Mr. Cohen wrote to Mr. Putin’s spokesman, Dmitri S. Peskov, asking for help restarting the Trump Tower project, which had stalled. But Mr. Cohen did not appear to have Mr. Peskov’s direct email, and instead wrote to a general inbox for press inquiries.  The project never got government permits or financing, and died weeks later.

Yes, this article was on the front page.  Dozens of reporters and hundreds of hours of work, and this is all they've come up with.  And still they soldier on!

But is that crazier than the "obstruction of justice" narrative?  On that narrative, we have a big front page story today, "Mueller Has Early Draft of Trump Letter Giving Reasons for Firing Comey," by Michael Schmidt and Maggie Haberman.  Yes, it's the same Maggie Haberman -- she's the official mistress of conspiracy theories at Pravda.  

The overriding story is that special counsel Robert Mueller supposedly continues to investigate the subject of Trump's potential "obstruction of justice" by giving directions to Comey or firing him or something like that.  Today's nugget that supposedly justifies a front-page article is that there was a draft of a letter to Comey, firing him, that was prepared by President Trump and White House counselor Stephen Miller.  That draft was different from the final version of the letter delivered to Comey!  The White House counsel weighed in and modified the letter, including to give different reasons for the firing than appeared in the original Trump/Miller draft!  Of course, the Times reporters have not actually seen the draft, and cannot give us the specifics of what was changed.

So you ask, what if anything does this have to do with obstruction of justice?  You won't find the answer to that question in this article.  Are you shocked to learn that lawyers sometimes review drafts of letters and suggest modifications to the client to keep him out of legal trouble?

Over at National Review, Andrew McCarthy makes the points that we have been making here at Manhattan Contrarian since back in June and July:

As we have repeatedly observed . . . it makes no more sense to talk about an obstruction indictment of the president over his urging the FBI director or the attorney general to shut down an investigation than it does to talk about such an indictment over a presidential pardon. . . .  [T]he president’s subordinates have [no] power to countermand him. The “independence of law enforcement” is an aspiration — and a worthy one in most instances. But it is not even a fact, much less a legal rule. Notwithstanding the grandiloquence of high-ranking law-enforcement officials about their vaunted independence, they do not constitute a separate branch of government.  Not only do they work for the chief executive; they do not even have their own power. Under the Constitution, only one official in the executive branch has power — the president. The first sentence of Article II is crystal clear: “The executive Power shall be vested in a President of the United States."

Unfortunately, New York Times, when you put stories like these on the front page, intelligent readers will draw the inference that this is the best you've got to support your narrative.  Nine months of hyperventilation, and this is all you've come up with?  Really???

Should The Federal Government Just Write A Blank Check To Cover The Flooding In Houston?

You have to be impressed with the response so far by the Texans to the massive floods in the Houston area.  Media reports are filled with images of fleets of privately-owned boats joining in rescue efforts, of hundreds of people lining up to join in volunteer efforts at shelters and food pantries, of brave volunteers carrying old people and children and dogs through the flood waters to safety.  These people are remarkably and commendably self-reliant and immediately willing to pitch in to help their neighbors when trouble hits.

And then yesterday Texas Governor Greg Abbott came out and said that Texas will "need" a federal "relief package" (aka handout) "in excess of" $125 billion.  Whoa! -- What happened to that old Texas self-reliance, Greg?  Not to be outdone, Houston-area Democratic Congresswoman Sheila Jackson Lee immediately upped the ante to $155 billion.  Next thing you know, seemingly conservative Republican and budget-hawkish Senator Ted Cruz was joining Lee to make the demand for the massive federal handout "bipartisan."  Back in 2012/13 Cruz had earned himself much scorn from New Yorkers for providing at least a little token push-back against the then-proposed $60 billion federal "relief" handout after Hurricane Sandy.  I guess that was then.

Actually, I can't say I blame these Texans.  Katrina in 2005 and then Sandy in 2012 set the new parameters for federal handouts after natural disasters, which basically come down to this: When people are dying in the streets, the feds can't say no; so now is your chance to get everything on your wish list and then some paid for by the infinite bag of free federal money.  Louisiana and New York played this game brilliantly, and got all the other states to pay for everything with even the most tenuous relationship to their hurricanes.  Having been on the paying end a couple of times, you can't expect the Texans to sit back and fail to collect when their turn comes.

In a post way back on January 2, 2013 I warned New Yorkers that they were playing a dangerous game by demanding a massive blank-check handout from the feds for recovery from Hurricane Sandy, because New York is not much subject to natural disasters like hurricanes and tornados, and we would end up paying ten or twenty times over to the other states by the time we were done:

Federal government open-check-book disaster relief is . . . a particularly terrible idea for New York and New Jersey, because these areas, thankfully, are not very subject to natural disasters.  We almost never get a serious tornado or earthquake, and hurricanes, while they do occur, are quite rare here compared to other areas like the Gulf Coast and Florida.  According to data from NOAA here, in the 50 years from 1961 to 2010 some 27 "major" hurricanes (categories 3, 4 and 5) made landfall in the United States.  Of those, 23 hit the Gulf Coast or Florida; 3 hit the Carolinas; and just one (Gloria in 1985) hit in the mid-Atlantic.  While we may be looking to get a big handout at this moment, over time the disaster relief game is a massive transfer away from New York and New Jersey and to other areas far more susceptible to hurricanes, tornados and earthquakes.  By demanding this relief now, we are encouraging more building in those areas and setting ourselves up to pay 10 or 20 or more times any amount we can hope to get in today's handout.         

Ability to do this kind of simple arithmetic was never the strong suit of New York progressives.  Things have been relatively calm in hurricane world since 2012; however, we are now seeing the early stages of the inevitable turnabout.

But, you ask, isn't paying the bills for recovery from a big natural disaster a basic job of the federal government?  Actually, not at all.  From the beginning of the republic through well into the twentieth century, the federal government provided nothing at all in the way of disaster relief funds.  Consider this history from the Texas Almanac of the Galveston hurricane of 1900.  The town was literally wiped out.  Almost all the buildings were destroyed and something close to half the people died.  Disaster relief poured in from charitable efforts, from other states, and from the state of Texas.  The feds contributed not a dime; and what's more, it seems that nobody even thought to ask them.  In those days, this just wasn't viewed as part of the federal mission.

And that wasn't much changed well into your lifetime.  FEMA was only created in 1979.  As recently as 2000, the feds contributed relatively small amounts for hurricane recovery to supplement state, local and charitable efforts.  At this link, CNN helpfully compiles the losses from hurricanes since 2000 that have caused $1 billion and more of damages, and how much of those losses have been paid for by the federal government.  Pre-Katrina in 2005, the federal contributions were remarkably small:  Of about $2 billion in losses from Lili in 2002, the feds covered only about 7%; of about $8 billion from Isabel in 2003, the feds covered about 18%; of about $21 billion from Charley in 2004, the feds covered about 10%; and so forth.  Summarizing the pre-Katrina situation, CNN states:

In the half dozen storms that caused at least $1 billion in damages immediately before Hurricane Katrina, the federal government contributed funds to cover only 17% of estimated damages in federal aid, on average.    

Hey, we're just trying to be nice!  The problem is that once the feds got into paying something, there was no limiting principle.  If you have an infinite pile of free money, and you recognize a responsibility to pay something, why shouldn't you pay everything?  Then Katrina (2005) blew the lid off any restraints of any kind on the federal handouts.  The losses from Katrina were in the range of $160 billion, and the cable news networks ran nonstop footage of the drowning and the suffering and the destruction for weeks on end.  By the time it was over the feds had paid about $115 billion, or some 72% of all losses.  

And once that had happened, why should anybody else with a natural disaster on their hands settle for a federal contribution of a lousy 10 or 20 percent?  Federal contributions for run-of-the-mill hurricanes immediately ratcheted up to the 30-60% range.  Then, with Sandy in 2012, New York and New Jersey put on a full court press to squeeze every possible dollar out of the feds, with a supportive Obama administration that thought that passing out the free money was their highest calling in life.  According to the CNN chart, the feds paid almost $60 billion, some 80% of around $75 billion in losses from that storm (that barely qualified for hurricane status).  Over to you, Texas!

So, other than the Manhattan Contrarian, is there anyone else out there who might advocate for putting any kind of reasonable limits on the federal contributions to Hurricane Harvey relief?  I can't think of who in Congress might do it.  President Trump?  I suspect he will be only too happy to see a big payoff go to people who are essentially his core supporters.  The media?  They're looking for any excuse to excoriate Trump for being too stingy.

Meanwhile, I'm sorry but $150 billion or so is real money.  With the federal money, Houston will be rebuilt bigger and better than ever in the same flood plain, waiting for the next "500 year flood" -- of which they've already had three in the past three years.  The current dearth of major landfalling hurricanes will inevitably end.  Does anyone care if this is a sustainable model? 

UPDATE, September 5, 2017:  With Hurricane Irma now a Category 5 and approaching the Gold Coast of Florida, I'm wondering if another big strike might knock some sense into anybody.  Even if we've gotten to a point where $150 billion seems like just a rounding error in the federal budget, how about $300 billion?  Tens of billions to restore the ocean-facing condos of the wealthy? 

How To "Solve" All Known Human Problems: Spend Some Of The Infinite Free Federal Money

Are you somebody who laments the end of bipartisanship in the U.S. Congress?  You feel that politics has become so polarized that we just can't "get anything done" any more.  Why can't the Congress just get back to "solving problems" like it used to?

If you are one of these people, you will be glad to hear that a new bipartisan "Problem Solvers Caucus" has been formed in the Congress.  It consists of some 43 Congresspeople, roughly equally split between the two parties.  The leaders are Rep. Tom Reed (R-NY) and Rep. Josh Gottheimer (D-NJ).  Gottheimer -- who narrowly took his Northern NJ seat from eight-term conservative Republican Scott Garrett in the last election -- has a website biography of himself that doesn't even mention his political party.  Instead, it rings with the clarion call for bipartisanship.  Sounds like he's your type of guy!

Josh’s approach to public service is rooted in his experience in both the public and private sectors. During his time working with President Clinton, Senator Frank Lautenberg, and Speaker Thomas Foley, he saw that, by seeking common ground, it’s possible to find a bipartisan path forward without compromising your core values. Josh firmly believes that it doesn’t matter if an idea comes from the Democratic or Republican side of the aisle, only whether it will help the communities and people of the Fifth District.

As its first task, the Problem Solvers Caucus has taken on Obamacare.  Here we have the ultimate polarizing partisan issue.  Not a single Republican voted for the Obamacare bills on their way to enactment back in 2010, and not a single Democrat has voted for any of the Republican-sponsored repeal/replace measures that have been under consideration by Congress this year.  And as a result, as premiums soar, insurers withdraw, and Obamacare otherwise craters, we are at an impasse with seemingly no resolution in sight.  Surely this is a clear example of a "problem" that is in desperate need of a "solution."  Call in the Problem Solvers!

And it turns out that the Problem Solvers have actually put forth their proposed solution (or more precisely, plural solutions) in a press release issued on July 31.  Here is a copy of the press release from the website of another member of the Caucus, Rep. Ryan Costello (R-PA).  Will it surprise you to learn that essentially every proposed "solution" consists of the exact same thing, namely throwing more and more of the infinite free federal money at Obamacare to keep it afloat and save its participants from having to pay the full cost of their "coverage"?  Some excerpts, with comments interspersed:

1. Bring cost-sharing reduction (CSR) payments under the Congressional oversight and appropriations process, but ensure they have mandatory funding. CSR payments are an important part of helping households earning between 100% and 250% of the federal poverty level afford to participate in the individual market. Bringing CSR payments under the appropriations process ensures that Congress can provide proper oversight.

The "cost sharing reduction payments" -- those are the insurance company bailouts that were provided for in the Obamacare law, but without appropriation, and then Congress declined to appropriate the money.  So Obama just went ahead and spent the money anyway without appropriation and in defiance of the Constitution.  A federal judge in the D.C. District Court declared the payments unconstitutional, but then declined to issue an injunction pending appeal.  Meanwhile, the Problem Solvers decline to tell us how much money they are prepared to throw at this.  But with a little research, we find that the amount of the CSR payments has recently been running around $7 billion per year, and with projections that the subsidies will rapidly escalate to around $12 billion annually by as soon as 2020.  By the way, President Trump has so far continued these blatantly unconstitutional expenditures, although to his partial credit he has said he will discontinue them as part of his strategy to get Congress to act on Obamacare repeal.  Thus, note that in the "Problem Solvers" press release, the phrase "bring CSR payments under the Congressional oversight and appropriations process" is the euphemism of the moment for "spend $120 billion or so over the next ten years of the infinite free federal money so that people don't have to take responsibility for themselves."  Problem solved!

2. Create a dedicated stability fund that states can use to reduce premiums and limit losses for providing coverage—especially for those with pre-existing conditions.

"Create a dedicated stability fund" -- another one of the literally infinite number of euphemisms for "throw some more of the infinite free federal money at it."  For this one I can't find any estimate of the cost.  $100 billion?  How about a trillion?  Problem solved!

3. Adjust the employer mandate by raising the threshold on the requirement for employers to provide insurance under the employer mandate to businesses of 500 employees or more. . . . Additionally, the definition of “full time” under the employer mandate should indicate that a full-time work week is 40 hours.   

Did you doubt that there is an infinite number of ways to say "throw some more of the infinite free federal money at it"?  This time it's "adjust the employer mandate" -- which of course means that fewer people will be insured through employers, which means that more people will head for the exchanges, which then means more of the "cost sharing reduction" payments.  Of course, the infinite free federal money will step in.  Problem solved!

4. Repeal the medical device tax. This tax adds a 2.3% sales tax on medical device supplies. The costs of the tax are passed on to consumers and it should be repealed. 

Well, that's roughly $3 billion per year that was a big part of the "scoring" that supposedly made Obamacare affordable.  But then, a lousy $3 billion per year is not even a rounding error when the money you are playing with is infinite and free.  Problem solved!

Read enough of this stuff and you start to understand what Rep. Gottheimer is talking about when he says "it doesn’t matter if an idea comes from the Democratic or Republican side of the aisle, only whether it will help the communities and people. . . ."  It means "Republicans can also come up with ways to throw around the infinite free federal money."  The people on the paying end will never notice!  What I can't believe is how many Republican Congresspeople are dumb enough to get schnookered into going along with these transparent dependency-creating vote buying schemes for Democrats.

Where is a single Congressperson from the Democratic side who will go along with any "solution" to any "problem" that involves spending less federal money?