Bonuses for Disaster: Wall Street's Shame Circuits Burn Out

Wall Street firms paid executives $18.4 billion in bonuses in 2008 for running the country’s financial system into the ground, and President Obama called it “shameful.” Here’s something you won’t often hear me say: He’s right.

Now, in America, everyone should be free to get rich. I want you to be rich, and I don’t want the government taking your money away to “spread the wealth around.” Bill Gates is the ultimate American success story, and he is not generally begrudged his wealth – he created it, with imagination, determination and a little luck. We all want to be like him.

And the government should not tell private companies how much to pay their executives, or what to do with their money (unless, of course, it’s money that came from us, the taxpayers.)

But last year’s bonuses were the fifth most-lavish in history, according to the Los Angeles Times, in one of the worst financial years ever. Some of those bonuses were undoubtedly paid to people who worked in companies that made money, and they deserve it.

If I find out who they are, though, I will buy stock in that company.

We mortgaged our grandchildren last year to bail out the financial industry. My little granddaughter, playing in her crib, is in debt up to her ears. She will be working, decades from now, to pay taxes to try to retire the debt created by the financial system bailout.

I wonder how I’m going to explain it to her.

In 1989, Joseph Hazelton, captain of the ill-fated Exxon Valdez, ran his ship into the ground and created a disaster. He did not receive a bonus.

Baiting the Pro-life Movement: NBC Refuses Super Bowl Ad

NBC will not sell air time during the Super Bowl to CatholicVote.org, which wants to run a moving, but non-confrontational ad about the potential of life. The decision is outrageous, but it is also a trap for conservatives, who should think carefully about their response.

The ad is available on YouTube, and has more than 850,000 hits since its introduction during the Inaugural. It will exceed two million by the time the Super Bowl is played, thanks to the controversy – and CatholicVote.org won’t have to spend up to $3 million for the spot.

NBC says it rejected the ad because it does not allow advocacy ads at the Super Bowl. It points to its rejection of an ad by People for the Ethical Treatment of Animals to show that it’s not playing favorites – but it rejected the PETA ad because it was too sexual, and offered suggestions on how to tone it down to a level it would be accepted. (The ad is an utterly inappropriate for broadcast double entendre. It’s on YouTube too – but you’ll have to look it up.)

Aside from the irony of NBC claiming it has any standards at all, the law is clear that a private news outlet has the freedom to choose what advertising it will accept. It is government censorship that is banned by the First Amendment. Private censorship, on the other hand, is itself a protect freedom. An over-reaction to this snub will have unintended consequences.

For years, the liberals – who have little affection for actual liberty – have advocated a return to the misnamed “Fairness Doctrine,” which required equal time for opposing viewpoints. (Who decides which viewpoints are "opposing," and how many?) The doctrine was scrapped during the Reagan Administration, but liberals have been wroth at their inability to penetrate the talk radio market and want to bring it back.

Unable to draw an audience for their ideas that would create a profitable business model, liberals would like government to force broadcasters to give them what they cannot earn. The NBC decision could easily enrage enough prolife conservatives to create bipartisan support for a return to the Fairness Doctrine.

The Fairness Doctrine is communism imported into what Supreme Court Justice William Brennan once called “the marketplace of ideas.” Lovers of liberty and life should avoid a response that will make it harder, not easier, to get their message to the people.

Do this: forward the link to this post to people in your address book. Urge them to watch the video. The best response will be to make NBC wish it had taken the movement’s money, rather than give them the audience for free.

Building a Better Monkey Trap: Strickland's Expansion of the Entitlement Constellation

You will soon be paying for health insurance for children whose parents make more than $65,000 per year, Gov. Strickland announced yesterday in his State of the State address.
This entitlement expansion creates a monkey trap for the next administration.

Gov. Strickland wants to expand children’s health coverage to families earning 300% of the federal poverty level. For a family of four, the poverty level is $22,050. Do the math: $22,050 x 3.00 = $66,150.

The median household income in Ohio is $49,099. That means half of the households make more than that, half make less. Gov. Strickland’s proposal will be available to more than half of the households in Ohio.

Hubert H. Humphrey once said a society is judged by how it treats its most vulnerable citizens. When we stretch “most vulnerable” to include more than half, we have abandoned meaning. Anyone less wealthy than Bill Gates is relatively more vulnerable – the “most vulnerable 99.9%,” anyone? -- but it is unreasonable to expect he would be willing to pay the government to take care of all of the rest of us.

So, how can the Governor expand government when there’s a $7 billion deficit? He should send a thank you note to President Obama, with flowers.

It turns out that Ohio is going to get about $3.4 billion from the federal government to pay for the things that the Governor will not cut and will not pay for. That money, part of the federal stimulus package, is one-time money, and it takes the pressure off -- for now.

By the time the money runs out, the Governor’s proposal will be part of the entitlements constellation. Without federal money, the choice in next budget will be to take it away from the children, or raise taxes to pay for it.

The monkey trap is staked container with a very narrow neck. A monkey delicacy is placed inside as bait.

The monkey reaches inside, and can barely put his hand through the opening. When he clenches the bait, he cannot withdraw his fisted hand – and he waits for the hunter, unwilling to relinquish his prize to save his life.

Medicaid and Medicare now consume about 40% of the state budget, and squeeze everything else – education, prisons and law enforcement, public health. Gov. Strickland should be tackling this voracious beast. Instead, he proposes to expand it, and in the process has created a monkey trap for the next administration.

Making the Insurance Companies Pay for (insert you favorite thing here)

I was waiting to go in to see the audiologist when an acquaintance came out. She plopped down next to me and began to talk.

“Do you know that insurance companies don’t pay for hearing aids?” she asked indignantly.

Yes, I’m aware of that.

“Well, we should do something about that! We should make them pay for hearing aids! We need to write to Congress, or start a petition or something.”

But the insurance companies don’t have a pot of money, I pointed out. They only have money they get from us when we pay our insurance premiums. The same thing with the federal government – the only money they have is the money they take from us in taxes.

She was adamant, and I tried again. If hearing aids are mandated, either our insurance rates or our taxes will go up.

She looked me in the eye. “I understand exactly what you are saying,” she said. “And I want you to pay for my hearing aids.”

I was probably staring at her with my mouth hanging open – I really don’t remember, I was stunned. She grinned at me and added, “I guess that’s why you’re a Republican, and I’m a Democrat.”

I guess so.

We in the conservative movement tend to think that those tax-and-spend liberals just don’t understand what they’re doing – that they don’t realize that paying for their stuff takes money from somebody else.

Maybe it’s just that they don’t care.

It’s good, but not enough to argue the moral dimension of economics – that one person has no moral right to take another’s property for the first person’s gain. My acquaintance believes that it’s immoral for the second person to be well off while the first person has to go without hearing aids, or a a new car, or whatever. Like any matter of belief, it’s not susceptible to change by mere reason.

The winning argument is her self-interest – don’t kill the goose that laid the golden egg. As many governments around the world have discovered, taxing a percentage of nothing is still nothing.

Flouting a Constitutional Rule: Gov. Strickland's Deficit-Shifting Plan

Ohio, prohibited by Article VIII, Section 1 of its Constitution from running a deficit, will shift its deficit this summer to the federal government. But an improper act does not gain legitimacy because someone else does it for you, and the costs of this free money will mount in the years ahead.

The Columbus Dispatch reported yesterday that Ohio stands to receive more than $9 billion from the Obama Administration – call it Obamafare, the bailout program for states. That’s almost double the amount Gov. Strickland had asked for, and more than the worst-case scenario $7.3 billion deficit predicted over the next two years.

Gov. Strickland did not seem displeased. "I had not heard of this number, and I haven't heard of that kind of estimate state by state," Strickland told the Dispatch. "That would exceed what I asked for, wouldn't it?"

When one person does a prohibited act – say, stealing – by having someone else do it, they are both guilty of the theft under the law. It’s called complicity. The same moral logic applies to this deficit shifting. Gov. Strickland, prevented by law from deficit spending, is relying on President Obama to do it for him.

But it’s your money. Or, more precisely, it will be your money that either pays back the Chinese from whom the money is borrowed, or it will be your money that loses its value as the printing presses crank out more currency, and inflation kicks in.

Aside from the obvious financial costs of spending money we don’t have, there are other dangers in this free money.

One of them might be called the Medicaid problem. Federal money has narcotic properties – it produces dependence and an artificial sense of security. No government program has grown like Medicaid, the majority of which is funded by the federal government, with states providing smaller matching funds.

In exchange for the federal Medicaid money, the states give up important powers that could otherwise enable them to control costs – for example, there is a long list of mandatory procedures that must be covered. After 43 years, states across the nation are going broke paying for their share of the program.

Obamafare will surely come with stacks of new rules binding the state’s hands. And, like the ill-fated Comprehensive Employment and Training Act of the 1970s, Obamafare is likely to be extended in the years ahead, because governments always predict deficits.

Ohio is a strong, major state, and its people are resilient and resourceful. We should make the hard decisions about what government we need, pay for it, and let people get about building the lives they choose.

One President at a Time

A profoundly American event occurred today: political power was transferred without violence. Such a transfer has not been the historic norm in the world, and it is worth reflecting on the moment.

Such peaceful transitions require the consent of the governed. Those on the losing end of an election must accept the results, or the fabric of our society will be torn assunder.

The Republic will not falter because of a poor electoral choice. It survived both Jimmy Carter and Richard Nixon -- because in the end, America is not its leaders, but its people.

“He’s not MY president,” some of my liberal friends said to me about George W. Bush. But as Barack Obama said in November, we only have one president at a time. Today, his name is Obama, and he is my president – because I am an American.

May God be with you, Mr. President.

Follow the Money: How to Tackle the Ohio Deficit Monster

The way governments write budgets doesn’t work well, and it works especially badly in bad economic times. Here’s a better approach: Don’t make “cuts” -- decide what to fund, and fund it.

The problem. First, let’s think about the traditional approach. The budget office creates a “baseline” budget – what will it cost to do next year what we did this year? (Hint: it always costs more.) Then, the budget office compares the baseline to the money that is expected to come in, and tries to fill the hole. There are only two ways to fill the hole: cut things out, or get more money (that is, raise taxes.)

Even Gov. Strickland realizes that raising taxes in a recession is political and economic suicide, and he has vowed not to do it. So, the chief executive typically tells department heads to find things that can be trimmed in their budgets. They shave a little here and a little there and go on pretty much doing what they’ve always done.

It’s called inertia: the tendency of a thing to continue along in the same direction until acted on by an outside force.

This government inertia assumes that everything it did yesterday must be done again tomorrow. It avoids the central questions of government: What should a government do, and how much of it, and why?

Government, lacking the private sector tool of profit-and-loss for measurement, forgets to ask the question – so they just keep asking for more money, or they cut everything, good and bad alike.

A better way. The CEO – governor, mayor, president – should ask those unasked questions, and decide what the government should do. Prioritize the list. Start at the top and fund the top priority, the move on to the second one.

Now, when you run out of money, ask this question: Is the next thing on the list worth raising taxes? If not, you’re done. If you think the next item is really essential, it’s time to go to the people and tell them why you need the money.

But don’t pay living expenses on the credit card.

There are a lot of details – some government duties are statutory. Maybe it’s time to ask the Legislature to repeal a particular law. More details: Some items in the budget affect others – if you cut the budget to maintain trooper cruisers, you may spend more money to replace the cruisers that wear out earlier.

Such devils-in-the-details don’t change this fundamental issue: every once in a while, you have to ask why your’re doing what you’re doing. It’s a question for Gov. Strickland to ask now.

Ohio gives away $3.5 million for technology that works half the time

Stupid Government Tricks, Part 4

The State of Ohio just announced it will give away $3.5 million in grants to put solar water heaters and wind turbines in homes. The program is evidence that Gov. Strickland has not yet exhausted worthy targets for budget cuts.

Your state government really, really likes such green technology, and is bothered that more of us don’t buy it.

To create a market where none exists, the state is taking your money and investing it for you in making other peoples’ homes “green.” Your money is being given to these other people on a “first come, first served basis” according to Sherry Hubbard, Chief of something called the Ohio Energy Office.

Why aren’t people buying, say, solar water heaters? Ms. Hubbard knows the answer.

"For most of the time, it's sufficient to heat water," she told the Columbus Dispatch. "You would perhaps have a backup heater for the very coldest of days."

That is, for Cleveland, all the days in November through April, according to the manufacturer of one such system. That is, in Ohio’s largest city, they won’t work for half the year -- which isn't stopping the dysfunctional Cleveland city government from installing them in firehouses there.

So, you have to have two hot water heaters -- a solar one and a regular old backup one -- and the solar variety is expensive. A web search suggests prices between $2,500 and $5,600 -- meaning it could take more than a decade to recover the cost through energy savings, even if it worked all year around.

Assuming the technology is indeed workable, a market for it will emerge when energy prices rise to the point where it makes economic sense. When gas was $4 a gallon this summer, sales of the Toyota Prius hybrid went through the roof. Gasoline later fell by half, and so did Prius sales, according to Business Week.

The lesson is that when alternative energy makes economic sense, people will buy it. As energy prices rise, people will eventually buy it for the same reason people buy energy-efficient furnaces – it saves them money.

I like green. I just don't like green at any cost.

The next time Gov. Strickland talks about the Deficit That Swallowed Ohio, remember the $3.5 million in grants – and ask yourself, how many more programs and offices are lurking in state government that we could, or even should, do without.

(NON-MATH PEOPLE IGNORE THIS PART: A gas water heater costs about $700 to buy and install, and costs around $400 per year to operate. Assuming no energy costs to run the solar heater -- and you do have to pump the water up to the roof -- deduct the capital costs of the heater and installation, then divide the remainder by the annual operating costs to obtain the number of years to save enough to pay for the solar heater. Like this:

$5,600 - $700= $4,900
$4,900/400=12.25 years)

Blaming the State For the Defendant's Lawyers: The Curious Case of Michael Brillon

A career criminal whose taxpayer-funded lawyers repeatedly delayed his case for three years is now free – because, he complains, it took too long to try his case.

Michael Brillon, whose long criminal record includes a conviction for sexual assault on a minor, was convicted in 2004 by a jury of assaulting his girlfriend. As a habitual offender, he was sentenced to 12 to 24 years in prison. (Note: Ohio has no habitual offender law.)

But Brillon sat in jail between his arrest and his trial. He went through six defense lawyers during that time, all of them paid from the public treasury. Brillon fired two of them, and three others quit – one of them said it was because Brillon had threatened his life, which seems to be at least a constructive firing.

Aside from the game of musical defense lawyer chairs cause by the Defendant, the defense asked to continue hearings in the case, with the consent of Mr. Brillon, because:

1. The defense lawyer was moving his office.
2. The defense lawyer wanted more time to file a motion to recuse the judge.
3. Various defense lawyers want more time to prepare.

And, Mr. Brillon waived his right to a speedy trial, not once but twice.

The Vermont Supreme Court ruled that the delay offended the Constitution – and that it was somehow the state’s fault.

Maybe Mr. Brillon’s half-dozen lawyers took too long to get ready for trial. And the record seems to suggest serious problems with Vermont’s public defender, problems that no doubt frustrate the Vermont Supreme Court.

But setting a violent felon free on a community is no way to send a message. The length of time Mr. Brillon waited did not hurt his case – no documents were lost, no witnesses died or moved away or lost their memories. Justice was done on the merits.

Justice was not done on appeal. The Vermont Supreme Court allowed the defendant to control the process, and then penalized the community for it.

The United State Supreme Court has accepted the case. Perhaps at least five justices will recall that the point of a criminal trial is to fairly convict the guilty and acquit the innocent.

Charlie Myers and the Juvenile Justice System: Sometimes, Good Intentions Aren't Enough

Charlie Myers, now awaiting trial for the murder of Jennifer Nelson, burned down a neighbor’s home in 2004 after breaking into it and stealing. His case reveals a deep flaw in Ohio’s juvenile justice system.

Myers had already done time in juvenile prison twice before, and was not quite 18 when he torched his neighbor’s house. He appeared before a juvenile judge, who refused to allow him to be tried as an adult because of the series of tragedies that constituted the young man’s life. The Columbus Dispatch has a fine piece of journalism on the case today.

But this is not a story about bad judgment -- the judge did her best to follow the law, and no judge knows the future. This is a story about a juvenile justice system that misses the point.

Under current law, the system is concerned first with the offender, not society. Sometimes it works -- many young people who make teenage mistakes do not repeat them as adults.

But what about somebody like Charlie Myers?

Before someone like Myers can be tried as an adult -- and face adult penalties -- the juvenile court must hold what’s called an amenability hearing. Basically, if the judge thinks that any treatment, counseling or programming can possibly rehabilitate the young offender, he stays in the juvenile system.

It was supposed to get easier to try the worst young offenders as adults under the Juvenile Justice Reform Act of 2002 – but that amenability provision means that “bindovers” are still pretty rare.

Compare the juvenile law with what the law says about adult felony sentencing – that it’s to punish the offender and set an example to deter others.

We can do better. Here’s how: for a 16-year-old or 17-year-old who commits a serious felony – arson and burglary would qualify in my book – there should be no amenability hearing. Instead, the law should focus on the community, and state a preference to try the offender as an adult, with adult penalties -- although that preference could be overcome by sufficient evidence.

Research shows that adult prison time is not an important deterrent to other youths. Fine. There are two other truths about prison time for serious juvenile offenders: it’s deserved punishment -- and they won’t harm the rest of us while they’re locked up.

Charlie Meyer’s 2004 crimes would have put him in jeopardy of more than a decade in prison in the adult system, and if tried as an adult, he might have been there still.

He was not. Jenifer Nelson, 29, leaves behind a four-year-old son.

Doing Jobs or Jobs That Need Doing: Mr. Obama's Plan for 600,000 New Government Employees

Jobs in a free country are created to do something that needs done. President-elect Obama’s proposed jobs program will create jobs to say that we did – a road we have been down before, with awful results that included a $30,000 arificial rock.

Last Saturday, Mr. Obama said he will create 3 million new jobs when he takes office – with 80% of those jobs in the private sector. Do the math – that’s 600,000 new government jobs. What are all those people going to be doing, and why does it need doing?

As always, history is instructive. 1970 was a recession year, and the politicians swung into high pander to create the Comprehensive Employment & Training Act (CETA). The program was not designed to do something that needed done, it was designed to make paychecks.

It was supposed to be a temporary $1 billion program – today we would call it a “stimulus” -- but by 1978 it was still there, and costing $6 billion. It would eventually be killed off by President Reagan.

The money was sent to state and local government to spend pretty much as they wanted to. There were many, many famous examples of waste. One cited by Reagan and Wisconsin Sen. William Proxmire was a door-to-door census of dogs and cats in a California county. CETA paid $400,000 to have 85 people conduct the survey.

CETA also paid $30,000 to build an artificial rock for rock climbers to practice on, gave $500 a month to a guy in Atlanta to “organize for demonstration and confrontation” and sponsored a nude sculpture class.

In Philadelphia, 33 Democratic committeemen put their relatives on the CETA payroll.

Government certainly has jobs that need doing – catch and prosecute criminals, protect the environment, defend our borders.

The Census Bureau says we had 2.4 million civilian federal employees in 2007, along with 3.8 million state employees, and 10.9 million local government employees – and that’s just full-timers. That’s a total of 17.1 million people on the public payroll, or almost 12% of the 145 million workers in America. Perhaps that’s enough government workers to do the jobs that need doing.

This debate has been going on for a while. Click here for an excellent 1990 essay from the Cato Institute.

Panhandling in Washington: Gov. Strickland & Co. hit us up for $1 trillion

The amount of money being panhandled in the halls of Congress by Gov. Strickland & Co. is an alcoholic’s plea: enough for a sandwich, or a dollar, or whatever you can spare. Like the change tossed to the drunkard, the nation’s treasure will be wasted on the governors’ unreformed habits.

Governor Strickland joined other governors Friday in requesting a $1 trillion bailout for state governments from the federal government. A month ago, the governors were demanding a mere $134 billion for the states. You will have noticed how the economy became eight times worse in the past 30 days.

This increased demand came in spite of Ohio’s auto industry getting federal bailout money.

The governors of the several states have no more clue how they will right their ships than did the CEOs of the Detroit Three, who had a similarly elastic calculation of the size of their critical need. The D-3 must-have amount was $25 billion in November, then became $34 billion in December, until the Republicans in Congress finally said no -- and President Bush said yes to about $18 billion, just before Christmas. Apparently, that was just enough after all.

The governors have another thing in common with the bankruptcy-proof automakers: None of them seems to have a plan on what to do when the federal cash runs out. Give them money, and they will ask again – just like that alcoholic on the street.

Gov. Strickland recently exempted Medicaid from his planning for spending cuts. But Medicaid is 40% of the state budget. How, exactly, is this going to work?

The Governor's answer is to ignore the Medicaid monster and ask the federal government to pay the bill for business as usual.

David Walker, a former Comptroller of the United States, estimates our total debt and unfunded obligations, such as Social Security, at $56 trillion. That’s almost a half a million dollars for every household in the United States.

The Governors of Texas and South Carolina are not joining Gov. Strickland in the panhandling line, and write about their reasons in the Wall Street Journal. Both of them are Republicans, and represent the backbone of their party – and the future of America.

What's Right With America, Part 1

About the same number of Americans are working today as the middle of 2006 – and more than almost any time in American history. This country will not collapse – we have both the means and the will to survive and thrive.

We’ve all heard about the rising unemployment rate – and if you’ve lost your job, it’s a crisis.

But people are working. One year ago, American employment hit an all-time high, of 146.2 million people. The latest numbers from the Bureau of Labor Statistics put American employment at 145.5 million.

Look at the chart below. That’s the number of people working in America, and it’s a far cry from the image Photoshopped by the gloom-and-doom crowd.

And people are spending money. Based on the Wall Street Journal’s report on the drop in spending, retail trade in December should still top $400 billion.

There are major, structural problems in our economy – and they may be worsened by our liberal friends’ spend-and-nationalize policies. But the great engine of the American economy is still strong.

Those 145.5 million Americans are still working, still spending money, still paying their bills. The auto mechanic’s paycheck will buy groceries and insurance. The grocer and insurer will use that money buy gasoline and clothing. The gasoline station and clothier will spend that money again, and so it will go, as money turns over again and again.

America is great because of her people. She does not cease to be great because of greedy boys on Wall Street, or inept leadership in the boardroom or in the halls of government.

We, the American people, will not surrender our dreams. We will not stop working. We will not settle for a future of indolence and dependency.

Like a family that got in over its head, America will work its way through these dark times, and one day soon it will again be Morning in America. That shining future will not be produced by a political party or a government program or even some great leader. It will be produced by Americans in the American way, living free.