Conservative Thought blog can now be found at www.contracostagop.org/blog

We have moved.  Conservative Thought Blog can now be found at www.contracostagop.org/blog

Pathological Altruism on a National Scale

Last week I wrote about the Pathological Altruism that has inflicted the City of Richmond in its efforts to use eminent domain to “save” homeowners with underwater mortgages.  This week I look at the concept on a bigger stage, the country as a whole.

As a refresher Pathological Altruism has been defined by Professor Barbara Oakley in her book “Concepts and implications of altruism bias and pathological altruism,” as:

“…Altruism that attempts to promote the welfare of others, but instead results in unanticipated harm.  A crucial qualification is that while the altruistic actor fails to anticipate the harm, an external observer would conclude that it was reasonably foreseeable.”

The modern welfare state, from European socialistic countries to the U.S. version, reflects the growth of pathological altruism.  In this country everything from Social Security, which discourages people from establishing their own retirement plans and is itself going bankrupt, to a cache of government provided medical programs, including Medicare, Medicaid, SCHIP and now ObamaCare, are a dysfunctional set of third party payment schemes that allows the individual customers of care to avoid the decisions of who and how care is provided and payment is made within the system.

The modern “welfare system”, including TANF, or Temporary Assistance for Needy Families (formerly Aid to Families with Dependent Children) , SNAP (food stamps), WIC, Headstart,  and 122 other Federal programs for low income people (not to mention State programs that compliment these programs) encourages single parent motherhood, near permanent unemployment, and the abandonment of parental responsibilities and other dysfunctional behavior.  For example, when LBJ signed “The Great Society” legislation in the 1960’s 24% of black children were born into single mother households; today the number is 74%.

Or look today at the student loan crises.  Included in the passage of ObamaCare was a provision that allowed the federal government to take over the student loan industry; this year student loans are now greater than $1 Trillion and surpass credit card debt as the largest debt owed in the country.  Yet, only 25-30% of students with loans graduate, with many if those completing degrees in low paying majors such as ethnic studies, woman’s studies, sociology, etc.   Economists are now seeing many young people with $25,000-$35,000 in student debt, living with their parents, unable to purchase a house and/or other large material possessions (cars!)or participate in the society as adults.

The Housing Collapse of 2008

The housing collapse is in many ways, its own special version of Pathological Altruism and was a foreshadowing of the Obama Administration slate of domestic policies.

Many credit the beginning of the housing collapse with the Jimmy Carter’s signing of the Housing and Community Reinvestment Act in 1977.  This act was passed to “encourage” banks and savings and loan associations to meet the credit needs of low and moderate borrowers and to eliminate the “discriminatory lending practices” in low income neighborhoods known as “redlining”.

The Act, however, did not come into prominence until Bill Clinton’s election.  During Mr. Clinton’s first Presidential campaign he encouraged, in his book “Putting People First”,  using private pension funds to invest in affordable housing programs; after his election he tapped Robert Reich to lead the effort to “generate long term social, ancillary, and economic benefits from these private pension plans” by investing in “Economically Target Investments”.  Few pension plans agreed to participate but the Clinton Administration, though HUD Secretary Henry Cisneros was able to recruit Freddie Mae, Fannie Mac and commercial banks into the affordable housing market by exploiting one of the provisions of the Community Investment Act.

HUD and bank regulators then began the process of pressuring banks to make “subprime loans”.  Banks were required in 1993 to make 30% of their loans to low income borrowers.  This was subsequently raised to 40% in 1996, 42/% in 1997, and 50% in 2000 by HUD Secretary Mario Cuomo.  The Bush administration, under its “compassion conservative” efforts, eventually raised the rate to 56%.  During this period and until the collapse of the market in 2008, banks could not open branches or conduct much of their regular business without having a “passing grade”, meeting their sub-prime loan quotas, in the low income lending market.

Fannie and Freddie did their part in the degradation of the housing market by continuously lowering underwriting standards for the loans they purchased from banks and Alan Greenspan and the Federal Reserve did their part by keeping money “cheap”.  Total CRA lending rose from $8 billion in 1991 to $4.5 trillion in 2007.  In 1990 80% of loans were solid prime loans with large down payments; that number fell to 15% in 2007.  In 1990 a minuscule number of sub-prime loans were “securitized” ; by 2007, virtually all of them were.

The American Enterprise Institute calculates that approximately 28 million high risk loans were processed during this period, while thousands of regulators and the banking industry ignored the “safety and soundness” rules that were in-place in federal and state banking laws.  How did this happen?

Pathological Altruism.

Patholoical Altruism in Action: Richmond, California

Pathological Altruism is altruism that attempts to promote the welfare of others, but instead results in unanticipated harm…A crucial qualification is that while the altruistic actor fails to anticipate the harm, an external observer would conclude that it was reasonably foreseeable.”

-----Barbara Oakley, “Concepts and implications of altruism bias and pathological altruism,” Proceedings of the National Academy of Sciences

An old saying my mother would sometimes use when I was, let’s say less than perfect, was, “the road to hell is paved with good intentions”.  In today’s world, that destination is Richmond, California.

We have Barbara Oakley to thank for providing a definition to describe Richmond; I would have thought more in terms of ignorance and the law of unintended consequences.  But the many negative consequences awaiting the city, and others, surrounding its plan to use eminent domain to “save” underwater homeowners are well known to the City; most are spelled out several times in the Wells Fargo lawsuit against the city and its partner Mortgage Resolution Partners.  “Saving” between six hundred and one thousand underwater mortgage holders will hurt:

·         Every homeowner in Richmond:  property values will fall and the entire residential real estate market will decline in the city.  According to City Data, there are 36,151 houses in Richmond (47% rentals).  So the city will help  less than 1% of them and  punish 99+%.   

·         All potential Richmond homeowners; new homeowners will a.) Find it difficult to obtain loans in the city and b.) Be required to pay higher interest on loans they do obtain to cover the higher risk lenders face.

·         Renters; as residential loans become more expensive, landlords will pass these increases on to renters.

·         The City of Richmond; the city will lose property and sales tax revenue as property values decline and fewer dollars are spent in city businesses as its overall economy worsens.

·         The mortgage backed securities market in California and, possibly the country; as risks rise, especially if other cities follow Richmond in this scheme, the market will decline or become more expensive.

·         State and local pension plans, 401(k) plans, college savings plans, insurance companies, mutual funds, university endowment funds, and individual retirees who own the securities involved in the mortgages in Richmond; as the city and Mortgage Resolution Partners execute their scheme, the owners of the securitized bonds will lose hundreds of millions of dollars.

·         Taxpayers; will have to cover losses suffered by Freddie Mac and Fannie Mae, two of the largest investors in the Trusts involved in the city’s scheme.

·         The “saved” homeowners; will each owe tens of thousands of dollars in taxes as the IRS counts their mortgage reduction as income!

In a recent interview with Bloomberg News, Richmond’s mayor, Gayle McLaughlin, indicated that “the economic recovery that has slowly crept across the U.S. has mostly bypassed Richmond”.  Cities like Richmond have a right and an obligation to utilize such a program for the public benefit."

Really?  

She is surprised that demonizing, suing, and penalizing capitalism, businesses, and success in general, leads to the economic recovery bypassing the city?  Or as City Councilman Nathanial Bates said in the same Bloomberg article “The way you treat your largest taxpayer is an indication of how you treat the smallest taxpayer.  It sends a negative message to the business community and potential investors who are interested in coming to your city of how they would be treated just because they are big business."

I’m sure the mayor and city council care for the people of Richmond; or, at least care enough to get re-elected.   And I’m sure that at least people with the targeted underwater mortgages love the mayor and council.  It is just that desperate, anti-capitalistic, progressive, destructive, pathological altruistic result that gets in the way. 

The city has a long and proud history as a “Progressive” city, i.e., dependent and dysfunctional; a city where entrepreneurship is defined by how often you can sue Chevron or run programs where the city government hands out money for some mythical collective purpose.

In 2011 the Mayor participated in an Occupy Wall Street protest.  In an open letter to the Occupy movement she complained that the city had a growing number of poor residents while Chevron was making billions of dollars.  Without recognizing the irony of her statement, the mayor was negatively critiquing her own path, a path she is taking the city and its residents down:  implementing social justice and social advocacy programs that have and will continue making the city’s residents poorer while the city continues punishing profitable companies, retirees, pension and endowment funds and their workers/taxpayers to complete the downward spiral.

Pathological altruism at its finest.

Obama Channels Eugene McCarthy; Democratic Congressman Keith Ellison knows “the bottom line”

The July jobs report last month reported that 195,000 jobs were created in the economy.  The problem was that most were part –time.  Of 953,000 jobs created so far in 2013, 77% or 731,000 are part-time.  Most are in the retail and restaurant industries.  In June part-time jobs exploded, growing by 360,000, while full time jobs dropped by 240,000.

Thanks to my son, Chris (political writer and American History PhD), we may know why this is happening:  Democratic Congressman, Senator and five time Presidential candidate Eugene McCarthy proposed it in 1989.  In his 1989 book, Mr. McCarty proposed that we become a part-time work society as a means to reach full employment, improve income distribution, increase the consumer market, make a better life for the contemporary American family, and jump tall buildings in a single bound (okay, I made the last one up!).   The book, “Nonfinancial Economics” (the title says it all) was not a best seller but is still available on Amazon.com.

Proving that “nonfinancial economics” must be in the Minnesota water supply, one of its Congressman, Keith Ellison, has proposed the “Inclusive Prosperity Act”.  Explaining the Act at the July 25^th Progressive Democrats of America roundtable, Ellison said “the bottom line is we are not broke, there’s plenty of money.  It’s just the government doesn’t have it.”  Ellison continued, “the government has a right, the government and the people of the United States have a right to run the programs of the United States.  Health, welfare, housing—all these things.”  Ellison estimates his “Inclusive Prosperity Act” would raise $300 Billion in tax revenue annually by imposing a tax on the trading of stocks, bonds, and derivatives.

The revenue raised by the “Inclusive Prosperity Act” would, he said, “fund international sustainable prosperity programs such as health care, AID treatments, research and prevention programs, climate change adaption and mitigation efforts by developing nations.

Maybe we need to get Minnesota out of the union…….

I wrote this piece in jest, having received the two reports referenced today.  I took a break to have dinner and then came back to push the “publish” button when it hit me how serious this is.  This is a picture of ignorance: economic, financial, and social ignorance espoused by politicians that have and are being elected and re-elected to office.  So enjoy this short post.  And then get angry and fight back against ignorance.

Antioch USD announces “central goal”: be “all-inclusive”

Be very concerned when a school Superintendent uses words like “all inclusive” to describe the central goal of his district.  It means that at the next parent teacher conference the discussion will probably focus on the quality of the muffins or the type of band-aids used, rather than the results of a reading program.  Feel badly for the children and the parents who actually think this is good.

Contrary to Antioch USD Superintendent Donald Gill’s July 23^rd guest commentary in the Contra Costa Times about his District, schools providing breakfast, “second chance breakfast” (rewarding tardiness won’t create more tardiness?), lunch and dinner, snacks, health care, etc. to school children is not positive, but is yet another deterioration of our culture and society.  It is, ultimately, bad for everyone.  There is nothing endearing about parents abdicating their responsibilities to raise their children by turning them over to a school district for twelve hours a day.  Why not just build orphanages and give parents visiting rights?

Families have held our culture together since its founding; eating a meal together has always been a core event of parenthood.  Whether it’s talking about the events of the day, reinforcing and encouraging good behavior, being good role models, or dispensing discipline, it is an essential event of the day. 

In his book “Cooked” food critic and nutritionist, Michael Pollen reflects on the importance of the family meal to our culture.  “The shared meal is no small thing,” he says.  “It is a foundation of family life, the place where our children learn the art of conversation and acquire the habits of civilization: sharing, listening, taking turns, navigating differences, and arguing without offending.”  In other words, sharing a meal with parents is where our children learn the skills necessary to function successfully in a school environment and grow into capable citizens.

Dr. Gill’s announcement also appears to be an abdication of the district’s purpose, to provide the best possible education to kindergarten through high school age children.  It is squandering the district personnel’s time and is recognition, to paraphrase W.C. Fields, that “if you can’t dazzle them with brilliance, baffle them with bull”. 

The district, like many urban school districts, has racial and discipline issues, lawsuits, morale problems, and a less than stellar educational record.  Struggling to educate children within this chaos, Dr. Gill has adopted the strategy of failing school systems in Detroit, Chicago, Los Angeles, etc.:  distract and placate parents by providing redundant social services, rather than exceptional educational services.  Rather than facing the community straight on, his strategy is nothing more than buying the support of a dependent and sometimes hostile segment of the district, while growing another, larger, generation of dysfunctional entitlement children.

The irony of the District’s decision is that it will make the job of educating their children more difficult.  As the children feel less and less loved and valued at home their behavior will deteriorate.  Ultimately, in the name of political correctness, Dr. Gill and the district is doing themselves and the people of Antioch and East County communities a dis-service.

Barak Obama: Perpetuating and growing Inequality

“A society that puts equality –in the sense of equality of outcome-ahead of freedom will end up with neither equality or freedom.  The use of force to achieve equality will destroy freedom, and the force, introduced for good purposes, will end up in the hands of people who use it to promote their own interest.”

                                                              -Economist Milton Friedman (1912-2006)

How prescient of Dr. Friedman to foresee the Obama Administration.

The President, who has done more to destroy the middle-class than anyone in recent memory, called his speech on Wednesday, July 24 “A Better Bargain for the Middle Class”.  This from a man who has squandered his first five years in office on ineffective policies for reducing inequalities through redistributing wealth rather than creating or growing it.

Tear the veneer from any Obama policy or program and in its basic foundation it is a redistribution plan designed as a health care plan, an energy plan, a tax plan, a stimulus plan.  The President appears to have redefined “middle-class” as a larger food stamp grant, ninety nine weeks of unemployment; government subsidized everything, and lots of “programs”.   Not my idea of “middle-class”.

 The President came to office in 2008 with the economy in recession and a 7.8% unemployment rate.   His policies have failed to ignite what we normally call a recovery.  Since he came into office economic growth has only averaged about 2% or less per year and was still an anemic 1.8% in the first quarter of this year.   

The Wall Street Journal noted after the President’s speech, that stocks and housing prices are rising, but job growth has never arrived as it does in an economy with 3%-4% growth.   Unemployment in California is still high, at 8.5% in June, with African-Americans (17.1%) and Hispanics (11.1%) suffering disproportionately, according to the California Labor Department.

The Journal and Senier Research, using census numbers, put the median annual income level in May of this year at $51,500, 5%, or $2,718 less, than in June 2009, after the recovery was announced.  In other words, median real household income has fallen during both the recession and the recovery.

What job growth that has taken place during the President’s administration is illusionary with part time, temporary and contract employment now the rule, more so now as ObamaCare is incenting businesses to cut employees’ hours below thirty hours per week.

The July fifth jobs report showed the economy created 195,000 jobs the previous month.  However, sixty percent of the job gains were in low paying industries: retail firms added 37,000 jobs, leisure and hospitality companies added 75,000.  The number of people wanting full time work, but working  part time increased by 322,000 to 8.2 million (1.3 million in California).   The underemployment rate (the unemployed, the people working part time who want full time work, and the people who have stopped looking for work) now totals 20 million Americans and rose in June from 13.8% to 14.3%. 

According to the Associated Press, temporary and contract  workers currently number 17 million as companies turn to them in the face of ObamaCare and other uncertainties in the economy.  The number of “temps” in the workforce has increased more than 50% since the recession ended in 2009, to 2.7 million people.

And we have yet to reach the same number of employed that we enjoyed before the recession began.  The Teamsters Union calls this the “Jobs gap” and puts the shortfall at 9.1 million jobs.  This “gap” includes the net 3.4 million jobs lost between December 2007 and December 2012 and the 5.8 million jobs that should have been created during this time to absorb new potential labor market entrants. 

Five national unions, the Teamsters, the United Food and Commercial Workers, Unite Here, the Laborers’ International Union and the International Brotherhood of Electrical workers have all demanded that ObamaCare be repealed or reformed to save union health plans and pay levels.  The union representing the IRS, the agency that will run ObamaCare, has demanded their workers not be included in it.

Ronald Reagan came to office in 1981 with 10.8% unemployment and Jimmy Carter’s recession in full bloom; he cut taxes and regulation, focusing on growing the economy.  The economy grew at 4% through his administration. Fifty-five months after the recession of 1980 started (about where we are now with Barak Obama) the Reagan recovery had created 7.8 million more jobs than when the recession started (there was no “job gap”)and continued creating jobs throughout President Reagan’s administration.  According to the Wall Street Journal, the median family income rose during the Reagan presidency by $3,380 or 7.7%.

I opened this column with a quote from Milton Friedman and will close it with one from Winston Churchill: “socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery”.

Welcome, Winston, to the Obama years.

It's a Stampede!

In my July 19th post I reported that three unions had sent letters to the President demanding the repeal or reform of ObamaCare.  By "reform" they meant they are demanding that the federal government subsidize union members health insurance under ObamaCare.  They were also concerned that rules requiring employers to provide health insurance to full time workers, defined as 30 hours or more, was creating a situation were employers were reducing hours (and pay) of full time workers and would destroy the time honored tradition of the 40 hour work week.
Well, union concern has grown to five unions:

- International Brotherhood of Teamsters
- the united Food and Commercial Workers
- Unite Here
- Laborers' International Union of North America
- International Brotherhood of Electrical Workers

the two new unions wrote the President that the new law "will not only shatter our hard-earned health-benefits, but destroy the foundation of the 40 hour work week".

Also entering the union outcry this week was the National Treasury Employees Union, the union of the IRS employees that will implement and run ObamaCare for the Federal government.  Not us, they said, how dare you try to put us into ObamaCare.

Makes you feel really good about what is coming, doesn't it?

ObamaCare: fraud, identity theft AND bad health care

Democratic State Insurance Commissioner David Jones has issued a warning:  consumers could fall prey to fraud, identity theft, or other crimes at the hands of the people hired to help them enroll in ObamaCare.  “We can have a real disaster on our hands” he said in an interview this month.

Jones, whose Department regulates more than 300,000 insurance agents and brokers in the State is concerned that Covered California, ObamaCare in California, does not have the proper procedures in-place to ensure that people hired as counselors are adequately screened and monitored nor have they established procedures for handling complaints or working with police about those complaints.

Covered California will certify 21,000 "enrollment counselors" from 3,600 Community organizations.  These “counselors” will guide enrollees to the proper plan for them and complete the enrollment process.  They, and their community organization, will receive a commission for each enrollment.

What could possibly go wrong?

Covered California‘s rules do not specify offenses that disqualify applicants from a counseling position.  “We don’t want applicants from communities where the exchange really needs to reach out being sent away because they made a mistake in the past or bounced a rent check or have a minor drug offense”, said a spokesman for the California Pan-Ethnic network, one of Covered California’s Community organizations. 

Jones (remember, he’s a Democrat) continued by saying, “Once they are in that position of trust, it’s possible they will obtain information that will allow them to build the trust they have with the individual they are working with and potentially sell them all manner of bogus products, steal their identity, gain access to certain assets they might have.  The list is virtually endless.”

What could possibly go wrong?

The Los Angeles Unified School District is taking another approach, one directly from the East German Stasi (secret police) playbook.  The district will use students to sell ObamaCare to their parents and report to district officials those parents who do not co-operate.

As for the implementation side of the equation, the Federal government is implementing the largest government database ever assembled.  Called “The Hub”, it will combine data from the IRS, Social Security System, Health and Human Services, and other Federal databases with State location and MediCaid (MediCal in California) information.  So, Community organizers/counselors will have access to our Social Security numbers, tax data, residential location, business information and health data.

What could possibly go wrong?

 In a strange twist of fraud, the Obama Administration has not been able to get “The Hub” working.  Being unable to check employer records for pay, health insurance coverage, co-pays, etc., they have postponed the “employers mandate” for one year (until after the election; they may be technically stupid, but are not politically stupid).  The individual mandate, the requirement that everyone must buy health insurance or pay a fine, will go forward even though an individual’s employment, pay, and health insurance records cannot be verified.  Individuals will be asked to “self-assert” that they should get a government subsidy (Mr. Jones, do you certify that you deserve a $12,000 government subsidy, or do you want to forgo it this year?). 

What could possibly go wrong?

MediCare provides health insurance to 48 million Americans (40 million seniors, 8 million disabled). Implemented in 1965, Congress projected its costs would eventually grow to cost taxpayers $12 billion per year.  In 2010, expenditures were $528 Billion.  Fraud (“improper payments” in Federal government jargon) that year, was $47.9 billion.

Medicare is prone to fraud because it is based on the honor system for providers and patients.

ObamaCare is based on monstrous complexity, incompetence, and a willingness, almost gleefulness, to tolerate fraud.  Targeting 300 million Americans, what could possibly go wrong?

Am I Next?

The San Francisco Chronicle on Sunday 21 had a front page article on the protests related to the Trayvon Martin/George Zimmerman verdict.  Accompanying the article was a picture; both the picture and article generated this letter to the editor, which was published on July 24:

Editor:

Your front page on Sunday, July 21 had a picture of a young black boy with a sign that asked Am I Next?”

Tell him yes, if he lives in a black neighborhood.   Then refer him to your coverage of Alaysha Carradine or any of the dozens of killings in Oakland, any year.

More than 90% of African-Americans who die violently, die at the hands of another African-American.

I am tired of black leaders , black community organizations, and black protesters saying they are fighting racism by telling their children and grandchildren that they will be killed by people of another color.  This message only enhances the chances that racism will continue in the future and these hustlers will continue to collect the checks they generate being hateful.

I feel awful for both the Martin and Zimmerman families, but can we just shut up and get back to reality.  And work for the end of racism.

Hal Bray

Unions demand repeal or reform of "ObamaCare"

The Obama administration has managed to pull off a “hat-trick” when it comes to people and organizations hating the President’s signature health care achievement: Business owners, labor unions and taxpayers are all demanding health reform be repealed or significantly reformed.

Unions are the latest to join this demand.  The Presidents of three of the largest unions in the country, the International Brotherhood of Teamsters, the United Food and Commercial Workers, and Unite Here, are demanding that the Affordable Care Act, or “ObamaCare”, be repealed or “fixed” to their satisfaction.

In a letter to the President , Nancy Pelosi and Harry Reid the unions reminded the President and Democrats that it was union support—boots on the ground and money-- that got them elected and “time is running out: Congress voted for this law; we voted for you…we have a problem; you need to fix it”.

The unions have multiple problems, in fact, with the law.  Union multi-employer health plans currently have approximately 20 million members.  The unions’ most serious concern is that union health plans will be hit with a double whammy on January 1, 2014: the cost of their multi-employer plans will rise  and union members will not have access to federal subsidies available to individuals purchasing lower priced plans in the State exchanges (Covered California in California).  The unions are afraid that many members will leave union health plans or that many, especially smaller, employers will drop union health plans to allow their workers to purchase plans on the individual market.  Both scenarios would be “devastating” claim the unions and make union membership less important to current and potential future members.

The unions are also concerned "ObamaCar" “will shatter not only our hard-earned health-benefits, but destroy the foundation of the 40 hour work week” by defining “full-time” as 30 hours or more per week and requiring employers to provide health care to full-time workers.   These requirements, they complain, are incenting employers to cut current employee hours and only hire part-time workers.
Current employment numbers seem to bear out this fear.  The consequences of these provisions are two-fold: fewer hours equals less pay for workers and the loss of employer provided health insurance.

An unrelated study at Northwestern University supports the concerns expressed by unions.  The study forecasts that up to 940,000 people will quit their jobs when ObamaCare becomes available.  Why?  The authors show that many people work, not for the money, but to obtain health insurance.  Other employees stay at their current employer because of the company’s health plan.  With exchanges available and providing subsidies in the individual markets, the authors show that many people will quit working or use the individual markets to free themselves from the restraint of employer and/or union provided health plans.

Are the union concerns valid?  Does the Northwestern study show pending devastation or freedom?  What will hundreds of thousands of people quitting work or dropping union health plans for government subsidized individual health plans do to tax rates and government debt?  Maybe the ultimate question is why would you pass legislation with this complexity, with this potential disastrous effect on one-seventh of the economy without understanding these concerns?

Nancy Pelosi said when passing the Affordable Care Act, “we have to pass this legislation so you can read what is in it.”  Maybe someone could have read AND understood it before voting for it.

Obamanomics: Learning to love temporary, part-time and contract work

The July fifth jobs report was reported in the mainstream media as possibly the greatest economic event in years.  The economy, the media screamed, created 195,000 jobs and job creation for the past two months were upgraded raising the three month average 202,000 per month.  The unemployment rate stayed at 7.6% as more people started looking for a job.

Underneath all the hoopla is a different story.

First, 60% of the job gains, according to the Wall Street Journal, were in low paying industries: retail firms added 37,000 jobs, leisure and hospitality companies added 75,000; the number of higher paying manufacturing jobs decreased by 6,000. 

The number of people wanting full time work, but working  part time increased by 322,000 to 8.2 million (1.3 million in California).   The underemployment rate (the unemployed, the people working part time who want full time work, and the people who have stopped looking for work) now totals 20 million Americans and rose in June from 13.8% to 14.3%. 

According to the Associated Press, temporary and contract  workers currently number 17 million in the economy as companies turn to them in the face of uncertainty in the economy.  The number of “temps” in the workforce has increased more than 50% to 2.7 million people since the recession ended four years ago.

One explanation for the accelerated growth of part-time, contract and temporary jobs is ObamaCare.  The law requires employers with more than 50 workers to provide full time workers health insurance or pay a $2000 fine; it defines “full time” as 30 hours per week or more, giving businesses an incentive to hire more part-time or temporary workers.

The labor participation rate (the percentage of able-bodied Americans working or actively seeking work) rose from 63.4% to a still pathetic 63.5%.  The labor participation rate was at its highest point in 2000 when it hit 67.3%, but has been declining since.

The consequences of the move to temporary, part-time and/or contract workers are that the combination of low pay, few benefits and little job security makes these workers less likely to spend freely and, therefore, boost the economy.  It may look great that 195,000 jobs were added in June, but if most were people who lost jobs paying $60,000-$100,000+  and are now asking “do you want fries with that order”, we will see little economic recovery in the near future.

ObamaCare: Confusion and consequences

As the implementation of ObamaCare gets closer there is more and more confusion about the economic consequences of the law.  Businesses, workers, unions and taxpayers are trying to figure out how their decisions will affect their lives and the lives of others as the October 1 start date approaches.  How will decisions by others affect me?  Will I benefit from the law more than I suffer from it?  Who will suffer the most economic damage due to the law?

Nothing is causing more speculation and hurting jobs growth more than the requirement that most businesses must provide health care for full time employees, defined as 30 hours or more per week, or pay a fine.  Many in the retail, restaurant, non-profit and other lower paying industries (and the workers in those industries) are lobbying the Obama Administration to change the definition of full time back to the 40 hours per week standard and speculation is rampant that many of these businesses will reduce employee hours to 29 hours per week to avoid the health care requirement.

California Legislators are, of course, proposing a solution.

Assembly Bill 880 will impose State fines of $6,000 to $15,000 on top of Federal fines for not providing health insurance coverage to full time employees. It will also punish employers for reducing their employees' hours to less than thirty per week. It seems the Legislature cannot stop themselves from pushing businesses out of California.

Who will benefit and who will be punished with the intended and unintended consequences of this rushed, unnecessary bill?  Are they protecting the workers of the state or are they concerned about the financial burden a giant wave of part-time employees signing up for an expanded government funded Medi-Cal will have on the State? 

According to University of Chicago economist Casey Mulligan, they should be concerned for the State and Federal budgets.  He has calculated that workers in low paying industries, such as the retail and restaurant industries, may be better off working part-time and getting federal subsidies or state Med-Cal, rather than working full time.  His numbers show that many lower paid workers will net more income working part time and receiving government subsidies, than working full time with no subsidies.  And workers would have fewer expenses associated with going to work full time.

Taxpayers, of course, will bear the burden of this solution, funding up to $12,000+ per employee in this new employment paradigm.

How do unions fare in this new world? 

Twenty million people--workers, retirees and dependents-- receive their health care through union affiliated multi-employers trusts.  Unions are demanding that these workers and their families, excluded from the new health exchanges, be subsidized by the Federal government.   The Teamsters, carpenters, roofers, retail workers, janitors, etc. are dependent on union negotiated health benefits for health care, but in this new world will receive no subsidies or tax credits. 

And small non-union employers (less than 50 employees) will enjoy a competitive advantage of a 50% tax credit reimbursing them for the cost of health insurance while similar companies providing health insurance through union trusts plans will not.  Things go from bad to worse for unions in 2018 when the government will levy a 40% excise tax on so-called “Cadillac” health plans, plans often negotiated in labor contracts.

At this point many unions are demanding the Obama Administration subsidize their union plans or repeal the entire law.

So the final question is not who will suffer and who will benefit from ObamaCare, but why are we implementing a law affecting one-seventh of our economy without knowing these answers?

On March 9, 2010, Nancy Pelosi admonished the public when she told reporters “we have to pass this bill so you can find out what is in it”.

 Three years later we still don’t know what is in the bill and what the consequences will be.

Contract decisions in the National Basketball Association

National Basketball Association Center Dwight Howard is the most sought after free agent in the NBA.  Courted by five teams, most analysts think the bidding is down to the Lakers (his team last year) and the Houston Rockets.

People familiar with the negotiation think the important factors in picking where he will play for perhaps the remainder of his career,  includes team mates, the area, the history and culture of the team and, of course, the money.  But "the money" includes more than most people think.  Taxes may break a tie in his decision process.

LaBron James was the first basketball player to mention the "tax consequences" of picking a team to join.  Leaving Cleveland in 2010 he chose to play for the Miami Heat over the New York Knicks, citing taxes as one of his criteria in making the decision.

Mr. Howard, under the NBA's labor agreement, can be offered more by the Lakers than they can by the Rockets.  But, the Rockets offer of $88 over four years (the maximum they can offer under the NBA's labor agreement) compares favorably over the possible offers from the Lakers due to approximately $8 million in income tax savings in Texas, which has no income tax, and a lower cost  of living in Houston.

California's hostile business environment strikes again.

Student Aid: An investment in our future?

The new State budget includes approximately $305 million annually for “Middle class scholarships” to CSU and UC campuses.  This is on top of the ongoing CalGrant program which has provided (and continues to provide) $1.6 Billion annually to those who have graduated from California high schools.

Since Barak Obama became President Federal Pell grants have grown 84% to $34.5 Billion per year.

Federal Student loans now top $1 Trillion dollars, more than all credit card debt in the country.

This is an enormous investment in the youth of America and we should be grateful to the political leaders that have led this charge to provide college to all of our young people.

Well, not really. 

In 2010 sixty percent of all college students were Pell grant recipients, a fifty percent increase from 2008.  However, only 25% of Pell grant recipients under the age of twenty-five graduate with in six years.  Of those recipients older than twenty-five when receiving a grant, only 3% graduate.   

According to the College Board, forty-four percent of the over 25 year old Pell grant recipients are laid off workers who are seeking to change careers but have few study habits and don’t really know how or want to go to school.

But students receiving Federal loans are doing much better, right?

No, According to an Associated Press study, more than 40% of full time students in four year schools with federal loans fail to graduate within 6 years and 75% of community college students fail to graduate within three years.   Of those who graduate, 50% are either unemployed or in jobs that don’t require a college degree (can you say barista!). 

And many graduate with degrees in subjects, like ethnic or women’s’ studies, sociology, and creative writing, that have little economic reward and are struggling to pay the $27,000 to $40,000 debt (the average student debt) they foisted upon themselves in college.  The default rate on student loans has grown to 12% this year, with 35% of the loans at least 90 days late, but not technically in default.  Many studies are now showing that these former students will be unable to buy a house or participate in the economy in other significant ways for years to come.

Okay, but students attending college on CalGrants are doing better than those on Federal grants and loans, right?

No.  The California Student Aid Commission, the State Agency that runs Calgrants (and other grants in the State) does not release graduation rates (which speak volumes!).   The State Legislative Analyst Office (LAO), in a January, 2013 report, indicated that colleges must maintain a 30% graduation rate and meet other requirements to remain in the CalGrant programs.  Last year one hundred and fifty-four schools were deemed ineligible to continue in the Calgrant programs, but the report did not specifically say why the schools were unable to meet such “lofty” goals.

So, on an “investment” of more than $2 trillion per year of taxpayer’s dollars we have a failure rate of 70-75%.   At least there is no fraud or financial malfeasance in such honorable programs, right?

We should be so fortunate.

Like the housing bubble where banks had no “skin” in the game, colleges and universities have had no skin in the game.   It is in their best interest to give money out as quickly as possible; all loses are on the taxpayer.  Colleges and government agencies require no credit checks and the funds come with few restrictions on how the money can be spent.  Government lending agencies are only interested in the intent of the student to attend college and their financial “need”; just last year the federal government began investigating possible fraud and, to no one’s surprise, have found “improper payments” of $829 million in the Pell grant program and $614 million in student loans.

If the majority of students do not graduate or complete a certificate program, and there is more than $1 Billion in fraud in student aid programs, why do we continue them as designed?  Surely someone must benefit.

Yes, there are people and groups who benefit.  We will examine who benefits in my next posting.

Covered California: ObamaCare is Here

ObamaCare is here!  Yea or Nay!  As we near the implementation date of October 1 for the Affordable Care Act we are being bombarded daily with the good news and the bad news.  Which is true?   I tend to believe, like Democrat Senator, Max Baucus, that it is going to be a financial and health care disaster.  

If we look at RomneyCare in Massachusetts (ObamaCare is supposedly modeled after RomneyCare), the State has the highest insurance rates in the country and the longest wait to see a doctor; it also, it’s advocates say, has provided 98% of the State’s residents with insurance coverage.

California is the key state in the implementation of ObamaCare and is one of only 17 States that are building its own exchange (the Federal government is building the exchanges in the other states).  California’s program is called Covered California. 

The Contra Costa Times recently reported the State has been given $900+million by the Obama Administration so far to implement the program.   However, it is difficult, if not impossible, to track the State’s expenditures to implement the program.  Why?  In 2010 the State passed legislation allowing California to keep all contracts secret for one year and all rates secret forever.  It also exempts from the California Public Records Act any negotiations, minutes of meetings, Board meetings records, training, or communications of any type.  Transparentcy appears to be a problem with all Democrat Administrations.

Last week (June 19^th) the Governor signed legislation authorizing the implementation of three Exchange Call Centers and the hiring of hundreds of County workers to help sell insurance programs through the exchanges.  There will be a 250 person exchange in Concord and two others elsewhere in the State.

The Governor also authorized distributing $37 million to forty-eight community based organization to perform “outreach” duties throughout California.

According to Covered California’s website the program is targeting 5.3 million Californians who are currently uninsured or purchase health insure on their own.  Of the 5.3 million who are uninsured, 2.6 million will qualify for federal subsidies.  Another 1.4 million will qualify for Medical (Medicaid).

Where do those Californians who qualify for a subsidy live?

780,000 live in Los Angeles County

390,000 live in the Bay area; 130,000 live in the Sacramento Area

200,000 are in Orange County; 190,000 in San Diego; 180,000 in Riverside; 160,000 in San Bernardino

185,000 are in the San Joaquin Valley; 100,000 in Northern California and Sierra Counties.

And, according to Covered California, what is the ethnic makeup of those eligible for Subsidies:

1,190,000 Latinos

870,000 Whites

370,000 Asian

100,000 African American

70,000 “Other”

The health plans that have agreed to participate in the Exchanges are:

Alameda Alliance for Health                                        L.A. Care Health Plan

Anthem Blue Cross of California                                 Molina HealthCare

Blue Shield of California                                              Valley Health Care

Chinese Community Health Plan                                  Ventura County Health Care Plan

Contra Costa Health Plan                                            Western Health Advantage

Health Net                                                                   Kaiser Permanente

Maybe more important than which health plans ARE participating is who is NOT participating.  Aetna, United HealthCare, and Cigna, three of the largest health plans in the State, are not participating in the Exchanges, narrowing the choice of plans and doctors participants will have when choosing care.

The Most Transparent Administration in History?

During his first term in office, the President compared himself favorably to Abe Lincoln, FDR, and Lyndon Johnson.  

I would suggest Al Capone, Bugsy Siegel, and John Dillinger would be a better comparison.   Or the four (of the last seven) Illinois Governors who have gone to prison.

The Obama Administration is currently embroiled in eight, yes eight controversies/ scandals that bring the President and his appointees’ ethics and judgment into question.

Benghazi

Eight months after the killing of our four Americans in Benghazi we still don’t know where the President (Commander-in-Chief) was after receiving his initial report.  We also don’t know who came up with the video as the cover up for the real events.  There are still many details to this killing of Americans that remain a mystery.

IRS harasses conservatives, Romney Donors

Eighty-eight IRS agents and supervisors in Cincinnati and Washington who were harassing conservative groups, pro-Israel groups, and religious figures have now been identified.  The Commissioner of the IRS was at the White House 157 times during the period in question, but can only remember going for an Easter egg hunt.  Really? 

We also know the IRS also targeted large Romney donors and bundlers, most of which were also audited by the Labor Department, OSHA, and the EPA.  None of the donors were found guilty of any abuses or crimes, but spent thousands defending themselves. 

In the meantime, the Barak H. Obama Foundation has not been audited, nor has the “Organizing for Action” 501c(4), formerly the Obama for America campaign organization, although they are selling access to the President for $500,000.

EPA Director’s Secret Email Account

It has recently been discovered that former EPA Director Lisa Jackson was using a secret email account (under the alias Richard Windsor) in violation of several federal laws to conduct business.  Using this account she conducted regular EPA business and released confidential EPA reports to EarthWatch, the National Resources Defense Fund and others, including the names and locations of farmers under investigation by the agency.

Justice Department spies on Associated Press

Using the excuse of finding the source of a national security leak, the Justice department secretly obtained Associate Press phone records of 20 work, home or personal phone lines/numbers in multiple cities used by hundreds of reporters and editors.   The AP now fears that the Obama Administration is able to track how hundreds of its reporters gather news, intimidating sources who would otherwise talk to AP reporters.

Justice Depart spies on Fox News

The Justice Department also spied on Fox News Reporter James Rosen, Secretly obtaining his and his parent’s personal and business phone and email records and covertly tracking his movements within the State Department.

Another secret set of email accounts

Thomas Perez, Assistant Attorney General and the President’s nominee for Labor Secretary, has been using two secret email accounts to avoid complying with Freedom of Information requests.  He has admitted sending and receiving 1200 emails on those accounts, but will only release the “to”, “from” and “subject line” of the emails. 

Two Illegal appointments to the National Labor Relations Board

The President has made two appointments to the NLRB, both of which have been found to be illegal/unconstitutional by the Appellate Courts.  Unable to get two appointments through Senate confirmations, the President simply declared that congress was in recess and made “recess appointments”.  The courts found that the Constitution defines when Congress is in session, not the President, and ruled the appointments illegal.

ObamaCare

Although billions of dollars have been allocated to implement ObamaCare (California has received $1 Billion so far), the Administration has run out of money to implement the program.  So Secretary of Health and Human Services Kathleen Sibelius simply, in violation of several laws and Article I of the Constitution, “asked” health care and insurance companies that she regulates to donate hundreds of millions of dollars. 

 The Mafia would be proud.

Several final chilling thoughts

The President claims that the he has no knowledge of any of these scandals, even though his
White House staff and attorney have acknowledged they knew of several. 

And the person, Sara Hall Ingram, in charge of the IRS unit intimidating conservative groups and others has not been fired.  She has been promoted and is leading the implementation of ObamaCare.

And, if that doesn’t scare you, to monitor compliance with ObamaCare laws (47 new major changes to the IRS revenue code, 23 new taxes) the administration is building the largest personal information database ever built by the government.  Known as the Federal Data Services Hub, it will combine the IRS’s own data (income, taxes, and employment status) with Social Security, Homeland Security, Justice Depart, Health and Human Services (enrollment in entitlement programs and medical claims data) and residency data from the 50 states.

In other words, the Obama Administration has left no stone unturned, no department or branch of the government untouched when it comes to subverting democracy and intimidating its opponents.

 And now, with the help of technology it will have access to every conceivable part of our lives.   

OMG! Could E.J. Dionne be correct?

I have always hated the world view of uber liberal opinion writer E.J. Dionne Jr. and have never agreed with anything he has written.  Until last Friday.  And then it is not exactly an agreement, but more a recognition that his argument is good, really good.

His column in the Contra Costa Times, "Utopian impracticality is libertarianism's Achilles heel" (read at http://www.arcamax.com/politics/ejdionnejr/s-1338122) is worth reading.  Although he exaggerates his argument, it should still make conservatives think about how we discuss the size and worth of government.

The article discusses big government, what he calls "center left states" based on "welfare states conjoined with market economies" verses "small government or libertarianism" and asks a very good question:  "if socialism is discredited by the failure of communists regimes in the real world, why isn't libertarianism discredited by the absence of any libertarian regimes in the world"? He offers the proposition that most "free and prosperous countries" have governments that "consume around 40% of their GDP".

The topic for today is our (conservatives) use of language in discussing government.  We will consider his 40% proposition and his conclusion in a later posting.

Today we will consider if we should moderate our criticisms when expressing our disgust at an overly large, out of control government at all levels of society.   And no, we should not moderate our anger, our values, our beliefs, but we should moderate our language.

For example, We often fail to express our dislike of large or unlimited government by demanding what appears to be no government.  Our language used to discuss the subject implies we see nothing redeemable about any government services.  We harm ourselves by exaggerating our view.  We are not anarchists.

One practical example will help here.   We (Republican Party) are working with the NAACP.  We can, and have, shown how the government can oppress the NAACP and people of color.  They can show how government benefits both.  For example the President of the East Contra Costa NAACP graduated from high school at 17 and enlisted in the Navy, retiring 20 year later with a pension.  She then went to work for the County Health Department where, among other duties, she works today on opening an asthma clinic for under served people.

It will be difficult to convince her that government is bad.  To do so indiscriminately is to denounce her life.  Not a winning debate tactic.

 Our mission, our task, is to show her and others in the NAACP that life can and should be better with a smaller government and a robust private sector economy.  A robust economy with good, well paying jobs that allows people to pay for health coverage is far better than an excessive nanny government providing someone welfare and a "free" government provided asthma clinic.

We must use language, a more precise argument, that fights for a small  government with limited defined responsibilities and services, not one with the excesses we have today.

Today we will take a quick look at a  recent Contra Costa Times opinion page column.  The column, by Assembly Democrat Susan Bonilla, shows us that the left never quit, never stop spending, are never satiated in their appetite for "programs"

Ms. Bonilla's column is "California must reinvest in the future--our youngest learners".  In the column, Ms. Bonilla is the designated bulls-----r of the Democratic Party, espousing a new effort to provide universal pre-school for all of California's children.  She  informs us that she has drafted Assembly Joint Resolution 16 to "begin the planning process to position California to receive future federal funding for early childhood development".  She reminds us that this is a top goal of the President and of Democrats in California and that  "more than 100 U.S. studies show that high-quality preschool...produces significant long term academic and emotional gains for all children".

Ms. Bonilla ignores the hundreds of studies that also show that children grow emotionally and educationally when they are with their parents, not pre-school instructors.  She also ignores the comprehensive three year study on Head Start published in 2012 by the Obama administration's Health and Human Services Agency that shows that, with a budget of $16 BILLION per year, Head Start achieves NONE of its goals!

Let's go back to September, 2010 when Governor Swartzenkennedy signed "pre-kintergarden" into law in California.  Democrats, after failing to pass universal preschool for 20 years, simply changed the name to "pre-kintergarden" and told us that they were going to provide a second year of kindergarten for all children and it would cost nothing, zero, nada.  Never mind that the Legislative Analyst reported the cost would grow over twelve years to $900 million per year "plus costs".

Now, Democrats are back telling us they are going to provide preschool for everyone, their holy grail of "universal preschool" where they can indoctrinate from birth, build a huge state bureaucracy to develop and control curriculum and hire tens of thousands of public sector teachers and bureaucrats paying union dues.

The message is clear.   Collectively we, the taxpayers of California, don't make enough money, even if taxed at 100%, to pay for everything they want to do; their appetite is inexhaustible.

During the State of the Union speech the President said he wants to establish pre-school for Children.  

   

Barak, t is called Head start, a program we have funded since 1964.  Last year’s budget was $16 billion and a recent audit by the Obama Administration, Health and Human Services, found the program meets none of its goals. 

 

Fix the K-12 system instead.

The President also said he wants to raise the minimum wage to $9. 

 

Barak, people making less than government poverty level wages qualify for an Earned Income Tax Credit (“Refund”) of up to $5700, making their effective pay more than $10 per hour.   They also qualify for entitlements such as food stamps, housing vouchers, child care, Medicaid, etc.

Create private sector jobs instead.

Finally Pennsylvania officials reported recently in the Wall Street Journal that the average welfare recipient in that state receives $45,000 annually in benefits when counting the combined entitlements they receive.

How much do California welfare recipients receive annually?

As a country and a State our government is redistributing money and growing “the safety net” when government officials and a compliant news media hide the basics facts from us.

We must demand to know the scope of current entitlements before even debating changes to a system that is not working.

Welcome to CoCo Conservative Thought, a blog for Republicans and other conservatives within Contra Costa County.  We thought we would test and play this week, so if you are viewing and post, please provide feedback on what you would like to see.