REFRESHING DISCRETION

BY SEACHRANAI

In an opinion piece today, the Wall Street Journal brought to light a previous unpublished letter from Wisconsin AG J.B. Van Hollen to Chuck Grassley. The letter was written in January as a response to comments Grassley made to all 50 state Attorney Generals urging them to put pressure on local financial institutions via state sanctioned punitive action. To quote the Journal, and the letter, Mr. Van Hollen wrote Sen. Grassley in reply:

“Rest assured we will evaluate on a case-by-case basis and make appropriate prosecutorial determinations…”

"However, I will not be initiating investigations through press releases, nor will I treat all corporate executive expenditures as presumptively wrongful. Wisconsin law certainly does not. Financial institutions (and other businesses) on the verge of insolvency are ill-advised to make unnecessary expenditures, whether to executives or otherwise. At the same time, contractual obligations are generally to be fulfilled, work should earn compensation, and there is no law in Wisconsin making a contract illegal simply because someone is well compensated. Absent specific information indicating a transaction is fraudulent as opposed to foolish, I will not use my office to threaten litigation in an attempt to micromanage Wisconsin's businesses. Corporate governance is generally a matter for shareholders, not public officeholders."

The Journal appropriately drew the distinction between Mr. Van Hollen’s thoughtful deference of our legal system, and the brazen political posturing of AG’s like Andrew Cuomo, praising Van Hollen for his respect for prosecutorial discretion and dubbing him the “Un Cuomo”.

It is refreshing to hear that someone elected to public office is dutifully upholding their oath to exercise the letter of the law. Too easily do elected officials bend to the whim of the masses, abandoning principles to feed on populist rhetoric and steal cheap political gains. It is my hope that a majority of the officers of our court system look, as Mr. Van Hollen does, with disdain at the bombastic political grandstanding that is all too common and Washington DC. If only more spoke out publicly against it.

Kudos to the Journal – Keep publishing these kinds of letters when they come up.

AN AVIDITY TO PUNISH

BY CINCINNATUS

I’ve watched with substantial unease and alarm as our government and media have whipped up public anger and created a frenzied mob bent on the utter ruin of a segment of their fellow citizens. That the government’s efforts are intended to divert that angry public’s attention away from its own blunders, missteps and corruption is undeniable, but does not diminish its effectiveness. The AIG debacle has dominated the news cycle for over a week now and culminated in the passage by the House of an ad hoc, 90% tax on the contractually-obligated bonuses. President Obama said he opposed that bill as unconstitutional last night in a 60 Minutes interview, which would be politically courageous and laudable in the eyes of conservatives if he didn’t then hedge by saying he believes he could support the alternative Senate bill, which is being crafted as we speak much to the same effect. As the differences between the legislation are unclear at this point, we can only wait until the Senate deigns it necessary to share the details with the unwashed masses that they have dispatched to stand outside AIG HQ with torches and pitchforks.

I understand the anger about the bonuses. I am angry and perplexed. From a business standpoint it is fiscally irresponsible and downright suicidal to reward key members of a department within your organization that is in all likelihood responsible for your collapse with exorbitant bonuses. The situation is made all the more outrageous due to the fact that we, the taxpayers, own nearly 80% of AIG and that our money was used to pay these clowns. But I’ve already discussed our AIG-related anger, its uses and abuses last week (see here). What I’m talking about here is the disturbing way in which our government and the media are targeting American citizens for harassment and excessive ad hoc taxation in a manner usually reserved for banana republics and reminiscent of the early 20th century rise of fascism.

Thomas Paine wrote, “An Avidity to punish is always dangerous to liberty. It leads men to stretch, to misinterpret, and to misapply even the best of laws. He that would make his own liberty secure must guard even his enemy from oppression; for if he violates this duty he establishes a precedent that will reach to himself.” I find it sadly ironic that the same politicians who have clamored for the closure of Guantanamo Bay on civil liberties grounds are now leading the charge to target American citizens for extra-constitutional punishment and a rhetorical tarring and feathering. It is our country at its ugliest, when it gnashes its teeth and hurls rocks in frenzied, ignorant hatred while those who are meant to stay their hand supply the ammunition and stand by goading them on. For those of you who are angry at AIG and support the House’s 90% tax, which even President Obama regards as unconstitutional (for what that’s worth), let the final words of Thomas Paine’s quote ring in your ears: “…if he violates this duty he establishes a precedent that will reach unto himself.” In other words, when the political winds change it may be you who faces the public stoning.

OUR LYING, DISINGENUOUS GOVERNMENT

BY CINCINNATUS

The news media, the White House and especially Congress have been keen to whip up public outrage over the millions of dollars in bonuses recently paid out to company executives by AIG, a company of which the United States Government holds 79.9% equity. The bonus money, which came from taxpayer-furnished bailout funds, has become the focus of ire and the symbol of Wall Street greed and incompetence. We’re all angry about it. But before you let the government play you for a fool, let’s be sure we’re upset for the right reasons, as our friend

the littlecog points out.

First of all, don’t believe that Congress and the White House were caught by surprise by these bonuses. They knew they were coming and when they were coming. Bloomberg news reported on them in detail back in January (see here). Furthermore, members of Congress voted to add the “Dodd Amendment” to the AIG bailout legislation that provided an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009.” They let this happen. Members of Congress and the administration are lying, play-acting and disingenuously trying to get you so upset at AIG that you forget or ignore all of these undisputed facts, not to mention the trillions of dollars that they shoveled into AIG and others to make these bonus payouts possible.

Our anger at AIG also serves another purpose, and that is to provide fuel to the fire of the anti-capitalist agenda being driven by the sitting government. The more we ignore government malfeasance while we rage and decry AIG and demand punishment, regulation and, most importantly of course, our money back, the more we pave the way for further fascistic government intrusion into the market on a long-term basis.

At the very least, our anger will ensure the perpetual failure of the very businesses our tax dollars now go to subsidize. The government will use our raw emotion to place even further restrictions on AIG and other bailout recipients that will render them unable to entice the talent required to turn the companies around. Then they’ll apologetically crawl back before Congress and, like Oliver Twist, ask for more.

My rage is focused on our elected officials in Washington, who self-righteously feign shock and disgust and posture themselves as the vigilant stewards of our tax dollars, when in fact they deserve just as much of our contempt (if not more) as does AIG. They are lying. They know they are lying. They hope to make us dance to their music and insulate themselves from any accountability whatsoever. Just yesterday I listened to Barney Frank on NPR spluttering and lisping through a fire and brimstone sermon aimed at AIG and expressing his outrage and shock over the bonuses. Chuck Grassley of Iowa famously declared that the executives should apologize to the American people and then either resign, kill themselves, or both. What audacity.

Don't be made a fool. Don't tolerate this behavior out of your government.

"HOMICIDE BOMBER" IS REPETITIOUSLY REDUNDANT

BY CINCINNATUS

Anyone else tired of the horribly redundant term "homicide bombers" that Fox News insists on using to refer to suicide bombers? "Homicide bomber" could refer to just about any person or persons who blow something up in order to murder someone, regardless of whether they kill themselves or not. "Suicide bomber" is a much more apt term, as it describes the means by which the bombing, which is obviously intended to kill people, is carried out. It's an obnoxious example of pseudo-conservative Newspeak that grates me with its utter uselessness.

CRAZY PILLS?

BY CINCINNATUS

Am I taking crazy pills or does this analysis by the New York Times make absolutely no sense? And it’s starting to get more and more traction today, as I’ve already seen it discussed on Fox News this morning. How will outrage among average Americans over irresponsible business practice in any way derail or harm an agenda that, at its core, is about demonizing private enterprise and demanding more regulation? As long as the president continues to decry excessive executive compensation and wag his finger at AIG, people don’t seem to correlate continued corporate “large-living” with him. It seems to me that the natural result of the public outcry against this sort of thing will be to demand more regulation, more punishment. The only area that President Obama runs into trouble is with the people who’s concept of punishment is to demand that these corporations be allowed to fail (like, say, me) rather than receive continued bailouts at taxpayer expense. Up to this point, however, our collective voice has had little effect on the success of bailout legislation…

ALL CARROT, NO STICK

BY CINCINNATUS

The Obama education reform plan was unveiled earlier this week to somewhat mixed reviews, particularly from the NEA union. We’ve seen education reform trotted out by just about every administration in recent memory and beyond, and by and large it typically means increased spending on new education programs rather than correcting or eliminating non-working elements of our public education system. Obama’s reform plan is no different. He has managed to raise eyebrows by challenging the NEA on merit pay for educators, to which they are vehemently opposed. On this I applaud him. However, incentives are only half the solution. There must also be disincentives to ensure that education reform is truly effective.

Unless the president is willing to really go the distance with the NEA (rather than put up a brief fight and roll over when they bite back, as I suspect he will), he must draw a line in the sand and challenge underperforming teachers and the tenure system. As anyone who has been to the Northern Virginia DMV can tell you, employees tend to become underproductive and in many cases counterproductive when a bureaucracy shields them from termination (just one of many reasons I fear Universal Healthcare). Merit pay will only incentivize those who are already determined to succeed and contribute to achieve in a system in which there is no penalty for complacency. Those who care only for the steady paycheck that their tenure ensures (precisely the individuals at the root of the problem) might reach for some low-hanging fruit every now and again, but by and large they will be content to steer their steady and unremarkable course. In the private sector, these individuals would typically get a pink slip for their lack of drive and, most importantly, their lack of results. Until we are willing to do the same with our educators, education reform will only amount to throwing more money at the problem.

GETTING THE MESSAGE?

BY CINCINNATUS

President Obama has signed the $410 billion spending bill laden with earmarks, but held his nose while doing so. According the president, it’s time to get serious on wasteful spending. Pardon me if I remain skeptical. But perhaps, now that they’ve gotten the glut out of their systems, the Democrats are starting to heed the words uttered in our recent article, “Who’s Driving This Thing?” They understand that they can’t keep up this ridiculous and irresponsible pace of spending and nest-feathering. What remains to be seen is if they are going to do the right thing on spending or just look like they’re trying to do the right thing on spending.

According to this New York Times article, House Democrats will be enacting changes to restrict wasteful spending, including a 20 day review period for the White House to get a peek at legislative earmarks. What I find most intriguing about the promised reform is that it represents a deference on the part of Congressional Democrats to the president. Depending on how this “cooperation” plays out, President Obama may be asserting his unquestioned authority over his party and putting an end to speculation about a Pelosi/Reid power play. If things go badly, however, it could spell disaster. Perhaps the president is finally taking the firm hand that pundits have widely said he must in order to govern effectively. We shall see.

LAME JOKE LOST IN TRANSLATION

BY CINCINNATUS

Secretary of State Hillary Clinton, in an attempt at levity and charm with her Russian counterpart Sergei Lavrov, presented him with what was supposed to be a "Reset" button today (see here). The gift was intended to symbolize the Obama administration's desire to start from scratch with the Russians rather than continue the relatively hard-line Bush policies of the past few years.

While an incredibly lame gesture not suited for diplomatic relations (particularly with Russia), it also turned out to be an embarrassment for Clinton, as the button bore the Russian word for "overcharged" rather than "reset." Clinton and Lavrov laughed it off after the Russian Foreign Minister told her flatly that she had "got it wrong."

WHO'S DRIVING THIS THING?

BY CINCINNATUS

GOP Senators put a stop to Harry Reid’s efforts to end debate and cast a final vote on the $410 billion spending measure that has received substantial publicity for its copious earmarks (see here). The move puts some elements of government under threat of a shutdown for lack of funding if a stopgap spending measure isn’t passed by this evening. It appears Republicans are finally willing to go the distance in standing up to excessive spending after seeing their party nearly annihilated as a result of six years of fiscal apathy. According to this article, a small cadre of conservative Democrats are also shaking their heads at the level of waste the spending bill represents, without whom curbing this largesse would be a futile enterprise. But Pelosi and Reid are firm task masters, and quite frankly it remains to be seen who is really leading the Democratic Party: the president or them.

At the very least, President Obama has demonstrated a very hands-off approach to the deeds of his Democratic fellows in Congress. Which is fine (from a separation of powers perspective), as long as he demonstrates the willingness to veto their legislation at the expense of party unity. Recent events, however, do not seem to indicate that this is the case. The president has so far shown himself to be a party man, paying lip service to bipartisanship while Nancy Pelosi and Harry Reid shut conservative lawmakers out of the legislative process, craft and propose sickeningly wasteful and bloated spending measures, and attempt to force a vote before full disclosure of the details. With their current overwhelming majority in the House and tenuous dominance of the Senate, the Democrats can get away with this behavior on sheer numbers alone. But at what cost?

The $410 billion spending measure that was stalled yesterday is just the most recent in a steady march of federal payouts whose price tag defies reality and even comprehension. Reasonable people can debate the merits of the concept of government stimulus during economic downturns, and they have, but many agree that a large portion of the spending included in the stimulus package that was passed will have no stimulative effect. It is, in reality, shabbily camouflaged pork, clinging to a bare-bones stimulus that lacks direction or focus. After the heated stimulus debate last month, one would think the Democrats in Congress would tread softly on earmarks and pork. Moreover, President Obama’s much-touted campaign pledge to reduce earmarks and wasteful spending in Washington has tethered his party in large measure to fiscal responsibility. With Americans hurting now more than ever from the economic mess and the threat of their children and grandchildren living in financial slavery to the federal government looming with each new titanic spending bill, the issue is certainly relevant.

Which is why, from a purely political perspective, I can’t understand why Democrats don’t show more discipline on earmarks and spending. If they were to demonstrate real fiscal responsibility (and not just play-acting at carefully staged White House summits) and combat waste as publicly and faithfully as the GOP has decided to, they could accomplish three critical goals: actually reduce spending, fulfill the president’s promise, and steal the issue from the Republicans, who are clinging to it desperately and tenaciously because it’s all they have. Their refusal to do so, however, means that they are wholly focused on cramming through a liberal agenda that has been stifled for nearly a decade as quickly as possible. But as I said, this could come at great cost to them. For the sake of momentum, they are sacrificing refinement, caution and discipline. Their major legislation up to this point has been hastily cobbled together, laden with wasteful earmarks and unfocused, with money thrown here there and everywhere to pad liberal interests but ultimately without focus. Their supermajority will allow them to get away with this for a little while, but a backlash is coming. The midterm Congressional elections will be a critical indicator of whether the Democrats have as firm a mandate as they believe they do and how much leeway they have to misbehave. And as the president shows no willingness or ability to reign them in, the Democrats will certainly test their limits before 2010.

PHOTO OF THE WEEK

I've never said Barack Obama wasn't a class act. Right on, Mr. President.