So you want to stick it to the VA GOP and help conservative candidates in the process?

Tue, 27 Dec 2011 00:43:41 +0000

There is a lot of discussion about the VA primary ballot fiasco. In a lot of ways, this development is a Rorschach test of what is wrong with out country today. Lots of stupid rules that are used by those in power in play gotcha games with the governed. Well, I am a big fan of forcing those in power to swallow that which they force the rest of us digest.

It is noteworthy that few online sources actually quote the entirety of Section 24.2-506 which strikingly fails to provide petition requirement for a Presidential candidate:

§ 24.2-506. Petition of qualified voters required; number of signatures required; certain towns excepted.

The name of any candidate for any office, other than a party nominee, shall not be printed upon any official ballots provided for the election unless he shall file along with his declaration of candidacy a petition therefor, on a
form prescribed by the State Board, signed by the number of qualified voters specified below after January 1 of the year in which the election is held and listing the residence address of each such voter. Each signature on the petition shall have been witnessed by a person who is himself a qualified voter, or qualified to register to vote, for the office for which he is circulating the petition and whose affidavit to that effect appears on each page of the petition.

Each voter signing the petition may provide on the petition the last four digits of his social security number, if any; however, noncompliance with this requirement shall not be cause to invalidate the voter’s signature on the
petition.

The minimum number of signatures of qualified voters required for candidate petitions shall be as follows:

1. For a candidate for the United States Senate, Governor, Lieutenant Governor, or Attorney General, 10,000 signatures, including the signatures of at least 400 qualified voters from each congressional district in the Commonwealth; [Note the absence of "President" from this list]

2. For a candidate for the United States House of Representatives, 1,000 signatures;

3. For a candidate for the Senate of Virginia, 250 signatures;

4. For a candidate for the House of Delegates or for a constitutional office, 125 signatures;

5. For a candidate for membership on the governing body or elected school board of any county or city, 125 signatures; or if from an election district not at large containing 1,000 or fewer registered voters, 50 signatures;

6. For a candidate for membership on the governing body or elected school board of any town which has more than 1,500 registered voters, 125 signatures; or if from a ward or other district not at large, 25 signatures;

7. For membership on the governing body or elected school board of any town which has 1,500 or fewer registered voters, no petition shall be required;

8. For a candidate for director of a soil and water conservation district created pursuant to Article 3 (§ 10.1-506 et seq.) of Chapter 5 of Title 10.1, 25 signatures; and

9. For any other candidate, 50 signatures.

Rhe requirements for a Presidential candidate are not specifically identified in the statute, it seems like there is room to argue that the requirements for a Presidential candidate are provided in subsection 9 which pertains to “other” offices. I hate sloppy statute drafting as much as a hate inside politics games playing. A campaign could use this argument to take on both.

The Presidential Primaries: Circular Firing Squads and Dictionary Abuse

Thu, 08 Dec 2011 02:58:27 +0000

I. State of the race

A lot of people aren’t particularly thrilled with the candidates running for President. Many Romney supporters seem to support Romney because they say “nobody else can win in November.” Not a glowing sales pitch, whatever the merits of the candidate. Most of the Newt supporters I know seem to support Newt because he is the anti-Romney “who can win”and is showing some surprised popularity in the polls. This appeal is also of the “take your medicine and like it” variety which is about as motivation as the Romney rationale to me.

On a side note, I suspect that before all of this is over, Romney will fall away and Perry will become the anti-Newt, and ultimately win the nomination. I disclose that prediction in the interests of transparency, but I don’t think it is relevant in any way to this diary.

II. Priorities

Repealing Obamacare is in my view the most pressing issue that we face. We can $1+T deficits for another four years and still pull out of the ditch. However, if we don’t repeal Obamacare in 2013, it won’t ever be repealed. Without repealing Obamacare, I don’t see how we will get our deficits under control in 2017 much less 2027 or . . . ever.

Thus, it is critical to defeat Obama in November 2012. If I thought that there was only one candidate capable of defeating Obama, I would be on that bandwagon 100%. However, I agree with Rush Limbaugh and believe that most of the individuals running for Presidentare are capable of winning the general election against Obama. No matter how this ends up, I will support the nominee. That is my priority, to have the best possible nominee in the best possible position to win in November. I would even vote for Ron Paul if it came to that, figuring that the world could recover from a 4 year American hiatus, and that our allies would have a new found appreciation for the American Atlas on which all that is good stands.

III. Concerns

Given my priorities, I am very much concerned that various words and phrases are being substantially misused to our long term and collective detriment. I do not want any Republican candidate to be unfairly and inaccurately sadled with false negative ideological baggage. Such a result is contrary to my priorities and hopefull to your priorities as well.

There are enough negative things that one can truthfully say about the candidates that there should be no reason to manufacture or exaggerate the negatives in an effort to temporarily help our personal favorite candidate. I have identified two frequently misused terms, but there are other examples of dictionary abuse that could be cited.

A. “Amnesty”

Governor Perry supports allowing illegal immigrants to attend public Texas universities while paying instate tuition. I personally disagree with the policy. However, to refer to that policy as amnesty is contrary to the meaning of the word.

Amnesty is associated with a range of definitions such as “a general pardon for offenses“, or “an act of forgiveness for past offenses”, or even “a forgetting or overlooking of any past offense“. None of the listed definitions is applicable to Perry’s in-state tuition plan. Illegal aliens are not being forgiven of anything. Nothing is being forgiven or forgotten. A student under Perry’s plan is not immune to deportation or presecution while attending school. Nor is a student under Perry’s plan granted citizenship or any kind of permanent legal status in Texas. The in-state tuition plan is just an extension of the public school system. Young people (who may or may not have had anything to do with the decision to enter the U.S. illegally, are allowed to continue their state sponsored education.

Why is it that free K-12 education fine, but subsidized college education (and yes, public universities are subsidized by taxpayers) somehow constitutes “amnesty”?

I don’t agree with the in-state tuition policy, but it is not amnesty. Nothing is being forgiven. Nothing is being forgotten. Nothing is being overlooked. Nothing stops the deportation of the student or the student’s family.

Is library use by illegal immigrants amnesty? Access to 9-1-1 services? Calling in-state tuition “amnesty” is an abuse of the word. It might be unwise or unfair. It might be a magnet to attrach people who otherwise wouldn’t come here (doubtful), but IT IS NOT AMNESTY.

On immigration Perry holds the following positions:

Enforce the border. As a side note, does anyone address this issue with more crediblity or genuine energy than Perry?
No Amnesty. ”Well one of the things we’re not going to do is support amnesty. There’s not anybody that’s going to be–I don’t care whether you’ve been here 25 days or 25 years–there’s not going to be be amnesty involved in the program.”

People going around defaming Perry with the “pro amesty” label are aiding and abetting President Obama because they are dispiriting Republican primary voters with falsehoods. If Perry is the nominee, those same people will be saddling the Republican nominee with a false label that will only dampen Republican voter turnout, putting the entire country at risk.

Disagree with the policy, but be specific and don’t use overly broad labels to hurt your own side.

B. “Individual Mandate”

Much has been about Newt Gingrich’s comments regarding the “individual mandate”. A Glenn Beck interview (hat tip to Robert B. Sklaroff, MD) squarely addresses the issue and is worth looking at carefully.

GLENN: All right. Well, and I think this is where we fundamentally differ is it seems to me ?? and let me just play the audio here ?? that you are for the individual mandate for healthcare and you have been for quite some time. Let’s play the audio.

GINGRICH: I am for people, individuals, exactly like automobile insurance, individuals having health insurance and being required to have health insurance, and I am prepared to vote for a voucher system which will give individuals on a sliding scale a government subsidy so it will ensure that everyone as individuals have health insurance.

GLENN: Okay. That’s 1993. Here is May 2011.

GINGRICH: All of a sudden responsibility to help pay for healthcare. And I think that there are ways to do it that make most libertarians relatively happy. I’ve said consistently we ought to have some requirement to either have health insurance OR you post a bond OR in some way you indicate you are going to be held accountable.

VOICE: That is the individual mandate, is it not?

GINGRICH: It’s a variation on it.

Even back in 1993, Newt was talking about reforming health care so that whether a person was on Medicaid, Medicare, or private insurance, people could have private accounts under their own control and not dependent on their employer to allow individuals to make their own health care decisions. The private accounts idea or voucher has been advocated by conservatives going back at least as far as Milton Friedman. HSA accounts are currently a mainstream conservative idea, but they weren’t so accepted back in 1993. Newt was an early backer of such an approach. Indiana has implemented such a program with respect to Medicaid, and it is by all appearances a big suggess.

I am not going to defend Newt’s comments in 1993, although I think it is clear from the context that Newt’s version of an “individual mandate” is very different from the Obamacare version of an “individual mandate”. Rather I would focus on what Newt said in May of 2011.

If you look at the language carefully, there are essentially three options in what Newt considers a “variation” on an “individual mandate”:

“have health insurance OR”
“post a bond OR”
“in some way indicate that you are going to be held accountable”

This is not your Obama’s versino of a “individual mandate”. This “variation” of an individual mandate is flexible and gives people options while addressing the “free rider” issue. You don’t have to agree with it. However, to imply that Newt’s articulation in 2011 of an “individual mandate” is essentially the mandate in Obamacare is a clear misreading of what Newt actually said. The “individual mandate” envisioned by Newt is to occur in the context of a “voucher system” and it includes option 3—that the patient “in some way indicate that you are going to be held accountable“. There are a variety of different ways this could be done, and I don’t think individual accountabilty for incurring expenses is contrary to conservativism. To the contrary, it is utterly consistent with an individual account approach—the conservative mechanism by which to reform healthcare.

People going around defaming Newt with the “he supports an individual mandate, just like Obama” label are aiding and abetting President Obama because they are dispiriting Republican primary voters with falsehoods. If Newt is the nominee, those same people will be saddling the Republican nominee with a false label that will only dampen Republican voter turnout, putting the entire country at risk.

IV. CONCLUSIONS

There is a lot to like and dislike about our candidates. You can definitely count me on the side of “is this best we have after the 2010 tea party election?” Each candidate has some obvious flaws, and since every individual weighs those flaws differently, different voters make different assessments as to who they think is stronger, more electable, would make a better President, etc.

This diary is a plea that while we all engage in jousting over candidates, issues, and events that we:

Reiterate that we will support the nominee
Refrain from loading Republican candidates with labels that are purely false at worst, or highly misleading at best.

Our various candidates may temporarily be adversaries of each other, but that is no reason for the conservative community to become adversaries with ourselves. Please don’t add the litany of misleading garbage that President Obama’s $1B war chest will inevitably place on our nominee. There will be enough BS out there without adding to it ourselves.

A call to unity! The necessity of voting out Obama in 2012 and stopping the leftist tilt of the 20th Century

Sat, 05 Feb 2011 19:45:43 +0000

I will vote for the Republican nominee for President in 2012. I will only vote to send Republicans to Washington DC. I will take the opportunity to try and convince others to do likewise.

I make these statements enthusiastically and unequivocally. This may not be big news since I have always voted to send Republicans to DC. Not once in my life have I ever voted to send a candidate from the Democrat party, the Libertarian party, the Reform party, etc. to Washington DC.

It should go without saying that it is absolutely imperative that President Obama not win re-election in 2012. The stakes are incredibly high, and if we are to achieve this shared goal we will need to at least not deliberately insult each other. The anti-Obama coalition has to survive through November 2012. We either stand together, or the country will change in ways that are too horrible to fully fathom.

Many political blogs have included inspirational clips from the movie Braveheart. If that movie can’t get your blood pumping faster about the basic struggles that have existed throughout human history, nothing will. I confess that back when I was a litigator, I would play songs from the Braveheart soundtrack before court appearances in an attempt to distract me from the nervousness resulting from my inexperience.

This is not one of those inspirational clips. I think we need a different kind of motivation. The clip is an example of people who should be united against a common foe but instead are disabled from effective action as a result of unproductive infighting.

http://www.youtube.com/embed/p9AG3Z9Nyu0” frameborder=”0″ allowfullscreen>

Braveheart clip.

For those who have not seen the movie*–it ends with the betrayal and execution of William Wallace. The people of Scotland could not unite effectively in their common interest against the English king. Their disagreements were real. I am not glossing over them. However, the interests and benefits of temporary unity far outweighed what divided them. Unfortunately for them, they weren’t able to realize that until William Wallace’s head was placed on stick for public display.

I am not calling for a “truce” on anything. People should stick to their principles, and be willing to defend those principles with rational argument and evidence. All I am asking for is that commentors not so quickly challenge the good faith of other commentors. Please remember that at the end of the day, we want everyone at Red State to vote Republican in 2012. Friends can disagree with each other. Allies can have different belief systems from each other. However, it is difficult to stay in the same foxhole with someone who impugns your character or insults you. There will be a lot of internal arguments between now and November 2012. We need to be aware that while the arguments can and should fly between now and then, we want the “other guy” to vote Republican in 2012.

We don’t want people sitting on their hands. We don’t want people making protest votes for third parties that we all know have no chances of winning. In short, we need to acknowledge that there is sufficient common ground that unites us that even those we disagree with be accommodated a certain modicrum of respect. At a mimumum, we don’t need to be picking fights, looking for ways to insult, etc. with those who share some very important common goals. At this point, I think most of us are aware of certain scars that need not be picked.

Some specific data points for consideration:

1. Reversability of Obamacare. In the history of the Western world, I am unaware of any nation that has instituted government provided universal health care and managed to repeal it. The US is an exceptional nation, but we should not fool ourselves into thinking repeal of Obamacare is an easy task. Once its tentacles are fully embedded into the fabric of the country (like SS and Medicare before it), it will become harder and harder to change, much less repeal.

2. Window of opportunity. If Obamacare is not repealed by 2014, the odds of it being repealed are low. There is only one presidential election between now and then. There will be only one more Congressional election between now and then. When the window closes, smart money says the window will stay closed.

3. The ability to truly “be conservative” will be permanently changed if Obamacare is not repealed. However you define conservative, the ability to actually pursue and implement conservative policies will be forever altered if Obamacare is not repealed. You can argue about the definitions of conservative, neo-cons, paleo, etc until you are blue in the face.

Those definitions will become meaningless in a post-Obamacare world. Conservatism as we know it here in the US in 2010 doesn’t exist anywhere else in the Western world. Limited government as known by Americans before the Wilson and FDR administrations is unknown to us here in 2010, and doesn’t exist anywhere on the globe.

A. Pre-Wilson Administration. There were people who supported limited government before the Woodrow Wilson administration. No doubt they believed passionately in their principles. However, the ideas and ideology of those individuals were permanently precluded from the political landscape as a result of the Wilson administration. To this date, no matter who was in power in DC, we have not been able to get even close for the limited government positions of people living in the early 20th century. The leftist and statist tilt of Wilson stands unreversed today. The ideologies of those Wilson opponents are irrelevant today. Whatever differences divided them, they all ended up as political losers—and their ideas and beliefs regarding the appropriate size of government have largely been vanguished from the face of the earth. No doubt they had disagreements as well, but in hindsight, can there be any doubt that what united them was far more important than what divided them? No elected official in DC in the year 2010 represents a position that Wilson’s opponents would recognize as “limited government” from their perspective. The ideology of those opponents is dead, and their internal disagreements died with them.

B. Pre-New Deal. The New Deal was opposed by a sizable percentage of the U.S. population. There were a lot of people arguing that our system of limited government was being threatened by FDR. The judicial system struck down so many of FDR’s initiatives, that the threatened to enlarge and then stack the court with less hostile justices. The ideologies of the individuals who opposed the New Deal are totally absent in today’s political landscape. Back in the day, elected officials actually disputed the validity of Social Security. Since that time, the landscape has changed. As conservative as Senator DeMint is, he is not willing to do what many Republican Senators did at the time that SS was enacted—to oppose the existence of Social Security as a federal entitlement. The viewpoints of those who opposed the New Deal have almost entirely disappeared from the political landscape of 2010. Whatever differences they had, their unity or lack thereof with regards to SS is the legacy that they leave behind. Put another way, being for “limited government” in 2010 is unrecognizable as the “limited government” position to those who opposed the New Deal. The markers have once again been moved, and they have been moved against.

C. UK and Canada. The UK and Canada are excellent examples of how a government healthcare system makes being “conservative” functionally impossible as we currently think of in today’s terms. Thatcher was undoubtedly the high water mark of conservatism in the UK. However, she did not even voice an attempt to junk the national health system. Give the huge expense of that health system and the contrary data point with respect to limited government, the best that Thatcher could do was privatize some industries and reduce some taxes. I am not saying her policies weren’t bold, but in comparison to the Reagan policies of the 1980s, it was small potatoes. The ability to do anyting that we would call conservative was simply made impossible by the national health system. The same can be said for Canada. Canada right now has the most conservative leadership than it has ever had during my lifetime. However, by American standards, Harper is a moderate Republican. In Canada, he is there version of Sen DeMint. National healthcare moves political markers in a way that will be very destructive.

The Bottom Line:

We can spend a lot of time in the next 2 years arguing about what the proper definition of conservatism is. However, if in doing so, we manage to break apart our 2012 stop Obama coalition, our arguments, values, and belief systems will ultimately become irrelevant. The yard markers will have moved.

Just as the positions of “limited government voters” pre-Wilson and pre-FDR are found only in history books, so to will the arguments we make today if Obamacare is not repealed.

We must stop Obama in 2012 and we must repeal Obamacare in 2013. Otherwise, none of arguments about “definitions” will ever matter again.

*Please note that I am not making an argument either way about the historical accuracy of the movie.

A trojan horse for killing Obamacare in 2011

Thu, 04 Nov 2010 06:57:44 +0000

There is no doubt in my mind that repeal of the monstrosity known as Obamacare is a necessity for preserving our Republic in a recognizable state. If Obamacare were to survive through to its full implementation, the balance between the private and public sectors would forever be out alignment. Moreover, it would become harder and harder to repeal or even fix as people allowed themselves to become dependent on the system and our health care marketplace lost its economic dynamism. In other words, we would be taking a giant step and maybe an irreversible step towards socialism.

In discussing the killing of this statutory and regulatory monstrosity, the options are typically characterized as one or more of the following:

(1) Symbolic votes. Vote to repeal healthcare on day 1 in the House, even though nothing can come of it. In other words, the Senate won’t be able to pass repeal, and if it did, Obama would just veto it anyway. I am not against this option, but I do believe there are things we could also do that would start to really dismantle Obamacare in 2011—see below.

(2) Tinker with the Stink. Some, but not many, say that we should try to fix what is wrong with Obamacare. Since it’s far easier to trash to the entire thing and start over, this is hardly an acceptable option. Besides, you play with pigs in the mud for half a minute, and you will look and smell like the pigs.

(3) Pray for a Stay. Challenging Obamacare in the courts is worth doing. I am definitely not against pressing forward with all the lawsuits, but does anyone believe that the judicial system is likely to be a big help on this issue? Do conservatives really want to give courts the first real crack and bringing down Obamacare? Isn’t that like relying on the French army to stop the Nazi’s in WWII? I mean they may help slow things down, and they might help clean up at the end, but does anyone feel comfortable that a Supreme Court that upheld much of McCain-Feingold is going to do our work for us?

(4) Repeal and Replace. This is really just a variation of tinker with the stink. I haven’t seen any realistic “replacements” and who wants to replace a foul odor anyway?

(5) Defunding. The defund Obamacare sounds like a nice option in theory, but in practice, it’s really just a government shutdown option. The only way to specifically defund Obamacare is to put riders in the appropriation bills, which are no easier to pass or harder to veto than a bill repealing Obamacare. Given the importance of putting a wood stake in the heart of Obamacare, I am willing to go with this option. However, there is a smarter option I believe we should try first.

(6) Trojan Horse Repeal. One of the brilliant aspects of Obamacare is how it will totally discredit free market activity in health care. The system is designed to make it impossible for a for-profit insurance companies to function. Ultimately even non-for-profits will shut down, and only the government will be left. Obamacare is really an attempt to discredit capitalism by placing sufficiently impossible and contradictory obligations onto insurance companies that they all cry uncle. I say beat the bastards at their own game with our own Trojan horse.

Health Savings Accounts coupled with high-deductible health-insurance could be a fatal Trojan horse for Obamacare. Conservatives could push for some concrete steps that would enhance HSAs, helping Americans deal with health care issues while at the same time jabbing some knives into Obamacare.

While there are many disturbing tentacles to Obamacare, the worst provision at its core is the ability of the HHS to define what is “acceptable” insurance coverage and what is “not acceptable.” From Heritage:

“But the worst news for those using HSAs is the provision requiring all policies to cover at least 60 percent of the actuarial value of the benefits offered. What’s the actual value? No one really knows—not until the Health and Human Services Department issues regulations on how to calculate it.”

HSAs are the most American way to deal with increasing health care costs because HSAs put consumers, not government and not insurance companies in the driver seat.

Small businesses and the large war to save the economy

Wed, 27 Oct 2010 03:20:09 +0000

We all know that these are very serious times. The US economy appears to be dangling on a thread. The rest of the western world doesn’t appear to be doing much better. When politicians and media pundits talk about how to get the economy “moving again” they tend to focus on tax policy. No doubt tax policy has a big impact on the economy. However, any move on tax policy gets in the same old arguments of class warfare and the ever growing debt. We do need to fight those battles, and we need to get some directionally correct movement on taxes.

However, there are other political battles that involve far less of a politically entrenched defense that could nonetheless have a large positive impact on the economy without adding a penny to the deficit. Yes, I am talking about regulations. It is my hope that in the final week of the 2010 campaign, that Republican candidates help their campaigns and future governing mandates by educating the American people the stupidity and costs of stifling government regulations.

The American voter is ready to embrace deregulation at all levels, federal, state, and local levels. Now is the best time to make this case. The Democrats are rudderless and flayling about like headless chickens.

The USA Today has a great article showing how regulatory policies are killing small businesses while so many in government and the media declare the importance of small businesses.

In an economic climate with few jobs and cutbacks on basic city services such as police protection and firefighting, you would think cities and states would be overjoyed when someone was willing to open up a new business, bringing with him jobs, economic vitality and tax revenues. You might think that, but you’d be wrong.

I work with small businesses each and every day. I was nonetheless surprised to hear just how self-defeating so many regulations are. Keep in mind, the focus here is just on city/local regulations. When you factor in state and federal regulations, its amazing that anyone anywhere even considers opening a business.

Instead, cities and states stifle new small businesses at every turn, burying them in mounds of paperwork; lengthy, expensive and arbitrary permitting processes; pointless educational requirements for occupations; or even just outright bans. Today, the Institute for Justice released a series of studies documenting government-imposed barriers to entrepreneurship in eight cities. In every city studied, overwhelming regulations destroyed or crippled would-be businesses at a time when they are most needed.

The problems with our government can be found at all levels. Even red states and red cities have some incredibly stifling regulations. Red Staters need to take back their city councils and local governments if we want to have a prosperous economy sometime in the foreseeable future. Whatever happens in the November elections, we need to press on and expand the tea party movement so that it is not so exclusively focused on DC. We need a tea party revolution in every major city.

Time and again, these reports document how local bureaucrats believe they should dictate every aspect of a person’s small business. They want to choose who can go into which business, where, what the business should look like, and what signs will be put in the windows. And if that means that businesses fail, or never open, or can operate only illegally, or waste all their money trying to get permits so they have nothing left for actual operations, that’s just too bad. This attitude would be bad enough in prosperous times, but in a period of financial strain and high unemployment, it’s almost suicidally foolish.

The article provides some specific examples of horror stories:

In Chicago, Esmeralda Rodriguez tried to open a children’s play center, paying rent month after month while she waited in vain for the government permits she needed to open her business. After a full year of bureaucratic red tape, she finally exhausted her life savings and closed down for good.

•Worried more about their personal aesthetic preferences than the survival of local businesses, Houston now strictly limits all window signs — inexpensive advertising that is vital for small shops that can’t afford to advertise through other media.

•Los Angeles places enormous and pointless restrictions on home-based business. For people who are struggling and can’t afford to rent commercial space, working out of the home might be their only option to stay afloat. But in Los Angeles, they had better make sure they don’t use their garage, manufacture or sell any products, advertise or violate any of the other myriad laws. Many businesses end up operating illegally, scared to grow their business for fear that the next knock on the door could be a regulator.

•In Miami, an accidental loophole in state law allowed jitney van transportation services to flourish briefly. As soon as Miami-Dade County got the opportunity, however, it shut down the new jitneys and ensured no others would open by requiring any new business to prove it wouldn’t hurt its competitors. It even allowed those competitors to object to any new businesses, which is like allowing Burger King to veto the building of a new McDonald‘s.

•In Milwaukee, Nasir Khan spent tens of thousands of dollars renovating an abandoned hot dog stand and getting permits, only to have them withdrawn when a local alderman intervened. The politician wanted something nicer than a hot dog stand at that corner, and apparently it was better to have no business than one he didn’t like.

•In Newark, several long-term businesses just managed to escape destruction. The city tried to use eminent domain to remove one of the few thriving business areas, but new judicial restrictions on eminent domain put a stop to the city’s plans. Ignatius Paslis was also lucky. Although the city delayed his permits so that his café catering to Rutgers students could not open until after all the students had left for the summer, he managed to survive until the fall, and now his business is thriving.

•Philadelphia’s permitting and licensing codes are difficult enough in themselves, but city officials often seem hellbent on treating the system as a perverse game designed to punish honest enterprise. The government required convenience store owner Ramesh Naropanth to put new gates on his store before it would allow him to sell sandwiches, setting the small businessman back $8,000.

•In Washington, D.C., hundreds of people have waited more than a year to take the required class and test to become a taxi driver. Rather than encourage these individuals to create jobs for themselves, the city has simply stopped offering the class and test.

When people ask what Republicans can do to help the economy give the constraints of large budget deficits, the answer should turn to a broad freedom-based agenda. More specifically, just getting rid of the purposeful obstacles placed in the way of small businesses would do a lot to get our economy growing. No fair minded American can oppose getting rid of these obstacles. The challenge of course is shining the light of day on these regulations and the how/why they were ever passed in the first place.

Republicans have so low hanging fruit on this issue. The Institute for Justice report is truly damning. Deregulation of small businesses is a winner economically and a winner politically. Its time to give those who dream and strive some political momentum and legal cover. I would humbly suggest to the DC Republicans that tackle the issue of deregulation on a weekly basis, identifying ways in which Washington DC places its firm boot on the throats of small business. Its a meaningful stimulus, and even the CBO won’t classify it as a cost to the federal government.

Establishment republicans, DC ruling class types, and RINOs: A conservative’s humble request

Tue, 14 Sep 2010 20:37:05 +0000

This Delaware primary has definitely gotten out of control Liberals have been talking about/predicting/hoping for a conservative crack up for a long long time. By the looks of things, this Delaware primary self destruction is the ONLY piece of good news that a liberal can point to. The events of the last week really are a dream come true for them, which means that could be a true nightmare for us. The hostility and resentment goes far outside the confines of O’Donnell v. Castle. Frankly, the heat about this primary is no longer about the candidates, and it hasn’t been about the candidates for the past several days.

I find myself confronted with anger against people who used to be my refuge in the storm, and that itself is troubling in many differnt ways. I listen to Rush daily because he cheers me up, gets me motivated, and inspires as sense of possibilities. Today, I had to turn the program off. Instead of being a source of renewal, it became a source of pain. That is a knock against me as well as knock against many of us who have engaged in this primary. Frankly, our patterns of discourse that served us fairly well in the past started breaking down a bit in earlier this season and came to full fledged disintgeration about a week ago.

In an effort to restablish some unity and to heal some wounds, I write this diary.

First and foremost, I hope that no matter who wins the DE primary, that we all support the winner. By support I mean vote for, and not spend time trashing until after the November election. It doesn’t mean you have to provide money to the campaign or even necessarily make affirmative statements about the campaign. Vote (if you live in Delaware) and refrain from any kind of slams. These are fairly easy to satisfy requirements, and I hope we can all agree on this. I write this having absolutely no idea how the voting is going.

Second, I would ask that neither side take cheap potshots at the political integrity or fidelity to conservative values of the other side. Most of us on this site agree that if Ronald Reagan could be secretly cloned and run in the primary as a candidate, we would vote for him. Since that isn’t an option, we have legitimate disagreements resulting from inferior options. Each of us gives some weight to candiate foibles as well as policy positions. However, different people weigh things differently.

Some Castle supporters called O’Donnell supporters stupid for betting on what appeared to be low probability candidacy. Such insults were not appropriate. Although I did not insult people on that particular train of thought, I know that I too hurled some insults at folks in ways that was shame on me. Frustration is not an excuse for shorthand. Saying “you are an idiot” is often just another way of saying “I am so frustrated that I can’t make you see this point of view that I will cut loose with a cheap blow.” I want to reiterate the apologies that I have already made and apologize to anyone else whom feels slighted by a sarcastic barb or gutter insult.

Similarly, I would ask that those in support of O’Donnell take care in the upcoming days (regardless of the outcome of the primary) to refrain from instinctivey calling Castle “supporters” as RINOs, establishment types, ruling class elites, snobs, etc.

I have never before been called in a RINO. Twice I voted for Steve Forbes for President even though he had no shot of winning. In 2008, I voted for Fred Thompson even though Fred wasn’t campaigning in Michigan. I even had the pleasure of appearing on a local news program being interviewed as to whom I voted for, and why. So I gave Fred a free tv spot in an election where he won about 1% of the vote.

I am no stranger to the long-shot candidate. Some long shots are better than others. I support the candidacies of Twomey, Rubio, Miller, Angle, Paul and others who would be classified as upstarts or young guns or tea party candidates.

My failure to get fully behind the O’Donnell candidacy was not based on her stated policy positions. Rather, it was based on my assessment of her capabilities as a candidate. I believe (and continue to believe) that her record has some glaring weaknesses that would make it difficult for her to be elected in Delaware. However, my failure to support her was never based on “liking” Castle or wanting anything less than full conservative in the Senate. If Rubio was from Delaware, I would have been all in.

People like me should not have to endure inaccurate labels such as RINO, ruling class elites or establishment Republicans. The irony of course is that those folks aren’t insulted by the label, but true conservatives are. To me, they are fighting words—and the results have been verbal fights that are simply not desirable to our shared goals.

The biggest source of frustration during this process for me has been the inability of many people (there are exceptions out there) to say hey, we disagree but I know you are fully onboard with the conservative movement. Calling people like me who have no connections to DC, no connections to any MSM outlet, and who live in the middle of flyover country–callings us RINOs or establishment DC types because of one primary is incredibly frustrating and more importantly, inaccurate.

So I humbly ask that when confronted with someone who disagrees with you about a candidate, don’t casually throw out labels like RINO or establishment Republican. Those are fighting words to us, and they only serve to instill futility and despair in our hearts. Being conservative is about the values you support, not the candidates you support. We can and do disagree on what the best way to approach political victory in this country. We should respect that differences are made in good faith, and should not go out of our way to create easily defeatable straw men arguments like “You must like cap & trade since you support Castle so strongly.”

I am a conservative. Feel free to disagree with me on anything, but please refrain from diminishing a lifetime of conservatism based on a single disagreement between two flawed candidates in the tiny state of Delaware.

Thank you for your time. JSobieski

The $20B “escrow fund” may turn out to be a slush fund, but it wasn’t the result of a shakedown

Tue, 22 Jun 2010 04:18:49 +0000

I am a conservative for a wide variety of reasons. I am skeptical of utopian attempts to “perfect man” or to “socially engineer” society. I am skeptical of the power of fiat, and respect the power of unintended consequences. My conservatism is also based on the premise that truth is the highest value. The metaphysical forces of faith, hope, and love are by definition false if not grounded in truth.

In the aftermath of Rep. Barton’s comments about the $20B “shakedown” for the Obama “slush fund” I have found myself in strong disagreements with people I would typically be in agreement with. I would characterize myself to be a straight-up Reagan conservative. I almost always find myself in agreement with someone like Rush Limbaugh in terms of substance, and often in terms of process/strategy.

My instincts and experience on the issue of the $20B “escrow account” was that it probably wasn’t BP’s first choice, but that they probably agreed to it without much arm twisting—definitely not arm twisting of a magnitude to justify the characterization of a “shake down” or “extortion.”

As an attorney and an engineer, I appreciate the inefficiencies and costs of litigation. I also appreciate the fact that when it comes to the issue of damages, it is easy for courts to treat similar claims differently, even if the courts are in the same jurisdiction. Conduct some legal research on consequential damages in the 50 United States, and you will see that even courts in the same state aren’t consistent on the issue.

The bottom line is that I didn’t think BP’s acqiescence to the “escrow fund” was inherently stupid, and thus I didn’t see that acquisence as inherently the result of a shakedown. Not saying it was a wise decision, but it wasn’t per se stupid either. I do think that Obama has instituted so many transgressions against conservative values that we as a conservative community understandably were quick to put this particular action in the same category as other crowning Obama “achievements.”

The truth of the matter, is quite different.

http://voices.washingtonpost.com/right-now/2010/06/do_republicans_deserve_credit.html

Apparently:
(1) The original idea for a non-BP managed “escrow account” came from Republicans, not Obama or the White House.

(2) BP agreed to fund the $20B escrow account BEFORE the meeting at the White House.

The evidence in support of the two propositions above can be found here below:

Do Republicans deserve partial credit for the BP fund?

Rep. Trent Franks (R-Ariz.), who was an oil and gas engineer before he started his career in politics, says President Obama is politicizing the BP escrow fund after having little to do with it being set up.

[T]he real story here is that BP had already made the decision to set aside $20 billion to compensate those harmed by this tragic disaster several days prior to the President’s speech. The true outrage is that this was never the President’s idea at all, and he should be ashamed for pretending it was for political purposes.

On Thursday, Rep. Anh “Joseph” Cao told me that he pressed BP on the fund idea a month ago, inspired by the example of Exxon after its 1989 spill off the coast of Alaska. And on Friday I talked with Ray McKinney, another engineer, who is running for Congress in Georgia against Rep. John Barrow (D-Ga.). McKinney stressed that there was no serious disagreement about the escrow issue, and said Democrats were concocting a political debate when all that mattered was making BP pay and investigating the disaster.

I think the reason Barton agreed to “recant” his apology is in large part because the Republican leadership understands the point above. Given the value that conservatives place on truth, we should get past attacking the creation of the “escrow account” on the basis of coercion and instead focus on making sure that it functions properly.

UPDATE: The full money quote direcly from R-Franks press release:

“However, the real story here is that BP had already made the decision to set aside $20 billion to compensate those harmed by this tragic disaster several days prior to the President’s speech. The true outrage is that this was never the President’s idea at all, and he should be ashamed for pretending it was for political purposes.”

http://franks.house.gov/press_releases/467

Stupak 2, Obama/Pelosi 0

Fri, 12 Mar 2010 16:17:22 +0000

For the second time in 4 months, the forces of Obamacare have failed to bend the “Stupak 12″ to their will. The End Game for Obamacare is finally approaching.

The AP reports:

Top House Democrats said they have given up trying to win over some conservative Democrats demanding that the bill strictly bar federal aid for abortion. That means they likely will have to win converts from among 39 House Democrats who voted against the House’s initial health bill in November.

This shows how “serious” Pelosi et al were about addressing Stupak’s concerns, and how un-Nelson-like the House holdouts on this issue have been. Nelson caved in days, and the “discussions” with Stupak lasted what—5 minutes?

I wouldn’t call Stupak “conservative” in any way (he supports a “public option”) and for the most part, “Blue Dog” status is more mythological than unicorns and dragons. However, on the issue of abortion funding, there is good reason to conclude that there is actually some pro-life integrity on the Democrat side in the House, and that integrity should be commended. Does this surprise me? Yes, but what a pleasant surprise.

The irony that abortion funding will be the final torpedo in comprehensive health reform is simply delicious. The Hyde Amendment has been the law of the land for years, but the inability of democrats to continue to live under the principle of the Hydge Amendment will in the end, the death knell for their generational desire for HCR.

TIme to remain vigilent, but prepare for celebration (i.e. time to stock up on some extra adult beverages)!

Life and death: a conservative perspective

Tue, 24 Nov 2009 04:45:13 +0000

There is a lot going in both domestically and abroad that requires the attention of patriotic Americans. The Western world finds itself in a fragile state, economically, politically, and dare I suggest spiritually. The trangressions against what is good and right are legion. We live in a world in which good is often characterized as evil and dangerous while evil doers are often characterized as victims or as people who are merely misunderstood.

One the pleasures of reading redstate.com is that many of the writers here are conservative, and there is an inclination to defend conservatism unabashedly, rather than apologetically. The many postings on this site range from the latest legislative news pertaining to Obamination-care to philosophical musings regarding the writings of profound thinkers like Kirk and Burke.

I enjoy it all, and have recently been planning to post about about the differences between conservatism and classical liberalism, acknowledging the very real possibility that I may be more of Lockean classical liberal than a Burkean conservative. In modern political thought, the two groups are definitely close cousins, but that is a story for another day.

While many here and elsewhere have tried to define conservatism as a three-legged stool, I have always resisted that characterization. To me conservatism may manifest itself in different stools, but conservatism is a unified whole. In the famous allegory of the blind mend and the elephant (http://www.sacred-texts.com/isl/egt/egt15.htm) six men come into contact with a unitary elephant but each comes away with a different conclusion as to what an elephant is. I think conservatism and other worthy philosophies are difficult to fully comprehend, particularlly in a single instance of time.

Yes, conservatism is a philosophy, and it is broader than a merely political philosophy. When asked to explain conservatism to someone who is not well read on the subject, I usualy emphasize the humility of conservatism, the anti-utopian acknowledgment that man is flawed and limited. Conservatism means that when someone proposes to reorganize 1/6 of a nation’s economy, at the very least you try to slow things down and be very very skeptical that the plan makes any sense. A conservative is someone who appreciates the laws of unintended consequences, and acknowledges that mankind, while clever in its own way, is unlikely to ever get a batting average close to 0.500 when it comes to making good public policy decisions. A conservative understands that the physician creed of first do no harm should apply to politicians in the practice of public policy as well as to physicians in the practice of medicine. No government program will ever look out for the well being of a child as effectively as loving parents.

So where am I going with any of this?

This story (http://www.breitbart.com/article.php?id=D9C5DTGO3&show_article=1) raises some issues worth considering for those who otherwise embrace conservatisim:

During the Terri Schiavo matter, there were some commentators on this site who professed 100% certainty that she was in a “persistent vegetative state” from which no recovery was possible. Although many of those same individuals were shrewd enough not to buy into global warming, socialized medicine, and other such nonesense, I did find it interesting how those on the opposite side of the issue were so unwilling to look behind the medical conclusion of persistent vegetative state.

Medicine, while a noble and knowledgeable calling, is still subject to the general skepticism that is conservatism. For a while, butter was bad and margarine was good. Then, the conclusions were switched. Same for nutra sweet and sugar. Bottled water was chic in the 90s, but gauche in an era of global warming . . . er cooling . . er change. Is caffeine good for you now, or something to be avoided? I forget, but as a conservative, I know that the assessments may change over time, and that inevitably such assessments are based on other parameters. Water can kill you if you don’t imbibe in moderation.

According to the article (which could simply be the latest version of oops, forget what we said yesterday), 4 in 10 patients with consciousness disorders are wrongly diagnosed as being in a persistent vegetative state. This guys parents, like Schiavo’s, were convinced that he was still there. Good thing he didn’t have an ex-spouse trying to pull the feeding tube.

You can’t sell a piece of land in Florida without a written contract because an oral statement is considered to unreliable and would through the entire system of private property into too much chaos. Thus, as a matter of public policy, real estate sales must be in writing.

In contrast, you can pull the plug on a former spouse based on an uncorroborated testimony that is self-serving to the person putting forh the testimony.

Being conservative means a healthy skepticism of the certainty found on the pull out the feeding tube side of the Schiavo debate. We don’t really understand all of the holes in our understanding.

We won–the debate is over

Sat, 18 Oct 2008 15:04:24 +0000

We keep hearing about how this is a democrat year and that the Republicans face an incredibly strong (and many say insurmountable head wind) this November.

I am not a pollster, and I know that it can be challenging to differentiate what I want to happen from a pure analytical analysis of what will ultimately happen or what is likely happen.

All I know is this. Despite Obama’s many personal strengths and the purported strengths of the democrat party this November, Obama has been spending 90% of his time in recent weeks talking about cutting taxes.

He has probably spent more time talking about cutting taxes in the last three weeks than Reagan did in the run up to the 1980 election (Reagan consistently included foreign policy stuff in his speeches and touched on a wide variety of issues).

Obama is sounding like one trick pony at this point, and if you didn’t realize what his record is, he could easily be construed as a middle of the road Republican (but for a certain “spreading of the wealth” comment).

This is similar to when Bill Clinton declared the end of the era of Big Government.

Despite everything, Obama feels compelled to try and sound like Reagan–to sound as conservative as he can without turning off his base.

This says a lot of good things about where the country is.

Lets just help people connect some dots.

[Update] When both parties are in a debate as to who the best task cutter is, it is time to win the election.

Why does capitalism go undefended?

Wed, 08 Oct 2008 00:00:04 +0000

These debates are downers. Its not that I think McCain will lose, because I think McCain ultimately will prevail. Barack Obama would rather be President of France than the US, and I think a lot of blue collar types get that.

These debates are wasted opportunities for the conservative movement, and from our perspective, the best interests of America.

All of the ongoing narratives on the economy are left wing narratives, and none of those memes are being challenged. Being unable to challenge the narrative, McCain is like an injured boxer on the ropes.

The financial crisis is the result of deregulation
Trickle down economics leads to job losses
Tax cuts for the rich somehow reduce the real wages of workers
$350 Million in CEO pay is a big part of the problem, but $20B in earmarks is nothing, and the IOUs for Social Security aren’t even worth mentioning
Tax cuts are really just another form of government spending

A principled free-market person could knock these things out of the park. I’ve even heard Huckabee talk about some of these things on his show. For whatever reason, McCain just can’t articulate arguments contrary to these narratives. Probably because capitalism is not high on his list of principles. He is an honorable man, a hero and a man of personal character. He is not however a business person, and he like Obama, has never really worked in the free market. In other words, capitalism is merely a theory to McCain, while global warming is a threat requiring a hero to come save the day.

You campaign with the candidate you have, and the candidate strengths that you have. I predict (hope) that McCain will at least repeat an infinitum over the next couple of weeks the following:

Obama SAYS he wants to cut your taxes, but has never even tried to do so . . . NOT EVEN ONCE. He has repeatedly tried to raise taxes and he has repeatedly voted to increase spending. Barack’s record shows his true commitment to tax policy–he is a tax and spend democrat who believes that any money you retain after taxes is the result of the generosity of the government

Questions for the talented Mr. Obama

Tue, 07 Oct 2008 01:38:21 +0000

I hope McCain posits at least a couple of these questions in the debate tonight (or alternatively, in some tv ads):

If you want to cut taxes for middle class Americans, why haven’t you authored legislation to do just that?

Can you point to any tax cut legislation that you supported in your career as a legislator?

Can you think of one example where the fundamental goodness of American was being challenged/attacked, and you argued with that person?

Should people in the Russian government care about what the American people think of them?

Please identify uses of military force by the U.S. that you supported.

Do you think tax rates influence the behavior of individuals and businesses?

What is your most significant professional accomplishment?

Can you think of one country in the world that became more prosperous by increasing taxes on the wealthy?

Can you identify one aspect of the French public policy that you find inferior to current American policy?

What do you say to critics who say you want to make American more like Europe?

What has been your most significant mistake as an elected official?

If McCain had a friend who was a former member of the KKK and was unrepentent, would you consider that a character flaw?

When have you ever tried to eliminate tax loopholes?

I encourage everyone to add questions of their own in the comments. The McCain campaign obviously needs some help.

Ultimately, I agree with Dick Morris’s analysis yesterday–push the tax cut issue, and point out how unlikely it is that Obama would ever reduce taxes. If McCain drives home this single point, I think he can close the economy gap.

Myths about the proposed Paulson rescue plan

Tue, 30 Sep 2008 15:54:36 +0000

The following myths and misconceptions seem about the core aspects of the Paulson plan are being widely disseminated. I think it makes sense to dispel those myths in one place.

Myth #1: A credit crunch only impacts “Wall Street”. I don’t think most people believe this myth. However, I put it out there in the interest of fairness and objectivity. I am a self-employed attorney. My clients are predominantly small businesses. A credit cruch impacts everyone. Job creation will be negatively impacted. Here in the midwest, many of the automotive companies are cash strapped and dependent upon the availability of credit. A full-board credit crunch will do considerable damage to Michigan’s unemployment numbers, which are already close to Western European levels. Not sure if the entire nation would be put into a depression, but I do think Michigan’s unemployment numbers good get close to 20% if there is a large crash.

To my fellow opponents of the Paulson plan, I say don’t use the “Wall Street isn’t Main Street” lines in an attempt to divide up parts of the country that actually depend on each other. I understand that politicians use such lines as crutches, but were are mere bloggers, so lets be honest about that aspect.

Myth #2: Opponents of the Paulson plan favor doing nothing. This is a weak straw man argument. While there may be some proponents of simply doing nothing, I am not aware of a single official in Washington DC or any voice in the public debate supporting the position of doing nothing.

Myth #3: Its either the Paulson plan or nothing. For a partial list of alternative ideas, check out the following links. Maybe we can’t get these through Congress, but they seem a lot less extreme than the Paulson plan, so who knows. Besides, some things can be done by executive order and regulatory rule making. Suspending the Mark-To-Market Accounting rule for a couple of weeks would be a great start.

http://www.forbes.com/forbes/2008/1006/017.html

http://www.ftportfolios.com/Commentary/EconomicResearch/2008/9/22/heresaplantoavoidanew_rtc

http://online.wsj.com/article_email/SB122178603685354943-lMyQjAxMDI4MjIxMjcyODI2Wj.html

Myth #4: This problem is caused solely or even primarily by bad loans. 91% of mortgages are in full compliance. 9% are in some state of deliquency. Lets assume for the sake of argument that 9% of mortgages are in 100% default and that the home values of those mortgatges is actually $0. Neither assumption is valid, but assume that negative outcome for the purpose of this analysis. GM’s losses in the last full quarter of 2008 far exceeded 9%. It has been losing money for years, and yet is still able to operate. In contrast, the Wall Street banks have been raking it in until recently. There is clearly more at play here than merely bad loans.

The equation is some bad loans + mark-to-market rule + debt to equity rule = Current Crisis. Bad loans are just the initial spark for this crisis. The other two rules are the causes of the severe spreading of that fire.

9% losses are not enough to bring a Wall Street firm to its knees. However, under Mark-To-Market accounting rules, 9% mortgage delinquency has resulted in an aggregate decrease in value of mortgage-based securities that far exceeds the 9% deliqyuency rate. The bubble popped–and many good mortgage paper is just as distressed as the bad paper.

Under the Mark-To-Market rule, an asset can only be valued as high as an immediately available sales price. Combined with a fixed debt to equity ratio, the MTM rule forces firesales of distressed assets, further reducing the temporary market value of those assets.

In other words, the MTM rule plus the DtoE rule means spiraling distress sales of relatively illiquid assets. The purpose of the Paulson plan is actually to address this by purchasing paper at “above market rates” (e.g. above teh MTM value).

Myth #5: Any deviation from the Mark-To-Market Rule is fraudulent accounting. MTM was optional in this context until as recently as October 2007. I believe it was originally introducted for these types of securities in 1997. I don’t see how the temporary use of 1996 accounting rules for illiquid assets is more fraudulent than Paulson deciding the “true value” of the paper.

As a compromise, I propose we adopt the Paulson Valustion Rule–let Paulson substitute his “fair value” for each distressed asset (he would have to do this anyway under the Paulson plan, so I say evaluate away Mr. Paulson) and let companies use that valuation in their balance sheets, which will expand the debt they can take on, etc. and generally unravel the problem.

Anyway, I hope this helps. This “debate” is very frustrating as we are all talking past each other. Of course, it would be nice to have actual policy makers address some of the Paulson alternatives . . .

Why can’t Congress debate this proposal instead of arguing how to expand socialism

Thu, 25 Sep 2008 01:21:11 +0000

I am 100% against the original rescue plan set forth by President Bush. Moreover, I like each new proposed wrinkle to the plan even less than the original. Is listening to Republicans discuss the U.S. government buying shares of private companies and characterizing that as a good and necessary thing a sign of the apocolypse?

Unfortunately, we are being held hostage. I mean that both as conservatives and as Americans. If we do not take corrective action, credit will completely dry up and the economy will go into a death spiral in a way that it hasn’t since the great depression. Think 5% unemployment is too high, well it won’t be less than 15% if small businesses can’t get loans.

Principled conservatices are basically being threatened with the following choice: (1) embrace unprecedented government intrusion in the economy such that it will take decades to roll back on a bite, scratch, and brawl basis; or (2) destroy the country as we know it.

Of course some of us think (1) also destroys the country as we know it, but that is for another day.

I have identified a modificed version of the White House/Treasury/Fed plan that make sense to me, costs virtually nothing, and involves no steps not currently planned for (i.e. my plan is a subset of the government plan).

The Sobieski Plan:

STEP 1: Set up a committee of people whose job it will be to determine the proper value of the distressed mortgage-based securities that are causing the crises. Everybody arguing about the rescue plan pretty much agrees on this, they just disagree on exactly who sits on the committee and what type of oversight there will be. Given step 2, I don’t think there will be as much fuss about Step 1 and I suspect it will be easy to reach agreement on the “valuation board” of my proposal.

STEP 2: Instead of having the government purchase the distressed security at a fair value price determined by the “Valuation Committee” which is what Bush/Paulson/Bernacke/et al want, we instead allow the current owner of the security to assign that same value to the asset. In other words, we allow the owner to adjust their balance sheet in accordance with the “fair value” as determined by the committee that would otherwise be chartered with spending the $700B… only the committee won’t be entitled to spend the money.

STEP 3: Celebrate the $700B in cost savings

STEP 4: If necessary, the Valuation Committee could continue to meet, providing updated “fair value” determinations as the various bonds age, updating the values accordingly. This can be done until the crisis is past.

If you think about it, its hard to argue against this plan. the core approach of the rescue plan is to help clean up the balance sheets of these beaten down bond holders so that the can loan money again.

In terms of impact to their various balance sheets, the impact of the Bush plan is the same as the impact of the Sobieski plan. My plan just happens to be $700B less expensive.

Plan B? Plan C?

Tue, 23 Sep 2008 09:14:22 +0000

I admit to not being a Wall Street guy, but I have always had a pretty good understanding of economics and a practical sense for business.

I understand that there is an incredible snowball effect resulting from the fact that there is currently no demand in the market for mortgage-based securities. None. Who wants to buy this stuff today? Only people anticipating a government bailout or those looking to take advantage of truly distressed sellers and distressed prices.

I am open to being convinced that the proposed $700B bailout is necessary. However, until alternative approaches are addressed, I am affirmatively against a last minute government authorization for tremendous power and a $700B spending authorization based on an implicit calculus that we either acquiesce or the economy goes into the toilet.

Before we all just jump on board with a plan that had it been proposed by a Clinton Admnistration would have no chance of having broad conservative support, I would suggest taking a loot at the following articles:

http://www.ftportfolios.com/Commentary/EconomicResearch/2008/9/22/heresaplantoavoidanew_rtc

http://online.wsj.com/article_email/SB122178603685354943-lMyQjAxMDI4MjIxMjcyODI2Wj.html

The current crisis is based on the convergence of two primary factors:

(1) There is little demand for mortgage based securities in the current time, resulting in bonds currently “worth” 70-80% less (see Merrill Lynch) of their par value even though only 9% of mortgages are in default and home values are only down 20-30% (i.e. mortgage-based securities are temporarily undervalued and if an individual had any in their portfolio, they would rationally ride out the storm to avoid selling in hyper-distressed conditions).

(2) The ability of financial institutions to issue debt is limited by balance sheet considerations, which means that Merrill Lynch and other financial institutions cannot do what your or I would do, which is simply ride out the storm. They can’t issue new debt without first clearing off their balance sheets. Thus, the bad paper is a hot potato they need to get off their balance sheet if the economy is to avoid a liquidity crisis.

Bottom Line: Financial institutions need to get the distressed bonds out of their debt/equity ratios in order to make loans.

There are at least a couple of alternative ways to approach this problem:
(1) Have government buy the distressed paper at a valuation above the distressed price but below the true price so that tax payers get some profit in the end

(2) Temporarily relax the mark-to-market rules so that instead of centralizing the distressed paper into a centralized Bad Bank of the US, the paper can be held in a decentralized manner by their current owners.

(3) Temporarily raise the permitted debt/equity ratio so that distressed debt paper doesn’t preclude new activities

Until someone can tell me why (2) and/or (3) are deficient, I am firmly against (1).

I vote for Plan B. Until proponents of Plan A actually address other proposed solutions, I am not going to jump on the $700B bailout package that will involve more than $1T in spending before the democrats get through with it.

Plan B? Plan C?

Tue, 23 Sep 2008 09:13:58 +0000

I admit to not being a Wall Street guy, but I have always had a pretty good understanding of economics and a practical sense for business.

http://www.ftportfolios.com/Commentary/EconomicResearch/2008/9/22/heresaplantoavoidanew_rtc

http://online.wsj.com/article_email/SB122178603685354943-lMyQjAxMDI4MjIxMjcyODI2Wj.html

The current crisis is based on the convergence of two primary factors:

Bottom Line: Financial institutions need to get the distressed bonds out of their debt/equity ratios in order to make loans.

(3) Temporarily raise the permitted debt/equity ratio so that distressed debt paper doesn’t preclude new activities

Until someone can tell me why (2) and/or (3) are deficient, I am firmly against (1).

Is the financial crisis the result of accounting rule changes?

Mon, 22 Sep 2008 00:05:00 +0000

As an inhouse lawyer for a Fortune 500 company in the 90s, I can definitively say that many corporate mistakes are based on a desire to get the accounting to “work out” in accordance with the goals of corporate executives.

In one instance, I was asked to convert a relatively simple 2-way transaction into an incredibly complex 3-way agreement so that the transaction could be structured as a lease. Leasing was considered to have certain tax advantages for the customer, and the structure of this particular lease was to lead to accelerated revenue recognition for my company.

It was clear as crystal that all three parties were taking significant risks to engage in the transaction. The fact that the two-way relationship was already getting clouded up with performance issues did not cause either of the two parties to hesitate in bringing in a third party to finance the new lease-based transaction.

I’ll never know how the thing turned out, but to me it seemed like juggling flaming battons on an oil freighter, so I left corporate life for private practice.

I bring up the dark underbelly of accounting rules because the financial crisis occuring before our very eyes makes no sense to me. The vast majority of mortgages are not in default.

9 in 100 mortgages is in default. http://www.freerepublic.com/focus/f-news/2086579/posts. This is up from merely 1 in 100 mortgages back in 2007. However, even if absolutely no payments are received by any mortgage in default, one would expect the mortgage holders to be incurring at most a 9% loss. Here in Detroit, a 9% operating loss is not something that causes talk of bankruptcies or bailout. The 9% loss would of course be off-set by the profitable mortgages and other profitable non-mortgage operations.

So what in the heck explains the magnitude of the financial crisis? Why are taxpayers being saddled with hundreds of billions of loan guarantees and other bailout activities?

How can this crises be so deep, broad, and dangerous if only 9 in 100 mortgages is in default?

Accounting rules. Or more specifically, accounting rules accentuating the temporary lack of a debt marketplace for mortgage-backed securities.

See http://online.wsj.com/article_email/SB122178603685354943-lMyQjAxMDI4MjIxMjcyODI2Wj.html for an explanation by someone much more familiar with accounting, banking, and bailouts than I am.

The biggest culprit is a change in our accounting rules that the Financial Accounting Standards Board and the SEC put into place over the past 15 years: Fair Value Accounting. Fair Value Accounting dictates that financial institutions holding financial instruments available for sale (such as mortgage-backed securities) must mark those assets to market. That sounds reasonable. But what do we do when the already thin market for those assets freezes up and only a handful of transactions occur at extremely depressed prices?

The answer to date from the SEC, FASB, bank regulators and the Treasury has been (more or less) “mark the assets to market even though there is no meaningful market.” The accounting profession, scarred by decades of costly litigation, just keeps marking down the assets as fast as it can.

This is contrary to everything we know about bank regulation. When there are temporary impairments of asset values due to economic and marketplace events, regulators must give institutions an opportunity to survive the temporary impairment. Assets should not be marked to unrealistic fire-sale prices. Regulators must evaluate the assets on the basis of their true economic value (a discounted cash-flow analysis).

If we had followed today’s approach during the 1980s, we would have nationalized all of the major banks in the country and thousands of additional banks and thrifts would have failed. I have little doubt that the country would have gone from a serious recession into a depression.

If we do not halt the insanity of forcing financial firms to mark assets to a nonexistent market rather than their realistic economic value, the cancer will keep spreading and will plunge the world into very difficult economic times for years to come.

Apparently even mortgage debt that is being paid on time has to be written off because of the stampede to dump all mortgage-backed assets. Thus, banks are facing dramatic losses not because a significant number of mortgages are in default, but because the market for mortgage-backed securities is essentially zero, triggering all of the banks to take on paper losses for the assets that they hold.

Given the relatively small number of foreclosures (I realize that 9% is actually not that small, but statistically speaking, it shouldn’t be more than a rounding error), this is the only explanation I have read that actually makes sense to me.

Of course it begs the following questions:

If this is the or a source of the problem, why can’t we fix it by going back to the old rule?

Why is nobody besides the author of the WSJ article raising this issue?

What do the RedState financial guys think about the analysis and proposed solution?