Government – Page 96 – artdiamondblog.com

Fewer Jobs Under Obama’s High-Cost Health Plan

“Dave Ratner, owner of four pet stores in Western Massachusetts, is worried about being able to pay into a state health benefits plan.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A16) AGAWAM, Mass. — Dave Ratner, owner of Dave’s Soda and Pet City, is pretty sure he is about to get “whacked” by the new state law that requires employers to contribute to health care benefits for their workers or pay a $295-per-employee penalty. In order to avoid thousands of dollars in fines, Mr. Ratner is considering not adding part-time workers at his four pet supply stores in Western Massachusetts.

But the penalty in Massachusetts is picayune compared with what some health experts believe Senator Barack Obama, the Democratic presidential nominee, might impose as part of his plan to provide affordable coverage for the uninsured. Though Mr. Obama has not released details, economists believe he might require large and medium companies to contribute as much as 6 percent of their payrolls.
That, Mr. Ratner said, would be catastrophic to a low-margin business like his, which has 90 employees, 29 of them full-time workers who are offered health benefits.
“To all of a sudden whack 6 to 7 percent of payroll costs, forget it,” he said. “If they do that, prices go up and employment goes down because nobody can absorb that.”

For the full story, see:

KEVIN SACK. “Businesses Wary of Details in Obama Health Plan.” The New York Times (Mon., October 27, 2008): A16.

Democratic Housing Secretary Cisneros Aided Irresponsible House Buying

“Henry G. Cisneros, secretary of housing and urban development, speaking to President Bill Clinton on Dec. 19, 1994, in Washington.” Source of caption and photo: online version of the 2006 NYT article cited below.

(p. 1) SAN ANTONIO — A grandson of Mexican immigrants and a former mayor of this town, Henry G. Cisneros has spent years trying to make the dream of homeownership come true for low-income families.

As the Clinton administration’s top housing official in the mid-1990s, Mr. Cisneros loosened mortgage restrictions so first-time buyers could qualify for loans they could never get before.
Then, capitalizing on a housing expansion he helped unleash, he joined the boards of a major builder, KB Home, and the largest mortgage lender in the nation, Countrywide Financial — two companies that rode the housing boom, drawing criticism along the way for abusive business practices.
And Mr. Cisneros became a developer himself. The Lago Vista development here in his hometown once stood as a testament to his life’s work.
Joining with KB, he built 428 homes for low-income buyers in what was a neglected, industrial neighborhood. He often made the trip from downtown to ask residents if they were happy.
“People bought here because of Cisneros,” says Celia Morales, a Lago Vista resident. “There was a feeling of, ‘He’s got our back.’ ”
But Mr. Cisneros rarely comes around anymore. Lago Vista, like many communities born in the housing boom, is now under stress. Scores of homes have been foreclosed, including one in five over the last six years on the community’s longest street, Sunbend Falls, according to property records.
While Mr. Cisneros says he remains proud of his work, he has misgivings over what his passion has wrought. He insists that the worst problems developed only after “bad actors” hijacked his good intentions but acknowledges that “people came to homeownership who should not have been homeowners.”

For the full story, see:
DAVID STREITFELD and GRETCHEN MORGENSON. “The Reckoning; Man in the Middle; Building Flawed American Dreams; Helping Low-Income Families Buy Homes and Watching the Failures.” The New York Times, Section 1 (Sun., October 19, 2008): 1 & 23.

“THE DEVELOPER Henry Cisneros in his office in San Antonio with Sylvia Arce-Garcia, an executive assistant. He is the head of CityView, a developer.” Source of caption and photo: online version of the 2008 NYT article cited above.

“Ill-Conceived Regulation Poisoned the System”

Source of formula title and of formula: online version of the WSJ commentary quoted and cited below.

(p. A17) Here’s how ill-conceived regulation poisoned the system. Until recently, bank CEOs and regulators slept well at night thanks to a financial model developed in the 1990s called “value at risk” or VaR. It assesses historical variances and covariances among different securities, informing financial institutions of the risks they’re taking. By assessing risk factors across all securities, VaR can compare historical levels of risk for given portfolios, usually up to a 99% probability that banks would not lose more than a certain amount of money. In normal times, banks compare the VaR worst case with their capital to make sure their reserves can cover losses.

But VaR can’t account for extreme unprecedented events — the collapse of Barings in 1995 due to a rogue trader in Singapore, or today’s government-mandated bad mortgages bundled into securities that are hard to value and unwind. The “1% likely” happened. And because the 1% literally didn’t compute, there was no estimate of the stunning losses that have occurred.
Yale mathematician Benoit Mandelbrot pointed out the shortcomings of the VaR model in his “The (Mis)behavior of Markets,” published in 2004. He noted that bell curves work for, say, disparities in the height of people. In markets, instead of flat tails of rare events at either end of the bell curve, there are “fat tails” of huge upsides and huge downsides. Markets are more complex than the neat shape of bell curves.
Last year’s bestselling nonfiction book had a similar theme. In “The Black Swan,” former trader Nassim Nicholas Taleb pointed out that extreme outcomes are actually common, warning that financial engineers — “scientists,” as he calls them — ignore these unlikely outcomes at their peril. But today’s credit panic was not entirely unpredictable. Mr. Taleb was prescient in writing, “The government-sponsored institution Fannie Mae, when I look at their risks, seems to be sitting on a barrel of dynamite, vulnerable to the slightest hiccup. But not to worry: Their large staffs of scientists deemed these events ‘unlikely.'”

For the full commentary, see:
L. GORDON CROVITZ. “The 1% Panic.” The Wall Street Journal (Mon., OCTOBER 13, 2008): A17.
(Note: the online version of the article had the following added subtitle: “Our financial models were only meant to work 99% of the time.”)

For the Taleb book mentioned in the commentary, see:
Taleb, Nassim Nicholas. The Black Swan: The Impact of the Highly Improbable. New York: Random House, 2007.

For an insightful review of the Taleb book, see:
Diamond, Arthur M., Jr. “Review of the Black Swan: The Impact of the Highly Improbable.” Journal of Scientific Exploration 22, no. 3 (2008): 419-22.

Dem’s Acorn Group Registers Mickey Mouse to Vote for Obama

“Suspicious voter registration applications in recent months include this one for Mickey Mouse, of Orlando, Fla.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A13) WASHINGTON — Thousands of suspicious voter registrations collected by the housing-advocacy group known as Acorn have become a rallying point for Republicans, who claim left-leaning activists may be trying to rig votes in the 2008 elections.

Many of the potentially faulty registrations were flagged to election officials as a result of the group’s own internal controls.
Democrats say the Republicans are attempting to whip up fear as a way of discouraging some newly registered voters from going to the polls. If past elections are an indication, such claims also may serve as a way to set up potential legal challenges should close election results produce disputed counts and recounts.
Faulty registrations in recent months include those in the names of Mickey Mouse in Florida, Batman in New Mexico and Dallas Cowboys football players in Nevada. State and federal authorities have opened investigations in about a dozen states; as many as 16,000 registrations in Pennsylvania are under suspicion. The Michigan attorney general’s office Tuesday said it arrested and filed felony charges against a former Acorn canvasser for allegedly forging six voter applications.

For the full story, see:
EVAN PEREZ. “Probes Focus on Advocacy Group’s Voter Registration.” The Wall Street Journal (Weds., OCTOBER 15, 2008): A13.

Lawyer for Obama’s Acorn Group Is Concerned About Group’s Embezzlement and Possible Violations of Federal Laws

(p. A15) An internal report by a lawyer for the community organizing group Acorn raises questions about whether the web of relationships among its 174 affiliates may have led to violations of federal laws.

The group, formally known as the Association of Community Organizations for Reform Now, has been in the news over accusations that it is involved in voter registration fraud, charges it says are overblown and politically motivated.
Republicans have tried to make an issue of Senator Barack Obama’s ties to the group, which he represented in a lawsuit in 1995. The Obama campaign has denied any connection with Acorn’s voter registration drives.
The June 18 report, written by Elizabeth Kingsley, a Washington lawyer, spells out her concerns about potentially improper use of charitable dollars for political purposes; money transfers among the affiliates; and potential conflicts created by employees working for multiple affiliates, among other things.
It also offers a different account of the embezzlement of almost $1 million by the brother of Acorn’s founder, Wade Rathke, than the one the organization gave in July, when word of the theft became public.
“A full analysis of potential liability will require consultation with a knowledgeable white-collar criminal attorney,” Ms. Kingsley wrote of the embezzlement, which occurred in 2000 but was not disclosed until this summer.

For the full story, see:
STEPHANIE STROM. “Acorn Report Raises Issues of Legality.” The New York Times (Weds., October 22, 2008): A15.

Growing the Nanny State: California Senate Bans Helium Balloons

“Don Caldwell, who made an effigy of California state Sen. Jack Scott in protest of his proposed balloon ban, with his wife, Laura.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A1) California state Sen. Jack Scott says he didn’t intend to “be a party pooper.” It’s just that helium-filled foil balloons — like those found at hospital gift shops and office parties — are dangerous. They float into electric lines and cause power outages, more than 800 in California last year, utilities say.

He drafted a bill to ban foil balloons; it sailed through the state Senate and now awaits a vote in the Assembly.
He didn’t expect the issue to blow up the way it did.
Last month, at a pro-balloon rally in a Pasadena park, protesters cheered as a group of children pounced on an effigy of Mr. Scott — made entirely of balloons.
“There’s a leg, get that leg!” shouted John Kobylt, a radio talk-show host who broadcast the protest live. “Look what’s left of him!” he said, holding up a sagging cluster of punctured latex. “That’s what happens when you ban our balloons.”
Wedding planners, party organizers and balloon artists all rallied to the cause. The industry body, the Balloon Council, set up a Web site — www.savetheballoons.com — that urges people to contact their state representatives. Members began a grass-roots campaign to garner support.
“My first reaction to this was, ‘You’ve got to be kidding. Is this a joke?'” recalled Barry Broad, the lobbyist they hired to spearhead the pro-balloon effort. “Balloons (p. A16) and ice-cream cones are associated with the lighthearted parts of life, and now suddenly they have this evil-twin side?”

For the full story, see:
AMY KAUFMAN. “California Targets New Menace: Helium-Filled Foil Balloons; State Senate Sees Danger and Cracks Down, But Party Planners Fight Back; the $100 Fine.” The Wall Street Journal (Tues., July 15, 2008): A1 & A16.

SNL CSPAN Pelosi, Frank Bailout Skit

Source: screen capture from the NBC video clip mentioned, and linked to below.

Most Saturday Night Live (SNL) skits support liberal causes and politicians, and are critical of those with sympathies for free markets.
There was a wonderful, rare exception aired as the second skit on the 10/04/08 show. The skit pokes fun at the Democrats for their responsibility in creating the mortgage meltdown crisis. Nancy Pelosi and Barney Frank are shown expressing sympathy for various miscreants who expect the taxpayer to bail them out of their financial responsibilites.
(An interesting sidenote is that NBC pulled the clip from their web site for a about a full day, even though they left up other clips from the same show. Some bloggers suggested that employees of NBC had political motivations for their act of quasi-censorshp.)

The skit was entitled “C-span Bailout” and as of 10/08/08, could be found at:
http://www.nbc.com/Saturday_Night_Live/video/clips/c-span-bailout/727521/

The Fragility of Freedom

Source of book image on the left:
http://images.barnesandnoble.com/images/25780000/25788683.jpg
Source of book image on the right: http://www.churchillsociety.org/Churchill%20Book%20Discussion%20Group.htm

Several recent books support a common conclusion that freedom is fragile, and its preservation can sometimes depend on the courage of a few individuals. I recently heard discussions on C-SPAN of a couple of books (images above) on WW2 that emphasize this point. Hitler might very well have succeeded in the long-term conquest of continental Europe, and even Great Britain, if Churchill and a few others had not taken a stand.
Earlier, also on C-SPAN, I heard John Ferling make a similar point with regard to the American Revolution. (See the images of his two relevant books below.) Were it not for the actions of George Washington, and a few others, the revolution very well might have failed.
One can view this as a bad news, good news, story. In earlier entries on the blog, I have quoted articles suggesting that the French are especially bothered by how “precarious” life can be. Well, the bad news is, that on this, the French may be right.
But, on the other hand, the stories of Churchill, and Washington, also tell us that with some courage and determination and wisdom, individuals can sometimes make a big difference in how stories end. That is the good news.
(And yes, Nassim, luck matters too.)

Books referred to:
Ferling, John. Almost a Miracle: The American Victory in the War of Independence. New York: Oxford University Press, USA, 2007.
Ferling, John. A Leap in the Dark: The Struggle to Create the American Republic. 1st ed. New York: Oxford University Press, USA, 2003.
Lukacs, John R. Blood, Toil, Tears and Sweat: The Dire Warning: Churchill’s First Speech as Prime Minister. New York: Basic Books, 2008.
Olson, Lynne. Troublesome Young Men: The Rebels Who Brought Churchill to Power and Helped Save England. 1st ed. New York: Farrar, Straus and Giroux, 2007.

Worst Hard Time

Source of book image: http://www.bookswim.com/images_books/large/The_Worst_Hard_Time_The_Untold_Story_of_Those_Who_Survived_the_Great_American_Dust_Bowl-119185970830588.jpg

Timothy Egan’s book presents an engrossing picture of what life was like in a particular time and place in U.S. history. The time is the 1920s and 1930s, and the place is the lower “high” plains, mainly of Oklahoma and Texas. Egan is a master of telling us meaningful stories about the goals and struggles of particular people, so that we care when the land blows away from them, and they suffer.
You will need, however, to look elsewhere for a deep understanding of the causes of what happened. Egan mainly aims at describing, not explaining. And when he explains, he mainly rounds up the usual suspects one would expect a New York Times reporter to round up (e.g., Herbert Hoover).
(For deeper and more illuminating explanations of what was going on during the worst of the period, you’d do better by consulting Amity Shlaes’s The Forgotten Man.)

References to books mentioned above:
Egan, Timothy. The Worst Hard Time: The Untold Story of Those Who Survived the Great American Dust Bowl. Boston: Houghton Mifflin, 2006.
Shlaes, Amity. The Forgotten Man: A New History of the Great Depression. New York: HarperCollins, 2007.

EPA Mandates that Texas Keep Digging Ethanol Hole

“At the Reeve plant near Garden City, Kan., grain is made into ethanol, and the byproducts are fed to cattle in the adjacent feedlot.” Source of caption and photo: online version of the NYT article quoted and cited below.

Unfortunately, the EPA rejected Gov. Paley’s request, discussed in the article quoted below:

(p. C1) The ethanol industry, until recently a golden child that got favorable treatment from Washington, is facing a critical decision on its future.

Gov. Rick Perry of Texas is asking the Environmental Protection Agency to temporarily waive regulations requiring the oil industry to blend ever-increasing amounts of ethanol into gasoline. A decision is expected in the next few weeks.
Mr. Perry says the billions of bushels of corn being used to produce all that mandated ethanol would be better suited as livestock feed than as fuel.
Feed prices have soared in the last two years as fuel has begun competing with food for cropland.
“When you find yourself in a hole, you have to quit digging,” Mr. Perry said in an interview. “And we are in a hole.”
His request for an emergency waiver cutting the ethanol mandate to 4.5 billion gallons, from the 9 billion gallons required this year and the 10.5 billion required in 2009, is backed by a coalition of food, livestock and environmental groups.
Farmers and ethanol and other biofuel producers are lobbying to keep the existing mandates.

For the full story, see:
DAVID STREITFELD. “Uprising Against the Ethanol Mandate.” The New York Times (Weds., July 23, 2008): C1 & C5.