“No Man’s life liberty or property is safe while the legislature is in session”.

- attributed to NY State Judge Gideon Tucker



Friday, July 16, 2010

Chris Christie Caves On Property Tax Limits

I read with some degree of shock in yesterday's Wall Street Journal that New Jersey's Governor, Chris Christie, caved in to Democrats on the property tax issue.

For months, Christie has been steadfastly promoting a hardline, unyielding 2.5% property tax increase limit by way of a state constitutional amendment. Commentaries on his fight with the Democratically-controlled legislature noted how porous and easily-evaded the cap they proposed would be.

Guess what? Christie blinked and folded. He gave into the legislative route, with its many easy avenues of escape for the state's legislature. Among the reasons they can override a 2% cap are: "health care, pensions, state emergencies and increased school enrollment."

Furthermore, the law allows a simple majority, rather than the proposed amendment's supermajority, to suspend the cap.

The Journal piece noted that New Jerseyans know what's going on,

"Taxpayers seem to understand the danger. In a Monmouth University/Gannett New Jersey Press Media poll after the budge and tax compromise, three-quarters believed the state's tax problems would persist, and 54% said they favored Mr. Christie's constitutional cap compared to the 35% who preferred the one that passed."

I think Christie has made a colossal mistake. If he thinks the Democrat-dominated state legislature won't slow roll him on spending and cause this cap to be liberally pierced and rendered moot, he, and the rest of the state's residents and taxpayers, are in for a nasty surprise.

Thursday, July 15, 2010

MassachusettsCare & Mitt Romney's Presidential Aspirations

Last week, in Wednesday's Wall Street Journal, Joseph Rago gave a devastating accounting of Mitt Romney's Massachusetts care.

It seems that current governor Deval Patrick, without consulting his own state's insurance commissioner, went ahead and vetoed rate increases necessary to preserve the firms' financial integrity.

Thanks to that move, with which said commissioner disagreed, "the five major state insurers have so far collectively lost $116 million due to the rate cap."

Robert Dynan, the insurance commissioner, was quoted as stating, in a letter to his staff, that,

"This action was taken against my objections and without including me in the conversation....and that "there most likely will be a train wreck (or perhaps several train wrecks)." "

The Journal piece also notes, near its conclusion,

"Meanwhile, Richard Moore, a state senator from Uxbridge and an architect of the 2006 plan, has introduced a new bill that will make physician participation in government health programs a condition of medical licensure. This would essentially convert all Massachusetts doctors into public employees."

Makes you want to rush right out, sell your home, quit your job and move to the Bay State, doesn't it?

So as Patrick attempts to control the price of every scintilla of activity or good in the state's medical system, you have to wonder what the effect of this disaster will be on ol' Mitt's aspirations for 2012.

Personally, I think he's toast. Back in 2008, he was merely stuffy and arch. A bit too polished. But he sounded good.

Now, he has this albatross around his neck. Nevermind what Republicans will think- its the independents that will sink him, should his party be foolish enough to nominate him to run for President.

Nobody with a brain will let Romney go near the White House with this monstrosity in his governing past.

Wednesday, July 14, 2010

The Strange Case of the Milwaukee Teachers

There's a game of chicken being played throughout the nation over teachers' salaries and jobs, according to a recent piece in the Wall Street Journal.

Last week, on Wednesday, the Journal reported on a situation unfolding in Milwaukee, Wisconsin. Essentially, the facts are that the city's school board planned to terminate 428 teachers, in light of "declining tax collections and falling enrollment."

The article lists the average cash compensation for a city teacher at $56,000, but health and pension benefits are valued at more than $40,000 a year.

The Journal piece states,

"The current health plan costs taxpayers $26,844 per family, compared to the typical $14,500 cost for a private employer family plan. The plan does not require teachers to pay any premiums toward the cost of the health plan- a situation that is all but extinct in private employment. In the spring, the school board offered a new health plan that would reduce costs to $17,172 per family. The plan would have saved money by requiring co-pays."

The article reported that "when union officials were presented with the option, they chose to allow their members to be dismissed."

The teachers were laid off without even being allowed by their own union to vote on the offer from the Milwaukee school board.

Why?

Contends the Journal,

"The Milwaukee Teachers Education Association was immovable on benefits in part because it placed a bet on its Democratic friends in Washington rushing to the rescue. "The problem must be addressed with a national solution, a federal stimulus package that will restore educator positions," Pat Omar, the union's executive director said in June. The union's strategy in recent weeks has been to stage rallies demanding a federal bailout, and it used hundreds of school kids at those rallies as political props."

A the article correctly concludes,

"It is hardly sensible to force taxpayers in Mississippi, Colorado, New Hampshire and elsewhere to step in and save the union's bacon. A federal bailout only further entrenches bad policies- especially unaffordable benefit packages- that led to the school funding crisis in the first place and leave every child behind."

What amazes me is that the Milwaukee teacher's union's executives really believe nobody will notice that they are playing a shell game. After all, federal bailouts are paid by taxpayers. That means, even if less proportionally, Wisconsin taxpayers, too. Plus, what about them paying for teacher bailouts in 49 other states?

Do these union officials really believe everyone else is that gullible? Maybe because they managed to secure these pie-in-the-sky benefits packages in the first place, they still believe in that Tooth Fairy delivering now-unaffordable benefit promises.

Tuesday, July 13, 2010

State Pensions Go "Hybrid?" It's Way Overdue

This past weekend's Wall Street Journal featured an article entitled States Shift to Hybrid Pensions.

Really? It's long, long overdue. Private sector employers moved to defined contribution plans decades ago. The very concept of defined benefit, with its outsize, unlimited risk to the provider, is a joke nowadays. Think maximal counterparty risk.

Think I'm kidding or wrong? Just ask long-retired steel or airline workers. They fought their employers tooth and nail while active, then expected defined benefit promises to come true, after having worked so hard to cripple their employers' ability to operate profitably far into the future.

Now we learn that state and local workers may have to rejoin the real world. Great. It's about time.

The amazing thing, though, one learns from the Journal piece, is how many states will continue to allow some form of defined benefit plan, including, in some cases, an absolute defined benefit.

Other states are more sanguine and are acknowledging the basic unaffordability of defined benefit plans for state and local government workers.

Still, one reads this howler,

"Some workers aren't enthralled. "It's less benefit overall because of the variability of that 401(K) component," said Doug Pratt, director of communications for the Michigan Education Association, a union representing 130,000 school employees.

The reduced benefits mean "we're going to lose some good people" who will find the benefits package less attractive, he said."

Yeah, right! That'll be the day!

Just where do all those "good people" plan to work instead?

As good as Chris Christie, New Jersey's new governor, is on this topic, he's still not tough enough. I want to see a governor and the legislature simply repudiate the unwise and unaffordable defined benefit plans, challenge the unions affected to sue and push the state into Chapter 7, where it can reorganize, restructure and negotiate obligations, and force these people into defined contribution plans, or nothing.

That's reality and the longer we delay recognizing this fairy tale of municipal worker defined benefit plans, the worse off we, and they, will all be.

Monday, July 12, 2010

Berwick's Recess Appointment As Healthcare Rationer-In-Chief

Wasn't Wonderboy's administration supposed to be the nation's most transparent ever?

So why the recess appointment of Dr. Donald Berwick to head Medicare and Medicaid? What's transparent about ducking a Senate confirmation hearing?

This little episode reconfirms that Wonderboy is, in fact, just another political hack who lies to project the image he desires.

In this case, it's obvious why Berwick was a recess appointment. With quotes like this, you understand why the administration couldn't risk a public hearing about Berwick,

"The decision is not whether or not we will ration care- the decision is whether we will ration with our eyes open."

"The primary functions of heath regulation is "to constrain decentralized, individual decision making" and "to weigh public welfare against the choices of private consumers."

That last passage, from the Wall Street Journal, means individual control and choice over health care is gone. In Berwick's world, you are just a cog in society's centralized health care calculations.

Welcome to Orwell's world of 1984, etc.

Berwick idolizes Britain's socialized, public health care system, saying,

"I love it...such a seductress...a global treasure."

Another Wonderboy campaign promise broken. Another big lie revealed.