Barbara Comstock for Congress

February 3, 2014

This has been an endorsement delayed by various things, but now that I have a spare moment…

I freely acknowledge that I do not live in the 10th Congressional District; however, I know many who do, and for what it’s worth, I think they’d be well served by Delegate Comstock.

Those who read this blog know that I focus more on issues than personal relationships. In this case, the key issue is Plan ’13 From Outer Space (the McDonnell tax increase from last year)…and Ms. Comstock opposed it.

Given her district, that is one courageous vote, a vote that makes it clear she will stand for limited government even when the Republican leadership loses its way.

There are other candidates, but Ms. Comstock is the only one with experience in office – experience that she has used not to curry favor with party leadership, but to stand with her constituents.

Given her history in Richmond, I believe Barbara Comstock will make an excellent member of Congress.


Impeaching Mark Herring is a terrible idea

January 27, 2014

“I’ve never seen anything as brutally clear as this…an odd, set, stony quality to it, as if tomorrow’s already happening and there’s nothing you can do about it. The way you feel before an ill-considered attack - knowing it’ll fail. But you cannot stop it.”

- General John Buford (acted by Sam Elliot), Gettysburg (1993)

Of course, Buford did manage to “stop” his nightmare scenario (the Union Army charging up a hill that could not be taken) by his own actions. I doubt I will be as successful, but I feel I have to try to stop what will be a catastrophic error by the Richmond Republicans: the impeachment of Mark Herring.

Plans to impeach Herring are already afoot. My friend Shaun Kenney has the details. The crime: Herring agreed with plaintiffs suing the state over the 2006 Marriage Amendment. The plaintiffs said it violates the federal constitution, and Herring essentially said the plaintiffs were right. This is apparently a “constitutional crisis.”

I beg to differ. The “crisis” will be within the Republican Party if they actually try to impeach and remove Herring. This is a mistake on multiple levels.

First, there is the matter of constitutions: In case anyone forgot, Herring’s oath is to uphold both the Federal and state constitutions, and the Federal one comes first. You can argue with Herring’s reasoning on whether or not the 2006 amendment violates the Federal Constitution, but he has the power to express his opinion and act on it. To attempt to remove him from office for upholding the Federal constitution (as he sees it) is a much greater danger than anything Herring has done. I would also note that this great concern for the state constitution was appallingly missing back in 2007 when “transportation solutions” were a priority, the result being a dog’s breakfast of legislation that nearly every Republican not named Bob Marshall swore was a great achievement, yet was laughed out of town by a unanimous state Supreme Court. Voters might find the idea that the Constitution is paramount when it can stop same-sex-marriage but irrelevant when it protects their money from the taxman to be…a bit strange (more on that later).

Second, there is the question of Herring’s action: I’m reading some bizarre hair-splitting from some who say that Herring didn’t have to defend the 2006 amendment, but he shouldn’t have opposed it publicly. Why? Based on the rulings from the federal Supreme Court on this matter last year, refusing to defend and openly advocating for the plaintiffs is a distinction without a difference. Does it really matter that Herring is simply open about his agreement with the plaintiffs?

Next up, we have the political implications, which are vast and multi-dimensional. For starters, as I noted above, the RPV’s respect for the state constitution is hardly consistent, and Democrats will gleefully remind voters of that for months and years. Again, voters saw the Richmond Republican crew pass and celebrate a blatantly unconstitutional tax scheme less than a decade ago. They will wonder why the constitution is so important now, and they will conclude that the Republicans care more about stopping gay marriages than keeping taxes low and government limited. That’s the political equivalent of drowning the Commonwealth in blue paint.

Yet there are also ramifications for just this year. Political capital that would otherwise be saved up for stopping Medicaid expansion (Brian Schoeneman explains the financial implications here; he didn’t mention that Medicaid does – at best – nothing to improve the health of the poor, but that would just reinforce the point) or Governor McAuliffe’s budget spending spree will be wasted on an effort doomed to fail (seven Senate Democrats would have to vote to remove Herring from office, and that’s not happening).

Finally, there is the one thing we are all forgetting - the flip side of what Herring has done: I may be the only person to notice this, but there are serious problems with the 1971 Virginia Constitution. Article 10 (on education) specifically discriminates against schools of faith, and could be read to make vouchers illegal in the Commonwealth (a potential violation of freedom of religion). Article 11 (on environmental protection) could be used to ride roughshod over property rights (and the Fifth and Fourteenth federal amendments). Do we really want future Attorneys General to arbitrarily defend an overreaching state government? Or muzzle itself in the face of such overreach? I feel the question answers itself.

For these reasons, impeaching Mark Herring is a terrible idea – one that will damage Virginia, the cause of limited government within Virginia, and the Republican Party of Virginia for years – if not decades.

Cross-posted to Virginia Virtucon


Why the Republican Party must turn its back on Bob McDonnell

January 22, 2014

Bob McDonnell and I shared a ballot in 2009; he was on the top of the Republican ticket, and I was on the bottom. There are even pictures of us shaking hands somewhere on the campaign trail (I’m sure they’ll pop up after this post). Yet the recent indictment of the former Governor should cause all Virginia Republicans to take a long, hard look at him…and then cut him loose.

There will be plenty of arguments as to whether the Governor did anything illegal (or whether the honest services fraud law that is being used against him is constitutional). However, it is abundantly clear that the Governor’s behavior was unseemly.

It also gives Virginians – especially Virginia Republicans – the chance to look at McDonnell’s record…and in fact, it isn’t pretty.

Under McDonnell’s tenure, Virginia saw tax increases large and small (including those originally within an ABC privatization plan that were only dropped after anti-tax-hike Republicans screamed bloody murder), borrowing from the state retirement fund to balance budgets, a slew of corporatist “incentives” to businesses. In nearly every instance of economic policy, Governor McDonnell chose to increase the power of state government, only to reveal in tragic terms that power indeed corrupts.

But what of McDonnell’s “contribution” to the Republican Party? Well, let’s take a closer look at that: gains in the House of Delegates that can be attributed to redistricting, gains in Congress that can be attributed to “Obamacare” (it was not yet Robertscare), and one state senate seat that is almost certainly the result of one man’s work in Spotsylvania County (and it sure wasn’t Robert F. McDonnell).

Oh, and no statewide wins for his entire tenure as Governor.

Simply put, as Governor, Robert McDonnell was a failure: a political failure and a policy failure. His legacy will haunt the Republican Party of Virginia for years, unless it does the right thing, and turn its back on him.

The Republican Party of Virginia can cling to Bob McDonnell and his clique, or it can embrace the future.

It cannot do both.


The Republican Party, TARP, and Ed Gillespie (plus some personal news)

January 17, 2014

For those wondering where I’ve been for the past three weeks, I was recently married (Sunday, the 12th, to be exact). For those interested, meet the new Mrs. Liberal.

Anyhow, while I’ve been on my honeymoon, Ed Gillespie made it official – he is running for the U.S. Senate. Whether he wins the nomination or not is an open question (I’ll admit it may not be wide open at this point); for what it’s worth, I do think he would be a better Senator than Mark Warner. However, as I have discussed before wedding planning dominated my time, Ed has one fatal flaw to the party: his support for TARP (a.k.a., the Bank Bailout).

I should note that I have considered TARP a policy mistake practically since its conception, and I have maintained that view over the years. I have also explained why Republican nominees who support TARP are badly handicapped against their opponents: because they essentially agree with the Democrats’ excuse for the poor economic performance of the Obama Administration (i.e., the “2008 crisis” did it).

There are, however, even greater problems for TARP-backing Republicans when they get into office. Whatever arguments may roil the GOP, there is near universal recognition that spending needs to be reduced in general, and entitlement spending in particular. However, any pro-TARP Republican who talks about entitlement reductions and/or reductions in anti-poverty programs (no matter how inefficient or counter-productive said programs might be), will get slammed as a friend of the rich and a hypocrite for supporting the $700 billion bailout. While many, many Democrats also supported the bailout, they aren’t talking about these cuts. We Republicans are, and thus we suffer the consequences of cynical voters and lack of trust when we say America can’t afford spending X on entitlements or Y on discretionary spending when our spokesmen voted for $700 billion for the nation’s biggest banks.

I will admit that TARP, as a stand-alone issue, doesn’t resonate with voters as it did in 2008. However, its effects still scar the political landscape. Its damage still affects Republican politicians who supported it (such as Romney and Ryan in 2012)…

…which brings us to Gillespie. Whatever else one may say of him, as White House Counsel during 2008, he was at the forefront of defending TARP (see here). He is the epitome of the TARP-stained Republican pol. He will find his ability to maneuver on political issues far more restrained than he or his supporters believe.

In short, I do not think he will defeat Warner. More to the point, whether he does or not, his nomination and (if it happens) election will keep the party stuck in its TARP-supporting past, when it must instead highlight the TARP opponents in the party in order to re-establish trust on spending with the voters.

I have many friends who are fond of Gillespie (and some who aren’t); I don’t know the man personally. I do, however, know his stance on TARP, and that is enough for me to say that if he were nominated, the party – and the country – will lose more than it gains.

Cross-posted to Virginia Virtucon


Ed Gillespie – would-be Senate candidate – backed TARP (meaning I can’t support him)

December 29, 2013

There have been whispers (and much louder) about Ed Gillespie running for United States Senate next year. Given his national connections and the potential vulnerability of Senator Mark Warner, one can understand why there is excitement around Gillespie’s potential candidacy.

That said, Gillespie has one very critical flaw: as White House Counsel in 2008, he was a loud defender of TARP (CNN):

(CNN’s John) KING: You mentioned the economy. One of the last acts was this bailout. And $350 billion of it has been spent on George W. Bush’s watch. The second installment will come on Barack Obama’s. But many Americans, when you travel, they think, where did this money go? Did big banks get it on Wall Street? It is being flushed literally down the toilet? They don’t see the impact on Main Street.

But can you cite specific evidence that the first $350 billion has done anything to begin the turnaround?

GILLESPIE: You can, John. And in fact, if you look at the rates that have narrowed in terms of credit markets, the TED spreads and LIBOR, things, frankly, I didn’t know that much about until about six months ago, they were very — the spreads were high. And that’s not good for the credit markets.

The injection that the Treasury has put into the capital markets has helped ease those. Again, this is a difficult time. But the president said the other night, I believe rightly, that had we not acted boldly and had we not put this money into the financial markets, we would have seen a lot worse of a financial strain on the American people today than what we’re already witnessing.

Now, readers of my blog will know that I’ve been critical of TARP practically since its conception, and I have maintained that it was a terrible mistake. However, there is more to it than that. When Republicans nominate TARP supporters, they are essentially agreeing with the Democrats’ claim that the situation in 2008 was so terrible that President Obama should essentially be given a pass for any economic problems under his watch. It was one of the reasons Mitt Romney’s criticism of the president on the economy was so ineffective. It also damaged his efforts to criticize enlarging government in general.

As for Gillespie’s specific comments, we now know LIBOR was a badly corrupted indicator, one that even at the time should have been eclipsed by SONIA and EONIA (which were based on actual transactions, had already discounted the pre-September concerns about the economy, and thus did not jump in panic when Lehman Brothers sank beneath the waves).

Thus, for policy and political reasons, I cannot support Gillespie for the nomination. Support for TARP is a stain that cannot be removed.

Cross-posted to Virginia Virtucon


My advice for the GOP: stop government from hurting the poor

December 29, 2013

The Republican Party is getting a lot of advice lately, and it would have received mine sooner but for a bout with the flu. Now that I’ve (mostly) recovered, I’m ready. If the GOP is looking for both better results at the polls and a more just, prosperous country, the solution is this: focus on the poor and the cost of living.

Most people in politics (and out) presume that when government interacts with the poor, it is a boon and benefit to them, at least in the short term. Even most Republicans who argue against government intervention focus on the long-term damage of dependency, while assuming short-term benefit. However, in many ways, government policies actually damage the poor in many ways, particularly regarding the effects on the cost of living – i.e., prices.

This can be seen in nearly every major piece of the American families’ budget for necessities: ethanol subsidies and regulations driving up the price of corn (and corn-fed foods), other farm policies driving up food prices as well, cotton trade barriers – which are so clearly out of whack that we pay Brazil not to sue us in the World Trade Organization – driving up the price of clothes (Delta Farm Press), “green energy” policies driving up electricity bills (Investor’s Business Daily), and finally, a crippling health care shortage exacerbated by the AMA’s control over prices – control handed to them by the government.

When government drives up the cost of living, it hurts all Americans, but it especially hurts poor Americans. Whatever one’s views on the causes of income inequality, policies like those described above make disposable income disparities worse. In some cases, they are simply a dressed-up version of redistribution from the poor to the rich.

This is not the free market; it is corporatism run amok. It must be stopped. The GOP would do the country and itself a great service if it addressed this set of problems, and promised America to reverse them.

Cross-posted to Bearing Drift


When you crunch the numbers, Ryan-Murray is a bad deal

December 11, 2013

It’s no secret that the Ryan-Murray budget deal (a.k.a., the Bipartisan Budget Act of 2013) is modest. Many think that was the only way such a deal could be struck, and I am sympathetic to that view. However, I have now had the time to look over the numbers – and more importantly, the assumptions behind them – and as a result, I consider it a bad deal.

The top-line numbers seem beneficial, however minimally: $31 billion in increased defense spending over two years, $22 billion in net deficit reduction, and no explicit tax increases.  However, the numbers simply don’t hold up to scrutiny. To understand why, one has to look at the particulars of the deficit reduction in the deal (CBO).

You’ll save how much? You sure about that?

We’ll start with the increase in the airline security fee. I am something of an agnostic on fee increases (if the government is providing services to individual customers, those customers should cover that cost; anything less subsidizes those customers and crowds out private sector competition where applicable). However, fee increase do have price effects: i.e., if you raise the price of air travel, you’ll have fewer air travelers. As this effect never seems to make it to Congressional score-keeping, the deficit reduction figure cited for this ($12.6 billion) is out of date and overestimated the moment it’s published.

A similar malady affects the $731 million estimated for the repeal of cost reimbursement for American-registered ships (if you know someone who makes Liberian flags, invest in the business) and the $2.1 billion for reduction in fees to lenders who “rehabilitate” (CBO’s word) student loans from default (fewer fees means fewer rehabs). All in all, over $15.4 billion in deficit reduction is ripe for economic erosion.

Hide the spending

Next up, we have cuts that aren’t really cuts, such as the $3.1 billion supposedly saved from ending mandatory payments to non-profit student loan servicers. There is only one problem (CBO):

Although this provision would reduce direct spending by an estimated $3.1 billion over the 2014-2023 period, those loans would still need to be serviced. As a result, CBO estimates that implementing this provision would require additional discretionary appropriations of roughly the same magnitude as the mandatory funding that would be eliminated.

In other words, that $3.1 billion still has to be spent, but since it’s being move to appropriations (which is still under the sequester), the deal’s supporters can pretend they made a cut, when all they really did was make  a dodge.

A plan to revamp health benefits for federal employees ($2.8 billion) has the same chicanery, because spending on retirees would fall, but spending for active employees would rise:

The provision would reduce direct spending because the government contribution for health benefits for federal retirees is classified as direct spending. On the other hand, implementing the provision would increase spending subject to appropriation, assuming appropriation of the necessary funds, because the government contribution for health benefits for active federal employees is classified as discretionary spending.

That’s roughly $5.9 billion in phantom “cuts.” Added to the $15.4 billion from problematic assumptions, and we have $21.3 billion in “deficit reduction” that doesn’t stand up to scrutiny.

Unfortunately, it’s even worse than that.

Don’t forget your discount!

One thing those of us in economics know is that a dollar today is more valuable than a dollar in, say, 2023. If you have to borrow that dollar today, you still have ten years of interest payments. In fact, the interest rate is a decent way to compare today’s dollar with 2023′s discounted version; hence the term discount rate.

I could go into a deep discussion about how even a spent dollar you don’t have to borrow is affected by the discount rate (since you can’t lend or invest it). However, since this is the federal government, we know every new dollar spent is borrowed. Even better, the discount rate standard is Treasury notes, which is exactly what the government would use to borrow the money. Thus the justification for discounting future savings makes perfect sense.

The effect of discounting is profound: the $22 billion in nominal deficit reduction plummets to $14 billion in present-value savings. Meanwhile, the questionable deficit reductions and dodges are barely discounted at all, to $19.7 billion. In other words, this deal is a bad one.

Now, you may wonder why the top-line deficit reduction fell so far when the discounting was applied, but the questionable figures didn’t. The reason is that the overall deficit reduction was mainly in the “out years,” where discounting (interest rate compounded) has the greatest effect. The dodges and question marks, by contrast, are mainly “front-loaded” in more immediate years. In other words, the riskiest and shadiest “deficit reduction” pieces are immediate, while the more certain savings are further off in the future, and thus less valuable. As a result, any real reduction in deficits is unlikely in this deal.

But there’s more defense spending! Yeah, about that

What is more likely to win conservatives and Republicans over on this deal is the increase in defense spending vis a vis the sequester. However, even that is far less than meets the eye. The $31 billion in higher defense spending over two years is less than 3% of the biennial overall defense budget. More importantly, the increase ends in 2016, meaning any new Pentagon projects funded by the $31 billion will have a sustainment tail with no money to back it up. If anything, this short-term blip could merely encourage people to make permanent obligations with temporary money.

So, in the end, I would opine that even the temporary increase in defense spending is less than advertised. It certainly isn’t worth a “deficit reduction” that is based on questionable assumptions, parlor games, and a hope that nobody notices interest payments and their effect on the value of money.

At the end of the day, the numbers in this budget deal just don’t hold up.

Cross-posted to Virginia Virtucon and Bearing Drift


Vermont’s Democrats take aim at ethanol

November 20, 2013

Giving credit where it’s due (Burlington Free Press, emphasis added):

U.S. Rep. Peter Welch, D-Vt., says it’s time to pull the plug on America’s commitment to manufacturing ethanol as a way to reduce the country’s dependence on foreign oil.

“It’s been a flop,” Welch said in an interview last week. “It was well intentioned, but it’s been a flop.”

Sens. Patrick Leahy, D-Vt., and Bernie Sanders, I-Vt., are on record as opposed to continuing ethanol subsidies, but Welch has been more outspoken on the subject, supporting a 2011 GOP amendment to ban funding for EPA regulations on the ethanol content of gasoline.

Welch said he began revising his views on ethanol following discussions with Franklin County farmers who told them that ethanol in gasoline was wrecking the engines of their farm machinery and driving up the cost of feed corn.

That last part is the most telling: our ethanol policies are driving up the price of food, thus making life more expensive. It’s Pitchfork Corporatism at its worst.

Kudos to Congressman Welch and to Vermont’s two Senators – and as an aside, it’s nice to know Bernie Sanders and I agree on two issues.


Ken Cuccinelli was a squish, which brought his ticket-mates down with him. Period. (UPDATED)

November 14, 2013

We are now over a week past Election Day 2013, and a dangerous revisionism is sweeping across the right in Virginia. I have watched in amazement as Ken Cuccinelli has practically escaped all blame for what is arguably the worst performance by a Republican nominee for Governor since 1985 (using percentage of the total vote as the standard). I’ve seen blame thrown at his ticket-mates (well, one of them anyway), the Republican National Committee, the “establishment”, “RINOs”, Bill Bolling, etc.

However, take a broader view of the election and it becomes clear that Cuccinelli did this to himself and his ticket-mates, with a horrific slew of mistakes on the tax issue. Ken Cuccinelli lost because he was a squish.

I know I am just about the only blogger in the Virginia rightosphere to say that, but let’s be honest. Would any other Republican who spoke with pride about his role in raising taxes – not once, mind you, but twice – get the accolades and pats on the back that Ken is receiving now? To ask the question is to answer it.

Outside of Virginia, most of the high- and medium-profile races were in the northeast. In New Jersey – a state that gave Obama 58% in 2012 – a pro-life, anti-same-sex-marriage Republican Governor ran for re-election, but with a record of lowering taxes. Chris Christie did two points better than Obama. Meanwhile, in Westchester County – a suburb so full of limousine liberals that Obama did better there than he did in Fairfax – Republican County Executive Rob Astorino faced a barrage of negative ads about his social conservative view. However, he also had a record of low taxes, and won re-election easily.

If that’s not enough, consider this. Ken Cuccinelli actually did come closer to victory (2.5%) than Mitt Romney did (3.9%), but in the areas most affected by the tax increases Cuccinelli defended and praised, he lost by a larger margin than Romney’s.

I have seen Republicans in Virginia fall for the same, failed model for a dozen years: social conservatives hoping to win over the center by supporting, defending, or refusing to oppose tax increases. It has been an unfettered disaster, and Ken Cuccinelli was just the latest to make that mistake…bringing down his fellow statewide candidates in the process.

The message from 2013 is crystal clear: Republicans who take pride in raising taxes will lose, period. Folks, Ken Cuccinelli did this to himself.

Cross-posted to Virginia Virtucon

UPDATE: I would also note that in Prince William County, long considered the swing county in the state, only one Republican Delegate voted for Plan ’13 From Outer Space; he went on to become the only incumbent GOP delegate in the county to be defeated at the polls.


Election Take-aways

November 6, 2013

Number of tax increases enacted by Governor Chris Christie during his term: zero

Number of tax increase endorsed by Ken Cuccinelli during his campaign: two

Advantage of Democrats over Republicans in Virginia yesterday: five

Advantage of Democrats over Republicans in New Jersey yesterday: twelve

Cuccinelli’s support for election: 45%

Christie’s support for re-election: 60%


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