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

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.

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%

Well, that was fast: Democrats willing to drop medical devices tax

October 1, 2013

So, less than 12 hours after the shutdown begins, and as the American people were supposedly preparing to set every Congressional Republican on fire until they all caved, the first movement comes from…Democrats (The Corner):

Senator Dick Durbin suggested that Democrats would be willing to negotiate on the medical-device tax as part of an effort to end the government shutdown.

“It’s conceivable some aspect of [the health-care law] would be” up for negotiation, the Illinois senator said on CNN’s New Day on Tuesday morning. “We can work out something, I believe, on the medical-device tax — that was one of the proposals of the Republicans.”

“That’s one thing Republicans want to talk about, let’s sit down and put that on the table,” he added.

Lest we forget, just before midnight, the Democrats were insisting on a “clean CR,” and were convinced that the American people were with them. In fact, they all voted against a CR that wiped out the very tax that Durbin (the Number Two Democrat in the Senate) is now willing to end.

Personally, I suspect a deal will be made within the next two or three days, but interestingly enough, the GOP – against all conventional wisdom – may have drawn first blood.

In defense (sort of) of Ted Cruz

September 27, 2013

The junior Senator from Texas has been taking it on the chin lately. A majority of his fellow Republicans in the Senate just refused to stand with him in blocking cloture on the bill to continue funding the government, and his determination to keep Robertscare (a.k.a. “Obamacare”) out of Fiscal Year 2014 – to the point of working with House Republicans upset at the Speaker’s attempt to kick the can down the road – has “startled” House GOP leaders, according to Robert Costa. Conventional wisdom is holding that Cruz – by doing everything within his power to make FY14 a non-Robertscare year, even risking a government shut-down – is marching himself and his party into political oblivion.

Truth be told, I’m not so sure about that.

This is not to say I’m completely sold on Cruz’s strategy. It is to say that the logic most of Cruz’s critics are using – the 1995-96 shutdown episode – is a very bad example of what’s happening today.

The ’95-’96 shutdown was a traumatic event for the Republican Party. It badly damaged the party brand, and weakened the conservative movement for years (one could argue that it still hasn’t recovered). However, the passage of time has clouded memories as to what the fight actually entailed, and why it can’t really be used as an example here and now.

For starters, the actual argument that shut the government down in 1995 wasn’t about whether or not to balance the budget: both Bill Clinton and the Republican Congress agreed on that. It wasn’t about whether or not to raise taxes either; neither side was willing to do so. Even the timing was, eventually, agreed: seven years.

The government shutdown of 1995-96 was due to an argument between Bill Clinton and Newt Gingrich over whose group of economists had a better prediction of revenues over the next seven years. That is not a joke. That was the argument that set the parties at each others’ throats and sent the federal employees home. It is a comic understatement to say that voters didn’t quite see the need for all the fuss.

This time, however, the argument is about Robertscare, whose popularity is, shall we say, lacking. The argument is as clear today to the American people as is was incomprehensible to them in 1995-96. There is no guarantee that voters will be upset at those who shut the government down to stop Robertscare as they were at those who shut the government down to stop Clinton’s economists from winning a statistical argument.

Moreover, as Costa himself noted in his piece (link above) Cruz is not above shifting tactics…

Later Thursday, Cruz met again with House conservatives at a venue near the Capitol. According to one House member, the bicameral bloc talked deep into the night about the CR and how to pressure Boehner. At the top of the agenda: making a one-year delay of Obamacare a requirement for government funding, and to accept nothing less, should the defunding effort continue to unravel. There is fear the Boehner is resistant to making that demand as part of a CR, and conservatives discussed ways to force his hand.

One could argue that a delay would be even more consequential than “defunding” (which wouldn’t hit mandated Robertscare spending and would only affect FY14 anyway). More to the point, Cruz et al are clearly not as rigid as some believe or claim.

Finally, there is the matter of what happens if Cruz’s effort fails, and Robertscare goes on regardless. Many Democrats are convinced that the plan will succeed, and thus end the argument. However, several Democrats have also discussed moving to a “single payer” system before Robertscare was even implemented…which can hardly be seen as an endorsement of what’s about to come. If Robertscare goes off the rails, Cruz’s credibility will rise, as he can claim he led the last effort to stop it.

Oddly enough, this is where I have the most concern with Cruz’s plan. Voters tend to respond to divisive battles – even those where they clearly stand with one side or the other – by supporting politicians who avoided the conflict rather than fought it – in other words, folks who were nowhere near Washington when it all went down. That bodes badly for Cruz.

At present, though, the battle is not really over. The American people have yet to decide if they are angry at the president for insisting on Robertscare or the Republicans for insisting it be defunded or delayed.

More to the point, those looking at the 1995-96 shutdown as an example could – stress, could – be in for a surprise.

Cross-posted to Virgina Virtucon


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