VA – 7: No endorsement

April 15, 2014

I have previously posted my views on the political bloodletting within the Republican Party of Virginia. For those who chose not to click on the link, I lamented the vitriol, lack of strategic thinking, and personalizations that I have seen from both “sides” of this battle. It’s as if issues don’t matter anymore.

There is no better example of this debacle than the fracas over the Republican nomination for the 7th Congressional District – which is why I refuse to endorse either candidate who remains.

The incumbent – Eric Cantor – has been accused of much by the “insurgents” within the GOP. I have no idea if any of them are true. I do know that he was a leading supporter of TARP (a.k.a., the bank bailout), an economic and political mistake for which Americans are still paying (especially Republicans, from the political angle). I already slipped on this banana peel once in 2012, and I will not do so again – ever. Eric Cantor will never win my endorsement for a Republican nomination (supporting the Ryan-Murray budget didn’t help either, but that’s a minor matter, compared to TARP).

This does not mean, however, that I can support his opponent, Dave Brat. Brat, for all his strong rhetoric on spending today, spent years as an aide to State Senator Walter Stosch, one of the most prolific tax-hikers in the RPV (the Warner tax hike of 2004, HB3202 in 2007, and Plan ’13 From Outer Space). Brat even donated to Stosch as he faced the fight of his political life in 2007 – his nomination fight against Joe Blackburn.

That in itself would be troubling enough. When one adds Brat’s own statements on foreign affairs – such as his insistence (Breitbart) that Communist China “is feeding 1.2 billion people for the first time in human history” through “free market capitalism” (there are over half a billion desperately poor Chinese in the rural hinterland who would greatly dispute both points if they were free to speak) and his own campaign website where he rails against “two unfunded wars” – it becomes clear that he is not ready for Washington anymore than Cantor is deserving to stay there.

I am grateful that my home is in the 4th District, as thus I need not cast a vote in the 7th. To be fair, either man is sure to be superior to whomever the Democrats nominate.

That said, I do not know who would receive my vote if I were in the 7th. I do know that neither of them have deserved it. Therefore, I endorse neither. 

IMF Introduces Ukraine to Faux-sterity

March 28, 2014

No matter what the situation, no matter how bad the problem, no matter how catastrophic the state of affairs, a nation can always count on the International Monetary Fund to make things worse.

This week, Ukraine is about to learn that painful lesson.

The IMF is sending $18 billion to the new Ukraine government, but like everything else the IMF does, it’s merely a loan, and it comes with crushing conditions that will damage the already-flattened economy there even more.

Among the faux-sterity demands on the IMF….

An income tax hike from 17% to 25%: yet another reminder that “supply-side” is still foreign to the IMF (The Hindu)…

An increase in consumption taxes: showing that at least the IMF is consistent – they don’t understand Keynesian economics either (Wall Street Journal).

A reduction in gas subsidies (which is good), but not a privatization of the Naftogaz gas firm (which is bad): When you manage to make the governor of Yanukovic’s home province (Donetsk) sound like Mr. Clean, you’re doing it wrong (WSJ again).

Some (perhaps) reduction in the government bureaucracy: although it’s hard to tell just how many. CNN says 24,000. Russia Today says 80,000, but limited to the “law enforcement” sector only – leaving aside than anything out of RT should be taken with a lotswife of salt. Either way, at least the IMF learned not to try the government-pay-cuts that kept Greece’s government just as large in size and scope while pretending to cut its cost.

Still, overall, this is a painfully unnecessary set of “reforms,” which will badly miss revenue targets and likely put Ukraine in a far deeper economic contraction than the current projection of 3%.

Meanwhile, the Russian creditors get full return, despite propping up the Yanukovic regime that put Ukraine on its back in the first place (Telegraph).

So Ukraine will follow Greece and Spain over the economic cliff…

…while Putin and his cronies laugh all the way to the bank.

Cross-posted to Virginia Virtucon

Bob Marshall is now running in the 10th, but I still prefer Barbara Comstock

February 10, 2014

One week ago today, I endorsed Barbara Comstock for the Republican nomination for the 10th Congressional District. Since then, a new entrant, Bob Marshall, has caused me to rethink my decision – but not to change it. Barring the discovery of documentation showing that Delegate Comstock supported the bank bailout, she is still my preferred choice for the seat.

Don’t get me wrong, Bob Marshall has done yeoman’s work for all Virginia taxpayers in his 20-plus years as a Delegate. In fact, that’s half the problem: the House of Representatives is a far different body, one in which individual members have far less power than legislators do in Richmond. If Bob were running for the Senate, I would be thrilled; he’s not.

Moreover, Barbara Comstock is not your typical “Establishment” Republican in Virginia. Last year – as a Fairfax County Delegate with nearly every interest group screaming, begging, and cajoling her to support Plan ’13 From Outer Space – she said No.

In other words, assuming this comes down to Comstock and Marshall (and given the rest of the field, it almost certainly will), it is in fact a battle between two genuine supporters of limited government. The question is this: would Virginia be better served by Comstock in Washington and Marshall in Richmond? Or the other way around?

I think the answer is obvious. Virginia would lose far more than it could possibly gain if Marshall is sent to Congress. Better for him to stay where he is most valuable (Richmond), while Comstock can continue standing up for taxpayers in her own, quiet way in Washington.

The true cost of the Patently Deficient and Unaffordably Careless Act : $2 trillion in cost and 2 million in jobs lost over ten years

February 5, 2014

The Congressional Budget Office has released its analysis of what the Patently Deficient and Unaffordably Careless Act (PDUCA, a.k.a. “Obamacare” or Robertscare), and it is brutal.

For starters the actual cost of the PDUCA (now that a full 10 years of implementation is considered) is over $2 trillion. It will cause the deficit to increase - not decrease - every single year between now and 2024 (CBO). The total increase in debt is over $1.5 trillion.

Moreover, over 2 million jobs will be casualties – because workers would rather take health insurance subsidies than jobs. Frighteningly enough, the Administration actually thinks this is a good thing (John Podhoretz, New York Post).

If nothing else, this reveals just how damaging the PDUCA is, and why Republicans need to repeal it, then reform the health insurance market in a way that helps more people without greater government intervention (a focus on the shortage in providers and a breakup of the AMA-CMS collusion would be an excellent start).

Cross-posted to Bearing Drift

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.

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

Bill Bolling has advice…which he didn’t follow

December 5, 2013

It should surprise no one that Bill Bolling took the opportunity to offer advice to the Republican Party of Virginia in the aftermath of Election 2013. I would even disagree (slightly) with my fellow BD contributor (D.J. Spiker) who insisted that “no one asked.” I’m sure plenty of Democrats and media folks were begging for a missive just like this from the outgoing Lieutenant Governor. What I found interesting, however, was that Bolling offered advice that he, himself, refused to follow – and I don’t mean during his pre-2012 record (with Spiker dissects quite well).

In fact, Bolling doesn’t offer “advice” as much as complaints. He sees voters in Virginia being turned off by the GOP, and is very specific on the reasons why. When it comes to how to address the problem, however, he becomes much more vague, and for good reason – when Bolling himself decided to recast himself as a “moderate,” he completely ignored the very problems he now raises.

For example, in the Times-Dispatch column, Bolling specifically talks about winning over “more moderate and independent voters in Northern Virginia and rapidly changing suburbs in Richmond and Hampton Roads.” Here’s the problem: his version of “moderation’ included backing a $1.3-billion-a-year tax increase that was specifically aimed at the wallets of these very voters. Republican after Republican in the General Assembly from “the rural parts of our state” defended the tax-hike as something from which their voters were largely spared. If there was a worse way to upset “Northern Virginia and (the) rapidly changing suburbs in Richmond and Hampton Roads,” I have trouble thinking of one.

Bolling then stumbles with basic math: “An objective analysis of exit polls from recent elections shows that we are losing favor with three key demographic groups: women, young people and rapidly growing populations of Hispanic, Asian and Indian voters” – but lumping in Hispanic, (I presume East) Asians, and Indians (South Asians, again I presume) into one supergroup is only part of the problem. Again, these “key demographic groups” all share one thing in common – they are poorer than Virginia on average. Not to beat a dead horse, but the aforementioned tax increase was almost malevolently designed to whack the poorest voters the hardest in the affected regions of the state – regions where a dollar doesn’t go as far as rural Virginia in the first place. Again, if Bolling is concerned about driving these voters away, his first concern should be the fellow in the mirror.

Things get worse in the next paragraph:

With women and young people we have to more effectively communicate our views on important issues like abortion and gay rights, and with growing immigrant populations we must be open to responsible immigration reforms that show these new Virginians that we value the enormous contributions they make to our state.

Hmmm, that sounds like getting the party to change its message, its policies, or both on divisive social issues, issues on which Bolling moved not at all towards the “center” over the last year and a half.

Instead, Bolling played the game we usually get from Republicans looking to win over voters concerned about social issues, but who would consider voting GOP anyway: do nothing on the social issues themselves but abandon the very limited-government and low tax policies that would win them over in the first place. Instead of using 2013 to openly discuss how to best protect unborn children without alienating their would-be mothers, or having a frank discussion about how the same-sex marriage debate is light-years away from 2004 (or 2006, for that matter), Bill Bolling spent the year defending a tax increase that whacked the very voters he now says the party must court, with the added indignity of supporting a plan to lump them into Medicaid – a system that is so flawed that numerous studies are showing patients without any insurance might actually be healthier than Medicaid clients.

Here’s what Bolling, McDonnell, and even Cuccinelli seem to have missed: in the 21st century, three Republicans went wobbly on taxes (Earley in 2001 by refusing to comment on a proposed tax hike for months, Kilgore in 2005 for being all over the map on the issue, and, yes, Cuccinelli in 2013 for backing a smaller version of the tax-hike, then taking credit for making the big one constitutional).


In 2009, by contrast, Bob McDonnell (as much as it pains all of us to remember) specifically ran an anti-tax-hike platform – and led the GOP to its best election result in the history of Virginia Gubernatorial elections (a clean statewide sweep and a two-thirds-plus majority in the House of Delegates).

The Republican Party does have problems in Virginia, but fixing them will require more than the standard nonsense that we have seen going back a dozen years. When Republicans run as the party of smaller government and lighter taxes, they win. When they don’t, they lose.

Cross-posted to Bearing Drift

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.


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