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Proposed: Shut Down USPS Altogether

March 3, 2010

Yesterday, US Postmaster General John Potter submitted recommendations to Congress regarding the insolvency of the USPS. He noted a need — which is nearly 20 years too late, in my opinion — to reinvent the USPS to suit modern needs.

Therein lies the entire issue that should be resolved: the USPS was mandated by the founders (and it’s authorized in Article I of the Constitution). They lived in a time before telegraphs, telephones, computers and the Internet, instant messaging, Federal Express and UPS, and junk mail. The USPS, like most other government agencies, has long outlived its usefulness to most people.

Also, despite its reorganization nearly 30 years ago, the USPS has been hemmarhoging money in recent years. Last year’s “stimulus” package included $4 billion to shore up the over-extended pension plan of USPS; somehow, the USPS is supposed to pay that money back to the Treasury despite its continued insolvency.

The solution isn’t to fight technology and efficient competition. As more and more people rely on real-time communication like telephone calls, video conferencing, and even e-mail and instant messaging, the less of a need there is for a massive infrastructure more suited to the Nineteenth Century than the Twenty-first.

That massive amount of infrastructure — in terms of buildings, vehicles, people, and pension obligations — is certainly not suited to delivery of the small amount of mail destined to rural areas that critics of privatization complain about. If there’s a legitimate concern about rural delivery, that’s something the government could subsidize to private companies and it would still cost the American taxpayers a lot less than maintaining the current system. Privatized rural mail delivery isn’t a novelty: the Pony Express was a privately run company. And the Pony Express’ demise came just days after the transcontinental telegraph made mail delivery less relevant.

Congress could pass a constitutional amendment, and pass it along to the states for ratification, to eliminate the postal service as we know it. Whatever legitimate government interests remain — delivery of official papers, rural delivery, etc. — could be farmed out to contractors.

The government is already eating a lot of the pension obligations of the USPS; the rate this fiscal year is 100%, per the aforementioned “stimulus” bill. A lot (if not all) of the future obligations could be met by selling the USPS’ land holdings. This would benefit the federal government and also local jurisdictions where that land, much of it in very lucrative areas, could again be taxed. That’s not a trivial point in all of this: USPS holds over 8000 actual post office buildings and maintains a real estate portfolio beyond its operational buildings. Not one of those properties pays taxes to school districts or other entities (consider that when you bring up “competition”: UPS, FedEx, and other overnight services usually have to pay taxes from which USPS is exempt).

I don’t think the founders ever intended for the postal service they saw as necessary one day being relegated to the duty of delivering bulk-rate junk mail. We’ve been wise enough to amend the Constitution when it’s been warranted, righting wrongs (in the case of slavery) and expanding freedoms (voting rights). It’s time to do it for all the right reasons to end the US Postal Service, an idea which is out of date for this and future eras and an institution which no longer serves the purpose for which it was created.


Obama Plan to Cap Health Insurance Premiums Is Foolish

February 22, 2010

President Obama is set to propose limits and rollbacks on health insurance premium increases this week. This is stupid policy for a lot of reasons. For starters, insurers have to pass along increases in what they pay in claims. The way to reduce those claims isn’t to cap premiums but to encourage more efficiencies in the healthcare system.

I get it that people are pissed off about paying more in premiums. But insurance companies are in business and have to make a profit. Their profits aren’t obscene — they operate on slim margins as it is. They are not fleecing consumers.

Capping the limits will lead to consequences that Obama and his economically-retarded advisors won’t want. Insurers will have to use even more scrutiny in paying (make that denying) claims. They’ll also have to be more cautious about risks they assume, meaning they’ll tighten underwriting so that it’s more difficult to get coverage unless you’re in perfect health. Or even, where states allow them, adjust benefits accordingly — which means decreases in the amount of coverage and increased liabilities to the insured.

Judge these things by the results, not the intentions. Just as when state officials try to cap the price of any good or service, the result isn’t good for consumers — it invariably leads to a shortage. In this case, it will be a shortage of claims payments, benefits, or even available coverage for people with “routine” maladies for which underwriting otherwise wouldn’t be problematic. That’s no way to get more people covered in this country.

It’s time for the Democrats to get over their bizarre obsession with trying to micromanage our healthcare system and our health insurance sector. When are they going to do something meaningful to create an environment in which people actually want to grow their businesses and expand our economy? And when the fuck are they going to take a serious look at their own handiwork in growing and expanding government — which is much more egregious than the 3.4% margins health insurance companies are “guilty”? How about a goddamn cap on the growth rate of your government flunkies and their inflated pensions at all levels, Democrats?

Debra Medina Gives Conspiracy Theory Answer to Government Role in 9/11

February 11, 2010

I haven’t addressed the Texas GOP gubernatorial primary here yet, but I posted the other day about Farouk Shami’s claim about “a lot of innocent people” being executed. I’ve had plenty of questions about Tea Party darling Debra Medina and her wacky ideas about changing the tax structure in our state or proclaiming states rights over myriad issues (note: add Lincoln to the list of alleged RINOs since he, the nation’s first Republican president, gave a resounding response to the states rights issue at Fort Sumter, SC) or her positions on science (“intelligent design” isn’t science, etc.). Now we can add another wacky idea that pretty much disqualifies her candidacy: she isn’t sure if the US government was culpable for the terrorist attacks on 9/11.

She quickly backtracked in a statement. Unfortunately, she said, “The real underlying question here, though, is whether or not people have the right to question our government.”

Huh?That wasn’t the goddamn question. The question was about whether you — Debra Medina, candidate for the governorship of the state with the second highest population — or the people around you in your campaign believe the US government was responsible for or otherwise played a role in the 9/11 attacks that killed nearly 3000 people. Either you’re a truther or you aren’t.

It’s stupid that this is even an issue in a governor’s race, but that’s what you get when you have a substantial part of the electorate who are irrational and pissed off. An emotive electorate isn’t a good thing. Some think that’s how we got Obama. I hope it doesn’t give us something like Medina. At least she showed her true colors today.

Texans can do a lot better than this, whether Medina actually sympathizes with some of her nuttier supporters or even if she’s just trying to find some middle ground that won’t alienate them while still trying to disavow conspiracy theories — frankly, I’d find that kind of middle ground even more disconcerting. The GOP has two credible candidates in Rick Perry and Kay Bailey Hutchison; the Democrats have one credible candidate in former Houston mayor Bill White. If there are any more debates, let’s limit it to serious adults and not conspiracy theorists and cranks.

Two Questions for Farouk Shami

February 9, 2010

During last night’s debate, you answered that you’d support a death penalty moratorium if you were elected governor of the state of Texas even though our state constitution doesn’t give the governor that much authority (many people continue to belabor under the false assumption that a Texas governor has broad powers to commute or pardon sentences when, in fact, the state constitution only allows such authority if the Board of Pardons and Parole recommends such to the governor). You elaborated by saying that “a lot of innocent people have been killed.”

I have two questions:

  1. How many “innocent people have been killed” via the death penalty in Texas?
  2. What are their names?

I’m not going to hold my breath awaiting an answer to either question but I’d really like to see the media follow up this claim, particularly with stronger “evidence” than has been cited in possibly exonerating Cameron Todd Willingham. Shami’s claim is plural; I want a list of “a lot of” names, otherwise I think Mr Shami owes the state — and its juries, judges, and appellate system — an apology for maligning the state in a most despicable fashion. It’s one thing to support a moratorium, but it’s something else to exaggerate and engage in hyperbole and outright lies. The former isn’t incompatible with serving in public office, but the latter should be grounds for anyone to dismiss such a candidate as a thoughtless crank.

Watchdog Reports TARP Fail

January 31, 2010

Neil Barofsky, Special Inspector General for TARP, has reported to Congress that despite the softened blow to the financial sector there remain many problems that could expose US taxpayers to even bigger problems. His report specifies trouble in several areas, including mortgage lending (and security of mortgage debt backed by taxpayers) and exacerbation of problems he sees with respect to the fundamentals of the system such as “too big to fail” and executive compensation.

The report points out that companies “too big to fail” have actually enlarged due to TARP. This is one of the ironies of the post-Massachusetts senate race as Obama has shifted focus from health care reform to a populist bashing of the banking industry. What the fuck is he thinking if in 2008 and 2009 an appropriate “solution” is to force one company to take over another as a matter of national interest (e. g., Bank of America’s take over of Merrill Lynch at the “suggestion” of Hank Paulson) and in 2010 the remedy is to break it back up? I know this clown lacks any real world work experience (and has assembled a team around him with little more than he has outside of community organizing or teaching), but doesn’t he at least pay attention to his own level of intellectual consistency about such things?

Barofsky also warns that government may have actually exacerbated the housing market bubble:

The government has done more than simply support the mortgage market; in many ways it has become the mortgage market, with the taxpayer shouldering the risk that had once been borne by the private investor.

The fact that government wanted to intervene in the markets was alarming enough to me, but I knew the only reforms that would be attempted would be window-dressing at best and re-regulation of private industry at worst. We’re getting both of those. Government has done nothing to change its policies — such as Community Re-Investment — which encouraged risky lending practices banks and other institutions never would’ve gotten into if not for laws and regulations requiring such. Government also hasn’t shown a willingness to stop underwriting losses of bad businesses at the expense of the good ones. Not every bank and mortgage company had to be bailed out because some were principled enough to know that it’s folly to make a business out of loaning sizable amounts of money to people who have no ability to pay; accordingly, they passed up on Fannie/Freddie and had smaller exposures to sub-prime portfolios. It’s possible to make money loaning to people who can afford to pay you back, but it’s hard to make money off those who shouldn’t be buying houses, cars, and other large items without first establishing the ability and creditworthiness to pay off loans.

The most fundamental reforms the government needs to take remains getting out of two things:

  1. Insuring banking and financial industry losses, and
  2. Creating incentives or requirements for lenders to take greater risks than they can stomach.

Instead, the government continues to look at ways to regulate banks into doing things elected officials think they should or shouldn’t do. The administration isn’t offering new solutions, it’s still disallowing banks to make valid risk analysis of every borrower (and encouraging lending to those who are too risky), strong-arming lenders into lending when there’s little or no demand for loans (hint: right now there’s an abundance of cash on the sidelines and not enough borrowers — it’s not exactly an environment conducive to writing lots of loans because of the uncertainty peddled by and resulting from this administration), and determining how much executives should be paid rather than letting boards and shareholders decide.

The government — speaking here of federal, state, and local — has a very serious issue about its own creditworthiness right now. It has made promises it simply cannot back up. That includes all these programs and attempts to “save” the very industries its policies and laws encourage lenders to make “risky” (or at least “riskier”) loans as well as entitlement programs which are becoming increasingly top-heavy (with more “takers” than “payers”) and public sector pension programs. Never mind a massive spike in the budget deficit thanks to the reckless spending habits the Democrats running Congress said they’d stop in 2006 and haven’t yet; now with a president from their party, they’re out of control and raising debt limits on a frequent basis.

How bad would things have gotten if institutions hadn’t been deemed “too big to fail”? Lehman was allowed to fail. Yes, it made things rather unpleasant. Surely things could’ve been more unpleasant had others faced bankruptcy (which didn’t kill Citi) or sale of assets — toxic or otherwise. But at least those in the strongest position would’ve been able to consume any of the weaker companies, or at least the parts of their businesses with actual worth, and the weak would’ve been displaced. Instead, the government has shored up the weak at the expense of the strong and thereby made the whole economy as fragile as its shored-up weak links. Shouldn’t be a surprise considering government is filled with too many lawyers bent on various forms of “justice” that have nothing to do with justice and idealists who lack actual business experience; in their collective milieu, it’s noble to take from the successful and give it to the unsuccessful and consider it public service — they don’t care about the results of their programs.

And that’s a systemic problem: government policy isn’t about actual results, it’s only about placating interest groups whether policies ever actually live up to their promises. Our binary party system only results in a pissing match between which one will live up to its promises before corrupting itself and bankrupting the nation in catering to its ever-increasingly polarizing partisan interests. What it’s shown is that neither party can be trusted with power over any branch of government, and the American people should dread when the Congress and White House are run by one party. Too often, the parties prove themselves to be two sides of the same coin.

Barofksy’s report lauds government’s actions to some degree but at least is honest enough to admit that the bailouts created more risk in the system. When will those in government look at their own handiwork and see that it’s more often than not made things steadily worse instead of better?

GDP Up. Call Me Cynical.

January 29, 2010

The phrase that comes to mind is “irrational exhuberence.” I’m talking about the glee following the initial look at last quarter’s GDP, which the government pegs at a whopping 5.7%.

Why am I not impressed? Many reasons.

  1. This is quarter-to-quarter. Meaning, it’s comparing 2009Q4 to 2008Q4. If you don’t remember the last quarter of 2008, let me remind you that the economy had become paralyzed on the news of pending collapse of the financial sector and our entire economy. This resulted in subsequent massive government spending and interference in the markets to prop up the financial sector, flailing automobile sector (including the government take over of GM and taking it upon itself to sell Chrysler to Fiat) and “cash for clunkers,” stimulus plans which seem only to reward political cronies and punish political enemies, and a failed (thankfully) attempt to take over a sixth of the US economy via health care.
  2. Also related to 2008Q4, business spending ground to a halt due to uncertainty. Even with some certainty, it wouldn’t take much spending to create an inflated “improvement” in growth. How much certainty is there now? Confidence remains low. Companies aren’t hiring. The administration has tried repeatedly to strong-arm banks into lending again; the State of the Union speech included a platitude about the government lending directly to small businesses. This isn’t recovery — this is a half-assed attempt to continue reckless centrally-planned economic policies.
  3. Real final sales (GDP minus changes in domestic inventories) rose only 2.2% annualized. Consider that in relation to the next point because I believe it demonstrates that businesses aren’t expanding inventories at a sizable enough clip to begin hiring new workers any time soon.
  4. Consumer spending increased 1.44% quarter-to-quarter. Remember again where things were in the last quarter of 2008 with many people cutting back on expenses due to Paulson’s and Bernenke’s scare-mongering that led to the bailout of the financial sector.
  5. Housing grew by 5.7%, but this has been spurred on — like so many other things (e. g., car sales) — by government subsidy. Yes, growth via spending thanks to tax and other incentives always count in GDP but we’ve never had so much in the form of government subsidies and breaks accounting for GDP growth (remember this when you read the reports about the growing deficit: private sector economic growth is required to increase revenue to the federal government).
  6. Government has expanded. The private sector hasn’t yet.

I’m not saying the sky is falling. I didn’t believe it was in 2008 — and I don’t think we’d be in such bad shape now if the economy hadn’t been psychologically crippled by however many billions of dollars those overseeing our financial sector insisted we pay to prevent said sky from falling. We’ll never know for sure, but we can be sure that spending all this money has so far proven to keep the economy weak enough that we have over 10% unemployment, shrinking revenues (and the pledged folly of higher taxes) to all levels of government, and a federal government floating an unprecedented amount of debt in an environment in which debt obligations are hard to sell. Recessions and slow downs aren’t always tied to rational, fundamental issues; it’s easier to get out of recessions where fundamentals are allowed to sort themselves out. Psychologically-driven recessions — in which irrationality is the order of the day despite the fundamentals — are harder to get out of because nobody wants to take that first step in hiring new people, adding inventory, or doing other things which reflect faith that the economy either has or will soon improve.

So what I am saying, however, is that we shouldn’t delude ourselves that we’re recovering well or even that we’re out of recession. Technically, we weren’t in one when our “experts” scared us into believing the sky was falling. We took their bait and sure as shit ended up in a recession. Technically, if these numbers on top of last quarter’s are true, we’re no longer in a recession.

If so, will government begin to contract and pull its hand back from meddling so the private sector can expand? Or, as I now fear, are we stuck with power-hungry central planners who think we need even more meddling? All indications are that this administration remains hostile to the private sector and their actions and plans for spending even more money (like building high-speed train lines — how’s Amtrak doing, btw? — while floating balloons about meager spending freezes) tell a different story.

Just like I think the new GDP figures do.

Cayman Islands Also Had Pact With Devil?

January 19, 2010

A 5.8 magnitude earthquake struck off the coast of the Cayman Islands at 9:23am US/Eastern (which is also local time in the Caymans). Updates and weird explanations for this earthquake to follow on tomorrow’s 700 Club with Pat Robertson.