Category Archives: Government Transparency

Babs Boxer Will Do Anything For Re-Election: Even Cosponsor S.604!

Back in July, I sent letters to Barbara Boxer and Dianne Feinstein urging them to support or even cosponsor S.604, the Audit-The-Fed bill. I received the typical mealy-mouthed responses (posted below after the fold), and like a bad blogger I never actually mentioned the responses here. How mealy-mouthed was Boxer’s response? Well, THIS was the most substantive thing she said:

I believe that all citizens should become involved in the legislative process by letting their voices be heard, and I appreciate the time and effort that you took to share your thoughts with me. One of the most important aspects of my job is keeping informed about the views of my constituents, and I welcome your comments so that I may continue to represent California to the best of my ability. Should I have the opportunity to consider legislation on this or similar issues, I will keep your views in mind.

Great… You thank me for sharing my thoughts. I feel empowered!

What you don’t say is anything whatsoever regarding your opinion on the legislation (at least Feinstein gave me *something*). So how do I interpret your letter?

‘I’m gonna put my finger up in the air and see which way the wind blows, because I have a vulnerable seat in 2010 and I don’t want to piss anyone off. If I see any benefit to myself, I might at some point take a position on this legislation.’

So, today, when I was reading United Liberty, I was reminded of S.604, and decided to check to see if there were any surprises. And to my astonishment, there was! Barbara Boxer actually co-sponsored S.604!!

Do I think she’s really all that interested in an audit of the Federal Reserve? Not from the email response I received. But hey, she knows a populist wave when she sees one, and she’s gonna ride this one to Nov 2010.

There are a lot of forces assembling behind the Audit the Fed movement. Those forces are having traction. Enough traction, in fact, to get a California Democratic Senator to fall into line. It may be a political calculation, but if someone like Boxer has to make that calculation, it proves that there’s actually some real mojo here. Congratulations are due to Ron Paul, because without his tireless work in the House, we wouldn’t be this close to a serious review of what goes on at the Fed.
» Read more

FacebookGoogle+RedditStumbleUponEmailWordPressShare

Transparency No Longer* In Vogue in Democrat Controlled Congress

Gosh, it doesn’t seem like all that long ago the American public was promised hope, change, and a more open, transparent, ethical federal government if we only elected Obama the next President of the United States. Before that, in 2006 Pelosi and Co. made many of the same promises. Now the Democrats have the House, the Senate, and the White House. The “dark days” of the “most secretive administration in American history” (i.e. the Bush Administration) and the “culture of corruption” of the G.O.P. controlled congress are over…right?

As Congress lurches closer to a decision on an enormous overhaul of the American health care system, pressure is mounting on legislative leaders to make the final bill available online for citizens to read before a vote. […]

[…]

At town hall meetings across the country this past summer, the main topic was health care, but there was a strong undercurrent of anger over the way Congress rushed through passage of the stimulus, global warming and bank bailout bills without seeming to understand the consequences. The stimulus bill, for example, was 1,100 pages long and made available to Congress and the public just 13 hours before lawmakers voted on it. The bill has failed to provide the promised help to the job market, and there was outrage when it was discovered that the legislation included an amendment allowing American International Group, a bailout recipient, to give out millions in employee bonuses. […]

[…]

The [Sunlight Foundation] has begun an effort to get Congress to post bills online, for all to see, 72 hours before lawmakers vote on them.

“It would give the public a chance to really digest and understand what is in the bill,” Rosenberg said, “and communicate whether that is a good or a bad thing while there is still time to fix it.”

A similar effort is under way in Congress. Reps. Brian Baird, D-Wash., and Greg Walden, R-Ore., are circulating a petition among House lawmakers that would force a vote on the 72-hour rule.

Nearly every Republican has signed on, but the Democratic leadership is unwilling to cede control over when bills are brought to the floor for votes and are discouraging their rank and file from signing the petition. Senate Democrats voted down a similar measure last week for the health care bill.

Hope.

Change.

Transparency.

Damn…just…damn.

» Read more

Results Not Typical

The Federal Trade Commission has taken a solid step towards regulation of bloggers, first by declaring that any “in-kind” contribution for a product review must be considered an official endorsement and requires disclosure. Despite the fact that I — of my own volition — did so on the one occasion I was actually given something free to review, I think that’s a process I’m going to have to discontinue. So from this point forward, if I review something, you won’t know whether I’ve received any compensation for it. So take it for what its worth. (As a side note, if anyone wants to send me something free to review, I’ll gladly accept it!)

But their regulations changed in another way… It used to be that if you were advertising a product with customer testimonials that highlighted non-typical results — i.e. “I lost 243 lbs on BulimiaRX dietary supplement!” or “Cheatypants McSweatervest’s revolutionary system has me making $25K a month from home with only 10 minutes a day of work!” — would need to not only provide their current small-font “Results not typical” disclaimer, but would now have to clearly document typical results:

Under the revised Guides, advertisements that feature a consumer and convey his or her experience with a product or service as typical when that is not the case will be required to clearly disclose the results that consumers can generally expect. In contrast to the 1980 version of the Guides – which allowed advertisers to describe unusual results in a testimonial as long as they included a disclaimer such as “results not typical” – the revised Guides no longer contain this safe harbor.

So I think I’ve got the solution:

Barack Obama, Sept 12, 2008
And I can make a firm pledge: under my plan, no family making less than $250,000 will see their taxes increase* – not your income taxes, not your payroll taxes, not your capital gains taxes, not any of your taxes.

* Results not typical. Families making less than $250,000 can expect to see rises in cigarette taxes, increased energy costs through cap and trade and/or gasoline taxes, soda taxes, and mandates to buy costly insurance plans they can’t afford. They can expect to pay all the taxes levied on “corporations”, as well as the cost of new regulations, who will pass those on in the cost of goods. Families can expect taxation through the form of inflation, eating away at the buying power of their paychecks. Firm pledges have not taken Viagra and should not be expected to last more than 4 hours.

There. Thanks, FTC. You’ve cleared up a lot with these new regulations.

PATRIOT Act – Much Ado About Drugs, Not About Terrorism

The PATRIOT Act was sold to the country as the line in the sand protecting us from the murderous hordes of Islamist terrorists. Passed in a hurry following 9/11, they told us that these powers were needed for terrorism only, and not for general law-enforcement. Civil libertarians didn’t believe this assertion, of course, and as usual when it comes to government power, we were right (link to PDF report).

In a traditional search warrant, the person/people/place being search are notified when the search is conducted. One aspect of the PATRIOT Act is the delayed notification warrant, aka the “Sneak and Peek”. For this, the search is conducted but the person being investigated is not told that the search was executed for some delayed time afterwards. For a terrorism surveillance case, this allows investigators to attempt to detect plots in the planning stage.

In the government’s FY2008 (Oct’07 to Sep’08), 763 new warrants were obtained. Of these new warrants, a mere 3 were for terrorism. What were the rest?

Table 2 presents the types of offenses specified in delayed-notice search warrant and extension requests reported in 2008. Drug offenses were specified in 65 percent of applications reported, followed by fraud (5 percent), weapons, and tax offenses (4 percent each).

Someday, the warnings issued by libertarians — rather than being ignored — will actually be heeded. On that day I will die of shock.

Hat Tip: David Rittgers, Cato@Liberty

Why You Should Support Auditing The Fed

The Fed is tasked with the dual goals of price stability and restraining inflation. Folks like myself would suggest it hasn’t done a very good job of either, but that’s not crucial to the question of whether we should be able to determine how they’re attempting to fulfill their mission.

Particularly irksome when we’re talking about an audit is the fact that they’ve just admitted to engaging in gold swaps, influencing the gold price, in opposition to past denials and with the assertion that they should be able to continue hiding the specifics:

The Federal Reserve System has disclosed to the Gold Anti-Trust Action Committee Inc. that it has gold swap arrangements with foreign banks that it does not want the public to know about.

The disclosure, GATA says, contradicts denials provided by the Fed to GATA in 2001 and suggests that the Fed is indeed very much involved in the surreptitious international central bank manipulation of the gold price particularly and the currency markets generally.

The Fed’s disclosure came this week in a letter to GATA’s Washington-area lawyer, William J. Olson of Vienna, Virginia (http://www.lawandfreedom.com/), denying GATA’s administrative appeal of a freedom-of-information request to the Fed for information about gold swaps, transactions in which monetary gold is temporarily exchanged between central banks or between central banks and bullion banks. (See the International Monetary Fund’s treatise on gold swaps here: http://www.imf.org/external/bopage/pdf/99-10.pdf.)

Gold has been flirting with the $1000/oz level for several weeks (topping it a few times). Those in the gold market have long believed that central banks are suppressing the price to keep fears of inflation from hitting the roof.

How much longer do we have to allow the fed to lie to us, and then when we catch them red-handed, assert that they know well enough that we have to let them hide details on top of their lies?

I say we audit the fed. Then End The Fed.

HHS Blocks Misleading Insurance Company Propoganda! [It Just Happens To Be True]

The Department of Health and Human Services isn’t pleased. You see, Humana has sent out a mailer (PDF) claiming that under the proposed health care legislation, Medicare Advantage benefits might be cut. HHS thinks this might be misleading, partly because Max Baucus (D-MT) says it won’t cut benefits and because they suggest it can be confused with an official Medicare communication (from the AP, via EconLog):

“The health care reform bill we released … strengthens Medicare and does not cut benefits,” said Baucus. “From lower prescription drug costs, to free preventive care, to better treatment for chronic conditions, seniors have so much to gain from health reform — and I’m not going to let insurance company profits stand in the way of improving Medicare for seniors.”

Humana has about 1.4 million Medicare Advantage enrollees, and the program accounts for about half the company’s revenue, Noland said.

The Humana mailer focused squarely on the Medicare Advantage program.

“While these programs need to be made more efficient, if the proposed funding cut levels become law, millions of seniors and disabled individuals could lose many of the important benefits and services that make Medicare Advantage health plans so valuable,” it said.

In a warning letter to Humana, HHS said the government is concerned that the mailer “is misleading and confusing” partly because the company’s lobbying campaign could be mistaken for an official communication about Medicare benefits.

HHS ordered the company to immediately halt any such mailings, and remove any related materials from its Web site. In the letter, the government also said it may take other action against Humana.

A PDF of the mailer is linked above. It certainly seems to me to be a “call your congressman” message, not an official Medicare communication.

So that leaves point #2. It could be misleading, false advertising. After all, Max Baucus says that Medicare Advantage won’t be cut, and he’s one of the main guys writing the bill. And he’s a Congressman, surely he can be trusted!

Or… Maybe not. At least, the Congressional Budget Office doesn’t think so (via QandO):

The head of the nonpartisan Congressional Budget Office, Douglas Elmendorf, told senators Tuesday that seniors in Medicare’s managed care plans would see reduced benefits under a bill in the Finance Committee.

The bill would cut payments to the Medicare Advantage plans by more than $100 billion over 10 years.

Elmendorf said the changes would reduce the extra benefits that would be made available to beneficiaries.

Hmm. So Humana is under the gun for “misleading and confusing” communications.

But they’re just reporting the facts of what is going on in Congress! Oh, wait, I guess that’s pretty much misleading and confusing by definition…

The NEA Con-Call; There’s Not Much “There” There

On August 10th, a conference call occurred, including folks from the White House, the National Endowment for the Arts, and the arts community. The purpose of the call was to “rally the troops” of artists who had spent time working for the Obama campaign, enlisting their help to push national service initiatives. The revelation of this call was the follow-up by Andrew Breitbart to the ACORN scandal, and as a fellow contributor to his “Big Hollywood” site put it, was pretty damning.

Monday, we have the NEA under the microscope. The Obama Administration was caught red-handed (is that “racist”?) funneling tax payer dollars into an official propaganda department. I can’t wait to see what the excuse will be this time.

Yeah, that’s pretty damning — if true. If there are taxpayer dollars being funneled into the arts community as a walking campaign for Barack Obama, there’s definitely something to be concerned about.

Thankfully, though, this is the internet age. Some anti-government crank in California like me can look at the transcript of the call (available here, courtesy of the very same Andrew Breitbart site), and piece together exactly what happened and what this means.

Because this is going to be a long post, let me set my thesis up front. I don’t like this call. I don’t like what it means. I view what occurred on this call as more properly being the domain of the DNC than the NEA or White House. But I don’t think any laws were broken, I don’t think this is really a walking Barack Obama campaign ad, and what was discussed on the call is not outside the mandate of the NEA.

So let’s look at the call:

Main Participants:
Mike Skolnic: Organizer of call. Independent filmmaker now Political Director for Russell Simmons, asked by United We Serve to arrange this call due to his extensive contacts within the art community.
Buffy Wicks: White House Office of Public Engagement (actual title not disclosed)
Nell Abernathy: Outreach Director for United We Serve
Yosi Sargent: Director of Communications, National Endowment For the Arts
Various artists: Mainly artists already engaged in Democratic activism, some who worked for Obama campaign.

Purpose of Call:
United We Serve is an initiative managed by the White House and the Corporation for National & Community Service, a federal agency formed in 1993 (as an outgrowth of existing agencies) to administer programs like SeniorCorps and AmeriCorps, and expanded in 2002 by George W. Bush to include USA Freedom Corps. United We Serve is an initiative looking to publicize and coordinate community and volunteer service through their Serve.gov web site. The conference call was intended to publicize this site and the United We Serve initiative to influential artists to help them further this in their communities. As such, the call was directed at furthering United We Serve primarily (although assuredly benefiting Barack Obama is a secondary benefit for the White House).

Potential Issues Raised by the Call:
There are several things that could be improper about this call, some of which I will accept and some of which I hope to dispel.

  • Using the National Endowment for the Arts, a funding arm for art and art education, in the furtherance of partisan goals of Barack Obama.
  • Similar to the above, the use of taxpayer funds for the same.
  • Direct influence of the White House Office of Public Engagement on the NEA.

So, again, we need to look at the transcript of the call to hash a lot of this out, because looking at the purpose of the call as I state it above compared to the potential issues raised by the call leaves a lot of room for subtlety and nuance. So if you didn’t click over already, I suggest you read the transcript itself. The advantage of the internet tends to be great access to primary sources, and you do well to make yourself familiar with them before forming a full opinion.

So let’s dispel a few things right up front.

Are taxpayer funds being used?
As far as I can tell, no. There was never a single mention that I could find in the transcript of offer or even discussion of the NEA providing grants or funds for these programs. It was rather one-sided, inasmuch the artists were pretty much told “you’ve shown previously that you care about X, here are some ways that YOU can help make X happen in your community and how Serve.gov will help you do so.”

Is this about partisan legislative efforts and Barack Obama’s agenda?
Again, no. The topic of the call was community service and volunteerism, and the furtherance of Serve.gov rather than legislation. A question was asked by one of the artists at the very end of the call regarding Organizing for America, and Nell Abernathy on the call very expressly stated that the two groups are different, unrelated, and that United We Serve has no intention of using the assistance of the artists for anything other than the furthering of community service and volunteerism. It was left by Nell along the lines of ‘the most I can do is tell you who to contact at OFA, but that’s a ball they need to run with.’

Alternatively, the language from Mike Skolnic (who, as he points out, is not employed by the government) was a bit more open. But I think it was clear that he was speaking not as a voice of United We Serve, the NEA, or the Office of Public Engagement when he made his statements in this manner.

Is the White House exerting partisan pressure on the NEA?
This, again, I don’t really see. It is clear that the NEA is signing up to help United We Serve, but the implications of that are far more interesting.

This is an excerpt (some portions cut to remove unnecessary language) from Yosi Sargent’s portion of the talk. It immediately suggested to me that the NEA was overreaching its mandate to further the arts and art education. The language here is arguably the most objectionable of the entire call (emphasis added):

This is what we fought for. We fought for a chance to be at the table and not only at the table but we’re setting the table. And now the official rule of National Endowment for the Arts, as director of communication and say, We here at the NEA are extremely proud to participate in the president’s United We Serve initiative.

This is a chance for us to partner with the White House and the corporation for national community service along the arts community in immediately affecting some change in our communities.

Really I want to emphasize, and I know that other people have brought it up already, but I want to just hearken back to it really quickly in that this is just the beginning. This is the first telephone call of a brand new conversation. We are just now learning how to really bring this community together to speak with the government. What that looks like legally, we’re still trying to figure out the laws of putting government Web sites on Facebook and the use of Twitter.

This is all being sorted out. We are participating in history as it’s being made. So bear with us as we learn the language so that we can speak to each other safely and we can really work together to move the needle and to get stuff done.

He is quite clearly saying that the NEA is excited to be joining in a partnership with United We Serve and the Corporation for National & Community Service. He is clearly saying that the NEA will be working not just to promote the arts, but to promote actual Federal government programs outside the arts.

Now, this seems to go beyond the NEA’s mandate as explained in their “About Us” page:

The National Endowment for the Arts is a public agency dedicated to supporting excellence in the arts, both new and established; bringing the arts to all Americans; and providing leadership in arts education. Established by Congress in 1965 as an independent agency of the federal government, the Endowment is the nation’s largest annual funder of the arts, bringing great art to all 50 states, including rural areas, inner cities, and military bases.

You see, nothing there says that they should be serving the government’s agenda. Their mandate, according to this very short blurb, is to promote the ARTS, not the government. So, on its face, it appears that the NEA will be going too far…

…but that doesn’t take into account the legislation forming the NEA (PDF), and what mission it was truly tasked with. From Title 20 U.S.C. § 954:

(o) Correlation and development of endowment programs with other Federal and non-Federal programs; expenditure of appropriations. The Chairperson shall correlate the programs of the National Endowment for the Arts insofar as practicable, with existing Federal programs and with those undertaken by other public agencies or private groups, and shall develop the programs of the Endowment with due regard to the contribution to the objectives of this Act which can be made by other Federal agencies under existing programs. The Chairperson may enter into interagency agreements to promote or assist with the arts-related activities of other Federal agencies, on a reimbursable or nonreimbursable basis, and may use funds authorized to be appropriated for the purposes of subsection (c) for the costs of such activities.

What does this mean? The Corporation for National & Community Service is a federal agency, and United We Serve is a portion of that agency that may need arts-related activities. Thus, the National Endowment of the Arts, per the actual founding legislation created by Congress, is well within its authority to use its power, through funding or without funding, to help United We Serve achieve its goals. The NEA is not overstepping its bounds here. Those bounds may be farther out than we realized, but there’s nothing I see that suggests they cannot be doing this.

Now, as a libertarian, I don’t expect myself or most conservatives to like what was discussed on this call. There are reasons to object, largely based on the appearance of impropriety and the fact that the government views these artists as vessels to promote its agenda. There’s a fundamental view of the relationship between the government and its citizens that I believe gets confused. This administration seems to see a path to self-actualization for all Americans through collectivism organized by government. But I don’t see this as anything different, new, or particularly “damning” knowing what we already know about this administration. This is certainly less of a “gotcha” than the ACORN tapes, in factual terms, but I suspect that if you listen to the Glenn Becks of the world, they’ll make a mountain out of a molehill.

Obama Raises Taxes Without Vote of Congress

“I can make a firm pledge….no family making less than $250,000 will see any form of tax increase…..not any of your taxes”-Barack Obama, September 12, 2008

Once again, President Obama has lied to the country. After raising cigarette taxes earlier this year, Obama just ordered another tax increase. This time, he raised every American’s taxes without a vote of Congress and with the simple stroke of a pen. Obama increased taxes on Chinese-made tires.

In one of his first major decisions on trade policy, President Obama opted Friday to impose a tariff on tires from China, a move that fulfills his campaign promise to “crack down” on imports that unfairly undermine American workers but risks angering the nation’s second-largest trading partner.

The decision is intended to bolster the ailing U.S. tire industry, in which more than 5,000 jobs have been lost over the past five years as the volume of Chinese tires in the market has tripled.

It comes at a sensitive time, however. Leaders from the world’s largest economies are preparing to gather in Pittsburgh in less than two weeks to discuss more cooperation amid tensions over trade.

The tire tariff will amount to 35 percent the first year, 30 percent the second and 25 percent the third.

Which means American consumers will see an increase in prices of at least 35% for their tires in the name of saving 5,000 jobs. Chinese and US companies with factories overseas are not going to pay the tariffs, they’ll pass them on to consumers. There is also the latest example of the Obama administration diplomatic ineptness of angering trade partners before major trade talks with China among other countries. Also, there was not much public debate over this, since this decision was reached behind closed doors with the help of an obscure Federal trade panel with no citizen input.

Of course with the Obama administration, there’s always someone or some group to be paid back.

Although a federal trade panel had recommended higher levies — of 55, 45 and 35 percent, respectively — the decision is considered a victory for the United Steelworkers union, which filed the trade complaint.

The United Steelworkers union endorsed Obama’s presidential bid and the Steelworkers had a massive grassroots effort that claimed credit for helping win Pennsylvania, Ohio, and Virginia; among other states.

“Hope and Change” indeed.

I’m one of the original co-founders of The Liberty Papers all the way back in 2005. Since then, I wound up doing this blogging thing professionally. Now I’m running the site now. You can find my other work at IJ Review.com and Rare. You can also find me over at the R Street Institute.

UAW = Unions Accepting Welfare

Hmm, I guess we can see once again that our Congress is not in any way trying to manage our car companies (and their unions) for political gain:

The latest example is the $10 billion taxpayers will be asked to shell out to prop up the United Auto Workers’ retiree health insurance program.

That provision is tucked deep into the bill passed by the House.

In effect, it would ask every taxpayer, regardless of whether they’ll have health insurance coverage themselves after they retire — and most won’t — to chip in to maintain the UAW’s coverage, which even after the union’s givebacks is still better than what the average American worker receives.

The helping hand is a recognition by Congress that the union’s volunteer employee benefit association, or VEBA, can’t possibly stay solvent if it is asked to cover all of the union workers taking early buyouts from the Detroit automakers.

So the union’s supporters added language to the House’s gargantuan health care bill that requires the federal government to pick up most of the cost of catastrophic claims for union retirees age 55 to 64.

The biggest beneficiary would be the UAW, which got $60 billion from the Big Three in exchange for taking on the obligation for retiree health care.

I don’t suppose I’ll be getting a gift basket from the UAW thanking me for my generosity. I’ll bet quite a few Congressmen will, though.

Hat Tip: John Stossel

The Nuance Of Medical Marijuana Raids In California

One of Obama’s campaign promises was to stop federal raids on medical marijuana dispensaries which were allowed by state law. Many pundits (myself included) have been lambasting him for not living up to that promise based upon stories like these:

Police raids on medical marijuana dispensaries continue–and continue with federal help, despite an Obama promise to end federal raids on state-legal medical pot dealers.

Of course, Obama gave his Justice Department a loophole, with Attorney General Eric Holder saying back in March that his DEA’s resources would “go after those people who violate both federal and state law….Given the limited resources that we have, our focus will be on people, organizations that are growing, cultivating substantial amounts of marijuana and doing so in a way that’s inconsistent with federal and state law.” This was a way to live up to Obama’s promise that federal raids on people who were not violating their own state’s law regarding medical marijuana would cease.

Unfortunately, so far it’s hard to know how serious to take this promise in relation to these latest L.A. raids, since the federal agents’ role in the raids on two Westside pot dispensaries (and their owners’ private homes) is still unexplained as of this writing. As the San Jose Mercury News reports.

Authorities are not saying why they raided two medical marijuana clinics and arrested the operator at his Los Angeles home. Jeffrey Joseph was free on bail Thursday, one day after local and federal agents searched his home and the dispensaries in Los Angeles and Culver City. Agents seized 450 plants and hundreds of pounds of marijuana products.

Spokespeople for the Drug Enforcement Administration, Los Angeles police, and the U.S. attorney say they don’t know what Joseph was book on. County prosecutors released no details.

Distributing medical pot is legal under California law but it’s a federal crime. However, the U.S. attorney general has said he wouldn’t target distributors unless state and federal laws were broken. County prosecutors say the task force was acting on a state warrant.

There’s a little history here. Medical Marijuana dispensaries have become much more common in Los Angeles over the last few years due to several loopholes and exemptions that made it possible for them to open quickly. The city council has been trying recently to cut down on these loopholes in order to reduce the number of operating dispensaries, but their own legal exemptions are making it very hard to do this quickly.

So how to close these shops without having to go through arduous examinations of dispensaries’ “hardship exemption” applications? Simple, prove they’ve been doing something else to break the guidelines. On the bright side, they can then call in the big guns at the DEA to lend a hand! It’s win-win for the City Council and the Feds (and a big LOSE for the dispensary owners and their customers, of course).

Sadly, many of the dispensaries are making the job easy on the city. A personal acquaintance of mine is a CPA and runs the books for several of these dispensaries, and this is his take on the matter:

The more I interact within this industry the more I realize how illegal most of these operations are. The state attorney general set up specific guidelines, as did the state board of equalization, that would allow an owner to operate freely without fear of raids & prosecution. The key issue in these operations is transparency, which most dispensaries fail to realize. Those operations that have their doors and books open to state and city regulators are never harassed. The clubs that operate outside of the guidelines are always targeted. And from a accounting and tax standpoint, it’s extremely simple to figure out who is operating by the book and who’s not.

I tell all my new clients to always be aware of the fact that the board of equalization is keeping a close eye on the industry to ensure that every sale is taxed and that every penny is sent to the state. The state BOE is in bed with the Feds and have no problem calling for the leg-breakers (the IRS) when they feel they’re being ripped off; which in most cases they are.

These raids are a violent and disruptive elucidation of one critical aspect of business in our government-dominated world — your business exists at the pleasure of the state. If they want to find a reason to come after you, they will find a reason to come after you, or manufacture one. There are a lot of regulations attached to any business, and even more to the medical marijuana industry. If they’re watching, they’ll catch you breaking one of them:

The only power any government has is the power to crack down on criminals. Well, when there aren’t enough criminals, one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws.
-Ayn Rand

This is the modern equivalent to catching Al Capone on tax evasion, when there wasn’t enough to bust him on the charges of bootlegging (and everything else he was involved in). Obama’s not technically breaking his promise here, but he’s still offering to bring in the big guns and prosecute pot dispensaries if they violate tax laws. He’s violating the spirit of the promise.

Government Abandons Lying; Resorts To Pure Naked Threats

I’m at a loss. I don’t know what world can justify this, and can only hope that my readers will be just as appalled as I am, because I have nothing to add.

WASHINGTON (AP) — Former Treasury Secretary Henry Paulson testified on Thursday that he pressured Bank of America Corp. last year to go through with its plans to buy Merrill Lynch but didn’t tell the bank’s chief to hide potential losses from shareholders.

Paulson acknowledged that he warned the bank’s CEO, Kenneth Lewis, that Lewis could lose his job if he dropped the deal. Paulson also said he pledged government aid to the bank but declined to put that promise in writing because the details would have been vague and would have to be disclosed publicly by the Treasury Department.

In testimony to the committee, Paulson said he told Lewis last year that reneging on his promise to purchase Merrill Lynch would show a “colossal lack of judgment.”

Paulson said that “under such circumstances,” the Federal Reserve would be justified in removing management at the bank.

“By referring to the Federal Reserve’s supervisory powers, I intended to deliver a strong message reinforcing the view that had been consistently expressed by the Federal Reserve, as Bank of America’s regulator, and shared by the Treasury, that it would be unthinkable for Bank of America to take this destructive action for which there was no reasonable legal basis and which would show a lack of judgment,” Paulson said.

Paulson said he believed his remarks to Lewis were “appropriate.”

Federal Reserve Chairman Ben Bernanke has denied threatening to oust Lewis and said he never told anyone else to, either. But another Fed official suggested otherwise in an e-mail obtained by House investigators.

Jeffrey Lacker, president of the Richmond Federal Reserve Bank, said in a December 2008 e-mail that Bernanke had planned to make “even more clear” that if Bank of America backed out on the deal, “management is gone.”

Paulson said Bernanke never asked him to relay the message. But, he added, he believed he was expressing the Fed’s opinion that dropping the deal “would raise serious questions about the competence and judgment of Bank of America’s management and board.”

I’ve previously covered this type of activity by Paulson & Bernanke here and here.

California’s problem is taxation

Instapundit links to a NYT Magazine propaganda piece about governing California, and the part about taxation reads as if it were written by Assembly Speaker Karen Bass, right down to euphemistically renaming taxes “revenue”:

In the view of many, the origins of the mud slog began with the passage of Proposition 13 in 1978, the landmark referendum that capped property taxes. “Over 50 percent of our revenue is dependent on personal income tax, and that’s a very important part of explaining the boom-and-bust cycle,” according to another Republican candidate for governor, Tom Campbell, an immaculately credentialed policy marvel who graduated from Harvard Law School magna cum laude and who later studied under the conservative economist Milton Friedman before going on to represent Silicon Valley for five terms in the United States Congress.

This dependence on income tax was the first thing Dianne Feinstein mentioned when I asked her to assess California’s problems. “In most states, it’s one-third property tax, one-third sales tax and one-third income tax,” Feinstein said. “It’s 55 percent income tax in California. And 45 percent of that comes from the top brackets.”

When the economy is booming, the stock market soaring and jobs abundant, relying on income taxes is not a problem. That was the case in the years after Schwarzenegger first became governor in 2003, and he was hailed as a “postpartisan” leader who cut taxes and appealed to Democrats by aggressively tackling issues like global warming. But in today’s cratering economy — in which California faces a decline in personal income for the first time since 1938 and unemployment sits at 11.5 percent — the state’s coffers have shriveled up quickly, along with the governor’s popularity.

Passing a budget or increasing revenues in California is dicey in the best of times. The state constitution requires that two-thirds of the Legislature agree on a budget or higher taxes — the kind of overwhelming political consensus, in other words, usually reserved for amendments to the federal Constitution. (California is one of just a handful states that require a two-thirds vote to pass a budget.)

These words were written not by Speaker Bass, but rather by the Times’ own Mark Leibovich. He gets some of the facts right, but draws from them a woefully wrong conclusion. Where Liebovich sees a state that would be better off if only politicians could increase property taxes without limit or one party had total control of the budgeting process, I see a state that manages to overtax its citizens despite some pretty robust taxpayer protections in the state constitution. What’s the difference between me and Mark Leibovich? I actually have to pay for the excesses of Sacramento.

Let me list out for you the taxes and fees I remember having to pay in the last year:

  • Income tax
  • Sales tax
  • Property tax
  • Gas tax
  • Vehicle License fee

This doesn’t include the various line items about government surcharges and fees on every utility bill I pay, some of which I’m sure is attributable to the state. Even so, the taxes and fees I listed above still amount to about 25% of my income. On top of the 30% of my income that goes to Washington D.C., that’s more than half my income.

You might think that such a fate could only happen to someone who was rich enough not to worry about only having 55% of his income go to Washington and Sacramento. You’d be wrong. I’m very solidly in the middle class, and it would be even harder making ends meet if California’s political class could force me to surrender even more of my hard-earned income. I hear the same from nearly everyone I know.

I’m a Californian, and I pay more for government than I do for anything else. From the perspective of a citizen, California’s problem is taxation–too much, not too little.

A Vote for Revenue

Politicians are usually most revealing when speaking off-the-cuff, and so it was with Karen Bass:

Q: How do you think conservative talk radio has affected the Legislature’s work?

A: The Republicans were essentially threatened and terrorized against voting for revenue. Now [some] are facing recalls. They operate under a terrorist threat: “You vote for revenue and your career is over.” I don’t know why we allow that kind of terrorism to exist. I guess it’s about free speech, but it’s extremely unfair.

The California Assembly Speaker was talking about California’s budget crisis. There is a simple problem here. Decades of runaway spending by both the democratically-controlled legislature and voters during the boom years has the state government scrambling to meet its commitments now.

The solution, however, is more complex. Democrats have been the majority party in the legislature for decades, and this budget mess falls squarely on their backs. The solution, deep cuts to wasteful and often useless state bureaucracy, is simply not an option to them. Cutting the bureaucracy would be a loss of political capital for the Democrats, making the entire enterprise of state government less profitable. Instead, we have people like Karen Bass pulling stupid politician tricks:

The Golden State is one of only three in the nation which requires a two-thirds majority vote to raise taxes. This is forcing Democrats in Sacramento to try to recruit a handful of Republicans to pass their current plan to close the state’s gap with a combination of cuts and taxes. So far, no GOP legislator has broken ranks.

Then came Plan B. This week, the Democratic leadership mustered enough support to pass a series of budget bills with a simple majority, hoping to send them onto Governor Schwarzenegger.

Some of these bills do raise revenues, but legislators believe they can avoid the necessary two-thirds majority by reclassifying some taxes as “user fees”, while raising taxes elsewhere and claiming the end result is “tax neutral”.

A call to the Legislative Counsel’s office pointed to the part of the State Constitution which explains the need for a two-thirds majority: “any changes in state taxes enacted for the purpose of increasing revenues collected pursuant thereto whether by increased rates or changes in methods of computation must be imposed by an Act passed by not less than two-thirds of all members elected to each of the two houses of the Legislature, except that no new ad valorem taxes on real property, or sales or transaction taxes on the sales of real property may be imposed.”

But when pushed for an explanation as to where the law allows a simple majority, by creating “revenue neutral” taxes and exchanging a tax for a user fee, we were directed to the Assembly Speaker Karen Bass’s office.

Her office did not return calls or emails (though the emails were read). Other calls asking for guidance were met with silence, and another reference to the section of the state constitution cited above.

So, this is what Karen Bass means when she says Republicans have been terrorized into voting against revenue? Let’s revisit her quote and fill in what’s actually happening:

The Republicans were essentially threatened and terrorized against voting for a law that deliberately violates taxpayer protections in the Constitution. Now [some] are facing recalls. They operate under a terrorist threat: “You vote for a law that deliberately violates taxpayer protections in the Constitution and your career is over.” I don’t know why we allow that kind of terrorism to exist. I guess it’s about free speech, but it’s extremely unfair.

Karen Bass is saying that pressuring politicians to simply follow the law is terrorism. As Instapundit would say, the state is in the best of hands!

It’s Time to Impeach Obama

It’s time to impeach Obama; indict him, and his entire administration, for fraud, coercion, extortion, influence peddling, and grand theft under the color of law, amongst hundreds of other charges.

It is not simply the auto issue; but that is currently the most visible.

This is no hyperbole. I am not simply spouting off. I believe, and will from this point forward, work to see, Barack Obama impeached, charged, indicted, tried, and imprisoned, for the crimes he and his cronies have committed against this nation, and its people.

Also, let me make this clear: This is NOT about politics, or at least not about political ideology. I believe that everyone, left, right, libertarian, or indifferent to ideology; should see what Obama and his administration are doing, and understand the damage it is doing, and will do, to this country.

We cannot allow our nation to become a nation of men. We MUST remain a nation of laws.

At this point, Obama, and his administration, aren’t even bothering to PRETEND to obey the law, or the constitution. They have embarked on a campaign of theft and fraud never seen before in the history of man kind; knowing that they had the full cover of the media protecting them, a friendly congress, and a co-operative judiciary.

They are in clear violation of the constitution, and hundreds if not thousands, of state and federal laws; blatantly and knowingly flouting them in fact, because, in Obamas words, “We won”.

Well, I’m sorry sir, for now at least, we are still a nation of laws; and you must be brought to account.

I am a cynically romantic optimistic pessimist. I am neither liberal, nor conservative. I am a (somewhat disgruntled) muscular minarchist… something like a constructive anarchist.

Basically what that means, is that I believe, all things being equal, responsible adults should be able to do whatever the hell they want to do, so long as nobody’s getting hurt, who isn’t paying extra

California Department Of Real Estate Trust Fund Nearing Deficit!

The California Department Of Real Estate oversees and administers the state’s real estate agent and broker licensing program. During the big housing boom, the fees generated by the high level of real estate activity (and the agents/brokers who were licensed to enable that activity) has caused them to build up some a nice Trust Fund. But activity is down, and there may be trouble ahead:

DRE, as the department is called, gets all its money for its 344-person department from license fees, license exam fees and subdivision fees (which are going up, too). But all those things are down because fewer people are taking the license test or getting licenses. And development fees? Well, homebuilding has been all but mothballed.

All these things have taken a $13.7 million bite out of the department’s $44 million budget.

For example, license exams have dropped from around 22,000 in March 2005 to just under 2,900 this past March. And the number of licensees dropped in March for a 14th straight month.

But don’t worry! They’ve got a trust fund! They’ve lent their reserves to the state of California, so all is well!

To make matters worse, the state Legislature and the Govenator have borrowed about $10.9 million from DRE reserves. If the state doesn’t repay that loan, and if the fees don’t go up, DRE projects its reserves will dry up and it’ll run out of money next year. In just over four years, DRE would be almost $88 million in the hole.

Wait… How could that make matters “worse”? How can they just suggest that the state might not pay back that loan — or worse, the implicit notion that they might do so out of higher taxes on the rest of Californians? If they’ve loaned the money to the state of CA, what could possibly go wrong? After all, the State of CA and the California DRE have two different revenue streams, so loaning from one pocket to the other is not in any way a fiscal end-around!

If it’s such a bad thing for the state of CA to borrow money from the CA DRE reserves, why is it a good thing that the US Federal Government is borrowing the surplus generated by Social Security payroll taxes?

Agree Now, Or Your Regulator Will Make You Agree Later

Interesting notes that Judicial Watch has gotten hold of from Paulson/Bernanke’s offer they can’t refuse back in October. It’s the talking points from the meeting… “Strongarm” would be an understatement:

We plan to announce the program tomorrow–and–that your nine firms will be the initial participants….

This is a combined program (bank liability guarantee and capital purchase). Your firms need to agree to both.

  • We don’t believe it is tenable to opt out because doing so would leave you vulnerable and exposed.
  • If a capital infusion is not appealing, you should be aware that your regulator will require it in any circumstance.

I’m left wondering how it could have possibly been worse, but then I came up with a scenario.

Bush could have given the banks to the UAW. At least he didn’t do that!

Hat Tip: Reason

Regulation Is About Competition, Not Safety

Just a little Friday afternoon food for thought, c/o the Mises Institute. One would initially think that FAA rules mandating the retirement of pilots at age 65 (age 60 as recently as 2007) would be based upon the safety of passengers — but one would be wrong:

Flashback to 1959. The airline industry is on the cusp of its fifth decade, but there is a problem facing younger pilots who want to enter it. The old-timers just won’t retire, and this frustrates potential entrants with much flying experience and training, thanks to military service in World War II, Korea, and elsewhere. The result is a sort of malinvestment in human capital, with many men trained to be pilots without private-sector jobs to justify the training.

What is a young, aspiring pilot to do? Well, he and his peers could make their presence and skills known to the airlines, signaling that the labor market had changed and that it would be possible to hire new pilots at lower wages. Not only would some airlines opt for the lower-priced laborers, thus lowering the airlines’ reservation price required to provide flights to consumers, some owners of capital might invest in new airlines, thus increasing consumer choice, industry output, and create a downward pressure on prices.

Such would be the market solution, coordinated by changes in relative prices, and it would be peaceful, characterized by voluntary interaction and compromise by the parties involved. Unfortunately, there was another option, requiring the pilot to join a pilots union to lobby the federal government to enact rules forcing existing pilots to retire at age 60. All the union needed was a lobbying presence and some sympathetic regulators at the FAA.

Guess which option was chosen? It seems that in 1959, the aspiring pilots found a sympathetic ear in C.R. Smith, the then-president of American Airlines who also wanted to ground his older pilots. The industry was switching to jet engines, and Smith wanted to freeload off of the tax-supported training with those engines many of the younger pilots received in the military. So Smith instructed his lobbyists in Washington to rewrite FAA rules to force retirement at 60, and in December of 1959, an FAA administrator named Elwood R. Quesada simply authorized them. In January of 1961, Quesada retired from the FAA and immediately joined the board of directors of American Airlines. The retirement age rule has been in effect for almost 50 years.

Now, I’m not going to claim that the retirement rule is a bad rule, nor am I going to claim that it has made passengers any more or less safe. I simply don’t have any real data to back up such a claim. But I find it more than a little bit upsetting — if not surprising — that such a rule would be made purely on the basis of interest group politics, and not primarily for safety.

Hat Tip: Coyote Blog

Bundling The Banks Into A TARP

Geithner's Treasury Grabs A Bank
Back in October, the banks appeared to be in very deep trouble. Such deep trouble that they were forced to enter a deal with the Devil decided to run to the government for assistance. But they were shocked — SHOCKED! — when the government starting attaching a whole bunch of regulations and conditions to the deal after the fact.

So they want to return the money. And the government won’t take it back without a fight:

The bottom line for the banks is that if they want out of TARP, they have to be able to withdraw from all the other sources of emergency public support that the government has given them. If they want the support, then they have to agree to the conditions and regulations that come with TARP. No subsidies without regulations. To put it into more common terms, banks can decide to break up with the government or they can decide to stay together. But they don’t get to be friends with benefits.

Imagine the outcry from utility regulators if you signed up for the sports package with your cable company because you wanted, say, SpeedTV. After a while, you grow tired of the programming and all the extra cost because you don’t think you need to pay for TVG and all the other channels, so you call the company and try to cancel the sports package. And they tell you that if you want to quit the sports package, you’ll have to cancel cable, internet, and phone service altogether — you can’t have just one!

I think Stuart Varney lays it out quite well (c/o Michael Wade @ QandO):

I must be naive. I really thought the administration would welcome the return of bank bailout money. Some $340 million in TARP cash flowed back this week from four small banks in Louisiana, New York, Indiana and California. This isn’t much when we routinely talk in trillions, but clearly that money has not been wasted or otherwise sunk down Wall Street’s black hole. So why no cheering as the cash comes back?

My answer: The government wants to control the banks, just as it now controls GM and Chrysler, and will surely control the health industry in the not-too-distant future. Keeping them TARP-stuffed is the key to control. And for this intensely political president, mere influence is not enough. The White House wants to tell ‘em what to do. Control. Direct. Command.

I’ll have a more detailed post coming up when I get around to it, but I think I, too, was naive. I expected more from Obama. I honestly believed that he was actually trying to become President because he wanted to improve outcomes, not just drive the train. I was sure, of course, that Obama was going to be pointing us the wrong direction, but I thought he was at least going to try to do so carefully, efficiently, and taking input from all sides before doing so. In short, I knew I wasn’t going to like him, but I thought he was going to be reasonable.

Not so much. He wants to control the financial sector. He doesn’t just want to fix it, he wants to remake it according to his own ideology. He doesn’t want them to succeed without government; he wants them to be dependent on government. I thought Bush was an exceptionally authoritarian President, but it seems that he was just laying the groundwork for Barack Obama.

The Feds have the banks in the grasp of their talons and they’re squeezing. And by god they won’t let up until submission is complete.

The Obameter at the 100 Day Mark

Yeah I know, the “First 100 Days” of President Barack Obama is somewhat arbitrary. Still, a great deal has happened in these first 100 days so why not take another look at the Obameter shall we?

So far, President Obama has kept 27 campaign promises, compromised on 7, broken 6, stalled on 3, has 63 “in the works,” and no action on the remaining 408.

As a Libertarian, there are certain promises I would like to see kept but many more broken. Perhaps my biggest disappointment as far as his pro-liberty broken promises go would have to be his failure to follow through with his “sunlight before signing” promise. I am disappointed but I can’t say I am surprised that out of the 12 bills Obama signed into law, only once did he make good on this promise. It would be a major bastardization of the English language to suggest that The Lilly Ledbetter Fair Pay Act, SCHIP, and the so-called stimulus bill are all “emergency” legislation which would be exempt from the 5 day waiting period*.

Overall, Barack Obama turned out to be exactly the president I thought he would be: a collectivist president hell bent on growing the size and scope of the federal government.

» Read more

The White House owes us some answers

“The Government should not keep information confidential merely because public officials might be embarrassed by disclosure, because errors and failures might be revealed, or because of speculative or abstract fears.”President Barack Obama

Along with other plaintiffs, talk radio host Michael Savage has sued Homeland Security Secretary Janet Reno and Attorney General Eric Holder for their roles in this issue.  While I don’t agree with the social agenda of the group bringing about the suit, at least they are attacking the issue on constitutional grounds.

Several questions occurred to me before I clicked the “send” button on the now infamous DHS report on right-wing extremism:

  • Did Janet Napolitano, Eric Holder or Barack Obama know about the report in advance?
  • Who was the highest level person to know of the report? Who authorized it to be released?
  • Why was the report issued (and released) when it was?  Did the timing have anything to do with Tea Parties planned across the country?

Hopefully, we’ll learn a lot more during the discovery phase of this suit.  Since President Obama repeatedly mentioned government transparency on the campaign trail, I’m sure the White House will be releasing these details to the general public over the next day or two.

1 2 3 4