Tidbits Quotations on July 17, 2010
To Accompany the July 17, 2010 edition of Tidbits
Bob Jensen at Trinity University


This is not a forwarded politically-biased message since David Walker is leading a very bipartisan effort to save the United States from economic disaster. Former Andersen Partner David Walker was appointed U.S. Comptroller General by President Bill Clinton and retained in the same position under President Bush ---

In his government position David Walker became staggered by the pending economic doom of the United States.

At the American Accounting Association 2010 annual meetings in San Francisco in August, David Walker will be the only person inducted this year into the Accounting Hall of Fame. Since leaving government service, David became the CEO of the Peterson Foundation that is trying to aid our government in saving the United States from entitlements bankruptcy. (By the way, as I read it, the Peterson Foundation supported the latest health care legislation that, in theory, will reduce deficit spending, although I personally think it should’ve been a full-fledged national health plan).

President Obama has appointed a joint task force to find ways of preventing total economic disaster of the United States that exists not so much because of current trillion dollar deficits as the threat of unfunded future entitlements obligations, with Medicare being the biggest unfunded entitlement as baby boomers retire.

Before viewing the Town Hall video, you might want to view the following earlier video:

You can watch a 30-minute version at
http://www.pgpf.org/newsroom/press/IOUSA-Solutions-Premiers-on-CNN/   (Scroll Down a bit)
Note that great efforts were made to keep this a bipartisan panel along with the occasional video clips of President Obama discussing the debt crisis. The problem is a build up over spending for most of our nation’s history, It landed at the feet of President Obama, but he’s certainly not the cause nor is his the recent expansion of health care coverage the real cause.

One take home from the CNN show was that over 60% of the booked National Debt increases are funded off shore (largely in Asia and the Middle East).  

 This going to greatly constrain the global influence and economic choices of the United States.

By 2016 the interest payments on the National Debt will be the biggest single item in the Federal Budget, more than national defense or social security. And an enormous portion of this interest cash flow will be flowing to foreign nations that may begin to put all sorts of strings on their decisions  to roll over funding our National Debt.

The unbooked entitlement obligations that are not part of the National Debt are over $60 trillion and exploding exponentially. The Medicare D entitlements to retirees like me added over $8 trillion of entitlements under the Bush Presidency.

Most of the problems are solvable except for the Number 1 entitlements problem --- Medicare.
Drastic measures must be taken to keep Medicare sustainable.



Watch National Town Meetings


Video on IOUSA Bipartisan Solutions to Saving the USA

If you missed Sunday afternoon CNN’s two-hour IOUSA Solutions broadcast, you can watch a 30-minute version at
http://www.pgpf.org/newsroom/press/IOUSA-Solutions-Premiers-on-CNN/   (Scroll Down a bit)
Note that great efforts were made to keep this a bipartisan panel along with the occasional video clips of President Obama discussing the debt crisis. The problem is a build up over spending for most of our nation’s history, It landed at the feet of President Obama, but he’s certainly not the cause nor is his the recent expansion of health care coverage the real cause.

One take home from the CNN show was that over 60% of the booked National Debt increases are funded off shore (largely in Asia and the Middle East).
This going to greatly constrain the global influence and economic choices of the United States.

By 2016 the interest payments on the National Debt will be the biggest single item in the Federal Budget, more than national defense or social security. And an enormous portion of this interest cash flow will be flowing to foreign nations that may begin to put all sorts of strings on their decisions  to roll over funding our National Debt.

The unbooked entitlement obligations that are not part of the National Debt are over $60 trillion and exploding exponentially. The Medicare D entitlements to retirees like me added over $8 trillion of entitlements under the Bush Presidency.

Most of the problems are solvable except for the Number 1 entitlements problem --- Medicare.
Drastic measures must be taken to keep Medicare sustainable.


I thought the show was pretty balanced from a bipartisan standpoint and from the standpoint of possible solutions.

Many of the possible “solutions” are really too small to really make a dent in the problem. For example, medical costs can be reduced by one of my favorite solutions of limiting (like they do in Texas) punitive damage recoveries in malpractice lawsuits. However, the cost savings are a mere drop in the bucket. Another drop in the bucket will be the achievable increased savings from decreasing medical and disability-claim frauds. These are important solutions, but they are not solutions that will save the USA.

The big possible solutions to save the USA are as follows (you and I won’t particularly like these solutions):



Watch for the other possible solutions in the 30-minute summary video ---
(Scroll Down a bit)


Here is the original (and somewhat dated video that does not delve into solutions very much)
IOUSA (the most frightening movie in American history) ---
(see a 30-minute version of the documentary at www.iousathemovie.com )

If you missed Sunday afternoon CNN’s two-hour IOUSA Solutions broadcast, you can watch a 30-minute version at
http://www.pgpf.org/newsroom/press/IOUSA-Solutions-Premiers-on-CNN/   (Scroll Down a bit)
Note that great efforts were made to keep this a bipartisan panel along with the occasional video clips of President Obama discussing the debt crisis. The problem is a build up over spending for most of our nation’s history, It landed at the feet of President Obama, but he’s certainly not the cause nor is his the recent expansion of health care coverage the real cause.

Watch the World Premiere of I.O.U.S.A.: Solutions on CNN
Saturday, April 10, 1:00-3:00 p.m. EST or Sunday, April 11, 3:00-5:00 p.m. EST

Featured Panelists Include:

  • Peter G. Peterson, Founder and Chairman, Peter G. Peterson Foundation
  • David Walker, President & CEO, Peter G. Peterson Foundation
  • Sen. Bill Bradley
  • Maya MacGuineas, President of the Committee for a Responsible Federal Budget
  • Amy Holmes, political contributor for CNN
  • Joe Johns, CNN Congressional Correspondent
  • Diane Lim Rodgers, Chief Economist, Concord Coalition
  • Jeanne Sahadi, senior writer and columnist for CNNMoney.com

Watch for the other possible solutions in the 30-minute summary video ---
(Scroll Down a bit)


CBS Sixty minutes has a great video on the enormous cost of keeping dying people artificially alive:
High Cost of Dying --- http://www.cbsnews.com/video/watch/?id=5737437n&tag=mncol;lst;3
(wait for the commercials to play out)

U.S. Debt/Deficit Clock --- http://www.usdebtclock.org/

"The Looming Entitlement Fiscal Burden," by Gary Becker, The Becker-Posner Blog, April 11, 2010 ---

"The Entitlement Quandary," by Richard Posner, The Becker-Posner Blog, April 11, 2010 ---

David Walker --- http://en.wikipedia.org/wiki/David_M._Walker_(U.S._Comptroller_General)

Niall Ferguson --- http://en.wikipedia.org/wiki/Niall_Ferguson

Call it the fatal arithmetic of imperial decline. Without radical fiscal reform, it could apply to America next.
Niall Ferguson, "An Empire at Risk:  How Great Powers Fail," Newsweek Magazine Cover Story, November 26, 2009 --- http://www.newsweek.com/id/224694/page/1
Please note that this is NBC’s liberal Newsweek Magazine and not Fox News or The Wall Street Journal.

. . .

In other words, there is no end in sight to the borrowing binge. Unless entitlements are cut or taxes are raised, there will never be another balanced budget. Let's assume I live another 30 years and follow my grandfathers to the grave at about 75. By 2039, when I shuffle off this mortal coil, the federal debt held by the public will have reached 91 percent of GDP, according to the CBO's extended baseline projections. Nothing to worry about, retort -deficit-loving economists like Paul Krugman.

. . .

Another way of doing this kind of exercise is to calculate the net present value of the unfunded liabilities of the Social Security and Medicare systems. One recent estimate puts them at about $104 trillion, 10 times the stated federal debt.

Continued in article --- http://www.newsweek.com/id/224694/page/1


Niall Ferguson is the Laurence A. Tisch professor of history at Harvard University and the author of The Ascent of Money. In late 2009 he puts forth an unbooked discounted present value liability of $104 trillion for Social Security plus Medicare. In late 2008, the former Chief Accountant of the United States Government, placed this estimate at$43 trillion. We can hardly attribute the $104-$43=$61 trillion difference to President Obama's first year in office. We must accordingly attribute the $61 trillion to margin of error and most economists would probably put a present value of unbooked (off-balance-sheet) present value of Social Security and Medicare debt to be somewhere between $43 trillion and $107 trillion To this we must add other unbooked present value of entitlement debt estimates which range from $13 trillion to $40 trillion. If Obamacare passes it will add untold trillions to trillions more because our legislators are not looking at entitlements beyond 2019.


The Meaning of "Unbooked" versus "Booked" National Debt
By "unbooked" we mean that the debt is not included in the current "booked" National Debt of $12 trillion. The booked debt is debt of the United States for which interest is now being paid daily at slightly under a million dollars a minute. Cash must be raised daily for interest payments. Cash is raised from taxes, borrowing, and/or (shudder) the current Fed approach to simply printing money. Interest is not yet being paid on the unbooked debt for which retirement and medical bills have not yet arrived in Washington DC for payment. The unbooked debt is by far the most frightening because our leaders keep adding to this debt without realizing how it may bring down the entire American Dream to say nothing of reducing the U.S. Military to almost nothing.

Niall Ferguson,
"An Empire at Risk:  How Great Powers Fail," Newsweek Magazine Cover Story, November 26, 2009 --- http://www.newsweek.com/id/224694/page/1

This matters more for a superpower than for a small Atlantic island for one very simple reason. As interest payments eat into the budget, something has to give—and that something is nearly always defense expenditure. According to the CBO, a significant decline in the relative share of national security in the federal budget is already baked into the cake. On the Pentagon's present plan, defense spending is set to fall from above 4 percent now to 3.2 percent of GDP in 2015 and to 2.6 percent of GDP by 2028.

Over the longer run, to my own estimated departure date of 2039, spending on health care rises from 16 percent to 33 percent of GDP (some of the money presumably is going to keep me from expiring even sooner). But spending on everything other than health, Social Security, and interest payments drops from 12 percent to 8.4 percent.

This is how empires decline. It begins with a debt explosion. It ends with an inexorable reduction in the resources available for the Army, Navy, and Air Force. Which is why voters are right to worry about America's debt crisis. According to a recent Rasmussen report, 42 percent of Americans now say that cutting the deficit in half by the end of the president's first term should be the administration's most important task—significantly more than the 24 percent who see health-care reform as the No. 1 priority. But cutting the deficit in half is simply not enough. If the United States doesn't come up soon with a credible plan to restore the federal budget to balance over the next five to 10 years, the danger is very real that a debt crisis could lead to a major weakening of American power.

Blessed are the young, for they shall inherit the national debt.
Herbert Hoover --- http://www.brainyquote.com/quotes/quotes/h/herberthoo110353.html

Historic Political Humor --- http://myloc.gov/exhibitions/hopeforamerica/Pages/default.aspx

"The Town Hall Revolt, One Year Later Democrats didn't get the message. Will Republicans do better?" by Peggy Noonan, The Wall Street Journal, July 9, 2010 ---

Much has happened in the dense and shifting political landscape of the past 18 months—the quick breakdown along partisan lines in Congress; continuing arguments over spending, the economy and immigration; the big Republican wins in Virginia, New Jersey and Massachusetts; the Gulf oil spill; falling poll numbers for the president and his party.

But the biggest political moment, the one that carried the deepest implications, came exactly one year ago, in July and August of 2009, in the town hall rebellion. Looking back, that was a turning point in both parties' fortunes. That is when the first resistance to Washington's plans on health care became manifest, and it's when a more generalized resistance rose and spread. President Obama and his party in Congress had, during their first months in power, done the one thing they could not afford to do politically, and that was arouse and unite their opposition. The conservative movement and Republican Party had been left fractured and broken by the end of the Bush years. Now, suddenly, they had something to fight against together. Social conservatives hated the social provisions, liberty-minded conservatives the state control, economic conservatives the spending. Health care brought them together. The center, which had gone for Mr. Obama in 2008, joined them.

Neither the Republicans nor the Democrats saw it coming. But it was a seminal moment, and whatever is coming in November, it started there.

It was a largely self-generated uprising, and it was marked, wherever it happened, in San Diego or St. Louis, by certain common elements. The visiting senator or representative, gone home to visit the voters, always seemed shocked at the size of the audience and the depth of his constituents' anger. There was usually a voter making a videotape in the back of the hall. There were almost always spirited speeches from voters. There was never, or not once that I saw, a strong and informed response from the congressman. In one way it was like the Iranian revolution: Most people got the earliest and fullest reports of what was happening on the Internet, through YouTube. Voters would take shaky videos on their cellphones and post them when they got home. Suddenly, over a matter of weeks, you could type in "town hall" and you'd get hundreds, and finally thousands, of choices.

The politicians, every one of them, seemed taken aback—shaken and unprepared. They tried various strategies—mollify the crowd, or try to explain to them how complex governing is. Sen. Arlen Specter tried that in early August 2009, in an appearance with Health and Human Services Secretary Kathleen Sebelius. Faced with fierce criticism of the health-care bill as it then stood, Mr. Specter explained that see here, it's a thousand-page bill and sometimes Congress must make judgements "very fast." The crowd exploded in jeers.

When Rep. Russ Carnahan held a town hall meeting at a community college in Missouri on July 20, he tried patiently to explain that ObamaCare not only would be deficit-neutral, it would save money. They didn't shout him down, they laughed. When Sen. Claire McCaskill appeared before a town-hall meeting in Jefferson County, Mo., on Aug. 11, she responded to the crowd with words that sum up the moment: "I don't get it. . . . I honestly don't get it. . . . You don't trust me?" "No!" the crowd roared.

When Rep. Brian Baird went before his constituents in Clark County, Wash., on Aug. 18, he was met by this speech from a young man in the audience: "I heard you say that you are going to let us keep our health insurance. Well thank you! It's not your right to decide whether I keep my current plan or not, that's my decision." The constituent got cheers.

It was a real pushback, and it was fueled by indignation. The attitude was: "We have terrible worries—unemployment, the cost of government, its demands, our ability to compete and win in the world. You are focused on your thing, but we are focused on these things."

The videos, still on YouTube, can be pretty stirring. There's a real "Mr. Smith Goes to Washington" feel about them. It was not only Democrats but Republicans too who felt the heat, and were surprised by it.

The president, of course, got his victory on health care. But a funny thing is, normally the press and the public judge a president's effectiveness in large part by legislative victories—whether he has "the ability to get his program through Congress." Winning brings winning, which increases popularity. Mr. Obama won on more than health care; he won on the stimulus package and the Detroit bailout. And yet his poll numbers continue to float downward. He is not more loved with victory. To an unusual and maybe unprecedented degree his victories seem like victories for him, and for his party, and for his agenda, but they haven't settled in as broad triumphs that illustrate power and competence.

In the past an LBJ showed his mastery by taming and controlling Congress. Mr. Obama's ability to work closely with the Democrats does not seem like evidence of mastery. The biggest single phrase you hear about him now, and it isn't coming from pundits and being repeated, it is bubbling up from normal people and being seized by pundits, is the idea that he is in over his head, and out of his depth. And this while he keeps winning.

Nor is the left happy with him. In The Nation this week, Eric Alterman writes that most progressives agree "the Obama presidency has been a big disappointment." No public option on health care, and labor unions, "among his most fervent and dedicated foot soldiers," see card check as "deader than Jimmy Hoffa." Is it possible the president "fooled gullible progressives during the election into believing he was a left-liberal partisan when in fact he is much closer to a conservative corporate shill"? Progressives, including two Mr. Alterman knows "who sport Nobel Prizes on their shelves" now feel this way.

Meanwhile some Republicans are feeling triumphalist, but it may be premature. At the moment they are beating up Republican National Committee chairman Michael Steele for his comments on Afghanistan. What was wrong with what Mr. Steele said was obvious: Afghanistan was not Mr. Obama's war of choice but a nine-year-old war the president has so far continued. But Afghanistan, like Iraq, is the meal he was served, not the meal he chose.

Far worse than Mr. Steele's muddling of the facts is that he spoke in a way that suggested the war could be used as a political tool against the administration. He was approaching a grave matter—war—in a merely partisan and political manner. How cheap and hackish.

The Republicans still need to show that they are worthy of the electoral bounty that is likely to come their way. Are they ready to govern, or only to win? Part of being worthy is showing yourself capable of having serious and truly open debate. What, in the post-9/11 world, should be our overarching foreign policy? What is it we're trying to accomplish? How should we try to get it done? What is the way out of our economic disaster? What must we do, how must we do it?

It's hard for those who do politics as a profession not to get lost in the day-to-day, but if they don't start thinking big and encouraging debate, they're going to blow it, too. And they'll find out at a town hall meeting in 2013. Or earlier.

How Little Academic Achievers are Made
Who needs stark regression discontinuity to establish something that any competent, responsible parent can tell you over a cup of Starbucks? If you're trying to raise a well-educated, well-rounded child, you need to limit — not increase — the time he spends on a home computer. Of course, now that there's scientific research to prove the point, will educators and government bureaucrats take notice?

Marybeth Hicks, "Common Sense in Education Strikes Again," Townhall, July 14, 2010 ---

Bob Jensen's threads on the dark side are at http://www.trinity.edu/rjensen/000aaa/theworry.htm

"Attacks on Freedom," by John Stossel, Townhall, July 14, 2010 ---

Something's happened to America, and it isn't good. It's become easier to get into trouble. We've become a nation of a million rules. Not the kind of bottom-up rules that people generate through voluntary associations. Those are fine. I mean imposed, top-down rules formed in the brains of meddling bureaucrats who think they know better than we how to manage our lives.

Cross them, and we are in trouble.

The National Marine Fishery Service (NMFS) received an anonymous fax that a seafood shipment to Alabama from David McNab contained "undersized lobster tails" and was improperly packed in clear plastic bags, rather than the cardboard boxes allegedly required under Honduran law. When the $4 million shipment arrived, NMFS agents seized it. McNab served eight years in prison, even though the Honduran government informed the court that the regulation requiring cardboard boxes had been repealed.

How about this one? Four kindergartners -- yes, 5-year-old boys -- played cops and robbers at Wilson Elementary in New Jersey. One yelled: "Boom! I have a bazooka, and I want to shoot you." He did not, of course, have a bazooka. Nevertheless, all four boys were suspended from school for three days for "making threats," a violation of their school district's zero-tolerance policy. School Principal Georgia Baumann said, "We cannot take any of these statements in a light manner." District Superintendent William Bauer said: "This is a no-tolerance policy. We're very firm on weapons and threats."

Give me a break. These are just some of the stories featured in a new book, "One Nation Under Arrest". I'll discuss more on my Fox Business show Thursday night.

Here's another: Ansche Hedgepeth, 12, committed this heinous crime: She left school in Washington, D.C., entered a Metrorail station to head home and ate a French fry. An undercover officer arrested her, confiscating her jacket, backpack and shoelaces. She was handcuffed and taken to the Juvenile Processing Center. Only after three hours in custody was the 12-year-old released into her mother's custody. The chief of Metro Transit Police said: "We really do believe in zero-tolerance. Anyone taken into custody has to be handcuffed for officer safety." She was sentenced to community service and now carries an arrest record. Washington's Metro has since rescinded its zero-tolerance policy.

Keith John Sampson, a student-employee at Indiana-Purdue University Indianapolis, had the temerity to read "Notre Dame Versus the Klan: How the Fighting Irish Defeated the Ku Klux Klan" during breaks on the job. One student complained because the book's cover depicted the Klan. The university then found Sampson guilty of racial harassment! Thankfully, a great organization, the Foundation for Individual Rights in Education (FIRE), came to his defense and got his school record cleared.

Palo Alto, Calif., ordered Kay Leibrand, a grandmother, to lower her carefully trimmed hedges. Leibrand argued that no one's vision was obstructed and asked the code officer to take a look. He refused. Then the city dispatched two police officers. They arrested her, loaded her into a patrol car in front of her neighbors and hauled her down to the station.

In 2001, honor student Lindsay Brown parked her car in the wrong spot at her high school. A county police officer looked inside and saw a kitchen knife -- a butter knife with a rounded tip. Because Lindsay was on school property, she had violated the zero-tolerance policy for knives. She was arrested, handcuffed and hauled off to county jail where she spent nine hours on a felony weapons possession charge. School Principal Fred Bode told a local paper, "A weapon is a weapon."

Congress creates, on average, one new crime every week. Federal agencies create thousands more -- so many, in fact that the Congressional Research Service itself said that merely counting them would be impossible.

This is a bad trend. As Lao Tsu said, "The more laws and order are made prominent, the more thieves and robbers there will be."

Continued in article

"How The SEC Is Violating My Wife’s First Amendment Rights," by Brad Feld, MIT's Technology Review, July 11, 2010 ---

I think I will take Scott's word for it.
"The Generalized Linial-Nisan Conjecture is false," by Scott Aaronson, MIT's Technology Review, July 11, 2010 ---
Good thing this the original conjecture wasn't published in The Accounting Review ---

"Who Will Investigate the Investigators? Another voter fraud scandal involving the Justice Department," by John Fund, The Wall Street Journal, July 8, 2010 ---

J. Christian Adams,, a former career Justice Department lawyer who resigned recently to protest political interference in cases he worked on, made some news yesterday in testimony before the U.S. Commission on Civil Rights.

As expected, he claimed that Associate Attorney General Thomas Perrelli, an Obama appointee, overruled a unanimous recommendation by six career Justice attorneys for continued prosecution of members of the New Black Panther Party on charges of voter intimidation in an incident I detailed here yesterday. But Mr. Adams leveled an even more explosive charge beyond the Panther case. He testified that last year Deputy Assistant Attorney General Julie Fernandes made a jaw-dropping announcement to attorneys in Justice's Voting Rights section. She said she would not support any enforcement of a key section of the federal "Motor Voter" law -- Section 8, which requires states to periodically purge their voter rolls of dead people, felons, illegal voters and those who have moved out of state.

According to Mr. Adams, Justice lawyers were told by Ms. Fernandes: "We're not interested in those kind of cases. What do they have to do with helping increase minority access and turnout? We want to increase access to the ballot, not limit it."

If true, Ms. Fernandes was endorsing a policy of ignoring federal law and encouraging potential voter fraud. Ms. Fernandes was unavailable for comment yesterday, but the Justice Department has issued a statement accusing Mr. Adams of "distorting facts" in general and having a political agenda.

But there is some evidence backing up Mr. Adams. Last year, Justice abandoned a case it had pursued for three years against Missouri for failing to clean up its rolls. When filed in 2005, one-third of Missouri counties had more registered voters than voting-age residents. What's more, Missouri Secretary of State Robin Carnahan, a Democrat who this year is her party's candidate for a vacant U.S. Senate seat, contended that her office had no obligation to ensure individual counties were complying with the federal law mandating a cleanup of their voter rolls.

The case made slow but steady progress through the courts for more than three years, amid little or no evidence of progress in cleaning up Missouri's voter rolls. Despite this, Obama Justice saw fit to dismiss the case in March 2009. Curiously, only a month earlier, Ms. Carnahan had announced her Senate candidacy. Missouri has a long and documented history of voter fraud in Democratic-leaning cities such as St. Louis and Kansas City. Ms. Carnahan may now stand to benefit from voter fraud facilitated by the improperly kept voter rolls that she herself allowed to continue.

Mr. Adams' allegations would seem to call for the senior management of Justice to be compelled to testify under oath to U.S. Commission on Civil Rights. But Justice is making none of its officials available and is refusing to enforce subpoenas issued by the commission. The more this story develops, the more it appears Justice is engaged in a massive coverup of its politicization of voting rights cases.


Racist Hatred in America
Here's the Guy Eric Holder Decided To Spring Free:  Three Cheers and Applause for Osama Bin Ladin!

"Look Ahead in Anger Hyperbolic:  rhetoric threatens to swamp our politics," by Sasha Abramsky, Chronicle of Higher Education, July 11, 2010 ---

In many ways, whether our political leanings are left, right, or middle of the road, rage is our shared experience these days. One way of looking at what is happening is that it is an expression of our anxiety over what increasingly looks to be Pax Americana's departing hegemony.

During the Bush presidency, furious books by liberal commentators—Al Franken's Lies and the Lying Liars Who Tell Them, for example, topped best-seller lists. Today, with a liberal president, one is more likely to see conservative jeremiads dominating the list: Glenn Beck's Arguing With Idiots; Sarah Palin's Going Rogue; Michelle Malkin's The Culture of Corruption. Liberal or conservative, they tend to be books long on hyperbolic rhetoric and short on facts.

Over the past year, that rhetoric has threatened to swamp our political culture. Increasingly, a language of bitterness, frustration, and fury has become our default response to the unraveling of illusion. It is no accident that the most rageful moment in modern American history has emerged barely a year after one of the most utopian moments—the movement that swept Obama into the White House and brought millions onto the streets of America's cities to celebrate his victory. "In addition to resignation and a cynical turning away from yesterday's illusions," the German philosopher Peter Sloterdijk writes, in his book Rage and Time: A Psychopolitical Investigation (originally published in Der Zeit, recently brought out in English translation by Columbia University Press), "these waves often lead to momentous formations of rage."

Continued in article

"The Climategate Whitewash Continues Global warming alarmists claim vindication after last year's data manipulation scandal. Don't believe the 'independent' reviews," by Patrick J. Michaels, The Wall Street Journal, July 12, 2010 ---

Last November there was a world-wide outcry when a trove of emails were released suggesting some of the world's leading climate scientists engaged in professional misconduct, data manipulation and jiggering of both the scientific literature and climatic data to paint what scientist Keith Briffa called "a nice, tidy story" of climate history. The scandal became known as Climategate.

Now a supposedly independent review of the evidence says, in effect, "nothing to see here." Last week "The Independent Climate Change E-mails Review," commissioned and paid for by the University of East Anglia, exonerated the University of East Anglia. The review committee was chaired by Sir Muir Russell, former vice chancellor at the University of Glasgow.

Mr. Russell took pains to present his committee, which consisted of four other academics, as independent. He told the Times of London that "Given the nature of the allegations it is right that someone who has no links to either the university or the climate science community looks at the evidence and makes recommendations based on what they find."

No links? One of the panel's four members, Prof. Geoffrey Boulton, was on the faculty of East Anglia's School of Environmental Sciences for 18 years. At the beginning of his tenure, the Climatic Research Unit (CRU)—the source of the Climategate emails—was established in Mr. Boulton's school at East Anglia. Last December, Mr. Boulton signed a petition declaring that the scientists who established the global climate records at East Anglia "adhere to the highest levels of professional integrity."

This purportedly independent review comes on the heels of two others—one by the University of East Anglia itself and the other by Penn State University, both completed in the spring, concerning its own employee, Prof. Michael Mann. Mr. Mann was one of the Climategate principals who proposed a plan, which was clearly laid out in emails whose veracity Mr. Mann has not challenged, to destroy a scientific journal that dared to publish three papers with which he and his East Anglia friends disagreed. These two reviews also saw no evil. For example, Penn State "determined that Dr. Michael E. Mann did not engage in, nor did he participate in, directly or indirectly, any actions that seriously deviated from accepted practices within the academic community."

Readers of both earlier reports need to know that both institutions receive tens of millions in federal global warming research funding (which can be confirmed by perusing the grant histories of Messrs. Jones or Mann, compiled from public sources, that are available online at freerepublic.com). Any admission of substantial scientific misbehavior would likely result in a significant loss of funding.

It's impossible to find anything wrong if you really aren't looking. In a famous email of May 29, 2008, Phil Jones, director of East Anglia's CRU, wrote to Mr. Mann, under the subject line "IPCC & FOI," "Can you delete any emails you may have had with Keith [Briffa] re AR4 [the Intergovernmental Panel on Climate Change (IPCC) report]? Keith will do likewise . . . can you also email Gene [Wahl, an employee of the U.S. Department of Commerce] to do the same . . . We will be getting Caspar [Amman, of the U.S. National Center for Atmospheric Research] to do likewise."

Mr. Jones emailed later that he had "deleted loads of emails" so that anyone who might bring a Freedom of Information Act request would get very little. According to New Scientist writer Fred Pearce, "Russell and his team never asked Jones or his colleagues whether they had actually done this."

The Russell report states that "On the allegation of withholding temperature data, we find that the CRU was not in a position to withhold access to such data." Really? Here's what CRU director Jones wrote to Australian scientist Warrick Hughes in February 2005: "We have 25 years or so invested in the work. Why should I make the data available to you, when your aim is to try and find something wrong with it[?]"

Then there's the problem of interference with peer review in the scientific literature. Here too Mr. Russell could find no wrong: "On the allegations that there was subversion of the peer review or editorial process, we find no evidence to substantiate this."

Really? Mr. Mann claims that temperatures roughly 800 years ago, in what has been referred to as the Medieval Warm Period, were not as warm as those measured recently. This is important because if modern temperatures are not unusual, it casts doubt on the fear that global warming is a serious threat. In 2003, Willie Soon of the Smithsonian Institution and Sallie Baliunas of Harvard published a paper in the journal Climate Research that took exception to Mr. Mann's work, work which also was at variance with a large number of independent studies of paleoclimate. So it would seem the Soon-Baliunas paper was just part of the normal to-and-fro of science.

But Mr. Jones wrote Mr. Mann on March 11, 2003, that "I'll be emailing the journal to tell them I'm having nothing more to do with it until they rid themselves of this troublesome editor," Chris de Freitas of the University of Auckland. Mr. Mann responded to Mr. Jones on the same day: "I think we should stop considering 'Climate Research' as a legitimate peer-reviewed journal. Perhaps we should encourage our colleagues . . . to no longer submit to, or cite papers in, this journal. We would also need to consider what we tell or request our more reasonable colleagues who currently sit on the editorial board."

Mr. Mann ultimately wrote to Mr. Jones on July 11, 2003, that "I think the community should . . . terminate its involvement with this journal at all levels . . . and leave it to wither away into oblivion and disrepute."

Climate Research and several other journals have stopped accepting anything that substantially challenges the received wisdom on global warming perpetuated by the CRU. I have had four perfectly good manuscripts rejected out of hand since the CRU shenanigans, and I'm hardly the only one. Roy Spencer of the University of Alabama, Huntsville, has noted that it's becoming nearly impossible to publish anything on global warming that's nonalarmist in peer-reviewed journals.

Of course, Mr. Russell didn't look to see if the ugly pressure tactics discussed in the Climategate emails had any consequences. That's because they only interviewed CRU people, not the people whom they had trashed.

Mr. Michaels, a professor of environmental sciences at the University of Virginia from 1980-2007, is now a senior fellow at the Cato Institute.


Teaching Case on Loan Loss Reserves
From The Wall Street Journal Accounting Weekly Review on July 9, 2010

Better Credit-Card Statistics? Yes, Because Jobless Have Left
by: Aparajita Saha-Bubna
Jul 06, 2010
Click here to view the full article on WSJ.com

TOPICS: Bad Debts, Banking, Loan Loss Allowance

SUMMARY: The persistently high U.S. unemployment rate has led to a divergence from the rate at which credit card receivables are written off by U.S. banks and other credit card issuers. Those write offs have declined as the unemployed have simply been washed out of the credit system. Further, card issuers have reduced available lines of credit as "new rules limiting fees...and curbs on rate increases...make it less lucrative for card issuers to lend to the less credit-worthy."

CLASSROOM APPLICATION: The article may be used in any financial accounting class covering receivables, bad debts, and write offs.

1. (Introductory) What is the usual relationship between the level of unemployment and rates at which credit-card companies write off loan balances? In your answer, include and define the statistical term "correlation."

2. (Introductory) Why has the typical relationship between loan write offs and the unemployment rate diverged as U.S. unemployment has remained high?

3. (Advanced) Explain the difference between recording bad debt expense and writing off specific accounts receivable. You may prepare your answer by including the journal entry format of the accounting for these events.

4. (Advanced) What does the author mean by the statement that "issuers of plastic also are seeing a bump in earnings from whittling down their loss reserves..."? In your answer, propose an alternate term for "loss reserves."

5. (Advanced) Describe how information from the financial reporting system for credit-card issuing corporations provides the data used in the analysis for this article.

Reviewed By: Judy Beckman, University of Rhode Island

"Better Credit-Card Statistics? Yes, Because Jobless Have Left," by: Aparajita Saha-Bubna, The Wall Street Journal, July 6, 2010 ---

Chronically high unemployment is disrupting what once used to be easy math: the tight correlation between joblessness and souring credit-card loans.

For years, the rate at which credit-card companies write off loan balances has shadowed the unemployment rate. An out-of-work borrower, of course, tends to fall behind on payments.

But for months now, some U.S. card issuers, such as American Express Co., Capital One Financial Corp., J.P. Morgan Chase & Co., Bank of America Corp., Citigroup Inc. and Discover Financial Services, are reporting improving credit trends despite stubbornly high unemployment rates. Issuers of plastic are also seeing a bump in earnings from whittling down their loss reserves, a trend that's expected to continue this year.

The reason for the divergence is grim: Some people have been unemployed so long they have simply been washed out of the credit system and no longer have any effect on the numbers.

"We have never seen the kind of divergence we've seen this time" between unemployment and credit losses, said David Nelms, Discover Financial's chief executive, last month in an interview. "I expect credit will continue to improve. I'm much less optimistic about the total unemployment rate."

The U.S. economy shed jobs in June for the first time this year and the unemployment rate remained high at 9.5%, according to data released Friday. A slight decline in the unemployment rate, from 9.7%, reflected discouraged workers giving up on searching for jobs. In a sign of the labor market's continued weakness, 46% of unemployed Americans were out of work for more than six months in June.

Meanwhile, the quality of credit-card loans has been broadly improving this year. Discover wrote off an annualized 7.97% of its card balances in its fiscal second quarter ended May 31, lower than the 8.51% rate in the first quarter. Write-offs in May similarly improved for most of its peers, who will report second-quarter results later this month.

For instance, AmEx's uncollectible U.S. card balances totaled an annual rate of 6.3% in May, down from 6.7% in April, and J.P. Morgan Chase wrote off 8.95% of card loans, down from 9.03%, during the same period. In a sign of things to come, the rate of borrowers behind on their card payments—a key gauge for future loan losses—is also falling across the board.

"I think we actually see in this phase of the cycle a little bit of reduction in the impact on credit metrics of things like unemployment," said Richard D. Fairbank, Capital One's chief executive, after the bank reported fourth-quarter results in January.

As Americans stay unemployed for long stretches, they fall behind on card payments, get written off—and have no access to new credit. While their continued unemployment keeps the jobless rate high, they no longer have any influence on the statistics of delinquencies or write-offs on cards. Meanwhile, card lenders have tightened standards, and new borrowers are less likely to get into trouble.

"Over time the weaker cardholders get weeded out," says Richard X. Bove, an analyst with Rochdale Securities, so "the quality of your portfolio gets better even as unemployment is high."

Card companies, burned by credit losses and sweeping credit-card legislation passed last year, have scaled back on credit lines, becoming more selective on borrowers. New rules limiting fees, such as those hitting card users exceeding their credit limit or paying late, and curbs on rate increases, make it less lucrative for card issuers to lend to the less creditworthy.

This time around, says Scott Hoyt, senior director of consumer economics at website Moody's Economy.com, the impact on credit losses "from actions taken by lenders has become stronger than the unemployment rate."

Jensen Comment
Perhaps agreeing to phony loan-loss reserve levels of banks has been the darkest hour in the history of CPA auditing ---

Bob Jensen's threads on dirty tricks of credit card companies are at

"Amnesty Will Cost U.S. Taxpayers at Least $2.6 Trillion," Robert Rector, The Heritage Foundation, June 6, 2010 ---

. . .

Factors That Could Increase Future Costs

The $2.6 trillion figure is a rough estimate of future costs that would result from putting 10 million adult illegal immigrants on a guaranteed pathway to citizenship. There are a number of factors that could raise or lower these future costs. Among the factors that could increase the net cost (benefits received minus taxes paid) well above $2.6 trillion are the following:

  1. The actual number of illegal immigrants may be greater than 12 million. The estimated cost of $2.6 trillion in future retirement costs outlined above assumes that the number of illegal immigrants in the U.S. in 2007 was around 12 million, based on data from the Pew Hispanic Center. While the Pew Hispanic Center is the most widely used source for demographic information about illegal immigrants, its data assume that some 90 percent of illegal immigrants appear in the Census Bureau's Current Population Survey (CPS).[19] It is possible that many illegal immigrants do not appear in the CPS and that the total number of illegal immigrants is substantially higher than 12 million. Some estimates place the number of illegal immigrants as high as 20 million. Clearly, if the illegal immigrant population is greater than 12 million, then the net retirement costs resulting from amnesty would be, ceteris paribus, higher as well.
  1. There is a huge potential for amnesty fraud. In order to receive amnesty and a Z visa and be put on a pathway to citizenship, an illegal immigrant must demonstrate that he or she was in the U.S. illegally and employed on January 1, 2007. However, the standard to demonstrate residence is very loose. The illegal immigrant need merely produce two affidavits from non-relatives asserting that he or she was working in the U.S. on the appropriate date. The affidavits could even come from other illegal immigrants. It is doubtful that the Department of Homeland Security has any real capacity to separate true affidavits from bogus ones, especially in the crush of processing millions of applications in the space of a year or two. Consequently, the potential for amnesty based on fraudulent documents is very high. In the 1986 amnesty, an estimated 25 percent of the amnesties granted were fraudulent.[20] In the last 20 years, the underground industry producing fraudulent documents has grown vastly larger and more sophisticated. In this round of amnesty, the fraud rate could be as high as or higher than in 1986, resulting in millions of additional amnesties.
  1. Spouses and children living abroad may be added to the amnesty population. In its present form, the bill grants amnesty to employed illegal immigrants who were in the U.S. on January 1, 2007. Any spouses, children, and parents of employed illegal immigrants who were residing in the U.S. on that date will also receive Z visas and amnesty. However, many illegal immigrants have spouses and children living abroad; under S. 1348, while illegal immigrants and their families inside the U.S. are put on a path to citizenship, families living abroad are not. family members living abroad would be denied Z visas and would not be permitted to reside in the U.S. for the foreseeable future. Presumably, the Z visa holder could have his family join him when he achieves legal permanent residence, but this would not occur until eight years after he is initially given the Z visa.

    The designers of the bill appear to have excluded spouses and children living abroad from eligibility for Z visas in order to lower the apparent number of amnesty recipients, but pressure will build to eliminate this exclusion. At some point, either before or after the bill's passage, a "technical correction" will almost certainly be introduced allowing spouses and children living abroad to obtain Z visas and get on the pathway to citizenship. For every 10 illegal immigrants living in the U.S., there may be four dependents living abroad; if the current illegal population is 12 million, the number of additional dependents who could be brought permanently into the country should the exclusion be eliminated may be as high as five million.
    [21] The overall number of amnesty recipients and dependents could easily reach 17 million.
  1. Medicaid and Medicare costs are likely to rise faster than the rate of general inflation. To project the future governmental costs of amnesty recipients during retirement, this paper has used the current net governmental costs for elderly immigrants with skill levels similar to the amnesty population. These net governmental costs amount to $17,000 per person per year in 2004; half of this cost was medical care expenditures under the Medicare and Medicaid programs. The cost of government Medicaid and Medicare benefits has tended to escalate rapidly both because medical cost inflation has been greater than the general rate of inflation in the economy and because the range of medical services provided by these programs has expanded. The cost of Medicare and Medicaid services is likely to continue to increase more rapidly than inflation for the foreseeable future. As a consequence, the actual retirement costs for amnesty recipients will almost certainly be greater than $2.6 trillion, even after adjusting for general inflation.

Factors That Could Reduce Future Costs

By contrast, three factors could reduce the future costs estimated in this paper:

  1. Not all illegal immigrants will get amnesty. The cost estimate in this paper assumes that all illegal immigrants residing in the U.S. will receive amnesty. In reality, not every illegal immigrant who was present in the U.S. on January 1, 2007, will actually receive amnesty. Some will not apply for a Z visa. Some will be found ineligible due to lack of proof of residence, despite the lax evidentiary standards. Some illegal immigrants will fail the criminal background checks and be rejected.
  1. Some amnesty recipients will return to their native countries. Granting amnesty and creating a pathway to citizenship creates powerful financial incentives for illegal immigrants to remain in the U.S. permanently. Nonetheless, some Z visa holders and legal permanent residents will return to their native countries before reaching old age. Even in this case, some amnesty recipients will have earned eligibility for Social Security benefits and thereby will impose governmental costs even after leaving the nation. To the extent that amnesty recipients leave the U.S. at some point in the future rather than living out their full lives in the U.S., future governmental costs will be reduced. This, however, simply underscores the fact that illegal immigrants, on average, are a fiscal burden. The longer they remain in the U.S., the greater the burden.
  1. The net taxes paid by second-generation immigrants may offset some costs. The average amnesty recipient will reach retirement age in 30 to 35 years. By that time, many of the children of amnesty recipients will have reached adulthood and will be receiving benefits in their own right and paying taxes. This second generation will have better education and higher incomes than their parents. In consequence, their government benefits will be lower and their tax payments will be higher than those of their parents. It is possible that, on average, these second-generation immigrants will be net fiscal contributors; the taxes they pay could exceed the benefits they receive. If this is the case, their net tax payments may offset some the government retirement costs of their parents; however, in calculating the fiscal contributions of second-generation families, it is essential to count more than Social Security taxes paid. A family that pays $3,000 in Social Security taxes while receiving $30,000 in a variety of government benefits does not contribute to governmental solvency. At present, it is uncertain to what extent, if any, the children of potential amnesty recipients will be net fiscal contributors (paying taxes exceeding total benefits). Further, even if they are net contributors, these second-generation families would have to make very large contributions in order to significantly offset the $17,000 per year net cost of their parents.

One final factor should be considered: Some illegal immigrants may become citizens, and thereby impose costs on taxpayers, even without amnesty. Under current law, a child born inside the U.S. to illegal immigrant parents is deemed a U.S. citizen. Upon reaching age 21, this child can petition for his illegal immigrant parents to be given legal permanent residence. In most cases, the petition is automatically accepted. Upon receiving LPR, the parents could begin to gain eligibility to Social Security and Medicare; within five years, the parents would become eligible for most means-tested welfare programs.

This means that, even without amnesty, some current illegal immigrants could become eligible in their retirement years for the type of benefits described in this study. Consequently, some of the costs estimated in this paper may occur without amnesty. How many illegal immigrant parents would, under current law, be placed on the pathway to citizenship by the petitions of their native-born children is unknown. Certainly the path to entitlement through the amnesty provided in S. 1348 is easier and more attractive. Nonetheless, the fact that some illegal immigrants can obtain access to government benefits under current law does not reduce the fiscal costs estimated in this paper; it simply means that a portion of these costs may occur even if S. 1348 is not enacted.

Congressional Budget Office Estimate of S. 1348

At first glance, the figures presented in this paper appear to differ from the cost estimates of S. 1348 by the Congressional Budget Office (CBO).[22] However, the CBO has estimated only the changes in benefits and revenues that would occur in the first 10 years after enactment of S. 1348. By contrast, the retirement costs analyzed in this paper will not really begin until 25 to 30 years after passage of the legislation. The current paper and the CBO study thus analyze very different impacts from the bill.

Currently, very few illegal immigrants are elderly, and virtually none receive Social Security and Medicare. A major result of S. 1348 would be to make illegal immigrants eligible for Medicare, Medicaid, and Social Security during their retirement years. CBO does not address these retirement costs at all.

The CBO report does conclude that in the first 10 years after enactment of S. 1348, federal taxes and other revenues paid by Z visa holders would increase by $63 billion while federal benefits would increase by $33 billion. This should not be surprising since, as this paper has pointed out, under S. 1348, increases in tax revenues would occur immediately while increases in benefits, for the most part, would not begin for 10 years or more. However, in subsequent decades, benefits received by amnesty recipients would increase significantly. When the amnesty recipients reach retirement age, total benefits received will outstrip taxes paid by roughly seven to one. Thus, while amnesty may reduce government net costs slightly in the short run, in the long run, the fiscal effects will be substantially negative.

There are other limitations to the CBO study. First, it covers only federal benefits and revenues and ignores state and local government costs. Second, it covers only changes in spending and revenue that would result from S. 1348 and ignores the government benefits currently received by illegal immigrant families. Finally, the CBO report does not analyze the total fiscal balance of amnesty recipient families either before or after amnesty. (The total fiscal balance of a family equals total federal state and local benefits received by the family minus total taxes paid.) Similarly, it does not analyze the total fiscal balance of amnesty recipients either before or after retirement.

Policy Discussion: Reducing the Costs of immigration Reform

amnesty is not only very expensive, but it also violates the rule of law and is manifestly unfair. It gives the inestimable gift of U.S. citizenship to millions of individuals whose sole qualification for receiving citizenship is that they broke U.S. laws. Consider that on January 1, 2007, there were hundreds of thousands of foreigners in the U.S. on a variety of temporary visas. Because these individuals were here lawfully, none will be granted citizenship under S. 1348. By contrast those who were in the U.S. illegally on that same day will be given the privilege of citizenship.

Consider two foreigners who were in the U.S. on temporary visas that expired in December 2006. One of these individuals lawfully returned home upon expiration of his visa; the other chose to remain in the U.S. unlawfully. Under S. 1348, which of these individuals will be granted the privileges and benefits of citizenship? The one who broke the laws, while the individual who respected the law will have little chance for citizenship. Is this fair? Of all the people in the world who wish to come to America, why should any American feel compelled to place those who broke the laws on a guaranteed path to citizenship?

It is often argued that it is unfair to expect illegal immigrants who have spent years in the U.S. and have begun to raise families here to uproot their families and return home. But S. 1348 makes no distinction between illegal immigrants who have been in the U.S. for decades and those that have been here only a few days. Everyone who was here illegally on January 1, 2007, is potentially eligible for citizenship.

In order to constrain fiscal costs, immigration reform should include three policies:

  1. Emphasize enforcement. In 1986, the U.S. granted amnesty to some three million illegal immigrants as a quid pro quo for a prohibition on the future hiring of illegal immigrants. The amnesty was granted, but the prohibition on the future hiring of illegal immigrants was never enforced. S. 1348 repeats the same mistake; mass amnesty will be granted, but the border and employment enforcement provisions of the act are hollow and will probably never be enforced. To avoid repeating the mistakes of 1986, enforcement must come first.[23]
  1. Do not grant amnesty. amnesty is unfair and would be very expensive. Proponents of S. 1348 will argue that there is no feasible alternative to giving citizenship to all the illegal immigrants in the U.S. But serious, phased enforcement of a ban on hiring illegal immigrants would cause many, if not most, illegal immigrants to voluntarily leave the U.S. and return to their native countries. To minimize economic disruption, it might be possible to give some current illegal immigrants temporary work visas, with the explicit provision that they must return home over time. Such temporary visas would not grant access to welfare, Social Security, Medicare, or citizenship. If necessary, the exiting illegal workers could be replaced by legitimate temporary workers or by permanent immigrants who have never violated U.S. laws.[24]
  1. Close the "anchor baby" loophole. As explained above, under current law, when U.S.-born children of illegal immigrants turn 21, they can petition the government to grant their illegal immigrant parents legal permanent residence, thereby conferring an automatic path to welfare entitlements and citizenship upon the parents (hence the term "anchor baby"). The popular concept of "birthright citi­zenship"-that anyone born in the United States is automatically a U.S. citizen-is historically and legally inaccurate and ought to be corrected by Congress.[25] Regardless, this backdoor path to citizenship for illegal immigrant parents should be closed.[26]


There are currently at least 12 million illegal immigrants in the U.S. The immigration reform bill currently being debated in the Senate would grant amnesty to these individuals and would likely result in the entry of 4 to 5 million dependents living abroad into the U.S. as permanent residents. Illegal immigrants receiving amnesty will immediately begin earning eligibility for Social Security and Medicare benefits and, after approximately 10 years, gain access to a wide variety of means-tested welfare programs, such as Medicaid, Food Stamps, and public housing.

Because amnesty recipients have very low education levels (75 to 85 percent have only a high school diploma or less), they are likely to receive more in government benefits than they pay in taxes through most of their lives. When they reach retirement age, amnesty recipients will impose a large net cost on taxpayers, receiving each year at least $17,000 more per person in benefits than they pay in taxes. The illegal immigrants granted amnesty under S. 1348 are likely to impose a net cost of at least $2.6 trillion on U.S. taxpayers during their retirement years. Policymakers should carefully consider the potential long-term fiscal costs before enacting the amnesty provisions of this bill.

Proponents of S. 1348 will emphasize that amnesty recipients will pay Social Security taxes during their working years, thereby presumably helping to alleviate the great burden already on the government retirement system. Given their low skill levels, the Social Security tax payments of amnesty recipients will, on average, be modest. More important is the fact that, in future years, Social Security benefits will be funded by both Social Security taxes and general revenue. What matters is not the small amount of Social Security taxes that will be paid but the overall fiscal balance (total federal state and local benefits received minus all taxes paid) of amnesty recipients. If the net benefits taken by amnesty recipients and their families exceed the Social Security and other taxes paid, the amnesty recipients will undermine rather than strengthen the financial support for U.S. retirees, even before they reach retirement age themselves.

Finally, if S. 1348 is enacted, the public should expect to see a broad array of new spending proposals and programs designed to help amnesty recipients move upward economically and socially. Many of these programs are likely to be enacted into law, further increasing fiscal pressures.

Robert Rector is Senior Research Fellow in Domestic Policy Studies at The Heritage Foundation.


"Who Pays for ObamaCare? What Donald Berwick and Joe the Plumber both understand," The Wall Street Journal, July 12, 2010 ---

Among Donald Berwick's greatest rhetorical hits is this one: "any health-care funding plan that is just, equitable, civilized and humane must—must—redistribute wealth from the richer among us to the poorer and less fortunate." Count that as one more reason that President Obama made Dr. Berwick a recess appointee to run Medicare and Medicaid rather than have this philosophy debated in the Senate.

We are also learning that "spreading the wealth," as Mr. Obama famously told Joe the Plumber in 2008, is the silent intellectual and political foundation of ObamaCare. We say silent because Democrats never admitted this while the bill was moving through Congress.

But only days after the bill passed, Senate Finance Chairman Max Baucus exulted that it would result in "a leveling" of the "maldistribution of income in America," adding that "The wealthy are getting way, way too wealthy, and the middle-income class is left behind." David Leonhardt of the New York Times, who channels White House budget director Peter Orszag, also cheered after the bill passed that ObamaCare is "the federal government's biggest attack on economic inequality" in generations.

An April analysis by Patrick Fleenor and Gerald Prante of the Tax Foundation reveals how right they are. ObamaCare's new "health-care funding plan" will shift some $104 billion in 2016 to Americans in the bottom half of the income distribution from those in the top half. The wealth transfer will be even larger in future years. While every income group sees a direct or indirect tax increase, everyone below the 50th income percentile comes out a net beneficiary.

At least at the start, Americans in the 50th through 80th income percentiles—or those earning between $99,000 to $158,000—are nearly beneficiaries too, if not for the taxes on insurers, drug makers and other businesses that will be passed on to everyone as higher health costs. This group will eventually get soaked even more—probably through a value-added tax—once ObamaCare's costs explode. But at the beginning the biggest losers are the upper middle class, especially the top 10% of income earners, mainly because a 3.8% Medicare "payroll" tax surcharge will now apply to investment income. ObamaCare, in short, is almost certainly the largest wealth transfer in American history.

Distributional analyses like the Tax Foundation's are usually staples in any Beltway policy debate, especially when Republicans want to cut taxes. Yet aside from this or that provision, none of the outfits that usually report for this duty—the Tax Policy Center of the Brookings Institution and Urban Institute, the Center for Budget and Policy Priorities—have attempted to estimate the full incidence of ObamaCare's taxes and subsidies.

In part this may be because ObamaCare is such a complex rewrite of health, tax, welfare and labor laws. But it's also embarrassing to liberals that much of ObamaCare's redistribution will merely move income to the lower middle class from the upper middle class, and the President habitually promises that people earning under $200,000 will be exempt from his tax increases. We now know they won't be.

With his vast new powers over what government spends, Dr. Berwick will be well situated to equalize outcomes even more, and he certainly seems inclined to do so. The most charitable reading of his redistribution remarks, delivered in a 2008 London speech, is that any health insurance system will involve some degree of redistribution to the "less fortunate," that is, to the sick from the healthy.

Yet Dr. Berwick made those comments in the context of a larger, and bitter, indictment of the U.S. health system, even though the huge public programs he will run already account for about half of all national health spending. From his point of view this isn't enough. And his main stance was that individual clinical choices must be subordinated to government central planning to serve his view of social justice and health care guaranteed by the state.

The great irony is that this sort of enforced egalitarianism imposes higher taxes and other policies that reduce the total stock of wealth and leave less for Dr. Berwick to redistribute. Economic growth has been by far the most important factor in improving health and longevity, especially for those whom Dr. Berwick calls "the poorer and less fortunate."

Americans have learned the hard way over the past two years that this Administration believes in wealth redistribution first, economic growth second. Or as Dr. Berwick also put it in his wealth-redistribution speech, it is crucial not to have to rely on "the darkness of private enterprise."

Bob Jensen's threads on health care are at

Obama's new rules of engagement in Afghanistan prove deadly to U.S. Soldiers ---

Col. Booth forwarded the following speculation that Gen. Crystal's statements to the media were deliberately planned with a purpose
Not wanting to be responsible for military casualties under President Obama's new and very dangerous rules of engagement

Jun 29, 2010 09:34:36 PM, vetadmiral@aol.com  wrote:

I could never believe that the general was dumb enough to allow a counter-culture magazine reporter to have unfettered access like that and expect him to be buddies. Hell, even I've had negative experiences with the press. I grew up in a military family and know that you don't make flag rank (generals and admirals) by being politically naive.

I didn't know the Rules Of Engagement were so idiotic. Barry is making Carter look like Alexander the Great. Once again our soldiers are being sacrificed for political expediency. Shame on the politicians. Shame on the Kool-Aid people that elected him. One thing is certain, Barry is screwing up our country.


This article was sent to me by a former nuclear sub commander, a Navy captain. This article makes as much sense as anything I've heard or read about the McChrystal debacle. Whether you believe the article are not one thing is for certain: McChrystal and his men let this happen on purpose they were not blindsided and they are certainly not stupid. There's no question they're fed up with Obama with good reason. One thing is for certain: a community organizer will always be a community organizer and not a true commander-in-chief respected by the troops.


McChrystal knew exactly what he as doing plus new Rules of Engagement explained. This explains a lot:

They should plant the Yellow Heart (as it is now being called) firmly in the middle of Obama's forehead and send him back to Chicago - or maybe to Mecca

The General and the Community Organizer by Paul R. Hollrah

Channel-surfing from ABC, CBS, NBC, and CNN through MSNBC and Fox News, the inside-the-beltway pundits had a field day trying to get inside the heads of Barack Obama, Joe Biden, General Stanley McChrystal, and McChrystal’s top aides. The one thing common to all of the analyses, by the most famous and highly-paid talking heads in the Western World, was that they are all wrong… dead wrong. What is certain is that they all owe General McChrystal and his senior aides an apology for assuming that they are lame-brained numbskulls.

The facts of the McChrystal case are not in dispute. General McChrystal and his senior officers allowed a reporter for Rolling Stone Magazine, Michael Hastings, to have almost unprecedented access during an extended stay in Paris . The extended stay was due, in part, to an excess of atmospheric ash from Iceland ’s Eyjafjallajokull volcano, keeping the McChrystal party grounded for days.

In an interview with CNN, Hastings reported that he had a tape recorder in his hand most of the time and that McChrystal was “very aware” that his comments would find their way into print. He said, “McChrystal and his people set no ground rules for their conversations, although they did ask that some parts of their conversations were off the record.” Hastings subsequently published a lengthy profile of General McChrystal on June 22, titled, The Runaway General.

As Hastings wrote in his profile <http://www.rollingstone.com/politics/news/17390/119236> , McChrystal thought that Obama looked “uncomfortable and intimidated” by the roomful of military brass during their first meeting. Of their second meeting, an advisor to McChrystal quoted the general as saying that it was “a 10-minute photo op.” He went on to say, “Obama clearly didn’t know anything about (McChrystal), who he was. Here’s the guy who’s going to run his f_ _ _ing war, but he didn’t seem very engaged. The Boss was pretty disappointed.”

As General McChrystal flew from Afghanistan to Washington to face Obama in the Oval Office, the almost unanimous opinion of the talking heads was that the comments made by McChrystal and his staff were off the cuff and inadvertent. But to believe that is to totally ignore who these men are.

General McChrystal and his top officers are not simple-minded, knuckle-dragging brutes. To the contrary, they are intelligent, thoughtful, highly educated, patriots… graduates of West Point and other fine universities… who are dedicated to duty, honor, and country. To think that such men would be so careless as to speak unflatteringly of Obama, Biden, and other top administration figures, in the presence of a reporter for a notoriously left wing publication, defies logic… at the very least. To think that men who are trained to be careful and deliberate in everything they do, could do something so careless and so unguarded is simply beyond comprehension.

I would argue that McChrystal and his aides knew exactly what they were doing.

From the day that he became the handpicked “spear carrier” for Obama’s unique brand of warfare… playing at being Commander in Chief while playing to his far left constituency… McChrystal’s life had been one of constant frustration. After telling Obama exactly how many troops he needed to carry out his mission, Obama dithered for months before deciding to give him just half the troops he requested. McChrystal could not have been happy about that.

The Obama team insisted on new Rules of Engagement designed to reduce collateral damage (civilian casualties). Obama’s ROE required that U.S. troops must be able to see the enemy with weapon in hand before they were allowed to return fire. One videotape circulated on the Internet showed a platoon of Marines pinned down by enemy sniper fire. But since the enemy was firing from some distance behind the open window of a building, the Marines could not actually see the weapon being fired. Although they were taking deadly fire, they were prohibited by the ROE from putting small arms fire or an RPG through the window opening.

Under Obama’s politically correct ROE, our soldiers and Marines were required to fight with one hand tied behind their backs. McChrystal could not have been happy about that.

A strict new interrogation policy, dictated by Attorney General Eric Holder, required that prisoners must be delivered to an Interrogation Center within twenty-four hours of being captured or be released. A great deal of actionable intelligence was lost as a result and battle-hardened enemy fighters were returned to the field to kill Americans. McChrystal must have found that to be incomprehensible.

But the greatest insult to our troops in the field, and to the officers who lead them, may be a new battlefield medal designed by the Obama team. It is called the Courageous Restraint Medal and is awarded to soldiers and Marines who demonstrate uncommon restrain in combat by not firing their weapons even when they feel threatened by the enemy. Would we be surprised to learn that the preponderance of these medals were awarded posthumously? McChrystal must have found that to be an insanity.

I suggest that, having his best military judgments subjected to the White House political sieve for nearly a year and a half, McChrystal decided that he’d had enough. And when he announced to his senior staff that he was prepared to retire they decided to push back… to make the most of a bad situation. It was clear that, if McChrystal were to simply take off his uniform and walk away, his retirement would be page-twenty news for a day or two before the mainstream media and the American people forgot all about him.

They had to make the most of his retirement because it provided a one-time opportunity to show the American people, as well as our enemies and our allies, that the man who claims the title of Commander in Chief of the U.S. military does not command the respect of our men and women in uniform. To make the most of that opportunity they had to choose their messenger very carefully.

They knew that, by openly showing their disrespect for Obama in front of just any newsman, they may not attract the attention they desired. Like any astute observer of the MSM, they knew that most reporters would turn on their own mothers if it meant a good story. But they could not take a chance that a mainstream media reporter might suffer a rare pang of conscience when confronted with the prospect of ruining the careers of some of the most senior officers in the War on Terror. They had to fix the odds as much as possible in their favor so they chose to use Michael Hastings and Rolling Stone Magazine.

During the long hours that General McChrystal was in the air between Kabul and Washington , Obama knew that he had just two choices… both bad. He could declare McChrystal to be an irreplaceable asset in the war effort, give him a public reprimand, and send him back to Kabul . Or he could fire McChrystal, sending a clear message that, at least in his own mind, he was the Commander in Chief.

In the former case, he was certain to appear weak and ineffectual… a man not totally in charge. In the latter case, he might at least win a few rave reviews from the Kool-Ade drinkers in the mainstream media. He chose the latter of the two options.

But what is now lost in all of the hand-wringing and speculation is the fact that McChrystal and his people have succeeded in doing exactly what they set out to do. They wanted to plant the seed in the minds of the American people that Obama is not up to the task of being Commander in Chief and that he does not command the respect of the men and women of the uniformed services… from the newest Private E-1 up to the top four-star generals and admirals. That seed is now firmly planted and it cannot be unplanted.

From this day forward, no one will have to tell the American people that Stanley McChrystal is a true warrior, a man’s man, and that Barack Obama is nothing more than a… community organizer. Well done, General!





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