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Thursday, November 20, 2008
Tobacco money, Bailout Window, Eric Holder
The Atlanta Journal-Constitution
Thinking Right’s weekend free-for-all. Pick a topic:
Advocacy groups are making their annual claim that Georgia should be spending more on anti-smoking efforts. Yet Georgia is at precisely the national average and smoking by adults here has declined from 22 percent to 19 percent in three years. This line of argument — that dollars should be thrown at programs on the basis of a formula or the availability of free money (the tobacco industry settlement) — is something the governor and legislators really have to resist. The tobacco settlement dollars, amounting to $1.42 billion over 10 years, should be put into the state’s General Fund and spent according to competing needs, advocacy groups and phony report cards notwithstanding.
Hurry. The Bailout Window is closing. Or it is fervently hoped. “Printing billion-dollar sums of cash each time an industry faces turmoil is not an economic solution; it is a moral hazard,” declared U.S. Rep. Tom Price (R-Roswell). He’s five words short, though. Insert “or state or local government” between “industry” and “faces.”
The likely new Attorney General in the Obama administration, Eric Holder, is the Clinton administration retread who essentially green-lighted the Marc Rich pardon in the last hour of Bill’s term of office, prompting a national outrage. Two questions here: Could a Republican get away with doing that? And, on a somewhat related matter, will it be a scandal if U.S. attorneys are fired? It was when Democrats found campaign-value scandal in the dismissal of eight U.S. attorneys two years ago.
Anybody surprised at the report by state auditors that the halls of fame created across Georgia are unlikely to be self-sufficient by July 1, the deadline set by the General Assembly? The Golf Hall of Fame in Augusta and the Aviation Hall of Fame in Warner Robins are required to be self-sufficient by that date. Macon’s Music Hall Fame has a 2011 deadline; its Sports Hall of Fame, 2012. John Abbey, who heads the performance audit division, told legislators that without dramatic increases in fund-raising or attendance, they’ll have to stay on the subsidy dole past the deadlines, according to a Morris News Service account by Brandon Larrabee.
A pro-life advocacy group runs a radio commercial that describes Senate candidate Jim Martin as the leader of a “one-man effort” to kill legislation to ban partial birth abortions. If the effort had no followers, how do we know he led? On the campaign trail, the photos accompanying news accounts of “rallies” usually show a few staffers, a few reporters and some stragglers trying to get in out of the cold. Is it a rally if nobody rallies?
Spend no time trying to make sense of campaign commercials. I watched the one that accused Saxby Chambliss of supporting the FairTax and a 23 percent increase in the sales tax that never once mentioned that it would eliminate the income tax and do away with the IRS. Unimportant, I suppose.
President-elect Barack Obama and U.S. Sen. John McCain met and agreed to cooperate on issues like global warming, illegal immigration and others. No surprise here. They sometimes sounded alike on the campaign trail.
Headline: “Auto bailout stuck in neutral.” That is the proper gear.
A trade association representing owners of dry cleaners claims a Florida-based gas marketer, Infinite Energy, exploited the panic of Hurricane Katrina to lock them into long-term contracts at inflated prices. How is this possible? Nobody knows the future of energy prices. Gamble on the future and somebody wins and somebody loses. Case closed.
New-housing construction dropped 4.5 percent last month to the lowest level since 1959. If over-building produced excess inventory, as it did, the market necessarily adjusts, as it’s doing. Too many of anything on the market and somebody wins (buyers) and somebody loses (sellers). Another case closed.
Quote of the week from Jim Martin to Bill Clinton: “You have left us a great legacy.”
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Change needed in D.C. and Atlanta
The Atlanta Journal-Constitution
While pondering the question of what “change” President-elect Barack Obama represents — he sound like Al Gore on global warming, while recycling the Clintonistas back into positions of power — we look elsewhere today for an example of what’s wrong with government.
At issue is, or was, the question of whether automatic cost-of-living raises amounting to 3 percent per year should be given to retired teachers. A proposal put forth by Gov. Sonny Perdue would have required the Board of Trustees to vote on whether to grant the COLAs and if so, by how much. Beneficiaries naturally objected, as they do nationally when any less-attractive proposal surfaces as part of an effort to fix Social Security.
The teachers so intimidated politicians like Lt. Gov. Casey Cagle and House Speaker Pro Tem Mark Burkhalter that they immediately buckled, urging the board to do nothing to change the system, despite the fact that automatic COLAs were never built into the funding mechanism for the Teachers Retirement System of Georgia.
Under pressure, even Perdue tried to pull his proposal. The board capitulated and voted to continue the automatic-COLA practice.
The lesson here is that politicians can’t stand up to beneficiaries, especially to beneficiaries who are well-organized public employees. The need, therefore, is to change the model — to get politicians out of the post-employment benefits business. The way to do that is to eliminate defined-benefit plans for future employees, including teachers, and to switch to defined-contribution plans where, at the end of every day, the employee and the employer are even. The employee owns his retirement account and takes the cash with him when he moves to other employment.
The current system is an invitation to politicians to pander. It incentivizes employees and retirees to game the system for higher benefits than those their financial contributions warrant.
We’ve seen in Washington that politicians never change. The change has to come, therefore, in the structure of the programs. Build a firewall between beneficiaries and politicians with Retirement Savings Accounts, 401(k)s, Health Savings Accounts and others that give control to individual beneficiaries.
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