Bureaucracy and Regulations in action: The Fourth Branch of the US Govt.

[Crafty_Dog]

Perhaps even more to the point is that this is the man who believes in the power of the state to "nudge" we the unwilling into state-desired behaviors.

This is the guy who Glenn Beck called "the second most dangerous man in America".

[objectivist1]

Yes, I'm well-aware of this man's predilection for controlling others' behavior.  He's a true Marxist in that sense.  Believes that man can create utopia on this earth, if only the right government polices are enacted.  The very essence of the difference between conservatives and leftists.

[Crafty_Dog]

http://www.cbc.ca/news/canada/windsor/story/2013/05/31/wdr-moore-tornado-relief-us-border.html

[Crafty_Dog]

http://online.wsj.com/article/SB10001424127887323734304578542981761557180.html?mod=WSJ_Opinion_LEADTop

[Crafty_Dog]

The Founders didn't quite anticipate the imperial bureaucracy
Published by: Dan Calabrese

Our masters.
 
First of all, I wish someone could explain to me how Beltway conventional wisdom declares a shallow hack like Ezra Klein "bright," but doesn't recognize the real brainpower in Jay Cost. If you read the Weekly Standard at all, you know Cost for being thorough, analytical and always honest in his assessments. And as we see here, he does his homework and knows his history. Cost has done a really excellent piece that spells out one of the biggest problems facing the citizens of this nation - the fact that a gigantic bureaucracy the Founders could never have anticipated, and really designed no mechanism for reining in, has become such a power unto itself.

Here is the money passage:

The Declaration of Independence vested all sovereign power in the people alone, while the Constitution established a government to manage that power in a republican fashion. While the people still swear fealty to the founding ideals, they have not put much thought recently into the problems the Founders tackled. As society has become more complex, the government has, too; Americans have not reexamined the structure of government, in an age in which it accounts for more than 20 percent of the national economy, to ensure it still reflects the republican spirit. In fact, there has not been a serious public discussion about the organization of the bureaucracy since the 1880s, even as it has doubled in size many times over. And so today, it is a vast enterprise of millions of workers, with precious little oversight from the people’s elected representatives.

It’s no wonder that some agency somewhere in the bureaucracy could have worked so perniciously for so long against the people’s interests. Perhaps the only surprise is that we ever noticed the malfeasance at the IRS at all. Were it not for the over-the-top questioning from the IRS—asking one group to pledge not to protest abortion clinics, another to reveal what books their members were reading, another to say what they’re praying about—all this might still be hidden in the shadows, unbeknownst to an overburdened Congress and an incurious media. And it remains to be seen what will be done about it, whether the bureaucracy, now under attack, has the resources and wherewithal to block oversight and prevent reform.

If there is a battle between the people and the bureaucracy to see who will maintain power, the bureaucracy has a huge advantage because it knows the inside picture, knows where the bodies are buried and knows how to lay hold of the public's resources. Elected officials are theoretically responsive to the voters, but the truth is they know the bureaucracy can make more trouble for them on any given day than some constituent.

The IRS is far from the only bad actor here. We've all heard stories of the excesses at the EPA, and the truth is few really know what goes on in a broad sense within every little agency of the federal government. Even Obama's defenders - in a strange manner of defending him - acknowledge that the government is too big for anyone to really keep tabs on what it's doing.

Congress could pass reforms that would make the bureaucracy more accountable, which would most certainly mean it would have to be smaller, but if Congress tries, you know the greatest resistance will come from the bureaucracy itself and its champions in Congress.

This is a fight that needs to be waged at some point. I'm not sure how to fight it, and I don't see anyone willing to lead it. But someone needs to.

Follow all of Dan's work, including his series of Christian spiritual warfare novels, by liking his page on Facebook.

[Crafty_Dog]

second post

Money to burn
The muddle-headed world of American public-pension accounting
 
 
SLOWLY but surely the cost of America’s public-sector pension promises is becoming clear. Last year the best estimate of the shortfall was more than $4 trillion. To deal with its deficit, a giant Californian pension fund, CalPERS, recently announced plans that will increase contributions by employers (in effect, taxpayers) by up to a half, starting in 2015-16.

Final-salary pension costs have risen for decades because workers are living longer and the retirement age has barely budged. The bill was disguised in the 1980s and 1990s by good asset returns. But dismal equity markets have since forced many private providers to close final-salary schemes to new members and switch to less lavish defined-contribution plans.

This shift has hardly happened in the public sector, in large part because the accounting treatment is so different. Devin Nunes, a Republican congressman, recently revived a bill to move to a more conservative accounting approach.

Failing to recognise the true cost of public pensions builds up all sorts of problems, as an academic paper last year made clear. As pension funds become more mature (i.e., more of their members are retired) their asset allocation should, in theory, become more conservative. After all, the fund has to worry more about paying benefits immediately and has less scope to gamble that riskier assets will deliver long-term growth.

Sure enough, mature pension funds in Canada and Europe and in America’s private sector all follow this approach. But more mature American public plans have riskier portfolios than less mature equivalents. In its latest “Global Financial Stability Report” the IMF worried that American funds had increased the riskiness of their portfolios, “exposing them to greater volatility and liquidity risks”.

The explanation for such Behaviour is not hard to find. American public-sector schemes discount their liabilities by the expected return on their assets. The riskier the asset mix, the higher the assumed return—and the lower the bill appears to be.

This is an odd way of thinking. Suppose a car company borrowed $10 billion in the form of a 20-year bond to build a manufacturing plant and planned to pay off the debt with the profits from running the plant. The car company will assume a higher return on capital than its financing cost (otherwise it should not build the plant). But it still has to recognise the $10 billion bond liability on its balance-sheet. It cannot say it owes only $2 billion because it expects a very high return.

The reason is clear. If the plant fails to earn a high return, the firm will still be liable to repay the bond. Similarly, if pension schemes fail to earn a high return on their assets, they still have to pay benefits. Final-salary pensions are a debt-like liability.

When private-sector companies account for their pension schemes, therefore, they discount liabilities with a corporate-bond yield. Lower yields have pushed up liabilities and led to big deficits. Moody’s, a ratings agency, will in future use a long-term bond yield to discount American public-pension schemes, resulting in much larger liabilities than before.

Even if you use the expected-return methodology, the discount rate used by public-sector pension funds should fall. That is because all pension funds tend to own some bonds, and low bond yields mean low future returns. But the paper finds no link at all between the discount rates used by public-sector funds and the level of bond yields.

The motto seems to be: if reality is challenging, just ignore it.

The Governmental Accounting Standards Board (GASB) did change the rules for public pension funds last year. But the revised rules still throw up absurdities. In a paper for theFinancial Analysts Journal, Robert Novy-Marx of the University of Rochester argues that by destroying assets invested in cash a scheme can reduce its deficit by increasing the expected return on remaining assets. “A plan can sometimes improve its funding status by literally burning money,” he remarks.

This seemed such a startling finding that The Economist asked GASB to comment. Instead of a detailed rebuttal, we received this response: “GASB gave serious consideration to the views of Professor Novy-Marx when developing its new pension standards.” Not serious enough, it seems. American taxpayers must not know whether to laugh or cry.

Economist.com/blogs/buttonwood

[G M]

The low information voters are in for a bad time when the bills finally come due.

[G M]

The low information voters are in for a bad time when the bills finally come due.

Detroit To Dump Retiree Health Costs On ObamaCare

By JED GRAHAM, INVESTOR'S BUSINESS DAILY
 

 Posted 09:18 AM ET
 
 
The federal government isn't among the creditors Detroit has turned to for mercy, but U.S. taxpayers will bear a large share of the cost of its restructuring.
 
High on emergency manager Kevyn Orr's to-do list: slash health care outlays for thousands of early retirees by shifting them to ObamaCare.
 
Detroit spent $177 million on health benefits for 19,000 retirees last year but figures it can cut that to $28 million-$40 million a year.
 
Part of the savings would come from paring supplemental coverage for retirees age 65 and older, most of whom already get Medicare.
 
But the federal government will pick up much of the slack for early retirees through age 64, who will be eligible for subsidized coverage as long as household income is less than 400% of the poverty level.
 
The news is hardly surprising. While the Motor City is an early mover when it comes to shifting early retirees to ObamaCare, it's not alone and the road for doing so has been well-paved.
 
Last month, Chicago Mayor Rahm Emanuel — Obama's chief of staff when the law was passed in 2010 — disclosed that the Windy City would shift 30,000 early retirees to ObamaCare. Last year, retiree health care cost the city $109 million, but that's projected to balloon to $500 million within a decade.
 
Sheboygan County, Wis., also has crunched the numbers and envisions saving $286,000 in the upcoming fiscal year by shifting early retirees to ObamaCare's exchanges starting Jan. 1.
 
ObamaCare's crafters intended to provide an alternative to employer-provided coverage for retirees, which had long been in decline.
 
The law set aside $5 billion to offset employer costs from June 2010 until the launch of the subsidized exchanges at the start of 2014. The funds, to reimburse 80% of per-person claims between $15,000 and $90,000, were exhausted by December 2011. New claims were rejected.
 
About half of the employers who signed up for the program were government entities, including the city of Stockton, which has sought to dump retiree health care in bankruptcy proceedings.
 
Stockton public employee retirees recently agreed to accept $5.1 million in a lump sum, which is equal to just 2% of their lost health benefits.
 
The Early Retiree Reinsurance Program was described by the Department of Health and Human Services "as a bridge to the new health insurance Exchanges."
 
The implication was that employers would cross that bridge by shifting coverage to the federal government come 2014.
 
While relatively few government entities have declared such an intention, it seems logical to expect many to make that move in the next year or so.
 
As governments struggle with massive liabilities for pension and health benefits, court rulings have lent support to the contention that pensions are protected under state constitutions. On the other hand, rulings in a number of states have found no such protections for health benefits.
 
In a recent column, former Comptroller General David Walker wrote that ObamaCare presented "a huge opportunity for states and localities in desperate need of fixing their long-term finances."
 
He predicted: "The overall tax burden will shift, and in ways that Americans in other more fiscally responsible states may not appreciate."
 
Walker also warned that the influx of older, high-cost patients into ObamaCare would put upward pressure on premiums and make it less likely younger workers would sign up.


Read More At Investor's Business Daily: http://news.investors.com/061813-660353-detroit-chicago-shift-retiree-costs-to-obamacare.htm