Sunday, December 26, 2010

One prominent Leftist who is not hostile to Christmas

The Christmas message from Julia Gillard below. She is the Prime Minister of Australia and an avowed atheist. Yet she obviously respects community traditions. No "Happy holidays" from her. The speech could have been made by a conservative. Australian Leftists do tend to be more moderate than their U.S. and U.K. counterparts

In the Gillard family, Christmas is a time for tradition. Everyone has the same job on Christmas Day. I always get to peel the potatoes and carrots. We eat the same food in the same order. Dad tells the same jokes!

We get a little older each year, and the presents for my niece and nephew have changed as the years go by, but not too much else does.

I hope this Christmas you are able to share your own special traditions with people who you love and who love you in return. Whether that’s time in church, or with your family, or at the cricket or on the beach, or helping others, I hope this Christmas is a special one.

Christmas is also a time when we reflect on what’s been. After lunch on Christmas Day, I think many of us have that quiet moment where we look around and think, "all in all, we’re lucky to have each other". Certainly, that’s how I feel about our country this Christmas.

We are all Australians, all people of this place, and as a people, as a nation, we have got so much to be grateful for. Through it all, there’s nowhere I’d rather be. We are still lucky.

For some I know Christmas this year is a sad time. We lost a lot of brave Australians this year: from the 2nd Combat Engineer Regiment, from the 2nd Commando Regiment, from the Special Air Service Regiment, from 6 RAR.

They died for us and I know every Australian has a special thought for their partners and children, their families, and their mates, this Christmas. We don’t forget.

Just as Christmas reminds us of the good things we have, it can be a tough time for some among us. So if your Christmas is a sadder one this year because of family problems, or illness, or the loss of a loved one, I hope you know that you’re never alone.

2010 has been an eventful year in our country’s life, but above all else, we shouldn’t forget the most wonderful thing that happened this year. The drought broke in the eastern states at last.

Of course, it’s never easy on the land, and I know that now it’s flooding which is making life hard in many places even today, but we’re grateful for some of the rain at least. We think of the farmers still in drought. We wish some of the rain would come your way now too.

I want to say something to Australians who have to work at Christmas to serve and protect us - our police and fire fighters, our ambulance officers and nurses, emergency personnel and of course our troops abroad. So many people sacrifice their Christmas Day to make life better for others. It’s hard to think of a more generous Christmas present than that. Thank you.

Finally, whether you’re going around the corner or across the country please drive safely. Don’t make next Christmas a sad anniversary.

For all Australians, my wish is that this Christmas, wherever you are in our country or overseas, you have the chance to do those special things that mean Christmas for you, with people who are special to you. I wish you the merriest of Christmases and the happiest of New Years.



The Age of Uncertainty

Entrepreneurs fret daily over economic uncertainty. Case in point: Even with passage of the lame-duck tax deal, they still don’t know what their tax burden will be two years from now.

Approval of that deal lifted what The Wall Street Journal dubs the “world of the temporary tax code” to unprecedented heights. The Journal explains: "The U.S. will have no permanent regime governing levies on salaries, capital gains and dividends, the Social Security tax, as well as a slew of targeted breaks for families, students and other groups. This on top of dozens of corporate-tax provisions that already were subject to annual renewal."

All this uncertainty “complicates planning and discourages hiring and investment” because “businesses tend to be more reluctant to invest when they perceive high levels of uncertainty about various things, including taxes.”

One bitter fruit of all this uncertainty can be gleaned from a recent Federal Reserve study. The Fed calculated that skittish companies are now sitting on nearly $2 trillion of cash reserves rather than deploying those resources to expand payrolls, build new plants, or purchase new equipment. This is not only $130 billion higher than it was at the end of June but, as a percentage of total assets, the highest cash-reserve level in over half a century.

Two recent court decisions exemplify the full extent of the uncertainty created by the current administration. On December 10, the U.S. Court of Appeals for the District of Columbia rejected a plea from the nation’s manufacturers to scuttle a regulatory initiative by the Environmental Protection Agency that would subject them to new regulatory burdens in a quixotic effort to reduce carbon-dioxide emissions. “The EPA’s agenda,” the National Association of Manufacturers said in a statement, “places unnecessary burdens on manufacturers, drives up energy costs and imposes even more uncertainty on the nation’s job creators.”

The second court decision concerned the new health-care law. A federal judge in Virginia ruled that a crucial provision in Obamacare — the mandate that individuals purchase governmentally approved health insurance — violates the Constitution. “An individual’s personal decision to [purchase or decline to purchase] health insurance from a private provider,” District Court Judge Henry Hudson wrote, “is beyond the historical reach of the U.S. Constitution.” The fate of the policy now depends on the Supreme Court.

And regardless of the ultimate fate of the mandate, the statuary language of Obamacare bestows unprecedented discretionary power upon the federal bureaucrats charged with its implementation. John Hoff, a former assistant secretary at the Department of Health and Human Services, explained: "While it is detailed in some instances, [the new health law] is largely aspirational; it directs the Administration to achieve various universally desired goals — better quality of health care, improved access to care, and increased efficiency of delivery. It constructs the scaffolding of federal control and gives the Administration very broad authority to achieve these aspirations. Each of the many actions taken to implement it will determine the shape of that control. Implementation will be technically difficult and politically charged."

This high degree of bureaucratic discretion, it is important to point out, affects the entire health-care sector, which now constitutes fully one-sixth of the economy.

At this stage, business executives or ordinary citizens trying to comprehend the implications of the new law might as well flip a coin or hire a fortune teller. How will the bureaucrats interpret this “aspirational” language? Will Judge Hudson’s decision be upheld on appeal? And what consequences will flow from all these unknowns? Will insurance rates skyrocket, encouraging consumers to forgo coverage until they need it, which in turn will cause insurers to increase premiums further in a never-ending insurance death spiral?

Should employers maintain their current health plans under the law’s “grandfather” clause, or just dump their employees into the new health exchanges where the cost of coverage might be prohibitive? And if the cost of coverage skyrockets, what about all those rosy projections of manageable subsidy costs from the Congressional Budget Office? Those dollar figures might jump by a few hundred billion — or more. Where will that money come from?

Then there’s the president’s on-again, off-again offshore-drilling policy. And what about employers who may face stacked union elections if the Department of Labor opts to circumvent Congress and implement card check (the number one item on Big Labor’s wish list) administratively?

This layered uncertainty looms as a Sword of Damocles over every business, every investor, and every head of household in America. It has suffocated the risk-taking, entrepreneurial spirit that has made America the exceptional nation in human history. For entrepreneurship hinges on intelligent risk-taking, not closing your eyes and plunging headfirst off the foggy cliff of government intervention and manipulation.

Our current and ongoing economic malaise arises from something we have not seen in America since the days of FDR’s failed New Deal. Our entrepreneurs — society’s economic risk-takers — have lost confidence — $2 trillion worth of confidence — in the federal government’s willingness to let them operate in a way that makes economic sense.

This is why the recent tax deal ultimately does nothing to improve our long-term economic outlook. True, the compromise was better than one potential option: a catastrophic increase in the tax burden that would have destroyed jobs, businesses, and lives. But the goals of this legislative exercise should have been more ambitious: One, create breathing room for entrepreneurs, families, and investors in the form of a reasonable tax and regulatory burden; and two, guarantee that Congress will remain faithful to these policies for the long haul. This would give our most productive citizens the confidence that if they make an investment that requires a long time horizon, they can count on a stable policy environment.

This would mean, among other things, a permanent extension of the Bush-era tax rates for everyone, putting an end to the most egregious regulatory initiatives now underway, consigning Obamacare to the dustbin of history, and allowing energy companies to identify, recover, and generate as much domestic energy as possible.

Our wealth creators will re-engage with our free-enterprise system only when these good policies are in place and stable. And we will know we have succeeded only when investors and businesses move that sidelined $2 trillion into new plants, equipment, and jobs.



State House Shell Games

For years, trickery and quick fixes have just fed the spending habit. Today the budget holes are cavernous and an age of austeriy would seem both inevitable and likely soon


Over the past two years, states have faced accumulated budget deficits of some $300 billion. Federal stimulus money helped cover about two-thirds of that gap, but state governments have had to close the rest themselves. To do so, many have resorted to tricks and gimmicks that Thomas DiNapoli, New York State's comptroller, speaking about his own state's budget, described as a "fiscal shell game." Such shenanigans mortgage the future for quick fixes in the present, and are a bigger part of states' fiscal woes than most taxpayers know.

One common maneuver has been to fill budget holes with borrowed money. Arizona is Exhibit A. Since the housing bubble burst in 2007 and the state's economy began to contract, Arizona has borrowed approximately $2 billion, relying on new debt to close 17% of its budget deficits, according to a report in the Arizona Capitol Times newspaper on Oct. 8. Among the loans: $450 million that the state plans to pay back with future revenues from its lottery. The cost to the state over the next two decades will be about $680 million in principal and interest.

Arizona has also sold its state government buildings, including those that house its Assembly and Senate, to generate $1 billion in one-time revenue. But the sales were part of a gimmick: No buyer stepped forward to purchase the buildings. Instead, the state issued more than $1 billion of notes backed by the rents that it will pay on the buildings—at a cost of $1.5 billion over 20 years. The state remains in control of the buildings, and a financial trustee collects the state's payments and issues checks to buyers of the notes. Since the borrowing is technically being repaid by rents—not tax revenues, as in the case of lottery revenues—Arizona was able to borrow the money despite a provision in its constitution that explicitly limits state borrowing to just $350,000.

States don't only play the debt game in recessions. To make an annual contribution for public employees' retirements, Illinois borrowed $10 billion in 2003, depositing the sum in its pension funds. But in the boom years that followed, the state still failed to make adequate contributions. So Illinois had to borrow again in 2009, issuing some $3.5 billion in new debt at a cost of $4.5 billion in future principal and interest payments. This year, it borrowed yet another $4 billion for the same reason.
Some budget trickery betrays pledges made by lawmakers to taxpayers. One common example is "sweeps," when a state shifts money from accounts dedicated to specific purposes, like highway maintenance, into general accounts where the money can be spent on anything.

One honey pot is the tax revenue designated by federal law for upgrading 911 emergency-response systems. An August survey by the Federal Communications Commission reported that states redirected $135 million in these taxes last year to spending for other purposes. New York is a serial abuser: Since 1991, the Empire State has collected an estimated $600 million from its 911 tax. But only $84 million has actually gone to local officials for upgrading emergency services.

These fund transfers have become so routine that New York must now do "reverse sweeps." For example, New York created a fund 20 years ago to finance bridge and road construction and maintenance. But it often transfers money out of it and into the state's general accounts—only to replace what's been swept by borrowing more. About a third of the Dedicated Highway and Bridge Trust Fund's disbursements, or nearly $1 billion, now goes toward debt service, a figure projected to rise to 70% by 2014. And so New York is shifting tax dollars back from its hard-pressed general fund to help pay off the transportation account's debt.

In some states, fund transfers have provoked opposition, particularly in cases where the government grabbed money from accounts that are not taxpayer-funded. Since 1975, New Hampshire has operated a medical-malpractice insurance fund financed by physician premiums to provide them with liability protection when they have difficulty obtaining it elsewhere. The fund has built up a surplus of $140 million, and last year the state tried to seize and sweep $110 million of it into its general fund. But the doctors sued, and the state's Supreme Court blocked the transfer.

Now states are even casting a covetous eye at private bank accounts. This year Michigan decreased the time that money can sit unclaimed in a citizen's bank account before the state claims it to three years from 15. The state projected the move could provide its general fund with a one-time boost of $200 million.

Early-retirement plans also have turned into budget gimmicks. Michigan recently passed a retirement plan to provide generous additional benefits for up to 6,400 retirees who can step down at age 59. The plan supposedly will save the state's general fund around $80 million in salaries and benefits in its first year.

Sounds good in theory. But recent history shows the danger of this strategy. In 2002, New Jersey offered an early-retirement plan that 4,000 workers took advantage of. Although it saved the state budget $314 million, the retirement benefits were so rich that they cost the pension system $645 million.

Illinois, meanwhile, passed modest pension reforms earlier this year that apply to new workers. The savings won't materialize for years—but the legislation included language that allowed the state to calculate the future savings and apply up to $300 million toward closing this year's budget gap.

Time and again, the quick fix just feeds the spending habit. In 2004, Gov. Arnold Schwarzenegger promised that California could get out of its hole with borrowed money, and voters approved $10.9 billion in deficit bonds. Relieved of its immediate financial squeeze, Sacramento discarded fiscal discipline and went on a binge, hiking spending by nearly a third, or $34 billion, over the next four years. Today the state is back in the hole, facing a $25 billion budget deficit over the next 18 months.

States keep hoping that tax revenues, which began to slump in 2008, will increase significantly and bail them out. But as a report by the National Association of Governors put it earlier this year, states now face "new austere realities."
In other words: fat chance. This new reality isn't going away, and elected officials had better wake up to it.



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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)


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