What's the Matter With Manhattan?
Back in 2004, Thomas Frank wrote a famous book, "What's the Matter with Kansas?", in which he lamented working class white people's choices to vote their "values" rather than what -- in his not-so-humble opinion -- was in their "genuine" economic interests. Why didn't they identify as liberals and vote Democratic?
Frank's book was the midwife of President Obama's infamous "clinging to guns and God" remark on April 11, 2008:
The last few years have not been kind to Frank's or Obama's dogmatic assumptions that economic liberalism is in the interest of Kansas -- i.e., the working people of America.
The presumed tension between Kansans' economic interests and their social values appears increasingly fake.
But in the meantime, as Newark, N.J., Mayor Cory Booker's dramatic heresy on Bain capital last weekend shows, the inverse divide is opening up in the Democratic base that could be called "What's the Matter with Manhattan?"
Liberals live in rich social enclaves with artistic, progressive values that are underwritten largely by the wealth that Wall Street and capitalism create.
A 2009 Quinnipiac poll notes that socially liberal values rise with income -- "support for same-sex marriage also rises with income, as those making less than $50,000 per year oppose it 54 to 39 percent, while voters making more than $100,000 per year support it 58 to 36 percent."
The very rich are disproportionately strong social liberals, whom Bill Clinton persuaded could safely vote for Democrats. Obama's attacks on private equity and the 1 percent are making them think anew: Why should Manhattan vote their values against their pocketbooks?
Manhattan (metaphorically speaking) is thinking hard about that:
In 2008 Obama carried the majority of the rather rich -- those making $200,000 or more per year -- earning 52 percent of the vote, which was 17 points more than John Kerry in 2004. The latest Quinnipiac poll shows Obama trailing among the more modestly affluent -- those making $100,000 or more -- 49 percent to 43 percent.
Raul Fernandez, part owner of the Washington Capitals and the Washington Wizards, donated $30,000 to Obama in 2008. He told The Washington Post last month to count him into the "anybody but Obama" camp. "They paint (wealth creation) with one big brush," Fernandez told the paper. "They are truly trying to make it evil."
And it's not just as donors that these people count.
According to the National Journal, more than one-third of Virginia voters make more than $100,000 per year, and 7 percent make more than $200,000 a year -- more than the coveted Latino voters in that state. In Colorado, another swing state, 8 percent of voters make $200,000 a year or more. Obama carried them last time around by double digits (compared to Bush's 66 percent of this vote in 2004).
If Manhattan -- or more to the point Aspen, Colo. -- votes its economic interests instead of its social values, Obama loses. "What's the matter with Aspen?" could become Thomas Frank's new rallying crime.
Meanwhile "Kansas," metaphorically speaking, is ever more unified against Obama:
Obama won just 40 percent of non-college-educated whites in 2008. Last week's Quinnipiac poll showed him winning just 32 percent of them against Romney.
In another swing state, Florida, a poll released this week shows Obama's deficit among white voters is growing, especially among those without a college degree; Obama now trails Romney 57 percent to 30 percent among less educated whites.
In Florida, the social issues are clearly helping Romney. Twenty-two percent of voters say gay marriage will be "very" or "extremely" important to their vote. They are breaking for Romney 2-1.
Liberals such as Frank thought that working class white voters were so dumb they were being fooled by Republicans into voting against their economic interests by "ginned up" social issues campaigns. Kansans knew better.
Obama is trying to borrow that model, to get affluent white voters to vote against their economic interests by ginning up social issue campaigns like the war on women or endorsing gay marriage.
Will Manhattan be as smart as Kansas?
Public pension funds desperately need Romney
If you are getting 1% interest at the bank, why do you suppose those legislators you elect are still betting the return on pension funds will be 7.5% to 8%? The answer is simple. If they don’t project those rates the law they enacted forces them to currently fund the shortfall. Since legislators don’t have any money that means you, the ones who elected these politicians, will have to pay higher taxes or get fewer services or benefits.
In the article below we find that cities reducing the rate will have to currently fund millions and in some cases billions each year to comply with the law. That means these well-meaning politicians have screwed up royally and you dear taxpayer are going to pay through the nose because of their mistakes.
This problem is no longer a disaster waiting to occur it is a catastrophe. Cities, counties, states as well as teachers, unionists and others will be looking for the taxpayers to bail them out and pay those pensions out of increased taxes. You will note in the article that the union bosses who bankrupted so many companies and cities with higher wages, pensions and medical benefits are now attempting to force the legislators to pay those pensions by taxing the people.
Compounding this problem is the redistributionist policies of the present administration. They are preaching that profits are evil and as a result stock prices that make up the great majority of all pensions assets are languishing with the exception of the crony capitalists like GE. Their policies have now affected growth in the value of stocks in such a material way that pension funds will all go broke if governmental attitudes towards profits and free enterprise don’t change
All this can be changed by a rejection of the Democrat party at all levels in the November election. They are the ones preaching that capitalism is wrong while they attempt to tax that capital out of existence. Unfortunately we have imbeciles in Hollywood, Wall Street, Washington and elsewhere who have no clue that what they want is leading us into bankruptcy.
Rate of return is determined by the annual increase in the value of stock plus dividends held by pensions. Ever since the Democrats were returned to office in 2007 the stock market hasn’t even been a 1% affair (when it was not falling or recovering). Should the Republicans be returned to office this pension problem could be easily solved. That would happen because stock prices would soar with the repeal of Obamacare, Dodd Frank and Sarbanes-Oxley and the elimination of onerous regulations and policies like the EPA impose.
Rates of return are a funny thing. They respond to freedom of opportunity. When Clinton buckled under on Welfare in 1996 the S&P 500 went up 70% from 1-1-96 to 12-31-97. That‘s right 70%. Now we know what happened to that same stock index when it became apparent that Barack Obama would become President in September 2008. It fell 50% and caused a panic in the marketplace.
We can save the pensions and we can save those irresponsible politicians (or if you want to be more precise “ourselves”) if we throw out the redistributionist Democrats and elect Republicans who believe in free enterprise and market-based decision making. We could easily have a 70% increase in pension values and solve this pension problem. All we need to do is believe in ourselves and loosen the shackles of government.
A 1% return is pathetic and illustrates what a failure the Democrat party is. Under George W. Bush there were three years where the S&P 500 went up over 20% a year. And Barack Obama and leading Democrats say those were failed policies. They want us to believe 1% returns are better.
-- comments by retired accountant Dick McDonald
Few investors are more bullish these days than public pension funds. While Americans are typically earning less than 1 percent interest on their savings accounts and watching their 401(k) balances yo-yo along with the stock market, most public pension funds are still betting they will earn annual returns of 7 to 8 percent over the long haul, a practice that Mayor Michael R. Bloomberg recently called “indefensible.”
Now public pension funds across the country are facing a painful reckoning. Their projections look increasingly out of touch in today’s low-interest environment, and pressure is mounting to be more realistic. But lowering their investment assumptions, even slightly, means turning for more cash to local taxpayers — who pay part of the cost of public pensions through property and other taxes.
In New York, the city’s chief actuary, Robert North, has proposed lowering the assumed rate of return for the city’s five pension funds to 7 percent from 8 percent, which would be one of the sharpest reductions by a public pension fund in the United States. But that change would mean finding an additional $1.9 billion for the pension system every year, a huge amount for a city already depositing more than a tenth of its budget — $7.3 billion a year — into the funds.
But to many observers, even 7 percent is too high in today’s market conditions.
“The actuary is supposedly going to lower the assumed reinvestment rate from an absolutely hysterical, laughable 8 percent to a totally indefensible 7 or 7.5 percent,” Mr. Bloomberg said during a trip to Albany in late February. “If I can give you one piece of financial advice: If somebody offers you a guaranteed 7 percent on your money for the rest of your life, you take it and just make sure the guy’s name is not Madoff.”
Public retirement systems from Alaska to Maine are running into the same dilemma as they struggle to lower their assumed rates of return in light of very low interest rates and unpredictable stock prices.
They are facing opposition from public-sector unions, which fear that increased pension costs to taxpayers will further feed the push to cut retirement benefits for public workers. In New York, the Legislature this year cut pensions for public workers who are hired in the future, and around the country governors and mayors are citing high pension costs as a reason for requiring workers to contribute more, or work longer, to earn retirement benefits.
In addition to lowering the projected rate of return, Mr. North has also recommended that the New York City trustees acknowledge that city workers are living longer and reporting more disabilities — changes that would cost the city an additional $2.8 billion in pension contributions this year. Mr. North has called for the city to soften the blow to the budget by pushing much of the increased pension cost into the future, by spreading the increased liability out over 22 years.
Ailing pension systems have been among the factors that have recently driven struggling cities into Chapter 9 bankruptcy. Such bankruptcies are rare, but economists warn that more are likely in the coming years. Faulty assumptions can mask problems, and municipal pension funds are often so big that if they run into a crisis their home cities cannot afford to bail them out.
Democrat rule of Northern cities is so bad that savvy blacks are moving to the SOUTH
Winston Churchill captured what this presidential election is about when he observed “the inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.”
It’s why the young black Democrat mayor of Newark, NJ, Cory Booker, got high level repudiation from the Obama campaign, including from the president himself, when he insolently suggested that Bain Capital, the investment firm once headed by Mitt Romney, might actually do positive things.
Booker, an Obama campaign surrogate, went off script on Meet the Press when he refused to justify a campaign attack ad depicting the evils of Bain. “I’m not about to sit here and indict private equity….Especially that I know I live in a state where pension funds, unions and other people are investing in companies like Bain Capital.”
This was more than insubordination to Booker’s campaign handlers.
It was unmitigated heresy driving to the core of the Obama campaign message. The narrative, telescoping the theme of four years of this presidency, says that the American economy collapsed because of unbridled capitalism. To recover, the narrative continues, we must allow all knowing, all powerful, but compassionate political leadership in Washington to re-arrange the American economy and make sure businessmen never steamroller Americans again.
But Booker, educated at Stanford, Oxford, and Yale Law School, is a new breed of young black politician, who is actually trying to make a difference. And he is too close to realities on the ground to deny the truth he sees.
As mayor of Newark, he governs a city that is more than 50 percent black with a 25 percent poverty rate. It’s clear that what Newark needs is more business and investment, not more government.
George Mason University economist Walter Williams recently noted that America’s poorest cities with populations over 250,000 – Detroit, Buffalo, Cincinnati, Cleveland, Miami, St. Louis, El Paso, Milwaukee, Philadelphia, and Newark – have one common characteristic. For decades they have been run by liberal, Democratic administrations. The mayors of six of them have been black.
The big government, high taxation, overreaching regulation model of governing has been a saga of failure in America’s cities. And it certainly has not served well the black populations that disproportionately populate them.
And interestingly, in another paradox of black political behavior (I wrote last week about the stark contrast between the values that blacks embrace in church on Sunday and the values they vote for on Election Day Tuesday), blacks are voting with their feet against the same political regimes that they are supporting in the voting booth.
The New York Times reported last March that, according to new census data, blacks are departing our failed northern cities and heading south. Blacks may be pulling the lever for “blue” candidates, but they’re leaving the blue states and moving to the red ones.
Michigan, Illinois, New York, and other major Northern black population centers have shown net black population decreases over the last decade, and “among the 25 counties with the biggest increase in black population, three quarters are in the South.”
Professor of history Clement Price at Rutgers University in Cory Booker’s Newark says “the black urban experience has essentially lost its appeal with blacks in America.”
These black Americans on the move are young and educated – 40 percent between 21 and 40 and one in four with college degrees – and looking for opportunity.
And the places in America today with the growth and opportunity they seek are those areas that embrace freedom and entrepreneurship.
Cory Booker knows this. And he knows that fixing America’s blighted urban areas means pushing back on the smothering government that caused this decay and inviting in creative and courageous business minds and their investment capital.
So Booker’s defense of Bain and capitalism should come as no surprise.
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