January 2012

Government Employee Pensions’ Threat to New Jersey’s Fiscal Health

by Ivan Osorio on November 20, 2009 · 2 comments

in Deregulate to Stimulate, Economy

New Jersey residents pay the highest state and local taxes in the nation, notes the New Jersey Taxpayers’ Association (NJTA). And what do they get for all that money? For most New Jerseyites, not much more than residents of other states, but for government employees, the benefits are great, according to a NJTA analysis of the state’s public employee compensation.

For example, a police officer who retires with a $105,000 salary after 25 years of service can end up making more in retirement, after 29 years, than he or she did while working.

But that’s not all. Public employee pensions are a ticking time bomb that could bring fiscal catastrophe to the state.

New Jersey’s public employee pensions are under funded by billions of dollars which means there is going to be huge political pressure applied by Public Employees and Retirees to yet again increase taxes on the residents of New Jersey. However, that will simply be a stall tactic. The math will not work over the long term. There are too many employees and retirees in the current pension plans, the benefits are too generous, and there are too few tax payers with enough income to support these pensions. The New Jersey Pension Plans are under funded by roughly $50 billion (some studies and assumptions put the real liability at substantially higher levels). Therefore, on average, every NJ taxpayer will be required to pay more than $20,000to continue these pension benefits in addition to current tax rates. For each day that passes in which these plans are not modified, that tax burden will grow.

New Jersey, California, and Michigan may be egregious cases, but there’s no reason to believe that this situation could not repeat itself in even more states.

For more on public sector unions, see here.

CEI Weekly: CEI Starts Gore Debate Fundraiser

by Charles Huang on November 20, 2009

in CEI Projects, Economy, Energy, Environment, International, Legal, Regulation

CEI Weekly is a compilation of articles and blog posts from CEI’s fellows and associates sent out via e-mail every Friday. Also included in the Weekly newsletter is a brief description of CEI’s weekly podcast and a feature on a major CEI breakthrough made during the week. To sign up for CEI Weekly, go to http://cei.org/newsletters.


CEI Weekly
November 20, 2009


>>[Video] CEI Encourages Al Gore to Debate on Global Warming
In an attempt to convince Al Gore to change his mind about refusing to debate, CEI has started a new campaign called the Pledge-a-Dollar-to-Debate campaign. This campaign will allow individuals to pledge money to Al Gore should he choose to debate Lord Monckton. Check out the video and send your pledges to: GoreDebate@CEI.org.


>>Shaping the Debate
Health Care is Not a Right
Iain Murray and Roger Abbott’s Article in the Washington Examiner Opinion Zone

VAT Would Be One Big Tub of Trouble
Wayne Crews and Ryan Young’s Op-ed in the Investor’s Business Daily

Congress, Tobacco, and a President Who Lights Up
Sam Kazman’s Article in Cigar Magazine

Climate Charter
Myron Ebell’s quote in the San Jose Mercury News


>>Best of the Blogs
Harvard Medical School Dean Gives ObamaCare a “Failing Grade”
by Hans Bader
The Dean of Harvard Medical School just gave the Obama health care plan a “failing grade,” saying it will harm America’s health and finances, and hamper the medical innovation needed to save patients’ lives. Dean Jeffrey S. Flier writes, “In discussions with dozens of health-care leaders and economists, I find near unanimity of opinion that, whatever its shape, the final legislation that will emerge from Congress will markedly accelerate national health-care spending rather than restrain it. Likewise, nearly all agree that the legislation would do little or nothing to improve quality or change health-care’s dysfunctional delivery system.”

Labor’s Day at the Federalist Society
by F. Vincent Vernuccio
Workers may get violent if their wages are cut. The United Auto Workers union (UAW) has a monopoly and was an anchor on the Big Three U.S. automakers. These two ideas were professed by two labor leaders at the recent Federalist Society Convention in Washington, D.C. There may be violence, says Damon A. Silvers, Associate General Counsel for the AFL-CIO and Deputy Chair of the Congressional Oversight Panel for TARP. Silvers spoke on last Friday’s panel “Labor: Wall Street, Labor Unions, and the Obama Administration: A New Paradigm for Capitol and Labor?” Speaking to the panel, he claimed economic downturns which cause people to have their wages cut, can have devastating results.

Making Broadband Accessible: Innovation, Not Intervention
by Ryan Young
FCC regulators want to provide wider and cheaper broadband access by subsidizing it, raising taxes, and forcing network owners to share their network infrastructure with competitors.
A few things the FCC should consider: Subsidies don’t make broadband access any less expensive. They just change who pays for it. In this case, that would be anybody with a phone.

Not Sure What DDT Does to Birds, But I Know How it Helps People
by Michael Fumento
There’s been much in the news lately about the brown pelican being delisted as an endangered species since its recovery from the effects of DDT. I happen to know people whose work I trust who disagree as to whether DDT actually thinned bird eggshells and thus led to declines in various species. That said, all of them are agreed as to the value in saving lives in poor areas – including parts of Africa today.


>>Liberty Week Podcast
Episode 69: Feed the World With Property Rights
We start by pigging out on swine flu statistics, putting off action on global warming and wagging our finger at a corrupt judge. We proceed with the fight between Intel and AMD and wrap up with an interview with CEI Senior Fellow Gregory Conko on how to end world hunger.


>>Support CEI
Like what you read?
The Competitive Enterprise Institute’s 25-year record of success is made possible by our over 3,000 supporters. Make sure to stop by www.cei.org/support and make a donation to continue your support or become a supporter. Curious about all the possible ways to donate to CEI? Contact Al Canata at acanata@cei.org or 202-331-2280 to find out more.

Charles Huang

Web and Media Associate

Competitive Enterprise Institute

chuang@cei.org

http://www.cei.org

http://www.openmarket.org

202-331-1010

The Economic Way of Thinking about Stimulus Packages, Part II

by Ryan Young on November 19, 2009

in Economy, Stimulus to Nowhere

In light of the news about stimulus job creation statistics not being as advertised — complete with made-up Congressional districts — I offer another surprisingly relevant insight from Mises’ Human Action. Turns out there is a reason stimulus advocates are resorting to trickery:

“If government spending for public works is financed by taxing the citizens or borrowing from them, the citizens’ power to spend and invest is curtailed to the same extent as that of the public treasury expands. No additional jobs are created.”

-Ludwig von Mises, Human Action, 4th ed., (Irvington-on-Hudson New York: Foundation for Economic Education, 1996 [1949], p. 776.

“Cultlike” Union Organizing Tactics?

by Ivan Osorio on November 19, 2009 · 1 comment

in Labor, Politics as Usual

The row between the UNITE-HERE hospitality and textile union and Workers United — which broke away from UNITE-HERE earlier this year and joined the powerful and growing Service Employees International Union (SEIU) — has taken a bizarre and ugly turn.

According to The New York Times, several UNITE-HERE organizers have complained about a practice known as “pink sheeting,” in which union members are pressured to reveal private and potentially embarrassing personal information about themselves. Union organizers then allegedly use those workers’ stories to present as testimonials that illustrate the kind of hardships that the union has helped its members overcome.

More than a dozen organizers said in interviews that they had often been pressured to detail such personal anguish — sometimes under the threat of dismissal from their union positions — and that their supervisors later used the information to press them to comply with their orders.

“It’s extremely cultlike and extremely manipulative,” said Amelia Frank-Vitale, a Yale graduate and former hotel union organizer who said these practices drove her to see a therapist.

Several organizers grew incensed when they discovered that details of their history had been put into the union’s database so that supervisors could use that information to manipulate them.

UNITE-HERE President John Wilhelm denied that pink sheeting was common, and denounced “the organized campaign to condemn it” (as Times reporter Steven Greenhouse describes it) as an effort by SEIU to discredit UNITE-HERE.  As I’ve noted here before, SEIU is not above bullying its own members, and SEIU President Andy Stern has motive to go after Wilhelm’s union.

Before UNITE (Union of Needletrades, Industrial & Textile Employees) and HERE (Hotel Employees & Restaurant Employees) merged in 2004,  Stern has made no secret of his desire for SEIU to absorb the two unions. He offered HERE’s Wilhelm and UNITE chief Bruce Raynor to join SEIU. They declined and merged their unions with each other, but did join the Change to Win coalition, which Stern helped found in 2005 when he took SEIU out of the AFL-CIO (the Wilhelm-led UNITE-HERE has since rejoined the AFL-CIO). As The Las Vegas Sun‘s Michael Mishak, who interviewed Stern in May 2009, notes:

To hear [Stern] tell it, two of the nation’s most progressive unions would not now be at war had they only listened to his advice five years ago. Back then, as Unite, the garment and apparel workers union, and Here, the hotel and casino workers union, considered merging, Stern suggested an alternative: join SEIU, which was surging forward as the country’s largest and fastest-growing union.

Unite President Bruce Raynor and Here leader John Wilhelm declined.

Instead they formed Unite Here, parent of the Culinary Union, promising to organize large numbers of workers nationally. The honeymoon was short-lived, and long-simmering tensions between the two leaders erupted into public view this year, with Raynor calling for a divorce and Wilhelm struggling to keep the merger intact

Yet whatever SEIU’s motives, the claims made against UNITE-HERE are serious enough to warrant further investigation. (Thanks to Vincent Vernuccio for the Times link.)

For more on SEIU, see here.

For more on UNITE-HERE, see here.

Property Owner Fights Nashville Land Grab

by Marc Scribner on November 19, 2009

in Economy, Legal, Personal Liberty, Politics as Usual

Yesterday, Tower Investments filed a motion to dismiss the Nashville-chartered Metropolitan Housing and Development Agency’s Petition for Condemnation of the company’s 5.6-acre downtown property. MHDA is attempting to clear land for the proposed Music City Convention Center, the construction of which is currently projected to cost nearly $600 million.

What makes this case particularly interesting is that Tower doesn’t oppose the development plan per se; rather, it wants to build a hotel “in such a way that enhances and accommodates the convention center.” The problem is that the development authority’s master plan includes the construction of a similar hotel, but on the city’s terms and with public support. Given that a government-commissioned study of the development plan admits that the convention center will almost certainly lose money in the long-term, and that Nashville Metro is already more than $2 billion in debt, one might expect that an offer to lessen the public finance burden while achieving virtually the same ends would be a welcome act.

Unfortunately, local officials don’t see it this way. Earlier this year, the Metro Council refused to adopt a proposed financial accountability amendment to the ordinance authorizing the Music City Center development project. The amendment would have required the council to set a maximum public financing limit and mandate council approval of the financing mechanism. And just a few weeks ago, a Metro commission rejected a proposal to allow referendums on major public capital investments, which likely would have led to a vote on the convention center project.

Fundamentally, this case comes down to the almost-universal inability of municipal bureaucrats to understand that economic development can, does, and will occur without them waving their magic wands.

“Obama Warns on Dangers of US Debt”

by Fred Smith on November 19, 2009

in Bailout Watch, Deregulate to Stimulate, Economy, Stimulus to Nowhere

This morning I read with interest – and amazement – the above headline.  Does our president live in the same world that I inhabit?  He’s worried about America’s increasing indebtedness and is pushing for a massive expansion of health entitlements (aka wealth redistribution programs) and the cap-and-tax global warming initiatives (aka wealth redistribution programs) and a host of other other wealth-destroying regulatory programs. Yet, he’s worried about America’s growing debt?

Our political system is only now perhaps emerging from a foolish policy of lowering credit standards to encourage universal home ownership.  We’re now about to lower credit standards for health and energy investments.  In effect, the problems of subprime mortgages are now being universalized.  But, as in the subprime case, we’re assured that these moves will actually lower the national debt! Does reality have any relevancy?

“I Can’t See the Objection”

by Fred Smith on November 19, 2009

in Deregulate to Stimulate, Personal Liberty, Precaution & Risk, Tech & Telecom

The National Federation of the Blind and the American Council of the Blind are seeking a preliminary injunction in federal court to stop ASU’s plan to use Kindles in place of traditional textbooks. Their objection was based on the point that it is far from easy for a blind individual to access the Navigation Features of this device.  And they’re right – the “Home Menu” lists the books stored but that order changes as soon as they’re accessed and that list is not available on audio.  The titles, for example, aren’t read aloud.

But, the early versions of any technology are often clumsy.  Books, after all, have long been less accessible to the visually handicapped.  This is not unusual; many visual projects – movies, TVs, plays, operas – all remain inaccessible.  But, the goal of civilization is not the utopian goal of making everything available for everyone but rather to make the world more accessible to more people and Kindle certainly advances that goal.  With some skill or with the assistance of a sighted individual, Kindle allows the blind the opportunity to “read” vastly more books than ever before.  While, readers have always been available and audio books are increasingly common, these are generally more expensive.  Moreover future Kindle products will almost certainly embody audio instructions to guide the blind through the various menu functions.

Utopian passions are dangerous.  The search for the perfect can too easily make it impossible to attain the good.

Gun Control Laws Empower Pirates and Terrorists!

by Fred Smith on November 19, 2009

in International, Nanny State, Personal Liberty

As John Lott has so effectively demonstrated time and time again, widespread citizen gun possession is an effective way of increasing public safety. His policy suggestions have never been more relevant than in today’s world where the military has disarmed its troops exposing them to the horrors recently experienced in Camp Hood, where U.S. ships remain far too exposed to pirate attacks.

Yet, an article in the Washington Times today quotes Roger Middleton, a piracy specialist at the London-based Chatham House: “the international community was still ‘solidly against’ armed guards aboard vessels at sea” and goes on to note that “American ships have taken a different line from the rest of the international community.”  Remember when Ross Perot sent his own team to Iran to rescue his employees.  Americans aren’t immune to self-defense and rarely are as concerned as the “international community” about the root causes that have driven these poor individuals to resort to piracy.

Perhaps, America hasn’t gone quite as crazy as we think.

More cash/ Fewer clunkers

by Michelle Minton on November 19, 2009

in Economy, Odds & Ends, Stimulus to Nowhere

More cash/Fewer Clunkers

Via the Von Mises blog:  According to the consumer pricing index report released by the Bureau of Labor Statistics report, the price of used cars rose 3.4% in October thanks to the government’s cash-for-clunkers that spirited away a large portion of the used-car inventory. So, for those of us who chose not to buy a new “greener” car last month, and who want to purchase a dirty old used car, we have a smaller pool from which to select. Fewer goods results in increased demand and increased prices. Thanks a lot Big Government. You helped rich folks knock off a few grand on their brand new cars that cost tens of thousands of dollars and left those working on a much smaller budget potentially priced out of the used-car market, with no car to get to work or shuttle around kids, and left without a bailout to stand on.

Reid Health Care Bill Adds New Tax Increases, Costs Twice As Much As Promised

by Hans Bader on November 19, 2009 · 3 comments

in Health and Illness, Healthcare, Insurance, Legal, Personal Liberty, Politics as Usual, Precaution & Risk, Regulation, Sanctimony

The health care “reform” bill drafted by Senate Majority Leader Harry Reid adds new tax increases, and costs twice as much as its promised $849 billion price tag.

The tax increases (in billions) include:

1. 40% excise tax on health coverage in excess of $8,500 (individuals) / $23,000 (families). . .
2. Additional 0.5% Medicare (Hospital Insurance) tax on wages in excess of $200,000 ($250,000 for joint filers) – begins in 2013 – $54 B tax increase
3. Impose annual fee on manufacturers and importers of branded drugs – begins in 2010 – $22 B tax increase
4. Impose annual fee on manufacturers and importers of certain medical devices – begins in 2010 – $19 B tax increase
5. Impose annual fee on manufacturers and importers of certain medical devices – begins in 2010 – $60 B tax increase
6. Cut in half (to $500K) the amount of an executive’s compensation that a health plan can deduct from its corporate income taxes – begins in 2013 . . .
7. Impose 5% excise tax on cosmetic surgery and similar procedures – begins for surgery in 2010 – $6 B tax increase!

The bill will cost far more than projected. The bill uses “accounting tricks” to keep the short-term costs down, by temporarily raising taxes before spending explodes. But in every year thereafter, it will increase the deficit, notes an analysis from the Congressional Budget Office. “In its true first decade (2014 to 2023), CBO projects the bill’s costs to be $1.8 trillion — double the price Reid is advertising.”

The Dean of Harvard Medical School, Jeffrey S. Flier, gave the health care bill a “failing grade” in an analysis published yesterday in The Wall Street Journal, saying that it would drive up costs and stifle medical innovation.

The health care “reform” bills “would reduce senior care,” increase “medical costs,”  and “jeopardize access to care for millions,” reported experts at the federal Centers for Medicare and Medicaid Services.    They will explode state and federal deficits, and contain payoffs for trial lawyers and racial preferences.

ObamaCare spends money on frills like “cultural competency,” while cutting spending on crucial things like anesthesia.

Fact-checkers say Obama is lying about health care.  In a speech, Obama claimed that Medicare is “unsustainable” and “running out of money,” then contradicted himself by claiming that “Medicare is a government program that works really well,” making it a model for national health care.

A CNN commentary noted that Obama’s plan would take away “5 freedoms,” such as the freedom to choose your doctors, keep your existing plan if you like it, and choose what’s in your plan.

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