QOTD - Not Getting It edition

I was reading an article in the Denver Post this morning about how the Balanced Budget Amendment fell 23 votes short in the house yesterday.

It's full of the usual diatribes and complaints about how Congress can't afford to limit itself, how we have to be able to spend more than we collect in tax revenues each year.

But here's the quote that jumped out at me:

Democrats overwhelmingly opposed the proposal, arguing that such a requirement would force Congress to make devastating cuts to social programs.

 Um, well, yeah, that's sort-of the point now isn't it. We need to make cuts across the board, as we're spending roughly twice what we collect, and we now have a federal debt of over $15 TRILLION. Calling them "devastating" is just the usual verbal scare-mongering that is sadly used by members of both sides of the aisle. I remember when we would have to say "billion with a 'B'" to distinguish from "million with an 'M'". Sadly, the only time we hear the word 'billion' anymore, it's related to amounts that are usually prefaced with the word 'only'.

It brings to mind the old saw about government spending: A million here, a million there, and pretty soon we're talking about real money. Billions of dollars in spending are now part of the noise floor, and don't even make us raise our eyebrows.

It's like this, Congress. If you don't start making "devastating" cuts to the entire Federal budget, the impending economic collapse will aptly be described as devastating, and we won't even have to use scare quotes.

Further thoughts on Dr. Warren

On Wednesday, I wrote about why I thought Dr. Warren's ideas are wrong.

This morning, I had a further thought. An epiphany, if you will.

Now, again, this is probably rather naive and simple-sighted of me, but the irony of the situation amuses me to now end.

In part of the 2009 interview with Dr. Warren that I did not quote, she said:

HINOJOSA: So, how is it possible? We were all upset about these big bonuses and all this executive pay. And it’s right back—this is like deja vu all over again.

WARREN: Yeah. This one, I have to say, truly amazes me, that these folks who are supposed to be the smartest folks in the room, believe that they can take taxpayer money and save their businesses from complete destruction, and still continue to reward themselves as if—they had earned it all. It’s as if they don’t understand the world changed when you had to take money from the taxpayers to stay alive.

HINOJOSA: But did the world really change for them?

WARREN: Well, evidently not. And—I think what that means is that we really have to change this one now, again, by statute. I’m sorry, I—I was really a believer. “The market will heal itself, everything will correct here,” at least on executive pay. Because no one would be so foolish as to think, “I’ll take taxpayer money and then, while people are unemployed, I will lard my—myself with—with pay.”

For her, one of the most egregious actions was that executives continued to get big paychecks, and that bonuses were paid out, even though these companies received TARP and other bailout funds.

But what were the companies supposed to do? As I recall, they were contractually obligated to pay out those bonuses. Yes, most of the executives and traders returned them, or donated them to charity, due to public pressure and shaming, but the companies had no choice in the matter. Had the not paid those bonuses, they would have been subjected to employee lawsuits, which would have cost them even more money.

I mentioned irony earlier, and here's where I find it. Dr. Warren wants to control executive compensation for companies that received federal funds, and thinks that the bonuses shouldn't have been paid. There is already a free-market process in place for that. It's called bankruptcy. Had those banks been allowed to go into bankruptcy, the courts could have voided the employment contracts, thus eliminating the employee bonuses. The courts could have restructured the compensation packages for all of the employees involved. Any expenditures require the approval of the appointed trustee (if there is one) and the court.

However, that's not good enough for the socialist and progressive members of our society. Free-market corrections aren't "social justice", whatever that means. Instead, the answer is always more government, more regulations, and more control.

We see where that has pushed this country.

What's wrong with Elizabeth Warren?

Rod Dreher, formerly of the editorial board at the Dallas Morning News and the Templeton Foundation, and now with The American Conservative, asks "Remind Me Why I’m Supposed to Hate Elizabeth Warren, Because I’m Not Seeing It".


As part of his evidence, he refers to a PBS interview conducted in 2009.


To me, the critical portion of the interview that he quotes is this:

WARREN: We’ve gotta change the executive compensation structure. And it’s straight across the board.

HINOJOSA: For every single company across the board?

WARREN: You—you bet.

HINOJOSA: But when you look at Goldman Sachs, for example, they did pay back the Tarp money. So, what responsibility do we have, what authority do we have to go in and say, “You need to check out your executive pay and lower it”?

WARREN: They paid back the Tarp money, but they’re still operating with government guarantees. They still are counting on the taxpayer to back stop them. And I believe that gives the taxpayer a seat at the table in decision making over executive compensation. It’s our money. The key has to be that congress needs to rewrite all of the rules on executive compensation. And we need a special set of rules for any company that’s relying on any kind of taxpayer back stop.

HINOJOSA: And the hands are gonna go up and say, “Oh, my god, they’re controlling executive pay. This is—we’re going down the tubes in America.”

WARREN: They’re saying, “You might cut us off from our taxpayer subsidies.” And, you know, that just breaks my heart.

HINOJOSA: Okay. But—but if they’re saying, “Look this is capitalism.”

WARREN: No, this is not capitalism. That’s the whole point. This is socialism. This is the part where they’re using taxpayer guarantees and taxpayer support in order to eek out some kind of private gain. And this is just wrong.

I have no problems with being beholden to government requirements when you suck at the government teat. That's part of playing the game. If you run your company into the ground, and the government bails you out, guess what? The government gets to define at least some of the rules of the game. That's all well and good.

Unfortunately, that's not precisely what happened with TARP and the other government bailouts. The government knew that taking federal stimulus or bailout dollars could be perceived as a negative. So, they essentially forced some financial institutions that didn't need a bailout into the program, just to level the playing field, as it were. That way, no one major financial institution could say "Bank with us, we didn't take any federal money", thus adversely affecting those that did.

Not that any company would do that, would they?



Further, there were occasions when banks attempted to repay their bailout loans early, in order to get out from under the strictures of TARP, and the government told them no, they couldn't repay early.

So, for Dr. Warren to claim that a company operating under government guarantees is subject to exceptional government control is a bit of a chimera. It's not good enough that they still owe the government money, now their business model is backed by "guarantees." Do tariffs count as guarantees? What about price controls? What about startup loans similar to those provided to Solyndra (and I wouldn't have too many problems with loans bringing along leg irons, but that's another post for another day).

My issue with Dr. Warren is that she out-and-out supports a socialist agenda. Sure, for now she's trying to specifically tailor that agenda. But when has a tailored agenda remained form-fitting? How long before it becomes nothing more than a tent to cover up a multitude of sins? What are the conservative/libertarian complaints about Cain's 9-9-9 plan? The same concept applies here.

Further, let's fast-forward to 2011. Dr. Warren has been making the rounds again with her "God bless" polemic:

There is nobody in this country who got rich on his own. Nobody. You built a factory out there -- good for you.

But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory.

Now look. You built a factory and it turned into something terrific or a great idea -- God bless! Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.

 So now, it's not good enough that you have accepted direct government aid in the form of a loan or a payout. You have not just stood on the shoulders of giants a la Sir Isaac Newton. No, your entire success has been bootstrapped by a governmental support network that built your roads, educated your workers and protected your assets.

Guess what? In Dr. Warren's world, I would bet real money that this constitutes "operating with government guarantees", and your company is now subject to wage controls subject to the whim of the government.

Yes, this a bit of a slippery slope argument. However, as Thomas Jefferson reminds us "[t]he natural progress of things is for liberty to yield and government to gain ground."

Looking at her interview in 2009, and her statements here in 2011, I see nothing in her positions that would preserve the liberty of commerce without yielding ground to increased governmental control.

And that, my dear readers, is what's wrong with Dr. Elizabeth Warren.

Paging Mr. Murphy. Mr. Murphy, please answer.

So we moved to the greatness of Northern Kentucky about 4 months ago.  Once it started getting colder, the missus noticed that wonderful aroma of gasoline in the cabin of her van.  After a little poking and prodding around the internet (hey, I don't know enough to poke and prod under the hood), it seems the general consensus is that it was most likely the fuel pressure regulator leaking.  It seems that cold weather exacerbates this condition.

We finally found a mechanic with good references and got the van in this morning to be looked at.  Sure enough, the fuel pressure regulator does need to be replaced.  Apparently, so too do the injector o-rings, the upper manifold intake gasket, a coolant hose, a missing motor mount bolt, and one or two other things I don't remember at the moment.  Oh, yeah, we also had a small oil leak we wanted them to locate.  Turns out the oil pan gasket is bad and needs to be replaced.

Grand total will be just south of $1,500.

OUCH

Four or five years ago my response would have been, "Well, time to shop for a new vehicle."  However, my attitude has slowly changed (and been changed) in the interegnum.  The vehicle is paid for, and has right at 110,000 miles on the odometer.  We did have to have the upper intake manifold gasket replaced around 60k as well, and the mechanic indicated that it's a pretty common repair on our vehicle (Chevy Venture).  So, I can shell out $1,500 and have a vehicle that's pretty good to go for the next 3 - 5 years, or I can take on a car payment.

Let's look at some numbers.  We bought this van for about 18k used, so I'll run with that for what it would cost us to find another quality used vehicle that meets the needs of our family.  My bank is currently offering auto loans on used vehicles at 5.69%.  If I finance for 60 months, that's $347 a month.  Over the loan period, I'll pay out almost 21k.  Or, I can pay out the $1,500 and get it repaired.  That's the equivalent of 4 of those loan payments, and I'll still have a paid-for car.

Yeah, sometimes I get the itch to have better/nicer/fancier wheels.  My wife sometimes gets feature envy seeing some of the newer vehicles with power sliding this, and power folding that.  Heck, I do too.  But ya know, both of my vehicles are paid for.  In fact, we don't have any debt at all right now.  No credit cards, no car payments, no student loans, nothing.  Now, that does change in about 6 weeks when our house is built but even then, the only debt we'll have is the mortgage.  Oh, and we have almost enough in our emergency fund to pay for the car repairs.

Long story short?  Cash is king, and I have (newly) found aversion to debt.  It's amazing how much money is left over at the end of the month when you're not sending it all off to the banks.  I like it much better than having too much month left at the end of the money.  Instead of taking on more debt, I'll get the engine work done now (~$800) and in a month or two I'll get the oil pan gasket fixed.  If I time it right, I'll just do that instead of the next scheduled oil change, and kill two birds with one stone :)

So, Mr. Murphy?  I know you knocked on the door, but I don't feel like answering right now.  I'm too busy getting on with my life.