From 70 to 2018

Sunday is the 9th of Av* on the Jewish Calendar. If Yom Kippur is universally recognized as the holiest day of the year, the 9th of Av, is unquestionably the saddest. It is the anniversary of the destruction of both the First and Second Temples. Jews around the world will mourn by fasting, reading the Book of Lamentations, and engaging in communal self-examination.

Self-examination for what, exactly? The Rabbis say that the Second Temple was destroyed as punishment for sinat chinam, among Jews, usually translated as “baseless hatred.”

But is any hatred truly baseless? Doesn’t even irrational hatred have some basis? Does anyone really hate someone else for no reason at all? Individuals have grudges, groups have rivalries, parties have different visions for the future. Sure, some of these may get out of hand, but are they ever totally baseless?

Rabbi David Fohrman discusses this at some length in his writing. In discussing the destruction of the Temple, the rabbis tell a story about what got the ball rolling. It’s the story of Kamsa and Bar Kamsa, and in it lies both the answer to our question, and a lesson for Americans today.
The story begins with a party. A wealthy man – he remains unnamed, perhaps a personal punishment – is throwing a party, and he sends his servant with an invitation to his friend, Kamsa. The servant, by mistake, brings the invitation to his enemy, a man named Bar Kamsa.

When the host sees Bar Kamsa at the party, he orders him to leave. Bar Kamsa, embarrassed at the mistake, asks to be allowed to save face. He’ll pay for his food. The host turns him down. He’ll pay for half the party. No, says the host, you must leave. Bar Kamsa will pay for the whole party, just don’t humiliate him in front all these people. No, insists the host, and forcibly escorts Bar Kamsa to the door.

What really stings Bar Kamsa, is that a number of prominent rabbis at the party saw the whole thing and who did nothing. Fine, the host was his enemy, thinks Bar Kamsa, I get that. He was being a jerk, but did I really expect anything better?

But the rabbis, it’s their job to encourage people to act with decency and respect, and they just sat there and did nothing. The longer Bar Kamsa thinks of this, the angrier he gets, until he finally decides to take revenge. He tells the Romans that the rabbis are plotting rebellion, manipulates events to make it look that way, and the whole thing snowballs into an actual revolt and the burning of the Temple. Bar Kamsa’s hatred has sown the seeds of Israel’s national destruction.

Fohrman notes that when we’ve been wronged, we react on two separate scales. One is how right we are, the other is how intensely we feel it. Was Bar Kamsa right? Of course he was. He humiliated in front of the cream of Jerusalem society, and the conscience of that society passively let it happen.

But on a scale of 1 to 10, how angry was he? Looks like 11. How angry should he have been? A four, maybe a five? After all, it’s just a party. By next week, everyone will have forgotten about it. Instead he decided to turn it into an international incident that ended up destroying the remnants of Jewish sovereignty for the next 1900 years.

Bar Kamsa, the host, and even to some extent the rabbis, had stopped seeing other people as whole human beings, and instead saw them as symbols. The host saw Bar Kamsa not as a person who was trying to redeem an uncomfortable situation, but as “enemy.” Bar Kamsa saw the rabbis as people who may not even have fully understood what was going on, but purely as instruments of his humiliation. The rabbis, for their part, didn’t see the host and Bar Kamsa as people acting out a personal drama in public, but as litigants in a dispute they couldn’t rule on. It’s much easier to get uncontrollably angry at a symbol than at an actual person.

Which brings us to today. Our social media personas can’t possibly reflect our full selves, and we react to others’ personas as though they were pure, true, authentic, and complete. For most of us, even for public figures, politics is a fragment of our lives. But we increasingly reduce each other to avatars of political movements, judging and punishing each other on that basis.

We react rather than taking time to think. We post with the fierce urgency of now, rather than the calm reflection of later. We use words designed for anger, and then find ourselves made angry not only by our own words, but by those of others.  We go to 11 on the outrage meter and stay there, on everything, and we quickly make our disagreements about each other rather than about the thing we disagree on.

Increasingly, we think there is no escape, feel backed into a corner, raising the stakes of our politics. Each side believes that the other, given power, will use that power to take away our livelihoods and ruin our social lives merely for holding the “wrong” opinions. Each side believes that the other represents a metaphorical authoritarian gun pointed at our heads. Elected officials openly compare policy to the Holocaust, and call for the public harassment of political opponents – and it won’t end with high-level officials.

Since the election, the bulk of the hysteria has come from the Democrats and the Left. This is because they lost. However, given the reason that many voted for Trump, exemplified by Michael Anton’s famously persuasive Flight 93 Election article, I am reluctant to conclude that Republicans would have behaved much better had they lost. The Russians on whom so much attention is focused were careful to leave plenty of conspiratorial breadcrumbs on both sides of the street.

The Left is more responsible for the relentless politicization of every square inch of our public, private, and personal lives. But that doesn’t absolve anyone of trying to arrest this slide. Because we have a very clear message on the consequences of not arresting it.

And I have no idea how to put that back together.


*It’s actually the 10th of Av, but the fast and commemoration are put off for a day because the 9th falls on the Jewish Sabbath.

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More From the Democratic Bad Idea Factory

Back in the 1960s, Colorado lengthened its state legislative session from 120 calendar days to 160, reverting it back to 120 via a 1988 Constitutional Amendment.  It’s still among the longest in the country, and two Democratic bills up in the State House of Representatives argue in favor of reducing it even further.

The first, HB18-1209, would prevent parents and grandparents from using 529 accounts to deduct the cost of K-12 private school tuition from their state income taxes.  Under 529 accounts, parents and grandparents may pre-fund college tuition tax-free.  The 2017 tax reform law extended that exemption to K-12 education under federal law, but it remained up to the individual states to decide whether 529 deposits would be tax-exempt under state taxes.

In this session, two competing an diametrically opposed bills were introduced in the House.  HB18-1221 (sponsored by Republicans) would have explicitly allowed 529 funds to be used to K-12 tax free, but it was killed in committee.  HB18-1209, which is still alive, would explicitly prevent 529s from being used that way under state law.  It will probably pass the House, and it’ll be up to the Republican-controlled Senate to kill it in committee.

The objections to HB18-1221 were primarily from the teachers unions and their supporters.  They argued that it was an attack on public education, but to be honest, you can’t really get there from here.  The money would have been deductible from the general fund.  It’s not a voucher, it’s not even a refundable tax credit.  It would have reduced general fund monies, but wouldn’t have affected the school funding formula, and money wouldn’t “follow” the student from public to private schools, so on a per-pupil basis, anyone taking advantage of this would actually be increasing the per-student school funding in that district.

The other argument is that the public schools will suffer when the “better” students leave to go to private school.  This claim is absurd on the face of it.  If the better students are leaving, it’s because their parents think they can do better in a private school and are willing to pay for the privilege.  Those parents are surely under no obligation to subject their children to an inferior education in addition to paying for it while they wait for their local school board to figure out what to do.  The only way this claim makes any sense at all is if the mere existence of private schools poses a threat to public education.

This latter argument, by the way, was what swayed a majority of the local Jewish Community Relations Council not to support 1221, even though it would have made a substantial difference to many families struggling to pay day school tuition.  Because apparently education is a Jewish value, unless it’s Jewish education.

The other product of the Bad Idea Factory is a government-run 401(k) for everyone in the state, known as HB18-1298.  The bill reprises last year’s similar effort.  Every business in the state with more than a certain number of employees, who doesn’t offer a retirement plan, would be required to participate in the state’s plan, and employees would be automatically opted in to participation, with the ability to opt out.  That number of employees would ratchet down, going from 100 to 5 over a period of three years.

The real effect here – perhaps even the goal – is to force out privately-run 401(k) plans.  It would have the effect of concentrating investment power in the hands of the government, and eventually forcing us all into the same, government-run retirement system.  And they call me ideological.

More subtly, the authors of the bill accept at least two premises that those of us pushing for reform of the state’s catastrophically underfunded public pensions have been making for years.  First, the bill explains that the DC plan won’t add to the state’s liabilities.  Second, by making the plan opt-out rather than opt-in, they admit that default choices are sticky, that people tend to stick with them even if the effort required to switch is low.  Which is why they want PERA to continue to default to the DB plan.

Third, and most critically, they admit that a DC plan can help people save for retirement in a constructive way that helps ensure security.  And it raises the question – if a DC plan isn’t good enough for teachers and state employees, why is it good enough for the rest of us?

Most factories, if they continued to turn out products like these at such a rate, would go bankrupt and close up shop.  The Democrats and the Left went intellectually bankrupt at least a decade ago, but unfortunately, don’t show any signs of going out of business.

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Republic vs. Democracy

Say, “our democracy,” and it shall follow as the night the day that a libertarian will pedantically correct you, “We’re a republic, not a democracy.”  This is usually said hearkening back to the Founders, and of course it’s technically correct.  We are, or at least were designed to be, a representative republic and not a direct Athenian democracy.

I can state with some confidence that the number of people it’s persuaded is in the low single-digits.  Neither those being corrected nor those listening in are likely to second-guess their opinions on whatever subject is at hand, and there’s a good reason for that: our elections are democratic, we frequently have ballot measures that are decided by majority democratic vote, and people use the word “democracy” in common parlance all the time without thinking, “What Would Pericles Do?”

Most of the time, it’s both annoying and irrelevant.

A recent Washington Post oped decried the practice of “gunsplaining,” or pointing out that gun control activists often don’t know very much about the items they’re trying to regulate or ban.  The author argued that the sole purpose of correcting factual mistakes is to bully gun-control advocates into silence.  In my experience, bringing up the fact that there’s no such thing as a “full semi-automatic mode,” or noting with some derision that a Congressman, who’s actually empowered to make laws on this subject, describes a non-existent, “shoulder thing that goes up,” serves a different purpose.

Most of the gun-control activists and legislators in this country are on the left, which has spent the last century or so quietly and not-so-quietly shifting control over our lives to a bureaucracy of experts.  We are expected not merely to defer but to actually give thanks for this growing rule-by-enlightened-bureaucrat.  But when the subject turns to firearms, these very same people turn ignorance into a virtue.  “Gunsplaining”, in its best form, is used to make sure that we’re all talking about the same thing, as with any technical subject, and to make sure that people who want to impose new laws or regulations don’t make them overly-broad.  It’s not contemptuous; it pays the other party the respect of assuming that they’re acting in good faith.

To shout, “We’re a Republic, not a democracy!” in the middle of a gun control discussion doesn’t do any of that, because it’s not really relevant to the subject at hand.

There are plenty of cases where it does matter.  If the discussion is about eliminating the Electoral College in favor of a mythical National Popular Vote, or Colorado’s recent Amendment 71, changin

 

g the way that Constitutional amendments are adopted, govsplaining is entirely appropriate.  Like gunsplaining, it assumes that the other side is discussing the issue in good faith, may simply not recognize the difference between the two or the difference it makes, and tries to reach some understanding of terms that matter.  Govsplaining should be confined to those instances, but usually isn’t.

Contrary to popular opinion, this confusion is not a recent development, nor does it represent a catastrophic failure of our educational system, although there are plenty of those.  Allow a lengthy quotation from Gordon S. Wood’s Empire of Liberty  towards the end (pp. 717-18), where he’s discussing the changes between 1789 and 1815 in our early Republic:

If indeed the Americans had become one homogeneous people and the people as a single estate were all there was, then many Americans now became much more willing than they had been in 1789 to label their government a “democracy.”  At the time of the Revolution, “democracy” had been a pejorative term that conservative leveled at those who wanted to give too much power to the people; indeed Federalists identified democracy with mobocracy, or as Gouverneur Morris said, “no government at all…”

But increasingly in the years following the Revolution the Republicans and other popular groups, especially in the North, began turning the once derogatory terms “democracy” and “democrat” into emblems of pride.  Even in the early 1790s some contended that “the words Republican and Democratic are synonymous” and claimed that anyone who “is not a Democrat is an aristocrat or a monocrat.”  …soon many of the Northern Republicans began labeling their party the Democratic-Republican party.  Early in the first decade of the nineteenth century even neutral observers were casually referring to the Republicans as the “Dems” or the “Democrats.”

With these Democrats regarding themselves as the nation, it was not long before people began to challenge the traditional culture’s aversion to the term “democracy.”  “The government adopted here is a DEMOCRACY,” boasted the populist Baptist Elias Smith (pictured) in 1809.  “It is well for us to understand this word, so much ridiculed by the international enemies of our beloved country.  The word DEMOCRACY is formed of two Greek words, one signifies the people, and the other the government which is in the people…. My Friends, let us never be ashamed of DEMOCRACY!”

We all know the difference between a representative republic and a direct democracy.  The Americans of 1790-1810 knew it, too.  I suspect when pressed, most Americans even now understand the difference.  It’s important not to let corruption of the language degrade our understanding of institutions, and eventually our institutions themselves.  But it’s most important when it’ll do some actual good.

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SB200 Passes the Senate With No Democrat Votes

SB200, the PERA reform bill, has passed the State Senate on a party-line 19-16 vote, with Sen. Cheri Jahn (U) joining the majority Republicans in support.

It faces a tougher road in House, where the Democrats have a 10-seat majority, pending a Republican successor to evicted Rep. Steve Lebsock (D-R) in House District 34.  But the bill has Democratic support, even among leadership.  Majority Leader K.C. Becker (D) is one of the sponsors, and she’s been working with Sen. Jack Tate (R) since the beginning to get something written that can both pass and do more than just tweak things until the next crisis.

With a minority in the Senate, and the Republicans solidly behind the bill as amended, it was easy for Democrats to vote to oppose.  They took no risk in doing so.  What they could do was propose amendments that laid down markers for what the unions party expects to see changed coming out of the House and headed into a presumed conference committee.  I covered those in a previous post, but they amount to:

  • Reducing the employee contribution increase
  • Increasing the employer contribution
  • Not increasing the retirement age
  • Not expanding access to the Defined Contribution plan
  • Increasing the COLA cap
  • Eliminating the new oversight committee

Now is where the Senate Republicans and House Democrats who have been leading the effort will really be tested.  The needle to thread is much narrower, with Republicans more likely to vote against a substantially weakened bill, but Democrats potentially demanding more change to vote for it.

The Senate Democrats, in particular Sen. Rachel Zenzinger, complained that they were willing to compromise but that the Republicans had rejected such efforts.  In fact, the final bill represented serious compromise from the Republican desiderata going in.

Will Becker and her co-sponsor Rep. Dan Pabon (D) be able to corral enough House Democrats to avoid poison-pill amendments, and have Sens. Tate and Priola been clear and convincing about just what those red lines are?  Should a weakened bill make it out of conference, will enough Senate Republicans vote against it to offset any pickup in Senate Democrats.  Recall that in the Senate Finance Committee, Sen. Jahn actually voted to support two amendments by Sen. Lois Court (D-Not Math) that ended up being proposed again on the floor.

We’re far from done.  Let’s just hope they’re not still marking up amendments the first week in May.

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Sen. Dan Kagan Emerges as Defender of PERA

In Friday’s debate on SB200, the PERA reform bill, Sen. Daniel Kagan (D-Cherry Hills) emerged as the floor leader of those fighting to defend the current system.  Neither his positions nor his prominence on this issue should entirely be a surprise to observers.

Kagan’s district isn’t particularly left-wing: it’s got a 32000 – 27000 Democrat-to-Republican registration advantage, but also has 35,000 Unaffiliated voters.  Kagan won his race against Republican Nancy Doty 53% – 47% in 2016, running slightly behind Hillary Clinton, who got 56% of the three-way vote among herself, Donald Trump, and Libertarian Gary Johnson.  Located in suburban Denver, it’s a battleground district, but because of its loction also has a lot of PERA members and retirees.

Kagan reliably votes the Democratic line and has since his time in State House of Representatives, but has a way of conducting himself with civility and generally respects even hostile witnesses who come before his committees.  The plummy British accent born of a well-to-do aristocratic upbringing probably doesn’t hurt as a public face, either.

On Friday, Kagan proposed three separate amendments, all of which could well have been written by the unions.  The first would have restored an increase in the employer contribution, a 1.5% increase as compared with the 2.0% increase that was amended out in the Finance Committee.  He used the traditional phrases about “shared sacrifice,” but also noted that the SAED enacted in 2006 was supposed to come from money from foregone raises, claiming that the nominal current 20.15% overstates the actual employer contribution.

This is an argument rejected by both the governor’s office and even PERA itself, whose former executive director, the late Greg Smith, testified before committee that it was his impression that school boards around the state were eating the SAED themselves rather than taking it out of teacher pay.

Next, he moved an amendment to raise the COLA cap from 1.25% to 1.75%, although he didn’t speak to that amendment.

Finally, he proposed L-013, comprehensively different plan altogether.  These sorts of amendments are called “strike-through” amendments because they strike-through the whole of the bill, seeking to replace it with something else.  In this case, the “something else” would restore the employer contribution to 1.5%, lowered the increase in the employee contribution to 1.5%, capped the COLA at 1.75%, increased the Highest Average Salary calculation from 3 years to 5 years (as opposed to the 7 in the bill), rescinded the increase in the retirement age, kept the calculation on net pay rather than gross pay, and prevented the expansion of the DC plan availability to all employees.

He defended this proposal by arguing that the plan’s actuaries confirmed that, according to their assumptions, it would put PERA on a path to 100% funding in 30 years.  He claimed that PERA was not in “crisis” as in 2010, but did lack “resiliency,” especially since the adoption of more “conservative” assumptions.  The language here is important.  The term that the PERA Board would use for its November 2016 revisions in the expected rate of return and mortality tables is “realistic,” but this is incorrect – they are more conservative, and still far too optimistic.  It is those assumptions that the actuaries are operating under.

He also derided the expanded DC plan availability as a “poisoned chalice,” that most PERA members rejected in favor of the shared responsibility and pooled resources of a DB plan that would always be there for people.  I think it should be obvious to all but the most blind observer that the experience of the last 20 years shows that, absent continual adjustments, benefit cuts, and increased taxpayer contributions, the DB plan will not “always be there.”

Debate on this amendment – backed by the unions – will continue Monday morning when the Senate reconvenes.

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Bruce Catton and U.S. Grant

 

Having finished Ron Chernow’s biography of Grant, I decided to go back to my library and re-read Bruce Catton’s shorter treatment of the subject, U.S. Grant and the American Military Tradition. Catton did most of his writing in the 50s and 60s, so some of the scholarship is dated, but most of his conclusions have held up.

More than that, Catton’s writing verges on the poetic, both summarizing and illuminating a subject with an economy of words I often wish I had.  For instance, in describing frontier Ohio of the 1820s and 1830s:

Men who could do everything they chose to do presently believed that they must do everything they could.  The brightest chance men ever had must be exploited to the hilt.  And the sum of innumerable individual freedoms strangely became an overpowering community of interest.

When dissecting the rights and wrongs of secession, its present-day defenders (who do not defend the institution of slavery, it should be emphasized) tend to focus on the clinical, legal aspects of the matter.  Catton captures what they miss, and why the North and especially the West was willing to fight:

Against anything, that is, which threatened the unity and the continuity of the American experiment.

Specifically, they would see in an attempt to dissolve the Federal Union a wanton laying of hands on everything that made life worth living.  Such a fission was a crime against nature; the eternal Federal Union was both a condition of their material prosperity and a mystic symbol that went beyond life and all of life’s values.

On the post-Shiloh commanders:

McClellan, Halleck, and Buell, then, were the new team, and that hackneyed word “brilliant” was applied to all three.  The Administration expected much of them.  It had yet to learn what brilliance can look like when it is watered down by excessive caution and a distaste for making decisions, and when it is accompanied every step of they way by a strong prima donna complex.

And on how Americans view war.  Catton believes it goes a long way towards explaining why Grant – representative of his people – was doomed to substantially fail at the big post-war task of Reconstruction and restoration:

…the will-o’-the-wisp again, recurrent in American history.  Victory becomes an end in itself, and “unconditional surrender” expresses all anyone wants to look for, because if the enemy gives up unconditionally he is completely and totally beaten and all of the complex problems which made an enemy out of him in the first place will probably go away and nobody will have to bother with them any more.  The golden age is always going to return just as soon as the guns have cooled and the flags have been furled, and the world’s great age will begin anew the moment the victorious armies have been demobilized.

Sound familiar?

Catton was not, of course, infallible.  He had this to say about President-Generals, whose training is to treat Congress as supreme, the executive as the instrument of Congress’s declared war aims:

It made it inevitable that when he himself became President he would provide an enduring illustration of the fact that it can be risky to put a professional soldier in the White House, not because the man will try to use too much authority in that position but because he will try to use too little.

Catton wrote these words in 1954, with full awareness of who was then president.  But history doesn’t bear out his fear, entirely.  Washington maintained a strong sense of the office’s limitations, but worked to strengthen both the federal government and the executive.  Neither of the two previous Whig presidents – both generals – lived long enough to have much impact in the office.  And Eisenhower was working with an already-stronger executive, which he worked to professionalize, treating his cabinet a little like a corporate boardroom of competing ideas.

He differs with Chernow on a few points, and Catton is somewhat better at drawing connections.  Catton considers the Santo Domingo treaty not merely ill-advised but actually corrupt, for instance.  Both note that Grant manumitted the one slave he ever owned as quickly as he could (a gift), but only Catton points out that Grant did so even though he could really have used the money from a sale at that point in his life.

Catton is also harder on the Radical Republicans, and somewhat more forgiving of Andrew Johnson, than Chernow is, possibly because Catton was unaware of the postwar wave of white supremacist violence that swept over much of the Deep South.  He argues that the Radical Republicans were at least as interested in using blacks as a means to political power as they were in their welfare – not the last time that would happen in American history.  Catton also claims that Johnson adopted Lincoln’s view of postwar reconciliation, where Chernow states that Johnson adopted a softer line through misbegotten racial solidarity.  Whether this is from cynicism or greater political savvy, or from both, it’s hard to know.

 

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SB200 and PERA Reform – The Good, The Bad, and The Missing

Today, the State Senate is scheduled to debate SB18-200, the PERA reform bill, on the floor.  As befits a big, complicated problem, it’s a big, complicated bill.  As with any big, complicated bill it’s a mix of good and bad.  In this case, there are also elements that are missing that would vastly improve the bill’s effectiveness and fairness.

And as with any bill, especially one in a divided legislature, there are political considerations.  The bill is the result of several months of bipartisan effort, led by Republican Sen. Jack Tate and Democratic Rep. K.C. Becker, but also with the contributions of several Democratic senators and Republican representatives.

The Good

Photo Credit: Todd Shepherd

The Good in SB200 can be broken down into three parts. First, there’s the usual dial-turning and knob-twisting, but in this case, there’s also some screw-tightening and refitting.  Second, there will be expanded legislative oversight. Third, there will be an expansion of the Defined Contribution plan.  Let’s take each of these in turn.

The Dials and Knobs

The bill will increase contributions and decrease benefits in a number of ways:

  • Employee contributions will step up another 3%
  • Contributions will be calculated on gross, rather than net salary, reducing the incentive to game the system through deductions and spiking
  • The Highest Average Salary will be calculated on 7 years, rather than the current 3 years
  • COLAs will take a 2-year break, and then will max out at 1.25% per year
  • The retirement age will increase to 65 for new and younger employees
  • If needed to keep the plan on track, employee contributions and COLAs will be adjusted automatically

The retirement age increase and the COLA limits have been the main targets of PERA members, for obvious reasons.  COLA limitations put almost all the inflation risk on retirees.  Adjusting the retirement age for new employees is relatively uncontroversial – there is no group less organized than those who have not yet decided to sign an employment contract.  But adjusting the retirement age for existing employees, even younger employees who have time to adjust, will have to be tested in the courts to see whether that’s considered enough of a “core” benefit to resist change.

Increased Oversight

The bill also calls for the creation of a new joint legislative committee, composed of six House and six Senate members, three from each of the caucuses, specifically to oversee PERA.  The committee would also have four non-voting outside experts appointed by the Treasurer.  Creation of this committee would create an in-house body of expertise, much like we have with the Joint Budget Committee, and which is lacking the legislature now.  It would also allow outside experts to grill the Board publicly and hold it accountable – at least in words – for the effects of its decisions and recommendations.

Defined Contribution

Currently, State employees – but not teachers or other PERA members – have the option to choose the Defined Contribution plan when they join PERA.  This bill would extend that option to all new PERA members, and it is one of the most reviled parts of the bill as far as PERA and the unions are concerned.  They believe that it will work to undermine the DB plan, but they say that as though it were a bad thing.

The Bad

The bad was the increase in the employer (read: taxpayer) contribution.  The original bill would have increased that by 2%, when employers are already putting in 20.15% of salary.  For school districts who are already paying upwards of 1/8 of their operating expenses into PERA, this would tighten budgets even further.  Small governments and municipalities would also be looking a 23-25% of salary going into PERA.  Fortunately, this was amended out of the bill in the Finance Committee on a party-line vote.

So, if there’s only good, and not much bad, why isn’t the Independence Institute full-throatedly behind the bill?  Because of…

The Missing

We believe that, as it stands, the bill can do some good, but represents a potentially substantial missed opportunity to do more to solve the problem over the long term.

Obviously, our preferred DC/DB mix would be to get rid of the DB option for all new employees to keep from perpetuating the problem into the future.  That would still leave the unfunded liability of $50 billion to be dealt with.  We would also like to see an option for current PERA members to change their choice and go to the DC plan.  This could be done in a cost-neutral way, where members only take their own contributions and the actuarial value of their vested benefits with them, and PERA would be able to set the price.

Barring that, we would have preferred an entirely new, more conservative DB plan with no employee contribution above the normal cost, and separate accounting for employer contributions going to the normal cost and the unfunded liability.

The bill implements neither of those.  At a minimum, therefore, the defined contribution should be the default option, rather than the defined benefit.  In the first place, the default option tends to be “sticky,” meaning that people tend to stick with what they’re put into as a default.  Leaving the DB as the default will tend to minimize DC participation.  That leads to a potential political problem down the road, where low DC participation is cited as a reason to yank the option altogether.

Second, the new oversight committee is the minimum of governance reform.  But it isn’t Board reform, nor does it prevent the Board from using public money to lobby the legislature for or (mostly) against additional proposed reforms.  Allowing the Board to lobby against additional reforms raises the stakes for this bill, which is bad, but also increases the likelihood that we’ll end up back in the same place in a few years.

Last, PERA needs to take some accounting measures to keep itself on track.  Namely, it should seek more outside advice than just its actuaries when estimating its expected rate of return.  It should ask multiple investment firms to provide estimates of how well its current portfolio will do.  It should also decouple its discount rate from its rate of return, using something like the Muni 20 Index.  It will only do these things if required by law.  For those who dismiss these requirements as details, we should remember that the current crisis was initiated when PERA lowered its expected rate of return from 7.5% to 7.25%.  And for the knobs and dials to mean anything, the discount rate and rate of return need to reflect reality as well as they can.

We doubt that if a fix is passed, there will be any appetite in the short-term to pass additional reforms.  PERA and its allies will reprise their call to let the current reforms work, as their did with SB-1 for the last 7 years.  This bill is the chance to get things right, so let’s do that.

UPDATE: The Senate fought back floor amendments to raise the COLA cap and to restore the employer contribution.  When the Senate adjourned, it was considering a “strike-through” from Sen. Kagan that would have replaced the proposed reform plan with one essentially written by the unions.  That amendment would restore the employer contributions, raise the COLA cap, lower the employee contribution increase, retain the current retirement age, and eliminate the DC expansion.  It will resume consideration of the bill and the amendment on Monday.

While it is likely that this amendment, along with all others to weaken the bill, will fail in the Senate, they also provide a preview of amendments that will be offered in the House, both in the Finance Committee and on the floor.  Whether those amendments pass and force the bill to a Conference Committee will be the result of the efforts to defend against them by Reps. Pabon and Becker, and the level of commitment by Speaker Crisanta Duran to the bill’s integrity.

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Civil Unrest, Not Civil War

Among many conservatives, Civil War is in the air.   For many, there’s a sense that things as they are now cannot go on.  The civil order as we have known it is broken, and that things will end either in organized violence or in a semi-violent divorce.

Conservatives should remember not to immanentize the eschaton.

Instead of looking to the decades leading up to 1861, we have a far closer parallel with another decade – the 1790s.

Read this, from a 1961 number of American Quarterly, “Republican Thought and the Political Violence of the 1790s,” by John R. Howe, Jr.:

By the middle of the decade, American political life had reached the point where no genuine debate, no real dialogue was possible for there no longer existed the toleration of differences which debate requires.  Instead there had developed an emotional and psychological climate in which stereotypes stood in the place of reality.  In the eyes of Jeffersonians, Federalists became monarchists or aristocrats bent upon destroying America’s republican experiment.  And Jeffersonians became in Federalist minds social levelers and anarchists, proponents of mob rule.  As Joseph Charles has observed, men believed that the primary danger during these years arose not from foreign invaders but from within, from “former comrades-in-arms or fellow legislators.”  Over the entire decade there hung an ominous sense of crisis, of continuing emergency, of life lived at a turning point when fateful decisions were being made and enemies were poised to do the ultimate evil….

In sum, American political life during much of the 1790s was gross and distorted, characterized by heated exaggeration and haunted by conspiratorial fantasy.  Events were viewed in apocalyptic terms with the very survival of republican liberty riding in the balance.

Sound familiar?

Gordon S. Wood, in his magisterial Empire of Liberty notes that friendships were broken, there was political violence on a local scale scattered throughout the country.  Everyday life and even religious affiliation became increasingly politicized.  While this happened at the beginning of parties, those parties were largely organized around the personalities of their respective leaders, Hamilton and Jefferson.

Jefferson’s Republicans didn’t necessarily expect to win in 1796, but the loss was clearly disappointing.  In response, they adopted tactics that can only be described as resistance.  They retreated to the state governments as bulwarks against what they saw as a too-powerful central government.  They openly talked about states nullifying federal laws they considered unconstitutional.  That picture accompanying this post?  That’s from a fistfight on the floor of the US House of Representatives.

The Federalists, whose real leader wasn’t President Adams (who saw himself above parties), but Alexander Hamilton, continued to govern as though the government were simply the government, and any organized opposition to it was akin to treason.  They reached out not to allies, but to the local or state elites to fill appointed posts and run for office.  Instead of organizing, they wrote opinion pieces for the newspapers, and letters to each other.

Ultimately, it was organizing that brought the Republicans to power nationally.  Aaron Burr’s efforts in New York tipped that state’s legislature, and thus its electoral votes, to the Republicans, and put Jefferson over the top.  The Republicans would win the next six consecutive presidential elections, even as the part fragmented into regional and ideological factions of its own.

The Federalists were down, but not really out until the elections of 1816 and 1820.  The conflict between the parties was resolved when the Federalists, by then almost exclusively concentrated in New England, ended up on the wrong side of the War of 1812.  They worked to break the embargo and trade with Britain.  They rediscovered their small-f federalist principles when their state militias frequently refused to cross the border into Canada.  Old line churches often actually prayed for British victory.

By the end of the war, the country had a renewed sense of nationhood, and had turned away from Britain in the east, and towards its own future in the west.  In 1789, almost all Americans had once been British subjects; by 1815, only those over 40 had, and even fewer could remember that time.

Neither the ideologies nor the tactics nor the self-identification with an “aristocracy” cut as cleanly today as they did in 1796.  That’s less important than the fact that the conflict was eventually resolved, peacefully among Americans, even if it did require a war.  Right now, the question of which issue will be the ultimate dividing line, which party is more in touch with the body politic, which one will emerge to create a durable, long-term majority, is still very much up in the air.

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Talking Down the Dollar

The dollar has been weakening over the last year.  I tend to like a strong dollar, so I don’t like to see the President or the Treasury Secretary talking the dollar down, as the expression goes. I understand the impetus – it makes exports easier, which should help employment. But of course, you’re also being paid in depreciated dollars.
 
Now, maybe that works out when the cycle swings back, and you’re holding all these more valuable dollars, and you can start buying up valuable properties overseas. I just tend to think that underlying economic competitiveness overshadows transient currency moves, and that those moves are unpredictable enough as it is.
 
That said, the reporting on this has been, as usual, atrocious. First, talking down the dollar is not ipso facto a threat to or an abandonment of the dollar’s status as a reserve currency.
 
Second, the ECB is furious about it, because it undermines their own strategy, and they’re already pissed about tax reform repatriating potentially hundreds of billions of dollars back here to invest. If it were clearly against our interests, the ECB wouldn’t be reacting this way.
 
Third, it’s not an abandonment of decades long US policy. That’s just the sort of historical amnesia that 23-year-old reporters with no interest in the “date range” feature on google have been exhibiting since before Ben Rhodes saw it as a way to sell them on the Iran Deal.
 
John Snow did it in 2003 under GW Bush. Prior to that, Jeffrey Frankel has documented similar short-lived statements and policies under Carter, during the second Reagan Administration, GHW Bush in 1991, and early, briefly, in the Clinton Administration.
 
Only when the dollar has been extremely strong has it worried policymakers enough to actually intervene in the markets; many of the above examples are just talk. And there’s no evidence that right now, Trump or Mnuchin are doing anything other than talking, or that even if they wanted to, they could successfully intervene in the exchange rate markets for very long, anyway.
 
Chill.

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Some Short History Reading Lists

We were over at a friend’s house for lunch this Shabbat.  Knowing that 1) I have a lot of history books, and 2) I tend to read them, he was kind enough to ask me for some reading lists about the Revolutionary War, the Civil War, and the Cold War.  “I haven’t had much luck with fiction, so I’m trying to round out my history.”

Here’s what I sent him.  These aren’t intended to be college syllabuses, or comprehensive.  They’re books that I have and leafed through, or that I’ve read.  I’ve tried to vary them by author.  I could have had the entire Revolutionary War list by Joseph Ellis, the whole Civil War list by Bruce Catton, but what’s the fun in that?  My library, while large by 19th Century standards, is limited by the size of the house.  Had I fewer books, I would paradoxically have more room for them.  But it’s a good list, enough to cover some key points, get an overview, or just when your appetite for more.

American Revolution

For a decent overview of the war as a whole, Liberty by Thomas Fleming isn’t bad.  I think it was originally written as a companion book to a PBS series, but it’s good in its own right.  For a deeper examination of the issues around the Revolution and the war, and how the Founders handled them, American Creation by Joseph Ellis is recommended.

We all know of Washington Crossing the Delaware; David Hackett Fischer has written a great in-depth review of the events surrounding that crossing and subsequent battles, and how they set the stage for the rest of the war, in Washington’s Crossing.

And for well-researched discussions of adoption of the two primary founding documents – the Declaration and the Constitution, Pauline Maier’s American Scripture and Ratification give surprising insights into what people were thinking at the time.

The Founders lived on into the post-Revolutionary era, and had a second act right after the Constitution in  1787, so some bios are in order.  Richard Brookheiser’s short Founding Father is a fine thumbnail bio of Washington; for something longer Ron Chernow has bios of both Washington and Hamilton.  And David McCullough’s John Adams is what the PBS series was based on.

Having come this far, read about 700+ pages about the early Republic, when were getting ourselves established, with Gordon Wood’s Empire of Liberty.  I’m reading it now, and pretty much every chapter has some surprise or another.

Civil War

For the lead-up to the war, and how we got to the point of secession and war, William Freehling’s long, two-volume The Road to Disunion is among the best.

Much of the same material is covered in the first volume of Bruce Catton’s very readable and shorter three-volume Centennial History of the Civil War.  These are The Coming Fury, Terrible Swift Sword, and Never Call Retreat.  I would recommend anything written by Catton on the Civil War.

Also excellent is Battle Cry of Freedom by James McPherson.  As a guide to Lincoln’s war, what the events looked like from DC, Doris Kearns Goodwin’s Team of Rivals is magnificent.

Cold War

This one is tougher, because it covers decades, not mere years, so the politics, military, and technology changed substantially from 1948 to 1989.  I’ve picked out the books I have and have read that do a good job talking about the Cold War.  My library is heavier on the spy stuff, but there was a lot of spy stuff.

Witness by Whittaker Chambers is indispensable.  He starts out as a Communist, and then converts over to the good guys, and was a key player in one of the great Cold War controversies, the Alger Hiss case.  Nixon’s rise to prominence began with this case, and the left never forgave him for being right.

The Great Terror, is one of the best books about Stalin’s Russia, by one of the best chroniclers of the 20th Century, Robert Conquest.

The Gulag Archipelago by Solzhenitsyn is recognized as the best insider account of the Soviet punishment system.

Berlin 1961 by Frederick Kempe covers the building of the Berlin Wall.

Merchants of Treason by my friend Norman Polmar and KGB: The Secret Work of Soviet Secret Agents are old now, but a good guide to how to the KGB operated in the day, and how the Russians still operate today.

There’s also a vast literature of spy fiction, from Len Deighton’s devastating Game-Set-Match trilogy to John LeCarre’s oeuvre (start with Tinker, Tailor, Soldier, Spy).

That’s enough to keep you busy for a few years.  So what are you still doing on this page?

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