Commentary From the Mile High City

"Star of the conservative blogosphere" Denver Post

"The Rocky Mountain Alliance offers the best of what the blogosphere has to offer." -David Harsanyi, Denver Post
Joshua Sharf

 notify list
to receive email when this site is updated, enter your email address:
 recent posts
24 (2 entries)
Anglosphere (1 entries)
Biking (1 entries)
Blogging (35 entries)
Business (173 entries)
CFA (3 entries)
China (5 entries)
Climate Change (3 entries)
Colorado (20 entries)
Denver (12 entries)
Design (4 entries)
Economics (39 entries)
Education (6 entries)
Electoral College (1 entries)
Environmentalism (3 entries)
Europe (0 entries)
Flying (2 entries)
Foreign Affairs (1 entries)
General (89 entries)
Gun Control (2 entries)
Health Care (7 entries)
Higher Ed (7 entries)
History (8 entries)
Home Improvement (1 entries)
Illegal Immigration (35 entries)
Internet (4 entries)
Israel (57 entries)
Jewish (49 entries)
Judicial Nominations (12 entries)
Katrina (0 entries)
Literature (1 entries)
Media (37 entries)
Music (3 entries)
Photoblogging (32 entries)
Politics (152 entries)
Porkbusters (5 entries)
Radio (16 entries)
Religion (1 entries)
Reviews (8 entries)
Robed Masters (4 entries)
Science (1 entries)
Sports (9 entries)
Taxes (2 entries)
Transportation (6 entries)
Unions (1 entries)
War on Terror (180 entries)
my other blogs
Three-Letter Monte

Rocky Mtn. Alliance
Best Destiny
Daily Blogster
Geezerville USA
Mount Virtus
Night Twister
Rocky Mountain Right
Slapstick Politics
The New Conservative
Thinking Right
View from a Height

other blogs
One Big Swede
American Thinker
Meryl Yourish
NRO Corner
Little Green Footballs
No Left Turns
A Constrained Vision

business blogs
Accidental Verbosity
Assymetrical Information
Carnival of the Capitalists
Cold Springs Shops
Commodity Trader
Coyote Blog
Different River
Everyone's Illusion
Fast Company Blog
Financial Rounds
Freakonomics Blog
Management Craft
Trader Mike
Carnival of the Capitalists Submission

business data
Inst. Supply Mgmt.
St. Louis Fed Economic Data
Nat'l Bureau of Economic Research
Economic Calendar
Stock Charts

colorado blogs
Pirate Ballerina
Pagan Capitalist
Boker Tov, Boulder
Colorado Pols
Jeff Sherman

<-?Colorado BlogRing#->

sites, not blogs
Thinking Rock Press
 help israel
Israel Travel Ministry
Friends of the IDF
Volunteers for Israel
Magen David Adom
 1939 World's Fair
1939: The Lost World of the Fair
The New York World's Fair: 1939-1940
The Last Great Fair by Jeffrey Hart
Iconography of Hope (U.Va.)
Images From the '39 Fair
Tour the 1939 New York Fair
Powered by
Movable Type 3.2

« March 2009 | Main | May 2009 »

April 30, 2009

The State Backs Loans

Apparently jealous of the Federal government's ability to distort credit markets, the Colorado legislature has decided to get in on the act.  SB-051, which Gov. Ritter signed into law, would extend loans to banks, who would then turn around and loan the money to homeowners and businesses to install solar equipment.  The idea is to smooth out the cash flows, eliminating the up-front cost of the system, up to $12,500.

For the homeowner, and especially for the business-owner, for whom the interest and depreciation are deductible, this is a good deal.

For the government and the taxpayer, not so much.  There's no fiscal note attached, which means that, in theory, there's no cost to the government.  This can't possibly be true, otherwise there would be an obvious arbitrage opportunity for the state.  The state can obviously issue debt for lower interest than the banks will lend it out at.  The state could do that, split the difference on the interest with the banks.

Why not do this?  Because of default risk.  You know, people not being able to pay the debt.  Which under the terms of the bill will almost always result in subordinated liens against the property, with the taxpayer coming out on the short end of the foreclosure proceedings.

Now, where have we heard this story before?

Because It's Worked So Well In The Past

This, from tomorrow's Wall Street Journal:

The program is the Term Asset-Backed Securities Loan Facility, or TALF, in which investors are given low-cost loans from the Fed and in turn use the money to buy securities backed by consumer debt. The loans in this program are three-year loans and so far have been aimed at car debt, credit-card debt and other consumer loans. The Fed is preparing to announce new loans with five-year terms to better match the needs of investors in commercial-mortgage-backed securities, an effort to boost that sector.

Officials have been reluctant to make such long-term loans, for fear five-year commitments could hamper the central bank's ability to withdraw money from the financial system down the road. They have been looking to design the expansion so the loans are less appealing in later years.


The $700 billion CMBS market has rallied in the past month on hopes TALF would be used to restart the market. Yields on triple-A CMBS bonds have fallen to about 10% from 12%, according to Trepp, which tracks commercial-property debt markets.

Bringing down the yields on existing debt is critical to spark new lending because, as long as investors can buy top-rated CMBS that yield as much as junk bonds, it would be unprofitable for banks to make new loans. That is because they would have to offer higher yields to attract investors, wiping out their profits.

How is this wrong?  Let us count the ways.

  1. The government is actively encouraging debt-backed securities in real estate
  2. This worked so well before that it now finds itself in partnership with the UAW, with Chrysler declaring Chapter 11.
  3. The credit card experiment was so successful in bringing down card rates that Obama called in the credit card companies to explain to them a) who's in charge now, and b) their rates are too high
  4. Just because you artificially lower rates by creating demand doesn't mean the investments are any better
  5. It's inflationary, because it puts money into the system that the Fed can't get out quickly
  6. They want to limit the benefit in the out-years, making the whole project less attractive to speculators investors
The last paragraph doesn't make any sense to me.  First of all, it's only true if the banks can only make money re-selling the debt.  How about, you know, collecting the interest on the original loans?  Secondly, if the investors would already rather buy CBMS debt than junk bonds, the rate should already be lower.

In fact, bringing down the yields is critical to spark new lending because the borrowers can't afford the rates the banks want to charge.

You know, kind of like how some people couldn't afford mortgages.

April 24, 2009

Clinton Strikes Back at Israel

Israel's new government has adopted the position that it will not seriously engage the Palestinians until serious progress has been made on curbing the Mad Mullahs' nuclear ambitions. It's been pointed out that this makes a great deal of sense for Israel. The Palestinians are clearly a lower-order threat, lacking the means to immediately eradicate slightly less than half of the world's Jewish population. The Israeli populace realizes this, and it may well make it possible for Netanyahu to successfully confront this increasingly hostile administration, where his previous encounter with a Clinton failed.

Secretary of State Clinton has responded by taking a harder line, and invoking the need to get the other Arab states on board before confronting Iran:

Clinton noted that every Arab official she has met with "wants very much to support the strongest possible policy toward Iran." But, she said, "they believe that Israel's willingness to reenter into discussions with the Palestinian Authority strengthens them in being able to deal with Iran."

She said the Obama administration was seeking to coordinate the Arab and Israeli positions so the unusual dynamic of unity on Iran could be exploited.

She must realize this is nonsense on stilts. The only thing more frightening is if she doesn't. Seriously curbing Iran would have the effect of undermining its support for Hamas and Hezbollah, easing any progress there is to be had between Israel and the Palestinians.

Acutal unity on the dynamic of Iran would come from the Arab governments' realizing that a nuclear Iran poses a serious existential threat to them, not independent of the effect it would have on Israel. The Arab regimes - far from actually wanted a resolution of the Palestinian-Israeli issue - have repeated used it to avoid progress on all sorts of issues. That they should do so now shouldn't come as a surprise with anyone who's not suffering from extremely serious memory loss. It certainly shouldn't come as a surprise to a Secretary of State who tried to use her alleged foreign policy experience to sell her Presidential campaign.

What's going on here is serious doubt that the US has staying power in the region, something that Obama's prostrations - both figurative and literal - have only served to promote. He has clearly shown he has no appetite for confronting Iran over either its repression or its aggression, even as Iran continues to build up its ability to deter us from doing so.

The Arab states realize that Iran's possession of a bomb would be used to chase the US from the region, forcing a most unpleasant - and surely temporary - accomodation with a regime that has proved canny in pursuit of its religious agenda. Their linking their support for a hard line against Iran with the Palestinians is a semi-polite way of not putting themselves on what they believe will be the losing side.

April 21, 2009

Ranking Colorado's Tax Burden

Rep. Lois Court sent out her blast email yesterday, trying to put in a few bullet points the fiscal tangle we're in.  Give her credit, she did mention Amendment 23.  But the bulk of the bullet points were about Bird-Arvescough, TABOR, and a claim that the Tax Foundation says we're 6th from the bottom in state tax burden.

Look again.  Maybe we're 6th from the bottom in state tax burden only, or in per capital dollars taken in by the state.  But what counts is state and local tax burden, since a large proportion of state outlays go to localities.  Unless you're freezing property taxes, local taxes can replace state funding, and vice-versa.

  • In 2008, according to the aforementioned Tax Foundation, Colorado wasn't 46th (counting DC), it was 34th in percentage of personal income taken for state & local taxes
  • According to a calculation I made from Census Bureau data, we were 40th in per capita dollars
  • According to Governing Magazine, in 2006, we were 20th in dollars, and 38th in percentage of personal income taken for taxes
Lois also stated that "we can't borrow our way out of the problem."  No, but the state can - and has - issued debt to pay for capital projects.  Oh, has it ever.  Also according to governing, we're 6th in the country in state & local debt as a percentage of state & local revenue at 97%.  According to the American Legislative Exchange Council, we're 48th in debt service as a percentage of the state budget, at over 11%.

No, we can't borrow our way of the problem; we've borrowed our way into the problem.

Finally, Lois claims that "Taxes + Fees = Revenues = Services."  Well, sort of.  A number of programs and departments have done little more than hire more staff, and a considerable amount of state government goes not to providing services but to writing and enforcing regulation and to re-distributing wealth.

April 20, 2009

Photoblogging from Long Island

Friday morning at Long Beach:

Not your typical Bridge Shot:

Long Island has a "Cradle of Flight" museum, which I guess makes sense, since there were a lot of flight schools out there in the early 1900s. I guess that leaves Kitty Hawk as the Birthplace of Flight and Dayton as the Womb of Flight.

The obligatory WPA art as you enter the museum. Icarus is the only one who gets a spot as both inventor and plane.

An early place design. A lot of these were intended to touch down on both land and water, but if you tried a design like that with today's engines, it'd rip the wings right off the fuselage.

This is the instrument panel that Jimmy Doolittle used in the first blind flight. It demonstrated that you really needed to trust the instruments, and not the "seat of your pants" feeling that they replaced. "Seat of the pants" was getting a lot of pilots killed, because the inner ear isn't as finely engineered as these gyros. Funny thing is that every instrument in the basic VFR flight training, 80 years later, is here on this panel.

A model assembly line for WWII fighters:

You can make out a lot of actual buildings in this poster, but not the actual Pan Am building. It hadn't been built yet. ("The what?" "There was a building called the...oh, never mind.")

The museum has a IMAX in it, and the control room for the theater is in a fishbowl. Every high school AV geek's secret fantasy. The bottom platter is the spool, the top is the take-up reel. The film feeds from the inside of the bottom, runs up about a story and a half to the projector, and then back down to the inside of the take-up reel, so there's never a need to rewind. Which is good, because the film is 3" wide and worth its weight in gold.

April 19, 2009

The Least Important Leading Indicator

1) Consumer sentiment is useless is predicting the single most important engine of economic growth

2) Since it's somewhat correlated with media coverage of the economy, attempts to jawbone up the economy are doomed to fail, or at least be irrelevant.

3) Consumer sentiment during non-recessionary periods of Republican and Democrat administrations over the last 28 years clearly shows patterns that indicate more favorable coverage during the Clinton years.


U.S. consumer confidence rebounded this month to the highest levels since the demise of Wall Street, according to a highly regarded study.

The University of Michigan's Consumer Sentiment Report, released today, is based on a scale of one to 100, and preliminary April figures show confidence rose to a level of 61.9, up from 57.3 in March. This is the highest index reached since September, when the survey recorded a 70.3.

In the study, people said they're feeling better about spending money because they think the recession is going to bottom out this year, not because their personal economic situation has improved.

And why would they think that? Well, why do you think?

Most consumers really only know about their own situation at the moment.  They're going to form their opinions about the broader economy based on 1) what they're hearing in the press and 2) what they're hearing from their friends, co-workers, and businesses.  And as much as we don't like to admit it, voices of authority such as the President and the Fed Chairman still carry weight, especially when reduced to optimistic sound bites.

Worse, this statistic has just about no predictive value.  I correlated the St. Louis Fed's record of Consumer Sentiment with the change in personal spending, month-over-month, for the last 30 years.  I lagged them from 0-12 months.  The best correlation was lagged by one month, meaning that consumer sentiment best predicted next month's increase in spending.  It correlated at 0.22, which is pretty meaningless, and has an r-squared of 5%, meaning that the best, the best that this does is to predict 5% of next month's increase in personal spending.

OK, I hear you say, but both numbers are sort of bounded.  After a while, you can be making more than you're spending, top out your spending, still be feeling really good about the economy, but not feeling better, and not spending more.  Aha!  The month-to-month change in sentiment predicts less than 1% of the change in personal spending for any month in the coming year.

This means that 1) consumer sentiment is useless is predicting the single most important engine of economic growth, and 2) since it's somewhat correlated with media coverage of the economy, attempts to jawbone up the economy are doomed to fail, or at least be irrelevant.

But when you look at the graph of consumer sentiment, and compare it with GDP growth, something else emerges:

Sentiment recovers during the first years of the Reagan Administration and then stays high, but flat until the recession of 1990-91.  It then recovers as the economy begins to, only to dip again just in time for the election.  At which time it goes on an 8-year, unbroken upward trend, cresting and then declining with the election of George W. Bush.  The attacks of 9/11 no doubt helped push it down, but in fact, we were headed into a recession at that point, anyway.  Then, despite the recovering a prosperous economy until 2007, sentiment bounces around, but trends flat for the decade.

There's never any one, single cause for anything outside of physics, but there's pretty strong evidence here that unremittingly positive coverage during the 90s pushed up sentiment, while unremittingly skeptical coverage during the Bush years helped keep it in check.

The good news is that this probably didn't actually affect the real economy.  The bad news is that it almost certainly affected out politics.

April 17, 2009

What Next for Colorado Tea Parties?

What next?

The Tea Party movement is simply not going to be co-opted by the Republican Party.  It's not a creation thereof, and it's simply not made for the kind of team politics required by any political party.  In order to benefit from the movement, the Republicans will have to earn their trust, and prove that they mean to live by what we say are our foundational principles - smaller government, lower taxes, more personal liberty.  The Republicans can benefit from the movement, but they can neither control nor direct it.

In any event, the next elections are over 18 months away, the next nomination assemblies
almost a year out.  What can the movement accomplish in the meantime?

This is a movement tailor-made for the initiative process.  To push initiatives that clarify for an intentionally myopic State Supreme Court that TABOR means what it says; that retain our control over an initiative process whose purpose is to rein in the legislature; that re-assert our state's prerogatives as a sovereign entity, not merely an administrative district for the Federal government.

It will mean some coordination among Tea Party organizers, and it will mean some savvy and informed polling and political activity beforehand.  They'll need to determine both what can pass and what current Democrat agenda items pose the biggest threats to our freedoms here in Colorado.  It will mean calling in some experienced and informed legal advice in crafting these initiatives.

It may be tempting to over-reach to provoke the courts and remind people aware of what we're really up against, but it can also be squandering a opportunity.  It's a tried-and-true Lefty tactic, but it only works if there's a fall-back position that people are willing to work for, all over again.  Our team tends to have jobs and families, and their team tends to have a Zombie-like ability to keep pressing regardless of losses, so personally, I'd tend to opt for ambitious but effective proposals.

This answer will make Republicans uncomfortable, since by definition, it doesn't involve getting them elected.  But it does involve teaching these newly-created activists how to organize for action, getting them savvy about the political process, and creating results that will get them taken seriously by those who matter right now.  It's a valuable tool in the maturation process of a movement that should be the party's natural allies in showing - again - that our ideas, when present free of personal political ambition, win.

It's one reason why the Democrats - even now - are plotting to make the initiative process, the one process in state government they don't control - subject to as much rule-bound litigation as possible.  They are co-opting Republican goodwill in cleaning up potential fraud, spinning it as a mutual belief that the citizenry needs to be brought under control.

At the end of the day, Republicans have enough institutional staying-power to be there when the movement has matured.  Libertarians are simply not going to get elected to anything, although libertarian-leaning Republicans can.  The party may have to wait to reap the benefits of this movement, and certain team members may find themselves uncomfortable with certain agenda items they have to sign onto.  News flash: not all Democrats are socialists, although that's the agenda of the party.

Too many Republican office-holders and office-seekers will be unhappy with this answer.  But if the party tries and fails to control the movement, it will be seen as irrelevant and meddling.  If it tries and succeeds, it will only strangle the baby in the cradle.

Colorado has one of the most open and welcoming citizen initiative processes in the country, for the time being.  Let's make the best use of it for our ideas, and if we deserve it, the elected offices and day-to-day governance will come our way.

UPDATE: Made a couple of edits, to make this less of a rant at Republicans and more of constructive advice for Tea Partiers.

When Astroturfing Isn't

The Denver Post reporters John Ingold and George Plavin either don't know what "astroturfing" is, or don't care to correct leftists for using the term incorrectly.  In their report on the Denver Tea Party, they quote Mike "The Headless Chicken" Huttner, as deriding the Tea Parties:

"The tea parties are the latest version in a months-long campaign against change, organized by right-wing think tanks and lobbyists who have done well over the last eight years under George Bush," he said.

He pointed to a number of national conservative political groups listed as sponsors on, including FreedomWorks and Americans for Limited Government.

But of course, publicizing events isn't astroturfing. 

Astroturfing is when paid activists pretend to be unpaid volunteers or "men on the street."  It's when ACORN members pretend to be "outraged citizens" stalking AIG employees.  It's when people are paid to spam websites with comments, or when the Pew Foundation finances a campaign finance reform campaign, and then conducts a poll showing increased interest in the subject.  It's when DNC employees photocopy petition signatures and then report the number submitted in triplicate. 

In short, it involves deception, and hiding one's involvement in a campaign in order to make it look popular.

This isn't random name-calling, this is an attempt to deprive the language of a useful term for the sort of thing the Left excels at by changing the definition to any sort of organizing.

When The Money Keeps Rolling In, You Don't Keep Books

In Evita, a very white-washed Che Guevara makes appropriate fun on Evita's very own "stimulus" plan, the Foundation Eva Peron, sort of a Make-a-Wish Foundation for adults.  Obama's stimulus plan serves much the same function for liberal interest groups.

Now, while Evita skimmed off the top for herself, nobody's accusing the folks at the top here of doing the same thing.  (Obama's crew may be allergic to 1040s, but that's something else.)  Still, everyone's supposedly committed to "transparency" - our own state government excepted - so states and localities are expected to, you know, track where they're spending all this borrowing.

Apparently, that wasn't in the budget:

When it comes to the $787 billion in federal stimulus money flowing from Washington to the states, it will cost money to spend money.

Nebraska's governor's office told lawmakers it expects to spend more than $1.2 million over two years to oversee disbursement of about $1.5 billion Nebraska stands to receive in federal stimulus funds.

Other states, including Colorado, are in similar straits. But Washington -- at least for now -- isn't handing out money for states to hire auditors and accountants, and the stimulus law requires stringent reporting from states to ensure transparency and curb abuses.

You're kidding me, right?  Nebraska's complaining about having to spend less that 0.1%, less than one tenth of one percent of this handout boondoggle on administrative overhead?  Governor Bill "I'll Take All Of It" Ritter didn't think about this before he committed the state to this spending?

In any case, remember, money is fungible.  If we're spending an extra couple of hundred million on, oh, transportation projects and workforce training, we really ought to be able to cut a million out to pay for the administrative costs.

Naturally, this last point completely escapes the AP, both in their main story and in their Colorado-specific addendum at the end.

April 16, 2009

Central Ave. Pizza Shop After Passover

April 14, 2009

The Natural History Museum

Kind of disappointing, actually. I went - as I always go - for the space science aspect, but found that the earth science displays were much more up-to-date and engaging. (They weren't all about global warming, but it was certainly a presence, and since one of the pay-for-displays was about the subject, I can't help thinking there's an agenda there to brainwash kids into thinking that earth science is more interesting than space. Pity, that.)

Aside from the human evolution room, most of the standing exhibits looked as though they hadn't been changed since my dad was in school. Dioramas and large displays of Indian gods.

We didn't see any of the movies or planetarium shows, but we did see a couple of riveting photo exhibitions, one from the Apollo missions and one from the latest trip to Saturn's rings and moons. Jazzy stuff, all of it.

But the centerpiece was...flat. The big Debt Star Persisphere and Helicline totally fail to inspire. There's a movie inside the perisphere (no, it's not really called that) about the Big Bang, with Maya Angelou phonetically working her way through the script, and then...the Helicline, which is supposed to tell you about the history of the universe. But there are too few pictures, too little of anything, really, to hold your interest.

Along the balcony railing is a sense-of-scale exhibit about objects from 10-18 meters to 1024> meters, but again, there's no real connection between the panels, and no context. You look at each panel and think, "so what?"

The Smithsonian had a movie, Powers of 10, which I must have sat through at least 102 times growing up. It's brilliant, and even now, thirty years later, it's still 10 times better than what I saw yesterday.

Of course, pictures:

Here's the Helicline. See? It's just...bare. Shiny and metallic doesn't mean, "interesting."

Even here, the planets may be to scale, but they're not placed to scale from the sun. That might mean putting Pluto out on the Upper East Side, but they could have done better than Matisse Meets NASA.

This was interesting. Don't park under a meteorite.

April 13, 2009

Long Beach, NY

Delayed Photoblogging

From the trip back from Castle Rock a few weeks ago, when it looked as though Spring had arrived.


Forest, Meet Trees

The state legislature, having voted down measures that would make sure that voters are 1) eligible to vote, 2) eligible to vote in Colorado, 3) citizens, 4) who they say they are, and 5) not voting someplace else, is proudly preparing to take us back to the days of pencil lead under the finger tips and submerged ballot boxes:

State lawmakers have introduced a bill that would push Colorado toward an all-paper election system, but the measure doesn't contain a hard deadline for achieving such a system.

Instead, if the bill passes, the legislature would merely declare its intent that every voter in Colorado cast their vote on paper. It would be up to the secretary of state to actually effect that change through a provision in the bill requiring that office to approve counties' purchases of new voting machines.

This is a bipartisan mess, but given that the other measures were all opposed on a party-line vote, it's fair to say where the Democrats would rather have our attention distracted focused.

Apparently, it's more important to be deciphering, inferring, or imputing "voter intent," than to be assured that it's a voter whose intent we should care about in the first place.

I Think They're Called, "Prices"

The Wall Street Journal reports that the government is lagging in instituting an "electricity efficiency" program that would reward companies for saving electricity.

In an efficiency market, states or the federal government would require utilities to buy a certain amount of energy-efficiency certificates.

The certificates would be established when electricity use is permanently eliminated through a project, from changing lighting to replacing air-conditioner chillers. The credits could then be traded on a secondary market, making a growing number of efficiency projects profitable.

Challenges exist in forming such efficiency markets, which already are in place in some European countries. Precisely measuring reductions in electricity consumption can be tricky. In addition, efficiency programs have for decades almost solely been run by utilities, whose profits conversely rely on a steady growth in electricity demand.
Now, one might think that actually saving money on electricity would be enough to induce people to, you know, save money on electricity.  Apparently, these federal regulators have never heard of things like, "Internal Rate of Return" and, "Net Present Value.'

For the uninitiated, a company calculates how much a project will cost, and then calculates how much they'll save or earn on it over its lifetime.  Much like deciding exactly how many shoes much electricity the economy needs, this can be a detailed and careful calculation.

The cost of electricity is factored into these things.  Of course, raising the cost of electricity also raises the cost of the project, since it raises the cost of producing the bulbs.  (No doubt, the government will tell the bulb manufacturers what a fair profit margin is.)

So instead of letting price signals work the way they have for the last couple of hundred years, the government will establish a secondary market, including the oversight mechanisms for it, a taxation system for the electric companies, including its oversight bureaucracy, a means of measuring how much electricity would have been used otherwise, not counting for the fact that cheaper electricity could mean more production, God forbid.

In effect, instead of just letting their customers save money by buying less of their product, the government is going to mandate that utilities sell back the ability to save money to their customers.

You know, if they put this much effort into dynamic scoring of the tax system...

April 8, 2009

The Denver Post on HSAs and Single-Payer

Guess which one gets a better review?

As the Colorado House of Representative took us further down the road to socialized health care earlier this week, Douglas County School are considering moving to a Health Savings Account plan for their employees. Needless to say, the Denver Post finds this objectionable:

Douglas County School District soon may join a growing number of employers pushing workers to manage their own medical spending with health savings accounts, eliminating copays for drugs and doctor visits.

The transition is frightening for many who see it as a reinvention of health insurance as they've always known it.


The plan would work nicely for about 85 percent of employees, who are predicted not to spend more than the $1,000 put into their accounts by the district.

But for the other 15 percent, the change could mean a few extra thousand dollars a year spent on health care.

By the twenty-second paragraph, we find out that the system would actually include all that preventative care that single-payer advocates talk about:

A major component of the new health plan, up for a teachers-union vote at the end of the month, is a push to get employees to eat healthier and exercise more.

The plan comes with free preventive care, meaning no charge for mammograms, well-baby checkups and vaccines. Also, the district wants to reward employees for getting healthier - holding contests akin to "The Biggest Loser" reality TV show.

In-between is a real-life, specific case of financial hardship that the plan might cause.

And then, almost at the end of the article, comes what could well be the most appealing aspect of the plan for middle-class employees:

Health savings accounts are the fastest-growing trend in health care, said Andrew Sykes, chairman of Health at Work, a Chicago company hired by Douglas County to coordinate the possible conversion. The accounts have a triple tax benefit - the money goes in pre-tax, grows without tax and can be taken out without tax penalty to spend on health care.

In fact, the money can eventually be rolled over into a regular IRA, without the health-care-spending stipulation. And the tax implications for that real-life case aren't even discussed.

Compare this with the promise-heavy description of single-payer earlier this week:

During the extended debate on the bill, Democrats argued passionately for a government-backed system covering all Coloradans to replace a current system they said is inefficient and full of holes.

"I think it is our responsibility that every single Coloradan, regardless of their wealth or position in society, get the health care they need," said Rep. Daniel Kagan, D-Cherry Hills Village. "It is our obligation."

"This system we have right now," said Rep. Claire Levy, D-Boulder, "is completely and fundamentally broken, and there's no amount of patching it up that we can do to provide universal coverage."

Democrats said a single-payer system would save money overall by streamlining the health-care machinery and taking advantage of economies of scale.

Eventually, we get to the Republican response, but the political trumps are saved for the last paragraph:

Last month, the head of the state Department of Health Care Policy and Financing told lawmakers that Ritter is against the bill, noting that Ritter's health-care commission studied a single-payer system and rejected the idea.

There are no numbers given, no estimates of what such a system will cost or what care compromises will inevitably have to be made, no examples of people who would lose treatment because it wasn't deemed cost-effective by the state, only vague Republican accusations of rationing and expense.

In the meantime, a system that the Post admits will work for 85% of employees, that is intended to control costs by having individual rather than bureaucracies make choices, that provides a serious tax shelter for the young and healthy - exactly when we want people to be putting away money for retirement, is described as scary.

Apparently, for the Denver Post, free stuff is an easier sell that freedom.

iPod Coolness

Even their vending machines are cool. I almost bought something just...because.

April 5, 2009

Smoot-Hawley = Pace-Tapia

Apparently having failed to learn any lessons from the 1930s, Sen. Tapia and Rep. Pace have decided to sponsor HB 1328, which would:

Requires state agencies that purchase steel products to give a preference to such products produced in the United States if certain conditions are met.


Each governmental body shall Require that every contract for the construction, reconstruction, alteration, repair, improvement, or maintenance of public works contain a provision that, if any steel or foundry products are to be used or supplied in the performance of the contract or subcontract, only steel or foundry products made in the United States shall be used or supplied in the performance of the contract or any of the subcontracts unless the head of the governmental body determines in writing that the cost of domestic steel or foundry products is considered to be unreasonable.

The Smoot-Hawley Tariffs are rightly blamed for, if not bringing on the Depression, acting as a severely aggravating factor in its depth. This particular bill would permit US-made "steel products" to be up to 15% more expensive than the comparable foreign product, which would rise to 25% if the government found that such a purchase would "benefit the local or state economy through improves job security and employment opportunity." This ridiculously low standard is met pretty much by definition.

Worse, the language of the bill is so broad that "steel products" could include not merely steel and alloys as raw material, but also in machinery used to execute the contract. This is going to needlessly and perpetually complicate the act of executive such simple contracts as road-building.

Canada (rightly) threw a fit over proposed Congressional protectionism earlier in the year, and the US is now fixing an unnecessary mess with Mexico over a couple of dozen Mexican trucks plying the roads. I don't know if Canadian or Mexican law permits reprisals against products from individual American states, but I'm sure that legislation could be tailored to hit Colorado directly.

For the record, Canada and Mexico are Colorado's largest trading partners, to the tune of about $3 billion of Colorado exports a year:

Wonder how well that will benefit the local or state economy's job security and employment opportunity."

April 3, 2009


The Administration made it clear at least a week ago: play ball with us, or else.

But President Barack Obama wasn't in a mood to hear them out. He stopped the conversation and offered a blunt reminder of the public's reaction to such explanations. "Be careful how you make those statements, gentlemen. The public isn't buying that."

"My administration," the president added, "is the only thing between you and the pitchforks."

Anybody ask him about those Fannie and Freddie bonuses?

In the letter, a copy of which was made available to The Wall Street Journal, Mr. Lockhart defends the bonuses as vital to retaining talent at the two companies, the main providers of funding for U.S. home mortgages. Fannie and Freddie, which reported combined losses of about $108 billion for 2008, are being propped up by capital infusions from the U.S. Treasury.


"It is not realistic to expect that experienced and highly skilled employees will indefinitely continue to work as hard as they have if we do not provide reasonable incentives to perform," Mr. Lockhart wrote. He argued that the companies need "skilled and experienced staff" to manage safely their more than $5 trillion in debt and guarantees of mortgage securities.

"For personal privacy and safety reasons," Mr. Lockhart said, it wouldn't be appropriate to release the names of all employees receiving bonuses of $100,000 or more.

April 2, 2009

Like They Can Just Print the Money

I'm beginning to think that having put the State Capitol near the Mint was a mistake. I think the Democrats are beginning to think that they can just print their way out of whatever burdens they put on the state.

We found out last month that the Colorado Unemployment Insurance Fund was safe, despite climbing unemployment numbers:

Reforms instituted a generation ago appear poised to keep the system solvent even as other states see their unemployment programs go broke. And work is under way to improve the department's Web site this spring, which should make it more user-friendly and ease the strain on the phone system.


In the 1980s, state lawmakers set out to protect the state's Unemployment Insurance Trust Fund -- it is used to pay benefits to people who lose their jobs -- after watching it go broke in a recession.

The result was an additional tax, dubbed a "solvency surcharge," that was designed to kick in whenever the trust fund's balance fell below 0.9 percent of the wages paid in the state. The calculation is made each year on June 30, and in 2004, after three years of recession, the tax kicked in.

The result: Colorado's unemployment trust fund grew to $672 million last fall, just as the latest recession was taking hold. That allayed fears that Colorado could again find its unemployment fund out of money.


"It would take a deep recession that went on for several years before we would go insolvent," [Mike Cullen, Colorado's director of unemployment insurance] said.

His assertion is backed up by various scenarios that have been considered, including a moderate or even severe recession, said Alex Hall, the department's chief economist.

"Certainly with all the information we have available at this time, and what we feel are reasonable scenarios, including scenarios that take us into a pretty deep recession, we feel that the surcharge is providing that stability and revenue for the unemployment insurance trust fund, and that solvency will not be an issue for us," Hall said.

Well, not so fast there, cowboy.

In a state budget outlook delivered week, the Colorado Legislative Council Staff predicted the fund balance "will fall precariously close to insolvency" to just $44 million by June 30, 2010, down from nearly $700 million on June 30 last year.

The Colorado Department of Labor and Employment expects a healthier fund at $187 million on June 30, 2010, but still has concerns, said Mike Rose, chief of statistical programs for the department.

"We also consider it possible that the fund might be marginally solvent at periods in 2010 and 2011," he said Wednesday.

Unemployment insurance payouts are expected to total $834.1 million in the current fiscal year that ends June 30 and stay at that level for another year, according to the council forecast.

In the midst of this, the legislature seems poised to pass HB 1170, which would entitle employees who are locked out - that is, they have jobs but are involved in a labor dispute - to receive unemployment benefits.

Here's a chart showing the monthly balance of the Colorado Unemployment Insurance Fund, along with a 12-month moving average of employer contributions and benefits paid out:

The reason I've smoothed out these payments and contributions is that employer contributions are extremely seasonal. They generally see a large jump in May, when the surcharge is assessed. They also tend to have almost no contribution during the last month of each quarter, while the first month of each quarter is the highest.

So, the payouts are still rising, and have just passed the contributions. For the first time since the recovery from the last recession, we've seen an actual drop in the fund's balance. Even if all those conveniently-times stories about how we're hitting bottom are correct, unemployment is a trailing indicator. Since contributions are based on the current aggregate salaries paid, that means that contributions will fall even as unemployment rises. This dynamic refills the coffers during the latter part of recoveries and prosperity, but drains them towards the middle and end of recessions.

Then, there's this:

A state Senate committee took up a bill Wednesday that would make Colorado eligible for $127 million in federal stimulus money for the fund by expanding the definition of who can qualify for jobless benefits. It would cost the state an estimated $14.6 million in the fiscal year that begins July 1 to make the changes, largely to pay benefits for newly eligible residents.

So we'll pick up a net $100 million this year, at the cost of no future returns and nobody-bothers-to-ask how much more in perpetual commitments down the line.

The only way out is to float debt. If we end up having to do this during an inflationary period, it'll mean higher rates and even more trouble down the line.

Unemployment insurance is well-established by now. But I can't help wondering if it wouldn't be better to give it to the employees up front rather than paying to the government for what passes for their traditional definition of, "safekeeping"

April 1, 2009

Trade of the Century

The Broncos just played their first pre-season game against the Bears.  They lost.

The Jay Cutler agonistes saga came to an end today as the Broncos sent him to the Chicago Bears for a placeholder and bunch of draft picks.

Orton's a decent guy who won't kill you with mistakes, but he's the classic Bears quarterback of the last quarter-century who can't get the ball past the first down marker.  During a goal-line stand.  As for the picks, they're above-average but not much more that Orton is.  I mean, it's not Herschel Walker or Ricky Williams-type stuff here, it's two firsts and a third from a middling team.  The only upside to this is that the new GM can't possibly be worse than Shanahan was at the draft.

The Broncos needed two things out of this deal - a quarterback who can play a little while Chris Sims matures and defensive help.  Yes, I'm completely in the tank for the Redskins, but Jason Campbell - who's better than Orton - wasn't taking them to the promised land, and they were loaded with linebackers.

This is what happens when you've either convinced yourself that it's rebuilding time, or you've set a deadline for yesterday to do the deal.  When you put yourself under that kind of pressure, people take advantage.

What's remarkable is how quickly the Broncos have gone from class act to grease fire.  The new coach made a rookie mistake that's snowballed into a situation that could deflate and alienate all the win-now veterans they brought in.  The owner seemed powerless to stop the deterioration, which doesn't bode well for the future.

Look, maybe they have us all fooled.  Maybe this is the first leg of a three-way deal that we're all going to be calling brilliant in November.  So far, though, not so much.

Electoral College

Last night Michael, Ben, and I spoke with Robert Hardaway of the DU Law School to talk about the Colorado legislature's misguided attempt to amend the Constitution without, you know, actually amending the Constitution. I've posted before (and Twittered relentlessly) about the attempt to join an interstate compact to render the Electoral College a dead letter. 

He agreed that the Supreme Court was exceedingly unlikely to permit such a compact under Article I Section 10:

No State shall, without the Consent of Congress, lay any Duty of
Tonnage, keep Troops, or Ships of War in time of Peace, enter into any
Agreement or Compact with another State
, or with a foreign Power, or
engage in War, unless actually invaded, or in such imminent Danger as
will not admit of delay. (yes, emphasis added - ed.)

He also pointed out that there's no definition provided of the "National Popular Vote."  Apparently in 1960, the newspapers added up the popular vote and decided Kennedy won, while Congressional Quarterly came to the conclusion that Nixon had won the popular vote.  The determination of what count to use would rest in the hands of the state's top election official, presumably - but not named as - the Secretary of State.

One point we didn't get around to discussing was the question of Puerto Rico.  Puerto Rico is, of course, not a state, but its citizens are US Citizens.  Would they suddenly be eligible to hold a Commonwealth-wide referendum and have their votes counted?  At this point, I certainly wouldn't rule out the State Supreme Court ruling that way.

I've separated out our discussion Prof Hardaway for podcast here, or you can listen to the whole show here.


Power, Faith, and Fantasy

Six Days of War

An Army of Davids

Learning to Read Midrash

Size Matters

Deals From Hell

A War Like No Other


A Civil War

Supreme Command

The (Mis)Behavior of Markets

The Wisdom of Crowds

Inventing Money

When Genius Failed

Blink: The Power of Thinking Without Thinking

Back in Action : An American Soldier's Story of Courage, Faith and Fortitude

How Would You Move Mt. Fuji?

Good to Great

Built to Last

Financial Fine Print

The Day the Universe Changed


The Multiple Identities of the Middle-East

The Case for Democracy

A Better War: The Unexamined Victories and Final Tragedy of America's Last Years in Vietnam

The Italians

Zakhor: Jewish History and Jewish Memory

Beyond the Verse: Talmudic Readings and Lectures

Reading Levinas/Reading Talmud