Going 'Galt' May Be Hard-wired Into Our Psychology

Instapundit recently posted this email from a reader:

Interesting article, and somewhat parallels my experience. I’ve “gone Galt” myself, taking 6 weeks leave without pay. Business is very slow, we’ve already got too many people wasting away on overhead. SinceI don’t need the money (right now), I volunteered to take some time off in the hope that someone else won’t get laid off.

The one positive in all this is that I think that (at my marginal tax rate) I’ve denied the (state and federal) government some $4,000 in income taxes.

Here's an economics research paper that may give some insight into the 'Going Galt' phenonmenon (emphasis added):

A Behavioral Laffer Curve: Emergence of a SocialNorm of Fairness in a Real Effort Experiment

Abstract

This paper demonstrates, through a controlled experiment, that the “Laffer curve” phenomenon does not always reflect a conventional income - leisure trade-off. Whether out of reason or out of emotion, taxpayers may also be willing to punish intentionally unfair tax setters by working less than they would under the same exogenous circumstances...

...1. Introduction

The quest for American independence grew as issues like taxation without representation in the British government angered the local population of the former British colonies. When the British decided to tax the colonists to pay a share of their expensive war against the French and Indians, the colonists were angry and rallied behind the phrase, “No Taxation without Representation”. The British were then forced to remove (1764-1767) most of the unfair taxes (tax on sugar, Stamp Act, Townsend Act) that they had been trying to enforce unilaterally. Two centuries later, the same scenario repeated in California as property taxes went out of control. Taxpayers were losing their home because they could not pay their property taxes, yet the government maintained the burden. California taxpayers stood up and passed Proposition 13 (1978) that reduced property taxes by about 57%. The tax revolt that swept the country had a worldwide impact.

Since then, tax revolts have been closely associated with the name of Arthur Laffer who forcefully defended as a simple rule of public finance that there is a unique optimal tax rate which maximizes revenue collection. If the tax level is set below this level, raising taxes (more specifically, marginal tax rates) will increase tax revenue. However, if the tax level is set above this level, then raising taxes will decrease tax revenue. This proposition, now called the “Laffer curve”, had considerable influence on fiscal doctrine, and fuelled the “supply side economics” argument that a tax cut would actually increase tax revenue if the government is operating on the right side of the curve.

The Laffer curve was based on conventional economic analysis: tax revenues are obviously zero if the tax rate is zero, and are still zero if the tax rate is equal to one, as rational agents would withdraw from the market to evade tax or consume untaxed leisure. However, our paper demonstrates that the Laffer curve phenomenon does not always reflect a conventional income - leisure trade-off. Consistent with the history of tax revolts, we demonstrate the existence of a “behavioral Laffer curve” that will arise as a reaction to the perceived unfairness of taxation by a Leviathan government. Whether out of reason or out of emotion, taxpayers are willing to “punish” tax setters who intentionally violated the social norm of fair taxation by working less than they would under the same exogenous circumstances. We further point out that the behavioral Laffer curve peaks at a substantially lower tax rate than the conventional Laffer curve...

This Is What Goes for Transparency at the EPA

WSJ: The EPA Silences a Climate Skeptic by Kim Strassel:

The professional penalty for offering a contrary view to elites like Al Gore is a smear campaign.

Wherever Jim Hansen is right now -- whatever speech the "censored" NASA scientist is giving -- perhaps he'll find time to mention the plight of Alan Carlin. Though don't count on it.

Mr. Hansen, as everyone in this solar system knows, is the director of NASA's Goddard Institute for Space Studies. Starting in 2004, he launched a campaign against the Bush administration, claiming it was censoring his global-warming thoughts and fiddling with the science. It was all a bit of a hoot, given Mr. Hansen was already a world-famous devotee of the theory of man-made global warming, a reputation earned with some 1,400 speeches he'd given, many while working for Mr. Bush. But it gave Democrats a fun talking point, one the Obama team later picked up.

So much so that one of President Barack Obama's first acts was a memo to agencies demanding new transparency in government, and science. The nominee to head the Environmental Protection Agency (EPA), Lisa Jackson, joined in, exclaiming, "As administrator, I will ensure EPA's efforts to address the environmental crises of today are rooted in three fundamental values: science-based policies and program, adherence to the rule of law, and overwhelming transparency." In case anyone missed the point, Mr. Obama took another shot at his predecessors in April, vowing that "the days of science taking a backseat to ideology are over."

Except, that is, when it comes to Mr. Carlin, a senior analyst in the EPA's National Center for Environmental Economics and a 35-year veteran of the agency. In March, the Obama EPA prepared to engage the global-warming debate in an astounding new way, by issuing an "endangerment" finding on carbon. It establishes that carbon is a pollutant, and thereby gives the EPA the authority to regulate it -- even if Congress doesn't act.

Around this time, Mr. Carlin and a colleague presented a 98-page analysis arguing the agency should take another look, as the science behind man-made global warming is inconclusive at best. The analysis noted that global temperatures were on a downward trend. It pointed out problems with climate models. It highlighted new research that contradicts apocalyptic scenarios. "We believe our concerns and reservations are sufficiently important to warrant a serious review of the science by EPA," the report read.

The response to Mr. Carlin was an email from his boss, Al McGartland, forbidding him from "any direct communication" with anyone outside of his office with regard to his analysis. When Mr. Carlin tried again to disseminate his analysis, Mr. McGartland decreed: "The administrator and the administration have decided to move forward on endangerment, and your comments do not help the legal or policy case for this decision. . . . I can only see one impact of your comments given where we are in the process, and that would be a very negative impact on our office." (Emphasis added.)

Mr. McGartland blasted yet another email: "With the endangerment finding nearly final, you need to move on to other issues and subjects. I don't want you to spend any additional EPA time on climate change. No papers, no research etc, at least until we see what EPA is going to do with Climate." Ideology? Nope, not here. Just us science folk. Honest...

Is Quality, Not Cost Containment, the Issue with Healthcare in America?

From a 2005 aritcle in the New York Times Magazine, The Quality Cure? (emphasis added):

...Virtually every would-be reformer, Democrat and Republican alike, starts with the presumption that the major problem in health care is high costs. This is understandable: America now spends 15 percent of its gross domestic product on health care. That's a higher percentage than any country has ever spent in the history of the planet, and the figure is increasing. The United States spends more on health care than on automobiles; we spend more on health care than China spends on tea; in fact, as Cutler likes to point out, we spend more on health than the Chinese spend, per capita, on everything. And health care threatens (far more than Social Security) to consume the federal government. Medicare, the health-care program for retirees, and Medicaid, which provides basic services for the poor, already account for one-fifth of the federal budget, and their share could double in a generation.

Curbing such growth has been the aim of every reformer, and according to Cutler, it is the reason reform has failed. The Clinton team proposed to pay for universal coverage by limiting increases in spending (partly through mandatory caps). But limiting spending also meant limiting service. The proposed legislation was never put to a vote.

Managed care was next at trying to contain costs. It succeeded for a while, until it became clear that Americans did not want health-maintenance organizations to limit their choices any more than they wanted the government to. Since then, reform has languished. The Medicare drug bill is suggestive of why. The Republican Congress promised restraint but then passed a hugely expensive law that barred Medicare from using its clout to negotiate prices with drug companies. The pattern has been failed efforts to control costs, followed by a void of new ideas.

Cutler's approach is radically different. He says that most health-care spending is actually good. Spending has been rising, he says, because it delivers positive, and measurable, economic value, and because it can do more things that Americans want. Therefore, Cutler says, we should focus on improving the quality of care rather than on reducing our consumption of it. Rather than pay less, he wants to pay more wisely -- to encourage health-care providers to do more of what they should and less of what is wasteful...

The National Debt Road Trip

Senator Coburn's Report: 100 Stilumus Projects: A Second Opinion

A real tear-jerker: 100 Stilumus Projects: A Second Opinion

(HT: Michelle Malkin)

Evolution in the Blink of an Eye

Science News: Evolution Can Occur In Less Than 10 Years, Guppy Study Finds:

How fast can evolution take place? In just a few years, according to a new study on guppies led by UC Riverside's Swanne Gordon, a graduate student in biology.

Gordon and her colleagues studied guppies — small fresh-water fish biologists have studied for long — from the Yarra River, Trinidad. They introduced the guppies into the nearby Damier River, in a section above a barrier waterfall that excluded all predators. The guppies and their descendents also colonized the lower portion of the stream, below the barrier waterfall, that contained natural predators.

Eight years later (less than 30 guppy generations), the researchers found that the guppies in the low-predation environment above the barrier waterfall had adapted to their new environment by producing larger and fewer offspring with each reproductive cycle. No such adaptation was seen in the guppies that colonized the high-predation environment below the barrier waterfall.

"High-predation females invest more resources into current reproduction because a high rate of mortality, driven by predators, means these females may not get another chance to reproduce," explained Gordon, who works in the lab of David Reznick, a professor of biology. "Low-predation females, on the other hand, produce larger embryos because the larger babies are more competitive in the resource-limited environments typical of low-predation sites. Moreover, low-predation females produce fewer embryos not only because they have larger embryos but also because they invest fewer resources in current reproduction."

Natural guppy populations can be divided into two basic types. High-predation populations are usually found in the downstream reaches of rivers, where they coexist with predatory fishes that have strong effects on guppy demographics. Low-predation populations are typically found in upstream tributaries above barrier waterfalls, where strong predatory fishes are absent. Researchers have found that this broad contrast in predation regime has driven the evolution of many adaptive differences between the two guppy types in color, morphology, behavior, and life history.

Gordon's research team performed a second experiment to measure how well adapted to survival the new population of guppies were. To this end, they introduced two new sets of guppies, one from a portion of the Yarra River that contained predators and one from a predator-free tributary to the Yarra River into the high-and low-predation environments in the Damier River.

They found that the resident, locally adapted guppies were significantly more likely to survive a four-week time period than the guppies from the two sites on the Yarra River. This was especially true for juveniles. The adapted population of juveniles showed a 54-59 percent increase in survival rate compared to their counterparts from the newly introduced group.

"This shows that adaptive change can improve survival rates after fewer than ten years in a new environment," Gordon said. "It shows, too, that evolution might sometimes influence population dynamics in the face of environmental change."...

Humans Meet Your Masters

Related: Not Just Through The Eyes: Squid 'Sight' Offers Insight Into Treating Human Eye Diseases

NCR moving from Ohio to Georgia

Via the Cincinnati Enquirer:

DAYTON, Ohio — NCR Corp. says it is relocating its corporate headquarters to Georgia and some of the roughly 1,250 workers at its current headquarters in Dayton will be offered transfers when the company moves.

The maker of ATMS and retail checkout scanners said Tuesday the new headquarters will be in Duluth, Ga., a suburb of Atlanta.

NCR said it chose the new location after considering available work force, infrastructure, financial incentives and government tax structures.

The company says it will also establish a state-of-the-art manufacturing plant in Columbus, Ga., that will employ an additional 870 people over the next five years...

Federal Grant Gives $91,300 to Purchase a $133,000 Home

You can't make this stuff up! The safety net is becoming a hammock and fair-minded taxpayers are holding it up.

South Florida Sun Sentinel: Federal stimulus money allows Tamarac mom to buy first home:

Even though she sees the pain of people struggling in this economy, Staci Gullett is poised to take a leap of faith.

Gullett, 28, who works for the state unemployment office, deals all day long with people who sob on the telephone as they beg her to push their benefits through.

But she's also seeing firsthand the benefits of a federal grant project meant to ease the nation's economic pain by getting distressed houses off the market and giving or lending people money to spend on them.

Gullett will become one of Broward's first recipients of the Neighborhood Stabilization Program, the national housing rescue plan to help cities and states flip foreclosed homes, rent them out, or dole out grants to first-time home buyers. On June 19 she's closing on her first housing purchase, a two-bedroom with hardwood floors in Tamarac.

All I did was rent," Gullett said. "To buy my own home, it's wonderful. And I'll have a back yard."

In Broward and Palm Beach counties, dozens of local governments have been awarded a total of $104 million to turn abandoned, foreclosed properties into occupied, tax-producing dwellings.

Tamarac has $4.7 million to spend on down-payment assistance in some neighborhoods, such as Heathgate-Sunflower, Westwood, Mainlands, Vanguard Village and Concord Village.

Gullett is a single mother of a 1-year-old daughter, Madison. With a salary "in the 20s" as a clerk for the state unemployment office, she meets the program's income guidelines.

The house in the Mainlands neighborhood will cost her $133,000. The city, through a grant, is chipping in $91,300...

Details on the city's assitance program can be found on their web site.

In Memoriam

Remember to honor all that put their lives on the line for our freedom.

Sergeant Matt Maupin

WSJ: Soak the Rich, Lose the Rich

Americans know how to use the moving van to escape high taxes:

With states facing nearly $100 billion in combined budget deficits this year, we're seeing more governors than ever proposing the Barack Obama solution to balancing the budget: Soak the rich. Lawmakers in California, Connecticut, Delaware, Illinois, Minnesota, New Jersey, New York and Oregon want to raise income tax rates on the top 1% or 2% or 5% of their citizens. New Illinois Gov. Patrick Quinn wants a 50% increase in the income tax rate on the wealthy because this is the "fair" way to close his state's gaping deficit.

Mr. Quinn and other tax-raising governors have been emboldened by recent studies by left-wing groups like the Center for Budget and Policy Priorities that suggest that "tax increases, particularly tax increases on higher-income families, may be the best available option." A recent letter to New York Gov. David Paterson signed by 100 economists advises the Empire State to "raise tax rates for high income families right away."

Here's the problem for states that want to pry more money out of the wallets of rich people. It never works because people, investment capital and businesses are mobile: They can leave tax-unfriendly states and move to tax-friendly states.

And the evidence that we discovered in our new study for the American Legislative Exchange Council, "Rich States, Poor States," published in March, shows that Americans are more sensitive to high taxes than ever before. The tax differential between low-tax and high-tax states is widening, meaning that a relocation from high-tax California or Ohio, to no-income tax Texas or Tennessee, is all the more financially profitable both in terms of lower tax bills and more job opportunities...

Three Plead Guilty to Voter Fraud in Ohio

3 voting advocates guilty

Three staff members for Vote Today Ohio, an independent get-out-the-vote organization supporting Barack Obama, pleaded guilty in Franklin County this afternoon to improper voting.

The three came to Ohio from states where Obama was likely to win in an effort to swing Ohio's electoral college vote toward their candidate, Judge Charles A. Schneider said. The judge gave all three 60 days in jail but suspended it if they paid a $1,000 fine. He also ordered a year's probation.

The three are Daniel Hausman, 32, and Amy Little, 50, both of New York, and Yolanda Hippensteele, 30, of California. They told the court they had good intentions when they registered to vote and cast ballots the same day in early voting at Veterans Memorial.

"I was paying rent and living full-time in Ohio," Hippensteele told the judge, "I didn't attempt to vote in another state. ... I think it's all a misunderstanding. I have a profound respect for the voting process."

Assistant Prosecutor Brian Simms said the three later tried to rescind their registration and cancel their votes; two were successful. Franklin County Prosecutor Ron O'Brien had warned visiting campaign staff members that they shouldn't vote here if they didn't plan to stay after the election.

Schneider told the three that "rescinding your request is like giving back the money once you've been caught."

Torture Memos: Food for Thought

In the wake of the recently released Torture Memos by the Obama administration, the following is offered as food for thought.

Coming in From the Cold: CIA Spy Calls Waterboarding Necessary But Torture:

A leader of the CIA team that captured the first major al Qaeda figure, Abu Zubaydah, says subjecting him to waterboarding was torture but necessary.

In the first public comment by any CIA officer involved in handling high-value al Qaeda targets, John Kiriakou, now retired, said the technique broke Zubaydah in less than 35 seconds.

"The next day, he told his interrogator that Allah had visited him in his cell during the night and told him to cooperate," said Kiriakou in an interview to be broadcast tonight on ABC News' "World News With Charles Gibson" and "Nightline."

"From that day on, he answered every question," Kiriakou said. "The threat information he provided disrupted a number of attacks, maybe dozens of attacks."

And here's a look at the issue through the lenses of Science and Game Theory:

Assume for the moment that torture was used on terrorists like Khalid Shaikh Mohammed (KSM) ("principal architect" of the 9/11 attacks). The science of immune systems (Immunology), Evolution and an analysis informed by Game Theory (specifically, Evolutionary Game Theory) -- a branch of applied mathematics that is used in the social sciences (most notably economics), biology, engineering, political science, international relations, computer science, and philosophy -- offer us billions of years of 'best practices' in dealing with deadly threats that can be translated to the moral challenges our society faces in the Global War on Terror.

In principle, an immune system's mechanism works to protect an organism by attacking pathogens that would do it harm. White blood cells, or leukocytes, are constantly at work defending against harmful microbes in the body. The fevers we experience when our bodies get the flu, a 'high-level attack' and a disease that takes 250,000 to 500,000 humans annually, are part of the overall defenses the immune system utilizes. Because the body doesn't operate properly in a fever's high temperatures, it maintains a normal temperature when it is simply experiencing 'low-level attacks', like the germs that infect a small wound on your hand.

Unfortunately, the immune system's protection comes at a price; it's a two-edged sword with built-in imperfections. Sometimes it attacks the very organism it's trying to defend. This condition is called Autoimmunity. Rheumatology is one branch of medicine that treats one of these imperfections.

Eons of Evolution have given us a mechanism that precariously balances aggressive actions with unintended consequences. We must remind ourselves that the attack-and-defend interplay between pathogens and immune systems is not a steady-state system, but is co-evolving. One of the more fascinating adaptations is the process of active immunity and its production of antibodies. With active immunity, an immune system is constantly re-programming itself in response to the diseases/attacks it has survived.

Much like the immune system uses fever, our society should keep waterboarding as a legitimate, but rarely used, tool to protect the greater good. Particularly against individuals like KSM who are determined to destroy our society.

The argument is often made that the Geneva Conventions and policies against torture are there to protect our soldiers. But the historical evidence doesn't support this claim. The Nazis and Japanese abused POWs during WWII. POWs were tortured during the Vietnam War. And more recently, our troops have been tortured to death in Iraq.

Like a doctor treating a patient, our society should be guided by the core principles of 'first do no harm' and the Golden Rule (treat others as you would have them treat you) as we debate and evolve our policies. Implied within the Golden Rule and the Geneva Conventions is an expectation of reciprocity; even from our enemies. It's worth remembering that al-Qaida and its operatives are not signatories to the Geneva Conventions and have no claim on its protection.

While water boarding is an extreme tactic, it is justified by the extreme measures our enemies have taken against us. Our challenge is to make sure that we judiciously use this tool and don't allow a potential abuse that would result in an attack on the very society we're trying to protect; ala an autoimmune disease. We must be mindful of the potential hazard of declaring the operation (our anti-terrorism tactics) a success at the expense of losing the patient (our ethics and morals).

Related:

• Strategic analysis in evolutionary genetics and the theory of games
• Evolution and the Theory of Games
• Game Theory.Net: Understanding the biochemistry of bacteria will lead to more relaxed bacteria—and healthier humans
• Evolutionary Game Theory

Update: Intel chief: Harsh techniques brought good info

Cincinnati Tea Party II

Great coverage and pictures at RWNJ and BizzyBlog.

Kowtow-gate?

White House: No bow to Saudi:

The White House is denying that the president bowed to King Abdullah of Saudi Arabia at a G-20 meeting in London, a scene that drew criticism on the right and praise from some Arab outlets.

"It wasn't a bow. He grasped his hand with two hands, and he's taller than King Abdullah," said an Obama aide, who spoke on the condition of anonymity...

Under What Authority Can the President Extend This Promise?

President Obama's remarks on U.S. car industry:

...GOVERNMENT WARRANTY

It is my hope that the steps I am announcing today will go a long way towards answering many of the questions people may have about the future of GM and Chrysler. But just in case there are still nagging doubts, let me say it as plainly as I can -- if you buy a car from Chrysler or General Motors, you will be able to get your car serviced and repaired, just like always. Your warrantee will be safe.

In fact, it will be safer than it's ever been. Because starting today, the United States government will stand behind your warrantee...

This begs the question, "How did they organize the protest?"

Wales News: Anarchy in the UK as G20 protestors set to march:

AN ARMY of anarchists is set to march on London’s G20 summit, to vent their anger at bankers.

Thousands of activists are expected to travel from all across Wales to the capital, to coincide with the meeting of the leaders of the world’s 20 most powerful economies in London this week.

Among those travelling up to London is Ian Bone, once dubbed “the most dangerous man in Britain,” who rose to prominence in Swansea in the 1980s.

The 61-year-old, who founded anarchist newspaper Class War, said: “There will be hundreds, thousands, of anarchists pouring into London from Radnorshire to Powys, from Brecon and elsewhere. There will be a lot of people from Swansea and Newport.”...

If you read just one analysis on the financial meltdown, 'Fluke? Credit crisis was a heist' must be the one

A jaw dropping analysis from Jim Jubank. Read the whole thing!!!:

Fluke? Credit crisis was a heist
By Jim Jubak

Thanks to a complicit Congress, the reins were systematically loosened on the looters of the financial industry. And they're still at it, looking for new plunder.

It was no accident.

The folks in power in Washington and on Wall Street want to pretend that the current global financial crisis -- you know, the one that reduced household net worth in the United States by $11.2 trillion in 2008, according to the Federal Reserve -- was an accident caused by some unfortunate confluence of greed and asleep-at-the-switch regulators.

What we're now living through, though, is the result of a conscious, planned looting of the world economy. Its roots stretch back decades. And it wouldn't have been possible without the contrivances of the bought-and-paid-for folks who sit in Congress.

Of course, just because the plan blew up on the looters, taking off a financial finger here and a portfolio hand there, you shouldn't have any illusion that they've retired. In fact, in the "solutions" now being proposed -- by Congress -- to fix the global and U.S. financial systems, you can see the looters at work as hard as ever.

Blaming the regulators

The smoke screen -- the official explanation of the global crash -- was on full display at a March 5 hearing led by Sens. Chris Dodd, D-Conn., and Richard Shelby, R-Ala., respectively the chairman and ranking minority member of the Senate Banking Committee, into the $170 billion morass that is American International Group (AIG, news, msgs). Served up on the grill were Eric Dinallo, the supervisor of insurance for New York state, and Scott Polakoff, the acting director of the federal Office of Thrift Supervision.

"Are you trying to evade your responsibility?" Shelby thundered at Dinallo, who was responsible for regulating AIG's insurance business, headquartered in New York.

Neither Dinallo nor Polakoff had a convincing explanation for why their agencies hadn't done more to stop the meltdown at AIG, which has so far cost taxpayers $170 billion. At times, they certainly seemed like they were trying to weasel out of responsibility, exactly as Shelby suggested.

Dinallo, for example, pointed out his agency regulated only AIG's insurance business and not the London financial-products unit, which had written the derivative contracts that took down the company. Shelby countered by asking why Dinallo's office hadn't done more to stop the risky lending of securities by the company's regulated insurance units, which account for $35 billion of the $170 billion bailout.

Polakoff wound up eating crow and more crow. "AIG was successful in many regards for many years, but it had issues and challenges," he said in his prepared statement for the committee. After that exercise in the numbingly obvious, it was hard to muster up much sympathy for Polakoff when Sen. Jack Reed, D-R.I., got him to participate in his own evisceration. "The perception that this London operation was some rogue group that was unsupervised, that you had no access to it and that your regulator authority didn't reach there is not accurate," Reed said. "Correct," Polakoff answered. "That would be a false statement."...

New York Times: Many in Government Knew Weeks Ago About A.I.G. Bonuses (Updated with Video)

Many in Government Knew Weeks Ago About A.I.G. Bonuses

March 20, 2009

By EDMUND L. ANDREWS and JACKIE CALMES
WASHINGTON — The question was direct and prescient. Representative Joseph Crowley, Democrat of New York, asked the Treasury secretary in an open hearing what could be done to stop American International Group from paying $165 million in bonuses to hundreds of employees in the very unit that had nearly destroyed the company.

Timothy F. Geithner, the Treasury secretary, responded by saying that executive pay in the financial industry had gotten “out of whack” in recent years, and pledged to crack down on exorbitant pay at companies like A.I.G. that were being bailed out with billons of taxpayer dollars.

The exchange took place before the House Ways and Means Committee on March 3 — one week before Mr. Geithner claims he first learned that the failed insurance company was about to pay a round of bonuses that have since caused a political uproar.

A Treasury spokesman, Isaac Baker, said in a statement on Thursday night, “Although Congressman Crowley raised the issue of the bonuses two weeks ago, Secretary Geithner was not aware of the timing or full extent of the contractual retention payments or the other bonus programs until his staff brought them to his attention on March 10.”

Mr. Baker said that after Mr. Geithner had been briefed on the bonuses, he called Edward M. Liddy, the chief executive of A.I.G., and “insisted that they be renegotiated and restructured, in light of the extraordinary assistance being provided by taxpayers.”

Mr. Baker added that Mr. Geithner “takes full responsibility for not being aware of these programs before last week.” ...

Congresswoman Jean Schmidt Joins the 'Haste Makes Waste' Crowd

Our Congress is stuck on stupid and there are several Republicans that are going along for the ride; including Ohio's 2nd District's Jean Schmidt.

While Ms. Schmidt may be lauded for voting against the wasteful stimulus bill that included the AIG Bonus protections, yesterday she got caught up in the irrationality of the moment and was one of 328 voting [t]o impose an additional tax on bonuses received from certain TARP recipients.

The constitutionality of the proposed law is being debated, but we already know that the 'Law of Unintended Consequences' has a way of rearing its head when Congress acts in haste (emphasis added):

Statement of Judiciary Ranking Member Lamar Smith Full Committee Mark-up of the “End GREED Act”

Ranking Member Smith: Mr. Chairman, the American people are rightly outraged by the $165 million in bonuses recently given to AIG executives. Using taxpayer dollars intended to save struggling companies to pay instead for bonuses is hard to believe.

It’s a shocking, but real-life example of what happens when we rush legislation through Congress without much debate. And it’s why we should not be considering this bill today.

In responding to the economic crisis, Congress has let emotion overrun reason. There has been little accountability or transparency in this process, despite continued promises from the Administration.

When it comes to today’s proposal, Congress has let expediency override common-sense. We have had no debate, no hearing, no witnesses, and no real evaluation of this bill.

Congress already has learned the hard way about the unintended consequences of rushing to legislate without adequate expert testimony and debate. But that’s exactly what we’re doing now.

The Majority told us about this proposal yesterday. I asked for a hearing so we could analyze the proposal and ensure that it doesn’t result in unintended consequences.

We should hear from experts, weigh their opinions and come up with a constitutional and considered solution to the AIG bonuses blunder. It will do no good if we pass a law that is flawed.

The Supreme Court, for example, instructed us long ago, in U.S. v. Security Industrial Bank, that the Bankruptcy Clause is subject to the Fifth Amendment’s takings clause.

Any expectation that we can use the Bankruptcy Clause in this bill to get around the Takings Clause is unfounded. AIG executives may be able to recover through takings claims the money this bill tries to take back.

Where will that get us? Once again, the taxpayer will be left holding the bag.

Further, this bill is open to the question of whether the Bankruptcy Clause can be used in the unprecedented way this bill proposes. That is why we have hearings and subcommittee markups, which are glaringly missing here.

Any solution must ensure accountability, transparency and fiscal responsibility to guard against waste, fraud and abuse.

We have had less than 24 hours to review and consider this bill, which raises constitutional issues. It is wrong to rush to judgment on this issue without at least holding a hearing.

The legislation that started this problem was rushed through Congress in this same manner. In fact, the language that allowed AIG executives to receive these bonuses was added by a Democratic Senator at the last minute to the $787 billion stimulus bill.

Why is this legislation being rushed through the Judiciary Committee? Is it on orders from the Speaker? What happened to transparency and the public’s interest to know the facts?

I’m sorry we are considering this bill today, but I understand the need to address the issue.

Senator Sherrod Brown: Hypocrisy Writ Large (Updated)

Guess who's asking the AIG CEO to Immediately Renegotiate Contracts with Bonus Payments:

Brown: AIG Bonus Payments Are Slap-In-the-Face to Hardworking Ohioans
March 17, 2009

WASHINGTON, D.C. –U.S. Sen. Sherrod Brown (D-OH), Chairman of the Senate Banking Subcommittee on Economic Policy, today called on American International Group (AIG) Chairman and CEO Edward Liddy to immediately renegotiate contacts to prevent $165 million in bonus payments to AIG executives.

“AIG’s actions are a slap-in-the-face to hardworking Ohio families,” said Brown. “Bonuses at companies like AIG—companies relying on taxpayer funds to stay afloat—are an outrage. I hope AIG executives voluntarily return these bonuses. If they don’t, I will push to have them recouped through the U.S. tax code.”...

Yep...the same Senator that was shuttled back to Washington D.C. by Obama on a White House provided plane to cast the deciding vote on the Spending Stimulus Bill.

What's that you ask?...What does the Stimulus Bill have to do with the AIG "slap-in-the-face" bonus payments? It was Brown's vote that put into law the provision guaranteeing the payments (HT: ButAsForMe) (emphasis added):

`SEC. 111. EXECUTIVE COMPENSATION AND CORPORATE GOVERNANCE...

...`(iii) The prohibition required under clause (i) shall not be construed to prohibit any bonus payment required to be paid pursuant to a written employment contract executed on or before February 11, 2009, as such valid employment contracts are determined by the Secretary or the designee of the Secretary...

Update: Via CNN:

Bonuses allowed by stimulus bill

WASHINGTON (CNN) -- Democratic leaders scrambling to strip AIG executives of bonuses are having a hard time answering a key question: Why didn't Congress act to prevent the bonuses in the first place?

There's always more we can do, and hindsight is 20/20," said Senate Majority Leader Harry Reid Tuesday.

But though some lawmakers did move to prevent bonuses in the stimulus bill last month, the final language actually makes an exception for pre-existing contracts, effectively exempting AIG.

Senate Banking Committee Chairman Chris Dodd, D-Connecticut, who originally proposed the executive compensation provision, said he did not include the exemption clause, which said new rules "shall not be construed to prohibit any bonus payment required to be paid pursuant to a written employment contract executed on or before February 11, 2009."

In an interview with CNN, Dodd denied inserting that exemption at the 11th hour, and insisted he doesn't know how it got there.

"When I wrote the language there was no such language like that," Dodd told CNN Tuesday.

Multiple Senate Democratic leadership sources also deny knowing how the exemption got into the bill.

The mystery isn't just how what was effectively a protection for AIG was put into the stimulus bill -- it's also how a provision intended to prevent AIG from giving executive bonuses, was taken out.

The Senate passed a bipartisan amendment proposed by Sen. Olympia Snowe, R- Maine, and Sen. Ron Wyden, D-Oregon, that would have taxed bonuses on any company getting federal bailout dollars, if the company didn't pay back the bonus money to the government.

But the idea was stripped from the stimulus bill during hurried, closed-door negotiations with the White House and House of Representatives.

Senate Finance Committee Chairman Max Baucus, D-Montana, who is now pursing a similar bonus tax idea in the wake of outrage over AIG, said it was a mistake to drop it from the stimulus bill. He made a stunning admission. Watch why Americans are angry »

"Frankly it was such a rush -- we're talking about the stimulus bill now -- to get it passed, I didn't have time and other conferees didn't have time to address many of the provisions that were modified significantly," said Baucus.

"We shouldn't be here. That should have passed, but it didn't," he said.

Snowe chastised colleagues for expressing outrage about AIG's bonuses, when just last month they did away with her amendment intended to prevent it.

"We tried. It simply didn't happen, and that's a tragedy, given what's happened today," Snowe told CNN in an interview.

Majority Leader Reid would not directly answer a question from CNN about whether that was a mistake.

Update 2: The 'I was against it, before I was for it' hits just keep on coming.

"Outrage" from Republican Senator Snowe, who also voted for H.R.1:

Snowe Expresses Outrage over AIG Bonuses and UBS Tax Crimes

March 17, 2009

Washington, D.C. -
At today’s Senate Finance Committee hearing examining Ponzi schemes and other egregious tax evasions, U.S. Senator Olympia J. Snowe (R-Maine) today voiced outrage over the extreme violation of public trust committed by American International Group (AIG) for doling out $165 million in bonuses after receiving a $170 billion bailout from the federal government.

"These bonuses are a staggering insult to the American people," Senator Snowe said. "Clearly these executives need a strong and resounding reality check."

Referring to her amendment with Senator Ron Wyden (D-Ore.) that would have forced financial institutions receiving TARP money to repay bonuses over $100,000 or face a 35 percent excise tax on what is not immediately repaid to the treasury, Senator Snowe commented that if the provision had not been stripped out of the final stimulus package, the American people could reclaim these obscene bonuses.

"The stimulus debate presented an opportunity to enact firm restrictions on the ability of financial institutions receiving TARP funds to provide executive compensation," Snowe continued. "The Snowe-Wyden amendment would have forced AIG to either return the TARP money or pay out the bonuses and incur a 35 percent tax – equating to roughly $58 million. Yet my provision with Senator Wyden was inexplicably stripped out of the final package - leaving us with the unacceptable outcome we face today."...

The Law of Unintended Consequences cannot be Abrogated

Former Treasury Secretary Larry Summers is relying on the foundational principles of contract law to explain why the $165 million AIG bonus payments must be honored (via This Week with George Stephanopoulos (emphasis added)):

...We are a country of law. There are contracts. The government cannot just abrogate contracts. Every legal step possible to limit those bonuses is being taken by Secretary Geithner and by the Federal Reserve system...

The Obama administration does not have a consistent policy on respecting contract law and it will have unintended consequences:

(WSJ) Mortgage 'Cramdown' Plan Hits Turbulence in Senate

A central piece of President Barack Obama's plan to aid strapped homeowners is running into turbulence in the Senate as Democrats scramble to secure support from both parties' moderates.

The bill, which has already passed the House, would allow judges to write down mortgage debt [as in change the written contract] for people in bankruptcy court...

Sec. 103 of the H.R. 1106 details (emphasis added) the potential 'abrogation' of existing contracts passed by the House and now being considered in the Senate:

SEC. 103. AUTHORITY TO MODIFY CERTAIN MORTGAGES.

Section 1322 of title 11, United States Code, is amended-- ...

...`(D) by providing for payments of such modified loan directly to the holder of the claim or, at the discretion of the court, through the trustee during the term of the plan; ...

Update: From the AP story FACT CHECK: Obama having it both ways on economy?:.

...THE CLAIM: Obama repeated his assertion that his housing bailout will help "stabilize the housing market and help responsible homeowners stay in their homes."
THE FACTS: Even officials in his administration, many supporters of the plan in Congress and the Federal Reserve chairman have said some of the bailout money is bound to go to those who acted irresponsibly.

Fed Chairman Ben Bernanke has said it's important for the nation to go ahead with the plan even though it means assistance will go to some who should have known better than to get in over their heads.

Sheila Bair, head of the Federal Deposit Insurance Corp., made a similar point when she said it's "simply impractical" to examine every delinquent loan and weed out those taken by people who overstated their income or assets to get a mortgage they couldn't afford.

The Cincinnati Tea Party

The Cincinnati Tea Party was a HUGE success. Here are some of the great pics from the event:

A New Era of Responsibility

Cincinnati Tea Party: Fountain Square on March 15, 2009

Cincinnati Tea Party - March 15, 2009 3:00pm
Fountain Square Cincinnati (Update: pictures):

Most of us do things the right way. We go to school, get a job, work hard, raise a family, build a home. Our govenment takes an ever increasing share of the money we earned, and wastes it on every pet project under the sun. The "stimulus" bill and the mortgage bailout are the final straw. Those of us that got the 30-year fixed mortgage don't want to prop up the ones that bought a home two times what they could afford with an interest only loan. We also don't want to prop up the speculators that drove up the cost of housing by flipping homes and who are now under water. Those people made bad decisions and they deserve to suffer the consequences.

Why Protest?

Because the left wing has proven that it works. The problem is that most of us have jobs. We're not on welfare, nor are we the idle rich. We picked March 15th specifically to make it something accessible to those who can't come during the week. We also picked late afternoon so we have fewer conflicts with church. Even so, we know it's a hardship to take time out of your busy schedule to wave signs and shout slogans. Unfortunately, our government is now adding debt to pay for things such as $400,000 to train teachers how to deal with bullies. $200,000 for tattoo removal. $2,000,000 to study grape genetics. Taxes will go up to pay for this. If we stay on the same path, we'll look up and find that the lives we worked so hard to build are gone.

Please join us on March 15, 2009 and make your voice heard. Protests are being held across the country. You are not alone with your frustration. Please go here and confirm your attendance. It's very important that we know you're coming so we can pressure the media into covering us!

Obama's Belated Sanctimony

There's only one thing that's worst than a sanctimonious politician; one that's dumbfoundingly late with his sanctimony. Obama has recently taken this political skill to new heights as he piles on the rhetoric with the stimulus spending plan. This comes on the heels of the call-out of Wall Street bonuses.

While addressing the gathering of the United States Conference of Mayors, he warned them to watch the taxpayers' money:

...“I want to be clear about this: We cannot tolerate business as usual -- not in Washington, not in our state capitols, not in America’s cities and towns,” Mr. Obama told a gathering of the United States Conference of Mayors. He said he was putting them “on notice” that if they propose a wasteful project, “I will call them out on it.”...

Where was Obama's admonition for the big slice of cheese Pelosi's mouse got?:

Talk about a pet project. A tiny mouse with the longtime backing of a political giant may soon reap the benefits of the economic-stimulus package.

Lawmakers and administration officials divulged Wednesday that the $789 billion economic stimulus bill being finalized behind closed doors in Congress includes $30 million for wetlands restoration that the Obama administration intends to spend in the San Francisco Bay Area to protect, among other things, the endangered salt marsh harvest mouse.

House Speaker Nancy Pelosi represents the city of San Francisco and has previously championed preserving the mouse's habitat in the Bay Area...

Summary of Obama's Housing Plan

McMansions for Borrowers with McSalaries!

It's Settled: Americans Don't Care About Pork

Schumer: The American People Don't Care About Pork Projects In Stimulus

The Financial Crisis and Beyond

A Conversation with Joseph R. Perella

Joseph Perella '64, the highly regarded pioneer in mergers and acquisitions (M&A), visits Lehigh University to lead a discussion on the worldwide financial crisis. The forum begins with an introduction by Paul Brown, dean of the College of Business and Economics, which is followed by a lecture by Perella and, last, a candid Q&A session featuring Perella and Lehigh President Alice P. Gast.

Stimulus: Laughing Through our Tears

HT: Instapundit

Questioning the Outrage

Obama calls $18B in Wall St. bonuses 'shameful' ...

How rich (pun intended) that Obama rails against Wall Street considering that he was enabler-in-chief as Senator and candidate Obama. Remember that he was out in front supporting (Obama Working the Phones on TARP ) and voting for the Troubled Asset Release Program. He had every opportunity to include transparency and compensation provisions into the bill, but he was AWOL on behalf of the American taxpayer.

Obama helped open the barn door and is now complaining that the horses have escaped.

In Less than One Week, Obama Pisses-off Two of our Allies

First Afghanistan:

KABUL, Afghanistan (AP) - President Hamid Karzai condemned a U.S. operation he said killed 16 Afghan civilians, while hundreds of villagers denounced the American military during an angry demonstration Sunday.

Karzai said the killing of innocent Afghans during U.S. military operations "is strengthening the terrorists."...

Then Pakistan:

ISLAMABAD, Pakistan – The message from Washington to Pakistan was clear: there is no change in U.S. policy when it comes to going after al-Qaida and Taliban targets in Pakistan’s lawless border areas. After all, Barack Obama warned during his presidential campaign that America must go after terrorist targets if Pakistan did not act first.

It should not have been a surprise, then, to Pakistanis when on Friday night, five missiles from remotely piloted Predator drones struck targets in the lawless tribal areas of North and South Waziristan – but it was.

The twin attacks killed 22 people, including some foreign militants, but also many civilians.

Who’s in charge?
The Pakistan government quickly voiced its outrage. "These attacks can affect Pakistan’s cooperation in the war on terror," Pakistan’s President Asif Ali Zardari told U.S. Ambassador Anne Patterson the following day.

The foreign ministry followed up with a terse statement expressing "the sincere hope that the United States will review its policy." And Pakistan’s Prime Minister Syed Yousuf Raza Gilani – already on record promising the country there would be no more drone attacks once Obama became president – was embarrassed...