It’s Thursday, November 10th, 2011….and here’s The Gouge!

First up, a common-sense commentary by Phillip Howard in the WSJ a majority of Ohioans obviously missed:

The Public-Union Albatross

What it means when 90% of an agency’s workers retire with disability benefits.

The indictment of seven Long Island Rail Road workers for disability fraud last week cast a spotlight on a troubled government agency. Until recently, over 90% of LIRR workers retired with a disability—even those who worked desk jobs—adding about $36,000 to their annual pensions. The cost to New York taxpayers over the past decade was $300 million.

As one investigator put it, fraud of this kind “became a culture of sorts among the LIRR workers, who took to gathering in doctor’s waiting rooms bragging to each [other] about their disabilities while simultaneously talking about their golf game.” How could almost every employee think fraud was the right thing to do?

The LIRR disability epidemic is hardly unique—82% of senior California state troopers are “disabled” in their last year before retirement. Pension abuses are so common—for example, “spiking” pensions with excess overtime in the last year of employment—that they’re taken for granted.

Governors in Wisconsin and Ohio this year have led well-publicized showdowns with public unions. Union leaders argue they are “decimat[ing] the collective bargaining rights of public employees.” What are these so-called “rights”? The dispute has focused on rich benefit packages that are drowning public budgets. Far more important is the lack of productivity.

“I’ve never seen anyone terminated for incompetence,” observed a long-time human relations official in New York City. In Cincinnati, police personnel records must be expunged every few years—making periodic misconduct essentially unaccountable. Over the past decade, Los Angeles succeeded in firing five teachers (out of 33,000), at a cost of $3.5 million.

Collective-bargaining rights have made government virtually unmanageable. Promotions, reassignments and layoffs are dictated by rigid rules, without any opportunity for managerial judgment. In 2010, shortly after receiving an award as best first-year teacher in Wisconsin, Megan Sampson had to be let go under “last in, first out” provisions of the union contract.

Even what task someone should do on a given day is subject to detailed rules. Last year, when a virus disabled two computers in a shared federal office in Washington, D.C., the IT technician fixed one but said he was unable to fix the other because it wasn’t listed on his form.

Making things work better is an affront to union prerogatives. The refuse-collection union in Toledo sued when the city proposed consolidating garbage collection with the surrounding county. (Toledo ended up making a cash settlement.) In Wisconsin, when budget cuts eliminated funding to mow the grass along the roads, the union sued to stop the county executive from giving the job to inmates.

No decision is too small for union micromanagement. Under the New York City union contract, when new equipment is installed the city must reopen collective bargaining “for the sole purpose of negotiating with the union on the practical impact, if any, such equipment has on the affected employees.” Trying to get ideas from public employees can be illegal. A deputy mayor of New York City was “warned not to talk with employees in order to get suggestions” because it might violate the “direct dealing law.”

How inefficient is this system? Ten percent? Thirty percent? Pause on the math here. Over 20 million people work for federal, state and local government, or one in seven workers in America. Their salaries and benefits total roughly $1.5 trillion of taxpayer funds each year (about 10% of GDP). They spend another $2 trillion. If government could be run more efficiently by 30%, that would result in annual savings worth $1 trillion.

What’s amazing is that anything gets done in government. This is a tribute to countless public employees who render public service, against all odds, by their personal pride and willpower, despite having to wrestle daily choices through a slimy bureaucracy.

One huge hurdle stands in the way of making government manageable: public unions. The head of the American Federation of State, County and Municipal Employees recently bragged that the union had contributed $90 million in the 2010 off-year election alone. Where did the unions get all that money? The power is imbedded in an artificial legal construct—a “collective-bargaining right” that deducts union dues from all public employees, whether or not they want to belong to the union.

Some states, such as Indiana, have succeeded in eliminating this requirement. I would go further: America should ban political contributions by public unions, by constitutional amendment if necessary. Government is supposed to serve the public, not public employees.

America must bulldoze the current system and start over. Only then can we balance budgets and restore competence, dignity and purpose to public service.

And as this next item from the Journal details, the unions’ shills on the “Super Committee” are ensuring they get their money’s worth:

A Super Offer Rejected

Republicans bid $500 billion in new revenues. Democrats want more.

Pessimism is growing about the Congressional super committee on deficit reduction, so we were eager to listen yesterday when Pat Toomey called with the latest lowdown. Most notably, the Pennsylvania Senator explained why he and his five fellow Republicans have decided to put new tax revenues on the table.

The rap from Democrats has been that Republicans refuse to touch revenues, preferring only to cut spending. But Mr. Toomey explained that this week the GOP Six offered to raise revenues by $500 billion over 10 years as part of a tax reform that would lock in lower tax rates in return for giving up deductions. Democrats have rejected it, which is puzzling since it would achieve so many of their stated goals. (Not when you understand Dimocrats!)

The GOP offer would raise about $250 billion over 10 years by using some variation of economist Martin Feldstein’s proposal that no combination of deductions could exceed, say, 2% of a taxpayer’s adjusted gross income. (See Mr. Feldstein’s Journal op-ed, “The Tax Reform Evidence From 1986,” Oct. 24.) That’s a big revenue hit, especially for earners in the top tax brackets who benefit more from tax breaks. Grover Norquist of tax-pledge fame would probably not be pleased.

In return for these cuts in deductions, Mr. Toomey says the top individual tax rate would fall to 28% from 35%, with the other tax-rate brackets falling by similar proportions. The current top rates for capital gains and dividends (15%) and the estate tax (35%) would remain unchanged. The GOP negotiators agreed to the Democrat request that these tax changes be statically scored—which assumes no revenue gains from economic growth—yet they would still yield $250 billion in additional revenue over a decade even with the lower tax rates.

“It’s a bitter pill to accept new statically scored revenue,” says Mr. Toomey, “but I think it’s justified to prevent the tax increase that’s coming” in 2013. Given the history of revenue gains after marginal-rate tax cuts, the tax windfall for the Treasury would likely far exceed $250 billion over a decade.

Another $40 billion or so in new revenue would come from changing the formula for adjusting tax brackets for inflation. And $200 billion more would come from a variety of asset and spectrum sales, user fees, tax compliance and other things—all scored on a static basis by the Joint Tax Committee. Mr. Toomey says the Members have also made progress on a corporate tax reform that would cut the rate to 25% in return for eliminating deductions, though any agreement would probably have to be done in two stages to work out the details.

As for spending cuts, Democrats would only have to agree to $750 billion over 10 years. About $180 billion of that would come from changing the inflation calculation for benefits, so the other reductions would hardly be extreme. Keep in mind that any changes in ObamaCare (with its 3.8-percentage point payroll tax increase) and major reform of Medicare and Medicaid were long ago ruled out by Democrats.

Despite the modest spending cuts, the deal Mr. Toomey describes would be a big political win for all concerned. It would give the economy a major lift by taking the tax increase now scheduled for 2013 off the table, and it would show that Congress can at least make some progress toward controlling federal spending. With a ratio of $1.50 in spending cuts to $1 in tax increases, the offer is far better for Democrats than the $3 to $1 ratio that President Obama’s own Simpson-Bowles deficit commission recommended.

Mr. Toomey says Democrats nonetheless rejected this offer on Tuesday night, a fact that leaves him “enormously frustrated.” He says Democrats are insisting on at least $1 trillion in new revenues while refusing to allow any reduction in tax rates or to stop the tax increase that will hit in 2013. The freshman Republican now fears the talks will end with a whimper of small revenue and spending measures that will do little to help the economy or the federal fisc.

We report all this because it’s news and because it illustrates the real political obstacles to more sensible economic policy in Washington. In media mythology, the only barrier to a budget deal is conservative opposition to raising taxes. But even when Republicans put $500 billion in statically scored new revenues on the table, at the risk of upsetting their political base, Democrats declare that tax reform without higher tax rates is impossible. So who are the real “ideologues” here?

Democrats must believe they can blame Republicans if the super committee fails, riding their campaign against “millionaires and billionaires” back to complete power in Washington. It’s a reckless bet, but the American public may have to call it.

One thing’s certain: the MSM will pull out all the stops, and the unions will empty their members wallets to help Dimocrats sell this fable.

Speaking of fables….

Cain Accuser Filed Complaint in Next Job

A woman who settled a sexual harassment complaint against GOP presidential candidate Herman Cain in 1999 complained three years later at her next job about unfair treatment, saying she should be allowed to work from home after a serious car accident and accusing a manager of circulating a sexually charged email, The Associated Press has learned.

Karen Kraushaar, 55, filed the complaint while working as a spokeswoman at the Immigration and Naturalization Service in the Justice Departmentin late 2002 or early 2003, with the assistance of her lawyer, Joel Bennett, who also handled her earlier sexual harassment complaint against Cain in 1999. Three former supervisors familiar with Kraushaar’s complaint, which did not include a claim of sexual harassment, described it for the AP under condition of anonymity because the matter was handled internally by the agency and was not public.

Kraushaar told the AP she considered her employment complaint “relatively minor” and she later dropped it. “The concern was that there may have been discrimination on the job and that I was being treated unfairly,” Kraushaar said.

Kraushaar said Tuesday she did not remember details about the complaint and did not remember asking for a payment, a promotion or a Harvard fellowship. Bennett, her lawyer, declined to discuss the case with the AP, saying he considered it confidential.

No questionable personal history here; it’s just that they were all against me; first it was the strawberries….

The “sexually charged email” contained a joke listing reasons men and men and women were like computers, including that men were like computers because “in order to get their attention, you have to turn them on.” Women were like computers because “even your smallest mistakes are stored in long-term memory for later retrieval.”

If this is the best she’s got on Cain, no wonder neither she nor her lawyer are offering any additional details.  All of which, by the way, makes Cain’s incredibly disjointed, contradictory response to charges he knew would be forthcoming all the more inexplicable.

And in the Environmental Moment, a bit of from the WSJ‘s Holman Jenkins, courtesy of Jeff Foutch:

Green Energy’s Mr. Fixit

For his next trick, Herbert Allison must salvage the unsalvageable.

The following is believed to be an acceptance letter from Herbert M. Allison, a former chief financial officer of Merrill Lynch, chosen by the White House to advise on the Department of Energy’s “green” loan program. He was recruited after the collapse of Solyndra, a solar company that received $535 million in federal loan guarantees.

Dear Mr. President:

Thank you for placing your confidence in a non-Goldman alum. Your chief of staff, citing my long career in business, said I was hired because I’m “tough” and “always tell it like it is.” This is most flattering. I fully understand that these words are used in the Washington sense.

Per discussions with your staff, I understand my mission will be to ensure that, in the future, the “i’s” are properly dotted and “t’s” properly crossed, that the highly effective habits of highly effective managers are highly effectively employed, and that best practices are practiced in the best practical way in the DOE loan program.

It won’t be my job to question whether the policy itself is foolish.

I see, for instance, that four loans have been approved to build solar power plants in California. DOE maintains these loans are low-risk for taxpayers because contracts already are in place to sell the power to local utilities. In April, Gov. Brown signed a law requiring California utilities to get 33% of their power from “renewables” by 2020.

I will refrain from noting that California remains a democracy and Gov. Brown and his policies may not be popular by the time the plants are built. Voters may decide not to allow their electricity rates to be increased by 50% to secure DOE’s loans.

I also see that 15 electric vehicle models are expected by 2014, with potential production four times greater than J.D. Power’s estimate of consumer demand, even assuming continuation of today’s $7,500-per-buyer tax credit. The latest data also indicate that the average Chevy Volt buyer has an annual income of $175,000. I will not examine the political viability of an industry premised on taxing average Americans to subsidize cars for wealthy Americans.

I also understand that the long-term economic viability of the electric-car business depends on the adoption of unpopular policies that neither you nor your predecessors nor any other candidate for federal office has been willing to endorse, such as higher gasoline prices.

However, my focus will be on making sure the right forms are filled out in the right order by the DOE’s loan portfolio monitors.

As you know, I was previously hired to run Fannie Mae after it went bust. It will not be among my duties to draw attention to similarities between Fannie Mae and DOE’s energy loan program.

I will also refrain from contradicting a meme by one of your administration’s supporters in the media, who claims a solar-based “energy transformation” is at hand due to the operation of “Moore’s Law.”

Solar-panel prices have come down sharply, it’s true, but the reason is not big efficiency gains. Under Moore’s Law, computer chips doubled their capacity every 18 months. It took 25 years for commercial solar panels to double their efficiency to today’s 10% or so, and no “transformations” appear to be in the offing. Solyndra went bankrupt because its panels, with 12% efficiency, couldn’t be delivered at a competitive price.

The solar-panel price collapse has two causes: Chinese overproduction and decisions by governments around the world that it no longer is politically feasible to subsidize the industry. Listen to the words of Chairman Michael Ahearn of First Solar Inc. on a conference call last week: “Declining subsidy pool . . . Shrinking subsidy programs . . . European countries reducing their subsidies . . . No significant new state-level solar programs . . . Moving downward in terms of subsidies . . . A much lower subsidy level . . . Solar industries feeding mostly off of legacy subsidies in California.”

My focus, however, will be on procedures, not on the wisdom of taxpayer money being used to create a solar industry addicted to subsidies and unable to survive without them, in a world where strapped governments can’t meet basic commitments to citizens.

Once again, thank you for the faith you have placed in me. At Merrill, our rule was to invest in businesses that could sell their products to willing consumers at prices greater than the cost of producing them. A different approach has been adopted by DOE. I respect this difference.

In sum, if forms that should have been filled out in triplicate were, wastefully, filled out in quadruplicate, or alternatively, filled out malfeasantly in duplicate, I will leave no stone unturned to identify the culprits.

I will not point out that Americans are made poorer by all this, or that many of the beneficiaries of solar subsidies are large campaign donors, or that the biggest danger now is political pressure for more subsidies to cover up the failure of those already offered.

Pointing this out is not my job. It’s the job of the super committee.

Respectfully,
Herbert M. Allison Jr.

In a related item….

Keystone pipeline decision could be delayed until after election

The project has left Obama trapped between environmentalists who oppose it and unions who back it because it would create jobs.

The Obama administration is considering a move that could delay a decision on the controversial Keystone XL pipeline by requiring sponsors to reduce the project’s environmental risks before it can be approved, according to people with knowledge of the deliberations.

The step might put off a decision until after the 2012 election and be a way for the White House to at least temporarily avoid antagonizing either the unions that support the pipeline or the environmental activists who oppose it as President Obama gears up for his campaign.

In other words….The Obamao’s once again voting “present”….while America’s energy bills continue to skyrocket.

Then there’s this disturbing bit of news forwarded by Steve Boss:

Counterfeit Chinese parts found on Boeing P8-A

Counterfeit parts from China have been found on Boeing Co.’s P8-A Poseidon airplane, the 737-based “sub-killer” that’s built in Renton and Seattle.  Bloomberg reports that in addition to Boeing, counterfeit Chinese parts were also found on military systems and subsystems made by Raytheon Co. and L-3 Communications.

No dramatic systems failures or loss of lives can be traced to the phony Chinese parts, but “disastrous consequences could take place,” according to one U.S. senator.

“No….’dramatic’….systems failures….can be traced to the phony Chinese parts”; what about UNdramatic failures?!?  Welcome to Team Tick-Tock’s leaner, greener U.S. Military.

On the Lighter Side….

Finally, in News of Bizarre, yet another thing you don’t hear every day:

Former Rugby Player Claims Stroke Turned Him Gay

A former British rugby player claims a stroke turned him gay overnight, the Daily Mail reported. Chris Birch, 26, a bank clerk, broke his neck while attempting a back flip and suffered a stroke in 2005. When he woke up, he told his family he was no longer interested in women.

“It sounds strange, but when I came round, I immediately felt different,” Birch told the Daily Mail. “I wasn’t interested in women any more. I was definitely gay. I had never been attracted to a man before – I’d never even had any gay friends.”

His mental transformation was accompanied by a physical one – Birch lost 110 pounds, cut his hair and started dating men. He also quit his job as a rugby player in order to study hairdressing.

To which we can only respond, yeah….

Magoo