Erik Brown thought he had found help with his healthcare bill. Instead, he found himself trapped in a nightmare at the exchange.
Justin and Bob Plain discuss the General Assembly’s budget and whether all money in a society belongs to the government, so that letting people keep it is the same as giving it away.
URI economics professor Len Lardaro’s suggestions about how Rhode Island government should develop its economic policies takes a rosy view of experts and misses the critical structures of a democratic republic.
A 2009 report by a state government work group warned that a health benefits exchange structured like HealthSource RI would not work, which sheds new light on early estimates that consultants and state government officials projected when seeking federal taxpayer dollars.
This is interesting (emphasis in original):
On May 23 , 2012 a trade of $1,000,000 (face value) took place at a price of $121.75, representing a huge profit to the insider who sold. Not only was he collecting $77,500 a year in interest on his $1 million invested in just 18 months he had made an additional $210,000 in the market repricing the suspicious initial pricing of the insured bonds . The investor made approximately 25% annualized. Nice trade right? Or was this actually an insider getting out because he got more inside info.? On May 24 , 2012 38 Studios announced it was laying off all its employees.
To be fair, starting with a John DePetro tweet (about a week earlier, as I recall), the smoke was already visible to folks paying attention. Whether the rumors would have been enough to unload $1 million of profitable investments, though, is, as the post goes on to suggest, a matter into which the Securities and Exchange Commission (SEC) should take a look.
From time to time, I’ll mention the philosophical notion that people really do live in different worlds. Depending where they get their information and what registers when they skim headlines, two people can have entirely incompatible senses of the Obama Administration.
Many readers of the Current-Anchor will be entirely unsurprised to learn that Obama’s Justice Department, under Attorney General Eric Holder, has apparently been using its discretion concerning whom to investigate and what to prosecute as a sort of mafiosi extortion technique to target particular industries. As Glenn Reynolds puts it:
A while back, some adult performers noticed that banks were terminating their accounts. The reason, it turned out, was a Justice Department program called “Operation Choke Point.” This program, apparently, seeks to target businesses regarded as undesirable — like porn — by hitting them at a financial “choke point”: their bank accounts.
The way it works, it appears, is that the feds go to a bank and point out that a particular industry is full of bad seeds and will be coming under a lot of scrutiny, as will any organization with which it does business. It’s unlikely the Justice Department alludes to the possibility of spontaneous fires or visits from thugs, but the possibility of expensive investigations and visits from government agents are daunting enough.
Last year, Kevin Mooney reported on this site about a banking challenge that faced Bullseye Shooting Supplies in Woonsocket. Without explanation, owner Paul Connolly was required to transfer all of his business from Sovereign Bank elsewhere.
As John Hayward suggests, in Human Events, “no one’s even pretending DOJ had anything resembling the authority to do this.” The perpetrators simply ignore the controversy. And so do most of the news media from which Americans derive their sense of what the government is doing.
So, for some, it’s still possible to think the Obama Administration is just going about its business as any other presidential administration has done — albeit with a bit less competence than is desirable. But for others, the actions of our federal government and the complicity of the news media leave a much more disturbing impression.
Justin and Bob Plain discuss the appropriate role of government in branding and promoting tourism in Rhode Island.
Folks who pay attention to policy for a while will come across the term “regulatory capture,” which describes the circumstance in which inevitable incentives lead government regulators to begin serving, rather than restraining, the big players in the industry they oversee. Their main audience is the regulated industry; their main prospects for future employment are within it; and it’s easier to access much of the information they need if they build relationships within it.
Economist Luigi Zingales suggests that the dynamic applies to economists, as well:
While not all data economists use are proprietary, access to proprietary data provides a unique advantage in a highly competitive academic market. To obtain those data academic economists have to develop a reputation to treat their sources nicely. Hence, their incentives to cater to industry or to the political authority that controls the data are similar to those of the regulators.
Will Baude expands the concept to legal academics:
… some of the other mechanisms do seem to apply to law professors, too, such as the desire to make money consulting and witnessing, the desire to ascend to government office, or the fact that conclusions that are congenial to the powerful are more likely to implemented by the government or other powerful entities.
An obvious next step is to apply it to journalists. We can look to Obama Press Secretary Jay Carney for an example. Locally, I noted, last year, when laid off Providence Journal photographer Connie Grosch transitioned to the office of Democrat Congressman David Cicilline. (She’s since left the position.) Former Projo business writer Neil Downing is now a Chief Revenue Agent with Rhode Island’s Division of Taxation. I’m sure the list goes on, limited only by my relatively short time paying this much attention.
All of the elements of “capture” are present for journalists who cover any aspect of government. Much of their work is about and most highly trafficked by insiders. The most obvious (and remunerative) use of their highly specific knowledge outside of journalism is within government. And it is easier to get information — whether exclusive tips or basic data — when one has a working relationship with the people who hold it.
Nobody’s at fault, here, but it is a problem with our civic system of which we should be aware, especially when following the news.
(Via Instapundit.)
Justin and Bob Plain take up the question of to pay or not to pay the 38 Studios bonds.
Are worries about punishment by the ratings agencies and the bond market worries about individual decisions in a legitimate marketplace, or worries about collusion? If the answer to this question is based upon a fear that investors may decide amongst themselves to turn down money-making opportunities, to impose a boycott or to fix prices above a certain interest rate in order to make Rhode Island an “example”, then the answer is headed towards an allegation of illegal activity.
Those who have expressed concerned about “punishment” should be absolutely clear with the public about the mechanisms by which they expect individual, profit-seeking bond holders to leave money on the table, in order to make an example of Rhode Island, because it will never be cost-efficient, or moral, or in the best interests of the people of this state to accept either illegal collusion or leaders who would tolerate it.
Calls to be “prudent” and pay the 38 Studios bonds miss the cost of allowing schemes that trap responsible people into paying other people’s commitments to work.
During testimony before the Rhode Island House of Representatives Oversight Committee last night advocating for full payment of the 38 Studios moral obligation bonds, John Simmons of the Rhode Island Public Expenditures Council repeatedly made the point that the bond market will not recognize any difference between non-payment of moral obligation versus non-payment of general obligation debt. They will both be considered “default” by the state of Rhode Island.
Simmons stated that, based upon the bonding agreement, there was “fully an obligation of the state of Rhode Island to make the payments if the underlying transaction went under”. Representatives Spencer Dickinson and Mike Chippendale both challenged this.
Rep. Dickinson paraphrased an Economic Development Corporation bond prospectus, referring to a statement that “there’s no possible way that the state or any municipality is intended to obligate itself in the case of these bonds” (on page 35, according to the Rep). Mr. Simmons responded that he had seen similar language in other prospectuses “30, 40, 50 maybe a lot more times”. Pressed by Dickinson as to why this did not establish a clear difference between moral and general obligation bonds, Mr. Simmons read from a ratings agency statement, and said that the agency “is saying to you that it doesn’t make a difference to them if it’s GO, moral obligation or appropriation debt. If you do not pay it is default on debt. They’re giving an equal weight, in the sense of how they approach it”.
Rep. Chippendale quoted from the law that authorized the bonds…
I’m just going to read it. “The 2010 bonds and the interest thereon do not constitute a debt, liability or obligation of the state or any political subdivision thereof, and neither the faith or credit nor the taking or taxing power of the state or any political subdivision thereof is pledged to the payment of the bonds, or the interest thereon. That’s a fairly clear statement. Of course, you did address that and you said that’s fairly boilerplate…
Mr. Simmons’ reply was that…
What you have in the language is fairly standard boilerplate language on this type of debt, constant debt, this is a fairly large amount.
But a blithe dismissal of some very clear language in the bond authorization is a blithe assertion that everyone — legislators, citizens and investors — should know that the rules that the financial industry makes up for itself (and for its own benefit, by the way) can automatically override the plain text of a law. Finance industry decrees are the real final law of the land; the law made by legislatures, on the other hand, is only real to the degree that it does not conflict with the limits that financiers lay down.
This kind of system, where the people are expected to accept that there are privileged classes who can ignore the plain meaning of actual laws made by the government chosen by the representatives of the people, cannot be reconciled with the rule of law. If the best argument that John Simmons can muster about there being no difference between moral obligation and general obligation bonds is that bondholder and ratings agency decrees can override what the law says, his opinion on this aspect of repayment deserves summary dismissal.
More to come on this topic…
Philip K. Howard has an eye-opening series of examples in the Daily Beast of silly rules that make it impossible for government officials to take common-sense steps in their regular activities. He presents the resulting incompetence — the title is “Government Has Made America Inept” — as if it results from a natural growth of policies and regulations, like a weed or tumor.
Howard has apparently written a book on the topic, but my impression from the brief article is that he lets government officials off too easily. Consider:
Budgets are out of control because government executives lack flexibility to shave here and there to make ends meet. Soon after his election, New York Governor Andrew Cuomo thought he had found an easy way to save $50 million when he learned that a large juvenile detention center was empty, with no prospects of use anytime soon. There it was, sitting upstate, with several dozen employees—doing nothing but costing taxpayers millions of dollars. But no one had the authority to close it down, not even the governor. There’s a New York law that prohibits closing down any facility with union employees without at least one year’s notice. So $50 million of taxpayer revenue—that’s ten thousand families each paying $5,000 in state taxes—was wasted for no public purpose.
To say simply that “there’s a law” skirts the realities that the legislature can change the law and that there’s a reason the law was written. An inevitable, organic growth isn’t what brought about the circumstance that Howard decries; it’s a deliberate design, meant intentionally to lock in privileges for some and to make things difficult to reform.
In those terms, even a governor who has no power to subvert the law ought to have incentive to work to change it. In a functioning political system, there ought to be political payoff for a governor to push for common sense, and for legislators to abide by it.
Government’s just gotten so big and invasive that there’s no way the people can keep an eye on everything, and the media too often gets lured by circumstances into reissuing government press releases with a little bit of value-added commentary mixed in.
I’ve got an op-ed in the Providence Journal today about the state Ethics Commission’s dismissal of a complaint I made on a local issue. To be more specific, the commission’s director and his staff of lawyers dismissed the complaint based on some principle that isn’t anywhere in any law, rule, or other text that I can find or that the lawyers can tell me about:
The only explanation I can see is that Mr. Willever and his team of lawyers are applying some unwritten principle that more resembles faith than reason. One could say that they believe in a doctrine of ethical infallibility for government agents who are acting ex cathedra. As long as a government official is not tainted by any wicked temptations from the private sector, everything he or she does must be ethical. …
The frightening judgment of the Ethics Commission is apparently that government officials are a class apart, a ruling elite — almost a priestly order dispensing truth to the masses in accord with the will of government.
The more I sift through the weeds of Rhode Island politics, the more its problems become defined for me. Previously, I’d thought of the Ethics Commission as a toe hold (albeit a weak and tiny one) for asserting the rule of law in the Ocean State. Sure, it had become a tool for government officials to define everything up to the absolutely unethical line as ethical, but at least there was a line.
It was a great disappointment to learn that the Ethics Commission does not appear to be what I’d hoped it was. How dramatic an overhaul the state needs, if that’s the case!
Yesterday, Rhode Island’s Director of Revenue Analysis Paul Dion tweeted a story that Rhode Island is one of only six states doing well by three measures highlighted by the S&P ratings agency:
So which states are prepared [for another recession]? S&P uses three measures to determine a state’s progress in its fiscal recovery: 1) whether or not general fund or operating fund balances are equal to or greater than the state forecast for the end of the 2014 fiscal year, 2) whether rainy day fund balances have been restored to at least their 2008 level, and 3) whether a state is funding its actuarially recommended pension contribution.
Based on those standards, six states are in the positive for all three categories: Indiana, Michigan, Rhode Island, South Carolina, Utah and Wisconsin.
I suggested that it’s not exactly a new story that the state government is making itself secure while the population languishes, to which Dion responded that “if state government does well your narrative is shot to hell.”
My reply is that the more important question is what does Rhode Island state government do well? Whom does it serve?
The S&P report is narrow in scope, essentially giving an indication of what investors should be considering when looking for bonds. I’d argue it’s too short sighted. Sure Rhode Island’s government might be ready to weather another recession (assuming the state ever really exited the last one), but what about its people?
Sure, the state government’s rainy day fund may be at its 2008 level, but its labor force is down around 20,000 people. The number of Rhode Islanders who say that they’re employed is down almost 30,000. Where’s their rainy day fund? Are they ready for another recession?
Via Instapundit comes an interesting observation from the National Republican Senatorial Committee:
Yesterday, our friends at the DSCC tweeted this “important message for New Hampshire.” It linked to a hidden “message” page on Jeanne Shaheen’s website providing what seems to be a script with research and high resolution images of the Senator that would be the type that commonly appear in political ads run by outside groups like Harry Reid’s Majority PAC. Remember, coordination between the DSCC and these outside groups is prohibited by law.
Turns out that over the last few months, we’ve picked up on the fact that each time the DSCC sends an “important message” to voters of a battleground state, a liberal outside group quickly adheres to the message by producing an ad to be run on television. In other words, anytime the DSCC sends an “important message,” it is a directive to outside groups to run an “uncoordinated” ad (since, you know coordination would be illegal).
In other words, to avoid the appearance of “coordinating,” it looks like the politicians make a public statement that the outside groups know to be a directive. That seems very similar to the way Rhode Island’s own U.S. Senator Sheldon Whitehouse’s anti-Tea Party rhetoric was apparently taken by officials in the IRS and other government agencies as an instruction to target them.
The evisceration of the Atlantic salmon is not a tale of free-market self destruction, but of society’s evolving needs and priorities, which are highly contingent on wealth.
Arguments that point to the government’s paper trail for its actions miss the point of what’s required for the American way of life and government to persist.
Much about the travails of Nevada rancher Clive Bundy, who has been facing down the federal Bureau of Land Management (BLM) with the help of militia-type groups from across the country, offers many lessons from a conservative point of view. David French makes a good one:
With few options left within conventional politics, rural Americans are beginning to contemplate more dramatic measures, such as the state secession movements building in Colorado, Maryland, California, and elsewhere. The more viable state secession movements aim to limit urban control by literally removing rural counties from their states and forming new states around geographic regions of common interests.
But until there’s a long-term solution, we may very well see more Bundy Ranch moments, where individual Americans (and their allies) simply refuse to consent to laws that destroy their way of life for the sake of regulations that provide no perceivable benefit to others. (I can only imagine my frustration if I had to end a more-than-century-old family lifestyle, arguably for the sake of a turtle that no one will see).
So does Peter Kirsanow:
One can acknowledge that the government has the right — in fact, the responsibility — to enforce the law, yet object that this administration habitually enforces the law in a capricious, arbitrary, and discriminatory manner. They imperiously go after a Bundy while excusing scores of miscreants whose get-out-of-jail-free card is membership in a politically-correct class. They regularly waive legal requirements out of sheer political expediency. They fail to defend duly enacted statutes with which they, the enlightened, disagree.
It can hardly be denied that President Obama and the progressive movement generally traffic in divisiveness, especially when they feel those who wind up on their side of the divide are more powerful.
The thought that keeps returning to me, however, is that the Bundy episode is a great illustration of the different perspectives of the Left and the Right. I mean, one needn’t give total credence to speculation that Senate Majority Leader Harry Reid (D, NV) is orchestrating the routing of the rancher as part of a Chinese solar farm deal to think the whole story sounds very familiar… even to the point being a cliché. The main difference is that the Hollywood cliché would require the powerful force behind the strong-arm tactics to drive people off of their land to be Big Business. Jean-Claude Van Damme’s Nowhere to Run comes quickly to mind.
It’s interesting, isn’t it, that progressives, the media, the Democrats (etc.) would find a huge story worthy of deep investigation in the controversy if it were a private business doing the strong arming. When it’s the government, though, we may get some minor concessions that the BLM is going about things the wrong way, but motives and justifications are assumed to be pure.
Assurances about the state government’s ability to keep sensitive information private ring hollow when an “opt out” Web site for privacy seekers returns a warning that its security certificate has been revoked.
Participants in the climate change debate tend to stand at opposite ends of a string of questions and push “yes” and “no” against each other along the scale. We should break the question down to the political theory underlying the tug-of-war.
What is important to keep in mind here is that, unlike the mayors and city councils of cities like Central Falls and Woonsocket, fire districts do not start out from a position, under the general laws of Rhode Island, of being able to tax without direct voter approval. Fire-district levies still have to go to the voters, and it should not be assumed that empaneling a budget commission automatically negates this. A budget commission should have to submit a budget it formulates to the same voters who recently rejected the others, and re-modifying the fiscal stability act to say in effect that the union is permanent while the voters can be relegated to an advisory role (at best) is not a satisfactory solution here.
This means that the final stage built into the fiscal stability act, receivership aimed at an official bankruptcy proceeding, where everything is put on the table including the entirety of existing contracts, will be a real possibility once the state steps in. And rightly or wrongly, the realities of political pressures and “financial market forces” are that it will be much easier to send a fire district into full-blown bankruptcy than sending municipal governments has been.
Superior Court Judge Brian Stern’s order liquidating the Central Coventry Fire District describes the crisis the district is in very succinctly…
The yearly operating expenses of the fire district were far in excess of the amount of funds that was being generated by taxes and other fees. The board had created what can only be described as an elaborate Ponzi scheme to hide this from the taxpayers, which resulted in a multimillion dollar structural deficit. A twenty, thirty, or even a fifty percent increase in taxes would not even resolve the entire structural deficit the board had created at the time.Full detail on how the district got into this position, is in the main post.
Another organization speaking out against the RI Center for Freedom & Prosperity’s Spotlight on Spending report appears to have a business model that charges dues for access to taxpayer-funded services.
Yesterday, Patrick mentioned the statement of Sen. Harold Metts (D, Providence) that he supports the master lever (i.e., straight-party voting on Rhode Island’s ballots) because his constituents know what party is best for them. As that hearing happened, I saw a number of tweets of astonishment that he would say such a thing.
But this is just the annual tradition. Here’s a paragraph from my liveblog of the corresponding hearing back in 2012:
Senator Metts commented that his father always knew what party was for poor people and what party were for rich. (His grandparents were Republicans.) People may not know the specifics and all the complicated political things that candidates fight about, but people know which party “is going to put food on the table.”
Add it to the long list of evidence that nothing will change until Rhode Islanders start changing the people making the speeches.
Employees of the RI Hospitality Education Foundation came to the defense of the Governor’s Workforce Board, which the RI Center for Freedom & Prosperity recommended eliminating, and which supplies one-third or more of the foundation’s funding.
In February, the Federal Communications Commission (FCC) set off a bit of a row (mainly outside of the mainstream media) with its intention to monitor newsrooms and help the news media determine what stories should claim some of their limited time and space. As William Bigelow explained, on Breitbart’s Big Government site:
FCC commissioner Mignon Clyburn, who was appointed to the FCC by Barack Obama and is the daughter of House Democratic Rep. James Clyburn, said in 2012, “This study begins the charting of a course to a more effective delivery of necessary information to all citizens… [the FCC] must emphatically insist that we leave no American behind when it comes to meeting the needs of those in varied and vibrant communities of our nation – be they native born, immigrant, disabled, non-English speaking, low-income, or other.” …
The plan is referred to as “the CIN Study.” Ajit Pai, one of the FCC’s five commissioners (and one of two Republicans), condemned the action, saying, “This has never been put to an FCC vote; it was just announced. I’ve never had any input into the process.”
With his recent press conference claiming success for the Affordable Care Act (ACA) exchanges, President Obama gave a sample of the dark turn that such monitoring could take. Here’s Carl Cannon, of RealClearPolitics:
“I want to make sure everybody understands,” [Obama] said, looking at press row. “In the months, years ahead … there will be additional challenges to implementing this law. There will be days when the website stumbles, I guarantee it. So, press, I want you to anticipate: There will be some moment when the website is down, and I know it will be on all of your front pages. It’s going to happen. It won’t be news.”
Take a moment to digest that comment, and to consider its context. He’s saying that if www.healthcare.gov continues to have problems providing a service Americans are required by law to obtain, that’s not news.
Party loyalty and ideological bias have already hindered the ability of the nation’s news media to accurately convey to the American people who Obama and his radical ilk are and what they want to accomplish. It’s a very dangerous line they’re walking.
Multiple sources have reported that the police union members involved in the Rhode Island pension reform lawsuit have voted the proposed settlement down in the first stage of a two stage approval process. According to the arcane rules in place, rejection by one of six different plaintiff groups means the settlement is not supposed to go forward. Judge Sarah Taft-Carter has responded by (what else?) ordering the parties back into secret mediation.
Ian Donnis of Rhode Island Public Radio has posted an unofficial tally of the vote provided by “spokesman for the coalition of plaintiffs in the case” Ray Sullivan…
Teachers: 7,442 eligible, 2,320 ballots received: 31% vote to reject
Retirees: 6,840 eligible, 1,810 ballots received: 26% vote to reject
State: 5,045 eligible,1,697 ballots received: 34% vote to reject
Municipal: 3,261 eligible, 504 ballots received: 15% vote to reject
Fire: 619 eligible, 170 ballots received: 27% vote to reject
Police: 417 eligible, 254 ballots received: 61% vote to reject
It is becoming extremely difficult at this point to see how a “settlement” process could be finished in time for the General Assembly to act on legislation, prior to the end of the session that’s supposed to finish up in early June.
Steven Brown of the RI Chapter of the ACLU: “The votes that voters get to choose across the country are on some of the most divisive, controversial, social, ideological issues there are; abortion, gay rights, same-sex marriage, anti-immigrant. We are deluding ourselves if we think we can hold a convention and not have those issues come to the fore….What’s troubling about that is that we are talking about individual rights that should not be subject to majoritarian control. You’ll hear about all of the safeguards that are in place; first you have to elect the delegates, and then the convention has to vote to approve an amendment, then it’s up to the voters to approve or reject it….They aren’t safeguards, when you’re talking about minority rights”.
Professor Jared Goldstein: “On a basic level, the concern that we’ll have a runaway convention, or that they’ll pass recommendations that are contrary to our fundamental rights is really a point of view that expresses simple, profound distrust of the people, that is, we can’t trust the people the enact legislation that will help us because they may take away our constitutional rights….Don’t we want the people to decide these fundamental questions about what our society is like?…If the answer is no, then who do we trust? Do we just want the judges to decide what our rights are? What are they basing them on?”
Remember, voter fraud doesn’t exist (PJMedia): * 765 voters with an exact match of first and last name, DOB and last four digits of SSN were registered in N.C. and another state and voted in N.C. and the other state in the 2012 general election. * 35,750 voters with the same first and last name […]