OBAMANTOINETTE

Let them drive a Chevy Volt! That was President Obama's response to a citizen concerned about historically high gas prices. He actually told the man that he should think about a trade-in. Of course, the President doesn't need to worry about a buying a new car - the Chevy Volt costs only $40,000. Or the costs of commuting to work at $4.00 per gallon. Or the taxes, registration and insurance. Or trying to fit a family of more than 4 into a fuel efficient car. And maybe he thinks shippers of produce to supermarkets should also trade in their 18-wheelers for Chevy Volts. But he doesn't have to worry about the rising cost of groceries either. "Let them eat cake!"

Time for Totalitarianism

Democrat Douglas LaFollette, the Wisconsin Secretary of State, who by the way, has failed to discharge his duty to publish the budget repair bill that was passed several weeks ago--resulting in the law not going into effect,  said at a Madison rally yesterday that conservatives "have brainwashed approximately 50 percent of the voters in our state."   Mr. La Follette echoes Bernie Sanders' opinion about the voters.  In Sanders' book, "Outsider in the House", Sanders said  ordinary citizens are "ignorant" and prone to "fear" when they vote for Republicans.   

So, that's it.  We're too stupid for democracy.  If millions are prone to brainwashing, then we need totalitarian leaders who will dispense with pesky elections and rule in our best interest.   After all, if we can be so easily brainwashed,  we certainly cannot take care of ourselves. 

What passes as news on VPR

The other morning VPR's "news" broadcasts provided another example of the garden variety propaganda which passes as news on VPR.  The first story reported a "concern" by what VPR called a nuclear "watchdog".  The "watchdog" is the New England Coalition against Nuclear Pollution, an organization whose rigid religious beliefs about  nuclear power have not changed one iota since its founding forty years ago despite the unparalleled safety and clean air record of nuclear power.  New England Coalition's "concern" broadcast by VPR was that there were submerged cables at Vermont Yankee.  VPR did not bother to air any response to debunk this harebrained claim.   In fact, VPR has broadcast this particular "concern" about submerged cables at least a half a dozen times over the last six months.  VPR has regularly broadcast New England Coalition's press releases as news for decades, most of the time without broadcasting any response to the Coalition's claims.  And VPR always calls the New England Coalition a "watchdog", rather than the rigidly ideological advocacy group it actually is.

The  next story did use the word "ideologue" about--guess who?  Republicans.  The story was a typical puff piece "interview"  with Rep. Peter Welch.  As usual, VPR never asked any tough questions, but allowed Welch to pronounce his views  without examination.  Welch was talking about the budget, and of course, indicated that Republican ideologues were getting in the way of a sensible budget.  VPR could have asked Welch why the Democrats did not pass their budget last year, or what is Welch's plan to deal with the 1.5 trillion dollar deficit this year, but VPR, as usual, never asked any questions except those which allowed Welch a platform for his views.

So: this is what passes for news at VPR:  a broadcast of a press release by a rigidly ideological advocacy group called a "watchdog" by VPR, and a broadcast of  a press event on behalf of  Rep. Welch in which Welch   disparages his opponents with VPR's tacit approval.

VPR has a perfect right to broadcast propaganda.  But it should not call itself a news organization or ask for taxpayer's money to support its ideology. 

Dodd-Frank: Regulations Only a Government Could Love

            The Dodd-Frank Law was hastily passed by Congress last year with the stated objective of preventing another financial crisis like the one precipitated by the mortgage industry activities which came to a head in late 2007 and 2008.  Like many politically-motivated laws, the Dodd-Frank regulations don’t address the root of the problem, but instead add an enormous burden to the business community resulting in some absurd compliance requirements at enormous cost to tax payers and consumers. 

            It has become clear over the past several years that the primary cause of the housing bubble and inevitable mortgage debacle was the peeling away over the years of sound credit standards.  This approach was pushed by Congress to promote home ownership for all.  It was implemented by Fannie Mae and Freddie Mac, quasi government agencies created by Congress, and the nation’s largest purchasers of home mortgages originated by mortgage companies and banks. Unfortunately, the Dodd-Frank bill does nothing to address Fannie Mae and Freddie Mac. 

            Instead, for instance, it requires collection of ever more data from banks and mortgage companies.  The Home Mortgage Disclosure Act (HMDA) required collection and reporting of 28 pieces of data for each residential mortgage loan originated by mortgage lenders even before Dodd-Frank.  Dodd-Frank has increased reporting requirements by adding another 13 required data points.  It is unclear what the government does with all of the data or how it relates to preventing future problems.  What is clear is that it is a costly process in both time and money.  Those costs are ultimately borne by all of us.

            Another requirement mandates that the mortgage loan officer working with the borrower cannot be the person ordering the property appraisal.  That task must be accomplished by someone further removed from the transaction. Once the appraisal is received by the financial institution it now, thanks to Dodd-Frank, must be reviewed by someone other than the loan officer and other than the person who ordered it.  In the event the person reviewing the appraisal is another lender who may typically have a vote on approval of mortgage loan, he and the lender cannot participate in the vote.  Keeping track of all of this is not only another costly administrative challenge, it removes the original lender from accountability for the mortgage he originates, and it adds to the time and cost of making a mortgage loan.

            These are relatively minor examples picked from many in the 5,000 pages of regulations stemming from the Dodd-Frank Law.  Instead of addressing the problems directly, and reviewing effectiveness and enforcement of existing regulations, Congress is smothering the financial services industry with regulatory overkill. Bernie Sanders, Pat Leahy, and Peter Welch supported this legislation.  They should be held accountable to all of us Vermonters who will be paying higher taxes and higher costs to obtain a mortgage.          

Power to the People--2011 version

“Those who govern least govern best.”  --attributed to Aristotle and Plato

It has been over forty years since members of my generation rebelled against what we called The Establishment.  Since then, the Establishment has become even more monolithic and powerful than it was in the 1960’s.   Nearly every institution today from professional organizations (AMA, ABA, ACLU) to identity groups (NAACP, NOW, League of Women Voters) to private and public sector unions to mainline Christian churches and mainstream media to virtually every institution of higher learning have the same view of  power and politics:  ordinary  people are ignorant and incapable of running their own lives,  and government is the solution to all our problems.  Power has dramatically aggregated to Washington D.C., and institutions that used to be independent have become D.C. power brokers.    President Obama’s top ten contributors to his 2008 campaign demonstrate how the proponents of government contol  over ordinary Americans have become The Establishment: 

University of California	$1,591,395
Goldman Sachs	$994,795
Harvard University	$854,747
Microsoft Corp	$833,617
Google Inc	$803,436
Citigroup Inc.	$701,290
JP Morgan Chase & Co.	$695,132
Time Warner	$590,084
Sidley Austin LLP	$588,598
Stanford University	$586,557
National Amusements Inc	$551,683
UBS AG	$543,219
Wilmerhale Llp	$542,618
Skadden, Arps	$530,839
IBM Corp	$528,822
Columbia University	$528,302
Morgan Stanley	$514,881
General Electric	$499,130
US Government	$494,820
Latham & Watkins	$493,835

* Hat tip:  Opensecrets.org

Ordinary people are the best judge of what is best for themselves and their families.  In my law practice,  I have met hundreds of  people who are in legal trouble, many through no fault of  their own.  Some have terrible dilemmas they face; others are facing terrible tragedy.  I have also met many people working hard to operate their businesses or plan for their families' futures.   The vast majority of my clients deal with their problems and challenges with grace, fortitude and wisdom,  even if they have few resources.   They are not victims, they are grownups dealing with tough issues on their own or with the help of their families.  They are the "ordinary" people whose judgment about what is best for themselves and their families is far superior to what the Establishment understands or believes. 

The Establishment does not believe in ordinary people.  They believe that they know what is best for all of us—and they are out to prove it.  Each year they want to take over more power to determine what is best for us and our families.  In Vermont we are going to be protected by a Health Care Reform Panel and an Accountable Care Organization.  In Washington Bernie Sanders has proposed Early Care and Educations Systems administered by the government for children aged 6 weeks to five years.  These are two of the latest examples of the Establishment's power grabs.

 We 1960's geezers should lead a new rebellion against the Establishment, and demand that Washington D.C. and Montpelier stop snatching power and money from the people.

Corporate Profits Are NOT Evil

This may come as a shock to some politicians, but it is not evil for a corporation to turn a profit. In fact, horror of horrors, the goal of a corporation is to make a profit. What are profits? Profits are what is left over after a company pays its operating costs. Profits are used for many things - few, if any, are evil. They can be used to expand the company (which creates jobs), for research and development, as donations to charities, or they can be handed over to evil stockholders. Whoops. Stockholders are not evil either - you probably are one yourself. Do you have a pension or a 401(k)? Then you are a stockholder and I'm sure you are not evil.

A company that fails to maximize its profits will soon find that they can no longer compete in the global marketplace and may have to layoff workers or go out of business. A company that fails to maximize profits will fail to obtain capital from investors, thus limiting their ability to expand. If a company intentionally or negligently fails to maximize profits, they may even be subject to shareholder suits.

That brings up taxes and costs of hiring. The United States has the highest corporate taxes in the developed world. If taxes and hiring costs are too high in one country and lower in another - companies are going to move operations to the lower cost country in order to maximize their profit. That is not evil, it is a necessity. If they did not, they would not be able to compete.

This phenomenon can even happen within the United States, as well as globally. For instance, in Massachusetts recently Fidelity announced they were moving jobs right across the border to New Hampshire. They are trying to lower their costs so they can effectively compete and maximize their profits.

Countries and states compete for companies to come so that their people will be employed and to expand their tax base. It used to be that America had the resources and the educated population needed by companies so they were willing to pay any extra costs required to operate here. That is not the case anymore. The U.S. is lagging behind in education despite the fact that we are paying more per student than most if other developed nations. Other countries are now able to provide educated employees and resources needed as well as offering lower costs of hiring and taxes.

What can be done?

First of all, the U.S. needs to lower the costs of doing business here. Not only does the U.S. have the highest corporate tax rate, corporate profits can actually be taxed twice! They are taxed at the corporate level and they are taxed again at the stockholder level when the corporation distributes its profits to its stockholders. Government mandates on benefits and payroll taxes have also made hiring new employees prohibitive.

Secondly, we need to start educating our future employees. We need to recognize that throwing more money at the problem is not working. Schools need to be held accountable when they fail to produce educated students. Expectations of student performance need to raised.

Thirdly, we need to reduce the size and scope of government regulations. Companies face a huge amount of costs from trying to comply with an overwhelming amount of regulations - often redundant at the federal, state and local level.

Fourth, the size of government debt needs to be significantly reduced. The government is competing with companies for capital to fund its overwhelming debt. Guess who always wins that competition? Capital that goes to the government cannot be used by companies for job creation.

Finally, politicians can stop bad-mouthing corporate profits for political gain. One would think those in favor of more revenues for the government would want to expand the tax base. Expanding the tax base necessarily involves increased profits. Higher profits mean more revenue from corporations and more revenue from the people those corporations hire. It is in the government's best interest for a company to maximize its profits because government revenue goes up as a result.

So, next time you hear a politician bad-mouth corporate profits, know that they are actually bad-mouthing increased job creation, research and development, charitable contributions, returns on investment for your 401(k) and government revenue.

Renewable Energy...A "tax" on working Vermonters

An informative article in yesterday's Wall Street Journal exposes the real cost of so-called "renewable energy".  For instance, the article points out that it costs $210 per megawatt hour for solar power. This compares to only $95 per megawatt hour for coal generated power.  Government subsidies in the form of tax credits and mandates on utilities to purchase solar power are the only reasons that solar power can be made economically viable.  The problem is that the cost of the subsidies and power purchases (feed-in tariffs) are passed on to consumers who pay higher taxes to fund the subsidies and higher electric rates to cover the costs to utilities for the above market rates they are forced to pay to the producers of solar power.  In Vermont utilities pay $0.30 per kilowatt for solar power (and $0.20 per kilowatt for wind power) which compares to only $0.04 per kilowatt for power produced by Vermont Yankee.

Force feeding renewable energy at great cost to tax payers and consumers is weakening our economy with the burden falling disproportionately on low and fixed income Vermonters.  We should, instead, continue to rely upon proven low cost energy sources until renewable energy technology can make solar and wind generated power competitive with other sources.