Archive for the ‘corruption’ Category

Congress is a criminal enterprise.

Friday, November 18th, 2011

Mark Twain once said, ” There is no true criminal class in America with the possible exception of Congress.” It’s time to withdraw the qualifier. It is now apparent that, with a few rare exceptions, Congress is a criminal enterprise and the Obama Administration is, as well. Here is the story of part of it.
“To entrench Fannie’s privileged position, Morgenson and Rosner write, Johnson and Raines channeled some of the profits to members of Congress — contributing to campaigns and handing out patronage positions to relatives and former staff members. Fannie paid academics to do research showing the benefits of its activities and playing down the risks, and shrewdly organized bankers, real estate brokers and housing advocacy groups to lobby on its behalf. Essentially, taxpayers were unknowingly handing Fannie billions of dollars a year to finance a campaign of self-promotion and self-­protection. Morgenson and Rosner offer telling details, as when they describe how Lawrence Summers, then a deputy Treasury secretary, buried a department report recommending that Fannie and Freddie be privatized. A few years later, according to Morgenson and Rosner, Fannie hired Kenneth Starr, the former solicitor general and Whitewater investigator, who intimidated a member of Congress who had the temerity to ask how much the company was paying its top executives.”The latter item is just to show that the corruption was bi-partisan. The quoted text above was written by Robert Reich, the left wing former Clinton Labor Secretary.

Johnson was the man chosen by Obama to vet his possible VP choices. When his history came to the public’s attention, he quickly withdrew. He had no financial background at the time he became the chief of Fannie Mae. He was a pure political animal.

The most telling recent blow is the bankruptcy of MF Global, a commodity trading firm run by Job Corzine, former governor of New Jersey. It appears that he stole $600 million of investor’s money. Another commodity trader has now closed her fund and returned her customer’s money. Here’s why: “The reason for my decision to pull the plug was excruciatingly simple: I could no longer tell my clients that their monies and positions were safe in the futures and options markets – because they are not. And this goes not just for my clients, but for every futures and options account in the United States. The entire system has been utterly destroyed by the MF Global collapse. Given this sad reality, I could not in good conscience take one more step as a commodity broker, soliciting trades that I knew were unsafe or holding funds that I knew to be in jeopardy.

I do not agree with some of her theories, she appears to be a “birther,” for example, but that doesn’t matter. If Obama is a legal citizen, his corruption is just as bad.

“A firm, led by a crony of the Obama regime, stole all of the non-margined cash held by customers of his firm. Let’s not sugar-coat this or make this crime seem “complex” and “abstract” by drowning ourselves in six-dollar words and uber-technical jargon. Jon Corzine STOLE the customer cash at MF Global. Knowing Jon Corzine, and knowing the abject lawlessness and contempt for humanity of the Marxist Obama regime and its cronies, this is not really a surprise. What was a surprise was the reaction of the exchanges and regulators. Their reaction has been to take a bad situation and make it orders of magnitude worse. Specifically, they froze customers out of their accounts WHILE THE MARKETS CONTINUED TO TRADE, refusing to even allow them to liquidate. This is unfathomable. The risk exposure precedent that has been set is completely intolerable and has destroyed the entire industry paradigm. No informed person can continue to engage these markets, and no moral person can continue to broker or facilitate customer engagement in what is now a massive game of Russian Roulette.”

The bankruptcy petition may have been responsible for freezing the accounts but criminal law should deal with this. Corzine should spend years in prison. Here is a depressing comment: “If Obama doesn’t win next year, watch for a January 19, 2013 pardon.”

Debt, interest rates and gotterdammerung

Thursday, July 7th, 2011

The debt limit talks seem to go on forever. Obama and the Democrats seem oblivious to the danger. All they think of is re-election. All is politics. Our present day ruling class seems even worse than those who saw the Civil War come and the Panic of 1893 and 1903. The last presidential administrations that seemed to understand economics were those of Harding and Coolidge and Eisenhower. Both preceded the “Great Society” of Lyndon Johnson that began the race to the bottom.

What we have had since Reagan is a Congress, and often a president, who ignored all rules of economics and saw government spending as the key to re-election. We are about to pay the price.

Here is an analysis of the effect of interest rates on our debt.

We have seen very low interest rates as a result of the fact that the Federal Reserve has been buying Treasury debt. What would happen if that debt had to be sold to others at a price determined by a market in interest rates ? Note the 1981-1990 scenario. It adds $5 trillion in debt by 2021, only ten years from now.

Instead, let’s look at an “alternative scenario” with the books uncooked by CBO.

You could look at the pdf file. Or you could look at some simple projections.

CBO estimated that 1 percent higher interest rates each year could increase deficits by $1.3 trillion over ten years. CBO also estimated a few other “rules of thumb” to show how changes in inflation and economic growth have significant impacts on budget forecasts. The projections show that lower economic growth of just 0.1 percentage point each year could increase deficits by $310 billion over ten years, while 1 percentage point higher inflation each year could add almost $900 billion to deficits.

The alternate scenario chart shows the debt going to 250% of GDP, about where Japan is now. Japan has had a “lost decade” that has lasted 20 years.

We will have a Greece style collapse before then, probably led by public employee unions.

The Presidency of Calvin Coolidge- I

Friday, May 6th, 2011

Friday, August 2, 1923 was to be Coolidge’s last day of vacation at Plymouth Notch. He had posed for photographs for the small pool of reporters who covered his doings. They had shown him chopping away rot from a maple tree, wearing his suit pants and vest but bowing to the informality of the occasion by removing his suit coat. He had previously worn a woolen smock that had belonged to his grandfather for such chores but, recently, there had been accusations that it was a costume of some sort. He remarked that “In public life it is sometimes necessary in order to appear really natural to be actually artificial.”

The Coolidge family retired early. A telegram from San Francisco conveying the news of the president’s death reached reporters staying in a boarding house in Bridgewater, Vermont. They hastened the eight miles to Plymouth Notch and knocked on the door of John Coolidge’s house. He awakened his son who then dressed and came downstairs. He was informed in a telephone call from his father’s store to Secretary of State Hughes that the oath of office could be administered by a notary. Coolidge returned home and, at 2:47 am, his father administered the oath of office as president.

The nation’s newspapers carried drawings and painting of the scene the next day. It is still the only instance of a father administering the oath of office of president to his son and of a man taking the oath at home. The house was small and lacked indoor plumbing. It was typical of Coolidge in its lack of pretension and the image was a powerful one to begin his presidency. After the oath was administered, the Coolidges returned to bed, also typical. They arose at 6 am and began the trip back to Washington with a stop at his mother’s grave in a nearby cemetery. These symbols would stand him in good stead when the Harding scandals began to fill the newspapers in the months to come.

Harding’s body was returned to Washington on August 7 where he lay in state in the Capitol. Coolidge issued a proclamation for a day of national mourning and it was apparent that Harding was genuinely liked by the public. The funeral was in Marion, Ohio on August 10.

In 1923, the presidency was very different from what it became under Hoover and Roosevelt. Coolidge greeted White House visitors in person, the last president to do so. He had one secretary and no aides. His telephone was not on his desk but in a nearby booth and unused. He did not know how to drive a car. He had carefully cultivated his image, even to his famous lack of small talk. At a dinner party while vice-president, a woman next to him at the dinner table told him she had a bet with her husband that she could get him to say at least three words. His reply was, “You lose.”

Now, he was president. In 1924, he told William Allen White that “A lot of people in Plymouth can’t understand how I got to be president, least of all my father.” He added, “Now a lot of those people remember some interesting things that never happened.” White’s comment was that Coolidge never grinned after his jokes. This misled some people into thinking he was dumb. Rural Vermonters appreciated his wit but many of the intelligentsia did not. He did not suffer fools gladly, for one thing. Once, after a long and animated conversation with financier Bernard Baruch, he asked why Baruch was smiling. The financier replied, “Mr President, you are so different from what people say you are. Your smile indicates both amusement at that and interest — and I hope friendliness.” Baruch added, “Everybody says you never say anything.” “Well Baruch,” Coolidge replied, “many times I say only ‘yes’ or ‘no’ to people. Even that is too much. It winds them up for twenty minutes or more.”

One of Coolidge’s most famous sayings was made to Hoover, who he disliked, on the latter’s ascension to the presidency in 1928. ” You have to stand every day three or four hours of visitors. Nine-tenths of them want something they ought not to have. If you keep dead still they will run down in three or four minutes. If you even cough or smile, they will start up all over again.” Will Rogers appreciated Coolidge’s dry wit. “Mr Coolidge had more subtle humor than almost any public man I ever met. I have often said I would like to have hidden in his desk somewhere and just heard the sly little digs that he pulled on various people that never got ’em at all.”

Another story concerned his wife’s asking about the preacher’s sermon in church that morning. “What did he talk about.” His reply was concise. “Sin.” When asked for more detail, he replied, “He’s against it.” Someone told him the story one day and his reply was “It would be better if it were true.” Still, these stories indicated a warmth toward him that was widely held and that would serve him well. His son, Calvin, inherited the family wit and showed it one day when working at a summer job as a laborer. One of the other boys said, “Gee. If my father was the president , I wouldn’t be working here !” Calvin replied, “You would if your father were my father.”

Harding had held twice weekly press conferences and Coolidge assured the reporters that would continue. He held a total of 520 press conferences in the next five years. The questions were submitted in writing and he answered those he chose to. The answers were to be attributed to a “White House spokesman.” He was genuinely liked by reporters and commented on his excellent relations with the press in his Autobiography. He needed a secretary and was advised well by Congressional leaders to hire C. Bascom Slemp, a 53 year old former Congressman and master political strategist. Coolidge faced a difficult relationship with his Republican colleagues in the Senate. Harding had been one of them and was a friendly man; neither was true of Coolidge.

There was Frank Stearns, an old supporter from Massachusetts. Coolidge liked to have Stearns with him even though both might not say a word. He thought better when Stearns was there. One day, after an hour in which neither said a word, Stearns rose to leave and Coolidge said, “Stay a while longer.” Dwight Morrow, a friend from Amherst and now a partner at JP Morgan was another close friend. Murray Crain was gone but his assistant, William Butler, was there. He was RNC chair, with help from Coolidge, and, when Lodge died, Butler took his place in the Senate. House Speaker Gillett was the fourth of the “Massachusetts gang.” Aside from them, Coolidge had few friends.


Mellon and Hoover with Coolidge

He retained Harding’s cabinet although several left under a cloud by 1924. The last to leave was Hoover, to run for president in 1928. Coolidge respected but did not like Hoover, calling him “Wonder Boy.” His most trusted adviser was Treasury Secretary Mellon. At their first meeting, Mellon told the president he had come to resign. The president said, “Forget it.” Coolidge was the last president to write all his own speeches and they have stood up well over time. He was also the first to use radio in reaching out to the public. When asked for a theme of his administration, he answered “stability, confidence and reassurance.” We are currently seeing how important the lack of those qualities may be in economic recovery, or the lack of it. It is possible (more of this later in a summing up) that his decision to retire in 1928 may have led to the Great Depression as Hoover was an active progressive and Roosevelt followed his lead almost completely. The depression of 1920-21 was the last to be treated with Laissez Faire economics. The 1929 crash and depression might have been short as the country was already emerging in 1932 in spite of Hoover’s misguided policies. We will never know.

One area where Coolidge enjoyed the approbation of everyone was with his wife, Grace. She was witty, attractive and provided a useful contrast to her husband. Their two sons were also attractive and a positive aspect of his presidency although that was to be dashed during the summer of 1924. Coolidge had four months to prepare before he would be obliged to state his policies before Congress. Major problems included the war reparations issue which would eventually lead to the 1929 crash and much of which was out of his hands as Benjamin Strong and the other major central bank leaders were almost immune to political influence. The other members of this small club included the Bank of England director Montagu Norman, Bank of France director Emile Morceau, and Hjalmer Schacht of the Reichsbank. These men controlled world finance and tried to “sterilize” the reparations that France had insisted Germany pay for World War I. Strong was ill with tuberculosis and died in 1928, leaving the Federal Reserve in weak hands.

The Washington Naval Conference of 1923 was considered a success. It had major consequences as Japan was encouraged and England was damaged but Coolidge was a very determined disarmament advocate for fiscal reasons. He had little interest in foreign affairs although he was a mild supporter of the League of Nations and was not an isolationist as Hiram Johnson had been. Relations with Mexico had been poor since the 1911 Mexican revolution and Albert Fall had been expected to help with this but he chose to enrich himself instead. Ironically, the Teapot Dome scandal did eventually have some beneficial effects such as large capacity oil storage facilities in Pearl Harbor.

It also got a beautiful new library for my alma mater, the University of Southern California. Rufus von Kleinschmidt, president of the university, agreed to testify as a character witness for Harry Doheny, one of the principals in the Teapot Dome affair. Doheny donated a magnificent library that is still the center of the campus. It was donated in memory of his son, H L Doheny Jr and the date of his death is given as 1921. Many still probably assume that he was wounded in the war and died of his wounds but, in fact, he was shot by his mistress.

Coolidge’s first address to Congress as president took place on December 6, 1923. He presented a list of requests that continued Harding policies. Immigration was to be restricted for the first time. Railroads needed investment. Highways were to be funded although the states were expected to do much of this. He included other issues, such as civil service reforms and military and naval increases. Harding had been a great Navy president and Coolidge continued almost all his policies. He declined suggestions to cancel foreign debts, they would be canceled eventually anyway in the Depression. He differed a bit from Harding in his enthusiastic support for civil rights for “colored people” and advocated funding for black doctors and colleges. He opposed support for crop prices, which would become a major issue the rest of his presidency. His State of the Union address was the first to be broadcast to the American public. It was well received. The next night, at the annual Gridiron Dinner, he announced that he was a candidate for 1924.

His most important recommendation was for a reduction in the income tax rates, possibly one reason why Ronald Reagan was so fond of him. Wilson had raised income tax rates during the war to very high levels. The federal income tax had only been introduced in 1913. In 1914, only 360,000 tax payers had paid any tax at all. The Progressives who had been behind the constitutional amendment had seen it as a redistributionist measure and expected that only the rich would pay taxes. However, in 1917, Congress passed a surtax as a war measure that affected anyone with more than a $6,000 income. At $100,000 income, the tax was 25%. After the war, the surtax remained in place bringing in $1.3 billion in 1919 and over $1 billion in 1920, years of severe recession, if not depression. In 1920, the top bracket was 70% and while everyone talked about tax cuts, nobody seemed to do anything about it until Harding took office.

Coolidge had to convince a reluctant Congress about tax cuts. The Simmons-Longworth Bill, the best he could get, cut maximum surtax rates to 40% but raised the estate tax and added a gift tax. He wanted to return to pre-war rates but it was a hard fight. There is nothing new under the sun, least of all Congressional spending. The Coolidges worked on building friendships and entertained more than the Hardings had. One issue that was divisive was Prohibition. It was a Progressive initiative and Gifford Pinchot, a Progressive governor of Pennsylvania and passionate Prohibitionist complained that Coolidge was a weak supporter. The conventional wisdom has come down to us that Prohibition was a cause supported by blue nose Republicans. Nothing could be further from the truth. Pinchot supporters encouraged him to run against Coolidge in the 1924 primaries. They noted that brewery interests had supported Coolidge in Massachusetts. PInchot had already clashed with Coolidge when he asked him to intervene in a coal strike in Pennsylvania. Coolidge declined.

In October, 1923, the Tea Pot Dome scandal began to surface. Coolidge was under suspicion for a while as he had been present at many cabinet meetings where decisions were made. Eventually, he was shown to be clear of any involvement and his reputation as incorruptible kept him out of the scandal. Senator Thomas J Walsh of Montana, a Democrat and maverick, had been leading the investigation. Coolidge then took charge of the investigation, outflanking Walsh by appointing a special counsel. In fact, he appointed two, a Democrat and a Republican. This act took much of the partisan steam out of the scandal and it did not affect the 1924 election.

Harry Daugherty was the next Tea Pot Dome figure to come under scrutiny. He had been Harding’s campaign mastermind but he had no relationship with Coolidge. However, the austere Coolidge resisted efforts to dismiss Daugherty. He said “I will not remove the Attorney General, for two reasons. First, it is a sound rule that when the president dies in office, it is the duty of his successor for the remainder of that term to maintain the counselors and policies of the deceased president. Second, I ask you if there is any man in the cabinet for whom- were he still living- President Harding would more surely demand his day in court?

Tremendous pressure was brought to bear on Coolidge. One evening, February 18, 1924, William Borah, a powerful member of the Senate, was urging the president to request Daugherty’s resignation. As he talked, Daugherty walked into the room. Coolidge had arranged a mano a mano. The next day Burton K Wheeler (who was to incur my father’s bitter enmity by his isolationist antics in 1940), a freshman Democratic Senator from Montana, introduced a resolution calling for an investigation of Daugherty’s Justice Department. It was all based on innuendo. Recent investigation of the entire scandal has suggested that Daugherty, while appearances were not good, bore little responsibility for the crimes committed by some of his associates. In fact, some (including Coolidge’s biographer Robert Sobel) have concluded that the real target was Coolidge. He was well liked by the public but had little support within the GOP, especially the bosses.

Coolidge stood firm and many of the attacks on him by Democrats backfired. On February 29, the Democrats called upon him to release the tax records of Doheny, Fall and Sinclair. He refused noting this was prohibited by law. Slemp, his secretary, appeared before Congress as a witness and was questioned about telegrams he had seen. Nothing of consequence resulted. Burton K Wheeler then accused Daugherty of criminal activities. Daugherty retaliated with an accusation that Wheeler, a Democrat, was involved with the Industrial Workers of the World, the “Wobblies,” a radical socialist group. Eventually, the entire matter deteriorated into a series of accusations directed at each side. Daugherty refused to provide Justice Department records to the Senate committee and, eventually, this provided Coolidge with a justification to request his resignation and end the controversy.

For Daugherty’s replacement, Coolidge chose an Amherst alumnus (naturally), named Harlan Fisk Stone, former Dean of Columbia Law School and a distinguished judge. To replace Denby, Borah suggested Curtis Wilbur, an Annapolis graduate and Chief Justice of the California Supreme Court. Both were outstanding nominations and they were quickly confirmed. First, Coolidge had to ease Daugherty out and he asked Chief Justice Taft, with whom he had a close relationship, to bring Daugherty around to reality. Coolidge replied to Daugherty’s protests with ” I am not questioning your fairness or integrity. I am merely reciting the fact that you are placed in two positions; one is your personal interest, the other your office of attorney general, which may be in conflict. How can I satisfy a request for action in matters of this nature on the grounds that you, as attorney general, advise against it, when you are the individual against whom the inquiry is directed necessarily have a personal interest in it?” Daugherty protested but resigned the next day.

Harlan Stone was easily confirmed as Attorney General and the entire matter faded from public view, especially after Senator Wheeler was himself indicted on a bribery charge. He was eventually exonerated but the public lost interest in the committee and the scandal. The only people actually tried were Fall, Doheny and Sinclair. Later, after the matter had faded from the press, Wheeler and Walsh had occasion to meet with the president to plead for a road project in Montana. He listened to their presentation then commented dryly, “Well, I don’t want to see any scandal about it.” Wheeler told the story on himself

The entire matter had left Coolidge a popular president with the country but not in Washington. The politicians had not wanted him on the ticket in 1920 and they did not want him in 1924. His legislative agenda, some thirty recommended pieces of legislation, was defunct with only one item passed. That was a minor bill reorganizing the diplomatic service. The Soldiers’ Bonus Bill passed both houses of Congress and was vetoed by Coolidge as it would be by Roosevelt. It passed over his veto in the form of a paid up insurance plan which cost the government $2 billion. Coolidge signed the immigration bill with reluctance because it singled out Japanese immigrants for a total ban. This would have repercussions later in foreign policy with Japan. Newspapers commented on the record of Congress ignoring Coolidge’s agenda in legislation. However, the public was behind Coolidge. The 1924 election was coming quickly.

This is becoming too long for a single post and will be continued this weekend.

The Harding – Coolidge government.

Sunday, April 17th, 2011

The Republican convention of 1920 knew that the party was heavily favored to win the fall election. Wilson was forlornly hoping for third term nomination in spite of his crippled state as a result of the stroke. Teddy Roosevelt had died in 1919 at the age of 60. The contenders on the Republican side included Illinois Governor Frank Lowden whose only major handicap with the voters was the fact the he had married the daughter of George Pullman, the railroad tycoon, and was rather ostentatious in displaying his wealth. He had, however, been a reform governor of Illinois. General Leonard Wood, who had been a medical officer commissioned into the regular army in 1886 as a line officer, was another. He had been the senior officer of the US Army in 1917, yet President Wilson had appointed John J. Pershing, junior to Wood, to the European command. Wilson considered Wood a potential political rival, somewhat like Harry Truman and Franklin Roosevelt considered General MacArthur.

The third contender was Hiram Johnson, who had run as Teddy Roosevelt’s VP candidate on the Progressive ticket in 1912. There was little enthusiasm for him except among former Progressives who had returned to the party for 1920. Warren Harding is often described as a dark horse who was selected by party bosses after the leaders had exhausted each other. In fact, he was always in the top four and his selection was not a surprise to the convention.

The huge surprise was the nomination of Coolidge for Vice-President. He did not seek the nomination and was not interested after his experience as lieutenant governor of Massachusetts. After the Boston Police Strike, his name was familiar to the nation and in a favorable way. A big issue was the League of Nations and Coolidge favored membership, although with the Lodge reservations. Senator Lodge, no ally of Coolidge, exchanged letters with him on the League and agreed to disagree. Nevertheless, Lodge offered to place Coolidge’s name in nomination for President. Why he made the offer is not know. After several very favorable newspaper profiles appeared in early 1920, Coolidge made another statement that he was not a candidate for President. Frank Stearns and Lodge tried to bring a Coolidge delegation to the convention but Wood lived in Massachusetts and the delegation split. His interest in the nomination was further diminished by the death of his beloved step-mother, Carrie in May 1920.

Lowden’s handlers favored Coolidge as a VP candidate as he and the governor were from different parts of the country. Lowden’s biggest problem with the bosses was his reputation as incorruptible. The Illinois party bosses distrusted him. They feared he couldn’t be bought, or if so, wouldn’t stay bought. Robert Sobel, in his biography of Coolidge, says that Lowden was probably the best qualified Republican of the 1920s. One of the party bosses, Boies Penrose, asked Harding if he wanted to be president. Harding liked being a Senator and declined, leading Penrose to look elsewhere. By the time of the convention, Penrose was fatally ill, although his reputation was still powerful. He awakened from a coma during the convention, asked about the voting and suggested they choose Harding. Then, he lapsed into the coma again.

There were 16 primaries in 1920 but they held little power in the nomination. General Wood won the New Hampshire contest and Hiram Johnson won North Dakota. In the end, the primaries were indeterminate and Wood alienated some potential supporters by entering primaries where a favorite son preferred to keep the delegation united. Harding won as a favorite son in Ohio but Wood also took some delegates and Harding was not optimistic about his chances. Harry Daugherty, his manager, pressed him to keep his options open. Two considerations remained. Ex-soldiers were becoming disillusioned by the results of the war and women would vote for the first time in a national election. A soldier and a rich man might have trouble with those groups. Hiram Johnson was a progressive and anathema to the bosses, plus he did not have Roosevelt’s personality and charisma.

It was not just pique that caused the party bosses to hate Johnson. In 1916, he refused to support Charles Evans Hughes, the GOP candidate, and Hughes lost California, re-electing Wilson. Much history turned on that decision by Johnson as the US entered the war the next year.

[ I will insert a medical note here. Hughes’ daughter, Elizabeth, developed diabetes before the discovery of insulin. She was first treated by a Doctor Frederick Allen who had developed a theory that diabetics could be treated by competely eliminating glucose and sucrose from their diet. This was based on observations during the First World War where diabetics tolerated starvation better then the non-diabetics. The problem was that the children lost weight, craved sugar and were starving although they did not go into diabetic coma. Fortunately, Banting discovered insulin in 1921 and Elizabeth was one of his first patients (after Leonard Thompson, his first). When she began insulin, she was 14 years old and weighed 54 pounds. She lived to the age of 74 and many of her family were unaware of her diabetes as she injected herself each day.]

There is a famous story that reporters came to Hughes’ house on election night to interview him. The Hughes people were so certain he had been elected that they told the reporters that “the President is asleep.” The riposte was “When he wakes up, tell him he isn’t President.” None would forget Johnson’s role in that fiasco.

The campaign was so acrimonious that it was unlikely that any of the front runners could combine forces. Harding had not challenged favorite sons in primaries. Daugherty actually predicted the convention result to reporters, saying that at “eleven minutes after two, Friday morning of the convention, when ten or twenty weary men are sitting around a table, someone will say, “Who will be nominated ?”

Harry Daugherty and Harding.

There were huge problems for the country, of which the League of Nations was a minor one. The end of the war had brought a severe recession/ depression with 25% unemployment and a shrinking GDP. Inflation had outpaced wages but wage increases were out of the question with 25% unemployment. The remaining Progressive agenda, including Prohibition, which most Republicans opposed, was another issue. Johnson was an ardent isolationist; Wood was more internationalist, and Lowden was more concerned with the economy. This mattered less for the nomination as the decision would be made on political issues. Coolidge was a long, long shot as a favorite son presidential candidate and his organization at the convention was rudimentary. Stearns was a novice in national politics and Coolidge’s other supporters, including Dwight Morrow, had little influence. Crane had been very ill and would play no more role in Coolidge’s career.

The leading candidates canceled each other out and there was a mini-scandal about campaign funds which harmed both but did not help Johnson. The Literary Digest polled its readers, the precursor of modern polls, and found that Wood led Johnson with 277,486 vs 266,087. Coolidge received 33,621 votes and Harding little more. At 11 pm Thursday, the bosses sent for Harding. He was asked if there was anything in his past that would be a problem. His mistress and mother of his illegitimate child was in Chicago with him but he assured them that he was clean. Messages were sent to the other candidates’ headquarters telling them that Harding was to be the nominee but they did not surrender meekly. Wood and Lowden attempted to broker a deal but the campaign had been so bitter that neither could deliver delegates to the other.

The convention reconvened at 10 am. Voting recommenced and the trend was now toward Harding. On the tenth ballot, he was elected with 692 1/2 voted to Wood’s 156 and Johnson’s 80 1/2. Coolidge still received five votes on the final ballot. Now, the convention was to turn to the vice-presidential nomination. Tradition had, and still has, the expectation that the presidential nominee will choose his vice-president. Harding’s choice was Senator Irvine Lenroot of Wisconsin. Irving Lenroot had been a close confident of Robert LaFollette, his Wisconsin colleague. He flirted with the Progressives but broke with them over the war. His choice was not popular with conservatives because of his Progressive record and was equally unpopular with Progressives because he had broken with them. Furthermore, he didn’t want the nomination. Unsurprisingly, he preferred the Senate.

The convention delegates made this exercise in insider politics superfluous. They were hot and tired and wanted to get home. On the floor, Crane was trying to whip up interest in Coolidge as a VP candidate. Meanwhile, nomination and seconding speeches for Lenroot droned on. There was resistance to allowing the bosses to pick both nominees. Senator Lodge, tired and elderly, turned the gavel over to Ohio’s Frank Willis. An Oregon delegate asked for the floor. Assuming this would be another Lenroot seconding speech, Willis recognized him. Wallace MacCamant was something of a maverick and he was about to make history. He had read Coolidge’s speech “Have Faith in Massachusetts” which had been published in pamphlet form and widely circulated. The entire Oregon delegation were behind MacCamant as he made his fiery nomination speech for Coolidge. It energized the convention and was followed by a series of seconding speeches. One came from H.L. Remmel of Arkansas who had shortly before seconded Lenroot. It was, in part, a revolt against the bosses. Coolidge was seen as above the grubby business of politics with an absolutely clean record. Coolidge won on the first roll call. It was quickly made unanimous. Telegrams poured in including one from Wilson’s vice-president, Thomas Marshall.

The only real constituency that Coolidge had was the convention delegates who were about to disperse. Some speculated that, had he run a campaign at the convention, he might have been nominated for president. This was not Coolidge’s style. The party bosses were not supporters and he was not well known in the country. He had worked within the party machine in Massachusetts, always waiting his turn. Now he had been catapulted into the national scene but his solitary status would create many problems for him in the future.

Harding planned a “front porch campaign” similar to that conducted by his model, McKinley. In the meantime, the campaign began in a fashion that reminds some of Eisenhower in 1952. He was amiable, warm and decent but dull. The press reacted as they did to Eisenhower, considering him an amiable dunce. Harding, however, had been a well respected Senator and had been considered by Roosevelt as a possible VP nominee in discussions he had in 1919 before his death. It must also be added that Wilson was the ideal for intellectuals and progressives so that Harding would have no chance for a fair judgment. Arthur Schlessinger, in his history of the New Deal, slanders Harding as he did Coolidge with selective quotes and false statements. I will have more to say about that when I discuss Coolidge’s presidency. One example was a quote of Wilson’s Secretary of the Interior, Franklin Lane, who, writing in his death bed, mused about conditions in the country such as “the negroes being lynched, the miner’s civil war, labor’s holdups, employers’ ruthlessness, the subordination of humanity to industry..” The trouble was that Lane died in 1920 and Harding did not take office until 1921. Schlessinger omits this information. Lane was describing conditions under Wilson.

The entire period of the 1920s has been distorted and slandered by historians as they try to imply that it was a decade of excess under Republicans that led irreversibly to the Great Depression. All this was written later by historians, like Arthur Schlessinger, who adored FDR and condemned his predecessors for emphasis. In Nevins and Commager’s “A Pocket History of the United States,” the 1920s is described as “dull, bourgeois and ruthless.” “‘The business of America is business’,” said President Coolidge succinctly, and the observation was apt if not profound.” It was also an incomplete quote that distorted the meaning. They continue to describe the period so: “Never before, not even in the McKinley era, had American society been so materialistic, never before so completely dominated by the ideal of the marketplace or the techniques of the machinery.” Some of us might consider this a fair description of the Clinton era, as well, but, of course, the president’s party was not the same.

The Democrats chose James Cox of Ohio with a platform that, aside from endorsing the League of Nations, differed little from the Republican. For vice-president, they chose former Assistant Secretary of the Navy, Franklin D Roosevelt. In 1920, few Americans were still enthusiastic about the war or the League of Nations. They had been hammered by wartime inflation and the economic collapse after. Wilson was still trying to maneuver for a nomination for a third time. Newspaper reporters were not very enthusiastic about Cox who was also a compromise candidate after 40 ballots. They called it “the kangaroo election” suggesting the hind legs were stronger than the front ones, a prescient description.

Coolidge traveled to Washington to meet with Harding; they knew each other slightly. He returned to Boston and, on “Notification Day,” July 27, he was officially informed of his nomination by a delegation from the convention. He gave a short speech of acceptance striking themes that were traditional for him. “The destiny, the greatness of America lies around the hearth stone. If thrift and industry are taught there, and the example of self-sacrifice oft appears, if honor abide there, and high ideals, if there the building of fortune be subordinate to the building of character, America will live in security, rejoicing in an abundant prosperity and good government at home, and in peace, respect and confidence abroad.” Crane, his mentor in Massachusetts politics, was in the audience but he died on October 2, not having the opportunity to see them win the election. Coolidge would miss his wisdom desperately in his presidency. Stearns was there but was not the adviser Crane would have been.

As the campaign began, Harding’s plan for a “front porch campaign” was shelved as Cox and Roosevelt began a very aggressive travel schedule. Originally, this was to be Coolidge’s role but he was not a very good speaker to crowds. During his presidency he would become the first president to use radio effectively but radio was still too primitive in 1920 and there was no such thing as a “broadcast.” Coolidge’s awkwardness as a speaker led the party to surround him with orators, including Lowden. A reporter asked Coolidge if he liked the campaign.”I don’t like it,” he replied. “I don’t like to speak. It’s all nonsense. I’d much better be at home doing my work (as governor).” He did go off message, telling voters that there was a better chance of America entering the League of Nations under a Republican administration than under the Democrats. What he meant by this was Wilson’s unwillingness to permit any (Lodge) exceptions in a bill to join the League. Wilson’s unwillingness to compromise is the real reason why the US never entered the League.

Harding and Coolidge received 16.1 million votes compared to 9.1 million for Cox and Roosevelt. Harding’s theme of “Return to Normalcy” was a popular one. Furthermore, he meant it. The Progressive agenda of Wilson was dead and its structures were quickly dismantled. Few women bothered to vote so the predictions based on their participation would have to wait for later elections. The Old South went solid Democratic, as usual, but Tennessee went Republican for the first time since 1868 and would not do so again until Eisenhower.

As the Coolidges prepared to move to Washington for the inauguration, they realized that housing would be a problem. There was no official residence for the vice-president. They could not afford the expensive city on the VP’s $12,000 salary and Coolidge refused an offer from Stearns to provide a leased home. They finally accepted an offer from outgoing Vice-President Marshall to turn over his two room apartment in the Willard hotel to them. It cost $8/ day and they accepted. They would remain there until he became president. In his acceptance speech in the Senate chambers, he praised the Senate and hoped to make friends but this was not to be. He had not been the Senate’s candidate and he was not the friendly, outgoing man his predecessor had been. Harding made good his promise to Coolidge that he would attend cabinet meetings and Coolidge learned a great deal during the next two years. His own presidency was to follow the Harding agenda right up to 1928.

Harding chose a strong cabinet, with two lethal exceptions. The party bosses who chose him wanted strong men around him as they perceived him to be weak. In fact, this went well with his own desires, not because he felt weak but because he wanted a strong cabinet. The Secretary of State was to be Charles Evans Hughes, presidential candidate of 1916 and a former Supreme Court justice. Secretary of the Treasury Andrew Mellon was a former banker and industrialist plus one of the world’s richest men. Secretary of Commerce Herbert Hoover was a former successful businessman and a holdover from Wilson’s administration. He was world famous for his humanitarian work in Europe after the war.

Two of his cabinet members were disasters and may have caused his death. His campaign manager, Harry Daugherty, became Attorney General, not an unusual appointment but a disaster as it happened. Edwin Denby, Secretary of the Navy was not quite as bad but became enmeshed in scandal. Albert B Fall became Secretary of the Interior and the other disastrous nominee. At the time, there seem nothing wrong. Daugherty was hailed as a political genius for getting Harding elected. Denby had served in the Navy during the Spanish-American War, served in Congress on the House Naval Affairs Committee and enlisted in the Marine Corps as a private when the US entered World War I where he rose to major by the war end. His reputation is being rehabilitated recently.

Albert B Fall had served in the Spanish-American War and had been a Senator from New Mexico. He was considered an expert on Mexico, with which relations were terrible after Wilson’s interference and attacks on the Mexican government. Hughes had even suggested Fall for Secretary of State before the post was offered to him. It’s possible Fall might have stayed out of trouble as Secretary of State where opportunities for corruption were fewer.

Harding and Coolidge were opposites in personality, Harding being a joiner and made friends easily. He also had a string of extramarital affairs but they were discreet. His wife was older and ambitious but their marriage was cold. Their ideas on policy, however, were close and Coolidge continued Harding’s policies through his own presidency. Harding wished for compromise and hoped for consensus. He was not a leader and knew it. Coolidge had been a leader in Massachusetts but, curiously, was less so as president. Harding called a special session of Congress on April12, 1921, a month after the inauguration. He called for gradual liquidation of the war debt, slashing government spending and tax reduction from the high wartime rates. He advocated an increased tariff for manufacturing and agricultural products and asked Congress to set up a “national budget system,” a precursor of OMB and other economic policy agencies. He demanded lower railroad rates, a bete noir of farmers, and large scale highway construction, to be funded by the states.

Harding advocated a larger merchant marine and a larger Navy to protect the sea lanes. He supported the development of aviation and radio, both technological advances. He wanted increased restriction of immigration, an anti-lynching law, and a Department of Public Welfare. He ended his speech with an equivocal mention of the League of Nations which seemed to satisfy everyone, pro and con the League. Harding was a master of legislative relations. He held card parties, drank whiskey with Senators and socialized with possible opponents, which would be held against him later but which got his agenda enacted. When Coolidge succeeded Harding, he was fortunate that the agenda was in place and he did little to change Harding priorities. It was a highly successful program for the next decade.

Coolidge spent the next two years studying the federal government but had little otherwise to do. His chief contribution was representing the president at social functions. He wrote his father in 1921, shortly after the inauguration, that he and his wife were out to dinner three times a week. Grace Coolidge later said that her husband enjoyed the dinners at first but gradually wearied of them. They were the most senior guests so could leave early and were usually in bed by 10 o’clock. He gave speeches, most of which were bland, if not banal, but a few were interesting. In 1922 he gave a speech advocating employee stock ownership. “In the ideal industry, each individual would become an owner, an operator, and a manager, a master and a servant, a ruler and a subject.. This there would be established a system of true industrial democracy.”

Some of his speeches expressed his own philosophy. “people are not created for the benefit of industry, but industry is created for the benefit of the people.” These sentiments, of course, run counter to the false view promoted by hostile historians. Coolidge considered these two years as an education on government. He had been quite provincial but he met many people and traveled to many places as vice-president. He was not part of the inner circle in Washington, which might have been fortunate in retrospect. He wrote for magazines, an opportunity to develop his thoughts and acquire some additional income. Harding dropped the idea of using him as an assistant and confidant.

The administration did well in the early months. The Red Scare of Wilson’s Attorney General was ended. Treaties were negotiated. The Washington Naval Conference took place in November 1921. Disarmament was popular as the myth of war profiteers was given great credence in those days. Little Orphan Annie’s benefactor was Daddy Warbucks. Harding pardoned a number of people imprisoned during the war, including Socialist leader Eugene V Debs. He even invited Debs to the White House. His legislative agenda moved along. An immigration law was passed, which provided new restrictions. Charles G Dawes, a well know financial expert, was placed in charge of The Bureau of the Budget when enacted. A Veterans Bureau was established for war veterans. A proposed Veterans Bonus was vetoed, however. He supported Secretary Mellon’s proposal to cut tax rates but opposition was too strong. He reestablished relations with Columbia, healing the breach caused by the Panama Canal and the US interference in Columbia’s affairs.

Harding supported the Fordney-McCumber Tariff of 1922. This was a protective tariff on agricultural imports. American farmers had seen agricultural prices rise as demand for agricultural products soared in the war and afterward until European agriculture could recover. Later, during Coolidge’s administration, this tariff would become counterproductive as Europe recovered but it was an article of faith with the Farm Bloc that formed in the 1920s. Harding pressed his friend, Elbert Gary, CEO of US Steel, to cut the 12 hour workday to 8 hours. The work week was sometimes 7 days a week and Harding pressed for this to be reduced, as well. Gary refused at first but eventually gave in by 1923.

In the early days of the Harding Administration, the country was in the grip of a severe recession that, had it lasted longer, would have earned the name Depression. In 1919-20 there were more than thirty thousand bankruptcies, half a million farm foreclosures and 5 million unemployed. On June 12, the day Harding and Coolidge were nominated, the Dow-Jones Industrial Average stood at 78.93. On Election Day, as business anticipated the new administration, it had risen to 85.23. In January 1921, before the new administration took charge, the unemployment rate was 20%. The GNP had dropped from $88.9 billion in 1920 to $74 billion in 1921, a decline of 1/6 in one year. There was little theoretical basis for measures to try to assist the recovery at the time but Harding asked Hoover to convene a conference on unemployment to consider what could be done for such a slump.

The 1922 election saw some Republican losses in Congress but they held both houses of Congress. This election also saw the formation of a cohesive Farm Bloc that would bedevil Coolidge when his turn came. Fordney and McCumber, authors of the tariff, lost their seats but the issue would remain. The Bloc tended to be progressive although it included members of both parties.

In 1923, the first hints of scandals to follow appeared. On February 1, 1923, the counsel for the Veterans Bureau resigned. On February 12, the Senate announced an investigation. Three days later, Director Charles Forbes resigned. He could not account for hundreds of millions of dollars of supplies and equipment. It became clear he had been selling them. When Harding learned of the scandal, he demanded Forbes resign but allowed him to leave the country. Soon after this Albert Fall resigned and took a job with Harry Sinclair‘s oil company. On March 14, Cramer, the counsel who had already resigned from the Veterans Bureau, shot himself. One of Daugherty’s assistants was confronted by Harding about accusations of corruption and the assistant shot himself on May 29. The Senate attempted to impeach Daugherty in 1922 but he was acquitted. Harding was quoted as saying ““I have no trouble with my enemies. I can take care of my enemies in a fight. But my friends, my goddamned friends, they’re the ones who keep me walking the floor at nights!”

The Harding party left for a two month “Voyage of Understanding” in June 1923. At this point, Coolidge was considering retiring from politics as he realized that Harding had most likely decided to drop him from the ticket in 1924. Everything changed on Friday, August 2 at 7:32 pm in San Francisco when Harding died.

To be continued here

Union rule

Saturday, March 12th, 2011

The situation in Madison Wisconsin has been so well covered by Ann Althouse on her blog, that I have not felt it necessary to mention it. Yesterday, the situation began to change. This is what union rule would look like:

The state Senators had passed the limited budget bill that included only the collective bargaining provisions. The Democrats had blocked the fiscal portions of the bill by fleeing the state two weeks ago. Walker has had this option since they left but he and Majority Leader FitzGerald, were negotiating with the Democrats in hopes the standoff could be ended. The negotiations (not reported by the MSM, of course) broke down when it became apparent that the Democrats are nationalizing this controversy. Walker then encouraged the Senate Republicans to go ahead with Plan B. They did and the law was signed by Walker yesterday.

Why has this issue been so inflammatory? There are even leftist academics who are advocating serious violence.

My prediction: 10 years from now public higher education, at least in many states, will have ceased to exist. 20 years from now state governments will realize that they still own the buildings and property on their former state university campuses and start charging us rent to use them. 25 years from now citizens will complain that they can’t afford to send their children to college–any college. But by then the peasant class will be so firmly established that it won’t really matter.

Welcome to the 19th century.

Meanwhile, the Republican criminals in Wisconsin forced through their attack on workers’ rights, leading to an uproar in Madison. (Thanks to Steve Nadler for the link.) At some point these acts of brazen viciousness are going to lead to a renewed philosophical interest in the question of when acts of political violence are morally justified, an issue that has, oddly, not been widely addressed in political philosophy since Locke. (Ted Honderich’s somewhat controversial work on Palestinian terrorism is a recent exception.)

Here is a respected academic advocating political violence on the pattern of the Palestinians. The Cloward-Piven Strategy lives again ! Naturally, the two authors were sociologists.

Why has this rather routine process in a midwest state gotten such national attention? There are at least two reasons. One is that Obama has to win Wisconsin next year to be re-elected. Wisconsin has been a blue state for many years and was the origin of Progressivism with the La Follette family. It is even the origin of the public employee unions, as the AFSCME began there. However, the Republican swept state offices in the 2010 election. Why ?

The wave of red crashed ashore in Wisconsin as well, as Republicans took over the governor’s mansion, a Senate seat, two U.S. House seats and the state legislature.

Political newcomer Ron Johnson defeated incumbent Democratic Sen. Russ Feingold by a comfortable 5-point margin, and Milwaukee County Executive Scott Walker took the governor’s office by a similar margin over Milwaukee Mayor Tom Barrett.

Republican Kurt Schuller defeated incumbent state Treasurer Dawn Marie Sass, and Republican Attorney General J.B. Van Hollen was re-elected.

Secretary of State Doug LaFollette was the only Democrat left standing among statewide officeholders.
Democrats lost control of both houses of the state legislature, making Wisconsin the only state in the nation where Democrats lost a governor’s office, a Senate seat and a complete legislature, according to the Milwaukee Journal Sentinel.

Why the furor ? After all, the issues were not earth-shaking ones.

Why did this happen ?

State taxpayers were concerned about the fiscal situation. Walker had been left a huge deficit by his Democrat predecessor. Some of this was denied by the hard left which said that there was no deficit. This has been disproved.

To the extent that there is an imbalance — Walker claims there is a $137 million deficit — it is not because of a drop in revenues or increases in the cost of state employee contracts, benefits or pensions. It is because Walker and his allies pushed through $140 million in new spending for special-interest groups in January.

Actually, the alleged “new spending consists of promised tax breaks for employers who bring new jobs to the state. No new jobs, no tax breaks. Democrats have trouble with these matters. It requires math. The same left claims that the Social Security Trust Fund actually contains funds.

The rebuttal:

In other words, Walker’s decisions did impact the budget — but not necessarily the budget for this current fiscal year, which is facing $137 million shortfall.

“The vast majority of the cost of those bills … will be in the next budget, the 2011-213 budget, which has not even been debated yet,” says Brett Healy, president of the MacIver Institute.

Instead, this current year’s deficit is mainly due to other factors: the nearly $60 million Wisconsin owes Minnesota, and deficits in various state departments, including the corrections department, the medical assistance program, and the public defenders’ office.

“This stuff [the Walker legislation] will add to the deficit of the upcoming budget, but it has no immediate impact,” says Healy. “Gov. Walker is trying to be responsible and actually do something to try to stop the bleeding. And for anyone to say that somehow he made the current situation worse is just plain wrong.”

Ezra Klein, a 26 year old UCLA graduate with no financial experience seems to be the source of this accusation. Mr Klein would do well to study the matter more, even carefully reading the letter he quotes, before making accusations.

Under the new law, government workers will vote annually on whether they wish to be represented by a union, and the state will not be compelled to extract union dues from employees’ paychecks on behalf of the unions. Health-care and pension benefits for government workers will be set by the people’s elected representatives outside of the union-dominated collective-bargaining process, and wage increases will be indexed to inflation. Government workers still will enjoy salary-and-benefit packages that in most cases exceed what those workers could hope to command in the private sector, along with such hard-to-price benefits as enhanced job security.

That is the real source of the rage on the left: Mandatory union representation, empowered by mandatory collective bargaining and mandatory dues deductions enforced by the state, creates an enormous flow of cash for Democratic political candidates and their pet causes. From 1989 to the present, five of the ten biggest donors to American political campaigns have been labor unions, including public-sector unions such as the National Education Association and the American Federation of State, County, and Municipal Employees. The overwhelming majority of those donations go to Democrats. The union bosses and their Democratic patrons know that giving workers more of a choice about union representation will diminish that power and reduce that cash flow. That is what this is about, for all of the cheap talk about “civil rights” — as though federal employees in Washington were being treated like second-class citizens because their unions do not enjoy the same princely powers until now wielded by Wisconsin’s

The provisions on union membership and mandatory dues collection are stilettos aimed at the heart of union political power. In Indiana, governor Mitch Daniels decertified public employee unions by executive order when he took office two years ago.

On his first day Daniels reversed an executive order signed by a Democratic predecessor granting collective bargaining rights to state employees. Union membership plummeted overnight. “I think they were happy to have the extra thousand dollars that would have gone to dues,” Kitchell said. Decertifying the public-employees’ union has spared Indiana pressures that have crippled other state governments. Unhindered by union demands, the governor instituted a “pay for performance” scheme, rewarding state employees who met explicit goals with raises ranging from 4 percent to 10 percent. The salaries of underperforming employees stayed flat. No one was fired, but every time a job went vacant a supervisor had to justify hiring a replacement. The number of state employees has fallen from 35,000 to under 30,000, back where it was in 1982.

Here, I think, is the heart of the Democrat/union fury at Scott Walker. Unions, especially public employee unions, are heavy hitters in politics and support Democrats almost exclusively. The push for “card check” by the Obama administration during the last Congress was an example of payback for union support. Private industry unions have found themselves unable to win elections in attempts to organize workers at non-union plants. Therefore, they have tried to get “card check” passed while the Democrats held Congress. Card check is a term for non-secret ballot elections. The voter has to make his vote public and therefore subject to the sort of pressure seen above in the video.

incoming legislators would do well to heed the public’s desire for big government and big labor to step back and allow the free enterprise system and job creators to get our economy moving again.

One of the signature issues of the election was the misnamed “Employee Free Choice Act” and its “card check” provision that would have effectively eliminated private ballot voting for employees deciding whether to join a union. Poll after poll warned that voters—including union households—would reject any attempt to circumvent the secret ballot, and they made good on their word. More than 40 candidates who had voted for, cosponsored, or endorsed EFCA were asked not to return—including at least 31 who co-sponsored the bill in the 111th Congress.

It is important to note this was an American issue, rather than a partisan issue. In the Senate, eight candidates who supported card check lost while West Virginia Gov. Joe Manchin, who came out against the bill, won. And voters in four states, Arizona, Utah, South Dakota, and South Carolina, passed measures to head off any potential efforts to kill secret ballots in their states.

This is an issue related to that in Wisconsin. Unions need money and dues are the “mothers milk of politics” to quote Jesse Unruh, late political power in California. Why do they need money, aside for political power? You will not read this in the NY Times or LA Times but unions are in deep financial trouble.

‘We spent a fortune to elect Barack Obama,” declared Andy Stern last month, and the president of the Service Employees International Union wasn’t exaggerating. The SEIU and AFL-CIO have been spending so much on politics that they’re going deeply into debt.

That news comes courtesy of federal disclosure forms that unions file each year with the Department of Labor. The Bush Administration toughened the enforcement of those disclosure rules, but under pressure from unions the Obama Labor shop is slashing funding for such enforcement. Without such disclosure, workers wouldn’t be able to see how their union chiefs are managing their mandatory dues money.

Alarm is coming even from inside the AFL-CIO — specifically, from Tom Buffenbarger, president of the International Association of Machinists and Aerospace Workers, who sits on the AFL-CIO’s finance committee. Bloomberg News reports that he is circulating a report claiming the AFL-CIO engaged in “creative accounting” to conceal financial difficulties heading into last year’s Presidential election. As recently as 2000, the union consortium of 8.5 million members had a $45 million surplus. By June of last year it had $90.6 million in liabilities, or $2.3 million more than its $88.3 million in assets. “If we are not careful, insolvency may be right around the corner,” Mr. Buffenbarger warned.

Here may be the answer to the furious and violent reaction to Scott Walker. The dues provisions and annual election provision may cut union income by up to 90%, especially in a tight economy when that $1000 in dues money could come in very handy. After Mitch Daniels ended mandatory dues collection in Indiana, union dues income from public employees fell 95%. The recent furor and walkout by Democrats in Indiana concerns that new legislation would affect private unions and their dues. Daniels has suggested that the legislature delay this issue for now. The proposals would make Indiana a “right-to-work” state.

By the end of 2008, the SEIU also owed Bank of America nearly $88 million, including its headquarters loan and another $10 million for unspecified purposes. This is the same BofA that the union has spent the past months attacking as the face of Wall Street excess. The SEIU has protested outside of Bank of America offices and demanded the resignation of CEO Ken Lewis. We assume no one forced the SEIU to invest in real estate or borrow from a bank to finance it.

An SEIU spokeswoman says the union works on a four-year cycle, in which it goes “all out for the presidential election” and then rebuilds its finances. She adds the union has paid back more than $10 million of the $25 million it borrowed last year. But it’s nonetheless true that the SEIU’s liabilities have continued to climb each year from 2003 to 2008.

The dues and annual election provisions, if copied by other states in serious fiscal peril, could cut the union movement off at the knees. That is where the fury originates.

No explanation is necessary

Tuesday, March 8th, 2011

Another underground video is now available. It was a sting, of course, but the length of the video pretty much explains itself.

Here is NPR. No explanation is necessary.

Yes, it is quite clear what they believe.

Preparing the battlefield

Monday, March 7th, 2011

On the day before Emperor Darius planned to battle Alexander at the battlefield of Gaugamela, thousands of slaves leveled the field to assist in the use of chariots with great scythes mounted on the wheels. Darius believed he had not had enough room to use his superior numbers at Isus, the first battle two years before.

It didn’t help.

Now, we see another attempt to prepare a battlefield. The political left fears that Obamacare and its mandate will not survive Supreme Court scrutiny so they are viciously attacking Justice Thomas and Scalia in an attempt to intimidate them. No mention, of course, is made of various speaking engagements and contacts with left wing groups by such members of the Court as Ginsberg (Former ACLU counsel) and Kagan (Obama Solicitor General).

Still reeling from a 2010 Supreme Court ruling that opened the door to an explosion of political ads from corporate interests and fearful the court could overturn President Barack Obama’s healthcare overhaul, liberal groups have launched an aggressive — and, at times, personal — attack on the court’s most conservative justices.

The sharp questioning of the impartiality and ethics of Justices Clarence Thomas, Antonin Scalia and, to a lesser extent, Samuel Alito, represent the most concerted attack on a bloc of justices since the early 1970s, when conservatives waged a long campaign against the liberal justices of the Warren court, most notably Justices William O. Douglas and Abe Fortas.

Abe Fortas was a crony of LBJ and a labor lawyer. His nomination to be Chief Justice was derailed by ethics complaints that caused him to resign as Associate Justice soon after.

In 1965, Lyndon Johnson, then President, persuaded Supreme Court Justice Arthur Goldberg to resign his seat to become Ambassador to the United Nations so that he could appoint Fortas, his longtime friend, to the Court. Johnson thought that some of his Great Society reforms could be ruled unconstitutional by the Court, and he felt that Fortas would let him know if that was to happen. Johnson and Fortas did collaborate while Fortas was a justice; Fortas co-wrote Johnson’s 1966 State of the Union speech.

Now, THERE is conflict of interest ! All in a good cause, of course. The Great Society that has bankrupted the United States.

Thomas and Scalia have been accused of undermining public confidence in the court by engaging in partisan politics and making decisions that could benefit the political and financial interests of family members and associates. And liberal groups have called on the Justice Department to investigate whether the two justices’ alleged conflicts of interest should have disqualified them from voting in the 2010 decision on political spending, Citizens United vs. Federal Election Commission. One low-profile liberal watchdog group last week asked the Missouri Supreme Court to disbar Thomas.

This is standard Saul Alinsky tactics, of course.

“What we’re seeing is that there is major concern among liberals that the four died-in-the-wool conservatives on the court — with Justice Kennedy, when they’re able to bring him on board — are now in a period of real activism,” said Noah Feldman, a Harvard law professor and author of a book about the sometimes heated battles surrounding the jurisprudence of the liberal justices appointed to the Supreme Court by former President Franklin D. Roosevelt.

“In this [modern] context, it’s not so surprising that attacks on the justices would veer from the purely ideological into attempts to delegitimize the justices personally, to some extent,” said Feldman, who clerked for retired liberal Justice David Souter but nonetheless drew fire from the left for a February New York Times op-ed in which he argued that the political engagement of Thomas and Scalia pales in comparison to their predecessors and could, in fact, help better inform their decisions.

No, facts are not of interest. The LA Times has weighed in with the disappointing Jonathan Turley waving the bloody shirt.

This was a rally sponsored by Common Cause, Turley’s sponsor.

Louis XIV of France was infamous for his view that there was no distinction between himself and the state, allegedly proclaiming “L’État, c’est moi” (“I am the State”). That notorious merging of personality with an institution was again on display in a February speech by Supreme Court Justice Clarence Thomas before the conservative Federalist Society.

Wow ! Heady company for the poor kid from the South Carolina ghetto.

Thomas used the friendly audience to finally address a chorus of criticism over his alleged conflicts of interest and violation of federal disclosure rules concerning his wife’s income. Rather than answer these questions, however, Thomas denounced his critics as “undermining” the court and endangering the country by weakening core institutions.

In January, Common Cause released documents showing that Thomas had attended events funded by conservative billionaires David and Charles Koch. Thomas was even featured in Koch promotional material — along with Glenn Beck, Rush Limbaugh and others — for events that sought financial and political support for conservative political causes.

Horrors !!!

Are you starting to see the pattern ? The Citizens United decision is a proxy for the favors done the left by past campaign finance legislation, including that authored by John McCain. Obama was elected by a flood of unidentified money coming from God knows where. He turned down federal financing after promising to abide by the rules. His campaign TURNED OFF credit card validation software so the source of the contributions could not be traced. Fake names were used. Contributions poured in from other countries including Gaza, controlled by Hamas.

What is interesting to me is that the merchant acquirer has knowingly violated a basic CNP fraud prevention technique to accommodate a merchant (Obama Campaign). I think that both the Associations (VISA & MasterCard) would be highly interested in looking at the merchant acquirer that was processing these transactions. The value of ignoring the AVS responses is that multiple invalid transactions may be made without fear of being rejected by the authorization systems. This means that the real owner of the credit card account is willing to allow multiple transactions to be made on the account using different names and addresses that under normal conditions would be denied. The merchant acquirer has a complete listing of all transactions done and it would be very interesting to see how many transactions were conducted on the same account number using different names. I would think that this would be a Federal violation under the current campaign funding laws.

No, this is unimportant. The election is over and Obama and his friends, whoever they are, won.

What is important is Clarence Thomas and his wife’s job.

Worse yet, Common Cause discovered that Thomas had failed to disclose a source of income for 13 years on required federal forms. Thomas stated that his wife, Virginia, had no income, when in truth she had hundreds of thousands of dollars of income from conservative organizations, including roughly $700,000 from the Heritage Foundation between 2003 and 2007. Thomas reported “none” in answering specific questions about “spousal non-investment income” on annual forms — answers expressly made “subject to civil and criminal sanctions.”

In the interests of full disclosure, I was consulted by Common Cause before the release of the Thomas documents. I found the violations regarding Virginia Thomas’ income particularly alarming.

Virginia Thomas was receiving money from groups that had expressed direct interest in the outcome of cases that came before her husband, including Citizens United vs. Federal Election Commission, in which the court in 2010 struck down limitations on corporate contributions to elections.

A justice is expressly required by federal law to recuse himself from any case “in which his impartiality might reasonably be questioned.” This law specifically requires recusal when he knows that “his spouse … has a financial interest in the subject matter in controversy or in a party to the proceeding, or any other interest that could be substantially affected by the outcome of the proceeding.

Virginia Thomas, like the 40% of Greater DC who are not government employees, is a lobbyist. She was before she met Justice Thomas. I was not aware that lobbyists whose clients lose on an issue are fired. She could broadly be construed to have a financial interest in issues that come before the Court but this is not a new issue. They have been married since before he was elevated to the Court and her occupation has not changed.

The present tactic is not new.

In 1991, Thomas returned to government service in the Legislative Affairs Office of the United States Department of Labor, where she argued against comparable-worth legislation that would have mandated equal pay for women and men in jobs deemed to be comparable. That year, her husband, Clarence Thomas was nominated by President George H. W. Bush to fill the open seat on the U.S. Supreme Court left by the retirement of Justice Thurgood Marshall. She attended the contentious Senate confirmation hearings and stood by her husband as he was accused of sexual harassment. During the confirmation hearings, several Democratic Senators claimed that her job with the Labor Department might create a conflict of interest for her husband if he was seated on the Supreme Court.

This is just more preparation of the battlefield for the coming Obamacare decision. I expect it to be nasty and vicious and, for Justice Thomas, very personal. The left knows no scruples in gaining an advantage in a struggle.

The same efforts will be made with Scalia but he does not seem as vulnerable. Thomas’ life, and that of his wife, have been the subject of slander and libel since 1991. If you doubt that, take a look at the comments following the LA Times column by Turley. Get ready for the political equivalent of eye gouging and biting as this winds to a conclusion. After all, Obama learned his politics in Chicago.

The Stand at Madison

Friday, February 18th, 2011

This week has seen the most amazing events unfold in Madison Wisconsin. Most of us have considered Wisconsin sort of a lost cause. The Progressive Party began there with the La Follette family and Robert La Follette who broke with Teddy Roosevelt in 1912 and later ran for president on a Progressive ticket in 1924. His family dominated Wisconsin politics, although Senator Joe McCarthy showed the odd character of their politics, too. The German socialism that influenced the Progressives has waned but the shock of the first real stand against the public employee unions has highlighted the recent changes in Wisconsin.

The Republicans swept the state as part of the 2010 electoral route of Democrats and the political left. Governor Scott Walker is not well known but his stand against the unions will make him a national figure by this weekend. The legislation he has introduced will limit the unions to bargaining for salary only. Benefits will not be subject to collective bargaining. In addition, teachers and other state employees, except those in police or firefighter unions, will be required to contribute small amounts to their pension and health care plans. My brother-in-law is a retired policeman in Chicago. My sister tells me that they have always had to contribute to his pension and the health plan. In Wisconsin, up to date, none of these employees have been required to contribute anything. Zip ! Zero !

The Republicans took over the majority in the state Senate 19 to 14. Apparently, Wisconsin law requires a super quorum including at least one member of each party to vote on legislation affecting the budget or funding state programs. As a result, the Wisconsin Senate Democrats, all 14 of them, fled the state. It turns out their hideaway was spectacular and they have announced that they may stay away for weeks.

President Obama has intervened by saying “Wisconsin is conducting an assault on unions.” In addition, his “Organizing for America” group, which has become part of the DNC, is now helping organize the demonstrations in Madison.

The state Capitol is occupied by union demonstrators who apparently plan to shut down the government. They are carrying outrageous signs and there may be violence not far below the surface. Where will this lead ?

Here is an estimate of what is at stake and the stakes are high.

It has long been understood that the 2010 elections were just the beginning of the struggle to reverse America’s current decline. It will take at least two or three election cycles to correct decades of bad policy choices. We aren’t staring into the fiscal abyss because of any single policy or event, but rather the cumulative effect of dozens, if not hundreds, of flawed decisions made by fickle politicians who capitalized on the fact that the American public was largely disengaged. In the end, these decisions created a vast political class who live off the fruits of others’ labors.

When a business wants to increase its future earnings, it has to find new markets and sell more of its product. For the political class its the same, only their markets and products are government services. As a result, every year, public sector unions spend tens of millions of dollars lobbying for bigger government and filling the campaign coffers of the politicians who acquiesce to their demands. In addition to bigger government, they’ve won pay packages higher than the private sector, almost 100% job security and the ability to retire in their fifties with lifetime retirement income and health benefits. All paid for by us. Unlike private sector unions, every dollar funding government employees’ pay, pension and benefits comes out of our paychecks.

The moral hazard of public employee unions was known to Franklin Roosevelt who opposed them. John Kennedy permitted government workers to unionize by executive order. Ironically, Wisconsin, in its Progressive era, was the origin of the largest public employee union.

If there is any doubt how important the fight in Wisconsin is, look no further than the left’s reaction to it. Governor Walker’s proposal calls on public employees to pay more into their retirement fund and pay around 12% of their health insurance premiums. It also ends collective bargaining for most public employees, which mostly affects union bosses rather than rank and file members and is an important measure to forestall a future fiscal crisis.

Actually, as I understand it, the collective bargaining is still permitted for salary but not benefits.


For this, tens of thousands of public school teachers called in ’sick.’ So many, in fact, that hundreds of schools across Wisconsin have been closed for days. They pressed school children into service as fellow protesters, most not understanding the issue at hand. They drew up signs comparing the governor to Hitler and called the GOP Nazis. Several GOP Senators have faced multiple death threats. When all of this wasn’t enough to stop the proposal, their allies in the Senate simply fled the state to prevent a vote from happening.

The rest of the nation is starting to notice.

Among key provisions of Mr. Walker’s plan: limiting collective bargaining for most state and local government employees to the issue of wages (instead of an array of issues, like health coverage or vacations); requiring government workers to contribute 5.8 percent of their pay to their pensions, much more than now; and requiring state employees to pay at least 12.6 percent of health care premiums (most pay about 6 percent now) …

In an unusual move, he would require secret-ballot votes each year at every public-sector union to determine whether a majority of workers still want to be unionized. He would require public-employee unions to negotiate new contracts every year, an often lengthy process.

The result has resembled Cairo and the demonstrations seem to be building up into a national showdown with public employee unions. Scott Walker is under enormous pressure but a large part of the nation is behind him. The union tactics may well alienate an even larger share of the public.

The Hitler meme is as common as it was with George W Bush. Democrats seem to have limited imagination.

The Wall Street Journal sees the riots as a European phenomenon brought here.

For Americans who don’t think the welfare state riots of France or Greece can happen here, we recommend a look at the union and Democratic Party spectacle now unfolding in Wisconsin. Over the past few days, thousands have swarmed the state capital and airwaves to intimidate lawmakers and disrupt Governor Scott Walker’s plan to level the playing field between taxpayers and government unions.

Mr. Walker’s very modest proposal would take away the ability of most government employees to collectively bargain for benefits. They could still bargain for higher wages, but future wage increases would be capped at the federal Consumer Price Index, unless otherwise specified by a voter referendum. The bill would also require union members to contribute 5.8% of salary toward their pensions and chip in 12.6% of the cost of their health insurance premiums.

If those numbers don’t sound outrageous, you probably work in the private economy.

This looks to be building up to a national showdown with public employee unions. I hope Scott Walker is safe and keeps his courage in spite of demonstrations on the front lawn of his and other legislators homes. He looks like he is not weakening.

More to come.

UPDATES:

1. John Fund adds some background to the story with an explanation of the issues behind the furious union response.

2. Here is a rebuttal to a false story the Democrats are circulating to the effect there was no deficit until Walker “ginned one up.”

We re-read the fiscal bureau memo, talked to Lang, consulted reporter Jason Stein of the Journal Sentinel’s Madison Bureau, read various news accounts and examined the issue in detail.

Our conclusion: Maddow and the others are wrong.

There is, indeed, a projected deficit that required attention, and Walker and GOP lawmakers did not create it.

More on that second point in a bit.

The confusion, it appears, stems from a section in Lang’s memo that — read on its own — does project a $121 million surplus in the state’s general fund as of June 30, 2011.

But the remainder of the routine memo — consider it the fine print — outlines $258 million in unpaid bills or expected shortfalls in programs such as Medicaid services for the needy ($174 million alone), the public defender’s office and corrections. Additionally, the state owes Minnesota $58.7 million under a discontinued tax reciprocity deal.

The result, by our math and Lang’s, is the $137 million shortfall.

Sorry folks, the head-in-the-sand version is not true. The only state with a surplus is North Dakota.

3. Now, we have a doctor (or a fake) handing out excuse slips for the teachers that called in sick. This is illegal and apparently there are multiple folks in white coats handing out these slips with his name. This is practice of medicine without a license and treating (for him) patients without a good faith exam. How does he know they are or were sick ? Digging deeper and violating the first rule of holes.

4. Here is a new blog reporting on the antics of the runaway Democrat Senators.

5. Here is a video of one of the physicians committing fraud.

She doesn’t seem concerned. I sure hope Walker sets the medical board on them.

6. Here are more local accounts of the standoff. I like this sentence.

The Governor stands firm. I understand that there are strategies in place for next steps which will shake up the stalemate….I have known him for at least 15 years, but he is different now. He is a man who has met his time and his place, and he seems to know it.

Here is a very important comment from a Newsbusters thread on the Wisconsin situation.

Would someone please note that Unions make the great lion’s share of their $ from negotiating “benefits”, not salaries… or collection of dues.

This is why the decoupling of the Salaries and Benefits so important to Unions in Wisconsin. And why the Union’s have countered the way they have. They’ll give up Salary and Jobs for Teachers in a second, but they will fight to death for Benefit negotiation position. In another life as an executive in CA, I used to do administration for two Teamster’s “Health and Welfare” benefit packages. Do your research, but you’ll find I’m correct about motivation of Unions. I also believe that the amount of money kept by Unions will be very interesting to both your viewers, and the tax payers of the US of A. The way it works is that the Unions negotiate with the “Employer” regarding how much money per member/per month they will need to support the benefit options required in Union contract. In the case of WI, they negotiate with each of the 77 counties. Then the Unions negotiate the terms of benefits with “providers”/Ins Co’s, etc. They make the lion’s share of their money off of what is called the “breakage” created by Employees choosing between plan options, and the administration of the programs.

Let me explain with an example: A Union begins by negotiating with the Employer/State. They’ll claim their buying leverage will afford Employer significant savings. They’ll end up with a 3-tiered cost structure which allows the Union a profit even with the highest benefit option available as Union already has a very good idea about what Providers will be charging. But it gets even more lucrative for Unions at this point. Let’s say high-end Blue Cross PPO coverage costs $400 for the Family tier. What a Union will do is require $425 from Employer, plus a loaded in admin fee, as a charge for all Families in the employer group. So far, so fair? But, the Union will also offer a few other plans for Employees to choose from. The Union will also have developed relationships with a few cheaper HMO plans, and lesser PPO benefit structure plans that charge, as an example, $325 and $375, respectively.

At an Open House, employees will choose what fits their needs and the Union is in line for the “breakage“. The left over breakage is then, to my experience, placed in a fund where only the Union has the checkbook. Cars, Vacations and Condo’s, oh my. The Union also makes a “commission” off of things like Pre Legal, Dental and Term Life. As another profit source, the Union also leans on the Administrator for favors I’d rather not list, but usually involving idiocy like buying thousands of dollars of “raffle tickets” and leasing cars for the Union’s Business Agents, not entirely above board. Of course I am relating my experience, and what little I know of others who also did Union administration. I’d expect any simple research by an actual reporter would open up a Pandora’s box of Slush in the Badger State.

Very revealing comment. This is why “benefits” is such a life and death issue for the unions.

Here is more on the lefty physicians writing fake “sick leave” notes for demonstrating teachers. The comments are very interesting and have more on applicable Wisconsin laws.

The myth of Scooter Libby

Thursday, November 18th, 2010

UPDATE: Even the Washington Post complains about the lies and distortions in the movie. Given the Post’s history, that is severe criticism of the movie’s writers.

The Hollywood left has now released their version of the Valerie Plame affair. It is a movie called “Fair Game” and it perpetuates the myth that Vice-President Cheney’s chief of staff Scooter Libby told columnist Robert Novak that Joseph Wilson’s wife was a CIA agent. In fact, Novak got his information, and so testified before a grand jury, from Richard Armitage, a State Department assistant secretary and no ally of Bush and the White House. Armitage, typically, does not appear in the movie. This article in World Affairs Journal reviews the movie and provides a succinct account of the story.

Joe Wilson had gone to Niger in 2002 at the request of the CIA after Cheney had asked the agency about reports that Iraq bought yellowcake from Niger. According to a declassified CIA memo, Wilson found that Iraq had sent a commercial delegation to Niger to expand trade and that the only Niger export Iraq would care about was yellowcake. So there was an attempt, but it proved fruitless. In his 2003 State of Union address, Bush said the British had reported an effort by Iraq to buy “significant quantities of uranium” in Africa. In his July 6, 2003, Times op-ed, Wilson suggested that that statement was evidence the administration was manipulating intelligence to push the war. But Bush said only that the British reported that Iraq “sought” to purchase yellowcake, which was precisely what Wilson had found and reported, according to the CIA. Still, the op-ed caused a furor, and the White House quickly backed off the statements about Iraqi efforts.

My opinion is that the Bush White House made a catastrophic error in not defending the “sixteen words” in the State of the Union address. They were later shown to be correct as he did not assert that Saddam obtained the yellowcake but did make an unsuccessful attempt. The failure to defend those words began the myth that “Bush lied us into war.” It was a disastrous mistake.

Valerie Plame says in her memoir that she read the report that the CIA wrote immediately after debriefing Wilson on his trip and also read his column before it was published. She added that she thought the column was accurate. She said the report was only a few pages long. No one, let alone a professional intelligence officer, could have missed the part about Iraq trying to buy yellowcake. She had to know the column was wrong, but evidently said nothing. So she was anything but an innocent bystander as her husband created a political firestorm.

The book “Shaddow Warriors” makes the assertion that Wilson and Plame were actually working for French intelligence. France, of course, opposed the Iraq invasion and France, under Jacques Chirac, was deeply invested in Iraq and in the “oil for food” scam that corrupted the UN and a number of other organizations that helped Saddam evade the sanctions.

The other interesting story in the article concerns Libby’s attempt to obtain a pardon from Bush before he left office. It is to Bush’s discredit that he did not pardon Libby.

Even at the end of the long ordeal, poor memory — and irony — continued to played a role. Libby called White House counsel Fred Fielding as the clock was winding down on Bush’s term to ask if he could meet with the president to make his case for a pardon. Fielding mentioned he had received a call from a senator who had defended Libby. That surprised Libby, who knew the senator but had not considered him an ardent supporter. And Libby suggested it might have been another senator who Libby knew had spoken to Fielding.
Libby, who answered questions for this article, asked Fielding three times if he was sure it was the senator Fielding mentioned, and Fielding insisted that it was. But a little later, Fielding realized that he had made a mistake and that the senator Libby had mentioned was the one who had called. “Fred,” Libby said wryly, “you could be indicted.” The incident evidently didn’t convince Fielding that Libby may have made a similar memory error. Fielding didn’t return calls seeking comment.

Shame on Bush and Fielding for refusing to help an innocent man who had been wronged. The evidence against Libby was weak and the prosecutor knew throughout the entire process that Armitage had been the source for Novak.

Republicans and immigration.

Sunday, November 7th, 2010

The recent election said little about illegal immigration. Sharon Angle, according to this LA Times piece, may have come off too harsh on illegal immigration. Nevada has a large Hispanic population and elected a Republican governor who is Hispanic. Ken Buck may have gotten some backlash from a reputation as an enforcer of laws against employing illegals. However, the Republicans won Arizona where illegal immigration is an issue and Hispanics are a large sector of the population. What does this mean ?

Republicans are in favor of legal immigration. Democrats try to mix the legal and illegal sides of this issue to confuse voters. Many Hispanic voters oppose illegal immigration but may worry about harassment of legal residents. There is no question that California has been devastated by the demands of the illegal population. Texas has escaped some of the negative effects because its state government is funded by sales tax, not income tax which may be avoided by illegals.

What is the solution ?

One is to build the fence and control the border. So far, 600 miles have been constructed and the “virtual fence” advocated by George Bush has been shown to be useless.

The Obama administration is preparing to scrap plans to extend the high-tech “virtual” border fence along vast stretches of the 1,969-mile U.S.-Mexico border, ending a troubled and politically contentious security measure inaugurated in 2006 by then-President George W. Bush, the Houston Chronicle learned Friday.

The decision, expected to be announced shortly by the Department of Homeland Security, comes after federal authorities poured nearly $1 billion into a four-year, post-9/11 demonstration project to show that state-of-the-art remote cameras and ground sensors could help U.S. Border Patrol agents intercept undocumented immigrants, drug smugglers or potential terrorists surreptitiously crossing the border.
Homeland Security Secretary Janet Napolitano, a former governor of Arizona keenly familiar with the technical problems afflicting the project, first signaled plans to scrub the “invisible fence” with a series of internal decisions in recent weeks that shifted the year-to-year contract with the prime contractor to a month-to-month contract due to expire on Nov. 21.

It was a waste of money and time. The real fence, however, has been effective where built. That is why most illegals are coming through Arizona now. There is a fence in California.

Once the fence is built, then what ?

Many of the workers compensation claims I review, about 70%, are for workers with Spanish surnames. Of these, about half are Spanish speaking only. When reviewing these cases, I note that the vast majority claim two years of education. Two years ! They are illiterate in Spanish, let alone English. They have no skills and can work at manual labor only. They tend to become injured and disabled by age 40. Then, they are a drag on the economy as they live on disability.

Legal immigrants bring education and skills. Canada requires that immigrants have assets and education. Very few countries permit illegal immigration as we do. Certainly Mexico does not permit immigration. There is no naturalized citizenship in Mexico.

What about illegals who have been here for years and have families who are citizens ? We can develop a policy toward these people once the border is secure. Right now, we have the significant possibility of a violent failed state on our southern border. That will accelerate migration and may well lead to violent confrontations between criminal gangs, who are learning tactics from Islamist groups, and US authorities.

Close the border and then worry about the illegals residing in the US with significant ties here.