The Pelosi Principle Validated

George Rebane

[This is the submitted form of my regular Union column which was published in the newspaper’s 14jul12 print and online editions.]

Every morning we wake up to reports of yet more of Europe’s countries foundering on socialist shoals.  Hollande, France’s new president, got into office by promising self-levitating growth, something he has no idea about how to accomplish beyond raising taxes and unfunded spending.  And a few weeks after his election the stark reality is that France will already break its pledge to reduce deficits, and enter a new cycle of accelerating debt.

Readers may recall that France, along with Germany, were the main economic bulwarks against the falling dominoes of the European Union.  Greece, Italy, Spain, Portugal, Ireland, Belgium, …, all of them are being taken down by the unserviceable debts run up by the their socialist programs of wealth redistribution.  They are now running out of wealth to redistribute, and the printing press beckons.

In America, our Washington progressives have long taught their acolytes that Europe and its profligate social policies are the answer to our own economic problems.  But our problem is that we already redistribute so much wealth so poorly that our government borrows and encumbers our children with 40 cents of debt for every dollar it spends today.  And the only solution being applied is more lies about spending and tax increases.

The biggest lie came wrapped in Obamacare (aka the cynically named Patient Protection & Affordable Care Act, PPACA).  Obamacare itself was forged secretly and passed in the dark of night by Democrats who had not read the bill.  Their leaders’ response to the national protest was that Obamacare would reveal the power and glory of socializing healthcare after the bill became law.  In a statement inaugurating Congress’ new and fundamentally transformed process of legislation, House Speaker Pelosi informed us that it was only after passage that we would find out all the new stuff that had been written into it.

And truer words never came out of Washington.  Every passing month since the President’s signature a new Obamacare zinger has been exposed through a more careful reading.  The first lie exposed was the CBO’s conclusion that the bill would not save a penny in healthcare costs, but instead add almost a trillion dollars to our debt in its first decade.

Then came the endless litany of newly discovered taxes and fees that Obamacare would impose in the futile attempt to slow the country’s descent into fiscal ruin.  The highlight of these revelations exploded in Chief Justice Roberts’ ruling that Obamacare’s individual mandate was not the touted ‘penalty’ for refusing health insurance, but was instead a tax.  His unprecedented judicial rewriting of the law to make it constitutional opens up whole new avenues for government to tax us into any behavior that they think proper.

Team Obama immediately thanked the Supreme Court for ruling the law constitutional, and just as quickly denied the basis for the ruling – again calling the individual mandate a penalty and not a tax.  Half the voters have no idea what is going on with Obamacare.  They only hear the daily lies from the administration because SCOTUS traditionally remains silent after its rulings.

But the biggest piece of unexploded ordnance yet to be uncovered in Obamacare is the Independent Payment Advisory Board.  This is the unelected panel of up to fifteen experts with enormous extra- and unconstitutional powers to tax and legislate.  IPAB will not only call the shots on how Health and Human Services must implement Obamacare, in who gets what services when, but also how and where (including transfers from Medicare) the program will get its needed funds.

IPAB is truly the agency from hell, because after 2019 its existence and vast powers are out Congress’ hands.  The law unconstitutionally encumbers future Congresses to have essentially no power to rein it in.  In the meantime, IPAB’s proposals can be overturned only with supermajorities in both houses and the President’s signature.

For a full discussion of this initiative to cancel American democracy, I urge you to read the Cato Institute’s ‘The Independent Advisory Board – PPACA’s Anti-Constitutional and Authoritarian Super-Legislature.’ (Policy Analysis #700, June 14, 2012)  Pelosi had no idea how prescient she was.

“I can make a firm pledge.  Under my plan, no family making less than $250,000 a year will see any form of tax increase.  Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes,”   Exit question – who said that on September 12, 2008.

George Rebane is an entrepreneur and a retired systems scientist in Nevada County who regularly expands these and other themes on KVMR and Rebane’s Ruminations (www.georgerebane.com).

Comments

[billy T]

Silly Nancy. And then Obama said it wouldn't raise our taxes and it will pay for itself and even reduce the deficit. ROTFLMAO. Stop it, you guys are killing me!! Too funny

[TomKenworth]

One thing never discussed. The older you get, the more likely you are to use medical resources. Why not index the percentage of income paid for universal health care to age? And of course no caps on amounts paid, so a wea;thy

[TomKenworth]

The previous comment sent itself, before I even finished writing, so delete it:

One thing never discussed. The older you get, the more likely you are to use medical resources. Why not index the percentage of income paid for universal health care to age? And of course no caps on amounts paid, so a wealthy 88 year old making 10 million per year from investments might pay 40%, or 4 million per year to the health care system, I'm sure poor baby can live on 6 million per year.

[TomKenworth]

Now I see that Mary Matalin has figured out the final copout for outsourcing, while attempting to deflect Romney's role in outsourcing. "It's a consequence of the global economy." Instead of taking responsibility for decisions made in corporate boardrooms, the Republicans are going to say that the God of Global Economy made them do it. Wow! If nothing else, Romney definitely held stock in Bain as it outsourced, and that is a form of support.

[George Rebane]

TomKenworth, your socialist nostrums are priceless. You know how much money is sufficient for a man to live on. You berate people who invest in companies participating in the global economy. People get blamed for holding stock in companies that outsourced (BTW, Bain created more jobs in the US than it did overseas.

Your vituperation is so precisely directed that it bypasses all the pension funds, IRAs, etc for liberals that also invest in companies that have been outsourcing jobs for years, let alone the legions of progressive plutocrats who do so even as I write.

Holier than thou must sure feel good to all them Dems who are lambasting Romney and the 'rich', while comfortable in the knowledge that their constituents are way too dumb to call any of these exhortations to question.

[TomKenworth]

George, there is no question that we all participated in the Great Outsourcing, but most Americans did so because there no longer products for them to buy, that were made here. "Bain created more jobs here than overseas?" How many did Bain destroy to then go on and "create new, and mostly likely fewer than before," jobs. Of course you can argue that the jobs were already dead, when Bain arrived on the scene. The real question is, "do we want an America of 99% serfs paid the global minimum wage, or do we need to rethink what's going on.

[George Rebane]

TomKenworth 1231pm - I have done my rethinking on the problem of wealth redistribution in these pages for the last five years, and have made concrete proposals. The only reply from the progressives has been that governments need to tax more, spend more, regulate more, inhibit more enterprise, and eliminate more liberties. Our legacy is the 20th century history of collectivism, and today's poster child of progressivism, the ongoing disaster in the eurozone.

(The chorus 'It was the bankers' fault.' won't wash. Banks can neither tax, nor regulate, nor print money. To the extent banks can cause mischief, they can only do so as full working partners in collusion and corruption with government.)

[Russ Steele]

TomKenworth you asked the question " How many did Bain destroy to then go on and "create new, and mostly likely fewer than before," jobs"

Do you know how to do research on the Internet. Here is your answer and it took all of ten minutes to find HERE.

How many jobs did Romney and Bain Capital create?

At the end of 1998, Staples had more than 42,000 employees, Sports Authority had almost 14,000, Gartner Group had almost 3,000, and Steel Dynamics had over 500. So at the beginning of 1999, when Romney left Bain Capital, these four companies alone employed almost 60,000 total employees. While some of the job growth at Sports Authority came from acquisitions, there is no doubt that these four companies created tens of thousands of jobs over the period.

Fast forward to today. By the end of 2011, Staples had about 89,000 employees. Sports Authority is now a private company. The last time it reported employee numbers, in 2006, it had 14,300 employees. In addition, Gartner Group had over 4,400 and Steel Dynamics had over 6,000 employees. Using the most recently available data, these four companies alone employed almost 125,000 total employees.

Bain Capital also successfully turned around several existing businesses during Romney’s tenure. For example, Bain Capital bought Wesley Jessen Vision Care for $6 million in 1994. It had been a division of Schering Plough and was not profitable. Bain Capital and a new CEO turned it around and sold it to Ciba Geigy for over $300 million in 2001. When it was sold, it appears to have had 2,600 employees. Today, the company is part of Ciba Vision.

Overall, then, the companies Bain Capital funded under Romney have created tens of thousands of jobs using any measure.

How many jobs did Romney and Bain Capital destroy?

A Wall Street Journal article mentions four companies—American Pad & Paper (Ampad), Dade Behring, DDI, and Stage Stores—that Bain Capital made very profitable investments in and took money out of; later, the companies went bankrupt.

ooo

When Dade went public in 1996, it employed 5,500. This increased to 7,400 with an acquisition in 1997. Employment declined thereafter, reaching a bottom of 6,000 in 2002. It rebounded to 6,400 in 2006, just before the sale to Siemens. So, overall, employment declined by 1,000 from its peak in 1997 to its final level in 2006. This was undoubtedly unpleasant, but does not seem to be as dire as portrayed.

DDI produced circuit boards for the telecom business. It went public with 1,800 employees in 1999. It then made an acquisition to get to 3,200 employees. After the tech bubble burst, the company’s business declined and it went into chapter 11 bankruptcy. Like the other two companies above, DDI came out of bankruptcy and today has almost 1,700 employees and is profitable. So, overall, employment declined by 1,500.

American Pad & Paper (Ampad) was a manufacturer and marketer of paper-based office products. In 1992, Bain Capital acquired Ampad from Mead. Bain Capital and new management made “additional acquisitions in order to enhance the company's scale, broaden its product line, expand upon its national presence, and strengthen its distribution capabilities.”2 It went public in 1996, but declined soon thereafter, going into chapter 11 in 1999. The different pieces of the business were sold thereafter. Employment was 4,105 in 1996 when the company went public. It had declined to 3,800 by 2000, the last employment numbers available. So, as of 2000, employment had declined by 300.

When you combine the increase at Stage and the decreases at the other three companies, you end up with a net increase in jobs of 1,100.