Bacon's Rebellion

Now that it’s the New Year, what happened to the Sound and the Fury?

Christine Romans interviewed me this morning for CNN American Morning. A one-on-one interview running more than five minutes on a national cable network is a generous allotment of time, but it barely skims the surface of the weighty topics at stake. Still, I can’t complain. The interview provides a nice introduction to the “Boomergeddon” book.

The Bacon bottom line: 2/3 of Boomers are financially unprepared for retirement (our friend Groveton is a relatively rare exception) and will have to work longer than they ever anticipated. We can’t count on government to act responsibly enough to preserve the integrity of Social Security and Medicare, so we’ll have to add to savings to offset the risk of cutbacks to the retirement safety net.

And how do we do that? Strip the costs out of our lifestyles to lower our spending profile, pay down debt, become as self reliant as possible — and don’t count on the government to bail you out. You’ve got about 15 years to work on it. Good luck!

The sleeper story of the season: Gov. Bob McDonnell, staff and senior legislators will be paying calls on rating agencies S&P, Fitch and Moody’s to defend Virginia’s AA rating.

According to Chelyen Davis with the Free-Lance Star, McDonnell says he has no reason to believe that the AAA is in jeopardy, but he’s never met with the rating analysts and he wants to make sure they “have confidence in what we’re doing.” In particular, he wants to explain how Virginia intends to honor its commitments to the Virginia Retirement System.

Good luck, governor. Make sure you have an explanation handy for that Senate Finance Committee report that says Virginia cannot borrow any more money if it wants to maintains its self-imposed debt capacity cap of 5% of revenue.

Gov. Bob McDonnell made a few big promises when he ran for governor. One of those promises, raising more money for transportation, was a bust. Privatizing the state’s ABC stores, collecting royalties from offshore oil drilling and slapping tolls on Interstate highways have crumbled like the asphalt on Interstate 95. But another of his promises, to promote job creation, has panned out pretty well. So far, McDonnell has lived up to his campaign slogan, “Bob’s for Jobs.”

The looming insolvency of many states and municipalities is getting more and more attention. CBS’ 60 Minutes highlighted the problem Sunday, and everyone concerned about Virginia public policy needs to watch this video.

Needless to say, Virginia is in far better shape than Illinois, New Jersey and California, but it would be foolhardy to think that we are immune from their difficulties. The fact is, we don’t have a good handle on the financial strength of all Virginia’s municipalities and all the independent authorities that have issued debt. We don’t know how much publicly backed debt there is, we don’t know what potential liabilities governments are potentially liable for, and we don’t know how well covered the debt is. We don’t know what impact declining property values will have on municipal revenues, what impact consumer deleveraging will have on sales tax revenues or laggardly economic growth will have on income taxes.

Meanwhile, we face massive cutbacks in federal aid when the “stimulus” package expires, continuing increases in Medicaid spending, and more cuts of unknown magnitude when the newly elected Congress gets serious (or semi-serious) about closing the federal budget gap.

The 50 states, metropolitan regions and municipalities are coming to the end of an the expansionary era that has prevailed since World War II. Spending will be painful to cut. Much of it is baked into the dysfunctional human settlement patterns — scattered, disconnected, low-density — that we have built over the past 60 years. More spending is tied to our dysfunctional, privately-owned-but-highly-regulated health care system, and yet more is tied to our dysfunctional, hyper-bureaucratized public educational system. The days of blindly shoveling more money at roads, schools and health care are over. We cannot afford this madness anymore.

Our major public institutions have evolved as far as they can usefully evolve. They have reached a dead end. Collectively, they are nearing collapse. Virginia has been less profligate than other states, so that foundational truth may not yet be self evident to everyone. But the design flaws in our institutions are endemic — Virginia is only a few years behind the rest.

Government As Usual will not work. We cannot solve our problems by trimming a bit here and there, jacking up taxes and fees but spreading the pain so no one notices, implementing private-sector processes in the search of ephemeral efficiencies, borrowing up to our AAA debt limit, diverting the public’s attention with culture-war issues, and hoping that some economic miracle from source unknown will deliver a revenue windfall from the heavens. No, we must fundamentally re-think the way we deliver and pay for every major public services at the state and municipal level.

Just as we need a new compact between government and citizen at the federal level, we need a new compact at the state, regional and local level. Either we devise the new compact through a deliberative democratic process informed by reasoned debate, or it will be imposed upon us in a panicked crisis mode by remorseless creditors.

One of the enduring controversies in Virginia involves the so-called “Gun Show Loophole”. I say so-called because the term “gun show loophole” generates intense debate and considerable emotion.

While Gov. Robert F. McDonnell was attorney general in 2006, he did nothing when informed about serious accusations that eventually led to the conviction and 10-year sentence of John W. Forbes II, a former state finance secretary.

Fellow Baconauts.

• Groveton is really a skinny nerd with a huge subscription list to hard right magazines and blogs and has ‘fair and balanced” Fox News switched on 24/7.
• Grovetown isn’t a guy at all, but a woman posing as a guy.
• Grovetown is really an amalgam of several people. Risse uses this tactic all the time. The “real” Risse identifies himself as “EMR.” That’s simple enough, but he often comments using other names. This is another plot to make us think we are hearing several independent voices. In reality, Risse is a 1950’s style, Kerouac-like subversive who wants to pollute our thought patterns with an enormously complicated vocabulary that he has invented. My advice: Don’t let him inside your head.

Anyway, the Big Bacon has promised to reveal Groveton’s real identity soon. It is now supposedly a secret because Groveton’s employer might be upset that he’s blogging. But that could be TBB, too.

Peter Galuszka (aka “Mr. Gooze”)

“Crestfallen” is the only way to describe the feeling.

After ALL THE WORK on AntiPartisan action and AntiPartisanism, and then not get invited to the “No Labels” kick off on Monday at Columbia University!!

There is no question about the need to stop Whack a Mole Politics and to stop Tossing Rocks at Empty Pigeonholes (TRAPE).

Yes politics IS broken. It has been for at least three decades and becomes more broke with each passing campaign cycle.

BUT how to fix politics?

The “Founding Leaders” and the invited guests said all the right things…

BUT WAIT:

1,000 people in the audience?

A slick web site already up?

They have raised a million dollars BEFORE it was a public activity?

The “Founding Leaders” are primarily agents and shills who have worked for the two dominate political Clans.

The only ‘name’ from the Commonwealth has been described as the most craftily partisan politician in the large municipality where he lives and from which he was elected to congress and served as the chair of the Elephant Clan fund raising committee in the House.

It was pointed out on another Blog that the ONLY ‘senior’ Elephant Clan personalities were FORMER office holders who recently lost a primary to the WingNut / Anger of Ignorance Crowd.

You have to know ‘the system’ to dismantle ‘the system’ but is this just an attempt to preserve the 19th Century ‘Grand Old Two Party System’?

Is there a way forward that does not involve articulating an AGENDA?

Does it make sense to just raise money to ‘protect’ Clan candidates from Right WingNut and Left WingNut attacks?

After all, the primary DRIVERS of civilization’s dysfunctions are:

Unsustainable human settlement patterns,

A governance structure that does match the economic, social and physical structure of contemporary society, and

An economic system that lives on Mass OverConsumption, speculation and debt AND

WAS ALL CREATED AND IMPLEMENTED WHEN THERE WAS A FUNCTIONING AND CIVIL TWO PARTY SYSTEM – 1950 to 1990.

How will No Labels produce “what citizens want” when the vast majority of citizens have no idea what the real options are or what would be in their best interest as individuals, for their Households or as members of the hundreds of ‘communities’ (small ‘c’) in which every citizen is trying to exist?

The answer will be the Agenda No Labels articulates and how well they integrate those who do not care how ‘the system’ worked before it FAILED.

Perhaps it was not such a bad thing not to be invited…

EMR

Conservatives are all thumped up about regarding U.S. District Judge Henry Hudson’s declaring a critical part of Obamacare unconstitutional.

• The ruling deals only with that part of the health law that has the federal government requiring that all people buy health insurance. While Atty. Gen. Kenneth Cuccinelli won on this point, Hudson did not go along with the Cooch on striking down the law entirely or delaying its implementation until a higher court can rule on an appeal, which the Justice Department has already filed.
• Two other federal judges have upheld the law, including one in Lynchburg. Both were appointed by a Democrat. Hudson is a Bush appointee.
• Virginia is not the only state to challenge Obamacare. About 20 attorneys general are suing in Florida. While the Cooch scored some points, he’s just one of many conservatives who dislikes the law. Indeed, my old college roomate, an ecologist-turned-Republican who is a former congressman from New Hampshire, is against it.
• The “Commerce Clause” aspect which is what Hudson is dwelling upon is a very elastic and flexible concept. It has been used this way and that for years. So while Hudson’s narrow ruling has interpreted the clause one way, it is quite possible an appeals judge might see it differently.

My personal view is mixed. While I enthusiastically embrace health care reform, I do have some misgivings about being forced to buy something. Yet, I understand that one of the reasons why all need to buy health insurance is that productive tax payers get stuck with the emergency room or other bills of cheapskates who skimp on insurance until they are sick or injured.

It could very well be that the only solution to this is socialized medicine with a one-payer system. We are perhaps the only advanced industrial country that doesn’t have one. I know several doctors on the front lines of health care who are sick to death of having to deal with for-profit (or even non-profit) insurance companies that game the managed care program set up three decades ago.

The Dems have suffered a defeat, but it may not last. Meanwhile, I haven’t seen one clear new reform from the GOP or from the naysayers like Jim Bacon who somehow thinks that a medical concierge system might work (sure Jim, if you are rich).

Peter Galuszka

Attorney General Ken Cuccinelli racked up the biggest legal victory of his career yesterday when a federal judge ruled for Virginia in its legal challenge to the Patient Protection and Affordable Care Act (aka Obamacare). Wrote Federal Judge Henry E. Hudson on the provision that would compel Americans to purchase health insurance or pay a fine:

For months now, I have been harping on the theme that Virginia faces a challenging fiscal future and that we need to start getting our financial affairs in order now. Two more straws in the wind…

Gov. Bob McDonnell has announced a $4 billion transportation plan, most of which would be funded through borrowing. The justification for heaping on new state debt is that building now will prove to be cheaper than building in the future, when construction costs and financing costs rise in tandem with a recovering economy.

I can see the logic, but I object to the plan on two grounds. First, I believe that human settlement patterns are undergoing a significant alteration — investment and population are flowing back toward the urban core (as reinforced in today’s Wall Street Journal, “Downtowns Get a Fresh Lease“). McDonnell wants to dump billions of dollars into transportation projects geared to the post-World War II paradigm of endlessly expanding the metropolitan frontier rather than the emerging paradigm of retrofitting what we’ve already built. Most of the money will be wasted. Furthermore, $4 billion is a drop in the bucket compared to our transportation needs. We need to conduct a fundamental re-thinking of our transportation policy — which projects we fund, and how we fund them — before putting the state billions of dollars into debt.

The second reason to object to borrowing more money is that Virginia is already testing the outer limits of its borrowing capacity at a time we need to be shoring up our finances, not borrowing more. State and municipal finances will grow more precarious with each passing year, a fact that will be only partially masked by the anemic economic rebound the country is experiencing.

Virginia faces many long-term challenges: (1) runaway Medicaid costs, (2) weak growth in sales and property tax revenues, and (3) declining largesse from the federal government. To that list of problems, which I have blogged about previously, let me add one more: a long-term rise in interest rates. Permit me to quote myself from the “Boomergeddon” blog at some length: