Wednesday, December 15, 2010

Feinstein Embraces “Pearl Harbor Style” Legislating


Radical environmentalists have realized that they cannot win a public debate arguing that a two-inch bait fish is more important than families in the San Joaquin Valley and are scrambling for a new message. They are also crafting a sneak attack to take control of our water.

The Left’s need to re-image the Delta water debate is particularly desperate due to a ruling in the U.S. District Court which rebuked the federal government as having used “sloppy science” to justify the man-made drought. Judge Oliver Wanger ordered federal agencies back to the drawing board.

However, the Left is already pressing ahead with its backup plan with the help of Senator Dianne Feinstein. That plan is concealed in massive $1.1 trillion federal spending bill for 2012 and would designate the entire Sacramento-San Joaquin River Delta as a National Heritage Area. If it becomes law, the Heritage designation would establish a new federal mandate to protect the natural, scenic, historic, cultural, and recreational resources of the Delta - a thinly veiled effort to cut off valley water supplies.

Feinstein’s controversial proposal is opposed by water users, farmers, and rural communities. They understand that National Heritage Areas create another layer of government between water rights owners and the government who controls delivery. Many others would also raise concerns if they knew Congress was considering the creation of this new National Heritage Area. However Democratic leaders, at the request of Senator Feinstein, are working to bypass public debate. They want to sneak the Heritage designation into law by air-dropping it into the nearly two thousand page Fiscal Year 2012 Omnibus Appropriations bill (see page 880).

The action taking place this week is particularly outrageous coming from Senator Feinstein, who just over a year ago came unhinged when Senator Jim DeMint (R-SC) tried to restore Delta pumping through an amendment on the Senate Floor.

Senator DeMint’s amendment came in the light of day and was subject to both a full public debate as well as a separate vote. Yet Senator Feinstein persisted in describing it as a “Pearl Harbor” style of legislating (see the outrageous video here).

What a difference an election makes. With her allies losing power in the House, Feinstein apparently has changed her view on sneak attacks.

Friday, December 10, 2010

Public Pension Bill Making Headlines

Pension Woes Prompt GOP Move

The new Republican House leadership, whose party benefited in November from public antipathy toward the bailout of banks, is moving to avoid a federal bailout of state and local pension funds.

Congress has little authority over, or responsibility for, state and local public-employee pensions. But with pension liabilities increasingly stressing state and municipal finances, the prospect that the problem will end up in Washington's lap has some academics and politicians urging that the federal government move preemptively.

In New Jersey, concerns about cuts in public pensions have led to a rise in retirements this year.

The latest wrinkle: A bill introduced last week by three prominent House Republicans to deny states and localities the ability to sell tax-exempt bonds—the lifeblood for many governments—unless they report their pension-fund liabilities to the Treasury Department. The federal tax-free status of interest on municipal bonds helps generate demand for the bonds and lowers government borrowing costs.

The goal, the congressmen say, is to get a better handle on funding woes of public pensions, which they say are not always forthcoming about the true extent of their financial exposure.

For decades, the federal government has regulated corporate pension funds and a federal agency, the Pension Benefit Guaranty Corp., can bail them out.

But there is no such federal backstop for state and local employee pensions. Some argue that Washington would be hard pressed to ignore a pension plan if it threatened a major government insolvency.

"The point of this is to smoke the rats out of their holes," said Rep. Devin Nunes of California, who introduced the bill. "What is the total amount of pension debt? No one really knows."

Read the full article from the Wall Street Journal here.

Pension reality check
The Washington Post
December 8, 2010

State and local government spending stands at 12.6 percent of U.S. gross domestic product - the highest share ever. To be sure, this largely reflects the recession, during which state and local spending has been growing more slowly than it did earlier in the decade while GDP has been falling or stagnant. Still, long-term state and local financial commitments, above all for pensions and health-care benefits of public employees, are driving much of the cost. And since states have to balance their budgets, spiraling employee compensation threatens to crowd out the provision of public services such as education, recreation and road maintenance.

Getting states, counties and cities back on a sustainable budget path is primarily their own responsibility. But federal policies can help - or hurt. At the moment, Congress is considering one of each type. On the helpful side, a trio of Republican members of the House - Paul Ryan (Wis.), Darrell Issa (Calif.) and Devin Nunes (Calif.) - have proposed a bill that would require all state and local governments that issue federally tax-exempt bonds to file accurate annual reports of their pension liabilities with the Treasury Department.

Public-employee pension funds are notorious for understating their liabilities through the use of vague projections and rosy investment-return assumptions. This proposal would force pension funds to show what they would earn if invested only in super-safe Treasury securities - a reasonable point of comparison given that pension benefits are usually guaranteed by law. And the bill would declare that the federal government is not liable for covering state and local pension fund shortfalls, another incentive for such plans to enact reforms.

Read the column in the Washington Post here.

Accounting for Public Pensions
The New York Times
December 10, 2010

As companies moved away from defined-benefit plans, most cities and states did not follow. One reason for that may have been that the Government Accounting Standards Board — the public sector equivalent of FASB — has done much less to force good disclosures, or comparable ones.

Having limited information available can obscure problems, but when concerns arise, a lack of good data can have the opposite effect; people assume the worst.

Estimates of unfunded pension liabilities can be breathtaking. Two economists, Robert Novy-Marx of the University of Rochester and Joshua Rauh of Northwestern, put the figures at $3 trillion for state governments and almost $600 billion for municipalities. Those figures are far greater than official government figures, and are highly dependent on interest rate levels, which can and do fluctuate. They may be too high, but there is no way to be sure of that.

Some people say the 1974 passage of the Employee Retirement Income Security Act, known as Erisa, led to the demise of private pension plans because companies for the first time really had to honor pension promises. But the trend did not pick up steam until the accountants forced disclosure of real numbers. Most state constitutions have long barred cutting public pension benefits that have been earned, but that fact alone did not force change.

This week, three Republican members of Congress, led by Representative Devin Nunes of California, a senior member of the Ways and Means Committee, proposed legislation to force states and cities to report pension fund liabilities on the same basis, and to force them to disclose market values of assets. The bill would not even allow smoothing, so the state of pension funding will seem volatile as markets rise and fall. Such volatility could be reduced by putting more pension money into bonds than stocks, but doing so would force governments to admit they were likely to earn less on investments, and thus need to put even more money into pension plans.

Read the complete column in the New York Times here.

Wednesday, December 8, 2010

Immigrant Children Used as a Political Prop by House Democrats


Today, all of America witnessed one more example of the current majority’s failed leadership when immigrant children were used as a political prop by House Democratic leaders.

For the past four years, Democrats had significant majorities in Congress as well as two Presidents – a Republican then a Democrat - willing to sign an immigration reform bill. However, instead of dealing with the issue in the light of day with public hearings and a thoughtful, deliberate, and responsible process, Democrats chose to force a vote on legislation during the waning days of a lame-duck Congress with little chance for debate, no chance of amendment, and no chance of getting to the President’s desk.

Make no mistake, the activity in the House today was nothing more than an attempt by Democrats in Congress to pander to Hispanic voters for partisan political purposes.