Some notes on Colorado Shooting

Several important points
4 months of planning make it very difficult to stop this type of attack.
Gun-free zone yet again.
10 minutes between when attack starts and when police are able to arrive at the crime scene. Attack was already over when police arrived.
60 explosive devices in his apartment (30 homemade grenades) -- what would this guy have been able to do without any guns.
Side points
Large magazines like that in this shooting often jam -- large magazines require very strong springs, but over time the pressure from the bullets being held in the magazine cause the metal in the spring to suffer fatigue. When the spring loses its ability to push bullets into the chamber properly you get jams.
As occurred in the Aurora, Colorado attack, the gun used in the Tucson, Arizona shooting also jammed.
I have seen several concerns that if citizens had been allowed to carry permitted concealed handguns into the theater, there would be more casualties from the crossfire. There is one problem with this claim. Despite all the defensive gun uses that have stopped multiple victim public shootings, this possible scenario has never occurred.
Slightly longer discussion
As I have already noted, this horrible tragedy occurred in yet another gun-free zone. Don Kates notes: "it turns out that Century 16 Theaters no-gun policy also applies to its own security personnel, including the off-duty policy officer on the premises."
On Fox News at 5:34 PM EDT, the Aurora police chief said that the killer had been receiving "a high volume of deliveries at work and home over the past four months".
CBS notes that the attack erupted at 12:30 AM. Reuters has this timeline:
* Local police began receiving emergency calls at 12:39 a.m. Within a minute, hundreds of 911 calls had been placed. * Police arrived at the scene at 12:40 a.m. (0640 GMT) The suspect, Holmes, was taken into custody in the parking lot near the back door of the theater.
Police arrived very quickly once they called, but it appears that nine minutes elapsed between when the attack started and they were notified.
From a June 2010 piece entitled: Think Tough Gun Laws Keep Europeans Safe? Think Again...
It wasn't supposed to happen in England, with all its very strict gun control laws. And yet last week Derrick Bird shot and killed 12 people and wounded 11 others. A headline in The Times of London read: "Toughest laws in the world could not stop Cumbria tragedy." . . .
Take a simple example. Suppose your family is being stalked by a criminal who intends on harming them. Would you feel safer putting up a sign in front of your home with the message: "This Home is a Gun-Free Zone"? Probably not. The sign would only tell criminals that they would meet little resistance if they attacked. But in effect, we have put these signs on everything from schools to a couple of cities.

I meant to bring up Edinboro, PA as an example of a school shooting that had been stopped by a citizen with a gun.
Immediate calls went out for gun control.
The Hill Newspaper: "Gun control calls follow Colorado theater shootings, but few expect major changes"
Fox News: "Mass shooting prompts calls from Capitol Hill and beyond for tighter gun laws"
"We don't want sympathy. We want action," Dan Gross, president of the Brady campaign said Friday as Obama and Romney mourned the dead. "Everyone is scared of the NRA," [Ed Rendell] said on MSNBC. "Number one, there are some things worth losing for in politics and to be able to prevent carnage like this is worth losing for." . . .
The Guardian Newspaper in the UK -- Guns in America: beyond control: America has had more than its share of deadly shootings, but there is scant hope of a change to gun laws Of course, this claim is patently false.
As noted earlier, there are all sorts of calls for more gun control on twitter.
Editorials and op-eds are already calling for bans and registration. The Economist Magazine has this piece.

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Massive vote fraud in Philly? Shocking

Philadelphia has seen some significant vote fraud over time. There was a state Senate race that was determined by absentee ballot vote fraud (Federal Judge: "Substantial evidence was presented establishing massive absentee ballot fraud, deception, intimidation, harassment and forgery"). There was one case in the last decade or so where a single person who was from NJ had voted in Philly over a hundred times in one election. Now there is this case.
CITY COMMISSIONER Al Schmidt said the notion of voter fraud in Philadelphia is so politicized and distorted that some claim it never happens, and others claim there are hundreds of thousands of cases. The truth, Schmidt added, is somewhere in the middle. Now Schmidt is in the middle of the debate after releasing a report Wednesday that raised as many questions as it answered about voter irregularities. Schmidt, the lone Republican on the commission, said at a news conference Wednesday that the report was not done to support recent state legislation requiring voters to show identification before casting ballots. . . . Schmidt's staff examined voter records from 14 or 15 of the city's 1,687 polling places, where 179,176 voters cast ballots in the April 24 primary election. . . .


The Economist magazine misreads Gary Becker's economics of crime paper

For Gary Becker the point of criminal penalties was not to drive crime rates towards zero. The point was to make sure that the criminals internalized the cost of committing crime. You may speed to get a relative to hospital on time. You might steal food when you are starving. According to Becker, the penalties shouldn't be so high that people won't do those crimes. The point is similar for firms, even the anti-trust crimes that the Economist discusses. After all, antitrust violations can be efficiency creating even if the government doesn't recognize that possibility as often as it should. Becker was arguing that there was likely a non-zero optimal amount of crime and it was not for the reasons that the Economist magazine says regarding false conviction, though that might also play a role.
Indeed, Mr Becker’s crime calculus might lead to the conclusion that fines should be as draconian as possible—seizing all a wrongdoer’s assets, for example. Anything lower reduces the expected cost of criminality, without doing anything to improve the probability of detection. (Treating whistleblowers leniently is consistent with this logic: letting them off punishment raises the odds of truth-telling, and therefore of detection.) There are plenty of arguments against ultra-high fines, however. One is that false convictions carry too high a cost. Another is that fines of this sort could cripple firms, reducing competition. . . .


Jobs picture stalling in 10 battleground states

From the WSJ:
The data confirm job growth has sputtered in these states since the winter's brisk pace of job growth. . .
The basic numbers:
Unemployment rose in June in six of 10 battleground states that could play a pivotal role in the presidential election, reflecting job cuts in some cases and weak payroll growth in others. The jobless rate climbed a 10th of a percentage point last month in Michigan, Pennsylvania, Colorado, Iowa, New Hampshire and Virginia, the Labor Department said in a report released Friday. The rate held steady in three other battleground states—Nevada, Florida, and North Carolina. Ohio was the only battleground state where unemployment fell last month. Nevada's 11.6% jobless rate remained the highest of any state in the nation. The rates in North Carolina, at 9.4%, Michigan, at 8.6%, and Florida, also at 8.6%, remained stuck above the national average of 8.2%. Joblessness was far below the national rate in three of the battleground states—Virginia, with 5.7%; Iowa with 5.2%; and New Hampshire, with 5.1%. Employers cut jobs in Colorado, Iowa, Michigan and Nevada. . . .

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Top income earners have seen income plunge and tax rate rise from 2007 to 2009

The income of the top 1% falls by 37%, but their share of taxes falls by 9%.

Income inequality has gone down during the recession and the share of taxes paid by the wealthiest has gone up. Is that really what people want? In 2009, the wealthiest one percent paid an average effective tax rate of 28.9%. Data from the National Taxpayers' Union.



Dick Morris talks about how Obama is gutting the Welfare reform law

Dick Morris negotiated the welfare reform law on behalf of Bill Clinton. Starting at about 4:10 into the video you will see the discussion.

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No guns policy at Cinemark Theaters?

The movie theatre was not a statutory gun-free zone. The exception for secure “public” buildings applies to buildings owned or managed by a public entity, not to all buildings accessible by the general public. Private business owners who invite the public onto their own premises can set their own policies: “Nothing in this part 2 [establishing the scope and limits of a Colorado concealed carry permit] shall be construed to limit, restrict, or prohibit in any manner the existing rights of a private property owner, private tenant, private employer, or private business entity.” Colo. Rev. Stat. Ann. § 18-12-214(5).

The attack did occur at a Cinemark theater. Here are pictures taken by Ray Hickman from another Cinemark theater in Ft. Collins, CO. Cinemark Fort Collins, 4721 South Timberline Rd Fort Collins, CO 80525

Here is a picture of this theater from the Cinemark website.

J. Neil Shulman has this post:

My sister, who lives in Colorado and has a license to carry a concealed handgun, tells me every Cinemark movie theater she’s gone to has the same sign the Cinemark Century 16 Theater displayed to its customers: No Firearms Allowed. This sign informed James Holmes that the management was guaranteeing nobody would be shooting back. . . .
Here is a post at The Truth About Guns.

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Posts for gun control on Twitter from early this morning

UPDATE: Of course, it isn't just tweets that are pushing for gun control.  Here is a post by David Weigel attacking those who hoped that someone with a permitted concealed handgun would have been present at the movie theater:
It'll be a while before we hear anything so knuckleheaded about the shootings. The fact that Colorado has these laws [concealed handgun laws] is evidence that they don't stop all massacres. . . .
UPDATE 2: Of course, the theater was a gun-free zone.

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Interview on Sun TV in Canada on MYTHS OF GUN CRIME

Obama IRS rewriting Obamacare now that it is clear that states aren't doing what was intended

Congress wrote the Obamacare law to achieve a particular result, but things haven't worked out quite as intended. In this case, Democrats wrote the law to put pressure on states to adopt the health insurance exchanges, but apparently Democrats thought that the pressure would be so great that states would have to adopt the exchanges. They never really planned for the exchanges not being set up. From the Cato Institute:
It turns out that ObamaCare makes an essential part of its regulatory scheme—an $800 billion bailout of private health insurance companies—conditional upon state governments creating the health insurance “exchanges” envisioned in the law.

This was no “drafting error.” During congressional consideration of the bill, its lead author, Sen. Max Baucus (D-MT), acknowledged that he intentionally and purposefully made that bailout conditional on states implementing their own Exchanges.

Now that it appears that as many as 30 states will not create Exchanges, the law is in peril. When states refuse to establish an Exchange, they are blocking not only that bailout, but also the $2,000 per worker tax ObamaCare imposes on employers. If enough states refuse to establish an Exchange, they can effectively force Congress to repeal much or all of the law.

That might explain why the IRS is literally rewriting the statute. On May 24, the IRS finalized a regulation that says the law’s $800 billion insurance-industry bailout will not be conditional on states creating Exchanges. With the stroke of pen, the IRS (1) stripped states of the power Congress gave them to shield employers from that $2,000 per-worker tax, (2) imposed that illegal tax on employers whom Congress exempted, and (3) issued up to $800 billion of tax credits and direct subsidies to private health insurance companies—without any congressional authorization whatsoever. . . .

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US Post Office about to declare bankruptcy

From the WSJ:
While lawmakers continue to fight over how to fix the ailing U.S. Postal Service, the agency's money problems are only growing worse. The Postal Service repeated on Wednesday that without congressional action, it will default—a first in its long history, a spokesman said—on a legally required annual $5.5 billion payment, due Aug. 1, into a health-benefits fund for future retirees. Action in Congress isn't likely, as the House prepares to leave for its August recess. The agency said a default on the payment, for 2011, wouldn't directly affect service or its ability to pay employees and suppliers. But "these ongoing liquidity issues unnecessarily undermine confidence in the viability of the Postal Service among our customers," said spokesman David Partenheimer. The agency says it will default on its 2012 retiree health payment as well—also roughly $5.5 billion, due Sept. 30—if there is no legislative action by then. . . .

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Obama administration threatens Fast and Furious whistleblowers

From Fox News:
The head of ATF recently warned employees that they will face "consequences" if they don't "respect the chain of command," in what Republican lawmakers are decrying as an "ominous message" meant to frighten would-be whistle-blowers in the wake of the Operation Fast and Furious scandal. Sen. Charles Grassley, R-Iowa., and Rep. Darrell Issa, R-Calif., fired off a letter Wednesday to Acting Director B. Todd Jones saying the message "could be interpreted as a threat" and urging him to clarify. "It was scary," Issa told Fox News on Thursday, in reference to Jones' video message to employees. In the July 9 video message, Jones touched on a topic he described as "choices and consequences." By that, Jones said, he was talking about "organizational discipline" and the need for workers to "play by the rules" -- embedded in the warning was the line about properly raising internal concerns. "Choices and consequences means simply that if you make poor choices, that if you don't abide by the rules, that if you don't respect the chain of command, if you don't find the appropriate way to raise your concerns to your leadership, there will be consequences, because we cannot tolerate -- we cannot tolerate -- an undisciplined organization," he said. Issa told Fox News it's obvious what Jones was talking about. . . .

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"George Zimmerman breaks silence on 'Hannity'"

It is incredibly rare that a defense attorney would let his client go public and do a TV interview. Any tiny mistake will be used against the defendant. The fact that Zimmerman did the interview suggests two things.

(1) That Zimmerman has nothing to hide.

(2) That the prosecutors and judge have been trying this case in the media and the defense attorneys probably felt that they couldn't let these attacks go unanswered. The fact that a woman claims that see started being sexually molested at age 6 by a boy who was a year older than she was just doesn't seem credible to me.


Home sales fall by 5.4% last month, prices rise only because mix of homes being sold changed

When is the housing market finally going to recovery? With interest rates at record lows, one would have thought that it would be booming right now. From the Associated Press:
Americans bought fewer homes in June than May, indicating the weak economy could make a modest housing recovery choppy.
The National Association of Realtors said Thursday that sales of previously occupied homes fell 5.4 percent in June to a seasonally adjusted annual rate of 4.37 million homes. That's the fewest since October.
Sales are up 4.5 percent from a year ago, evidence that the market is still recovering. But the annual sales pace is below the 6 million that economists consider healthy. The June drop in completed re-sales contrasts with more encouraging data that show gains in new residential construction, higher builder confidence and more signed contracts to buy previously owned homes.
"It is only one month and the rest of the housing indicators have all continued to show improvement," said Jennifer Lee, senior economist at BMO Capital Markets. "Let's hope this June decline is a blip."
The number of first-time buyers, critical to a housing recovery, made up just 32 percent of sales. That's down from 34 percent in May. In healthy markets, first-time buyers make up more than 40 percent of the market.
The median home price rose 5 percent to $189,400. That's mostly because sales of more expensive homes rose, while sales of cheaper homes fell, the Realtors group said. . . .

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Newest Fox News piece: UN gun control treaty will reveal gun laws Obama really supports

Since I wrote this piece, I am hearing that the UN is unlikely put out the Arms Trade Treaty either tomorrow or next week. I have also heard the problem is with China and Russia who don't want any restrictions on government selling guns. My newest piece at Fox News starts this way:
Sometime later this week, the UN will finally unveil its Arms Trade Treaty. The exact date the treaty will be released is a secret.

Russia, China, France -- with its new Socialist government -- Britain and the Obama administration are writing the treaty behind closed doors. Yet even if the final treaty is being kept under wraps, we still have a pretty good idea of some of the requirements that will be in it.

The group writing the treaty is not promising. Russia and Britain ban handguns and many other types of weapons. The possession of guns for self-defense is completely prohibited in China. The Obama administration is undoubtedly the most hostile administration to gun ownership in US history, with Obama having personally supported bans of handguns and semi-automatic weapons before becoming president. And remember the recent scandal where the Obama administration was caught allowing guns go to Mexican drug gangs, hoping it would help push for gun control laws.

The treaty seems unlikely to ever receive the two-thirds majority necessary to be ratified by the US Senate, but that doesn't mean it still won't have consequences for Americans. . . .

UPDATE: A couple of people suggest that Obama is not hostile to gun ownership. For those who don't know about Obama's views on guns, I suggest that they go here and here.

Four days after the piece was published it was still number one in terms of views.

UPDATE: Fox News: "UN arms treaty aims at terror, but puts Second Amendment in crosshairs"

American Second Amendment rights and U.S. foreign policy interests could be directly threatened by the latest wording of a United Nations draft treaty seeking control over international trade in conventional weapons, FoxNews.com has learned. . . .

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The Economics of Nannies

Little wonder that female graduates from Yale and even Harvard-MBAs drop out so often from the labor market rather than pursue their own around-the-clock career. On the other hand, this article ultimately shows why one shouldn't rely on NPR or the NY Times for economic discussions.
. . . When Muneton started working through Pavillion in 2002, however, she increased her salary to $85,000 a year. As she gathered sterling recommendations, she began increasing her pay. Eventually she worked for some of the country’s wealthiest people, whom she accompanied on private jets to many of the world’s most exclusive resorts. Today, she says, “there are no more poor people in my family.” Muneton bought a nice house for her mother, a condo for her sister and a taxi cab each for two of her brothers. She also owns a beach house in Brazil, a penthouse in Miami and two properties (a six-unit building and a duplex) in Los Angeles.

How does a nanny earn more than the average pediatrician? The simple answer is hard work — plus a strange seller’s market that follows a couple of quirky economic principles. A typical high-priced nanny effectively signs her (and they are almost always women) life over to the family she works for. According to Cliff Greenhouse, Pavillion’s president, that kind of commitment is essentially built into the price. Many clients are paying for the privilege of not having to worry about their child’s care, which means never worrying if their nanny has plans. Which, of course, she can’t, pretty much ever. . . .

. . . According to Pavillion’s vice president, Seth Norman Greenberg, a nanny increases her market value if she speaks fluent French (or, increasingly, Mandarin); can cook a four-course meal (and, occasionally, macrobiotic dishes); and ride, wash and groom a horse. . . .

And then there’s social climbing. “A lot of families, especially new money, are really concerned about their children getting close to other very affluent children,” Greenhouse says. “How do they do that? They find a superstar nanny who already has lots of contacts, lots of other nanny friends who work with other high profile families.” There are the intangibles too. “I’m working with a phenomenal Caribbean nanny right now,” Greenhouse says. “She is drop-dead beautiful. Her presentation is such that you’re proud to have her by your children’s side at the most high-profile events.” . . .

Some of the economics here is pretty lame. Pavillion has a reputation that helps people sort out who makes the best nannies. If they provide inaccurate information, wealthy people will tell others not to trust them. Those wealthy people will also not go back Pavillion when their first suggestion doesn't work out.
. . . But it’s hard not to wonder if the nannies who make twice as much an hour as the ones we’re considering are also twice as good. Nannies can be evaluated in the same way as what economists call “experience goods” — like wine, whose value can only be determined after experiencing it. When it comes to experience goods, price can be useful to reject anything below a certain minimum. After all, a $3 bottle of wine or a $5-an-hour nanny are pretty sketchy.

But price is useless — or worse, misleading — in differentiating among the adequate. . . . They also bear resemblance to “credence goods,” an economic term for something — whether a jar of vitamins or an auto tuneup — whose true value can never quite be determined. You’re more likely to overpay for a credence good in the hope that a higher cost increases the likelihood of a benefit. . . .

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Destructive Flash Mob at Walmart in Jacksonville Florida

Do these individuals realize that they will drive businesses out of minority neighborhoods? Many people will pay higher prices from this destruction. One wonders if Obama's rhetoric that businesses are these greedy people who haven't worked hard encourages this type of behavior. This Walmart was apparently just two miles from a house party that police had broken up earlier in the evening. A newspaper story is available here:
A huge house party broken up by police in a North Jacksonville subdivision didn't end there Saturday night as hundreds of young partygoers ignited a flash mob at the Lem Turner Road Walmart Supercenter.

They caused havoc that was recorded and posted on YouTube until Tuesday afternoon, while one person reported being shot during the party.

The Sheriff's Office said investigations into both are "active and ongoing." The shooting is being investigated by the aggravated battery unit detectives while patrol officers follow up on the Walmart incident.

Walmart spokeswoman Dianna Gee said she learned of the incident Saturday night, then spoke with the shift manager at the 12100 Lem Turner Road store. She said the YouTube video is being reviewed, and that the employees did as they were trained by steering clear of the chaos and calling police.

"The actions of these teenagers was deplorable and put at risk the safety of innocent bystanders, staff and customers," Gee said. "We are committed to assisting law enforcement in any way we can to identify the people responsible for the commotion, including acts of vandalism and thefts at the store." . . .

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"France's proposed tax hikes spark 'exodus' of wealthy"

So how short will France's tax revenues be From the UK Telegraph:
The latest estate agency figures have shown large numbers of France's most well-heeled families selling up and moving to neighbouring countries. Many are fleeing a proposed new higher tax rate of 75 per cent on all earnings over one million euros. (£780,000) The previous top tax bracket of 41 per cent on earnings over 72,000 euros is also set to increase to 45 per cent. Sotheby's Realty, the estate agent arm of the British auction house, said its French offices sold more than 100 properties over 1.7 million euros between April and June this year - a marked increase on the same period in 2011. Alexander Kraft, head of Sotheby's Realty, France, said: "The result of the presidential election has had a real impact on our sales. "Now a large number of wealthy French families are leaving the country as a direct result of the proposals of the new government. . . . Gilles Martin, a Swiss tax consultant, reported the same trend. "Since the socialists came to power in France, I have been deluged with inquiries from rich French people who would rather pay their tax in Switzerland," he told Switzerland's 20 Minutes newspaper. . . .

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Despite being forbidden from doing so, some New York Times to NBC News employees making donations to Obama's presidential campaign

The article at the Daily Caller is by Alex Pappas:
Employees of news outlets including the New York Times and the Huffington Post have donated money to President Obama’s re-election campaign, according to records reviewed by The Daily Caller. Christina Norman, the executive editor for HuffPost BlackVoices, donated $2,500 to the “Obama Victory Fund 2012” in March. Norman didn’t return a request for comment, but a Huffington Post spokeswoman told TheDC that “these donations were made before she knew of our policies, having come from an executive background at OWN and MTV.” Two employees of the New York Times Company also donated money to Obama’s re-election campaign, according to Federal Election Commission records. . . . Blogger Michael Petrelis first uncovered Singer’s and Stickney’s donations in May. At the time, New York Times spokeswoman Eileen Murphy confirmed that the company’s corporate policy “requires that any employee involved in the planning, creation or oversight of news and editorial content not give money to any political candidate or election cause.” “In this case he made this donation without direct knowledge of that policy,” Murphy said of Stickney. “He is now aware of the policy and sincerely regrets having made the donation.” . . .


Ranking Congressmen and Senators with the Flesch-Kincaid test to use of longer words and longer sentences

The Sunlight Foundation has provided its data available here. A higher score doesn't necessarily mean that someone is smarter, as politicians may be speaking so that their constituents or at least a greater percentage of their constituents understand what they are saying. It might be interesting to see how their Flesch-Kincaid scores line up with the education levels of their congressional districts.
Overall, the complexity of speech in the Congressional Record has declined steadily since 2005, with the drop among Republicans slightly outpacing that for Democrats (see Figure 1). Through April 25, 2012, this year's Congressional Record clocks in at a 10.6 grade level, down from 11.5 in 2005.

Between 1996 and 2005, Republicans overall spoke at consistently 2/10ths of a grade level higher than Democrats, except for 2001, when a rare moment of national unity also seems to have extended to speaking at the same grade level. But following 2005, something happened, and Congressional speech has been on the decline since. For Republicans as a whole, the decline was from an 11.6 grade level to a 10.3 grade level in 2011 (up slightly to 10.4 in 2012 so far). For Democrats, it was a decline from 11.4 to 10.6 in 2011 (also up slightly to 10.8 in 2012 so far.) . . .

One possibility for the changing scores may simply be whether someone is in the majority. For example, the word "compromise" is apparently a word that a politician gains points from using. I assume that someone in the majority is more likely to use that word. Other words such as "compassion," "reconciliation," "inevitable," and "lobbyist" are also big point words. It would be interesting to see if the type of language used varies with whether one is in the majority or minority. As noted in the quote above, the party in power seems to get higher Flesch-Kincaid scores.


James Carville says that the Citizens United case has so far benefited Democrats more than Republicans

Well, possibly the Democrats will now calm down their rhetoric a little over the case. The point for allowing free speech isn't that it systematically benefits one side. It is that there is a benefit from allowing speech and competing ideas. From ABC's "This Week":
CARVILLE: The real surprising thing of the campaign is the Democratic super PACs have been more influential thus far, Priorities USA, American Bridge. They have driven the debate in this campaign much more than -- than the Republican super PACs. Now, whether that continues through September and October, I'm not willing to say, but as of July 15th, it's the Democratic super PACs that have basically driven this whole Bain tax return, whatever it is. And for better or for worse, that's what happened.

WILL: It's an old story about advertising. Advertising dollars are just as good as the product they have advertised. The entire Ford Motor Company's marketing genius was put behind the Edsel, didn't help. The Edsel wasn't a good product. . . .

Some worry that this means that this means that David Brock is driving American political debate.


"Obama misses new budget deadline"

What is the point of these rules if the Obama administration is never going to even try to follow them? It is like the Obama administration doesn't think that the rules apply to them.
The Obama administration has missed another annual budget deadline, failing to send Congress a mid-session budget review before July 16.

The Office of Management and Budget (OMB) confirmed Monday that the deadline for the review, due every year on that date, was not met this year.

“There will be a mid-session review and timing is still being determined,” spokeswoman Moira Mack said.

Last year, OMB issued its mid-session review on Sept. 1. The document is supposed to contain revised spending, tax collection and deficit numbers to update the February budget proposal.

Releasing documents late has become a regular event at OMB. Obama this year released his 2013 budget past deadline for the third year in a row. Under the law, the budget is to be released on the first Monday in February, but came out on Feb. 13 this year.

The Obama administration also delayed the release of the budget last year, waiting until Feb. 14. . . .


Another Broken Obama Promise: Price of Health Insurance up 13.9% over last year

Health insurance costs have soared 8.2 times faster than inflation over the last year! From the BLS.

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Average per person wealth in Canada exceeds that for Americans

Might people consider adopting Canada's economic policy of cutting marginal income tax rates and restraining government spending? Canada's marginal corporate income tax rate is about 15% below ours. That is a big difference if investors get to keep 15 cents more of every dollar that they make from Canadian investments. From Bloomberg:
On July 1, Canada Day, Canadians awoke to a startling, if pleasant, piece of news: For the first time in recent history, the average Canadian is richer than the average American.

According to data from Environics Analytics WealthScapes published in the Globe and Mail, the net worth of the average Canadian household in 2011 was $363,202, while the average American household’s net worth was $319,970.

A few days later, Canada and the U.S. both released the latest job figures. Canada’s unemployment rate fell, again, to 7.2 percent, and America’s was a stagnant 8.2 percent. Canada continues to thrive while the U.S. struggles to find its way out of an intractable economic crisis and a political sine curve of hope and despair. . . .

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Merrill Lynch predicts 2Q GDP at horrid 1.1% annual rate

Calculated Risk has this from Merrill Lynch:
Today’s weak retail sales report leaves Q2 GDP tracking a meager 1.1%. We expect the economy to remain weak through the rest of the year with growth of only 1.3% in Q3 and 1.0% in Q4. This translates to GDP growth of only 1.3% Q4/Q4, significantly below the Fed’s forecast of 1.9-2.4%.
Lower sales, higher inventories, falling interest rates, all point to a slowing economy. From Reuters:
U.S. retail sales fell in June for the third straight month, the longest run of consecutive drops since 2008 when the country was mired in recession. Sales slipped 0.5 percent, with declines across a wide swath of industries from electronics and cars to building supplies, the Commerce Department said on Monday. Analysts had expected a small increase. "Evidence is increasingly clear that the U.S. economy is slowing," said Jim Baird, an investment strategist at Plante Moran Financial Advisors in Kalamazoo, Michigan. The report adds to a spate of soft economic data that is raising pressure on President Barack Obama ahead of his November re-election bid. Republican challenger Mitt Romney is focusing his campaign on the weak economy, which has plagued Obama's presidency. The dollar declined against the euro and the yield on 10-year U.S. government bonds dropped to an all-time low as the data stoked worries the economy was floundering and could need more help from the Federal Reserve. U.S. stock prices san k. . . .
The JP Morgan forecast is here.
This morning we lowered our tracking of Q2 GDP growth from 1.7% to 1.4%. For some time now we have noted that our Q3 GDP call — which was already below consensus at 2.0% — had risks that were skewed to the downside. . . .
UPDATE: Economists Expect Growth in Second Quarter Was Weak 1.2%
Economists surveyed by Dow Jones Newswires expect real GDP to have grown at an annual rate of just 1.2% last quarter, down from the tepid 1.9% in the first quarter. The expected rate would be the slowest growth since 0.4% posted in the first quarter of 2011. . . .
UPDATE: Computer sales keep dropping.
"For the first time since 2001, client PC shipments have declined sequentially for three consecutive quarters-and have been below historical averages for the last seven quarters," AMD CEO Rory Read said during the chip supplier's second quarter earnings conference call. . . .

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Do Democrats really want to play this game of chicken?

Presidents are usually blamed more than others for other the economy is going. In this case, I think that it is more than fair. But what impact will the big expected tax increases and spending changes have on the economy? There are two effects from the taxes. Higher marginal tax rates on labor next year will actually increase work effort now and decrease it in the future. But the higher taxes on individual owned businesses will reduce their investments now. They will try to get more out of their employees now, but they will not make as much new capital investments as they otherwise would have. My guess is that firms will be less likely hire new workers at this point because that will be viewed as an investment. The changes in government spending may also create chaos in the economy, though I am not sure how much defense contractors, for example, will believe that those cuts will actually occur. From the Washington Post:
Democrats are making increasingly explicit threats about their willingness to let nearly $600 billion worth of tax hikes and spending cuts take effect in January unless Republicans drop their opposition to higher taxes for the nation’s wealthiest households.

Emboldened by signs that GOP resistance to new taxes may be weakening, senior Democrats say they are prepared to weather a fiscal event that could plunge the nation back into recession if the new year arrives without an acceptable compromise.

In a speech Monday, Sen. Patty Murray (Wash.), the Senate’s No. 4 Democrat and the leader of the caucus’s campaign arm, plans to make the clearest case yet for going over what some have called the “fiscal cliff.”

“If we can’t get a good deal, a balanced deal that calls on the wealthy to pay their fair share, then I will absolutely continue this debate into 2013,” Murray plans to say, according to excerpts of the speech provided to The Washington Post. . . .

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New Fox News piece: Obama needs a history lesson on business and the US

My newest piece starts this way:
According to President Obama, his administration has been pro-business, indeed one of the most pro-business administrations ever. Yet, on Friday, in Roanoke, Virginia, Obama admonished those opposed to higher taxes on business: "If you’ve got a business -- you didn’t build that. Somebody else made that happen."

What a slap in the face to all those Americans who built successful businesses. And Obama wonders why businesses are afraid to invest, when he uses such rhetoric.

Obama, during his presidency, regularly has called Wall Street executives “fat cats,” bondholders “speculators,” and accuses doctors of giving patients unnecessary and harmful surgery.

He has regularly blamed private companies rather than the government for the financial crisis. Indeed, the only blame he gives to the federal government is that there wasn’t enough regulation.

Even for liberal New York City mayor Michael Bloomberg Obama's attacks have at times been too much: “[Obama’s] bashing of Wall Street is something that should worry everybody.” . . .

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The Financial Times could use a good economics lesson

This article by Lisa Pollack in the Financial Times assumes that making investments isn't productive. I would argue that there is a reason why scientists are getting paid more in these financial markets than they were getting in science and that is they are producing more wealth there. Moving resources from lower to higher valued uses is valuable.

She approvingly cites a study that claims:

we find that industries that are in competition for resources with finance are particularly damaged by financial booms. Specifically, we show that manufacturing sectors that are either R&D-intensive or dependent on external finance suffer disproportionate reductions in productivity growth when finance booms. . . .

Finance literally bids rocket scientists away from the satellite industry. The result is that erstwhile scientists, people who in another age dreamt of curing cancer or flying to Mars, today dream of becoming hedge fund managers. . . .


"Economists less optimistic as early 2012 gains wither"

Another summer of recovery lost. From Fox News:
Economists say the sales and profit gains of early this year are disappearing, and they are increasingly pessimistic about short-term growth.

They also are gloomy because of the potential impact in the U.S. from Europe's financial crisis, the possible expiration of the Bush tax cuts in December, and the prospect of major cuts in federal spending.

A survey by the National Association for Business Economics released Monday also found less evidence of hiring, confirming the trend in recent monthly jobs reports from the government.

In the quarterly survey of 67 economists who work for companies or industry trade groups, 22 percent reported rising employment in July, down from about 30 percent in the last three surveys and 42 percent a year ago. On the positive side, only 9 percent said employment was falling. The rest said it was unchanged.

Just 39 percent of the economists surveyed reported rising sales at their companies in July, down from 60 percent in April. There was a similar trend on corporate profit margins, with 29 percent reporting rising margins in July, compared with 40 percent in April.

"The survey results suggest worsening economic conditions," said Nayantara Hensel, a business professor at National Defense University who analyzed the results for NABE. "The rising sales and profit margins experienced earlier in the year may have been short-lived." . . .

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So why did Microsoft and NBC split on MSNBC?

Here was the original explanation that I saw from Howard Kurtz:
“NBC executives have grown frustrated at not having sole control of the MSNBC website, which does original reporting as well as aggregating content from the AP, Reuters, New York Times and elsewhere,” Kurtz reports. “At the same time, as the MSNBC channel has forged a separate identity as the liberal home of Rachel Maddow, Chris Matthews, Ed Schultz and others, the company has worried about the brand confusion caused by its straight-news site bearing the same name. And the cable channel has lacked a site solely devoted to pushing its personalities.” . . .
If NBC were already concerned about the brand confusion, it would seem that it would be easy to confirm by whether NBC now changes the hard left bent of the programing on what has been MSNBC. But that seems unlikely to happen.

Well, the Associated Press has this quite different and what appears to be a much more accurate take.

Microsoft, in particular, had grown frustrated by contract terms requiring it to exclusively feature MSNBC.com content on its own websites. That exasperation was exacerbated by the MSNBC cable channel's strategy to counter Fox News Channel's appeal to conservative viewers by tailoring its programming for an audience with a liberal viewpoint.

The strategy fed a perception that material from MSNBC's website was politically slanted, too.

"Being limited to MSNBC.com content was problematic to us because we couldn't have the multiple news sources and the multiple perspectives that our users were telling us that they wanted," said Bob Visse, general manager of MSN.com. . . .


Op-ed at RealClearMarkets: Austerity Works: It's Time to Give It a Try

This piece is with my son Sherwin. The graphs are pretty powerful. The piece starts this way:
Austerity or growth, is that the choice facing Americans and others around the world?

The debate never seems to abate. European Union finance ministers last week gave Spain permission to delay cutting some government spending and reducing its deficit, though many such as The Economist magazine fear that even the cuts that will be made go too far. A similar decision may soon have to be made for Greece. Even though the pro-bailout parties won the June Parliamentary election, they too are asking for a two-year delay in cutting spending and reducing their budget deficit.

The Obama administration has put increasing pressure on German Chancellor Angela Merkel to ease up on Germany's austerity prescription. President Obama continually touts more government spending as the cure, and derided Republican "let's cut more" spending strategy as the cause of Europe's economic problems.

Last month, German Finance Minister Wolfgang Schäuble was having none of it, telling Obama to fix the U.S. deficit before giving Europe advice: "Herr Obama should above all deal with the reduction of the American deficit. That is higher than that in the euro zone." . . .

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Social Security is $20.5 trillion in debt

Larry Kotlikoff has this warning in Sunday's New York Post:
Social Security’s trustees say the system needs only “modest changes.” In fact, the system is desperately broke. The proof is buried deep in the trustees’ own 2012 report in a complex table, numbered IV.B6. Table IV.B6 is a long-run balance sheet for Social Security. It shows that the system’s $88.9 trillion in liabilities exceed its $68.4 trillion in assets by $20.5 trillion. The $20.5 trillion fiscal gap separating Social Security’s liabilities and assets — its unfunded liability — is enormous; it is 1.4 times US gross domestic product and 34 times annual Social Security taxes. Because $20.5 trillion is equal to 31% of the projected taxes, the system is 31 percent underfunded. To pay all promised benefits would require immediately and permanently raising Social Security’s 12.4 percent payroll tax (split evenly between employer and employee) by 31%, or 3.9 percentage points. . . .
Will President Obama think differently about his temporary cut in Social Security taxes? Temporary tax cuts aren't particularly beneficial, and it would be better to cut income tax rates, but for about half the population their federal income tax rate is already zero.

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Washington, DC becomes known as the "recession-proof" city

Obama has certainly achieved a remarkable recovery in one US city, and it is probably safe to say that his policies of massive government spending did make a difference here. Taking money from the rest of the country and moving it to Washington, DC certainly did help the local economy, though at the expense of everyone else. From Fox News:
The City Hall corruption comes amid years of prosperity in which the nation’s capital became known as a nearly recession-proof city and a preferred market for such celebrity chefs and restaurateurs as Mike Issabella.

The changes mark a long road of success since the 1990s -- when the city, in part because of the crack epidemic, became known as “the murder capital.” Today the murder rate is at a roughly 40-year low. . . .

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Rasmussen: "16% Rate U.S. Economy As Good Or Excellent"

The Rasmussen results are available here.

Obama doubles down on anti-free trade rhetoric, won't let go of outsourcing jobs issue

Anti-business, anti-free trade rhetoric continues from Obama. One is either left with the notion that Obama doesn't understand corporate finance or he is dishonest. Given that even the Washington Post and FactCheck.org understands these points and has repeatedly pointed them out, one has to lean towards the latter. With charges of felony, you would think that the press would force the Obama campaign harder to back up their claims. From the Associated Press:
An unrelenting President Barack Obama jabbed at Mitt Romney's record with a private equity firm in an ad Saturday that aimed to keep his rival on the defensive just as the Republican challenger's campaign hoped to take advantage of poor economic data to gain an edge on the incumbent.

Obama met Romney's plea for an apology for the attacks with a mocking ad that charged that the firm shipped American jobs to China and Mexico, that Romney has personal wealth in investments in Switzerland, Bermuda and the Cayman Islands, and that as Massachusetts governor, he sent state jobs to India.

"Mitt Romney's not the solution. He's the problem," the ads says as Romney is heard singing "America the Beautiful." . . .

Saturday, in Clifton, Va., Obama again tried to tie Romney to the loss of American jobs, contrasting himself with his rival.

"I want to stop giving tax breaks to companies that are shipping jobs overseas," Obama [said] . . . . "Let's give those tax breaks that are investing right here in Virginia, right here in the United States of America, hiring American workers to make American products to sell around the world."

Romney's spokeswoman, Andrea Saul, fired back Saturday, accusing the president of being less than truthful about Romney's record.

"The American people deserve the truth and they certainly deserve better from their president," Saul said, from Boston. . . .

From Fox News:
Obama in an interview with WJLA-TV said Friday that Romney needs to better explain his tenure at Bain.

"Ultimately Mr. Romney, I think, is going to have to answer those questions, because if he aspires to being president, one of the things you learn is, you are ultimately responsible for the conduct of your operations," Obama said. "But again that's probably a question that he's going to have to answer and I think that's a legitimate part of the campaign." . . .

Anderson Cooper on CNN summarizes the Obama campaign strategy this way:
Basically the Obama campaign wants to paint Romney as the greedy, out of touch rich guy, whose com BC closed factories and killed jobs just to make a quick buck. . . .
David Gergen had this statement on CNN on July 10th. When asked by Anderson Cooper if Obama was opening himself up to the charge that he is attacking success, Gergen said (3:19 into the video):
Absolutely, and you know I happen to think that the attacks on Bain capital are well off base. I know something about that company. I know something about the people who work there. I have done some work with them in the past. I was on a board that sold out to Bain Capital. . . .
Here is another statement by Gergen on July 12th:
Having said that, again, what's surprising about this is the Obama campaign is now playing a very rough form of politics. And is that really what we were promised way back when? . . .
The AP story also has this note at the end of the piece:
Bain Capital said in a statement that Romney "remained the sole stockholder for a time while formal ownership was being documented and transferred to the group of partners who took over management of the firm in 1999."
CNN reports the accusations from Team Obama of felonious conduct are simply false. John King spoke to four executives at Bain, two of whom are “active” supporters of Barack Obama and three of whom are Democrats. All four said that Mitt Romney left Bain in a rush in 1999 so as to work full time on rescuing the 2002 Salt Lake City Olympics, and that he had nothing to do with Bain after he left in February 1999. So what about the attacks on Romney by Obama claiming that Romney was still running Bain in 2000 and 2001? Well, that claim is essential to the Obama campaign ad on outsourcing. From the Washington Post on July 12, 2012:
Just because you are listed as an owner of shares does not mean you have a managerial role. . . .

Fortune obtained the offering documents for a Bain Capital Fund circulating in June 2000, as well as a fund in 2001. None of the documents show that Romney was listed as being among the “key investment professionals.” As Fortune put it, “the contemporaneous Bain documents show that Romney was indeed telling the truth about no longer having operational input at Bain -- which, one should note, is different from no longer having legal or financial ties to the firm.” . . .

In the Massachusetts document, Romney is also listed as 100 percent owner of “Bain Capital Inc.” But there is less than meets the eye here. Bain Capital Inc. was the management firm, which was paid a management fee to run the funds and actually made virtually no profit, since it existed to pay salaries and expenses. After Romney formally left Bain in 2001, a new entity called “Bain Capital LLC” took over the management function.

By virtually all accounts, Romney was focused on the Olympics in the 1999-2002 period. Yet because Romney had not legally separated from Bain, his name is littered across Securities and Exchange Commission filings concerning Bain Capital deals during this period. The crazy quilt of private-equity structures, in some ways, makes his ownership appear even more ominous, as the filings list hundreds of thousands of shares controlled by Romney. . . .

Info from FactCheck.org is available here. Fortune's article is available here.
Moreover, unwinding a private equity firm's ownership structure is extremely complicated. The "firm" itself is largely a legal construct of convenience, since it doesn't pay salaries, make investments or do much of anything else. Instead, what matters are the individual funds.

In the case of Bain Capital's funds, it's reasonable to assume that Romney was considered a "key man," meaning that each fund's limited partners could have voted to end the fund's investment period -- or take over fund management themselves -- if a super-majority felt it prudent. But that didn't happen, and Bain saw no reason to expend massive administrative effort to amend existing funds. Instead, it asked Romney to sign documents when necessary, and made the managerial/ownership changes on new funds going forward. . . .

On July 13 the Washington Post had this:
The one thing new we saw in the Globe story was the assertion that “Romney’s state financial disclosure forms indicate he earned at least $100,000 as a Bain ‘executive’ in 2001 and 2002, separate from investment earnings.” But then we realized we had already reviewed those documents in January. The 2001 form describes him as a “former executive” (see page 1 of form A-5) — the campaign says this was retirement pay — but the 2002 form says “executive.” So either you believe he suddenly rejoined the firm, after leaving it, or someone made a typo.

Romney’s sudden departure from Bain had left the partnership in flux, in fact almost breaking up the firm, and a final resolution was not reached until he ended his Olympic sojourn and decided to run for governor. At that point, he signed retirement papers that set his departure date as February 1999, the month he left for the Olympics.

Fortune magazine on Thursday reported that it had obtained the offering documents for Bain Capital funds circulating in 2000 and 2001. None of the documents show that Romney was listed as being among the “key investment professionals” who would manage the money. As Fortune put it, “the contemporaneous Bain documents show that Romney was indeed telling the truth about no longer having operational input at Bain — which, one should note, is different from no longer having legal or financial ties to the firm.”

Still, if the Obama campaign wants to put its money where its mouth is, it should immediately lodge a complaint about Romney’s financial disclosure form, filed just last year, rather than try to mislead people about potential violations in relatively unimportant SEC documents. . . .

Obama's campaign has spent $100 million on attack ads in swing states.
President Barack Obama's campaign has spent nearly $100 million on television commercials in selected battleground states so far, unleashing a sustained early barrage designed to create lasting, negative impressions of Republican Mitt Romney before he and his allies ramp up for the fall. In a reflection of campaign strategy, more than one-fifth of the president's ad spending has been in Ohio, a state that looms as a must-win for Romney more so than for Obama. Florida ranks second and Virginia third, according to organizations that track media spending and other sources. About three-quarters of the president's advertising has been critical of Romney as Obama struggles to turn the election into a choice between him and his rival, rather than a referendum on his own handling of the weak economy. Obama's television ad spending dwarfs the Romney campaign's so far by a margin of 4-1 or more. . . .

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Zimmerman asks for new judge, it is about time

I have long been concerned that Circuit Judge Kenneth Lester, the judge presiding over Zimmerman's case, has been biased against Zimmerman and has been doing what he can to poison the water. Bond is supposed to be set, not on the basis of an individual's wealth, but on whether they are going to flee the jurisdiction of the court. As far as I can tell, Lester provided no evidence that Zimmerman, who has voluntarily shown up at court multiple times, was preparing to flee the court's jurisdiction.
The ex-neighborhood watch volunteer charged with killing Trayvon Martin asked for a new judge Friday, claiming the current one is biased because he said George Zimmerman had "flaunted the system."

Zimmerman said in a motion he feared he would be unable to get a fair "stand your ground" hearing or a fair trial with Circuit Judge Kenneth Lester presiding over the case. Lester was appointed in April after Zimmerman claimed a potential conflict of interest with the original judge.

Earlier this month, Lester said in an order granting Zimmerman bond that Zimmerman had "under any definition ... flaunted the system" by failing to disclose at an April bond hearing that he had raised $135,000 from donations for his legal defense.

Zimmerman's wife, Shellie, testified at the bond hearing that they had limited resources since she was a student and Zimmerman wasn't working. Zimmerman said nothing to correct his wife's testimony.

Lester at the time allowed Zimmerman to be released on a $150,000 bond. The judge revoked the bond after prosecutors presented jailhouse recordings of Zimmerman instructing his wife on how to transfer funds raised from a website to different bank accounts.

Zimmerman returned to jail in June but left last week after Lester granted him a $1 million bond, saying state law compelled him to grant bail. In the second bond order, the judge said it appeared Zimmerman was preparing to flee to avoid prosecution based on the money he had raised and his possession of second passport that he had failed to disclose to the court.

Zimmerman argued that showed bias.

"The court makes sweeping generalizations about Mr. Zimmerman based on limited information and disregards the evidence that contradicts those conclusions," Zimmerman said in the motion.

A spokeswoman for the state attorney's office said in an email Friday that prosecutors object to the defense motion and will file a formal response early next week. . . .


Massive political expenditures by Public Teacher Unions

My own guess is that education vouchers would not only vastly improve the quality of education (improving it the most for those who are stuck in the worst schools, namely where the poor, minorities live), but it would also reduce unionization of teachers and reduce the political pressure that helps hurt the quality of education for those at the bottom of the economic ladder. This discussion explains why you would be missing much of the public unions' political activity if you only looked at their donations to politicians. From the WSJ:
What do the American Ireland Fund, the Rev. Al Sharpton and the Gay, Lesbian and Straight Education Network have in common?

All have received some of the more than $330 million that America's two largest teachers unions spent in the past five years on outside causes, political campaigns, lobbying and issue education.

The contributions—totaling more than $200 million from the National Education Association and more than $130 million from the American Federation of Teachers—were disclosed in annual reports that unions file with the Labor Department detailing their spending on political activities and advocacy work, as well as separate political-action-committee filings. . . .

Members' dues underwrite much of the unions' "political activities," but not donations to candidates, parties and PACs. Those are funded by voluntary contributions. The NEA, the largest teachers union, with about 3.2 million members, also has a super PAC, which can raise unlimited funds. That super PAC had more than $3 million in cash on hand the end of June. . . .

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President Obama: "If you’ve got a business -- you didn’t build that. Somebody else made that happen."

Transcript from a talk in Roanoke, Virginia on July 13, 2012:
So I’m going to reduce the deficit in a balanced way. We’ve already made a trillion dollars’ worth of cuts. We can make another trillion or trillion-two, and what we then do is ask for the wealthy to pay a little bit more. (Applause.) And, by the way, we’ve tried that before -- a guy named Bill Clinton did it. We created 23 million new jobs, turned a deficit into a surplus, and rich people did just fine. We created a lot of millionaires.
There are a lot of wealthy, successful Americans who agree with me -- because they want to give something back. They know they didn’t -- look, if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something -- there are a whole bunch of hardworking people out there. (Applause.)
If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business -- you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet. . . .
Someone should really educate Obama about the history of the United States. A lot of states in the US didn't have public education until the 1870s, and yet they had literacy rates around 96 percent. Public universities got started well after private universities did, and so the vast majority of our colleges were originally private. That even the subways in NYC were originally built and operated privately until government price controls (a 5 cent maximum fare) and "capturing" of existing private lines. You had private highways in the US up until 1916.

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"Mechanics of President Obama's Proposal to Raise Taxes on the 'Rich'"

TaxProf has a nice collection of links on Obama's tax the rich proposals available here.

Possibly one of the more interesting points that he links to is from the Tax Foundation:

The president and his economic team tend to dismiss the impact that such as tax hike will have on business activity because only 2 or 3 percent of taxpayers with business income are taxed at the highest rates.

While this statistic is true, the more economically meaningful statistic is how much overall business income will be taxed at the highest rates. For example, Treasury data for 2007 indicates that 50 percent of all pass-through income is earned by taxpayers subject to the top two tax brackets of 33 percent and 35 percent. . . .

No matter how you cut the data, the fact is that hiking the top individual income tax rates would amount to one of the largest single tax increases on individually owned businesses in modern history and a threat to the long-term economic health of the nation.

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