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Taxpayers Beware of Stem Cell Head Fake


Tuesday February 7th, 2017   •   Posted by K. Lloyd Billingsley at 5:17am PST   •  

The California Institute for Regenerative Medicine (CIRM) is in the news again, but this time it’s not slick ad copy masquerading as journalism, with the goal of shaking down taxpayers for more money. This time its Joe Rodota, former cabinet secretary to Gov. Pete Wilson, and Bernard Munos of the Innothink Center for Research in Biomedical Innovation, in a Sacramento Bee commentary headlined “To fulfill stem cell agency’s promise, consider winding it down.” The case for that is rather strong.

In twelve years, CIRM has failed to provide any of the promised life-saving cures and therapies. As Rodota and Munos recall, the Proposition 71 initiative that created CIRM also promised royalties that “will generate thousands of new jobs and millions in new state revenues.” CIRM is a bust on that too, and as the authors explain, the state agency “recently failed to raise just $75 million in new funds from private investors.” So no surprise that CIRM wants more money from taxpayers.

CIRM vice chair Art Torres, a former state Senator and Democratic Party boss, “recently floated a $5 billion trial balloon.” Torres is the non-scientist CIRM hired when others were willing to serve for nothing, and CIRM bosses immediately tripled Torres’ salary. So while CIRM fails to deliver cures, therapies and royalties, it succeeds as a sinecure for washed-up politicians and a conduit to redistribute money to favored insiders. Even so, Rodota and Munos don’t reject Torres’ $5 billion bond proposal.

They offer a laundry list of how the $5 billion could be used, under the auspices of the University of California. Only California companies with “potential to greatly impact patient health” would be eligible. The companies would give UC shares of their stock, which the UC would sell or leverage “as it sees fit.” Rodota and Munos say the bond would “build an army of new companies working on cures,” and “provide funding for hiring more UC professors or reducing the out-of-pocket cost of higher education.” No word about the odds of another $5 billion producing any life-saving cures when $3 billion failed to do so.

Taxpayers should consider the Rodota-Munos scheme a replay of Proposition 71’s false promises. Better to burst the $5 billion bond balloon, shut down CIRM completely, and let private citizens invest in medical research as they see fit.

The Statist Dynamic Rolls On


Monday February 6th, 2017   •   Posted by K. Lloyd Billingsley at 9:17am PST   •  

 

Before the 2016 election, Republicans were telling anybody who will listen that they would repeal and replace the Affordable Care Act, also known as Obamacare. After the election, with control of the House, Senate and White House, the Republicans want to “fix” and “repair,” the ACA. This betrays a familiar dynamic of the bipartisan ruling class.

Liberal and left-wing Democrats take the lead in the expansion of government, as in the FDR’s New Deal and Lyndon Johnson’s Great Society, with its vaunted “War on Poverty” that proved particularly destructive. Republicans have been in a position to scale back or eliminate these statist programs but declined to do so. Instead they do their best to “fix” or “repair” them, to “make them work,” imagining that this shows that they have “grown” or become more compassionate. For all the talk of accountability, small government, fiscal responsibility and so forth, the Republicans effectively function as tax collectors of the welfare state, completely comfortable with ever-expanding government. This dynamic is much more serious with the Affordable Care Act.

Not only is it unaffordable, but as health reporter Emily Bazar has shown, Obamacare promotes “widespread consumer misery.” Many victims wonder if Obamacare was just laying the groundwork for what Hillary Clinton called the “public option” or “single payer.” Both mean government monopoly health care, what some politicians persist in calling “socialized medicine.”

Despite the claim of the 44th president of the United States, you could not keep your health plan under the ACA, perhaps the most massive “taking” in U.S. history. Under the ACA, you don’t get the care you believe best meets your needs. You get only what the government wants you to have, but that is not how statists advertise it. As the then-president put back in 2013, health care is “a right.” This is highly misleading because as John Graham has noted, there is no right to health care even in Canada’s government monopoly system.

The ACA was a statist coup disguised in a white coat. Attempts to “repair” it amount to collaboration with that coup, and betray utter contempt for the people. Truth is, even the status quo ante would be better than the “widespread consumer misery” of the ACA.

The Federal Government’s Big Bet on Student Loans Goes Bad


Monday February 6th, 2017   •   Posted by Craig Eyermann at 6:36am PST   •  

bored_student_ML With the flurry of executive actions that President Trump has taken since coming into office on January 20, 2016 that has dominated the nation’s news coverage, surprisingly little attention has been paid to the deteriorating condition of the U.S. government’s student loan portfolio under President Obama’s administration, which became news in the days just before the inauguration. The Wall Street Journal reports on the Education Department’s student loan reporting scandal:

Many more students have defaulted on or failed to pay back their college loans than the U.S. government previously believed.

Last Friday, the Education Department released a memo saying that it had overstated student loan repayment rates at most colleges and trade schools and provided updated numbers.

When The Wall Street Journal analyzed the new numbers, the data revealed that the Department previously had inflated the repayment rates for 99.8% of all colleges and trade schools in the country.

The new analysis shows that at more than 1,000 colleges and trade schools, or about a quarter of the total, at least half the students had defaulted or failed to pay down at least $1 on their debt within seven years.

Worse, the WSJ‘s editors have suggested that rather than having been the result of a computer coding error, the previous numbers on student loan defaults at thousands of colleges and trade schools may have been cooked to support President Obama’s political agenda. The National Association of Student Financial Aid Adminstrators excerpts the following portions of the WSJ‘s editorial analysis:

In early January the department disclosed that it had discovered a ‘coding error’ that incorrectly computed College Scorecard repayment rates—that is, the percentage of borrowers who haven’t defaulted and have repaid at least one dollar of their loan principal. The department says the error ‘led to the undercounting of some borrowers who had not reduced their loan balances by at least one dollar.’

The department played down the mistake, but the new average three-year repayment rate has declined by 20 percentage points to 46%. This is huge. It means that fewer than half of undergraduate borrowers at the average college are paying down their debt.

... The other scandal is that the Obama Administration used the inflated Scorecard repayment data as a pretext to single out for-profit colleges for punitive regulation. The punishment was tucked into a rule finalized in October allowing borrowers who claim their college defrauded them to discharge their debt. It requires for-profits in which 50% or fewer borrowers are paying down their principal to post the equivalent of a surgeon general’s warning in all promotional materials.

... This combination of cynicism and incompetence is what made the Obama Administration’s regulatory machine so destructive. One of the biggest messes it leaves behind is the government takeover of student loans that is likely to saddle taxpayers with hundreds of billions in losses. The Trump Administration now has to begin the cleanup job.

The Education Department’s corrected numbers confirm that the problem of student loan defaults and delinquencies is not confined to for-profit institutions, but also exists at similar levels among both non-profit and public institutions.

But the problems don’t stop there. Since President Obama greatly increased the role of the federal government in directly issuing student loans, borrowing nearly one trillion dollars to loan out to students at colleges and trade schools over the last 8 years, that 54% of student loan borrowers are now either defaulting or are delinquent in making payments on their loans means that the U.S. government isn’t getting anywhere near the revenue that it needs to sustain this portion of the national debt.

cumulative_total_borrowed_by_us_government_to_fund_federal_direct_student_loans_jan1998_nov2016

The options that the U.S. government has to deal with the increasingly negative outcomes from this situation are limited. With such inadequate revenues from student loan payments coming in to cover the cost of servicing their portion of the national debt, the U.S. government must either cut spending, increase taxes, or borrow even more money than it was planning to roll over the debt and compensate for that unrealized revenue.

Getting the U.S. government into the student loan business in such a big way was supposed to improve its fiscal situation, eliminating the need for politicians to risk their seats in Washington D.C. by having to make such potentially unpopular choices. Sadly, President Obama’s student loan fiasco would appear to have only made the need to make those hard choices more unavoidable.

Accountability Begins to Arrive at the VA


Thursday February 2nd, 2017   •   Posted by Craig Eyermann at 6:40am PST   •  

public_corruption_6-source-fbi After years of absence, some semblance of accountability may have finally begun to return to the scandal-plagued Department of Veterans Affairs with the reported firings of two of the VA’s most ethically challenged employees.

Luke Rosiak of the Daily Caller News Foundation reports on the Inauguration Day firing of the VA’s most notorious bureaucrats.

Days into Donald Trump’s administration, heads are finally beginning to roll at the Department of Veterans Affairs. Two notoriously corrupt employees in Puerto Rico were fired this week, indicating that more may be on the way.

One is the hospital’s CEO, DeWayne Hamlin, who offered an employee $305,000 to quit after she played a role in exposing his drug arrest.

While Hamlin’s firing is long-delayed good news, perhaps the most disturbing aspect of this story involves Bob McDonald, who was appointed by President Obama to run the VA after the former head of the department, Eric Shinseki, was compelled to resign in disgrace after the exposure of the VA’s secret wait list health care rationing scandal. McDonald appears to have tolerated the institutionalization of corruption at the VA.

Under former Secretary of Veterans Affairs Bob McDonald, the agency ignored years of evidence about shoddy work ethic, theft and whistleblower retaliation. The VA finally began a months-long investigative proceeding last year, after an outside agency, the Office of Special Counsel, prodded VA leadership.

Even as it knew of the problems, McDonald tapped Hamlin to mold other VA employees in his image, having him serve as a “coach” at the Leaders Shaping Leaders training session in September. McDonald said the training is the number-one way to shape the agency’s culture.

The other long-delayed good news at the VA is the termination of Elizabeth Rivera, who had been allowed to return to her job in the VA’s security office after having missed work for several days after she was arrested and held in jail for her role in an armed robbery.

After TheDCNF broke the story, administrators told Congress it wasn’t true and Elizabeth Rivera Rivera had been fired, before backtracking and claiming that it was impossible to fire employees for off-duty crimes.

Outside lawyers ridiculed this explanation, and spokesmen at the time would not say why she wasn’t simply fired for missing work because she was in jail.

She was suddenly fired Tuesday for misconduct, including being absent without leave and failing to disclose other arrests on her job application, which her background check apparently did not catch.

Under President Obama’s administration, numerous government agencies became characterized by the toleration of the misconduct of badly behaving employees appointed by the president. The firings for grievous misconduct that have begun at the VA under the new Trump administration are a welcome first step toward reforming the bureaucracies that became far too tolerant of such corrosive behavior.

Covered California Misery Still Getting Worse


Tuesday January 31st, 2017   •   Posted by K. Lloyd Billingsley at 9:03am PST   •  

cadoctorSince the dawn of Covered California, the state’s wholly owned subsidiary of the federal Affordable Care Act, health journalist Emily Bazar has tracked the dysfunctions. The skyrocketing premiums, cancellations and “glitches” of the $454 million computer system were responsible for “widespread consumer misery,” not exactly a ringing endorsement. Covered California also dropped 2,000 pregnant women from their plans, causing them to lose their prenatal appointments. More recently, victims of Covered California protested a massive “bait and switch” trick that makes glowing promises then sticks them with expensive, inferior coverage. On the other hand, victims who think Covered California can’t get any worse are sadly mistaken.

In her most recent column, Emily Bazar charts how Covered California slammed victims by nearly doubling their premiums and depriving them of their tax credits. Covered California boss Peter Lee cited “systems issues that had never occurred before,” an allusion to the $454 million computer system that Covered California blames for everything. Lee helpfully added that “real people” have been affected. One of them is Mike Connelly, 62, of Granite Bay, who like others was mistakenly kicked over to Medi-Cal. “After they have you,” Connelly told Bazar, “they won’t let you go,” and that is not a good thing. Medi-Cal service is shaky and as Bazar noted, they “demand posthumous payback from enrollees 55 and older for a broad range of medical costs,” even if they didn’t use any medical services. All victims of the ACA, meanwhile, should understand that actual health concerns are secondary.

The Affordable Care Act is perhaps the greatest “taking” in U.S. history. It takes away the plans the people like and gives them only what the government wants them to have. The ACA increases the size and power of government and lays the groundwork for government monopoly health care, the “public option.” The people ought to beware because once that system has you, it won’t let you go. Even if you don’t like the plan, you have to keep it.

Subsidiarity Waste Not Sexy for Taxpayers


Monday January 30th, 2017   •   Posted by K. Lloyd Billingsley at 9:42am PST   •  

wasteblackboardThis just in: Sacramento City Unified School District has actually fired an administrator, but as Loretta Kalb notes in the Sacramento Bee, this rare dismissal is not an example of accountability. The administrator, Felisberto Cedros, is embroiled in a sexual harassment case against African American school worker Delecia Sydnor, whom he had threatened to “whip” if she reported him. That was in 2014 and the district paid $175,000 to settle Sydnor’s lawsuit, but in the interim “Cedros has received full pay of between $110,000 and $139,000 in newly created jobs in the district office.”

In the summer of 2015 Cedros was placed on paid administrative leave, then moved to the district office and “designated principal on special projects,” with the same $139,303 salary. In July 2016, the district demoted Cedros to “assistant principal on special assignment” at a salary of $109,886. As a local union official told Kalb, the district created “a no-show job for a proven sexual harasser.” And the district paid the settlement, not Cedros himself. All those taxpayer dollars won’t be used to teach kids, and more of that is going on down in Los Angeles.

As the Bee’s Dan Walters reports, the massive Los Angeles Unified School District has been improperly spending nearly $500 million designated for “English learner” students. That’s what the state Department of Education wanted, but state superintendent Tom Torlakson (D-CTA) allowed the district to spend the money on higher salaries for teachers. When advocacy groups complained, the LAUSD conducted a “realignment exercise” by categorizing previous expenditures as qualifying for the Local Control Funding Formula grants, claiming that this turned a potential $1.5 billion deficit into a surplus of $280 million in 2017-18 and a $252 million surplus in 1018-19.

Longtime observer Walters is not fooled: “Nothing changed, in other words, except some computer codes. And L.A. Unified still has an immense achievement gap” This is what governor Jerry Brown (D-CTA) calls “subsidiarity,” but taxpayers might view it as a payoff to teacher unions for helping with his political campaign. That’s what Brown had in mind when he authorized government employee unions in his first go-round as governor.

The New 10-Year Forecast for the Public Debt


Monday January 30th, 2017   •   Posted by Craig Eyermann at 6:32am PST   •  

Every January, the Congressional Budget Office releases its Budget and Economic Forecast for the next 10 years, which in January 2017 covers the period from 2017 through 2027.

The following chart shows what the CBO foresees for the portion of the U.S. government’s total public debt outstanding that is held by the public, which includes government-issued liabilities held by the Federal Reserve, U.S. banks, insurance companies, investment and pension funds, corporations, individuals and also foreign nations and other institutions. What it doesn’t include is the portion of the national debt that is held by U.S. government entities, which is dominated by federal liabilities issued to the trust funds for Social Security and the pension funds for U.S. military and civilian federal government employees.

cbo_budget_economic_outlook_2017_to_2027_figure_1

The CBO has also provided the following chart that looks at the history of the public portion of the U.S. national debt from 1790 through the present, along with what it currently projects through 2050.

cbo_budget_economic_outlook_2017_to_2027_figure_1_8

Here’s what the CBO had to say about the growth of the public debt projected for the 10 years through 2027 in the slideshow that accompanied this year’s budget and economic outlook.

From 2017 to 2027, federal debt held by the public is projected to rise from $15 trillion to $25 trillions – that is, from 77 percent of GDP to 89% of GDP.

That percentage in 2027 would be the highest since 1947 and more than twice the average over the past five decades.

To put the federal budget on a sustainable path for the long term, lawmakers would have to make major changes to tax policies, spending policies, or both –

  • By reducing spending for large benefit programs,
  • By letting revenues rise more than they would under current law, or
  • By adopting some combination of those approaches.

It would be nice to know what path the U.S. government will take under President Trump, who has so far been all over the map as to the direction that his administration will take with respect to the country’s fiscal and tax policies. No matter what however, the CBO’s 10-year budget and economic outlook confirms that path that President Obama has left behind as his legacy in office is not sustainable, so the only thing that is guaranteed is that big changes are coming.

The 2017 Wastebook Is Out!


Saturday January 28th, 2017   •   Posted by Craig Eyermann at 10:47am PST   •  

wastebook-2017 In his second year after having taken over production of the annual Wastebook from former Senator Tom Coburn, Senator Jeff Flake has highlighted 50 ways in which the U.S. federal government’s bureaucrats have squandered taxpayer dollars.

Here are five items that stood out from the pack, which we selected just because they involved animals.

  • The National Science Foundation (NSF) handed out three grants totaling more than $1.3 million, which went in part to research the physical mechanisms by which cats and dogs drink water. The good news is that the researchers appear to have finally solved the national mystery of why dogs would seem to be such sloppy drinkers, so at least we have something to show for the grants.
  • The U.S. Department of Commerce has handed the Massachusetts Digital Games Institute (MassDiGI) nearly $2.5 million, through the Economic Development Administration, “to support its ongoing efforts to promote entrepreneurship, academic cooperation and economic development across the state’s video and digital games ecosystem.” MassDiGI does this by hosting 1 to 2 day camps for students to develop new video games, which include titles like Cat Tsunami, in which players “must navigate a cat on a surfboard across waves of other cats to reach a Black Friday catnip sale.”
  • The National Institute of Health (NIH) provided grants totaling $817,000 to the State University of New York at Buffalo, which enabled researchers to collect and compare DNA samples obtained from the drool of monkeys, gorillas, orangutans, macaques and humans in order to “gain insights into evolution of saliva.
  • The U.S. Department of Agriculture has spent $118,000 at its National Wildlife Research Center in Ohio, to determine how fast a vehicle can travel, without hitting a bird standing on the road, before it can fly away to safety. In one set of experiments, raccoon carcasses were weighted down to the middle of a road to both attract turkey vultures and to keep them from moving off to the side of a road as they fed on it, so the researchers could attempt to ram them with a 2003 Ford F250 pickup truck.
  • The National Institute on Drug Abuse has spent over $3.4 million at Northeastern University to study aggression and anxiety in rodents. The researchers have been doing that by pitting juvenile male Syrian hamsters in “cage matches” against each other in timed rounds where the hamsters would be awarded points for biting, pursuing, and lunging at the other animal in the videotaped events. Some of the matches have involved combat between hamsters that had been injected with performance enhancing steroids.

We saved the best for last: a $1.5 million federally funded research project that involved putting fish on a treadmill!

Board of Equalization Bilks Taxpayers


Friday January 27th, 2017   •   Posted by K. Lloyd Billingsley at 4:26am PST   •  

moneyonscaleCalifornia maintains a state Board of Equalization that, contrary to its name, does not equalize anything. Board of Taxation would more accurate because the state body collects taxes, and as Adam Ashton notes in the Sacramento Bee, board members use some of the tax money they collect to promote themselves in their districts. In the next six months, the four elected BOE members will spend $800,000 on “so-called education and outreach programs.” Previously there was no limit on how much they could spend on such programs “developed using taxpayer funds” and last year the BOE spent $1.6 million taxpayer dollars in that manner. Last year, state Controller Betty Yee said she had done it, even though “I think it’s not appropriate.” It isn’t and by Ashton’s count, six audits, including one from the state Department of Finance, are “investigating whether elected members enhance their direct staffs by tapping nonpolitical public employees for pet projects.”

Ashton has also observed that the BOE has been dishing out raises as high as 10 percent to high-level management without performance reviews. Cynthia Bridges, BOE Executive Director, handed out the raises. Bridges was ousted last March but “subsequently hired to join the BOE staff of board member Jerome Horton.” What a cozy world, but this hardly exhausts BOE problems.

As we noted, the BOE’s Sacramento headquarters is known as a “24-story money pit,” with a history of leaks, mold, burst pipes, falling glass, a bat infestation and traces of toxic substances. Over two decades bureaucratic bosses spent some $60 million on repairs. That would not have been necessary if the building had been properly constructed. It wasn’t, because politicians were looking the other way, and they allowed the statute of limitations on defective construction to run out in 2002. As the money pit grows deeper and wider, BOE members are still able to spend public funds to promote themselves and waste taxpayer dollars on unmerited raises for already overpaid BOE bosses.

Obamacare Bait-and-Switch Bludgeons Californians


Thursday January 26th, 2017   •   Posted by K. Lloyd Billingsley at 8:38am PST   •  

baitswitch“Thousands of people enrolled in Covered California face higher-than-expected bills from their insurers because the exchange sent incorrect tax credit information to the health plans.” That’s the latest from health reporter Emily Bazar, now with Kaiser Health News. As she explains, Covered California, the state’s Obamacare system, send the wrong tax information for 25,000 policy holders, meaning “higher premiums than consumers initially anticipated.” Beth Freeman of San Bruno, for example, is paying $330 a month more than she expected. Covered California mouthpiece Lizelda Lopez told Bazar that most of the victims will “owe more out of pocket than they originally thought.” Freeman was told it was all because of a “computer data error” and there was nothing Covered California could do about it. She called it an example of “bait-and-switch,” but Emily Bazar has already confirmed that it is much worse.

As we noted, last year Covered California dropped 2,000 pregnant women from their plans, and they lost their established doctors and missed prenatal appointments. Bazar had previously charged that Covered California was responsible for “widespread consumer misery,” raising rates 13.2 percent this year, booting people off plans, making it more difficult to cancel policies when people go on Medicare, and other woes. Covered California blamed the $454 million computer system, but had no trouble dishing out $184 million in contracts, without competitive bidding, to firms and people with ties to Covered California bosses. When it comes to prodigious waste, the system functioned just fine. If Californians didn’t like their plan, they had to keep it, and the “bait-and-switch” is much worse than Beth Freeman imagines.

The widespread consumer misery is inherent in the system. Democrat Hillary Clinton supported Obamacare but wanted a switch to a “public option,” and a “single payer,” system. That means government monopoly health care, with Big Brother in charge of all.

On the other hand, Clinton lost the election. Embattled individuals like Beth Freeman, and the 2,000 pregnant women booted off their plan, make a strong case that Obamacare should be scrapped.

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