CTA Rides Cost Taxpayers $6-$9 Per Rider

CTA: Rides cost $7-$9.90, but agency makes about 98 cents for each -- chicagotribune.com

Above is the headline from the Tribune. My headline is the taxpayer cost to subsidize the CTA riders. While there is a regional taxing authority for the CTA, that money doesn't just come from there. As we've seen repeatedly over the last few years, Springfield is kicking more and more money each year into the CTA coffers to keep drastic route cuts and fare increases from happening.

That means if you live downstate and the state highway in your area is full of potholes, it's possible the money to fix it is instead being used to subsidize the CTA service.

Where does all the money to CTA go? According to the Tribune article and CTA 65% goes to wages. The white collar workers at CTA are getting ready for their fourth consectutive year without a pay raise, and will get 18 unpaid furlough days this year; again. The union workers on the other hand gets 3-4% per year in raises, and refuses any furlough days.

In fairness, the union workers in their last contract did have to increase their own pension contributions and insurance payments. My guess is it comes no where close to what their white collar co-workers are enduring. It should.

If the union cries poverty, please laugh heartily at them. The average wage for a bus driver come out to $57,000 a year before benefits, $55,000 for a train operator, don't forget, it goes up next year by 3.5 percent.

Governor Quinn just got CTA enough cash to forestall some serious fare hikes over the next couple of years, but not enough to stop the service cuts planned for January. Maybe some layoffs are necessary for the CTA's union members to realize that they are part of the problem and need to help with the solution.

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Unemployment Smoke and Mirrors

I got my laugh this week over the President crowing about the unemployment rate dropping to 10% for November. First, he sold us a $787 billion 'economic stimulus package' that said unemployment wouldn't go over 8% if we spent that money.

The second reason I laugh is that November and December unemployment numbers are generally lower than any two months of the year, as retailers hire seasonal help for their holiday sales.

If you want a truer reflection of unemployment, check the numbers released the first week of February, when the seasonal workers are gone. My guess is you'll see 10.5% for January.

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Hypocrisy

Jonah Goldberg of National Review Online has an excellent editorial in today's Chicago Tribune on the intellectual hypocrisy of the folks currently in charge.

His idea of the intellectual hypocrisy of the government is based on a JP Morgan chart, which shows the private sector experience of the President's appointees.

As you can see from the chart, Obama's cabinet doesn't fall a little short of others in "real world" experience, but about 2/3 short of previous least experienced cabinet (Kennedy).

His cabinet isn't made up of folks who've run things, and done things that they had to worry about the cost of. It's made up of people who've never managed an actual enterprise.

Goldberg's point is that folks who've never run everything are proposing to run basically everything from your health care to auto emissions to banks and auto makers.

Their record, by the way, isn't so good so far. They took over banks with TARP, and set rules for how they can pay people, and now the banks can't find experienced bankers to run them under the new rules.

And, since the banks are finding ways to meet the TARP repayment requirements early, and get out from under the government, the Fed now wants to change to rules so it can take over healthy banks it thinks might be a threat to financial stability. That change is sure to make it easier to get folks to work in the industry.

They took over GM, fired the old CEO, ousted his replacement, and now worry about finding anyone else who wants to run Government Motors. My guess is they won't find a senior level executive with experience in that industry to take the job.

I'll refer our friends in D.C. back to a book I read some 20 years ago, that explained exactly why the government was bad at running things. Command of the Seas by John Lehman; Regan's Secretary of the Navy; who wanted to get the government out of the shipyard business because they did a poor job of running them. Government regulations on compensation made it impossible to get anyone above the mid-manager level in the civilian sector to take on the job of managing any of the Navy's shipyards. Lack of experience led regularly to decisions that caused huge cost overruns, poor performance, and a lack of competitiveness with the civilian sector on nearly every job the government managed yards performed.

Lehman found those problems not only at the yards, but in every part of the Department of the Navy that was run by career civil servants. He also found the one thing that could stop any government reform from working as designed; Congress. As hard as anyone would try to fix something, someone in one chamber or the other would find it a threat to a constituency and get a rider passed in a bill that undid the reform.

Anyone that thinks health care reform or cap and trade is going to work any different doesn't understand the culture of government, and the hypocrisy of their intellect.

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Why Was Hasan In the Army?

It's becoming more and more evident that Major Hasan, the man responsible for the Fort Hood shooting last week was a known muslim extremist. The question then becomes why was he still in the military?

The question is two fold. First, why didn't he, if he was so convinced the wars in Iraq and Afghanistan were so wrong; resign his commission. He obviously had some courage in convictions to kill all those folks, but not enough conviction to resign his commission (and paycheck) as a protest.

The second is why didn't the military do something to get rid of him. That's actually pretty easy, it's called the press. Without every duck in a row, had the military tried to remove him from the service all he had to do was hire a decent lawyer and start a media battle.

Let me give you an example. The military life insurance (SGLI) has a suicide clause in it that says you receive no insurance money for suicide. Yet in 21 years in the military I saw quite a large number of them due to some of the jobs I had. In every case the family was paid the full amount of the insurance. When I asked the Captain I worked for why he said the cost of fighting the legal battle over the money was much more than just paying the insurance. A destitute wife and three kids will always win over the law infront of a jury, plus the bad publicity cost in recruiting.

In Hasan's case we have a lot of apologists in America for Muslim extremists who would be more than happy to rally around a guy getting tossed from the military for his religious beliefs. What we lack is moderate Muslims with the courage of their convictions to stand up and say "That guy is a whack job and should be tossed from the military".

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No Hope or Change for Unemployed

So the Labor Department just released the unemployment numbers. The rate is now up to 10.2%, it's highest in more than a quarter century.

Back in 2003 and early 2004, moving towards the election season, we were bombarded with blasts at then President George W. about his "jobless recovery" and the 6 percent unemployment rate.

So how will the left spin their recovery that isn't just jobless, but actually shedding jobs? Remember the good old days, when Nancy Pelosi would blast Bush on jobs creation, complaining when only 80 or 90,000 jobs were created in a month? What will she say to President Obama who's touting other news that says we are in a recovery, when 190,000 jobs were lost!

Does anyone remember this graph, that was used to justify the 'stimulus' package earlier this year.

According to the Chart, unemployment should be about around 7.8% since we passed the stimulus. Instead, the number is literally off the top of the chart.

The flip side to unemployment is that our productivity numbers had their biggest jump in nearly a decade. It's normal to see productivity going up before jobs are added, but not at a 9% pace. In fact, it's up enough that people should really be worried about why the jobs aren't showing up.

Why aren't they? Fear in the business sector is the easiest answer. There is currently tons of new regulation on business waiting to be passed in Congress. Business' won't expand until they have a better feel on where things like health care reform and cap and trade are headed.

Here's an example. Say you employ 95 people, and your productivity for them is up 9.5% last quarter. You probably have enough work to add between 5 and 10 new workers. But if the House version of health care reform passes, that would put you at the magic 100 number. Now in 2010 your taxes or benefits package costs will increase greatly, you aren't a "small business" anymore.

So do you hire the workers you need, and hope that you increase profits enough to cover the expenses of not only the workers, but the new health care bill, or do you hold off and see what happens in DC?

If you have 100 workers right now, and know that the House is getting ready for a ramrod vote on Saturday, do you keep what you've got, or get rid of a few folks to get back under the onerous 100?

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This Is Not A Referendum!

Do as the MSM and White House are doing, and say to yourself over and over "the election results in Virginia and New Jersey are not a referendum on Barack Obama or the Democrats". Just keep saying it, at some point you'll believe it, they do.

The truth is Barack Obama & Company spent a lot of time in New Jersey trying to save John Corzine from his record. Tim Kaine, the head of the DNC is the outgoing governor of Virginia, and the GOP took his seat, and a few others in the state. The NY Times and Washington Post will undoubtedly repeat the party line that these aren't referendums on the Democrats, they are.

The party line is that the "Obama coalition" didn't show up to vote in those elections. The young, and people of color chose to stay home, even though Obama showed up five times in New Jersey to beg to come out and vote and make a difference. That is somewhat of a referendum on President Obama's staying power. He's not as new and cool as he was last year.

Add to that fact that the ballots were pretty much stuffed with white guys who are career politicians, and you have a recipe for not getting out the youth vote, or the minority vote. This is something that the Democrats will have to keep in mind for the 2010 mid-term elections.

New York's 23rd Congressional District did go to the Democrats. I'm not sure that is a true indicator of anything though, since the "GOP" candidate dropped out Saturday and endorsed the Democratic candidate, leaving Doug Hoffman of the Conservative Party out on his own. The State GOP can blame themselves for that loss, though. They put up a candidate as a Republican who's farther left than many Democrats, and wonder why she didn't poll well and couldn't raise money.

Another interesting tidbit, Maine it was thought, would be one of the first states to pass a Gay Marriage ballot referendum, and instead it wend down. This didn't surprise me. Maine has an independent streak as a state, but generally runs a little bit to the right. They elect moderate republicans to the Senate all the time. So the idea that this didn't fly up there shouldn't be a surprise to anyone, except the folks that thought the 2008 elections mean the entire country shifted to the left.

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Is it Much Ado About Nothing?

The AP has a story out today asking if the uproar over the "Public Option" in the current health care reform bills is much ado about nothing. If you read only the public option portion of the bill, you'd probably have a hard time disagreeing with that assessment.

The reason they give for believing it's a lot of hot air over a little thing is the CBO estimates of the number of people who will opt for the public insurance program. The CBO says only about two percent of the population would take the public option. In the current House bill you can't get into the public option if you are covered by a plan through your job. To be eligible you'd have to work for a small enough company that the rest of the bill doesn't compel it provide coverage, or already be buying insurance on your own.

I think the CBO has done a good job in point out costs associated with all of the health care legislation, but as always, they do it with static numbers. They assume that no individuals or businesses will change their habits based on the new law. That's where the problem lies with their current estimate. I also understand that it would be nearly impossible for the CBO to run dynamic computer models on behavior in the short amount of time Congress gives them to review legislation. I often wonder if that isn't by Congressional design.

History has already shown in Maine, Massachusetts, New York and New Jersey that the guaranteed issuance and group rating methods drive private insurance companies out of the markets after raising costs to the point they can't be profitable. Both the House and Senate bills contain each of these provisions in them, and I doubt that history will suddenly undo itself, and they'll work without raising costs.

The result will be (as it has been already) that as costs go up insurance companies will drop out of the exchange program, and choices will dwindle to a few not-for profit companies and the public option. Don't think so, go online and try and get a health insurance quote in Maine. There are about 5 companies left doing business there.

Another cost driver in the bill, which seems innocuous at first, is the rescission rules. We all get to hear the breathless stories on the news of the woman who had her insurance dropped right before she started treatment for cancer. "Oh those heartless insurance companies!" the anchor will opine. What the news doesn't tell you is that for every one person who is wrongfully dropped about two hundred and fifty are rightfully dropped for fraudulently obtaining insurance.

The House fix for this is to compel insurance companies to pay for care for anyone they want to drop until a mediator has decided if it's a case of fraud where the person should be dropped. That sounds fair enough, if you are the patient. However, if you are the insurance company, you now get legal bills and medical bills for the 99% of people you can legally drop for fraudulently obtaining insurance. How much of that money does anyone think will be recouped from the fraudster? Who do you think will make it up to the insurance company? Congress isn't going to pay them for it, which means the folks who are legit will get higher premiums to pay for both the care, and legal bills of someone else.

I also think this is going to end up one of the bigger legal entanglements of the bill. Guaranteed issuance says you can't be denied coverage due to a pre-existing condition, and community ratings say you can't be charged more because of it, but the proposed law also says if you don't reveal it you have obtained insurance fraudulently. I'm pretty sure this will end up in court about as fast as any other provision in the bill.

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Sugar High Recovery

My favorite radio guy, Charlie Sykes has often called the economic numbers driven by Cash for Clunkers and the housing tax credit a "sugar high" for the economy.

Yesteday everyone on the left side of the aisle in DC was touting the economic numbers that showed the recession had ended, based on the last quarter GDP numbers. Wall St., never folks to pass on good news, added well over 100 points to the Dow.

Ah but the sugar high. Today numbers came out that showed consumer spending growth, even with Cash for Clunkers, was only up for one month, and down for the next, wages are stagnant, and employment numbers aren't great.

Consumer sentiment dropped, and the outlook for the quarter, with holiday spending is for spending growth to be about 1%. That's not the stuff lasting recoveries are made of.

The Dow dropped 249 points on todays news, it's biggest one day drop since July. Wall St. isn't, evidently buying into the idea of a full blown recovery.

I actually have another thing that made me realize this is a sugar high. My 401(k) statement came in the mail a few days ago. Generally things looked pretty good, the market has moved mostly up the last quarter, which made my stock based funds perform pretty well. But even with the market moving up, my bond fund outperformed the stock funds. That's very unusual, and almost never happens.

Why are they going up so quick? Investors don't buy the recovery, and would like to put money into the standard 'safe haven' instrument of choice. However, since so much is being borrowed, they also doubt the ability to repay them; bonds are loans you know; and are demanding a better return on investment.

Basically, the investor class has put the government bond market into a 'sub prime' category in all but name.

The crash from that sugar high is going to be much worse than anything we've seen before, unless somehow fiscal discipline returns to Washington.

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Health Care Reform Act

Rep. Paul Ryan of Wisconsin has made the house version of "health care reform" available for reading and download (pdf format). I hope you have a lot of time, as it is 1,990 pages long, since your legislators want to vote on it next week, I'm pretty sure most of them won't have time to read it.

If you think 1,990 pages of legislation is incomprehensible, and and it's contents unknow even to those who claim to be the authors, you are probably right. Just perusing through it the bill is a mish-mash of amendments and revisions to existing codes. My guess is that if it were to be gone through completely it probably contains dozens, if not hundreds, of entaglement problems, where one section orders one thing, another section the opposite, or something substantially different.

Considering Dingell, Rangel, George Miller and Henry Waxman are the principle authors, you can rest assured that they have included plenty of pay-offs to their favored groups. I doubt any of them have passed legislation that didn't.

Have a good read.

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Take His Time?

So, my laugh of the day started yesterday, when I heard a newscaster say that President Obama planned to "take his time" in making a decision on if or when to send more troops to Afghanistan.

Really? Hasn't he already been doing that? A month ago we all heard that McChrystal had asked for more troops, and shortly after that we found out that the original assessment/request was sent in a month before that.

Two months, and now we hear that they are going to take their time? They have been taking their time already. My guess is whenever the commander in chief decides he has to decide, Congress will then want hearings to second guess whatever that decision is, delaying things even longer.

Here's where the real problem is for Obama. He can't ignore McChrystal, he spent his short time in the Senate telling GWB that he was an idiot for not listening to the commanders on the ground. )Well, until the commanders said they needed more troops, then he said Bush was an idiot for listening to them). The he complained he was wasting time in Iraq and not concentrating on Afghanistan.

Now he's in the drivers seat, and it's time to concentrate harder on Afghanistan, and those damn folks over there refuse to realize he is The One© and just lay down arms and sing Kumbaya. So the apparent strategy is just ignore everything, and hope everyone forgets to fight over there.

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