Dogma vs. what works

I see hyperbole.
In the Las Vegas Sun, Jon Ralston writes, "But both Rory Reid and [Brian] Sandoval have abandoned any pretense that they want to pay teachers more or infuse any money into one of — if not the — most pathetically funded states in the country."

Because Reid and Sandoval, the two major candidates for governor, want to hold teachers and administrators accountable (and make it easier to get rid of ineffective teachers and administrators) and give students a choice in where they are educated, Ralston believes that this election is really about "conservative vs. very conservative" ideas.

Although Ralston seems to be one of the few people who recognize the similarities between the candidates' plans, he misses the big picture. First, how much you spend matters less than how effectively you spend it. Second, our public education system is broke and it needs a major overhaul. Third, yes, there are such things as bad teachers; the sad thing is we can’t get rid of them. Finally, school choice works.

Let's begin.

Spending more money does not produce better student achievement
1) Nevada's education spending ranks anywhere from 26th to 47th (using figures from the U.S. government) depending on which expenditures you include and how you calculate the numbers. But does this matter?

No. Between 1959 and 2007, Nevada increased public education spending by 180 percent per pupil – and yes, that is after adjusting for inflation (but doesn’t include capital costs and debt repayment). Even with this 180 percent more money per pupil, no one in his or her right mind would argue that the quality of education today is better than 50 years ago.

In fact, almost no respected researcher argues that spending more money improves student achievement.

The National Working Group on Funding Student Learning, an assembly of several education researchers including professors from Washington, Wisconsin, Vanderbilt, Penn State, Stanford and U.C. Berkeley (hardly a bastion of conservative thought) reached a consensus that "the connection between resources and learning has been growing weaker, not stronger,” and that “…the system itself is the problem … State education finance systems were not designed with student learning in mind …”

And much more evidence suggests that there is no correlation between spending more money and improving student achievement.

Don't forget, it is widely recognized that teachers in Nevada are paid quite well relative to other states (ranking anywere from 17th to 22nd highest). Not that paying teachers more helps. According to Dale Ballou and Michael Podgursky, authors of "Teacher Quality and Teacher Pay," increasing the pay of teachers does not attract higher-quality teachers to the profession - school districts simply spent more money on the same pool of teachers.


Someone once defined insanity as doing the same thing over and over again and expecting different results. When it comes to education policy, doing the same thing over and over again is cruel and selfish because of the effects it has on entire generations of children.
2) Reid and Sandoval are right: Public education in Nevada is broken. We have dismal math and reading scores, rank fourth-worst in drop-out rate and are last in the nation in graduation rates. Fewer than half of low-income, black and Hispanic children can read at grade level, according to the NAEP fourth-grade reading exam. According to Education Week, fewer than one-third of African-Americans, Hispanics and Native Americans will graduate on time with a standard high school diploma in the Silver State.

Why are our results so bad? The major reason is that Nevada's public education system is an unaccountable, bureaucratic monopoly that focuses on jobs for adults, not education for students. I’m not alone in this judgment. The School Finance Redesign Project at the University of Washington, Bothel, concluded that public education is “focused on maintaining programs and paying adults, not on searching for the most effective way to educate our children.”

It's not fiction, bad teachers do exist.
3) Both candidates want to reform teacher evaluations, teacher seniority and teacher tenure. Doing so will help ensure we get bad teachers out of classrooms.

The National Council on Teacher Quality notes that Nevada is a state where earning tenure is “virtually automatic.” Few higher-ed teachers, by contrast, actually receive tenure, and even then it takes five or more years to earn the privilege. Tenure makes it hard to get rid of really bad teachers.

According to the Center for American Progress, a left-of-center think tank (read: NOT CONSERVATIVE), and the U.S. Department of Education’s National Center for Education Statistics, Nevada’s school districts terminated or failed to renew the contracts of just 0.2 percent of “untenured teachers” and 0.3 percent of “tenured teachers” in 2007-08. Overall, Nevada kept 99.4 percent of its teachers that year. Only Arkansas, Delaware and Pennsylvania fired fewer teachers.

If getting rid of bad teachers and implementing teacher evaluations, eliminating seniority privileges and tenure is such a conservative idea, then why would U.S. Secretary of Education Arne Duncan say, “[w]hen inflexible seniority and rigid tenure rules that we designed put adults ahead of children — then we are not only putting kids at risk, we are putting the entire education system at risk.” Yup, Arne Duncan: NOT A CONSERVATIVE.

Furthermore, Whitney Tilson of Democrats for Education Reform (read: NOT A CONSERVATIVE) identifies “three pillars of mediocrity” that must be eliminated: a) Lifetime tenure, b) lockstep pay and c) seniority (instead of merit).

Advocating education policies that actually work doesn't mean those ideas are conservative.

4) School choice isn’t a conservative issue, either. It's an education issue. Partisans have made it into an ideological issue solely because one major source of campaign funding – the teacher unions – hates school choice. More choice for parents and students means less opportunity for unions to control and manipulate education policy and, thus, fewer opportunities to fatten their own pockets.

Howard Fuller, a former Black Panther and current professor at Marquette University (read: NOT A CONSERVATIVE) has stated: "There is a fundamental issue confronting African Americans, and therefore all Americans. Parents without the power to make educational choices lack an indispensable tool for helping their children secure an effective education."

Anthony Colón, a former vice president of La Raza (read: NOT A CONSERVATIVE) has stated: "Vouchers are not a Republican idea. If your community is underperforming with low graduation rates and sits at the bottom of the barrel in math and science, you don't worry about vouchers being a Republican issue. You worry about what works for your community."

Senator James T. Meeks, a Democrat from inner-city Chicago (read: NOT A CONSERVATIVE), not only pushed for a voucher program for low-income children in Chicago, but when the union was angered by his efforts he wrote the union a check and returned its campaign donations.

And don’t forget the crowd that marched in Florida to expand the Step Up for Students program.



Or the crowd that marched on D.C. to protest the Democrats' union-backed and ideologically driven attempt to kill a voucher program that works.



Note, Connecticut Independent Joe Lieberman and California Democrat Dianne Feinstein (Read: NOT CONSERVATIVES) have tried to bring back the D.C. Opportunity Scholarship Program.

Speaking of what works, how about the evidence that vouchers work? Nine out of 10 empirical studies find that students benefit from the use of vouchers to attend private schools. Eighteen out of 19 studies find that public schools improve when faced with voucher competition. In 2009, a U.S. Department of Education study found that students using the D.C. voucher to attend a private school over a three-year period saw an 18-month gain in reading skills, while a 2010 report found that students using the scholarship to attend a private school saw graduation rates that were 21 percentage points higher than the control group.

It is very, very clear that vouchers improve student achievement, graduation rates and public schools. It is also clear that competition between public schools as well as public school choice improve student achievement.

Researcher Carolyn Hoxby of Stanford University found that charter schools in New York improved student achievement in reading and mathematics, especially among low-income children. Importantly, Hoxby's research shows that the charter schools closed the achievement gap significantly. Additionally, Marcus Winters, a senior fellow at the Manhattan Institute, found that traditional public schools improved when faced with competition from charter schools.

Even the union-run but autonomous Pilot Schools in Boston outperformed the traditional government monopoly school. Choice and school decentralization work. Period.

If Jon Ralston really does believe we need to spend more money on education, then he is advocating what doesn't work. Ralston is completely wrong in his assessment of Reid vs. Sandoval. Painting empirically proven education policies as ideologically driven dogma is not only incorrect, it is a disservice to the students of Nevada who deserve a much better education. Reid vs. Sandoval on education policy isn’t “conservative vs. very conservative” ... it is “what works vs. what works.”

New Las Vegas firefighter contract proposal includes a (smaller) raise

Hard times in the private sector: 14 percent unemployment and companies reducing bonuses, benefits and even base pay.

Hard times for Las Vegas firefighters: Smaller pay increases, slightly reduced benefits, no layoffs and a guarantee the city won't privatize ambulance services for at least two years. And the average firefighter is already making over $123,000 in salary (with overtime) and over $174,000 including benefits.

From the RJ, here are some of the details.

· Eliminate a cost-of-living raise. The previous contract called for a cost-of-living raise of 3.5 percent.
· Reduce step increases by half in the next two budget years and cut the starting salary of new employees by 5 percent. Step raises average about 5.6 percent. A city firefighter's base pay now is $44,947 to $77,602 a year.
· Eliminate the uniform allowance of $1,500 a year for 2011, an expected savings of $900,000.
· Reduce the city's medical contribution to $360 per pay period, down from $450 per pay period. The contribution will be in only 24 pay periods instead of 26. [Emphasis added]

So while the private sector experiences record unemployment, Las Vegas firefighters — who made on average over $174,000 last year — will continue to receive pay raises.

Just another thing to keep in mind the next time local governments want more of your money.

Breitbart offers $100,000 for full JournoList archive

I love Andrew Breitbart.

[I]n the interests of journalistic transparency, and to offer the American public a unique insight in the workings of the Democrat-Media Complex, I’m offering $100,000 for the full “JournoList” archive, source fully protected. Now there’s an offer somebody can’t refuse.

Yes, the mainstream media that came together to play up the false allegations that the “N-Word” was hurled 15 times by Tea Party participants at the Congressional Black Caucus outside the Capitol the day before the “Obamacare” vote, is the same MSM that colluded to make sure the American public accepted the smear, and refused to show the exculpatory videos that disproved the incendiary charges of Tea Party racism.

Ezra Klein’s “JournoList 400” is the epitome of progressive and liberal collusion that conservatives, Tea Partiers, moderates and many independents have long suspected and feared exists at the heart of contemporary American political journalism. …

The “JournoList” is the story: who was on it and which positions of journalistic power and authority do they hold? Now that the nature and the scope of the list has been exposed, I think the public has a right to know who shapes the big media narratives and how. …

Like a ventriloquist’s dummy, the reporters on the listserv mimicked the talking points invented and agreed upon by the intellectuals who were invited to the virtual cocktail party that was Klein’s “JournoList.” …

The fact that 400 journalists did not recognize how wrong their collusion, however informal, was shows an enormous ethical blind spot toward the pretense of impartiality. As journalists actively participated in an online brainstorming session on how best to spin stories in favor of one party against another, they continued to cash their paychecks from their employers under the impression that they would report, not spin the agreed-upon “news” on behalf of their “JournoList” peers.

The American people, at least half of whom are the objects of scorn of this group of 400, deserve to know who was colluding against them so that in the future they can better understand how the once-objective media has come to be so corrupted and despised.

We want the list of journalists that comprised the 400 members of the “JournoList” and we want the contents of the listserv. Why should Weigel be the only person exposed and humiliated?

I therefore offer the sum of $100,000 to the person who provides the full “JournoList” archive. We will protect that person’s privacy and identity forever. No one will ever know who became $100,000 richer – and did the right thing, morally and ethically — by shining the light of truth on this seamy underworld of the media.

$100,000 is not a lot to spend on the Holy Grail of media bias when there is a country to save.

If you aren't familiar with JournoList, read Michael Calderone's background story.

For the past two years, several hundred left-leaning bloggers, political reporters, magazine writers, policy wonks and academics have talked stories and compared notes in an off-the-record online meeting space called JournoList. …

But some of the journalists who participate in the online discussion say — off the record, of course — that it has been a great help in their work. On the record, The New Yorker’s Jeffrey Toobin acknowledged that a Talk of the Town piece — he won’t say which one — got its start in part via a conversation on JournoList. And JLister Eric Alterman, The Nation writer and CUNY professor, said he’s seen discussions that start on the list seep into the world beyond.

“I’m very lazy about writing when I’m not getting paid,” Alterman said. “So if I take the trouble to write something in any detail on the list, I tend to cannibalize it. It doesn’t surprise me when I see things on the list on people’s blogs.”

Last April, criticism of ABC’s handling of a Democratic presidential debate took shape on JList before morphing into an open letter to the network, signed by more than 40 journalists and academics — many of whom are JList members.

But beyond these specific examples, it’s hard to trace JList’s influence in the media, because so few JListers are willing to talk on the record about it.

Ezra Klein, the founder of JournoList, closed it down last week after someone leaked postings by Dave Weigel bashing conservatives and calling, among other things, for Matt Drudge to set himself on fire. But Weigel was probably one of the more conservative members of the all-liberal group.

I hope someone takes Breitbart up on his offer. Finding out what media members really think and how they coordinate to create narratives favoring their biases would offer stunning proof of what believers in limited government already know.

Think government is too big?

Well, it probably is.

Why don't we raise the minimum wage to $100 an hour?

Because of a 2006 constitutional amendment, Nevada's minimum-wage will increase by 70 cents an hour on July 1.

Nevada's hourly minimum wage is set to jump 70 cents, or 9.3 percent, on Thursday, from $7.55 to $8.25 for workers who don't receive health benefits through their employer. For workers with company-sponsored health insurance, the minimum will rise 10.7 percent, from $6.55 to $7.25.

Credit the increases to a referendum Nevada's voters passed in 2006. The law pushed the Silver State's minimum wage for uninsured workers $1 per hour higher than the federal rate, and required Nevada's base wage to rise every July 1 based on either inflation or any federal wage hike -- whichever is higher. The federal minimum rose last summer to $7.25.

Liberals, as you might imagine, are thrilled with this news.

But Jan Gilbert, Northern Nevada coordinator for advocacy group Progressive Leadership Alliance of Nevada, said there's abundant national research showing that raising the minimum wage doesn't cost jobs, and such pay increases actually stimulate the broader economy. A 2009 report from the Economic Policy Institute found that boosting the federal minimum wage to $7.25 would generate $5.5 billion in additional consumer spending over a year.

"I think there's kind of a Chicken Little, 'sky-is-falling' reaction," Gilbert said. "If anything, what an increase really does is increase consumers' buying power, reduce costly employee turnover, raise productivity, increase consumer satisfaction and improve the reputation of companies. A raise is a benefit to our economy. It's more money being spent in our economy."

There's abundant national research all right, but even liberal researches (who support increasing it) admit that increasing the minimum wage increases unemployment. And teenagers are increasingly feeling the effects of this misguided policy.

But let's leave that aside and take Gilbert at her word. If raising the minimum wage leads to this host of positive consequences, why don't we increase it to $100 an hour? or $5000? or $1 million?

This isn't a hypothetical question. I'm serious.

The answer to this question reveals the fundamental flaw in liberals' economic way of thinking. Liberals assume that there's a seemingly endless supply of other people's money (OPM) or stuff (health care, food, transportation, etc…). (Important caveat here: The only point of money is to be able to purchase things. No one wants pieces of green paper; we want the purchasing power that green paper represents.) If there is a never-ending supply of OPM and there are poor people, it logically follows that rich people are harming the poor, because they have more than their "fair share" of money. Hence it is the government's job to redistribute wealth through things like the minimum wage and taxes that punish the wealthy.

The logic is sound, except that they are basing their arguments on a faulty premise.

There isn't an endless supply of other people's money or stuff. The world, in fact, is defined by scarcity — unlimited human needs and wants in a world with limited resources and time. And if the world is defined by scarcity, we can't mandate people get paid $100 or $5000 an hour without hyperinflation or record-high unemployment that leads to complete economic collapse.

If there are scarce resources in the world — and there are — you can't mandate that someone gets something, like a wage, that they can't earn, because the resources don't exist. (Another important caveat: You can do this in the short term if you cannibalize savings that have been built up over the years or go into debt. But as the U.S. is seeing right now, that's not sustainable.) And no amount of government mandates can change this reality.

The minimum wage is just another well-intentioned policy that hurts the people its advocates claim to want to help the most.

Bonus: The Review-Journal drops a great editorial on the minimum wage today.

Supreme Court extends gun rights nationwide

5-4.

The Supreme Court held Monday that Americans have the right to own a gun for self-defense anywhere they live, expanding the conservative court's embrace of gun rights since John Roberts became Chief Justice.

By a 5-4 vote, the justices cast doubt on handgun bans in the Chicago area, but signaled that some limitations on the Constitution's "right to keep and bear arms" could survive legal challenges.

Full decision is here.

Head over to HotAir for a quick breakdown of the arguments.

My favorite part is Justice Samuel Alito destroying Justice Stephen Breyer's dissent.

The next constraint JUSTICE STEVENS suggests is harder to evaluate. He describes as “an important tool for guiding judicial discretion” “sensitivity to the interaction between the intrinsic aspects of liberty and the practical realities of contemporary society.” Post, at 24. I cannot say whether that sensitivity will really guide judges because I have no idea what it is. Is it some sixth sense instilled in judges when they ascend to the bench? Or does it mean judges are more constrained when they agonize about the cosmic conflict between liberty and its potentially harmful consequences? Attempting to give the concept more precision, JUSTICE STEVENS explains that “sensitivity is an aspect of a deeper principle: the need to approach our work with humility and caution.” Ibid. Both traits are undeniably admirable, though what relation they bear to sensitivity is a mystery. But it makes no difference, for the first case JUSTICE STEVENS cites in support, see ibid., Casey, 505 U. S., at 849, dispels any illusion that he has a meaningful form of judicial modesty in mind.

JUSTICE STEVENS offers no examples to illustrate the next constraint: stare decisis, post, at 25. But his view of it is surely not very confining, since he holds out as a “canonical” exemplar of the proper approach, see post, at 16, 54, Lawrence, which overruled a case decided a mere 17 years earlier, Bowers v. Hardwick, 478 U. S. 186 (1986), see 539 U. S., at 578 (it “was not correct when it was decided, and it is not correct today”). Moreover, JUSTICE STEVENS would apply that constraint unevenly: He apparently approves those Warren Court cases that adopted jot-for-jot incorporation of procedural protections for criminal defendants, post, at 11, but would abandon those Warren Court rulings that undercut his approach to substantive rights, on the basis that we have “cut back” on cases from that era before, post, at 12.

Framing the debate

Here's a great summary from Dan Mitchell at Cato. I particularly like the last line of this passage:

Barack Obama and Angela Merkel are the two main characters in what is being portrayed as a fight between American “stimulus” and European “austerity” at the G-20 summit meeting in Canada. My immediate instinct is to cheer for the Europeans. After all, “austerity” presumably means cutting back on wasteful government spending. Obama’s definition of “stimulus,” by contrast, is borrowing money from China and distributing it to various Democratic-leaning special-interest groups.

Read the full post here.

Wrestling with big government

"Regular Job" @ Yahoo! Video

Former CEO of World Wrestilng Entertainment (WWE, formerly WWF) Linda McMahon is running for U.S. Senate in Connecticut. Obviously her opponent will poke fun of the fact she used to work with guys like The Rock and Randy Savage, but she decided to poke fun of it first. So can Mrs. McMahon wrestle big government and bring down our debt?

Five years after Kelo, property rights generally stronger

Five years ago last Wednesday, the Supreme Court ruled 5-4 in Kelo v. City of New London that the government could use eminent domain to take your home or business and give it to another private citizen or business — if the recipient promised to provide greater tax returns. Yes, the decision really is as bad as it sounds.

Fortunately, Americans haven't taken this affront to property rights lying down.



As Bob Irwin writes, the backlash in the past five years has been remarkable.

• 9 state high courts have limited eminent domain powers
• 43 state legislatures have passed greater property rights protections
• 44 eminent domain abuse projects have been defeated by grassroots activists
• 88 percent of the public now believe that property rights are as important as free speech and freedom of religion

Much of the credit goes to the Institute for Justice, which took the case to the Supreme Court and has done incredible work bringing this issue to the attention of tens of millions of Americans.

Dodd-Frank bill: putting a cast on the wrong leg

The American financial system has been hobbling on a broken leg for over a decade. Perverse regulatory incentives that required Fannie and Freddie to hold, in their portfolio of mortgage assets, a minimum percentage of sub-prime loans combined with monetary policy looser than Paul Krugman's grip on reality to create an Austrian Business Cycle on steroids.

The massive malignment of resources towards an artificially-inflated housing market eventually and inevitably led to a major financial collapse and economic recession. Thanks, Alan Greenspan. Thanks, Barney Frank.

So now Senator Chris Dodd and Rep. Frank are trying to atone for past sins (creating many of the previous regulations that contributed to the collapse) by drafting a brand new financial regulation bill. Problem is, the Dodd-Frank bill does absolutely nothing to address the central problems that led to financial collapse - i.e. regulations requiring or encouraging subprime lending and overly loose monetary policy. Dodd and Frank apparently understand that the American financial system has a broken leg. They just don't know which one is broken, so they're putting a cast on the healthy leg. Gee, I wonder if that will improve ambulation...

It seems the most economically illiterate individuals in the world have amassed themselves in Washington, DC and are running the country. With a complete misunderstanding of financial and monetary economics and the continued push for failed Keynesianism, American policymakers are parading ineptitude.

As one financial analyst is quoted today in the Washington Times:

"The U.S. continues to stick its head in the sand and ignore the animal mating calls of austerity measures [coming from Europe]. A crisis may need to develop before [Washington] wakes up and takes action."

The president of the Bundesbank clearly understands the blunders of Washington as well. He made that clear in a recent Handelsblatt column as reported by the Wall Street Journal:

"Where did the financial crisis begin? Which central bank conducted monetary policy that was too loose? Which country went down the wrong path of social policy by encouraging low income households to take on mortgage loans that they can never pay back?"

In frustration, I will concur with the famed words of Henry Ford:

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."

Apparently, those who understand the monetary and banking system the least work on Capitol Hill.

Keynesian economics at work: Housing bubble bursts (again)

A key tenet of Keynesian economic philosophy is that government must take an active role during downturns in the business cycle (otherwise known as depressions or recessions). Keynesians believe that government policies must encourage more spending and greater employment in the short term. This additional spending, or "stimulus," will bring the economy out of its downturn and lead to economic growth.

This was the rationale given for the $787 billion stimulus pushed by President Obama and Sen. Harry Reid last year. And now, more than a year later, the results are in and the stimulus was and is an epic failure. Especially for Nevada.

Included in the federal stimulus was another example of the failed Keynesian way of thinking — an $8,000 tax credit for new homeowners that was supposed to expire in November 2009. Before it expired, though, Congress passed an extension through April 2010 and also extended a $6,500 tax credit to some current homeowners.

This tax credit was going to provide a "stimulus" to the struggling housing market that would allow it to recover. Did that happen?

No. All it did was push up the timeline for buyers who were going to buy anyway in the near future. It also cost taxpayers a lot of money. And now that the tax credit has expired, mortgage applications have fallen by 42 percent, and since home sales follow mortgage applications by a couple months, the housing market has hit a record low for new home sales. Total home sales are about to take a big hit, and those numbers are likely going to fall even further in the near future.

Mortgage applications tend to lead home sales by a couple of months. Move mortgage applications over two months and the potential drop-off in sales is going to be enormous.

Head over to Bloomberg for the full interactive chart. How bad will it get?

[F]inancing requests for home purchases plunged 42 percent from late April through early June, to levels last seen at the start of 1997. The decline reversed a 48 percent surge in the two months leading up to an April 30 contract-signing deadline to qualify for the home-buyers’ tax credit. ...

Existing home sales, which are tallied when transactions close, will rise 6 percent to a 6.1 million annual rate in May, economists surveyed by Bloomberg News forecast before today’s report from the National Association of Realtors. Purchases may hold up in June because buyers still had time to make the June 30 closing date to qualify for the credit. Then, beginning in July, sales will tumble, Shepherdson said.

“The summer is going to be dreadful because the tax credit pulled activity from the summer into the spring,” Shepherdson, the chief U.S. economist at the Valhalla, New York-based research group, said in a telephone interview last week. “New lows do seem entirely possible,” he wrote in a note to clients. [Emphasis added]

This shouldn't surprise anyone, since the government's other stimulus program, "Cash for Clunkers," had the exact same effect.

What's especially ironic in all of this is that Keynesians, like Paul Krugman, wanted the government to create a housing bubble in 2002 in order to offset the NASDAQ bubble. As we all know, especially in Nevada, we got one — thanks to the Federal Reserve setting artificially low interest rates and irresponsible mortgages from Fannie and Freddie based on political pressure.

What do our politicians need to do? The same thing they needed to do 16 months ago. Let the economy retract in the short term in order for individuals to move assets from low-value industries to more productive sectors of the economy.

During recessions, in a free-market system, the economy moves money and jobs from low-performing areas to higher-performing ones. And when I say "the economy," I mean millions of individuals acting in their own self-interest. The economy isn't a giant organism that has a mind of its own.

This reset is necessary and healthy, because resources (natural resources, products and people) are scarce. Keeping limited resources in low-value sectors of the economy and not allowing them to move to high-value sectors limits economic growth.

To use an analogy, it's like pruning a tree. In the short term, the tree is smaller, because you've cut back in some areas. But those cut backs are necessary to stimulate growth in the long term. Without those cuts, the tree won't grow as large and may even die.

Let's also use automobiles as a historical example. Before cars, people still needed transportation. They just used horses and buggies. As cars replaced the horse and buggy, the horse and buggy manufactures were hurt. Consumers no longer needed their product (at least not on such a large scale). Employees lost jobs. Large businesses closed or were forced to retool. This is the kind of economic reordering that happens everyday in the free market. And for consumers, it's good that this happens.

Unfortunately, the government often prevents the necessary corrections from happening.

While it's good for consumers in the long run for recessions and corrections to happen, economic downturns can be painful in the present. And politicians, citing misguided economic theories, are eager to look like they're doing something to help. Politicians offer bailouts and stimulus packages that they claim will jumpstart the economy and decrease unemployment.

While stimulus packages, bailouts and creating bubble markets may work in the short term, they do not create sustainable economic growth. This is because scarce resources are not transferred from low-value products to high-value ones, as explained above.

Politicians or the Federal Reserve guided by Keynesian economics, pay little attention to the idea of long-term consequences. Unfortunately, for politicians this often makes sense for selfish reasons. Politicians want to get re-elected. By the time long-term consequences hit, it is likely a different politician will have to take the unpopular steps to deal with the mess they have created. Ironically, the politicians who actually created the mess may be remembered fondly for the good times they oversaw. The Federal Reserve faces political pressure to make sure the economy keeps going strong.

Because politicians and the Federal Reserve bowed to the political pressure in 2002 to improve things in the short run, we are now suffering the long-run economic consequences.

The stimulus bill and bailouts are simply a doubling down on our past mistakes. We must let individuals in the market shift scarce resources from low-value products to high-value ones, or our long-term economic growth will continue to be stunted.

Should America follow the Swedish model?

Sweden is often upheld as an example of a socialist paradise that the U.S. should emulate. ReasonTV takes a closer look at why that's not possible and how Sweden is moving in a more free-market direction.

Rory Reid on education: Innovate without spending more

Via Jim Clark at Nevada News and Views:

And in Reno last week Reid crossed swords with state teacher union leaders by firmly stating that in his endeavor to improve public education he will not raise taxes. Speaking at a round-table discussion at Swope Middle School Reid told teacher union officials: “I have described how (improvements in education) can occur in the budget neutral way. You can innovate without significant cost.” (Emphasis added)

Reid is exactly right. Improvements like empowerment schools, which involve giving principals control over 90 percent of their budgets, and open enrollment don't require extra funding.

But the good news is that stronger educational reforms like vouchers, which have raised graduation rates among students in Washington, D.C., or tax credits can actually save Nevada a billion dollars over the next 10 years while increasing student achievement.

Around the country, educational reforms are gathering bi-partisan support. No matter how the governor's race turns out, let's hope that Nevada's next governor follows the lead of states where education reforms have greatly increased their students' achievement.

Vouchers work...again...who would have guessed?

A new report just released by the National Center for Education Statistics (NCES) reveals that students receiving vouchers in the D.C. Opportunity Scholarship program saw graduation rates that were 12 points higher than students who applied but did not receive a voucher. Better yet, students who won a voucher and then used it to attend a private school saw graduation rates that were 21 points higher than the control group.

The treatment group (students who won a voucher) saw a graduation rate of 82 percent.
The control group (which did not win a voucher, but of which 47 percent attended a charter school or private school anyway) saw a graduation rate of 70 percent — much higher than the District's official graduation rate.

The D.C district's graduation rate, according to NCES, is 56 percent.
The graduation rate for students winning and then using the voucher to attend a private school was 91 percent.

This all means that the effects of vouchers in D.C. are substantially understated by the report because nearly half of the control group exercised school choice. Unfortunately, journalists are unlikely to uncover these nuances and will instead report that vouchers don't work, despite the considerable scientific evidence that finds vouchers improve student achievement.

Rate-busting heroes

Walter Block has an excellent refutation of the union-created myth of the rate-buster today at the Mises Institute. The central fallacy, as Block points out, is the belief that there is a limited amount of work for humans to accomplish. This, of course, would imply that there is an upward bound to the desires that humans would like to have fulfilled - meaning that humans have no desire to achieve a higher standard of living.

Obviously, this is inaccurate, as is the belief that "rate-busters" somehow take work away from others. In reality, the rate-buster is a hero because he provides for more of the needs of others.

Hail the rate-buster!

Nevada Taxpayers Association releases 62 spending reforms for Nevada

A lot of good ideas, so dive right in.

I'll only highlight one area of recommendations that is extremely important — reforming Nevada's budgeting process.

The current budget process has been in place since 1993. Known as a cost-to-continue budget, it tends to presume that the spending levels of the prior biennium are still viable. This base budget is then increased by “roll-ups,” which include increased caseloads, enrollments, utility costs, grounds upkeep costs, building maintenance costs, and shared administrative costs (Personnel Department costs, IT costs, etc.).

During periods of economic growth this tends to allow a budget that is on automatic pilot for increased spending. The following recommendations regarding the budget are focused on providing solutions that more efficiently identify expenditures, and also provide additional accountability and transparency to Nevadans about where and how their tax dollars are being spent.

1. Prioritize the expenditure of funds.
Reason: Frequently when the need arises for fiscal “belt-tightening,” it is often a vocal minority who argues for nonessential program enhancements. Priorities should be established for programs and services that are essential to the well-being of the general public or carry penalties (mandated programs and services) for not being in compliance. Prioritization of agency budgets would also identify what programs or services should be maintained during an economic downturn vs. those that should be considered for cuts.
Action Required: Implementation by Governor and Legislature. (Statute should be changed, otherwise the Governor’s office needs to prepare two budgets.)
Note: Also see recommendation #43 of the SAGE Commission Report. The Commission looked at the Arkansas priorities budget law which has been in place since 1945 and determined this would be a viable template for future Nevada budgets.

2. Program-based or Performance-based budgets should be utilized when applicable.
Reason: Program Based - Where multiple agencies and departments provide similar programs, those agency/department budgets should be program-based. This would allow for better program coordination and provide program continuity. A lead agency should be established and based on funding could award grants to other governmental units and nonprofit organizations that meet program requirements. This would streamline administrative procedures and minimize duplicative administrative costs. (For example, substance abuse programs separately funded with no coordinated link include programs administered by the Department of Prisons, the Office of Parole and Probation, the Department of Education, Clark and Washoe county drug courts, DARE, etc.) When analyzing the delivery of a program or service, nonprofit agencies that work in a particular field should receive consideration as a potential service or program provider.
Performance Based - Many agencies and departments are responsible for delivering a specific service(s). These departmental budgets should be based on what is necessary to efficiently perform/deliver the service(s) based on specific goals and required outcomes.
Action Required: See recommendation 1 “Action Required.”

3. Objectives should be established for each program or service to be provided.
Reason: Specific objectives to be achieved can be measured to facilitate an evaluation of the effectiveness of the program or service to allow corrective action to be taken if necessary, or provide for the enhancement or elimination of the program of service.
Action Required: Implementation by Governor

4. The outcome-based performance indicators that have been developed for each agency/department should be based on the objectives established and also posted on the State’s website.
Reason: This would provide the measurement standards for the objectives set for programs or services and allow greater transparency and accountability by taxpayers.
Action Required: Implementation by Governor or Legislature.

These reforms are similar to the budget reforms Geoffrey Lawrence has written about for NPRI and that the SAGE Commission has recommended (number 43).

They're also something Nevada's families and businesses do instinctively. Nevada's government should do the same.

(h/t Doug Busselman)

Pigs in space

President Obama wanted to scrap a Bush-era space program that was running over budget and behind schedule in favor of private competition in space flight. A Republican senator wants more pork to the NASA monopoly on space flight and, of course, politically connected firms in his home state. As a result, the senator has won Citizens Against Government Waste's Porker of the Month Award.

Bad news for high-tech education?

A new study by researchers at Duke University's Sanford School of Public Policy suggests that having a computer at home may actually lower student test scores, especially for low-income students. The study reports, "increased availability of high speed internet is actually associated with less frequent self-reported computer use for homework."

So what do kids use computers for? Playing video games and socializing with friends, of course. On the bright side, the study does find that parental monitoring of a child's computer use can lead to more productive time on the computer.

Extending unemployment

People who understand free-market economics have long understood that some Americans want to copy everything that doesn’t work in Europe while ignoring everything that does. I’m not talking about socialized medicine; I’m talking about European-style unemployment.

Since 2008 the U.S. has continually extended unemployment benefits beyond the 26-week maximum period. The duration of the benefits has been extended to as much as 99 weeks. Not surprisingly, more and more people have remained unemployed in the long run.

European unemployment lasts a notoriously long time. Generous benefits – some life-long – encourage people to forego seeking employment and instead collect benefit checks for as long as possible. Not surprisingly, there are more long-term unemployed in Europe than are in the short-term and medium-term categories combined.

Senator Harry Reid and many others want to keep the extended unemployment benefits flowing. Unfortunately, this only means we will see longer, European-style unemployment.


Percent of unemployed by unemployment duration






*Source: Eurostat

According to Eurostat: For the EU27 and all Member States, short-term unemployment refers to a duration of unemployment of less than one month, medium-term unemployment to one to six months, and long-term unemployment to six months and more. For the U.S., short-term unemployment refers to a duration of up to five weeks, medium-term unemployment to five to 26 weeks and long-term unemployment to 27 weeks or more. In all cases, unemployment is still ongoing at the time of the reference week.

Read my full article on this subject: "How politicians’ ‘compassion’ delays economic recovery."

IFC delays tax study, new release date unknown

This might be the first time I've broken news here on Write on Nevada, so enjoy.

By contract, the Interim Finance Committee's tax study, prepared by Moody's Analytics, was scheduled to be released by July 1, 2010. From the original Request for Proposal:

The consultant will prepare and present a final written report of its findings and recommendations, including the proposed strategies and recommendations from the Nevada Vision Stakeholder Group, to the Interim Finance Committee on or before July 1, 2010. (Emphasis original)

But Dave Ziegler and Russell Guindon, both from the Legislative Counsel Bureau, have confirmed that the release of the tax study has been delayed. Both told me that the state is now negotiating with Moody's to extend its contract. Neither would offer me a reason for the delay or tell me when Moody's will release the tax study or even when the new deadline will be released.

I've also called Sen. Horsford, chair of the tax study subcommittee of the IFC, but he won't comment on the record about it. If he does give me a comment, I'll update this post to include it. I've also got a call into Assemblyman Marcus Conklin, vice chair of the tax study subcommittee. I'll let you know what/if I hear back.

No word on when the next meeting of the Nevada Vision Stakeholder Group will be, either.

I'll give you some more thoughts tomorrow, but I'll leave you today with NPRI's revenue-neutral tax study that would broaden, stabilize and simplify Nevada's tax system. It's the only current study of Nevada's tax system and may be for quite a while.

And it didn't cost the taxpayers of Nevada $253,000 of dubiously appropriated contingency funds, either.

Authoritarian salaries

*A disgruntled UNLV professor riding on his high horse to civilize Nevada.
Remember those academic authoritarians at UNLV who wanted to civilize native Nevadans via military force (or at least a force of enlightened men like them)? Yes, those gentlemen were unhappy that Nevadans - real or imagined - preferred gambling and drinking rather than paying taxes to support fine art, music, theatre and the professors' salaries.

Speaking of salaries, NPRI acquired more public-worker salaries last week. So how much are these UNLV professors making?

*Dr. William M. Epstein made $139,633.01 in 2009, with $111,576.96 in base salary.

*Dr. William N. Thompson made $71,366.22 in 2009, with $57,587.52 in base salary.

Both are paid well above the personal per capita income in Nevada of $38,578.

Yup, nothing feels better than being degraded by well-off Ivory Tower elitists who hold jobs subsidized by the very people they appear to loathe.

Learn more at transparentnevada.com.

Rory Reid: No need to mess with Nevada's tax structure

From yesterday's Las Vegas Sun:

Reid has long declared he will not raise taxes, especially in this economy. And last week, he said the state’s tax structure is sound enough not to mess with.

Sen. Horsford, call your office.

Now, if Reid is looking for a revenue-neutral tax reform that broadens, simplifies and stabilizes Nevada's tax structure, he should check out NPRI's recent study, One Sound State, Once Again: Comprehensive fiscal reforms to again make Nevada strong, prosperous and free.

Of course, if Reid's the wonk he's portrayed as, maybe he already has.

For now, we should all just remember Reid's promise about taxes and the state tax structure.

“I disagree with that,” he [Reid] said about the need for a tax increase.

Nevada now has the nation's highest unemployment rate

Just another reminder that the stimulus was and is an epic failure, especially for Nevada.

Nevada captured the top spot for joblessness in May, pushing Michigan out of a position it had held for more than four years.

New numbers from the state Department of Employment, Training and Rehabilitation show joblessness in the Silver State jumped to 14 percent in May, up from 13.7 percent in April…

Nevada’s increase comes even as the recession is easing nationally. The country’s unemployment rate ticked down from April to May, dropping from 9.9 percent to 9.7 percent…

Nevada’s employers did add 4,800 jobs overall, but most of the increase came from seasonal or Census hiring. Still, the additions are an improvement from a year ago, when employers cut payrolls by 2,400 jobs from April to May. (Emphasis added)

And of course, here comes Sen. Reid to say that things would have been worse without the stimulus.

On a day that Nevada’s unemployment rate topped the nation, Sen. Harry Reid said things would be even worse if Democrats had not acted to create or save jobs through economic stimulus.

Reid, D-Nev., defended Democrats in a Senate speech Friday morning, saying 3 million Americans going to work today have Democrats to thank for pushing through the economic recovery bill last year.

“The economy in Nevada is not in good shape. It is getting better but not good,” he said. “We are one of the leading states in the union with unemployment but think how much worse it would be if we have not been able to create these jobs in Nevada with the recovery bill.”

It's easy to evaluate Sen. Reid's claim that the stimulus has helped the economy, because President Obama told us how the stimulus would affect the (national, not state) unemployment rate when Congress passed it last year. Needless to say, Obama and Sen. Reid were completely wrong on the stimulus' impact.



Objectively, Nevada's unemployment situation can't be placed solely on Reid and Obama. After all, the Nevada Legislature passing the largest tax increase in the state's history last session and the legislative leadership's constant efforts to create a corporate income tax have contributed to our state's high unemployment.

But when you have politicians in power who don't understand economics, these are the results you get.

Bonus video of Sen. Reid talking about job loss.

Wyoming: Don't move to Nevada, because it’s considering a corporate income tax

Ideas have consequences, and in this case just talking about the idea of a corporate income tax is being used to make companies think twice about coming to Nevada.

Thanks, liberals.

Stop for a minute and think what you paid last year in your States income tax. If you are comparing Nevada and Wyoming, keep in mind that the Nevada State Legislature is being lobbied hard to install a corporate income tax. Don't gamble that this will not happen. Wyoming never has and never will have a state income tax on corporations. It is one of the only states with a budget surplus! (Emphasis added)

And actually, it's worse than they describe. It's Nevada's legislative leadership that is rallying the hardest for a corporate income tax.

Imagine the economic damage they'll cause if they succeed.

Minimum wages destroy jobs

Nevada is about to raise the minimum wage on July 1, 2010 from $7.25 an hour to $8.25 an hour for those without health insurance – a 13.8 percent increase. Those minimum wage workers better be able to produce more than $8.25 an hour (plus payroll tax costs, and other administration costs associated with your labor) in value, otherwise they are out of job! I expect unemployment to increase after July 1 (if businesses haven’t already anticipated the wage increase and cut jobs already).

Wynn takes on Washington

Visit msnbc.com for breaking news, world news, and news about the economy

Steve Wynn is mad and he's not going to take it anymore. "China is stable, Washington is not" says Wynn. Washington has gone crazy, pumping out one bad idea after another. Mr. Wynn couldn't be more right.

Still fighting for liberty in Massachusetts

Nevada, unlike Massachusetts, is a right-to-work state, meaning it's much easier to get a job here without joining a union. When Maj. Stephen L. Godin, a retired U.S. Marine teaching Naval Science (Navy JROTC) at North High in Worcester, Mass., was told he had to pay dues to the local teacher union, he refused.

Fortunately, Governor Deval Patrick signed a bill in response to Godin's actions that allows all JROTC teachers in the state to avoid paying union dues. Politicians in Massachusetts passed the bill because the U.S. military pays for half of JROTC salaries and already covers medical and dental insurance expenses.

But here's another good reason for it: Forcing people to pay dues to an organization that spends most of its time engaging in political lobbying on one-sided issues that have very little to do with education is objectionable and morally equivalent to theft.

What's happening with the Nevada Vision Stakeholder Group?

Last time we saw them was on May 14, when the Nevada Vision Stakeholder Group ordered Moody's Analytics to revise its entire preliminary report and discussed ways to skirt the open-meeting law.

And there's no truth to the rumor that Nevada Vision Stakeholder Group Chairman Robert Lang moved back home to Virginia because he couldn't handle the Vegas summer heat. As he told us at the last meeting, he's from New York not Virginia.

All kidding aside, I called their legislative staff today and Dave Ziegler told me their next meeting has not been scheduled, but should happen "sometime this summer."

Now, Chairman Lang can call a meeting at any point, but it's probably a little difficult with people's schedules and vacations … and because the NVSG ordered Moody's to rewrite its entire preliminary report and do a better job of incorporating the NVSG's suggestions. And because the public found out what the NVSG was proposing and was not amused — calls for other people to take and spend your money aren't popular. Who knew?

One problem is that the NVSG has 20 unique individuals on it who all have different ideas about what the future of Nevada should look like. Which is precisely why the idea of the NVSG determining a singular vision for Nevada's 3 million people is such a joke.

Also complicating the mix is that the whole purpose of the NVSG is to provide the legislature with political cover for passing tax increases.

So even though the NVSG isn't meeting for a few more weeks, the legislators who created it and want to raise your taxes in 2011 (and create a corporate income tax) are still hard at work behind the scenes.

Keep checking in with Write on Nevada and NPRI.org, and we'll let you know the latest on the NVSG as soon as we know.

In the meantime, check out NPRI's revenue-neutral tax reform proposal that would broaden, stabilize and simplify Nevada's tax structure.

Respect my authoritah

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Respect My Authoritah
http://www.thedailyshow.com/
Daily Show Full Episodes Political Humor Tea Party

Not too long ago, a man from Illinois named Barack Obama promised to scale back presidential power ... until he got elected to the office of U.S. president. Enjoy the parody from Comedy Central's Jon Stewart.

UAW cuts jobs

For years the Big Three focused on building pensions for workers rather than cars for consumers. Will that change in a globalized economy?

Today, there are more union workers in government (7.9 million) than in the private sector (7.4 million), despite there being five times as many workers in the private sector, because private-sector unions must deal with choice and competition in the open market. As it turns out, both consumers and laborers prefer non-union goods, services and jobs over unionized alternatives.

According to the Detroit Free Press, the United Auto Workers union has laid off 130 workers at its Detroit headquarters as a result of strained finances. The union has seen its membership plummet from 700,000 in 2000 to 350,000 workers today.

Now, will the union bounce back with government subsidies and protection, or will the Big Three focus on building cars for once?

Debt threatens democracies in EU

Says … EU Commission President Jose Manuel Barroso.

John Monks, former head of the TUC (Trade Union Confederation), said he had been ‘shocked’ by the severity of the warning from Mr Barroso, who is a former prime minister of Portugal.

Mr Monks, now head of the European TUC, said: ‘I had a discussion with Barroso last Friday about what can be done for Greece, Spain, Portugal and the rest and his message was blunt: “Look, if they do not carry out these austerity packages, these countries could virtually disappear in the way that we know them as democracies. They've got no choice, this is it.”

‘He's very, very worried. He shocked us with an apocalyptic vision of democracies in Europe collapsing because of the state of indebtedness.’ …

The looming bankruptcy of Spain, one of the foremost economies in Europe, poses far more of a threat to European unity and the euro project than Greece.

Greece contributes 2.5 percent of GDP to Europe, Spain nearly 12 percent.

Think about that. Debt threatens to overthrow a government. Debt is a real threat to the sovereignty of major countries around the world.

And who's standing in the way of saving European democracies? Public employee unions. Sound familiar?

Mr Monks said union barons across Europe were planning a co-ordinated ‘day of action’ against the cuts on 29 September, involving national strikes and protests.

Let's hope that the leaders (and citizens) of a country that has a $130 trillion national debt are paying attention.

If the federal government were a business, national debt would be $130 trillion

Honestly, I have a hard enough time wrapping my head around the current official figure of $14 trillion, so finding out that the national debt is almost 10 times that amount is staggering.

The debt numbers start to get really hairy when you add in liabilities under Social Security and Medicare — in other words, when you account for the present value of those future payments in the same way that businesses have to account for the obligations they incur. Start with the entitlements and those numbers get run-for-the-hills ugly in a hurry: a combined $106 trillion in liabilities for Social Security and Medicare, or more than five times the total federal, state, and local debt we’ve totaled up so far. In real terms, what that means is that we’d need $106 trillion in real, investable capital, earning 6 percent a year, on hand, today, to meet the obligations we have under those entitlement programs. For perspective, that’s about twice the total private net worth of the United States. (A little more, in fact.)

Suffice it to say, we’re a bit short of that $106 trillion. In fact, we’re exactly $106 trillion short, since the total value of the Social Security “trust fund” is less than the value of the change you’ve got rattling around behind your couch cushions, its precise worth being: $0.00. Because the “trust fund” (which is not a trust fund) is by law “invested” (meaning, not invested) in Treasury bonds, there is no national nest egg to fund these entitlements. As Bruce Bartlett explained in Forbes, “The trust fund does not have any actual resources with which to pay Social Security benefits. It’s as if you wrote an IOU to yourself; no matter how large the IOU is it doesn’t increase your net worth. . . . Consequently, whether there is $2.4 trillion in the Social Security trust fund or $240 trillion has no bearing on the federal government’s ability to pay benefits that have been promised.” Seeing no political incentives to reduce benefits, Bartlett calculates that an 81 percent tax increase will be necessary to pay those obligations. “Those who think otherwise are either grossly ignorant of the fiscal facts, in denial, or living in a fantasy world.”

There’s more, of course. Much more. Besides those monthly pension checks, the states are on the hook for retirees’ health care and other benefits, to the tune of another $1 trillion. And, depending on how you account for it, another half a trillion or so (conservatively estimated) in liabilities related to the government’s guarantee of Fannie Mae, Freddie Mac, and securities supported under the bailouts. Now, these aren’t perfect numbers, but that’s the rough picture: Call it $130 trillion or so, or just under ten times the official national debt.

The liabilities of Social Security and Medicare are the largest and scariest, but read the whole thing to see where the rest of the debt comes from.

The numbers show the folly of these liberal programs — especially defined-benefit pensions, Social Security and Medicare. The fact is, they're broke. It's easy to make a promise and backload a program's costs (hello, Obamacare), but politicians can't change the fact that there's no such thing as a free lunch. How compassionate is it to create a program that's going to be bankrupt at the exact time the largest number of people are going to be counting on it?

But since liberals don't understand basic economics, I guess it's not surprising that they think they can provide health care and retirement to everyone without understanding the opportunity cost of such promises. If economic principles are too difficult for liberals (of either party) to understand, then they should at least look to socialist countries that are a little further along the road of liberal policies than we are and understand where our country (without a major correction) is heading.

Democratic Congressman attacks college student

Unbelievable.



And here I thought we were supposed to be worried about Tea Party violence. Looks like the facts get in the way of the liberal narrative once again.

Etheridge has issued an apology, but it's likely this incident will haunt him politically for a long time.

Exit question: Will Etheridge get charged with assault?

(h/t Big Government)

What's your plan?

U.S. Senate candidate Sharron Angle supports private accounts for Social Security, so Harry Reid is busy attacking and demonizing her and her idea. But what is Reid's plan to save the floundering and unsustainable program? That is the question Michael Tanner of the Cato Institute asks in a recent Las Vegas Review-Journal column.

First let's address the problem facing Social Security. According to Mr. Tanner,

Thanks to the economic downturn, Social Security is running a temporary cash-flow deficit today. That deficit will turn permanent in just six years. Of course, in theory, the Social Security Trust Fund will pay benefits until 2037. That's not much comfort to today's 35-year-olds, who have faithfully paid into the program their entire working lives but will face an automatic 27 percent cut in benefits unless the program is reformed before they retire.

Unfortunately, the trust fund is made up of U.S. Treasury Bonds, which function just like an IOU from the government (the government borrows your money to supplement current spending and then promises to pay you back later). Tanner continues,

Even if Congress can find a way to redeem the bonds, the Trust Fund surplus will be completely exhausted by 2037. At that point, Social Security will have to rely solely on revenue from the payroll tax - and that won't be sufficient to pay all promised benefits. Overall, the amount the system has promised beyond what it can actually pay now totals $15.8 trillion.

There are only three ways to address the issue, and even Bill Clinton gets it: 1) raise taxes 2) cut benefits or 3) allow private investment.

So if Senator Reid is attacking Angle for her support of private investment, what is his plan? Michael Tanner may have figured it out:

Since Reid is attacking Angle for her support for private investment, one can logically conclude he must therefore favor tax increases and/or benefit cuts. And mighty big tax increases they would have to be -- a 50 percent increase in the payroll tax, or the equivalent. The benefit cuts would be no less draconian.