Big Government Is Good - Capitalism Is Evil!

A dear friend recently gave me: "More Money Than God" by Sabastian Mallaby.

It is an excellent and enjoyable read about many of the more prominent Hedge Fund founders and their exploits. Mallaby concludes hedge funds have served and continue to serve a valuable purpose and most should not be regulated. Though many have gone out of business by their own hand not one dime of tax payer money has been wasted in saving them. The basic reasons are because hedge funds generally have very tight internal risk controls, their principals risk their own money and mostly they make money by driving money away from extremes and towards rational pricing levels.

That said, Mallaby, does identify three circumstances where restricted oversight would be justified.

Mallaby takes the reader on another interesting sojourn and describes why financial institutions got into the housing debacle and here again his words ring true.

In my humble opinion what the new financial legislation will ultimately accomplish is more red tape and increased burdening costs upon our economic system. Furthermore, it should heighten fear among bond and equity holders because it appears to have, as a primal objective, the placing of government bureaucrats in the role of becoming the final arbiter in defining risk and trying to prevent an entity becoming too big to fail.

In essence, over 2200 pages of new legislation could transfer more risk from the private sector to the public sector and, I submit, will ultimately insure not only bigger government but also, in the process, make our own government more likely to fail. Wherein radical liberals once expounded on the benefits of welfare, which proved to be a social disaster, they now have expanded the concept of government welfarism to the entire private sector believing bigger government should control the growth of the private sector keeping it from becoming too big itself.

It becomes clearer every day that Obama's and radical liberal's mission, all along, has been to disincentivise and to drive a stake through Capitalism's heart.


Obama has been ably assisted by a revolutionary staff who have stated never let a crisis pass when it comes to providing an opportunity for change.

If, as most Americans still believe, Capitalism is worth saving and made our nation an economic powerhouse they had better start speaking up and working to change the mind set of those who no longer depend on Capitalism but derive all their benefits from an expanded government.

More than 40% of Americans no longer pay income taxes and thus, have no vested interest in our economic system because they 'know' there is a free lunch. It comes with a government label. Neither do they understand economics and they certainly oppose wealth creation believing we are a racist society that needs radical correcting.

This is what Populism's class war is all about and though it did not begin with Clinton it certainly got a boost from his campaign and time in office and that is what Obama perfected to get elected and continues to preach to this very day.

It is all about good and evil and Obama is the righteous knight saving the downtrodden from the evils of a free and still racist society. An America with its evil feconomic system where citizens retain the ability to keep the fruits of their labor which, of course, produces uneven and inequitable results, must be radically altered - changed! Wealth must be dispersed and taxed until the pursuit of happiness is equalized. This will only be accomplished by a larger, more oppressive government.

Government's past failures of oversight, must be ignored and, heaven forbid, the contribution of the politicians to their occurrence must never be admitted or exposed. (See 1 and 1a below.)

Here's an excellent analysis of Federal spending - particularly over time: http://www.heritage.org/research/reports/2010/06/federal%20spending%20by%20the%20numbers%202010

Liberal's 'angle' to beating female opposition is to attack them and label them another Palin. (See 1b below.)
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Just imagine damn you! That's the stuff of dreams and that's the snake oil Obama continues to sell to the unwashed. (See 2 below.)
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19 months of Obama has been vexing but soon it will become taxing. (See 3 below.)
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A weapons expert explains why weapons experts are ineffective. (See 4 below.)
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Eric Johnson is our best hope for having improved government in Georgia. He is a true conservative on fiscal matters and sensible about most social issues.

Roy Barnes is a clever good old boy who was a lousy governor and lied about a massive development project.

Oxendine is an embarrassing ethical calamity, Handel has little experience of an executive nature and Deal is just another Republican politician. (See 5 below.)
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Middle East peace parameters. (See 6 below.)

Meanwhile Turkey 'drones' on about Israel's violations while Turkey assists in the massacre of Kurds using Israeli equipment. (See 6a below.)
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Follow Massachusetts if you want insight into where 'Oamascare' will take us. (See 7 below.)
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Why has the roar of 'black panthers' been muted by the liberal elite? Their silence will one day come back to bite them. It is already gnawing at our body politik. (See 8 below.)
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Response from a memo reader:

I read with great interest your comments on "polling your liberal friends". I am truly frustrated when speaking to many of my Jewish, extremely liberal and very affluent friends (most of which you know), who seen to be clueless as to what is going on in the world around them. I have begged then to please read and listen to other than liberal media and then decide as to which side is in the right rather than only getting one point of view. It truly puzzles me that these individuals, who are pillars in the Jewish community do not seem to care about any other point of view.

HELP!!

Regards,
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Dick



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1)Speaking Up for American Capitalism
Business has taken a pounding on Capitol Hill and at the White House and for the most part has remained silent. It's time to make our case.
By GREGG SHERRILL

It's been a hard stretch for American businesses. With the bankruptcy of Lehman Brothers, the near collapse of the world's financial system, a recession with stubbornly high unemployment, the travails of the auto industry, and the calamity of the BP oil spill, let's just say it's been quite a few years. And all of this has been amplified by shrill rhetoric, finger-pointing and blame games played out in ceaseless media coverage.


Business, in the dual role that politicians try to fashion for it—providing funds to government, and all too often serving as a scapegoat—has taken a pounding on Capitol Hill and at the White House. For the most part, the business community has remained relatively silent. In my view, we simply have not tried hard enough to make our case.

The reaction is partially understandable. We were hit from several directions at once, and the financial crisis turned so quickly into a collapse of demand that our primary concern was just to survive and work our way out of the rubble. Our focus turned inward.

Because the financial crisis and resulting recession caused so much pain, a bashing of our entire free enterprise system may have been inevitable. My fear is that by remaining quiet in the face of this onslaught, we have allowed it to intensify. In fact, other than those companies that were a part of the system of easy credit and disguised risk that so spectacularly collapsed, American business as a whole has nothing whatsoever to apologize for.

The good news is that despite the political cacophony, and our silence, most Americans still instinctively understand this.

According to a recent analysis in The Economist magazine, the overwhelming majority of Americans say they prefer the free enterprise system to any collectivist alternative. In one such poll, as the Economist reports in a feature titled "The 70-30 Nation," the Pew Research Center asked respondents whether they were better off in a free market rather than a socialist economy "even though there may be severe ups and downs from time to time." Seventy percent said yes.

So why are the 30% in charge of the 70%? According to American Enterprise Institute President Arthur Brooks, the "game changer" was the economic crisis. As he writes in his book "The Battle," "the opportunity to expand the 30 percent coalition was not the Democratic sweep in 2008. It was the financial crisis of 2008-2009, which was used as a tool to attack the free enterprise system . . ."

Furthermore, Mr. Brooks argues that it's time to make "the moral case for free people and free markets." I couldn't agree more.

The free enterprise system, hard-wired into this country's DNA, has created more wealth and lifted more people out of poverty than any other system ever devised by human beings. For the entire history of our nation, people from all over the world have come here for the opportunity to succeed on their own merits.

It would be a profound mistake to grow government's size in a way that would fundamentally shift its level of involvement in our overall economy. Other countries have tried this strategy in various ways, especially over the last century. The results have often been negative, and at times disastrous. None has come close to the levels of growth and individual prosperity driven by the American free enterprise system.

The truth is that when it comes to the things that define our society like energy, mobility and shelter, government can do nothing without the cooperation of business and industry. Nor, for that matter, can business function in this fiercely competitive global marketplace without the appropriate regulation and incentives that government can provide.

Expanded trade, competitive tax policies, a coherent energy policy, a realistic regulatory approach—it is in these areas that our government can most effectively ensure that we maintain our pre-eminent position in the world. At its best, government is the guarantor of our freedom to create, to lead and to innovate.


Political attacks will only intensify in an election year, and they could result in serious economic damage. The danger is that people will buy into the false perception that government can fix our current crisis, which will lead to policies making our economic recovery more difficult. I think we all need to take a step back and put partisan politics aside. We need to work together to come up with solutions that reflect the input of many voices, including business.

My business is the automotive industry, and we've found ourselves for some time now at the center of much of the national debate, where science, technology, business, economics, politics and ideology all intersect. As an executive and an engineer, I take great satisfaction in the role our industry has played in building our society. We've helped give people everywhere an unprecedented measure of mobility. And by providing them with that mobility, we've helped to provide an unprecedented measure of freedom.

I'm proud to be part of an economic system that still offers the greatest opportunity for individual prosperity and quality of life. I believe my colleagues in all segments of American business and industry share that pride. It's time we find our voices and speak up. We have a powerful story to tell.

Mr. Sherrill is chairman and CEO of Tenneco Inc.

1a)American politics has caught the British disease
Under Barack Obama, the phenomenon of class resentment is a live political issue, says Janet Daley.
By Janet Daley

Friends of the working man? Both When David Cameron visits the United States this week, he will find a country whose national political argument has become more like our own in Britain than probably he – and certainly I – would ever have imagined. For America has learned, thanks to Barack Obama's crash course in European-style government, about the titanic force of class differences. The president's determination to transform the US into a social democracy, complete with a centrally run healthcare programme and a redistributive tax system, has collided rather magnificently with America's history as a nation of displaced people who were prepared to risk their futures on a bid to be free from the power of the state.

They are talking a lot about this in the US now. Suddenly the phenomenon of class resentment is a live political issue. Some commentators describe it as the Democrats' "middle-class problem", which means that there has been a spectacular collapse of support for the administration among the core blue-collar voters who should constitute its base. (This terminology may be confusing: the "middle class" in the US means the skilled working, or lower middle, class. University-educated professionals are described as the "upper middle class" which, in this country, tends to mean a notch or two below titled aristocracy.)


Gordon Brown's 'fairness' is not the kind of fairness most people wantThere was a warning of what was to come during the election campaign with Joe the Plumber, to whom Mr Obama unwisely confided his intention to "spread the wealth around". Americans who have risen from poverty to become qualified tradesmen or entrepreneurs generally believe that they have a right to put what wealth they produce back into their own businesses, rather than trusting governments to spread it around among those judged to be deserving.

But Joe's warning was not heeded. Most of the constituency whose instincts were the same as his voted for Obama, and have now lived to regret it. This in itself is not especially surprising: it could simply be seen as the self-interested politics of personal survival. What is more startling is the growth in America of precisely the sort of political alignment which we have known for many years in Britain: an electoral alliance of the educated, self-consciously (or self-deceivingly, depending on your point of view) "enlightened" class with the poor and deprived.

America, in other words, has discovered bourgeois guilt. A country without a hereditary nobility has embraced noblesse oblige. Now, there is nothing inherently strange or perverse about people who lead successful, secure lives feeling a sense of responsibility toward those who are disadvantaged. What is peculiar in American terms is that this sentiment is taking on precisely the pseudo-aristocratic tone of disdain for the aspiring, struggling middle class that is such a familiar part of the British scene.

Liberal politics is now – over there as much as here – a form of social snobbery. To express concern about mass immigration, or reservations about the Obama healthcare plan, is unacceptable in bien-pensant circles because this is simply not the way educated people are supposed to think. It follows that those who do think (and talk) this way are small-minded bigots, rednecks, oiks, or whatever your local code word is for "not the right sort".

The petit bourgeois virtues of thrift, ambition and self-reliance – which are essential for anyone attempting to escape from poverty under his own steam – have long been derided in Britain as tokens of a downmarket upbringing. But not long ago in America they were considered, even among the highly educated, to be the quintessential national virtues, because even well-off professionals had probably had parents or grandparents who were once penniless immigrants. Nobody dismissed "ambition" as a form of gaucherie: the opposite of having ambition was being a bum, a good-for-nothing who would waste the opportunities that the new country offered for self-improvement.

But now the British Lefties who – like so many Jane Austen heroines looking down on those "in trade" – used to dismiss Margaret Thatcher as "a grocer's daughter", have their counterparts in the US, where virtually everybody's family started poor. Our "white van man" is their Tea Party activist, and the insult war is getting very vicious. It is becoming commonplace now for liberals in the US to label the Tea Party movement as racist, the most damaging insult of all in respectable American life.

So the Democrats, who once represented the interests of ferociously self-respecting blue-collar America, are now seen – under their highly educated president, who wholeheartedly embraces the orthodoxy of the liberal salon – as having abandoned their traditional following. Which is precisely what Labour did here when it turned its back on what used to be called "the respectable working class" because of its embarrassing resentments and "prejudices" against welfare claimants, immigrants, and anti-social youths. Bizarrely, among people who see themselves as profoundly empathetic, there was an utter failure to understand why the spirit of benevolent understanding and tolerance did not flourish among those whose daily lives were directly affected by a mass influx of foreign workers, or local delinquency, or a welfare system that rewarded inertia.

So who will speak – both here and over there – for the aspiring, the enterprising, the law-abiding, and, perhaps most important of all in these economic times, the productive classes? Mr Cameron seems unsure whether he wishes to recapture the Thatcher constituency of C1s and C2s, or to cultivate the liberal drawing rooms with a green/overseas aid/gay marriage portfolio. He speaks warmly of the virtuous and hard-working, but his tax policies will make them pay off most of the national deficit out of their own pockets.

In the US, there is probably no going back for the Obama administration. It has definitively lost faith with the "little guy" voters who once thought of a Democratic presidency as a form of divine protection, and this president does not seem to have the ingenious flexibility of a Bill Clinton, who swung Right after his first disastrous years in office, partly under pressure from a Republican Congress.

What is most depressing about this – apart from the injustice of it – is that the people who have been disenfranchised and disowned are the very ones on whom both countries' economic recovery depends


1b)Angling for Harry Reid Why the tea party favorite thinks voters will reject the attacks on her views and help her topple the Senate majority leader.
By STEPHEN MOORE

Sharron Angle first realized the extent of the brewing revolt against Washington in late March, at a tea party protest in Searchlight, Nev. A "Woodstock of the West," she calls it. "More than 30,000 people sojourned to this tiny rural town of 900 people," Mrs. Angle says. "The highways were jammed up and became parking lots."

To get to the stage, this 60-year-old grandmother of 10 says she "climbed on the back of a Harley Davidson Road King bike and rode through the immense crowds." Once there, she reminded the throng that Senate Majority Leader Harry Reid must be replaced.

Now, after sprinting past two better-known and better-funded opponents in the June Republican primary, the party has chosen Mrs. Angle to go up against him. "I knew that if we were going to actually defeat Harry Reid," Mrs. Angle says, "we had to have a candidate who would offer a sharp policy contrast. Someone who would not just pay lip service to limited government principles, but had a solid record of voting that way time and again. I'm that candidate."

Thus has Sharron Angle—a former teacher, business owner, state legislator and political rabble-rouser—emerged as one of the three most prominent figures in the tea party movement. Sarah Palin and Rand Paul of Kentucky are the other two. Her campaign to become the next U.S. Senator from Nevada figures to be among the most closely watched, and surely among the most colorful, contests this November.

Liberal groups and Mr. Reid are gleeful that a "right wing extremist" has won the GOP nomination. At a recent fund raising dinner for the majority leader in Las Vegas, President Barack Obama labeled her "extreme, even for a Republican." Some Republicans privately grumble that she may be unelectable because of her staunchly conservative stands. And to be sure, some of her positions, such as banning fluoridated water or providing massages to rehabilitate convicts, seem a bit, well, odd.

But is she the kook Mr. Reid portrays her as in his TV ads?

I met with Mrs. Angle twice, first in Washington, D.C., late last month, then again during the Freedomfest conference last week in Las Vegas. In person, she seems anything but a threat to the American way of life. She is petite, has Irish red hair with and a pretty round face. She's friendly, but businesslike, and unlike most politicians, comes across as sincere in her convictions. Her husband, Ted, a 35 year veteran of the Bureau of Land Management (he explains that he's a conservative who worked to protect property rights, not violate them), stands constantly by her side as a confidant and de facto campaign manager.

When I ask whether it is really possible to knock off a Senate majority leader, she laughs and replies, "only Reid thinks he's too big to fail." Her strategy against the Reid attack machine is to link him to the lousy economy in Nevada. When I ask her if Nevadans want to give up Mr. Reid's clout in Washington, she replies: "When Harry Reid got to be majority leader, the unemployment rate was 4.4%. Now it is 14%, higher than even in Michigan. . . . What has Harry Reid's power done for our state?" Her new TV ad, unrolled this week, hammers this message. "We know he is going to attack me constantly," she says, because "he can't possibly run on his record."

Despite the deep recession, Mrs. Angle is not impressed by Mr. Reid's desire to extend unemployment benefits. "This only incentivizes folks that could work," Mrs. Angle says, "but can't, because they're making more on unemployment than they can by going back to work. The longer they're out of the work force, their skills become less marketable." Not too many Republicans even in safe seats are willing to speak that truth.

Regarding jobs, she points to Mr. Reid's role in killing three clean coal-fired plants in rural Ely, where she and her husband have lived since 1971. After years of opposition by Mr. Reid in league with various environmental groups, NV Energy halted development of a $5 billion plant in February 2009.

That meant the loss of 5,000 jobs, Mrs. Angle says. "That's really when we realized Harry Reid doesn't care about jobs or people losing their homes. And it's also when 'Anybody but Harry Reid' signs first began to sprout up all over the state."

Sharron Angle's first foray into activism was when her son was held back in kindergarten in 1983 and "the poor little guy was made to feel like a failure. He hated school." She wanted to home school him, but the school system and the courts said no. Her response was to open a one-room school with a Christian-based curriculum. It soon had 24 students.

"I didn't realize how many other parents were angry with the school system," she recalls. She charged $125 a month to cover the cost of supplies but taught for free. (Mrs. Angle has a degree in education from the University of Nevada, Reno.)

In 1985 she rallied hundreds of parents behind her successful effort to pass a bill through the Nevada legislature allowing parents to home school anywhere in the state. The result of her effort is that in Nevada home schooling has become a popular alternative to the public schools, and Mrs. Angle is referred to as the "home school heroine."

"I was just a mother, and the government had gotten between me and my child, and that's like getting between a mother bear and her cubs," she says. "I think that's what activates the tea party movement. What they see is the government interfering with their lives, and with the inheritance of their children. Are we going to pass down liberty or deficits? And that's really what this movement is about." The cub—her 6-year-old son—now has a masters degree and teaches high school history in Yerrington, Nevada.

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Mrs. Angle was later elected to the county school board, and in 1998 she ran for state legislature, where she served for eight tumultuous years. She gained a reputation as a crusader who wouldn't flinch in a battle with the leaders of either party. Critics lampoon the times she cast the lone "no" vote for spending bills. They began to call these votes "62 to Angle," she tells me, smiling.

Mrs. Angle's most legendary fight was within her own party. In 2003, then Gov. Kenny Guinn, a Republican, schemed to raise the sales tax by half a billion dollars. Mr. Guinn declared that anybody who opposed his tax was "irrelevant, irresponsible and cowardly." The governor seemed to be pointing directly at her, says Mrs. Angle. "He knew from the start I would be against it."

The frustrated governor couldn't get the constitutionally required two-thirds vote of approval without her. As she tells the story, "at one critical point, the minority leader asked me: 'So, Sharron, what's your number?' That meant how big a tax increase could I tolerate? And I told them my number was zero."

When the bullying failed, the Nevada Supreme Court, in a spectacular abuse of the constitution, allowed the tax hike to go through without the two-thirds vote. The justices decreed that the money was needed for the schools and that the right to an adequate education took precedence over a procedural safeguard.

The next day, Ms. Angle recalls, "I went into the conference room and was told there's nothing you can do, Sharron. It's all over. The Supreme Court has the last word. And I said, 'No, it's not over.'"

She spearheaded a movement to get the Supreme Court replaced. In the next election in 2006, voters threw out five of the seven members of the Nevada Supreme Court; the other two had retired. "It was a referendum on that tax increase vote," she argues. "And the new court came in and reversed that decision and made our constitution whole."

Democrats think Ms. Angle is a piñata they easily defeat. The attacks run the gamut from her antifluoridation views ("my constituents all opposed" fluoridation), to her desire to abolish the Education Department, to favoring private Social Security accounts.

Mrs. Angle stands her ground: "I support voluntary personal retirement accounts for Social Security," she says. "It should be people's free choice." But she also notes that her 83-year-old mother and 84-year-old mother-in-law are on Social Security and Medicare. "I certainly will work to protect their benefits," she says.

Mrs. Angle is not bashful about wanting to take a knife to what she labels "C-priority programs," including federal agencies like the Environmental Protection Agency. She thinks such bodies should be funded "by the states under the 10th Amendment." As for federal education funding, Mrs. Angle believes it's a drain because control of the schools "should stay as close to the local level as possible, where the child, the teacher, and the parent are the main stakeholders, and make the majority of the decisions.

"If we did that," Mrs. Angle contends, "we would see a lot more money actually spent in the classroom."

The explosion of federal debt under President Obama and Mr. Reid, according to Mrs. Angle, is a moral and economic calamity. "We simply have to stop the Obama-Reid spending and bailouts—now," she says. It's a simple message that resonates with the tea party faithful and Republican voters.

But the key in this Senate race are swing voters—the 20% of Nevada independents who went for Mr. Obama in 2008. The political pros I talked to in the state are skeptical she can win those voters because of their liberal-leaning social views.

Mrs. Angle takes exception to my suggestion that her pro-life and antigay rights positions could hurt her. "This is a state that twice has voted to ban same sex marriages," she reminds me.

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Still, the attack ads seem to be hurting her. A Las Vegas Review-Journal poll this week has the majority leader pulling into the lead for the first time by 44% to 37%. But his approval rating remains well below 50%, which always spells trouble for any incumbent, especially in this agitated political environment.

To win, Sharron Angle is going to need a major money influx from the conservative groups that pushed her over the top in the primary to counter the $25 million Mr. Reid is expected to spend. What Mrs. Angle has going for her is a contagious optimism that Nevadans would never send Mr. Reid back to the Senate given the fiscal carnage in Washington.

Nevada voters, she says, "are disillusioned, disappointed and disgusted with what had happened since the 2008 election. They are tired of this establishment machine that doesn't understand that we—the people— are in control. They are saying 'We don't care if you're a Republican or a Democrat. We don't believe either one of you.'"

She is banking on the depth of this discontent to help her topple the most powerful man in the United States Senate
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2) Three Million Imaginary Jobs
The White House says the stimulus worked beyond even its hopes. Seriously.

It may be that the last people in America who believe that the $862 billion economic stimulus of February 2009 created millions of net new jobs are Vice President Joe Biden and the staff economists in the White House. Yesterday, President Obama's chief economist announced that the plan had "created or saved" between 2.5 million and 3.6 million jobs and raised GDP by 2.7% to 3.2% through June 30. Don't you feel better already?


Christina Romer went so far as to claim that the 3.5 million new jobs that she promised while the stimulus was being debated in Congress will arrive "two quarters earlier than anticipated." Yup, the official White House line is that the plan is working better than even they had hoped.

We almost feel sorry for Ms. Romer having to make this argument given that since February 2009 the U.S. economy has lost a net 2.35 million jobs. Using the White House "created or saved" measure means that even if there were only three million Americans left with jobs today, the White House could claim that every one was saved by the stimulus.

The White House also naturally insists that things would be much worse without the stimulus billions spent on the likes of Medicaid payments, high speed rail projects, unemployment benefits and windmills. Mr. Obama said recently in Racine, Wisconsin that the economy "would have been a lot worse" and the unemployment rate would have gone to "12 or 13, or 15 [percent]" if government hadn't spent all of that money.

This is called a counterfactual: a what would have happened scenario that can't be refuted. What we do know is what White House economists at the time said would happen if the stimulus didn't pass. They said the unemployment rate would peak at 9% without the stimulus (there's your counterfactual) and that with the stimulus the rate would stay at 8% or below. (See the nearby chart.) In other words, today there are 700,000 fewer jobs than Ms. Romer predicted we would have if we had done nothing at all. If this is a job creation success, what does failure look like?

All of these White House jobs estimates are based on the increasingly discredited Keynesian spending "multiplier," which according to White House economist Larry Summers means that every $1 of government spending will yield roughly $1.50 in higher GDP. Ms. Romer thus plugs her spending data into the Keynesian computer models and, presto, out come 2.5 million to 3.6 million jobs, even if the real economy has lost jobs. To adapt Groucho Marx: Who are you going to believe, the White House computer models, or your own eyes?

Or, as Milton Friedman used to say, "there's no such thing as a free lunch." The money government spends does create some jobs—the folks working on road projects, say—but that money has to come from somewhere, which means taxing or borrowing it from areas of the private economy that are nearly always more productive. This doesn't mean that government spending is always a bad idea, but it does mean that government spending as economic stimulus is fanciful.

Harvard economist Robert Barro first blew apart Keynesian assumptions with his famous 1974 essay, "Are Government Bonds Net Wealth?" He and Charles J. Redlick, also of Harvard, recently updated this demolition in a new study for the Mercatus Center examining 50 years of defense spending in various countries. They find a multiplier effect of between 0.4 and 0.7. This means that government spending shrinks the private economy, because it "crowds out other components of GDP, particularly investment."

This would certainly explain better than Ms. Romer's computer models why a nearly $1 trillion stimulus has been followed by a mediocre economic recovery, a 9.5% unemployment rate, and almost no net new private job creation.
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3)Lost in Taxation: The IRS's vast new ObamaCare powers

If it seems as if the tax code was conceived by graphic artist M.C. Escher, wait until you meet the new and not improved Internal Revenue Service created by ObamaCare. What, you're not already on a first-name basis with your local IRS agent?

National Taxpayer Advocate Nina Olson, who operates inside the IRS, highlighted the agency's new mission in her annual report to Congress last week. Look out below. She notes that the IRS is already "greatly taxed"—pun intended?—"by the additional role it is playing in delivering social benefits and programs to the American public," like tax credits for first-time homebuyers or purchasing electric cars. Yet with ObamaCare, the agency is now responsible for "the most extensive social benefit program the IRS has been asked to implement in recent history." And without "sufficient funding" it won't be able to discharge these new duties.

That wouldn't be tragic, given that those new duties include audits to determine who has the insurance "as required by law" and collecting penalties from Americans who don't. Companies that don't sponsor health plans will also be punished. This crackdown will "involve nearly every division and function of the IRS," Ms. Olson reports.

Well, well. Republicans argued during the health debate that the IRS would have to hire hundreds of new agents and staff to enforce ObamaCare. They were brushed off by Democrats and the press corps as if they believed the President was born on the moon. The IRS says it hasn't figured out how much extra money and manpower it will need but admits that both numbers are greater than zero.

Ms. Olson also exposed a damaging provision that she estimates will hit some 30 million sole proprietorships and subchapter S corporations, two million farms and one million charities and other tax-exempt organizations. Prior to ObamaCare, businesses only had to tell the IRS the value of services they purchase. But starting in 2013 they will also have to report the value of goods they buy from a single vendor that total more than $600 annually—including office supplies and the like.

Democrats snuck in this obligation to narrow the mythical "tax gap" of unreported business income, but Ms. Olson says that the tracking costs for small businesses will be "disproportionate as compared with any resulting improvement in tax compliance." Job creation, here we come . . . at least for the accountants who will attempt to comply with a vast new 1099 reporting burden.

Meanwhile, the IRS will be inundated with useless information, because without a huge upgrade its information systems won't be able to manage and track the nanodetails.

In a Monday letter, even Democratic Senators Mark Begich (Alaska), Ben Nelson (Nebraska), Jeanne Shaheen (New Hampshire) and Evan Bayh (Indiana) denounce this new "burden" on small businesses and insist that the IRS use its discretion to find "better ways to structure this reporting requirement." In other words, they want regulators to fix one problem among many that all four Senators created by voting for ObamaCare.

We never thought anyone would be nostalgic for the tax system of a few months ago, but post-ObamaCare, here we are.
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4)Weapons Inspectors Can't Disarm Iran: Hostile regimes have too many ways to hide their clandestine nuclear programs
By DAVID KAY
Tehran's belligerent rhetoric about its nuclear program ratchets up daily, while the international community continues to push for tougher sanctions. The hope is that economic pressure can force Iran to the bargaining table, where it will agree to abandon its weapons capabilities—and that such disarmament will be verified by inspections. As a former weapons inspector, I have very bad news: A weapons-inspection regime in Iran will not work.

Inspection and verification are often viewed as ways to prevent a country from developing nuclear weapons. This is well beyond the capabilities of any conceivable inspection regime, especially given Iran's status as an almost-nuclear-capable state. The fact that inspectors must let Tehran carry out its civilian-nuclear effort while policing the military program makes the task largely unachievable.

The International Atomic Energy Agency (IAEA) would need access to all of the infrastructure that could possibly aid in fashioning a nuclear weapon and potential delivery systems. They also would need a full and complete declaration of all Tehran's nuclear components, all of its uranium enrichment, all of its plutonium-related activities, and all missile testing, production and deployment sites.

This is just not plausible when inspectors confront a hostile regime. Tehran has kept hidden its nuclear activities and support networks, domestic and foreign. It has refused repeated IAEA requests for interviews with the scientists and engineers responsible for large areas of its secret atomic work, and it has refused to disclose the details of its involvement with North Korea and with Pakistan's A.Q. Khan nuclear smuggling network.

The result is that Iran now has a broad capability in all aspects of the complex nuclear-weapons process—from converting natural uranium into enriched uranium using gas centrifuges, to designing and testing the components of a nuclear weapon, to working on the construction of a missile-deliverable warhead, to building and testing missiles capable of delivering that nuclear warhead over significant distances.

Imagine the following scenario: Inspectors are roaming around Iran trying to find a clandestine centrifuge plant. They have information that it is hidden in an Iranian military base, but that's all they know. Which base and where in that base is unknown. The inspectors would like to descend on various sites without advance notice, with equipment capable of searching underground as well as above ground, and conduct environmental sampling. They would also insist on interviewing personnel and looking over anything entering or leaving the base during their time in situ.

This is exactly how inspection regimes have fallen apart in the past. The realities on the ground are too complex for inspectors to ever be able to promise even a 50% guarantee of success. Access to facilities, personnel, communications and documents is often delayed—if not entirely denied—by a hostile regime such as Iran's.

There's also the question of manpower. The IAEA would need a large body of adequately trained, equipped, supported and financed inspectors, but the only countries capable of supplying them are the United States, the United Kingdom and France—countries that would obviously be viewed with great distrust by Iran. On the other hand, Russian and Chinese personnel would clearly be suspected of bias in favor of the Islamic Republic. Israel, Pakistan and India have qualified scientists, but hardly seem an appropriate source of inspectors. So, creating a technically qualified group of people that is both acceptable to Iran and independent would be a huge hurdle. Arms-control inspections are easier for political leaders to support in the abstract than in actual operation.

We have seen the failures time and again. Individual IAEA inspectors in the 1980s raised serious questions about the extent and direction of Iraq's nuclear program. These suspicions were buried, and the inspectors moved to other jobs. Even after the 1991 Gulf War, the IAEA leadership at first rejected inspection findings that showed massive violations by Iraq.

Beginning in the early 1990s, the IAEA leadership gave Iran a public "clean bill of health" on living up to its safeguard obligations as a signatory of the Nuclear Non-Proliferation Treaty in the face of questions from inspectors. Even after Iran's 20-year-long clandestine program started to be revealed, the IAEA inspectors have had a hard time getting United Nations authority to confront the Islamic Republic. It is easier to temporize and delay than to confront violations.

The net result is that violators become emboldened and inspectors become demoralized, learning to look the other way when transgressions are discovered.

The blunt truth is that weapons inspections simply cannot prevent a government in charge of a large country from developing nuclear weapons, when that government has decided to breach its obligations not to. The international community must use inspectors when possible to aid their efforts, but it needs to face up to the fact that these people are not the answer to the problem at hand. If they fail to see the limits of the IAEA or any other inspection team, only further disaster awaits.

Mr. Kay led the U.N. inspections after the Persian Gulf War that uncovered the Iraqi nuclear program. He later led the CIA's Iraq Survey Group, which determined there were no Iraqi weapons of mass destruction at the time of the 2003 invasion. A longer version of this op-ed appeared in the March/April issue of The National Interest.
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5)Can a Democrat Take the Georgia Governor's Mansion? A loss in this year of the GOP would be embarrassing—and fully deserved
By KYLE WINGFIELD

For a case study in how red state Republicans are giving Democrats an opening in what should be a GOP year, look no further than the Georgia governor's mansion.

It's been eight years since Georgians elected Sonny Perdue as their first Republican governor since Reconstruction. But his tenure has offered future candidates few bragging rights, and the Republican field for this Tuesday's primary is an uninspiring jumble. With the GOP anticipating big national success in November, a high-profile loss in Georgia would be a stinging embarrassment.

After decades of promising to make government leaner and cleaner if given the chance, state Republicans adopted many of the bad habits they'd criticized. Since 2000, Georgia has had one of the nation's fastest growing populations, but surging revenues didn't translate into tax cuts. The budget grew three times faster than the population did—almost 40%, to $21.2 billion in fiscal year 2009 from $15.2 billion in 2003.

When the recession hit and revenues plunged, the state's GOP leadership only downsized a little bit, and then only very reluctantly. Over the past two years they have rescinded $428 million in property tax relief that their Democratic predecessors had passed, instituted a $200 million plus hospital bed tax, relied on billions in federal stimulus dollars to balance the budget, and tried to get by with a series of furloughs—anything but make lasting cuts.

Meantime, they've accomplished little on the conservative agenda they all pay lip service to. A 2005 tort reform was gutted this spring by the state Supreme Court in a unanimous decision. As for school choice, there's been only modest progress: This spring, legislators couldn't even bring themselves to extend vouchers to military families and foster kids, likely because they feared a backlash from the education establishment. And lawmakers made only one attempt to simplify the convoluted state tax code.

The Republicans' best reason for optimism is a conservative electorate that bucked the leftward national trend in 2006 and 2008, and is hot as a teapot about President Obama's policies.

For months, the nominal GOP front-runner has been John Oxendine, who's served as the state's insurance commissioner since 1995. Despite being well-known, Mr. Oxendine is shunned by the Georgia Republican establishment, which considers him a potential nightmare for the party's image. He's been ridiculed in the press for putting a siren and blue light atop his personal car to weave through Atlanta traffic.

More seriously, Mr. Oxendine faces a state ethics investigation into money funneled to his campaign from a friendly insurance executive via out-of-state PACs. He returned the money after my newspaper reported the donations; an ethics commission hearing has been postponed until after the primaries.

But the most recent polling suggests that former Secretary of State Karen Handel may have overtaken Mr. Oxendine. As in other states, like California and South Carolina, Sarah Palin seems to have worked her magic: Mrs. Handel's popularity took off after Mrs. Palin endorsed her this past week. Within days, she rolled out a robocall recorded by Mrs. Palin to more than 300,000 households.

Mrs. Handel also touts the support of Arizona Gov. Jan Brewer. Her state's fight with the federal government over its new illegal immigration law has many fans in Georgia, which reportedly has more illegal aliens than Arizona does.

These endorsements have chapped the hide of a third candidate, Nathan Deal, who until recently was tied for second place with Mrs. Handel. In an otherwise quiet 17 years in Congress, Mr. Deal repeatedly proposed ending birthright citizenship for immigrants. His tactic has been to portray Mrs. Handel as socially liberal on issues like gay rights, which in Georgia is a political liability.

Hoping to slide by them as they squabble is longtime state senator Eric Johnson. Mr. Johnson is an outspoken school-choice advocate and may be the purest social and economic conservative in contention. But the Savannah resident is not well-known among the Atlanta suburbanites who cast a big chunk of GOP primary votes.

Awaiting the eventual GOP nominee presumably will be Roy Barnes, a Democrat who served one term as governor before Mr. Perdue defeated him in 2002. Mr. Barnes entered the race as the Democratic leader, and the main question is whether he can win the nomination without a runoff.

Either way, Mr. Barnes would still face an uphill battle in a conservative state. His chance of moving back into the governor's mansion hinges on which candidate emerges from the GOP contest. Running against Mr. Oxendine would be Mr. Barnes's best bet; if he's on the Republican ticket, many conservative voters and activists would likely stay at home.

If Mr. Barnes can convince voters he's not a Democrat in the Obama-Pelosi-Reid mold—he's already talking about tax cuts and helping small businesses—while Republicans bloody each other in a run-off, Georgians may decide that after 130 years of all-Democratic rule and an eight-year GOP reign, it's time to see what divided government looks like.

Mr. Wingfield is a columnist for the Atlanta Journal-Constitution.
-------------------------------------------------------------------------------------6)Parameters for a Final Peace Agreement between Israel and the PA
By Ted Belman

It is safe to say that the purpose of the Netanyahu-Obama meeting on July 6 was to demonstrate that the two are friends and that the U.S.-Israel bond is unbreakable. Obama needed to send such a message going into the November elections, and Netanyahu needed such a message to keep his coalition intact.


That doesn't mean that the settlement freeze will end in September.


Netanyahu announced that he expected direct talks to start within weeks, and Saeb Erekat announced that the PA wants the freeze to continue and wants guarantees that the direct talks will result in "the establishment of an independent Palestinian state on the lands captured in the 1967 war and small territory exchanges to solve the problem of the settlements."


It is entirely possible that Obama will broker a deal whereby the PA agrees to talks in exchange for a continuation of the freeze in whole or in part. It is less likely that Obama will give such a guarantee.


Many people argue that we know what the ultimate deal will look like -- namely the creation of an independent, viable, contiguous Palestinian state with the '67 borders with minor swaps, a divided Jerusalem, and a just solution to the refugee problem. The truth is quite the opposite.


The peace process began with UNSC Resolution 242, whose goal it was to achieve a "peaceful and accepted settlement." Thus, any settlement must be agreed upon and not imposed. The resolution required "[w]ithdrawal of Israeli armed forces from territories occupied in the recent conflict." There was much debate before this language was adopted by the UNSC, clearly indicating that not all territories must be withdrawn from. In fact, Israel has already withdrawn from more than 90% of such territories in the form of Sinai and Gaza. Little-noticed is that this provision requires no withdrawal from territories occupied in the '48 war of independence.


This resolution also provided that such a settlement must include "termination of all claims or states of belligerency" and the recognition that "every State in the area" has the "right to live in peace within secure and recognized boundaries free from threats or acts of force." This is the basis for Israel demanding an end-of-conflict agreement.


At the Rabat Conference in 1974, Jordan and all Arab countries recognized the PLO as the "sole legitimate representative of the Palestinian people" with respect to Judea and Samaria (the West Bank).


Egypt signed such a peace treaty with Israel in 1980. Jordan signed a peace treaty with Israel in 1994.


Pursuant to the Oslo Accords, Israel must now reach an agreement with the Palestinian Authority, which replaced the PLO as the negotiating party. The Oslo Accords did not predetermine the disposition of Jerusalem, borders, Israeli settlements, and refugees other than to label them as final status issues to be negotiated. The Oslo Accords envisioned a settlement pursuant to the parameters of Resolution 242.


In 2003, the Roadmap was accepted by the PA and by Israel, albeit subject to fourteen reservations. Chief among the changes to the peace parameters of Oslo was the insertion of the Saudi Plan, later adopted as the Arab League Initiative. This plan was at odds with Resolution 242 in that it required the withdrawal from all occupied territories subject to minor swaps of land of equal value, the division of Jerusalem, and a just settlement of the refugee problem pursuant to General Assembly Resolution 194, which provided
that refugees wishing to return to their homes and live at peace with their neighbors should be permitted to do so at the earliest practicable date, and that compensation should be paid for property of those choosing not to return.


This resolution, being passed by the General Assembly, was not binding.


PM Sharon objected strenuously to the insertion of the Saudi Plan, but Secretary Powell overcame his objections by ramming it down his throat, arguing that "the Roadmap is only a process."


Sharon had one more bite at the apple when he was negotiating with President Bush for a letter of commitment and principles in conjunction with the proposed disengagement from Gaza.


Dore Gold of the JCPA commented on the significance of this letter.


•President Bush's April 14, 2004, letter to Prime Minister Sharon represents a significant shift in U.S. policy, as compared to the Clinton Parameters advanced by the former president after the failed Camp David Summit of July 2000 and in subsequent months.
•In his plan, Clinton provided conditional approval of settlement blocs, but insisted that there needed to be "territorial swaps" of land from pre-1967 Israel in exchange for any West Bank land Israel would retain. Bush does not insist on any land swaps involving Israeli territory.
•Clinton spoke of Palestinian refugees finding homes in other states including Israel, while Bush states that Palestinian refugees should be settled in a future Palestinian state "rather than Israel."
•The Clinton Parameters dropped the idea of defensible borders and replaced them with "security guarantees" including a proposed "international presence" in the Jordan Valley. In contrast, Bush refers to "defensible borders" in the context of preserving and strengthening "Israel's capability to deter and defend itself, by itself."
•According to the Clinton Parameters, Israel's security needs "need not and should not come at the expense of Palestinian sovereignty or interfere with Palestinian territorial integrity." In contrast, Bush allows for Israel to continue to control airspace, territorial waters, and land passages in the Gaza Strip and the West Bank "pending agreements or other arrangements."
•During the Clinton era, the signing of a peace treaty was supposed to produce security for Israelis. Under Bush, security must be achieved first, as a prerequisite for peace. Given the threats Israel still faces from Hamas, Islamic Jihad, and Yasser Arafat's own Fatah Tanzim, the approach taken in the Bush letter represents a significant improvement for Israel and for the prospects of a lasting peace.
•The Clinton Parameters explicitly envisioned the re-division of sovereignty in Jerusalem according to a formula whereby "what is Arab should be Palestinian" and "what is Jewish should be Israeli." Bush's letter is silent on the issue of Jerusalem. While support for a unified Jerusalem under Israeli sovereignty is missing, at least there is no attempt to return to the Clinton formulations.


Thus, the Clinton Parameters were much in line with the Saudi Plan, and the Bush letter flew in the face of both of these and resorted to Resolution 242, which provided the original parameters of Oslo.



In June of last year, Secretary Clinton disavowed the Bush letter, saying it "did not become part of the official position of the United States government." Israel begs to differ.


When Obama was interviewed by Yonit Levi for Israel TV on July 7, he said at forty seconds into Part 2, "our view on settlements is consistent with all the previous administrations" and continued "that view was always voiced not in the spirit of trying to undermine Israel's security but to strengthen it." He made it clear that he was talking about the freeze, which he called the "moratorium."


Keep in mind that there are two separate but interconnected issues here: namely where Israel can build in the interim and what lands she is expected to cede in the final agreement. Bush's letter clearly referred to the parameters for final settlement, but such parameters have implications for where he permitted Israel to build in the interim. Israel and the Bush administration had agreed that Israel could build within the construction line of the settlements in Judea and Samaria and could build unabated in the settlement blocks. Obama is flat-out wrong to say that his view on settlements is consistent with that of Bush. It isn't. By demanding the freeze, Obama was against Israel building anywhere east of the green line.


The Jerusalem Post reported on July 5,


"according to [an Israeli] proposal, Obama would publicly hint at acceptance of then-US president George W. Bush's 2004 letter to then prime minister Ariel Sharon, and Netanyahu would say that while settlement construction would continue inside the large settlement blocks, it would not be restarted outside of those areas.

The Washington Times reported the next day on the significance of the Bush letter and reported that Dan Shapiro, the White House National Security Council's senior director for the Middle East and North Africa, "declined to say whether the 2004 letter reflected the Obama administration's understanding of the parameters or borders of a final settlement to the conflict."


So this proposal is still out there. President Obama must accept the terms of the Bush letter for there to be any progress. Even then, there will be great debate on what blocs will be included. Negotiations will include whether Israel will cede Arab east Jerusalem (where the Palestinians live) to the PA and whether it will allow a token return of refugees, both in line with the Clinton parameters. It is likely that if Israel gets to retain more land and settlements, it will be more flexible on accepting a token number of refugees. Thus, all the issues are interrelated.


In the interview mentioned above, Obama was asked if he was still demanding a freeze, and he replied that he now only seeks direct negotiations. Make of that what you will.

Still to be debated are whether Israel will get defensible borders and whether the Bush letter will be followed in placing Israel security needs above Palestinian sovereignty.


The fact that the PA doesn't speak for nearly half the Palestinians who are living in Gaza is an issue that can not be ignored. If Israel came to an agreement with the PA on final status issues, Hamas, which runs Gaza and remains dedicated to Israel's destruction, could hold out. The fact that the PA continues to incite sentiment contrary to the Roadmap is also ignored.


The bottom line is that all issues are to be negotiated and agreed upon. This requirement is in both Resolution 242 and the Roadmap. If there is no agreement between the two parties, which is likely, will Obama or the U.N. attempt to impose a plan, even though it is illegal to do so under prior agreements?


Ted Belman is a retired lawyer and editor of Israpundit. He made aliya in 2009 and lives in Jerusalem.

6a)Syria massacres Kurds aided by Turkey's Israel-made drones


Syrian troops and Kurdish tribesman are locked in fierce battle since the Syrian army blasted four northeastern Kurdish towns and neighborhoods at the end of June, military and intelligence sources report. Hundreds of Kurds are reported dead.

The Syrian campaign is backed by Heron (Eitan) spy drones Israel sold Turkey, made accessible on the personal say-so of Prime Minister Tayyip Recep Erdogan. Turkey therefore becomes the first NATO member to make advanced Western military technology available for the use of a strong ally of radical Iran and an active sponsor of terrorists. Following intense exchanges between Jerusalem and Washington, the NATO command was urged to put Ankara on the carpet - with no response as yet.

The drones are being used to track Kurds in flight across Syria's borders, mainly into Lebanon, where Hizballah is helping Syria hunt the refugees down. The accessibility to Damascus of the unmanned aerial vehicles is in direct breach of the Israel-Turkish sales contracts which barred their use - and the use of other Israeli high-tech items sold to Turkey during years of close military collaboration - in the service of hostile states or entities.

Extending their sphere to Syrian and Lebanese skies gives the Syrian army and Hizballah (Iran's external arm) a unique opportunity to study the Heron (Eitan)'s sophisticated attributes in real combat conditions at close hand and adjust their own tactics accordingly to outwit them.

Intelligence sources have no doubt that Iranian intelligence officers stationed in Damascus and Beirut jumped at the opportunity to learn more about the Israeli wonder-drones.

Regarding the crackdown on the Kurds, our military sources report that three large-scale Syrian military operations against the Kurdish people are in progress under the guidance of Turkish generals based at Syrian staff headquarters in Damascus:

1. Syrian elite forces are battling suspected Kurdish members of the Turkish PKK in at least four northeastern Syrian towns near the Syrian-Turkish-Iraqi border triangle: the big Kurdish town of Qamishli, the mixed Kurdish-Assyrian town of Al Asakah and two others, Qaratshuk and Diwar. All four and their outlying villages are under massive Syrian army siege after complete residential blocks were blasted - acting as the trigger for the current fighting.

Not all the victims are PKK fighters by any means. Most were civilians. Turkish intelligence sources tried to justify the Syrian massacre and their government's complicity by claiming that 2,000 of the 6,000 PKK fighters conducting terrorist attacks in Turkey from North Iraqi havens are Syrian Kurds or providers of alternative bases for their Turkish comrades to strike Turkish military positions from a second direction.

While until Saturday, July 17, Damascus was tight-lipped about its grim campaign against its Kurdish community, Turkish military sources were more vocal. They placed the number of Kurdish dead in battle at 185 and another 400 taken captive, many of whom will be turned over to Ankara. Our sources estimate the number of dead as much higher - more than 300, with at least 1,000 injured.

2. Large Syrian contingents are sealing the Iraqi border against the flight of Syrian Kurds - but also to block the entry of PKK reinforcements for aiding their beleaguered brethren.

3. The Syrian-Lebanese frontier is similarly sealed to keep Kurdish fighters from fleeing the country. debkafile's military sources report that on this border, Syrian and Hizballah units are working together, with the latter forcibly blocking the roads to Lebanese cities.

An all-night gunfight in the Al-Naba'a (Tel Azaatar) district of south Beirut ended Wednesday morning, July 14 with an unknown number of Kurdish fighters dead.

One was identified by residents as Al Haj Reid, aged 37, a recent arrival from Syria.
When Turkish reporters finally tackled Syrian president Bashar Assad on his anti-Kurd campaign Saturday morning, July 17, their questions were smoothly turned aside. "I'm not following the details concerning this operation," said the Syrian ruler. "The issue is not about capturing 10 or 100 terrorists. What matters is the principle."

He added: "Our cooperation with Turkey in the security field is not new (!). We have coordinated for many years. Intervening when there are preparations for a terrorist attack or for infiltration is a dimension of this cooperation."

Military sources comment: Syrian military cooperation dates recently from the military pact they signed in October 2009.

As a big ceremony was staged Saturday to celebrate the 10th anniversary of Bashar Assad's ascent to power, the US-based Human Rights Watch group published a report called "A Wasted Decade" declaring there is "no freedom, no rights" in Syria. Instead of the transparency and democracy he promised, his regime suppresses criticism and its prisons soon filled with political prisoners, journalists, and human rights activists.
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7)Home /News /Health and Fitness News from the Boston Globe
Firms cancel health coverage, With cost rising, small companies turning to state
By Kay Lazar

The relentlessly rising cost of health insurance is prompting some small Massachusetts companies to drop coverage for their workers and encourage them to sign up for state-subsidized care instead, a trend that, some analysts say, could eventually weigh heavily on the state’s already-stressed budget.

Since April 1, the date many insurance contracts are renewed for small businesses, the owners of about 90 small companies terminated their insurance plans with Braintree-based broker Jeff Rich and indicated in a follow-up survey that they were relying on publicly-funded insurance for their employees.

In Sandwich, business consultant Bill Fields said he has been hired by small businesses to enroll about 400 workers in state-subsidized care since April, because the company owners said they could no longer afford to provide coverage. Fields said that is by far the largest number he has handled in such a short time.

“They are giving up out of frustration,’’ Fields said of the employers. “Most of them are very compassionate but they simply can’t afford health insurance any more.’’

Precisely how many small businesses have recently given up offering insurance is hard to pinpoint. The Office of Labor and Workforce Development said the most recent quarterly insurance data collected from small companies has not been compiled.

State officials said they have not seen convincing evidence that there is a trend. There has not been an unusually large spike in enrollment in Commonwealth Care, the subsidized insurance program, according to spokesman Richard Powers. And in any case, Dr. JudyAnn Bigby, secretary of health and human services, said the administration budgeted for higher health care spending because it anticipated that there would be growing numbers of long-term unemployed residents who would be signing up for coverage.

The Massachusetts Division of Health Care Finance and Policy annually surveys employers and found no significant drop in coverage as of the end of 2009, when more than three-quarters of companies offered health insurance.

But insurance brokers say the pace of terminations has picked up considerably since then among small companies, of which there are thousands in Massachusetts. Many of these companies — restaurants, day-care centers, hair salons, and retail shops — typically pay such low wages that their workers qualify for state-subsidized health insurance when their employers drop their plans.

“Those employers are trying to keep their doors open, and to the extent they can cut expenses, they will cut health insurance because they know their people can go to Commonwealth Care,’’ said Mark Gaunya, president of the Massachusetts Association of Health Underwriters, a trade group representing more than 1,000 brokers and other insurance professionals.

The issue is coming to a head as the Patrick administration battles insurers over swiftly escalating rates they have been charging small employers. In February, the governor filed sweeping legislation that proposes to give the Division of Insurance the power to essentially cap health care price increases. That proposal is still pending.

And on April 1, exercising authority the administration had never before used, the division denied 235 of 274 increases proposed by insurers for plans covering individuals and small businesses — base premiums would have increased as much as 32 percent. On July 1, it again held 137 proposed increases to 2009 rates.

The sides have been locked in negotiations for months, with the Patrick administration recently reaching agreement with two insurance carriers on lower rates.

“The Patrick-Murray Administration has taken decisive action to provide small businesses and working families with immediate relief from skyrocketing health insurance premiums,’’ the governor’s press secretary, Juan Martinez, said in a statement. He declined to directly address whether small businesses are increasingly dropping health coverage and directing their workers to subsidized care.

But analysts said the burden of double-digit insurance increases shouldered by small businesses over the last several years is likely to become more of a public problem.

“The more the employer insurance system unravels, the higher the cost is going to be for the state in providing subsidies to low income workers,’’ said Larry Levitt, vice president of the Kaiser Family Foundation, a California-based think tank. “From a state finance perspective, stabilizing employer insurance is definitely important.’’

The state’s landmark 2006 health insurance overhaul included regulations designed to discourage low-wage employees from opting for state health insurance over their companies’ often more pricey coverage. It denied eligibility to any one whose employer had offered him or her coverage in the past six months and paid at least 33 percent toward the individual’s plan.

Most health care advocates and brokers had widely interpreted that to include even workers whose companies had dropped coverage. But recently, some companies that have terminated their group plans have tested those waters and found that their employees were accepted for state-subsidized coverage.

Additionally, company owners say, it has become far cheaper to pay the state penalty for not covering their workers — roughly $295 annually per employee — than to pay thousands more in premiums.

In New Bedford, the Early Learning Child Care center is now paying $1,500 quarterly in fines to the state, instead of the $30,000 it contributed quarterly toward 13 workers’ health insurance premiums. When Executive Director Judy Knox terminated the company’s health plan late last year, she asked Fields, the consultant, to help 10 of those workers enroll in Commonwealth Care. The other three went on spouses’ plans or were eligible for Medicare.

“We had had, in the three previous years, between 17 and 18 percent increases every year,’’ Knox said. “I was so worried about the staff and their coverage, but for most of them, Commonwealth Care seems to be working out very well.’’ The state program covers people with incomes up to 300 percent of the federal poverty level.

Come 2014, when the bulk of the federal health care law goes into effect, the penalties for small companies that do not provide health insurance coverage will be less onerous than those in Massachusetts. That could tempt more small companies to opt out nationally, sending more workers to the public rolls — if health care costs can’t be restrained, some analysts said.

“Struggling business don’t necessarily feel the need to offer coverage to attract workers,’’ said Kaiser’s Levitt.

Massachusetts has not decided whether to adopt the federal rules for small businesses.

The federal law does not impose any penalty on companies with fewer than 50 employees that do not offer coverage, whereas in Massachusetts, employers with more than the equivalent of 11 full-time employees face fines for not offering a health plan and contributing at least 20 percent toward that coverage. But for companies with more than 50 workers, the federal law comes down a lot harder than does the state law.
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8)Why the silence from The Post on Black Panther Party story?
By Andrew Alexander

Thursday's Post reported about a growing controversy over the Justice Department's decision to scale down a voter-intimidation case against members of the New Black Panther Party. The story succinctly summarized the issues but left many readers with a question: What took you so long?

For months, readers have contacted the ombudsman wondering why The Post hasn't been covering the case. The calls increased recently after competitors such as the New York Times and the Associated Press wrote stories. Fox News and right-wing bloggers have been pumping the story. Liberal bloggers have countered, accusing them of trying to manufacture a scandal.

But The Post has been virtually silent.

The story has its origins on Election Day in 2008, when two members of the New Black Panther Party stood in front of a Philadelphia polling place. YouTube video of the men, now viewed nearly 1.5 million times, shows both wearing paramilitary clothing. One carried a nightstick.

Early last year, just before the Bush administration left office, the Justice Department filed a voter-intimidation lawsuit against the men, the New Black Panther Party and its chairman. But several months later, with the government poised to win by default because the defendants didn't contest the suit, the Obama Justice Department decided the case was over-charged and narrowed it to the man with the nightstick. It secured only a narrow injunction forbidding him from displaying a weapon within 100 feet of Philadelphia polling places through 2012.

Congressional Republicans pounced. For months they stalled the confirmation of Thomas E. Perez, President Obama's pick to head the Justice Department's Civil Rights Division, while seeking answers to why the case had been downgraded over the objections of some of the department's career lawyers. The Justice Department's Office of Professional Responsibility launched an investigation, which is pending. The independent, eight-member Commission on Civil Rights also began what has become a yearlong probe with multiple public hearings; its report is due soon. Rep. Frank R. Wolf (R-Va.), a prominent lawmaker in The Post's circulation area, has been a loud and leading critic of how the case was handled. His office has "aggressively" sought to interest The Post in coverage, a spokesman said.


The controversy was elevated last month when J. Christian Adams, a former Justice Department lawyer who had helped develop the case, wrote in the Washington Times that his superiors' decision to reduce its scope was "motivated by a lawless hostility toward equal enforcement of the law." Some in the department believe "the law should not be used against black wrongdoers because of the long history of slavery and segregation," he wrote. Adams recently repeated these charges in public testimony before the commission.

The Post didn't cover it. Indeed, until Thursday's story, The Post had written no news stories about the controversy this year. In 2009, there were passing references to it in only three stories.

That's prompted many readers to accuse The Post of a double standard. Royal S. Dellinger of Olney said that if the controversy had involved Bush administration Attorney General John D. Ashcroft, "Lord, there'd have been editorials and stories, and it would go on for months."

To be sure, ideology and party politics are at play. Liberal bloggers have accused Adams of being a right-wing activist (he insisted to me Friday that his sole motivation is applying civil rights laws in a race-neutral way). Conservatives appointed during the Bush administration control a majority of the civil rights commission's board. And Fox News has used interviews with Adams to push the story. Sarah Palin has weighed in via Twitter, urging followers to watch Fox News anchor Megyn Kelly's coverage because "her revelations leave Left steaming."

The Post should never base coverage decisions on ideology, nor should it feel obligated to order stories simply because of blogosphere chatter from the right or the left.

But in this case, coverage is justified because it's a controversy that screams for clarity that The Post should provide. If Attorney General Eric H. Holder Jr. and his department are not colorblind in enforcing civil rights laws, they should be nailed. If the Commission on Civil Rights' investigation is purely partisan, that should be revealed. If Adams is pursuing a right-wing agenda, he should be exposed.

National Editor Kevin Merida, who termed the controversy "significant," said he wished The Post had written about it sooner. The delay was a result of limited staffing and a heavy volume of other news on the Justice Department beat, he said.

Better late than never. There's plenty left to explore.
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