Pinnacol escapes, but lessons linger

Editor: The capitol gang's thieving intent toward Pinnacol shouldn't be forgotten, even though on April 15 (fittingly) they called off the heist. Mark Hillman draws exactly the right lesson. Stealing is wrong - even if government does it We allow government to tax and spend, recognizing that forcibly taking the fruits of someone else's labor would constitute theft if anyone else did it.

In turn, we expect our elected officials to remember that their responsibility is to represent taxpaying families and businesses - not to protect government at all costs.

Well, after three years of spending every available tax dollar, dismissing every opportunity to save for the next downturn, and surreptitiously raising taxes without voter approval, Colorado's Democrat lawmakers are now planning to steal - a term I don't use loosely - $500 million to balance this year's state budget.

Targets of the heist are Colorado businesses that protect their employees against workplace injuries by purchasing coverage from Pinnacol Assurance, a state-sanctioned insurance company.

Although created in state law, Pinnacol operates as a mutual insurance company for which the state assumes no liability. When Pinnacol suffers losses, Colorado employers pay higher premiums. If Pinnacol builds a surplus, employers receive rebates.

After years of financial distress, Pinnacol turned a $200 million deficit into a surplus reserve of some $700 million - from which Democrat leaders, Governor Ritter and (it gives me no pleasure to note) two Republican legislators now intend to beg, borrow or outright steal.

Inconveniently, Colorado law explicitly explains that state government "has no claim to nor any interest in (Pinnacol's) revenues, money, and assets and shall not borrow, appropriate, or direct payments . . . for any purpose."

If the constitution doesn't constrain these lawmakers, mere statutes won't either.

So this is what it's come to: lawmakers suggest that their only options are to steal money paid by Colorado employers to pay for workplace injuries or to cut $300 million from colleges and universities.

Perhaps if anytime in the past year those same lawmakers and Gov. Ritter had heeded warnings of a recession they wouldn't be in such a fix. Instead, they built a budget based on rosy economic projections, then ignored warnings from their own economists, then underestimated the magnitude of their earlier errors, and finally acted after their options were severely limited by their own intransigence.

Gov. Ritter conceded as much recently when he told listeners to KOA's Mike Rosen Show: "We already for next year's budget have cut $1.2 billion and have $300 million more to find."

Why is it necessary to cut so much from next year's budget when revenues fell far more in the current year ($1.1 billion) than from this year to next ($100 million)? Because statehouse leaders balanced this year's budget mostly with smoke and mirrors.

When business leaders objected to the proposed Pinnacol heist, lawmakers whined.

Sen. Suzanne Williams (D-Aurora) wanted car dealer John Medved, testifying at a committee hearing, to tell her how to balance the budget without stealing from the injured workers fund. Medved instead schooled Williams on budget balancing in the real world where theft is still illegal, explaining the tough choices he made to address a $500,000 a month shortfall.

Meanwhile, "enraged" college students rallied on the Capitol steps with clever signs - or so they thought - asking "WTF? Where's the funding?" As though they and their professors have an inherent right to taxpayer subsidies.

So long as colleges and universities offer a plethora of trivial degrees in professional victimology, rather than focusing scarce resources on genuine disciplines like medicine, engineering and physics, such pleas of poverty can't be taken seriously.

Unfortunately, Sen. Al White (R-Hayden) outrageously pandered to students, telling them Pinnacol has their funding. The obvious lesson is that a business that responsibly saves for hard times will be plundered by those that do not.

Gov. Ritter could have exhibited leadership by squelching the idea immediately. Instead, he needs the legislature's help to cover his dismal fiscal record and, therefore, can't afford confrontation.

"First, it's a legal question. Then it's a question of whether it's the right thing to do," he explained to a KOA caller.

Ritter has it backwards, forgetting a lesson his mother surely taught him: the first question is whether it's right or wrong. And stealing is wrong, even if a lawyer says it's legal.

What I saw at the big protest

Many folks in Denver are mad and appear not ready to accept our government as it currently stands. More than 5000 people made it a point to congregate at the state capitol under a sunny, warm sky at noon on Wednesday, TAX DAY. The most accurate statement that can be made about the rally is that: Once again, the people “get it,” but the politicians and the media, still do not get it. Let me make my point:

The people really do get it: There were signs all over the place decrying the rise of socialism, higher taxes ahead, government bailouts, the loss of economic freedom, etc. There was even a sign saying, “I left a socialist country for this?”

Most notably there were constant calls for Tax Ritter to show up. A mom likened herself to a rattlesnake that warns its prey before its deadly attack. Politicians take warning was her final statement. Another man told the crowd how “pissed off” he was. To make his point, he repeated his chant as he listed all the ills of our current government policies. He did this to repeated cheers from the crowd. Another speaker called for a third party, as he reminded us that both the Dems and the Repubs got us into this mess. I loved the guy that opined: Kick all the bastard out!!!

Now we get to the media. I’ve got to call out the Denver Daily News. The headline read: Tea-d off over illegals” by Peter Marcus. Wednesday April 15, 2009.

I called Mr. Marcus who told me he had no agenda by highlighting the Illegal issue. When I challenged him, he told me he mentioned the tax issues in the second paragraph and that showed he didn’t have an agenda. Folks, this is the problem with the media today. For someone to take that stand; shows either complete disregard for reality or an agenda. That agenda being, let’s highlight the Illegal Immigrant issue rather than the real tax issues.

It has also come to my attention that many of the major media outlets treated the Tea Party rallies with the same approach. That being: This is just another right wing attempt to rally the Republicans for the next election cycle.

The media's approach just makes my point: The media thinks it makes the news and they hate the fact that they are losing power over the people.

Multiple taxes support grasping government

"In political arithmetic, two and two do not always make four.'' Alexander Hamilton quoted this old maxim in the Federalist Papers in his discussion of the need for taxes to support the government being proposed by the Federal Convention of 1787. Hamilton contended that a tax on consumption was adequate for all practical purposes which also had the virtue of being almost self regulating in that citizens reduce their spending, and therefore government revenues, if the tax is too high. Of course, Hamilton never heard of what in recent years has been called "supply-side economics," which is based on the idea that high income tax rates are also self defeating. But his reasoning and President Ronald Reagan’s were exactly the same.

Unfortunately, this political wisdom is disregarded in Sacramento and Washington, D.C., as rapacious governments there not only are raising tax rates in pursuit of ever-elusive revenues but are addicted to taxes on almost every conceivable object. I submit that both these tendencies are evidence of incompetence or knavery or both.

Liberal Democrat politicians (and their Republican enablers like Gov. Arnold Schwarzenegger), when they propose tax increases and new taxes to make up the government’s revenue shortage, are acting on the assumption that these measures will actually produce more revenue. But they ignore the depressing effect which their high tax and spending policies have already had on domestic consumption and especially business enterprise.

The best evidence of this effect is the startling discovery, only a month after legislative leaders and the governor agreed to a hodge podge of spending cuts, tax increases and borrowing to cover the $40 billion shortfall, that they were short an additional $8 billion. Now the voters are being offered a six-part package May 17 that includes a two-year extension of the sales and income tax rate increases.

Until control of the government changes to a new, more fiscally conservative political party, we are not likely to see anything but a series of stopgap measures featuring a lot of posturing by political leaders but no permanent solution to the "revenue problem."

In truth, revenue is not the problem; unrestrained spending is. As long as that is the bad habit of those who make our laws and administer the government, there will never—repeat, never–be enough money to support the government. Not only does raising taxes not work but the existence of so many taxes on so many items is evidence that the government’s appetite for revenue is insatiable.

From time to time friends email me lists of the number and variety of taxes which our governments impose these days. They include taxes on income (individuals and corporations), sales, property, fuel, estates and inheritances, liquor, cigarettes, luxuries, telephones, highway usage and much, much more.

Our governments have gone far beyond constitutional limitations. The federal government was authorized to provide for the common defense and to promote the general welfare, which consisted in maintaining armed forces, regulating trade, collecting taxes and enforcing its own laws. State governments had broader powers, but even those originally did not include providing cradle-to-grave security or even public schools.

California government spends upwards of $100 billion each year, and the federal government spends $3 trillion–with no end in sight in either case. No taxes will ever be enough when there is, in principle, no limit to the number and variety of objects on which that money can be spent.

When Americans trade their labor or supply a product in return for money, they are enterprising. When governments increase taxes, they are greedy. Are you as tired as I am of hearing government spokesmen say that people who make lots of money in the marketplace are greedy but that those who tax us heavily are compassionate?

It is not surprising that improvident or unsuccessful individuals and corporations are encouraged to seek bailouts, for that is what our governments do whenever they commandeer more and more of our money. Too often taxes are not intended to defray the costs of legitimate functions but to bail out governments that can’t control their fiscal appetites.

On Wednesday, all across America, citizens are holding TEA (Taxed Enough Already) parties to protest out-of-control taxing and spending by our state and federal governments. You will probably not learn about this in our major media, but then the apologists for the king of England were not interested in the colonists’ complaints either

Public outrage is building, as it ought to, and we will be fortunate if it overturns the modern Leviathan and restores constitutional government to our country.

TABOR on life support

Seventeen years ago, Colorado voters frustrated by the excesses of an unresponsive government passed the Taxpayers Bill of Rights (TABOR), a constitutional amendment designed to limit government spending and give voters to final word on tax hikes. Initially, government officials largely adhered to TABOR's strictures, ever mindful that the voters had spoken and expected those they elected to play by the rules.

Last month's Orwellian decision by the Colorado Supreme Court signaled that no longer will the executive, legislative nor judicial branches of state government - all dominated by liberals - abide by a constitutional amendment that crimps their big-spender style.

Governing powers wager than most voters have forgotten why TABOR passed, much less what it was intended to do. That's a dangerous gamble because TABOR's primary tenets - subjecting tax increases to a public vote and limiting government spending - still elicit strong public support.

Last year, a constitutional amendment that would have rolled back the requirement that surplus tax revenues be refunded to taxpayers lost 55% to 45%, despite a $2.5 million campaign and only token opposition.

Instead of living within TABOR's easily-defined guardrails, Democrats have adopted a strategy of making it irrelevant through subversive interpretations and raising unprecedented revenue through "fees" - indistinguishable from taxes to anyone but a lawyer.

Last year, Gov. Bill Ritter first proposed a $100 increase in the annual vehicle registration fee - distinguished from the registration tax only by the quarter-inch that separates the two on your car's registration papers.

When KOA radio's Mike Rosen suggested that Ritter was merely side-stepping TABOR because it didn't apply to fees, the governor explained that this $500 million measure was legitimately a fee because "there really is a direct relationship between highway usage and infrastructure."

He didn't bother to explain how that was different from the fuel tax, since there is obviously a "direct relationship" between gasoline and transportation.

This year, Democrat legislators gave Ritter a $250 million vehicle fee increase. Can a fuel "fee" increase be far behind?

Ritter and his Democrat spending machine have also devised a new fee on hospitals, calculated to raise $600 million a year, while claiming to do so without raising costs on consumers. Magically, hospitals and state government rake in more money, but conveniently nobody pays more. Right.

Which brings us to the courts, unelected because the justices are expected to apply the law regardless of whether doing so is convenient or popular.

When the courts ruled that no "tax policy change" occurred even though Ritter and the legislature amended state law - what is law if not "policy"? - to force school districts to raise more property tax revenues, liberals were emboldened to short-circuit another TABOR provision that puts voters in charge.

The "weakening" clause reserves to voters the ability to ease existing limits on revenue, spending or debt. But Democrats, taking another page from Orwell, declared that the state's general fund spending limit - that's what state law calls it - is not a limit but "an allocation strategy."

"TABOR is silent on allocation strategies," declares Democrat Sen. John Morse, endorsing yet another slap in the face to taxpayers.

It's difficult to imagine why Democrats lawmakers would present voters with an outright tax increase ever again, so long as they can find legal lapdogs who will apply weasel words to change tax increases and spending limits into something else.

What tax issues, then, will voters be asked to consider? Mostly local government taxes or state matters in which the legislature or a special interest thinks it can fund a warm-fuzzy government program by taxing an unpopular target.

TABOR's most significant remaining limit, a cap on total state spending, was modified and temporarily suspended by Referendum C. Under those terms it returns in 2011, whereupon the cult of big government will undoubtedly devise a scheme to render it meaningless, too.

Won't it be ironic if, by inventing so many loopholes through which taxpayers can be soaked, overreaching Democrats sew the seeds of the next taxpayer revolt?

Off with their heads!

One of the hallmarks of revolution -- particularly of the socialist variety -- is retribution. My previous posts about the Obama brand of "retributive justice" have focused on the systemic penalties that his policies have on those who produce wealth. They are punitive -- bot not focused on specific individuals. Until now, I was of a mind that not even in Obama's "new America" would we be stringing up capitalists to cries of "off with their heads". I guess I've underestimated the zeal of the anti-business zealots in the Congress. Last week the House voted 328-93 to slap a 90% tax -- ex post facto -- on the bonuses of anyone at every bank receiving $5 billion in TARP money who earns more than $250,000 a year. A draft Senate version is even broader. This tax applies to income earned last year and under legally binding employment contracts. It is confiscatory and punitive to the extreme, and targets many talented and innocent executives who have been working in good faith and have had nothing at all to do with the melt down at their companies.

Keep in mind that many of the banks who took TARP money did so under pressure from Ben Bernanke and Hank Paulson, who famously gathered them into a meeting room at Treasury and twisted arms until they took Federal bail out funds whether they wanted them or not. Now the government apparently has these companies where it wants them: having forced them to take the money, they are now confiscating the wealth created by the individuals who run them. Its a classic nationalization power play worthy of Hugo Chavez. And it is patently un-American and unconstitutional.

The The Wall Street Journal has an important lead editorial on this today -- I won't repeat it here. But this is a salient paragraph from it that is worth keeping in mind:

The financial system will suffer in particular, just when the Obama Administration is desperately seeking more private capital to ride out future losses. Facing such limits on the ability to reward talent, every bank CEO will try to pay off the TARP as soon as possible, whether or not this leaves the bank with a weaker capital base. Hedge funds and other investors that Treasury needs for its new Public-Private Investment Program, or for the Federal Reserve's TALF, will also be warier, if they'll play at all. Treasury may promise nothing punitive for these programs, but that's also what it said about the TARP.

America is quickly becoming a banana republic with executive fiat taking precedence over legal contracts. It will fully undermine our system -- and reflects the total lack of understanding that our government has about how incentives influence business and how markets work.

Viva la revolucion!!