Washington Policy Blog

Far be it from me to blaspheme the French (not when I love their fries so much) but their employer/employee regulatory setup is for the frogs.

Today's Wall Street Journal has an article about Jerome Kerviel -- the rogue bank trader that misplaced $7.2 billion in January. That's billion with a "B". Stories are flying all over the internet about his exploits. Suffice to say he was caught in his web of lies. Truth of the matter is that he didn't rip off $7.2 billion. He engaged in shady trading and computer hacking trying to make his bank, Societe Generale, lots of money on various stock market exchanges. Some circles of global society are even heralding his actions as some sort of Robin Hood -- even though he didn't actually steal anything, much less redistribute the wealth. He "lost" wealth while acting illegally. No one is better off; that may be the worst part of all.

Anyway, here's the kicker:

Societe Generale can't just up and fire him.

According to the Journal, even though Kerviel was taken into custody and has essentially copped to the fraud, his employer is not allowed to tell him to pick up his things and hit the road.

From the Journal, "French law stipulates that to do that [fire Kerviel], the bank must first call him in for a sit-down meeting and explain its dissatisfaction. [Kerviel] has the right bring along a trade-union official, a lawyer or anyone else he'd like."

So, French law dictates that a rogue trader who lost $7.2 billion in shady and illegal behavior cannot be thrown out?

Me thinks Donald Trump has no plans on relocating to a country where "You're Fired!" is considered blasphemy.

Al Gore refers to climate change as a "planetary emergency."

Here is a state emergency announced today:

Meanwhile, Gov. Christine Gregoire declared a state of emergency this afternoon for more than a dozen counties as a result of the "relentless" snowstorms that have been pounding mountain passes and Eastern Washington for days."

This is not normal. And it just goes to show that Greg Nickels was right in 2005:

At first, Nickels said he was not distressed by these trends. "I think like most Americans I sort of said, 'So what? It would be nice if it were a few degrees warmer.' " But then he learned more about how Seattle's water and electricity supplies could be hurt by a shrinking snowpack. In meetings with Seattle's water and electricity department chiefs, Nickels said he heard repeated forecasts for below-average snowpack. Eventually he said he realized "we're never going to get average again."

The Olympian reports this morning that lawmakers support the concept of creating a searchable budget website but are concerned about the projected price tag of one of the proposals ($1.4 million):

"Not the right year to be asking for it, but the right idea," said Rep. Kelli Linville, D-Bellingham, on Wednesday. "It's public dollars, and the more transparency in the budget, the better."

The million dollar fiscal note is surprising in light of the experience of the states that have already implemented their versions of this reform.

The fiscal note for Texas showed “no fiscal implication to the State is anticipated” for its website.

Missouri's budget office said its website was done "within existing resources."

Then there's also the possibility of free assistance with programming and source code for the website from Microsoft and Google.

Even if the projected costs are accurate, I have to imagine that improving citizen access to details on the billons spent by government would rank high on the state’s priority list under government accountability efforts (much like the costs of complying with the public records law).

Time will tell if lawmakers share this view.

One of the more interesting debates happening in Olympia right now is how to pay for the paid family leave entitlement put into law last year. Count me as one of the naive individuals who thought the legislature was supposed to figure out the details of a program before adopting it.

Apparently last year's faith based punt on the family leave entitlement hasn't put a damper on some lawmakers' desire to adopt new programs without figuring out the details first. Consider the following statement from Senate Majority Leader Lisa Brown concerning the proposal to adopt a sales tax rebate for the state's low income.

According to The Olympian: “Senate Majority Leader Lisa Brown, D-Spokane, said it might be necessary to create the program this year but determine the amount of assistance next year when the state's budget outlook is clearer.”

The Yakima Herald is encouraging lawmakers to take a deep breath and not move forward with this type of faith based budgeting:

"The Seattle Times reported Friday that Democratic leaders in Olympia are pushing Senate Bill 6809, which starting next year would provide a sales-tax break for low-income families of as much as $470.

About 350,000 households in the state would be eligible for the proposed rebate, which calls for the state to provide a 10 percent match to people who qualify for the federal Earned Income Tax Credit . . . Projected hit on the state treasury: About $120 million every two years.

But that's not all. Even if it's approved, Washington residents would not be able to apply for the credit until next year because the state Department of Revenue hasn't even had time to determine just how much it would cost to administer the plan. It's expected to take several months for the state to set up a system to handle the paperwork involved.

The unknown costs of such an ongoing program are reason enough to shelve it.

Have state lawmakers already forgotten that an expected $1.4 billion surplus at the end of the current budget cycle is expected to turn into a deficit of as much as $600 million by the end of the 2009-2011 budget period . . . We said before the session began that this is not a good time for state lawmakers to embark on costly new programs -- including this election-year grandstanding.

If majority-party Democrats insist on railroading this ill-advised legislation through this session, then we would call upon Gregoire to heed her own advice about "save the surplus" and veto it to show that she meant what she said."

Meanwhile, The Seattle PI warns today that "Reality will bite state budget."

"Gov. Chris Gregoire and leading Democrats in the House and Senate have reached one early agreement in this year's budget negotiations: It's time for a reality check.

Anticipating a bleak revenue forecast, they've agreed to start looking for places to trim the $33 billion budget they passed last year. They say they want to have their priorities in order in case the slowing economy forces them to find efficiencies or even cut programs altogether.

"We're not taking for granted that everything that was budgeted last year is going to go forward this year," said Senate Majority Leader Lisa Brown, D-Spokane.

Neither she nor any other Democratic leaders provided specific examples of what might have to be cut.

Gone are the halcyon days of a skyrocketing real estate market and a ballooning economy that had led to back-to-back-to-back upward adjustments in the state's revenue forecasts.

And gone is the free and easy feeling about spending, the unflinching commitment to "targeted investments" that Democrats have enjoyed for the past three years.

The upcoming revenue forecast comes out on Valentine's Day, but given the circumstances no one is expecting a very rosy message from the state's top economist, ChangMook Sohn."

Global warming activists often refer to the scientific "consensus" on climate change as a justification for the costly government programs they advocate. The science, however, is still evolving, as is evidenced by this new study done by NOAA indicating that climate change may actually reduce the severity of hurricanes.

But even if there isn't a scientific consensus on the impacts of climate change, K.C. Golden of Climate Solutions and a member of the Governor's Climate Advisory Team cited another group whose testimony persuaded him when speaking to the State Senate last week.

"...our federal government has not stepped up and provided very satisfying answers to those questions. I was reminded as we just heard the companion bill in the House when I heard the voices of the [children] who came up insisting on solutions in a very clear voice, it isn't right that the federal government hasn't stepped up and offered solutions."

At the next legislative hearing on climate change, expect to see fewer NOAA scientists testifying and more children.

We sent in our comments on the Washington State Climate Advisory Team's draft recommendations today. We will post a link to the complete comments tomorrow.

One thing we did not comment on, but deserves attention are the CAT's comments about the impact on transportation projects on jobs. They argue that "Transit capital investment is a significant source of job creation. This analysis indicates that in the year following the investment 314 jobs are created for each $10 million invested in transit capital funding."

The Seattle Times, provides a different, refreshing, take today. Regarding the President's plan to offer $500 checks, they say "In fact, the economy is not a mechanism operated by the president. It is all of us, earning, spending, saving and investing. ... These problems are not going to be fixed with $500 checks. They will be fixed by people cutting their losses, replenishing their savings, adjusting their attitudes about risk and making better decisions."

While we can debate the merits of the stimulus package, it is nice that the Times states clearly who really makes a difference in the economy. In the short-term these checks may help, but it may add to the debt if government spending does not decline.

Similarly, spending money on transit to "create" jobs doesn't really do that. It simply takes money from people who might have invested more efficiently elsewhere and steers it to transit. Thus, the CAT and others who make these claims, count the jobs created but ignore the jobs lost elsewhere.

In this way, stimulus checks without spending reductions and government spending are similar. Both take money from people in the form of taxes and then put it back into the economy in the form of rebates or government spending. Rebates are better because they go where the economy needs it most (i.e. where demand is high) whereas government spending goes where politicians decide.

So, when the Climate Advisory Team or others make the claim that increased government spending will "create" jobs, we hope the Seattle Times will remind them that the economy is not operated by government, but by all of us earning, saving, spending and investing.

The Seattle Times today reported that a new analysis done by the UW Climate Impacts Group projected that sea level would rise 6 inches in Seattle by 2050, and would likely climb 14 inches by the end of the century. They said that sea level along the coast would not rise until 2100, when it would increase by 2 inches. The sea level rise there would be offset by the uplifting of the tectonic plates.

Sea level has been rising for centuries, although this would be a modest increase in the rate.

Whenever I see stories like this, I like to go back and see what had been predicted previously. I frequently refer back to two studies, one done by the Puget Sound Action Team in October 2005 and the other by the Department of Ecology in November of 2006.

The Puget Sound Action Team report, "Uncertain Future," said this about the rise in sea level: "This is one of the best understood and predictable components of future climate." In the report they predict, on page 21, that sea level will rise by 1 meter (3.28 feet) by 2100 and Seattle will see a sea level rise of over 2.5 feet. Neah Bay on the coast, they claimed, would see an increase of 1.3 feet. They called these projections the "mid-range."

The Department of Ecology also did a study. The purpose of that piece was to estimate the economic costs of climate change on Washington state.

In that report they said that "Sea levels in the northeast Pacific Ocean are projected to rise between 3 inches and more than 40 inches above current levels by the end of this century."They went on to say that "Tacoma can expect sea levels to rise between 5 inches and 20.6 inches by 2045 compared with present levels." Today's estimate, 6 inches, is at the lowest end of their previous projection.

To come up with their economic projections they used three scenarios. For that the "Department of Ecology has mapped the impact of modest (2’) and catastrophic (10’ and 20’) sea level rise on the state’s present-day shoreline." The new study shows that what was "modest" in November 2006 is almost twice the likely level of increase today. Today, catastrophic is 4 feet, which the Climate Impacts Group now calls "highly unlikely," or one-fifth of the Department of Ecology's previous estimate.

The most telling line, however, is that barely 14 months ago the Department of Ecology claimed that "Like other aspects of climate change, sea levels appear to be rising faster than earlier models had projected." Now that their projections are significantly lower, however, don't expect them to write "sea levels appear to be rising more slowly than earlier models had projected."

The error is in these documents is dramatic. The Puget Sound Action Team overestimated sea level rise by anywhere from 3 to 7 times. The Department of Ecology doubled the likely increase and inflated the worst-case scenario by a factor of 5. It is likely, however, that the Department of Ecology document will continue to be used to justify high costs of addressing climate change.

This data also makes clear how strong the bias is at the organizations writing the reports. Despite claims that their data is "scientific," the errors are always in the same direction. Such a consistent pattern of overestimation points to an obvious political bias.

These numbers show why climate alarmists' claims of "certainty" and "conservative estimates" sound increasingly like "I am not a crook."