The Great Water Heist

By Jim Jordan

In this well-intended document, protecting clean water is and should be a big priority. The Constitution of Pennsylvania specifies that people have a right to clean water. No one of sound mind can argue against  protecting water, as it should be a priority of every citizen, and this process must be carried out within all other laws of Pennsylvania.

The USDA Forest Service defines a riparian buffer as:

Streams, rivers, lakes, and bays and their adjacent side channels, floodplain, and wetlands. In specific cases, the riparian buffer may also include a portion of the hillslope that directly serves as streamside habitats for wildlife.

To a homeowner with a stream running through his property, ordinances on riparian buffers may present a costly situation from something as simple as mowing weeds. Cutting weeds on a bank could reduce a stream’s filtration characteristics and allow poisons to leach into the waterways. This means that those weeds will need to be replaced, of course under township supervision and with an engineer’s report, thus assuming there are no fines, mowing the wrong weeds could result in hundreds or even thousands of dollars to the homeowner.

This is not a hypothetical situation – if you live in Chester County, your municipality has enacted legislation “protecting” riparian buffers on private property. Every municipality must create a comprehensive plan to outline growth controls as mandated by Chester County via a document called Landscapes. This utopian guide sets priorities which municipalities are instructed to enact through their Planning Commissions. Specifics included in Landscapes are items such as “creating affordable housing” and strict regulations around riparian buffers.

Having created a Riparian Buffer ordinance for my municipality I have uncovered many of the legalities of water legislation at the local, state and federal levels. In the quest to “do something”, mandates coming from the county level are little more than feel-good ordinances that put unreasonable restrictions on landowners. Riparian ordinances often end up creating ever larger buffers, so large that a homeowner’s property becomes untouchable, and at the same time not addressing the primary sources of water pollution: agriculture, industry, and waste treatment.

Despite their failings, Planning Commissions are typically representative of and reactive to the will of the people, and if not they are easily replaced. Unfortunately, there is now Federal legislation, introduced on April 2, 2009 by U.S. Senator Russ Feingold allegedly intended to restore protections for waterways throughout the country.  Feingold’s Clean Water Restoration Act (CWRA) would ensure protections for rivers, streams and wetlands, which were long protected under the Clean Water Act (CWA), but are now in jeopardy of losing protections as a result of two recent Supreme Court cases.

Specifically, legislation S. 787, fundamentally changes the definition of “water” under control of the federal government:

The term ‘waters of the United States’ means all waters subject to the ebb and flow of the tide, the territorial seas, and all interstate and intrastate waters and their tributaries, including lakes, rivers, streams (including intermittent streams), mudflats, sandflats, wetlands, sloughs, prairie potholes, wet meadows, playa lakes, natural ponds, and all impoundments of the foregoing, to the fullest extent that these waters, or activities affecting these waters, are subject to the legislative power of Congress under the Constitution.

No longer is there a requirement for the waters to be navigable, and includes a vast component of “activities affecting these waters”. This essentially grants vast new control of land, via all waterways and riparian buffers, to the Federal government. Ominously, the entire text of S787 has no mention whatsoever of “just compensation”, meaning that the Federal government will be able to dismantle use of land without the consequence of paying for it. This is perhaps the greatest heist ever conceived by government, turning over perhaps our most precious asset to the special interests controlling Washington DC.

We are already burdened by state and local ordinances, often passed with little or no awareness by those affected. The proposed CWRA adds a Federal component to this already tricky area. It is a matter of our inherent right through the Pennsylvania Constitution, yet that document is constrained by the other rights it specifies and laws it establishes. As we continually and typically see from our Federal government, they are not so constrained. We ignore this legislation at our own peril.

Again, It’s The Government

I want all the AIG bonuses paid, all $165 million of them. Congress, you see, just can’t seem to properly manage anything, other than managing blame-games when their own policies have caused unexpected circumstances. Back to the old, “It’s not my fault” routine. Hmm. Someone wrote a book along those lines.
So pay out those bonuses, even to the AIG employees working in the division that brought AIG to its knees. I do not want special taxes on the bonuses. I do not want any sort of government intervention. The government has already intervened too much. I admit I was as queasy as the rest of you over this news of these bonuses, then I did what I always do. I sat down and thought about the facts of the matter, trying to take my emotions out of the equation.
Now that the topic is out of the way, please just hear me out. It’s extremely rare that I do bullet points in articles, but there is so much wrong on this topic that I decided it would be much easier for any reader of the article if I use bullet points in this case. The bullet points won’t follow a timeline, because most of it is concurrent. Almost all of it was this week, with the blame flying from one place to another.

Background:

• The first AIG bailout, in fall 2008, came with very few strings attached. It was done in the form of a secured loan, the loan being collateralized by all AIG assets. The loan was $85 billion and allowed the US government to take an 80% equity interest in the company, which allowed veto of dividend payments.
• AIG has now received $170 billion dollars in bailout money, $30 billion of that coming as recently as the beginning of this month. Apparently, no one in the US Congress was aware of the potential “chaos” that was just down the road. Now that the non-chaos is upon us, those in Congress are trying to figure out how to “fix” it.
• Congress would not have cared the least bit about this if it hadn’t come out in mainstream news. Now they have to seem to be as outraged as the public the mainstream news is trying to incite anger in by pointing out more injustice in the world. Had the news been relayed only to members of Congress, most of them would have just given a puzzled look to the messenger and said, “And how is that important to me? It’s only $165 million.”
• AIG is under contractual obligation to pay the bonuses, or “retention payments.” These contracts were entered into before AIG fell apart. Unless the contracts are declared legally invalid at the time they were executed, or the employee did something illegal to fulfill the terms of the contract, those contracts are legally binding.
• Had AIG withheld the retention payments, which were paid last week, they would have been in violation of any legal contracts. That, of course, results in lawsuits, most likely a class action lawsuit in this case, due to the number or affected employees. That results in the lawsuit being won by the class, plus the legal fees AIG incurs defending it, plus the likelihood of the class being awarded reimbursement for legal fees. Taxpayers, now owning 80% of AIG, are on the hook once again.
• Congress had a chance to stop this if they wished. They instead chose to include an amendment in the recent stimulus bill that stated that any “contractually obligated bonuses [to entities that received bailout funds] agreed on or before Feb. 11, 2009,” would be excluded from executive pay provisions. Can we say, again, “Hey, AIG had some of those contracts!”
• The Senate dropped an amendment to the stimulus bill that would have required companies paying more than $100,000 in bonuses to either be subjected to a 35% excise tax, or to return the bailout funds.

Current happenings:

• What a mess. Now the public knows that AIG is complying with contractual obligations they were told to go ahead and comply with, and the public is infuriated. “The government must do something!” But the government already did do “something.” It just didn’t work out so well, as with most things the government does. Most of the people who are incensed over this don’t even realize that this is pocket change that will not have any effect on them, their children, or their grandchildren. They’re choosing to single out the “small change” indignities, rather than looking at the overall picture.
• Congress has to do “something.” They just can’t figure out what. The contracts were already in place, and Congress agreed the contracts should be honored, so what to do now? How to recover?
• One proposal is to tax the bonuses at 100%, negating them. Mr. Harry Reid has said about this, “Remember, we, as a Congress, are not defenseless. We can also do things.” They can obviously do a lot of “things.” Their “things” are what keep causing these messes. Do we really want Congress legislating something after the fact to take care of something they didn’t think of at the time, or that they want at that point in time? Do we want to live in a society where Senator Chuck Schumer can say that, if we don’t do it ourselves, they will force it upon us?
• How is any potential legislation to “recover” this money emergency legislation? Is there anything in this administration that isn’t an emergency, and that doesn’t have to be forced through Congress so quickly that the public, much less the members of Congress who are voting on it, don’t even have time to read it? Why wasn’t funding for a speed-reading course for all members of Congress included in the stimulus or the budget bill? Do we need a, “No Politician Left Behind” bill added to the appropriations for education funding?
• Another proposal is to undo the contracts, but that one isn’t viable. The government can’t undo contracts between private parties unless the terms of the contract are illegal. No, wait. Sorry about that. They apparently can. I just remembered that they recently gave the authority to judges hearing bankruptcy cases the authority to alter mortgage agreements. Maybe this is just a new trend of hope and change.
• At least some part of the bonuses was apparently paid out to foreign nationals, who aren’t subject to US taxes. I haven’t yet been able to verify that, but if it’s true, that money would be difficult, if not impossible, to recover.

The bulleted list is done now, and for any of you who haven’t fallen asleep yet, I’ll leave you with a few things now.

I received while I was writing this article an e-mail from Bob Casey’s office that addresses this issue. In the video, he said, “the American people have provided them help.” Excuse me? The only way I provided them help was through bad decisions of US Congress. No one solicited my opinion, and they didn’t listen when I objected.

He says they (AIG) “came to the American people.” I’ve never talked to anyone from AIG. He also says, “the American people gave them $170 billion dollars.” Sorry, Mr. Casey. I didn’t co-sign that note; YOU did.

I don’t know how Mr. Casey typically presents himself on video. I don’t remember ever having seen video of him before, but in this particular one, he doesn’t seem particularly lucid. I won’t speculate on that. If there was a reason for his lack of lucidity, whatever it was, I can understand it. If I were in the position of trying to defend this, I’d need to be as distracted as he seemed to be. I’d also need the teleprompter he was obviously using, but that seems to be the vogue thing to do now anyway.

So, for those who have been patient in your reading, I said all that to say this: I have a reasonable solution to this whole mess. It’s one that hasn’t been proposed by any much greater minds than mine, at least not as far as I’ve heard on the radio, television, or the Internet news. (Please correct me if I’m wrong here.)

The solution in this particular case is to take a brief break from the four-year holiday that I’ve decided to term “Hopey Changemas,” partly in honor of the brilliant author Mark Steyn. If we take a temporary holiday break, we can get back to the simple idea of responsibility, whether it’s personal or group responsibility, rather than avoiding responsibility, and the whole mess can be put aside quickly and easily.

There were 246 representatives and 60 senators who voted for the bill that excluded bonuses to companies that had received bailout funds. That works out to slightly more than half a million dollars each, so why not spread the debt among them, and let them pay it back?

It can’t be forced with lawsuits, due to sovereign immunity laws. (That means you can’t be sued unless you choose to allow yourself to be sued.) However, the involved parties in Congress want justice, and honorable actions, so why not choose to be just and honorable, admit they made a mistake in oversight if in nothing else, and willingly pay it off themselves?

That would show honor, and dignity, and allow us to cling to a hope that they do still have some of both.

Gina Breckenridge is the PACC’s newsletter editor.

The Necessity for Action

by Rep. Samuel E. Rohrer, PA-128th District

The danger of being number 10 is that no one really knows who you are. George Washington was our first president; but how many can name number 10 off the top of their head? And Sir Edmund Hillary was the first person to climb Everest, but does anyone know who the tenth person was to reach the summit?

And then consider our amendments to the United States Constitution: most of us know the 1st Amendment verbatim, but do you know what the Tenth Amendment says?

“The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

Sometimes thought of as an afterthought, to “sweep up” anything the Founders may have forgotten, the 10th Amendment today is taking on monumental importance as increasing federal intrusion into state affairs threatens to completely destroy the balance between state and federal power.

In the Federalist Papers, authors Jay, Madison, and Hamilton labored to convince a monarch-shy colonial population that they needed a strong government to preserve a free, cohesive nation. The authors took pains to outline how the Constitutional structure of the government would prohibit the federal government from becoming big enough to overwhelm the powers of both the states and the democratic process. The 10th Amendment was foundational to this system of checks and balances, constitutionally restricting the federal government to covering issues related to commerce, national defense, the postal system, and the like.

“Power begets power,” though, as the saying goes, and the federal government slowly began expanding its powers. One of the most effective and insidious ways that the federal government has taken over control of state affairs is by first passing a mandate and then offering federal money to states with significant strings attached.

Whether the issue is welfare, Real ID, No Child Left Behind, or health insurance programs, tantalizing packages have been dangled in front of state governors and legislators, promising to stop the budget gap or expand a politically successful program. States have taken the money, and over time, the requirements and restrictions on those state funds have slowly but surely changed the direction of state policy.

Instead of developing programs to fit the needs of state citizens and altering them to best use the state resources, programs are instead clumsily built around the federal funding requirements, so the state does not lose a single available dollar. This significant paradigm shift should be a wake-up call to every citizen not only in Pennsylvania, but also across the nation.

Therefore, because the Supreme Court allowed the federal government to offer funds on conditions, states have subjected themselves to Washington. This submission completely distorts the checks and balances inherent in our Constitution, and enshrined in the 10th Amendment.

In order to raise awareness of this improper delegation of power, I have joined with representatives, senators, Democrats, and Republicans from over 30 states and introduced a resolution into the Pennsylvania General Assembly that reaffirms Pennsylvaniaâ?™s constitutional powers under the 10th Amendment. This 10th Amendment Resolution (House Resolution 95) is little more than a restatement of the last amendment to the Bill of Rights, reminding state legislatures that the federal government must no longer be allowed to commandeer our rightful authority.

As difficult as it is to believe someone could oppose a resolution as plain as reaffirming a basic tenet of our Constitution, sadly, opposition is too often the case in our state legislatures. This issue, however, is gaining traction among American citizens who are unwilling to sit back while Washington blatantly ignores their voices.

Supporting the 10th Amendment Resolution is a grassroots effort if ever there was one. I encourage you to spread the word and contact your family, friends and relatives, in and out of Pennsylvania, and encourage them to speak up. This issue will not go away—and it gives a voice to those who have grown frustrated and disillusioned with our federal government.

The 10th Amendment Resolution simply yet powerfully affirms our belief in the constitutional structure of our government. Join me today in that affirmation.

Rep. Rohrer will be holding the “10th Amendment Rally for the State of Independence” on Monday, March 16 at noon in the Rotunda of the State Capitol. Please make plans to join him there. Visit www.samrohrer.com for more information.

Making Irresponsibility Affordable

by Gina Breckenridge

Sometimes I still find myself amazed by my own naïveté. I had read a lot of speculation about what would be included in Obama’s foreclosure “crisis” plan, now termed the “Making Home Affordable” plan, but I held some small amount of belief that much of it simply was speculation. I also mistakenly thought that the 31% rule was going to be applied to net income. That’s higher than my preference of 25%, but still workable in some circumstances.

Since it is once again “imperative that we continue to move with speed,” I’m going to outline some of the problems with “Making Home Affordable.” I know that many people are having trouble keeping up with and absorbing all the news with everything happening so quickly, and I’m beginning to believe that the members of the Obama administration are not only acting with speed, but also taking speed, and that’s what’s preventing them from being able to engage in rational thought.

The disturbing but least egregious part of the proposal is the intent to modify mortgage payments by either reducing interest rates, extending the term of the loan, reducing principal, or a combination of these, to no more than 31% of the borrower’s gross income.

I won’t bore you with all the figures, but I actually sat down and calculated that. I was very generous in my calculations, assuming a household income of $65,000 per year, which is considerably higher than the national average. Also, state tax rates can vary from 0% (seven states) to as much as 10.3% (guess where that is), and some states use marginal rates, as the federal government does. It wasn’t possible to come up with a meaningful median, so I used the PA tax rate of 3.07%.

I factored in federal, state, Social Security and Medicare taxes, and allowed only a small bit of additional payment for escrow, such as taxes and insurance. I did not take into account any city or county taxes, or unemployment insurance. The final figure was a staggering 40% of net income, which would be making Dave Ramsey roll over in his grave if he weren’t, fortunately, still with us to tell people to stop being stupid with money.

Although some families might be able to swing a mortgage payment that’s 40% of their take-home pay, that’s highly unlikely with many of these mortgages. A very large percentage of troubled mortgages are subprime and were given to borrowers with substandard credit scores and little to no down payment. In other words, they already had a history of not saving for a home, and not paying their bills on time. Of the borrowers who have had loan remodifications in the past year, when all this started, well more than half are already back in default.

The most egregious part of the program is the proposal to allow bankruptcy judges to modify mortgage contracts. If you read no other part of this article, please read this part and understand the implications.

This administration is proposing to allow judges to arbitrarily alter legally-binding contracts made between businesses and consumers. If the business doesn’t willingly alter the terms, a judge can tell them they must. Let that sink in for a minute.

Beyond that, Fannie Mae and Freddie Mac are already covered in other parts of the proposal. This part would almost exclusively cover subprime mortgages, most of which are held in mortgage-backed securities owned by private investors, hedge funds, insurance companies, etc. This means the debt is not held by one entity, but has been chipped apart and sold to millions of investors. If a mortgage servicer modifies a loan based on a judge’s order, two things happen. The mortgage servicer is a ripe candidate for a lawsuit filed by shareholders, and the federal government has violated the Fifth Amendment by taking that which is private property without just compensation.

I won’t go into the details of many of the troubled mortgages being 80/20 loans, other than to say what that means is the borrowers took out an 80% loan, then borrowed the down payment for the other 20% because they didn’t have it or didn’t want to put it up. The administration hasn’t yet come up with a plan for dealing with the secondary loans, but I’m sure something creative and bold is in the works.

Please don’t get me wrong. I hate seeing responsible home buyers lose their homes. I have empathy for those who are in foreclosure due to job losses, medical expenses, or anything else that wasn’t foreseen. What I have no sympathy at all for is people who were irresponsible in home purchases and are intent on dragging the rest of us down with them.

Speaking of personal responsibility, part of the Obama plan is to extend these benefits only to “responsible” home buyers. I can’t wait to see how they end up defining the word “responsible.”

Real Government Reform From Rep. Schroder

Is the first step to managing Commonwealth fiscal health managing the finances of those who write the budget itself?

The economic news is going from bad to worse for the state Treasury and Pennsylvania taxpayers.  Gov. Ed Rendell recently said he expects Pennsylvania’s budget deficit to exceed $2.3 billion by the end of this fiscal year and he has announced he intends to furlough as many as 2,000 state employees. 

House Appropriations Committee Chairman Dwight Evans (D-Philadelphia) is projecting a deficit as high as $5 billion in two years.  Evans recently blamed the deficit on lower than projected sales and income taxes, and the rush of newly unemployed citizens taking advantage of state-sponsored relief programs. He has hinted that a tax increase is forthcoming.  

While it’s easy to pin the blame for Pennsylvania’s economic woes on the nation’s economic downturn, such is not the case.  Ours is not a budget crisis.  It is a spending crisis that no bailout is going to fix.  In fact, recent budgets have routinely increased spending beyond the rate of inflation and relied on unrealistic revenue projections and one-time revenue sources.  

From 2002-03 to the current 2008-09 budget, state spending increased by 38.6 percent while the rate of inflation rose by only 19.5 percent.  Even before the state budget was passed in July, there were signs that revenues were not coming in according to Rendell administration projections.  Several of my House Republican colleagues and I strenuously objected to spending increases and the expansion of programs supported by one-time revenues.  At the same time, Senate analysts were warning of deficits reaching into the billions.  Inflated revenue projections and the use of one-time revenue sources are a prescription for fiscal disaster.  For these reasons, I voted against the current budget.  Just weeks after the current budget passed, Pennsylvania was in a financial crisis.

For eight straight months, actual revenues have been well below the administration’s estimates.  Clearly, the cause of the budget crisis pre-dates the economic downturn that began in October of 2008.  Public corruption, fueled by greed, has also further eroded public confidence in elected leaders.  We cannot allow this to continue and we cannot allow fiscal mismanagement to be used by the Rendell administration to foist a tax increase on Pennsylvania citizens.

We have reached a point in Pennsylvania where simple program cuts and layoffs will not be enough.  We have talked about reforming state government for years.  The time has come to take action.  I am preparing to introduce several pieces of legislation, known as the Legislative Cost Reduction Package, to reduce the cost of governing the Commonwealth.

I have put together a package of bills that would cut salaries for members of the General Assembly and freeze staff salaries at 2008 levels.   My plan would eliminate cost of living adjustments (COLAs) and state-paid health benefits for lawmakers, and would change the pension system for legislators to a defined contribution plan that will be structured to provide cost savings over the long term. I am also proposing a measure that would require surpluses in legislative leadership accounts to be returned annually to the state Treasury, and eliminating funding for discretionary grants, also known as WAMs.

Essentially, the concept behind my legislation is to return Pennsylvania to a part-time Legislature.  Specifically, my legislation would save $12.8 million by reducing the base salaries of members of the Pennsylvania House and Senate from $78,315 annually to $30,000, and trimming the amount of additional compensation for those in leadership positions.  Another $4.4 million would come from the elimination of state-paid health benefits for lawmakers. 

Legislative surplus accounts, containing an estimated $200 million, would be surrendered to the state Treasury.  An additional $3.5 million would be saved through a staff wage freeze, and savings ranging from $250 million to $600 million would come through the elimination of discretionary spending for local grants.  

Our current economic crisis demands swift and sustained action, not a temporary fix.  The legislation I am proposing would result in immediate and significant savings to the Commonwealth and its taxpayers, and the effect would be lasting. As legislators, it is imperative that we absorb the first cutbacks.  Only then will we have the moral standing to make the kind of choices it will take to balance the next budget without increasing taxes.  Increasing taxes during an economic downturn would only worsen an already difficult situation.

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Curt Schroder is the General Assembly Representative for District 155