Legal Challenge to SarbOx

This is really interesting, a case is headed to the SCOTUS in which the plaintiffs will argue that the PCAOB, created by Congress through the Sarbanes-Oxley legislation, is unconstitutional. The law blogs say it’s a steep challenge for the plaintiffs, however the plaintiff’s counsel obviously feels differently and wrote an op-ed in the WSJ laying out their case.

That’s why we are now seeking review from the Supreme Court over a case we first brought during the administration of George W. Bush challenging the structure of an agency that has great economic impact yet operates almost entirely outside the President’s control. We, along with Republican lead counsel Michael Carvin and attorneys with the free-market Competitive Enterprise Institute, are asking the Court to give President Obama the power he is constitutionally entitled to exercise over this entity that affects so many shareholders and entrepreneurs: the Public Company Accounting Oversight Board.

[From The PCAOB: An Obstacle to President Obama's Success - WSJ.com]

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Mr. Post Partisan & California’s Special Election

CA’s special election is tomorrow and having run the attached post twice already, I am running it again today. As I predicted then, we have yet to see any political advertising featuring the Governor and political leaders in Sacramento, which makes this story in the Chronicle almost amusing, almost except for the fact that the underlying consequences are very serious.

Schwarzenegger has definitely achieved post partisan status, he is disliked equally by everyone in the state regardless of political party affiliation, and it speaks volumes that a Republican governor’s biggest supporters are the Assembly and Senate leaders in Sacramento, who are Democrats.

The former movie actor’s poll numbers soared and his popularity peaked as he emerged victorious from the 2003 recall of Gov. Gray Davis, selling voters on the idea of “sweeping Sacramento clean” of big spending and high taxes.

His popularity crashed equally dramatically in 2005, with his disastrous call for a special election – and his failure to sell another wide range of Republican-backed budget-reform proposals.

He “re-emerged in 2006,” Whalen said, chastened and selling himself as “Mr. Post-Partisan.” His approval ratings jumped.

Now, on the eve of a critical election, Schwarzenegger’s ratings have tanked again and his ability to sell what he argues are some of the most critical budget measures ever facing California appears questionable.

[From Schwarzenegger's vaunted salesmanship tested]

As for the special election, nothing has been presented that changes my views on these measures. Far from softening the pain of economic conditions and reform, these measures put off the inevitable deep spending cuts that the state must make. With a current debt load of $100 billion, CA simply can’t go back to the debt markets and borrow more money for ordinary general fund use and with the state’s credit rating only better than Michigan, the cost of borrowing will be onerous to say the least. Borrowing one’s way out of debt is something that ordinary people understand doesn’t work, which is why 5 out of 6 measures on tomorrow’s ballot are failing badly in polling.

Labor unions have raised $28 million to support these measures, while opponents have spent just $4 million, which is quite a stark difference when you look at the poll numbers. Since the bulk of advertising in support of these measures, all fear based messaging… starts with the firefighters (complete with sooty faces) and then moves into “teachers will get pink slips” spots, started airing the polls have only seen opposition numbers for these measures go higher.

— Repost —-

Here’s how I’m voting on the measures slated for the special election on 5/19, a very important election that is a consequence of the budget that Sacramento passed recently in an attempt to close the gap on a record $42 billion deficit. I usually wait until the week of the election to post my voting guide because I think it’s important to hear all the debate on the issues but in this case the choice is so stark that I don’t see any reason to wait.

Several of the compromises that the legislature entered into require voter approval before they can be implemented. Public polling on these measures indicates they are vastly unpopular with the exception of Prop 1F and given that the governor and every other elected official is disliked by voters of both parties, it is certain that in the weeks ahead we will be deluged with TV advertising from special interest groups like the California Teachers Association instead of direct appeals from elected officials.

Prop 1A: No

Why: This is political cynicism at it’s worst, they give you something that all rational people want, in this case a spending limit that restricts politicians from spending more money than the state has, while slipping something really bad in the back door, in this case a stealth $16 billion tax increase by extending for 2 years the income tax, sales tax, and sundry fee increases that were passed in the most recent budget. It gets worse, because of the way the spending cap and revenue forecasts are calculated we are assured that CA will be stuck with a budget that is well above where we are today. No thanks.

Prop 1B: No

Why: This measure is the product of a negotiation between the governor and the powerful teacher’s union that allowed the governor to tap the education budget to cover the shortfall in the general budget. There has always been a disingenuous spin laid out by the teacher’s union on this issue because they claim that education was being cut by $9.3 billion in the emergency budget that passed recently but what they knew all along is that the Spendulus bill that got rammed through Congress included $11 billion earmarked for education in California… meaning that it was useful to cry poor over the budget all the while knowing that education was actually getting more money than the original budget allocated before the deficit grew to epic proportions.

1B is a pretty technical measure but the end result is that the so-called “rainy day fund” would be committed for the first $9.3 billion to the education bucket… meaning the rainy day fund wouldn’t actually be a rainy day fund until the $9.3b was paid out. It’s yet another bait-and-switch from Sacramento.

Prop 1C: No

Why: This one is pretty straightforward, the state wants to borrow $5 billion against future earnings from the lottery. Personally, I think the lottery should be shut down because it’s nothing but a regressive tax on people who can least afford it but hey if they want to spend $5, 10 or 20 bucks on a game of chance with odds far worse than anything Vegas has to offer, well who am I to say they should not. Back to the proposition, my primary opposition is that this is a one time fix equivalent to giving a heroin addict one last fix before they go into rehab. Also, because we have to pay interest on the debt secured by the lottery earnings, the result is that the state pays out lottery earnings as interest rather than what they were supposed to do, go to the people of California.

Prop 1D an 1E: No

Why: These measures redirect funds that were specifically allocated by voters in previous years elections and it is appropriate that voters should be asked if they want to suspend those measures and redirect the funds. However, even if these 2 measures pass they amount to about $1b, which doesn’t make a dent in the deficit and does not solve the underlying spending problem. I figure that in light of the bigger issues these two measures are inconsequential so fail the entire slate and force the legislature to get serious about fixing the structural budget issues.

Prop 1F: Yes

Why: This measure denies legislators and elected officials pay increases when the state is operating a budget deficit. This measure is largely symbolic because if you read the fine print you find that the state’s director of finance gets to determine when a deficit is largely a deficit which means they could ignore all the non-general fund budget components, which have driven the state into deficit for the last 9 years. But hey, sometimes symbolism is all that voters have so I’m voting yes.