Here are his ten points in order:
1. Defund Obamacare. He starts by demanding we defund Obamacare, which is fine for the red-meat crowd, but didn’t sway the public to vote for Romney. So more is needed. Fortunately, he actually does suggest a plan to replace it with in point three, so let’s examine that here too:
3. Reagancare. Barf. Naming a disaster after Reagan is an insult, and this is a disaster. This “plan” begins with the usual “let insurers compete across state lines” line which the public has already rejected several times but which talk radio repeats like dogma. Then he goes full retard.
First, he says we should limit malpractice lawsuits “to cost,” which shows he doesn’t understand how the legal system works. Not only is this the practical equivalent of banning malpractice suits, but you are smoking crack if you think the public will support a plan where a mother of five goes in for a $100 dental procedure, dies, and gets awarded $100. Bullsh*t.
Then comes this: “Provide high risk pools for individuals that genuinely can’t afford coverage.” Well, duh! Why don’t we do that now? Oh yeah... cost. The reason Obama is trying to run Obamacare through private insurers is because the cost of the uninsurables is impossible for the government to bear. Right now around 5% of the public absorbs 49% of all healthcare costs. That means to set up the pools he wants to cover this 5% of the population, the federal government will need to cough up roughly $1.5 trillion a year. Paying for that would increase the federal budget by roughly 40%. This is what happens when people bloviate without knowing the facts.
So his plan is to enrich insurers, put taxpayers on the hook for $1.5 trillion a year, and make sure that people who are injured by doctors are screwed. Yeah, average voters will jump right on that.
2. “Make Congress and the Bureaucracy Live Under Obamacare.” Notice three things here besides the fact that, in any worthwhile agenda, a point this closely related to the first would be wrapped into the first. Point one: this is a stupid promise. If people hate Obamacare, then promise to end it... don’t promise to apply it to Washington. Conversely, if people don’t hate Obamacare enough to support repeal, then what in the world makes you think this will be anymore meaningful to them? This reeks of pettiness.
Point two: this is what’s called “inside baseball.” This is like promising to change the way new bills are distributed around the Senate... no one gives a sh*t! Tinkering with government procedure is a game for wonks, not something the public cares about. Point three: I’m not in a mood to debunk this, but Washington IS living under Obamacare, and promising to make them do what they are already doing as some sort of revenge will only lead to disappointment.
4. Pledge To Read Every Bill. Oh goodie, an unenforceable pledge to tinker with the inner workings of Congress! I can see middle class families breathing easier already.
5. The Job Creation Act FINALLY! After three wasted and one insane point, we come to something the public cares about: creating jobs. Let’s see what our friend suggests... “defund Obamacare.”
Excuse me. //Ahhhhhhhhhhhhhh!!!
I’m back. So to create jobs, we’re going to defund Obamacare. Great, I’m sure the public will be all over that. Let’s see what else this guy comes up with. Oh, we need to repeal Sarbanes Oxley... something that is meaningless to average people and which doesn’t affect jobs. Indeed, except for the fact that this guy keeps hearing this screamed at him by talk radio, I’ll bet he doesn’t even know what the supposed problem is with Sarbanes Oxley.
Next, he wants to “do away with the National Labor Relations Board.” I wonder if he understands that eliminating the NLRB would just send these issues to federal courts instead, which would stretch labor disputes out for years, put companies under court control, and create different labor rules throughout the country? I’m thinking, no.
Then he suggests increased funding for unemployed worker retraining. Yeah, throw more money at a program that isn’t working without a hint of reform... how liberal. He also wants to allow businesses to “write off all of their new equipment after one year” to encourage them to buy more. That’s the closest he comes to a workable idea, but that just moves future purchases forward one year, it doesn’t actually increase economic activity – it’s recapture that matters. Moreover, equipment competes with labor, so this will probably reduce employment.
This is a boogeyman economic agenda. This guy simply lists the things talk radio told him “are killing jobs in Amer'Ka!” and he wants them gone. None of this would work, and none of it would appeal to average voters.
6. A Two Year Spending Freeze! He will freeze ALL spending, “including government salaries” for the next two years, “except spending on defense, Veteran Affairs, and entitlement programs.” //ROFLMAO!! This BIG spending freeze will apply to only 13% of the budget because of his exception and will probably only slow growth by half a percentage point. Nice. Oh, and as with his other points, this offers nothing to make the lives of average voters better, i.e. Joe Sixpack doesn’t care.
7. “Cut Your Gas Bill Act.” Drill in ANWR, build the Keystone Pipeline and encourage offshore drilling. Ok, so this is finally something that might appeal to average people. But does the public actually think this will benefit them? Nobody trusts the oil companies; they are constantly talking about collusion. Do you think a promise to help oil companies will be meaningful to the public? Will the promise of a few cents reduction at the pump in ten years sway voters? It didn’t work for Romney or McCain/Palin.
8. “Claw Back the NSA Act”. Sigh. Agreed. We finally stumbled on something useful, something the public will like. Kumbaya. Of course, this is a minor concern only for the public and you’ll have to fight conservative hawks to make this happen, but at least it’s something.
9. Audit the Fed! LOL! Not only is this just more tinkering with procedures, but this is all premised on false conspiracy theories. You don’t elevate paranoia to policy.
10. No More Bailouts! Repeal Dodd-Frank. Yeah. Average people are just screaming for that. Oh wait, they don’t even know what Dodd-Frank is, nor would repealing Dodd-Frank prevent bailouts.
And that’s it. Notice that most of this is obsession, some is conspiracy theory, and the rest is talking points. The writer of this agenda doesn’t understand how government works, how law works, what the budget looks like, how jobs are created, or even why he doesn’t like some of the boogeymen he hates. Notice also that none of this will appeal to average people outside of the talk radio set (where this stuff is taken on faith as a panacea).
So I ask, is this really what conservatism has become? Purging the Earth of Obama, tinkering with government procedure, giving breaks to crony-socialist companies and “common sense” ideas that ignore little things like a $1.5 trillion price tag? You know, when Buckley and Reagan defined conservatism, conservatism actually stood for things. It stood for the American dream. Conservatives pushed for more and better jobs through deregulation to make it easier to start businesses and hire people, tax cuts to let people keep more of what they earned, free trade to help sell American goods overseas. It stood for helping people buy homes. It stood for helping people send their kids to college and improving education through the introduction of competition. Conservatives pushed to help people save for retirement, invest their money, and pass on their wealth to their kids. There’s none of that in this agenda... or on talk radio.
We can do better.
43 comments:
For the uninitiated, what is Sarbanes Oxley and the supposed problem with it?
tryanmax, Sabranes Oxley is a law which imposes various accounting requirements on publicly traded companies. It has two provisions that really upset Big Business. Big Business then got conservatives to carry their water on this. Those two provisions are as follows:
(1) After S-O, assets must be reported on balance sheets at fair market value where such information is available rather than the company estimating their value however they wish... which is what was done previously. This was in response to things like the asset-backed securities which had much lower real values than were being reported.
Big Business responded, "But we have no way to know what these things are really worth. Boo hoo hoo!" When that didn't wash, they switched to, "But this will make our balance sheets look bad and that will make our companies look worse to investors!!"
(2) The provision that REALLY upset them required that any corporate officers or board member who signed off on a company's financial disclosure to investors would now be liable for the truth of the things they swore to. Prior to this, when they "swore" that something was true, they were only swearing that they had been told it was true by the independent auditors. Those auditors, however, would simultaneously swear that they had no idea if what they are reporting is true because they relied on what the company told them. This provision ended that shell game.
The complaint Big Business made about this was (I kid you not): (1) it's impossible to know what's true with the company, (2) it would be too expensive to find out what's true about the company's financial position, (3) no one will want to serve on a board if they really are held to the things they swear are true.
This was picked up by conservative groups who claimed this would (1) "cost jobs" in some unexplained manner, (2) destroy America's competitiveness somehow, and (3) would hurt investors because companies would now spend money to figure out their actual financial position and investors really don't care about that... they are happy to be lied too if it saves the company money.
That's the boogeyman.
The one thing I would propose as a change to the fed would be to have them focus on good monetary practices. Right now they also have to look at unemployment as well and it puts them at odds. Instead of allowing recessions to happen naturally people freak out. Left alone most recessions fix themselves rapidly. I don't care if we are officially out of a recession. It feels fake and until the fed stops feeding the economy with crack the pain will only be worse when it does crash. I don't understand how they don't see it?
Koshcat, I agree with that. By asking the Fed to do two competing things at the same time, we create a problem that gets us to places like the current situation where their intervention has really only frozen the problem in place. It also makes the Fed political, which is bad because we should not be politicizing the money supply.
In terms of the Fed not seeing it, I suspect they really do, but they don't know how to get out of the mess they have created. This month will be interesting to see they handed "tapering." I don't think they can do it without pain, but they are hoping they can. We'll see.
I think the reason is more a question of political will regarding the Fed. The nature of politics is making voters feel better now. The public doesn't like being told to take their medicine now to feel good sooner in the future. What's the old proverb? "never do today what can be postponed until tomorrow" (at least when it comes to taking one's economic medicine).
You have heard my thoughts on the insurance mechanism before so I won't repeat them again now.
Andrew.....I think the gov't has been doing amazing things with our monetary supply. Did you know that the Treasury has claimed we haven't added a penny to our national debt since May?! So what that our deficit has added +$100bn every month, we haven't increased our debt at all!! These guys economic and fiscal policies are finally paying off!!
"For the last 100 days, there has been no variability at all in the federal government debt subject to the legal limit: It has remained precisely $16,699,396,000,000" Treasury Dept 8-26-13
I guess the lesson here is, as per your article above on SOX, the numbers are what we tell you they are. Take 'em, believe 'em and oh yeah, shut up!
/s off
I agree there is very little here that will appeal to voters or even create an impression that you are trying to help them. Even the better ideas need semantic repackaging, to coin a phrase.
Conservatives should understand that there are promises you can run on (successfully) and there is stuff you can do once in power - and they are not often the same. To be charitable, conservatives are sometimes too honest. But there is no excuse for being dumb.
What is wrong with insurers competing across state lines? The public may not see the upside but that doesn´t make it wrong or politically harmful?
"Pledge To Read Every Bill."
Ok, but how do you enforce such a thing? Will there be a test? Who will give the test? The Vice President? This would guarantee that Congress can only pass 2-3 bills per year.
Ah, Utopia!
El Gordo - I don't think Andrew is suggesting there is anything wrong with insurers competing across state lines. He is merely pointing out that Republicans need more than that regarding an alternative to lure voters. The winning argument is one that helps Americans solve affordability of the cost of health care at a cost that is more affordable than the Obama plan. They lied when they pitched it claiming costs would go down. We can't just say repeal it or defund it without specifics about how Republican administration would accomplish that.
Good points. The problems we have are not going to be cured by bumper sticker politics. I think Obamacare is going to be a disaster, but there's no way I would trust the big insurance companies to look out after my interests...The NLRB does good work, they do some pretty dumb stuff as well, it needs tweeked, not disassembled. The GOP needs a viable alternative to Obamacare, something that works for everyone, so far I haven't seen anything from them. The populist in me likes the idea that big wig governemnt folks should have to live within their means also, so I don't have a problem with telling these folks they get what we get, it might actually make some of them think a little. (That last sentence would have made Willie Faulkner proud of me.)I'm all for letting companies compete, but there still needs to be oversight. I was a stock and commodity broker for 10 years back in the 80s and I can tell you that greed will make smart people do stupid things.
Jed, I agree. The issue with the Fed seems more about public relations than actually fixing anything at this point. I also get the feeling that the point to what the Fed is doing is more about holding up the stock market to keep balance sheets safe than it is helping the economy.
Patriot, One of the biggest problems with these numbers at a national level is that they are all estimated. No one wants to wait until the real numbers are in, so they use estimates and estimates are easy to tweak.
El Gordo, Agreed.
there is very little here that will appeal to voters or even create an impression that you are trying to help them.
That is very true, and that's the problem. None of this stuff can win the public because none of this is meant to help the public. This is about "ideology," only the ideology in question is basically paranoia, tinkering with procedure, and derangement.
That really highlights the problem with the talk radio set at the moment: they don't like the public and they have no intention of trying to win them over. They see politics as being about lists of demands, not doing a better job.
What's worse is that this stuff gets repeated mindlessly on talk radio so much that it's become unquestioned dogma. And as you can see in the article, they are very questionable.
These are the problems we face at the moment.
El Gordo, Even assuming we could force every Congressman to read every bill, how exactly does that change anything? Do you really think anyone would change their vote? Hardly.
What is wrong with insurers competing across state lines? The public may not see the upside but that doesn´t make it wrong or politically harmful?
There's nothing wrong with this, but it won't change anything.
(1) Insurers are already free to compete in any state they want. They just face different requirements in those states.
(2) Even if there were no requirements on insurers, the problem with competing across state lines is that doctors remain local and insurers develop their rates by negotiating with local doctors. That means there won't be national rates
(3) The public has already heard this and rejected it repeatedly. And the reason they have is that they don't trust the insurers any more than they do the government to fix this. So by using this as our alternative, we are telling people "We want to enslave you to Big Insurance rather than Big Government." That's a loser.
(4) As I discuss in my book and when we talked about our healthcare system at the blog, the cost of healthcare is being driven by insurance, i.e. the disconnect between buyers and sellers. Just making it slightly cheaper for insurers won't fix the cost problem.
(5) This doesn't solve the access problem, which people do care about.
So while it's not a bad idea, it doesn't help much of anything and it's political poison as lead idea.
Jed, Exactly. There's nothing wrong with the idea, but it won't do all that much and it's unsellable. We need a plan that average people will hear and say, "Ok, I see how that will help solve this problem." Just repeating this idea doesn't do that. It sounds like, "Do nothing" at best and "Trust those big insurers everyone hates to solve it" at worst. That's a non-starter.
Critch, Agreed. :)
Not only will bumper sticker politics not solve this problem, but our bumper stickers aren't aimed at the right people... they are aimed at the choir when they need to be aimed at the people outside walking past the church.
And to be sure, I have no problem at all with making Washington live under the rules they foist on the rest of us -- they should. And that's the sort of promise you make somewhere along the line. But that's not a promise that is going to win anybody over when you haven't first told them how you plan to make their lives better. There is basically nothing here that a middle class family can look at and say, "Ok, I see how this will help me."
"...the problem with the talk radio set at the moment: they don't like the public and they have no intention of trying to win them over."
Yes. I would put it this way: They focus on the enemy - the left - until they can´t see anything else. In this warped perspective, the People are either a silent majority of good, salt of the earth conservatives or degenerate, low information moochers.
It is easy to see how this happens when your informational universe is determined by blogs, talk radio and so on. I sympathize. But when it comes to winning elections or selling products, you need to know who your target is. And the left is not our target audience! The radical fringe is not the People and if you spend your time wrestling those pigs, you are not talking to the People. And you will get a stink on you.
By the way, most people are dreadfully uninformed but since our goal is to live under a small government that doesn´t rule every second of our lives, you can hardly condemn a man for not being highly politicized. It was a virtue in the good old days when government mattered less.
El Gordo, Exactly!! I couldn't have said it better myself! :D
The problem right now is that conservatism is being led by blogs, pundits and talk radio who focus entirely on attacking "the enemy." They have divided the world into two camps -- loyal listeners who are all good, well-informed, salt of the earth types... and low-information moochers who have been bought and sold by the enemy or who lack the moral character to be "reel 'merikans."
The result is a disaster. That approach generates an "if you're not with us, then you're against us" mindset that has led to the Great RINO Inquisition of 2010-2013. It results in the spewing of tons of anger at the public, which makes us look hateful and stupid and keeps people from wanting to join us. And it has resulted in a paralysis whereby
the only ideas that will be accepted are those that oppose the enemy.
This is the problem and it's highly destructive to conservatism. It completely misunderstands the nature of the public and of politics, it drives people away rather than attracting them, and it results in a meaningless rump ideology that is hidebound by its own disinformation and blind rage.
And on the idea of the left not being our target audience, I am amazed how quickly people on the right now respond with, "You'll never win over the left, so why try?" whenever someone comes up with an idea. No one is trying to win over the left. They are unwinnable. The people we need to win over are the middle, who can be swayed. Unfortunately, this is that mindset again -- the world is black and white, good and evil, and if you're trying to reach beyond the cult, then you are trying to reach evil. That idea is nonsense and it will keep us from ever winning the public.
Andrew, its the same with young voters, blacks, and hispanics. "You can't win the black/youth/hispanic vote so why event try appealing to them?"
Well, you don't need to win all of them. Or even more than half. You just need to win enough of them that it hurts the Democrats.
OT: Is it just me, or is having the Russians in charge of removing the Syrian chemical weapons cache after having already supplied Syria with weapons make any sense?
Andrew
As to Sarbanes Oxley (SOX) requiring accounting changes this actually believe it or not is not in the law. The law was a response to the ENRON fiasco where Lay said he did not know that the accounting statements were bogus because the CFO (skillman) implemented poor internal controls. This made it hard to prove fraud.
The law states in simplest terms that the CEO will understand what his internal controls are and that they are adequate to prepare materially accurate financial statements and that he has tested them.
This last generates the problem. Testing internal controls sounds like a no brainer but it is extremely invasive time consuming and expensive and to most CEO's assumptions a waste of their time. In order to make the assurance standards have to be followed and the standards that have generally been accepted are COSO (Committee of Sponsoring Organizations) for financial controls and COBIT for IT controls (I forget what that anachronism stands for). These rules are not dictated by the law by the courts accepting them as the procedures to use.
Andrew to continue
The problem with SOX is the essential problem with all compliance auditing. Compliance auditing is not done for the companies benefit. It is done for a third party's benefit. So the companies and auditors start doing the minimum required to meet the standards so that they can be done with it. Management then begins to make ridiculous arguments that are pure sophistry in order to not have to report any issues with their internal controls and the audit work itself gets dumbed down as its point is just to enough that if there is a fraud the CEO can point to it and argue they did due diligence in court.
Full Disclosure I hate this law as it has significantly reduced the level of operational auditing done in Internal Audit departments. It has even forwarded the notion that Internal Audit should not even do Operational audits as to avoid being involved in managerial decisions to assuage some general hysteria regarding what happened at Enron. The hysteria is misplaced.
Internal Audit is by definition not truly independent as they are employees of the company. Forcing IA into compliance rolls that were heretofore done by external audit due to the hugely increased audit costs is actually setting up a situation in my professional opinion where too much reliance is on the company IA departments and not the External auditors paid to be independent.
The further factor is that the companies now argue to not have IA involved in any operational audits. These are audits designed to uncover weaknesses in controls and report them to management. Since the reports are scrutinized by the external auditors management won’t engage in these audits because they don't want any issue reported they will have to answer for at year end when the external auditors are expressing their opinion on the internal controls.
This law if in effect would not have stopped Enron. Enron's upper management was corrupt and SFAS (Statement of Financial Accounting Concepts) state that if there is collusion on behalf of top management the public cannot rely on an audit to uncover the irregularity. All of the same fraudulent crap with the external Auditor Arthur Anderson would have occurred only this time it would have been those loans are off books so they don't affect the financial statements so they are not SOX.
European law is actually better it requires testing of all internal controls and does not give a "it is not generating the financial statement out".
To my mind the main issue with SOX is that time effort and money that was once used by Internal Audit departments to identify real control and efficiency weaknesses and improve the financial effectiveness of the company is now wasted in a pointless effort to prove there are no control weaknesses. This is to my mind why it is wrong. There is no such thing as a company with perfect internal controls but investors being stupid will not take that in consideration if something hits an audit report so the its not material its now Sox Relevant game is played to keep it out and the issue is ignored.
Sorry Andrew but SOX is a bad law and I state that as an IT Auditor whose time is consumed by it.
Sorry for the delay Kit, it's been a busy day.
Yep. I hear that all the time... "We can't get all Hispanics/women/blacks, so there's no point in trying." Talk about stupid reasoning.
Bev, Nope, nothing about any of this makes sense. It makes no sense why Obama started this or why he can't find a solution or why he was poo pooing the Russian idea or then claimed he came up with it. It's been nonsense galore!
Indi, That's really an argument for making SOX stronger by adding more internal requirements rather than letting them rely on independent auditors, it doesn't invalidate the need for the law.
In fact, it only shows why this law is needed. Those "third parties" that you are dismissing are people who lend the company their money through the stocks and loans they make. If you want the benefits of being a publicly-traded company, then you need to agree to be honest with the people who finance your public status.
Also, what you are saying doesn't support the "conservative criticism" that this law somehow magically costs jobs.
"Nope, nothing about any of this makes sense."
And didn't Assad just swear to Charlie Rose that Syria (as in the government as opposed to the rebels) didn't use or have any chemical weapons?
Or maybe this was all planned and is THE most brilliant case of diplomatic gamesmanship in the history of the world? Maybe Obama DOES deserve that Nobel PP!
Andrew
According to the former state comptroller of Kentucky who now gives seminars in finding and detecting fraud "If you want to ensure that fraud occurs in your organization make a set of complex rules that are cumbersome, confusing. time consuming and hard to follow. Your employees will start cutting corners just to get their work done and that will create a culture of rule breaking.
Those third parties are relying on the work of External Auditors independent CPA firms who are paid to perform audits and who are liable for bad opinions given. SOX sounds good to lawyers on paper but the amount of work cannot be affordibly done at the 100 dollars an hour that those firms charge so the bulk of that work is done by Internal Auditors who are employees of that company. That is bad for your investors.
:
I worked for a company that was a retailer and they relied on a computer generated report to determine their biggest accrual reserve inventory loss. One of the subs had an error in the way the report valued excess inventory which is reserved at a greater rate due to improper computing changes.
The report used values for items that were already sold years before that were much less only for calculating inventory values. I was tasked with auditing these reports generation for the company. My analysis showed half the report was wrong and the weighted average costs for some excess items what less than the lowest cost of any unit in inventory. I prepared my analysis, wrote the finding and inquired of the controller to the issue.
My boss called me, chewed me out for not vetting it, tried to find errors and when he could not obtusely refused to understand the issue. When I protested as I should for professional reasons I was told that I was causing problems and that they work would be removed from the work papers and the errors passed on a rounding errors. My evaluation was then hacked for that job. This is not the only time this was done.
Prior to SOX any Internal Audit shop would have investigated that finding. management would have been demanding to know exactly what was causing the error, how much it costs to fix, what it was potentially costing the company is bad data and developed a plan to fix it. This is what an operational audit does.
Instead the executive management made the decision to classify the issue as immaterial so that they did not have to address this to the external auditors. It corrupts Internal audit departments in ways that would never exist before this. This is why SOX is a terrible law.
You cannot make perfect internal controls, you cannot ensure that there will never be fraud. To write a law like SOX that demands this without any leeway for reality is the same kind of fantasy thinking that goes on at bureaucratic levels. SOX will not stop fraud. It creates fraud. More SOX laws will only create more fraud because the premise is wrong. The premise being that internal controls can stop fraud from occurring.
Not only that the law itself insulates bad actors. If I have paid external auditors to audit my controls and a team of IA employees to do the brunt of the work and they have gone in and identified every issue that is there and then created excuses for why the issues are not important I can bury you in a mountain of paperwork which to prove I did wrong will require you to hire an army of accountants that will drag your trial out for decades.
Accounting is an art not a science. Compliance auditing becomes an exercise in sophistry at the end of the day. The only question is how much BS is there and the intent of management and accountants have revealed a truth that they teach as a concept of auditing that if the CEO is a crook beware cause you cannot create an audit that is designed to insure he does not hoodwink you.
Bev, In all honesty, I've never seen a more confused bit of foreign policy. Everything going on is double-speak, nonsense and face saving and none of it is consistent or believable.
It is truly confusing.
What Sox does is to stop or significantly reduce what Internal Audit work is really for. To go out, evaluate a process, identify the significant issues and work with management to develop plans that solve those issues and create value for the company.
Every Internal Audit job I did prior to SOX had a requirement that I find savings in the company that exceeded twice my salary. No IA job after that has had that requirement. By taking me and my skills at evaluating financial and computer systems and use me to simply explain away issues instead of finding the company money you cost the company money and efficiency which will in reality cost jobs. Maybe not to a significant effect I don't know but I can tell you the IA departments produce less value than they did before because of this law.
Sorry but I have to live with this and I know at a gut level by the way decisions are made that this causes this, Until this law passed I never worked for anyone in Internal Audit who would literally argue not to report a finding they knew would help management. I have to live with this. OK I will stop ranting now.
Indie, I won't pretend to understand that stuff in the slightest. However, it's pretty obvious to me that what you are describing is the ideal, and if everyone lived by it, SOX would probably not have ever been considered. As they say, it only takes one bad apple to spoil the bunch.
Indi, I have a couple responses.
1. First, this article isn't about SOX. So let's not get carried away discussing it. SOX is a minor point at best which means nothing to the public.
Still, in that regard, you haven't answered my question: how would repealing SOX create jobs?
2. You're applying the wrong standard in your analysis. You are making what is fast becoming a frustratingly common mistake among conservatives: you are saying, "this can't achieve perfection so it's bad." No one is looking for perfection. The purpose of the law is to solve a problem that had become very obvious -- CEOs had no idea if the disclosures they were making to the investors were true. They hid behind external auditors, who hid behind company data. The point to this law was to require the CEO (and the Board) to actually investigate the things they were swearing were true before they swore to them. No one expected it to be perfect, they just expected it to work better.
And if you think what this law does is inadequate or doesn't work, then propose a different solution. Just arguing for repeal is a nonstarter because it leaves the original problem unsolved. It's like a doctor saying, "Gee the heart pills I gave you didn't solve the problem, so let's stop those and that should solve the problem."
And in that regard, you can't dismiss the value of solving this problem. If investors can't trust the accuracy of the financial records that get revealed to them, then the whole stock market becomes a random crapshoot. We can't allow that, not if we believe in capitalism.
BTW, as for burying people in paperwork, lawyers specialize in digging through paperwork walls and finding the hidden information. And your boss is taking a HUGE risk if something goes wrong with that company.
Bev.....I expect one of the choom gang to come on tv (maybe the CINP - Commander in Pot), look at the camera, and say...."Who you gonna believe, me or your lying ears/eyes!"
Yeah...This was planned like this all along. Our most awesome Preezy stared down down those mean, wascally Wussians, and they blinked. Isn't he awesome?! Because...Obama. Yeah...That's the ticket!
So anyone watching the Obama "You're welcome for my saving the world" press conference? I have it on, but frankly, I'm finding it impossible to listen to. Blah-blah-blah-Iran will get a nuclear bomb-blah-blah-blah-I, I, I, I-blah-blah-blah-building the middle class-blah-blah-blah.
T-Rav - I just can't watch it. I just can't...
Bev, understandable. I think I've lost the ability to comprehend his words, they're just so dumb.
Andrew, I'm late to this, but I do have a couple of comments on SOX if you'll indulge me. Quit rolling your eyes.
First, I agree with you at this point that repealing SOX won't save or produce any jobs. The reason is that jobs were lost upon its passage, and the standards it decreed have now promulgated through GAAP standards (which are moving toward international standards anyway). Those aren't going to change back anytime soon. We aren't going to dismantle the Public Company Accounting Oversight Board (PCAOB) either.
Having the CEO responsible for the financial statements was a good thing (though when was the last time we saw a significant prosecution of a CEO? Any since Bush?) Most everything else had a a negligible effect, a questionable effect, or a detrimental effect, in my opinion.
Jobs were lost upon SOX's passage due to two factors; 1) the requirement for auditing firms to pay a large fee and register to audit publicly traded firms, plus be accountable to the PCAOB; 2) the failure to create "Big GAAP" versus "Small GAAP" standards.
Factor 1 meant less competition among auditing firms, and greater risk for auditors. So the public audit playing field got limited to the big firms and they increased their audit fees accordingly, most by at least by two to three times. This is a drop in the bucket for big companies, but it prevented smaller firms from seeking capital by going through a public stock offering (e.g. fear of the increased cost of going public, increased annual compliance costs, and additional scrutiny from regulatory agencies, etc.) Granted, too many crap firms went public during the tech bubble, but SOX arguably overreacted to those failures, thereby producing fewer US based IPOs, or at least reducing the scale of a startup by driving it to the private equity market.
Factor 2 relates to how the accounting industry reacted to SOX. Being risk averse fuddy-duddies, accountants figured what's good for the Fortune 500 is good for the average S corporation with 50 employees. So these privately owned entities, the auditors of which previously had no requirement to test internal controls (we'd assess control risk at maximum and substantively test accounts instead), suddenly were telling their clients that their audits were going to cost triple because they have to do work which does not add value to the audit.
But even that wasn't the main issue. These smaller companies usually had a few affiliates, many of which would now have to be consolidated under the new rules (as Individualist says, thanks Enron.) Generally, the lenders to these small companies understood the distinction between say, a real estate affiliate and the business operation, and didn't want them consolidated in the first place. So either you end up expanding the audit to encompass several companies, or you have GAAP departures.
Most loan officers for these smaller companies really didn't understand GAAP to begin with, so having a departure in the opinion to the financial statements would be a red flag. So either you start disclosing and auditing a lot more, or the statements will confuse lenders; either way, you increase costs without adding value.
It's taken about 10 years, but the accounting profession is almost to the point of creating "Small GAAP", which is a standard of accounting for smaller private companies that doesn't require nearly the disclosures and internal control testing that is more appropriate for publicly traded firms. This is good, but it took too long and arguably slowed job creation in the meantime.
SOX did its damage because of the way it came about. It slowed US IPOs by limiting access to public investor capital, but it's now too ingrained in GAAP and GAAS to have a beneficial effect if repealed.
Which is a long winded and boring way to say that Talk Radio is indeed foolish for trying to sell its repeal as a job creator.
Ah! Something I know a little about. At best, it is questionable whether IPOs actually create jobs. The general assumption that they do comes from the DotCom Bubble (née Boom) when, at that specific time, they did. The mantra of the day was "grow fast or fail." Of course, many did both. Since then, post-IPO growth has shrunk dramatically, to the point where it is questionable whether the IPO contributes any growth at all, or if the firms would have grown at that pace regardless.
There's a handy graph on page 7 (PDF page 9) of this report.
wahsatchmo, Excellent comment! I concur.
I have three responses.
First, I do agree the law is not a good one. It does not achieve its purpose and it does harm in the process. It needs to be reformed. Ergo, I support the idea of a fix. But simply repealing it (1) won't work for the reasons you state and (2) doesn't solve the initial problem. The goal of the law is a good one; we need to maintain the integrity of public disclosures or the whole investment system starts to break down. So the answer isn't to repeal this and walk away, it's to fix it.
Secondly, I think it's very foolish for Talk Radio to claim this will create jobs. As you note, it won't do that even if we repeal it. But even beyond that, the number of jobs we are talking about through IPOs is tiny compared to the job market. This is the sort of thing that might create 20,000 jobs a year tops... less than are being laid off this week by the mortgage departments of a couple big banks. So promising this as a panacea is truly foolish as it will produce no more than a blip on the jobs screen.
Third, hanging our hat on something this esoteric as a selling point really takes the focus of our ideology away from where it should be. We need to focus on average people and tell them how we will improve their lives. To average people this sounds like: "Do something Big Business asked us to do that lets them get away with stuff." That's not a winner.
Indeed, that's the real problem to me. By pushing this messages, Talk Radio sends the message that conservatism is about letting CEOs lie (or claim ignorance). It puts us on the wrong side. It also makes it clear that we don't care about average people and that we have no real plan to help average people. It makes us the ideology of the corrupt rich... robber barons.
It also wrongly sends the message to conservatives that there is a simple magic bullet that we can fire to create jobs. Seriously, look at how this guy treats it: "Oh yeah, just repeal this and it will be a jobs paradise." That's simply wrong. We need people to understand that a true jobs agenda will not be easy. It will require significant regulatory reform, tax reform, and maybe even some spending. To give the impression that there are magic bullet fixes only sets us up for failure.
tryanmax, I can't speak to the data you produced, but I do understand the idea why IPOs would create jobs. Private company wants to expand, doesn't have the money, goes the IPO route, expands and becomes a huge company. I'm sure that sometimes that works and other times it doesn't. I just doubt that in an economy that needs 2.5 million new jobs a year just to stay at zero, that the IPO process can really make a dent in the unemployment picture (we are averaging only 13 IPOs a month this year).
That said, I am all for doing whatever it takes to increase innovation and this would likely do that. So I am in favor of a repair of this law.
My problem is with the Talk Radio idea that repealing this will deliver us to the Promised Land of Jobs. It won't. It might be a smart thing to do, but it won't deliver on that promise and it sounds horrible (or irrelevant) to the general public. That makes this a fix you do quietly... not as part of a platform.
Andrew, exactly. IPOs are just one more of those things hailed as panacea when there is no way they possibly could be. Jobs numbers track small business trends (< 500 employees). They almost always do. Every politico pays lip service to boosting small business, but it never materializes in the policy.
tryanmax, True, small business is the key... but Big Business funds campaigns and think tanks.
What bothers me is really this: both Indi and wasatchmo have laid out reasons why this law needs to be reformed. They've also pointed out some potential job losses, though not many and, as wasatchmo points out, they won't come back with a repeal. So reform is a good idea, but it won't make much of a splash.
Yet, Talk Radio pushes this like a miracle cure.
And what bothers me is that I don't think the Talk Radio hosts who repeat this like dogma even begin to understand what this law is or why they claim it should be repealed. Yet they keep saying this because everyone else is saying it, and they start to invent promises to sell the idea, e.g. it will create jobs!
I would love to ask Rush or Beck or Savage: tell me what this law actually does and tell me why that's bad. I would bet my life savings that not one of them would come anywhere near the truth.
That is the problem with so much of the "agenda" I hear on talk radio... it's uninformed, its distorted, it won't work, and yet it gets treated as sacrosanct -- don't you dare object and don't you dare suggest something else. Moreover, it gets pushed like this is something that will inspire the public to join us in vast numbers.
And because of that, our side ignores things they should be pushing, things that could make a huge difference, and opportunists get a ready made set of boogeymen they can use which they can then mix in with their own boogeymen to drain conservatives of money, time and credibility.
That is what bothers me.
By the way, I should say I agree with a lot of what Individualist said, even if I disagree with the effectiveness of the conclusion.
He considers accounting to be an art, rather than a science. I describe accounting as a language, one that can be taught to convey an understanding, but one that one must love to appreciate its nuances, lies, and outright affronts.
10-KEY FIST BUMP!
LOL! Accountants are certainly a breed apart.
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