Principled Opposition to Spending America’s Future

“Idealism is fine, but as it approaches reality, the costs become prohibitive.”
— William F. Buckley, Jr.

The Obama/Pelosi/Reid “stimulus” bill—or as some Republicans have called it, “the Generational Theft Act”—is an exercise in absurdity. While the Democrats in Congress, on the verge of blowing through $800,000,000,000,000+, refuse to ponder the magnitude or even potential effectiveness of such a package, or even allow Republicans to see the bill, we as conservatives (or even as non-conservatives, as resisting the idiocracy is a non-ideological affair) should seriously study the ramifications of the proposed bill and strenuously object to the Senate’s assent. Now that the bill has passed conference, our last (long) shot is that the compromise does not satisfy the three liberal Senate Republicans.

Simply, we cannot afford this bill.

Costs:

Eight years ago, when President Bush took office, our federal budget was around $1.7 trillion. This year, the federal deficit (the difference between federal expenditures and federal revenues) will be over $1 trillion—and that’s before adding the almost $1 trillion stimulus package to next year’s budget deficit. Think about that for a minute. Our deficit will be more than twice what the ENTIRE FEDERAL BUDGET was eight years ago (credit to Rich Lowry at NRO).

Additionally, the cost for this bill will be ladled upon young Americans and the yet-born next generation. According to a reliable estimate based on 30 year bond rates, for each dollar borrowed to pay for the Obama/Pelosi/Reid plan—money that Congress absolutely will borrow, as it doesn’t have sufficient revenues—future taxpayers, our children and grandchildren, will be forced to pay back $2.50 in principal and interest. Over 30 years, taxpayers will be on the hook for $1.28 trillion in interest or $2.063 trillion total.

According to Marc Thiessen, the Republican Policy Committee determined that “for the cost of the Democrat’s spending bill, Congress could provide every American taxpayer a rebate check for $9,460.” If we include non-taxpayers, every American would receive $6,336. Of course, if the Democrats in Congress sent every American a check, there’s the danger that we’d spend our tax dollars in non-approved ways.

Foolish Steadfastness to Disproven Beliefs:

When we’ve borrowed and spent our way into a perilous economic position, only the Pelosi/Reid Keystone Congress could fashion a rescue plan involving more borrowing and spending.

The Democrats are steadfastly, recklessly, and incompetently pursuing this course of action because they are convinced such a brobdignagian level of spending is necessary to jump-start the economy, and they actually believe that the spending will work—despite all evidence to the contrary.

A Congressional Budget Office report has utterly destroyed their assumptions. The Democrat mantra for the last several weeks has been “spend on infrastructure and spend now!” Somewhere between mantra and printer, the bill morphed into a plan that neither spends much on infrastructure, nor spends the little amount earmarked soon enough to make a difference.

In the Democrats’ plan, only about $100 billion will be spent on infrastructure needs, and of that $100 billion, only $26 billion will be spent in 2009. Of $355 billion in infrastructure and other similar expenditures, only $136 billion will be spent by October 2010. Taking the entire “stimulus” package into account, each job “created” will cost us $225,000 per job (numbers are approximate, as no one seems to know the exact numbers, especially the Democrats). Keep in mind that these infrastructure-related jobs are merely temporary.

The crack staff of my own home state senator, Jim DeMint—God bless that man—did a bit of digging as well. The DeMint report, recently released at the Heritage Foundation, stated:

“The bill, if it were a country, would have the 15th largest economy in the world–right in between Australia and Mexico, greater than the gross domestic products of Saudi Arabia and Iran put together… The stimulus bill will cost well over $1 billion for every page it is printed on.”

Included in the Democrat Plan:

• $400,000,000 for researching STDs
• $200,000,000 for bike trails and off-road vehicle paths
• $200,000,000 to buy electric cars for government employees
• $34,000,000 to renovate the Department of Commerce
• $75,000,000 for a smoking cessation program
• $250,000,000,000 for entitlement spending
• $200,000,000,000 to bailout recklessly irresponsible states (NY and CA) with money from fiscally-prudent states
• Destruction of the 1996 Welfare Reform
• A secret attempt to create a government agency to monitor private healthcare expenditures

Stimulate the economy? Create jobs? Not here. The Obama/Pelosi/Reid plan is a compilation of 40 years’ worth of liberal pet causes—with some absurdity thrown in for good measure.

As Mark Steyn said, “The ‘stimulus’ package is just politics as usual with a few extra zeroes on the end.”

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A New Legal Paradigm?

This blog is typically devoted to all things conservative, but I think the other authors would agree that it is more generally devoted to ideas of all shapes and sizes on a wide range of policy ideas. Thus, this post.

I, like many of my confreres, am in the midst of the summer job search. In past years, the process was rather clear: apply beginning in August/September of your second year of law school to firms that are hiring summer associates for the following summer. That job, if done well, likely turned into an offer of employment after graduation. There was security for you and the employer–they had filled a position with a talented up-and-coming law student and you had secured summer (and likely post-graduation) employment within weeks of starting your second year.
This year, things have changed and many employers have scaled back their summer programs by half or more. Many firms, even here in Arizona, are laying off seasoned attorneys as a way to cut costs.
In thinking about how to market myself to firms that might be going through a difficult financial spell, I wondered if there wasn’t a better way to lawyer. I’ve spoken to others in law school who want to change the business model of law firms as well. The law firm structure is burdened by a heavy overhead: high rents for offices, high salaries for attorneys, etc. The savings for law firms that fire an attorney can be tremendous, about $250,000 per lawyer. Given that roughly 85% of law firm expense comes from rent and personnel costs, cutting the number of attorneys is the most logical–and efficient–way to lower the overall cost of doing business.
Unless you change the model (e.g., Axiom Legal). Why are law firms tied to the traditional model when it seems so terribly inefficient?
In our fall hiring cycle, firms in Phoenix advertised starting salaries between $120-135K/yr. and those in Los Angeles offered $160K/yr. When a wide-eyed law student starts to think of the possibility of making that much money, paying off loans in a flash, and perhaps sticking around for a partnership salary well beyond those starting figures, the traditional firm route may seem like the best option. But the law firm structure seems fundamentally flawed in its conception and operation. The high overhead requires firms to bill clients three times what they actually pay attorneys in compensation. The other two-thirds of the billable hour goes to paying staff, rent, and funding the partnership pot.
I suppose there will come a time, if it is not already here, when clients will not be willing to pay exorbitant hourly fees for a lawyer to work on routine (or even complex) matters. Outside of litigation, perhaps, it seems that the costs of lawyering can be rather fixed. For example: After 10 years of writing contracts, a lawyer is a rather good judge of how long it will take to write a particular type of contract given the complexity of the issues, the type of parties, etc. He can easily come up with a flat fee that would adequately compensate him for his work, but also provide the parties with a cost-effective means of handling the day-to-day business transactions that require a lawyer. An initial flat fee for writing contracts may be based on an hourly rate–such contracts take 10 hours to write, I want $X for an “hourly” rate, so the whole contract cost is $10X. But after the initial calculation, you would know that Contract Type A will cost $10X, Contract Type B will cost $10Y and so on.
This type of arrangement has some distinct advantages: If you were a solo practitioner or not otherwise burdened by firm overhead costs, you could lower your rate considerably compared to firms, thus providing your client with a quality product at a price lower than a firm would charge, and providing yourself with a salary (or fee) that compensates you more than you actually were compensated at the firm. (So, if the firm charges a client $150 for an hour of your work, you are likely receiving $50/hr. in compensation. In my contract hypothetical, you could in effect charge $1000 to write a contract that takes 10 hours to write and you make $100/hr.–double what you made when you were paying the firm. And, there are no six-minute increments to record.) Both you and the client benefit from the lack of high overhead while maintaining the quality of work the client expects. You benefit even more by not being tied to the billable hour and the demands of face time at the firm, client development, etc. (An interesting theological critique of the billable hour is here.)
The current financial crisis is a prime opportunity for the legal world to reconsider its basic model. What is the practice of law all about? To me, it’s about doing interesting work that I thoroughly enjoy. It’s a happy coincidence that such work often pays a very nice salary. But there are other things to life than an 80-hour work week. What is the future of law firms? Will Axiom-like groups take over? I hope so.