Thursday, March 7, 2013

Lautenberg calls Menendez ethics accusations 'too bad'

Sen. Frank Lautenberg (D-N.J.) said Thursday he was saddened to see his junior colleague, Sen. Robert Menendez (D-N.J.), ensnarled in a brewing controversy over trips he took to the Dominican Republic and a report that he may have solicited prostitutes.

"If there are infractions as they are reported, it’s too bad," Lautenberg told reporters, according to the Newark Star-Ledger.

Menendez is facing questions over a pair trips he took to the Dominican Republic with Salomon Melgen, a Florida eye doctor under investigation by the Federal Bureau of Investigation. Menendez had not originally paid for two of the trips on Melgen's private jet to the Dominican Republic, calling him a longtime friend, but his office announced Wednesday that he had reimbursed Melgen $58,5000 for the trip.

“Sen. Menendez has traveled on Dr. Melgen’s plane on three occasions, all of which have been paid for and reported appropriately,” Menendez's office said in a statement.

The Daily Caller has also reported that Menendez solicited prostitutes during the trips, although Menendez has vehemently denied that charge.

“Any allegations of engaging with prostitutes are manufactured by a politically motivated right-wing blog and are false," Menendez's office said.

"There a lot that’s said and covered, but I for one know Bob as a very capable United States senator, and I’m sorry to see him in this position," Lautenberg said. "But I can’t give you anything more. Don’t want to. Don’t know to."

White House press secretary Jay Carney also declined to comment when asked about the reports on Thursday.

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Christian Armenia's government and Islamic Iran's mullah's: The strategic partnership upclose

By Adil Baguirov, co-founder, U.S. Azeriz Network (USAN) - 01/31/13 03:50 PM ET

Harout Harry Semerdjian has courageously detailed the unusually deep and far-reaching strategic relationship between Christian Armenia and Islamic Iran ("Christian Armenia and Islamic Iran: An unusual partnership explained"). However, two crucial points have been ignored in the article, making it fundamentally flawed.

Firstly, no one is, or can, blockade Armenia, despite what some commentators feel. It is not possible for two out of four neighbors to “blockade” Armenia, especially since with one of the supposedly “blockading” neighbors, Turkey, there is an annual trade turnover to the tune of $200 million (which is an enormous figure for Armenia), and open airspace, with regular flights. Instead, it is Armenian government that has blockaded its own nation by being hostile, Turcophobic, and anti-Azerbaijani since its independence.

Let us keep in mind that Armenia has been militarily occupying some 16 percent of Azerbaijan, including the Nagorno-Karabakh region, since 1992, and ethnically cleansing the 75 percent Azerbaijani supermajority, some 600,000 people, from those lands, thus causing the interruption of trade, diplomatic and political relations with Azerbaijan.

The Armenian government knows the only way to peace, prosperity and development. The UN Security Council, of which U.S. is a permanent member, passed four resolutions in 1993: 822, 853, 874, and 884, calling on Armenian occupying forces to withdraw from occupied territories, including the Nagorno-Karabakh region of Azerbaijan, and to allow the return of Azerbaijani displaced. On March 14, 2008, the UN General Assembly reiterated that position.

However, Armenia has been anything but a good neighbor, not just against Azerbaijan, but also against Turkey. The Armenian Declaration of Independence, adopted by the Supreme Council of Armenia, and signed by its president Levon Ter-Petrossian on August 23, 1990, states in its Article 11: “The Republic of Armenia stands in support of the task of achieving international recognition of the 1915 Genocide in Ottoman Turkey and Western Armenia.”

Seemingly not satisfied with the territorial claims to Azerbaijan, the Armenian government refers to Eastern Turkey, where according to centuries of Ottoman, Russian and European census data Armenians were a minority, as “Western Armenia” – as well as declares that anti-Turkish resolutions and activities in U.S. Congress and other parliaments are its state policy and government objective.  Needless to say, this did not bode well with the Turkish people, who have been demanding that Armenian government changes its stance before relations could flourish.

Secondly, Armenia's relations with Iran go, unnecessarily, much deeper than the author admits. According to Wikileaks-published cable from the U.S. Embassy in Armenia, in 2003, two Bulgarian manufacturers “Vazovski Mashinostroitelnye Zavodi” and “Arsenal”, and the Armenian Ministry of Defense (MOD) completed a sale of weapons that were then resold to Iran via the Armenian government-owned company “ZAO Veber” and an Iranian arms dealer Abbas Abdi Asjerd through an Armenian bank, and later recovered by the U.S.-led Coalition forces in Iraq.

In a deal signed by then-defense-minister and now-president Serzh Sargsyan, our Armenian "allies" have delivered at least 1000 RPG-22Ms and 260 PKM machine guns to Iran, who in turn passed them on to Iranian-backed Hizbullah brigades in Iraq, killing at least one U.S. soldier and wounding several more, on January 31, 2008. This American soldier was Matthew F. Straughter, native of St Charles, Missouri and formerly of Belleville. He was declared dead in Baghdad from wounds suffered when his vehicle was struck by an Armenian-shipped RPG-22. He was assigned to the 1138th Engineer Company, 35th Engineer Brigade, Missouri National Guard, Fort Leonard Wood, Mo. He was only 27 years old, is survived by wife, Thelma, and five children.

Armenia, one of the most undemocratic countries in the region that is the second largest per capita U.S. foreign aid recipient (which, amusingly enough, includes military aid), was almost sanctioned for arms trade with Iran, by the U.S. government,  but as has been the case several times before, the Armenian lobby intervened, making the U.S. government to once again overlook America's own national interests.

The only way for a stable peace and open borders is for the Armenian government to abandon its policies of military occupation and war crimes in Azerbaijan, and for it, together with the Armenian diaspora and lobby to stop their turcophobia and anti-Azerbaijanism. All USAID-sponsored polls show that Armenian population does not share the same priorities as the Armenian government and lobby, preferring higher standards of living over hate, racism, ethnic cleansing and military aggression. Future U.S. foreign aid packages should be contingent on Armenia’s compliance with international and U.S. law.

Baguirov is the co-founder and member of the Board of Directors of the U.S. Azeris Network (USAN), and author of academic articles, such as Nagorno-Karabakh: Competing Legal, Historic and Economic Claims in Political, Academic and Media Discourses".

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Fed Study Suggests A Central Idea Underlying Obamacare Is Wrong

A core idea at the heart of President Obama’s healthcare reform law is the notion that while expanding coverage is expensive, there are huge offsetting savings to be had from reforming how medicine is practiced by doctors and hospitals. Who knows, maybe a third of the $2.7 trillion spent on healthcare is wasted.

Now this notion is based mostly on the research of the Dartmouth Institute for Health Policy & Clinical Practice. It shows Medicare spending in some regions of the country is significantly higher than others. Kaiser Health News: “This geographic variation in spending, which the government has also examined, was a motivating force behind a number of government initiatives including changes in Medicare payment to reward hospitals and doctors who provide good care efficiently.”

And if that research is wrong? Well, then we have a problem. And a paper from a Federal Reserve economist suggests just that (via KHN):

[T]he variation in Medicare spending across states is attributable to factors that affect health and health behaviors, rather than practice styles. … It is not surprising that states in the South spend more on Medicare and have worse outcomes. These states perform significantly worse in numerous areas, including high school graduation rates, test scores, insurance, unemployment, violent crime, and teenage pregnancy. There are many ways that such differences can affect health utilization and outcomes, including differences in underlying health, social supports and social stressors, patient self-care and advocacy, ease of access to services, capabilities and quality of hospital and physician nurses and technicians, and cultural differences in attitudes toward care. A comparison of health spending in Mississippi with health spending in Minnesota is not likely to provide a usual metric of the ‘inefficiencies’ of the health system, nor is likely to provide a useful guide to improve the quality of care in places where it is lacking.

Certainly this is still an open issue, as the KHN article makes clear. But the fact that it is — and that we still rejiggered a fifth of the economy partly based on this research — should give policymakers pause — and perhaps a new found sense of humility.


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DAY'S END ROUNDUP

FROM THE BLOGS:

Hagel's experience as a grunt
At War's Don Gomez wonders if Chuck Hagel's experience as a sergeant in Vietnam gives him enough experience to lead the Pentagon.

NRA loses congressional supporter
Huffington Post's Chelsea Klene reports former Rep. Debbie Halvorson (D-Ill.) is backing away from the NRA and is supporting President Obama's gun-control proposals.

GOP gets Tech-savvy 
Red State's Ned Ryun says conservatives are giving themselves a more technologically competitive edge to muster votes in 2014.

A big thank you to Israel
According to the New York Post's editorial board, the White House owes Israel a big thank you for their air strike in Syria this morning.

OTHER NEWS SOURCES:

Chuck Hagel comes under fire at hearing
Former colleagues of Sen. Hagel demand answers to tough questios on the former Senator's past votes and remarks, The Hill's Jeremy Herb reports.

House GOP want answers
House Republicans are drafting a bill that will force President Obama to estimate when federal budget will be balanced, The Hill's Pete Kasperowicz reports.

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Federal Judge Defies Sentencing Scheme That Treats Low-Level Drug Offenders Like Kingpins

A tough-on-crime prosecutor turned federal judge who last year blasted prosecutors’ abuse of draconian mandatory minimum sentences has now issued a damning judicial indictment of another aspect of the harsh U.S. drug sentencing scheme.

In an opinion declining to rely upon federal drug sentence guidelines, U.S. District Judge John Gleeson calls the guidelines for drug crimes “deeply and structurally flawed,” subjecting “low-level offenders” to “prison terms more suitable for a drug boss.”

Over twenty-five years of application experience have demonstrated the perverse outcomes generated by the Guidelines ranges for drug trafficking offenses. … [S]entencing judges have routinely departed from these Guidelines, which have never been the “heartlands” that the original Commission aspired to create. Despite these consistent departures, federal drug sentencing has contributed to the national crisis of mass incarceration.

Gleeson, who in 1992 led the team of prosecutors that sent John J. Gotti to life in prison, issued an opinion last May blasting federal mandatory minimum sentences for low-level drug offenders that “distort the sentencing process and mandate unjust sentences.” Under the Anti-Drug Abuse Act of 1986, he lamented, “An addict who is paid $300 to stand at the entrance to a pier and watch for the police while a boatload of cocaine is offloaded” … “qualifies for kingpin treatment”. In this week’s opinion, he points out that even those who manage to escape mandatory minimum sentences don’t fare much better under the alternative federal sentencing scheme for drug crimes, the U.S. Sentencing Guidelines.

Defendant Ysidro Diaz, who was a “run-of-the-mill, low-level participant in a drug distribution offense,” narrowly escaped a mandatory minimum sentence of 10 years because he satisfied all five requirements for “safety valve relief.” Instead, Gleeson was tasked with looking to U.S. Sentencing Guidelines, which recommended 8-10 years in prison, even though Diaz had no prior convictions.

While the U.S. Supreme Court ruled in 2005 that judges could no longer be obligated to follow these guidelines, Gleeson points out that they have nonetheless contributed to exponential increases in sentence length and an accompanying spike in federal incarceration for drug crimes:

Perhaps the best indication that the Guidelines ranges for drug trafficking offenses are excessively severe is the dramatic impact they have had on the federal prison population despite the fact that judges so frequently sentence well below them. […]

In less than a decade, from 1985 to 1991, the length of federal drug trafficking sentences increased by over two-and-a-half times. Sentences for drug trafficking were “elevated above almost every serious crime except murder.” The increase in sentence length for drug offenders “was the single greatest contributor to growth in the federal prison population between 1998 and 2010.”

We must never lose sight of the fact that real people are at the receiving end of these sentences. Incarceration is often necessary, but the unnecessarily punitive extra months and years the drug trafficking offense guideline advises us to dish out matter: children grow up; loved ones drift away; employment opportunities fade; parents die.

Of course, it’s not just long sentences that have overwhelmed federal prisons with drug offenders. Criminalization of nonviolent drug offenses, and frequent prosecution of offenders are just as fundamental. But disproportionate punishment implicates fundamental due process principles and has even been found to violate the Eighth Amendment, which is probably why Gleeson is one of several federal judges who have been uncharacteristically vocal in pleading with both prosecutors and lawmakers for immediate sentencing reform.

(HT Sentencing Law and Policy)


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NRA president: 'Anyone's guess' what Reid will do on gun control

The president of the National Rifle Association said Senate Majority Leader Harry Reid (D-Nev.) is under "incredible pressure" concerning new gun laws — and it's "anyone's guess" how he will handle to contentious issue.

David Keene, the NRA president, made the comments about Reid on Thursday at a Christian Science Monitor breakfast.

"He's under incredible pressure right now because he's got, as any member of Congress or senator does, he's got his own beliefs," Keene said, according to CNN. 

"He's got the views and the demands of his constituents on the one hand, and the pressure he faces from party leaders and his president on the other. So where Harry Reid ends up in this debate is anybody's guess and I think that's one of the guessing games that's going on around Washington now."

President Obama and a number of legislators have called for congressional action to reduce gun violence in response to a shooting massacre at Sandy Hook Elementary School in Newtown, Conn., in December that resulted in 27 dead. 

Obama recently enacted a number of executive orders aimed at reducing the number of deaths by gun violence in the United States and has also called for Congress to pass new laws tightening gun restrictions.

Reid himself has said he would bring gun-violence legislation to the floor and allow consideration of a number of amendments. 

But that openness to passing new gun-control laws poses a challenge for Reid, who has a "B" rating from the NRA. According to the Center for Responsive Politics, Reid has also received almost $8,500 from gun lobbying organizations.

On Tuesday, Reid declined to endorse legislation introduced by Sen. Dianne Feinstein (D-Calif.) that would reinstate an assault-weapons ban. Feinstein's legislation has the support of Sens. Dick Durbin (D-Ill.) and Charles Schumer (D-N.Y.), the 2nd- and 3rd ranking Democrats in the Senate.

"She’s talked to me about her assault weapons. The new one. She believes in it fervently, and I admire her for that. I’ll take a look at that," Reid said in response to a question from a reporter. "We’re going to have votes on all kinds of issues dealing with guns, and I think everyone would be well advised to read the legislation before they determine how they’re going to vote [on] it."

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GOP Governor’s Plan To Pay For Roads By Taxing The Poor Advances

Virginia Gov. Bob McDonnell (R) has been stumping for his new transportation plan, which would eliminate the state’s gas tax and instead fund transportation via an expanded sales tax. The plan would shift the cost of transportation funding away from those who use the system and onto Virginia’s poorest residents. But so far, it has encountered little resistance:

Virginia Gov. Bob McDonnell’s controversial transportation bill passed the House of Delegates Finance Committee on Wednesday, moving past its first hurdle in the state’s 2013 General Assembly session.

In a 14-8 vote along party lines, the committee passed McDonnell’s package, which calls for eliminating the state’s 17.5 cents per gallon gas tax and raising the state sales tax from 5 percent to 5.8 percent.

McDonnell’s plan would wallop the poor, while letting the richest Virginian’s (not to mention any out of state drivers passing through) off largely scot-free, as this chart shows:

“Eliminating the gas tax paid by highway users and raising taxes on all other Virginians to pave our roads makes no sense,” said State Sen. Chap Petersen (D). “Indeed, eliminating our traditional road funding because cars are more efficient makes about as much sense as canceling your child’s college fund because tuition keeps rising.”


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Isis Pharma shares rise on Kynamro approval

NEW YORK -- Shares of Isis Pharmaceuticals Inc. soared Wednesday on news that the U.S. Food and Drug Administration approved its new drug application for its Kynamro cholesterol drug.

THE SPARK: The approval clears the way for Kynamro, the company's first drug, to reach market.

Carlsbad, Calif.-based Isis has a deal with Genzyme, a unit of French drugmaker Sanofi SA, to market the drug if it is approved. The FDA approval triggers a $25 million milestone payment to Isis from Genzyme.

THE BIG PICTURE: Kynamro is an injectable drug designed to treat patients who are genetically predisposed to have high levels of LDL cholesterol, known as the "bad" cholesterol. The drug has been approved for use as an adjunct to lipid-lowering medications and diet for patients with homozygous familial hypercholesterolemia.

HoFH is a rare inherited condition that makes the body unable to remove LDL cholesterol from the blood, causing abnormally high levels of circulating LDL cholesterol. In the United States, HoFH occurs in about one in one million individuals, according to the company.

THE ANALYSIS: BMO Capital markets analyst Dr. Jim Birchenough backed his "Outperform" rating for the stock, estimating the drug's peak sales at about $400 million. He added that the approval also bodes well for Isis' platform of more than 20 drug candidates.

Jefferies analyst Eun Yang backed an "Underperform" rating for Isis, but raised her price target by 50 cents to $7. Yang said that while the approval is a good thing for the company, she still thinks that the drug's commercial potential is low given the numerous side effects identified while it was being tested, including links to both benign and cancerous tumors. As a result, Yang said the drug's peak U.S. sales potential is probably less than $100 million.

THE SHARES: Up $1.51, or 11 percent, to $14.89 in afternoon trading, after peaking at $15.60 and coming within a penny of its 52-week high. Isis shares have risen steadily since November, gaining about 74 percent.


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To Outsmart ObamaCare, Go Protean

How big can a company get with just 50 employees? We're about to find out.

Thousands of small businesses across the U.S. are desperately looking for a way to escape their own fiscal cliff. That's because ObamaCare is forcing them to cover their employees' health care or pay a fine—either of which will cut into profits and stymie future investment and growth.

We've already seen many of America's biggest companies respond to the new law by laying off employees, putting them on part-time, or raising prices. But those are short-term solutions. Ultimately, these corporations will have to innovate and restructure to thrive in the era of ObamaCare. If small businesses follow their lead, they may even gain an advantage over their big competitors.

In his 2009 book "The Future Arrived Yesterday," veteran Silicon Valley journalist Michael S. Malone described a new organizational model called a "Protean Corporation." Like a protozoan single-cell organism, the protean corporation has the ability to "shape shift," rapidly adapting to internal and external forces in the market and the company. At the heart of a true protean corporation is a tiny number of core employees surrounded by a large cloud of resources, generally contracted or outsourced talent that does most of the work.

While the concept has been used successfully in large corporations like Intel, Microsoft and IBM, it is bound to appeal to smaller companies now. Such businesses have several ways to get their workforce under the 50-employee limit at which certain ObamaCare rules kick in. These include reducing workers' hours to move full-time employees to part-time; laying off workers; and either selling the company or closing down.

"Going protean" offers a better strategy for many businesses. Owners of protean companies create a core of strategic employees who manage the big-picture elements of the enterprise—the culture, business model, product mix, vision, strategy, etc. This core then outsources the business tasks to other corporations.

Non-core tasks could include things like accounting, marketing, product development, manufacturing, IT, PR, legal, finance, etc. There is almost nothing that cannot be outsourced—including even the CEO function (which can already happen, e.g., when a company is in turnaround.)

To most business owners, "outsourcing" means shipping jobs overseas. But in the protean sense, it means having tasks performed in the context of a contractual relationship as opposed to an employment relationship. It's not about replacing employees with contractors, but about replacing employees with corporations.

These new contracts will be a mix of large corporations, small businesses, micro-corporations and even nano-corporations (an individual doing business as a corporation). But to be a protean solution, it must involve a corporation-to-corporation relationship. Any substitute—e.g., a sole proprietorship—is only a time bomb because eventually the government will pressure you to turn any so-called 1099 contractors into employees.

In the context of ObamaCare, a small business could go protean by offering current employees contracts for doing their current work as a corporate entity instead of as an employee. Entrepreneurial employees will jump at the chance to form a corporation and run their own business. Non-entrepreneurial employees can choose to move on and find other work—or work hard to join the core company.

Going protean won't work without a massive mental shift. A company no longer manages employees, but tasks and contracts instead—a quantum leap in management styles and process.

The biggest change is replacing human-resources. Instead of writing position descriptions and managing employees, the protean corporation writes contracts and scope-of-work documents and manages those.

There is another subtle but powerful shift. Instead of relationships being vertical—e.g., boss-employee—the relationships are peer, corp-to-corp. Having your work done by people who own corporations will be completely different than working with people with an employee mindset.

Perhaps the biggest change protean corporations will experience is in the nature of their relationships with people. When a person is an employee, he or she is, by definition, in partnership with the government—the Equal Employment Opportunity Commission, the Occupational Safety and Health Administration, etc.—and is subject to all the government's regulations. But when a protean corporation enters into a relationship with that same person, now a corporation, it is a purely contractual relationship with a fellow enterprise. As long as there is no fraud or breach of contract, and the agreement is legal, the government really has nothing to say.

In the years ahead, as government continues to impose itself into the marketplace and reduce the freedom of the commercial sector through statist programs like ObamaCare, businesses will have to look for creative solutions to survive. Going protean is only one way, and others will emerge.

Yet as small enterprises approach 50 employees (or retreat back below that number), look for a significant number of them to concentrate on growing in revenues without ever again growing in employees. The result can be a wave of entrepreneurship, new company creation, business growth and economic freedom. Not a bad result when you consider that it will be spurred by the government's bid to keep America's businesses under its thumb.

Mr. Christiansen is an entrepreneur based in San Diego. He has owned an IT-training company and an executive forum group and currently has a Web-design firm, Quorim.com

A version of this article appeared January 29, 2013, on page A13 in the U.S. edition of The Wall Street Journal, with the headline: To Outsmart ObamaCare, Go Protean.


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