13. May 2012 by admin.

Many years ago, before I entered the workforce, I understood that Social Security is not a retirement program.  It is a tax, whose proceeds are used to pay retirement and other benefits.  The difference is subtle but important.

In a real retirement plan, the money collected from you and/or your employer is invested over time.  In a defined-benefit plan, there is a commitment to pay you in the future at a specified rate.  In a defined-contribution retirement plan, the money is held in your name and invested.  But in either case, the money is invested in a productive enterprise, so that it will grow, and the amount paid in at the beginning is driven by the amount to be collected at the end.

Under Social Security, the money that you and your employer pay is lent to the rest of the government and spent.  The money that you ultimately receive in benefits is paid by current workers.  The vaunted ‘trust fund’ is an accounting fiction.  And the politicians who vote for new goodies can just as easily vote to take them away.

I didn’t know about defined-benefit and defined-contribution plans in 1979, when I was finishing high school.  But the rest of it, I knew back then.

And it wasn’t a deep dark secret: I read about it in books from the library and bookstores.

The government wants us to believe that Social Security is a pension plan.  They even send out statements every year with the benefits that we might receive, if the politicians don’t change their minds.  But it isn’t so.

Now, I’m roughly halfway through my working life.  With the recent discussions over the Social Security tax, it’s really clear that it’s fake.  (The employee share of Social Security tax was cut by a third a couple of years ago, as a temporary measure.  The cut was continued after raucous debate, as it was the only tax cut that reached the majority of ordinary Americans.  A real pension plan, driven by the need to pay people in the future, would never do that.)

Yet people still believe that Social Security represents a commitment for their retirement.

Now that I’m halfway through my working life, I would have liked to believe that Social Security would be there for me.

But now I’m sure that I will ultimately retire in a coffin.

Posted in Politics, Dysfunctional Government, Money | 3 Comments »

18. April 2012 by admin.

A New York State legislator has introduced a bill that would enable bus drivers and train crews on the subway and commuter railroads to carry Tasers to deter assaults.

The news report struck a nerve for me: a long time ago, when crime in New York City was at least twice as bad as it is now, I was a subway conductor.  At the time, conductors were required to watch the outside of the train move out of the station for a distance of three car lengths.  Many people cringed at that aspect of the job: you’re hanging out the window, uniformed, a target.

I had the job for a year, traveling under some of the worst neighborhoods in the city, and emerged from the experience pretty much unscathed.  I got spat on a few times, and simply washed it off at the end of the trip.  Someone tried to swipe my hat once; they failed.  And the most painful experience came when someone threw a pad of postcards at me.  Back then, some ads in the subway included pads of postcards for prospective customers to write in for more information.  When someone throws one at you while you’re on a moving train, it stings.

It was fun to do for a year, although I wouldn’t have wanted to spend the rest of my life at it.  Perhaps it was just because I was in my early twenties and felt indestructible, but the job didn’t seem very dangerous as long as you kept your wits about you.

Would I have wanted to be armed?  Absolutely not.   I don’t believe anything good would have come of it.

If transit workers had Tasers, for every bad guy subdued, there’d be at least five frazzled passengers zapped because their bus driver was having a bad day, ten fellow workers Tased in crew room hijinks, and probably a hundred passengers intimidated into silence.

It’s a bad idea.  Unfortunately, it’s been introduced in the New York State Legislature, where bad ideas never die.

Posted in Mass Transit, Occupational Danger, Dysfunctional Government | 4 Comments »

25. March 2012 by admin.

Last week, I was having a chat with a conservative friend.  He was my boss, years ago, and since retired.

“The conservatives say that one of the reasons we’re not doing so well is excessive government regulation,” I said.  ”Supposedly, if we ditch all these rules, we’ll unleash growth and create jobs.”

“Right.”

“But there are vast enterprises, with billions of dollars and tens of thousands of workers, associated with these regulations.  Not just the government bureaucrats, but private-sector consultants and others, all associated with the maintenance of and compliance with these regulations.  What happens to them?”

“That’s not my concern.  They’ll just have to find work for themselves in the new environment.  Did you expect the government to help them?”

No, I really didn’t expect the government to help them.  In fact, however onerous and pointless they may seem, most government regulations have a political constituency behind them, which will make them hard to get rid of.

But as much as I’d like to believe otherwise, it seems more likely that cutting government regulations will destroy more jobs than it creates.

Oh, bother.

Posted in Politics, Dysfunctional Government, Things Falling Apart | 1 Comment »

19. March 2012 by admin.

When Barack Obama was running for President, he had the entirely reasonable idea of letting the Bush tax cuts expire for those making over $200k/year.  In December 2010, he caved and signed on to an extension of the tax cuts for two more years, even though the government was (and still is) running huge deficits.

What happened?

Allow me a somewhat fanciful explanation:

Sometime after he was elected but before he was inaugurated, President-elect Obama was briefed on the realities of our world and the Presidency.  He was told the truth about terrorists and UFOs, the proper way to order an ICBM launch, and the location of the secret White House Coke machine.

I’ll speculate further that he was also given a briefing rather like the ‘primal forces of nature’ speech from the movie Network about how the US was doomed, and how he couldn’t raise taxes on the rich, or tweak entitlements, or do any of the practical things that one might think of to actually address the problems we face.  He was also informed in grisly detail of the consequences for proposing such heresies, or telling the American public the truth about what we are facing.

And so Barack Obama, apostle of Hope and Change, became yet another politician.

But we didn’t get that briefing.  We’re outside the corridors of power, watching our country crumble around us, wondering, if not about our next meal, where our meals will come from two years from now.

If we set aside, for a moment, our notions of what is politically correct or feasible, how could we restore productivity and prosperity?  Or is it really a lost cause?

Posted in Politics, Dysfunctional Government, Money, Barack Obama | 1 Comment »

11. February 2012 by admin.

Walking down the street near my office the other day, I found myself contemplating New York City taxicabs.  A few years ago, the cab scene was a monoculture of Ford Crown Victorias; there are plenty of them still around, but there are Toyotas and Ford Explorer SUVs and Transit Connect vans, which are wheelchair-accessible.  (Nothing by General Motors, though.  Weird.)

New York City is under a court order to make all its taxis wheelchair-accessible.  On a practical level, it seems absurd: the proportion of taxi passengers who use a wheelchair is so small that the cost difference for a wheelchair-accessible taxis works out to over $100,000 per wheelchair-using passenger.  Drivers don’t like the boxy vans that are commonly used: besides the issue of maneuverability in city traffic, they’re less conducive to conversation with passengers, which leads to smaller tips.

But we have the Americans with Disabilities Act, which mandates wheelchair-accessible taxis and buses and countless other things.  OK: it’s the law, so we have to accept it.

For a moment, I contemplated the New York City I grew up in: the seat of commerce and finance of the most productive and powerful nation on Earth.  We had big Checker cabs that were almost wheelchair-accessible.  It wouldn’t have taken much redesign to make it happen, back then.

If the world had gone forward as we imagined it would in the 1960s, we’d probably have wheelchair-accessible taxis, buses, subways, and everything else by now.   We’d consider it a statement of our power and prosperity that we could make these simple amenities accessible to everyone, and we wouldn’t begrudge the cost.  And if the world had gone forward as we imagined it in the 1960s, I’d be planning my next vacation on the Moon.

But it didn’t happen that way.  After the novelty of visiting the Moon wore off, we stopped doing it.  We stopped being productive, because it’s cheaper to do productive things elsewhere.  The prosperity that would have made such things as wheelchair-accessible taxis effortless faded away.  In its place we have the enforced stinginess of the bean counters.

If we were truly a rich country, we’d have wheelchair-accessible taxis as a matter of the corporate pride of the taxi operators.

But we’re not really as rich as we imagine, so we have wheelchair-accessible taxis by government fiat.

Or, we’ll get them, eventually.

Posted in New York City, Dysfunctional Government | No Comments »

10. December 2011 by admin.

In 2010, I voted for Carl Paladino, the Republican candidate, in the New York gubernatorial election.  He was the Tea Party candidate, and a bit of a nut, but I couldn’t to bring myself to vote for Andrew Cuomo, the Democratic candidate, because he was just another politician.  (That, and his father had been governor before him.)

I doubted that Paladino would actually win, and I was right.

But I was pleasantly surprised with the first few months of Governor Cuomo.  He stood up to the rest of the government and was able to balance the budget with no new taxes.  Even though I didn’t vote for him, I was pleased to see him succeed.

Until this week.

In 2009, New York passed a temporary income tax surcharge on those earning over about $200k/year.  The surcharge is set to expire at the end of this year.  It’s the mirror image of the Federal ‘Bush tax cuts’ in that it’s a temporary increase in tax rates.

For the last few months, Governor Cuomo was insisting that he would not renew the surcharge.  But he’s apparently been worn down.  In the last two weeks, he has been talking about ‘using the tax code to create new jobs.’  I have no idea what that means.

And now this week, we have new income tax rates.  The highest rate is now 8.82%, well above the pre-surcharge rate of 6.85%, but below the surcharged rate of 8.97%.  For the rest of us, we get a 0.2% rate cut, or about 3-4% of the average New Yorker’s state income taxes.

Oh, goody: I got a tax cut.  It’s not enough to even pay for my daily newspaper, but I’m supposed to be all happy about it.

And if I earned millions, I could still say I got a tax cut, at least with respect to last year’s tax rates.

I still can’t see for the life of me how such tweakage will create one single job.

Posted in New York State, Dysfunctional Government | 1 Comment »

6. December 2011 by admin.

A limited audit of the Federal Reserve Bank, conducted as part of recent ‘bank reform’ legislation, revealed that the Fed had lent some $16 trillion to US and foreign banks between 2007 and 2010.

This shouldn’t really be a surprise: bits and pieces about how the Federal Reserve was throwing money around in an effort to restart the economy appeared from time to time.  But since it’s a story that requires more than eight seconds to explain, the media didn’t really say very much about it.

OK: the Fed did what it’s supposedly intended to: maintain the money supply as the cornerstone of a functioning economy.  But in September 2008, when we were told that the would would come to an end if the government didn’t allocate $700 billion right this instant to bail out banks and insurance companies, we were being played for fools.

If the government hadn’t allocated the funds, the Fed would have.  It would make their $16 trillion pot a little more risky, which would have tweaked interest rates up a bit.  But life, and the economy, would have gone on.

We won’t get fooled again… I hope.

But beyond that, the actions of the Fed reveal that it doesn’t really matter what the government does: the Fed, and the banks, will do what they want anyway.

Posted in Dysfunctional Government, Money | No Comments »

16. November 2011 by admin.

I’ve been travelling a lot in the past month: it’s why I haven’t been able write a post for a while.  (It’s not just the travelling, it’s the load of things I have to do when I get there.)  But I’ve been thinking about airport security, and the people who say that it violates their Fourth Amendment rights.

I can’t say that I’ve had a genuinely bad airport security experience.  I’ve never been groped or had my things maliciously searched, and I’ve never had an encounter with airport security staff–anywhere–that wasn’t completely professional.  On the other hand, it isn’t necessarily a pleasant experience.

Anyhow, the Fourth Amendment states:

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

OK: does airport security, as it’s currently practiced, constitute an ‘unreasonable search’?

While I rail against the government doing lots of things, I can’t rail against the principle of airport security.  Besides terrorists, there are other things that people might bring on airliners that are troublesome.  Everyone wants to get to their destination safely, and airport security is part of making that happen.   Perhaps it could be done better, smarter, or less obtrusively, but from where we’re starting, I’m not sure there are practical alternatives.

So there’s an obvious public interest involved, making airport searches reasonable.

But going further:

• A US airliner is private property.  If there were no TSA, wouldn’t airlines still have the right to search you before flying, to make sure you weren’t carrying anything dangerous?  (Indeed, isn’t that what the airlines did before 11 September?)
• I’ve traveled to other countries, and I’m not sure they have laws similar to our Fourth Amendment.  If I object to being searched in the US on Fourth Amendment grounds, does that objection go away when I travel from a place without a Fourth Amendment?

Yesterday morning, at the subway station on my way to work, the police had set up a random search table, with a TSA guy in his electric-blue shirt brandishing some kind of detection instrument.  I expected to be stopped: there were four cops and one TSA guy, and they looked like they needed something to do.  But they let me pass.

Searching people before they get on airplanes is unpleasant, but reasonable.

Searching people before a subway ride?  That’s worrisome.

Posted in Travel, Dysfunctional Government | No Comments »

6. August 2011 by admin.

I’m sitting in the park on the Manhattan side of the Williamsburg Bridge.  It’s a pleasant summer afternoon, I’ve been riding my bike, and the endorphins are flowing: it’s all good.

When I was a kid, I lived near here, and my parents and I would go out on our bikes on Sunday morning.  It’s good to see that the park is, if anything, a little nicer than I remember it.

It’s been a crazy week with the alleged resolution of the debt brouhaha:

• Each side is now yowling that it was taken advantage of by the other.  Obama sold out to the Tea Party, while the Tea Partiers wimped out.
• On Wednesday, the government borrowed nearly a quarter of a trillion dollars, apparently making up for lost time.
• Some Republican (mainstream, not Tea Party) noted that the GOP was more than willing to let the deadline pass, until they considered that the Treasury, having to prioritize spending, would short the things that would make the public the angriest (like Social Security) so that they could blame the Republicans.  I find it hard to believe that the Obama administration would do that, but I suspect that a Republican administration would.
• After a 500-point drop on Thursday, the stock market had a barf-bag day on Friday.
• On Friday afternoon, after the markets closed, Standard and Poor’s downgraded US government debt from AAA to AA+.

But where does that leave us as far as the rest of the economy?  Sadly, not too well.  But that’s not really new.

The national government is a one-trick pony: there is only one thing it can do to address a sluggish economy: deficit spending.  Whether this takes the form of tax cuts or new spending programs, the goal is the same: provide loose money to encourage commerce and tide people over until new growth takes hold.

But in fact, the government spigot has been stuck on ‘loose’ for many years now.  Between the bailouts, the stimulus, tax cuts, and the Federal Reserve’s quantitative easing, we’ve delivered enough stimulation to launch the Empire State Building into orbit.  It hasn’t worked.

Now is the time to re-examine our premises and seek a new way forward.  It won’t be easy, and some of it will certainly be painful, but it’s still better than the alternative of yet more debt.

Posted in Dysfunctional Government, Life Goes On, Money | No Comments »

3. August 2011 by admin.

Yesterday, the Senate passed and the President signed into law a measure increasing the debt ceiling, and making present and future cuts in Federal spending–but no new taxes–averting the immediate crisis of a government unable to satisfy its $4 billion daily borrowing fix.  Everybody hates it, but then a good compromise leaves everybody mad.

Except that the plan doesn’t actually cut spending by a meaningful amount in the near term, and anything further in the future can be undone by the next Congress.

Moreover, it sets a dangerous precedent in that the next stage of spending cuts will be determined by a joint committee of Congress, with input from the President, and then be voted up or down with no debate or possibility of amendment.  On one level, since politicians don’t seem to have the intestinal fortitude to vote for serious spending cuts, this seems a practical necessity.

But the committee–called ’super Congress’ by some–has no constraints on what it can include in its ’spending cut’ package.  If they wanted to require all of us to wear lime-green underwear, they could.  For now, we can only hope that they’ll limit their concerns to things that will help the government’s finances.

OK, now that the circus is over, how about going back to the economy and creating jobs?

The economy is languishing, with growth in the first quarter restated at a 0.4% annual rate and the second quarter  at a 1.3% annual rate.  If you exclude banking/finance, and perhaps the oil companies, the rest of us are in a recession.

The government has one thing, and one thing only, it can do to stimulate the economy: it can make money looser.  It can do this by tax cuts (the Republican method) or new spending (the Democratic method), but either way, the intent is the same: to provide new money to encourage the private sector to invest and hire, or at least to tide people over.

But in spite of partisan bickering, the spigot has been stuck on ‘loose’ for a long time now.  Most Federal spending is preset before the budget process starts: Social Security, Medicare, and interest payments.  And the new plan is supposed to tighten things up, even if only incrementally.

So what can the government actually do to create jobs?

For my part, I have no idea.

Posted in Dysfunctional Government, Money | No Comments »

30. July 2011 by admin.

Yesterday,  the Republican-controlled House of Representatives passed a bill to raise the debt ceiling, begin to cut spending, and attempt to address the nation’s fiscal problems.  It was voted down in the Senate in less than two hours, with no serious debate.

Meanwhile, Our Fearless Leader, true to form, has left the details of the Democratic plan to Congress.  Senate Majority Leader Harry Reid is working on such a plan, but the details aren’t there yet, and the House Republicans have already resolved to vote it down.

The headline on today’s Daily News reads ‘Bam: Call Your Reps.’  I would call my reps if I thought it would do any good.  Alas, they’re all solid Democrats, and won’t care.  Or my position will be swamped by many of my fellow constituents.

We’re in trouble now because our government made promises in the past that it now cannot keep.  This happened because the productive capacity of the country was left to rot.  We’ve been working around it for a couple of decades now, telling ourselves lies about ‘the service economy’ and blowing bubbles, but we’ve burned through our savings and our credit and now find ourselves no better off.

A limited government like ours cannot simply will productive capacity into being.  It can’t construct productive enterprises for itself, and it can’t force the private sector to create jobs.  Under the circumstances, the only alternative is to cut spending and find a way to back away from its promises while causing the least damage.

The Republican plan is an effort to do that.  I disagree with the Republican orthodoxy in that I believe that new, higher taxes will be necessary.  The Republicans will say that higher taxes merely encourage higher spending, but one of the lessons of the Reagan administration is that politicians will spend anyway.

If we can’t expect some adult leadership from our government, then we’re really done for.

Moreover, if you want to ask where our productive capacity went, part of it got crystallized into the wealth of the very. very rich.  If the government can return some of that through taxation into the circulating economy, that can only help the rest of us.

So while I don’t completely agree with the Republicans, at least they’re trying.

Posted in Dysfunctional Government, Money | No Comments »

27. July 2011 by admin.

Yesterday, my tasks at work were more graphical than verbal, and I found myself listening to talk radio again.  A while back, I had subscribed to XM, which got swallowed by Sirius (or was it the other way around), so I can access the XM/Sirius radio channels on my computer.  I had a choice of listening to left-wing talk radio or right-wing talk radio, and so spent about an hour with each.

The left-wing guy railed against the big corporations that are taking over the world and leaving nothing for the rest of us.  He had a guest with an opposing position.  The guest shouted; the host shouted; there was plenty of heat but no light.  It was a perfect mirror image of Sean Hannity.

The right wing guy bemoaned the freeloaders who were looking for the government to solve their problems, and the widespread lack of personal responsibility.

But I have to wonder: I’m sure that there are conservatives who worry about corporate overreach (many of our founding fathers had the same concerns), and I’m sure that there are liberals who are ticked off with the freeloaders who take no personal responsibility and abuse the system.  On a practical level, there’s probably more common ground than most of us care to admit.

Meanwhile, the circus continues in Washington.  A couple of plans to stave off default seem to be emerging.  Both are of the kick-the-can-down-the-road variety, with the Republican version (which seems more likely to pass at this point) having us do it all over again in six months.  But the Tea Party Republicans still consider it as cutting the government too much slack.

In my guts I feel like one of these proposals will get passed, and we’ll all allegedly heave a giant sigh of relief.  For my part, I’m not sure that ‘default’ is necessarily a bad thing.  First, it won’t be a real default: we’ll still pay interest on our debt, and almost certainly will continue to pay Social Security and the military.  Government contractors will probably be told to wait for payment, and parts of the government will get shut down.

But at that point there will be an actual, instead of a potential, problem.  We will have to face the naked reality of the situation, and actually do something.

If we’re worried about the country’s credit rating, the damage is already done, and will get worse if we kick the can down the road.  But a ‘default’ might actually help the situation because we’ll have to do something about it.

A ‘default’ will be disruptive and unpleasant.  But among the alternatives before us, it may be the least painful in the long term.

In any case, we’ll know in six days….

Posted in Media, Dysfunctional Government | No Comments »

17. July 2011 by admin.

Before 2000, when politics were less polarized, I used to observe that given two candidates, one Republican and one Democrat, who were about evenly matched on the issues, I would vote for the Democrat.  I noted that while the Republican was a little closer to my views on the principles, the Democrat seemed more like the person I’d prefer to see in office: a little more humble, a little more trustworthy.

Some time after 2001 I read the thought somewhere that Republicans view power primarily as an opportunity, while Democrats see it more as a responsibility.

In our current debt-ceiling brouhaha, the Republicans like to point out that now-President Obama voted against a debt-ceiling increase while a Senator during the Bush administration.  But the Democrats relented then, at least partially because they saw maintaining a functioning government as part of their responsibility, even if a President they didn’t agree with was spending too much.

Since I last wrote, not much has changed in the current debt-ceiling drama, except that both sides have hardened their positions, and our President has gone out on a limb and suggested raising the retirement age for Social Security and making other entitlement tweaks.  But he isn’t supported by Democratic Congressional leadership, while the Republicans absolutely insist that there be no new taxes, because that kills jobs.

(There is a cogent rebuttal to that: the economy has become fractured, which portions doing really well, and most of us having trouble.  In that case, it is reasonable for the government to seek to fund itself by taxing the part doing really well more heavily.  Note that we’re not doing this to set up new programs, but to keep the promises we’ve already made.)

Some radicals on the right have suggested that we should ’starve the beast’ and relentlessly cut taxes until government can no longer function.  The Republicans have the opportunity to do that now.  They can remake government in their own image, if they can just tough it out for…

16 days.

Posted in Politics, Dysfunctional Government, Money | No Comments »

7. July 2011 by admin.

This afternoon, overtaken with a task that required relatively little actual thought, I turned on Rush Limbaugh.  It was instructive.

He played of a clip of some remarks by Republican Senator Marco Rubio of Florida:

… I want to know which one of these taxes they’re proposing will create jobs. I want to know how many jobs are going to be created by the plane tax. How many jobs are going to be created by the oil company tax I heard so much about. How many jobs are created by going after the millionaires and billionaires the president talks about? I want to know: How many jobs do they create?

The short answer is that taxes don’t create jobs, except maybe for tax accountants.  The longer answer is that the primary responsibility of government is to maintain an environment in which jobs are created, chiefly by the private sector.  And, as much as we would wish it otherwise, governments don’t–can’t–work for free.

Later, Rush discussed the difference between the ‘deficit’ and the ‘debt.’   His description was accurate: the ‘deficit’ is the amount in a specific timeframe that the government spends that it didn’t receive in taxes, while the ‘debt’ is the accumulated borrowings.  He further noted, accurately, that the government, even given the limits of the debt ceiling, is not in danger of defaulting on its debt.  Instead, hitting the debt ceiling would force the government to stop deficit spending.

But what he didn’t say was that if the government had to stop deficit spending, it  would necessarily have to shut itself down, and would probably have to cut entitlements.

I’m not sure the dittoheads on Social Security would be happy with that.

Posted in Rush Limbaugh, Dysfunctional Government, Money | No Comments »

6. July 2011 by admin.

I was watching Fox News this evening.  Yes, they’re a mouthpiece for the Republicans, but that can be helpful sometimes.  Tonight, they were rebutting Obama’s assertion that the Republicans have no ideas about how to address the deficit.

The Republicans, according to the report, are not against increasing government revenue.  The government can raise revenues by selling assets, or increasing user fees.  But tax increases of any kind, including getting rid of loopholes, regardless of how useless or stupid they may be, are absolutely off the table.

Usually, I disregard this as mere brinksmanship: they’re just playing chicken.  In New York, things like this happen with some regularity, and earlier this year, a Federal government shutdown was avoided with last-minute negotiations.

But we’re in a deep, deep hole: the Federal government is broke.  Getting out will be difficult and painful: it will take both tax increases and spending cuts, and we’re all going to get taken down a couple of notches.  We’re also going to learn the hard way that ‘entitlements’ are not ‘debts,’ and can be changed at the stroke of a pen.  In 2008, I had voted for Obama hoping that he would help us face our problems.  But he turned out to be just another politician.

We’re broke now: it’s just that we can juggle the books for another few weeks, until 2 August, before the country is officially in default.

What’s so difficult? I hear you cry.  Just raise the debt ceiling, like the last dozen times, and everything will be fine.  But the usual rationale is that after one raises the debt ceiling, the economy recovers, and the resulting growth cuts unemployment and covers the debt.  Unfortunately, that hasn’t been working for the last few years.  Our economy has lost the productive capacity that it would need to properly recover from our current situation.

So the alternatives are to negotiate some spending cuts, and possibly tax increases, and kick the can down the road for a few months, or to let a default happen.

If the default is inevitable, maybe it’s better for it to happen now:

• We’re all (except the very, very rich) stretched now, but it will be worse next year;
• If it happens now, we have a chance to stabilize the situation by next year’s elections.

And, perhaps, that is what is underneath the Republicans’ position.  They may want the default to take place, not out of malice, but because it is the least painful of the available alternatives.

I tend to doubt that this will be the usual game of chicken.

Posted in Dysfunctional Government, Money | No Comments »

3. July 2011 by admin.

Right now, the Federal government is running against the debt ceiling: on 2 August, it will no longer be able to borrow money, and be officially broke.  Timothy Geithner, Secretary of the Treasury, has cited Section 4 of the 14th Amendment as a reason that the government should keep borrowing anyway.  Let’s read it together, shall we?

*          *          *

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

*          *          *

The Amendment was enacted after the Civil War, and the former Confederate states were required to ratify it as a condition of readmission.  In that context, the meaning is clear: what the Union spent to fight the Civil War was a valid debt that could not be repudiated, but as for the debts of the Confederacy, or the value of slaves as assets, well, tough noogies.

OK: what does that mean now?

Debts of the United States that have been previously authorized cannot be repudiated.   So we have to continue paying interest on our outstanding debts.

But what if we’re in such bad shape that we need to take out new debt to service our existing debt?

In that case, perhaps, we could use the authority to coin money, if we hadn’t delegated it to the Federal Reserve.  But we’re not quite there, yet.

More practically, what the 14th Amendment tells us is that we do not have the option of failing to service our debts.  If we can’t create new debt, we have to take money that would be spent on other activities in order to pay the interest we owe.

So this means that everything else–defense, civilian administration, and even Social Security and Medicare–must be cut in order to pay our debts.

Even Social Security? I hear you cry.  You mean like poor little old ladies?

Alas, the little old ladies don’t have a Constitutional amendment.  Sorry.

Posted in Dysfunctional Government, Money | No Comments »

16. May 2011 by admin.

Last week, the Federal Communications Commission (FCC) announced a new scheme, called PLAN (Personal Localized Alerting Network) for alerting the populace to emergencies through cell phone messages.  New phone will include programming to receive the messages, which will be broadcast from cell phone towers in the affected area.

Some have suggested that this is yet another way for the government to monitor one’s activities.  From the information in hand, it doesn’t look like that.  When you carry a cell phone and keep it turned on, the phone company knows where you are: it’s how you can receive calls.   From the information in hand, PLAN actually seems a step backward: the messages are addressed through cell phone towers, to whatever phones have the programming to receive the messages.  The receivers of the message are not localized, or even identified, by the transmission of a PLAN message.

Are we now so distrustful of the government that what is actually a public safety enhancement is viewed as a form of mind control?  Perhaps, but:

• The description of PLAN indicates that the system will provide ‘text-like messages.’  Well, is it a text message, or isn’t it?  Perhaps one could forward a brief audio message through PLAN, but the description is unclear.  I’m OK with a textual message, but having my phone interrupt me in the middle of a call is not so good.
• The description notes that there are three kinds of message that will be forwarded through PLAN: Amber Alerts (for child kidnapping), alerts involving imminent threats to safety of life (tornado warnings?), and Presidential messages.  A service provider may enable users to block the first two kinds of messages, but not Presidential alerts:
  • I’ve never liked the concept of the Amber Alert.  It reminds me of Fahrenheit 451, when the police enlist the help of the neighborhood to catch the fleeing Montag: OK, everyone drop what you’re doing and look out your front door… now!  It’s true that child kidnapping is very rare, and Amber Alerts are actually infrequent.  But we’ve created an infrastructure that could readily be abused at the whim of our leadership. So I’ll shut them off… for now, anyway.
  • I have to wonder what the President would tell the nation through an emergency text message.  Perhaps they’ll send out one every Fourth of July at noon, as a test.  But in an actual emergency, what would he tell us?  “Put your head between your legs, and kiss your ass goodbye”?

So no, I’m not going to hang onto my old cell phone just to duck out of PLAN.  Like anything else in our modern world, it can be used for good or for ill.

Posted in Dysfunctional Government, Fearmongering | No Comments »

11. May 2011 by admin.

President Obama was speaking in Texas the other day about immigration reform.  His proposals are dead on arrival in the Republican-controlled House and tepid Senate, but he was at it anyway:  “Maybe they’ll need a moat,” he said of the Republicans. “Maybe they’ll want alligators in the moat.”

He’s probably right.  But that isn’t the real problem.

One of the basic attributes of a nation is that it has the right to decide whether to allow people and things in and out.  We’ve failed at that for quite some time, and while there has been progress in building a fence (which, in itself, is not a bad idea), there are still wide open spaces that the Border Patrol cannot practically supervise, as well as criminal elements with a vested interest in moving across the border on their own terms.

But let’s imagine, for a wild moment, that today we installed a hermetically sealed border: nothing could get in or out unless the designated authorities allowed it.  Drug smugglers and terrorists are kept out; business travelers can pass through freely; other people can get in if they have the resources and patience.  Fine and dandy.

OK: what do we do about the roughly 12 million that are already here illegally?   Right now, the government doesn’t generally go looking around for illegal aliens.  If they cross paths with one, he might get deported, but maybe not.  But that satisfies nobody.

One approach is that favored by Obama, and Democrats in general: provide a path to legal residence, and ultimately citizenship, for those who are worthy of it (as demonstrated by living here peacefully, paying one’s taxes, otherwise not breaking the law, etc.).

It’s a practical solution.  It was so practical that it was actually done in the 1980s, under Ronald Reagan.  But we were supposed to couple that with reinforcing the border and making it harder for illegal immigrants to get jobs, and we didn’t really do that part.  So here we are again.

Some on the right have suggested mass deportations as a solution.  But that is a nonstarter for many practical reasons, most obviously because we would have to overtly turn our country into a police state in order to make sure we got everyone.  And as soon as an American citizen got deported inadvertently, all of the politicians who were responsible for the plan would be on their way out, routed by a groundswell of popular anger.

So the Republicans simply say ‘no amnesty,’ and nothing changes.  (Never mind, by the way, that providing a path to residence through paying a fine and filling out piles of paperwork does not constitute ‘amnesty.’)  And we have an underclass of scared people who are willing to work for very little, which drives down wages for the rest of us.  Is that what America stands for?

Perhaps not, but eerily, it’s what the Republicans stand for.  The modern Republican stands for lower taxes, less regulation, and less of everything that can get between a businessman and his profits.  If government policy can be used to lower wages, then that’s good, too.

But if what you really want (although won’t admit) is to keep a scared underclass on hand to lower wages, then a secure border isn’t really very helpful.  As for the criminals who might sneak across, the answer is simple: live somewhere else.

So while the Republicans profess to be defenders of the realm, they’re really defenders of the status quo, because that’s what best serves their real interests.

And if that weren’t enough, there’s also the other reason for ‘no amnesty’ that is more acceptable in polite company: if the currently illegal immigrants ultimately became citizens, they’d probably be Democrats.

Posted in Immigration, Dysfunctional Government, Barack Obama | 1 Comment »

30. April 2011 by admin.

The other day, President Barack Obama released his long-form birth certificate, supposedly ending the controversy over whether or not he was actually born in Hawaii.  While I find myself opposed to his policies (even after I voted for him!), the whole ‘birther’ exercise seems pointless and stupid.  (And it isn’t over: some are asserting that the long-form birth certificate is itself a forgery, and 70% of the respondents in a poll in the Daily News assert that the release of the certificate does not close the issue.)

For my part, if competent authority saw fit to issue Obama a US passport–that indicates his place of birth as Hawaii–well before he became President, then he’s a US citizen, born in Hawaii.  He spent most of his youth and adolescence outside the US, and was therefore not steeped in American culture, but that doesn’t disqualify him to be President, and nevertheless, we voted for him.

In other news this week, both AlterNet.org and Glenn Beck (weird combination!) came forward with the a draft form proposed by the Department of State for new passport applicants.   The form asks for your immediate relatives (parents, siblings, children), every address you’ve lived at since birth, and every job you’ve held, including your supervisor’s name.

Once upon a time, I was a New York subway conductor.  Every day, I was assigned to a different route.  I guess my ’supervisor’ would have been the Crew Dispatcher, but I never met him and don’t remember his name.

If you weren’t born at a ‘medical facility,’ there is an additional series of questions, including your mother’s address one year before and after your birth, medical care she received, and other records of your birth.  (But if you were born at a medical facility, I guess you get the short-form birth certificate from your local Department of Vital records and you’re good to go.)

The reports don’t indicate the context in which the form will be used: whether it’s for all applicants, or just those who can’t otherwise document themselves.  The one context where the form would genuinely seem to be useful is for a child of illegal immigrants who is born in the US in someone’s house.  (As much as some may resent it, it’s still the law of the land, and even if the Constitution is changed, those already born here will still be citizens.)

But it will be genuinely be chilling if this form is required for all new passports, and freakish if it is required for renewals.

I guess I’ll find out when my passport runs out in two years.

If I have to fill out the form, I’ll have to find our who the Crew Dispatcher was.

Or can I just dig up a copy of my long-form birth certificate?

Posted in Politics, Dysfunctional Government, Barack Obama | No Comments »

29. January 2011 by admin.

Last Tuesday, I had wanted to watch the President’s State of the Union address, but my wife wanted to watch a Korean soap opera.  I deferred to my wife: I find the Korean soaps entertaining, or at least the ones with English subtitles.  And I could watch the address later, or at least read a transcript.

This morning, I finally got around to watching the speech.  I’m genuinely disappointed:

• President Obama told us that ‘innovation’ was the way out of our troubles.  OK, but the problem with innovation is that it ends up getting manufactured in China.
• He gave us chapter and verse about how education needs to be improved in the US, and got a standing ovation for stating the obvious about respecting teachers.  But there was nothing about how, specifically, we might enhance school performance.
• He also agreed that it was necessary to do something about government spending.  However, entitlements were completely off the table, although they represent most of our problem.
• He noted that the Federal government would reorganize itself to become more efficient.  That’s certainly a good idea, but hardly a source of jobs.
• He indicated that he was willing to consider changes to last year’s health reform law, most specifically the onerous requirement for businesses to report virtually all of their spending to the government.  Funny, but if everyone hates the idea, why didn’t it get changed in the ‘wonderfully productive’ lame-duck session of Congress before Christmas?

Posted in Dysfunctional Government, Things Falling Apart, Barack Obama | No Comments »

21. December 2010 by admin.

About two weeks ago, I received a request from New York State to participate in a survey about ‘green jobs.’  (Aren’t all jobs ‘green,’ if you get paid in real money?)  I filled in the survey over the Internet.

Yesterday, the mailman brought me a Second Notice: evidently I hadn’t filled the survey out fast enough.  This time, the package included a paper survey form for me to fill out, perhaps believing that the reason I didn’t respond the first time was because I didn’t have Internet access.

New York State is quite thoroughly broke.  The Legislature is still on its own little planet, sucking its thumbs and ignoring the billions of dollars by which tax receipts (including a nifty new tax on employers) fail to cover the state’s expenditures.  And yet, somehow, the Department of Labor has the funds for this exercise.

But it’s not just pointless surveys.  A while back, the State and City spent $4 million to rename the Triborough Bridge as the Robert F. Kennedy Bridge.  And now they want to rename the Queensboro Bridge as the Ed Koch Bridge.

I recognize that many of the things that government spends money on are fixed in law and cannot be readily changed.  Still, can’t we at least lay off the stupid stuff?

Posted in New York State, Dysfunctional Government | No Comments »

20. December 2010 by admin.

About 20 years ago, my parents gave me a bailout.

I had gotten divorced and was broke, and had moved back to New York City.  My job here paid better, but I still had a pile of installment debt from when I was married.  So one day, my parents sent me a check for $5,000.  It didn’t totally wipe out my debts, but it put a big dent in them, and I was able to better balance my books going forward.

I ultimately got completely out of debt, and then… I fell in love again, and got married.  And one hates to say ‘no’ to one’s beloved.    My new wife is more reasonable about money, so it wasn’t the crisis it was the first time, and things stayed under control.  But I got further into debt when I went into business for myself.  Today, I still am in debt, but I’m working to pay it back.

What can we learn from this?

1. Bailouts work if the bailout has actual value behind it.   My parents bailed me out with actual money they had in their checking account.   (OK, it’s fiat money, but it represents the savings of my parents, who didn’t have to borrow to send it to me.) When the Feds bail out banks and insurance companies with money they don’t have, it merely kicks the can down the road… and turns it into a bigger can.  And ultimately someone who has real value (i.e. the rich) will have to really bail us out.
2. Bailouts don’t change behavior.  You may be chastened by having received a bailout, but the feeling will wear off, and given the same circumstances as before, you’ll be back to your old tricks.

Posted in Navel-gazing, Dysfunctional Government, Money | No Comments »

18. December 2010 by admin.

Yesterday, President Obama signed into law an extension of the Bush tax cuts for two years, after insisting in his campaign that he wanted to let the cuts expire for those earning over $250,000/year.  The liberals who supported him are disappointed that he turned his back on his principles; more moderate commentators commend him for pivoting to the center like Bill Clinton.

For my part, I’m disgusted.

The bonanza for the rich (relief from what would have been a maximum 13% tax increase) was accompanied by a one-third cut in the employees’ portion of the Social Security tax for next year.  So we’ve all got a share of the goodies.
In this battle between Republicans and Democrats, the only thing that both sides can agree on is spending money they don’t have.

Meanwhile, the toxic borrowing goes on, and nobody seems to want to do anything about it.

Posted in Dysfunctional Government, Money, Barack Obama | No Comments »

25. November 2010 by admin.

On 1 November, the government changed the rules about airport security.  My colleague, whose name is misspelled in his passport, has had to get a new one because airline staffers, who used to just wink at the discrepancy, aren’t allowed to to that anymore.

At the same time, body scanners and ‘enhanced pat-downs’ came into more general use.  I’ve said before that I don’t mind the body scanner, as long as I can’t hear the guy off in a room somewhere looking at me naked and snickering.

Much has been written about how the new scanners and searches are demeaning, an assault on one’s dignity.  Perhaps, but we’ve set our Fourth Amendment rights at airports aside for about 40 years, since metal detectors first came into use.  I accept that, consistent with government’s responsibility to maintain civil order, my person and effects may be searched before I can travel on a plane.

What bothers me more about the new security procedures is that I’m not sure how effective they are.  Our modern approach to problems like this is to throw expensive equipment and onerous procedures at the problem.  Politicians like body scanners because they can say that they’re doing something concrete to fix the problem.  The manufacturers of the devices earn a living out of it, and turn around and support the politicians.  Everybody’s happy, right?

One of my pastimes when flying is to imagine how, if I were a bad guy, I could circumvent the security rules and do something evil.  I’ve had some clever thoughts in that vein, though in the name of good citizenship I won’t report them here.  My point is that what makes people dangerous is what they are thinking, far more than the objects they may be carrying.  But we can’t examine people’s thoughts, so we examine their objects.

The Israelis have been practicing effective airport security for decades.  I’ve never experienced it, but the reports I’ve read suggest that they question passengers to establish their motives for travelling, at least to satisfy themselves that their motive will not impact the safety of the flight.  They pay attention to the passenger’s thoughts, as well as his objects.

It’s a compelling alternative, and I would like to see it applied here, even if it meant that I would have to arrive at the airport three hours before my flight.  It would meaningfully improve airport security.  I’d even pay an extra $50 for every airplane ticket to help pay for it.

But that’s why it won’t work:

• People will complain, just as they do now with pat-downs and body scanners, that the aggressive questioning is an assault on their civil liberties.
• It will mean that passengers will have to arrive at the airport early, in a disciplined frame of mind, prepared to submit to questioning, which will deter many casual travelers.  The airlines won’t want that.
• While I’m willing to pay for genuine airport security, I’m probably in the minority.  We’re still in the mode of processing passengers as cheaply as possible.
• It’s possible to teach someone the skills of the present airport security regime in a few days or weeks, and establish that he is doing a satisfactory job through direct inspection.  The Israeli method turns on professional judgement, accrued through years of experience.  Where would we get the people?

So we’re probably stuck with the methods we use now, at least until some invents a machine to read minds.

Just as long as I can’t hear them snicker.

Posted in Dysfunctional Government | No Comments »

21. November 2010 by admin.

I like being married.  I’ve been married and single, and for me there is no comparison: my wife brings me peace and happiness, which means more to me than the do-whatever-I-want freedom of being single.  But for an individual, one always has a choice.

As a society, we’re stuck with having a government, whether we like it or not.   But is it too much to ask that my government act like responsible adults?

My wife, like many wives I’m sure, asks me for stuff.  Most of the time it’s perfectly reasonable, but sometimes she asks me for things that we can’t quite afford.

Sometimes I’d really like to get her whatever-it-is, and sometimes I’m not sure it’s worthwhile.

When I was married the first time, I tried to tell my wife , ‘no,’ and she would just make my life miserable.  She thought we were rich, and that my resources were really infinite.  So after some tension, I would give up and buy whatever it was, until I really ran out of money and credit.  And then we got divorced.

My wife today is more fiscally responsible.  Sometimes I do stretch to buy something if I think it would really make her happy.  But I can tell her, “I’d really like to do this for you, but to do it would mean that I’d have to borrow and pay interest,” and she understands. And it works: although I’m still in debt from starting my business, it’s getting paid off, and I’m putting money in the bank.

In other words, we deal with money like responsible adults.

Meanwhile, our leadership seems to be unable to exercise even a little self-control.  Most of what our Federal government spends money on is fixed by law: Social Security, Medicare, interest on the national debt.  Only a small portion can be readily tweaked from year to year.

So if the government isn’t raising enough revenue from taxes to cover its expenses, then it needs to raise taxes or cut expenses.  We all know that from managing our personal expenses.  And sometimes, in our personal lives, being responsible means telling someone dear that they can’t have what they want, at least not now.  Anyone with a spouse and/or children knows that can be unhappy.  But if you’re responsible, you know that a little unhappiness now can work out better in the long run.

But our leadership seems incapable of making hard decisions.  One can’t raise taxes, even if it’s prudent, because someone on the other side will say that it’s better to cut taxes, and enough people will believe him because nobody likes to pay taxes.

And entitlements are called–with good reason–the third rail of politics.  President Bush, back in 2004, had a reasonable idea with privatizing Social Security.  But even he could not kiss the third rail without getting badly burned.

The same drama plays out for New York State, stumbling from one crisis to another, with some faction of the legislature believing that the money will always come from somewhere.

When will they grow up?

Posted in Navel-gazing, Dysfunctional Government, Money | No Comments »

10. November 2010 by admin.

Ronald Reagan, on balance, was one of our better Presidents.  Although the Soviet Union would probably have collapsed anyway, he accelerated the process; he reversed the trend toward bigger government; he made us feel better about ourselves, which seems silly, but is important, as it leads us to solve problems for ourselves, instead of moaning and wailing for the government to do it.

But there was one point where Reagan was mistaken.  He believed that tax cuts were an effective way to constrain the government: it the revenue isn’t coming in, then it can’t be spent.  Of course, his own administration did otherwise, ushering in the ear of huge deficits.  He proposed that he could cut taxes, increase defense spending, and still balance the budget.  I guess two out of three isn’t bad.

But now that we have the perspective of over two decades,  it’s clear that reducing taxes does not constrain government.  On the contrary: as long as someone out there is willing to lend, the politicians are willing to borrow.  Only when there is really and truly no more money will they stop.  But even then, they will rarely shut anything down.  Instead, they reduce its budget so that it works half-assedly.

And if we can come up with a gimmick in order to keep spending, like the current ‘quantitative easing’ by the Federal Reserve, so much the better.

Anything to avoid facing reality….

Posted in Ronald Reagan, Dysfunctional Government, Money | No Comments »

12. March 2010 by admin.

It looks like Our Fearless Leader will get his way and ‘health care reform’ will soon be the law of the land.  Heaven help us.

Health care reform–the campaign promise–was intended to address a practical problem: it costs too much.  It costs the government; it costs private insurers (who pass the cost along); and woe unto that poor soul who gets seriously ill without insurance.  He’ll end up broke: lacking the clout to negotiate a better deal, he will have to pay full price.

Imagine a community beset by monsters, who come out at night, wreck buildings, eat the cows and chickens, and the occasional small child.

To deal with this obvious danger, the government mandates that everyone carry monster insurance.  It works like this: when monsters attack your home, you call for help, and within three minutes, the Monster Insurance crew arrives at your home in a truck with a tank of strawberry-flavored Ensure.  The monster is hosed down with Ensure; he licks it off his belly; and contented, he slinks back into the night.

What will this do the population of monsters?   They’ll find it easier to feed, and grow stronger, and reproduce in greater numbers.  The Monster Insurance crews will need bigger trucks, and premiums will go up.  Moreover, when the monsters get tired of strawberry-flavored Ensure, the crew will have to bring other flavors.

‘But wait!’ I hear you scream.  ‘We’re not talking about monsters, we’re talking about medical treatments that save people’s lives!’  That’s true.  But what kind of life is it if all you’re going is earning money to pay for health care?  And what happens when all your taxes–if you’re healthy enough to earn a living–go to pay for other people’s health care… and the government still can’t balance its books?  (We’re closer to that in New York State than most people care to admit.)

Right now, health care is about one-sixth of the economy, considerably more than in other industrialized countries.   I’ll predict that if health care reform passes, within ten years, health care will be at least one-quarter of the economy, and the cost will still be bankrupting all of us.

Now is the time to face the monsters, rather than figure out better ways of feeding them.

Posted in Health Care, Dysfunctional Government, Barack Obama | No Comments »

27. January 2010 by admin.

The Obama administration indicated yesterday that the President would call for a three-year freeze on discretionary spending as part of the State of the Union address tonight.  It’s official: he’s now just another politician, and not even a very good one.

Every President in modern memory, except one, has jumped up and down and insisted that the deficit be reduced.  (The only exception was Clinton: we were flush with the Peace Dividend and actually ran surpluses.)  And every President who jumped up and down about deficit reduction never actually accomplished it.

The freeze in discretionary spending affects less than $500 billion of a $3.5 trillion budget.  (Can’t anyone divide?  The press is reporting that the freeze affects 17% of the budget, but when I went to school, 500/3500 = 1/7 = about 14%!)  Of course, the sacred cows of defense and entitlements are off the table.  Projected savings from this measure in the first year are estimated to be $10 to $15 billion, or less than 0.5 %.  It’s like saying that I’ll balance my family budget by giving up magazines, books, and movies.

On the other hand, deficit spending (whether actual spending increases or tax cuts) is the government’s most useful tool for dealing with a bad economy.  The spending has to be chosen wisely, which didn’t happen with last year’s stimulus package (in which the Democratic Congress ran around like kids in a candy store).  Bad deficit spending is worse than flushing the money down the toilet, because the recipients of the money will have reason to expect more in the future. But good deficit spending (say, investments in infrastructure) can be genuinely useful.

More than I’m disappointed by the substance of the move, I’m disappointed that our President seems to be displaying no leadership at all.  He’s getting the buzz that people are worried about the deficits, so he’s serving up some old blather to suggest that people shouldn’t worry.

I wish President Obama would:

• Pick a direction.  For all that I railed against President Bush, he at least did this part right.  If Obama wants to temper his decisions to make them more acceptable to the opposition, it should be done before taking the plans to the public.  Setting forth a big plan, and then conceding later, looks wishy-washy.
• Articulate a clear vision of what he’s trying to do, going beyond the sound bites and addressing reasonable concerns from the other side.
• Do NOT then throw the issue over the fence and let Congress hash out the details.  Architects don’t draw up plans and then say, “OK, my work is finished, it’s now the contractor’s job.”  They generally have a role in managing the construction project, keeping things on track, and fixing glitches that pop up.

Obama also disappointed me with his remark that he’d ‘rather be a really good one-term President, than a mediocre two-term President.’  The only way you can get to be a mediocre two-term President is to get re-elected, and for that you have to be a good one-term President.

Looking back, when was the last mediocre two-term President?  Not Clinton: he presided over peace and prosperity, as well as bringing us the ongoing drama of the impeachment that wasn’t.  Not Reagan: he helped end the Cold War.  Not Nixon: he didn’t serve two full terms, and he resigned in disgrace: definitely not mediocre.  Not Johnson: he brought us civil rights and Big Government: the latter was perhaps not a good thing, but still not mediocre.  (Johnson also didn’t serve two full terms.)  Maybe Eisenhower, but that was before I was born, so I can’t really say.

But I’ll grant the possibility that someone might get re-elected to the Presidency, then go to sleep, and end up a mediocre two-term President.  Unfortunately, the only sure methods of being a great one-term President without running the risk of being a mediocre two-term President are to either (1) refuse to run for re-election or (2) die in office.

Posted in Dysfunctional Government, Money, Barack Obama | No Comments »

29. December 2009 by admin.

Last Friday, a young man from Nigeria attempted to set off a bomb on a Northwest Airlines flight from Amsterdam shortly before it was due to arrive in Detroit.  The effort failed because the explosive didn’t go off as intended: it just lit on fire, and the man was tackled at that point by another passenger.

It wasn’t as if this guy was a total surprise: he was on a terrorist watch list, and his father, a wealthy banker in Nigeria, contacted the American embassy to warn us about him.  But somehow we didn’t recognize the problem in time, didn’t yank his visa, and didn’t stop him from boarding the flight.

The bomb itself was 50 grams of explosive powder packed into a condom and sewn into his underwear (this last resulting in a slew of really silly headlines: ‘Fruit of the Loon;’ ‘Pants on Fire’).  There was nothing to show on a metal detector, and one would have to do a very thorough pat-down to find the package (insert appropriate off-color remark here).

The response from our leadership has been singularly inept: Janet Napolitano, Secretary of Homeland Security, first asserted that ‘the system worked’ until confronted by overwhelming evidence that it hadn’t.  And Our Fearless Leader took a few minutes out of his Hawaii vacation on Monday to tell us what we already knew, because, after all, the President should say something about such an event.

There is talk about using full-body scanners to detect packages that one might carry on one’s person.  They’re effective, but they enable the viewer to look at the scanned person… naked.   I guess that’s OK, just as long as I can’t hear them snicker.

I’ll take someone in a remote location looking at me naked and snickering over some of the rules that came out after the incident.  For the last hour of a flight, passengers are to sit in their seats and do nothing.  No laptops, or blankets, or pillows, or even a paperback novel.  And no hints as to where the plane might be: the video with the map is out, as well as announcements from the pilot.  (Meanwhile, the terrorist can still look out the window!)

I understand that some of these rules may have been rescinded, so perhaps things are a little saner now.  And I’ll admit that I don’t know what the proper response to this event should be.  But adding yet another layer of aviation-security theater does not reassure me.

At least I don’t have any business trips for the next few months….

Posted in Dysfunctional Government, Terrorism, Barack Obama | No Comments »

25. December 2009 by admin.

Just for the record, we had a good Christmas.  I didn’t start my shopping until the day before yesterday, but somehow it all came together, and my wife presented her Christmas program, as in past years, and it all came out well.

Yesterday morning, I watched the party-line vote on the health-care bill.  The last time I stopped what I was doing to watch the wheels of government grinding was when President Clinton was impeached and tried before the Senate.  I returned to my work that day feeling that justice had been done: that whatever peccadilloes our President had been involved in, they represented nothing even close to grounds for removal from office.

This time I was observing a travesty.  Health-care reform is bad for the country.  For myself as an individual and as a business owner, I see nothing but higher costs, worse health care, and fewer options.

The only good thing is that the vote is not the end of the road.  While we were led to believe that Obama would be signing the health-care bill into law while enjoying his Christmas turkey, that isn’t happening.  The House and Senate versions must still be reconciled, which won’t happen until February or so.

Perhaps this mess will be derailed, after all….

Posted in Health Care, Dysfunctional Government | No Comments »

22. December 2009 by admin.

The health care reform bill passed the Senate on Monday morning, and is close to becoming law.  The Democrats, by their numbers, have simply silenced any effective debate on the measure.

The poorer among us will be covered by an expansion of Medicaid.  Funding for Medicaid is provided jointly by the Federal government and the states.  As a result, most states will be mandated to support the cost of a broader Medicaid program.   However, Senator Nelson of Nebraska got, as part of the price for his support of the measure, that the Feds would pay Nebraska’s increased Medicaid costs so the state wouldn’t have to.   Meanwhile, with New York State going broke even without new Medicaid mandates, our esteemed senators, loyal Democrats that they are, didn’t get us one thin dime.  (Senator Nelson also insisted that the Federal government not pay for abortions through insurance subsidies, but that’s within the realm of reasonable politics.)

The rest of us will have to purchase insurance for ourselves or get it through our employment.  Those who don’t will have to pay a penalty tax.  Given that insurers won’t be able to decline coverage for pre-existing conditions, or adjust rates to the age of the insured to properly reflect the actual risk, insurance will become very expensive. New York has similar rules as part of state law, so insurance is already expensive here, but premiums are expected to rise still further.

As a result, insurance will be so expensive that most ordinary people won’t be able to afford it without help.  So the Federal government will subsidize part or all of the cost.

Meanwhile, the government will also define what constitutes an ‘acceptable’ health insurance policy.  As a result, when the cost of medical care goes up (as it certainly will, because there are no direct measures to contain costs), Federal regulators will respond by identifying ‘appropriate’ treatments that will be covered by ‘acceptable’ insurance policies.  And expensive treatments will be limited or made unavailable as a result.  The government may also institute a rule, similar to current Medicare, that a doctor who takes insurance money may not contract independently with patients for treatments that insurance won’t cover.

Yes, insurance companies will remain, and they will ‘compete’ for your business.  But with the benefits to be provided set by government, and the actuarial performance set by government, they won’t be able to compete on the actual attributes of their insurance.

So what we end up with is government control of the health care system, just like socialized medicine.  But instead of the government paying directly for health care, the control is accomplished through regulation of insurance, which everyone is required to buy.

And there’s nothing I can do about it.  I could write my Senators and Congressman, but they’re true loyal Democrats, totally in favor of the plan.  They didn’t even try to wheedle some extra benefits for their home state like Senator Nelson.

I should save my breath to cool my porridge.

Posted in Health Care, Dysfunctional Government, Barack Obama | No Comments »

19. September 2009 by admin.

I have been wanting to write something about President Obama’s health care plan, but have been having trouble getting all my thoughts in order.  I know:

• Government spending on health care in this country (at all levels) per capita is slightly higher than in countries with ’socialized medicine.’
• Private spending on health care in the US is about the same per capita as public spending, so we collectively spend a little more than twice as much on health care.
• In countries with socialized medicine, there are often shortages of doctors, and waiting lists for specialized treatments.  And sometimes people die from not having receive treatments that would be more readily available in the US.
• On the other hand, on general measures of public health, such as life expectancy, infant mortality, and obesity, the US is behind other countries with socialized medicine.
• The US is the fount of medical innovation in the world, chiefly because someone who comes up with a good idea can turn a profit from it.
• People in the US go bankrupt every day from the cost of health care.  An extended illness or cancer can easily wipe out an individual’s savings.  Insurance can help, but often has its own limitations and horror stories.
• The cost of health care is going up rapidly, much faster than the general rate of inflation.  My health insurance premium went up 20% this year, and that’s consistent with past years.  Back when I was an employee, my company would moan every year about how the price if insurance had gone up, and that they would absorb most of the cost, but our co-pays would have to go up.
• Medicare, the government insurance program for the elderly, tries to limit its costs by setting rates at which it will reimburse for services, but does not try to limit the services themselves.  This is called ‘not getting between the doctor and the patient.’

Some first thoughts:

• If the cost of health care continues to go up, it will upend not only the government’s budget, but everyone else’s as well.
• It would be tempting to believe that we could somehow ‘cut the waste’ and magically reduce the cost of health care without actually reducing the care that is delivered.  Perhaps we can trim a few percent, but not enough to solve the problem.
• It’s one matter for the government to take measures to control its own costs.  That’s entirely reasonable.  It’s quite another for the government to try to solve everyone’s cost problem.
• It would be spectacularly bad for the government to do something that would kill the innovative, capitalist component of health care.

More to follow….

Posted in Health Care, Dysfunctional Government, Barack Obama | No Comments »

16. August 2009 by admin.

I need to say, at the outset, that I’m not a car person.  I don’t own a car; I don’t feel I need one to be complete as a man or as an American; I consider them a means of transportation and not a member of the family; and I certainly do not want, as one recent commercial would suggest, to have a relationship with a car that smolders for a long time (the relationship, not the car).

One of the more successful government programs to stimulate the economy has been a grant of up to $4500 to people turning in old cars, for the purpose of buying a more fuel-efficient new car.  I’m not sure how much it is actually stimulating the economy, but it’s making people feel better, and I’ll grant that that’s worth something.

I accept, on an intellectual level, that the cars turned in under this program should be disabled so that they (1) can’t be turned in again, and (2) won’t appear on the roads of America (or anyplace else).

But the method for disabling the cars upsets me on a visceral level.  The engine oil is replaced with a solution of sodium silicate (brand name: Castle Clunker Bomb) and the engine is run at moderate speed to grind itself to destruction.

I can understand why the bureaucrats came up with the method: it’s effective, relatively safe, requires little mechanical skill, and doesn’t depend on the configuration of the engine.  But I can imagine myself as a mechanic, after a lifetime of training and experience in keeping cars running smoothly, having to listen to the sound of the engine destroying itself.  I’d want to tell my boss to go to hell; I’d rather drill a hole in the engine block (one of the methods that was considered and rejected).

When we kill living things of necessity, we try to do it cleanly.  I said at the beginning of this entry that I’m not a car person.  But the thought of enlisting a machine in the cause of its own destruction really bothers me.

Is the Clunker Bomb a metaphor for our world, in which productivity is turned to destruction?   Is it that my mother told me to ‘waste not, want not,’ and the thought of destroying thousands of car engines seems spectacularly wasteful?

Or is it that a society that destroys its cars–almost as near and dear to our hearts as Americans as our family pets–in such a horrendous manner will one day devise a similar method to destroy its people?

Posted in Automobiles, Dysfunctional Government, Money | No Comments »

23. July 2009 by admin.

I could give chapter and verse on how rotten I believe health care is in this country.  I had the devil’s own time getting health insurance when I went into business for myself, and the premiums went up about 20% when the policy renewed this spring.  Hospitals are most unpleasant places; most of them seem to run on the ragged edge of malpractice.

And the price of all this rottenness?  Governments (Federal, State, and local) in the US collectively spend more per capita than in countries with ’socialized medicine.’  Private payers spend again as much: in total, we spend more than twice as much per capita on health care than in other industrialized countries.

And the cost goes up and up, faster than the general rate of inflation.  My insurance company isn’t raising my premium by 20% to tick me off: they do it because their costs went up similarly.

This is the ‘unsustainable’ condition that President Obama is warning us about in his efforts for ‘health care reform.’  Unchecked, the costs will upend government budgets, and indeed the private economy as well.

Last night, Our Fearless Leader addressed the nation to address the issue.  He sounded all the right notes, but one thing troubles me:

The President noted that we pay more for health care than in other countries, and that lowering health care costs is a key goal.  He then asserted that two-thirds of the cost of health care reform is what is currently being paid in the existing system, and that one-third will have to come from cost savings or taxes or some other new funding.

So he’s contemplating a 50% increase in expenditures.

How, exactly, is this a savings?

Unfortunately, a real solution to this problem necessarily involves limiting the actual cost of health care, and nothing in the current plans seems to do more than nibble around the edges.

The problem is that the current system is an immense self-licking ice cream cone, and there are are politicial constituencies that earn their living from it.  Until an effort is made to actually contain costs, and not just find newer and cleverer ways to fund them, we’re still stuck.

Posted in Health Care, Dysfunctional Government, Barack Obama | No Comments »

10. June 2009 by admin.

It’s long been my contention that the Blackberry device, with its instant ability to send and receive e-mail, is a detriment, rather than an asset, to one’s professional abilities.  I’ve known too many people who fire off an instant Blackberry response to an easy question or to good news, but disappear for weeks when asked something requiring actual thought.  And I’ve had too many instances of confusion over someone’s half-baked Blackberry answer.  (For my part, I have a cell phone with Windows that can send and receive e-mails.  But it will only do it when I ask: it won’t poke me in the ribs when a message comes in.  And I usually wait until I’m at my computer to answer the e-mails, unless it’s genuinely urgent or the phone is the only device at hand.)

Now the Blackberry has tripped up the apparently former Majority Leader of the New York State Senate, Malcolm Smith.  There are 32 Democrats and 30 Republicans in the State Senate, and Smith is the leader of the Democrats.

But this week, two Democratic state senators decided that they would caucus with the Republicans instead, tipping the balance of the Senate.

And how did this happen?  Apparently some time in the recent past, Smith had a meeting with Tom Golisano, one-time candidate for Governor, who recently moved to Florida, amid considerable publicity, to avoid heavy New York State taxes.  And at this meeting, Smith apparently offended Golisano by paying more attention to his Blackberry than his guest.  So Golisano set the wheels in motion for a Republican coup.

As far as my reaction to the coup itself, I have none.  The New York State Legislature is a nexus of evil in the modern world, and I don’t believe that it matters which party is in power.  I can’t say that the Republicans are better or worse than the Democrats (within the NY legislature), and I can’t say whether the coup was a blow for democracy or an exercise in corruption.

But it’s good to see a Blackberry addict get what he deserves.

Posted in New York State, Dysfunctional Government, PDA | No Comments »

10. May 2009 by admin.

I have been terribly busy the last few weeks, and haven’t had much time to write.  But while I’ve been out, I note that a number of… entities… have signed on as subscribers to this site.  The names and e-mails addresses seem strange: not strange enough to have been obviously generated by a computer, but not like people’s actual names.

I have to believe that it’s a new form of spam, although I can’t understand to what end: if someone writes a comment, I have to approve it before it appears on the site.  And so far, I haven’t received any comments.

In any case, I’ve deleted all of the subscribers that have signed on so far.  If you meant to be a subscriber, I’m sorry; you’ll have to go back and subscribe again.  But for those who would subscribe in the future: after you subscribe, you have one week to submit a cogent comment on one of the postings.  If I don’t see a comment (I don’t necessarily have to agree with it!), I’ll assume that you’re some kind of bot, and will delete your subscription.

*          *          *

Last week, the state legislature passed a plan to help the Metropolitan Transportation Authority.  The plan will raise about $1.5 billion through a new payroll tax and  a surcharge on taxi rides.  As a result, the Draconian service cuts that were contemplated a few weeks ago will not come to pass, although there will be some cuts and a modest fare increase.

I should be relieved: while the fare increase is not a big deal for me, the service cuts are a problem, and part of my income as an engineering consultant is derived from the MTA’s capital spending.  But I don’t like it.

One again, the state has papered over the problem with taxing and spending, rather than addressing the real problems.  Why does operating the MTA cost what it does?  Can it work more efficiently?  Given that the operation of the MTA is vital to the economic health of the region and the state, why didn’t the state face the problem squarely in the first place, instead of coming up with half-measures later?  State spending increased by $11 billion this year: what did they spend it on?  And what happens next year, expecially if the economy is still sagging?

But the answers to those questions require thought….

Posted in New York State, Dysfunctional Government, Blogging | No Comments »

5. April 2009 by admin.

This past week, the New York State Assembly passed, and the state Senate is contemplating, the state budget for the fiscal year that began… last Thursday.

At a time when the economy is reeling, and one would figure the need to cut back, the budget weighs in at $132 billion, up some $11 billion over last year, and $8 billion over the budget that Governor Paterson proposed.  The State Assembly news release indicated that the budget “closes a projected a $17.65 billion General Fund gap by implementing $5.1 billion in necessary spending cuts, raising $5.2 billion in revenue, utilizing $1.1 in non-recurring revenues and maximizing $6.2 billion in federal stimulus dollars.”

I’m afraid to ask how there can be a $5.1 billion dollar cut if spending is up by $11 billion, and I’m not sure how ‘maximizing’ Federal aid differs from spending it.

Somewhere in New York is $5 billion in State spending that is absolutely wasteful and stupid, and the State leadership was finally able to kill it.  But beyond that, it seems as if the State simply relied on Federal aid and tax increases to otherwise maintain the status quo.  What happens a couple of years down the road, when the economy has recovered and the Federal government is no longer handing out aid?

Meanwhile, the budget legislation also modifies the state drug laws to favor rehabilitation instead of prison.  The original Rockefeller laws from the 1970s were modified a few years ago to eliminate their supposed Draconian excesses, and it seemed to work: prison populations are down, and the streets are far safer now than 20 years ago.   Yet the state Legislature is changing them now, and allocating additional funding for drug treatment alternatives.

So the state has money to preserve the sacred cow of education, and can drop the pile of nuisance taxes that were part of Governor Paterson’s original plan, but they can’t come up with a way to provide funding for the MTA and deter fare hikes and service cuts.  (Perhaps the MTA was one of the stupid items that got cut.)

The distressing part of it is that there seems to be nothing that we as citizens can do to stop this madness.  The state election laws effectively favor incumbents by making it very difficult for newcomers to run for office.  Once in a while, someone makes it, gets sucked into the Albany machine, and turns into a Legislature droid.

And electing a new governor doesn’t seem to help, either.  A while back, we elected Eliot Spitzer on his promise to clean up Albany.  Within six months, he was in a pissing contest with Joe Bruno, leader of the State Senate.  Governor Spitzer had a legitimate question: was Bruno using State travel privileges for political gain?  But by pursuing the matter in a thoroughly inept manner, making it look as if he was using the State Police to spy on Bruno, Spitzer effectively shot himself in the foot.  Needless to say, no actual cleanup occurred.

And then Spitzer really imploded when it turned out that he was seeing prostitutes, and he left office, leaving us Governor Paterson, who has been a singular model of ineptitude.

What can we do (besides move to New Jersey)?

Posted in New York State, Dysfunctional Government, Money | No Comments »

29. March 2009 by admin.

Last week, the Metropolitan Transportation Authority (MTA), our local mass transit agency, voted to raise fares and cut service.  The price of a monthly MetroCard for the buses and subways will go from $81 to $103 per month, and fares and tolls for other MTA facilities (they’re also in charge of the commuter railroads, and toll bridges and tunnels) will similarly go up.

That, in and of itself, wouldn’t be too bad: public transportation in New York works pretty well, and would be a good value even with the fare increase.  But the plan also includes a series of service cuts, including dropping two subway lines and about 30 bus routes, and reducing late-night subway service by one-third.

In good times, financing the MTA is not a critical problem: the agency is financed with transfer taxes on real estate and other similar transations.  But since the economy went kablooie, tax revenues are way down.

Historically, New York State has subsidized the MTA to some extent, but that’s difficult right now because the state is broke.  It’s not as if we couldn’t see the problem coming: Richard Ravitch, who ran the MTA years ago, was tasked last year with coming up with a plan to help finance the MTA under the current circumstances.  However, none of his recommendations have gotten through the New York State Legislature.  The Ravitch report included a plan to charge tolls on the East and Harlem River bridges that are currently free, but somehow the Legislature first decided that the toll could only be $2 (not the $5 proposed in the Ravitch report) and then couldn’t be done at all.

The only thing that the Legislature has apparently done, and isn’t specific to the MTA, is to crank up the income tax on higher brackets (above $250,000/yr).  While such a tax increase is a necessary component of dealing with the problem,  it can’t be the entire solution: raise the taxes enough, and the people who pay them will go elsewhere.

But then the Legislature seems to be on its own little planet, where there’s a shortage of funds, but never any need to do anything about it, and the Governor is on his own little satellite, apparently sucking his thumb while the whole mess unfolds.

The thought is that the Legislature will get off its rump and ‘do something’ to help fund the MTA.  The newspapers have been suggesting that we should all call the Governor and our legislators to get them to do something.

It seems pointless: I’ll save my breath to cool my porridge.

But watch: sometime late in May they’ll put something together, and the fares will only go up by 10%.

They always do stuff like that.

They’ll come through.

Won’t they?

Posted in New York State, Dysfunctional Government, Money | No Comments »

22. March 2009 by admin.

The big news last week was that failing insurance company AIG, despite receiving $180 billion in bailouts from the government, spent $165 million on employee bonuses, including some of the people who were responsible for AIG imploding.  There was an uproar in the press, and the House passed a 90% penalty tax in an effort to recover the bonus money.

But then it came out that our leadership knew about the bonuses and lad let them stand in earlier bailout legislation.  Moreover, the Constitution prohibits retroactive law.

I’d like to think that a prudent management, in writing contracts for employee bonuses, would include provisions for cancelling the bonus if the employee runs the company into the ground.  But then a prudent management would not have let itself be run into the ground.

In the end, even though it feels good to give in to the populist rage and try to take the bonuses back through one means or another, it’s probably better to let them stand.  We’re supposed to be a nation of laws and not of mob rule.  Moreover, some of the employees receiving bonuses might actually deserve them.

The bigger questions  are:

• Why did AIG management, over the years, applaud the very measures that led to their destruction?  The short answer is, ‘they turned a profit.’
• Why did the government so readily hand over billions to bail out AIG?  The short answer is, ‘AIG was, and is, too big to fail.’
• Why did nobody care to look beyond the short answers?

Posted in Dysfunctional Government, Things Falling Apart, Money | No Comments »

8. March 2009 by admin.

For the last few weeks, I’ve been trying to resolve the disconnect between Barack Obama’s speech on the economy a couple of weeks ago, in which he reassured us that we’d get through it together, stronger than we were before, and the facts on the ground.

Last Friday, the Labor Department announced the unemployment figures for February: a new loss of 651,000 jobs, and a current unemployment rate of 8.1%.  I remember the last time we had an unemployment rate of 8.1%, back in 1983.  Somehow we got through that in one piece; indeed, before that, in the 1970s, we had worse.

And everything in our society still seems to work: there’s gas at the pumps and power at the socket and food in the stores.  Yes, times are tough: my son, who is finishing college this year, is looking for work without success.  But the world does not seem to be coming to an end: in my work, I booked a new project this week, and the stream of business still appears to be flowing.

From those observations, I would expect continued unemployment, perhaps an increase in crime, and probably higher taxes, but the overall economy would start to improve in a couple of  years and we’d get out of this morass.

So why did Our Fearless Leader address us that night as if our cities were in ruins and the end of the world was at hand?  Have we really become a nation of crybabies?

Maybe, but I don’t think Obama is really the crybaby type.

My current explanation is rather more worrisome.

Our recent Presidents, Clinton and Bush, were masters of dissimulation.  They would happily tell us what they wanted us to hear, and disregard, gloss over, or simply lie about the inconvenient truths in conflict with their agendas.

Barack Obama is a politician, to be sure, but he does not have the talent of his predecessors.  Or perhaps he simply believes that it’s better to at least try to be aboveboard with the electorate.

In any case, I’m sure that he has been briefed on the dimensions of the economic situation rather more thoroughly than what we’ve been able to read in the newspapers.

He has said for the record that things will get worse before they get better, but he hasn’t said how much worse they will get.

He knows how close we are to a state of emergency.

And I suspect that it’s closer than we think.

Perhaps he believes that the stimulus package, and similar deficit spending, is our last, best effort to pull ourselves out of the whirlpool; perhaps he believes that the primal forces of our downfall have been set in motion, and can no longer be stopped.

In either case, he recognizes that to discuss this matter forthrightly would ignite a panic, and bring about precisely the emergency he is seeking to avoid, or at least postpone.

So he addressed us two weeks ago as if the havoc, chaos, and destruction had already been released, while things still seem relatively normal.

This does not look good….

Posted in Dysfunctional Government, Money, Barack Obama | No Comments »

7. March 2009 by admin.

This week, the prime minister of Britain, Gordon Brown, arrived here on a state visit.  There was a minor flap when our relationship with the UK was referred to as a ’special partnership’ when it should be ’special relationship.’  Whatever.

But the gifts that were exchanged between the President and the Prime Minster were telling:

• The Prime Minister brought, for President Obama, a pen holder made from the wood of an old British warship.  President Obama gave a collection of DVDs of classic American movies.  (I hope, at least, that the DVDs were encoded for use in the UK….)
• The Prime Minster’s wife brought dresses and books for the President’s daughters.  Michelle Obama’s gifts for the Prime Minister’s sons were two toy Marine One helicopters.  (Made in China, no doubt….)

Doubtless, if the Obamas were buying gifts for friends of the family, their choices would have been reasonable.  But Barack is the President now, on the world stage, and needs to do better.

Meanwhile, Secretary of State Clinton presented the Russian foreign minister with a yellow box with a red pushbutton to symbolize the President’s wish to ‘push the restart button’ on relations with the Russians.

The box was labeled with ‘Reset’ (in English) and ‘Peregruzka,’ which someone at the State Department thought meant ‘reset,’ but actually means ‘overcharge.’

Moreover, whoever made up the box did a rotten job: the Russian word is rendered in the Roman alphabet, and the labels on the box were written on tape (proper industrial control panels are engraved).  I’m astonished that with all the resources of the State Department at hand, our Secretary of State could field such a piece of crap.

A while back in my career, when I worked for a really large organization, we were all sent off for two days training about how to maintain a non-hostile working environment.  One of the points discussed in the training was to be mindful of cultural differences between yourself and the people around you.

This would seem obvious, not just in the context of a workplace, but especially in the context of our leaders, who are dealing with people from around the world.

We like to believe that former President Bush shunned diplomacy, and was inept in dealing with the world, but he got details like this right, which helped assure that even though the people we dealt with might disagree with us, they took us seriously.  In contrast, the Obama administration comes off as a gaggle of buffoons.  It won’t matter if they agree with us or not if they think we’re a bunch of clowns.

Surely we can do better….

Posted in Dysfunctional Government | No Comments »

1. March 2009 by admin.

A former colleague recently sent me a New York Times article from 1999 discussing how Fannie Mae was easing requirements for the mortgages that it would purchase from banks, in an effort to increase home ownership among minorities.

As far as I know, my correspondent is correct: the root cause of our current economic woes was the decision in the 1990s, in terms of government policy, to make it easier to get a mortgage, ostensibly to encourage home ownership.

Yet last Monday, in a series on the economic crisis, the NBC Nightly News overlooked this detail.  According to the report, the origin of our difficulties came after 11 September 2001, when, in an effort to prop up the economy, interest rates were held low, and mortgages were issued to anyone who was breathing.  No mention was made of what led to the easy mortgages.

Yes, it’s a case of biased reporting.

The editors at Nightly News probably anticipated that if they traced the origins of our problems to government policy in the 1990s, they would be deemed ‘offensive:’ how dare you accuse innocent minorities of ruining the economy!

But the New York Post, which points to the easy-mortgage policies of the 1990s and neglects what happened afterward, is also biased. It strains their world view to consider that businessmen might be motivated by greed, to the exclusion of common sense.

Ultimately, it is the responsibility of each of us to review the news and decide for ourselves.

Everyone has their own particular axe to grind.

Even me.

Posted in Media, Dysfunctional Government, Money | No Comments »

26. February 2009 by admin.

Last Tuesday, President Obama addressed a joint session of Congress, and the nation, about the state of the economy.  I was disappointed.

For a while now, I’ve been trying to compose some coherent thoughts about the $787B stimulus package signed into law last night.  In brief, I don’t like it.

But how can I fairly say that I don’t like it when I don’t know what’s in it?  I know that there’s something about tax cuts and money for states and localities and ’shovel-ready’ projects.  On that level, my problem is still the same: commentators will pull out some aspect of the package or another for discussion or criticism, but I still don’t have a coherent view of the whole thing.

There are, however, some things that I can point to:

• Our Fearless Leader, in fact, exercised no leadership in composing the package.  In the runup to his inauguration, he indicated that he wanted to see a stimulus bill on his desk, but kept his hands off while the Democratic party faithful went to work.
• The Democrats responded like kids in a candy store.  Since all government spending stimulates to some degree, they decided to try and remake the world in the moderate President Obama that we elected.  Some of the really stupid stuff got killed through the legislative process, but much of it is still there.
• One provision that particularly bothers me relates to welfare reform, one of the great successes of social legislation.  The package makes funds available to localities who abolish their requirements for welfare recipients to seek work or be placed in jobs.  (Mayor Bloomberg has wisely declined this aid.)  The thought is that in a tough job market, it’s pointless to press welfare recipients to try and find jobs that don’t exist.  But the real reason, I suspect, is to deter cash-strapped local governments from replacing union civil servants with welfare recipients.  You know what?  Times are tought all over!

Obama’s speech Tuesday night was somewhat of a disappointment.  He bagan and ended with an exhortation about how we would get through this crisis, and end up stronger than before.  President Bush said the same thing after 11 September, and it resonated: there was actual physical destruction that I could go and see if I really wanted to.  But while we’re told that there is a vast economic crisis, it’s a little hard to believe when there is still food (and everything else) in the stores and power at the socket.  Obama’s call, alas, rings hollow.

He discussed how credit is essential to the economy, and the measures to try and get banks to lend again. So far, so good.

And then he launched into a discussion that was a rehash of his campaign promises on education and health care.   Despite his efforts to tie these to addressing the current crisis, it all seemed a distraction.

At least he didn’t say ‘green jobs.’

Posted in Dysfunctional Government, Money, Barack Obama | No Comments »

22. February 2009 by admin.

Last week, Our Fearless Leader signed the $787 billion stimulus package (a/k/a The American Recovery and Reinvestment Act) into law.  I’m not sure how much good it will do: reports in the news about it seem to emphasize one detail or another, and I have yet to see a coherent description of the entire package.  Supposedly, I’ll get some more money in my pocket as withholding rates get tweaked, but I’m not sure if my taxes will actually change.

Together with that, there have been plans for further help to the bank, and Obama has forthrightly been telling us that our problems will take time to resolve.  While I dread what form of deficit spending will be inflicted on us next, I appreciate that our leadership recognizes the dimensions of the problem.

So I’m perplexed now when our leadership announced, yesterday, that the deficit will be cut in half by the end of Obama’s first term (i.e. 2013).   So is the economy a major, major problem, or something that will blow over in a couple of years?

For almost as long as I can remember, Presidents have promised to cut the deficit by such-and-such a date, and it’s never, ever happened.  Is our leadership being open with us, or are they reverting to one of the oldest tricks in the book, after barely a month?

Posted in Dysfunctional Government, Barack Obama | No Comments »

17. January 2009 by admin.

On Thursday afternoon, a US Airways jetliner encountered a flock of geese shortly after takeoff.  The geese fouled both of the plane’s engines, but the pilot, Chesley Sullenberger, managed to ditch the plane in the Hudson River.  All of the passengers and crew were evacuated, with only minor injuries.

Mr. Sullenberger is a hero of the sort that we don’t hear about often enough.  It seems rare to read a story in the newspaper about someone who did something right: it’s usually the other way around.

But then, the world is filled with people who do things right.  They may not be heroes, but they keep the lights on and the trains running and the supermarket shelves filled.   It’s natural that in the normal course of events that the people who make mistakes make the headlines.

What I really worry about, though, is why the people who are in authority–the people that we should be able to count on to do things right–seem to make the biggest mistakes.

• Earlier this week, I watched part of the documentary No End in Sight about the Iraq war.  One of the ground rules of warfare is to know your enemy, but we blundered into Iraq reveling in our ignorance of the enemy, thinking that a two-week show of precision munitions would leave all of Iraq happy to go along with us.  Time after time, our plans blew up in our faces, and it was only after the surge (in 2007) that things began to move in the right direction.
• Aside from Captain Sullenberger’s heroic exploits, the rest of Friday night’s network newscast was a litany of dread: bank failures, bankruptcies, and layoffs.  Our current economic difficulties seem to be the result of astonishing lapses of judgement on the part of both our political and financial leadership.  Worse, today nobody seems to know what to do about it.

If the airline pilots and subway motormen and all the other people who build and operate our physical world were one-tenth as inept as our leadership, we would be living among piles of smoldering wreckage, having to kill rats for food.

Somebody send help….

Posted in Dysfunctional Government, Life Goes On | No Comments »

10. January 2009 by admin.

As Our New Fearless Leader is developing his plan to spend hundreds of billions to help the economy, an op-ed piece in yesterday’s New York Post suggests an alternative: substantially cut Federal taxes to ‘energize the added investments, new hiring and extra risk-taking needed to move our economy’s pace from tepid to torrid.’

I’d like to believe that this would a better approach than Obama’s efforts to remake the country in his own image.  But the short answer is, ‘Isn’t that what our current Fearless Leader was pursuing for eight years, that got us into this mess?’

Either method involves Brobdingnagian (the word ‘huge’ simply doesn’t cut it) deficits, which will have to be paid for in the long run with higher taxes and/or inflation.  Moreover, the rest of the world, which has been subsidizing our deficits for the last few years, has been reluctant to continue, as they need the money for their own problems.

More specifically:

•  Added investments: in what? Nail salons?  If someone wanted to make a large infrastructure investment, in, say, a power plant, a transmission line, a factory, or a railroad, they would face a daunting gauntlet of regulations and community opposition.  Moreover, investors today want don’t want to wait years to see their profits.  This would be especially true if the tax environment would be expected to change in the next few years.
• New hiring: only fools hire employees these days.  It’s much cheaper to hire independent contractors or outsource. While hiring someone as a contractor is better than not hiring him at all, part of our problem is that employment is perceived as impermanent: if you believe that you can lose your job at any moment, you’re going to limit your spending to the necessities.
• Extra risk-taking:  It’s entirely honorable to try, and fail, and take your own lumps.  The problem arises when people take imprudent risks, don’t recognize the initial signs of trouble, fail en masse, and then expect the government to bail them out.

The basic problem underlying our difficulties–which neither Presidential candidate addressed–is that labor is seen as a cost to be minimized, rather than a productive asset to be maintained and developed.  In the modern view of business, employees really are disposable.  And until that changes–which Obama’s plans say nothing about–the outlook will continue to be dismal for those of us who are not on the ‘rich investor’ side of the equation.

All right, what should the government do?

• Tweak taxes higher for the wealthy:  The Federal government does necessary things that cost money, and someone has to pay for it.  The government also needs to be prepared for emergencies, like war or natural disaster.
• Act to moderate the very worst effects of the downturn: This includes aid to states and localities, on a limited basis, contingent on the beneficiary exercising its own fiscal restraint.  (The New York legislature, in particular, is off on its own little planet where everything is still rosy, and they can spend to their heart’s content.)  A modest stimulus payment will also help.  One aspect of Obama’s plan that I agree with is tweaking taxes to make them more progressive (lower rates in the lower brackets, higher rates in the higher brackets).
• Tweak tax policies to encourage business:  For my business, profits are poison: about half of them go up in taxes.  When I had a really good year, I was running around in December buying things for the business, because, as I told people at the time, ‘it’s either spend it or turn it over to the government.’ I can run my business to limit profits and pay less tax, but it keeps the business weak, as it can’t amass capital.
• Otherwise, sit tight and sweat it out:   We got into this snit as a result of our collective delusions, and it will take time to recover.  If we try to maintain our delusions through deficit spending, it will take us that much longer to get over them.  We did it before, in the 1980s, when we had both inflation and unemployment: under Reagan, unemployment surged at first, but things came back into balance shortly after.

OK, I still haven’t done anything about the bean-counters who see labor as a cost to be reduced.  I don’t believe that any reasonable government can directly change people’s attitudes.

However, it will lead us away from being fat, dumb, and happy, and will hopefully make us better and more productive employees.  If the bean-counters see labor as a better value for their dollar, they might be re-awakened to the value of employees as assets.

Of course, all of this will be painful in the short term, which is why it will never happen.

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9. January 2009 by admin.

No, I know that I can’t.

And I can’t say that it would make any difference if I could: New York is not a swing state, so even if I could change my vote, and get all my friends to change their vote, it wouldn’t make any difference.

And furthermore, even if McCain had won the election, I’m not sure he would be able to do anything different.

But I found President-elect Obama to be thoroughly distressing when he discussed the economy earlier this week and told us that we would be running trillion-dollar deficits for ‘years to come.’

Yes, the economy is in bad shape: the official unemployment rate in December went up to 7.2%.  I’ve written about various aspects of our bad economy in these pages before.

But Our New Fearless Leader looks like a kid in a candy store.  It’s not just an effort to stimulate the economy: he wants to remake the country in his own image.  We’ll have solar energy and computerized medical records and better education and broadband access for all and no rainy days on weekends.

Unfortunately, the government has tried to remake the country, or some facet of it, and failed miserably.  Alternate energy is an admirable goal, but after three decades (at least) of government meddling, we still import more than half of the petroleum that we use.  The Clinton administration tried to implement a national health care system.  It failed miserably.  For my part, I couldn’t understand how it was supposed to work: something about ‘alliances’ with ‘clout’ to get the lowest prices.

And a look back to our recent events is more troubling: in September, we allocated ~$700 billion to ‘unfreeze the credit markets’ by ‘buying troubled assets.’  Since then, about half of the money has been spent: none of it went to buy troubled assets, and the credit markets are still frozen.  (I’ve stopped getting pre-approved credit card notices, so I’m sure there’s something wrong.)

So I’m not convinced that the answer to our problem whose origins are in too much debt is to take out yet more debt, and to do it RIGHT NOW.  Let’s take the time to think things through: if we’re going to spend trillions, we need to make sure that we get it right, as we won’t get another chance.

Posted in Dysfunctional Government, Barack Obama | No Comments »

18. December 2008 by admin.

Yesterday’s news report noted that the Federal Reserve Bank was reducing the federal funds rate to the range of zero to 0.25%.  And in the next breath, the newscaster noted that the Fed was going to spend $2 trillion to buy up assets.  (’They’d buy up Picassos if they thought it would help the economy,’ a commentator quipped.)

A couple of months ago, we were told that the world would come to an end if Congress didn’t pass a measure allocating $750 billion for the purpose of purchasing ‘toxic’ assets.  Since then, some of the money has been spent buying ownership stakes in banks, and the White House has been contemplating using some of the money to help the automobile manufacturers, but none of it was actually used to buy assets, i.e. what it was allocated for.

So now we have the Fed running around buying assets.

Does this mean that the Fed could have done this at any time, and it didn’t need an allocation from Congress?

(No, not at any time.  Only when it was funny.)

Then what was the point of the $750 billion that we needed to save the world–half of which is still sitting there, and the other half was used for stuff that had nothing to do with the purpose it was allocated for?

Our leadership is either fantastically stupid, or they’re robbing us blind.

And my problem is, from my perspective, I can’t discern which of those alternatives is actually the case.

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8. November 2008 by admin.

I headed out bright and early Tuesday morning to pull the lever for Barack Obama.  The polling place was busy, but curiously, nobody was waiting to vote in my district, so I got in and out fast.  So that’s that.

And yet…

Some years ago, I read Thomas Frank’s book, What’s the Matter with Kansas?, and wondered at the political landscape where the struggling Kansans would consistently vote Republican, despite the fact that Republican policies were taking their jobs and leaving them worse off.

A New York Post op-ed piece at the time suggested that the Kansans were simply looking out for their own self-interest: they wanted to pay lower taxes.  But it’s more than that.

The United States used to stand for the idea of a place with limited government where one could work hard, compete fairly, and succeed.  The rest of the world probably still believes that, to some degree.  But for those of us who live here, it seems rather different.  I’ve speculated about the causes for that in these pages, and so won’t rehash that here.

I live in the city, and I’m pragmatic: I see that the changes around us under the Republicans (not necessarily initiated by the government, but encouraged by its free-market policies) are changing our country into something that we Americans are not necessarily morally, emotionally, or mentally prepared to face: a new era of competition for all of us.

So I’ll vote for Obama, to take a step away from that.  But it is a step away from what the United States traditionally stood for, and, yes, a step in the direction of socialism.

On the other hand, in cherishing what we stood for, unlike the Kansans of Franks’ book, I wouldn’t (and didn’t) vote for McCain as the more ‘true American’ alternative.  McCain is for big government too, just in a slightly different flavor.

But now I understand where the Kansans are coming from.

*          *          *

The MTA, our local transportation agency, is renaming what we always knew as the Triborough Bridge as the Robert F. Kennedy Bridge.  The name refers to a group of toll bridges that connect Manhattan, the Bronx, and Queens.

We’ve known for some time that the MTA is in dire financial straits: another subway and bus fare hike seems inevitable for next year.  So why are they spending hundreds of thousands (and perhaps millions) of dollars to rename a bridge that had a perfectly good (and functional) name to begin with?

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18. October 2008 by admin.

It’s been another week where one needs a barf bag to follow the stock market.  Perhaps the market is beginning to stabilize, and the reality may be sinking in that the party is over, and we’ll have to go back to earning a living.  I hope so, anyway.

The rightist New York Post blames the economic crisis of the past weeks on Democratic politicians who encoursged banks to make mortgage loans to people who couldn’t afford them.  Both of the Presidential candidates lay the blame with greedy Wall Streeters who profitied from financial instruments that they didn’t really understand.

And both of those are true.  Those who say that Wall Street should be hoisted on its own petard, instead of being bailed out by the government, conveniently ignore that the government does not have clean hands in this matter.  Part of what genuinely worries me about this issue is that since everyone (politicians who encouraged bad lending, irresponsible borrowers, the banks that lent the money, and the Wall Streeters who believed that they could engineer the risk out of the whole affair) got us into this mess through their bad judgement, who will have the smarts to get us out of it?

But underneath it all, with 20/20 hindsight, it seems that everyone forgot a basic rule of economics: that the value of something, over the long term, determines its price, and not the other way around.  When the price of something becomes separated from its value, bad things happen.  It led to the Dutch tulip panic of years ago, to the stock market crash of the 1920s, and to the current economoc crisis.

Yes, the politicians encouraged banks to make loans to questionable borrowers in the 1990s, in the name of civil rights.  But if that was all that had happened, it would not have resulted in the situation before us.

But these loans were available to everyone, and many people took advantage of them, driving up the price of real estate.  It’s a funny thing: when the price of a loaf of bread or a gallon of gasoline shoots up, people get upset, but when the price of houses goes up, everyone’s happier because they think they’re getting richer.

Meanwhile, the underlying value of the property hadn’t really changed: the houses didn’t grow new bedrooms.  They were the same buildings, still where they were before, in neighborhoods that hadn’t really changed.   But somehow everyone believed that the rising prices reflected rising values, and that wealth was therefore being fabricated out of thin air.

Ultimately, even bankers and businessmen with normally good judgement bought into the charade, putting up new real estate developments into an overextended market.

And then the music stopped, and prices moved back into alignment with the underlying values.  Beyond the irresponsible borrowers who couldn’t pay their mortgages, even more responsible people might simply walk away from a house with a $500,000 mortgage if the property is only worth $300,000.

And now we have to pick up the pieces….

Posted in Dysfunctional Government, Things Falling Apart, Money | No Comments »