Archive for August 2011

Growing Jobs

August 30, 2011

House Republican Majority Leader, Eric Cantor, announced that Republicans would begin to pass legislation aimed at repealing “jobs killing” regulations.  Sanctimoniously, Cantor said the GOP would pass legislation which would ties the hands of Government rule making departments. Cantor also predicted tax cuts for small businesses.  Their first target, however, would be clean air regulations for power (and pollution) generating utilities.

As usual, the GOP has proposed letting the fox back in the chicken coop.

The dust is hardly settled on the housing bubble collapse and the financial sector implosion.  The nations economy has been staggered by events stemming from lack of, and enforcement of regulations.  What are these people thinking?

The current high unemployment rate has exposed the real soft under belly of our Country.  Real value adding productivity.  During the buoyant 90’s and 00’s, the US shipped millions of jobs overseas.  None of these jobs left for reasons of regulations or taxes.  They left because it was simply cheaper to produce in China and other low labor cost countries.  No one seemed to notice because the country was building houses and collateralized debt obligations, and living off credit when necessary.

But facts do not matter too much any more.  The 24/7 news cycle demands quotes and the GOP, better than anyone, understands this.  President Obama and the Democrats could not only be batting this soft ball down, they could be introducing their own plans.

Where is the Democratic plan?

The problem is there are no 24/7 plans that are possible.  Rebuilding our jobs producing economy will be a lengthy process.  No politician wants to stand up and ask the country to be patient, or demand that we sacrifice together in order to rebuild our productive strength.

I cannot fault Cantor for taking his best political shot.  In the absence of any Democratic plan or statements, why shouldn’t the GOP try to get credit and help their 2012 election chances.  The only reason I can think of is that the GOP medicine may make the patient even more seriously ill.

First and Second Amendment Quagmires

August 29, 2011

Our Constitution’s Bill of Rights have stood the test of time.  Through these amendments, the individual gets a definition on where his/her rights end and where their government’s begin.  Over time, the Supreme Court has recently made this demarkation much more difficult to understand rationally.

Strict constructionists believe the Constitution is literal and if there is a question, the answer can be found in the “Founders intent”.  Others believe in the Constitution’s words but seek to answer questions about interpretations within the framework of modern everyday life.

Everyone talks about “freedom of speech” and refers to their First Amendment rights.  If anything more defines what it is to be an American, I cannot think of it.  The Supreme Court, however, has ruled that political campaign contributions are an expression of free speech.  The Court has also ruled that corporations are the same as people.  QED, corporations can spend as much as they wish on campaign or political statements.

Hmmm.  Let me think about that.  The Founding Fathers were Federalists and they sought the “disinterested” elected officials.  This meant that the Founders did not want outside interests influencing elected officials.   Now, the likes of Scalia, Alito, Roberts, and Thomas think everyone has free speech but if you have a lot of money, you can spend more and have more “free speech”.

The Second Amendment is less clearly written than the First.  The Court has, however, been able to discern the Founders real intent.  The Founders meant, according to the Court, that every citizen should have the right to own and carry as many firearms, of any type or description, as they wanted.  The Founders who knew and possessed only muskets and single shot, self loading hand guns, somehow envisioned a better America if everyone carried as many weapons as they wanted.

Hmmm.  I wonder whether the Founders thought about what is going on in Libya right now.  The rebels have awoken and realized that all sorts of people possess advanced weapons like automatic rifles, grenade launchers, and surface to air hand held missile launchers.  How can our Court justify drawing the arms line at unlimited AK-47s, and rule out heavier weapons?

Both of these Amendments underscore the need for the Constitution to be read with some degree of evolution to the times.  The revolutionary farmer who used a gun for both protection and for “food gathering” hunting has been replaced with police forces and supermarkets.  Free speech has become an oxymoron with respect to politics.  Granting US corporations, especially those with foreign ownership, access to our political stage based upon their willingness to pay money seems way out of place.  Shading our political process towards those who “speak the most”, that is spend the most, seems equally as misguided.

Most of this year our Congress has been consumed with dysfunctional debate over the debt and deficit, and over how to get our economy growing again.  These issues are no where to be heard or seen.  Like a slow growing cancer, however, they are poised to produce potentially devastating injury to our Country.

The greatest irony here is that the Founding Fathers would be turning in their graves if they could see the Court endorsing in their names unlimited corporate political spending and wide spread unregulated ownership of arms.


Michelle The Economists

August 28, 2011

Michelle Bachmann has toned down her campaign rhetoric on social issues.  (Apparently for the time being, no long term promises.) Apparently once she tested voters reactions outside Iowa, she found people had other interests they considered far more relevant.  Surprise, surprise.

Michelle donned her economic sage’s uniform and pronounced she would get jobs growing in just one economic quarter.  How would she do it?  Well, of course, by cutting taxes.

Michelle promised to cut corporate taxes, allow corporation to repatriate foreign earnings tax-free, eliminate capital gains and estate taxes.  Bang, once accomplished jobs would flood back to unemployed Americans.  Why has not anyone else thought of that?

Actually these four cuts are standard GOP fair.  Don’t you remember the corporate tax slight of hand?  The GOP shouts that US corporations pay the highest corporate tax in the world – 35%.  Truth, the average corporate tax is about 10% once all the loopholes and exemptions are taken into account.

Repatriating foreign earnings has a recent track record.  In 2005, under similar GOP promises of jobs if a tax holiday would be placed upon overseas earnings, the results were that corporations increased dividends and bought back their own stock.  Need I say, no jobs were created.

Capital gains is another chestnut.  The GOP argument is more money will be invested and greater chance (new start up companies) will be taken if there were no capital gains.  Jobs will result, the GOP says.  Low capital gains taxes for corporate leaders’ stock options and stock grants has already lead to widespread out of control increases in corporate remuneration.  The near collapse of the world financial sector in 2008 has been linked to the seductive effect of quick capital gains.  I see no reason why suddenly this will be a good idea.

Estate tax elimination is another dumb idea.  The real issue is simply how much of an exemption is appropriate for wealthy Americans.  The son or daughter who inherits the family farm and must sell the farm because they can’t afford the taxes seems to me inappropriate.  Whereas Warren Buffet (who probably already has insulated his billions from estate taxes), might not need unlimited exemptions.

Over and above all, Bachmann has voted not to increase the debt ceiling.  With these types of tax cuts, where are the offsets coming from?  If you believe there will be jobs, I have bridge for you to buy too.


The Lull before the Storm

August 27, 2011

Irene is cruising up the East Coast.  It looks every bit the Hurricane that weather forecasters have predicted.  It does not look good for the North Carolina outer banks and the East Coast north, all the way to the Big Apple.  Today, however, it is quiet and all that can be done is just to wait.

The Northeast and Middle Atlantic have pretty much gotten a free ride the last few years.  Most all these storms have taken a right turn and headed out to sea.  Not this time, so it seems.  Nature is about to meet a lot of people.

This year has seen killer tornados and treacherous floods in other parts of the country.  All of these natural disasters display nature’s amazing power.  Try as much as man can, the tools officials use to try and mitigate or control these phenomena pale in comparison.  I wonder in this age of “government is the problem” whether emergency relief operations are still justified?

I wonder whether President Obama should identify offsetting savings before ordering any un-budgeted FEMA expenditures.  I wonder whether emergency relief assistance should wait for congressional approval before extending them to homeless and unemployed workers?

To be sure, much disaster relief is carried out by States, Counties, and local governments along side of private relief organizations like the Red Cross.  There is one thing, however, that all these organizations have in common.  They can only provide relief if there is funding or a believable promise they can pay in due time.

Our Country is much larger and far more complicated than when it was founded.  The US faces all sorts of challenges from national security to building a thriving economy.  There are education, health, and social welfare issues that only a Federal government can meet.  If we are to be the United States, all US citizens must expect the same availability of these services.

All of these services, however, require funding.  Citizens have every right to demand these Government services function properly, and in a caring and timely manner.  Government need not be the problem.

As the East Coast sits and awaits Irene, I hope people are considering how necessary a government is that serves all the people all the time.  It might be tempting to want the hand of government nearby when the winds approach but absent when the skies turn blue.

I wonder whether that approach works?

News or Disinformation?

August 25, 2011

There was a small article in today’s newspaper stating that China was rapidly closing the gap in its military capability with the West.  This ominous sounding declaration may be news or it may be the long expected defense aimed at keeping the $650 billion annual US defense budget just where it is.  Which is it?

There is of course another possibility.  This news article may be true and also part of an effort to avoid any defense cuts.  If so, another question arises.  How can the US spend 10 times as much as the Chinese and be in a toe to toe race in capability?

Are the Chinese that much smarter?  Or, could it be that the US defense budget includes many other expenses the Chinese do not spend money on?

For sure the Chinese do not need to finance two now unnecessary wars.  Iraq and Afghanistan spending was and is larger than the entire Chinese defense spending.

Over the weekend, there were reports that more than half of NATO members were reducing their defense spend.  Budgetary concerns were given as the reason.  I wonder whether that news was also part of the build up to maintaining the current US spend?

Just considering that the US spends more on defense than all other countries combined and at least 10 times more than who ever is in second place, one must wonder why this is necessary.  In the business world, most astute business leaders would recognize this spending situation as fraught with danger.  Waste and inefficiency would be suspected.  Misrepresentation (booking an expense as R&D when in fact it was a legal settlement for example) would also be among the usual suspects when a businessman investigated spending of this level.

I wonder who looks into US defense spending?

These type of articles are just the tip of the iceberg.  If and when there are legitimate proposals to cut defense spending, we should expect an avalanche of similar “news”


Rights Are Not Free

August 24, 2011

In the industrialized Western world, life is very complicated, but from any historic perspective, very comfortable.  I am speaking of the average person.  There are those who live in opulent style and others who live on handouts from others.

In the third world, life is far more dangerous and meager.  The man with a gun rules.  Disease, famine, and early mortality await third world inhabitants each day.

So why are so many American politicians speaking of “taking back their country” as if America had been invaded by a foreign enemy?

This populist theme appeals to the greedy and the less informed.  Why should they have to share their hard earned (often inherited) wealth with others?  Why should those with their hands out asking for help not have work?  The thinking goes that if we deny the poor a handout, they will by necessity have to find a job.  The problem of poor people can be fixed easily some say.

Entitlements and public assistance are the main focus.  The word “entitlement” seems to evoke a visceral reaction.  Why should anyone be entitled to anything?

The simple answer is no one is “entitled” to Medicare or Medicaid or Social Security, or for that matter, public assistance.  Rather these are programs conceived to augment individual Americans’ economic means under certain conditions.  Medicare assists Americans with fixed incomes.  Medicaid assists Americans who are unable to afford medical care.  Social Security assists retired workers to live independently for as long as possible.  Food stamps and welfare payments assist others with chronic economic problems.

The absence of these programs would leave millions of Americans devastated and and subject to third world conditions.  These “entitlement” programs make sense for recipients as well as the rest of us.  Who wants to see people living and dying on street corners.

Most Americans view the access to food, housing and health care as a basic right.  The rights are not free, however.

In addition to funding, these rights carry (or should carry) responsibilities.

I would suggest responsibilities might lie in two broad categories.  (1) Preventive measures are steps which should be taken by recipients aimed at reducing the demand.  (2) Payment measures are those which each recipient undertakes to make the cost to the general public less.

Preventive measures could be regular “preventive” doctors visits.  Following medical advice (with proof) would be another.  In certain cases, recipients should be required to attend health education classes in order to receive continued coverage.  Birth control (for those receiving public assistance) should be a must.

Payment measures could largely be met by “documented” employment and payroll taxes.  In cases of unemployment, public works and government subsidized part time work should be required.  Cleaning streets and light manufacturing jobs currently outsourced to China could provide plenty of useful work.  These are just the tip of an ice berg of useful, temporary employment

The idea that those without do not deserve health care or assistance to live on their own is ethically and morally wrong.  The real issue before the country is how can we afford to meet these rights.

A portion of the solution is that those receiving benefits must meet their responsibilities too.

This could be a strong centrist position and clearly differentiate the middle from the uncaring right and the unthinking left.

Not Black Enough

August 23, 2011

Cornell West, Travis Smilie, and others are speaking out castigating President Obama for not delivering on his promises.  West claimed that Obama was beholding to the titans of Wall Street inferring that Wall Street’s needs out ranked those of the black community.  My first reaction was “get in line” (along with the Unions, Immigrants, Gay/Lesbians, and the over 65 crowd).

Then I began to wonder who in the black community were they speaking for?  And what exactly could the President do when GOP resistance made a mockery out of the debt limit increase?  And if the missing President Obama actions were not words, where would the President get the money to spend on the black community?

I am sure we will hear the same whine from other groups whose special interest were not addressed as they wished or as President Obama had promised.  What all these groups (Blacks, Hispanics, Gay/Lesbians, Unions, and over 65-ers) have in common is there is no better deal awaiting them with a GOP Administration.  That truth is not very satisfying to be sure but these groups should think seriously about the current state of the country and how it might impact them under the GOP.

On the other side of the coin, each of these groups could benefit from self improvement as well as government policies, and in return, the country could over the long term benefit hugely if the complaints of each of these groups were addressed.

  • Just consider the money spent on Medicaid.  What if the need for Medicaid was halved, or quartered?
  • What if Mexican undocumented workers were documented, paid taxes, and educated their children bringing them into American mainstream life?
  • What if Gay/Lesbians were recognized without prejudice and their participation in everyday life were welcomed?
  • What if Unions did not need to fight for fair pay and benefits and instead sought to ensure their members stayed current in their skills and training?
  • And those over 65, what if they embraced means testing and some modification in governments benefits so that those who were most at risk could continue to receive care?

“Me first”, however, seems to be the order of the day.  Some, like West and Smilie just seem to want to sound the most ridiculous and self centered.  Maybe for them, it is about them and not the others they claim to speak for.