Archive for July 2014

Getting It Wrong And Ready To Do It Again

July 30, 2014

Presidents are prisoners of the times. Events happen, often following a period of neglect and sometimes following stimulation. Today, our country is neglecting its infrastructure while many Congressional voices try to “stimulate” growth through lower taxes. Hmmm.

I wonder how that will work out?

George W Bush’s presidency offers several cases in point. Inheriting a budget surplus, the Bush Administration, at the first signs of a slowing economy, championed an across the board income tax reduction.

Whether the tax reduction did anything but make the rich richer is hard to say. The economy, in any case, rebounded and bloomed through the rest of the Bush years, that is until it imploded.

Credit default swaps and collateralized debt obligations certainly were not Bush Administration recommendations.  They were instead manifestation of Wall Street greed without regard for the country or their customers.  These financial instruments were like viruses and their unregulated use grew out of control practically taking the world’s entire banking system down.

Once the patient (our economy) was on its back, it became apparent how unprepared the “small” government was. Liquidity became the issue. Banks no longer trusted each other and lending dried up.

Corporations were faced with bleak prospects and watched their stock prices plummet. As a consequent, corporations slashed budgets and associated headcount. Unemployment jumped.

As the dust settled, one could see the economy was working, albeit much less robustly and with far more unemployed. The lesson there for anyone to see was that productivity could be increased simply by removing unneeded overhead. Corporations were operating more efficiently.

Immediately the talking heads turned to how to reduce unemployment. A worthy task, but the how to accomplish it meant everything. Stimulus.

The economy needed to be stimulated with more liquidity.   The only source capable enough and willing to help was the Federal government. After authorizing about $800 billion (reflecting  each Congress members’ favorite pork barrel project), it was time to move on.

Progressives argued the stimulus needed to be increased and conservatives argued it was already wasteful and too large. Hmmm.

About this time, the unfortunate legacy of the Bush tax cuts was catching up with the front page. Debt and unbalanced budgets became the political pros mantra. And single focus issues are political red meat.

Slash federal and state employment and while at it, cut benefits and pensions too, were many politicians favored recommendation.  Many States and even federal agencies followed this path.

Unemployment swelled with public sector workers joining the private sector, recession idled, unemployed.

The unemployment level topped out about ten months after President Obama took office. Standing at 10.1% unemployed, the nation took a deep breath. What more needed to be done?

The stand off between progressives and conservatives may have strangely been a good dysfunction. No more damage could be unintentionally done. It was now up to Adam Smith’s silent hand to reallocate resources to their most productive places.

Five years later there are abundant signs that the economy is strong and resting upon fundamentally firm underpinnings. No particular place in our economy is red hot. Housing is ok but not great. Manufacturing is growing but not that fast. Banks are profitable but not apparently risking their financial health on murky trades. And, the service industry is perking along meeting the needs of the rest of the economy. (It is true also that income inequality rivals the gilded age but that was true before the 2008/9 recession.)

The GOP got it wrong prior to the recession and got it wrong on how to get out of the recession. Democrats got lucky since the financial implosion took place on Bush’s watch. It could have just as easily waited until President Obama was in office.

The Democrats also got it wrong by not looking for “efficiencies” in spending. How can the country get a bigger bang for its buck?

The GOP seems locked into a non-spending mindset (except for defense), while Democrats are quite happy to spend without thinking about productivity. Both parties got it wrong in the past and seem ready to get it wrong again.

Shameful And Irresponsible

July 29, 2014

This week we may see Congress step up and hit a single. To be clear, the bi-partisan VA fix bill is not a home run but in a Congress where rhetoric trumps commonsense or logic, the VA compromise bill has elements that make total sense, and at least count as a base hit..

What could have been so hard in finding this path forward?

The winning words, by Senator Bernie Sanders, were “I don’t care about the VA, I care about our veterans”.

Ever since President George W Bush sent American soldiers in Iraq (and thereby extended the stay in Afghanistan), the fundamental responsibilities a government has to its soldiers has been disregarded. Equipment inadequacies, shortages, and multiple/extended tours are incompatible with wars of choice.

Topping the list, however, was the decision to hold pat with the VA staffing, funding, and facilities even though Iraq and Afghanistan were sending home thousands of new patients. Both the Bush and the Obama Administrations have stood silently by as one VA horror story after another has come to light.

Congress has done no better and arguably worse. Where was oversight? Wasting time on Benghazi while Veterans waited for an appointments. Hmmm.

Fixes to the VA shortage problem has been well known. The problem was how to fund the large spending increase necessary.

Shamefully, the GOP blocked all solutions unless offsetting cuts could be identified. Irresponsibly, Democrats did not embrace the notion that government spending can be cut through retirement of unneeded programs or retooling existing spending programs and extracting greater efficiency at lower expenditure levels.

A government that spends about $3 trillion each year must have ample opportunities to cut spending and then reinvest this money in new initiatives.

Regrettably, our Congress members have been more concerned about their supporters (read defense contractors, farm owners, and those receiving social safety net benefits). Veterans just weren’t high enough on the food chain to count.

It is unlikely the VA emergency fix will initiate a fundamental change in Congressional attitudes.  We must, instead, be satisfied with the good news that, at least for a while, Veterans will receive attention they deserve.

An Anxious Waiting

July 28, 2014

The fall elections cannot come soon enough for 2016 potential Presidential candidates.   There are so many juicy events, both domestically and international, which Presidential demagogues could jaw about but they, for the most part, are resisting the urge to brag the limelight. I wonder why?

Why, for instance, does a Ted Cruz or Marco Rubio not wax eloquently (on national TV) contrasting what the Obama Administration is doing (or not doing) with what a Cruz or Rubio Administration would do?

Or, why hasn’t Chris Christie or Rick Perry not sold their children in order to raise funds for Israel in its latest Palestinian clash?

And, although not 2016 candidates, why hasn’t John McCain or Lindsay Graham lectured the President on how he has lost the Iraq and Afghanistan wars?

Why, indeed, when these subjects still make the front page with one headline after another? Are these suddenly mute GOP leaders wasting an opportunity?

It is, of course, summer and vacation time. Accordingly, it could be that relaxing, recharging the batteries, and keeping off the national stage might be a sufficient answer. Hmmm, maybe not.

And it could be that none of these candidates has a better idea (almost assuredly true). Hmmm. I don’t think that excuse has prevented them from “speaking to Americans” in the past.

I would suggest a more basic motive. From poling data, the GOP has a definite chance of capturing both the House and the Senate this fall. Why take a chance by pontificating on one of these issues and un-intendedly turn voters against the party?

All of the issues facing the President these days are complex, thorny, and nuanced.  These issues require careful analysis and mostly require long term strategies for which there is no national consensus. Efforts to build a national consensus does not fit 10 second sound bites. Worse, any serious recommendation ties the candidate to a position which can be later evaluated.  Hmmm.

Latin American immigration, support for Israel, and the Middle East (including Afghanistan) are all issues which are not new. The GOP learned as recently as 2012 what a hard line on immigration reform would bring. And while 2016 will see both parties stand up to say how much a friend of Israel they are, the American public can count and know the difference between 800+ and 2 civilian deaths in the current Gaza crisis. And strangely, most Americans have had a stomach full of Iraq, Afghanistan, and the Sunni-Shiite-Taliban craziness.

The 2016 hopefuls could turn their attention to jobs but there is a reasonable chance that after a slow but steady decline in unemployment that the percentage might fall below 6%.  Think about these previous hot button topics… debt, deficit, jobs, tax cuts, and healthcare.  Only healthcare has not had enough time to play out and undermine the conservative position.

There is for sure plenty of room for GOP candidates to offer alternative routes to achieve debt reduction or balancing the budget.  There is plenty of room for creative ideas on job creation and tax code reform.  And there is an ocean of room for how to bring US healthcare into the 21st century.  Among the many thoughtful proposals, however, one would not find “leave it to the States” or “cut taxes and cut social network spending” or “increase defense spending while decreasing any other spending”.

So, come Thanksgiving, I wonder what we will hear from these now silent candidates?

Does An Exception Prove The Rule?

July 26, 2014

This week, in a Philadelphia suburb, a mental health patient shot and killed his case worker and wounded his doctor. The shooter was in the doctor’s office in a section of a much larger wellness center. The entire building was a “gun free” zone.

The rest of the story, was a surprise.

The doctor pulled his gun and returned fire. When the dust settled, the patient was seriously wounded and being restrained by other hospital employees who entered the room through windows. Police officials credit the doctor’s action with saving the lives of an untold of other hospital patients, workers, and visitors.

The facts seem to support this claim. Packing even when expressly prohibited saved a life and possibly many others.  One for the NRA?

Maybe but not for certain. A doctor’s oath is “do no harm”.  The oath seems compromised when he/she is packing, and completely over the line when using a firearm while on duty.

So how do we reconcile the use in self defense? This is a trick question.  The doctor never needed to be put in jeopardy.

Mistake number one is that the patient should never have gained access carrying a gun and more than 40 bullets. Mistake number two, some one considered potentially dangerous should never be in a position to attack the doctor or case worker without security personal present. In short, the “wellness center” was not prepared for a reasonably predictable outcome if there were no steps to insure guns were in fact prohibited.

The NRA will argue that everyone should be carrying. They feel packing will act both as a deterrent and as a self defense measure. Hmmm.

In this case, however, the patient, if he thought the doctor was packing, would have fired at him first before then shooting the case worker. I don’t like this picture.

The alternative to unlimited carry is keeping guns in homes, fields for hunting, and shooting ranges for sport.

For public buildings it is impractical to screen everyone.  Those buildings where mental health clients are more likely to frequent, we should remember President Reagan.  He once said, “Trust but verify”.   Mental health patients, considered capable of violent behavior, should be screened (metal detectors) prior to doctor’s office or hospital entrances.

No sets of procedures, however, other than the most draconian, can assure complete safety from irrational acts. Arming everyone will simply put more weapons in the hands of those unable (or unwilling) to use them safely.

Doctors with guns, even though in this situation greater tragedy was prevented, is not the answer.

The Argument For Pension Reforms

July 24, 2014

Across the country many public workers in States, localities, and school districts are experiencing pressure from authorities to renegotiate pensions (and benefits). Why are these previous promises under threat of not being kept?

In most cases authorities cite either demographics (the public sector workers are living too long) or that there is not enough money in the pension fund because the already invested pension money is not earning what it was projected to earn. In either case, the underlying reason is tax payers do not wished to pay more to make up for any short fall.

But aren’t promises, promises?

Another line of reasoning is that pension (and benefit) reform is based upon comparison with the private sector. There has been a massive shift in the private sector’s approach to pensions (and benefits). For competitive reasons, the private sector has moved to make less rich both the pension and the benefit plans. In short, pensions and benefits as originally promised were becoming prohibitively expensive.  Consequently, companies were losing competitiveness versus companies which produced products overseas.

So the argument became, no change, no job.

Regrettably, many private sector unions did agree to reform and still their jobs were swept away to low cost countries. So much for promises.

The math dealing with pensions or any other benefit (mainly healthcare) is pretty straight forward. The employers and the worker must contribute enough money from current pay that when it is invested, will yield enough to cover actual payout costs for the life of the employee. With Americans living longer, the payout period will be longer than when most of these plans were first instituted.  Investing pension funds is much harder given the practical zero interest policy of the Federal Reserve.

Something has to change if the funds are too meet their obligations.

All aspects of pensions and benefits are negotiable. There are not hard and fast rules binding either employer or employee. The reality, however, is that some agreements will not serve either the employer or the employee well. Too much employer costs risk jobs, too much employee costs makes everyday living more difficult given how Americans have become use to spending their income.

Oh what a mess.

There are other methods for covering workers with retirement or healthcare. European countries have adopted methods where there is a nationwide safety net while individuals can contribute or save for a more generous retirement. These European systems, however, involve all citizens and all companies.

Anyone can save more and any company (or government organization) can provide more generous benefits but nobody can provide less than the standard.  Hmmm.

Can you hear the howl “socialized pensions or socialized medicine” coming?

Maybe, but so what. If Americans slip into the spot where pensions are inadequate for the elderly to live, the public will be asked to subsidize. You can pay me now, or pay me later.

What Makes People Do Such Things?

July 21, 2014

Why would any country supply irregular troops with high powered, sophisticated missiles? Why would anyone possessing such missiles fire them indiscriminately at a flying object some 35,000 feet above? Why would these irregulars, once the plane shot down had been confirmed to be a civilian, non-combatant carrying about 300, not have stood down and allowed international aide workers to humanly collect the remains?

Why would a country bristle at the notion they were using disproportionate force in trying to stop missile attacks? Why would that nation act indignantly even though the death toll was running about 500 of them to 2 of us? Why would a country allow itself to get “suckered” in so that any response, no matter how justified, was likely to kill non-combatants?

Why would one religious sect wreak havoc upon another, all in the name of Allah? Why would the political establishment insist upon no realignment of government ministries, assuring a continuation of violence? Why would anyone send another to self detonate a massive bomb in hopes of killing an many innocents as possible?

Power and wealth offer as good as any explanation. If you have what you consider too small a share or maybe you have been cut out entirely, one can understand efforts, within certain bounds, of trying to correct the imbalance. Money and the personal power to get money can usually be attributed to most conflicts.

This weekend in Philadelphia, the Catholic Archdiocese made all in order in the Cathedral. The occasion was the visit of a relic, a two once sample of Pope John Paul’s blood. The faithful were invited to worship in front of the blood sample and use the occasion to seek divine intercession. Hmmm.

Besides creating the allusion of vampires and other blood suckers, why would any foist such a thing on others hoping for something better in life?

All of these events, in one way or another, defy rational explanation. They do reveal the lengths man is capable of going while at the same time offering what he purports to be a rational explanation.

What makes people do such things?

Slow Boil Over A Surrogate War

July 20, 2014

The downing of Malaysian Air flight 17 was a shock. As time as progressed, the justification of the senseless murders of almost 300 people is no less murky.  Our madness slow boil seems centered upon a surrogate war.

Was this simply an accident of war or was the missile attack part of a premeditated message? The 300 unlucky passengers had nothing to do with either side in the Ukraine-Russia conflict. Malaysian Airlines is based in Kuala Lumpur, in an entirely different continent.

What message could be contained in this tragedy?

Reports that insurgents or possibly just local residents were scouring the debris fields picking up valuables including credit cards has added disgust. Instead of treating the death scene with respect, it appears to have turned into an opportunity for quick gain, at least for some.

Is that the message, human condition is abominable?

According to a New York Times report, the air route which the plane was using was open… open that is until the plane would have reached the Russian border. Unbelievably, the Russian airway authorities had closed the airspace beginning with its Ukrainian border eastward.

Flight 17 was downed about 50 miles short of the border. The question of the day is what would have happened had the plane not been short down?

The second question of the day, why would Malaysian Air have flown a route it could not have completed?

There are many conspiracy theories possible. A more straight forward explanation is human error. Sophisticated surface to air missiles in the hands of irregular military types makes no sense on all accounts. Command and control is lacking with irregulars.

Non-combatants should be expected to assume they are not a target, so flying the same route they have always flown ought to be expected. A responsible airline, however, would have been expected to have checked for any alerts.

The Ukraine conflict is a surrogate war. The West (Europe plus the US) versus the Russian Federation. The West is trying to extend its influence east and the Russians are trying to block these efforts. For the West, bluffing and then looking the other way is a preferred strategy. For Russia, bluffs normally do not exist. This contrast of style was for sure a contributing factor.

The top people on both sides know this, yet were willing to play the surrogate game.

The surrogate game is being played in other lands too. Syria, Iraq, Gaza, and to an extent, in Afghanistan to name a few. The mess called central Africa is another place to observe non-combatants dying from outside influence.

The problem with these wars is that the sides are not clear. Who are the good guys and who are the bad ones. The US has a role to play but it is not around the use of US military force.

More likely the US role is to reiterate where our influence will be placed, where we will be neutral, and where we will not exert any influence. Once these positions are made clear, then we must ensure our actions support them. The current world confusion has arisen because the US has gone silent (while still exerting force) and allowed itself to believe it could expand its influence unrestrictedly.

Expanding the European Union was risky, expanding NATO was bordering on foolish and trying to convince the Russians that “star wars” was good for them was a joke.

Most of the world is poverty stricken. Most of those region’s would be leaders are simply people in pursuit of personal wealth. Democratic rule (as we know it) is just not going to happen. Some form of benevolent authoritarian government is the best those populations can hope for.

Telling the American people that open elections, capitalism, and human rights will bring much of the world into the 21st century is a disservice to everyone and for countries such as Russia and China, represents a threat to their established governments. It times for the rhetoric which President Obama and members of Congress select to get real.

Real in the sense of the facts, real in the sense of what is truly possible.  Real in the sense of McDonalds or Subway or Nike or Facebook or Twitter.  These social forces will do more than bullets and bombs.