Archive for January 2015

Mitt Romney’s New Vision

January 30, 2015

The Mitt Romney remake (I’m interested in the poor) did not go as far as he might have wished. Today, Mitt declared he would not seek the GOP nomination. Mitt said this would open a path for those less well known and just as inexperienced to seek the nomination. Hmmm.

I suspect Mitt’s new vision involves a stalemated convention and that the GOP would turn to the elder statesman for their tie breaking choice. Maybe… a stalemate is certainly Mitts best option at this time. Jeb Bush appears to be the moderate’s choice (as measured where the money is going) and Mitt can only hope for a tie later on.

Jeb Bush will certainly be a formidable nominee in any general election. He’s articulate, serious, and an experienced executive. A far better choice than his brother. The question remains will Jeb get tied up in a pretzel, like Romney did, just to get the nomination and then lose the general?

There is enough latent distrust for Hillary that cobbling together a majority in the general election may be easier for a GOP candidate than gaining the nomination.   The Republican “base” will demand positions not compatible with a majority of American voters.  End of story.

Hillary is wisely keeping her powder dry and will wait until she has a better idea of who exactly is running and what positions have this candidate been saddled with.

Mitt’s decision to wait until there is a stalemated convention runs another risk. Candidates like Hucklebee, Cruz, Paul, Santorum, or Graham pose no challenge for Hillary. She would welcome the nomination of any of them.

Hillary’s nightmare might be someone like Ohio Governor Kasich who appears to have common sense and executive experience. Kasich, however, would have to get by Bush and big money would not like that. Hmmm.

I wonder whether Mitt’s new vision foresees all that?

Anyone Home At The White House?

January 28, 2015

President Obama has been traveling to India and Saudi Arabia the past week, and while the cat’s away, the mice have played.

What was the staff thinking when it proposed to end 529 tax status or when it said it planned to requests bids for drilling off the coast of Virginia and the Carolinas?

Each of these proposals could have merit as part of some larger and more comprehensive plan. But any comprehensive, Democrat sponsored reforms have no chance of seeing the light of day. So what’s wrong with these “one offs”.

Did the White House think about who might be using 529s and for whom would the tax deduction mean the most? For sure, tax loop holes should be eliminated in any comprehensive tax reform, but have you heard any business leader suggest that the deductions, credits, and exclusions big business receives as part of the tax code be eliminated when the corporate rate of 35% is lowered? There is no point in saving college money in a 529 unless there is a tax advantage, otherwise a bank savings account serves the same purpose.

Opening oil exploration off the east coast is again an idea worth considering but why would someone open off-shore drilling while threatening to block the XL Pipe Line? How is one better for the environment than the other? And has anyone check the price of oil recently? Why fight a political battle and risk offending environmental and tourism groups before such a bridge needs to be crossed?

I wonder what’s going on?

Misplaced Disappointment – Whose Fault?

January 27, 2015

Historic events only come ever so often. One planned yesterday for the East Coast (Boston to Washington) turned out to not be so historic. Snow storms can be serious and are usually a pain in the back side when we think about clearing the snow and just getting around. Fate, however, guided the snow storm about 50 to 100 miles further out to sea yesterday and the back side of the low pressure area just had a lot less chance to dump the 2-3 feet of snow that had been predicted. Feel depressed?

The major cities of Philadelphia, New York, and Boston called out their emergency preparedness teams and prepared their cities for the worst. Schools closed, public transit shutdown, and snow plows were on the ready. States of New Jersey, New York, Connecticut, and Massachusetts did the same on the State level. Cheering all the activity on was your local news service.

News broadcasts were breathless about the historic proportions of the coming storm. Hour by hour forecasts predicting snow fall amounts were laid out for the public. And the warnings and fervent requests that the listener stay tuned for important updates were on every station.

National and international news was put aside to make room for the next snow forecast.

The news media treated the storm like any other event they report.  The stations wanted to dramatize the approaching storm in order to attract more listeners. “Weather readers” labeled “meteorologists” by TV producers gave one more graphic description after another with absolute conviction that what they were “reading” would come to pass. Hmmm.

So, as dawn arrived in both New York and Philadelphia, life could continue almost as usual, there seemed a profound disappointment spreading. While snow storms are nothing to fooled with, they hype for this one and the public’s dutiful preparation went for naught.

Was this disappointment misplaced?

If the disappointment was aimed at the forecasters who predicted with certainty, I would say no. The TV news business was exposed for what it is… a sham. TV weather readers, especially the young women, are clearly hired as visual eye candy. The male weather readers, while less attractive, attempt to portray themselves as seasoned experts. They are given the weather to read and that’s their job.

Weather news is “produced” and the link between sensational weather reports and TV audience numbers is not missed by these producers. It’s the numbers silly.

By definition the weather is only vaguely predictable. For this storm to blow 50 to 100 miles further out to sea should surprise no one. Remember Hurricane Sandy? Instead of blowing out to sea, Sandy took a left turn an blew 180 degrees opposite, straight into land.

The problem with weather is most people can’t comprehend probabilities. The downside risk associated with not preparing far outweighs the inconvenience caused by being cautious. This does not excuse the News Media shameful behavior.

I think my disappointment was not misplaced when I blame the media for over hyping.

The Greek Tragedy, Version 2.1?

January 26, 2015

Over the weekend Greek voters elected the “radical leftist” party, Syriza, to try and lead Greece out of the austerity induced deep economic rut Greece has been stuck in. Alexis Tsipras, Syriza’s leader began immediately to form a government by agreeing to form a coalition with Anel, a populous right wing party. Hmmm.

Greece has been laboring under austerity economic measures which it was forced to accept as conditions for the EU to bail out. With 25% unemployment, austerity coupled with vanishing hope that the economy would suddenly get better, Greek voters decided they had waited long enough. It was time for a new approach.

The options open to Syriza are not many. Tsipras campaigned on the promise to “renegotiate” the terms of the EU bailout. Without more government spending on jobs, there is little hope on seeing the unemployment figure drop. And without the ability to borrow more or pay out less in repayments there is no money for Greece to spend.

The EU might now be more sympathetic to less austerity since it finds EU’s own economy stagnating and has found it necessary to pursue quantitative easing via new ECB policies. But these are the Greeks Germany is reminding the EU.

Greece got into this hole by years of wholesale tax dogging and wasteful government spending. These foolish policies seemed necessary at the time to placate the Greek society (we won’t complain about taxes if the government does not prosecute when we don’t pay them). Wasteful government spending was spread around (somewhat like the US defense budget) so why would anyone complain?

Pundits have predicted that Greece will exit the “Euro” and begin printing their own currency again. Simply printing money, however, will do nothing to solve Greece’s underlying economic realities long term. While there may be a return to the “drachma”, there must be increased tax revenue and wiser government expenditures.

EU officials will be viewing this abrupt change in Greece with a wider lenses. Spain also sports high unemployment and is bound to similar austerity EU conditions. And Italy can’t be far behind. Allowing Greece to withdraw from the Euro, without serious negotiations, would only encourage other countries to follow.

This new left-right government should offer a novel way to reform the underlying Greek tendencies to wait until tomorrow. We shall see.

Jeb and Mitt

January 24, 2015

Former Governors and potential GOP Presidential candidates, Jeb Bush and Mitt Romney met two days ago in a private meeting. Pundits speculated that the meeting’s purpose was discuss how both could run for the GOP nomination and not destroy the moderate Republican wing and giving more help to of the far more conservative Republican base. Hmmm.

The conservative GOP base seems to have something for everyone. Less government regulations draws big money’s support. Lower taxes is everyone’s favorite even though most Republicans don’t realize who gains the most in across the board tax cuts. For some crazy reason, “REPEALING and replacing” the Affordable Care Act (Obamacare) gets the GOP crowd to the edge of their chairs. But best of all are the “gifts” for the anti-immigration faction or the bible thumpers who seek deportation and anti-abortion (or any other infringement on women’s comprehensive healthcare) measures.

The Jeb and Mitt talks might ordinarily seems pointless since “moderate” and “GOP” seem incompatible. The wisdom of not fighting within the GOP seems obvious since there is a path to the White House for a sane GOP.  The GOP House, has not seen this wisdom yet.  The House introduced a draconian anti-abortion bill (instead of other governance bill) which would have prevented women from using their own money to buy comprehensive health care insurance, if that insurance included abortion coverage. Luckily House Republican women stepped forward and said no way with out votes.

The cold political calculation suggests that a moderate, divisive issue free campaign is the best if not the only path to the White House for the GOP.  Clearly Mitt and Jeb recognize that.  I just wonder whether American voters are looking and listening.

The question they should be asking is “what would this Party try to pass if they also occupy the White House”?

Income Inequality – Really?

January 20, 2015

President Obama tonight with present his 7th State of the Union in a speech before Congress. Feeling giddy? If so, I suggest you imagine our Capital Building full of eager and respectful lawmakers sitting on the edge of their chairs awaiting word on how the US can address the income inequality besieging the middle class. Hmmm.

Reports have recently revealed that the average income ($54,000 and change) has dropped by about $3000 to $51,000 and change during President Obama’s watch. What has the President been doing? Has he not been looking out for the middle class?

Surprisingly (hmmm)), the Fortune 500 companies saw their CEOs compensation gain of over $13 million from an average of $2.2 million in 2008 to $15.5 in 2014, while the middle class was losing 6% on average. What can be done about that?

Business lobbies have been pleading for a reform of the US corporate tax (35%). Reform in their minds means a lowering corporate tax to maybe the 20% range but with no change to exceptions, credits and other loopholes which enable companies like GE to legally pay no corporate tax at all. Hmmm.

The President will propose tonight changes to an obscure provision in the Estate Tax which allows the top 1/2 of 1% to pass assets to their beneficiaries tax free. The White House proposes to eliminate this loophole and use the funds to provide tax credits to the middle class. Hmmm.

Let’s think about this. The decline in the average income raises questions of fairness (how can the top earners earn more and the average person earn less) and the unintended negative consequence a poorer middle class represents upon the economy.

So tell me again why any asset should be able to be sold without being charged a capital gain? Tax credits are also a bit squirrelly. Why should any American not pay their proportionate share of the tax burden? But at least the President is opening the conversation and leaving plenty of room for a GOP response.

I wonder if the GOP will seize the opportunity to address the injustice of a company not passing on “productivity gains” to all workers. I wonder if the GOP will think about capping the senior executives pay at some historic ratio to their average workers’ pay?

Certainly we don’t want the Government setting wages and salaries but the Government could and should impose a surtax on companies (like CBS or Oracle) whose CEO take home obscene amounts of money simply because he/she can. (Make no mistake, CEOs and other senior executives will always and should always make much more than factory or office workers. It is simply a matter of degree.)

If companies that insist upon paying the senior executives over the top compensation packages, then their shareholders need to understand the company will pay a surtax. Hmmm.

There are a compelling arguments that says the global price of labor has simply reduced the American workers’ wagees and salaries on a competitive basis. Undoubtably there is truth in this assertion. It does not follow, however, that senior executives and especially CEOs should garner all the value productivity gains produce.

Morally and maybe business sense-wise, the growing gap between the wealthy and everyone else is an unstable situation. Whose going to consume the products of business if each year they are earning less than the year before?

In the olden days, most good paying jobs were manual in nature. All that was required was a strong back and a good attitude. Today, globalization demands more skills from workers if workers want “good pay”. In the time it will take to convert the middle class to these higher skill levels (using their heads and less of their backs), there is no excuse for companies to reward senior executives with the spoils of globalization.

Too bad the President won’t address this.  I wonder whether Senator Joni Ernst will in the GOP response?

Another Supreme Decision Coming

January 17, 2015

The Supreme Court announced yesterday that it would hear oral arguments on four cases seeking clarity whether States can Constitutionally deny same sex couples the right to marry. Until recently, the Court had a holiday since each of the appeals courts had ruled for same sex marriage. Finally one appeals court ruled against same sex marriage and there you have it… the recipe for a Supreme Court deciding vote.

For States rights and religious values reasons there are strong sentiments to allow individual States to decide for themselves. The Constitution and common practice, on the other hand, seem to read same sex couples seeking marriage have a strong case.

What will the Court decide given its conservative nature and that 6 Justices are Catholic?

The “your kidding me” aspect of one of the cases in Ohio offers insight into the fragile basis for denying same sex couples marriage rights.  One same sex couple seeking marriage already live together and already have adopted children, and already live side by side with other Ohioans just as ordinary other couple. Ohio law, however, denies the right for same sex couples to marry or for same sex couples to “jointly adopt” (one can, two can’t). This sets up all sorts of potential problems should the adoptive parent die.

On a more general basis, the entire issue is about contract law and equal access to benefits flowing from the State and Federal Government. (Religious arguments should be irrelevant since we have separation of church and State.  Don’t we?

Consider, two people form a partnership, how does property or assets flow when one dies or the both choose to separate?  There is either a contract or there is a marriage agreement. So why should the State require some couples to have a contract while others can choose  a much simpler and more inclusive path which spells out property and benefits benefits?

Those who hold religious beliefs that marriage is an institution based upon one man and one woman have difficulty seeing that this is not a religious question. Religious groups often point to history and trace back one man, one woman through antiquity, and claim, therefore, man/female model is natural law. In the US, however, the Constitution is the basis for the nation’s laws.  The Constitution spells out  each person must be treated the same under the law. Federal and State benefits have historically not treat same sex couples the same as heterosexual ones and only recently has the tide moved in the direction of treating same sex couples the same as heterosexual ones.

Religious groups, of course, are private organizations and can (at their own peril) treat individuals differently in accordance with their traditions.

Hmmm.

With 36 States already allowing same sex marriage, the Supreme Court will have to reach pretty low to come up with an argument supporting States rights to treat individuals differently under the law.