Miscellany: 1/31/11

Quote of the Day

Faithful are the wounds of a friend, but the kisses of an enemy are deceitful.
Proverbs 27:6

Florida v HHS: ObamaCare Unconstitutional: Thumbs UP!

I have no doubt the progressives will paint this decision as merely evening the score at 2 Dem judges, yes--2 GOP judges, no. There are probably another dozen or more related district court cases in process. All of these have to go to the appellate courts before they see their way to the Supreme Court, although it's possible (but unlikely) that the Supreme Court would directly hear the appeal. This case is highly significant, though, because 25 other states had joined the lawsuit, and Judge Roger Vinson goes beyond Virginia v Sebelius, where Judge Henry Hudson threw out the individual mandate but kept the rest of the law intact.

Judge Vinson ruled that not only did the individual mandate constitute a slippery-slope overreach of "necessary and proper" Congressional authority and interstate commerce regulation, but Congressional dumping of new Medicaid funding obligations on the states was improper, and since the Democrats "forgot" to put in a standard severability clause (in my opinion, forcing the judges to rule all-or-nothing--an earlier version of the bill had the severability clause), there is no sustainable business model given the need for the system to subsidize premiums for poorer people and/or high-risk policy holders from day one and the mandate is needed for purposes of funding other people's health care.

I have previously pointed out the morally bankrupt part of the Democratic Party Health Care Law: you have progressive politicians promising "free" medical care and other goodies, which do nothing to control costs: physicals and medical tests, for example, are not free; the guarantee of health insurance, regardless of health condition,  means people don't have to buy "real" insurance and hence can wait until a chronic health problem surfaces and then socialize their expenses, which unconscionably raises costs for "good faith" policyholders. You have to have reforms in place which, among other things, motivate overweight people (like myself) to lose weight, instead of knowing Big Sis is going to cover our costs whether or not we get to a healthy weight.

Think in terms of an auto insurance policy; everyone knows you can dramatically cut the costs of auto insurance by assuming responsibility for a limited amount, say, a $1000 deductible. People with a history of accidents should have to pay more. There should be, at minimum, a waiting period for coverage and/or higher premiums for an existing health problem. I've repeatedly pointed out that Clinton rejected Dole's offer for catastrophic insurance. If the government was to reinsure health care insurers, e.g., for lifetime caps for chronically ill individuals, you would find more vendors willing to take on higher risk patients. Let me also point out that gold-plated coverages for unions and business executives are unfairly being subsidized at the expense of lower-income and/or individual policyholders. Say, for instance, that a union member, at a 25% tax rate, has a $20,000 policy tax-free. This means the government is doing without $5000 in taxes and is giving that policyholder a 25% discount. (The question Paul Ryan (D-WI) and others worry about is that without a tax benefit to the employer, their portion of the costs go up and may drop coverage.  There are a number of ways to respond: for example, large employers may have the scale to attract better pricing and/or lower administrative costs, and one could limit tax exemptions on relevant plans.)


Egyptian Protesters Should Not Look a Gift Horse in the Mouth

You would think that Egyptians and others would have learned from the American voters' mistake in 2008 putting an idealistic, inspirational orator with a thin resume in the White House.

It's fairly easy to understand why Mohamed ElBaradai, an experienced, widely respected diplomat and a 2005 Nobel Peace Prize winner (for his efforts on promoting peaceful versus military use of nuclear materials), has galvanized the Egyptian opposition. It's fairly easy to scapegoat President Mubarak for any and all problems over the past 3 decades. (Anyone thinking I'm trying to be an apologist for the Mubarak regime here did not read yesterday's post.) It's tougher to be constructive; in fact, Obama makes a point out of that in defending pushing-on-a-string ObamaCare, but he disingenuously pretends to be open-minded, while throwing the opposition a trivial bone he feels he doesn't need. That's not legitimate negotiation; it's sort of like saying 'I'll let you rearrange the items on the plate so it's a more attractive presentation, but I'm not letting you in the kitchen'. But going back to ElBaradai, keep in mind that he hasn't been living in Egypt for the past few years; he's a carpetbagger.

President Mubarak for years has resisted naming a vice president. He finally did so. But the protesters are saying, 'too little, too late' and to a certain extent, VP Omar Suleiman has been given the kiss of death. (I'll never forget when a co-founder of the company I was working for, and my boss, resigned to join a company considered a potential rival. The company's CEO and other co-founder was furious, and there was talk of a lawsuit. Phil spent his last few days shuttered in his office. On leaving, he recommended that I be named his replacement (he couldn't recruit me to his new employer because of the legal agreement). That was a kiss of death as far as my chances; there was also a wild, totally unfounded rumor going around that I was management's stooge out to fire the mainframe personnel and replace them with young college graduates, and the result was that a few key mainframe personnel threatened to resign if I was named to replace Phil. Of course, one of those people, who I barely knew and had never interacted with, ended up leaving shortly after an incompetent supervisor was named to the position and I transitioned elsewhere. That's how I became SBC's (now AT&T) corporate DBA for the duration of our 1-year contract with them before deregulation.)

So I'm empathetic with VP Suleiman, and here's a key news item that is not getting enough coverage in place of more sensationalized aspects of the civil unrest:

Mubarak's newly appointed vice president, longtime intelligence chief Omar Suleiman, announced Monday that he had begun discussing reform with opposition parties. Speaking on the state television network, Suleiman said a reform package should be drawn up "expeditiously." "The other parties will also have a role to play, which will lead to real political reform," Suleiman said.

The point is if Suleiman is doing that, it's a strong indication that Mubarak is de facto transitioning out of power; the only question is when, not if, he leaves the Presidency. Suleiman seems to have the support of the powerful, popular, respected military, and he is negotiating what Mubarak hasn't attempted for years.

In the interim, the Nobel laureate, the experienced diplomat, has brashly dictated to the Obama Administration effectively, "You're either with us or against us. Get with the program or you won't have a voice in the future of Egypt." Now, of course, there is always political posturing, and no doubt  ElBaradai is herding wildcats (e.g., leftists, the Muslim Brotherhood, etc.) He needs to be careful, because he might find himself marginalized by coalition groups more interested in transitioning from one inflexible, autocratic regime to an Islamic autocratic regime.

I would urge the Egyptians to show some patience here and not have unrealistic expectations: you are not going to fix all of Egypt's problems simply by exiling the Mubarak government. Whether or not Suleiman runs for president later this year, I'm more interested in the Egyptians reforming their constitutional democracy than continuing the chaos over the past week.


Sports Moment

The faithful reader to this blog knows I'll occasionally devote a segment to sports achievements (I'm particularly partial to major league baseball). When I attended OLLU, the small traditional Catholic women's college had only recently turned coed and didn't participate in intercollegiate sports. I had a segment several weeks back featuring a video on a major fire in early May 2008 at the main hall on campus. OLLU has a men's basketball team that plays in the Red River Athletic Conference of NAIA Division I. This video shows the improbable ending moments of the January 22 game against #1-ranked LSU-Shreveport. (Obviously the student game announcer needs to come out of his shell and tell us what he really thinks...)



Political Humor

President Hu Jingtao said in a speech yesterday that China has to do more to improve human rights. Too bad he's not in a position to do something about it. - Jay Leno

[That's what President Jingtao said just before sending in his check to the ACLU.]

An original:

• Reportedly Julian Assante has dressed in drag as an old woman and driven an old red car in and out of traffic, occasionally pulling off the road, leery of being tailed by CIA operatives. Of course, he didn't realize the colleague he was speaking to under the cone of silence was a double spy, the dirty old man feeling him up was an agent checking for weapons, he didn't notice there was a GPS tracking device under his car, and the CIA viewed his driving from Google Earth.

Musical Interlude: One-Hit Wonders/Instrumentals

Exorcist Theme (Tubular Bells) Cast out that progressive devil!

Miscellany: 1/30/11

Quote of the Day

We are closer to God when we are asking questions than when we think we have the answers.
Abraham Joshua Heschel

The Tragedy and Chaos in Egypt Continues

We conservatives intrinsically distrust chaos and unexpected, radical changes in policies (in terms of domestic issues, that might include things like redefining marriage, adding an inadequately funded, new entitlement, or instituting an unprecedented mandate on insurance products).

It is difficult making sense of 6 days of chaos in Egypt. In hindsight, it should not have been that much of a surprise: Tunisia's recent revolution was sparked by repressive treatment of a vendor whom subsequently lit himself on fire , eventually resulting in the Ben Ali regime going into exile two weeks ago. But the return of Islamist leaders from exile to the predominantly secular country has a distinct feel to what we observed in Iran more than 30 years ago. In the meanwhile, the contagion has spread to Sudan, while the predominantly Christian Southern Sudan is set to assert its independence. On the other hand, an investigation of former Lebanese Prime Minister Hariri's assassination, thought to be linked with long-time Syrian domination of Lebanon in conjunction with Hezbollah allies, has triggered a backlash, resulting in a return of Syrian low-key dominance in Lebanon. And Syrian strongman Bashar al-Assad, unsurprisingly, is paying lip service to reforms.

The Obama Administration response has been, in my opinion, erratic. VP Joe Biden has said that Mubarak is no dictator and shouldn't step down. Yet there has been some evidence that the US government has secretly backed opposition groups bent on toppling the Mubarak government in favor of a more democratic Egypt. The opposition has fallen in line behind 2005 Nobel Peace Prize winner and former IAEA Director General Mohamed ElBaradei, whom has reprimanded the US for being ambivalent on where it stood regarding the Mubarak government.

What would Ambassador Guillemette say or do? Let me first quote what I said in Friday's post:

I believe it is in the best interests of Egypt's future that it provides greater economic and political freedom, guarantees equal opportunity to political, social or business leadership, maintains the secular nature of its government, and guarantees the civil rights of its minorities.

Additional comments:

• I would look for a face-saving way for President Mubarak to announce his intent not to run for reelection, not now, but at some unspecified time of his choosing, prior to the next scheduled Presidential election.
• I would say that Egypt has been a reliable, invaluable ally for international stability in the region and on the War on Terrorism. However, the Egyptian record on political reforms over the past 30 years has been unsatisfactory. The United State does not support domestic policies inconsistent with our own beliefs in individual rights and political pluralism.
• We call for government reforms which provide more balance of power between the legislature and the office of the Presidency, an independent judiciary, and a more open, independently verifiable electoral process including multiple political parties/candidates.
• We would recommend the formation of a unity government cabinet, including representation of opposition leaders.
• The magnitude of aid to Egypt depends on the implementation and good faith sustenance of political reforms.

It's Time For President Obama To Show Some REAL Leadership

First of all, I'm glad to hear Speaker Boehner reassure citizens that the House Republicans will not, contrary to Obama Administration Chicken Little assertions, play chicken with raising the the debt ceiling (perhaps two months away). A $100B savings would be a step in the right direction, but we need to do more, and I want to repeat: we need to do more in the nature of government business streamlining and reduction in federal governmente employee compensation.

What I would like to see is more commitment, both from Republican leadership and Democratic leadership (i.e., Majority Leader Reid and President Obama), on the bipartisan deficit reduction plan. In particular, half-measures, like Obama's offer to freeze a small fraction of spending, is not enough. Medicare and social security have to be on the table. Entitlements are the largest growing portions of the federal budget with the largest (baby boomer) generation phasing into retirement, drawing on social security and Medicare. The Republicans are understandably reluctant to play, one more time, into partisan Democratic hands playing whack-a-mole with any substantive proposal. DEMOCRATIC DEMAGOGUERY IS NOT AN OPTION. If you don't solve the problem now, to stop exploding expenditures from the get-go, these expenses are going to make California, Illinois and New York state budget problems look trivial. Everything has to be on the table: on the beneficiary side, premiums and deductibles will need to rise, adjustments will have to moderate, eligibility will need to tighten, and payroll taxes may need to be increased. As long as Democrats continue to play the class warfare game instead of shared burden (how can they possibly justify people drawing 2 or 3 times more than what they put into the system and say it's fair to continue to get a free ride?), we are hastening the day of reckoning.

Let me be clear: interest payments increase with each additional dollar in the deficit: but we are also paying very low interest. If and when interest rates climb, we could be talking 2 or 3 times the interest, even if we stop adding to the debt. That's money that can't be used to cut a social security check or a Medicare payment. "Don't worry: be happy" may be a pleasant song, but it's lousy public policy, and Obama's policy of picking winners and losers won't do.

Obama's real legacy may well be not only whom lost Lebanon, Egypt, or Tunisia, but whom lost the Democratic twin pillars of entitlements.

Political Humor

A few originals:

• President Obama has a new slogan: "Win the Future". Vice President Biden helped him out with that suggestion; Biden remembered that Newt Gingrich published a 2005 book called "Winning the Future" and was sure that the President could use it in his own State of the Union speech. Or, taking into account Obama's spendthrift ways and the Fed's printing press, we conservatives know exactly what what Obama's slogan really means: "Whip Inflation Now: The Future"

Courtesy Gerald R. Ford Museum

• I guess President Obama can't count on Rush Limbaugh showing up at his birthday parties anymore. Rush wants more proof it's Obama's birthday....

Musical Interlude: One-Hit Wonders/Instrumentals

Edie Brickell & the New Bohemians, "What I Am"

Miscellany: 1/29.11

Quote of the Day

Half the world is composed of people who have something to say and can't, and the other half who have nothing to say and keep on saying it.
Robert Frost

The Illinois State Supreme Court Decision:
Rahm Emanual's Eligibility to Run for Chicago Mayor: Thumbs DOWN!

First of all, let me point out I have no dogs in this fight: I don't really care which Democrat mismanages the city (so long as the federal government doesn't bail out Chicago). Second, I'm not a fan of what I regard as unnecessary restrictions on elective office (or jobs). In part, that's why I haven't really concerned myself with the debate over Barack Obama's birth certificate. To be honest, I don't agree with the Constitutional requirement barring eligibility of naturalized citizens from the Presidency. A number of jobs (e.g., school teachers) requires local residency, which I think unduly restricts the potential employee pool. I personally feel that Rahm Emanuel, a former area multi-term Congressman, knows the city quite well and has been a legitimate resident for years and have absolutely no problem with his running for the job of mayor. The issue is, when you do have a residency requirement, whether or not it's salient to the job requirements, do you enforce it reasonably, consistently and fairly?

But for the court to rule 7-0 that, in fact, Rahm Emanuel was a resident over the past year in Chicago, is absolutely ludicrous. (Although it doesn't really affect the decision outcome per se, it seems fairly clear at least two judges (including the chief justice) had appearance of conflict of interest.) It all boils down to a lack of specificity of what is meant or intended by the criterion, and it seems fairly clear that by any common sense interpretation, Rahm Emanuel has not been a resident of the city of Chicago.

I should point out that Emanuel had several other sympatheizers, including former Republican Governor Jim Edgar and Attorney General Jim Ryan, whom felt that the appellate court, in reversing Emanuel's residency, had created a "new" standard: what about Lincoln and others, whom worked out of state? In fact, the election code clearly says: "No elector or spouse shall be deemed to have lost his or her residence in any precinct or election district in this State by reason of his or her absence on business of the United States, or of this State."

In fact, the state Supreme Court mocked the appellate court:

[The] appellate court found that the candidate unquestionably was a qualified elector, it concluded that he did not meet the residency requirement of section 3.1–10–5 because he did not “actually reside” or “actually live” in Chicago for the entire year next preceding the election. The court did so without ever explaining what it meant by the terms “actually reside” or “actually live.”

Doesn't that remind you of Clinton's sophistic comment "that depends on what the meaning of the word 'is' is"? Or Justice Potter Stewart's famous discussion of hardcore porn "I know it when I see it"? I wonder what the justices would have said if the appellate court had simply said, "I know what it means to be a Chicago resident during the year preceding an election, and Rahm Emanuel was not such a resident."

Now I suspect that the city may need to tighten up exactly what it means in the future so this won't happen again, e.g., you show evidence of timestamped residential bills in your name (electric power, car insurance, newspaper, cable, water, and phone); the post office actively delivers mail, only in your/your family's name, to your local address and/or local post office box; vendor invoices and delivery receipts to your address; past year magazines or other regular publications with your stamped address; your auto insurance and registration tied to your local residence; all wages are subject to any relevant local and state income tax; you can show a pattern of personally signed (credit card slips), timestamped transactions by local merchant (e.g., restaurant, oil changes, gasoline, dry cleaning, grocery, home repairs and parking); Sunday church contribution receipts by date; and independently verified attendance at local meetings and events (photos, sign-in sheets, roll calls, documented in-person interviews or local media appearances).

I've done the road warrior bit as a consultant, but my travel expenses were well-documented (hotel, auto, restaurant, flights, and airport parking) and I returned home on weekends, picked up mail, shopped and worked out--and flew out Sunday afternoons/evenings. I suspect many legislators do the same type thing (and/or hold town halls, etc., on weekends).

Now I think what I just wrote here is just a common sense partial listing off the top of my head; why it didn't seem to occur to the justicies, say, items you have to submit to show proof of residence for getting a drivers license or registering to vote and ask if Rahm Emanuel would be able to qualify for residency beyond merely owning property in Illinois. They admit, at one point, Rahm Emanuel is paying income taxes both Illinois and DC. (I suspect that Rahm Emanuel is paying wage taxes in DC and passive rental income in Illinois.) I was not impressed by the fact, say, he left some personal items at the house (say, the garage or attic). I don't think it was particularly relevant.

The way I see it (but again, those lawyers and legislators in Illinois are so smart, maybe they already thought of this), there are two types of residency--active and inactive. In my view, Rahm Emanuel's residency was inactive, and he would reestablish active residency once he moved back into his own house (or a new purchased property). I was a military brat whom lived on military bases (technically not part of the states in the sense you didn't pay state sales taxes, etc., on base), so I could see why my Dad was still technically a Massachusetts resident even though most of Air Force career he lived out of state (and he never reestablished residency once he retired). But it was natural for him to cast a Massachusetts ballot if he was going to vote. That being said, if Fall River has had a residency requirement for city office, I would agree my Dad didn't qualify, having had lived outside the state for over 15 years.

More to the point, the Illinois Supreme Court simply ignored inconvenient truths. It wasn't just whether Rahm Emanuel was a resident in theory, but whether he was a resident over the past year. Saying that he owned the house and paying taxes on the property doesn't mean squat; the tenants are covering his property taxes through their rent. I'm sure lots of people own homes in multiple states. Interestingly, the Supreme Court brings up the example of what if they spent 10 months in Chicago and 2 months in, say, their Florida winter home. Do they qualify? Here's my take: they didn't say "former residents"; they didn't say the last 2 or 3 months before the election; they didn't say property owners. It was clear they didn't want carpetbagging candidates (like Alan Keyes during the 2004 Illinois US Senate campaign); they wanted candidates well-versed in CURRENT local issues. Maybe Rahm Emanuel has kept up with how badly his fellow progressives have run the city of Chicago into the ground.

I am not impressed with elaborate houses of cards that lawyers and legislators build to the extent that the Illinois State Supreme Court rules UNANIMOUSLY against a common sense reading of what a prior year residency requirement plainly means:

At that time Jesus said, "I praise you, Father, Lord of heaven and earth, because you have hidden these things from the wise and learned, and revealed them to little children. (Matthew 11:25)

HELL, NO! We Won't Go! AMTRAK V. 2.0:
NOW--An Even FASTER Way to Burn Tax Money
Tea Party Express: Are You Listening?
Shuster (R-PA), Mica (R-FL) Are F-CINO
"Fiscal Conservative In Name Only"

This is EXACTLY how a Republican Congress in the 2000's lost its way: they become chairs of various committees--and then pursue spending that has more to do with exercising power than to fiscal discipline. Shuster is head of the Railroad Subcommittee and Mica is chair of the superset Transportation Committee. And both of them are promoting the smoke-and-mirrors accounting of Barack Obama's high-speed rail initiative.

What part of Japan's enormous public debt (over twice their GDP) resulting in recent debt downgrades do people not understand? (Japan has "invested" heavily in high-speed rails.) China seems to be adapting the concept to mega-cities (e.g., a 42M metropolis to the northwest of Hong Kong.) But in many cases the main motivation in China's case was to divert passengers from slow rail in order to improve freight train utilization; the problem is the prices of high-speed trains approached the prices of airline seats, beyond the budget for many Chinese, whom simply downsized to more affordable long-distance bus services--aggravating China's already congested highways. Can anyone say "unexpected consequences"?

Some studies show relevant passenger fares only cover about 20% of costs. I think some cost analyses of a long-dreamed connection between Los Angeles and San Francisco have fared poorly. New Wisconsin Governor Walker and Ohio Governor Kasich have canceled high-speed rail projects in their states, and I'm hoping Florida Governor Scott will do the same for the ultimate boondoggle Orlando-Tampa Bay rail project. But what I hope the Tea Party will address the two Congressmen and repeat the mantra: "SHOW ME THE MONEY!"

Follow-Up to Taco Bell Beef Kerfuffle

I did a write-up on this last Wednesday--and I'm proud to that I'm one of the few bloggers I know whom have come down primarily on Taco Bell's side of the dispute. In fact, almost every other post is accepting the allegation, chapter and verse. The plaintiffs in the case have been very secretive about the nature of their sampling and testing which is a red flag to any empirical researcher like myself.

But it would be very unusual for company management to have published its ingredient list (before the incident) and to directly argue that 88% of its taco meat mix is ground beef unless it was confident through whatever quality control processes are done that the results would bear this out. There's a huge difference between 35% and 88% that is far beyond any conventional standard error of measurement.



Political Humor

A few originals:

• A powerful snowstorm hit the East Coast this week, leaving Washington DC under a blanket of snow. As you know, snow is another form of water. The facts that the $1.5T deficit federal government was "under water", and spendthrift Democrats were heading down that slippery slope seem apropos.
• If you ever wanted to know how President Obama managed to pull off a hat trick of 3 consecutive $1.3T-plus federal deficits, look no further than his hometown of Chicago. With a FY2011 budget deficit of $520M (it would be worse except Mayor Daley got a billion bucks for privatizing parking meters) and the school budget another $1B in the red, you'll be glad to know some things never change--like unrealistic, unsustainable special interest promises: mayoral candidate Gery Chico has promised to find $200M in operational efficiencies and bloated administrative budgets to fund another 2000 police officers. On a separate note, Chico has won the endorsements of the city's police and fireman unions.

Musical Interlude: One-Hit Wonders/Instrumentals

Van McCoy, "The Hustle"

Miscellany: 1/28/11

Quote of the Day

Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.
Benjamin Franklin

Revolution in Egypt? An Alternate Perspective

I watched a few hours of coverage on the Egypt crisis today on Fox News. Any regular reader of this blog knows that I mostly sidestep foreign issues, except to argue for tree trade. In multiple posts, I've talked about streamlining our foreign relationships, minimizing our entanglements, and learning to choose our battles carefully (because we don't have the resources to be the world's policeman). I'm not an isolationist; I don't buy into Ron Paul's provocative belief that somehow our foreign policy sins triggered the 9/11 attacks, and I do think we have to be vigilant and proactive against America's enemies whom may be motivated, beyond our control, by a number of factors (e.g., our economic or military prowess (in a zero-sum analysis), influence, core democratic principles, alliances, false beliefs, etc.) In fact, I was in favor of our logistic support of the Northern Alliance against the Taliban, and I would have supported stronger assistance from the Obama Administration in favor of Iran's Green Revolution.

As most people know, Anwar Sadat's vice president, Hosni Mubarak, succeeded him after the former president's assassination at the hands of a military plant from a radical Islamic offshoot of the banned Muslim Brotherhood (under Egypt's secular constitution) because of what was seen as the betrayal in terms of a peace treaty with Israel. Mubarak's government is widely regarded as autocratic; elections are viewed cynically, and food and other prices are soaring beyond the disposable income of many Egyptians whom feel are being left behind (particularly young, underemployed).

There have been crowds which have seen Iraq's fledging democracy take hold and recent uprisings elsewhere in the Middle East. But one unsettling issue is the fact that the Muslim Brotherhood looks like it's trying to co-opt the secular rebellion, just as religious authorities had in the late 1970's had co-opted the secular rebellion against the Shah of Iran.

It's very clear that the Obama Administration is treading a very thin line here. A lot depends on how vested the military is in Mubarak's leadership; I have absolutely no doubt that the lessons of how Iran brutally repressed the Green Revolution were not lost on Mubarak. If, in fact, Mubarak is deposed, the Obama Administration wants to be seen as supportive of America's democratic ideals and a friend of the new (hopefully secular) government; on the other hand, the Mubarek government, however autocratic it may be, has been helpful on the War on Terror and has stood by its controversial peace treaty with Israel. The last thing Washington wants is a successor government which breaks with Israel and adds to instability in the region. Mubarak has promised reforms before, but it's almost like a dieter acting on New Year's resolution to lose weight: the first few weeks are fine, but then old habits gradually reassert themselves.

A worrisome element is the fact that Muslims attend services on Friday, and clerics apparently encouraged today's civil unrest. As the day's events unfolded, Internet and other communications were cut off, tear gas was used to disperse crowds, and there were rumors that Mubarak might go into exile. But a determined Mubarak was defiant, accepted the resignation of his cabinet, and promised reforms. My subjective feel of the situation suggests that Mubarak will survive this incident, just as Iran's theocracy survived its popular uprising.

What disturbed me during Fox News' coverage was an inane series of commentators whom seemed to be Bush Administration veterans (including Dana Perino, the former Bush press secretary, whom, in my opinion, has never measured up to the late Tony Snow and never will). I don't recall seeing Bush's Secretaries of State Powell and Rice on Fox News other than general news clips. The general gist of the commentary was to accuse the Obama Administration of incompetently betraying the pro-democratic agenda, and Perino came as close as I've ever seen to criticizing Bush, suggesting he didn't push Mubarak hard enough on political reforms. John Bolton, on the other hand, seemed to be the voice of reason among all the commentators I heard.

My personal take? I don't think it is our place to tell other countries how to elect or select their leaders. I don't think making possible the election between an Egyptian version of Barack Obama or Sarah Palin is a panacea. I do think that we shouldn't revisit the early occupational mistakes in Iraq, where the Sunnis were excluded from the nascent government and civil service. From my perspective, Bush did not sufficiently promote one of the key principles of our democratic republic: the guarantee of individual/minority rights. We know what has happened to the small population of Iraqi Christians following a government largely drawn, not between secular parties, but competing Muslim-dominated ones. One of the things that appealed to me about the Green Revolution was the fact it seemed to imply a rejection of a theocratic dictatorship. But I don't think we need to push our style of government on Egyptians. I believe it is in the best interests of Egypt's future that it provides greater economic and political freedom, guarantees equal opportunity to political, social or business leadership, maintains the secular nature of its government, and guarantees the civil rights of its minorities.

Education Potpourri

I was watching a spot on Bill O'Reilly's show earlier this week when he brought up in a segment with two Fox News contributors the Amy Chua kerfuffle (i.e., why Asian mothers are superior: Amy explains that the hard-earned academic accomplishments in American schools by Asian immigrants and other Asian Americans is culturally based, including an almost fanatical obsession with their child's academic success, including time spent outside of school and at home). Of course, Bill O'Reilly is an "expert" because in his prior career, he used to be a teacher, quickly dismissed Amy Chua's analysis (he claimed that all kids needed these days is a little more discipline) and suggested that Amy Chua did a bad job as a mother, all but an abusive parent cheating her kids out of their childhood. See if you can follow this, Mr. Bill: whereas one should not stereotype people, the fact is that Asian students face the same teachers, resources, classroom constraints, etc., at school. What's fundamentally different is the level of parental involvement, not genetic superiority. Passing judgment from your own culturally-driven experience to Amy Chua's valid personal experience is grossly unfair.

George Will has penned an interesting column: "States can handle school reform". There are a couple of basic points that Will is trying to get across: first, schools are administered at the local/state level, and conservatives would rather leave decisions closer to the place of the education experience through the federalist concept of our state and national government. Second, improvements in education have a direct relationship to increases in GDP. He points out some of the same points I've raised, e.g., class size doesn't account for the observed differences in academic performance because Asian classes are often up to 50% larger and yet the students still outperform American students.

Finally, ABC-TV provided a segment on an Ohio woman whom lied about where she lived so she could send her kids to a better public school. If I was on that jury: NOT GUILTY. God bless the mother whom so loves her kids that she is willing to do almost anything to give them the opportunities she probably never had. WE NEED COMPETITION IN EDUCATION.



Political Humor

This just in: A little while ago the Illinois Supreme Court ruled that Rahm Emanuel can run for mayor of Chicago. The law in Chicago is very clear: Dead people can vote and live people can run. - Jay Leno

[That's right: the dead members of the Illinois State Supreme Court ruled in favor of Rahm Emanuel...]

Someone hacked the account of French President Nicolas Sarkozy. Or not really hacked. Someone asked for his password and he surrendered it. - Jimmy Kimmel

[Hackers broke into the Facebook account of French President Nicolas Sarkozy and posted a message that he will not run again next year. The hackers didn't specify how they managed to get in, but rumor has it that Sarkozy's password was WHITEFLAG.]

Musical Interlude: One-Hit Wonders/Instrumentals

A-ha, "Take on Me"

Miscellany: 1/27/11

Quote of the Day

What is now proved was once only imagined.
William Blake

State Bankruptcy to Shed Pension Deals and Other Debts? Thumbs DOWN!

Any regular reader of this blog knows I am not a fan of union leadership; we generally recognize that corrupt deal making of Democratic politicians generally results in a bad deal for the citizens: as Dennis Byrne points out in his current post "The Worst is Yet to Come in Illinois: "Compare that with Illinois, where state and local officers have stood weasel tall in controlling labor costs - handing out job guarantees (Gov. Quinn) and signing 10-year contracts (Mayor Richard M. Daley)." Byrne then adds: "Nationally, public pensions are facing a collective deficit of more than $3 trillion."

Some Republican leaders, notably former Florida Governor Jeb Bush and former Speaker Newt Gingrich,  argue that state bankruptcy, just like local/county bankruptcies are handled, would avert  what many see as almost inevitable federal bailouts of Democratic-controlled  and mismanaged states of California, Illinois and New York--and allow states to break out of bad contracts (such as Quinn's and Daley's unconscionable deals). The co-authors then describe some procedural steps to enable the bankruptcy process but then give probably the best reason behind the option: knowing that the courts have the right to set the collective agreements aside gives the states leverage to force unions back to the bargaining table to renegotiate.

House Majority Leader Eric Cantor quickly dashed water on the idea, but columnist James Pethokoukis immediately read this as a sellout to Wall Street (which would stand to lose say, if  state bondholders found themselves ripped off for pennies on the dollar, like Obama's corrupt auto company bankruptcy dealings).

No, I don't think we have to resort to yet another conspiracy theory. The US Constitution (Article 1 Section 10) says "No State shall...make any...Law impairing the Obligation of Contracts." Besides, the ability to do bankruptcy may actually result in perverse circumstances. Think of how Barack Obama, who will now preside over the third consecutive $1.3T or more budget deficit this coming September, voted against raising the debt ceiling when the national debt was half of its current size; now as President, he has members of his Administration crying Chicken Little. What restraint does a Democratic governor have to keep the budget in balance, to demand painful concessions from the unions? Why not let the federal judge take the heat? In short, moral hazards. If you think you've seen this movie before, you have, e.g., the S&L crisis and, of course, the real estate bubble. If the government was going to guarantee depositors, this allowed the S&L's to take on riskier loans; if the bank could pass mortgage notes with little collateral to the GSE's, which in turn had the implicit backing of the US Treasury (and, of course, the American citizen), the bank was really reaping the short-term rewards for doing the deal but left the American taxpayer holding the risk and losses...

No, the states have a statutory requirement to balance their books already. Maybe as citizens see their state services shrink while taxes go up, they'll think twice about electing spendthrift governors and state legislators in the future...

Even the Liberals Progressives Are Beginning to Catch On...

I just wanted to highlight a couple of posts where both authors seem to wax enthusiasm over Obama's "leadership" and "intelligence" since taking over, fully buying into the fiction that Obama found himself in over his head with an economic tsunami. I do not accept, for instance, that an earlier bankruptcy and reorganization for GM and Chrysler would have caused  any more problems than the Obama effort. I hardly think a President whom will likely run his third consecutive $1.3T or more deficit is smarter than the CEO's whom, unlike Ford's, ran their car companies into a ditch.

As I read Megan McArdle's  "The President as Micromanager", I know what my concept of a great manager is--and it's not Barack Obama. By any objective standard, Obama failed to lead; he basically let Harry Reid and Nancy Pelosi craft legislation on their own terms: he only outlined some general goals and then got out of the way and let the legislative heads go cook some nasty sausages, with fillers (e.g., earmarks, corrupt deals like the Cornhusker Kickback). Remember how he was against individual mandates for insurance while he was running for his party's nomination but threw individual liberty under the bus of last year's bill? This was NOT an accident; imagine the spin that the opposition could have made over some of the President's specific target goals getting voted down. But anyone who has ever had to impose discipline over undisciplined kids or students know: what happens when you take away freedoms they have taken for granted (e.g., curfew or detention)? So look at former Speaker Pelosi, absolutely furious that Obama cut a deal extending all the Bush tax cuts for 2 years in the lame duck session; she was so angry, she didn't even attend the signing ceremony. And, most currently, Harry Reid is sniping at Obama's promise to veto bills with earmarks; never mind a $14T debt: he doesn't like anyone infringing on his divine right to insert Nevada goodies into bills.

Megan McArdle's analysis, comparing Obama to a CEO whom is heading a ship that everyone knows is sinking but decides to put his best foot forward, brought to mind the Clayton Williams 1990 campaign for Texas Governor. Williams was a wildcatter and businessman with no prior political experience and had a certain good-old-boy charisma that connected with voters and he blew past his competition and had a 20-pt. lead over Democrat Ann Richards. Caught in a sudden rainstorm that briefly delayed his schedule, Williams said he would try to make the best of the inconvenience, "joking" that if you know you're going to be raped no matter what, you might as well sit back and enjoy the experience. It would be difficult to think of any reasonable person joking about rape--not to mention the fact he was running against a woman. Richards was able to come from behind and narrowly defeated him. (To a certain extent, Clayton Williams was much like Barack Obama and Sarah Palin in being a political novice (on a statewide basis) with plenty of charm and charisma, a breath of fresh air from business as usual--but sometimes one makes mistakes or lapses in judgment that experienced politicians would almost never make.)

McArdle then comments:

[Obama] understands the broad parameters within which the fixes will be carried out. But he can't make Congress do it before there's an actual crisis. And saying all of this is all too likely to trigger the crisis--a crisis he'd much rather would happen during someone else's presidency. So he tells us what we want to hear: that we need to find a way to fix Social Security without, y'know, changing it in any way. And will you look at those green jobs! I think we're going to have a bumper crop!

I definitely disagree. After all, tax cutter President Ronald Reagan, with an opposition Congress, did agree to an increase in payroll taxes--before the 1984 election--to fix social security almost 30 years ago. If there was ever a time Obama could have fixed social security on his terms, it was with a super-majority in both houses of Congress.  After all, Obama sold the health care legislation based on a few million uninsured--whom are not poor (because they would qualify for an existing program Medicaid). Many of those are uninsured because they prefer to pay a la carte; others lack it briefly between jobs (and have a COBRA option). But 60 million people collect social security--which is directly paid by the government.

But I do agree with Megan that the President is putting lipstick on a pig and punting the issue to another administration down the line.

Robert Samuelson (i.e., not economist Paul) does a good job of summarizing some inconvenient truths, not discussed in the State of the Union Address:

• "In fiscal 2010, the deficit -- the gap between government spending and revenues -- was $1.3 trillion. Of that, about $725 billion was a "structural" deficit, says Mark Zandi of Moody's Analytics. That is, it would exist even if the economy were at full employment (5.75 percent by Zandi's estimate)." Samuelson then notes this understates the problem because we are paying historically low interest rates and then will explode quickly.
• "The real issue isn't the deficit. It's the exploding spending on the elderly -- for Social Security, Medicare and Medicaid -- which automatically expands the size of government..." Samuelson implicitly rebukes Harry Reid and other "don't worry--be happy" Democrats insisting there is no real problem. There is no free lunch. Running deficits costs interest and raising taxes shrinks disposable income (with a negative effect on GDP)--never mind bailing out the elderly whom are getting paid more than they paid into the system.
• "The Republican Study Committee -- 176 House members -- recently proposed $2.5 trillion of cuts over a decade in non-defense, non-elderly programs...But this budget category covers only a sixth of federal spending." Obviously we have to broaden budget cuts to include defense and entitlements.
• "The elderly have "earned" their Social Security and Medicare by their lifelong payroll taxes, which were put aside for their retirement. Not so." No, the 15.3% (including employer contribution) is paid out to current beneficiaries, many of whom, living longer than expected, are receiving 2 to 3 times what they paid into the system. Any leftover goes into reserves, which are used to help finance the government deficit. As we baby boomers retire, it'll shrink the labor pool propping up entitlements. Oh, and the latest news from CBO? We expect a $600B deficit on social security spending over the coming decade if we don't fix the system.

"Obama's expedient evasion is the opposite of presidential leadership. It maximizes short-term approval ratings while running long-term risks. A loss of investor confidence could trigger a chaotic flight from Treasury bonds and the dollar. "  Amen

Oh, and the NY Times leaves us with this warning tonight:

S.& P. lowered its sovereign credit rating for Japan to AA- from AA. That is three levels below the highest possible rating, and S.& P.’s first downgrade of Japanese government debt since 2002. With the lower grade, Japan’s debt rating is now on par with China’s...S.& P.’s move came just weeks after both it and its rival ratings agency, Moody’s, cautioned that they might take a more negative stance on the United States. 

Political Humor

For the State of the Union address last night, Republicans and Democrats sat next to each other, instead of on opposite sides. The press called it "date night." How come they go on a date, but we're the ones who get screwed. - Jay Leno

[Well, the Democrats were all upset because they spent all that money, and the Republicans STILL said 'No'.]

An original:

• President Obama in the State of the Union Address mentioned our country is facing another Sputnik moment. He was, no doubt, making reference to the imminent retirement of our space shuttle program and Obama's cancellation of the Constellation program. [Maybe if Government Motors had been building spacecraft...] Now we'll be paying for Russian technology to transport our astronauts to outer space.  We're #1! We're #1!

Musical Interlude: One-Hit Wonders/Instrumental

Lawrence Welk, "Calcutta". My maternal grandfather was a big Lawrence Welk fan.

Miscellany: 1/26/11

Quote of the Day

The latter part of a wise person's life is occupied with curing the follies, prejudices and false opinions they contracted earlier.
Jonathan Swift

Obama Sets a New American Record Federal Deficit for FY 2011

After Obama's setting a new spending record with a $1.4T deficit in FY 2009, an improving economy slashed the deficit to $1.3T in FY 2010. The CBO now projects that the current fiscal year deficit, nearly half over, will approach $1.5T. Obama credits Harry Reid and Nancy Pelosi for their invaluable assistance in setting the new all-time record.

Sunday Talk Soup

I'm sure in his mind, David Gregory thinks he's being evenhanded. But when Gregory failed to get Senate Majority Leader Harry Reid recently even to acknowledge there were serious unfunded liabilities with social security (not to mention Medicare) with the largest generation in American history starting to retire, with the same retirement ages despite significantly longer lives and hence a larger number of social security payments and a smaller number of workers (roughly about 3) available to support each new retiree, Gregory simply doesn't have credibility.

Let's suppose, for a moment, that David Gregory did due diligence and actually read last August SSA trustee's summary report. He might have noticed the following:

The Disability Insurance (DI) Trust Fund, however, is now projected to become exhausted in 2018, two years earlier than in last year’s report. Thus, changes to improve the financial status of the DI program are needed soon.Social Security expenditures are expected to exceed tax receipts this year for the first time since 1983. The projected deficit of $41 billion this year (excluding interest income) is attributable to the recession and to an expected $25 billion downward adjustment to 2010 income that corrects for excess payroll tax revenue credited to the trust funds in earlier years. This deficit is expected to shrink substantially for 2011...After 2014 deficits are expected to grow rapidly as the baby boom generation’s retirement causes the number of beneficiaries to grow substantially more rapidly than the number of covered workers. The annual deficits will be made up by redeeming trust fund assets in amounts less than interest earnings through 2024, and then by redeeming trust fund assets until reserves are exhausted in 2037, at which point tax income would be sufficient to pay about 75 percent of scheduled benefits through 2084.

I'm not going to tell Republicans how to respond to these questions, but I would make the following points. First, the President's own bipartisan deficit reduction commission agreed on the necessity of social security reform and specifically introduced steps like increasing the retirement age and reforming benefit increases, passing their recommendations by a clear majority vote. Second, this is a retirement system, not a social welfare program paid out of general revenues. Participants have paid into the system under the expectation of drawing upon that income stream; you do not change the rules after the game has been played (e.g., means testing). Furthermore, I reject any attempt to institute a back-door class warfare general tax increase (i.e., lifting the income ceiling to pay for other beneficiaries). We must also insist on the concept of shared sacrifice, and we must not allow a morally hazardous situation whereby people who did not save for their retirement are rewarded and those who did are penalized. Third, we have an obligation to solve this problem now; it's morally unacceptable that we collect, say, way beyond what we put into the system on the backs of the younger generation, exhausting their own reserve. What Harry Reid and other liberal Democrats are doing is nothing short of a moral outrage by perpetuating a Ponzi scheme. We cannot shift our own bills onto the backs of future generations whom need to cover their own government obligations.

I Have a Beef With Taco Bell...

I really should have put this item in my nutrition blog, but I can't resist the opportunity to mock the situation: it really reflects the impact of Big Sis and predatory lawyers, which are a drag on our economy.

Most informed consumers know how to read product names and labels. In particular, if I'm looking to purchase wheat bread, I know there are all sorts of label gimmicks. I know to look to check for "100% whole wheat bread", with the first ingredient listed as whole wheat flour. I don't fall for "whole wheat bread" or "made with 100% whole wheat", either of which implies a blend of flours, including (less nutritious) enriched flours ("whole wheat" might reflect a blend that is mostly whole wheat). (Most wheat products are based on the endosperm, not the nutritious bran or germ.) Of course, let us read a typically readable FDA source:

Does the term "whole grain" mean the same as "100 percent whole grain"? If a product is labeled as "whole wheat bagel" or "whole wheat pizza," how much whole wheat should it contain? What is graham flour?

FDA has not defined any claims concerning the grain content of foods. However, the agency has established standards of identity for various types of cereal flours and related products in 21 CFR Part 137, including a standard of identity for "whole wheat flour" (§ 137.200) and "whole durum flour" (§ 137.225). Graham flour is an alternative name for whole wheat flour (§ 137.200). Depending on the context in which a "whole grain" statement appears on the label, it could be construed as meaning that the product is "100 percent whole grain." We recommend that products labeled with "100 percent whole grain" not contain grain ingredients other than those the agency considers to be whole grains. Consumers should be able to look at the ingredient statement to determine whether the predominant or first ingredient listed is a whole grain. We note that wheat flour should not be labeled as a whole grain flour because wheat flour is a synonym of flour (§ 137.105), and thus, the bran and germ have been removed. However, whole wheat flour (§ 137.200) should be considered a whole grain flour because it contains all the parts of the grain, i.e., the bran, endosperm, and germ. We recommend that pizza that is labeled "whole grain " or "whole wheat" only be labeled as such when the flour ingredient in the crust is made entirely from whole grain flours or whole wheat flour, respectively. Similarly, we recommend that bagels, labeled as "whole grain " or "whole wheat" only be labeled as such when bagels are made entirely from whole grain flours or whole wheat flour, respectively.

Let me translate from legalese: The FDA standard for whole grain refers to the ingredient itself, not the finished product. It cautions the consumer reading the ingredient list that the ingredient "wheat flour" does not imply "whole wheat flour". Products labeled "100% whole wheat" implies the flour mix is exclusively whole wheat. It recommends, but does not mandate, that vendors not label their product "whole wheat" unless the underlying flour content is 100% whole wheat. In my experience, vendors will always label the product "100% whole wheat" if it's not a flour blend, and if an item is described simply as "whole wheat" or "made with whole wheat", I'll check the ingredient panel for a second flour not including the term "whole".

There's a reason I've been going through whole grain explanation: a similar situation exists for discussing meat products. Whether we are talking about hot dogs, mystery meatloaf at school or bargain meat patties at a supermarket, we are well aware they can include comparably inexpensive (high-carb, e.g., grain products) fillers, (egg) binders, various additives, flavor enhancers, mechanically deboned meats, and/or (non-meat protein) extenders. (If you have a nutrition label, it's fairly easy to tell: meat has no appreciable carbohydrate grams.) In a manner analogous to whole grain bakers, McDonald's particularly emphasizes its hamburgers are 100% beef (no fillers, extenders or additives).

A consumer rights class action suit was filed last week by by the Montgomery law firm Beasley, Allen, Crow, Methvin, Portis & Miles on behalf of Taco Bell customer Amanda Obney, claiming that the taco filling contains only 35% beef, the rest being fillers and extenders. The suit is not asking for damages, but insists on corrective advertising, claiming that Taco Bell's beef taco don't meet minimum USDA standards for being called "beef" and Taco Bell's lower cost filling in effect confuses customers in an apples-and-oranges cost comparison with other vendors selling "real" beef tacos. [According to the USDA food standards and labeling policy book, beef taco filling must be at least 40% fresh beef.]

Taco Bell responded strongly yesterday, insisting that its recipe consists of 88% of pure beef, with remaining ingredients being a mixture of water, spices, and only 3 to 5% fillers (oats, starches, sugar, etc.) It specifically refutes the allegation of extenders.

I haven't seen a breakdown of the sampling done or the results, but there is a nutrition label using the label "taco meat filling", with beef being listed as the first ingredient. (It is odd they label the mixture "meat" vs. "beef"...) I don't see any obvious extender, e.g., soy flour or concentrate. The soy ingredients I see are probably emulsifiers or binders. But given the fact that the label's leading ingredient is beef (unless test results show otherwise), I'm fine with Taco Bell labeling its taco as 'beef' or 'made with beef'. Of course, Taco Bell has been tweaking its humdrum hamburger rivals for some time. It might be fun for Wendy's to reprise the Clara Peller "Where's the beef?" ad at Taco Bell (or perhaps Sherlock Holmes walking past the Taco Bell on the way to Wendy's)...




Political Humor

President Obama made his annual State of the Union address tonight from Washington, D.C. It was on all the channels. One of the shows they pre-empted was an hour of "America's Biggest Loser," which means all those fat people exercised this week for no reason at all. - Jimmy Kimmel

[No. It's just the loser of the mid-term elections was giving a speech on TV... He managed to shed 63 Democrats, and nearly two trillion British pounds in additions to the national debt...]

Despite cutting half of the city’s police force, the mayor of Camden, New Jersey, says the city’s crime statistics will not be affected. When asked how that’s possible, he cited the new law that makes stabbing a misdemeanor. - Conan O'Brien

[The mayor went on to explain one of the officers laid off was the department's statistician.]

Musical Interlude: One-Hit Wonders/Instrumentals. I've been referencing a number of website compilations of cited categories (e.g., Tunecaster and Lyrics on Demand). Note that I occasionally quibble with categories. For example, most people remember Rupert Holmes' signature song "Escape/The Pina Colada Song", but I preferred his follow-up single, the jealous/slightly paranoid "Him".

Rupert Holmes, "Escape/The Pina Colada Song"



Rupert Holmes, "Him"

Miscellany: 1/25/11

Quote of the Day

The nine most terrifying words in the English language are, 'I'm from the government and I'm here to help.'
Ronald Reagan

The State of the Union Address: A Critique

The first thing that struck me was the muted tone of and reaction to the speech; the speech fell flat. You did get the obligatory standing ovation to the obligatory reference of the sacrifice of our troops overseas. The Democrats did whoop it up when it came to hailing the new health care entitlement.

The President clearly is trying to set up the Republicans to assume a co-equal share of the responsibility, even though the Republicans only control the House. He didn't really signal any flexibility; for example, the only flexibility he shows on health care is the concept of medical malpractice reform. In fact, he tossed out the same bone last year. Instead, he's still selling things like guaranteed acceptance and putting adult children on household policies; the latter is going to push up policy costs assuming adult children use medical services. It is simply better to isolate high-cost patients needing subsidized care into high risk pools; you cannot force a business to service money-losing customers from day 1: it's unconstitutional. The best way to spread risk across the population is through some universal (e.g., national sales) tax or maybe a tax on health care charges/insurance premiums.

He put in several plugs for his initiatives--making much ado, for instance, over the repeal of don't ask, don't tell as allowing gays to serve (but, in fact, DADT did allow gays to serve); his stimulus spending for solar rooftop tiles (but not the fact a Massachusetts solar company is shifting its panel manufacturing to China); his nationalization of student loans (while ignoring, like federal subsidies exacerbated the housing bubble, it only makes the taxpayer vulnerable to pricey college loan defaults in an industry in which it has no distinctive competencies); his pushing-on-a-string consumer protection financial deregulation, etc. He once again vowed not to make the Bush tax cuts permanent for high-income taxpayers. He's still pushing his high-speed rail initiative as if the business case was self-evident (which it's not). He is still in a state of denial about our economy's vulnerability to oil supply shock and an overemphasis on consumption (both of which are exacerbating our trade imbalance and currency security); in fact, he explicitly linked eliminating subsidies for oil to green energy subsidies. (Let me be clear: cut subsidies, but use the savings to reduce the debt.)

I do not like the President's metaphor of the current economic milieu being our Sputnik moment: we need to respond to the challenge of other nations' exports of manufactured items, to our middling educational achievement scores, etc. First of all, the Americans were not really caught flat-footed or by surprise; America started its own ICBM program in 1945, and in 1955 both the US and USSR, within days of each other, announced goals of launching a satellite into space by 1958. The USSR did launch its Sputnik I in October 1957, and the US followed with Explorer 1 in January 1958. (However, it should be noted that President Eisenhower, worried about international reactions to an American satellite passing over USSR air space or how the satellite was launched into space, passed on an opportunity to put a satellite in orbit in 1956. I could very easily see a President Obama back then, given his obsession with diplomatic standing, echoing the same concerns.) The ARPA/NASA response, with separate missions, was already well under way before President Kennedy's iconic goal to land a man on the man.

But economic challenges to America had been made far before the rise of China and India; for instance, Germany (with 82 million people, i.e., with less than a third of America's population) exports more. It's not just a matter of income levels; gross per capita income of multiple European nations exceeds America's. When I was earning my graduate business degrees in the 1980's, a number of American students were learning Japanese, as companies from east Asia launched formidable challenges in automobiles and electronics; at the time, W. Edwards Deming's quality control ideas were readily implemented by Japanese challengers. We only need to change the names of the parties; China and India's scientists and engineers are able to compete very efficiently given cheap computer hardware and the Internet.

One of the reasons I don't like the Sputnik example is that I think Obama is using it to justify progressive interventions in the free market. In fact, what is impacting company investment in American factories and jobs is a tax structure which is uncompetitive and high regulations and mandates. Now I give Obama credit for addressing lower business tax rates and certain regulation overkill--specifically the $600 health care expenditure paperwork required by the new health care bill. But notice how there was really nothing new in anything he said here--and he qualified everything. So he's willing to consider lowering the corporate tax rate--but really only in the sense he makes up for the loss of income through the elimination of various deductions or exceptions. This, of course, totally ignores the fact that lower tax rates stimulate additional economic activity.

HALF-MEASURES, HALF-MEASURES, HALF-MEASURES: I predicted it. He paid lip service to the deficit--but not REAL cuts: only limits like a temporary freeze in pay or expenditure levels. Remember how many times he's dismissed earmarks as simply a fraction of a percent in spending? But he raised the point tonight--knowing full well that the Republicans in each house already ruled out earmarks. He's willing to discuss changes in health care--but ONLY if they are consistent with his goals of expanding coverage or improving quality. He tried to sell changes for hundreds of billions over a decade--knowing full well that amounts to single-digit percentages of his $1.4-plus trillion deficits PER YEAR. He briefly mentioned social security--but made it clear that partial privatization of employee contributions was NOT an option. He's for cutting deficits--but not on the backs of people whom benefit from government programs... He says he objects to some (unidentified) conclusions from the bipartisan deficit cut commission, but barely touches on the fact that nearly half the federal expenditures are entitlements like Medicare and social security. He talks about FREEZING domestic programs and CUTS of defense spending.

He just doesn't understand how his economic goals or policies are intrinsically inconsistent: he wants the economy to produce more things--but he spent time talking about the need to hire more math, science, technology and engineering teachers: not nearly as much time on increasing the pipeline and production of professional scientists and engineers. He talks about the middling performance of students, but then rallies the Congress to cheer for the sake of all those "underpaid" ineffective teachers...

He did push some themes I liked: streamlining federal agencies; tax simplification; more trade deals; legal immigration reform (foreign college students); regulatory reform; malpractice reform; etc.

Tough Questions for a Libertarian-Conservative

If a principled libertarian took a look at my posts, he or she would quickly find problems with a number of my opinions--for example, my pro-life and anti-drug positions. Take, for instance, the question of drug legalization. Libertarians argue the classification of drugs is arbitrary, the black market can be dangerous and expensive, and it creates a vicious circle of crime as people look to finance illegal goods. There are a number of things I would say in response. For one thing, drug transactions are subject to supply and demand: a high price has an effect on demand. Second, there will always be transactions outside a legal exchange (e.g., participants may want to purchase stronger stuff, without any taxes or anonymously). Third, it is difficult to assess costs and risks, e.g., effects on the family and public safety, susceptibility to addiction, lost productivity, physiological changes in the brain, treatment facilities, etc. I've never used myself; I'm not attempting to pass judgment on those whom experiment, and I think other people have a right to live their own lives, and make their own mistakes (so long as they acknowledge responsibility for their actions). I'm more concerned about the pusher, whom I hold at least partially responsible for what his customers do under the influence or what happens to them.

Abortion is a very tough question; in fact, libertarian Ron Paul, a physician, opposes abortion. A baby's life begins at conception; he or she is biologically distinct from the mother. I would hope that the mother makes the correct moral decision. To a certain sense, I would have to ask myself--what if I met a mother beating her 6-month child... If I cannot speak out for a child's life, who will speak for my own?

Abortionist Kermit Gosnell was arrested last week for the deaths of an abortion patient and 7 "born alive" infants whom were killed by scissors. President Barack Obama, who stonewalled a born-alive infant protection act as a state senator, used the anniversary of Roe v Wade to reaffirm his support for a woman's legal right to have her child aborted. What should have been ideally a rare occurrence by some accounts has led to 50 million deaths involving overall nearly one of every 3 American women.

Political Humor

Police in Austria are looking for a bank robber who wears a Barack Obama mask while committing robberies. He started out with a Sarah Palin mask, but no one took him seriously. - Jay Leno

[That's because he had to wait in line to get to the teller's window, and he gave up two-thirds of the way through the line...]

A few originals:

• Recently convicted 93-year-old John "Sonny" Franzese, an alleged mobster, had been difficult to arrest. Detectives had tailed him to an ice cream parlor in the middle of winter. He had placed his coat on a chair and headed for the restroom. Detectives became suspicious when he never returned to his seat. You would have figured that they had learned their lesson after he had earlier gone into that hotel room with a 20-year-old hooker, whom left 4 hours later...
• Majority Leader Eric Cantor was disappointed that Minority Leader Nancy Pelosi chose another Republican (Rep. Bartlett (R-MD)) to go to the State of the Union address. Barney Frank (D-MA) subsequently found Eric another nice Jewish man to go with: Steve Cohen (D-TN).

Musical Interlude: One-Hit Wonders/Instrumentals

Herb Alpert & the Tijuana Brass, "A Taste of Honey". Does it get any better than this?

Miscellany: 1/24/11

Quote of the Day

The hero is the one who kindles a great light in the world, who sets up blazing torches in the dark streets of life for men to see by. The saint is the man who walks through the dark paths of the world, himself a light.
Felix Adler

Our Thoughts and Prayers With the Victims of Terrorist Attack in Russia

At least 35 died and more than 150 wounded (including a number of Western European visitors) at Moscow's Domodedovo airport via a suicide bomber; it is expected that an Islamic radical from the North Caucasus region is responsible. We express our solitary with the Russian people and visitors in this tragic event and wish the Russian government Godspeed in finding the source group responsible and bringing them to justice.

Jack LaLanne: RIP

Perhaps young people today know him from juicer promotions, but Jack LaLanne was the exercise guru when I was growing up, before Jane Fonda created the exercise video cassette franchise.



The USPS and Politics

Over the weekend one of my favorite films was playing on cable: "You've Got Mail", the last film in the Tom Hanks/Meg Ryan romantic comedy trilogy and a contemporary remake of the 1940 film "The Shop Around the Corner". Joe Fox, a mega-bookstore businessman, unknowingly becomes an anonymous email penpal with Kathleen Kelly, a bleeding-heart liberal, small, independent bookstore owner. Kathleen's bookshop faces stiff new competition by Joe, whom is opening up a Fox Books superstore around the corner. Kathleen mounts an anti-Walmart style campaign against Fox, which fails, and Kathleen eventually goes out of business. The battle has left the two people embittered at each other. I won't reveal the ending here (Meg's facial expressions alone are worth the price of the movie). Already time has moved on, with dial-up Internet service an anachronism and Borders itself the subject of bankruptcy rumors.

The post office itself has largely become an anachronism since the early days of the republic (specifically mentioned in the US Constitution itself) and has repeatedly run at deficits, with sharply reduced first-class mail as customers shift to the Internet to email (versus write letters), receive and pay bills, shop, etc. In particular, the Post Office lost a record $8.5B last year. It has attempted to pare costs; it has reduced headcount by a third over the past decade (mostly by attrition). In fact, the USPS loses money at over half of its 32,000 post offices. But, unbelievably, there's a Congressional law saying that management can't close a branch simply because it's losing money. (Should we be surprised? After all, the military has sometimes been blocked from the closing of a domestic military base because of the political pull of  the base's Congressman or Senators. And, of course, there are military goods or supplies manufactured by a legislator's home territory business that are imposed on the military, requested or not (which is forced to manage the inventory of unrequested equipment and supplies.)) Senator Carper (D-DE) has proposed striking the language in question, and I strongly support this. (I have not read the bill language, but it's possible the intent of Congress was to eliminate a situation where a postmaster could simply purge all post offices in rural areas. If this is the intent, one way of approaching is to define a consistent, minimal standard of service, e.g., some level of regular delivery service is available within a reasonable distance for pickup. Thus, you might be able to consolidate contiguous rural post offices, but not eliminate all of them (assuming they can't be serviced by nearby urban/suburban areas).

Another hoop the Postmaster must jump through is the independent Postal Regulatory Commission which reports to Congress. For instance, Congressmen want to ensure that the Postmaster isn't jumping at any minor reason (even a lease expiration) to justify closing a branch.

In any event, the Post Office is in the middle of closing 500 offices (since late last year) and has plans to close another 2000 offices. This concerns Senator Susan Collins (R-ME); she believes that the Postmaster should concentrate by having mail personnel pay roughly the same amount into benefits (including health care) as other groups of federal employees, before one starts shutting down services. (I think there have been some labor givebacks; I think progress is relative to the timing of labor agreements.)

The bottom line, from my perspective, is to delegate authority to management (i.e., the Postmaster)--in terms of personnel and operations. Otherwise, if the Congress micromanages the Postmaster, the Congress must accept full responsibility for the deficit. Yes, you have to jawbone compensation issues to get unfunded mandates under control. Yes, with declining first-class mail, you need to consolidate branches. Review the Postmaster's performance? Of course.

I Was Wrong: Obama DOESN'T Know Symbolism
Anti-American Song at White House State Dinner?

My dad is a Korean War vet, so I'm sure he won't appreciate the following news item:



Political Humor

New research has found that Angelfish can distinguish between large and small and can count to three. So Angelfish are ahead of American students in math and science. - Jay Leno

[Well, Jay, it's all the time fish spend in schools...]

And now--what you won't see tomorrow night during is former Speaker Nancy Pelosi leading the Congress and home audience in calisthenics during the State of the Union address, so for the benefit of those dieters whom were counting on Pelosi-zing tomorrow night, I offer the following retrospective:



Musical Interlude: One-Hit Wonders/Instrumentals

Tommy Tutone, "867-5309"

Miscellany: 1/23/11

Quote of the Day

You can't choose the ways in which you'll be tested.
Robert J. Sawyer

The State Pension Crisis: Some Comments                    

Whenever I get my annual social security statement, there is one year that sticks out like a sore thumb: the year I was a visiting professor at Illinois State. Illinois is one of those states where teachers are not in social security. Others include Texas and California. (I think the NY Times author is wrong, at least for university professors, because FICA was deducted from my UTEP paychecks.) About 7 other states (AK, CO, MA, NV, OH, LA, ME) include (or have included) public employees of all types. The state holdouts from social security insisted they could deliver earlier, better benefits with minimal (if any) contributions from employees because of superior investment returns. (In fact, state pension funds are like cookie jars for politicians whom should be on a fiscal diet, and pension funds are often the last item on the agenda to get funded.)

One study cited in the NYT piece points out the reason Maine's system has remained above water is because pension plan benefits are not portable and only 1 in 5 work long enough to qualify for pension. Social security, on the other hand, is a key cornerstone for today's mobile worker's portable retirement plan.

We can generally describe two types of pension plans (popularized, as was health insurance, as a workaround to wage controls during WWII): defined-benefit and defined-contribution. (There are also variations, including hybrid systems.) Defined-benefit programs (e.g., social security) generally guarantee payments after certain criteria are met (typically age and tenure of service), and underlying investments are managed or under the control of the employer. However, employers also assume the intrinsic risks (e.g., recessionary periods, retiree payout period and investment management). Since the 1980's, most US (and Western) employers have attempted to control those risks by initiating or transitioning to a defined-contribution system, where an employee has more responsibility and control over his (and relevant employer-match) contributions.

Unfortunately, few state governments have defied public unions (with the exception of only a few: Alaska, Michigan, and (non-state) DC) by following the lead of the private sector in controlling pension risk, hence keeping all the risk on state taxpayers: most, no doubt, on defined-contribution plans themselves. In California, two-thirds of voters want defined-contribution plans for their states; this cause was addressed by failed GOP nominee Meg Whitman. New Governor Jerry Brown, with teacher union support, has basically proposed a series of half-measures: raising the retirement age to 60 (only for new employees), upping employee contributions into the plan, minimizing end-of-career earnings gimmicks to pump up the annuity payout, and improving transparency of the system. In essence, the only thing Brown is doing is postponing the inevitable: you can put lipstick on a pig, but it's still a pig. Now by some sources, the average California state pension is $25K/year--this contrasts to the average $14K for social security as of the beginning of 2010. Yet a number of cities and states (e.g., Chicago, Boston, Philadelphia, Ohio, Illinois, and Connecticut) have plans that could be insolvent even before California's: by the end of this decade, if not years earlier.

A 2007 USA Today column provided some other thought-provoking statistics: the federal government's unfunded liability for military and civil servants was even larger than social security's $4.6T. The average civil servant in 2005 got  $17,640--over twice the average private sector pensioner at $7652. And what makes it worse is that public sector pensioners can retire much earlier (say, 56) than private sector ones.


Any faithful reader knows I'm fond of using Thomas Kuhn's concept of a paradigm shift; in essence, you have a conceptual model that becomes too cumbersome to accommodate observations (say, for instance, a theory that the earth is at the center of the universe). Ultimately a new simplifying theory replaces the cumbersome patchwork. I've particularly used this concept within the context of our convoluted tax and regulatory systems. I find it absolutely incredulous and arrogant that local, state, and federal governments, which exist at the expense of the private sector, are trying to patch  fundamentally broken pension system decades after the private sector in large part recognized that a defined-benefit system is unsustainable, think they can "fix" these chronically deficient systems, when they find themselves constantly unprepared to handle predictable recessionary periods--no rainy day funding. A private sector company would never be able to survive or attract capital with such large, unfunded liabilities and excessive costs... I repeat, as I have said before: it is time for public sector employees to share in the same risks and sacrifice as the rest of the economy.

Of course, the public sector pensioners have their predictable, self-serving defenders, e.g., suggesting only a minority of public servants reach the salary and pension levels making for sensational columns, government employees tend to be more educated, experienced or skilled than the overall labor force and hence deserve premium salaries or benefits, etc. I have personally witnessed people with private sector waiting months or even years to get into civil service; this is a classic symptom that the public sector labor market is inefficient.


WSJ: Colleges Academically Adrift? Vedder's Review... Thumbs UP!

For those not familiar with Richard Arum (NYU)and Josipa Roksa (UVA)'s important new book, Academically Adrift: Limited Learning on College Campuses, let me quote Richard Vedder's review from The Chronicle of Higher Education:

Arum and Roksa conclude:

• “gains in critical thinking, complex reasoning, and writing skills (i.e., general collegiate skills) are either exceedingly small or empirically non-existent for a large proportion of students”;
• 36 percent of students experienced no significant improvement in learning (as measured by the CLA) over four years of schooling;
• less than one-half of seniors had completed over 20 pages of writing for a course in the prior semester;
• total time spent in academic pursuits is 16 percent; students are academically engaged, typically, well under 30 hours per week;
• scholarship from earlier decades suggest there has been a sharp decline in both academic work effort and learning;
• “students…majoring in traditional liberal-arts fields…demonstrated significantly higher gains in critical thinking, complex reasoning and writing skills over time than students in other fields of study. Students majoring in business, education, social work , and communications had the lowest measurable gains”;
• 35 percent of the students sampled spent five hours or less a week studying alone; the average for all students was under 9 hours.

I wholeheartedly concur with Vedder's salient concluding insights and questions:

We are sending too many kids to school to learn too little to get jobs for which often the little that they do learn is not even necessary. Ultimately, the public policy question is why the financially strapped federal government provides billions of dollars to subsidize [increasingly expensive] “higher education?” Why do states subsidize the institutions that are responsible for this decline, rather than directly supporting a modest number of serious, hard-working and financially needy students? Why is higher education so dysfunctional, and becoming more so daily? When is the bubble going to burst?

I will point out that I've raised what I consider to be an unsustainable college cost bubble on prior occasions (e.g., last August). In part, it's been sustained by government-guaranteed student loans; I was highly critical of the self-serving, empire-building rationale to nationalize student education loans. I am amused to think what Thomas Jefferson, who fought establishment of a national bank, would think of what's become of the party he founded... You have to wonder about the gullibility of voters whom, after the Democrats allowed two government-sponsored entities (Fannie Mae and Freddie Mac) to become a duopoly exposing the American taxpayers to nearly half of the mortgage market during the housing bubble, thought it was a "good idea" to go after student loans. After all, if low-collateral, lower-income people were able to get money needed to bid up the price of a house, which exacerbated the bubble, what do you think happens when unsuitable students are guaranteed funding for college and then drop out, never complete their degree or get a watered-down degree?





Political Humor

A periodic reminder that you can find summaries of the latest late-night jokes at websites like newsmax and, in many cases, relevant copies or vignettes are available from the show's website, e.g., David Letterman's Top 10.

The prosecutors say that the highest-level mobster [of the 127 arrested in 3 states] arrested is known as “The Old Man.” I think they call him that because he makes an offer he can’t remember. - Craig Ferguson

[What else do you think the younger generation refers to as the head of a crime family? Kids these days have no respect...]

The government may force alcohol companies to put nutrition labels on every bottle. If you can still read the labels, the alcohol isn’t bad for you yet. - Jimmy Fallon

[If you think that's bad, just wait bartenders need to get customer sign-offs  for their mixed drinks...That looks like a doctor's signature to me...]

Musical Interlude: One-Hit Wonders/Instrumentals

The Surfaris, "Wipe Out"