Quote of the Day
Faith that the thing can be done is essential to any great achievement.
Thomas N. Carruther
S&P Puts the Congress and President on Notice:
GET YOUR FINANCIAL HOUSE IN ORDER OR ELSE!
If an agreement is not reached and meaningful implementation [of a plan reducing deficits and the national debt] does not begin by [2013], this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer ‘AAA’ sovereigns.
I had to hold my tongue while Treasury Secretary Tim Geithner during Sunday talk soup said that the U.S. shouldn’t be borrowing “from the Chinese” and other foreign investors to finance tax cuts for the wealthiest Americans. This is the same old same old long-discredited Obama class warfare argument. Money is fungible; he's arguing that the Chinese and other foreign investors shouldn't finance the $80B in incremental arithmetic effect difference from Clinton-era tax rates (39.6% vs. 35%) in terms of a $1.6T deficit. (Now we know there's an economic effect to increasing tax rates which will offset any increase over tax rates, plus I think when you are talking tax rates that have been in effect for some 8 years or so, suggesting maintaining the status quo as "unpaid for tax cuts" lacks any reasonable credibility or context.) But we are talking about 5% of the deficit; how in the world can Geithner talk about foreigners paying for the 5% of the deficit involving the Bush tax cuts for higher income taxpayers (whom pay twice their share of national income in taxes) but not the 15% of the deficit involving the Bush tax cut from lower-earning taxpayers? It's totally arbitrary.
The point is--even if you taxed away ALL of the income of upper-income taxpayers (most states, counties and/or cities also tax income, there are property and other taxes, etc.), you still wouldn't pay off these massive deficits--but more importantly, we still don't have legitimate entitlement reforms and the health care reform is based on smoke-and-mirror accounting. We have to be serious about reining in spending--and the fact of the matter is the CBO pointed out the recent budget agreement amounted to literally less than $1B in real cuts. And we're not even looking at other financial risks caused by implicit government guarantees:
The point is--even if you taxed away ALL of the income of upper-income taxpayers (most states, counties and/or cities also tax income, there are property and other taxes, etc.), you still wouldn't pay off these massive deficits--but more importantly, we still don't have legitimate entitlement reforms and the health care reform is based on smoke-and-mirror accounting. We have to be serious about reining in spending--and the fact of the matter is the CBO pointed out the recent budget agreement amounted to literally less than $1B in real cuts. And we're not even looking at other financial risks caused by implicit government guarantees:
Additional fiscal risks we see for the U.S. include the potential for further extraordinary official assistance to large players in the U.S. financial or other sectors, along with outlays related to various federal credit programs. We estimate that it could cost the U.S. government as much as 3.5% of GDP to appropriately capitalize and relaunch Fannie Mae and Freddie Mac, two financial institutions now under federal control, in addition to the 1% of GDP already invested (see "U.S. Government Cost To Resolve And Relaunch Fannie Mae And Freddie Mac Could Approach $700 Billion," Nov. 4, 2010, RatingsDirect). The potential for losses on federal direct and guaranteed loans (such as student loans) is another material fiscal risk, in our view.
Barack Obama is simply not credible. Even on a trivial point like defunding 4 unfilled czar positions in the budget agreement, Obama just issued a signing statement essentially saying he believes this budget restriction infringes on his constitutional authority and hence he will ignore it. Not only does this, once again, reflect rank hypocrisy (i.e., he had criticized George W. Bush for the same type thing) (and we haven't mentioned his earlier vote as senator against raising the debt limit purely on political grounds), but it shows that the President cannot be trusted on a budget agreement involving less than $1B from a $1.6T deficit!
If I was elected President, I would make Paul Ryan's budget cuts look like they were graded on a curve. I would be the most unpopular President in the history of the country. How about firing 25% of all federal employees (including military personnel) and reforming federal pensions? How about shutting down at least 50% of military bases overseas? I would reduce the number of Cabinet positions to about a half dozen. I would transform Medicare and Medicaid into catastrophic health care programs, I would institute a significant national sales tax, and I would radically streamline federal regulations and federal tax levels. And I'm just getting started; I would set an American record for Presidential vetoes. (Of course, even my own mother wouldn't vote for me...)
If I was elected President, I would make Paul Ryan's budget cuts look like they were graded on a curve. I would be the most unpopular President in the history of the country. How about firing 25% of all federal employees (including military personnel) and reforming federal pensions? How about shutting down at least 50% of military bases overseas? I would reduce the number of Cabinet positions to about a half dozen. I would transform Medicare and Medicaid into catastrophic health care programs, I would institute a significant national sales tax, and I would radically streamline federal regulations and federal tax levels. And I'm just getting started; I would set an American record for Presidential vetoes. (Of course, even my own mother wouldn't vote for me...)
John Rich: "For the Kids": Thumbs UP!
I mentioned the hit single (which I purchased) in a prior post; John Rich recently posted this video featuring his charity single. Please consider giving via this iTunes link and/or John Rich's website. Aren't these kids BEAUTIFUL?
Political Potpourri
I haven't done this semi-regular feature in a while. What got me started on doing this today is that I heard Donald Trump in what seems to be a weekly ongoing spot on Fox News 'Fox & Friends' bashing Mitt Romney (one of my favored candidates). Mitt Romney is a big boy and can speak for himself, but I think some analysis is in order to away strip some of Trump's self-promoting hype, which I despise with a passion.
Trump's attacl, however, was not a new topic as this morning's New York Post had similar comments:
Well, Mitt Romney is a basically small-business guy, if you really think about it. He was a hedge fund. He was a funds guy. He walked away with some money from a very good company that he didn't create. He worked there. He didn't create it.
Let's provide some relative context here: Donald Trump's net worth is estimated at $2.7B. By 2007, Romney had between $190 to $250M in blind trusts; he reportedly put at least $40M into his 2008 run for the GOP nomination, but I haven't seen information on post-run fundraisers, book income or business income since the campaign. Small business guy? You don't make that kind of money running a dry cleaner (yeah, I know what you're thinking: no doubt Trump claims that George Jefferson was one of his Upper East Side tenants ...)
Romney was/is a management consultant and venture capitalist. Any MBA (myself included) knows the Boston Consulting Group's growth-share matrix (no doubt I've probably used terms like "cash cows" in my commentaries); Bain, a former BCG consultant, had started up his own consulting group and hired a young Mitt Romney (with CEO ambitions), among others. Bain and Romney raised $37M to start up a private equity investment concern, Bain Capital, which Romney ran. Trump is playing fast and loose with the facts; Bain Capital has had a hedge fund, which Romney wanted to drop after early losses. But Bain Capital focused on startups and leveraged buyouts, with a roster of clients like Staples, Domino's Pizza, Sealy, Sports Authority, and other industrial and medical concerns, with an impressive 113% annual internal rate of return on realized investments over 14 years. In 1991, he temporarily left Bain Capital to assume the reins of now financially failing Bain & Co., and turned around that operation as well.
Romney's wife Ann developed MS and found the family vacation home in Salt Lake City suburb, Park City, a therapeutic location. (At the ending stages of my academic career, I had an unsuccessful campus visit (job interview) with a Protestant college in Salt Lake City, which is a very interesting place, even for us non-Mormons. I loved the seagull sounds at crosswalks (yes, I know the story), and the city has a distinctive layout. I remember going through Park City, probably with a college contact showing me the area sights. On an aside, not sure what happened with the college; what I remember was that I was loaned a personal car during my stay, and the visit coordinator failed to show up at the hotel to take the keys and escort me to the airport. I left the keys with airline or airport personnel and later phoned the passive-aggressive visit coordinator with the details (he was in a state of denial about being late, implying he just missed me). [The original schedule was tight, I couldn't reach him by phone, and he was at least 15 minutes late and nowhere in sight.] I probably should have just taken a taxi for my own peace of mind, knowing the college would not reimburse me. It would not surprise me if the bungled car return resulted in the rejection of my candidacy.)
In any event, the 2002 Salt Lake City Winter Olympic Games was running almost $400M below revenue targets, and there was some discussion of scaling back the Games. Romney took over a failing project, on the world stage, and guided it to a $100M profit.
So, taking that into consideration, let's review the record. Both men have impressive educational credentials and have gone past their fathers' impressive professional accomplishments. But even though there is no doubt Donald has a higher net worth, I think his brand has been badly tarnished with prominent business bankruptcies (in particular, the casinos), and his wealth has been built primarily on real estate development: apartment suites, office buildings, golf courses, etc. After the recent real estate bubble crash, many homeowners are underwater on their mortgages, and I suspect there are a number of zombie banks out there. There is no doubt about the fact you can't manufacture prime real estate, and I don't doubt that Donald Trump has considerable negotiation skills to deal with anachronistic unions in heavily blue areas. But if you ask me who has proven broad-based management skills across a wide variety of companies that make and sell things or produce services, who has turned around failing enterprises, and who, if anyone, has not only proven public service administration knowledge and skills but the ability to reorganize an out-of-control, intractable federal government empire: Donald Trump--you're FIRED! Mitt Romney--you're HIRED!
On a side note, Donald, this thing about being Obama's worst nightmare: PLEASE... you are Obama's wet dream! Could Obama possibly dream of a better opponent to use for class warfare rhetoric than a billionaire whom runs hotels only the highest earning/net worth individuals can afford to stay at or golf courses where membership and green fees beyond the budgets of the average joe? From Obama's perspective, how could you choose a better symbol of the GOP being the party of limousine-riding, country club elitists than Donald Trump?
Trump, who is pathetically peddling red meat populist stands, including the birther nonsense and against the Chinese trade imbalance, is proudly pointing out one or 2 recent polls where he has taken up to an 11-point lead on Romney; let me say, first of all, Trump has a massive publicity advantage over the GOP field, much as Sarah Palin has had since the 2008 general election; but sooner or later, the honeymoon ends, and he's going to have to deal with opponents whom are more than willing to attack his multiple marriages, his past contributions to Democratic politicians, including "squeaky clean" Charlie Rangel, his lack of a cohesive political philosophy behind his populism, his credibility and judgment for going after Obama on the birther delusion, his obvious political opportunism, his inability to connect with Joe Six Pack, and his inexperience in the public sector. (If we have learned anything from the Bush and Obama Presidencies, it's the problems with a thin resume.) His red meat populism on not allowing nuclear Iran is hardly constructive and responsible; the last thing we need with a chronic deficit problem is somebody looking to put Bush/Obama foreign intervention policies on steroids...
He is also have a public spat with Karl Rove, whom as Bush's adviser, Trump argues, is responsible for the politics resulting in the election of the indisputably incompetent Barack Obama. Rove rightly points out that Trump, whom oddly enough seems to be digging himself further in the hole rather than admitting he was wrong or misled into resurrecting a long-debunked story or conspiracy (that even conspiracy-prone Glenn Beck disavows), is playing right into Obama's hands, by allowing him to continue to stereotype the conservatives/Tea Party type.
I myself have published criticisms of George W. Bush. A lot of it dealt with his standoffish relationship with Congress, a failure to keep spending in check, his Iraq decision opening the Pandora's box of sectarian conflict and management failures in dealing with post-invasion Iraq (despite his own criticisms of Clinton's nation building), his addition to unfunded liabilities of Medicare and failure to resolving the rapidly insolvent entitlement programs, his gut-check ("I am the decider") style of leadership and confusing stubbornness ("stay the course") with principle, his belated response to revising military strategy in Iraq, not to mention his abandonment of conservative principles during the economic tsunami (among other things). The problem is that Bush seemed to basically be sitting out the end of his Presidency even before the 2006 mid-terms, making little more than a half-hearted attempt to pass immigration reform (which ultimately failed as even Bush's base deserted him on the issue under the pressure of media conservatives).
Karl Rove won't say it (because clearly he has a vested interest in George W. Bush's legacy), but Trump's flippant response to serious issues (e.g., Iran's nuclear ambitions) is like Bush's "the Decider" on steroids. Trump has zero credibility on foreign policy (if anything, worse than Bush, whom as Texas governor at least had to deal with Mexico along its southwestern border). (I do grant that Romney does need to address the same issues in terms of military and foreign policy experience, although I think he approaches this issues with a few guiding principles and then hiring the right people to deliver the vision.) My personal hope is that Romney concludes, as I do, that we need to rightsize our military and diplomatic involvement; we can't afford to outspend the rest of the world on defense and diplomatic efforts.
Fukushima Nuclear Incident Update
IAEA notes:
- daily: There was some cursory discussion of the TEPCO 63-measure roadmap presented yesterday and briefly discussed in yesterday's post. There was discussion of white smoke on Saturday from reactors 2 through 4 and a short-circuit yesterday at the common use spent fuel pool. Zeolite is being used at the inlet screen pump for the first 3 reactors to control for contaminated water. Ongoing declining ambient radioactive levels continue; the only notable exceptions to LNT standards in food and drink are certain samples of shitake mushrooms. We see a continued increase of leafy vegetables and other products being allowed to resume distribution.
Atomic Power Review notes:
- afternoon: There were a few items of note. First, there is discussion of bids being received on certain work that would result in clearing the Daiichi site within 10-15 years. Second, the irresponsible Western press (what else is new?) is falsely trying to make the two-layer containment discussed in yesterday's post sound like TEPCO intends to bury the site... Finally, there is discussion of high radiation being noted by certain robots. The readings were not unexpected (given the long-expected fuel damage in the 3 reactors) or unprecedented in earlier nuclear incidents or accidents.
The Hiroshima Syndrome blogger notes in today's post that earlier Western news report reporting higher sea readings were from within inlet (with existing barriers), instead of open sea. TEPCO is estimating it will take up to 3 months to stop all the suspected leaks (from the reactor coolant loop) and up to 9 months to get the reactors in cold shutdown (with reactor 2 being considered the most time-consuming). He also notes maybe up to a half dozen of these portable heat exchange devices will be used for each of the three reactors to get them to cold shutdown temperatures. With respect to the hot spots indicated by the robots, he notes that robot functionality was limited in those areas and at some point workers will have to be used at relatively short intervals.
Political Humor
"This is the week that we celebrate America’s libraries by returning overdue books." - Craig Ferguson
[Well, I knew things would change when the GOP captured the House last fall. But recently President Obama got a visit from the new Librarian of Congress whom was there to collect an overdue book; Laura Bush was left standing on the front porch while the President got money for the fine.]
"Joe Biden apparently fell asleep during President Obama's speech on reducing national debt yesterday. Now Joe Biden can embarrass the President without even opening his mouth." –Jay Leno
[When Joe was a little boy, his mom used to read a story to him every night until he fell asleep. His very favorite story was about this man named Robin Hood whom would steal from the rich to give to the poor...]
Musical Interlude: My Favorite Groups
ABBA, "Angel Eyes". In my wildest dreams, Agnetha would sing this song about me. In real life, she has had a hard time coping with fame (unwanted attention, the loss of privacy, stalkers, etc.), a near fatal air flight that left her dreading to travel while with ABBA, broken trust and relationships, the loss of loved ones, etc. The last thing she needs is some groupie or guy trying to exploit her fame and fortune (the big money went to the two male songwriters, including her ex-husband). I have never been to Sweden myself (my dad was stationed in Europe while I was in fifth grade but we lived in France and visited a few contiguous countries). I don't know what she was like before becoming famous (she had already established a singing career before joining ABBA), but I'm willing to bet she's a worthy sweetheart. I wish her true forever love from the right man whom knows, loves and accepts her as a real person, not just because of her beauty, talent, fame or resources, and God abundantly blesses her, her pets and her beloved children and grandchildren.
