Going into the 2014 midterm elections, many Democratic Party strategists think a proposal to raise the federal minimum wage will provide a potent source of ammunition in campaigns against Republicans. The minimum wage, currently $7.25 an hour, was last raised in 2009, and President Obama has proposed that the wage should gradually increase to $10.10 an hour by 2015; in fact, if the minimum wage had simply been indexed to inflation since the late 1960s, then it would currently be just over ten dollars an hour. Among the electorate, the idea of raising the minimum wage enjoys broad--and bipartisan support. Many Republican lawmakers, however, claim that raising the federal minimum will hurt small businesses.
For those GOP politicians who resist raising the minimum wage, I have a question: You claim that cutting taxes on the wealthy--supply-side economics--makes fiscal sense. You claim that the benefits of allowing the wealthy to keep more of their own money will "trickle down" to the general population through, say, greater investment in productive activities--which leads, theoretically, to increased employment and a more vibrant economy overall. The metaphor frequently invoked to describe this situation is that "a rising tide lifts all boats."
So my question is this: Why does this boat-lifting rising tide come only from putting more money in the hands of those who already have significant fortunes? Wouldn't putting more cold hard cash in the pockets of those who have less similarly cause some minor flooding along the shores of the American economy?
Showing posts with label The Economy. Show all posts
Showing posts with label The Economy. Show all posts
Monday, December 30, 2013
Sunday, June 23, 2013
To Each According to What We Say They Deserve
Last week, Federal Reserve Chairman Ben Bernanke outlined the steps that the government would gradually--gradually, mind you--take in withdrawing economic stimulus measures that have been in place for the last four years or so. As the national economy improves, the Fed will "scale down gradually its monthly purchases of Treasury securities and mortgage-backed bonds beginning later this year and ending when the unemployment rate hits 7 percent." The central bank will also eventually begin raising interest rates, which currently hover around zero, in an attempt to ward off inflationary pressures. Shortly after Bernanke made this announcement, the Masters of the Universe on Wall Street flipped out and stocks took a nose-dive. I don't pretend to understand all the vagaries of high finance, but I do understand that, whenever the Fed Chairman raises interest rates--or even mentions raising interest rates at any time in the foreseeable future--stocks crash.
Now, just last year, the Republican nominee for President, Mitt Romney--whose picture could presumably grace a dictionary entry for "Wall Street"--got into a heap of trouble when he lambasted the 47% of Americans "who are dependent upon government": a group of people who would never vote for Romney because he would "never convince them that they should take personal responsibility and care for their lives.”
So what we learned last week is this: The same titans of finance who scream "Socialism!" when the government offers support so that poor people can do things like eat or avoid homelessness will also scream--in terror--if that same government threatens to withdraw support for programs that enable multi-millionaires to become billionaires.
And Republicans wonder why they can't win elections.
Now, just last year, the Republican nominee for President, Mitt Romney--whose picture could presumably grace a dictionary entry for "Wall Street"--got into a heap of trouble when he lambasted the 47% of Americans "who are dependent upon government": a group of people who would never vote for Romney because he would "never convince them that they should take personal responsibility and care for their lives.”
So what we learned last week is this: The same titans of finance who scream "Socialism!" when the government offers support so that poor people can do things like eat or avoid homelessness will also scream--in terror--if that same government threatens to withdraw support for programs that enable multi-millionaires to become billionaires.
And Republicans wonder why they can't win elections.
Wednesday, May 15, 2013
Extremity in the Pursuit of Moderation Is No Virtue
I give up.
For as long as I can remember--which admittedly is not very long, thanks to repeated blows to the head suffered during my last whaling expedition--at least WOS told me they were suffered during a whaling expedition--frankly, it sounds a little fishy to me. . . . Get it? "Fishy"? "Whaling expedition"? Huh? Huh?
Where was I?
Oh, yes.
For as long as I can remember, one could scarcely turn on the news or read a newspaper without finding some dire warnings about the impending societal breakdown caused by our soaring national budget deficit. Indeed, the deficit was of such concern that it caused lawmakers of both parties to embrace draconian fiscal solutions. Social spending slashed! Taxes raised on the wealthy! (Well, "as if," but still.) Freezes in government salaries! Layoffs in government offices! Reduced allocations for selective enforcement of IRS laws! (Which the more I hear about the more I start to wonder if there really is any major scandal going on there, but that's another story.) The Republic must be saved from its own profligacy, and if some temporary pain is the price we must pay to stabilize the national budget, so be it! So you would think today's news that the budget deficit is actually shrinking faster than expected, and that the annual deficit would actually be about $200 billion less than projections had indicated would be unambiguously good news.
Except it's not!
Economists have mixed feelings about deficit reduction based on their ideological leanings. For some, the fact that the deficit is shrinking is less important than the fact that unemployment remains high, there being some correlation between a shrinking deficit and continued job shortages--presumably because government could do more to increase employment if it were willing to spend money, which would increase the deficit, but for ostensibly "good" reasons. Got it? Other economists say that any current shrinkage is but a temporary reprieve from overwhelming forces that will come crashing down upon us in some not-too-distant future, plunging us into a Mad-Maxian dystopia of widespread anarchy and rampant Thunderdome construction.
Now, what I don't know about economics could fill a book--an economics textbook most likely. But if deficits are bad, and reducing deficits is also bad, could somebody please tell me at what point I get to stop panicking?
And as if this economic quandary weren't bad enough, we can't even count on biological certainties anymore. You know how you're not supposed to eat too much salt? Well, now it turns out that a low-salt diet has no particular benefits and may even increase the risk of heart attacks! Yes, presumably one still should not ingest excessive amounts of salt--
--and I love this commercial for a drug--I think it's Cialis--that features the disclaimer that people shouldn't "drink alcohol to excess" while taking the drug. Are there drugs whose makers recommend excessive drinking?--
--but having too little salt in one's diet may be just as bad.
Must we constantly struggle, Goldilocks-like, to find the just-right balance in everything? Can we not agree on the relative horribleness of anything? Hitler, maybe. At least he's good for something.
For as long as I can remember--which admittedly is not very long, thanks to repeated blows to the head suffered during my last whaling expedition--at least WOS told me they were suffered during a whaling expedition--frankly, it sounds a little fishy to me. . . . Get it? "Fishy"? "Whaling expedition"? Huh? Huh?
Where was I?
Oh, yes.
For as long as I can remember, one could scarcely turn on the news or read a newspaper without finding some dire warnings about the impending societal breakdown caused by our soaring national budget deficit. Indeed, the deficit was of such concern that it caused lawmakers of both parties to embrace draconian fiscal solutions. Social spending slashed! Taxes raised on the wealthy! (Well, "as if," but still.) Freezes in government salaries! Layoffs in government offices! Reduced allocations for selective enforcement of IRS laws! (Which the more I hear about the more I start to wonder if there really is any major scandal going on there, but that's another story.) The Republic must be saved from its own profligacy, and if some temporary pain is the price we must pay to stabilize the national budget, so be it! So you would think today's news that the budget deficit is actually shrinking faster than expected, and that the annual deficit would actually be about $200 billion less than projections had indicated would be unambiguously good news.
Except it's not!
Economists have mixed feelings about deficit reduction based on their ideological leanings. For some, the fact that the deficit is shrinking is less important than the fact that unemployment remains high, there being some correlation between a shrinking deficit and continued job shortages--presumably because government could do more to increase employment if it were willing to spend money, which would increase the deficit, but for ostensibly "good" reasons. Got it? Other economists say that any current shrinkage is but a temporary reprieve from overwhelming forces that will come crashing down upon us in some not-too-distant future, plunging us into a Mad-Maxian dystopia of widespread anarchy and rampant Thunderdome construction.
Now, what I don't know about economics could fill a book--an economics textbook most likely. But if deficits are bad, and reducing deficits is also bad, could somebody please tell me at what point I get to stop panicking?
And as if this economic quandary weren't bad enough, we can't even count on biological certainties anymore. You know how you're not supposed to eat too much salt? Well, now it turns out that a low-salt diet has no particular benefits and may even increase the risk of heart attacks! Yes, presumably one still should not ingest excessive amounts of salt--
--and I love this commercial for a drug--I think it's Cialis--that features the disclaimer that people shouldn't "drink alcohol to excess" while taking the drug. Are there drugs whose makers recommend excessive drinking?--
--but having too little salt in one's diet may be just as bad.
Must we constantly struggle, Goldilocks-like, to find the just-right balance in everything? Can we not agree on the relative horribleness of anything? Hitler, maybe. At least he's good for something.
Friday, December 28, 2012
A Senator's Lot Is Not a Happy One
Pity United States senators. They had to cut short their Christmas vacations to return to Washington at the behest of President Obama and their caucus leadership. They face the real possibility of having to work through New Year's Eve! And for what? The possibility of rescuing the nation from financial disaster? For THAT they have to miss "Dick Clark's Rockin' New Year's Eve with Ryan Seacrest"?!?
(DIGRESSION: How can it be "Dick Clark's Rockin' New Year's Eve" if (A) it's "with Ryan Seacrest" and (B) Dick Clark is somewhat dead? Has Dick Clark, in death, become the James Patterson of New Year's festivities? EOD)
You still don't feel bad for the senate? Well, what if I pointed out to you that senators receive NO COMPENSATION! Well, OK, they make a token salary of $174,000 per year. Plus, I guess, whatever income they have from their private investments. And, yes, sure, they have the prospect of any number of lucrative post-congressional careers. And, OK, I guess if you want to be technical, there are probably some non-financial rewards to serving in this highly exclusive prestigious institution that sets the course of national policy and quite literally makes history on a regular basis, but still: We're talking CHRISTMAS VACATION!!! Senator Charles Schumer (D-NY), how do you feel about having to cut short Christmas?
“'I didn’t realize how much I didn’t want to be here until I got here,' said Mr. Schumer, who had taken the red eye from San Francisco, where he had arrived only days earlier to visit his daughter."
AND HE'S JEWISH!
Adding insult to injury, the senators have had to return to Washington to do nothing in particular, as there is no specific legislation to vote on. Senator Harry Reid is waiting for the White House to propose a solution to the imminent arrival of the "fiscal cliff," which I frankly don't understand, but from everything I've heard will lead directly to the zombie apocalypse and/or commence the 1,000 year reign of Gondrok, Dark Lord of Chaos. Or something.
Where was I?
Ah, yes, Reid is waiting for Obama, who needs assurances from Sen. Mitch McConnell that Republicans won't simply filibuster any proposal, and everybody needs assurances from Speaker of the House John Boehner that, IF the senate passes legislation, the Republicans in the House of Representatives won't just screw everybody over like they did last week. So, in other words, the senators are angry because they have nothing to do, but none of them will do anything unless and until they know that nobody will undo whatever they decide to. . .do.
As of last month, the job being done by Congress met with the approval of 18% of Americans. Who ARE those people?
(DIGRESSION: How can it be "Dick Clark's Rockin' New Year's Eve" if (A) it's "with Ryan Seacrest" and (B) Dick Clark is somewhat dead? Has Dick Clark, in death, become the James Patterson of New Year's festivities? EOD)
You still don't feel bad for the senate? Well, what if I pointed out to you that senators receive NO COMPENSATION! Well, OK, they make a token salary of $174,000 per year. Plus, I guess, whatever income they have from their private investments. And, yes, sure, they have the prospect of any number of lucrative post-congressional careers. And, OK, I guess if you want to be technical, there are probably some non-financial rewards to serving in this highly exclusive prestigious institution that sets the course of national policy and quite literally makes history on a regular basis, but still: We're talking CHRISTMAS VACATION!!! Senator Charles Schumer (D-NY), how do you feel about having to cut short Christmas?
“'I didn’t realize how much I didn’t want to be here until I got here,' said Mr. Schumer, who had taken the red eye from San Francisco, where he had arrived only days earlier to visit his daughter."
AND HE'S JEWISH!
Adding insult to injury, the senators have had to return to Washington to do nothing in particular, as there is no specific legislation to vote on. Senator Harry Reid is waiting for the White House to propose a solution to the imminent arrival of the "fiscal cliff," which I frankly don't understand, but from everything I've heard will lead directly to the zombie apocalypse and/or commence the 1,000 year reign of Gondrok, Dark Lord of Chaos. Or something.
Where was I?
Ah, yes, Reid is waiting for Obama, who needs assurances from Sen. Mitch McConnell that Republicans won't simply filibuster any proposal, and everybody needs assurances from Speaker of the House John Boehner that, IF the senate passes legislation, the Republicans in the House of Representatives won't just screw everybody over like they did last week. So, in other words, the senators are angry because they have nothing to do, but none of them will do anything unless and until they know that nobody will undo whatever they decide to. . .do.
As of last month, the job being done by Congress met with the approval of 18% of Americans. Who ARE those people?
Sunday, June 3, 2012
The Solipsist Reads the Times (So You Don't Have To)
84-year-old former Egyptian dictator and Robert De Niro look-alike Hosni Mubarak was sentenced to life in prison. He thus has nothing to look forward to but sitting around his room, watching television, and eating bland food, as opposed to your typical octogenarian who's out there windsurfing. The Egyptian people, though, are disappointed in the verdict--some people are just never satisfied!--as the judge only found Mubarak guilty of being an accomplice to the murders of a couple hundred protesters during the early days of the uprising. I suppose this is technically true, in the same way that Hitler was an accomplice to the SS. Interestingly, this disappointing verdict has once again united the country: Islamists, liberals, and bears (oh my) have once again banded together to protest the corruption of the ruling elite. Nothing like a common enemy to bring out the best in people.
In other news, the world economy still sucks. The basic problem seems to be that we live in a globally interconnected world without globally interconnected regulatory systems. (Don't say that out loud, though: People will accuse you of being a New-World Order leftist like, uh, the first President Bush.)
It turns out that Mitt Romney is a "Star Trek" fan. Initially, this news worried me, as I feared it might induce certain people--FOS, for instance--to vote for the man. Then I realized this was unlikely: After all, Romney may be a closet "Trek"-enthusiast (he rejects the "Trekkie" appellation), but Barack Obama is the nation's first Vulcan president. Finding out Mitt Romney likes "Star Trek," though, does make him harder to hate, until I remember his attitudes toward everything that people who value a decent society hold dear; then I regain my urge to hurl tribbles at the man.
Iraq has increased its oil output tremendously, so much so, in fact, that the international community is cautiously optimistic that stronger sanctions against Iran may not prove as disruptive to world oil supplies. Commenting on this news, former National Security Advisor and Secretary of State Condoleeza Rice said, "This is welcome news, of course. Still, I would once again emphasize that increased oil production was never the predominant concern; liberating Iraq from a dictatorial regime and bringing democracy to the Middle East were." Former Vice President Dick Cheney, in contrast, cackled and exclaimed, "Yahtzee!"
I was also disturbed to hear that, despite the fall of Saddam Hussein, the tradition of state-sanctioned torture continues in Iraq. At an auction for oil contracts, "An elevator-music rendition of Lionel Richie's 'Hello' played over and over." Monsters!
The more painkillers are used--and the earlier in treatment they are prescribed--the greater the overall costs to employers. Hm. You know, when you see that sentence typed out, you realize that one of the central premises of this article is that if you take more pills and use them for a longer period of time, it will cost more money. No wonder Times readers are so well-informed!
Finally, the Times provides an interesting discussion of the various controversies and disputes around the Sept. 11 Memorial Museum. One ongoing debate focused on whether or not to include photographs of the 19 hijackers who crashed planes into the World Trade Center, the Pentagon, and a field in Pennsylvania. Those opposed claim that this affords the murderers an undeserved honor. It really doesn't, though. Photographs of criminals don't celebrate the criminals. Think of these as mug shots.
In other news, the world economy still sucks. The basic problem seems to be that we live in a globally interconnected world without globally interconnected regulatory systems. (Don't say that out loud, though: People will accuse you of being a New-World Order leftist like, uh, the first President Bush.)
It turns out that Mitt Romney is a "Star Trek" fan. Initially, this news worried me, as I feared it might induce certain people--FOS, for instance--to vote for the man. Then I realized this was unlikely: After all, Romney may be a closet "Trek"-enthusiast (he rejects the "Trekkie" appellation), but Barack Obama is the nation's first Vulcan president. Finding out Mitt Romney likes "Star Trek," though, does make him harder to hate, until I remember his attitudes toward everything that people who value a decent society hold dear; then I regain my urge to hurl tribbles at the man.
Iraq has increased its oil output tremendously, so much so, in fact, that the international community is cautiously optimistic that stronger sanctions against Iran may not prove as disruptive to world oil supplies. Commenting on this news, former National Security Advisor and Secretary of State Condoleeza Rice said, "This is welcome news, of course. Still, I would once again emphasize that increased oil production was never the predominant concern; liberating Iraq from a dictatorial regime and bringing democracy to the Middle East were." Former Vice President Dick Cheney, in contrast, cackled and exclaimed, "Yahtzee!"
I was also disturbed to hear that, despite the fall of Saddam Hussein, the tradition of state-sanctioned torture continues in Iraq. At an auction for oil contracts, "An elevator-music rendition of Lionel Richie's 'Hello' played over and over." Monsters!
The more painkillers are used--and the earlier in treatment they are prescribed--the greater the overall costs to employers. Hm. You know, when you see that sentence typed out, you realize that one of the central premises of this article is that if you take more pills and use them for a longer period of time, it will cost more money. No wonder Times readers are so well-informed!
Finally, the Times provides an interesting discussion of the various controversies and disputes around the Sept. 11 Memorial Museum. One ongoing debate focused on whether or not to include photographs of the 19 hijackers who crashed planes into the World Trade Center, the Pentagon, and a field in Pennsylvania. Those opposed claim that this affords the murderers an undeserved honor. It really doesn't, though. Photographs of criminals don't celebrate the criminals. Think of these as mug shots.
Sunday, May 27, 2012
In Order to Save Time, This Post Has No Title
Tim Jackson, a professor of sustainable development, considers productivity overrated. For one thing, he says, our emphasis on productivity increases unemployment: Since increased productivity, by definition, means greater output from the same (or fewer) inputs, then, as productivity grows, fewer inputs are needed. And for "inputs," read "employees." Jackson says we should rethink our commitment to ever-increasing productivity, and instead focus our energies on improving those sectors of the economy in which increased efficiency is not the best way to measure value--sectors like healthcare, the arts, and education. Furthermore, a renewed commitment to craftsmanship--valuing quality over quantity--could lead to greater employment and, indeed, greater human satisfaction.
But what does he know? He's British! I bet he'd love to see America slack off: That's what Brits have been waiting for since 1776! We relinquish our productivity advantage, next thing you know, we'll all be speaking. . . whatever language they speak in Britain!
Since its inception, this blog has been produced with a commitment to ever-increasing efficiency. Every day, I type for one hour, whether I have anything to say or not, and I have increased the number of words typed by over 17% over the last three years. Furthermore, when I have a point to make, I have striven to say it in the most efficient way possible, efforts that probably reached their culmination in my celebrated post of August 14, 2010, reprinted here in its entirety:
Kumquats!
Efficiency overrated indeed!
But what does he know? He's British! I bet he'd love to see America slack off: That's what Brits have been waiting for since 1776! We relinquish our productivity advantage, next thing you know, we'll all be speaking. . . whatever language they speak in Britain!
Since its inception, this blog has been produced with a commitment to ever-increasing efficiency. Every day, I type for one hour, whether I have anything to say or not, and I have increased the number of words typed by over 17% over the last three years. Furthermore, when I have a point to make, I have striven to say it in the most efficient way possible, efforts that probably reached their culmination in my celebrated post of August 14, 2010, reprinted here in its entirety:
Kumquats!
Efficiency overrated indeed!
Saturday, May 26, 2012
The Solipsist Reads the Times (So You Don't Have To)
"Scores of federal regulators are stationed inside JPMorgan Chase’s Manhattan headquarters, but none of them were assigned to the powerful unit that recently disclosed a multibillion trading loss."I'm no expert on bank regulation, but I think I've figured out the problem! Did you know that there are more than 100 federal regulators embedded at JPMorgan Chase? Yet not ONE was placed in the unit that caused all the recent agita. Makes you wonder where they were assigned. Turns out about 60 of them were working on lower-profile accounts, 13 were assigned to the cafeteria, 10 to the supply closet, and one was responsible for feeding the company hedgehog. The bad news: JPMorgan Chase lost billions. The good news: Spiny Nigel is fat and happy.
The first post-revolutionary, freely-elected Egyptian president will be chosen in a run-off between a committed Islamist and a member of deposed dictator Hosni Mubarak's inner circle. This seems a textbook case of choosing the lesser of two evils, and I have to throw my weight behind the Islamist, Mohamed Morsi. Why? Well, the secular candidate Ahmed Shafik, previously served as Prime Minister, but was forced to resign because of his propensity to make comments like this: "I fought in wars. I killed and was killed!"
The Muslim Brotherhood may be worrisome, but do we really need an Egyptian George W. Bush?
Pedro Hernandez has been arraigned in the 33-year-old disappearance and murder of Etan Patz, to which Hernandez confessed earlier this week. While investigators have not released many details, there are suggestions that Hernandez has long suffered from mental illness, including hallucinations. According to Hernandez, he killed Etan and then disposed of the body in a nearby dumpster. My question: With the intense searching that was going on at the time, how could the body not have been found?
For the sake of Etan's family, we can all hope that this arrest brings closure. But I have my doubts. After all, while mental illness could explain why Hernandez murdered Etan, it could also explain why he would confess to a murder he didn't commit. And with no physical evidence, it may be hard to prosecute.
The biggest bank in Spain is seeking a huge government bailout. Officials at Bankia thought they would need about 4 billion euros. Turns out, they need a little bit more: about 23 billion euros. I think the thing that is most shocking about the general corruption and incompetence of the banking industry--in Spain as well as the US (and probably everywhere else)--is not so much the fact that the banks made bad bets and lost huge amounts of money; nor is it the fact that they need public bailouts; the most egregiously pathetic aspect of this whole situation is that, once they have turned to the government for help, and the government has agreed to help them, the bankers cannot apparently even figure out how much they need! I mean, as I may have mentioned, I'm no expert on bank regulation--and what I don't know about finance could fill a book (specifically, a book about finance)--but if someone said to me, "Hey, I'm going to give you money to settle up all your outstanding financial commitments," I could tell them off the bat how much I need! I certainly wouldn't be "off" by about 500 freakin' percent!
In a scandal that the Italian press has dubbed "Vatileaks," a number of confidential documents detailing papal finances and other internal communications have been released to the public. Who leaked the documents? Paolo Gabriele, the Pope's butler, has been arrested. So, yes, according to the authorities, the butler did it. No word on whether it was on a dark and stormy night.
Finally, Miralax, a laxative for adults, is extremely popular among parents of young children. Many parents dispense Miralax as part of a daily regimen to help chronically constipated children, presumably because it's easier than convincing them to eat a piece of broccoli. So far, no harmful side effects have popped up, but people are understandably leery of overmedicating children.
I admit, my exposure has been limited, but given what I've heard about the abundance of poopy diapers in the world, I was shocked to hear that childhood constipation had reached such epidemic proportions as to make the front page of the New York Times.
You're welcome, Nation!
Sunday, December 11, 2011
The 24/7 Rat Race
Today's Times featured a front-page story about high-flying traders--you know, the type who destroyed the world economy a few years back--who get up in the wee small hours of the morning to get a jump on the day's trading: They don't want to sleep through the opening bells in the euro zone, you see. I imagine some of these folks probably alter their sleep cycles to keep pace with markets in Asia.
Does it make me a bad person that I take some satisfaction in knowing that the sleep debt these guys--and they are mostly guys--rack up will probably lead to a great deal of personal suffering and, perhaps, premature death?
Turn off your Bloomberg terminals! Go to sleep! Maybe you'll dream of a way to do something productive with your lives!
Does it make me a bad person that I take some satisfaction in knowing that the sleep debt these guys--and they are mostly guys--rack up will probably lead to a great deal of personal suffering and, perhaps, premature death?
Turn off your Bloomberg terminals! Go to sleep! Maybe you'll dream of a way to do something productive with your lives!
Saturday, December 3, 2011
Unemployment Plummets after Fed Changes Meaning of "Unemployed"
WASHINGTON--Obama administration officials yesterday declared an end to the unemployment crisis, after a working group of economists, manufacturers, and anatomists released a report officially changing the meaning of the word "unemployed" from its previous definition--"without a job; out of work"--to the more politically useful, "state of having or possessing three or more legs."
"We felt something had to be done to solve the unemployment problem once and for all," Labor Secretary Hilda Solis said. "Finding jobs for 27 million people was just not a feasible solution. We think this represents a good compromise."
Treasury Secretary Timothy Geithner seconded Solis. "Have YOU ever tried to employ 43 million people? Can't be done."
When asked about the new definition, Dr. Michelle Sokolove, the lead anatomist on the panel, explained, "Originally we looked at fingers. We thought defining the unemployed as those lacking a full set of fingers--ten--might help us eliminate 96 million people from the ranks of the unemployed. You'd be surprised, though, how many people in America are missing fingers--even if we exclude pinkies." Sokolove went on to explain that this method of counting the "unemployed" actually produced an increase in the unemployment rate to 9.7%. "We had a similar problem with toes."
Eventually, the panel thought about using a surplus of fingers as the defining characteristic of an "unemployed person." While this did lower the official unemployment rate to 7.3%, the panel felt that more could be done.
"Actually," said Solis, "it was former Labor Secretary Robert [Too-Tall] Reich who came up with the ultimate solution. "We had him on a conference call, and he said, 'Well, if you're going to base the unemployment rate on ridiculous physical characteristics, why not only count people with three legs as unemployed?' The man's a genius!"
"Yeah, that was what we call sarcasm," Reich explained, when asked for comment.
The new measurement will go into official use immediately. With this announcement, the United States unemployment rate has now fallen to 0.0002%.
In a related story, unemployment benefits for Anthony "Sidecar" Montrose of Butters, NC, have been extended another 50 weeks.
"We felt something had to be done to solve the unemployment problem once and for all," Labor Secretary Hilda Solis said. "Finding jobs for 27 million people was just not a feasible solution. We think this represents a good compromise."
Treasury Secretary Timothy Geithner seconded Solis. "Have YOU ever tried to employ 43 million people? Can't be done."
When asked about the new definition, Dr. Michelle Sokolove, the lead anatomist on the panel, explained, "Originally we looked at fingers. We thought defining the unemployed as those lacking a full set of fingers--ten--might help us eliminate 96 million people from the ranks of the unemployed. You'd be surprised, though, how many people in America are missing fingers--even if we exclude pinkies." Sokolove went on to explain that this method of counting the "unemployed" actually produced an increase in the unemployment rate to 9.7%. "We had a similar problem with toes."
Eventually, the panel thought about using a surplus of fingers as the defining characteristic of an "unemployed person." While this did lower the official unemployment rate to 7.3%, the panel felt that more could be done.
"Actually," said Solis, "it was former Labor Secretary Robert [Too-Tall] Reich who came up with the ultimate solution. "We had him on a conference call, and he said, 'Well, if you're going to base the unemployment rate on ridiculous physical characteristics, why not only count people with three legs as unemployed?' The man's a genius!"
"Yeah, that was what we call sarcasm," Reich explained, when asked for comment.
The new measurement will go into official use immediately. With this announcement, the United States unemployment rate has now fallen to 0.0002%.
In a related story, unemployment benefits for Anthony "Sidecar" Montrose of Butters, NC, have been extended another 50 weeks.
Tuesday, November 29, 2011
The Cost of Doing Business
Among the financial shenanihoots that helped bring down the world financial system was a scheme by Citigroup to sell investments that were designed to fail so that the company could bet against them and reap huge profits. The Securities and Exchange Commission took a dim view of this and filed suit against Citigroup. The two parties agreed to settle the lawsuit: Citigroup would pay a $285 million fine, without admitting to any wrongdoing. All that was left was for Federal Judge Jed S. Rakoff to sign off on the deal. Yesterday, however, Judge Rakoff rejected this agreement.
Good for him.
The agreement bothered Judge Rakoff because he was asked, essentially, to serve as a "rubber stamp." Despite the fact that the SEC alleged that Citigroup had committed fraud, the agreement provided insufficient specifics, and the company was not required to admit wrongdoing. Therefore, the judge could not determine whether the agreement was “fair, reasonable, adequate and in the public interest." And about that whole, "Is it in the public interest" question? Let me save you some trouble, Judge Rakoff: It's not.
The judge correctly pointed out that, while $285 million may sound like a lot of money, it's basically pocket change to a company like Citigroup. And paying such a fine--particularly if a settlement does not require a company to admit wrongdoing--can be written off as an acceptable cost of doing business. The SEC wants to settle the cases because the agency worries--understandably--that it cannot win a trial against a company with the vast legal and financial resources of Citigroup. A bird in the hand--or 285 million birds--is worth some even more hefty amount in the bush.
Except it's not.
If the government took Citigroup--or AIG or Bank of America or any of the other malefactors of great wealth--to trial, nobody knows what would happen. The government might very well lose the case. I suspect, though, they might not. And at any rate, going to trial would send a message that the costs of doing business might turn out higher than Citigroup might like to pay. Obviously, these petty-cash fines don't convince the wrongdoers to change their evil ways.
So Judge Jed Rakoff did his job. Now it's time for the SEC to do theirs.
Good for him.
The agreement bothered Judge Rakoff because he was asked, essentially, to serve as a "rubber stamp." Despite the fact that the SEC alleged that Citigroup had committed fraud, the agreement provided insufficient specifics, and the company was not required to admit wrongdoing. Therefore, the judge could not determine whether the agreement was “fair, reasonable, adequate and in the public interest." And about that whole, "Is it in the public interest" question? Let me save you some trouble, Judge Rakoff: It's not.
The judge correctly pointed out that, while $285 million may sound like a lot of money, it's basically pocket change to a company like Citigroup. And paying such a fine--particularly if a settlement does not require a company to admit wrongdoing--can be written off as an acceptable cost of doing business. The SEC wants to settle the cases because the agency worries--understandably--that it cannot win a trial against a company with the vast legal and financial resources of Citigroup. A bird in the hand--or 285 million birds--is worth some even more hefty amount in the bush.
Except it's not.
If the government took Citigroup--or AIG or Bank of America or any of the other malefactors of great wealth--to trial, nobody knows what would happen. The government might very well lose the case. I suspect, though, they might not. And at any rate, going to trial would send a message that the costs of doing business might turn out higher than Citigroup might like to pay. Obviously, these petty-cash fines don't convince the wrongdoers to change their evil ways.
So Judge Jed Rakoff did his job. Now it's time for the SEC to do theirs.
Friday, November 25, 2011
Black and Blue
Yesterday morning, I ran to the store to buy milk and cat food (we were out of cereal). On my way home, I passed Best Buy. In front of the store were some temporary barricades, and behind the barricades were. . . tents. A new front in the "Occupy" movement, perhaps? Sadly, no. Just people lining up early for the big deals on Black Friday.
When I was a child, I remember asking someone--I think it was DOS--in all sincerity whether stores were open the day after Thanksgiving. I guess I figured, since I had no school, maybe everything was closed. Anyway, DOS informed me that, not only were stores open, but the day after Thanksgiving was probably the biggest shopping day of the year. I don't recall whether he used the term "Black Friday" or not; the phrase wasn't so commonly circulated back then. At some point, I learned that the day earned its nickname from the fact that this was the day on which stores got "into the black" (and "out of the red") for the year.
I'm honestly not sure when "Black Friday" became a common meme, a regular fixture on the national calendar. I realized this year, though, that many people discussed Black Friday as if it were an actual, official holiday. Like, "What are you doing for Thanksgiving? Where are you going for Black Friday?" If as many people celebrated Arbor Day, we'd probably go a long way toward solving the world's environmental crisis.
I tell myself those people camped out in front of Best Buy must be enjoying themselves because otherwise there is truly no rational explanation for their behavior. I saw in the paper that one of the mega deals being offered was a $500 HDTV for $200. A hefty savings, sure. But assume these people got to the "campsite" at, say, 9:00 AM (a highly conservative estimate) and would be on line 'til the doors opened at, say, 10:00 PM (again, a conservative estimate); that means people were "earning" a bit less than $25 an hour for their "labor" (the $300 savings divided by 13 hours). $25 an hour is not a bad wage, but remember, the estimates of the time spent on line are conservative: Most people probably earned a much lower "hourly wage." And even those at the higher end of the "payscale" are simply working for the privilege of handing over $200 to a major retailer.
OK, for some families, the opportunity to miss the drama around the Thanksgiving dinner table is a reward in and of itself--but you don't need to patronize Best Buy to receive it!
Maybe some of the nation's "Occupiers" should move their own tents in front of Best Buy and Macy's and Wal-Mart and have a discussion with their fellow campers.
When I was a child, I remember asking someone--I think it was DOS--in all sincerity whether stores were open the day after Thanksgiving. I guess I figured, since I had no school, maybe everything was closed. Anyway, DOS informed me that, not only were stores open, but the day after Thanksgiving was probably the biggest shopping day of the year. I don't recall whether he used the term "Black Friday" or not; the phrase wasn't so commonly circulated back then. At some point, I learned that the day earned its nickname from the fact that this was the day on which stores got "into the black" (and "out of the red") for the year.
I'm honestly not sure when "Black Friday" became a common meme, a regular fixture on the national calendar. I realized this year, though, that many people discussed Black Friday as if it were an actual, official holiday. Like, "What are you doing for Thanksgiving? Where are you going for Black Friday?" If as many people celebrated Arbor Day, we'd probably go a long way toward solving the world's environmental crisis.
I tell myself those people camped out in front of Best Buy must be enjoying themselves because otherwise there is truly no rational explanation for their behavior. I saw in the paper that one of the mega deals being offered was a $500 HDTV for $200. A hefty savings, sure. But assume these people got to the "campsite" at, say, 9:00 AM (a highly conservative estimate) and would be on line 'til the doors opened at, say, 10:00 PM (again, a conservative estimate); that means people were "earning" a bit less than $25 an hour for their "labor" (the $300 savings divided by 13 hours). $25 an hour is not a bad wage, but remember, the estimates of the time spent on line are conservative: Most people probably earned a much lower "hourly wage." And even those at the higher end of the "payscale" are simply working for the privilege of handing over $200 to a major retailer.
OK, for some families, the opportunity to miss the drama around the Thanksgiving dinner table is a reward in and of itself--but you don't need to patronize Best Buy to receive it!
Maybe some of the nation's "Occupiers" should move their own tents in front of Best Buy and Macy's and Wal-Mart and have a discussion with their fellow campers.
Thursday, September 22, 2011
Insult to Injury
From the "This Again?!?" Department: The federal government may shut down at the end of next week unless Congress can agree on a new spending bill. What's holding things up this time? The highly controversial issue at the heart of the disagreement is whether to spend money to help the victims of things like Hurricane Irene and tornadoes in the Midwest. Yeah, I know, they were asking for it, but still. . . .
See, most House Democrats and a number of Republicans voted against a bill that would have authorized about $3.5 billion in disaster relief. The Democrats object that the bill is insufficient; indeed, a similar Senate bill, which has a certain level of bipartisan support, authorizes about twice as much.
What really riles Democrats, though, is the Republican leadership's insistence that any disaster funding be paid for by offsetting spending cuts elsewhere. In fact, the Republicans who voted against the bill objected that the measure didn't include ENOUGH cuts.
Do Republicans not understand that people have lost their homes? Do they really think now is the time to be playing budget games? And for anyone tempted to play devil's advocate--for anyone who says, "Well, look, we DO need to find a way to pay for these things! It's not like we can just PRINT more money! (Well,OK, we can, but still. . . .)"--consider that the same folks who are saying we must make cuts to pay for responses to unforeseen disasters are many of the same folks who saw no need to make cuts to pay for the foreseen disasters of the Bush administration. As Nancy Pelosi said, "We never paid for tax cuts for the rich. We never paid for the wars in Afghanistan and Iraq.”
Oh, sorry. I suppose I'm engaging in class warfare here.
See, most House Democrats and a number of Republicans voted against a bill that would have authorized about $3.5 billion in disaster relief. The Democrats object that the bill is insufficient; indeed, a similar Senate bill, which has a certain level of bipartisan support, authorizes about twice as much.
What really riles Democrats, though, is the Republican leadership's insistence that any disaster funding be paid for by offsetting spending cuts elsewhere. In fact, the Republicans who voted against the bill objected that the measure didn't include ENOUGH cuts.
Do Republicans not understand that people have lost their homes? Do they really think now is the time to be playing budget games? And for anyone tempted to play devil's advocate--for anyone who says, "Well, look, we DO need to find a way to pay for these things! It's not like we can just PRINT more money! (Well,OK, we can, but still. . . .)"--consider that the same folks who are saying we must make cuts to pay for responses to unforeseen disasters are many of the same folks who saw no need to make cuts to pay for the foreseen disasters of the Bush administration. As Nancy Pelosi said, "We never paid for tax cuts for the rich. We never paid for the wars in Afghanistan and Iraq.”
Oh, sorry. I suppose I'm engaging in class warfare here.
Tuesday, September 20, 2011
You Say "Class Warfare" Like It's a Bad Thing
Ever since President Obama has (finally!) shown signs of taking a stand against Republican rapaciousness, the airwaves have been abuzz with cries of "class warfare." "Class warfare," according to GOP congressman Paul Ryan, "may make for really good politics, but it makes for rotten economics."
Rotten economics? Worse than what we have now?
Here's a thought: If the Republicans and the uber-rich are so scared of class warfare, maybe they shouldn't have declared it. Because as anyone with a scintilla of sense--at least anyone not constrained by a desire to maintain the status quo--understands, class warfare was declared long ago.
It was declared by those who crafted major bailouts for obscenely overcompensated bankers without so much as a pinky-swear that these recipients of public largesse foreswear 7-figure bonuses or use a significant portion of these funds to help out beleaguered homeowners.
It was declared by those who clamor to repeal a well-intentioned if imperfect healthcare reform bill that aims to insure millions of people for whom even a curable disease may mean financial catastrophe, while enjoying a generous, taxpayer funded healthcare plan for themselves.
It was declared by the representatives of a party whose presidential candidates would not even agree to a hypothetical deficit-reduction plan that called for one dollar in revenue (tax) increases for every ten dollars in spending cuts.
Of course these people want to keep the general public from recognizing that war has been declared. Let's face it: They're hopelessly outnumbered. If people get angry enough to accept the declaration of war, what makes the superrich and their political lickspittles think they can actually prevail?
The only reason that there hasn't (yet) been blood on the streets is the stubborn belief among the citizenry--ingrained in us from our youth--that America is a "classless society." Sure, some people are rich and some are poor, but everyone is equal. The socioeconomic strata into which one is born is no more fixed than one's imagination. As long as people believe that, they don't want to engage in class warfare: They want to fraternize with the enemy.
But as millions of people--well-educated people, as well as the perennial "underclass"--find it harder and harder to make ends meet, to put food on the table, to stretch a paycheck beyond the bare necessities, to find gainful employment despite months or years of searching, they find it harder and harder to reconcile their misery with the ideal of a classless society. They--we--know we're struggling, and we know who is to blame.
Class warfare? They started it. Bring it on.
Rotten economics? Worse than what we have now?
Here's a thought: If the Republicans and the uber-rich are so scared of class warfare, maybe they shouldn't have declared it. Because as anyone with a scintilla of sense--at least anyone not constrained by a desire to maintain the status quo--understands, class warfare was declared long ago.
It was declared by those who crafted major bailouts for obscenely overcompensated bankers without so much as a pinky-swear that these recipients of public largesse foreswear 7-figure bonuses or use a significant portion of these funds to help out beleaguered homeowners.
It was declared by those who clamor to repeal a well-intentioned if imperfect healthcare reform bill that aims to insure millions of people for whom even a curable disease may mean financial catastrophe, while enjoying a generous, taxpayer funded healthcare plan for themselves.
It was declared by the representatives of a party whose presidential candidates would not even agree to a hypothetical deficit-reduction plan that called for one dollar in revenue (tax) increases for every ten dollars in spending cuts.
Of course these people want to keep the general public from recognizing that war has been declared. Let's face it: They're hopelessly outnumbered. If people get angry enough to accept the declaration of war, what makes the superrich and their political lickspittles think they can actually prevail?
The only reason that there hasn't (yet) been blood on the streets is the stubborn belief among the citizenry--ingrained in us from our youth--that America is a "classless society." Sure, some people are rich and some are poor, but everyone is equal. The socioeconomic strata into which one is born is no more fixed than one's imagination. As long as people believe that, they don't want to engage in class warfare: They want to fraternize with the enemy.
But as millions of people--well-educated people, as well as the perennial "underclass"--find it harder and harder to make ends meet, to put food on the table, to stretch a paycheck beyond the bare necessities, to find gainful employment despite months or years of searching, they find it harder and harder to reconcile their misery with the ideal of a classless society. They--we--know we're struggling, and we know who is to blame.
Class warfare? They started it. Bring it on.
Saturday, July 30, 2011
Debt Watch
As we approach financial armageddon, with the imminent breaching of the federal debt limit, we would like to say two things.
One: President Obama needs to take control of this situation. Many have suggested that Obama invoke the 14th Amendment, which has a clause stating that "The validity of the public debt of the United States . . .shall not be questioned." Others have suggested Obama could simply declare a sort of financial emergency to unilaterally raise the debt ceiling--akin to Abraham Lincoln suspending habeas corpus during the Civil War. Either approach may run afoul of constitutional law, something of which President Obama, a constitutional scholar is well aware. Nevertheless, in times of crisis, leaders lead. Obama could (and probably should) seize the initiative and then dare Republicans in Congress to defy him. He might lose in the courts, but at least for the meantime, a crisis could be averted.
Still, if we hit the debt ceiling, and no solution is found, then the Treasury Department will have to decide which bills get paid. We have a simple suggestion: Those federal payments earmarked for people and projects in the districts of those Republicans (and any Democrats) opposed to rasing the debt limit should simply not be made. We're sure their constituents will applaud their financial rectitude and ideological purity, while they wait for their social security checks that never show up.
Once again, you're welcome, America.
One: President Obama needs to take control of this situation. Many have suggested that Obama invoke the 14th Amendment, which has a clause stating that "The validity of the public debt of the United States . . .shall not be questioned." Others have suggested Obama could simply declare a sort of financial emergency to unilaterally raise the debt ceiling--akin to Abraham Lincoln suspending habeas corpus during the Civil War. Either approach may run afoul of constitutional law, something of which President Obama, a constitutional scholar is well aware. Nevertheless, in times of crisis, leaders lead. Obama could (and probably should) seize the initiative and then dare Republicans in Congress to defy him. He might lose in the courts, but at least for the meantime, a crisis could be averted.
Still, if we hit the debt ceiling, and no solution is found, then the Treasury Department will have to decide which bills get paid. We have a simple suggestion: Those federal payments earmarked for people and projects in the districts of those Republicans (and any Democrats) opposed to rasing the debt limit should simply not be made. We're sure their constituents will applaud their financial rectitude and ideological purity, while they wait for their social security checks that never show up.
Once again, you're welcome, America.
Wednesday, July 13, 2011
We Knew Politicians Were Feckless, But Yeesh!
We confess, we don't fully understand all the foofaraw, currently roiling Washington and Wall Street, about the nation's debt ceiling. Analysts and pundits regularly trot out the explanation that the debt ceiling is roughly equivalent to a credit limit; hitting the ceiling is akin to maxing out one's Visa. The major difference being that, when our country hits its debt ceiling, apparently all it has to do is vote itself a credit increase. Try THAT with American Express! ("Uh, yeah, I'm at Saks Fifth Avenue, and my card's been declined. I don't understand. I voted myself an extra $5,000 credit line before I left the house.")
In other words, the debt ceiling is ultimately symbolic. People fear all manner of financial catastrophe should the US default on its debts, and for all we know, they may be right. Even if catastrophe occurs, though, it seems that the powers-that-be would simply need to say, "OK, you got us, we'll raise the debt limit." Catastrophe eliminated.
Today's entry, though, is not about the debt limit, as such, but about the latest maneuver to solve the problem.
Despite the best (?) efforts of President Obama and Joe Biden and John Boehner and Eric Cantor, it's looking more and more like Congress will fail to pass legislation raising the debt ceiling before August 2 (financial D-Day). Rather than accept failure, though, the Senate Minority Leader, Mitch McConnell (R.-KY--the state, not the sexual lubricant), has proposed that Congress essentially empower President Obama to raise the debt limit himself--without, as many Republicans have demanded, presenting a plan for offsetting spending cuts. Congress would then vote on the President's proposal. While they could still certainly vote against raising the limit, the President would then presumably just veto that action, after which it is unlikely that Congress would muster the votes to overturn the veto. Both the White House and the Speaker of the House have expressed interest in this plan.
So, let's get this straight: The leaders of the Republican Party, who have essentially spent the last two years vituperating about how Barack Obama was a closet socialist dictator bent on increasing his power and unilaterally imposing his will on the country--these same people are now considering a plan whereby they would. . . increase Barack Obama's power and allow him to unilaterally impose his will on the country?
At the risk of eliciting a ear-splitting "Duh!": Do these people stand for anything?!? We understand McConnell's motivation: He knows he and Boehner can't corral the most vocal members of their right-wing majority to support any sort of compromises with the anti-Christ Obama. Fearing for his and his fellow Republican's electoral prospects if they become known as a party willing to sacrifice national well-being for ideological purity, McConnell wants to wash his hands of the whole thing: Let Obama take the heat. Not that Obama will face much heat for raising the debt ceiling, as those most opposed to such action would be unlikely to vote for Obama anyway. But still, what's the point of even having a separate legislature if they are so scared of electoral consequences that they abdicate their responsibilities to, y'know, legislate--at least about anything more controversial than, say, naming a national flower or passing non-binding resolutions to declare that corn dogs are tasty?
What's so bad about being voted out of office, anyway? You become a highly paid lobbyist, a Sunday-morning talk-show pontificator, or a contestant on "Dancing with the Stars." Maybe all three. And if you're voted out of office because you actually took a stand on something, maybe you do all three of those things without that gut-gnawing sense of shame and missed opportunities.
Do your job, McConnell. Do your job, and face the consequences.
Is it any wonder Congress is held in contempt?
Solipsistography
"Debt Talk Mired, Leader for G.O.P. Proposes Option"
In other words, the debt ceiling is ultimately symbolic. People fear all manner of financial catastrophe should the US default on its debts, and for all we know, they may be right. Even if catastrophe occurs, though, it seems that the powers-that-be would simply need to say, "OK, you got us, we'll raise the debt limit." Catastrophe eliminated.
Today's entry, though, is not about the debt limit, as such, but about the latest maneuver to solve the problem.
Despite the best (?) efforts of President Obama and Joe Biden and John Boehner and Eric Cantor, it's looking more and more like Congress will fail to pass legislation raising the debt ceiling before August 2 (financial D-Day). Rather than accept failure, though, the Senate Minority Leader, Mitch McConnell (R.-KY--the state, not the sexual lubricant), has proposed that Congress essentially empower President Obama to raise the debt limit himself--without, as many Republicans have demanded, presenting a plan for offsetting spending cuts. Congress would then vote on the President's proposal. While they could still certainly vote against raising the limit, the President would then presumably just veto that action, after which it is unlikely that Congress would muster the votes to overturn the veto. Both the White House and the Speaker of the House have expressed interest in this plan.
So, let's get this straight: The leaders of the Republican Party, who have essentially spent the last two years vituperating about how Barack Obama was a closet socialist dictator bent on increasing his power and unilaterally imposing his will on the country--these same people are now considering a plan whereby they would. . . increase Barack Obama's power and allow him to unilaterally impose his will on the country?
At the risk of eliciting a ear-splitting "Duh!": Do these people stand for anything?!? We understand McConnell's motivation: He knows he and Boehner can't corral the most vocal members of their right-wing majority to support any sort of compromises with the anti-Christ Obama. Fearing for his and his fellow Republican's electoral prospects if they become known as a party willing to sacrifice national well-being for ideological purity, McConnell wants to wash his hands of the whole thing: Let Obama take the heat. Not that Obama will face much heat for raising the debt ceiling, as those most opposed to such action would be unlikely to vote for Obama anyway. But still, what's the point of even having a separate legislature if they are so scared of electoral consequences that they abdicate their responsibilities to, y'know, legislate--at least about anything more controversial than, say, naming a national flower or passing non-binding resolutions to declare that corn dogs are tasty?
What's so bad about being voted out of office, anyway? You become a highly paid lobbyist, a Sunday-morning talk-show pontificator, or a contestant on "Dancing with the Stars." Maybe all three. And if you're voted out of office because you actually took a stand on something, maybe you do all three of those things without that gut-gnawing sense of shame and missed opportunities.
Do your job, McConnell. Do your job, and face the consequences.
Is it any wonder Congress is held in contempt?
Solipsistography
"Debt Talk Mired, Leader for G.O.P. Proposes Option"
Monday, June 20, 2011
Bring the Funds Back Home
When corporations offer to pay taxes, consult your cardiologist: You need to take that with several grains of salt. Nonetheless, that's what some of America's biggest companies are doing.
In order to "help" with the United States' continuing financial woes, megafirms like Apple, Google, Microsoft, and others are proposing to repatriate foreign profits. Once this money--potentially hundreds of billions of dollars--is brought "home," it will be subject to taxes, providing an immediate infusion to a cash-strapped treasury. The catch, though, is that the companies are requesting a hefty tax break: Instead of paying the regular tax of 35% on these foreign profits, corporations want a one-time, one-year tax-cut--to just over 5%.
Corporate chieftains argue that this proposal is a win-win: Companies pay less tax than they would normally have to pay. The government gets badly needed funds to reduce deficits or (heaven forfend!) provide services to those in need. And businesses would increase their ability to stimulate the economy by buying goods and services and/or hiring new employees. Critics respond that similar amnesties in the past have provided less of an economic jolt than expected.
On the surface, the proposal has some merit. Apple, for example, has some $12 billion sitting in foreign banks. While it would be nice to see them fork over $4.2 billion in taxes, that isn't really an immediate option. The choice is between Apple paying a little over $600 million (5.25%) or just keeping the money overseas, in which case the government gets nothing now. The proposal looks even more attractive if--as proponents suggest would happen--Apple uses a large portion of the remaining $11.4 billion to spur investment or hiring.
Politically, the idea is distasteful: Humongous corporations receiving multi-billion dollar tax breaks looks bad when average Americans are struggling to get by. But we can swallow hard and accept the idea politically. On the other hand, we question the economics.
The potential upside of this proposal is that companies would use the money they bring back from overseas in a manner productive both to themselves and to the general economy--by buying stuff and hiring people. There are, however, no guarantees that corporations would actually do this: They could, instead, simply park the money in American banks (which wouldn't be the worst outcome as the money could then be lent out to others) or, worse, reward shareholders with hefty dividends.
Because here's the thing: The very fact that the money is now just sitting around overseas doing nothing suggests that these corporations don't really need the money; if they did, they presumably would bring the bucks back home regardless of the tax implications. Rational economic behavior suggests that Apple and Google and Microsoft and the like consider sequestering money overseas--presumably earning interest--a more productive use of capital than bringing it back home. A tax break, therefore, would seem simply to be an unearned reward for acquiring capital overseas. It also sends a dangerous message to multinational conglomerates: If you wait long enough, you won't have to pay proper taxes on your earnings.
On the other hand, the government could use tax policy to generate revenue and stimulate the economy. And while the absolute number of dollars might be smaller, the results would be more likely to generate economic growth.
Millions of Americans have 401k's or similar retirement accounts. These accounts, often tied to the stock market, have taken a battering over the last few years. Account holders, though, have been largely unable to pull their money out of these diminishing funds. That is because, as retirement accounts, these funds are supposed to be off limits until the holders reach retirement age. If someone does withdraw funds early, they face massive tax penalties.
So. . . why not substantially reduce these penalties? People struggling to pay bills or buy clothes or put food on the table would presumably welcome the chance to tap into these substantial (even if diminished) pots of cash. They would pay a small amount of tax on their withdrawals, thus, as in the corporate scenario, supplying important government revenue. Furthermore, these folks are highly unlikely simply to pull out the money and stick it under the mattress: They will use it to, y'know, buy stuff, thus stimulating demand and, perhaps, generating a need for companies to start hiring again.
Those who object that this undercuts the purpose of the 401k--to provide workers with a comfortable retirement--need to look at the state of the funds themselves: Even before the recession, it was unclear that a typical worker's 401k truly would have provided a secure retirement. Since the crash, the accounts have shrunk and are thus even less likely to provide a soft cushion for retirement.
So if the government decides to provide Google with a nice tax holiday, fine. The actual effect on the American economy will probably be negligible at worst. But if economic stimulus and popular support are the goal, the best place to start would be with the little guy.
Solipsistography
"Companies Push for Tax Break on Foreign Cash"
*******************************************
Answers to yesterday's Shakespearean Insult Quiz:
The following insults were Solipsisms: Pallet jacker; Bobbin; Blue-footed booby; Randy savage; Thrice-mullioned otter (we were particularly pleased with that one); and, Spastic colon
In order to "help" with the United States' continuing financial woes, megafirms like Apple, Google, Microsoft, and others are proposing to repatriate foreign profits. Once this money--potentially hundreds of billions of dollars--is brought "home," it will be subject to taxes, providing an immediate infusion to a cash-strapped treasury. The catch, though, is that the companies are requesting a hefty tax break: Instead of paying the regular tax of 35% on these foreign profits, corporations want a one-time, one-year tax-cut--to just over 5%.
Corporate chieftains argue that this proposal is a win-win: Companies pay less tax than they would normally have to pay. The government gets badly needed funds to reduce deficits or (heaven forfend!) provide services to those in need. And businesses would increase their ability to stimulate the economy by buying goods and services and/or hiring new employees. Critics respond that similar amnesties in the past have provided less of an economic jolt than expected.
On the surface, the proposal has some merit. Apple, for example, has some $12 billion sitting in foreign banks. While it would be nice to see them fork over $4.2 billion in taxes, that isn't really an immediate option. The choice is between Apple paying a little over $600 million (5.25%) or just keeping the money overseas, in which case the government gets nothing now. The proposal looks even more attractive if--as proponents suggest would happen--Apple uses a large portion of the remaining $11.4 billion to spur investment or hiring.
Politically, the idea is distasteful: Humongous corporations receiving multi-billion dollar tax breaks looks bad when average Americans are struggling to get by. But we can swallow hard and accept the idea politically. On the other hand, we question the economics.
The potential upside of this proposal is that companies would use the money they bring back from overseas in a manner productive both to themselves and to the general economy--by buying stuff and hiring people. There are, however, no guarantees that corporations would actually do this: They could, instead, simply park the money in American banks (which wouldn't be the worst outcome as the money could then be lent out to others) or, worse, reward shareholders with hefty dividends.
Because here's the thing: The very fact that the money is now just sitting around overseas doing nothing suggests that these corporations don't really need the money; if they did, they presumably would bring the bucks back home regardless of the tax implications. Rational economic behavior suggests that Apple and Google and Microsoft and the like consider sequestering money overseas--presumably earning interest--a more productive use of capital than bringing it back home. A tax break, therefore, would seem simply to be an unearned reward for acquiring capital overseas. It also sends a dangerous message to multinational conglomerates: If you wait long enough, you won't have to pay proper taxes on your earnings.
On the other hand, the government could use tax policy to generate revenue and stimulate the economy. And while the absolute number of dollars might be smaller, the results would be more likely to generate economic growth.
Millions of Americans have 401k's or similar retirement accounts. These accounts, often tied to the stock market, have taken a battering over the last few years. Account holders, though, have been largely unable to pull their money out of these diminishing funds. That is because, as retirement accounts, these funds are supposed to be off limits until the holders reach retirement age. If someone does withdraw funds early, they face massive tax penalties.
So. . . why not substantially reduce these penalties? People struggling to pay bills or buy clothes or put food on the table would presumably welcome the chance to tap into these substantial (even if diminished) pots of cash. They would pay a small amount of tax on their withdrawals, thus, as in the corporate scenario, supplying important government revenue. Furthermore, these folks are highly unlikely simply to pull out the money and stick it under the mattress: They will use it to, y'know, buy stuff, thus stimulating demand and, perhaps, generating a need for companies to start hiring again.
Those who object that this undercuts the purpose of the 401k--to provide workers with a comfortable retirement--need to look at the state of the funds themselves: Even before the recession, it was unclear that a typical worker's 401k truly would have provided a secure retirement. Since the crash, the accounts have shrunk and are thus even less likely to provide a soft cushion for retirement.
So if the government decides to provide Google with a nice tax holiday, fine. The actual effect on the American economy will probably be negligible at worst. But if economic stimulus and popular support are the goal, the best place to start would be with the little guy.
Solipsistography
"Companies Push for Tax Break on Foreign Cash"
*******************************************
Answers to yesterday's Shakespearean Insult Quiz:
The following insults were Solipsisms: Pallet jacker; Bobbin; Blue-footed booby; Randy savage; Thrice-mullioned otter (we were particularly pleased with that one); and, Spastic colon
Saturday, May 14, 2011
All's Fair in Love and Taxation
Cash-strapped localities have started exploring the possibility of taxing non-profit entities. This makes a certain amount of sense. Non-profits that own substantial amounts of property could conceivably help cities and states withstand some of the ravages of today's economic crises. And if we're talking, say, about universities with multi-billion dollar endowments, one can understand the cities' impulse to ask these groups to contribute more to the common welfare.
We have some problems with the thought, though, of most non-profit organizations, which, remember, don't make a lot of money--some of them hardly make any profits at all!--having to pay taxes on their facilities. The whole point of offering non-profits tax exemptions is to help them to help us: Your local homeless shelter or after-school program provides services that a community needs. If an NPO didn't do it, the government would probably have to (or at least pay for the consequences of NOT having the service), which means higher tax bills for everyone. The tax break is a theoretically cost-effective way to assist these organizations.
What we really have a problem with, though, is the fact that while some non-profits may be asked to pay property taxes, others won't be. If states are going to start taxing universities and hospitals, shouldn't they also tax the other large property-owning non-profits like, oh, the Catholic Church and other large religious organizations?
Yes, we know, first amendment, blah blah blah. But if other NPOs must do their share, why shouldn't the church? We'll even make a deal: If the churches pay their fair share in taxes, then they can even participate in the political process. That way, for example, they could even encourage their parishioners to vote for certain candidates or, say, discourage their clergy from offering communion to Catholic candidates like John Kerry who support abortion rights, which they didn't do because they're non-profits and not allowed to participate in the political process. Oh, wait.
What's good for the non-profit goose is good for the non-secular gander.
Solipsistography
"Squeezed Cities Ask Nonprofits for More Money"
We have some problems with the thought, though, of most non-profit organizations, which, remember, don't make a lot of money--some of them hardly make any profits at all!--having to pay taxes on their facilities. The whole point of offering non-profits tax exemptions is to help them to help us: Your local homeless shelter or after-school program provides services that a community needs. If an NPO didn't do it, the government would probably have to (or at least pay for the consequences of NOT having the service), which means higher tax bills for everyone. The tax break is a theoretically cost-effective way to assist these organizations.
What we really have a problem with, though, is the fact that while some non-profits may be asked to pay property taxes, others won't be. If states are going to start taxing universities and hospitals, shouldn't they also tax the other large property-owning non-profits like, oh, the Catholic Church and other large religious organizations?
Yes, we know, first amendment, blah blah blah. But if other NPOs must do their share, why shouldn't the church? We'll even make a deal: If the churches pay their fair share in taxes, then they can even participate in the political process. That way, for example, they could even encourage their parishioners to vote for certain candidates or, say, discourage their clergy from offering communion to Catholic candidates like John Kerry who support abortion rights, which they didn't do because they're non-profits and not allowed to participate in the political process. Oh, wait.
What's good for the non-profit goose is good for the non-secular gander.
Solipsistography
"Squeezed Cities Ask Nonprofits for More Money"
Friday, May 6, 2011
SLO Death
Every spring for the last few years, the Solipsist's college has held a Staff Appreciation Day. The administration springs for food. A couple of the faculty members barbeque. Offices close early. And the Solipsist karaokes--whether people want him to or not.
This year, due to budget cuts and an increasing workload, the college had to cancel the formal Staff Appreciation Day. Instead, the administration provided a luncheon for the staff, served by the managers. A nice gesture, to be sure, but somewhat dampened by the fact that this week layoffs were announced. Suffice to say, we found something mildly ironic in the idea of an event expressing appreciation for the staff who have just been informed of their dismissal. Mildly ironic and majorly depressing.
One of our colleagues published an article in the faculty association's newsletter about the increasing demand for "accountability" on the part of community-college (and other) educators. Teachers must be accountable! Staff must be accountable! Administration must be accountable! Students must succeed, and those responsible for their success must provide evidence that they are, in fact, succeeding.
If this sounds reasonable to you, we understand. Certainly the public has a right to know how tax dollars are spent, and, indeed, community-college faculty should be held accountable for doing that for which they have been hired. The problem, though, is that a great number of those who talk most about accountabiity seem to start from a position of doubt--an assumption that we are not doing our jobs. As a result, we faculty must constantly prove our worth. The current buzzworthy term in higher-education is "Student Learning Outcomes" (SLOs). It is not enough to give lectures, to design engaging, interactive classes, and to spend twice as many hours again prepping for classes and grading papers; it is not enough to hold office hours and other student conferences; it is not enough to attend departmental meetings and sit on numerous committees. We must also provide data-based proof that all of this is effective. This means more number-crunching, more meetings, more reports. More work for everybody.
But go back to that luncheon we discussed earlier, the one at which all those soon-to-be-laid-off employees were feted. While faculty must provide ever-more evidence that they are doing what they are supposed to be doing, the numbers of those who support the mission of the college--and by extension the teachers--are diminishing. Those who are left must pick up ever more of the slack. And all the while, teachers must take more time away from teaching in order to fill out reports to prove that they are teaching.
We're stuck in a vicious circle--one that's located around a drain.
This year, due to budget cuts and an increasing workload, the college had to cancel the formal Staff Appreciation Day. Instead, the administration provided a luncheon for the staff, served by the managers. A nice gesture, to be sure, but somewhat dampened by the fact that this week layoffs were announced. Suffice to say, we found something mildly ironic in the idea of an event expressing appreciation for the staff who have just been informed of their dismissal. Mildly ironic and majorly depressing.
One of our colleagues published an article in the faculty association's newsletter about the increasing demand for "accountability" on the part of community-college (and other) educators. Teachers must be accountable! Staff must be accountable! Administration must be accountable! Students must succeed, and those responsible for their success must provide evidence that they are, in fact, succeeding.
If this sounds reasonable to you, we understand. Certainly the public has a right to know how tax dollars are spent, and, indeed, community-college faculty should be held accountable for doing that for which they have been hired. The problem, though, is that a great number of those who talk most about accountabiity seem to start from a position of doubt--an assumption that we are not doing our jobs. As a result, we faculty must constantly prove our worth. The current buzzworthy term in higher-education is "Student Learning Outcomes" (SLOs). It is not enough to give lectures, to design engaging, interactive classes, and to spend twice as many hours again prepping for classes and grading papers; it is not enough to hold office hours and other student conferences; it is not enough to attend departmental meetings and sit on numerous committees. We must also provide data-based proof that all of this is effective. This means more number-crunching, more meetings, more reports. More work for everybody.
But go back to that luncheon we discussed earlier, the one at which all those soon-to-be-laid-off employees were feted. While faculty must provide ever-more evidence that they are doing what they are supposed to be doing, the numbers of those who support the mission of the college--and by extension the teachers--are diminishing. Those who are left must pick up ever more of the slack. And all the while, teachers must take more time away from teaching in order to fill out reports to prove that they are teaching.
We're stuck in a vicious circle--one that's located around a drain.
Sunday, January 2, 2011
Obligations
The Solipsist has had it up to here (his hand is at his chin) with people blaming the nation's economic woes on unions, particularly public-service unions. At a time when right-wingers oppose any attempt to raise taxes on millionaires, it seems disingenuous at best to claim that the main culprit behind state-budget disasters is the pensions of teachers and other public-sector employees.
Certainly there are abuses. People react with justifiable outrage to stories of retired politicians collecting six-figure pensions, but these are the exceptions, not the rule. In New Jersey, whose citizens have expressed some of the greatest outrage, the average public-sector pension is $20,000 a year; teachers earn, on average, $46,000. Pardon us if these figures don't provoke an urge to march, pitchfork in hand, to our local UFT office demanding a clawback of hard-earned tax dollars.
Obviously, the Solipsist--a teacher and son of a teacher--is a biased commentator. But we have little patience for those who claim that teachers (along with other government employees and civil service workers) should accept pension cuts in the spirit of shared civic sacrifice. Put simply, many of these folks have already sacrificed.
Consider: Teachers are, by definition, highly educated people. They must graduate college and then either satisfy state-certification requirements or earn post-graduate degrees or both. The Solipist's FFB Emi Ha has jumped through hoops over the last year or so to prove that she is qualified to teach in her new hometown, despite having multiple degrees and teaching experience and having satisfied all certification requirements in her previous hometown. The Solipsist himself has two post-graduate degrees, as well as a BA and state certification to teach in New York.
Our point is, when one decides to become a teacher, it is not for lack of intellectual capacity or professional ambition. These are people who could easily have chosen more financially remunerative careers in law, politics, or finance. They chose, though, to provide service. They sacrificed.
In many cases, these workers continued to sacrifice. Indeed, in the face of state and municipal budget difficulties, some public-sector unions agreed to forego wage increases. The spirit of sacrifice exists in these workers. Ironically, one of the concessions that some unions made was to forego raises in exchange for pension guarantees--guarantees that are now apparently endangered.
By all means, look at abusive pension-padding practices and crack down on those. But stop blaming deficits on the people who have chosen to take a lifetime pay cut to serve their fellow citizens.
Certainly there are abuses. People react with justifiable outrage to stories of retired politicians collecting six-figure pensions, but these are the exceptions, not the rule. In New Jersey, whose citizens have expressed some of the greatest outrage, the average public-sector pension is $20,000 a year; teachers earn, on average, $46,000. Pardon us if these figures don't provoke an urge to march, pitchfork in hand, to our local UFT office demanding a clawback of hard-earned tax dollars.
Obviously, the Solipsist--a teacher and son of a teacher--is a biased commentator. But we have little patience for those who claim that teachers (along with other government employees and civil service workers) should accept pension cuts in the spirit of shared civic sacrifice. Put simply, many of these folks have already sacrificed.
Consider: Teachers are, by definition, highly educated people. They must graduate college and then either satisfy state-certification requirements or earn post-graduate degrees or both. The Solipist's FFB Emi Ha has jumped through hoops over the last year or so to prove that she is qualified to teach in her new hometown, despite having multiple degrees and teaching experience and having satisfied all certification requirements in her previous hometown. The Solipsist himself has two post-graduate degrees, as well as a BA and state certification to teach in New York.
Our point is, when one decides to become a teacher, it is not for lack of intellectual capacity or professional ambition. These are people who could easily have chosen more financially remunerative careers in law, politics, or finance. They chose, though, to provide service. They sacrificed.
In many cases, these workers continued to sacrifice. Indeed, in the face of state and municipal budget difficulties, some public-sector unions agreed to forego wage increases. The spirit of sacrifice exists in these workers. Ironically, one of the concessions that some unions made was to forego raises in exchange for pension guarantees--guarantees that are now apparently endangered.
By all means, look at abusive pension-padding practices and crack down on those. But stop blaming deficits on the people who have chosen to take a lifetime pay cut to serve their fellow citizens.
Sunday, November 14, 2010
The Solipsist Solves the Budget Crisis!
Cool interactive feature on the Times website today: You get to implement various pieces of the deficit-reduction plan proposed earlier this week. Frankly, we don't see what's so tricky. We plugged the $1.4 trillion gap with a fairly balanced combination of tax increases (53%) and spending cuts (47%). Admittedly, we probably cut more than some would like from the military, and we realize that anything that puts the words 'raise' and 'taxes' together in the same sentence is a political non-starter, but still this could work.
We find it hard to believe that people still argue over such common-sense measures as raising the social-security age and/or increasing the amount of income subject to social-security taxes. We also have never understood the logic behind the whole mortgage-interest deduction. Sure, we don't own our own home, so we have no real stake in that one, but it's always struck us as a ludicrous loophole. Even if you accept the argument that home-ownership promotes strong communities, and therefore has "positive externalities" that a government should support, does anyone think people choose to buy a house because they get a mortgage interest deduction? That is, isn't the federal government simply rewarding people for behavior they would likely engage in anyway? It's like paying a 10-year-old to eat ice cream.
(DIGRESSION: And, while we're on the subject, if the government believes the best way to stimulate the economy is for citizens to spend spend spend--see President Beavis' exhortation after 9/11 that the most patriotic thing Americans could do would be to go shopping--why isn't credit-card interest afforded similar preferential tax consideration? EOD)
We had an idea for reducing the deficit that the Times doesn't even allow you to plug in: The federal government should conduct a national survey to find out how many people identify themselves as members of a "Tea Party." Let's say 10% of the country claims membership. Well, then, simply cut federal spending by that amount and make sure that not one dime of "evil" federal largesse goes to those folks. In fairness, we would allow them to stop paying federal income taxes. But since "Tea-Party" states tend to receive federal services far in excess of what they pay in taxes, overall this should result in a tidy net sum to the Feds. In 2005, for example, Alaska received $1.84 in federal spending for every dollar paid in taxes; Kentucky, home of Tea Party Senator Rand Paul, got $1.51; and militia favorite Idaho raked in $1.21. On the other hand, "big-spending," liberal bastions like Massachusetts ($0.82), New York ($0.79), and California ($0.78) receive significantly less federal aid proportionally.
Anyway, try the Times's budget-balancing app. Let Solipsist Nation know how you would solve the country's financial woes.
We find it hard to believe that people still argue over such common-sense measures as raising the social-security age and/or increasing the amount of income subject to social-security taxes. We also have never understood the logic behind the whole mortgage-interest deduction. Sure, we don't own our own home, so we have no real stake in that one, but it's always struck us as a ludicrous loophole. Even if you accept the argument that home-ownership promotes strong communities, and therefore has "positive externalities" that a government should support, does anyone think people choose to buy a house because they get a mortgage interest deduction? That is, isn't the federal government simply rewarding people for behavior they would likely engage in anyway? It's like paying a 10-year-old to eat ice cream.
(DIGRESSION: And, while we're on the subject, if the government believes the best way to stimulate the economy is for citizens to spend spend spend--see President Beavis' exhortation after 9/11 that the most patriotic thing Americans could do would be to go shopping--why isn't credit-card interest afforded similar preferential tax consideration? EOD)
We had an idea for reducing the deficit that the Times doesn't even allow you to plug in: The federal government should conduct a national survey to find out how many people identify themselves as members of a "Tea Party." Let's say 10% of the country claims membership. Well, then, simply cut federal spending by that amount and make sure that not one dime of "evil" federal largesse goes to those folks. In fairness, we would allow them to stop paying federal income taxes. But since "Tea-Party" states tend to receive federal services far in excess of what they pay in taxes, overall this should result in a tidy net sum to the Feds. In 2005, for example, Alaska received $1.84 in federal spending for every dollar paid in taxes; Kentucky, home of Tea Party Senator Rand Paul, got $1.51; and militia favorite Idaho raked in $1.21. On the other hand, "big-spending," liberal bastions like Massachusetts ($0.82), New York ($0.79), and California ($0.78) receive significantly less federal aid proportionally.
Anyway, try the Times's budget-balancing app. Let Solipsist Nation know how you would solve the country's financial woes.
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