Tuesday, September 25, 2012

Romney's Taxes

Romney's release of 2011 taxes and an accountants' statement don't do him many favors.  They do show that he paid taxes in all previous years, contrary to Sen. Reid's claim.  Otherwise, he does not do much to support America.  He paid very low taxes.  Andrea Mitchell noted that the summary of 20 years of prior taxes look higher because the tax rates were higher in previous years.  I was surprised to find the best listing of prior year tax rates in Forbes

For much of that 20 year period the top tax rate for salaried income was over 40% and the maximum capital gains tax rate was over 20%.  For 2011 the rates were 37% and 15%.  The table shows how much taxes on rich taxpayers have gone down.  When you look at Federal payroll taxes (for Social Security and Medicare) and state income taxes, sales taxes, and property taxes, the formerly "progressive" tax rates where rich pay higher taxes than the poor, have become "regressive" taxes that fall more heavily on the poor.  Romney's claim that 47% of potential taxpayers pay no taxes, ignores all taxes except federal income taxes. 

If Romney were a loyal, patriotic American earning as much as he does, he should pay something on the order of 30% of his income in federal taxes, not less than 15%. 

Romney and other Republican tax bashers say capital gains taxes have to be low, because they experience double taxation.  Their companies pay tax, and they get their investment income only after the companies are taxed.  But if the companies paid no taxes, workers salaries could be higher, too.  Why don't salaried workers get a double taxation break?  In addition, capital gains taxes are paid only after an asset is sold.  Therefore, many wealthy individuals have the earnings tax free for years. 

For example, if you buy some stock for $100, and it goes up $50 the first year.  You have made $50, but you pay no tax on it, because you don't sell it.  The next year, if the stock goes up another 50%, you make $75, but you pay no tax on that $75, plus you have made money on ALL of the profit you made the first year, because that profit was not taxed.  A salaried worker pays taxes on all of his income in the year he makes it; there is no benefit from compound interest, i.e., interest on the prior years' interest.  On the other hand, a rich person can hold a profitable asset for many years without paying any taxes on it, earning profit on the earlier profit that was not taxed.  Then when he sells it, he pays much lower taxes than someone who works for a living.  Basically the government gives him an interest free loan of the taxes due each year until he sells the asset.  Who's the "welfare queen" in this picture? 

It doesn't seem fair to me.  It's a good deal, but it's not fair. 



Year Top Regular Rates Max. Capital Gains Rate Capital Gains Taxation Notes
Wages & Other Earned Income Unearned Income Except Cap Gains Above Joint Taxable Income of
1916 15% 15% $2,000,000 15% Realized gains taxed same as other income
1917 67% 67% $2,000,000 67%
1918 77% 77% $1,000,000 77%
1919-21 73% 73% $1,000,000 73%
1922 58% 58% $200,000 12.50% Maximum rate
1923 43.50% 43.50% $200,000 12.50%
1924 46% 46% $500,000 12.50%
1925-28 25% 25% $100,000 12.50%
1929 24% 24% $100,000 12.50%
1930-31 25% 25% $100,000 12.50%
1932-33 63% 63% $1,000,000 12.50%
1934-35 63% 63% $1,000,000 31.50% Sliding exclusion of 70%>10yrs 0% <1 small="small" yr.="yr.">
1936-37 78% 78% $2,000,000 39%
1938-40 78% 78% $2,000,000 30% Excl. 50%>2yrs; 67% 18-24mo; 0%<18mo 30="30" ax="ax" small="small">
1941 80% 80% $2,000,000 30%
1942-43 88% 88% $200,000 25% Exclusion 50% > 6 months; 25% maximum




1944-45 94% 94% $200,000 25%
1946-47 86.50% 86.50% $200,000 25%
1948-49 82.10% 82.10% $200,000 25%
1950 84.40% 84.40% $200,000 25%
51-64 91% 91% $200,000 25%
64-67 70% 70% $200,000 25%
1968 75.30% 75.30% $200,000 26.90% Transition
1969 77% 77% $200,000 27.50%
1970 50% 70% $200,000 32.30%
1971 50% 70% $200,000 34.30%
1972-75 50% 70% $200,000 36.50% 50% exclusion - minimum tax effects
1976-77 50% 70% $203,200 39.90%
1978 50% 70% $203,200 39%
1979-80 50% 70% $215,400 28% 60% exclusion
1981 50% 70% $215,400 23.70% 50% or 60% exclusion
1982-86 50% 50% $215,400 20% 60% exclusion
1987 38.50% 38.50% $192,930 28% Maximum rate
1988-90* 28%/33% 28%/33% * 28%/33% Realized gains taxed same as other income
1991-92 31.90% 31.90% $82,150 28.90% Maximum rate
1993-96 43.70% 40.80% $250,000 29.20%
1997-2000 43.70% 40.80% $275,000 21.20%
2001 43.20% 40.30% $297,350 21.20%
2002 42.70% 39.80% $307,050 21.20% 18% top capital gains rate in rare cases
2003-05 39.00% 36.10% $311,950 16.10% Reduced maximum rate which also applied to dividends
2006-07 38.60% 35.70% $336,550 15.70%
2008-09 38.30% 35.40% $357,700 15.40%
2010-12 37.90% 35.00% $373,650 15%
2013-on 44.60% 44.60% $396,100 25% 21.2% income tax plus 3.8% Medicare tax; also on dividends

Thursday, September 20, 2012

Concern about Military is about Contractors

With the approach to the "fiscal cliff," there is a lot of talk about the desire to avoid cutting the Defense budget.  On its face, this appears to be concern about the fighting men and women in Afghanistan and other dangerous places, but it's really concern about defense contractors.  I don't think the Republicans really care about the people serving in the military.  Very few Republicans (or Democrats) in the House or Senate served in the military.  But they do care about their contributions from defense contractors, and about jobs in plants in their home districts.  Because of their concern about their home districts, the government had to change the whole procedure it uses to close military bases, because if handled the normal way, no base would ever be closed.  It's almost the same thing with defense contractors; every congressman wants to funnel money home to his defense contractor.  Hence, the frequent congressional mandates to build weapons systems that the Pentagon doesn't want. 

So, I am not too concerned about all the furor about saving the Defense Department budget; it's really about saving elections for incumbent congressmen and senators.  The bottom line on jobs is serious, but why should we be more concerned about keeping jobs at defense plants than anywhere else?  We need more jobs in computer companies, too, in airlines, everywhere.  Why should defense contractors get special consideration?  Because they give lots of money to the reelection campaigns of people in Congress.  It's all about the money, not about patriotism. 

Sleaze on Wall Street

I was struck reading Michael Lewis' book Boomerang about how sleazy Wall Street salesmen are.  Basically they are worse than used car salesmen, but are selling stuff worth billions.  Lewis says one of the main problems the Germans ran into during the 2008 economic crisis was that they believed the salesmen.  He says reports a conversation with Dirk Rothig, a German banker, talking about the German Landesbanks:
"The people in these banks were never spoiled by any Wall Street salesmen.  Now there is someone with a platinum American Express credit card who can take them to the Grand Prix in Monaco....  He has no limit....  All of a sudden a very smart guy from Merrill Lynch shows up and starts to pay a lot of attention to you.  They thought, 'Oh he just like me!'"
At bottom, he [Rothig]  says, the Germans were blind to the possibility that the Americans were playing the game by something other than official rules.  The Germans took the rules at their face value; they looked into the history of triple-A-rated bonds and accepted the official story that triple-A-rated bonds were completely risk-free. 
It's a shame that America has become such a corrupt country, while the Germans seemed to have maintained their moral standards.  Perhaps their terrible failings during World War II have made them more moral today, while our relatively easy course through WW II made us less concerned about our morals.  In particular Wall Street appears to have become a snake pit that has attracted some of the lowest types of humanity. 
 

The Rewards of Military Service

I've decided there are relatively few rewards for military service beyond those of any other job.  If the pay is good and you are not getting shot, then it's as good as any other government job.  But any idea of patriotism or idealism is out the window.  There is a lot of talk about the importance of those serving in the military, but I don't think most Americans believe it, or even if they claim to believe it, they don't act on it.  Companies tout giving jobs to veterans, but it's not because they really care about veterans; it's because it's good publicity for the company. 

If there is any psychic benefit to military service, it is only for the person who serves.  He or she can be personally proud of serving and protecting the nation but don't expect anybody else to share in that feeling.  With the rise in income inequality in the US, soldiers are not protecting their own homes and families so much as they are being paid to protect the enormous wealth of the few at the top of the pyramid.  Neither Romney, nor any of his five sons served in the military, but they are willing to pay some poor, dumb redneck to go shoot some Afghans for them. 

Things have changed for the better.  Veterans returning from Vietnam, like me, were reviled as psychotic baby killers.  After 9/11 there was a genuine increase in patriotism and a desire to protect the US from another, similar assault.  The diversion into the war in Iraq, which had nothing to do with 9/11 tended to waste that feeling and discredit the service of those who volunteered after 9/11.  The military is still more respected than it was after Vietnam, but the spirit of 9/11 is mostly dead. 

Keystone Pipeline


The Keystone pipeline is mostly out of the news now, but it's still an important issue.  Romney brings it up occasionally; Obama tries to hide it under the rug.  Obama is wrong on this issue.  The real debate is about use of fossil fuels, not possible pollution from the pipeline. The pipeline itself will have little environmental impact. There are many pipelines crisscrossing America. Most don't leak, and if they do, it's not the end of the world.

The complaints about possible pollution of Nebraska's aquifer is a red herring. Environmentalists just want to break America's dependence on oil.  Because they pipeline makes oil cheap and easy to use, they want to stop it, not because the pipeline itself will pollute.  Environmentalists argue it would be easier and safer to build a pipeline to the Pacific and ship the oil to China.  If the Chinese burn the oil, the world gets the same pollution, but America gets none of the benefits.

It's fine to have a debate about the use of fossil fuels, but it should be a straightforward debate, not one obscured by fake, legalistic arguments about an environmental impact statement for an oil pipeline. 

Thursday, September 13, 2012

Congressional Email re Foreign Service

I hope that in the light of the killing of Amb. Christopher Stevens and the attacks on the American diplomatic missions in Libya, Egypt and Yemen, you will stand up for the Foreign Service.  Gov. Romney and the Republicans have been very critical of the Foreign Service, and actually seemed to imply that Foreign Service officers deserve to die because they are wimps.  This attitude was illustrated by former Sen. Norm Coleman, Romney's surrogate on the PBS NewsHour last night, who strongly criticized the statement issued by Embassy Cairo, which PBS said, "appeared aimed at calming tensions in Egypt over an anti-Muslim film made in California."  Fortunately Amb. Nicolas Burns defended the Foreign Service, saying that Romney should not have attacked Embassy Cairo for "the actions of an embassy under siege, under great tension." (See PBS report at - http://www.pbs.org/newshour/rundown/2012/09/candidates-spar-over-foreign-policy-following-attacks-in-libya-egypt.html)

When I was in the Foreign Service many years ago, Republican Sen. Jesse Helms hated it, and would have done almost anything to eliminate it, starting with cutting the State Department budget as deeply as possible.  I worry that this same attitude persists in Washington today. 
I hope that you will stand up for the Foreign Service and not put the lives of Foreign Service officers needlessly at risk.  The Foreign Service was already under great stress because of the burden of the Iraq and Afghanistan wars; now the general increase of tensions in Middle East appears likely to increase that burden and the dangers that FSOs face.  Please support them. 

Wednesday, September 12, 2012

Sen. Mitch McConnell Is the Problem

One of the biggest problems facing America today is Senate Minority leader Kentucky Senator Mitch McConnell.  Speaker of the House John Boehner is also a problem, but he legitimately has a Republican majority in the House.  McConnell does not have a majority but through misuse of the the filibuster, he has been able to require 60 votes to pass any meaningful legislation, and since the Democrats do not have 60 votes, he has been able to block any meaningful work by the Senate.  McConnell was a draft dodger during the Vietnam War, apparently escaping service because his mentor, Sen. John Sherman Cooper of Kentucky, intervened on his behalf with his draft board or with the Army.  If McConnell loved America he would have answered his country's call during war, and he would be willing to work to salvage his country's dire fiscal situation.

The Republicans' veto power in the Senate has been particularly harmful in dealing with the country's financial crisis, and is a major concern in the run-up to the "fiscal cliff" of automatic budget cuts at the end of the year. On fiscal issues, the Republicans and the Democrats are at loggerheads, and there appears to be no path to a bipartisan solution or to one-party rule.  Meanwhile, the country continues to run up huge budget deficits.  Clinton's balanced budgets were due in large part to pressure from Newt Gingrich and his Republican majority, but today a similar scenario seems impossible.  The Republicans blame Obama, and he deserves some of it, but I think the main responsibility for the deadlock lies with the Republicans.

McConnell famously said in October 2010, "The single most important thing we want to achieve is for Obama to be a one-term president."  It would appear that the Republicans are ready to allow terrible things to happen to the US in order to defeat Obama.  Partisanship trumps patriotism   In that case, the Republicans appear to unlikely to act responsibly when we hit the "fiscal cliff."  Even now, by refusing to compromise on raising taxes along with budget cuts, the deficit and the national debt just get bigger.

A starting point for a solution already exists in the bipartisan Simpson-Bowles report.  Obama is partly responsible for not pushing harder to do something with the report, but the House and the Senate are also responsible.  The most intransigent position is the Republican opposition to any tax increases.  It has made negotiation impossible.

I don't personally know how to handle total intransigence.  I encountered it at the State Department in dealing with Reagan's Defense Department.  Richard Perle and his office were usually opposed to whatever we at State were trying to do regarding stopping missile proliferation.  They wanted an absolute guarantee from other nations on the issue, i.e., the US had to be absolutely sure that other nations would not violate the agreement, but this is impossible when dealing with human beings or other nations.  We have laws against murder, but people still commit murder.  We have laws against speeding, but people still speed.  Refusing to outlaw murder because murder will still happen seems silly to me, but that was the Republican position.  I couldn't figure out how to deal with it.  Although some other people eventually got a Missile Technology Control Regime agreement after I quit working on it because I was assigned to the embassy in Bangkok, Thailand.  I'm guessing they somehow figured out how to cut Richard Perle out of the loop.  But he showed how successful complete intransigence can be in stopping the government from working.

Thursday, August 23, 2012

Tour at US Embassy in Rome

My short tour as head of the Science Section at the American Embassy in Rome was not very pleasant.

My previous tour as Science Counselor at the embassy in Warsaw was under a cloud because Washington under the Gingrich Republican Congress had cut off funding for science cooperation that was supposed to go on for several more years.  An unexpected call from Washington offered me the job in Rome.

When I arrived in Rome, the State Department was being sued by several environmental groups upset at how the Italians were fishing for swordfish.  The United Nations had put a limit on how long Italian driftnets could be, and these groups sued the State Department to force it to enforce the UN mandate.  The Justice Department argued the case that the State Department did not need court oversight, but lost.  At the time I was not clear what leverage the environmental groups had on the State Department, but as this court decision shows, the leverage was Italian exports to the US.  The environmental groups would force the Commerce Department to withdraw its certification of Italian exports of fish to the US unless Italy was in compliance with the UN resolution.  As a result, a Federal judge ended up in charge of US fishery policy in Italy.

Who really ended up in charge of American fishery policy toward Italy was Greenpeace Italy.  The environmental groups could decide whether any US agreement with Italy on driftnets warranted allowing the Commerce Department decision to stand.  Any US proposal would be run by the US environmental groups; they would then ask Greenpeace Italy for its recommendation before replying to the court.  The Greenpeace Italy swordfish staff was basically one person who spent full time monitoring swordfish fishing boat, and who always smelled strongly of fish when we met with him.  The court decision cites Greenpeace reports in several places in its decision. 

We had a huge meeting in Rome with many representatives of interested parties in the US and Italy.  They came to a resolution, negotiated mainly by my assistant, who had handled fishery matters during a previous tour in Venezuela, and a staff assistant to the Italian director of the fishery office of the Italian Agriculture Ministry.  Under the agreement, the Italian Agriculture Ministry agreed to toughen up its enforcement practices.  A few months later, however, the Agriculture Minister requested a meeting with the Ambassador on the matter.  He said that because his ministry's enforcement officers had stepped up their efforts against illegal driftnet use, the Italian fishermen in Sicily, where most of them were located, had taken out hit contracts with the Mafia on the ministry's enforcement personnel.  The Minister felt that some of his employees were in genuine danger and requested that the agreement be watered down somewhat.  Meanwhile, other fishermen were demonstrating outside the Agriculture Ministry in downtown Rome and creating huge traffic jams.  My assistant who had negotiated the agreement was sick, and I had to go with the Ambassador to meet with the Minister.  The Ambassador was very upset when I told him that he did not have much negotiating room because any change would have to be approved by a federal judge, which meant essentially that it would have to be approved by Greenpeace Italy.  As a result, my last full day on the job in the Foreign Service was spent on the telephone negotiating some "happy-to-glad" changes in the language of the agreement and getting preliminary approval from Washington . 

I had forgotten the terms of the agreement, but they were summarized in the court opinion as:

First, Italy announced its intention to submit a voluntary rationalization and conversion plan to provide for the cancellation of all driftnet fishing licenses, accompanied by a surrender of the driftnets, between 1997 and 1999.

Second, Italy committed to introduce a ban on the use of Sardinian ports by driftnet vessels from other ports. The Sardinian port ban subsequently passed.

Third, Italy announced its intention to pass a law with an escalation of sanctions for fishing with illegal driftnets.

This appears to be one of the decisions that affected our office's work; however, the date of the decision is well after I had already retired from the Foreign Service.

A 2008 study of the driftnet problem showed that not much had changed over the 10 years following my retirement.


Thursday, August 16, 2012

Punishing America for Fareed's Mistake

I saw on the CNN summary for Fareed Zakaria's GPS show last Sunday that he had planned to have Gen. Colin Powell talk about Syria and other international issues.  The NRA and the Republicans succeeded in muffling a reasonable voice on foreign policy by putting Fareed off the air for one paragraph that may have accidentally been plagiarized.  The show was dropped and apparently will be off the air for at least a month.  Cancelling his show is sort of like cutting off your nose to spite your face.  Candy Crowley is not bad, but by focusing on politics, she is caught up in a bunch of nasty people calling each other nasty names, while important stuff is going on overseas -- Syria, Iran, the Euro crisis -- but is not being covered by anybody, now that Fareed is barred from TV.  I hope CNN gets whatever it was they wanted from Karl Rove, maybe $100 million more in campaign ads for the Republicans.  Is Time-Warner's grovelling to the Republican establishment less culpable than Fareed's paragraph? 

Swift Boats Are Back

The Republicans have a new anti-Obama attack group, the Special Operations Opsec Education Fund, according to Reuters and the New York Times.  This is basically the same idea as the Swift Boat campaign waged by George W. Bush against Sen. John Kerry during his Presidential campaign.  The Swift Boat campaign vilified all Vietnam veterans by vilifying Kerry's military service, while the new Opsec campaign is aimed more specifically at Obama as Commander-in-Chief because he managed to kill Osama bin Laden, which the incompetent, cowardly Republicans had failed to do while George W. Bush was Commander-in-Chief. 

If the Republicans wanted to make sure that I, a Vietnam veteran, do not support Romney (or any other Republican) this is the way to do it.  It's probably coincidental, but both groups are primarily Navy veterans, the Swift boat veterans from Vietnam, and now the Navy seals from the bin Laden attack.  It makes me inclined to think that Navy officers are less patriotic than officers from other services, although that is probably not justified on the basis of the political actions of a handful of Navy personnel.  However, Chief of Staff General George C. Marshall set the standard during World War II and the years following it when he served as Secretary of State and Secretary of Defense, when he would not vote for any candidate because it might make it more difficult for him to serve the man he had not supported if he was elected.  Certainly soldiers should be allowed to vote, and retired officers should be allowed to campaign, but I think it is questionable when they attack the leadership of the country for being unpatriotic.  I think that makes them unpatriotic.  It's okay to attack the policies, but not to attack the Commander-in-Chief for disloyalty.  Do they want to try him for treason? 

The Republicans pursued two disastrous wars, Iraq and Afghanistan, during which they failed to capture or kill bin Laden.  Now they try to turn Obama's success in doing what they failed to do, against him.  Go back and look at what George W. Bush said and did when we found Saddam Hussein, who was not nearly as important an enemy of the United States as Osama bin Laden.  Republicans can brag, too.  What about "Mission Accomplished" blazoned across an aircraft carrier when the real Iraq war was just starting.  Was George W. Bush a traitor?  I think not; he was trying his best, but as a cowardly Vietnam draft dodger, he just didn't have it in him to fight a war well. 

Friday, August 10, 2012

Sorry for Fareed

I am so sorry that Fareed Zakaria plagiarized something from the New Yorker, according to Politico, and then got caught by the NRA.  The NRA is an unscrupulous, mean-spirited organization that lords itself over our political establishment.  That they got an intelligent liberal like Fareed will scare the less brave liberals in government.  It's like Parade Magazine's report of Grover Norquist fighting with a good man like George H.W. Bush because he went back on his pledge to not raise taxes. 

I hope that Fareed will continue to fight the good fight against the NRA and for intelligent, liberal policies to be pursued by the US Government. 

After comparing what is supposed to be plagiarized, I'm less concerned about Fareed.  Technically they got him, but in fact he gave credit to the real source of the information, a book by Adam Winkler.  The New York Times has a comparison of the texts.  He pretty much copied Ms. Lepore's summary of Winkler's book, but he didn't really copy any of her original ideas.  He could have read the book and come up with more or less the same summary.  This is sort of like "plagiarism lite," but it will be a stain on Fareed's reputation, and the NRA will be happy about that. 

In any case I will miss him in Time and on CNN. 


Thursday, August 09, 2012

Did Jews Fight in Iraq?

In my opinion, the Iraq war was largely started by American and Israeli Jews who wanted to kill Saddam Hussein.  Deputy Secretary of Defense Paul Wolfowitz led the charge aided by many Jewish colleagues at Defense and other parts of the foreign policy and defense establishment, such as Doug Feith, and Dov Zakheim. Senator Joe Leiberman was a big supporter.  Of course, President Bush II was interested in showing up or avenging his father, Bush I, and played into their hands.  Dick Cheney just wanted a war to throw some money to his defense industry buddies, but he had his own influential Jew to help him, Scooter Libby.  

So, Iraq was at least in part a war for Jews and Israel.  My question is, "Did Jews fight in it?"  I think not, although my evidence is not very scientific.  I looked up a list of the names of those buried in Section 60 of Arlington Cemetery, who were killed in Iraq.  I hoped there would be some listing of how many tombstones have stars of David on them, but I could not find out.  Looking at the names, it's hard to tell.  There are a lot of Polish and other Slavic names that could be Jewish, or could be Christians of Eastern European ancestry.  However, when I searched the list for "gold" or "stein," which appear in many Jewish names, I found no hits.  If it were an Asian war started by a Christian, e.g., Korea or Vietnam, I could understand, but this was a war in the Middle East pushed strongly by Jews.  

ObamaCare Should Have Been Single Payer


To control health care costs, we need single, public payer system.  The HCA takeover of Denver non-profit hospitals shows how profitable health care is.  Republicans kept it that way by blocking single payer and leaving insurance companies, huge medical companies, and doctors are in control.  Many doctors are working for hospitals or corporations rather than private practice because of the financial incentives.  

The obvious solution to the health care problem was Medicare for everybody, and then cost controls on what Medicare funds.  Obvious problems are the last six months of life for older people who incur huge costs that don't produce better quality of life, just longer life, as well as younger people with hugely expensive diseases, and of course the multiple unnecessary tests.  

High Speed Trading Takes Over Stock Market



This chart from Technology Review shows the growth of high speed trading over the last few years.  As the article says, at some point somebody other than insiders like Knight Capital is going to get burned, perhaps just some average investors.

You can thank 401(k)s and IRAs for a lot of this.  In many cases these are just money that is not actively managed by the people it belongs to, allowing the stock market to play with it.  They have just anted up and put a huge pot of money on the table for the hedge funds and big investors.  As this money gets churned, the big guys probably get rich (unless their computer program blows up) and the little guys get fleeced.  It's virtually (no pun intended) impossible for the SEC to police, because it's so big, so fast, and so complicated.

Friday, July 27, 2012

Al-Qaeda Still Alive

It looks like al-Qaeda is still alive.  They are somewhat active in Iraq, Syria, and Mali.  Al-Qaeda is is a radical Sunni group; most of the 9/11 hijackers came from Sunni Saudi Arabia.  Now they are one of the groups terrorizing the current Shiite government of Iraq, and one of the groups undermining the Alawite/Shiite  government of Assad in Syria.  Meanwhile they are taking over the government of Mali in central Africa.  So, the US is opposing al-Qaeda in Iraq in order for us to support the Maliki government we have set up, although Maliki is very close to Iran, our declared enemy.  We are supporting the goal of al-Qaeda in Syria of overthrowing Assad, even if we so not support al-Qaeda explicitly.  The Syrian rebels deny that they work with al-Qaeda, which may be true, but only because al-Qaeda works in Syria without identifying itself overtly.  Finally, in Mali al-Qaeda makes no bones about openly taking over the government, leading to concerns that it may become a new base of operations for al-Qaeda, as Afghanistan was before 9/11, according to CNN's Erin Burnett.

Saturday, July 14, 2012

Is Ameica Still a Great Nation? 2

All the talk about the European atom smasher finding the Higgs boson adds to the perception of the decline of America.  The US was supposed to have a particle accelerator in Texas, the Superconducting Super Collider, to rival CERN's in France and Switzerland, but we decided in 1993 that we couldn't afford it.  Maybe the world doesn't need two huge accelerators, but the fact is that today Europe has one and the US doesn't.  Two generations ago, the US would have been in the lead.

Today, the US has no manned access to space.  Ironically, we have the International Space Station, but no American way to get people to or from it.  We are dependent on the Russians to transport the crew.  When I was doing science work at American embassies overseas, one of the best selling points we had was NASA.  NASA had a wonderful reputation, mainly build on manned missions like the moon landing and the Shuttle, but also on scientific missions, particular the Hubble space telescope.  The moon landing is now several generations ago, the Shuttle is in museums, and we have no way to service the Hubble, which will eventually die in orbit.  You could see how important manned space activities were when the Shuttles were flown to the various museums that will house them.  People stopped whatever they were doing to watch the Shuttles fly over on the 747 transport.  That greatness is gone.  NASA 20 years ago was what Apple was like before Steve Jobs died.  It was a world leader that caught everyone's imagination.  America has lost its Apple.

After the fall of Berlin wall, the US instituted a number of programs to help the Eastern European nations coming out of Communism.  I went to Poland to run the Maria Sklodowski Curie Fund to help Polish scientists by financing small scientific cooperative projects between American and Polish scientists.  We signed an agreement to maintain the cooperation for five years.  After two years, the Republicans took over Congress in the Newt Gingrich revolution, and cancelled funding for the cooperation years earlier than specified in the agreement.  The US did it under terms of the agreement that were put in for the Poles in case they ran out of funds, saying that the agreement could be cancelled if either party found it impossible to fund it.  The only reason it was impossible for the US was that Congress refused to do so.  It was an enormous contrast to the Marshall Plan that the US funded after World War II.  The US had relatively much more debt, still had some rationing as a result of the war, but we sacrificed to help the Europeans.  The Republican revolution was not that generous.  In large measure, the European Union stepped in where the US failed, and is largely responsible for the current day success of the Poles and other Eastern Europeans.  The contrast between the "greatest generation's" Marshall Plan, and the Gingrich Revolutions selfishness could hardly be starker.

The continual growth of a huge national debt and budget deficit is another sign of decline.  There is nothing wrong with going somewhat into debt sometimes,but going hugely into debt all the time is bad.  Although they agree there is a problem, the US is badly divided on this issue, with Democrats saying that taxes must be raised, while Republicans say expenses must be cut.  The Democrats are in general more willing to put up with debt, but responsible Democrats less so.  The US grew its social welfare programs, like Medicare and Social Security, when its economy was strong.  Now we can't afford as much social welfare as we could a generation ago, but we can't have a civilized debate about how to reduce it, or pay for it.  When you cut benefits, you hurt people.  Today, Republicans, unlike Reagan, are unconcerned about who gets hurt; the taxpayers just want their money back.  So, there is no discussion of how to reduce programs in a way that creates the least harm.  There is more discussion of how to raise taxes, but only because the huge Bush tax cuts that were limited in time have been continued long past their intended expiration date.  The "fiscal cliff" in theory will focus minds on taxes and budget cuts, but in fact Congress will probably muddle through without making a real decision.  That is not the mark of a great nation.

A personal bugaboo for me has been America's hatred of its military since Vietnam.  It's okay to hate the military as long as the nation is not threatened, but when it is, it may be hard to overcome.  A good military requires good people to serve in it.  Currently very few of the best Americans will serve.  The service academies still turn out pretty good officers, but their perspective is somewhat limited.  The military also needs outsiders who will bring a different outlook.  This means you need some good people from Harvard and Stanford, as well a more graduates of good state universities.  But today's generation grew up with parents or grandparents who avoided service in Vietnam, and who often pilloried veterans as psychotic baby killers, rather than praising them as defenders of the nation.  Vietnam veterans probably share the homecoming experiences of Confederate veterans or low-ranking German soldiers who served under Hitler. The 9/11 attack began changing this attitude, because America really was attacked, but it was not a traditional military attack.  Terrorists don't wear uniforms; The 9/11 attack was carried out by a handful of people who all died in the attack, except for Osama bin Laden and a few of his associates.  Thus, it didn't really call for a military response, although that is how we responded.  The resulting mess, getting rid of Saddam Hussein but strengthening the Iraqi regime, has not done a great deal to strengthen respect for the military, although it has helped.  The Afghan war has at best been a wash, with no clear positive result from years of fighting.  The fact that some many troops come home with mental problems has to some extend reinforced the perception that soldiers are psychotic killers, further discouraging people from joining the military.  Without a strong military, the US position in the world is weakened, because it will be less able to respond if it is threatened by another country.

Monday, July 09, 2012

Barclays Adds to Bankers' Poor Image

The revelation that Barclays Bank manipulated the LIBOR interest rate is another example of corruption among world class bankers.  Although Barclays is the only bank which has admitted guilt so far, it seems clear from emails and other documents that the manipulation was widespread among the other world class banks that Barclays did business with, probably including such big names a JP Morgan Chase and Citibank. Jamie Dimon was just on Capitol Hill testifying about loosing billions of dollars in bad investments, but the Senators and Congressmen basically gave him a pass.  With few exceptions they praised him and asked for his advice on banking regulation and the economy.  I was ashamed of my Senator, Michael Bennet, for kowtowing to Dimon by throwing him softball questions.  Now Jamie Dimon's similarly named colleague at Barclays, Robert Diamond, has resigned under pressure for rate fixing.

It is clear why the banking community, and Jamie Dimon in particular, were so opposed to Elizabeth Warren's taking over the Consumer Financial Protection Bureau.  They were afraid that she would be a real police woman, and they knew that they were dirty.  They may not be criminals, but they are dishonest and corrupt.  They have just manipulated the Congress to make it legal to do the unscrupulous things that they do.  Their actions are often so complicated and involve such obscure financial instruments that it is very difficult to specify them as crimes, but Elizabeth Warren, as a Harvard law professor, could probably have done it.  So, Jamie Dimon and his fellow big-shot bankers paid lobbyists and congressmen and senators directly to keep her out.  He obviously got to President Obama, too, which is why I am not voting for Obama.  He sold out America for something -- money, Jamie Dimon's love?  I don't know what, but I don't like it.  It was not good for the country.

Friday, July 06, 2012

Is America Still a Great Nation?

Morning Joe on MSNBC had an excellent discussion of the Presidency this morning with several historians.  It mainly focused on recent Presidents, but they were compared to the really great Presidents of history.  Unfortunately, the recent Presidents don't measure up to Washington, Jefferson and Lincoln, except perhaps for FDR.

There was a lot of praise for Reagan, JFK, Truman, Eisenhower and some others.  The best justification for Reagan was that he inspired a new conservative, Republican attitude which has continued to this day.  I think Reagan was a decent guy, but for some reason today's Republicans fail to see the full scope of his presidency.  First, his tax cuts created budget deficits which bedevil the US up to today.  He was actually too nice for many Republicans.  He surrounded himself with conservative, true believers who cut taxes drastically in anticipation of his cutting government expenditures.  However, when Reagan found that the draconian budget cuts his staffers had proposed would actually lead to widespread hardship in the US, perhaps including starvation, deaths from easily cured diseases, etc., he backed off, under pressure from Democrats.  The result was that we got the tax cuts without the budget cuts and budget deficits into the distant future.  Only Clinton eventually returned the nation to a surplus, ant then only for a few years.  To Reagan's credit, when he realized the damage his tax cuts were doing to the country, he raised taxes, a fact today's Republicans seem to overlook when they lionize him.  He was President when we won the Cold War, but that was in large part due to the containment policy that the US had instituted long before Reagan was President.

Of all the recent Presidents, I think George H.W. Bush (#41) was probably the best, but he doesn't compare to the pantheon of earlier greats.  He won the first Iraq war, handling it much better than his son, Bush 43, did the second Iraq war.  Additionally, after Bush 41 pledged not to raise taxes, he did raise them when he believed it was the best thing for the country, although he knew it would undermine his chances for re-election.  He put the country ahead of his own personal career.

The Morning Joe historians commented about how important it was to have a war in order to have a memorable presidency.  But to have a war be a positive for a president's legacy, they thought it had to be a war which the US fought all in.  World Wars I and II are the only ones that fall into that category, and Wilson's handling of the World War I aftermath, partially due to his poor health, did not help his legacy.  On the other hand, Franklin Roosevelt's handling of WW II secured his place in history.  The Vietnam War besmirched all the presidents it touched, and Bush 43's mishandling of the Afghan War and the second Iraq war only sealed his reputation as a horrible, failed President.

Clinton and Carter did not get wars.  Nobody much likes Carter, but grudgingly mentions his successful Middle East peace negotiations, which no one since him has been able to replicate, or even approximate.  Clinton had Bosnia, which I don't remember anyone mentioning.  It was a mixed bag for him; on one hand there was a lot of genocide before he did anything, on the other the Balkans have been relatively stable since the Dayton Accords.

There was a lot of sympathy for the largely ignored presidencies of Truman and Eisenhower, but they didn't rise to greatness.  Truman basically took over from FDR at the end of WW II without messing up too badly.  Eisenhower mainly presided over good times as the country recovered from WW II but fought the largely forgotten Korean War.  The historians gave Eisenhower kudos for his handling of the Korean War, but I think it was more the precursor of the recent unsuccessful wars like Vietnam and Afghanistan.  The US did not "win," and there is still no peace treaty ending it.  I think the real hero of the post-World War II decade was Gen. George Marshall. He was probably more responsible for the Allied military victory than any other American military man.  He was Eisenhower's mentor and boss.  After the war he served as Secretary of State and Secretary of Defense, but he would not seek public office, despite his enormous popularity at the end of the war.  He lent his name and prestige to the Marshall Plan, which was largely responsible for the prosperous Europe we have today (despite its current troubles with the Euro).  Marshall never voted because he did not want political loyalties to get in the way of his service to his country.  Eisenhower was not quite so willing to put his country ahead of his own personal career.

On the subject of military service, I am very disheartened that it has become such a badge of dishonor for political service.  No recent President has been a veteran, although a number of veterans have run for President.  Obama did not serve; he defeated McCain who was a prisoner of war in Vietnam.  Bush was a coward who evaded service in Vietnam by joining a National Guard unit in Alabama for which he rarely did anything.  His Vice-President Cheney was also a coward who evaded service in the military altogether, although he was draft age during the Vietnam War.  Bush ran against Al Gore, who served in Vietnam despite his father's being a Senator.  The Gore family, unlike the Bushes, had a tradition of military service to the country.  Then Bush ran against Senator Kerry, whom he viciously attacked through the Swift Boat Veterans group, for being a Vietnam veteran.  I find it disgraceful that Bush did it, and sad that this country despises veterans so deeply that the attack worked.  Clinton, of course, ran against Bush 41, who was a decorated World War II pilot, and Bob Dole, another decorated World War II veteran who was badly wounded in Italy.  Reagan served in the military during World War II, but sort of like Bush 43 did.  Reagan stayed in California and made movies for the Army.  Jimmy Carter was a Navy officer who graduated from Annapolis, and many of the earlier presidents had some military service.

Tuesday, July 03, 2012

Gun Walking v. Gun Sales

The debate over the Congressional contempt citation for Attorney General Holder has obscured the debate about supplying weapons to Mexican drug gangs.  The gun lobby has done a great job of obscuring the fact that the US is supplying many weapons to the gangs without the ill-advised "Fast and Furious" operation.  This Huffington Post article about the Mexican Ambassador to the US's testimony before Congress lays out the damage that the US sale of weapons has done to Mexico.  In most cases the weapons are supplied by Americans who profit by selling them the weapons -- gun dealers and American buyers serving as shills for Mexican gang buyers.  Most of the newly supplied weapons are assault weapons.

End Filibusters

The Republicans have managed to stop the wheels of government by using the Senate filibuster process on all kinds of bills that they don't like.  According to Bloomberg, Common Cause is suing to stop the uncontrolled use of the filibuster.  Since the Democrats took over the Senate and the Republicans lost their majority there, the use of the filibuster has gone up to 276 times in 2007-10 from 130 in 2003-06.  84 filibuster motions had been used in this Congress up until May 2012.  This has effectively instituted a governing process that requires a super-majority in the Senate, and has made it difficult to the US government to function.  Currently it is blocking any progress on the budget process that is leading up to the "fiscal cliff" at the end of the year, when many programs will automatically end or begin unless the Congress takes some action that is currently blocked by the filibuster rule.

Wednesday, June 27, 2012

Mortgage Deduction vs. Capital Gains Tax

I am in favor of passing Bowles-Simpson, and I would defer to them how to revise tthe tax system, but the tax system is badly out of whack and needs revising quickly and thoroughly.  If people don't respect the tax code, if they perceive it as unfair, they won't pay.  Everybody will be a tax cheat, as they are in many southern European countries, like Greece and Italy.  That said, I wonder if it would be better to eliminate the mortgage deduction, which affects a broad portion or the population, or the capital gains tax rate, which lowers taxes mainly for the rich.

In 2006, the mortgage interest deduction cost the US $76 billion.  Although it affects a broad population, most of the benefit went to the moderately or conspicuously rich.  Half of the benefit went to 12% of the taxpayers, those making more than $100,000 per year.  If it was eliminated, house prices would fall probably 10-15%.  This article says it promoted the then-housing bubble.  

Bowles-Simpson proposed replacing the current deduction with a 12% tax credit (so you don't have to itemize to benefit, since usually only the wealthy itemize).  A 15% credit proposed by a GW Bush panel would have produced $388 billion from 2013 to 2019, i.e., about $65 billion/year additional revenue.  

A CBO analysis points out that the capital gains tax includes a tax on any change in value due to inflation, which is not real income, but is similar to any tax on interest which does not account for inflation.  On the other hand, capital gains tax is not imposed until the item is sold, which may delay taxes for years.  Capital gains over time have produced between 4-7% of revenues for individuals, although they were over 10% for the latter half of the 1990s.  Changes in tax rates affect behavior, but usually for a short time, a few years.  If capital gains taxes are going up, people will sell assets sooner to be taxed at the lower rate, but once they are sold, the spike in selling is over.  In general it is hard to predict capital gains revenues.  

The conservative Heritage Foundation position is that raising capital gains will stifle the economy.  It implies that rich entrepreneurs will not work if they have to pay the same taxes as plumbers or engineers.  They just won't get out of bed in the morning.

A Wall Street Journal article has some specific numbers for capital gains tax receipts in fairly recent years.  In 2003, receipts were $51.3 billion.  In 2007 they were $137.1 billion.  A rough estimate is that if these rich people (and they are almost all rich) paid at the regular tax level (35%) rather than the current capital gains level (15%) the receipts would roughly double, i.e., to $100 billion in 2003 and $250 billion in 2007.  This is very rough, because rich people hold some assets for a long time, and only sell them when the capital gains tax is relatively low.  If there were no special capital gains tax, sales of assets would smooth out; with they special, lower tax they tend to bunch up either just before the rate goes up, or just after it comes down.  But it seems like you could estimate that the lower capital gains rate cost the US treasury about $100 billion per year during the first decade of the 2000s, or about $1 trillion over the last 10 years.  

Thursday, June 21, 2012

Means Testing Social Security

I am interested in the extent to which Social Security is reduced by means testing, since I am a retired US government employee who also qualifies for Social Security because of years spent working in the private sector.  Because of my government retirement, my Social Security is severely reduced, by something like 2/3 or 3/4.  I get less than $50 per month, which every month when I get it seems more like a joke or an insult than social "security."  I will have to live a long time just to get back the money I have paid into Social Security, much less any "government money."

So, what about older rich people like Warren Buffett or T. Boone Pickens?  Do they face limits on the Social Security they can collect?  The Arizona Republic says Buffett collects $32,000 per year, or about $2,600 more per month than I do.  I presume the government has determined that he need the "security" more than I do.  Rep. Ron Paul admitted on Morning Joe that he gets Social Security, although he did not say how much he gets; I think he probably gets more than I do.  In 2007 Sen. John McCain reported that he collected $23,160 in Social Security, or about $1,900 per month more than I do.  It is harder to find out what Boone Pickens collects from Social Security, but this article says he and fellow Texan Ross Perot do collect it.

The main means test that rich people face now seems to be that they have to pay income tax on their Social Security.  Payments are also reduced if you continue to work after you start collecting Social Security, but the limits are reduced as you get older.  So, there are probably no limits on Buffett or Pickens, who are both over 80.

One article in the Huffington Post makes the argument that instead of means testing Social Security payments, the government should remove the limit on the amount of income that is subject to the payroll tax for Social Security, currently $110,100.  Since the payroll tax rate is almost as high as the capital gains tax that most rich people pay on their income, eliminating the limit would substantially increase the income of the Social Security trust fund and do a lot to make Social Security self-sustaining.

For me personally, however, the lesson is that as a retired US government employee, I am subject to a much stricted means test than the richest people in America.  Once again the 1% gets welfare paid by the 99%.





Bin Laden and Drones

I am not entirely happy with the way the Obama administration has handled the bin Laden killing and the frequent drone killings.  I think it was okay to kill bin Laden, but it would have been better to capture him and try him, in the US or in some international court.  If he had resisted arrest, the Seals could certainly have killed him.  I think he was killed because the US did not know what to do with him legally.  The cowardly Republicans are scared to death of bringing any terrorists in the continental US, although the chance of their escaping and harming anyone is practically nil.  The only way they could get out is if they were found not guilty of terrorism, and in that case there is no justification for holding them.

I do not like the idea of executing terrorists by drone attack.  I think it should be used very sparingly, only when there is evidence of a genuine, immediate threat to the US, and the US has to act to save lives.  On the other hand, I do not want to risk the lives of American troops unnecessarily.  The drone attacks certainly save the lives of some American troops.  But we are fighting to preserve American values of justice, honor, and the rule of law.  Destroying these values also has a significant cost.  Presumably we would not kill people willy-nilly, just because they looked suspicious.  So, somewhere there is a trade-off between saving the lives of American troops and destroying American values.  I believe Obama has erred on the side of destroying American values in order to save troops lives.

Wednesday, June 20, 2012

Supreme Court Coup

Americans and Egyptians have been upset at what they call a coup by the Egyptian Supreme Court in ruling on presidential candidates, etc.  They forget that we had our own coup in the US by our Supreme Court in deciding Bush v. Gore, and appointing George W. Bush President of the US regardless of what the actual vote was in Florida. The US survived this coup, although poorly, since Bush was one of the worst Presidents in American history.  Egypt may survive its little coup, but it is much more unstable than the US was.  The big issue is Islamic fundamentalism, which has been given a huge boost by America's ill-advised war in Iraq, which hugely strengthened the hand of Islamic fundamentalists in the Middle East.

Fed Still Alone

Today's announcement by the Fed that it will continue the "twist" to lower long term interest rates, since it can't reduce short term interest rates below zero, shows how isolated the Fed is because the Congress can't or won't do anything.  We still have no fiscal policy, only a monetary policy.  Monetary policy can't do everything.  The Republicans complain that the Fed should not have an employment mandate in its duties, but Congress is doing nothing about unemployment.

The Republicans complain that the US looks like Greece in terms of incurring too much debt, and they have a point, but the US also looks like Greece because it has a dysfunctional government, in that our Parliament, Congress, does nothing.

One of the main reasons for a do-nothing Congress has been the introduction of the requirement of a 60% majority to pass any legislation, rather than 51%.  I don't think the founders of the United States anticipated this outcome, although when talking about the Supreme Court, the Republicans always say we should adhere to what the founders were thinking in the 1700s.  Until recently, the 60 vote requirement for cloture was only used for very important legislation where there was an actual filibuster.  The Democrats are partly to blame for not forcing the Republicans to conduct an actual filibuster speaking for hours like Jimmy Steward in "Mr. Smith Goes to Washington," not just saying they are conducting a virtual filibuster.

I don't think the Fed should take actions to prop up the stock market unless there is a crisis.  I guess there could be debate about whether we are currently in a crisis, but I don't think we are.  Bernanke could let the Dow drop at least 1,000 points before acting as if there were a crisis.  There is a crisis in Europe, but to some extent that is a good thing for US markets.  The Fed should work with the IMF and its European counterparts to assure liquidity, minimize bank failures, etc., but that doesn't necessarily include propping up the stock market.

Wednesday, June 13, 2012

Iraq and Iran

Arianna Huffington is right in her blog about the Iraq-Iran partnership made in America. The US war in Iraq vastly strengthened Iran's role in the Middle East.  The strengthened Iran already has consequences in today's Middle East because of its support for Syria's President Assad in addition to other trouble-making groups such as Hezbollah.  

Wednesday, May 30, 2012

Polish Death Camps

Poland has objected to Obama's reference to a "Polish death camp" while honoring a Pole who helped make the world aware of the Holocaust taking place in Nazi death camps in Poland.  The Polish objection shows their sensitivity on this issue, but certainly what Obama meant was that this was a death camp in Poland, not a death camp run by the Polish government.

Nevertheless, when I lived in Poland I was struck by the fact that they almost always referred to atrocities of the the World War II era as having been carried out by the Nazis, not by the Germans.  The Germans are still here and still next door neighbors of Poland, but the Nazi government is long gone.  So, the Poles live up to the standard that they are demanding from Obama.

Sunday, May 27, 2012

Memorial Day Rembrance

Just for the record on Memorial Day, I want to remember the two men in my unit, A Battery 2/94th Artillery, who were killed at Firebase Barbara and whose names are on the Vietnam Memorial wall:
Paul Kosanke, and
Willie Austin, Jr.

Friday, May 11, 2012

Congressional Letter re Finance


I sent the following to my two Colorado Senators:

Please support Sen. Sherrod Brown's SAFE Banking Act of 2012 to rein in "too big to fail" banks.  JP Morgan's $2 billion loss announced yesterday shows how seriously out of control our banking industry is, only a few years after the 2008 Lehman debacle.  Although JP Morgan claims that its "hedging" was not in violation of the Volker rule, I think that it likely was.  JP Morgan was just gambling with its depositors' money, trying to make a quick buck, which was almost riskless, because the US taxpayers are still guaranteeing the assets of the "too big to fail" banks.

Simon Johnson of MIT and the IMF has called for Jamie Dimon to resign.


You are just throwing away America's money guaranteeing the foolish bets of fat cats on Wall Street.  I can't tell you how disappointed I am that President Obama threw Elizabeth Warren under the bus after all she did to establish the Consumer Financial Protection Bureau.  She was the only one in Washington speaking out for the middle class, and now she is gone.

I don't have much hope.  The US Congress is largely dysfunctional.  We have no fiscal policy.  Ben Bernanke has so far saved us from disaster with monetary policy, but he can't singlehandedly save the world.  You could give him a little help.

Two of the most important additional things the Congress could do are

-- Put the Bowles-Simpson proposals back on the table to address our financial crisis.  They were reasonable; they addressed the most important issue facing the US, and they have been ignored by the Congress.

-- Reinstate the Glass-Steagall Act.  The repeal of Glass-Steagall, led in Congress by Republican Phil Gramm and signed by President Bill Clinton, was responsible for the financial crash of 2008 and the current rogue activities of the big banks.  Banks should be banks, not gambling casinos.  


War Didn't Help

In today's NYT, Paul Krugman talks about how World War II pulled the US out of the Depression, although people back then also said that stimulus would not work.

It reminded me of the difference between World War II and the Iraq and Afghanistan wars.  First Roosevelt in WW II called on all of America to pay for the war, although it still ran up enormous deficits.  Bush said, "Go shopping," to support the Iraq war; you don't need to pay taxes.  If Bush had attempted to pay for the Iraq war, we probably would have had fairer, more equitable taxes, which would have done something to mitigate the perception that the current US tax system is seriously unjust.  We grew up hearing about the merits of the American progressive tax system that taxed the rich more than the poor, and now we find that we have a regressive tax system that taxes the poor more than the rich.  The Republicans argue that the rich still pay the bulk of the taxes, which is true, but only because they earn the bulk of the income.  Also, defenders of the current system seldom bring payroll taxes into the discussion, because if they did, the disparity would be even worse.  It's true that many very poor people don't pay income tax, but many more of them pay payroll taxes for Social Security and Medicare.

The other disparity between the rich and the poor that the war widened is between those who defend America and those who stay home and make money while the soldiers fight.  In the old days, especially when there was a draft, the stay-at-homes were shamed as "war profiteers," but today they are hailed as "entrepreneurs."  In WW II almost everybody who was healthy fought; today almost all soldiers come from the lower classes, and disproportionately from small towns and rural areas, where there is still some feeling of patriotism.  Ironically, the 9/11 attack on the twin towers was directed at America's richest 1%, but the 1% by and large didn't fight back, it hired the 99% to fight and die for them.  Now when those soldiers come home seeking jobs, the 1% that owns everything usually turns its back on them.

The US has regressed so far back toward the old feudal system that we don't need new laws or an updated Constitution, we need a new Magna Carta.  Welcome to the 13th century!

Tuesday, May 08, 2012

Guantanamo Trials Are Legal Failure

The "trial" of the 9/11 terrorists in Guantanamo signals a significant failure of the American legal system.  The victims of 9/11 deserve better, because no one will believe that justice will have been done.  The prisoners may be guilty, but many victims of lynchings and other mob violence over the years have also been guilty.  The sign of civilization would be a fair trial, but Congress and the Obama administration have balked at allowing a fair rial.  The military lawyers in Guantanamo will do their best, but they have been put in an impossible situation.

Tuesday, April 17, 2012

25th Anniversary of MTCR

The following is a press release from the US Department of State:

Formed by the (then) G-7 industrialized countries in 1987, the Missile Technology Control Regime (MTCR) is an informal political understanding among states that seek to limit the proliferation of missiles and related technology; it is not a treaty. Since its creation, 27 additional countries have joined the MTCR, and many other countries have adhered unilaterally to the MTCR Guidelines or otherwise control exports of MTCR Annex items.

Originally focused on restricting exports of nuclear-capable ballistic missiles and related technology, the Regime expanded its scope in 1993 to cover unmanned delivery systems capable of carrying all types of weapons of mass destruction (WMD) -- chemical, biological, and nuclear. In 2002, the MTCR Partners (members) made terrorism an explicit focus of the Regime. Both of those steps were in direct support of the WMD nonproliferation objectives of the Biological Weapons Convention, Chemical Weapons Convention, and Nuclear Nonproliferation Treaty.

The MTCR seeks to limit the risks of proliferation of WMD by controlling transfers that could make a contribution to delivery systems (other than manned aircraft) for such weapons. More broadly, the MTCR Guidelines (export control policies) and Annex (list of export-controlled items) have become the international standard for responsible missile-related export behavior. The MTCR and its Annex were implicitly endorsed in UN Security Council Resolution (UNSCR) 1540 of 2004, which affirms that the proliferation of WMD delivery means constitutes a threat to international peace and security and requires all UN Member States to establish domestic controls against such proliferation. The MTCR Annex also forms the basis of the list of missile-related items prohibited from being transferred to Iran under UNSCRs 1737 and 1929, and to North Korea under UNSCR 1718.

Over the course of the Regime’s 25-year history, the efforts of MTCR member countries have reduced the number of countries possessing missiles capable of delivering WMD, the global inventory of such missiles, and the number of countries interested in acquiring such missiles. The establishment by MTCR member and adherent countries of missile-related export controls has significantly reduced the availability to proliferators of support from the countries possessing the most and best technology. The export controls, information-sharing, and patterns of cooperation fostered by the MTCR also have resulted in the interdiction of numerous shipments of equipment intended for missile programs of concern. All of these measures have made it more difficult, time-consuming, and costly for proliferators to produce or acquire WMD capable missiles.

As it has done since 1987, the United States will continue to work through the MTCR to reduce the global missile proliferation threat by restraining the missile-related exports of an expanding number of countries and by increasing the pressure on proliferators to abandon their missile programs. The United States continues to encourage all non-member countries to support the MTCR’s efforts and to unilaterally abide by MTCR standards in the interest of international peace and security.

The MTCR currently has 34 members: Argentina, Australia, Austria, Belgium, Brazil, Bulgaria, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Ireland, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Poland, Portugal, the Republic of Korea, the Russian Federation, South Africa, Spain, Sweden, Switzerland, Turkey, Ukraine, the United Kingdom, and the United States.

Sunday, April 15, 2012

Liberal Education Still Important

With all the talk today about education, no one talks about the importance of a liberal education.  Despite the Conservative hatred of the word liberal, it means "free."  It is the education that free men should have in order to be able to govern themselves.  In the old days, when voting was limited to white men who owned land, they were the only ones who needed a liberal education.  Now that everybody can vote, everybody needs a liberal education.  We were close to that goal in the 1960's with the rise of cheap state universities and community colleges, but as governments have gone bankrupt, that ideal has disappeared.

Instead of seeing education as a resource that should be widely available, it is a commercial enterprise that is expensive, even for no-name colleges and universities.  Thus it has become all about money, not about learning.   All the students and the professors care about are salable skills.  Universities have become trade schools rather than centers of learning.

The Denver Post ran a front page article on higher education Sunday, but it was all about money -- funding for education.  Doing a search of the page, I did not find a single reference to the liberal arts, which was the most important role of a university a few decades ago, and certainly a hundred years ago.  Higher education has changed, and not for the better. The "bottom line" was that it's looking more and more like the State of Colorado will soon quit funding higher education entirely.

Romney VP Hopefuls Are Fiscal Failures

Two frequently discussed vice presidential hopefuls for presidential candidate Mitt Romney are Rob Portman and Mitch Daniels.  Both were the principle budget strategists for George W. Bush as heads of his Office of Management and Budget (OMB).  Indiana Governor Mitch Daniels was head of OMB from 2001 to 2003; Ohio Senator Portman was OMB director from 2006 to 2007.

Daniels oversaw the post-9/11 invasions of Afghanistan and Iraq without raising taxes.  He publicly estimated the cost of the Iraq war at $50 to $60 billion. A recent Brown University study has estimated the direct cost of the Iraq war at around $750 billion.  Wikipedia says that on Daniels' watch, the US went from a budget surplus of $236 billion to a deficit of $400 billion.  Wikipedia says that on Portman's watch the US public debt increased by $469 billion.

Both of these Republican budget directors follow in the footsteps of David Stockman, Reagan's OMB chief from 1981 to 1985.  Stockman successfully led the fight for Reagan's huge tax cuts, but after cutting revenues, he was unsuccessful in cutting federal expenditures, thus beginning the series of huge budget deficits that persist to this day.  Stockman doubled the national debt from $1 trillion to $2 trillion during his tenure.  The current national debt is about $15.5 trillion.

Jobs Bill and Facebook

I am worried that there is some connection between the recently passed Jobs bill and the Facebook IPO.  Facebook has been the poster child for huge IPOs that give preference to insiders.  Facebook was limited by the old restrictions of privately held companies.  It's not clear whether the new Jobs bill will change its situation. It may be too big, maybe not.  It's already in the situation where the number of shareholders of record is limited, but the actual number of shareholders is much higher.  Goldman Sachs counts as one shareholder, but it can hold shares for its preferred clients, raising the total well beyond 500 or whatever the limit was.  Even if this law does not directly affect Facebook, it will affect new IPOs, and while it may marginally aid new businesses, it will enormously aid rich Wall Street insiders.  At the same time, as the NYT article points out, it may increase the risks of bad investments in questionable companies by small, unsophisticated investors.  I would like to know what Elizabeth Warren thinks about the bill.  Is it good for America?  Is it good for the middle class (or what's left of it)?  Or is it just good for the super rich, especially those who live in Silicon Valley?  Unfortunately I do not trust Obama to do what is best for the middle class (and the country).  He has sold out to the super rich.

Monday, April 02, 2012

Sen. Bill Frist and Denver Hospitals

I have been upset for some time about HCA's takeover of a number of Colorado hospitals.  HCA is owned by the Frist family, whom Sen. Bill Frist represented in the Senate.  Health care is a mess; hospitals are making fortunes, and Bill Frist's is one of them.  Rather than using his expertise on health care to improve it while he was in the Senate, he used it mainly to enrich himself and his family.  Although he was Senate leader, he is remembered mainly for his provide-medical-care-at-any-cost argument to keep Terri Schiavo alive.  Frist is an example of what is wrong with the American health care system, and he was a leader in the Senate.  What is good for his wallet is not necessarily good for the country.

Now, Frist's for-profit HCA plans to take over many of Colorado's not-for-profit hospitals, creating concerns that the hospitals will no longer be run for the public benefit.

On the other hand, a Catholic-conected hospital systsem, SCL, plans to expand in Colorado, raising questions about whether the hospitals taken over will provide for the full range of women's health services that they provide now, since the Catholic church opposes contraception, abortion, etc.




Bernanke Lectures Aimed at Ron Paul

Fed Chairman Bernanke's lectures at George Washington University are aimed at Republican candidate Ron Paul, who represents a significant strain of thought about the Federal Reserve.  Paul believes that the Fed is evil because it interferes with the free functioning the American economy and most often encourages inflation.  Paul would like to see the US return to the gold standard.  Bernanke's first lecture dealt extensively with the issue, in particular recalling William Jennings Bryan's speech about "the cross of gold" on which the rich were crucifying average workers and farmers.

Bernanke correctly asked why the world economies should be restricted by the amount of gold that is mined around the world.  It's clearly better to have a money supply that can be managed to correspond the amount of goods and services being produced that the amount of gold being mined.  On the other hand, Paul is right that an irresponsible Fed can allow or encourage detrimental policies which might well increase inflation (or create deflation).  In an ideal world, however, the US would have a competent Fed which would maintain a proper money supply to facilitate growth and full employment.

One problem these days is that the US has no fiscal policy.  Congress is dysfunctional.  Republicans refuse to raise taxes; Democrats, to cut expenditures.  So, the full burden of trying to manage the American economy falls on the Fed, with some help from the Executive Branch, depending on what it can do by executive order, by the Treasury selling bonds, etc.

But Paul's gold bugs don't trust bureaucrats.  They would rather have the economy controlled by external forces, rather than the government.

I prefer to have Bernanke try to manage the economy rather than leave it hostage to South African gold miners.

Republicans Not Saving Money


In a legitimate debate about health care, Democrats would want single payer system assuring coverage for everybody.  Republicans would want a system that reduced costs.  What actually happened with Obama Care, however, was that the Republican insistence on using private heath insurance companies actually increased costs by increasing the power and profits of  insurance companies without reducing doctors' or hospitals' costs.  A single payer system would have given the government leverage to bring down costs; whether it would have actually done so will never be known.  Congress was quick to restore doctors' Medicare fees to the old, higher level when they were in danger of being reduced by some of the automatic budget reductions.  

Some doctors refuse to accept Medicare patients because Medicare pays less than private insurance.  If Congress had passed "Medicare for everybody," however, doctors would have had less opportunity to earn the high rates they currently do, although for the doctors who treat the richest "one-percent" price is irrelevant.  

In a New York Times report on the richest one percent,they found that after a general category called "managers," physicians made up the next largest portion of the one percent, with those working out of their own offices earning the most. Almost none of these rich doctors work in a world where fees are set by a free market; they are either paid by insurance companies or the government, in both cases with fees set in advance.  A patient who walks in the door of a doctor's office has no bargaining rights.  The doctors make sure up front that they are will paid.

The Republicans did nothing to insert free market principles in the health care law.  If anything, they strengthened the hands of the doctors in negotiating with the insurance companies and the government, assuring that the most expensive health care in the world will become even more expensive.