Monday, November 23, 2009
Time To Change Recession Strategy
Wall Street Salaries Are Too High
Something needs to be done. I don't see how you can regulate salaries in general to get at the huge salaries in business and finance, although a very few are being regulated under the bailout program. The problem is really the huge gap between them and everybody else, even including doctors and lawyers, according to the article. So, I propose a huge tax on huge incomes. It could start at say $1 million annual income. Increase the marginal tax on income over $1 million at something like 50%. Then maybe tax income over $10 million at 70%. Annual income over $100 million at 90%. These rich people will have so many loopholes, deductions, credits, etc., that the actual net tax on them will be much lower.
In addition, to level the income gap, there should be less preference for income generated from financial transactions and activities. Capital gains and dividends should be taxed at a higher rate. One old justification for lower capital gains taxes was inflation, but there is no inflation anymore. Another argument is that low capital gains taxes encourage innovation and entrepeneurship. Okay, but limit that advantage to income that actually comes from innovation. Give the break only to those who fund startups. There shouldn't be a lower tax for people who buy IBM or Walmart today and sell it for a profit in a week or even many years later; they didn't create IBM or Walmart.
Similarly, an argument for dividends is that corporations already pay income tax, and thus dividend income is taxed twice. But like rich individuals, few corporations pay anything like the full corporate tax (35%?) on their full gross income. They have many credits, deductions, writeoffs, etc. You could also tax the first relatively small amount of dividends at a lower rate, to encourage investment by individuals, but tax dividends at a higher rate for individuals who receive more than $10,000 or $20,000 annually in dividends.
It's easy to tax people who earn a salary, but difficult to tax people's income from business and financial activities. Thus, you can be pretty sure what an average worker's gross income is, but it's much more difficult to know for someone involved in business and finance. That argues for even higher taxes on the rich, because they will evade taxes anyway.
The recent dust-up about people who were hiding money in secret bank accounts overseas and not paying taxes on the income is just one example of the problem.
Friday, November 20, 2009
More Steve Simon on Terror
Friday, November 06, 2009
Almost Time for Geithner to Go
Gambling on Wall Street
Buying Patriotism
Thursday, November 05, 2009
Steve Simon Against Afghan Buildup
Monday, November 02, 2009
Corruption on Wall Street
Wednesday, October 21, 2009
Letter on Too-Big-To-Fail Banks
Friday, October 16, 2009
Israel Needs To Man-Up
Thursday, October 15, 2009
I Still Like Elizabeth Warren
Calvin Trillin Is Right
Scale Back Afghanistan
Friday, October 09, 2009
Afghanistan Quandry
Sunday, September 13, 2009
Jews Still Hate Roosevelt
Thursday, September 10, 2009
Hooray for Elizabeth Warren
Saturday, August 29, 2009
Last Days in Rome
Writing about the end of my Foreign Service career in my previous post reminded me of my last days at the embassy in Rome before I went home for good.
People may say I was foolish to step into the job without looking into the office politics, but I had taken other less than stellar assignments for the good of the country, the service, or whatever. I knew that I was not God’s gift the Foreign Service, and I was willing to do jobs that more elite officers frowned on. Plus, I knew I was probably being asked because Amb. Rey in Warsaw had already proposed eliminating by job there due to the decline in Polish-American scientific cooperation. It gave me an opportunity to move on to a more active assignment. Plus, the Washington decision not to comply with the five-year cooperation agreement had soured my relationship with my Polish contacts, who thought, correctly, that the US was failing to live up to its legal obligations. They were reluctant to make an issue of it, because at that time Poland wanted more than anything to be admitted to NATO, and would not do anything to jeopardize that objective. So, it was a convenient time for me to leave. But I was bitter that the US had not lived up to its obligations, especially when it had sent me there to carry them out.
It turned out that the day I was scheduled to leave Warsaw for Rome was the day that Newt Gingrich shut down the US Government. All of our clothes, furniture, etc., had been packed and sent to Rome, except for what we could fit in our car, plus our two dogs. The house we were leaving was empty. I had spent my last day in the embassy, and I was up in the Defense Attaché’s office saying good-bye, when I got a call from my Polish assistant saying that I had to come back to my office and speak to Rome on the telephone. Some administration flunky in Rome told me that because the government had been shut down, I should stay in Warsaw and not come to Rome. Of course, by then I had no place to stay in Warsaw. I was furious. I felt that the US was putting my wife and me (and our dogs) out on the street in Warsaw for the duration of the government shutdown. For the first time, I looked to see if I knew anybody in Rome, and it turned out that I knew the Deputy Chief of Mission, the second to the Ambassador, from serving with him in Brazil. I told him my situation, that I had no place to live in Warsaw, and he said to go ahead and leave for Rome; he would work something out. The solution turned out to be furloughing my American assistant, and keeping me on the State payroll as essential, rather than the other way around, which did not endear me to my assistant.
Being almost furloughed in Warsaw was the straw that broke the camel’s back as far as my State Department career went. I was reminded of the old joke about the boy who pushed the family outhouse into the river. That night when his father confronted him about it, the boy said, “Like George Washington, I cannot tell a lie. I pushed the outhouse into the river.” With that, his father took off his belt and tanned his hide. The boy sobbed, “But George Washington’s father didn’t spank him when he chopped down the cherry tree.” The boy’s father replied, “George Washington’s father wasn’t in the cherry tree when he chopped it down.” I was in the cherry tree when Newt Gingrich chopped it down. He had already been messing with me by cutting off funding for Polish cooperation. I had had it. But while I didn’t really care that much about my career at that point, I still felt an obligation to the United States. I had promised to serve as Science Counselor in Rome while Italy held the Presidency of the EU, and unlike the US Government, I intended to honor my promise. Although I was unhappy, I was in a good position to leave. I had put in my twenty plus years and was old enough to retire anytime that I wanted. I didn’t have to give up my retirement pension over a matter of principle.
When I arrived in Rome, I found that two of the big issues that were my responsibility were North Korean nuclear proliferation and Italian swordfish driftnet regulation. The North Korean nuclear program was an issue because the Republican Congress refused to appropriate enough money for the US to fulfill its commitments under the agreement limiting North Korea’s activities. Therefore, one of my jobs was to go hat in hand to the Italian Foreign Ministry and ask them to get the EU to contribute enough money to allow the US to meet its commitments to North Korea, since Congress would not do it. It was like funding for Polish scientific cooperation all over again. The Republican Congress didn’t have the moral gumption to meet America’s legal commitments. I was unhappy to be once again the fall guy for the Republican Congress’ lack of integrity.
I had little interest in the swordfish driftnet issue. I had never worked on fisheries issues and there was a whole fisheries bureaucracy that I was not familiar with. My assistant had handled fisheries issues in Venezuela and had been handling them in Rome. I was happy to leave the issue with her. When I arrived in Rome, I discovered that my office was being sued by four environmental groups for failing to force the Italian government to obey UN resolutions restricting the length of driftnets used to catch swordfish. My assistant was in constant touch with the State Department legal advisor’s office, which kept her up to date on the trial. The actual courtroom argument was handled by the Justice Department. Washington assured us that we would win the case. We lost. As a result, a US District Court judge in New York City had to approve our office’s actions regarding the swordfish fisheries issue. I thought that this was unconstitutional because the Constitution assigns foreign policy matters to the Executive Branch. This seemed to be a usurpation of authority by the Judicial Branch. What happened was that when there was any proposal to take action regarding swordfish, the State Department informed the judge, and the judge contacted the winning environmental plaintiffs for their approval. They always contacted the Greenpeace expert in Rome who handled fisheries matters for Greenpeace. If he approved, then the environmental groups would approve, the judge would approve, and State could accept the agreement.
The US sent a big delegation to Rome to negotiate tougher enforcement by Italy. My assistant played a large role, since she and one of the key staffers in the Italian Agriculture Ministry, which handled fisheries matters, had a good working relationship. The US (i.e., State, the judge, the environmental groups, and Greenpeace Italy) and the Italian Government were all happy with the agreement. On my second to last day in the Embassy before I was to return to Washington and retire, the Agriculture Minister asked to see the Ambassador about the swordfish issue. It turned out that because of the tougher enforcement by the ministry, the fishermen had enlisted the Mafia to threaten the ministry’s enforcement officers. The minister was afraid that some of his officers would be injured or killed, and wanted the US to agree to some loosening of the enforcement regime. It sounds like a joke, but most of the fishermen lived in Sicily, the home of the Mafia. Some swordfish boats worked out of the port of Fuimicino near the Rome airport. A few days earlier, the fishermen had blocked the streets in front of the ministry, creating enough of a disturbance to get on the news.
On the day of the appointment, my assistant was too sick to come into the office; so, I had to accompany the Ambassador to meet with the Minister about an issue that I had tried to avoid for the whole six or so months I had been in Rome. (Payback for getting her furloughed? Probably not.) My main function in the meeting was to tell the Ambassador that he had no authority to revise the agreement with the Minister, because any revision had to be approved by a judge in New York. He was of course furious, because under the Constitution he should have been empowered to negotiate with the Minister. The agreement could be revised, but the Ambassador had to defer to the judge. I spent my last 24 hours as a working Foreign Service officer successfully getting approval from Washington for a revised agreement. For my efforts, I got a letter of reprimand from the Ambassador, who had not liked my keeping him on a leash. I wanted him to know that the State Department’s and his personal authority had been unconstitutionally usurped by a federal judge. Whether his letter went into my official file was a moot question, because at that point promotion was not an option. I was on my way to the Washington retirement seminar.
Before I formally committed to retire, I had asked the State Department to tell me how much my retirement pension would be. It was a big pay cut from my salary, but my wife and I thought that we could live on it. As icing on the cake, however, about the time I finished the retirement seminar, just one or two days before I was formally taken off the payroll, the retirement office told me that they has miscalculated my retirement pay and that it would be about 10 percent less than they had told me in Rome. I think that what happened was that while I was overseas, Congress had voted itself and other government employees in the US a locality pay bonus, which did not apply to me serving overseas. Therefore, my retirement was calculated on a base pay that was about 10% less than it would have been if I had been serving in Washington. I was punished for serving my country abroad, and all Foreign Service officers abroad have been until this year, when the rules were finally revised.
Well, this is not as funny to me as “Burn After Reading,” but I suppose that the characters in the movie didn’t see their lives as funny either, except maybe the senior CIA guy who was the Director of Operations or something. But if the Justice Department goes after him like it is going after the CIA interrogators now, even he may not be laughing long. At least I have a kindred spirit in Osborn Cox.
Friday, August 28, 2009
My Hero Osburn Cox
I would like to think that Amb. Rey eliminated by job because the main part of it was promoting scientific cooperation between the US and Poland under a five-year agreement signed just before I got there. After two or three years, the Republicans under Newt Gingrich took over the House during the Clinton administration, and quit funding the cooperation, thus eliminating about half of my job. Then Newt shut down the entire government while I was moving from Warsaw to Rome, leaving me with no job and no place to live in either city, until Rome finally took me in. An Army Vietnam veteran with over twenty years in the Foreign Service, and the US Government put my wife and me out on the streets of Warsaw in November with no place to live! So Newt and company made me a liberal Democrat. They represented the fools that I, like Osburn Cox, have been fighting. However, I don't plan to shoot anybody or chop them into pieces. I do plan to blog about it.
Perhaps someone will someday stumble over this blog and think that it contains sensitive information that they can sell to the Russians. They must decide, however, whether it is "drivel" or "dribble." You want dribble? Listen to George W. Bush, Dick Cheney, and John Bolton -- absolute idiots, numskulls, and cowards (because they didn't go to Vietnam, they didn't go to New York City on 9/11, and they tortured people). They are of a piece with Newt. And Tom DeLay is dancing with the stars. Idiots on parade! But I'm the one who retired and went away. Ironically, I had relatively good efficiency reports and was in no danger of losing my position as a Foreign Service officer, although I was having trouble keeping an assignment. Well at least I have a hero: Osburn Cox.
Tuesday, August 25, 2009
Military-Civilian Disconnect
I’m afraid that there is an increasing disconnect between the military and civil society. All this talk of “Support our troops,” means support them so that I don’t have to go. The disconnect means there will be less support for the troops when they come home, whether it’s military medical care (Walter Reed), the VA’s huge backlog, or just Americans not saying thanks by not giving vets jobs. It’s partly fallout from the Vietnam War (spoken as a Vietnam veteran), because so few of the social elites served despite the existence of the draft. Having avoided military service themselves, they can’t now say it’s a good thing. The latest travesty is the Congressional hold put on the nomination of the Secretary of the Army by the senators from Kansas, Roberts and Brownback. They are forcing the Army to fight two wars without its own political leadership. When the people of Kansas turn against the military, you know it’s in trouble