Archive for February, 2010

Charley Reese’s rules of personal finance

February 28, 2010

1. Don’t live beyond your means.

2. Don’t buy more than you can pay for.

3. Don’t expect to get rich quick.

4. Don’t confuse salesmen with friends or advisers.

 

Charley Reese

Charley Reese, now retired, used to be one of my favorite newspaper columnists.

 

Click on Charley Reese’s Archive to read some of his old columns.

Click on Charley Reese’s Columns to read some more of his columns including his farewell column.

Click on Charley Reese Wiki for his Wikipedia biography.

Why I don’t believe abortion is murder

February 27, 2010

Right to life activists say that abortion is murder, while proponents of abortion rights say it is a matter of individual choice.  But if abortion really is murder, it can’t be a matter of individual choice.  Nobody thinks there is a right to commit murder to preserve your own life or health, nor a right to murder infants who were born as the result of rape or incest.

So is abortion murder?  Is it the taking of a human life?  My own belief is that a human life consists of a human mind in a human body.  My life extends to long as my brain functions; when that ceases, there is no point in trying to keep my brain-dead body functioning, even though the body has my DNA and meets the definition of biological life.  Similarly, my human life did not begin until I had a functioning brain and mind, capable of awareness of myself as an individual, and not did my rights as an individual begin before that point.

Religious opponents of abortion say that human identity is a question of soul, which is different from mind and brain, and that the soul enters the body or emerges at the moment the sperm fertilizes the egg.  However, in the normal course of events, most fertilized eggs perish in what is called “spontaneous abortion.”  If you believe that God created the world and its biological processes, and you also believe that God loves individual human beings, it seems hard to explain why God would create a process in which the vast majority of human souls perish almost as soon as they come into existence.  It is easier to think that the fertilized egg is only a potential human soul.

Many Christian leaders have taught that life begins at “quickening,” the independent movement of the fetus in the womb.  Click on this article and this article for some of the historic background; click on this article for an argument that human life begins with the first breath.

I am a member of a reading group which read Dante’s Divine Comedy a couple of years ago. Somewhere Dante says that the human fetus begins as a “vegetable soul,” capable of growth, develops into an “animal soul,” capable of independent movement, and later becomes a “human soul,” capable of self-awareness. This is what I think, too. It fits with the U.S. Supreme Court decision in Roe vs. Wade, which distinguished between the first trimester of pregnancy, in which there was a right of abortion; the second trimester, in which there was a restricted right; and the third trimester, in which there is virtually no right.

I wish I knew how to write about these matters without sounding so cold and clinical.  And being a male, I know nothing about what it is like to be pregnant or to be a mother; I am not even a parent.  I don’t think abortion is nothing – only that it isn’t murder, and that it isn’t necessarily the worst choice to make. Like former President Clinton, I would like to live in a world in which abortion is “safe, legal and rare.”

Now I will turn to what I think is the strongest argument against abortion.

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Mr. Plummer and the string stretchers

February 26, 2010

Mr. Samuel Plummer (I still think of him as Mr. Plummer), who was principal of Williamsport (Md.) High School when I attended, gave a talk to a high school assembly on the benefits of education which was remembered for years.  I don’t remember his exact words, but I remember the gist of it.  It went as follows: –

If you look outside the windows of the auditorium, you’ll see men digging ditches for the new sewer main.  It is important work, and it is very hard work, in the hot sun.  If you keep on watching, you’ll see other men putting little pegs into the ground, and stretching string between the pegs, to show where the ditch is supposed to go.  Now stretching string between pegs is much easier work than digging a ditch with a shovel, but strange to say, the men who stretch the string are paid more than the men who dig the ditch.

Now what is the difference between the men who dig the ditch and the men who stretch the string? The men who stretch the string have high school diplomas. The men who dig the ditch dropped out of high school before they graduated. So it is up to you.  Do you want to be a ditch-digger or a string-stretcher? If you want to be a string-stretcher, stay in high school until you graduate.

And if you keep on watching the ditch digging, you’ll see men walking around with clip boards who are doing hardly any work at all. They are college graduates. So you can see the value of education.

Mr. Plummer probably would be gratified to know that the wage gap between college graduates, high school graduates and high-school dropouts still exists. Click on this chart or its duplicate for recent figures.  The chart shows that from the mid-1970s to the mid-1990s, the average real earnings (meaning pay adjusted for inflation) of people with college educations rose, while the earnings of those with lesser education fell. Since then all groups made slight gains, but the education gap remained.

The difference is that nowadays high school dropouts have a hard time finding any work at all, while high school graduates are competing with college graduates for the jobs equivalent to string stretcher. It really takes a college education to get the kind of job a high school graduate could get 60 years ago.  And while high school education is free, college education is not affordable to increasing numbers of people.

But I don’t think that more schooling for everyone will necessarily close the wage gap.  I’ll go into the reasons below.

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Winter, my wonderful car and globalization

February 26, 2010

Nine inches of snow fell overnight here in Rochester, N.Y., and I had to get out and about this morning before the snowplow crews had time to clear my street.  I thought about my car and how it compared to the first cars I owned back in the 1960s.

Back then, you had to think about whether your car would start on a cold winter morning. To be safe, you had to run your car in neutral the night before for 10 or 15 minutes to charge the battery, and then again in the morning. I never even think about it now.  I just turn the ignition in my 2006 Saturn Ion-2, which of course has an alternator, and I take it for granted that it starts.

When I first moved to Rochester in the mid-1970s, rustproofing your car was a big deal.  I unfortunately made the choice of an inexpensive undercoating job rather than a premium service, and lived to regret it. Now, with my plastic card, rust is not something I have to think about.

Under conditions I drove in this morning, I would have expected to get stuck several times.  I was in fact on the verge of getting stuck a couple of times, but my car had good enough traction to keep going.

Compared to the first cars I owned, my present car is like something out of science fiction.  I won’t even mention the Global Positioning System and the other technological bells and whistles I don’t care about.

General Motors Corp., the maker of my car, is losing money and has divested the Saturn brand. Yet back in the 1960s and 1970s, when quality wasn’t nearly as good as it is today, GM was making money hand over first.  That is what it is to compete in a global economy.

When I was a high school student, I got straight As without having to work hard.  When I sent to college, I found I had many classmates who had straight As in high school.  I studied harder and learned more in college than I ever did in high school, but my grades were not as good.

Likewise with the United States in the world economy.  Our industries have to do better just to hold their own than they once did to reign supreme. But that doesn’t mean we can’t hold our own.

Rep. Louise Slaughter at the health care summit

February 26, 2010

My congresswoman, Rep. Louise Slaughter, had a moving statement at yesterday’s health care summit about a woman who had to use her sister’s dentures because she couldn’t afford to pay for them. Click on this for Rep. Slaughter’s statement and the right-wing response. I do NOT agree with the headline on the link, although I can understand the feelings that prompted it. Click on this for more from Rep. Slaughter.

Who pays the taxes?

February 25, 2010

When we talk about raising or cutting taxes, we almost always talk about income taxes.  Yet income taxes are just one of the main forms of taxes that Americans pay.

There are income taxes, which fall most heavily on the affluent.

There are residential property taxes, which fall most heavily on the middle class.

There are payroll taxes, which fall most heavily on wage earners.

There are sales and excise taxes, which fall most heavily on the poor.

During the past couple of decades the trend has been for income taxes to go down and for other forms of taxes to go up. According to this report and this report, the wealthiest 400 Americans paid an effective income tax rate of less than 17 percent in the latest year for which figures are available.

And then of course, there’s borrowing, which is taxation of future generations.  As a nation we can’t continually cut taxes on the upper income brackets, while increasing borrowing and increasing taxes on everybody else, without things getting out of balance.

Budget reconciliation and health care reform

February 24, 2010

Passage of health care reform through budget reconciliation votes is nothing new, as this article by National Public Radio points out. For example, it recalls the COBRA law which allows workers to keep their employee health benefits after they leave their job is the COnsolidated Budget Reconciliation Act of 1985.

Click on this for more background about budget reconciliation votes.

The loss of American independence

February 24, 2010

In 1956, the British and French governments defied the wishes of the U.S. government by invading Egypt and taking over the Suez Canal.  President Eisenhower forced them to stop by threatening to sell the U.S. government’s holdings of Pound Sterling bonds, which would have crashed the value of the British pound and brought about an economic depression.

Now the United States government will soon be in a position, and may already be in a position, where the Chinese government could order us out of Afghanistan, or tell us to keep hands off Taiwan, simply by threatening to sell their U.S. Treasury bonds, thereby crashing the dollar and the U.S. economy along with it.

The weak U.S. position is not so much due to the U.S. government budget deficit as to the overall U.S. trade deficit with the world.  It would not be so bad if we were borrowing from foreigners in order to build factories and create new businesses and industries, but our borrowing is to finance current consumption. What we need to be thinking about as a nation is how we can produce more for our own needs and to export.  We can’t downsize our way to prosperity.

The economic generation gap

February 23, 2010

One of the promises of American life is that each generation should have a better material standard of living than the generation that went before.  That was true of me and my parents.  The house I live in alone is larger than the house in which my parents raised my brother and me.

But this is not true of the generation coming after me.  Younger people face a more restricted world than the one I grew up in.  When I was in high school and college, anybody could get a job of some kind.  The high school graduate got a better job than the high school dropout, and the college graduate got a better job than the high school graduate, but nobody who really wanted to work went without work very long.

Education at a state university was affordable for the middle class, and working your way through college was do-able for poor students.  Nowadays students graduate with a crushing burden of debt that can take decades to pay off; it is a form of indentured servitude.  Yet the need for educational credentials is greater than ever.

When I became a business news reporter for the Rochester (NY) Democrat and Chronicle in 1978, my qualification was that I was a capable reporter and that I wanted the job.  By the time I retired in 1998, we were getting job applications from young people with MBA degrees.  I often remarked in the 1990s that if I had been applying for the job I had, I would never have been able to get it.

Labor unions accepted two-tier (and sometimes three-tier) wage contracts, in which younger workers started at a lower wage rate than their seniors did, and would never catch up with the older generation.  We see a similar philosophy with proposals for so-called Social Security reform, in which the reductions in benefits are supposed to fall on those still in the work force while existing retirees such as myself were “grandfathered” in.

All these things have been going on for a long time, but the current recession makes things much worse.  The economy is still bleeding jobs, and it is not clear when, if ever, this can be made up.  It is no joke to be middle-aged in this economy, but it is tough to be young and competing with middle-aged people for entry-level jobs.  No matter so many young people are living at home.

All the things that are necessary to wean the country off debt will mean a slower-growing economy and less opportunity for young people.  It will not be possible to bring the federal budget under control without reducing military spending, and the military is a major employer of young people.

There is a good article on the impact of the recession in the March issue of The Atlantic Monthly.  The author, Don Peck, points out that many members of the younger generation are psychologically unprepared for the harsh world they will face.  I came of age in the greatest economic expansion this country has ever known, but remembering the admonitions of my parents, based on their experience of the Great Depression, to work hard, save my money and be prepared for the worst.  The generation coming of age now has been taught to expect the best, but faces the worst economy since the 1930s.

[Update 9/5/10]  This infographic shows how college students are being exploited by lenders.

“It’s not our fault”

February 23, 2010

I see by my morning newspaper that President Obama has abandoned a public option for health care reform. The public option itself was a compromise of from a single-payer plan, which would be the simplest and least expensive way to provide health care for all.

President Obama’s goal appears to be to show how reasonable he is, and how unreasonable his opponents are. But polling data indicates that the public doesn’t care who’s being reasonable. The Republicans have gained rather than losing in public esteem for being so intransigent. But what the public really cares about, in the end, is whether the legislation makes a positive difference in their lives.  No political leader and no party will win relection on the slogan, “It’s not our fault.”

Washington’s Birthday

February 22, 2010

Today is the former holiday once known as Washington’s Birthday.  We Americans stopped taking note of it long before it was combined with Lincoln’s Birthday into the meaningless President’s Day.

When I was a boy, Abraham Lincoln was a living figure to me, but not George Washington.  Life in small-town Williamsport, Md., in the 1940s, even though we had radios and automobiles, was close enough to Lincoln’s that I could identify with him; today my life back then is almost as distant as Lincoln’s to the Twitter and Facebook generation.  I could identify with Lincoln’s warm humanity, but not Washington’s distant coldness.  Washington seemed more like an English country gentleman somehow transplanted to Virginia and enrolled in the American cause.

It wasn’t until late in life that I came to appreciate Washington’s true greatness.  I owe this mainly to two books, Founding Father: George Washington by Richard Brookhiser, and His Excellency, George Washington by Joseph J. Ellis.

Washington was not cold and emotionless.  He was man of haughty pride, fiery temper and strong passions, held in check by iron will and self-discipline.  He was a capable general and a capable President, but his true greatness lay in his character.  He staked everything, including his life, on the Revolutionary cause.  He held the Continental Army together in the darkest days of the Revolutionary War, including the winter at Valley Forge when the army lacked shelter, decent shoes, warm clothing and decent food.  In spite of all his frustrations with a sometimes incompetent and corrupt Congress, he never challenged civilian authority.

His greatest moment came at the end of the Revolutionary War, when the victorious former colonies seemed ready to disintegrate into chaos.  He could have made himself dictator, as so many other revolutionary leaders in the same situation have done, but he chose to return to Mount Vernon.  As President, he led a nation that was much more divided than it is now. He held it together by means of his prestige which he maintained through strict impartiality.

Washington was not a perfect person.  He was a slaveowner.  But he, along with Abraham Lincoln, are among the few people in American history of whom the more I learn about them, the more I respect them.  I become extremely irritated at TV advertisements for President’s Day sales, in which Washington and Lincoln are made figures of ridicule.  It is not so much that I object to joking about great individuals as that the cartoonish jokes are all there is.

Many of our patriotic holidays have lost their meaning.  On the Fourth of July, few people think of the meaning of the Declaration of Independence.  On Thanksgiving Day, many give thanks, but few think of the Mayflower Compact.  About the only meaningful patriotic holidays we have left are Martin Luther King Jr. Day, in which school children and others do think about the meaning of Dr. King’s life, and Memorial Day, when we do pay tribute to those who gave their lives in the nation’s wars. That’s a reason for celebrating these two holidays all the more.

A parable for our time

February 22, 2010

Charlie Munger, the long-time partner of Warren Buffett in his Berkshire-Hathaway investment fund, wrote a caustic parable which sums up very nicely the economic history and current economic plight of the United States. Click on this to read it.

The Laws of Utopia

February 21, 2010

Responsibility for essential tasks stays with the people who are doing the work.

The power to determine how work gets done stays with the people who are doing the work.

Rewards for creating value flow back to the people and organizations that are creating it.

This is my spin on something I took off Teresa and Patrick NIelsen Hayden’s Making Light web log.

Germany as an economic role model

February 20, 2010

The excuse we Americans give ourselves for the erosion of our manufacturing industries is that we can’t be expected to compete with the sweatshop industries of China and other low-wage countries.  But workers in Germany get higher wages than American workers, and yet Germany enjoys a trade surplus with the world and with China.  While the United States exports soybeans to China, Germany exports high-speed railroad technology.  Germany in fact was the world’s top exporting nation for years, until last year when it took second place to China. That’s amazing, when you consider that Germany has only 83 million people.

There is a good article about Germany’s achievements by a business writer named Eamonn Fingleton in the March issue of The American Prospect magazine. Click on this to read it.

The basic facts about Germany’s economic performance can be found here and here and here and here.  The counter-argument is that although Germany as a nation is more solvent and its workers better-off, the growth of its Gross Domestic Product has lagged behind the United States. But Gross Domestic Product is a poor indicator of national well-being, as has been known for some time.

The basic fact about Germany is that it is run for the benefit of producers rather than consumers.

Germany’s policy of fostering manufacturing industries goes back for more than a century. Unlike Americans and Britons, Germans historically have believed that the unit of economic competition is not the individual nor the firm, but the nation.

Germany never enacted anti-trust laws. When German companies have dominant positions in their industries, like Eastman Kodak Co., Xerox Corp. and IBM Corp. in the 1970s, the German government encourages them, not tries to break them up.  The structure of German industry is like what U.S. industry would be if, a century ago, industrialists and financiers such as John D. Rockefeller Sr. and J.P. Morgan had been given free rein.

As a result, German banks are closely allied to industry in a way that wouldn’t be considered proper in the United States.  Fingleton notes that German manufacturers have hausbanks that keep them going through recessions, and enable them to come back stronger than ever. We have had nothing like that in the United States since the Morgan era.  Big American banks  devote themselves to “financial engineering”; the German banks invest in companies that do actual engineering.

The Germans have more effective means of promoting savings and investment than cutting the top tax rates for millionaires and billionaires.  Fingleton points out that German industrialists early on saw the relationship between scientific research and industrial growth.  When George Eastman decided to establish Kodak Research Laboratories here in Rochester, he traveled to Germany to see how it was done.

The other major force in the German economy is the power of the German labor movement.  German trade unions resist outsourcing, but work with their employers to make their companies more efficient and competitive.  Unions have representation on the boards of directors of large corporations – an innovation introduced in the late 1940s by the British occupation authorities under the then Labor government.

The power of labor unions means German workers have greater job security, which may be a handicap to individual employers but benefits the German economy as a whole, Fingleton claims.  In downturns, German firms tend to cut hours of work rather than employees.  German employers have a greater incentive to increase the productivity of their workers, through training and technology, and as a rule German workers stay with their employers instead of taking new skills elsewhere.

When you look at these achievements, you have to consider that German industry was devastated during the Second World War and Germany had to rebuild their economic structure literally from the ground up, and then that for the past 20 years Germany has been struggling to integrate the dysfunctional East German economy into the larger economic structure.  It’s quite a success story, and if not one to copy in all aspects, one to learn from.

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Selling the stimulus

February 20, 2010

President Obama is trying to sell the idea that the stimulus package is a success in reviving the economy, which suggests that he has more or less given up on trying to accomplish anything more than he already has.  The Democrats point out that the rate of job loss is slowing down, but what people experience is the still-increasing cumulative job loss whose effects will be with us for years to come. While the President is still popular, “things could be worse” is not a winning slogan.

Bush = Truman, Obama = Ike?

February 19, 2010

George W.  Bush is reported to have said that he will be remembered in history as another Harry Truman and Barack Obama as another Dwight Eisenhower.

As President, George W. Bush, like President Truman, stood his ground even though his policies were unpopular. This is the quality I most respect about Bush.  Unfortunately, while Truman’s unpopular policies helped the United States get through a dangerous period safely, Bush’s policies (in my opinion) led us deeper into danger.

As President, Barack Obama, like Dwight D. Eisenhower, has attempted to stay above the fray and let his enemies discredit themselves through their own extremism. Unfortunately, Obama faces an entirely different situation. President Eisenhower presided over a nation that was prosperous and at peace, and his main challenge was to heal political divisions. President Obama faces multiple crises that call for the temperament of a Truman rather than an Eisenhower.

But this isn’t what George W. Bush meant.  He meant that President Obama is carrying on his policies. This is largely true.

This is partly because President Bush adopted some of the policies that candidate Obama was advocating – setting a timetable for withdrawal from Iraq, going after Taliban and al Qaeda leaders with Predator missiles. But it is more that Obama is following in Bush’s footsteps, in treating Constitutional rights to due process as optional, and in following economic policies more attuned to boosting the Dow Jones average than reducing the unemployment rate.

The return of nuclear power

February 18, 2010

President Obama earlier this week announced a loan guarantee for the first nuclear power plant in the United States in nearly 30 years. His decision is in line with his State of the Union address in which he called for “a new generation of clean, safe nuclear power plants.”

I guess I am reluctantly in agreement with what he is doing.  If we want to reduce our dependence on foreign oil, if we want to stop emitting greenhouse gasses that burn up the planet, we have to find alternatives to fossil fuels, and nuclear energy is an alternative source we have available right now.

Nuclear power is dangerous, as the Chernobyl disaster showed, if you don’t follow elementary safety precautions, but like many dangerous activities, it can be carried on safely if operated by people who know what they’re doing and who don’t gamble with margins of safety.  The U.S. Navy runs on nuclear power.  France generates 78 percent of its electricity from nuclear power plants, and has electricity to export. In contrast, the United States is a net importer of electricity.  This isn’t likely to change any time soon, because a lot of our alternative energy plans, such as development of electric cars, depend on abundant electricity. I of course favor development of photovoltaic electricity, wind energy, geothermal power and other renewable sources with all deliberate speed.

I think that the United States someday will have to rethink its policy on reprocessing of nuclear fuel. This would be a way of reducing the amount of nuclear waste (in terms of total radioactivity; the physical volume would be greater) and of burning up the nuclear material in nuclear weapons.  We discontinued reprocessing under the Carter administration because reprocessing technology can be used for nuclear bombs as well as nuclear power plants, and we wanted to set a good example. It would set a better example to use the nuclear bomb material to produce useful electricity.

Here is commentary on President Obama’s action, and here is some background information on nuclear power in the United States.

Upstate New York and the Spiritualists

February 18, 2010

I just finished reading The Heyday of Spiritualism by Slater Brown, a used paperback I bought the other day at Bookends, a used-book store on Jefferson Road in suburban Rochester.  It told me a couple of things I hadn’t known about the Spiritualist movement.

I always thought Spiritualism originated with the Fox sisters in Hydesville, near Newark, N.Y.  That would make Spiritualism one of two major religious movements to originate in Wayne County (the other being Mormonism, originating in nearby Palmyra). But according to Slater Brown, it has a long history, going back to the origins of hypnotism and Mesmerism in 18th century France and including the visions of Immanual Swedenborg in 18th century Sweden.  I always thought that the Fox sisters when old admitted their mysterious spirit rappings were a hoax. But according to Brown, that also is wrong. The source of information of the alleged confession is a hostile and unreliable source that the Fox women would hardly have confided in.

Reading the book made me recall what a great intellectual ferment took place in upstate New York during the 19th century. The women’s suffrage movement originated in Seneca Falls, N.Y.  The Shakers and the Oneida Communithy were based in upstate New York.  Susan B. Anthony and Frederick Douglass not only both lived in Rochester, but they knew each other and were good friends. Upstate New York was a stronghold of abolitionism and Universalism (and many Universalists were strongly interested in Spiritualism).

Later on upstate New York became a center of manufacturing industry – Bausch & Lomb Inc., Carrier Corp., Eastman Kodak Co., General Electric Co., IBM Corp. and Xerox Corp. For the most part they were located in this region of the country not because of any geographic advantages or natural resources, but because certain creative individuals happened to live here.

All this seems a contrast to upstate New York today. (If I’m missing something, please add a comment). What is it that makes a region or a nation a hotbed of creativity in a particular era? Is it a matter of chance? Is it a result of certain talented and enterprising individuals happening to be born in one place rather than another? Or are there historical and social factors that can be understood and – maybe – duplicated?

The Founders and the Tea Party

February 18, 2010

One of the things I have in common with the Tea Party movement, if this article is to be believed, is reverence for the ideals of the Founding Fathers of our nation.

They established a country based on the principle of the rule of law – the principle that nobody is above the duty to obey the law and nobody is below the protection of the law.  They did not wait for a Bill of Rights to establish the right of habeas corpus and to forbid bills of attainder and ex post facto laws (Section I, Article 9). This mean that can only be punished for violating a law that was in effect at the time; the government can’t pass a law that applies just to you or your group, or make some action of yours illegal that was legal at the time.  And furthermore, if you’re arrested, you have a right to be taken before a judge and told exactly what law you’re accused of violating.

The Founders would have recognized the dictators of the 20th century as successors to the absolute monarchs of their day, who could sign warrants to have someone imprisoned in a Bastille and be accountable to noone.  And if they had been told that the government of the United States had created a worldwide network of secret Bastilles, where people could be taken in secret and held without being charged with any crime, if they had been told that torture was not only accepted but popular, I think they would have sighed and felt justified in their fears of the precariousness of freedom and democracy.

The Founders, like all human beings, were people of their time.  When the signers of the Declaration of Independence affirmed that “all men are created equal, and are endowed by their Creator with certain inalienable rights,” they probably didn’t imagine this principle would someday extend to men who didn’t own property, to men with dark skins or to women. George Washington and Thomas Jefferson were slaveowners. While I am still stirred by Thomas Jefferson’s great words about political and intellectual freedom, I have to admit that he was a racist. This are not trivial matters.

But on other matters, we would benefit from remembering the wisdom of the Founders – their awareness of the danger of a self-perpetuating aristocracy of wealth, or of a large permanent standing army and entanglement in foreign wars.  They established the principle of disentangling government from organized religion which has not only protected the freedom of dissenters, but contributed to the vitality of religion in the United States.

What progress we’ve made since the days of the Founders is based on directions and benchmarks set in their day.  If we don’t remember the past, we still may have to learn the lessons of history – the hard way.

Obama as a legislator

February 17, 2010

The qualities by which Barack Obama made a name for himself in the Illinois State Senate and the United States Senate are not the qualities he needs as President.

His great quality as a legislator was his ability to relate to people with viewpoints and backgrounds different from his own, and to find the middle ground of compromise. Click here for a review of his record in the Illinois state legislature and here and here for review and comment on his record in the U.S. Senate.  If he had remained in the Senate, he might – who knows? – have succeeded Senator Kennedy as the leader of the progressive cause.

But as President, the ability to understand the other person’s point of view is not enough. Eloquence is not enough. Showing good will and good faith is not enough. The willingness to compromise is not enough. These are all good qualities. But sometimes you have to use the constitutional powers of your office. Sometimes you have to fight. In fact, there is no reason to compromise with someone who isn’t willing and able to fight if necessary.

What’s the point of the bipartisan summit?

February 17, 2010

I don’t seem what President Obama thinks he can accomplish with next week’s bipartisan meeting with congressional leaders on health care.

Does he expect to win over the Republican leadership with his sweet reasonableness? That fact is, that as a matter if partisan politics, there is no advantage to the Republican Party in cooperating with Obama and the Democrats on health care. The American people will credit any health care reform to Obama and the Democrats, no matter now many supposedly Republican suggestions it incorporates.

Or does he expect to show how reasonable he and the Democrats are compared to the Republicans? The American people don’t care how reasonable or unreasonable he is. They only care whether something positive is accomplished. If nothing is done, it won’t be any use saying it is somebody else’s fault.

Life’s little mysteries

February 16, 2010

How is it that vending machines that refuse to accept Canadian coins will give Canadian coins in change?

The Social Security shell game

February 15, 2010

Social Security is not a Ponzi scheme, as some of my otherwise well-informed friends think. But the politics of Social Security is a shell game.

The Social Security trust fund in most years has taken in more than has been paid out in benefits. The surplus has been invested in U.S. Treasury bonds, which are sold during economic downturns when less is being collected for the fund from payroll taxes.

During the Reagan administration, some people noticed that when the Baby Boom generation retired, there would be so many of them that the trust fund might not be able to pay full benefits. So a bipartisan agreement was reached to increase payroll taxes and build up enough of a surplus in the trust fund to cover the Baby Boomers. This accordingly was done. The Social Security trust fund has accumulated a $2.4 trillion surplus, all invested in U.S. Treasury bonds.

Social Security is separate from the general governmental budget. The U.S. Treasury bonds in its trust funds are just as much a fiduciary obligation of the U.S. government as the bonds held by Goldman Sachs or by banks in China, Japan or Germany. When I worked on the newspaper, I phoned the Treasury PR department and was told that the trust fund has bond certificates, which are locked away in a bank vault somewhere.

Here’s where the shell game comes in. For certain purposes, politicians and commentators remember that the Social Security fund is separate from the general government. For other purposes, they claim that it is not. For example, the Clinton administration claimed to have a budget surplus because it offset the government’s overall deficit with the Social Security surplus. But the surplus was an illusion, because it ignored the obligation to redeem the bonds in the trust fund.

When President George W. Bush took office, he used that alleged surplus as an excuse to cut top income tax rates and wage two wars without doing anything special to pay for them. Now, guess what! With the government now in deficit, Congressional Republicans say we can’t afford to draw down the $2.4 trillion fund in order to meet its obligations.

Rep. Paul Ryan, a Wisconsin Republican, this month presented a budget balancing plan on behalf of Congressional Republicans that involves more top-bracket tax cuts, drastic cuts in Social Security and Medicare benefits and eventually privatizing Social Security.

It is really hard to keep track of which walnut shell the pea is under.

For the statistical history of the Social Security trust fund’s operations, click on this.

For a further explanation of how the shell game works, click on this

For background on the Ryan plan for Social Security, click here and here and here.

For more background on Social Security, click on this and this and this.

Economic Recovery Plan B

February 15, 2010

Plan A for promoting economic recovery is for the government to try to keep people employed and keep money in circulation so that businesses will have customers when they start to recover. Plan B is for the government to do nothing except cut tax rates on the highest-income taxpayers, who then, having more money than they need, will invest it in productive enterprise and put Americans back to work.

The problem with that is that the greatest period of economic growth in American history was the 1950s and 1960s, when the top income tax rate was 70 percent to 95 percent. Since the 1980s, the top tax rates have been less than half that, and we’ve experience economic stagnation for everyone except millionaires and billionaires.

I am not of course saying cuts in the top tax rates caused the economic stagnation or that income tax rates should be put back to pre-Reagan levels. I am saying that experience shows that enriching millionaires and billionaires is not the key to economic recovery.

No more bragging about upstate New York snow

February 14, 2010

I guess I can no longer brag to my friends back in Maryland how severe the winters are in upstate New York. The Rochester Democrat and Chronicle reports that Washington, D.C., has had nearly 60 inches of snow this winter and Baltimore has had 80 inches, much of it during the big storm last week. In contrast, here in Rochester, N.Y., we’ve had only 65 inches and no severe blizzards (so far).

The great thing about Rochester is that the community is geared for snow and takes it in stride. Back home, it always came as an unexpected emergency.

When I was a little boy growing up in western Maryland, a snowfall of just 4 or 5 inches would have made me ecstatic. The county superintendent of schools would have been sure to call a “Snow Day” and I would have to day off from school.

Later, as a grown-up newspaperman covering mayor and council meetings in my home city of Hagerstown, Md., I got used to the annual ritual of “economizing” by turning down requests for new snowplows and eliminating contingency funds for snow emergencies.

Some winters, there was hardly any snow at all. And when there was, Bill Potter, the city street superintendent, and his team of mechanical geniuses could somehow get the city’s antique snowplowing equipment working. And if they couldn’t, well – snow will always melt.

All that was 45 or so years ago, and I don’t know how things are now. But it made me appreciate how the Rochester area, including the county and town governments, are organized for winter. Native Rochesterians take for granted the fact that, the morning after a snowstorm, the main roads and streets will be plowed and the side streets will be plowed not too long after. That is not a universal rule.

Here in Rochester, we even have sidewalk snowplowing, which I’d never heard of before I moved here. In Hagerstown, the standard method of keeping sidewalks free of snow and ice was to fine property owners who didn’t. If you were aged or infirm, you’d better be able to hire a teenager to do it for you.

We’ve had blizzards which knocked out electricity and telephone service, including a couple of ice storms over the decades in which service wasn’t restored for weeks. But for the most part, even after the worst storm, life was soon back to normal.

I came to appreciate, as the people in Washington, Baltimore and Hagerstown must, the efforts of the snowplow drivers, the telephone and electric company linemen and all the other people whose efforts make it possible for the rest of us to have food and water, stay warm and go about our daily lives. And it made me appreciate as well the importance of being prepared for the worst, and not gambling with false economies.