Tag Archives: taxes

2 Cents Worth On Life Its Ownself

Thankfully, the politicians and the quirks of human foibles replenish the inventory of cheap thoughts and opinions for sale at this bargain price. 

In the last couple of days there have been breathless reports that housing is in a slump again; that prices for houses have dropped and that there is a glut of foreclosed homes on the market depressing prices across the land.  Is this really news?  If you’ve been awake for the last year such information is not new.  With unemployment at 9.8% and foreclosures continuing why in the world would anyone think the prices of homes would stabilize yet or go up?   The existence of Fannie and Freddie and Federal policies will only act as an anchor on the housing market.   Until they let the private market work as it should things won’t improve very rapidly.

NASA may not be going to the Moon, and beyond to Mars, in the next generation under the new guy’s policies but maybe the NASA officials will learn how to celebrate Ramadan.   That will surely advance the knowledge meter and our American proclivity for exploration.   The Crescent flag flying over NASA headquarters doesn’t have quite the same inspirational impact as the American flag being planted on the Mo0n by Armstrong and cohorts.

The Chinese have been publicly working on a missile system that is capable of knocking out our aircraft carriers.  Now the announcement that our Navy will be pulling back further from the Chinese coast.  If our ships can’t ply the high seas in all international waters then what is their purpose?  The Chi Coms seem to be winning already without firing a shot.

At the same time some major US companies (GE) are reported to be entering joint ventures with Chinese companies to build all sorts of things.  Those things include the avionics for Chinese built military aircraft.  What is wrong with this picture?

Does anyone but me miss the old days when there were only about 8-10 bowl games and they were all played on or before January 1?  Now we have 35 bowl games and they play into the first week of January.  That is 70 teams playing in bowls.  Reminds me of the modern notion that we are all winners regardless of performance.  You know, those soccer teams for kids where everyone gets a trophy at season’s end even if they didn’t win a single game.

At this time of year in 1862 both sides in the War Between the States were still burying their dead and preparing for winter quarters after the bloody battle at Fredericksburg, Va.   It was one of Lee’s great victories and a bone headed move by the Yankees looking for a quick kill to end the war.  The Yankee generals had bowed to the pressure from politicians and pressed the attack on unfavorable ground with the loss of life greater than all we have lost in Iraq and Afghanistan in one day not counting the horribly wounded.

I think the politicians again underestimate the intelligence and resolve of the American people when it comes to dealing with the ballooning Social Security obligations that will drown us in debt and deficits.  We can understand basic math and arithmetic–there ain’t enough money to pay all the folks under the current system.  Our life expectancy has increased dramatically since the 1930’s and that is a good thing. With that increase it is logical and fair to adjust the age for receiving benefits upward and delay retirement.  Not only is the life expectancy up but our standard of general health is better.  Adjust the age limit upward over a decade or so and let’s get on with it.  That would allow time for those in their 40’s and 50’s to adapt to the new time frame without undue hardship on anyone.

I suppose the family photo album will soon be a thing of the past.  With all the new electronic methods of using digital phones, etc. for picture-taking and then downloading everything to a computer we won’t have them soon.  There is and was something comforting and nostalgic about sitting down and turning those album pages and looking at family and times past. It brought up such memories while on the living room couch or the love seat in front of the fireplace in the den.  Computers are associated in the mind with work and gathering around the computer just doesn’t have the same “warmth” as feeling that person next to you on the couch as you slowly flip through the pics.

If it weren’t for the fact that Iowa holds one of the earliest primaries in the nation for presidential candidates would there be any doubt that the ethanol subsidy would be eliminated?  The facts are in–in is not cost efficient and can damage engines and dramatically drives up the cost of corn which in turn increases the price for our livestock.  That means much higher prices for our food.   It has been a political boondoggle from the start and one wonders when it will end.  Even the “Greens” in Germany and Spain have had to bite the bullet on environmental issues and have seen the subsidies for solar cut because it is too darn expensive.   I think even the folks in Iowa would agree that “corn for cars” just doesn’t make environmental or economic sense.

The next time you open the New York Post you should recall that its historical predecessor was the original Post started by Alexander Hamilton and others. 

“No man will ever bring out of the Presidency the reputation which carries him into it.” T. Jefferson  www.olcranky.wordpress.com

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The California Way?

For decades now the carnard has been that so goes California so goes the nation.  It has allegedly been the trend setter for everything from social mores to economic development and political leanings.  There has certainly been some truth to that assertion.  Those Hollywood glitz hounds do continue to lead the way in style and social outlook.  They are very trendy and so much of the nation does follow that lead.  This applies to the language we use and the clothes that some of us wear.  Many of us got stuck in a fashion -challenged mode years ago and we are hopelessly out of sync with the glitterati. 

In politics it was the Reagan launch pad and then the more liberal influences of the cheese and Chardonnay crowd from San Francisco.  We have seen the changes there work their way across the land in politics and economics.  Pelosi is now Speaker of the House and we have a very progressive Governor in Sacremento.  When it comes to demographics there is no doubt that California has lead the way in illegal immigration and the every changing ethnic makeup of its society as a harbinger for the rest of the nation.  California was not so many decades ago a leading manufactoring state and center.  Its aircraft industry was the leader.  Even ahead of Boeing up in Seattle for years.  The entire LA region was filled with machine shops and and manufactoring facilities.  Then it lead the way with Silicon Valley and the entire computer and IT revolution of the last couple of decades.

The tax policy of California has also been at the forefront of the tax debates for over thirty years.  First there was the Jarvis revolt of the ’70’s and then the escalating increases in taxes as the years went by and the constant increase in government spending.   The reduction in property taxes has lead to an increase in every other tax that can be conjured up by the mind of man.  In envoirnmental policy there is no peer with the activists in California.  They control the flow of your water and the mileage and emissions of your vehicle more stringently than anywhere else.   They also have restricted the exploration for more fossil fuel like no other and lead the way and have the highest cost for gasoline exceeded only by Hawaii and maybe Alaska due to lack of refinery capacity and transportation costs.   The issue is do we want to follow their lead.  Is their existence a heaven or a hell?

The manufactoring jobs have disappeared rapidly over the last couple of decades.  LA is no longer a major manufactoring locale.  They do a lot of stevedore work unloading manufactored goods from China at Long Beach but the jobs to make those goods are not here.  The budget is in a crisis at the moment and appears that they voters will reject the latest effort to raise taxes.  Maybe they had some very local and targeted Tea Parties out there a couple of months ago.  California has been heading toward displacing New Jersey, New York and Conneticutt as the highest tax states in the nation.  Now they are talking about legalizing pot and taxing it as a revenue source.  Sure sounds like a solid business plan to me.  It is running deficits as far as the eye can see and there is no existing plan to rein in those costs.  They also have a debt that is huge and there is no obvious way it can be paid.  Soon they won’t  be able to issue state bonds because their rating will be so low.  They can’t  cover their current operating expenses.  The size of state government has expanded enormously in the last decade or so.  A greater percentage than ever of their citizens are not in the productive market place but working a government job.  Those jobs don’t create money or an economy for the people.  They drain money from the  economic system.  They allow illegal aliens to attend school without any effort to turn that information over to the Immigration authorities so that the citizens don’t have to bear the burden of paying for the schooling of those that are not even citizens.  Likewise no effort is made to restrict the use of emergency room use by illegals. 

California is running out of water by the day and the agricultural industry is facing destruction if relief is not found.   How will they support any future development without new sources of water?  

You can come up with your own analysis of California.  It has so many wonderful positives about it–the climate, the topograhy and the people.  Do we want the rest of the nation to follow its example on those key economic issues and just as importantly can we afford it.   Will the nation replicate the California experience?

If it is the leader of the trends for the nation then I fear for the nation.   Maybe the upcoming vote on taxes will be a wake up call for the politicians there and elsewhere.  If not then their sleep may be disturbed with nightmares down the road.

Taxes and death are inevitable as Ben Franklin said but the former we can control as a free people. 

read more at www.olcranky.wordpress.com

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The Tea Bag and Tax Revolts

Ever since Rick Santelli had his rant on the Chicago Board of Trade floor there has been a slowly growing groundswell of movement to put his call to arms in action.  You might recall how he voiced great displeasure specifically with the idea of bailing out someone’s lifestyle by reworking their mortgage for them with Federal tax dollars which means OUR money.   Remember there is no test to determine if the receipients of such Federal largese are deserving or not.  They might be able to afford their mortgage but for the fact they squandered their money on other things, like gambling trips to Vegas or any other frivilous venture.  The crowd on the floor that day gave him a rousing cheer and the White House was very quick to demean him by name implying he didn’t understand the situation.  I don’t know about you but nothing makes me madder than a wet hen than for someone I disagree with to tell me I don’t understand.  Such a east coast elitist comment.  We understand all too damn well!   Santelli talked about having a tea party just like the old Boston Tea Party in Chicago sometime this spring.  Many have taken the call to arms to heart and are pursuing that vision.

By now you may have already received one of the many emails or other communiques about the tea bag revolt.  If you are unhappy with TARP, TALF, the Stimulus Bill, the soon to be Son of Stimulus Bill (as is already being discussed by Geithner, the tax cheat in -chief and assorted members of the Democratic House and Senate delegations, the cap and trade “tax” hike,  and the budget proposals that are a Faustian deal at best) then you should join the Tea Bag Revolt.  It is the perfect way for the Silent Majority to demonstrate their displeasure and anger.  We aren’t the types to go running down the streets with bullhorns and plackards but we can do this. 

The suggestion is to mail a tea bag to the White House on April 1, 2009.  You don’t even need to enclose a letter.  Just put the tea bag in an envelope and drop it in the mail to 1600 Pennsylvania Ave., Washington D. C. 20500.   That’s it.  It will send a message loud and clear.  I have never done anything like this in my life but I intend to exercise my rights of free speech and mail my tea bag.  Total costs is 43 cents, at least until the Post Office raises prices again.  I have no idea how many tea bags will be sent.  Maybe only a 100 of us will do it, maybe a 1000, maybe many more.  Of course the Post Office will be required to not deliver all of them if in fact there are hundreds of thousands of them.  The press probably won’t give it much play; need I explain why that is true. 

I have a personal addendum I would like to add for all those who are upset, angry and fearful of the severe shift in direction the country is taking and that is to begin the tax revolt.  The mother’s milk of the socialist agenda in Washington is taxes.  That is their power over all of us and our economy.  We can starve the beast.  Many of you file estimated quarterly tax returns.   The first one is due April 15 for this year.  Yes, I know it is the same day that the returns are due for tax year 2008.  When you estimate your payment this year you can reduce the payment by 25% of what it would have been otherwise.   It is an estimate after all.  If enough of us did that they would certainly feel the pinch in Washington.  I intend to do it.  I want them to see and feel the power of the roughly 50% of us who carry all the water in this economy and pay the freight for the ever expanding growth of Government.  If there is no change then I intend to crank it up on June 15th when the next quarterly estimate payment is due.  I will cut mine by 50% at that point.  Just those two reductions to start with.  Biden says it is our patriotic duty to pay taxes, well, I think it is our patriotic duty to fight back for the very founding principles that built this nation and for which so many have scarificed so much over the years.   After June, we’ll see.  Stay tuned.  I encourage each and everyone of you to cut back on the payments.  You can pay the extra amount later, if there is an extra amount owed at all.  They are estimates.   Those who have a W-4 form can adjust it on April 15th and then change it back later if that is their desire.   No one is being urged to violate the law, to the contrary you are urged to follow the law and also exercise your rights. 

As a side note you are reminded that for the first few decades  the Federal Income tax collection was made by returns that were filed only once a year.  There was no payroll withholding.  That didn’t start until the regime of FDR.  The Government wanted the money quicker and with greater assurance of collection.  So they imposed the burden on the employer.  Hasn’t it ever occurred to you that it is strange that the employer has to do bookkeeping and tax collection for the Government?  Your employer doesn’t owe your taxes yet they have to collect it and in the correct amount and then pay it over to the Government coffers.   Who compensates those employers for that work?  Also FDR promised that social security payments would never be subject to income taxes.  Guess what, they are now.  Up to 85% of your social security distributions can be taxed.  So you get screwed over twice.  They take your money and keep it for decades with no return whatsoever then when they graciously give you back your own money they tax you for it.  What a deal!


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Get rich with taxes!

Let me get this straight.  The Government is going to spend lots of money and that is going to create wealth for all of us.   They plan on spending trillions in the next year or so.  That is a lot of potential wealth creation.   Let’s do some math on that one.  Take your own estimate of how many taxpayers there are in the country right now.  Not total population but taxpayers.  Then divide that into say 2 trillion which seems to be a pretty conservative estimate now of the spending proposed between bailouts and stimulus planned for the coming year or so.   (Indeed when you add in the extra money that is likely to be spent by the Fed which will be off the expense books it is quite likely too low).  Anyway, do your own math and see what you come up with per taxpayer.  It is a huge number, at least to my way of thinking.   Then just cut whatever number you came up with in half.   Let’s just write a check for those folks.  It would be more efficient.   Of course there is one big problem with creating wealth and a healthy economy with Government spending and that is that the money has to come from taxes ultimately.   That means we are paying for it.   We are advancing money to ourselves.  Regrettably we don’t get it until it has been filtered through Washington and then redistributed the way the politicians want after they pick the winners and losers in our society.  The winners you can be sure are the ones who are most likely to vote back into office the very politicians who parcel out the money.

We have had a tremendous reduction in wealth over the last year because of the drop in values of everything from stocks to housing.  That loss may well continue for some time to come and I question whether new Government spending is going to restore that wealth.  Every dollar spent has to be rasied by taxes.  Even the money borrowed by the Government has to be repaid and you guessed it, that can only happen if the tax revenues are there to pay them back.   The only alternative is inflation if the Government decides to simply print more money and make it worth less.   It is a demographic fact of life that the housing market is not going to be robust for years because of the bust of the Baby Boom generation.   We can’t change those numbers no matter what Congress does and doesn’t do.   There will continue to be demand for housing but it will remain subdued compared to the ’80’s and 90′ and the early years of this century because there will not be enough buyers for all types of housing as there was during the prime time for the Boomers.   That demand and the ridiculous regulations that not only permitted but urged lending to folks who couldn’t afford the house they were buying caused the bubble in housing prices for the last 15 years.

There was a long time rule of thumb that house prices would grow at about the same rate as overall wages.  Historically that has been around 3% at year.   Which is not bad for a long term investment and especially since it is an asset that the average Joe gets to use on a regular basis.  He lives there.    As you know the value of housing was increasing far beyond that 3% rate  recently in many areas of the country for years.  That was a clear warning sign to everyone.   Anytime any asset starts appreciating much faster than an historical average you can be sure that at a point that rapid increase will disappear.   Sometimes the value of gold will increase $10 in a day but it can’t do that day after day ad infinitum.    Nothing can apprecite like  that.

We are probably in for a fairly long haul of being thrifty because people are just now learning the lessons of excess.  The excess was on all levels–private and governmental.  We will truly be in an Age of Thrift for some time.  It won’t last forever, nothing every does in economics, but it will endure for years.  Government spending won’t make that change nor will it affect the demographics of the waning Boomer years.   I want to see us have a robust and growing economy as much as the next person.   I don’t  understand though how taxing ourselves will do it.   That
Government spending is a tax plan ultimately.  I would love to hear someone explain to me how all that spending is not going to result in a huge tax bill.  I fear we will not be spending our way to prosperity but taxing ourselves into economic oblivion.   Just when things might seem to be improving the bills will start arriving in the mailbox.
Even the Government hasn’t figured out a way yet to create the free lunch.  They will try mightly to persuade you that that is what they are offering now.   Taxes or inflation.  Those are our choices down the road if we embark on this profligate spree of Government largess.   Neither has positive implications for our future.  The market if left unfettered can and will correct itself by punishing the foolish and wasteful and rewarding the industrious and thrifty.   Trying to be Mother Nanny will not solve our problems but merely surrender more of our freedoms to politicians and entangle our economy even more with the whims and caprices of those politicians who want us in thrall to Mother Government.

Scrip is not money but more akin to a redeemable coupon for assets, goods or services.  As the Allies took over the countries of Europe during WWII they often would resort to scrip on a short term basis for the market to function at least on a primitive basis.   The victors would issue it to the local population for use to acquire the necessities of life.  Much like a ration card.   Corporations can even issue scrip.  In over 40 years of law practice I was involved in one case where we issued scrip to creditors.  It is the only case I know of where it was done.    Germany worked under a scrip and ration card system for about 3 years after the War.  The new Marks weren’t put into circulation again until about 1948.  Each person was issued a set number on a specific date and then they were off and running.

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Taxes down the ages

Discussion and disputes over taxes are nothing new under the sun.   From biblical times to now there has always been friction between governments and the people subject to that particular government over how taxes are to be paid, who  has to pay them and what form that taxation will take.     In very ancient times the taxes usually took the form of in- kind payments or contributions to the King.   It would be so many bushels of grain or containers of wine or olive oil or whatever other commidity had value to the Kingdom.   This was the method in ancient Babylon and in Solomoniac times in the Bible.   You can see many examples of that.  Even after the use of coin and money became more prevalent those monies were usually employed for dealings  between merchants or the State and the people it was dealing with.   Ordinary folks even if they had some wealth rarely had any significant coinage.   By the Roman era the use of coins for payment had become much more prevalent. 

In many instances the “taxes” were paid by the dedication of service to the King.  For examply you can read about how King Solomon built the Temple and the use he made of workmen.  Some would have been slaves of course but others were paying a part of their taxes but giving their labor to the King.   The Bible refers to them as “forced labor”.  Exactly who would be taxed was always a bone of contention just as it is today.   Everyone naturally wanted the “other guy” to be the one that got taxed.   The King or government wanted ease of collection and dependability of the revenue stream.   The governments quickly figured out that the best way was to go where the money was–the ports and market places and the established farms where someone couldn’t just pack up and take off.  You couldn’t abandon your farm very easily.   

In medieaval times and during the Dark Ages much of the “tax” was paid by labor because of the feudal system and the fact that coinage was even rarer than it had been during the Roman era.   You ended up with a crazy quilt style of obligations that were due from the serf on up the class system.   Even the Knight owed taxes that were usually due with his military service for his liege lord.   Some were paid with money and many were paid in -kind from the produce of the land.  More than one revolt or war  has been fought over the issue of the fairness or lack thereof of taxes.   Recall our own American history and the the cry “no taxation without representation”.     That certainly  wasn’t the only cause of the Revolution but it was a major contributor.    Our nation existed for over 115 years without an income tax and we relied on tariffs  on imports and other duties and fees to support the operations of government.   We even taxed whiskey and that led to the first real tax revolt  in the country.  It was called the Whiskey Rebellion and was centered in south central Pennsylvania.  Washington raised and army to quell the revolt but thankfully calm was restored without having to use force against the people.

You can only tax what the people have.   In a socialist or communist country there is no tax because the people have nothing.  Everything belongs to the State in the first place and the central government gives you what it thinks you deserve.   In the west we do have ownership.   Even the poorest among us has ownership of his labor and the value of that labor.   In socialist societies even your labor belongs to the State, see, Castro’s Cuba for a modern example.  The tax revenues were used to let the King live in splendor in times past and for military uses and for major public works like the aqueducts of Rome.   Now our taxes are used for myriad reasons and purposes.   So many that it literally is impossible for any one person to sit down and itemize the uses the Feds make of our tax dollars these days.   Most of us don’t get the see the benefit of our tax dollars today.  The obvious matters like military and roads and schools are apparent but the social expenditures mostly go under the radar for us.   In times past the people could see the result of taxes like the aqueducts, the army or the games in the arena.    We have reached the point where tax policy is now used for so many  purposes that it blurs the benefits of submitting to taxation.   Ultimately the government needs us to submit to taxes.  A tax revolt would bring any government to its knees even today.   A government needs the voluntay support for taxation from the majority of its citizens otherwise the tax system loses respect and the perception becomes that only the saps pay taxes–as in Turkey or Italy where tax collection is openly flaunted.

Our government needs to render a more honest and understandable accounting of our dollars soon if they expect the  willing support of the people to surrender our earned wealth for the common good.   That is as it should be; the government has to earn our trust and respect continuously as the steward of the wealth it extracts from us.

In the very early days of our nation we had few federal judges and the members of the Supreme Court had to “ride the circuit” sometimes and go to the outlying areas to conduct trials.   This was  corrected very soon but even then there  was not an intermediate appellate court as we have today and appeals went directly to the Supreme Court from local district court.

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Economic quandries or quackeries

There is much discussion about our economy and the future direction for it and for the green movement.  It occurs to me that there are some overlooked bumps in the road that no one is discussing however.   Logical thought can ponder some near term and long term consequences of planned and proposed action from the new administration.  Then there are those ugly unintended consequences that no one has imagined yet.   Those are always the real surprises and sometimes the nastiest ones to deal with.

The defiict will probably be even higer than already projected for the next year at least.  We have already programmed spending for the various bailouts and stimulus packages proposed that will  push the deficit to historic and dangerous levels for next year.   It is dangerous because we are borrowing money and the day might come when our lenders (China, the Arab states) either don’t have the money to loan or else they decide not to loan for political reasons.   When the Treasury can’t find buyers for  US Treasury bills and notes we are in very deep trouble.   There is a limit to how much we can borrow and how much our creditors will lend us.  I don’t pretend to know that number or limit but there is one as sure as the sky is blue.   I fear we might be perilously close to testing that limit sooner rather than later.  There is going to be an additional add on to the deficit due to reduced tax revenues.   The losses in the stock market have been huge this year.   Normally December is a selling month as the big investors and institutions take intentional losses on their bad investments to offset their capital gains on their winners during the year.  This year I don’t think the winners will be that big and the capital gains will be dramatically reduced from what you would expect in a normal year.   I am sure some egg head economist could estimate that number.  But the hedge funds are selling hundreds of billions of dollars worth of stocks and so are the mutual funds to meet their cash demands for customer redemptions and to cover margin calls.  That doesn’t even count the millions of ordinary folks who have big losses and have sold out taking those losses in exchange for a cash position.  Come next spring the Federal tax collector will get much less revenue from capital gains taxes than would ordinarily be the case.  Those revenues will fall off the chart is my prediction.   We are talking billions.    In addition to that you have the threat and certainity of increased taxes whether they come right away or are delayed a year or two.    People don’t like paying taxes, even those smarmy Hollywood types, and they will be doing everything they can to reduce their tax burden by delaying income or diverting that income to another entity.   That will be another drag on tax revenues that will show up the following year–only 16 months from now.

We are going to creat zillions of new jobs by promoting a green economy, whatever the hell that is.   Just remember that those new jobs come at a cost of lost jobs also.  For a new job working on a wind farm there will be an offsetting job lost by a worker  at a coal fired energy plant.   For every new job created to maintain a electric car there will be a job lost by a traditional mechanic working on a gasoline engines.   The list of lost jobs goes on and on.  You think it through  for yourself and you will come  up with many examples and probably many  I never thought about.    Coal miners will be devastated.  That is an industry that employes hundreds of thousands when you include the transportation of  coal.   We need to very carefully make the politicians talk about and acknowledge the jobs that will be lost when they talk about creating new jobs.   Farm jobs will take another big hit if free trade is curtailed as proposed.   Caterpiller the giant industrial and earth moving company  will be whacked because they will not be able  to compete without free trade agreements.  The import tariffs will be too high.   The politicians should have to adhere to truth in advertizing standards and talk about “net” jobs created, if any.

Everyone is on the electric car bandwagon.   They say we have the technology in place to development these cars within a decade on a commercial basis.  Supposedly it will reduce carbon emissions and save money by not sending it to foreign countries.  Those are all great ideas.  But the technology is based upon lithium and cobalt for the battaries.  By the way the Chevy Volt that gets so much hype I find puzzling.  They advertise with glee that it gets 40 miles! on one charge before it has to be renewed.  I guess you folks living in the east coast corridor may think that sounds good but hell I couldn’t drive to see a client and back to my office on that charge.  Sounds damn inconvenient to me to say the least.   Of much more importance is to realize that the essential ingredients in these batteries are not abundant in the US.  Those supplies will have to come from Russia, China and the Congo.   Now you tell me how comfortable you are with that idea of depending on them for your energy source.  Russia is not exactly our best buddy and will certainly not have our best interests at heart.  The Chinese are not known for a charitable nature and I wouldn’t trust them at all.  The Congo….is there anything more to say about unreliability.   Now we depend upon the Arabs for most of our oil but I am far from convinced that swapping them for the Russkies, Chinamen and whoever is in control of the Congo at any given time is an improvement.   Think about that for a while.   Also just to fill out the thinking game, think about where the electricity is going to come from to charge up those cars.   The electricity has to be produced with power.   It won’t be from solar or wind for decades if ever and it won’t come from hydroelectric for many reasons (not the least of which is to protect the snail darter fish!).   There are trade offs I don’t think we have thought through.   Seems to me if we are going to pump billions of dollars into green industry then we should do it for coal.  Make coal a clean energy source.   We have enough to last centuries and would not be dependent on foreigners for our source.  Some express great confidence in American ingenuity when it comes to green technology; I wish they would show the same confidence in our science and innovativeness when it comes to improving coal.  I don’t own any coal and never will but I do love my country and that solution would be so much better for our economy and would keep jobs and then we could have reduced carbon emissions and along the way improve the gas mileage of our vehicles.  The oil supplies would then loom so much larger because the demand would be reduced dramatically.

You better remember to take the turkey out of the freezer today.  They take a lot longer than you think to thaw out.  Many a Thanksgiving dinner has been delayed because someone find the turkey still hard as a rock on Thanksgiving morning after setting it out to thaw only the night before.

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Presidential Honeymoon or Nightmare on Elm Street

The pundits are rife with comments these days about rallying around the new President-Elect and pulling for him to be successful.  A nice sentiment in the abstract but application might be harder to achieve.   Usually there is disagreement on one or two major issues with any new President but we basically felt they were steering the ship of state generally in a direction that was acceptable.   Many times we disagree with the methods and means of accomplishing a particular goal but the goal is one supported by a goodly majority of the people.  Improving the economy is a worthwhile goal that no one would disagree with.   But would the improved economy be one that we will recognize and afford the same opportunities and flexibility for innovation that we have traditionally fostered.  That is one of the rubs with the new administration.   Further, if the improvement comes at the cost of even bigger and more intrusive Government there will be many who will oppose that because the “improvement” will lower the bar for all of us as Nanny Government takes charge of our lives.   A fear of a drab sameness for all of us permeates many today.   The Government will be in charge of defining and controlling what you can achieve with your life and work.

If the improvement is only for some as a result of redistribution of the wealth at the expense of those who had some wealth then the stage is set for serious problems in our society and the economy itself.  Under the free market system that we have enjoyed for lo these 200 years there is always a redistribution of wealth in progress.  Those on the lower end have moved up; sometimes there ascent is truly remarkable.   Warren Buffet ring a bell.   More often it is not spectacular but steady and lifts the standard of living for the overwhelming majority of us.   Study the hard statistics and numbers for the last 100 years of our and you will see a consistent improvement of the lives of the ordinary Americans.  That history has been astounding.  Compare incomes, housing, education and net worth of families over that time frame and you will see what I mean.  Don’t forget too that even the poor receive food stamps, subsidized housing, a free education through high school and even at the college level you can receive a degree at minimal cost in the state systems or receive grants and loans.   We have more cars air conditioning and consumer goods than ever before.  In the poorest neighberhoods you will see everyone walking around with cell phones and inside most of those homes you will see a plasma screen tv.    For sure we have had our ups and downs on occasion but the steady rise of standards of living can not be denied by any intelligent person.  Likewise many of the “rich” have taken a fall.  They make mistakes and lose the family fortune.   It happens all the time.  Our socio-economic brackets have never been static and they aren’t now.   The mobility of opportunity up or down and increase or decrease of wealth has inspired all of us and our ancestors.   There has always been the hope of moving up.  If it ain’t broke don’t try to fix it.  You more likely will  mess up a good thing.  We have had a good thing–a damn good thing.

Change is not always a good thing.  The Russian Revolution was certainly a change but was that a good thing?  It impeded that progress of the Russian people for 70 years and ended up costing millions of lives along the way.   Was radically reducing our military under Carter a good thing?   It merely emboldened our Cold War enemies and made the world a more dangerous place.    We long ago recognized that tariff protections never work in the long run.   Smoot-Hawley was a failure and  similar  protections decades later didn’t ultimately  help the Detroit Big Three.   Histroy is replete with changes that were disasters.  

The list of disagreements with the incoming administration is very long and of great concern is that it is more than differences in goals to achieve commonly desired  results.  It is the results themselves that are at issue.   Big Government versus restricted and less intrusive Government can’t be reconciled.   Immigration can’t be smoothed over.   There are many who feel illegal is just that and that there should never be an amnesty.   Higher taxes versus lower taxes aren’t compatible.   The overriding dispute is on the size and scope of Government and the control of Government over individuals, companies and groups.    I don’t think there will be any joining of hands and singing Kumbaya around the campfire anytime soon.   The vision of the new administration is not the vision for millions for this great nation.   They feel under siege by the Barbarians at the gates.   So some of us will wish our nation well and hope it still has life left in the American dream but will oppose those trying to redefine and corrupt that dream.   Some want nothing to do with a change for what they believe to be for the worse.

To  scuttle a ship means to intentionally  sink her.   This is down by opening the sea cocks in the below deck areas.   There was a mass scuttling of ships of great note after WWI in 1919.  The German navy was required under the truce terms to bring their fleet to Scapa flow in Scotland and be interned or surrendered to the British on behalf of all the Allies.   When the Germans realized that they would never be able to control their own ships again the entire fleet scuttled on command right off the coast of Scotland.  The British were publicly outraged but privately admired the professional demeanor of the German sailors.   They weren’t really surprised by what happened it is what they would have done themselves as professional sailors.

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Welfare or charity?

The topic of welfare has risen to the fore again as well it should with one of the tax proposals from one of our candidates for President.   If we as a people believe our taxes should be used to give money directly to one particular group selected by politicians then I suppose we have no choice but to go along under our democratic principles.  But I do like truth in advertising.   The refundable tax credits are welfare by any reasonable definition of the word and it strikes me as reasonable to use that term.   The folks who are to receive the cash payments are indeed workers  but they are ones who only pay payroll taxes, to wit: FICA (Socical Security) and Medicare payments.  They will pay approximately 7.5% of their wages for that and their employer has to pay an additional 7.5%.   I don’t view that as any great sacrifice on their part.  After all it is for their own retirement money down the road.  If you believe the theory behind Social Security it is your money being put aside for retirement and the Medicare portion is for your personal benefit too when you become eligible.   The point is that those taxes are not income taxes and those funds don’t contribute to the money needed to run our bloated Federal establishment and all the other expenses of Government.   All the estimates say that about 40% of the folks would qualify for this cash payment  even though they pay no income taxes.  The politicians have made the decision that this group is worthy of special help; that this group of folks can’t make it on their own without public assistance.   The Federal budget is enormous and that means a little over half of us have to fund everything else  for the Government–military, the entitlement programs, like food stamps, etc, all the Federal agencies.  We are reaching a point where there is not going to be enough of us who actually pay income taxes to foot the total bill for everything except Social Security and Medicare.  Just as now there is only about 2 workers for every person collecting Social Security, and that is part of the problem with that system, we will soon be facing the same dilemma with our general Federal budget items.   How low can the ratio go of income tax paying citizens to non payers?   Thirty percent, twenty per cent.   There is a point where it all will collapse.

Start from scratch and ask yourself how much in income taxes anyone should have to pay regardless of their income.   Whether they make $25,000 a year or a million what is the upper limit you  think is “fair”.  How much should someone be allowed to keep of their own earnings.   I have seen several polls on the topic before and most of them say the majority of us believe income taxes should never be more than 30% of anyone’s income.   Remember we all have to additionally pay local and state taxes too.  There has to be a limit unless you prefer a socialistic or communist form of governance where the Government owns and controls everything including the right to tell you where you will work and what you will make and there are no taxes because the Government already owns everything.

We are rapidly heading to a situation where only half of us and soon even less than half will be paying for the operation of the Government.   That is unsustainable.   We need to take a hard look now at our taxing policy.   If we do not there will soon be a true tax rebellion.   Once less than half of us are paying for everything we will have reached a tipping point of opposition.   There is a long and strong reluctance to high taxes in the Nation and it will grow from reluctance to outright defiance.  We could become like Italy where cheating on the tax man is a national sport and only the foolhardy are paying the taxes due.  

 I once read an interesting article years ago by a very famous businesman who proposed that we limit the right to vote to only those that pay income taxes.   If you didn’t pay income taxes in the year before the election you couldn’t vote.  It is a very intriguing concept and does have some merit.   No one would be denied their civil rights.  The right to vote is not well covered in the US constitution.   The 15th amendment only speaks about denying rights based upon race, color or previous condition of involuntary servitude.   Otherwise the Constitution is silent about any Federal standards for voter qualifications.  The premise of the argument was quiet straight forward–why should those who are not paying the bill have a say in how the money is spent?   Shouldn’t those who are funding the Governement have the right to determine how that Governement will be spending the money.  You have heard a lot lately the expression “no skin in the game” referring to the mortgage bailout situation and those homeowners who bought their homes for virtually no money down and that is an apt phrase when it comes to those who don’t pony up income taxes.   What is their skin in the game?   Remember the proposal is abundantly clear that the non tax paying citizens would have all their civil rights under the Constitution protected.  If you have people who don’t pay but still vote isn’t that an invitation to worse corruption in the political process where the ones in control of Government will be inclined to dole out goodies (bread and circuses) to the non payers to keep their votes and thus the power?   If the Government is going to take my money by force of law at least let me have a say in how it is spent and don’t let the non payer have an equal voice.   If I am paying for the free lunch for someone else they shouldn’t get to select the menu.    Those are the arguments.  They do pose very interesting questions  of fairness.   I thought you might enjoy the mental exercise of thinking that through.

Taking your money and giving it directly  to someone else is welfare, it is not merely adjusting tax policy.   If such a welfare program is the will of the people then let them speak to it in plain english.

The English royal family changed its surname during WWI from the German surname(s) that had been used for over a 100 years.  This was at the height of the war in 1917.   You know the name chosen of course–Windsor.  Oh, technically the Royals aren’t name the way you and I are.  It is not Charles Windsor.  It is Charles of the House of Windsor for example.

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Thoughts on Bailout and election

I still don’t understand why they folks in Washington don’t go straight to the heart of the matter which is houses and mortgages.  They are helping out all the wrong people.   I don’t care a tinker’s toot about the companies or individuals who bought those crazy bundled “securities” backed by mortgages.   It is not the mortgages themselves that are going to be bought by the Government but the securities issued by high flying investors and brokers around the world.   As far as I am concerned they can reap what they sowed.   We would get a much bigger bang for the buck if we went right to the bad mortgages themselves and re worked those for folks who can make a sensible payout on the value of the mortgage and underlying  home value.  It should be limited of course to only those who occupy the home as their principle place of residence so as to exclude the investor types who bought several homes on cheap credit to try and flip them for a quick profit.  They made a bad investment and should have the same pain as the rest of us.   Bear in mind that the overwhelming majority of mortgages are current and valid and that some 30%  plus of homeowners have no mortgage at all but have paid their’s off over years of hard work and sacrifice.    Those who can’t pay a re worked loan should be foreclosed because they never should have bought the house in the first place.   That was their mistake, not mine.

Changing that crazy mark to market rule would also offer immediate help along with a mortgage insurance program backed by a Government guarantee.  The insurance should be paid for by the homeowners needing the help, not the rest of us.   Upping the FDIC limits would not cost any initial outlay and would be mor efficient and  economical and definitely would calm the money scare for many.  I don’t really prefer any of the above but I am trying to be reasonable in the political envoirnment.   Of course we can all feel so much better about everything knowing that the domestic supply of wooden arrows has been assured with the Senate bill, along with other appalliing add ons.   Thanks to those two Democratic Senators from Oregon.   Was there ever a more classic case of the abuse of the earmark system.  We face very serious problems with our financial market and economy and yet those folks can’t keep their hands out of the public cookie jar.  It is not the amount of money but the reflection of an attitude.  One that we must make sure Washington finally learns we don’t like.  If they would only spend the public money with the same thought and consideration they use when they spend their own money we would all benefit.  I rather doubt they would have invested in wooden arrows with their own money.

If I hear one more time that Obama is going to give a “tax break” to 95% of the people I will be apoplytic.   I only want truth in advertising.  It is not a tax cut at all.  It is a simple wealth redistribution program.   It will take money from those who pay taxes and literally give money to those deemed worthy.   It is a welfare program, pure and simple.  Forty per cent of the folks pay no income taxes at all.   They will get a check from the Government.   The money comes from those who do pay taxes.   If that welfare program is something that the majority really wants to do then so be it.  But let’s call a duck a duck.  I do wish that the debate would be on the truth.  Those “refundable tax credits” in the Obama plan are nothing but welfare payments.   Let’s have an honest discussion on that and not use smoke and mirrors to obfuscate what is NOT a tax cut.  We should not be using the tax code as a disguise for a gigantic welfare program.   Is a cash payment to some really the best way to keep the American dream alive?   Are those seeking power pandering or worse outright buying votes with a promise of cash in your pocket?  I bet you want to be rich some day.  Many sure do.  If you do hope to be “rich” some day why would you want to punish exactly what you want to become yourself.    Talk about hitting yourself on the toe with your own hammer.

I saw one of those elevator signs today with factoids displayed.  It gave the definition of “keelhaul” and said it meant to severely rebuke.   Well, that is generally ok but the history of the word is much more interesting than that.  In  the days of the sailing ships the sailors who plied those waters were a tough and rowdy bunch.  Discipline was harsh.  Sometimes over the edge like in “Billy Budd” or “Mutiny on the Bounty” but truth is more often than not some punishment was deserved.   There were many punishments meted out at sea.  As recently as the second world war it was common to throw a rowdy sailor in the brig on bread and water for several days or even lash them to the mainmast for a couple of days exposed to the elements.   In the days of the tall ships (sailing ships), when a seaman got badly out of hand the sternest punishment a captain could dish out was to keelhaul him.  It was worse than giving lashes.  Those lashes were dreadful but rarely caused death.  To keelhaul meant to take a man and tie him with to two connecting ropes around his waist and then throw him over board at the prow of the ship.  Then the sailors would drag each rope from the prow to the stern on each side of the beam of the ship.  This meant that the miscreant was literally pulled along underneath the keel of the ship from stem to stern.  Those ships were encrusted with barnacles that could cut like a knife.  The length of time under the ship depended on the skill of the sailors pulling the ropes and the luck of the man underneath the keel.  If he survived the dragging and was not drowned when he was finally pulled aboard then he was sure a mess from all the cuts and abraisons and the sting of the salt water.   It was the ultimate punishment short of hanging or walking the plank.    You had a chance to live.   So you can see that the word certainly does mean to severely rebuke and a bit more.   Hope you found that of some interest.  The true story behind words I find fascinating. 


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Adages for Politicians to heed

Some of the old bromides have real use even in our sophisticated world.   After all they became popular and endured over the ages because there was some deep seated truth to the comment, otherwise they would have wilted on the vine of time.  Let’s look at a few of those sayings that have endured and apply them to our politics and politicians of this election cycle.

Measure twice, cut once–an old saying from the carpenters of the world.  It has great application for anyone, anytime.   The idea is straightforward–think and plan your actions.  The carpenter knows that you need to make sure your mearsurements are correct before you take to the saw.  If you miss the right measurement and the board is too short then you have a useless piece of wood.    Therefore make sure of your goal and end result before you embark on any enterprise.    Think it through, then once again.   That extra measure will sure prevent aggravation later on.   It is a good lesson for life and politics.

Neither a borrower or lender be–our good friend Ben Franklin made that popular but he took it from Proverbs.  Still sound advice that as endured for millennia.  It applies very aptly to our current economic situation and the proclivity of our government for a couple of decades now.  Both Democrat and Republican parties have allowed us to be borrowers on a gigantic scale.  We have run deficients for years.  Even under Clinton that everyone thinks had a balanced budget, the facts are we were not funding the Social Security and Medicare burdens to come.  We used the money from those collections to run the day to day operations of the Government.  Check it out.  That is a fact.  When the Government took money from the Social Security fund it simply gave the fund an IOU!  That is like you promising to pay yourself a million dollars.    Our foreign aid money is merely lending in disguise with no prospects of ever being repaid.   That doesn’t even begin to cover our obligations with the IMF and other world lending agencies.  Some argue that credit is the oil for the economic engine of the US and the world, but I take the position that it is the monkey wrench in the works.  Credit should always be kept to the absolute minimum.   We have become addicted to it.  Just look at the credit card debt of our people today.  That is not healthy for the individuals or our society.

Reinforce success–from our military friends.  It is good advice for all of us.  When we find that groove and are humming, we should go at it hard.   A current political topic that you can relate this to is the issue of drilling for more oil in the States, offshore and in Alaska.   The Republicans have hit a nerve with the man in the street on it and should hammer it every day in every appearance.   The ordinary Joe doesn’t give a hoot about Polar bears when gas is $4.00 and the people have the common sense to realize that those hundreds of billions sent each year to Arab nations could be spent right here at home and produce thousands of good paying jobs for Americans without tax payer money eing spent and that energy independence is a vital concern to the health of our nation.  Those monies spent with American companies will be spent by American companies and their employees and shareholders  in America.  Where does the money go that we hand over to the Arabs?  Not necessarily here.  You make up your own mind about it, but the point here is that it is a “success” and we’ll see if the Republicans reinforce it as the doctrine dictates.  Even T. Boone Pickens has stated repeatedly to drill, drill, drill.  Driling after all is the only way to get natural gas which by the way is a fossil fuel.  Thought we would give that little geology lesson to Ms. Pelosi.

A penny saved is a penny earned–a truism if ever there was one.  Politicians in particular should follow this advice from the ages.   They all seem to forget that there are two sides to ever balance sheet.   That when income diminshes or costs rise too much,  you can cut expenses.  You don’t HAVE to increase revenues (taxes) necessarily or borrow money.  (See above about borrowing).   How many Government agencies are in fact worthless?   Take OSHA for an example.  Do you really think we need thousands of Federal employees to insure safe work envoirnments?  Trust me there are plenty of John Edwards out there that love suing companies that cause harm due to unsafe or negligent work places or practices.  Those plaintiff’s lawyers are chomping at the bit.  Industry has plenty of incentive to protect its employees already and the employees  have remedies available.  Does OSHA truly add anything except a more swollen Federal payroll?   You could make your own list of useless Government spending and it would be right.  How many farmers need a County Agent anymore from the Department of Agriculture?  Other than some record keeping and research what does that department do that helps you with your daily life.

Don’t let the tail wag the dog–this is very applicable to the special interests groups where so often the small bloc exerts such great influence on our laws and policies.    Our tax code is bulging with little goodies for all stripes of interests groups as are our other laws.  They overwhelm.   This evil of a small group dominating policy and political outcomes cuts across party lines.  Unions, business groups and yes, those NGO’s are constantly seeking special tax breaks, grants or favors from the government.   The charities are as bad as any of them.  The farmers with their subsidies and the industries with their requests for trade barriers and unions with their demands to increase their membership all feed at the trough and the result is that some minority with political clout wags all the rest of us.   We can’t eliminate lobbying because it is fair for anyone to speak their mind and make their wishes known, but we can hold the politicians accountable for every favor  they hand out to those “tails” that we all end up paying for.   We, the people are the dog and those unions, etc. should get no more  special treatment than the average working bloke.

How about that Hadron  accelerator in Europe?  It is huge, 17 miles in circumference.  It is close to completion now and the experiments will be starting soon.  These are the ventures we should continue to pursue.  One breakthrough and our disagreements over energy policy could become passe in a generation.  Just as the stem cell debate is fading due to scientific advancement that is making it irrelevant, a breakthrough on the fusion front could transform  our energy supplies.  Fusion remember doesn’t have the waste problem of the fission process we have been using for decades.  Fusion could produce electricity in prodigess  amounts.  Let’s all wish them luck with the research.

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